2. Indicate whether the following statements are true or false:

Lido Pizza purchased a new oven that cost $15,000 cash on January 2, 2016. The oven has an expected useful life of five years an

Reptile [31]

Answer:

$4,800

Explanation:

The computation of the accumulated depreciation would Lidos report on the 2017 balance sheet is shown below:

= (Purchase value of new oven- estimated salvage value ) ÷ (expected useful life)

= ($15,000 - $3,000) ÷ (5 years)

= ($12,000) ÷ (5 years)

= $2,400

Now for 2017, the accumulated depreciation is

= Depreciation expense × number of years

= $2,400 × 2 years

= $4,800

4 0

3 years ago

On December 31, Year 10, Brown Company changed its inventory valuation method from the weighted-average method to FIFO for fi

Butoxors [25]

Answer: Overstatement of profit by $8000

Explanation:

The change in an accounting method of valuing stock which results in decrease in the value of stock will increase the profit when compared to the period before the method that decrease the stock was used. To effect the change a debit charge will be made to the retained earnings and a credit charge to the stock account to reduce the value.

6 0

3 years ago

Clever Cuts is a retail chain specializing in salon-quality hair-care products. During the year, Clever Cuts had sales of $ 39

meriva

Answer:

Sales Revenue $39,300,000

Cost of Goods Sold ($20385000)

Gross Profit $18915000

Selling, General and Administrative Expenses ($7,225,000)

Net Income $11690000

Explanation:

Sales Revenue $39,300,000

Cost of Goods Sold ($20385000)

Gross Profit $18915000

Selling, General and Administrative Expenses ($7,225,000)

Net Income $11690000

Cost of Goods Sold is calculated as (Opening Inventory + Purchases – Closing Inventory) ($3,100,000 + $21,400,000 - $4,115,000).

Sales Revenue is deducted from Cost of Goods Sold to find Gross Profit after which Selling, General and Administrative Expenses are deducted which gives us Net Income of $11690000.

4 0

3 years ago

Why does a government place price ceilings, such as rent control, on some “essential” goods?. A. to prevent the development of a

Maksim231197 [3]

The government place price ceilings, such as rent control, on some essential goods because of the reason of limiting <span>the impact of equilibrium pricing. This will also limit the direct increase of the prices of the goods. This will also help regulate the flow of prices in the market.</span>

8 0

3 years ago

Read 2 more answers

The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the indu

yan [13]

Answer:

4.50%

Explanation:

Note:<em> Question is incomplete but very similar one is attached as picture below</em>

Current ROE = Net Income / Equity = $21,000 / $280,000 = 7.50%

Current Inventory = $210,000

Target Current ratio = 2.70

1. Current assets at target Current ratio = Current Liabilities * Target current ratio = $70000 * 2.70 = $189,000

2. Reduction in Inventories = Present Current assets - Current assets under target current ratio

Reduction in Inventories = $14000 + $70000 + $210000 - $189000

Reduction in Inventories = $105000

3. Reduction on common equity using sale of inventory = Current Equity - reduction

Reduction on common equity using sale of inventory = $280,000 - $105,000

Reduction on common equity using sale of inventory = $175,000

4. Change in ROE = New ROE - Current ROE

Change in ROE = [21000 / 175000] - 7.50%

Change in ROE = 12% - 7.50%

Change in ROE = 4.50%

4 0

3 years ago