Read the following short scenario. Then select the response that best describes your views.

The agreed cost of an item to be purchased by a business on credit is $4,000. The applicable cost will be debited to advertising

Hoochie [10]

Answer:

$4,480

Explanation:

The total amount to be recorded as expense would include the cost of the item purchased an the values of the applicable taxes.

As such, the advertising expense would include the value of the goods and services tax as well as the provincial sales tax with both tax rates applied to the applicable cost.

Goods and services tax = 5% × $4,000

= $200

Provincial sales tax = 7% × $4,000

= $280

Total debit to advertising expense

= $4,000 + $200 + $280

= $4,480

7 0

3 years ago

Jefferson Co. uses the following standard to produce a single unit of its product: Variable overhead $6 (2 hrs. per unit @ $3/hr

tankabanditka [31]

Answer:

B. 6,000U

Explanation:

The total variable overhead variance shall be calculated using the following formula:

Variable overhead variance=(Actual units produced*Standard hours per unit* Standard rate per hour) - (Actual variable production overhead cost of actual production)

Standard rate per hour=$3

Standard hours per unit=2

Actual units produced=24,000

Actual variable production overhead cost of actual production=$150,000

Variable overhead variance=(24,000*2*3-150,000)

=(144,000-150,000)

=$6,000U

So the answer is B. 6,000U

7 0

4 years ago

At the end of the year, a company has a $1,200 debit balance in Manufacturing Overhead. As a result, the company:a.makes an adju

Nonamiya [84]

Answer:

d. makes an adjusting journal entry by debiting Cost of Goods Sold for $1,200 and crediting Manufacturing Overhead for $1,200.

Explanation:

The debit balance of $1,200 in the Manufacturing Overhead account represents under-applied overhead. To ensure that the Cost of Goods Sold is accurate, the debit balance is debited to the Cost of Goods Sold while the corresponding credit goes to the Manufacturing Overhead account.

5 0

3 years ago

Carper Company is considering a capital investment of $390,000 in additional productive facilities. The new machinery is expecte

VARVARA [1.3K]

Answer:

(1) Payback period is 4.588 years or 4 years and 215 days

(2) 5.13%

Explanation:

(1)

Payback period is the time period in which Initial Investment made in the project is recovered in the form of cash inflows.

Payback period = Initial Investment / Annual net cash flow

Payback period = $390,000 / $85,000 = 4.588 years = 4 years and 215 days

(2)

As per given data

Net Income = $20,000

Initial Investment = $390,000

Annual rate of return is the ration of net income to the investment made in the project.

Annual rate of return = Annual net Income / Initial Investment

Annual rate of return = ($20,000 / $390,000) x 100 = 5.13%

8 0

3 years ago

Read 2 more answers

Assume that on February 1, Procter & Gamble (P&G) paid $729,600 in advance for 2 years’ insurance coverage. Prepare P&am

Readme [11.4K]

Answer:

Journal entry on February 1:

Debit Prepaid Insurance $729,600

Credit Cash $729,600

Annual adjusting entry on June 30:

Debit Insurance Expense $152,000

Credits Prepaid Insurance $152,000

Explanation:

On February 1, Procter & Gamble (P&G) paid $729,600 in advance for 2 years’ insurance coverage. The company records the insurance as the prepaid Insurance:

Debit Prepaid Insurance $729,600

Credit Cash $729,600

On Jun 30, the last day of the following 5 months, the company records an adjusting entry that Credits Prepaid Insurance for $152,000 ($729,600 divided by 24 months times the 5 months that will be prepaid as of Jun 30) and Debits Insurance Expense for $152,000

Debit Insurance Expense $152,000

Credits Prepaid Insurance $152,000

7 0

3 years ago