Answer:
each shareholder has $250,000 of the dividends.
Explanation:
At the end of the year, just before the distribution, each shareholder's basis is:
= $400000 + 10000 + 50000
= $550,000
after the distribution, each shareholder's basis is:
= 300000 + 200000
= $500000
therefore, each shareholder has $250,000 of the dividends.
Yi Company began operations on January 1, 2013. During 2013, the company engaged in the following cash transactions: 1) issued stock for $52,000 2) borrowed $31,000 from its bank 3) provided consulting services for $50,000 4) paid back $21,000 of the bank loan 5) paid rent expense for $12,000 6) purchased equipment costing $18,000 7) paid $3,600 dividends to stockholders 8) paid employees' salaries, $27,000 What is Yi's net cash flow from operating activities?
Answer:
$11,000
Explanation:
Data provided
Provided consulting services = $50,000
Paid rent expenses = $12,000
Paid employee salaries = $27,000
The calculation of Yi's net cash flow from operating activities is given below:-
Yi's net cash flow from operating activities = Provided consulting services - Paid rent expenses - Paid employee salaries
= $50,000 - $12,000 - $27,000
= $11,000
Sp, for computing the Yi's net cash flow from operating activities we simply applied the above formula.
Answer:
Yi's net cash flow from operating activities is $11,000.
Explanation:
Firstly, we need to determine the net income as follows:
Yi Company Net income
Service revenue from consulting service $50,000
Rent expense ($12,000)
Salaries ($27,000)
Net income $11,000
The amount above $11,000 represents cash flows from operating activities since every other time affects net cash flows from financing activities or investing activities.
Minimizing Exposure Lola Co. (a U.S. firm) expects to receive 10 million euros in 1 year. It does not plan to hedge this transaction with a forward contract or other hedging techniques. This is its only international business, and it is not exposed to any other form of exchange rate risk. Lola Co. plans to purchase materials for future operations, and it will send its payment for these materials in 1 year. The value of the materials to be purchased is about equal to the expected value of the receivables. Lola Co. can purchase the materials from Switzerland, Hong Kong, Canada, or the United States. Another alternative is that it could also purchase one-fourth of the materials from each of the four countries mentioned in the previous sentence. The supplies will be invoiced in the currency of the country from which they are imported. The movements of the euro and the Swiss franc against the dollar are highly correlated and will continue to be highly correlated. The Hong Kong dollar is tied to the U.S. dollar and you expect that it will continue to be tied to the dollar. The movements in the value of Canadian dollar against the U.S. dollar are independent of (not correlated with) the movements of other currencies against the U.S. dollar. Lola Co. believes that none of the sources of the imports would provide a clear cost advantage.
Required:
Which alternative should Lola Co. select for obtaining supplies that will minimize its overall exchange rate risk?
Answer:
Lola Co. should purchase every one of its provisions from Switzerland. Because the developments of the Euro and the Swiss franc against the dollar are profoundly associated. The installments and receipts will both move a similar way. Therefore the Lola Co. select for obtaining supplies will limit the general Exchange rate risk.
On January 1, the first day of the fiscal year, Designer Fabric Inc. issues a $3,000,000, 8%, 10-year bond that pays semiannual interest of $120,000 ($3,000,000 X 8% X ½ year), receiving cash of $3,000,000. Journalize the entries to record (a) the issuance of the bonds, (b) the first interest payment on June 30, and (c) the payment of the principal on the maturity date of December 31 on page 11. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
cash 3,000,000 debit
bonds payable 3,000,000 credit
--to record issuance of the bonds--
interest expense 120,000 debit
cash 120,000 credit
--to record the payment of interest--
bonds payable 3,000,000 debit
interest expense 120,000 debit
cash 3,120,000 credit
--to record last interest payment and also, maturity of the bonds--
Explanation:
As the company recieve the par value no premium nor discount is recognized at issuance just, the cash proceeds and bonds payable
Then, the entire amount of interst is reocgnize as expense as been issued at par
Last, we write-off the payble and also, declare the interest expense for the last time-period from June 30th to Deember 31th year 10.
Final answer:
The answer provides the journal entries for Designer Fabric Inc. bond issuance, first interest payment, and principal payment, helping understand accounting entries for bond transactions.
Explanation:
Journal Entries for Designer Fabric Inc. Bond Issuance:
(a) Issuance of bonds: Debit Cash $3,000,000, Credit Bonds Payable $3,000,000.
(b) First interest payment on June 30: Debit Interest Expense $120,000, Credit Cash $120,000.
(c) Payment of principal on December 31: Debit Bonds Payable $3,000,000, Credit Cash $3,000,000.
A new highway is to be constructed. Design A calls for a concrete pavement costing $90 per foot with a 20- year life; two paved ditches costing $3 per foot each; and three box culverts every mile, each costing $9,000 and having a 20- year life. Annual maintenance will cost $1,800 per mil e; the culverts must be cleaned every five years at a cost of $450 each per mile.
Design B calls for a bituminous pavement costing $45 per foot with a 10- year life; two sodded ditches costing $1.50 per foot each; and three pipe culverts every mile, each costing $2,250 and having a 10 -year life. The replacement culverts will cost $2,400 each. Annual maintenance will cost $2,700 per mile; the culverts must be cleaned yearly at a cost of $225 each per mile; and the annual ditch maintenance will cost $1.50 per foot per ditch.
Compare the two designs on the basis of equivalent worth per mile for a 20- year period. Find the most economical design on the basis of AW and PW if the MARR is 6% per year. (Note: assuming cleaning also occurs at the end of the life time)
note ;
1:comparision is based on 1 mile.
2:1 mile = 5280feet
for this problem:
a: Develop the cash flow table for each design
b:set up the cash flow equation but do not perform the numerical computations.
To compare the two highway designs, a cash flow table for each design should be developed, which includes costs for construction, maintenance, and cleaning or replacement of culverts over 20 years. Then, a cash flow equation for each design should be set up to calculate Present Worth, factoring in the provided Minimum Attractive Rate of Return (MARR). This will help determine the most economical design.
Explanation:Cash Flow and Cost AnalysisThe question is asking to compare two different highway designs, Design A and Design B, based on their conjectured costs over a 20-year period. These costs include initial construction, annual maintenance, and the cleaning and replacement of culverts.
To determine the most economical design, we'll need to factor in not just the upfront costs, but also the continuing costs of maintenance, as indicated by the term 'equivalent worth'. The 'Minimum Attractive Rate of Return (MARR)' is given as 6%, which is the minimum return the project is expected to yield over its lifetime. It's used to calculate the 'Present Worth (PW)' and 'Annual Worth (AW)', key indicators in cost comparison and investment decisions.
a. For the cash flow table, we'll need to document outflows (costs) and inflows (returns) per year for each design. For Design A, the costs include pavement, ditches, culverts, their cleaning, and annual maintenance; similarly for Design B, apart from variations in the type of construction and maintenance.
b. To set up the cash flow equation, it's important to take into account the MARR. Without doing the actual computations, for Design A, the cash flow equation would look something like this: PWA = (cost of pavement + cost of ditches + cost of culverts - MARR)/(1 + MARR)20. Likewise, we'll have a similar equation for Design B, which will help compare the two designs’ equivalent worth.
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The is the interest rate that a firm pays on any new debt financing. Andalusian Limited (AL) can borrow funds at an interest rate of 9.70% for a period of six years. Its marginal federal-plus-state tax rate is 45%. AL’s after-tax cost of debt is (rounded to two decimal places). At the present time, Andalusian Limited (AL) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,136.50 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If AL wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 4.48% 6.72% 5.60% 5.04%
Answer:
5.34%
The correct option is C,5.60%
Explanation:
The are two requirements here,the first is after cost of debt for the first part of the case study and after tax cost of debt for the second part of the scenario:
1.after tax cost of debt=pretax cost of debt*(1-t)
pretax cost of debt is 9.7%
t is the tax rate at 45% or 0.45
after tax cost of debt=9.7%*(1-0.45)=5.34%
2.
The pretax cost of debt here is computed using the rate formula in excel:
=rate(nper,pmt,-pv,fv)
nper is the number of times the bond pays coupon interest which is 15
pmt is the annual coupon interest receivable by investors i.e $1000*12%=$120
pv is the current market price of the bond which is $1,136.50
fv is the face value of the bond at $1000
=rate(15,120,-1136.50,1000)
rate =10.19%
after tax cost of debt=10.19% *(1-0.45)=5.60%
The after-tax cost of debt for Andalusian Limited (AL), assuming an interest rate of 9.70% and a tax rate of 45%, would be 5.33%, rounded to two decimal places. This calculation reflects the cost of new debt financing for the company based on current market conditions and the company's creditworthiness, not the terms of its existing bonds.
Explanation:The original question asks for the after-tax cost of debt for Andalusian Limited (AL). The after-tax cost of debt is calculated as the interest rate on new debt multiplied by (1 - Tax Rate). In AL's case, the interest rate is 9.70% and the tax rate is 45%.
Therefore, we calculate the after-tax cost of debt as follows: 9.70% * (1 - 0.45) = 5.33%. Thus, if the firm wants to issue new debt, a reasonable estimate of the after-tax cost of debt would be 5.33%, rounded to two decimal places.
The given example of the $1,000 bond selling at a market price of $1,136.50, with a 12% annual coupon rate, does not affect the calculation of the after-tax cost of new debt financing. This is because the cost of new debt financing for a corporation is determined by the current market conditions and the creditworthiness of the company, not by the terms of its existing outstanding bonds.
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Vertis Corporation is interested in cutting the amount of time between when a customer places an order and when the order is completed. Details for the first quarter of the year are provided here. Choose the correct answer from the options provided.
Days
Wait time 12
Inspection time 0.6
Process time 6
Move time 0.4
Queue time 8
Compute the manufacturing cycle efficiency (MCE).
Answer:manufacturing cycle efficiency (MCE)= 0.40
Explanation:
Solution to solve for the manufacturing cycle efficiency (MCE)
Manufacturing Cycle Efficiency (MCE) is solved using the following
Throughput time = Process time + Inspection time + Move time + Queue time
= 6 Days + 0.6 Days + 0.4 Days + 8 Days
= 15 Days
Therefore, the Manufacturing cycle efficiency (MCE) = Process time / Throughput time
= 6 Days / 15 Days
= 0.40
Therefore, the Manufacturing Cycle Efficiency (MCE) will be 0.40
A bond with a face value of $ 90000 and a quoted price of 104 has a selling price of: (Round your final answer to the nearest dollar.) A. $ 93600. B. $ 90000. C. $ 86538. D. $ 99 000.
Answer:
A. $93,600
Explanation:
Data provided as per the question below:-
Face value = $90,000
Quoted price = 104
The computation of selling price is shown below:-
Selling Price = Face value × Quoted price ÷ 100
= $90,000 × 104 ÷ 100
= $90,000 × 1.04
= $93,600
Therefore for computing the selling price we simply applied the above formula.
The selling price of a bond is calculated by multiplying the face value by its quoted price and dividing by 100. In this case, a bond with a face value of $90,000 and a quoted price of 104 has a selling price of $93,600.
Explanation:The selling price of a bond is calculated by multiplying the face value of the bond by its quoted price, and then dividing by 100. The quoted price of bonds is usually expressed in terms of a percentage of the face value of the bond. So in this case, to find the selling price of a bond with a face value of $ 90,000 and a quoted price of 104, you simply multiply $90,000 by 104 then divide by 100.
Therefore, the selling price is calculated as follows: $(90,000 * 104) / 100 = $93,600
This means that a bond with a face value of $90,000 and a quoted price of 104 has a selling price of $93,600, rounded to the nearest dollar. So the correct answer is A. $ 93600.
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The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): Pretax accounting income: $ 160 Pretax accounting income included: Overweight fines (not deductible for tax purposes) 8 Depreciation expense 80 Depreciation in the tax return using MACRS: 119 The applicable tax rate is 25%. There are no other temporary or permanent differences. Franklin's taxable income ($ in millions) is: Multiple Choice $39. $129. $121. $119.
Answer:
$129
Explanation:
Pretax accounting income: $ 160
Overweight fines (not deductible for tax purposes) 8
Depreciation expense 80
Depreciation in the tax return using MACRS: 119
Franklin's taxable income ($ in millions) = $160 + $8 - ($119 - $80) =
Which of the statements below is TRUE? A. The increase in working capital accounts necessary to support a project also provides for cost increases at the end of the project. B. Decreases in accounts payable constitute a source of cash flow because you are using your suppliers to help finance your business operations. C. An increase in working capital can be brought about by an increase in inventory. D. Decreases in accounts receivables constitute a use of cash flow because you are helping your customers finance their purchases.
Answer:
C. An increase in working capital can be brought about by an increase in inventory.
Explanation:
A. The increase in working capital accounts necessary to support a project also provides for cost increases at the end of the project. False
If a project begins, the working capital is increased at the beginning due to additional resources and operations and are realized at termination of assets.
B. Decreases in accounts payable constitute a source of cash flow because you are using your suppliers to help finance your business operations. False
Decrease in the Accounts payable balance means that the company has paid more of its credit purchases than the purchases made for the month
Therefore, decrease in accounts payable is a source of cash outflow. Therefore, dues are paid back using cash in hand.
C. An increase in working capital can be brought about by an increase in inventory. True
Working capital is the capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities. Therefore, an increase in working capital can be brought about by an increase in the amount of assets which is inventory.
D. Decreases in accounts receivables constitute a use of cash flow because you are helping your customers finance their purchases. False
The accounts receivable asset shows how much money customers who bought products on credit still owe the business; this asset is a promise of cash that the business will receive. Cash doesn’t increase until the business collects money from its customers. Therefore, decrease in accounts receivables is a source of cash flow with better ways of recovering cash from your customers.
Porter Incorporated issued $210,000 of 6 percent, 10-year, callable bonds on January 1, Year 1. The bonds were issued at their face value. The call premium was 2 percent (bonds are callable at 102). Interest was payable annually on December 31. The bonds were called on December 31, Year 5. Required Prepare the journal entries to record the bond issue on January 1, Year 1, and the bond redemption on December 31, Year 5. Entries for accrual and payment of interest are not required.
Answer:
Jan. 1
Dr Cash $210,000
Cr Bonds Payable $210,000
Dec. 31
Dr Loss on Bond Redemption $4,200
Bonds Payable $210,000
Cr Cash $214,200
Explanation:
Porter Incorporated Journal entries
Jan. 1
Dr Cash $210,000
Cr Bonds Payable $210,000
Dec. 31
Dr Loss on Bond Redemption $4,200
Bonds Payable $210,000
Cr Cash $214,200
(102%×$210,000=$214,200)
Hirdt Co. uses the percentage-of-receivables basis to record bad debt expense and concludes that 3% of accounts receivable will become uncollectible. Accounts receivable are $401,100 at the end of the year, and the allowance for doubtful accounts has a credit balance of $3,110. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)(a) Prepare the adjusting journal entry to record bad debt expense for the year.(b) If the allowance for doubtful accounts had a debit balance of $890 instead of a credit balance of $3,110, prepare the adjusting journal entry for bad debt expense
Answer:
the answer is given below;
Explanation:
a.Allowance for doubtful accounts $401,100*3%=$12,033
Allowance for doubtful accounts-opening ($3,110)
Bad Debt Expense $8,923
Bad Debt Expense Dr.$8,923
Allowance for doubtful accounts Cr.$8,923
b.Allowance for doubtful Accounts $401,100*3%=$12,033
Allowance for doubtful accounts-opening $890
Bad Debt Expense $12,923
Bad Debt Expense Dr.$12,923
Allowance for doubtful accounts Cr.$12,923
U.S. car dealers sell both used and new cars each year. However, only the sales of the new cars count toward GDP. The sale of used cars does not count because:
a. the car had been previously counted in the GDP of the year it was built.
b. there are more used cars than new cars.
c. the value of the used car depends on the value of the new car.
d. the value of used cars cannot be determined.
Answer: a. the car had been previously counted in the GDP of the year it was built.
Explanation: Though both used and new cars are sold in the U.S. by car dealers, the sale of used cars does not count because the car had been previously counted in the GDP of the year it was built. The Gross Domestic Product (GDP) which is defined as a measure of the economic production of a country in financial terms over a specific time period (usually a year), sums the dollar value of what has been produced in the economy over the year, not what was actually sold. In simpler terms, they were produced in a previous year and are part of that year's GDP.
a. the car had been previously counted in the GDP of the year it was built.
The sale of used cars does not count toward GDP because the car had been previously counted in the GDP of the year it was built.
GDP measures the value of goods and services produced within a specific period, typically one year. When a new car is manufactured and sold, its value is included in that year's GDP.
However, reselling that car in subsequent years does not count towards GDP because it does not reflect new production, merely a transfer of ownership of an already produced good. This exclusion helps prevent double counting of goods and ensures that GDP accurately reflects the amount of new production occurring within the economy in a given year.Larry estimates that the costs of insurance, license, and depreciation to operate his car total $435 per month and that the gas, oil, and maintenance costs are 34 cents per mile. Larry also estimates that, on average, he drives his car 2,000 miles per month. Required: a. How much cost would Larry expect to incur during April if he drove the car 1,578 miles
Answer:
$971.52
Explanation:
Larry's fixed costs for using his car are $435 per month. He has to pay this even if he drove zero miles during the month.
The variable cost is 34 cents per mile, and he drove a total of 1,578 miles, therefore:
34 x 1,578 = 536,52 dollars.
As a result, his total costs are:
435 in fixed costs + 536,52 in variable costs = 971.52
The Red Bud Co. pays a constant dividend of $3.10 a share. The company announced today that it will continue to do this for another 2 years after which time they will discontinue paying dividends permanently. What is one share of this stock worth today if the required rate of return is 8.7 percent?
Answer:
The stock is worth $5.48 today
Explanation:
The dividend on this stock is just like an annuity as the amount of dividend is constant and they are paid after a constant interval of time and for a defined period of time. Thus, the price of this share today will be the present value of annuity or the present value of expected future dividends. Using the present value of ordinary annuity formula, the price of the stock will be,
Price today = 3.1 * [ (1 - (1+0.087)^-2) / 0.087 ]
Price today = $5.475 rounded off to $5.48
Annual depreciation $ 3,000 Annual mileage 14,640 Current year's loan interest $ 710 Miles per gallon 24 Insurance $ 860 License and registration fees $ 125 Average gasoline price $ 3.50 per gallon Oil changes/repairs $ 730 Parking/tolls $ 660 a. Calculate total annual operating cost of the motor vehicle.
Answer:
$8,220
Explanation:
The computation of the total annual operating cost is shown below:
= Fixed cost + variable cost
where,
Fixed cost = Annual depreciation + Annual loan interest + insurance + license and registration fees
= $3,000 + $710 + $860 + $125
= $4,695
And, the variable cost
= Gasoline expense + Parking or tolls + Oil changes or repairs
where,
Gasoline expense is
= (Annual mileage ÷ miles per gallon) × average price per gallon
= ($14,640 ÷ 24) × $3.50 per gallon
= $2,135
Parking or tolls = $660
And, the Oil changes or repairs is $730
So, the variable cost is
= $2,135 + $660 + $730
= $3,525
So, the total annual operating cost is
= $4,695 + $3,525
= $8,220
Therefore, The total annual operating cost is a mix of fixed cost and the variable cost
Bannister Motors Corporation reported the following variances for the period just ended: Variable-overhead spending variance: $50,000U Variable-overhead efficiency variance: $28,000U Fixed-overhead budget variance: $70,000U Fixed-overhead volume variance: $30,000U If Bannister desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts, the company should focus on variances that total:
Answer:
Company should focus on variances that total is $120,000 U
Explanation:
Given:
Variable-overhead spending variance = $50,000 U
Variable-overhead efficiency variance = $28,000 U
Fixed-overhead budget variance = $70,000 U
Fixed-overhead volume variance = $30,000 U
Computation:
The company should pay initial attention to its expenses whether it is a fixed or variable expense.
Company should focus on variances = Variable-overhead spending variance + Fixed-overhead budget variance
Company should focus on variances = $50,000 U + $70,000 U
Company should focus on variances = $120,000 U
Sheridan Company expects to purchase $230000 of materials in July and $240000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?
Answer:
$237,500
Explanation:
The computation of cash disbursements for materials is shown below:-
August cash disbursement for materials Purchased = (Materials in July × Purchases are paid for in the month) + (Materials in August × Following month of purchase)
= ($230000 × 1 ÷ 4) + ($240000 × 3 ÷ 4)
= ($230000 × 0.25) + ($240,000 × 0.75)
= $57,500 + $180,000
= $237,500
Therefore for computing the cash disbursements for materials we simply applied the above formula.
Data were collected on recent releases that includes the gross (in millions of dollars), the budget (in millions of dollars), the run time (in minutes), and the score given by critics on a review aggregation website. A regression model is constructed to predict the gross. The accompanying scatterplot shows Gross vs. Budget. What (if anything) does this scatterplot tell about the following Assumptions and Conditions for the regression?
a) Linearity condition
b) Equal Spread condition
c) Normality assumption
Answer:
The plot is attached.
a) Linearity Condition:
an upward pattern is seen in the dissipate plot. All the focuses are plotted near one another demonstrating that the relationship is solid. Henceforth I can say that there is a solid positive straight connection among spending plan and gross. As the estimation of spending builds, the estimation of gross likewise increments.
Truly, the plot is sensibly honest without any Bends.
b) Equal Spread Condition:
to check the suspicion of equivalent spread condition, a lingering plot is required. A remaining plot is plotted with the free factor on the x-pivot and the lingering esteems on the y-hub. In the event that the remaining plot has arbitrary focuses, I can say that the difference is consistent. As such, a leftover plot with irregular focuses is said to follow the presumption of fairness of difference.
For this situation, the leftover plot isn't appeared, consequently there is inadequate data to check the equivalent spread condition.
c) Normality Condition:
Another presumption of relapse examination is the suspicion of ordinariness of residuals. This presumption can be checked with the assistance of PP plot. A PP plot with S shape shows that the suspicion of ordinariness of residuals is followed.
For this situation, there is inadequate data to check the typicality presumption in light of the fact that the PP plot isn't given.
The Consumer Price Index A. is the ratio of the average price of a typical basket of goods to the cost of producing those goods B. compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods typically consumed in period 2 C. measures the average of the prices paid by urban consumers for a fixed basket of goods and services D. measures the increase in the prices of the goods included in GDP
Answer:
compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period.
Explanation:
The consumer price index refers to the price change with related to the goods and services consumed by the consumer or purchased i.e foods, medicine, clothing, etc
Moreover, it also determines the changes in the price level as compare to the base year
And, there is a negative relationship between the price level and the money value.
Suppose that Larimer Company sells a product for $20. Unit costs are as follows: Direct materials $2.10 Direct labor 1.25 Variable factory overhead 2.00 Variable selling and administrative expense 1.05 Total fixed factory overhead is $56,590 per year, and total fixed selling and administrative expense is $38,610. Required: 1. Calculate the variable cost per unit and the contribution margin per unit. 2. Calculate the contribution margin ratio and the variable cost ratio. 3. Calculate the break-even units. 4. Prepare a contribution margin income statement at the break-even number of units. Enter all amounts as positive numbers.
Answer:
1. $ 6.40
2. 68% and 32%
3. 7,000
4. a contribution margin income statement at the break-even number of units
Sales (7,000×$20.00) 140,000
Less Variable Costs (7,000×$6.40) (44,800)
Contribution 95,200
Less Fixed Costs ($56,590+$38,610) (95,200)
Net Income 0
Explanation:
the variable cost per unit and the contribution margin per unit.
variable cost per unit
Direct materials 2.10
Direct labor 1.25
Variable factory overhead 2.00
Variable selling and administrative expense 1.05
Total 6.40
contribution margin per unit
contribution margin per unit = Sales - Variable Cost
= $20.00 - $ 6.40
= $13,60
the contribution margin ratio and the variable cost ratio
contribution margin ratio
contribution margin ratio = Contribution / sales × 100
= $13,60/$20.00× 100
= 68%
variable cost ratio
variable cost ratio = variable cost / sales × 100
= $6.40/$20.00× 100
= 32%
the break-even units
break-even units = fixed costs / contribution margin per unit
= ($56,590+$38,610)/ $13,60
= 7,000
a contribution margin income statement at the break-even number of units
Sales (7,000×$20.00) 140,000
Less Variable Costs (7,000×$6.40) (44,800)
Contribution 95,200
Less Fixed Costs ($56,590+$38,610) (95,200)
Net Income 0
Company had no investments prior to the current year. It had the following transactions involving short-term available-for-sale and held-to-maturity securities during the year. Prepare journal entries to record the following transactions associated with the investment purchases.
January 10 Purchased 6,000 shares of Gray Company stock at $15.00 plus a broker's fee of $700. (Classified as short-term available-for-sale securities)
June 1 Purchased $180,000 of Duke Company 4%, five-year bonds at par value. Interest payments are paid semiannually on June 1 and December 1. (Classified as held-to- maturity)
July 1 Sold 3,000 shares of Gray company stock at $22 less a $600 brokerage fee.
December 1 Received a check for the first semiannual interest payment on the Duke Company bonds.
(show calculations in description of JE when appropriate) Date Description DR CR Jan. 10 June 1 July 1 Dec. 1
Answer:
Date Description DR CR
Jan10 Short-term available for sales $90,700
cash 90,700
June 1 Held to maturity securities 180,000
cash 180,000
July 1 Cash 65,400
brokerage fee 600
Short-term available for sale securities 45,000
Income statement 15,000
workings
Jan 10 purchases = (6000*$15 ) + 700= $90,700
july 1 sales = 3000*$22 = $66,000
Explanation:
A company purchased $9,500 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $475 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals:
$7,968.
$8,342.
$7,925.
$8,170.
$8,600.
Answer:
The amount paid would be $ 8754.75 or $8755
Explanation:
The terms of 3/10, n/45 tell us the 3 % discount will be allowed within the first ten days.
The company bought $9,500 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $475 of that merchandise. So the amount of merchandise inventory left would be
$9,500-$475= $ 9025
On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to.
The discount allowed on $ 9025 would be
3 % of $ 9025=( 3/100)*9025= $ 270.75
Deducting this discount from the amount of $ 9025
The amount paid would be $ 9025 -$ 270.75= $ 8754.75 or $8755
Answer:
The cash paid on June 24 equals $ 8,754.25
Explanation:
Let's recall that term 3/10, indicates the number of days (from the invoice date) within which the buyer should pay the invoice in order to receive the 3 % discount.
n/45 means that if the buyer does not pay the (full) invoice amount within the 10 days to qualify for the discount, then the net amount is due within 45 days after the sales invoice date.
Now, let's calculate the cash paid on June 24, this way:
June 15 - Purchase of $ 9,500
June 20 - Return of $ 475, Balance of $ 9,025
June 24 - Payment of balance less 3% discount because the company is paying before 10 days from the invoice date
9,025 * 0.97 = 8,754.25
Asset A and B have expected returns of 5% and 3% per year respectively. Their annual volatilities are both 20% and the correlation coefficient between the returns of assets A and B is 30%. The risk free rate is 1% per year. 1. Find the weights on A and B in a portfolio with minimal risk. 2. Find the weights on A and B in the optimal risky portfolio that has the maximum Sharpe ratio.
Answer:
1. Weight of A=0.5, Weight of B= 0.5
2. Asset A has the highest shape ratio. The weight of A and B in the optimal risky portfolio that has the highest shape ratio is:
Weight of A= 0.105, Weight of B= 0.895
Explanation:
Expected return of Asset A= 5%Expected return of Asset A= 5%
Expected return of Asset B= 3%
Annual volatilities of Asset A= 20%
Annual votalities of Asset B= 20%
1. Correlation coefficient = 30% = 0.3 < 1
Risk Free Rate = 1% =0.01
1. Weight of A and B in portfolio with minimal risk is:
Weight of A= β^2B - Cov (XAXB) /β^2A + β^2B - 2Cov (XAXB)
Therefore,
CovXAXB = PAB (Volatility of A) (Volatility of B)
= 0.3 × 0.2 × 0.2
= 0.012
Hence,
Weight of A= (0.2)^2 - 0.012 / (0.2)^2 + (0.2)^2 - 2(0.012)
Weight of A= 0.04 - 0.012 / 0.04 + 0.04 - 0.024
= 0.028/ 0.08 - 0.024
= 0.028/ 0.056
=0.5
Weight of A = 0.5
Weight of B= 1 - Weight of A
Weight of B= 1 - 0.5
Weight of B= 0.5
2. Shape ratio of A= RA - Rf / β
= 0.05 - 0.01 / 2
= 0.04/2
= 0.02 =20%
Shape ratio of B= RB - Rf / β
= 0.03 - 0.01/ 2
0.02 / 2
=0.01 = 10%
So, Asset A has the highest shape ratio
Cov (XAXB) = PAB (Volatility of A) (Volatility of B)
= 0.03 × 0.2 × 0.1
= 0.006
Weight of A= β^2B - Cov (XAXB) /β^2A + β^2B - 2Cov (XAXB)
Weight of A = (0.1)^2 - 0.006 / (0.2)^2 + (0.1)^2 - 2(0.006)
= 0.01 - 0.006 / 0.04 +0.01 - 0.012
= 0.004/ 0.05 - 0.012
= 0.004/ 0.038
= 0.105
Weight of A = 0.105
Weight of B= 1 - 0.105
Weight of B= 0.895
Minimum risk & Optimal risky portfolio weights: Asset A: 61.8%, Asset B: 38.2%.
1. Minimum Risk Portfolio:
To find the weights for the minimum risk portfolio, we can utilize the following formula:
Weight of A (Wa) = ( σ_B² * rho - σ_A * σ_B * rho) / (σ_A² * σ_B² - σ_A² * σ_B² * rho²)Weight of B (Wb) = 1 - Wawhere:
σ_A & σ_B are the volatilities of Asset A and B (both 20%)
ρ is the correlation coefficient (30%)
Plugging in the values:
Wa = ((0.20)² * 0.3 - (0.20) * (0.20) * 0.3) / ((0.20)² * (0.20)² - (0.20)² * (0.20)² * (0.3)²)
Wa ≈ 0.618
Therefore, Wb = 1 - 0.618 ≈ 0.382
Minimum Risk Portfolio weights:
Asset A: 61.8%
Asset B: 38.2%
2. Optimal Risky Portfolio (Maximum Sharpe Ratio):
The optimal risky portfolio maximizes the Sharpe ratio, which measures the return earned per unit of risk. Here, we'll utilize the following formula:
Weight of A (Wa) = (σ_B² * (E_r - Rf) - σ_A * σ_B * rho * (E_r - Rf)) / (σ_A² * σ_B² - σ_A² * σ_B² * rho²)where:
E_r is the expected return on the portfolio (we want to maximize it)
Rf is the risk-free rate (1%)
Assuming an equal expected return target (E_r) for both portfolios (minimum risk and optimal risky), the weight calculation simplifies because the expected return terms cancel out. We end up with the same weights as the minimum risk portfolio.
Therefore, the optimal risky portfolio (for maximum Sharpe ratio) also has the following weights:
Asset A: 61.8%
Asset B: 38.2%
In essence, with these given parameters, the minimum risk portfolio and the optimal risky portfolio have the same weights. This is because the correlation between the assets is relatively low (30%), and the expected returns are assumed to be similar.
The stockholders' equity section of the balance sheet for Pokagon Corporation appeared as follows before its recent stock dividend: Common stock, $10 par, 10,000 shares issued and outstanding $ 100,000 Additional paid-in capital - common 120,000 Retained earnings 150,000 Total stockholders' equity $370,000 Pokagon declared a 10% stock dividend when the market price per share was $20. After the stock dividend was distributed, the components of the stockholders' equity section were:
Answer:
Common stock = $110,000
Additional Paid in capital = $130,000
Retained earnings = $130,000
Explanation:
The computation of stockholders' equity is given below:
Common stock = Outstanding shares + (Stock dividend percentage × Shares issued × Par value per share)
= 100,000 + (10% × 10,000 × $10)
= $110,000
Additional Paid in capital = Additional paid-in capital - common + (Stock dividend percentage × Shares issued × (Market price per share - Par value per share))
= 120,000 + (10% × 10,000 × ($20 - $10))
= $130,000
Retained earnings= Retained earning(Given) - (Stock dividend percentage × Outstanding shares × Market price per share)
= 150,000 - (10% × 100,000 × $20)
= $130,000
Cedar Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $ 7.00 per square foot from the supplier. Delivery costs are $ 0.40 per square foot. Carpenters' wages are $ 20.00 per hour. Payroll costs are $ 3.00 per hour, and benefits are $ 6.00 per hour. How much is the direct labor standard cost per hour? A. $ 9.00 B. $ 23.00 C. $ 29.00 D. $ 20.00
Answer:
Standard direct labour cost = $20.00 per hour
Explanation:
The direct labour costs represent expenditures incurred in respect of direct worker which can be traced to the product been produced. For example, the labour cost of machine operator saddled with production task.
The payroll cost is not a direct labour cost because payroll employed are not direct workers, also benefits are overheads related to direct workers
Standard direct labour cost = $20.00
Darrox, Inc. is considering a fourminusyear project that has an initial outlay or cost of $90,000. The future cash inflows from its project are $50,000, $30,000, $30,000, and $30,000 for years 1, 2, 3 and 4, respectively. Darrox uses the internal rate of return method to evaluate projects. What is the approximate IRR for this project?
Answer:
22.8
Explanation:
Internal rate of return (IRR) is the interest rate at which net present value of all cash flows becomes zero. It measure the profitability of the investment.
IRR of Current Project
IRR = 22.8%
Working for NPV is attached with this answer in Excel Format please find it.
Oriole Legler requires an estimate of the cost of goods lost by fire on March 9. Merchandise on hand on January 1 was $42,560. Purchases since January 1 were $80,640; freight-in, $3,808; purchase returns and allowances, $2,688. Sales are made at 33 1/3% above cost and totaled $129,000 to March 9. Goods costing $12,208 were left undamaged by the fire; remaining goods were destroyed. Collapse question part (a) Compute the cost of goods destroyed. (Round gross profit percentage and final answer to 0 decimal places, e.g. 15% or 125.) Cost of goods destroyed $
Answer:
the cost of goods destroyed is $15,362
Explanation:
Note Sales are made at 33 1/3% above cost. Thus the Mark -up is 1/3.
Using the Mark-up and Margin Relationship :
Gross Profit Margin = 1/(3+1)
=1/4
Therefore gross profit = $129,000× 25%
= $32,250
Income Statement Using the Gross Profit Margin
Sales $129,000
Less Cost of Goods Sold
Opening Stock $42,560
Add Purchases $80,640
Add Freight In $3,808
Less Returns ( $2,688) $81,760
Available for Sale $124,320
Less Closing Stock ($12,208)
$112,112
Less Goods destroyed ( $15,362) (96,750)
Gross Profit $32,250
g Swifty Corporation issued 3,100 5%, 5-year, $1,000 bonds dated January 1, 2022, at face value. Interest is paid each January 1. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
Dr Cash $3,100,000
Cr Bonds payable $3,100,000
Explanation:
Since the bonds were issued at face value of $1000 each,the cash proceeds received from the entire issue of 3,100 bonds can be computed thus:
Cash proceeds=$1000*3,100=$3,100,000
The cash proceeds imply that cash inflows have increased by $3,100,000, as a result cash account should be debited with $3,100,00o while the same amount is credited to bonds payable since an increase in debt obligation should be a credit entry.
Managers in international businesses will need to evaluate the attractiveness of a country as a market or location for a facility or investment. Knowing how to think about events and situations will help the manager make that evaluation. Managers can use economic and socioeconomic indicators to evaluate potential locations to conduct business.
Answer:
The statement is: True.
Explanation:
Before starting businesses in a foreign country, managers must analyze if the target region fulfills the minimal conditions to conduct operations and, more important if the returns are good enough to cover the expenses of the investment. For such a purpose, social indicators such as average consumer income, education, or occupational class should be reviewed by executives. Countries with higher ratings should be the priority to start international businesses there.
During 2019, Globe Life Corporation had following transactions affecting stockholders' equity: a. Feb. 1 Repurchased 230 shares of the company's own common stock at $22 cash per share. b. Jul. 15 Sold 130 of the shares purchased on February 1 for $23 cash per share. c. Oct. 1 Sold 100 of the shares purchased on February 1 for $21 cash per share.
Answer:
The requirement of question is prepare journal entries for each of above transaction; It is assumed that par value of each share is $1
Explanation:
Feb 1.
Common Stocks 230*1 Dr.$230
Paid in capital in excess of par 230*(22-1) Dr.$4,830
Cash 230*22 Cr.$5,060
b. Jul 15
Cash 130*23 Dr.$ 2,990
Common Stocks 130*1 Cr.$130
Paid in capital in excess of par 130*(23-1) Cr.$2,860
c.Oct 1
Cash 100*21 Dr.$2,100
Common Stocks 100*1 Cr.$100
Paid in Capital in excess of par 100*(21-1) Cr.$2,000