Answer:
b. debit Bad Debt Expense, $13,600; credit Allowance for Doubtful Accounts, $13,600
Explanation:
Allowance for Doubtful Accounts is a contra asset account, It normally has credit balance but an adjustment may also make it's balance debit.
The uncollectible receivables of $13,000 means the there should be a credit balance in Allowance for Doubtful Accounts at the end of the period. This account already has debit balance of $600 which is also needs to be adjusted.
Total adjustment = $13,000 + $600 = $13,600
Candlewood LLC started business on September 1, 2019, and adopted a calendar year. During 2020, Candlewood incurred $6,500 in legal fees for drafting the LLC's operating agreement and $3,000 in accounting fees for tax advice of an organizational nature, for a total of $9,500 of organizational costs. Candlewood also incurred $30,000 of preopening advertising expenses and $24,500 of salaries and training costs for new employees before opening for business, for a total of $54,500 of startup costs. The LLC wants to take the largest deduction available for these costs.
If required, round any division to five decimal places and use in subsequent computations. Round your final answers to the nearest dollar.
In 2019, the LLC may deduct $___________ as organizational expenses and $____________ as startup expenses.
Answer:
The answer to this question can be described as follows:
Explanation:
The beginning expenses relate to the costs incurred in starting of the company. Once starting Activities lead to successful trade, instead of investment amounts. It can be removed throughout the taxable income for the company will be the year of graduation. In this question two blank is available, which can be described as follows:
Expenditures payment of living for the new company. Rs 5000 reduced by half the start-up expenses surpass 50,000 as far as the new company.Concord County owned an idle parcel of real estate consisting of land and a factory building. Concord gave title to this realty to Pharoah Company as an incentive for Pharoah to establish manufacturing operations in the County. Pharoah paid nothing for this realty, which had a fair value of $230000 at the date of the grant. Pharoah should record this nonmonetary transaction as a:_______
a. Credit to Contribution Revenue for $280000
b. Memo entry only
c. Credit to Donated Capital for $280000.
d. Credit to Comprehensive Income for $280000.
Answer:
a. Credit to Contribution Revenue for $230000
Explanation:
Nonmonetary transaction can be said to occur in a situation where a business activity is said to be concluded without the transfer of money between accounts for parties which is been tied to the transaction .
Example is change of address or in a situation where a more complex transactions occured.
Therefore Pharoah should record this nonmonetary transaction as a Credit to Contribution Revenue for $230000 because
Pharoah paid nothing for this realty, which had a fair value of $230000 at the date of the grant.
Answer:
Credit to Donated capital for $230000 ( C )
Explanation:
pharaoh receiving a parcel of real estate from Concord County with a fair value of $230000 and not paying for it i.e as a grant. Pharaoh will record such non monetary transaction as credit to donated capital. this is because the cost/capital he would have spent in acquiring that property for his business have been saved and the asset was Donated to him by Concord County which means he still got the property which is very essential for his business.this is why he should record this transaction under Donated capital.
You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customers:
Price (Dollars) Adults (Tickets) Children (Tickets)
20 0 0
18 25 0
16 50 0
14 100 0
12 150 0
10 200 0
8 300 25
6 300 50
4 300 100
2 300 150
0 300 200
To maximize profit, you would charge _____ (number) for an adult's ticket and _____ (number) for a child?s ticket. Total profit in this case would be _____ (number).
The city council passes a law prohibiting you from charging different prices to different customers.
Now you set a price of _____(number) for all tickets, resulting in _____(number) in profit.
Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination.
Groups of People Better Off Worse Off Unchanged
Adults
Children
You, the Producer
Suppose the fixed cost of the play were $2,600 rather than $2,000.
Complete the following sentences indicating how this would change your answers to the previous parts.
In the presence of price discrimination, the adult price of a ticket would _____ (increase, decrease, remain the same), and the child price would _____ (increase, decrease, remain the same). Total profit would _____ (rise, fall) to (number).
If price discrimination were banned and the monopolist continued to produce the play no matter what the profit, the price of a ticket would _____ (increase, decrease, remain the same), and total profit would _____ (rise, fall) to _____ (number).
Answer:
Explanation:
To maximize profit, you would charge $8 for an adult's ticket and $4 for a child?s ticket. Total profit in this case would be $800.
The city council passes a law prohibiting you from charging different prices to different customers.
Now you set a price of $8 for all tickets, resulting in $600 in profit.
Indicate whether each of the following groups of people is better off, worse off, or the same because of the law prohibiting price discrimination.
Groups of People Better Off Worse Off Unchanged
Adults x
Children x
You, the Producer x
Suppose the fixed cost of the play were $2,600 rather than $2,000.
Complete the following sentences indicating how this would change your answers to the previous parts.
In the presence of price discrimination, the adult price of a ticket would remain the same, and the child price would remain the same. Total profit would fall to $200.
If price discrimination were banned and the monopolist continued to produce the play no matter what the profit, the price of a ticket would remain the same, and total profit would fall to $0.
Opponents of tax reforms intended to raise saving argue that such reforms a. favor those with high income, and that saving may not rise because of the substitution effect. b. favor those with high income, and that saving may not rise because of the income effect. c. favor those with low income, and that saving may not rise because of the substitution effect. d. favor those with low income, and that saving may not rise because of the income effect.
Answer:
Option B
Explanation:
In simple words, under such tax reforms the government is intending to raise indirect taxes which will lead to higher prices of certain goods and is also declining taxes on savings. Both of these steps will work as an incentive for individuals to save more.
However a big majority of community is stating that this will only lead to more burden on the weaker section due to higher prices of commodities and will eventually result in lower standard of living for certain individuals.
Two firms, A and B, each currently dump 20 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives each firm 10 pollution permits, which it can either use or sell to the other firm. It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river. After the two firms buy or sell pollution permits from each other, we would expect that:_________.
Answer:
Firm B will no longer pollute and firm A will no longer reduce its pollution at all.
Explanation:
It is noticed here that this is used as a form to calculate the pollution production rate of both firms in the case above.
Therefore, firm B will have to sell out its allotted 20 permits, and clean up all of its 50 units of pollution. The price per permit will be above $50 each. Firm A will BUY ALL 20 of B's permits. It will then dump 40 tons into the water, and will clean up its remaining 10. The price it pays for a permit will be under $100.
Based on the information given, it will be expected that Firm A will no longer pollute; and Firm B will not reduce its pollution at all.
Pollution simply means the introduction of harmful materials into the environment. The harmful materials are known as pollutants.
It should be noted that buying 10 permits from firm B, firm A can reduce all its pollution to zero. Also, Since B has sold the permits to A, firm B will not be in a position to reduce any of its pollution levels. The firm makes a profit by selling 10 permits purchased for $500 to $1000 to firm A since it is beneficial both for A and B.
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The Milwaukee Bucks are considering whether they should add an additional vending area, at a cost of $500,000, to the new arena in downtown Milwaukee. They will only make the investment if it will result in an ROR of 15% or higher. The revenue is expected to be between $138,000 and $165,000 per year for five years. Use a present worth analysis to determine if the decision to invest is sensitive to the projected range of revenue.
Answer:
The required cash flow to earn 15% per year is $ 149,157.8
Now, If the expected cash flow is more than $ 149,157.8 per year, they can invest the amount, else it is not suggestible/advisable.
Explanation:
Solution
Given that:
Milwaukee Bucks are considering whether they should add an additional vending area, at a cost of = $500,000
The investment to be made will result in a ROR = 15%
Expected revenue = between $138,000 and $165,000
Now,
The Computation of Required Cash flow per year is stated as follows:
= Initial Investment / PVAF (r%, n )
= $ 500,000 / PVAF (15%, 5)
= $ 500,000 / 3.3522
= $ 149,157.8
Thus,
The required flow of cash to earn 15% per year is $ 149,157.8
If the expected cash flow is more than $ 149,157.8 per year, they can invest the amount, else it is not suggestible.
The financial statements for Castile Products, Inc., are given below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 20,000
Accounts receivable, net 230,000
Merchandise inventory 350,000
Prepaid expenses 7,000
Total current assets 607,000
Property and equipment, net 890,000
Total assets $ 1,497,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $ 210,000
Bonds payable, 9% 330,000
Total liabilities 540,000
Stockholders’ equity:
Common stock, $10 par value $ 110,000
Retained earnings 847,000
Total stockholders’ equity 957,000
Total liabilities and equity $ 1,497,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales $ 2,120,000
Cost of goods sold 1,200,000
Gross margin 920,000
Selling and administrative expenses 650,000
Net operating income 270,000
Interest expense 29,700
Net income before taxes 240,300
Income taxes (30%) 72,090
Net income $ 168,210
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $290,000. All sales were on account.
Assume that Castile Products, Inc., paid dividends of $2.95 per share during the year. Also assume that the company’s common stock had a market price of $72 at the end of the year and there was no change in the number of outstanding shares of common stock during the year.
Required:
Compute financial ratios as follows:
1.
Earnings per share. (Round your answer to 2 decimal places.)
2.
Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your final percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)
3.
Dividend yield ratio. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)
4.
Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.)
5.
Book value per share. (Round your answer to 2 decimal places.)
Answer:
1. The Earning per share is $ 15.29 per share
2. The Dividend payout ratio is 0.193 or 19.3%
3. The Dividend yield ratio is 0.041 or 4.1%
4. The Price-earnings ratio is 4.7
5. The Book value per share is $ 87 per share
Explanation:
1. To calculate Earning per share we use the following formula:
Earning per share = Net income /Number of common shares
Number of common shares= 110,000 /10 = 11,000 shares
Earning per share= $168,210 /11,000
Earning per share = $ 15.29 per share
2. To calculate Dividend payout ratio we use the following formula:
Dividend paid = 2.95*11n000= $32,450
Payout ratio = $32,450 / $168,210
Payout ratio =0.193 or 19.3%
3. To calculate Dividend yield ratio we use the following formula:
Dividend yield ratio =dividend /current price
Dividend yield ratio = 2.95 / 72
Dividend yield ratio =0.041 or 4.1%
4. To calculate Price-earnings ratio we use the following formula:
PE ratio =Market price per share /EPS
PE ratio= 72 /15.29
PE ratio = 4.7
5. To calculate Book value per share we use the following formula:
Book value per share =Total sharehoders equity /number of share
Book value per share= $957,000/11,000
Book value per share= $ 87 per share
1. The Earning per share is $15.29 per share
2. The Dividend payout ratio is 19.3%
3. The Dividend yield ratio is 4.1%
4. The Price-earnings ratio is 4.7
Calculation of Net income1. To Compute Earning per share we use the following formula:
The formula of Earning per share is = Net income /Number of common shares
Number of common shares is = 110,000 /10 = 11,000 shares
Earning per share is = $168,210 /11,000
Earning per share is = $15.29 per share
2. To compute Dividend payout ratio we use the following formula:
Dividend paid is = 2.95*11n000= $32,450
Payout ratio is = $32,450 / $168,210
Therefore, Payout ratio =0.193 or 19.3%
3. To Compute Dividend yield ratio we use the following formula:
Then Dividend yield ratio =dividend /current price
Dividend yield ratio = 2.95 / 72
Therefore, Dividend yield ratio is = 0.041 or 4.1%
4. To Compute Price-earnings ratio we use the following formula:
PE ratio is =Market price per share /EPS
PE ratio is = 72 /15.29
Thus, PE ratio = 4.7
5. To Compute the Book value per share we use the following formula:
Book value per share is =Total shareholders equity /number of share
Then, Book value per share= $957,000/11,000
Hence, Book value per share= $ 87 per share
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In the Month of March, Baldwin Corporation received orders of 158 units at a price of $15.00 for their product Bolt. Baldwin uses the accrual method of accounting and offers 30 day credit terms. Baldwin delivers 106 units in March and the balance of 53 units in April. They received payment for 53 units in March, 53 units in April, and 53 units in May. How much revenue is recognized on the March income statement from this order
Answer:
The revenue recognized is "$1,470".
Explanation:
In March, no sales will be acknowledged because the goods became shipped in April although Baldwin follows the financial reporting accrual process.Both sales will be recognized in April because the distribution of the goods was in April. An application being filled or revenue is recognized after all the burden is passed on to the customer and distribution according to Accrual Accounting.Therefore sales in April was recognized,
= [tex]98\times 15[/tex]
= $[tex]1470[/tex]
York’s outstanding stock consists of 80,000 shares of noncumulative 6.5% preferred stock with a $5 par value and also 250,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.
2016 total cash dividends $15,500 2018 total cash dividends $225,000
2017 total cash dividends 24,000 2019 total cash dividends 375,000
Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined.
Per Value Dividend Rate Dividend Per Number of Preferred
Per Preferred Share Preferred Share Preferred Share Dividend
Annual Preferred Dividend:
Total Cash Paid to Paid to Dividends in
Dividend Paid Preferred Common Arrears at year-end
2016 15,500
2017 24,000
2018 225,000
2019 375,000
Total: $639,500
Answer and Explanation:
The presentation of each year dividend amount and the total dividend paid is shown below:
Particulars Par Dividend Dividend No. of Preferred
value Rate Per preferred dividend
Preferred Preferred shares
shares shares
Annual
preferred
dividend $5 6.50% $0.325 $80,000 $26,000
Particulars Total cash Paid to Paid to Dividend in arrears
dividend preferred common paid at year end
2016 $15,500 $15,500 $0 $0
2017 $24,000 $24,000 $0 $0
2018 $225,000 $26,000 $199,000 $0
2019 $375,000 $26,000 $349,000 $0
Total $639,500 $91,500 $548,000 $0
The dividend is the amount which is paid to the preference shareholders and the equity shareholders but the first the payment is made to preference shareholders
Answer:
The presentation of each year dividend amount and the total dividend paid is shown below:
Particulars Par Dividend Dividend No. of Preferred
value Rate Per preferred dividend
Preferred Preferred shares
shares shares
Annual
preferred
dividend $5 6.50% $0.325 $80,000 $26,000
Particulars Total cash Paid to Paid to Dividend in arrears
dividend preferred common paid at year end
2016 $15,500 $15,500 $0 $0
2017 $24,000 $24,000 $0 $0
2018 $225,000 $26,000 $199,000 $0
2019 $375,000 $26,000 $349,000 $0
Total $639,500 $91,500 $548,000 $0
The dividend is the amount which is paid to the preference shareholders and the equity shareholders but the first the payment is made to preference shareholders !!!!!!!!!!!!!!!
Explanation:
On January 1, Year 1, Parker Company issued bonds with a face value of $75,000, a stated rate of interest of 6 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 8 percent at the time the bonds were issued. The bonds sold for $69,011. Parker used the effective interest rate method to amortize the bond discount. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Required a. Prepare an amortization table. b. What is the carrying value that would appear on the Year 4 balance sheet? c. What is the interest expense that would appear on the Year 4 income statement? d. What is the amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows?
Answer:
The carrying value of the bond in year 4 is $73,611
The interest expense that would appear in year 4 income statement is $5,786 The amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows is $ 4,500
Explanation:
Find attached amortization schedule for Parker company
The balance at end of each is the opening balance that year plus interest expense minus the cash paid as coupon payment.
A deficit in a nation’s current account means:
A. it must limit the flow of foreign capital investment
B. it must have a deficit in its financial account as well
C. it must increase interest rates to attract foreign investment
D. there must be a surplus in its financial account
E. there must be more exports than imports for the nation.
Answer:
B. it must have a deficit in its financial account as well
Explanation:
Current account deficit is the measure of the a country trade, a country imports and exports the goods. Net effect of both will be deficit or surplus.
If the Payment against the imports are higher than the receipts against the exports then there is a deficit.
If the Payment against the imports are Lower than the receipts against the exports then there is a Surplus.
Park Corporation is planning to issue bonds with a face value of $750,000 and a coupon rate of 7.5 percent. The bonds mature in 4 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent.
Required:
1. Provide the journal entry to record the issuance of the bonds.
2. Provide the journal entry to record the interest payment on June 30 and December 31 of this year.
3. What bonds payable amount will Claire report on this year's December 31 balance sheet?
Answer:
Bond issuance
Dr Cash $725,010.82
Dr Discount on bonds payable $ 24,989.18
Cr bonds payable $750,000
30 June :
Dr interest expense 30,812.96
Cr cash 28,125.00
Dr bonds discount 2,687.96
December 31:
Dr interest expense 30,927.20
Cr cash 28,125.00
Dr bonds discount 2,802.20
Bonds payable at 31st Dec: $ 730,500.98
Explanation:
The price on the bonds issue is computed using pv formula in excel as shown below:
=-pv(rate,nper,pmt,fv)
rate is the semiannual market interest of 4.25% i.e 8.5%*6/12
nper is the number of semiannual coupon payments of the bond which is 4 years multiplied by 2=8
pmt is the semiannual coupon payment=$750,000*7.5%*6/12=$ 28,125.00
fv is the face value of $750,000
=-pv(4.25%,8,28125,750000)=$725,010.82
find attached amortization schedule
discount on bonds payable=$750,000-$725,010.82=$24,989.18
Suppose Chef Plus manufactures cast iron skillets. One model is a 10-inch skillet that sells for $ 35. Chef Plus projects sales of 650 10-inch skillets per month. The production costs are $ 6 per skillet for direct materials, $ 4 per skillet for direct labor, and $ 1 per skillet for manufacturing overhead. Chef Plus has 25 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 30% of the next month's sales. Selling and administrative expenses for this product line are $ 1 comma 400 per month. How many 10-inch skillets should Chef Plus produce in July?
Answer:
Production Budget = 820 units
Explanation:
Chef Plus Manufacturers
Production Budget
The production budget is calculated by using the following formula.
Sales + Desired Ending Inventory - Opening Inventory= Production Budget
Units
Sales 650
+Desired Ending Inventory (30 % of 650 ) 195
Less Opening Inventory 25
Production Budget 820
The desired ending inventory is calculated by finding the 30 % of 650 units which is given in the question .
Desired Ending Inventory = 30 % of Sales = 30 % of 650 = 195
Also the opening inventory is given for July= 25 units
Assume you had determined that John Firestone, vice president of Pierce Chemicals, was a prospect for your paper and metal containers. You call Mr. Firestone to see if he can see you this week. When his secretary answers the telephone, you say, "May I speak to Mr. Firestone, please?" and she says, "What is it you wish to talk to him about?"
a) How would you answer her question?
b) What would you say if you were told, "I’m sorry, but Mr. Firestone is too busy to talk with you"?
Answer: Please refer to Explanation.
Explanation:
1. Honesty.
State the purpose of your call to the secretary and sell your product. For instance, " Hello, my name is Mr. Petal and I represent a fast rising Paper and Metal Container company. After researching about your company, I felt it most expedient to get in touch with Mr. Firestone as I believe this is business he will be interested in. We offer perks that are unmatched in the industry".
2. Persistence.
You can be persistent on the phone if you detect deceit in the secretary's tone.
For instance,
" Having been in the chemical industry myself, I know such an opportunity does not come often and I really do guarantee that we give the best benefits in the industry. If you can, just let me talk to Mr. Firestone, I promise that neither of you will regret it".
If it still doesn't work, ask for a convenient time you can call back.
You have a $5,000 medical bill and health insurance with a $500 deductible. You also have a 80/20 co-insurance, meaning the insurance pays 80% and the insured pays 20%. What is your total out-of-pocket expense for the original $5,000 bill?
Answer:
$1,400
Explanation:
Out-of-pocket expense refers to the payment you have to make for medical attention costs that are not reimbursed by your insurance like deductibles and coinsurance. In this case, you have to pay a $500 deductible and you are also responsible for the 20% of $4,500 that is the remaining amount as the insurance will cover the 80%. The total out of the pocket expense would be equal to the sum of the deductible plus the 20% of the reamining amount:
Out-of-pocket expense= 500+(4,500*20%)
Out-of-pocket expense= 500+900
Out-of-pocket expense= 1,400
According to this, your total out-of-pocket expense for the original $5,000 bill is $1,400.
Answer:
$1,500
Explanation:
SnowParadise operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 10 % return on investment on the company's $ 270,000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. SnowParadise projects fixed costs to be $ 31,000 for the ski season. The resort serves about 725,000 skiers and snowboarders each season. Variable costs are about $ 7 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices. Would SnowParadise emphasize target pricing or cost-plus pricing? Why?
Answer and Explanation:
The cost plus pricing refers to the pricing in which the markup percentage is added to the cost of the goods and services the company so that the selling price could be determined
According to the given situation, it is mentioned that the resort have a favorable reputation among skiers which derives that the company products and pricing is different from other company dealing is same type of business. And due to the favorable reputation, the managers have some control over the ticket prices
So it shows the cost plus pricing situation.
Bolster Foods’ (BF) balance sheet shows a total of $25 million long-term debt with a coupon rate of 8.50%. The yield to maturity on this debt is 8.00%, and the debt has a total current market value of $27 million. The balance sheet also shows that the company has 10 million shares of stock, and the stock has a book value per share of $5.00. The current stock price is $20.00 per share, and stockholders' required rate of return, rs, is 12.25%. The company recently decided that its target capital structure should have 35% debt, with the balance being common equity. The tax rate is 40%. Calculate WACCs based on book, market, and target capital structures. What is the sum of these three WACCs?
Answer:
Sum of these three WACCs = 30.77%
Explanation:
As per the data given in the question,
We need to do following calculations which are shown below:
Cost of debt =Yield to maturity × (1 - tax rate)
=8% × (1 - 0.40)
= 4.8%
And, the required rate of return is 12.25%
To calculate Book value :
Total value = $25 million +$10 million × $5.00
= $75 million
WACC = (Debt ÷ total value ) × cost of debt + (Equity total value ÷ total value ) × cost of debt
= 25 ÷ 75 × 4.8% + 50 ÷ 75 × 12.25%
= 9.77%
To calculate Market value :
Total value = $27 million + 10 million × $20.00
= $227 million
WACC = 27 ÷ 227 × 4.8% + 200 ÷ 227 × 12.25%
= 11.36%
Now Target capital structure :
Weight of debt = 0.35
Weight of equity = 1 - 0.35 = 0.65
WACC = 0.35 × 4.8% + 0.65 × 12.25%
= 9.64%
Sum of these three WACCs
= 9.77% + 11.36% + 9.64%
= 30.77%
The sum of these three WACCs is 30.77%.
Based on the information given, the book value will be calculated as:
= $25 million + ($10 million × $5.00)
= $25 million + $50 million
= $75 million
The first WACC will be:
= (25 / 75 × 4.8%) + (50/ 75 × 12.25%)
= 9.77%
The second WACC will be:
= (27 / 227 × 4.8%) +( 200 / 227 × 12.25%)
= 11.36%
The third WACC will be:
= (0.35 × 4.8%) + (0.65 × 12.25%)
= 9.64%
Therefore, the sum of these three WACCs will be:
= 9.77% + 11.36% + 9.64% = 30.77%
In conclusion, the correct option is 30.77%.
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Two new variables, the market value of the firm (a measure of firm size, in millions of dollars) and stock return (a measure of firm performance, in percentage points), are added to the regression: ModifyingAbove ln (Earnings )with caret equals 3.86 minus 0.28 Female plus 0.37 ln (MarketValue )plus 0.004 Return(Earnings)=3.86−0.28Female+0.37ln(MarketValue)+0.004Return, (0.030.03) (0.040.04) (0.0040.004) (0.0030.003) n = 46,670, Upper R overbar squared R2 = 0.345. If MarketValue increases by 4.644.64%, what is the increase in earnings
Answer:
Explanation:
If Market Value increases by 4.64%, then earnings increase by:
㏑(Earnings) = 0.37 × ㏑(4.64)
= 0.37 × 1.534714
Earnings = Exp (0.56784418)
= 1.76%
If Market Value increases by 4.64%, earnings increase by 1.76%
The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:
Beginning Ending
Raw materials inventory $563,000 $626,000
The raw materials used in manufacturing during the year totaled $1,098,000. Raw materials purchased during the year amount to:
a. $955,000.
b. $892,000.
c. $1,565,000.
d. $408,000.
e. $1,081,000.
Answer:
Raw material purchased = $1,161,000
Explanation:
Raw material purchase budget is determined by adjusting the raw material usage budget for opening and closing inventory of materials.
Purchase budget = usage budgeted + closing inventory - Opening inventory
Purchase budget = 1,098,000 + 626,000 - 563,000= $1,161,000
Note the closing inventory represents the stock of materials needed to be kept, hence it will increase the purchase budget. So we added.
On the other hand hands, the opening inventory represented what already existed , hence we subtracted it as it will reduce what will be required.
Raw material purchased = $1,161,000
Mills Corporation acquired as a long-term investment $225 million of 8% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $250.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $240.0 million.
Required:
1. Prepare the journal entry to record Mills'investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective market) rate.
2. At what amount will Mills report its investment in the December 31, 2021, balance sheet?
Answer:
Dr investment in bonds $225 million
Dr premium on bonds investment
Cr cash $250 million
Dr cash $9,000,000
Cr interest income 7,500,000
cr bonds premium 1,500,000
Dr cash $9,000,0000
Cr interest income $ 7,545,000.00
Cr bond premium $ 1,455,000.00
Mills would report the investment at $ 246,955,000.00
Explanation:
The journal entry to record Mill's investment is to simply debit investment accounts with cash paid for the investment and credit same amount to cash account.
The premium paid on the investment=cash paid-face value=$250 million-$225 million=$25 million
Find attache bond investment amortization schedule
Suppose that JVC is trying to decide how to price a new stereo system composed of a receiver, CD player, and speakers. The company's economists have estimated that two different groups will purchase these products: students and club owners. The economists analysis suggests that the total market for its brand of stereos consists of 10,000 students and 50,000 club owners. In addition, it is estimated that the maximum amount each group will pay for each stereo component is as follows:
Group Receiver CD Player Speakers
Students $250 $150 $100
Club owners $200 $75 $250
Required:
a) Suppose that JVC markets the receiver, CD player, and speakers are sold separately and together. What prices should JVC charge to maximize revenues?
The revenues table is:
[tex]\text{Receivers} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 200\\\\\text{CD player}\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 75\\\\\text{Speaker} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 250\\\\\text{Combined ( bundling )} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 500[/tex]
Calculating the pricing JVC will charge in order to increase revenues:Calculating the separate price for the receiver:
when
[tex]P = 250[/tex] only for the students to buy
[tex]\to TR = 250 \times 10,000 = 2,500,000[/tex]
[tex]P = 200[/tex], both types will buy
[tex]\to TR = 200 \times (60,000) = 12,000,000[/tex]
Therefore, the higher [tex]TR[/tex], with [tex]P = 200[/tex], and the charge [tex]P = 200[/tex], for Receiver:
Calculating the value of CD player:
[tex]If \ P = 150,\ \ TR = 150\times 10,000 = 1,500,000 \\\\If \ P = 75, \ \ TR = 75 \times (60,000) = 4,500,000[/tex]
Therefore, the higher [tex]TR[/tex], with [tex]P = 75[/tex],
Speakers,
if[tex]P = 100[/tex] , both types buy
[tex]\to TR = 100 \times (60,000) = 6,000,000[/tex]
If [tex]P = 250[/tex], only club owners buy
[tex]\to TR = 250 \times 50,000 = 12,500,000[/tex]
So higher [tex]TR[/tex] with [tex]P = 250[/tex]
Now combined Willingness to pay
For students, [tex]250+150+100 = 500[/tex]
For club owners, [tex]200+75+250 = 525[/tex]
So if [tex]P = 500[/tex], both types buy
[tex]\to TR = 500 \times 60,000 = 30,000,000[/tex]
if [tex]P = 525[/tex], only club owners buy, then
[tex]\to TR = 525 \times 50,000 = 26,250,000[/tex]
so higher [tex]TR[/tex] with [tex]P = 500[/tex]
Therefore, the calculated table values are:
[tex]\text{Receivers} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 200\\\\\text{CD player}\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 75\\\\\text{Speaker} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 250\\\\\text{Combined ( bundling )} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 500[/tex]
Find out more information about the revenues here:
brainly.com/question/15602440
Currently, Bruner Inc.'s bonds sell for $1,110. They pay a $120 annual coupon, have a 15-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between this bond's YTM and its YTC
Answer:
0.59%
Explanation:
The yield to maturity can be computed using the rate formula in excel as follows:
=rate(nper,pmt,-pv,fv)
nper is the coupon payments payable by the bond till maturity which is 15
pmt is the coupon paymet of $120
pv is the current market price of $1,110
fv is the face value of $1000
=rate(15,120,-1110,1000)=10.51%
The yield to call can be computed in a similar,while the only difference the future value would now be call price in 5 years which is $1050 and nper is also 5
=rate(5,120,-1110,1050)=9.92%
Difference between YTM to YTC=10.65%-9.92%
=0.59%
Match each form of unemployment with an example. Note that every item may not have a match.
a. cyclical unemployment
b. structural unemployment
c. frictional unemployment
1. An unemployed paper mill worker. The local paper mill shut down due to lack of demand for paper products in a digital age.
2. An unemployed banker during a recession. The banker would be hired back once the economy began growing normally again.
3. A retiree. After a successful career in real estate, she now lives off her retirement savings and Social Security.
4. An unemployed stockbroker who is willingly taking some time off before looking for a new job.
5. An unemployed cashier. A small clothing store shut down due to its customers buying clothes from a new big-box retailer.
Answer:
1. Structural unemployment
2. Cyclical Unemployment
3. No match
4. Frictional unemployment
5. No match.
Explanation:
a. Cyclical Unemployment can be described as an unemployment that occurs when there is a low demand for goods and services in a country as a result of slow economic growth or recession.
b. Structural unemployment is an unemployment that occurs because of industrial reorganization coming from technological change that makes current skills of workers obsolete.
c. Frictional unemployment is unemployment that occurs when people are in the process of searching a new job and changing from one job to another.
Based on the above definition, we have:
1. Structural unemployment
2. Cyclical Unemployment
3. No match
4. Frictional unemployment
5. No match.
Answer: No 1, cyclicnal unemployment
2, Cyclical Unemployment
a, Cyclical unemployment is unemployment that results when the overall demand for goods and services in an economy cannot support full employment. It occurs during periods of slow economic growth or during periods of economic contraction. This can be match to 1 and 2
b, 3and 4.
Frictional unemployment is a type of unemployment. It is sometimes called search unemployment and can be based on the circumstances of the individual. It is time spent between jobs when a worker is searching for a job or transferring from one job to another.
C. 5,
Structural unemployment is a form of involuntary unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers. Structural unemployment is often brought about by technological changes that make the job skills of many workers obsolete.
Explanation:
Unemployment is a term referring to individuals who are employable and seeking a job but are unable to find a job.
Usually measured by the unemployment rate, which is dividing the number of unemployed people by the total number of people in the workforce, unemployment serves as one of the indicators.
A recent start-up company, which we will call Dronegistics, has developed an innovative unmanned aerial vehicle, or drone. The company plans to sell its drones to companies who would use them to make commercial deliveries within congested urban areas. Dronegistics has identified several markets in Asia as having high commercial potential. Japan and Singapore are perceived to have the strongest market potential currently, but mainland China, Thailand, and Malaysia are perceived to have strong and growing potential over time, even if their potential may not be as strong currently. Despite expectations that several other firms will introduce competitive products in the near future, which will have an impact on the attractiveness for later entrants, Dronegistics lacks the experience and resources to enter more than one Asian market at a time. The decision-making challenge facing Dronegistics incorporates all of the following location clocks associated with timing decisions EXCEPT the:
__a. firm clock.
__b. location clock.
__c. incentives clock.
__d. competitive clock.
Answer:
c. incentives clock
Explanation:
Dronegistics as a recent startup is faced with the following location clocks' decision-making challenges:
a) Firm clock: It is a recent startup and lacks the resources to enter more than one Asian market at a time.
b) Location clock: It does not know which location to start with in Asia, with no experience locating in more than one location at the same time.
c) Competitive clock: It is afraid of the timing of new entrants into the drones market with competitive products.
Barnes Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $214,000; and fixed costs $71,800. Management is considering the following independent courses of action to increase net income. Compute the net income to be earned under each alternative. 1. Increase selling price by 10% with no change in total variable costs or sales volume. Net income $Enter the net income in dollars 2. Reduce variable costs to 55% of sales. Net income $Enter the net income in dollars 3. Reduce fixed costs by $23,000. Net income $Enter the net income in dollars Which course of action will produce the highest net income? Select an option
Answer:
$14,200
$44,200
$63,200
$37,200
Explanation:
As per the data given in the question,
Presentation of profitability Statement
Particulars Amount Per unit
Sales $300,000 $60 ($300,000÷5,000)
Less: Variable cost $214,000
Contribution $86,000
Less: Fixed cost $71,800
Net income $14,200
Alternative 1 : increase selling price by 10%
Presentation of profitability Statement
Particulars Amount
Sales ($60+10% of $60) × 5,000 $330,000
Less: Variable cost $214,000
Contribution $116,000
Less: Fixed cost $71,800
Net income $44,200
Alternative 2 : reduce variable cost to 55% sales
Presentation of profitability Statement
Particulars Amount
Sales $300,000
Less: Variable cost(300,000×55%) $165,000
Contribution $135,000
Less: Fixed cost $71,800
Net income $63,200
Alternative 3 : reduce fixed cost by 23,000
Presentation of profitability Statement
Particulars Amount
Sales $300,000
Less: Variable cost $214,000
Contribution $86,000
Less: Fixed cost($71,800-$23,000) $48,800
Net income $37,200
Therefore alternative 2 produced highest net income.
Glaston Company manufactures a single product using a JIT inventory system. The production budget indicates that the number of units expected to be produced are 193,000 in October, 201,500 in November, and 198,000 in December. Glaston assigns variable overhead at a rate of $0.75 per unit of production. Fixed overhead equals $150,000 per month. Compute the total budgeted overhead that would appear on the factory overhead budget for month of October.Group of answer choices$343,000.$150,000.$144,750.$301,125.$294,750.
Answer:
$294,750
Explanation:
The computation of the total budgeted overhead is shown below:
Particulars October November December
Fixed overhead $150,000 $150,000 $150,000
Number of units 193,000 201,500 198,000
Variable overhead $144,750
(193,000 units × $0.75)
Total budgeted overhead $294,750
For computing the total budgeted overhead we simply fixed overhead and the variable overhead so that the total budgeted overhead could come
Huey Company acquires 100% of the stock of Solar Corporation on January 1, 2019, for $2,400,000 cash. As of that date Solar had the following account balances: Book Value Fair value Cash $300,000 $300,000 Accounts receivable 325,000 325,000 Inventory 350,000 400,000 Building-net (10 year life) 1,000,000 900,000 Equipment-net (5 year life) 300,000 400,000 Land 600,000 900,000 Accounts Payable 125,000 125,000 Bonds Payable (Face amount $1,000,000, due 12/31/2023) 2,000,000 2,050,000 Common stock 700,000 Additional paid-in capital 250,000 Retained earnings 880,000 In 2019 and 2020, Solar had net income of $250,000 and $240,000, respectively. In addition, Solar paid dividends of $16,000 in both years. Inventory is assumed to be sold in 2019. Assume straight line amortization/ depreciation for assets and bonds payable. What is the amount of goodwill at date of acquisition?
Answer:
Amount of goodwill $270,000
Explanation:
As per the data given in the question,
Excess of acquisition price $570,000
which is come from
= Total consideration paid - common stock - additional paid in capital - retained earnings
= $2,400,000 - $700,000 - $250,000 - $880,000
= $570,000
Now
Adjustment for difference (fair value minus book value) :
Particulars Book value Fair value Amount
Inventory $350,000 $400,000 $50,000
Building-net $1,000,000 $900,000 ($100,000 )
Equipment-net $300,000 $400,000 $100,000
Land $600,000 $900,000 $300,000
Bonds payable $2,000,000 $2,050,000 ($50,000 )
Total amount $300,000
Now
Amount of goodwill is
= $570,000 - $300,000
= $270,000
William has an A.A. in general studies, but he does not know what career he wants to pursue. He decides to get a job for a year before going back to school. He wants a job near home in an office. He enjoys collaborating with other employees. William places a lot of value on freedom of thought and action at work. He needs about $50,000 per year.
William interviews at a company as an entry level sales person. He learns that it takes about 15 minutes to drive to the office. His job would be to work in a cubicle on a phone talking to potential clients from a script. The job pays about $50,000 per year with the possibility for performance-based bonuses.
Which factor makes this job a poor fit for William?
a. The company is in a bad location.
b. He wants more freedom in how he makes sales.
c. He is opposed to sales work.
d. The job does not pay enough money.
Answer:
b. He wants more freedom in how he makes sales.
Explanation:
The factor that makes this job an inappropriate fit for William corresponds to the lack of freedom in the way he makes sales, as all the other requirements that Willian wants for the job are met, such as the possibility that his office is only 15 minutes away from his office. home and also the $ 50,000 annual income he wants to raise.
However, in the announcement of the issue, a little bit is said about Willian's personality, who likes to collaborate with other employees and who values freedom of thought and action at work.
So the working conditions offered by the company can be an impediment for Willian to accept the job offer, since his job would be to work in a cubicle on a phone talking to potential clients from a script, and this could conflict with his professional profile, which needs more freedom to be able to express itself and reach its maximum efficiency.
It is concluded that this question shows the importance of an individual looking for a job in a company that identifies with the culture and organizational values, as well as the importance of companies selecting candidates with the most appropriate profile for the company, for that the work develops the capacities and skills of the employee, in order to make the work more motivating and productive.
The method by which consumers acquire products and services
Indicate in general journal form how the items below would be entered in a worksheet for the preparation of the statement of cash flows. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) (a) Net income is $340,000. (b) Cash dividends declared and paid totaled $112,000. (c) Equipment was purchased for $113,000. (d) Equipment that originally cost $46,000 and had accumulated depreciation of $36,800 was sold for $11,500.
Answer:
a.
Cash flow Statement $340,000 (debit)
Net Income $340,000 (credit)
b.
Cash Dividend $112,000 (debit)
Cash flow Statement $112,000 (credit)
c.
Equipment $113,000 (debit)
Cash flow Statement $113,000 (credit)
d.
J1
Cash flow Statement $11,500 (debit)
Equipment $11,500 (credit)
J2
Profit of Loss $2,300 (debit)
Cash flow Statement $2,300 (credit)
Explanation:
a.
To record Net Income from Operating Activities
b.
To record cash outflow from Dividend Payout
c.
To record cost of Purchase of Equipment
d.
J1
To record proceeds from Sale of Equipment
J2
To record profit on sale of Equipment