143,000 161,750 180,500 Insurance expense 9,000 9,000 9,000 Depreciation expense 42,000 42,000 42,000 Total operating expenses 320,000 346,250 372,500 Net income $58,000 $94,750 $131,500 Required: a. Determine which expenses are mixed and, by use of the high-low method, separate each mixed expense into its variable and fixed components. State the cost formula for each mixed expense. All calculations must be shown. b. Compute the company's total contribution margin for May. Calculation must be shown
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
The Specter Company is a merchandising firm that sells a single product. The company's
revenues and expenses for the last three months are given below:
April May June
Sales in units 4,500 5,250 6,000
Sales revenue $630,000 $735,000 $840,000
Less cost of
goods sold
252,000 294,000 336,000
Gross Margin 378,000 441,000 504,000
Less operating
expenses:
Shipping
expense
56,000 63,500 71,000
Advertising
expense
70,000 70,000 70,000
Salaries and
commissions
143,000 161,750 180,500
Insurance
expense
9,000 9,000 9,000
Depreciation
expense
42,000 42,000 42,000
Total operating
expenses
320,000 346,250 372,500
Net income $58,000 $94,750 $131,500
Required:
a. Determine which expenses are mixed and, by use of the high-low method, separate each
mixed expense into its variable and fixed components. State the cost formula for each
mixed expense. All calculations must be shown.
b. Compute the company's total contribution margin for May. Calculation must be shown
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