Answer: Sell short the stock because it is overpriced.
Explanation:
To find out if the stock is overpriced or underpriced, you would need to check to see if the Expected return is indeed 12%.
With the given variables you can do this with the Capital Asset Pricing Model.
The formula is,
Er = Rf + b(Rm + Rf)
Where,
Er is the expected return
Rf is the Risk free rate
b is the Beta
Rm is the Market Rate
Inserting the figures,
= 7% + 1.3(15% - 7%)
= 17.4%
The stock should have an expected return of 17.4% but only has an expected return of 12%. It is underperforming and is therefore OVERPRICED. To benefit from this you should sell the stock short so that when the market prices adjust you can make a profit.
Ayayai Corp. has 320,000 shares of $10 par value common stock outstanding. It declares a 14% stock dividend on December 1 when the market price per share is $17. The dividend shares are issued on December 31. Prepare the entries for the declaration and distribution of the stock dividend.
Answer:
320,000 stocks with $10 par value
14% stock dividend (small stock dividend ≤ 20%)
so we will use the market price of the stocks = $17 x 320,000 x 14% = $761,600 total distribution
320,00 x 14% = 44,800 stocks x $10 par value = $448,000
the additional paid in capital = $761,600 - $448,000 = $313,600
December 1, declaration of stock dividend
Dr Retained earnings 761,600
Cr Common stock dividends distributable 448,000
Cr Additional paid in capital in excess of par value 313,600
December 31, distribution of stock dividends
Dr Common stock dividends distributable 448,000
Cr Common stock 448,000
In business, it is customary to praise individualistic competition and denigrate collective bargaining in all forms. However, in the Hanseatic League, we clearly see an example of merchants working together for mutual success over a period of three hundred years! What lessons are we to learn from this? Are there prospects for more merchant leagues in an increasingly globalized economy? Outline your thoughts on these questions in ten sentences minimum, and post them in the discussion. Then select two fellow students posts for peer review and critique their comments without the use of flattery.
Answer:
What lessons are we to learn from this?
The Hanseatic league, just like the Northern Italian City-States of the Late Middle Ages, are early examples of capitalism: they represent proto-capitalism.
In the cities that belonged to the Hanseatic League, the work of merchants was promoted, and capital accumulation and the profit motive began to develop. However, this does not meant that cooperation was out of place. The merchants cooperated voluntarily because they could get more working in association.
Are there prospects for more merchant leagues in an increasingly globalized economy?
There will always be the prospect for more merchant leagues, because people naturally cooperate if it is in the benefit of all the parties.
In fact, trade unions and economic unions could be seen as a form of merchant league, that are created by states instead of individual merchants.
An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly regarded chef and many long-term kitchen and wait staff who work together smoothly to make innovative new dishes. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere. What should the investor consider when making a decision?
Answer:
The investor will find that the restaurant's financial statements undervalue the true value of its resources.
Explanation:
It is said here that the investor will find the financial statements undervalue the true value of its resources. In as much as the quality of the chefs, staffs and standard of the restaurant, all were put into consideration.
It is also known that financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
Financial statements are written records that convey the business activities and the financial performance of a company.
The balance sheet provides an overview of assets, liabilities, and stockholders' equity as a snapshot in time.
Answer: The investor will find that the restaurant's financial statements will undervalue the true value of its resources.
Explanation:
A Financial statements is a formal record of all financial activities that shows the position of a business, person, or other entity’s. Important financial information are presented in a structured manner and in a away it can be easily understood. This financial statement helps one value the true worth of a business, individual or entity’s.
A company issues a callable (at par) ten-year, 6% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $104 per $100 of face value. What is the yield to maturity of this bond when it is released? A) 0.60% B) 1.92% C) 4.00% D) 5.47%
Answer:
B) 1.92%
Explanation:
For computing the yield to maturity we need to apply the RATE formula i.e to be shown in the attachment
Given that,
Present value = $104
Future value or Face value = $100
PMT = $100 × 6% = $6
NPER = 1
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
After applying the above formula, the yield to maturity is 1.92%
The ________________ desires to find a solution to a social problem rather than to simply earn profits.
Answer:
Social Entrepreneur.
Marissa gives Larry a check made payable to cash in payment for a
computer that she is buying from him. Larry then gives the check to his
nephew, Gary Graduate, without indorsing it, as a graduation gift. Marissa
then stops payment on the check because she claims that Larry breached the
contract. When the check bounces, Gary makes a claim against Marissa for
the amount of the check. Marissa responds that Gary cannot collect on the
check since he is not a holder because Larry never indorsed the check to
him. Which statement is true?
1.Gary is at least a holder
2.Gary is not a holder or holder in due course because the check was never indorsed
3.Gary is not a holder or holder in due course because of the shelter principal
4.Gary is not a holder or holder in due clause because Larry breached the contract
Answer:
The correct answer is the option 2: Gary is not a holder or holder in due course becuase the check was never indorsed.
Explanation:
To begin with, the field of law and more in particular the commercial law and all its scenarios, any check that has been passing through hands must be indorsed in order to be able to be payable to the person who has it the last, in any other case if the check is not indorsed then that means by law that the check has never changed its owner and therefore that it can not be payable for anybody else. That is why, Gary is not a holder because his uncle did not indorsed him the check correctly.
Prepare Lipman Auto Parts’ cash budget for January and February. How much cash will Lipman Auto Parts borrow in February if collections from customers that month total $13,800.00 instead of $14,800.00?
Answer:
The answer given is for the data given in the question below.
Explanation:
The complete question is :
Lipman Auto Parts, a family-owned auto parts store,began January with $10,300 in cash. Management forecasts that collection from credit customers will be $11,400.00 in January and $14,800 in February. The store is scheduled to receive $5,000.00 in cash on a business note receivable in January. Projected cash payments include inventory purchases($13,000 in January and $13,600 in February) and operating expenses ($2,700 each month). Lipman Auto Parts' bank requires $10,000 minimum balance in the store's checking account. At the end of any month when the account balance dips below $10,000, the bank automatically extends credit to the store in multiples of $1,000. Lipman Auto Parts borrows as little as possible and pays back loans in quarterly installments of $2,000, plus 4 percent interest on the entire unpaid principal. The first payment occurs three months after the loan.
Prepare Lipman Auto Parts' cash budget for January and February
How much cash will Lipman auto Pars borrow in February if collections form customer that month total $13,800 instated of $14,800?
Answer would be like this :
Lipman Auto Parts
Cash Budget
January - February
January February Beginning cash balance $ 10,300 $ 41,000
Cash collections from customers $ 11,400 $ 14,800
Collection of note receivable $ 5,000 $ -
Total cash available $ 56,700 $ 55,800
Cash payments:
Purchases of inventory $ 13,000 $ 13,600
Operating expenses $ 2,700 $ 2,700
Total cash payments $ 15,700 $ 16,300
Ending Cash Balance Before Financing $ 41,000 39,500
Less Required Cash Balance 10,000 10,000
Cash Excess $ 31,000 29500
Financing of Cash Deficiency ------- -------
Ending Cash Balance $ 41,000 39500
Lipman Auto Parts
Cash Budget
January - February
January February Beginning cash balance $ 10,300 $ 41,000
Cash collections from customers $ 11,400 $ 13,800
Collection of note receivable $ 5,000 $ -
Total cash available $ 56,700 $ 54,800
Cash payments:
Purchases of inventory $ 13,000 $ 13,600
Operating expenses $ 2,700 $ 2,700
Total cash payments $ 15,700 $ 16,300
Ending Cash Balance Before Financing $ 41,000 38,500
Less Required Cash Balance 10,000 10,000
Cash Excess $ 31,000 28500
Financing of Cash Deficiency ------- -------
Ending Cash Balance $ 41,000 38500
Which of the following assertions is true?
A) Agency costs do not involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value and do not involve costs that are incurred by shareholders to make sure that managers pursue shareholder value.
B) Agency costs do not involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value, but do involve costs that are incurred by shareholders to make sure that managers pursue shareholder value.
C) Agency costs involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value, but not costs that are incurred by shareholders to make sure that managers pursue shareholder value.
D) Agency costs involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value and costs that are incurred by shareholders to make sure that managers pursue shareholder value.
Answer:
D) Agency costs involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value and costs that are incurred by shareholders to make sure that managers pursue shareholder value.
Explanation:
Due to the fact that most public companies are not managed by owners but by managers, agency cost arises.
Agency cost arises when the manager pursues her own interest to the detriment of the owners.
In order to mitigate against agency costs , owners put certain mechanisms in place to limit these costs. Some of these mechanisms include increased monitoring and employment contracts
I hope my answer helps you
Cane Company manufactures two products called Alpha and Beta that sell for $135 and $95, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 105,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 30 $ 18 Direct labor 23 16 Variable manufacturing overhead 10 8 Traceable fixed manufacturing overhead 19 21 Variable selling expenses 15 11 Common fixed expenses 18 13 Total cost per unit $ 115 $ 87 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 6. Assume that Cane normally produces and sells 93,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line
Answer:
financial disadvantage = ($1,953,000)
Explanation:
Alpha selling price $135 per unit
Beta selling price $95 per unit
raw materials = $6 per pound
production capacity 105,000 of each product
Alpha Beta
Direct materials $30 $18
Direct labor $23 $16
Variable manufacturing overhead $10 $8
Traceable fixed manufacturing overhead $19 $21
Variable selling expenses $15 $11
Common fixed expenses $18 $13
Total cost per unit $115 $87
margin per unit $20 $8
93,000 Betas produced per year:
total revenue $8,835,000
COGS ($5,859,000)
Gross profit $2,976,000
Variable selling expense ($1,023,000)
Fixed common expenses ($1,209,000)
net profit $744,000
if the Beta product line is discontinued:
lost net profits ($744,000)
fixed common expenses ($1,209,000)
financial disadvantage ($1,953,000)
If the company decides to shut down the production of Betas, then it will lose $1,953,000. This includes lost profits generated by the product and unavoidable fixed costs which must be allocated to Alphas.
Select the sentence where the idea is clearer.
A. We have every desire for and hope of a substantial salary increase.
B. We have every desire and hope of a substantial salary increase.
Answer:
B. We have every desire and hope of a substantial salary increase.
Explanation:
Prepositions are used along with a noun or a pronoun to indicate a relationship with another word or element in the clause. It makes an idea clearer.
Examples of prepositions are at, for, if, on, in, over, and under.
These are used to describe location time or place. However we should avoid unnecessary use of prepositions.
In this instance the use of for in the following sentence is unnecessary, as 'every desire' is adequate : 'We have every desire for and hope of a substantial salary increase. '
We have every desire and hope of a substantial salary increase. Is a more concise and better option
Rachel's Recordings reported net income of $240,000. Beginning balances in Accounts Receivable and Accounts Payable were $17,000 and $22,000 respectively. Ending balances in these accounts were $11,500 and $30,000, respectively. Assuming that all relevant information has been presented, Rachel's net cash flows from operating activities would be:
Answer:
Rachel's net cash flows from operating activities is $258,500
Explanation:
Rachel Cash flow from Operating activities
Particulars Amount
Net Income $240,000
+ Increase in Account Payable +$13,000
(Ending balance - Beginning balance)
30,000-17,000= 13,000
-Decrease in Account receivable +$5500
(Ending balance - Beginning balance)
11,500-17,000= -5500
Cash flow from operating activities $258,500
Therefore, the cash flow from operating activities is $258,500
Future Value (LG5-1) Compute the future value in year 8 of a $4,400 deposit in year 1, and another $3,900 deposit at the end of year 3 using an 10 percent interest rate. (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Future value =_______
Answer:
Total future value = $15,712.78
Explanation:
Future value is computed using the formula below:
FV = PV × (1+r)^n
FV- Future value, n -number of years, interest rate per annum
First deposit
FV = 4,400× (1.1)^8 = 9,431.79
Second deposit
Note the deposit was made in year 3, by the end of year year 8, then the number of years would be = (8-3) = 5 years
FV = 3,900 × (1.1)^5 = 6,280.98
Total future value = 9,431.79+ 6,280.98= $15,712.779
Total future value = $15,712.78
In contrast to expected utility theory, prospect theory: A. weights outcomes based on their true probabilities, while expected utility uses a subjective weighting function. B. assumes people only care about their level of wealth instead of expected utility. C. allows people to treat gains and losses asymmetrically. D. decision makers are more sensitive to a given change in the outcome for large gains or losses than for small ones.
Answer: C. allows people to treat gains and losses asymmetrically.
Explanation:
According to the Prospect Theory, people generally are very averse to losses. For this reason they will always pick the option that gives them.gains as opposed to losses even if the result is the same. This means that they ascribe greater utility towards gains than losses meaning that they treat them asymptomatically.
For example, two options could be put to you. One makes you $10 and the other makes you $20 but you will lose $10. The result is the same but according to this theory you will pick the first option because gains are favoured to losses.
Expected Utility on the other hand involves people picking options and not knowing what the outcome will be so they cannot treat loss or gain asymmetrically. This is in contrast to the Prospect theory as because they know what might happen, they are able to pick gains.
ou currently own 10 percent of the 3.0 million outstanding shares of Webster Mills. The company has just announced a rights offering with a subscription price of $40. One right will be issued for each share of outstanding stock. This offering will provide $12 million of new financing for the firm, ignoring all issue costs. Assume that all rights are exercised. What will be your new ownership position if you opted to sell your rights rather than exercise them personally
Answer: 9.09% ownership
Explanation:
Your current ownership of the shares in Webster Mills is 10% of 3 million.
That means that you own,
= 10% * 3 million
= 300,000 shares.
The new offering that the company is doing equates one right to each share of existing stock and is expected to raise $12 million in new financing at a cost of $40. The goal is to find out how many new shares this will add.
= 12,000,000/40
= 300,000 shares
This means that 300,000 new shares will be added.
There are already 3,000,000 shares outstanding and now there are 300,00 extra which would bring the total to,
= 3,000,000 + 300,000
= 3,300,000 outstanding shares.
Since you sold your rights then you still have shares but now your percentage of ownership will change because of the increase in outstanding shares.
Your ownership percentage is now,
= 300,000 shares (that you own) / 3,300,000 (new outstanding balance)
= 0.0909
= 9.09%
Your new ownership position is that you own 9.09% of Webster Mills.
The new ownership position if you opted to sell your rights rather than exercise them personally is 9.09% of 3.3 Million shares.
The calculation is as follows:New shares Issued is
= Proceeds ÷ Subscription price
= $12 M ÷ $40
= 300,000
Now
New Composition = No. of shares held ÷ Total shares after issuance
= 300,000 ÷ 3,300,000
= 0.0909
= 9.09%
Therefore we can conclude that The new ownership position if you opted to sell your rights rather than exercise them personally is 9.09% of 3.3 Million shares.
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ctual and budgeted fixed overhead $1,092,000 Standard variable overhead rate $27.00 per standard labor hour Actual variable overhead costs $137,144 Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.) The direct labor rate variance is
Answer:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Explanation:
Giving the following information:
Actual and budgeted fixed overhead $1,092,000
Standard variable overhead rate $27.00 per standard labor hour
Actual variable overhead costs $137,144
We weren't provided with enough information to calculate the direct labor rate variance. But I will provide the formula.
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= actual direct labor costs/total actual hours worked
James Smith, a health inspector for the state of Missouri, inspected a restaurant owned by Salley Slick. Smith found numerous health violations in the restaurant and fined Slick accordingly. When Smith notified Slick of the infractions, Smith strongly suggested that $5,000 "would sure prove handy in the Spring" when he planned to purchase a new fishing boat. Slick understood Smith's obvious hint and offered Smith $5,000 if he would lose the paperwork concerning the failure of the restaurant to meet proper inspection guidelines. Smith accepted the $5,000 and lost the paperwork. One month later, Smith returned to the restaurant and told Slick that he would reappear every month and find violations unless Slick produced $1,000 each month to go toward the purchase of a fleet for Smith. Slick agreed to make the $1,000 payments. What crimes have been committed by Smith and Slick?
Answer:
Smith is guilty of Bribery and corruption While slick is guilty of breaking health code and trying to bribe a public officer.
Explanation:
Bribery has occurred because Smith's judgment has been paid for/influenced through the $5000 he has received from Slick. Money he plans to use on a boat. Smith has solicitated a bribe and is guilty of bribery. Since he sought for the bribe, he has committed a crime of bribery solicitation. After receiving the money, he committed the crime of accepting a bribe. When additional sums of money were requested, Smith further committed the crime of extortion and blackmail. He has been shown to be greedy.
Slick is guilty of trying to bribe a public official to escape the payment of fines and also guilty of violating health codes.
The following data apply to Hill's Hiking Equipment: Value of operations $20,000, Short-term investments $1,000, Debt $6,000, Number of shares 300; The company plans on distributing $50 million by repurchasing stock. What will the intrinsic per share stock price be immediately after the repurchase?
Answer:
$50
Explanation:
Solution
Recall that:
The company plans on giving out $50 million by repurchasing stock hence, number of stock to be purchased = 50/50 = 1 million
The Number of share bought back = 300-1 = 299
Thus
$20,000 + $1,000 - $6000 = $15,000
$15,000 / 300 shares = $50
Before Repurchase After the repurchase
Value of operations 20000 20000
Short-term investments 1000 950
Less : Debt 6000 6000
Intrinsic value of equity 15000 14950
Number of shares 300 299
Intrinsic value per share 50 50
Therefore the intrinsic per share stock price be immediately after the repurchase is $50
Lusk Corporation produces and sells 14,900 units of Product X each month. The selling price of Product X is $31 per unit, and variable expenses are $25 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $73,000 of the $113,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the annual financial advantage (disadvantage) for the company of eliminating this product should be: g
Answer:
Effect on income= $34,500 decrease
Explanation:
Giving the following information:
Sales= 14,900 units
Selling price= $31 per unit
Variable expenses= $25 per unit.
The study shows that $73,000 of the $113,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued.
First, we need to calculate the current income of Product X.
Net income= 14,900*(31 - 25) - 113,000= -$38,500
Now, the effect of discontinuing the product.
Effect on income= unavoidable fixed costs - current income
Effect on income= - 73,000 + 38,500
Effect on income= $34,500 decrease
Brightstone Tire and Rubber Company has capacity to produce 221,000 tires. Brightstone presently produces and sells 169,000 tires for the North American market at a price of $114 per tire. Brightstone is evaluating a special order from a European automobile company, Euro Motors. Euro is offering to buy 26,000 tires for $93.6 per tire. Brightstone's accounting system indicates that the total cost per tire is as follows:
Direct materials $54
Direct labor 24
Factory overhead (62% variable) 24
Selling and administrative expenses (44% variable) 25
Total $127.00
Brightstone pays a selling commission equal to 4% of the selling price on North American orders, which is included in the variable portion of the selling and administrative expenses. However, this special order would not have a sales commission. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $7.65 per tire. In addition, Euro has made the order conditional on receiving European safety certification. Brightstone estimates that this certification would cost $165,424.
Required:
A. Prepare a differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
B. Determine whether the company should reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors
C. What is the minimum price per unit that would be financially acceptable to Brightstone?
Answer and Explanation:
A. The preparation of the differential analysis dated January 21 on whether to reject (Alternative 1) or accept (Alternative 2) the special order from Euro Motors is presented below:
Differential analysis
Reject (Alternative 1) or accept (Alternative 2)
Jan 21
Particulars Reject order Accept order Differential effect on income
(Alternative 1) (Alternative 2) (Alternative 2)
Revenues
(26,000 tires × $93.6) $2,433,600 $2,433,600
Less: cost
direct material
(26,000 tires × $54) -$1,404,000 -$1,404,000
Direct labor
(26,000 tires × $24) -$624,000 -$624,000
Variable factory overhead
(26,000 tires × $24 × 0.62) -$386,880 -$386,880
Variable selling and admin expenses
(26,000 tires × $25 × 0.44) - ($114 × 4%)
-$167,440 -$167,440
Shipping cost
(26,000 tires × $7.65) -$198,900 -$198,900
Certification cost -$165,424 -$165,424
Income or loss -$513,044 -$513,044
B. As we can see that there is a loss of -$513,044 so the special order should be rejected
C. The minimum price is
= Selling price - differential income per unit
= $93.6 - (-$513,044 ÷ 26,000 tires)
= $93.6 - (-$19.73)
= $113.33
Cavy Company accumulated 560 hours of direct labor on Job 567 and 820 hours on Job 888. The direct labor was incurred at a rate of $15 per direct labor hour for Job 567 and $25 per direct labor for Job 888. Journalize the entry to record the flow of labor costs into production. If an amount box does not require an entry, leave it blank. Work in Process
Answer:
Dr work-in-process $ 28,900.00
Cr wages payable $ 28,900.00
Explanation:
The total amount of labor costs incurred on both jobs would be debited to work in process account , while the credit entry would be posted to the wages payable account.
Total labor cost incurred=(560*$15)+(820*$25)=$28,900.00
The amount is debited to work in process so as to add up to other direct costs of production while entry into wages payable indicates that employees are being owed.
The 2021 income statement of Adrian Express reports sales of $19.310.000. cost of goods sold of $12,250,000, and net income of $1,700,000. Balance sheet information is provided in the following table. ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 2021 2e2e Assets Current assets: Cash Accounts receivable Inventory Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity $ 700,000 1,600,000 2,000,000 4,900,000 $9, 200,000 $ 860,000 1,100,000 1,500,000 4,340,000 $7,800, eae $1,920,000 2,400,000 1.900.000 2,980,000 $9,200,000 $1,760,000 2,500,000 1.900,800 1.640.ece $7,8ee, eee Industry averages for the following profitability ratios are as follows: Gross profit ratio Return on assets Profit margin Asset turnover Return on equity 25% 15% 2.5tines 35%
Required:
Calculate the five profitability ratios listed above for Adrian Express
(Round your answers to 1 decimal place.) Profitability Ratios Gross profit ratio Return on assets Profit margin Asset turnover Return on equity
Answer:
The Gross profit ratio is 36.6%
The Return on assets is 20%
The Profit margin is 8.8%
The Asset turnover would be 2.3 times
The Return on equity is 40.4%
Explanation:
The calculation of the five profitability ratios listed would be a follows:
Gross profit = Sales - Cost of goods sold
= $19,310,000 - $12,250,000
= $7,060,000
Gross profit ratio = Gross profit / Sales * 100
= $7,060,000 / $19,310,000 * 100
= 36.6%
The Gross profit ratio is 36.6%
Return on assets = Net income / Average total assets * 100
= $1,700,000 / [($9,200,000+$7,800,000)/2] * 100
= 20%
The Return on assets would be 20%
Profit margin = Net profit / Sales * 100
= $1,700,000 / $19,310,000 * 100
= 8.8%
The Profit margin would be 8.8%
Asset turnover = Sales / Average total assets
= $19,310,000 / [($9,200,000+$7,800,000)/2]
= 2.3 times
The Asset turnover would be 2.3 times
Return on equity = Net income / Average total equity
= $1,700,000 / [($1,900,000+$2,980,000+$1,900,000+$1,640,000)/2]
= 40.4%
The Return on equity would be 40.4%
On September 12, 3,500 shares of Aspen Company are acquired at a price of $39.00 per share plus a $175 brokerage commission. On October 15, a $1.20-per-share dividend was received on the Aspen Company stock. On November 10, 1,400.00 shares of the Aspen Company stock were sold for $33 per share less a $70 brokerage commission. When required, round final answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Sept. 12 Oct. 15 Nov. 10
Answer:
Sept 12
Dr Investments-Aspen Company Stock 136,675
Dr Cash 136,675
Oct 15
Dr Cash 4,200
Cr Dividends Revenue 4,200
Nov 10
Dr Cash 46,130
Dr Loss on sale of Investments 8,540
Cr Investments-Aspen Company Stock 54,670
Explanation:
Aspen Company Journal entry
Sept 12
Dr Investments-Aspen Company Stock 136,675
[(3,500*39)+175]
Dr Cash 136,675
Oct 15
Dr Cash 4,200
(3,500*1.20)
Cr Dividends Revenue 4,200
Nov 10
Dr Cash 46,130
[(1,400*33)-70]
Dr Loss on sale of Investments 8,540
(54,670-46,130)
Cr Investments-Aspen Company Stock 54,670
(136,675/3500*1,400
Sheridan Co. leased equipment to Union Co. on July 1, 2021, and properly recorded the sales-type lease at $146000, the present value of the lease payments discounted at 9%. The first of eight annual lease payments of $22000 due at the beginning of each year of the lease term was received and recorded on July 3, 2021. Sheridan had purchased the equipment for $113000. What amount of interest revenue from the lease should Sheridan report in its 2021 income statement
Answer:
The amount of interest revenue from the lease should Sheridan report in its 2021 income statement is $5,580
Explanation:
According to the given data The first payment will reduce the principle because interest has not started to accrue ,
Therefore= $146,000 - $22,000 = $124,000
The Computation of interest that will be owned for 6 months would be as follows:
Interest revenue for full year = $124,000*9% = $11,160
Therefore, the amount of interest revenue from the lease is = Interest revenue for full year*6/12
amount of interest revenue from the lease = $11,160*6/12 = $5,580 (from july to december)
The amount of interest revenue from the lease should Sheridan report in its 2021 income statement is $5,580
Identify the top five recipient countries of FDI from the US. Then Identify top 10 MNEs headquartered in the US that have made outbound FDI elsewhere. Why do theses countries attract FDI from the US? Explain using the resource and the institution based views.
Answer:
The top five recipient countries of FDI from the US are:
The Netherlands - 866.33 billion dollarsUnited Kingdom - 757.78 billion dollarsLuxembourg - 713.83 billion dollarsIreland - 442.17 billion dollarsCanada - 401.87 billion dollarsThose countries attract FDI from the US either because of low taxes, including low corporate taxes (The Netherlands, Luxembourg, Ireland), or for very close relationships at all levels: cultural, commercial, geographical, and so on (Canada, and the United Kingdom).
From a resource perspective, only Canada is particularly resource-rich, it has large quantities of natural gas, oil, and metals.
The other four countries are not resource-rich, instead, they have institutions that protect property rights, that promote investment, and that do not charge very high taxes.
On January 1, 2013, Grant Corporation issued $600,000, 8%, 10-year bonds dated January 1, 2013, at 104. The bonds pay semi-annual interest on January 1 and July1. The company uses the straight-line method of amortization and has a calendar year end. Instructions Prepare all the journal entries that Grant Corporation would make related to this bond issue through January 1, 2014. Be sure to indicate the date on which the entries would be made.
Answer:
January 1, 2013 Bonds are issued
Dr Cash 624,000
Cr Bonds payable 600,000
Cr Premium on bonds payable 24,000
July 1, 2013 first coupon is paid
Dr Interest expense 22,800
Dr Premium on bonds payable 1,200
Cr Cash 24,000
December 31, 2013 accrued interest
Dr Interest expense 22,800
Cr Interest payable 22,800
January 1, 2014 second coupon is paid
Dr Interest payable 22,800
Dr Premium on bonds payable 1,200
Cr Cash 24,000
Explanation:
issued $600,000 in 8%, 10 year bonds that pay semi annual coupons.
Sales price 104 = $624,000
premium on bonds payable $24,000
amortization using the straight line method = $24,000 / 20 = $1,200 per coupon paid
accrued interests on bonds payable must be recorded on December 31, 2013.
The following transactions were completed by the company a. The owner invested $19,000 cash in the company in exchange for its common stock. b. The company purchased supplies for $1,500 cash c. The owner invested $12,000 of equipment in the company in exchange for more common stock. d. The company purchased $400 of additional supplies on credit. e. The company purchased land for $11,000 cash Required Enter the impact of each transaction on individual items of the accounting equation. (Enter decreases to account balances with a minus sign.) Assets Liabilities+ Accounts Equity CommonD Cash +Supplies + Equipment+ Land Dividends Revenue +Revenue Expenses Payable Stock $19,000+ Bal 19,000 Bal 19,000 + Bal 19,000 + 0 Bal 19,000 + 0
Answer:
ASSETS = LIABILITIES + EQUITY
cash supplies equip. land = acc. payable common stock
19,000 19,000
-1,500 1,500
12,000 12,000
400 400
-11,000 11,000
6,500 1,900 12,000 11,000 = 400 31,000
Explanation:
Dr cash 19,000
Cr common stock 19,000
Dr supplies 1,500
Cr cash 1,500
Dr equipment 12,000
Cr common stock 12,000
Dr supplies 400
Cr accounts payable 400
Dr land 11,000
Cr cash 11,000
Judith Thompson, the manager of the student center cafeteria, has added pizza to the menu. The pizza is ordered frozen from a local pizza establishment and baked at the cafeteria. Judith anticipates a weekly demand of 10 pizzas. The cafeteria is open 45 weeks a year, 5 days a week. The ordering cost is $15 and the holding cost is $0.40 per pizza per year. The pizza vendor has a 4-day lead-time and Judith wants to maintain 1 pizza for safety stock. What is the optimal reorder point
Answer:
9 pizzas
Explanation:
Given that:
A pizza is ordered frozen from a local pizza establishment and baked at the cafeteria.
Judith anticipates a weekly demand of 10 pizzas.
Opening weeks in a year = 45 weeks
Opening days in a week = 5 days
Daily demand = 10/5 = 2
Ordering cost = $15
Holding cost = $0.40 /pizza/year
Lead time = 4 days
Safety stock = 1 pizza
The objective is to determine the optimal reorder point.
The optimal reorder point = (daily demand × lead time) + safety stock
The optimal reorder point =( 2 × 4 ) + 1
The optimal reorder point = 8 + 1
The optimal reorder point = 9 pizzas
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 6 comma 000 units per year. The cost of each unit is $97, and the inventory carrying cost is $8 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 120 units. (This is a corporate operation, and there are 250 working days per year).
A) What is the EOQ?B) What is the average inventory if the EOQ is used?C) What is the optimal number of orders per year?
Answer:
A) EOQ = 208.56 units
B) Average inventory = 104.28 units
C) Optimum number of order = 28.76 times
Explanation:
Economic order quantity is the order quantity that minimizes the balance of ordering and carrying cost.
Economic order quantity = √2× 29× 6,000/8=208.56 units
Average inventory = Minimum stock level + Order quantity/2
minimum stock level is not given , hence
Average inventory = 208.56/2 = 104.28 units
Optimum number of order
Optimum number of order = Demand / order quantity
= 6000/208.56= 28.76 times.
EOQ = 208.56 units
B) Average inventory = 104.28 units
C) Optimum number of order = 28.76 times
Steve wanted to open a day care service facility for dogs. He estimated the costs involved in providing the services desired by dog owners. After extensive deliberation, Steve decided not to proceed with the plan as the cost of providing the services was too high compared to the rates dog owners would be willing to pay. Which of the following stages of the new-product development process has Steve used to arrive at this decision?A. Idea screening.B. Business analysis.C. Idea generation.D. Test marketing.
Answer:
Business analysis.
Explanation:
homeworklib You want to evaluate three mutual funds using the information ratio measure for performance evaluation. The risk-free return during the sample period is 6%, and the average return on the market portfolio is 19%. The average returns, residual standard deviations, and betas for the three funds are given below. Average Return Residual Standard Deviation Beta Fund A 20 % 4.00 % 0.8 Fund B 21 % 1.25 % 1.0 Fund C 23 % 1.20 % 1.2 The fund with the highest information ratio measure is Multiple Choice Funds A and C (tied for highest). Funds A and B (tied for highest). Fund A. Fund C. Fund B.
Answer:
The fund with the highest ratio is Fund B.
Explanation:
Risk-free return = 6%
The average return on the market portfolio = 19%
The ratio equation formula is as follows:
FUND A: Return on fund - Risk free rate - Beta (Return on market portfolio - Risk free rate)/Standard deviation of fund
FUND A : 20 - 6 - 0.8(19 - 6 ) / 4 = 0.9
FUND B : 21 - 6 - 1(13)/1.25 = 1.6
FUND C : 23 -6 - 1.2 (13 ) /1.2 = 1.167
Therefore, the fund with the highest ratio is Fund B.