Answer:
I think C.
Explanation:
Please correct me if wrong and if right, give brainliest plz?
One of the top-selling items at a gift shop at Hilo, HI are autographed pictures of Jack Star. Sales are 18 pictures per week, and the supplier charges $60 per picture. Currently the gift shop orders a 6-week supply at one time from the supplier. The total cost of placing each order is $45. Annual holding costs are $15 per picture. Assume that the shop operates 52 weeks/year.
A) What is the shop's current average inventory level?
B) What is the shop's current annual inventory holding cost?
C) What is the shop's current annual ordering cost (total cost of placing orders over the entire year)?
D) If the shop wishes to minimize total annual cost, what size orders should be placed?
E) At the optimal ordering quantity, what is the ordering and inventory holding cost per picture sold?
F) At the optimal ordering quantity, what is the shop's inventory turns per year?
Answer:
a. 54
b. 810 dollars
c. 390 dollars
d. 75 pictures
e. 561.6 dollars and 562.5 dollars
f. 38 pictures
Explanation:
demand per week = 18 pictures
annually this demand = 18 *52 = 936
charge per unit = 60 dollars
order for 6 weeks = 6*18 = 108 quantities
cost of ordering = 45 dollars
cost of holding annually = 15 dollars
a. current average inventory
= (18*6)/2
= 54 pictures
b. current annual holding cost
(108/2)*15
= 810 dollars
c. current annual holding cost
= 936/108 * 45
= 390 dollars
d. size orders to be placed
= [tex]\sqrt{\frac{2*936*45}{15} }[/tex]
= [tex]\sqrt{5616}[/tex]
= 74.9
≈ 75 pictures have to be ordered
e. ordering holding cost per picture
936/75 * 45
= 561.6 dollars
and inventory holding cost per picture
= 75/2 * 15
=562.5 dollars
f. shop inventory per year at optimal ordering quantity
= 75/2
= 37.5
≈ 38 pictures
Economic goals for sustainable development can be formulated ________. Group of answer choices by disentangling them from social goals only if we include environmental and social goals in the planning only if there is a complete overlap with social and environmental goals on their own terms without reference to environmental goals only if we exclude environmental goals
Answer:
only if we include environmental and social goals in the planning.
Explanation:
An economy is a function of how money, means of production and resources (raw materials) are carefully used to facilitate the demands and supply of goods and services to meet the unending needs or requirements of the consumers.
Hence, a region's or country's economy is largely dependent on how resources are being allocated and utilized, how many goods and services are to be produced, what should be produced, for whom they are to be produced for and how much money are to be spent by the consumers to acquire these goods and services.
Sustainable development can be defined as an idea or development model that is typically aimed at providing basic human needs such as food, fiber, textiles, etc., without compromising or jeopardizing the ability of future generations to create agricultural solutions to their own basic needs.
Generally, economic goals for sustainable development and growth of a country can be formulated only if environmental and social goals are included in the planning.
On January 1, 2019, Sunland Company granted Sam Wine, an employee, an option to buy 1,000 shares of Sunland Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5520. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Sunland Co. stock in 2021 were:
Using the fair value method, Sunland Company should recognize compensation expenses for 2019on its books in the amount of 2019 is $5,520.
What is a compensation expense?Compensation expenses are compensation-associated expenses used as a reward for exceptional job performance.
Examples of such compensation expense plans include bonuses, commissions, stock options, and profit-sharing.
Data and Calculations:Number of option shares granted = 1,000 shares
Grant price = $30
Exercise period = 5 years
Total compensation expense based on the fair value option pricing model = $5,520
The 2019 compensation expense = $6,000 ($30 x 1,000)/5
Question Completion:Quoted market prices of Sunland Co. stock in 2021 were:
July 1 = $30 per share
Oct 1 = $36 per share
Dec 1 = $40 per share
Required:
As a result of the option granted to Wine, using the fair value method, Sunland Company should recognize compensation expenses for 2019 on its books in the amount of 2019.
Thus, the 2019 compensation expense is $5,520.
Learn more about stock options at https://brainly.com/question/25693765
Pasadena Candle Inc. projected sales of 800,000 candles for January. The estimated January 1 inventory is 35,000 units, and the desired January 31 inventory is 20,000 units. What is the budgeted production (in units) for January?
Answer:
785,000
Explanation:
Calculation to determine the budgeted production (in units) for January
BUDGETED PRODUCTION (in units) FOR JANUARY
Expected units to be sold 800000
Add Desired ending inventory, Dec 31 20000
Total units available 820000
(800,000+20,000)
Less Estimated beginning inventory, Jan 1 (35000)
Total units to be produced 785000
(820,000-35,000)
Therefore the budgeted production (in units) for January is 785,000
The following events took place in January 2018. Sports Equipment Rentals (SER) rents equipment on an hourly or daily basis to customers. SER prepares monthly financial statements. Match each event with the choice that correctly describes the effect of the transaction on the accounting equation. Increase/decrease means one asset account increases and another decreases by the same amount. Use this selection for the next eight questions: Assets Liabilities EquityA. Increase No effect Increase B. Increase Increase No effectC. No effect Decrease IncreaseD. Increase/Decrease No effect No effectE. No TransactionJanuary 3: SER purchases $2,000 of sports equipment on credit. January 8: Customers pay SER $8,500 for daily rentals for services provided over the past three days. January 16: SER receives $4,000 for a 2-week rental for equipment for several teams. The rental period begins on February 10, 2014. January 17: SER signs an agreement to provide $4,500 of equipment to a customer in early February. The customer has not yet made a payment. January 25: SER receives $3,000 for services provided and billed in the prior month. January 30: SER rents out skates for a party that day and bills the customer for $300.January 30: SER completes a contract by providing rental equipment to a private school from January 17-30. The school paid $500 for the rental in December 2000. January 31: SER receives $120 in interest on a note receivable. (SER loaned an employee $10, 000 last November and the employee is paying SER monthly interest. The employee will repay the $10, 000 principal after one year.)
Answer:
Payment received from Debtor: it'll increase Assets by $3,000 and reduce another asset by $3,000.Therefore, Il won't affect the financial position of SER. it's just a substitution of 1 sort of asset into another
Explanation:
Accounting Equation: Assets = Equity + Liability
All the business transaction affects the equation supported double accounting concept. The above transaction will affect the equation in the following manner.
Credit purchase of equipment: it'll increase Assets by $2,000 and Liability also by $2,000.
Daily rental received by SER: it'll increase Assets by $8,500 and Equity by $8,500. Daily rental is that the income of SER so it'll increase profitability and equity.
Rent received for Feb month: it'll increase Assets by $4,000 and Liability by $4,000. Advance rent is going to be treated as a liability until the proper receive the rent being established.
it'll not affect the equation because merely signing an agreement with no payment for the services won't end in any assets or liability.
Payment received from Debtor: it'll increase Assets by $3,000 and reduce another asset by $3,000.Therefore, Il won't affect the financial position of SER. it's just a substitution of 1 sort of asset into another
Botosan Factory has budgeted factory overhead for the year at $717,474, and budgeted direct labor hours for the year are 364,200. If the actual direct labor hours for the month of May are 331,400, the overhead allocated for May is
Answer:
$652,858
Explanation:
Predetermined overhead rate = Budgeted Overheads ÷ Budgeted Activity
= $717,474 ÷ 364,200
= $1.97 per direct labor hour
Allocated overheads = Predetermined overhead rate x Actual Activity
= $1.97 x 331,400 direct labor hours
= $652,858
therefore,
The overhead allocated for May is $652,858.
Yale Corporation issued to Zap Corporation $48,000, 8% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1, 2020. Assume that the company uses the effective interest amortization method. If the bonds were sold to yield 9%, provide journal entries to be made at each of the following dates.a. January 1, 2020, for issuance of bonds. b. June 30, 2020, for the interest payment. • Note: List multiple debits or credits (when applicable) in alphabetical order. • Note: Round your answers to the nearest whole dollar. Cr. Dr. 54,957 X X 0 Date Account Name a. Jan. 1, 2020 Cash Discount on Bonds Payable Bonds Payable b. June 30, 2020 Interest Expense Discount on Bonds Payable Cash 60,000 5,403 x 0 2,457 X 0 X 57 x 2,400 x
Answer:
Yale Corporation
Journal Entries:
a. January 1, 2020:
Debit Cash $44,878
Debit Premium on bonds $3,122
Credit 8% Bonds Payable $48,000
To record issuance of the bonds.
b. June 30, 2020:
Debit Interest Expense $2,020
Credit Bond Discounts $100
Credit Cash $1,920
To record the first payment of interest.
Explanation:
a) Data and Calculations:
January 1, 2020:
Face value of bonds = $48,000
Price of bonds = $44,878
Discounts on bonds = $3,122
Coupon interest rate = 8%
Interest payment = semiannually on June 30 and December 31
Maturity period = 10 years
Effective interest rate = 9%
June 30, 2020:
Interest Expense $2,020 ($44,878 * 4.5%)
Cash payment 1,920 ($48,000 * 4%)
Discount amortization $100
Value of Bonds = $44,978 ($44,878 + $100)
December 31, 2020:
Interest Expense $2,024 ($44,978 * 4.5%)
Cash payment 1,920 ($48,000 * 4%)
Discount amortization $104
Value of Bonds = $45,082 ($44,978 + $104)
N (# of periods) 20
I/Y (Interest per year) 9
PMT (Periodic Payment) 1920
FV (Future Value) 48000
Results
PV = $44,878.10
Sum of all periodic payments $38,400.00
Total Interest $41,521.90
Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor costs.
Products Sales Revenue Traditional ABC
Product 540X 198,200 54,440 45,520
Product 137Y 158,700 49,090 39,290
Product 249S 83,190 11,290 30,010
Required:
a. For each product line, compute operating income using the traditional costing system.
b. For each product line, compute operating income using the activity-based costing system
Solution :
a). Operating the income using traditional costing system
Products Sales revenue($) Traditional($) Operating income($)
( A ) ( B ) ( A - B )
540X 198,200 54,440 143,760
137Y 158,700 49,090 109,610
249S 83,190 11,290 71,900
b). Operating income using the activity-based costing system
Products Sales revenue($) Traditional($) Operating income($)
( A ) ( B ) ( A - B )
540X 198,200 45,520 152,680
137Y 158,700 39,290 119,410
249S 83,190 30010 53,180
Compute straight-line depreciation on the building at the end of one year, assuming an estimated 10-year useful life and a $16,000 estimated residual value. (Do not round intermediate calculations.)What should be the book value of (a) the land and (b) the building at the end of year 2
Answer:
Missing word "Bridge City Consulting bought a building and the land on which it is located for $120,000 cash. The land is estimated to represent 70 percent of the purchase price. The company paid $10,000 for building renovations before it was ready for use."
Total Cost of Land and Building (100%) = $120,000
Cost of Land (70%) = $84,000
Cost of Building (30%) = $36,000
Cost of Building Renovations = $10,000
Total Cost of Building = $36,000 + $10,000
Total Cost of Building = $46,000
1. Annual Depreciation(Year End Depreciation) = (Cost of Building - Residual Value)/ Number of Year
Annual Depreciation = $46,000 - $16,000 / 10
Annual Depreciation = $30,000 / 10
Annual Depreciation = $3,000
2. Book Value of Land at the end of two years = $84,000
Book Value of Building at the end of two years = $46,000 - ($3,000*2 year) = $46,000 - $6,000 = $40,000
Hence, Book Value of Land and Building at the end of two year is = $84,000 + $40,000 = $124,000
Luker Corporation uses a process costing system The company had $ 172,500 of beginning Finished Goods Inventory on October 1. It transferred in $ 849,000 of units completed during the period . The ending Finished Goods Inventory balance on October 31 was $ 170,200 . The entry to account for the cost of goods sold in October is
Answer:
First calculate the Cost of Goods sold:
= Opening Finished goods inventory + Goods transferred in - Closing finished goods inventory
= 172,500 + 849,000 - 170,200
= $851,800
The entry to record this is:
Date Account Title Debit Credit
October 31 Cost of Goods Sold $851,800
Finished Goods Inventory $851,800
$1,000 par value zero-coupon bonds (ignore liquidity premiums) Bond Years to Maturity Yield to Maturity A 1 6.00% B 2 7.50% C 3 7.99% D 4 8.49% E 5 10.70% One year from now bond C should sell for ________ (to the nearest dollar).
Answer:
$842
Explanation:
The computation of the One year from now bond C should sell is shown below;
But before that we have to determined the expected yield to maturity for bond C in one year :
So,
1.0799^3 = 1.06 x (1 + r)^2
1.188 = (1 + r)^2
√1.188 = √(1 + r)^2
1.08999 = 1 + r
r = 0.08999
= 9%
Now
the yield to maturity = (future value ÷ present value)^0.5 - 1
0.09 + 1 = ($1,000 ÷ value in 1 year)^0.5
1.09 = ($1,000 ÷ value in 1 year)^0.5
1.09^2 = $1,000 ÷ value in 1 year
So,
value in 1 year is
= $1,000 ÷ 1.09^2
= $1,000 ÷ 1.1881
= $841.68
≈ $842
Snack food vendors and beer distributors earn some monopoly profits in their local markets but see them slowly erode from various new substitutes. When California voted on legalizing marijuana, which side would you think that California beer distributors were on
Answer: Opposing side
Explanation:
Substitutes to the products offered by monopolies are frowned upon by monopolies because it means that they cannot raise prices whenever they want anymore because people could simply switch to the substitutes.
Substitutes therefore reduce the power of monopolies. Marijuana is a substitute to beer as a recreational product so beer companies would be opposed to it being legalized as it would pose a threat to whatever dominance they have in the recreational sector.
In its 2016 annual report, Lockheed Martin reported net earnings of $5,302 million and dividends paid of $2,048 million. Your forecast of net income for Lockheed Martin for 2017 is $5,504 million. What are projected dividends for the company for 2017
Answer:
The dividend for 2017 will be = $2124.98
Explanation:
The net earnings for the year 2016 = $5302
Dividend paid for the year 2016 = $2048
The forecast for the income of 2017 = $5504
The projected dividend for the year 2017 = 5504 x (2047 / 5302)
The projected dividend for the year 2017 = 2124.98
The dividend for 2017 will be = $2124.98
Sunland Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand. Not included in the physical count were $24,840 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $21,960 of goods sold to Alvarez Company for $30,630, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Sunland report as its December 31 inventory
Answer:
$246,800
Explanation:
Calculation to determine What amount should Sunland report as its December 31 inventory
Using this formula
Ending inventory = Inventory count as per physical count + Inventory in transit FOB Shipping point (Purchases) + Inventory in transit FOB destination (Sales)
Let plug in the formula
Ending inventory= $200,000 + $24,840+ $21,960
Ending inventory= $246,800
Therefore What amount should Sunland report as its December 31 inventory is $246,800
Patty’s Pies has sells 900 pies in August for $20.00 each. At the end of August Patty advertises her pies in the local Valupak which will mail to 25,000 local houses. Statistics show that approximately .5% (one half of one percent) of Valupak recipients result in a sale. Based upon this information, compute the amount of sales Patty would budget for September.
Answer: $20,500
Explanation:
The amount of sales that Patty would budget for September will be calculated thus:
The expected increase in sales unit will be calculated as:
= 0.5% × 25,000
= 125
Therefore, the unit of sale in September will then be:
= 900 pies + 125 pies
= 1025 pies
Then, the total amount of sale will be:
= 1,025 × $20
= $20,500
Assume that the one-year interest rate is on the vertical axis of the IS-LM model and that the yield curve is initially upward sloping. Suppose that financial market participants expect that the central bank will pursue an open market purchase of bonds in the future. Given this information, we would expect which of the following to occur?
A. The yield curve will become flatter.
B. The yield curve will become vertical.
C. The yield curve will become steeper.
D. The yield curve will become downward sloping.
Answer: A. The yield curve will become flatter.
Explanation:
With the information given in the question, then it should be expected that the yield curve should be flatter.
On the other hand, if the participants that are in the financial market expect the central bank to pursue a contractionary monetary policy in the future, then the yield curve will become steeper.
Consider the following limit order book for a share of stock. The last trade in the stock occurred at a price of $105.
Limit Buy Orders Limit Sell Orders Price Shares Price Shares $104.75 400 $104.80 150 104.70 700 104.85 150 104.65 400 104.90 300 104.60 200 104.95 150 103.65 500
a. If a market buy order for 150 shares comes in, at what price will it be filled? (Round your answer to 2 decimal places.)
b. At what price would the next market buy order be filled? (Round your answer to 2 decimal places.)
Answer:
A. $104.80
B. $104.85
Explanation:
A. Based on the information given If a market buy order for 150 shares comes in, the PRICE at which it will be filled is $104.80
Best price = $104.80
B. Based on the information given At what PRICE would the next market buy order be filled is $104.85
Next best price = 104.85
Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $13.00 per unit. The unit cost for the business to make the part is $22.00, including fixed costs and $11.00, excluding fixed costs. If 32,354 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it
Answer:
$64,708 cost decrease
Explanation:
Calculation to determine the amount of differential cost increase or decrease from making the part rather than purchasing it
First step
Purchase cost =$13
Manufacturing cost = $11 (variable)
Profit in manufacturing =$13-$11
Profit in manufacturing=$2
Now let determine the amount of differential cost increase or decrease
Cost decrease by =$2*32,354
Cost decrease by $64,708
Therefore the amount of differential cost DECREASE from making the part rather than purchasing it is $64,708
The nominal interest rate in the U.S. is 5% and the nominal interest rate in Canada is 3%. The spot value of the U.S. dollar is 1 ($/Canadian dollar) and the forward rate is 1.2 ($/Canadian dollar). Which of the following is not true?A. The interest parity condition does not hold.
B. The dollar is likely to appreciate in spot markets.
C. Money will flow into the Canada.
D. The dollar is trading at a forward discount.
Answer: B. The dollar is likely to appreciate in spot markets.
Explanation:
First find the forward rate using the forward rate formula:
Forward rate = Spot rate * (1 + Interest rate of Canada) / (1 + Interest rate of US)
= 1 * ( 1 + 3%) / (1 + 5%)
= 0.980952
= 0.98
The forward rate according to the formula is less than the forward rate that is trading.
This means that the U.S. dollar is trading at a forward discount and when this happens, the dollar will not appreciate in the spot markets because it is scheduled to be discounted in the forward market.
Western Electric has 34,000 shares of common stock outstanding at a price per share of $83 and a rate of return of 12.80 percent. The firm has 7,500 shares of 8.20 percent preferred stock outstanding at a price of $97.00 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $416,000 and currently sells for 113 percent of face. The yield to maturity on the debt is 8.20 percent. What is the firm's weighted average cost of capital if the tax rate is 40 percent
Answer:
11.03 %
Explanation:
Cost of Capital = Cost of equity x Weight of Equity + Cost of Preferred Stock x Weight of Preferred Stock + Cost of Debt x Weight of Debt.
where,
Cost of equity = 12.80 %
Cost of Preferred Stock = 8.20 %
Cost of Debt = 8.20 x (1 - 0.40) = 4.92 %
also,
Total Market Value = 34,000 x $83 + 7,500 x $97.00 + $416,000 x 113%
= $2,822,000 + $727,500 + $470,080
= $4,019,580
Weight of Equity = $2,822,000 ÷ $4,019,580 = 0.70
Weight of Preferred Stock = $727,500 ÷ $4,019,580 = 0.18
Weight of Debt = $470,080 ÷ $4,019,580 = 0.12
therefore,
Cost of Capital = 12.80 % x 0.70 + 8.20 % x 0.18 + 4.92 % x 0.12
= 11.03 %
Case :
"Dear Mr. President—Please Cancel our Project!": The Honolulu Elevated Rail Project
This case is a great current example of a very expensive project that was kicked off because of an assumed need—to relieve congestion in downtown Honolulu through an elevated urban rail system. Critics argue that in addition to having a ballooning cost, the actual planning was poorly conceived, leaving Honolulu with an intrusive and ugly rail system through the downtown area, ruining panoramic views, and impeding traffic. Additionally, advocates underestimated the power needs for the rail system, requiring the transport authority to renegotiate electricity fees for the system. Finally, the original costs that were assumed for the project were calculated during an economic downturn and with the economy booming again, the costs of the project have gone up dramatically. All of these elements points to a state Governor who is anxious to be rid of the project and hoping that President Trump will deny additional federal funding, in which case the project will likely be cancelled.
Required:
a. Why are public works projects like the Honolulu Rail project nearly impossible to stop once they have been approved, even if later cost estimates skyrocket?
b. Project Management researchers have charged that many large infrastructure projects, like this one, suffer from "delusion" and "deception" on the parts of their advocates. Explain how "delusion" might be a cause of ballooning budgets in this project. How does "deception" affect the final project budget overruns?
Answer:
a.The project has been approved and it has been proved necessary.
b. They often choose the cheapest budget and do not forecast any problems in to make the project more viable.
Explanation:
a.There's an extensive process to approve a project like this, since it has so many filters before being approved, canceling it would be saying these filters failed. These filters exist to prove that these projects are necessary and if they're necessary they need to be done, no matter the cost.
b. THe people in charge of setting these projects going often choose the cheapest options to make the projects viable, when doing so the cost will eventually rise and, when the government has already approved it they will continue to spend money on the project.
A farmer who owns the means to produce wealth (farm equipment, land, cattle, etc.) and employs individuals to work on the farm but has also experienced the hardship that comes with farming can be said to be experiencing a ____________ (three word term).
Answer:
Sustainable agriculture farming.
Explanation:
In Agriculture, there are various farming techniques adopted by farmers for the growth and development of their crops. An effective and efficient agricultural technique would have a significant impact on the level of productivity attained by the farmers and as such meeting the unending requirements or needs (demands) of the consumers.
Basically, there are various agricultural techniques used in farming and these includes;
I. Mixed farming.
II. Arable farming.
III. Pastoral farming.
IV. Bush fallowing.
V. Shifting cultivation.
VI. Nomadic herding.
VII. Subsistence farming.
Sustainable agriculture farming can be defined as a farming model that is typically aimed at providing basic human needs such as food, fiber, textiles, etc., without compromising or jeopardizing the ability of future generations to create agricultural solutions to their own basic needs.
This ultimately implies that, when the production of textiles, fiber and food to meet the present human needs deplete the natural base, there is a direct decrease in the ability of future generations to produce to meet their own basic needs regardless of having the means to produce wealth such as farm equipment, land, cattle, labor, etc.
What are similarity and difference between delayed payment and trade credit?
Help me pls, I have a time limited
Answer:
Delayed Payment means a purchase by a buyer in which title to the grain passes to the buyer at a determined price and payment to the seller is not made in less than twenty-one (21) days after delivery.
Answer:
Trade credit is a business-to-business (B2B) agreement in which a customer can purchase goods without paying cash up front, and paying the supplier at a later scheduled date. Usually, businesses that operate with trade credits will give buyers 30, 60, or 90 days to pay, with the transaction recorded through an invoice.
Trade credit can be thought of as a type of 0% financing, increasing a company’s assets while deferring payment for a specified value of goods or services to some time in the future and requiring no interest to be paid in relation to the repayment period.
KEY TAKEAWAYS
Trade credit is a type of commercial financing in which a customer is allowed to purchase goods or services and pay the supplier at a later scheduled date.
Trade credit can be a good way for businesses to free up cash flow and finance short-term growth.
Trade credit can create complexity for financial accounting depending on the accounting method used.
Trade credit financing is usually encouraged globally by regulators and can create opportunities for new financial technology solutions.
Suppliers are usually at a disadvantage with a trade credit as they have sold goods but not received payment.
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Trade Credit
Understanding Trade Credit
Trade credit is an advantage for a buyer. In some cases, certain buyers may be able to negotiate longer trade credit repayment terms, which provides an even greater advantage. Often, sellers will have specific criteria for qualifying for trade credit.
A B2B trade credit can help a business to obtain, manufacture, and sell goods before ever having to pay for them. This allows businesses to receive a revenue stream that can retroactively cover costs of goods sold. Walmart is one of the biggest utilizers of trade credit, seeking to pay retroactively for inventory sold in their stores. International business deals also involve trade credit terms. In general, if trade credit is offered to a buyer it typically always provides an advantage for a company’s cash flow.
The number of days for which a credit is given is determined by the company allowing the credit and is agreed upon by both the company allowing the credit and the company receiving it. Trade credit can also be an essential way for businesses to finance short-term growth. Because trade credit is a form of credit with no interest, it can often be used to encourage sales.
Since trade credit puts suppliers at somewhat of a disadvantage, many suppliers use discounts when trade credits are involved to encourage early payments. A supplier may give a discount if a customer pays within a certain number of days before the due date. For example, a 2% discount if payment is received within 10 days of issuing a 30-day credit. This discount would be referred to as 2%/10 net 30 or simply just 2/10 net 30.
Trade Credit Accounting
Trade credits are accounted for by both sellers and buyers. Accounting with trade credits can differ based on whether a company uses cash accounting or accrual accounting. Accrual accounting is required for all public companies. With accrual accounting, a company must recognize revenues and expenses at the time they are transacted.
Trade credit invoicing can make accrual accounting more complex. If a public company offers trade credits it must book the revenue and expenses associated with the sale at the time of the transaction. When trade credit invoicing is involved, companies do not immediately receive cash assets to cover expenses. Therefore, companies must account for the assets as accounts receivable on their balance sheet.
With trade credit, there is the possibility of default. Companies offering trade credits also usually offer discounts, which means they can receive less than the accounts receivable balance. Both defaults and discounts can require the need for accounts receivable write-offs from defaults or write-downs from discounts. These are considered liabilities a company must expense.
Alternatively, trade credit is a useful option for businesses on the buying side. A company can obtain assets but would not need to credit cash or recognize any expenses immediately. In this way, trade credit can act like a 0% loan on the balance sheet.
The new office supply discounter, Paper Clips, Etc. (PCE), sells a certain type of ergonomically correct office chair. The annual holding cost per unit is $25, annual demand is 180,000 chairs, and the ordering cost is $150 per order. The lead time is 5 days. Because demand is variable (standard deviation of daily demand is 30 chairs), PCE has decided to establish a customer service level of 96%. The store is open 300 days per year.
Required:
a. What is the optimal order quantity?
b. What is the safety stock?
c. What is the reorder point?
d. What is the optimal annual total inventory cost?
Solution :
Given data:
Annual demand, D = 180,000 chairs
Ordering cost, F = $ 150 per order
Annual holding cost per unit, C = $25
Lead time of order, L = 5 days
Standard deviation of order during lead time = 30
a). The optimal order quantity
[tex]$=\sqrt{\frac{2FD}{C}}$[/tex]
[tex]$=\sqrt{\frac{2\times 150 \times 180,000 }{25}}$[/tex]
= 1469.69
= 1470 (rounding off)
b). The Z value of the customer service of 90%,
i.e., the probability of 0.90 as per normal distribution table = 1.29
∴ Safety stock = Z value x standard deviation of order during lead time
= 1.29 x 30
= 38.7
= 39 (rounding off)
c). The reorder point
[tex]= \text{Average demand per day} x \text{Demand lead time (day) + Safety stock}[/tex]
[tex]$=\frac{\text{annual demand}}{\text{300 days}} \times \text{ Demand Lead time (days) + Safety stock}$[/tex]
[tex]$=\frac{180,000}{300} \times 5 + 39$[/tex]
= 3039
d). The optimal annual total inventory cost
[tex]$\text{= Annual ordering cost + Annual Inventory carrying cost}$[/tex]
[tex]$\text{= Number of orders} \times \text{Ordering cost + Average inventory} \times }$[/tex] [tex]$\text{Inventory holding cost per unit per year}$[/tex]
[tex]$=\frac{\text{annual demand}}{\text{optimum order quantity}} \times \text{ordering cost+}\frac{\text{optimum ordering cost}}{2}\times C$[/tex]
[tex]$=\frac{180,000}{1470} \times 150 + \frac{1470}{2} \times 25$[/tex]
= 18367.34 + 18375
= $ 36,742.34
On the statement of cash flows, the cash flows from operating activities section would include:_____.a. cash receipts from sales activities.b. receipts from the issuance of capital stock.c. payments for the acquisition of investments.d. receipts from the sale of investments.
Answer:
a. cash receipts from sales activities
Explanation:
Cash flows from operating activities can be regarded as a section of a cash flow statement of a company which gives explanation about the sources as well as the uses of cash as regards ongoing regular business activities in particular period. These could typically encompass net income from the income statement as well as changes in working capital and adjustments to net income. It can be regarded as the first section which is depicted on a cash flow statement of a company. It should be noted that On the statement of cash flows, the cash flows from operating activities section would include a cash receipts from sales activities.
Decide if the following probability is classical, empirical, or subjective.
You calculate that the probability of randomly choosing a student who is right-handed is about 54%.
Answer:
Classical probability
Explanation:
Classical probability is calculated only when all possible outcomes in the sample space are down and equally likely to occur. It is the probability of known events or events whose resulting probabilities are definitive
For example, students are either left-handed, right-handed or ambidextrous
Subjective probability is a guess on the likelihood an event would occur.
Experimental probability is the probability derived by repeatedly carrying out an experiment and recording the outcomes
A company intends to refinance a portion of its short-term debt in Year 2 and is negotiating a long-term financing agreement with a local bank. This agreement would be noncancelable and would extend for a period of 2 years. The amount of short-term debt that the company can exclude from its statement of financial position at December 31, Year 1.
a. May exceed the amount available for refinancing under the agreement.
b. Depends on the demonstrated ability to consummate the refinancing.
c. Must be adjusted by the difference between the present value and the market value of the current debt.
d. Is zero unless the refinancing has occurred by year end.
Answer:
Refinancing Short-term Debt
The amount of short-term debt that the company can exclude from its statement of financial position at December 31, Year 1:
b. Depends on the demonstrated ability to consummate the refinancing.
Explanation:
Demonstrating the ability to consummate the refinancing agreement of short-term obligations to long-term obligations enables the borrowing entity to exclude the obligations from its current liabilities and to classify the obligations as noncurrent. This ability is demonstrated when an entity issues post-balance-sheet-date long-term obligation or equity securities or enters into a financing agreement that meets some criteria. These criteria are that the agreement lasts more than 1 year, is noncancelable by the lender, no agreement violation exists at the balance sheet date, and the lender does not default on the agreement.
If you have a derivative position where you might be obligated to sell Japanese yen, you are a: Group of answer choices Call option buyer/holder. Put option writer/seller. Put option buyer/holder. Call option writer/seller.
Answer:
The answer is B
Explanation:
The answer is B. Put option writer/seller. Put option writer has a right but not the obligation to sell an asset at a specified price while put option buyer is the reverse
Option A is wrong. Call option buyer/holder has the right but not the obligation to buy an asset at a specified price while call option writer/seller is the reverse.
BBB Leasing purchased a machine for $280,000 and leased it to Jack Tupp Auto Repair on January 1, 2021. Lease description: Quarterly rental payments $16,427 at beginning of each period Lease term 5 years (20 quarters) No residual value; no BPO Economic life of machine 5 years Implicit interest rate 7% Fair value of asset $280,000 What is the balance in the lease payable account after the April 1, 2021, lease payment
Answer: $251758.53
Explanation:
Based on the information given in the question,
Total lease liability = $280,000
Then, the balance in the lease payable account when the first lease payment takes place on January 1, 2021 will be:
= $280,000 - $16,427
= $263573
The, the interest that is included in the lease payment that's made on April 1, 2021 Will be:
= $263573 x 7% x 1/4
= $4612.53
Then, the principal amount that's included in the lease payment made on April 1, 2021 will be:
= $16,427 - $4612.53
= $11814.47
Therefore, the balance in the lease payable account after the April 1, 2021, lease payment will be:
= $263573 - $11814.47
= $251758.53
The Polaris Company uses a job-order costing system. The following transactions occurred in October:
a. Raw materials purchased on account, $210,000.
b. Raw materials used in production, $190,000 ($152,000 direct materials and $38,000 indirect materials).
c. Accrued direct labor cost of $50,000 and indirect labor cost of $21,000.
d. Depreciation recorded on factory equipment, $104,000. Other manufacturing overhead costs accrued during October, $131,000.
f. The company applies manufacturing overhead cost to production using a predetermined rate of $5 per machine-hour. A total of 76,100 machine-hours were used in October.
g. Jobs costing $514,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h. Jobs that had cost $453,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 36% above cost.
Required:
a. Prepare journal entries to record the information given above.
b. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Proccss has a beginning balance of $42,000.
Answer:
The Polaris Company
a. Journal Entries
a. Debit Raw materials $210,000
Credit Accounts Payable $210,000
To record the purchase of raw materials on account.
b. Debit Work in Process $152,000
Debit Manufacturing Overhead $38,000
Credit Raw materials $190,000
To record raw materials used in production as direct and indirect.
c. Debit Work in Process $50,000
Debit Manufacturing Overhead $21,000
Credit Payroll $71,000
To record the costs of direct labor and indirect labor.
d. Debit Manufacturing Overhead $104,000
Credit Depreciation on factory equipment, $104,000
To record the depreciation expense.
Debit Manufacturing Overhead $131,000
Credit Other Expense $131,000
To record other manufacturing overhead costs.
f. Debit Work in Process $380,500
Credit Manufacturing Overhead $380,500
To record manufacturing overhead applied at the rate of $5 for 76,100 DLHs.
g. Debit Finished Goods $514,000
Credit Work in Process $514,000
To record the cost of goods manufactured.
h. Debit Cost of Goods Sold $453,000
Credit Finished Goods $453,000
To record the cost of goods sold.
Debit Accounts Receivable $616,080
Credit Sales Revenue $616,080
To record the sale of goods on account at 36% above cost.
b. T-accounts:
Manufacturing Overhead
Account Titles Debit Credit
Raw materials $38,000
Indirect labor cost 21,000
Factory depreciation 104,000
Other expenses 131,000
Work in Process $380,500
Overapplied overhead 86,500
Work in Process
Account Titles Debit Credit
Beginning inventory $42,000
Raw materials 152,000
Direct labor cost 50,000
Overhead 380,500
Finished Goods $514,000
Ending inventory $110,500
Explanation:
a) Data and Analysis:
a. Raw materials $210,000 Accounts Payable $210,000
b. Work in Process $152,000 Manufacturing Overhead $38,000 Raw materials $190,000
c. Work in Process $50,000 Manufacturing Overhead $21,000 Payroll $71,000
d. Manufacturing Overhead $104,000 Depreciation on factory equipment, $104,000 Manufacturing Overhead $131,000 Other Expense $131,000
f. Work in Process $380,500 Manufacturing Overhead $380,500
g. Finished Goods $514,000 Work in Process $514,000
h. Cost of Goods Sold $453,000 Finished Goods $453,000
Accounts Receivable $616,080 Sales Revenue $616,080