Answer:
Polo will report $318,750 as its investment in Stallion at December 31, 20X8
Explanation:
Common stock = $300,000 acquired at 75%
Net income = $40,000
Pay dividends = $10,000
Increase in value of Patent = $50,000
Economic Life = 10
Amortization = $5,000
Therefore, the $ 5000 would be reduced from the net income.
Investments in Polo = $300,000 + [0.75 × (40000 - 10000 - 5000)]
= $300,000+ 0.75(25,000)
= $300,000+ $18,750
= $318,750
Teal Mountain Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 8 years and requires equal rental payments of $54,782 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $340,000, an estimated useful life of 8 years, and no estimated residual value. The appropriate interest rate is 8%. Click here to view factor tables. Prepare Teal Mountain’s 2019 and 2020 journal entries, assuming Teal Mountain depreciates similar equipment it owns on a straight-line basis
Answer:
See the explanation below.
Explanation:
Date Details Dr ($) Cr ($) .
31 Dec. '19 Leased equipment 340,000
Lease liability 340,000
To record liability form equipment lease. .
31 Dec. '19 Leased liability 54,782
Cash 54,782
To record lease payment. .
31 Dec. '20 Interest expense 22,817.44
Lease liability 31,964.56
Cash 54,782
To record interest expense and lease payment. .
31 Dec. '20 Depreciation expense 42,500
Accumulated depreciation - lease 42,500
To record right-of -use equipment amortization .
Note:
31 Dec. '20 Interest expense = (340,000 - 54,782) * 8% = $22,817.44
31 Dec. '20 Lease liability = $54,782 - $22,817.44 = $31,964.56
31 Dec. '20 Depreciation expense = 340,000 / 8 = $42,500
Caba Corporation’s sales budget for the first half of the year is as follows: Budgeted Sales January $ 115,000 February $ 198,000 March $ 220,000 April $ 250,000 May $ 210,000 June $ 290,000 Total: $ 1,283,000 Sales are 30% cash and 70% on account. Sales on account are to be collected over a three-month period, with 20% collected in the month of the sale, 65% collected in the first month following the sale, and 15% collected in the second month following the sale. What is the budgeted balance in the Accounts Receivable account as of June 30?
Answer:
$210,550
Explanation:
The accounts receivable represents the amount yet uncollected from sales made on credit.
Given that sales on account/credit are to be collected in the format; 20% collected in the month of the sale, 65% collected in the first month following the sale, and 15% collected in the second month following the sale and 70% of sales are on account, the budgeted balance in the Accounts Receivable account as of June 30 will be made of;
80% * 70% of sales in June15% * 70% of sales in MayThis is equivalent to
80% * 70% * $290,000 + 15% * 70% * $210,000
= $210,550
As an auditor for Bernard and Thomas, you are responsible for determining the proper classification of income statement items in the audit of California Sports Grill. Required: Select whether each of the following items should be classified as discontinued operations, other revenues, or other expenses.
Items Description
a. One of the company's restaurants was destroyed in a forest fire that raged through Southern California. Uninsured losses from Other expenses the fire are estimated to be $450,000
b. Califomia Sports Grill has three operating divisions: restaurants, catering, and frozen retail foods. The company sells the frozen retail foods division of the business for a profit of $2.4 million in order to focus more on the restaurant and catering business
c. An employee strike to increase wages and benefits shut down operations for several days at an estimated cost of $200,000.
d. A restaurant waiter slipped on a wet floor and sued the company. The employeo won a settlement for $100,000, but Califormia Sports Grill has not yet paid the settiement.
e. The company owns and operates over 40 restaurants but sold one restaurant this year at a gain of $650,000 Other revenues
Answer:
a. One of the company's restaurants was destroyed in a forest fire that raged through Southern California. Uninsured losses from the fire are estimated to be $450,000: Other expenses.
b. California Sports Grill has three operating divisions: restaurants, catering, and frozen retail foods. The company sells the frozen retail foods division of the business for a profit of $2.4 million in order to focus more on the restaurant and catering business: Discontinued operations.
c. An employee strike to increase wages and benefits shut down operations for several days at an estimated cost of $200,000: Other expenses.
d. A restaurant waiter slipped on a wet floor and sued the company. The employee won a settlement for $100,000, but California Sports Grill has not yet paid the settlement: Other expenses.
e. The company owns and operates over 40 restaurants but sold one restaurant this year at a gain of $650,000: Other revenues.
Explanation:
Other expenses in business management are non-operating expenses that a business incurs. It is a cost that isn't related to the main operation of a company's business, such as interest expense, losses incurred from disposal of a fixed asset.
Other revenues in business are revenues that are derived by a company from any source other than the company's business operations, such as a company selling one of it's restaurants.
Discontinued operations in business describes a situation where parts of a company's core business are sold, abandoned or shut down and all the profits or losses are usually reported separately on an income statement.
Vesuvius Company has net sales revenue of $786,000, cost of goods sold of $346,200,net income of $151,200, and preferred dividends of $13,000 during the current year. At the beginning of the year, 491,000 shares of common stock were outstanding, and, at the end of the year, 543,000 shares of common stock were outstanding.A total of 4,000 preferred shares were outstanding throughout the year. The company’s earnings per share for the current year is closest to:
Answer:
$0.27
Explanation:
Earnings per share is the total earnings attributable to common stockholders divided by the weighted average number of common stock.
total earnings attributable to common stockholders=net income-preferred stock dividends
net income is $151,200
preferred dividends is $13,000
earnings attributable to common stock=$151,200-$13,000=$138,200.00
weighted average number of common stock=(491,000+543,000)/2 = 517,000.00
EPS=$138,200/ 517,000=$ 0.27
Here are selected data for Sunny Sky Corporation: Beginning raw materials inventory $37,000 Beginning work in process inventory $62,200 Beginning finished goods inventory $58,300 Cost of materials purchased $151,000 Cost of direct materials requisitioned $91,300 Direct labor incurred $135,000 Actual manufacturing overhead $160,000 Cost of goods manufactured $287,000 Cost of goods sold $265,000 Manufacturing overhead rate (per dollar of direct labor cost) $1.25 What is the finished goods ending inventory
Answer:
Value of closing inventory = $60,300
Explanation:
The closing inventory represents the value of goods available for sale but yet to be sold as at the end of a particular period of time . It is calculated as follows:
Closing inventory = opening inventory + goods manufactured - cost of goods sold
58,300 + 287,000 - 285,000 = 60,300
Value of closing inventory = $60,300
Vasquez Construction has been awarded a contract by a local school board to build a new public school and must provide a performance bond. a. With respect to the performance bond, identify the principal, surety, and obligee. b. If Vasquez Construction fails to complete the building according to the terms of the contract, what would be the surety’s obligation? c. Does the surety have any recourse against Vasquez Construction in this example? Explain your answer.
Answer:
(a) The Vasquez construction is the principal, the surety is the party that underwrites the contract and local school board is the obligee.
(b) If Vasquez fails to finish the contract, then the surety will be required to pay for the loss suffered by the obligee due to the contract failure.
(c) In a surety bonds contract, the surety has a legal right to get back the losses from the principal.
Explanation:
Solution:
(a) Under a performance bond contract, the owners assures that the work will be completed within a specific time frame and contract specification.
In this example given, the Vasquez construction is the principal, the surety is the party that underwrites the contract and local school board is the obligee.
(b) If the Vasquez construction fails to complete or finish the contract, then the surety will be obliged to pay for the loss suffered by the obligee due to the failure of the contract.
(c) In a surety bond contract, the surety has a legal right to recover the losses from the principal. for this later on, the surety can recover it's loss from the principal.
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:
Direct materials: 4 pounds at $8 per pound $ 32
Direct labor: 2 hours at $16 per hour 32
Variable overhead: 2 hours at $6 per hour 12
Total standard cost per unit $ 76
The planning budget for March was based on producing and selling 32,000 units. However, during March the company actually produced and sold 37,000 units and incurred the following costs:
a. Purchased 160,000 pounds of raw materials at a cost of $7.40 per pound. All of this material was used in production.
b. Direct laborers worked 67,000 hours at a rate of $17 per hour.
c. Total variable manufacturing overhead for the month was $422,100.
Required:
1. What raw materials cost would be included in the company's planning budget for March?2. What raw materials cost would be included in the company's flexible budget for March?3. What is the materials price variance for March?4. What is the materials quantity variance for March?
Answer:
Material cost for planning budget =$1,024,000
Material cost flexible budget =$1,184,000
Material price variance $96,000 favorable
Quantity variance $96,000 unfavorable
Explanation:
Material cost for planning budget = $32 × 32,000 =$1024000
Material cost flexible budget = $32× 37,000 =$1184000
Material price variance: $
160,000 pounds should have cost ( 160,000 × $8.00) 1,280,000
but did cost ( 160,000× $7.40) 1,184,000
Material price variance 96000 favorable
Material quantity variance
pounds
37,000 units should have used (37,000 × 4 pounds) 148,000
but did take 160,000
Variance 12000 unfavorable
standard price × $8.00
Quantity variance $96,000 unfavorable
Sheridan, Inc. acquired 40% of Pina Corporation's voting stock on January 1, 2021 for $1060000. During 2021, Pina earned $364000 and paid dividends of $250000. Sheridan's 40% interest in Pina gives Sheridan the ability to exercise significant influence over Pina's operating and financial policies. During 2022, Pina earned $533000 and paid cash dividends of $138000 on April 1 and $138000 on October 1. On July 1, 2022, Sheridan sold half of its stock in Pina for $681000 cash. What should the gain be on sale of this investment in Sheridan's 2022 income statement?
Answer:
$102,500
Explanation:
As per the given question the solution of gain be on sale is provided below:-
For reaching the gain be on sale first we need to follow some steps which is following below:-
Step 1
December 31, 2021 Investment = Initial investment + Net income - Dividend
= $1,060,000 + ($364,000 × 40%) - ($250,000 × 40%)
= $1,060,000 + $145,600 - $100,000
= $1,205,600 - $100,000
= $1,105,600
Step 2
July 1,2022 Investment = December 31, 2021 Investment + Net income - Dividend
= $1,105,600 + ($533,000 × 6 months ÷ 12 months × 40%) - ($138,000 × 40%)
= $1,105,600 + $106,600 - $55,200
= $1,212,200 - $55,200
= $1,157,000
Step 3
Now, the investment half value = $1,157,000 ÷ 2
= $578,500
and finally
So, Gain = Stock - Half value of Investment
= $681,000 - $578,500
= $102,500
So, we have calculated the gain be on sale in Sheridan's 2022 income statement by using the above formula.
Lincoln Company issued $ 90,000 of​ 10-year, 9 % bonds payable on January​ 1, 2018. Lincoln Company pays interest each January 1 and July 1 and amortizes discount or premium by the​ straight-line amortization method. The company can issue its bonds payable under various conditions.
Requirements
1. Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required.
2. Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 92. Explanations are not required.
3. Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 103. Explanations are not required.
4. Which bond price results in the most interest expense for Anderson Company? Explain in detail.
Answer:
1. Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at face value. Explanations are not required.
Issuance of bonds:
Dr Cash 90,000
Cr Bonds payable 90,000
First coupon payment:
Dr Interest expense 4,050
Cr Cash 4,050
2. Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 92.
Issuance of bonds:
Dr Cash 82,800
Dr Discount on bonds payable 7,200
Cr Bonds payable 90,000
First coupon payment:
Dr Interest expense 4,410
Cr Cash 4,050
Cr Discount on bonds payable (= $7,200 / 20) 360
3. Journalize Anderson Company's issuance of the bonds and first semiannual interest payment assuming the bonds were issued at 103.
Issuance of bonds:
Dr Cash 92,700
Cr Bonds payable 90,000
Cr Premium on bonds payable 2,700
First coupon payment:
Dr Interest expense 3,915
Dr Premium on bonds payable (=$2,700 / 20) 135
Cr Cash 4,050
4. Which bond price results in the most interest expense for Anderson Company?
If the company sells its bonds at a price lower than face value (at a discount) it will receive less money for the bonds they owe. The discount that is recorded increases the amount of interest expense because even though the amount of cash paid doesn't change, the real interest is higher.
Explanation:
issued $90,000 in 9% bonds payable, 10 year maturity, semi annual coupon.
Presented below is information related to copyrights owned by Ivanhoe Company at December 31, 2020.
Cost $8,620,000
Carrying amount 4,300,000
Expected future net cash flows 4,180,000
Fair value 3,440,000
Assume that Ivanhoe Company will continue to use this copyright in the future. As of December 31, 2020, the copyright is estimated to have a remaining useful life of 10 years.
Required:
(a) Prepare the journal entry to record the impairment of the asset at December 31, 2020. The company does not use accumulated amortization accounts.(b) Prepare the journal entry to record amortization expense for 2021 related to the copyrights
Answer:
A.
Impairment of Intangible Assets
Dr Loss on impairment 860,000
Cr Copyrights 860,000
B.
Dr Amortization expense 344,000
Cr Copyrights 344,000
Explanation:
Ivanhoe Company
Impairment of Intangible Assets
Recoverability test: If the sum of the expected future net cash flows is less or lower than the carrying amount of the asset, then an impairment has occurred.
Asset is Impaired
Expected future cash flow$4,180,000
Carrying value $4,300,000
$(120,000)
A.
Impairment of Intangible Assets
Dr Loss on impairment 860,000
Cr Copyrights 860,000
Fair value test:Carrying amount $ 4,300,000
Fair value 3,440,000
Loss on impairment$ (860,000)
B.
Dr Amortization expense 344,000
Cr Copyrights 344,000
Carrying amount$3,440,000
Useful life ÷10 years
Amortization per year$ 344,000
P & G Auto Parts sells parts to AAA Car Repair during 2021. P&G offers rebates of 3% on purchases up to $80,000 and 6% on purchases above $80,000 if the customer’s purchases for the year exceed $300,000. In the past, AAA normally purchases $400,000 in parts during a calendar year. On March 25, 2021, AAA Car Repair purchased $90,000 of parts.
Required:
1. The journal entry to record the purchase includes a ____________.
Answer:
Credit to sales revenue for $87,000
Explanation:
So, in the question above we are given the following parameters or information or data in order to be able to solve this question effectively and the data or parameters are;
=> " rebates of 3% on purchases up to $80,000 and 6% on purchases above $80,000 if the customer’s purchases for the year exceed $300,000"
=> "In the past, AAA normally purchases $400,000 in parts during a calendar year."
=>" On March 25, 2021, AAA Car Repair purchased $90,000 of parts."
Hence, the rebates on $80,000 purchases = 80000 × 3/100 = 2,400.
Rebates on purchases greater than $80,000 = (90,000 - 80,000) × 6/100 = 600.
Total rebate= 2400 + 600 = $3000.
Hence, the net sales revenue = sales - rebate = $90,000 - $3000 = $87,000.
On June 1, 2021, Andres Property Management entered into a 2-year contract to oversee leasing and maintenance for an apartment building. The contract starts on July 1, 2021. Under the terms of the contract, Andres will be paid a fixed fee of $56,000 per year and will receive an additional 15% of the fixed fee at the end of each year provided that building occupancy exceeds 90%. Andres estimates a 30% chance it will exceed the occupancy threshold, and concludes the revenue recognition over time is appropriate for this contract.
Required:
1. Assume Andres estimates variable consideration as the expected value. How much revenue should Andres recognize on this contract in 2021?
Answer:
429,260
Explanation:
Contract commencement date = July 1 , 2021
Contract payment term = $56,000 / annual
Additional 15% ($8,400) at the end of each year if occupancy exceeds 90%
Estimate of meeting occupancy threshold = 30%
At the year end 2012, Contract timeline = 6 month (1/2 year)
Base revenue recognized 56000/2 = $28,000
Additional payment = (8400*30% )/2 =$1260
Revenue recognized at December 31 , 2021 = $28000+ $1260 = $29,260
Describe the best structural configuration for an organization?
Explanation:
The structural configuration in an organization corresponds to a model that helps in understanding the organizations existing in a company for the development of effective strategies.
In order to establish the configuration, all parts of the organization, design parameters, situational factors and coordination mechanisms must be simulated, so that there is an integrated understanding so that it is possible to establish which strategic management model will be ideal for each type of organization. structural configuration.
There are seven types of organizational configuration:
business organization, machine organization, professional organization, diversified organization, innovative organization, missionary organization and political organization.There are also the forces associated with the structural configuration, such as: learning, efficiency, direction, proefficiency, responsibility, cooperation and competition.
For a company to develop the best structural configuration, it must be evaluated to identify challenges and impediments of the project, so that it is aligned with the organizational values and objectives, so that the structure is integrated and effective.
Bonita Company's inventory records show the following data:
Units Unit Cost
Inventory, January 1 10000 $9.00
Purchases: June 18 9000 9.00
November 8 6000 8.00
A physical inventory on December 31 shows 3500 units on hand. Bonita sells the units for $15 each. The company has an effective tax rate of 20%. Bonita uses the periodic inventory method.
Required:
1. The weighted-average cost per unit is ___________.
O $8.52
O $8.53
O $9.10
O $8.76
Answer:
$8.76
Explanation:
Total cost of inventory = (10,000 * $9) + (9,000 * $9) + (6,000 * $8) = $219,000
Total units of inventory = 10,000 + 9,000 + 6,000 = 25,000
The weighted-average cost per unit = $219,000 / 25,000 = $8.76
The following information applies to the questions displayed below.
The December 31, 2021, unadjusted trial balance for Demon Deacons Corporation is presented below.
Debit $ 8,400 13,400 5,280 2,400 Accounts Credit Cash Accounts Receivable Prepaid Rent Supplies Deferred Revenue Common Stock Retained Earnings Service Revenue Salaries Expense 1,400 11,000 4,400 39, 680 27,000 $56,480 $56,480 At year-end, the following additional information is available
1. The balance of Prepaid Rent, $5,280, represents payment on October 31, 2021, for rent from November 1, 2021,
2. The balance of Deferred Revenue, $1,400, represents payment in advance from a customer. By the end of the .
3. An additional $700 in salaries is owed to employees at the end of the year but will not be paid until January 4
4. The balance of Supplies, $2,400, represents the amount of office supplies on hand at the beginning of the year to April 30, 2022 year, $350 of the services have been provided. 2022 of $900 plus an additional $1,500 purchased throughout 2021. By the end of 2021, only $640 of supplies remains.
Find the given attachment
The independent cases are listed below includes all balance sheet accounts related to operating activities:
Case A Case B Case C
Net income $ 303,000 $ 11,500 $ 413,000
Depreciation expense 33,000 143,000 73,000
Accounts receivable increase (decrease) 86,000 (193,000) (13,000)
Inventory increase (decrease) (43,000) 28,000 43,000
Accounts payable increase (decrease) (43,000) 113,000 63,000
Accrued liabilities increase (decrease) 53,000 (213,000) (33,000)
Required:
1. Show the operating activities section of cash flows for each of the given cases. (Amounts to be deducted should be indicated with minus sign.)
Case A Case B Case C
Net Income
Adjustments to Reconcile Net income to Net Cash Provided by Operating Activities
Depreciation
Changes in Assets and Liabilities
Accounts Receivable
Inventory
Accounts Payable
Accrued Liabilities
Net Cash Provided by Operating Activities
Answer:
Explanation:
Cash flow from operating activities:
Case A Case B Case C
Net Income 3,03,000 11,500 4,13,000
Depreciation Expense 33,000 1,43,000 73,000
Accounts Receivable increase(decrease) -86,000 1,93,000 13,000
Inventory increase(decrease) 43,000 -28,000 -43,000
Accounts Payable increase(decrease) -43,000 1,13,000 63,000
Accrued Liabilities increase(decrease) 53,000 -2,13,000 -33,000
Net Cash provided by Operating activities 3,03,000 2,19,500 4,86,000
Answer:
See answer and explanation below.
Explanation:
Details Case A ($) Case B ($) Case C ($)
Net income 303,000 11,500 413,000
Depreciation expense 33,000 143,000 73,000
Changes in Assets and Liab.:
Accounts receivable (86,000) 193,000 13,000
Inventory 43,000 (28,000) (43,000)
Accounts payable (43,000) 113,000 63,000
Accrued liabilities 53,000 (213,000) (33,000)
Net Cash from Operating Act. 303,000 219,500 486,000
Ted is the owner and chief executive officer of a business. He recently began an advertising campaign to promote a new product that is regulated by state law. The law is somewhat unclear. Before launching the campaign, he researched the relevant law and consulted with his attorney in an effort to comply with the law. Nevertheless, the attorney general of his state has filed a lawsuit against him for deceptive advertising. Ted's best defense is that ___________.a. He acted in good faith by conducting due diligence and acting accordingly, under anunclear law.b. Marshall owns and operates a construction firm.c. He uses inexpensive and low-gradebuilding products and accepts inferior carpentry work from his subcontractors.d. Nevertheless, Marshall complies with all the city building codes as well as all state and federal laws.
Answer:
The answer is "Option a"
Explanation:
In the given question only "option a" is correct, which can be described as follows:
He is the owner and managing director of an organization and recently he introduced media attention initiatives to encourage a specific app controlled by federal law.Its law is rather ambiguous. He reviewed the relevant law before starting the initiative and met with his counsel in an attempt to comply with the rule. Even so, this state attorney general's office also filed a suit against him after misleading publicity. He provides the best defense, which acted in good faith with proper research and in line with an unspecified rule.Turnbull Corp. is in the process of constructing a new plant at a cost of $30 million. It expects the project to generate cash flows of $13,000,000, $23,000,000, and 29,000,000 over the next three years. The cost of capital is 20 percent. What is the net present value of this project? (Do not round intermediate computations. Round final answer to nearest million dollars) Group of answer choices $10 mil. $14 mil. $12 mil. $16 mil.
Answer:
$14 mil.
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator:
Cash flow in year 0 = $-30 million
Cash flow in year 1 = $13,000,000
Cash flow in year 2 = $23,000,000
Cash flow in year 3 = 29,000,000
I = 20%
NPV = $13,587,630
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
When the non-dividend paying stock price is $20, the strike price is $20, the risk-free rate is 6%, the volatility is 20% and the time to maturity is 3 months, which of the following is the price of a European call option on the stock?
(Note: N(*) represent cumulative normal density function.)
a. 20*N(0.1) - 19.7*N(0.2)
b. 19.7*N(0.2) - 20N*(0.1)
c. 19.7*N(0.1) - 20N*(0.2)
d. 20N*(0.2) - 19.7N*(0.1)
Answer:
The correct option is d.20N(0.2)-19.7N*(0.1)
Explanation:
Given the following inputs:
Stock Price 20
Strike Price 20
Time to maturity: 0.25
Risk-free Rate 0.06
Dividend Yield 0
Annualized volatility 0.2
Cost of Carry 0.06
We get the following outputs:
d1=0.2
d2=0.1
N(d1)=0.57925971
N(d2)=0.53982784
Call=0.94937723
ChipMaker is a company that produces computer chips. To gain an advantage over other computer chip makers, ChipMaker focuses on reducing its costs below all of its competitors and has aligned its value chain accordingly. Recently, several of ChipMaker's competitors have begun to reduce the company's competitive advantage. In response to this threat, ChipMaker has decided to add production capacity in an effort to lower costs. By increasing production volume in an effort to reduce costs, the company is pursuing which sources of cost advantage? technological advantages size differences and economies of scale first-mover advantage differential access to productive inputs
Answer:
The correct answer is: size differences and economies of scale.
Explanation:
To begin with, in order to obtain an advantage in the field of business and in that way to overcome the other competitors there are differentes way of getting that. One of them, the economies of scale, focus on decreasing the cost of the production by the act of increasing the amount of goods producted. In that order, more is better, therefore that when ChipMaker decided to add production capacity in an effort to lower costs it is pursuing size differences and economies of scale.
In the past, some people believed that the Fed routinely expanded the money supply during the presidential election years to help the incumbent president. For this question, assume that the Fed allows inflation to be 3% in every presidential election year instead of 2% in other years.If people form expectations adaptively, their expectations will ________ inflation so expansionary policy will____________. a) Overestimate; reduce the unemployment rate.b) Overestimate; increase the unemployment ratec) Underestimate; increase the unemployment rated) Underestimate; reduce the unemployment rate.e) Accurately estimate; not change the unemployment rate.
Answer:
Option c. Underestimate, increase the unemployment rate
Explanation:
Suppose a ten-year, $ 1 comma 000 bond with an 8.6 % coupon rate and semiannual coupons is trading for $ 1 comma 035.77. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.9 % APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is nothing%. (Round to two decimal places.)
Answer:
a. 8.30 %
b. $918.65
c. 16,60%
Explanation:
a. What is the bond's yield to maturity
Using a Financial Calculator Enter the following respective values and find i.
N = 10×2 = 20
Pmt = $1,000 × 8.6 % / 2 = $43
P/yr = 2
Pv = $ 1,035.77
Fv = $1,000
YTM / i = ?
i = 8.30%
Therefore yield to maturity is 8.30 %
b. What will be the bond's price
Using a Financial Calculator Enter the following respective values and find Pv .
N = 10×2 = 20
Pmt = $1,000 × 8.6 % / 2 = $43
P/yr = 2
Fv = $1,000
YTM / i = 9.90%
Pv = ?
Pv = $ 918.65
Therefore the bond's price is $918.65
c. What is the bond's yield to maturity
bond's yield to maturity - expressed as an APR = 8.30 % × 2
= 16,60%
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,785,000 in annual sales, with costs of $695,000. The tax rate is 25 percent and the required return on the project is 12 percent. What is the project’s NPV? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, and round your answer to 2 decimal places, e.g., 1,234,567.89.)
Answer:
$115,849.581
Explanation:
For computing the net present value first we have to do following calculations
Annual depreciation expense is
= (Cost - Salvage value) ÷ Useful life
= ($2.31 million ÷ 3)
= $770,000
Now
Annual Operating cash flow = (Sales - Costs) × (1 - tax rate) + Tax savings on Annual depreciation
= ($1,785,000 - $695,000) × (1 - 0.25) + (0.25 × $770,000)
= $817,500 + $192,500
= $1,010,000
Now Present value of annuity is
= Annuity × [1 - (1 + interest rate)^ -time period] ÷ rate
= $1,010,000 × {1 - (1.12)^-3] ÷ 0.12
= $1,010,000 × 2.401831268
= $2,425,849.581
So, Net present value is
= Present value of inflows - Present value of outflows
= $2,425,849.581 - $2,310,000
= $115,849.581
Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given below:
Required:
1-a. Compute the companywide break-even point in dollar sales. (Round "CM ratio" to 2 decimal places and final answer to the nearest whole dollar amount.)
1-b. Compute the break-even point for the Chicago office and for the Minneapolis office. (Round "CM ratio" to 2 decimal places and final answers to the nearest whole dollar amount.)
1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points?
Greater than
Less than
Equal to
2. By how much would the company’s net operating income increase if Minneapolis increased its sales by $48,750 per year? Assume no change in cost behavior patterns.
3. Refer to the original data. Assume that sales in Chicago increase by $32,500 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.
a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e.1234 should be entered as 12.3)
Answer:
Explanation:
1a
Break-even point in dollar sales 406957 =(109200+78000)/46%
1b
Break even point
Chicago office 72429 =50700/70%
Minneapolis office 146250 =58500/40%
1c
Greater than
2
Increase in sales 48750
X CM ratio 40%
Net operating income increase 19500
3
Total company Chicago Minneapolis
Amount % Amount % Amount %
Sales 520000 100.0% 130000 100.0% 390000 100.0%
Variable expenses 273000 52.5% 39000 30.0% 234000 60.0%
Contribution margin 247000 47.5% 91000 70.0% 156000 40.0%
Traceable fixed expenses 109200 21.0% 50700 39.0% 58500 15.0%
Office segment margin 137800 26.5% 40300 31.0% 97500 25.0%
Common fixed expenses not traceable 78000 15.0%
Net operating income 59800
In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $460,000, and direct materials costs, $200,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $1,271,100. Actual direct material cost had been assigned to jobs as follows.
Jobs completed and sold $ 420,000
Jobs in finished goods inventory 76,000
Jobs in work in process inventory 53,000
Total actual direct materials cost $ 549,000
1. Determine the predetermined overhead rate for 2017.
2&3. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied.
4. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 and 3
Req 4
Determine the predetermined overhead rate for 2017.
Overhead Rate
Choose Numerator: / Choose Denominator:
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 and 3
Req 4
Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied.
Factory Overhead
Actual overhead
Applied overhead
Underapplied overhead 0 = Overhead Rate
Estimated overhead costs / Estimated direct material costs = Overhead rate
/ = 0
Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.
No Date General Journal Debit Credit
1 Dec 31 Cost of goods sold
1 Factory overhead
Answer:
1. Predetermined Overhead Rate 2.3
2. Under applied Overhead $ 8300
3.Cost of goods sold $ 8,300 Dr
Factory overhead $ 8300 Cr
Explanation:
As direct labor is not given overhead rate is calculated on the basis of direct material costs
Predetermined Overhead Rate= Estimated Overheads/ Estimated Direct Materials Cost
1. Predetermined Overhead Rate= $460,000/ $200,000= 2.3
Now we multiply the predetermined overhead rate with the actual material costs to get the aplpied overhead. And the difference is found.
Actual Overheads $1,271,100
Applied Overheads = 2.3 * $ 549,000 = $ 1262700
2. Under applied Overhead = Actual Overhead- Applied Overhead
= $1,271,100-$ 1262700= $ 8300
The under applied overhead is debited to Cost Of Goods Sold.
No Date General Journal Debit Credit
1 Dec 31 Cost of goods sold $ 8,300 Dr
1 Factory overhead $ 8300 Cr
What operations strategy should Nokero pursue? Should it continue to supply all of its light bulb orders from a single factory location in China? In terms of supply chain networks, should Nokero maintain fulfillment warehouses in Africa, Asia, and Latin America? How should Nokero address the last mile issue of accessing people in the most remote locations? How should Nokero build its supply chain footprint in international markets? What regions should it emphasize? A number of potential supply chain partners have asked Nokero for exclusive distribution rights in key geographic markets. Should Nokero grant exclusive country distribution rights? What performance standards or metrics should Nokero put in place for supply chain partners (distributors)?
Answer:
Explanation:
Nokero would benefit in maintaining its fulfillment warehouses in Africa, Asia, and Latin America. Maintaining these warehouses allows Nokero to efficiently transfer its products without the risk of running out of stock. It may be helpful to use Total Cost Analysis, which is ananalysis of all costs that include shipping, inventory, overhead, and risks (Daniels, Radebaugh, &Sullivan, 2015), Nokero may run into issues with costs related to shipping. However, the benefit of product transfer speed may outweigh the costs.Challenges that Nokero face in accessing remote locations may be solved through negotiations of a contract manufacturer, a contracted company who oversees supply-chain and manufacturing (Daniels, Radebaugh, & Sullivan, 2015). Through a contract manufacturer, Nokero can push products to remote locations that are not normally in the shipping radius of its fulfillment plants. Alternatively, Nokero can adopt contract manufacturing for all of its manufacturing and supply chain, while eliminating its current setup. However, Nokero would lose control of these processes – a risk that a global company may not be keen to take.18-5Building a distribution footprint could be accomplished by setting up a logistic system that would reach the current network of customers and also be able to outsource some of their distributions to specific companies of their choice. Nokero should open an additional distribution
NOKERO4center in the African region. As the text informs, Nokero’s “largest customers are distributors, associations, and individuals that have ordered thousands of light bulbs, including Anzocare (South African Alternative Energy Association) and major individual distributors from India, Kenya, Zambia, Ghana, and Fiji” (Daniels, Radebaugh, & Sullivan, 2015 p.724). Because of these customers’ location, additional stress is placed on their current factory located in China, viathe port of Shenzhen, which fulfills large commercial orders while smaller orders are outsourced to their partner, also in Shenzhen, China. Keep in mind that out of this current port, Nokero also fills orders for another large region, which includes, “Afghanistan, Australia, Nigeria, Central America, Cote D’Ivoire, Mali, Burkia Faso, and Vietnam. These regions should be emphasized out of the recommended new location in the region of Africa.
ne year ago, a U.S. investor converted dollars to yen and purchased 100 shares of stock in a Japanese company at a price of 3,150 yen per share. The stock's total purchase cost was 315,000 yen. At the time of purchase, in the currency market 1 yen equaled $0.00952. Today, the stock is selling at a price of 3,465 yen per share, and in the currency market $1 equals 145 yen. The stock does not pay a dividend. If the investor were to sell the stock today and convert the proceeds back to dollars, what would be his realized return on his initial dollar investment from holding the stock
Answer:
realized loss = -20.31%
Explanation:
stock price ¥3,150, total operation ¥315,000
in US dollars = ¥315,000 x $0.00952 = $2,998.80
current market price ¥3,465, total operation ¥346,500
in US dollars = ¥346,500 / ¥145 = $2,389.66
realized loss = (current value in US dollars - initial investment) / initial investment = ($2,389.66 - $2,998.80) / $2,998.80 = -20.31%
Even though the stock price increased significantly (10%), the yen depreciated against the dollar even more (-38%)
New Orleans Chemicals Company follows the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet:
New Orleans Chemicals Company
Comparative Balance Sheet
December 31, 2018 and 2017
2018 2017 Increase/ (Decrease)
Common Stock $ $35,000 $2,200 $32,800
Retained Earnings 157,000 92,000 65,000
Treasury Stock (8,100) (5,200) (2,900)
Total Equity $183,900 $89,000 $94,900
Net Income for 2018 was $94,000.
Based on the above information, determine the amount of dividends declared during 2018.
Answer:
$2,000
Explanation:
The dividend here can be calculated using the following formula:
Dividend paid = (Closing Retained Earnings - Opening Retained Earnings + Profit for the year)
Here,
Closing Retained Earnings is $157,000
Opening Retained Earnings is $65,000
And
Profit for the year is $94,000
By putting values, we have:
Dividend paid = $65,000 + $94,000 - $157,000
= $2,000
Wiemers Corporation’s comparative balance sheets are presented below.
WIEMERS CORPORATION
Balance Sheets
December 31
2017 2016
Cash $ 4,500 $ 3,200
Accounts receivable (net) 20,800 23,300
Inventory 10,100 7,200
Land 19,500 26,400
Buildings 70,000 70,000
Accumulated depreciation—buildings (14,600 ) (10,600 )
Total $110,300 $119,500
Accounts payable $ 12,700 $ 31,100
Common stock 74,900 68,600
Retained earnings 22,700 19,800
Total $110,300 $119,500
Wiemers’s 2017 income statement included net sales of $110,000, cost of goods sold of $60,800, and net income of $15,000.
Required:
1. Compute the following ratios for 2017.
a. Current ratio.b. Acid-test ratio.c. Accounts receivable turnover.d. Inventory turnover.e. Profit margin
Answer:
a. Current ratio = 2.79
b. Acid-test ratio = 1.99
c. Accounts receivable turnover = 2.92 times
d. Inventory turnover = 6.02 times
e. Profit margin = 13.64%
Explanation:
2017 Ratios
a. Current ratio = Current Assets / Current Liabilities
= ($ 4,500 + $20,800 + $10,100) / $ 12,700
= 2.79
b. Acid-test ratio = Current Assets - Inventory / Current Liabilities
= ($ 4,500 + $20,800) / $ 12,700
= 1.99
c. Accounts receivable turnover = Cost of Sales / Accounts receivable
= $60,800 / 20,800
= 2.92 times
d. Inventory turnover = Cost of Sales / Inventory
= $60,800 / 10,100
= 6.02 times
e. Profit margin = Net Profit / Sales
= $15,000 / $110,000×100
= 13.64%
Fire Department Turns to BI Analytics. New York City has nearly one million buildings, and each year, more than 3000 of them experience a major fire. The Fire Department of the City of New York (FDNY) is adding BI analytics to its arsenal of firefighting equipment. It has created a database of over 60 different factors (e.g., building location, age of the building, whether it has electrical issues, the number, and location of sprinklers) in an attempt to determine which buildings are more likely to have a fire than others. The values of these parameters for each building are fed into a BI analytics system that assigns each of the city's 330,000 inspectable buildings a risk score. (FDNY doesn't inspect single and two-family homes.) Building inspectors then use these risk scores to prioritize which buildings to visit on their weekly inspections. The FDNY has roughly 350 inspectors who are trained and certified to perform their duties.
Which set of three parameters all provides measures useful in determining which buildings are more likely to have a fire than others?
a. Year the building was constructed, the number of building occupants, and primary materials used in the construction of the building
b. Primary materials used in the construction of the building, the assessed value for property taxes, and distance from the nearest fire station
c. Distance from the nearest fire hydrant, whether or not the building has an elevator, and the number of stories in the building
d. The amount the building is insured for, distance from the nearest fire hydrant, and primary building materials used in the construction of the building
Answer:D
Explanation: