Answer: a. credit to Accumulated Depreciation of $481
Explanation:
Find the monthly depreciation on all the assets;
Communications Equipment
= 9,600 / (8 years * 12 months)
= 9,600/96
= $100
Furniture
= 17,424 / (12 * 12)
= 17,424/144
= $121
Computer
= 12,480 / (4 * 12)
= 12,480/48
= $260
Add that up;
= 260 + 121 + 100
= $481
This figure will be debited to the depreciation expense account every month and credited to the Accumulated depreciation account to account for the reduction in Asset value.
In periods subsequent to an asset transfer from a subsidiary to its parent at a gain, what effects continue on the seller's and buyer's books from a consolidated reporting perspective?
a. retained earnings of the seller are overstated
b. retained earnings of the buyer are overstated
c. retained earnings of the seller are understated
d. retained earnings of the buyer are understated
Answer:
a. retained earnings of the seller are overstated
Explanation:
An asset transfer from a subsidiary to its parent at a gain is an Intragroup transaction. Intragroup transactions must be eliminated otherwise the financial statements would be misleading and not have a faithful representation.
The consequence of this transfer is that the Income of the Seller (subsidiary) increases and this also increases the Retained Income Balance of for the Subsequent years. We should eliminate this Income.
Zach buys a car for $18,900 with 5% interest over 5 years. What is true about this monthly payment loan?
Select the correct answer below:
Zach will pay $4,725 in interest on the loan.
Zach will pay $3,780 each year of his loan.
O Zach will pay $4,725 each year of his loan.
Zach will pay $2,500 in interest on this loan.
Answer:
Zach will pay $4,725 in interest on the loan.
Explanation:
In calculating interest the formula that applies is
I= P x R x T
where I = interest
P = principal amount
R = interest rate
T= time
In the case of Zach
I= $18,900 x 5/100 x 5
I = $18,900 x 0.05 x 5
I =$945 x 5
I =$4,725
Interest for the loan is $4,725
Answer: Zach will pay $2,500 in interest on this loan
Explanation: First, we must calculate Zach's monthly payment.
P=18900⋅ (0.05/12)
________________. = 356.67
1- ( 1 + 0.05/12) ^-60
If the monthly payments are $356.67, then the yearly payback is 356.67⋅12=$4280.04.
And, he will pay that each year for 5 years. So, 4280.04⋅5=$21,400.20 is the total payback amount.
Therefore, Zach will pay 21,400.20−18,900=$2500.20 in interest over the life of the loan.
The balance sheet for Kingbird, Inc. shows the following: total paid-in capital and retained earnings $860,000, total stockholders’ equity $788,400, common stock issued 42,000 shares, and common stock outstanding 36,000 shares.
Required:
Compute the book value per share.
Answer:
$21.9 per share
Explanation:
Book value per share = Total stockholders’ equity/Common stock outstanding
Book value per share = $788,400 / 36,000
Book value per share = $21.9 per share
What distinguishes the true ribs from the false ribs from the floating ribs? What functional advantage is provided by these three types of ribs, i.e., why have three types?
Answer:
Explanation:
For these ribs, the costal cartilage of each attaches to the cartilage of the next higher rib. The last false ribs (11–12) are also called floating (vertebral) ribs, because these ribs do not attach to the sternum at all.
Let understand that the main function of the Ribs is to aid respiration. The rib also serves as a cage to protect vital organ such as Lungs, Heart.
The ribs structure is characterized with 12 thoracic vertebrae.The true ribs are the number 1 to 7 of the thoracic vertebrae, the false ribs are the number 8 to 12 of the thoracic vertebrae and the floating ribs are the number 11 to 12 of the thoracic vertebrae.In conclusion, what distinguish the true ribs from others is that the first seven ribs are connected directly to the sternum which is located at the middle of the chest while the false ribs are linked to the sternum indirectly.
Learn more about the ribs here
brainly.com/question/18917198
On October 1, 2018, Bullseye Company sold 250,000 gallons of diesel fuel to Schmidt Co. at $3 per gallon. On November 8, 2018, 150,000 gallons were delivered; on December 27, 2018. another 50,000 gallons were delivered; and on January 15, 2019, the remaining 50,000 gallons were delivered. Payment terms are 10% due on October 1, 2018, 50% due on first delivery; 20% due on the next delivery; and the remaining 20% due on final delivery. Required: Do the three deliveries each represent a distinct performance obligation, or is there a single performance obligation requiring three deliveries
1. Do each of the three deliveries represent a distinct performance obligation, or is there a single performance obligation requiring three deliveries?2. What amount of revenue should bullseye recognize from this sale during 2018?
Answer:
1) We must follow the revenue recognition principle in order to determine whether these transactions represent one single performance obligation or three separate ones. If revenue can be recognized after each delivery has been made, then each transaction will be considered a separate performance obligation.
Personally, I believe that on November 8, 2018, $450,000 in revenue must be recognized since title of the goods passed from Bullseye to Schmidt. That means that the earning process had been realized. The same for the other transactions, so I would consider them 3 separate performance obligations.
2) total revenue for 2018:
November 8 = $450,000
December 27: $150,000
total = $600,000
Faldo Corp sells on terms that allow customers 45 days to pay for merchandise. Its sales last year were $425,000, and its year-end receivables were $60,000. If its DSO is less than the 45-day credit period, then customers are paying on time. Otherwise, they are paying late. By how much are customers paying early or late
Answer:
Faldo Corp
Customers are paying late by 6.5 days (51.5 - 45)
Explanation:
DSO = Accounts Receivable/Sales last year * 365 days
= $60,000/$425,000 * 365
= 51.5 days
Customers are paying late by 6.5 days (51.5 - 45)
b) Faldo Corp's Days Sales Outstanding (DSO) is an estimate of the number of days it takes Faldo to collect its outstanding accounts receivable. This means that DSO measures how long it takes Faldo's customers to pay an invoice. Faldo can calculate its DSO by dividing the total accounts receivables of last year by the total credit sales of last year. This is then multiplied by 365 days.
On November 1, 2018, Sandra Company borrowed $200,000 cash on a 1-year, 6% note payable that requires Sandra Company to pay both principal and interest on October 31, 2019. Given no prior adjusting entries have been recorded, the adjusting journal entry on December 31, 2018, Sandra Company's year-end, would include a:___________.
Answer:
Credit to Interest Payable of $2,000
Explanation:
Preparation of the adjusting journal entry on December 31, 2018 for Sandra Company's year-end
In a situation where the interest amount has already been accrued but has not yet been paid we going to debit the Interest Expense with amount of $2,000 and credit Interest Payable with the amount of $2,000 which means that
the interest expense amount that has accrued for both the month of November and December 2018 will be calculated as :
Accrued Interest Expense=$200,000 × 0.06 × 2 / 12
Accrued Interest Expense= $2,000
Therefore the the adjusting journal entry on December 31, 2018, Sandra Company's year-end, would include a: CREDIT to Interest Payable of $2,000
social elements common to this work. Note that common contexts are listed toward the top, and less common contexts are listed toward the bottom. According to O*NET, what are common work contexts for Construction Carpenters? Check all that apply.
spend time sitting
wear common protective or safety equipment
face-to-face discussions
exposed to hazardous equipment
spend time using hands to handle, control, or feel objects, tools, or controls
public speaking
Answer: 2.wear common protective or safety equipment
3.face-to-face discussions
4.exposed to hazardous equipment
5.spend time using hands to handle, control, or feel objects, tools, or controls
Explanation: i just took the test :)
Answer:
outdoors, exposed to weather
spend time using hands to handle objects, tools, or controls
exposed to contaminants
Explanation:
Got it right on edge2021
Tatum Company has four products in its inventory. Information about the December 31, 2021, Inventory is as follows: Product 101 102 103 104 Total Cost $161,000 119,400 79,500 40,600 Total Replacement Cost $146,900 112,700 53,000 37,900 Total Net Realizable Value $133,500 145,900 67,100 68,100 The normal profit is 40% of total cost. The normal profit is 40% of total cost. Required:1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products.2. Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry.Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products. Product Total Cost Replacement cost NRV NRV - NP Market Inventory Value 101 102 103 104 Totals Required 1 Required 2 > Required 1 Required 2 Assuming that inventory write-downs are common for Tatum Company, record any necessary year-end adjusting entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record any necessary year-end adjusting entry assuming that inventory write- downs are common for Tatum Company. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal
A review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company's objectives is called a:______
a. vendor analysis
b. portfolio analysis
c. business analysis
d. SWOT analysis
e. concept analysis
Answer:
c. business analysis
Explanation:
A review of the sales, costs, and profit projections for a new product to find out whether they satisfy the company's objectives is called a business analysis.
This ultimately implies that, many organizations and business owners use business analysis to measure the level of satisfaction with respect to the company's objectives and its customers through the process of analyzing or reviewing the sales, costs and profits projection of its new products before pushing them out into the market.
A stock currently sells for $65. The dividend yield is 3.5 percent and the dividend growth rate is 4.8 percent. What is the amount of the dividend to be paid in one year
Answer:
$2.275
Explanation:
Calculation for the amount of the dividend to be paid in one year
Using this formula
D1 =Dividend yield* Stock Amount
Let plug in the formula
D1= .035($65)
D1= $2.275
Therefore the amount of the dividend to be paid in one year will be $2.275
mention at least two reason due to which business is necessary.
Explanation:
Business is essential and promotes the quality of human life for two reasons: for producing economic goods and services and for generating jobs.
Economics is the science that studies and uses the set of actions that use resources to produce and distribute goods and services for consumption whose objective is to assist in the survival and quality of life of individuals. Companies are responsible for producing essential goods and services, such as food, medicine, clothing, etc.
The generation of jobs is also a factor that comes from business, through the human labor force that companies need to operate the business, it is possible to generate income for individuals, strengthen the economy, etc.
A static budget: _________
a. should be compared to actual costs to assess how well costs were controlled.
b. should be compared to a flexible budget to assess how well costs were controlled.
c. is valid for only one level of activity. represents the best way to set spending targets for managers.
d. A planning budget is prepared before the period begins and is valid for only the planned level of activity.
Answer:
Explanation: A planning budget is prepared before the period begins and is valid for only the planned level of activity.
A static budget a planning budget is prepared before the period begins and is valid for only the planned level of activity. The answer is OPTION D.
A static budget is a type of planning budget that is prepared in advance of a specific period, such as a fiscal year or a quarter. It is based on the expected level of activity or production for that period and sets spending targets for various cost categories. However, a static budget is only valid for the planned level of activity and does not adjust for changes in actual activity levels.
To assess how well costs were controlled during the period, the static budget should be compared to the actual costs incurred. This comparison helps identify any variations or differences between planned and actual performance, which can provide valuable insights for future budgeting and cost management decisions.
In contrast, a flexible budget is a more dynamic tool that adjusts for changes in activity levels. It allows managers to see how costs should have behaved based on the actual level of activity achieved, providing a more accurate evaluation of cost control performance.
To learn more about managers, click here.
https://brainly.com/question/32150882
#SPJ2
A large bakery buys flour in 25-pound bags. The bakery uses an average of 1,215 bags a year. Preparing an order and receiving a shipment of flour involves a cost of $10 per order. Annual carrying costs are $75 per bag.
Required:
a. Determine the economic order quantity.
b. What is the average number of bags on hand?
c. How many orders per year will there be?
d. Compute the total cost of ordering and carrying flour.
Answer:
annual demand = 1,215 bags of flour
ordering costs = $10 per order
annual carrying costs = $75 per bag
a. Determine the economic order quantity.
EOQ = √[(2 x S x D) / H]
EOQ = √[(2 x $10 x 1,215) / $75] = 18 bags of flour
b. What is the average number of bags on hand?
average number of bags on hand = 18 / 2 = 9
c. How many orders per year will there be?
total number of orders per year = 1,215 / 18 = 67.5 orders
d. Compute the total cost of ordering and carrying flour.
total cost of ordering flour = 67.5 x $10 = $675
since we assume that the company keeps operating after the year ends, we can use fractions when calculating the number of orders per year
total cost of carrying flour = 9 x $75 = $675
total cost of ordering and carrying flour = $1,350
The results in the large bakery are as follows:
(a). Economic Order Quantity = 18 Bags of Flour.
(b). Average Number of Bags on Hand = 9 Bags.
(c). Total Number of Orders Per Year = 67.5 orders.
(d). Total cost of ordering and carrying flour = $675.
What is economic order quantity?The Economic Order Quantity is employed to undervalue the costs of the order.
The total costs contain the Fixed Cost and Variable costs. These costs include the acquisition costs from the supplier, ordering costs, and moving costs.
(a). Computation of Economic Order Quantity:
According to the given information,
Annual Demand(D) = 1,215 bags of flour
Ordering Costs(O)= $10 per order
Annual Carrying Costs(C) = $75 per bag
Apply the given values in the formula of Economic Order Quantity,
[tex]\text{Economic Order Quantity} = \sqrt{\dfrac{2 \times O \times D }{C} }\\\\\text{Economic Order Quantity} =\sqrt{\dfrac{2\times \$10 \times \$1,215}{\$75} }\\\\\text{Economic Order Quantity} = 18 \text{bags}[/tex]
Therefore, the Economic Order Quantity is 18 bags.
(b). Computation of the average number of bags on hand:
[tex]\text{Average Number of Bags on Hand} =\dfrac{ \text{Economic Order Quantity}}{2}\\\text{Average Number of Bags on Hand} =\dfrac{18}{2}\\\\\text{Average Number of Bags on Hand} =9 \text{bags}[/tex]
(c). Computation of total numbers of orders per year:
[tex]\text{Total Number of Orders Per Year} = \dfrac{\text{Actual Demand}}{\text{Economic Order Quantity}}\\\\\text{Total Number of Orders Per Year} = \dfrac{1,215}{18}\\\\\text{Total Number of Orders Per Year} =67.5\text{Orders}[/tex]
(d). Computation of the total cost of ordering and carrying flour:
[tex]\text{Total Cost of Ordering Flour} = \text{Total Numbers of Orders Per Year} \times \text{\text{Ordering Cost}}\\\text{Total Cost of Ordering Flour} =9 \times \$75\\\text{Total Cost of Ordering Flour} = \$675[/tex]
Learn more about the economic order quantity, refer to:
https://brainly.com/question/16986815
Jeff needs to copy a phrase from one paragraph to the second paragraph
Which activity is a good practice when selling online media?
A.
Avoid integrating contests and promotions because this will draw attention away from the product.
B.
Avoid endemic advertising because the ad will not stand out on the page.
C.
Avoid integrating the advertiser’s brand into online content.
D.
Avoid quoting too high a price.
Answer:
For Plato the answer is D: Avoid quoting too high a price.
Explanation:
I got it right
In a decentralized company in which the divisions are organized as investment centers, how could a division be considered the least profitable even though it earned the largest amount of income from operations?
Answer:
This can be due to the method of allocating cost.
Explanation:
In the given scenario a division in a decentralised company earned the largest amount of income from operations, yet it was the least profitable.
This can be as a result of the cost allocation method the company uses.
If the company uses a cost allocation method where cost from other division is paid for by the division with largest income. The result will be that the other divisions that generate less income will appear to be more profitable.
The remedy for this is to use activity based costing. Where cost is allocated based on the level of activity of a division.
That way divisions will only pay for cost associated with their activity
$6 million contract. The contract calls for a payment of $1.2 million today, $1.5 million one year from now, $1.5 million two years from now, and $1.8 million three years from today. What is this contract really worth if Ramon can earn 10.5 percent on his money
Answer:
the present value is $5.12 million
Explanation:
The computation of the present value is shown below:
As we know that
Present value = Cash flows × Present value of discounting factor (rate% and duration)
= $1.2 million + $1.5 million ÷ 1.105 + $1.5 million ÷ 1.105^2 + $1.8 million ÷ 1.105^3
= $5.12 million
Hence, the present value is $5.12 million
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Determine which is the better investment: compounded semiannually or compounded quarterly. Round your answers to decimal places.
Answer:
the numbers are missing, so I looked for a similar question and found:
Determine which is the better investment: 5.22% compounded semiannually or 5.24% compounded quarterly. Round your answers to 2 decimal places.
effective interest rate for semiannual compounding = (1 + 5.22%/2)² - 1 = 5.29%effective interest rate for quarterly compounding = (1 + 5.24%/4)⁴ - 1 = 5.34%Compounded quarterly is a better investment than compounded semiannually
Explanation:
The shorter the compounding period, the more interests received (or paid if it is a loan) and the nominal interest rate is the same:
E.g. lets assume that the nominal interest rate is 10% per year:
effective interest rate for annual compounding = 10%effective interest rate for semiannual compounding = (1 + 10%/2)² - 1 = 10.25%effective interest rate for quarterly compounding = (1 + 10%/4)⁴ - 1 = 10.38%effective interest rate for monthly compounding = (1 + 10%/12)¹² - 1 = 10.47%Suppose the State bank of Pakistan instructs its Trading Desk to purchase Pkr 5 billion of securities. Analyze the result of this transaction on the balance sheets of the State bank of Pakistan and commercial banks.
Answer:
In simple words, the transaction given in the question will result different for state bank and commercial banks. Assuming the securities will be purchased from the commercial banks, the balance sheet of commercial banks will decrease assets and will increase their cash balance, thus, resulting in overall no change balance on assets side.
On the other hand, the state bank will add securities on the asset side of the balance sheet and will decrease cash balance.
Elena's aunt gave her $100 for her birthday with the condition that Elena buys herself something. In deciding how to spend the money, Elena narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally, she decides on Option B. The opportunity cost of this decision is
Answer: b. the value to Elena of the option she would have chosen had Option B not been available.
Explanation:
The opportunity cost of a course of action is the value of the next best alternative that would have been chosen had the current action not been undertaken.
The opportunity cost to Elena therefore, is the value of whatever option she would have chosen had option B not been available because that would have been the next best alternative.
A machine costs $5240 and produces benefits of $1000 at the end of each year for 8 years. Assume an annual interest rate of 10%. What is the payback period (in years)
Answer:
5.24 years
Explanation:
the payback period = $5,240 / $1,000 = 5.24 years
The payback period is the amount of time it takes a project to generate enough cash to cover the initial investment required to carry it out.
You can also calculate the discounted payback period which first calculates the present value of each cash flow:
PV of cash flow 1 = $909.09PV of cash flow 2 = $826.45PV of cash flow 3 = $751.31PV of cash flow 4 = $683.01PV of cash flow 5 = $620.92PV of cash flow 6 = $564.47PV of cash flow 7 = $513.16PV of cash flow 8 = $466.51in this case, the discounted payback period = 7.8 years
what is business marketing?
Answer:
Business marketing
Business marketing is a marketing practice of individuals or organizations. It allows them to sell products or services to other companies or organizations that resell them, use them in their products or services or use them to support their works. It is a way to promote business and improve profit too.
Answer:
yes
Explanation:
Business marketing is a marketing practice of individuals or organizations. It allows them to sell products or services to other companies or organizations that resell them, use them in their products or services or use them to support their works. It is a way to promote business and improve profit too.
Read the following cases and answer the questions given at the end.
Wasi sold his factory carrying motorcycles manufacturing plants to Tipu stating its production capacity of 200,000 units annually. Tipu, after buying the factory came to know that the contract was based on false claim of the stated production capacity. Briefly describe whether the contract is valid, voidable or void contract.
A music hall was rented out for a series of concerts. The hall caught fire before the date of first Concert. Explain the nature of contract with respect to executed/executor/valid or voidable contract.
A threatens B to kill if he does not sell his BMW worth Rs. 1.65M to the former for Rs 1M. B, to save his life, agreed to sell his BMW to A and receives the payments. Is this a valid contract? Explain your answer with reason in either case.
Answer:
Wasi sold his factory carrying motorcycles manufacturing plants to Tipu stating its production capacity of 200,000 units annually. Tipu, after buying the factory came to know that the contract was based on false claim of the stated production capacity.
This contract is voidable. It might be valid in princple, but there is one undeniable fact, and that is that Wasi misrepresented the production capacity of the plant. Tusi could easily render this contract void in a civil court.
A music hall was rented out for a series of concerts. The hall caught fire before the date of first Concert. Explain the nature of contract with respect to executed/executor/valid or voidable contract.
This contract is valid. The principles of the contract are valid: the hall was in good condition, and the parts of the agreement willfully signed the contract. The fact that the hall shortly after caught fire is not anyone's fault in particular.
A threatens B to kill if he does not sell his BMW worth Rs. 1.65M to the former for Rs 1M. B, to save his life, agreed to sell his BMW to A and receives the payments. Is this a valid contract?
This contract is void, from start. The reason is simply that threatening to kill a person in order to make this person act as one wishes is an illegal act. Person B did not have any other option but to accept the terms, since his life was at stake. This contract would immediately struck down in court, and person A would have to face criminal justice.
The Wiz Co. owes $60 to its bondholders. The company expects to have a cash flow of $136 if the economy continues as is but that cash flow will deceases to $54 if the economy enters a recession. Should the company face the real possibility of bankruptcy, it will incur legal and other fees of $30. What amount will bondholders be paid in the case of a recession?
Answer:
$24
Explanation:
Calculation for the amount that the bondholders
will paid in the case of a recession
Using this formula
Amount to be paid by Bondholder=Decreased in cash flow- Legal and other fees
Let plug in the formula
Amount to be paid by Bondholder = $54 − $30
Amount to be paid by Bondholder= $24
Therefore the amount that the bondholders will paid in the case of a recession is $24
If a target was purchased for $1,500.0m with an equity contribution of $500.0m, what is the enterprise value of the target if it used $500.0m of cash flow to repay debt?
a. $1,000.0m
b. $500.0m
c. $1,500.0m
d. $2,000.0m
Answer: a. $1,000.0m
Explanation:
Even though the company's enterprise value has no growth, the equity investment of the sponsor will rise from $500.0m when purchased to $1,000.0m when the target for the value of the enterprise is sold for $1500.0m.
The debt was $1000m at year 0 while the remaining $500m was for equity. It should be noted that at the fifth year, equity will be $1,000.0m while the debt will be $500m.
Waterway Company acquired a plant asset at the beginning of Year 1. The asset has an estimated service life of 5 years. An employee has prepared depreciation schedules for this asset using three different methods to compare the results of using one method with the results of using other methods. You are to assume that the following schedules have been correctly prepared for this asset using (1) the straight-line method, (2) the sum-of-the-years'-digits method, and (3) the double-declining-balance method.
Year
Straight-Line
Sum-of-the-
Years'-Digits
Double-Declining-
Balance
1 $12,420 $20,700 $27,600
2 12,420 16,560 16,560
3 12,420 12,420 9,936
4 12,420 8,280 5,962
5 12,420 4,140 2,042
Total $62,100 $62,100 $62,100
Answer the following questions.
What is the cost of the asset being depreciated?
Cost of asset $
Answer:
$69,000
Explanation:
The double-declining method uses twice the rate of the straight-line depreciation method.
In this case, we need to determine the depreciation rate under the straight-line method. The asset has a useful life of 5 years.
the depreciation rate = 1/5 x 100
=0.2 x 100
=20%
The Depreciation rate for the double-declining method is 40%. The straight-line method considers salvage value at the beginning, but double-declining depreciates until the salvage value.
In the first year under the double-declining method, the depreciation amount was $27,600.
It means 40% of the asset cost is $27,600.
The asset cost is 100%
40%=$27,600
100% = 27,600/40 x 100
=$690 x 100
=$69,000
Asset cost = $69,000
What career would a graduate of a drama school be most likely to pursue?
.Fine Artist
.Musician
.Actor
.Dancer
Answer:
actor is the answer. have a good day, and pls mark brainlest
Answer:
Id say actor.
duuuuh if anything dancer
Explanation:
Can I please get brainleist.
A business taxpayer sells inventory for $80,000. The adjusted basis of the property is $58,000 at the time of the sale and the inventory had been held more than one year. The taxpayer has:______
a. No gain or loss.
b. Sold a long-term capital asset.
c. Sold a short-term capital asset.
d. An ordinary gain.
e. None of the above.
Answer:
d. An ordinary gain.
Explanation:
The business taxpayer sells inventory for $80,000. The adjusted basis of property is $58,000 at the time of the sale and the inventory had been held more than one year. The taxpayer has an ordinary gain. Inventory (stock in trade) is classified as an ordinary Asset; and it will be reported as an ordinary gain.
A firm have an inventory turnover of 5 times a year on a cost of goods sold of $800 000.if the firm improves the inventory turnover to 8 times a year while the cost of goods sold remains the same, which of the following statement is true?
A)$100,000 is additionally invested in purchasing stock
b)$160,000 is released into working capital
c)$60,000 is additionally invested in purchasing stock
d)$60,000 is released into working capital
Answer:
d)$60,000 is released into working capital
Explanation:
Inventory turnover gives the number of times that a business buys and sells inventory. A high inventory means that a business moves its stock fast, thereby generating cash.
The formula for inventory turnover ratio
=Cost of goods sold/ average inventory
If a firm has COGS of $800,000 and an inventory turnover of 5, then the average inventory will be
=$800,000 /5
= $160,000
should the firm improve turnover to 8, then the average inventory will be
=$800,000/8
=$100,000
It means the firm will be requiring an average inventory of $100,000 as opposed to $160,000 previously. The difference ($60,000) is to be released to working capital.