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Lady bird [3.3K]
3 years ago
5

Latham Corporation constructs a new factory building. The materials cost $300,000. Other costs include direct labor of $150,000,

worker pension costs of $5,000, architectural fees of $15,000, and depreciation on equipment of $25,000. The land was purchased for $30,000. A loan of $500,000 is needed to finance the construction, and interest of $40,000 is paid during the year.
Required:
What is Latham's basis in the building?
Business
1 answer:
Dovator [93]3 years ago
3 0

Answer:

$535,000

Explanation:

The computation of the Latham's basis in the building is shown below:

= The material cost + direct labor cost + worker pension cost + architectural fees + depreciation on equipment  + interest paid during the year

= $300,000 + $150,000 + $5,000 + $15,000 + $25,000 + $40,000

= $535,000

It includes both direct and indirect cost

Since we have to compute for the building so we do not considered the purchase value of land and the loan amount

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3 years ago
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at the end of the current year, using the aging of accounts receivable method, management estimated that $16,500 of the accounts
Furkat [3]

The adjusting entry that the company should pass at the end of the current year to record the bad debts expense:

Bad Debts Expense 16,900

Allowance for Doubtful Accounts  16,900

<h3>What is an allowance for doubtful accounts?</h3>

A contra account called an allowance for doubtful accounts nets against the total receivables shown on the balance sheet to only show the amounts anticipated to be paid. The percentage of accounts receivable that are anticipated to be uncollectible is estimated by the allowance for doubtful accounts.

A negative balance in the allowance for doubtful accounts means that more accounts than anticipated have been written off. A contra asset account with a typical credit balance is the allowance for doubtful accounts.

Under the aging method, the adjusting entry for bad debt expense is calculated using the following formula:

Estimate of uncollectible accounts - (+) Current credit (debit) balance in the allowance for doubtful accounts = Bad debt expense

Hence, The adjusting entry that the company should pass at the end of the current year to record the bad debts expense is given above.

Learn more about the allowance for doubtful accounts:

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"Your question is incomplete, probably the complete question/missing part is:"

Bad Debts Expense 16,500

Allowance for Doubtful Accounts  16,500

Bad Debts Expense 16,100

Allowance for Doubtful Accounts  16,100

Bad Debts Expense 16,900

Allowance for Doubtful Accounts  16,900

Accounts Receivable 16,500

Bad Debts Expense 400

Sales  16,900

Accounts Receivable 16,900

Allowance for Doubtful Accounts  16,900

8 0
2 years ago
Scampini Technologies is expected to generate $25 million in free cash flow next year, and FCF is expected to grow at a constant
Feliz [49]

Answer:

The stock’s value per share is $10.42

Explanation:

For:    

FCF1 = Expected cash flow of the firm

        = $25 million  

WACC = 10%    

g = 4%    

Firm value = FCF1/(WACC - g)    

                  = 25,000,000/(0.10 - 0.04)    

                  = $416,666,666.67    

We know that there is no debt & preferred stock, so the firm value will be equal to Equity value :

Firm value = Equity value

                 = $416,666,666.67

stock value per share = Equity Value/No. of share outstanding

                                     = $416,666,666.67/40,000,000

                                     = $10.42 per share

Therefore, The stock’s value per share is $10.42

7 0
3 years ago
"A customer is long the Swiss Franc at a cost of $.60 per SF. The customer wishes to place a collar on the position using PHLX S
AURORKA [14]

Answer:

To create the collar, the customer would: <u>buy 1 PHLX 59 SF Call and sell 1 PHLX 61 SF Call.</u>

Explanation:

The meaning of a "collar" is that a put is bought at a strike price that is less than the price of the underlying instrument (this implies that a floor has been put on the price of the instrument); and that a call is disposed at a strike price which is higher than the price of the underlying instrument (this indicates that a ceiling above which the instrument will be called away has been created).

When a collar is put on the price, it indicates that the customer is majorly giving a guarantee for the underlying instrument's minimum and maximum price.

This should make the net cost of the collar to be close to zero due to the fact that the two contracts are "out the money" and also because the premium paid to buy the put is offset by the premium received when the call was sold.

Therefore, since customer in the question wishes to place a collar on the position using PHLX SF FLEX options, he would <u>buy 1 PHLX 59 SF Call and sell 1 PHLX 61 SF Call</u> to create the collar.

3 0
3 years ago
During 2019, Revitup, Inc., an exercise video retailer, purchased $10,000 of videos for which it paid $7,000 and owes $3,000. Of
Ksju [112]

Answer:

8000$

Explanation:

The Income Statement is one of an organization's centre budget summaries that show their benefit and losses. Revidup should report 8000$ as a cost on its income statement. The expense of the sum sold must be accounted for in the income statement whether the payment is in advance or if the amount of money is made later. The reason to report 8000$ is that, it is the cost of the amount sold and it is compulsory to report it as an expense in income statement.

3 0
3 years ago
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