Answer:
The total liabilities at end of September is $5,000
Explanation:
The $21,000 received from business owner is capital which would have been credited to capital and debited to cash.
The purchase of office equipment meant that cash decreased by $4000,a credit of $4,000 and a credit of $5,000 to notes payable while the $9000 is debited to equipment account.
The insurance expense,utility bill,rent as well as the purchase of office furniture were all cash settled and had no liability impact,hence the only liability outstanding at month end is the notes payable on office equipment of $5,000
Culver Company has completed all of its operating budgets. The sales budget for the year shows 50,180 units and total sales of $2,273,600. The total unit cost of making one unit of sales is $23. Selling and administrative expenses are expected to be $301,900. Interest is estimated to be $10,000. Income taxes are estimated to be $214,000.
Required:
Prepare a budgeted multiple-step income statement for the year ending December 31, 2017.
Answer:
Net Income = $593,560
Explanation:
Cost of Goods Sold=sales unit × cost of sales per unit
= $23 × 50,180 = $1,154,140
Income statement December 31,2017
Particular Amount($)
Sales 2,273,600
Less:-Cost of goods sold (1,154,140)
Gross Profit 1,119,460
Less-Selling and Administrative Expenses (3,019,00)
Income from Operation 817,560
Less-Estimated Interest (10,000)
Income before Taxes 807,560
Less-Income Taxes (214,000)
Net Income 593,560
Bill and Guilda each own 50 percent of the stock of Radiata Corporation, an S corporation. Guilda's basis in her stock is $21,000. On May 26, 2018, Bill sells his stock, with a basis of $40,000, to Loraine for $50,000. For the 2018 tax year, Radiata Corporation has a loss of $104,000.
Round your final answers to the nearest dollar. Use a 365-day year in your computations.
a. Calculate the amount of the corporation's loss that may be deducted by Bill on his 2018 tax return.
$___________
b. Calculate the amount of the corporation's loss that may be deducted by Guilda on her 2018 tax return.
$___________
c. Calculate the amount of the corporation's loss that may be deducted by Loraine on her 2018 tax return.
$___________
Answer:
a) $20,800
b) $21,000
c) $31,200
Explanation:
a) Bill held his stock from January 1 to May 26. The loss accrued to him should only be for those days.
The number of days are,
= 31 (January) + 28 ( February) + 31 + 30 + 26
= 146 days.
50% of the losses accrued to him for 146 days out of 365.
= 104,000 * 0.5 * 146/365
= $20,800
b) The maximum amount of loss that Guilda can claim on her 2018 tax return as a current shareholder is equal to her current basis in the stock. That basis is $21,000 so Guilda can only deduct $21,000 from her 2018 tax return.
c) Seeing as Lorraine acquired the stock from Bill on May 26, the amount of loss due to her will be for the period she held the stock.
She held the stock for,
= 365 - 146
= 219 days
At 50% ownership, her losses will be,
= 104,000 * 0.5 * 219/365
= $31,200
At the end of May, the following adjustment data were assembled:A. Insurance expired during May is $275B. Supplies on hand on May 31 are $715C. Depreciation of office equipment for May is $330D. Accrued receptionist salary on May 31 is $325E. Rent expired during May is $1,600F. Unearned fees on May 31 are $3,210Required:Journalize the adjusting entries.
Answer and Explanation:
The journal entries are shown below:
a. Insurance expense $275
To Prepaid insurance $275
(Being the insurance expense is recorded)
b. Supplies expense $785 ($1,500 - $715)
To Supplies $785
(Being the supplies expense is recorded)
We assume the balance of supplies before adjustment is $1,500
c. Depreciation - office equipment $330
To Accumulated depreciation $330
(Being the depreciation expense is recorded)
d. Salary Dr $325
To Accrued salary $325
(Being the accrued salary is recorded)
e. Rent expense $1,600
To Prepaid rent $1,600
(Being the rent expense is recorded)
f. Unearned fees $790
To Fees revenue $790
(Being the unearned fees is recorded)
We assume the balance of unearned fees before adjustment is $4,000
So, $790 is come from
= $4,000 - $3,210
= $790
Adjusting entries are recorded to account for income and expenditures in the correct accounting period. The entries include adjustments for insurance, supplies, depreciation, salaries, rent, and unearned fees, according to the provided end-of-May adjustment data.
Explanation:Adjusting entries are made in the journal at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred. The goal is to update the accounts for any earned revenues and incurred expenses that have not been recorded during the accounting period. Here are the adjusting entries based on the provided adjustment data:
Insurance Expense: Debit Insurance Expense $275, Credit Prepaid Insurance $275Supplies: Debit Supplies Expense for the used amount, Credit Supplies for the same amount to reflect the $715 on handDepreciation: Debit Depreciation Expense $330, Credit Accumulated Depreciation – Office Equipment $330Salaries Expense: Debit Salaries Expense $325, Credit Salaries Payable $325Rent Expense: Debit Rent Expense $1,600, Credit Prepaid Rent $1,600Unearned Fees: Debit Unearned Fees $3,210, Credit Fees Earned $3,210These adjusting entries ensure that the company's financial statements reflect the true financial position and results of operations for May.
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Consider two bonds, a 3-year bond paying an annual coupon of 3%, and a 20-year bond, also with an annual coupon of 3%. Both bonds currently sell at par value. Now suppose that interest rates rise and the yield to maturity of the two bonds increases to 6%. a. What is the new price of the 3-year bond?
Answer:
New price = $919.81
Explanation:
Computation of the given data are as follows:
Let Face value (FV) = $1,000
YTM (Rate ) = 6%
Time period (Nper) = 3 years
Coupon rate = 3%
Coupon payment = 3% × $1,000 = $30
So, we can calculate the new price by using financial calculator.
The attachment is attached below:
New price = $919.81
Daniel Patrick Moynihan, the late senator from New York, once introduced a bill that would levy a 10,000 percent tax on certain hollow-tipped bullets.
True or False:
This tax won't raise much revenue because the high tax rate would likely cause the equilibrium quantity to be near zero.
Answer:
True.
Explanation:
Daniel Patrick Moynihan, the late senator from New York, once introduced a bill that would levy a 10,000 percent tax on certain hollow-tipped bullets.
However, this tax won't raise much revenue because the high tax rate would likely cause the equilibrium quantity to be near zero.
8. Fung Manufacturing, Inc. (FMI), currently has 275000 shares of stock outstanding that sell for $75 per share. Assuming no market imperfections or tax effects exist, what will the share price be after: a. RMO has a two-for-five reverse stock split? b. RMO has a 6 percent stock dividend? c. RMO has a 18 percent stock dividend? d. RMO has a nine—for-two stock split? e. Redo parts a to d and determine the new number of shares.
Final answer:
After various stock actions, FMI's share prices adjust to maintain the same total market value. A reverse stock split increases the price, while a stock dividend or a regular stock split decreases the price.
Explanation:
Fung Manufacturing, Inc. (FMI) starts with 275,000 shares worth $75 each. The share price adjustment after various stock actions are as follows:
Two-for-five reverse stock split: The number of shares will reduce to 2/5 of the original. New price = (275,000 * 2/5) shares = 110,000 shares; total market value remains the same, so the new share price = 275,000 * $75 / 110,000 = $187.50.6 percent stock dividend: The number of shares increases by 6%, but the market cap remains the same, so the new share price will decrease to factor the increase in shares. New shares = 275,000 * 1.06 = 291,500; new share price = (275,000 * $75) / 291,500 = $70.50.18 percent stock dividend: Similar to the 6% dividend, shares increase by 18%. New shares = 275,000 * 1.18 = 324,500; new share price = market cap / new number of shares = $20,625,000 / 324,500 = $63.55.Nine-for-two stock split: The number of shares becomes 9/2 times the original. New shares = 275,000 * (9/2) = 1,237,500; new share price = market cap / new number of shares = $20,625,000 / 1,237,500 = $16.67.The concept of capital gains is relevant as it represents the increase in value of stock between purchase and sale, impacting investor returns alongside dividends.
The April 30 bank statement for Trimble Corporation shows an ending balance of $40,262. The unadjusted cash account balance was $33,750. The accountant for Trimble gathered the following information: There was a deposit in transit for $5,356. The bank statement reports a service charge of $174. A credit memo included in the bank statement shows interest earned of $815. Outstanding checks totaled $13,797. The bank statement included a $2,570 NSF check deposited in April. What is the true cash balance as of April 30?
Answer:
$36,961
Explanation:
The bank reconciliation is one done between the balance per the books and balance per the bank statement. This is usually as a result of transactions known as reconciling items. These are items that have either been recognized in books but yet to be recorded by the bank or vice versa, transactions recorded wrongly by one of the parties etc.
To know the true cash balance, we must first determine what transactions must be adjusted in the books; these are
service charge of $174 - this will be deducted from the book balancecredit memo included in the bank statement shows interest earned of $815 - this will be added to the book balancea $2,570 NSF check deposited in April - This will be added back to the book balanceHence, the true cash balance as of April 30
= $33,750 - $174 + $815 + $2570
= $36,961
The cash flows below contain the year 1 cash flows for a potential real estate investment. What is the property's operating expense ratio? Year 1 Number of Units 75 Average Rent $800 Potential Gross Income $720,000 Vacancy and Collection Losses ($72,000) Effective Gross Income $648,000 Operating Expenses ($243,389) Capital Expenditures ($19,440) Net Operating Income $385,171 Annual Debt Service ($323,301) Before-Tax Cash Flow $61,870
Answer:
37.56%
Explanation:
Data provided
Operating expenses = $243,389
Effective gross income = $648,000
The computation of property's operating expense ratio is shown below:-
Operating expenses ratio = Operating expenses ÷ Effective gross income
= $243,389 ÷ $648,000
= 0.3756
= 37.56%
Therefore for computing the operating expenses ratio we simply divide operating expenses by effective gross income.
The Azuza Company owns no plant assets and had the following income statement for the year:
Sales revenue $930,000
Cost of goods sold $650,000
Wages expense 210,000
Rent expense 42,000
Utilities expense 12,000 914,000
Net income $16,000
Additional information about the company includes:
End of Year Beginning of Year
Accounts receivable $67,000 $59,000
Inventory 62,000 86,000
Prepaid rent 9,000 7,000
Accounts payable 22,000 30,000
Wages payable 9,000 7,000
Required:
Use the preceding information to calculate the cash flow from operating activities using the indirect method. Remember to use negative signs with answers when appropriate.
Answer:Please see answer below
Explanation:
Solving
Net income= $16,000
Change in asset and liabilities
Accounts receivable Increased $67,000- $59,000 =- -8000
Inventory Decreased 62,000- 86,000=24,000
Prepaid rent --Increased 9,000- 7,000 = -2000
Accounts payable ---decreased 22,000 -30,000 = -8000
Wages payable ----Increased 9,000- 7,000=2000
Net cash provided by operating activity.=24,000+ 2000-(8000+2000+8000)
= $24,000
Net income= $16,000
Change in asset and liabilities
Accounts receivable--Increase -$8,000
Inventory--Decreased-- $24,000
Prepaid rent --Increased -$2,000
Accounts payable ---decreased-$8,000
Wages payable ----Increased $2,000
Net cash provided by operating activities,= $24,000
hown here are annual financial data at December 31, 2017, taken from two different companies. Music World Retail Wave-Board Manufacturing Beginning inventory Merchandise $ 200,000 Finished goods $ 500,000 Cost of purchases 300,000 Cost of goods manufactured 875,000 Ending inventory Merchandise 175,000 Finished goods 225,000 Required: 1. Prepare the cost of goods sold section of the income statement at December 31, 2017, for each company in Merchandising Business and Manufacturing Business.
Answer and Explanation:
As per the data given in the question,
a)
Music World Retail
Partial Income Statement
For year ended Dec-31,2017
Cost of goods sold :
Beginning merchandise inventory $200,000
Add: Cost of purchase $300,000
Goods available for sale $500,000
Less: Ending merchandise inventory $175,000
Cost of goods sold $325,000
b)
Wave Board Manufacturing
Partial Income Statement
For year ended Dec-31,2017
Cost of goods sold :
Beginning finished goods inventory $500,000
Add: Cost of goods manufacture $875,000
Goods available for sale $1,375,000
Less: Ending finished inventory $$225,000
Cost of goods sold $1,150,000
We simply applied the above format
Assume the perpetual inventory method is used. 1) The company purchased $13,800 of merchandise on account under terms 2/10, n/30. 2) The company returned $3,300 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $21,600 cash. What effect will the return of merchandise to the supplier have on the accounting equation?
Answer:
Assets and liabilities are reduced by $3,300.
Explanation:
The effect that the return of merchandise to the supplier have on the accounting equation is that Assets and liabilities are reduced by $3,300 because the purchase return will decrease assets or reduced the assets which is the merchandise inventory and decrease liabilities or reduced the liabilities which is accounts payable by $3,300 which is said to be the full invoiced amount of the merchandise returned.
The return of merchandise to the supplier impacts the accounting equation by reducing both assets and liabilities of the company. The assets decrease due to the reduction in inventory and cash, and the liabilities decrease because the accounts payable have been settled.
Explanation:When the company returned merchandise to the supplier for the amount of $3,300, it impacted the accounting equation by decreasing both the assets and liabilities of the company. Initially, the company had a liability (accounts payable) of $13,800. However, when returning the merchandise, the company reduced the accounts payable by $3,300 to $10,500. Using the perpetual inventory method, the inventory (an asset) would also reduce by $3,300.
Furthermore, the company took advantage of the 2/10 discount and paid the liability within the discount period. Therefore, the payment is 98% of $10,500, which is $10,290. So, the company's assets (cash) would decrease by this amount, and the liabilities (accounts payable) would reduce to zero.
In conclusion, the return of merchandise and the payment within the discount period impact the accounting equation. The assets decrease due to the reduction in inventory and cash, and the liabilities decrease due to the settlement of accounts payable.
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Javonte Co. set standards of 2 hours of direct labor per unit of product and $15.80 per hour for the labor rate. During October, the company uses 12,100 hours of direct labor at a $193,600 total cost to produce 6,400 units of product. In November, the company uses 16,100 hours of direct labor at a $258,405 total cost to produce 6,800 units of product. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate (1) Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor cost variance for each of these two months. Classify each variance as favorable or unfavorable. (2) Javonte investigates variances of more than 5% of actual direct labor cost. Which direct labor variances will the company investigate further?
Answer:
October
direct labor rate variance =$2,420 unfavorable
direct labor efficiency variance =$11,060 favorable
direct labor cost variance = $ 8,640 favorable
Investigate : direct labor efficiency variance
November
direct labor rate variance = $4,025 unfavorable
direct labor efficiency variance =$ 39,500 favorable
direct labor cost variance = $35,475 favorable
Investigate : direct labor efficiency variance
Explanation:
October
direct labor rate variance = (Aq × Ap) - (Aq × Sp)
= (12,100×$16) - (12,100×$15.80)
=$2,420 unfavorable
direct labor efficiency variance = (Aq × Sp) - (Sq × Sp)
=(12,100 × $15.80) - (6,400×2 ×$15.80)
=$11,060 favorable
direct labor cost variance = direct labor rate variance + direct labor efficiency variance
= $2,420 (A) + $11,060 (F)
= $ 8,640 favorable
November
direct labor rate variance = (Aq × Ap) - (Aq × Sp)
= (16,100×$16.05) - (16,100×$15.80)
= $4,025 unfavorable
direct labor efficiency variance = (Aq × Sp) - (Sq × Sp)
=(16,100 × $15.80) - (6,800×2 ×$15.80)
=$ 39,500 favorable
direct labor cost variance = direct labor rate variance + direct labor efficiency variance
= $4,025 (A) + $ 39,500 (F)
= $35,475 favorable
Filer Manufacturing has 7.4 million shares of common stock outstanding. The current share price is $44, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $68.2 million and a coupon rate of 6.1 percent and sells for 109.2 percent of par. The second issue has a face value of $58.2 million and a coupon rate of 6.6 percent and sells for 107.1 percent of par. The first issue matures in 9 years, the second in 26 years. Suppose the company’s stock has a beta of 1.3. The risk-free rate is 2.2 percent, and the market risk premium is 6.1 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent. What is the company’s WACC?
Answer:
6.08%
Explanation:
WACC = [(market value of equity / total value of financing) x cost of equity] + [(market value of debt / total value of financing) x cost of debt x (1 - tax rate)]
market value of equity = 7,400,000 shares x $44 = $325,600,000total value of financing = $325,600,000 + $74,474,400 + $62,332,200 = $462,406,600cost of equity = risk free rate of return + Beta × (market rate of return – risk free rate of return) = 2.2% + 1.3(6.1% - 2.2%) = 2.2% + 5.07% = 7.27%market value of debt₁ = $68,200,000 x 1.092 = $74,474,400 market value of debt₂ = $58,200,000 x 1.071 = $62,332,200tax rate = 40%cost of debt₁ = yield to maturity = [C + (F - P)/n] / (F + P)/2 = [2,080,100 + (68,200,000 - 74,474,400)/18] / (68,200,000 + 74,474,400)/2 = 1,731,522 / 71,337,200 = 0.0242 x 2 = 4.8545% cost of debt₂ = yield to maturity = [C + (F - P)/n] / (F + P)/2 = [1,920,600 + (58,200,000 - 62,332,200)/52] / (58,200,000 + 62,332,200)/2 = 1,841,135 / 60,266,100 = 0.03055 x 2 = 6.11002%WACC = [(market value of equity / total value of financing) x cost of equity] + [(market value of debt₁ / total value of financing) x cost of debt₁ x (1 - tax rate)] + [(market value of debt₂ / total value of financing) x cost of debt₂ x (1 - tax rate)]
WACC = [($325,600,000 / $462,406,600) x 7.27%] + [($74,474,400 / $462,406,600) x 4.8545% x (1 - 40%)] + [($62,332,200 / $462,406,600) x 6.11002% x (1 - 40%)] = 5.12% + 0.47% + 0.49% = 6.08%
Describe whether the following changes cause the short-run aggregate supply to increase, decrease, or neither. a. The price level increases. b. Input prices decrease. c. Firms and workers expect the price level to fall. d. The price level decreases. e. New policies increase the cost of meeting government regulations. f. The number of workers in the labor force
Answer:
Short Run Aggregate Supply SRAS is the total goods and services available in an economy at different price levels with respect to fixed production resources.
Explanation:
A) When the price level increases, aggregate supply increases as well because demand is high and manufacturers will produce more.
B) When Input prices decrease, short run aggregate supply is not affected.
C) When firms and workers expect the price level to fall, aggregate supply decreases to cushion the effect of imminent loss due to fall in prices.
D) When the price level decreases, supply also decreases since it is an indication that the market is approaching saturation,
E) New policies increase the cost of meeting government regulations and does not necessarily influence SRAS.
F) The number of workers in the labor force does not affect SRAS.
Pendant Publishing is considering a new product line that has expected sales of $1,100,000 per year for each of the next 5 years. New equipment that is required to produce the new product will cost $1,200,000. The equipment has a useful life of 5 years and a $300,000 salvage value and will be sold at the end of year 5 for its’ salvage value. Total variable costs of the product line are $450,000 per year, total fixed costs (not including depreciation) will be an additional $180,000 per year and the initial working capital investment, to buy inventory, will be $15,000. The discount rate (interest rate) for the project is 10% and the company’s tax rate is 35%. What is the operating cash flow of year 1 for the company?
Answer:
The operating cash flow of year 1 for the company is $368,500
Explanation:
In order to calculate the operating cash flow of year 1 for the company first we need to calculate the Cashflow before tax and depreciation as follows:
Cashflow before tax=Sales-Variable cost-fixed cost
Cashflow before tax=$1,100,000-$450,000-$180,000
Cashflow before tax=$470,000
Depreciation = Original cost - Salvage / fixed Cost
Depreciation= $1,200,000 - $300,000 / 5
= $180,000
Therefore, to calculate the operating cash flow of year 1 for the company we would have to make the following calculation:
Operating Cash Flow=(CFBT×65%)+Depreciation×35%
Operating Cash Flow=($470,000×65%)+($180,000×35%)
Operating Cash Flow=$368,500
The operating cash flow of year 1 for the company is $368,500
Smart Stream Inc. uses the product cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 10,000 cellular phones are as follows:
Variable costs per unit: Fixed costs:
Direct materials $150 Factory overhead $350,000
Direct labor 25 Selling and admin. exp. 140,000
Factory overhead 40
Selling and administrative expenses 25
Total $240
Smart Stream desires a profit equal to a 30% rate of return on invested assets of $1,200,000.
a. Determine the amount of desired profit from the production and sale of 10,000 cellular phones.
$
b. Determine the cost per unit for the production of 10,000 units of cellular phones.
$per unit
c. Determine the product cost markup percentage for cellular phones.
%
d. Determine the selling price of cellular phones. Round to the nearest dollar.
Cost $per unit
Markup $per unit
Selling price $per unit
Calculate desired profit, cost per unit, product cost markup percentage, and selling price for Smart Stream Inc. using the cost-plus approach to product pricing.
a. Desired profit: Desired profit = Rate of return on invested assets * Invested assets = 30% * $1,200,000 = $360,000.
b. Cost per unit: Cost per unit = Total costs / Number of units = $240 / 10,000 units = $24 per unit.
c. Product cost markup percentage: Markup percentage = (Desired profit + Total fixed costs) / Total variable costs * 100% = ($360,000 + $490,000) / ($150 + $25 + $40 + $25) * 100% = 103.08%.
d. Selling price: Selling price per unit = Cost per unit + Markup per unit = $24 + ($24 * 1.0308) = $24 + $24.92 = $48.92 (rounded to $49).
Levered, Inc., and Unlevered, Inc., are identical in every way except their capital structures. Each company expects to earn $12.6 million before interest per year in perpetuity, with each company distributing all its earnings as dividends. Levered’s perpetual debt has a market value of $74 million and costs 5 percent per year. Levered has 3.2 million shares outstanding that sell for $90 per share. Unlevered has no debt and 4.9 million shares outstanding, currently worth $73 per share. Neither firm pays taxes. What is the value of each company's equity?
Answer: Unlevered firm Equity is worth $357,700,000.
Levered firm Equity is worth $283,700,000 going by the Modigliani-Miller Proposition I.
Explanation:
The Unlevered firm has no debt and so the value of it's equity can be calculated by simply multiplying shares outstanding by the market price.
= 4.9 million * 73
= $357,700,000
Unlevered firm Equity is worth $357,700,000.
Now according to Modigliani-Miller Proposition I, if a Levered firm and an identical Unlevered firm are not paying taxes, they should be of equal value.
This means that the Levered firm should have a value of $357,700,000 meaning that their equity should be that value minus the value of their debt.
= 357,700,000 - 74,000,000
= $283,700,000
$283,700,000 should be the value of their Equity going by the Modigliani-Miller Proposition I.
Calculating with their figures however gives,
= 3.2 million * 90
= $288,000,000
The market value of the Levered firm is more than it's value according to the Modigliani-Miller Proposition I.
This means that the Unlevered firm's Equity is UNDERVALUED and the Levered Firm's Equity is OVERVALUED.
Problem 9-20 Two investment advisers are comparing performance. One averaged a 16% rate of return and the other a 15% rate of return. However, the beta of the first investor was 1.3, whereas that of the second investor was 1. a. Can you tell which investor was a better selector of individual stocks (aside from the issue of general movements in the market)? First investor Second investor Cannot determine b. If the T-bill rate was 7% and the market return during the period was 10%, which investor would be considered the superior stock selector? Second investor First investor Cannot determine c. What if the T-bill rate was 4% and the market return was 14%? First investor Second investor Cannot determine
Answer:
Imma solve it out for you no problem. Give me a quick second
Explanation:
Give me a minute to solve it out real quick. I gotchu
What range of returns should you expect to see with a 99 percent probability for the riskiest asset in this group?: Large company stocks have an average return of 9.1 percent and a standard deviation of 18.7 percent; small company stocks have an average return of 10.85 percent and a standard deviation of 24.64 percent; and corporate bonds have an average return of 6.8 percent and a standard deviation of 11.4 percent.
Answer: Range is, -63.07% to 84.77%
Explanation:
The range of returns that you can expect to see 99% of the time is calculated by the formula
= Mean+- (3 * standard deviation)
The question asks for the range of returns you should expect to see with a 99 percent probability for the RISKIEST ASSET.
The Riskiest Asset is one with the highest standard deviation which is the Small Company Stock.
Calculating the range therefore is,
Lower limit,
= Mean - (3 * standard deviation)
= 10.85% - (3 * 24.64%)
= -63.07%
Upper limit
= Mean + (3 * standard deviation)
= 10.85% - (3 * 24.64%)
= 84.77%
Range is, -63.07% to 84.77%
Final answer:
The range of returns for small company stocks with a 99 percent probability is -63.07 percent to 84.77 percent. This calculation is based on the highest standard deviation among the assets, which indicates the highest risk level.
Explanation:
To determine the range of returns for the riskiest asset with a 99 percent probability, we'll use the concept of standard deviation and the empirical rule, which applies to normally distributed data. Considering that small company stocks have the highest standard deviation at 24.64 percent, they are the riskiest asset among those listed. The empirical rule says that for a normal distribution, approximately 99 percent of the data will fall within three standard deviations of the mean.
Accordingly, we calculate the range as follows:
Identify the mean return for small company stocks: 10.85 percent.
Calculate three standard deviations: 3 × 24.64 percent = 73.92 percent.
Compute the lower and upper bounds: 10.85 percent ± 73.92 percent.
So, the range with 99 percent probability is -63.07 percent to 84.77 percent. This wide range highlights the high risk and high potential return associated with small company stocks.
Shaw Company sells goods that cost $300,000 to Ricard Company for $410,000 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $40,000. The standalone selling price of the goods is $370,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete. (a) Prepare the journal entries (if any) to record the sale on January 2, 2020.
Answer:
January 2, 2020
Dr Accounts receivable 410,000
Cr Sales revenue 370,000
Cr Unearned revenue 40,000
Dr Cost of goods sold 300,000
Cr Merchandise inventory 300,000
Accrual accounting states that revenues must be recognized during the periods that they actually occur (i.e. the earning process is completed). Since the installation process lasts 6 months, the unearned revenue will be recognized as the process is being completed.
Cooper Industries wants to replace two small delivery trucks with one larger delivery truck. The old trucks are valued at $13,000 each. The new truck will cost $52,000. If Cooper’s controllable margin is $97,000 and their operating assets were valued at $580,000 before they bought the new truck, what will their new ROI be?
A: 17.5%
B: 16.0%
C: 15.3%
D: 16.7%
The new ROI after Cooper Industries replaces two old trucks with a new one, considering their controllable margin and altered operating assets, is found to be approximately 16.0%.
Explanation:First, let's estimate the change in operating assets. Cooper Industries had old trucks valued at $13,000 each. They had two of these old trucks, so the total is $26,000. They've replaced these with a new truck costing $52,000. The net change is $52,000 - $26,000 = $26,000 increase in operating assets.
So, their total operating assets after purchasing the new truck becomes $580,000 + $26,000 = $606,000.
Return on Investment (ROI) is calculated as (Controllable Margin / Operating Assets) * 100. Therefore, the new ROI is ($97,000 / $606,000) * 100 = 16.01%, which rounds to 16.0% (Option B).
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At the beginning of the month, the Painting Department of Skye Manufacturing had 40,000 units in inventory, 80% complete as to materials, and 25% complete as to conversion. The cost of the beginning inventory, $48,650, consisted of $42,400 of material costs and $6,250 of conversion costs. During the month the department started 135,000 units and transferred 150,000 units to the next manufacturing department. Costs added in the current month consisted of $329,600 of materials costs and $604,500 of conversion costs. At the end of the month, the department had 25,000 units in inventory, 40% complete as to materials and 10% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the costs per equivalent unit of materials and conversion respectively for the Painting Department.
Answer:
Material Cost per equivalent unit = $2.325
Conversion Cost per equivalent unit = $4.004
Explanation:
According to the scenario, computation of the given data are as follow:-
Particular Material cost Conversion cost
Completed and transferred out units 150,000 150,000
Work in process at the end of the month 10,000 2,500
Equivalent units per material 160,000 152,500
Cost incurred in the current month consisted $372,000 $610,750
Cost per equivalent unit $2.325 $4.004
Work in Process at the end of the Month Material Cost = Units × Percent
= 25,000 × 40÷100 = 10,000
Work in process at the end of the month conversion cost =25,000 × 10÷100
= 2,500
Material Cost incurred= $329,600 + $42,400 = $372,000
Conversion Cost incurred= $604,500 + $6,250 = $610,750
Cost Per Equivalent Unit = Cost Incurred ÷ Equivalent Unit
Material Cost per equivalent unit = 372,000 ÷ 160,000
= $2.325
Conversion Cost per equivalent unit = 610,750 ÷ 152,500
= $4.004
On September 1, 2020, Windsor Company sold at 104 (plus accrued interest) 3,840 of its 8%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $13 per share. Shortly after issuance, the warrants were quoted on the market for $2 each. No fair value can be determined for the Windsor Company bonds. Interest is payable on December 1 and June 1. Prepare in general journal format the entry to record the issuance of the bonds. (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.) Account Titles and Explanation
Answer:
total sales value = 3,840 x $1,000 = $3,840,000 x 1.04 = $3,993,600
since each bond carried 2 detachable stock warrants, we must include in the bond issuance the value of the stock warrants = 3,840 bonds x 2 warrants x $2 per warrant = $15,360
the premium on bonds payable = total cash received - bonds payable - stock warrants = $3,993,600 - $3,840,000 - $15,360 = $138,240
the journal entry for recording the bond issuance:
September 1, 2020, 3,840 8% bonds issued
Dr Cash 3,993,600
Cr Bonds payable 3,840,000
Cr Premium on bonds payable 138,240
Cr Additional paid in capital - warrants 15,360
To record the issuance of the Windsor Company bonds with detachable stock warrants, the market value of the warrants is used to allocate a portion of the proceeds. The journal entry includes the accounts for Cash, Bonds Payable, Premium on Bonds Payable, and Stock Warrants. The Premium on Bonds Payable is adjusted to account for the value of the warrants.
To record the issuance of the bonds with detachable stock warrants by Windsor Company, we must separate the bond's value from the warrants' value. Since we do not have a fair value for the bonds, we need to use the market value of the warrants to allocate a portion of the proceeds to the warrants and the remainder to the bonds. Here is the journal entry on September 1, 2020, assuming the bonds were issued for cash:
Cash (3,840 bonds × $1,000 face value × 104%) = $3,993,600Bonds Payable (face value of the bonds) = $3,840,000Premium on Bonds Payable (the excess of cash received over the face value of the bonds) = $153,600However, this does not take into account the value of the attached warrants. To allocate value to the warrants, we can use the market value of the warrants (3,840 bonds × 2 warrants/bond × $2 per warrant = $15,360). Therefore, the journal entry would include an additional line:
Stock Warrants (value of the detachable warrants) = $15,360The Stock Warrants account reflects the value attributed to the warrants, which would then reduce the Premium on Bonds Payable by the same amount. The adjusted premium would be the original premium less the value of the warrants ($153,600 - $15,360 = $138,240).
Calculate the inventory turnover for 2019. (Round your answer to 2 decimal places.) Calculate the number of days' sales in inventory for 2019, using year-end inventories. (Use 365 days a year. Round your answer to 1 decimal place.) Calculate the accounts receivable turnover for 2019. (Round your answer to 1 decimal place.) Calculate the number of days' sales in accounts receivable for 2019, using year-end accounts receivable. (Use 365 days a year. Round your answer to 1 decimal place.)
Answer:
A.3.63 times
B.95.5 days
C.21.0 times
D.13.5 days
Explanation:
a.
Inventory turnover = Cost of goods sold / Average inventories
Hence:
= $602,250 / $166,000
= 3.63 times
b.
Number of days’ sales in inventory = Inventory at year-end / Average day’s cost of good sold
= $157,575 / $1,650
= 95.5 days
Average day’s cost of goods sold
= Annual cost of good sold / 365
= $602,250 / 365 = $1,650
c.Accounts receivable turnover
= Sales / Average accounts receivable
= $821,250 / $39,100
= 21.0 times
d.
Number of days’ sales in accounts receivable
= Accounts receivable at year-end / Average day’s sales
= $30,400 / $2,250 = 13.5 days
Average day’s sales = Annual sales / 365
= $821,250 / 365
= $2,250
Final answer:
Explanation of inventory turnover, days' sales in inventory, accounts receivable turnover, and days' sales in accounts receivable for the year 2019.
Explanation:
Inventory Turnover for 2019:
Calculate Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $500,000 / $100,000 = 5 times
Days' Sales in Inventory for 2019:
Calculate Days' Sales in Inventory = 365 days / Inventory Turnover
Days' Sales in Inventory = 365 days / 5 = 73 days
Accounts Receivable Turnover for 2019:
Calculate Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable
Accounts Receivable Turnover = $700,000 / $50,000 = 14 times
Days' Sales in Accounts Receivable for 2019:
Calculate Days' Sales in Accounts Receivable = 365 days / Accounts Receivable Turnover
Days' Sales in Accounts Receivable = 365 days / 14 = 26 days
WACC.
Eric has another get-rich-quick idea, but needs funding to support it. He chooses an all-debt funding scenario.
He will borrow $4 comma 911 from Wendy, who will charge him 4% on the loan.
He will also borrow $4 comma 305 from Bebe, who will charge him 6% on the loan, and $2 comma 784 from Shelly, who will charge him 12% on the loan.
What is the weighted average cost of capital for Eric?
Answer:
6.57%
Explanation:
The WACC formula is really easy you just have to calculate the weights of the debt or equity whatever is given in the question and then multiply it by the percentage of borrowing given. The total borrowing in this question is 12000(4911+4305+2784).
WACC for this question will be calculated as:
=> (4911/12000)*0.04 + (4305/12000)*0.06 + (2784/12000)*0.12
=> 0.0657
=> 6.57%
Hope this helps,
Goodluck buddy
Advanced Enterprises reports yearminusend information from 2018 as follows: Sales (160 comma 250 units) $ 963 comma 000 Cost of goods sold 641 comma 000 Gross margin 322 comma 000 Operating expenses 269 comma 000 Operating income $ 53 comma 000 Advanced is developing the 2019 budget. In 2019 the company would like to increase selling prices by 13.5%, and as a result expects a decrease in sales volume of 9%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. What is budgeted sales for 2019?
Answer:
Sales budget in 2019 $994,543.55
Explanation:
The sales budgeted shows the expected units to be sold at a particular price for forth coming accounting period, together with the total sales revenue.
Selling price in 2018= 963,000/160,250 =$6.009
Expected selling price in 2019 = 113.5%× price in 2018
= 113.5% × $6.009 = $6.820
Expected sales volume in 2019= (100- 9%)× sales volume in 2018
= 91%× 160,250
=145827.5
Sales budget for 2019 = $6.820 × 145,827.5
= $994,543.55
Pelicans Ice is a snow cone stand near the local park. To plan for the future, it wants to determine its cost behavior patterns. It has the following information available about its operating costs and the number of snow cones served.
Month Number of snow cones Total operating costs
January 6,400 $5,980
February 7,000 $6,400
March 4000 $5000
April 6,900 $6,330
May 8000 $9000
June 7,250 $6,575
Using the high-low method, the monthly operating costs if Pelicans sells 12,000 snow cones in a month are:
A) $9,800. B) $7,200. C) $21,000. D) $2,600.
Answer:
The total operating of 12,000 snow cones is $13,000
Explanation:
Variable cost=Cost at highest level-Cost at lowest level/highest activity-lowest activity
cost at highest level of activity=$9000,with 8000 level of activity
cost at lowest level of activity =$5,000 with 4000 level of activity
variable cost=$9,000-$5,000/8000-4000=$1
fixed cost=total cost -variable cost
at 8,000 level of activity fixed cost is computed thus:
fixed cost=$9,000-(8000*$1)=$1000
for 12,000 snow cones
total cost=$1,000+(12,000*$1)=$13,000
The options are not correct
On March 1, 2018, E Corp. issued $1,400,000 of 8% nonconvertible bonds at 101, due on February 28, 2028. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitled the holder to purchase, for $65, one share of Evan's $45 par common stock. On March 1, 2018, the market price of each warrant was $3. By what amount should the bond issue proceeds increase shareholders' equity?
Answer:
$210,000
Explanation:
No market value was been given for the bonds.
Therefore the amount attributable to the warrants (shareholders' equity) =
Market price of each warrant was $3 ×50 detachable stock warrants per bond
=$150
Issued $1,400,000/$1,000 bond
=$1,400
Hence:
$150 × 1,400 bonds
= $210,000.
Therefore the amount that the bond should issue if proceeds increase shareholders' equity is $210,000
Why is it difficult for the federal government to increase or decrease spending
Answer:
here you go bruv
Explanation:
The New York Times published a chart today that succinctly explains why it is so hard to cut the federal government's spending: the programs that people want to cut don't cost very much, and the programs that cost a lot people don't want to cut.
How do managers decide upon an ethical course of action when confronted with decisions pertaining to working conditions, human rights, corruption, and environmental pollution? From an ethical perspective, how do managers determine the moral obligations that flow from the power of a multinational? In many cases, there are no easy answers to these questions because some are very real dilemmas with no obvious correct action. Nevertheless, managers can and should do many things to make sure that basic ethical principles are adhered to and that ethical issues are routinely inserted into international business decisions.
Explanation:
Organizational ethics is a competitive advantage in organizations.
In the globalized business world, the companies that insert an ethical context in all their internal and external decisions are those with a better positioning in the market, a better image before the stakeholders and greater value for the potential audience.
Nowadays, companies are also seen as transforming agents of society, so it is important that there is ethical management for all social and environmental issues on the rise in the world, it is necessary that issues involving working conditions, human rights, corruption and environmental pollution are based on ethical policies that assist in complying with the legislation in force in a locality and that overcome it, becoming an agent that acts with transparency in favor of improving the living conditions of society.
The internationalization of companies is another factor that requires an ethical and moral positioning established through legislation, culture and values of a specific country where a multinational is established, since cultural differences can be related to ethical dilemmas whose managers must seek preventive actions so that differences and values are respected and established through an ethical inclusion policy.