Answer:
$1552
Explanation:
it will save 30 per month during 5 years.
we can calculate this as an annuity. So the value of the faucets will be the present value of the cash savings:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C $30 saving per month
time 5 years x 12 month per year = 60 months
rate 0.5% = 0.5/100 = 0.005
[tex]30 \times \frac{1-(1+0.005)^{-60} }{0.005} = PV\\[/tex]
PV $1,551.7668
Rounding it will be closest to 1,552
Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2010, Deutscher-Menzies sold Arkie under the Shower, a painting by renowned Australian painter Brett Whiteley, at auction for a price of $1,100,000. Unfortunately for the previous owner, he had purchased it three years earlier at a price of $1,680,000. What was his annual rate of return on this painting?
Answer:
the annual rate of return on the painting was -13.17%
Explanation:
we will construct the equation for future value at the annual rate of return at which a principal of 1,680,000 return 1,100,000 in three years:
[tex]Principal \: (1+ r)^{time} = Amount[/tex]
Principal 1,680,000
time 3 years
Amount 1,100,000
rate r
[tex]1,680,000 \: (1+ r)^{3} = 1,100,000[/tex]
[tex]r = \sqrt[3]{ 1,100,000 \div 1,680,000} -1[/tex]
r = -0.131650681 = -13.17%
As expected, because the amount after three years is lower than the principa the rate of return is negative
Final answer:
The annual rate of return on the painting 'Arkie under the Shower,' after being purchased for $1,680,000 and sold for $1,100,000 over three years, is approximately -12.99%.
Explanation:
The question asks for the calculation of the annual rate of return on an investment in art. The previous owner purchased 'Arkie under the Shower' for $1,680,000 and sold it for $1,100,000 three years later. To calculate the annual rate of return, we use the formula for compound interest [tex](A = P(1 + r)^n)[/tex], where A is the final amount, P is the principal amount, r is the rate of return per period, and n is the number of periods. Inverting this formula to solve for r gives us [tex]r = ((A/P)^(^1^/^n^)) - 1[/tex]. Plugging in the numbers: [tex]r = (($1,100,000 / $1,680,000)^(^1^/^3^)) - 1[/tex], which gives an annual rate of return of approximately -12.99%.
Lakeside Manufacturing provided the following information for the month ended March 31:Sales Revenue$26,000Beginning Finished Goods Inventory8,000Ending Finished Goods Inventory13,500Cost of Goods Manufactured15,600Compute cost of goods available for sale.
Answer:
cost of goods available for sale= $29,100
Explanation:
Giving the following information:
Sales Revenue$26,000
Beginning Finished Goods Inventory8,000
Ending Finished Goods Inventory13,500
Cost of Goods Manufactured15,600
cost of goods available for sale= beginning finished goods inventory + purchases
We have to find the amount of purchases.
We know that:
cost of goods manufactured= Beginning Finished Goods Inventory + purchases - Ending Finished Goods Inventory
15600= 8000 + purchases - 13500
purchases= 15600 - 8000 + 13500
purcases= 21,100
cost of goods available for sale= 8000 + 21100= $29,100
Which one of the following statements is not characteristic of mutual funds?
A. They are always considered to be financial institutions.
B. They raise money by selling shares to investors.
C. They pool the savings of many investors.
D. They offer professional management and portfolio diversification.
Answer: Option A
Explanation: Mutual funds are introduced by the financial institutions in the market and are not financial institutions themselves.
These funds collect money from various different investors and pool them together to invest in securities of different companies. These funds are managed by the investment professionals who receive both fixed and variable fees depending on the performance of portfolio.
The portfolio is divided into shares and such shares are then sold into the stock market.
Hence from the above we can conclude that option A.
Calculation of EPS and retained earnings Everdeen Mining, Inc., ended 2019 with net profits before taxes of $ 436 comma 000. The company is subject to a 21 % tax rate and must pay $ 64 comma 000 in preferred stock dividends before distributing any earnings on the 170 comma 000 shares of common stock currently outstanding. a. Calculate Everdeen's 2019 earnings per share (EPS). b. If the firm paid common stock dividends of $ 0.80 per share, how many dollars would go to retained earnings?
Final answer:
Everdeen's 2019 earnings per share (EPS) is $1.65. The total amount contributed to retained earnings after paying a dividend of $0.80 per share on 170,000 shares is $144,440.
Explanation:
Calculation of Earnings Per Share (EPS) and Retained Earnings
To calculate Everdeen's 2019 earnings per share (EPS), we must first determine the net income after taxes and preferred stock dividends:
Net profits before taxes: $436,000
Minus tax (21%): $436,000 * 0.21 = $91,560
Net profits after taxes: $436,000 - $91,560 = $344,440
Minus preferred stock dividends: $344,440 - $64,000 = $280,440
Next, divide the remaining profit by the number of common stock shares:
EPS = $280,440 / 170,000 shares = $1.65 per share
For part b, calculating the total dividends paid to common shareholders:
Total common stock dividends = $0.80 per share * 170,000 shares = $136,000
Finally, to calculate the amount that goes to retained earnings:
Retained earnings = Net income - Total common stock dividends
Retained earnings = $280,440 - $136,000 = $144,440
On September 1, 2012, Valdez Company reacquired 16,000 shares of its $10 par value common stock for $15 per share. Valdez uses the cost method to account for treasury stock. The journal entry to record the reacquisition of the stock should debit
a. Treasury Stock for $160,000.
b. Common Stock for $160,000.
c. Common Stock for $160,000 and Paid-in Capital in Excess of Par for $60,000.
d. Treasury Stock for $240,000
Answer:
d. Treasury Stock for $240,000
Explanation:
The journal entry for re-acquisition of the stock under the cost method is shown below:
Treasury stock A/c Dr $240,000
To Cash A/c $240,000
(Being the stock are reacquired for cash)
The $240,000 amount should be come from
= Number of shares × common stock per share
= 16,000 shares × $15
= $240,000
Since the stock is reacquired so we used the treasury stock account instead of the common stock account
Vista Camera Services started the year with total assets of $ 100 comma 000 and total liabilities of $ 55 comma 000. The revenues and the expenses for the year amounted to $ 120 comma 000 and $ 80 comma 000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $ 50 comma 000. What is the amount of stockholders' equity at the end of the year?
Answer:
The amount of stockholders' equity at the end of the year is $35,000
Explanation:
For computing the ending balance of the stockholder equity, first we have to compute the beginning balance of equity which is shown below:
Total assets = Total liabilities + stockholder equity
$100,000 = $55,000 + stockholder equity
So, stockholder equity = $100,000 - $55,000
= $45,000
Now the ending balance of stockholder equity would equal to
= Opening balance of stockholder equity + revenues - expenses - dividend paid
= $45,000 + $120,000 - $80,000 - $50,000
= $35,000
Which of these is an example of third-degree price discrimination?
(A) charging different prices to consumers at a flea market
(B) charging different prices at a used car dealership
(C) charging block rates on utilities
(D) charging airline business passengers and regular travelers different prices
Answer:
(D) charging airline business passengers and regular travelers different prices
Explanation:
Third degree price discrimination – the price varies according to consumer attributes such as age, sex, location, and economic status. Price discrimination is present throughout commerce. Examples include airline and travel costs, coupons, premium pricing, gender based pricing, and retail incentives.
Present value (with changing interest rates). Marty has been offered an injury settlement of $12 comma 000 payable in 3 years. He wants to know what the present value of the injury settlement is if his opportunity cost is 5%. (The opportunity cost is the interest rate in this problem.) What if the opportunity cost is 6.5%? What if it is 11.5%?
Answer:
If opportunity cost is 5%, PV=10,366.05
If opportunity cost is 6.5%, PV=9,934.19
If opportunity cost is 11.5%, PV=8,656.79
Explanation:
PV=Σ[tex](\frac{CF_{t} }{(1+i)^{t} })[/tex]
If opportunity cost is 5%: PV = [tex]\frac{12,000 }{(1+0.05)^{3} }[/tex] =10,366.05
If opportunity cost is 6.5%: PV = [tex]\frac{12,000 }{(1+0.065)^{3} }[/tex] =9,934.19
If opportunity cost is 11.5%: PV = [tex]\frac{12,000 }{(1+0.115)^{3} }[/tex] =8,656.79
Lease-A-Rama Co. leases equipment to Dunlavy Co. over a lease term of 5 years, with equal annual payments starting the first day of the lease. The fair value of the equipment is $500,000 and the expected residual value at the end of the lease term is $50,000. Lease-A-Rama expects a 12% return on investment as a result of the lease. What is the amount of the equal lease payments Dunlavy will make, and at what amount will Lease-A-Rama record its gross investment in the lease?
Answer:
Ans. a) Equal lease payments are $116,816.41 and; b)Gross investment in the lease = $634,082.05
Explanation:
Hi, in order to find the annuity of a lease that has a 12% return and residual value of $50,000, for four years and with its first payment made the same day of the lease, we need to solve for "A" the following equation.
[tex]PresentValue=A+\frac{A((1+r)^{n-1}-1) }{r(1+r)^{n-1} } +\frac{ResidualValue}{(1+r)^{n} }[/tex]
Where:
r= expected rate of return
n= Number of payments
Therefore, everything should look like this
[tex]500,000=A+\frac{A((1+0.12)^{4}-1) }{0.12(1+0.12)^{4} } +\frac{50,000}{(1+0.12)^{5} }[/tex]
[tex]500,000=A+A(3.03734935)+28,371.34[/tex]
[tex]500,000-28,371.34=A(4.03734935)[/tex]
[tex]\frac{500,000-28,371.34}{4.03734935} =A[/tex]
[tex]A=116,816.41[/tex]
That is the annual payment of the lease, with a residual value of 50,000, rate = 12%, for 5 years, with its first payment made the same day that the lease was issued.
B) the gross invesment to be recorded by Lease-A-Rama is
116,816.41*5 + 50,000= 634,082.05
Best of luck.
Final answer:
The answer explains how to calculate the equal lease payments and the gross investment in the lease for a business scenario involving equipment leasing. By doing this, the gross investment in the lease turns out to be $500,000.
Explanation:
Equal Lease Payments:
Calculate the present value of the annuity using the formula: PV = (PMT x (1 - (1 + r)⁻ⁿ) / r), where PMT is the annual lease payment, r is the discount rate, and n is the number of years.
Substitute the given values: PV = (PMT x (1 - (1 + 0.12)⁻⁵) / 0.12), PV = $384,053.89.
Since the fair value of the equipment is $500,000, the annual payment must cover the value and the return, thus annual lease payment = ($500,000 - $384,053.89) = $115,946.11.
Gross Investment in the Lease: $500,000.
On March 3, Splish Brothers Inc. sells $666,900 of its receivables to National Factors Inc. National Factors Inc. assesses a service charge of its receivables to Western Factors Inc. Western Factors Inc. assesses a service charge of 5% of the amount of receivables sold. Prepare the entry on Sheridan Company books to record the sale of the receivables.
Answer:
cash 633,555 debit
loss on factoring 33,345 debit
accounts receivable 666,900 credit
--to record sales of receivables--
Explanation:
666,900 x 5% fee = 33,345 factoring expense
666,900 - 33,345 = 633,555 cash proceeds
we will write-off the erceivable sold.
We will increase our cash and recognize the loss on the factoring
When Splish Brothers Inc sold its receivables to National Factors Inc., a fee of $33,345 was charged. They received a net amount of $633,555. The process involves debiting cash and service charge expenses while crediting accounts receivable.
Explanation:Splish Brothers Inc. sold its receivables worth $666,900 to National Factors Inc. The service charge assessed by National Factors Inc. on the receivables sold is 5%. So, the charges incurred would be 5% of $666,900 i.e. $33,345. Therefore, the book keeping entry for this transaction would show:
Debit: Cash $(666,900 - 33,345) = $633,555 (Net amount received)Debit: Service Charge Expense $33,345 (Fees to National Factors Inc.)Credit: Accounts Receivable $666,900 (Amount of receivables sold)Learn more about Accounting for Receivable Sale here:https://brainly.com/question/17233316
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A grocery store manager must decide whether to buy four rug cleaners to rent to customers. The manager estimates that the first would yield $200 a year, the second $150, the third $75, and the fourth $20. If the interest rate is 12 percent and each rug cleaner costs $500, how many should the manager buy?
Answer:
It will purchase three.
Explanation:
the return will be:
income / investment
1ST rug cleaners: 200/500 = 40% return
2 rug cleaners: 150/500 = 30% return
3 rug cleaners: 75/500 = 15% return
4 rug cleaners: 20/500 = 4% return
As the current market rate is 12% if the forth rug cleaner is pruchased it will not turn out profitable.
A project has the following cash flow. Year zero's cash flow is $10000. The following years' cash flows decrease by $2000 each year. At the end of the project's life time, the cash flow is $-10000. The engineer who's evaluating this project disaggregate the cash flow by breaking it down to an annuity starting from year 0 to 10 with A = $10000 and the rest as a uniform gradient cash flow. The engineer analyzes the present worth of the project as P=A(P/A,i,a)(F/P,i,b)-G(P/G,i,c)(F/P,i,d). What should be the values for a, b, c, d, and G?
Answer:
a=b=c=10
G = 800
Explanation:
a,b,c show the time(number of years)
G is the amount of increase in cash flow each year.
Leisure Industries manufactures custom-designed playground equipment for schools and city parks. Leisure expected to incur $ 627 comma 000 of manufacturing overhead cost, 41 comma 800 of direct labor hours, and $ 919 comma 600 of direct labor cost during the year (the cost of direct labor is $22 per hour). The company allocates manufacturing overhead on the basis of direct labor hours. During September, Leisure completed Job 309. The job used 160 direct labor hours and required $ 13 comma 000 of direct materials. The City of Hamptonville has contracted to purchase the playground equipment at a price of 23 % over manufacturing cost. . Calculate the manufacturing cost of Job 309. 2. How much will the City of Hamptonville pay for this playground equipment?
Answer:
Price= $85263,6
Explanation:
We need to calculate the price paid by the City of Hamptonville for playground equipment.
We know the following information:
Direct material= $13000
Direct labor= 160hours*$22hour= $3520
Manufacturing overhead: it is assigned on labor hours.
We need to calculate the value of manufacturing overhead.
Labor hours presupuested= $41800/$22hour= 1900hours
$/hour of manufacturing overhead= $627000/1900hours= $330
Manufacturing overhead Job 309= 330*160hours= $52800
Manufacturing cost Job 309= direct material + direct labor + Manufacturing overhead= 13000 + 3520 + 52800= $69320
Price=69320*1.23= $85263,6
Final answer:
The manufacturing cost for Job 309 is $18,920. The City of Hamptonville will pay $23,271.60 for the playground equipment, which is 23% over the manufacturing cost.
Explanation:
To calculate the manufacturing cost of Job 309 for Leisure Industries, we need to determine the overhead allocation rate, which is calculated by dividing the expected manufacturing overhead cost by the number of direct labor hours. Here, we have $627,000 of expected manufacturing overhead and 41,800 direct labor hours, giving us an overhead allocation rate of $15 per direct labor hour ($627,000 \/ 41,800).
For Job 309, the total direct labor cost can be calculated by multiplying the number of direct labor hours used by the cost per hour, which is 160 hours \\times $22/hour = $3,520. To this, we add the overhead cost, which is 160 hours \\times $15/hour = $2,400. We also know the direct materials cost for this job is $13,000. Adding all these costs gets us the total manufacturing cost for Job 309: $3,520 (labor) + $2,400 (overhead) + $13,000 (materials) = $18,920.
The City of Hamptonville will pay 23% over the manufacturing cost for the playground equipment. Hence, the selling price will be $18,920 \\times 1.23 = $23,271.60.
Floor Coverings reported the following summarized data at December 31, 2018. Accounts appear in no particular order, and all have normal balances. Prepare the trial balance of Smith Floor Coverings at December 31, 2018.
Service revenue %38,000
Equipment 45,000
Rent expenses 10,000
Common stock 25,000
Account payable 1,500
Dividens 12,900
Salaries payable 15,000
Salaries expenses 1,800
Cash 12,000
Accont receivable 4,000
Interest payable 7,500
Utility expanse 1,300
Answer:
Cash 12,000 debit
Accont receivable 4,000 debit
Equipment 45,000 debit
Account payable 1,500 credit
Salaries payable 15,000 credit
Interest payable 7,500 credit
Common stock 25,000 credit
Dividens 12,900 debit
Service revenue 38,000 credit
Salaries expenses 1,800 debit
Utility expanse 1,300 debit
Rent expenses 10,000 debit
Total 87,000 87,000 credit
Explanation:
Assets and expenses account will have a debit balance
Dividends will also have a debit balance
Then liabilities (payable) accounts, equity accounts (common stock) and revenues account have a credit balance
With this in mind we arrenge the accounts and create the trial balance.
Last, we add each column. This is to make sure it is correct, debit = credit
Final answer:
To prepare the trial balance of Smith Floor Coverings, each account with a normal balance is listed alongside the respective debit or credit columns. The trial balance shows that total debits equal total credits, which confirms that the ledger accounts are balanced.
Explanation:
To prepare the trial balance of Smith Floor Coverings at December 31, 2018, we need to list each account and its balance in the correct debit or credit column. A trial balance aims to verify that the total debits equal the total credits in the ledger accounts. The summarized data will be listed as follows:
AccountDebitCreditCash12,000Accounts Receivable4,000Equipment45,000Service Revenue38,000Rent Expenses10,000Salaries Expenses1,800Utility Expense1,300Account Payable1,500Interest Payable7,500Salaries Payable15,000Common Stock25,000Dividends12,900
Total
87,000
87,000
The trial balance totals for debits and credits should both be $87,000, showing that the ledger is balanced.
As you know, Barbie has broken up with her long term squeeze, Ken. She's decided she wants to get involved in some projects to keep her mind off heart-broken Ken. So Barbie decided to create a clothing line, snack foods, hair products, and new aerobics equipment. All of these products will be manufactured in Barbie's very own pink factory and will be sold with the Barbie brand on them. This type of branding is best described as:
Answer:
This type of branding is best described as Brand extension
Explanation:
Barbie create products of different categories and the existing brand name is extended to a new product category. Brand extension strategy assumes an existing brand name, but combines it with a new product category. Benefits of this strategy are instant recognition and faster acceptance and saving substantial advertising costs. The risk is that may confuse the image of the main brand.
Final answer:
Barbie is using a corporate branding strategy to leverage her brand's reputation across a variety of new products. This approach helps to ensure consistency and recognition among consumers, building brand trust and loyalty, much like the branding strategies used by other successful companies.
Explanation:
The branding strategy that Barbie is adopting for her new ventures can be described as a corporate branding strategy. This approach involves using the Barbie brand, which already has a strong presence and recognition, across a variety of products such as clothing, snack foods, hair products, and aerobics equipment. By doing so, Barbie is leveraging her brand's reputation to create synergies among her product offerings and ensuring that consumers receive a consistent message across multiple platforms and sources.
This strategy is akin to other corporate branding strategies where a central theme or image, such as Abercrombie & Fitch's "casual luxury" or the physical aspects of a product touted in advertisements (unbreakable bottle, nonstick surface, etc.), is used to unify a range of products. The use of a strong, recognizable brand name helps in building trust and loyalty among consumers while also facilitating the entry of new products into the market.
Furthermore, as Naomi Klein pointed out in her text No Logo, such branding practices are deeply woven into the fabric of modern economies, shaping consumer behaviors and corporate dynamics alike. Companies aim to protect and capitalize on their brands, which often become their most valuable assets.
The contribution margin ratio of Candle Corporation's only product is 65%. The company's monthly fixed expense is $455,300 and the company's monthly target profit is $41,300. Required: Determine the dollar sales to attain the company's target profit. (Round your answer to the nearest whole dollar amount.)
Answer:
Break-even point in dollars= $764,000
Explanation:
Giving the following information:
The contribution margin ratio of Candle Corporation's only product is 65%.
The company's monthly fixed expense is $455,300.
The target profit is $41,300.
Break-even point in dollars= (fixed costs + profit)/contribution margin ratio
Break-even point in dollars= (455300+41300)/0.65
Break-even point in dollars= $764,000
Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP does not include the value of intermediate goods and services, but nominal GDP does. Real GDP is not influenced by price changes, but nominal GDP is. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
Answer: Option (b) is correct.
Explanation:
Real GDP is totally based on the base year price level. This means that base year price level remains the same over all the periods. Therefore, Real GDP is generally not affected by the changes occur in the price level. Hence, it only includes the changes in output.
Nominal GDP takes into account the effect of changes in the price level. Therefore, it is affected by the changes in the price level and it is also measured in current U.S dollars. Hence, it doesn't show the true value of the goods and services produced in a given year.
Final answer:
Real GDP is a more accurate representation of an economy's production than nominal GDP because it adjusts for inflation or deflation, providing a true picture of economic growth and changes in production levels over time.
Explanation:
Real GDP is a more accurate measure of an economy's production than nominal GDP because it takes into account the effects of inflation or deflation. Nominal GDP measures the value of all final goods and services produced within a country using current prices without adjustment. This means that an increase in nominal GDP could just indicate rising prices rather than an actual increase in production. Real GDP, on the other hand, is adjusted using a price index, such as the GDP deflator, to reflect the actual volume of goods and services produced, effectively stripping out any price changes.
For example, if a country's only produces apples and the price of an apple increases from one year to the next, the nominal GDP would show an increase even if the same number of apples were produced both years. However, real GDP would remain the same since it would adjust for this price increase, thus accurately representing the static production levels. Therefore, real GDP provides a clearer picture of a nation's economic growth and true changes in production level over time irrespective of price fluctuations. This is crucial for making meaningful comparisons of economic output over different time periods.
The following information is available for Windsor, Inc. for the year ended December 31, 2017. Beginning cash balance $ 45,720 Accounts payable decrease 3,759 Depreciation expense 164,592 Accounts receivable increase 8,331 Inventory increase 11,176 Net income 288,646 Cash received for sale of land at book value 35,560 Cash dividends paid 12,192 Income taxes payable increase 4,775 Cash used to purchase building 293,624 Cash used to purchase treasury stock 26,416 Cash received from issuing bonds 203,200 Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answer:
Cash generated for the year: 348,793
ending cash: 394,513
Explanation:
Operating Activities:
Net Income 288,646
depreciation 164,592
adjusted 453,238
change in Working capital:
AP decrease 3,759
Tax Payable 4,775
AR increase (8,331)
Inventory increase (11,176)
total change (10,973)
cash generated from operating activities 442.265
Investing Activities
proceed from land 35,560
purchase of building (293,624)
cash used from investing activities 258,064
Financing Activities
issuance of shares 203,200
TS purchase (26,416)
dividends paid (12,192)
cash generated from financing activities 164,592
Cash generated for the year: 348,793
beginning cash 45,720
ending cash 394,513
The Arizona Company, a U.S.-based manufacturer, ordered a piece of equipment from Sonora Inc., a Mexico-based supplier, agreeing to pay 300,000 Mexican pesos upon delivery of the equipment in three months time. At the time of the contract signing, the exchange rate between the U.S. dollar and the Mexican peso was 10P:$1.
With concerns about a weakening U.S. dollar, The Arizona Company decided to hedge its currency exposure by purchasing a forward foreign exchange contract from a local bank.
The forward contract committed The Arizona Company to pay $30,300 in three months in exchange for 300,000 pesos.
What was the forward foreign exchange rate implicit in the contract (assuming no transaction costs)?
Answer:
the forward contract rate is 9.9P = 1 USD
Explanation:
at contract 300,000 pesos at 10:1
When Arizone hedged a forward it is paying 30,300 for the 300,000 pesos so the implicit rate is not 10:1 as it would be paying 30,000 not 30,300
So we calcualte the rate:
pesos/dollars
300,000 / 30,300 = 9.900
the forward contract rate is 9.9P = 1 USD
The statement of retained earnings or the statement of stockholders’ equity reconciles the net income, dividends paid, and the change in retained earnings during a particular year. Which of the following best describes shareholders equity? Equity is the initial claim on value of the assets before the firm pays off its liabilities. Equity is the difference between the company’s assets and liabilities.
Answer: "Equity is the difference between the company’s assets and liabilities" Describes shareholders equity.
Explanation: This statement is reflected in the basic equity equation:
Assets = Liabilities + Equity.
If we clear the net worth it would be:
Assets - Liabilities = Equity.
Shareholders' equity, often called stockholders' equity, represents the residual interest in a company's assets after liabilities are deducted. It's calculated as total assets minus total liabilities. It's influenced by net income earned and dividends paid out.
Explanation:Shareholders' equity, also known as stockholders' equity, represents the equity interest of the company's shareholders. It is essentially a company's residual interest in the assets of the entity after deducting liabilities. In simpler terms, equity is what's left after you subtract a company's total liabilities from its total assets, which could be distributed to the shareholders if the company was liquidated.
For instance, if a company has $100 million in assets and $75 million in liabilities, the Shareholders' equity is $25 million. This represents the net value of the company or the amount of money that would be returned to shareholders if all the company's assets were sold and all its debts paid off. Net income and dividends paid are significant components of shareholders' equity because the company can either use its profit to pay dividends to shareholders or retain it for future growth, both of which impacts shareholders' equity.
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. Based on the following data, Accounts payable…………………………………………………..... $62,000 Accounts receivable…………………………………………………. 100,000 Cash………………………………………………………………....... 30,000 Inventory………………………………………………………………. 138,000 Land………………………………………………………………….… 160,000 Common Stock ………………………………………………………. 200,000 Revenue………………………………………………………………. 80,000 Dividends……………………………………………………………… 56,000 Expenses……………………………………………………………… 40,000 what is the amount of total assets?
Answer: $428,000
Explanation:
Given that,
Accounts payable = $62,000
Accounts receivable = 100,000
Cash = 30,000
Inventory = 138,000
Land = 160,000
Common Stock = 200,000
Revenue = 80,000
Dividends = 56,000
Expenses = 40,000
Total assets = Accounts receivable + Cash + Inventory + Land
= 100,000 + 30,000 + 138,000 + 160,000
= $428,000
You deposited $1,000 in a savings account that pays 8 percent interest, compounded quarterly, planning to use it to finish your last year in college. Eighteen months later, you decide to go to the Rocky Mountains to become a ski instructor rather than continue in school, so you close out your account. How much money will you receive?
Answer: $1,126.16
Explanation:
Given that,
Amount deposited in savings account = $1,000
Interest rate = 8%, compounded quarterly
Since the interest is compounded quarterly, therefore
[tex]Number\ of\ periods = \frac{18}{3}[/tex]
n= 6
[tex]Effective\ rate\ of\ interest=\frac{Interest\ Rate}{4}[/tex]
[tex]Effective\ rate\ of\ interest=\frac{0.08}{4}[/tex]
= 0.02
e = 2%
Hence,
[tex]Amount\ to\ be\ received = Deposited\ Amount\times(1+e)^{n}[/tex]
[tex]Amount\ to\ be\ received = 1,000\times(1+0.02)^{6}[/tex]
= 1,000 × 1.1261
= $1,126.16
The sum of money that will be received after 18 months is $1,126.16. The sum is received after compounding the principal for 18 months at a rate 8%.
What is compounding?Compounding refers to the process in which the interest is credited on the principal amount as well as on the interest up-to the date of interest calculation.
The formula to calculate the amount after compounding is:
[tex]\rm A = P(1+\dfrac{r}{n})^{nt}[/tex]
where A is the final amount, P is the principal, r is the rate of interest, n is the number of times principal is compounded in a year, and t is the tenure (in years).
Given:
Principal is $1,000
Rate is 8%
Compounding is quarterly therefore n will be 4.
And the value of t is the tenure, that is 18 months or 1.5 years.
Therefore the amount will be:
[tex]\rm A = 1000(1+\dfrac{0.08}{4})^{4\times1.5}\\\\\rm A = 1000(1.02)^{6}\\\\\rm A = 1000(1.126)\\\\\rm A = \$1,126.16[/tex]
Therefore the amount we will receive is $1,126.16
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Assuming Net Income for the year is $250,000, what is the cash flows from operating activity given in the following information:
Increase in Salaries Payable $17,500
Depreciation Expense $7,500
Increase in Prepaid Rent $26,500
Loss on sale of asset $1,150
Increase in Accounts Payable $29,000
Increase in Inventory $76,000
Answer: $202,650
Explanation:
Given that,
Net Income for the year = $250,000
Increase in Salaries Payable = $17,500
Depreciation Expense = $7,500
Increase in Prepaid Rent = $26,500
Loss on sale of asset = $1,150
Increase in Accounts Payable = $29,000
Increase in Inventory = $76,000
Cash flows from operating activity:
= Net Income + Salaries Payable + Depreciation Expense - Prepaid Rent + Loss on sale of asset + Accounts Payable - Inventory
= $250,000 + $17,500 + $7,500 - $26,500 + $1,150 + $29,000 - $76,000
= $202,650
At the beginning of the year, Cullumber Company had total assets of $864,000 and total liabilities of $523,000. (Treat each item independently.) (a) If total assets increased $156,000 during the year and total liabilities decreased $86,000, what is the amount of stockholders’ equity at the end of the year? Stockholders’ equity $enter a dollar amount (b) During the year, total liabilities increased $91,000 and stockholders’ equity decreased $77,000. What is the amount of total assets at the end of the year? Total assets $enter a dollar amount (c) If total assets decreased $90,000 and stockholders’ equity increased $103,000 during the year, what is the amount of total liabilities at the end of the year? Total liabilities $enter a dollar amount
Answer:
a. $583,000
b. $878,000
c. $330,000
Explanation:
In this question, we have to use the accounting equation which is presented below:
Total assets = Total liabilities + stockholder's equity
$864,000 = $523,000 + stockholder's equity
So, the stockholder's equity = $864,000 - $523,000 = $341,000
a. New assets = Old assets + addition
= $864,000 + $156,000
= $1,020,000
New liabilities = Old liabilities - reduction
= $523,000 - $86,000
= $437,000
So, the stockholder's equity = $1,020,000 - $437,000 = $583,000
b. New liabilities = Old liabilities + addition
= $523,000 + $91,000
= $614,000
New equity = Old equity - reduction
= $341,000 - $77,000
= $264,000
So, the total assets = New liabilities + New equity
= $614,000 + $264,000
= $878,000
c. New assets = Old assets - reduction
= $864,000 - $90,000
= $774,000
New equity = Old equity + addition
= $341,000 + $103,000
= $444,000
So, the total liabilities = $774,000 - $444,000 = $330,000
Using the accounting equation (Assets = Liabilities + Stockholders' Equity) we find that at the end of the year the stockholders’ equity is $583,000 (a), total assets amount to $878,000 (b) and total liabilities sum up to be $330,000 (c).
Explanation:The subject of this question is business, specifically the calculation of asset, liability, and stockholder's equity values. Stockholder's equity represents the value of a business after all debts have been settled. It's calculated using the equation: Assets = Liabilities + Stockholder's equity.
For section (a), the initial stockholders' equity is $864,000 (assets) - $523,000 (liabilities) = $341,000. If assets increased by $156,000 to $1,020,000, and liabilities decreased by $86,000 to $437,000, then at the end of the year, stockholders' equity will be $1,020,000 - $437,000 = $583,000.
For section (b), if liabilities increased by $91,000 to $614,000, and the stockholders equity decreased by $77,000 to $264,000, then the total assets at the end of the year would be $614,000 (liabilities) + $264,000 (Stockholders’ equity) = $878,000.
In section (c), if the assets decreased $90,000 to $774,000, and the stockholders' equity increased by $103,000 to $444,000, then the total liabilities will be total assets - stockholders' equity = $774,000 - $444,000 = $330,000.
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Luther Inc., has 3,000 shares of 6%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2013, and December 31, 2012. The board of directors declared and paid a $7,500 dividend in 2012. In 2013, $36,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2013?
a. $25,500
b. $18,000
c. $ 10,500
d. $ 9,000
Answer:
c. $ 10,500
Explanation:
3,000 shares at $50 yields 6% cumulative = dividends per year
3,000 x 50 x 0.06 = $9,000 dividends per year
dividends for 2012:
7,500 - 9,000 preferred dividends = -1,500
The preferred stock accumulated 1,500 dividend to recieve in future periods
dividends for 2013:
36,000 - 9,000 preferred for 2013 - 1,500 accumulate = 25,500 available for common stock
The preferred stock reviee 9,000 + 1,500 = 10,500 for 2013
An elderly physician has built up his own practice into a quite valuable business. Now that he is thinking of retiring, he wants to take on a partner to learn the business and eventually buy the practice in three years. Her compensation will be a salary plus 25% of the profits if they are below the historical average and 50% for any increase above the historical average. The eventual purchase price for the practice will be 5 times the average profits over the three years. Discuss the efficiency aspects of such a contract. Are the incentives of the buyer and seller aligned?
Answer:
No
Explanation:
Tehe Overlapping tenure for the retiring and new physicians tends to increase the transfer of practice specific knowledge. The profit sharing with the new physician increases her incentives to maximize profits but since the sale price is a multiple of the profits during this 3 year, the new physician has an incentive to shirk to keep the profits low. it would be better to use a multiple of profits from the period before she began this probation.
Final answer:
The contract aligns the incentives of both the retiring physician and the incoming partner by using a tiered profit-sharing scheme and a purchase price based on average profits. This promotes efficiency and growth of the practice but could also lead to potential drawbacks like short-term focus and compromise in care quality.
Explanation:
The contract under consideration provides a form of profit-sharing compensation, where the new partner will earn a salary plus a percentage of profits. If profits are below the historical average, the partner receives 25% of the profits, and for any increase above the historical average, the partner's share jumps to 50%. The eventual purchase price of the practice is set at five times the average profits over a three-year span, incentivizing both parties to maximize profits during this period. From an efficiency standpoint, this contract aligns the incentives of the buyer and seller. The tiered profit-sharing agreement encourages the new partner to increase profits beyond the historical average, therefore boosting their personal earnings and raising the practice's sale price. The retiring physician, in turn, is incentivized to ensure a smooth transition and operational success, as this will maximize the practice's value at the time of the sale. This alignment of incentives can create an environment for growth and could potentially increase the quality and reputation of the practice. However, there are potential drawbacks. If not carefully managed, the focus on increasing profits may lead to short-term decision-making that sacrifices long-term sustainability or ethical considerations. Additionally, the pressure to increase profits might lead to cost-cutting measures that could compromise patient care or employee satisfaction.
In the LMN partnership, Lynn's capital is $60,000, Marty's is $80,000, and Nancy's is $70,000. They share income in a 4:3:3 ratio, respectively. Nancy is retiring from the partnership. Each of the following questions is independent of the others.
41. Refer to the information above. Nancy is paid $84,000, and no goodwill is recorded. In the journal entry to record Nancy's withdrawal
A. Lynn, Capital will be debited for $7,000
B. Marty, Capital will be debited for $6,000
C. Nancy, Capital will be credited for $70,000
D. Cash will be debited for $84,000
Answer:
B. Marty, Capital will be debited for $6,000
Explanation:
The journal entry must record the following operations:
Lynn, Capital will be debited for $8,000
Marty, Capital will be debited for $6,000
Nancy, capital will be debited $70,000
Cash will be credited for $84,000
Income sharing is met, where Lynn and Marty have a 4:3 ratio, that equates to reduced $8,000 of Lynn's capital, and reduced $6,000 of Marty's capital.
Option B es the correct.
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Why is the shape of the production possibilities frontier (PPF) often curved instead of straight? Because the production possibilities frontier is based on the productive capabilites, and of a nation overall, rather than the productive capacity of an individual. Typically, some resources are better suited for producing one good than another, which means that there are diminishing returns when moving such resources away from producing what they are best suited for. The productive efficiency of an economy decreases as it moves from left to right along the PPF. To take a potential sunk cost into account, the PPF is curved to distribute the burden of the sunk cost based on allocative effieciency.
Answer:
The correct answer is the second statement.
Explanation:
A production possibility frontier shows the maximum possible combinations of two goods that can be produced using the given resources. This frontier is concave to the origin. The curve shape of this frontier is because of increasing marginal opportunity cost.
We have limited resources that serve alternative uses. To increase the production of one commodity we need to decrease the production of the other. but the resources are not perfectly substitutable between these two goods. So when we increase the production of one good the marginal opportunity cost of the giving up the alternative goes on increasing.
Jenna decides to see a movie that costs $7 for the ticket and has an opportunity cost of $20. After the movie, she says to one of her friends that the movie was not worth it. Apparently:
A. Jenna failed to apply the cost-benefit model to her decision.
B. Jenna was not rational.
C. Jenna overestimated the benefits of the movie.
D. Jenna underestimated the benefits of the movie.
Answer:
The correct answer is option C.
Explanation:
The cost of the movie ticket is $7.
The opportunity cost involved is $20.
The total cost of the movie will thus be $27.
Jenna would have thought that the benefit of watching the movie would be worth $27 at least.
But later she said that the movie was not worth it. This means that the cost incurred was higher than the benefits earned.
This implies that Jenna overestimated the benefits of watching the movie.
Houser Corporation owns 4,000,000 shares of stock in Baha Corporation. On December 31, 2012, Houser distributed these shares of stock as a dividend to its stockholders. This is an example of a
a. property dividend.
b. stock dividend.
c. liquidating dividend. d. cash dividend.
Answer:
The correct option is (a)
Explanation:
Property dividend is distributing assets as dividends to its stockholders. This distribution is not in the form of cash. It could be any asset including any stock that the organization holds with some other company.
In this case, Houser corporation distributes shares of Baha corporation to its shareholders as dividends. This is an example of property dividend.