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tresset_1 [31]
2 years ago
11

On December 31, 2015, Howells, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost

for financial statement and income tax purposes. The change will result in a $2,000,000 increase in the beginning inventory at January 1, 2015. Assume a 30% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is Group of answer choices $0. $1,400,000. $1,750,000. $2,500,000.
Business
1 answer:
il63 [147K]2 years ago
5 0

Answer:

$1,400,000

Explanation:

According to the scenario, computation of the given data are as follows,

Increase in beginning inventory = $2,000,000

Income tax rate = 30%

So, we can calculate the effect on beginning retained earning by using following formula,

Cumulative effect = Increase beginning inventory × (1 -  tax rate)

= $2,000,000 × ( 1 - 30%)

= $2,000,000 × 70%

= $1,400,000

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valkas [14]
The vice president and some other people i think<span />
7 0
3 years ago
Bryant Company has a factory machine with a book value of $93,100 and a remaining useful life of 5 years. It can be sold for $27
NISA [10]

Answer:

The old machine should be replaced.

Explanation:

Note: See the attached excel file for the the analysis showing whether the old machine should be retained or replaced.

From the attached excel file, the following calculation are made:

Variable Manufacturing cost of Retain = Initial Variable Manufacturing cost * remaining useful life of old machine = $592,600 * 5 = $2,963,000

Variable Manufacturing cost of Replace = New Variable Manufacturing cost * Remaining useful life of new machine = $505,500 * 5 = $2,527,500

From the attached excel, it can be observed that the total cost of Retain is $32,200 higher than the total cost of Replace. This therefore implies that the old machine should be replaced.

Download xlsx
6 0
3 years ago
Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets
nadya68 [22]

Answer:

$ 49,640

Explanation:

The question is asking for PLANNING BUDGET

Planning Budget does not in anyway mean flexible budget.

So the quantity of units for Planning Budget would be what the company budgeted that is 7,300 units

The next step in the solution to the question will be to know the cost per unit. For Direct Labor the price given is $ 6.80 per unit

Total Direct Labor for May in the planning budget would be 7,300 X 6.80 = $ 49,640

6 0
3 years ago
Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual i
nignag [31]

Answer:

Sep 6 Debit inventory $ 1740, Credit Accounts payable $1740

Sep 9 Debit inventory $40 , Credit freight expense $40

Sep 10 Debit Accounts payable $56, Credit inventory $56

Sep 12 Debit Accounts receivable $650, Credit Revenues $650

           Debit Cost of Sales $450, Credit  Inventory $450

Sep 14 Debit Sales return $45, Credit Accounts Receivable $45

           Debit Inventory $34, Credit Cost of sales $34

Sep 20 Debit Accounts receivable $730, Credit Revenues $730

            Debit Cost of Sales $560 , Credit Inventory $560

Explanation:

The Question is incomplete but its nature shows that it requires journal entries for The Sep month transactions.

4 0
3 years ago
Accumulated Depreciation and Depreciation Expense are classified, respectively, as _____. (A) asset, contra liability (B) expens
andrew-mc [135]

Answer:

(D) contra asset, expense

Explanation:

Accumulated depreciation is a contra asset. When preparing ledger accounts, it will be credited hence will have a credit balance.It is also recorded in the balance sheet. On the other hand, depreciation expense is considered an operating expense. It is included as an item in the income statement when calculating a business's net income.

7 0
3 years ago
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