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3 years ago

At December 31, 2019, Swifty Corporation reported the following as plant assets.

Business

1 answer:

Kay [80]3 years ago

6 0

Answer:

April 01 2020

Land Debit $ 2,200,000

Cash Credit $2,200,000

To record purchase of land

May 01 2020

Cash Debit $ 504,000

Allowance for depreciation equipment Debit $ 363,720

Equipment Credit $ 840,000

Gain on sale of equipment Credit $ 27,720

To record sale of equipment and to recognise gain on sale

June 01 2020

Cash Debit $ 1,450,000

Land Credit $ 399,000

Gain in sale of land Credit $1,051,000

To record sale of land and gain on the sale

July 01 2020

Equipment Debit $ 2,480,000

Cash Credit $ 2,480,000

To record purchase of equipment

December 31 2020

Allowance for depreciation Debit $ 491,000

Equipment Credit $ 491,000

To record retirement of equipment

The adjusting entry for depreciation is as follows:

December 31 2020

Depreciation expense - Equipment Debit $ 4,985,000

Depreciation expense - Buildings Debit $ 578,200

Allowance for depreciation - Equipment Credit $ 4,985,000

Allowance for depreciation - Buildings Credit $ 578,200

Explanation:

Computation for Depreciation expense for the year

Equipment Jan 01 2020 $ 48,670,000 for 4 months @ 10 %

Sales - May 01 2020 $( 840,000)

Adjusted balance May 01 2020 $ 47,830,000 for 2 months @ 10 %

Purchases July 01 2020 $ 2,480,000

Adjusted balance July 01 2020 $ 50,310,000 for 6 months @ 10 %

Depreciation expense for 4 months = $ 48,670,000*10 % *4/12 = $1,622,333

Depreciation expense for 2 months = $ 47,830,000*10 % *2/12 = $ 797,167

Depreciation expense for 6 months = $ 51,310,000*10 % *6/12 =$ 2,565,500

Total depreciation equipment $ 4,985,000

Depreciation on buildings $ 28,910,000 * 2 % $ 578,200

Depreciation has to be recorded for full year on assets retired on December 31 2020

Computation of gain and loss on sale of equipment

Cost of equipment purchased on January 1 2016 $ 840,000

Depreciation rate 10 %

Equipment sold on May 01 2020

Depreciation charged for 4 years and 3 months @ 10 %

$ 840,000 * 4.33 *10 % $ 363,720

Net book value of equipment disposed on May 01 2020 $ 476,280

Sale value of equipment $ 504,000

Gain on sale of equipment $ (27,720 )

The gain on sale of land is the difference between the cost and sales proceeds since land is not depreciated

Sale proceeds - Cost = $ 1,450,000 - $ 399,000 = $ 1,051,000

The assets that was retired on Dec 31 2020 was purchased on December 31 2010 and was considered for depreciation for 10 years and was fully depreciated and had ni book value on the date of retirement

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A new furnace for your small factory will cost $45,000 and a year to install, will require ongoing maintenance expenditures of $

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Answer:

a) NPV = $43,874.65

b) IRR = 24.37%

c) payback period = 5.33 years

d) equivalent annual cost = $6,024.55

e) equivalent annual savings = $13,298.61

f) since the NPV is positive, the equivalent annual savings must be higher than the equivalent annual costs

Explanation:

initial outlay year 0 = -$45,000

net savings year 1 = -$1,400 + (4,200 x $2) = $7,000

net savings year 2 = -$1,400 + (4,200 x $2.50) = $9,100

net savings year 3 = -$1,400 + (4,200 x $3) = $11,200

net savings years 4 - 20 = -$1,400 + (4,200 x $3.50) = $13,300

discount rate = 12%

using a financial calculator:

NPV = $43,874.65

IRR = 24.37%

payback period = 5.33 years

equivalent annual cost = (present value of costs x 12%) / / [1 - (1 + 12%)⁻ⁿ] =[($45,000 + $10,457.22) x 12%] / [1 - (1 + 12%)⁻ⁿ] = $6,654.87 / 0.89633 = $7,424.57

equivalent annual savings = (present value of savings x 12%) / / [1 - (1 + 12%)⁻ⁿ] = ($99,332.87 x 12%) / / [1 - (1 + 12%)⁻ⁿ] = $11,919.94 / 0.89633 = $13,298.61

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4 years ago

Compute the selling price if variable costs are $16 per unit. Determine the formula used to calculate the selling price.

dezoksy [38]

Answer: $40

Explanation:

Selling price can be calculated through the contribution margin equation;

Contribution margin = (Selling Price - Variable cost) / Selling Price

Contribution margin = Fixed costs/break-even point

= 660,000/1,100,000

= 60%

60% = (Selling Price - 16) / Selling Price

Selling price * 60% = Selling price - 16

16 = Selling price - (0.6 * selling price)

16 = Selling price * 40%

16/40% = Selling price

Selling price = $40

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3 years ago

One benefit of specialization is that it

tiny-mole [99]

-Whenever countries have different opportunity costs in production they can benefit from specialization and trade.
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3 years ago

The LIBOR scandal in 2012 involved a. banks reporting inflated earnings from their loans. b. hackers breaking into the loan docu

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Answer:

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3 years ago

You own a stock portfolio invested 30 percent in Stock Q, 25 percent in Stock R, 25 percent in Stock S, and 20 percent in Stock

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Answer:

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3 years ago