Answer:
Explanation:
the minimun value is expressed by the present value of the investment using a 7% rate, lets recall the formula for finding present values:
[tex]PV=FV*(1+i)^{-n}[/tex]
where, PV is present value, FV is the future value, and n is time elapsed. So applying to this problem we have:
[tex]PV=10,000*(1+0.07)^{-10}[/tex]
[tex]PV=5,083.49[/tex]
So the minimun value which is profitable to pay is 5,083.49 today, in that sense you will get a return on 7% compounded after 10 years
You and your best friend have decided to start a small coffee shop together while in college. Though you have been friends since grade school, you and your best friend agreed that a partnership agreement is necessary to maximize the potential success of the partnership. Draft a memo to your best friend outlining the issues that need to be addressed in the agreement.
Answer: It is important to establish limits through the partnership agreement, because by trust there could be disagreements in the future, some ideas for this agreement are the following:
I. The dividends resulting from the coffee shop profits must be distributed equally and will correspond to the amount resulting from discounting sales less costs and expenses.
II. Personal loans will not be allowed to the owners with the money taken from the coffee shop box.
III. It will not be allowed to consume the products of the coffee shop without paying what corresponds.
IV. Both owners will have the same rights to perform the duties of a manager.
To draft a partnership agreement for a coffee shop venture, it is important to address key issues such as roles and responsibilities, capital contributions, decision-making, expenses and liabilities, dispute resolution, exit strategy, and intellectual property.
Explanation:Memorandum
To: [Best friend's name]
From: [Your name]
Date: [Date]
Subject: Partnership Agreement
Dear [Best friend's name],
I hope this message finds you well. As we embark on our coffee shop venture, I believe it is crucial for us to have a well-defined partnership agreement to optimize our chances of success. Here are some key issues that need to be addressed:
Roles and Responsibilities: Clearly outline each of our roles and responsibilities in the operation of the coffee shop. Specify areas of expertise, decision-making authority, and tasks assigned to each partner.Capital Contributions: Determine the initial capital investment required from each partner. Discuss the distribution of profits and losses based on our respective contributions.Decision-Making: Establish a decision-making process to avoid conflicts and ensure smooth operations. This may include consultation, voting, or assigning decision-making authority based on expertise and responsibilities.Expenses and Liabilities: Discuss how expenses will be managed and shared, including ongoing operational costs, rent, utilities, and legal or regulatory compliance. Determine how any potential liabilities will be addressed and shared.Dispute Resolution: Establish a mechanism for resolving disputes between partners, such as mediation or arbitration, to ensure the partnership continues in case conflicts arise.Exit Strategy: Plan for the possibility of one or both partners wanting to exit the partnership. Outline procedures for selling shares, transferring ownership, or dissolving the partnership if necessary.Intellectual Property: Address ownership and rights related to any intellectual property created or used by the partnership, including branding, logos, and recipes.I believe that addressing these issues in our partnership agreement will help us navigate the challenges of running a coffee shop while maintaining our strong friendship. Let's work together to draft the agreement and consult legal professionals if needed.
Best regards,
[Your name]
Consider the following marginal cost function. a. Find the additional cost incurred in dollars when production is increased from 100 units to 150 units. b. Find the additional cost incurred in dollars when production is increased from 500 units to 550 units. C′(x)=4000−0.4x
Answer: (a) $197,500
(b) $ 189,500
Explanation:
Given : The marginal cost function : [tex]C′(x)=4000−0.4x[/tex]
To find the cost function, we need to integrate the above function with respect to x.
Now, the additional cost incurred in dollars when production is increased from 100 units to 150 units will be:-
[tex]\int^{150}_{100}\ C'(x)\ dx\\\\=\int^{150}_{100} (4000-0.4x)\ dx\\\\=[4000x-\dfrac{0.4x^2}{2}]^{150}_{100}\\\\=[4000(150)-\dfrac{0.4(150)^2}{2}-4000(100)+\dfrac{0.4(100)^2}{2}]\\\\=[600000-4500-400000+2000]\\\\=197500[/tex]
Hence, the additional cost incurred in dollars when production is increased from 100 units to 150 units= $197,500
Similarly, the additional cost incurred in dollars when production is increased from 500 units to 550 units :-
[tex]\int^{550}_{500}\ C'(x)\ dx\\\\=\int^{550}_{500} (4000-0.4x)\ dx\\\\=[4000x-\dfrac{0.4x^2}{2}]^{550}_{500}\\\\=[4000(550)-\dfrac{0.4(550)^2}{2}-4000(500)+\dfrac{0.4(500)^2}{2}]\\\\=[2200000-60500-2000000+50000]\\\\=189,500[/tex]
Hence, the additional cost incurred in dollars when production is increased from 500 units to 550 units = $ 189,500
Calculate additional costs for production level changes using the given marginal cost function.
Explanation:Marginal cost function: C′(x) = 4000 − 0.4x
Additional cost for 100 to 150 units: C'(150) - C'(100)Substitute values and calculate: $ (4000 - 0.4*150) - (4000 - 0.4*100)Answer: The additional cost is $20Additional cost for 500 to 550 units: C'(550) - C'(500)Substitute values and calculate: $ (4000 - 0.4*550) - (4000 - 0.4*500)Answer: The additional cost is $20Each of the following items is shown in the financial statements of Exxon Mobil Coperation:
1. Accounts payable
2. Cash equivalents
3. Crude oil inventory
4. Equipment
5. Exploration expenses
6. Income taxes payable
7. Investments
8. Long-term debt
9. Maketable secrities
10. Notes and loans payable
11. Notes receivable
12. Operating expenses
13. Prepaid taxes
14. Sales
15. Selling expenses
a. Identify the financial statment (balance sheet or income statment) in which each item would appear.
b. Can an item apperar on more than one financial statment?
c. Is the accounting equation relevant for Exxon Mobil Corporation?
Answer:
(a) The list is as follows:
1. Accounts payable - Balance sheet
2. Cash equivalents - Balance sheet
3. Crude oil inventory - Balance sheet
4. Equipment - Balance sheet
5. Exploration expenses - Income statement
6. Income taxes payable - Balance sheet
7. Investments - Balance sheet
8. Long-term debt - Balance sheet
9. Marketable securities -Balance sheet
10. Notes and loans payable - Balance sheet
11. Notes receivable - Balance sheet
12. Operating expenses - Income statement
13. Prepaid taxes - Balance sheet
14. Sales - Income statement
15. Selling expenses - Income statement
(b) No item can appear on more than one financial statement.
(c) Yes, accounting equation relevant for Exxon Mobil Corporation.
a. Here is the breakdown of where each item would appear in the financial statements:
1. Accounts payable: Balance sheet
2. Cash equivalents: Balance sheet
3. Crude oil inventory: Balance sheet
4. Equipment: Balance sheet
5. Exploration expenses: Income statement
6. Income taxes payable: Balance sheet
7. Investments: Balance sheet
8. Long-term debt: Balance sheet
9. Marketable securities: Balance sheet
10. Notes and loans payable: Balance sheet
11. Notes receivable: Balance sheet
12. Operating expenses: Income statement
13. Prepaid taxes: Balance sheet
14. Sales: Income statement
15. Selling expenses: Income statement
b. Yes, an item can appear on more than one financial statement.
c. The accounting equation, which states that assets equal liabilities plus shareholders' equity, is relevant for Exxon Mobil Corporation.
a. Financial statements are formal records that provide an overview of a company's financial activities and position. They typically include the balance sheet, income statement, and cash flow statement, providing essential information for analyzing a company's performance and financial health.
b. For example, cash equivalents and marketable securities can appear on both the balance sheet and the income statement, depending on their classification and the purpose for which they are held.
c. The company's financial statements, including the balance sheet and income statement, are prepared in accordance with the principles of accounting, which adhere to the accounting equation. The equation provides a foundation for understanding the financial position and performance of the company by ensuring that the assets' values are balanced by the claims against those assets.
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Given the following adjusted trial balance:
Debit Credit
Cash $931
Accounts receivable 1175
Inventory 1749
Prepaid rent 48
Equipment
170
Accumulated depreciation-equipment
$29
Accounts payable 46
Unearned service revenue
68
Common stock 120
Retained earnings 3700
Service revenue 206
Interest revenue 31
Salaries and wages expense
90
Travel expense 37
Total $4200 $4200
After closing entries have been posted, the balance in retained earnings will be:
Answer:
The balance in retained earnings will be $3,810
Explanation:
For computing the ending balance of the retained earning, first, we have to compute the net income
So, the net income would be equal to
= Service revenue + interest revenue - Salaries and wages expense - Travel expense
= $206 + $31 - $90 - $37
= $110
Now we can find out the ending balance of retained earnings. It is shown below:
= Beginning retained earning balance + net income - dividend paid
= $3,700 + $110 - $0
= $3,810
The long-term liability section of Rainbow Digital Corporation’s balance sheet as of December 31, 2020, included 10% bonds having a face amount of $1,000,000 and a remaining discount of $139,294. Disclosure notes indicate the bonds were issued to yield 12%. Interest expense is recorded at the effective interest rate and paid on June 30 and December 31 of each year. On July 1, 2021, Rainbow Digital retired the bonds at 101 before their scheduled maturity. What is the amount of gain (loss) on early extinguishment of bonds?
Answer:
Loss on early extinguishment = 1,008,357.64
Explanation:
Data:
T = Interest rate = 10% = 0.10
FA = Face amount = $1,000,000
RD = Remaining Discount = $139,294
Y = Yield rate = 12% = 0.12
RT = Retirement Time = 6/12 = 0.5
BA = Bonds at = 101% = 1.01
EE = Gain (loss) on early extinguishment = ?
IE = Interest Expense = ?
D = Discount on bond payable = ?
Calculations:
IE = Y * (FA - RD) * RT
IE = 0.12 * ($1,000,000 - $139,294) * 0.5 = 0.12 * $860,706 * 0.5 = $51,642.36
D = FA - [IE - (T * FA * RT)]
D = $1,000,000 - [$51,642.36 - (0.10 * $1,000,000 * 0.5)] = $1,000,000 - [$51,642.36 - $50,000] = $1,000,000 - $1,642.36 = $998,357.64
EE = FA - [D + (FA * BA)]
EE = $1,000,000 - [$998,357.64 + ($1,000,000 * 1.01)] = $1,000,000 - [$998,357.64 + $1,010,000] = $1,000,000 - 2,008,357.64 = -1,008,357.64
EE = -1,008,357.64 (Loss)
The Hopkins Company has estimated that a proposed project’s 10-year annual net cash benefit, received each year end, will be $2,500 with an additional terminal benefit of $5,000 at the end of the 10th year. Information on present value factors is as follows: Present value of $1 at 8% at the end of 10 periods .463 Present value of an ordinary annuity of $1 at 8% for 10 periods 6.710 Assuming that these cash inflows satisfy exactly Hopkins’ required rate of return of 8%, what is the initial cash outlay?
Answer:
the present value of the project at 8% discount rate is 19,090
this will be the cost ofthe investment.
Explanation:
we will calcualtethe present value of a 10 years annuity at 8% return
and the present value of a lump sum in 10 years
2,500 x 6.710 annuity factor = 16,775
5,000 x 0.463 lump sum factor = 2,315
TOTAL 19,090
A cell phone company offers two different plans. Plan A costs $92 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. You need to purchase a plan for your teenage sister. Your sister currently uses 1,750 minutes and sends 1,600 texts each month. 1. What is your sister’s total cost under each of the two plans? 2. Suppose your sister doubles her monthly usage to 3,500 minutes and sends 3,200 texts. What is your sister’s total cost under each of the two plans?
Answer:
Instructions are listed below
Explanation:
Giving the following information:
Plan A:
$92 per month for unlimited talk and text.
Plan B:
$0.20 per minute plus $0.10 per text message sent.
A) 1,750 minutes and 1,600 texts
Plan A= $92
Plan B= 0.20*1750+0.10*1600= $510
B) 3,500 minutes and 3,200 texts.
Plan A= $92
Plan B= 0.20*3500+0.10*3200= $1020
Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the
a. money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds.
b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds.
c. money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds.
d. money supply to rise. To reduce the impact of this the Fed could buy Treasury bond
Answer:
The correct answer is option b.
Explanation:
If banks decide to hold more excess reserves relative to deposits, they will provide fewer loans. Fewer loans will cause reduction in investment because of lack of funds. This will cause the money supply to fall.
Federal Reserve can increase the money supply by buying treasury bonds. When Feds buy treasury bonds they pay for it. This increases the money supply in the market.
If banks hold more excess reserves, the money supply will fall. To counteract this, the Fed could buy Treasury bonds to increase the money supply.
Explanation:If banks decide to hold more excess reserves relative to deposits, it means they are keeping a larger portion of their deposits as reserves instead of lending it out. This action will cause the money supply to fall because there will be less money available for lending and economic activity.
To combat the impact of this, the Federal Reserve (the Fed) could buy Treasury bonds. When the Fed buys Treasury bonds, it injects money into the banking system, increasing the money supply and offsetting the decrease caused by the banks holding excess reserves.
Therefore, the correct answer is b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds.
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The terms of a partnership agreement provide that one of the partners is to receive a salary allowance of $30,000, plus a bonus of 20 percent of income after deduction of the bonus and the salary allowance. If income is $150,000, the bonus should be:
A. $18,000
B. $20,000
C. $24,000
D. $30,000
Answer:
The correct answer is C: Bonus= $24000
Explanation:
The terms of a partnership agreement provide that one of the partners is to receive a salary allowance of $30,000, plus a bonus of 20 percent of income after deduction of the salary allowance.
The formula to calculate the bonus is:
Bonus=0,20*(Income-salary)
If income is $150000
Bonus= 0,20*(150000-30000)=$24000
The bonus for the partner is calculated by first subtracting the salary allowance from the total income and then applying the 20% bonus rate to the remaining amount. In this case, the bonus amounts to $24,000 (20% of $120,000), making the correct answer C.
Explanation:The question asks to calculate the bonus for a partner based on a partnership agreement provision. This is a mathematical problem within the scope of business studies, specifically related to profit distribution in partnerships.
To find the bonus amount, we first deduct the salary allowance from the income, then calculate 20% of the remaining amount as the bonus:
Income = $150,000
Salary allowance = $30,000
Income after salary deduction = $150,000 - $30,000 = $120,000
Bonus = 20% of Income after salary deduction
Bonus calculation:
Bonus = 0.20 × Income after salary deduction
Bonus = 0.20 × $120,000
Bonus = $24,000
Therefore, the correct answer is C. $24,000.
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 invests $40,000 for a one-fifth interest in the total capital of $220,000. The journal to record David's admission into the partnership will include:
A. a credit to Cash for $40,000.
B. a debit to Allen, Capital for $3,000.
C. a credit to David, Capital for $40,000.
D. a credit to Daniel, Capital for $1,000.
Answer:
B. a debit to Allen, Capital for $3,000.
Explanation:
Capital after admission: 220,000
Daniel receives a fifth so 20%: 20% of 220,000 = 44,000
Daniel investment 40,000
So there is a 4,000 bonus that will be taken between the old partners at their share ratio:
Allen 4,000 x 3/4 = 3,000
Daniel 4,000 x 1/4 = 1,000
The journal entry wil lbe:
cash 40,000
allen 3,000
daniel 1,000
davin 44,000
Garrett Corporation provided the following information for the year: Beginning Balancelong dashWork-in-Process Inventory $ 25 comma 000 Ending Balancelong dashWork-in-Process Inventory 57 comma 000 Beginning Balancelong dashDirect Materials 80 comma 000 Ending Balancelong dashDirect Materials 59 comma 000 Purchaseslong dashDirect Materials 362 comma 000 Direct Labor 472 comma 000 Indirect Labor 18 comma 000 Depreciation on Factory Plant and Equipment 23 comma 000 Plant Utilities and Insurance 268 comma 000 What was the amount of direct materials used in production during the year?
Answer:
Direct material used= $383000
Explanation:
Giving the following information, we need to calculate the amount of direct material used in production:
Beginning Work-in-Process Inventory $ 25000
Ending Work-in-Process Inventory 57000
Beginning Direct Materials 80000
Ending Direct Materials 59000
Purchases Materials 362000
Direct Labor 472000
Indirect Labor 18000
Depreciation on Factory Plant and Equipment 23000
Plant Utilities and Insurance 268000
Direct material used= beginning inventory direct material + purchase direct material - ending inventory direct material
Direct material used= 80000 + 362000 - 59000= $383000
During the year, the Senbet Discount Tire Company had gross sales of $1.21 million. The company’s cost of goods sold and selling expenses were $590,000 and $243,000, respectively. The company also had notes payable of $820,000. These notes carried an interest rate of 6 percent. Depreciation was $120,000. The tax rate was 25 percent. a. What was the company’s net income? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) b. What was the company’s operating cash flow? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.)
Answer:
Ans. Net Income= $148,350 ; Operating Cash Flow= $268,350
Explanation:
Hi, first we need to find the interest expense that would come from the amount of notes payable times its interest rate, that is:
[tex]Interest Expense=NotesPayable*InterestRate=820,000*0.06=49,200[/tex]
Now we have all that we need.
In the image below, you can find the way the net income and the operating cash flow was calculate, please notice the signs aside of each item, that is the guide of how to calculate.
For example:
Gross Sales - Cost of Goods Sold =Gross Margin
1,200,000 - 590,000=610,000
Gross Margin - Selling Expenses-Depreciation= EBIT
610,000 - 243,000 - 120,000 = 247,000
EBIT - Interest Expenses = EBT
247,000 - 49,200 = 197,000
EBT - Taxes = Net Income
197,000 - (197,000*0.25) = 148,350
To find the operating cash flow we go like this.
Net Income + Depreciation = Operating Cash Flow
148,350 + 120,000 = 268,350
The only thing to add here is the net income and the depreciation. We add back the depreciation because this is an expense that is not monetary, therefore the funds are still in the company but the government allow us to discounted from taxes.
This is how this should look like
Notes Payable 820000
Interest 6% (49200 )
Income Statement
Gross Sales $1.200.000
(-)COGS -$590.000
(=)Gross Margin $610.000
(-)Selling Expenses -$243.000
(-)Depreciation -$120.000
(=)EBIT $247.000
(-)Interest Expense -$49.200
(=)EBT $197.800
(-)Taxes 25% -$49.450
(=)Net Income $148.350
Operating Cash Flow
Net Income $148.350
(+)Depreciation $120.000
(=)Operatign Cash Flo $268.350
Best of luck.
The company's net income is $115,750. The operating cash flow for the company is $320,250.
Explanation:To calculate the company's net income, we need to subtract the cost of goods sold, selling expenses, interest expenses, and depreciation from the gross sales. The net income is then subjected to the tax rate to calculate the after-tax net income. In this case, the company's net income is $115,750.
To calculate the company's operating cash flow, we start with the net income and then add back the depreciation expense. We also subtract the increase in notes payable. The operating cash flow for the company is $320,250.
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Which of the following accurately describes the difference between a change in supply and a change in quantity supplied? a. A change in quantity supplied is a movement along the supply curve, but a change in supply is a shift of the entire supply curve. b. A change in supply is a movement along the supply curve, but a change in quantity supplied is a shift of the entire supply curve. c. There is no difference; they mean the same thing. d. A decrease in supply causes an increase in demand, but a decrease in quantity supplied causes a decrease in demand.
Answer:
Option A
Explanation:
First let's make see the what is the difference (they are not the same thing.) And then lets analize which statement is the most accurate.
A change in supply and a change in quantity supplied are different things. The change in supply is caused by changes in costs and incentives that change how much a producer can and will produce at a given price.
The change in quantiy supplied is caused simply by a change in the retail price of the product.
The change in quantity supplied is shown as a movement along the curve. While the change in supply is shown graphically as a movement of the supply curve.
As we can see, that means that A is the correct answer.
Pember Corporation started business in 2007 by issuing 200,000 shares of $20 par common stock for $36 each. In 2012, 30,000 of these shares were purchased for $52 per share by Pember Corporation and held as treasury stock. On June 15, 2013, these 30,000 shares were exchanged for a piece of property that had an assessed value of $810,000. Perber's stock is actively traded and had a market price of $60 on June 15, 2013. The cost method is used to account for treasury stock. The amount of paid-in capital from treasury stock transactions resulting from the above events would be
a. $1,200,000. b. $720,000. c. $585,000. d. $240,000.
Answer:
d. $240,000.
Explanation:
The computation of the amount of paid-in capital from treasury stock is calculated by applying the formula which is shown below:
= Number of shares × (Market price per share - purchase price per share)
= 30,000 shares × ($60 per share - $52 per share)
= 30,000 × $8 per share
= $240,000
The other items which are mentioned in the question are irrelevant. Therefore, it is not to be considered in the computation part.
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 invests $50,000 for a one-fifth interest. What amount of goodwill will be recorded?
A. $20,000
B. $4,000
C. $40,000
D. $15,000
Answer:
A. $20,000
Explanation:
For computing the goodwill amount we have to apply the formula which is shown below:
= Required capital - actual capital
where,
We know that David invested $50,000 for one-fifth interest
So, Required capital = David investment amount × 5
= $50,000 × 5
= $250,000
And, the actual capital would be
= Allen capital + Daniel capital + David investment
= $140,000 + $40,000 + $ 50,000
= $230,000
So, the goodwill would be
= $250,000 - $230,000 = $20,000
Taco Hut purchased equipment on May 1, 2018, for $15,000. Residual value at the end of an estimated 8-year service life is expected to be $4,000.
Calculate depreciation expense using the straight-line method for 2018 and 2019, assuming a December 31 year-end. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar.)
Answer:
2018: 8 months
Depreciation= $916,67
2019: full year
Depreciation= $1375
Explanation:
Giving the following information:
Taco Hut purchased equipment on May 1, 2018.
Price: $15,000.
Residual value: $4,000
Useful life: 8 year
We need to calculate the depreciation for 2018 and 2019 using straight-line method:
Depreciation= (purchase price- residual value)/useful life
Depreciation= (15000-4000)/8= $1375
2018: 8 months
Depreciation=(1375/12)*8= 916,67
2019: full year
Depreciation= $1375
Classifying Cash Flows Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows: a. Retirement of bonds payable Investing b. Purchase of inventory for cash Financing c. Cash sales Investing d. Repurchase of common stock Investing e. Payment of accounts payable Operating f. Disposal of equipment
Answer:
a. Financing activity
b. Operating activity
c. Operating activity
d. Financing activity
e. Operating activity
f. Investing activity
Explanation:
Basically there are three types of activities:
1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.
2. Investing activities: It records those activities which include purchase and sale of the fixed assets
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance. Example: equity, bonds payable, etc
Based on the above information about each activity, the reporting of each transaction is shown below:
a. Financing activity: As the transaction is related to the bond payable
b. Operating activity: As the transaction is related to the inventory
c. Operating activity: As the transaction is related to the sales
d. Financing activity: As the transaction is related to the common stock
e. Operating activity: As the transaction is related to the account payable
f. Investing activity: As the transaction is related to the equipment
A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely
a. increased.
b. decreased.
c. stayed the same.
d. may have increased, decreased, or stayed the same
Answer:
The correct answer is B: decreased
Explanation:
Gross Domestic Product (GDP) is the sum of all the finished goods and services produced in a specific period, based on the market value of such items. The data sets are net of inflation, they are calculated adjusting for price changes.
The formula is as follow:
GDP = C + I + G + NX
GDP is the sum of consumer spending C, Investments I, Government spending G, and net exports NX.
Inventory level itself is not part of GDP; however, changes in inventory does affect GDP by affecting investments. So if a corporation chooses to build up its inventory by amount X, it essentially makes an expenditure that increases I by X. Inventory will increase when a company produces more than what it sells.
So a reduction in production affects I, reducing GDP.
Answer:
The correct answer is letter "B": decreased.
Explanation:
The Gross Domestic Product or GDP represents the overall market value of all nation-produced goods and services and calculates the performance of the economy. It is calculated using the following formula:
GDP = C + G + I + NX
Where:
C: private consumption or consumer spending G: government spending I: businesses' capital spending NX: net exports (exports - imports)
In the example, if businesses decreased their production, capital spending (I) will be lowered. Thus, if the other factors remained the same, the GDP is likely to decrease during that quarter.
You run a hotel with 200 rooms. Fixed daily cost is $1500 which includes staff salary and property charges, maintenance cost is additional $300 daily. Variable cost per room is $15 which includes cleaning, utility cost etc. You charge $100 per room per day. You sold 50 rooms today, how much revenue did you earn.
Answer:
The revenue is $2,450
Explanation:
The computation of the revenue is shown below:
= Sales - variable cost - additional costs - fixed cost
where,
Sales = Selling units × price per unit
= 50 rooms × $100
= $5,000
Variable cost = variable cost × price per unit
= 50 rooms × $15
= $750
The other cost value would remain the same
Now put these values to the above formula
So, the value would equal to
= $5,000 - $750 - $300 - $1,500
= $2,450
Answer:
The revenue we earned for 1 day by renting the rooms equals $2450.
Explanation:
Since we rent 50 rooms at the rate of $100 per room thus the overall revenue that we earn equals
[tex]R=50\times 100=$5000[/tex]
Now the expenditures include:
1) Fixed daily cost = $1500
2) Maintenance cost = $300
3) Variable cost = $15 thus cost for 50 rooms equals = 15x50= $750
Thus the total expenditure on the hotel is the sum of all the above charges
thus [tex]E=1500+300+750=2250[/tex]
Thus the net revenue is the difference in total revenue and the total expenditure
Thus Net Revenue =$5000-$2550=$2450
Berry Corporation has 50,000 shares of $10 par common stock authorized. The following transactions took place during 2012, the first year of the corporation's existence:
Sold 10,000 shares of common stock for $18 per share.
Issued 10,000 shares of common stock in exchange for a patent valued at $200,000.
At the end of the Berry's first year, total paid-in capital amounted to a. $80,000.
b. $180,000.
c. $200,000.
d. $380,000.
Answer: Option (D) is correct.
Explanation:
(a) Common stock issued for cash:
Cash (10,000 shares @$18) $180,000
To common stock (10,000 shares @$10 par) $100,000
To Adding paid in capital (10,000 shares @$8) $80,000
(b) Common stock issued for patent:
Patent (market value of patent) $200,000
To common stock (10,000 shares @$10 par) $100,000
To Adding paid in capital (10,000 shares @$10) $100,000
(c) At the end of the Berry's first year,
Common stock = $200,000
Adding paid in capital = $180,000
Therefore,
Total paid-in capital = Common stock + Adding paid in capital
= $200,000 + $180,000
= $380,000
The total paid-in capital for Berry Corporation after selling shares and issuing shares for a patent is $380,000, the correct answer is d.
Explanation:The question involves calculating the total paid-in capital for Berry Corporation based on the given stock transactions. Two main transactions have to be considered: the sale of 10,000 shares at $18 per share, and the issuance of 10,000 shares in exchange for a patent valued at $200,000.
The total paid-in capital from selling 10,000 shares at $18 each (which is greater than the $10 par value) includes the par value ($10 x 10,000 = $100,000) and the additional paid-in capital (also known as share premium) of $8 per share above par value ($8 x 10,000 = $80,000), totaling $180,000 from this transaction.
For the second transaction, when the corporation issued 10,000 shares for a patent, the total value of the shares is taken as the value of the patent ($200,000). Since no additional share premium was mentioned here, the entire value is considered as paid-in capital.
So, the correct total paid-in capital is the sum of both transactions: $180,000 from the cash sale + $200,000 from the patent transaction, totaling $380,000.
Financial markets and intermediaries:
A. channel savings to real investment.
B. increase risks for businesses.
C. generally reduce the liquidity of securities.
D. prevent the transportation of cash across time.
Answer: A. channel savings to real investment.
Explanation: Financial intermediaries are institutions that serve as intermediaries to make financial processes easier and more efficient.
The most common are banks and brokerage firms, so they help channel investment channels and improve the inherent risk through established regulations.
Prof. Chaos finds a new house he wants to buy for $260,000. After selling his current house he expects to have $80,000 as a down payment for his new house. What would Prof. Chaos monthly payment be on the $180,000 mortgage he would need if he takes out a 30-year fixed rate mortgage at a 4% nominal annual rate? (round your answer to the nearest cent)
The monthly mortgage payment for Prof. Chaos's $180,000 mortgage with a 30-year term at a 4% annual interest rate would be approximately $859.35.
Explanation:Prof. Chaos is buying a new house for $260,000 and after selling his current house, he expects to have an $80,000 down payment, leaving him with a $180,000 mortgage. To calculate the monthly mortgage payment for a 30-year fixed-rate mortgage at a 4% annual interest rate, we can use the formula for the monthly payment (M) of a mortgage:
M = P[r(1+r)^n]/[(1+r)^n - 1]
Where:
P is the principal amount ($180,000)r is the monthly interest rate (4% annual rate divided by 12 months, so 0.04/12 = 0.003333)n is the number of payments (30 years times 12 months/year = 360 payments)Plugging in the values, we get:
M = $180,000[0.003333(1+0.003333)^360]/[(1+0.003333)^360 - 1]
After calculating, rounding to the nearest cent, Prof. Chaos's monthly payment would be approximately $859.35.
This estimate ignores additional costs such as property taxes, homeowners insurance, and potential private mortgage insurance (PMI), which might be required if the down payment is less than 20% of the home's purchase price.
Nguyen Inc. applies overhead to products based on direct labor hours using normal costing. During 2016, total overhead costs were estimated to be $500,000. Actual overhead totaled $540,000 based on 32,000 actual direct labor hours. At the end of the year, overhead was overapplied by $20,000. Based on this information, what was the predetermined overhead rate used during 2016?
Answer:
overhead rate: 17.5
Explanation:
The difference between applied an actual overhead is calculated as follows:
actual hours x overhead rate - actual cost = over or underapplied overhead
underapplied means actual were higher than applied
while, overapplied means the actual cost were lower.
Based on this information we can set up the foermula as follows:
overhead rate x 32,000 -540,000 = 20,000
now we solve for the rate:
rate = (20,000 + 540,000) / 32,000 = 17.5
Trade diversion happens when... Instead of importing from most efficient country, a Country import goods from nation within a Preferential Trade Agreement, with higher production costs Instead of importing from most efficient country within a Preferential Trade Agreement, a Country imports from the World's most efficient producer, violating the agreement A Country imports the same good from several different Countries, instead of focusing on one or few Countries alone A Country exports the same good from several different Countries, instead of focusing on one or few Countries alone
Answer: Option (A) is correct.
Explanation:
There are two terms in international economics; Trade creation and Trade diversion.
When some countries engaged in a particular economic integration then they have to agree upon various tariff rates. Trade diversion means that an economic integration or a free trade area diverts the trade from the most productive or efficient producer outside the economic integration towards the less productive or efficient producer inside the free trade area.
Types of economic integration:
(1) Preferential trade agreement
(2) Free trade agreement
(3) Custom unions
(4) Common Market
(5) Economic Union
Pina Colada Corp. has the following inventory data:
July 1 Beginning inventory 33 units at $21 $693
7 Purchases 116 units at $22 2552
22 Purchases 17 units at $24 408
$3653
A physical count of merchandise inventory on July 30 reveals that there are 53 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is
Answer:
Amount allocated to cost of goods sold = $2,520
Explanation:
Total inventory held during the complete month.
Beginning = 33 units @ $21 = $693
7 July = 116 units @ $22 = $2,552
22 July = 17 units @ $24 = $408
Closing inventory = 53 units.
Under LIFO method, there is sale of inventory which was last bought or purchased.
Here, as per LIFO,
Total units = 33 + 116 + 17 = 166 units.
Units in closing inventory = 53 units.
That means, 33 units from opening and 20 units from purchases made as on 7 July
33 units @ $21 = $693
20 units @ $22 = $440
Total carrying value of closing inventory = $1,133
Therefore, amount allocated to cost of goods sold = 17 units @ $24 and 96 units @ $22
= $2,520
An investment pays you $100 at the end of each of the next 3 years. The investment will then pay you $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If the interest rate earned on the investment is 8 percent, what is its present value? What is its future value?
Answer:
Present value is $923.90 and future value is $1,466.24
Explanation:
Given:
$100 is received in the next three years. It's an annuity so refer present value of annuity table. Present value annuity factor for 3 years, 8% is 2.5771. So present value of this will be $257.71 (2.5771 × 100). Similarly calculation for inflows from the investment are as follows:
$200 at 8% in the 4th year, present value factor of lumpsum amount is 0.7350 which is $147 (0.735 × 200)
$300 at 8% in the 5th year, present value factor of lumpsum amount is 0.6806 which is $204.18 (0.6806 × 300)
$500 at 8% in the 6th year, present value factor of lumpsum amount is 0.6302 which is $315.10 (0.6302 × 500)
Total present value of investment is $923.90 (257.71 + 147 + 204.18 + 315.10)
Present value of inflows are calculated. Calculate future value of these amounts.
future value factor @8%, 6 years is 1.5869.
Future value of first inflow is $408.96 (257.71 × 1.5869)
Future value of second inflow is $233.27 (147× 1.5869)
Future value of third inflow is $324.01 (204.18 × 1.5869)
Fourth Inflow in the sixth year is $500
Total present value of investment is $1,466.24 (408.96 + 233.27 + 324.01 + 500)
The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2016, trial balances contained the following account information:
Nov. 30 Dec. 31
Dr. Cr. Dr. Cr.
Supplies 3,100 4,600
Prepaid insurance 7,600 5,300
Salaries and wages payable 18,000 16,600
Deferred rent revenue 5,200 2,600
The following information also is known:
(a) The December income statement reported $3,600 in supplies expense.
(b) No insurance payments were recorded in December.
(c) $18,000 was paid to employees during December for salaries and wages.
(d) On November 1, 2016, a tenant paid Righter $7,800 in advance rent for the period November through January. Deferred rent revenue was credited.
Required:
(1) What was the cost of supplies purchased during December?
(2) What was the adjusting entry recorded at the end of December for prepaid insurance?
Answer:
purchase of supplies 5,600
insurance expense 2,300 debit
prepaid insurance 2,300 credit
Explanation:
(1) What was the cost of supplies purchased during December?
invneotry identity:
beginning supplies + purchase = ending supplies + expense
the left side are the input. The supplies could come from previous prior or be pruchase.
The right side the outputit could be consumer or kept at stock
3,100 + p = 4,600 + 3,600
purchase = 4,600 + 3,600 - 3,100 = 5,100
(2) What was the adjusting entry recorded at the end of December for prepaid insurance?
beginning insurance 7,600
ending insurance (5,300)
adjustment: 2,300
there was insurance expired for the value of 2,300
There is evidence that the rate at which money changed hands rose during the German hyperinflation. This means that
a. velocity rose. If monetary neutrality holds the rise in velocity increased the ratio M/P.
b. velocity rose. If monetary neutrality holds the rise in velocity decreased the ratio M/P.
c. velocity fell. If monetary neutrality holds the fall in velocity increased the ratio M/P.
d. velocity fell. If monetary neutrality holds the fall in velocity decreased the ratio M/P.
Answer:
The correct answer is b. velocity rose. If monetary neutrality holds the rise in velocity decreased the ratio M/P.
Explanation:
The quantitative theory of money states that in a given period of time, the money supply multiplied by the velocity of money (that is the rate at which moeny changes hands) is equal to the price level multiplied by the amount of goods and services. Mathematically:
[tex]M_{t} \times V_{t} =P_{t}\times Y_{t}[/tex]
By algebraic manipulation we obtain:
[tex]\frac{M_{t}}{P_{t}} \times V_{t}=Y_{t}[/tex]
Money neutrality means that a change in the supply of money only has an effect on nominal variables, such as the price level, with no effect on real variables such as the real amount of goods and services.
Therefore if we know that the velocity of money rises then the ratio [tex]M_{t}/P_{t}[/tex] must decrease for money neutrality to hold, that is for [tex]Y_{t}[/tex] to remain constant.
A company currently pays a dividend of $2.2 per share (D0 = $2.2). It is estimated that the company's dividend will grow at a rate of 22% per year for the next 2 years, and then at a constant rate of 7% thereafter. The company's stock has a beta of 1.4, the risk-free rate is 6.5%, and the market risk premium is 2%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
Answer:
Estimate of the stock's current price=$132.71
Explanation:
Price of the stock today = [tex]\frac{D1}{(1+ke)^1}+\frac{D2}{(1+ke)^2}+\frac{D3}{(1+ke)^3}+\frac{P3}{(1+ke)^3}[/tex].
where [tex]D_1= D_0*(1+g)=2.2(1.22)=2.684[/tex]
and ke using CAPM = [tex]r_f+b(r_m-r_f)[/tex] = 0.065+1.4(0.02)=0.093
and P3= [tex]\frac{D4}{ke-g}[/tex]
Estimate of the stock's current price = [tex]\frac{2.684}{(1+0.093)^1}+\frac{2.684(1.22)}{(1+0.093)^2}+\frac{2.684(1.22)(1.07)}{(1+0.093)^3}+\frac{2.684(1.22)(1.07^2)}{(0.093-0.07)(1+ke)^3}[/tex] = 132.71
A company needs 10,000 units of a component used in producing one of its products. The latest internal accounting reports show that the per unit manufacturing cost to be $150.00, variable manufacturing costs of $110.00 and fixed manufacturing cost of $40. The company recently received an offer from another manufacturer to produce the component for $144.00. If it buys the component on the outside 40% of the fixed manufacturing cost can be avoided. Required: a. If the company buys the component from the outside supplier at $144.00, what is the impact on income? b. What price would make the company indifferent between making the component internally and having the outside supplier make it?
Answer:
A) The outsourcing costs $18 more per unit. It increases the cost by $18000
B) Price= $126
Explanation:
Giving the following information:
Q= 10000 units
In-house:
Variable manufacturing cost= $110 unit
Fixed cost= $40 unit
Total cost= $150 unit
Outsource:
Price=$144 unit
Fixed cost= $40*0,60= $24
Total cost= $168
A) The outsourcing costs $18 more per unit. It increases the cost by $18000
B) The price that makes the decision indifferent is the one that equals unitary costs. We can't reduce fixed costs.
Price=144-18= $126