Answer:
$ 101.39
Explanation:
The new coupon rate would be the treasury rate plus 280bp which is 5%+2.8%=7.8%
The new yield to maturity would be 7%+0.5%=7.5%
Note that 100 basis point is 1%
The new price can be computed using excel pv formula
new price=-pv(rate,nper,pmt,fv)
rate is the semiannual yield i.e 7.5%*6/12=3.75%
nper is the number of semiannual coupons of the bond i.e 5.78*2=11.56
pmt is the semiannual coupon =$100*7.8%*6/12=$3.9
face value is $100
=-pv(3.75%,11.56,3.9,100)=$101.39
An investor must decide between putting $2,000 into a regular retirement plan or putting $1,440 into a Roth retirement plan. If the investor's tax rate is 28% now and in retirement, and she expects to earn 12% per year over the next 20 years, which will produce more cash in the end?
Answer:
They both produced the same cash amount
Explanation:
The regular retirement would have its deducted after withdrawal from the plan while Roth retirement plan's tax would have been deducted prior to investing funds in the plan
The future value of the $2000 is computed thus:
FV=PV*(1+r)^n
PV is the amount saved in the plan which is $2000
r is the growth rate of the funds in the plan which is 12%
n is the number of years the amount would be left in the plan
FV=$2000*(1+12%)^20=$ 19,292.59
After tax amount=$ 19,292.59*(1-28%)=$ 13,890.66
The future value of the $1,440 is computed thus:
FV=$1,440*(1+12%)^20=$ 13,890.66
The Roth plan has not tax implication thereafter as tax was paid before savings.
Suppose that your state raises its sales tax from 5 percent to 6 percent. The state revenue commissioner forecasts a 20 percent increase in sales tax revenue. Which of the following are plausible as a result of this increase in the sales tax. Is this plausible? Explain.
Answer: No it's not plausible.
Explanation:
Here is the complete question:
Suppose that your state raises its sales tax from 5 percent to 6 percent. The state revenue commissioner forecasts a 20 percent increase in sales tax revenue. Is this plausible? Explain.
From the question, we are told that the state increases its sales tax from 5 percent to 6 percent and the state revenue commissioner predicted that a 20 percent increase in the sales tax revenue due to the increase in sales tax.
This is not plausible, when the sales tax increases from from 5 percent to 6 percent, this will lead to an increase in the prices of the goods. According to the law of demand, the higher the price of goods and services, the lower will be the demand for the good. So, in this case, due to the increase in sales tax, it may prompt the consumers to reduce their spending.
Therefore, a 20 percent increase in the sales tax revenue is not plausible. Even if there will be an increase in the sales tax revenue, it won't be up to 20 percent.
Assume that $4.4 million is deposited into a bank with a reserve requirement of 16 percent. Instructions: Round your answer to two decimal places. a. What is the money supply as a result
Answer:
$3696000
Explanation:
Given:
Amount deposited into a bank is $4.4 million with a reserve requirement of 16 percent.
To find: money supply
Solution:
Amount deposited into a bank = $4.4 million = $4400000
Amount of reserve = [tex]\frac{16}{100}[/tex] × 4400000 = $704000
Money supply = Amount deposited into a bank - Amount of reserve
= $4400000 - $704000
=$3696000
As a company produces more units within the relevant range, the difference between total variable cost and total fixed cost is:___________. A) Total variable cost and total fixed cost bother remain constant B) Total variable cost and total fixed cost both change C) Total variable cost changes and total fixed cost remains constant D) Total variable cost remains constant and total fixed cost changes
Answer:
C.Total variable cost changes and total fixed cost remains constant
Explanation:
The difference between both the total variable cost and total fixed cost is that then total variable cost changes and the total fixed cost remains constant because variable cost changes reason been that it is not constant which means that it is movable while fixed cost remains constant and tend to remain fixed in which case means that it is not movable. Example of fixed cost is Land because land cannot be moved from one location to another location.
Suppose that a company's equity is currently selling for $28.25 per share and that there are 4.7 million shares outstanding and 27 thousand bonds outstanding, which are selling at 100 percent of par. If the firm was considering an active change to their capital structure so that the firm would have a D/E of 1.7, which type of security (stocks or bonds) would they need to sell to accomplish this, and how much would they have to sell
Answer:
Debt would be issued
amount of debt issuance is $ 198,717,500.00
Explanation:
Target capital structure is Debt/Equity=1.7
Current capital structure=debt value/equity value
equity value=$28.25*4,700,000=$132,775,000.00
debt value=27,000*$1000=$27,000,000
Current D/E=$27,000,000/$132,775,000= 0.20
This implies that debt would to be increased
The required amount of debt is computed below which is x
1.7=x/132,775,000.00
x=1.7*132,775,000.00
x=$ 225,717,500.00
Required debt is $225,717,500.00
amount of debt issue=required debt-existing debt= 225,717,500.00-27,000,000=$198,717,500.00
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
Standard Quantity or Hours Standard Price
or Rate Standard Cost
Direct materials 5.6 pounds $ 3.00 per pound $ 16.80
Direct labor 0.4 hours $ 7.00 per hour $ 2.80
During the most recent month, the following activity was recorded:
a. Ten thousand eight hundred pounds of material were purchased at a cost of $2.90 per pound.
b.
The company produced only 1,080 units, using 9,720 pounds of material. (The rest of the material purchased remained in raw materials inventory.)
c. Five hundred and thirty two hours of direct labor time were recorded at a total labor cost of $6,384.
Required:
Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations.)
Direct materials price variance F
Direct materials quantity variance U
Answer:
Instructions are below.
Explanation:
Giving the following information:
Standard:
Direct materials 5.6 pounds $ 3.00 per pound
Actual:
10,800 pounds were purchased at a cost of $2.90 per pound.
The company produced only 1,080 units, using 9,720 pounds of material.
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (3 - 2.9)*10,800
Direct material price variance= $1,080 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (5.6*1,080 - 9,720)*3
Direct material quantity variance= $11,016 unfavorable
Porter Plumbing's stock had a required return of 11.75% last year, when the risk-free rate was 5.50% and the market risk premium was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 2%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return
Answer:
New required rate of return = 11.88%
Explanation:
The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.
Under CAPM, Ke= Rf + β(Rm-Rf)
Ke- required rate of return, Rf-risk-free rate (treasury bill rate), β= Beta, Rm= Return on market.
Using the model, we work out Beta which is not given and then re-calculate the required rate of return of the new stock
Ke- 11.75 % Rf- 5.5, Rm-Rf = 4.75%, β= ?
11.75% = 5.50% + β(4.75%)
11.75% -5.50% = β(4.75%)
(11.75-5.50)/4.75= β
1.315789474 = β
1.315 = β
New required rate of return
5.50% + 1.315(1.02×4.75)
11.875
New required rate of return = 11.88%
Answer:
Explanation:
Given
Required rate of return, (Re) = 11.75%
Risk-free rate (Rf) = 5.50%
Market risk premium (Rm - Rf) = 4.75
Let's calculate beta (b) first, by using below formula.
Re = Rf + b (Rm - Rf)
11.75 = 5.50 + b ( 4.75)
By solving, we get beta (b) = 1.3157 = 1.32
Now, market risk premium is increased by 2%.
So, new market risk premium (Rm - Rf) = 6.75%. Beta and Rf values are same.
New Required rate of return (Re) = 5.50 + 1.32 * 6.75
By solving, we get Re = 14.41 %
1. The following is (are) non-verbal communication
a. Facial expression b. Appearance c. Posture d. All of the above
2. Communication is the task of imparting ……………………………………..
a. Training b. Information c. Knowledge d. Messaged
3. Reports from the subordinates to the superiors take the form of
a. face-to-face communication b. upward communication
c. downward communication d. visual communication
4. The communication cycle, the process of re translation of signals into ideas is called
a. response b. encoding c. decoding d. feedback
5. A gesture is an example of
a. speeches b. body language c. grammar d. written language
6. Which of the following is NOT a component in the Communication Model?
(1) Sender (2) Messenger (3) Encoding (4) Receiver
a. All of the above b. All, except (1) c. All, except (2) d. All, except (3)
7. What are the common barriers that impede communication?
(1) Barriers with people (2) Barriers with words
(3) Barriers made by cultural differences (4) Barriers made by distance
a. All of the above b. All, except (2) c. All, except (3) d All, except (4)
8. Effective communication can ONLY be achieved when:
(1) The audience is understood (2) Feedback is encouraged (3) Thoughts are organised
a. All of the above b. All, except (1) c. All, except (2) d. All, except (3)
9. The most important goal of business communication is …………………
a. favourable relationship between sender and receiver b. organizational goodwill
c. receiver response d. receiver understanding
10. The study of communication through touch is ………………………………
a. chronemics b. haptics c. proxemics d. semantics
11. Which of the following information should be included in minutes?
(1) Date and venue of the meeting (2) Decisions made at the meeting
(3) Comments from the members (4) Action to be taken by the members
A. All of the above B. All, except (2) C. All, except (3) D. All, except (4)
12. Which of the following sentences about reports is NOT true?
a. A short report is meant to convey information in an efficient, compact format.
b. An annual report is usually published once a year for shareholders as well as for employers.
c. A recommendation report examines a situation and concludes with specific recommendations.
d. A proposal is a report written to convince a reader that a need exists and that specific action should be taken to remedy that need.
13. What kind of information should be included in a resume?
(1) Work experience (2) Education (3) Affiliation and membership (4) Letter of recommendation
a. All, except (1) b. All, except (2) c. All, except (3) d. All, except (4)
14. The inside address should be written
a. above the salutation b. below the salutation c. above the heading d. above the date
15. Salutation
a. comes at the end of the letter b. comes above the inside address
c. begins at left hand margin of the letter d. comes in body of the letter
16. A memo is an example of
a. lateral communication b. external communication
c. internal communication d. downward communication
17. Communication that takes place between employees with same status is referred to as ……..
18 . ………………………… is the final link in the chain of the communication process.
19. This type of communication takes place within a single person or the same person, usually for the purpose of clarifying ideas or analyzing a situation is referred to as ………
20. …………………… is the study of measurable distance between people as they interact
21. A ………………… communication is a form of communication that is meant to share information in a manner that conforms to laid down professional rules, processes and standards and without the use of the slang language or terms
1. All of the above are non-verbal communication.
2. Communication is the task of imparting information.
3. Reports from the subordinates to the superiors take the form of upward communication.
4. The communication cycle, the process of re translation of signals into ideas is called encoding.
5. A gesture is an example of body language.
6. All, except (2) is not a component in the Communication Model.
7. All of the above are the common barriers that impede communication.
8. All of the above are the effective communication can be achieved.
9. The most important goal of business communication is receiver understanding.
10. The study of communication through touch is haptics.
11. All of the above information should be included in minutes.
12. An annual report is usually published once a year for shareholders as well as for employers is not true.
13. All, except (4) should be included in a resume.
14. The inside address should be written below the salutation
15. Salutation begins at left hand margin of the letter.
16. A memo is an example of downward communication.
17. Communication that takes place between employees with same status is referred to as horizontal communication.
18. Feedback is the final link in the chain of the communication process.
19. This type of communication takes place within a single person or the same person, usually for the purpose of clarifying ideas or analyzing a situation is referred to as interpersonal communication
20. Proxemics is the study of measurable distance between people as they interact.
21. Inarticulate communication is a form of communication that is meant to share information in a manner that conforms to laid down professional rules, processes and standards and without the use of the slang language or terms.
Learn more about communication here:
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Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31, 2012.
Transactions Units Unit
Cost
a. Inventory, December 31, 2011 500 $ 10
For the year 2012:
b. Purchase, April 11 800 8
c. Purchase, June 1 700 12
d. Sale, May 1 (sold for $38 per unit) 500
e. Sale, July 3 (sold for $38 per unit) 520
f. Operating expenses (excluding income tax expense), $19,000
Required:
1. Calculate the number and cost of goods available for sale.
2. Calculate the number of units in ending inventory.
3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)
4. Prepare an Income Statement that shows 2012 amounts under the FIFO method, LIFO method and weighted average method.
Answer:
Explanation:
Sales Purchase
Transaction unit Unit Unit cost Total
Opening inventory 500 10 5000
April 11 800 8 6,400
June 1 700 12 8,400
May 1 500 38
July 3 520 38
Operating expenses = $19,000
1)Number of goods available = 2000
Cost of goods available = $19,800
2) Number of units in ending inventory
= Opening inventory + purchase - sales
1500-1020= 480
3) COST(FIFO)
Ending inventory Goods sold
May 1 500*10 = 5000
July 3 520* 8 = 4,160
280 * 8 = 2240
700*12 = 8,400
Total 10,640 9,160
COST (LIFO)
May 1 500 * 12 = 6000
July 3 200*12 = 2400
320* 8 = 2560
480*8 = 3,840
500*10 = 5000
Total 8,840 10,960
Weighted average cost
19800/2000 =9.9 480*9.9 = 4,752 1020*9.9=10,098
sales revenue = (500+520)* 38 =$38760
Income statement
FIFO LIFO WEIGHTED AV
Sales 38,760 38,760 38,760
Cost of goods 9,160 10,960 10,098
Gross profit 29,600 27,800 28,662
Operating expenses 19,000 19,000 19,000
PBIT 10,600 8,800 9,662
Waupaca Company establishes a $450 petty cash fund on September 9. On September 30, the fund shows $213 in cash along with receipts for the following expenditures: transportation-in, $40; postage expenses, $75; and miscellaneous expenses, $110. The petty cashier could not account for a $12 shortage in the fund. The company uses the perpetual system in accounting for merchandise inventory. Prepare (1) the September 9 entry to establish the fund, (2) the September 30 entry to reimburse the fund, and (3) an October 1 entry to increase the fund to $520.
Answer:
Waupaca Company General Journal
Sept 09
Dr Petty cash $450
Cr Cash $450
Sept 30
Dr Transportation in $40
Dr Postage expense $75
Dr Miscellaneous expense $110
Dr Cash short and over $12
Cr Cash $237
October 1
Dr Petty cash $70
Cr Cash $70
Explanation:
Sept 09
To establish petty cash fund by debiting Petty cash with $450 and Crediting Cash with the same amount
Sept 30
To record expenses by Debiting all the expenditure and crediting cash
Oct 1
To increase petty cash balance by Debiting Dr Petty cash$70(520-450) and Crediting Cash with the same amount
Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $4 million. The fiscal year ends on December 31.Required:Should this contingent liability be reported, disclosed in a note only, or neither.
Answer:
This should be reported
Explanation:
A contingent liability can be described as a liability that likely to be incurred at it depends on the outcome of an uncertain future event.
The condition for reporting a contingent liability is that its contigency must be likely and it is possible to reasonably estimate the amount of the liability.
Since it is indicated in the question that investigation indicates that a product recall is probable, ant it is estimated to cost the company $4 million, it therefore implies that the contigent liability meets the two conditions for it to be reported.
Differential Analysis for a Lease or Buy Decision Sloan Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $125,500. The freight and installation costs for the equipment are $1,600. If purchased, annual repairs and maintenance are estimated to be $2,500 per year over the five-year useful life of the equipment. Alternatively, Sloan can lease the equipment from a domestic supplier for $30,000 per year for five years, with no additional costs. Prepare a differential analysis dated December 3 to determine whether Sloan should lease (Alternative 1) or purchase (Alternative 2) the equipment. Hint: This is a "lease or buy" decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner. If an amount is zero, enter "0". Use a minus sign to indicate a loss. Differential Analysis Lease Equipment (Alt. 1) or Buy Equipment (Alt. 2) December 3 Lease Equipment (Alternative 1) Buy Equipment (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $ $ $ Costs: Purchase price $ $ $ Freight and installation Repair and maintenance (5 years) Lease (5 years) Income (loss) $ $ $ Determine whether Carr should lease (Alternative 1) or buy (Alternative 2) the equipment.
Answer: Carr should buy the equipment
Explanation:
Lease financing is a source of medium- and long-term financing whereby the owner of an asset gives the right to use an asset to another person, against periodical payments. Here, the owner of the asset is called the lessor and the person who uses the asset is called the lessee.
Based on the attached explanation, Carr should buy the equipment.
Todd Mountain Development Corporation is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow at the rate of 10% per year. The risk-free rate of return is 8%, and the expected return on the market portfolio is 18%. The stock of Todd Mountain Development Corporation has a beta of 0.60. Using the constant-growth DDM, the intrinsic value of the stock is _________.
Answer:
$75
Explanation:
As per the data given in the question,
Ke = risk free rate of return + beta×(market portfolio - risk free rate of return)
= 8% + 0.60 × (18% - 8%)
= 8% + 6%
= 14%
= 0.14
Now using the constant-growth DDM model :
Intrinsic value of the stock = Dividend ÷ (Ke - expected growing rate)
= $3 ÷ (0.14-0.10)
= $75
Hence, Intrinsic value of the stock is $75.
Consider the hypothetical example of Dominion Island that has firms producing only two goods, gold and cotton, the
proceeds of which it uses to purchase other goods and services from neighbouring islands through its banks. Assuming
that all other required institutions in an economy are prevalent in this island, discuss the circular flow of income and
spending in Dominion Island. No diagram is required.
Answer:
Circular Flow of Income simply refers to how money moves from one point to another through an economy.
Explanation:
Inflow
In every economy, the household sector must engage in spending. This is referred to as Consumption (C).
When injects money via public projects, and other forms of spending, it is referred to as Government Spending (G).
In the case above, the money flows from those who produce the gold and the cotton.
The two firms producing goods (gold and cotton) also inject money into the economy when they invest and expand their operations. This is referred to as (I).
As the produce gold and cotton and export to other neighbouring Islands, more money flows into the economy. This is typified by (X).
From the monies they receive, they pay their workers the banks make money from the transactions and also pay their workers, hence the Consumption loop is completed.
Outflow
Both the bank and the companies producing gold and cotton and the workers who have received payment all pay taxes (T) to the government. This reduces the flow of money in circulation but also enables Government Spending. Hence the Government Spending loop is completed.
The household and businesses also keep monies aside. This is called savings (S) and also has a way of reducing money from the economy when it increases.
Another leakage happens when the two firms import raw materials and labour for their production. Let's call this (M). When importation happens, money leaves the economy and the Import-Export loop is completed.
Let's examine the Inflow-Outflow factors
All the income (inflow) into Dominion Island are captured as C + G + X + I while
all the expenditure/outflows of Dominion Island are captured as T + S + M.
The relationship between the inflow and the outflow also helps us to understand the Gross Domestic Product of Dominion Island.
"GDP of Dominion Island is defined as the value (in monetary terms) of all finished goods and services made within it in a given period." It can also be summarised as "the sum of monies spent by consumers, the government, monies invested by the firms in Dominion Island, and the income from exports minus the total value of imports into Dominion Island.
Put in the form of an equation GDP for Dominion Island therefore
= C + G + I + (X – M).
Cheers!
Explanation:
The groups in this island of Dominion are;
1. the firm
2. the banks
3. the workers
4. neigboring islands
For the firms, they have:
1. In one case cash outflows to labourers who work to produce the two products gold and cotton.
2. And in another case, the firms are consumers since they pay for other products available in neighbouring islands.
For the banks, they get cash inflows since they receive payments from the two firms.
For workers, who receive their wages from the firms take this wages to their individual households as cash inflows which they spend in the economy making them Consumers and they may likely save some part of their wages.
For the neighbouring islands, they receive cash inflows from Dominion island as exports.
Suppose Antonio and Caroline are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Antonio chooses Right and Caroline chooses Right, Antonio will receive a payoff of 3 and Caroline will receive a payoff of 7.
Caroline
Left Right
Antonio Left 4, 6 6, 8
Right 7, 5 3, 7
The only dominant strategy in this game is for_________ to choose________ . The outcome reflecting the unique Nash equilibrium in this game is as follows: Antonio chooses_________ and Caroline chooses_________ .
Answer:
Caroline to choose right
Antonio chooses left and Caroline chooses right.
Explanation:
Interpreting the payoff matrix:
Both choose right:
Antonio receives 3, Caroline receives 7
Both choose left:
Antonio receives 4, Carolina receives 6
Caroline chooses left, Antonio chooses right:
Antonio receives 7, Caroline receives 5
Caroline chooses right, Antonio chooses left:
Antonio receives 6, Caroline receives 8
As we can see, Antonio only has a better payoff then Caroline if she chooses left and he chooses right. Therefore, the dominant strategy is for Caroline to choose right, this way she will always have the greater payoff.
If Antonio chooses right, the outcome may alter depending on the outcome, therefore it is not a Nash Equilibrium. However, if Antonio chooses left, no matter what Caroline chooses, she will have the greater payoff. At the same time, if Caroline chooses right, Antonio cannot change the outcome by changing his strategy. Therefore, the outcome reflecting the unique Nash equilibrium in this game is as follows: Antonio chooses left and Caroline chooses right.
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 b. Purchase of inventory for cash c. Cash sales d. Repurchase of common stock e. Payment of accounts payable f. Disposal of equipment
Answer:
a. Retirement of bonds payable = financing activity
b. Purchase of inventory for cash = operating activity
c. Cash sales = operating activity
d. Repurchase of common stock = financing activity
e. Payment of accounts payable = operating activity
f. Disposal of equipment = investing activity
Explanation:
Operating Activities are Activities relating to trading in the normal course of business.
Investing Activities are Activities relating to movement in capital expenditure items.
Financing Activities are Activities relating to movement in Interest of company owners and providers of finance.
One Device makes universal remote controls and expects to sell 500 units in January, 800 in February, 450 in March, 550 in April, and 600 in May. The required ending inventory is 20% of the next month’s sales. Prepare a production budget for the first four months of the year. What is the total required production for the year?
Answer and Explanation:
The preparation of the production budget and The total required production for the year is as follows
One Device
Production budget
For the first four months
Particulars Jan Feb Mar April Year
Expected
unit sales 500 units 800 units 450 units 550 units
Add:
Ending
inventory 160 units 90 units 110 units 120 units
($800 × 20%) ($450 × 20%) ($550 × 20%) ($600 × 20%)
Total
required units 660 units 890 units 560 units 670 units
Less:
Beginning
inventory 100 units 160 units 90 units 110 units
($500 × 20%) ($800 × 20%) ($450 × 20%) ($550 × 20%)
Required
production
units 560 units 730 units 470 units 560 units 2,320 units
Problems with (or leakages from) the money creation process would include an increase in the reserve requirement. unwillingness of borrowers to obtain loans from banks to invest in factories or expansion of the firm. a decrease in the reserve requirement. an increase in the federal funds rate. a decrease in the federal funds rate.
Answer:
The correct answer is unwillingness of borrowers to obtain loans from banks to invest in factories or expansion of the firm.
Explanation:
Solution
Given that:
Leakage problem occurs or happens within an economy when the money goes out of the economy, which leads to a loss in the economic value of goods and services, and also leads to loss in profits making.
This would lead to an unwillingness of borrower's to obtain loans from banks in the expansion of the firm or to invest in factories.
Sun Devil Hair Design has the following transactions during the month of February. February 2 Pay $700 for radio advertising for February. February 7 Purchase beauty supplies of $1,300 on account. February 14 Provide beauty services of $2,900 to customers and receive cash. February 15 Pay employee salaries for the current month of $900. February 25 Provide beauty services of $1,000 to customers on account. February 28 Pay utility bill for the current month of $300.
Required:
Record each transaction. Sun Devil uses the following accounts: Cash, Accounts Receivable, Supplies, Accounts Payable, Service Revenue, Advertising Expense, Salaries Expense, and Utilities Expense.
Answer:
Sun Devil Hair Design Journal entries
Feb. 2
Dr Advertising expense 70p0
Cr Cash 700
Feb. 7
Dr Supplies 1,300
Cr Accounts payable 1,300
Feb. 14
Dr Cash 2,900
Cr Service revenue 2,900
Feb. 15
Dr Salaries expense 900
Cr Cash 900
Feb. 25
Dr Accounts receivable 1,000
Cr Service revenue 1,000
Feb. 28
Dr Utilities expense 300
Cr Cash 300
Explanation:
No further explanation was been given in this question.
The following purchase transactions occurred during September for Rehoboth, Inc.:
Sep.
4 Purchased cleaning supplies for $113 on account from General Supplies.
19 Purchased office equipment for $3,650 on account from Office Warehouse.
23 Purchased cleaning supplies for $183 on account from Rubble Supplies.
Record these transactions (in chronological order) in the following purchases journal. If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required" and leave the amount boxes blank.
Answer: The answer is given below
Explanation:
The purchases journal is an accounting book which takes record of all the acquisitions that are made on credit a a particular period of time. It is a record which keeps track of the vendors that a company is owing using accounts payable or vendor credit and also the current balance that the company owed each vendor.
The transactions above has been recorded in the purchases journal. Kindly check the attached document for further information.
Chuck Olson, age 16, buys a used car from Bobby Duncan Used Cars Center on September 15, 2006. Olson agrees to pay $200 a month for 12 months. A month after the purchase, Olson is involved in an accident that wrecks the car. He immediately calls Duncan Cars and informs them that he is disaffirming the contract. According to traditional common laws, which of the following is most likely to be true?
a. Olson does not have a duty to place Duncan in status quo ante
b. Olson can ask Duncan to pay for the damages as he hasn't made the full payment for the car.
c. Olson has to pay for the damages and then return the car to Duncan.
d. Olson can successfully press charges and force Duncan to take care of the damages caused to the car.
Answer:
Olson can successfully press charges and force Duncan to take care of the damages caused to the car ( D )
Explanation:
Chuck Olson age 16 ( a minor ) can successfully press charges and request/force Bobby Duncan used cars center to take care of the damages caused to the car. this is because according to traditional common laws a contract entered by a minor is considered null and void hence Olson can successfully disaffirm the contract and Bobby Duncan would have to accept the damages and take care of them.
A minor is not required by traditional common law to entered into any form of obligatory contract.
Macro Company has the following adjusted accounts and balances at June 30:
Accounts Payable $280
Accounts Receivable 530
Accumulated Amortization 140
Accumulated Depreciation 230
Cash 1,000
Common Stock 280
Deferred Revenue 90
Depreciation Expense 100
Equipment 1,380
Income Tax Expense 100
Income Tax Payable 30
Interest Expense 170
Interest Revenue 50
Notes Payable (long-term) 1,280
Office Expenses 800
Prepaid Rent 40
Rent Expense 380
Retained Earnings 110
Salaries and Wages Expense 640
Sales Revenue 3,530
Software 190
Supplies 690
Required:
Prepare an adjusted trial balance for Macro Company at June 30.
Answer:
Debit Credit
$ $
Cash 1000
Account receivable 530
Supplies 690
Prepaid rent 40
Software 190
Equipment 1380
Accumlated depreciation 230
Accumlated Amortization 140
Account payable 80
Income tax payable 30
Unearned revenue 90
Notes payable 1280
Common stock 280
Retained earnings 110
Sales revenue 3530
Interest revenue 50
Depreciation expenses 100
Interest expenses 170
Income tax expenses 100
Office expenses 800
Rent expenses 380
Salaries and wages expenses 640
TOTAL 6020 6020
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety helmets. Your boss has asked you to perform a comprehensive analysis of the company’s financial statements, including comparing Lydex’s performance to its major competitors. The company’s financial statements for the last two years are as follows:You decide, finally, to assess the company’s liquidity and asset management. For both this year and last year, compute:a. Working capital.b. The current ratio. (Round your final answers to 2 decimal places.)c. The acid-test ratio. (Round your final answers to 2 decimal places.)d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,750,000.) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.)e. The average sale period. (The inventory at the beginning of last year totaled $2,110,000.) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.)f. The operating cycle. (Round your intermediate calculations and final answer to 2 decimal place.)g. The total asset turnover. (The total assets at the beginning of last year totaled $14,690,000.) (Round your final answers to 2 decimal places.)
Answer:
a. Working capital.
current assets - current liabilities
current year = 7,800,000 - 3,900,000 = $3,900,000 last year = 5,940,000 - 2,760,000 = $3,180,000b. The current ratio. (Round your final answers to 2 decimal places.)
current year = 7,800,000 / 3,900,000 = 2 last year = 5,940,000 / 2,760,000 = 2.15c. The acid-test ratio. (Round your final answers to 2 decimal places.)
current year = (7,800,000 - 3,900,000) / 3,900,000 = 1 last year = (5,940,000 - 2,400,000) / 2,760,000 = 1.28d. The average collection period. (The accounts receivable at the beginning of last year totaled $1,750,000.) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.)
turnover ratio = net sales / average accounts receivable
7
7.03
current year = 365 / 7 = 52.14 days last year = 365 / 7.03 = 51.92 dayse. The average sale period. (The inventory at the beginning of last year totaled $2,110,000.) (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal place.)
current year = {[(3,900,000 + 2,400,000) / 2] / $12,600,000} x 365 = 91.25 dayslast year = {[(2,400,000 + $2,110,000) / 2] / $9,900,000} x 365 = 83.14 daysf. The operating cycle. (Round your intermediate calculations and final answer to 2 decimal place.)
current year = 52.14 + 91.25 = 143.39 days last year = 51.92 + 83.14 = 135.06 daysg. The total asset turnover. (The total assets at the beginning of last year totaled $14,690,000.) (Round your final answers to 2 decimal places.)
current year = 15,750,000 / [(17,100,000 + 14,880,000)/2] = 0.98 last year = 12,480,000 / [(14,880,000 + 14,690,000)/2] = 0.84
Private solutions to correct for externalities consider the following scenario:________.
Suppose that a chicken farm uses a nearby stream to dispose of the wastes released by its chickens. These wastes flow downstream into a lake that has become thick with algae and polluted due to the minerals in the waste matter. The local office of a nonprofit environmental organization collects enough donations to stop the farm's pollution.
Which of the following types of private solutions to the externality of pollution has occurred in this case?
A. Integration of different types of businesses
B. Contracts
C. Moral codes and social sanctions
D. Charities
It's important to note that sometimes private solutions to externalities do not work. For example, this occurs when communications barriers or social customs are important enough relative to the potential gains involved that __________
Answer: Charities; coordinating negotiations among all of the parties too costly
Explanation:
From the question, we are told that that a chicken farm uses a nearby stream to dispose of the wastes that is released by its chickens and that the wastes flow downstream into a lake that has become polluted due to the waste matter. The local office of a nonprofit environmental organization then collects enough donations in order to stop the farm's pollution.
The type types of private solutions to the pollution externality which has occured is charity. This is because it is a voluntary activity. The money collected is meant for a specific objective which is to tackle the issue of pollution.
It is also vital to note that sometimes the private solutions to externalities might not work. For example, this occurs when communications barriers or social customs are important enough relative to the potential gains involved that coordinating negotiations among all of the parties too costly.
The following transactions occur in November.
November 1 Issue common stock in exchange for $11,800 cash.
November 2 Purchase equipment with a long-term note for $2,300 from Spartan Corporation.
November 4 Purchase supplies for $1,200 on account.
November 10 Provide services to customers on account for $7,800.
November 15 Pay creditors on account, $1,000.
November 20 Pay employees $1,800 for the first half of the month.
November 22 Provide services to customers for $9,800 cash.
November 24 Pay $920 on the note from Spartan Corporation.
November 26 Collect $5,800 on account from customers.
November 28 Pay $1,000 to the local utility company for November gas and electricity.
November 30 Pay $3,800 rent for November.
Required:
1. Record each transaction.
2. Post each transaction to appropriate t-account.
Answer:
Required 1.
November 1
Cash $11,800 (debit)
Common Shares $11,800 (credit)
November 2
Equipment $2,300 (debit)
Note Payable $2,300 (credit)
November 4
Supplies $1,200 (debit)
Trade Payable $1,200 (credit)
November 10
Trade Receivable $7,800 (debit)
Revenue $7,800 (credit)
November 15
Trade Payable $1,000 (debit)
Cash $1,000 (credit)
November 20
Salaries and Wages $1,800 (debit)
Cash $1,800 (credit)
November 22
Cash $9,800 (debit)
Revenue $9,800 (credit)
November 24
Note Payable $920 (debit)
Cash $920 (credit)
November 26
Cash $5,800 (debit)
Trade Receivable $5,800 (credit)
November 28
Utilities $1,000 (debit)
Cash $1,000 (credit)
November 30
Rent $3,800 (debit)
Cash $3,800 (credit)
Required 2.
T - Account Balances
Cash = $18,800 (debit)
Common Shares = $11,800 (credit)
Equipment = $2,300 (debit)
Note Payable = $1,380 (credit)
Supplies = $1,200 (debit)
Trade Payable = $200 (credit)
Trade Receivable = $2,000 (debit)
Revenue = $17,600 (credit)
Salaries and Wages = $1,800 (debit)
Utilities = $1,000 (debit)
Rent = $3,800 (debit)
Explanation:
T - Account Balance Calculations :
Cash = $11,800 - $1,000 - $1,800 + $9,800 - $920 + $5,800 - $1,000 - $3,800 = $18,800 (debit)
Common Shares = $11,800 (credit)
Equipment = $2,300 (debit)
Note Payable $2,300 - $920 = $1,380 (credit)
Supplies = $1,200 (debit)
Trade Payable $1,200 - $1,000 = $200 (credit)
Trade Receivable $7,800 - $5,800 = $2,000 (debit)
Revenue $7,800 + $9,800 = $17,600 (credit)
Salaries and Wages = $1,800 (debit)
Utilities = $1,000 (debit)
Rent = $3,800 (debit)
Calip Corporation, a merchandising company, reported the following results for October: Sales $413,000 Cost of goods sold (all variable) $169,100 Total variable selling expense $20,700 Total fixed selling expense $17,900 Total variable administrative expense $13,100 Total fixed administrative expense $30,400 The contribution margin for October is:_________.
a) $210,100
b) $364,700
c) $161,800
d) $243,900
Answer:
$243,900
Explanation:
Calip corporation reported the following results for the month of October
Sales= $413,000
Cost of goods sold= $169,100
Total variable sling expenditure= $20,700
Total fixed selling expense= $17,900
Total variable administrative expense= $13,100
Total fixed administrative expense= $30,400
The contribution margin can be calculated by subtracting the total cost of goods sold from the sales
= $413,000-$169,100
= $243,900
Hence the contribution margin for October is $243,900
Moral hazard is a problem associated with debt and equity contracts arising from:
a. the borrower's incentive to undertake highly risky investments.
b. the owners' inability to ensure that managers will act in the owners' interest.
c. the difficulty lenders have in sorting out good credit risks from bad credit risks.
d. All of these.
e. only the borrower's incentive to undertake highly risky investments and the owners' inability to ensure that managers will act in the owners' interest of these.
The company's fixed costs that are traceable to the Northern branch is $175,000, while fixed costs that are traceable to the Southern branch is $180,000. The Northern branch is further divided into two segments based on the customer types: the local and the nonlocal. Traceable fixed cost for the local is $68,250, and traceable fixed cost for the nonlocal is $88,700.
How much is the common fixed costs of the two order types for the Northern branch?
Answer:
$18,050
Explanation:
The computation of the common fixed cost of two order types for the northern branch is shown below:
= Company fixed cost traceable to the northern branch - traceable fixed cost for the local - traceable fixed cost for the non local
= $175,000 - $68,250 - $88,700
= $18,050
For computing it we simply deducted the traceable fixed cost from the company fixed cost so that the common fixed cost for the two orders types could come
The common fixed cost is the cost which supports more than the one division in the same business
Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $80,000; Year 2, $90,000; Year 3, $150,000; Year 4, $150,000; Year 5, $160,000; and Year 6, $180,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 250,000 shares of cumulative, preferred 2% stock, $20 par, and 500,000 shares of common stock, $15 par. Required: 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of Year 1. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".
Answer:
Year Dividend 2% Cumulative Preferred Common Stock
Declared Dividends Dividends
Total Per Share Total Per Share
Year 1 $80,000 $100,000 $0.40 0 0
Year 2 $90,000 $100,000 $0.40 0 0
Year 3 $150,000 $100,000 $0.40 $20,000 $0.04
Year 4 $150,000 $100,000 $0.40 $50,000 $0.10
Year 5 $160,000 $100,000 $0.40 $60,000 $0.12
Year 6 $180,000 $100,000 $0.40 $80,000 $0.16
Explanation:
Cumulative, Preferred Stock attracts fixed dividend every year, whether profit is made or not, and whether dividend is declared or not. In any year when there is no dividend declared, the dividend due to cumulative preferred stock is accumulated and paid whenever dividend is declared. And the holders of cumulative prefered stock take precedence in receiving dividends.
Preferred Stock is a class of stock that attracts fixed dividend based on percentage. They have preference with respect to dividend before the Common Stock and in the sharing of company resources. There are many variants. Some are cumulative and others are non-cumulative. Some are participatory while others are not.
Dave is a salesperson who takes a long time to make decisions. He loves sales because he responds well to the pressure he faces in the many new or uncertain situations as a salesperson. Like most successful salespeople, he is high in his tolerance for ambiguity. Dave represents a person with a(n) ________ style.
Answer:
Analytical decision-making style
Explanation:
In this style of decision making or taking, it involves the process of careful studying and examination of a lot of information about a particular thing before taking action or decision. People with this type of decision making style are usually reserve and quiet, uses logical reasoning and they look at all possible options before arriving at a conclusion or decision.