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marusya05 [52]
3 years ago
12

Hoffman, Inc. adjusts its books each month but closes its books at the end of the year. The trial balance at March 31 before adj

ustments is as follows: Debit Credit Cash $ 10,940 Accounts Receivable 9,640 Supplies 1,320 Prepaid Insurance 3,200 Equipment 27,000 Accumulated Depreciation: Equipment $ 10,800 Unearned Service Revenue 6,600 Capital Stock 5,300 Retained Earnings 23,500 Dividends 1,580 Service Revenue Earned 17,190 Salaries Expense 7,900 Utilities Expense 410 Rent Expense 1,400 $ 63,390 $ 63,390 According to service contracts, $4,830 of the Unearned Service Revenue has been earned in March. The amount of Service Revenue Earned to be reported in the March income statement is:
Business
1 answer:
serious [3.7K]3 years ago
5 0

Answer:

$22,020

Explanation:

Given, (Before Adjustment)

Unearned Service Revenue $6,600

Service revenue $17,190

The adjusting entry to record the expired unearned revenue is

Debit     Unearned Service Revenue     $4,830

Credit          Service revenue                   $4,830

Therefore, the amount of Service Revenue Earned to be reported in the March income statement is as follows:

Service revenue before adjustments              =   $17,190

<u>Unearned Service Revenue earned in March =  $4,830 </u>

Service revenue after adjustment                 = $22,020

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Answer:

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Level capacity strategy

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Read 2 more answers
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $940,000,
Tanya [424]

Answer:

a. Year 0 Net Cash Flows = $984,000

b. We have:

Year 1 net operating cash flows = $306,159

Year 2 net operating cash flows = $332,986

Year 3 net operating cash flows = $261,479

c. Additional Year 3- cash flow = $504,877

d. The machine should be purchased.

Explanation:

We start by first calculating the following:

Initial Investment = Base Price + Modification Cost = $940,000 + $25,000 = $965,000

Useful Life = 3 years

Depreciation in Year 1 = 0.3333 * $965,000 = $321,634.50

Depreciation in Year 2 = 0.4445 * $965,000 = $428,942.50

Depreciation in Year 3 = 0.1481 * $965,000 = $142,916.50

Book Value at the end of Year 3 = $965,000 - $321,634.50 - $428,942.50 - $142,916.50 = $71,506.50

After-tax Salvage Value = Salvage Value - (Salvage Value - Book Value) * Marginal tax rate = $624,000 – ($624,000 - $71,506.50) * 25% = $485,877

Initial Investment in NWC = $19,000

We can now proceed as follows:

a. What is the Year 0 net cash flow?

Year 0 Net Cash Flows = Initial Investment + Initial Investment in NWC = $965,000 + $19,000 = $984,000

b. What are the net operating cash flows in Years 1, 2, 3?

Year 1 net operating cash flows = (Pretax Cost Saving * (1 - tax)) + (tax * Depreciation in year 1) = ($301,000 * (1 – 0.25)) + (0.25 * $321,634.50) = $306,159

Year 2 net operating cash flows = (Pretax Cost Saving * (1 - tax)) + (tax * Depreciation in year 2) = ($301,000 * (1 – 0.25)) + (0.25 * $428,942.50) = $332,986

Year 3 net operating cash flows = (Pretax Cost Saving * (1 - tax)) + (tax * Depreciation in year 3) = ($301,000 * (1 – 0.25)) + (0.25 * $142,916.50) = $261,479

c. What is the additional Year 3- cash flow (i.e. after tax salvage and the return of working capital)?

Additional Year 3- cash flow = NWC recovered + After-tax Salvage Value = $19,000 + $485,877 = $504,877

d. If the project's cost of capital is 12%, should the machine be purchased?

This can be determined from the net present value (NPV) calculated as follows:

NPV = -$984,000 + ($306,159/1.12^1) + ($332,986/1.12^2) + ($261,479/1.12^3) + ($504,877/1.12^3) = $100,287.71

Since the NPV of the machine of $100,287.71 is positive, the machine should be purchased.

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The sum of the <u>Total assets</u> plus <u>total fixed assets</u> results in <u>total assets</u>.

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Question c)

The subtraction of the <u>cost of good sold</u> from <u>net sales</u> is equal to the <u>gross margin</u>

Question d)

The subtraction of <u>Operating expenses</u> from <u>gross margin</u> results in the <u>Net Operating profits, before the taxes.</u>

Question e)

The subtraction of <u>Taxes</u> from <u>Net Profit before tax</u> results in <u>Net profit after taxes</u>

Question f)

The division of <u>Net profit after tax </u>over the <u>Net saves</u> gives you the <u>Net profit margin percentage.</u>

Question g)

The division of <u>Net profit Margin percent</u> over the <u>asset turnover </u>results in a <u>return on assets. </u>

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3 years ago
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