Answer:
Check the calculation below.
Explanation:
a) Amount in account after 3 years:
= $1,000 (1+ 0.03)5 + $1,000 (1+ 0.03)4+ $1,000 (1+ 0.03)3 + $1,000 (1+ 0.03)2 + $1,000 (1+ 0.03)
= $1,159.27 + 1,125.51 + 1,092.73 + 1,060.90 + 1,030
= $5,468.40
b) Calculation of amount of payment:
Let the amount of each of two payment be "P".
Now, $4,000 = P (1 + 0.015)3 + P (1 + 0.015)2
or,$4,000 = 1.0457 P + 1.0302 P
or, P = $4,000 / 2.0759
or, P = 1,927 (Approx)
To have $10,000 in ten years with 10% interest compounded annually, you need to deposit $3,874.38.
Explanation:To calculate how much money you need to put into a bank account to have $10,000 in ten years with 10% interest compounded annually, you can use the formula for compound interest, which is A = P(1 + r/n)^nt. In this case, P is the principal amount (the initial deposit), r is the interest rate (10% or 0.10), n is the number of times interest is compounded per year (1 for annually compounded interest), and t is the number of years (10).
Substituting these values into the formula, we get A = P(1 + 0.10/1)^(1*10) = 10,000. Rearranging the formula to solve for P, we have P = A / (1 + r/n)^nt. Plugging in the known values, we calculate P = 10,000 / (1 + 0.10/1)^(1*10) = $3,874.38.
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Consider the three transactions T1, T2, and T3, and the schedules S1 and S2 given below.
Draw the serializability (precedence) graphs for S1 and S2, and state whether each schedule is serializable or not.
If a schedule is serializable, write down the equivalent serial schedule(s).
T1: r1 (X); r1 (Z); w1 (X);
T2: r2 (Z); r2 (Y); w2 (Z); w2 (Y);
T3: r3 (X); r3 (Y); w3 (Y);
S1: r1 (X); r2 (Z); r1 (Z); r3 (X); r3 (Y); w1 (X); w3 (Y); r2 (Y); w2 (Z); w2 (Y);
S2: r1 (X); r2 (Z); r3 (X); r1 (Z); r2 (Y); r3 (Y); w1 (X); w2 (Z); w3 (Y); w2 (Y);
Answer
The answer and procedures of the exercise are attached in a microsoft excel document.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Carlson, Inc. owns 80 percent of Madrid, Inc. Carlson reports net income for 2018 (without consideration of its investment in Madrid, Inc.) of $1,500,000. For the same year, Madrid reports net income of $705,000. Carlson had bonds payable outstanding on January 1, 2018 with a carrying value of $1,200,000. Madrid acquired the bonds on the open market on January 3, 2018 for $1,090,000. For the year 2018, Carlson reported interest expense on the bonds in the amount of $96,000, while Madrid reported interest income of $94,000 for the same bonds. Assuming there are no excess amortizations or other intra-entity transactions, what is Carlson’s share of consolidated net income?
Answer:
$2,176,000
Explanation:
The computation of the Carlson’s share of consolidated net income is shown below:
= Net income for 2018 + Madrid net income × ownership percentage + income from bond + excess interest
= $1,500,000 + $705,000 × 80% + $110,000 + $2,000
= $1,500,000 + $564,000 + $110,000 +$2,000
= $2,176,000
The income from bond would be
= $1,200,000 - $1,090,000
= $110,000
And, the excess interest would be
= $96,000 - $94,000
= $2,000
What is meant by a progressive tax?
A regressive tax?
A pro- portional tax?
Comment on the progressivity or regressivity of each of the following taxes, indicating in each case where you think the tax incidence lies:
(a) the Federal personal in- come tax
(b) a 4 percent state general sales tax
(c) a Federal excise tax on automobile tires
(d) a municipal property tax on real estate
(e) the Federal corporate income tax
(f) the portion of the payroll tax levied on employers
Answer:
Progressive tax—A tax that takes a larger percentage of income from high-income groups than from low-income groups.
Regressive tax—A tax that takes a larger percentage of income from low-income groups than from high-income groups
A proportional tax is an income tax system where the same percentage of tax is levied on all taxpayers, regardless of their income.
Explanation:
Taxes can be progressive, regressive, or proportional, impacting individuals based on their income levels. The Federal personal income tax is progressive, a general sales tax is regressive, and the payroll tax on employers is proportionally regressive.
A progressive tax is a tax where the tax rate increases as the taxable income or expenditure increases. This system aims to tax individuals based on their ability to pay, with higher-income earners paying a greater percentage of their income in taxes.
A regressive tax is one where the tax burden falls more heavily on low-income individuals, since the tax takes up a larger percentage of their income despite the rate being flat or decreasing as the income increases.
A proportional tax, or flat tax, is where everyone pays the same percentage of their income, regardless of how much they earn.
The Federal personal income tax is progressive, with high-income earners paying a higher percentage of their income.A 4% state general sales tax is generally regressive, as it consumes a larger portion of lower-income earners' budgets.A Federal excise tax on automobile tires is regressive, as it represents a larger financial burden relative to income for those with lower incomes who still need to purchase tires.A municipal property tax on real estate is typically regressive unless it includes exemptions or progressive elements to mitigate the burden on lower-value properties and their owners.The Federal corporate income tax is intended to be progressive, as it taxes corporations based on their profits.The portion of the payroll tax levied on employers is proportional up to a certain income cap, after which it becomes regressive.TopChop sells hairstyling franchises. TopChop receives $56,000 from a new franchisee for providing initial training, equipment and furnishings that have a standalone selling price of $56,000. TopChop also receives $35,000 per year for use of the TopChop name and for ongoing consulting services (starting on the date the franchise is purchased). Carlos became a TopChop franchisee on July 1, 2016, and on August 1, 2016, had completed training and was open for business.
How much revenue in 2016 will TopChop recognize for its arrangement with Carlos?
Answer:
$73,500 is the revenue TopChop will recognize for the arrangement with Carlos.
Explanation:
Revenue is calculated as follows.
= amount received + Use of name
= $56,000 + $35,000 × (1÷2)
= $73,500
New franchise fee can be immediately recognised as income.
Final answer:
TopChop would recognize $56,000 for the initial equipment and training, and a prorated amount of $17,500 for the half-year use of the franchise name and consulting services, totaling $73,500 in revenue for 2016.
Explanation:
TopChop will recognize revenue based on when the services are provided. Since the franchise was purchased on July 1, 2016, and Carlos completed training and opened for business on August 1, 2016, TopChop would recognize the full $56,000 for the initial training, equipment, and furnishings immediately, as this is the standalone selling price and the service was provided.
Additionally, TopChop would recognize prorated annual fees for the consulting services and use of the TopChop name starting from July 1, 2016, to December 31, 2016 (half of the $35,000 annual fee), which is $17,500.
Therefore, the total revenue recognized by TopChop for its arrangement with Carlos in 2016 would be $56,000 (for setup services) plus $17,500 (from the annual fee), totaling $73,500.
A firm has a tax burden of 0.9,a leverage ratio of 1.1, an interest burden of 0.6, and a return-on-sales ratio of 13%. The firm generates $2.62 in sales per dollar of assets.
What is the firm's ROE?
Answer:
the firm's ROE is 20%
Explanation:
The tax burden is 0.9
The interest burden is 0.6
The return on sales margin is 13%
The turnover ratio is 2.62
The leverage ratio is 1.1
Calculate the ROE
ROE = 0.9 * 0.6 * 0.13 * 2.62 * 1.1
=0.2 or 20%
When investing for a long term, investors care about the volatility of ________ returns and not
the volatility of ________ returns.
A) average, cumulative
B) cumulative, average
C) mean, cumulative
D) mean, average
Answer:
B) cumulative, average
Explanation:
Cumulative return is the total return that the investment has earned; the average return has to do with the average return of investment that has accrued to the investment within a specified period.
Hank owns a gym called Ultimate Fitness. During the past year, Hank sold his facility to purchase a larger building with a parking lot. He received sales proceeds of $125,000 from the buyer. He paid a sales commission to his broker of $6,500. The building had an original cost of $105,500 and had accumulated depreciation for tax purposes of $15,825. What is Hank's realized gain or loss on the sale? Gain of $118,5
Answer:
$28,825 gain
Explanation:
For computing the gain or loss, first, we have to determine the book value of an asset which is shown below:
= Original value of the building - accumulated depreciation
= $105,500 - $15,825
= $89,675
So, the gain would be
= Sale value - sales commission - book value
= $125,000 - $6,500 - $89,675
= $28,825 gain
McDonald’s, Burger King, and Wendy’s all produce hamburgers, among other things. However, if you prefer burgers from McDonald’s, you might consider other burgers an imperfect substitute. With this in mind, which of the following statements would be correct about McDonald’s prices in the short run?
a. McDonald’s will maximize profits by producing where marginal revenue equals marginal cost.
b. McDonald’s will charge a price higher than marginal revenue and marginal cost.
c. McDonald’s will charge a price equal to marginal cost.
d. McDonald’s will set its prices like a perfect competitor.
e. McDonald’s consumers will pay a higher price as long as it is worth the value they place on their preference for McDonald’s burgers.
f. McDonald’s will set its prices like a monopolist.
Answer:
Correct statements about McDonald's price in given scenario are given below.
Explanation:
1. McDonald's will maximize profits by producing where marginal revenue equals marginal cost.
2. McDonald's will charge a price higher than marginal revenue and marginal cost.
3. McDonald's consumer will pay a higher price as long as it is worth value they place on their preference for McDonald's burgers.
4. McDonald's will set it's price like a monopolist.
McDonald's compete in market with two other competitor. Consumer prefer McDonald's burgers and consider other two firms burgers as a imperfect substitute.
In this scenario McDonald's will act like a monopoly in burger market.
Answer:
Correct statements about McDonald's price in given scenario are given below.
Explanation:
1. McDonald's will maximize profits by producing where marginal revenue equals marginal cost.
2. McDonald's will charge a price higher than marginal revenue and marginal cost.
3. McDonald's consumer will pay a higher price as long as it is worth value they place on their preference for McDonald's burgers.
4. McDonald's will set it's price like a monopolist.
McDonald's compete in market with two other competitor. Consumer prefer McDonald's burgers and consider other two firms burgers as a imperfect substitute.
In this scenario McDonald's will act like a monopoly in burger market.
The Reading Co. has adopted a policy of increasing the annual dividend on its common stock at a constant rate of 3 percent annually. The last dividend it paid (T = 0) was $.90 a share. What will be the company's dividend six years from now?
Answer:
$1.07
Explanation:
In this question ,we use the formula which is shown below:
A = P × (1 + r ÷ 100)^n
where,
P = Present value $0.90
A = Future value
rate =3%
number of years = 6
Now put these values to the above formula
So, the value would be equal to
= $0.90 × (1 + 3%)^6
= $0.90 × 1.03^6
= $0.90 + 1.194052
= $1.07
We considered all the items so that the correct dividend can come
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of soda, one bag of chips, and one comic book. In year one, the basket costs $10.00. In year two, the price of the same basket is $9.00. From year one to year two, there is at an annual rate of . In year one, $50.00 will buy baskets, and in year two, $50.00 will buy baskets. This example illustrates that, as the price level falls, the value of money .
Answer:
price level fall and value of money is rises
Explanation:
given data
one year basket costs = $10.00
two year two basket costs = $9.00
one year buy baskets = $50
year two,buy baskets = $50
to find out
as the price level falls, the value of money will be
solution
we see that when we compare to 1 year price go down from $10 to $ 9
so deflation at annual rate is [tex]\frac{10-9}{10}[/tex] = 10%
so here
sum of $50 will be buy here = [tex]\frac{50}{10}[/tex] = $5 in one year
and $ 50 buy in 2 year is = [tex]\frac{50}{9}[/tex] = $5.56 in two year
so this is show here that price level fall and value of money is rises
The price level reflects the number of dollars needed to buy a basket of goods, and as the price level falls, the value of money increases.
Explanation:The price level reflects the number of dollars needed to buy a basket of goods. In year one, the basket costs $10.00, and in year two, the price is $9.00. From year one to year two, there is an annual rate of inflation of 10%. This example illustrates that as the price level falls, the value of money increases.
Lattimer Company had the following results of operations for the past year: Sales (15,000 units at $12.25) $183,750 Variable manufacturing costs $101,250 Fixed manufacturing costs 24,750 Selling and administrative expenses (all fixed) 39,750 (165,750) Operating income $18,000 A foreign company whose sales will not affect Lattimer's market offers to buy 5,500 units at $8.00 per unit. In addition to existing costs, selling these units would add a $0.30 selling cost for export fees. If Lattimer accepts this additional business, the special order will yield a:
a. $3,850 loss.
b. $6,875 profit.
c. $2,200 loss.
d. $5,225 profit.
e. $9,350 loss.
The special order from the foreign company will yield a profit of $5,225 after all variable costs are accounted for. This is found by subtracting the additional costs of manufacturing and export fees from the revenue from the order.
Explanation:
To calculate the income or loss from the additional business, we need to look at the additional revenue it will bring and the additional costs linked to it. The revenue from the foreign company's order will be 5,500 units * $8.00/unit = $44,000. The additional variable manufacturing cost for the 5,500 units can be calculated by multiplying the cost per unit (Variable manufacturing costs $101,250 / 15,000 units = $6.75 per unit) by 5,500 units, yielding $37,125. The additional selling cost for export fees is $0.30/unit * 5,500 units = $1,650. The total cost of the special order, therefore, is $37,125 + $1,650 = $38,775. So subtracting the total cost from the total income, we find that the special order will yield a profit of $44,000 - $38,775 = $5,225. Thus, the correct answer is d. $5,225 profit.
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Maquiladoras are
a. import-export agents of the Mexican government.
b. production facilities in north-central Mexican states.
c. freight forwarders from Mexico.
d. exchange controls from central banks in Latin American countries.
e. global marketing programs established in Latin American countries.
Answer: b. production facilities in north-central Mexican states.
Explanation: A maquiladora is a company located in the north of Mexico, which usually imports the products with tax facilities, performs a manufacturing process and then exports the products to which they belong again, this figure is used to reduce production costs. Example: A textile company, manufactures the products outside the country and then the finished product returns to the origin.
Use the data set WAGE2.dta to estimate the following model: log (wage) = β0 + β1educ + β2exper + β3tenure + β4married + β5south + β6urban + β7black + β8IQ + u (a) Use the variable KWW (the "knowledge of the world of work" test score) as a proxy for ability in place of IQ. What is the estimated return to education in this case? (b) Now, use IQ and KWW together as proxy variables. What happens to the estimated return to education? (c) In part (b), are IQ and KWW individuall significant? Are they jointly significant?
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Compute the total manufacturing cost for a manufacturer with the following information for the month.
Raw materials purchased $ 32,400
Direct materials used 53,750
Direct labor used 12,000
Factory supervisor salary 8,000
Salesperson commissions 6,200
Depreciation expense—Factory building 3,500
Depreciation expense—Delivery equipment 2,200
Indirect materials 1,250
Final answer:
The total manufacturing cost is the sum of direct materials used, direct labor, and manufacturing overhead expenses. In this case, it would be $53,750 for direct materials, $12,000 for direct labor, and $12,750 for manufacturing overhead (supervisor salary, factory building depreciation, and indirect materials), amounting to $78,500 in total.
Explanation:
The total manufacturing cost for a manufacturer includes all costs directly associated with the production process. To calculate this, we sum the direct materials used, direct labor, and manufacturing overhead expenses. The direct materials are the raw materials that are transformed into the finished product, and direct labor is the cost of the workforce that is directly involved in the manufacturing process. Manufacturing overhead consists of indirect costs related to production, such as the factory supervisor's salary and the depreciation on the factory building.
To compute the total manufacturing cost, we add:
Direct materials used: $53,750
Direct labor used: $12,000
Factory supervisor salary (part of manufacturing overhead): $8,000
Depreciation expense—Factory building (part of manufacturing overhead): $3,500
Indirect materials (part of manufacturing overhead): $1,250
However, salesperson commissions and depreciation on delivery equipment are not part of manufacturing costs, as they are generally considered selling and administrative expenses. Therefore, they are not included in the total manufacturing cost calculation.
Adding the values provided:
$53,750 (Direct materials used) + $12,000 (Direct labor used) + $8,000 (Factory supervisor's salary) + $3,500 (Depreciation on factory building) + $1,250 (Indirect materials) = $78,500 total manufacturing cost.
Which one of the following is a general characteristic of a securities broker?
A.Trades from his or her own inventory
B. Trades only foreign securities
C. Trades listed securities in an auction market
D. Trades electronically from any geographic location
E. Is the principal trader of debt securities
Answer:C. Trade listed security in an auction market
Explanation:
A broker is an agent in the securites market that deals in the purchase and sales of securities for a return referred to as brokerage.
The securites market is an auction market for securities.
He may or may not trade from his own inventory, his trading his not restricted to foreign securities,he may trade physically or electronically and he his a principal trader of not only debt securities but including equity securities.
Paccar Winch makes winch components for its different product lines. The firm operates its production facility 300 days per year. It has orders for about 12,000 winch components per year and has the capability of producing 100 per day. Setting up the winch production costs $50. The cost of each winch component is $1. The holding cost is $0.10 per winch component per year. a) What is the optimal size of the production run?
b) What is the average holding cost per year?
c) What is the average setup cost per year?
d) What is the total cost per year, including the cost of the winch components?
Answer:
Please see attachment
Explanation:
Please see attachment
Powell Company began the 2016 accounting period with $19,100 cash, $60,800 inventory, $48,800 common stock, and $31,100 retained earnings. During 2016, Powell experienced the following events: 1. Sold merchandise costing $36,200 for $76,000 on account to Prentise Furniture Store. 2. Delivered the goods to Prentise under terms FOB destination. Freight costs were $365 cash. 3. Received returned goods from Prentise. The goods cost Powell $1,940 and were sold to Prentise for $3,960. 4. Granted Prentise a $1,100 allowance for damaged goods that Prentise agreed to keep. 5. Collected partial payment of $52,500 cash from accounts receivable. Requireda. Record the events in general journal format. Required a. Record the events in general journal format. (If no entry is required for a transaction/event, select No journal entry required in the first account field.) view transaction list view general journal Journal Entry Worksheet 1 2 3 4 5 6 Sold merchandise for $76,000 on account to Prentise Furniture Store. General Journal Debit Credit Date 1a. *Enter debits before credits done clear entry record entryb. Open general ledger T-accounts with the appropriate beginning balances and post the journal entries to the T-accounts.c. Prepare an income statement, balance sheet, and statement of cash flows. d. Why would Prentise agree to keep the damaged goods?
Answer
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
For which capital component must you make a tax adjustment when calculating a firm’s weighted average cost of capital (WACC)?
a. Debt
b. Equity
c. Preferred stock
Omni Consumer Products Company (OCP) can borrow funds at an interest rate of 12.50% for a period of seven years. Its marginal federal-plus-state tax rate is 30%. OCP’s after-tax cost of debt is (rounded to two decimal places).
At the present time, Omni Consumer Products Company (OCP) has 20-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,382.73 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 30%. If OCP wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.)
Answer:
1. Debt
2. 8.75%
3. 8.85%
4. 6.195%
Explanation:
For computing the tax adjustment, the Debt capital component is taken
The normal formula to compute WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
The computation of the pre-tax cost of debt and after-tax cost of debt is shown below:
1. The after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 12.50% × ( 1 - 0.30)
= 8.75%
The NPER represents the time period.
Given that,
Present value = $1,382.73
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 13% = $130
NPER = 20 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
3. The pretax cost of debt is 8.85%
4. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 8.85% × ( 1 - 0.30)
= 6.195%
When calculating a firm's WACC, a tax adjustment is made for the debt component. The after-tax cost of debt is calculated by multiplying the pre-tax cost of debt by one minus the marginal tax rate. Omni Consumer Products Company's after-tax cost of debt is 8.75% based on an interest rate of 12.50% and a tax rate of 30%. The YTM rate on OCP's existing bonds would be a reasonable estimate for its after-tax cost of debt if they want to issue new debt.
Explanation:When calculating a firm's weighted average cost of capital (WACC), you need to make a tax adjustment for debt component. The cost of debt is adjusted for taxes because interest payments made on debt are tax-deductible. To calculate the after-tax cost of debt, you need to multiply the pre-tax cost of debt by one minus the marginal tax rate.
In the case of Omni Consumer Products Company (OCP), they can borrow funds at an interest rate of 12.50%. To calculate the after-tax cost of debt, you would multiply 12.50% by (1 - 30%) = 0.7 to get 8.75% as the after-tax cost of debt for OCP.
If OCP wants to issue new debt, a reasonable estimate for its after-tax cost of debt would be the yield to maturity (YTM) rate on its existing bonds. The YTM rate is the rate of return anticipated on a bond if it is held until maturity and takes into account the bond's current market price, coupon rate, and time to maturity. So, the YTM rate on OCP's existing bonds would be a reasonable estimate for its after-tax cost of debt.
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Andrew is saving up money for a down payment on a car. He currently has $5470, but knows he can get a loan at a lower interest rate if he can put down $6253. If he invests the $5470 in an account that earns 4.8% annually, compounded quarterly, how long will it take Andrew to accumulate the $6253? Round your answer to two decimal places, if necessary.
Answer:
2.79 quarters, so almost 3 quarters or 9 months
Explanation:
We write the equation, and solve it. To solve for x, as x is an exponent, we must use logarithms.
[tex]5,470(1+0.048)^{X} = 6,253\\(1.048)^{X} = \frac{6,253}{5,470} \\(1.048)^{X} = 1.14\\XLog1.048 = Log 1.14\\X = \frac{Log1.14}{Log 1.048} \\\\X = 2.79\\[/tex]
Final answer:
It will take Andrew approximately 4.36 years to accumulate $6253 by investing $5470 in an account that earns 4.8% annually, compounded quarterly.
Explanation:
To calculate how long it will take Andrew to accumulate $6253 by investing $5470 in an account that earns 4.8% annually, compounded quarterly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final amount ($6253)
P = principal amount ($5470)
r = annual interest rate (4.8% or 0.048)
n = number of times interest is compounded per year (4)
t = number of years
Plugging in the values: 6253 = 5470(1 + 0.048/4)^(4t)
Dividing both sides by 5470: 1.1433 = (1.012)^4t
Taking the logarithm of both sides to solve for t: 4t = log(1.1433)/log(1.012)
t = (log(1.1433)/log(1.012))/4
Using a calculator, we find that t is approximately 4.36 years. Therefore, it will take Andrew approximately 4.36 years to accumulate $6253.
Stacey and Andrew each own one-half of the stock in Parakeet Corporation, a calendar year taxpayer. Cash distributions from Parakeet are: $350,000 to Stacey and $150,000 to Andrew. If Parakeet’s current E&P is $160,000, how much current E&P is allocated to Andrew’s distribution?
Question 8 options:
$5,000
$10,000
$48,000
$150,000
None of the above.
Answer:
$48,000
Explanation:
E&P allocate for Andrew's distribution
= 160,000 * 150,000/(350,000+150,000)
= 160,000 * 150,000/500,000
= 48,000
The correct answer is $48,000
You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2018, you discover the following errors related to the 2016 and 2017 financial statements: Inventory at 12/31/16 was understated by $6,800. Inventory at 12/31/17 was overstated by $9,800. On 12/31/17, inventory was purchased for $3,800. The company did not record the purchase until the inventory was paid for early in 2018. At that time, the purchase was recorded by a debit to purchases and a credit to cash. The company uses a periodic inventory system. Required: 1. Assuming that the errors were discovered after the 2017 financial statements were issued, analyze the effect of the errors on 2017 and 2016 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.
Inventory understatement in 2016 led to overstated COGS and understated net income and retained earnings. The opposite effect occurred in 2017 due to inventory overstatement and delay in recording a purchase. A journal entry in 2018 correcting these errors would debit Inventory and credit COGS/Purchases for the respective amounts.
Explanation:In 2016, an understatement of $6,800 in the inventory would have caused the Cost of Goods Sold (COGS) to be overstated and thus, the net income and retained earnings would have been understated. In 2017, the overstatement of $9,800 in inventory and the delay in recording the inventory purchase of $3,800 would have caused COGS to be understated and net income and retained earnings to be overstated. An understated COGS value will make the profit look higher than it actually is. To correct these errors a journal entry in 2018, would debit Inventory for $6,800 and $3,800 and credit COGS and Purchases respectively. Similarly, for the overstatement, a debit to COGS and a credit to Inventory for $9,800.
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Andrew owns a popular, but expensive Chinese restaurant. In order to introduce more people to his brand, he offers a series of one-time "taste fairs" in which he brings his recipes to a locally sponsored event. Customers are able to pay modest amounts for small servings of his creations while not paying for the ambiance of the famous restaurant. What need is Andrew addressing?
the restaurant’s lack of customers
customers’ lack of money
customers’ lack of time
the customers’ lack of access
Answer: customers' lack of money
Explanation:
Here, in this particular case we can state that the restaurateur Andrew who owns and run a popular contemporary but expensive Chinese restaurant is addressing the fact that customer's lack money. The fact in this particular case is that consumers are willing to pay a modest amounts for the small amount of food being served while in contrast not paying for the "atmosphere" of his restaurant.
A yearminusend review of Accounts Receivable and estimated uncollectible percentages revealed the following:
Days Outstanding Accounts Receivable Est. Percent Uncollectible
1 -30days $ 60, 000 3%
31-60 days $ 40,000 5%
61-90 days $ 25, 000 12%
Over 90 days $ 7, 000 50%
Before the yearminusend adjustment, the credit balance in Allowance for Uncollectible Accounts was $ 1, 000. Under the agingminusofminusreceivables method, the UncollectibleminusAccount Expense at yearminusend is _______?
Answer:
The Uncollectible Account Expense at year end is $9,300
Explanation:
At the end of the year:
Estimated Uncollectible = $60,000 x 3% + $40,000 x 5% + $25,000 x 12% + $7,000 x 50% = $10,300
The company uses aging of receivables method. Before adjustment, the credit balance in Allowance for Uncollectible Accounts was $ 1,000. Therefore: Uncollectible Account Expense = $10,300 - $1,000 = $9,300
The entry:
Debit Uncollectible Account Expense $9,300
Credit Allowance for Uncollectible Accounts $9,300
Penny Bank, a discount store, is highly competitive. When entering a new market, Penny Bank often cuts prices so deeply that it sells below costs, effectively pushing smaller retail stores with less purchasing power out of the market. In this case, Penny Bank is using___________.
Answer: The correct answer is "Predatory pricing".
Explanation: In this case, Penny Bank is using predatory pricing.
Predatory prices consist of a pricing strategy that seeks to reduce prices below cost and have the effect of removing all competitors from the market, which although they are equally efficient as the firm that carries out the strategy, cannot withstand the competition of such low prices. The predominant firm on the other hand, aims to keep the entire market and then increase prices and obtain monopoly profits.
What is fiscal policy?
A. Fiscal policy can be described as changes in interest rates and taxes to achieve macroeconomic policy objectives.
B. Fiscal policy can be described as changes in interest rates to achieve macroeconomic policy objectives.
C. Fiscal policy can be described as changes in government spending and interest rates to achieve macroeconomic policy objectives.
D. Fiscal policy can be described as changes in government spending and taxes to achieve macroeconomic policy objectives.
Who is responsible for fiscal policy?
A. The federal government controls fiscal policy.
B. The federal government and the Federal Reserve jointly control fiscal policy.
C. Fiscal policy is controlled by market forces.
D. The Federal Reserve controls fiscal policy.
Answer:
What is fiscal policy? The correct answer is D) Fiscal policy can be described as changes in government spending and taxes to achieve macroeconomic policy objectives.
Who is responsible for fiscal policy? The correct answer is A) The federal government controls fiscal policy.
Explanation:
What is fiscal policy? In order to achieve macroeconomic goals and influence the economy, fiscal policy adjusts goverments spendings and tax rates.
Who is responsible for fiscal policy? The responsibility for fiscal policy holds the federal government, the legislative branch (Congress) such as the executive branch (president & Secretary of treasure).
Answer:
D
Explanation:
A condominium developer buys three times as much land as is needed to build a planned 50-unit development so that, if things go well, two additional 50-unit developments can be built without having to acquire additional land. The developer is prepared to exercise the option to:A) quit.B) expand.C) abandon.D) wait.E) rebuild.
Answer:E
Explanation:
: On 1/1/X1, Wolfpack Inc. issues 3-year bonds with a face value of $50,000 and a face (stated) rate of 4% compounded semi-annually. The market interest rate for bonds of similar risk and maturity is 5% compounded semi-annually. Interest is paid semi-annually on June 30 and December 31 beginning on June 30, 20X1. The bonds mature on 12/31/X3. A. What is the issue price of the bonds on 1/1/X1? Note to student: If you have trouble answering this question, go to the last page of this graded assignment where you will be asked a series of questions that, if answered correctly, should lead you to the correct answer. Answer: $__
Answer:
The issue price of the bond on 1/1/X1 is: $48,623.
Explanation:
We discounted the cash flow from the bond, comprising of the coupon stream and the principal repayment, at market return rate applied to other bond with similar risk and maturity to come up with the issue price of the bond.
We have: r = 5/2 = 2.5%; Semi-annual payment = 50,000 x 4%/2 = 1,000; n = 3 x 2 = 6
Thus Issue price = Present value of coupon stream + Present value of principal repayment = (1,000 / 2.5%) x [ 1 - (1+2.5%)^-6 ] + (50,000/1.025^-6) = $48,623.
If the minimum wage is set above the market equilibrium wage, a. All of the above are correct. b. highly-skilled workers will have a harder time finding jobs. c. unemployment will rise. d. the quantity of labor supplied will be below the quantity of labor demanded.
Answer: The correct answer is "c. unemployment will rise.".
Explanation: If the minimum wage is set above the market equilibrium wage, unemployment will rise.
When the minimum wage is set above the market equilibrium salary, the amount of work offered is greater than the amount demanded. The result is unemployment.
Answer:
(C). Unemployment will rise
Explanation:
Minimum wage is the lowest amount that can be paid to an employee for performing a job and paying below this amount is illegal.
Market equilibrium wage is the amount companies are willing to pay workers taking on new jobs, when the market is in equilibrium (when demand equals supply).
Setting the minimum wage above the market equilibrium wage will mean that more people will be available to take jobs, while companies will reduce the amount of people they hire if they are to keep their wage costs constant.
As such, "unemployment will increase", and demand for labor reduces and goes below the quantity of labor supplied.
Two years ago Darryl put $3,000 into an account paying 3 percent interest. How much does he have in the account today? A. $3,180.00 B. $3,182.70 C. $3,183.62 D. None of the above are correct to the nearest cent.
Answer:
Amount in his account after 3 years will be $3182.7
So option (b) is correct answer
Explanation:
We have given time n = 2 years
Principal amount P = $3000
Rate of interest r = 3 %
We have to found the amount in his account after 2 year
We know that amount is given by
[tex]A=P(1+\frac{r}{100})^n[/tex]
So amount will be
[tex]A=3000\times (1+\frac{3}{100})^2=$3182.7[/tex]
So the amount in his account after 3 years will be $3182.7
So option (b) is correct option
Final answer:
After compounding 3 percent annual interest on the initial deposit of $3,000 over two years, Darryl will have a total of $3,182.70 in his account, which corresponds to option B in the given choices.
Explanation:
To answer the question, Darryl put $3,000 into an account paying 3 percent interest compounded annually two years ago. To find out how much he has now, we can use the formula for compound interest:
To answer the question, Darryl put $3,000 into an account paying 3 percent interest compounded annually two years ago. To find out how much he has now, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the amount of money accumulated after n years, including interest.
P is the principal amount (the initial amount of money).
r is the annual interest rate (decimal).
n is the number of times that interest is compounded per year.
t is the time the money is invested for in years.
Since the interest is compounded annually, n is 1.
Converting the interest rate to a decimal, we get r = 3/100 = 0.03.
Now, plug in the values:
A = 3000(1 + 0.03/1)^(1*2) = 3000(1 + 0.03)^2 = 3000(1.03)^2 = 3000 * 1.0609 = $3,182.70
Therefore, the correct answer is B. $3,182.70.
Hudson Co. reports the contribution margin income statement for 2015. Assume sales and variable costs per unit remain constant.
HUDSON CO.
Contribution Margin Income Statement
For Year Ended December 31, 2015
Sales (9,300 units at $225 each) $ 2,092,500
Variable costs (9,300 units at $180 each) 1,674,000
Contribution margin $ 418,500
Fixed costs 321,300
Pretax income $ 97,200
The marketing manager believes that increasing advertising costs by $78,000 in 2016 will increase the company’s sales volume to 10,700 units. Prepare a forecasted contribution margin income statement for 2016 assuming the company incurs the additional advertising costs.
Forecasted contribution margin income statement for 2016
Sales ?
Variable Cost ?
Contribution Margin ?
Fixed Cost ?
Pretax Income ?
Answer:
Explanation:
The preparation of the forecasted contribution margin income statement for 2016 is presented below:
HUDSON CO.
Contribution Margin Income Statement
For the Year 2016
Sales (10,700 units × $225) $2,407,500
Less: Variable cost (10,700 units × $180) - $1,926,000
Contribution margin $481,500
Less: Fixed cost ($321,300 + $78,000) - $399,300
Pre tax income $82,200
Since the pre tax income is reduced so it is advised not to increase the advertising cost