Ultimate Business Study Guide - Questions & Answers

LaQuesha Jackson has made a considerable fortune. She wishes to start a perpetual scholarship for engi- neering students at her school. The scholarship will provide a student with an annual stipend of $10,000 for each of 4 years (freshman through senior), plus an additional $5000 during the senior year to cover job search expenses. Assume that students graduate in 4 years, and the money is paid at the beginning of each year with the first award at the beginning of Year 1. The interest rate is 10%. Required:a. Determine the equivalent uniform annual cos (EUAC) of providing the scholarship. b. How much money must LaQuesha donate?
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Dapper Corporation had only one job in process on May 1. The job had been charged with $1,010 of direct materials, $3,630 of direct labor, and $5,510 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $15.70 per direct labor-hour. During May, the following activity was recorded:Raw materials (all direct materials):Beginning balance$9,700Purchased during the month$25,000Used in production$31,400Labor:Direct labor-hours worked during the month2,160Direct labor cost incurred$29,808Actual manufacturing overhead costs incurred$31,800Inventories:Raw materials, May 30?Work in process, May 30$20,100Work in process inventory on May 30 contains $3,450 of direct labor cost. Raw materials consist solely of items that are classified as direct materials. Required:1. The balance in the raw materials inventory account on May 30 was ___________.a) $3,180b) $3,820c) $3,300d) $3,420
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The adjusted trial balance for Waterway Industries at the end of the current year, 2021, contained the following accounts. 5-year Bonds Payable 9% $3000000 Interest Payable 48000 Premium on Bonds Payable 98000 Notes Payable (3 months.) 38000 Notes Payable (5 yr.) 166000 Mortgage Payable ($13000 due currently) 200000 Salaries and wages Payable 16000 Income Taxes Payable (due 3/15 of 2022) 23000 The total long-term liabilities reported on the balance sheet are $_______.
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Denzel Brooks opened a Web consulting business called Venture Consultants and completed the following transactions in March.March 1 Brooks invested $195,000 cash along with $29,000 in office equipment in the company in exchange for common stock.2 The company prepaid $8,000 cash for six months' rent for an office. Hint: Debit Prepaid Rent for $8,000.3 The company made credit purchases of office equipment for $4,200 and office supplies for $2,400. Payment is due within 10 days.6 The company completed services for a client and immediately received $3,500 cash.9 The company completed a $9,200 project for a client, who must pay within 30 days.12 The company paid $6,600 cash to settle the account payable created on March 3.19 The company paid $4,700 cash for the premium on a 12-month insurance policy. Hint: Debit Prepaid Insurance for $4,700.22 The company received $3,900 cash as partial payment for the work completed on March 9.25 The company completed work for another client for $3,760 on credit.29 The company paid a $6,200 cash dividend.30 The company purchased $1,600 of additional office supplies on credit.31 The company paid $700 cash for this month's utility bill.Required:1. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307); Dividends (319); Services Revenue (403); and Utilities Expense (690).
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Inventory records for Marvin Company revealed the following:Date Transaction Number of Units Unit CostMar. 1 Beginning inventory 900 $7.14Mar. 10 Purchase 560 7.57 Mar. 16 Purchase 790 8.02Mar. 23 Purchase 510 8.42 Marvin sold 1,900 units of inventory during the month. Cost of goods sold assuming FIFO would be:__________. (Do not round your intermediate calculations. Round your answer to the nearest dollar amount)A. $15,998.B. $14,194.C. $14,844.D. $15,155.
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Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. Product G Product B Selling price per unit $150 $180 Variable costs per unit 60 108 Contribution margin per unit $90 $72 Machine hours to produce 1 unit 0.4 hours 1.0 hours Maximum unit sales per month 550 units 200 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $9,000 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)Required:1. Determine the contribution margin per machine hour that each product generates.2. How many units of product G and product B should the company produce if it continues to operate with only one shift? How much total contribution margin does this mix produce each month?
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Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $90 million, a coupon rate of 6 percent, and sells for 98 percent of par. The second issue has a face value of $75 million, a coupon rate of 5 percent, and sells for 110 percent of par. The first issue matures in 22 years, the second in 7 years. Both bonds make semiannual coupon payments.Required:a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)b. What are the companys capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)
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Joyful Gas Company an independent oil producer in Dallas, Texas. In March, company geologist discovered a pool of oil that tripled the companys proven reserves. Prior to disclosing the new oil to the public, Joy Gas Company quietly bought most of its stock as treasury stock. After the discovery was announced, the companys stock price increased from $5 to $28.Please discuss and answer at least two the following questions:________. 1. What accounting principle is involved? 2. Who are the stakeholders?
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Dalrymple Bay Coal Terminal, a coal-handling facility and export terminal in Queensland, Australia, has issued triple-A rated bonds for $680 million in Australian dollars. The bonds will be used to refinance existing bank debt caused by the acquisition of eases from the Queensland government in 2002. The Commonwealth Bank of Australia acted as investment bankers to the transaction. Required:1. This means the Commonwealth Bank of Australia __________.Group of answer choices:A. Engaged in factoring the saleB. Bought the bonds from Dalrymple and sold them to the publicC. Operates in the secondary securities marketD. Was responsible for co-insurance of the bond premiumE. Would be responsible for paying the dividend if Dalrymple were unable to
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Doyle Company issued $390,000 of 10-year, 8 percent bonds on January 1, Year 2. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Doyle immediately invested the proceeds from the bond issue in land. The land was leased for an annual $52,500 of cash revenue, which was collected on December 31 of each year, beginning December 31, Year 2.Required:1. Prepare the income statement, balance sheet, and statement of cash flows for Year 2 and Year 3. (Amounts to be deducted and net loss amount should be indicated with minus sign.)
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For the following error, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a. The payment of cash for the purchase of office equipment of $10,100 was debited to Land for $10,100 and credited to Cash for $10,100.
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Edward Marshall Boehm, Inc. is a small, high-quality porcelain art objects company that has been very successful, particularly at producing images of vanishing species of birds. These pieces are complex sculptures selling from $100 to over $20,000, and are sought by some sophisticated collectors. The company is run by Mr. and Mrs. Boehm (pronounced "beam"): he is the artist and master of the complex hard paste porcelain manufacturing process; she is in charge of the marketing and financial aspects of the business. The demand for the artistic creations is growing, but many of the companys past policies no longer seemed appropriate. The Boehms wanted to position the company for the long run. Their stated goals for the company were "to make the world aware of Mr. Boehms artistic talent, to help world wildlife causes by creating appreciation and protection for threatened species, and to build a continuing business that could make them comfortably wealthy, perhaps millionaires."Required:1. Based on the above information, what competitive strategy could Edward Marshall Boehm pursue and what competitive strategy is not a good option, given its goals?O Focused differentiation, but not cost leadership O Broad differentiation, but not global strategy O Unrelated diversification, but not broad differentiation O Related diversification, but not the focused cost approach O Cost leadership, but not transnational strategy
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Suppose the Fed raises the required reserve ratio, a move that is normally thought to reduce the money supply. However, banks find themselves with a reserve deficiency after the required reserve ratio is increased and are likely to react by requesting a loan from the Fed. Does this action prevent the money supply from contracting as predicted? Explain your answer.
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The adjusted trial balance for Tybalt Construction as of December 31, 2017, follows.TYBALT CONSTRUCTIONAdjusted Trial BalanceDecember 31, 2017No.Account TitleDebitCredit101Cash$6,500104Short-term investments22,000126Supplies8,000128Prepaid insurance8,300167Equipment50,000168Accumulated depreciationEquipment $25,000173Building162,000174Accumulated depreciationBuilding 54,000183Land68,020201Accounts payable16,500203Interest payable 3,000208Rent payable3,200210Wages payable 2,400213Property taxes payable1,200233Unearned professional fees7,400251Long-term notes payable68,000301O. Tybalt, Capital132,800302O. Tybalt, Withdrawals10,000401Professional fees earned100,000406Rent earned15,500407Dividends earned2,000409Interest ear2,400606Depreciation expenseBuilding11,880612Depreciation expenseEquipment7,500623Wages expense28,500633Interest expense4,800637Insurance expense7,300640Rent expense11,600652Supplies expense7,100682Postage expense3,500683Property taxes expense3,100684Repairs expense7,800688Telephone expense2,100690Utilities expense3,400Totals$ 433,400$ 433,400O. Tybalt invested $6,500 cash in the business during year 2017 (the December 31, 2016, credit balance of the O. Tybalt, Capital account was $126,300). Tybalt Construction is required to make a $8,500 payment on its long-term notes payable during 2018. Required:1a. Prepare the income statement for the calendar-year 2017.1b. Prepare the statement of owner's equity for the calendar-year 2017.1c. Prepare the classified balance sheet at December 31, 2017.2. Prepare the necessary closing entries at December 31, 2017.
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Linda and Richard are married and file a joint return for 2019. During the year, Linda, who works as an accountant for a national airline, used $2,100 worth of free passes for travel on the airline; Richard used the same amount. Linda and Richard also used $850 worth of employee discount coupons for hotel rooms at the hotel chain that is also owned by the airline. Richard is employed at State University as an accounting clerk. Under a tuition reduction plan, Richard saved $4,000 in tuition fees during 2019. He is studying for a master's degree in business at night while still working full-time. Richard also had $30 worth of personal typing done by his administrative assistant at the University.What is the amount of fringe benefits that should be included in Linda and Richard's gross income on their 2019 tax return?
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For each separate case below, follow the 3-step process for adjusting the prepaid asset account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Prepaid Insurance. The Prepaid Insurance account has a $4,700 debit balance to start the year. A re- view of insurance policies and payments shows that $900 of unexpired insurance remains at year-end. b. Prepaid Insurance. The Prepaid Insurance account has a $5,890 debit balance at the start of the year. A review of insurance policies and payments shows $1,040 of insurance has expired by year-end. c. Prepaid Rent. On September 1 of the current year, the company prepaid $24,000 for 2 years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $24,000.
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Wayne and May, who are both in their early 40s, have been happily married for nearly 20 years. While they have been saving some money for their eventual retirement, they know they are well short of what they need. Given their age, what percent of their income should they devote to retirement savings in order to make sure that they reach their retirement income goal? a) 15% - 25%. b) 10% - 15%. c) More than 50%. d) 25% - 40%.
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On December 31, 2019, Spearmint, Inc., issued $450,000 of 9 percent, 3-year bonds for cash of $461,795. After recording the related entry, Bonds Payable had a balance of $450,000 and Premium on Bonds Payable had a balance of $11,795. Spearmint uses the straight-line bond amortization method. The first semiannual interest payment was made on June 30, 2020.Required:Complete the necessary journal entry for June 30, 2020.
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Gilberto Company currently manufactures 40,000 units per year of one of its crucial parts. Variable costs are $1.60 per unit, fixed costs related to making this part are $40,000 per year, and allocated fixed costs are $30,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $2.70 per unit guaranteed for a three-year period.Required:a. Calculate the total incremental cost of making 40,000 and buying 40,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier?
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Hank Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch. 3,920 ounces of grape concentrate at $0.01 per ounce 54 pounds of granulated sugar at $0.55 per pound 60 lemons at $0.70 each 50 yeast tablets at $0.21 each 250 nutrient tablets at $0.11 each 1,600 ounces of water at $0.005 per ounce Hank estimates that 2% of the grape concentrate is wasted, 10% of the sugar is lost, and 25% of the lemons cannot be used.Required:1. Compute the standard cost of the ingredients for one gallon of wine. (Carry computations to two decimal places.) (Round unit costs to 2 decimal places, e.g. 2.75.)
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Seranno Inc. budgeted production of 47,000 personal journals in 20Y6. Paper is required to produce a journal. Assume 115 square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 324,000 square yards. The desired December 31, 20Y6, paper inventory is 243,000 square yards.If paper costs $0.13 per square yard, determine the direct materials purchases budget for 20Y6. If required, round your final answer to the nearest dollar.
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At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $840,000, and direct materials costs, $400,000. At year-end, the companys records show that actual overhead costs for the year are $1,151,500. Actual direct materials cost had been assigned to jobs as follows.Jobs completed and sold $390,000 Jobs in finished goods inventory 83,000 Jobs in work in process inventory 55,000 Total actual direct materials cost $528,000Required:a. Determine the predetermined overhead rate.b. Enter the overhead costs incurred and the amounts applied to jobs during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied.c. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.
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Handy Leather, Inc., produces three sizes of sports gloves: small, medium, and large. A glove pattern is first stenciled onto leather in the Pattern Department. The stenciled patterns are then sent to the Cut and Sew Department, where the glove is cut and sewed together. Handy Leather uses the multiple production department factory overhead rate method of allocating factory overhead costs. Its factory overhead costs were budgeted as follows:Pattern Department overhead$135,000Cut and Sew Department overhead227,800Total$362,800The direct labor estimated for each production department was as follows:Pattern Department2,700direct labor hoursCut and Sew Department3,400Total6,100direct labor hoursDirect labor hours are used to allocate the production department overhead to the products. The direct labor hours per unit for each product for each production department were obtained from the engineering records as follows:Production DepartmentsSmall GloveMedium GloveLarge GlovePattern Department0.040.050.06Cut and Sew Department0.080.100.12Direct labor hours per unit0.120.150.18Required:a. Determine the two production department factory overhead rates.b. Use the two production department factory overhead rates to determine the factory overhead per unit for each product.
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Highpoint, Inc., is considering investing in automated equipment with a ten-year useful life. Managers at Highpoint have estimated the cash flows associated with the tangible costs and benefits of automation, but have been unable to estimate the cash flows associated with the intangible benefits. Using the company's 14% required rate of return, the net present value of the cash flows associated with just the tangible costs and benefits is a negative $182,560. Required:1. How large would the annual net cash inflows from the intangible benefits have to be to make this a financially acceptable investment?
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