Answer:
18.87%
Explanation:
The computation of the cost of preferred stock is shown below:
As we know that
The cost of preferred stock = Preferred dividend ÷ (issue price per share - flotation costs per share)
where,
Preferred dividend is
= 100 × 5%
= $5
Issued price per share is $28
And, the flotation cost is $1.50
So, the cost of preferred stock is
= $5 ÷ ($28 - $1.50)
= 18.87%
We simply applied the above formula
Suppose that preferences over private consumption C and public goods G are such that these two goods are perfect substitutes, that is, the marginal rate of substitution of public goods for private goods is a constant b > 0. Determine the optimal quantity of public goods that the government should provide, and interpret your results. Make sure you show all of the relevant cases. What happens when b changes, or when q changes?
Repeat part (a), except with perfect complements preferences, that is, for the case where the representative consumer always wishes to consume private consumption goods and public goods in fixed proportions, or C = aG, with a > 0.
Answer:
Please see explanation below.
Explanation:
Public goods are goods consumed collectively, they are provided for all members of a community,
no one can be excluded from their consumption. The consumption by one person does not decrease the consumption possibilities for others. Public goods are available for everybody without paying, and these goods cannot be rationed: they are either provided for the whole community, or for no one. Examples of public goods include the public lighting system, public roads, radio broadcasts, national defence, lighthouses, town pavements, etc.
Private goods, on the other hand, are goods consumed individually, and if a unit has been consumed by
someone, then no one else can also consume the same unit. Private goods are scarcely available, and consuming a unit will decrease the amount available for further consumption. Therefore consumers compete for private goods, i.e. private goods are rival in consumption. Consumers can consume them if they pay the price, non-payers are excluded from consumption.
In the first scenario, given that both the private good and public good are perfect substitutes, the optimum quantity produced by the government is at the point where marginal social cost is equal to the marginal social benefit. This optimum output is lower than that of the private firm because the price of public good is higher than price of private good (since marginal social cost > marginal private cost).
If b increases, that means consumers are willing to give up more units of public goods for one unit of the private good. Therefore, the quantity produced by the government will reduce.
For the second part of the question: C = aG, where a > 0.
This implies that equal or more units of the private good is consumed with a particular units of public good. The optimum output still remain at the point where marginal social cost is equal to marginal social benefit but this output level is lower than if the two goods were to be perfect substitutes.
Vaughn Company provides for bad debt expense at the rate of 3% of accounts receivable. The following data are available for 2018: Allowance for doubtful accounts, 1/1/18 (Cr.) $ 11900 Accounts written off as uncollectible during 2018 9900 Ending accounts receivable 1197000 The Allowance for Doubtful Accounts balance at December 31, 2018, should be
Answer:
The Allowance for Doubtful Accounts balance at December 31, 2018, should be $35,613.
Explanation:
The question did not tell us whether the ending balance of accounts receivable had already been adjusted for with the write-off that happened during the year. If we assume, it was not adjusted for, the required journals would be:
Debit Allowance for doubtful accounts $9,900
Credit Accounts receivable $9,900
(To write-off accounts receivable)
The impact on accounts receivable is $1,197,000 - $9,900 = $1,187,100
The impact on Allowance for doubtful accounts is $11,900 - $9,900 = $2,000
3% of accounts receivable ($1,187,100) = $35,613
The required bad debt expense is $35,613 - $2,000 = $33,613
Debit Bad debt expense $33,613
Credit Allowance for doubtful accounts $33,613
(To record bad debt expense for the year)
The following events apply to Gulf Seafood for the 2018 fiscal year.
1. The company started when it acquired $60,000 cash by issuing common stock.
2. Purchased a new cooktop that cost $40,000 cash.
3. Earned $72.000 in cash revenue.
4. Paid $25,000 cash for salaries expense.
5. Adjusted the records to reflect the use of the cooktop. Purchased on January 1, 2018, the cooktop has an expected useful life of four years and an estimated salvage value of $4,000. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018.
Required:
a. Record the above transactions in a horizontal statements model like the following one. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA) and net change in cash (NC). The letters NA indicate that an element is not effected by the event. Enter any decreases to account balances and cash outflows with minus sign.)
Answer:
Gulf Seafood cash flow for the 2018 fiscal year
Amount in $ Operating Investing Financing
Issuance of stock 60,000 NA NA FA
Purchase of new cooktop -40,000 NA IA NA
Cash revenue 72,000 OA NA NA
Cash salaries -25,000 OA NA NA
Depreciation of cooktop 9,000 OA NA NA
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
Depreciation = (cost - residual value)/estimated useful life
= (40000 - 4000)/4
= $9,000
This depreciation is a non-cash item that may be added back to the net income in the operating segment of the cash flow.
On July 4, Blossom's Restaurant accepts a Visa card for a $150 dinner bill. Visa charges a 2% service fee. Prepare the entry on Blossom’s books related to the transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
The journal entry is shown below.
Explanation:
According to the scenario, the journal entry for the given data are as follows:
Journal entry
Jul.4 Cash A/c Dr $147
Card charges A/c Dr. $3
To Sales revenue A/c $150
(Being card transaction is recorded)
Computation:
Cash = $150 - 2% × $150 = $147
Card charges = $150 × 2% = $3
"Ginny sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Ginny realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Eric and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Ginny knows that if they both work hard, Eric will earn $90 on the beach and Ginny will earn $180 at her stand, so they will each take home half of their total revenue: $90+$1802=$135 . If Eric shirks, he'll generate only $50 in earnings. Ginny does not know that Eric estimates his personal cost (or disutility) of working hard as opposed to shirking at $25."
Answer:
Explanation:
Once out of Ginny sight, Alex faces a dilemma: Work very hard (put in all effort) or shirk (put in little effort). If he works hard, he'll sell enough water to generate $90 in earnings (not including his personal cost). If he shirks, he'll only generate $50 in earnings. After the end of the work, he'll split his earnings with Ginny and also get half of what she earns at her stand. In terms of Eric's total utility, it is worse for him to work hard. Close A If Alex works hard, Alex and Sunita together earn $270 ($180 + $90), of which Eric keeps $120. However, he loses $20 worth of utility by working hard. Therefore his net earnings is $100. If he shirks, Eric and Ginny together earn $270 ($200+ $70), of which Eric will keeps $120, while his personal cost is zero. Therefore Alex, individually, is better off when he shirks. A more better way of finding the solution to the problem is to note that from Eric's view, the amount of money he gets from Ginny's sales from the stand does not rely on his own sales.
Lambert Company purchased $140,000 of goods in September and expects to purchase $130,000 of goods in October. Lambert typically pays for 20% of purchases in the month of purchase and 80% in the following month. In mid-October, Lambert expects to buy a new computer for $4,500 using the company credit card. Typically, the credit card bill is paid in full in the following month. September credit card purchases totaled $6,000. What are the total cash disbursements expected by Lambert during the month of October?
Answer:
Cash disbursements for October will be $144000
Explanation:
The cash disbursements for October will include 80% amount of September purchases and 20% amount of October purchases along with the payment for September's credit card bill.
The cash disbursements are,
80% of September's purchases = 0.8 * 140000 = $112000
20% of October's purchases = 0.2 * 130000 = $26000
Credit card bill for September = 6000
Cash Disbursements - October = 112000 + 26000 + 6000 = $144000
1-a. Assume that Andretti Company has sufficient capacity to produce 120,150 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 35% above the present 89,000 units each year if it were willing to increase the fixed selling expenses by $140,000. What is the financial advantage (disadvantage) of investing an additional $140,000 in fixed selling expenses?
Answer:
The answer is given below;
Explanation:
The opportunity gain of investing in fixed selling expenses could be quantified by comparing with interest rates prevailing in the market.
if the net margin earned on producing extra quantity is greater than the return earned on placing funds in bank account,then it is financially viable to invest in fixed selling expenses and vice versa.
Which citation style did you learn to use in this course?
A.
American Psychological Association style
B.
Chicago Manual style
C.
Modern Language Association style
D.
Library Association style
Please select the best answer from the choices provided
A
B
C
D
The citation style I learned to use in this course is APA (American Psychological Association) style.
Explanation:The citation style that I learned to use in this course is American Psychological Association style (APA). APA style is often used in education, psychology, and science fields. It emphasizes author names and dates of publication in in-text citations and provides guidelines for creating a list of references at the end of a document. The citation style I learned to use in this course is APA (American Psychological Association) style.
Adjusted WACC. Lewis runs an outdoor adventure company and wants to know what effect a tax change will have on his company's WACC. Currently, Lewis has the following financing pattern: Equity: 35% and cost of 14.00% Preferred stock: 15% and cost of 11.00% Debt: 50% and cost of 10.0% before taxes What is the adjusted WACC for Lewis if the tax rate is a. 40%? b. 30%? c. 20%? d. 10%? e. 0%? a. What is the adjusted WACC for Lewis if the tax rate is 40%? nothing% (Round to two decimal place
Answer:
The workings of Adjusted WACC under each of Tax scenario are attached
Explanation:
Steve's utility for socks (91) and other goods (92) is given by U(21,92) = 10q1.1 q2.9 The price of the composite good is p2=1 and the price of a pair of socks is p1=2. Steve's income is Y=100. Every year, Steve's mom buys him 20 pairs of socks. Find the equivalent variation of the gift. What is the difference between the cost of the gift and the equivalent valuation cash amount?
Answer:
120
Explanation:
Look up attached file
Suppose that an American opens and operates a candy factory in Finland. This is an example of a. foreign portfolio investment. We can expect it to increase Finnish GNP more than Finnish GDP. b. foreign portfolio investment. We can expect it to increase Finnish GDP more than Finnish GNP. c. foreign direct investment. We can expect it to increase Finnish GDP more than Finnish GNP. d. foreign direct investment. We can expect it to increase Finnish GNP more than Finnish GDP.
Answer: c. foreign direct investment. We can expect it to increase Finnish GDP more than Finnish GNP.
Explanation:
By directly opening a company in Finland, the American company has engaged in Foreign Direct Investment because it has actual control as it operates the candy factory.
Now, as you may or may not know, Gross Domestic Product (GDP) is the total amount of goods Produced IN a country in a given period which is usually a year.
Gross National Product on the other hand, is the GDP + ( Net income from foreign Investment). That means when calculating GNP, you take do this,
GNP = GDP + Income from foreign Investment - income from foreign Investment within the country.
Essentially it removes foreign owned production from the GDP and adds the country's own foreign investments in other countries.
What this means is that, the GDP will be strengthened by the the opening of the company in Finland by the Americans because it will contribute to GDP. But GNP will not be so lucky because when counting GNP, the income from the Candy company will be subtracted because it is foreign owned.
If you need any clarification do comment.
Phipps Company borrowed $16,000 cash on October 1, 2014, and signed a six-month, 6% interest-bearing note payable with interest payable at maturity. Assuming that adjusting entries have not been made during the year, the amount of accrued interest payable to be reported on the December 31, 2014 balance sheet is which of the following?a $240.b $360.c $120.d $480.
Answer:
The accrued interest payable to be reported on December 31, 2014 will be $240 and option a is the correct answer.
Explanation:
The interest rate given on the notes payable is the annual rate. Following the accrual basis of accounting, the revenues and expenses for a period should be matched and recorded in their respective periods. Thus, the interest relating to the period from October to December will be recorded as an expense on 31 December 2014 and debited to interest expense and credited to interest payable as the interest will be paid at maturity.
The interest expense for the 3 month period from October to December is,
Interest expense = 16000 * 0.06 * 3/12 = $240
The entry will be,
31 Dec 2014 Interest expense $240 Dr
Interest Payable $240 Cr
Answer:
The amount of accrued interest payable to be reported on the December 31, 2014 balance sheet is a $240
Explanation:
Phipps Company borrowed $16,000, 6% interest rate.
The amount of the interest per year = 6% x $16,000 = $960
The amount of the interest per month = $960/12 = $80
On December 31, 2014, following 3 months borrowing, the amount Interest expense Phipps Company records:
$80 x 3 = $240
The adjusting entry:
Debit Interest expense $240
Credit Interest Payable $240
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
Division Osaka Yokohama
Sales $ 10,700,000 $ 37,000,000
Net operating income $ 749,000 $ 3,330,000
Average operating assets $ 2,675,000 $ 18,500,000
For each division, compute the return on investment (ROI) in terms of margin and turnover.
Answer:
Osaka ROI is 28%
Yokohama ROI is 18%
Explanation:
The formula for return on investment =net income/average operating assets*100
For Osaka division:
net income is $749,000
average operating assets is $2,675,000
return on investment=$749,000/$2,675,000*100
=28%
For Yokohama
net income is $3,330,000
average operating assets is $18,500,000
return on investment=$3,330,000/$18,500,000
=18%
Even though Yokohama has a higher net operating income ,the Osaka division recorded a better performance using ROI as a performance metric,which shows profit computation is an absolute figure which does not consider the amount of resources invested in order to earn the profit
The United Kingdom produces computers and sells them to Japan. At the same time Japan produces cars and sells them to the United Kingdom. Suppose there is an appreciation in the pound. This will cause:
A. An increase in imports into the United Kingdom and an increase in exports to Japan, which will cause an increase in aggregate demand and real GDP.
B. A decrease in imports into the United Kingdom and an increase in exports to Japan, which will cause an increase in aggregate demand and real GDP.
C. An increase in imports into the United Kingdom and a decrease in exports to Japan, which will cause a decrease in aggregate demand and real GDP.
D. A decrease in imports into the United Kingdom and a decrease in exports to Japan, which will cause a decrease in aggregate demand and real GDP.
Answer:
The United Kingdom produces computers and sells them to Japan. At the same time Japan produces cars and sells them to the United Kingdom. Suppose there is an appreciation in the pound. This will cause: an increase in imports into the United Kingdom and a decrease in exports to Japan, which will cause a decrease in aggregate demand and real GDP - Option C.
Explanation:
Option C is the correct answer choice, the reason being that an appreciation in the value of the pound will mean that the UK's goods will look more costly. This will mean that imports of foreign goods into the UK will rise whereas exports of UK goods will fall.
Apple reports the following net sales (in $ millions) by product line in its fiscal year 2017 annual report.
Product line 2017 Sales 2016 Sales
iPhone $141,319 $136,700
iPad 19,222 28,628
Mac 25,850 22,831
Services 29,980 24,348
Other 12,863 11,132
1. If Apple assigns overhead costs to product lines based on sales, which product line would be assigned the highest amount of overhead costs for 2017?
2. If Apple assigns overhead costs to product lines based on sales, which product line would be assigned the lowest amount of overhead costs for 2017?
3. Which of Apple’s product lines had the largest percentage increase in sales from 2016 to 2017?
Answer:
1. iPhone
2.Others
3. Services
Explanation:
1. According to the question the product line of iPhone would have the highest amount which is $141,319 in 2017
2. According the second point the others product line based on sales would have the least amount which is $12,863 in 2017.
3. The increase in sales from 2016 to 2017 is shown below:-
Particulars 2017 (A) 2018 (B) Difference Percentage
C = A - B C ÷ B × 100
iPhone $141,319 $136,700 $4,619 3.4%
iPad $19,222 $28,628 ($1,406) (6.4%)
Mac $25,850 $22,831 $3,019 13.2%
Services $29,980 $24,348 $5,632 23.1%
Other $12,863 $11,132 $1,731 15.5%
Therefore Services has the highest sales from 2016 to 2017
An incomplete cost of goods manufactured schedule is presented below. Complete the cost of goods manufactured schedule for Hobbit Company. HOBBIT COMPANY Cost of Goods Manufactured Schedule Work in process (1/1) $216,680 Direct materials Raw materials inventory (1/1) $ Add: Raw materials purchases 159,060 Total raw materials available for use Less: Raw materials inventory (12/31) 29,230 Direct materials used $183,850 Direct labor Manufacturing overhead Indirect labor 26,160 Factory depreciation 40,720 Factory utilities 73,100 Total overhead 139,980 Total manufacturing costs Total cost of work in process Less: Work in process (12/31) 84,720 Cost of goods manufactured $546,610
Answer:
HOBBIT COMPANY
Cost of Goods Manufactured Schedule
Direct materials Raw materials inventory (1/1) $ 54020
Add: Raw materials purchases 159,060
Total raw materials available for use 213080
Less: Raw materials inventory (12/31) 29,230
Direct materials used $183,850
Direct labor $ 90820
Manufacturing overhead 139,980
Indirect labor 26,160
Factory depreciation 40,720
Factory utilities 73,100
Total overhead 139,980
Total manufacturing costs $414650
Work in process (1/1) $216,680
Total cost of work in process $ 631330
Less: Work in process (12/31) 84,720
Cost of goods manufactured $546,610
Explanation:
HOBBIT COMPANY
Cost of Goods Manufactured Schedule
Direct materials Raw materials inventory (1/1) $ 54020
Add: Raw materials purchases 159,060
Total raw materials available for use 213080
Less: Raw materials inventory (12/31) 29,230
Direct materials used $183,850
STEP 1) Using the direct materials used figure we move upwards to calculate the missing figures doing reverse calculations.
Direct materials used + Raw materials inventory =Total raw materials available for use
Total raw materials available for use =$183,850 +29,230 =213080
Total raw materials available for use -Raw materials purchases=Direct materials Raw materials inventory
Direct materials Raw materials inventory=213080- 159,060 = 54020
Direct materials used $183,850
Direct labor $ 90820
Manufacturing overhead 139,980
Indirect labor 26,160
Factory depreciation 40,720
Factory utilities 73,100
Total overhead 139,980
Total manufacturing costs $414650
Work in process (1/1) $216,680
Total cost of work in process $ 631330
Less: Work in process (12/31) 84,720
Cost of goods manufactured $546,610
STEP 2) Moving backwards from the Cost of goods manufactured figure we find the Total cost of work in process doing reverse calculations
Cost of goods manufactured $546,610 + Work in process (12/31) 84,720 =Total cost of work in process
Total cost of work in process =$546,610 + 84,720 = $ 631330
STEP 3) Then we find the total manufacturing Cost .
Total cost of work in process Less Work in process (1/1) $216,680 =Total manufacturing costs
Total manufacturing costs =$ 631330-$216,680 = $414650
STEP 4) From the Total manufacturing costs we find the Direct labor using the following
Direct labor =Total manufacturing costs-Manufacturing overhead 139,980-Direct materials used $183,850
Direct labor = $414650-139,980- $183,850 = $ 90820
The completion of the Cost of Goods Manufactured Schedule is as follows:
Cost of Goods Manufactured Schedule
Work in process (1/1) $216,680
Direct materials 183,850
Direct labor 90,920
Manufacturing overhead 139,980
Total manufacturing costs $631,330
Less: Work in process (12/31) 84,720
Cost of goods manufactured $546,610
Data and Calculations:
Raw materials inventory:
Raw materials inventory (1/1) $54,020
Add: Raw materials purchases 159,060
Total raw materials available for use $213,080
Less: Raw materials inventory (12/31) 29,230
Direct materials used $183,850
Total raw materials available for use = $213,080 ($29,230 + $183,850)
Raw materials inventory at January 1 = $54,020 ($213,080 - $159,060)
Manufacturing overhead
Indirect labor 26,160
Factory depreciation 40,720
Factory utilities 73,100
Total overhead 139,980
Total manufacturing costs:
The total cost of work in process $631,330
Less: Work in process (12/31) 84,720
Cost of goods manufactured $546,610
Total cost of work in process = $631,330 ($546,610 + $84,720)
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Sedgwick Inc. is considering Plan 1 which is estimated to have sales of $40,000 and costs of $15,500. The company currently has sales of $37,000 and costs of $14,000. Compare plans using incremental analysis. If Plan 1 is selected, there would be incremental Choose your answer here in profit by $Type your answer here .
Answer:
If Plan 1 is selected, there would be 0.652 incremental profit by $1,500.
Explanation:
This can be calculated as follows:
Incremental sales revenue = Estimated sales revenue - Current sales revenue = $40,000 - $37,000 = $3,000
Incremental costs = Estimated cost - Current costs = $15,500 - $14,000 = $1,500.
Incremental profit = Incremental sales revenue - Incremental costs = $3,000 - $1,500 = $1,500
Profit from current operation = $37,000 - $14,000 = $23,000.
Percentage increase in profit = ($1,500/$23,000) * 100 = 6.52%, or 0.652
Therefore, if Plan 1 is selected there would be 0.652 incremental profit by $1,500
JJ Industries will pay a regular dividend of $2.50 per share for each of the next four years. At the end of the four years, the company will also pay out a liquidating dividend of $61 per share, and the company will cease operations. If the discount rate is 8 percent, what is the current value of the company’s stock
Answer:
$53.11
Explanation:
The computation of the current value of the common stock is shown below
Year Cash flow Discount rate at 8% Present Value
1 $2.5 0.92593 $2.31
2 $2.5 0.85734 $2.14
3 $2.5 0.79383 $1.98
4 $2.5 0.73503 $1.84
4 $61 0.73503 $44.84
Total $53.11
The discount is come from
= 1 ÷ 1 + 0.08^1
The same is applied for other years
We simply multiplies the dividend with its discount rate so that the present value or the current value could arrive
Mary Strand’s regular hourly wage rate is $14, and she receives an hourly rate of $21 for work in excess of 40 hours. During a January pay period, Mary works 45 hours. Mary’s federal income tax withholding is $85, and she has no voluntary deductions. Compute Mary Strand’s gross earnings and net pay for the pay period. Assume that the FICA tax rate is 7.65%. (Round answers to 2 decimal places, e.g. 15.25.)
Final answer:
Mary Strand's gross earnings for the pay period are $665, and after accounting for FICA and federal income tax withholdings, her net pay is $529.13.
Explanation:
To compute Mary Strand's gross earnings for a January pay period where she works 45 hours, we need to consider her regular hourly wage and overtime pay. Mary's regular earnings for 40 hours at $14 per hour is $560 (40 hours * $14/hour). Her overtime earnings for the additional 5 hours at $21 per hour is $105 (5 hours * $21/hour). Therefore, her total gross earnings would be $665 ($560 + $105).
The net pay is calculated by subtracting Mary's taxes and other deductions from her gross earnings. First, we calculate the FICA tax, which is 7.65% of her gross earnings: $665 * 7.65% = $50.87 (rounded to two decimal places). Her federal income tax withholding is $85. Therefore, her total deductions are $135.87 ($85 + $50.87). Subtracting this from her gross earnings gives us her net pay: $665 - $135.87 = $529.13.
So, Mary Strand's gross earnings for the pay period are $665, and her net pay is $529.13 (rounded to two decimal places).
Marigold Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2019, and December 31, 2020. This information is presented below: Cost Lower-of-Cost-or-Market 12/31/19 $355,570 $338,310 12/31/20 374,580 361,170 (a) Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 12/31/19 12/31/20 (b) Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market under a perpetual system (loss method is used)
The Marigold Company should write down its inventory by $17,260 and $13,410 at the end of the years 2019 and 2020 respectfully. They record these losses on market decline by using journal entries to the account 'Allowance to Reduce Inventory to Market'.
Explanation:The given problem involves the concept of Lower-of-Cost-or-Market (LCM) valuation and the Last-In-First-Out (LIFO) inventory costing method. Here is a step-by-step explanation of creating the required journal entries:
Journal entries under LIFO-Cost-Or-Market valuation
Firstly, Marigold Company would have to write down its inventory at the end of each year to its market value, if the market value is less than the cost.
For December 31, 2019:
Date: 12/31/19
Debit: Loss due to Market Decline of Inventory $17,260
Credit: Allowance to Reduce Inventory to Market $17,260
(To record market decline of inventory at December 31, 2019)
For December 31, 2020:
Date: 12/31/20
Debit: Loss due to Market Decline of Inventory $13,410
Credit: Allowance to Reduce Inventory to Market $13,410
(To record market decline of inventory at December 31, 2020)
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The normal time for an entire process 155.2 minutes. The allowance factor for this process is set by a union contract and is equal to 14%. What is the approximate standard time for this process?
Answer: 180.47 minutes
Explanation:
The approximate standard time for a process is calculated by using the following formula,
Standard time = Normal time / (1- allowance fraction)
Standard time = 155.2/(1-0.14)
Standard time = 180.47 minutes
The approximate standard time for this process is 180.47 minutes .
Austin Fisher contributed land, inventory, and $34,000 cash to a partnership. The land had a book value of $70,000 and a market value of $127,000. The inventory had a book value of $62,000 and a market value of $57,700. The partnership also assumed a $50,000 note payable owed by Fisher that was used originally to purchase the land. Provide the journal entry for Fisher.
Answer:
The journal entry will be as follows;
Explanation:
Cash Dr.$34,000
Land Dr.$127,000
Inventory Dr.$57,700
Note Payable Cr.$50,000
Capital-Fisher Cr.$168,700
With contribution of assets net off of note payable by partnership,the fisher capital will be recorded in partnership.
Consider a small landscaping company run by Mr. Viemeister. He is considering increasing his firm’s capacity. If he adds one more worker, the firm’s total monthly revenue will increase from $54,000 to $66,000. If he adds one more tractor, monthly revenue will increase from $54,000 to $62,000. Each additional worker costs $4,000 per month, while an additional tractor would also cost $4,000 per month.
. a. What is the marginal revenue product of labor? The marginal revenue product of capital?
b. What is the ratio of the marginal revenue product of labor to the price of labor (MRPL/PL)? . What is the ratio of the marginal product of capital to the price of capital (MRPK/PK)?
. c. Is the firm using the least-costly combination of inputs?
d. Does adding an additional worker or adding an additional tractor yield a larger increase in total revenue for each dollar spent?
Answer:
A.$12,000
B.$8000
C.MRPL/PL = 3
MRPK/PK =2
D) Since each of the above calculated ratios are more than one, therefore adding additional worker or tractor will increase the total revenue for each of the dollar spent.
Explanation:
(a) The Marginal Revenue Product of Labor (MRPL) can said to be the additional revenue generated when an additional worker is employed.
$66,000 - $54,000 = $12,000
Thus, MRPL is 12,000
b) Marginal revenue product of capital is
( 62000 - 54000)= $8000
c) MRPL/PL = 12000/ 4000= 3
MRPK/PK = 8000/4000=2
Therefore Since these two ratios are not equal it means the firm is not using the least cost combination of inputs.
d) Since each of the above calculated ratios are more than one, therefore adding additional worker or tractor will increase the total revenue for each of the dollar spent.
Damon Corporation issued $400,000 of 6% bonds on May 1, 2020 using straight-line interest. The bonds were dated January 1, 2020, and mature January 1, 2023, with interest payable July 1 and January 1. The bonds were issued at face value plus accrued interest.
Prepare Damon's journal entries for (a) the May 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.
Answer:
May 1
Dr Cash408,000
Cr Bonds Payable 400,000
Cr Interest Expense 8,000
July 1
Dr Interest Expense 12,000
Cr Cash 12,000
Dec 31
Dr Interest Expense 12,000
Cr Interest Payable12,000
Explanation:
May 1,
Dr Cash408,000
Cr Bonds Payable 400,000
Cr Interest Expense 8,000(Accrued Interest = 400,000 x 6% x 4/12)
July 1
Dr Interest Expense 12,000
Cr Cash 12,000(Bond interest expense = 400,000 x 6% x 6/12)
Dec 31
Dr Interest Expense 12,000
Cr Interest Payable12,000
Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.
Activity Expected Costs Expected Activity
Handling materials $625,000 100,000 parts
Inspecting product 900,000 1,500 batches
Processing purchase orders 105,000 700 orders
Paying suppliers 175,000 500 invoices
Insuring the factory 300,000 40,000 square feet
Designing packaging 75,000 2 models
Required:
a. Compute a single plantwide overhead rate for the year, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours.
b. In January of this year, the Deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.
Answer:
a $17.44 per direct labor hour
b. Assignment of Overheads
Deluxe model =$43,600
Basic model = $104,640
Explanation:
Plant wide overhead rate is the allocation rate used for allocating overheads (indirect costs) to jobs or products calculated for the whole entity.
Plant wide overhead rate = Budgeted Overheads / Budgeted Activity.
Calculation of Budgeted Overheads :
Handling materials 625,000
Inspecting product 900,000
Processing purchase orders 105,000
Paying suppliers 175,000
Insuring the factory 300,000
Designing packaging 75,000
Total Cost 2,180,000
Plant wide overhead rate = Budgeted Overheads / Budgeted Activity.
= $2,180,000/125,000
= $17.44 per direct labor hour
Assignment of Overheads
Deluxe model required 2,500 direct labor hours
Deluxe model = 2,500 × $17.44
= $43,600
Basic model required 6,000 direct labor hours
Basic model = 6,000 × $17.44
= $104,640
An advantage of using "negotiated" transfer prices is: A. Both the selling and buying units have complete information about costs B. The market price will always be chosen C. Once the price is set, it never needs to be adjusted D. It may take more of managers' time than is beneficial for the company
Answer:
The correct option is A,both the selling and buying units have complete information about costs.
Explanation:
A negotiated transfer price is a price agreed between the selling and buying divisions having considered factors such the external purchase price,the opportunity costs of selling internally and externally ,whether or not there is surplus capacity and may more.
Negotiated transfer price is fairer to both divisions as opposed to a transfer price imposed by management which could result in low morale in the buying or selling division depending on whether the price was set too high or too low.
MV Corporation has debt with market value of $ 95 million, common equity with a book value of $ 101 million, and preferred stock worth $ 17 million outstanding. Its common equity trades at $ 51 per share, and the firm has 6.1 million shares outstanding. What weights should MV Corporation use in its WACC?
Answer:
The total market value of the firm is $423.1 million.
Debt is 22.44% of the total value, Preferred stock is 4.10%,
Common equity is 73.52%.
Explanation:
MV Corporation
Value of debt: $95 million
Value of preferred stock: $17 million
Market value of common equity: $51 per share × 6.1 million shares= $311.1million
Total market value of firm: $95 +17 +311.1 =$423.1 million
Weights for WACC calculation:
Debt = 95÷423.1
=22.45%
Preferred Stock 17÷423.1
=4.10%
Common Equity 311.1÷423.1
=73.52
Hence The total market value of the firm is $423.1million. Debt is 22.44% of the total value, preferred stock is 4.10%, and common equity is 73.52%.
Zhao Co. has fixed costs of $354,000. Its single product sells for $175 per unit, and variable costs are $116 per unit. The company expects sales of 10,000 units. Prepare a contribution margin income statement for the year ended December 31, 2019.
Answer:
Contribution margin income statement for the year ended December 31, 2019
Sales (10,000×$175) 1,750,000
Less Variable Costs (10,000×$116) (1,160,000)
Contribution 590,000
Less Fixed Costs (354,000)
Net Income/(loss) 236,000
Explanation:
Variable Costing Income = Contribution - Fixed Costs
To prepare a contribution margin income statement for Zhao Co., calculate the total sales, total variable costs, and total contribution margin. The income statement will show the company's revenue, costs, and profit for the year.
Explanation:To prepare a contribution margin income statement, you need to calculate the total sales, total variable costs, and total contribution margin. The contribution margin is the selling price per unit minus the variable cost per unit.
First, calculate the total sales: 10,000 units x $175 per unit = $1,750,000.
Next, calculate the total variable costs: 10,000 units x $116 per unit = $1,160,000.
Finally, calculate the contribution margin: Total sales - Total variable costs = $1,750,000 - $1,160,000 = $590,000.
Contribution Margin Income Statement:Sales: $1,750,000Variable Costs: $1,160,000Contribution Margin: $590,000Fixed Costs: $354,000Net Income: Contribution Margin - Fixed Costs = $590,000 - $354,000 = $236,000The contribution margin income statement shows the company's revenue, costs, and profit for the year.
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Cullumber Corporation earns $840000 and pays cash dividends of $300000 during 2021. Dexter Corporation owns 4200 of the 10000 outstanding shares of Cullumber. What amount should Dexter show in the investment account at December 31, 2021 if the beginning of the year balance in the account was $1080000?
Answer: $1,306,800
Explanation:
In answering this question, we look at how much of that income, Cullumber still had on hand and then take the proportion that belongs to Dexter.
Cullumber Corporation earns $840,000 and pays cash dividends of $300,000 during 2021.
That means that after paying the dividends they are left with,
= 840,000 - 300,000
= $540,000
Now, Dexter owns 4200 out of 10,000 shares. That means they own,
= 4,200/10,000
= 42% of Cullumber Corporation stock.
If they own 42% of the stock, they are entitled to 42% of the income so,
= 42% * 540,000
= $226,800
Now we then add this figure to the opening balance,
= $1,080,000 + $226,800
= $1,306,800
$1,306,800 is the amount Dexter should show in the investment account at December 31, 2021.
Rede Inc. manufactures a single product. Variable costing net operating income was $63,800 last year and its inventory decreased by 300 units. Fixed manufacturing overhead cost was $4 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year
Answer:
$62,600
Explanation:
Net operating income under variable costing = $63,800
Fixed manufacturing overhead cost deferred in inventory = (300 units multiplied by $4) =$1,200
the absorption costing net operating income last year= $63,800 - $1,200 = $62,600