Ultimate Business Study Guide - Questions & Answers
Carla incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following values and adjusted bases:FMV Adjusted basisInventory $35,750 $10,100Building 153,000 106,500Land 291,750 375,000Total $480,500 $491,600The corporation also assumed a mortage of $153,750 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $320,750.Required:a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation?b. What amount of gain or loss does Carla recognize on the transfer of the property to the corporation?c. What is Carla's basis in the stock she receives in her corporation?
In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $1,740,000, and direct materials costs, $600,000. At year-end 2017, the companys records show that actual overhead costs for the year are $1,497,400. Actual direct material cost had been assigned to jobs as follows.Jobs completed and sold $380,000 Jobs in finished goods inventory 74,000 Jobs in work in process inventory 59,000 Total actual direct materials cost $513,0001. Determine the pre-determined overhead rate for 2017.2. Enter the overhead costs incurred and the amounts applied during the year using the pre-determined overhead rate and determine whether overhead is overapplied or underapplied.3. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.
Department R had 4,200 units in work in process that were 70% completed as to labor and overhead at the beginning of the period. During the period, 36,600 units of direct materials were added, 38,500 units were completed, and 2,300 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was: a. 36,480 b. 38,500 c. 40,680 d. 45,000
The company's adjusted trial balance as follows includes the following accounts balances: Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Owner, Capital, $63,500; Owner, Withdrawals, $2,000; Sales, $56,000; Sales Returns and Allowances, $3,000; Sales Discounts, $1,500; Depreciation Expense, $25,000; and Salaries Expense, $23,000. All accounts have normal balances.Prepare the second closing entry by selecting the account names and entering dollar amounts in the debit and credit columns.
Concord Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The lease is for a 7-year period and requires equal annual payments of $26,143 at the beginning of each year. The first payment is received on January 1, 2017. Concord had purchased the machine during 2016 for $75,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Concord. Concord set the annual rental to ensure an 8% rate of return. The machine has an economic life of 8 years with no residual value and reverts to Concord at the termination of the lease.Required:1. Compute the amount of the lease receivable. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) 2. Prepare all necessary journal entries for Headland for 2017. (Round answers to decimal places e.g. 5,125.)
Keener Incorporated had the following transactions occur involving current assets and current liabilities during February 2017.Feb. 3 Accounts receivable of $14,000 are collected.7 Equipment is purchased for $27,800 cash.11 Paid $2,300 for a 3-year insurance policy.14 Accounts payable of $12,500 are paid.18 Cash dividends of $5,700 are declared.Additional information:1. As of February 1, 2017, current assets were $130,200, and current liabilities were $49,300.2. As of February 1, 2017, current assets included $15,900 of inventory and $1,000 of prepaid expenses.(a) Compute the current ratio as of the beginning of the month and after each transaction.(b) Compute the acid-test ratio as of the beginning of the month and after each transactionRound answers to 1 decimal place, e.g. 1.6.)Current ratio Acid-test ratioFebruary 1 :1 :1February 3 :1 :1February 7 :1 :1February 11 :1 :1February 14 :1 :1February 18 :1 :1
Condensed financial data of Monty Company for 2020 and 2019 are presented below. MONTY COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 2020 2019 Cash $1,810 $1,160 Receivables 1,740 1,310 Inventory 1,630 1,890Plant assets 1,910 1,720 Accumulated depreciation (1,220 ) (1,180 )Long-term investments (held-to-maturity) 1,280 1,420 $7,150 $6,320 Accounts payable $1,220 $920 Accrued liabilities 190 240 Bonds payable 1,420 1,580 Common stock 1,940 1,730 Retained earnings 2,380 1,850 $7,150 $6,320 MONTY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6,960 Cost of goods sold 4,780 Gross margin 2,180 Selling and administrative expenses 920 Income from operations 1,260 Other revenues and gains Gain on sale of investments 80 Income before tax 1,340Income tax expense 550 Net income 790 Cash dividends 260 Income retained in business $530Additional information: During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020. Required:1. Prepare a statement of cash flows using the indirect method.
Carrejo Corporation has two divisions: Division M and Division N. Data from the most recent month appear below: Total Company Division M Division N Sales $404,000 $181,000 $223,000 Variable expenses 152,130 65,160 86,970 Contribution margin 251,870 115,840 136,030 Traceable fixed expenses 192,000 87,000 105,000 Segment margin 59,870 28,840 31,030 Common fixed expenses 52,520 23,530 28,990 Net operating income $7,350 $5,310 $2,040 Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division N is closest to:a. $172,131b. $219,656c. $258,230d. $392,211
What are the four basic operating principles of the information processing cycle?information, storage, input, processinggathering, input, output, processinginput, gathering, software, outputinput, processing, output, storage
Rachaels Restaurant, a fast-food restaurant company, operates a chain of restaurants across the nation. Each restaurant employs eight people; one is a manager paid a salary plus a bonus equal to 4 percent of sales. Other employees, two cooks, one dishwasher, and four servers, are paid salaries. Each manager is budgeted $3,000 per month for advertising costs.Required: Classify each of the following costs incurred by Rachael's Restaurant as fixed, variable, or mixed: a. Advertising costs relative to the number of customers for a particular restaurant. b. Rental costs relative to the number of restaurants. c. Cooks salaries at a particular location relative to the number of customers. d. Cost of supplies (cups, plates, spoons, etc.) relative to the number of customers. e. Manager's compensation relative to the number of customers. f. Servers' salaries relative to the number of restaurants.
Consider the following situations for Shocker: a, On November 28, 2021, Shocker receives a $3,150 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited. b. On December 1, 2021, the company pays a local radio station $2,430 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited. c. Employee salaries for the month of December totaling $7,100 will be paid on January 7, 2022. d. On August 31, 2021, Shocker borrows $61,000 from a local bank. A note is signed with principal and 9% interest to be paid on August 31, 2022.Required:1. Record the necessary adjusting entries for Shocker at December 31, 2021. No adjusting entries were made during the year.
The Brite Beverage Company bottles soft drinks into aluminum cans. The manufacturing process consists of three activities: Mixing: water, sugar, and beverage concentrate are mixed. Filling: mixed beverage is filled into 12-oz. cans. Packaging: properly filled cans are boxed into cardboard "fridge packs." The activity costs associated with these activities for the period are as follows: Mixing $216,000 Filling 168,000 Packaging 96,000 Total $480,000 The activity costs do not include materials costs, which are ignored for this analysis. Each can is expected to contain 12 ounces of beverage. Thus, after being filled, each can is automatically weighed. If a can is too light, it is rejected, or "kicked," from the filling line prior to being packaged. The primary cause of kicks is heat expansion. With heat expansion, the beverage overflows during filling, resulting in underweight cans. This process begins by mixing and filling 6,300,000 cans during the period, of which only 6,000,000 cans are actually packaged. Three hundred thousand cans are rejected due to underweight kicks. A process improvement team has determined that cooling the cans prior to filling them will reduce the amount of overflows due to expansion. After this improvement, the number of kicks is expected to decline from 300,000 cans to 63,000 cans, thus increasing the number of filled cans to 6,237,000 [6,000,000 + (300,000 63,000)].Required:a. Determine the total activity cost per packaged can under present operations. Round to the nearest cent.b. Determine the amount of increased packaging activity costs from the expected improvements.c. Determine the expected total activity cost per packaged can after improvements. Round to two decimal places.
Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations: Crazy Mountain Outfitters Co. Unadjusted Trial Balance April 30, 2019 Debit Balances Credit Balances Cash 11,400 Accounts Receivable 72,600 Supplies 7,200 Equipment 112,000 Accounts Payable 12,200 Unearned Fees 19,200 John Bridger, Capital 137,800 John Bridger, Drawing 10,000 Fees Earned 305,800 Wages Expense 157,800 Rent Expense 55,000 Utilities Expense 42,000 Miscellaneous Expense 7,000 475,000 475,000 For preparing the adjusting entries, the following data were assembled: a. Supplies on hand on April 30 were $1,380. b. Fees earned but unbilled on April 30 were $3,900. c. Depreciation of equipment was estimated to be $3,000 for the year. d. Unpaid wages accrued on April 30 were $2,475. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $14,140 of the services was provided between April 1 and April 30. Required:1. Journalize the adjusting entries necessary on April 30. 2019. 2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters before the adjusting entries. 3. Determine the revenues, expense, and net income of Crazy Mountain Outfitters after the adjusting entries. 4. Determine the effect of the adjusting entries on Retained Earnings.
Read the case below and answer the questions that follow.You are attempting to achieve a positive and helpful tone to invite employees to the benefits fair. Your goal is to get as many employees to attend as possible. In this exercise, you will assume the role of a human resources (HR) specialist for your company. Each year, your company holds an open enrollment period during October. During this period, employees can make changes to various benefits, such as health insurance, dental insurance, life insurance, and retirement packages.As part of the open enrollment period, you hold a benefits fair. At this event, representatives for each of your approved insurance and retirement plan vendors are available. Also, representatives from your own office are there to answer questions. To attract employees to the event, you also invite several high-profile speakers to discuss health care and retirement planning.You are writing several messages to employees to invite them to the event. You will send these messages via email and as announcements on the corporate intranet. You expect that you can be particularly influential by posting to the benefits blog, which is one of the most widely accessed blogs on your corporate intranet.Question:1. You often find that employees choose a health care plan without carefully considering their options. In fact, sometimes employees realize they are spending too much for health care or that they lack health care options, and they end up blaming you for not informing them sufficiently of their options ahead of time. You want employees to attend the fair and take the time to carefully weigh their options. Which of the following statements is most likely to attract employees to the fair to do so?Multiple ChoiceO This presentation helps you choose which of the five health insurance options works best for your family.O This presentation discusses the relative benefits and costs of each health care option.O In this presentation, we provide you with the answers you need about the five health insurance options.