Answer:
Positive supply shock that shifts SRAS to the right.
Explanation:
There are different factors that affect this but primarily its seen that change in input price and also productivity are the two vital factors.
Normally, the AS curve is defined as showing the quantity of real GDP producers will supply at any aggregate price level.
Supply shocks are events that shift the aggregate supply curve. When the aggregate supply curve shifts to the right, then at every price level, a greater quantity of real GDP is produced. This is called a positive supply shock. When the AS curve shifts to the left, then at every price level, a lower quantity of real GDP is produced. This is a negative supply shock.
Answer:
positive supply shock that shifts SRAS to the right.
Explanation:
Following are the merchandising transactions for Dollar Store:Nov. 1 Dollar Store purchases merchandise for $1,500 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.5 Dollar Store pays cash for the November 1 purchase.7 Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.10 Dollar Store pays $90 cash for transportation costs for the November 1 purchase.13 Dollar Store sells merchandise for $1,600 with terms n/30. The cost of the merchandise is $800.16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $160 and cost $80: the items were not damaged and were returned to inventory.Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.
The journal entries are shown below.
Journal entries;No Date General Journal Debit Credit
1 1-Nov Merchandise invnetory 1,500
Accounts payable 1,500
2 5-Nov Accounts payable 1,500
Merchandise inventory 30
cash 1470
3 7-Nov Cash 196
Merchandise inventory 196
4 10-Nov Merchandise inventory 90
cash 90
5 13-Nov Accounts receivable 1,600
Sales 1,600
6 cost of goods sold 800
Merchandise inventory 800
7 16-Nov Sales return and allowance 160
Accounts receivable 160
8 merchandise inventory 80
cost of goods sold 80
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On April 1 of the current year, Morgan Jones established a business to manage rental property. She completed the following transactions during April:
Opened a business bank account with a deposit of $46,000 in exchange for common stock.
Purchased office supplies on account, $3,180.
Received cash from fees earned for managing rental property, $8,940.
Paid rent on office and equipment for the month, $3,910.
Paid creditors on account, $1,450.
Billed customers for fees earned for managing rental property, $7,240.
Paid automobile expenses for month, $870, and miscellaneous expenses, $430.
Paid office salaries, $2,750.
Determined that the cost of supplies on hand was $1,880; therefore, the cost of supplies used was $1,300.
Paid dividends, $2,610.
Required:
1. Indicate the effect of each transaction and the balances after each transaction:
For those boxes in which no entry is required, leave the box blank.
For those boxes in which you must enter subtractive or negative numbers use a minus sign.
2. Stockholders’ equity is the right of stockholders (owners) to the assets of the business. These rights are increased by issuing common stock and revenues and decreased by dividends and expenses.
3. Determine the net income for April.
$
4. How much did April’s transactions increase or decrease stockholders’ equity?
Increased by $
Answer:
Morgan Jones
1. Effect of each transaction and the balances after each transaction:
a) Assets are increased by $46,000 and Equity is increased by $46,000.
Balances: Cash $46,000 and Common Stock $46,000
b) Assets are increased by $3,180 and Liabilities are increased by $3,180.
Balances: Office Supplies $3,180 and Accounts Payable $3,180
c) Assets are increased by $8,940 and Equity is increased by $8,940
Balances: Cash $54,940 and Retained Earnings $8,940
d) Assets are reduced by $3,910 and Equity is reduced by $3,910
Balances: Cash $51,030 and Retained Earnings $5,030
e) Assets are reduced by $1,450 and Liabilities are reduced by $1,450
Balances: Cash $49,580 and Accounts Payable $1,730
f) Assets are increased by $7,240 and Equity is increased by $7,240
Balances: Accounts Receivable $7,240 and Retained Earnings $12,270
g) Assets are reduced by $4,050 and Equity is reduced by $4,050
Balances: Cash $45,530 and Retained Earnings $8,220
Automobile Expenses = $870
Miscellaneous Expenses = $430
Office Salaries = $2,750
Total $4,050
h) Assets are reduced by $1,300 and Equity is reduced by $1,300
Balances: Office Supplies $1,880 and Retained Earnings $6,920
i) Assets are reduced by $2,610 and Equity is reduced by $2,610
Balances: Cash $42,920 and Retained Earnings $4,310
2. Stockholders' Equity:
Common Stock $46,000
Retained Earnings $4,310
Total Equity = $50,310
3. Net Income for April = $6,920
4. How much April's transactions increased or decreased stockholder' equity: increased by $4,310
Explanation:
a) Effect of transactions: Each transaction affects at least two accounts, one or two of assets and one or two of liabilities and equity. The accounting equation is represented by assets = liabilities + equity. This equation is always in balance by each transaction because of the double effects of each transaction.
b) Assets are the resources owned by the entity while liabilities and equity represent resources supplied by creditors and those belonging to the stockholders in the form of resources supplied to and generated by the entity. At each point in time, the assets belong proportionately to either the creditors (liabilities) or the stockholders (equity).
Trew Company plans to issue bonds with a face value of $902,000 and a coupon rate of 6 percent. The bonds will mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds are sold on January 1 of this year. (FV of $1, PV of $1, FVA of $1, and PVA of $1). Determine the issuance price of the bonds assuming an annual market rate of interest of 7.5 percent.
Answer:
$807,992
Explanation:
issue $902,000 with a 6% semiannual coupon and 10 year maturity. coupon payment = $27,060
if the annual market interest rate = 7.5%, the bonds should be sold at a discount:
issue price = present value of face value + present value of interest payments
present value of face value = $902,000 / (1 + 3.75%)²⁰ = $431,961present value of annuity = $27,060 x {1 - [1 / (1 + 3.75%)²⁰]} / 3.75% = $376,031issue price = $431,961 + $376,031 = $807,992
the journal entry should be:
Dr Cash 807,992
Dr Discount on bonds payable 94,008
Cr Bonds payable 902,000
The issuance price of the bonds is $807,992.
The calculation is as follows:Issue price = present value of face value + present value of interest payments
Here
Present value of face value is
= $902,000 ÷ (1 + 3.75%)^20
= $431,961
And,
The present value of annuity is
= $27,060 × {1 - [1 ÷ (1 + 3.75%)^20]} ÷ 3.75%
= $376,031
So, the issue price is
= $431,961 + $376,031
= $807,992
Therefore we can conclude that The issuance price of the bonds is $807,992.
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Tallow, Inc. had reported the following balances: LOADING...(Click the icon to view the 2018 and 2019 balances.) 11. Compute Tallow's earnings per share for 2019. 12. Compute Tallow's price/earnings ratio for 2019, assuming the market price is $ 35 per share. 13. Compute Tallow's rate of return on common stockholders' equity for 2019. 11. Compute Tallow's earnings per share for 2019.
Answer:
Explanation:
Rate of return on common stockholder's equity for 2019:
= (Net Income - Preferred Dividend) / Av. common stockholder's equity
= ($94,000 - $26,000) / $312,000
= $68,000 / $312,000
= 0.2179 or 21.79%
Av. common stockholder's equity 2019 :
Total stockholder's equity 2018 ( Common) = Total stockholder's equity - Stockholder's Equity attributable to preferred
= $318,000 - $22,000
= $296,000
Total stockholder's equity 2019 ( Common) = Total stockholder's equity - Stockholder's Equity attributable to preferred
= $350,000 - $22,000
= $328,000
Av. common stockholder's equity 2019 = ($296,000 + $328,000) / 2 = $312,000
Venetian Company has two production departments, Fabricating and Assembling. At a department managers meeting, the controller uses flexible budget graphs to explain total budgeted costs. Separate graphs based on direct labor hours are used for each department. The graphs show the following.
1. At zero direct labor hours, the total budgeted cost line and the fixed cost line intersect the vertical axis at $ 53,000 in the Fabricating Department and $ 43,000 in the Assembling Department.
2. At normal capacity of 46,100 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $ 131,370 in the Fabricating Department, and $ 93,710 in the Assembling Department.
State the total budgeted cost formula for each department, round to 2 decimal place.
Fabricating Department = $_____ _____ +total _____ of $_____ per direct labor hours
Assembling Department = $_____ _____ +total _____ of $_____ per direct labor hours
Compute the total budgeted cost for each department, assuming actual direct labor hours worked were 49,100 and 43,100, in the Fabricating and Assembling Departments, respectively.
Fabricating Department Assembling Department
The total budgeted cost $__________________ $__________________
Answer:
Fabricating Department = $136470= 53000 +total 49100 of $1.7 per direct labor hours
Assembling Department = $$ 90,410= 43000 +total 43100 of $ 1.10 per direct labor hours
Explanation:
When a fixed line intersects a vertical axis at the point of total budgeted cost line represents total cost of the activity . From this we can calculate the following.
Fabricating Assembling
Total Cost for 46100 DLH $131,370 $93,710
Fixed Costs (53000) (43,000)
Variable Costs 78370 50,710
Variable Cost Per hour 78370 / 46100 50,710 / 46100
= $ 1.7 = $1.10
Fabricating Assembling
Total DLH 49100 43100
Variable Cost Per hour $ 1.7 $1.10
Variable Costs $ 83470 $ 47410
Fixed Costs 53000 43,000
Total Budgeted Cost 136470 $ 90,410
Damon Company receives its monthly bank statement, which reports a balance of $1,875. After comparing this to the company’s cash records, Damon’s accountants determine that deposits outstanding total $3,700 and checks outstanding total $3,950.
Required:
Calculate the reconciled bank balance for cash.
Answer:
The reconciled bank balance for cash is $1,625.
Explanation:
This question centres around bank reconciliation statement preparation. Bank reconciliation is a way of reconciling the bank statement to the cash book balance. Usually, there are discrepancies between the two as a result of direct bank transfers, standing orders, etc. The reconciling items are cleared within the business rule to avoid having aging items in the bank reconciliation.
To reconcile the bank balance for cash, we do the following:
Damon Company
Bank reconciliation statement
Balance per bank statement $1,875
Add: Deposits outstanding $3,700
Less: Checks outstanding ($3,950)
Balance per cash book $1,625
Stealth bank holds deposits of $200 million. It holds reserves of $15 million. It has purchased government bonds worth $75 million. The current value of its loans, if sold at market value, is $130 million. What is the value of Stealth bank's liabilities?
Answer:
$220 million
Explanation:
Stealth bank total value of liabilities will be:
Reserves $15 million
Government bonds purchased $75 million
Market value (loan) $130 million
Value of bank liabilities $220 million
You must estimate the intrinsic value of Noe Technologies' stock. The end-of-year free cash flow (FCF1) is expected to be $24.50 million, and it is expected to grow at a constant rate of 7.0% a year thereafter. The company's WACC is 10.0%, it has $125.0 million of long-term debt plus preferred stock outstanding, and there are 15.0 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock
Answer:
Intrinsic value per share of common stock is $46.11
Explanation:
To calculate the intrinsic value per share, we first need to calculate the value of firm using FCF and then calculate the value of equity by deducting the market value of debt and preferred stock from the value of firm. Then we will divide the value of equity by the number of common stock shares.
Value of firm will be calculated using the constant growth model discounted cash flow approach. The formula for value of firm is,
Value of firm = FCF1 / WACC - g
Value of firm = 24.5 / (0.1 - 0.07)
Value of firm = $816.6666667 rounded off to $816.67
Value of equity = 816.67 - 125 = $691.67
Value per share = 691.67 / 15
Value per share = $46.11
Perpetual Inventory Using LIFOBeginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:Inventory Purchases Sales May 1 1,550 units at $44 May 10 720 units at $45 May 12 1,200 units May 20 1,200 units at $48 May 14 830 units May 31 1,000 unitsAssuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 5. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.
Answer:
Date Purchases Sales
May 1 1,550 units at $44
May 10 720 units at $45
May 12 1,200 units
COGS (720 x $45 = $32,400)
COGS (480 x $44 = $21,120)
TOTAL COGS FOR MAY 12 SALE = $53,520
Inventory after sale 1,070 units at $44
May 20 1,200 units at $48
May 14 830 units
COGS (830 x $48 = $39,840)
TOTAL COGS FOR MAY 14 SALE = $39,840
Inventory after sale 1,070 units at $44
370 units at $48
May 31 1,000 units
COGS (370 x $48 = $17,760)
COGS (630 x $44 = $27,720)
TOTAL COGS FOR MAY 12 SALE = $45,480
Inventory after sale 440 units at $44
Under LIFO (last in, first out), the cost of goods sold is determined using the price of the last units purchased, which means that the most recent (or updated) price is used to calculate COGS.
MOSS COMPANY
Selected Balance Sheet Information
December 31, 2019 and 2018
2019 2018
Current assets Cash $ 90,150 $ 32,300
Accounts receivable 30,500 43,000
Inventory 65,500 55,200
Current liabilities Accounts payable 41,400 31,200
Income taxes payable 2,600 3,300
MOSS COMPANY
Income Statement
For Year Ended December 31, 2019
Sales $ 539,000
Cost of goods sold 353,600
Gross profit 185,400
Operating expenses Depreciation expense $ 47,000
Other expenses 127,500 174,500
Income before taxes 10,900
Income taxes expense 6,600
Net income $ 4,300
Use the information above to calculate cash flows from operating activities using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
cash flows from operating activities is $63,000
Explanation:
Cash flow from Operating Activities
Net income before taxes 10,900
Adjustments for Non - Cash Items
Depreciation expense 47,000
Adjustments for Changes in Working Capital
Decrease in Accounts receivable 12,500
Increase in Inventory -10,300
Increase in Accounts payable 10,200
Cash Generated From Operations 70,300
Income tax Paid (3,300+6,600- 2,600) -7,300
Net Cash from Operating Activities 63,000
Therefore, cash flows from operating activities is $63,000
Wilturner Company incurs $85,000 of labor related directly to the product in the Assembly Department, and $34,000 of labor related to the Assembly Department as a whole, and $21,000 of labor for services that help production in both the Assembly and Finishing departments. The amount of direct labor and factory overhead respectively are:
Answer:
Direct labor= $85,000
Manufacturing overhead= $55,000
Explanation:
Giving the following information:
Wilturner Company incurs $85,000 of labor related directly to the product in the Assembly Department, and $34,000 of labor related to the Assembly Department as a whole, and $21,000 of labor for services that help production in both the Assembly and Finishing departments.
Manufacturing overhead is the number of production costs that can't be directly linked toa specific product. It includes indirect labor.
Direct labor= $85,000
Manufacturing overhead= 34,000 + 21,000= $55,000
Following are Nintendo’s revenue and expense accounts for a recent March 31 fiscal year-end (yen in millions). (Enter answers in millions.) Net sales ¥ 1,888,622 Cost of sales 1,254,981 Advertising expense 118,308 Other expense, net 397,544 Prepare the company's closing entries for its revenues and its expenses.
Answer:
1.
Dr. Net Sales ¥ 1,888,622
Cr. Income Summary ¥ 1,888,622
2.
Dr. Income Summary ¥1,770,833
Cr. Cost of sales ¥ 1,254,981
Cr. Advertising expense ¥ 118,308
Cr. Other expense ¥ 397,544
Explanation:
Closing Entries are passed to close the temporary accounts of a business for the year. These accounts are closed and their balances are transferred to income summary account.
First we will close the the revenue / income accounts and then expenses or cost accounts.
Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2014.
Costs and Production Data
Actual
Standard
Raw materials unit cost $2.25 $2.10
Raw materials units used 10,600 10,000
Direct labor payroll $120,960 $120,000
Direct labor hours worked 14,400 15,000
Manufacturing overhead incurred $189,500
Manufacturing overhead applied $193,500
Machine hours expected to be used at normal capacity 42,500
Budgeted fixed overhead for June $55,250
Variable overhead rate per machine hour $3.00
Fixed overhead rate per machine hour $1.30
Overhead is applied on the basis of standard machine hours. Three hours of machine time are required for each direct labor hour. The jobs were sold for $400,000. Selling and administrative expenses were $40,000. Assume that the amount of raw materials purchased equaled the amount used.
Instructions
(a)
Compute all of the variances for (1) direct materials and (2) direct labor.
LQV $4,800 F
(b)
Compute the total overhead variance.
(c) Prepare an income statement for management. (Ignore income taxes.)
Answer: The answer is provided below
Explanation:
a) Variances for Direct materials =
( actual rate - standard rate) × actual quantity
= ($2.25 - $2.10) × 10,600
= 1590
Variance for Direct material quantity
= (10,600 - 10,000) × 2.1
= 1260
Variance for labor rate
= (8.4 - 8) × 14,400
= 0.4 × 14400
= 5760
b. Total overhead variace = Actual overhead - ovehead applied
= $189,500 - $193,500
= 4000(F)
c. Sale revenue $400,000
COGS at standard $334,500
Gross profit At standard $65,500
Variances:
Material price. 1590(U)
Material qty variance 1260(U)
Labor price varaince 5760(U)
Labor qty variance 4800(F)
Overhead variance 4000(F)
Total vairiance 190(F)
Gross profit ( Actual) 65,690
Selling and admin expense 40,000
Net income $25,64
Frank and Bob are equal members in Soxy Socks, LLC. When forming the LLC, Frank contributed $57,000 in cash and $57,000 worth of equipment. Frank's adjusted basis in the equipment was $42,000. Bob contributed $57,000 in cash and $57,000 worth of land. Bob's adjusted basis in the land was $23,000. On 3/15/X4, Soxy Socks sells the land Bob contributed for $65,000. How much gain (loss) related to this transaction will Bob report on his X4 return
Answer:
The gain (loss) related to this transaction will Bob report on his X4 return is $38,000
Explanation:
Solution
Given that
The value of land = 57,000
Less: Bob's Adjusted Basis in the land is = -$23,000
The Built in Gain allocated to BOB = $34,000
Now,
The consideration in sales = $65,000
Less: Land Value is = -57000
Both members gain to be allocated= 8000
Hence,
The Total Gain Allocated to BOB is = 34000+(8000*50%) =
34000 = 4000
= 38,000
Note: The original $34000 of built-in gain on the contributed land must be given to the contributing partner which is Bob.
The remaining $8000 of gain must be shared equally between Bob and Frank.
So, Bob will report $38000 gain ($34,000 + (50% × $8,000)) from this transaction on his returns
Mueller Company sold merchandise costing $120,000 for $240,000. Mueller estimates that merchandise costing $5,000 will be returned for a refund of $10,000. Mueller should report net sales of:
Answer:
The answer is $230,000
Explanation:
Net sales is the sum of a company's gross(total) sales minus any returned goods, sales allowances and/or discounts. The total amount of revenue on a company's income statement is the net sales.
Gross sales - $240,000
Merchandise returned - $10,000
Net sales = Gross sales - goods returned
$240,000 - $10,000
= $230,000
The period manufacturing costs of a company is comprised of $2,000,000 in direct materials, $1,000,000 in direct labor, and $500,000 in overhead, resulting in 7,000 units of product. Manufacturing operations is consisted of two processes, machining and assembly. Machining takes up 40% of direct materials, 60% of direct labor, and 50% of overhead. Provide a hybrid manufacturing cost statement, containing combined activity based costing and process costing.
Answer:
The Direct material cost per unit is = 285.714 per unit
The Direct labor per unit is= 142.857 per unit
The Overhead cost per unit is = 71.4285 per unit
Explanation:
Solution
We recall that:
The total direct material= $2000000
The total direct labor= $1000000
The units in products = 7000 units
The total Overheads= $500000
Now,
The direct materials on machinery is = $ 800,000(40%)
The direct labor on machinery is= $ 600,000(60 %)
The machinery on overheard is = $ 250,000(50 %)
The direct materials on assembly is = $ 1200,000
The Direct labor on assembly is = $ 400,000
The Overhead on assembly is = $ 250,000
Thus,
The hybrid manufacturing cost statement is represented or shown below
Particular Machinery (40%)in $ Assembly (60%)in $ Total in $
Now,
Particular = Direct material,
Machinery (40%)in $ = 800000
Assembly 60% in $ = 1200000
Total in $ =2000000
Grand total = 1650000
Particular = labor
Machinery (40%)in $ = 600000
Assembly 60% in $ = 400000
Total in $ = 1000000
Grand total = 1850000
Particulars = Overhead
Machinery (40%)in $ =250000
Assembly 60% in $ = 250000
Total in $ = 500000
Grand total = 3500000
Thus,
The Direct material cost per unit = 2000000/7000 = 285.714 per unit
The Direct labor per unit = 1000000/700 = 142.857 per unit
The Overhead cost per unit = 500000/7 = 71.4285 per unit
The capitalist economy comprises two forms of economic organization, the market mechanism operated by prices and the administrative mechanism of firms. a. The market mechanism is referred to as the "visible hand" while the administrative mechanism of firms is referred to as the "invisible hand". b. The market mechanism is referred to as the "invisible hand" while the administrative mechanism of firms is referred to as the "visible hand". c. The simultaneous operation of both "hands" means that the capitalist system is often referred to as an "ambidextrous organization". d. The notion of the capitalist economy as governed by market processes is a myth. In reality the global capitalist economy is controlled by large corporations.
Answer:
Option B: The market mechanism is referred to as the "invisible hand" while the administrative mechanism of firms is referred to as the "visible hand"
Explanation:
The invisible hand of the market mechanism is simply the known first form of the market as it is the point in which individuals and firms make independent decisions and well guided by market prices. Deliberate and conscious global planning is not needed in invisible hand market mechanism.
The visible hand market mechanism is also called administrative mechanism as it involves active planning in coordinating players.
Economic decisions are usually in the hierarchy that is the firm by managers and imposed through a hierarchy.
Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $30,000 and has cash on hand of $20,000 contributed by Lanni’s owners. Lanni takes out a bank loan. It receives $50,000 in cash and signs a note promising to pay back the loan over 3 years.
a-1. Prepare the balance sheet just after it gets the bank loan. (Omit the "$" sign in your response.)
Assets Liabilities & Shareholders' Equity
Cash $ Bank loan $
Computers Shareholders' equity
Total $ Total $
a-2. What is the ratio of real assets to total assets? (Round your answer to 2 decimal places.)
Ratio of real assets to total assets
b-1. Prepare the balance sheet after Lanni spends the $70,000 to develop its software product. (Omit the "$" sign in your response.)Assets Liabilities & Shareholders' Equity Software product $ Bank loan $ Computers Shareholders' equity Total $ Total $ b-2. What is the ratio of real assets to total assets?Ratio of real assets to total assets c-1. Lanni sells the software product to Microsoft, which will market it to the public under the Microsoft name. Lanni accepts payment in the form of 1,500 shares for $80 per share. Prepare the balance sheet after Lanni accepts the payment of shares from Microsoft. (Omit the "$" sign in your response.)Assets Liabilities & Shareholders' Equity Microsoft shares $ Bank loan $ Computers Shareholders' equity Total $ Total $ c-2. What is the ratio of real assets to total assets? (Round your answer to 2 decimal places.)
Ratio of real assets to total assets
Answer:
A-2 Ratio of real Assets to Total Assets = 0.3
B-2 Ratio of real Assets to Total Assets= 1
C-2 Ratio of real Assets to Total Assets= 0.2
The company has low ratio at the start , increases to full when producing and then again decreases.
Explanation:
The balance sheet after Lanni accepts the Bank Loan. The cash increases and so does the liability increases.
Lanni Products
Balance Sheet
Assets Liabilities & Shareholders' Equity
Cash $ 70,000 Bank loan $ 50,000
Computers $30,000 Shareholders' equity 50,000
Total $ 100,000 Total $ 100,000
A-2 Ratio of real Assets to Total Assets
Real Assets = $ 30,000
Total Assets = $ 100,000
Ratio = 30,000/100,000 = 0.3
B-1
Lanni Products
Balance Sheet
Assets Liabilities & Shareholders' Equity
Software $ 70,000 Bank loan $ 50,000
Computers $30,000 Shareholders' equity 50,000
Total $ 100,000 Total $ 100,000
The software costs $ 70,000. The Balance sheet is as given above and the cash will be replaced by the software.
B-2 Ratio of real Assets to Total Assets
Real Assets = $ 100,000
Total Assets = $ 100,000
Ratio = 100,000/100,000 = 1.0
C-1 The share given are calculated ( 1500 *80= $ 120,000) . And after it accepts the payment the share holder's equity increases and the assets as well.
Lanni Products
Balance Sheet
Assets Liabilities & Shareholders' Equity
Shares $ 120,000 Bank loan $ 50,000
( 1500 *80)
Computers $30,000 Shareholders' equity 100,000
Total $ 150,000 Total $ 150,000
C-2 Ratio of real Assets to Total Assets
Real Assets = $ 30,000
Total Assets = $ 150,000
Ratio = 30,000/150,000 = 0.2
a semiannual interest of 3.5%. Any money he invests would have to be left in the fund for at least five years if he wanted to withdraw it without penalty. a) What is the nominal interest rate on this investment? b) What is the annual effective interest rate? c) If James deposits $8,000 in the fund now, how much will it be worth in five years?
Answer:
Results are below.
Explanation:
Giving the following information:
The semiannual interest of 3.5%.
A) We need to calculate the nominal interest rate:
Nominal interest rate= 0.035/2= 0.0175
B) Real interest rate:
Real interest rate= (1.0175^2) - 1= 0.03531
It compounds interest twice a year. Therefore, is higher
C) Investment= $8,000
We will use the following formula:
FV= PV*(1+i)^n
n= 10
i= 0.175
PV= 8,000
FV= 8,000*(1.0175^10)
FV= $9,515.56
Management now needs to determine the number of engines to be produced in each plant in each month, as well as the number of engines each plant should sell to each assembly plant in June and July. Define decision variables and formulate to problem to maximize the total profit (total sales revenue minus sum of production costs, inventory costs, backordering costs, and shipping costs).
Answer:
yes
Explanation:
shhshsh I am not sure if you are not the intended recipient you are not the intended recipient
The following data apply to Grullon-Ikenberry Inc. (GII): Value of operations $1,000, Short-term investments $100, Debt $300, Number of shares 100; The company plans on distributing $50 million as dividend payments. What will the intrinsic per share stock price be immediately after the distribution?pital-budget-850-000-wants-maintain-target-capital-structure-35-debt-65--q3670174
Answer:
1) $6.32
2) $7.50
3) $6.65
4) $7.35
The correct option is the second one ,$7.50
Explanation:
The value of operations is $1,000
If dividends of $50 million is paid,such cash would be paid would be gotten from short-term investments of $100 million since it is easily convertible to cash without losing a significant portion of its value,hence the short term investments reduce to $50 million
$ million
Value of operations $1000
plus value of non-operating assets $50
Value of firm $1050
less value of debt ($300)
Intrinsic value of the firm $750
Intrinsic value of share=$750/100=$7.5
The intrinsic value per share is the total value attributable to common stock divided by the number of common stock in issue.
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Month Occupancy- Days Electrical Costs January 3,250 $ 9,660 February 3,470 $ 10,185 March 3,660 $ 10,360 April 1,760 $ 6,160 May 1,350 $ 4,725 June 4,350 $ 11,575 July 3,280 $ 9,765 August 1,610 $ 5,635 September 700 $ 2,450 October 1,300 $ 4,550 November 1,640 $ 5,740 December 2,220 $ 7,770 Required:
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount)
2. What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
Number of days present in a month.
Income taxes paid on hotel income.
Seasonal factors like winter or summer.
Systematic factors like guests, switching off fans and light
Answer and Explanation:
The computation of the fixed cost and the variable cost of electricity per occupancy-day by using high low method is shown below:
The Variable cost of electricity per occupancy-day = (High electrical cost - low electrical cost) ÷ (High month occupancy days - low month occupancy days)
= ($11,575 - $2,450) ÷ (4,350 - 700)
= $9,125 ÷ 3,650
= $2.50 per occupancy days
Now the fixed cost equal to
= High electrical cost - (High month occupancy days × Variable cost per occupancy days)
= $11,575 - (4,350 × $2.50)
= $11,575 - $10,875
= $700
The other factors other than the occupancy days affect the variation in electrical costs from month to month is the number of days present in a month as it remains fixed with respect to the occupancy , seasonal factors like winter or summer as in the summer the electrical cost is high as compared in the winter season , and the Systematic factors like guests, switching off fans and light depend on their wish or as per usage.
Larkspur, Inc. uses a periodic inventory system. Its records show the following for the month of May, in which 80 units were sold.
Date Explanation Units Unit Cost Total Cost
May 1 Inventory 28 $9 $252
15 Purchase 26 10 260
24 Purchase 39 11 429
Total 93 $941
Required:
1. Calculate the weighted-average unit cost. (Round answer to 3 decimal places, e.g. 5.125.)
2. Calculate the ending inventory at May 31 using the FIFO, LIFO and average-cost methods. (Round answers to 0 decimal places, e.g. 125.)
Answer:
Explanation:
Date Unit Unit cost Total Goods sold Cost Total
May 1 28 9 252 28 9 252
May 15 26 10 260 26 10 260
May 24 39 11 429 26 11 286
Total 93 941 80
1) Weighted average unit cost = 941/93 = $10.118
FIFO method
2)Ending inventory (93-80)*11 =$ 143
FIFO method assumes that the first set of inventory are the first to be sold
LIFO method
LIFO assumes that the last set of inventory are the first to be sold
Goods Sold Cost Total
39 11 429
26 10 260
15 9 135
Ending Inventory = (93-80)*9 = $117
Average Cost Method
Ending Inventory = 13 * 10.118 =$131.534
In a democratic capitalist environment the price mechanism automatically becomes the planning tool for its homeostasis; what is the significance of the public sector in this environment?
Answer:
In a market economy, the price mechanism is indeed the primary coordinator of the decisions of buyers and sellers, because the price for goods and services adjust to an equilibrium point, where demand and supply are equal.
However, the public sector still has two important functions in this enviroment:
Correcting market failures - a market failure is a situation in which the market does not produce a good outcome. An example of market failure is pollution. Market failures can be corrected by government intervention, for example, by setting anti-pollution regulations.Providing public goods - some public goods are not provided by the private sector because they are not profitable. The public sector can therefore step in and provide this type of goods.Cellular Access Inc., is a cellular telephone service provider that reported net operating profit after tax (NOPAT) of $ 250$250 million for the most recent fiscal year. The firm had depreciation expenses of $ 100$100 million, capital expenditures of $ 200$200 million, and no interest expenses. Working capital increased by $ 10$10 million. Calculate the free cash flow for Cellular Access for the most recent fiscal year.
Answer:
Therefore, the free cash flow for Cellular Access for the most recent fiscal year is $ 140 million
Explanation:
Given;
Net operating profit after tax (NOPAT) = $ 250
Depreciation expenses = $100 million
Capital expenditures = $200 million
Net working capital increment = $10 million
Free Cash Flows = net operating profit after tax + Depreciation - capital expenditure - Increase in net working capital
Free Cash Flows = ($250 + $100 - $200 - $10) million Free Cash Flows = $ 140 million
A bank in Austin, Texas, has allowed its state banking license, under which it had been regulated by the Federal Deposit Insurance Corporation, a U.S. bank regulator, to expire. It has switched to a federal banking license, under which it is now regulated by the Office of the Comptroller of the Currency, another bank regulator. Do these regulators subject the bank to social or economic regulation?
Answer: c. economic regulation because they regulate only the activities of banks.
Explanation:
Economic Regulation refers to rules, regulations and policies that are established by a Governmental or Independent Adminstrative agency with the aim being to monitor the entrance of new firms as well as the activities of existing firms in an industry including the financial industry. They help protect the industry through their actions and are thus very important.
A very important example of such an organization is the Office of the Comptroller of the Currency. They have the mandate of regulating all national Banks including foreign Banks as well. As the regulator of such an industry and going by the definition of an Economic regulation, the regulation they apply is Economic in nature to ensure that the banks behave in such a way that will not be detrimental to the industry and the Economy.
The MoMi Corporation’s cash flow from operations before interest and taxes was $5.6 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 16% of pretax cash flow each year. The tax rate is 35%. Depreciation was $380,000 in the year just ended and is expected to grow at the same rate as the operating cash flow. The appropriate market capitalization rate for the unleveraged cash flow is 12% per year, and the firm currently has debt of $7.3 million outstanding. Use the free cash flow approach to value the firm’s equity. (Round answer to nearest whole number. Enter your answer in dollars not in millions.)
Answer:
Value of the firm = $ 43155000
Value of the firm's equity = $ 35855000
Explanation:
The objective of this question is to determine the value of the firm and the value of the firm's equity
Cash flow from operations =( 5.6 million + 5% of 5.6 million ) = 5880000
Depreciation = ( 380000 + 5% of 380,000 ) = 399000
Taxable income = 5880000 - 399000 = 5481000
Net income (after tax) = ( 5481000 - 35% of 5481000 ) = 3562650
Cash flow from operations (after tax) = 3562650 + 399000 = 3961650 ( which is the depreciation, being non-cash expense)
However, The Free cash flow available = Cash flow from operations (after tax) - Income from investment
= 3961650 - ( 5600000 × 16% × 1.05)
= 3961650 - 940800
= 3020850
Value of the firm = Free cash flow available / (Capitalization rate - Growth rate)
Value of the firm = 3020850 / 0.12 - 0. 05
Value of the firm = 3020850 / 0.07
Value of the firm = $ 43155000
Value of the firm's equity = Total value of firm - Value of debt of firm
Value of the firm's equity = $ 43155000 - $ 7300000
Value of the firm's equity = $ 35855000
On January 1, 2014, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc. for $3,800,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail's board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail's board which gave it the ability to significantly influence Sauk Trail's operating and investing activities.January 1, 2014, carrying amounts and corresponding fair values for Sauk Trail's assets and liabilities follow: Carrying Amount Fair ValueCash and receivables $ 165,000 $ 165,000Computing equipment 5,495,000 6,580,000Patented technology 155,000 4,110,000Trademark 205,000 2,110,000Liabilities (240,000 ) (240,000 )Also as of January 1, 2014, Sauk Trail's computing equipment had a remaining estimated useful life of seven years. The patented technology was estimated to have a five-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost.During the next two years, Sauk Trail reported the following net income and dividends: Net Income Dividends Declared:2014 $ 1,910,000 $ 205,0002015 2,095,000 215,000a. How much of Ridge Road's $3,800,000 payment for Sauk Trail is attributable to goodwill?b. What amount should Ridge Road report for its equity in Sauk Trail's earnings on its income statements for 2014 and 2015?c. What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2014 and 2015?
Answer: a. $236,500 b. $287,250 c. $4269500
Explanation:
The balance sheet also called the statement of financial position or a statement of financial condition is the summary of financial balances of an individual or an organization.
The calculations for a-c has been attached
A)
Acquisition Price $3,800,000
Book Val Acquired $1,445,000
Excess PMT $2,355,000
Excess fair value: Computer equip 271,250
Excess fair value: Patented Tech 988,750
Excess fair value: Trademark 476,250
1,736,250
Goodwill $618,750
Amortization
Computer equip $38,750
Patented Tech 197,750
$236,500
B)
Basic Equity accual 477500
Less: Amortization $236,500
$241,000
Basic Equity accrual 523750
Less: annual amortization $236,500
$287,250
C)
Acquisition Price $3,800,000
Add Equity $241,000
Less div -51250
Invest in ST1 $3,989,750
Add Equity $287,250
Less div -53750
Invest in ST2 $4,223,250
Bill's Grill is a popular college restaurant that is famous for its hamburgers. The owner of the restaurant, Bill, mixes fresh ground beef and pork with a secret ingredient to make delicious quarter-pound hamburgers that are advertised as having no more than 25% fat. Bill can buy beef containing 80% meat and 20% fat at $0.85 per pound. He can buy pork containing 70% meat and 30% fat at $0.65 per pound. Bill wants to determine the minimum cost way to blend the beef and pork to make hamburgers that have no more than 25% fat.
Required:
1. What is objective function for the mathematical formulation, in words?
Answer:
Explanation:
Given that:
Bill can buy containing 80% meat and 20 % pound at $0.85 per pound
Also; He can buy pork containing 70% meat and 30% fat at $0.65 per pound.
Bill, mixes fresh ground beef and pork with a secret ingredient to make delicious quarter-pound hamburgers that are advertised as having no more than 25% fat.
From the information given:
The Objective is that Bill wants to determine the minimum cost way to blend the beef and pork to make hamburgers that have no more than 25% fat.
Also: Required is to find the objective function for the mathematical formulation, in words.
Assumptions:
Let assume that [tex]\mathbf{Z_1}[/tex] should be the percentage of the beef.
Let assume that [tex]\mathbf{Z_2}[/tex] should be the percentage of the beef.
The buying cost of beef is $0.85 and the buying cost of pork is $0.65
Hence; the Minimum Objective cost function for this model will be :
[tex]\mathbf{Min:0.85Z_1 + 0.65Z_2}[/tex]
Also; from above:
We know that the fat in beef and pork is 20% and 30% respectively ( 0.2 and 0.3).
And Bill decided to make hamburgers that have fat not more than 25% (0.25)
Equally ; we can formulate a decision that the sum of the beef and pork should be less than or equal to 0.25
So:
[tex]\mathbf{0.85Z_1 + 0.65Z_2 \leq 0.25}[/tex]
Since Bill is using both beef and pork for the production; there is need to add both entity together because He does not have to use either beef or pork alone;
So;
[tex]\mathbf{Z_1+Z_2 =1}[/tex]
Of course , we know that the percentage of this aftermath result can't be zero. i.e it is definitely greater than 1.
So; [tex]\mathbf{Z_1,Z_2 > 1}[/tex]
Thus; the Objective function of this model is :
[tex]\mathbf{Min:0.85Z_1 + 0.65Z_2}[/tex] which is subjected to [tex]\mathbf{0.85Z_1 + 0.65Z_2 \leq 0.25} \\ \\ \mathbf{Z_1+Z_2 =1} \\ \\ \mathbf{Z_1,Z_2 > 1}[/tex]
Cutter Enterprises purchased equipment for $57,000 on January 1, 2021. The equipment is expected to have a five-year life and a residual value of $5,700. Using the double-declining-balance method, depreciation for 2021 and the book value at December 31, 2021, would be: Multiple Choice $20,520 and $33,780 respectively. $22,800 and $34,200 respectively. $20,520 and $36,480 respectively. $22,800 and $28,500 respectively.
Answer:
The correct answer is C.
Explanation:
Giving the following information:
Purchasing price= $57,000
Useful life= five-year
Residual value= $5,700.
To calculate the depreciation expense under the double-declining balance, we need to use the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
Annual depreciation= 2*[(57,000 - 5,700)/5]
Annual depreciation= $20,520
Book value= 57,000 - 20,520
Book value= $36,480