Facts:
On April 1, 2020, Bert's Baseball Company purchased equipment for $66,000. The company expected the equipment to last four years or 6,000 hours, with an estimated salvage value of $6,000 at the end of the useful life. The equipment was used 1,000 hours during 2020.
1. What amount of depreciation expense will Bert's Baseball Company record in 2020 using the straight-line method of depreciation?
2. What amount of depreciation expense will Bert's Baseball Company record in 2020 using the units-of-activity method of depreciation?
3. In your opinion, is it ethical for a company to change depreciation methods for the sole purpose of maximizing profitability (increasing net income)? Why or why not? Explain.
In: Accounting
Jen and Larry’s Frozen Yogurt Company
In 2019, Jennifer (Jen) Liu and Larry Mestas founded Jean and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or microbatch strategy to the production and sale of frozen yogurt. Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $600,000 in 2019 and were estimated to be $1.2 million in 2020.
Because Jen and Larry were selling premium frozen yogurt containing premium ingredients, each small cup of yogurt sold for $3, and the cost of producing the frozen yogurt averaged $1.50 per cup. Administrative expenses, including Jen and Larry’s salary and expenses for an accountant and two other administrative staff, were estimated at $180,000 in 2020. Marketing expenses, largely in the form of behind-the-counter workers, in-store posters, and advertising in local newspapers, were projected to be $200,000 in 2020.
An investment in bricks and mortar was necessary to make and sell the yogurt. Initial specialty equipment and the renovation of an old warehouse building in lower downtown (known as LoDo) occurred at the beginning of 2019. Additional equipment needed to make the amount of yogurt forecasted to be sold in 2020 was purchased at the beginning of 2020. As a result, depreciation expenses were expected to be $50,000 in 2020. Interest expenses were estimated at $15,000 in 2020. The average tax rate was expected to be 25% of taxable income.
How many cups of frozen yogurt would have to be sold for the firm to reach its projected revenues of $1.2 million?
Calculate the dollar amount of EBDAT if Jen and Larry’s Frozen Yogurt Company achieves the forecasted $1.2 million in sales for 2020. What would EBDAT be as a percent of revenues?
In: Finance
Part 1 -- Bonds:
REQUIRED:
Part 2 -- Installment note:
REQUIRED:
In: Accounting
PROBLEM 5: FOREIGN CURRENCY (20 MARKS TOTAL)
Use the information here for answering questions 1 to 3 on this page.
On 1 April 2020, Winton Ltd, an Australian entity, places an order for GBP £200,000 of inventory with Austen plc, a UK supplier. On the same date, Winton Ltd enters into a forward exchange contract with the bank to buy GBP £200,000, to be settled on 31 July 2020. The goods are shipped FOB London on 1 May 2020 and are paid for on 31 July 2020. Winton Ltd has a reporting date of 30 June.
The following exchange rates are applicable.
Spot
rate
Forward rate for 31/7/20
1 April 2020
A$1 = 0.63
GBP
A$1 = 0.61 GBP
1 May 2020
A$1 = 0.67
GBP
A$1 = 0.64 GBP
30 June 2020 A$1 = 0.62
GBP
A$1 = 0.60 GBP
31 July 2020 A$1 =
0.59
GBP
A$1 = 0.59 GBP
Q1: Complete the table showing the movement and the change in value of the hedged item
Type text or numbers as appropriate in the following table. Enter numbers as numerals only. Use a negative symbol '-' in front of your number where appropriate to indicate a loss. Enter a 0 if you do not need to enter data in that field.
Q2: Complete the table showing the movement and the change in value of the hedging instrument
Type text or numbers as appropriate in the following table. Enter numbers as numerals only. Use a negative symbol '-' in front of your number where appropriate to indicate a loss or a liability. Enter a 0 if you do not need to enter data in that field.
Q3: Provide the journal entries for Winton Ltd to reflect the above transactions
In: Accounting
Question 1.Obaapa Fashions Ltd has budgeted to sell 100,000 pieces of face masks for April 2020. At the end of March 2020, the company had 20,000 pieces of face mask in inventory and would like to have an inventory of 30,000 pieces of face masks at the end of April. Each piece of face mask requires 2 square meters of treated fabric, the primary raw material. Inventory of the treated fabric at the beginning of April is 5,000 square meters. It is expected that each square meter of the treated fabric will cost GHS3. Assuming the sales budget is met, and the desired ending inventory of the face mask is achieved, how many square meters of the treated fabric need to be purchased in April 2020, in order to have an ending inventory of 8,000 square meters of the treated fabric? What will be the cost of purchases for April 2020? (show all workings clearly).
Question 2.
Ewuarbena & Co Manufacturing Ltd have budgeted to sell these quantities of its products, Chocomix, for the coming months in 2020: January – 160,000 sachets; February – 240,000 sachets; March – 200,000 sachets; April – 400,000 sachets; and May – 150,000 sachets. The company expects to sell each sachet for GHS20. The company has decided that to avoid losing customers arising from production hold-ups it would like to maintain a finished goods inventory in the future equal to one-fifth of the following month's budgeted sales. At the beginning of January 2020, the company had finished goods inventory of 10,000 sachets. What is total budgeted sales and production for the 2020 1st quarter ended (January – March 2020)? (show all workings clearly)
In: Accounting
Edwards and Everett, Inc. had the following items in its capital structure at December 31, 2020:
Common stock options, issued in 2019, exercisable for 22,000 shares, beginning in 2022, at a “strike” price of $20 per share. The cash that would be received from the option-holders from a hypothetical exercise of the options at December 31, 2020 would be sufficient for Edwards & Everett to acquire 13,400 shares of its own common stock (as treasury stock).
Treasury stock, common, 20,000 shares, acquired on November 30, 2019 …...
$
280,000
Additional paid-in-capital ....................................................................................
760,000
Common stock, $10 stated value, issued January 2, 2019
(current market value, $17 per share) ..................................................................
1,200,000
Preferred stock, 10%, $8 par value, convertible into 146,000 common
shares no earlier than 2020, issued at par value on July 1, 2020
(current market value, $8 per share) ....................................................................
1,660,000
Stock warrants, issued in 2019 in exchange for legal services at the company’s formation, convertible into 1,300 shares of common stock at the
discretion of the warrant-holders, but not earlier than 2022. A
hypothetical conversion of the warrants at December 31, 2020 would
require a $14,000 cash payment from the warrant-holders, which would
be sufficient for Edwards & Everett to acquire 300 shares of its own
common stock (as treasury stock)........................................................................
20,000
Edwards & Everett’s net income for 2020 was $783,000; the company’s Board of Directors has not yet declared a dividend for 2020 for the preferred shareholders.
What earnings per share did Edwards and Everett, Inc. report for the year ended December 31, 2020? Prepare a schedule to support your answer.
In: Accounting
FINANCIAL ACCOUNTING II
Edwards and Everett, Inc. had the following items in its capital structure at December 31, 2020:
Common stock options, issued in 2019, exercisable for 22,000 shares, beginning in 2022, at a “strike” price of $20 per share. The cash that would be received from the option-holders from a hypothetical exercise of the options at December 31, 2020 would be sufficient for Edwards & Everett to acquire 13,400 shares of its own common stock (as treasury stock).
Treasury stock, common, 20,000 shares, acquired on November 30, 2019 ...... $280,000
Additional paid-in-capital........................................................................................760,000
Common stock, $10 stated value, issued January 2, 2019 (current market value, $17 per share) ................................................................ 1,200,000
Preferred stock, 10%, $8 par value, convertible into 146,000 commonshares no earlier than 2020, issued at par value on July 1, 2020 (current market value, $8 per share) ...................................................................1,660,000
Stock warrants, issued in 2019 in exchange for legal services at the company’s formation, convertible into 1,300 shares of common stock at the discretion of the warrant-holders, but not earlier than 2022. A hypothetical conversion of the warrants at December 31, 2020 would require a $14,000 cash payment from the warrant-holders, which would be sufficient for Edwards & Everett to acquire 300 shares of its own common stock (as treasury stock)........................................................................ 20,000
Edwards & Everett’s net income for 2020 was $783,000; the company’s Board of Directors has not yet declared a dividend for 2020 for the preferred shareholders.
What earnings per share did Edwards and Everett, Inc. report for the year ended December 31, 2020? Prepare a schedule to support your answer.
In: Accounting
The following information was obtained from the accounting records and financial statements of Palmer Inc.
|
Assets |
2019 |
2020 |
∆ |
|
Cash |
$ 280,000 |
315,000 |
35,000 |
|
Accounts receivable |
720,000 |
755,000 |
35,000 |
|
Inventory |
855,000 |
800,000 |
(55,000) |
|
Capital assets |
1,720,000 |
1,930,000 |
210,000 |
|
Accumulated depreciation |
(580,000) |
(550,000) |
30,000 |
|
Net capital assets |
1,140,000 |
1,380,000 |
240,000 |
|
Total |
2,995,000 |
3,250,000 |
|
|
Liabilities and Stockholders’ equity |
|||
|
Accounts payable |
445,000 |
360,000 |
(85,000) |
|
Interest payable |
60,000 |
75,000 |
15,000 |
|
Income taxes payable |
40,000 |
50,000 |
10,000 |
|
Bonds payable |
800,000 |
900,000 |
100,000 |
|
Common stocks |
1,200,000 |
1,350,000 |
150,000 |
|
Retained earnings |
450,000 |
515,000 |
65,000 |
|
Total |
2,995,000 |
3,250,000 |
|
|
Income Statement 2020 |
|||
|
Sales |
$ 3,200,000 |
||
|
Cost of goods sold |
(2,100,000) |
||
|
Gross profit |
1,100,000 |
||
|
Depreciation expenses |
(105,000) |
||
|
Operating expenses |
(655,000) |
||
|
Interest expenses |
(35,000) |
||
|
Income tax expenses |
(55,000) |
||
|
Loss on retirement of bonds payable |
(10,000) |
||
|
Loss on disposal of capital assets |
(20,000) |
||
|
Net income |
220,000 |
Additional information:
Required:
In: Accounting
Alternative A and Alternative B are being considered for
recovering aluminum from garbage. Alternative A – has a capital
cost of $100,000, a first year maintenance cost of $15,000, with
maintenance increasing by $500 per year for each year after the
first. Alternative B - has a capital cost of $120,000, a first year
maintenance cost of $17,000, with maintenance increasing by $1,000
per year after the first. Revenues from the sale of aluminum are
$20,000 in the first year, increasing $2,000 per year for each year
after the first. Life of both alternatives is 10 years. There is no
salvage value. The before-tax MARR is 10%. Using present worth
analysis, determine which alternative is preferred.
a.) The present worth of alternative A
b.) The present worth of alternative B
In: Economics
I appreciate your help!
1. Generally, if the owner of an IRA dies before beginning required minimum distributions, the designated beneficiary must:
A. Take the entire amount in lump-sum in the year after the year
of death.
B. Take the required minimum distributions for the years
after the year of death.
C. Take the entire amount within five years after the year of
death.
D. Begin to take the required minimum distributions when the
beneficiary turns 70½.
2. James, who lives in Texas, is searching for like-kind replacement property for his investment-use unimproved land. Each of the following is qualified like-kind property EXCEPT:
A. An office building located in California.
B. An apartment building located in Oklahoma.
C. A 25-year lease of unimproved land in Texas.
In: Accounting