Answer: Option B
Explanation: Capital budgeting refers to the process in which an analyst tries to evaluate whether a long term investment will be profitable for the organisation or not.
In the capital budgeting process, only the quantitative aspects of a project will be taken into consideration and qualitative aspects such as quality and work space safety are not considered.
Hence from the above we can conclude that the right option is B.
In formal financial analysis of a capital budgeting program, factors like quality of the output and safety of employees are typically not included. The focus is primarily on the monetary aspects of a project.
Explanation:The formal financial analysis of a capital budgeting program typically includes the evaluation of all types of cash flows, such as initial investment, operating cash flows, and terminal cash flows. However, it does not take into account factors like the quality of the output or the safety of employees. These are important considerations, but they lie outside the realm of formal financial analysis.
Therefore, amongst the choices given, the correct answer is option (d) Neither a nor b is included. Quality of output (a) and safety of employees (b) don't typically fall within the material scope of a formal financial analysis in a capital budgeting program. The focus is more on the monetary aspects of a project like cash inflow, cash outflow, return on investment, and so on.
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Show a detailed journalizing of the following transactions:
Galle Inc. entered into the following transactions during January;
Jan 1- Borrowed $250,000 from First Street Bank by signing a note payable.
Jan 4 - Purchased $25,000 of equipment for cash.
Jan 6 - Paid $2,250 to landlord for rent for January.
Jan 15 - Performed services for customers on account, $10,000.
Jan 25 - Collected $3,000 from customers for services performed in Transaction d.
Jan 30 - Paid salaries of $2,500 for the current month.
Answer:
cash (+assets) 250,000 debit
Note Payable (+Liabilities) 250,000 credit
equipment (+Assets) 25,000 debit
Cash (-Assets) 25,000 credit
Rent expense (-Equity) 2,250 debit
Cash (-Assets) 2,250 credit
Account Receivable (+Assets) 10,000 debit
Service Revenue (+Equity) 10,000 credit
Cash (+ Assets) 3,000 debit
Account Receivable (-Assets) 3,000 credit
Salaries expense (-Equity) 2,500 debit
Cash (-Assets) 2,500 credit
Explanation:
We will post after each account, which component of the accounting equation modifies.
Also, we must remember than journal entries should have debit = credit
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.
Nataraj (2007) finds that a 100% increase in the price of water for heavy users in Santa Cruz caused the quantity of water they demanded to fall by an average of 20%. (Before the increase, heavy users initially paid $1.55 per unit, but afterwards they paid $3.10 per unit.) In percentage terms, how much did their water expenditure (price times quantity)long dashwhich is the water company's revenuelong dashchange? With the price increase, the company's revenue changed by .31 nothing%. (Enter your answer rounded to two decimal places.)
Answer:
The sales revenue will increase by 60%
Explanation:
Let's work this as the amount of sales were 1 units:
Price when to 3.10 dollars from 1.55
And quantity from 1 untis to "0.8 unit"
So revenue before price changes: 1.55 x 1 = 1.55
Revenue after price changes: 3.10 x 0.8 = 2.48
The percentaje in sales revenue will be.
new price sales/ old price sales - 1 = 2.48 / 1.55 -1 = 0.6
We can conclude the sales revenue will increase by 60%
Final answer:
The company's revenue increased by approximately 59.35% after the price of water doubled and the demand decreased by 20%, demonstrating how higher prices for utilities can sometimes lead to higher revenues even with reduced consumption.
Explanation:
The question involves calculating the percentage change in water expenditure following a price increase of water for heavy users, as found by Nataraj (2007). To start, we are informed that the initial price of $1.55 per unit doubled to $3.10 per unit, resulting in a 20% decrease in the quantity of water demanded by heavy users. The key here is to determine how this change affected the water company's revenue.
Before the increase, if we presume 100 units were purchased, the total revenue would be $155 (100 units * $1.55). After the price increase and a 20% reduction in demand, 80 units would now be purchased, resulting in a total revenue of $248 (80 units * $3.10). We calculate the percentage change in revenue by subtracting the initial revenue from the final revenue, dividing by the initial revenue, and then multiplying by 100 to convert it into a percentage.
(($248 - $155) / $155) * 100 = 59.35%.
Therefore, with the price increase, the company's revenue changed by an increase of approximately 59.35%, contrary to the question's incorrectly stated outcome of .31 nothing percent.
Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones. Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit. With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent. This margin is 5 percent larger than that of her largest competitor, Apps, Inc. a. If Jamie decides to embark on her new venture, what will her accounting costs be during the first year of operation
Answer:
The accounting costs during the first year of operation is $145,000
Explanation:
Accounting cost: It is that cost which represents expenditure for a particular year.
In this question, the accounting cost would be annual overhead costs and operating expenses. So, it would be $145,000
All other costs which are mentioned in the question are irrelevant. Thus, ignored the other things because they are used to compute the implicit and the opportunity cost
On June 1, 2018, Dirty Harry Co. borrowed cash by issuing a 6-month noninterest-bearing note with a maturity value of $480,000 and a discount rate of 9%. Assuming straight-line amortization of the discount, what is the carrying value of the note as of September 30, 2018? (Round all calculations to the nearest whole dollar amount.)
Answer:
Ans. the carrying value of the note as of September 30, 2018 is $404,006
Explanation:
Hi, the note was issued to mature in 6 months, and 4 months had passed, therefore there are still 2 months left for the note to mature, in other words, this works just as a non-coupon bond which you price in terms of its discount rate and the time remaining for this instrument to mature.
With that in mind, what we need to do is to find the time remaining for the bond to mature, so remember that it was issued on June,1 2018, and in order to facilitate our calculations, we say: "From June 1 to June 30, there is a month..." Now our date will match its maturity, so we just count months until September 30 and we found out that the result is 4 months, it means that this note has 2 months until it matures.
The formula to use is as follows.
[tex]Value(Sep.2018)=\frac{IssuingValue}{(1+Disc.Rate)^{n} }[/tex]
Where n is the months to its maturity.
Everything should look like this:
[tex]Value(Sep.2018)=\frac{480,000}{(1+0.09)^{2} }=404,006[/tex]
Best of luck.
The carrying value of the Dirty Harry Co. note on September 30, 2018, is calculated to be $472,800, taking into account the amortization of the discount over the 4 month period.
Explanation:The subject of the question is related to the concept of noninterest-bearing notes and their carrying value. In the case of the Dirty Harry Co. note, the discount for the 6-month period would be $480,000 * 9% * (6/12) = $21,600. Given that the note was issued on June 1, 2018, the amount of the discount that has been amortized by September 30, 2018 (4 months later), would be $21,600 * (4/6) = $14,400. Therefore, the carrying value of the note on September 30, 2018, would be the maturity value of the note minus the unamortized discount, or $480,000 - ($21,600 - $14,400) = $472,800)
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On January 1, 2016, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. On December 31, 2017, Jacob Inc. sold the truck for $43,000. What amount of gain or loss should Jacob Inc. record on December 31, 2017?
A. Gain, $22,000.
B. Gain, $5,000.
C. Loss, $3,000.
D. Loss, $18,000.
Answer:
The correct answer is B: gain $5000
Explanation:
Giving the following information:
On January 1, 2016, = commercial truck for $48,000.
straight-line depreciation method.
useful life of eight years.
residual value of $8,000.
On December 31, 2017, Jacob Inc. sold the truck for $43,000.
Depreciation expense per year= (Purchase value - residual value)/8
Depreciation expense per year= (48000-8000)/8=5000
Accumulated depreciation year 2= 5000*2= 10000
To calculate the gain or loss we need to use the following formula:
Gain/loss= price value - book value
Gain/loss= price value - (purchase price - accumulated depreciation)
Gain/loss= 43000 - (48000- 10000)= 5000 gain
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
Which of the following is true about foreign direct investment (FDI)?
(A) It is less risky than franchising
(B) It is only done by public companies
(C) It is different than a Greenfield venture
(D) It involves ownership of foreign assets
Answer:
D.
Explanation:
Let's analize what is FDI. And why D is the correct answer.
Foreign direct investment (FDI) is is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. So it involves ownership of foreign assets.
Now why A B and C are false.
C. Greenfield venture is a form of FDI.
B. No, it can be done by private companies. Is the most common actually.
A. The risk depends on the market, and other factors, but it can be generalized as less risky.
Foreign Direct Investment (FDI) involves ownership of foreign assets.
Explanation:Foreign Direct Investment (FDI) is a type of international business activity where a company from one country directly invests in another country.
The correct option about FDI is: (D) It involves ownership of foreign assets.
FDI can take various forms such as mergers and acquisitions, joint ventures, and establishing wholly-owned subsidiaries. In contrast to franchising, FDI provides more control and ownership over the foreign assets, making it a riskier venture. Additionally, FDI is not limited to public companies; private companies can also engage in FDI.
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Your company is contemplating bidding on an RFP (Request For Proposal) to produce 100,000 units of a specialized part. Suppose, however, that the requesting company really needs only 90,000 units of the part. Also assume that, because the part is specialized, potential suppliers do not yet possess the machines and factories needed to produce it and that overhead expenses involved in production have yet to be incurred. Suppose the average costs of all potential suppliers are as follows: Units Average Total Cost (Dollars Per Unit) 90,000 4 100,000 3 True or False: The requesting company can solicit lower bids by requesting 100,000 units as opposed to 90,000. True False
Answer: True
Explanation:
Average costs of all potential suppliers:
Units = 90,000 at average total cost = $4 per unit
So,
Total cost = No. of units × Average total cost per unit
= 90,000 × $4
= $360,000
Units = 100,000 at average total cost = $3 per unit
So,
Total cost = No. of units × Average total cost per unit
= 100,000 × $3
= $300,000
Hence, the company will save 60,000 dollar if it orders 100,000 units.
Answer:
True
Explanation:
The computation is shown below:
At 90,000 units
The total cost is
= 90,000 units × $4
= 360,000 units
At 100,000 units
The total cost is
= 100,000 units × $3
= $300,000
So as we can see that there is a difference of $60,000 after deducting the total cost at 90,000 units from total cost at 100,000 units
Therefore, in 100,000 units the company could save $60,000
Hence, the given statement is true
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
Bramble Corp. just began business and made the following four inventory purchases in June:
June 1 140 units $938
June 10 190 units 1292
June 15 190 units 1349
June 28 140 units 1050
$4629
A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO inventory method, the value of the ending inventory (rounded to whole dollar) on June 30 is
Answer:
the value of the ending inventory (rounded to whole dollar) on June 30 is 1400
Explanation:
Month Units Cost Unit Cost Inven. Inven. Cost
jun-01 140 938 7 140 980
jun-10 190 1292 7 60 420
jun-15 190 1349 7 0 0
jun-28 140 1050 8 0 0
200 1400
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
Montego Company’s Cash account had a balance of $14,000 on January 1. Analysis of the company’s Cash account during the year revealed the following information: Receipts from customers $ 50,000 Payments for dividends 10,000 Receipts of dividends 5,000 Payments for merchandise 25,000 Receipts from issuance of stock 20,000 On December 31, the company’s Cash account had a balance of ____.
Answer:
ending cash balance 54,000
Explanation:
receipts from customer 50,000
payment for merchandise (25,000)
generated from operating activities 25,000
receipts of dividends 5,000
generated from investing activities 5,000
issuance of stock 20,000
payment for dividends (10,000)
generated from financing activities 10,000
cash generated for the cash 40,000
beginning cash balance 14, 000
ending cash balance 54,000
Answer:
$54,000
Explanation:
The computation of the ending cash balance is shown below:
= Beginning cash balance + cash receipts - cash payments
where,
Beginning cash balance is $14,000
Cash receipts would be
= Receipts from customers + Receipts of dividends + Receipts from issuance of stock
= $50,000 + $5,000 + $20,000
= $75,000
And, the cash payment is
= Payments for dividends + Payments for merchandise
= $10,000 + $25,000
= $35,000
So, the ending cash balance would be
= $14,000 + $75,000 - $35,000
= $54,000
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.
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
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
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 .
How would external reporting of GAAP-based financial statements differ for a nonprofit hospital compared to a for-profit hospital?
Answer and Explanation:
The external reporting of GAAP-based budget summaries for a non-benefit hospital will vary to a profit hospital in the accompanying ways:
For profit's hospital money related reports starts heading as "letter" from the entrepreneur or the CEO. The focal point of this letter is on the earlier year tending to any trouble the organization has survived. Though, non-benefit yearly reports report out the association's motivation and measurements about what number of individuals have profited by the examination, projects and administrations.The yearly report of revenue driven associations regularly delineates how well they deal with their cash, to dazzle the potential speculators. Though, non-benefit associations simply center around how they go out dealing with the things will pretty much nothing or less assets close by, and the financing they put into their projects and administrations to help improve the network and offer help for those out of luck.For profit associations wind up revealing their future field-tested strategies, for example, new item or administration propelling, which would make higher income and benefits for the organization in future. Not-for-profit associations, will some way or another state what administrations or projects have been the best and how they plan on building up these to serve more individuals on a bigger scale.Final answer:
Nonprofit hospitals report financial activities with an emphasis on their mission and may include complex revenue recognition, whereas for-profit hospitals focus on profitability with a clear link between costs and revenues. The Notes to the Financial Statements are critical for understanding the financial policies and assumptions of both types of hospitals. Long-term liabilities and operational efficiency reporting may also differ due to the distinct goals of nonprofit vs. for-profit hospitals.
Explanation:
The external reporting of GAAP-based financial statements for nonprofit hospitals vs. for-profit hospitals differs primarily due to the underlying purpose of each entity and the way activities are reported. Nonprofit hospitals, which focus on advancing their mission rather than generating profit, report their activities and financial performance in a manner that emphasizes the revenue and expenses linked to their charitable operations. This might include detailing expenses for community health programs with a not-so-clear link between expenses and the revenues like grants or donations. In contrast, for-profit hospitals report financial performance with a focus on profitability, including a clear cost-revenue structure in their income statement, also known as the profit/loss statement.
For nonprofit hospitals, revenue recognition and the matching of expenses can be complex, especially when dealing with non-cash contributions or governmental grants. The Notes to the Financial Statements play a critical role in both types of hospitals, outlining key accounting assumptions and financial policies.
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.
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.
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.
Determine which economic principle is illustrated by each scenario. The owner of a snow cone trailer realizes that the demand for snow cones is low during the winter, and thus, closes shop until the temperature warms back up near summertime. The local river has so much pollution that three-eyed fish are forming. The government responds by regulating the amount of chemicals that can be dumped into the river. At a high-end restaurant, the restaurant owner has one chef at a meat station, one chef at a vegetable station, and one chef, who has an artistic eye, plate the food she is given. The result is increased service speed, and the kitchen is able to serve more customers in an evening. During the summer, a bumper crop of oranges in Florida causes a surplus in the supply of oranges nationwide. As a result, prices fall to compensate for the surplus and consumers enjoy the fruits of the farmers' labor. Answer Bank
Answer:
The correct answer is: market efficiency; government intervention; specialization; equilibrium.
Explanation:
The owner of the snow cones realizes that the demand for snow cones has decreased in winter, and thus, closes shop to open back. This is an example of market efficiency.
The local river is being polluted too much because of the huge quantity of chemicals being dumped in the river. The government, as a result, enforces regulation on the quantity of chemicals being dumped. This is an example of government intervention in the economy.
At a restaurant one chef is placed at the vegetable station, one chef is at meat station, and one is to plate the food. This an example of specialization the management is placing chef that specializes in vegetable, meat and in plating at their respective positions. So they can work in the most efficient manner and the service speed increases.
The favorable weather leads to an increase in the supply of oranges. This causes a rightward shift in the supply curve. The price of oranges fall as a result. This is an example of change in equilibrium.
The described scenarios illustrate the law of demand, government regulation, division of labor, and the law of supply in various economic contexts, demonstrating the responsiveness of markets to changes and external factors.
Explanation:The scenarios provided illustrate different economic principles:
The snow cone trailer owner's decision to close shop during winter demonstrates the law of demand, where he recognizes that demand for snow cones decreases as the temperature drops.The government's intervention to regulate pollution showcases government regulation influencing market outcomes to protect public health and the environment.The high-end restaurant optimizing its staff's skills for efficiency represents the principle of division of labor, which increases productivity and service speed.The drop in orange prices due to a bumper crop exemplifies the law of supply, where an increase in supply, if not matched by an increase in demand, typically leads to lower prices.These scenarios underscore how markets operate under the laws of demand and supply, and how both producers and consumers respond to changes in market conditions, including seasonal variations and government policies.
Hermann Corporation had net income of $200,000 and paid dividends to commonstockholders of $50,000 in 2012. The weighted average number of shares outstanding in2012 was 50,000 shares. Hermann Corporation's common stock is selling for $50 pershare on the New York Stock Exchange. Hermann Corporation's price-earnings ratio is
Answer:
the P/E ratio is 12.5
Explanation:
the price-earning ratio represent how many times the earnings per shares "fits" into the price of the share. It represent how many years are needed to payback the investment of rchase the share.
We first need the earningper share:
[tex]\frac{income - preferred \: dividends}{outstading \: shares} = EPS[/tex]
200,000 net income / 50,000 = 4 dollars EPS
price-earnings ratio:
[tex]\frac{Price}{EPS} = P/E[/tex]
50/4 = 12.5 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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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
A manufacturing company has a beginning finished goods inventory of $16,100, raw material purchases of $19,500, cost of goods manufactured of $35,500, and an ending finished goods inventory of $19,300. The cost of goods sold for this company is:
Answer:
Cost of goods sold= $32300
Explanation:
The cost of goods sold refers to the direct costs attributable to the production of the goods sold in a company. This amount includes the cost of the materials used in creating the goods along with the direct labor costs used to produce the goods. It excludes indirect expenses, such as distribution costs and sales force costs.
COGS=Beginning Inventory+Production during period−Ending Inventory
COGS= $16,100 + 35,500 - $19,300= $32300
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.
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
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
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
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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 sales