Answer:
Check the following calculations
Explanation:
1. Working capital techniques focuses on short term borrowings of an organisation. An organisations meet its working capital needs by borrowing the funds for short term and meet the funds it requires to manage the operational requirements. This is the reason why short term borrowing limits of any organisation is linked directly to the value of its working capital ie., Inventories, receivables etc.,
2. A manager typically focusses on reducing the receivables by improving the collections from overdue debtors and on evaluating whether the inventories are procured optimally or purchased in bulk more than the requirement and negotiates with vendors for increased credit terms. He also works on ensuring that the short term borrowings are represented by the drawing power available from its current assets. If there is any gap, he would work on borrowing long term funds and utilise it to meet the shortfall in working capital with necessary approvals.
3.Accounts receivable cycle represents the no of days between the date of invoicing to a customer to the date of realisation of billed amount from the customer. In health care industry, most of the revenues are settled through insurance claim process. Insurance companies typically delay the settlement stating deficiencies in the documents submitted. This would result in increased ageing of receivables. Unless closely monitored and followed up, the realisation of dues would be a concern in this industry.
4. Goal of Economic Order Quantity (EOQ) is to minimise the inventory holding costs and the costs of ordering a product by optimally assessing the quantity to order .Here , the key assumption is the demand quantity would be certain and constant throughout the period. Just in Time (JIT) inventory is a manufacturing system which focuses to produce or procure products only when the demand arise. Hence, the focus is mainly on time reduction between the time of order and time of sourcing the material. JIT doesnt assume any static demand.
5. Revenue cycle in a Health care industry represents the difference between the date of admission of a patient and the date of receipt of fees . Steps involved in managing revenue cycle in a health care industry are provided below:
- Developing a robust system to track and monitor the revenue cycle for each patient
- Agreeing on a clear SOP (Standard operating procedure) with Insurance companies in submission and settlement of claims
- Review of revenue cycle by Top management team and raising relevant queries and actionable points to improve the status
Decision on offering cash discount.
It is prudent to collect after 30 days instead of giving cash discount as shown below
The service division of Raney Industries reported the following results for 2017.
Sales $567,200
Variable costs 340,320
Controllable fixed costs 95,700
Average operating assets 609,100
Management is considering the following independent courses of action in 2018 in order to maximize the return on investment for this division.
(1) Reduce average operating assets by $127,100, with no change in controllable margin.
(2) Increase sales $102,300, with no change in the contribution margin percentage.
Compute the controllable margin and the return on investment for 2017.
Answer:
$131,180; 21.53%
Explanation:
The controllable margin and the return on investment for 2017 are as follows:
Controllable Margin = Sales - Variable cost - Controllable fixed cost
= $567,200 - $340,320 - $95,700
= $131,180
Return on investment = Controllable Margin ÷ Average operating assets
= $131,180 ÷ $609,100
= 0.2153
= 21.53%
Maria is the assistant director of a not-for-profit organization that provides support to families. She is the head of a division that concentrates on evaluating the abilities (skills) building programs the organization provides to families. She reports directly to the agency manager. As a whole, this organization has been careful in hiring this time because of augmented competition for federal grant money. Nevertheless, they have also suffered high workforce turnover. Three executives, three important research staff, and one staff individual from the finance section have left.
Maria has a challenging schedule that requires frequent travel; nonetheless, she supervises two executives who in turn are responsible for six staff members each. Both executives were hired within the last eight months:
Manager 1: Robin has a specific background in research. She manages staff who provide research support to another division that delivers behavioral health services to young people. She supports her staff and is very organized; nevertheless, she often takes a very black and white view of issues. High-level leadership of the agency values Robin’s latest research on the therapeutic division’s services. Robin is very motivated and determined and expects the same from her staff.
Manager 2: Linda has a strong experience in social science research and assessment. She manages staff that work on different assignments within the organization. She is recognized as a problem solver and is supportive of her staff. She is very organized and has a wealth of practice in valuation of family services. She is very talented and can sometimes take on too much.
Management is recognizing that staff is becoming overworked as everyone takes on increased responsibilities due to high staff turnover. Staff have also mentioned that Robin’s "glass half-empty" approach style leaves them feeling disappointed. In addition, she has not shared budgets with her managers, so they are having difficulty appropriately allocating work to staff. Linda said she has not received sufficient information from the finance department to complete the budgets. The finance department said they have sent her all the information they have available.
As staff become distressed, the managers are becoming unsatisfied. They feel like they are unable to advocate for their staff or solve problems without key information like the departmental budget
Question. Analyze each one of these persons (Robin and Linda) and summarize their approach to work.
Answer:
Robin and Linda have a different type of leadership skill
Explanation:
Robin has met the qualification for the path-goal of the company. She has the type of leadership that may work when employee morale is high.
Linda has met the qualification of transformational leadership. She treats the employee as complete human beings, consider emotions and perspective. She builds motivation by providing a clear vision. She also has a leadership skill ability to solve complex problems.
Both of them may help Maria to lead the company. Robin will help her utilize the task-oriented approach. Linda will help demonstrate a relationship-oriented style to the employee. These two orientations could be structured to support one another.
Robin has a rigid, research-oriented approach that demotivates her team due to a lack of budget transparency, while Linda is a supportive problem solver who may overburden herself with tasks and faces issues with insufficient budget information from finance.
Robin, the first manager, has a research-focused background and serves as a support to a division handling behavioral health services. Her approach is described as organized and motivated; however, it tends to be rigid, viewing issues in a "black and white" manner. This particular perspective causes her staff to feel demotivated. Additionally, Robin doesn't share budget details with her team, leading to allocation challenges among her staff.
Linda, the second manager, possesses significant experience in social science research and evaluation. Linda is acknowledged for her problem-solving skills and her capacity to organize and evaluate family services. Although recognized for her abilities and support for her team, she sometimes overextends herself by taking on too much work. Linda has expressed difficulty in receiving necessary budget information from the finance department, which hampers her ability to manage her department effectively.
Both managers are navigating the challenges of a high-turnover environment, which includes managing overworked staff and insufficient information flow from the finance department. Efforts to address budget communication and staff burnout could improve management and staff satisfaction. Understanding these dynamics within the organization is crucial for devising strategies that address staff welfare and service delivery effectiveness.
Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $60,000 to produce 1,675 units that can be sold now for $97,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $290 per unit. If Holmes processes further, the units can be sold for $415 each. Should Holmes sell the product now or process it further.
Please answer in the format provided below
Sales As Is Process further Incremental Accounting
Sales $97,500
Additional Process costs
Total $97,500
Answer:
Holmes should sell process the product further, because the profit if process further is higher than sell product now.
Explanation:
Net profit if sell product now is $37,500 ( = sales to another manufacturer $97,500 – already spent $60,000)
Sales as in process further/ Incremental Accounting
Sales: $695,125 (=$415 x 1,675 units)
Additional Process costs: $485,570 (=$290 x 1,675 units)
Net profit if process further = total sales $695,125 – already spent $60,000 – additional process cost $485,570 = $149,555, higher than profit $37,500 if sell now.
Janice Cullen, owner of a nationally renowned photography business, files a registration statement and prospectus with the SEC. Five days after she files the registration statement, she has a meeting with her top 10 clients (primarily business owners who usually seek Janice for marketing purposes). During this meeting, Janice distributes a red-herring prospectus. At the end of the meeting, Janice decides to sell securities to her 10 clients, as well as 30 other clients with whom she had been emailing, despite the SEC?s not having yet declared her registration statement effective. Consequently, the SEC takes Janice to court for selling securities before the effective date of registration.The court holds Janice liable for violating the 1933 Securities Act.But what if the facts of the case were different? Select each set of facts below that could change the outcome of the case.A. Janice?s photography business was a registered non-profit, and focused on teaching art and photography in public schools. Her top 10 clients were owners of local charities.B. Janice published a tombstone advertisement before meeting with her top 10 clients. They saw this advertisement and were eager to engage in business with Janice.C. The 40 clients who bought the securities from Janice were accredited investors.D. Janice sold the securities to the 40 clients 25 days after she filed her registration statement.Ps. There might be more than one answer - choose all that apply
Answer: (A) and (D)
Explanation:
(A)
Since it is a nationally renowned photography business, it has been running for sometime. Most likely hence, it has been operating as a registered nonprofit organization and the top 10 clients were owners of local charities
(D)
Janice sold the securities to the 40 clients 25 days after filing her registration statement with the Securities and Exchange Commission.
The question says she "decided" to sell those securities on the 5th day after filing her registration statement. It didn't say she sold it on that day.
So, if we sold the securities 25 days after, her court case would be different.
The presence of pollution in the dry cleaning industry leads in the long run to dynamic inefficiencies because:
A) people will buy fewer clothes that need dry cleaning than they otherwise would have.
B) people will develop substitutes for dry cleaning that are wasteful.
C) firms will be induced to leave the industry because of artificially high costs.
D) firms whose average private cost is less than price will stay in (or enter) the dry cleaning
industry even though their average social cost exceeds price.
E) firms whose average private cost exceeds the price will exit (or fail to enter) the dry
cleaning industry even though their average social cost is less than price.
Answer:
D) firms whose average private cost is less than price will stay in (or enter) the dry cleaning
industry even though their average social cost exceeds price.
Explanation:
When there is pollution as a result of the daily business, then it involves a huge social cost, as you cause harm to public.
But company's do not consider it in making the decision for business, as it generally do not impact the business in financial matters.
As even if the average cost is less then revenue the profit will be there to run the business.
But till the moment the financial impact is not strong of the social cost the pollution will not affect.
Briefly explain whether you agree or disagree with the following statement: "AssetsLOADING... are things of value that people own. Liabilities are debts. Therefore, a bank will always consider a checking account deposit to be an asset and a car loan to be a liability."
A. Disagree. Checking accounts represent something that the bank owes to the owner of the account. It is a bank liability.
B. Disagree. Both checking accounts and car loans represent bank liabilities.
C. Agree. Loans are debts and therefore bank liabilities.
D. Agree. Checking accounts are something of value that is in the bank. Therefore, they are a bank asset.
Answer:
A. Disagree. Checking accounts represent something that the bank owes to the owner of the account. It is a bank liability.
Explanation:
Given the definitions of liabilities and assets, it is also important to distinguish the point of view when discussing whether a specific item is an asset or liability.
Since a checking account represents money bank users deposit into the bank, that means that the bank owes the money deposited to the bank customer.
Similarly, a car loan is a bank asset. It is an essential bank product representing the money lent to someone. That means bank users owe the bank in that case. Although the bank doesn't possess the loan money after providing someone with a loan, the loan money will be returned to the bank after some time (representing the key asset characteristic).
The first step in process flow analysis is:
(A) To develop a flowchart
(B) To break the process down into blocks
(C) To decide what technique will be used to analyze the process flow
(D) To select an appropriate transformation process for analysis
Answer:
The answer is develop a flowchart. Letter A
Explanation:
The first step in process flow analysis is to develop a flowchart
Controls are not designed to provide assurance that:A. Transactions are executed in accordance with management's authorization.B. Fraud will be eliminated.C. Access to assets is permitted only in accordance with management's authorization.D. The recorded accountability for assets is compared with the existing assets at reasonable intervals.
Answer:
B. Fraud will be eliminated.
Explanation:
Controls when established provides the quality of assurance that the procedures are followed properly, regarding each and every accounting transactions.
There is an inbuilt rate of fraud in any business, which is unavoidable irrespective of any controls established.
Thus, controls do not assure elimination of fraud, but yes the effective implementation of control makes the fraud difficult to occur, as the controls set a standard procedure of doing an act.
This is basically because the controls establish the strict rules to be followed while accounting for transactions which states the clear picture of fair practice of accounting.
Controls are not designed to provide assurance thatFraud will be eliminated. "The correct answer is B.
Controls in an organization are designed to ensure that various aspects of operations are conducted effectively and efficiently. Here's the rationale behind each option:
A. Transactions are executed in accordance with management's authorization. Controls are indeed designed to ensure that transactions are executed according to management's authorization. This is to prevent unauthorized transactions and ensure that all actions taken are within the scope of management's directives.
B. Fraud will be eliminated. While controls are designed to reduce the risk of fraud, they cannot guarantee that fraud will be completely eliminated. Fraud can be perpetrated by individuals who are skilled at circumventing controls, or it can be due to collusion among employees. Therefore, controls can mitigate but not entirely eliminate the risk of fraud.
C. Access to assets is permitted only in accordance with management's authorization. Controls are designed to ensure that access to assets is restricted and only granted to authorized personnel. This helps in safeguarding the assets and preventing unauthorized use or theft.
D. The recorded accountability for assets is compared with the existing assets at reasonable intervals. Controls include regular reconciliations and physical counts of assets to ensure that the recorded accountability matches the actual assets on hand. This is to detect any discrepancies that might indicate theft, loss, or errors in record-keeping.
In summary, while controls can significantly reduce the risk of unauthorized transactions, unauthorized access to assets, and discrepancies in asset records, they cannot ensure the complete elimination of fraud. Hence, the statement that controls are not designed to provide assurance that fraud will be eliminated is correct."
Initially, the exchange rate between Macedonian denars and Canadian dollars is in equilibrium. Then, there is a decrease in demand for Canadian dollars. As a result of a decrease in demand for Canadian dollars, what happens to Macedonia's currency in relation to Canada's currency?
a. no change in Macedonian denars
b. an appreciation in Macedonian denars
c. a depreciation in Macedonian denars
Also, as a result of a decrease in demand for Canadian dollars, what happens to Canada's currency in relation to Macedonia's currency?
a. a depreciation in Canadian dollars
b. no change in Canadian dollars
c. an appreciation in Canadian dollars
Answer:
b. an appreciation in Macedonian denars
a. a depreciation in Canadian dollars
Explanation:
An appreciation of currency means the value of a currency rises in relation to another country's currency.
Depreciation of a currency is when the value of a currency of a county falls in relation to another country's currency.
If there is a decrease in demand for Canadian dollars, the value of Macedonia's currency increases because more of Macedonia's currency is demanded for in relation to Canadian dollars. Therefore, Macedonia's currency would appreciate while Canadian dollars would depreciate.
Q 11.34: In 2020, First Inc. issued 12,000 shares of 8%, $60 par-value preferred stock with a cumulative-dividend feature. In 2020, the firm paid total dividends of $30,000, and in 2021, it paid total dividends of $45,000. If First declares $180,000 in total dividends for 2022, what amount will be available for its common stockholders?
Answer:
amount will be available for its common stockholders is $82,200
Explanation:
Dividend paid in 2020 is $30,000
Dividend for preferred stock holder in 2020 is = 12,000 × 60 × 8% = $57,600
Dividend accumulated for the next year is = 57600 - 30000 = $27,600
Dividend paid in 2021 is $45,000
from 57600, company paid 27600 and tjis year dividend as $17400
so total $45000 is paid
Balance unpaid dividend is accumulated = $57,600 - $17,400 = $40,200
in 2022, Total dividend is $180,000
Dividend payable to preferred stock holder in 2020 = $57,600
so total amount allotted to preferred stock holder is = 57600+40200 = $97800
we know total dividend paid in 2022 is $180,000
so dividend payable to common stockholders is =180000- 97800 = $82,200
Suppose a period of continuous political instability leads people to believe that the economy will slide into a deep recession. As a result, people become more likely to accept ______money in exchange for goods and services. U.S. dollars are an example of _____ money.
Answer:
(1) Commodity
(2) Flat
Explanation:
(1) Commodity
If people expect a deep recession coming ahead, they know that fiat (paper) money will lose all its purchasing power. Holding fiat money will not buy them their standard basket of goods & services, so they will prefer to hold commodity money.
(2) Flat
Fiat money is the legal tender money authorized by government, and any country's currency is a fiat money.
Suppose you invested $59 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a
dividend of 0.38 today and then you sold it for $66. What was your return on the investment?
A) 8.76%
B) 13.76%
C) 12.51%
D) 10.01%
Answer:
C) 12.51%
Explanation:
Initial stock price = $59
Selling price = $66
Dividends paid = $0.38
The total return on the investment is the the sum of the dividend yield and the capital gains yield on the investment:
[tex]R= DY +CGY\\R=\frac{dividends}{initial\ price}+ \frac{final\ price-initial\ price}{initial\ price} \\R=\frac{0.38}{59}+ \frac{66-59}{59}\\R=0.1251 = 12.51\%[/tex]
The return on the investment is 12.51%
To calculate the total return on the investment, the capital gains and dividends received are combined. The total earnings of $7.38, divided by the initial $59 investment and converted to a percentage, yield a total return of 12.51%.
Explanation:The subject of this question is the calculation of total return on investment (ROI), which is a concept in finance and investing. To calculate the total return, we consider both the capital gains and any dividends received. The initial investment was $59, and the investment was sold for $66, resulting in a capital gain of $66 - $59 = $7. The investor also received a dividend payment of $0.38. The total earnings are therefore $7 (capital gain) + $0.38 (dividend), which equals $7.38. To find the total return as a percentage, we divide the total earnings by the initial investment and multiply by 100: ($7.38 / $59) × 100 = 12.51%. Therefore, the correct answer is C) 12.51%.
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A small country can import a good at a world price of 10 per unit. The domestic supply
curve of the good is
S= 20 +10 P
The demand curve is
D = 400- 5 P
In addition, each unit of production yields a marginal social benefit of 10.
a. Calculate the total effect on welfare of a tariff of 5 per unit levied on imports.
b. Calculate the total effect of a production subsidy of 5 per unit.
c. Why does the production subsidy produce a greater gain in welfare than the tariff?
d. What would the optimal production subsidy be?
Answer:
Please see attachment
Explanation:
Please see attachment
This answer deals with how tariffs and subsidies affect the welfare of a small country. Tariffs increase prices and reduce welfare, while subsidies promote domestic production and consumption, increasing welfare. The optimal production subsidy aligns the marginal social benefit with the marginal cost of production.
Explanation:The subject of this question is economics, focusing on the impact of tariffs and subsidies on the welfare of a small country. The concepts used in this scenario include demand and supply curves, world price, tariffs, and social benefits.
To calculate the total effect on welfare, we first need to understand how tariffs and subsidies impact price, quantity demanded and supplied, and the overall equilibrium in the market.
(a) A tariff of 5 per unit raises the price from 10 (world price) to 15. Plugging this into the supply (S= 20 +10 P) and demand (D = 400- 5 P) equations gives the new quantities. The change in consumer and producer surplus implies the welfare effect of the tariff.
(b) A production subsidy of 5 per unit effectively reduces the cost of production. This shifts the supply curve down by the amount of the subsidy, leading to an equilibrium with a lower price and higher quantity than before. The change in consumer and producer surplus from this new equilibrium gives the welfare impact.
(c) A subsidy improves welfare more than a tariff as it encourages domestic production without raising the price for consumers. Therefore, unlike tariffs, subsidies stimulate both consumption and production, resulting in a greater gain in welfare.
(d) The optimal production subsidy can be derived by setting the marginal social benefit equal to the marginal cost of production. Solving for the price in the supply function, then comparing it with the world price plus the subsidy, we can determine the optimal subsidy level.
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Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided a total of $156,000 of services on account. In 2021, the company wrote off uncollectible accounts of $6,300. By the end of 2021, cash collections on accounts receivable totaled $132,300. Pincus estimates that 10% of the accounts receivable balance at 12/31/2021 will prove uncollectible.
Required:
1. & 2. What journal entry did Pincus record to write off uncollectible accounts during 2021 and to recognize bad debt expense for 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
What journal entry did Pincus record to write off uncollectible accounts during 2021
Dr Allowance for Uncollectible Accounts $ 6,300
Cr Accounts receivable $ 6,300
What journal entry did Pincus record to recognize bad debt expense for 2021?
Dr Bad Debt Expense $ 8,040
Cr Allowance for Uncollectible Accounts $ 8,040
Explanation:
Pincus provided a total of $156,000 of services on account.
Dr Accounts receivable $ 156,000
Cr Sales $ 156,000
In 2021, the company wrote off uncollectible accounts of $6,300
Dr Allowance for Uncollectible Accounts $ 6,300
Cr Accounts receivable $ 6,300
By the end of 2021, cash collections on accounts receivable totaled $132,300.
Dr Cash $ 132,300
Cr Accounts receivable $ 132,300
Balances on Accounts 31.12.2012 before adjustment
Accounts receivable CREDIT $ 17,400
Allowance for Uncollectible Accounts DEBIT $ 6,300
Pincus estimates that 10% of the accounts receivable balance at 12/31/2021 will prove uncollectible.
Dr Bad Debt Expense $ 8,040
Cr Allowance for Uncollectible Accounts $ 8,040
If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of estimated value.
Because the company already has a DEBIT balance ($6,300) in the Allowance for Doubtful Accounts it's necessary to register an entry that COMPLEMENT ($8,040) the existing value and reflect the value estimated as bad debts ($1,740).
Bad Debt Expense = $8,040 - $6,300 = $1,740
It's necessary to reflect $1,740 in the Allowance for Uncollectible Accounts as Credit, so we need an entry of $8,040.
Healthy Life Co. is an HMO for businesses in the Fresno area. The following account balances appear on Healthy Life’s balance sheet: Common stock (3,000,000 shares authorized; 2,200,000 shares issued), $15 par, $33,000,000; Paid-in capital in excess of par—common stock, $9,000,000; and Retained earnings, $89,550,000. The board of directors declared a 5% stock dividend when the market price of the stock was $18 a share. Healthy Life reported no income or loss for the current year.
A. Journalize the entries to record (1) the declaration of the dividend, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates.
B. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders’ equity.
C. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders’ equity.
Answer:
Please see attachment .
Explanation:
Please see attachment .
Chris Co. is considering replacing an old machine. The old machine was purchased for $100,000 and has a book value of $40,000 and should last four more years. Chris Co. believes that it can sell the old machine for $50,000. The new machine cost $80,000 and will have a 4-year life and a $10,000 salvage value. Currently, it cost $20,000 annually to operate the old machine. The new machine is more efficient and should reduce operating cost by 50%. Based on quantitative analysis, calculate the relevant costs and indicate if Chris Co. should replace the old machine?
a. No, because the relevant cost of the new machine is $10,000 more than the cost of the old machine.
b. Yes, because the relevant cost of the new machine is $10,000 less than the cost of the old machine.
c. No, because the relevant cost of the new machine is $20,000 more than the cost of the old machine.
d. Yes, because the relevant cost of the new machine is $20,000 less than the cost of the old machine.
Answer:
The answer is letter A.
Explanation:
No, because the relevant cost of the new machine is $10,000 more than the cost of the old machine.
Final answer:
After calculating the relevant costs for both keeping the old machine and purchasing the new machine, Chris Co. will save $80,000 over the next four years by purchasing the new machine. Thus, the company should replace the old machine.
Explanation:
To determine whether Chris Co. should replace the old machine, we need to calculate the relevant costs of keeping the old machine versus purchasing and operating the new one over the next four years. We'll ignore sunk costs like the purchase price of the old machine and focus only on the cash flows that will actually be affected by the decision from now on.
The old machine can be sold for $50,000, which is a cash inflow. It costs $20,000 annually to operate, totaling $80,000 over the next four years. The new machine costs $80,000 and will have a $10,000 salvage value in four years. The operational costs of the new machine are 50% less than the old machine, which would be $10,000 annually ($20,000 / 2), totaling $40,000 over the next four years.
The total cost for keeping the old machine for the next four years (ignoring the book value since it's a sunk cost and non-cash expense): sale of old machine - cost of operation = $50,000 - $80,000 = -$30,000.
The total cost for purchasing and operating the new machine: cost of new machine + operational costs - salvage value = $80,000 + $40,000 - $10,000 = $110,000.
The net savings by replacing the old machine: cost of keeping old machine - cost of new machine = -$30,000 - $110,000 = $80,000.
Since the cost of replacing the machine is $80,000 less than keeping the old one, the answer is (d) Yes, because the relevant cost of the new machine is $20,000 less than the cost of the old machine.
How much would $100, growing at 5% per year, be worth after 75 years?
$3,689.11
$3,883.27
$4,077.43
$4,281.30
$4,495.37
Answer:
The correct answer is B.
Explanation:
Giving the following information:
How much would $100, growing at 5% per year, be worth after 75 years?
We need to use the following formula:
FV= PV*(1+i)^n
FV= 100*(1.05)^75= $3,883.27
Modigliani Manufacturing has a target debt-equity ratio of .50. Its cost of equity is 18 percent and its cost of debt is 11 percent. If the tax rate is 35 percent, what is Modigliani's WACC? 14.38% 16.31% 18.92% 20.55% 22.34%
Answer: ko = ke(E/V) + kd(D/V)(1-T)
ko = 18(100/150) + 11(50/150)(1-0.35)
ko = 12 + 2.38
ko = 14.38%
The correct answer is 14.38%
Explanation: WACC equals cost of equity multiplied by the ratio of equity to value of the firm plus cost of debt multiplied by the after-tax ratio of debt to the value of the firm. the variables are defined as follows:
Ko = WACC
ke = Cost of equity
E = Market value of equity
kd = Cost of debt
D = Market value of debt
T = Corporate tax rate
The Modigliani's WACC is 14.38%.
The calculation is as follows:Weight of equity = 1 ÷ (1+Debt equity Ratio) = 1 ÷ 1.5
Weight of Debt = 0.5 ÷ 1.5
WACC =Weight of Equity × Cost of Equity + Weight of Debt × Cost of Debt × (1-Tax rate)
=1 ÷ 1.5 × 18% + 0.5 ÷ 1.5 × 11% × (1 -35%)
= 14.38%
Therefore we can conclude that the first option is correct.
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Presented below is information related to equipment owned by Monty Company at December 31, 2017.
Cost (residual value $0) $8,943,400
Accumulated depreciation to date 991,000
Value-in-use 5,524,100
Fair value less cost of disposal 4,361,570
Assume that Monty intends to dispose of the equipment in the coming year. As of December 31, 2017, the equipment has a remaining useful life of 8 years. Monty uses straight-line depreciation.
Required :
1. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017.
2. Prepare the journal entry to record depreciation expense for 2018.
Answer:
Question 1: DR Profit & Loss Account $2,428,300
CR Equipment $2,428,300
Question 2: DR Depreciation Expense $690,512.50
CR Accumulated Depreciation $690,512.50
Explanation:
Question 1)
DR Profit & Loss Account $2,428,300
CR Equipment $2,428,300
IAS 36 – Impairment of Assets states that the assets is considered to be impaired if the Carrying Amount of an asset is greater than the Recoverable Amount. Recoverable Amount of an assets is the higher of Fair Value less Cost to Sell and Value-in-Use.
In case of Monty Company, recoverable amount of Equipment will be $5,524,100 i.e. Value-in-Use as it is greater than the Fair Value les cost to sell. The carrying amount of Equipment $7,952,400 ($8,943,400 - $991,000 = $7,952,400) exceeds the recoverable amount $5,524,100, Therefore, the asset is considered impaired and must be written down by $2,428,300 ($7,952,400 - $5,524,100 = $2,428,300). The impairment loss is charged to the statement of profit and loss.
Question 2)
DR Depreciation Expense $690,512.50
CR Accumulated Depreciation $690,512.50
Once the asset is impaired, the recoverable amount of the asset is then depreciated over the remaining useful life of the asset. In case of Monty Company, depreciation charge for equipment in 2018 will be ($5,524,100 ÷ 8 = $690,512.50)
Which of the following entries would be made to record the purchase of inventory on account, if a company uses the perpetual inventory system?
A) a debit to Accounts Payable and a credit to Purchases
B) a debit to Accounts Payable and a credit to Merchandise Inventory
C) a debit to Merchandise Inventory and a credit to Accounts Payable
D) a debit to Purchases and a credit to Accounts Payable
Answer:
C) a debit to Merchandise Inventory and a credit to Accounts Payable
Explanation:
The journal entry to record the purchase of inventory on account by using the perpetual inventory system is shown below:
Merchandise Inventory A/c Dr XXXXX
To Accounts Payable A/c XXXXX
(Being merchandise is purchase on credit)
Simply we debited the merchandise inventory account and credited the account payable account so that the correct posting can be done.
Larkin Company accumulated the following standard cost data concerning product I-Tal.
Direct materials per unit: 2.10 pounds at $6.36 per pound
Direct labor per unit: 5.26 hours at $10 per hour
Manufacturing overhead: Allocated based on direct labor hours at a predetermined rate of $19.00 per direct labor hour
Compute the standard cost of one unit of product I-Tal. (Round answer to 2 decimal places, e.g. 2.75.)Standard cost _____ $
Answer:
$165.90
Explanation:
The computation of the standard cost of one unit of product is shown below:
Direct material per unit = 2.10 pounds × $6.36 per pound = $13.36
Direct labor per unit = 5.26 hours × $10 per hour = $52.6
Manufacturing overhead per unit = 5.26 hours × $19 per direct labor hour = $99.94
The total would be $165.90 which reflect the standard cost of one unit of product I-Tal
A number of years ago, Kay acquired an interest in a partnership in which she is not a material participant. Kay's basis in her partnership interest at the beginning of 2015 is $40,000. Kay's share of the partnership loss is $35,000 in 2015, while her share of the partnership income is $15,000 in 2016. How much may Kay deduct in 2015 and 2016, assuming that she owns no other passive activities?
Answer:
deduction = 0 in 2015
Deduction = $ 15000 in 2016
balance = $20000
it is carried forward to the year 2017
Explanation:
given data
partnership interest = $40,000
partnership loss = $35,000
partnership income = $15,000
to find out
How much may Kay deduct in 2015 and 2016
solution
we can say that Loss is adjust or deduct against Profit of Kay when it makes profit during a year
so as that Kay make loss in 2015 and no profits during that year to adjust those loses against
so deduction = 0 in 2015
but
in 2016
Kay income = $ 15000
Kay adjust loss of previous year against this income to extent of income available
so Deduction = $ 15000 in 2016
and after that
here balance after deducting the passive loss is
balance = $35000 - $15000
balance = $20000
it is carried forward to the year 2017
Does the fact that your bank keeps only a fraction of your account balance in reserve worry you? Why don't people rush to the bank and retrieve their money? What would happen if they did?
Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. Is an opinion what contains the image. Judge it like it is.
Shelton Co. purchased a parcel of land six years ago for $874,500. At that time, the firm invested $146,000 in grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land for $54,500 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $926,000. What value should be included in the initial cost of the warehouse project for the use of this land? $1,020,500
Answer:
$926,000
Explanation:
For computing the initial cost of the warehouse project, we consider the current value of the land i.e represent the opportunity cost and the land value which is purchased six years ago for $874,500 represent the sunk cost which is not recoverable now. So, this sunk cost is not relevant.
And, the lease cost is also not relevant as the lease period will be ended soon.
All other information which is given is not relevant. Hence, ignored it
correct,P5-23 (similar to) Value of a retirement annuity Personal Finance Problem An insurance agent is trying to sell you an annuity, that will provide you with $9 comma 800 at the end of each year for the next 25 years. If you don't purchase this annuity, you can invest your money and earn a return of 5%. What is the most you would pay for this annuity right now?
Answer:
What is the most you would pay for this annuity right now?$ 138.121
Explanation:
The annuity formula is as follows:
Annuity : Annuity * ((1-1/(1+r)^t)/r where
r : Rate of return
t : Quantity of years of the annuity.
Annuity : ( ( 1- 1/ (1+0,05) ^ 25 ) / 0,05 = ( 1 - 0,295 ) / 0,05 = 14,09
$9,800 * 14,09 = $ 138,121
Every year, the U.S. Census Bureau conducts an income survey of about 60,000 American families that are carefully selected to represent the whole population. The data collected are used to measure income inequality. Which of the following is a reason that census data may provide an inaccurate measure of income inequality? Very few people move from one income quintile to another over the years. Higher-income families tend to have more people to support. In-kind transfers do not improve standards of living but are counted as income.
Answer:Higher income families tend to have more people to support.
Explanation:
Income inequality refers to the differences in income among the populace.
The fact that a family has an high income does not suffice that all the income will be available for his consumption for he may have to give out the less privilege and this will not be captured by the census.
The fact that few move from one to another level of income to another will not disrupt census figure and this hold equally hold for in kind transfer they cannot disrupt census figure and can improve living standard.
A sole proprietorship:
A. provides limited liability for its owner.
B. involves significant legal costs during the formation process.
C. has an unlimited life.
D. has its profits taxed as personal income.
E. can generally raise significant capital from nonowner sources.
Answer:
D. has its profits taxed as personal income.
Explanation:
Characteristics of a sole proprietorship :
1. It Is Owned by one person
2. The onwer has an unlimited liability.
3. It doesn't usually have an unlimited life. It usually ends with the death of the owner.
4. Profits are taxed as personal income.
5. It is very easy to form. It requires little legal cost.
Garnet Company’s most popular product has a unit variable cost of $40 and a unit sales price of $70.40. Fixed manufacturing costs are $192,000 when the company produces and sells 10,000 units. Garnet has been approached with a one-time opportunity to sell 1,000 more units for $56 each. Because the customer is a foreign wholesaler, these sales will not impact present sales. If Garnet has sufficient capacity, how much will net income change as a result of the special order?
A : $3,200 decrease
B : $56,000 increase
C : $16,000 increase
D : $14,400 decrease
Answer:
16,000
Explanation:
The net income change will be a $56,000 increase due to the special order.
The net income change as a result of the special order will be a $56,000 increase.
To calculate the change in net income, we first need to determine the additional revenue from the special order, which is 1,000 units * $56 = $56,000. Then, we subtract the variable cost of the additional units, 1,000 units * $40 = $40,000. Therefore, the net income increase will be $56,000 - $40,000 = $16,000.
Clothing Frontiers began operations on January 1 and engages in the following transactions during the year related to stockholders’ equity. January 1 Issues 600 shares of common stock for $40 per share. April 1 Issues 100 additional shares of common stock for $44 per share.
Required:
a) Record the transactions, assuming Clothing Frontiers has no-par common stock.
b) Record the transactions, assuming Clothing Frontiers has either $1 par value or $1 stated value common stock.
Answer:
Explanation:
The journal entries are shown below:
1. Cash A/c Dr $24,000 (600 shares × $40)
To Common Stock $600 (600 shares × $1)
To Additional Paid-in Capital in excess of par - Common Stock $23,400
(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)
2. Cash A/c Dr $4,400 (100 shares × $44)
To Common Stock $100 (100 shares × $1)
To Additional Paid-in Capital in excess of par - Common Stock $4,300
(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)
If the Federal Reserve were to change from an expansionary to a contractionary monetary
policy, this would be an example of ________.
A) unsystematic risk
B) systematic risk
C) independent risk
D) diversification risk
Answer:
B) systematic risk
Explanation:
Federal Reserve changes in monetary policies affect the entire securities market hence considered a Systematic risk. It is also known as the Non-diversifiable risk ; it cannot be diversified away unlike stock specific or industry specific risk(unsystematic ) which can be eliminated through diversification.
Systematic risk is unavoidable and may be difficult to predict. Other examples include increase in long term interest rates, recessions or wars. Additionally, Investors are only compensated for systematic risk and not for diversifiable risk.