Considering an 8% annual rate of return, Walt should not pay more than $39,315 for this investment, which is the sum of the present values of the investment returns over the seven-year period.
Explanation:In order to ascertain how much Walt should pay for an investment that provides varying returns for seven years with an intended annual rate of 8%, we need to calculate the present value of all the future investments. This cash flow is discounted to the present value using the formula: PV = FV / (1 + r)^n where FV is future value, r is the interest rate and n is the number of periods.
Year 1: $12,500 / (1 + 0.08)^1 = $11,574Year 2: $10,000 / (1 + 0.08)^2 = $8,610Year 3: $7,500 / (1 + 0.08)^3 = $5,887Year 4: $5,000 / (1 + 0.08)^4 = $3,675Year 5: $2,500 / (1 + 0.08)^5 = $1,735Year 6: $0Year 7: $12,500 / (1 + 0.08)^7 = $7,834By summing up these calculated values, Walt should not pay more than $39,315 for this investment given his expectation of an 8% return.
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The following selected information is from Princeton Company’s comparative balance sheets. At December 31 2017 2016 Common stock, $10 par value $ 120,000 $ 110,000 Paid-in capital in excess of par 577,000 347,000 Retained earnings 323,500 297,500 The company’s net income for the year ended December 31, 2017, was $53,000. 1. Complete the T-accounts to calculate the cash received from the sale of its common stock during 2017.
Answer:
cash 240,000 debit
common stock 10,000 credit
additional paid-in 230,000 credit
Explanation:
Common stock 2017 - Common stock 2016 = Δ2017
additional paid-in 2017 - additional paid-in 2016 = Δ2017
120,000 - 110,000 = 10,000
577,000 - 347,000 = 230,000
Total increase 240,000
The cash received from the sale of common stock during 2017 is calculated by the increase in common stock ($10,000) and the increase in paid-in capital in excess of par ($230,000), totaling $240,000.
To calculate the cash received from the sale of common stock during 2017, we need to analyze the changes in the common stock account. The comparison of the common stock values between 2016 and 2017 shows an increase from $110,000 to $120,000, which means the company issued more stock. However, the paid-in capital in excess of par also increased from $347,000 to $577,000. We can calculate the total cash received by summing the increase in common stock and the increase in paid-in capital in excess of par.
The increase in common stock is $120,000 - $110,000 = $10,000.
The increase in paid-in capital in excess of par is $577,000 - $347,000 = $230,000.
Therefore, the cash received from the sale of common stock is $10,000 + $230,000 = $240,000 in 2017.
SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 4,000 of these meals using 960 direct labor-hours. The company paid these direct labor workers a total of $9,600 for this work, or $10.00 per hour. According to the standard cost card for this meal, it should require 0.25 direct labor-hours at a cost of $9.75 per hour. Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 4,000 meals? How much does this differ from the actual direct labor cost?
Final answer:
According to the standards, the direct labor cost should have been $9,750 to prepare 4,000 meals. The actual direct labor cost was $9,600, which is $150 less than the standard direct labor cost.
Explanation:
To calculate the direct labor cost that should have been incurred to prepare 4,000 meals, we can multiply the standard direct labor-hours per meal by the number of meals. According to the standard cost card, 1 meal should require 0.25 direct labor-hours, so 4,000 meals would require 1,000 direct labor-hours (4,000 x 0.25). Next, we can multiply the standard labor cost per hour by the number of direct labor-hours to get the standard direct labor cost. According to the standard, the labor cost per hour is $9.75, so the standard direct labor cost would be $9,750 (1,000 x $9.75).
To find the difference between the standard and actual direct labor costs, we subtract the actual direct labor cost from the standard direct labor cost. The actual direct labor cost is given as $9,600. Subtracting this from the standard direct labor cost of $9,750 gives us a difference of -$150. This means that the actual direct labor cost is $150 less than the standard direct labor cost.
Under the FIFO method, unit costs would: a) result from costs in the beginning inventory being added in with current period costs. b) contain some element of cost from the prior period. c) not contain some elements of cost from the prior period. d) not include costs incurred to complete beginning inventory.
Answer:
a) result from costs in the beginning inventory being added in with current period costs.
Explanation:
Because the FIFO means First In First Out
the beginning inventory AKA cost from prior period will be include to determinate the cost of the units that made first in. Then the remaining cost added to finish this units will be assing to calculate the cost of units under FIFO
example
100 units BI WIP $5,000
cost added to finish this units $10,000
Total cost $15,000
units cost $15,000/100 = $150
If there are more units finsihed during the period, they may have a diferent units cost.
Cabell Products is a division of a major corporation. Last year the division had total sales of $25,540,000, net operating income of $1,277,000, and average operating assets of $7,151,200. The company's minimum required rate of return is 16%. The division's return on investment (ROI) is closest to:
Answer:
The divisions return on investment would be close to 17.86%
Explanation:
Return on investment is a very useful financial ratio which is used to take out how much of the benefit or profit , an investor would get in relation to the investment made by them.
FORMULA FOR CALCULATING RETURN ON INVESTMENT =
\frac{NET \: OPERATING \: INCOME}{TOTAL \: OPERATING \: ASSETS}
given - operating income = $1277,000
total operating assets = $7151,200
= \frac{\$ 1,277,000}{\$ 7,151,200} \times 100
= 17.857%
= 17.86% ( APPROXIMATELY )
View each of the below-listed provisions that are often contained in bond indentures alone. Which of these provisions would tend to REDUCE the yield to maturity that investors would otherwise require on a newly issued bond?1. Fixed assets are used as security for a bond.2. A given bond is subordinated to other classes of debt.3. The bond can be converted into the firm's common stock.4. The bond has a sinking fund.5. The bond has a call provision.6. The indenture contains covenants that restrict the use of additional debt.A. 1, 3, 4, 6B. 1, 4, 6C. 1, 2, 3, 4, 6D. 1, 3, 4, 5, 6E. 1, 2, 3, 4, 5, 6
Final answer:
Provisions in a bond indenture impact the risk and therefore the yield required by investors. Provisions that secure the debt, allow conversion to stock, provide for a sinking fund, or limit additional debt issuance tend to reduce the required yield.
Explanation:
Bonds are debt securities that provide an avenue for corporations to raise capital. Bond provisions influence investor perception of risk, which in turn affects the yield to maturity that investors require. The yield to maturity is the total return anticipated on a bond if the bond is held until it matures. Let's examine the given bond provisions and their potential impact on yield to maturity:
Fixed assets as security (1) provide a guarantee which reduces risk, thereby likely reducing the yield required by investors.A subordinated bond (2) ranks lower in claim than other debts in the case of a liquidation, increasing risk and thus, typically requiring a higher yield.A convertible bond (3) allows investors to convert the bond into stock, often above the bond's nominal value, which is an attractive option that can reduce the required yield.A bond with a sinking fund (4) provides for periodic repayment before maturity, reducing risk and potentially the yield required.A bond with a call provision (5) can be retired early by the issuer, often in a lower interest rate environment, which increases risk for investors and the expected yield.Restrictive covenants (6) limit the issuer's ability to take on additional debt, protecting the bondholder's interests and possibly reducing the yield required.Considering the provisions that would tend to reduce the yield to maturity, we can conclude that options 1, 3, 4, and 6 would have this effect. Therefore, the correct choice of provisions is A. 1, 3, 4, 6.
In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2017, B & B's inventories were $32.6 million (FIFO). B & B's records indicated that the inventories would have totaled $24.1 million at December 31, 2017, if determined on an average cost basisIgnoring income taxes, what journal entry will B & B use to record the adjustment in 2018?
Answer: The journal entry is as follows:
Explanation:
Given that,
Barton and Barton company's inventories were $32.6 million at December 31st, 2017
But the records of B and B's company indicated that inventories would have totaled $24.1 million December 31st, 2017
Therefore, the journal entry for the adjustment in the records of B and B's company in 2018 is as follows:
Debit Credit
Retained Earnings A\c $8.5 million
To Inventory $8.5 million
Retained Earnings = $32.6 million - $24.1 million
= $8.5 million
Final answer:
To adjust for the change from FIFO to average cost method, B & B would debit the Inventory Valuation Adjustment Account and credit the Inventory Account by $8.5 million, reducing inventory value on the balance sheet.
Explanation:
The Barton and Barton Company switched inventory valuation from the FIFO (First-In, First-Out) method to the average cost method. Due to this change, the inventory's value also changed. As of December 31, 2017, using FIFO, inventory was valued at $32.6 million, but at the same time, had B & B used the Average Cost method, the inventory would be valued at $24.1 million. This indicates an $8.5 million overstatement in its inventory value using FIFO.
The journal entry to record the adjustment in 2018 would be as follows:
Debit Inventory Valuation Adjustment Account for $8.5 millionCredit Inventory Account for $8.5 millionThis entry would reduce the inventory value on the balance sheet to reflect the valuation change. Ignoring income taxes, there are no associated tax effects to consider in this journal entry.
The fire chief of a medium-sized city has estimated that the initial cost of a new fire station will be $4 million. Annual upkeep costs are estimated at $300,000. Benefits to citizens of $550,000 per year and disbenefits of $90,000 per year have also been identified. Use a discount rate of 4% per year to determine if the station is economically justified by the conventional B/C ratio.
Answer: So B/C ratio = PW(B)/PW(C) = [tex]\frac{11500000}{11500000}[/tex]= 1
So economically there is no befit and no loss of new fire station.
Explanation:
Net annual benefit B = Benefit-Disbenefit = 550000-90000 = 460000
I = 4000000
O&M(Annual keep up cost) = 300000
i = 0.04
As n is not given so assuming this project to be perceptual.
P.V of perpetuity = [tex]\frac{A}{i}[/tex]
Now;
PW(B)=tex]\frac{460000}{0.04}[/tex] = $11500000
PW (C) = I +PW[tex]\times[/tex](O&M) = [tex]4000000+\frac{300000}{0.04}[/tex] = $11500000
So B/C ratio =[tex]\frac{PW(B)}{PW(C)}[/tex]=[tex]\frac{11500000}{11500000}[/tex] = 1
So economically there is no befit and no loss of new fire station.
On January 1, Puckett Company paid $2.01 million for 67,000 shares of Harrison’s voting common stock, which represents a 40 percent investment. No allocation to goodwill or other specific account was made. Significant influence over Harrison is achieved by this acquisition and so Puckett applies the equity method. Harrison distributed a dividend of $2 per share during the year and reported net income of $595,000. What is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31?
Answer:
The $2,114,000 is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31.
Explanation:
Given that,
Purchase amount in respect for 67,000 shares = $2,010,000
Investment percentage = 40%
Dividend = $2 per share
Net income = $595,000
Through these information which is shown above, we can calculate the balance in Investment in Harrison account. The steps for computation is shown below:
Step 1: Purchase amount
Step 2: Add Investment percentage income = Net income × Investment percentage
Step 3 : Less Dividend (Number of Shares × Dividend per share)
Now,
Purchase amount = $2,010,000
Add - $595,000 × 40% = $238,000
Less - 67000 × $2 = $134,000
So, the final amount is $2,114,000
Thus, the $2,114,000 is the balance in the Investment in Harrison account found in Puckett’s financial records as of December 31.
Wiley Consulting purchased $7,800 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.
Answer:
Supplies 7,800 debit
Cash 7,800 credit
Explanation:
It will increase their supplies valuation by the amount purchased, the suppliesexpense will be recognize over time by comparing the book value with the current existence at the end of the period.
Becasue it was paid, you use cash account.
A firm has fixed costs (FC) of $10,000. Its variable costs (VC) to produce 5,000 widgets are $2,000 and to produce 10,000 widgets are $3,000. What is the firm's total cost (TC) to produce 5,000 widgets?
Answer:
The firm's total cost (TC) to produce 5,000 widgets is $12,000.
Explanation:
Total Cost : It is the sum of Fixed cost and Variable cost
where,
Variable cost is the cost which is change when production level changes. while, fixed cost is the cost which is fixed whether production level change or not.
The following information is given in the question:
1. Fixed cost = $10,000
2. Variable cost for 5,000 widgets = $2,000
3. Variable cost for 10,000 widgets = $3,000
The formula for calculating Total Cost to produce 5,000 widgets is shown below:
Total cost = Fixed cost + Variable cost
= $10,000 + $2,0000
= $12,000
Since, the question is asking for only $5,000 widgets and in the given question, the variable cost is given for $5,000 widgets is $2,000 . So, this variable cost is used and for the fixed cost the amount will be same.
Thus, The firm's total cost (TC) to produce 5,000 widgets is $12,000.
Jim is beginning his research on franchise businesses in order to find one that meets his needs. A quick, easy way to get general information is to
A. ask a local franchise owner. B. check the Yellow Pages. C. look up Internet sites. D. call the corporate headquarters 17.
Answer:
Jim is beginning his research on franchise businesses in order to find one that meets his needs. A quick, easy way to get general information is to look up Internet sites - C.
Answer:
The correct answer is letter "C": look up Internet sites.
Explanation:
The internet offers diverse information about different topics at an incredibly fast speed. In recent years, many web pages allow random users to rate or give comments on certain topics, individuals or institutions so others can have a general idea of what they could deal with.
In that case, if Jim is looking for franchise businesses, it is not a bad idea to made research on the internet but he will need to dive into some of the information he finds to obtain a consistent idea of them.
Assume the demand function for basketballs is given by QD = 150 −3P + 0.1I, where P = price of a basketball, and I = average income of consumers. Also, assume the supply of basketballs is given by QS = 2P. If the market for basketballs is perfectly competitive, and the average income is equal to $1,500, what is the equilibrium price and quantity? What if a 20 percent income tax is introduced?
Answer: (1) Equilibrium price = 60 and Equilibrium quantity = 120, when I = $1500.
(2) Equilibrium price = 54 and Equilibrium quantity = 108, when I = $1200.
Explanation:
(1) When Average income (I) = $1500
At equilibrium, QD = QS
150 - 3p + 0.1I = 2p
150 - 3p + 0.1 × 1500 = 2p
5p = 300
p = [tex]\frac{300}{5}[/tex]
p = 60
q = 2p ⇒ 2 × 60 = 120
Hence, p and q are equilibrium price and equilibrium quantity, respectively.
(2) If 20% income tax is introduced then Average income (I) = $1500 - 20% of $1500 ⇒ $1500 - $300 = $1200
At equilibrium, QD = QS
150 - 3p + 0.1I = 2p
150 - 3p + 0.1 × 1200 = 2p
5p = 270
p = [tex]\frac{270}{5}[/tex]
p = 54
q = 2p ⇒ 2 × 54 = 108
Hence, p and q are equilibrium price and equilibrium quantity, respectively.
Final answer:
To calculate the equilibrium price and quantity for basketballs, we set the demand function equal to the supply function, using the provided income. Initially, with no tax, the equilibrium price is $60, and the quantity is 120 basketballs. Introducing a 20% income tax affects consumers' income and demand, thereby potentially adjusting the equilibrium again.
Explanation:
To find the equilibrium price and quantity for basketballs, given the demand function QD = 150 −3P + 0.1I where I is income ($1500), and the supply function QS = 2P, we set QD equal to QS to solve for the equilibrium. Plugging the average income value into the demand function yields QD = 150 −3P + 0.1(1500), simplifying to QD = 150 −3P + 150. Setting this equal to the supply function gives 150 −3P + 150 = 2P, leading to 5P = 300, so P = 60. The equilibrium quantity (Q) is found by plugging the price back into either the supply or demand equation, resulting in QS = 2(60) = 120, thus, the equilibrium price is $60, and the equilibrium quantity is 120 basketballs.
Introducing a 20 percent income tax on the average income of $1500 reduces this to $1200 (after tax income). Re-calculating with the new income in the demand function gives QD = 150 −3P + 0.1(1200) or QD = 150 −3P + 120. Setting this equal to the supply again gives a new equilibrium. However, without explicit calculations for the new equilibrium with the tax, we understand the process involves substituting the adjusted income into the demand function, solving for P and Q as before. The introduction of the tax essentially shifts the demand curve leftward, likely lowering the equilibrium quantity and potentially changing the equilibrium price depending on the degree of the shift.
Stazia Inc is a software company that intends to collaborate with Softron Inc, another multinational company. Steve, the chief executive officer of Stazia, decides to discuss the company's objectives with Jared, the chief executive officer of Softron. Steve seeks to obtain information about the services Softron offers and the quality process it follows. Steve intends to gather maximum information from this discussion including nonverbal cues. In this scenario, which of the following channels of communication should Steve use? A) An email message B) A telephone conversation C) A face-to-face meeting D) A voice mail
Answer: option C
Explanation: A face to face interaction between the concerned parties will be the best alternative in this case as Steve wants to have maximum information and also non verbal clues. In Email message and voice mail there might be a lack of information as the transmission and transfer of messages will be slow and also there will be no nonverbal clues. In case of telephone conversation the information transmission will be fast but the problem regarding non verbal clues will still be there, hence, face to face conversation is the best alternative.
The correct answer is C. A face-to-face meeting
Explanation:
A face-to-face meeting is one of the most common communication forms used in business, this implies participants meet in the same space and at the same time and therefore interaction occurs directly. This type of interaction is more beneficial than email messages, telephone conversation or voice mails in terms of understanding both the verbal and non-verbal information.
Indeed, only in a face-to-face meeting, you can see the gestures, movements, and position of the other person which often reveals more than his/her words. Due to this, Steve should use a face-to-face meeting because this channel would allow him to gather more information than other channels as it is the only one that would allow him to understand nonverbal cues.
Clothing Emporium was organized on January 1, 2018. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2018, Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. What is total paid-in capital at the end of 2018? a. $370,000. b. $420,000. c. $320,000. d. $470,000.
Answer:
a. $370,000.
Explanation:
The first would be to define additional paid-in that would be the amount paid over face value if the face value is 100 and the share at issued at 105 then there is a 5$ additional paid-in per share.
With that in noticed we are going to check the transaction during 2018:
30,000 at $7 ($5 face value $2 additional paid in)20,000 at $8 ($5 face value $3 additional paid in)Common stock
we got 50,000 issued with their face of $5 = 250,000
additional paid-in capital would be
30,000 shares at $2 = $60,000
and 20,000 shares at $3 = $60,000
additional paid-in $120,000
The total paid-in would be
250,000 common stock
+ 120,000 additional paid-in
Equal to 370,000
C Co. reported a retained earnings balance of $320,000 at December 31, 2017. In September 2018, C determined that insurance premiums of $69,000 for the three-year period beginning January 1, 2017, had been paid and fully expensed in 2017. C has a 35% income tax rate. What amount should C report as adjusted beginning retained earnings in its 2018 statement of retained earnings?
Answer:
C should report $349,900 as the adjusted beginning retained earnings in its 2018 statement of retained earnings.
Explanation:
We are given the retained earnings for 2017 as $320,000, and in September of 2018 C realized that the insurance premium of $69,000 which had been paid on 1 January , 2017 was for 3 years , which means 2/3 of $69,000 was not for the year 2017 and it is now prepaid .
Amount prepaid = 2/3 x $69,000
= $46,000
But it is given that the income tax rate is 35% , so of $46,000 C will adjust or add only 65% of 46,000 in he earnings because 35% would be deducted,
= $46,000 - $46,000 x 35%
= $46,000 - $16,100
= $29,900
So we will add this amount with the $320,000,
therefore adjusted beginning retained earnings would be $349,900.
hich of the following statements is CORRECT? a. A corporation is a legal entity created by a state, and it has a life and existence that is separate from the lives and existence of its owners and managers. b. A hostile takeover is the main method of transferring ownership interest in a corporation. c. Limited liability is an advantage of the corporate form of organization to its owners (stockholders), but corporations have more trouble raising money in financial markets because of the complexity of this form of organization. d. Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organization. e. Although the stockholders of the corporation are insulated by limited legal liability, the legal status of the corporation does not protect the firm's managers in the same way, i.e., bondholders can sue the firm's managers if the firm defaults on its debt.
The correct answer is a, stating that a corporation is a legal entity separate from its owners and managers. Hostile takeovers are not the primary method of ownership transfer, and the ability to raise funds is an advantage, not a disadvantage, of corporations. Limited liability applies to stockholders, but not necessarily to firm managers in all situations.
Explanation:The correct statement is a. A corporation is indeed a legal entity created by a state and has a life and existence that is separate from the lives and existence of its owners and managers. This means that although the individual shareholders own parts of the company, the corporation itself is recognized by law as a separate entity with its own rights and liabilities.
Hostile takeovers are not the main method of transferring ownership interest in a corporation; they are just one of several methods, and not the most common. The ability to raise funds is actually an advantage of the corporate form of organization because corporations can issue stock or bonds, not a disadvantage due to complexity.
While limited liability is indeed an advantage for the stockholders, the corporate form does not necessarily provide the same legal protection to its managers in the case of the firm's default on its debts. In certain circumstances, managers can be held personally liable if they violate the law or engage in misconduct.
You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an “effective” annual interest rate (not a nominal rate) of 7.1225%, how much should you be willing to pay for the bond?
To calculate how much you should pay for a bond, you should calculate the present value of the bond's cash flows, including semiannual coupon payments and the face value payment at the end of the bond's term, using your desired rate of return as your discounting factor.
Explanation:Firstly, we need to understand the components of a bond. A bond is essentially an IOU note that a capital provider buys, and then at the maturity date, that amount (also known as the face value of the bond) is repaid to the investor along with the final interest repayment. The bond has a coupon rate or interest rate which is generally paid semiannually.
In order to calculate the amount one should be willing to pay for the bond given an effective annual rate, we need to calculate the present value (PV) of the bond. PV is based on the principle that a dollar you have now is worth more than the promise or expectation that you will receive a dollar in the future. In simpler terms, money you have now could be invested in a way that will earn interest and grow over time, therefore the same amount of money promised or expected in the future is worth less to you today.
The bond pays semiannual coupons, which means you receive interest twice a year and it has a 10-year period, so it equals to 20 periods. The coupon payment per period will be $1,000 * 8% / 2 = $40. At the end of the 10th year, you will receive the last coupon payment (40) plus the face value of the bond (1000).
We discount these cash flows back to present with the desired annual rate of return. Since cash flows are semiannually, we would use half the rate. We then add together these PVs to get the PV of the bond, which is the amount you should be willing to pay for this bond.
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Shimada Products Corporation of Japan is anxious to enter the electronic calculator market. Management believes that in order to be competitive in world markets, the price of the electronic calculator that the company is developing cannot exceed $67. Shimada’s required rate of return is 28% on all investments. An investment of $3,100,000 would be required to purchase the equipment needed to produce the 42,000 calculators that management believes can be sold each year at the $67 price. Required: Compute the target cost of one calculator
To compute the target cost of the electronic calculator for Shimada Products Corporation, the total investment must be adjusted for the desired rate of return and then divided by the number of units expected to sell. The initial calculation shows that the target cost per calculator ($94.48) exceeds the desired selling price of $67, indicating that adjustments are necessary for Shimada to be competitive.
Explanation:The student is asking to compute the target cost of a calculator that Shimada Products Corporation is planning to develop. To determine this, we need to consider the total investment, the required rate of return, and the number of units Shimada expects to sell annually. We initiall subtract the total expected return on the investment from the total investment to find out the total allowable cost for all calculators. Then we divide this allowable cost by the number of units to get the target cost per calculator which cannot exceed the set selling price to stay competitive.
Determine the total return on investment by multiplying the initial investment by the required rate of return ($3,100,000 x 0.28 = $868,000).Add this annual return to the initial investment to determine the total amount that needs to be recovered each year ($3,100,000 + $868,000 = $3,968,000).Calculate the target cost per calculator by dividing this amount by the number of calculators expected to be sold each year ($3,968,000 ÷ 42,000 ≈ $94.48).Since the target cost exceeds the desired selling price of $67, Shimada will need to reduce costs or reconsider its price or investment to meet the target cost within the competitive range.If the real wage falls the:a. marginal cost of labor falls.b. firm will hire additional labor.c. marginal benefit of the worker decreases.d. All of the above.e. A and B only.
Answer: The correct answer is "D. All of the above".
Explanation:
Marginal cost of labor: It is the additional cost of hiring an additional worker. Normally the workers' salary is the same, so the marginal cost of labor will always be the same.
The correct answer is "D" because if the real wage falls, the cost of hiring a worker for the company is lower, therefore companies will hire additional workers.
And if workers' wages decrease, their marginal benefit also decreases because they will have less income.
Use the following information to calculate the change in the company's cash balance for the year. Credit Sales $800,000 Cash Sales $500,000 Operating Expenses on Credit $200,000 Cash Operating Expenses $700,000 Accounts Receivable (Beg. of Year) $50,000 Accounts Receivable (End of Year) $80,000 Accounts Payable (Beg. of Year) $50,000 Accounts Payable (End of Year) $100,000 Income Taxes Paid $160,000
Answer:
Cash generated from operating activities 460,000
Explanation:
Cash Sales 500,000
Credit sales collection
beginning AR 50,000
+ 800,000 credit sales
- ending AR 80,000 = 770,000
payment to providers
Accounts Payable beginning 50,000
+ Operating expenses credit 700,000
- Accounts Payable ending 100,000= (650,000)
taxes paid (160,000)
Cash generated from operating activities 460,000
Analysis reveals that a company had a net increase in cash of $21,650 for the current year. Net cash provided by operating activities was $19,500; net cash used in investing activities was $10,750 and net cash provided by financing activities was $12,900. If the year-end cash balance is $26,250, the beginning cash balance was _______.
Answer:
the beginning cash balance was $4,600
Explanation:
Beginning Cash Flow + net increase in cash of for the current year =
Equals year-end cash balance
We put the know values:
beginning + $21,650 = $26,250
and now solve for the beginning cash balance:
beginning = $26,250 - $21,650 = $4,600
Resuming:
Always keep in mind the idea that account or balance have the following reasoning:
there is a begining balance
there are transaction or event that modifies them
and creaste a new or ending balance
beginning + increase - decrease = ending
you start the day with 4 apples (begining balance)
you end up with 7 apples (ending balance)
the change would be 3
beginning 4 + X = ending 7
The beginning cash balance was $4,600, calculated by subtracting the net cash movements from the year-end cash balance.
Explanation:To calculate the beginning cash balance of the company, we need to consider the net change in cash throughout the year in conjunction with the year-end cash balance. The net increase in cash for the year was $21,650, which gives us a starting formula: Beginning Cash Balance + Net Cash Provided by Operating Activities - Net Cash Used in Investing Activities + Net Cash Provided by Financing Activities = Year-End Cash Balance.
We can plug the provided numbers into this formula:
Net Cash Provided by Operating Activities: $19,500Net Cash Used in Investing Activities: -$10,750 (note the negative because this is cash used, not provided)Net Cash Provided by Financing Activities: $12,900Year-End Cash Balance: $26,250Using these figures, the formula transforms to:
Beginning Cash Balance + $19,500 - $10,750 + $12,900 = $26,250
Therefore:
Beginning Cash Balance = $26,250 - ($19,500 - $10,750 + $12,900)
Beginning Cash Balance = $4,600
The beginning cash balance was $4,600.
Warner Company’s year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable. 1. Prepare the December 31 year-end adjusting entry for uncollectibles.
Answer:
bad debt expense 885 debit
allowance for doubtful accounts 885 credit
Explanation:
expected uncollectibles
1.5% of AR = 99,000 x 1.5% = 1,485
current balance credit (600)
Adjustment 885
When calculating over account receivable, we stimated the allowance so we have to adjsut for the diference.
The year-end adjusting entry for uncollectibles is given in the image below.
What is journal entry?Journal entry is the systematic record of all the financial transactions, that shows all the transactions of the business incurred in a particular period of time.
It is the primary recording of all the transactions related to the money only.
Computation of amount of expected uncollectibles:
According to the given information,
The amount of expected uncollectibles are:
[tex]1.5\% \text{of} \text{Accounts Receivable}- \text{Currect Balance Credit}[/tex]
[tex]= 1.5\% \times \$99,000- 600\\=\$885[/tex]
Therefore, the amount of expected uncollectibles are 885.
Refer, the image given below for the adjustment entry of the expected uncollectibles.
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On January 1, 2018, Magnus Corporation had 60,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred: Mar. 1 Issued 35,000 shares of common stock for $550,000. June 1 Declared a cash dividend of $2.00 per share to stockholders of record on June 15. July 30 Paid the $2.00 cash dividend. Dec. 1 Purchased 5,000 shares of common stock for the treasury for $22 per share. Dec. 15 Declared a cash dividend on outstanding shares of $2.20 per share to stockholders of record on December 31.
Prepare journal entries to record the above transactions.
Answer:
(A) March 1st
cash debit 550,000
common stock credit 35,000
additional paid-in credit 515,000
(B) June 1
dividends debit 180,000
dividends payable credit 180,000
(C) June 15
dividends payable debit 180,000
cash credit 180,000
(D) Dec 1
Treasury Stock debit 110,000
Cash credit 110,000
(E) Dec 15
dividends debit 187,000
dividends payable credit 187,000
Explanation:
(A)
[tex]issued - par\: value = additional\: paid-in[/tex]
[tex]issued - (common\: stock\: issued * face\: value\: per\: share) = additional\: paid-in[/tex]
[tex]550,000 - (35,000 \times 1) = 515,000[/tex]
(B)
[tex]60,000 \: beginning + 30,000 \: issued = 90,000 \: shares \: outstanding[/tex]
[tex]shares \: outstanding \times dividends \: per \: share = dividends \: payable[/tex]
[tex]90,000 \times 2 = 180,000[/tex]
(C)
payment of (B)
(D)
[tex]shares \: purchased \times share \: price = treasury \: stock \\ 5,000 \times 22 = 110,000[/tex]
(E)
[tex]60,000\: beginning + 30,000\: issued - 5,000\: treasury\: stock = 85,000\: shares\: outstanding[/tex]
[tex]85,000 \times 2.20 = 187,000[/tex]
The answer provides the journal entries for the accounting transactions of Magnus Corporation during 2018. These transactions involve stock issuance, dividends declaration and payment, and treasury stock purchases.
Explanation:To answer your question, let's record each transaction as journal entries:
For the Mar. 1 transaction: Cash (Dr.) $550,000, Common Stock (Cr.) $35,000, and Paid-in Capital in Excess of Par (Cr.) $515,000. For the June 1 transaction: Dividends Declared (Dr.) $190,000 and Dividends Payable (Cr.) $190,000. For the July 30 transaction: Dividends Payable (Dr.) $190,000 and Cash (Cr.) $190,000. For the Dec. 1 transaction: Treasury Stock (Dr.) $110,000 and Cash (Cr.) $110,000. For the Dec. 15 transaction: Dividends Declared (Dr.) $191,000, and Dividends Payable (Cr.) $191,000.
The journal entries for the transactions of Magnus Corporation demonstrate the recording of stock issuance, dividends declaration and payment, and treasury stock purchase in accounting.
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Georgette was making $4,000 per month, but her work cut her hours, so she is now making $2,500 per month. What do you expect to happen to Georgette’s demand curve for powdered cheese (an inferior good) as a result of this income change?
Answer:
The demand curve of an inferior good increase when the income decrease.
Explanation:
Georgette will decrease their demand for normal goods and move towards inferior goods. So the powdered cheese among other inferior goods demand will increase for her.
Inferior goods have a negative income elasticity, which means their demand drop when income rises and increases when income drops.
If she takes another job or receives her hours back, Georgette will be more willing to spend on more costly substitutes. Decreasing their demand for inferior goods.
Brown Corp., a calendar-year taxpayer, was organized and actively began operations on July 1, 2013, and incurred the following costs:Legal fees to obtain corporate charter$45,000Commission paid to underwriter30,000Other stock issue costs15,000Brown wishes to amortize its organizational costs over the shortest period allowed for tax purposes. In 2013, what amount should Brown deduct for the amortization of organizational expenses (excluding any immediate expensing allowed)?
Answer:
The amount of amortized organizational expenses for the year 2013 would be $6,333 ( approximately )
Explanation:
First of all the important point here to note is that while calculating the amortized organizational cost we only include the legal fee for drafting the corporate charter and not the commission paid to underwriter or cost incurred while selling the stock.
In the legal fee for corporate charter too there are limitations , as only $50,000 are allowed as total expenditure to be amortized over a period of 15 years or 180 months. Where for the first year the limitation allowed is $5000 and rest of the amount would be amortized over 180 months.
So $45,000 - $5000 = $40,000
$40000 / 180 = $222.22
Now multiplying this by 6 months as the operations of company began on 1 July , 2013,
$222.22 x 6 = $1333.32
Now adding this amount to $5000 will give us the total amortized organizational expense,
$5000 + $1333.32 = $6,333.32
= $6,333 ( approximately )
On its 2017 balance sheet, Walgreens Boot Alliance, Inc., reports treasury stock at cost of $4,934 million. The company has a total of 1,172,513,618 shares issued and 1,082,986,591 shares outstanding. What average price did Walgreens pay for treasury shares?
Answer:
$57.02 Average price per share in treasury Stock
Explanation:
Treasury Stock in dollars 4,934M
[tex]\frac{Treasury \: Stock_{dollars}}{Treasury \: Stock_{shares}} \\Where:\\issued - outstanding = Treasury \: Stock_{shares}[/tex]
1,172,513,618 - 1,082,986,591 = 89,527,027 TS in shares
4,934,000,000/89,527,027 = 57.02264565
$57.02 Average price per share in treasury Stock
Walgreens Boot Alliance, Inc. paid an average price of $55.10 for each treasury share, calculated by dividing the total treasury stock cost of $4,934 million by the number of treasury shares, which is 89,527,027.
For calculating the average price Walgreens paid for its treasury shares. Walgreens Boot Alliance, Inc. reports treasury stock for $4,934 million and has 89,527,027 treasury shares (calculated as 1,172,513,618 issued shares minus 1,082,986,591 outstanding shares). To find the average price paid for treasury shares, divide the total cost by the number of treasury shares.
Average price paid for treasury shares = Total Treasury Stock Cost / Number of Treasury Shares
= $4,934 million / 89,527,027 shares
= $55.10 per share (rounded to two decimal places)
Therefore, Walgreens paid an average of $55.10 for each treasury share it purchased.
Consider the following data from a company annual report: which of the following is inventory turnover? Sales: $1,200,000 Cost of Goods Sold: $60,000 Raw Materials Inventory: $80,000 Finished Goods Inventory: $20,000 Work-in-Process: $20,000
Answer:
The inventory turnover is 0.5
Explanation:
Inventory turnover ratio or stock turnover ratio is ratio which tells about how much of inventory company has sold and how much of it is left. This ratio helps management in making right decisions regarding pricing and marketing strategy, manufacturing etc.
FORMULA FOR CALCULATING INVENTORY TURNOVER RATIO =
[tex]\frac{COST OF GOODS SOLD}{AVERAGE INVENTORY}[/tex]
Here we will take cost of goods sold not sales because by taking cost of goods sold we will get better accuracy , as sales will include a mark up over cost.
Average inventory will include raw material inventory, finished goods and work in progress
[tex]\frac{\$60000}{\$80000+\$20000+\$20000}= .5[/tex]
Therefore the average turnover ratio is 0.5
At the beginning of the accounting period, Nutrition Incorporated estimated that total fixed overhead cost would be $50,600 and that sales volume would be 10,000 units. At the end of the accounting period actual fixed overhead cost amounted to $56,100 and actual sales volume was 11,000 units. Nutrition uses a predetermined overhead rate and a cost plus pricing model to establish its sales price. Based on this information the predetermined overhead rate is
Answer:
$ 5.06 per unit
Explanation:
Given data:
Estimated fixed overhead cost = $ 50600
Estimated sales volume = 10000 units
Actual fixed overhead cost = $ 56100
Actual sales volume = 11000 units
Now,
the predetermined overhead rate is given as:
Predetermined overhead rate = (Estimated Fixed Overhead Cost) / (Number of estimated sales Volume)
on substituting the values in the above formula, we get
Predetermined overhead rate = $ 50600 / 10000
or
Predetermined overhead rate = $ 5.06 per unit
Easter Egg and Poultry Company has $1,710,000 in assets and $698,000 of debt. It reports net income of $196,000. a. What is the firm’s return on assets? (Enter your answer as a percent rounded to 2 decimal places.) b. What is its return on stockholders’ equity? (Enter your answer as a percent rounded to 2 decimal places.) c. If the firm has an asset turnover ratio of 3.5 times, what is the profit margin (return on sales)? (Enter your answer as a percent rounded to 2 decimal places.)
Answer:
a) Firm’s return on assets = 11.46 %
b) Return on stockholders’ equity = 19.37%
c) Profit margin = 3.27%
Explanation:
a) Return on assets = [tex]\frac{Net Income}{Total Assets} X 100[/tex]
= [tex]\frac{196,000}{1,710,000} X 100 = 11.46 percent[/tex]
b) Return on stockholder's equity = [tex]\frac{Net income}{Equity} X 100[/tex]
Equity =Total assets - Debt = $1,710,000 - $698,000 = $1,012,000
Return on equity = [tex]\frac{196,000}{1,012,000} X100 = 19.37 percent[/tex]
c) Asset Turnover ratio = [tex]\frac{Net Sales}{Total Assets}[/tex] = 3.5
then Net sales = 3.5 X Total Assets = = 3.5 X $1,710,000 = $5,985,000
Profit margin = [tex]\frac{Net profit}{Net sales} X 100 [tex]= \frac{196,000}{5,985,000} X 100 = 3.27 percent[/tex]
a) Firm’s return on assets = 11.46 %
b) Return on stockholders’ equity = 19.37%
c) Profit margin = 3.27%
Final answer:
The firm's return on assets is 11.46%, its return on stockholders' equity is 19.37%, and the profit margin is 3.28% Approx.
Explanation:
To calculate the return on assets (ROA) for Easter Egg and Poultry Company, we divide the net income by the total assets and multiply by 100 to get a percentage:
ROA = (Net Income / Total Assets) × 100
ROA = ($196,000 / $1,710,000) × 100
ROA = 11.46%
To calculate the return on stockholders' equity (ROSE), we first need to determine the stockholders' equity by subtracting total debt from total assets. Then divide the net income by the stockholders' equity and multiply by 100 to get a percentage:
Stockholders' Equity = Total Assets - Total Debt
Stockholders' Equity = $1,710,000 - $698,000
Stockholders' Equity = $1,012,000
ROSE = (Net Income / Stockholders' Equity) × 100
ROSE = ($196,000 / $1,012,000) × 100
ROSE = 19.37%
For the asset turnover ratio, we have the formula:
Asset Turnover Ratio = Sales / Total Assets
Given an asset turnover ratio of 3.5 times, to find the profit margin (or return on sales), we need to divide net income by sales. We have the ratio of assets to sales, so we can use it to find sales:
Sales = Asset Turnover Ratio × Total Assets
Sales = 3.5 × $1,710,000
Sales = $5,985,000
Profit Margin = (Net Income / Sales) × 100
Profit Margin = ($196,000 / $5,985,000) × 100
Profit Margin = 3.28% Approx.
You are the manager of the packaging department in a cookie factory. (Obviously, the packaging employees cannot eat the cookies that are transferred in during the period.) After your employees insert cookies into colorful packages (step 1) for display on store shelves, the packages of cookies are then boxed using cardboard cartons (step 2) for shipment to stores. Each unit of product is represented by a carton of packaged cookies. The packaging department began the period with 1,000 units of cookies. During the period, 5,000 units of cookies were transferred in from the baking department and 5,500 units of cookies were transferred out to the finished goods department. The number of units of cookies in the ending inventory of the packaging department equals:
Explanation:
Cookies are transferred to the colorful packaging to be displayed on the shelves of the stores. These packaged cookies are transferred in the carton to be delivered at the stores.
Now the data given in this question is as follows:
Staring Units of cookies in the packaging department = 1000 units
New units of cookies transferred in from the baking department to the packaging department = 5000 units.
Now total units that packaging department have = 1000 + 5000 = 6000 units of cookies.
Total unit of cookies transferred out to the finished goods department = 5500 units of cookies.
So the number of units of cookies in the ending inventory of the packing department will be the total units in the packaging department less the total units transferred out to the finished goods department, i-e
6000 - 5500 = 500 units of cookies remaining in the packaging department.