Answer:
Refer to the merchandise that customer return to the seller after the sale.
Explanation:
Sales return is a option given by a seller to its customers to return the product purchased due to some other reasons. The sales returns are received by sellers and the invoice is then adjusted. The seller records the sales return under the account sales return and allowances. Customers usually return the products to sellers if they are not satisfied with either the quality or quantity.
Ollie Company experienced the following events during its first-year operations: 1. Acquired $72,000 cash from the issue of common stock. 2. Borrowed $26,000 from the First City Bank. 3. Earned $59,000 of cash revenue. 4. Incurred $43,000 of cash expenses. 5. Paid a $7,000 cash dividend. 6. Paid $43,000 to purchase land. Required: Prepare a statement of changes in stockholders' equity.
Answer and Explanation:
The preparation of the statement of changes in stockholders' equity is presented below:
Ollie Company
Statement of changes in stockholders' equity
Beginning common stock $0
Add: Common stock issuance $72,000
Ending common stock $72,000
Beginning retained earning $0
Add: Net income $16,000 ($59,000 - $43,000)
Less: cash Dividend paid -$7,000
Ending retained earning $9,000
Total stockholder equity $81,000 ($72,000 + $9,000)
The ending total stockholders' equity for Ollie Company in its first-year operations would be $81,000. This is after considering the money gained from issuing common stock, net income, and cash dividend paid.
Explanation:The statement of changes in stockholders' equity for Ollie Company for its first-year operations would include the following:
The company acquired $72,000 cash from the issue of common stock. The common stock amount should increase by $72,000.The company did not issue any additional stock nor did it repurchase any stock, hence other factors affecting the common stock remain the same.The company borrowed $26,000. This transaction affects liabilities, not the stockholder's equity. Thus, this event won't be reflected on the statement of changes in stockholders' equity.The company earned $59,000 of cash revenue and incurred $43,000 of cash expenses. The difference becomes net income of $16,000. This amount is added to beginning retained earnings.The company paid a $7,000 cash dividend, which reduces retained earnings by $7,000.So the ending total stockholders' equity for Ollie Company would be the sum total of $72,000 (from issuing common stock), $16,000 (net income), and -$7,000 (cash dividend), which sums to a total of $81,000.
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Suppose you are a manager of a firm that operates in a duopoly. Recently, the state attorney general fined you and your competitor for price fixing. In your market, firms only set prices, not total quantities to sell. From previous experience, you know your competitor has a marginal cost of $ 2.42 . Further, your marginal costs are $ 2.40 . The previous cartel price was $10.00, when you and your competitor were price fixing. What price level do you now choose to maximize profits
Answer:
$2.41
Explanation:
Anytime there is price fixing between two competitors,
if one competitor chooses to fix price it should not exceed competitors marginal cost (price) and should be above his marginal cost (price).
Since, the price fixing of $10 will be fined (previous cartel price). Then, the ideal price to maximize the profit would be below the competitor's price ($2.42) and above his marginal cost ($2.40).
Thus, the ideal price to maximize profits would be $2.41, which is above his marginal cost and below competitor price
An economy is operating with output $300 billion above its natural level, and fiscal policymakers want to close this expansionary gap. The central bank agrees to adjust the money supply to hold the interest rate constant, so there is no crowding out. The marginal propensity to consume is 3/5, and the price level is completely fixed in the short run.
Required:
1. To close the expansionary gap, the government would need ____________.
Answer:
$120 billion
Explanation:
Economy operating at $300 billion above its natural level of output.
Marginal propensity to consume, MPC = 3/5 = 0.6
For closing this expansionary gap, the government have to decrease its spending by the amount calculated as follows:
Spending multiplier:
= 1/ (1 - MPC)
= 1/ (1 - 0.6)
= 1/ 0.4
= 2.5
Hence, the government spending reduces by
= Expansionary gap ÷ Spending multiplier
= $300 ÷ 2.5
= $120 billion
Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $3,300 of direct materials and used $4,800 of direct labor. The job was not finished by the end of September, but needed an additional $3,800 of direct materials and additional direct labor of $7,300 to finish the job in October. The company applies overhead at the end of each month at a rate of 100% of the direct labor cost incurred. What is the total cost of the job when it is completed in October?
Answer:
$35,300
Explanation:
At the end of September total cost =
Material=$3,300
Labour=4800
Overheads(100% ×4800)=4800
Total=12,900
At the end of October total cost=
Material=3800
Labour=9300
Overheads(100% of 9300)=9300
Total=$22400
Total cost of the job at the end of October when it is completed
=$22,400$+$12,900
=$35,300
Therefore the total cost of the job when it is completed in October is $35,300
Final answer:
The total cost of Job A3B is calculated by summing the direct materials, direct labor, and applied overhead for both September and October, resulting in a total cost of $31,300.
Explanation:
The total cost of Job A3B when it is completed in October is calculated by adding the cost of direct materials, direct labor, and applied overhead for both months.
Direct materials: $3,300 (September) + $3,800 (October) = $7,100
Direct labor: $4,800 (September) + $7,300 (October) = $12,100
Applied overhead: Since overhead is applied at a rate of 100% of direct labor cost, it will be equal to the total direct labor cost. Therefore, applied overhead = $12,100.
Now, add up all the costs to find the total production cost:
Total cost = Direct materials + Direct labor + Applied overhead
Total cost = $7,100 + $12,100 + $12,100 = $31,300
Therefore, the total cost of Job A3B is $31,300.
Niles Company granted 111 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $22 per share on January 1, 2020, the grant date of the restricted stock award. When calculating diluted EPS at December 31, 2021, what will be the net increase in the weighted-average number of shares outstanding if the market price of the common shares averaged $22 per share during 2021?
Answer:
Net increase in the denominator will be equal to the new shares which Niles will issued to their executives.
Thus, increase in the denominator = 111 million
A textbook publisher produces a textbook for $25 per book and sells a lot of 160 to the Campus Bookstore for $50 per unit. The bookstore sells the textbook new for $75 and used for $60. This edition of the book is used for 2 years (4 semesters). The bookstore sells all textbooks that it has at the beginning each semester, and it repurchases 50% of those at the end of each semester for $30. What is the net profit for the publisher (sales - costs) over the life of this 160-unit lot of textbooks
Answer:
$4,000
Explanation:
The net profit of the publisher over the useful life of the 160-unit lot of textbooks is the difference between his selling price to the bookstore and the cost incurred multiplied by the number of unit.
Hence the net profit of the publisher
= 160( $50 - $25)
= 160 * $25
= $4,000
Final answer:
The net profit for the publisher is $4,000.
Explanation:
To calculate the net profit for the publisher over the life of a 160-unit lot of textbooks, we first determine the revenue generated from selling these books to the Campus Bookstore and then subtract the costs incurred in producing them. The publisher sells each textbook for $50 and incurs a production cost of $25 per textbook.
The total revenue from selling 160 textbooks to the Campus Bookstore is 160 books × $50/book = $8,000.
The total cost of producing these textbooks is 160 books × $25/book = $4,000.
Therefore, the net profit for the publisher over the life of this 160-unit lot of textbooks is $8,000 - $4,000 = $4,000.
Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $33,950,000, with the promise to buy them back at a price of $34,000,000. a. Calculate the yield on the repo if it has a 5-day maturity. b. Calculate the yield on the repo if it has a 15-day maturity.
Answer:
a. 10.60%
b. 3.53%
Explanation:
a. Calculate the yield on the repo if it has a 5-day maturity.
Profit = $34,000,000 − $33,950,000 = $50,000
Using 360 days a year, we have:
Yield on the repo = ($50,000/$33,950,000)*(360/5) = 0.1060, or 10.60%
b. Calculate the yield on the repo if it has a 15-day maturity.
Using 360 days a year also, we have:
Yield on the repo = ($50,000/$33,950,000)*(360/15) = 0.0353, or 3.53%
Consider a portfolio consisting of the following three stocks: LOADING.... The volatility of the market portfolio is 10 % and it has an expected return of 8 %. The risk-free rate is 3 %. a. Compute the beta and expected return of each stock. b. Using your answer from part (a), calculate the expected return of the portfolio. c. What is the beta of the portfolio? d. Using your answer from part (c), calculate the expected return of the portfolio and verify that it matches your answer to part (b). a. Compute the beta and expected return of each stock. (Round to two decimal places.) Portfolio Weight (A) Volatility (B) Correlation (C) Beta (D) Expected Return (E) HEC Corp 0.28 10 % 0.48 nothing nothing% Green Widget 0.34 30 % 0.58 nothing nothing% Alive And Well 0.38 11 % 0.59 nothing nothing%
Answer:
Explanation:
Portfolio Weight Volatility Correlation and Market Portfolio
HEC Corp 0.28 10% 0.48
Green Widget 0.34 30% 0.58
Alive And Well 0.38 11% 0.59
a. (i) Calculation of Beta
Coefficient of correlation = Covariance / (SD security*SD market)
HEC Corp: 0.28 = Covariance / (0.10*0.10)
Covariance = 0.0028
Beta of HEC Corp = Covariance / Market variance
= 0.0028 / 0.12² = 0.1944
Beta of HEC Corp = 0.19
Green Widget: 0.34 = Covariance / (0.30*0.10)
Covariance = 0.0102
Beta of Green Widget = Covariance / Market variance
= 0.0102 / 0.30² = 0.113
Beta of Green Widget= 0.11
Alive And Well: 0.38 = Covariance / (0.11*0.10)
Covariance = 0.00418
Beta of Alive And Well = Covariance / Market variance
= 0.00418 / 0.11² = 0.345
Beta of Alive And Well = 0.35
(ii) Calculation of expected return
Expected return = Risk free rate + Beta(Expected return of market - Risk free rate)
HEC Corp = 3 + 0.19 (8-3) = 3.95%
Green Widget = 3 + 0.11 (8-3) = 4=3.55%
Alive And Well = 3 + 0.35 (8-3) = 4.75%
b. Expected return of Portfolio = (3.95 x 0.28) + (3.55 x 0.34) + (4.75 x 0.38) = 4.118%
Expected return of Portfolio = 4.12
c. Beta of portfolio = (0.19 x 0.28) + (0.11 x 0.34) + (0.35 x 0.38) = 0.2236
Beta of portfolio = 0.2236
d. Expected return of portfolio = Risk free rate + Portfolio Beta(Expected return of market - Risk free rate)
= 3 + 0.2236 (8-3) = 4.118%
Expected return of portfolio = 4.12%
The regular selling price per chaise lounge is $290. The company is analyzing the opportunity to accept a special sales order for 1200 chaise lounge at a price of $210 per unit. Fixed costs would remain unchanged. The company has the capacity to produce 55,000 chaise lounges per year, but is currently producing and selling 9000 chaise lounges per year. The 1200 units would not require any variable marketing and administrative expenses. Regular sales will not be affected by the special order. If the company were to accept this special order, how would operating income be affected
Answer:
$84,000
Explanation:
The calculation of operating income is shown below:-
Sales $252,000
(1,200 × $210)
Variable Manufacturing cost $127,200
(1,200 × $106)
Variable marketing and
administrative cost $40,800
(1,200 × $34)
Incremental profit $84,000
So, the incremental profit is $84,000
Question 3: Sam’s Retails has the following data available as of 30 June 2019. Required: From the data, establish an income statement and a balance sheet
Sam’s Retails Data as of 30 June 2019
Sales
Administration expense Shop Lease
Cash at Bank
Costs of Good Sold Wages and salaries Accounts payables Miscellaneous Expense Land and buildings
542,000 1,500 24,000 175,000 274,000 38,500 15,050 2,500 127,000
Supplies expenses
Prepaid by a client for the company service Prepaid Insurance
Vehicles
Mortgage
Supplies
Account receivables
600 15,000 3,000 34,000 320,000 45,000 102,000
Note: Company income tax 30%, during the accounting period. The company has paid 2.5% of interest on the mortgage. Profit is retained for further investment
Answer:
Please refer explanation and attachment
Explanation:
The income statement has been provided in attachment 1 and balance sheet in attachment 2. Unfortunately, due to lack of information such as depreciation, lease details and mortgage payments, the balance could not be tallied. However, all information provided has been used to derive the results shown.
You will need to make certain assumptions to complete this discussion and embedded in the scenario below are the assumptions. Scenario: Your company, a US multinational, has just transferred you as a manager of [you choose your position] to the following country [you choose the country]. You are in the industry of [you choose the industry]. To prepare for your departure, you want to get a better feel for the environment you will be in, and you will need to research the following: The political, economic, regulatory, and technical environments of your industry for your country. A few sentences on each are enough. This is to show you understand your new role as a global manager. For your initial post, please include the following for your classmates' review: • Describe the country, industry, and position you have chosen. • Summarize the research your conducted on the industry, outlined above. • Explain what you feel your primary concerns will be in your new position.
Answer:
My position-General Manager
My Country-Japan
Industry-Pharmaceuticals.
Let guess the US based pharmaceutical organization named as XYZ Pvt. Ltd. Similar to a Multinational Corporation it has a few provincial workplaces in various country. As being at a place of General Manager I have moved to Japan to care for the working of XYZ Industry.
Before joining the as General Manager in regarded pharmaceutical industry I might want to experience the accompanying focuses:
1. Accessibility of clinical office, for example, emergency clinics, clinical facilities, clinical camps, Pharmacy store.
2. Financial state of individuals of Japan.
3. Buying example of individuals.
4. Opponent rivals in the market.
5. There creation strategies and cost of item charged.
Along these lines, being a G.M of the referenced MNC it is my prime obligation to take care of the predominant financial and market condition.To think about the economic situation of Japan, I have experienced the ailments, for example, accessibility of clinical offices, emergency clinics, clinical camps which is the most significant piece of overview for a pharmaceutical organization. This exploration has been done through auxiliary source or is optional information based. subsequent to social affair the data about clinical offices I have experienced the financial states of Japanese i.e the amount they are probably going to spend on their clinical prosperity on the grounds that the creation must be done when you are known with the buying example and request of your client. subsequent to getting buying design it is a significant part to take care of the rivals in the market and the value they charge for there item. The benefit might be made when organization is going to offer generally modest cost with viable nature of meds.
In the wake of concerning all the above focuses it is the duty of organization to follow financially savvy system for creation to procure greatest benefit and advantages however being a pharmaceutical organization the significant job is to keep up the nature of medication which ought to never be undermined in any circumstance.
General Food Stuffs packages a variety of breakfast cereals and snack bars, which it aggregates as simply units of sale when doing medium-term planning. General Food Stuffs has created the following aggregate plan for the next 3 months: Month 1 Month 2 Month 3 Beginning Inventory 5,000 Forecast (units of sale) 28,000 29,000 30,000 Overall Production 30,000 30,000 30,000 Ending Inventory Regular Production ($2/unit) Overtime Production ($3/unit) General Food Stuffs can produce up to 20,000 units of sale a month in regular time, when production costs are only $2 per unit of sale. When General Food Stuffs has to exceed 20,000 units of sale in a single month, all units of sale in excess of 20,000 must be produced in overtime production at a cost of $3 per unit of sale. What is the cost of overtime production for Month 3?
Answer:
$30,000
Explanation:
Month 1 Month 2 Month 3
Beginning Inventory 5,000 7,000 8,000
Forecast (units of sale) 28,000 29,000 30,000
Overall Production 30,000 30,000 30,000
Ending Inventory 7,000 8,000 8,000
since the company can produce 20,000 units during regular time, and all excess units will count as overtime, then the overtime costs for any of the three months = (overall production - regular production) x overtime costs = (30,000 - 20,000) x $3 = 10,000 x $3 = $30,000.
The overtime production is the same for the three months since budgeted total production is 30,000 units which exceeds the regular production by 10,000 each month.
Capital budgeting is: the process of finding the cost to start a new project. the process of deciding which project to do to increase the firm’s value. the process of budgeting companies monthly revenue and cost. the process of estimating how long the life of a new project. None of the above.
Answer:
the process of deciding which project to do to increase the firm’s value.
Explanation:
Some of the Capital budgeting methods include:
1. internal rate of return- internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
2. Cash pay back period- it is the period it takes to recover the amount invested in a project from its cummulative cash flows.
3. Net present value: net present value is the present value of after tax cash flows from an investment less the amount invested.
I hope my answer helps you
Capital budgeting is the process by which firms decide which long-term investments will maximize their value, involving the analysis of potential earnings and the source of capital required for these investments.
Capital budgeting is the process of deciding which project to do to increase the firm’s value. It involves evaluating the long-term profitability and financial impact of potential investments and projects. Firms raise financial capital to fund these projects, which can come from early-stage investors, reinvesting profits, borrowing, or selling stock.
Capital budgets differ from operating budgets in that they are used for long-term investments in assets like buildings and machinery, and are part of a capital improvement plan identifying long-term spending needs.
Unlike operating budgeting, which includes recurring spending items for day-to-day operations such as salaries and utilities, capital budgeting focuses on investments that will benefit the firm in the future, like purchasing new equipment or building new facilities. These decisions are crucial because they can impact a firm's earnings for years to come. Therefore, capital budgeting often involves cost analysis, comparison with potential revenues, and consideration of the cost of various sources of capital.
Norbury Corporation's net income last year was $27,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases) Asset and Contra-Asset Accounts: Accounts receivable$14,500 Inventory$(3,800) Prepaid expenses$10,000 Accumulated depreciation$26,000 Liability Accounts: Accounts payable$14,000 Accrued liabilities$(8,300) Income taxes payable$2,900 Based solely on this information, the net cash provided by (used in) operating activities under the indirect method on the statement of cash flows would be:
Final answer:
The net cash provided by (used in) operating activities under the indirect method on the statement of cash flows would be $60,900
Explanation:
The student has asked how to calculate the net cash provided by (used in) operating activities under the indirect method on the statement of cash flows for Norbury Corporation based on the provided changes in balance sheet accounts. Starting with Norbury Corporation's net income of $27,000, we make adjustments for changes in asset and liability accounts as follows:
Add back non-cash expenses such as accumulated depreciation ($26,000)Subtract increases in accounts receivable ($14,500) since this represents income that did not result in cashAdd decreases in inventory ($3,800) which may represent inventory sold and converted into cashSubtract increases in prepaid expenses ($10,000) since this reflects cash paid in advance for future expensesAdd increases in accounts payable ($14,000) which suggest that expenses have been incurred but not yet paid in cashSubtract decreases in accrued liabilities ($8,300) since this might represent cash payments made to settle those liabilitiesAdd increases in income taxes payable ($2,900) as taxes have been recognized but not yet paid in cashThus,
Cash flows from operating activities = Net Income + Non-Cash Expenses + Non-Operating Losses − Non-Operating Gains + Decrease in Current Assets − Increase in Current Assets + Increase in Current Liabilities − Decrease in Current Liabilities
= $27,000 + $26,000 + $10,000 + $3,800 - $14,500 + $14,000 + $2,900 - $8,300
= $60,900
Skysong Company purchased an electric wax melter on April 30, 2020, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase. List price of new melter $17,380 Cash paid 11,000 Cost of old melter (5-year life, $770 salvage value) 12,320 Accumulated Depreciation-old melter (straight-line) 6,930 Secondhand fair value of old melter 5,720 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Skysong’s fiscal year ends on December 31, and depreciation has been recorded through December 31, 2019. (C
Answer:
(a) has commercial substance
J1
Electric wax melter 5,720 (debit)
Accumulated depreciation :old gas model 6,930 (debit)
Old gas model : cost 12,320 (credit)
Profit on exchange of old gas model 320 (credit)
J2
Electric wax melter 11,000 (debit)
Cash 11,000 (debit)
(b) lacks commercial substance
J1
Electric wax melter 5,390 (debit)
Accumulated depreciation :old gas model 6,930 (debit)
Old gas model : cost 12,320 (credit)
J2
Electric wax melter 11,000 (debit)
Cash 11,000 (debit)
Explanation:
In terms of IAS 16, if an exchange of non-monetary item has commercial substance the Asset Acquired is measured at the Fair Value of Asset Given up or Fair Value of Asset Acquired.
However if an exchange of non-monetary item lacks commercial substance the Asset Acquired is measured at Carrying Amount of Asset Given up and there would no be any gain or loss on the exhange of asset given up.
(a) has commercial substance
J1
Electric wax melter 5,720 (debit)
Accumulated depreciation :old gas model 6,930 (debit)
Old gas model : cost 12,320 (credit)
Profit on exchange of old gas model 320 (credit)
J2
Electric wax melter 11,000 (debit)
Cash 11,000 (debit)
(b) lacks commercial substance
J1
Electric wax melter 5,390 (debit)
Accumulated depreciation :old gas model 6,930 (debit)
Old gas model : cost 12,320 (credit)
J2
Electric wax melter 11,000 (debit)
Cash 11,000 (debit)
The accounting for asset exchanges depends on whether the exchange has commercial substance or not. With commercial substance, the entry involves recording the new asset at its full value, and recognizing gains or losses. Without commercial substance, the entry usually involves recording the new asset at the book value of the old asset plus any cash paid.
Explanation:The question involves journal entries associated with the exchange of assets in accounting, specifically related to Skysong Company's purchase of a new electric wax melter.
First, let's look at the situation when the exchange has commercial substance:Debit Equipment ($17,380: list price of new melter) Credit Accumulated Depreciation ($6,930: accumulated depreciation of old melter) Credit Equipment ($12,320: cost of old melter) Credit Cash ($11,000: cash paid) Now, for the situation where the exchange lacks commercial substance: The calculations might become complex and may require additional data. Usually, the entry would involve recording the new asset at the book value of the old asset (cost - accumulated depreciation), plus cash paid. The gain or loss would then be deferred or recognized depending on the specific circumstances.This type of transactions are guided by Accounting Standards Codification (ASC) 845, which relates to nonmonetary transactions.
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Returns and Actions Kunal Nayyar from London, had $60,000 in investments in the USA at the beginning of the year that consisted of a diversified portfolio of stocks (40 percent), bonds (40 percent), and cash equivalents (20 percent). His returns over the past 12 months were 14 percent on stocks, 5 percent on bonds, and 1 percent on cash equivalents. What is Kunal's average return for the year? Round your answer to one decimal place. % If Kunal wanted to rebalance his portfolio to its original position, what specific actions should he take?
Answer:
Average rate of return is 7.8% , and total amount is $4,680
If Kunal wanted to rebalance his portfolio to its original position, he needs to transfer $672 (= $25,872 - $25,200) from stock account to bond account and $816 ( = $12,936 - $12,120) from stock account to cash.
Explanation:
Total return for year = 14% * (40% of $60,000) + 5% * (40% of $60,000+ 1% *(20% of $60,000) = $4,680
Average rate of return = $4,680/ $60,000 = 7.8%
At beginning, the amount in per diversified portfolio is as below:
Amount invested in stock = 40% * $60,000 = $24,000 Amount invested in bond = 40% * $60,000 = $24,000 Amount in cash = 20% *$60,000 = $12,000
After receiving return, the amount in per diversified portfolio is as below:
Amount invested in stock = $24,000 *(1+14%) = $27,360
Amount invested in bond = $24,000 *(1+5%) = $25,200 Amount in cash = $12,000 * (1 + 1%) = $12,120
And amount in Kunal’s investment fund = $27,360 + $25,200 + $12,120 = $64,680
If Kunal wanted to rebalance his portfolio to its original position, the amount in per diversified portfolio is as below:
Amount invested in stock = 40% * $64,680 = $25,872
Amount invested in bond = 40% * $64,680 = $25,872 Amount in cash = 20% * $64,680 = $12,936
⇒ Kunal needs to transfer $672 (= $25,872 - $25,200) from stock account to bond account and $816 ( = $12,936 - $12,120) from stock account to cash.
A used car can be kept for two more years and then sold for an estimated $3000, or it could be sold now for $7500. The average annual maintenance cost over the past 7 years has been $500 per year. However, if the car is kept for two more years this cost is expected to be $1800 the first year and $2000 the second year. As an alternative a new car can be purchased for $22,000 and be used for 4 years, after which it can be sold for $8000. The new car will be under warranty for the first 4 years, and not extra maintenance cost will be incurred during those years. If the MARR is 15% per year what is the better option and why?
a. Keep car, do not buy new one because EUAC Defender is $5111 and EUAC of Challenger is $6104
b. Buy new car because EUAC of challenger is $4904 and EUAC and defender is $5111
c. Buy new car because EUAC of Challenger is -$9308 and EUAC of defender is $498
Final answer:
To determine whether to keep an old car or buy a new one, you calculate and compare the Equivalent Uniform Annual Cost (EUAC) for each, taking into account all costs and the time value of money as per the Minimum Attractive Rate of Return (MARR). The option with the lower EUAC is usually preferred, signaling better economic value over time. Due to discrepancies in the information provided, a precise recommendation cannot be made without accurate data.
Explanation:
Evaluating the Economic Merits of Keeping vs. Buying a Car
To decide between keeping a used car or buying a new one, we need to calculate and compare the Equivalent Uniform Annual Cost (EUAC) for each option. A challenge in this business decision lies in accounting for all associated costs including purchase, maintenance, and sale price, and the time value of money represented by the Minimum Attractive Rate of Return (MARR) over a given period.
For the used car (Defender), we have:
- Future sale price in two years: $3000
- Maintenance costs for the next two years: $1800 and $2000 respectively
- Selling now price: $7500
Calculating the EUAC for the used car incorporates these costs and the MARR of 15%.
The new car (Challenger) would require:
- Initial purchase price: $22,000
- Sale price after 4 years: $8000
- Maintenance costs: $0 (due to warranty)
Again, calculating the EUAC for the new car incorporates the purchase and future sale price and considers the MARR of 15%.
To make an informed decision, we would perform a detailed calculation for each option's EUAC, compare the results, and choose the option with the lower EUAC, indicating a more economical choice over time. However, the information provided appears to contain a discrepancy, and without correct data or further clarification, we cannot provide an exact answer. The concept of EUAC is essential for understanding how to evaluate such financial decisions effectively.
Listed below are various transactions that a company incurred during the current year. Select the impact on total stockholders’ equity for each scenario. Specifically state whether stockholders’ equity would increase (I), decrease (D), or have no effect (NE) as a result of each transaction listed below. Consider each transaction independently.
1. No par common stock is issued.
2. Treasury stock is sold at cost for cash (assume the cost method).
3. Treasury shares of preferred stock are purchased (assume the cost method).
4. A payment date occurs for a cash dividend.
Answer: Please refer to Explanation
Explanation:
1. No par common stock is issued. NO EFFECT (NE)
There is no effect because this neither increases nor does it reduce Equity.
2. Treasury stock is sold at cost for cash (assume the cost method). INCREASE (I).
This transaction increases equity as Treasury stock is being put into the market. Treasury stock is equity in the company that the company had repurchased.
3. Treasury shares of preferred stock are purchased (assume the cost method). DECREASE (I)
Buying Treasury whether Preferred or Ordinary reduces equity in the company as the company is essentially taking back ownership from owners.
4. A payment date occurs for a cash dividend. DECREASE (D)
Paying out dividends to shareholders has the effect of reducing equity.
Answer:
1.No par issue of common stock -stockholders' equity increases(I)
2.Sale of treasury stock at cost-stockholders' equity increases(I)
3.Purchase of preferred shares-reduces stockholders' equity(D)
4.Payment of cash dividend-no impact on stockholders' equity(NE)
Explanation:
Considering the first transaction of no par common stock issuance,this would increase the value of common stock ,hence stockholders' equity would increase.
Treasury stock sale would increase the stockholders' equity since the company has to receive cash consideration from the affected investors and also reduce treasury stock and concurrently increase total paid-in capital.
Purchase of treasury stock implies reduction in cash and also increase in treasury stock of prefered stock which is negative adjustment to total paid-in capital and retained earnings.
A payment of cash dividend dividend does any affect shareholders' equity since the retained earnings would have been debited at declaration date and dividend payable credited.
Susan starts a new word processing business with $5,000. She pays $450 in rent for the first month, $1000 for wages, and $50 for phone usage. The business in the first month was a success, and she sold $1,800 worth of her word processing services. Given the above determine the following :
What was Susan's initial capital?
How much were her expenses?
What was Susan's revenue for the month?
Using the Income Statement determine what was her Net Income for the month?
Answer:
The initial capital was $5000
The expenses for the first month were $1500
The revenue for the first month was $1800
The Net Income for the month was $300
Explanation:
The initial capital is the money that Susan put in to start the business. Susan starts the business with a capital of $5000 as stated in the question. Thus, the initial capital is $5000
The expenses for the month were of rent, wages and phone bill. The total amount of expenses for the month was = 450 + 1000 + 50 = $1500
The revenue for the first month was $1800 as Susan sold $1800 worth of goods in this month.
The income statement for the first month is as follows,
$ $
Revenue $1800
(-) Expenses
Rent expense 450
Wages Expense 1000
Phone Expense 50 (1500)
Net Income 300
Final answer:
Susan's initial capital was $5,000. Her total expenses for the month were $2,000, and her revenue was $1,800, resulting in a net loss of $200 for the month.
Explanation:
Susan's initial capital for starting her new word processing business was $5,000. To calculate her total expenses for the month, we sum up the costs of rent, wages, phone usage, and potentially utilities:
Rent: $450Wages: $1,000Phone: $50Utilities: $500 (expected average)Therefore, Susan's total expenses for the month were $2,000 (rent + wages + phone + utilities).
Susan's revenue for the month from her word processing services was $1,800.
Using the Income Statement for determining the Net Income for the month, we subtract the total expenses from the revenue:
Net Income = Revenue - Expenses
Net Income = $1,800 - $2,000 = -$200
Thus, Susan's Net Income for the month was a loss of $200.
If businesses are confident about an increase in demand for their products, they will Select the correct answer below: expand production and reduce investment spending expand production and investment spending reduce production and investment spending reduce production and expand investment spending
Answer:
expand production and investment spending
Explanation:
If there is high likelihood of surge in demand, then supply should be such that it should be able to meet those demands. Hence, to increase supply production should be increased .
Second production cost is sum of fixed cost and variable cost. While fixed cost (cost which remains constant such as rent, labor charges and other cost which does not change with unit of production) remains same but variable cost will increase as variable cost is dependent on number of units of goods produced. So, when production increases variable cost will increase and hence investment will increase.
Thus, correct answer will increase production and investment spending.
Shelby Corporation was organized in January to operate an air-conditioning sales and service business The charter issued by the state authorized the following capital stock: Common stock, $1 par value, 200,000 shares. Preferred stock, $10 par value, 6 percent, 50,000 shares During January and February, the following stock transactions were completed: a. Collected $841,000 cash and issued 29,000 shares of common stock b. Issued 19,500 shares of preferred stock at $39 per share; collected in cash Net income for the year was $59,000; cash dividends declared and paid at year-end were $10,000 Required Prepare the stockholders' equity section of the balance sheet at December 31 SHELBY CORPORATION Balance Sheet (Partial) At December 31 Stockholders' Equity Contributed Capital: Total Contributed Capital 0 Total Stockholders' Equity
Answer: Please refer to Explanation
Explanation:
This is how the stockholders' equity section of the balance sheet at December 31 should look like,
STOCKHOLDERS'S EQUITY
Contributed Capital
Common Stock (29000 shares x $ 1 par) $29,000
Preferred Stock (19500 shares x $ 10 par) $195,000
Paid in Capital in excess of Common Stock at par ($841000 - $29000) $812,000
Paid in Capital in excess of Preferred Stock at par (19500 shares x ($39 - $10)) $565,500
Total Contributed Capital (sum of all of the above) $1,601,500
Retained Earnings ( $59,000 - $10,000) $49,000
Total Stockholder's Equity (Retained Earnings to contributed cap) $1,650,500
If you need any clarification do comment.
The total stockholder's equity will be $1650500.
The total stockholder's equity will be calculated thus:
Contributed Capital
Common Stock = 29000 x $1 = $29,000
Preferred Stock = 19500 x $10 par = $195,000
Paid in Capital in excess of Common Stock at par = $841000 - $29000 = $812,000
Paid in Capital in excess of Preferred Stock at par = $19500 shares x ($39 - $10) = $565,500
Total Contributed Capital = $1,601,500
Retained Earnings = $59,000 - $10,000 = $49,000
Therefore, the total stockholder's equity will be:
= $1,601,500 + $49,000
= $1,650,500
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Cash Budget Pasadena Candle Inc. pays 40% of its purchases on account in the month of the purchase and 60% in the month following the purchase. If purchases are budgeted to be $40,000 for August and $36,000 for September. Prepare a simple cash budget for Pasadena Candle Inc. Pasadena Candle Inc. Schedule of Cash Payments for Purchases For the Month Ending September $ Total payments for purchases on account $
Answer:
Total payments for purchases on account $38,400
Explanation:
September Payments for Purchases include
40% of September Sales60% of August SalesSchedule of Cash Payments for Purchases For the Month Ending September
September Sales ($36,000×40%) = $14,400
August Sales ($40,000×60%) = $24,000
Total = $38,400
Answer:
Th e cash payments in the month of September is $38,400
Explanation:
August September
Cash payment $16,000 $14,400
balance of August purchases $24,000
September total payments $38,400
In August 40% of $40,000 would be paid since $40,000 was the worth of the purchases in August i,e $40000*40%=$16,000
In September the remaining 60% of $40,000 is due for payment i.e $40,000*60%=$24,000
In September 40% of the month purchases is due for payment,that is $36,000*40%=$14,400
The balance of 60% of $36,000 would be paid in October.
Michael operates his health food store as a sole proprietorship out of a building he owns. Based on the following information regarding Year 6, compute his net self-employment income (for SE tax purposes) for Year 6.
Gross receipts $100,000
Cost of Goods Sold 49,000
Utilities 6,000
Real estate taxes 1,000
Gain on sale of business truck 2,000
Depreciation expense 5,000
Section 179 expense 1,000
Mortgage interest on building 7,000
Contributions to Keogh retirement plan 2,000
Net operating loss (NOL) from Year 5 10,000
a. $24,000
b. $16,000
c. $31,000
d. $14,000
Answer:
c. $31000
Explanation:
Net self-employment income are gross income gotten from a trade or business, less allowable deductions attributable to the trade or business. When calculating self employment income, capital gains and losses, contributions for retirement, net operating losses are not considered.
Given that:
Gross receipts $100,000
Cost of goods sold $49,000
Utilities $6,000
Real estate taxes $1,000
Depreciation expense $5,000
Sec. 179 expense $1,000
Mortgage interest $7,000
Net self-employment income = Gross receipts - Cost of goods sold - Utilities - Real estate taxes - Depreciation expense - Sec 179 expense - Mort-age interest
Therefore, Net self-employment income = $100000 - $49000 - $6000 - $1000 - $5000 - $1000 - $7000 = $31000
Blue Split sells ice cream cones in a variety of flavours. The following are data for a recent week: Revenue (1,000 cones at $1.85 each) $1,850 Cost of ingredients $660 Rent 540 Store attendant 640 1,840 Pretax income $10 The manager estimates that if she were to increase the price of cones from $1.85 to $2.02 each, weekly volume would be cut to 850 cones due to competition from other nearby ice cream shops. Estimate the profit-maximizing price per cone.
Answer:
$1.40
Explanation:
Per cent change in price = ($2.02– $1.85)/$1.85 = +9%
Per cent change in demand = (1000 – 850)/1000 = –15%
The elasticity is = ln(1 + per cent change in quantity sold)/ln(1 + per cent change in price)
= ln(1 – 0.15)/ln(1 + 0.09)
= –0.16252/0.08618
= –1.886
Variable cost = $660/1000
Profit-maximising price = [–1.886/(–1.886+1)]*$0.66 = $1.40
As a result of a decrease in the demand for U.S. dollars, there has been depreciation in the value of the U.S. dollar relative to South Korean won. The depreciation in the U.S. dollar has benefitted some groups but harmed others. Indicate which of the groups are winners and which are losers from the standpoint of the depreciation of the U.S. dollar.
Answer:
Todd, an American, goes to visit South Korea for spring break - loser
Tood is a loser due to the depreciation of the U.S. dollar, because now he will need more dollars to buy a comparative amount of South Korean wons. His trip will now be more expensive.
An investment bank in South Korea, interested in purchasing U.S. government bonds - winner
The investment bank will exchange less wons for U.S. dollars than before. Buying the government bonds will now be cheaper for them.
Goodyear, a firm based in the United States, sells car tires in South Korea - winner
Goodyear will likely sell more cars because for its South Korean customers, the cars are now cheaper, since the value of the dollar has depreciated against the currency that they hold.
A family from South Korea visits relatives in the United States - winner
The South Korean family will exchange less wons for more U.S. dollars, making their trip cheaper.
A firm from South Korea sells handbags in the United States - loser
The handbags will now be more expensive for their American customers, likely causing a loss in sales revenue for the firm.
An electronics manufacturer in the United States, purchases a high tech company in South Korea - loser
The cost of the high tech South Korean company is now higher for the American manufacturer, because more dollars had to be exchanged for wons before the purchase.
Explanation:
Beta Company expects to incur overhead costs of $20,000 per month and direct production costs of $125 per unit. The estimated production activity for the upcoming year is 1,000 units. If the company desires to earn a gross profit of $50 per unit, the sales price per unit would be which of the following amounts
A) $379
B) $187
C) $136
D) $195
Answer:
$415
Explanation:
For computing the sales per unit first we have to determine the total sales value which is shown below:
Direct Production costs (1,000 units × $125) $125,000
Fixed Overhead costs for the year = $20,000 × 12 months = $240,000
Total Costs for the year $365,000
Gross Profit desired (1,000 units × $50) $50,000
Total Sales Value desired = Costs + Profit $415,000
Now
Sales price per unit is
= $415,000 ÷ 1,000 units
= $415
This is the answer but the same is not provided
The sales price per unit needed for Beta Company to achieve a gross profit of $50 per unit is $195, calculated by adding the per-unit production and overhead costs to the desired profit margin.
Explanation:To calculate the sales price per unit that Beta Company needs in order to achieve a gross profit of $50 per unit, we need to consider the given costs and desired profit margin. The company expects overhead costs of $20,000 per month. With an estimated production activity of 1,000 units, these fixed costs become $20 per unit (overhead costs / estimated production). The direct production cost is $125 per unit. Adding these costs together we get the total cost per unit, which is $125 (direct costs) + $20 (overhead per unit) = $145 per unit. To achieve a gross profit of $50, we add this desired profit to the total cost per unit, resulting in a sales price per unit of $195 ($145 + $50).
Larry recorded the following donations this year: $510 cash to a family in need $2,410 to a church $510 cash to a political campaign To the Salvation Army household items that originally cost $1,210 but are worth $310. What is Larry's maximum allowable charitable contribution if his AGI is $60,100?
Answer:
$2,720
Explanation:
A charitable contribution can be defined as the way in which a person or an individual
try to donate his or her own money , goods or services to an organization thereby deducting the market value of this contribution from the person income tax return.
$2,410 to a church
Household items worth of $310
Total $2,720
Therefore Larry maximum allowable charitable contribution if his AGI is $60,100 is $2,720
Employees earn vacation pay at the rate of one day per month. During the month of June, 10 employees qualify for one vacation day each. Their average daily wage is $150 per day. Which of the following is the necessary adjusting journal entry to record the June vacation benefits?
A. Debit Vacation Benefits Expense $1,500; credit Prepaid Vacation Benefits $1,500.B. Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.C. Debit Payroll Tax Expense $1,500; credit Payroll Taxes Payable $1,500.D. Debit Prepaid Vacation Benefits $1,500; credit Vacation Benefits Payable $1,500.E. Debit Vacation Benefits Payable; credit Vacation Benefits Expense $1,500.
Answer:
B. Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500
Explanation:
Lets consider all the other options to eliminate them from our choice
Option A: The entry provided debits the vacation benefits expenses and credits the prepaid vacation benefits. The liability for the vacation credit earned by the employees during the month needs to be recorded so this is not an adjustment of an advance vacation benefit.
Option C: The required entry has nothing to do with taxes so not relevant.
Option D: The entry is to record the liability for vacations earned by the employees so an expenses has to be recorded.
Option E: The option reduces the liability and reduces the expenses which is against the requirement of the question
A DI has two assets: 50 percent in one-month T-bills and 50 percent in real estate loans. If the DI must liquidate its T-bills today, it receives $98 per $100 of face value; if it can wait to liquidate them on maturity (in one month's time), it will receive $100 per $100 of face value. If the DI has to liquidate its real estate loans today, it receives $90 per $100 of face value. However, liquidation of real estate loans at the end of one month will produce $92 per $100 of face value. The one-month liquidity index value for this DI's asset portfolio is:
Answer:
Explanation:
The one-month liquidity index value for this DI's asset portfolio
= weight of T-bills * (value of T-bill today / value of T-bills after one month) + weight of real estate loan * (value of real estate loan today / value of real estate loan after one month)
= 50% * ($97 / $ 100) + 50% ($93/ $94)
= 0.5 * 0.97 + 0.5 *0.9894 = 0.9797
Therefore one-month liquidity index value for this DI's asset portfolio is 0.98.
Final answer:
The one-month liquidity index value of a depository institution's asset portfolio with 50% in T-bills and 50% in real estate loans is 0.97915.
Explanation:
The question asks about computing the one-month liquidity index value of a depository institution's (DI) asset portfolio, which comprises 50 percent in one-month T-bills and 50 percent in real estate loans. The liquidity index is a measure of how much less the DI would obtain if it had to liquidate assets today compared to their value at maturity in one month. To calculate this, we must compare the liquidation values (immediate cash received) for each asset type against their face value if held to maturity.
For the T-bills:
Immediate liquidation: $98 per $100 of face value
Value at maturity: $100 per $100 of face value
For the real estate loans:
Immediate liquidation: $90 per $100 of face value
Value at maturity: $92 per $100 of face value
The liquidity index for each asset type is calculated by dividing the immediate liquidation value by the value at maturity:
T-bills liquidity index = $98 / $100 = 0.98
Real estate loans liquidity index = $90 / $92 = 0.9783
As the portfolio is evenly split between the two assets, the overall liquidity index value of the asset portfolio is the average of the two individual indices:
Overall liquidity index = (0.98 + 0.9783) / 2 = 0.97915
Georgia Meadows Company uses the high-low method to analyze production costs. The following information relates to the production data for the first six months of the year. Month Cost(Y) Hours(H) January $ 8,542 6,530 February $ 7,750 5,950 March $ 9,700 7,500 April $ 7,435 5,700 May $ 7,200 5,500 June $ 9,263 6,750 What is the estimated total cost at an operating level of 8,000 hours?
Answer:
Total cost= $10,325
Explanation:
Giving the following information:
Month Cost(Y) Hours(H)
January: $8,542 - 6,530
February: $7,750 - 5,950
March: $9,700 - 7,500
April: $7,435 - 5,700
May: $7,200 - 5,500
June: $9,263 - 6,750
To calculate the total cost under the high-low method, we need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (9,700 - 7,200) / (7,500 - 5,500)
Variable cost per unit= $1.25 per hour
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 9,700 - (1.25*7,500)= $325
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 7,200 - (1.25*5,500)= $325
Now, for 8,000 hours:
Total cost= 325 + 1.25*8,000= $10,325