|
This alphabetized adjusted trial balance is for GalaVu Entertainment as of its December 31, 2014, year-end: |
| Debit | Credit | |||
| Accounts payable | $ | 43,400 | ||
| Accounts receivable | $ | 18,100 | ||
| Accumulated depreciation, automobiles | 68,400 | |||
| Accumulated depreciation, equipment | 19,900 | |||
| Advertising expense | 8,400 | |||
| Automobiles | 134,000 | |||
| Cash | 10,400 | |||
| Depreciation expense, automobiles | 12,600 | |||
| Depreciation expense, equipment | 3,500 | |||
| Equipment | 62,000 | |||
| Fees earned | 227,475 | |||
| Interest earned | 200 | |||
| Interest expense | 2,900 | |||
| Interest payable | 50 | |||
| Interest receivable | 400 | |||
| John Conroe, capital | 22,400 | |||
| John Conroe, withdrawals | 18,400 | |||
| Land | 32,000 | |||
| Long-term notes payable | 109,000 | |||
| Notes receivable (due in 90 days) | 77,000 | |||
| Office supplies | 3,400 | |||
| Office supplies expense | 12,400 | |||
| Repairs expense, automobiles | 7,800 | |||
| Salaries expense | 75,625 | |||
| Salaries payable | 4,900 | |||
| Unearned fees | 10,400 | |||
| Wages expense | 27,200 | |||
| Totals | $ | 506,125 | $ | 506,125 |
| Required: |
| Use the information in the trial balance to prepare: |
a.The income statement for the
year ended December 31, 2014.
|
In: Accounting
|
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $1,580 each. The average cost of a television from the manufacturer is $1,050. |
|
Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: |
| Costs | Cost Formula | ||
| Selling: | |||
| Advertising | $ | 1,145 | per month |
| Delivery of televisions | $ | 42 | per television sold |
| Sales salaries and commissions | $ | 3,500 | per month, plus 5% of sales |
| Utilities | $ | 480 | per month |
| Depreciation of sales facilities | $ | 3,080 | per month |
| Administrative: | |||
| Executive salaries | $ | 11,800 | per month |
| Depreciation of office equipment | $ | 530 | per month |
| Clerical | $ | 2,020 | per month, plus $57 per television sold |
| Insurance | $ | 780 | per month |
| During April, the company sold and delivered 232 televisions. |
| Required: |
| 1. |
Prepare an income statement for April using the traditional format with costs organized by function. |
| 2. |
Prepare an income statement for April, this time using the contribution format with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin. |
In: Accounting
DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $800,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $260,000. The old machine is being depreciated by $160,000 per year for each year of its remaining life.
The new machine has a purchase price of $1,180,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $255,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and the project cost of capital is 15%.
Year |
Depreciation Allowance, New |
Depreciation Allowance, Old |
Change in Depreciation |
| 1 | $ | $ | $ |
| 2 | $ | $ | $ |
| 3 | $ | $ | $ |
| 4 | $ | $ | $ |
| 5 | $ | $ | $ |
| CF1 | $ |
| CF2 | $ |
| CF3 | $ |
| CF4 | $ |
| CF5 | $ |
In: Accounting
Replacement Analysis
DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $800,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $265,000. The old machine is being depreciated by $160,000 per year for each year of its remaining life.
The new machine has a purchase price of $1,160,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $255,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and the project cost of capital is 13%.
Year |
Depreciation Allowance, New |
Depreciation Allowance, Old |
Change in Depreciation |
| 1 | $ | $ | $ |
| 2 | $ | $ | $ |
| 3 | $ | $ | $ |
| 4 | $ | $ | $ |
| 5 | $ | $ | $ |
| CF1 | $ |
| CF2 | $ |
| CF3 | $ |
| CF4 | $ |
| CF5 | $ |
In: Finance
DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $500,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $150,000. The old machine is being depreciated by $100,000 per year for each year of its remaining life.
The new machine has a purchase price of $875,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, annual pre-tax savings of $195,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and the project cost of capital is 14%.
What is the initial net cash flow if the new machine is purchased and the old one is replaced? Round your answer to the nearest dollar. Cash outflow, if any, should be indicated by a minus sign.
$
Calculate the annual depreciation allowances for both machines, and compute the change in the annual depreciation expense if the replacement is made. Do not round intermediate calculations. Round your answers to the nearest dollar. Negative values, if any, should be indicated by a minus sign.
Year |
Depreciation Allowance, New |
Depreciation Allowance, Old |
Change in Depreciation |
| 1 | $ | $ | $ |
| 2 | $ | $ | $ |
| 3 | $ | $ | $ |
| 4 | $ | $ | $ |
| 5 | $ | $ | $ |
What are the incremental net cash flows in Years 1 through 5? Do not round intermediate calculations. Round your answers to the nearest dollar. Cash outflows, if any, should be indicated by a minus sign.
| CF1 | $ |
| CF2 | $ |
| CF3 | $ |
| CF4 | $ |
| CF5 | $ |
Should the firm purchase the new machine? Support your answer. Do not round intermediate calculations. Round your answer to the nearest dollar. Negative value, if any, should be indicated by a minus sign.
NPV: $
The firm -Select-shouldshould notItem 23 purchase the new machine.
In general, how would each of the following factors affect the investment decision, and how should each be treated?
The expected life of the existing machine decreases.
If the expected life of the old machine decreases, the new machine will look -Select-betterworseItem 24 as cash flows attributable to the new machine would -Select-decreaseincreaseItem 25 .
The cost of capital is not constant but is increasing as DeYoung adds more projects into its capital budget for the year.
The -Select-higherlowerItem 26 capital cost should be used in the analysis.
In: Finance
DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $800,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $270,000. The old machine is being depreciated by $160,000 per year for each year of its remaining life.
The new machine has a purchase price of $1,185,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $255,000 will be realized if the new machine is installed. The company's marginal tax rate is 35% and the project cost of capital is 14%.
What is the initial net cash flow if the new machine is
purchased and the old one is replaced? Round your answer to the
nearest dollar.
$
What are the incremental net cash flows in Years 1 through 5? Do not round intermediate calculations. Round your answers to the nearest dollar.
| CF1 | $ 192700 |
| CF2 | $ 242470 |
| CF3 | $ 189382 |
| CF4 | $ 157529 |
| CF5 | $ |
Should the firm purchase the new machine?
No (Correct)
Support your answer. Do not round intermediate calculations. Round
your answer to the nearest dollar.
NPV: $
In: Finance
Course:Business Law
Frontier Entertainment Pty Ltd is a company that trades under the name “Concert Connections” (CC). In January of 2019, CC negotiated and arranged for an international acts to tour Australia in 2021.
On 15 September 2020, Tammy purchased from CC two tickets to the Ed Shearer concert in Brisbane on 07 January 2021. The reality is that as at 15 September 2020, due to the current COVID – 19 pandemic, it was highly unlikely that the Ed Shearer concert would proceed.
Jane purchased 3 tickets to the same concert as Tammy however unlike Tammy, Jane purchased her tickets in January of 2020, at a time when there was every
expectation that the Ed Shearer concert would proceed as expected as at that time, the future impact of the pandemic had not been fully realised.
Has CC acted in breach of the ACL by selling Tammy and/or Jane
tickets to the Ed Shearer concert?
Explain your answer
In: Accounting
|
Home Entertainment is a small, family-owned business that purchases LCD televisions from a reputable manufacturer and sells them at the retail level. The televisions sell, on average, for $2,250 each. The average cost of a television from the manufacturer is $1,340. |
|
Home Entertainment has always kept careful accounting records, and the costs that it incurs in a typical month are as follows: |
| Costs | Cost Formula | ||
| Selling: | |||
| Advertising | $ | 1,135 | per month |
| Delivery of televisions | $ | 45 | per television sold |
| Sales salaries and commissions | $ | 3,070 | per month, plus 4% of sales |
| Utilities | $ | 460 | per month |
| Depreciation of sales facilities | $ | 3,660 | per month |
| Administrative: | |||
| Executive salaries | $ | 9,550 | per month |
| Depreciation of office equipment | $ | 520 | per month |
| Clerical | $ | 1,660 | per month, plus $41 per television sold |
| Insurance | $ | 480 | per month |
| During April, the company sold and delivered 210 televisions. |
| Required: |
| 1. |
Prepare an income statement for April using the traditional format with costs organized by function. |
| 2. |
Prepare an income statement for April, this time using the contribution format with costs organized by behaviour. Show costs and revenues on both a total and a per unit basis down through contribution margin. |
In: Accounting
The following information applies to the questions displayed below.] Coney Island Entertainment issues $1,400,000 of 5% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:
2. The market interest rate is 6% and the bonds issue at a discount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.)
3. The market interest rate is 4% and the bonds issue at a premium. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.)
In: Accounting
Replacement Analysis
DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $800,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $270,000. The old machine is being depreciated by $160,000 per year, using the straight-line method.
The new machine has a purchase price of $1,190,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total, an annual savings of $255,000 will be realized if the new machine is installed. The company's marginal tax rate is 35%, and it has a 12% WACC.
Year |
Depreciation Allowance, New |
Depreciation Allowance, Old |
Change in Depreciation |
| 1 | $ | $ | $ |
| 2 | $ | $ | $ |
| 3 | $ | $ | $ |
| 4 | $ | $ | $ |
| 5 | $ | $ | $ |
| CF1 | $ |
| CF2 | $ |
| CF3 | $ |
| CF4 | $ |
| CF5 | $ |
In general, how would each of the following factors affect the
investment decision, and how should each be treated?
(1) The expected life of the existing machine decreases.
(2) The WACC is not constant but is increasing as DeYoung adds more
projects into its capital budget for the year.
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
In: Finance