flake center is considering purchasing new manufacturing equipment for 90000. the old network can be sold for 7000. the new network will require additional working capital of 10000. its anticipated eight-year life will generate additional client revenue of 40000 annually with operating costs, excluding depreciation, of 20000. at the end of eight years, it will have a salvage value of 9000 and return 8000 in working capital. taxes are not included.
1) if the company has a required rate of 12%, what is the net present value of the proposed investment?
2) assume taxes are 30%, what is the after-tax NPV of the proposed investment?
In: Accounting
Adelphi Company purchased a machine on January 1, 2017, for $50,000. The machine was estimated to have a service life of ten years with an estimated residual value of $5,000. Adelphi sold the machine on January 1, 2021 for $27,000. Adelphi uses the double declining method for depreciation. Using this information, how much is the gain or (loss) for the equipment sale entry made on January 1, 2021. Enter a loss as a negative number.
In: Accounting
Pronghorn Corp. was organized on January 1, 2022. It is authorized to issue 19,800 shares of 7%, $50 par value preferred stock and 462,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year. Jan. 10 Issued 71,000 shares of common stock for cash at $5 per share. Mar. 1 Issued 1,220 shares of preferred stock for cash at $56 per share. May 1 Issued 116,000 shares of common stock for cash at $8 per share. Sept. 1 Issued 5,200 shares of common stock for cash at $6 per share. Nov. 1 Issued 3,200 shares of preferred stock for cash at $58 per share.
Journalize the transactions.
Post to the stockholders’ equity accounts.
Prepare the paid-in capital portion of the stockholders’ equity section at December 31, 2022.
In: Accounting
Let's start the week by exploring the accrual basis of accounting. Why do accountants use this instead of the cash basis of accounting? What are some of the benefits of using accrual accounting?
Please use a different answer than whats on the Chegg database, thank you!
In: Accounting
On February 1, 2021, Cromley Motor Products issued 8% bonds, dated February 1, with a face amount of $90 million. The bonds mature on January 31, 2025 (4 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $90,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. Determine the price of the bonds issued on February 1, 2021.
2-a. Prepare amortization schedules that indicate Cromley’s effective interest expense for each interest period during the term to maturity.
2-b. Prepare amortization schedules that indicate Barnwell’s effective interest revenue for each interest period during the term to maturity.
3. Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell’s investment on February 1, 2021.
4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2023
In: Accounting
Consider the amount and timing of the following transactions made by J. Doe
December, 2014 : Purchased, paid for and applied fertilizer for the 2015 crop. $10,000.
April, 2015: Purchased and paid for seed, fuel, etc. $80,000
November 2015 : Half of crops sold for $90,000. The rest placed in storage to sell in 2016, valued currently at $90,000.
December 31, 2015: Accrued interest, $1,000.
January 15, 2016: Paid accrued interest.
May, 2016: Remaining 2015 crop sold. $105,000
In: Accounting
Income Statement
The goal of a business is to make a profit. Financial statements such as income statements and balance sheets report how successful a business has been in achieving this goal.
1. Use spreadsheet software to create an income statement for Sweet Treats using the data shown below step 8. Format the income statement similar to the one shown in Figure 1-2.2. Use appropriate number formats and rules under numbers as shown in Figure 1-2.2.
2. Enter the appropriate headings and date the income statement for the year ended December 31 of the current year.
3. Enter a formula to subtract the cost of goods sold from sales to find the gross profit on sales.
4. Enter a formula to subtract the total operating expenses from the gross profit on sales to find the net income from operations.
5. Enter a formula to subtract other expenses or add other income to find net income before income tax.
6. Enter a formula to subtract income tax to find net income after income tax.
7. Enter formulas to calculate the percentage of sales for gross profit on sales, net income from operations, net income before tax, and net income after tax. (Divide each number by sales.)
8. One goal of Sweet Treats is to have net income that is 25 percent of sales or higher. Assuming the company sells the same amount of merchandise and expenses and taxes remain the same, how much would the company have to increase prices to meet this goal?
Data for an income statement for the year ended December 31 of the current year:
Sales $325,000
Cost of Goods Sold 175,000
Operating Expenses
Advertising Expense 1,000
Delivery Expense 2,000
Office Supplies Expense 500
Payroll Taxes Expense 5,000
Salaries Expense 58,000
Utilities Expense 3,000
Miscellaneous Expense 400
Other Expense
Interest 2,500
Income Tax 11,500
In: Accounting
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $21, computed as follows:
| Direct materials | $ | 7 | |
| Direct labor | 6 | ||
| Variable manufacturing overhead | 3 | ||
| Fixed manufacturing overhead | 5 | ||
| Unit product cost | $ | 21 | |
An outside supplier has offered to provide the annual requirement of 2,900 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
Multiple Choice
($3) per unit on average
$3 per unit on average
$6 per unit on average
($8) per unit on average
In: Accounting
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 7% annual coupon. Bond L matures in 17 years, while Bond S matures in 1 year.
Assume that only one more interest payment is to be made on Bond S at its maturity and that 17 more payments are to be made on Bond L.
In: Accounting
In: Accounting
Grouper Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2017, and May 31, 2018. The income from operations for the fiscal year ended May 31, 2017, was $1,772,000 and income from continuing operations for the fiscal year ended May 31, 2018, was $2,440,000. In both years, the company incurred a 9% interest expense on $2,385,000 of debt, an obligation that requires interest-only payments for 5 years. The company experienced a loss from discontinued operations of $585,000 on February 2018. The company uses a 40% effective tax rate for income taxes.
The capital structure of Grouper Corporation on June 1, 2016, consisted of 977,000 shares of common stock outstanding and 20,100 shares of $50 par value, 6%, cumulative preferred stock. There were no preferred dividends in arrears, and the company had not issued any convertible securities, options, or warrants.
On October 1, 2016, Grouper sold an additional 475,000 shares of the common stock at $20 per share. Grouper distributed a 20% stock dividend on the common shares outstanding on January 1, 2017. On December 1, 2017, Grouper was able to sell an additional 781,000 shares of the common stock at $22 per share. These were the only common stock transactions that occurred during the two fiscal years.
Determine the weighted-average number of shares that Grouper Corporation would use in calculating earnings per share for the fiscal year ended:
Weighted-average number of shares
(1) May 31, 2017 Entry field with incorrect answer now contains modified data
(2) May 31, 2018 Entry field with incorrect answer
Prepare, in good form, a comparative income statement, beginning with income from operations, for Grouper Corporation for the fiscal years ended May 31, 2017, and May 31, 2018. This statement will be included in Grouper’s annual report and should display the appropriate earnings per share presentations. (Round earnings per share to 2 decimal places, e.g. $1.55.)
In: Accounting
Michael McNamara and Gregory Lau met while in university and always knew they wanted to be in business together. Shortly after university Michael went to work for a large mulinational firm while Gregory pursued an MBA.
After several years of experience the firm Lau McNamara was established on July 1, 1984 and the firm experienced slow but steady growth over time. It is now 2020 and Lau McNamara has grown to total staff of 55 employees and revenues exceeding $13,000,000 a year. They have largely grown in the area of consulting, tax and accounting.
About 5 years ago they hired a rising star Rose Femia. She has exceeded all expectations and has been pushing to expand the services provided by the firm to include assurance services. Mr. McNamara with his extensive contacts has been asked to bid on a contract to perform audits for 3 municipalities within the province of Ontario.
He has assigned this task to Ms. Femia.
At the moment staff are fully scheduled, if Lau McNamara were to be awarded the contract, it must hire one new staff member at an annual remuneration of $60,000 to handle the additional workload.
Ms. Femia is convinced that obtaining the contract will lead to additional new clients from the respective municipalities. Expected new work (excluding the three municipalities) is 830 hours at an average billing rate of $90 per hour. Other information follows about the firm’s current annual revenues and costs:
| Firm volume in hours (normal) | 30,750 | ||
| Fixed costs | $ | 575,000 | |
| Variable cost | $ | 35 |
/hr |
Should the firm win the contract, the audits of the three municipalities will require 870 hours of expected work.
As a side note, Michael McNamara is adamant that fixed costs should be considered for this short term bid. Gregory Lau argues that they should be disregarded for short-term decision making.
Required:
1. If the Rose Femia’s expectations are correct, what is the lowest bid the firm can submit and still expect to increase annual net income? What would be the hourly billing rate for the county audit jobs just to break even on all the new business? (Round "Average billing rate" answer to 2 decimal places.)
2. If the contract is obtained at a price of $44,800, what is the minimum number of hours of new business in addition to the municipality work that must be obtained for the firm to break even on total new business? What is the margin of safety (MOS) regarding the municipality job audit proposal?
In: Accounting
First part of question. Second will come through now.
Diversified Products, Inc., has recently acquired a small publishing company that offers three books for sale—a cookbook, a travel guide, and a handy speller. Each book sells for $10. The publishing company’s most recent monthly income statement is shown below.
|
Product Line |
||||||||||||||||||
|
Total |
Cookbook |
Travel |
Handy |
|||||||||||||||
|
Sales |
$ |
300,000 |
$ |
90,000 |
$ |
150,000 |
$ |
60,000 |
||||||||||
|
Expenses: |
||||||||||||||||||
|
Printing costs |
102,000 |
27,000 |
63,000 |
12,000 |
||||||||||||||
|
Advertising |
36,000 |
13,500 |
19,500 |
3,000 |
||||||||||||||
|
General sales |
18,000 |
5,400 |
9,000 |
3,600 |
||||||||||||||
|
Salaries |
33,000 |
18,000 |
9,000 |
6,000 |
||||||||||||||
|
Equipment depreciation |
9,000 |
3,000 |
3,000 |
3,000 |
||||||||||||||
|
Sales commissions |
30,000 |
9,000 |
15,000 |
6,000 |
||||||||||||||
|
General administration |
42,000 |
14,000 |
14,000 |
14,000 |
||||||||||||||
|
Warehouse rent |
12,000 |
3,600 |
6,000 |
2,400 |
||||||||||||||
|
Depreciation—office facilities |
3,000 |
1,000 |
1,000 |
1,000 |
||||||||||||||
|
Total expenses |
285,000 |
94,500 |
139,500 |
51,000 |
||||||||||||||
|
Net operating income (loss) |
$ |
15,000 |
$ |
(4,500 |
) |
$ |
10,500 |
$ |
9,000 |
|||||||||
Please see the url, for the second part of the question.
https://www.chegg.com/homework-help/questions-and-answers/second-part-question-following-additional-information-available-printing-costs-sales-commi-q38920042?trackid=jHh8sqog
I am not sure, but did you get the information for the second part of the question?
In: Accounting
Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31 follow.
| Debit | Credit | ||||||
| a. | Interest revenue | $ | 14,000 | ||||
| b. | Depreciation expense—Equipment | $ | 34,000 | ||||
| c. | Loss on sale of equipment | 25,850 | |||||
| d. | Accounts payable | 44,000 | |||||
| e. | Other operating expenses | 106,400 | |||||
| f. | Accumulated depreciation—Equipment | 71,600 | |||||
| g. | Gain from settlement of lawsuit | 44,000 | |||||
| h. | Accumulated depreciation—Buildings | 174,500 | |||||
| i. | Loss from operating a discontinued segment (pretax) | 18,250 | |||||
| j. | Gain on insurance recovery of tornado damage | 20,000 | |||||
| k. | Net sales | 998,000 | |||||
| l. | Depreciation expense—Buildings | 52,000 | |||||
| m. | Correction of overstatement of prior year’s sales (pretax) | 16,000 | |||||
| n. | Gain on sale of discontinued segment’s assets (pretax) | 34,000 | |||||
| o. | Loss from settlement of lawsuit | 23,250 | |||||
| p. | Income tax expense | ? | |||||
| q. | Cost of goods sold | 482,500 | |||||
2a. What is the amount of income from
continuing operations before income taxes?
2b. What is the amount of the income tax
expense?
2c. What is the amount of income from continuing
operations?
Assume that the company’s income tax rate is 30% for all items.
In: Accounting
Tanek Corp.’s sales slumped badly in 2017. For the first time in
its history, it operated at a loss. The company’s income statement
showed the following results from selling 575,500 units of product:
sales $2,877,500, total costs and expenses $2,992,600, and net loss
$115,100. Costs and expenses consisted of the amounts shown
below.
|
Total |
Variable |
Fixed |
||||
| Cost of goods sold | $2,463,140 | $1,830,090 | $633,050 | |||
| Selling expenses | 287,750 | 105,892 | 181,858 | |||
| Administrative expenses | 241,710 | 78,268 | 163,442 | |||
| $2,992,600 | $2,014,250 | $978,350 |
Management is considering the following independent alternatives
for 2018.
| 1. | Increase unit selling price 20% with no change in costs, expenses, and sales volume. | |
| 2. | Change the compensation of salespersons from fixed annual salaries totaling $172,650 to total salaries of $69,060 plus a 5% commission on sales. |
(a) Compute the break-even point in dollars for
2017. (Round final answer to 0 decimal places, e.g.
1,225.)
| Break-even point |
$ |
(b) Compute the contribution margin under each of
the alternative courses of action. (Round final answer
to 0 decimal places, e.g. 1,225.)
| Contribution margin for alternative 1 |
% |
|
| Contribution margin for alternative 2 |
% |
Compute the break-even point in dollars under each of the
alternative courses of action. (Round selling price per
unit to 2 decimal places, e.g. 5.25 and other calculations to 0
decimal places, e.g. 20% and also final answer to 0 decimal places,
e.g. 1,225.)
| Break-even point for alternative 1 |
$ |
|
| Break-even point for alternative 2 |
$ |
Which course of action do you recommend?
In: Accounting