A. Think of a product and describe the stages of production the product goes through.


Answer 1
Answer: The life cycle of a product is associated with marketing and management decisions within businesses, and all products go through five primary stages: development, introduction, growth, maturity, and decline. Each stage has its costs, opportunities, and risks, and individual products differ in how long they remain at any of the life cycle stages.

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Tidy Limited purchased a new van on January 1, 2018. The van cost $40,000. It has an estimated life of ten years and the estimated residual value is $3,500. Tidy uses the double-declining-balance method to compute depreciation. What is the adjusted balance in the Accumulated Depreciation account at the end of 2019
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The situation that requires a departure from the cost basis of accounting to the lower-of- cost-or-net-realizable-value basis in valuing inventory is necessitated by Select one: a. an increase in selling price. b. a decline in the value of the inventory. c. an increase in the value of the inventory. d. a desire for more profit.



B. A decline in the value of the inventory.


Cost basis accounting: It is a method of calculating the value of inventory on actual cost for tax purposes as the purchase price is adjusted for dividends and return of capital distribution. It uses lower of cost either original cost or current market price. The market price should not be less or more than the net realizable value. Net realizable value is defined as the selling price minus cost of completion. Therefore, the cost basis of accounting to the lower-of- cost-or-net-realizable-value basis in valuing inventory is necessitated by a decline in the value of the inventory.

A plant asset cost $96,000 and is estimated to have a $12,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be a. $8,040.
b. $13,500.
c. $11,812.
d. $9,190.



option (b) $13,500


Data provided in the question:

Cost of the plant asset = $96,0003

Salvage value = $12,000

Useful life = 8 years


using the double-declining-balance method

Depreciation rate = 2*\frac{\textup{1}}{\textup{Useful life}}


Depreciation rate = 2*\frac{\textup{1}}{\textup{8}}


Depreciation rate = 0.25 or 25%


For year 1

Depreciation expense = Depreciation rate × year book value

= 0.25 × $96,000

= $24,000

Book value for year 2 = $96,000 - $24,000 = $72,000

For year 2

Depreciation expense = Depreciation rate × year 2 book value

= 0.25 × $72,000

= $18,000

Book value for year 3 = $72,000 - $18,000 = $54,000

For year 3

Depreciation expense = Depreciation rate × year 3 book value

= 0.25 × $54,000

= $13,500


The correct answer is option (b) $13,500

Corporation W, which uses the accrual method of accounting, had earnings and profits of $95,000 on December 31, Year 1. Based on the following information, compute earnings and profits as of December 31, Year 2: Taxable income per return $185,000
Contributions in excess of 10% limitation 1,500
Interest paid for tax-exempt bonds 1,000
Tax-exempt interest received 3,000
Federal income taxes 55,400
MACRS depreciation in excess of straight-line alternative depreciation system 1,500

a. $226,600
b. 220,600
c. $282,000
d. $228,600



a. $226,600


Profit = $ (95000+185000-1500

- 1,000 + 3,000 - 55,400 + 1,500 )= $226000

items added back to profit are allowed deductions while items deducted are disallowed deductions

Depreciation was added back to profit because method used was in excess of straight line method and so does not reflect true depreciation

Vilas Company is considering a capital investment of $183,600 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $10,557 and $51,000, respectively. Vilas has a 12% cost of capital rate, which is the required rate of return on the investment.Required:
a. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)
b. Compute the annual rate of return on the proposed capital expenditure. (Round answer to 2 decimal places, e.g. 10.52%)
c. Using the discounted cash flow technique, compute the net present value.



Payback period    = 3.6  years

Annual rate of return = 11.50%

NPV  = 243.59  


The payback period: The estimated number of years it will take the initial cost to be recouped.

Payback period= initial cost/ Net cash inflow

                          = 183,600/51,000

                         = 3.6  years

Annual rate of return is the average annual income as a percentage of average investment

Annual rate of return = annual net income/ average investment

Average investment =( Initial,cost + scrap value)/2

                                 = (183,600 + 0)/2 = 91,800

Annual rate of return = (10,557/91,800)× 100

                                   = 11.50%

Net Present Value = The present value of cash inflow less the initial cost

PV of cash inflow = A × (1- (1+r)^(-n))/r

                             = 51,000 × (1- (1.12)^(-5)/0.12

                             =  183,843.59  

NPV = 183,843.59 - 183,600

       = 243.59  

Wolf Company used $5,940 of indirect raw materials and $56,700 of direct raw materials during the period. The company incurred $37,800 of direct factory labor and $6,480 of indirect factory labor during the period. What amount will Wolf assign to Manufacturing Overhead



Overhead= $12,420


Giving the following information:

Wolf Company used $5,940 of indirect raw materials and $6,480 of indirect factory labor during the period.

Factory overhead costs are the costs that can't be directly assigned to a product, service or job. This is why companies assigned overhead using manufacturing overhead rates.

In this case, the overhead is the sum if indirect material and indirect labor:

Overhead= 5,940 + 6,480= $12,420

Valley Designs issued a 90-day, 6% note for $96,000, dated April 22, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest. a. Determine the due date of the note. July 9 b. Determine the maturity value of the note. $ Feedback The due date is the date the note is to be paid. Remember the interest rate is stated on an annual basis, while the term is expressed as days. Assume a 360 day year. The maturity value is the amount that must be paid at the due date of the note. c1. Journalize the entry to record the receipt of the note by Bork Furniture. If an amount box does not require an entry, leave it blank. Accounts Receivable-Valley Designs Allowance for Doubtful Accounts Feedback The account receivable must be removed from the books and the newly issued note receivable recorded. c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank.


Answer: Please see answer in explanation column


a) Due date = April 22+90 days =  July  21

b) Maturity value = 96,000+(96,000*6%*90/360) = $97,440

c1) Journal entry  for receipt of note by Bork Furniture

           journal       Debit                          Credit

Notes receivable       $96,000  

Account receivable                                        $96,000

C2) Journal entry  to record receipt of payment at maturity

 journal                     Debit                             Credit

Cash                        $97,440  

Notes receivable                                            $96,000

Interest revenue                                       $1,440 (97,440-96,000)