Answer:
ending inventory= $3,300
Explanation:
Giving the following information:
Raw materials (all direct materials):
Beginning balance $9,700
Purchased during the month $25,000
Used in production $31,400
To calculate the ending balance for Direct materials, we need to use the following formula:
Direct material used= beginning inventory + purchases - ending inventory
31,400= 9,700 + 25,000 - ending inventory
ending inventory= 3,300
The agreement of the trial balance total is an indication that all transactions have been properly recorded in the books of accounts do you agree justify your answer
Answer: I did not agree that the agreement of trial balance is an indication that all transactions have been properly recorded in the books of account .it only means that certain types of errors have not been made.
Explanation:
Trial balance is an account prepared in order to test the arithmetical accuracy of entries in the ledger account. When a double entry principle has been observed then the total of debit entry must equal the total of credit entry in the trial balance. The balancing of the two sides of the trial balance does not mean that the account is correct. It means that certain types of errors have not been made. In the sense that there are several types of error which will not affect the balancing of trial balance such as the compensating error, error of original entry, error of omission, error of commission and so on will not affect the balancing of trial balance.
Environmental recovery company RexChem Partners plans to finance a site reclamation project that will require a 4-year cleanup period. If the company borrows $4.1 million now, how much will the company have to get at the end of each quarter in order to earn 15% per year, compounded weekly on its investment?
Answer:
728,839.57883 per quarter.
Explanation:
1. Effective Annual Rate = 10%
Effective rate continuously compounded = eln(1+r) - 1
ln(1.1) = 0.09531018
Montly rate = 0.09531018/12 = 0.07942515
e0.07942515 -1 = 0.00797414
Hence, monthly continuous rate =
0.797414%
2. Effective Quarterly rate
= (1+(Rate per year/52))Number of weeks
=(1+Rate per quarter)4,
(1+(0.15/52))208=(1+r)4,
r = 16.1583394% per quarter
Now, using the PMT function in excel,
=PMT(16.1583394%,16,-4100000)
728,839.57883
per quarter
Therefore In order to earn 15% per year compounded weekly on its investment at the end of each quarter, the company will have to get $728,839.57883
For each separate case below, follow the 3-step process for adjusting the prepaid asset account at December 31.
Step 1: Determine what the current account balance equals.
Step 2: Determine what the current account balance should equal.
Step 3: Record the December 31 adjusting entry to get from step 1 to step 2.
Assume no other adjusting entries are made during the year.
a. Prepaid Insurance. The Prepaid Insurance account has a $4,700 debit balance to start the year. A re- view of insurance policies and payments shows that $900 of unexpired insurance remains at year-end.
b. Prepaid Insurance. The Prepaid Insurance account has a $5,890 debit balance at the start of the year. A review of insurance policies and payments shows $1,040 of insurance has expired by year-end.
c. Prepaid Rent. On September 1 of the current year, the company prepaid $24,000 for 2 years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $24,000.
Answer:
a. Prepaid Insurance. The Prepaid Insurance account has a $4,700 debit balance to start the year. A re- view of insurance policies and payments shows that $900 of unexpired insurance remains at year-end.
Step 1: $4,700 debit balance
Step 2: $900 debit balance
Step 3: $4,700 - $900 = $3,800
Dr Insurance expense 3,800
Cr Prepaid insurance 3,800
b. Prepaid Insurance. The Prepaid Insurance account has a $5,890 debit balance at the start of the year. A review of insurance policies and payments shows $1,040 of insurance has expired by year-end.
Step 1: $5,890 debit balance
Step 2: $4,850 debit balance (= $5,890 - $1,040)
Step 3: $1,040
Dr Insurance expense 1,040
Cr Prepaid insurance 1,040
c. Prepaid Rent. On September 1 of the current year, the company prepaid $24,000 for 2 years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $24,000.
Step 1: $24,000 debit balance
Step 2: $20,000 debit balance (= $24,000 - $4,000)
Step 3: ($24,000/24) x 4 = $4,000
Dr Rent expense 4,000
Cr Prepaid rent 4,000
On December 31, 2019, Spearmint, Inc., issued $450,000 of 9 percent, 3-year bonds for cash of $461,795. After recording the related entry, Bonds Payable had a balance of $450,000 and Premium on Bonds Payable had a balance of $11,795. Spearmint uses the straight-line bond amortization method. The first semiannual interest payment was made on June 30, 2020.
Required:
Complete the necessary journal entry for June 30, 2020.
Answer: Please refer to Explanation
Explanation:
June 30, 2020
DR Bond Interest Expense $18,284
DR Premium on Bonds Payable $1,966
CR Cash $20,250
(To record Payment of Bond Interest)
Workings
Cash
Semi Annual Payment of Interest means that the interest rate of 9% which is annual will be split into 2 to make it 4.5% to make it semi annual.
= 450,000 * 4.5%
= $20,250
Premium on Bonds Payable
The straight-line bond amortization method means that a Bond's Discount or Premium amount will be amortized in equal proportions for the duration of the bond's life.
Seeing as there are semi annual payments, the Premium will be amortized semi-annually.
There are 3 years so semi-annually would be,
= 3 * 2
= 6 periods.
Semi- Annual Bond Amortization for the premium is therefore,
= 11,795/6
= $1,966
Bond Interest Expense
= Cash - Premium on Bonds Payable
= 20,250 - 1,966
= $18,284
"5. Problems and Applications Q5 You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost: P=MC, P>ATC Which of the following statements are true about the firm? Check all that apply. The firm can increase its profit by reducing its output. The firm is possibly maximizing profit. The firm is in long-run equilibrium."
Answer: The firm can increase its profit by reducing its output.
Explanation:
Monopolistic Competitive Firms maximise profit at the point where MR = MC. This firm is producing at MC = P. This means that should the company want to make profit, they should reduce their output. This will have the effect of increasing their price and hence marginal revenue as well as reducing marginal cost to a point where MR = MC where they will then be maximising profit.
The Gecko Company and the Gordon Company are two firms whose business risk is the same but that have different dividend policies. Gecko pays no dividend, whereas Gordon has an expected dividend yield of 5 percent. Suppose the capital gains tax rate is zero, whereas the income tax rate is 25 percent. Gecko has an expected earnings growth rate of 8 percent annually, and its stock price is expected to grow at this same rate.Required:If the aftertax expected returns on the two stocks are equal (because they are in the same risk class), what is the pretax required return on Gordon’s stock? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)Pretax return %
Answer:
10.67%
Explanation:
Gecko Company
Gecko = Expected Earnings growth rate = 8% annually
As there are no Capital gains tax, thus after Tax returns = Pretax returns
= 8%
Expected Dividend yield of Gordon = 5%
After tax returns = 5(1-.25)
=5(0.75)
= 3.75%
Assuming the pay out ratio = 100%
Gordon’s required pretax return = 8/ (1-.25)
=8/0.75
= 10.67%
At pretax return of 10.67% on Gordon the after tax returns on both the stocks are equal.
3) SNG's stock is selling for $15 per share. The firm's income, assets, and stock price have been growing at an annual 15% rate and are expected to continue to grow at this rate for 3 more years. No dividends have been declared as yet, but the firm intends to declare a $2.00 dividend at the end of the last year of its supernormal growth. After that, dividends are expected to grow at the firm's normal growth rate of 6%. The firm's required rate of return is 18%. You should:
Answer:
Since the current stock's price should be $11.97, then the stock is overpriced, so you should not buy it.
Explanation:
if we use the dividend growth model to determine the intrinsic stock price:
Div₃ = $2.00
Div₄ = $2.12 (6% growth rate)
using the dividend growth model we can determine the terminal price of the stock in year 3
P₃ = $2.12 / (18% - 6%) = $17.67
terminal price in year 3 = $2 + $17.67 = $19.67
to determine the present value of the stock we must discount the future value by 18%:
present value = $19.67 / (1 + r)ⁿ = $19.67 / 1.18³ = $11.97
Since the current stock's price should be $11.97, then the stock is overpriced.
Rush Industries, Inc. builds parts for large automated heavy equipment. The Vice President for Marketing has determined that sales are dwindling for the firm's products because of aggressive pricing by competitors. Rush Industries sells the product for $775 whereas the competition's comparable part is selling in the $650 range. The VP for Marketing has determined that a price drop to $625 is necessary to regain market share and annual sales of 1,200 units. Data based on sales of 1,200 units is as follows:
Budgeted Amount Actual Amount Cost
Direct materials (sheet metal) 8,000 sq.ft. 10,000 sq.ft. $9.66 per sq.ft.
Direct labor 4,800 hrs. 5,000 hrs. $33.60 per hour
Machine setups 2,600 hrs. 2,800 hrs. $42.00 per hour
Mechanical assembly 3,200 hrs. 3,600 hrs. $34.00 per hour
Required:
1. The current cost per unit is ___________.
Answer:
The current cost per unit is $ 420.50
Explanation:
The current cost per unit is synonymous with the actual cost per unit which is determined by summing up all costs incurred in actual sense and dividing by the sales volume of 1,200 units
direct materials =10,000*$9.66=$ 96,600
direct labor=5,000*$33.60 =$ 168,000
machine set-ups=2,800*$42 =$ 117,600
mechanical assembly=3,600*$34=$122,400
total actual costs =$ 504,600
cost per unit=total costs/sales volume=$ 504,600/1200=$ 420.50
Using budgeted figures would only give us budgeted cost per unit
FX Services granted 15.5 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. The common shares have a market price of $8 per share on the grant date. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives? (Round your answer to 1 decimal place.)
Answer:
$31 million
Explanation:
No of shares = 15.5 million
Market price per share on grant date = $8
Market value of common shares = 15.5 * 10⁶ * 8
= $124 million
No of years = 4
Cost per year = ($124 * 10⁶) / 4
= $31 million
Jonathan owns a shoe factory that produces flashy shoes, but he pays his workers the bare minimum wage so that he can live large. The workers at his factory, led by Cosku, have formed a union, and are threatening to go on strike unless they receive a higher wage so that they can reasonably support their families. Five years ago, when Jonathan hired most of the workers, unemployment was very high. Now, unemployment is very low. This has changed the relative bargaining power of the employers and the employees, which Cosku and Jonathan remember from when they took ECON 104. Which statement most accurately describes how their relative power now may affect the campaign for higher wages?a) Jonathan - the factory owner - has more bargaining power than before, because he knows they will be very grateful to him for hiring them when unemployment was high. He thinks he won't have to pay workers more.b) Cosku and the workers have higher bargaining power, because they are less replaceable due to unemployment. There are very few people who Jonathan can hire to replace the workers, and if there are no workers, Jonathan cannot continue to live large. Thus, the power dynamics of the situation favor the workers winning higher wages.c) Both parties are in a better position. If Jonathan gives workers a higher wage, it will cause inflation, and then he can charge more for the flashy shoes from his factory. Workers will make more, and so will Jonathan.d) Cosku and the workers are in a worse position because they already make minimum wage. The government will see their protests and think that it's silly, because they are already paid a legal wage.
Answer:
b. Cosku and the workers have higher bargaining power, because they are less replaceable due to unemployment. There are very few people who Jonathan can hire to replace the workers, and if there are no workers, Jonathan cannot continue to live large Thus, the power dynamics of the situation favor the workers winning higher wages
Explanation:
Since in the given question it is mentioned that the employees will go on strike until they do not received higher wages so that they can support their families
And in case of low unemployment, the relative bargaining power of the employers and the employees is changed i.e high. Moreover they are very Less person through which they can hire in order to replace the workers and in the case when there is no workers so he is unable to continue its business operations due to which he cannot live large.
So to overcome this he have to agree to pay the higher wages to the employees other wise the workers could leave the organization
Answer:
b) Cosku and the workers have higher bargaining power..........dynamics of the situation favor the workers winning higher wages
Explanation:
Labour markets wages & employment are determined on the basis of :- labour demand by firms & labour supply by workers ; and relative bargaining power of buyer firms & seller workers.
Firms more bargaining power leads to reducing pressure on wage rates with more employment. Workers more bargaining power leads to increasing pressure on wage rates with less employment.
At the time of Jonathan's shoe factory inception, more unemployment meant firms had more bargaining power & hence the wages were lower. However, no hike in wages with time make workers demand higher wage with strike warning. Meanwhile, less unemployed labour supply available implies that firms have no substitute labour to hire. So, union & workers have higher bargaining power & labour irreplaceability due to less unemployment - state that Jonathan has no other alternative than to accept labour favouring notion of higher wages.
sment / ACCT100 Assessment 3
Superhub Ltd carries an inventory of a type of electrical device for electrician. The store uses the FIFO method and a perpetual inventory
system. Business records indicate the following transactions for the device.
July 1 (beginning): the store had 100 units of device costing $103 each
July 10: 150 devices were purchased each costing $91
July 15: 173 devices were sold
July 22: 200 devices were bought for $113 each.
July 30: 194 devices were sold
Determine the amounts of Superhub Ltd's ending inventory (at 31 July) in the month of July using the FIFO method.
st
Answer:
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Answer:
The value of closing inventory using FIFO under perpetual inventory system is $9379
Explanation:
The FIFO or first in first out method is a method of inventory valuation which basis the value of ending inventory on the assumption that the inventories that were purchased first were the ones that were sold first and the closing or ending inventory is comprised of the most recent purchases.
The perpetual method of inventory recording makes real time record and changes in the inventory level as soon as a transaction relating to inventory occurs.
The ending inventory of the business can be calculated as follows:
Transaction Purchases Sale Balance
1. Opening Inventory (100 * 103) 10300
2. July 10 purchase (150 * 91) 13650 23950
3. July 15 sale (100*103 + 73*91) 16943 7007
4. July 22 purchase (200 * 113) 22600 29607
5. July 30 sale (77*91 + 117*113) 20228 9379
Totals 36250 37171 9379
The value of closing inventory is $9379. The sale made on July 15 was made through using 100 units of opening inventory at a cost of $103 per unit and 73 units from July 10 purchases at $91 per unit.The sale made on July 30 was made through using the remaining units of July 10 purchases (150 - 73 = 77) at $91 per unit and using the units from July 22 purchase (194 - 77 = 117) at $113 per unit.The closing inventory in units is = 200 - 117 = 83The cost of closing inventory is 83 * 113 = $9379Moon Flower Cosmetics Company's executives are aware that their Asian customer base is interested in advanced skin care treatments beyond Moon Flower's traditional herbal and organic compounds. Moon Flower and a large American chemical company are in discussions to create a 50-50 partnership in a new firm, which would create skin care treatments based on innovative chemical formulations that would be marketed both in Asia and the United States. Beyond being a cross-border alliance, this partnership can be called a(n):_________
a. nonequity strategic alliance.
b. joint venture
c. horizontal complementary alliances
d. equity strategic allianc
Answer:
Letter b is correct. Joint venture.
Explanation:
The Joint Venture strategy can be defined as an economic association that occurs between two or more companies, whose objective is to carry out a certain activity during a limited period of time.
Joint Venture operations are commonly used for various organizational purposes, such as commercial, logistical, technological, etc., in addition to being a strategy that makes it possible to accelerate business by combining business resources.
It is necessary to know that in addition to the mutual benefits, the companies that adopt this strategy also share the same risks and costs, therefore planning is necessary so that the commercial association is profitable for both companies.
The given situation represent the partnership that we called as the joint venture.
The following information should be considered:
It means the association that should be created between two or more companies where the objectives are same and it is for the limited period. In this, there is the mutual benefits, risk, cost so could be born by the companies.Therefore we can conclude that The given situation represent the partnership that we called as the joint venture.
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The following information is available for Skysong Corporation for the year ended December 31, 2022.
Beginning cash balance $35,000
Accounts payable decrease 3,200
Depreciation expense 83,000
Accounts receivable increase 9,700
Inventory increase 13,400
Net income 336,000
Cash received for sale of land at book value 35,000
Sales revenue 744,500
Cash dividends paid 10,800
Income tax payable increase 4,900
Cash used to purchase building 147,500
Cash used to purchase treasury stock 39,700
Cash received from issuing bonds 216,000
Required:
(a) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis (15,000).)
Answer and Explanation:
The preparation of the cash flow statement is presented below:
Skysong Corporation
Cash flow statement
For the year ended December 31, 2022
Cash flow from operating activities
Net operating income $336,000
Adjustment made
Add: Depreciation expenses $83,000
Less: Increase in account receivable -$9,700
Less: Increase in inventory -$13,400
Less: Decrease in account payable -$3,200
Add: Increase in income tax payable $4,900
Net cash provided by operating activities $397,600
Cash flow from investing activities
Purchase of Building -$147,500
Sale of land $35,000
Net cash used by investing activities -$112,500
Cash flow from financing activities
Purchase of treasury stock -$39,700
Issuance of the common stock $216,000
Dividend paid -$10,800
Net cash used by financing activities $165,500
Increase in cash $450,600
Add: Beginning cash balance $35,000
Ending cash balance $485,600
The items which shows in a positive sign represents the cash inflow and the items which depicts in a negative sign shows the cash outflow
Van pays the following medical expenses this year:
a. $1500 for doctor bills for van's son who is claimed as a dependant by Van's former spouse.
b. $300 for Van's eyeglasses
c. $900 for Van's dental work
d. $3800 for Van's face lift. Van, a newscaster, is worried about the wrinkles around his eyes.
Required:
1. How much can Van include on his return as qualified medical expenses before limitation?
Answer:
The amount Van can include on his return as qualified medical expenses before limitation is $2,700
Explanation:
The amount of medical expenses that Van can include on his return as qualified medical expenses before limitation are the following:
a. $1,500 for doctor bills for van's son who is claimed as a dependant by Van's former spouse.
b. $300 for Van's eyeglasses
c. $900 for Van's dental work
Therefore, amount Van can include on his return as qualified medical expenses before limitation=$1.500+$300+$900
amount Van can include on his return as qualified medical expenses before limitation=$2,700
Jaime works as a Power Plant Manager. What are some tasks that he may be involved in?
Answer:
a plant manager would be involved in a variety of tasks such as:
overseeing the plan and its daily operations that the manufacturing/production facility are in charge of
managing employees
increase production within the plant
implement and monitor safety procedures
might work on plants machinery or the planet management software
A shift in the supply curve can be caused by:
A. a change in buyers' incomes
B. a change in the price of a good
C. a change in one of the determinants of supply
D. a shift in demand.
Answer:
C. a change in one of the determinants of supply
Explanation:
Some of the factors that can cause a shift in supply includes:
Change in the price of input
Government regulations
Changes in the number of suppliers
Technological advancement
Only changes in price leads to movement along the supply curve
I hope my answer helps you
Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $14.00 per unit. The unit cost for the business to make the part is $20.00, including fixed costs, and $12.00, not including fixed costs. If 38,493 units of the part are normally purchased during the year but could be manufactured using unused capacity, the amount of differential cost increase or decrease from making the part rather than purchasing it would be a
Answer:
The correct answer to the following question will be "$76,986".
Explanation:
Although the organization is reportedly going to pay $14.00 per unit, even before manufactured throughout the corporation, cost and save per unit will become the variation among current value as well as production costs without set rate. The cost of operating expenses will not be included to measure the gain because the idle resources of the company would be included and would not raise the fixed costs.
Therefore the cost differential would be as follows:
⇒ [tex]Differential \ cost = (Current \ purchasing \ price-Manufacturing \ cost \ excluding \ fixed \ cost)\times 38,493[/tex]On putting the values in the above formula, we get
⇒ [tex]=(14-12)\times 38,493[/tex]
⇒ [tex]=2\times 38,493[/tex]
⇒ [tex]=76,986[/tex]
Journalize the entries for the following transactions. Refer to the Chart of Accounts for exact wording of account titles. (Note: The company uses a clearinghouse to take care of all bank as well as non-bank credit cards used by its customers. )
A. Sold merchandise for cash, $30,500. The cost of the goods sold was $16,165.
B. Sold merchandise on account, $254,300. The cost of the merchandise sold was $134,779
C. Sold merchandise to customers who used MasterCard and VISA, $162,900. The cost of the merchandise sold was $86,337.
D. Sold merchandise to customers who used American Express, $72,000. The cost of the merchandise sold was $38,160.
E. Received and paid an invoice from National Clearing House Credit Co. for $7,010, representing a service fee paid for processing MasterCard, VISA, and American Express sales.
Answer and Explanation:
The journal entries are shown below:
A. Cash Dr $30,500
To Sales revenue $30,500
(Being the merchandise is sold for cash)
For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue
Cost of goods sold Dr $16,165
To Merchandise inventory $16,165
(being the cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited
B. Account receivable Dr $254,300
To Sales revenue $254,300
(Being the merchandise sold for account)
For recording this we debited the account receivable as it increased the assets and credited the sales revenue as it also increased the revenue
Cost of goods sold Dr $134,779
To Merchandise inventory $134,779
(being the cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited
C. Cash Dr $162,900
To Sales revenue $162,900
(Being the merchandise is sold for cash)
For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue
Cost of goods sold Dr $86,337
To Merchandise inventory $86,337
(being the cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited
D. Cash Dr $72,000
To Sales revenue $72,000
(Being the merchandise is sold for cash)
For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue
Cost of goods sold Dr $38,160
To Merchandise inventory $38,160
(being the cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited
E. Credit card expenses Dr $7,010
To Cash $7,010
(Being the cash paid is recorded)
For recording this we debited the credit card expense as it increased the expenses and reduced the assets so cash is credited
Laura Bryant joined Kellogg's straight after university in 2002. She joined the Field Sales team initially. This involved visiting five to ten supermarkets a day to develop relationships at a local level. After two years her hard work was rewarded and she was promoted to Customer Marketing Manager at Head Office. This helped to raise her profile as she wanted to move into marketing. With support from her manager, Laura made the transition from Sales to Marketing as Assistant Brand Manager on Rice Krispies and Frosties. In 2009 she was promoted again to manage the marketing plan for Special K and she is now Brand Manager for Kellogg's Cornflakes. The company has helped motivate her to climb the hierarchy of needs and achieve her career ambitions.
A. Identify and explain the theory of motivation applied by the manager at Kellog’s company. Identify each level and support your answer from examples from the case.
B. Herzberg's motivational factors and Maslow's esteem and self-actualization needs are similar. Explain how organizations can meet these needs.
Answer:
(A)The theory applied by the manger is refereed to as the Vroom's expectancy. it was made to inspire Laura to perform better in her place of work, for this she was promoted duw to her performance and zeal to work.
(B) The motivational factors of Herzberg and Maslow's esteem and self actualization are very close.
Maslow's esteem and actualization focused on employee motivation towards work. while Herzberg motivational factor where more of recognition, achievement, prestige and status.
Explanation:
Solution
(A) The theory used by manager is called the Vroom’s expectancy m which was used to inspire Laura.
Laura put in a great amount of work towards developing her sales relationship which showed in desired output.
For this performance, she was promoted to the level of Customer Manager at Head Office. (Expectancy)
This made her move into marketing field though she was initially an assistant Brand Manager but later became the Brand Manager. (Instrumentality).
Her desire to move from Sales to marketing was possible in the end (Valence).
(B) The factors of Herzberg's motivation and Maslow's self-actualization and respect needs are considered very close.
The motivating factors initiated by Herzberg are job elements as responsibility, recognition, achievement, and growth. this was all centered on employee motivation and satisfaction
With regard to Maslow’s respect and self-actualization needs which focused on motivating employee into work. esteem needs centered on status, prestige,and recognition. Self-actualization is called an achievement that us supreme where a person or individual creates an impact that is seen as positive or beneficial to the society.
In 2009, the great recession finally took its toll on the Alamo Title company in San Antonio, Texas. The housing business was in steep decline and the size of the company was reduced to half its former size through layoffs. Alamo Title was experiencing many new and unexpected challenges to keep its doors open for business. Management was discussing what style of management would be the most effective to use now at the company and brought you in to advise them. Which management style would you recommend they use?
Answer:
Theory X management style
Explanation:
Theory X is focused on the standard laborer's suppositions. This theory of management believes the average worker has no motivation, lacks accountability and is focused to specific ambitions. Overall, managers of theory X style assume their workers are less smart, stupider, and only operate for a reliable income.
In such a management style the managers keeps strong supervision over their subordinates, therefore, it will be suitable style as the company is already in steep condition and further problems might lead to total loss.
On August 1, 2007 the Dell Computer Corporation's stock closed trading at $ 27.76 per share while Apple Corporation's shares closed at $ 133.64. Does this mean that because Apple's stock price is roughly four times that of Dell's, Apple is the more valuable company? Interpret the prices for these two firms using the information found here:
(Most recent 12 months) Dell 2007 Apple 2007
Net Income ($ millions) $3,572 $3,130
Shares outstanding (millions) 2300 869.16
Earnings per share ($) $1.55 $3.60
Price per share (8/1/07) $27.76 $133.64
Price-to-earnings ratio (PE ratio) 17.91 37.11
Book value of common equity ($ millions) $4,129 $9,984
Book value per share ($) $1.80 $11.49
Market-to-book ratio 15.42 11.63
It appears that Apple enjoys a (lower or higher) price per share when compared to its 2007 earnings but a (lower or higher) price when compared to the book value of the firm's equity. The (higher or lower) market-to-book ratio for Apple reflects that fact that Apple has used a great deal (less or more) equity and (more or less) debt to finance its operations.
Answer: The answer is provided below
Explanation:
It appears that Apple enjoys a (higher) price per share when compared to its 2007 earnings but a (lower) price when compared to the book value of the firm's equity. The (lower) market-to-book ratio for Apple reflects the fact that Apple has used a great deal (more) equity and (less) debt to finance its operations.
Apple will enjoy a higher price per share because Apple Corporation's shares closed at $ 133.64 while Dell Computer Corporation's stock closed trading at $ 27.76 per share. Also, the lower market-to-book ratio for Apple of $11.63 compared to Dell's market to book ratio of $15.42 shows that Apple used more of equity and less debt for its business.
A company purchased a 3-acre tract of land for a building site for $450,000. The company demolished the old building at a cost of $22,000, but was able to sell scrap from the building for $2,500. The cost of title transfer was $1,400 and attorney fees for reviewing the contract was $700. Property taxes paid were $8,000, of which $750 covered the period after the purchase date. The capitalized cost of the land is: Multiple Choice $345,350. $478,850. $480,350. $480,600.
Answer:
$478,850
Explanation:
The computation of capitalized cost of the land is shown below:-
Capitalized cost of the land = Purchase cost + Demolition of old building + Cost of Title insurance + Attorney fees + Property taxes paid - Scrap value of the building
= $450,000 + $22,000 + $1,400 + $700 + ($8,000 - $750) - $2,500
= $450,000 + $22,000 + $1,400 + $700 + $7,250 - $2,500
= $481,350 - $2,500
= $478,850
So, for computing the capitalized cost of the land we simply applied the above formula.
beyond lower turnover ,how else does costco benefit from treating its employees well?
Answer:
In simple words, by treating the employees well in the organisation businesses can get a lot of unexpected profits besides the lower cost due to lower employee turnover.
Employees in such organisation will always be motivated to work hard and self align their interests with objectives and goals of the organisation. Also employee satisfaction leads to lesser conflict with the workplace which further leads to more efficiency.
a. Two years ago your firm took out a 30- year amortizing loan to purchase a small office building. The loan has a 4.80% APR with monthly payments of $2623.33.
i. How much do you owe on the loan today? (4 points)
ii. How much interest did the firm pay on the loan in the past year? (5 points)
iii. Suppose starting next year (fourth year) the loan rate jumps to 7.2% APR. What is the remaining balance? What will be the monthly payment? (6 points)
Answer:
i. How much do you owe on the loan today?
remaining principal balance = $484,331.31ii. How much interest did the firm pay on the loan in the past year?
during year 2, $23,458 was paid in interests ($28,833.33 was paid in interest during year 1).iii. Suppose starting next year (fourth year) the loan rate jumps to 7.2% APR. What is the remaining balance? What will be the monthly payment?
the remaining balance at the beginning of year 4 is $475,916the new monthly payment will be $3,375.72Explanation:
I prepared two amortization schedules using an excel spreadsheet. The principal on the loan was $500,000. The first one has a fixed 4.8% APR for the whole 30 years. In the second one, the APR changes to 7.2% at the beginning of year 4.
Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? During a period of economic growth and in an optimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during an economic recession and a pessimistic environment. During an economic recession and in a pessimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during good economic times. In 2008, the United States began to witness one of the worst recessions since the 1930s. The collapse of the housing bubble in 2006 led to a massive decline in real estate prices, affecting consumers and institutions, especially banking and financial entities. Severe liquidity shortfalls in the United States as well as other global markets led to a serious credit crisis. During the credit crisis of 2008–2009, several banks and other businesses went through a reorganization process or were forced to liquidate. Consider the following example: In December 2008, Hawaiian Telcom took action to strengthen its balance sheet by reducing debt. Although the company continued to operate, its creditors could not collect their debts or loan payments that were due prior to the legal action that the company took. However, on November 30, 2009, the company had $75 million in cash on hand. This is an example of: Liquidation Reorganization
Answer: 1. During an economic recession and in a pessimistic environment, the yield spread between US government bonds and corporate bonds could be higher than during good economic times.
2. Reorganization
Explanation:
1. When there is a higher yield gap between the US Government bonds and Corporate bonds, this means that the Corporate bonds carry more risk. In a Pessimistic Environment, the ability of a company to pay it's Debt obligations is called into question as the economy is going through hard times and they must be as well. If this is the case which it usually is, higher risk will be attached to Corporate bonds which means that the yield spread/gap will be higher in such an environment than in an Optimistic environment.
2. Reorganization refers to the changing of the way a company is run from it's ownership to it's structure and modus operandi. It is usually done to ensure the business survives when it is going through hard times and the current status quo cannot stand. Hawaiian Telecom engaged in Reorganization by engaging in the actions described.
We are evaluating a project that costs $735,200, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 80,000 units per year. Price per unit is $48, variable cost per unit is $33, and fixed costs are $730,000 per year. The tax rate is 22 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±15 percent.(a-1) Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)(a-2) What is the degree of operating leverage at the accounting break-even point? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)(b-1) Calculate the base-case cash flow and NPV. (Do not round intermediate calculations. Round your cash flow answer to the nearest whole number, e.g., 32. Round your NPV answer to 2 decimal places, e.g., 32.16.)(b-2) What is the sensitivity of NPV to changes in the quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)(c) What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. )
Answer:
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Explanation:
Carla Vista Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns period extends 60 days. On February 10, 2021, a customer purchases $3500 of products (cost $1750). Assuming that based on prior experience, estimated returns are 20%. The journal entry to record the actual return of $200 of merchandise includes a:______
Answer:
debit to Returned Inventory for $100
Explanation:
The Journal entry is following below:
1. Sales Returns & Allowance Dr, $200
To Account Receivable $200
(Being sales return is recorded)
Here, we debited the sales return and allowances as it is return and we credited the accounts receivable as it reduces the assets.
2. Returned Inventory Dr, $100
To Cost of Goods Sold $100
(Being returned Inventory is recorded)
Here, we debited the returned inventory as it is return while we credited the cost of goods sold as the expenses is reduced.
Working note
Returned inventory = Actual return × Cost ÷ Customer purchase
= $200 × $1,750 ÷ $3,500
= $200 × 0.5
= $100
Polaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 30,000 Rets per year. Costs associated with this level of production and sales are given:
Unit Total
Direct materials $15 $450,000
Direct labor 8 240,000
Variable manufacturing overhead 3 90,000
Fixed manufacturing overhead 9 270,000
Variable selling expense 4 120,000
Fixed selling expense 6 180,000
Total cost $45 $1,350,000
The Rets normally sell for $50 each. Fixed manufacturing overhead is constant at $270,000 per year within the range of 25,000 through 30,000 Rets per year.
Required:
Assume that due to a recession, Polaski Company expects to sell only 25,000 Rets through regular channels next year.
A large retail chain has offered to purchase 5,000 Rets if Polaski is willing to accept a 16% discount off the regular price.
There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 75%.
However, Polaski Company would have to purchase a special machine to engrave the retail chain's name on the 5,000 units. This machine would cost $10,000. Polaski Company has no assurance that the retail chain will purchase additional units any time in the future.
Determine the impact on profits next year if this special order is accepted.
Refer to the original data, assume again that Polaski Company expects to sell only 25,000 Rets through regular channels next year.
The U.S. Army would like to make a one-time-only purchase of 5,000 Rets.
The Army would pay a fixed fee of $1.80 per Ret, and in addition it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units.
Since the army would pick up the Rets with its own trucks, there would be no variable selling expenses of any type associated with this order.
If Polaski Company accepts the order, by how much will profits be increased or decreased for the year. Assume the same situation as that described above, except that the company expects to sell 30,000 Rets through regular channels next year. Thus, accepting the U.S. Army's order would require giving up regular sales of 5,000 Rets.
If the Army's order is accepted, by how much will profits be increased or decreased from what they would be if the 5,000 Rets were sold through regular channels?
Answer:
production level 30,000 units
production costs at that level:
direct materials $15 per unit = $450,000direct labor $8 per unit = $240,000variable manufacturing overhead $3 per unit = $90,000fixed overhead $9 per unit = $270,000variable selling expense $4 per unit = $120,000fixed selling expense $6 per unit = $180,000total costs per unit $45 = $1,350,000sales price $50 per unit, profit $5 per unit = $150,000
fixed manufacturing overhead constant between 25,000 - 30,000 units
scenario 1:
due to a recession, sales decrease to 25,000 units:
special order for 5,000 at $42 per unit
additional costs = $10,000 for special machine
without special order with special order
total units sold 25,000 30,000
total revenue $1,250,000 $1,460,000
- variable px costs -$650,000 -$780,000
- fixed ma. overhead -$270,000 -$270,000
gross profit $330,000 $410,000
- variable selling exp. -$100,000 -$115,000
- fixed selling exp. -$180,000 -$180,000
- special machine $0 -$10,000
net profit $50,000 $105,000
profits will increase by $50,000 if the special order is accepted
scenario 2:
normal sales levels 30,000 units, Army wishes to purchase 5,000 units:
special order for 5,000 at production costs + $1.80
additional costs = $10,000 for special machine
without special order with special order
total units sold 30,000 30,000
total revenue $1,500,000 $1,434,000
- variable px costs -$780,000 -$780,000
- fixed ma. overhead -$270,000 -$270,000
gross profit $450,000 $384,000
- variable selling exp. -$120,000 -$100,000
- fixed selling exp. -$180,000 -$180,000
net profit $150,000 $104,000
profits will decrease by -$46,000 if the Army's special order is accepted
Innovative Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fees Earned, Rent Expense, Advertising Expense, Utilities Expense, Miscellaneous Expense.
Journalize the following selected transactions for October 20Y2 in a two-column journal. Journal entry explanations may be omitted.
Oct. 1 Paid rent for the month, $2,500.
4 Paid advertising expense, $600.
5 Paid cash for supplies, $1,200.
6 Purchased office equipment on account, $9,200.
12 Received cash from customers on account, $15,900.
20 Paid creditor on account, $3,410. 27 Paid cash for miscellaneous expenses, $550.
30 Paid telephone bill for the month, $400.
31 Fees earned and billed to customers for the month, $50,170.
31 Paid electricity bill for the month, $830.
31 Paid dividends, $1,850.
Answer:
Please see the Journal Entry below for Innovative Consulting Co.
Explanation:
Oct. 1
Debit: Rent Expense $2,500
Credit: Cash $2,500
Oct. 4
Debit: Advertising Expense $600
Credit: Cash $600
Oct. 5
Debit: Supplies $1,200
Credit: Cash $1,200
Oct. 6
Debit: Office Equipment $9,200
Credit: Accounts Payable $9,200
Oct. 12
Debit: Cash $15,900
Credit: Accounts Receivable $15,900
Oct. 20
Debit: Accounts Payable $3,410
Credit: Cash $3,410
Oct. 27
Debit: Miscellaneous Expense $550
Credit: Cash $550
Oct. 30
Debit: Utilities Expense $400
Credit: Cash $400
Oct. 31
Debit: Accounts Receivable $50,170
Credit: Fees Earned $50,170
Oct. 31
Debit: Utilities Expense $830
Credit: Cash $830
Oct. 31
Debit: Dividends $1,850
Credit: Cash $1,850
Prepare the issuer's journal entry for each of the following separate transactions.
A. On March 1, Atlantic Co. issues 45,000 shares of $3 par value common stock for $305,000 cash.
B. On April 1, OP Co. issues no-par value common stock for $75,000 cash.
C. On April 6, MPG issues 2,500 shares of $25 par value common stock for $44,000 of inventory, $160,000 of machinery, and acceptance of a $94,000 note payable.
Answer:
Double entry is given in the explanation.
Explanation:
Part A. The common stock is always recorded at par which is $3 per share here and the Capital Paid In is the remainder amount which is calculated as under:
Capital Paid In = Cash Received - Common Stock
Here,
Capital Received is $305,000
Capital Stock = 45,000 shares * $3 par value = $135,000
By putting the values, we have:
Capital Paid In = $305,000 - $135,000 = $170,000
Double Entry would be:
Dr Cash $305,000
Cr Common Stock $135,000
Cr Capital Paid In $170,000
Part B. The common stock of the stocks that are issued at no par value is always recorded at money received which means there is no capital paid-in.
Double Entry would be:
Dr Cash $75,000
Cr Common Stock $75,000
Part C. The inventory received is worth $44,000 which would be debited to inventory account. In exchange of inventory $44,000 and machinery worth $160,000 (Machinery will also be debited), 2500 shares having $25 par value (common stock will be credited at par and the excess of par would be capital paid-in) and $94,000 note payables were issued (Note payable would be credited at $94,000).
Double Entry would be:
Dr Inventory $44,000
Dr Machinery $160,000
Cr Note Payable $94,000
Cr Common Stock (2000 * $25) $50,000
Cr Capital Paid In (Balancing Figure) $60,000