Answer: C) analyzing financial ratios based on accounting ratios
Explanation:
1 ) Common Equity (C/E)= $5 million, Shares outstanding are 450,000, market price of stock is $16.62 What is the difference between Book Value and Market price of stock? 2 ) Last year C/E ended at =$2,000,000 and shares outstanding are 300,000, This year NI=$400,000 Div=$300,000 What is Book Value of shares at the end of this year? What was BV at end of last year? 3 ) Current Assets= $5000. Current Liabilities=$2000 (Accts Payable $1200, Accrued wages $500 Notes payable $300). What is NOWC? 4 ) Sales are $20 mill, Operating costs are $12mill (other than depreciation which equals $3mill), $9million in 10% bonds outstanding, tax rate 40% What is EBIT
Answer:
The difference between book value and market value is for 2,479,000 dollars
per share the difference is for 5.5 dollars
b) book value per share 7
c) new working capital: 2,000
d= EBIT 8,000,000
Explanation:
450,000 x 16.62 - 5,000,000 = 2,479,000
in share price:
16.62 - 5,000,000/450,000 = 5.5
2,000,000 + 400,000 - 300,000 = 2,100,000
2,100,00 / 300,000 = 7
c) net working capital
current assetis - current liab
5,000 - 3000 = 2,000
sales 20,000,000
operating cost 12,000,000
earnings before interest and taxes 8,000,000
Suppose there are two states that do not trade: Iowa and Nebraska. Each state produces the same two goods: corn and wheat. For Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. At present, Iowa produces 20 million bushels of wheat and 120 million bushels of corn, while Nebraska produces 20 million bushels of corn and 120 million bushels of wheat.
...
a. Explain how, with trade, Nebraska can end up with 40 million bushels of wheat and 120 million bushels of corn while Iowa can end up with 40 million bushels of corn and 120 million bushels of wheat.
b. If the states ended up with the numbers given in a, assuming the person who arranges the trade (the trader) gets the remainder, how much would the trader get?
Final answer:
Nebraska can end up with 40 million bushels of wheat and 120 million bushels of corn, while Iowa can end up with 40 million bushels of corn and 120 million bushels of wheat through specialization and comparative advantage.
Explanation:
In this scenario, with trade, Nebraska can end up with 40 million bushels of wheat and 120 million bushels of corn, while Iowa can end up with 40 million bushels of corn and 120 million bushels of wheat. This can be achieved through specialization and comparative advantage.
Nebraska has a lower opportunity cost for producing corn compared to wheat, while Iowa has a lower opportunity cost for producing wheat compared to corn. It means that Nebraska has a comparative advantage in corn production, and Iowa has a comparative advantage in wheat production.
By specializing in the goods they have a comparative advantage in and trading with each other, both states can benefit. Nebraska can increase its corn production and trade the surplus for wheat with Iowa, while Iowa can increase its wheat production and trade the surplus for corn with Nebraska.
Final answer:
Iowa and Nebraska can each benefit from specializing in the good they produce more efficiently and then trading, according to their opportunity costs. Without specific trade ratios, it's assumed that a perfect trade occurs, leaving no remainder for the trader.
Explanation:
Understanding Opportunity Costs and Gains from Trade
In this scenario, both Iowa and Nebraska can increase their consumption of goods by specializing in the production of the good with the lowest opportunity cost and then trading. For Iowa, the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska, the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. This means Iowa is relatively better at producing corn, while Nebraska is relatively better at producing wheat.
With trade, if Iowa specializes in corn, it can trade some of its corn for Nebraska's wheat, and vice versa. To reach the desired outcome in the question, where Nebraska ends up with 40 million bushels of wheat and 120 million bushels of corn, and Iowa ends up with 40 million bushels of corn and 120 million bushels of wheat, a mutually beneficial trade would occur based on their respective opportunity costs.
For part b of the question, if we assume that Iowa and Nebraska trade such that they both reach the desired outcome of 40 million bushels of their less efficient commodity and 120 million bushels of their efficient commodity, then the amount of goods traded would equate to the difference between their initial and final amounts. Since no specifics on trade quantities are provided, it would be necessary to determine a trade ratio acceptable to both parties that would lead to the final desired quantities without any remainder. Hence, the trader would not have any remainder if such a perfect trade is achieved.
You just received a bonus at your job of $4,000 which you decide to put in a saving account at the local bank. Assume that banks lend out all excess reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited in the banking system. Round your answers to the nearest dollar.
(a) The reserve requirement is 18%, how much will your deposit increase the total value of checkable deposits?
(b) If the reserve requirement is 7%, how much will your deposit increase the total value of checkable deposits?
Answer:
(A) 22,222.22
(B) 57,142.86
Explanation:
we will divide the deposit by the reserve requirement to know how much will expand the money supply.
4,000/0.18 = 22,222.22
4,000/0.07 = 57,142.86
The reasoning behind this multiplier effect is the following:
you deposit 4,000
the bank leave 18% = 920
And lend the remaninder: 3,080
Then, when this are deposit, again takes the minimun reserve and lend the remainder:
3,080 x 18% = 554.4
3,080 - 554.4 = 2,525.6
This process is repeated giving diminished amount to money available to lend. Thus, finding a limit on the division between fund and reserve requirement.
4,000/0.18 = 22,222.22
Which of the following would increase the future value of a single cash flow?
(A) decrease in the cash flow
(B) an increase in the interest rate
(C) a decrease in the time period
(D) a decrease in the time period
Answer: B) an increase in the interest rate
Explanation: Future Value: it is the money that will be earned by multiplying at an interest rate.
This value depends on the cash changes generated by that asset and usually depends on the size, time and risk. For example: If $ 100 is deposited in an account that generates an annual interest rate of 10%, in one year the future value of the deposit is $ 110
Suppose that Greece and Sweden both produce oil and stained glass. Greece's opportunity cost of producing a pane of stained glass is 4 barrels of oil while Sweden's opportunity cost of producing a pane of stained glass is 8 barrels of oil.
By comparing the opportunity cost of producing stained glass in the two countries, you can tell that _____ has a comparative advantage in the production of stained glass and _____ has a comparative advantage in the production of oil.
Answer: Greece; Sweden
Explanation:
A country or a firm has a comparative advantage in producing a commodity if the opportunity cost of producing that commodity in terms of other commodity is lower in that country or firm as compared to the other country or firm.
Greece's opportunity cost of producing a pane of stained glass = 4 barrels of oil
Sweden's opportunity cost of producing a pane of stained glass = 8 barrels of oil
Therefore, opportunity cost of producing a pane of stained glass is lower in Greece as compared to the Sweden.
Hence, Greece has a comparative advantage in producing stained glass.
Greece's opportunity cost of producing a barrel of oil = [tex]\frac{1}{4}[/tex]
= 0.25 pane of stained glass
Sweden's opportunity cost of producing a barrel of oil = [tex]\frac{1}{8}[/tex]
= 0.125 pane of Stained glass
Therefore, opportunity cost of producing a barrel of oil is lower in Sweden as compared to the Greece.
Hence, Sweden has a comparative advantage in producing Oil.
By comparing the opportunity cost of producing stained glass in the two countries, you can tell that Greece has a comparative advantage in the production of stained glass and Sweden has a comparative advantage in the production of oil.
Comparative advantage is defined as the ability of a country to produce a good at a lower opportunity cost than another country. In this case, Greece's opportunity cost of producing a pane of stained glass is 4 barrels of oil, while Sweden's opportunity cost is 8 barrels of oil.
Therefore, Greece has a comparative advantage in producing stained glass because its opportunity cost is lower compared to Sweden. On the other hand, Sweden has a comparative advantage in producing oil because its opportunity cost for oil is lower when compared to Greece's higher cost of producing stained glass.
In summary, Greece has a comparative advantage in the production of stained glass, and Sweden has a comparative advantage in the production of oil.
On November 1, 2018, Quantum Technology, a geothermal energy supplier, borrowed $22 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 9% promissory note. Interest was payable at maturity. Quantum’s fiscal period is the calendar year. Required: 1. Prepare the journal entry for the issuance of the note by Quantum Technology. 2. & 3. Prepare the appropriate adjusting entry for the note by Quantum on December 31, 2018 and journal entry for the payment of the note at maturity.
Answer:
when signing the note:
cash 22,000,000
note payable 22,000,000
accrued interest at december 31th, 2018
interest expense 330,000 debit
interest payable 330,000 credit
payment of the note:
payment of the note
note payable 22,000,000
interest payable 330,000
interest expense 1,185,000
cash 23,485,000
Explanation:
adjusting entry:
principal x rate x time
22,000,000
rate 9% / 12 = 0.0075
months 2
We must express rate and time in the same metric, in this case, months
22,000,000 x 0.75 x 2 = 330,000 accrued interest
payment of the note:
22,000,000 x 0.75 x 9 = 1,485,000
already accrued 330,000
interest expense 1,185,000
You and your best friend are brilliant entrepreneurs who are considering opening your own business tutoring struggling college students in economics. This wonderful endeavor takes the place of the job you were offered working for a rival tutoring service and earning $4,000 a month. Your best friend was offered a similar job at $3,000 (better not tell him about your offer!). Operating expenses for your tutoring business will total $6,000 monthly when you include variable costs such as hiring other tutors. Additionally you will need to lease a building to work out of for $3,000 per month. Together the two of you have enough to cover these operating expenses and the lease but if you pull that money out of your bank accounts you will lose out on $500 in interest income you could have collectively earned. You anticipate revenue from your tutoring business will be $12,000 per month, (medium) What would be the accounting profit/loss per month for your business? What would be the economic profit/loss per month for your business? Should you and your friend open the business? Why or why not?
Answer:
Accounting profit: 3,000
Economic loss: 4,500
It is not in their best interest to open the business. It will destroy capital as they will earn more income from the factor alone than combined into this project.
It is better to accept the offers and put the savings to yield interest unti la better project presents or reconsider the project to make it profitable.
Explanation:
Accounting result (explicit cost only)
average revenue 12,000
monthly expenses (6,000)
building lease (3,000)
accounting profit 3,000
Economic result: Accounting revenue less opportunity cost of the factor.
accounting profit 3,000
labor factor (7,000) sum of both yours and friend offers
capital factor (500) interest from the saving
economic loss 4,500
Based on the calculations, the tutoring business would have an accounting profit of [tex]$3,000[/tex] per month but an economic loss of [tex]$4,500[/tex] per month.
To determine whether you and your friend should open the tutoring business, we need to calculate the accounting profit/loss and the economic profit/loss for the business.
Given information:
- Your potential salary from the rival tutoring service: [tex]$4,000[/tex] per month
- Your friend's potential salary from the rival tutoring service: [tex]$3,000[/tex] per month
- Operating expenses for the tutoring business: [tex]$6,000[/tex] per month
- Lease for the building: [tex]$3,000[/tex] per month
- Forgone interest income: [tex]$500[/tex] per month
- Anticipated revenue from the tutoring business: [tex]$12,000[/tex] per month
Step-1:
Calculation of accounting profit/loss:
Accounting profit/loss = Total revenue - Explicit costs
Explicit costs = Operating expenses + Lease for the building
Explicit costs = [tex]$6,000 + 3,000 = 9,000[/tex]
Accounting profit/loss = [tex]$12,000 - 9,000 = 3,000[/tex] per month
Step-2:
Calculation of economic profit/loss:
Economic profit/loss = Total revenue - Explicit costs - Implicit costs
Implicit costs = Your potential salary + Your friend's potential salary + Forgone interest income
Implicit costs = [tex]$4,000 + 3,000 + 500 = 7,500[/tex]
Economic profit/loss = $12,000 - $9,000 - $7,500 = -$4,500 per month
[tex]\text{Accounting profit/loss} &= \$3,000 \text{ per month} \\[/tex]
[tex]\text{Economic profit/loss} &= -\$4,500 \text{ per month}[/tex]
While the business would generate positive accounting profit, the economic loss indicates that the opportunity cost of opening the business (forgone salaries and interest income) outweighs the accounting profit.
Therefore, it may not be advisable for you and your friend to open the tutoring business, as the economic loss suggests that the available resources (time, effort, and money) could be better utilized in alternative opportunities that would generate a positive economic profit.
Consider a sequential game between a shopkeeper and a haggling customer. The party who moves first chooses either a high price ($50) or low price ($20) and the second mover either agrees to the price or walks away from the deal and neither party gets anything. Ignore costs and assume the customer values the item at $60.
If the shopkeeper goes first and quotes a low price, what is the best response of the customer?
(A) Walk away from the deal
(B) Accept the low price happily
(C) Laugh at the storeowner
(D) Slam the storeowner’s door on the way out
Answer:
(B) Accept the low price happily
Explanation:
As the customer was willing to pay up to 60 dollars for the item, the offer of 50 dollars will be acceptable as it is creating a consumer surplus of 10 dollars.
The customer will look for his own benefit and to his judgement, the deal is good as it saves 10 dollars.
The amount earn by the seller is irrelevant.
Answer:
The correct answer is letter "B": Accept the low price happily.
Explanation:
As the purpose of the game was determining the price of a good out of the outcome of the sequential game, if the shopkeeper wins but chooses a low price ($20 according to the example), the shopkeeper will be playing to the customer's favor. The customer valued the item at $60 but only a $20 payment is needed. Then, there are $40 the customer will save out of the purchase, thus, it is likely the customer will take the price and walk away with the item happily.
In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.
Refer to the information provided above. David directly purchases a one-fifth interest by paying Allen $34,000 and Daniel $10,000. The land account is increased before David is admitted. What are the capital balances of Allen and Daniel after David is admitted into the partnership?
Allen Daniel
A) 136000 34000
B) 160000 60000
C) 170000 50000
D) 140000 40000
A. Option A
B. Option B
C. Option C
D. Option D
C
Answer:
C) 170000 50000
Explanation:
David spend in total 44,000 to acquire a fifth of the company
So the partnership after increasing the land accont had a value for:
44,000 / 0.2 = 220,000
Previously it had 140,000 + 40,000 = 180,000
Increase for 40,000
This increase will be allocate in a share ratio of 3:1
Allen 40,000 x 3/4 = 30,000
Daniel 10,000 x 1/4 = 10,000
Capital balance:
140,000 + 30,000 = 170,000
40,000 + 10,000 = 50,000
The cash from David was directly to Allen and Daniel it do not go through the company
On December 31, Rivera Company receives a utility bill in the mail for $440. Rivera Company intends to pay the bill in early January of next year. If the appropriate adjusting entry is not made at the end of the year, what will be the effect on: (a) Income statement accounts (overstated, understated, or no effect)? (b) Net income (overstated, understated, or no effect)? (c) Balance sheet accounts (overstated, understated, or no effect)?
Answer:
(a)overstated
(b)overstated
(c)no effect
Explanation:
(a) As there is an expense account (utilities expense) which, is not included in the income statement, result for the year will be higher than if was.
(b)The revenues account will be oaky. But, the total expenses will be lower, as there are cost of the period which are not included.
So the Net incoem will be higher than a correct income as their expenses do not include this utilities expense
(c) The balance sheet will have no effect in the total Asset or Total Liaiblities+SE but, it is a change in the composition.
The income (reained earnings) should be lower as the income will be lower and a liability will be create (utilities payable) to fill this so:
with the mistake:
liab 0 equity (+400)
ammending the mistake
liab 400 equity 0
the net effect is zero.
It will decrease equity and increase liability, but the su of both will be the same
Macroeconomics A. studies how computer automation has changed economics. B. studies the behavior of the economy as a whole. C. involves the interaction between different countries in specific markets. D. studies the behavior of individual consumers, firms and markets.
Answer:
B. studies the behavior of the economy as a whole.
Explanation:
Macroeconomics -
The word Macroeconomics is bifurcated into macro , which means huge , and economics ,
It is one of the branch of economics , which deals with the behavior , decision - making , structure of the economy as a complete whole unit .
It is very inclusive unit with including , national , regional and global economies .
Hence , from the options given in the question , the correct answer is B. studies the behavior of the economy as a whole .
The market value of the equity of Ginger, Inc., is $635,000. The balance sheet shows $39,000 in cash and $215,000 in debt, while the income statement has EBIT of $96,400 and a total of $168,000 in depreciation and amortization. What is the enterprise value–EBITDA multiple for this company? The market value of the equity of Ginger, Inc., is $635,000. The balance sheet shows $39,000 in cash and $215,000 in debt, while the income statement has EBIT of $96,400 and a total of $168,000 in depreciation and amortization. What is the enterprise value–EBITDA multiple for this company?
Answer:
EBITDA Multiple = 3,067
Explanation:
The EBITDA multiple is a financial ratio that compares a company’s Enterprise Value to its annual EBITDA. This multiple is used to determine the value of a company and compare it to the value of other, similar businesses. The ratio takes a company’s enterprise value (which represents market capitalization plus net debt) and compares it to the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for a given period.
Formula:
EBITDA Multiple = Enterprise Value / EBITDA
To Determine the Enterprise Value and EBITDA:
Enterprise Value = (market capitalization + value of debt + minority interest + preferred shares) – (cash and cash equivalents)
EBITDA = Earnings Before Tax + Interest + Depreciation + Amortization
In this exercise:
Enterprise Value= market value + value of debt - cash= 635000+ 215000 - 39000=$811000
Ebitda= ebit + depreciation and amortization = 96400+168000= $264400
EBITDA Multiple = Enterprise Value / EBITDA=811000/264400=3,067
Given the following adjusted trial balance:
Debit Credit
Cash $1762
Accounts receivable 2224
Inventory 3311
Prepaid rent 91
Equipment 320
Accumulated depreciation-equipment
$55
Accounts payable 87
Unearned service revenue
129
Common stock 218
Retained earnings 7010
Service revenue 390
Interest revenue 59
Salaries and wages expense
170
Travel expense 70
Total $7948
Net income for the year is
Answer:
The net income for the year is $209
Explanation:
Net income: It the income which is left after paying all the expenses.
In the simplest form,
The net income = Total revenue - total expenditure
So, the net income would equal to
= Service revenue + interest revenue - Salaries and wages expense - Travel expense
= $390 + $59 - $170 - $70
= $209
All other items which are presented in the question are related to the balance sheet so these all items would not be considered in the computation part.
Which of the following characteristics leads to an upward-sloping supply curve? Instructions: Click the box with a check mark for correct or click a second time to clear the box for incorrect. Increasing opportunity costs unanswered Increasing marginal costs unanswered Diminishing marginal utility unanswered A decrease in resource prices unanswered An increase in resource prices unanswered Increasing labor productivity
Answer:
-Increasing opportunity costs
-Increasing marginal costs
-Increase labor productivity
Explanation:
A supply curve is a graphical form of representation of the price of the product and the quantity of the product which the seller can supply in the market. The supply curve slopes towards upward. This represents that the higher price brings with it an increase in the high amount of profit. Also, there is a direct relationship among the quantity of the commodity and the price which he is willing to sell.
Answer:
-Increasing opportunity costs
-Increasing marginal costs
-Increase labor productivity
Explanation:
A supply curve is a graphical form of representation of the price of the product and the quantity of the product which the seller can supply in the market. The supply curve slopes towards upward. This represents that the higher price brings with it an increase in the high amount of profit. Also, there is a direct relationship among the quantity of the commodity and the price which he is willing to sell.
You are planning to save $1,000,000 for retirement over the next 30 years. If you are earning interest at the rate of 6% and you spend all the money in 20 years after retirement, what annual level of living expenses will those savings support?
Answer:
The retirement fund will provide 87,148.56 dollars per year during 20 years
Explanation:
The plan is to achieve 1,000,000 in 30 years.
Then we will spend them equally during a period of 20 years
We want to knwo how much will the retirement account provide.
So, we need to calculate the cuota of an annuity of 20 years with a presenet vale of 1,000,000 dollars at 6% discount rate:
[tex]PV \div \frac{1-(1+r)^{-time} }{rate} = C\\[/tex]
PV $1,000,000.00
time 20 years
rate 6% = 6/100 = 0.06
[tex]1000000 \times \frac{1-(1+0.06)^{-20} }{0.06} = C\\[/tex]
C $ 87,184.56
The retirement fund will provide 87,148.56 dollars per year during 20 years
The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed $560,000 in the common stock account and $5.6 million in the additional paid-in surplus account. The 2015 balance sheet showed $600,000 and $6 million in the same two accounts, respectively. If the company paid out $510,000 in cash dividends during 2015, what was the cash flow to stockholders for the year?
Answer:
what was the cash flow to stockholders for the year?
$70000
Explanation:
Cash flow to stockholders = dividends received - change in common stock account - change in paid-in capital
= 510,000 - (600,000-560,000) -(6,000,000-5,600,000)
=70000 This represents the net cash flow to stockholders.
This represents the net cash flow to stockholders.
The cash flow to stockholders for the year is $70,000.
Explanation:The cash flow to stockholders for the year can be calculated by subtracting the change in the common stock and additional paid-in surplus accounts from the cash dividends paid out. In this case, the change in the common stock account is $40,000 ($600,000 - $560,000) and the change in the additional paid-in surplus account is $400,000 ($6,000,000 - $5,600,000). Therefore, the cash flow to stockholders for the year is $510,000 - $40,000 - $400,000 = $70,000.
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Alpaca Corporation had revenues of $300,000 in its first year of operations. The company has not collected on $19,900 of its sales and still owes $28,000 on $96,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,700 in salaries. Owners invested $19,000 in the business and $19,000 was borrowed on a five-year note. The company paid $4,600 in interest that was the amount owed for the year, and paid $8,600 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. (Assume taxes are paid in the same year). Compute the cash balance at the end of the first year for Alpaca Corporation.
Answer:
Cash at the end of the year: 150,820
Explanation:
sales 300,000
uncollected: (19,900)
collected: 280,100
purchase 96,000
unpaid (28,000)
paid 68,000
Operating activities
Operating
collected 280,100
paid to supplies (68,000)
salaries (13,700)
insurance paid (8,600)
income tax paid (72,560) (A)
generated from operating 117,240
Financing:
contribution 19,000
note payabke 19,000
interest payment (4,600)
generated from financing 33,400
Cash at the end of the year: 117,240 + 33,400 = 150,820
(A) the tax expense will be calculating the income statement.
net income:
sales revenue 300,000
COGS (96,000) (B)
salaries expense (13,700)
interest expense (4,600)
insurance expense (4,300) (C)
pre-tax income 181,400
tax expense 40% (72,560)
net income 108,840
(B) There is no inventory at hand so, all the purchase are cost of goods sold.
(C) The insurance expense will be the expense for half the contract value because, it is for two years
At the beginning of the year, Culver had an inventory of $350000. During the year, the company purchased goods costing $1230000. If Culver reported ending inventory of $480000 and sales of $1900000, their cost of goods sold and gross profit rate would be
Answer: cost of goods sold = $1,100,000
Gross profit = $800,000
Explanation: As we know that :-
Gross profit = Sales - Cost of goods sold
Now we can compute cost of goods sold using following formula :-
Cost of goods sold = opening inventory + purchase - closing inventory
putting the values into equation we get :-
Cost of goods sold = $350,000 + $1,230,000 - $480,000
= $1,100,000
Therefore,
Gross profit = $1,900,000 - $1,100,000
= $800,000
Final answer:
Culver's cost of goods sold is $1,100,000, and the gross profit rate is 42.1%.
Explanation:
To calculate the cost of goods sold (COGS) for Culver, we use the following formula:
COGS = Beginning Inventory + Purchases - Ending Inventory
COGS = $350,000 + $1,230,000 - $480,000 = $1,100,000.
With COGS and sales known, the gross profit can be calculated as follows:
Gross Profit = Sales - COGS
Gross Profit = $1,900,000 - $1,100,000 = $800,000.
To find the gross profit rate, we divide the gross profit by the sales:
Gross Profit Rate = Gross Profit / Sales
Gross Profit Rate = $800,000 / $1,900,000
Gross Profit Rate = 0.421 or 42.1%
Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $20. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units. Units Unit Cost Cost Beginning Inventory 1,000 $ 20 $ 20,000 Purchase #1 1,800 22 39,600 Purchase #2 800 26 20,800 Purchase #3 1,200 29 34,800 (a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of goods sold for the period. Ending inventory balance $Answer 0
Answer:
Ending Inventory 31,900
COGS 65,300
Explanation:
[tex]\left[\begin{array}{cccc}$Date&$Cost&$Units&$Subtotal\\Beginning&20&100&2,000\\P1&22&1,800&39,600\\P2&26&800&20,800\\P3&29&1,200&34,800\\Total&&3,900&97,200\\\end{array}\right][/tex]
Ending Inventory: 3,900 available - 2,800 = 1,100
As we use FIFO the 1,100 untis from ending inventory will be from the newest purchase:
1,100 units at 29 = 31,900
then we can calculate COGS as the difference between the cost of goods available for sale and the ending inventory
97,200 - 31,900 = 65,300 COGS
The following items are components of a traditional Balance Sheet. How much are the total assets of the firm?
Plant and Equipment $42,000
Common Stock $15,000
Cash $ 8,000
Inventory $21,000
Allowance for Uncollectable Accounts $ 6,000
Paid-In Capital $ 6,000
Accumulated Depreciation $28,000
Accounts Receivable $22,000
Answer:
$ 59,000
Explanation:
The total Asset is compounded of:
Plant and Equipment $42,000
Cash $ 8,000
Inventory $21,000
Allowance for Uncollectable Accounts $ 6,000 ( negative, netting Accounts Receivables )
Accumulated Depreciation $28,000 ( negative, netting Plant and Equipment )
Accounts Receivable $22,000
Assets ( Net ) : $ 59,000
Final answer:
The total assets of the firm amount to $65,000, calculated by combining cash, accounts receivable, inventory, and the net value of plant and equipment.
Explanation:
The total assets of the firm are calculated by adding up all assets listed on the balance sheet. This includes current assets such as cash, accounts receivable, and inventory, as well as fixed assets such as plant and equipment. When calculating total assets, it is important to note that accumulated depreciation is not an asset but a reduction of the book value of the assets. Similarly, the allowance for uncollectable accounts is an estimate of accounts receivable that may not be collected and also not added to the total assets.
To compute the total assets, we proceed as follows:
Add cash and accounts receivable: $8,000 + $22,000 = $30,000.
Add inventory: $30,000 + $21,000 = $51,000.
Add plant and equipment (net of accumulated depreciation): $42,000 - $28,000 = $14,000 (net value).
Combine the values calculated: $51,000 + $14,000 = $65,000 (total assets).
Therefore, the total assets of the firm amount to $65,000.
At December 31, Folgeys Coffee Company reports the following results for its calendar year. Cash sales $ 900,000 Credit sales 300,000 Its year-end unadjusted trial balance includes the following items. Accounts receivable $ 125,000 debit Allowance for doubtful accounts 5,000 debit Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be (a) 3% of credit sales, (b) 1% of total sales and (c) 6% of year-end accounts receivable.
Answer:
A)
bad debt expense 9,000 debit
allowace for doubtful account 9,000 credit
------to record bad debt expense ---
B)
bad debt expense 9,000 debit
allowace for doubtful account 9,000 credit
------to record bad debt expense ---
C)
bad debt expense 12,500 debit
allowace for doubtful account 12,500 credit
------to record bad debt expense ---
Explanation:
a) 3% of credit sales
300,000 x 3% = 9,000
full value
b) 1% total sales
900,000 x 1% = 9,000
c)
125,000 x 6% = 7,500
we adjust to leave the year-end allowance at this value
allowance
debit credit
5,000
XXXX
7,500
the allowance wil be 7,500 + 5,000 = 12,500
The correct answer are $9,000, $12,000 and $12,500 respectively
Question A:
At December 31:
Bad expenses account Dr $9,000
Allowance for doubtful account $9,000
To record the bad expense
Further Explanation:To calculate the bad expense, you should multiply credit sales by the percentage of uncontrollable estimates. This can be expressed as:
Credit sales x percentage of uncontrollable estimates
From the given question:
Credit sales = $300,000 Percentage of the uncontrollable given = 3%If you substitute the value, then you have:
$300,000 x 3%
= $9,000.
Question B:
At December 31:
Bad expenses account Dr $12,000
Allowance for doubtful accounts $12,000
To record the bad expense
Further ExplanationHere, you should add the cash sale and credit sales and multiply the derived value with the percentage of uncontrollable estimates. These can be expressed as:
(Cash sales + Credit sales) x percentage of uncontrollable estimates
From the given question:
Cash sales = $900,000 Credit sales = $300,000 Percentage of the uncontrollable given = 1%If you substitute the value, you have:
($900,000 + $300,000) × 1%
= $12,000
Question C:
Bad debt expense Dr $12,500
To Allowance for doubtful debts $12,500
To record the bad expense
Further ExplanationHere, you should add the allowance for doubtful accounts with the value derived from Multiplying account receivable and percentage of uncontrollable estimates. This can be expressed as:
Allowance for doubtful accounts + (Accounts receivable × percentage of uncontrollable estimates)
From the given question,
Allowance for doubtful accounts = $5000 Accounts receivable = $125,000 Percentage of the uncontrollable given = 6%If you substitute the value, you have:
$5,000 + ($125,000 × 6%)
$5,000 + $7,500
= $12,500
LEARN MORE:
At December 31, Hawke Company reports the following results for its calendar year. Cash sales $ 1,883,940 Credit sales $ 3,070,000 In addition, its unadjusted trial balance includes the following items https://brainly.com/question/13858882Warner Company’s year-end unadjusted trial balance shows accounts receivable of $89,000, allowance for doubtful accounts of $500 (credit), and sales of $270,000. https://brainly.com/question/13914621KEYWORDS:
account receivableallowance for doubtful accountfolgeys coffeecash salescredit salesMatch the following statements to Involves acquiring the resources necessary to run the business. appropriate terms. Distributions of cash from a corporation to its stock holders. select an appropriate term Consumed assets or services. select an appropriate term Ownership is limited to one person. select an appropriate term Officers and others who manage the business. select an appropriate term Creditor claims against the assets of the business. select an appropriate term A separate legal entity under state laws. select an appropriate term A report prepared by management that presents financial information. select an appropriate term A section of the annual report that presents management’s views. select an appropriate term Future economic benefits. select an appropriate term Involves acquiring the resources necessary to run the business
Answer:
Distributions of cash from a corporation to its stock holders - Dividends
Consumed assets or services - Expenses
Ownership is limited to one person - Sole Proprietorship
Officers and others who manage the business - Internal users
Creditor claims against the assets of the business - Liabilities
A separate legal entity under state laws - Corporation
A report prepared by management that presents financial information - Annual Report
A section of the annual report that presents management’s views - Management discussion and analysis
Future economic benefits - Investing activities
Pierre's Ice Cream Company produces ultra-rich ice cream, which it sells in Cleveland, Ohio, and other neighboring places. Last year, its actual return on investment exceeded its target return on investment (ROI) for that fiscal year. The following results were found on its financial statements: Gross revenues: $250,000 Total assets: $500,000 Gross profits: $100,000 Total liabilities: $200,000 Net profits after tax: $ 50,000 Owner's equity: $300,000 What was the actual ROI for Pierre's Ice Cream Company?
Answer:
The actual return on investment was 16.67%
Explanation:
the Return on Investment, will be the net income copared with the own funds (equity). So, we will compare the 50,000 net income with the owner's equity 300,000
50,000/300,000 = 0.1667 = 16.67%
The return on investment is 16.67% This means for every dollar of equity the comany earn 16.67 cent
It also means the company will return their entire investment in:
1/ROI = 1/0.166666 = 6 years
In Macroland, currency held by the public is 2,000 econs, bank reserves are 300 econs, and the desired reserve/deposit ratio is 15 percent. If commercial banks borrow 100 econs in reserves from the Central Bank through discount window lending, then the money supply in Macroland will _____ to _____ econs, assuming that the public does not wish to change the amount of currency it holds.
A. increase; 3,133
B. increase; 4,100 C. increase; 4,667 D. increase; 2,667
Answer: Option (C) is correct.
Explanation:
Given that,
Currency held by the public = 2,000 econs
Bank reserves = 300 econs
Desired reserve/deposit ratio = 15 percent
If Commercial banks borrow 100 econs in reserves from the Central Bank.
[tex]\frac{Reserves}{Deposits}[/tex] = 0.15
[tex]\frac{300}{Deposits}[/tex] = 0.15
Deposits = [tex]\frac{300}{0.15}[/tex]
= 2000
Money supply = Currency held by the public + Deposits
= 2,000 + 2,000
= 4,000
Money multiplier = [tex]\frac{1}{rr}[/tex]
= [tex]\frac{1}{0.15}[/tex]
= 6.67
Increase in money supply = Borrowing amount × Money multiplier
= 100 x 6.67
= 667
Hence, money supply increases from 4,000 econs to 4,667 econs.
Final answer:
With the addition of 100 econs in reserves borrowed from the Central Bank and a reserve/deposit ratio of 15%, the money supply in Macroland will increase by 667 econs, resulting in a total money supply of 2,967 econs.
Explanation:
When the Central Bank of Macroland lends 100 econs to commercial banks through the discount window, the increase in reserves is used by banks to create more loans and thereby increase the money supply. With a desired reserve/deposit ratio of 15%, also known as the required reserve ratio, each econ of additional reserves can support 1/0.15 econs of new deposits. Therefore, the money multiplier is 1 / 0.15 = 6.67. When banks receive an additional 100 econs in reserves, they can potentially increase the money supply by 100 econs * 6.67 = 667 econs.
Since the initial currency held by the public remains unchanged (2,000 econs), and the initial reserve amount was 300 econs (before borrowing), the total initial money supply was 2,300 econs (currency held by the public + bank reserves). After the 100 econs are borrowed by the banks, and banks utilize their full lending capacity, the money supply will be the initial money supply plus the additional money created through lending: 2,300 + 667 = 2,967 econs. Therefore, the money supply in Macroland will increase to 2,967 econs.
A farmer produces both beans and corn on her farm. If she must give up 16 bushels of corn to be able to get 6 bushels of beans, then her opportunity cost of 1 bushel of beans is _______
(A) 0.38 bushels of corn
(B) 16.00 bushels of corn
(C) 2.67 bushels of corn
(D) 2.99 bushels of corn
Answer:
C. 2.67 bushels of corn
Explanation:
The opportunity cost is the cost of the best alternative not taken. In this case, if you choose to produce beans, you choose not to produce corn (this is the bets altenative not taken.. in this case the only one alternative).
For every 6 bushels of beans, you choose not to produce 16 bushels of corn, so:
6 bushels of beans= 16 bushels of corn
1 bushel of beans = (16 bushels of corn/6)
1 bushel of beans= 2.67 bushels of corn
Ayayai Corp. sells merchandise on account for $7000 to Nash's Trading Post, LLC with credit terms of 2/8, n/30. Nash's Trading Post, LLC returns $1600 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?
Answer:
The amount of the check is $5,292
Explanation:
The computation of the amount of the check is shown below:
= (Sales amount - return amount - Discount rate of adjusted sales)
= ($7,000 - $1,600 - 0.02 × $5,400
= $5,400 - $108
= $5,292
The adjusted sales equals to
= Sales amount - return amount
= $7,000 - $1,600
= $5,400
We assume that the Nash's trading company paid the amount within 8 days so that it can avails 2% discount
The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company. Required: For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. 1.The cost of a hard drive installed in a computer.
Answer:
1.The cost of a hard drive installed in a computer = Direct Material Cost
Explanation:
Direct Material relates to the basic inputs required to make the final good.
Here, for the information it is provided that, PC Works assembles custom computers, which are supplied by various manufacturers.
Since the main business of PC Works is to assemble the computers, installing a hard disk will be the main component of service, thus, It is part of direct material.
You have been hired by the AutoEdge board of directors to assist them decide whether to stay in South Korea or return to the United States. As part of your analysis, Lester has asked you to conduct a net present value analysis. What are the limitations of net present value?
Answer:
.Requires estimation of future cash-flows and the appropriate discount rate
.Does not take into account qualitative factors
.Difficult to apply when comparing projects with differing lifespans
Explanation:
The net present value is the sum of the present values of all expected cash-flows less the initial outlay. Limitations of this method are that one has to estimate future cash-flows and the company's cost of capital to use when discounting these cash-flows. In this case, as part of net present value analysis, the analyst would have to estimate the cash-flows and the applicable discount rate for each scenario, i.e if the company stays in South Korea or returns to the United States. Making a decision based on these projections may lead to a sub-optimal decision if incorrect information is used. The method also does not take into account other qualitative factors which may not necessarily be reflected in the expected cash-flows e.g the possibility of losing key employees if the company relocates. It is also difficult to apply when comparing projects with differing lifespans.
Bond Yields and Rates of Return A 30-year, 10% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,100. The bond sells for $1,050. (Assume that the bond has just been issued.) What is the bond's yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.
Answer:
The bond's yield to maturity is 9.45% using Excel to get exact values, and 9.59% using approximate method.
Explanation:
We can calculate is using 2 ways, using Excel to get the exact percentage or with approximate methods, calculating the semi-annual Yield to Maturity using the following formula
[tex]YTM_{sm} =\cfrac{PMT+\cfrac{FV-PV}n}{\cfrac{FV+PV}2}[/tex]
And from there we can calculate the Yield to Maturity just by multiplying the semi-annual one by 2.
Identifying the given information.
We have a period of 30 years, so for the semiannual bond we have [tex]n=2(30) = 60[/tex] periods.
The face value, FV, is $1000, the coupon rate is 0.10, thus we can use them to find the interest per period PMT.
[tex]PMT=0.10 \times \cfrac{1000}{2}\\PMT=\$ 50[/tex]
The current price of the bond, PV is $1050.
Replacing the values on the semiannual Yield to Maturity
[tex]YTM_{sm} =\cfrac{PMT+\cfrac{FV-PV}n}{\cfrac{FV+PV}2}[/tex]
[tex]YTM_{sm}=\cfrac{50+\cfrac{1000-1050}{60}}{\cfrac{1000+1050}{2}}[/tex]
Simplifying we get
[tex]YTM_{sm}=4.797\%\\[/tex]
Finding the Yield to Maturity.
We can just multiply by 2 to get the Yield to Maturity from our previous result and rounding it to 2 decimals we get
[tex]YTM = 2 YTM_{sm}\\YTM=9.59\%[/tex]
Alternatively we can use Excel and write:
RATE(n, PMT, PV, FV)*2
That is
RATE(60,50,1050,1000)*2
And we will get the exact Yield to maturity 9.49%
Presented below are the financial statements of Wildhorse Company.
Wildhorse Company
Comparative Balance Sheets
December 31
Assets
2017
2016
Cash
$ 41,300
$ 23,600
Accounts receivable
23,600
16,520
Inventory
33,040
23,600
Property, plant, and equipment
70,800
92,040
Accumulated depreciation
(37,760
)
(28,320
)
Total
$130,980
$127,440
Liabilities and Stockholders’ Equity
Accounts payable
$ 22,420
$ 17,700
Income taxes payable
8,260
9,440
Bonds payable
20,060
38,940
Common stock
21,240
16,520
Retained earnings
59,000
44,840
Total
$130,980
$127,440
Wildhorse Company
Income Statement
For the Year Ended December 31, 2017
Sales revenue
$285,560
Cost of goods sold
206,500
Gross profit
79,060
Selling expenses
$21,240
Administrative expenses
7,080
28,320
Income from operations
50,740
Interest expense
3,540
Income before income taxes
47,200
Income tax expense
9,440
Net income
$ 37,760
Additional data:
1. Depreciation expense was $20,650.
2. Dividends declared and paid were $23,600.
3. During the year equipment was sold for $10,030 cash. This equipment cost $21,240 originally and had accumulated depreciation of $11,210 at the time of sale.
Problem 12-7A Presented below are the financial st
Problem 12-7A Presented below are the financial st
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answer:
Cash flows using the indirect method $ 17,700
Explanation:
Assets 2017 2016
Cash $41,300 $23,600
Accounts Receivable $23,600 $16,520
Inventory $33,040 $23,600
TOTAL CURRENT ASSETS $97,940 $63,720
Property and Equipment $70,800 $92,040
Depreciation Acc. -$37,760 -$28,320
TOTAL ASSETS $130,980 $127,440
Liabilities
Accounts Payable $22,420 $17,700
Bonds Payable $20,060 $38,940
Income Tax Payable $8,260 $9,440
TOTAL CURRENT LIABILITIES $50,740 $66,080
TOTAL LIABILITIES $50,740 $66,080
Common Stock $21,240 $16,520
Retained Earnings $59,000 $44,840
TOTAL EQUITY $80,240 $61,360
TOTAL EQUITY + LIABILITIES $130,980 $127,440
Income Statement 2017
Sales revenue $285,560
Cost of goods sold -$206,500
Gross Profit $79,060
Selling expenses -$21,240
Administrative expenses -$7,080
Income from Operations $50,740
Interest expenses -$3,540
Income before income taxes $47,200
Income taxe expenses -$9,440
NET INCOME $37,760
Cash Flow Ind Method $17,700
Net Income $37,760
Depreciation $20,650
Dividends -$23,600
Bonds Payables -$18,880
Income Tax Payable -$1,180
Accounts Payables $4,720
Inventory -$9,440
Accounts Receivable -$7,080
Common Stock $4,720
Equipment Sold -$0,910
Equipment $10,940
Retained Earnings Report
Opening retained earnings $44,840
Add: Net Income $37,760
Subtotal $82,600
Less: Dividens -$23,600
Ending retained earnings $ 59,000