Answer:
So, Break-even EBIT is $265,643.45
Explanation:
Let Break-even EBIT be $x
Number of shares outstanding = 150,000
Current Price of share = $39.36
EPS = EBIT / Number of shares outstanding
EPS = $x / 150,000
Levered Plan:
Value of Debt = $100,000
Interest Rate = 9.6%
Interest Expense = 9.6% *$100,000 = $9600
Number of shares repurchased = $100,000 / $39.36
Number of shares repurchased = $2,541
Number of shares outstanding = 150,000 - 2,541
Number of shares outstanding = 147,459
EPS = (EBIT - Interest Expense) / Number of shares outstanding
EPS = ($x - $9600) / 147,459
EPS under All equity plan = EPS under levered plan
$x / 150,000 = ($x - $9600) / 147,459
147,459 * $x = 150,000 * $x - $675,000,000
$675,000,000 = 2,541 * $x
$x = $265,643.45
So, Break-even EBIT is $265,643.45
Many former employees at AlphaEnergy, an energy trading and supply company, had a large
part of their portfolio invested in AlphaEnergyʹs stock. These employees were bearing a high
degree of ________ risk.
A) unsystematic
B) systematic
C) market-specific
D) non-diversifiable
Answer:
Letter A is correct. Unsystematic risk.
Explanation:
Unlike systematic risk, which is an inherent market risk, unsystematic risk is inherent in a specific sector or company.
The case in point concerns the investment of former AlphaEnergy employees, which is a unsystematic risk, as the investment risk in single-company shares includes regulatory changes, management changes, loss of market due to competition and withdrawal of the product from the market.
To reduce this type of risk, investors should seek diversification in their stock portfolio.
Mary Stahley invested $1500 in a 48-month certificate of deposit (CD) that earned 6.5% annual simple interest. When the CD matured, she invested the full amount in a mutual fund that had an annual growth equivalent to 21% compounded annually. How much was the mutual fund worth after 10 years? (Round your answer to the nearest cent.)
Answer:
$12714.98
Explanation:
Data provided in the question:
Initial amount invested = $1,500
Simple interest rate = 6.5%
Duration for simple interest = 48 months = 4 years
Now,
Simple interest = Amount × Interest rate × Time
= $1,500 × 0.065 × 4
= $390
Therefore,
Total amount = $1500 + $390
= $1890
Now
The amount = $1890 is invested in mutual fund which is compounded annually at 21% for 10 years
thus,
Final amount = Principle × (1 + r)ⁿ
here, r = 21% = 0.21
n = 10 years
Therefore,
Final amount = $1890 × (1 + 0.21)¹⁰
= $12714.98
Commercial bank term loans:
a)are offered to superior credit applicants.
b)usually carry fixed interest rates.
c)are very short-term in nature and are offered to superior credit applicants.
d)are very short-term in nature.
Answer:
c) are very short-term in nature and are offered to superior credit applicants.
Explanation:
Commercial bank term loans are most often used for short-term funding needs and granted to creditworthy applicants only.
The loan interest may be fixed or floating subject to applicants’ choices.
(a) Is correct but not enough compared to (c)
(b) Is not correct because it can carry floating rate also
(c) Totally correct in term of length and applicant
(d) Is correct but not enough compared to (c)
Suppose you invested $93 in the Ishares High Yield Fund (HYG) a month ago. It paid a
dividend of $0.53 today and then you sold it for $94. What was your dividend yield and capital
gains yield on the investment?
A) 0.54%, 1.13%
B) 0.57%, 1.08%
C) 0.57%, 1.13%
D) 1.08%, 1.18%
Answer:
B) 0.57%, 1.08%
Explanation:
The computations are shown below:
Dividend yield = (Annual yield) ÷ (market price) × 100
where,
Market price = $94 per share
Annual dividend = $0.53 per share
So, the dividend yield = ($0.53 per share ÷ $94 per share) × 100
= 0.57%
Capital gain yield = (Market price - purchase price) ÷ (purchase price) × 100
= ($94 - $93) ÷ ($93) × 100
= 1.08%
Along a short-run aggregate supply curve, output is related to unexpected movements in the ______. Along a Phillips curve, unemployment is related to unexpected movements in the ______. price level; inflation rate inflation rate; price level unemployment rate; price level price level; level of output
Answer:
The answer is price level and inflation rate
Explanation:
Because the short run Phillips curve represents a combination of unemployment and inflation that an economy might experience given current expectations about inflation. It is an inverse relationship between inflation and unemployment.
Instant messaging (IM) enables users to communicate in real time via the Internet.Complete the following sentence about instant messaging.Instant messaging is designed for messages.IM is increasingly used by businesses. Identify the reasons workers find IM useful. Check all that apply.a. Controlb. Conveniencec. Litigationd. Unobtrusivenesse. Presence functionalityf. Speed
Answer: Instant messaging is designed for messages online real time.
Explanation:
Which the message are received instantly when sent.
B. a Control, b. Convenience c. Litigation f. Speed
The user has control of it, it's convenient for use, can be used as evidence in litigation, however it's obtrusive it could be disturbing to the receiver and it's presence functionality cannot be determined until it's sent and received.
Instant messaging (IM) is increasingly used in business due to its convenience (b), unobtrusiveness (d), presence functionality (e), and speed (f). It enables easy, fast, and effective communication with less disruption.
Explanation:
Several factors contribute to the popularity of instant messaging (IM) in business environments. Among them are convenience, unobtrusiveness, presence functionality, and speed.
IM is convenient as it allows users to communicate quickly and effectively without the need to leave their workstations. In addition, IM is unobtrusive, since it allows users to receive and respond to messages at their own pace, causing less disruption compared to phone calls or face-to-face meetings.
Presence functionality is another significant advantage of IM. This feature shows whether a user is online and available to communicate, which can greatly aid in coordinating tasks and avoiding communication delays. Finally, speed is a critical factor. IM provides real-time communication, enabling instant sharing of information and quick problem-solving.
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Mary, Inc. uses straight-line depreciation for all of its depreciable assets. Mary sold a used piece of machinery on December 31, 2015, that it purchased on January 1, 2014, for $15,000.
The asset had a five-year life, zero residual value, and $3,000 accumulated depreciation as of December 31, 2014.
If the sales price of the used machine was $9,500, the resulting gain or loss upon the sale was which of the following amounts?
A. Loss of $500
B. Gain of $500
C. Loss of $3,000
D. Gain of $3,000
E. No gain or loss upon the sale
Mary, Inc. had a gain of $500 on the sale of the machinery, calculated by subtracting the book value just before the sale from the sales price. The correct option is B. Gain of $500.
Mary, Inc. purchased machinery for $15,000 on January 1, 2014, with a five-year life and zero residual value. As of December 31, 2014, it had $3,000 accumulated depreciation. To calculate the annual depreciation, we use the formula: (Cost - Residual Value) / Useful Life. In this case, it's ($15,000 - $0) / 5 = $3,000 per year.
By the end of 2015, two years of depreciation have accumulated, which is 2 * $3,000 = $6,000. The book value of the machinery just before the sale is then $15,000 - $6,000 = $9,000. Mary, Inc. sold the machinery for $9,500, resulting in a gain of $9,500 - $9,000 = $500. The correct option is B. Gain of $500.
A cap-and-trade program 31 1 Multiple Choice eBook 0 assigns a property right to the atmosphere 0 mandates that every firm individually cut its emissions to below a certain level. 0 assigns a property right to polluting the atmosphere. 0 is easy to establish and enforce.
Answer:
Option 3. Assigns a property right to pollute the atmosphere
Explanation:
It makes a cap on the pollution and the permits are transferable so that it assign how much to pollutes means assigning property rights to the firms to pollute.
Everyone is not required to reduce pollution if the firm can buy permits to pollute.
Excel Memory Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce two units of X per hour or three units of Y per hour, and it has 4,200 production hours available. Contribution margin is $8 for product X and $7 for product Y.
Calculate contribution margin per production hour.
Answer:
Please see attachment
Explanation:
Please see attachment
A county accounts for its debt service payments in the Debt Service Fund. The amount of unmatured, unpaid interest on general long-term liabilities at the beginning of the year was $122,000. The ending balance was $165,000. The Debt Service Fund made principal payments of $600,000 and interest payments of $150,000 during the year. The Debt Service Fund should report expenditures for debt service for the year of
A. $150,000.
B. $722,000
C. $750,000
D.$793,000.
Answer:
D.$793,000.
Explanation:
Please see attachment
Tang Company accumulates the following data concerning raw materials in making its finished product: (1) Price per pound of raw materials—net purchase price $3.04, freight-in $0.49, and receiving and handling $0.23. (2) Quantity per gallon of finished product—required materials 3.50 pounds, allowance for waste and spoilage 0.80 pounds. Compute the following. (Round answers to 2 decimal places, e.g. 1.25.) (a) Standard direct materials price per pound of raw materials. $ (b) Standard direct materials quantity per gallon. pounds (c) Total standard materials cost per gallon. $ Click if you would like to Show Work for this question: Open Show Work
Answer:
a) price per pound: 3.76 dollars
b) 4.30 pounds
c) standard cost: std raw material quantity * std price
4.30 * $3.76 = $16.168
Explanation:
Raw material cost: we must include all the necessary cost to get theraw material ready for use:
3.04 raw materials +0.49 fregiht +0.23 handling= 3.76 total cost
Pounds per gallon of finished product: we must inclde the allowance because, iof we input less gallon we aren't ending with a gallon of finished product.
3.50 + 0.80 allowance = 4.30 pounds
Answer:
a. 3.76
b.4.30
c.16.168
Explanation:
a. 3.04 raw materials +0.49 freight +0.23 handling= 3.76 total cost
b. 3.50 + 0.80 allowance = 4.30 pounds
c. 4.30 * $3.76 = $16.168
Baker is single and earned $226,400 of salary as an employee in 2019. How much should his employer have withheld from his paycheck for FICA taxes?
Answer:
$ 11,481
Explanation:
In 2018, Cindy is married and files a joint return. She operates a sole proprietorship in which she materially participates. Her proprietorship generates a gross income of $225,000 and deductions of $525,000, resulting in a loss of $300,000. What is Cindy’s excess business loss for the year?
a. $-0-.
b. $30,000.
c. $250,000.
d. $280,000.
e. None of the abov
Answer:
E. None of the above
Explanation:
Aggregate business deductions $52
Less: Aggregate business gross income and gains (225,00 Less: Threshold amount (250,00) Excess business loss $50000
Therefore the excess business loss is $50000 which none of the above given choices. The correct answer for this problem is therefore none of the above.
The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.
Rina spends all of her money on paperback novels and donuts. In 2009 she earned $14.00 per hour, the price of a paperback novel was $7.00, and the price of a donut was $2.00.
1: Which of the following give the nominal value of a variable? Check all that apply.
A) The price of a donut is $2.00 in 2009.
B) Rina's wage is $14.00 per hour in 2009.
C) Rina's wage is 2 paperback novels per hour in 2009.
Answer:
A) The price of a donut is $2.00 in 2009.
B) Rina's wage is $14.00 per hour in 2009.
Explanation:
The nominal value of a variable is its monetary amount, in this case, in dollars which is susceptible to currency fluctuations and inflation. Therefore, statements A and B present the nominal value of a variable.
When valuing a variable as an exchange for another good, that is assigning a real value to that variable since monetary changes won't affect the relationship between two goods.
The answers are A) and B)
Final answer:
In economics, nominal value refers to measurements in terms of actual prices, while real value refers to measurements adjusted for inflation. In the given scenario, the variables representing nominal value are the price of a donut and Rina's wage. The variable representing real value is Rina's wage in terms of paperback novels per hour.
Explanation:
In economics, the classical dichotomy refers to the separation of real and nominal variables. Nominal value refers to the measurement of a statistic in terms of actual prices that exist at the time. Real value, on the other hand, refers to the same statistic after it has been adjusted for inflation. In the given scenario, the variables that represent nominal value are:
A) The price of a donut is $2.00 in 2009.B) Rina's wage is $14.00 per hour in 2009.The variable that represents real value is:
C) Rina's wage is 2 paperback novels per hour in 2009.Which of the following is not a strength of sensitivity analysis?
(A) Provides indication of stand-alone risk.
(B) None of these answers.
(C) Idenifies dangerous variables.
(D) Does not reflect diversificiation.
(E) Gives some breakeven information.
he following information is available for Evans Corporation: 2018 2017 Average common stockholders’ equity $1,500,000 $1,000,000 Average total stockholders’ equity 2,000,000 1,500,000 Common dividends declared and paid 72,000 50,000 Preferred dividends declared and paid 30,000 30,000 Net income 360,000 300,000 Compute the return on common stockholders’ equity for both years.
Answer:
Please see attachment
Explanation:
Please see attachment .
Issuers of coupon bondsmake a single payment of principal when the bonds matures, but multiple payments of interest over the life of the bond.make a single payment of interest and principal.make multiple payments of principal, but a single payment of interest.make a single payment of principal at the time the bond is issued and multiple payments of interest over the life of the bond.You purchase a two-year $1000 face value bond at par. The bond has a 6% coupon rate.However, do to cashflow problems, the company misses the first coupon payment, but pays both coupons payments in year 2. What is your rate of return?0.05830.06530.03000.06000.0428
Answer:Make a single payment of principal when the bonds matured but multiple payment of interest over the life of the bond.
2.0600
Explanation:
Bonds normally has a life of span from one upward for which interest will be paid to the investors as compensation for use of their fund and the principal sum will be refunded on the expiration of the bond life.
The return on a bond is fixed as specified in the bond contract the inability to make payment as at when due may not affect the return obtainable from the bond initial contract.
The following information is from Amos Company for the year ended December 31, 2019.
a. Retained earnings at December 31, 2018 (before discovery of error), $858,000.
b. Cash dividends declared and paid during the year, $11,000.
c. Two years ago, it forgot to record depreciation expense of $45,600 (net of tax benefit).
d. The company earned $209,000 in net income this year.
Required :
Prepare a statement of retained earnings for Amos Company.
Answer:
Explanation:
The preparation of the statement of retained earnings for Amos Company is shown below:
Retained earnings at December 31, 2018 (before discovery of error) $858,000
Less: Depreciation expense two years ago -$45,600
Add: net income $209,000
Less: Cash dividends declared and paid during the year -$11,000
Retained earnings at December 31, 2019 $1,010,400
Fred quits his job with a big accounting firm, where he was earning $95,000 per year, to start his own accounting business in a building he owns. He previously rented the building to someone who paid him rent of $22,000 per year, but now Fred collects no rent because he is using the building himself. Fred pays himself a salary of $32,000 per year and has other expenses of $25,000 per year. The yearly economic cost for Fred's accounting business is Enter your response as an integer)
Answer:
economic cost for Fred's accounting business is $142,000
Explanation:
given data
earning = $95,000 per year
rent = $22,000 per year
salary = $32,000 per year
other expenses = $25,000 per year
to find out
economic cost for Fred's accounting business
solution
we know that economic costs include both the explicit costs and implicit costs and here explicit costs is the expenditure on factor of production purchase from outside
so implicit costs is opportunity cost of owner provided resource and other expense is an explicit cost
so here Economic cost is here
Economic cost = Foregone salary + Foregone rent + Other expenses ..............1
put here value
Economic cost = 95,000 + 22,000 + 25,000
Economic cost = = $142000
so
economic cost for Fred's accounting business is $142,000
The campus bookstore sells 4,000 sets of graduation regalia each year. Placing an order from their supplier costs $25 regardless of order quantity, so they usually place a large order (a half year's supply) at a time. It costs $5 per year to hold a cap and gown in inventory, primarily insurance costs for the highly flammable material. What is the difference in the total cost if they order at their optimal order quantity compared to their current policy?
The bookstore should order 283 sets of regalia at a time to minimize total inventory costs. With current order policy, the total costs amount to $5,050 per year. If they adopt an optimal ordering quantity based on the EOQ model, their costs increase to $14,790 per year, a difference of $9,740.
Explanation:The subject is related to inventory management, specifically around the topic of optimal order quantity. In cost minimization problems like this, an economic order quantity (EOQ) model can be used. The EOQ model calculates the ideal order quantity a company needs to purchase in order to reduce its total inventory costs.
Under this model, the total costs of inventory consists of ordering costs and carrying costs. In the given scenario, the ordering cost is $25 per order and the carrying cost is $5 per year for each set of regalia held in inventory. The formula to calculate economic order quantity is: EOQ = sqrt((2 * D * S) / H), where D is the demand, S is the ordering cost, and H is the holding or carrying cost.
Using this formula, we find EOQ = sqrt((2 * 4000 * 25) / 5) = sqrt(400,000 / 5) = sqrt(80,000) = 283 units. So, the bookstore should be ordering 283 sets of regalia at a time to minimize costs. To calculate the difference in cost, we first find the total cost under the current policy of ordering half a year's supply at a time, i.e., 4000/2 = 2000 units per order. Hence, their Total Inventory cost (TIC) = D/Q * S + Q/2 * H = 4000/2000*25 + 2000/2*5 = $50 + $5000 = $5050 per year.
With the EOQ model, their order quantity reduces to 283 units, hence the Total Inventory Cost (TIC) = 4000/283 * 25 + 283/2 * 5 = $14,083 + $707 = $14,790 per year. So, the difference in total cost if they order at their optimal order quantity compared to their current policy is $14,790 - $5,050 = $9,740 more per year.
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Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $380,000 and results in 68,000 units of MSB and 98,000 units of CBL. Each MSB sells for $2, and each unit of CBL sells for $10. Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis. (Round the calculation of "Relative Proportion" to the nearest whole percent. Round your final answers to the nearest dollar amount.)
Final answer:
The joint cost allocated to Commercial Building Lumber (CBL) using a physical-units basis is $224,200, which is calculated by finding the proportion of total units that are CBL and then applying that percentage to the total joint costs.
Explanation:
To allocate the joint costs to Commercial Building Lumber (CBL) using the physical-units basis, you first need to find the total number of units produced and then determine what percentage of these units are CBL.
Total units = MSB units + CBL units
= 68,000 MSB + 98,000 CBL
= 166,000 units
The relative proportion of CBL is:
Percentage of CBL = (CBL Units / Total Units) * 100
= (98,000 / 166,000) * 100
= 59%
The amount of joint cost allocated to CBL is then calculated by multiplying the total joint cost by the relative proportion of CBL:
Joint Cost Allocated to CBL = Total Joint Cost * (Percentage of CBL / 100)
= $380,000 * (59% / 100)
= $380,000 * 0.59
= $224,200 (rounded to the nearest dollar)
Sunny Day Manufacturing Company is considering investing in a one-year project that requires an initial investment of $475,000. To do so, it will have to issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow of $595,000. The rate of return that Sunny Day expects to earn on its project (net of its flotation costs) is _______(rounded to two decimal places).
Answer:
22.81%
Explanation:
Data provided in the question:
Initial investment = $475,000
Flotation cost = 2.00%
Cash inflow = $595,000
Now,
Amount of Flotation cost = Flotation cost × Initial investment
= 0.02 × $475,000
= $9,500
Thus,
Rate of return = [ Cash inflow ÷ (Initial investment + Flotation cost) ] - 1
or
Rate of return = [ $595,000 ÷ ($475,000 + $9,500) ] - 1
or
Rate of return = 0.2281 or 22.81%
Sunny Day Manufacturing Company will incur a flotation cost of $9,500 when issuing new common stock for its one-year project investment of $475,000. After taking into account the expected cash inflow of $595,000 at the end of the year, the company expects to earn a rate of return of approximately 22.79% on its project, net of its flotation costs.
Explanation:To calculate the rate of return that Sunny Day Manufacturing Company expects to earn on its project, we must first understand that this value shows how much profit the company is expecting based on its investment. Given the initial investment of $475,000 and the cash inflow expected at the year-end of $595,000, we can see an apparent profit. However, we must account for the flotation cost of 2%, which is the cost incurred when issuing new common stock. This cost is $9,500 ($475,000 ×2%). Therefore, the net investment is $484,500 ($475,000 + $9,500).
Now, we can calculate the rate of return, which is the net gain or loss made on an investment per unit of invested capital. Here it is the ratio of profit to net investment: ($595,000 - $484,500) / $484,500. Consequently, the required rate of return, rounded to two decimal places, is approximately 22.79%.
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Tsypkin Company's budgeted sales quantity was 80,000 units of product. The company's accountant, using regression analysis, applied the following cost formula to estimate costs at the master budget level for this year: Total cost = $500,000 + ($5.20 × units produced and sold). The product had a budgeted selling price of $15.20 each. During the year, the actual sales were 82,000 units and selling price was $15.15 per unit. The actual variable costs were $418,200 and the fixed costs were $500,000. What was Tsypkin's sales price variance? a. $4,100 favorable b. $6,300 favorable c. $4,100 unfavorable d. None of these.
Answer:
c. $4,100 unfavorable
Explanation:
The computation of the sales price variance is shown below:
= (Budgeted selling price - actual selling price) × actual quantity
= ($15.20 - $15.15) × 82,000 units
= 4,100 unfavorable
We simply apply the sales price variance formula so the correct amount can come
All other information which is given is not relevant. Hence, ignored it
=
Metlock, Inc. has 5900 shares of 6%, $50 par value, cumulative preferred stock and 118000 shares of $1 par value common stock outstanding at December 31, 2020, and December 31, 2019. The board of directors declared and paid a $11500 dividend in 2019. In 2020, $57500 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2020?
Answer:
$23900
Explanation:
Given: Cumulative Preferred stock is 5900 shares of 6% at $50.
Dividend paid in 2019= $11500
First lets calculate the value of preferred stock.
Preferred stock= [tex]5900 shares\times \$ 50\times \frac{6}{100}[/tex]
∴ Preferred stock= $17700.
Formula:
Dividend received by preferred stockholder= [tex][Preferred\ stock +(Preferred\ stock-Dividend\ paid)][/tex]
⇒Dividend received by preferred stockholder=[tex]17700+(17700-11500)[/tex]
⇒ Dividend received by preferred stockholder= [tex]17700+6200= \$ 23900[/tex]
∴ $23900 dividend received by preferred stockholder in 2020.
Widget Corp. wants to shift its list of inventory to a cloud so that its different branches can access it easily. The company needs a cloud computing option that would provide high flexibility to add or drop resources. The cloud computing option should be cost-effective and should not expose mission-critical applications and data to the outside world. Which cloud computing option would be most suitable for Widget Corp.?
a. A hybrid cloud
b. A private cloud
c. A public cloud
d. A community cloud
Answer:
A hybrid cloud
Explanation:
Answer:
The correct answer is letter "A": hybrid cloud.
Explanation:
Hybrid clouds are mixtures of public and private clouds that offer great flexibility to companies in terms of cost and data storage. Hybrid clouds require the construction of a public and private cloud and an appropriate wide area network or WAN connectivity between the two of them.
Bond prices and maturity dates. Les Company is about to issue a bond with annual coupon payments, an annual coupon rate of 8%, and par value of $1,000. The yield to maturity for this bond is 5%.
What is the price of the bond if it matures in 15, 20, 25, or 30 years?
What do you notice about the bond in relationship to the maturity of the bond?
Answer:
Answers are enlisted below
Explanation:
1) year price
5 1120.43
10 1197.35
15 1246.48
20 1277.86
2) inverse relationship as maturity increases bond price increases
A company that has identified an employee with future managerial potential might send that employee to a three-week university-sponsored program to help improve the individual’s leadership skills. This is an example of _____.
Answer:
development
Explanation:
An individual when grows do not only grows individually, but also helps in the development of the organization.
Accordingly when the organization sees some potential in the individual of growth and development - it shall to develop the managerial skills and allow him to become a leader, send him for some leadership course.
The leadership course will develop the leadership potential professionally that shall help him and the organization as well.
Briefly explain whether you agree or disagree with the following statement: "Assets 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."
Answer:
I disagree. It is clearly a bank liability.
An oligopoly arises when _ have all or most of the sales in an industry. If oligopolists with the same marginal costs and no fixed costs compete against each other in price, it leads to all firms _.
a) A few large firms; making a loss
b) Many small firms; making large profits
c) A few large firms; making zero profit
d) Many small firms; making zero profits
Answer:
The correct answer is letter "D": Many small firms; making zero profits.
Explanation:
An oligopoly is when the market is controlled by a small group of two or more firms. Businesses in an oligopoly can agree in price collusion and create barriers to entry for new commerce. When they compete against each other they act like perfect competitors which generate a price dropdown and causing zero profits for the firms.
Orion Flour Mills purchased a new machine and made the following expenditures: Purchase price $ 63,000 Sales tax 5,400 Shipment of machine 880 Insurance on the machine for the first year 580 Installation of machine 1,760 The machine, including sales tax, was purchased on account, with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Record the above expenditures for the new machine. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
The appropriate journal entry to record the transaction is: Debit Equipment $7,1040; Debit Prepaid insurance $580; Credit Cash $3,220; Credit Accounts payable $68,400.
Journal entryOrion Flour Mills journal entry
Debit Equipment $7,1040
($63,000 + $5,400 + $880 + $1,760)
Debit Prepaid insurance $580
Credit Cash $3,220
($880 + $1,760 + $580)
Credit Accounts payable $68,400
($63,000 + $5,400)
Inconclusion the appropriate journal entry to record the transaction is: Debit Equipment $7,1040; Debit Prepaid insurance $580; Credit Cash $3,220; Credit Accounts payable $68,400.
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The expenditures are recorded by debiting Machinery for the combined amounts of purchase price, sales tax, shipment, insurance, and installation. The machine, including its sales tax, is posted as accounts payable and the other expenditures are paid in cash.
Explanation:The question is about tracking and recording the expenses related to the purchase of a machine by Orion Flour Mills. The relevant expenditures that need to be accounted for, include the purchase price, sales tax, shipment, insurance, and installation costs. It is important to note that the machine, including its sales tax, was purchased on account which means it's not paid for immediately.
Here's how to record the transactions:
Debit Machinery for $63,000 (purchase price) plus $5,400 (sales tax). This transaction is posted as accounts payable as it's due in 30 days. Debit Machinery for $880 (shipment costs), $580 (insurance for the first year) and $1,760 (installation), because these are capitalized as part of the equipment cost. These costs are paid in cash. Learn more about Recording Expenditures here:https://brainly.com/question/31871722
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