On October 1, Eder Fabrication borrowed $84 million and issued a nine-month, 15% promissory note. Interest was payable at maturity. Prepare the journal entry for the issuance of the note and the appropriate adjusting entry for the note at December 31, the end of the reporting period.
Answers
Answer and Explanation:
The journal entries are shown below:
Cash $84,000,000
To Notes payable $84,000,000
(Being issuance of the note is recorded)
Interest expense($84,000,000 × 15% × 3 ÷ 12) $3,150,000
To Interest payable $3,150,000
(Being interest expense is recorded)
Related Questions
A Lorenz curve refers to a graphic illustration of the share of population on the _______________ and the cumulative percentage of total income received on the __________________ .
1. left quintile; right quintile
2. right quintile; left quintile
3. horizontal axis; vertical axis
4. vertical axis; horizontal axis
Answers
The Lorenz curve shows the cumulative share of population on horizontal axis and cumulative percentage of total income received on the vertical axis.
A Lorenz curve is a graphical representation of a population's income or wealth distribution. It is named after economist Max Lorenz, who introduced the concept in 1905. The Lorenz curve is plotted on a graph with the cumulative percentage of the population on the vertical axis and the cumulative percentage of total income received on the horizontal axis.
The curve illustrates the distribution of income or wealth in a population, to show the extent to which the distribution is unequal. For example, a perfectly equal distribution of income or wealth would be represented by a straight line on the graph, while a more unequal distribution would be represented by a curve that is farther from the straight line.
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Identify whether each scenario describes a drawback or an advantage of trade regulation.
benefit of
trade regulations
drawback of
trade regulations
Melanie owns a juice and soda company. Her
country imposes tariffs on imported soft drinks.
Melanie and her employees feel secure because
they aren't threatened by heavy competition from
foreign beverages.
Chad owns a shoe factory. For 15 years, his
country has blocked virtually all foreign shoes
from entering the domestic market. Chad does
not feel the need to innovate and create new
styles of shoes to offer variety to consumers.
Ravi has a unique vision for the future of
smartphones. He believes his design can propel
his nation to the top tier of smartphone exporters.
But he holds off on starting a manufacturing
company because he thinks foreign competition
Answers
Answer:
Advantage
Drawback
Advantage
Drawback
Explanation:
Trade regulations may vary according to the policy.
1. Melaine had an advantage in this regulation. This brought protection against heavy competitors.
2. Chad has been using this Protectionism to keep on selling obsolete shoes. A huge drawback for his customers.
3. Ravi realized a great opportunity with this market opening a great advantage. He can sell it overseas.
4. Sharon has suffered a drawback in buying a new car. Either She will pay much more for the same car or She'll buy a simpler one.
_________ is an important financial percentage that results by subtracting a project's costs from its benefits and then dividing by the costs.
Answers
Return on Investment (ROI) is a financial metric used to evaluate the performance of investments.
It is calculated by subtracting a project's costs from its benefits, and then dividing the difference by the costs. This percentage can then be used to compare different investments and decide which one is the best option.
ROI is an important measure for businesses and investors, as it allows them to determine the expected rate of return for different investments or projects. A higher ROI indicates that the investment is more profitable, as it provides a higher return for the same amount of money invested.
Conversely, a lower ROI indicates that the investment is less profitable, as it provides a lower return for the same amount of money invested.
The ROI calculation can also be used to determine if the cost of a project is justified based on the expected return.
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Jamal and Keisha each earn money by washing cars and mowing lawns.
Jamal can mow 4 lawns or wash 8 cars in one day. Keisha can mow 3 lawns or wash 9 cars in one day. They both charge $25 for each lawn and $15 for each car.
The chart shows their production after 3 days.
A 3-column table has 2 rows. The first column has entries Lawns, cars. The second column is labeled Jamal with entries 12, 24. The third column is labeled Keisha with entries 9, 27.
Jamal and Keisha are considering entering into an agreement to trade tasks.
How can specialization of labor benefit Jamal and Keisha? Check all that apply.
Jamal can specialize in washing cars, because he has the comparative advantage.
Keisha can specialize in washing cars, because she has the comparative advantage.
Specialization allows them to collectively mow 3 more lawns and wash 3 more cars every three days.
Specialization allows them to collectively mow 12 more lawns and wash 27 more cars every three days.
Specialization allows them to earn more money.
Answers
Answer:
Jamal and Keisha are considering entering into an agreement to trade tasks.
How can specialization of labor benefit Jamal and Keisha? Check all that apply.
Jamal can specialize in washing cars, because he has the comparative advantage.
Keisha can specialize in washing cars, because she has the comparative advantage.
Specialization allows them to collectively mow 3 more lawns and wash 3 more cars every three days.
Specialization allows them to collectively mow 12 more lawns and wash 27 more cars every three days.
Specialization allows them to earn more money.
The way in which labor specialization can be advantageous to Jamal, as well as, Keisha would be:
B). Keisha can specialize in washing cars because she has a comparative advantage.
C). Specialization allows them to collectively mow 3 more lawns and wash 3 more cars every three days.
F). Specialization allows them to earn more money.
The specialization of labor is characterized as the process in which the laborers are deployed for particular tasks in order to promote efficiency. In this process, the ability of laborers is successfully utilized as they are provided the job of their skill area which enhances productivity(effectively and efficiently).In the given case, the labor specialization would assist Jamal and Keisha in increasing their profits by designating the skill areas as per the expertise(Keisha in washing cars and Jamal in mowing lawns) they possess.
Thus, options B, C, and F are the correct answers.
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Mrs. Mulcahy, age 65, is concerned that she may not qualify for enrollment in a Medicare prescription drug plan because, although she is entitled to Part A, she is not enrolled under Medicare Part B. What should you tell her
Answers
What should you tell her is: She do not have to enroll under Part B before she enroll in a prescription drug plan.
Medicare prescription drug plan is plan that help to cover all prescribed drugs which means that any person under the plan drugs is covered thereby by saving costs.
Based on the scenario every person who is qualified to Part A or who is enrolled under Part B is qualified to register for Medicare prescription drug plan.
Since she is qualified for Part A, she do not need to register or enroll in Part B before been enrolled in a Medicare prescription drug plan.
Inconclusion What should you tell her is: She do not have to enroll under Part B before she enroll in a prescription drug plan.
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Answer:
An individual who is entitled to Part A or enrolled under Part B is eligible to enroll in a Medicare prescription drug plan. As long as Mrs. Mulcahy is entitled to Part A, she does not need to enroll under Part B before enrolling in a prescription drug plan.
Explanation:
In the steady state, investment is ________ and net investment is ________.
c. positive; zero
Answers
Answer:
c. positive; zero
Explanation:
In the steady state, investment is positive and net investment is zero.
A steady-state describes a scenario where the investment level in an economy matches depreciation. New investments increase capital stock. Growth or positive investment is possible where new investments are greater than depreciation. In a steady-state, the net investment is zero because depreciation erodes the value of new investments.
Why is it difficult to change real capital
Answers
Answer:
I don't know
Explanation:
can you help me with my question Enter the coordinates of the point on the unit circle at the given angle. 270° ([?], [ ] Enter
Real capital is defined as tangible resources, such as land, that are used in the creation of goods or services. Since the majority of them are fixed, it is exceedingly challenging to grow to their sizes.
What is economics?The term Economics is the study of scarcity and its inferences for the use of resources, manufacture of goods and services, growth of production and welfare over time, and a great diverseness of other complex issues of vital concern to society.
Economic skillfulness is important because it grants businesses to reduce their costs and change their output. For consumers, economic efficiency leads to lower prices for goods and services
Real capital, often known as real capital (economics) Non-financial capital, such as equipment for manufacturers, sewing machines for tailors, or shovels for gravediggers.
Therefore, By the difficulty, To change the real capital the physical tools that aid in the production of goods or services be there.
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Suppose a group of investors pooled $750,000 and founded Best National Bank in Rochester, NY. Best National Bank used $$75,000 of this to purchase shares in the New York Federal Reserve Bank. With the remaining $675,000, the bank manager purchased a building, furniture, and equipment for the bank.
Answers
Answer:
I have no idea to wat the answer is
You have just begun a new job as a bank teller at Santa's Elf Bank. Your supervisor asks you what the difference is between reserves and excess reserves in terms of banking. You want to impress your supervisor, so you recall what you learned in your economics course in order to form your response. What is the difference between reserves and excess reserves in terms of banking
Answers
Answer:
Excess reserves refer to the reserves that the banks have beyond the legally required reserve amounts. Reserves are the funds banks keep on hand to meet Federal Reserve requirements.
Explanation:
The financial institutions are the institutes comprising of the economic transactions and maintaining the surplus and deficit in the economy. It is the intermediate banking institution that lends and deposits the money to the customers and from the customers.
The difference between the reserves and the excess reserves:
Bank reserves are termed as the left amount of the cash that is kept by the bank to cover the situation of unexpected demand of the cash in the institute. The excess reserves are the amount of additional cash that has been kept with the bank in hand and declines to loan out as the amount is declared as the bank's cash in hand.
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5. The current level of money supply in the economy is 10million USD. However the economy needs 50million USD. If the reserve requirement is 15%, what the government should make to meet the amount of money supply its economy needs? (Use open market operation concept).
Answers
To meet the amount of money supply its economy needs the government should Use the open market operation concept.
What is the economy?The annual output to the annual consumption ratio, which also evaluates the flow of money into the market by considering each person's purchasing power, is the backbone of every country's economy.
The Federal Reserve participates in open market operations, which are defined as the sale and purchase of securities there. They enable the Federal Reserve to control price changes without directly affecting the market economy.
It would encourage economic stability by reducing commercial banks' reserves and by reducing their investment and loan activities. So this will be considered to meet the amount of money supply its economy needs.
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How do your habits differ from when you started this course?
Answers
When individuals start a course, their habits may differ from later stages. Over time, common changes in habits occur.
How habits may differFirstly, individuals may initially struggle with time management, finding it challenging to allocate sufficient hours for studying and completing tasks.
However, as the course progresses, they develop better time management skills and create structured study schedules. Secondly, at the beginning of the course, individuals may not have a well-established study routine.
As they advance, they often develop a consistent study routine that suits their learning style, helping them stay organized and focused. Lastly, individuals may initially feel excited and motivated about the course. However, as time goes on, they may face challenges or experience periods of lower motivation. Thus, it becomes important to develop strategies to maintain engagement and motivation throughout the course.
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A quality control activity analysis indicated the following four activity costs of a hotel:
Inspecting cleanliness of rooms $49,300
Processing lost customer reservations 98,600
Rework incorrectly prepared room service meal 246,500
Employee training 98,600
Total $493,000
Sales are $2,900,000. Prepare a cost of quality report. Round percent of sales to one decimal place.
Answers
The Cost of Quality Report is as follows:
Quality Cost Quality Percentage of Percentage of
Classification Cost Quality Cost Total Sales
Prevention $98,600 20% ($98,600/$493,000) 3.4%
Appraisal 49,300 10% ($49,300/$493,000) 1.7%
Internal Failure 246,500 50% ($246,500/$493,000) 8.5%
External Failure 98,600 20% ($98,600/$493,000) 3.4%
Total Quality Costs $493,000 100% 17.0%
Data and Calculations:
Inspecting cleanliness of rooms $49,300 (Appraisal)
Processing lost customer reservations 98,600 (External failure)
Rework incorrectly prepared room service meal 246,500 (Internal failure)
Employee training 98,600 (Prevention)
Total $493,000
Sales $2,900,000
Percentage of Quality Cost = Quality Cost/Total Quality Cost * 100
Percentage of Total Sales = Quality Cost/Total Sales * 100
Thus, the cost of quality report is an appraisal of how the hotel uses its resources to prevent poor quality, including its internal and external failures.
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Complete the text with words or phrases from the box.
as well as but also
finally
for example retenty
the first one
the second one
WELCOME TO RFC GROUP
FC Group ple is one of the largest
financial services companies in the
country. It has branches.not.only.
in the capital,
. 2 in four
other cities. FC is rapidly expanding
overseas.
.3, it already has
operations in Brazil, Poland and Turkey.
FC has two main divisions.
" is its Financial
This division provides independent
financial advice to start-up companies.
s, the Internet
Technology Division, provides secure
e-mail services ....................
6 access
to online databases.
it also has a unit helping small
companies design their own websites.
Services Division.
Answers
Answer:
can you say about this financial group?
it's mean what is the main aim of this group.
What is a key factor you should consider when determining asset allocation
and diversification?
A. Real estate holdings
B. Avoiding similar investments
C. Rate of return
D. Portfolio size
SUBMIT
Answers
A key factor you should consider when determining asset allocation and diversification is Real estate holdings. Thus, option A is appropriate.
Real estate is a type of property that includes both unimproved land and improvements including buildings, furnishings, roads, buildings, and utility systems. Ownership of the land, improvements, and natural resources like minerals, plants, animals, water, etc. is conferred by property rights.
When you make a real agent investment, you are actually buying a physical, observable piece of land or property. Purchasing shares of a firm gives you a claim to a portion of the business itself; this is very different from investing in equities. Each sort of investment carries different risks.
A real estate agent is a qualified individual who acts as a buyer's or seller's agent in real estate deals.
Thus, option A is correct.
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f Honduras is open to international trade in oranges without any restrictions, it will import
tons of oranges.
Suppose the Honduran government wants to reduce imports to exactly 100 tons of oranges to help domestic producers. A tariff of
$
per ton will achieve this.
A tariff set at this level would raise
$
in revenue for the Honduran government.
Answers
Suppose that Honduras is open to international trade in oranges without any restrictions, it will import an infinite amount of oranges. Therefore, the import of oranges can be limited through a tariff. The Honduran government wants to reduce imports to exactly 100 tons of oranges to help domestic producers.
A tariff of $720 per ton will achieve this. A tariff set at this level would raise $72,000 in revenue for the Honduran government.
Tariff: It is a tax imposed by a government on imported or exported goods. The main purpose of a tariff is to limit imports and protect domestic production and employment.
In this scenario, a tariff is imposed by the Honduran government to limit the import of oranges and help domestic producers. Therefore, if the tariff is set at $720 per ton, then it would reduce the imports of oranges to exactly 100 tons, which is the desired goal of the Honduran government.
Moreover, the tariff rate multiplied by the number of imports gives the amount of revenue raised by the Honduran government, which is $720 × 100 = $72,000. Thus, a tariff set at $720 per ton will raise $72,000 in revenue for the Honduran government.
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The composition of the Fingroup Fund portfolio is as follows:_________.
Stock Shares Price
A 200,000 $35
B 300,000 40
C 400,000 20
D 600,000 25
The fund has not borrowed any funds, but its accrued management fee with the portfolio manager currently totals $30,000. There are 4 million shares outstanding. What is the net asset value of the fund?
Answers
Answer: $10.49
Explanation:
Net Asset Value is the equity of the portfolio divided by the number of shares outstanding.
Equity = Assets - Liabilities
So,
Net Asset Value = (Assets - Liabilities) / No. of shares outstanding
Assets = (200,000 * 35) + (300,000 * 40) + (400,000 * 20) + (600,000 * 25)
= $42,000,000
Liabilities will be the accrued management fee.
Net Asset Value = (42,000,000 - 30,000) / 4,000,000
= 10.4925
= $10.49
One of Hawk Company's customers returned products that cost Hawk $500, which was sold on account for $800. Which of the following correctly describes the affect of the return on the financial statements? Group of answer choices Gross profit decreases $800. Total current assets decrease $300. Sales returns and allowances increase $300. Net sales increase $300.
Answers
Answer:
Total current assets decrease $300
Explanation:
Based on the information given what correctly describes the effect of the return on the financial statements will be: TOTAL CURRENT ASSETS DECREASE $300 which is calculated as ($800-$500) reason been that INVENTORY INCREASES with the amount of $500 while ACCOUNTS RECEIVABLE on the other had DECREASES with the amount of $800 leading to DECREASE IN TOTAL ASSETS of the amount of $300.
Evaluate the impact of Brexit on the United Kingdom's long-run economic growth, with
specific reference to the Solow Model. Discuss any potential policy measures that could
offset or mitigate these effects using the following determinants of growth:
a. capital accumulation
b. labour force
c. technology
d. total factor productivity
Answers
The Solow Model, which concentrates on the factors that influence economic growth, may be used to assess how Brexit would affect the United Kingdom's long-term economic growth.
Brexit may have an impact on UK capital formation. Investment inflows and capital accumulation may be hampered by uncertainty surrounding trade agreements and access to the EU market.
The United Kingdom's work force may be impacted by Brexit. The availability of skilled and unskilled labor may be impacted by changes to immigration laws and limitations on the movement of employees from the EU.
The long-term expansion of the economy depends on technological breakthroughs. Brexit may affect the UK's ability to participate in joint research and development initiatives inside the EU and impede the transfer of knowledge and technology.
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Some of the forklifts we use in the distribution centers will have to be replaced in the second quarter of the 2023 financial year, and we have to start thinking about it soon! We always purchased the forklifts outright from available cash resources or funded them by borrowing the required funding from the bank. We have recently learnt that many companies choose to lease their forklifts. These forklifts normally last a good ten years if we take good care of them. Prepare some relevant information that needs to be considered in a decision to lease or purchase?
Report on the following:
● Different options in the market
● Accounting treatment of the options
● Tax implications of the options
● Cost differentials and
● Cash flow implications
What would the correct decision be for the company.
Answers
Different options in the market:
The distribution center has two options when it comes to replacing its forklifts – leasing or purchasing. With leasing, the center would use the forklifts for a specified period, usually a few years, and then return them to the leasing company. On the other hand, purchasing the forklifts will give the center permanent ownership of the forklifts.
Accounting treatment of the options:
Leasing forklifts is treated as an operating expense that is reflected in the income statement. The lease payments are recorded as expenses over the life of the lease. However, purchased forklifts are treated as a fixed asset that is depreciated over their useful life. The depreciation expense is recognized over several accounting periods on the income statement.
Tax implications of the options:
Leasing forklifts can provide significant tax savings for the business as the lease payments are fully tax-deductible expenses in the financial year they are made. In contrast, depreciation and interest expense for purchased forklifts are deductible over several years, so tax deductions are delayed.
Cost differentials and cash flow implications:
Leasing forklifts would result in lower upfront costs and lower monthly payments compared to purchasing, but the total cost of leasing is typically higher over the long term. In contrast, purchasing requires a substantial upfront payment or a loan, but the total cost is lower over the long term. Cash flow implications of purchasing include funding the entire upfront cost of the forklifts and paying for any maintenance and repairs needed over the lifetime of the forklifts, while cash flow implications of leasing include lower upfront costs but higher monthly payments, which will reduce available cash flow in the short term.
What would the correct decision be for the company:
The company should decide based on its financial situation, long-term business planning, and cash flow requirements. If the company has a limited budget, a short-term need for the forklifts, or requires the latest models frequently, leasing may be a better option. But if the company values ownership, anticipates long-term use or higher utilization, and has the cash resources or access to financing, purchasing may be the more cost-effective option. The decision should consider the financial implications, tax considerations, and cash flow requirements of either option.
The supply and demand curve is a tool used by entrepreneurs.
True or false
Answers
Answer:
TRUE
Explanation:
accidents and mistakes are powerful source of innovation true or false?
Answers
Answer:
true
Explanation:
they gives us great lesson
The following is an example in which the proposed method is applied to a fixed asset with an original cost of $248,000, an estimated useful life of 5 years, and a salvage value of approximately $8,000. Year Years of Life Used Fraction Rate Depreciation Expense Accumulated Depreciation at End of Year Book at End of Year 1 1 1/15 $16,000 $16,000 $232,000 2 2 2/15 $32,000 $48,000 $200,000 3 3 3/15 $48,000 $96,000 $152,000 4 4 4/15 $64,000 $160,000 $88,000 5 5 5/15 $80,000 $240,000 $8,000 The president favors the new method because he has heard the following. It will increase the funds recovered during the years near the end of the assets’ useful lives when maintenance and replacement disbursements are high. It will result in increased write-offs in later years and thereby will reduce taxes. Instructions What is the purpose of accounting for depreciation? Is the president’s proposal within the scope of generally accepted accounting principles? In making your decision, discuss the circumstances, if any, under which use of the method would be reasonable and those, if any, under which it would not be reasonable. The president wants your advice on the following issues. (1) Do depreciation charges recover or create funds? Explain. (2) Assume that the Internal Revenue Service accepts the proposed depreciation method in this case. If the proposed method were used for stockholder and tax reporting purposes, how would it affect the availability of cash flows generated by operations?
Answers
The purpose of accounting for depreciation is to allocate the cost of a tangible or physical asset over its useful life.
What is depreciation?It should be noted that depreciation simply means the wear and tear of a product based in usage. Depreciation shows how much of an asset has been used.
The scope of generally accepted accounting principles aims to improve the clarity and consistency if the communication of financial information. The five principles include:
Revenue recognition.
Cost principle.
Matching principle.
Objectivity principle.
Full disclosure.
The president’s proposal is within the scope of generally accepted accounting principles. It should be noted that depreciation doesn't guarantee funds.
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The annual maintenance cost of a monument in the state capital is estimated to be $4850. A perpetual i fund of $100,000 is set up to pay for this maintenance expenditure. Determine the interest rate this fund earns if the interest is compounded quarterly
Answers
Answer:
4.76%
Explanation:
P[(1+i/4)^4 - 1] = A
$100,000*P[(1+i/4)^4 - 1] = $4,850
[(1+i/4)^4 - 1] = $4,850/$100,000
[(1+i/4)^4 - 1] = 0.0485
(1+i/4)^4 = 0.0485 + 1
(1+i/4)^4 = 1.0485
(1+i/4) = 1.0485^(1/4)
(1+i/4) = 1.01191
i/4 = 1.01191 - 1
i/4 = 0.01191
i = 0.01191*4
i = 0.04764
i = 4.76%
A contract pledging title to assets as security for a node or bond is known as (an):
A. Sinking fund.
B. Mortgage.
C. Equity.
D. Lease.
E. Indenture
Answers
Answer:
B. Mortgage.
Explanation:
This is simply explained to be a loan that has been taken in retrospect to purchasing of lands or property. This is of different forms, some are said to run for 15 years while some run up till 30 years in some cases too. In many cases, they are sometimes addressed to be "claims on property". Some are seen to be fixed-rated and in this case, borrowers are known to pays the same interest rate for the life of the loan.
In as much as they are forms of rights from incoperation, individuals and businesses use mortgages to make large real estate purchases without paying the entire purchase price up front. Borrower also repays the loan, plus interest, until she or he owns the property free and clear.
Which question can best help a consumer assess risk when purchasing insurance? How much must be paid to make a claim? What problems are most likely to happen? What are the possible payouts on a claim? How much are the monthly premiums?
Answers
Answer: the answer is : What problems are most likely to happen?
Explanation:
Answer:
b
Explanation:
Under the gross method, ________. A. the processing fees charged are deducted from the company's bank account by the credit card processor B. the total sales plus the processing fee assessed equals the net amount of cash deposited C. the proceeds from debit and credit card transactions are deposited on the last day of the month D. there will be no fee charged by the credit card processor for the transaction
Answers
Answer: . A. the processing fees charged are deducted from the company's bank account by the credit card processor
Explanation:
Gross method is simply used for recording purchases made by th customers at full invoice price. It should be noted that there are no deduction in cash discounts.
Under the gross method, the processing fees charged are deducted from the company's bank account by the credit card processor.
What would be the compound interest rate if tom borrowed $6,000 at a 3% interest rate for 2 years?.
Answers
If Tom borrowed $6,000 over two years at a rate of 3%, the compound interest rate would be $365.4.
How Does Compound Interest Work?Compound interest is the rate of interest on savings that is calculated using both the initial principal and the interest that has accumulated over previous periods.
"Interest on Interest," also known as the power of compound interest, is thought to have been invented in Italy in the 17th century. Compared to simple interest, which only takes into account the principal, it will grow a sum more quickly.
Compound interest is the rate at which money grows at a faster rate when there are more periods of compounding.
Sum acquired = $6,000 .
The interest rate is 3%.
Year is the number of years.
A =\(P[1+r]^{n}\) .
After two years, the amount is 6,000 [1 x 3%]² .
The sum after two years is 6,365.4 .
The sum after two years minus the amount borrowed is 6,365.4 .
The sum after 6,000 is $365.4 .
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Chapter 25 DIFFERENTIAL ANALYSIS, PRODUCT PRICING,AND ACTIVITY-BASED COSTING
Answers
Chapter 25 of Managerial Accounting is about differential analysis, product pricing, and activity-based costing. Differential analysis is the study of costs and revenues of different alternatives to help make decisions.
Managers use differential analysis to decide whether or not they should accept a special order, make or buy, sell or process further, or repair or replace equipment. In differential analysis, managers calculate the incremental revenue and incremental cost of each alternative.
If incremental revenue is greater than incremental cost, managers will choose the alternative with the higher profit. On the other hand, if incremental cost is greater than incremental revenue, managers will reject the alternative.
Product pricing is a critical issue for any business. Managers must determine the price that will make a profit while being competitive with other companies. In setting product prices, managers need to consider the cost structure of the product, competitors' prices, and customer demand.
Activity-based costing (ABC) is a costing method that allocates costs based on the activities involved in making a product or delivering a service. ABC helps managers to identify the true cost of products and services.
Managers can use ABC to make better decisions about pricing, product mix, and cost control. ABC provides a more accurate picture of the cost of each product than traditional costing methods.
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On December 1, Jasmin Ernst organized Ernst Consulting. On December 3, the owner contributed $83,110 in assets to launch the business. On December 31, the company’s records show the following items and amounts.
Cash $ 14,550 Cash withdrawals by owner $ 1,120
Accounts receivable 12,940 Consulting revenue 12,940
Office supplies 2,400 Rent expense 2,640
Land 45,860 Salaries expense 5,920
Office equipment 17,020 Telephone expense 800
Accounts payable 7,820 Miscellaneous expenses 620
Owner investments 83,110
Answers
The preparation of the stockholder equity is presented below:
Statement of stockholder equity
J.Ernst, Capital, December 1 $ 0
Add: Investment by owner $83,100
Add: Net Income $2,960
Less: Withdrawals by owner ($1,120)
J.Ernst, Capital, December 31 $84,940
Working note:
The preparation of the income statement is presented below:Income Statement
Consulting revenue $12,940
Less:
Rent expense $2,640
Salaries expense $5,920
Telephone expense $800
Miscellaneous expenses $620
Total expenses ($9,980)
Net Income $2,960
Therefore we can conclude that the ending balance of the stockholder equity is $84,940
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Fickel Company has two manufacturing departments—Assembly and Testing & Packaging. The predetermined overhead rates in Assembly and Testing & Packaging are $19.00 per direct labor-hour and $15.00 per direct labor-hour, respectively. The company’s direct labor wage rate is $21.00 per hour. The following information pertains to Job N-60: Assembly Testing & Packaging Direct materials $ 375 $ 39 Direct labor $ 168 $ 84 Required: 1. What is the total manufacturing cost assigned to Job N-60? (Do not round intermediate calculations.) 2. If Job N-60 consists of 10 units, what is the unit product cost for this job?
Answers
The total manufacturing cost assigned to Job N-60 is $ 696. If Job N-60 consists of 10 units, the unit product cost for this job is $111.00.
How to find the manufacturing costs ?Direct materials (Assembly + Testing & Packaging) = $375 + $39
= $414
Direct labor (Assembly + Testing & Packaging) = $168 + $84
= $252
Overhead applied (Assembly + Testing & Packaging) = $19 * 168 + $15 * 84 = $316 + $126
= $442
Total manufacturing cost = $414 + $252 + $442
= $1110
Unit product cost = Total manufacturing cost / Number of units
= $1110 / 10
= $111.00
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