Final answer:
To recognize the 2021 income tax benefit from the net operating loss, multiply the $137 million loss by the 25% tax rate to determine the tax benefit, which is $34.25 million, reflected as a Deferred Tax Asset. The net operating loss on the income statement remains $137 million.
Explanation:
To recognize the income tax benefit of the net operating loss in 2021, we first need to determine the tax benefits of the $137 million operating loss, the $5 million EPA penalty, and the $12 million estimated loss contingency.
In this case, the entire $137 million loss is tax-deductible. However, the $12 million estimated loss contingency will be tax deductible when actually paid in 2022, not in 2021. Yet, for financial accounting purposes, we recognize the benefit in the year that the loss is reported. Therefore, the income tax benefit will be based on the full $137 million loss.
The journal entry to recognize the income tax benefit is:
Debit: Income Tax Benefit $34.25 millionCredit: Deferred Tax Asset $34.25 millionTo calculate the benefit, multiply the $137 million by the tax rate of 25% (137 million * 0.25 = $34.25 million).
The net operating loss reported in the 2021 income statement is $137 million since that is the pretax operating loss before considering the tax benefit.
Final answer:
The journal entry to recognize the income tax benefit of the net operating loss for Fore Farms in 2021 debits Income Tax Benefit and credits Deferred Tax Asset for $34.25 million, which is 25% of the $137 million pretax operating loss. The net operating loss reported on the 2021 income statement is $137 million.
Explanation:
To recognize the income tax benefit of the net operating loss for Fore Farms in 2021, we need to consider the penalty and the estimated loss from accruing a loss contingency. Since the tax rate is 25% and the total pretax operating loss is $137 million (including both the penalty and the loss contingency), the journal entry would reflect an income tax benefit at this tax rate on the taxable portions of the operating loss.
The journal entry is as follows:
Debit Income Tax Benefit: $137 million x 25% = $34.25 millionCredit Deferred Tax Asset: $34.25 millionThe net operating loss for the income statement would be the pretax operating loss amount, which is $137 million.
QUESTION 10 Cyclical unemployment is caused by: a. cyclical changes in the job skills among workers. b. shifts in the job skills required in the economy. c. declines in real GDP. d. seasonal layoffs.
Answer:
d. seasonal layoffs
Explanation:
When a business cycle changes, certain employees relevant in previous cycle may not be relevant in the next cycle, hence, leading to cyclical unemployment. This happens mostly in businesses that are highly seasonal.
Final answer:
Cyclical unemployment occurs due to insufficient aggregate demand in the economy, which happens during economic downturns or recessions. This leads to a decline in production and fewer workers being needed, increasing unemployment.
Explanation:
Cyclical unemployment occurs when there is insufficient aggregate demand in the economy to provide jobs for everyone willing to work. This type of unemployment is closely linked to the economic business cycles. During periods of recession, aggregate demand decreases, which leads to reduced production, and consequently, fewer workers are required. This results in a rise in cyclical unemployment where the number of unemployed individuals exceeds the number of job vacancies available.
Cyclical unemployment is different from other types such as structural or frictional unemployment. Structural unemployment is due to a mismatch between the workers' skills and the skills needed for available jobs, whereas frictional unemployment involves workers transitioning between jobs or entering the workforce.
Answering the student's question, cyclical unemployment is caused by: c. declines in real GDP, given that during such declines, demand for goods and services falls, leading to reduced production needs and a decrease in labor demand.
Compute the payback period for each of these two separate investments: A new operating system for an existing machine is expected to cost $250,000 and have a useful life of five years. The system yields an incremental after-tax income of $72,115 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. A machine costs $170,000, has a $13,000 salvage value, is expected to last eleven years, and will generate an after-tax income of $39,000 per year after straight-line depreciation.
Answer:
The operating system has payback of 3.47 years
The machine has a payback of 4.36 years
Explanation:
Payback period is the length of time taken for the initial investment to repay itself.
The project after the payback period would begin to yield returns on the investment.
Payback period=Initial investment/after-tax income per year
For the operating system the initial investment is the cost of $250,000
after-tax income is the incremental amount of $72,115
payback period=$250,000/$72,115=3.47 years
The machine has an initial capital outlay of $170,000
after tax income of $39,000
payback period=$170,000/$39,000=4.36 years
Entry, Exit, and Long Run Profitability — End of Chapter Problem A year ago, you graduated from college and decided to open your own computer software company. Over the past year, your firm generated $500,000 in revenue. You hired two software engineers and paid each of them $150,000 over the past year. You also purchased computer equipment that cost a total of $30,000. To save money, you decided to use the basement of your house for the business. Previously, you had rented this space to a tenant for $6,000 per year. Instead of opening your own business, you could have gone to work for Microsoft and earned $200,000 over the past year. a. What were your accounting profits of your firm over the past year? 170000 b. What were the economic profits of your firm over the past year? $ 506000 should not have c. Given this information, you launched your own business.
Answer:
$-36,000
Explanation:
Accounting profit = revenue - salary paid - equipment purchased
= 500,000 - (2 x 150,000) - 30,000
= 470,000 - 300,000
= 170,000
(a)
Computing for Economic profit = Accounting profit - Rent foregone - Salary given up
= 170,000 - 6,000 - 200,000
= - 36,000
(c) Since economic profit < 0, you should not have opened the business. You invited losses instead of gains, you should bit have started this at all
The firm's accounting profit is calculated as total revenues minus explicit costs resulting in $50,000. The software company's accounting profit is $170,000, but after considering implicit costs, the economic profit is -$36,000, indicating that the business is not economically profitable.
Explanation:Understanding Accounting and Economic ProfitsTo answer the question about the firm's accounting profit, we need to calculate the difference between total revenues and explicit costs. In the given example, the firm had sales revenue of $1 million and expenses including $600,000 on labor, $150,000 on capital, and $200,000 on materials. Using the formula for accounting profit (total revenues minus explicit costs), the calculation would be $1,000,000 - ($600,000 + $150,000 + $200,000), resulting in $50,000 in accounting profit.
Regarding the scenario provided earlier in the question, your software company's accounting profit would be calculated as revenue ($500,000) minus explicit costs (wages of $300,000 and equipment cost of $30,000), which equals $170,000. However, to accurately measure the economic profit, we must also consider implicit costs such as the foregone rent of $6,000 and the alternative salary at Microsoft of $200,000. Subtracting these implicit costs from the accounting profit, the economic profit is actually -$36,000, suggesting that your business is not economically profitable.
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A student makes the following observation: "The Dow Jones Industrial Average currently has a value of 13,500, while the S&P 500 has a value of 1,500. Therefore, the prices of the stocks in the DJIA are nine times as high as the price of the stocks in the S&P 500." Is the student's observation correct
Answer: No, these indexes are averages of stock prices and indicate the overall performance of the stock market.
Explanation:
GIVEN the following ;
Dow Jones industrial average = $13,500
S&P 500 Industrial average = $1,500
Prices of stock in the DIJA are not nine times as high as the price of stocks in the S&P 500, the indexes displayed are only used as a measure of performance obtained from large companies listed on the United States stock exchange market. The measurement of the Dow Jones industrial average takes 30 large companies into cognizance while the S&P 500 averages stocks from 500 large companies.
Shadee Corp. expects to sell 550 sun visors in May and 380 in June. Each visor sells for $12. Shadee’s beginning and ending finished goods inventories for May are 85 and 45 units, respectively. Ending finished goods inventory for June will be 65 units. It expects the following unit sales for the third quarter: July 545 August 460 September 470 Sixty percent of Shadee’s sales are cash. Of the credit sales, 54 percent is collected in the month of the sale, 37 percent is collected during the following month, and 9 percent is never collected. Required: Calculate Shadee’s total cash receipts for August and September. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)
Answer:
August = $5, 472
September = $5,419
Explanation:
Shadee Corporation
Cash Receipt Budget
For the month of August & September
August September
Sales Volume 460 470
Price per unit 12 12
Total Sales $5,520 $5,640
60% Cash Sales $3,312 $3,384
Credit Sales:
54% collected in the month of sales
$1,192 $1,218
37% collected in the following month
$968 (1) $817
Total budgeted cash receipt
$5,472 $5,419
Note: (1)
37% of July's credit sale will be collected in the month of August. Therefore,
July's total sales = 545 × 12 = $6540
60% of them is cash = $3,924
Remaining is credit = $2,616
37% of credit sales = $2,616 × 37% = $968
When The Total cash receipts for August and also September
The Total cash receipts for August are = $5,472
The Total cash receipts for September are = $5,419
Calculation of Cash Receipts
Shade Corporation
Then the Cash Receipt Budget
For August & September
August September
Then Sales Volume 460 470
Price per unit 12 12
Therefore, The Total Sales of $5,520 $5,640
60% Cash Sales $3,312 $3,384
Then the Credit Sales:
54% collected in the month of sales
$1,192 $1,218
Then, 37% were collected in the following month
$968 (1) $817
The Total budgeted cash receipt
$5,472 $5,419
Note: (1)
37% of July's credit sale will be collected in August. Therefore,
July's total sales = 545 × 12 = $6540
60% of them is cash = $3,924
Remaining is credit = $2,616
Therefore, 37% of credit sales = $2,616 × 37% = $968
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Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $220 million of 8% bonds, dated January 1, on January 1, 2021. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 10%. The price paid for the bonds was $201 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2021, was $210 million.
Answer and Explanation:
Journal Entries - Fuzzy Monkey Technologiesn Inc
Debit (In Million) Credit (In Million)
1. 1-Jan-21
Dr Investment in Bond $220.00
Cr To Cash $201.00
Cr To Discount on bond investment $19.00
(Being investment in bond recorded)
2. 30-Jun-21
Dr Cash ($220 *8% * 6/12) $8.80
Dr Discount on bond investment
$1.25
Cr To Interest revenue
($201*10%*6/12) $10.05
(Being revenue recoginition for bond interest and discount amortized)
3. 31-Dec-21
Dr Cash ($220 *8% * 6/12) $8.80
Dr Discount on bond investment $1.31
Cr To Interest revenue
($202.25*10%*6/12) $10.11
(Being revenue recoginition for bond interest and discount amortized)
4a:
Fuzzy monkey report its investment on December 31, 2021 balance sheet at fair value which is $210 million
4b:
Journal Entries - Fuzzy Monkey Technologies Inc.
Debit (In Million) Credit (In Million)
1 31-Dec-21
Dr Fair value adjustment ($210 - $201 - $1.25 - $1.31) $6.44
Cr To Unrealized holding gain or loss - OCI $6.44
(Being adjusting entry to record investment at fair value)
5:
Statement of cash flows (Partial)
For 2021
Amount (In million)
Cash flow from operating activities:
Interest received $17.60 Inflow
Cash flow from investing activities:
Cash paid for purchase of investment $201.00 Outflow
A marketing manager had a goal to improve market share for his paper plates by 2 percent in the coming year, and he felt he’d need to run television ads for two months as well as create a social media campaign in order to accomplish this. He priced the advertising he planned to use and set the budget accordingly, using which promotional budgeting technique?
Answer:
OBJECTIVE AND TASK BUDGETING.
Explanation:
Objective and task budgeting is an effective budgeting strategy which considers the firm’s overall promotional objectives. The budgeting is then done according to the requirements for meeting these goals.
By running television ads and a social media campaign, the marketing manager has created a means to meet his objective or goal which is to improve market share for his paper plates by 2 percent in the coming year. He then proceeds to price how much the advertising would cost him and then sets the budget. This budgeting is done by OBJECTIVE AND TASK BUDGETING. This allows the marketing manager to allocate a certain amount of money to its marketing budget based on his objectives, rather than choosing an arbitrary amount.
Top-Ten Inc. is considering replacing its existing machine that is used to produce musical CDs. This existing machine was purchase 3 years ago at a base price of $60,000. Installation costs at the time for the machine were $1,000. The existing machine is considered a 3-year class for MACRS. The existing machine can be sold today for $40,000 and for $10,000 in 3 years. The new machine has a purchase price of $80,000 and is also considered a 3-year class for MACRS. Installation costs for the new machine are $7,000. The estimated salvage value of the new machine is $20,000. This new machine is more efficient than the existing one and thus savings before taxes using the new machine are $8,000 a year. The company's marginal tax rate is 30% and the cost of capital is 12%. For this project, what is the incremental cash flow in year 1?
Answer: $12,943.10
Explanation:
To answer let us begin with knowing the MACRS percentages.
Both machines are considered a 3 year class for MACRS.
3 Year MACRS percentages are as follows,
Year 1= 33.33%
Year 2=44.45%
Year 3=14.81%
Year 4=7.41%
To calculate the Incremental cash flow we would need to subtract the tax on the Pre-tax savings as well as the depreciation tax shield.
DEPRECIATION TAX SHIELD.
Depreciation on New Machine is,
= First year MACRS * purchase price.
= 33.33% * 87,000 ( include installation price)
= $28,997.10
Subtract depreciation on original machine which is now in FOURTH year so we use the 4 year depreciation rate,
= 61,000 * 7.41%
= $4,520.10
Subtracting them would give,
= 28,997.10 - 4,520.10
= $24,477
This is the Additional depreciation.
We need to calculate the tax shield on it.
= 24,477 * 30%
= $7,341.10 is the tax shield.
Now to calculate the Incremental Cash flow.
= Pre-tax Savings - (tax on Pre-tax Savings) + Depreciation tax shield
= 8,000 - (8,000 * 30%) + 7,341.10
= $12,943.10
$12,943.10 is the Incremental Cash flow in year 1.
A division's return on investment may be improved by increasing:
A. capital turnover or sales margin.
B. sales margin and cost of capital.
C. cost of goods sold and expenses.
D. capital turnover or cost of capital.
E. sales revenue and cost of capital.
Answer:
The correct answer is letter "A": capital turnover or sales margin.
Explanation:
Return on Investment, or ROI, measures the amount of return on an investment relative to the cost of investment. The return of an investment is divided by its cost to calculate ROI. The result is expressed as a percentage or as a ratio. Investments with positive ROI are likely to be successful while those with negative figures are possible to end up in losses.
To increase a division's ROI, the firm can increase the capital turnover (capital assets that allow the company to profit) or the sales margin (the difference between costs and the net profit of selling a unit of a product).
A division's return on investment can be improved by increasing capital turnover or sales margin. Higher capital turnover indicates efficient use of capital to generate income, while higher sales margin indicates more profit made from sales.
Explanation:A division's return on investment (ROI) can be improved by increasing capital turnover or sales margin. ROI is a key performance metric used to measure the probability of gaining a return from an investment. It measures the efficiency of an investment or compares the efficiency of a number of different investments.
Capital turnover is the ratio of how capital is used to generate revenue. The higher the capital turnover ratio, the more effective a company is in using its capital to generate income. A high capital turnover can indicate higher ROI because it shows that the company is effectively using its capital.
On the other hand, sales margin, is the profit made from selling products or services after all costs associated with producing them are deducted. The higher the sales margin, the more profit per dollar of sales a company makes, and therefore, the higher the ROI.
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Noric Cruises Inc. began the month of October with the following balances: Common Stock, $150,000; Additional Paid-In Capital, $3,225,000; and Retained Earnings, $12,400,000. During June, Noric issued for cash 50,000 shares of common stock (with a stated value of $1) at $16 per share. Noric reported the following results for the month ended October 31: Net income $2,350,000 Cash dividends declared 475,000 Prepare a statement of stockholders’ equity for the month ended October 31. If there is a net loss or there has been a decrease in stockholders' equity, enter that amount as a negative number using a minus sign. If an amount box does not require an entry, leave it blank.
Answer:
The statement of stockholders’ equity for the month ended October 31 is $18,450,000.
Explanation:
Noric Cruises Inc.
Statement of stockholders’ equity for the month ended October 31
Common stock Paid-In Capital Retained Earnings
Opening balance $150,000 $3,225,000 $12,400,000
Addition 800,000 - -
Net income - - $2,350,000
Cash dividends - - (475,000)
Balance at Oct 31 $950,000 $3,225,000 $14,275,000
Noric Cruises Inc.
Statement of Stockholders' Equity
For the Month Ended October 31
Common
Stock Additional
Paid-In
Capital
Retained
Earnings
Total
Balances, October 1
$fill in the blank 2
150,000
$fill in the blank 3
3,225,000
$fill in the blank 4
12,400,000
$fill in the blank 5
15,775,000
Issued Common Stock
fill in the blank 7
50,000
fill in the blank 8
750,000
fill in the blank 9
0
fill in the blank 10
800,000
Net Income
fill in the blank 12
0
fill in the blank 13
0
fill in the blank 14
2,350,000
fill in the blank 15
2,350,000
Dividends
fill in the blank 17
fill in the blank 18
fill in the blank 19
fill in the blank 20
Balances, October 31
$fill in the blank 22
200,000
$fill in the blank 23
3,975,000
$fill in the blank 24
14,275,000
$fill in the blank 25
18,450,000
M Company has the following information available before recording the adjustment at the end of the year: Accounts Receivable $800,000 Allowance for doubtful accounts per books before adjustment $50,000 credit Bad Debt Expense calculated using percentage of receivables method $15,000 The cash (net) realizable value of the accounts receivable at the end of the year after adjustment is Select one: a. None of the above b. $735,000 c. $685,000 d. $750,000 e. $800,000
Answer:
b. $735,000
Explanation:
Bad debt Expense will be calculated using the percentage of debt loss. The expense will be calculated using the account receivable balance.
Allowance for Doubtful Accounts balance before adjustment = $50,000 Credit
Bad Debt expense based on percentage of receivables = $15,000
This adjustment will added to the balance of $50,000 to make Allowance for Doubtful Accounts ending balance equals to $65,000 ( $50,000 + $15,000 ).
Net realizable value of account receivable is the net value of Allowance for Doubtful Accounts and Account receivable.
Net Realizable value of the accounts receivable = $800,000 - $65,000 = $735,000
Suppose that you buy, and one year later sell, a foreign (British) bond under the following circumstances: When you buy the bond the exchange rate is $2.00 = pound£1. You pay pound£45 ($90) for the British bond. You sell the bond for pound£50. No interest payment was expected or received. When you sell the bond, the exchange rate is $1.50 = pound£1. What is your gain or loss in dollars $_______
- $15 loss is the answer
Solution:
Given,
The exchange rate is $2.00 = pound £1
The exchange rate is $1.50 = pound£1
You pay pound£45 ($90)
Now.
Buy ( $2.00 x 45 pounds = $90)
Sell ($1.50 x 50 pounds = $75)
=> $75 - $90 = - $15 loss
Using the information below, calculate net cash flows from financing activities. Net income $ 120,000 Receive cash from issuing stock 80,000 Pay cash for equipment 90,000 Increase in accounts receivable 10,000 Depreciation expense $ 30,000 Increase in accounts payable 5,000 Receive cash from sale of land 75,000 Pay cash dividends 20,000 Multiple Choice $60,000. $80,000. $100,000.
Final answer:
To calculate net cash flows from financing activities, we add up the cash inflows and subtract the cash outflows related to financing activities.
Explanation:
To calculate net cash flows from financing activities, we need to consider the cash inflows and outflows related to financing activities. In this case, the cash inflows include the cash received from issuing stock and the cash received from the sale of land, which amount to $80,000 and $75,000 respectively. The cash outflows include the cash paid for equipment and the cash paid as dividends, which amount to $90,000 and $20,000 respectively.
Therefore, the net cash flows from financing activities can be calculated as follows:
(Cash inflows - Cash outflows) = ($80,000 + $75,000) - ($90,000 + $20,000) = $145,000 - $110,000 = $35,000.
Hence, the correct answer is $35,000.
On January 2, 2020, a calendar-year corporation sold 8% bonds with a face value of $2510000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $2316000 to yield 10%. Using the effective-interest method of computing interest, how much should be charged to interest expense in 2020
Answer:
$231,600
Explanation:
In effective interest rate method, the interest expense is calculated on the the beginning Book value of the bond and market interest rate. Deducting the coupon payment from this value we get the amortization value of discount given on the issuance of bond
Interest Expense = Book value of the bond x Market rate = $2,316,000 x 10% = $231,600
Coupon Payment = Face value x coupon rate = $2,510,000 x 8% = $200,800
Discount Amortization = Interest Expense for the period - Coupon Payment = $231,600 - $200,800 = $30,800
$200,800 interest will be paid, Discount will be amortized by $30,800, and total expense of $231,600 will be charged as interest expense.
Below are transactions related to Impala Company.
(a)
The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $82,400.
(b)
14,000 shares of common stock with a par value of $54 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $824,000, of which $182,900 has been allocated to land and $641,100 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $70 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $62 per share.
(c)
No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.
Materials used
$12,820
Factory supplies used
980
Direct labor incurred
16,230
Additional overhead (over regular) caused by construction of
machinery, excluding factory supplies used
2,720
Fixed overhead rate applied to regular manufacturing operations
60% of direct labor cost
Cost of similar machinery if it had been purchased from
outside suppliers
44,960
Prepare journal entries on the books of Impala Company to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
(a)
Dr Land 82,400
Cr Grant Revenue 82,400
(b)
Dr Buildings 641,100
Dr Land 182,900
Cr Share Capital—Ordinary 756,000
Cr Share Premium—Ordinary 68,000
(c)
Dr Machinery 42,488
Cr Direct Labor 16,230
Cr Factory Overhead 13,438
Cr Materials 12,820
Explanation:
City of Pebble Beach Journal entries
(a)
Dr Land 82,400
Cr Grant Revenue 82,400
(b)
Dr Buildings 641,100
Dr Land 182,900
Cr Share Capital—Ordinary 756,000
($54×$14,000)
Cr Share Premium—Ordinary 68,000
(c)
Dr Machinery 42,488
Cr Direct Labor 16,230
Cr Factory Overhead 13,438
Cr Materials 12,820
Fixed overhead applied (60% × $16,230) $9,738
Additional overhead 2,720
Factory supplies used 980
$13,438
McDonnell-Myer Corporation reported net income of $3,410 million. The company had 594 million common shares outstanding at January 1 and sold 36 million shares on February 28. As part of an annual share repurchase plan, 6 million shares were retired on April 30 for $44 per share. Calculate McDonnell-Myer's earnings per share for the year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
To calculate the earnings per share for McDonnell-Myer Corporation, we need to find the weighted average number of shares outstanding and then divide the net income by this number. With the given share transactions throughout the year, the EPS comes out to $5.46.
To calculate earnings per share (EPS) for McDonnell-Myer Corporation, we must consider the weighted average of shares outstanding throughout the year. Here are the steps to calculate EPS:
Determine total shares outstanding at the beginning of the year: 594 million.Account for shares sold: An additional 36 million shares from February 28, or 11 months of the year.Subtract shares repurchased: 6 million shares were retired on April 30, so they were outstanding for 4 months of the year.Calculate the weighted average number of shares: (594 million * 12/12) + (36 million * 11/12) - (6 million * 4/12).Divide the net income by the weighted average number of shares to find the EPS.Here is the calculation:
594 million + 33 million (36 × 11/12) - 2 million (6 × 4/12) = 625 million weighted average shares.Net income / Weighted average number of shares = $3,410 million / 625 million.EPS = $5.46 per share (rounded to two decimal places).Therefore, the EPS for McDonnell-Myer is $5.46.
A problem that arises in markets where one party knows more about attributes of the good being sold than the other. Sellers of used goods, for example, know about their goods' defects, while buyers do not.eg. Tim would like to buy a used plasma television, but he is not an electronics expert and, thus, cannot assess the quality of a TV directly before owning it. Tim believes that owners of the worst TVs are more willing to sell their TVs than owners of the best TVs. Because of this, Tim believes that used TVs for sale are probably of low quality.Adverse SelectionDiverse SelectionNone of above
Answer: Adverse Selection.
Explanation:
The above situation described Adverse Selection because Adverse Selection refers to a situation where there is information asymmetry between buyers and sellers of a good or service. This means that a party involved has more information about the transaction than the other and this can lead to the person who has more information engaging in a transaction that is sure to benefit them at the expense of the person they are transacting with. A serious example is one of life insurance. Perhaps if a person knows that they will be dying soon but it won't show up on all medical scans and tests, they will get the life insurance and claim on it when they die. They had more information than the seller.
In the above scenario, Tim can make all the assumptions he wants to make but the fact is he simply will.not know what defects the television has because he is not the seller.
It is applaudible that he is approaching with caution though. He at least has a higher chance of success.
Answer:
Adverse selection
Explanation:
Adverse selection is a situation where buyers and sellers have access to different information, so they make decisions to buy and sell in transactions that benefits them the most. Other participants suffer as a result.
Tim has less information than the seller of second hand televisions, therefore he may not be able to make an informed decision that will benefit him.
The seller on the other hand knows all the defects on his second hand televisions. So he can sell at a price that will benefit him.
the rapidly evolving world of HR will increasingly require HR professionals to ________. focus exclusively on learning new trends in the HR profession thoroughly understand all aspects of what the companies they work for do integrate their operations with the finance department operations focus their attention on compliance with government regulation
Answer:
The correct answer is letter "B": thoroughly understand all aspects of what the companies they work for do.
Explanation:
Human Resources (HR) representatives usually have an overall scope of what departments constitute a company and what are the duties of each employee in each of those units. However, they are not involved in the activities of each employee or have a direct influence on the performance of workers meaning they do not follow a personalized approach to keeping employees' improvement.
That situation requires change. Nowadays, companies place more attention to the specialization of employees to take advantage of their skills as much as possible. Therefore, HR representatives will have to be more involved in every aspect of what the firms do to have more detailed information about the operations of the business and identify improvement areas if any.
Rick and his wife Michonne are building their dream home in Alexandria, VA. The couple have designed a two-story craftsman style house, complete with a samurai style training dojo and shooting range on the edge of their property. They have hired Walker Construction LLC, owned and operated by Negan Walker to complete the construction of their home. Negan has agreed to complete their home in four months. The contract has no provisions specifically dealing with payments. Rick and Michonne would like to pay Negan when the house is completed, however Negan is insisting on being paid as he works. Based on the information obtained chapter 17, structure a payment schedule that takes into account the needs of both owner and contractor. You can refer to the sample AIA Form of Agreement Between Owner and Architect on page D-2 for inspiration. However I am looking your own ideas based on the reading.
Answer:
Pay as you earn, P.A.Y.E
Explanation:
The best method to be adopted here is pay as you earn, P. A. Y. E.
Pay -as-you -earn is a type of payment, whereby the worker is being paid as per the amount, hour, day, week or month he used to work.
Most times, it is always based on daily basis.
In this aspect, Michonne and Negan should agree on P. A. Y. E method of payment. Because, it is the only method that will satisfy both parties.
To structure a payment schedule that meets the needs of both the owner and contractor, consider a milestone-based payment system.
Explanation:In order to structure a payment schedule that meets the needs of both the owner and contractor, Rick and Michonne could consider a milestone-based payment system. This would involve breaking the project down into specific milestones or phases, and making payments to Negan Walker upon the completion of each milestone. For example, they could agree to pay Negan a certain percentage of the total contract price upon the completion of the foundation, another percentage upon the completion of the framing, and so on until the project is finished. This would allow Rick and Michonne to pay Negan as the work progresses while also ensuring that Negan is paid for the work he has completed.
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The annual demand for a product is 14,500 units. The weekly demand is 279 units with a standard deviation of 85 units. The cost to place an order is $32.00, and the time from ordering to receipt is six weeks. The annual inventory carrying cost is $0.20 per unit. a. Find the reorder point necessary to provide a 95 percent service probability. (Round your answer to the nearest whole number.) Reorder point b. Suppose the production manager is asked to reduce the safety stock of this item by 55 percent. If she does so, what will the new service probability be?
Answer:
a) 2082 units
b) 0.6923
Explanation:
a) Recorder point
Lead time = 6 weeks
Expected demand during this time is 6*279 = 1674 units
Standard deviation = 85 units
Standard deviation for the 6 week period is 85 units* 6^0.5 = 208 units
At the 95% probability level, the z-score is 1.96 (look up on table)
Safety Stock = 1.96×208 units = 408 units
Recorder point = Safety stock + expected demand during the time period so,
1674 + 408 = 2082 units
b) 45% of 408 is about 184, so using the safety stock formula:
Safety Stock = X*180 = 184
X is your z-score which comes out to about 1.02. Look up on your table and correspond to the probability value.
p-value = 0.6923
Scarlett Corp. uses no debt. The weighted average cost of capital is 8.4 percent. If the current market value of the equity is $25 million and there are no taxes, what is EBIT?
Answer:
EBIT $2,100,000
Explanation:
WACC=EBIT/(V+D)
8.4%=EBIT/$25,000,000
EBIT=25,000,000*8.4%
EBIT=$2,100,000
do you have to pass your electives in order to pass 8th grade (my band teacher is purposley failing me even though i have done the work. and i have two band classes )
Answer:
no You are not required to pass them But if you pass it does help you GPA because electives still count as part of your GPA
no but usually if you fail two or more classes then you automatically fail .
Explanation:
Bonita Printing Corp. uses a job order cost system. The following data summarize the operations related to the first quarter’s production. 1. Materials purchased on account $197,000, and factory wages incurred $90,200. 2. Materials requisitioned and factory labor used by job: Job Number Materials Factory Labor A20 $38,240 $19,500 A21 44,120 22,200 A22 37,600 15,100 A23 41,870 25,800 General factory use 4,970 7,600 $166,800 $90,200 3. Manufacturing overhead costs incurred on account $51,000. 4. Depreciation on factory equipment $16,850. 5. Depreciation on the company’s office building was $15,300. 6. Manufacturing overhead rate is 80% of direct labor cost. 7. Jobs completed during the quarter: A20, A21, and A23. Prepare a schedule showing the individual cost elements and total cost for each job in item 7. Job Direct Materials Direct Labor Manufacturing Overhead Total A20 $Entry field with correct answer 38240 $Entry field with correct answer 19500 $Entry field with incorrect answer $Entry field with incorrect answer A21 Entry field with correct answer 44120 Entry field with correct answer 22200 Entry field with incorrect answer Entry field with incorrect answer A23 Entry field with correct answer 41870 Entry field with correct answer 25800 Entry field with incorrect answer Entry field with incorrect answer $Entry field with incorrect answer
Answer:
Check the explanation
Explanation:
The journal entry (which can comprise of a number of different item recordings, each of the items to be recorded will is either a credit or a debit. The overall figure in the debit side of the journal must be equal the overall figure in the credit side, or the journal entry will be considered unbalanced.) to the above question can be seen in the attached image below.
The total cost for each job in item 7 is calculated by considering the direct materials, direct labor, and manufacturing overhead costs. Job A20 has a total cost of $73,340, job A21 has a total cost of $86,080, and job A23 has a total cost of $88,310.
Explanation:To calculate the total cost for each job in item 7, we need to consider the direct materials, direct labor, and manufacturing overhead costs.
For job A20, the direct materials cost is $38,240, the direct labor cost is $19,500, and the manufacturing overhead cost is calculated as 80% of the direct labor cost, which is $15,600. Therefore, the total cost for job A20 is $38,240 + $19,500 + $15,600 = $73,340.
Similarly, for job A21, the total cost is $46,120 + $22,200 + $17,760 = $86,080, and for job A23, the total cost is $41,870 + $25,800 + $20,640 = $88,310.
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True or False: In some cases, individuals who start a business have special voting rights that help them exercise more control over the firm. They own a special class of stock called founders’ shares. True False
Answer:
The correct answer is true.
Explanation:
Founders' share is the stock issued to the founders of the company. These stocks are different from the usual common stocks in the sense that the founder's shares are only at par. It also comes with a vesting schedule which gives a firm the right to buy back unvested shares. Founders shares does not receive any returns till a dividend is payable to the stockholders.
McCoy's Fish House purchases a tract of land and an existing building for $910,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $2,100. The company also pays $12,200 in property taxes, which includes $8,100 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $4,100 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $45,500 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $3,200 and pays an additional $10,100 to level the land.
Answer:
SOLUTION FOUND IN THE ATTACHMENT BELOW.
Total cost of Land = $ 972,600
On December 31, 2019, Marigold Inc. borrowed $3,600,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $432,000; June 1, $720,000; July 1, $1,800,000; December 1, $1,800,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $4,800,000 6-year, 11% note, dated December 31, 2017, interest payable annually $1,920,000 2. March 1, 2020, expenditure included land costs of $180,000 3. Interest revenue earned in 2020 $58,800 Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest ____________$ Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Debit Credit Date Account Titles and Explanation December 31, 2020
Answer:
Interest on borrowed = $237,900
Actual interest paid = $1,351,200
Explanation:
As per the data given in the question,
Marigold Inc. borrowed = $3,600,000 at 13 % payable annually
Expenditure related to the building :
March 1 = $432,000
June 1 = $720,000
July 1 = $1,800,000
December 1 = $1,800,000
As per the formula,
Weighted avg = (Amount × no. of months ) ÷ months in a year
Amounts no. of months months in a year weighted avg
Mar 1 $432,000 10 12 $360,000
June 1 $720,000 7 12 $420,000
July 1 $1,800,000 6 12 $900,000
Dec 1 $1,800,000 1 12 $150,000
Total weighted avg = $1,830,000
Interest on borrowed = $1,830,000 × 13%
= $237,900
Actual interest paid :
$3,600,000 × 13% = $468,000
$4,800,000 × 14% = $672,000
$1,920,000 × 11% =$211,200
So, total Actual interest paid = $1,351,200
Final answer:
To determine the amount of interest capitalized in 2020 for the construction of the building, calculate the weighted-average accumulated expenditures and multiply by the interest rate. The amount of interest to be capitalized is $394,500. The journal entry to record the capitalization of interest and recognition of interest expense is provided.
Explanation:
In order to determine the amount of interest capitalized in 2020 in relation to the construction of the building, we need to calculate the weighted-average accumulated expenditures for the period. The formula to calculate the weighted-average accumulated expenditures is:
Weighted-Average Accumulated Expenditures = (Expenditure 1 x Time 1) + (Expenditure 2 x Time 2) + ... + (Expenditure n x Time n)
Once we have the weighted-average accumulated expenditures, we can calculate the amount of interest to be capitalized using the formula:
Interest to be Capitalized = Weighted-Average Accumulated Expenditures x Interest Rate
Based on the given information, the amount of interest to be capitalized in 2020 in relation to the construction of the building is $394,500.
The journal entry to record the capitalization of interest and the recognition of interest expense at December 31, 2020, would be:
Date Account Titles and Explanation
December 31, 2020 Building-in-Progress $394,500
Interest Payable $394,500
Bracken, Louden, and Menser, who share profits and losses in a ratio of 4:2:2, respectively are partners in a home decorating business that has not been able to generate the income the partners had hoped for. They have decided to liquidate the business and have sold all assets except for their decorating equipment. All partnership liabilities have been settled and all the partners are personally insolvent. The decorating equipment has a book value of $52,000, and the partners have capital account balances as follows:
Bracken, capital $ 31,400
Louden, capital 7,400
Menser, capital 13,200
Required:
Determine the amount of cash each partner will receive as a liquidating distribution if the decorating equipment is sold for the amount stated in each of the following independent cases (Do not round intermediate calculations):
a.$36,000
Final Distribution of Cash (Capital Balances)
Bracken_____ Louden_____ Menser_____
b. $20,000
Final Distribution of Cash (Capital Balances)
Bracken_____ Louden_____ Menser_____
c.$3,200.
Final Distribution of Cash (Capital Balances)
Bracken_____ Louden_____ Menser_____
Answer:
The computation of given question is shown below:-
Explanation:
a. Bracken Louden Menser
Profit/loss ratio 50% 25% 25%
Capital balances before sale $31,400 $7,400 $13,200
Loss from sale $16,000
Loss Allocation ($8,000) ($4,000) ($4,000)
Capital balance after sales $23,400 $3,400 $9,200
Distribution of cash $23,400 $3,400 $9,200
b.
Bracken Louden Menser
Capital balance $31,400 $7,400 $13,200
Loss from sale (32,000) ($16,000) ($8,000) ($8,000)
After sales Capital balance $15,400 ($600) $5,200
capital deficit allocation ($400) ($200)
New capital balance $15,000 $5,000
Distribution cash $15,000 0 $5,000
c.
Bracken Louden Menser
Profit/ loss ratio 50% 25% 25%
Capital balance before sale $31,400 $7,400 $13,200
Loss from sale 48,800
Loss allocation ($24,400) ($12,200) ($12,200)
After sale capital balance $7,000 ($4,800) $1,000
Allocate louden's deficit ($3,200) ($1,600)
New capital balance $3,800 ($600)
Allocate Menser's deficit ($600)
Distribution cash $3,200
Final answer:
In a liquidation scenario, the distribution of cash to partners is based on their capital account balances and the profit and loss sharing ratio. Bracken, Louden, and Menser have capital account balances of $31,400, $7,400, and $13,200, respectively. If the decorating equipment is sold for different amounts, the partners will receive different amounts of cash based on their profit and loss sharing ratio.
Explanation:
In this case, the partners have decided to liquidate their business and have sold all assets except for their decorating equipment. The book value of the decorating equipment is $52,000. To determine the amount of cash each partner will receive as a liquidating distribution, we need to calculate the total capital balance and distribute it based on the profit and loss sharing ratio.
The total capital balance is calculated by summing up the capital account balances of all partners: $31,400 + $7,400 + $13,200 = $52,000.
With a total capital balance of $52,000 and a profit and loss sharing ratio of 4:2:2, Bracken will receive 4/8 of the total cash, Louden will receive 2/8 of the total cash, and Menser will receive 2/8 of the total cash.
a. If the decorating equipment is sold for $36,000, Bracken will receive (4/8) * $36,000 = $18,000, Louden will receive (2/8) * $36,000 = $9,000, and Menser will receive (2/8) * $36,000 = $9,000.
b. If the decorating equipment is sold for $20,000, the distribution will be Bracken: $10,000, Louden: $5,000, Menser: $5,000.
c. If the decorating equipment is sold for $3,200, the distribution will be Bracken: $1,600, Louden: $800, Menser: $800.
Joey realizes that he has charged too much on his credit card and has racked up $4,000 in debt. If he can pay $125 each month and the card charges 18 percent APR (compounded monthly), how long will it take him to pay off the debt
Answer:
it take him 43.92 months to pay off the debt
Explanation:
Use financial calculator to find the number of months to pay off the debt
PV = -4000 is the value of credit card debt in present value
FV = 0 as loan is zero at the end of the period
PMT = 125 per month payment
1 / Y = 18% /12 = 1.5% per month interest rate
Click CPT
Click N = 43.92 months
It costs Glenwood, Inc. $82 per unit to manufacture 1,000 units per month of a product that it can sell for $122 each. Alternatively, Glenwood could process the units further into a more complex product, which would cost an additional $36 per unit. Glenwood could sell the more complex product for $162 each. How would processing the product further affect Glenwood's profit?
Explanation:
Total number of units to be manufactured = 1000
(i) The cost price of 1 unit = $ 82
The cost price of 1000 units = 82 * 1000 = $ 82000
Selling price of 1 unit = $ 122
The selling price of 1000 units = 122 * 1000 = $ 122000
Profit earned = 122000 - 82000 = $ 40000
(ii)To produce a complex product,
The cost price of 1 unit = $ 82 + $ 36 = $ 118
The cost price of 1000 units = 118 * 1000 = $ 118000
Selling price of 1 unit = $ 162
The selling price of 1000 units = 162 * 1000 = $ 162000
Profiy earned = 162000 - 118000 = $ 44000
Therefore, the profit would increase by $ 4000 if complex product was produced.
Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Fortes' income for the year consists of $119,900 in salary, $950 interest income, $1,450 nonqualifying dividends, and $950 long-term capital gains. The Fortes' expenses for the year consist of $2,950 in investment interest expense and $890 in tax preparation fees. Assuming that the Fortes' marginal tax rate is 32 percent and they make no special elections, what is the amount of investment interest expense deduction for the year
Answer:
$2,400
Explanation:
The computation of the investment interest expense is shown below:
Investment interest expenses is
= Interest Income + Non-qualifying dividends
= $950 + $1,450
= $2,400
We simply added the interest income and the non qualifying dividend so that the investment interest expense could come and the same is considered
Plus the investment interest income is $2,950 which exceeded than the $2,400 so $2,400 would be considered