BUSINESS COLLEGE

The demand rate for raw material A is normally distributed with an average of 300 pints per day. The standard deviation of daily demand is 15 pints. If the lead time for this material is 4 days, what is the standard deviation of demand during the 4-day lead time

Answers

Answer 1

Answer:

Answer:

the standard deviation of demand during the 4-day lead time is 30

Explanation:

the computation of the standard deviation of demand during the 4-day lead time is given below;

= Sqrt(Lead time) × Std deviation daily demand

= Sqrt(4) × 15

=2 × 15

= 30

Hence, the standard deviation of demand during the 4-day lead time is 30

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Kingbird Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows. KingBird Resort Trial Balance August 31, 2020 Debit Credit Cash $25,900 Prepaid Insurance 10,800 Supplies 8,900 Land 22,000 Buildings 122,000 Equipment 18,000 Accounts Payable $10,800 Unearned Rent Revenue 10,900 Mortgage Payable 62,000 Common Stock 99,300 Retained Earnings 9,000 Dividends 5,000 Rent Revenue 78,200 Salaries and Wages Expense 44,800 Utilities Expenses 9,200 Maintenance and Repairs Expense 3,600 $270,200 $270,200 Other data: 1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020. 2. An inventory count on August 31 shows $443 of supplies on hand. 3. Annual depreciation rates are (a) buildings (4%) (b) equipment (10%). Salvage value is estimated to be 10% of cost. 4. Unearned Rent Revenue of $3,472 was earned prior to August 31. 5. Salaries of $392 were unpaid at August 31. 6. Rentals of $873 were due from tenants at August 31. 7. The mortgage interest rate is 8% per year.A. Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.No. Date Account Titles and Explanation Debit Credit1. Aug. 312. Aug. 313a. Aug. 313b. Aug. 314. Aug. 315. Aug. 316. Aug. 317. Aug. 31B. Prepare an adjusted trial balance on August 31.
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Coburn (beginning capital, $55,000) and Webb (beginning capital $95,000) are partners. During 2017, the partnership earned net income of $71,000, and Coburn made drawings of $17,000 while Webb made drawings of $25,000. Assume the partnership income-sharing agreement calls for income to be divided 30% to Coburn and 70% to Webb. Prepare the journal entry to record the allocation of net income.

Answers

Answer:

Given that,

Beginning capital of Coburn = $55,000

Beginning capital of Webb = $95,000

Partnership earned net income = $71,000

Coburn made drawings = $17,000

Webb made drawings = $25,000

Income-sharing ratio = 30:70

Coburn's share in profits = Net income earned × 30%

= $71,000 × 0.3

= $21,300

Webb's share in profits = Net income earned × 30%

= $71,000 × 0.7

= $49,700

Therefore, the journal entry is as follows:

Profit and loss A/c Dr. $71,000

To Coburn's capital A/c $21,300

To Webb's capital A/c $49,700

(To record the allocation of net income)

Most voluntary changes in accounting principles are reported retrospectively. This means for each year reported in the comparative statements, we make those statements appear as if the newly adopted accounting method had been applied all along. A journal entry is created to adjust all account balances affected as of the date of the change. In the first set of financial statements after the change, a disclosure note describes the change and justifies the new method as preferable. It also describes the effects of the change on all items affected, including the fact that the retained earnings balance was revised in the statement of shareholders’ equity.Melas Company changed from the LIFO to the FIFO inventory costing method on January 1, Year 3. Inventory values at the end of each year since the inception of the company are as follows:

FIFO LIFO
Year 1 $195,000 $177,500
Year 2 $390,000 $355,000

Ignoring income tax considerations, prepare the appropriate journal entry, dated January 1, Year 3, to report this accounting change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answers

Answer:

Explanation: times all the number together

Crispy Fried Chicken bought equipment on January 2, 2018, for $ 33,000. The equipment was expected to remain in service for four years and to operate for 6,750 hours. At the end of the equipment's useful life, Crispy estimates that its residual value will be $ 6,000. The equipment operated for 675 hours the first year, 2,025 hours the second year, 2,700 hours the third year, and 1,350 hours the fourth year.Requirements
1. Prepare a schedule of depreciation expense, accumulated depreciation, and book value per year for the equipment under the three depreciation methods: straight-line, units-of-production, and double-declining-balance. Show your computations. Note: Three depreciation schedules must be prepared.
2. Which method tracks the wear and tear on the equipment most closely?

Answers

Final answer:

The straight-line method applies a consistent depreciation expense every year, the units-of-production method correlates depreciation with actual usage, and the double-declining-balance method accelerates depreciation. The units-of-production method tracks wear and tear on the equipment most closely.

Explanation:

Straight-Line Method:

Depreciation expense per year = (Cost - Residual value) / Useful life = ($33,000 - $6,000) / 4 = $6,750

Accumulated depreciation per year = Depreciation expense × Number of years

Book value per year = Cost - Accumulated depreciation

Units-of-Production Method:

Depreciation expense per hour = (Cost - Residual value) / Total estimated hours = ($33,000 - $6,000) / 6,750 = $3.26

Depreciation expense per year = Depreciation expense per hour × Number of hours operated

Accumulated depreciation per year = Sum of depreciation expenses each year

Book value per year = Cost - Accumulated depreciation

Double-Declining-Balance Method:

Depreciation expense = Book value at beginning of year × (2 / Useful life)

Accumulated depreciation per year = Sum of depreciation expenses each year

Book value per year = Cost - Accumulated depreciation

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Final answer:

The straight-line, units-of-production, and double-declining-balance depreciation methods result in different depreciation expenses which are based on the cost, salvage value, and usage of the equipment. The units-of-production method is the most accurate in tracking the wear and tear of the equipment as it considers the actual hours of operation.

Explanation:

The depreciation schedules for the three different methods; straight-line, units-of-production, and double-declining-balance, can be calculated as follows:

Straight-line depreciation: It involves spreading the cost of the asset evenly over its useful life. The annual depreciation is calculated as (Cost - Salvage Value) / Useful Life. Here, it would be ($33,000 - $6,000) / 4 = $6,750 per year.
Units-of-production depreciation: It involves depreciating the asset based on its usage or output. The depreciation per unit is calculated as (Cost - Salvage Value) / Total units of production. Here, it would be ($33,000 - $6,000) / 6,750 = $4 per hour. Multiply this rate by the number of hours each year to determine yearly depreciation.
Double-declining balance depreciation: It involves depreciating the asset faster in the early years of its life. The annual depreciation is calculated as 2 * (Cost - Accumulated Depreciation) / Useful Life. Note that the salvage value is not considered in this calculation. But depreciation stops when the book value equals the salvage value.

The units-of-production method most accurately tracks the wear and tear on the equipment as it directly ties the depreciation expense to the hours of the equipment's operation.

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Consider the following abbreviated financial statements for Cabo Wabo, Inc.: CABO WABO, INC. Partial Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Assets Liabilities and Owners’ Equity Current assets $ 3,151 $ 3,367 Current liabilities $ 1,399 $ 2,078 Net fixed assets 14,060 14,511 Long-term debt 7,377 8,419 CABO WABO, INC. 2019 Income Statement Sales $ 45,000 Costs 22,522 Depreciation 3,885 Interest paid 995 a. What is owners’ equity for 2018 and 2019? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) b. What is the change in net working capital for 2019? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c-1. In 2019, the company purchased $8,038 in new fixed assets. The tax rate is 23 percent. How much in fixed assets did the company sell? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c-2. What is the cash flow from assets for the year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) d-1. During 2019, the company raised $2,479 in new long-term debt. What is the cash flow to creditors? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) d-2. How much long-term debt must the company have paid off during the year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Answers

Answer:

a. What is owners’ equity for 2018 and 2019?

owners' equity 2018 = $8,435

owners' equity 2019 = $7,381

b. What is the change in net working capital for 2019?

-$463

c-1. In 2019, the company purchased $8,038 in new fixed assets. The tax rate is 23 percent. How much in fixed assets did the company sell?

net capital spending = $14,511 - $14,060 + $3,885 = $4,336

net capital spending = fixed assets purchased - sold

$4,336 = $8,038 - fixed assets sold

fixed assets sold = $3,702

c-2. What is the cash flow from assets for the year?

operating cash flow = EBIT + depreciation - taxes = $18,593 + $3,885 - $4,276 = $18,202

cash flow from assets = operating cash flow - change in net working capital - net capital spending = $18,202 - (-$463) - $4,336 = $14,329

d-1. During 2019, the company raised $2,479 in new long-term debt. What is the cash flow to creditors?

new long term debts = $8,419 (2019) - $7,377 (2018) = $1,042

cash flow form creditors = new long term debts - interests = $1,042 - $995 = $47

d-2. How much long-term debt must the company have paid off during the year?

new long term debts = new debt - retired debt

$1,042 = $2,479 - retired debt

retired debt = $2,479 - $1,042 = $1,437

a)The owners' equity for 2018 and 2019 is $8,435 and $7,381. b) The change in net working capital for 2019 is $463. c-1) The fix assets sell are $3,702, c2-The cash flow from assets for the year is $14,329. d-1)The cash flow to creditors is $47 and d-2)The long-term debt that the company must have paid off during the year is $1,437.

a)owners' equity 2018 = $8,435 owners' equity 2019 = $7,381

b. The change in net working capital for 2019 is $463

c-1. The company purchased $8,038 in new fixed assets. The tax rate Is 23 percent. The fixed assets sold are:

net capital spending $14,511 $14,060+ $3,885-$4,336

net capital spending = fixed assets purchased-sold

$4,336 $8,038-fixed assets sold

fixed assets sold = $3,702

c-2. The cash flow from assets for the year is:

operating cash flow - EBIT + depreciation-taxes = $18,593 +$3,885- $4,276 $18,202

cash flow from assets = operating cash flow-change in net working capital- net capital spending $18,202 (-$463)-$4,336 $14,329

d-1. During 2019, the company raised $2,479 in new long-term debt. The cash flow to creditors is:

new long term debts = $8,419 (2019) - $7,377 (2018) = $1,042 cash flow form creditors = new long term debts interests $1,042 - $995 = $47

d-2. The long-term debt that the company must have paid off during the year is:

new long term debts = new debt-retired debt $1,042 $2,479 - retired debt

retired debt = $2,479 - $1,042 = $1,437

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Rogue Drafting has debt with a market value of $450,000, preferred stock with a market value of $150,000, and common stock with a market value of $350,000. If debt has a cost of 8%, preferred stock a cost of 10%, common stock a cost of 12%, and the firm has a tax rate of 30%, what is the WACC?

Answers

Answer:

the WACC is 8.65%.

Explanation:

Total firm capital = $450,000 + $150,000 + $350,000

= $950,000

Weight of debt in the capital structure = $450,000/ $950,000

= 47.37%

Weight of preferred stock in the capital structure

= $150,000/ $950,000

= 15.79%

Weight of common stock in the capital structure

= $350,000/ $950,000

= 36.84%

The weighted average cost of capital is calculated using the below formula:

WACC= Wd*Kd(1 - t) + Wps*Kps + We*Ke

where:

Wd = Percentage of debt in the capital structure.

Kd = The before tax cost of debt

Wps = Percentage of preferred stock in the capital structure

Kps = Cost of preferred stock

We = Percentage of common stock in the capital structure

Ke = The cost of common stock

T = Tax rate

WACC = 47.37%*8%*(1 – 0.30) + 0.1579*10% + 36.84%*12%

= 2.65272% + 1.5790% + 4.4208%

= 8.65252%

Therefore, the WACC is 8.65%.

Final answer:

The Weighted Average Cost of Capital (WACC) can be calculated by determining the weight of each component of the firm's capital structure and multiplying it by its respective cost. In this case, the WACC is 8.03%.

Explanation:

To calculate the Weighted Average Cost of Capital (WACC), we need to determine the weight of each component of the firm's capital structure and multiply it by its respective cost. The formula for WACC is:

WACC = (Debt / Total Capital) * Cost of Debt + (Preferred Stock / Total Capital) * Cost of Preferred Stock + (Common Stock / Total Capital) * Cost of Common Stock

Using the given information:

Debt = $450,000, Preferred Stock = $150,000, Common Stock = $350,000

Cost of Debt = 8%, Cost of Preferred Stock = 10%, Cost of Common Stock = 12%

We can substitute these values into the formula to calculate the WACC:

WACC = (450,000 / (450,000 + 150,000 + 350,000)) * 8% + (150,000 / (450,000 + 150,000 + 350,000)) * 10% + (350,000 / (450,000 + 150,000 + 350,000)) * 12%

Simplifying the equation:

WACC = 0.4 * 8% + 0.133 * 10% + 0.31 * 12%

Calculating the percentages:

WACC = 0.032 + 0.0133 + 0.0372

WACC = 8.03%

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R. C. Barker makes purchasing decisions for his company. One product that he buys costs $50 per unit when the order quantity is less than 500. When the quantity ordered is 500 or more, the price per unit drops to $48. The ordering cost is $30 per order and the annual demand is 7,500 units. The holding cost is 10 percent of the purchase cost. If R. C. wishes to minimize his total annual inventory costs, he must evaluate the total cost for two possible order quantities. What are these two possible quantities?a. 300
b. 306
c. 500
d. 200
e. None of the above