Deadweight loss occurs due to a disparity between supply and demand. In this case, a shipping constraint caused a surplus of demand over supply in the wheat market, leading to a deadweight loss.
Explanation:The question is asking about the deadweight loss that occurs in the market for wheat due to an artificial shipping constraint that limits supply. Deadweight loss occurs when there's a difference between the equilibrium supply and demand and the quantity that is actually traded in the market. In your case, firms can only supply a maximum of 43.34 units of wheat because of this shipping constraint.
First, we should find out what's the equilibrium quantity and price for wheat without any market failure (ship constraints), by equating the demand function Qd=80-2p to the supply function Qs=40+1p. Solving this we get the equilibrium price represented as Pe and quantity as Qe. According to your provided demand and supply equations, we see that demand exceeds supply - indicative of a surplus.
This surplus represents the deadweight loss, which basically says that there are more goods that consumers want to buy at a certain price than what's available or being produced. This is also represented graphically in figure 3.22, as the area between the supply and demand curves from Qd up to the quantity supplied by firms of 43.34 units of wheat.
Learn more about Deadweight Loss here:https://brainly.com/question/32082652
#SPJ12
The deadweight loss in the market for wheat can be calculated by identifying the equilibrium price without the market failure (the artificial shipping constraint), calculating the surplus difference between the quantities supplied and demanded at this price, and comparing this to the quantity that can be supplied due to the shipping constraint. This difference represents the deadweight loss.
Explanation:Calculating Deadweight LossThe first step to calculate the deadweight loss is to identify the equilibrium price without the artificial shipping constraint. With the demand function Qd = 80 - 2p and the supply function Qs = 40 + 1p, we can find the equilibrium price (p) by setting Qd equal to Qs: 80 - 2p = 40 + 1p. Solving this equation will give us the equilibrium price.
Next, we calculate the quantity supplied and demanded using the equilibrium price obtained. The difference between these two quantities is known as the surplus.
Now, using the shipping constraint- a maximum of 43.34 units, which is lower than the quantity supplied, we can calculate the loss due to this constraint. This lost surplus represents the deadweight loss caused by the market failure (the shipping constraint in this question).
Therefore, to calculate the deadweight loss caused by the market failure, we can use the approach explained above.
Learn more about Deadweight Loss here:https://brainly.com/question/32082652
#SPJ11
The Mill Flow Company has two divisions. The Cutting Division prepares timber at its sawmills. The Assembly Division prepares the cut lumber into finished wood for the furniture industry. No inventories exist in either division at the beginning of 20X5. During the year, the Cutting Division prepared 60,000 cords of wood at a cost of $660,000. All the lumber was transferred to the Assembly Division, where additional operating costs of $6 per cord were incurred. The 600,000 boardfeet of finished wood were sold for $2,500,000.
Determine the operating income for each division if the transfer price from Cutting to Assembly is at cost - $11 a cord.
Answer:
Cutting $0
Revenue $1,480,000
Explanation:
Cutting Assembly
Revenue $660,000 $2,500,000
Cost of services:
Incurred $ 660,000 $ 360,000
Transferred-in $0 $660,000
Total $ 660,000 $1,020,000
Operating income $ 0 $1,480,000
60,000 cords x $11 = $660,000
Operating income:
Cutting
Revenue $660,000 - Total $ 660,000 =0
Assembly
Revenue $2,500,000- Total$1,020,000
=$1,480,000
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of soda, one bag of chips, and one comic book. In year one, the basket costs $9.00. In year two, the price of the same basket is $8.00. From year one to year two, there is at an annual rate of . In year one, $72.00 will buy baskets, and in year two, $72.00 will buy baskets. This example illustrates that, as the price level falls, the value of money . rises,falls,remains the same
Answer:
From Year 1 to Year 2 : There is annual deflation 11.11%
As price falls, value of money rises
Explanation:
Given : Commodity Basket Cost = $9 in Year 1 ; Commodity Basket Cost = $8 in Year 2
From Year 1 to Year 2 : There has been fall in price level. Proportionate (%) Fall in price level = Change in Price / Old Price x 100
So, Fall in price level = [ ( 9 - 8 ) / 9] x 100 = 1/9 x 100 = 11.11%
Hence, from year 1 to year 2 : there has been 11% fall in price i.e Deflation
Considering Income = $72 :
Year 1 : It can purchase 72 / 9 = 8 commodity baskets Year 2 : It can purchase 72 / 8 = 9 commodity basketsSo, it illustrates that : As price falls, the purchasing power of money (value of money) rises.
At December 31, 2020, Oriole Company has outstanding noncancelable purchase commitments for 37,600 gallons, at $3.24 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.
A.) Assuming that the market price as of December 31, 2020, is $2.70, record the journal entry.
B.)Give the entry in January 2018, when the 36,000-gallon shipment is received, assuming that the situation given in (b2) above existed at December 31, 2020, and that the market price in January 2021 was $2.70 per gallon. Prepare the journal entry for when the materials are received in January 2021.
Answer:
Unrealized holding Gain or Loss - Income (Dr.) $20,304
Estimated Liability on purchase commitments (Cr.) $20,304
Explanation:
Oriole Company has agreed to purchase Gallons of raw material for a defined price of $3.24 per gallon. The price is reduced on December 31, 2020. The Difference between the prices of gallons is recorded as unrealized gain on debit and liability is credited.
$3.24 - $2.70 = $0.54 * 37,600 Gallon = $20,304
Unrealized holding Gain or Loss - Income (Dr.) $20,304
Estimated Liability on purchase commitments (Cr.) $20,304
The raw material is purchased at the price of $2.70 per gallon and the 36,000 gallons are purchased. The journal entry to record this transaction is,
Raw material (Dr.) $76,896
Estimated liability on purchase commitments (Dr.) $20,304
Cash (Cr.) $97,200
A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $150,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1?
Answer:
a. The preparation of partial amortization is shown below:-
b. $2,892
Explanation:
a. Date Lease Effective Decrease in Outstanding
payment interest balance balance
July 1 $150,000
July 1 $5,376 $5,376 $144,624
($150,000 - $5,376)
Oct 1 $5,376 $2,892 $2,484 $142,140
( $5,376 - $2,892) ($144,624 - $2,484)
b. Interest expense on October 1 = $2,892
Working Note:-
Take the outstanding balance times 2% (8% annual = 2% quarterly)
So, the Effective interest = $144,624 × 0.02
= $2,892.48
To prepare a partial amortization table and calculate the amount of interest expense/revenue, we need to consider the balance after each payment. The first quarter's interest expenses are $3,000, with a principal repayment of $2,376. The second quarter's interest expenses amount to $2,952.48 with a remaining principal of $2,423.52 subtracted from the quarterly payment.
The question involves a finance lease agreement with an annual interest rate of 8% and quarterly lease payments of $5,376 over a 10-year lease term, with a present value of lease payments at $150,000. To address the first part of the question, we would need to create a partial amortization table reflecting the principal and interest components of the lease payments for the period up until the second payment on October 1.
To begin, the interest expense for the first quarter would be 2% of the present value (8% annual rate divided by 4 quarters), which equals $3,000 ($150,000 x 0.02). Thus, the principal repayment for the first quarter is $2,376 ($5,376 lease payment less $3,000 interest expense). The new balance of the liability after the first payment would be $147,624 ($150,000 initial liability less $2,376 principal repayment).
For the second quarter, interest expense is calculated on the new balance: $147,624 x 2% = $2,952.48. The principal repayment portion again is the total lease payment minus the interest expense, which would be $5,376 - $2,952.48 = $2,423.52.
The following information pertains to Lee Corp.'s defined benefit pension plan for year 2:Service cost $160,000Actual and expected gain on plan assets 35,000Unexpected loss on plan assets related to a year 1 disposal of a subsidiary 40,000Amortization of unrecognized prior service cost 5,000Annual interest on pension obligation 50,000What amount should Lee report as pension cost in its year 2 income statement?
Answer:
$180,000
Explanation:
This can be calculated as follows:
Pension cost in year 2 = Service cost + Prior service cost amortization + Interest cost - Actual and expected return on plan assets
Therefore, we have:
Pension cost in year 2 = $160,000 + $5,000 + $50,000 - $35,000 = $180,000
Therefore, Lee report should $180,000 as pension cost in its year 2 income statement.
Variable and Absorption Costing During its first year, Walnut, Inc., showed a $14 per-unit profit under absorption costing but would have reported a total profit $16,000 less under variable costing. If production exceeded sales by 1,000 units and an average contribution margin of 62.5% was maintained, what is the apparent: Fixed cost per unit? Sales price per unit? Variable cost per unit? Unit sales volume if total profit under absorption costing was $168,000?
Answer and Explanation:
The computation is shown below:
Fixed cost per unit is
= Higher Profit under Absorption costing ÷ units exceeded than sales
= $16,000 ÷ 1,000 units
= $16 per unit
Sales price per unit
= Contribution Margin Per Unit ÷ Contribution Margin Ratio
= ($16 + $14) ÷ (62.50%)
= $48
Variable Cost Per Unit is
= Sales Price Per Unit - Contribution Margin Per Unit
= $48 - $30
= $18 per unit
Unit sales volume is
= Total Profit under Absorption costing ÷ profit per unit
= $168,000 ÷ $14 per unit
= 12000 units
We simply applied the above formulas
The fixed cost per unit is $16. The sales price per unit is $22.40, the variable cost per unit is $8.40 and the unit sales volume of total profit under absorption costing is 10,857 units.
Explanation:If Walnut Inc. had a full-year profit of $168,000 under absorption costing, they would have had a total profit of $152,000 under variable costing (which is $16,000 less). The difference between variable costing and absorption costing profit gives us insight into the fixed manufacturing overhead per unit. Since production exceeds sales by 1,000 units, the fixed cost per unit would be $16 (the $16,000 difference divided by the 1,000 units).
Since the contribution margin is 62.5% and under absorption costing the profit per unit is $14, the selling price per unit is $14 divided by 62.5% which is $22.40. Therefore, the variable cost per unit would be the selling price minus profit per unit, which means $22.40 - $14 = $8.40.
To find the unit sales volume, we'll subtract the difference between absorption and variable costing profits from the absorption costing total profit and divide that result by the profit per unit under absorption costing. Hence, ($168,000 - $16,000) ÷ $14 = 10,857 units (rounded to the nearest whole number).
Learn more about Variable and Absorption Costing here:https://brainly.com/question/33126015
#SPJ3
Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $350,000 of net income, declared no dividends, and the following selected transactions occurred in the order given: Issued 100,000 shares of the common stock at $50 cash per share. Reacquired 20,000 shares at $45 cash per share. Reissued 7,500 shares from treasury for $46 per share. Reissued 7,500 shares from treasury for $44 per share. 2. Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
The journal entries are made as follows;
Explanation:
1.Cash 100,000*50 Dr.$5,000,000
Common Stocks 100,000*5 Cr.$500,000
Paid in capital-common stocks Cr.$4,500,000
2.Treasury Stocks 20,000*45 Dr.$100,000
Cash 20,000*45 Cr.$100,000
3. Cash 7,500*46 Dr.$345,000
Treasury Stocks 7,500*45 Cr.$337,500
Paid in Capital-Treasury stocks 7,500*(46-45) Cr.$7,500
4.Cash 7,500*44 Dr.$330,000
Paid in capital-Treasury Stock 7,500*1 Dr.$7,500
Treasury stocks 7,500*45 Cr.$337,500
.
Final answer:
The answer provides journal entries for stock transactions of Global Marine involving the issuance of shares, the reacquisition as treasury stock, and the reissuance of treasury shares at different prices.
Explanation:
The question pertains to a series of transactions involving the issuance, reacquisition, and reissuance of shares by Global Marine. Here are the journal entries for each transaction:
Issuance of 100,000 shares at $50 per share:Note that the treasury stock is recorded at cost (not par value) and reissuing it at a different price from the reacquisition cost requires adjusting the additional paid-in capital for treasury stock.
Brief Exercise 13-14 Coronado Corporation sells DVD players. The corporation also offers its customers a 4-year warranty contract. During 2020, Coronado sold 20,000 warranty contracts at $105 each. The corporation spent $189,000 servicing warranties during 2020, and it estimates that an additional $945,000 will be spent in the future to service the warranties.
a. Prepare Leppard’s journal entries for the sale of contracts. Assume the service costs are inventory costs.
b. Prepare Leppard’s journal entries for the cost of servicing the warranties. Assume the service costs are inventory costs.
c. Prepare Leppard’s journal entries for the recognition of warranty revenue. Assume the service costs are inventory costs.
Answer:
(a)Sale contracts
Dr Cash $2,100,000
Cr Unearned warranty revenue $2,100,000
b)Cost of servicing warranty
Dr Warranty expense $189,0000
Cr Inventory $189,000
(c)Recognized warranty revenue
Unearned warranty revenue $525,000
Explanation:
(a)Sale contracts
Dr Cash ($20,000 x105) $2,100,000
Cr Unearned warranty revenue $2,100,000
b)Cost of servicing warranty
Dr Warranty expense $189,0000
Cr Inventory $189,000
(c)Recognized warranty revenue
Unearned warranty revenue $525,000
($2,100,000 ×1/4)
The journal entries for the transactions described are:
Date Account Title Debit Credit
2020 Cash $2,100,000
Unearned Warranty Revenue $2,100,000
Working:
= Warranty contracts x Price of contract
= 20,000 x 105
= $2,100,000
Date Account Title Debit Credit
2020 Warranty Expense $189,000
Inventory $189,000
Date Account Title Debit Credit
Unearned Warranty Revenue $525,000
Warranty Revenue $525,000
Working
= Unearned warranty revenue / Period of warranty
= 2,100,000 / 4
= $525,000
Find out more at https://brainly.com/question/15237485.
The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years. Pretax accounting income $800,000 Excess tax depreciation (480,000) Litigation accrual 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income 60,000 Interest income from New York municipal bonds (20,000) Taxable income $430,000 1. Excess tax depreciation will reverse equally over a four-year period, 2021-2024. 2. It is estimated that the litigation liability will be paid in 2024. 3. Rent revenue will be recognized during the last year of the lease, 2024. 4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024. Instructions (a) Prepare a schedule of future taxable and (deductible) amounts. (b) Prepare a schedule of the deferred tax (asset) and liability at the end of 2020. (c) Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit). (d) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2020
Answer:
income tax expense 156,000 debit
deferred income tax liability 70,000 credit
income tax payable 86,000 credit
schedule:
2021 2022 2023 2024
depreciation 120,000 120,000 120,000 120,000
litigation (70,000)
rent revenue 60,000
taxable income 120,000 120,000 120,000 110,000
2021 2022 2023 2024
beginning 70,000 46,000 22,000 (2,000)
dep adjustment (24,000) (24,000) (24,000) (24,000)
rent revenue 12,000
litigation 14,000
ending 46,000 24,000 (2,000)* 0
Explanation:
pretax income 800,000
permanent difference:
municipal bonds interest (20,000)
accounting taxable income 780,000
temporary difference:
depreciation expense (480,000)
litigation 70,000
rent revenue 60,000
taxable income 430,000
480,000 / 4 = 120,000
we have income tax payable: 430,000 x 20% = 86,000
income tax expense 780,000 x 20% = 156,000
deferred tax income laibility 156,000 - 86,000 = 70,000
*on the tax schedule as the value switches to negative we no longer have a tax liability but asset.
the municipal bonds are not considered into calcualtikon as they are tax exempt therefore do not create temporary difference.
a. Deductible Amounts:
- Excess Tax Depreciation (reversal): 120,000 ($480,000 / 4)
- Litigation Accrual (payment): 0
- Unearned Rent Revenue (recognition): 60,000
Taxable Amounts:
- Excess Tax Depreciation (reversal): 120,000 annually
- Litigation Accrual (payment): 0 annually
- Unearned Rent Revenue (recognition): 0 annually
- Interest Income from New York Municipal Bonds: 20,000 annually
b. Deferred Tax Asset:
- Excess Tax Depreciation (reversal): 120,000
Deferred Tax Liability:
Net Deferred Tax Liability: 14,000 (Liability) + 12,000 (Liability) - 120,000 (Asset) = 6,000 (Liability)
c. Net Deferred Tax Expense (Benefit) = 6,000 (Liability)
d. Deferred Tax Expense (Income Statement) = 6,000 (from part c)
Income Taxes Payable (Balance Sheet) = 160,000 (Income Tax Expense) - 6,000 (Deferred Tax Expense) = 154,000
Journal Entry:
- Debit Income Tax Expense: 160,000
- Debit Deferred Tax Expense: 6,000
- Credit Income Taxes Payable: 154,000
Schedule of Future Taxable and (Deductible) Amounts:
Year 2020:
Taxable Amounts:
- Pretax Accounting Income: 8,00,000
- Interest Income from New York Municipal Bonds: 20,000
Deductible Amounts:
- Excess Tax Depreciation (reversal): 1,20,000 (4,80,000 / 4)
- Litigation Accrual (payment): 0
- Unearned Rent Revenue (recognition): 60,000
Year 2021-2024 (Estimates):
Schedule of Deferred Tax (Asset) and Liability at the End of 2020:
Deferred Tax Liability:
- Litigation Accrual (payment): 14,000 (70,000 x 20%)
- Unearned Rent Revenue (recognition): 12,000 (60,000 x 20%)
Since there is no beginning deferred tax asset or liability, the Net Deferred Tax Expense (Benefit) for 2020 is equal to the change in the deferred tax liability:
Net Deferred Tax Expense (Benefit) = Change in Deferred Tax Liability
Net Deferred Tax Expense (Benefit) = 6,000 (Liability)
Journal Entry to Record Income Tax Expense, Deferred Taxes and Income Taxes Payable for 2020:
Income Tax Expense (Income Statement) = 8,00,000 (Pretax Accounting Income) x 20% = 1,60,000
Deferred Tax Expense (Income Statement) = 6,000 (from part c)
Income Taxes Payable (Balance Sheet) = 1,60,000 (Income Tax Expense) - 6,000 (Deferred Tax Expense) = 1,54,000
This entry records the income tax expense for 2020, the deferred tax expense and the income taxes payable for the year.
For similar questions on Tax
https://brainly.com/question/28798067
#SPJ3
Which of these statements about a business plan is true?
A. Businesses do not need to document a business plan.
B. Established businesses do not create a business plan.
C. A business plan is a business’s roadmap for the future.
D. A business plan guarantees a business’s success.
Answer:
C. A business plan is a business’s roadmap for the future.
Explanation:
A business plan states formally the goals of the company; it shows the tasks that must be performed to reach those big goals and shows the financlal ways that could or should be used to accomplish the goals.
The business plan permits to understand how the business work and, thus, gives the basis for future actions. It is a tool of organization, direction, and communication, and the basis to develop a financial plan. In brief words: what the company wants to do and how it inteds do it.
A. Businesses do not need to document a business plan.
FALSE.
The business plan must be formal, not just an idea or view in the mind of the owners or managers, as such it must be documented.
B. Established businesses do not create a business plan.
FALSE.
Business plans change with time. As much as starting business, established business must periodically review the conditions and goals and update, or even importantly change the business plan.
C. A business plan is a business’s roadmap for the future.
TRUE.
Business plan gives direction, the ways to reach the goals, the tasks to be performed.
D. A business plan guarantees a business’s success.
FALSE.
Success is never guaranteed. Risk is intrinsic to all the human activities. Complexity of human interactions and changing circumstances do not permit to guarantee that a plan guarantees the success. That is why business plans must be revised and ajusted or changed to adapt the goals and the actions to be the most sucessfull possible, but without guarantees.
Answer:
c A business plan is a business’s roadmap for the future.
Explanation:
A movie theater faces the following hourly inverse demand curves:
Seniors: PS = 88 - Q
Adults: PA = 94 - Q
The theater has a fixed cost of $40, and a constant marginal cost of $2 per ticket.
a) If the movie theater uses segmenting, calculate the ticket prices charged to adults and seniors.
Answer:
Price for Seniors $ 45
Price for Adults $ 46
Explanation:
As the theater uses segmenting it will solve to maximize profit on each segment:
PS = 88- Q
Total Revenue = price x quantity = (88 - Q) Q = -Q^2 + 88Q
Marginal Revenue = 88-2Q
Marginal Revenue = Marginal Cost --> point to maximize profit
88 - 2Q = 2
(88 - 2) / 2 = Q
43 = Q
P = 88 - 43 = 45
For Adults:
Revenue (94 - Q)*Q = 94Q - Q^2
Marginal Revenue = 94 - 2Q
Marginal Revenue = Marginal Cost --> point to maximize profit
(94 - 2)Q = 2
Q = 46
P = 94 - 46 = 46
Kuhns Corp. has 160,000 shares of preferred stock outstanding that is cumulative and 100,000 common stock outstanding. The preferred dividend is $5.50 per share and has not been paid for 3 years. If Kuhns earned $1.70 million this year, what could be the maximum payment to the preferred stockholders on a per share basis
Answer:
$10.63 is the maximum per share dividend to be paid to preferred stockholders.
Explanation:
3 years dividend=$5.50*160,000*3
=$2,640,000
Since preferred dividends in arrears is more than the net income,it implies that the whole earnings would be used in settling the dividends with no dividends left for common stockholders,as a result of the point above,the maximum payment to the preferred stockholders on a per share basis is computed thus:
per share dividend=$1,700,000/160,000
=$10.63
Early in its fiscal year ending December 31, 2021, Morgan Manufacturing, Inc. (MMI) finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $340,000 immediately and signing a noninterest-bearing note requiring the company to pay $740,000 on December 31, 2023. An interest rate of 6% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $34,000 were paid at closing. At the end of April, the old building was demolished at a cost of $84,000, and an additional $64,000 was paid to clear and grade the land. MMI should record the land on the April 30 balance sheet as $[land].
Final answer:
MMI should record the land on the April 30 balance sheet as $1,048,940.37.
Explanation:
To record the land on the April 30 balance sheet, we need to determine the cost of the land. The initial payment of $340,000, the note payable of $740,000, and the closing costs of $34,000 need to be considered. We also need to calculate the present value of the note payable using the interest rate of 6% to determine the amount that should be recorded as the land cost.
Calculate the present value of the note payable: PV = FV / (1 + r)ⁿPV = $740,000 / (1 + 0.06)² = $674,940.37 (rounded to the nearest cent)Calculate the total cost of the land: $340,000 + $34,000 + $674,940.37 = $1,048,940.37 (rounded to the nearest cent)Therefore, MMI should record the land on the April 30 balance sheet as $1,048,940.37.
On January 1, Year 1, the Mahoney Company borrowed $168,000 cash from Sun Bank by issuing a five-year 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, Year 1. The annual payment on the loan based on the present value of annuity factor would be $40,725.The amount of principal repayment included in the December 31, Year 1 payment is:Multiple Choice$13,440.$37,467.$40,725.$27,285.
Answer:
The correct option is $27,285.
Explanation:
Annual interest =$168,000*8%
annual interest =$13,440.00
Annual repayment=$40,725.00
Principal repayment=Annual repayment-interest repayment
principal repayment=$40,725.00-$13,440.00
principal repayment=$ 27,285.00
The correct option is last option.
The first option is wrong because it is the interest repayment,not principal repayment.
The third option is also wrong because it comprises both interest and principal repayments
The option is $37,467 does not feature in the computation in anyway
Answer:
Principal paid= $27,285
Explanation:
The loan repayment is structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan and the accrued interest. This is called amortization.
The amount of principal = Annual installment - interest due
Annual installment = $40,725
Interest due = interest rate × principal amount
= 8%× 168,000 = $13,440
The amount of principal = $40,725 - $13,440
= $27,285
Which of the following are reasons managed floating exchange rates were adopted by the industrialized nations in 1973?
Check all that apply.
A) To avoid delays in adjustments of exchange rates caused by procedural difficulties and political biases
B) To enable dirty floats in order to offset free market forces of supply and demand
C) To enable more prompt and continuous adjustments of exchange rates in response to evolving market forces
D) To enable nations to initiate fluctuations in exchange rates
Answer:
A) To avoid delays in adjustments of exchange rates caused by procedural difficulties and political biases.
C) To enable more prompt and continuous adjustments of exchange rates in response to evolving market forces.
Explanation:
A managed floating exchange rate system allows the exchange rate to be allowed by a free market force of the supply and demand that consists of the some degrees of the government inventions. It was adopted in 1973 due to the overtime the float led to the market disordering and that caused a dramatic exchange rate fluctuations. Hence in order to control this, a system had to be made to keep at check on the change in rates.On January 1, 2021, Oliver Foods issued stock options for 44,000 shares to a division manager. The options have an estimated fair value of $3 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Oliver Foods' stock price increases by 5% in four years. Oliver Foods initially estimates that it is not probable the goal will be achieved. How much compensation will be recorded in each of the next four years
Options:
A. $77,500
B. $19,500
C. No effect
D. $77,000
Answer:
The correct answer is option (D)
$77,000
Explanation:
Compensation will be recorded in each of the next four years
=(44,000*7) / 4 = $77,000
Bradford Maintenance, a firm which provides lawn care services, has some seasonal variations in its cash flow needs, since much of the demand for its services is in the summer months. It uses long-term sources of funds to finance its assets such as its fleet of vehicles and lawn-care equipment and for the permanent funds that it must have at all times. For its peak seasonal needs it uses long-term sources and some short-term debt. What best describes the financial policy being followed by Bradford
Answer: B) Conservative Financial Policy
Explanation:
A Conservative Financial policy refers to a situation where an entity usually finances their permanent working capital with long term debt in part or in it's entirety.
It is stated that Bradford Maintainance uses long-term sources of funds to finance its assets which would point to a Conservative Financial Policy.
1. Why have OpenTable competitors had a difficult time competing against OpenTable? 2. What characteristics of the restaurant market make it difficult for a reservation system to work? 3. How did OpenTable change its marketing strategy to succeed? 4. Why would restaurants find the SaaS model very attractive?
Answer:
The answer to the question are listed in the explanation section below
Explanation:
The following number of question is explained below:
A thousands of restaurants use open table to allow their online bookings capability which is a right choice as open table is a well respected and as well large international company in the industry. Restaurants have moved from open table to the competition, for the following reasons such as retain customers,first class technology., comparable online booking, save money.Open table now has a real competition in the form of Eveve, which allows line reservation system for restaurants. SAAS model: Software as a service (POS) system. restaurant owners find it attractive because of the loud based solution,Lower initial and maintenance costs,easy upgrades, and lower learning curve
ssuming all else is constant, which of the following statements is CORRECT? a. A 20-year zero coupon bond has more reinvestment rate risk than a 20-year coupon bond. b. For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate. c. From a corporate borrower's point of view, interest paid on bonds is not tax-deductible. d. For any given maturity, a 1.0 percentage point decrease in the market interest rate would cause a smaller dollar capital gain than the capital loss stemming from a 1.0 percentage point increase in the interest rate. e. Price sensitivity as measured by the percentage change in price due to a given change in the required rate of return decreases as a bond's maturity increases.
Answer: b. For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate
Explanation:
This is very true. If market rates reduce by 1.0%, there is a larger drop in the price of a bond than the amount a bond gains in price if interest rates increase by that same 1.0%.
This is why the graph that relates bond prices to yield is concave and I attached a graph as proof.
Notice how the fall in price is greater when interest rate increases.
Yield-to-maturity is the interest rate an investor would earn if they reinvested every bond coupon payment at a constant interest rate until the bond's maturity date.
Hence, correct option is B.
"For a bond of any maturity, a 1.0% point increase in the market interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from a 1.0% point decrease in the interest rate."
Consider or use a graphical illustration of the link between the price of a typical bond and the current interest rate. The graph will show a cupped curve, illustrating that for any interest rate, the price decrease from an increase in rates is not comparable to the price increase from a comparable rate reduction .
To know more about Coupon bond, refer to the link:
https://brainly.com/question/14820453
H&R Block Inc. provides tax preparation services throughout the United States and other parts of the world. These services are provided through two segments: company-owned offices and franchised operations. Recent financial information provided by H&R Block for its company-owned and franchised operations is as follows (in millions): Company-Owned Franchised Operations Revenues $2,651 $ 335 Income from operations 617 86 Total assets 3,930 586 a. Use the DuPont formula to determine the return on investment for each business divisions. Round whole percents to one decimal place and investment turnover to two decimal places. Division Return on Investment Company-Owned % Franchised Operations % b. Determine the residual income for each division, assuming a minimum acceptable income of 15% of total assets. Round minimal acceptable return to the nearest million dollars. Division Residual income Company-Owned $ millions Franchised Operations $ millions c. The Franchised Operations (FO) segment has the return on investment, which is mainly the result of a investment turnover.
Answer:
Explanation:
A) Calculating ROI
For company owned;
Profit margin = 617/2651 = 23.3%
Asset turnover = 2651/3930 = 0.67
Return on investment (ROI) = 23.3*.67 = 15.6%
For Franchised operations;
Profit margin = 86/335 = 25.7%
Asset turnover = 335/586 = 0.57
Return on investment (ROI) = 25.7*.57 = 14.6%
B) Calculating Residual income
For company owned;
Operating income = 617
Minimum operating income = 3930*15% = 590
Residual income = 617-590 = 27
For For Franchised operations;
Operating income =86
Minimum operating income =586*15% = 88
Residual income = 86-88 = -2
C) The Franchised Operations (FO) section has the lowest return on investment, which is principally the result of the Lowest investment turnover.
Purdum Farms borrowed $24 million by signing a five-year note on December 31, 2017. Repayments of the principal are payable annually in installments of $4.8 million each. Purdum Farms makes the first payment on December 31, 2018 and then prepares its balance sheet. What amount will be reported as current and long-term liabilities, respectively, in connection with the note at December 31, 2018, after the first payment is made?
Answer:
The amount of $4.8 million will be reported as current liabilities on 31 December 2018 and the amount of $14.4 will be reported as long term liabilities.
Explanation:
The current liabilities are the short term liabilities or obligations that a business is expected to pay or settle within a year's time period. The long term liabilities, on the other hand, are the liabilities or obligations which are due to be paid any time more than a year.
The outstanding amount on Note Payable on 31 December 2018 after the first repayment will be, 24 - 4.8 = $19.2 million
Out of the $19.2 million that is outstanding, $4.8 million are to be paid on 31 December 2019 that is within a year. Thus, this amount will be reported as a current liability as it is payable within a one year period.
The remaining amount of 19.2 - 4.8 = $14.4 million will be reported as a non current liability as it is payable after more than a year from today.
Farmer and Taylor formed a partnership with capital contributions of $250,000 and $300,000, respectively. Their partnership agreement calls for Farmer to receive a $80,000 per year salary. The remaining income or loss is to be divided equally. Assuming net income for the current year is $195,000, the journal entry to allocate net income is:
Answer:
The journal entry is made as follows;
Explanation:
Net Income $195,000
Salary of farmer ($80,000)
Net distributive income $115,000
Per partner share $115,000/2=$57,500
Income Summary Dr.$115,000
Farmer Capital Cr.$57,500
Taylor Capital Cr.$57,500
The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents $ 9,219 Accounts receivable 74,422 Merchandise inventories 64,362 Prepaid expenses 4,900 Accounts payable $ 15,750 Notes payable 90,638 Other current liabilities 10,300 If net sales for the current year were $607,500, the firm's days' sales uncollected for the year is: (Use 365 days a year.)
Answer:
The correct answer is 44.73 days or 45 days.
Explanation:
According to the scenario, the computation of the given data are as follows:
We can calculate the day's sales uncollected by using following formula:
Day's sales uncollected = No. of days in year ÷ Debtor turnover ratio
Where, Debtor turnover ratio = Sales ÷ Accounts receivable
= $607,500 ÷ $74,422
= 8.16
So, by putting the value, we get
Day's sales uncollected = 365 days ÷ 8.16
= 44.73 days or 45 days.
Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2021. Estimated standalone fair values of the equipment, installation and training are $90,000, $60,000 and $30,000 respectively.
The journal entry to record the transaction on March 15, 2021 will include a :
A. credit to Unearned Service Revenue of $24,000
B. debit to Unearned Service Revenue of $30,000
C. credit to Sales Revenue for $144,000
D. credit to Service Revenue of $60,000.
Answer:
A. credit to Unearned Service Revenue of $24,000
Explanation:
Total cost = $90,000 + $60,000 + $30,000 = $180,000
Unearned service training service revenue = ($30,000 ÷ $180,000) × $144,000 = $24,000
Therefore, the correction option is A. credit to Unearned Service Revenue of $24,000.
Some countries have fixed exchange rate systems instead of flexible exchange rate systems. Which of the following is a reason why fixed exchange rate systems have limited abilities to use monetary policy? A. Under a fixed exchange rate system, if a central bank conducts a monetary policy, there is no change in domestic interest rates because people only respond to exchange rate changes. B. Under a fixed exchange rate system, if a central bank conducts a monetary policy, then it puts pressure on the exchange rate and the central bank would have to offset that effect. C. Under a fixed exchange rate system, central banks do not exist so monetary policy cannot be conducted. D. All of the above.
Answer:
Option B - Under a fixed exchange rate system, if a central bank conducts a monetary policy, then it puts pressure on the exchange rate and the central bank would have to offset that effect.
Explanation:
Central banks are required to initiate measures to keep the exchange rate fixed, such that any move by them which causes movement of exchange rate will have to be countered by themselves.
Hence, if a central bank administers a monetary policy under a fixed exchange rate system, it would exert pressure on the exchange rate and the central bank would have to counteract that effect.
Therefore, option B is the correct answer choice.
Harvard Company purchased equipment having an invoice price of $11,500. The terms of sale were 2/10, n/30, and Harvard paid within the discount period. In addition, Harvard paid a $160 delivery charge, $185 installation charge, and $931 sales tax.
Required:
a. The amount recorded as the cost of this equipment is ____________.
Answer:
$12,546
Explanation:
Invoice price $11,500 × 0.98 =$11,270
Add: Delivery charge $160
Installation charge $185
Sales tax $931
Cost of equipment $12,546
Therefore the amount recorded as the cost of this equipment is is $12,546
Kelly noticed her debit card was not in her wallet where she usually keeps it. She quickly checked her car and her desk, but was unable to locate it. What is the FIRST thing Kelly should do to help reduce the risk of fraudulent charges in case it was stolen?
Answer:
She should call her bank to report her card as lost or stolen.
Explanation:
Whenever a card is been lost, the most clever thing to do is to call your bank immediately, telling them to suspend all transaction on the card per say.
It is known to be normally reversible just in case it was in the right place or later found by you; but if not, the bank will then request a new card is generated. Your old card stays suspended until your new card arrives and you phone up to activate it.
If you think you’ve temporarily misplaced your debit or credit card or would like to freeze different types of transactions you can do this also through the Mobile Banking app.
On April 1, 2017, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign bank by signing an interest-bearing note due April 1, 2018. The dollar value of the loan was as follows: Date Amount April 1, 2017 $ 97,000 December 31, 2017 103,000 April 1, 2018 105,000 How much foreign exchange gain or loss should be included in Shannon’s 2017 income statement?
Answer:
Foreign exchange loss of $6000
Explanation:
The dollar loan should recognized in the balance of Shanon Company as $97,000 on 1 April 2017,at end of the year the loan amount should e revalued to reflect its current fair value.
At end of the year 2017,the dollar value of the loan has risen to $103,000,hence the obligation being owed has increased by $6,000($103,000-$97000),hence the increase in value of debt should be credited to loan account and debited to Shanon's 2017 income statement
Final answer:
Shannon Company should record a foreign exchange gain of $6,000 in the 2017 income statement due to the increase in the dollar value of the loan from $97,000 to $103,000 between April 1 and December 31, 2017.
Explanation:
On April 1, 2017, Shannon Company took out a loan for 100,000 euros, and the dollar value of this loan was $97,000. By December 31, 2017, the value of the same amount of euros rose to $103,000. To determine the foreign exchange gain or loss, Shannon Company should calculate the change in the dollar value of the loan between these two dates.
The process of calculating foreign exchange gains or losses involves comparing the dollar value of the loan at the beginning and end of the given period. In this case, Shannon Company's loan value went from $97,000 (April 1, 2017) to $103,000 (December 31, 2017), resulting in an increase of $6,000. This increase represents a foreign exchange gain that should be recorded in Shannon's 2017 income statement.
It is important to note that Shannon Company will have to reassess the value of the loan once more on the due date, April 1, 2018, at which point the dollar value is $105,000. However, for the 2017 income statement, only the change up to December 31, 2017, is relevant.
Q5. Einstein Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $10,000. Budgeted cash receipts are $85,000, while budgeted cash disbursements are $66,000. Einstein Company wants to have an ending cash balance of $25,000. The excess (deficiency) of cash available over disbursements for the month would be:
Answer:
There would be in the month an excess cash available of $29,000.
Explanation:
In order to calculate the excess (deficiency) of cash available over disbursements for the month, first we have to calculate the total cash.
Total cash= beginning cash balance+cash receipts
=$10,000+$85,000
=$95,000
There are budgeted cash disbursements of $66,000, so $95,000-$66,000=$29,000, hence there would be in the month an excess cash available of $29,000.
Cala Manufacturing purchases a large lot on which an old building is located as part of its plans to build a new plant. The negotiated purchase price is $224,000 for the lot plus $119,000 for the old building. The company pays $37,000 to tear down the old building and $54,696 to fill and level the lot. It also pays a total of $1,829,209 in construction costs—this amount consists of $1,720,600 for the new building and $108,609 for lighting and paving a parking area next to the building. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.
Answer:
Land $434,696
Land improvements $108,609
Building $1,720,600
To Cash $2,263,905
(Being the amount paid in cash is recorded)
Explanation:
The journal entry is shown below:
Land $434,696
Land improvements $108,609
Building $1,720,600
To Cash $2,263,905
(Being the amount paid in cash is recorded)
The land, land improvements and the building increases the assets so it is debited while the cash is credited as the cash is paid
The computation of the land is shown below:
= Purchase price of the land + purchase price for the old building + paid amount for tear down the old building + cost to fill and level the lot
= $224,000 + $119,000 + $37,000 + $54,696
= $434,696