The following information is for a proposed project that will provide the capability to produce a specialized product estimated to have a short market (sales) life before new technology, known to be in the R&D stage, makes it obsolete:
• Capital investment of $1,000,000, composed of $420,000 of depreciable equipment and $580,000 of non-depreciable capital (land, working capital, etc.)
• Assume that the depreciable property is in the MACRS (GDS) three-year property class.
• The study period is 3 years
• Annual operating and maintenance costs are $636,000 in the first year and increase at a rate of 6% per year.
• The estimated salvage value at the end of year 3 is $280,000
• The effective tax rate (combined federal and state) is 38%
• Assume that the recovered capital (salvage value – book value) is taxed at the same rate as taxable revenue
• After tax MARR is 10% Based on an after-tax analysis using net present value, what is the minimum amount of uniform annual revenue required to justify the project economically?
**
| You might find it easier to track things if year 3 is divided | ||||
| into a revenue column and a salvage value column and then add those together** Use of Excel is preferred. | ||||
In: Mechanical Engineering
Presented below are selected ledger accounts of Woods Corporation at December 31, 2015.
|
Cash |
$185,000 |
Salaries and wages expense (sales) |
$284,000 |
|
|
Inventory (beginning) |
535,000 |
Salaries and wages expense (office) |
346,000 |
|
|
Sales revenue |
4,175,000 |
Purchase returns |
15,000 |
|
|
Unearned sales revenue |
117,000 |
Sales returns and allowance |
79,000 |
|
|
Purchases |
2,786,000 |
Freight-in |
72,000 |
|
|
Sales discounts |
34,000 |
Accounts receivable |
142,500 |
|
|
Purchase discounts |
27,000 |
Sales commissions |
83,000 |
|
|
Selling expenses |
69,000 |
Telephone and Internet expense (sales) |
17,000 |
|
|
Accounting and legal services |
33,000 |
Utilities expense (office) |
32,000 |
|
|
Insurance expense (office) |
24,000 |
Miscellaneous office expenses |
8,000 |
|
|
Advertising expense |
54,000 |
Rent revenue |
240,000 |
|
|
Delivery expense |
93,000 |
Loss on sale of division |
60,000 |
|
|
Depreciation expense (office equipment) |
48,000 |
Interest expense |
176,000 |
|
|
Depreciation expense (sales equipment) |
36,000 |
Share capital—ordinary ($10 par) |
900,000 |
Woods's effective tax rate on all items is 30%. A physical inventory indicates that the ending inventory is $686,000.
Requirement:
Prepare a 2015 income statement for Woods Corporation
In: Accounting
1. The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years. Pretax accounting income $800,000 Excess tax depreciation (480,000) Litigation accrual 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income 60,000 Interest income from New York municipal bonds (20,000) Taxable income $430,000
1. Excess tax depreciation will reverse equally over a four-year period, 2021-2024.
2. It is estimated that the litigation liability will be paid in 2024.
3. Rent revenue will be recognized during the last year of the lease, 2024.
4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024.
(c) Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit).
(d) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2020.
In: Accounting
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,100 pounds of oysters in August. The company’s flexible budget for August appears below:
| Quilcene Oysteria | ||
| Flexible Budget | ||
| For the Month Ended August 31 | ||
| Actual pounds (q) | 7,100 | |
| Revenue ($4.15q) | $ | 29,465 |
| Expenses: | ||
| Packing supplies ($0.40q) | 2,840 | |
| Oyster bed maintenance ($3,300) | 3,300 | |
| Wages and salaries ($2,400 + $0.35q) | 4,885 | |
| Shipping ($0.60q) | 4,260 | |
| Utilities ($1,230) | 1,230 | |
| Other ($420 + $0.01q) | 491 | |
| Total expense | 17,006 | |
| Net operating income | $ | 12,459 |
The actual results for August appear below:
| Quilcene Oysteria | ||
| Income Statement | ||
| For the Month Ended August 31 | ||
| Actual pounds | 7,100 | |
| Revenue | $ | 27,300 |
| Expenses: | ||
| Packing supplies | 3,010 | |
| Oyster bed maintenance | 3,160 | |
| Wages and salaries | 5,295 | |
| Shipping | 3,990 | |
| Utilities | 1,040 | |
| Other | 1,111 | |
| Total expense | 17,606 | |
| Net operating income | $ | 9,694 |
Required:
Calculate the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
In: Accounting
|
These items are taken from the financial statements of |
|||
|
Beginning Retained Earnings |
$31,000 |
||
|
Utilities |
$2,000 |
||
|
Equipment |
$66,000 |
||
|
Accounts Payable |
$18,300 |
||
|
Cash |
$10,100 |
||
|
Salary & Wages Payable |
$3,000 |
||
|
Common Stock |
$40,000 |
||
|
Dividends |
$8,000 |
||
|
Service Revenue |
$64,000 |
||
|
Pre-Paid Insurance |
$3,500 |
||
|
Patent |
$14,000 |
||
|
Maintenance and Repairs Expense |
$1,800 |
||
|
Long-Term Debt |
$17,000 |
||
|
Depreciation Expense |
$3,600 |
||
|
Accounts Receivable |
$11,700 |
||
|
Insurance Expense |
$2,200 |
||
|
Salary & Wages Expense |
$37,000 |
||
|
Accumulated Depreciation - Equipment |
$17,600 |
||
|
Unearned Revenue |
$3,200 |
||
|
Copyright |
$5,000 |
||
|
Investment in ABC Corporation |
$9,900 |
||
|
Land Held for Investment |
$19,300 |
||
|
REQUIRED: |
|||
|
1) Label the account titles as asset, liability, equity, revenue or expense. |
|||
|
2) Prepare an income statement dated 12/31 of the prior year. |
|||
|
3) Prepare a retained earnings statement. |
|||
|
4) Prepare a Classified Balance Sheet. |
|||
|
5) Calculate the following ratios: |
|||
|
a) Earnings per share (assume there is no preferred stock dividends |
|||
|
and 15,000 average common shares outstanding) |
|||
|
b) Working Capital |
|||
|
c) Current Ratio |
|||
|
d) Debt to Total Assets |
|||
In: Accounting
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In: Accounting
A cable company offers two basic packages: sports and kids, and a combined package. There are three different types of users: parents, sports fans, and generalists. Assume that the cable company cannot discriminate among the three groups and must charge all customers the same price. The following table shows the maximum price that each type of consumer is willing to pay for each package. Sports Package Kids Package Parents 10 50 Sports fans 50 10 Generalists 40 40
|
Sports Package |
Kids Package |
|
|
Parents |
10 |
50 |
|
Sports fans |
50 |
10 |
|
Generalists |
40 |
40 |
If the cable company sells the packages separately, how much price should it charge for each package? What will be total revenue? What will happen if this price is slightly raised?
b. Rather than raising the single package price to increase revenue, suppose now the firm opts to offer mixed bundling where the customers can buy either a single package or a bundled package. Show that the cable company will earn a higher revenue with mixed bundling than the single pricing method in part a.
In: Economics
E4-23
Prepare closing entries.
The adjusted trial balance for Ryan Company is given below.
Instructions
Prepare the closing entries for the temporary accounts at August 31.
The trial balances shown below are before and after adjustment for Ryan Company at the end of its fiscal year.
|
RYAN COMPANY Trial Balance August 31, 2017 |
||||
|---|---|---|---|---|
|
Before Adjustment |
After Adjustment |
|||
|
Dr. |
Cr. |
Dr. |
Cr. |
|
|
Cash |
$10,900 |
$10,900 |
||
|
Accounts Receivable |
8,800 |
9,400 |
||
|
Supplies |
2,500 |
500 |
||
|
Prepaid Insurance |
4,000 |
2,500 |
||
|
Equipment |
16,000 |
16,000 |
||
|
Accumulated Depreciation—Equipment |
$ 3,600 |
$ 4,800 |
||
|
Accounts Payable |
5,800 |
5,800 |
||
|
Salaries and Wages Payable |
0 |
1,100 |
||
|
Unearned Rent Revenue |
1,800 |
800 |
||
|
Common Stock |
10,000 |
10,000 |
||
|
Retained Earnings |
5,500 |
5,500 |
||
|
Dividends |
2,800 |
2,800 |
||
|
Service Revenue |
34,000 |
34,600 |
||
|
Rent Revenue |
12,100 |
13,100 |
||
|
Salaries and Wages Expense |
17,000 |
18,100 |
||
|
Supplies Expense |
0 |
2,000 |
||
|
Rent Expense |
10,800 |
10,800 |
||
|
Insurance Expense |
0 |
1,500 |
||
|
Depreciation Expense |
0 |
1,200 |
||
|
$72,800 |
$72,800 |
$75,700 |
$75,700 |
|
In: Accounting
Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 8,000 pounds of oysters in August. The company’s flexible budget for August appears below:
| Quilcene Oysteria | ||
| Flexible Budget | ||
| For the Month Ended August 31 | ||
| Actual pounds (q) | 8,000 | |
| Revenue ($4.10q) | $ | 32,800 |
| Expenses: | ||
| Packing supplies ($0.40q) | 3,200 | |
| Oyster bed maintenance ($3,500) | 3,500 | |
| Wages and salaries ($2,500 + $0.45q) | 6,100 | |
| Shipping ($0.55q) | 4,400 | |
| Utilities ($1,210) | 1,210 | |
| Other ($480 + $0.01q) | 560 | |
| Total expense | 18,970 | |
| Net operating income | $ | 13,830 |
The actual results for August appear below:
| Quilcene Oysteria | ||
| Income Statement | ||
| For the Month Ended August 31 | ||
| Actual pounds | 8,000 | |
| Revenue | $ | 26,900 |
| Expenses: | ||
| Packing supplies | 3,370 | |
| Oyster bed maintenance | 3,360 | |
| Wages and salaries | 6,510 | |
| Shipping | 4,130 | |
| Utilities | 1,020 | |
| Other | 1,180 | |
| Total expense | 19,570 | |
| Net operating income | $ | 7,330 |
Required:
Calculate the company’s revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
In: Accounting
Below is an alphabetical list of the adjusted accounts of
Cullumber Tour Company at its year end, December 31, 2021. All
accounts have normal balances.
| Accounts payable | $7,310 | Interest receivable | $100 | |||
| Accounts receivable | 3,510 | Interest revenue | 1,100 | |||
| Accumulated depreciation—equipment | 15,000 | Notes payable | 40,000 | |||
| Cash | 4,500 | Notes receivable | 18,450 | |||
| Depreciation expense | 10,000 | Patents | 15,070 | |||
| Equipment | 50,000 | Prepaid insurance | 2,900 | |||
| F. Cullumber, capital | 17,370 | Service revenue | 65,050 | |||
| F. Cullumber, drawings | 33,000 | Short-term investments | 2,700 | |||
| Insurance expense | 1,500 | Supplies | 3,100 | |||
| Interest expense | 2,840 | Supplies expense | 2,400 | |||
| Interest payable | 740 | Unearned revenue | 3,500 |
Additional information:
| 1. | In 2022, $3,000 of the notes payable becomes due. | |
| 2. | The note receivable is due in 2023. | |
| 3. | On July 18, 2021, Fred Cullumber invested $3,200 cash in the business. |
a) Prepare closing journal entries and calculate the post-closing balance in F. Cullumber, Capital on December 31, 2021.
b) Prepare a classified balance sheet. (List Current Assets in order of liquidity.)
In: Accounting