Answer:
Current Liabilities = $2000000
Inventories = $800000
Explanation:
The current ratio and quick ratios both are measures to assess the liquidity position of businesses. These are useful indicators of how well the business is equipped to meet its current obligations using its most liquid assets.
The current ratio is calculated as follows,
Current Ratio = Current Assets / Current Liabilities
The quick ratio is calculated as follows,
Quick Ratio = (Current Assets - Inventories) / Current Liabilities
To calculate the inventory level, we must first determine the value of current liabilities using the current ratio.
1.5 = 3000000 / Current Liabilities
Current Liabilities = 3000000 / 1.5
Current Liabilities = $2000000
Using the quick ratio, we can calculate the level of inventories.
1.1 = (3000000 - Inventories) / 2000000
1.1 * 2000000 = 3000000 - Inventories
2200000 = 3000000 - Inventories
Inventories = 3000000 - 2200000
Inventories = $800000
The rest of the world sees problems; Martin sees opportunity. He made money in real estate and lost it when the recession hit. But soon he found another way to earn a living and has become wealthy again. Martin is high in ________.
Answer:
Resilience
Explanation:
In psychology, the term resilience refers to the process of coping with trauma, tragedy or adversity and adapt to it. But it doesn't only refer to the process of adaptation but actually it involves personal growth. In other words, the person grows thanks to the adversity, the person also sees problems as an opportunity to learn and become a better person.
In this example, Martin sees opportunity where the rest of the world sees problems, he made money and lost it but he's wealthy again. We can see that Marty has coped with adversity (the recession) but he adapted to it and he found a way to go through that and earn a living and become wealthy again, thus, this is an example of high resilience.
The Green Giant has a 7 percent profit margin and a 61 percent dividend payout ratio. The total asset turnover is 1.4 times and the equity multiplier is 1.6 times. What is the sustainable rate of growth
Answer:
5.17%
Explanation:
The green giant has a 7% profit margin
= 7/100
= 0.07
The dividend payout ratio is 67%
= 67/100
= 0.67
Total turnover is 1.4 times
Equity multiplier is 1.6 times
The first step is to calculate the return of equity
ROE= profit margin×total turnover×equity multiplier
= 0.07×1.4×1.6
= 0.1568
Therefore, the sustainable rate of growth can be calculated as follows
= return of equity×(1-dividend payout ratio)
= 0.1568×(1-0.67)
= 0.1568×0.33
= 0.0517×100
= 5.17%
Hence the sustainable rate of growth is 5.17%
Haag Corp.'s 2021 income statement showed pretax accounting income of $2,500,000. To compute the federal income tax liability, the following 2021 data are provided:
Income from exempt municipal bonds $ 100,000
Depreciation deducted for tax purposes in excess of depreciation deducted for financial statement purposes 200,000
Enacted corporate income tax rate 20%
Required:
Compute the amount that Haag should record for income tax payable.
Answer:
$440,000
Explanation:
The first is to calculate the taxable profits and taxable profit can be calculated as under:
Taxable Profit = Pre-Tax Accounting Profit - Tax allowable expenses not deducted + Tax disallowed expenses deducted previously - Tax disallowed Income added previously - Tax allowed income not added in accounting profits
Here
Pre-Tax Accounting Income is $2,500,000
Municipal Bond Income is the Tax Disallowed Income added previously to accounting profits and must be eliminated from it at $100,000
Depreciation for tax purposes which is in excess of the book depreciation allowed is $200,000 and is Tax allowed Expenses not deducted.
By putting the values, we have:
Taxable Profit = $2,500,000 - $200,000 - $100,000
Taxable Profit = $2,200,000
Now we will compute the income tax payable at 20%
Tax Payable = 20% * $2,200,000 = $440,000
Income tax payable is the compulsory charge to be paid by the individual or company earning incomes over the exempt slab rates. Tax payable is computed on the taxable income, which is computed by deducting the deductible expenses and incomes from the net profit earned during a particular financial period.
The amount of income tax payable by Haag is $440,000
Computation:
The taxable income and the income tax payable are shown in the image attached below.
The procedure to compute the tax liability is:
1. Determine the pre-tax accounting income that is given $2,500,000.
2. Deductions like tax allowable expenses, tax allowed incomes, etc. In this case, the deductions are the exempt income from municipal bonds and the deduction of depreciation amount as it was recorded in the financial statement.
3. The amount determined is taxable income over which the 20% income tax rate will be charged.
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During the year, Belyk Paving Co. had sales of $2,485,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,349,000, $660,000, and $462,000, respectively. In addition, the company had an interest expense of $287,000 and a tax rate of 24 percent. The company paid out $412,000 in cash dividends. Assume that net capital spending was zero, no new investments were made in net working capital, and no new stock was issued during the year. (lgnore any tax loss or carryforward provision and assume interest expense is fully deductible.)
Calculate the firm's net new long-term debt added during the year. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Answer:
$888,000
Explanation:
In order to determine how much new debt was added, we must calculate cash flows:
first we need to determine net income:
sales ($2,485,000) - COGS ($1,349,000) - S&A expenses ($660,000) - depreciation expense ($462,000) = EBIT = $14,000
since EBIT is lower than interest expense ($14,000 ≤ $287,000), we can assume there was a loss. But the question tells us to ignore any tax losses. So net income = $14,000 - $287,000 = -$273,000
operating cash flow = net income + adjustments = -$273,000 + $462,000 = $189,000
there were not capital spending and no new investments made, so cash flow from investing activities = $0
so the net cash flow from assets = $189,000
net cash flow form assets = net cash flow from stockholders + net cash flow from liabilities
net cash flow from stockholders = common stock issued - dividends = $0 - $412,000 = -$412,000
$189,000 = -$412,000 + net cash flow from liabilities
$601,000 = net cash flow from liabilities
net cash flow from liabilities = net new long term debt - interest expense
$601,000 = net new long term debt - $287,000
net new long term debt = $601,000 + $287,000 = $888,000
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages. Queno Company had FUTA taxable wages of $510,900 during the year. Determine its: (Round your answers to two decimal places.) a. gross FUTA tax $ . b. FUTA tax credits (assuming no penalties) $ . c. net FUTA tax
Answer:
a. $30,654
b. $27,588.60
c. $3,065.40
Explanation:
The Gross/ Standard Federal Unemployment Tax (FUTA) is 6.0% but employers tend to receive a 5.4% reduction/ credit upon filing form 940 leaving them with a net of 0.6%.
a. The Gross tax is;
= 510,900 * 6%
= $30,654
b. FUTA Tax Credits
= 510,900 * 5.4%
= $27,588.60
c. Net FUTA Tax
= 510,900 * 0.6%
= $3,065.40
Presented here are long-term liability items for Skysong, Inc. on December 31, 2017.
Bonds payable (due 2021) $920,000
Notes payable (due 2019) 84,000
Discount on bonds payable 23,000
Prepare the long-term liabilities section of the balance sheet for Skysong, Inc.
Answer:
Skysong, Inc.
Balance Sheet (Partial)
As on December 31, 2017.
Liabilities
Long Term Liabilities
Bonds payable (due 2021) $920,000
Notes payable (due 2019) $84,000
Discount on bonds payable ($23,000)
Total Long Term Liabilities $981,000
Explanation:
Long term liabilities are all those liabilities that will be paid after one year's time. As Bond Payable is due in 2021 and needs to be paid after 4 years it is classified as long term liabilities. Note Payable is also due in 2019 and needs to be paid after 2 years it is also classified as long term liabilities.
Which one of the following statements is correct?
a. Book values should always be given precedence over market values.
b. Financial statements are frequently the basis used for performance evaluations.
c. Historical information has no value when predicting the future.
d. Potential lenders place little value on financial statement information.
e. Reviewing financial information over time has very limited value.
Answer:
b. Financial statements are frequently the basis used for performance evaluations.
Explanation:
The financial statements are the accounting reports of an organization, through these documents it is possible to analyze what is the financial situation of a company in the internal and external environment, what are its greatest strengths and weaknesses.
They are instruments for evaluating organizational performance because they provide essential information about the general accounting situation of a company, which ensures greater reliability for a manager to make a decision directed to correct a problem or strategic implementation to achieve a certain result. It also allows stakeholders to analyze essential data and information when deciding to invest or do business with a particular company.
The BVM Corp., construction company, purchased a used hybrid electric pickup truck for 30,000 and used MACRS depreciation in the income tax return. During the time the company had the truck, they estimiated that it saved 9500 a year. At the end of 4 years. BVM sold the truck for 9000. The combined federal and state income tax rate for BVM is 40%. Compute the after-tax rate of return for the truck
Answer:
The BVM Corp.
The After-tax Rate of Return for the truck = After-Tax Income/Investment in Truck x 100
= $10,200/$30,000 x 100 = 34%
Explanation:
a) Calculations:
Current Value of the Truck =
Sale of Truck = $9,000
Savings from Truck = $38,000 ($9,500 x 4)
Total $47,000
Investment increase = $17,000 ($47,000 - 30,000)
Combined Tax = $6,800 (40% x $17,000)
After Tax Income = $10,200 ($17,000 - 6,800)
b) MACRS means the modified accelerated cost recovery system. It is an allowance by the IRS for faster depreciation in the first years of an asset's life and the depreciation slows later on in order to allow a business to recover the cost basis of certain assets that deteriorate over time.
c) Rate of return (ROR) is the percentage increase or decrease of an investment (truck) over a set period of time (4 years), which is calculated by taking the difference between the current (or expected) value ($47,000) and original value ($30,000), dividing by the original value, and then this is multiplied by 100.
A company’s weighted average cost of capital is 10.8% per year and the market intrinsic value of its debt is $33.1 million. The company’s free cash flow next year is expected to be $4.7 million and the free cash flow is expected to grow forever at a rate of 3.7% per year. If the company has three million shares of common stock outstanding, what is the intrinsic value per share? Question 6 options: A) $13.72 B) $9.48 C) $11.03 D) $12.24 E) $15.12
Answer:
C. $11.03
Explanation:
We need to first compute the firm's value which is shown below.
Firm's value = Free cash flow ÷ (Weighted average cost of capital - Growth rate)
Firm's value = $4.7 million ÷ ( 10.8% - 3.7%)
= $4.7 million ÷ 7.1%
= $66,197,183
Stock price = (Firm value - Debt) ÷ Number of shares
= ($66,197,183 - $33,100,000) ÷ 3,000,000
= $33,097,183 ÷ 3,000,000
= $11.03
Parker Corp. owns 80% of Smith Inc.'s common stock. During Year 1, Parker sold Smith $250,000 of inventory on the same terms as sales made to third parties. Smith sold all of the inventory purchased from Parker in Year 1. The following information pertains to Smith and Parker's sales for Year 1:
Parker:
Sales $ 1,000,000
Cost of sales 400,000
Total $ 600,000
Smith:
Sales $ 700,000
Cost of sales $ 350,000
Total $ 350,000
What amount should Parker report as cost of sales in its Year 1 consolidated income statement?
a. $750,000
b. $680,000
c. $500,000
d. $430,000
Answer:
c. $500,000
Explanation:
Given that :
Parker Corp. owns 80% of Smith Inc.'s common stock
During Year 1, Parker sold Smith $250,000 of inventory
Therefore; adjusted for inter Corp. sales = $250,000
The following information pertains to Smith and Parker's sales for Year 1:
Parker Smith
Sales $ 1,000,000 $ 700,000
Cost of Sales $400,000 $ 350,000
Total $ 600,000 $ 350,000
For the Unadjusted Cost of Sales of Parker and Smith = $400,000+$ 350,000
= $750,000
The amount that Parker should report as cost of sales in its Year 1 consolidated income statement = Unadjusted Cost of Sales - adjusted for inter Corp. sales
= $750,000 - $250,000
= $500,000
The Acmeville Metropolitan Bus Service currently charges $0.77 for an all-day ticket, and has an average of 472 riders a day. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must therefore find a way to increase revenues. The bus company is considering increasing the ticket price to $ 0.99 . The marketing department's studies indicate this price increase would reduce usage to 195 riders per day. Calculate the absolute value of the price elasticity of demand for bus tickets using the simple percentage change method. Round your answer to one decimal place.
Answer:
price elasticity of demand = -2.05, price elastic, or in absolute terms 2.05, price elastic
Explanation:
the formula to calculate price elasticity of demand is:
PED = % change in quantity / % change in price
% change in quantity = [(195 - 472) / 472] x 100 = -58.69%% change in price = [($0.99 - $0.77) / $0.77] x 100 = 28.57%PED = -58.69% / 28.57% = -2.05
Generally when we calculate PED we use absolute values, i.e. this PED = 2.05. When PED > 1, price elastic, which means that any change in price will result in a larger change in quantity demanded. When PED < 1, price inelastic, which means that any change in price will result in a smaller change in quantity demanded. When PED = 1, unit elastic, which means that any change in price will result in a proportional and inverse change in quantity demanded.
What do you see as the major deficiencies current information systems budgeting and prioritization processes are run
Answer:
The major challenges with the current information systems budgeting and prioritisation process are:
The focus was overly on how the budgeted monies will be spent and how much return it will bring to the business. Not much thought was given to how the monies required for the expenses will be generated. Budgeting not only looks at the outflow, it examines existing and potential sources of income/revenue. When this is balanced, the company can integrate such into their marketing strategy armed with what information about the market that they possess.The prioritization is all wrong. Budgeting is because there is are organisational objectives to be met with limited resources.
Because those resources are limited, the said objectives have to be prioritized. Income-generating projects must hold more priority over non-revenue generating activities.
If there is a strategic link between the company's Information Systems upgrade and an increase in its bottom line, then it must be given priority.
Cheers!
Each unit produced costs the company $8.00, and it is sold for $10.00. How much will the company gain or lose in a month if they stock the expected number of units demanded but sell 2000 units?
Missing information:
The demand for a product varies from month to month. Based on the past year's data, the following probability distribution shows MNM company's monthly demand.
x f(x)
Unit Demand Probability
0 0.10
1,000 0.10
2,000 0.30
3,000 0.40
4,000 0.10
Answer:
total expected demand = 100 + 600 + 1,200 + 400 = 2,300 units
the company spends 2,300 x $8 = $18,400 to produce the units in stock
the company earns 2,000 x $10 = $20,000 from selling the units
assuming that the remaining units (unsold units) must be discarded and have no value, then the company will earn $20,000 - $18,400 = $1,600
ou wish to retire in 20 years, at which time you want to have accumulated enough money to receive an annual annuity of $32,000 for 25 years after retirement. During the period before retirement you can earn 8 percent annually, while after retirement you can earn 10 percent on your money. What annual contributions to the retirement fund will allow you to receive the $32,000 annuity
Answer:
Annual contributions to the retirement fund will be $6,347.31
Explanation:
First find the Present Value of the Annuity giving payments of $32,000 annually for 25 years at the rate of 10%.
Using a Financial Calculator enter the following data
PMT = $32,000
P/y = 1
N = 25
R = 10%
FV = 0
Thus, the Present Value, PV is $290,465.28
At the time of retirement (in 20 years time) the Value of the annuity fund is $290,465.28.
Next we need to find the Payments PMT to reach this amount in 20 years time at the interest rate of 8%
Using a Financial Calculator enter the following data
FV = $290,465.28
N = 20
R = 8 %
PV = $0
Thus, the Payments, PMT required will be $6,347.3080
Conclusion :
Annual contributions to the retirement fund will be $6,347.31
A portfolio consists of $15,200 in Stock M and $23,400 invested in Stock N. The expected return on these stocks is 8.90 percent and 12.50 percent, respectively. What is the expected return on the portfolio
Answer:
Portfolio return = 11.08%
Explanation:
The expected return on the portfolio is the weighted average return of all the different stocks making up the portfolio. The weight of the individual stock would be the relative amount invested in each stock as a proportion of the total fund invested.
The expected return can be determined as follows
Weighted of stock A= 15,200/(15200+23400)=0.39
Weight of stock B = 23.400/((15200+23400)= 0.61
Expected return on portfolio = (0.39 ×8.90% ) + (0.61*12.50%)= 11.08 %
The demand in a market for smartphones has increased, causing prices to
rise. What effect will this likely have on the supply of smartphones?
A. The supply curve will shift up according to the increased demand.
B. Supply will decrease, as always happens when price increases.
C. The supply point will increase by moving along the existing supply
curve, and the entire curve will shift upwards as well.
D. The supply point will increase by moving along the existing supply
curve, the curve itself will not shift.
Answer: D. The supply point will increase by moving along the existing supply curve, the curve itself will not shift.
The demand in a market for smartphones has increased, causing prices to The supply point will increase by moving along the existing supply curve, the curve itself will not shift. Hence, the correct option is D.
What is Supply curve?Supply curve is the curve which is a graphic representation of the relationship among the quantity of product and the price of the products, which the seller is willing to supply.
Supply curve on the right means the increase in the supply of the product in market.
So, the shift to the supply curve to the right for the smartphones, will result from increase in consumer income, as the income of the customer rises, will result in outwards shift (right) and when goods are normal goods.
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What are some of the issues to consider in determining whether the Internet would provide your business with a competitive advantage
Answer:
relevancy, cost, and information
Explanation:
When determining whether the Internet would provide your business with a competitive advantage you need to consider relevancy, cost, and information. First would be how much extra cost will you incur in order to place your business on the internet. Secondly, you need to consider the importance of the internet to you business, such as what percentage of your customer population will be on the internet. And lastly, you need to consider how much information you actually need to acquire in order to successfully implement this course of action.
Prepare budgetary entries, using general ledger control accounts only, for each of the following unrelated situations: (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in whole dollars not in millions (i.e., 1,000,000 not 1.0).) Anticipated revenues are $11.8 million; anticipated expenditures and encumbrances are $8.0 million. Anticipated revenues are $8.0 million; anticipated expenditures and encumbrances are $9.4 million. Anticipated revenues are $9.4 million; anticipated transfers from other funds are $1.6 million; anticipated expenditures and encumbrances are $8.0 million; anticipated transfers to other funds are $0.7 million. Anticipated revenues are $8.6 million; anticipated transfers from other funds are $1.1 million; anticipated expenditures and encumbrances are $9.7 million; anticipated transfers to other funds are $1.0 million.
Answer:
Please see answer in explanatory column
Explanation:
Journal for Budgetary entries
a) Anticipated revenues are $11.8 million; anticipated expenditures and encumbrances are $8.0 million
Account Debit Credit
Estimated Revenue control $11,800,000
Appropriation control $8,000,000
Budgetary fund $3,800,000
Calculation
Budgetary fund = Estimated Revenue control $11,800,000-
Appropriation control $8,000,000 = $3,800,000
b)Anticipated revenues are $8.0 million; anticipated expenditures and encumbrances are $9.4 million.
Account Debit Credit
Estimated Revenue control $8,000,000
Budgetary fund $1,400,000
Appropriation control $9,400,000
Budgetary fund = Estimated Revenue control $8,000,000-
Appropriation control $9,400,000 = -$1,400,000 , therefore will be debited
c)Anticipated revenues are $9.4 million; anticipated transfers from other funds are $1.6 million; anticipated expenditures and encumbrances are $8.0 million; anticipated transfers to other funds are $0.7 million
Account Debit Credit
Estimated Revenue control $9,400,000
Estimated other finance source control$1,600,000
Appropraition control $8,000,000
Estimated other finance source control $700,000
Budgetary fund $2,300,000
Budgetary fund = Estimated Revenue control +Estimated other finance source control) -Appropriation control + Estimated other finance source control= $9,400,000 +$1,600,000)- $8,000,000 + 700,000 ) = 11,000,000 - $8,700,000 =$2,300,000
d)Anticipated revenues are $8.6 million; anticipated transfers from other funds are $1.1 million; anticipated expenditures and encumbrances are $9.7 million; anticipated transfers to other funds are $1.0 million.
Account Debit Credit
Estimated Revenue control $8,600,000
Estimated other finance source control$1,100,000
Budgetary fund $1,000,000
Appropraition control $9,700,000
Estimated other finance source control $1,000,000
Budgetary fund = Estimated Revenue control +Estimated other finance source control) -Appropriation control + Estimated other finance source control= $8,600,000 +$1,100,000)- $9,700,000 + 1,000,000 ) = 9,700,000 - $10,700,000 =-$1,000,000 so will be debited
Accounts Payable The balance in Ashwood Company's Accounts Payable account at December 31, 2016, was $1,200,000 before any necessary year-end adjustment relating to the following: Goods were in transit from a vendor to Ashwood on December 31, 2016. The invoice cost was $85,000, and the goods were shipped FOB shipping point on December 29, 2016. The goods were received on January 2, 2017. Goods shipped FOB shipping point on December 20, 2016, from a vendor to Ashwood were lost in transit. The invoice cost was $40,000. On January 5, 2017, Ashwood filed a $40,000 claim against the common carrier. Goods shipped FOB destination on December 22, 2016, from a vendor to Ashwood were received on January 6, 2017. The invoice cost was $20,000. What amount should Ashwood report as accounts payable on its December 31, 2016, balance sheet? a. $1,325,000 b. $1,260,000 c. $1,285,000 d. $1,345,000
Answer:
Ashwood CompanyAccounts Payable account at December 31, 2016:Amount to report in the balance sheet =
a. $1,325,000
Explanation:
The balance in the account was $1,200,000
Adjustments:
In transit goods, shipped FOB shipping point = $85,000
Lost in transit goods, shipped FOB shipping point = $40,000
Total = $1,325,000
The shipping terms determine when liability for goods in transit pass to the buyer and if the buyer should include the goods in its own Ending Inventory and adjust its Accounts Payable respectively. The liability for goods in transit passes to the buyer if the FOB is shipping point. The liability does not pass to the buyer if the FOB is destination.
Colter Steel has $4,800,000 in assets. Temporary current assets $ 1,600,000 Permanent current assets 1,530,000 Fixed assets 1,670,000 Total assets $ 4,800,000 Short-term rates are 12 percent. Long-term rates are 17 percent. Earnings before interest and taxes are $1,020,000. The tax rate is 40 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be
Answer:
Colter SteelEarnings after taxes:Earnings before interest and taxes = $1,020,000
Interests = $659,500
Pre-tax Earnings = $360,500
Income Tax (40%) 144,200 ($360,500 x 40%)
Earnings after taxes = $216,300
Explanation:
a) Interests:
i) Long-term interests = 17% of Fixed Assets ($1,670,000) = $283,900
ii) Short-term interest = 12% of current assets ($4,800,000 - 1,670,000) = $375,600
Total interests = $659,500 ($283,900 + 375,600)
b) Short-term rates are the interest rates for current assets (or short-term borrowings).
c) Long-term rates are the interest rates for long-term assets or fixed assets (or long-term borrowings).
Your company has net sales revenue of $49 million during the year. At the beginning of the year, fixed assets are $21 million. At the end of the year, fixed assets are $23 million. What is the fixed asset turnover ratio
Answer:
The fixed asset turnover ratio is 2.13 times.
Explanation:
Fixed Assets Turnover Ratio = Sales / Total Fixed Assets
= $49 million / $23 million
= 2.13 times
Note that we use the end of year balances for fixed assets in the calculation of fixed asset turnover ratio.
Conclusion :
The fixed asset turnover ratio is 2.13 times.
You manage an equity fund with an expected risk premium of 9% and a standard deviation of 12%. The rate on Treasury bills is 4%. Your client chooses to invest $50,000 of her portfolio in your equity fund and $40,000 in a T-bill money market fund. What is the reward-to-volatility (Sharpe) ratio for the equity fund?
Answer:
0.75%
Explanation:
Computation for reward-to-volatility (Sharpe) ratio for the equity fund
Using this formula
Reward to volatility ratio =Portfolio risk premium÷Standard deviation of portfolio excess return
Where ,
Portfolio risk premium =9%
Standard deviation of portfolio excess return=12%
Let plug in the formula
Reward to volatility ratio =0.09/0.12
Reward to volatility ratio =0.75%
Therefore reward-to-volatility (Sharpe) ratio for the equity fund will be 0.75%
Why does e-commerce save businesses money?
O
A. Because warehouses can stock much more inventory than stores.
B. Because they charge more for online purchases.
ОО
C. Because more people shop online than in stores.
D. Because they lower the quality of the product for online
purchases.
Answer:
A. Because warehouses can stock much more inventory than stores.
Explanation:
Transactions for Jayne Company for the month of June are presented below.
June
1 Issues common stock to investors in exchange for $5,000 cash.
2 Buys equipment on account for $1,100.
3 Pays $740 to landlord for June rent.
12 Sends Wil Wheaton a bill for $700 after completing welding work.
Identify the accounts to be debited and credited for each transaction.
Account Debited Account Credited
june 1
june 2
june 3
june 12
Answer:
June 1 , common stocks are issued
Dr Cash 5,000
Cr Common stock 5,000
June 2 , equipment purchased on account
Dr Equipment 1,100
Cr Accounts payable 1,100
June 3 , monthly rent paid
Dr Rent expense 740
Cr Cash 740
June 12, service revenue
Dr Accounts receivable 700
Cr Service revenue 700
What is the current price for a bond worth $4,000 that has a price quote of 50?
Answer:
$ 2,500 as far as i know.
Explanation:
The company that you manage has invested $5 million in developing a new product, but the development is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $1.5 million. If it would cost $2 million to finish development and make the product, you go ahead and do so. The most you should pay to complete development is $_______million.
Answer:
You should pay "$3" million to complete the development.
Explanation:
The possibility you've already plunged $5 million is therefore no longer important to either calculation, although this money disappears. All counts now would be the small chance of gaining money. When you are investing around $1 million and are able to produce $3 million in funding, users earn $2 million in gross income, so clients will.You seem entitled to say that perhaps a gross of $3 million has indeed been wasted to the venture, and you really should not even have begun it. That would be real, however, if you ever don't invest about $1 million extra you apparently can't have any profits and total damages will have been $5 million.And therefore what counts has never been the overall income, but the incremental benefit that you will receive. In reality, you'd pay approximately $3 million to feel a sense of achievement, not much more, and towards the bottom, you won't increase income.
On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $40,000 on March 31, 2022. The fair value of the merchandise exchanged is $37,600. Esquire views the financing component of this contract as significant. Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2021 interest accrual, and the March 31, 2022 collection. 2. What is the effective interest rate on the note
Answer:
1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2021 interest accrual, and the March 31, 2022 collection.
June 30, 2021, merchandise sold in exchange for note receivable
Dr Notes receivable 40,000
Cr Sales revenue 37,600
Cr Unearned interest revenue 2,400
December 31, 2021, accrued interests (= $2,400 x 6/9)
Dr Unearned interest revenue 1,600
Cr Interest revenue 1,600
March 31, 2022, note receivable is collected
Dr Cash 40,000
Cr Note receivable 40,000
Dr Unearned interest revenue 800
Cr Interest revenue 800
2. What is the effective interest rate on the note
effective period rate = $2,400 / $37,600 = 6.3829% (for 9 months)
annual rate = 6.3829% x 12/9 = 8.51%
The effects of inflation
Suppose Specific Automakers is considering signing a long-term contract with the union representing its workers. Specific Automakers and the union both agree that real wages should increase by 3%. Inflation is expected to be 6%, so they agree on a 9% nominal wage increase.
Now, suppose inflation turns out to be lower than expected, coming in at 5%. This would the _______union and _______ Specific Automakers because the real wage increase would now be _______.
Because of uncertainty about future inflation, the union devotes a large quantity of resources to monitoring inflation indicators in order to maximize its financial position.
This illustrates the fact that:
A. Inflation harms lenders and helps borrowers
B. Inflation obscures relative price changes
C. Variable inflation is associated with high transaction costs
Answer:
Benefit
Harm
Higher
C. Variable inflation is associated with high transaction costs
Explanation:
Inflation is a persistent rise in general price levels.
The increase in income was 9% based on the assumption that inflation would be 6%.
It turns out that inflation was 5%. The increase in income should have been 8% instead of 9%.
The union members end up earning more than they ought to, so they benefit. The company pays more than they ought to to workers, so they are in a disadvantage.
The union members spend a lot to monitor inflation. This is a transaction cost .
I hope my answer helps you
Ruby is 25 and has a good job at a biotechnology company. She currently has $11,400 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 9 percent, and she plans to leave it untouched until she retires at age 65. Ruby estimates that she will need $875,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $20,000 a year (she expects that Social Security will pay her an additional $15,000 a year).How much will Ruby's IRA be worth when she needs to start withdrawing money from it when she retires?
Answer:
$ 358,063
Explanation:
Calculation for the amount that Ruby's IRA will be worth when she needs to start withdrawing money from it when she retires.
Ruby's IRA worth when she retires at age of 65
First step
Using this formula to find how many years until Ruby retires
Time period= Retired age (-) current age
Let plug in the formula
65-25=40 years
Second step is to find the future value of IRA when she retires
Using this formula
Future value of IRA when she retires
= Present value(1+r)t
Let plug in the formula
$ 11,400 (1+0.09) ^40
=$11,400 (1.09) ^40
=$ 11,400 (31.409)
= $ 358,063
Therefore the amout that Ruby's IRA will be worth when she needs to start withdrawing money from it when she retires will be $358,063
A foundation was endowed with $15,000,000 in July 2010. In July 2014, $5,000,000 was expended for facilities, and it was decided to provide $250,000 at the end of each year forever to cover operating expenses. The first operating expense is in July 2015, and the first replacement expense in July 2014. If all money earns interest at 5% after the time of endowment, what amount would be available for the capital replacements at the end of every fifth year forever
Answer:
$2,274,639.75
Explanation:
Endowment on July 2010 = $15,000,000
Endowment amount on July 2014 = $15,000,000 (1+0.05)^4 - Expenditure on facilities
= $15,000,000 (1.2155) - $5,000,000
= $18,232,500 - $5,000,000
= $13,232,500
Amount to be set aside for operation expenses = $250,000/0.05 = $5,000,000
Amount available for capital replacement = $13,232,500 - $5,000,000 = $8,232,500
5-years effective interest rate = (1+0.05)^5 - 1 = 0.2763
Annual available for capital replacements every fifth year forever = $8,232,500 (0.2763) = $2,274,639.75
The amount that would be available for the capital replacements at the end of every fifth year forever is $2,274,513.93.
Endowment amount:
Endowment amount=[$15,000,000 (1+0.05)^4]- $5,000,000
Endowment amount=[$15,000,000 (1.21550625)] - $5,000,000
Endowment amount= $18,232,594- $5,000,000
Endowment amount= $13,232,594
Capital replacement:
Capital replacement = $13,232,594- ($250,000/0.05)
Capital replacement = $13,232,594 - $5,000,000
Capital replacement = $8,232,594
Effective interest rate :
Effective interest rate = (1+0.05)^5 - 1
Effective interest rate = (1.05)^5 - 1
Effective interest rate = 0.2762815625
Every Fifth year Capital replacements:
Every Fifth year Capital replacements= $8,232,594 ( 0.2762815625)
Every Fifth year Capital replacements=$2,274,513.93
Inconclusion the amount that would be available for the capital replacements at the end of every fifth year forever is $2,274,513.93.
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