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snow_tiger [21]
2 years ago
6

After the issuance of its year 1 financial statements, Serenity Inc. discovered a computational error of $150,000 in the calcula

tion of December 31, year 1 inventory. The error resulted in a $150,000 overstated in the cost of goods sold for the year ended December 31, year 1. In October, year 2, Serenity paid $500,000 to settle litigation initiated it during year 1. In the financial statements for year 2, the year 1 retained earnings balance, as previously reported, should be adjusted by (ignore income taxes):_________-
a. $350,000 debit
b. $500,000 debit
c. $150,000 credit
d. $650,000 credit
Business
1 answer:
Vladimir79 [104]2 years ago
4 0

Answer: C. $150,000 credit

Explanation:

In the financial statements for year 2, it should be noted that the year 1 retained earnings balance, should be adjusted by $150,000 credit.

The corrections of errors should be treated as the period adjustments before. In this case, the $150,000 overstatement for the cost of goods that was sold in the previous year, will then be credited to the beginning balance of the retained earnings.

Therefore, the correct option is C.

You might be interested in
Jim's Espresso expects sales to grow by 10.3 % next year. Using the following statements and the percent of sales​ method, forec
stepladder [879]

Answer:

Jim's Espresso

The forecasted costs will be :___________

a. Costs                = $110,168

b. Depreciation    = $6,575

c. Net Income      = $70,482

d. Cash                = $16,600

e. Accounts receivable  = $2,283

f. Inventory          = $4,511

g.​ Property, plant, and equipment = $11,085

Explanation:

a) Data and Calculations:

Sales growth = 10.3%

Balance Sheet

Assets                                                         Percentage of sales

                                                                   Current      Forecast

Cash and Equivalents              $15,050     0.07357    $16,600

Accounts Receivable                    2070     0.01012         2,283

Inventories                                    4090     0.01999         4,511

Total Current Assets                $21,210      

Property, Plant and Equipment 10,050     0.04913        11,085

Total Assets                             $31,260

Liabilities and Equity:

Accounts Payable                     $1,580

Debt                                             3930

Total Liabilities                         $5,510

Stockholders' Equity               25750

Total Liabilities and Equity   $31,260

Income Statement:              Current      %              Forecast

                                               Year

Sales                                 $204,560      1              $225,630

Costs Except Depreciation (99,880)     0.48827     (110,168)

EBITDA                              $104,680      0.51173

Depreciation                         (5,960)     0.02914        (6,575)

EBIT                                    $98,720      0.48260

Interest Expense (net)              (410)     0.00200

Pretax Income                    $98,310      0.48059

Income Tax                         (34,409)     0.16821

Net Income                        $63,901      0.31238       $70,482

The forecasts are based on sales of the current year and the next year.

5 0
3 years ago
Your company is about to undertake a major investment project. The project will require an initial outlay of $100 million for fi
Tcecarenko [31]

Answer:

A) initial outlay = $150 million

Cash flow year 1 = [($30 - $25) x 0.6] + $25 = $28

Cash flow year 2 = [($30 - $25) x 0.6] + $25 = $28

Cash flow year 3 = [($30 - $25) x 0.6] + $25 = $28

Cash flow year 4 = [($30 - $25) x 0.6] + $25 + ($25 x 60%) + $50 = $93

B) Using a financial calculator, NPV = -$16.85 million

C) cash flow year 4 should increase by $24.667 million, meaning that the selling price must increase by $$24.667/0.6 = $41.11 million

minimum selling price $25 + $41.11 = $66.11 million

7 0
3 years ago
Harvest master, a maker of farm equipment based in nebraska, is planning to send a u.s. marketing manager to lead a product laun
joja [24]

<span>The options attached to the question above are given below:</span>

<span>A. </span>The culture of the host country is likely to be much more individualistic than U.S. culture is.

 B. The manager will have greater difficulty finding educated workers in the host country than in the United States.

 C. The manager may not be familiar with the host country’s language.

D. The host country will likely tax a larger percentage of the manager’s income than the United States would.

E. The host country will likely have few protections for its workers.

ANSWER

The correct option is D.

A socialist system is a type of economic system in which the factors of production are jointly owned by all the citizens and production affair is regulated by the government. Such a country does not encourage individuals to operate personal business. Thus, such a country will lay high tax on the income of the manager in order to discourage him from selling his machine in their country.

8 0
3 years ago
A FLSA covered enterprise is the related activities performed through unified operation or common control by any period or perso
alexandr402 [8]

Answer:

Is an activity or a public agency

Explanation:

The FLSA represents the Fair Labor Standards Act. It is a federal law and it sets the minimum amount of wages, the record, the overtime as well as employment standards. FLSA stipulates an employee coverage either as an individual coverage or an enterprise coverage

For the enterprise cover as required in this question, an enterprise can only be covered if

1. The enterprise has minimum of two employees

2. The annual volume of sales is a minimum of $500,000

3. The enterprise can also be covered if it carries out activities such as providing medical care for its people, providing preschools or main (secondary or university) schools for children or the enterprise is an hospital. It is also covered if it is a public or government agency.  In order words <u>an activity or a public agency. </u>

6 0
2 years ago
Required: Accounting equation Ans: assets, capital, liabilities SE-2. You are provided the following information: i. Commencemen
Tasya [4]

Answer:

<h2> particular. l.f. Dr. rs. Cr. rs. </h2>

I) bank a/c. 1,00,00.

to capital a/c. 1,00,00

( being business started with bank balance)

II) purchase a/c 40,000.

to bank a/c. 40,000

(being goods purchased on credit)

III) BANK A/C 20,000.

TO GOODS A/C 20,000

(BEING GOODS SOLD ON CREDIT)

IV) FURNITURE A/C. 60,000.

TO BANK A/C. 60,000

(BEING FURNITURE PURCHASED ON CREDIT)

V) BANK A/C. 10,000.

TO FURNITURE A/C 10,000

(BEING FURNITURE SOLD ON CREDIT)

HOPE IT HELPS IM ALSO NOT COMPLETELY PERFECT AT IT

3 0
3 years ago
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