Answer:
The answer is creating wealth, with the economic value added is $390,000
Explanation:
The company WACC is: Percentage of mortgage bond in capital employed x Cost of mortgage bond x ( 1 - tax rate) + Percentage of unsecured bond in capital employed x Cost of unsecured bond x ( 1 - tax rate) + Percentage of common stock in capital employed x cost of common stock
In which: Percentage of mortgage bond in capital employed = 1,000,000/10,000,000 = 10%
Percentage of unsecured bond in capital employed = 3,000,000/10,000,000 = 30%;
Percentage of common stock in capital employed = (10,000,000 - 1,000,000 - 3,000,000) /10,000,000 = 60%
Cost of common stock = Risk free rate + Risk premium = 10% + 5% = 15%;
Tax rate = 40%
Thus, WACC = 10% x 8% x ( 1- 40%) + 30% x 9% x (1-40%) + 60% x 15% = 11.10%.
Thus, Capital cost per year: Capital employed x WACC = 10,000,000 x 11.10% = $1,110,000.
Economic value added = Operating Income - Capital cost = 1,500,000 - 1,110,000 = $390,000.
Q 11.34: In 2020, First Inc. issued 12,000 shares of 8%, $60 par-value preferred stock with a cumulative-dividend feature. In 2020, the firm paid total dividends of $30,000, and in 2021, it paid total dividends of $45,000. If First declares $180,000 in total dividends for 2022, what amount will be available for its common stockholders?
Answer:
amount will be available for its common stockholders is $82,200
Explanation:
Dividend paid in 2020 is $30,000
Dividend for preferred stock holder in 2020 is = 12,000 × 60 × 8% = $57,600
Dividend accumulated for the next year is = 57600 - 30000 = $27,600
Dividend paid in 2021 is $45,000
from 57600, company paid 27600 and tjis year dividend as $17400
so total $45000 is paid
Balance unpaid dividend is accumulated = $57,600 - $17,400 = $40,200
in 2022, Total dividend is $180,000
Dividend payable to preferred stock holder in 2020 = $57,600
so total amount allotted to preferred stock holder is = 57600+40200 = $97800
we know total dividend paid in 2022 is $180,000
so dividend payable to common stockholders is =180000- 97800 = $82,200
Garnet Company’s most popular product has a unit variable cost of $40 and a unit sales price of $70.40. Fixed manufacturing costs are $192,000 when the company produces and sells 10,000 units. Garnet has been approached with a one-time opportunity to sell 1,000 more units for $56 each. Because the customer is a foreign wholesaler, these sales will not impact present sales. If Garnet has sufficient capacity, how much will net income change as a result of the special order?
A : $3,200 decrease
B : $56,000 increase
C : $16,000 increase
D : $14,400 decrease
Answer:
16,000
Explanation:
The net income change will be a $56,000 increase due to the special order.
The net income change as a result of the special order will be a $56,000 increase.
To calculate the change in net income, we first need to determine the additional revenue from the special order, which is 1,000 units * $56 = $56,000. Then, we subtract the variable cost of the additional units, 1,000 units * $40 = $40,000. Therefore, the net income increase will be $56,000 - $40,000 = $16,000.
correct,P5-23 (similar to) Value of a retirement annuity Personal Finance Problem An insurance agent is trying to sell you an annuity, that will provide you with $9 comma 800 at the end of each year for the next 25 years. If you don't purchase this annuity, you can invest your money and earn a return of 5%. What is the most you would pay for this annuity right now?
Answer:
What is the most you would pay for this annuity right now?$ 138.121
Explanation:
The annuity formula is as follows:
Annuity : Annuity * ((1-1/(1+r)^t)/r where
r : Rate of return
t : Quantity of years of the annuity.
Annuity : ( ( 1- 1/ (1+0,05) ^ 25 ) / 0,05 = ( 1 - 0,295 ) / 0,05 = 14,09
$9,800 * 14,09 = $ 138,121
Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided a total of $156,000 of services on account. In 2021, the company wrote off uncollectible accounts of $6,300. By the end of 2021, cash collections on accounts receivable totaled $132,300. Pincus estimates that 10% of the accounts receivable balance at 12/31/2021 will prove uncollectible.
Required:
1. & 2. What journal entry did Pincus record to write off uncollectible accounts during 2021 and to recognize bad debt expense for 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
What journal entry did Pincus record to write off uncollectible accounts during 2021
Dr Allowance for Uncollectible Accounts $ 6,300
Cr Accounts receivable $ 6,300
What journal entry did Pincus record to recognize bad debt expense for 2021?
Dr Bad Debt Expense $ 8,040
Cr Allowance for Uncollectible Accounts $ 8,040
Explanation:
Pincus provided a total of $156,000 of services on account.
Dr Accounts receivable $ 156,000
Cr Sales $ 156,000
In 2021, the company wrote off uncollectible accounts of $6,300
Dr Allowance for Uncollectible Accounts $ 6,300
Cr Accounts receivable $ 6,300
By the end of 2021, cash collections on accounts receivable totaled $132,300.
Dr Cash $ 132,300
Cr Accounts receivable $ 132,300
Balances on Accounts 31.12.2012 before adjustment
Accounts receivable CREDIT $ 17,400
Allowance for Uncollectible Accounts DEBIT $ 6,300
Pincus estimates that 10% of the accounts receivable balance at 12/31/2021 will prove uncollectible.
Dr Bad Debt Expense $ 8,040
Cr Allowance for Uncollectible Accounts $ 8,040
If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the % of estimated value.
Because the company already has a DEBIT balance ($6,300) in the Allowance for Doubtful Accounts it's necessary to register an entry that COMPLEMENT ($8,040) the existing value and reflect the value estimated as bad debts ($1,740).
Bad Debt Expense = $8,040 - $6,300 = $1,740
It's necessary to reflect $1,740 in the Allowance for Uncollectible Accounts as Credit, so we need an entry of $8,040.
Briefly explain whether you agree or disagree with the following statement: "Assets are things of value that people own. Liabilities are debts. Therefore, a bank will always consider a checking account deposit to be an asset and a car loan to be a liability."
Answer:
I disagree. It is clearly a bank liability.
Suppose you invested $59 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a
dividend of 0.38 today and then you sold it for $66. What was your return on the investment?
A) 8.76%
B) 13.76%
C) 12.51%
D) 10.01%
Answer:
C) 12.51%
Explanation:
Initial stock price = $59
Selling price = $66
Dividends paid = $0.38
The total return on the investment is the the sum of the dividend yield and the capital gains yield on the investment:
[tex]R= DY +CGY\\R=\frac{dividends}{initial\ price}+ \frac{final\ price-initial\ price}{initial\ price} \\R=\frac{0.38}{59}+ \frac{66-59}{59}\\R=0.1251 = 12.51\%[/tex]
The return on the investment is 12.51%
To calculate the total return on the investment, the capital gains and dividends received are combined. The total earnings of $7.38, divided by the initial $59 investment and converted to a percentage, yield a total return of 12.51%.
Explanation:The subject of this question is the calculation of total return on investment (ROI), which is a concept in finance and investing. To calculate the total return, we consider both the capital gains and any dividends received. The initial investment was $59, and the investment was sold for $66, resulting in a capital gain of $66 - $59 = $7. The investor also received a dividend payment of $0.38. The total earnings are therefore $7 (capital gain) + $0.38 (dividend), which equals $7.38. To find the total return as a percentage, we divide the total earnings by the initial investment and multiply by 100: ($7.38 / $59) × 100 = 12.51%. Therefore, the correct answer is C) 12.51%.
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The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.
Rina spends all of her money on paperback novels and donuts. In 2009 she earned $14.00 per hour, the price of a paperback novel was $7.00, and the price of a donut was $2.00.
1: Which of the following give the nominal value of a variable? Check all that apply.
A) The price of a donut is $2.00 in 2009.
B) Rina's wage is $14.00 per hour in 2009.
C) Rina's wage is 2 paperback novels per hour in 2009.
Answer:
A) The price of a donut is $2.00 in 2009.
B) Rina's wage is $14.00 per hour in 2009.
Explanation:
The nominal value of a variable is its monetary amount, in this case, in dollars which is susceptible to currency fluctuations and inflation. Therefore, statements A and B present the nominal value of a variable.
When valuing a variable as an exchange for another good, that is assigning a real value to that variable since monetary changes won't affect the relationship between two goods.
The answers are A) and B)
Final answer:
In economics, nominal value refers to measurements in terms of actual prices, while real value refers to measurements adjusted for inflation. In the given scenario, the variables representing nominal value are the price of a donut and Rina's wage. The variable representing real value is Rina's wage in terms of paperback novels per hour.
Explanation:
In economics, the classical dichotomy refers to the separation of real and nominal variables. Nominal value refers to the measurement of a statistic in terms of actual prices that exist at the time. Real value, on the other hand, refers to the same statistic after it has been adjusted for inflation. In the given scenario, the variables that represent nominal value are:
A) The price of a donut is $2.00 in 2009.B) Rina's wage is $14.00 per hour in 2009.The variable that represents real value is:
C) Rina's wage is 2 paperback novels per hour in 2009.Chris Co. is considering replacing an old machine. The old machine was purchased for $100,000 and has a book value of $40,000 and should last four more years. Chris Co. believes that it can sell the old machine for $50,000. The new machine cost $80,000 and will have a 4-year life and a $10,000 salvage value. Currently, it cost $20,000 annually to operate the old machine. The new machine is more efficient and should reduce operating cost by 50%. Based on quantitative analysis, calculate the relevant costs and indicate if Chris Co. should replace the old machine?
a. No, because the relevant cost of the new machine is $10,000 more than the cost of the old machine.
b. Yes, because the relevant cost of the new machine is $10,000 less than the cost of the old machine.
c. No, because the relevant cost of the new machine is $20,000 more than the cost of the old machine.
d. Yes, because the relevant cost of the new machine is $20,000 less than the cost of the old machine.
Answer:
The answer is letter A.
Explanation:
No, because the relevant cost of the new machine is $10,000 more than the cost of the old machine.
Final answer:
After calculating the relevant costs for both keeping the old machine and purchasing the new machine, Chris Co. will save $80,000 over the next four years by purchasing the new machine. Thus, the company should replace the old machine.
Explanation:
To determine whether Chris Co. should replace the old machine, we need to calculate the relevant costs of keeping the old machine versus purchasing and operating the new one over the next four years. We'll ignore sunk costs like the purchase price of the old machine and focus only on the cash flows that will actually be affected by the decision from now on.
The old machine can be sold for $50,000, which is a cash inflow. It costs $20,000 annually to operate, totaling $80,000 over the next four years. The new machine costs $80,000 and will have a $10,000 salvage value in four years. The operational costs of the new machine are 50% less than the old machine, which would be $10,000 annually ($20,000 / 2), totaling $40,000 over the next four years.
The total cost for keeping the old machine for the next four years (ignoring the book value since it's a sunk cost and non-cash expense): sale of old machine - cost of operation = $50,000 - $80,000 = -$30,000.
The total cost for purchasing and operating the new machine: cost of new machine + operational costs - salvage value = $80,000 + $40,000 - $10,000 = $110,000.
The net savings by replacing the old machine: cost of keeping old machine - cost of new machine = -$30,000 - $110,000 = $80,000.
Since the cost of replacing the machine is $80,000 less than keeping the old one, the answer is (d) Yes, because the relevant cost of the new machine is $20,000 less than the cost of the old machine.
How much would $100, growing at 5% per year, be worth after 75 years?
$3,689.11
$3,883.27
$4,077.43
$4,281.30
$4,495.37
Answer:
The correct answer is B.
Explanation:
Giving the following information:
How much would $100, growing at 5% per year, be worth after 75 years?
We need to use the following formula:
FV= PV*(1+i)^n
FV= 100*(1.05)^75= $3,883.27
The presence of pollution in the dry cleaning industry leads in the long run to dynamic inefficiencies because:
A) people will buy fewer clothes that need dry cleaning than they otherwise would have.
B) people will develop substitutes for dry cleaning that are wasteful.
C) firms will be induced to leave the industry because of artificially high costs.
D) firms whose average private cost is less than price will stay in (or enter) the dry cleaning
industry even though their average social cost exceeds price.
E) firms whose average private cost exceeds the price will exit (or fail to enter) the dry
cleaning industry even though their average social cost is less than price.
Answer:
D) firms whose average private cost is less than price will stay in (or enter) the dry cleaning
industry even though their average social cost exceeds price.
Explanation:
When there is pollution as a result of the daily business, then it involves a huge social cost, as you cause harm to public.
But company's do not consider it in making the decision for business, as it generally do not impact the business in financial matters.
As even if the average cost is less then revenue the profit will be there to run the business.
But till the moment the financial impact is not strong of the social cost the pollution will not affect.
Modigliani Manufacturing has a target debt-equity ratio of .50. Its cost of equity is 18 percent and its cost of debt is 11 percent. If the tax rate is 35 percent, what is Modigliani's WACC? 14.38% 16.31% 18.92% 20.55% 22.34%
Answer: ko = ke(E/V) + kd(D/V)(1-T)
ko = 18(100/150) + 11(50/150)(1-0.35)
ko = 12 + 2.38
ko = 14.38%
The correct answer is 14.38%
Explanation: WACC equals cost of equity multiplied by the ratio of equity to value of the firm plus cost of debt multiplied by the after-tax ratio of debt to the value of the firm. the variables are defined as follows:
Ko = WACC
ke = Cost of equity
E = Market value of equity
kd = Cost of debt
D = Market value of debt
T = Corporate tax rate
The Modigliani's WACC is 14.38%.
The calculation is as follows:Weight of equity = 1 ÷ (1+Debt equity Ratio) = 1 ÷ 1.5
Weight of Debt = 0.5 ÷ 1.5
WACC =Weight of Equity × Cost of Equity + Weight of Debt × Cost of Debt × (1-Tax rate)
=1 ÷ 1.5 × 18% + 0.5 ÷ 1.5 × 11% × (1 -35%)
= 14.38%
Therefore we can conclude that the first option is correct.
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The following information is from Amos Company for the year ended December 31, 2019.
a. Retained earnings at December 31, 2018 (before discovery of error), $858,000.
b. Cash dividends declared and paid during the year, $11,000.
c. Two years ago, it forgot to record depreciation expense of $45,600 (net of tax benefit).
d. The company earned $209,000 in net income this year.
Required :
Prepare a statement of retained earnings for Amos Company.
Answer:
Explanation:
The preparation of the statement of retained earnings for Amos Company is shown below:
Retained earnings at December 31, 2018 (before discovery of error) $858,000
Less: Depreciation expense two years ago -$45,600
Add: net income $209,000
Less: Cash dividends declared and paid during the year -$11,000
Retained earnings at December 31, 2019 $1,010,400
A small country can import a good at a world price of 10 per unit. The domestic supply
curve of the good is
S= 20 +10 P
The demand curve is
D = 400- 5 P
In addition, each unit of production yields a marginal social benefit of 10.
a. Calculate the total effect on welfare of a tariff of 5 per unit levied on imports.
b. Calculate the total effect of a production subsidy of 5 per unit.
c. Why does the production subsidy produce a greater gain in welfare than the tariff?
d. What would the optimal production subsidy be?
Answer:
Please see attachment
Explanation:
Please see attachment
This answer deals with how tariffs and subsidies affect the welfare of a small country. Tariffs increase prices and reduce welfare, while subsidies promote domestic production and consumption, increasing welfare. The optimal production subsidy aligns the marginal social benefit with the marginal cost of production.
Explanation:The subject of this question is economics, focusing on the impact of tariffs and subsidies on the welfare of a small country. The concepts used in this scenario include demand and supply curves, world price, tariffs, and social benefits.
To calculate the total effect on welfare, we first need to understand how tariffs and subsidies impact price, quantity demanded and supplied, and the overall equilibrium in the market.
(a) A tariff of 5 per unit raises the price from 10 (world price) to 15. Plugging this into the supply (S= 20 +10 P) and demand (D = 400- 5 P) equations gives the new quantities. The change in consumer and producer surplus implies the welfare effect of the tariff.
(b) A production subsidy of 5 per unit effectively reduces the cost of production. This shifts the supply curve down by the amount of the subsidy, leading to an equilibrium with a lower price and higher quantity than before. The change in consumer and producer surplus from this new equilibrium gives the welfare impact.
(c) A subsidy improves welfare more than a tariff as it encourages domestic production without raising the price for consumers. Therefore, unlike tariffs, subsidies stimulate both consumption and production, resulting in a greater gain in welfare.
(d) The optimal production subsidy can be derived by setting the marginal social benefit equal to the marginal cost of production. Solving for the price in the supply function, then comparing it with the world price plus the subsidy, we can determine the optimal subsidy level.
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Excel Memory Company can sell all units of computer memory X and Y that it can produce, but it has limited production capacity. It can produce two units of X per hour or three units of Y per hour, and it has 4,200 production hours available. Contribution margin is $8 for product X and $7 for product Y.
Calculate contribution margin per production hour.
Answer:
Please see attachment
Explanation:
Please see attachment
If the Federal Reserve were to change from an expansionary to a contractionary monetary
policy, this would be an example of ________.
A) unsystematic risk
B) systematic risk
C) independent risk
D) diversification risk
Answer:
B) systematic risk
Explanation:
Federal Reserve changes in monetary policies affect the entire securities market hence considered a Systematic risk. It is also known as the Non-diversifiable risk ; it cannot be diversified away unlike stock specific or industry specific risk(unsystematic ) which can be eliminated through diversification.
Systematic risk is unavoidable and may be difficult to predict. Other examples include increase in long term interest rates, recessions or wars. Additionally, Investors are only compensated for systematic risk and not for diversifiable risk.
Maria is the assistant director of a not-for-profit organization that provides support to families. She is the head of a division that concentrates on evaluating the abilities (skills) building programs the organization provides to families. She reports directly to the agency manager. As a whole, this organization has been careful in hiring this time because of augmented competition for federal grant money. Nevertheless, they have also suffered high workforce turnover. Three executives, three important research staff, and one staff individual from the finance section have left.
Maria has a challenging schedule that requires frequent travel; nonetheless, she supervises two executives who in turn are responsible for six staff members each. Both executives were hired within the last eight months:
Manager 1: Robin has a specific background in research. She manages staff who provide research support to another division that delivers behavioral health services to young people. She supports her staff and is very organized; nevertheless, she often takes a very black and white view of issues. High-level leadership of the agency values Robin’s latest research on the therapeutic division’s services. Robin is very motivated and determined and expects the same from her staff.
Manager 2: Linda has a strong experience in social science research and assessment. She manages staff that work on different assignments within the organization. She is recognized as a problem solver and is supportive of her staff. She is very organized and has a wealth of practice in valuation of family services. She is very talented and can sometimes take on too much.
Management is recognizing that staff is becoming overworked as everyone takes on increased responsibilities due to high staff turnover. Staff have also mentioned that Robin’s "glass half-empty" approach style leaves them feeling disappointed. In addition, she has not shared budgets with her managers, so they are having difficulty appropriately allocating work to staff. Linda said she has not received sufficient information from the finance department to complete the budgets. The finance department said they have sent her all the information they have available.
As staff become distressed, the managers are becoming unsatisfied. They feel like they are unable to advocate for their staff or solve problems without key information like the departmental budget
Question. Analyze each one of these persons (Robin and Linda) and summarize their approach to work.
Answer:
Robin and Linda have a different type of leadership skill
Explanation:
Robin has met the qualification for the path-goal of the company. She has the type of leadership that may work when employee morale is high.
Linda has met the qualification of transformational leadership. She treats the employee as complete human beings, consider emotions and perspective. She builds motivation by providing a clear vision. She also has a leadership skill ability to solve complex problems.
Both of them may help Maria to lead the company. Robin will help her utilize the task-oriented approach. Linda will help demonstrate a relationship-oriented style to the employee. These two orientations could be structured to support one another.
Robin has a rigid, research-oriented approach that demotivates her team due to a lack of budget transparency, while Linda is a supportive problem solver who may overburden herself with tasks and faces issues with insufficient budget information from finance.
Robin, the first manager, has a research-focused background and serves as a support to a division handling behavioral health services. Her approach is described as organized and motivated; however, it tends to be rigid, viewing issues in a "black and white" manner. This particular perspective causes her staff to feel demotivated. Additionally, Robin doesn't share budget details with her team, leading to allocation challenges among her staff.
Linda, the second manager, possesses significant experience in social science research and evaluation. Linda is acknowledged for her problem-solving skills and her capacity to organize and evaluate family services. Although recognized for her abilities and support for her team, she sometimes overextends herself by taking on too much work. Linda has expressed difficulty in receiving necessary budget information from the finance department, which hampers her ability to manage her department effectively.
Both managers are navigating the challenges of a high-turnover environment, which includes managing overworked staff and insufficient information flow from the finance department. Efforts to address budget communication and staff burnout could improve management and staff satisfaction. Understanding these dynamics within the organization is crucial for devising strategies that address staff welfare and service delivery effectiveness.
Issuers of coupon bondsmake a single payment of principal when the bonds matures, but multiple payments of interest over the life of the bond.make a single payment of interest and principal.make multiple payments of principal, but a single payment of interest.make a single payment of principal at the time the bond is issued and multiple payments of interest over the life of the bond.You purchase a two-year $1000 face value bond at par. The bond has a 6% coupon rate.However, do to cashflow problems, the company misses the first coupon payment, but pays both coupons payments in year 2. What is your rate of return?0.05830.06530.03000.06000.0428
Answer:Make a single payment of principal when the bonds matured but multiple payment of interest over the life of the bond.
2.0600
Explanation:
Bonds normally has a life of span from one upward for which interest will be paid to the investors as compensation for use of their fund and the principal sum will be refunded on the expiration of the bond life.
The return on a bond is fixed as specified in the bond contract the inability to make payment as at when due may not affect the return obtainable from the bond initial contract.
Many former employees at AlphaEnergy, an energy trading and supply company, had a large
part of their portfolio invested in AlphaEnergyʹs stock. These employees were bearing a high
degree of ________ risk.
A) unsystematic
B) systematic
C) market-specific
D) non-diversifiable
Answer:
Letter A is correct. Unsystematic risk.
Explanation:
Unlike systematic risk, which is an inherent market risk, unsystematic risk is inherent in a specific sector or company.
The case in point concerns the investment of former AlphaEnergy employees, which is a unsystematic risk, as the investment risk in single-company shares includes regulatory changes, management changes, loss of market due to competition and withdrawal of the product from the market.
To reduce this type of risk, investors should seek diversification in their stock portfolio.
Initially, the exchange rate between Macedonian denars and Canadian dollars is in equilibrium. Then, there is a decrease in demand for Canadian dollars. As a result of a decrease in demand for Canadian dollars, what happens to Macedonia's currency in relation to Canada's currency?
a. no change in Macedonian denars
b. an appreciation in Macedonian denars
c. a depreciation in Macedonian denars
Also, as a result of a decrease in demand for Canadian dollars, what happens to Canada's currency in relation to Macedonia's currency?
a. a depreciation in Canadian dollars
b. no change in Canadian dollars
c. an appreciation in Canadian dollars
Answer:
b. an appreciation in Macedonian denars
a. a depreciation in Canadian dollars
Explanation:
An appreciation of currency means the value of a currency rises in relation to another country's currency.
Depreciation of a currency is when the value of a currency of a county falls in relation to another country's currency.
If there is a decrease in demand for Canadian dollars, the value of Macedonia's currency increases because more of Macedonia's currency is demanded for in relation to Canadian dollars. Therefore, Macedonia's currency would appreciate while Canadian dollars would depreciate.
Janice Cullen, owner of a nationally renowned photography business, files a registration statement and prospectus with the SEC. Five days after she files the registration statement, she has a meeting with her top 10 clients (primarily business owners who usually seek Janice for marketing purposes). During this meeting, Janice distributes a red-herring prospectus. At the end of the meeting, Janice decides to sell securities to her 10 clients, as well as 30 other clients with whom she had been emailing, despite the SEC?s not having yet declared her registration statement effective. Consequently, the SEC takes Janice to court for selling securities before the effective date of registration.The court holds Janice liable for violating the 1933 Securities Act.But what if the facts of the case were different? Select each set of facts below that could change the outcome of the case.A. Janice?s photography business was a registered non-profit, and focused on teaching art and photography in public schools. Her top 10 clients were owners of local charities.B. Janice published a tombstone advertisement before meeting with her top 10 clients. They saw this advertisement and were eager to engage in business with Janice.C. The 40 clients who bought the securities from Janice were accredited investors.D. Janice sold the securities to the 40 clients 25 days after she filed her registration statement.Ps. There might be more than one answer - choose all that apply
Answer: (A) and (D)
Explanation:
(A)
Since it is a nationally renowned photography business, it has been running for sometime. Most likely hence, it has been operating as a registered nonprofit organization and the top 10 clients were owners of local charities
(D)
Janice sold the securities to the 40 clients 25 days after filing her registration statement with the Securities and Exchange Commission.
The question says she "decided" to sell those securities on the 5th day after filing her registration statement. It didn't say she sold it on that day.
So, if we sold the securities 25 days after, her court case would be different.
Torque Co. has equipment with a carrying amount of $1,600,000. The expected future net cash flows from the equipment are $1,630,000, and its fair value is $1,360,000. The equipment is expected to be used in operations in the future. What amount (if any) should Torque report as an impairment to its equipment?
1. No impairment should be reported.
2. $240,000
3. $30,000
4. $270,000
Answer:
2. $240,000
Explanation:
Impairment loss is calculated as the difference between the book value (carrying amount) of an equipment and its fair market value, usually due to depreciation. Expected cash flows from the equipment are not considered when calculating impairment. Torque Co. should report an impairment of:
[tex]I= \$1,600,000 - $1,360,000 = \$240,000[/tex]
They should report an impairment of $240,000.
The first step in process flow analysis is:
(A) To develop a flowchart
(B) To break the process down into blocks
(C) To decide what technique will be used to analyze the process flow
(D) To select an appropriate transformation process for analysis
Answer:
The answer is develop a flowchart. Letter A
Explanation:
The first step in process flow analysis is to develop a flowchart
Bond prices and maturity dates. Les Company is about to issue a bond with annual coupon payments, an annual coupon rate of 8%, and par value of $1,000. The yield to maturity for this bond is 5%.
What is the price of the bond if it matures in 15, 20, 25, or 30 years?
What do you notice about the bond in relationship to the maturity of the bond?
Answer:
Answers are enlisted below
Explanation:
1) year price
5 1120.43
10 1197.35
15 1246.48
20 1277.86
2) inverse relationship as maturity increases bond price increases
A company that has identified an employee with future managerial potential might send that employee to a three-week university-sponsored program to help improve the individual’s leadership skills. This is an example of _____.
Answer:
development
Explanation:
An individual when grows do not only grows individually, but also helps in the development of the organization.
Accordingly when the organization sees some potential in the individual of growth and development - it shall to develop the managerial skills and allow him to become a leader, send him for some leadership course.
The leadership course will develop the leadership potential professionally that shall help him and the organization as well.
Every year, the U.S. Census Bureau conducts an income survey of about 60,000 American families that are carefully selected to represent the whole population. The data collected are used to measure income inequality. Which of the following is a reason that census data may provide an inaccurate measure of income inequality? Very few people move from one income quintile to another over the years. Higher-income families tend to have more people to support. In-kind transfers do not improve standards of living but are counted as income.
Answer:Higher income families tend to have more people to support.
Explanation:
Income inequality refers to the differences in income among the populace.
The fact that a family has an high income does not suffice that all the income will be available for his consumption for he may have to give out the less privilege and this will not be captured by the census.
The fact that few move from one to another level of income to another will not disrupt census figure and this hold equally hold for in kind transfer they cannot disrupt census figure and can improve living standard.
Presented below is information related to equipment owned by Monty Company at December 31, 2017.
Cost (residual value $0) $8,943,400
Accumulated depreciation to date 991,000
Value-in-use 5,524,100
Fair value less cost of disposal 4,361,570
Assume that Monty intends to dispose of the equipment in the coming year. As of December 31, 2017, the equipment has a remaining useful life of 8 years. Monty uses straight-line depreciation.
Required :
1. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017.
2. Prepare the journal entry to record depreciation expense for 2018.
Answer:
Question 1: DR Profit & Loss Account $2,428,300
CR Equipment $2,428,300
Question 2: DR Depreciation Expense $690,512.50
CR Accumulated Depreciation $690,512.50
Explanation:
Question 1)
DR Profit & Loss Account $2,428,300
CR Equipment $2,428,300
IAS 36 – Impairment of Assets states that the assets is considered to be impaired if the Carrying Amount of an asset is greater than the Recoverable Amount. Recoverable Amount of an assets is the higher of Fair Value less Cost to Sell and Value-in-Use.
In case of Monty Company, recoverable amount of Equipment will be $5,524,100 i.e. Value-in-Use as it is greater than the Fair Value les cost to sell. The carrying amount of Equipment $7,952,400 ($8,943,400 - $991,000 = $7,952,400) exceeds the recoverable amount $5,524,100, Therefore, the asset is considered impaired and must be written down by $2,428,300 ($7,952,400 - $5,524,100 = $2,428,300). The impairment loss is charged to the statement of profit and loss.
Question 2)
DR Depreciation Expense $690,512.50
CR Accumulated Depreciation $690,512.50
Once the asset is impaired, the recoverable amount of the asset is then depreciated over the remaining useful life of the asset. In case of Monty Company, depreciation charge for equipment in 2018 will be ($5,524,100 ÷ 8 = $690,512.50)
Tower Company planned to produce 3,000 units of its single product, Titactium, during November. The standards for one unit of Titactium specify six pounds of materials at $.30 per pound. Actual production in November was 3,100 units of Titactium. There was a Unfavorable materials price variance of $380 and an Favorable materials quantity variance of $120. Based on these variances, one could conclude that: a. more materials were purchased than were used. b. more materials were used than were purchased. c. the actual cost per pound for materials was less than the standard cost per pound. d. the actual usage of materials was less than the standard allowed.
Answer:
d. the actual usage of materials was less than the standard allowed.
Explanation:
For evaluating the price or quantity variance, we do not take into consider the number of quantity purchased, instead we focus on the number of quantity actually being used for manufacturing the targeted unit. So, we can easily eliminate the first two options.
Now, as per the question, there was an unfavourable material price variance of $380. That means, the budgeted price for the material is less than the actual price for manufacturing the product. However, the third option exactly contradicts the above situation.
The correct option is (d), because the actual usage of material was less than the budgeted one, which gives the favourable quantity variance of $120.
Controls are not designed to provide assurance that:A. Transactions are executed in accordance with management's authorization.B. Fraud will be eliminated.C. Access to assets is permitted only in accordance with management's authorization.D. The recorded accountability for assets is compared with the existing assets at reasonable intervals.
Answer:
B. Fraud will be eliminated.
Explanation:
Controls when established provides the quality of assurance that the procedures are followed properly, regarding each and every accounting transactions.
There is an inbuilt rate of fraud in any business, which is unavoidable irrespective of any controls established.
Thus, controls do not assure elimination of fraud, but yes the effective implementation of control makes the fraud difficult to occur, as the controls set a standard procedure of doing an act.
This is basically because the controls establish the strict rules to be followed while accounting for transactions which states the clear picture of fair practice of accounting.
Controls are not designed to provide assurance thatFraud will be eliminated. "The correct answer is B.
Controls in an organization are designed to ensure that various aspects of operations are conducted effectively and efficiently. Here's the rationale behind each option:
A. Transactions are executed in accordance with management's authorization. Controls are indeed designed to ensure that transactions are executed according to management's authorization. This is to prevent unauthorized transactions and ensure that all actions taken are within the scope of management's directives.
B. Fraud will be eliminated. While controls are designed to reduce the risk of fraud, they cannot guarantee that fraud will be completely eliminated. Fraud can be perpetrated by individuals who are skilled at circumventing controls, or it can be due to collusion among employees. Therefore, controls can mitigate but not entirely eliminate the risk of fraud.
C. Access to assets is permitted only in accordance with management's authorization. Controls are designed to ensure that access to assets is restricted and only granted to authorized personnel. This helps in safeguarding the assets and preventing unauthorized use or theft.
D. The recorded accountability for assets is compared with the existing assets at reasonable intervals. Controls include regular reconciliations and physical counts of assets to ensure that the recorded accountability matches the actual assets on hand. This is to detect any discrepancies that might indicate theft, loss, or errors in record-keeping.
In summary, while controls can significantly reduce the risk of unauthorized transactions, unauthorized access to assets, and discrepancies in asset records, they cannot ensure the complete elimination of fraud. Hence, the statement that controls are not designed to provide assurance that fraud will be eliminated is correct."
Which of the following entries would be made to record the purchase of inventory on account, if a company uses the perpetual inventory system?
A) a debit to Accounts Payable and a credit to Purchases
B) a debit to Accounts Payable and a credit to Merchandise Inventory
C) a debit to Merchandise Inventory and a credit to Accounts Payable
D) a debit to Purchases and a credit to Accounts Payable
Answer:
C) a debit to Merchandise Inventory and a credit to Accounts Payable
Explanation:
The journal entry to record the purchase of inventory on account by using the perpetual inventory system is shown below:
Merchandise Inventory A/c Dr XXXXX
To Accounts Payable A/c XXXXX
(Being merchandise is purchase on credit)
Simply we debited the merchandise inventory account and credited the account payable account so that the correct posting can be done.
Shelton Co. purchased a parcel of land six years ago for $874,500. At that time, the firm invested $146,000 in grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land for $54,500 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $926,000. What value should be included in the initial cost of the warehouse project for the use of this land? $1,020,500
Answer:
$926,000
Explanation:
For computing the initial cost of the warehouse project, we consider the current value of the land i.e represent the opportunity cost and the land value which is purchased six years ago for $874,500 represent the sunk cost which is not recoverable now. So, this sunk cost is not relevant.
And, the lease cost is also not relevant as the lease period will be ended soon.
All other information which is given is not relevant. Hence, ignored it