Answer:
1. The number of Shares of Preferred Stock issued was
88000/20 = 4400
2. Number of shares outstanding was
4400 - 1000= 3400
3. Average issue price of the preferred stock was
(88000+10340)/4400= 22.35
4. Average issue price of the common stock was
(478400/5200)= 92
5. The treasury stock transaction decreased stock equity by 9100
6. The treasury stock cost (9100/1000)= 9.1
7. Total stockholder Equity is 589,640
Stockholders Equity
Capital stock
Preferred stock 88000
paid in capital in excess of par 10340
Common stock 478400
total paid in capital 576740
Retained Earnings 22000
total paid in capital & Retained earnings 598740
less Treasury stock -9100
total Stockholders Equity 589640
Chemfast Corporation has issued 5,400 preferred shares, with 4,400 shares outstanding. The average issue price is $22.87 for preferred and $102.00 for common stock, while the treasury stock transaction decreased equity by $9,600.
Let's break down the provided data regarding Chemfast Corporation's stockholders' equity to answer the questions:
1. The number of shares of preferred stock issued was:
To find the number of issued preferred shares, use the par value:
Total amount of Preferred Stock / Par Value = $108,000 / $20 = 5,400 shares.
2. The number of shares of preferred stock outstanding was:
Issued shares minus treasury shares:
5,400 issued shares - 1,000 treasury shares = 4,400 outstanding shares.
3. The average issue price of the preferred stock was (per share):
Average issue price includes additional paid-in capital:
(Total Preferred Stock + Additional Paid-in Capital) / Number of issued shares = ($108,000 + $15,390) / 5,400 = $22.87 per share.
4. The average issue price of the common stock was (per share):
Total Common Stock / Number of issued shares = $632,400 / 6,200 = $102.00 per share.
5. The treasury stock transaction increased (decreased) stockholders' equity by:
The purchase of treasury stock decreases equity:
-$9,600 (since no shares have been sold).
6. The treasury stock cost (per share):
Cost of treasury stock / Number of treasury shares = $9,600 / 1,000 = $9.60 per share.
7. Total stockholders' equity is:
Summing up all components:
(Preferred Stock + Additional Paid-in Capital, Preferred + Common Stock + Retained Earnings) - Treasury Stock = ($108,000 + $15,390 + $632,400 + $32,000) - $9,600 = $778,190.
The SML helps determine the risk-aversion level among investors. The flatter the slope of the SMC, the the level of risk aversion. Which of the following statements best describes a shift in the SML caused by increased risk aversion? O The risk-free rate will increase. O The risk-free rate will decrease. O The risk-free rate will remain constant.
Increased risk aversion causes a shift in the SML, and the risk-free rate will decrease.
Explanation:Increased risk aversion leads to a shift in the Security Market Line (SML). The SML represents the relationship between an investment's expected return and its systematic risk (beta). When risk aversion increases, investors become less willing to take on risky investments, which leads to a flatter slope of the SML.
As risk aversion increases, the risk-free rate will typically decrease. The risk-free rate represents the return on a risk-free investment, such as a government bond. When investors are more risk-averse, they prioritize the safety of their investments and are willing to accept a lower return on risk-free assets.
The correct statement is c. The risk-free rate will remain constant.
The Security Market Line (SML) is a representation of the Capital Asset Pricing Model (CAPM) and shows the expected return of an investment as a function of its beta, or systematic risk. The equation for the SML is given by:
[tex]\[ E(R_i) = R_f + \beta_i \times (E(R_m) - R_f) \][/tex]
where:
- [tex]\( E(R_i) \)[/tex] is the expected return on the capital asset.
- [tex]\( R_f \)[/tex] is the risk-free rate of interest.
- [tex]\( \beta_i \)[/tex] is the beta of the investment.
- [tex]\( E(R_m) \)[/tex] is the expected return of the market.
- [tex]\( (E(R_m) - R_f) \)[/tex] is the market premium (the expected market return minus the risk-free rate).
An increase in risk aversion among investors will affect the market premium, not the risk-free rate. The risk-free rate is typically considered to be independent of investor risk preferences because it represents the return on an investment with no risk of financial loss. It is often represented by the yield on short-term government bonds, which are considered to be free of default risk.
When investors become more risk-averse, they demand a higher return for taking on additional risk. This increased risk aversion is reflected in a higher market premium, [tex]\( (E(R_m) - R_f) \)[/tex], because investors require a greater compensation for bearing the risk of the market portfolio. As a result, the SML will become steeper, as the expected return for a given level of beta increases.
To summarize, an increase in risk aversion will:
- Increase the market premium, [tex]\( (E(R_m) - R_f) \)[/tex].
- Make the SML steeper.
- Not affect the risk-free rate, [tex]\( R_f \)[/tex].
Therefore, the risk-free rate will remain constant, and the SML will shift upwards, indicating higher expected returns for all levels of systematic risk (beta).
The complete question is- The SML helps determine the risk-aversion level among investors. The flatter the slope of the SMC, the the level of risk aversion. Which of the following statements best describes a shift in the SML caused by increased risk aversion?
a. The risk-free rate will increase.
b. The risk-free rate will decrease.
c. The risk-free rate will remain constant.
Sushi Corp. purchased and installed electronic payment equipment at its drive-in restaurants in San Marcos, TX, at a cost of $54,000. The equipment has an estimated residual value of $2,700. The equipment is expected to process 271,000 payments over its three-useful Life. Per yea expected payment transactions are 65,040, year 1, 149,050, year 2,56,910, year 3.Required:Complete a depreciation schedule for each of the alternative methods.1. Straight line2. Units-of-production3. Double declining balance
Answer and Explanation:
The preparation of Straight line method , Units of production method and Double declining method is shown below:-
1. Straight line method
Income statement Balance Sheet
Year Depreciation Cost Accumulated Book value
expense depreciation
At acquisition $54,000
1 $17,100 $54,000 $17,100 $36,900
2 $17,100 $54,000 $34,200 $19,800
3 $17,100 $54,000 $51,300 $2,700
Working Note
Depreciation expenses
For 1 Year ($54,000 - $2,700) ÷ 3
= $17,100
For 2 year ($54,000 - $2,700) ÷ 3
= $17,100
For 3 year ($54,000 - $2,700) ÷ 3
= $17,100
2. Units of production method
Income statement Balance Sheet
Year Depreciation Cost Accumulated Book value
expense depreciation
At acquisition $54,000
1 $12,312 $54,000 $12,312 $41,688
2 $28,215 $54,000 $40,527 $13,473
3 $10,773 $54,000 $51,300 $2,700
Working Note
For 1 year ($54,000 - $2,700) ÷ 271,000 × $65,040 = $12,312
For 2 year ($54,000 - $2,700) ÷ 271,000 × $149,050 = $28,215
For 3 year ($54,000 - $2,700) ÷ 271,000 × $56,910 = $10,773
3. Double declining method
Income statement Balance Sheet
Year Depreciation Cost Accumulated Book value
expense depreciation
At acquisition $54,000
1 $36,000 $54,000 $36,000 $18,000
2 $12,000 $54,000 $48,000 $6,000
3 $3,300 $54,000 $51,300 $2,700
Working Note
For 1 year = $54,000 ÷ 3 × 2 = $36,000
For 2 year = $18,000 ÷ 3 × 2 = $12,000
For 3 year = 6,000 - 2,700 = $3,300
Therefore the preparation of depreciation schedule for each of the alternative methods is prepared above.
The Completion of a Depreciation Schedule in the books of Sushi Corp. for the three Depreciation Methods are as follows:
Straight-line Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
Year 1 $54,000 $17,100 $17,100 $36,900
Year 2 54,000 17,100 34,200 19,800
Year 3 54,000 17,100 51,300 2,700
Units-of-production method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
Year 1 $54,000 $12,312 $12,312 $41,688
Year 2 54,000 28,215 40,527 13,473
Year 3 54,000 10,773 51,300 2,700
Double-declining-balance Method:
Year Cost Depreciation Accumulated Net Book
Expense Depreciation Balance
Year 1 $54,000 $36,000 $36,000 $18,000
Year 2 54,000 12,000 48,000 6,000
Year 3 54,000 3,300 51,300 2,700
Data and Calculations:
Cost of equipment = $54,000
Estimated residual value = $2,700
Estimated useful life = 3 years
Depreciable amount = $51,300 ($54,000 - $2,700)
Units-of-production method:
Depreciation rate per transaction = $0.1893 ($51,300/271,000)
Number of payments = 271,000 Depreciation Expense
Year 1 transactions = 65,040 = $12,312 ($0.1893 x 65,040)
Year 2 transactions = 149,050 = $28,215 ($0.1893 x 149,050)
Year 3 transactions = 56,910 = $10,773 ($0.1893 x 56,910)
Straight-line Method:
Annual depreciation expense = $17,100 ($51,300/3)
Double-declining-balance Method:
Depreciation rate = 66.67% (100/3 x 2)
First year depreciation expense = $36,000 ($54,000 x 66.67%)
Second year depreciation expense = $12,000 ($18,000 x 66.67%)
Third year depreciation expense = $3,300 ($6,000 - $2,700)
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Suppose that the total utility from consuming one unit of good Z is 220 utils, the total utility from consuming two units of good Z is 320 utils, and the total utility from consuming three units of good Z is 400 utils. The marginal utility received from consuming the third unit of good Z is ____________.
Answer:
80 utils
Explanation:
Marginal utility (MU) is the extra or additional utility received from consuming an additional unit of a good.
From the question, we have:
MU from consuming the third unit of Z = Total utility from consuming three units of good Z - Total utility from consuming two units of good Z = 400 - 320 = 80 utils
Therefore, the marginal utility received from consuming the third unit of good Z is 80 utils.
Assume that you purchased 140 shares of Misty Company stock for $78 a share, that you received an annual dividend of $1.60 a share, and that you sold your Misty Company stock for $90 a share at the end of one year. What is the total return for your investment? (Ignore commission amounts for this question.)
Answer:
Return (%) = 17.43%
Explanation:
The return on investment is the sum of the dividends earned and capital gains made during the holding period of the investment.
Dividend is the proportion of the profit made by a company which is paid to shareholders.
Capital gains is another type of the return made on an equity investment as a result of increase in the value of the shares. It is difference between the cost of the share and the value at the time of disposal.
Therefore, we can can compute the return on the investment as follows:
Dividend= ($1.60× 140)= $224
Capital gains= (90-78) × 140= $1680
Total dollar return on Investment = $224+ $1680= $1904
Total return in (%) = Return/ cost of shares × 100
= 1904/ (140 × 78) × 100
= 17.43%
Suppose the economy exhibits a large, unexpected increase in productivity growth that lasts for a decade. Policymakers are (quite reasonably) slow to learn what has happened to potential output and incorrectly interpret the increase in output as a boom that leads actual output to exceed potential. Suppose they adjust macroeconomic policy so that the mismeasured level of short-run output is zero.
(a) What happens to the true amount of short-run output Y?
(b) What happens to inflation over time?
Answer:
W
Explanation:
A. What will happen to the true amount of short-run output is that the real output will drop to a new lower level, this implies that recession will be accidentally created by policy markers.
B. There will be a fall in inflation.
Identify the type of responsibility center.
1. The 3M Company manufactures and distributes products under the Post-it, Scotch, Nexcare, and Thinsulate brand names.
2. The J.M. Smucker Company Store and Café is located in Orrville, Ohio. The store sells a variety of company products, while the café offers items made with ingredients from the Smucker's brands.
3. The Fairmont Chicago, The Fairmont Royal York in Toronto, and The Fairmont Orchid in Hawaii are all hotels owned by their parent corporation, Fairmont Hotels & Resorts.
A. Cost
B. Investment
C. Profit
D. Revenue
Answer:
1. The 3M Company manufactures and distributes products under the Post-it, Scotch, Nexcare, and Thinsulate brand names. B. Investment
2. The J.M. Smucker Company Store and Café is located in Orrville, Ohio. The store sells a variety of company products, while the café offers items made with ingredients from the Smucker's brands. C. Profit
3. The Fairmont Chicago, The Fairmont Royal York in Toronto, and The Fairmont Orchid in Hawaii are all hotels owned by their parent corporation, Fairmont Hotels & Resorts. A. Cost
Explanation:
An investment is the allocation of the money for some benefits n the future and a benefit form the investment is return and includes the sales of the property like the products and brand names etc. Profits are the benefits or the advantages that are earned in buying and spending or profit of something like the sales of the company products etc. A cost is an expense that is associated with the group or the individual or the owner of the assets such as to hotels and the corporations.Wyandotte Chemical Company sells various chemicals to the automobile industry. Wyandotte currently sells 30,000 gallons of polyol per year at an average price of $15 per gallon. Fixed costs of manufacturing polyol are $90,000 per year and total variable costs equal $180,000. The operations research department has estimated that a 15 percent increase in output would not affect fixed costs but would reduce average variable costs by 60 cents per gallon. The marketing department has estimated the arc elasticity of demand for polyol to be -2.0.
a. how much would Wyandotte have to reduce the price of polyol to achieve a 15 percent increase in the quality sold?
b. evaluate the impact of such a price cut on
(i) total revenue.
(ii) total costs, and
(iii) total profits.
Answer:
a.–7.5% or -0.075
bi.$35,321
bii.$8,271
biii.$27,050
Explanation:
Wyandotte Chemical Company
a.
ED = %ΔQD / %ΔP
–2.0 = 15% / %ΔP. (15% more sales)
%ΔP = 15% / -2.0
%ΔP = –7.5% or -0.075
b.
Using the arc price formula, the new price will be:
%ΔP = P2 – P1/ [(P2+ P1)/2]
–0.075 = (P2– 15.00)/ [(P2+ 15)/2] -0.075P2– 1.125 = 2P2– 30
-2.075P2= -28.875
P2= $13.92
ΔP = $15 –$13.92 = $1.08
Finding new quantity using the arc price formula:
%ΔQ = Q2 – Q1/ [(Q2+ Q1)/2]
0.15 = (Q2– 30,000)/ [(Q2+ 30,000)/2]
Q2= 34,865 gallons (QUANTITY SOLD)
Therefore impact of the price cut on the following are:
i). On Total Revenue:
TR = P · Q
Before cut price: TR1, = 15(30,000) = $450,000
After cut price: TR2= 13.92(34,865)
= $485,321,
Consequently, ΔTR = $35,321 (change in total revenue)
ii). On Total Cost: we first find the FC and VCBefore price cut:
FC1=$90,000
After price cut: FC2= $90,000
VC per unit = $6.00 – 0.60 = $5.40
VC2= $5.40 × 34,865 = $188,271
TC2= FC + VC = 90,000 + 188,271 = $278,271
ΔTC = $8,271 (change in total cost)
iii). On Total Profits (π):
Before price cut: π, = $450,000 – $270,000 = $180,000
After price cut: π2= $485,321 – $278,271 = $207,050
(ΔTR - ΔTC = Δπ: $35,321 - $8,271 = 27,050)
Sheffield Corp. was organized on January 1, 2021. During its first year, the corporation issued 2,500 shares of $50 par value preferred stock and 150,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2021, $5,500; 2022, $12,300; and 2023, $27,200.
Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and noncumulative.
Answer:
Preferred stock Dividend Common stock dividend
2021 $5500 $0
2022 $6250 $6050
2021 $6250 $20950
Explanation:
Th dividends are distributed by the firm from he Net Income and are first paid to the preferred stockholders. The dividends paid to preferred stockholders remain constant and any dividend available after paying the preferred stockholders is paid to the common stockholders.
The preferred stock is non cumulative which means that if the company fails to pay full dividends or pays no dividends in a particular year to preferred stockholders, those dividends will not accumulate and will not be paid in the next year or whenever the company declares dividends.
The cash dividends that will be paid to Each class of stock for each year will be as follows,
The preferred stock dividends are fixed at = 50 * 0.05 = $2.5 per share
The total dividends on preferred stock is = 2.5 * 2500 = $6250
2021
Total Dividend declared = $5500
Dividend paid to Preferred stockholders = $5500
Dividend paid to Common stockholders = $0
2022
Total Dividend declared = $12300
Dividend paid to Preferred stockholders = $6250
Dividend paid to Common stockholders = 12300 - 6250 = $6050
2023
Total Dividend declared = $27200
Dividend paid to Preferred stockholders = $6250
Dividend paid to Common stockholders = 27200 - 6250 = 20950
Final answer:
To allocate dividends to each class of stock, calculate the preferred stock dividend for each year and allocate any remaining cash dividends to the common stockholders.
Explanation:
To calculate the allocation of dividends to each class of stock, we need to understand the terms and conditions of the preferred stock. In this case, the preferred stock has a par value of $50 and a dividend rate of 5%. However, it is noncumulative, which means that if the corporation skips or fails to pay a dividend in any year, it does not owe any past dividends to preferred stockholders.
Step 1: Calculate the preferred stock dividend for each year.
2021: 2,500 shares x $50 par value x 5% dividend rate = $6,2502022: 2,500 shares x $50 par value x 5% dividend rate = $6,2502023: 2,500 shares x $50 par value x 5% dividend rate = $6,250Step 2: Allocate any remaining cash dividends to the common stockholders.
2021: $5,500 - $6,250 = -$750 (no cash dividend for common stock)2022: $12,300 - $6,250 = $6,050 (cash dividend for common stock)2023: $27,200 - $6,250 = $20,950 (cash dividend for common stock)Therefore, the allocation of dividends to each class of stock is as follows:
Preferred Stock:2021: $6,2502022: $6,2502023: $6,250Common Stock:2021: $02022: $6,0502023: $20,950According to the textbook, it is useful to think of the firm as a(n) _____ composed of a series of distinct activities, including production, marketing, materials management, R&D, human resources, information systems, and the firm infrastructure. A. functional stream B. momentum machine C. inertia chain D. value chain
Answer:
D. value chain
Explanation:
Value chain comprises of the activities that a firm in an industry performs to deliver a product as goods and services for the market this concept has been developed by the porter. At the form level, the value chain is a business unit that states the product pass through distinct activities in order to gain some value. The primary activities include the inbound operations, marketing, and sales functions of the form. While the supporting includes the infrastructure, technology development, human resource management, and procurement of goods and services.Leadership versus management:
1. As a manager seeks to develop her leadership skills, she should be aware that ______.
A) Leadership is primarily about personal efficiency
B) Many different styles of leadership can be effective
C) There is one best leadership style to which all managers should aspire
D) Leadership is first and foremost about establishing a personal bond with employees
Answer:
B) Many different styles of leadership can be effective
Explanation:
Leadership refers to guiding, directing and motivating employees in such a manner so as to induce them to act in a desired way which contributes to fulfillment of organizational goals and group objectives.
Management is a more authoritative function in relation to leadership. A manager and leader both have followers, but a manager's following is owed to his authority and control while a leader creates his followers via personal traits such as charisma or sound judgement.
A manager is accountable for his own performance and his subordinates while there is no clear accountability for a leader, who is more concerned with group goals.
Thus, as a manager seeks to develop her leadership skills, she needs to be aware that leadership is more informal and thrives upon the state of interpersonal relationships, a leader builds with the followers.
There is no single leadership style which can be universally applied. Rather, leadership is situational and a leadership style should be based upon various parameters such as group goals, interests, the dynamics of the team, and the state of interpersonal relationships, etc.
The manager should be aware that many different styles of leadership can be effective. Leadership is not primarily about personal efficiency, nor is it mainly about establishing a personal bond with employees. Moreover, there isn’t one best leadership style for all situations.
Explanation:1. One key aspect of leadership versus management is that the manager seeking to develop her leadership skills should be aware that B) Many different styles of leadership can be effective. This is because different situations, teams, and organizational cultures may require different leadership styles for optimal effectiveness.
2. Contrary to A), leadership is not primarily about personal efficiency, but rather about inspiring and motivating others. Moreover, according to D), while establishing a personal bond with employees can be part of leadership, it is not the primary focus of leadership.
3. Lastly, C) is incorrect as it suggests a one-size-fits-all approach, which doesn't realistically apply to leadership as it should be adaptable based on the circumstances.
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From 1970 to 1998 the U.S. dollar Group of answer choices gained value compared to the Italian lira because inflation was higher in Italy. gained value compared to the Italian lira because inflation was lower in Italy. lost value compared to the Italian lira because inflation was higher in Italy. lost value compared to the Italian lira because inflation was lower in Italy.
Answer:
A. Gained value compared to the Italian lira because inflation was higher in Italy.
Explanation:
The following information has been provided to you by Watts Corporation: Net income $ 175,300 Increase in accounts payable 18,500 Increase in inventory 17,500 Increase in accounts receivable 9,700 Increase in bonds payable 75,000 Amortization of bond premium 5,400 Depreciation expense 21,300 Decrease in income taxes payable 7,300 What is Watts Corporation’s net cash flow from operating activities?
Answer:
$186,000
Explanation:
Cash Flow from operating activities cash generated from to day to day activities of the business. All the cash flows needed to operate the business smoothly.
Cash flows from operating activities
Net Income $175,300
Add: Non cash Expense Adjustments:
Depreciation expense $21,300
Amortization of bond premium $5,400
$26,700
Change in Working Capital:
Increase in inventory ($17,500)
Increase in accounts receivable ($9,700)
Increase in accounts payable $18,500
Decrease in income taxes payable ($7,300)
($16,000)
Net Operating Cash flow $186,000
Cash Flow from operating activities cash generated from to day to day activities of the business. All the cash flows needed to operate the business smoothly.
Depreciation and amortization are non cash expenses which was deducted in the calculation of Net income.
Increase in Liability will provide the cash and increase in assets will use the cash.
Increase in Bond Payable is the change in long term liability which is not included in the working capital and it is the part of the cash flow from financing activities.
Garcia Co. owns equipment that cost $81,200, with accumulated depreciation of $43,000. Garcia sells the equipment for cash. Record the sale of the equipment under the following three separate cases assuming Garcia sells the equipment for (1) $50,300 cash, (2) $38,200 cash, and (3) $33,100 cash.
Answer and Explanation:
The journal entries are as follows
1. For sale of equipment at $50,300
Cash Dr $50,300
Accumulated depreciation $43,000
To Equipment $81,200
To Gain on sale of equipment $12,100
(Being the sale of equipment is recorded)
Since the equipment is sold for $50,300 which increased the assets so cash account is debited along with it the accumulated depreciation is debited and the cost of equipment is credited plus the balancing figure is transferred to gain on sale of equipment because the sale value is more than the book value
2. For sale of equipment at $38,200
Cash Dr $38,200
Accumulated depreciation $43,000
To Equipment $81,200
(Being the sale of equipment is recorded)
Since the equipment is sold for $38,200 which increased the assets so cash account is debited along with it the accumulated depreciation is debited and the cost of equipment is credited
The book value and the sale value is equal so there is no loss or no gain recognized in this case
3. For sale of equipment at $33,100
Cash Dr $33,100
Accumulated depreciation $43,000
Loss on sale of equipment $5,100
To Equipment $81,200
(Being the sale of equipment is recorded)
Since the equipment is sold for $$33,100 which increased the assets so cash account is debited along with it the accumulated depreciation is debited and the cost of equipment is credited plus the balancing figure is transferred to loss on sale of equipment because the sale value is less than the book value
Under its executive stock option plan, National Corporation granted 15 million options on January 1, 2021, that permit executives to purchase 15 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $32 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose that unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2022 and 2023
Answer:
Compensation expense for 2022 and 2023 are $12 million and $16 million respectively.
Explanation:
Total compensation expenses = Number of options × Option fair of value = 15 million × $4 = $60 million
Number of years the option is allowed to be exercised = January 1, 2021 to December 31, 2023 = 3 years
Annual compensation expenses = Total compensation expenses ÷ Number of years the option is allowed to be exercised = $60 million ÷ 3 = $20 million
That shows that $20 million is recognized as compensation expenses in 2021.
As there is a 20% forfeiture of the options due to an unexpected turnover, total compensation expenses reduces to:
New total compensation expenses = $60 million × (100% - 20%) = $48 million
Accumulated expenses in 2022 = ($48 million ÷ 3) × 2 = $32 million
Compensation expenses recognized in 2022 = Accumulated expenses in 2022 - Compensation expenses already recognized in 2021 = $32 million - $20 million = $12 million
Compensation expenses recognized in 2023 = $48 million ÷ 3 = $16 million
Therefore, compensation expense for 2022 and 2023 are $12 million and $16 million respectively.
For 2022, the compensation expense is $0 since the options are not yet vestible. The total value of the options after forfeiture is $57 million. The compensation expense for 2023 needs to be calculated based on the time passed in the vesting period.
Explanation:Under National Corporation's executive stock option plan, 15 million options were granted initially. However, due to unexpected turnover, 5% of these options were forfeited. This means that only 95% of the original options remained, which amounts to 14.25 million options (15 million * 95%). As the fair value of each option is $4, the total fair value of these options sums up to $57 million (14.25 million options * $4 per option).
For 2022, there is no compensation expense as the options are not yet vestible. The compensation expense for these options is recognized over the vesting period which starts on December 31, 2023. Therefore, the compensation expense for 2022 is $0, and for 2023 will need to be calculated based on the proportion of time passed in the vesting period.
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Which of the following would help explain why the aggregate demand curve slopes downward? Group of answer choices An unexpectedly low price level raises the real wage, which causes firms to hire fewer workers and produce a smaller quantity of goods and services. A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate, which stimulates spending on net exports. A higher price level increases real wealth, which stimulates spending on consumption. A lower price level reduces the interest rate, which encourages greater spending on investment goods.
The aggregate demand curve slopes downward due to three effects: The wealth effect, the interest-rate effect, and the foreign exchange effect. These cause an increase in consumption, lower interest rates leading to more investment, and a depreciation of the exchange rate resulting in increased net exports when the price level falls.
Explanation:The aggregate demand curve slopes downward because of three fundamental effects: the wealth effect, the interest rate effect, and the foreign exchange effect.
The wealth effect implies that as price levels decrease, the purchasing power of money increases, leading to an increase in consumption. If, for example, the price of all goods and services fall, consumers can buy more with the same amount of money.
The interest rate effect indicates that as price levels decline, the demand for money reduces leading to lower interest rates. These lower rates encourage more borrowing and hence, lead to increased investment spending.
The foreign exchange effect means a lower price level causes the real exchange rate to depreciate, which stimulates spending on net exports.
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The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: Apr. 13 Wrote off account of Dean Sheppard, $6,530. May 15 Received $3,270 as partial payment on the $8,680 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27 Received $6,530 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31 Wrote off the following accounts as uncollectible (record as one journal entry): Paul Chapman $4,380 Duane DeRosa 3,270 Teresa Galloway 1,960 Ernie Klatt 2,740 Marty Richey 980 Dec. 31 If necessary, record the year-end adjusting entry for the uncollectible accounts. For those amount boxes in which no entry is required, leave the box blank. If an entry is not required, select "No entry" from the dropdown box(es).
Answer:
The year-end adjusting entries for the uncollectible accounts will be:
April 13:
Debit Allowance for doubtful accounts $6,530
Credit Accounts receivable $6,530
(To record write-off of accounts receivable - Dean Sheppard)
May 15:
Debit Cash $3,270
Credit Accounts receivable $3,270
(To record collection on account - Dan Pyle)
Debit Allowance for doubtful accounts $5,410
Credit Accounts receivable $5,410
(To record write-off of accounts receivable - Dan Pyle)
July 27:
Debit Accounts receivable $6,530
Credit Allowance for doubtful accounts $6,530
(To re-establish accounts receivable from Dean Sheppard)
Debit Cash $6,530
Credit Accounts receivable $6,530
(To record collection on account - Dean Sheppard)
December 31:
Debit Allowance for doubtful accounts $13,330
Credit Accounts receivable $13,330
(To record write-off of accounts receivable - Miscellaneous)
Explanation:
April 13: Shipway Company wrote-off account of Dean Sheppard, this means there would be a reduction in both allowance for doubtful accounts and accounts receivable.The receipt on May 15 of $3,270 reduced the accounts receivable but increased cash. However, the write-off of $5,410 caused a reduction in both the allowance account and accounts receivable.When there was a receipt of $6,530 on July 27, the accounts receivable would be reinstated and then adjusted for the cash receipt.Lastly, the write-off of the uncollectible accounts from miscellaneous customers were added up to arrive at $13,330.Supplies on hand at October 31 total $620. 2. Expired insurance for the month is $115. 3. Depreciation for the month is $60. 4. As of October 31, services worth $880 related to the previously recorded unearned revenue had been performed. 5. Services performed but unbilled (and no receivable has been recorded) at October 31 are $320. 6. Interest expense accrued at October 31 is $90. 7. Accrued salaries at October 31 are $1,540.
Answer:
The answer is given below;
Explanation:
It is assumed that supplies in Un-adjusted trial balance were $700
Supplies Expense Dr.$620
Supplies Cr.$620
2.Insurance Expense Dr.$115
Prepaid Insurance Cr.$115
3. Depreciation Expense Dr.$60
Accumulated Depreciation Cr.$60
4. Unearned Service Revenue Dr.$880
Service Revenue Cr.$880
5. Accounts Receivable Dr.$320
Service Revenue Cr.$320
6. Interest Expense Dr.$90
Interest Payable Cr.$90
7.Salaries Expense Dr.$1,540
Salaries Payable Cr.$1,540
One unit of A is made of three units of B, one unit of C and two units of D. B is composed of two units of E and one unit of D. C is made of one unit of B and two units of E. E is made of one unit of F. Items B, C, E and F have one week lead times; A and D have lead times of two weeks. Assume that lot for lot (L4L) lot sizing is used for Items A,B, and F; lots of size 50, 50, and 200 are used for Items C,D, and E, respectively. Items C, E, and F have on hand (beginning) inventories of 10, 50, and 150, respectively; all other items have zero beginning inventory. We are scheduled to receive 10 units of A in week 2, 50 units of E in week 1, and also 50 units of F in week 1. There are no order scheduled receipts. If 30 units of A are required in week 8, use the low level coded bill of materials to find the necessary planned order releases for all components.Note: Simplify data handling to include the receipt of orders that have actually been placed in previous periods, the following six level scheme can be used. (A number of different techniques are used in practice, but the importance issue is to keep track of what is on hand, what is expected to arrive, what is needed, and what size orders should be placed.) One way to calculate the numbers is as follows:Gross requirementsScheduled receiptsProjected available balanceNet requirementsPlanned order receiptPlanned order release
Answer:
Check the explanation
Explanation:
The following are the given details:
Item Leadtime On hand Inventory Lot sizingcriteria Schedulereceipts
A 2 0 L4L 10 in week 2
B 1 0 LAL 0
C 1 10 50 0
D 2 0 50 0
E 1 50 200 50 in week 1
F 1 150 L4L 50 in week 1
The Complete MRP schedule can be seen in the attached images below:
To determine the necessary planned order releases for all components, follow the steps of the Materials Requirements Planning (MRP) process.
Explanation:To determine the necessary planned order releases for all components, we need to follow the steps of the Materials Requirements Planning (MRP) process. Using the low level coded bill of materials, we start with the gross requirements for item A in week 8, which is 30 units. Then, we calculate the net requirements by subtracting the on-hand inventory and scheduled receipts from the gross requirements. Based on this, we can calculate the planned order release for each component by multiplying the net requirements with the lot size for each component and considering the lead time.
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Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales, $169,000 Credit sales, $469,000 Selling and administrative expenses, $129,000 Sales returns and allowances, $49,000 Gross profit, $509,000 Accounts receivable, $295,000 Sales discounts, $33,000 Allowance for doubtful accounts credit balance, $3,100 Flyer prepares an aging of accounts receivable and the result shows that 3% of accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded
Answer:
$5,750
Explanation:
The computation of the balance in the allowance for doubtful accounts after bad debt expense is shown below:
= Account receivable × estimated percentage - credit balance of Allowance for doubtful accounts
= $295,000 × 0.03 - $3,100
= $8,850 - $3,100
= $5,750
By deducting the credit balance from the estimated amount we can find out the balance in the allowance for doubtful accounts
Archie Hamilton is 45 years old and single. Archie had wage income of $55,000. He also had gambling winnings of $1,000. He is not sure if he should itemize or take the standard deduction. Archie paid the following: $5,200 qualifying home mortgage interest. $9,507 for real estate taxes. $5,040 for state income taxes withheld in 2019. Unreimbursed doctor and dentist bills in the amount of $7,000. Unreimbursed prescription drugs for $14. Vitamins for $120. A statement received from his church showing donations made throughout the year totaling $1,200. Receipts for donations of furniture and clothing in good, used condition to Goodwill. The total estimated fair market value is $100. Tax preparation fee of $315 for his 2018 tax return. $50 paid in 2019 on his 2018 balance due state income tax return. $45 investment expense $250 in gambling losses 11. What is the total amount of state income and real estate taxes deductible on Archie's Form 1040, Schedule A
Answer:
$10,000
Explanation:
Given information:
Archie Hamilton
paid $9,507 for real estates taxes.paid $5,040 for state income taxes withheld in 2019From the information above, it can be referred that;
deductions are allowed up to $10,000 for a combination of State income taxes and Real estate taxes as imposed by the U.S Internal Revenue Service.
In our scenario, the total amount of State income and Real estate taxes deductible on Archie's Form 1040, Schedule A is $10,000 for the year.
Answer:
$5,000
Explanation:
Even though Archie's state income and real estate property taxes are much higher, $9,507 + $5,040 = $14,547, his deductions are capped to only $5,000 per year (he is single) or $10,000 if he was married filing jointly.
The Tax Cuts and Jobs Act limited the amount that you can deduct from state taxes. Before 2018 the deductions were not limited to a certain amount.
Minder Industries stock has a beta of 1.08. The company just paid a dividend of $.65, and the dividends are expected to grow at 4 percent. The expected return on the market is 10.5 percent, and Treasury bills are yielding 3.4 percent. The most recent stock price for the company is $72. a. Calculate the cost of equity using the DCF method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations and enter your answer as a percent rounded to
Answer:
a. Under DCF method, the cost of equity is 4.945
b. The cost of equity under SML is 11.07%
Explanation:
a.
The DCF method values the stock based on the present value of the future expected dividends. The price per share for a stock whose dividends are expected to grow at a constant rate is calculated as follows,
P0 = D0 * (1+g) / r - g
We, know the price today, the growth rate in dividends and D0. Plugging in these values in the formula, we calculate r to be,
72 = 0.65 * (1+0.04) / (r- 0.04)
72 * (r-0.04) = 0.676
72r - 2.88 = 0.676
72r = 0.676 + 2.88
r = 3.556 / 72
r = 0.04938 or 4.938% rounded off to 4.94%
b.
The SML approach is used to calculate the required rate of return or cost of equity of a stock based on the stock's beta, the risk free rate and the market risk premium. The formula for r under this method is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate or t bills raterM is the expected return on marketr = 0.034 + 1.08 * (0.105 - 0.034) = 0.11068 or 11.068% rounded off to 11.07%
Super Saver Groceries purchased store equipment for $40,000. Super Saver estimates that at the end of its 10-year service life, the equipment will be worth $3,000. During the 10-year period, the company expects to use the equipment for a total of 10,000 hours. Super Saver used the equipment for 1,200 hours the first year. Required: Calculate depreciation expense of the equipment for the first year, using each of the following methods. (Do not round your intermediate calculations.) rev: 04_08_2019_QC_CS-164618 1. Straight-line.
Answer:
Annual depreciation= $3,700
Explanation:
Giving the following information:
Super Saver Groceries purchased store equipment for $40,000. Super Saver estimates that at the end of its 10-year service life, the equipment will be worth $3,000.
To calculate the depreciation expense under the straight-line method, we need to use the following formula:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (40,000 - 3,000)/10= $3,700
On November 3, the spot price for cotton was $0.81/lb., and the February futures price was $0.83/lb. On November 3, Levi Strauss sold 200 futures contracts on the commodity exchange at $0.83/lb. for delivery in February. Each contract was for 25,000 lbs. Levi Strauss designated these contracts as a cash flow hedge of 5 million lbs. of current inventory which it expected to sell in February. The average spot of this inventory when purchased was $0.58/lb. Levi Strauss properly documented the hedge and employed hedge accounting. On November 30, the company’s fiscal year end, the February commodity exchange futures price was $0.85/lb.If, on November 30, Levi Strauss concluded that the hedge was 100% effective, it should record the hedged cotton inventory in the November 30 balance sheet atA: $4,350,000B: $4,250,000C: $3,000,000D: $2,900,00
Answer:
C : $3,000,000
Explanation:
The Levi Strauss has sold futures at the price of $0.83/lb. The spot price for cotton is $0.81/lb. The difference between spot and exchange price is 0.02/lb ($0.83/lb - $0.81/lb). On November 30, The future prices of cotton raised to 0.85/lb. The average spot of the inventory when purchased was 0.58/lb. To record the inventory in balance sheet we will use average spot plus difference of spot and exchange price $0.58/lb + $0.02/lb = $0.60/lb. The total amount which will be reported in balance sheet will be 200 futures contacts * 25,000lbs * $060/lb = $3,000,000.
Final answer:
Levi Strauss should record the hedged inventory at the lower of cost or market, which is the original cost of D. $2,900,000 for the 5 million lbs. of cotton, despite the increase in futures price to $0.85/lb.
Explanation:
To calculate the proper balance sheet value of Levi Strauss's cotton inventory hedged by futures contracts, we need to consider the change in futures price.
On November 3, Levi Strauss sold 200 futures contracts at the price of $0.83/lb. for a total of 5 million lbs., which implies a commitment to sell cotton at a future value of $4,150,000 (5,000,000 lbs. x $0.83/lb.). By November 30, the futures price had risen to $0.85/lb., representing an unrealized gain on the futures contracts of $0.02/lb., or a total of $100,000 for the 5 million lbs. (5,000,000 lbs. x $0.02/lb.).
This unrealized gain would be recognized in other comprehensive income and would increase the value of the hedged inventory on the balance sheet to the lower of cost or market.
Since the original cost of the inventory was $2,900,000 (5,000,000 lbs. x $0.58/lb.) and the market value through the gain on the hedge is $4,250,000 ($4,150,000 from the future contracts plus $100,000 gain), Levi Strauss should record the hedged inventory at $2,900,000 as it is lower than the hedged market value.
Therefore, the correct answer is D: $2,900,000.
Choose the appropriate stage of the venture life cycle in which the following activities would occur.
Transition from one-person leadership to team management leadership
New-product development
Search for capital Increased competition
Venture assessment Attempts to acquire other firms
Consumer indifference to the entrepreneur's goods or services
Accumulation of resources
Major changes in entrepreneurial strategy
Development of an effective entrepreneurial team
Answer:
Transition from one-person leadership to team management leadership - GrowthNew-product development - Innovation or declineSearch for capital - Start-upIncreased competition - StabilizationVenture assessment - New-Venture DevelopmentAttempts to acquire other firms - Innovation or declineConsumer indifference to the entrepreneur's goods or services - StablizationAccumulation of resources - New-Venture DevelopmentMajor changes in entrepreneurial strategy - GrowthDevelopment of an effective entrepreneurial team - Start-upWhile it may not be possible to make the receiver happy when you deliver bad news, you can reduce bad feelings by structuring your message in a sensitive way. Most negative messages take an indirect approach, using a buffer, providing reasons, delivering the bad news with empathy, and closing pleasantly.
What buffering technique are you using if you show in your opening that you care and are concerned?
A. Best news
B. Understanding
C. Facts
Answer:
C. Facts
Explanation:
When offering bad news to a person it is important to reduce the negative effect of the news.
Buffering is the method by which effect of bad news is communicated without causing a negative reaction.
In opening the best technique is to present facts. This makes the receiver reason with the logic of the bad news.
For example if a staff is to be laid off. A good opening can be to state the need for the business to reduce staff in order to survive a trying economic climate.
Polo Publishers purchased a multi-color offset press with terms of $40,000 to be paid at the date of purchase, and a noninterest-bearing note requiring payment of $30,000 at the end of each year for five years. The interest rate implicit in the purchase contract is 11%. Polo would record the asset at:
Answer:
$150,876.91
Explanation:
To calculate, the present value of an ordinary annuity formula is used as follows:
PV = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] …………………………………. (1)
Where;
PV = Present value of the payments =?
P = yearly payment = $30,000
r = interest rate = 11% = 0.11
n = number of years = 5
Substitute the values into equation (1) to have:
PV = $30,000 × [{1 - [1 ÷ (1+0.11)]^5} ÷ 0.11] = $110,876.91
Amount to record = $40,000 + $110,876.91 = $150,876.91
Final answer:
To calculate the recording price of the multi-color offset press purchased by Polo Publishers, we add the initial payment to the present value of the annuity payments, discounted using the implicit 11% interest rate.
Explanation:
The valuation of Polo Publishers' multi-color offset press purchase involves recording the acquisition by calculating the present value of the noninterest-bearing note payments at the implicit interest rate of 11%. The purchase includes a cash payment of $40,000 at the time of purchase and a series of five annual payments of $30,000 each. To record the asset, we need to discount these future payments back to their present value using the implicit interest rate of 11%.
Using present value tables or a financial calculator, each $30,000 payment will be multiplied by the present value factor for an annuity at 11% for five years. This sum, plus the initial $40,000 cash payment, will give us the total recording price of the asset. For instance, if the present value factor at 11% for five years is 3.696, the calculation for the note would be $30,000 x 3.696 = $110,880. Adding the initial $40,000 payment gives us a total of $150,880 as the recording price for the asset.
This line consists of single-machine stations and is almost balanced (i.e. station rates are nearly equal). A manufacturing engineer has estimated the bottleneck rate of the line to be 1,000 fans per 20-hour day and the raw process time to be 50 minutes. The line has averaged 850 fans per 20-hour day, and the cycle time has averaged 2.8 hours. What would you estimate the WIP level to be
Answer:
119 fans
Explanation:
The computation of the estimated WIP is shown below:
= Average fans per hour × average hours
where,
Average fans per hour is
= 850 fans ÷ 20 hours
= 42.5 fans
And, the average hours is 2.8
So, the estimated WIP is
= 42.5 × 2.8
= 119 fans
We assume we have to find out the average estimated WIP level
A boat, costing $108,000 and uninsured, was wrecked the very first day it was used. It can either be disposed of for $11,000 cash and be replaced with a similar boat costing $110,000, or rebuilt for $98,000 and be brand new as far as operating characteristics and looks are concerned. A relevant cost analysis of the decision to replace the boat shows:
A cost equivalence between the two decision options.
An $11,000 net advantage associated with the decision to fix the old boat.
A $1,000 cost advantage associated with the decision to fix the old boat.
A $21,000 cost advantage associated with the decision to fix the old boat.
A $2,000 cost advantage associated with the decision to purchase a new boat.
Answer:
A $1,000 cost advantage associated with the decision to fix the old boat.
Explanation:
According to the scenario, the computation of the given data are as follows:
Dispose amount = $11,000
Replacement boat = $110,000
Rebuilt of boat = $98,000
So, we can calculate the cost advantage by using following formula:
Cost of new boat = replacement boat amount - Dispose amount
= $110,000 - $11,000
= $99,000
So, cost advantage = Cost of new boat - Rebuilt of boat
= $99,000 - $98,000
= $1,000
So, this shows that rebuilt the old boat is preferable because it will cost $1000 less.
Hence, $1,000 cost advantage associated with the decision to fix the old boat.
Last year, a toy manufacturer introduced a new toy truck that was a huge success. The company invested $4.50 million in a plastic injection molding machine (which can be sold for $4 million immediately) and $300,000 in plastic injection molds specifically for the toy (not valuable to anyone else). The cost of labor and materials necessary to make each truck runs about $4. This year, a competitor has developed a similar toy, significantly reducing demand for the toy truck. Now, the original manufacturer is deciding whether it should continue production of the toy truck. If the estimated demand is 100,000 trucks, the break-even price is $ per truck.
Answer:
Break-even price = $7
Explanation:
The break-even price is the price at which the the total contribution from the sale is equal to the fixed cost of $300,000.
(x- 4)× 100,000 = 300,000
100,000X - 400,000 = 300,000
100,000X = 300,000 + 400,000
x= 700,000/100,000
X = $7
Break-even price = $7
The break-even price per truck is $48.
Explanation:In order to determine the break-even price per truck, we need to calculate the total cost of production and divide it by the estimated demand. The total cost of production includes the cost of the plastic injection molding machine, the plastic injection molds, and the cost of labor and materials for each truck.
The total cost of production would be the sum of the initial investment in the machine ($4.5 million) minus the immediate resale value of the machine ($4 million), plus the cost of the molds ($300,000), and the cost of labor and materials for 100,000 trucks ($4 per truck * 100,000 trucks). This gives us a total cost of production of $4.8 million.
Dividing the total cost of production by the estimated demand of 100,000 trucks, we get a break-even price of $48 per truck.
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A quality inspector for Alpha-Beta Co. is concerned about the quality of the batch of several thousand blank DVD disks which his company produced this week and is preparing to ship. If the cost of replacing a defective DVD disk once it has been shipped is $2.50, while the cost for 80% inspection prior to shipment is $0.32 each, while the cost of 100% inspection prior to shipment is $0.40 each, at what point is she indifferent between 100% inspection and shipment without inspection?
Answer:
at point of 25% she indifferent between 100% inspection and shipment without inspection.
Explanation:
Let say x be the number of defects
N be units shipped
At no sampling the replacement cost is equal to inspection cost is:
2.50x = 0.4N
x/N = 0.4/2.50
= 0.16
The defect% is then given by:
= x/N*100
= 0.25*100
= 25%
Therefore, at point of 25% she indifferent between 100% inspection and shipment without inspection.