ACCOUNTING PRINCIPLES-W/WILEYPLUS
14th Edition
ISBN: 9781119707158
Author: Weygandt
Publisher: WILEY
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Chapter 27, Problem 1Q
To determine
Introduction: Capital expenditure states the decision-making of the management related to the acquisition of fixed assets. The capital expenditure budget prepared by the organization indicated a predetermined amount estimated to be spent on fixed asset acquisition during the year.
The process of screening and approving the capital expenditure budget.
Expert Solution & Answer
Explanation of Solution
The screening and approval procedure of capital expenditure capital budget is as follows:
- In the first step, the capital expenditures are evaluated, and a capital expenditure budget is prepared by the management and then the proposed budget is sent to the officer of the company.
- The officer then, after satisfying with the analysis of the capital expenditure budget proposed by the management, selects the suitable budget from the proposed budgets submitted by the management.
- The budget selected by the officer is then submitted to the directors who then provide final approval to the capital expenditure budget.
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When privately-held Toys "R" Us filed for bankruptcy in fall 2017, it disclosed that it had $5 billion in debt and was spending about $400 million per year for interest on that debt. Toys "R" Us net debt was $109.0 million in 2005, just before being taken over by private equity buyers in 2005. In that takeover, the company incurred $5.3 billion in debt. Sales revenue in the twelve months before the buyout in 2005 were $11.2 billion. Sales in the twelve months ending October 2017 were $11.1 billion.During the bankruptcy and store closing announcement in March 2018, the Toys "R" Us CEO stated that the company had fallen behind on the general upkeep and condition of its stores, which contributed to the decline in sales. It has also faced intense competition from other retailers, such as Amazon.com and Walmart. Toys "R" Us had had plans during 2017 to invest in technology, upgrade its stores to have toy testing areas, and create other features that would draw customers into the stores, but…
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summarized as follows:
a. Joel Palk invested additional cash in exchange for common stock with a deposit of $35,000 in the business bank account.
b. Paid $50,000 for the purchase of land adjacent to land currently owned by D'Lite Dry Cleaners as a future building site.
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Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers.
Jerry,
Incorporated Kate Company
Number of orders
Units per order
sales returns:
Number of returns
Total units returned
Number of sales calls.
3
2,000
60
360
1
60
5
140
4
Colleen sells its products at $290 per unit. The firm's gross margin ratio is 20%. Both Jerry and Kate pay their accounts promptly and
no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30
months, the firm has determined the following activity costs:
Activity
Sales calls
Order processing
Deliveries
Sales returns
Sales salary
Cost Driver and Rate
$ 700 per visit
460 per order
100 per order
210 per return and $5 per unit returned
80,000 per month
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Using customers as the cost objects, classify the activity costs into cost categories…
Chapter 27 Solutions
ACCOUNTING PRINCIPLES-W/WILEYPLUS
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