Select the correct answers.

Better Corp. (BC) began operations on January 1, Year 1. During Year 1, BC experienced the following accounting events: 1. Acqui

makkiz [27]

Answer:

Better Corp. (BC)

a. Accounting Equation

Assets = Liabilities + Equity

1. Cash $7,000 Common stock $7,000

2. Cash $12,000 Bank loan payable $12,000

3. Cash $47,000 Service Revenue $47,000

4. Cash ($30,000) Op. expenses ($30,000)

5. Cash ($8,000) Cash dividend ($8,000)

6. Land $20,000 Cash ($20,000)

Assets $28,000 = Liabilities $12,000 + Equity $16,000

b. Total assets = $28,000

Total liabilities = $12,000

Stockholders' equity = $16,000

Balance Sheet as of December 31, Year 1

Assets:

Cash $8,000

Land $20,000

Total assets $28,000

Liabilities:

Bank loan $12,000

Equity:

Common stock $7,000

R/Earnings 9,000

Total equity $16,000

Liabilities and

Equity $28,000

c. Total assets = $28,000

Total liabilities = $12,000

Total equity = $16,000

d. The Land will be shown on the December 31, Year balance sheet at $20,000. The reason is that this is the acquisition cost and the land is not held for trading (no information provided).

Explanation:

a) Data and Analysis based on the Accounting Equation:

1. Cash $7,000 Common stock $7,000

2. Cash $12,000 Bank loan payable $12,000

3. Cash $47,000 Service Revenue $47,000

4. Cash ($30,000) Operating expenses ($30,000)

5. Cash ($8,000) Cash dividend ($8,000)

6. Land $20,000 Cash ($20,000)

7 0

3 years ago

Ed bought $2,000 in stock shares one week before the stock price dropped $10.00. If he had waited for the price setback, he coul

Zanzabum

Answer:

He bought 40 shares.

Explanation:

Step 1: Determine the initial stock price

Use the expression below to determine the total initial stock price as shown;

T=S×s

where;

T=total initial stock price

S=initial stock price per share

s=number of shares

In our case;

T=$2,000

S=x

s=unknown

replacing;

2,000=x×s

s=2,000/x

Step 2: Determine the final stock price

Use the expression below;

F=f×s2

where;

F=final stock price=$2,000

f=final stock price per stock=(x-10)

s2=final number of shares bought=(2,000/x)+10

replacing;

2,000=(x-10){(2,000/x)+10)

2,000=x(2,000/x)+(10 x)-10(2,000/x)-100

(2,000=2,000+10 x-20,000/x-100)x

2,000 x=2,000 x+10 x²-20,000-100 x

2,000 x-2000 x=10 x²-100 x-20,000

10 x²-100 x-20,000=0

solving quadratically;

x=[100±√{100²-(4×10×-20,000)}]/(2×10)

x={100±√(10,000+800,000)}/20

x=(100±900)/20

x=1,000/20=50

Initial stock price=$50

Number of shares bought=2,000/x=2,000/50=40

He bought 40 shares.

4 0

3 years ago

Suppose your firm receives a million order on the last day of the year. You fill the order with million worth of inventory. The

s344n2d4d5 [400]

Answer:

a. Revenues - These will increase by $5 million to represent the entire value of the order.

b. Earnings. - Increase by $3 million

Earnings in this case are revenue less the cost of inventory which will be;

= 5 - 2

= $3 million

c. Receivables - Increase by $4 million

The customer paid $1 million upfront which means that they still owe $4 million out of the $5 million. This will go to the receivables account to show that the customer owes the business.

5 0

3 years ago

Segmented Income Statement Gorman Nurseries Inc. grows poinsettias and fruit trees in a green house/nursery operation. The follo

bija089 [108]

Answer:

Poinsettias records a loss of $118,125

Fruit Trees records a profit of $92,325

The company therefore records an overall $25,800 loss

NB: See the workings below see the assumption mad to allocate common expenses since none is given in the question.

Explanation:

Variable costing income statement is a type of income statement that records variable cost separately first to determine the contribution margin and thereafter record the fixed cost which is further split into direct fixed expenses and common expenses.

The segmented income statement for Gorman Nurseries for the coming year can therefore be presented as follows:

Gorman Nurseries Inc.

Segmented Income Statement

For the coming year

Particulars Poinsettias ($) Fruit Trees ($) Total ($)

Sales 970,000 3,100,000 4,070,000

Variable COGS (460,000) (1,630,000) (2,090,000)

Variable selling exp. (w1.) (38,800) (124,000) (162,800)

Contribution margin 471,200 1,346,000 1,817,200

Direct fixed overhead (160,000) (200,000) (360,000)

Direct fixed S $ Admn exp. (146,000) (87,000) (233,000)

Segment margin 165,200 1,059,000 1,224,200

Common fixed overh. (w2a) (176,077) (623,923) (800,000)

Common S $ Admn ex (w2b) (107,248) (342,752) (450,000)

Segment Net Income (loss)  (118,125)   92,325   (25,800) 

Workings:

w1. Variable selling expenses = Sales * Commission percentage

Poinsettias = $970,000 * 4% = $38,8000

Fruit Trees = $3,100,000 * 4% = $124,000

w2. Allocation of common expenses using the following assuptions:

a) Use cost of goods sold (COGS) to allocate Common fixed overhead:

Poinsettias = (460,000 / 2,090,000) * $800,000 = $176,077

Fruit Trees = (1,630,000 / 2,090,000) * $800,000 = $623,923

b) Use common selling and administrative expense using Sales:

Poinsettias = (970,000 / 4,070,000) * $450,000 = $176,077

Fruit Trees = (3,100,000 / 4,070,000) * $450,000 = $623,923

4 0

3 years ago

What do you understand from the term, ‘monopoly’. Give an example of a government-created monopoly. Is creating this monopoly ne

hodyreva [135]

Answer:

A monopoly is a company that can control the market. For example the government could put a hight import tax on shoes so no one would ship shoes into the countryman this means that the only shoe brand in the country can adjust there prices of their shoes and people would still buy them because there is no other shoe brand. This shows that they have control over the market (Or sitting at at monopoly position)

4 0

3 years ago