Amazon.com, Inc., headquartered in Seattle, WA, started its electronic commerce business in 1995 and expanded rapidly. The following transactions occurred during a recent year (dollars in millions):1. Issued stock for $623 cash (example).
2. Purchased equipment costing $6,320, paying $4,893 in cash and charging the rest on account.
3. Paid $5,000 in principal and $300 in interest expense on long-term debt.
4. Earned $177,866 in sales revenue; collected $123,949 in cash with the customers owing the rest on their Amazon credit card account.
5. Incurred $25,249 in shipping expenses, all on credit.
6. Paid $118,241 cash on accounts owed to suppliers.
7. Incurred $10,069 in marketing expenses; paid cash.
8. Collected $38,200 in cash from customers paying on their Amazon credit card account.
9. Borrowed $16,231 in cash as long-term debt.
10. Used inventory costing $111,934 when sold to customers.
11. Paid $830 in income tax recorded as an expense in the prior year.

Required:

For each of the transactions, complete the tabulation, indicating the effect (positive value for increase, negative value for decrease, and leave blank if no effect) of each transaction.

Answers

Answer 1

Answer:

Final answer:

This question is a test of understanding accounting principles and how various transactions impact a business's accounts. The student is required to analyze several transactions for Amazon.com, Inc., determining for each one how it affects the company's assets, liabilities, equity, revenue, and expenses.

Explanation:

To respond to this question will require understanding of accounting and financial transactions and the resulting impacts on business accounts, in this case, Amazon.com, Inc. For example, when Amazon issued stock for $623 cash, this increased cash (an asset) by $623 million and equity by the same amount. Buying equipment costing $6320 while paying $4893 in cash and charging the rest on the account reduced cash by $4893 and increased both equipment (another asset) by $6320 and accounts payable (a liability) by $1427 million ($6320 - $4893). Similarly, you can analyze other transactions: principal and interest payments on debt reduce cash and long-term debt or interest expense; generating sales revenue increases revenue and accounts receivable or cash; incurring expenses (e.g., shipping, marketing) increases expense and accounts payable or decreases cash; borrowing cash increases both cash and long-term debt, etc. Understanding the transactions in this way is central to the accounting process, which creates the financial statements that give stakeholders important information about a business's financial health.

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Chambers, Inc. uses flexible budgets. At normal capacity of 16,000 units, budgeted manufacturing overhead is: $64,000 variable and $180,000 fixed. If Chambers had actual overhead costs of $250,000 for 18,000 units produced, what is the difference between actual and budgeted costs?Chambers, Inc. uses flexible budgets. At normal ca

$2,000 unfavorable.

$2,000 favorable.

$8,000 favorable.

$6,000 unfavorable.

Answers

Answer:

The correct answer is B.

Explanation:

Giving the following information:

At the normal capacity of 16,000 units, budgeted manufacturing overhead is $64,000 variable and $180,000 fixed. If Chambers had actual overhead costs of $250,000 for 18,000 units produced.

Variable overhead rate= 64,000/16,000= $4

Overhead variance= real - allocated

Overhead variance= 250,000 - (4*18,000 + 180,000)= 250,000 - 252,000= 2,000 favorable

Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price? Select one: a. Consumers, who purchase more units of the product than they did before the price support program was implemented

b. Taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place

c. The government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program

d. Producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues

Answers

Answer:

d. Producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues

Explanation:

A government price support program is when the government impose a price limit on a product to control the price of the product i.e price floor, and also the purchase of any surplus. The price floor and the purchase of any surplus for the product encourages the producers to produce more of the product.

Since price floor must be higher than the equilibrium price for it to be effective, the producers of the agricultural product earn more by selling in units and also earn more for selling any surplus to the government.

A company is in its first month of operations. Supplies worth $4,000 were purchased on January 5. At the end of the month supplies worth $3,000 were in hand. What adjusting entry would be made at the end of January?

Answers

Answer:

Adjustying Entry at the end of January

Dr. Cr.

Supplies Expense Account $1,000

Supplies Inventory Account $1,000

Explanation:

Opening supplies = 0 (First month of operation)

Purchases on January 5 = $4,000

Supplies on January 31 = $3,000

Closing Inventory = Opening Inventory + Purchase during the month - Expense for the month

$3,000 = $0 + $4,000 - Expense for January

Expense for January = $4,000 - $3,000 = $1,000

Lorenzo Company applies overhead to jobs on the basis of direct materials cost. At year-end, the Work in Process Inventory account shows the following. Work in Process Inventory Date ExplanationDebit Credit Balance Dec.31 Direct materials cost1,900,000 1,900,000 31 Direct labor cost210,000 2,110,000 31 Overhead applied684,000 2,794,000 31 To finished goods 2,723,000 71,000 1. Determine the predetermined overhead rate used (based on direct materials cost). 2. Only one job remained in work in process inventory at December 31. Its direct materials cost is $22,000. How much direct labor cost and overhead cost are assigned to this job

Answers

Answer:

1. Overhead rate = Overhead costs / Direct material costs

Overhead rate = $684,000 / $1,900,000

Overhead rate = 0.36

Overhead rate = 36%

2. How much direct labor cost and overhead cost are assigned to this job?

Total cost of job in process $71,000

Less: Overhead applied $7,920

($22,000 * 36%)

Less: Material cost of job in process $22,000

Direct labor cost $41,080

Hence, direct labor cost is $41,080 and Overhead cost is $7,920

Final answer:

The predetermined overhead rate is 36%. For the last job with direct materials cost of $22,000, the direct labor cost assigned remains $210,000 and the overhead cost assigned is $7,920.

Explanation:

To answer your questions, first we need to determine the predetermined overhead rate which is the ratio of overhead costs to direct materials costs. Given that the total overhead costs were $684,000 and the total direct material cost was $1,900,000, the predetermined overhead rate would be $684,000 / $1,900,000 which equals approximately 0.36 or 36%.

Secondly, to calculate how much direct labor cost and overhead cost would be assigned to the last job which has a direct materials cost of $22,000: the direct labor cost remains the same as provided, which is $210,000. However, the overhead cost would be calculated by multiplying the direct materials cost of the job by the overhead rate (0.36), giving $22,000 * 0.36 = $7,920.

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Dudley is a manager at the SuperCuts franchise. He has had to fire two employees because they were treating walk-in customers with disdain and thus turning away business. Once those employees were gone, he trained new employees on how to greet customers. Business has been improving and he has realized how important personnel are for a retail business. What role do the personnel play at his SuperCuts franchise?

Answers

Answer:

they are the interface between the brand and the customer

Explanation:

Based on the information provided within the question it can be said that the personnel in SuperCuts are the interface between the brand and the customer. The personnel are the ones that interact on a daily basis with the shoppers and provide all the information that they need regarding the SuperCut's brand in order to generate sales.

Imagine that you are holding 5,000 shares of stock, currently selling at $40 per share. You are ready to sell the shares but would prefer to put off the sale until next year for tax reasons. If you continue to hold the shares until January, however, you face the risk that the stock will drop in value before year-end. You decide to use a collar to limit downside risk without laying out a good deal of additional funds. January call options with a strike of $45 are selling at $2, and January puts with a strike price of $35 are selling at $3. 1. What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at:
(a) $30
(b) $40
(c) $50
2. Compare these proceeds to what you would realize if you simply continued to hold the shares.

Answers

Answer:

1. What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at:

(a) $30 ⇒ $170,000

(b) $40 ⇒ $195,000

call strike price $45

call premium received $2

put strike price $35

put premium paid $3

you pay $2 - $3 = -$1

stock price

$30 $40 $50

stock value $30 $40 $50

put value $5 - -

call value - - -$5

premium paid -$1 -$1 -$1

net stock value $34 $39 $44

total # of stocks 5,000 5,000 5,000

portfolio's value $170,000 $195,000 $220,000

2. Compare these proceeds to what you would realize if you simply continued to hold the shares.

if you hold the stocks:

(a) $30 ⇒ $150,000 - $170,000 = -$20,000 (you gain by using a collar)

(b) $40 ⇒ $200,000 - $195,000 = $5,000 (you lose by using a collar)

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