Response:
Total Sales= $3,000,000
Clarification:
Based on the following details:
The expectation is to sell 10,000 mattresses over the current year, with 1,000 mattresses available in finished goods inventory at the previous year's close. Armando aims to end this year with at least 1,250 finished mattresses in inventory. There won't be any leftover work-in-process inventory. Each mattress retails for $300.
Production:
Sales projected= 10,000
Ending inventory goal= 1,250
Beginning inventory= (1,000)
Total needed= 10,250
Sales therefore total= 10,000*300= $3,000,000
The formula for calculating the present value of an ordinary annuity is
Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)]
With the present value set at 300000
PMT is the amount for monthly payments?
R is the interest rate at 0.059
K indicates monthly compounding, which is 12 as payments are made monthly
N represents the time period of 30 years
To derive the formula for PMT
PMT=pv÷ [(1-(1+r/k)^(-kn))÷(r/k)]
PMT=300,000÷((1−(1+0.059÷12)^(
−12×30))÷(0.059÷12))
=1,779.41
The company may continue with the advertising, but this is contingent on ensuring that the 1% revenue increase is equal to or exceeds the $10 spent on advertising.
Here's the reasoning:
A revenue uptick of 1% suggests that the advertisement played a role in attracting more customers. This opens possibilities for the company to maintain consistent advertising next year, potentially adapting the ad channel, enhancing ad quality, or changing its timing and location. The 1% increase could even equate to $20, although the actual revenue remains unspecified. Conversely, if the 1% growth is noticeably less than the advertising costs, the business should consider consulting with experts.
Answer: 1. On March 1, record the insurance purchase in advance. Debit Prepaid Insurance $36,000. Credit Cash $36,000. 2. On December 31, make the adjusting entry. Debit Insurance Expense $30,000. Credit Prepaid Insurance $30,000. Explanation: Mountaineer excavation preemptively acquires one year’s worth of flood insurance on March 1, totaling $36,000 ($3,000 a month). The insurance is documented as prepaid insurance: Debit Prepaid Insurance $36,000, Credit Cash $36,000. By December 31, at the conclusion of the following 10 months, an adjustment is recorded to Credit Prepaid Insurance for $30,000 ($3,000 per month for 10 months) and Debit Insurance Expense for the same amount.
