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Nadya [2.5K]
3 years ago
11

The before-tax income for Culver Co. for 2017 was $101,000 and $84,100 for 2018. However, the accountant noted that the followin

g errors had been made:
1. Sales for 2017 included amounts of $36,200 which had been received in cash during 2017, but for which the related products were delivered in 2018. Title did not pass to the purchaser until 2018

2. The inventory on December 31, 2017, was understated by $9,500.

3. The bookkeeper in recording interest expense for both 2017 and 2018 on bonds payable made the following entry on an annual basis. Interest Expense 13,800 Cash 13,800 The bonds have a face value of $230,000 and pay a stated interest rate of 6%. They were issued at a discount of $14,000 on January 1, 2017, to yield an effective-interest rate of 7%. (Assume that the effective-yield method should be used.)

4. Ordinary repairs to equipment had been erroneously charged to the Equipment account during 2017 and 2018. Repairs in the amount of $8,100 in 2017 and $8,500 in 2018 were so charged The company applies a rate of 10% to the balance in the Equipment account at the end of the year in its determination of depreciation charges.

Prepare a schedule showing the determination of corrected income before taxes for 2017 and 2018. (Enter negative amounts using either a negative sign preceding the number e.g. - 15,000 or parentheses e.g. (15,000). Round answers to 0 decimal places, e.g. 125.)
Business
1 answer:
valentina_108 [34]3 years ago
4 0

Answer:

Corrected income before tax year 2017 = $65,690  

Corrected income before tax year 2018 = $102,467

Explanation:

According to the scenario, computation of the given data are as follow:-

 

Particular                                            Year 2017 ($) Year 2018 ($)    

Income before tax                                            101,000    84,100    

Corrections      

1. In 2017, unearned sales                           -36,200      

Sales added in 2018                                                      36,200    

2. In 2017, understated ending inventory    9,500      

In 2018, overstated opening inventory                      -9,500    

3. Add-wrongly charged interest expenses    13,800            13,800    

Less-actual interest expenses      

In 2017 ($230,000-$14,000)×7%=$216,000×7% -15,120      

In 2018, bond of carrying amount

       =$216,000+($15,120-$13,800)=$217,320      

In 2018, Actual interest expense=($217,320×7%)    -15,212    

4 Add-wrongly charged depreciation expenses      

In 2017=($8,100×10%)                                           810      

In 2018,=($8,100-$810)×10%+$8,500×10% =                      1,579    

Less-actual expenses for repairs                          -8,100    -8,500    

Corrected income before tax                         65,690   102,467    

     

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Ari, Inc. is working on its cash budget for December. The budgeted beginning cash balance is $23,000. Budgeted cash receipts tot
xenn [34]

Answer:

The business will need to borrow $34,000

Explanation:

We will need to analyse the cash flows the business has in order to determine how much needs to be borrowed to meet the ending cash balance desired.

The opening cash balance is $23,000, cash inflow as receipts is $136,000

So total cash on hand will be 23,000+ 136,000= $159,000

The cash on hand less disbursements will give ending balance

Ending balance = 159,000 - 135,000

Ending balance= $24,000

Desired closing balance is $58,000

Balance to meet desired cash= 58,000 - 24,000

Balance to meet desired cash= $34,000

4 0
3 years ago
Kaplan, Inc. produces flash drives for computers, which it sells for $27 each. The variable cost to make each flash drive is $13
horsena [70]

Answer:

Contribution per unit

= Selling price - Variable cost per unit

 = $27 -$13

= $14

Contribution margin ratio

= Contribution per unit

  selling price

= $14

  $27

=  0.518518518

Break-even point in dollars

= $1,400

  0.518518518

= $2,700

               

Explanation:

Break-even point in dollars  equals fixed cost divided by contribution margin ratio. Contribution margin ratio is equal to contribution per unit divided by selling price. Contribution per unit is selling price minus variable cost per unit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

4 0
3 years ago
Hemingway Corporation has 100,000 shares of common stock issued and outstanding. At the meeting of the board of directors on Dec
DaniilM [7]

Answer:

See the journal entry below

Explanation:

Retained earnings A/c Dr $500,000

Dividends payable A/c Cr $500,000

Here, cash dividend is being declared by the board on 100,000 shares hence the account of retained earnings is debited and account of dividends payable is credited.

NB.

Amount = Share × Price per share

Given that;

Share = 100,000

Price per share = $5

Amount

= 100,000 × $5

= $500,000

4 0
3 years ago
Which of the following is not true in regard to selling fixed assets?
hichkok12 [17]
Your answer is C. Accumulated Depreciation will be credited. :D
5 0
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Comparison of product features is part of the ____ phase of the decision-making process
slava [35]
The evaluating alternatives part of the decision-making process!
7 0
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