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mamaluj [8]
3 years ago
11

Pelican Cove Corporation is trying to decide whether to invest in equipment to manufacture a new product. If the investment proj

ect is accepted, sales revenue will increase by $65,000 per year and materials costs will increase by $16,000 per year. The equipment will cost $140,000 and is depreciable over 10 years using simplified straight line. The firm has a marginal tax rate of 34%. Calculate the firm's annual cash flows resulting from the new project. Group of answer choices
Business
1 answer:
Vedmedyk [2.9K]3 years ago
3 0

Answer:

The firm's annual cash flows resulting from the new project is $58,220

Explanation:

Increase in EBIT               $81,000

(65,000 + 16,000)

Less: Depreciation           <u>$14,000</u>

Profit before tax               $67,000  

Less: Tax at 34%              <u>$22,780</u>

Net income                       $44,220  

Add: Depreciation            <u>$14,000</u>

Operating cash flows     <u>$58,220</u>

Note: Depreciation = $140,000/10 years = $14,000

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Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investm
harina [27]

Answer:

Suppose that in year 2021, Bloomfield had equal share of percentage of ownership in Clor as they had in previous year i.e 2020, it means that in 2021, the share of percentage that will be held by Bloomfield in Clor will be 26.59%

Explanation:

From the above, we will assume that Bloomfield stake in Clor using equity method and also investment in 2020 was $150,650 and $165,300 in 2021.

Inorder to calculate the percentage , we can make it Y hence we will add amount in 2020 with Y% of (Net income - Dividend declared) inorder to arrive at the total amount in 2021.

Solution.

$150,650 + Y% (75,600 - $20,500) = $165,300

$150,650 + $55,100Y = $165,300

$55,100Y = $165,300 - $150,650

$55,100Y = $14,650

Y% = $14,650/$55,100

Y% = 0.26588

Y = 0.26588 × 100

Y = 26.59

3 0
3 years ago
The following unadjusted trial balance contains the accounts and balances of Dylan Delivery Company as of December 31, 2010, its
REY [17]

Answer:

Dylan Delivery Company

1. 10-Column Worksheet (see attachment)

2. Closing Journal Entries at December 31, 2010:

Date  Description                        Debit         Credit  

Depreciation expense - Truck    80,000  

Salaries Expense                         111,000  

Office supplies expense             18,000  

Repairs expense- trucks             15,000

Income Summary                                          224,000

To close expenses to the Income Summary.

Date  Description                        Debit         Credit

Income Summary                      263,000

Delivery fees                                                263,000

To close revenue to the Income Summary.

Date  Description                       Debit         Credit

Net Income                                39,000

Retained Earnings                                        39,000

To close the net income to retained earnings.

2b) Capital to be reported on balance sheet as at December 31, 2010:

S. Dylan Capital                 $307,000

Retained Earnings                39,000

S. Dylan withdrawals           (34,000)

Net Capital                        $312,000

Explanation:

a) A 10-column worksheet is a tool used by accountants to close the temporary accounts, after necessary adjustments, and then extract a balance sheet.  It comprises two columns (debit and credit) for each of the following: Unadjusted Trial Balance, Adjusting Entries, Adjusted Trial Balance, Income Statement, and Balance Sheet.

b) A closing entry is a journal entry that is made at the end of an accounting period to transfer balances from a temporary account to a permanent account.  The four basic steps in the closing process are: Closing the revenue accounts—transferring the credit balances in the revenue accounts to a clearing account called Income Summary. Closing the expense accounts—transferring the debit balances in the expense accounts to a clearing account called Income Summary.  Extracting a balance between the revenue accounts and the expense accounts, called the net income or loss.  Closing the net income or loss to the Retained Earnings.

Download xlsx
5 0
3 years ago
Reynolds Manufacturers Inc. has estimated total factory overhead costs of $118,800 and expected direct labor hours of 10,800 for
Lisa [10]

Answer:

$15,730

Explanation:

<em>under absorption costing overheads are charged to product units using an overhead absorption rate. </em>

The overhead absorption rate is determined using the formula below:

<em>Overhead absorption rate is = Budgeted Overheads / budgeted Labour hours</em>

Factory overhead Absorption rate  (OAR)=  $118,800/10,800

                                               = $11 per hour

 Amount of 0verhead to charge Number number 117

                                  = 11 × 1,430

                                  = $15,730

6 0
3 years ago
Which phrase best completes the diagram?
igomit [66]
Low gross domestic product
7 0
3 years ago
Double-declining balance On January 1, 2021, the Excel Delivery Company purchased a delivery van for $51,000. At the end of its
agasfer [191]

Answer:

$18,480

Explanation:

Cost of van = $51,000

Useful life = 5 years

Salvage value = $4,800

Using the straight line, Annual depreciation

= (51000 - 4800)/5

= $9,240

Using the Double-declining balance method,

Annual depreciation = 2 × 9,240

                                  = $18,480

3 0
3 years ago
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