Answer:
$16,800
Explanation:
The computation of the amount of dividends common shareholders will receive in 2021 is shown below:-
Dividends per year for preferred stock = Par value × Cumulative preferred stock
= $520,000 × 7%
= $36,400
So, dividends in arrears for preferred stock for years is
For 2017 = Dividends per year for preferred stock - Cash dividend
= $36,400 - $32,000
= $4,400
For 2018 = For 2017 + (Dividends per year for preferred stock - Cash dividend)
= $4,400 + ($36,400 - $32,000)
= $8,800
Total dividends to be paid to preferred stockholders = For 2018 + Dividends per year for preferred stock
= $8,800 + $36,400
= $45,200
Finally
Dividends for common stockholders = Declared Cash Dividend - Total dividends to be paid to preferred stockholders
= $62,000 - $45,200
= $16,800
In 2019, Crane Company sold 2000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $240000. What was Crane’s 2019 net income?
Answer:
Crane's 2019 Net income is $120,000
Explanation:
Given the above information, we can get Crane's net income as shown below.
Sales $1,200,000
(2,000 units × $600)
Less: Variable expenses ($840,000)
(2,000 units × $420)
Contribution margin $360,000
Less: Fixed expenses ($240,000)
Net income. $120,000
Foxx Company incurs $240000 overhead costs each year in its three main departments, setup ($15000), machining ($165000), and packing ($60000). The setup department performs 40 setups per year, the machining department works 5000 hours per year, and the packing department packs 500 orders per year. Information about Foxx’s two products is as follows: Product A1 Product B1 Number of setups 20 20 Machining hours 1000 4000 Orders packed 150 350 Number of products manufactured 600 400 If machining hours are used as a base under traditional casting, how much overhead is assigned to Product A1 each year?
Answer:
Allocated MOH= $48,000
Explanation:
Giving the following information:
Estimated overhead= $240,000
Product A1 Product B1
Machining hours 1000 4000
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 240,000/5,000
Predetermined manufacturing overhead rate= $48 per machine-hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 48*1,000
Allocated MOH= $48,000
The following are the 20X2 transactions of the Midwest Heart Association, which has the following funds and fund balances on January 1, 20X2: Unrestricted net assets $ 281,000 Temporarily restricted net assets 87,000 Permanently restricted (endowment) net assets 219,000
1. Had Unrestricted pledges totaling $700,000, of which $150,000 is for 20X3 and uncollectible pledges estimated at 8 percent.
2. Had restricted use grants totaling $150,000.
3. Collected a total of $520,000 of current pledges and wrote off $30,000 of remaining uncollected current pledges.
4. Purchased office equipment for $15,000.
5. Used unrestricted funds to pay the $3,000 mortgage payment due on the buildings.
6. Received interest and dividends of $27,200 on unrestricted investments and $5,400 on temporarily restricted investments. An endowment investment with a recorded value of $5,000 was sold for $6,000, resulting in a realized transaction gain of $1,000. A donor-imposed restriction specified that gains on sales of endowment investments must be maintained in the permanently restricted endowment fund.
7. Recorded and allocated depreciation as follows:
Community services $ 12,000 Public health education 7,000 Research 10,000 Fund-raising 15,000 General and administrative 9,000 8. Had other operating costs of the unrestricted current fund: Community services $ 250,600 Public health education 100,000 Research 81,000 Fund-raising 39,000 General and administrative 61,000 9. Received clerical services totaling $2,400 donated during the fund drive. These are not part of the expenses reported in item 8. It has been determined that these donated services should be recorded.
Required: a. Prepare journal entries for the transactions in 20X2 b. Prepare a statement of activities for 20X2.
Answer:
Midwest Heart Association
1. Journal Entries:
1. Debit Pledges Receivable $700,000
Credit Pledges Revenue $700,000
To record unrestricted pledges received.
1. Debit Uncollectible Expense $56,000
Credit Allowance for Uncollectibles $56,000
To record 8% of uncollectible pledges.
2. Debit Temporarily restricted net assets $150,000
Credit Pledges Receivable $150,000
To record receipt of restricted use grants.
3. Debit Unrestricted net assets $520,000
Credit Pledges Receivable $520,000
To record current pledges collected
3. Debit Allowance for Uncollectible $26,000
Credit Uncollectible Expense $26,000
To record the write-off of $30,000 remaining uncollected pledges.
4. Debit Office Equipment $15,000
Credit Unrestricted net assets $15,000
To record the purchase of office equipment
5. Debit Building Mortgage $3,000
Credit Unrestricted net assets $3,000
To record the payment of mortgage on buildings.
6. Debit Unrestricted net assets $27,200
Debit Temporarily restricted net assets $5,400
Credit Interest and dividends Revenue $32,600
To record the receipt of interest and dividends.
6. Debit Permanently restricted net assets $1,000
Debit Unrestricted net assets $5,000
Credit Sale of Endowment Investment $6,000
To record the sale and gain of endowment investments.
7. Debit Depreciation Expense:
Community services $ 12,000
Public health education $7,000
Research $10,000
Fundraising $15,000
General and administrative $9,000
Credit Accumulated Depreciation $53,000
To record depreciation expense for the year.
8. Debit Other expenses:
Community services $ 250,600
Public health education $100,000
Research $81,000
Fundraising $39,000
General and administrative $61,000
Credit Unrestricted net assets $531,600
To record other expenses.
Debit Clerical services expense $2,400
Credit Donated clerical services $2,400
To record the receipt of donated clerical services.
b. Statement of Activities for the year ended December 31, 20X2:
Revenue:
Pledges $700,000
Interest and dividends 32,600
Sale of Endowments 6,000 $738,600
Depreciation expense:
Community services $ 12,000
Public health education $7,000
Research $10,000
Fundraising $15,000
General & administrative $9,000 53,000
Other expenses:
Community services $ 250,600
Public health education $100,000
Research $81,000
Fundraising $39,000
General and administrative $61,000 531,600
Clerical services expense $2,400
Change in net assets $151,600
Explanation:
a) Data and Calculations
1. Unrestricted net assets
Beginning balance $ 281,000
Pledges receivable 520,000
Office equipment (15,000)
Building mortgage (3,000)
Interest and Dividends 27,200
Sale of Endowment 5,000
Other expenses (531,600)
Ending balance $278,600
2. Temporarily restricted net assets
Beginning balance $ 87,000
Restricted use grants $150,000
Interest and Dividends 5,400
Ending balance $242,400
3. Permanently restricted (endowment) net assets
Beginning balance $ 219,000
Gain from Endowment 1,000
Ending balance $220,000
b) Midwest Heart Association's Statement of Activities is the financial statement that shows the revenues and expenses of the association, including the change in net assets during a period. It is like the income statement of a profit-making entity that shows revenue and expenses. While the excess in revenue over expenses is called net income for a profit-making entity, it is called change in net assets for a non-profit-making organization like Midwest Heart Association.
ABC, Inc. is a calendar-year corporation. Its financial statements for the years 2021 and 2020 contained errors as follows:
2021 2020
Ending inventory $9,000 overstated $24,000 overstated
Depreciation expense $6,000 understated $18,000 overstated
Assume that the proper correcting entries were made at December 31, 2020. By how much will 2021 income before taxes be overstated or understated?
A) $15,000 overstated B) $ 3,000 understated
C) $ 6,000 overstated D) $ 3,000 overstated
Answer: A) $15,000 overstated
Explanation:
Ending Inventory is subtracted from Cost of Goods sold so an overstated Ending Inventory would mean a smaller Cost of Goods sold and hence an overstated Income.
An Understated Depreciation amount would have the same effect because Depreciation is an expense so understating it would mean less expenses subtracted from Income leading to an overstated income.
As both of them will overstate income, the total overstatement would be;
= 9,000 + 6,000
= $15,000
Adam, Ben and Erica are liquidating their partnership. Before selling the assets and paying the liabilities, the capital balances are Adam $41,000, Ben $31,000 and Erica $20,000. The profit and loss sharing ratio has been 1:1:2 for Adam, Ben and Erica, respectively. The partnership has $72,000 cash, $40,000 non-cash assets, and $20,000 accounts payable. Requirement 1. Assuming the partnership sells the non-cash assets for $50,000, how much cash will each partner receive in final liquidation? Requirement 2. Assuming the partnership sells the non-cash assets for $25,000, how much cash will each partner receive in final liquidation?
Answer:
Adam = $41,000 , Ben = $31,000 , Erica =$20,000
Profit and loss sharing Ratio respectively =1:1:2
Requirement 1
Cash available $72,000
Add: Cash received from sale of $50,000
non-cash assets
$122,000
Less: Cash paid against account $20,000
receivables
Cash to be distributed $102,000
Distribution
Adam= $102,000 * 1/4 = $25,500
Ben = $102,000 * 1/4 = $25,500
Erica = $102,000 * 2/4 = $51,000
Requirement 2
Cash available $72,000
Add: Cash received from sale of $25,000
non-cash assets
$97,000
Less: Cash paid against account $20,000
receivables
Cash to be distributed $77,000
Distribution
Adam= $77,000 * 1/4 = $19,250
Ben = $77,000 * 1/4 = $19,250
Erica = $77,000 * 2/4 = $38,500
Which of the following would NOT cause an increase demand for iPhones? Group of answer choices price of comparable Android phones increases price of iPhones decreases income of possible customers increases price of data plans decreases
Answer:
price of iPhones decreases
Explanation:
A decrease in price increases quantity demanded but does not increase demand.
iPhones and Android phones are substitute goods.
Substitute goods are goods that can be used in place of another good.
An increase in the price of androids increases the cost of androids. So, consumers would increases their demand for iPhones.
Because iPhone is assumed to be a normal good. An increase in the price of iPhones would increase the demand for the good.
Normal goods are goods that are goods whose demand increases when income increases and falls when income falls
Data plans and iPhones are complement goods.
Complementary goods are goods that are consumed togethe
A decrease in the price of data plans would increase the demand for iPhones.
Suppose you are the money manager of a $2 million investment fund. The fund consists of four stocks with the following investments and betas. Stock Investment Beta A $ 200 000 1.50 B $ 300 000 -0.50 C $ 500 000 1.25 D $1000 000 O.75
If the market required rate of returns is 28 and the risk-free is 12%:
Calculate:
i. Stock A required rate of return
ii. Stock B required rate of return
iii. Stock C required rate of return
iv. Stock D required rate of return
v. What is the Fund’s required rate of return?
Answer:
5 ms
Explanation:
List and explain how the proportional method works when selling common and preferred stocks for one lump sum amount.
Answer and Explanation:
The proportional method is a method of allocating the fair market value of each security from the lump sum sale on the balance sheet based on the ratio of the value of the security to other securities involved in the sale.
It is calculated : fair market value of security/total lump sum sale
The proportional method is one of the methods used when a company sells in lump sum(usually when a business acquires another) as against when a company sells a particular class of stock such as ordinary stock or preferred stock. Using the proportional method, it is assumed that the fair market value of the classes of stock are known and so the company allocates the ratio of different classes involved on the balance sheet based on each class's fair market value. Another method for accounting for this kind of transaction as in allocating classes of stock from lump sale on the balance sheet is the incremental method
Assume that the standard cost to make one finished unit includes 1 hour of direct labor at $4 per hour. During March, 11,000 direct labor-hours were worked, 5,250 units of product were manufactured, and total direct labor cost was $40,000.
What is the labor rate variance for April? Select one:
A. $4,000 (U)
B. $2,000 (F)
C. $4,000 (F)
D. $2,000 (U)
Answer:
C. $4,000 F
Explanation:
With regards to the information above,
Direct labor rate variance for April
= (11,000 × $4) - $40,000
= $44,000 - $40,000
= $4,000 F
Vicky Robb is considering purchasing the common stock of Hawaii Industries, a rapidly growing boat manufacturer. She finds that the firm’s most recent (2020) annual dividend payment was $2.50 per share. Vicky estimates that these dividends will increase at a 20% annual rate, g1, over the next 3 years (2021, 2022, and 2023) because of the introduction of a hot new boat. At the end of the 3 years (the end of 2023), she expects the firm’s mature product line to result in a slowing of the dividend growth rate to 8% per year, g2, for the foreseeable future. Vicky’s required return, rs, is 15%. Required: What is the current (end-of-2020) value of Hawaii’s common stock, P0 = P2020.
Answer:
P0 = $51.9956 rounded off to $52.00
Explanation:
The two stage growth model of DDM will be used to calculate the price of a stock whose dividends are expected to grow over time with two different growth rates. The DDM values a stock based on the present value of the expected future dividends from the stock.
The formula for price of the stock today under this model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n + [ (D0 * (1+g1)^n * (1+g2) / (r - g2)) / (1+r)^n ]
Where,
D0 is the dividend today or most recently paid dividend g1 is the initial growth rate which is 20% g2 is the constant growth rate which is 8% r is the required rate of return
P0 = 2.5 * (1+0.2) / (1+0.15) + 2.5 * (1+0.2)^2 / (1+0.15)^2 +
2.5 * (1+0.2)^3 / (1+0.15)^3 +
[(2.5 * (1+0.2)^3 * (1+0.08) / (0.15 - 0.08) / (1+0.15)^3)
P0 = $51.9956 rounded off to $52.00
Based on the information given, the current value of the stock will be $52.00.
Based on the information given, the following can be denoted.
D0 = dividend today
g1 = initial growth rate = 0%
g2 = constant growth rate = 8%
r = required rate of return
P0 = [2.5 × (1+0.2) / (1+0.15) + 2.5 × (1+0.2)² / (1+0.15)² + 2.5 + (1+0.2)³] / (1+0.15)³ + (2.5 * (1+0.2)³ * (1+0.08) / (0.15 - 0.08) / (1+0.15)³]
P0 = $52.00
In conclusion, the price is $52.
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< Back to Assignment Attempts: Average: / 1 2. Introduction to the foreign-currency exchange market In an open economy, why is the supply curve for dollars in the foreign-currency exchange market vertical? Net capital outflow is determined by the real interest rate, not the real exchange rate. Net capital outflow is extremely sensitive to small changes in the real exchange rate. Net capital outflow is determined by real GDP, not the real exchange rate. Net capital outflow equals net exports. Grade It Now Save & Continue Continue without saving
Answer: Net capital outflow is determined by the real interest rate, not the real exchange rate
Explanation:
In the foreign-currency market, the supply of dollars is not dependent on the real exchange rate and so the supply curve will be vertical to indicate this independence by showing inelasticity which means that it is unaffected by the variables in the foreign-currency market.
Supply of dollars is rather dependent on the real interest rate.
This is because dollars get into the world economy (supply of dollars) as a result of investments by Americans into markets abroad in the form of Net Capital Outflow. If American real interest rate is low, Americans will invest in other countries with a higher rate of return thereby pumping more dollars into the world economy.
Calculate the amount realized at the end of 7 years through annual deposits of $1000 at 10% compound interest
Answer:
$9,487.17
Explanation:
The computation of the amount realized at the end of 7 years is shown below;
It can be determined by two methods, first is this one
Future value = $1,000 × 1.10^6 + $1,000 × 1.10^5 + … + $1,000 × 1.10 + $1,000
= $1,000 × (1.10^7 - 1) ÷ 0.10
= $1,000 × 9.48717
= $9,487.17
The second one is shown in the attachment
In both methods, the answers are the same
Novak Corporation has the following balances at December 31, 2017. Projected benefit obligation $2,621,000 Plan assets at fair value 2,047,000 Accumulated OCI (PSC) 1,031,000 What is the amount for pension liability that should be reported on Novak's balance sheet at December 31, 2017
Answer:
$574,000
Explanation:
Calculation for the amount for pension liability that should be reported on Novak's balance sheet at December 31, 2017
Using this formula
Pension liability=Projected benefit obligation - Plan assets
Let plug in the formula
Pension liability=$2,621,000-2,047,000
Pension liability=$574,000
Therefore the amount for pension liability that should be reported on Novak's balance sheet at December 31, 2017 will be $574,000
On November 1, Year 1, Noble Co borrowed $80,000 from South Bank and signed a 12% six month note payable, all due at maturity. The interest on this loan is stated separately. How much must Noble pay South Bank on May 1, Year 2, when the note matures?
a. $84,000
b. $89,600
c. $82,400
d. $80,000
Answer: answer is not in the option.
Correst answer -Noble must pay South Bank on May 1, Year 2, when the note matures, $84,800
Explanation:
Interest accrued = Principal(amount borrowed) x rate x time
= $80,000 x 12 x 6/12
= $4,800
Amount to be paid on may 1 st the next year (year 2 )=Amount borrowed + interest accrued
= $80,000 + $4,800 = $84,800
Noble must pay South Bank on May 1, Year 2, when the note matures the sum of $84,800
Review the critical external and internal environmental factors that have strategic implications in the future for Coca Cola1. Are Coca Cola recipients or creators of the market for their products? Why? How is this factored into the decisions of each firm?2. What recommendations can you make to the task force to enhance the effectiveness of Coke's strategy or change the strategic approach for better results?
Answer with Explanation:
Requirement 1.
First of all we will do SWOT analysis to develop an understanding of the company.
The Strengths of Coca Cola are as under:
Great brand recognition worldwideHighly valued company worldwideOperational in 200 countries across the globeLargest market share in cold beveragesHuge Customer FanSo many acquisition in last 10 yearsThe weaknesses of the company are as under:
Less diversified productsNot recommended by the doctors because of its adverse impact on health. Well known for its environmental issues which includes devastating effect on environment, violation of worker's rights in many countries, usage of water in different communities is so much high that it effects the local farmers.Aggressive competition with Pepsi has effected Coca Cola business operations and profits.The opportunities that must be exploited by the Coca Cola company are as under:
Diversification of products will help the company to grow its market share and improved profits.Specially focus on sales and marketing department in countries which are near the equator because the consumption of cold drinks here is more than countries with cold climate. Package beverages with environmentally friendly material to abandon single use plastic.Improving Supply chain management will increase benefits drawn because of its presence in almost 200 countries.The threats that Coca Cola faces is as under:
Environmental Issues which includes use of single use plastics, water controversy, etc.Raw material resourcing uncertaintyIndirect competitions which includes thousands of Local players in different states across the globe.Requirement 2.
No doubt they are the creators of the market. They set principles for aggressive marketing that was very helpful in gaining market share due to product design that encourage customer to buy, Brand design, Logo and Font, Simplicity of bottles, etc.
These factors are incorporated in each firm's decision making programs and is the reason why it enables the product acceptance by a wide majority of customers. Though the marketing strategy for every single product is different and is largely dependent on the location and availability of the product.
Requirement 3.
Following are some recommendations to Coca Cola Company:
Coca Cola Company must step into food market not because it would help in managing its supply chain but it will also help in building a more diversified product ranges.Infrastructure development which would include franchises of Coca cola that will help it to develop McDonald's like offerings of it own that only offers Coca Cola products. This will increase the market share of Coca Cola company increase its brand recognition as well. Furthermore, it can also add value to its franchises by use of special offers that would increase its franchise sales.The company must resolve its environmental issues to increase its share value as nowadays Dow's and S & P adds value to market price of shares of companies that are environmental friendly. Marketing and distribution team of gulf countries must be given additional budget to increase their sales as their is great demand of products here.Coca cola must introduce health benefiting drinks that they can recommend children to taste as frequent consumption of cold drinks are not recommended by the doctors.A project is expected to generate annual revenues of $119,300, with variable costs of $75,400, and fixed costs of $15,900. The annual depreciation is $3,950 and the tax rate is 34 percent. What is the annual operating cash flow?
Hint: Revenue - FC - VC - Depr. = EBIT. Taxes = EBIT x tax rate. OCF = EBIT + Depreciation - Taxes (same as chapter 2).
a. $61,143
b. $28,000
c. $19,823
d. $31,950
e. $45,243
Answer:
c. $19,823
Explanation:
For the computation of annual operating cash flow first we need to find out the EBIT and Tax which is shown below:-
EBIT = Revenue - Variable cost - Fixed cost - Depreciation
= $119,300 - $75,400 - $15,900 - $3,950
= $24,050
Tax = EBIT × Tax rate
= $24,050 × 34%
= $8,177
Operating cash flow = EBIT + Depreciation - Taxes
= $24,050 + $3,950 - $8,177
= $19,823
Hence, the correct option is c.
What is the bullwhip effect and how does it relate to lack of coordination in a supply chain?
Answer:
The bullwhip effect happens when retailers or other members of the supply chain overestimate a sudden increase in demand, and this causes a chain reaction in all the other participants of the supply chain that start requesting higher quantities of goods or materials for production. E.g. the fidget spinner was a very popular fad and its producers probably didn't anticipate how large the demand would be. Once the product became extremely popular, everyone wanted to sell fidget spinners. This caused an increase in the order quantities of all the supply chain. Once the fad faded out, all this momentum stopped and many stores, distributors, wholesalers, and even factories were left with huge unsold stocks of fidget spinners.
When the supply chain is well coordinated, there is little chance for some retailers or distributors to over react and want more product just in case. If your supply is guaranteed, then it would take some extraordinary increase in demand to make you want to increase your purchase orders. But if your supply chain is not well coordinated, you might fear that you will lose a lot of sales and other competitors will make them. Then you get anxious and start ordering large quantities.
A Treasury bond due in one year has a yield of 5.7%; a Treasury bond due in 5 years has a yield of 6.2%. A bond issued by Ford due in 5 years has a yield of 7.5%; a bond issued by Shell Oil due in one year has a yield of 6.5%. The default risk premiums on the bonds issued by Shell and Ford, respectively, are:__________. a. 1.0% and 1.2% b. 1.2% and 1.0%. c. 0.7% and 1.5%. d. 0.8% and 1.3%.
e. None of the options are correct
Answer:
d. 0.8% and 1.3%.
Explanation:
The default risk premiums on the bonds issued by Shell = 6.5% - 5.7% = 0.8%
The default risk premiums on the bonds issued by Ford = 7.5% - 6.2% = 1.3%
Hence, the default risk premium issued by Shell and Ford respectively are 0.8% and 1.3%
Stock X is selling for $40 a share. An American put option on this stock with a strike price of $48 is trading at $10 per share.
a. the put is in the money
b. the put is out of the money
c. you can make arbitrage profit by buying the put and exercising it immediately
d. a and c
Answer:
a. the put is in the money
Explanation:
Given that
The Selling price of stock x = $40
Strike price = $48
And, the trading per share = $10
Based on the above information
As we know that the put option is the option in which there is a right to sell the particular asset at a particular price on some future date
As we can see that the market price is lower than the strike price so this is the put within the money
Hence, the correct option is a.
A budget which estimates the types of selling expenses expected during the budget period is called a]
Answer:
selling expense budget
Explanation:
Selling expenses Budget in finance can be described as the budget that are needed to make the products reach the buyers/ consumers. This selling expenses Budget can range from the salary of the workers that are responsible for making the goods to reach the consumer s, the money paid on advertisement for the goods, all the money spent on promotion and others.
It should be noted that that selling expenses Budget gives estimates of all these afformentioned expenses.
What industries are presented in your community. How would you define the economic health of your community based on the industries presents?
Answer:
The healthcare industry can be explained as the medical industry or healthcare industry. It represent to the health economy.
Explanation:
The industries that are represented in the community are the combination of integration aggregation sectors. These sectors provide the economic system to the society or community. For finance, the healthcare industries ae very important. These care the building blocks of economy of a country. The healthcare industry consists of Hospitals, mental and dental practice activities, midwives, nurses, psychologist, psychiatrist. These industries as grow as the people get employment. Healthcare industry is the big tycoon profession that help government in their economic growth. Many employment will occur due to these industries.
g Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of contribution margin for 20,000 units would be:
Answer:
Total contribution margin= $60,000
Explanation:
First, we need to calculate the actual contribution margin:
Contribution margin= net income + fixed costs
Contribution margin= 36,000 + 30,000= $66,000
Now, the unitary contribution margin:
Unitary contribution margin= 66,000/22,000= $3
Finally, the total contribution margin for 20,000 units:
Total contribution margin= 3*20,000= $60,000
A customer has sold short 100 shares of ABC stock in a margin account. ABC declares and pays a 10% stock dividend. How many shares must be purchased to close out the short position?
A. 90
B. 100
C. 105
D. 110
Answer:
Option D, 110, is the right answer.
Explanation:
Total number of shares that short = 100 share
The rate of dividend that ABC declares and pays = 10%
Now we have to find the number of shares that should be purchased in order to close out the short position.
Number of shares = 100 × 110%
Number of shares = 100 × (110 / 100)
Number of shares = 110
Thus, option D 110 is correct.
A monopolist sells in two geographically divided markets, the East and the West. Marginal cost is constant at $50 in both markets. Demand and marginal revenue in each market are as follows:
QE = 900 - 2PE
MRE = 450 - QE
QW = 700 - PW
MRW = 700 - 2QW
a. Find the profit-maximizing price and quantity in each market
b. In which market is demand more elastic?
Answer:
A) QE = 400, PE = 250
QW = 325, PW = 375
b) east market has more elastic market demand
Explanation:
Given data :
Marginal cost = $50 ( both markets )
demand and marginal revenue in each market are given differently
a) Determine/find the profit-maximizing price and quantity in each market
For east market :
50 = 450 - QE
hence QE = 450 -50 = 400
since QE = 400 ( quantity for east market )
400 = 900 - 2PE
PE = 250 ( PROFIT maximizing price for east market )
For west market
50 = 700 - 2QW
Hence QW = 325
since QW = 325
325 = 700 - pw
PW = 375
B) The market in which demand is more elastic is the east market because the quantity demanded is higher and also the profit maximizing price is lower as well
You purchase one June 70 put contract for a put premium of $4. What is the maximum profit that you could gain from this strategy?
Answer:
$6,600
Explanation:
The payoff arise from put option is max (K - S, 0) - P
Now it would be maximum at S = 0
And, the maximum payoff is
K - 0 - P
= K - P
= 77 - 4
= $66
We assume that for each and every contract the number of shares is 00
So, the maximum profit gained from this strategy is
= $66 × 100 shares
= $6,600
We simply multiplied $66 by the number of shares so that the maximum profit gained could come and the same is to be considered
The balance sheet of ABC reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year, respectively. Net income and sales for the year are $240,000 and $2,000,000, respectively. What is ABC's profit margin (round to nearest whole percentage, just put in the number with no %)?
Answer: 12%
Explanation:
The Net Profit Margin refers to the percentage of Net Income from sales that a company got in the period of record. A higher margin is usually preferred to a lower one.
Profit margin ratio = Net income/ Sales
Profit margin ratio = 240,000 / 2,000,000
Profit margin ratio = 12%
Presented below is a partial amortization schedule for Premium Foods:
Period Issue Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value
$ 85,959
1 $ 2,900 $ 2,586 $ 314 85,645
2 2,900 2,578 322 85,323
1. Record the bond issue assuming the face value of bonds payable is $76,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Record the first interest payment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Please Note the table for better understanding
Period Issue Cash Paid Interest Expense Decrease in Carrying
Date Carrying Value Value
$85,959
1 $2,900 $2,586 $314 $85,645
2 $2,900 $2,578 $322 $85,323
1) Journal Entry Debit Credit
Cash A/C $85,959
To Premium on Bonds payable $9,959
To Bonds Payable $76,000
2) Journal Entry Debit Credit
Interest Expense $2,586
Premium on Bonds Payable $314
To Cash $2,900
ABC reports net income and sales for the year of $65,000 and $1,300,000, respectively. Return on equity is 10%. What is ABC's average Stockholders' Equity for the year?
Answer:
ABC's average Stockholders' Equity for the year is $650,000
Explanation:
Return on Equity = Net income / Average Equity
Hence, average equity = 65,000 / 10%
= $650,000
Herrindale Mart borrows $420,000 on July 1 with a short-term loan that has an annual interest rate of 5% which is payable on the first day of each subsequent quarter. What will Herrindale Mart need to accrue on August 31, assuming that no accrual has yet been made
Answer:
August 31, 202x (assuming a 360 day year)
Dr Interest expense 1,750
Cr Interest payable 1,750
Explanation:
The journal entry to record the loan:
July 1 , 202x
Dr Cash 420,000
Cr Notes payable 420,000
The journal entry to record accrued interest on the loan:
August 31, 202x (assuming a 360 day year)
Dr Interest expense 1,750
Cr Interest payable 1,750
Interest expense = $420,000 x 5% x 2/12 = $1,750
Monte Services, Inc. is trying to establish the standard labor cost of a typical brake repair. The following data have been collected from time and motion studies conducted over the past month.
Actual time spent on the brake repairs 1.0 hour
Hourly wage rate $12
Payroll taxes of wage rate 10%
Setup and downtime of actual labor time 20%
Cleanup and rest periods 30%
of actual labor time
Fringe benefits 25%
of wage rate
a. Determine the standard direct labor hours per brake repairs.
(Round answer to 2 decimal places, e.g. 1.25.)
Standard direct labor hours per brake repair_____________
b. Determine the standard direct labor hourly rate. (Round answer to 2 decimal places, e.g. 1.25.)
Standard direct labor hourly rate __________
c. Determine the standard direct labor cost per brake repair. (Round answer to 2 decimal places, e.g. 1.25.)
Answer:
a) standard direct labor hours per brake repair = hour spent repairing the brakes + setup time + cleanup time = 1 + (1 x 20%) + (1 x 30%) = 1.5 hours per brake repair
b) standard direct labor hourly rate = hourly wage rate + payroll taxes + fringe benefits = $12 + ($12 x 10%) + ($12 x 25%) = $16.20
c) standard direct labor cost per brake repair = 1.5 x $16.20 = $24.30