Onslow Co. purchases a used machine for $192,000 cash on January 2 and readies it for use the next day at an $6,000 cost. On January 3, it is installed on a required operating platform costing $1,200, and it is further readied for operations. The company predicts the machine will be used for six years and have a $23,040 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.
1.Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred.
Entry #1. Record the purchase of a used machine for $192,000 cash.
Entry #2. Record the costs of $6,000 cash incurred on the used machine.
Entry #3: Record the cost of $1,200 for an operating platform.
2. Prepare journal entries to record depreciation of the machine at December 31.
Entry #1Its first year in operations : Record the year-end adjusting entry for the depreciation expense of the used machine.
Entry#2 The year of its disposal : Record the year-end adjusting entry for the depreciation expense of the used machine.
3. Prepare journal entries to record the machine's disposal under each of the following separate assumptions:
Entry #1: Record the sale of the used machine for $23,000 cash.
Entry #2: Record the sale of the used machine for $92,000 cash.
Entry #3: Record the destruction of the used machine in a fire with $33,500 cash insurance settlement.

Answers

Answer 1

Answer:

Onslow Co.

1. Journal Entries:

Entry #1. Record the purchase of a used machine for $192,000 cash.

Jan 2:

Debit Plant $192,000

Credit Cash Account $192,000

To record the purchase of the used machine.

Entry #2. Record the costs of $6,000 cash incurred on the used machine.

Debit Plant $6,000

Credit Cash Account $6,000

To record the cost for readying it for use.

Entry #3: Record the cost of $1,200 for an operating platform.

Debit Plant Operating Platform $1,200

Credit Cash Account $1,200

2. Journal Entries for Depreciation:

Entry #1  Its first year in operations : Record the year-end adjusting entry for the depreciation expense of the used machine.

December 31, Year 1:

Debit Depreciation Expense $29,160

Credit Accumulated Depreciation $29,160

To record depreciation expense for the year.

Entry#2 The year of its disposal : Record the year-end adjusting entry for the depreciation expense of the used machine.

Year 5 December 31:

Debit Depreciation Expense $29,160

Credit Accumulated Depreciation $29,160

To record the depreciation expense for the year.

3. Journals Entries;

Entry #1: Record the sale of the used machine for $23,000 cash.

Debit Cash Account $23,000

Credit Plant Disposal $23,000

To record the cash receipt from the sale.

Debit Plant Disposal $198,000

Credit Plant $198,000

To record the transfer of machine sold.

Debit Accumulated Depreciation $145,800

Credit Plant Disposal $145,800

To record the transfer of balance to Sale of Machine.

Entry #2: Record the sale of the used machine for $92,000 cash.

Debit Cash Account $92,000

Credit Plant Disposal $92,000

To record the cash receipt from the sale.

Entry #3: Record the destruction of the used machine in a fire with $33,500 cash insurance settlement.

Debit Cash Account $33,500

Credit Plant Disposal $33,500

To record the cash receipt from insurance.

Explanation:

a) Data and Calculations:

Cost of machine =      $192,000

Readying cost =               6,000

Total =                        $198,000

Useful life = 6 years

Salvage value =          $23,040

Depreciable amount $174,960

Depreciation per year = $29,160 ($174,960/6)

Accumulated Depreciation after 5 years = $145,800 ($29,160 x 5)

Book value after 5 years = $52,200

Method of Depreciation = Straight-line


Related Questions

Suppose that the government is currently in a recession and elected officials have reached a conclusion that fiscal stimulus is needed. A new fiscal stimulus law (that was just passed) will involve spending $150 billion. Economists have informed you that the spending multiplier in the economy is 2.5 What is the total macroeconomic impact of the fiscal stimulus?

Answers

Answer:

The total macroeconomic impact of the fiscal stimulus is $375 billion.

Explanation:

In macroeconomics, a sending multiplier refers to a propositional factor that has a primary function of measuring the extent of the effect of a change in gross domestic product (GDP) as a result of a change in expenditure.

In order to determine the total macroeconomic impact of the fiscal stimulus, we just need to obtain the product of the spending and multiplier as follows:

Total macroeconomic impact = Spending * spending multiplier ............ (1)

Where;

Spending = $150 billion

Spending multiplier = 2.5

Substituting the values into equation (1), we have:

Total macroeconomic impact = $150 billion * 2.5 = $375 billion

Therefore, the total macroeconomic impact of the fiscal stimulus is $375 billion.

Categorize each transaction according to the U.S. account to which it belongs and the direction the money flows.AccountDirection of flowAn Australian company buys steel from a U.S. firm.The Federal Reserve buys $2 billion worth of euros.Profits are earned by a U.S. based mining company operatingin Mexico.An English company purchases a U.S.confectionary manufacturer.Financial accountPayment from foreignersFactor incomePayment to foreignersPayment from foreignersCurrent accountFinancial accountCurrent account

Answers

Answer:

Financial account transactions are those that involve capital goods or purchases.

The Current account is for goods and services.

1. Australian company buys steel from a U.S. firm. - Current Account. Payment from foreigners.

This is a purchase of a good being steel and the payment was made by foreigners to a U.S. firm.

2. The Federal Reserve buys $2 billion worth of euros. Financial Account. Payment to foreigners.

This is a capital flow involving the purchase of another currency. It was done by paying foreigners.

3. Profits are earned by a U.S. based mining company operating in Mexico. Current Account. Payment from foreigners.

These profits were made from business operations offering goods and services so is for the current account. The profits was made from Mexico so is a Payment from foreigners.

4. An English company purchases a U.S. confectionery manufacturer. Financial Account. Payment from Foreigners.

The English company invested in owing the confectionery manufacturer so this is a capital transaction. It involved a foreign company paying a U.S. company so is a payment from foreigners.

Answer:

a. If an English company purchases a U.S. confectionary manufacturer, payments from foreigners flow into the U.S. financial account.

b. If profits are earned by a U.S.-based mining company operating in Mexico, payments from foreigners flow into the U.S. current account.

c. If the Federal Reserve buys $2 billion worth of euros, payments to foreigners flow into the U.S. financial account.

d. If an Australian company buys steel from a U.S. firm, payments from foreigners flow into the U.S. current account.

Explanation:

Factor income includes wages, corporate profits, or any payment to owners of capital. An example of this is the profits earned in Mexico by the U.S. mining company. These profits are a payment from foreigners. This transaction is accepted for in the current account.

Sales and purchases of goods and services are often the biggest line item in the current account. The payment from Australia to the United States for steel falls into this account.

Private sales and purchases of assets include the exchange of any assets that create a future liability, such as the purchase of stocks or the purchase of a corporate entity. The English company's purchase of a U.S. confectionary manufacturer falls into the financial account.

Official asset sales and purchases are those purchases of assets, such as currency reserves, made by central banks. The Federal Reserve's purchase of $2 billion worth of euros falls into the financial account.

International transfers include direct monetary transfers into or out of the United States. This includes money sent by immigrants to family members in their native country. This question does not include an example of transfers.

Taylor Equipment Repair Service is owned by Jason Taylor. Cash $ 33,700 Supplies 5,780 Accounts Receivable 12,600 Equipment 77,400 Accounts Payable 23,400 Use the above figures to prepare a balance sheet dated February 28, 2019. Analyze: What is the net worth, or owner’s equity, at February 28, 2019, for Taylor Equipment Repair Service?

Answers

Answer:

Owners Equity/Net Worth is $106,080

Explanation:

Assets

Cash                             $33,700

Supplies                       $5,780

Accounts Receivable  $12,600

Equipment                    $77,400

Total Assets                 $129,480

Liabilities

Accounts Payable                 $23,400

Owners Equity (Balance)    $106,080

Total Liabilities and Equity    $129,480

The budget for Department 6 of Cardinal Company for the current month ending March 31 is as follows:
Materials $208,000
Factory wages 265,000
Supervisory salaries 67,800
Depreciation of plant and equipment 35,000
Power and light 22,500
Insurance and property taxes 15,500
Maintenance 9,700
During March, the costs incurred in Department 6 of Cardinal Company were materials, $204,000; factory wages, $285,000; supervisory salaries, $63,600; depreciation of plant and equipment, $35,000; power and light, $21,360; insurance and property taxes, $14,400; maintenance, $9,456.
(a) Prepare a budget performance report for the supervisor of Department 6 of Cardinal Company for the month of March.
(b) Are there any significant variances (5% or greater) of the budgeted amounts that should be examined by the supervisor?

Answers

Answer:

a) Cardinal Company, department 6

Budget performance report

For the month ended march 31, 202x

                                 Budget            Actual               Over           Under

                                                                                   budget        budget

Materials                $208,000         $204,000                              $4,000

Factory wages       $265,000         $285,000       ($20,000)

Supervisory salaries $67,800           $63,600                              $4,200

Depreciation P&E     $35,000           $35,000               -                    -

Power and light        $22,500            $21,360                                $1,140

Insurance and           $15,500             $14,400                               $1,100

property taxes

Maintenance               $9,700            $9,456                                 $244

Total                        $623,500         $632,816          ($9,316)

b) Factory wages were higher than budgeted by $20,000 or 7.55%, supervisory salaries were lower than budget by $4,200 or 6.19%, power and light were lower than budgeted by $1,140 or 5.07%, and insurance and property taxes were lower than budgeted by $1,100 or 7.1%

a) The Budget Performance Report  for the month ending March 31 to be presented to the Supervisor of Department 6, Cardinal Company is as follows:

                                                             Budget       Actual          Variance

Materials                                            $208,000  $204,000     $4,000  F

Factory wages                                     265,000    285,000     20,000  U

Supervisory salaries                              67,800       63,600       4,200  F

Depreciation of plant and equipment 35,000       35,000               0  None

Power and light                                    22,500         21,360         1,140  F

Insurance and property taxes              15,500         14,400         1,100  F

Maintenance                                           9,700          9,456           244  F

b) Significant Variances:

Factory Wages = 7.55% ($20,000/$265,000 x 100) Unfavorable

Supervisory salaries = 6.2% ($4,200/$67,800 x 100) Favorable

Power and Light = 5.1% ($1,140/$22,500 x 100) Favorable

Insurance and property taxes = 7.1% ($1,100/$15,500 x 100) Favorable

Thus, the significant variances that should be investigated by the supervisor included Factory Wages, Supervisory Salaries, Power and Light, and Insurance and Property Taxes for March.

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A dearborn company has earning per share of $2.30, it paid a dividend of $1.60 per share, and the market price of the company's stock is $64 per share. The price/earnings ratio is closest to:_______

a. 1.29
b. 91.43
c. 20.65
d. 9.60

Answers

Answer:

Price -earnings ratio= 27.83  times

Explanation:

The price-earning ratio is the ratio of the market price of a share to its earnings per share .

It helps investors to place a value on the shares of a company.The ratio gives an idea of how much a dollar of earning is worth in a company.

It is calculate as follows:

Price-Earnings ratio = Market price per share(MPS)/Earnings per share(EPS)

Price-earnings ratio = 64/2.30=27.83

Price -earnings ratio= 27.83  times

​Andre, Beau, and Caroline share profits and losses of their partnership in a ​:​: ratio respectively. If the net income is ​, calculate​ Caroline's share of the profits.​ (Do not round any intermediate​ calculations.)

Answers

Answer: $545,454.55

Explanation:

Caroline's share of the profit would be her sharing ratio over the total ratio time the net income.

= (6 / ( 6 + 2 + 3)) * 1,000,000

= 6/11 * 1,000,000

= $545,454.545

= $545,454.55

A single-stock futures contract on a non-dividend-paying stock with current price $250 has a maturity of 1 year. If the T-bill rate is 4%. What should the futures price be if the maturity of the contract is 2 years?

Answers

Answer:

$270.4

Explanation:

Calculation for What should the futures price be if the maturity of the contract is 2 years

Using this formula

Future Price= Stock Price ×(1 + Risk Free rate)^Maturity years

Let plug in the formula

Future Price=$250×(1+4%)^2

Future Price=$250×(1+0.04)^2

Future Price$250×(1.04)^2

Future Price=$250×1.0816

Future Price=$270.4

Therefore What should the futures price be if the maturity of the contract is 2 years will be $270.4

you own a bond that has a duration of 7 years interest rates are currently 8% but you belive the fed is about to increase rates by 35 basis points your predicted price change on this bond is

Answers

Answer: -2.27%

Explanation:

Bond prices are inversely related to interest rates so when the interest rises, the price of a bond will fall.

The formula for calculating this fall is;

= - Duration * ( Change in interest rate / (1 + current rate))

= -7 * ( 0.35%/(1 +8%))

= -0.022685

= -2.27%

This morning, you put a European protective put strategy in place when the cost of ABC stock was $29.15 per share and the 1-year $30 ABC put was priced at $1.05 per share. How much profit or loss per share will you earn from this strategy if the stock is worth $28 a share on the put expiration date? A) −$2.2 B) −$1.05 C) −$.20 D) $1.15 E) $4.20

Answers

Answer:

C) −$0.20

Explanation:

Stock Price (So) = $29.15,  Po = $1.05

Initial outflow = So + Po = $29.15 + $1.05

Initial outflow = $30.20

Strike Price (k)  $30

Stock price at maturity (St) = $28

Payoff = max(k-st,0)

Payoff = max(30-28,0)

Payoff = max(2,0)

Payoff = $2

The stock on maturity is sold in the market for $28.

Total inflow = Payoff + Stock price on maturity

Total inflow = $2 + $28

Total inflow = $30

Profit = Total inflow - Initial outflow

Profit = $30 - $30.20

Profit = -$0.20

The ending bank statement balance at November 30 is . The bank statement shows a service charge of ​, electronic funds receipts of​ $500, and a NSF check for​ $350. Deposits in transit total and outstanding checks are . The balance per books at November 30 is . What is the adjusted bank balance at November​ 30?

Answers

Answer:  $8,365‬

Explanation:

The Adjusted Bank balance will be = Ending bank balance + deposits in transit (these have not yet cleared and will be reflected in the account when they do)  - Outstanding checks ( these have cleared the bank either but have been recorded in the companies books as payments outwards)

= 7,550 + 2,550 - 1,735

= $8,365‬

The condensed income statement for a business for the past year is as follows: Product T U Sales $660,000 $320,000 Less variable costs 540,000 220,000 Contribution margin $ 120,000 $100,000 Less fixed costs 145,000 40,000 Income (loss) from operations $ (25,000) $ 60,000 Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of chang

Answers

Answer:

$120,000 Decrease

Explanation:

Calculation for the amount of change in net income resulting from the discontinuance of Product T.

PRODUCT T

Sales $660,000

Less Variable costs $540,000

Contribution margin $120,000 decrease

Therefore the amount of change in net income resulting from the discontinuance of Product T will be $120,000 decrease

On January 2, 2016, Lang Co. issued at par $10,000 of 4% bonds convertible in total into 1,000 shares of Lang’s common stock. No bonds were converted during 2016.Throughout 2016, Lang had 1,000 shares of common stock outstanding. Lang’s 2016 net income was $1,000. Lang’s income tax rate is 50%.No potential common shares other than the convertible bonds were outstanding during 2016. Lang’s diluted earnings per share for 2016 would bea. $ .50b. $ .60c. $ .70d. $1.00International Financial Reporting Standards are tested on the CPA exam along with U.S. GAAP. The following questions deal with the application of IFRS in accounting for share-based compensation.

Answers

Answer:

b. $0.6

Explanation:

Net income. $1,000

Add: Increase in net income if converted

[10,000 * 4% ( 1 - 50% )] $200

(a) Earnings available to equity share holders ($1,000 + $200). $1,200

(b) Number of shares outstanding

1,000 common shares + 1,000 potential shares = 2,000 shares outstanding

(a/b) Diluted earnings per share

1,200 ÷ 2,000 $0.6

When asking questions during criticism, it is best to be _______. a. understated b. defensive c. open minded d. annoyed Please select the best answer from the choices provided A B C D

Answers

Answer:

c. open minded

Explanation:

One should be open-minded when someone asks questions during criticisms. The correct option is c here.

Why is it important to be open-minded?

An individual should practice being open-minded because it helps to look at things and understand from everyone's perspective. The world is a place filled with people of different cultures having different social values, languages, mannerisms etc.

If we keep ourselves limited to a certain aspect then we will not gain any knowledge in our life. When we start practising being open-minded we tend to understand things from everyone's perspective and start to respect everyone's opinion.

Once we develop the habit of being open-minded then we start to have harmonious relationships with everyone. We start to handle criticisms maturely and never have any negative thoughts towards ourselves.

An open-minded person is happier in their life than a person who is not.

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A property management company hit its corporate goals for the year by increasing profits by 5%, two points higher than its 3% goal. Management was very pleased with the results and decided to celebrate with an extravagant meal for all managers. The following year, the company set the same goal, 3%, but fell very short. When digging into the cause, management found out that the associates were not as productive or as motivated as they were the year before. What should the company do to ensure it hits its goals for years to come

Answers

Available Options Are:

A. Continue training to improve its employees' skills  

B. Promote the best associates to managers  

C. Threaten lay-offs if goals are not hit  

D. Provide positive reinforcement for hitting goals

Answer:

Option D. Provide positive reinforcement for hitting goals

Explanation:

The training program is not required as the managers are already trained which means their is not skills deficit which has resulted in not achieving the business goals. Hence Option A is incorrect.

Option B is also incorrect because previously the same managers had achieved the goals hence promoting best associates to managers will not be impact making.

Option C is incorrect because threatening may result in further demotivating employees and it will also increase employee turnover. Hence it is also not a solution.

Option D is correct because the employees are demotivated and all they need is motivation which can be developed by developing a system of reward. This can be achieved by linking their interests with the company's interest. If they achieve their target then they must be awarded a certain portion of the target say 1%. This will increase their motivation to earn more by making additional sales.

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)

Answers

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%

Over a 38-year period an asset had an arithmetic return of 12.4 percent and a geometric return of 10.3 percent. Using Blume’s formula, what is your best estimate of the future annual returns over 6 years? 10 years? 19 years?

Answers

Answer:

Blume's formula combines the geometric and arithmetic means of an asset to be able to predict its returns in a given period.

The formula is;

= Geometric Mean*(T-1)/(N-1) + Arithmatic Mean *(N-T)/(N-1)

Where,

T = Period in question

N = Total period

6 years

= 10.3%*(6-1)/(38-1) + 12.4%*(38-6)/(38-1)

= 12.1 %

10 years

= 10.3%*(10-1)/(38-1) + 12.4%*(38-10)/(38-1)

= 11.89%

19 years

= 10.3%*(19-1)/(38-1) + 12.4%*(38-19)/(38-1)

= 11.38%

Panjim's prepaid expense account consists only of garage rental prepayments. Its 2015 beginning and ending balance were the same. Which one of the following statements must be true?Panjim had no garage rental expenses during 2015Panjim's prepaid expense account balance never varied during 2015Panjim's prepaid expense account balance varied during 2015None of the above statements is true

Answers

Answer:

Panjim's prepaid expense account balance varied during 2015

Explanation:

I will use the following example:

Panjim's prepaid garage expense was $1,000 on January 1, 2015

His garage expenses are $250 per quarter

After 6 months,  the accrued expenses will be $500, so the balance of the prepaid account = $500

Pinjam incurs in the same garage expenses during the rest of the year, but on December 31, 2015, he prepays the garage expenses for 2016, so the ending balance of the account is $1,000 also.

Prepaid expenses is an asset account, it is not the same as garage expenses which belongs to the income statement. Prepaid expenses must be accrued and the account's balance decreases as time passes, so it will vary during the year.

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:

Answers

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

When the world price of some good is above the domestic price (before trade), then after trade, that nation will likely be:

Answers

Answer:

EXPORT

Explanation:

If the domestic price of a country for  a good is lower than world price before trade, it mean that the country is producing that good efficiently - at a cheaper cost. After trade, the country would export the good, so that the world can produce more of the goods it produces efficiently.

If the world price is below domestic price of a country before trade, after trade, the country would import

Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $440,000. Shipping costs totaled $30,000. Foundation work to house the centrifuge cost $8,600. An additional water line had to be run to the equipment at a cost of $3,000. Labor and testing costs totaled $5,300. Materials used up in testing cost $2,600. The capitalized cost is:__________.
a. $489,900.
b. $470,000.
c. $481,600.
d. $489,500.

Answers

Answer:

d. $489,500

Explanation:

The capitalized cost will include all the costs incurred by Holiday laboratories to readily make the asset for use.

Therefore,

Capitalized cost = High speed industrial centrifuge + Shipping cost + Foundation cost + Equipment cost + Labor and testing cost + Material cost

= $440,000 + $30,000 + $8,600 + $3,000 + $5,300 + $2,600

= $489,500

Based on the costs incurred for the fixed asset, the capitalized cost will be a. $489,900

When it comes to fixed assets, all the costs that were needed to acquire the asset and install it will be capitalized.

The capitalized cost is therefore:

= Cost of equipment + Shipping cost + Foundation work cost + Additional water line cost + Labor costs + Materials cost

= 440,000 + 30,000 + 8,600 + 3,000 + 5,300 + 2,600

= $489,500

In conclusion, the capitalized cost was $489,500

Find out more about capitalizing cost at  https://brainly.com/question/25075987.

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?

Answers

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

Two new rides are being compared by a local amusement park in terms of their annual operating costs. The two rides are assumed to be able to generate the same level of revenue (therefore the focus on costs). The Tummy Tugger has a fixed cost of $10,000 per year and a variable cost of

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Complete Question:

Two new rides are being compared by a local amusement park in terms of their annual operating costs. The two rides are assumed to be able to generate the same level of revenue (and thus the focus on costs). The Tummy Tugger has fixed costs of $10,000 per year and variable costs of $2.50 per visitor. The Head Buzzer has fixed costs of $4000 per year, and variable costs of $4 per visitor. Provide answers to the following questions so the amusement park can make the needed comparison.

Requirement:

Mathematically determine the breakeven number of visitors per year for the two rides to have equal annual costs.

Answer:

4000 visitors

Explanation:

As we know that:

Total Annual Cost  = Variable Cost Per Unit * Total Units    +  Fixed Costs

For Tummy Tugger,

Variable Cost per Unit is $2.5 per visitor

Total Units are not given so we assume it to be "x"

Fixed cost is $10,000

By putting values we have:

Total Annual Cost  = $2.50x + $10,000 ........ Equation 2

Similarly for Head Buzzer,

Variable Cost per Unit is $4 per visitor

Total Units are not given so we assume it to be "x"

Fixed cost is $4,000

By putting values we have:

Total Annual Cost  = $4x + $4,000 .......... Equation 3

As per the requirement, the annual cost for both of the rides is same for the year, which means that Equation 2 is equal to Equation 3.

Mathematically,

2.50x + 10000 = $4x + 4000

$10,000 - $4,000 = $4x - $2.5x

$6,000 = $1.5x

x= $6,000 / $1.5 per unit   = 4,000 Units

At 4000 visitors for a year, the annual cost of both rides is the same.

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!

Answers

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.

Interest received from which of the following federal agency securities is exempt from all state and local taxation?
A. Fannie Mae Pass Through Certificates.
B. Treasury notes.
C. Federal Farm Credit Funding Corporation Bonds.
D. Federal Home Loan Bank Bonds.

Answers

Answer: B. Treasury notes.

Explanation:

Treasury Notes are tax exempt from all state and local taxation but are taxable by the Federal Government with the relevant tax rate being the investor's marginal tax rate.

The amount taxed is the interest received on the note when it matures. The investor can also be taxed on capital gain if they bought the Note at discounted prices and then sold it for more than that.

June Smith, a process engineer, has sold her 15-year patent for a new etching process to Silica Labs, Inc. In return, she has received $500,000 in cash and, based on its value on the sale date, $200,000 in common stock in Silica Labs. The stock is forecasted to double in market value over the next two months. Assuming that Silica Labs holds some long-term debt, which of the following describes the effect of the transaction on Silica Labs?
A. Current ratio will decrease and total debt to equity ratio will increase.
B. Current ratio will increase and total debt to equity ratio will decrease.
C. Current ratio will increase and total debt to equity ratio will increase.
D. Current ratio will decrease and total debt to equity ratio will decrease.

Answers

Answer: D. Current ratio will decrease and total debt to equity ratio will decrease.

Explanation:

The Current ratio is calculated by dividing the firm's current assets by it current liabilities. This transaction will have the effect of reducing the cash account of Silica Labs by $500,000 which means the numerator will be less in the equation which would lead to a lesser Current ratio.

The total debt to equity ratio is calculated by dividing the firms's total debt by its equity. Silica offered equity to June thereby increasing their equity account. This will mean that the denominator has increased in the equation which will lead to a lesser total debt to equity ratio.

Assume the spot Swiss franc is $0.7000 and the six-month forward rate is $0.6950. What is the minimum price that a six-month American call option with a strik-ing price of $0.6800 should sell for in a rational market

Answers

Answer:

2 cents

Explanation:

The spot price = $0.7000 = 70 cents, The forward rate = $0.6950 = 69.5 cents and the call option with striking price = $0.6800 = 68.00 cents

The annualized six month rate = 3 1/2 % = 3.5 %, therefore the rate = r/n, where n is the number of period per year = 2. Therefore r/n = 3.5% / 2 = 0.035 / 2 = 0.0175

The minimum price = Maximum (spot price - striking price, (forward rate - striking price) / (1 + 0.0175), 0) = Maximum(70 - 68, (69.5 - 68)/ 0.0175, 0)

Minimum price = Maximum (2 , 1.47, 0) = 2 cents

The minimum price for the American option is 2 cents.

We can arrive at this answer in the following format:

First, we will need to calculate the six-month annualized rate. This will be done as the following calculation:

[tex]3*(\frac{1}{2})=3.5[/tex]%

Then we will calculate the division of this value by the number of periods in the years, which are two. So we will calculate:

[tex]\frac{0.035}{2} = 0.0175[/tex]

With that we can calculate the minimum price as follows:

[tex]spot price - striking price = minimum price\\70 - 68= 2[/tex]

With that, we can say that the minimum price is equal to 2 cents.

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https://brainly.com/question/14085963?referrer=searchResults

Warren Co. recorded a right-of-use asset of $780,000 in a 10-year finance lease. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset after 2 years will be:

Answers

Answer: $624000

Explanation:

From the question, we are informed that Warren Co. recorded a right-of-use asset of $780,000 in a 10-year finance lease and that the interest rate charged by the lessor was 10%.

The balance in the right-of-use asset after 2 years will be calculated as:

= $780,000 - [($780,000/10) × 2]

= $780,000 - ($78000 × 2)

= $780,000 - $156,000

= $624000

Fogle Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity-based costing system:Overhead costs: Wages and salaries $143,000Other expenses 60,000Total $203,000Distribution of resource consumption: Making Bouquets (Activity Cost Pools) Delivery (Activity Cost Pools) Other (Activity Cost Pools) TotalWages and salaries 55% 35% 10% 100%Other expenses 40% 30% 30% 100%The "Other" activity cost pool consists of the costs of Idle capacity and organization-sustaining costs.The amount of activity for the year is as follows:Activity Cost Pool ActivityMaking bouquets 58,325 bouquetsDelivery 8,500 bouquetsWhat would be the total overhead cost per bouquet according to the activity-based costing system? In other words, what would be the overall activity rate for the making bouquets activity cost pool?a. $1.81 per bouquets.b. $1.76 per bouquets.c. $1.74 per bouquets.d. $1.66 per bouquets.

Answers

Answer:

b. $1.76 per bouquet.

Explanation:

Wages and Salaries cost is 143,000

Other expenses is 60,000

Making bouquet activity allocations :

Wages and Salaries 143,000 * 55% = 78650

Other expenses 60,000 * 40% = 24,000

Total is 102,650

number of bouquets is 58,325

102,650 / 58,325 = 1.76 per bouquets.

The cost of making each bouquet is approximately $1.76 per bouquet.

ABC will purchase a machine that will cost $2,575,000. Required modifications will cost $375,000. ABC will need to invest $75,000 for additional inventory. The machine has an IRS approved useful life of 7 years; it is presumed to have no salvage value. ABC plans to depreciate the machine by using the straight-line method. The machine is expected to increase ABC's sales revenues by $1,890,000 per year; operating costs excluding depreciation are estimated at $454,600 per year. Assume that the firm's tax rate is 40%. What is the annual operating cash flow?

Answers

Answer:

The Annual Operating Cash Flow is $1,029,811.43

Explanation:

Initial Investment = Cost of Machine + Modification Cost

Initial Investment = $2,575,000 + $375,000

Initial Investment = $2,950,000

Salvage Value = $0

Useful Life = 7 years

Depreciation per year = (Initial Investment - Salvage Value) / Useful Life

Depreciation per year = ($2,950,000 - $0) / 7

Depreciation per year = $421,428.57

Annual Operating Cash Flow = (Sales – Operating Costs) * (1 – Tax Rate) + Tax Rate * Depreciation

Annual Operating Cash Flow = ($1,890,000 - $454,600) * (1 - 0.40) + 0.40 * $421,428.571

Annual Operating Cash Flow = $1,435,400 * 0.60 + 0.40 * $421,428.571

Annual Operating Cash Flow = $1,029,811.4284

Annual Operating Cash Flow = $1,029,811.43

Critical Thinking Questions What investment options are open to Natasha? What chance does she have of earning a satisfactory return if she invests her $15,000 in (a) bluechip stocks, (b) growth stocks, (c) speculative stocks, (d) corporate bonds, or (e) municipal bonds?

Answers

Explanation:

Remember, a good investment is one that provides extra returns also called profit. Thus, Natasha faces the grim reality of accepting a certain percentage of risk for whatever investment choice she decides.

However, in terms of risk, the $15,000 could best be preserved in corporate bonds.

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