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Afina-wow [57]
3 years ago
13

Michael Barry, Attorney, P.C. began the year with total assets of $126,000, liabilities of $74,000, and stockholders’ equity of

$52,000. During the year, the business earned revenue of $110,000 and paid expenses of $33,000. The business also paid cash dividends of $69,000. How would Michael Barry record expenses paid of $33,000?
Business
1 answer:
goldenfox [79]3 years ago
3 0

Answer:

The expenses can be recorded as follows;

Debit to the expenses of $33,000 and a credit to the cash account of $33,000.

Explanation:

The accounting equation is an equation that tends to balance a company's assets on one side and the sum of its liabilities and shareholders equity on the opposite side of the equation. It form the basis for the double-entry system in accounting that includes an accounts debit and credit. The debit is a sum to an amount that is owed, it is usually listed on the left hand-side of an account while the credit is a listing of a sum that is received usually on the right hand side of an account.

In the case of Michael Barry, the accounting equation;

Assets=liabilities+stockholders equity

Assets=$126,000

Liabilities=$74,000

Stockholders equity=$52,000

liabilities+stockholders equity=74,000+52,000=$126,000

The assets equals the sum of the liabilities and stockholders equity.

To record expenses paid of $33,000;

                            Debit           Credit

Expenses          $33,000

Cash                                       $33,000

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Answer:

a. Debt holders have first claim on corporate value. The Preferred stockholders then have next claim and remaining is left for common stockholders.

b. The value of a financial asset is equal to present value of future cash flows which is provided by the asset. When investor buys a share of stock, (s)he typically expects to receive cash in the form of dividends and to sell the stock to receive cash from sale. However, the price any investor receives is highly dependent upon the dividends which the next investor expects to receive, and so on. Thus, the stock's value depends on cash dividends that the company is expected to provide and the discount rate used to find the present value of those dividends.

d. The formula to calculate present value of expected free cash flows is:

PVn=CFn(1+in)n

The formula for the present value of expected free cash flows when discounted at WACC is:

PV=∑Nn=0CFn(1+in)n

Explanation:

a. Debt holders have first claim on corporate value. The Preferred stockholders then have next claim and remaining is left for common stockholders.

b. The value of a financial asset is equal to present value of future cash flows which is provided by the asset. When investor buys a share of stock, (s)he typically expects to receive cash in the form of dividends and to sell the stock to receive cash from sale. However, the price any investor receives is highly dependent upon the dividends which the next investor expects to receive, and so on. Thus, the stock's value depends on cash dividends that the company is expected to provide and the discount rate used to find the present value of those dividends.

d. The formula to calculate present value of expected free cash flows is:

PVn=CFn(1+in)n

The formula for the present value of expected free cash flows when discounted at WACC is:

PV=∑Nn=0CFn(1+in)n

8 0
3 years ago
Simpkin Corporation owns manufacturing facilities in States A, B, and C. B uses a three- factor apportionment formula under whic
ivanzaharov [21]

Answer:

Simpkin Corporation

Simpkin's apportionable income assigned to B is:________.

b. $533,333

Explanation:

a) Data and Calculations:

Apportionable operating income = $1,000,000

                   State A            State B           State C         Totals

Sales      $400,000        $800,000      $300,000   $1,500,000

Payroll       100,000           150,000          50,000        300,000

Property   200,000          200,000        200,000       600,000

State B's portion of the operating income = $1,000,000 * $800,000/$1,500

= $533,333

5 0
3 years ago
Monroe minerals company purchased a copper mine for a 126,500,000 the mine was expected to produce 50,000 tons of copper over it
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Answer:

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7 0
2 years ago
The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm. Purchased $80,000 of materials on accou
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Journal entry

1. Dr Material 80000

                    Cr Accounts payable 80000

         (Purchase material on account)

2. Dr Work in process 4000

                       Cr Material   4000

        (issue material)

3. Dr Material   56000

                     Cr Accounts payable  56000

( Purchase material on account)

4. Dr Accounts payable  80000

                                    Cr Cash 80000

(Paid cash of material purchase)

5. Dr Work in process 68000

                          Cr Material  68000

( Issued material to production)

6. Dr Work in process  100000

                              Cr Wages payable  100000

    (Direct labor incurred)

7. Dr Factory overhead 106000

                  Cr Cash                  106000

( Paid cash on account of factory overhead)

8. Dr Work in process (100000*125%) 125000

              Cr Applied factory overhead             125000

( To record applied factory overhead)

9. Dr Factory overhead  50000

                             Cr Accumulated depreciation 50000

( To record depreciation on plant and equipment)

T-account

Cash                                                                             Material

Dr___________Cr__                                            __ DR ___________CR

                                                                                   148200     ---

           ---80000                                                          80000   ----    4000

          ---106000                                                            56000 ---

                                                                                                         -- 68000

Work in process                                                              Accounts payable

Dr____________Cr___                                          ___ DR ___________Cr                                                                                                        

33000 ---

4000---                                                                              80000        --  80000

68000--                                                                                               -- 56000

100000---

125000 ---

Wages payable                                                          Factory overhead

Dr ____________Cr__                                          __ Dr _____________Cr

            ---  100000                                                  106000 --

                                                                                50000 --

Applied factory overhead                                    Accumulated depreciation

Dr_____________Cr__                                          _ Dr ___________Cr_

          ---   1250000                                                                ---   50000

Finished goods                                                    Cost of goods sold

Dr_____________Cr__                                          _ Dr ___________Cr_

166000     ---                                                                         ---     263400

                ---   143200  

Material end =?  

Material (end) = 148200 +80000+56000-4000-68000=

Work in process (end) = ?

work in process  = 148200+166000-143200 =171000                                                                                

8 0
3 years ago
True or False. Since grant proposals need to be short, budget and personnel information should not be included.
Fittoniya [83]
False because is not to be included
6 0
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