Answer:
Ending Inventory $1,523
COGS $4,227
Explanation:
PURCHASES
DATE QUANTY PRICE SUBTOTAL
Beginning 10 $52 $520.00
1st 19 $50 $950.00
2nd 55 $59 $3,245.00
3rd 14 $63 $882.00
Because we sold at LIFO we record the latest units as COGS and the first untis at ending invenotry.
So we start from the first line until reach the 27 units
27 - 10 beginning = 17
we are short, so we move to next line
19 - 17 = 2 with this unit we cover the ending inventory, the diference is part of COGS and all the lines below are also COGS
COGS
2 units at $50
55 units at $59
14 units at $63
Total 4,227
Ending Inventory
10 units at $52
17 units at $59
Total $1,523
Bluff purchased equipment for business use for $35,000 and made $1,000 of improvements to the equipment. After deducting depreciation of $5,000, Bluff gave the equipment to Russett for business use. At the time the gift was made, the equipment had a fair market value of $32,000. Ignoring gift tax consequences, what is Russett's basis in the equipment
Answer:
After ignoring the gift tax basis, the Russett's basis in the equipment is equal to $31,000
Explanation:
For answering this question it is important that we have knowledge of the IRS publication 555, according to which we can take out the donee basis in the property ( in this case donee is Russett's ) in the situation when market value of the property is equal to or greater than the donors ( Bluff ) adjusted basis.
Then the donee basis will be equal to the donors adjusted basis of property.
In this case we will first take out donors ( bluff ) adjusted basis for equipment,
= $35,000(purchase value) + $1000(improvement) - $5000 (depreciation)
= $31,000
So here we can say that donors adjusted basis is less than market value , so in this case the russetts basis will be equal to bluff adjusted basis for property which is equal to $31,000.
Mary, a restaurant manager for a national chain of restaurants, and the other managers in her district, during weekly conference calls, explain to their district manager the reasons for different decisions; they also explain why certain costs and sales were higher or lower than they were the previous week. ________ is the explanation of their decisions and work results.
Your question asks what would be the best word to describe the decisions and work results explained to the district manager.
Answer: AccountabilityThe reason why "Accountability" would be the correct answer is because this is the word that best describes what the managers are reporting to the district manager.
The managers that are working for a business/company would need to tell or report any work results and decisions to the manager that is a higher rank than them, in this context the district manager would be higher than the restaurant manager.
There are manager positions that are not the highest positions, there is most likely a more higher manager position, and that is represented in this question.
The managers need to be responsible by telling the manager that's a higher rank than them about their plans and the results about their work, in order for the higher manager to know what's going on.
I hope this helps!Best regards,MasterInvestorFor its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 290,000 Permanent difference (14,100 ) 275,900 Temporary difference-depreciation (19,700 ) Taxable income $ 256,200 Tringali's tax rate is 32%. Assume that no estimated taxes have been paid. What should Tringali report as its deferred income tax liability as of the end of its first year of operations?
Answer:
Tringali corporation should report $ 88,288 as the deferred tax liability as of the end of the first year of its operations.
Explanation:
This type of income tax is a liability which a corporation records on its balance sheet because of the difference in revenue recognition between the corporation's accounting practices and the tax laws.
Here for calculating the deferred income tax we will simply calculate the tax rate given on the taxable income of the income and also on the temporary difference in the depreciation.
DEFERRED INCOME TAX LIABILITY =
TAXABLE INCOME X TAX RATE + TEMPORARY DIFFERENCE X TAX RATE
= $256,200 X 32% + $ 19,200 X 32%
= $81,984 + $6,304
= $ 88,288
What is joint tenancy?
Answer:
Explanation:
Joint tenancy is a lawful course of action in which at least two individuals possess a property together, each with equivalent rights and commitments. When one of the proprietors in a joint tenure dies, that proprietor's interest in the property goes to the survivors without the property experiencing the courts.
From the ledger balances given below, prepare a trial balance for the Metlock, Inc. at June 30, 2019. All account balances are normal.
Accounts Payable $8,700, Cash $6,400, Common Stock $21,200, Dividends $2,500, Equipment $16,500, Service Revenue $7,700, Accounts Receivable $4,700, Salaries and Wages Expense $4,800, and Rent Expense $2,700.
Answer:
[tex]\left[\begin{array}{ccc}Account&DEBIT&CREDIT\\Cash&6,400&-\\Account\: Receivable&4,700&-\\Equipment&16,500&-\\Account \: Payble&-&8,700\\Common \: Stock&-&21,200\\Dividends&2,500&-\\Serice \: Revenue&-&7,700\\S/W \: expense&4,800&-\\Rent \: expense&2,700&-\\Total&37,600&3,7600\\\end{array}\right][/tex]
Explanation:
Cash assets --> debit balance
AR assets --> debit balance
equipment assets --> debit balance
Account payable liability --> credit balance
CS equity --> credit balance
dvidends --> debit balance
revenue --> credit balance
expenses --> debit balance
James and Amanda are brother and sister who still live at home with their parents. Amanda is almost completely finished with her classes and is scheduled to graduate in a few months while James has only completed three courses. Amanda allows James to use her work from all of her past classes and to turn them in as his own. This is, a. not plagiarism because James and Amanda are related. b. a type of plagiarism called sharing work (collusion). c. a type of plagiarism called fabrication. d. not plagiarism because the tuition for both James and Amanda is paid by their parents so they can use the answers.
Answer:
The correct option is b) a type of plagiarism called sharing work ( collusion)
Explanation:
Plagiarism is a very unethical and unprofessional thing a person can do. It actually means when take some other persons thought, idea ,or any work and show it as your own, sometimes people do it intentionally and unintentionally.
In the question given above, it is the above it is a case of share working which is also know as collusion, this type of situation arises when a person passes on his or her work to other person willingly, as you can see the same thing has happened in this question as Amanda has allowed James to use her work as her own.
First Simple Bank pays 8.6 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match First Simple Bank over an investment horizon of 8 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer with Explanations:
Given:
Simple bank pays 8.6 percent simple interest.
Compound bank pays x percent interest compounded annually.
Assume an equal amount deposited in an account of each bank.
Find x such that at the end of 8 year the future values are equal.
Solution:
Assume an initial deposit of P in either account.
We calculate the future value after 8 years.
Simple bank:
future value, Fs = P(1+8*0.086) = 1.688P (8.6% simple interest)
Compound bank:
future value, Fc = P(1+x)^8 ( x% compounded annually)
In order that both future values are the same, we equate Fc and Fs
Fc = Fs
P(1+x)^8 = 1.688P
simplify
(1+x)^8 = 1.688
Take 8th root on both sides
(1+x)^(8*(1/8)) = 1.688^(1/8)
simplify
(1+x)^(1) = 1.688^(1/8)
take 8th root on right and simplify
1+x = 1.0676319
x = 1.0676319-1 = 0.0676319
Therefore the Compound Bank would offer an interest of 6.76%, rounded to 2 decimal places.
The rate that the bank should set if it wants to match First Simple Bank over an investment horizon of 8 years is 6.76%.
First step is to calculate the total interest using this formula
Total interest=Interest rate per period× Number of periods
Let plug in the formula
Total interest=.086×8
Total interest= .688
Now let calculate the bank rate using this formula
(1 + r)^n - 1
Set the two equal
(.086)(8) = (1 + r)^8 - 1
Hence:
r=(1+.688)^(1/8) - 1
r = 1.688^(1/8) - 1
r = .0676×100
r= 6.76%
Inconclusion the rate that the bank should set if it wants to match First Simple Bank over an investment horizon of 8 years is 6.76%.
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On December 1, 20X1, Money Co. gave Home Co. a $200,000, 11% loan. Money paid proceeds of $194,000 after the deduction of a $6,000 nonrefundable loan origination fee. Principal and interest are due in 60 monthly installments of $4,310, beginning January 1, 20X2. The repayments yield an effective interest rate of 11% at a present value of $200,000 and 12.4% at a present value of $194,000. What amount of income from this loan should Money report in its 20X1 income statement?A. $0B. $1,833C. $2,005D. $7,833
Answer: (C.) $2,005
Explanation:
Given :
Money Co. made a cash outflow of $194,000 for the $200,000 loan Money gave to Home Co.
The book value of the loan is $194,000.
The stated rate is 11%.
Hence they will receive an effective interest rate of 12.4% on cash outflow.
∴
Income from the loan = Book value × Effective interest rate × No. of months of the year
= $194,000 × 0.124 × [tex]\frac{1}{2}[/tex]
= $2,004.67
Hochberg Corporation uses an activity-based costing system with the following three activity cost pools: Activity Cost Pool Total Activity Fabrication 50,000 machine-hours Order processing 625 orders Other Not applicable The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. The company has provided the following data concerning its costs: Wages and salaries $ 433,000 Depreciation 160,000 Occupancy 169,000 Total $ 762,000 The distribution of resource consumption across activity cost pools is given below: Activity Cost Pools Fabricating Order Processing Other Total Wages and salaries 20% 70% 10% 100% Depreciation 10% 30% 60% 100% Occupancy 10% 70% 20% 100% The activity rate for the Fabrication activity cost pool is closest to:
Answer:
The correct answer is 2.39
Explanation:
TOTAL WAGES AND SALARIES = $433,000
DEPRECIATION = $160,000
OCCUPANCY = $169,000
TOTAL = $762,000
here for calculating the activity rate for activity cost pool , we will only use the given percentages of wages and salaries, depreciation and occupancy in the activity cost pool -
Amount Activity cost pool Amount allocated
Wages $433,000 20% $86,600
Depreciation $160,000 10% $16,000
Occupancy $169,000 10% $16,900
TOTAL $119,500
Cost driver machine hours 50,000
Rate per machine hour $119,500 / 50,000
2.39
Therefore the activity rate for activity cost pool is 2.39
Kent Enterprises purchased a truck for $60,000 on January 1 of its first year. The company uses the units-of-activity method and it estimates that the truck’s useful life will be 100,000 miles. The truck will have an estimated salvage value of $10,000. The company drives the truck 25,000 miles in the first year and drives it 20,000 miles in the second year. How much accumulated depreciation will be reported on the company’s balance sheet as of the end of the second year?
Answer:
Accumulated depreciation on car at the end of year 2 will be 22,500
Explanation:
The unit-of use Method recognize depreciation base on the use of a cost driver. This cost driver could be miles, number of units produced, or others.
[tex]\frac{Adquisition \: Value- \: Salvage \: Value}{cost \: driver}= Depreciation \: rate[/tex]
(60,000-10.000)/100,000 = .5 rate per mile
acumulated depreciation at year 2
[tex](year 1 + year 2) \times \: rate = \: accumulated \: depreciation[/tex]
25,000 + 20,000= 45,000 total miles driven
45,000 * 0.5 = 22,500
The standard quantity per unit defines the ________. price that should be paid for each unit of direct materials. total cost of direct materials that should be used for each unit of finished product. amount of direct materials that should be used for each unit of finished product including an allowance for normal inefficiencies, such as scrap and spoilage. amount of direct labor-hours that should be used to produce one unit of finished goods.
Answer:
amount of direct materials that should be used for each unit of finished product including an allowance for normal inefficiencies, such as scrap and spoilage.
Explanation:
the first statement refers to price
and the third to labor
direct Labor hours per unit is called efficiency rate. it is a labor measurement.
stabdard quantity: pounds, liters or units of raw materials including waste to get 1 finished product
A condensed income statement by product line for British Beverage Inc. indicated the following for King Cola for the past year: Sales $235,100 Cost of goods sold (110,000) Gross profit $125,100 Operating expenses (142,000) Operating loss $(16,900) It is estimated that 12% of the cost of goods sold represents fixed factory overhead costs and that 21% of the operating expenses are fixed. Since King Cola is only one of many products, the fixed costs will not be significantly affected if the product is discontinued. Prepare a differential analysis report for the proposed discontinuance of King Cola.
Answer:
Provided total expenses
Cost of goods sold = $110,000
Variable + Fixed
Provided 12% is fixed = $110,000 X 12% = $13,200
Variable = $110,000 - $13,200 = $96,800
Now in Operating Expenses
Total = $142,000
Fixed = $142,000 X 21% = $29,820
Variable = $142,000 - $29,820 = $112,180
Now if the product King Cola is discontinued then
All the variable cost can be avoided
In that case Net loss will be of Fixed cost
Total fixed cost = $13,200 +$29,820 = $43,020
Whereas current operating loss = $16,900
Now if the input and labor used for King Cola can be allocated to some other beneficial product which can further meet at least $43,020 - $16,900 = $26,120 profit from these additional inputs.
Else the company shall operate on king Cola as in case of operating with the same the loss is only of $16,900 whereas in case of non operation loss = $43,020
Which of the following statements is false? A. Healing is one characteristic of a servant leader. B. Servant leaders place the good of followers over their own self-interests. C. Servant leadership emphasizes that leaders be attentive to the concerns of their followers.D. Servant leadership is most effective in situations where subordinates are not open to being guided.
D is the correct answer.
Servant leaders can't lead if subordinates are not open to being guided.
Please vote my answer brainliest. thanks!
Servant leadership is most effective in situations where subordinates are not open to being guided: statement is false. Thus, option D is the correct option.
What is servant leadership?A leader's main objective in a servant leadership style is to serve others. This differs from traditional leadership, in which the success of the firm or organization is the leader's top priority. A servant leader shares authority, prioritizes the needs of the workforce, and supports staff members' growth and best performance. The people don't work for the leader; rather, the leader exists to serve the people.
A Servant Leader should concentrate on these things, according to its originator Robert K. Greenleaf: "Do those being served change as people? Do those who receive service improvements in health, wisdom, freedom, independence, and likelihood to serve others?" When leaders adopt a different perspective and put their teams first, both they and their staff grow personally, and the organization grows as a result of the staff's increasing dedication and engagement.
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Brown Fashions Inc.'s December 31, 2018 balance sheet showed total common equity of $3,750,000 and 250,000 shares of stock outstanding. During 2019, the firm had $750,000 of net income, and it paid out $500,000 as dividends. What was the book value per share at 12/31/19, assuming no common stock was either issued or retired during 2019?
Answer:
$16
Explanation:
Book Value of Equity = Value of complete equity/no of equity shares
Value of equity share as on 31 Dec 2019 = $3,750,000 + Net income - Dividend
= $3,750,000 + $750,000 - $500,000 = $4,000,000
Net income is a part of common equity, but dividend paid is not part of common equity as dividend paid reduces company's assets as cash or bank balance is reduced.
Provided there is no further issue of common stock and also no common stock is retired. Therefore number of shares = 250,000
Book value per share = $4,000,000/250,000 = $16
$16
A stock is expected to pay a dividend of $3.00 at the end of the year (i.e., D1 = $3.00), and it should continue to grow at a constant rate of 10% a year. If its required return is 14%, what is the stock's expected price 5 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.
Answer:
$120.79
Explanation:
Using dividend growth model, we have
P0 = [tex]\frac{D1}{Ke - g}[/tex]
P0 = Current market price
D1 = Dividend at the end of year 1
Ke = Required rate of return
g = growth rate
Now in the given case, Ke is constant @ 14%
g is also constant @ 10%
For price at the end of 5 years = P5
We need to calculate D6
D6 = (((((D1 +g) + g) + g) + g) + g)
= (((((3 +10%) +10%) + 10%) +10%) +10%)
= 4.83153
Therefore Expected price at the end of 5 years = [tex]\frac{4.83153}{0.14-0.10}[/tex]
= $120.79
Mitchell has a cause: He loves cats. As an economist, he could earn $100,000 as a faculty member, but instead he decides to devote his time to the Humane Society as its chief economist. Knowing nothing else, you would expect that he would receive
a.higher pay at the Humane Society because of the difference in skill levels.
b.lower pay at the Humane Society because of signal theory.
c.lower pay at the Humane Society because of the compensating differential theory.
d.higher pay at the Humane Society because of signal theory.
e.the same pay as either a professor or as a chief economist at the Humane Society.
Answer: (e.) The same pay as either a professor or as a chief economist at the Humane Society.
Explanation:
The correct answer would be option (e) because in this case there lies an ambiguity i.e. we are uncertain about skillets that an economists should be endowed with or for being a faculty member.
Therefore , it can be concluded that he would get at least as good pay as being faculty. In both cases he'll be better off.
After Jeff Bezos read about how the Internet was growing by 2,000 percent a month, he set out to use the Internet as a new distribution channel and founded Amazon, which is now the world's largest online retailer. This is clearly an example of a(n)A. firm that uses closed innovation. B. entrepreneur who commercialized invention into an innovation. C. business that entered the industry during its maturity stage. D. exception to the long tail business model
Answer:
B. entrepreneur who commercialized invention into an innovation
Explanation:
A- there wasn't any firm before
C- the business was growing not at maturity state
D.- his business is a distribution channel it is not relater to find niche markets
B.- He use an invention The Internet to innovate in the ways product are distribute and comercialized. It made an innovation(it didn't exist before) out of the invention
Lisah, Inc., manufactures golf clubs in three models. For the year, the Big Bart line has a net loss of $10,000 from sales $200,000, variable costs $180,000, and fixed costs $30,000. If the Big Bart line is eliminated, $20,000 of fixed costs will remain. Prepare an analysis showing whether the Big Bart line should be eliminated.
Answer:
It should be continued.
Explanation:
[tex]\left[\begin{array}{ccc}-&continued&discontinued&Sales&200,000&0&Variable Costing&-180,000&0&Contribution&20,000&0&Fixed Cost&-30,000&-20,000&Net Loss&-10,000&-20,000\end{array}\right][/tex]
It is better to continue with the Big Bart Line, because the net loss would increase by 10,000 if eliminated
Answer:
Please see attachment
Explanation:
Please see attachment
Which of the following statements is true of managers' communication? a. Surveys show that most managers do not realize the need to improve communication effectiveness. b. Managers' communication is past-oriented, that is, it directs employees' attention to prior mistakes. c. Everything that a manager does and says communicates something to the employees. d. Surveys show that most managers seek continuous feedback from employees and customers. Next
Answer:
The correct option here is C) everything that a manager does and says communicates something to the employees.
Explanation:
Manager's communication is a very important function, which is used in every company where the managers use this function to communicate with each other and with employees so that all the information can pass through to everyone.
Option a) is incorrect because managers don't think that there is no need to improve communication effectiveness, there is always room for improvement and every manager knows it.
Option b) is incorrect because it is not possible that all managers uses past oriented approach for communication and they don't seek employees attention towards the prior mistakes.
Option d) is incorrect because managers don't go around asking employees for their feedback and they might ask customers for feedback a few times but not continuously.
Option c) is correct because every actions of a manager has a message for its employees, every thing that a manger does , he does it in interest of the company and he wants all his employees to follow his lead, understand what he wants from them, understand true motives behind his actions.
Managers' communication is crucial and every action and word from a manager communicates something to the employees.
Explanation:The correct statement regarding managers' communication is option c: Everything that a manager does and says communicates something to the employees. Managers' communication is crucial in conveying information, expectations, and building relationships with their employees. Every action and word from a manager can have an impact on the employees' perception and understanding of their role and responsibilities.
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In the current year, Hanna Company reported quality-assurance warranty expense of $195,000 and the warranty liability account increased by $26,000. What were warranty expenditures during the year?
Answer: the correct answer is $169,000
Explanation: the warranty expenditures during the year is $195,000 minus the increment in the liability account $26,000 equals $169,000.
Exercise 23-5 Partially correct answer. Your answer is partially correct. Try again. The standard cost of Product B manufactured by Pharrell Company includes 3.1 units of direct materials at $6.1 per unit. During June, 26,900 units of direct materials are purchased at a cost of $5.85 per unit, and 26,900 units of direct materials are used to produce 8,500 units of Product B. (a) Compute the total materials variance and the price and quantity variances.
Answer:
price variance 6,725 favorable
quantity variance 3,355 unfavorable
Explanation:
Materials variance:
price:
actual units x (std - actual price)
26,900 (6.1-5.85) =6,725
quantity
(standard quantity - actual quantity) x std price
(8,500 x 3.1 - 26,900) x 6.1 = -3,355
Two divisions of the Oregano Company (Divisions TX and OY) have the same profit margins. Division TX's investment turnover is larger than that of Division OY (1.2 to 1.0). Income from operations for Division TX is $55,000, and income from operations for Division OY is $43,000. Division TX has a higher return on investment than Division OY by a. applying a negotiated price measure b. using its assets more efficiently in generating sales c. using income from operations as a performance measure d. comparing the profit margins
Answer:
b. using its assets more efficiently in generating sales
Explanation:
The investment turnover reflect the use of the resources available.
Return on Investment/Investment = TO investment
A higher Investment TO means the investment amount had a higher yield.
The TX division was more efficient with the resource given.
The efficiency-wage theory of worker turnover suggests that firms with higher turnover will have A. higher production costs and higher profits. B. lower production costs and higher profits. C. higher production costs and lower profits. D. lower production costs and lower profits.
Answer:
I believe the correct answer is C: higher production cost and lower profits
Explanation:
High turnover is directly connected with low efficiency, due to costly and time consuming worker on-boarding and training which translates into deterioration of margin (lower profits).
Answer:
The correct answer would be option A, Higher Production Costs and Higher Profits.
Explanation:
The Efficiency Wage theory of worker turnover states that if employee are paid more wages than the equilibrium level, the level of employee's efficiency increases which in turn will increase the productivity of the organization and thus contribute in the increase of profitability for the organization, and vice versa. It is commonly known that when wages increase, the production costs also increase. So this theory suggests that firms with higher turnover will have higher production costs and higher profits.
X-Tel budgets sales of $60,000 for April, $100,000 for May, and $80,000 for June. In addition, sales are 40% cash and 60% on credit. All credit sales are collected in the month following the sale. The April 1 balance in accounts receivable is $15,000. Prepare a schedule of budgeted cash receipts for April, May, and June.
Explanation:
Following is the detailed answer of the question.
X-Tel Cash Receipts Budgets For April, May, and June
APRIL MAY JUNE
Sales $60,000$ 100,000 $80,000
Less ending 36,000 60,000 48,000
account receivable (60%)
Cash receipts from 24,000 40,000 32,000
Cash sales (40% of sales)
Collections of 15,000 36,000 60,000
prior month’s receivables
Total cash receipts $39,000 $76,000 $92,000
So total cash receipts at the end of April, May and June are 39000, 76000 and 92000 respectively.
X-Tel's budgeted cash receipts for April, May, and June would be $39,000, $76,000, and $92,000 respectively. These figures are calculated considering both cash sales (40% of monthly sales amount) and collected credit sales (60% of previous month's sales)
Explanation:To determine the schedule of budgeted cash receipts, we need to work out the cash sales for each month and add that to the credit sales collected.
For April, 40% of $60,000 suggests cash sales are $24,000. In addition, the accounts receivables balance of $15,000 is collected giving you total receipts for April as $39,000.
For May, 40% of $100,000 equals $40,000 for cash sales and April's credit sales of $36,000 (60% of $60,000) are collected, to bring the total for May to $76,000.
For June, 40% of $80,000 will be $32,000 in cash sales and credit sales collected from May will be $60,000 (60% of $100,000), providing you with a total of $92,000 for June.
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Top Company holds 90 percent of Bottom Company’s common stock. In the current year, Top reports sales of $1,010,000 and cost of goods sold of $757,500. For this same period, Bottom has sales of $510,000 and cost of goods sold of $310,000. During the current year, Top sold merchandise to Bottom for $310,000. The subsidiary still possesses 40 percent of this inventory at the current year-end. Top had established the transfer price based on its normal gross profit rate. What are the consolidated sales and cost of goods sold?
Answer:
Sales Consolidated $1,159,000
COGS consolidated $804,000
Explanation:
The company will need to remove their sales between affiliates, because the goal for the consolidate statment is to represent the group performance with external entities
Sales Top $1,010,000
-sales between afilliates -$310,000
90% Bottom $459,000
Sales Consolidated $1,159,000
COGS top $757,500
-COGS sales between afiliated -$232500 (cross multiply)
90% Bottom $279,000
COGS consolidated $804,000
cross multiply:
1,010,000 generates 757,500 of COGS
310,000 generates 310,000x757,500/1,010,000 = 232,500 COGS
Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 5%, which implies a selling price of 123 ⅜. The straight-line method is used to allocate interest expense. 1.Using the implied selling price of 123 ⅜, what are the issuer's cash proceeds from issuance of these bonds. 2.What total amount of bond interest expense will be recognized over the life of these bonds? 3.What is the amount of bond interest expense recorded on the first interest payment date?
The issuer's cash proceeds from issuing the bonds would be $308,437.50. The total bond interest expense recognized over the life of the bonds would be $141,562.50, and the bond interest expense recorded on the first interest payment date would be $7,078.12.
Explanation:1. To find the issuer's cash proceeds from issuance of these bonds, we multiply the par value by the selling price. A selling price of 123 ⅜ means 123.375 in decimal format, which is equivalent to a selling price of 123.375% of the par value. So, $250,000 x 1.23375 = $308,437.50, which would be the cash proceeds from the bond issuance.
2. The total bond interest expense over its life will consist of the bond interest payments plus the bond discount or less the bond premium. In this case, bond interest payments are made semiannually with an 8% interest rate, so each payment is $250,000 x 0.08/2 = $10,000. Across the 10-year life of the bond, that’s 20 payments, so $10,000 x 20 = $200,000. A bond premium is the extra cash proceeds from selling the bond over its par value, which in this case is $308,437.50 - $250,000 = $58,437.50. So, the total bond interest expense will be $200,000 - $58,437.50 = $141,562.50.
3. Bond interest expense under the straight-line method is found by taking the bond premium of $58,437.50 and spreading it evenly over the 20 interest payment periods. This would mean $58,437.50 / 20 = $2,921.88 in bond premium expense per period. Subtract this from the cash interest payments of $10,000 per period to find the interest expense recognized every half year, $10,000 - $2,921.88 = $7,078.12 for the first interest payment date.
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Sue sells authentic Amish quilts on her website. Suppose Sue expects to sell 3 comma 000 quilts during the coming year. Her average sales price per quilt is $ 275, and her average cost per quilt is $ 150. Her fixed expenses total $ 225 comma 000. Compute her margin of safety a. in units (quilts). b. in sales dollars. c. as a percentage of expected sales.
Answer:
(A) 1,200 Margin of Safety_{units}
(B) 330,000 Margin of Safety_{usd}
(C) Margin of Safety 40% of Sales
Explanation:
(A)
[tex]Sales \: Revenue - Variable \: Cost = Contribution \: Margin[/tex]
275 - 150 = 125 CM per unit
[tex]\frac{Fixed\:Cost}{Contribution \:Margin} = Break\: Even\: Point_{units}[/tex]
[tex]\frac{225,000}{125} = 1,800 = Break\: Even\: Point_{units}[/tex]
[tex]{units \: sold- BEP_{units} = margin \: of \: safety_{units}[/tex]
3,000 - 1,800 = 1,200 Margin of Safety_{units}
HOW? we Calculate the contribution per unit. Then the BEP in units and with that the margin of safety in units.
(B)
[tex]\frac{Contribution Margin}{Sales Revenue} = $Contribution Margin Ratio[/tex]
125/275 = 0.45454545 = 5/11 CM ratio
[tex]\frac{Fixed\:Cost}{Contribution \:Margin \:Ratio} = Break\: Even\: Point_{dollars}[/tex]
225,000/(5/11) = 495,000 BEP USD
[tex]{current \:sales - BEP_{USD} = margin \: of \: safety[/tex]
825,000-495,000 = 330,000 Margin of Safety_{usd}
HOW? we Calculate the contribution ratio by dividing CM over sales. Then the BEP in dollars and with that the margin of safety in dollars.
Important: When posible to avoid rounding errors express as fraction iof posible
(C)
[tex]\frac{current \:sales - BEP_{USD}}{current \:sales} \times 100 = margin \: of \: safety[/tex]
[tex]\frac{330,000}{825,000} \times 100 = margin \: of \: safety[/tex]
Margin of Safety 40%
275-150 = 125
The Break even point225000/125
= 1800
The margin of safety3000-1800
= 1200
The contribution margin125/175 = 0.4545
Break even point225000/0.4545
= $495,049
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Consider the following information to calculate the balance of retained earnings at the end of May. Balance in retained earnings on April 30 $69,000 Dividends paid to stockholders during May $1,000 Revenues for the month of May $12,000 Expenses for the month of May 12,500 Select one: a. $43,500 b. $67,500 .$70,000 d. $94,500
Answer:
b. $67,500
Explanation:
[tex]$$Beginning Retained Earnings$$$+/- Net Income/Loss$$$- Dividends$$$Equals Ending Retained Earning[/tex]
notice that you must calculate the net income before working with retained earnings
12000 revenues - 12,500 expenses = -500 net loss
Now we can work out the Retained Earning Ending Balance:
69,000
-500 Net Loss
-1,000 Dividends
67,500
A project is expected to create operating cash flows of $22,500 a year for three years. The initial cost of the fixed assets is $50,000. These assets will be worthless at the end of the project. An additional $3,000 of net working capital will be required throughout the life of the project. What is the project’s net present value if the required rate of return is 10%?
Answer:
Net Present Value = $58,188 - $53,000 = $5,188
Explanation:
Net Present Value = Net Cash Inflow - Net Cash Outflow
Computing Net Cash Inflow Discounted @10% PV factor for each year = [tex]\frac{1}{(1 + r){^n}}[/tex] Where, r = interest rate = 10%, and n = period that is for year 1 = 1 for year 2 = 2 and for year 3 = 3
Year Cash Inflow PV Factor PV
1 $22,500 0.909 $20,452.5
2 $22,500 0.826 $18,585
3 $22,500 0.751 $16,897.5
3 $3,000 0.751 $2,253 (Working capital will be realized at end of project)
Net Cash inflow = $58,188
Net Cash outflow = Cost of fixed asset + Cost of working capital initially incurred
= $50,000 + $3,000 = $53,000
Net Present Value = $58,188 - $53,000 = $5,188
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: The sales and image of the innovating firm might decline in the market.
Explanation: As only the innovating firm will have the option to sell the product in the market, customers will judge the whole firm on the basis of that product, the overall research done by the innovating firm will result in loss of money and time. On the other hand other firms can use the research done by the innovating firm and can analyze the problem that sustains in the model and just by correcting the flaws detected they will be able to capture a substantial amount of market share in a very small span of time.