In January 2020, the management of Sheridan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred. Feb. 1 Purchased 500 shares of Muninger common stock for $27,500. Mar. 1 Purchased 700 shares of Tatman common stock for $17,500. Apr. 1 Purchased 40 $1,050, 6% Yoakem bonds for $42,000. Interest is payable semiannually on April 1 and October 1. July 1 Received a cash dividend of $0.50 per share on the Muninger common stock. Aug. 1 Sold 167 shares of Muninger common stock at $65 per share. Sept. 1 Received a $1 per share cash dividend on the Tatman common stock. Oct. 1 Received the semiannual interest on the Yoakem bonds. Oct. 1 Sold the Yoakem bonds for $41,000. At December 31, the fair value of the Muninger common stock was $56 per share. The fair value of the Tatman common stock was $24 per share.At December 31, the fair value of the Muninger common stock was $56 per share. The fair value of the Tatman common stock was $24 per share.
Prepare the adjusting entry at December 31, 2020, to report the investment securities at fair value. All securities are considered to be trading securities. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Answers
Answer: kindly check attached picture
Explanation:
Kindly check attached picture
Related Questions
Discuss how doing case analysis will help you develop skills needed to prepare recommendations for consideration in a Strategic Plan. What is a business model and how can it disrupt a company, industry and or both? Provide at least two examples.
Answers
Answer 1:
A Business Case Analysis (BCA) brings into consideration the best possible value obtainable from a proposed line of action by considering among other factors cost, risks, and profitability.
Business Case Analysis requires a thorough examination of the subject and the purpose of a business case.
It scrutinises all the assumptions upon which the proposed business case is founded and tries to balance the cost to the organisation against benefits. Benefits and Costs are weighted financially as well as non-financially and having researched all the possible angles to the risks, a recommendation is made.
One of the tools which are used in BCA as well as in crafting Strategic Plans is the SWOT Analysis. It cross-examines the relationship between an organisations Strengths, its Weaknesses, Opportunites and Threats.
A good strategic plan, therefore, is one which takes cognisance of one's strengths and how it can be used to take advantage of opportunities whilst minimizing threats and weaknesses at the least cost/risk possible.
Hence the tools in BCA are very integral in preparing recommendations for a Strategic Plan.
Answer 2
A Business Model refers to the methodology that a business currently or plans to use in generating utility or value, delivering such value, getting value in return, what type of customers that will, in turn, receive its value and return value for utility provided. It also speaks to the kind of products or services the business will be selling and how it will generate finance.
Example 1
The invention of the electronic mail by Ray Tomlinson disrupted the traditional way of writing letters. When the now big players such as "Yahoo" and "Google" commercialized it, the used a Freemium Bussiness Model.
This model allows users to take advantage of the basic features of the product or service for free but must pay if they require an upgrade to more advances functionalities.
This was necessary and it worked because service was novel. A lot of people needed the eMail but didn't know it yet. Giving out the basic functions for free was the strategy to overcome this need-knowledge gap.
Did it disrupt Postal Services around the world? Yes. Almost no one sends postal mail anymore except if it has to do with a shipment of tangible goods.
Example 2
Free offerings Model: This business model gives out its products or services for free. This model was popularized by "Google".
They provide lots of very useful services but gain access to user information for free as well which they, in turn, evaluate for targeted advertising or bespoke offers.
Cheers!
Match the terms in the left column with their appropriate definition in the right column. PROBLEMS Terms 1. Economic order quantity (EOQ) 2. Materials requirements planning (MRP) Definitions a. A document that creates a legal obligation to buy and pay for goods or services b. The method used to maintain the cash balance in the petty cash account
Answers
Answer: Please the terms do not match the definitions.
Please see below for the appropriate terms which match the given definitions.
Explanation:
A document that creates a legal obligation to buy and pay for goods or services ----Purchase order
A purchase order is defined as a contract or agreement between a buyer( buisness or company) and a seller who is usually a vendor to supply goods or services based on aggrement on the specific product or services, specific quantity for a specific price to be paid by the buyer when delivered .
b)The method used to maintain the cash balance in the petty cash account----- Imprest Fund
An imprest Fund is also known as Petty Cash fund which carries a fixed amount used by Buisnesyses to cover small routine expenses and are replaced or replenished to always maintain the fixed amount.
One year ago, a U.S. investor converted dollars to yen and purchased 100 shares of stock in a Japanese company at a price of 3,150 yen per share. The stock's total purchase cost was 315,000 yen. At the time of purchase, in the currency market 1 yen equaled $0.00952. Today, the stock is selling at a price of 3,465 yen per share, and in the currency market $1 equals 145 yen. The stock does not pay a dividend. If the investor were to sell the stock today and convert the proceeds back to dollars, what would be his realized return on his initial dollar investment from holding the stock?
Answers
Answer: -20.31%
Explanation:
A year ago, a United States investor converted dollars to yen and bought 100 shares of stock in a Japanese company at price of 3,150 yen per share. At that time of purchase, 1 yen equaled $0.00952.
Total cost =3150×100 yen = 315000 yen
= 315000 × 0.00952 = $2998.8
Today, the stock sells at a price of 3,465 yen per share, and in the currency market $1 equals 145 yen.
Total selling price=3465 × 100 = 346500 yen =346500/145 = $2389.7
Return = (2389.7-2998.8)×100/2998.8
= -20.31%
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Hubs 0.60 18,000 units Sprockets 0.20 55,000 units Additional information about the company follows: A. Hubs require $20 in direct materials per unit, and Sprockets require $18. B. The direct labor wage rate is $13 per hour. C. Hubs are more complex to manufacture than Sprockets and they require special equipment. D. The ABC system has the following activity cost pools.Activity cost pool (Activity measure) Overhead Cost Hubs Sprockets totMachine set up ( Number of set ups) $72000 100 300 400Special processing ( Machine hours) $200000 5000 0 5000General factory (Direct labor hours) $816000 8000 16000 24000Required:
1. Compute the activity rate(i.e predetermined overhead state) for each activity cost pool.
2. Determine the unit cost of each product according to the ABC system.
Answers
Answer:
Instructions are below.
Explanation:
Giving the following information:
Direct Labor-Hours:
Hubs= 0.6 per unit
Sprockets= 0.2 per unit
Production:
Hubs= 18,000 units
Sprockets= 55,000 units
Direct materials:
Hubs require $20
Sprockets require $18.
The direct labor wage rate is $13 per hour.
Activity cost pool (Activity measure) Overhead Cost Hubs Sprockets:
Machine set up ( Number of set ups) $72000 100 300 400
Special processing ( Machine hours) $200000 5000 0 5000
General factory (Direct labor hours) $816000 8000 16000 24000
First, we need to calculate the estimated overhead rate for each activity:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machine set up= 72000/400= $180 per set up
Special processing= 200,000/5000= $40 per machine-hour
General factory= 816,000/24000= $34 per direct labor hour
To allocate overhead, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Activity per unit:
Hubs:
Machine set up= 100/18,000= 0.0055
Special processing= 5,000/18,000= 0.28
General factory= 8,000/18,000= 0.44
Sprockets:
Machine set up= 300/55,000= 0.0055
General factory= 16,000/55,000= 0.291
Now, the cost per unit:
Hubs:
Direct material= 20
Direct labor= 0.6*13= 7.8
Allocated overhead= (180*0.0055) + (40*0.28) + (34*0.44)= 36.06
Cost per unit= $63.86
Sprockets:
Direct material= 18
Direct labor= 0.2*13= 2.6
Allocated overhead= (180*0.0055) + (34*0.291)= 10.88
Cost per unit= $31.48
The following account titles were drawn from the general ledger of Holt Food Supplies, Incorporated (HFSI): Computers, Operating Expenses, Rent Revenue, Building, Cash, Notes Payable, Land, Utilities Payable, Utilities Expense, Trucks, Gasoline Expense, Retained Earnings, Supplies, Accounts Payable, Office Furniture, Salaries Expense, Common Stock, Service Revenue, Interest Expense, Dividends, Supplies Expense. Required A. List each account title under the element of the accounting equation to which it belongs. B. Will all businesses have the same number of accounts?
Answers
Answer:
Assets= Liabilities + Owner's Equity
Part B: No, all companies do not have the same accounts. The accounts depend on the types of business they are doing. For example a tailoring company would own tailoring machines. A washing company would own washing machines etc. However the accounting equation remains the same. Assets= Liabilities + Owner;s Equity. The assets accounts are included in assets and liabilities and Owner's Equity accounts are inluded in liabilities and owner's equity section.
Explanation:
Holt Food Supplies, Incorporated (HFSI)
Assets
Cash
Supplies
Trucks
Computers
Office Furniture
Land
Building
Liabilities
Short term Liabilities
Accounts Payable
Utilities Payable
Long Term Liabilities
Notes Payable
Stockholder's Equity
Dividends
Common Stock
Retained Earnings(+ Net profit )*
Rent Revenue
Service Revenue
Operating Expenses
utilities Expense
salaries expense
supplies expense
interest expense
The above accounts are included in the balance sheet which is given by the equation
Assets= Liabilities + Retained Earnings
The net profit is calculated from the income statement in which the revenues are added and expenses are subtracted from them to get the net profit. That profit is added to the retained earnings of the balance sheet.
Net Profit = Revenue - Expenses
"Among social workers in selected U.S. urban areas, are the personality characteristics of Need for Structure or In-Group Preference related to prejudicial social judgments about African Americans, Latino Americans, or Asian Americans?" Which of the following is a well-stated subproblem that follows from this research problem?
a. Which group is more discriminated against by the public at large in each of the selected areas: African Americans, Latino Americans, or Asian Americans?
b. What is the most valid existing measure of In-Group Preference?
c. What is the relationship between an index of Need for Structure and an index of prejudice targeting attitudes about Asian Americans among the selected social workers?
d. Which analytic technique is best suited to addressing the research problem, multiple regression or path analysis?
Answers
Answer: What is the relationship between an index of Need for Structure and an index of prejudice targeting attitudes about Asian Americans among the selected social workers?
Explanation:
A research problem in research indicates a statement about the area of concern. The research problem is a question which bothers the researcher and hence needs to be investigated.
The problem statement is a description of an issue that the researcher wants to address or a condition that the researcher wants to improved upon. The problem statement shows the gap between current state and the state that is desired.
With regards to the question above, the subproblem will be what is the relationship between an index of Need for Structure and an index of prejudice targeting attitudes about Asian Americans among the selected social workers?
Among the four options provided, option C is the right answer has it provides further questions based on the main question.
An inexperienced accountant for Marigold Corp. showed the following in the income statement: income before income taxes $432,000 and unrealized gain on available-for-sale securities (before taxes) $85,200. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 33% tax rate. Prepare a correct statement of comprehensive income.
Answers
Answer:
$346,524
Explanation:
Marigold Corp correct statement of Comprehensive Income
Income before income taxes 432,000
Income taxes expenses 142,560
(432,000*33%)
Net Income or loss 289,440
(432,000-142,560)
Other comprehensive income:
Unrealized gain on available-for-sale securities before tax
(85,200-(85,200*33%)
=85,200-28,116
=57,084
Hence:
Comprehensive income:
289,440+57,084
=$346,524
An engineer planning for her retirement will deposit 10% of her salary each year into a stock found. The initial balance in her stock found (year 0) is $20,000. If her salary this year is $120,000 (end of year 1) and she expects her salary to increase by 5% each year, what will be the future worth of the found after 25 years if it earns 15% per year
Answers
Answer:
$4,202,290.77
Explanation:
This can be calculated using the for formula for calculating the future value of growing annuity as follows:
FV = C × {[(1 + r)^n - (1 + g)^n] ÷ (r - g)}
Where;
FV = future value or expected cash flow = ?
C = first year deposit = $120,000 * 10% = $12,000
r = rate of return = 15%, or 0.15
g = growth rate of salary = 5%, or 0.05
n = number of years = 25 years
Substituting all the values into equation (1), we have:
FV = 12,000 × {[(1 + 0.15)^25 - (1 + 0.05)^25] ÷ (0.15 - 0.05)} = $3,543,911.72
FV of initial balance = 20,000 * (1 + r)^n = 20,000 * (1 + 0.15)^25 = $658,379.05
Total FV = FV + FV of initial balance = $3,543,911.72 + $658,379.05 = $4,202,290.77
Therefore, the future worth of the found after 25 years if it earns 15% per year will be $4,202,290.77.
What kinds of unemployment is Naomi experiencing if she has a degree in a field that is experiencing a great deal of growth at the moment but is having a difficult time finding work because she just moved to a new city and does not know anyone yet?
Answers
Answer:
Naomi experiences Frictional Unemployment due her movement to a new city.
Explanation:
Although Naomi has a degree in a field that is experiencing a great deal of growth, her movement causes her to remain unemployed, not because she has no skill but because of the difference in the job and worker demand and supply between these two places, that is characteristic of frictional unemployment. Frictional unemployment is a type of unemployment that is based on the unemployed person's circumstances. It can be as a result of the person trying to find a better job or as a result of the person moving from an old place to a new place. This type of unemployment exists because jobs and workers have their differences, creating a type of mismatch between the supply and demand of jobs and workers.
Restaurants in tourist's areas will close during the off-season if their: a. AFC is less than their TR. b. ATC is less than their TR. c. AVC is greater than their TR. d. AFC is greater than their TR.
Answers
Answer: c. AVC is greater than their TR.
Explanation:
At the point where Average Variable Costs are greater than Total Revenue, this means that the restaurant is unable to cover its Variable Costs. It will therefore shutdown in the short run being the off season so as to stop incurring the Variable Costs.
If they shut down for instance, they will incur only fixed costs. If they do not shut down, they will incur both fixed costs and Variable Costs which are greater than revenue and so cannot be covered thereby increasing losses.
It is therefore better to shutdown in the off-season to keep the losses to a minimum.
Atlanta Company Spokane Company
Total liabilities $ 429,000 $ 549,000
Total equity 572,000 1,830,000
Compute the debt-to-equity ratio for each of the above companies. Which company appears to have a riskier financing structure?
A) Spokane
B) Company
C) Atlanta
D) Company
Answers
Answer:
C) Atlanta Company
Explanation:
Let's bear in mind that equity is an advantage that allows your company to buy and sell more.
So more equity means more ability to buy and sell and less the possibility of going bankrupt.
Liability on the other hand also gives advantage in trade r company , so more liability shows strongness of the company.
Now let's compare the equity and liability of the both companies
Atlanta Company
Total liabilities $ 429,000
Total equity 572,000
Spokane Company
Total liabilities $ 549,000
Total equity 1,830,000
The equity ratio is about 1:3
While liability is about 1:1.2
So Atlanta company has more riskier structure
A company purchased a commercial dishwasher by paying cash of $4,600. The dishwasher's fair value on the date of the purchase was $4,980. The company incurred $420 in transportation costs, $350 installation fees, and paid a $250 fine for illegal parking while the dishwasher was being delivered. For what amount will the company record the dishwasher?A company purchased a commercial dishwasher by paying cash of $4,600. The dishwasher's fair value on the date of the purchase was $4,980. The company incurred $420 in transportation costs, $350 installation fees, and paid a $250 fine for illegal parking while the dishwasher was being delivered. For what amount will the company record the dishwasher?
Answers
Answer:
$5750
Explanation:
All the cost that are necessary to bring the machine in ready for use condition for the company must form part of the asset as per the International Accounting Standard IAS 16 Property, Plant and Equipment guidelines.
Cash paid $4980
Transportation cost $420
Installation fees $350
Total cost $5750
The additional $250 cost that is paid as fine must not be included in the cost of the dishwasher machine as it was not necessary for the company to park the car in a inadmissible manner to make the dishwasher ready for use.
Suppose the government decides to enact a new tax on T-shirts. What will happen in the market for T-shirts? (Note: Neither the supply curve nor the demand curve for T-shirts is perfectly inelastic.)
Answers
Answer:
- The price buyers will pay will be higher
- The tax on T shirts will cause a dead weight loss
- There will be a decrease in T shirts sold
Explanation:
In this scenario when curve for demand and is not perfectly inelastic it means that with an increase in price there is a fall in the amount of a good demanded.
So when tax is imposed on the T shirts the producers will have a higher cost of production. This is transfered to the buyer in form of higher prices.
Since the increase in price reduces quantity demanded, the buyer will buy less T Shirts at the higher price
Dead weight loss is a cost to society as a result of inefficiency non the market.
When taxes are applied supply and demand go out of equillibrum as prices are now higher. Therefore tax imposition causes a dead weight loss.
Answer: B. The tax on T-shirts will cause a deadweight loss.
C. The price consumers pay for T-shirts will be higher.
D. The quantity of T-shirts sold will decrease.
Explanation:
The tax will cause a dead weight loss because the Economy is inefficient. By introducing taxes, the Supply and Demand Equilibrium changes and because of this, production shifts to a point where it is not efficient which reduces the welfare of the economy. That loss in welfare is the Deadweight loss.
As a direct result of taxes, consumers usually have to shoulder the burden. The tax will be added to the good which will increase it's price so that the producers are able to pay the Government the taxes required and still have enough for profit.
The Quantity of shirts sold will reduce. As neither the supply nor the demand curve for the T-shirts are perfectly Inelastic, an increase in price will reduce demand but depending on the Elasticity it might not be by a lot but so long as it is not perfectly Inelastic, the demand will reduce.
Florin and Guilder are two countries separated by a narrow sea.
They use currencies called, respectively, the Flop and the Gulp.
Suppose the nominal exchange rate is 5 Flops per Gulp.
A Guilderian trader buys a 40 Flop barrel of Florish pickles by exchanging 8 Gulps, and a Florish trader buys a 10 Gulp crate of Guilderian apples by exchanging 50 Flops.
Then the Gulp depreciates to 2 Flops per Gulp.
a. How much must the Guilderian pay for the same 40 Flop barrel of pickles? ____(Gulps)
b. How much must the Florish trader pay for the same 10 Gulp crate of apples? ____(Flops)
Answers
Answer:
a. 20 Gulps
b. 20 Flops
Explanation:
The 40 flop barrels of pickles will still maintain its price in Florin
only the foreigner (Guilderian) will feel the impact for buying externally
with the new exchange rate of 2 Flops per Gulp, the Guilderian will pay 40/2 Gulps. This is equal to 20 Gulps
The 10 Gulp crate of apple will maintain its price in Guilder.
only the foreigner (Florish) will feel the impact for buying externally
with the new exchange rate of 2 Flops per Gulp, the Florish will pay 10 x 2 Flops. This is equal to 20 Flops
Money in whatever form when in use or circulation as a means of trade, notably circulating banknotes and coins, is referred to as currency in the most specific meaning.
A currency, in a broader sense, is a system of money in widespread use, particularly among citizens of a country.
The answers are:
a. 20 Gulps
b. 20 Flops
The pricing of 40 flop buckets of pickle will remain the same in Florin, but foreigners will pay 40/2 Gulps to adapt to the recent exchange rate of 2 flops each gulp. This is the equivalent of 20 Gulps.
The pricing of a 10 Gulp apple package will remain the same in Guilder. Only the foreigner (Floridian) will suffer the effect of the change currency rate of 2 Flops per Gulp when purchasing externally; the Floridian will pay 10 x 2 Flops. This is the same as 20 Flops.
To know more about the currency and the calculation of the currencies, refer to the link below:
https://brainly.com/question/5748035
Suppose that you make a series of annual deposits into a bank account that pays 10% interest. The initial deposit at the end of the first year is $1,200. The deposit amount decline by $200 in each of the next four years. How much would you have immediately after the fifth deposit? Group of answer choices
Answers
Answer:
You will have $5,116 in the account.
Explanation:
a) End of 1st-year deposit of $1,200 will become $1,757 ($1,200 * 1.464) in four years' time.
b) End of 2nd-year deposit of $1,000 will become $1,331 ($1,000 * 1.331) in three years' time.
c) End of 3rd-year deposit of $800 will become $968 ($800 * 1.21) in two years' time.
d) End of 4th-year deposit of $600 will become $660 ($600 * 1.1) in a year's time.
e) End of 5th-year deposit of $400 will be $400 in 0 year's time.
f) The total will be $5,117 (a+b+c+d+e).
g) The future value factor is equal to 1.1ⁿ, where the discount factor is 10%.
Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. The unemployment created by this change is:
A. frictional unemployment created by sectoral shifts.
B. structural unemployment created by sectoral shifts.
C. structural unemployment created by efficiency wages.
D. frictional unemployment created by efficiency wages.
Answers
Answer:
The correct answer is: A. frictional unemployment created by sectoral shifts.
Explanation:
Frictional unemployment is a type of search unemployment, which occurs when the worker is looking for a job, or being transferred from one job to another.
This type of unemployment is caused by several circumstances, in the scenario exemplified by the question above, frictional unemployment occurs due to sectoral changes, due to the popularity of the low-carb diet, so there was a migration of jobs from bakeries that need less workers to the steakhouses who need more workers.
Plastic Company purchased 100 percent of Spoon Company's voting common stock for $648,000 on January 1, 20X4. At that date, Spoon reported assets of $690,000 and liabilities of $230,000. The book values and fair values of Spoon's assets were equal except for land, which had a fair value $108,000 more than book value, and equipment, which had a fair value $80,000 more than book value. The remaining economic life of all depreciable assets at January 1,20x4, was five years. Spoon reported net income of $68,000 and paid dividends of $34,000 in 20X4
Required Compute the amount of investment income to be reported by Plastic for 20X4
Answers
Answer:
The amount of investment income is $52,000
Explanation:
Assets of $690,000
Liabilities of $230,000
Spoon's assets were equal except for land, which had a fair value $108,000 more than book value, and equipment, which had a fair value $80,000 more than book value.
Net income of $68,000
Paid dividends of $34,000
Proportionate share of reported income
Share in income from investment = 68000 × 100% = $68,000
Depreciation on equipment = (80,000 ÷ 5) = ($16,000)
Amount of investment income = $68,000 - $16,000
= $52,000
Suppose the rate of return on short-term government securities (perceived to be risk-free) is about 6%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 16%. According to the capital asset pricing model:
A. What is the expected return on the market portfolio?
B. What would be the expected return on a zero-beta stock?
C. The stock risk has been evaluated at beta = -.5. Is the stock overpriced or under-priced?
Answers
Answer:
A. 16%
B. 6%
C. Underpriced. Note: This answer is based on the example we used to show how to complete solving this kind of question.
Explanation:
Given;
E(rM) = return required by the market for a portfolio = 16%, or 0.16
rf = rate of return on short-term government securities (perceived to be risk-free) = 6%, or 0.06
We can now proceed as follows:
A. What is the expected return on the market portfolio?
The formula for calculating the expected return on the market portfolio is as follows:
Expected return on the market portfolio = ([E(rM) - rf] / B) + rf
Where;
B = beta of the portfolio = 1
Substituting these values into the equation above, we have:
Expected return on the market portfolio = (0.16 - 0.06)/1 + 0.06 = 0.16, or 16%.
B. What would be the expected return on a zero-beta stock?
The formula for calculating the expected return on a zero-beta stock is as follows:
Expected return on a zero-beta stock = rf + B[E(rM) - rf]
Where;
B = beta of the portfolio = 0
Substituting these values into the equation above, we have:
Expected return on a zero-beta stock = 0.06 + 0[0.16 - 0.06] = 0.06, or 6%.
C. The stock risk has been evaluated at beta = -.5. Is the stock overpriced or under-priced?
In line with capital asset pricing model (CAPM), we have:
Expected return = E(r) = rf + B[E(rM) - rf]
B = beta of the portfolio = -0.5
Substituting these values into the equation above, we have:
E(r) = 0.06 - 0.5(0.16 - 0.06) = 0.06 - 0.05 = 0.01, or 1.00%
Note: To determine if a stock overpriced or under-priced, we make use of an example here by assuming buying a share of stock at $40 which is expected to pay $3 dividends next year and it is expected to sold then for $41.
In line with CAPM, the price must be:
Po = ($41 + $3) / [1 + E(r)] = $44 / (1 + 0.01) = $43.46
Since $43.46 is greater than purchase price of $40, the stock is underpriced.
On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $84,000 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Cash $ 11,360 Cash dividends $ 2,000 Accounts receivable 14,000 Consulting revenue 14,000 Office supplies 3,250 Rent expense 3,550 Land 46,000 Salaries expense 7,000 Office equipment 18,000 Telephone expense 760 Accounts payable 8,500 Miscellaneous expenses 580 Common Stock 84,000 Exercise 1-18 Preparing a statement of cash flows LO P2 Also assume the following: The owner’s initial investment consists of $38,000 cash and $46,000 in land in exchange for its common stock. The company’s $18,000 equipment purchase is paid in cash. The accounts payable balance of $8,500 consists of the $3,250 office supplies purchase and $5,250 in employee salaries yet to be paid. The company’s rent, telephone, and miscellaneous expenses are paid in cash. No cash has been collected on the $14,000 consulting fees earned. Using the above information prepare an October 31 statement of cash flows for Ernst Consulting. (Cash outflows should be indicated by a minus sign.)
Answers
Answer: The answer has been attached
Explanation:
The income statement also referred to as the profit and loss account is a financial statements of a company that shows the revenues and the expenses of a company during a particular period.
The income statement for Ernst consulting has been attached.
Upon graduating from college, you make an annual salary of $58,381. You set a goal to double it in the future. If your salary increases at an average annual rate of 7.61 percent, how long will it take to reach your goal? Round the answer to two decimal places.
Answers
Answer: 9.20
Explanation:
In finance there is a rule for calculating this called 'The Rule of 70'.
With The Rule of 70, you are able to calculate the amount of time it will take an investment to double if you divide 70 by the growth rate of the investment.
In this scenario, the investment is your salary and the growth rate is 7.61% pee year.
The amount of time it will take to double is therefore,
= 70 / 7.61
= 9.19842312746
= 9.20 years.
It will take 9.20 years to double.
Find the EAR in each of the following cases. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Use 365 days in a year.) Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 10.00 % Quarterly % 16.00 Monthly % 16.00 Daily % 12.00 Semiannually.
Answers
Answer:
10.38%
17.23%
17.35%
12.36%
Explanation:
10% quarterly:
EAR=(1+APR/4)^4-1
The APR is divided by 4 and raised to the power of 4 to show that interest is compounded four times a year
EAR=(1+10%/4)^4-1=10.38%
16% monthly:
EAR=(1+APR/12)^12-1=(1+16%/12)^12-1=17.23%
16% daily:
EAR=(1+APR/365)^365-1=(1+16%/365)^365-1=17.35%
12% semiannually:
EAR=(1+APR/2)^2-1=(1+12%/2)^2-1=12.36%
The APR is divided by 2 and raised to the power of 2 since interest compounding is twice a year
The Effective annual rate EAR in each of the following cases are: 10% quarterly: 10.38%, 16% monthly: 17.23%, 16% daily: 17.35%, 12% semiannually: 12.36%.
According to the question:
Stated Rate (APR)
Number of Times Compounded Effective Rate (EAR)
A:
EAR = (1+APR/4)⁴⁻¹
To demonstrate that interest is compounded four times year, the APR is divided by four and increased to the power of four.
EAR = (1+10%/4)⁴⁻¹
=10.38%
B:
EAR = (1+APR/12)¹²⁻¹
=(1+16%/12)¹²⁻¹
=17.23%
C:
EAR = (1+APR/365)³⁶⁵⁻¹
=(1+16%/365)³⁶⁵⁻¹
=17.35%
D:
EAR = (1+APR/2)²⁻¹
=(1+12%/2)²⁻¹
=12.36%
Thus, the EAR in each of the following cases are: 10% quarterly: 10.38%, 16% monthly: 17.23%, 16% daily: 17.35%, 12% semiannually: 12.36%.
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Sommer, Inc., is considering a project that will result in initial aftertax cash savings of $1.89 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt-equity ratio of .80, a cost of equity of 12.9 percent, and an aftertax cost of debt of 5.7 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 1 percent to the cost of capital for such risky projects.
What is the maximum initial cost the company would be willing to pay for the project?
Answers
Answer:
The maximum initial cost is $2,17,24,138
Explanation:
Solution
From the given question, we are asked to find the maximum initial cost the company would be willing to pay for the project.
Now,
The first step to take is to calculate the weighted Average Cost of Capital (WACC)
Which is:
The weighted Average Cost of Capital (WACC) = [After-tax Cost of Debt x Weight of Debt] + [Cost of Equity x Weight of Equity]
= [5.70% x (0.80/1.80)] + [12.90% x (1/1.80)]
= 2.53% + 7.17%
= 9.70%
Secondly we calculate for the project discount rate which is stated as follows:
The Project Discount Rate = Weighted Average Cost of Capital (WACC) + Risk Adjustment Factor
= 9.70% + 1%
= 10.70%
The third step is to find the maximum initial cost the company would be willing to pay for the project
So,
as regards to the NPV Method of Capital Budgeting, the Project should be received if the NPV of the present value is seen as positive,
Hence,
The NPV = Present Value of Annual cash inflows – Present Value of Cash Outflows.
Thus,
The Maximum initial cost the company would be willing to pay for the project is the Present Value of the annual after-tax in-flows which is determined as follows
The Maximum initial cost = Initial After-tax Savings / (Ke – g)
= $18,90,000 / (0.1070 - .02)
= $18,90,000 / 0.0870
= $2,17,24,138
Answer:
$2.17 Millions
Explanation:
There are
Step-1. WACC Computation
WACC = [Post Tax Cost of Debt x Debt Weight] + [Cost of Equity x Equity Weight]
= [5.7% * (0.80/1.80)] + [12.9% * (1/1.80)]
= 2.53% + 7.17%
= 9.7%
Now here we will Add 1% for the additional risk to the WACC calculated so that it represents the Project Discount Rate.
Project Discount Rate = 9.7% + 1% = 10.7%
Step 2. Computation of maximum initial cost the company would be willing to pay for the project.
Using the Dividend Valuation Model, we can calculate the Maximum initial cost the company would be willing to pay for the project.
Maximum initial cost = Initial After-tax Savings / (Ke – g)
Here
Present Value of the annual after-tax inflows is $1.89 Million
Ke is the WACC which is 10.7%
g is growth rate which is 2% here.
So by putting the values, we have:
Maximum initial cost = $1.89 / (10.7% - 2%)
= $1.89 / 8.7%
= $2.17 Millions
The monopolist wants to maximize its profits or minimize its losses. Analyze the case and give a recommendation as to what the monopolist should do based on the possible recommendations provided below. Explain how you reached this recommendation and the reasons for it.
Possible Recommendations:
a. Increase production and reduce the price.
b. Decrease production and raise the price.
c. Shut down.
d. The monopoly is currently at the correct position.
CASE:
Price=3
Quantity of Output=1500
Total Cost=4500
Average Cost= (must find)
Marginal Revenue=2
Total Revenue= (must find)
Fixed Costs= (must find)
Marginal Cost=3
Answers
Answer: hi
Explanation:
ji
A circuit contains two 90 Ω resistors connected in parallel. What's the total circuit resistance?
Answers
Answer:
45ohms
Explanation:
Total resistance in parallel can be calculated by the addition of both resistors
1/R= 1/R1 + 1/R2
The value given are
R1= 90 ohms , R2= 90 ohms
1/R = 1/90+1/90
Take the LCM of both denominators
1/R = 2/90
1/R = 1/45
Cross multiply both sides
R×1 = 45×1
R= 45 ohms
Thus, the total reistance is 45 ohms
Answer:
Total circuit resistance = 45ohms
Explanation:
Given that R1 = 90 and R2 = 90
Rt = total circuit resistance
Resistance in parallel:
Resistance in parallel is found by:
1/Rt = 1/R1 + 1/R2
1/Rt = 1/90 + 1/90
Take the L. C. M and simply
1/Rt = (1 + 1) / 90
1/Rt = 2 / 90
1/Rt = 1/45
Rt = 45 ohms
Total circuit resistance = 45ohms
Paper Moon, a manufacturer of outdoor lighting fixtures is operating at less than full capacity. The plant manager is considering making the mounting brackets now being purchased from a supplier at $8 each. Paper Moon already has the equipment to produce the brackets. The plant manager has analyzed the cost of producing the brackets and determined that each bracket will require $2 of direct material, $1 of direct labor, and $8 of manufacturing overhead. Seventy-five percent of the manufacturing overhead is a fixed cost that would not be affected by the decision to manufacture the brackets. Should Paper Moon continue to purchase the brackets or produce them internally?
Answers
Answer:
The fixtures should be purchased because it will save the Paper Moon by $3 per unit
Explanation:
To determine whether or not the fixtures should be manufacture purchased, we will compare the variable cost of making internally to the external purchase price.
Variable cost of making = 2 + 1 + (25%× 8)= $5
Note that the fixed manufacturing cost represents a cost that would be incurred irrespective of the decision taken. Hence it is considered. Only the variable portion is relevant.
Variable cost of making $5
External purchase price $8
Saving in cost by making $3
The fixtures should be purchased because it will save the Paper Moon by $3 per unit
Consider the following costs that were incurred during the current year:
1. Tire costs incurred
2. Sales commissions paid to the sales force
3. Wood glue consumed in the manufacture
4. Hourly wages of refinery security guards
5. The salary of a financial vice president
6. Advertising costs
7. Straight-line depreciation on factory machinery
8. Wages of assembly-line personnel
9. Delivery costs incurred
10. Newsprint consumed in printing
11. Plant insurance costs
12. LED costs incurred in light-bulb manufacturing
Required: Evaluate each of the preceding and determine whether the cost is:
(a) a product cost or a period cost
(b) variable or fixed in terms of behavior
AND
(c) for the product costs only, whether the cost is properly classified as direct material, direct labor, or manufacturing overhead. Item 1 is done as an
example: 1. Tire costs: Product cost, variable, direct material
Answers
Answer:
1. Tire costs incurred: Product cost, variable, and direct material.
2. Sales commissions paid to the sales force: Period, variable.
3. Wood glue consumed in the manufacture: Product cost, variable, and manufacturing overhead.
4. Hourly wages of refinery security guards: Product cost, fixed, and manufacturing overhead.
5. The salary of a financial vice president: Period cost, fixed.
6. Advertising costs: Period cost, fixed.
7. Straight-line depreciation on factory machinery: Product cost, fixed, and manufacturing overhead.
8. Wages of assembly-line personnel: Product cost, variable, and direct labor.
9. Delivery costs incurred: Period, variable.
10. Newsprint consumed in printing: Product cost, variable, and direct material.
11. Plant insurance costs: Product cost, fixed, and manufacturing overhead.
12. LED costs incurred in light-bulb manufacturing: Product cost, variable, and direct material.
Explanation:
In Accounting, Costing is the measurements of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production. The various type of costs are;
1. Product cost is the expenses incurred when a product is sold.
2. Period cost refers to the period in which costs are incurred.
3. Fixed cost refers to costs that remains constant over variations in production activity, irrespective of amount of goods.
3. Variable cost refers to cost which are the same per unit of production but vary directly with level of output.
4. Direct costs refer to the costs that are peculiar to a particular department or area while indirect cost can't be traced to any.
5. Manufacturing overhead are all indirect cost required in producing a good that isn't associated with direct materials or direct labor.
A small manufacturer that makes clothespins and other household products buys new injection molding equipment for a cost of $500,000. This will allow the manufacturer to make more clothespins in the same amount of time with an estimated increase in sales of 25%. If the manufacturer currently makes 75 tons of clothespins per year, which sell at $18,000 per ton, what will be the increase in revenue next year from the new equipment
Answers
Answer:
$337,500
Explanation:
Data provided in the question
Cost of an equipment = $500,000
Increased in sales = 25%
Currently number of tons made per year = 75 tons
Selling price per ton = $18,000
Based on the above information, the increased in revenue next year is
= Increased in sales × Currently number of tons made per year × Selling price per ton
= 25% × 75 tons × $18,000
= $337,500
By applying the above formula we can get the increased in revenue amount
Eli Lilly is very excited because sales for his nursery and plant company are expected to double from $600,000 to $1,200,000 next year. Eli notes that net assets (Assets − Liabilities) will remain at 50 percent of sales. His firm will enjoy an 8 percent return on total sales. He will start the year with $120,000 in the bank and is bragging about the Jaguar and luxury townhouse he will buy.
Compute his likely cash balance or deficit for the end of the year. Start with beginning cash and subtract the asset buildup (equal to 50 percent of the sales increase) and add in profit. (Negative amount should be indicated by a minus sign.)
Answers
Answer:
ending cash balance = -$84,000
Since the profits are not enough to cover asset buildup, he will probably need to borrow money to cover them. Even though his company will be more profitable, its cash position will not be very healthy.
Explanation:
current sales $600,000
net assets = equity = $300,000
return = $600,000 x 8% = $48,000
next year's sales $1,200,000
net assets = equity = $600,000
return = $1,200,000 x 8% = $96,000
asset buildup = $600,000 - $300,000 = $300,000
ending cash balance = beginning cash balance + profit - asset buildup = $120,000 + $96,000 - $300,000 = -$84,000
Bright Company purchased $10,000,000 (face amount) of 10% bonds of Enterprise Company on January 1, 2021, paying $8,853,000. The 10-year bonds mature on January 1, 2031. Semiannual interest is payable each July 1 and January 1. The discount of $1,147,000 provides an effective yield (market rate) of 12%. Bright Company uses the effective-interest method and plans to hold these bonds to maturity.
On July 1, 2011, Bright Company should increase its Held-to-Maturity Debt Securities
account for the Enterprise Co. bonds by __________.
Answers
Answer:
$31,180
Explanation:
Bright Company
Bond payments $8,853,000 ×0.06
=$531,180
Less Face amount $10,000,000×0.05
=$500,000
Held-to-Maturity Debt Securities $31,180
($531,180-$500,000)
Effective yield (market rate)
12%÷2= 6%.
Bonds
10%÷2=5%
Zander Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed to cost of goods sold at the end of the month. In July the company completed job F21X that consisted of 21,000 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job F21X shows the following costs: During the month, the actual manufacturing overhead cost incurred was $310, 800 and 14,000 completed units from job F21X were sold. No other products were sold during the month. The unadjusted cost of goods sold (in other words, the cost of goods sold BEFORE adjustment for any underapplied or overapplied overhead) for July is closest to:___________.A. $746, 200 B. $1, 075, 200 C. $1, 119, 300 D. $743, 400
Answers
Answer:
Find attached complete question:
The correct option is A,$ 746,200
Explanation:
The total standard costs for the whole items of inventory completed in the month of July is the sum of the beginning balance of inventory plus direct materials costs, direct labor cost as well as manufacturing overhead cost applied.
Total cost of completed units=$44,100+$564,900+$195,300+$315,000=$ 1,119,300.00
standard cost per unit=$1,119,300.00/21000=$53.3
Cost of goods sold(unadjusted)=$53.3 *14,000=$ 746,200.00