Presented below are two independent situations.Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared and paid a $60,000 dividend. On December 31, Nevins reported net income of $122,000 for the year. At December 31, the market price of Nevins Fashion was $15 per share. The stock is classified as available-for-sale.Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40% of Rogan’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $30,000. On December 31, Rogan reported a net income of $80,000 for the year.InstructionsPrepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc.
Answers
Answer:
See the explanation below
Explanation:
(a) Gambino Cosmetics
Since Gambino Cosmetics just 15% which is less than 20% of Nevins Fashion, the cost method for accounting for investments is the relevant method that is used as follows:
Stock investment = 10% * 200,000 * $13 = $260,000
Dividend income = 10% * $60,000 = $6,000
Available-for-sale (AFS) reserve = 10% * $122,000 = $12,000
Date Details Dr ($) Cr ($)
08 Mar. ‘15 Stock investments 260,000
Cash 260,000
To record investment in Nevins Fashion
30 Jun. ‘15 Cash 6,000
Dividend income 6,000
To record dividend income from investment in Nevins Fashion
31 Dec. ’15 Stock investments 12,000
AFS Reserve 12,000
To record share of income in Nevins Fashion
(b) Kanza, Inc.,
Since Kanza, Inc. acquired 40% in Rogan Corporation which is greater than 20%, the equity method for accounting for investments is the relevant method that is used as follows:
Stock investment = 40% * 30,000 * $9 = $108,000
Dividend income = 40% * $30,000 = $12,000
Investment revenue = 40% * $80,000 = $32,000
Date Details Dr ($) Cr ($)
01 Jan. ‘15 Stock investments 108,000
Cash 108,000
To record investment in Rogan Corporation
15 Jun. ‘15 Cash 12,000
Stock investment 12,000
To record dividend received from investment in Rogan Corporation
31 Dec. ’15 Stock investments 32,000
Investment revenue 32,000
To record share of income in Rogan Corporation
Journal entry is the primary record of transactions and events having monetary value in an financial year. Journal entry serves as a basis for preparation of accounts.
The entries for the given questions are provided in the attachment.
Recording of Journal Entries:Journal entries are primary records of a transaction.Accounts are prepared on the basis of entries.Entries are made for transactions that are in terms of money.There is dual effect of every transaction.Journal entry provides detail of every transaction entered into.Learn more about journal entries here:
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Related Questions
Flower Depot, Inc. sells a single product for $10. Variable costs are $4 per unit and fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales level would Flower Depot have to achieve to earn a target profit of $240,000
Answers
Answer:
Break-even point (dollars)= $600,000
Explanation:
Giving the following information:
Selling price per unit= $10
Variable costs per unit= $4
Fixed costs= $120,000
Desired profit= $240,000
To determine the sales level to achieve the desired profit, we need to use the break-even point in dollars formula:
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= (120,000 + 240,000) / [(10 -4)/10]
Break-even point (dollars)= 360,000/ 0.6
Break-even point (dollars)= $600,000
A sporting goods manufacturer budgets production of 48,000 pairs of ski boots in the first quarter and 39,000 pairs in the second quarter of the upcoming year. Each pair of boots require 2 kg of a key raw material. The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter's material needs. Beginning inventory for this material is 19,200 kg and the cost per kg is $9. What is the budgeted materials purchases cost for the first quarter
Answers
Answer:
$831,600
Explanation:
The budget must account for all of the production of the first quarter and 20% of the production of the second quarter, the number of boots considered in the budget is:
[tex]b= 48,000 +0.20*39,000\\b=55,800\ boots[/tex]
Assuming that each boot uses exactly 2kg of raw material and that the company has 19,200 kg on hand, the amount of raw material still required is:
[tex]m = 2*55,800-19,200\\m=92,400\ kg[/tex]
If the cost per kg is $9, then the budgeted materials purchases cost for the first quarter is:
[tex]C=92,400*\$9\\C=\$831,600[/tex]
The budgeted materials purchases cost is $831,600.
Yeaman Company manufactures luggage sets. Yeaman sells its luggage sets to department stores. Yeaman expects to sell 1 comma 850 luggage sets for $ 345 each in January and 2 comma 250 luggage sets for $ 345 each in February. All sales are cash only. Prepare the sales budget for January and February.
Answers
Answer and Explanation:
The preparation of the sales budget for the month of Jan and Feb is presented below:
Particulars January February
Budgeted luggage sets to be sold 1,850 2,250
Sales price per unit $345 $345
Total sales $638,250 $776,250
By multiply the luggage sets with the sales price per unit we can get the total sales and the same is shown above
Stockholders’ equity of Ernst Company consists of 79,000 shares of $5 par value, 9% cumulative preferred stock and 275,000 shares of $1 par value common stock. Both classes of stock have been outstanding since the company’s inception. Ernst did not declare any dividends in the prior year, but it now declares and pays a $120,000 cash dividend at the current year-end. Determine the amount distributed to each class of stockholders for this two-year-old company.
Answers
Answer:
Preferred stock dividends is $71,100
Common stock dividends is $48,900
Explanation:
The cumulative preferred stockholders would be paid prior year dividends as well as the current year's,hence would be entitled to two years' dividends with remnant thereafter being paid to common stockholders.
preferred stock dividends=79,000*$5*9%=$35,550
The preferred stock dividends per year is $35,550,which means that they would get $71,100 (dividends for two years).
Common stock dividends=$120,000-$71,100 =$48,900
The rationale for preferred stocks receiving arrears of dividends is because of the cumulative nature which entitles them to arrears of dividends
Answer:
Explanation:
Amount paid as a preferred dividend
preferred dividend = previous year dividend + current year dividend
{number of share × par value + {number of share × par value
× preferred dividend percentage} × preferred dividend percentage}
{79,000 shares × $5 each × 9%} + {79,000 shares × $5 each × 9%}
$35,550 + $35,550 = $71,100
the amount paid as preferred dividend is $71,100
Amount paid as common stock dividend = Total cash dividend paid - preferred dividend = $120,000 - $71,100
$48,900
the amount paid as common stock dividend is $48,900
Harold Manufacturing produces denim clothing. This year, it produced 5,120 denim jackets at a manufacturing cost of $41.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. Jackets can be sold as is to a secondhand clothing shop for $8.00 each. Jackets can be disassembled at a cost of $32,200 and sold to a recycler for $12.00 each. Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,120 jackets into only 2,900 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $101,700, but the jackets can then be sold for their regular price of $45.00 each.
Answers
Answer:
the best option is number 1, sell the jackets to a secondhand store at $8 will yield $40,960 in profits
Explanation:
the previous manufacturing costs can be considered sunk costs because they cannot be recovered, so we must analyze the options to determine which one yields the highest profit.
option 1
sell 5,120 jackets to secondhand stores at $8 each, profit = $40,960
option 2
disassemble the jackets and sell them at $12 each, profit = $61,440 - $32,200 (disassembling costs) = $29,240
option 3
rework the jackets, profit = ($45 x 2,900) - $101,700 = $28,800
the best option is number 1, sell the jackets to a secondhand store at $8 will yield $40,960 in profits
Wall-E makes 2 products, frames and hangers. Frames have a contribution margin per unit of $6.00 and hanger has a contribution margin per unit of $11.00. Wall-E has annual fixed costs of $290,000 units. Assume that frames and hangers are sold in a 3:1 mix (3 frames are sold for each hanger). How many units of each must be sold to break-even
Answers
Answer:
Break-even point (units)=40,000 units
Explanation:
Giving the following information:
Frames have a contribution margin per unit of $6.00 and hanger has a contribution margin per unit of $11.00. Wall-E has annual fixed costs of $290,000 units.
We need to calculate the break-even point in units for the whole company.
Break-even point (units)= Total fixed costs / Weighted average contribution margin ratio
Weighted average contribution margin ratio= (6*0.75) + (11*0.25)
Weighted average contribution margin ratio= 7.25
Break-even point (units)= 290,000/7.25
Break-even point (units)=40,000 units
Indicate whether each of the following transactions represents an increase in net exports, a decrease in net exports, an increase in net capital outflow, or a decrease in net capital outflow for the United States.
a. An American buys a Sony TV.
b. An American investor buys a controlling share in a South Korean electronics firm.
c. The Sony pension fund buys a bond from the U.S. Treasury.
d. A South Korean tourist buys some Sunkist oranges from an American farmer.
Answers
Answer: a. Decrease in Net Exports
b. Increase in Net Capital
c. Decrease in Net Capital.
d. Increase in Net Exports
Explanation:
a. A Decrease in Net Exports
Net Exports is Exports - Imports. In buying a Television from a foreign company, the American has imported the good. This will reduce Net Exports by the aforementioned formula.
b. An INCREASE in NET CAPITAL OUTFLOW
This is essentially Capital being invested in other countries. It increases when more is invested in other countries as opposed to less.
c. A DECREASE in NET CAPITAL OUTFLOW.
As previously stated, Net Capital Outflow increases when a country invests more in another country. Since we are looking at it from the perspective of the USA, Sony, which is not an American company, buying into such capital is considered a Decrease in Net Capital Outflow as money is coming into the US.
d. An INCREASE in NET EXPORTS
Here, a foreigner is buying goods in the USA. That translates to Export. And by the Net Export Equation, Net Exports will rise.
If you need any clarification do react or comment.
Net exports decrease when an American buys a Sony TV, while it increases when a South Korean tourist buys Sunkist oranges. Net capital outflow increases with purchase of a share in a South Korean company by an American and decreases when Sony pension fund buys a U.S. Treasury bond.
Explanation:Here are the transactions and their impact:
An American buys a Sony TV. This is an import and would decrease net exports for the United States.An American investor buys a controlling share in a South Korean electronics firm. This would increase net capital outflow as money is leaving the U.S and going to South Korea.The Sony pension fund buys a bond from the U.S. Treasury. This would decrease net capital outflow, as money is entering the U.S. from abroad.A South Korean tourist buys some Sunkist oranges from an American farmer. This would increase net exports as this is an export from the U.S to South Korea.Learn more about Net Exports and Net Capital Outflow here:https://brainly.com/question/37531629
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Partially completed budget performance reports for Garland Company, a manufacturer of light duty motors, follow: Garland Company Budget Performance Report—Vice President, Production For the Month Ended November 30 Plant Actual Budget Over Budget Under Budget Eastern Region $2,409,400 $2,420,000 $(10,600) Central Region 2,998,400 3,000,000 (1,600) Western Region (g) (h) $(i) $(j) $(k) $(l) $(12,200) Garland Company Budget Performance Report—Manager, Western Region Plant For the Month Ended November 30 Department Actual Budget Over Budget Under Budget Chip Fabrication $(a) $(b) $(c) Electronic Assembly 703,200 700,000 3,200 Final Assembly 516,600 525,000 $(8,400) $(d) $(e) $(f) $(8,400) Garland Company Budget Performance Report—Supervisor, Chip Fabrication For the Month Ended November 30 Cost Actual Budget Over Budget Under Budget Factory wages $95,500 $82,000 $13,500 Materials 115,300 120,000 $(4,700) Power and light 49,950 45,000 4,950 Maintenance 37,200 28,000 9,200 $297,950 $275,000 $27,650 $(4,700) a. Complete the budget performance reports by determining the correct amounts for the lettered spaces (a-l) as marked above. a. $ g. $ b. $ h. $ c. $ i. $ d. $ j. $ e. $ k. $ f. $ l. $ b. The budget for the Chip Fabrication Department indicates that the budget overrun was caused by a combination of budget in factory wages, power and light, and maintenance that exceeded a budget in materials.
Answers
Answer:
A. $297,950
B. $275,000
C. $22,950
D. $1,517,750
E. $1,500,000
F.$26,150
G. $1,517,750
H. $1,500,000
I. $17,750
J. $6,925,550
K. $6,920,000
L. $17,750
Explanation:
The completed budget of Garland has been well scripted and attached for your review.
Zoe's Bakery operates in a perfectly competitive industry. The variable costs at Zoe's Bakery increase, so all of the cost curves (with the exception of fixed cost) shift leftward. The demand for Zoe's pastries does not change, nor does the firm shut down. To maximize profits after the variable cost increase, Zoe's Bakery will ________ its price and ________ its level of production.
Answers
Answer:
Not change
Decrease
Explanation:
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply.
The bakery cannot change its price because it operates in a perfectly competitive market.
Instead the bakery would reduce cost by decreasing its level of production.
I hope my answer helps you
Zoe's Bakery will increase its price and decrease its level of production, as the short-term response in a perfectly competitive market leads to only a partial offset of the higher costs.
Zoe's Bakery operates in a perfectly competitive industry where an increase in variable costs leads to a leftward shift in the cost curves, which includes the average total cost, average variable cost, and marginal cost curves. In response to increased costs, to maximize profits, Zoe's Bakery will increase its price and decrease its level of production. This is because, in the short run, firms in perfectly competitive markets can only increase prices to partially offset the higher costs—prices rise, but by less than the increase in cost per unit. This could result in economic losses, potentially causing firms to exit the market in the long run. As a consequence, the price may eventually increase by the full amount of the increase in production cost to reach a new equilibrium.
Yale Company purchased equipment having an invoice price of $21,500. The terms of sale were 2/10, n/30, and Yale paid within the discount period. In addition, Yale paid a $320 delivery charge, $350 installation charge, and $1,183 sales tax. The amount recorded as the cost of this equipment is:
Select one:
a. $21,070.
b. $21,500.
c. $21,740.
d. $22,923.
Answers
Answer:
Correct option is D
$ 22,923
Explanation:
According to International Accounting standards (IAS) 16 property plan and equipment (PPE), the cost of an asset is the purchase cost plus other costs of bringing it to the intended working conditions.
So we will add the purchase cost to the cost of delivery, tax and installation.
The purchase cost less discount = (100-2)% × 21,500= $21,070
The cost of the equipment = $21,070 + 320 + 350 + 1183
=$ 22,923
On January 1, 2021, Tropical Paradise borrows $43,000 by agreeing to a 6%, five-year note with the bank. The funds will be used to purchase a new BMW convertible for use in promoting resort properties to potential customers. Loan payments of $831.31 are due at the end of each month with the first installment due on January 31, 2021.
Required:
Record the issuance of the installment note payable and the first two monthly payments.
Answers
Answer and Explanation:
The Journal entry with their narrations is shown below:-
1. Cash Dr, $43,000
To Notes Payable $43,000
(Being Cash is recorded)
2. Interest expenses Dr, $215
($43,000 × 6% ÷ 12)
Notes payable Dr, $616.31
To Cash $831.31
(Being Interest expenses is recorded)
3. Interest expenses Dr, $211.92
($43,000 - $616.31) × 6% ÷ 12)
Notes payable Dr, $619.39
To Cash $831.31
(Being Interest expenses is recorded)
Therefore we have recorded the issuance of the installment note payable and the first two monthly payments.
The issuance of the installment note payable and the first two instalments by Tropical Paradise can be recorded using journal entries. The issuance results in a 'Cash' debit and 'Notes Payable' credit worth $43,000. Payments result in 'Interest Expense' and 'Notes Payable' debits and a 'Cash' credit, where the amount reflects the payment towards interest and principal.
Explanation:Tropical Paradise's decision to borrow and subsequent payments can be recorded via journal entries. The issuance of the installment note payable would result in journal entry namely 'Cash' (Debit $43,000) and 'Notes Payable' (Credit $43,000). This represents the increase in cash by the loan amount and the establishment of the liability to pay this sum back to the bank.
Upon making the first monthly payment of $831.31, Tropical Paradise would make another journal entry: 'Interest Expense' (Debit $215) and 'Notes Payable' (Debit $616.31) to reflect the payment of some of the principal and interest, and 'Cash' (Credit $831.31) to show the reduction in available cash from making the payment. These entries would be repeated for the second payment as well.
The interest expense is calculated as the outstanding principal (in these cases, $43,000 and $42,383.69) multiplied by the annual interest rate (6%), divided by the number of periods in the year (12).
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The centralized computer technology department of Hardy Company has expenses of $320,000. The department has provided a total of 4,000 hours of service for the period. The Retail Division has used 2,750 hours of computer technology service during the period, and the Commercial Division has used 1,250 hours of computer technology service. Additional data for the two divisions is following below: Retail Division Commercial Division Sales $2,150,000 $1,200,000 Cost of goods sold 1,300,000 800,000 Selling expenses 150,000 175,000 Determine the divisional income from operations for the Retail Division and the Commercial Division. Do not round interim calculations. Hardy Company Divisional Income from Operations Retail Division Commercial Division $ $ $ $ $ $ Income from operations $ $
Answers
Answer:
Retail Division $480,000
Commercial Division $30,000
Explanation:
To measure divisional income consider only those items attributable to a particular division.
Retail Division
Sales 2,150,000
Less Cost of Sales (1,300,000)
Controllable Contribution 850,000
Less Controllable Fixed Cost :
Selling expenses (150,000)
Allocated Central Cost (2,750/4,000×$320,000) (220,000)
Divisional Profit Contribution 480,000
Commercial Division
Sales 1,200,000
Less Cost of Sales (800,000)
Controllable Contribution 400,000
Less Controllable Fixed Cost :
Selling expenses (150,000)
Allocated Central Cost (1,250/4,000×$320,000) (220,000)
Divisional Profit Contribution 30,000
This is a partial adjusted trial balance of Wildhorse Co.. WILDHORSE CO. Adjusted Trial Balance January 31, 2022 Debit Credit Supplies $780 Prepaid Insurance 1,620 Salaries and Wages Payable $1,040 Unearned Service Revenue 710 Supplies Expense 910 Insurance Expense 540 Salaries and Wages Expense 1,770 Service Revenue 4,350 Prepare the closing entries at January 31, 2022.
Answers
Answer:
The entries are made as follows;
Explanation:
Service Revenue Dr.$4,350
Income Summary Cr.$4,350
(To close revenue account)
Income Summary
Supplies expense Dr.$910
Insurance Expense Dr.$540
Salaries and Wages Expense Dr.$1,770
Income Summary Cr.$3,220
(To close expenses)
Income Summary (4,350-3,220) Dr.$1,130
Retained Earnings Cr.$1,130
Closing journal entries are made to temporary accounts like revenue and expense accounts. For Wildhorse Co., debit Service Revenue and credit Income Summary for the amount of revenue. Debit the total of all expenses to Income Summary and credit each individual expense. Lastly, debit Income Summary for the balance of net income and credit Retained Earnings.
Explanation:In closing the books for Wildhorse Co. on January 31, 2022, you group accounts into two categories: revenues and expenses. First, close revenues to Income Summary. The entry is a debit to Service Revenue for $4,350 and a credit to Income Summary for $4,350. Second, close the expense accounts. Debit Income Summary for the summed value of Supplies Expense ($910), Insurance Expense ($540), and Salaries and Wages Expense ($1,770), which totals $3,220, and then credit each expense individually. The balance in the Income Summary (representing net income) is $1,130 which is the difference between Service Revenue ($4,350) and total expenses ($3,220). Finally, close Income Summary and Retained Earnings. Debit Income Summary for $1,130 and credit Retained Earnings for $1,130.
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David Company uses the gross method to record sales made on credit. On June 10, 2017, it sold goods worth $250,000 with terms 2/10, n/30 to Charles Inc. On June 19, 2017, David received payment for 1/2 of the amount due from Charles Inc. David's fiscal year end is on June 30, 2017. What amount will be reported in the financial statements for the accounts receivable due from Charles Inc?
Answers
Answer:
$125,000
Explanation:
Good worth $250,000-$125,000
=$125,000
The amount that will be reported in the financial statements for the accounts receivable due from Charles Inc is $125,000 due to the fact that On June 10, 2017 goods worth $250,000 where sold to Charles Inc and On June 19, 2017, David received payment for 1/2 of the amount due from Charles Inc which makes us to arrived at $125,000 which is the 1/2 of $250,000 then less the actual amount which is $2,50,000 which in turn make us to arrived at $125,000 as the answer.
(1/2×$250,000)=$125,000
Newhard Company assigns overhead cost to Jobs on the basis of 125% of direct labor cost. The job cost sheet for Job 313 includes $10,000 in direct materials cost and $12,000 in direct labor cost. A total of 1,000 units were produced in Job 313.
Required:
a. What is the total manufacturing cost assigned to Job 313?
b. What is the unit product cost for Job 313?
a. Total manufacturing cost _____
b. Unit product cost _____
Answers
Answer:
a. Total manufacturing cost $37,000
b. Unit product cost $37
Explanation:
Total Cost = Sum of all manufacturing costs
Total manufacturing cost -
direct materials $10,000
direct labor $12,000
overhead ($12,000×125%) $15,000
Total $37,000
Unit Product Cost = Total Cost / Number of Units
= $37,000/ 1,000 units
= $37
Answer:
a. Total manufacturing cost is $37,000
b. Unit product cost is $37 per unit
Explanation:
The total manufacturing cost is the sum of the direct and indirect costs. The indirect costs are also known as overheads.
Given that the job cost sheet for Job 313 includes $10,000 in direct materials cost and $12,000 in direct labor cost,
Total direct cost = $10,000 + $12,000
= $22,000
Also given that the Company assigns overhead cost to Jobs on the basis of 125% of direct labor cost
Total overheads = 125% * $12,000
= $15,000
Hence total manufacturing cost
= $22,000 + $15,000
= $37,000
Given that 1,000 units were produced,
Unit cost = $37,000/1000
= $37 per unit
QUESTION 20 The South Division reported income from operations of $400,000 and total service department charges of $200,000. As a result, a. the gross profit margin was $200,000 b. income from operations before service department charges was $600,000 c. net income was $200,000 d. consolidated net income was $200,000
Answers
Answer:
Option (b) is correct.
Explanation:
Given that,
Income from operations = $400,000
Total service department charges = $200,000
The income from operations already takes into account the service department charges which means that it is already deducted. Hence, if we add the total service department charges to the income from operations then we can get the income from operations before service department charges.
So, the income from operations before service department charges is as follows:
= Income from operations + Total service department charges
= $400,000 + $200,000
= $600,000
Sisters of Charity of the Incarnate Word, operates a health and Wellness Center. Meaux was a paying member of the Health Center. The rules of the center which Meaux had been given state, "The Health and Wellness Center is not responsible for lost or stolen items." A sign stating, "We cannot assure the safety of your valuables" was posted at the check in desk. The Wellness Center furnished a lock and key to each member but had a master key to open lockers in case a member forgot or lost a key. One day, Meaux went to the Wellness Center and placed his clothes, an expensive Rolex watch, and a money clip with $400 cash in the locker assigned him. On returning from swimming, Meaux discovered that his locker had been pried open and that his watch and money had been stolen by some unknown person. Meaux sued the Sisters of Charity alleging that a bailment had been created between him and the sisters and that the sisters, as bailee, were negligent and therefore liable to him for the value of the stolen property. Was a bailment created between Meaux and the Sisters of Charity? What is required for a bailment to be made?
Answers
Answer:
a) A bailment was not created between Meaux and the Sisters of Charity. This answer is supported by the two requirements for a bailment to be made, stated in answer b) below.
b) A bailment is the temporary transfer of physical control of an item of personal property from the bailor to the bailee. It is not a transfer of ownership.
For a bailment to be made, there must be physical control of the bailed item and intention to control on the part of the bailee. Items kept in the lock are not under the custody of the Sisters of Charity and they did not have any intention to safeguard them; no wonder the rule and warning sign.
Explanation:
The alleged bailee, the Sisters of Charity, did not have any intention to control and there was no way they could have known what Meaux deposited in the lock. That was why the rules of the health and wellness center clearly declared that the Center was not responsible for lost or stolen items and went further with a sign that "we cannot assure the safety of your valuables."
These rule and sign are good warnings which Meaux should have taken into consideration before enrolling as a member of the center and also before bringing his expensive Rolex watch and cash to the center.
That the Sisters of Charity kept the master key for locks was for the interest of the Center patrons when they lost or forgot their keys.
1. Dougie’s Donuts most recent free cash flow (FCF) was $225 million; the FCF is expected to grow at a constant rate of 4%. The firm’s WACC is 12.55%, and it has 15 million shares of common stock outstanding. The firm has $75 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the firm has no other non-operating assets. It has $545 million in debt and $50 million in preferred stock. a. What is the value of operations? b. Immediately prior to the repurchase, what is the intrinsic value of equity? c. Immediately prior to the repurchase, what is the intrinsic stock price? d. How many shares will be repurchased? How many shares will remain after the repurchase? e. Immediately after the repurchase, what is the intrinsic value of equity? The intrinsic stock prices.
Answers
Answer:
a. What is the value of operations? = 2736.84 millions
b. Immediately prior to the repurchase,= 2811.84millions
what is the intrinsic value of equity? = 2216.84 millions
c. Immediately prior to the repurchase, what is the intrinsic stock price? = 147.79
d) How many shares will be repurchased?= 0.51million
How many shares will remain after the repurchase? = 14.49 millions
e. Immediately after the repurchase,= 2141.84millions
what is the intrinsic value of equity? The intrinsic stock prices. = 147.79
Explanation:
Find the picture in the attachment
Data for January for Bondi Corporation and its two major business segments, North and South, appear below: Sales revenues, North $660,000 Variable expenses, North $383,000 Traceable fixed expenses, North $79,000 Sales revenues, South $510,000 Variable expenses, South $291,000 Traceable fixed expenses, South $66,000 In addition, common fixed expenses totaled $179,000 and were allocated as follows: $93,000 to the North business segment and $86,000 to the South business segment. A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:_______
Answers
Answer:
Net income 105,000
Explanation:
Income statement for North Segment
$
Revenue 660,000
variable cost ( 383,000)
Contribution 277,000
Fixed expenses (79,000)
income before allctd. cost 198000
Allocated fixed cost (93,000)
Net income 105,000
Final answer:
The segment margin for the North business segment is $198,000, calculated by subtracting the variable and traceable fixed expenses from the sales revenues for that segment.
Explanation:
To calculate the segment margin for the North business segment of Bondi Corporation, we need to subtract all expenses that can be directly attributed to the segment from its sales revenues. This would include both variable and traceable fixed expenses specific to the North segment.
Here's how we calculate the segment margin:
Sales revenues, North: $660,000Less: Variable expenses, North: $383,000Less: Traceable fixed expenses, North: $79,000Segment margin for North: $660,000 - $383,000 - $79,000 = $198,000Note that the common fixed expenses allocated to the North segment are not included in the segment margin calculation. They are considered when calculating the net income for the entire company.
On January 1, 2018, Truesdale, Inc., purchased a piece of machinery for use in operations. The total acquisition cost was $33,000. The machine was expected to produce a total of 60,000 units during its life. The machine actually produced 16,000 units during 2018, 23,000 units during 2019, and 21,000 units during 2020. The machine has a salvage value of $3,000. Using the units-of-production method, the amount of depreciation that should be recorded during 2018, is approximately A. $8,000 B. $10,000 C. $8,800 D. $11,000
Answers
Answer:
A. $8,000
Explanation:
For computing the amount of depreciation expenses, first, we need to find out the depreciation expense per unit which is shown below:-
Depreciation expense per unit = (Total acquisition cost - Salvage value) ÷ Total units
= ($33,000 - $3,000) ÷ 60,000
= $30,000 ÷ 60,000
= 0.50 per unit
Amount of depreciation expenses = Actual Machine produced × Depreciation expense per unit
= 16,000 × 0.50
= $8,000
Therefore for computing the depreciation expenses we simply multiply the actual machine produced with depreciation expense per unit.
MoveIt Corporation is the world’s leading express-distribution company. In addition to the world’s largest fleet of all-cargo aircraft, the company has more than 54,000 ground vehicles that pick up and deliver packages. Assume that MoveIt sold a delivery truck for $26,000. MoveIt had originally purchased the truck for $43,000 and had recorded depreciation for three years.
1.Calculate the amount of gain or loss on disposal, assuming that Accumulated Depreciation was
(a) $17,000,
(b) $12,000, and
(c) $19,000
2.Using the following structure, indicate the effects on disposal of the truck, assuming that Accumulated Depreciation was (a) $17,000, (b) $12,000, and (c) $19,000.
3.Prepare the journal entry to record the disposal of the truck, assuming that Accumulated Depreciation was (a) $17,000, (b) $12,000, and (c) $19,000.
Answers
The gain or loss on disposal is calculated by subtracting the net book value (cost less accumulated depreciation) from the sale price of the asset. Depending on the amount of accumulated depreciation, the MoveIt Corporation would record a break-even, a loss, or a gain on the sale of its delivery truck.
Explanation:Calculating Gain or Loss on Disposal:
To calculate the gain or loss on the disposal of the delivery truck, we need to consider the truck's original cost, the accumulated depreciation, and the sale price. The formula for calculating gain or loss is:
Sale Price - (Original Cost - Accumulated Depreciation) = Gain or Loss
For (a) $17,000 in accumulated depreciation: $26,000 - ($43,000 - $17,000) = $0 (no gain or loss)For (b) $12,000 in accumulated depreciation: $26,000 - ($43,000 - $12,000) = -$5,000 (loss)For (c) $19,000 in accumulated depreciation: $26,000 - ($43,000 - $19,000) = $2,000 (gain)Journal Entry for Disposal of the Truck:
The journal entry varies based on the accumulated depreciation and whether there was a gain or loss:
For (a) $17,000 accumulated depreciation, the entry would balance with no gain or loss accounted for.For (b) $12,000 accumulated depreciation, the loss of $5,000 would be recorded.For (c) $19,000 accumulated depreciation, a gain of $2,000 would be recorded.The short-run is- a time period in which the prices of output cannot change but in whihc the prices of inputs have time to adjust- a time period in which output prices can change in response to supply and demand but in which all input prices have not yet been able to completely adjust- a time period in which neither the prices of output nor the prices of inputs are able to change- any time period ofless thatn a year
Answers
Answer:
a time period in which output prices can change in response to supply and demand but in which all input prices have not yet been able to completely adjust
Explanation:
Short run are the period in that at least one factor in production is fixed, in which the product can be increased by increasing the owners and increasing the number of variable factors such as purchasing more raw materials. Therefore, output may change with the increase in supply and demand.so the correct option is a time period in which output prices can change in response to supply and demand but in which all input prices have not yet been able to completely adjustPrepare a 4–6 page case analysis on the topic of strategic management and why it is critical to the success of an organization in meeting its goals and mission. In your analysis respond to the following question: What is strategic management and why is it critical to the success of an organization in meeting its goals and mission?
Answers
Answer:
Strategic management can be defined as the correct management of the resources of a certain organization, whose objective is to achieve the proposed goals. This means having very clear business objectives, analyzing the competition, internally analyzing the internal organization, having clear strategies and having them carried out by the administration in the business organization.
In order to achieve the established objectives, certain aspects must be taken into account, such as the business culture, the skills of all employees and the organizational structure of the company. Companies that do not conform to these characteristics may have some difficulties and problems to achieve business success.
Lower-level managers or employees can have a significant influence in establishing and implementing business strategies, although in the end, top management is responsible for applying business strategies.
Organizational leaders need to be responsible for learning from past strategies and examining their business environment, in search of other strategies. Excellent strategic management is paramount to have an overall perspective, both internal and external.
Explanation:
Strategic management is essential for organizational success, encompassing planning, execution, and monitoring of strategies to meet goals and missions. It ensures financial and management stability, fosters strategic thinking, and enhances the ability to handle pressure and challenges in the business environment.
Explanation:What is Strategic Management and Its Importance?Strategic management is a comprehensive approach to planning, implementing, monitoring, and analyzing an organization's strategies to achieve its goals and fulfill its mission. It serves as a fundament for decision-making processes, directing organizations towards sustainable growth and competitive advantage.
The importance of strategic management lies in its capacity to guide companies through a constantly changing business environment. By analyzing the organization's overall financial position and comparing it to peer organizations, strategic management provides insights into how operations and policies can be adjusted to strengthen financial positions and manage liabilities effectively.
Moreover, strategic management emphasizes the importance of keeping management issues in perspective. It provides strategies to prevent or remedy problems, ensuring that management challenges do not derail the organization's objectives. The integration of management and organization, along with a detailed financial plan, further illustrates how strategic decisions underpin the structural and financial stability of a company.
Key Components of Strategic ManagementAnalysis of the financial and competitive landscape.Development of a strategic vision aligned with the organization's mission.Implementation of strategies through effective organization and management structures.Monitoring and adjusting strategies based on performance and external changes.In conclusion, strategic management is critical to the success of any organization as it encompasses planning, executing, and monitoring strategies essential for meeting goals and fulfilling the mission. This structured approach not only addresses financial and managerial aspects but also emphasizes strategic thinking and the ability to work under pressure, making it indispensable for surviving and thriving in today's complex business world.
Consider the following statements regarding Company A and Company B:The two companies have identical operating results but have made different accounting method choices.Company B reported lower COGS than Company A this year. Prices rose throughout the year.Both companies took a PP&E write downs in 2016. Company B reversed the write down and wrote the assets back up this year.Which of the two companies most likely reports under US GAAP?A. A onlyB. B onlyC. A and BD. Neither A nor B
Answers
Answer:
A. A only
Explanation:
U.S. Generally Accepted Accounting Principles (GAAP) does not allow property, plant, and equipment to be written up or revalued. If the fair value of PP&E falls below the book value and the amount is material then a company must write down the asset to fair value.
Since under US GAAP, once PPE is written, it can not be reversed. as Company B is indicated to have reversed the write down while company A did not. It therefore means that Company A only is reporting under US GAAP.
Final answer:
Company A is most likely to report under US GAAP because US GAAP does not permit reversal of PP&E write-downs, and higher COGS reported by Company A could be indicative of using the LIFO method, permitted under US GAAP when prices rise.
Explanation:
The question asks which of the two companies, A or B, most likely reports under US GAAP, given that:
Company B reported lower COGS than Company A this year while prices rose.Company B reversed a PP&E write-down this year that was taken in 2016.Under US GAAP, reversing a write-down of PP&E (property, plant, and equipment) is not permitted once it is recorded. Moreover, if prices rise throughout the year and inventory valuation methods remain constant, COGS (Cost of Goods Sold) would typically increase under the last-in, first-out (LIFO) method which is allowed under US GAAP. This premise leads to the conclusion that Company A, which did not reverse the PP&E write-down and potentially follows LIFO accounting (assuming it led to higher COGS), is the one that most likely reports under US GAAP. Therefore, the correct answer is A. A only.
You work for a small startup company that just hired five new employees, doubling its number of team members. In preparation for the new employees’ first day in the office, you add five new user accounts to your CRM (customer relationship management) software subscription, a service that is hosted in the cloud. What aspect of cloud computing has worked to your advantage?
Answers
Answer:
Rapid elasticity.
Explanation:
Cloud computing is defined as an on demand available computer service, that focuses on data storage.and computing. It is not managed by the user.
Rapid elasticity is the ability to scale the services being used by an entity in cloud computing. There is ability to scale up or scale down on cloud service usage.
In this instance there was a scaling up when you added five new user accounts to your CRM (customer relationship management) software subscription, a service that is hosted in the cloud.
West Corp. issued 17-year bonds 2 years ago at a coupon rate of 10.3 percent. The bonds make semiannual payments. If these bonds currently sell for 102 percent of par value, what is the YTM
Answers
Answer:
10%
Explanation:
The actual return that an investor earn on a bond until its maturity is called the Yield to maturity. It is a long term return which is expressed in annual rate.
According to given data
It is assumed that face value of the bond is $1,000
Coupon Payment = C = $1,000 x 10.3% = $103 annually = $51.5 semiannually
Price of the Bond = P = $1,000 x 102% = $1,020
Numbers of period = n = (17-2) years x 2 = 30 periods
Use Following Formula to calculate YTM
Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Yield to maturity = [ $51.5 + ( $1,000 - $1,020 ) / 30 ] / [ ($1,000 + $1,020 ) / 2 ]
Yield to maturity = $50.83 / $1,010 = 0.0503 = 5.03% = 5% per Semiannual
Yield to maturity = 5% x 2 = 10% annually
Yield to maturity = 3.56% semiannually OR 7.12% annually
Answer:
The answer is 10.04%
Explanation:
Yield-to-maturity (YTM) is the of return an investor is expecting from its bonds.
The payment is semiannual.
Number of years, N is 30 years[(7 years - 2 years) x 2]
YTM = ?
Present Value(PV) = $102(102% of $100)
Coupon payment (PMT) = $5.15[(10.3percent ÷ 2) x $100]
Future Value(FV) = $100
Using Financial calculator, we have:
5.02percent
This is for semiannual
Therefore, annual YTM will be:
5.02 percent x 2
10.04%
Dayton has forecast sales to be $214,000 in February, $279,000 in March, $298,000 in April, and $314,000 in May. The average cost of goods sold is 60% of sales. All sales are made on credit and sales are collected 50% in the month of sale, 30% the month following and the remainder two months after the sale. What are budgeted cash receipts in May?
Answers
Answer:
The answer is attached;
Explanation:
The stockholders' equity section on the December 31, 2012, balance sheet of Chemfast Corporation reported the following amounts:
Contributed Capital
Preferred Stock (par $20; authorized 10,000 shares, ? issued, of which 1,000 shares are held as treasury stock) $108,000
Additional Paid-in Capital, Preferred 15,390
Common Stock (no-par; authorized 20,000 shares, issued and outstanding 6,200 shares) 632,400
Retained Earnings 32,000
Treasury Stock, 1,000 Preferred shares at cost 9,600
Assume that no shares of of treasury stock have been sold in the past. Complete the following statements (Amounts to be deducted should be indicated by a minus sign. Round "per share values" to 2 decimal places.)
1. The number of shares of preferred stock issued was?
2. The number of shares of preferred stock outstanding was?
3. The average issue price of the preferred stock was? (per share)
4. The average issue price of the common stock was? (per share)
5. The treasury stock transaction increased (decreased) stockholders? equity by?
6. The treasury stock cost? (per share)
7. Total stockholders' equity is?
Answers
Answer:
1. The number of Shares of Preferred Stock issued was
88000/20 = 4400
2. Number of shares outstanding was
4400 - 1000= 3400
3. Average issue price of the preferred stock was
(88000+10340)/4400= 22.35
4. Average issue price of the common stock was
(478400/5200)= 92
5. The treasury stock transaction decreased stock equity by 9100
6. The treasury stock cost (9100/1000)= 9.1
7. Total stockholder Equity is 589,640
Stockholders Equity
Capital stock
Preferred stock 88000
paid in capital in excess of par 10340
Common stock 478400
total paid in capital 576740
Retained Earnings 22000
total paid in capital & Retained earnings 598740
less Treasury stock -9100
total Stockholders Equity 589640
Chemfast Corporation has issued 5,400 preferred shares, with 4,400 shares outstanding. The average issue price is $22.87 for preferred and $102.00 for common stock, while the treasury stock transaction decreased equity by $9,600.
Let's break down the provided data regarding Chemfast Corporation's stockholders' equity to answer the questions:
1. The number of shares of preferred stock issued was:
To find the number of issued preferred shares, use the par value:
Total amount of Preferred Stock / Par Value = $108,000 / $20 = 5,400 shares.
2. The number of shares of preferred stock outstanding was:
Issued shares minus treasury shares:
5,400 issued shares - 1,000 treasury shares = 4,400 outstanding shares.
3. The average issue price of the preferred stock was (per share):
Average issue price includes additional paid-in capital:
(Total Preferred Stock + Additional Paid-in Capital) / Number of issued shares = ($108,000 + $15,390) / 5,400 = $22.87 per share.
4. The average issue price of the common stock was (per share):
Total Common Stock / Number of issued shares = $632,400 / 6,200 = $102.00 per share.
5. The treasury stock transaction increased (decreased) stockholders' equity by:
The purchase of treasury stock decreases equity:
-$9,600 (since no shares have been sold).
6. The treasury stock cost (per share):
Cost of treasury stock / Number of treasury shares = $9,600 / 1,000 = $9.60 per share.
7. Total stockholders' equity is:
Summing up all components:
(Preferred Stock + Additional Paid-in Capital, Preferred + Common Stock + Retained Earnings) - Treasury Stock = ($108,000 + $15,390 + $632,400 + $32,000) - $9,600 = $778,190.
Which of the following is not a result of following a well-designed budgeting process? Multiple Choice Assurance of future profits. Improved performance evaluations. Improved coordination of business activities. Improved communication of management's action plans. Improved decision-making processes.
Answers
Answer:
Assurance of future profits
Explanation:
Budgeting refers to estimating a future cost or revenue as on today so as to reduce business uncertainty and achieve planned goals. For example, budgeted costs reveal the estimated costs that would be incurred in the near future.
Budgeting is based upon past figures and current trends so as to estimate the future prospects of an activity under consideration. Such an activity reveals the course of action and aids better planning for the future.
For instance, a cash budget reveals the cash surplus or defict which shall arise in the near future and such a budget draws a firm's attention towards the funds it will require in the near future and from what sources those can be raised.
Since budgeting is an estimate and cannot account for unforeseen business events whose indications did not exist at the time of preparing such budgets, it's results cannot guarantee or assure future profits to a business. It's purpose is to reduce uncertainity, it cannot altogether eliminate uncertainity.
Matthias Corp. had the following foreign currency transactions during 2017:
Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $62,900 and paid the invoice on April 20 at the U.S. dollar equivalent of $53,200.
On September 1, borrowed the U.S. dollar equivalent of $305,000 evidenced by a note that is payable in the lender's local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $322,000.
Required:
In Matthias's 2017 income statement, what amount should be included as a net foreign exchange gain or loss?
Answers
Answer:
$7,300 loss
Explanation:
The computation of the net foreign exchange gain or loss included in the income statement is shown below:
Since the merchandise purchased value is $62,900
And, the paid amount is $53,200
So, the gain on transaction is
= $62,900 - $53,200
= $9,700
The borrowed amount is $305,000
And, the principal amount is $322,000
So, the loss is
= $305,000 - $322,000
= $17,000 loss
So in this case $7,300 loss is included which is a difference of $9,700 and $17,000