Answer:
Note Receivable debit 27,000
Account receivable credit 27,000
Explanation:
It will write-off the account and transfer the balance of Pharoah Company account to the notes receivable to represent the change in the conditions.
The interest will be accrued once times past. They are not relevant at the moment of recording the note in the accounting.
The interest entries will be done at end of the month, end of the accounting cycle or at the moment of honor the note.
A firm has a machine it can sell for $40,000. The book value of the machine is currently $20,000. If the firm sells the machine, what are the net proceed from the sale? Assume that the tax rate is 40%. Round to the nearest penny. Do not include a dollar sign in your answer.
The cost paid for the bond or debt purchase is called book value while, when the whole volume of the assets is sold during the base period is called sales value.
The answer is 12,000 dollars.
This can be calculated by:
The organization will have to pay expenses for the difference between the sales and the book value.
Given,
The amount at which the company can sell = $40,000The book value of the machine = $ 20,000The Tax rate = 40%= 40000 - 20000 × 40%
= 20000 × 40%
= 8000 tax income.
Total proceed 20,000 (gross profit) - 8,000 (tax income)
= 12,000 net proceed
Therefore 12,000 is the net proceed from the sale.
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Daniel Corporation had net income for 2018 of $ 74 comma 000. Daniel had 12 comma 000 shares of common stock outstanding at the beginning of the year and 17 comma 000 shares of common stock outstanding at the end of the year. There were 12 comma 000 shares of preferred stock outstanding all year. During 2018, Daniel declared and paid preferred dividends of $ 25 comma 000. On December 31, 2018, the market price of Daniel's common stock is $ 46.00 per share and the market price of its preferred stock is $ 68.00 per share. What is Daniel's price/earnings ratio at December 31, 2018? (Round any intermediate calculations and your fin
Final answer:
Daniel Corporation's price/earnings ratio at the end of 2018 is calculated by dividing the market price of its common stock ($46.00) by its earnings per share ($3.38), which after subtracting preferred dividends and adjusting for the weighted average number of shares, results in a ratio of approximately 13.61.
Explanation:
To calculate Daniel Corporation's price/earnings ratio at the end of 2018, we begin with its net income for the year, which is $74,000. Preferred dividends are then subtracted from this amount since they are not available to common shareholders. Daniel Corporation paid $25,000 in preferred dividends, leaving $74,000 - $25,000 = $49,000 for the common shareholders.
We then use the weighted average number of common shares outstanding to determine the earnings per share (EPS). Since the company had 12,000 shares at the beginning of the year and 17,000 at the end, we calculate the weighted average as follows: (12,000 shares for 1/2 year) + (17,000 shares for 1/2 year) = 6,000 + 8,500 = 14,500 weighted average shares.
Next, we divide the adjusted net income by the weighted average shares to get the EPS: $49,000 / 14,500 shares = approximately $3.38 EPS. The market price of common stock is given as $46.00 per share. Therefore, the price/earnings ratio is $46.00 / $3.38 = approximately 13.61.
Final answer:
Daniel Corporation's price/earnings ratio at December 31, 2018, can be found by dividing the market price per share ($46.00) by the earnings per share ($3.38), resulting in a P/E ratio of approximately 13.61.
Explanation:
The price/earnings ratio, or P/E ratio, is calculated by dividing the market price per share by the earnings per share (EPS). In Daniel Corporation’s case, the EPS is the net income minus preferred dividends, divided by the weighted average of outstanding shares during the year. To compute the weighted average, you would consider that 12,000 shares were outstanding for the whole year and an additional 5,000 shares ((17,000 - 12,000) for a part of the year).
To calculate the P/E ratio, first, we find the EPS for common stockholders. This is calculated by subtracting the $25,000 in preferred dividends from the $74,000 net income to get $49,000. Next, we need to determine the weighted average shares. If we assume that the additional 5,000 shares were outstanding for half the year, the calculation would be (12,000 shares × 12 months + 5,000 shares × 6 months) / 12 months, which equals 14,500 shares. Therefore, the EPS is $49,000 / 14,500 shares = $3.38 per share.
Finally, the P/E ratio is the closing market price divided by the EPS: $46.00 per share / $3.38 per share = approximately 13.61. Therefore, Daniel’s price/earnings ratio at December 31, 2018, would be 13.61, assuming a rounding to two decimal places.
Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. Estimated manufacturing overhead $132,440 Estimated machine-hours 2,800 Actual manufacturing overhead $128,600 Actual machine-hours 2,750 The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The overhead for the year was:
Answer:
The overhead for the year was $130,075
Explanation:
GIVEN INFORMATION -
ESTIMATED ACTUAL
Manufacturing overhead $132,440 $128,600
Machine hours 2800 2750
Here for calculating the overhead for the year we will use the following formula =
\frac{Estimated Manufacturing Overhead}{Estiamted Machine Hours}\times Actual Machine Hours
= \frac{\$132,440}{2800}\times 2750
\$47.3\times 2750 = \$130,075
Therefore the overhead for the year was $130,075
Answer:
The overhead for the year was: $130,075.
Explanation:
We have the following formula to determine overhead for the year:
+ Overhead for the year = Predetermined overhead rate ($ per machine hour) x Actual machine hours;
in which:
+ Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine-hours = 132,440 / 2,800 = $47.3/machine hour.
+ Actual machine hours is given at 2,750 hours.
=> Overhead for the year = Predetermined overhead rate ($ per machine hour) x Actual machine hours = 47.3 x 2,750 = $130,075.
So, the answer is $130,075.
In 2010, the co-chairmen of President Obama’s deficit reduction commission proposed curtailing or eliminating many tax deductions such as the one for mortgage interest. Economists who favor the proposal argue that it would (i) correct a misallocation of resources because too much of the economy’s capital stock is tied up in residential housing and too little is invested in corporate capital. (ii) cut both spending and taxes. (iii) encourage private philanthropy.
Answer:
(i) correct a misallocation of resources because too much of the economy’s capital stock is tied up in residential housing and too little is invested in corporate capital.
Explanation:
Among the options, the only one that makes sense is the first one. Cutting deductions from a sector - such as real estate - means that the government will be raising tax revenue - fiscal policy. In fact, historically the mortgage industry is a beneficiary of tax deductions.
The fiscal budget is limited and is allocated in sectors where the government deems it necessary. Therefore, withdrawing the tax deduction of the mortgage industry is a way of reallocating these resources to other areas, such as to stimulate some productive sector of the private sector.
When Coca-Cola carries a different price depending on whether the consumer purchases it in a fine restaurant, a fast-food restaurant, or a vending machine, then this form of price discrimination is known as ________ pricing.
Answer:
The correct answer is Channel pricing.
Explanation:
In the industry, the Channel Pricing is used with the purpose of setting the prices depending on the means of delivery of goods or services. Coca-cola used the channel pricing to offer different prices depending on the location the people usually buy the products.
Final answer:
Coca-Cola's different pricing in various settings is an example of product differentiation pricing, which is part of a broader strategy within monopolistic competition where firms have some power to set prices based on product differentiation.
Explanation:
When Coca-Cola carries a different price depending on whether the consumer purchases it in a fine restaurant, a fast-food restaurant, or a vending machine, then this form of price discrimination is known as product differentiation pricing. This strategy involves setting different prices for the same product in different venues to reflect varying consumer preferences, costs of selling, and perceived value. For instance, a consumer might be willing to pay more for a Coca-Cola at a fine restaurant due to the ambience and service quality, while expecting to pay less from a vending machine.
The pricing strategy is not only about differences in venues but also capitalizes on monopolistic competition. This arises where you have a market filled with goods that are similar but differentiated from one another in some way, such as by brand, quality, or location. These differences allow firms to have some degree of market power to set prices above marginal cost. However, the market remains competitive due to the variety of choices available to consumers.
Panther Co. had a quality-assurance warranty liability of $356,000 at the beginning of 2018 and $311,000 at the end of 2018. Warranty expense is based on 3% of sales, which were $58 million for the year. What were the warranty expenditures for 2018?
Answer:
warranty expenditures for 2018: $ 1,785,000
Explanation:
warranty expected 3% of sales
58,000,000 x 3% = 1,740,000
Beginning - warrant expenditures + expected liab = ending warrant liability
We post our givens in the formula and solve for expenditures:
356,000 - X + 1,740,000 = 311,000
1,740,000 + 356,000 - 311,000 = expenditures
1,785,000 = expenditures
Variable Costing Marsich Company has the following information for February: Sales $490,000 Variable cost of goods sold 220,500 Fixed manufacturing costs 83,300 Variable selling and administrative expenses 53,900 Fixed selling and administrative expenses 34,300 Determine the following for Marsich Company for the month of February: a. Manufacturing margin $ b. Contribution margin $ c. Operating income
Answer:
a. Manufacturing margin = $269,500
b. Contribution margin = $436,100
c. Operating income = $318,500
Explanation:
The formula of Manufacturing margin , Contribution margin & operating income is shown below. Along with it, the computation is also made.
Manufacturing margin = Sales - Variable cost of goods sold
= $490,000 - $220,500
= $269,500
Contribution margin = Sales - Variable selling and administrative expenses
= $490,000 - $53,900
= $436,100
Operating income = Contribution margin - (Fixed manufacturing costs + Fixed selling and administrative expenses )
= 436,100 - $(83,300 + 34,300)
= $318,500
Thus, a. Manufacturing margin = $269,500
b. Contribution margin = $436,100
c. Operating income = $318,500
The following information is from the records of Mountainview Camera Shop: Accounts receivable, December 31, 2018 $80,000 (debit) Net credit sales for 2018 160,000 Accounts written off as uncollectible during 2018 16,000 Cash sales during 2018 42,000 The company uses the direct writeminusoff method for bad debts. What is the amount of bad debts expense?
Answer:
The amount of bad debts expense is $16,000
Explanation:
Bad debt : The Bad debt is that amount in which the chances of payment receive is very less. Thus, the bad debt amount is deducted in the balance sheet under debtors account and also it is shown in Profit and loss Account in debit side.
Under direct write minus off method for bad debts, the bad debt amount is recognized irrespective of whatever information is given.
Since in the question, the non-collectible amount is given which is $16,000.
So, the amount of bad debts expense is $16,000
Bradford Services Inc. (BSI) is considering a project that has a cost of $10 million and an expected life of 3 years. There is a 30 percent probability of good conditions, in which case the project will provide a cash flow of $9 million at the end of each year for 3 years. There is a 40 percent probability of medium conditions, in which case the annual cash flows will be $4 million, and there is a 30 percent probability of bad conditions and a cash flow of $1 million per year. BSI uses a 12 percent cost of capital to evaluate projects like this. Find the project's expected cash flows and NPV.
The project's expected cash flows are $4.6 million and its NPV is $3.80 million.
Explanation:To calculate the project's expected cash flows, we need to calculate the expected cash flow for each condition and then multiply it by the probability of that condition occurring. For the good conditions, the cash flow is $9 million for 3 years, so the expected cash flow is $9 million times 0.30, which equals $2.7 million. For the medium conditions, the cash flow is $4 million for 3 years, so the expected cash flow is $4 million times 0.40, which equals $1.6 million. For the bad conditions, the cash flow is $1 million for 3 years, so the expected cash flow is $1 million times 0.30, which equals $0.3 million. Adding up these expected cash flows, we get $2.7 million + $1.6 million + $0.3 million = $4.6 million.
To calculate the project's NPV (Net Present Value), we need to discount the expected cash flows back to their present value. Using a 12% cost of capital, we can discount each year's cash flow individually. The present value of $2.7 million at a 12% discount rate for 3 years is $2.7 million / (1 + 0.12) + $2.7 million / (1 + 0.12)² + $2.7 million / (1 + 0.12)³ = $2.17 million. By the same calculation, the present value of $1.6 million is $1.43 million, and the present value of $0.3 million is $0.20 million. Adding up these present values, we get $2.17 million + $1.43 million + $0.20 million = $3.80 million. Therefore, the project's expected cash flows are $4.6 million and its NPV is $3.80 million.
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Better Buy, Inc. has 7 units in inventory on December 31. The units were purchased in November for $160 each. The price lists from the suppliers indicate that the same items would now cost the company a total of $1,155. What would be the amount reported as Ending Merchandise Inventory on the balance sheet?
Answer:
$1,120
Explanation:
Ending Merchandise Inventory is value of closing inventory in hand, to be valued at lower of cost or net realizable value or replacement value
Here, cost of closing inventory = 7 units X $160 each = $1,120
Since current realizable/ replacement value = $1,155
Cost is less than realizable value, therefore cost will be considered.
Thus ending merchandise inventory will be valued at total of $1,120.
Plastics, Inc. and Joe's Canoe Shack both operate businesses located on the river. Plastics, Inc. dumps pollution into the river, which results in fewer canoe rentals for Joe. The marginal cost of cleaning up the pollution is $12,000 for Plastics, Inc. Joe estimates a reduction in pollution will lead to a marginal benefit of $20,000.
1. If Joe owns the rights to the river, which of the following is the most likely outcome? a. Plastics will pay Joe $15000 to pollute. b. Joe will pay Plastics $15000 not to pollute. c. Joe will enforce his property rights and not allow Plastics to pollute. d. Plastics will use its property rights to continue polluting.
2. If Plastics, Inc. owns the rights to the river, which of the following is the most likely outcome? a. Plastics will pay Joe $15000 to pollute. b. Joe will pay Plastics $15000 not to pollute. c. Joe will enforce his property rights and not allow Plastics to pollute. d. Plastics will use its property rights to continue polluting.
Answer:
1.- If Joe owns the rights to the river will enforce his property rights and not allow Plastics to pollute and clean the pollution. Plastic is breaking his rights on the river
In this scenario Joe has benefit for 20,000
and Plastic losses for 12,000
2.- If Plastic own the rights to the river Joe will pay Plastics $15,000 to not pollute. This will make Plastic earn money for cleaning the river and Joe gain 5,000 incremental benefit
Explanation:
(A) Joe has legal claims, so It will used before any economic options
(B) Joe doesn't have legal claims, but It notices that a good offer make both parties win.
Plastic will receive 15,000 dollars to clean the river, which has cost of 12,000 realizing a net gain of 3,000
While Joe estimated a marginal benefit of 5,000 after paying to Plastic to clean the river, (20,000 benefit - 15,000 cost)
Notice: the option for escenario (B) is also stands on (A) but because Joe has the legal rights on the river, it will try to make Plastic paid the pollution on the river and take the benefit completely for his own.
The most likely outcomes are that Joe will enforce his property rights against pollution if he owns the river, and Plastics, Inc. will continue polluting if they hold the rights. The exact financial settlements depend on negotiations based on marginal costs and benefits.
Explanation:When considering property rights and environmental externalities, such as pollution, economic outcomes depend on who holds the rights. In the case where Joe owns the rights to the river, the most likely outcome is that he would enforce his rights and not allow Plastics, Inc. to pollute (c), since the marginal benefit to him from a cleaner river is greater than the marginal cost of cleaning up to Plastics, Inc.
In contrast, if Plastics, Inc. owns the rights to the river, they will likely use their property rights to continue polluting (d). However, there exists the possibility for negotiation where Joe could offer to pay Plastics, Inc. less than his marginal benefit of $20,000 to reduce pollution, ideally at a point where it exceeds Plastics' marginal cost of $12,000. This could result in a mutually beneficial agreement where pollution is reduced for a payment somewhere between these two values.
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service increases to 11,000. Suppose also that when the average income decreases to $50,000, the quantity demanded of mobile service decreases to 26,000. What is the income elasticity of demand for mobile service? Show calculation and interpret the result.
Answer: Income elasticity of demand for mobile services = 1.885
Explanation:
Given :
Income 1 = $55000
Income 2 = $60000
Demand 1 = 28000
Demand 2 = 33000
Formula for income elasticity as per mid point method is as follow:
[tex]\left ( \Delta \left ( Quantity demanded/2 \right )\div \Delta \left ( Income/2\right ) \right )\\[/tex]
i.e. [tex]\left ( (33000-28000)/(33000 + 28000)/2 \right )\div\left ( (60000-55000)/(60000+55000)/2\right ) \right )[/tex]
= 1.885
Since income elasticity of demand is positive and greater than 1 therefore mobile service is considered as a superior goods.
The income elasticity of demand of mobile service in this case is -0.7857, indicating it is an inferior but necessary good.
Explanation:The income elasticity of demand for mobile service can be calculated with the formula that divides the percentage change in quantity demanded by the percentage change in income. In this case, the change in quantity demanded is from 28,000 to 26,000, which is a decrease of 2,000. As a percentage, this is a decrease of about 7.14% (2000/28,000). The change in income is from $55,000 to $50,000, a decrease of $5,000. As a percentage, this is a decrease of about 9.09% (5000/55,000). The income elasticity of demand is then 7.14 / -9.09 = -0.7857.
A negative income elasticity of demand indicates that mobile service is an inferior good within this income range meaning as income decreases, the demand for the good increases. However, the negative value is less than 1 which means it's a necessary good, even though it's considered inferior. The quantity demanded decreases with decreased income but not to a very large extent.
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The fact that the marginal product falls as the number of workers increases illustrates a property calleda. diminishing marginal product. b. supply and demand. c. labor theory. d. utility maximization.
Answer: The fact that the marginal product falls as the number of workers increases illustrates a property called "a. diminishing marginal product".
Explanation: The law of diminishing returns is an economic concept according to which increasing the amount of a productive factor in the production of the good or service in question, causes the production yield to be lower as we increase this factor. As long as all other factors are maintained at a constant level (ceteris paribus).
Unemployment occurs:
A. for a variety of reasons.B. regionally when businesses or factories close.C. nationally when a recession hits.D. All of these are true.
Answer:
option D) is correct
Explanation:
The reason for unemployment are variable and there can be many reasons for unemployment.
Unemployment results from closing of factories and business breakdown as many workers or the firm employers are rendered jobless with nothing to do.
When there is recession nationally, then unemployment rates increase as the nation or the economy suffers from a breakdown, and is not able to serve its people. Due to recession everything suffers as a result of economy contraction - GDP drops, income drops, retail, sales and hence employment, everything suffers.
Therefore, all the mentioned points are true
The ledger of Tamarisk, Inc. at the end of the current year shows Accounts Receivable $109,000; Sales Revenue $830,000; and Sales Returns and Allowances $23,700. Prepare journal entries for each separate scenario below. (a) If Tamarisk, Inc. uses the direct write-off method to account for uncollectible accounts, journalize the entry at December 31, assuming Tamarisk, Inc. determines that L. Dole’s $1,500 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $2,500 in the trial balance, journalize the adjusting entry at December 31, assuming uncollectible accounts are estimated to be 11% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $205 in the trial balance, journalize the adjusting entry at December 31, assuming uncollectible accounts are estimated to be 9% of accounts receivable.
Answer:
(A)
bad debt expense 1,500 debit
account receivable 1,500 credit
(B)
bad debt expense 9,490
allowance for doubtful accounts 9,490
(C)
bad debt expense 10,015
allowance for doubtful accounts 10,015
Explanation:
(A)
Direct write-off doesn't use allowance,
bad debt is done directly to account receivable.
(B)
allowance = 11% of AR = 11% of 109,000 = 11,990
balance (2,500 credit)
11,990 - 2,500 = 9,490
(C)
allowance = 9% of AR = 9% of 109,000 = 9810
balance 205 debit
9,810 + 205 = 10,015
Comments: the allowance is expected to be 9% or 11% of AR
so the goal for B and C is to reach a final balance of 9% or 11% of AR
so we have to subtract the balance from the expected allowance to knwo the adjustment.
The journal entries for Tamarisk, Inc. are different depending on the scenario. For direct write-offs, uncollectible amounts are directly subtracted from the Account Receivable. For Allowance methods, the amount of bad debt is estimated based on a percentage of total receivables.
Explanation:For scenario a, Tamarisk, Inc. determines that L. Dole's $1,500 balance is uncollectible under the direct write-off method. The journal entry would be as follows:
Debit: Bad Debt Expense $1,500Credit: Accounts Receivable – L. Dole $1,500In scenario b, if
Allowance for Doubtful Accounts
has a credit balance of $2,500, and uncollectible accounts are estimated to be 11% of accounts receivable, the journal entry is:
Debit: Bad Debt Expense $9,490Credit: Allowance for Doubtful Accounts $9,490In scenario c, if Allowance for Doubtful Accounts has a debit balance of $205, and uncollectible accounts are estimated to be 9% of accounts receivable, the entry would be:
Debit: Bad Debt Expense $9,810Credit: Allowance for Doubtful Accounts $9,810In both scenarios b and c, the estimation of uncollectible accounts is calculated as a percentage of the total existing Account Receivables, 11% and 9% respectively.
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Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product A B C Selling price $ 300 $ 400 $ 300 Variable expenses: Direct materials 36 90 45 Other variable expenses 144 110 150 Total variable expenses 180 200 195 Contribution margin $ 120 $ 200 $ 105 Contribution margin ratio 40 % 50 % 35 % The same raw material is used in all three products. Barlow Company has only 4,500 pounds of raw material on hand and will not be able to obtain any more of it for several weeks due to a strike in its supplier’s plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. The material costs $9 per pound. Required: 1. Compute the amount of contribution margin that will be obtained per pound of material used in each product.
Answer:
Contribution margin per pound
Product A = $30
Product B = $20
Product C = $21
Explanation:
Products A B C
Direct Material $36 $90 $45
Provided cost of raw material per pound is $9
Pounds of raw
material used in a unit $36/9 = 4 $90/9 = 10 $45/9 = 5
Contribution per unit $120 $200 $105
Contribution margin per pound = Contribution per unit/ Pounds per unit
= $120/4 = $30 $200/10 = $20 $105/5 = $21
Highest contribution margin per pound is of Product A = $30
Contribution margin per pound
Product A = $30
Product B = $20
Product C = $21
By dividing the contribution margin of each product by the weight of the raw material used (determined by dividing the direct material cost by the cost per pound of $9), we find that Product A generates $30 per pound, Product B generates $20 per pound, and Product C generates $21 per pound. Hence, Product A should be prioritized for highest profitability.
Explanation:The amount of contribution margin per pound can be calculated by dividing the contribution margin of each product by the amount of raw material used in each. As for Barlow's products, we first need to determine the weight of the raw material used in each product. Since the material costs $9 per pound, we can find the weight by dividing the direct materials cost by $9.
For example, the weight of the raw material in Product A is $36 / $9 = 4 pounds. Hence, the contribution margin per pound for Product A is $120 / 4 = $30 per pound. Similar calculations can be repeated for Products B and C.
Product B: Raw material = $90 / $9 = 10 pounds, Contribution margin per pound = $200 / 10 = $20 per pound.
Product C: Raw material = $45 / $9 = 5 pounds, Contribution margin per pound = $105 / 5 = $21 per pound.
Based on these figures, it would be most profitable for Barlow to concentrate on manufacturing Product A, as it generates the highest contribution margin per pound of raw material.
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Suppose demand for a product is highly elastic. What will likely happen to a company's total revenue if it raises the price of that product?a. total revenue will riseb. total revenue will fallc. total revenue will remain the samed. total revenue will fluctuate
Answer:
The correct answer is b. Total revenue will fall.
Explanation:
The equation for the price elasticity of demand (PED) is ε = [tex]\frac{dQ/Q}{dP/P}[/tex]
where Q represents the quantity, P represents the price and d represents variation.
If the demand for a product is highly elastic, mathematically it means that the PED in absolute value is greater than 1.
|ε| > [tex]\frac{dQ/Q}{dP/P}[/tex] ⇒ |ε| > 1
Economically that means that the quantity demanded of that product will decrease more than proportionally to the increase in price of that same product. In other words, the company will experience that a increase in price of its product raises the revenue for each unit sold, but given that the PED is highly elastice an increase in price reduces the number of units actually sold to the extent the company's total revenue actually falls.
When you graduate from college, your mother plans to give you a gift of $70,000 to start you on your way. However, to determine what you learned in business school, your mother presents you with four options on how to receive the gift. Which of the four options presented by your mother will yield the greatest present value to you? A. A lump sum of $70,000 after grad school (2 years) assuming a 7% discount rate. B. A lump sum of $70,000 after grad school (2 years) assuming a 2% discount rate. C. A lump sum of $70,000 today. D $35,000 per year for the next 2 years using a 2% discount rate.
Answer:
C. A lump sum of $70,000 today.
Explanation:
C.- Because the if the cash is received today then you will don't have to discounted at all.
The other option puts the 70,00 in the future, so the present value will always be lower than 70,000 today under normal condition.
Final answer:
The mother's gift option that yields the greatest present value is Option C, the immediate lump sum of $70,000, since it does not need to be discounted and retains its full value.
Explanation:
To determine which option presented by the mother yields the greatest present value, we need to account for the time value of money. The present value (PV) is the current value of future sums of money at a specific discount rate. The discount rate is a percentage that represents the time value of money and the risk of the investment.
Option A is to receive $70,000 after 2 years at a 7% discount rate. The present value is calculated: PV = $70,000 / (1 + 0.07)^2 = $61,320.56.
Option B is also to receive $70,000 after 2 years, but at a 2% discount rate. The present value is calculated: PV = $70,000 / (1 + 0.02)^2 = $67,645.92.
Option C, which is $70,000 today, has no need for discounting as it's already in present terms, so PV = $70,000.
Option D is $35,000 per year for the next 2 years using a 2% discount rate. The present value is calculated as the sum of the PV of two payments: PV = $35,000 / (1 + 0.02) + $35,000 / (1 + 0.02)^2 = $34,313.73 + $33,641.89 = $67,955.62.
Comparing these options, we can see that Option C, which is the immediate lump sum of $70,000, has the highest present value and is therefore the best choice financially.
In 2017, Aaron transferred property worth $75,000 and services worth $25,000 to the BJ Corporation. In exchange, he received stock in BJ valued at $100,000. Immediately after the exchange, Aaron owned 80% of the only class of outstanding stock. Which of the following is true with regard to Aaron’s treatment of this transaction in 2017? A.Ordinary income of $25,000. B. Short-term capital gain of $25,000. C. Short-term capital gain of $100,000. D. No income until the stock is sold.
Answer:
A.Ordinary income of $25,000
Shares BJ 100,000
Property 75,000
Services fees 25,000
Explanation:
We adquire the company by performing this services, we can recognize them.
You must recognize ordinary income of $25,000 for services rendered to the corporation.
BJ will consider the 25,000 as compensation paid.
Final answer:
Aaron must recognize ordinary income of $25,000 for the services he provided to the BJ Corporation in exchange for stock, as services exchanged for stock are taxed as ordinary income.
Explanation:
The student asks for the correct taxation treatment for Aaron who transferred property and services for stock in BJ Corporation. The options given are ordinary income, short-term capital gain, and no income until the stock is sold.
Under the tax law, when services are exchanged for stock, the value of those services is treated as ordinary income to the person performing the services. Since Aaron provided services worth $25,000, this is the amount that would be recognized as ordinary income. The transfer of property for stock, where no liabilities are assumed by the corporation and where the transferor has control of the corporation immediately after the exchange, is generally not considered a taxable event. Therefore, Aaron would not recognize a capital gain on the transfer of the property until the stock received in exchange is sold.
Following these guidelines, the correct answer is that Aaron must recognize ordinary income of $25,000 for the services provided in exchange for the stock in 2017. This is because the transfer of property in exchange for stock generally does not trigger immediate taxation if certain conditions regarding control and liabilities are met, which seem to be the case here as Aaron owned 80% of the stock immediately after the exchange.
Yellow Enterprises reported the following ($ in 000s) as of December 31, 2018. All accounts have normal balances. Deficit (debit balance in retained earnings) $ 3,000 Common stock 2,700 Paid-in capital-treasury stock 1,300 Treasury stock at cost 260 Paid-in capital—excess of par 31,500 During 2019 ($ in 000s), net income was $10,300; 25% of the treasury stock was resold for $540; cash dividends declared were $800; cash dividends paid were $430. What ($ in 000s) was shareholders' equity as of December 31, 2018?
Answer:
The shareholders equity as of 31 December, 2018 is $32,240
Explanation:
Here for calculating the shareholders equity we will first have to find the total paid in capital of the Yellow enterprises and after that we will subtract the deficit balance that is remained in the retained earnings account, by doing this we will get the total paid in capital and retained earnings. Now we just have to subtract the treasury stock from the total paid in capital and retained earnings to get the remaining balance , which would be the shareholders equity of the Yellow enterprises.
so first step would be taking out total paid in capital =
common stock
+
paid in capital(excess of par)
+
paid in capital treasury stock
= 2700 + 31,500 + 1300
Total paid in capital = $35,500
Next step is to subtract deficit balance in retained earnings from this to get the total paid in capital and retained earnings =
total paid in capital - deficit balance in retained earnings
Total paid in capital and retained earnings = $35,500 - $3000
= $32,500
Now the last step for taking out shareholders equity we will subtract the treasury stock from the total paid in capital and retained earnings,
Shareholders equity = total paid in capital and retained earnings
-
treasury stock at cost
= $32,500 - $260
= $32,240
Shareholders' equity for Yellow Enterprises as of December 31, 2018, was calculated to be $32,240 (in 000s), after combining all equity components and subtracting the deficit.
Explanation:To calculate the shareholders' equity of Yellow Enterprises as of December 31, 2018, we need to sum up all the shareholders' equity components except the Deficit, because it is a deduction in the equity.
Shareholders' equity components are:
Calculating these:
Shareholders' Equity = Common stock + Paid-in capital-treasury stock + Paid-in capital—excess of par - Treasury stock at cost
Shareholders' Equity = $2,700 + $1,300 + $31,500 - $260
Shareholders' Equity = $35,240
To this, we must subtract the deficit (debit balance in retained earnings):
Shareholders' Equity = $35,240 - $3,000
Shareholders' Equity = $32,240
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What is the primary difference between income and wealth? A. Income is earned by households; wealth is gained by inheritance. B. Income is a flow variable; wealth is a stock variable. C. Income reveals net worth; wealth is a stock variable. D. Income is the value of what a household owns minus its debt; wealth is a measure of net worth.
Answer: the correct ianswer is B. Income is a flow variable; wealth is a stock variable.
Explanation:
A stock is measured at one specific time, and represents a quantity existing at that point in time (say, December 31, 2004), which may have accumulated in the past. A flow variable is measured over an interval of time. Therefore, a flow would be measured per unit of time (say a year).
Sweet Charity Company produces boxes of candy products by the gross (candy canes and lollipops). During September, sales in units were projected to be 20,000 and production was projected to be 14,000 units. Direct labor rate is $8.50 per hour, and each unit takes 0.75 hours of direct labor to make. What is the total cost of direct labor for September?
The total direct labor cost for Sweet Charity Company in September is calculated to be $89,250, based on projected production of 14,000 units, each requiring 0.75 hours of labor at $8.50 per hour.
Explanation:The total cost of direct labor for September for the Sweet Charity Company can be calculated by multiplying the number of units produced by the time it takes to make each unit and then by the direct labor rate. According to the given information, the production was projected to be 14,000 units, with each unit taking 0.75 hours of direct labor. The direct labor rate is $8.50 per hour.
To find the total direct labor hours required for production, we multiply the number of units (14,000) by the hours per unit (0.75 hours):
14,000 units × 0.75 hours/unit = 10,500 hoursNext, to calculate the total cost of direct labor, we multiply the total labor hours by the direct labor hourly rate:
10,500 hours × $8.50/hour = $89,250Therefore, the total labor cost for Sweet Charity Company in September is $89,250.
The larger the standard deviation of returns of an investment, _____. a. lesser is the chance that the realized return will differ significantly from the expected return b. greater is the chance that the realized return will be negative c. greater is the chance that the realized return will differ significantly from the expected return d. lesser is the chance that the realized return will be negative e. greater is the chance that the investment will outperform the market
Answer:
c. greater is the chance that the realized return will differ significantly from the expected return
Explanation:
The standard deviation is used as a measure of risk, it measures the dispersion of data relative to its mean. The expected return is measured by the mean, therefore if the standard deviation is large it will be more difficult to be accurate calculating the expected return as the values can differ significantly.
The manager at Vertical Wire Productions reported total sales revenue of $800,000. The variable expenses were $600,000, and there were $125,000 of total fixed expenses. Use the contribution margin shortcut formula to predict the breakeven point in dollars.
Answer:
[tex]BEP_{dollars} = 500,000 [/tex]
Explanation:
The first step will be get the contribtuion margin:
[tex]Sales\: Revenue - Variable \:Cost = Contribution \:Margin[/tex]
800,000 - 6000,000 = 200,000
This is the amount after variables cost used to pay the fixed cost and make a gain.
Second, we calcualte the contribution margin ratio
[tex]\frac{Contribution \:Margin}{Sales\: Revenue} = Contribution\: Margin\: Ratio[/tex]
200,000/800,000 = 0.25
Per dollar of sales 25 cents are available to pay the fixed cost.
Now, we calculate the break even point in dollars
[tex]\frac{Fixed\:Cost}{Contribution\: Margin \:Ratio} = Break\: Even\: Point_{dollars}[/tex]
[tex]\frac{125,000}{.025} = 500,000[/tex]
A firm that is first to the market with a new product frequently discovers that there are design flaws or problems with the product that were not anticipated. For example, the ballpoint pens made by the Reynolds International Pen Company often leaked. What effect do these problems have on the innovating firm, and how do these unexpected problems open up possibilities for other firms to enter the market?
Answer:
Explanation:they can bring the sales down
Since the firm is the first people to the market, the only thing people could buy from in the market is from the only firm in the market.
If the only firm ion the market has flaws in their products, then people would not buy their product(s), due to the fact that they have problems in their problems. These problems would make the firm not look so good to customers/consumers. Since they're the first, they would be making a "first impression" to it's consumers, and they didn't make a good first impression.
This would allow other firms to enter the market with products that don't have any problems/flaws. If other firms join the market and make products that don't have any problems, then people would choose them over the first firm, due to the fact that the other firms don't have problems with their products. This also allows firms to see what the problem was in the first firm in order to not make the same mistake, specifically by making solutions to those problems in their own products.
I hope this helps!Best regards,MasterInvestorWhich of the following is NOT characteristic of very large organizations? Select one: a. They can become increasingly bureaucratic. b. Levels are added to keep spans of control from becoming too small. c. Jobs are more specialized. d. Rules, procedures and paperwork are introduced. e. All of the above ARE characteristic of larger organizations.
Answer:
Adding up of levels to keep spans of control from becoming too small is not a characteristic of a very large organization.
Explanation:
Span of control is also known as management ratio. It refers to the number of subordinates working under a superior. In a large organization number of employees is also high, so the span of control generally tend to be large not small. Levels are added to make them small and effective. A large organization can become bureaucratic. The jobs here can also be specialized with skilled workers performing their specialized works. A lot of procedures and paperwork is involved as every task is performed officially according to a set procedure. All these options will not be correct answer.
A bond with a coupon rate of 7% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on January 30 at 100.125. What is the invoice price of the bond? The coupon period has 182 days.
To calculate the invoice price of a bond, you need to consider the ask price and the accrued interest. The accrued interest is calculated based on the coupon rate and the number of days since the last coupon payment. In this case, the invoice price is approximately $177.045.
Explanation:The invoice price of the bond can be calculated by using the formula:
where:
Ask Price is the quoted price of the bond, which is 100.125 in this case.Accrued Interest is the interest that has accumulated since the last coupon payment date, which is January 15 in this case.Since the coupon period has 182 days and the interest payments are made semiannually, the number of days since the last coupon payment can be calculated as 15 days + 182 days = 197 days.
Given that the coupon rate is 7%, the coupon payment can be calculated as 7% of the par value of the bond (which is typically $1,000). Therefore, the coupon payment is $70.
Substituting the values into the formula:
Solving for the accrued interest gives approximately $76.92.
Finally, substituting the values into the invoice price formula:
Calculating the sum gives the invoice price of approximately $177.045.
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The invoice price of the bond is calculated by adding the clean price ($1001.25) and the accrued interest ($2.88), resulting in approximately $1004.13.
To calculate the invoice price of the bond, we need to consider both the clean price and the accrued interest. The clean price, given as 100.125, is the price without accrued interest. Bonds with a coupon rate of 7% that pay semiannually will pay 3.5% every six months.
Step-by-Step Explanation:
Calculate the semiannual coupon payment: Face Value of Bond = $1000 (assuming standard face value)Semiannual Coupon Payment = 7%/2 * $1000 = $35Calculate the accrued interest up to January 30: Accrued Interest = (Number of Days Since Last Coupon Payment / Total Days in Period) * Semiannual Coupon PaymentNumber of Days Since Last Coupon Payment = 15 (from January 15 to January 30)Total Days in Period = 182Accrued Interest = (15 / 182) * $35 ≈ $2.88Add the accrued interest to the clean price to get the invoice price: Clean Price = 100.125% of Face Value = 1.00125 * $1000 = $1001.25Invoice Price = Clean Price + Accrued Interest = $1001.25 + $2.88 ≈ $1004.13Therefore, the invoice price of the bond on January 30 is approximately $1004.13.
A well-known conglomerate that manufactures a multitude of noncompeting consumer products instituted a corporatewide initiative to encourage the managers of its many divisions to share consumer demographic information. However, since the initiative was implemented, the CEO has noticed that less information is available than ever. Why do you think the CEO’s plan backfired?
Answer: Because of misperception by the managers.
Explanation: Every target group in case of business studies has many of its subsets and the managers of the conglomerate did not took this into consideration. They gave only the demographic information of consumers and failed to provide other relevant information necessary to support it.
The CEO's plan likely faltered because of cultural differences across divisions, increased management complexity and information overload problems, and a shift towards formalized information structures as the firm grew.
Explanation:It seems that the CEO's plan for encouraging the sharing of consumer demographic information backfired due to a combination of factors related to the complexities inherent in managing a large, diverse conglomerate. First, there's a challenge in synchronizing different business cultures. A manufacturer of consumer goods may have a vastly different culture from a tech startup, making it difficult to standardize the flow of information.
Furthermore, management complexity increases disproportionately as more layers of communication are added within a conglomerate. This often leads to information overload, where sharing becomes inefficient, and critical information fails to reach the intended recipients in a timely manner. Thus, the initiative may have inadvertently created a counterproductive environment where managers are less inclined to share information than before.
Lastly, as a firm grows and information about its products and financials becomes more widely available, managers may rely less on personal relationships and more on formal structures for sharing information. This shift can reduce the immediate perceived need to share information actively among divisions, especially if managers do not see a direct benefit to their specific operations.
What adjustments would need to be made in the Operating Section of the statement of cash flows prepared under the indirect method to account for the changes in the Accounts Payable and Accrued Expenses account balances for Google?
Explanation:
You will have to compare the Accounts payable of the current and previous year, and check the diference.
If the current year Account Payable is higher then the previous year, this means Google didn't pay as much, so it "save" cash for that diference so the diference will be positive.
If the opposite ocours, then Google pay more than previous year, so the diference will be posted as negatinve in the cash flow statment.
Accrued Expenses for this account, when doing the comparrison, if current is higher this means Google didn't pay as much expenses as it should be, so it save cash, the diference will be posted as positive.
If the actual is smaller, then Google pay more and the diference is posted as negtive.
Resuming, compare current with previous for each account,
when current is higher then adjustment is positive (save cash) when previous is higher then adjustment is negative(use cash)Weber Company purchases $50,000 of raw materials on account, and it incurs $60,000 of factory labor costs. Supporting records show that (a) the Assembly Department used $24,000 of raw materials and $35,000 of the factory labor, and (b) the Finishing Department used the remainder. Manufacturing overhead is assigned to departments on the basis of 160% of labor costs. Journalize the assignment of overhead to the Assembly and Finishing Departments. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
WIP assembly 56,000 debit
WIP Finishing 40,000 debit
Factory Overhead 96,000 credit
Explanation:
Assembly
DM 24000
DL 35000
FO 35,000 x 160% = 56,000
Finishing
26000
25000
FO 25,000 x 160% = 40,000
The manufacturing overhead of Weber Company, which is based on 160% of labor costs, is calculated for the Assembly Department and the Finishing Department. It results in $56,000 of overhead for the Assembly Department and $40,000 of overhead for the Finishing Department based on their respective labor costs.
Explanation:Weber Company is using two types of resources in its manufacturing process, which are raw materials and factory labor. These resources are allocated between the Assembly Department (AD) and the Finishing Department (FD). To calculate the manufacturing overhead which is based on 160% of labor costs, it is required to multiply the labor cost in each department by 1.6.
For the AD, the overhead will be $35,000 x 1.6 = $56,000.For the FD, the labor cost will be the total labor cost minus the AD's labor cost (i.e., $60,000-$35,000) which equals $25,000, so the overhead will be $25,000 x 1.6 = $40,000.In conclusion, the overhead for the AD is $56,000 and for the FD is $40,000.
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