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Yuki888 [10]
2 years ago
6

Abbie Marson is the sole owner and operator of Great Plains Company. As of the end of its accounting period, December 31, Year 1

, Great Plains Company has assets of $910,049 and liabilities of $274,794. During Year 2, Marson invested an additional $28,651 and withdrew $25,020 from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $988,160 and liabilities were $234,792?
Business
2 answers:
Nataliya [291]2 years ago
7 0

Answer:

The net income for Year 2 is $ 114,482

Explanation:

Accounting Equation is used in order to calculate the closing capital figure of Year 1 and Year 2:

Assets=Liabilities + Equity.

we can rearrange the formula as Assets-Liabilities = Equity

  • So in Year 1. the closing capital is: $910,049-$274,794 = $635,255.
  • In Year 2. the closing capital is : $988,160-$234,792 = $ 753,368

Now we can construct an equation to drive net income of year to by means of balancing figure:

Opening capital year 1:            $635,255

+ Additional Capital in Year 2: $28,651

-Drawing in year 2:                   $(25,020)

Net Income(Balancing figure)   <u>$114,482</u>              

Closing Capital Year 2:            $ 753,368              

joja [24]2 years ago
6 0

Answer:

$114,482

Explanation:

The accounting equation shows the relationship between the various elements of the balance sheet. These are the assets, liabilities and equity. It may be expressed mathematically as

Assets = Liabilities + Equity

As such, for  Great Plains Company as at December 31, Year 1

Equity = $910,049 - $274,794

= $635,255

As at December 31, Year 2

Equity = $988,160 - $234,792

= $753,368

Change in equity between year 1 and 2

= $753,368  - $635,255

= $118,113

This difference or change in equity between December 31, year 1 and 2 is as a result of the following;

  • amount withdrawn by the owner
  • Additional amount invested by the owner
  • Net income/loss of the business in year 2

As such,

$118,113 = $28,651 - $25,020 + net income

Net income = $118,113 - $28,651 + $25,020

= $114,482

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3 years ago
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Farrell wants to retire in six years. To have sufficient assets to fund retirement, Farrell needs to accumulate an additional $4
Mademuasel [1]

Answer:

$73,070.5

Explanation:

Inflation erodes the value of money. It makes more quantity of money to required to buy the same basket of food and services in the future.

With inflation, to calculate the the quantity of Dollars needed in n years time, we use the formula;

Inflated amount = h × (1 + f)^n

h= amount required today, f - inflation rate, n- number of years

So if Farrell needs $400,000 in 6 years time in real terms, with an inflation of 5% per year, he would need to have a quantity of money equal to

1.05^6 × 400,000 = $536,038.3.

To provide for $536,038.3  in 6 years time, he would need to contribute into a sinking fund on a yearly basis, an equal amount denoted as "A" in the formula below:

FV = A ×  ((1+r)^n  - 1)/r

FV - 536,038.3, r - 8%, n = 6

536,038.3 = A × ((1+0.08 )^(6) - 1)/0.08)

536, 038.3 = A × 7.3359

536,038.3/7.3359 = A

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$73,070.5

7 0
3 years ago
The beginning inventory at Midnight Supplies and data on purchases and sales for a three month period ending March 31 are as fol
larisa86 [58]

Answer:

1. Journal Entries

January 1

Dr.  Inventory                   $624,000

Cr.  Account Payables    $624,000

January 10

Dr.  Account Receivables $532,000

Cr.  Sales                           $532,000

January 28

Dr.  Account Receivables $175,000

Cr.  Sales                           $175,000

Dr.  Cost of Goods Sold   $276,400

Cr.  Inventory                    $276,400

January 30

Dr.  Cost of Goods Sold   $97,500

Cr.  Inventory                    $97,500

February 5

Dr.  Account Receivables $70,000

Cr.  Sales                           $70,000

Dr.  Cost of Goods Sold   $39,000

Cr.  Inventory                    $39,000

February 10

Dr.  Inventory                    $1,360,000

Cr.  Account Payable       $1,360,000

February 16

Dr.  Account Receivables $1,319,500

Cr.  Sales                           $1,319,500

Dr.  Cost of Goods Sold    $718,100

Cr.  Inventory                     $718,100

February 28

Dr.  Account Receivables    $1,261,500

Cr.  Sales                              $1,261,500

Dr.  Cost of Goods Sold      $696,000

Cr.  Inventory                       $696,000

March 5

Dr.  Inventory                $1,166,880

Cr.  Account Payables $1,166,880

March 14

Dr.  Account Receivables  $1,421,000

Cr.  Sales                            $1,421,000

Dr.  Cost of Goods Sold    $793,040

Cr.  Inventory                     $793,040

March 25

Dr.  Inventory               $246,000

Cr.  Account Payable  $246,000

March 30

Dr.  Account Receivables  $1,145,500

Cr.  Sales                            $1,145,500

Dr.  Cost of Goods Sold    $644,640

Cr.  Inventory                     $644,640

* Assuming Purchases and Sales are made on Account

2.

Sales Value = $5,924,500  

Opening Inventory = $175,000

Closing Inventory = $307,200

Purchases =  $3,396,880

Cost of Goods Sold =  $3,264,680

Gross Profit = $2,659,820

3.

As the prices are increasing the Inventory value using last-in, first-out will be lower because all the unit sold at last are sold and inventory of the old items which was purchased on the lower cost remains in the closing inventory. The cost of Goods sold will be higher in this case.

Explanation:

First In First out (FiFO) is an Inventory method which determines the inventory value and it requires that the unit purchased first will be sold first.

Cost of Goods Sold = Opening Inventory + Purchases - Closing Inventory

Cost of Goods Sold = $175,000 + $3,396,880 - $307,200 =

Gross Profit = Sales Value - Cost of Goods Sold

Gross Profit = $5,924,500 - $3,264,680

Gross Profit = $2,659,820

Inventory Working is made in a MS Excel File, which is attached with this answer please find it.

Download xlsx
6 0
3 years ago
Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $59, and the book value per
Ad libitum [116K]

Answer:

a. Filer's capital structure weight of equity on a book value basis is <u>24%</u>.

b. Filer's capital structure weight of debt on a book value basis is <u>76%</u>.

c. Filer's capital structure weight of equity on a market value basis is <u>80%</u>.

d. Filer's capital structure weight of debt on a market value basis is <u>20%</u>.

Explanation:

a. What is Filer's capital structure weight of equity on a book value basis? (Do not round your intermediate calculations.)

Equity book value = Equity book value per share * Number of shares = 11,600,000 * $5 = $58,000,000

Debt book value = Debt face value = First bond face value + Second face value = $99,000,000 + $81,200,000 = $180,200,000

Total book value = $58,000,000 + $180,200,000 = $238,200,000

Book value weight of equity = Equity book value / Total book value = $58,000,000 / $238,200,000 = 0.24, or 24%

Therefore, Filer's capital structure weight of equity on a book value basis is <u>24%</u>.

b. What is Filer's capital structure weight of debt on a book value basis? (Do not round your intermediate calculations.)

From part a, we have:

Debt book value = $180,200,000

Total book value = $238,200,000

Therefore, we have:

Book value weight of debt = Debt book value / Total book value = $180,200,000 / $238,200,000 = 0.76, or 76%

Therefore, Filer's capital structure weight of debt on a book value basis is <u>76%</u>.

c. What is Filer's capital structure weight of equity on a market value basis? (Do not round your intermediate calculations.)

Equity market value = Current share price * Number of shares = $59 * 11,600,000 = $684,400,000

Debt market value = Bond price quote * Par value of the bond

Debt market value = First bond market value + Second bond market value = (92% * $99,000,000) + (95.5% * $81,200,000) = $168,626,000

Total market value = Equity market value + Debt market value = $684,400,000 + $168,626,000 = $853,026,000

Market value weight of equity = Equity market value / Total market value = $684,400,000 / $853,026,000 = 0.80, or 80%

Therefore, Filer's capital structure weight of equity on a market value basis is <u>80%</u>.

d. What is Filer's capital structure weight of debt on a market value basis?

From part c, we have:

Debt market value = $168,626,000

Total market value = $853,026,000

Market value weight of debt = Debt market value / Total market value = $168,626,000 / $853,026,000 = 0.20, or 20%.

Therefore, Filer's capital structure weight of debt on a market value basis is <u>20%</u>.

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3 years ago
Economists refer to the necessity of holding all variables other than price constant in constructing a demand curve as the A. su
Andru [333]

Answer:

D. ceteris paribus condition

Explanation:

The Latin words “Ceteris paribus”, means “all other things remain the same”. It is an assumption usually included when by economists when stating laws or concepts such as demand and supply. Because, actually in the real word, it is feasible to eliminate other variables that might influence an outcome, aside the variables under study.  So therefore, we assume all other variables remain constant, when stating the relationship between two variables. For example, when constructing a demand curve showing the relationship between price and quantity demanded, we assume that all other variables that can influence demand other than price, remain the same, which in reality might be difficult to isolate.

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