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1.Meta Course Module 5 Module 5 Homework FNAN522-010_850-202120 Adv Financial Mgmt and Policy Meta Course A company has $2 million in machinery expenses and $3 million in rent. It costs $30 per unit in labor costs to produce the good, which is sold for $50 per unit. What is the break even point? Question 1 Not yet answered Marked out of 1.00 P Flag question Select one O a 100,000 units O b. 250,000 units O c. 50,000 units O d. 166,667 units
2.Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1, 2018, was as follows:
| Account Titles | Debit | Credit | ||||
| Cash | $ | 7 | ||||
| Accounts Receivable | 3 | |||||
| Supplies | 3 | |||||
| Equipment | 10 | |||||
| Accumulated Depreciation | $ | 2 | ||||
| Software | 6 | |||||
| Accumulated Amortization | 2 | |||||
| Accounts Payable | 5 | |||||
| Notes Payable (short-term) | 0 | |||||
| Salaries and Wages Payable | 0 | |||||
| Interest Payable | 0 | |||||
| Income Taxes Payable | 0 | |||||
| Deferred Revenue | 0 | |||||
| Common Stock | 15 | |||||
| Retained Earnings | 5 | |||||
| Service Revenue | 0 | |||||
| Depreciation Expense | 0 | |||||
| Amortization Expense | 0 | |||||
| Salaries and Wages Expense | 0 | |||||
| Supplies Expense | 0 | |||||
| Interest Expense | 0 | |||||
| Income Tax Expense | 0 | |||||
| Totals | $ | 29 | $ | 29 | ||
Transactions during 2018 follow:
Data for adjusting journal entries on December 31:
3.
On December 31, 2018, Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $31,000. The balance sheet (before the effect of income taxes) reflected total assets, $92,000; total liabilities, $41,000; and stockholders’ equity, $51,000. The data for the four adjusting journal entries follow:
Required:
Complete the following table to show the effects of the four adjusting journal entries. (Negative amounts should be indicated by a minus sign.)
1.
We can calculate the break even point in units using the following formula
Break-Even point in units = Fixed Costs ÷ (Sales price per unit – Variable costs per unit)
We can assume both the machinery expenses And rent are fixed cost
Total fixed cost = 2+3= 5 million
Is price equal = $50
Variable labour cost = $30
Break even point in unit = 5million/(50-30)
= 250,000 units
Answer is option B
2.
Adjusting Journal Entries:
1)Amortisation---------- Dr 2
To Accumulated amortisation 2
(Being Amortisation credited tp acc.amor)
1)Amortisation: It means Intangible assets value has been decreased due to amortisation like depreciation for tangible assets. So, Amortisation has to be charged to Intangible asset i.e., software. Software is an asset i.e, debit. In order to reduce the asset we have to credit the asset by debiting the amortisation but already accumulated amor account is being maintained, So credited to the acc. amortisation account.
2)Closing stock a/c-------Dr 3
To trading a/c 3
(Bringing the closing stock into books)
(Closing stock will be taken to Trading account for closing )
3) Depreciation a/c --------Dr 4
To Accumulated depreciation 4
(Being depreciation credited to acc. dep)
( Depreciation is the reduction in the value of the tangible asset, So assets value must be decreased. Means
Depreciation ---Dr
To Tangible Asset( Equipment)
But they are maintaining accumulated depreciation , so credited to acc dep instead of asset account)
4) Interest on notes payable-----Dr 1
To Accrued Interest 1
( Being Accrued interest to be paid has been charged)
( They have to pay interest on notes payable but not paid till year end. So interest as an expense has been debited as per accrual system and accrued interest is a liability which we have to pay next year. So shown as Accrued Interest or outstanding interest)
5) Salaries and wages------------Dr 3
To outstanding Salaries 3
(Being Salaries not yet paid or recorded)
(Salaries and wages are expenses . So debited . But they are not paid . So Created a liability so that we will pay next year)
6)Income tax expense -----------Dr 4
To Provision for tax 4
(Being provision created for tax expense)
(Income tax has to be paid for the current year and it is an expense. but we hadnot paid till. So created a provision as Provison for tax. In this case, we had created a provision because as we are uncertain about the tax amount. If we are sure like in the above 2 cases, we can create on accrued expense)
3.
A) In the first point the amortization of asset will impact the net income which will impact the shareholders balance and it also impacts the assets balance .
B) In the second point wages and salaries will impact the net income balance as it will decrease the net income and shareholders balance, also due to wages payable account the total liabilities also increase.
C) In the third point rent income for the current year which includes 1 month balance till 31 December of $ 1,700 ( 5100 / 3 ) will increase the net income and shareholders balance and unearned income under total liabilities will also be impacted.
D) In the fourth point due to Income tax payable the net income and shareholders balance will decrease and income tax payable will increase the balance of total liabilities.
PLEASE SEE THE ATTACHED FILE.
