Suppose you won $15 on a lotto ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. The price of candy bars is $0.75 and the price of peanuts is $1.50.
a. Complete the table below showing the alternative combinations of the two products that are available.
Instructions:Enter only whole numbers.
Consumption Alternatives
Goods A B C D E F
Candy Bars 0 4 8 12 16 20
Bags of Peanuts
b. Use the data in the above table to plot a budget line in the graph with candy bars on the horizontal axis.
Answers
Answer:
a)
candy bars bags of peanuts
20 0
16 2
12 4
8 6
4 8
0 10
b)
I attached the budget line graph
Related Questions
Byron Books Inc. recently reported $14 million of net income. Its EBIT was $22.4 million, and its tax rate was 30%. What was its interest expense? [Hint: Write out the headings for an income statement, and then fill in the known values. Then divide $14 million of net income by (1 - T) = 0.7 to find the pretax income. The difference between EBIT and taxable income must be interest expense. Use this same procedure to complete similar problems.] Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary. Do not round intermediate calculations.
Answers
Answer:
interest expense = $2,400,000
Explanation:
net income = (EBIT - interest expense) x (1 - 30)
$14,000,000 = ($22,400,000 - interest expense) x 0.7
$14,000,000 / 0.7 = $22,400,000 - interest expense
$20,000,000 = $22,400,000 - interest expense
interest expense = $22,400,000 - $20,000,000 = $2,400,000
Performance management:______________.a. Requires the courage to have difficult conversationsb. Cannot be accomplished well without good informationc. Means providing concrete exemplars to calibrate subjective perceptionsd. Should require collecting information from different sources and perspectivese. All of the above
Answers
Answer:
e. All of the above
Explanation:
Performance management is an activity that is done by management in the entire company. The entire process starts from collecting good quality information about the set standards and the actual performance.
When the management chooses to have some difficult conversations that is about areas which are not considered to improve they tend to increase the scope of improvement in those areas also.
This entire process requires huge co-operation from the entire business unit, employees, workers, and entire staff.
The business should always be run as a team task. Further the management shall describe the entire work to each team properly. And broader the information areas, more advanced performance will be regulated and better scope of improvement will be observed.
Thus, all the stated statements are true and correct about performance management.
Some people argue that “the only beneficiary of the entrepreneurial wealth is the entrepreneur him/herself” Do you agree? Why or why not?
Answers
Answer: I don't agree.
Explanation:
I do not agree that the only beneficiary of the entrepreneurial wealth is the entrepreneur himself/herself. Firstly, an entrepreneur is someone who has a business and takes all risks in order to make profit.
When an entrepreneur creates a business, he or she employs people who work for the entrepreneur and they get paid for the work done. In this way, the entrepreneur is contributing to the society.
Some entrepreneurs also give back to the society in form of scholarships, creating awareness on important issues etc. Furthermore, by setting up a business, the government taxes them and the tax can be utilized for the betterment of the country.
With the above explanation, the only beneficiary of the entrepreneurial wealth is not the entrepreneur him/herself. The whole society benefits.
For the past 10 years, Tony was an agent for It’s a Wonderful Life Insurance Company. While his career started out strong, Tony got involved in some transactions involving cash that violated his company’s ethical policies, and they terminated him as an agent last month, but did not notify Tony’s clients of his termination, and have not yet collected company forms and logos from Tony. Last week, Christopher, a long-time client of Tony’s, purchased a new It’s a Wonderful Life life insurance policy from Tony to cover the costs of his newborn child’s college education. The policy binder indicated that the insurance was in force as soon as Christopher signed the application and paid the premium (since Christopher was a long-time customer of Tony and the Insurance Company). Which of the following statements is correct?
A. The life insurance policy is not in force because Tony was no longer an agent of It’s a Wonderful Life Insurance Company.
B. The policy is in effect because Tony had the apparent authority to issue the policy.
C. The policy is in effect because Tony had the implied authority to issue the policy.
D. The policy is in effect because Tony had the express authority to issue the policy.
Answers
Answer:
C. The policy is in effect because Tony had the implied authority to issue the policy.
Explanation:
In the situation of Tony, it could be concluded safel that he has the implied authority due to the fact that, most of the company's forms and logos are still with him. And, also, none of the company's customers were notified about the termination of Tony's contract thereby invalidating him as being one of the staff of the company.
Better writing helps make your efforts more ___________.A. effectiveB. analyticalC. complexD. None of the above
Answers
Answer:
A. effective
Explanation:
As more and more one writes better, there will be communication of right message and ideas that will be passed across to the audience. As with other disciplines, continuous practice would make one to be better in terms of writing .There should also be search for knowledge which will assist to develop writing skills.
Through continuous writing, one's writing will be more effective having come across different hurdles. The hurdles here means challenges one would encounter at the beginning but which have now become Surmountable due to continuous practise.
Suppose you bought a bond with an annual coupon of 7% one year ago for $1,010. The bond sells for $985 today. A. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?B. What was your total nominal rate of return on this investment over the past year? C. If the inflation rate last year was 3%, what was your total real rate of return on this investment?
Answers
Answer:
(a) $45
(b) 4.45%
(c) 1.4%
Explanation:
Mentioned that,
The Value of bond one year ago is $1,010
The Annual coupon rate is 7%
The Selling value of bond today is $985
The Face value is $1,000
Based on the above information, the calculations are shown below:
a. Total dollar return on this investment is
= Current bond price - previous year price + Coupon payment
= $985 - $1,010 + ($1,000 × 7%)
= $985 - $1,010 + $70
= $45
(b) The total Nominal rate of return on this investment is
= [(Current bond price - previous year price + Coupon payment) ÷ previous year price]
= [($985 - $1,010 + ($1,000 × 7%)) ÷ $1,010]
= $45 ÷ $1,010
= 0.0445
= 4.45%
(c) In case when Inflation rate last year is 3%
The Total real rate of return is
= [(1 + Nominal rate) ÷ (1 + Inflation rate)] - 1
= [(1 + 4.45%) ÷ (1 + 3%)] - 1
= 1.0140 - 1
= 0.0140
= 1.4%
Judge Karen, a state appellate court judge, decides that the precedent for the case she is hearing is no longer correct due to technological changes. Her decision to overturn the case must be followed by___________.
Answers
Answer:
Increased publicity
Explanation:
if a judge overturns a case from a trial court and rejects precedent, the judge should get publicity for her decision and modification of the precedent so that it becomes a new way or basis of judging similar cases. In other words if judge Karen decides that the precedent before her to judge the case is outdated as a result of technological changes, she will decide on the case before her based on what she believes the precedent should reflect(new technologies) and this becomes the new basis for judging all such cases and as a result should be publicised for other judges to take note
Tim is a single, cash-method taxpayer with an AGI of $50,000. In April of this year, Tim paid $740 with his state income tax return for the previous year. During the year, Tim had $4,200 of state income tax and $15,300 of federal income tax withheld from his salary. In addition, Tim made estimated payments of $1,020 and $1,540 for state and federal income taxes, respectively. Finally, Tim expects to receive a refund of $380 for state income taxes when he files his state tax return for this year in April next year. What is the amount of taxes that Tim can deduct as an itemized deduction
Answers
Answer: $5960
Explanation:
Based on the analysis and the information provided in the question, the amount of taxes that Tim can deduct as an itemized deduction will be the addition of the Tim's state income tax return for the previous year, the state tax that was held during the year and the estimated state tax payment. This will be:
= $740 + $4200 + $1020
= $5960
Therefore, the amount of taxes that Tim can deduct as an itemized deduction will be $5960.
What are the differences between first-generation OD and second-generation OD? What are the major changes between these two generations of OD practice? What do you think have been the losses or gains in the second generation of OD practice?
Answers
-action research, survey feedback, and sociotechnical systems.
2nd generation: emphasized larger, system-wide concerns such as culture, change management, and organizational development.
I believe there is a little big of both losses and gains. OD is not a one-size fits all approach. therefore different organizations require different aproaches. it is a gain in the sense that we have new experience and research programs, academics have built on the previous practices so they are new and improved. But it is a loss because maybe for a certain company a 1st generation OD practice would work best but it has been over looked or changed so much because of the 2nd generation "gains" they never try it out.
The types of resources needed by a business are financial, physical, and labor resources.
a) true
b) false
Answers
Answer:
a. True
Explanation:
The above is true because financial resources are needed to enable a business meet up with its daily activities in terms of funding. Also, physical resources are buildings, machineries and assets in general which are required to carry a business daily operations. The labor resources, which is the most important resources are the workforce that carry out the day to day operations of a business.
Salesforce case assignment rules are based on elapsed time.a) trueb) false
Answers
Answer:
b) false
Explanation:
Salesforce case assignment deals with a company's lead generation strategies which can either be based on manual operations or automatic processes. For example, Web to Case strategy, Email to Case technique, On-Demand Email to Case system approach, etc.
Consequently, Salesforce case assignment rules run instantly, oftentimes on case creation and are not time-based
Hence, the correct answer is FALSE
Core competencies in organizations generally relate to:_________.A) costB) qualityC) timeD) flexibilityE) all of the above
Answers
The core competencies of a company refers to the resources and capabilities embodied in the Internal structures which serves as strategic advantages of the organization as well.
In other word, the core competencies are set of skills and abilities that make organization different from others.
Example of core competencies includes Communication, Flexibility, Adaptability, Interpersonal skills, Leadership skills, Problem-solving skills etc
We can conclude that the core competencies generally relate to quality and flexibility of the staffs or employees.
In conclusion, the Option B and D is correct.
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How many t-shirts would you recommend George order: 5,000, 7,500 or 10,000?
Answers
Answer:
10,000 t-shirts
Explanation:
Ordering 10,000 t-shirts will be adequate for George as this will increase his sales and profits and not only this he will also be getting discount on the purchase of the t-shirts. If any t-shirts are left they can be sold for a lower price to its regular customers or may be sold to another shopkeeper who sells lower priced t-shirts.
Question 1
1 pts
Having a global vision simply means having a willingness to sell outside
one's national borders if, and when, the opportunity arises.
True or
False
Answers
Answer:
False
Explanation:
Having a global vision I believe means that a management does recognize and very well reacts to international marketing opportunities. The management will be using different effective marketing strategies. The management is also very much aware of threats from their foreign competitors in all the different markets they are into.
Based on this short and concise explanation I just made, we can see that having a global vision does not mean having a willingness to sell outside one's national borders if, and when, the opportunity arises.
Simon Company's year-end balance sheets follow.
At December 31 2014 2013 2012
Assets
Cash $ 31,600 $ 35,500 $ 37,400
Accounts receivable, net 88,500 61,000 51,000
Merchandise inventory 112,000 83,600 52,500
Prepaid expenses 10,400 9,450 5,000
Plant assets, net 278,000 257,000 234,000
Total assets $ 520,500 $446,550 $ 379,900
Liabilities and Equity
Accounts payable $ 129,200 $ 73,000 $ 50,000
Long-term notes payable secured by
mortgages on plant assets 96,000 100,000 82,200
Common stock, $10 par value 162,000 162,000 162,000
Retained earnings 133,300 111,550 85,700
Total liabilities and equity $ 520,500 $446,550 $ 379,900
The company's income statements forthe y ears ended December 31, 2014 and 2013, follow.
For Year Ended December 31Sales
2014 2013
Sales $675,000 $630,000
Cost of goods sold $398,250 $390,600
Other operating expenses 202,500 144,900
Interest expense 12,300 13,000
Income taxes 9,550 8,925
Total costs and expenses 622,600 557,425
Net income $ 52.400 $ 72,575
Earnings per share $ 3.23 4.48
Evaluate the company's efficiency and profitability by computing the following for 2014 and 2013.
1. Profit margin ratio
2. Total Asset turn over.
3. Return on total asset
Answers
Answer:
1. 2014 = 11 % and 2013 = 15 %
2. 2014 = 1.30 times and 2013 = 1.41 times
3. 2014 = 14.27 % and 2013 = 21.16 %
Explanation:
1. Profit margin ratio
Profit margin ratio = Earnings Before Interest and Tax / Sales × 100
Therefore,
Profit margin ratio (2014) = ($ 52.400 + $ 9,550 + $12,300) / $675,000 × 100
= 11 %
Profit margin ratio (2013) = $ 72,575 + $ 8,925 + $13,000) / $630,000 × 100
= 15 %
2. Total Asset turnover.
Total Asset turnover = Sales ÷ Total Assets
Therefore,
Total Asset turnover (2014) = $675,000 ÷ $ 520,500
= 1.30 times
Total Asset turnover (2013) = $630,000 ÷ $446,550
= 1.41 times
3. Return on total asset
Return on total asset = Earnings Before Interest and Tax (EBIT) / Total Assets × 100
Therefore,
Return on total asset (2014) = $ 52.400 + $12,300 + $9,550 / $ 520,500 × 100
= 14.27 %
Return on total asset (2013) = $ 72,575 + $8,925 + $13,000 / $446,550 × 100
= 21.16 %
Pioche Company is considering selling a "premium" version of one of its products. The following information is available. The additional processing costs are the costs needed to transform the units from "standard" to "premium."Number of units produced 100,000Selling price of "standard" units $10 per unitAdditional processing costs $500,000Selling price of "premium" units $17 per unitBefore any additional processing costs, the total production cost for the 100,000 units is $900,000. What will be the change in Pioche Company's net income if the company decides to sell a "premium" version of this product?A- Decrease of $400,000B- Increase of $200,000C- No changeD- Decrease of $200,000E- Increase of $100,000
Answers
Answer: B- Increase of $200,000
Explanation:
The extra revenue that will be gained if the company sells premium units will be;
= Premium price - normal price
= 17 - 10
= $7
There are 100,000 unit so the extra revenue is;
= 7 * 100,000
= $700,000
The increase in Net income will be;
= 700,000 - additional processing costs
= 700,000 - 500,000
= $200,000
How do financial managers tend to value all assets in the same terms?a. By evaluating cash flowsb. By qualifying cash flowsc. By interpreting cash flowsd. By estimating cash flows
Answers
Answer:
a. By evaluating cash flows.
Explanation:
In Economics, an asset can be defined as any resources of economic value or items of monetary value that is being owned by an individual, country or business organization to generate income and derive benefits from.
Generally, assets can be classified broadly into four (4) categories and these are; capital assets, fixed assets, intangible assets, and financial assets.
Financial managers tend to value all assets in the same terms by evaluating cash flows.
Cash flow can be defined as the net amount of cash and cash-equivalents that is flowing into (received) and out (given) of a business. There are three (3) main components of the cash flow; investing, operating and financing.
Most people recognize Campbell's as a brand of soup, but Campbell's also manufactures Pace Picante Sauce, Pepperidge Farms products, Prego Sauce, Swanson Broth, and V8 juice. Campbell's International division offers more than 20 brands of soups, sauces, beverages, and baked snacks in the Asia Pacific region, Greater Europe and Latin America. Products such as Arnott's biscuits and crackers and Bià Band soups are well known overseas. Campbell's products are sold in more than 120 countries.Refer to Campbell's. Of the following what is probably Campbell's biggest labeling concern in its international markets?1. translating ingredient, 2. promotional, 3. instructional
Answers
Answer:
2. promotional
Explanation:
Even though the 3 options may represent a serious problem for Campbell's soup, but personally I believe that out of the 3, the most serious one is promotional. Many companies have very serious issues with translations, and not only small companies. E.g. when Pepsi ran an ad in China where it meant to say "Come alive with Pepsi", it really said "Pepsi brings your ancestors form the dead", and unless you like zombies, that is not a good idea.
For example, I really hope and assume that Goldfish baked tortillas (Pepperidge Farm) aren't made with real goldfish. But considering Asian countries that eat cats, dogs, bats and about anything that moves by itself, who knows. Maybe they expect them to be from real goldfish.
A corporation reports the following year-end balance sheet data. The company's equity ratio equals: Cash $ 58,000 Current liabilities $ 93,000 Accounts receivable 73,000 Long-term liabilities 44,000 Inventory 78,000 Common stock 118,000 Equipment 163,000 Retained earnings 117,000 Total assets $ 372,000 Total liabilities and equity $ 372,000a. 0.37 b. 2.25 c. 0.58 d. 0.63 e. 1.41
Answers
Answer:
Option D. 0.63
Explanation:
Equity ratio can be calculated by dividing Total equity and total
assets as given in the question
DATA
Total assets = $372,000
Total Equity and liabilities = $372,000
Solution
Total equity = total assets - total liabilities
Total equity = $372,000 - $93,000 - $44,000
Total equity = $ 235,000.
Equity Ratio = Total Equity / Total Asset.
Equity Ratio = $ 235,000 / $ 372,000
Equity Ratio = 0.63.
Which of the new four ps encompasses the old four ps as well as a range of other marketing activities that might not fit well into the old view of marketing?a) programs.b) processes.c) promotion.d) people.e) performance.
Answers
Answer: programs
Explanation:
Programs encompasses the old four ps as well as a range of other marketing activities that might not fit well into the old view of marketing.
It should be noted that a program has to do with the group of projects which are related and also managed in a manner which is coordinated in order to obtain benefits that are not available when one manages them individually.
Philip Morris expects the sales for his clothing company to be $530,000 next year. Philip notes that net assets (Assets − Liabilities) will remain unchanged. His clothing firm will enjoy a 10 percent return on total sales. He will start the year with $130,000 in the bank.What will Philip's ending cash balance be?
Answers
Answer:
$183,000
Explanation:
Calculation for the ending cash balance
Opening cash balance $130,000
Add Profit $53,000
(10% Return on total sales× Sales amount of $530,000)
Ending cash balance $183,000
Therefore the ending cash balance will be the amounts of $183,000
Class tracking is used to categorize income and expense transactions from different sectors. What are 2 options for assigning Classes?A. Assign one class to each row in a transaction. B. Assign a class in Bill transactions only. C. Assign one class to an entire transaction. D. Assign a class in Sales Invoices only.
Answers
Answer:
A. Assign one class to each row in a transaction.
C. Assign one class to an entire transaction.
Explanation:
You can use class tracking in QuickBooks to categorize sales and expenses according to different locations, classes or even divisions. E.g. if you are a retailer, you can classify your sales by classes like men's, women's and children clothes. Or you can also track your sales by online sales or sales made on a brick and mortar location.
You can also assign one class to an entire transaction in order to determine if it resulted in a gain or a loss.
Sam is skilled at making both necklaces and earrings. Sam has no preference between making necklaces or earrings since he earns the same amount from the two activities. If the selling price of earrings decreases from $40 to $20, then Sam's opportunity cost of making necklaces ______________ and making necklaces is now ______________ profitable than making earrings. Suppose that the necklaces market consists of several suppliers like Sam who are skilled at making both necklaces and earrings. Which of the following is likely to happen to the supply curve of necklaces when the price of a earrings decreases?
A. It does not change
B. It shifts to the left
C. It shifts to the right
Answers
Answer and Explanation:
Since in the question it is mentioned that Sam is skilled in both necklaces and earrings also he has no preference and the same amount is earned
In case when the selling price of earring reduced from $40 to $20 so the opportunity cost of necklace is decreased so automatically it would be more profitable
Also when the price is decreased so the supply curve would be shifted to the right
The MEC Company has two divisions: the Computer division and the Printer division. Cost and revenue information for the two divisions for the year is as follows: Computer Printer Division DivisionRevenue...................................................................... $1,100,000 $750,000Fixed costs:Costs unique to each division........................................ 450,000 375,000Costs allocated by corporate headquarters.................... 50,000 70,000Variable cost per unit.................................................... 7 6Unit sales of each division’s product.............................. 75,000 52,000Prepare a segment margin income statement showing each division’s contribution and segment margins and the overall company profit.Segment Income StatementTotal Company Computer Division Printer DivisionRevenue $1,850,000 $1,100,000 $750,000Variable Costs - 837,000 - 525,000 - 312,000Contribution Margin 1,013,000 575,000 438,000Traceable Fixed Costs - 825,000 - 450,000 -375,000Division (Segment) Margin 188,000 125,000 63,000Common Fixed Costs - 120,000Net Income $ 68,000How did they get common fixed costs?
Answers
Answer:
Segment Income statement
Explanation:
In segment reporting, common costs were not allocated. Both the segments have a positive margin which is covering all its variable cost and contributing towards the common fixed cost but excluding common fixed cost which is non-traceable and are allocated to the segment.
Segment Income Statement
Computer Division Printer Division Total
Revenue $1,100,000 $750,000 1850,000
Variable cost (525,000) (312,000) 837,000
Contribution margin 575000 438000 1,013,000
Costs unique to each division (450,000) (375,000) 825,000
Segment Margin 125,000 63,000 188,000
Fixed Cost (60,000) (60,000) 120,000
Net Income 65,000 3,000 68,000
If common fixed cost is fixed by 50,000 and 70,000 for computer and printer division respectively then
Segment Margin 125,000 63,000 188,000
Common fixed cost 70,000 50,000 120,000
Net Income 55,000 13,000 68,000
True or False: You should argue to convince your opponent, not to convince the third party. True or False
Answers
Answer:
False
Explanation:
Your opponent may always disagree it is better to convince the customers that way you can make more money. So focus on convincing the third party.
You produce an invoice for $1,346, increasing the Construction Income account. Show what other account is increased using the extended accounting equation.
Answers
Answer:
While the Construction Income account is increased by $1,346 (Equity - Retained Earnings, the other account that is increased is the Accounts Receivable account (Assets) in the extended accounting equation.
Explanation:
The accounting equation is Assets = Liabilities + Equity. This implies that every business transaction affects Assets, Liabilities, and Equity and always keep the equation in balance. A transaction may also affect only one side of the accounting equation. For example, cash received from customers (on credit account) will increase the Cash account and decrease the Accounts Receivable account, which only affects the Asset side of the equation.
In accounting for a contingent liability, if the likelihood of the obligation is probable but the amount cannot be estimated, a company must:_____.a. recognize the liability and report it on the balance sheet.
b. do nothing.
c. not recognize or disclose the liability until it is certain and the exact amount is known.
d. provide disclosure in the footnotes to the financial statements.
Answers
Answer: d. provide disclosure in the footnotes to the financial statements.
Explanation:
A contingent liability is an obligation that a company might owe in future depending on the outcome of an event such as a law suit.
To record a contingent liability in the books, two conditions must be satisfied;
Loss must be probableAmount must be estimableIf these two conditions are not satisfied then the contingent liability may simply be disclosed as a footnote in the financial statement. The amount here is not estimable so can be disclosed as a footnote.
During an unpredictable event, the coverage for the damage to a third person in which the insured party is liable is a contingent liability. Examples are goods warranties, lawsuits etc.
The correct answer is:
Option d. provide disclosure in the footnotes to the financial statements.
This can be explained as:
If during a trial or any event when the third party is insured then the owner business needs to remunerate the damage losses.For the contingent liability, the losses must be presumable and the damaged sum should be computable.If the above-stated circumstances are not satisfied then it is published in the footnote.Therefore, the amount is disclosed in the footnote.
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Suppose Ruston Company had the following cash flow results for 2019: Net Cash Flow from Operating Activities of $9,100,000 Net Cash Flow from Investing Activities of -$4,300,000 Net Cash Flow from Financing Activities of $3,400,000 Create a statement of cash flows with amounts in thousands. What is the Net Cash Flow?
Answers
Answer:
Explanation:
Suppose Ruston Company had the following cash flow results for 2019: Net Cash Flow from Operating Activities of $9,100,000 Net Cash Flow from Investing Activities of -$4,300,000 Net Cash Flow from Financing Activities of $3,400,000 Create a statement of cash flows with amounts in thousands. What is the Net Cash Flow?
8. Cracked Mirror, a local rock group, contracts to play for your high school prom. A week before the
dance, the group cancels its appearance. A teacher finds out that the band has instead booked a
concert elsewhere at the same time as the prom that will pay them $800 more. If you sue the band
for damages, what would be an appropriate amount and why?
Answers
Answer: The amount of money that they were paid for the high school prom. This is because that's the amount that has been sent on the band.
Explanation:
From the question, we are informed that Cracked Mirror, a local rock group, contracts to play for your high school prom and that a week before the
dance, the group cancels its appearance.
We are further told that a teacher finds out that the band has instead booked a
concert elsewhere at the same time as the prom that will pay them $800 more.
Based on the above information, if the band for damages, the appropriate amount would be the amount that they were paid for the high school prom. This is because that's the amount that has been sent on the band.
Primo Industries collected $105,000 from customers in 2022. Of the amount collected, $25,000 was for services performed in 2021. In addition, Primo performed services worth $40,000 in 2022, which will not be collected until 2023. Primo Industries also paid $72,000 for expenses in 2022. Of the amount paid, $30,000 was for expenses incurred on account in 2021. In addition, Primo incurred $42,000 of expenses in 2022, which will not be paid until 2023.
Required:
a. Compute 2022 cash-basis net income.
b. Compute 2022 accrual-basis net income.
Answers
Answer:
a.
Net Income for 2022 = $33000
b.
Net Income for 2022 = $36000
Explanation:
a.
The cash basis accounting follows that all the transactions should be recorded in the period in which cash is either received or paid out as a result of that transaction rather than in the period to which they relate to.
Thus, the Net Income for 2022 under cash basis will be,
Cash Receipts in 2022
Collections from customer 105000
Less: Cash Payments in 2020
Expenses paid (72000)
Net Income 33000
b.
Under accrual basis, the transactions should be recorded in the period to which they relate to rather than in the period when cash is received or paid out.
Thus, net income for 2022 under accrual basis will be,
Revenue 2022 = 105000 - 25000 + 40000 = $120000
Expenses 2022 = 72000 - 30000 + 42000 = $84000
Net Income = 120000 - 84000 = $36000
a. Net Income for 2022 cash-basis net income. = $33000
b. Net Income for 2022 accrual-basis net income. = $36000
a. The Net Income for 2022 under cash basis is:
Cash Receipts in 2022
Collections from customer 105000
Less: Cash Payments in 2020
Expenses paid (72000)
Net Income 33000
b. The net income for 2022 under accrual basis is:
Revenue 2022 = 105000 - 25000 + 40000 = $120000
Expenses 2022 = 72000 - 30000 + 42000 = $84000
So,
Net Income = 120000 - 84000
= $36000
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