Answer:
a. Sky King, world traveler, says if the airlines want to increase total revenue, they should lower fares for business travelers as well as for vacationers.
Sky King is assuming that the demand for airline tickets is price elastic, This means that a small decrease in the price of airline tickets will result in a proportionally larger increase of the quantity demanded. This will ultimately result in an increase of total revenue, e.g. price decreases by 5%, but quantity demanded in creases by 15%.
b. Both groups should respond equally to a price decrease
I guess that this question is related to the first question. If both groups of consumers respond equally to a price decrease, it means that both groups have exactly the same price elasticity of demand. This is usually not very common, theoretically it is possible, but generally business travelers have a more inelastic demand while vacationers tend to have a more elastic demand.
c. Bill Smith, a candidate for the state legislature, is proposing a large increase in the tax on cigarettes and liquor. He says "I'm not proposing these taxes to raise revenue but to discourage reckless drinking and the filthy smoking habit. If the price of cigarettes and liquor go up, the majority of people will quit using them. After all no one needs to smoke or drink?"
Bill believes that both cigarettes and liquor have an elastic demand since he believes that an increase in the price of cigarettes and liquor will result in consumers quitting. It applies the same logic as the first scenario, but on an inverse situation. You want to lower consumption, and increasing the price should do it. empirical evidence suggests that Bill is wrong, since people who like to drink or smoke will continue to do it regardless of the price. They might change for cheaper brands or ultimately, they will stop consuming other goods in order to be able to afford consuming cigarettes and liquor. Alcohol is by far the most dangerous and lethal drug in the world and the main problem with it is that people will do anything to get it. I'm not so sure about cigarettes, but since it also develops an addiction, the bad effects should be the same.
In preparing a company's statement of cash flows using the indirect method, the following information is available: Net income $ 52,000 Accounts payable decreased by 18,000 Accounts receivable increased by 25,000 Inventories increased by 5,000 Depreciation expense 30,000 Net cash provided by operating activities was:
Answer:
Cash flows from operating activities:
Net income $52,000
Adjustments to net income:
Depreciation expense $30,000Accounts receivable increased by ($25,000)Inventories increased by ($5,000) Accounts payable decreased by ($18,000) ($18,000)Net cash flow provided by operating activities $34,000
Assume the following amounts: Total fixed costs Selling price per unit Variable costs per unit If sales revenue per unit increases to and units are sold, what is the operating income?
Answer:
The correct option is c. 129,000.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Assume the following amounts:
Total fixed costs. $15,000
selling price per unit. $19
variable costs per unit. $12
if sales revenue per unit increases to $21 and 16,000 units are sold what is the operating income?
a 159,000
b. 336,000
c. 129,000
d. 144,000
The explanation to the answer is now provided as follows:
Since sales revenue per unit increases to $21, we use it as the selling price and proceed as follows:
Computation of Operating Income
Particular Amount ($)
Sales revenue (16,000 * $21) 336,000
Variable cost (16,000 * $12) (195,000)
Contribution 144,000
Fixed cost (15,000)
Operating income 129,000
Therefore, the correct option is c. 129,000. That is, operatin income is $129,000.
The sales process at Xerox typically follows the six stages of the personal selling process. During the second stage, the salesforce prepares for a presentation by
Answer:
Explanation:
During the second stage, the salesforce prepares for a presentation by researching the market and collecting all relevant information regarding your product or service. Doing so allows the salesforce to have all the information ready and tailored specifically to the potential client's particular needs in order to drastically increase the chances of convincing the potential client on buying the product that is being presented to them.
An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals $4,731. If Allowance for Doubtful Accounts has a $810 credit balance, the adjustment to record the bad debt expense for the period will require a:________.
a. debit to Allowance for Doubtful Accounts for $3,921.
b. debit to Bad Debt Expense for $3,921.
c. credit to Allowance for Doubtful for $4,731.
d. debit to Allowance for Doubtful Accounts for $4,731
Answer:
b. debit to bad debt expense for $3,921
Explanation:
Bad debt are debts owed to a business and which cannot be collected. Theses debts occurs during the course of business transaction and are caused by fraud, a company avoiding its obligation to pay or trade disagreements.
With regards to the above, the adjustment to bad debts expense will be the difference between accounts receivable and doubtful accounts.
Bad debts expense = $4,731 - $810 = $3,921
An airline sells 120 tickets for a flight that seats 100. Each ticket is non-refundable and costs $200. The unit cost of flying a passenger (fuel, food, etc.) is $80. If the flight is overbooked, each person who does not find a seat is given $300 in cash. Assume it is equally likely that any number of people between 91 and 120 show up for the flight. Rounded to the nearest thousand (e.g., 18500 rounds to 19000), on the average how much expected profit (ignoring fixed cost) will the flight generate
Answer:
14019.999
Explanation:
Capacity(n) = 100
Ticket sold (t) = 120
Cost pet ticket (c) = $200
Unit cost (u) = $80 per passenger
Refund amount (r) = $300
Number of people who show up for the flight falls between 91 and 120
Total Revenue = t * c = (120 * $200) = $24,000
Total cost of operating flight per trip:
(u * n) = ($80 * 100) = $8,000
Profit = Revenue - cost
Since number of passengers who show up falls between 91 and 120
Take number who show up as 'p'
Case 1:
If 91 <= P <= 100, then the airline won't pay any refund, hence, profit = 24000 - 80p
Case 2:
If 100 < p <= 120, then refund will be made
Refund = 300 * (p - 100)
Profit = 24000 - 80p - (300p - 30000)
24000 - 8000 - 300p + 30000
Profit = 46000 - 300p
Expected profit :
n = (120 - 90)
Case 1
P= summation (91 to 0) = 955
(100 - 90) * (24000) - 80(955)
(20 * 24000) - 76400 = 163,600
163,600 / 30 = 5453.3333
Case 2:
P = summation (101 - 120) = 2210
(120 - 100) * (46000) - 300(2210))
(920,000 - 663,000) / 30
= 257,000 / 30 = 8566.6666
Case 1 + case 2
(8566.6666 + 5453.333= 14019.999
A stock has had the following year-end prices and dividends:Year Price Dividend1 $ 64.73 â 2 71.60 $ .68 3 77.40 .73 4 63.67 .79 5 73.91 .88 6 83.75 .95 What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)Arithmetic average return %Geometric average return %
Answer:
Arithmetic average return = 7.23%
Geometric average return=6.44%
Explanation:
Calculation for the Arithmetic average return
First step is to calculate the return for each year
Using this formula
Return=(Current year price amount-Previous price amount + Current year dividend)/ Previous year price amount ×100
Let plug in the formula
Year 1 Return= ($71.60-$64.73 + $.68) / $64.73
Year 1 Return=$7.55/$64.73
Year 1 Return= 11.66%
Year 2 Return= ($77.40-$71.60 + $.73) / $71.60
Year 2 Return=$6.53=$71.60
Year 2 Return = 9.12%
Year 3 Return= ($63.67-$77.40 +$ .79) / $77.40 Year 3 Return=$-12.94/$77.40
Year 3 Return=-16.72%
Year 4 Return= ($73.91-$63.67 +$ .88) / $63.67
Year 4 Return=$11.12/$63.67
Year 4 Return = 17.47%
Year 5 Return= ($83.75-$73.91 + $.95) / $73.91 Year 5 Return=$10.79/$73.91
Year 5 Return= 14.60%
The second step is to calculate the arithmetic average return
Using the formula
Arithmetic average return = (Addition of the each year return percentage /Numbers of years)
Let plug in the formula
Arithmetic average return (.1166 + .0912-.1672 + .1747 + .1460) / 5
Arithmetic average return =0.3613/5
Arithmetic average return = .0723 ×100
Arithmetic average return = 7.23%
Calculation for the geometric average return
Using this formula
Geometric average return=(1+Each year return percentage)^1/Numbers of years-1)
Let plug in the formula
Geometric average return== [(1 + .1166)×(1 + .0912)×(1-.1672)×(1 + .1747)×(1 + .1460)]^1/5-1
Geometric average return=[(1.1166)×(1.0912)(0.8328)×(1.1747)×(1.146)]^1/5-1
Geometric average return=(1.366011)^1/5-1
Geometric average return=1.0644
Geometric average return=1.0644-1
Geometric average return=0.0644
Geometric average return=0.0644 ×100
Geometric average return=6.44%
Therefore the Arithmetic average return is 7.23% while Geometric average return is 6.44%.
What can you say about the value of a stock with constant dividend growth where the growth rate is larger than the discount rate
Answer:
Assuming that the growth rate of Company A' stock is larger than the discount rate this means that the stock price will be a negative value.
The implication is that the stock price is higher in comparison to the earnings. Perhaps, the entity is a newly launched organization that has not accumulated enough in earnings.
Explanation:
A stock that has a negative price should be investigated as the company may have liabilities that are in excess of the assets.
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:Unit SalesApril 82,000May 90,000June 122,000July 96,000The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 15% of the following month's unit sales. The inventory at the end of March was 12,300 units.Required:Prepare a production budget by month and in total, for the second quarter.
Answer:
Results are below.
Explanation:
Giving the following information:
Sales:
April 82,000
May 90,000
June 122,000
July 96,000
Desired ending inventory= 15% of the following month's unit sales.
The inventory at the end of March was 12,300 units
To calculate the production required, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
April:
Sales= 82,000
Desired ending inventory= 90,000*0.15= 13,500
Beginning inventory= (12,300)
Total production= 83,200
May:
Sales= 90,000
Desired ending inventory= 122,000*0.15= 18,300
Beginning inventory= (13,500)
Total production= 94,800
June:
Sales= 122,000
Desired ending inventory= 96,000*0.15= 14,400
Beginning inventory= (18,300)
Total production= 118,100
Problem 2.7 Service Station A service station uses 1,200 cases of oil a year. Ordering costs is $40 and annual carrying cost is $3 per case. The station owner has specified an annual service level of 99 percent. a. What is the optimal order quantity? EOQ = This is the lot size.
Answer:
179 units
Explanation:
The computation of the economic order quantity is shown below:
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
Annual demand = 1,200 cases
Ordering cost = $40
And, the annual carrying cost is $3 per case
Now placing these values to the above formula
So, the optimal order quantity is
[tex]= \sqrt{\frac{2\times \text{1,200}\times \text{\$40}}{\text{\$3}}}[/tex]
= 179 units
Hence, the optimal order quantity is 179 units
Which of the following budgets is prepared before the preparation of the production budget? a. Sales budget b. Cash budget c. Direct labor budget d. Capital expenditure budget
Answer:
a. Sales budget
Explanation:
Sales Budget is the starting point for the Budgetary process. The sales budget projects the number of units to be sold to meet the firms targets.
These units will then need to be used to populate the production required by the firm to meet its sales needs plus any inventory balances.
Suppose the average return on Asset A is 6.9 percent and the standard deviation is 8.1 percent and the average return and standard deviation on Asset B are 4.0 percent and 3.5 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to answer the following questions.
a. What is the probability that in any given year, the return on Asset A will be greater than 10 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16))
Greater than 10 percent %
Less than 0 percent %
b. What is the probability that in any given year, the return on Asset B will be greater than 10 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16))
Greater than 10 percent %
Less than 0 percent %
c-1 In 1979, the return on Asset A was -4.36 percent. How likely is it that such a low return will recur at some point in the future? (Round your answer to 2 decimal places. (e.g., 32.16))
Probability %
c-2 Asset B had a return of 10.70 percent in this same year. How likely is it that such a high return on T -bills will recur at some point in the future?(Round your answer to 2 decimal places. (e.g., 32.16)
Answer:
Explanation:
Let us follow this accordingly
a. We have that ;
Z is given as = (X-mean)/standard deviation
where X = 10, mean = 6.9 and standard deviation is 8.1 ------- for A
inputting values we have;
Z = (10-6.9)/8.1 = 0.3827
Using the NORMDIST function in excel, [NORMDIST(0.3827)] = 0.649. This is the probability of earning less than 10%.
Hence the probability of earning more than 10% = 1-0.649 = 0.351 or 35.1%
b. At less than 0%;
X = 0, mean = 6.9 and standard deviation is 8.1
Thus Z = (0-6.9)/8.1 = - 0.8519. Using the NORMDIST function in excel, [NORMDIST(-0.8519)] = 0.1971 or 19.71%.
From this, the probability of earning less than 0% = 19.71%
c. Also For B;
X = 10%, mean = 4% and standard deviation = 3.5%
inputting values gives us ;
Z = (10-4)/3.5 = 1.7143.
Using the NORMDIST function in excel, [NORMDIST(1.7143)] = 0.9568. This is the probability of earning less than 10%.
Which makes the probability of earning more than 10% = 1-0.9568 = 0.0432 i.e 4.32%
d. Als, X = 0.
Giving us;
Z = (0-4)/3.5 = -1.1429.
Using the NORMDIST function in excel, [NORMDIST(-1.1429)] = 0.1265 or 12.65%
Thus the probability of earning less than 0% = 12.65%
e. Return on A = -4.36%
Thus z = (-4.36 - 6.9)/8.1 = -1.39. NORMDIST of -1.39 = 0.0822 or 8.22%
f. Return of B = 10.7%
Thus z = (10.7% - 4)/3.5 = 1.9143.
Its NORMDIST = 0.9722
This makes the probability of earning less than 10.7%.
Thus required probability gives us = 1-0.9722 = 2.78%
Wallace, Simpson, and Prince are partners and share income and losses in a 3:4:3 ratio. The partnership's capital balances are Wallace, $68,000; Simpson, $90,000; and Prince, $42,000. Royal is admitted to the partnership on July 1 with a 20% equity and invests $50,000. The partnership would record the admission of Royal into the partnership as:
a. Debit Wallace, Capital $15,000; debit Simpson, Capital, $20,000; debit Prince, Capital $15,000; credit Royal, Capital $50,000.
b. Debit Cash $20,000; credit Prince, Capital $20,000.
c. Debit Cash $40,000; debit Wallace, Capital $3,000; debit Simpson, Capital, $4,000; debit Prince, Capital $3,000; credit Royal, Capital $50,000.
d. Debit Cash $50,000; credit Royal, Capital $50,000.
e. Debit Cash $50,000; credit Simpson, Capital $10,000, credit Royal, Capital $40,000.
Answer:
d. Debit Cash $50,000; Credit Royal, Capital $50,000
Explanation:
Date Description Debit Credit
Cash $50,000
Capital $50,000
Workings
Total capital after admission of Royal = $68,000 + $90,000 + $42,000 + $50,000 = $200,000
Royal’s capital contribution for 20% equity = 20% x $200,000 = $50,000
Since Royal’s contribution is equal to 20% of the total equity, there is no bonus.
1. A Letter of Credit (or LC) is one of the major pillars on which International Trade stands.
a) What is a Letter of Credit?
b) With the aid of a diagram, explain the LC procedure.
c) Explain to the CEO of Mbo Limited (a company in Ghana) which wants to buy large quantities of White Refined Granulated Sugar from Tiffany Anderson Group Ltd (a company in Brazil) why the LC is the most acceptable method to both the exporter and importer in a transaction such as he is about to undertake.
Answer:
Letter of Credit (LC)
a) Mbo Limited's bank can issue a letter of credit to Tiffany Anderson Group Ltd.'s bank a credit guarantee by which Mbo's bank guarantees that Mbo Limited will settle Tiffany Anderson Group Ltd in full for the amount involved in their trade relationship. It is usually used by importers and exporters to settle trade credit. It is the most acceptable means of settling debts across national boundaries.
b) A diagram is attached. The procedures are detailed below:
A. A Sales Contract is established between the seller (exporter) and the buyer(importer).
B. The importer makes a request to its bank for issuance of letter of credit.
C. The importer’s bank issues a letter of credit to the exporter’s bank.
D. The exporter’s bank advises on the letter of credit to the exporter.
E. The exporter presents export documents (bill of lading and invoice) to its bank.
F. The exporter’s bank delivers the documents to the importer’s bank.
G. The importer’s bank debits the account of the importer for the stated amount after confirming that the documents are in order.
H. The importer’s bank pays the purchase price to the exporter’s bank.
I. The exporter’s bank credits the exporter’s bank to show payment. This ends the transaction.
c. The letter of credit guarantees both the Mbo Limited and Tiffany Anderson Group Ltd. It guarantees and ensures that payment for goods are not paid to Tiffany Anderson Group Ltd until there is evidence that the correct goods and quantity have been shipped by Tiffany Anderson Group Ltd (through the bill of lading). It also assures Tiffany Anderson Group Ltd of payment for shipped goods since the documents cannot be released to Mbo Limited unless Mbo Limited's account had been debited and the money transmitted to Tiffany Anderson Group Ltd through its bank.
Explanation:
As above.
Tim and Michelle have decided to form a partnership with a 60/40 partnership interest ratio. Tim contributes cash and merchandise inventory with a market value of . While journalizing this transaction ________.
Complete question:
Tim and Michelle have decided to form a partnership with a 60/40 partnership interest ratio. Tim contributes $7500 cash and merchandise inventory with a market value of $1500. While journalizing this transaction ________.
A) Tim, Capital will be debited for $9000
B) Tim, Capital will be credited for $9000
C) Tim, Capital will be credited for $6000 and Michelle, Capital will be credited for $4500
D) Tim, Capital will be debited for $6000 and Michelle, Capital will be debited for $4500
Answer: Tim, Capital will be credited for $9000
Explanation: Tim's total contribution towards the partnership will be recorded as his capital. Since he has contributed $7,500 worth of cash, and merchandise inventory with a market value of $1,500. The market value of the merchandise inventory and the cash contributed adds up towards his capital contribution. This is $7,500 + $1,500 which sums up to a total of $9,000.
In order to improve your chances of matching with someone, you decide to update your online dating profile. Specifically, you decide that to impress potential partners you will show off what you know about monopolies and marginal revenue. Draft out an explanation as to what marginal revenue is for the monopolist so that you can have them all wanting to swipe right!
Answer:
A Monopolist has a downward sloping Demand curve which means that they will sell more goods if they charge lower prices.
Now Marginal Revenue is the change in the additional revenue that a company gets when it sells an extra unit. For this reason, the Marginal Revenue of a Monopoly is downward sloping as well because if the monopoly has to reduce their price to sell an additional unit, the additional unit will bring in less than the last unit.
The Marginal Revenue curve for a Monopoly is below the Demand Curve which gives them the opportunity to make an economic profit.
The point where the Marginal Revenue is equal to the Marginal Cost is the quantity where the Monopoly can maximise their profits as producing past this level will cost more than they are gaining per additional unit.
The price at which a monopolistically competitive firm sells its product:___________a. exceeds the marginal cost of production.b. produces economic profits in both the long run and the short run.c. equals the marginal cost of production.d. is less than the marginal cost of production.
Answer: b. produces economic profits in both the long run and the short run.
Explanation:
Monopolies sell at a price that results from the quantity where marginal revenue equals marginal costs as this maximises profits.
Monopolies have their marginal revenue lower than their demand curve so the point where the profit maximising quantity intersects with the demand curve will result in a price above the marginal cost of the good which means that they are able to make economic profits in the short run.
Monopolies are able to maintain this trend in the long run as well because there will be barriers to entry dissuading other competitors from coming in.
Suppose a State of California bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bonds is 5.5%, how much is the bond worth today
Answer:
the bond worth today is $651.60
Explanation:
The computation of the amount of bond worth today i.e. present value is to be shown below:
Present value = Amount ÷ (1 + interest rate)^number of years
where,
Amount = $1,000
Interest rate = 5.5%
And, the number of years is 8
Now placing these values to the above formula
So, the worth of the bond today is
= $1,000 ÷ (1 + 0.55)^8
= $651.60
hence, the bond worth today is $651.60
Outstanding debt of Home Depot trades with a yield to maturity of 5%. The tax rate of Home Depot is 35%. What is the effective cost of debt of Home Depot?
Answer:
the effective cost of debt of Home Depot is 3.25 %.
Explanation:
Effective Cost of debt is the cost of debt after the tax shield.
In terms of the Tax Act, interest expense attract a deduction known as tax shield from income tax and this lowers the cost of debt financing as compared to equity financing.
Effective cost of debt = interest × ( 1 - tax shield)
= 5.00 % × (1 - 0.35)
= 3.25 %
Modigliani and Miller's world of taxes. Roxy Broadcasting was originally an all-equity firm with a before-tax value of . Roxy now pays taxes at a % rate. What is the value of Roxy under the / debt-to-equity capital structure? Under the / capital structure? What is the value of Roxy under the / debt-to-equity capital structure?
Complete Question:
Modigliani and Miller's world of taxes. Roxy Broadcasting was originally an all-equity firm with a before-tax value of $20,000,000. Roxy now pays taxes at a 30% rate.
A. What is the value of Roxy under the 30/70 debt-to-equity capital structure?
B. Under the 70/30 capital structure?
Answer:
Requirement 1: $15,384,615
Requirement 2: $17,721,519
Explanation:
The value of the firm at zero percent debt is $20,000,000 then this means:
Value of Equity After Tax = Value of Firm * (1 - 30% Tax rate)
Value of Equity After Tax = $20,000,000 * 0.7 = $14,000,000
Now
Value of Levered Firm = Value of Unlevered Firm + (Debt percentage * Value of Levered Firm * Tax rate
Requirement 1: The value of levered company at 30/70 debt to equity ratio would be:
Here
Value of Levered Firm is X
Debt percentage is 30%
Tax rate is 30%
By putting values, we have:
X = $14,000,000 + (30% debt percentage * X * 30% Tax rate)
X = $14,000,000 + (0.3 * X * 0.3)
X = $14,000,000 + (0.09X)
X - 0.09X = $14,000,000
0.91X = $14,000,000
X = $14,000,000 / 0.91 = $15,384,615
Requirement 2: The value of levered company at 70/30 debt to equity ratio would be:
Here
Value of Levered Firm is X
Debt percentage is 70%
Tax rate is 30%
By putting values, we have:
X = $14,000,000 + (70% debt percentage * X * 30% Tax rate)
X = $14,000,000 + (0.7 * X * 0.3)
X = $14,000,000 + (0.21X)
X - 0.21X = $14,000,000
0.79X = $14,000,000
X = $14,000,000 / 0.79 = $17,721,519
Olivia Village was recently incorporated and began financial operations on July 1, 20X2, the beginning of its fiscal year. The following transactions occurred during this first fiscal year, July 1, 20X2, to June 30, 20X3:
1. The village council adopted a budget for general operations for the fiscal year ending June 30, 20X3. Revenue was estimated at $400,000. Legal authorizations for budgeted expenditures totaled $394,000.
2. Property taxes of $390,000 were levied; 2 percent of this amount was estimated to be uncollectible. These taxes are available to finance current expenditures as of the date of levy.
3. During the year, a village resident donated marketable securities valued at $50,000 to the village under the terms of a trust agreement that stipulated that the principal amount be kept intact. The use of revenue generated by the securities is restricted to financing college scholarships for needy students. Revenue earned and received on these marketable securities amounted to $5,500 through June 30, 20X3.
4. A general fund transfer of $5,000 was made to establish an internal service fund to provide for a permanent investment in inventory.
5. The village decided to install lighting in the village park financed through an authorized special assessment project at a cost of $75,000. The city is obligated if the property owners default on their special assessments. The village issued special assessment bonds in the amount of $72,000 and levied the first year’s special assessment of $24,000 against the village’s property owners. The remaining $3,000 for the project will be contributed from the village’s general fund.
6. The special assessments for the lighting project are due over a three-year period, and the first year’s assessments of $24,000 were collected. The $3,000 transfer from the village’s general fund was received by the lighting capital projects fund.
7. A contract for $75,000 was let for the lighting installation. The capital projects fund was encumbered for the contract. On June 30, 20X3, the contract was completed, and the contractor was paid.
8. During the year, the internal service fund purchased various supplies at a cost of $1,900.
9. The general fund cash collections recorded during the year as follows:
Current property taxes $ 386,000
Licenses and permit fees 7,000
The allowance for estimated uncollectible taxes is adjusted to $4,000.
10. The village council decided to build a village hall at an estimated cost of $500,000 to replace space occupied in rented facilities. The village does not record project authorizations. The council decided to issue general obligation bonds bearing interest at 6 percent. On June 30, 20X3, the bonds were issued at face value of $500,000, payable in 20 years. No contracts have been signed for this project, no expenditures have been made, nor has an annual operating budget been prepared.
11. The voucher for purchasing a fire truck for $15,000 was approved and paid by the general fund. This expenditure previously had been encumbered for $15,000.
Required:
Prepare journal entries to record properly each of these transactions in the appropriate fund or funds of Olivia Village for the fiscal year ended June 30, 20X3. Do not prepare closing entries for any fund. (Select the appropriate fund for each situation when required. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Olivia Village
Journal Entries:
July 1, 20X2 to June 30, 20X3:
1. No journal entry required.
2. Debit Property Taxes Receivable $390,000
Credit Property Tax Revenue $390,000
To record the levying of property taxes
Debit Uncollectible taxes expense $7,800
Credit Uncollectible tax expense $7,800
To record the estimated uncollectible of 2%.
3. Debit Marketable Securities $50,000
Credit Restricted Trust Fund Donations $50,000
To record the donation of marketable securities.
Debit Restricted Trust Fund $5,500
Credit Marketable Securities Revenue $5,500
To record the revenue earned on marketable securities.
4. Debit Internal Service Fund $5,000
Credit General Fund $5,000
To record the transfer of funds.
5. Debit Special Assessment Fund $72,000
Credit Special Assessment Bonds $72,000
To record the issue of bonds for special assessment project.
Debit Special Assessment Receivable $24,000
Credit Special Assessment Levy $24,000
To record the special assessment levied
6. Special Assessment Fund $27,000
Credit Special Assessment Receivable $24,000
Credit General Fund $3,000
To record the collection of the first year's special assessment and transfer from General Fund.
7. Debit Capital Projects Fund $75,000
Credit Contractor Payable $75,000
To record the letting of the contract for lighting.
June 30, 20X3:
Debit Contractor Payable $75,000
Credit Capital Projects Fund $75,000
To record the payment of the contractor for the project.
8. Debit Supplies $1,900
Credit Internal Service Fund $1,900
To record the purchase of various supplies.
9. Debit General Fund $393,000
Credit Property taxes Receivable $386,000
Credit Licenses and permit fees $7,000
To record cash collections for general fund
Debit Allowance for Uncollectible taxes $3,800
Credit Uncollectible Expenses $3,800
To adjust the allowance for uncollectible taxes to $4,000 balance.
10. Debit General Fund $500,000
Credit Bonds Payable $500,000
To record the issue of 6%, 20-year bonds payable.
11. Debit Fire Truck $15,000
Credit General Fund $15,000
To record the payment for the purchase of a fire truck.
Explanation:
Olivia Village can use the general journal to initially record transactions that occur during the year. The journal shows the accounts to be debited and the accounts to be credited.
Bramble Corp. purchased a delivery truck for $38,800 on January 1, 2019. The truck has an expected salvage value of $1,800, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 14,700 in 2019 and 12,900 in 2020. (a1) Calculate depreciable cost per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.)
Answer:
Depreciable cost per mile= $0.37
Explanation:
Giving the following information:
Purchase price= $38,800
Salvage value= $1,800
Expected to be driven 100,000 miles over its estimated useful life.
To calculate the depreciable cost per mile, we need to use the following formula:
Depreciable cost per mile= (original cost - salvage value)/useful life of production in miles
Depreciable cost per mile= (38,800 - 1,800)/100,000
Depreciable cost per mile= $0.37
Even though money loses purchasing power during inflationary periods, people still choose to hold part of their wealth in the form of money because:
Answer:
Money is an asset with the characteristics of liquidity
Explanation:
people still choose to hold part of their wealth in the form of money because money has characteristics of liquidity, that is, as an asset money can easily be accessed. And during inflation when prices of commodities have skyrocketed, more money would be required for business transactions. Money can easily be exchanged while doing any form of transaction.
Prepare journal entries for Iron City’s general fund for the following, including any adjusting and closing entries on December 31, 20X1 (the end of the fiscal year):
a. Acquired a three-year fire insurance policy for $5,400 on September 1,
b. Ordered new furniture for the city council meeting room on September 17, 20X1, at an estimated cost of $15,600. The furniture was delivered on October 1, its actual cost was $15,200, its estimated life is 10 years, and it has no residual value.
c. Acquired supplies on November 4, 20X1, for $1,800. Iron City uses the consumption method of accounting. Supplies on hand on December 31, 20X1, were $1,120.
Answer:
Journal entries are given below
Explanation:
Journal entries for Iron City’s general fund are given below
A)
September 1, 20x1: (To record the acquisition of fire Insurance policy)
DEBIT CREDIT
Expenditures $5,400
Vouchers Payable $5,400
B)
September 17, 20x1 (To record the Encumbrances for the purchase order of new furniture)
DEBIT CREDIT
Encumbrances $15,600
Budgetary Fund Balance $15,600
October 01, 20x1 (To record the receipt of the furniture)
DEBIT CREDIT
Expenditures $15,200
Vouchers Payable $15,200
C)
November 4,20x1 (To record the acquisition of Supplies)
DEBIT CREDIT
Expenditures $1,800
Vouchers Payable $1,800
December 31,20x1 (To record the recognition of ending inventory of Supplies)
DEBIT CREDIT
Inventory of Supplies $1,120
Expenditures $1,120
Eurocurrency markets are a source of attractively priced working capital loans for multinational firms because
Answer:
it offers softer interest rates of borrowers and greater interest rates for lenders depending on the situation
Explanation:
Due to the lack of firm or strong regulatory provisions or controls, such as tax law, interest caps, etc. Eurocurrency markets are commonly selected as attractively priced working capital loans for multinational firms because when compared with domestic banks, it offers softer interest rates of borrowers and greater interest rates for lenders accordingly.
Net sales, first month $13,000 Normal gross profit as a percentage of sales 45% Inventory, start of period $8,000 Net purchases, first month $7,000 Using the gross profit method of inventory estimation, the amount of normal gross profit would be
Answer: $5,850
Explanation:
The Normal Gross Profit under the gross profit method of inventory estimation is the growth profit percentage of sales multiplied by the sales figure.
= Net Sales * Gross Profit percentage
= 13,000 * 0.45
= $5,850
You are the CEO of Company A and you are using an industry leader (Leader Company) for benchmarking. Company A is much smaller than Company B in terms of total assets and total sales revenue. You should compare the:
Answer:
net income to net sales ratio of Company A to net income to net sales ratio of Leader Company
Explanation:
Benchmarking is defined as the practice of measuring a business's services, sales, and operations to another company's that is considered to be one of the best in the industry.
The purpose of benchmarking is to find out the reason for superior performance of top companies and using the knowledge to improve performance of one's own company.
In the given scenario company A is much smaller than company B so the benchmarking method must consider difference in scale of operations.
The best way will be to use ratio of net income to net sales of each is the companies.
& Co. owns vast amounts of corporate bonds. Suppose buys of bonds at face value on January 2, . The bonds pay interest at the annual rate of % on June 30 and December 31 and mature on December 31, . intends to hold the investment until maturity. Read the requirementsLOADING.... Requirement 1. How would the bond investment be classified on December 31, , balance sheet? The bond investment will be classified as a ▼ as of December 31, .
Answer:
Bonds held to maturity are recorded at the net carrying value (after any premium or discount amortization is made), but since these bonds were purchased at face value, there is no premium or discount to be amortized. The bonds should be reported at face value as non-current assets since they mature in more than 1 year.
Explanation:
all the numbers are missing, so I looked for a similar question:
Otter Creek & Co. Owns vast amount of corporate bonds. Suppose Otter Creek buys $1,200,000 of RoastCo bonds at face value on January 2, 2016. The RoastCo bond spay interest at an annual rate of 3% on June 30 and December 31, and mature on December 31, 2020. Otter Creek intends to hold the investment until maturity.
How would the bond investment be classified on December 31, 2016, balance sheet?
An initial license is issued in October of 2015. When must the license be renewed in order to prevent expiration?
Answer: September 2017
Explanation:
From the question, we are informed that an initial license is issued in October of 2015. One thing that we need to understand is that the license will only be effective for two years.
So, before it expires it is logical to renew it. In this scenario, since the initial license is issued in October 2015, this means that it'll be renewed in 2 years which will be September 2017.
If you put up $21,000 today in exchange for a 8.25 percent, 14-year annuity, what will the annual cash flow be
Answer:
$2,584.34
Explanation:
we can use the present value of an ordinary formula to calculate this:
present value = annual payment x annuity factor
present value = $21,000PV annuity factor, 8.25%, 14 periods = 8.12586annual payment = present value / annuity factor = $21,000 / 8.12586 = $2,584.34
When the interest rates are not whole number, e.g. 4%, instead of trying to use a present value annuity table, you should look online for annuity calculators that will calculate the annuity factors for you.
A perfectly competitive firm: A) will budget money to advertise its product. B) can adjust the price of the product so that it sells, in order to make more money.
Answer:
D) has output that is so small, relative to market supply, that it cannot influence the market price
Explanation:
The Perfect competition is that market condition in which it have various characteristics like
1. Large number of buyers and sellers
2. Same or similar products
3. Perfect knowledge
4. Free entry and exist
In this market competition, the output is very small also it is related to the market supply and the market supply does not affect the market price
Hence, the correct option is d.