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____ [38]
3 years ago
11

In 2018, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 20

17, CPS's inventories were $32 million (FIFO). CPS's records indicated that the inventories would have totaled $23.8 million at December 31, 2017, if determined on an average cost basis.
Prepare the journal entry to record the adjustment. (Ignore income taxes.) (Enter your answers in millions (i.e., 5,500,000 should be entered as 5.5). Round your answers to 1 decimal place. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Business
1 answer:
MaRussiya [10]3 years ago
4 0

Answer:

Dr Retained earnings $8.2

Cr Inventory $8.2

Explanation:

By changing method of an inventory valuation, the company should apply it retrospectively based on IAS 8 guidelines on change in accounting estimates and errors. Thus, the said difference from FIFO method to Weighted Average method of valuation should be credited directly against Retained earnings account because, accounts are already closed right after the year ended.

$32-$23.8= $8.2 million

To record the said adjustment you have to

Debit Retained earnings and credit Inventory in the amount of $8.2 million.

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I think it’s D. All of the above
3 0
3 years ago
Sam buys fuel for his construction vehicles from the local distributer. He uses 8,500 gallons a month. The local distributor cha
3241004551 [841]

Answer:

He should order 681.66 gallons to minimize the cost, but he have a 500 gallon tank he can fill, so he will order 500 gallons every time, to minimize the cost.

Explanation:

According to the given data we have the following:

h = handling cost per unit = $ 9

S = Ordering cost per order = $20.5

He uses 8,500 gallons a month, therefore, the annual demand D= 8,500*12 = 102,000 gallons .

Therefore, the optimal ordering quantity would be= [ (2*D*S) / h ]1/2

                                                                                   =681.66 units

He should order 681.66 gallons to minimize the cost, but he have a 500 gallon tank he can fill, so he will order 500 gallons every time, to minimize the cost.

3 0
3 years ago
Tyrion is compensated by his company under a straight commission plan. He receives 10 percent of the total sales revenue per wee
larisa [96]

Answer:

Salesperson compensation

Explanation:

According to straight commission plan the sales person is paid compensation on the basis of a fixed percentage of the total sales volume rather than paying a fixed salary.

This method encourages the sales persons to work efficiently towards increasing the sales in return for a compensation or commission.

In this particular case Tyron will receive 10% of $ 6,000 that is $ 600 as a commission for making these sales of $ 6,000.

8 0
3 years ago
What will happen if a country increases its money supply rapidly under fixed exchange rate regime? question 34 options: 1) the c
Serjik [45]

The answer is "trade deficit would widen in that country".

A fixed exchange rate regime forces financial discipline on nations and abridges price inflation. For instance, if a nation expands its cash supply by printing more money, the expansion in cash supply would prompt price inflation. Given fixed exchange rates, inflation would make the nation's merchandise noncompetitive in world markets, while the costs of imports would turn out to be more appealing in that nation. The outcome would be an augmenting exchange shortage in the nation, with the nation bringing in more than it sends out.

8 0
3 years ago
Firm A has $1 million in operating income and pays $250,000 in interest. In addition, firm A has $7.50 EPS. Firm B has an operat
Vitek1552 [10]

Answer:

$10.00

Explanation:

Earning per share is the ratio of net Income of the business per outstanding share of the business after deducting the preferred dividend from net earning. It shows how much each stockholder earn against their each share in a specific period.

Earning Per share ( EPS ) of Firm A  = $7.50 per share

Number of outstanding share can be calculated as follow

EPS  = Net Income / Outstanding Numbers of share

Outstanding Numbers of shares = Net Income / EPS

Outstanding Numbers of shares = ($1,000,000 - $250,000) / $7.5 per share = 100,000 shares

Firm B

As Tax will be ignored, interest expense is also same as the Firm A and numbers of share is also sames.

Operating Income = $2.0 million = $2,000,000

Less: Interest expense                    $250,000

Net Income                                      $175,000

EPS = $175,000 / 100,000 share = $17.5 per share

Difference  = $17.5 - $7.5 = $10 per share

8 0
3 years ago
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