Answer: Adverse Selection.
Explanation:
The above situation described Adverse Selection because Adverse Selection refers to a situation where there is information asymmetry between buyers and sellers of a good or service. This means that a party involved has more information about the transaction than the other and this can lead to the person who has more information engaging in a transaction that is sure to benefit them at the expense of the person they are transacting with. A serious example is one of life insurance. Perhaps if a person knows that they will be dying soon but it won't show up on all medical scans and tests, they will get the life insurance and claim on it when they die. They had more information than the seller.
In the above scenario, Tim can make all the assumptions he wants to make but the fact is he simply will.not know what defects the television has because he is not the seller.
It is applaudible that he is approaching with caution though. He at least has a higher chance of success.
Answer:
Adverse selection
Explanation:
Adverse selection is a situation where buyers and sellers have access to different information, so they make decisions to buy and sell in transactions that benefits them the most. Other participants suffer as a result.
Tim has less information than the seller of second hand televisions, therefore he may not be able to make an informed decision that will benefit him.
The seller on the other hand knows all the defects on his second hand televisions. So he can sell at a price that will benefit him.
To reduce its stock price, Shriver Food Systems, Inc., declared and issued a 75 percent stock dividend. The company has 710,000 shares authorized and 110,000 shares outstanding. The par value of the stock is $1 per share and the market value is $100 per share. Prepare the journal entry to record this large stock dividend. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Explanation of journal entry for Shriver Food Systems Inc. issuing a 75% stock dividend.
Journal Entry for Shriver Food Systems Inc. recording 75% stock dividend:
Stock Dividends Distributable (75% of Par Value x 110,000 shares) $82,500
Common Stock Dividends Distributable (25% of Par Value x 110,000 shares) $27,500
Common Stock (Par Value x 110,000 shares) $110,000
Additional Paid-in Capital (Difference between Market Value and Par Value x 110,000 shares) $9,000,000
LaMont works for a company in downtown Chicago. The firm encourages employees to use public transportation (to save the environment) by providing them with transit passes at a cost of $270 per month.
a. If LaMont receives one pass (worth $270) each month, how much of this benefit must he include in his gross income each year?
b. If the company provides each employee with $270 per month in parking benefits, how much of the parking benefit must LaMont include in his gross income each year?
Answer:
a) $180
b) $180
Explanation:
Employee Fringe Benefits is a form of payment by an employer other than money. The limit for employee fringe benefit is often decided by the IRS every year. The statutory limit for the year 2016 was $255, 2019 was $265 and the new statutory limit for the year 2020 is $270.
In the question provided, since the particular year was not stated, we will assume that the year is 2016 of which the limit for employee fringe benefit was $255.
a. The cost of transit pass qualifies as employee fringe benefit. Based on 2016 statutory limits, LaMont excludes $255.
Therefore his amount of transit pass benefit to be included in gross income
= ($270 - $255)×12
= $180
b. The cost of parking benefits qualifies as employee fringe benefit. Based on 2016 statutory limits, LaMont excludes $255.
Therefore his amount of parking benefit to be included in gross income
= ($270 - $255)×12
= $180
LaMont must include $3,240 in his gross income each year for both the transit pass benefit and the parking benefit.
Explanation:a. To calculate the total amount of the transit pass benefit that LaMont must include in his gross income each year, we need to multiply the monthly value of the pass ($270) by the number of months in a year (12 months). Therefore, LaMont must include a total of $3,240 ($270 x 12) in his gross income each year.
b. For the parking benefit, the calculation is the same. Since the company provides LaMont with $270 per month in parking benefits, he must include a total of $3,240 ($270 x 12) in his gross income each year for the parking benefit.
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If the quantity of money demanded exceeds the quantity of money supplied, then:
A) the quantity of nonmonetary assets demanded exceeds the quantity supplied.
B) the quantity of nonmonetary assets supplied exceeds the quantity demanded.
C) the quantity of nonmonetary assets demanded will still equal the quantity supplied, all else being equal.
D) you can make no conclusions about the relative supply and demand of nonmonetary assets
Answer:
The answer is option B. If the quantity of money demanded exceeds the quantity of money supplied, then: the quantity of non-monetary assets supplied exceeds the quantity demanded.
Explanation:
Non-monetary assets are assets that appear on the balance sheet but are not readily or easily convertible into cash or cash equivalents. they include equipment, buildings, lands, inventory, and patents.
If the quantity of money demanded exceeds the quantity of money supplied, then the company will be forced to part with their non monetary assets to meet up their capital needs.
In this situation, the quantity of non-monetary assets supplied will exceed the quantity demanded.
When money demand exceeds money supply, there isn't any definitive conclusion that could be drawn about the demand and supply of nonmonetary assets as they're influenced by multiple dynamic factors.
Explanation:When the quantity of money demanded exceeds the quantity of money supplied, it has implications on monetary and non-monetary markets. The answer is D - you can make no definitive conclusions about the relative supply and demand of nonmonetary assets. This is because the relationships between money supply, demand, and non-monetary assets can be influenced by a variety of external and internal factors, which are not explicitly mentioned in the question. For example, an increase in the quantity of money demanded doesn't necessarily imply changes in nonmonetary assets demanded or supplied. The status of nonmonetary assets depends on broader economic conditions, consumer confidence, and business expenditures among others.
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The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department ofWooden Figurines Incorporated had developed the following static budget for the third quarter. Duck Decoy is in theprocess of preparing the flexible budget and understanding the results.Actual Flexible StaticResults Budget BudgetSales volume (in units) 13,000 ______12,000Sales revenues $257,500 _______ $250,000Variable costs 154,000 ________ 175,000Contribution margin 103,500 ________ 75,000Fixed costs 50,500 $ ________ 49,500Operating profit $ 53,000 $_________ $ 25,5009) The flexible budget will report ________ for variable costs.A) $154,000B) $175,000C) $13,583D) $189,58310) The flexible budget will report ________ for the fixed costs.A) $49,500 FavorableB) $49,500C) $1,000 UnfavorableD) $50,500
Answer:
A. D) $189,583
B. B. $49,500
Explanation:
A. The computation of the flexible budget will report for the variable cost is shown below:-
= Static Variable cost ÷ Static sales volume × Actual sales volume
= $175,000 ÷ 12,000 × 13,000
= $189,583.33
B. The number of fixed costs in both flexible budget and static budget would be the same
= $49,500
So, flexible budget will report $49,500 for the fixed costs
The Woods Co. and the Speith Co. have both announced IPOs at $52 per share. One of these is undervalued by $11, and the other is overvalued by $5, but you have no way of knowing which is which. You plan to buy 1,900 shares of each issue. If an issue is underpriced, it will be rationed, and only half your order will be filled. a. If you could get 1,900 shares in Woods and 1,900 shares in Speith, what would your profit be
Answer:
$11,400
Explanation:
Data provided as per the question is below:-
Shares = 1,900
Undervalued amount = $11
Overvalued amount= $5
The computation of profit is shown below:-
Profit = Shares × Undervalue amount - Shares × Overvalued amount
= 1,900 × $11 - 1,900 × $5
= $20,900 - $9,500
= $11,400
Therefore for computing the profit we simply applied the above formula.
Rayya Co. purchases a machine for $176,400 on January 1, 2019. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is sold on July 1, 2023, during its fifth year of service. Prepare entries to record the partial year’s depreciation on July 1, 2023, and to record the sale under each seperate situation. (1) The machine is sold for $75,600 cash. (2) The machine is sold for $60,480 cash.
Answer:
Refer explanation
Explanation:
A. Straight-line depreciation is whereby the same amount is depreciated every year throughout the life of the asset. It is calculated as:
(Cost of asset - Salvage Value) / Estimated total number of life years of asset.
The depreciation per year for the machine would be: ($176400 - 0) / 7
= $25,200
Depreciation for partial year’s depreciation as at 01 July 2023 = $25,200 / 2 = $12,600
Debit : Depreciation account : $12600
Credit : Accumulated depreciation account : $12600
B. In order to account for sale, it should be identified whether it is a profit on sale or loss on sale. This is calculated by comparing the net book value of the asset at the time of sale, and it’s sale price. If the sale price is higher than the NBV, it is a profit on sale. If the sale price is lower than the NBV, it is a loss on sale. Net book value is calculated as cost of asset - accumulated depreciation.
If the asset was purchased on January 01 2019 and sold on July 01 2023, it was used for 4.5 years. Hence, the accumulated depreciation of the asset is $25200 x 4.5 = $113400.
NBV = $176400 - $113400 = $63000
(B1) Machine is sold for $75600
Profit on sale : $75600 - $63000 = $12600
Debit : Cash : $75600
Debit : Accumulated depreciation : $113400
Credit : Profit on sale of asset : $12600
Credit : Machinery Account : $176400
(B2) Machine is sold for $60480
Loss on sale : $60480 - $63000 = $2520
Debit : Cash : $60480
Debit : Loss on sale of asset : $2520
Debit : Accumulated depreciation :$113400
Credit : Machinery Account : $176400
Final answer:
When a machine is sold during its useful life, the company needs to record the partial year's depreciation and the sale transaction.
Explanation:
When a machine is sold during its useful life, the company needs to record the partial year's depreciation and the sale transaction. In this case, the machine was sold on July 1, 2023, during its fifth year of service. To record the partial year's depreciation, the company needs to calculate the depreciation expense for the first half of the year. Since the machine has a seven-year life and is depreciated using the straight-line method, the annual depreciation expense is calculated as the initial cost divided by the useful life. Therefore, the depreciation expense for the first half of 2023 would be half of the annual depreciation expense.
8.28 Two roadway designs are under consideration for access to a permanent suspension bridge. Design 1A will cost $3 million to build and $100,000 per year to maintain. Design 1B will cost $3.5 million to build and $40,000 per year to maintain. Both designs are assumed to be permanent. Use an AW-based rate of return equation to determine (a) the breakeven ROR, and (b) which design is preferred at a MARR of 10% per year.
Answer:
Breakeven ROR is 12%
At MARR of 10% 1B design is preferred as it has a lower present value of cost of $3,900,000
Explanation:
The breakeven rate of return ,is the rate of return where the present value of cost incurred under both arrangements are the same as shown below"
present of value of 1A=$3,000,000+$100,000/r
Present value of 1B=$3,500,000+$40,000/r
thereafter,at breakeven rate of return,both PVs are the same
$3,000,000+$100,000/r=$3,500,000+$40,000/r
100,000/r-40,000/r=3,500,000-3,000,000
(100,000-40,000)/r=500,000
60,000/r=500,000
r=60,000/500,000=12%
At MARR
cost 1A=$3,000,000+$100,000/10%=$4,000,000
Cost 1B=$3,500,000+$40,000/10%=$3,900,000
Susan Chen is a stock analyst. She values two goods: money (income) and her integrity. Her bonus is based on the number of investments she recommends to the company. Generally speaking, the higher the bonus she receives, Question 7 options: the smaller is the shift in her budget line. the more she is willing to trade off her integrity for money. the more she is indifferent to changes in the level of bonus. the less she is willing to trade off her integrity for money.
Answer:
The more she is willing to trade off her integrity for money
Explanation:
An indifference curve represents different combinations of two goods which a consumer can have, which shall yield same level of satisfaction.
Opportunity cost in case of two goods, refers to the units sacrificed or traded off of one good so as to consume more units of the other good.
In the given case, the analyst is faced with the trade off between two sources of utility or satisfaction i.e money and integrity. So if the individual wants more of one, she has to sacrifice some part of other.
Since her bonus is based upon number of investments she recommends to the company, if she'll be honest or focuses upon integrity, justness and fairness, her number of recommended investments would be lesser in comparison to the number of recommended investments if she is dishonest.
So, the higher the bonus she receives, means more the number of investments recommended by her which implies lesser integrity.
So, the higher the bonus she receives, the more she is willing to trade off her integrity for money.
Consider the following aggregate planning problem for one quarter: Regular Time Overtime Subcontracting Production Capacity/Month 1,000 200 150 Production Cost/Month 5 7 8 Assume that there is no initial inventory and there is forecasted demand of 1,250 units in each month in the quarter. Carrying cost is $1 per unit per month, and backlogs are not allowed. Use the transportation model to find the optimal solution. How much excess capacity is there? units What is the cost of the optimal solution? How many units are actually made by subcontracting? How many units incur a holding cost? In other words, how many are made in one month and held to meet the demand of a future month? units
Answer: $20,400
Explanation:
Optimal cost per month = Units x cost per unit
1000 x5 +200x7 +50x8
= $6,800
Optimal cost for three months = optimal cost per month x3
= 6,800 x3
= $20,400
Answer:
Check the explanation
Explanation:
The full explanation to the question can be seen in the Microsoft Excel (which is also a very useful spreadsheet program that is part of Microsoft Office suite of application software. This program present table of values and figures that are well arranged in rows and columns that can be manipulated mathematically through the use of both basic and complex arithmetic functions and operations.) in the attached images below.
The common stock of Water Town Mills pays an annual dividend of $1.84 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much are you willing to pay for one share of this stock if you want to earn a 13.6 percent annual return?
Answer:
The maximum that should be paid for a share of this stock today is $13.53.
Explanation:
The price of a company's stock which pays a constant dividend through out can be calculated using the zero growth model of the Dividend discount model (DDM). The formula for price of the stock today under DDM's zero growth model is,
P0 = D / r
P0 = 1.84 / 0.136
P0 = $13.529 rounded off to $13.53
In the consumer buying decision process, the information search stage yields a group of brands that a buyer views as possible alternatives. involves a buyer becoming aware of the need for a product. is not necessary when the buyer is involved in extensive decision making. occurs immediately after evaluation of alternatives. is lengthy for routine response buying behavior.
Answer:
The correct answer is letter "A": yields a group of brands that a buyer views as possible alternatives.
Explanation:
The consumer buying decision process explains the steps individuals follow at the moment of buying goods and services. Those steps are five (5): need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior.
After the need that must be covered is identified, individuals make an information search. In this stage, people gather all the data possible of the sources that can satisfy the need mainly based on features such as price and product quality.
In the consumer buying decision process, the information search stage
is lengthy for routine response buying behavior.
This stage is more extensive when consumers are engaging in routine or habitual buying behavior because they are less likely to engage in an extensive search for information when they have established brand preferences or have less involvement in the purchase decision.
The information search stage in the consumer buying decision process is the phase where individuals seek out information about products or services to aid in their purchase decision. For routine response buying behavior, which involves low-involvement purchases of frequently bought items this stage is typically brief.
In contrast, for more complex or high-involvement purchases, such as buying a car or a new computer, the information search stage can be lengthy. In these cases, buyers want to gather as much information as possible to make an informed decision.
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Seth Erkenbeck, a recent college graduate, has just completed the basic format to be used in preparing the statement of cash flows (indirect method) for ATM Software Developers. All amounts are in thousands (000s). ATM SOFTWARE DEVELOPERS Statement of Cash Flows For the year ended December 31, 2021 Cash Flows from Operating Activities Net income $ Adjustments to reconcile net income to net cash flows from operating activities: Net cash flows from operating activities Cash Flows from Investing Activities Net cash flows from investing activities Cash Flows from Financing Activities Net cash flows from financing activities Net increase (decrease) in cash $ 1,605 Cash at the beginning of the period 8,330 Cash at the end of the period $ 9,935 Listed below in random order are line items to be included in the statement of cash flows. Cash received from the sale of land $ 8,470 Issuance of common stock 12,625 Depreciation expense 5,375 Increase in accounts receivable 3,910 Decrease in accounts payable 1,670 Issuance of long-term notes payable 16,045 Purchase of equipment 39,415 Decrease in inventory 1,385 Decrease in prepaid rent 815 Payment of dividends 6,190 Net income 10,600 Purchase of treasury stock 2,525 Required: Prepare the statement of cash flows for ATM Software Developers using the indirect method. (List cash outflows and any decrease in cash as negative amounts. Enter your answers in thousands (i.e., 10,000,000 should be entered as 10,000).)
Answer:
Explanation:
Statement of cash flow is a statement of how activities of the income statement and statement of financial position impact the cash and cash equivalent of a company through it operating , financing and investing activities
STATEMENT OF CASH FLOW FOR ATM SOFTWARE
The figures appears to be in "000" already
Cash flow from operating activities
Net Income - 10600
Account receivable (3910)
Account payable (1670)
Depreciation expense 5375
Decrease in inventory 1385
Decease in prepaid rent 815
Net cash flow from operating activities 12595
Cash flow from investing activities
Sales of Land 8470
Purchase of equipment (39415)
Net cash flow from financing activities (30945)
Cash flow from financing activities
Issuance of stock - 12,625
long term note payable 16405
Purchase of treasury stock (2525)
Payments of dividends (6910)
Net cash flow from financing activities 19595
Net increase in cash 1605
Cash at the beginning 8330
Cash at the end 9935
The answer involves categorizing the given items into three main components of a statement of cash flows: Operating, Investing, and Financing activities. After assigning appropriate items under each category, their total sum indicates the net change in cash.
Explanation:To prepare the statement of cash flows using the indirect method, organize the given line items under the three main categories: Cash Flows from Operating Activities, Cash Flows from Investing Activities, and Cash Flows from Financing Activities.
Operating Activities:Start with net income: $10,600Add back depreciation expense (non-cash charge): $5,375Subtract increase in accounts receivable (an investment in working capital): -$3,910Add decrease in inventory (a recovery of working capital): $1,385Subtract decrease in prepaid rent (another use of cash): -$815Add decrease in accounts payable (a source of cash as liabilities are decreased): $1,670.Investing Activities:Subtract cash paid for the purchase of equipment: -$39,415Add cash received from the sale of land: $8,470Financing Activities:Add cash from issuance of common stock: $12,625Add cash from issuance of long-term notes payable: $16,045Subtract cash used for payment of dividends: -$6,190Subtract cash used for purchase of treasury stock: -$2,525After calculating each category, sum them up to find the net increase or decrease in cash.
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3. The effective rate of protection is a weighted average of nominal tariffs and tariffs on imported inputs. It has been noted that in most industrialized countries, the nominal tariffs on raw materials or intermediate components or products are lower than on final-stage products meant for final markets. Why would countries design their tariff structures in this manner? Who tends to be helped, and who is harmed by this cascading tariff structure?
Answer:
Industrialized countries place lesser tariff on raw or intermediate components because they want it to e more affordable to indigenous manufacturers who will use them to produce affordable finished products.
They charge higher tariff on final products meant fro final markets because this will increase the prices of imported goods.
when this is done, the following are domestic producers are helped.
Because of this, domestic producers are not forced to reduce their prices from increased competition, and domestic consumers are left paying higher prices as a result.
Therefore, It is the consumers that are harmed because higher tariff increases the price per item.
Sunland Company incurs the following costs to produce 11400 units of a subcomponent: Direct materials $9576 Direct labor 12882 Variable overhead 14364 Fixed overhead 16200 An outside supplier has offered to sell Sunland the subcomponent for $2.85 a unit. If Sunland accepts the offer, by how much will net income increase (decrease)?
Answer:
$4,392
Explanation:
Sunland Company
Therefore the costs are eliminated if they outsource the manufacturing:
Direct materials $9,576
Direct labor $12,882
Variable overhead $14,364
Total $36,882
Their new cost is ($2.85 X 11,400) $32,490
$36,882 - $32,490 = $4,392
If Sunland accepts the offer the net income increase (decrease) by $4,392
Owner made no investments in the business, and no dividends were paid during the year. Owner made no investments in the business, but dividends were $700 cash per month. No dividends were paid during the year, but the owner did invest an additional $45,000 cash in exchange for common stock. Dividends were $700 cash per month, and the owner invested an additional $35,000 cash in exchange for common stock. Determine the net income earned or net loss incurred by the business during the year for each of the above separate cases: (Decreases in equity should be indicated with a minus sign.)
Answer:
scenario 1
owner made no investment in the business and no dividend were paid during the year, there may be no income or net loss incurred by the business. there is no decrease or increase in equity.
scenario 2
owner made no investments in the business but dividend were $700 cash per month, the net income earned during the year equal $700*12 = $8,400. There is no changes in equity
scenario 3
No dividend were paid during the year but owner invested an additional $45,000 cash in exchange for common stock. There will be increase in equity by $45,000 but net income or net loss cannot be determined
scenario 4
Dividend were $700 cash per month and the owner invested additional $35,000 cash in exchange for common stock. The net Income earned will $8,400 while $35,000 will added to equity as additional capital.
Explanation:
A reward system for project management should be: a) based on the money saved managing the project b) differentiated from normal functional rewards c) greater than rewards for process management d) based on the money generated by the project.
Answer:
The correct answer is letter "B": differentiated from normal functional rewards.
Explanation:
Project management teams are those formed by groups of employees that are believed to be capable of creating an innovative plan to generate more benefits for the organization as a whole. At the moment of setting rewards for this group there should be extra incentives compared to the ones provided to workers under regular production conditions. The reason for that relies on the fact that project team members must push themselves to their limits to translate those efforts into a feasible project.
Bonita Industries purchased a new machine on October 31, 2020. A $4900 down payment was made and three monthly installments of $820 each are to be made beginning on November 30, 2020. The cash price would have been $47000. Bonita paid no installation charges under the monthly payment plan but an $820 installation charge would have been incurred with a cash purchase. The amount to be capitalized as the cost of the machine on October 31, 2020 would be:______
Answer:
$47,820
Explanation:
1.Cash price of the machine $47,000
Add Installation cost $820
Total$47,820
Therefore the amount to be capitalized as the cost of the machine on October 31, 2020 would be: $47,820
The following condensed information is reported by Sporting Collectibles.
2018 2017
Income Statement Information Sales revenue $ 14,820,000 $ 9,400,000
Cost of goods sold 9,544,080 6,900,000
Net income 418,000 348,000
Balance Sheet Information Current assets $ 1,700,000 $ 1,600,000
Long-term assets 2,300,000 2,000,000
Total assets $ 4,000,000 $ 3,600,000
Current liabilities $ 1,300,000 $ 1,000,000
Long-term liabilities 1,400,000 1,400,000
Common stock 900,000 900,000
Retained earnings 400,000 300,000
Total liabilities and stockholders' equity $ 4,000,000 $ 3,600,000
Required:
Calculate the following profitability ratios for 2018
Gross profit ratio %
Return on assets %
Profit margin %
Asset turnover times
Return on equity %
Answer:
Gross profit ratio % = 35.60%
Return on assets % = 10.45%
Profit margin % = 2.82%
Asset turnover times = 3.90 times
Return on equity % = 46.44%
Explanation:
a. Gross profit ratio %
Gross profit = Sales revenue - Cost of good sold = $14,820,000 - $9,544,080 = $5,275,920
Gross profit ratio % = (Gross profit / Sales revenue) * 100 = ($5,275,920 / $14,820,000) * 100 = 35.60%
b. Return on assets %
Return on assets % = (Net income / Total assets) * 100 = ($418,000/$4,000,000) * 100 = 10.45%
c. Profit margin %
Profit margin % = (Net income / Sale revenue) * 100 = ($418,000/$14,820,000) * 100 = 2.82%
d. Asset turnover times
Average total asset = ($4,000,000 + $3,600,000) / 2 = $3,800,000
Asset turnover times = Sales revenue / Average total asset = $14,820,000/$3,800,000 = 3.90 times
e. Return on equity %
Return on equity % = (Net income / Common stock) * 100 = ($418,000/$900,000) * 100 = 46.44%
The Down and Out Co. just issued a dividend of $2.41 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $45 a share, what is the company's cost of equity? (Do not round your intermediate calculations.)
Answer:
Cost of equity = 10.6%
Explanation:
The value of a stock using the dividend valuation model, is the present value of the expected future dividends discounted at the required rate of return. The required rate of return is the cost of equity
The model is represented below:
P = D× (1+g)/ ke- g
Ke- cost of equity, g - growth rate, p - price of the stock
This model can used to work out the cost of equity, as follows:
Ke = D× (1+g)/p + g
D- 2.41, g- 5%, - p -45
Ke = 2.41 ×(1.05)/45 + 0.05
Ke = 0.10623 × 100 ( we convert to percentage by multiplying by 100)
Ke= 10.6%
Cost of equity = 10.6%
Answer:
0.1062 or 10.62%
Step by Step Explanation:
The cost of equity can be find using the dividend growth model.
The cost of equity is:
Ke = D× (1+g)/p + g
[$2.41(1.05)/$45] + 0.05
=($2.5305/$45) +0.05
=0.0562 +0.05
=0.1062 or 10.62%
Therefore the company's cost of equity is 0.1062 or 10.62%
The stockholders equity section of Martino Inc. at the beginning of the current year appears below.Common stock, $10 par value, authorized 1,090,000 shares, 353,000 shares issued and outstanding $3,530,000Paid-in capital in excess of par�common stock 686,000Retained earnings 578,000During the current year, the following transactions occurred.1. The company issued to the stockholders 142,000 rights. Ten rights are needed to buy one share of stock at $33. The rights were void after 30 days. The market price of the stock at this time was $35 per share.2. The company sold to the public a $219,000, 10% bond issue at 104. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $31 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8.3. All but 7,100 of the rights issued in (1) were exercised in 30 days.4. At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing.5. During the current year, the company granted stock options for 10,600 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $31. The options were to expire at year-end and were considered compensation for the current year.6. All but 1,060 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract. Collapse question part(a)Prepare general journal entries for the current year to record the transactions listed above. (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.)
Find the given attachments for complete solution
The general journal entries for the current year are as follows: 1. Debit Cash and Credit Common Stock and Paid-in Capital in Excess of Par for the issuance of rights to stockholders. 2. Debit Cash and Discount on Bonds Payable and Bonds Payable, and Credit Paid-in Capital in Excess of Par for the sale of bonds with detachable warrants. 3. Debit Cash and Credit Common Stock and Paid-in Capital in Excess of Par for the exercise of rights.
Explanation:1. The issuance of rights to stockholders:
Debit Cash for 1,420,000 ($33 x 10 x 142,000)Credit Common Stock for $1,420,000 ($10 x 142,000)Credit Paid-in Capital in Excess of Par for $412,000 ($2 x 142,000)2. The sale of bonds with detachable warrants:
Debit Cash for $219,000 (the proceeds of the bond issue)Debit Discount on Bonds Payable for $33,600 (($100 - $96) x 142,000)Debit Bonds Payable for $227,600 ($219,000 + $8,600)Credit Paid-in Capital in Excess of Par for $3,640 ([$31 - $10] x 142,000)3. Exercise of rights:
Debit Cash for $229,000 ($33 x 7,100)Credit Common Stock for $71,000 ($10 x 7,100)Credit Paid-in Capital in Excess of Par for $158,000 ($2 x 7,100)4. Exercise of warrants and the balance remaining:
Debit Cash for $169,120 ([$31 - $8] x 10% x 142,000)Debit Paid-in Capital in Excess of Par for $7,300 ([$31 - $10] x 10% x 142,000)Credit Common Stock Warrants for $9,140 ($31 x 10% x 142,000)5. Grant of stock options:
No journal entry is required because stock options are not recorded at the time of grant6. Exercise of stock options and expiration:
Debit Cash for $305,860 ($31 x 9,540)Credit Common Stock for $95,400 ($10 x 9,540)Credit Paid-in Capital in Excess of Par for $210,460 ($21 x 9,540)Learn more about stockholder here:https://brainly.com/question/33709829
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Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
Sales are budgeted at $320,000 for November, $330,000 for December, and $310,000 for January.
Collections are expected to be 40% in the month of sale and 60% in the month following the sale.
The cost of goods sold is 75% of sales.
The company desires an ending merchandise inventory equal to 20% of the cost of goods sold in the following month.
Payment for merchandise is made in the month following the purchase.
The November beginning balance in the accounts receivable account is $67,000.
The November beginning balance in the accounts payable account is $254,000.
Prepare a Schedule of Expected Cash Collections for November and December.
Answer:
Explanation:
Schedule of expected cash collection is a form of budgeted that list the time frames and the amount of payment expected from customers for the purpose of efficient planning.
Account receivables
60% * October sales = 67,000
November sales
40% * 320000 (November sales) = $128,000
$195000
December cash collection
60%*320000 (November sales) = 192000
40%*330000 (December sales)= $132000
$324,000
Final answer:
To calculate the expected cash collections for November and December for Capes Corporation, figures from the current and previous months' sales are used based on the given collection pattern. For November, the expected collections total to $195,000, and for December, the total expected collections amount to $324,000.
Explanation:
To prepare the schedule of expected cash collections for November and December for Capes Corporation, we'll analyze the data given and calculate the collections based on the sales and the company's collection pattern.
November Sales Collections:Current Month Collections (40% of November sales):
0.40 × $320,000 = $128,000
Previous Month Collections (60% of October sales): Since we don't have October's sales, we'll assume it to be equivalent to the beginning accounts receivable balance: $67,000
December Sales Collections:Current Month Collections (40% of December sales):
0.40 × $330,000 = $132,000The expected cash collections for November is the sum of collections from both the current and previous month, which is $128,000 (current) + $67,000 (previous) = $195,000.
Similarly, the expected cash collections for December is $132,000 (current) + $192,000 (previous) = $324,000.
Karlie Hastings is a writer (employee) for the Santa Fe Gazette and has an annual salary of $49,000. This year, she also realized net self-employment earnings of $85,000 from a book she wrote. What portion of her self-employment earnings is subject to the two parts of the social security tax
Answer:
$92,041.2 is Karlie's gross self employment earning. 7.65% of this amount is subject to the first part of the social security tax while 92.35% of the remaining amount is subject to the second part of the social security tax.
Explanation:
Note that Karlie's self employment earning wasn't given but her NET self employment earning was given and the question is What portion of her self employment earning is subject to the two parts of the social security tax?
We are hence supposed to find her TSEE (Total or Gross Self Employment Earning)
To find this,
We know that her net SEE is $85,000 hence her gross SEE is=
GSEE= NSEE + (7.65% of GSEE)
GSEE = $85,000 + (7.65% of GSEE)
92.35 GSEE = $8,500,000
Hence GSEE= $92,041.2
So, this amount (her GSEE) is subject to the first part of the social security tax - that is the part that (7.65% of $92,041.2) is paid to Santa Fe Gazette, Karlie's employer or goes to business expenses.
On the other hand, 92.35% of her NSEE (92.35% of $85,000) is subject to the second part of the social security tax.
Karlie Hastings' self-employment earnings subject to the Social Security tax amounts to $64,000, which is calculated by subtracting her annual salary from the Social Security tax income cap and then applying the combined self-employment tax rate of 12.4% to this remainder.
The portion of Karlie Hastings' self-employment earnings that is subject to the two parts of the social security tax needs to be calculated based on her net self-employment earnings for the year. For the tax year specified, the Social Security tax rate for self-employed individuals is 12.4%, which is the combined employee and employer rate, since self-employed individuals pay both portions. However, there's a cap on the amount of income subject to this tax, which is $113,000 for this scenario as mentioned in the reference material.
First, calculate the total income subject to the Social Security tax, which is the total of her salary and self-employment earnings, with a cap at the $113,000 limit: $49,000 (salary) + $85,000 (self-employment earnings) = $134,000 total income. Since the cap is $113,000, only $113,000 of this income is subject to the 12.4% Social Security tax.
Next, calculate the Social Security tax on her self-employment income alone, as the salary has already been taxed through payroll: If the cap is $113,000 and her salary is $49,000, then $113,000 - $49,000 = $64,000 of her self-employment earnings is subject to the Social Security tax. Karlie would need to pay 12.4% on this $64,000 to cover her self-employment Social Security obligation, which amounts to $7,936.
Periodic Inventory by Three Methods The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are as follows: Date Transaction Number of Units Per Unit Total Apr. 3 Inventory 25 $1,200 $30,000 8 Purchase 75 1,240 93,000 11 Sale 40 2,000 80,000 30 Sale 30 2,000 60,000 May 8 Purchase 60 1,260 75,600 10 Sale 50 2,000 100,000 19 Sale 20 2,000 40,000 28 Purchase 80 1,260 100,800 June 5 Sale 40 2,250 90,000 16 Sale 25 2,250 56,250 21 Purchase 35 1,264 44,240 28 Sale 44 2,250 99,000
Required: 1.
Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system.
Answer:
Merchandise inventory = $32,864
Cost of merchandise sold = $310,776
Explanation:
As per the data given in the question,
Merchandise inventory = Balance of purchases on 21 April
= 26 units × $1,264 per unit
= $32,864
Calculating the ending inventory :
Details units
Ending inventory = beginning inventory + Purchase - Sale
Beginning inventory = 25 units
Add : Purchase made on
April 8 = 75 units
May 8 = 60 units
may 28 = 80 units
June 21 = 35 units
Total units for sale = 275 units
Less : Units sold on
April 11 = 40 units
April 30 = 30 units
May 10 = 50 units
May 19 = 20 units
June 5 = 40 units
June 16 = 25 units
June 28 = 44 units
Ending Inventory in units = 26 units
Cost of merchandise sold =Merchandise available for sale - (Merchandise inventory, June 30, 2016)
=$343,640 - $32,864
= $310,776
Final answer:
To calculate ending inventory and cost of goods sold using the FIFO method, aggregate all purchases, find total units sold, subtract units sold from cumulated inventory to find ending inventory, use recent purchase prices for ending inventory value, and subtract this from total cost of goods available for sale.
Explanation:
The question involves determining the ending inventory and cost of goods sold (COGS) for a period using the first-in, first-out (FIFO) method under a periodic inventory system. In the FIFO method, it is assumed that the oldest inventory is sold first. Therefore, the cost of the oldest inventory items is used to calculate COGS, while the cost of the most recently purchased items represents the ending inventory.
Step by Step Calculation:
Aggregate all purchases made during the period.
Sum up all sales in terms of units to find the total units sold.
Starting from the oldest inventory, subtract the units sold from the cumulated inventory to find the ending inventory.
Use the prices of the most recent purchases to calculate the value of the ending inventory.
COGS is then calculated by subtracting the ending inventory's value from the total cost of goods available for sale.
Because the question requires using the first-in, first-out approach, we prioritize costs based on the chronology of purchases. This method provides a systematic approach to managing inventory costs and reflects the flow of goods in many real-world situations.
The government offers a $9 per-unit subsidy for buyers in this market. Compute consumer surplus, producer surplus, government revenue and deadweight loss in this new setting. Are firms better or worse off with the subsidy
Explanation:
Subsidies are meant to reduce the money paid by buyers for units of commodity from the producers, while also reducing the selling price imposed by the producers on their sellers.
For example, the initial cost per unit of a popular commodity is $19 and the government then offers a $9 per-unit subsidy for buyers.
Consumer surplus= $9
Producer surplus= 10+9=$19
Use the following information to determine this company's cash flows from financing activities.
Net income was $467,000.
Issued common stock for $74,000 cash.
Paid cash dividend of $13,000.
Paid $120,000 cash to settle a note payable at its $120,000 maturity value.
Paid $120,000 cash to acquire its treasury stock.
Purchased equipment for $90,000 cash.
Answer:
See the explanation below.
Explanation:
Details Amount ($)
Issued common stock 74,000
Dividend paid (13,000)
Settlement of note payable (120,000)
Treasury stock acquired (120,000)
Net cash flows from financing activities (179,000)
What do you understand from the term, ‘monopoly’. Give an example of a government-created monopoly. Is creating this monopoly necessarily a bad public policy? Please explain in your own words
Answer:
A monopoly is a company that can control the market. For example the government could put a hight import tax on shoes so no one would ship shoes into the countryman this means that the only shoe brand in the country can adjust there prices of their shoes and people would still buy them because there is no other shoe brand. This shows that they have control over the market (Or sitting at at monopoly position)
A monopoly is when one entity controls a product or service market. The United States Postal Service is an example of a government-created monopoly, impacting public policy considerations.
Monopoly: A monopoly is a situation in which a single entity, either an individual or a company, dominates the market and controls the supply of a particular product or service.
Government-Created Monopoly Example: An example of a government-created monopoly is the United States Postal Service, where laws prohibit competitors from offering certain services.
Public Policy View: Creating a monopoly through government intervention can be considered as a strategic move for certain public services but may also limit competition and innovation in the long run.
You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 10 percent, which is paid semiannually. The yield to maturity on the bonds is 8 percent annual interest. There are 10 years to maturity. Compute the price of the bonds based on semiannual analysis.
Answer:
current market price of the bond is $667
Explanation:
the formula to calculate yield to maturity (YTM) is:
YTM = [C + (F - P)/n] / [(F + P)/2]
F = face value P = market price n = number of years x 2 = C = couponwe just start replacing and solve for P:
YTM = 8%C = 50F = 1,000n = 208% = [50 + (1,000 - P)/20] / [(1,000 + P)/2]
8% x (1,000 + P)/2 = 50 + (1,000 - P)/20
8% x (500 + 0.5P) = 50 + 50 - 0.05P
40 + 0.04P = 100 - 0.05P
0.04P + 0.05P = 100 - 40 = 60
0.09P = 60
P = 60 / 0.09 = 667
Noah graduated with his B.A. in early childhood education in December, but public schools are not hiring until spring.
Factors that are important to Noah are working with children in a classroom, providing educational opportunities, working close to home, and finding a full-time job by fall.
Noah is finally offered four jobs for which he is qualified. Which job is the best fit for Noah?
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Job #1: Para-educator in a kindergarten class
Close to home
$29,400 per year
Part-time position
Positive school culture
Networking with administrators
Job #2: Substitute Teacher in several schools
Up to $26,830 per year
Different school every day
Potential to work every day
Experience with many children
Up to 1 hour commute one way
Networking with many administrators
Job #3: Home Child Care Worker and Tutor
$30,000 per year
Help with homework
Drive children to after school activities
Work with one family's children
Job #4: After Care Provider
Close to home
Minimum Wage
Hours: 3-7pm on weekdays
Opportunities for Creativity
Experience with many children
Job #1
Job #2
Job #3
Job #4
Answer:
Job #1
Explanation:
Job #1 is best suited according to Noah's preference. She wants to work near home, have experience working with children and provide educational opportunities. The Job #1 offers her para- educator in kindergarten class. This job is close to her home and has positive school culture. This job provides her opportunity for networking with administrators and the pay is also good. Therefore Noah should select job #1.
A manager states that his process is really working well. Out of 1,500 parts, 1,477 were produced free of a particular defect and passed inspection. a. Calculate the defects per million opportunities (DPMO). (Round your answer to the nearest whole number.) Defects per million opportunities b. Based on Six-Sigma theory, how would you rate this performance
To calculate the DPMO, subtract defect-free parts from the total parts and multiply by 1,000,000, resulting in 15,333 DPMO. This performance falls short of Six Sigma standard, which allows for only 3.4 defects per million opportunities.
The student asked about calculating defects per million opportunities (DPMO) and assessing performance based on Six Sigma theory. To calculate DPMO for the given situation:
Subtract the number of defect-free parts (1,477) from the total parts produced (1,500). This gives us 23 defects.
Calculate the DPMO: (23 defects / 1,500 parts) * 1,000,000 = 15,333 DPMO (rounded to the nearest whole number).
Regarding the Six Sigma rating, the standard for a Six Sigma process is 3.4 defects per million opportunities. Since the calculated DPMO is 15,333, the process performance is below the Six Sigma threshold and would not be rated as Six Sigma proficient on a long term scale.
(A) The defects per million opportunities (DPMO) is [tex]15,333[/tex]. (B) A DPMO of [tex]15,333[/tex] indicates below Six Sigma quality, suggesting need for process improvement.
(A). To calculate the defects per million opportunities (DPMO), first, find the number of defective parts:
Defective parts = Total parts - Passed parts
Defective parts = [tex]1500 - 1477 = 23[/tex]
Next, calculate the DPMO using the formula:
DPMO = (Defective parts / Total parts) × [tex]1,000,000[/tex]
DPMO = [tex]\frac{23}{1500} \times 1,000,000 = 15,333[/tex]
(B). According to Six Sigma theory, DPMO values are used to assess process performance. A DPMO of approximately [tex]15,333[/tex] indicates a high level of defects relative to the total opportunities. This level of performance would typically fall below the Six Sigma quality standard, suggesting that the process may need improvement to achieve higher levels of quality and consistency.
If Jack bought 21 DVDs last year when his income was $30,000 and he buys 23 DVDs this year when his income is $35,000, then his income elasticity of demand is ______________ which means that DVDs are a(n) ______________ good for Jack.
Answer:
If Jack bought 21 DVDs last year when his income was $30,000 and he buys 23 DVDs this year when his income is $35,000, then his income elasticity of demand is 0.571 which means that DVDs are a(n) normal good for Jack.
Explanation:
Ei = ⌂Q/Q /⌂I/I
⌂Q = 23-21 = 2
⌂I = 35000-30000 =5000
I = 30000
Q=21
Ei=⌂Q/⌂I * I/Q = 2/5000 * 30000/21 = 2*6/21 =12/21 = 0.571
The income elasticity of demand is 0.571
Answer: 0.57; Normal good
Explanation:
Income elasticity of demand is an economic term that depicts the connection that exist between the income of a consumer and the consumer's demand of a product. When there is an increase or decrease in the income of a consumer, the consumer's income elasticity of demand will show if he will buy a product or not.
After the calculation which is shown in the attached file, the income elasticity of demand gotten is 0.57. This means that DVD is a normal good to Jack. For a normal good, the income elasticity of demand is positive but less than one.