Answer:
a)
period interest interest discount amortized bond's
payment expense on BP discount carrying value
0 49,320.60 750,679.40
1 32,000 37,533.97 43,786.63 5,533.97 756,213.37
2 32,000 37,810.67 37,975.96 5,810.67 762,024.04
3 32,000 38,101.20 31,874.76 6,101.20 768,125.24
4 32,000 38,406.26 43,786.63 6,406.26 774,531.50
b)
December 31, 2017, accrued interest on bonds payable
Dr Interest expense 19,050.60
Cr Interest payable 16,000
Cr Discount on bonds payable 3,050.60
c)
total interest expense year 2007:
($37,533.97/2) + $37,810.67 + ($38,101.20/2) = $18,776.99 + $37,810.67 + $19,050.60 = $75,638.26
Explanation:
the market price of the bonds:
$800,000 / 1.05¹⁰ = $491,130.60
$32,000 x 8.1109 (PV annuity factor, 4%, 10 periods) = $259,548.80
market price = $750,679.40
discount on bonds payable $49,320.60
discount amortization first payment = (750,679.40 x 0.05) - 32,000 = 5,533.97
discount amortization second payment = (756,213.37 x 0.05) - 32,000 = 5,810.67
discount amortization third payment = (762,024.04 x 0.05) - 32,000 = 6,101.20
discount amortization fourth payment = (768,125.24 x 0.05) - 32,000 = 6,406.26
The interest income and discount amortized are calculated based on the effective-interest method. The adjusting entry debits Bond Interest Expense and credits Discount on Bonds Payable. The income statement reports the interest expense as the sum of cash paid and discount amortized.
The interest on Logan Corporation's bonds is paid semi-annually, therefore the interest periods will be six months. The effective-interest method is used to amortize the premium or discount on these bonds, and it calculates interest expense based on the market rate and the outstanding balance of the bond.
For October 1, 2006, Logan Corporation issued $800,000 of 8% bonds. However, they were sold to yield 10% effective interest, which is annual, for six months this is 5% (10%/2). So, the interest income for the first period will be $800,000×5%=$40,000.
With actual cash received being $800,000×8%/2 = $32,000. The difference between the interest income and the cash received is the discount amortized.
For April 1, 2007, the carrying value of the bond will be the face value subtract the discount amortized. The remaining steps are essentially a repetition of the first period until October 1, 2007.
For adjusting entry on December 31, 2007, debit the Bond Interest Expense for the total discount amortized and credit Discount on Bonds Payable.
The interest expense on the income statement is the Bond Interest Expense, which includes both the cash paid and the discount amortized.
#SPJ3
Period Demand F1 F2
1 68 63 66
2 75 70 67
3 70 75 70
4 74 69 72
5 69 70 73
6 72 68 75
7 80 70 77
8 78 74 84
Required:
Compute MAD for each set of forecasts. Given your results, which forecast appears to be more accurate
Answer:
Kindly check explanation
Explanation:
Given the data:
Period Demand F1 F2
1 68 63 66
2 75 70 67
3 70 75 70
4 74 69 72
5 69 70 73
6 72 68 75
7 80 70 77
8 78 74 84
Mean absolute deviation (MAD) for F1:
P___Demand(D) __F1__F2___|D - F1|___|D-F2|
1____ 68 _______63 __66____5______ 2
2____75_______ 70__ 67____ 5______ 8
3____70_______ 75__ 70____ 5______ 0
4____74_______ 69__ 72____ 5______ 2
5____69_______ 70__ 73____ 1______ 4
6____72_______ 68__ 75____ 4______3
7____80_______ 70__ 77____ 10 _____3
8____78_______ 74__ 84____ 4______6
Mean absolute deviation (MAD) For F1 :
Σ(|D - F1|)/n :
(5 + 5 + 5 + 5 + 1 + 4 + 10 + 4) / 8
= 39 / 8
= 4.875
Mean absolute deviation (MAD) For F2 :
Σ(|D - F2|)/n :
(2 + 8 + 0 + 2 + 4 + 3 + 3 + 6) / 8
= 28 / 8
= 3.50
F2 seems to be more accurate has it has a Lower MAD value
To determine which forecast is more accurate between F1 and F2, the Mean Absolute Deviation (MAD) for each was calculated. It was found that Forecast F2, with a lower MAD of 3.75 compared to F1's 5.25, is the more accurate forecast.
The subject of this examination pertains to a field in mathematics known as forecasting. The Mean Absolute Deviation (MAD) is a commonly used method to measure the accuracy of forecast predictions. It is computed by taking the absolute value of the actual demand minus the forecasted demand, and then finding the average of these absolute differences over a specific period.
For F1: |68-63| + |75-70| + |70-75| + |74-69| + |69-70| + |72-68| + |80-70| + |78-74|. When you calculate these absolute differences and then divide the sum by 8 (number of periods), you get a MAD of 5.25.
For F2: |68-66| + |75-67| + |70-70| + |74-72| + |69-73| + |72-75| + |80-77| + |78-84|. Similarly, calculate these absolute differences and divide the sum by 8, you get a MAD of 3.75.
Given the results, the F2 forecast appears to be more accurate as it has a smaller MAD.
#SPJ3
Explanation:
The computation is shown below:
a. The gross margin is
Gross margin = (Sales revenues - Cost of sales) ÷ (Sales revenues) × 100
= ($10.7 million - $5.9 million) ÷ ($10.7 million) × 100
= 45%
b. The local operating margin is
= (Operating income ÷ Sales) × 100
where,
Operating income is
= (Sales - cost of sales - selling, general & administrative expenses - research & development - Depreciation & Amortization) ÷ (Sales revenue) × 100
= ($10.7 million - $5.9 million - $0.55 million - $1.2 million - $1.4 million) ÷ ($10.7 million) × 100
= ($1.65 million) ÷ ($10.7 million) × 100
= 15.42%
c. Net profit margin
= (Net profit ÷ Sales) × 100
where,
= (Sales - cost of sales - selling, general & administrative expenses - research & development - Depreciation & Amortization) × (1 - tax rate) ÷ (Sales revenue) × 100
= ($10.7 million - $5.9 million - $0.55 million - $1.2 million - $1.4 million) × (1 - 0.35) ÷ ($10.7 million) × 100
= ($1.0725 million) ÷ ($10.7 million) × 100
= 10.02%
Answer:
Payroll = $95,000,
Indirect labor = $25000
Direct labor paid = $95000 - $25000 = $70000
∵ predetermined overhead application rate is 170 % of direct labor cost
Overhead applied to work in process = 70000 × 170 %
= $119,000
Journal entry:
Debit ⇒ Work in process = $1190000
Credit ⇒ Factory Overheads = $119000
To record the application of factory overhead to production, you first calculate the direct labor cost, then multiply by the predetermined overhead rate. The journal entry is a debit to Work in Process and a credit to Factory Overhead for this calculated amount.
The Portside Watercraft company is using a job order costing system and a predetermined overhead rate based on direct labor cost. In this case, to record the application of factory overhead to production, you would first calculate the factory overhead applied by multiplying the direct labor cost (total labor cost minus indirect labor cost) by the predetermined rate.
The direct labor cost would be calculated by subtraction: $95,000 (total factory payroll) - $25,000 (indirect labor) = $70,000. Then multiply $70,000 by 170% (the predetermined overhead rate) to get $119,000. The journal entry would then be a debit to Work in Process for $119,000 and a credit to Factory Overhead for $119,000.
#SPJ3
a. $25,000 loss
b. $50,000 loss
c. $25,000 profit
d. $150,000 profit 13.
Answer:
a. $25,000 loss
Explanation:
Economic profit = revenues - explicit costs - opportunity costs
In this case, Mary's economic profit = profit from investment in new business - opportunity cost of not investing $1 million in risk-free bond - opportunity cost of quitting job
= $150,000 - $100,000 - $75,000
= ($25,000)
c. Why is the demand for labor called a "derived demand."
Answer:
(A)Wages decrease in the long term
Explanation:
(A) The principles of supply and demand applies here.
Higher worker productivity in a particular industry implies increased demand for workers in the industry (short term effect).
Increased supply of workers implies:
1. output per worker increases, resulting in increase in supply of products in the industry. But, the laws of supply and demand comes in, because when supply increases, prices decrease.
That is, the increase in worker productivity may cause a decrease in prices resulting in a decrease in wages since the firm's revenue declined (long term effect).
2. Increase in the supply of workers in the industry with increased in productivity over workers from other industry because of initial increase in wages. This would lead to a decrease in wages because the supply of workers would exceed demand.
(B) The compensation differential is the additional amount of money that a given worker must be offered in order to motivate him to accept a given undesirable job, relative to other jobs that the worker could perform.
(C) This is called a derived demand because it is often based on the demand for products.
For example, when consumers want more of a particular good or service eg clothing, more firms in the industry will want workers that make this product.
b. $35.00
c. $37.50
d. $37.60
Answer: $49.05
Explanation:
The call was purchased at $3.05 and the strike price at expiration is $46. The total expenses at expiration is:
= 46 + 3.05
= $49.05
To make a profit, the stock price will have to be above $49.05 which makes it the breakeven point.
Option not included.