A team of builders has surveyed buyers of their new homes for years. Consistently, only 48% of the buyers have indicated they were "quite satisfied" or "very satisfied" with the construction quality of their homes. The builders have adopted a revised quality inspection system to try to improve customer satisfaction. They have surveyed 400 buyers since then; these buyers seem representative, with no systematic changes from past purchasers. Of the 400 buyers, 210 indicated they were quite or very satisfied. Did they reach their goal? What is the appropriate test to perform?
Answers
Answer:
Explanation:
So, the hypothesis is:
H0 : p = .48 versus Ha : p≠ .48
check the picture attached for more explanation
The builders have succeeded in increasing customer satisfaction from 48% to 52.5%, according to survey results. To determine whether this change is statistically significant, the appropriate test to perform is the Proportion Z-Test.
Explanation:
This question pertains to statistics, a branch of mathematics. The builders' goal was to increase the percentage of buyers who were either 'quite satisfied' or 'very satisfied' with the construction quality of their homes from 48%. After implementing a revised quality inspection system, they surveyed 400 buyers and found that 210 were satisfied, which equates to 210/400 = 0.525 or 52.5%. Thus, they did reach their target of being above 48%. However, we still need to statistically verify the improvement.
The appropriate statistical test here is a Proportion Z-Test. The Proportion Z-Test is a tool used to compare the observed proportion of a sample to a theoretical one. It can help us decide whether the change in customer satisfaction is statistically significant, and not just a result of random sampling variability.
To carry out the Proportion Z-Test, one would need the pre-implementation proportion (48% in this case), the post-implementation observed proportion (52.5%), the sample size (400), and any significance level decided upon. These values will be used in a formula to calculate a Z-score, which will show if the change is significant.
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Related Questions
Each year, Mogul Enterprises prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2019 income statement, Mogul reported $11,000 of interest expense on its outstanding bonds. During the year, Mogul paid its regular installments of $9,000 of interest in cash. In its reconciliation schedule, Mogul should:
Answers
Answer:
$2,000 positive adjustments to net income under the indirect method for the decrease in bond discount
Explanation:
$11,000 of interest expense on its outstanding bonds.
Less $9,000 of interest in cash.
Balance $2,000
Therefore in its reconciliation schedule, Mogul should show a $2,000 positive adjustments to net income under the indirect method for the decrease in bond discount.
Jack's Construction Co. has 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8.5 percent. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4 percent and the market risk premium is 8 percent. Jack's tax rate is 35 percent. What is Jack's weighted average cost of capital?
Answers
Answer: 10.8%
Explanation:
To calculate the weighted average cost of capital we use the following formula,
WACC = Ve/Vt * Re + Vd/Vt * Rd( 1 - tax rate)
Where,
Ve is the value of equity in the company
Vt is the total value of the company gotten by adding debt to Equity.
Re is the cost of Equity
Vd is the total value of debt in the company
Rd is the cost of debt
From the question above we have every variable except the Cost of Equity.
We can calculate that using the CAPM formula which is,
Re = rF + b(rM - rF)
Where,
rF is the risk free rate
b is beta
rM - rF is the market premium.
Plugging in the figures we have,
= 4% + 1.1 ( 8%)
= 12.8%
Now that we have the cost of debt we can go back to the original formula but first the value of Equity and debt need to be ascertained,
Value of debt = 80,000 * $1,000 ( par value)
= $80,000,000
Value of Equity = 4,000,000 * 40
= $160,000,000
Adding them up we have,
= $160 m + $80m
= $240m
WACC = Ve/Vt * Re + Vd/Vt * Rd( 1 - tax rate)
WACC = (160/240 * 12.8%) + (80/240 * 8.5%( 1 - 0.35)
WACC = 10.8%
Jack's weighted average cost of capital is 10.8%.
Assume you have two investment opportunities that return the following cash flows: Year 1 Year 2 Year 3 Opportunity A $50,000 $50,000 $50,000 Opportunity B $150,000 Assume the opportunity cost rate is positive and the initial cost of the two investments is the same. True or False. You will be indifferent between Opportunity A and Opportunity B because each of the investments return the same total cash flows.
Answers
Answer:
False
Explanation:
Year 1 Year 2 Year 3
Opportunity A $50,000 $50,000 $50,000
Opportunity B $150,000
The basic premise of finances is that the value of money changes over time. In other words, one dollar today is worth more than one dollar tomorrow.
Since the discount rate is positive, we can assume 1%, then the present value of the net cash flows for the two projects would be:
Opportunity A = $50,000/1.01 + $50,000/1.01² + $50,000/1.01³ = $49,505 + $49,015 + $48,530 = $147,050
Opportunity B = $150,000/1.01³ = $145,589
So the net present value (NPV) of opportunity A will be higher than the NPV of opportunity B, therefore, the investor should choose opportunity A.
One of the largest losses in history from unauthorized securities trading involved a securities trader for the French bank, Societe Generale (SCGLY). The trader was able to circumvent internal controls and create more than $7 billion in trading losses in six months. The trader apparently escaped detection by using knowledge of the bank's internal control systems learned from a previous back-office monitoring job. Much of this monitoring involved the use of software to monitor trades. In addition, traders were usually kept to tight trading limits. Apparently, these controls failed in this case. Answer the following True or False questions about Societe Generale's internal controls. These will assist you in determining the weaknesses. 1. The loss could have been avoided with a number of internal controls. 2. Required vacation time may have alerted managers to the hidden losses. 3. If traders have access to the monitoring software, then the separation of duties control is violated. 4. The trader was not under managerial oversight.
Answers
Answer: 1.true, 2.true , 3.true, 4.true
Explanation:
The Societe Generale trading losses is an eye opener that shows how poor management of the internal control can lead to huge consequences and loses.
The accumulated losses could have been avoided with proper segregation of duties in the internal controls with supervisors relating with the traders regarding their trades which would not have allowed the trader,Kerviel to manipulate the monitoring software due to his extensive knowledge from his previous job. If traders have free access to the monitoring software, then the separation of duties control is violated.
---Also, If the trader had an required vacation time, he would have been vacant in his duties and maybe enabling detection of fraud by management although we cannot conclude he had note gone for his vacation and returned before perpetuating the act
---In addition if the trader was able to fraud the company over a span of 7 months then there , then he was not under managerial oversight else he would have been caught and his acts rectified on time.
1. The loss could have been avoided with a number of internal controls.---TrUe
2.. Required vacation time may have alerted managers to the hidden losses
3. If traders have access to the monitoring software, then the separation of duties control is violated---TrUe
4. The trader was not under managerial oversight-- true
Answer:
The loss could have been avoided with a number of internal controls.
True
Required vacation time may have alerted managers to the hidden losses.
True
If traders have access to the monitoring software, then the separation of duties control is violated.
True
The trader was not under managerial oversight.
True
Yem expects to produce 1 comma 750 units in January and 2 comma 120 units in February. The company budgets 5 pounds per unit of direct materials at a cost of $ 45 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is 5 comma 300 pounds. Yem desires the ending balance in Raw Materials Inventory to be 40% of the next month's direct materials needed for production. Desired ending balance for February is 4 comma 000 pounds. Prepare Yem's direct materials budget for January and February.
Answers
Answer:
Instructions are below.
Explanation:
Giving the following information:
Production:
January= 1,750 units
February= 2,120 units
The company budgets 5 pounds per unit of direct materials at a cost of $ 45 per pound.
Beginning inventory= 5,300 pounds.
Desired ending inventory= 40% of the next month's direct materials needed for production.
The desired ending balance for February is 4,000 pounds.
The purchases of direct material are calculated using the following formula:
Purchases= sales + desired ending inventory - beginning inventory
January (in pounds):
Production= 1,750*5= 8,750
Desired ending inventory= (2,120*5)*0.4= 4,240
Beginning inventory= (5,300)
Total purchase= 7,690 pounds
Total cost= 7,690*45= $346,050
February (in pounds):
Production= 2,120*5= 10,600
Desired ending inventory= 4,000
Beginning inventory= (4,240)
Total purchase= 10,360 pounds
Total cost= 10,360*45= $466,200
1. In the past, Christopher Morrison’s tire dealership in Cincinnati sold an average of 3,200 tires every year. In the past 2 years, 900 and 1000, respectively, were sold in fall, 1500 and 1400 in winter, 400 and 350 in spring and 400 and 450. With a major expansion planned, Christopher forecasts sales next year to increase to 4,000 tires. What will be the demand during each of the FOUR seasons of next year?
Answers
Answer:
Explanation:
Seasonality = average of a season in the past two years/average per season
Average per year = 3200 tires
Average per season = 3200/4 = 800
Sales in Fall = 900 and 1000. Average sold in fall = (900 + 1000)/2 = 950
Sales in winter = 1500 and 1400. Average sold in winter = (1500 + 1400)/2 = 1450
Sales in spring = 400 and 350. Average sold in spring = (400 + 350)/2 = 375
Sales in Summer = 400 and 450. Average sold in Summer = (400 + 450)/2 = 425
Seasonality of Fall = average sold in fall/average per season = 950/800 = 1.1875
Seasonality of winter = 1450/800 = 1.8125
Seasonality of spring = 375/800 = 0.46875
Seasonality of summer = 425/800 = 0.53125
Sales next year = 4000 tires
Average per season = 1000 tires
Seasonal forecast = average per season * seasonality
Forecast for each season:
Fall: 1000×1.1875 = 1187.5 tires
Winter: 1000×1.8125 = 1812.5
Spring: 1000×0.46875 = 468.75
Summer: 1000×0.53125 = 531.25
Rounding off the forecast to whole numbers Fall will be 1188, Winter 1813 Spring 469 and Summer 531
George Manufacturing had net income of $ 300 comma 000 and declared preferred dividends of $ 20 comma 000 during the current year. George began the year with 14 comma 000 common shares outstanding. It issued 40 comma 000 shares on June 30 and repurchased 6 comma 000 of the newly issued shares on November 1. Compute George's weightedminusaverage common shares outstanding for the year.
Answers
Answer:
33,000 shares
Explanation:
The computation of the weighted - average common shares outstanding is shown below:
= Outstanding common shares + Issued shares × number of months ÷ total number of months in a year - repurchased shares × number of months ÷ total number of months in a year
= 14,000 shares + 40,000 shares × 6 months ÷ 12 months - 6,000 shares × 2 months ÷ 12 months
= 14,000 shares + 20,000 shares - 1,000 shares
= 33,000 shares
A firm undertakes a five-year project that requires an initial capital investment of $100,000. The project is then expected to provide cash flow of $12,000 per year for the first two years, $50,000 in the third and fourth years, and $10,000 in the fifth year. The project has an end-of-life salvage value of $5,000. If the discount rate applied to these cash flows is 9.50 percent, to the nearest dollar, the net present value of this project is _____
Answers
Answer:
$3.356.86
Explanation:
The net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator:
Cash flow in year 0 = -$100,000
Cash flow in year 1 and 2 = $12,000
Cash flow in year 3 and 4 = $50,000
Cash flow in year 5 = $10,000 + $5,000 = $15,000
I = 9.50%
NPV = $3.356.86
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
Orton Corporation, which has a calendar year accounting period, purchased a new machine for $40,000 on April 1, 2006. At that time Orton expected to use the machine for nine years and then sell it for $4,000. The machine was sold for $22,000 on Sept. 30, 2011. Assuming straight-line depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of retirement, the gain to be recognized at the time of sale would be
Answers
To calculate the gain or loss to be recognized at the time of sale, subtract the accumulated depreciation from the selling price. In this case, there is a loss of $6,888.89 to be recognized.
Explanation:To calculate the gain to be recognized at the time of sale, we need to calculate the accumulated depreciation for the machine and compare it to the selling price. The machine was purchased for $40,000 and had an expected useful life of 9 years, so the annual depreciation expense would be $40,000 / 9 = $4,444.44.
Since the machine was sold on September 30, 2011, after 6.5 years (April 1, 2006, to September 30, 2011), the accumulated depreciation would be $4,444.44 * 6.5 = $28,888.89.
The gain to be recognized at the time of sale can be calculated by subtracting the accumulated depreciation from the selling price: $22,000 - $28,888.89 = -$6,888.89. Since the result is negative, it means that there is a loss of $6,888.89 to be recognized at the time of sale.
Scenario: Trader's Paradise Trader's Paradise is a global merchant that sells a variety of products. The company operates in forty-eight different countries (some developed, some developing) and some former communist countries. The company faces substantial risks given the differing conditions in foreign exchange markets. If Trader's Paradise purchases euros expecting the value to rise and generate a profit for the company, it is engaging in currency ________.
Answers
Answer: Hedging
Explanation: Trader's Paradise is engaging in currency hedging when it purchases one currency with hopes to profit from its rise in value. Hedging helps reduce one's exposure to risks. Currency hedging can be defined as the process of entering into a financial contract or arrangement in order to protect against unexpected, expected or anticipated price movements or interest rates in currencies. Predictability of exchange rates however, reduces the need for currency hedging.
A company paid $517,000 to purchase equipment and $16,700 to have the equipment delivered to and installed in the company's production facilities. The equipment is expected to be used a total of 29,700 hours throughout its estimated useful life of seven years. The estimated residual value of the equipment is $6,700. The company began using the equipment on May 1, 2018. The company has an October 31, 2018 year-end. It used the equipment for a total of 12,900 hours between May 1 and October 31, 2018. Using the units-of-production method, what amount of depreciation expense would the company report in the income statement prepared for the year-ended October 31, 2018?
Answers
Answer:
Using the units-of-production method, the amount of depreciation expense would the company report in the income statement prepared for the year-ended October 31, 2018 = $ 228899
Explanation:
Given
Acquisition Cost of Equipment = $ 517,000+ $ 16700= $ 533,700
Total units of production= 29,700 hours
Residual Value = $ 6700
Units of Production= 12,900 hours
Formula:
Depreciation per unit= (Cost -Salvage value) / Total units of production* Units of Production
Depreciation per unit= ($ 533,700 - 6700/ 29700)*12900
Depreciation per unit=($ 52,7000 / 29700)*12900
Depreciation per unit=( 17.744)*12900
Depreciation per unit= 228898.98= $ 228899
As units of production are given we do not need to calculate it for half year. The depreciation is calculated for units of production.
Cherokee Manufacturing Company established the following standard price and cost data: Sales price $ 12.00 per unit Variable manufacturing cost $ 7.20 per unit Fixed manufacturing cost $ 3,600 total Fixed selling and administrative cost $ 1,200 total Cherokee planned to produce and sell 2,000 units. Actual production and sales amounted to 2,200 units. Required Prepare the pro forma income statement in contribution format that would appear in a master budget. Prepare the pro forma income statement in contribution format that would appear in a flexible budget.
Answers
Answer:
Pro forma income statement in contribution format
Sales ( 2,200 units × $ 12.00) 26,400
Less Variable Costs :
Variable manufacturing cost ( 2,200 units × $ 7.20) (15,840)
Contribution 10,560
Less Expenses :
Fixed manufacturing cost (3,600)
Fixed selling and administrative cost (1,200)
Net Income 5,760
Explanation:
A flexed budget shows the Budgeted Costs and Revenues at Actual level of production rather than the Budgeted level of production.
A report is termed as the financial statement which shows the costs and revenues that are incurred by a firm. It also displays if a business is profitable or losing money over a given accounting period.
The financial statements, together with the pro forma financial statement, aids in the understanding of your company’s liquidity.
Pro forma income statement in contribution format
Sales[tex]( 2,200 \:units \times \$ 12.00)[/tex] 26,400
Less Variable Costs :
Variable manufacturing cost [tex]( 2,200 \:units \times \$ 7.20)[/tex] (15,840)
Contribution 10,560
Less: Expenses :
Fixed manufacturing cost (3,600)
Fixed selling and administrative cost (1,200)
Net Income 5,760
Therefore the net income is $5760
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Vaughn Manufacturing has outstanding 596000 shares of $2 par common stock and 119000 shares of no-par 6% preferred stock with a stated value of $5. The preferred stock is cumulative and nonparticipating. Dividends have been paid in every year except the past two years and the current year. Assuming that $215000 will be distributed as a dividend in the current year, how much will the common stockholders receive?
Answers
Answer: $107,900
Explanation:
Cumulative Preferred Shares refer to shares that a company has to pay dividends eventually. This means that if they are unable to pay for some years, they are to accrue that payment until they are able to.
There are 119000 shares of no-par 6% preferred stock with a stated value of $5.
That means preferred shares are liable to the following amount of dividends,
= 119,000 * 5 * 6%
= $35,700
Preferred Shares have not being paid for the past 2 years and need to be paid in the current year as well. That means 3 payments,
= 35,700 * 3
= $107,100
Preferred Shares are to be paid $107,100 out of the $215,000 with the rest going to common shares.
Amount going to Common Shares is,
= 215,000 - 107,100
= $107,900
Common Stockholders are to receive $107,900
Pharoah Company has accumulated the following budget data for the year 2020. 1. Sales: 31,410 units, unit selling price $89. 2. Cost of one unit of finished goods: direct materials 1 pound at $5 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $8 per direct labor hour. 3. Inventories (raw materials only): beginning, 10,240 pounds; ending, 15,220 pounds. 4. Selling and administrative expenses: $170,000; interest expense: $30,000. 5. Income taxes: 30% of income before income taxes. Prepare a schedule showing the computation of cost of goods sold for 2020. PHAROAH COMPANY Computation of Cost of Goods Sold Cost of one unit of finished goods: Direct materials $ Direct labor Manufacturing overhead Total $ Cost of Goods Sold $ Prepare a budgeted multiple-step income statement for 2020. PHAROAH COMPANY Budgeted Income Statement $ $
Answers
Answer:
Computation of cost of goods sold for 2020
Direct materials(1 pound× $5 ) $5
Direct labor(3 hours × $12) $36
manufacturing overhead ($8 × 3 hours) $24
Total unit cost $65
Budgeted multiple-step income statement for 2020
Sales ( 31,410 units × $89) 2,795,490
Less Cost of Sales (31,410 units × $65) (2,041,650)
Gross Profit 753,840
Less Operating Expenses :
Selling and administrative expenses: (170,000)
Operating Income 583,840
Less Non - Operating Expenses
Interest expense (30,000)
Income before income taxes 553,840
Income tax (553,840×30%) (166,152)
Income After income taxes 387,688
Explanation:
Cost of Sales = all manufacturing costs
Multi step - Income Statement separates income generated from Primary Activities of the Company (Operating Income) with Income generated from Secondary Activities of the Company (Non-Operating Income)
Sanchez Company has 48,000 shares of 7% preferred stock of $100 par and 92,000 shares of $50 par common stock issued and outstanding. The following amounts were distributed as dividends: Year 1 $497,000 Year 2 $490,000 Year 3 $524,000 Determine the dividends per share for preferred and common stock for each year. Round the dividends per share to the nearest cent.
Answers
Answer:
Check Explanation.
Explanation:
The following parameters are given for dividends of three years;
Year 1 = $497,000, Year 2 = $490,000 Year 3 = $524,000.
The number of shares= 48,000 of 7%, preferred stock = $100 par and 92,000 shares of $50 par common stock issued and outstanding.
Therefore,
Year one:
=> Amount Distributed = $497,000.
=> Preferred dividend = 48,000 × 7% × $100 = 336,000.
=> Common dividend = 497,000 - 336,000 = 161,000.
=> Preferred divided per share = 336,000/ 48,000 = $ 7.
=> Common dividend = Common dividend/ 92,000 shares = 161,000/ 92,000 shares =$ 1.75.
Year Two:
=> Amount Distributed = $490,000.
=> Preferred dividend = 48,000 × 7% × $100 = 336,000.
=> Common dividend = 490,000 - 336,000 = 113,000.
=> Preferred divided per share = 336,000/ 48,000 = $ 7.
=> Common dividend = Common dividend/ 92,000 shares = 113,000/ 92,000 shares =$1.23.
Year Three:
=> Amount Distributed = $524,000.
=> Preferred dividend = 48,000 × 7% × $100 = 336,000.
=> Common dividend = $524,000 - 336,000 = 188,000.
=> Preferred divided per share = 336,000/ 48,000 = $7.
=> Common dividend = Common dividend/ 92,000 shares = 188,000/ 92,000 shares =$2.04
Sheridan Company issues $280,000, 20-year, 10% bonds at 102. Prepare the journal entry to record the sale of these bonds on June 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Enter an account title enter a debit amount enter a credit amount Enter an account title enter a debit amount enter a credit amount Enter an account title enter a debit amount enter a credit amount
Answers
Answer:
Dr Cash 285,600
Cr Bonds payable 280,000
Cr Premium on bonds payable 5,600
Explanation:
Sheridan Company Journal entry
Dr Cash 285,600
Cr Bonds payable 280,000
Cr Premium on bonds payable 5,600
Par value of bonds ×Issue price of bonds
= $280,000 x 102%
=$280,000×1.02
= $285,600
Final answer:
The question relates to recording the journal entry for bonds sold over face value. Sheridan Company's journal entry for issuing $280,000, 20-year, 10% bonds at 102 would involve debiting Cash for $285,600, crediting Bonds Payable for $280,000, and crediting Premium on Bonds Payable for $5,600.
Explanation:
The subject of the student's question relates to corporate finance, specifically the issuance of bonds and the recording of such a transaction in the accounting records, which is a fundamental aspect of business finance. When Sheridan Company issues $280,000, 20-year, 10% bonds at 102, they are selling the bonds for more than their face value (par value). The journal entry to record this sale would involve debiting Cash for the proceeds received, crediting Bonds Payable for the face value of the bonds, and crediting Premium on Bonds Payable for the excess over the face value.
Journal Entry:
Cash (280,000 * 1.02) = $285,600 [Debit]Bonds Payable = $280,000 [Credit]Premium on Bonds Payable (285,600 - 280,000) = $5,600 [Credit]Thus, the journal entry on June 1, 2022, to record the sale of these bonds would be:
Debit Cash $285,600
Credit Bonds Payable $280,000
Credit Premium on Bonds Payable $5,600
The growth rate of Zerbia, a small developing country, has fallen close to zero percent in the current year. Harry Miller and Jonathan Taylor, who are columnists with a business daily, are discussing suitable fiscal measures to revive economic growth in the country. Jonathan feels that the income tax rates in Zerbia are too high. Lower income tax rates would increase consumer spending and so would promote economic growth. Harry, on the other hand, believes that an increase in government expenditure would have a substantial impact on the country's GDP. Additionally, he feels that investing in green technology would not only accelerate growth, it is also likely to be more sustainable in the long term. Which of the following can most reasonably be inferred from the information given above?
A. Private investment in green technology industries in Zerbia has been negligible.
B. Jonathan believes that the tax structure is not progressive enough.
C. Harry thinks that the value of the government purchases multiplier is high.
D. The economy of Zerbia is in a recession.
E. Increase in government investment in infrastructure is likely to result in a higher
budget deficit than the policy measure suggested by Jonathan.
Answers
Answer:
Option C
Explanation:
Clearly placed, the right response is obvious through the sentence 'Harry assumes, on the another side, that any improvement in governmental expenditures will have a huge effect on GDP.' Comparison is made with the result with utilizing the economic management instrument, that is, budget expenditures and taxation.
Thus, from the above we can conclude that the correct option is C.
9. Problems and Applications Q9 Purchasing-power parity holds between the nations of Ectenia and Wiknam, where the only commodity is Spam. In 2015, a can of Spam cost 4 dollars in Ectenia and 24 pesos in Wiknam. The exchange rate between Ectenian dollars and Wiknamian pesos was pesos per dollar. Over the next 14 years, inflation is expected to be 5 percent per year in Ectenia and 10 percent per year in Wiknam. If this inflation comes to pass, what will happen over this period to the price of Spam and the exchange rate? Over this period, the price of Spam in Ectenia will , and the price of Spam in Wiknam will . (Hint: Recall the rule of 70 from Chapter 27.) The exchange rate between the two countries will .
Answers
Answer:
In this case, one dollar is worth three pesos.9
Explanation:
Base on the scenario been described in the question, the exchange rate between the two countries will be gotten as follows
Since the purchasing-power parity (PPP) normally holds, the exchange rate will be (2/6) = 1/3dollars/peso. That is, one peso will buy you one third of a dollar. Alternatively,we can write this as (6/2) = 3 pesos/dollar. In this case, one dollar is worth three pesos.9
According to the principle of purchasing power parity, the price of Spam will increase in both Ectenia and Wiknam due to inflation. The exchange rate is expected to shift in favor of Ectenian dollars.
Explanation:According to the principle of purchasing power parity (PPP), the price of goods should be equalized between countries. Given the inflation rates in Ectenia and Wiknam, the price of Spam in Ectenia will increase over the 14-year period. The inflation rate in Wiknam is higher, so the price of Spam in Wiknam will increase even more.
The exchange rate between the two countries will depend on the relative inflation rates. As inflation erodes the purchasing power of a currency, the exchange rate will change. In this case, the exchange rate is expected to shift in favor of Ectenian dollars as the inflation rate is lower compared to Wiknamian pesos.
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Giada Foods reported $1,010 million in income before income taxes for 2021, its first year of operations. Tax depreciation exceeds depreciation for financial reporting purposes by $170 million. The company also had non-tax-deductible expenses of $108 million relating to permanent differences. The income tax rate for 2021 was 25%, but the enacted rate for years after 2021 is 30%. The balance in the deferred tax liability in the December 31, 2021, balance sheet is:
Answers
Answer:
$32.4 million
Explanation:
The computation of the balance in the deferred tax liability in the December 31, 2021, balance sheet is shown below:
Deferred tax liability is
= Tax depreciation exceeded depreciation for financial reporting purposes × enacted tax rate
= $108 million × 30%
= $32.4 million
Simply we multiplied the exceeded amount with the enacted rate so that the deferred tax liability could come
The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6: Cash balance according to the company’s records at August 31, $20,870. Cash balance according to the bank statement at August 31, $37,600. Checks outstanding, $23,375. Deposit in transit not recorded by bank, $7,500. A check for $100 in payment of an account was erroneously recorded in the check register as $1,000. Bank debit memo for service charges, $45. Journalize the entries that should be made by the company that (a) increase cash and (b) decrease cash.
Answers
Answer and Explanation:
The journal entries are shown below:
a. For increase in cash
Cash Dr $900 ($1,000 - $100)
To Account payable $900
(Being the increase in cash is recorded)
For recording this we debited the cash as it increased the assets and credited the account payable as it reduced the liabilities
b. For decrease in cash
Miscellaneous expense Dr $45
To cash $45
(Being the decrease in cash is recorded)
For recording this we debited the miscellaneous expense as it increased the expenses and credited the cash as it reduced the assets
On August 1, 2021, Trico Technologies, an aeronautic electronics company, borrows $21 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit arrangement. Trico signs a six-month, 9% promissory note. Interest is payable at maturity. FirstBanc Corp.’s year-end is December 31. Required: 1.-3. Record the necessary entries in the Journal Entry Worksheet below for FirstBanc Corp. Record the acceptance of note.
Answers
Answer:
On acceptance of note:
Debit Note receivable $21,000,000
Credit Cash $21,000,000
(Recognition of note receivable)
As at Dec 31:
Debit Interest receivable $787,500
Credit Interest revenue $787,500
(Recognition of interest accrual at Dec 31)
As at Feb 1 - collection of notes receivable:
Debit Cash $21,945,000
Credit Note receivable $21,000,000
Credit Interest receivable $945,000
(Collection of note receivable and interest)
Explanation:
Note is a promissory note with a written agreement made by the borrower to the lender (payee) to pay a certain, specific sum at a specified date.
Interest revenue on the note is calculated as: Principal x Interest Rate x Time
The total interest revenue is $21,000,000 x 9%/12 x 6 months = $945,000.
Monthly interest revenue is therefore $945,000 / 6 months = $157,500.
Total interest as at December 31, 2021 (Aug 1 - Dec 31): $157,500 x 5 months = $787,500.
Corporations with control both within and across industries are formed by a series of mergers and acquisitions across industries. These corporations are referred to as __________; they combine businesses in different commercial areas, all of which are owned by one holding company.
Answers
Answer:
conglomerate
Explanation:
In simple words, A conglomerate refers to the multi-industry corporation, which is a mixture of many enterprises operating within one organizational group in completely different sectors, which can include a holding company and several branches.
The conglomerates are always global and massive. The predominant conglomerates consolidate financial risk through investing in a variety of different industries, although other conglomerates opt to engage in a single sector, like those in mines.
Becky had net sales (all on account) in 2020 of $8,000,000. At December 31, 2020, before adjusting entries, the balances in selected accounts were:
accounts receivable $1,000,000 debit, and allowance for doubtful accounts $2,000 debit.
Becky estimates that 3% of its accounts receivable will prove to be uncollectible.
What is the net amount expected to be collected of the receivables reported on the financial statements at December 31, 2020?
Answers
Answer:
$970,000
Explanation:
Final answer:
To calculate the expected net collection of receivables, you subtract the adjusted allowance for doubtful accounts, which is estimated at 3% of accounts receivable, from the total accounts receivable. After adjusting the existing allowance balance, the net expected to be collected is $970,000.
Explanation:
The computation of the net amount expected to be collected involves estimating the uncollectible portion of accounts receivable. Becky's company uses an allowance method based on a percentage to account for doubtful accounts. First, we calculate the estimated amount that will not be collected.
To find the uncollectible amount, we take 3% of the accounts receivable balance:
0.03 × $1,000,000 = $30,000.
Next, we adjust the allowance for doubtful accounts. Since there is already a $2,000 debit, the additional amount needed to reach the estimated uncollectible amount of $30,000 will be:
$30,000 - $2,000 = $28,000. We would record this as a bad debt expense.
Finally, to determine the net amount expected to be collected, we subtract the adjusted allowance for doubtful accounts from the total accounts receivable :
$1,000,000 - $30,000 = $970,000.
Thus, Becky's company expects to collect a net amount of $970,000 from its receivables at the end of 2020.
Jonas is a 60% owner of Ard, an S corporation. At the beginning of the year, his stock basis is zero. Jonas's basis in a $33,200 loan made to Ard and evidenced by Ard's note has been reduced to $0 by prior losses. During the year, Jonas's net share of Ard's taxable income is $16,600. At the end of the year, Ard makes a $24,900 cash distribution to Jonas. After these transactions, what is Jonas's basis in his stock, and what is his basis in the debt? What is Jonas's recognized capital gain?
Answers
Answer:
Capital gain $24,900
Explanation:
Jonas's Stock basis $33,200
Less $8,300
Capital gain $24,900
$24,900 cash distribution - Net share of Ard's taxable income $16,600= $8,300
Therefore Jonas's recognized capital gain
of $24,900
You work for a bank as a business data analyst in the credit card risk-modeling department. Your bank recently conducted a bold experiment: over a short time interval three years ago, it quietly issued 600 credit cards to everyone who applied, regardless of their credit risk.
After three years, 150, or 25%, of card recipients defaulted – they failed to pay back at least some of the money they owed. However, the bank collected very valuable proprietary data that it can now use to optimize its future card-issuing process.
The bank initially collected six pieces of data about each person.
a. Age
b. Years at current employer
c. Years at current address
d. Income over the past year
e. Current credit card debt, and
f. Current automobile debt
Answers
10. The Marshall Variety Store uses the lifo retail inventory method at stable prices. The following information is available as of January 2, 2021: Cost Retail Inventory, January 2, 2021 $186,000 $270,000 Purchases 560,000 700,000 Sales 760,000 Net Markups 160,000 Net Markdowns 60,000 What was the inventory value as of December 31, 2021 using the lifo-retail inventory method
Answers
Answer:
$310,000
Explanation:
Beginning inventory: $186,000 (cost); $ 270,000 (retail);
$186,000 : $270,000 cost to retail ⇒ 1.45
Purchases: $560,000 (cost); $700,000 (retail);
$560,000 : $700,000 cost to retail ⇒ 1.25
Net markups: $n/a (cost); $160,000 (retail);
Net markdowns: $ n/a (cost); $60,000 (retail);
Sales: $ n/a (cost); $760,000 (retail).
the cost of goods sold (COGS) using LIFO = ($700,000 / 1.25) + ($60 / 1.4516) = $560,000 + $41,333.33 = $601,333.33
ending inventory = [($186,000 - $41,333.33) x 1.4516] + $160,000 - $60,000 = $210,000 + $160,000 - $60,000 = $310,000
The following standards have been established for a raw material used to make product O84: Standard quantity of the material per unit of output 7.7 meters Standard price of the material $ 18.50 per meter The following data pertain to a recent month's operations: Actual material purchased 4,000 meters Actual cost of material purchased $ 77,600 Actual material used in production 3,700 meters Actual output 560 units of product O84 The direct materials purchases variance is computed when the materials are purchased. Required: a. What is the materials price variance for the month
Answers
Answer:
$3,330 unfavorable
Explanation:
Material price variance is the difference between the standard price and actual price at the actual quantity. It could be due to the changes in the prices as expected.
Actual cost per unit = Total cost / Material Purchases = $77,600 / 4,000 meter =
Formula for Material price variance is
Material Price Variance = ( Standard price - Actual price ) x Actual Quantity
Material Price Variance = ( $18.5 - $19.4 ) x 3,700
Material Price Variance = --$0.9 x 3,700
Material Price Variance = --$3,330 = $3,330 unfavorable
As the actual cost is more than the estimated / budgeted cost, the higher cost incurred means higher expenditure which is unfavorable for the company.
Rishi, a protectionist, has seen several small businesses go bankrupt because they were unable to compete with the cheaper prices of goods provided by foreign companies. The cell-phone manufacturing industry has just started in the United Kingdom, and Rishi's company is one of the first to try its hand at cell-phone manufacturing. What argument is most likely to be used by Rishi to persuade his government to restrict the import of foreign cell phones from foreign companies?
Answers
Answer:
Key infant industries must be protected, specially those that operate with new technologies.
Explanation:
It takes time for infant industries to develop certain comparative advantages that allows them to compete against foreign firms. While they are developing their own comparative advantages, infant industries can easily go out of business due to foreign competitors that have been around for much longer.
In order to achieve competitive prices, infant industries must first achieve economies of scale. While foreign firms are already able to offer low prices because they are able to produce with lower costs.
Final answer:
Rishi would likely argue for the use of the infant industry argument as a way to temporarily protect the U.K.'s emerging cell-phone manufacturing industry, enabling it to develop the necessary qualities to compete globally.
Explanation:
Rishi, as a protectionist concerned about the survival and growth of a new domestic industry, is most likely to use the infant industry argument to persuade his government to restrict the import of foreign cell phones. This argument suggests that by temporarily blocking foreign competition, the U.K.'s nascent cell-phone manufacturing industry can have the necessary time to develop and reach a level of skill, management, technology, and economies of scale to be competitive globally. Therefore, Rishi would advocate for a policy of protectionism to serve as a short-term indirect subsidy, allowing the industry time to grow and eventually compete on equal terms without ongoing dependence on government support.
On April 22, the board of directors for Cosmic Candy, Incorporated declared a cash dividend of $1 per share payable to stockholders of record on May 15. The dividends are paid on June 8. The company has 1,000 shares of stock outstanding. Prepare the appropriate journal entry that will be recorded on June 8.
Answers
Answer and Explanation:
The Journal entry is shown below:-
Dividends payable Dr, $1,000
(1,000 shares × $1)
To Cash $1,000
(Being payment of cash dividend is recorded)
Therefore, for recording the payment of cash dividend we simply debited the Dividends payable as decreases the liability and credited the cash account as it decreasing the assets.
Lakeland, Inc., is a U.S.‑based MNC with a subsidiary in Mexico. Its Mexican subsidiary needs a one‑year loan of 10 million pesos for operating expenses. Since the Mexican interest rate is 40 percent, Lakeland is considering borrowing dollars, which it would convert to pesos to cover the operating expenses. By how much would the dollar have to appreciate against the peso to cause such a strategy to backfire? (The one‑year U.S. interest rate is 6%.)
Answers
Answer:
The dollar have to apprentice 32% against the peso.
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the Expected Future Exchange Return by using following formula:-
Expected Future Exchange Return= 1 - (1 + Mexican Interest Rate) ÷ ( 1 + US Interest Rate)
= 1 - ( 1 + 0.4) ÷ ( 1 + 0.06 )
= 1 - 1.32
= 0.32 or 32%
According to the Analysis, the dollar have to apprentice 32% against the peso for the given strategy to backfire