Answer:
Cowboy Law Firm
Income statement for the year ended December.
$
Service revenue 8,900
Less Expenses :
Salaries expense (2,000)
Utilities expense (1,100)
Net Income / (Loss) 5,800
Explanation:
Income statements shows Revenues earned and Expenses incurred at the end of the trading period.
Use your own language to explain that short run supply curve by a price-taking firm is the positively-sloped portion of the short-run marginal cost curve.
Answer:
See the answer and explanation below
Explanation:
A price-taking firm is a firm in a perfectly competitive market where all firms are price takers. That is, no firm in a perfectly competitive can influence the price as only the market determines the price.
The short run supply curve for a price-taking firm refers to the short marginal cost (SMC) curve at and above the shutdown point.
Note: See the attached graph for the shut run supply curve. Also note that point E in the attached graph is the shutdown point.
The shutdown point is the point where the short run marginal cost (SMC) is equal to the average variable cost (AVC) (i.e. where MC = AVC = Shutdown point).
This indicates that the short-run supply curve for a price-taking firm is the part of the SMC curve that lies above AVC curve.
The part of the SMC curve that lies below the AVC or the shutdown point is not part of the short run supply curve of a price-taking firm, because the firm is not engaging in any production at that point.
Therefore, the short run supply curve of a price-taking firm is the increasing portion of the short run MC curve above the shutdown point.
This follows the law of supply which states that more quantity of the product of a firm will be supplied when there is a rise in the market price.
In summary, the short run supply curve of a price-taking firm is the positively-sloped portion of the short-run marginal cost curve
Zoey Bella Company has a payroll of $10,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Prepare the adjusting entry on December 31 assuming the year ends on Thursday.
Answer:
Amount = (Total periodic pay / Number days in period) * Number days for current period
Amount = ($10,000/5) * 4
Amount = $8,000
Therefore, the amount to be recorded for adjusting entry is $8,000.
Journal Entry
Date Description Debit Credit
31 Dec Payroll expenses $8,000
Payroll expenses payable $8,000
(Being Payroll expenses recorded)
Terrance needs to comminicate with managers in several different locations regarding a sensitive complex topic. Therefore he should choose the communication medium highest in information richness which would be a:______
a. Voice mail message.
b. Group email.
c. Videoconference.
d. Recorded presentation.
Milltown Company specializes in selling used cars. During the month, the dealership sold 26 cars at an average price of $15,400 each. The budget for the month was to sell 24 cars at an average price of $16,400. Compute the dealerships sales volume variance for the month.
Answer:
Sales volume variance = $32,800 favorable
Explanation:
Please refer to the below for Sales Volume Variance formula and calculation.
Sales Volume Variance = (Budgeted sales volume - Actual sales volume) Standard price per unit
= ( 24 units - 26 units) $16,400
= ( 2 units ) $16,400
= $32,800 favorable
Assume that the government is currently balancing the national budget so that outlays equal tax revenue. Then the economy slips into recession, and the government decides to increase government spending by $50 billion. The government must pay for this by borrowing; it must sell $50 billion worth of Treasury bonds. As a result: Group of answer choices
Answer: b. be in deficit by at least $50 billion.
Explanation:
The Government budget had been balanced but it will now have to spend $50 billion more than it is making. This will mean that Government expenditure will rise by $50 billion over the tax revenue which will lead to a deficit of the same amount.
These are bonds however meaning that the Government would have to pay interest on the $50 billion. This will push the deficit owed to over $50 billion meaning that the Government would be in deficit of at least $50 billion.
To determine if a person is "in the business" of giving investment advice under the Investment Advisers Act of 1940, which of the following are considered?
I That the individual regularly gives advice on securities.
II That more than 50% of the individual's earnings are derived from making investment recommendations.
III That the individual receives compensation for giving advice on securities.
A. I only.
B. I and III only.
C. II and III only.
D. I, II, III.
Answer:
Correct Answer:
B. I and III only.
Explanation:
Someone in business of giving business advise is known as an investment adviser.
An investment adviser is a person or firm that is engaged in the business of providing investment advice to others or issuing reports or analyses regarding securities, for compensation. Based on the definition above, the best option for the question is Option B.
Wilson Dover Inc. The total value (debt plus equity) of Wilson Dover Inc. is $500 million and the face value of its 1-year coupon debt is $200 million. The volatility (σ) of Wilson Dover's total value is 0.60, and the risk-free rate is 5%. Assume that N(d1) = 0.9720 and N(d2) = 0.9050. Refer to the data for Wilson Dover Inc. What is the yield on Wilson Dover's debt? a. 7.05% b. 6.04% c. 6.70% d. 7.42% e. 6.36%
Answer:
7.42%
Explanation:
Value = 500 million
Amount of debt = 200 million
Time = year
Volatility = 6%
Risk free rate = 0.05
Nd1 = 0.9720
Nd2 = 0.9050
We have to calculate the value =
500 - (500 x 0.9720 - 200 x e^-0.05 x 0.9050)
= 186.17 million
We now calculate the yield
(200/186.17)^1 - 1
= 0.0742
= 7.42%
Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing 6%. What is your expected return on this investment
Answer:
9.2%
Explanation:
expected return of the investment = potential return x chance of each return happening
Expected return of the investment:
20% chance of occurring x 30% potential return = 0.2 x 30% = 6%50% chance of occurring x 10% potential return = 0.5 x 10% = 5%30% chance of occurring x -6% potential return = 0.3 x -6% = -1.8%total expected return = 9.2%You own a portfolio that has a total value of $145,000 and a beta of 1.31. You have another $58,000 to invest and you would like the beta of your portfolio to decrease to 1.19. What does the beta of the new investment have to be in order to accomplish this
Answer: 0.89
Explanation:
The total portfolio beta is a weighted average of the constituent security betas.
145,000 + 58,000 = $203,000
The total portfolio beta of 203,000 should have a beta of 1.19.
Proportion of New investment = 58,000/203,000
= 28.57%
Proportion of old portfolio = 145,000/203,000
= 71.43%
(0.7143 * 1.31) + (0.2857 * x) = 1.19
0.9357 + 0.2857x = 1.19
0.2857x = 0.2543
x= 0.89
Ink Inc. has a capital structure consisting of 25 percent debt and 75 percent common equity financing. The company has $800 million in net income and plans to pay out 40 percent of their earnings as dividends. What is the maximum amount of new financing that the company can raise without selling new common stock?
Answer:
$640 million
Explanation:
The computation of maximum amount of new financing is shown below:-
New financing from equity = $800 million × (1 - 40%)
= $480 million
New financing from debt = $480 million ÷ 75% × 25%
= $160 million
Now the maximum amount of new financing is
= $480 million + $160 million
= $640 million
Hence, the maximum amount of new financing is $640 million
Jonas doesn't want to keep his savings in an account because he doesn't want to pay bank fees. Which of the following is an argument against Jonas's thinking? Cash allows people to live in the moment. It is better to have cash for emergencies. Money is safer in the bank. The cost of living is increasing yearly.
The correct answer is C. Money is safer in the bank.
Explanation:
The main point or position of Jonas is that savings should be kept in an account due to the costs associated with this. In this context, the only argument that refutes Jonas' position and it is directly related to the main point of Jonas is "Money is safer in the bank" because even if keeping savings in a bank requires to pay fees this guarantees the money will be safe, which does not occur if Jonas keeps his savings at home. Moreover, the safety factor makes the option of the bank better, which refutes Jonas position.
Answer:
Money is safer in the bank.
Explanation:
on its advertisement, a company claims that it has funds in its possession that are in fact not available for payment of losses or claims. the company is guilty of
Answer:
Misrepresentation.
Explanation:
In this scenario, on its advertisement, a company claims that it has funds in its possession that are in fact not available for payment of losses or claims. The company is guilty of misrepresentation.
Misrepresentation can be defined as an untrue or misleading statement of fact made by a party to an individual or group of people to deceitfully lure or induce them to go into a contract. A company stating in its advert that it has funds in its possession but in the true sense or actual fact do not have the funds for payment of losses or claims; such a company is engaging in a fraudulent act and is liable to prosecution in any court of competent jurisdiction.
Zane, a new employee, is eager to get a promotion soon, and he hopes he can quickly rise through the ranks at the company. He decides to ask his supervisor, Mary, for professional development advice. This is an example of which of the following types of communication?
a. Downward
b. None of these are correct.
c. Upward
d. Horizontal
e. Diagonal
Answer:
C
Explanation:
Upward communication is communication from lower hierarchy in the organisation to higher hierarchy in the organisation
Downward communication is communication from higher hierarchy in the organisation to lower hierarchy in the organisation
Horizontal communication is communication within the same organisation hierarchy
Diagonal communication is cross functional communication between employees at different levels of the organisation
1. Chang Industries has 1,900 defective units of product that have already cost $13.90 each to produce. A salvage company will purchase the defective units as they are for $4.90 each. Chang's production manager reports that the defects can be corrected for $6.10 per unit, enabling them to be sold at their regular market price of $20.80. The incremental income or loss on reworking the units is:_______.
a. $18,620 income.
b. $30,210 income.
c. $27,930 income.
2. Poe Company is considering the purchase of new equipment costing $85,500. The projected net cash flows are $40,500 for the first two years and $35,500 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine.
Periods Present Value of 1 at 10% Present Value of anAnnuity of 1 at 10%
1 0.9091 0.9091
2 0.8264 1.7355
3 0.7513 2.4869
4 0.6830 3.1699
a. $(27,665).
b. $(14,857).
c. $27,665.
d. $35,709.
Answer:
1. $18620
2. $35709
Explanation:
1.we are required to find incremental loss.
= Defect(market price - price per unit - correction per unit)
Defect product = 900
Market price = 20.8
Price for each defect unit = 4.9
Price for defect correction = 6.1
1900(20.8-4.9-6.1)
= $18600
2. Present value of cash flow =
40500*0.9091 = 36818.55
40500*0.8264 = 33469.2
35500*0.7513 = 26671.15
35500*0.683 = 24246.5
Total = 121209
We subtract cost of new equipment from this value
121209-85500
= $35709
True or False:
Transactions that result in significant investing and financing activities bu that do not involve cash are reported either directly after the statement of cash flows or in a note to the financial statements
Answer: True
Explanation:
Transactions that do not increase or decrease cash, but that result in significant investing and financing activities, are reported as noncash activities either directly after the cash flow statement or in a note to the financial statements.
It is true that In cash-flow statement, any transaction that do not involve cash are reported directly after the statement or in a note to the financial statements
Non-cash activities includes depreciation amortization, unrealized gain, unrealized loss etc
In accounting, non-cash investing or financing activities are required to be disclosed in the footnotes to the financial statements or within the cash flow statement.
Therefore, It is true that In cash-flow statement, any transaction that do not involve cash are reported directly after the statement or in a note to the financial statements.
Read more about Non-cash activities here
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On July 1, Year 1, Yellow Rose Corp. paid $25,000 cash for a machine and paid an additional 8% sales tax. On the same date, an electrician was paid $1,000 to install custom switches to enhance the functionality of the machine. Yellow Rose estimates a five-year useful life, uses straight-line depreciation, and expects a $2,000 salvage value. The machine was placed in service on October 1, Year 1. Yellow Rose has a calendar year-end.On December 31, Year 2, the machine was sold for $14,000 cash. Depreciation expense for Year 2 was properly recorded.Use the data above to prepare each of the journal entries for Yellow Rose specified below.1. Prepare the journal entry to record the cost of the machine.2. Prepare the journal entry to record the Year 1 depreciation for the machine.3. Prepare the journal entry to record the sale of the machine.
Answer:
Journal entries are given below
Explanation:
July 1, Year 1 (Yellow Rose Corp. purchased a machine)
DEBIT CREDIT
Machine $28,000
Cash $28,000
Working
Cost of machine = Purchase price + Sales tax + Installation
Cost of machine = $25,000 + $2,000 + $1,000
Cost of machine = $28,000
Depreciation for year 1 (October to December)
DEBIT CREDIT
Depreciation Expenses $1,300
Accumulated Depreciation $1,300
Working
Annual Depreciation expense = (Cost - salvage value) / useful life
Annual Depreciation expense = (28000 - 2000) / 5 = $5,200
Depreciation for 3 months
Depreciation = $5,200 x 3/12
Depreciation = $1300
Sale of the machine
DEBIT CREDIT
Cash $14,000
Loss on Sale $7,500
Accumulated Depreciation $6,500
Machinery $28,000
Workng
Gain/Loss on sale = Sale proceed - carrying value
Gain/Loss on sale = 14,000 - 21,500
Loss on sale = $7,500
Carrying value = Cost - Accumulated depreciation
Carrying value = 28,000 - 6500 = 21500
Accumulated depreciation = $1,300 + $5,200 = $6,500
a regional manager for a pet supply chain, is responsible for keeping his employees updated on changes in diversity policies. Jared plays the role of a _______ in managing diversity. disseminator leader liaison figurehead communicator
Answer: disseminator
Explanation:
A disseminator is a person who spread news to others.A leader is a person to lead a group.Liaison is a cooperation that keeps a close working relationship between the people.figurehead - a leader without any power.communicator- person who communicates with others.Here, regional manager acts like a disseminator who keeps his employees updated on changes in diversity policies.
Hence, the correct answer is "disseminator ".
According to the statement as per the question, Jared plays the role of a DISSEMINATOR in managing diversity.
What is Disseminator?
When A disseminator in an organization's setting, is known as an individual who passes or communicates vital or useful information to colleagues and also teammates.
A disseminator may be one who spread the news to others.
A leader may be a person to guide a bunch.
Liaison could be a cooperation that keeps an in-depth working relationship between the people.
Figurehead - a frontrunner with no power.
Communicator- one that communicates with others.
Although, the region of the manager acts as sort of a disseminator who keeps his employees updated on changes in diversity policies.
Therefore, the right answer is "disseminator ".
Find out more information about Disseminator here:
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What's the future value of an investment of $1 a year for each of 4 years, at the end of the last year? Suppose the interest rate is 8%.
Answer:
4.51
Explanation:
We have to calculate fva. The future value of annuity
Here is the formula
Fva = A [( + I)^n-1/I]
Where a = annuity
I = interest rate
N = number of years
Inserting into formula
1[(1+0.08)^4 - 1/0.08]
= 1[(1.36049 - 1)/0.08]
= 4.51
Therefore the future investment is $4.51
A firm has a debt-to-equity of 0.69 and a market-to-book ratio of 3.0. What is the ratio of the book value of debt to the market value of equity?
Answer:
0.23
Explanation:
Debt to Equity Ratio = Total debt/ Total common equity
Market to book Ratio = Market price per share / Book value per share
Book debt to Market equity Ratio = Debt to Equity Ratio / Market to book Ratio
Book debt to Market equity Ratio = 0.69 / 3
Book debt to Market equity Ratio = 0.23
Therefore, the ratio is 0.23
During the year, Next Tec Corp. had the following cash flows: receipt from customers, $15,000; receipt from the bank for long-term borrowing, $6,500; payment to suppliers, $5,900; payment of dividends; $1,700, payment to workers, $2,900; and payment for machinery, $12,500. What amount would be reported for net financing cash flows in the statement of cash flows?
Answer:
$4,800
Explanation:
Next Tech corporation had the following cash flows
Receipt from customers= $15,000
Receipt from bank for long term borrowing= $6,500
Payment to suppliers= $5,900
Payment of dividend= $1,700
Payment to workers= $2,900
Payment for machinery= $12,500
Therefore, the amount that should be reported for the net financing cash flows in the statement of cash flow can be calculated as follows
= Receipt for bank long term borrowing-payment of dividend
= $6,500-$1,700
= $4,800
Hence the amount reported for net financing cash flows in the statement of cash flow is $4,800
Eccles Inc. Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%. Refer to the data for Eccles Inc. What is the firm's cost of equity according to MM with corporate taxes? a. 25.9% b. 32.0% c. 28.8% d. 21.0% e. 23.3%
Answer:
b) 32%
Explanation:
Formula for calculating cost of equity is given as ;
r levered = r levered + ( debt / equity × ( r unlevered - cost of debt) × ( 1 - tax)
r unlevered is the cost of an unlevered equity = 16.0%
Debt = $500,000
Cost of debt = 12%
Equity = unknown
Firstly, we need to calculate the value of the firm and the formula is denoted by;
EBIT ( 1 - tax ) / Unlevered cost of equity + ( debt × tax )
= $100,000 ( 1 - 30% ) / 16% + ( $500,000 × 30% )
= $100,000 ( 0.7 ) /0.16 + $30,000
= $437,500 + $150,000
= $587,500
r levered = 16% + ( $500,000 / ( $587,500 - $500,000 ) × ( 16% - 12% ) × ( 1 - 30%)
= 0.16 + ( $500,000 / 87,500 ) × 0.04 × ( 0.7 )
= 0.16 + 5.71 × 0.04 × 0.7
= 32%
Company X's current assets increased by $40 million from 2007 to 2008, while the company's current liabilities increased by $25 million over the same period. The cash impact of the change in working capital was:
a. A decrease of $15 million
b. An increase of $15 million
c. An increase of $40 million
d. An increase of $25 million
Answer:
b. An increase of $15 million
Explanation:
The computation of the cash impact of the change in working capital is shown below:
As we know that
Working capital = Current assets - current liabilities
So, the change in working capital is
= Increase in current assets - increased in current liabilities
= $40 million - $25 million
= $15 million
Hence, the b option is correct
Some towns limit the number of hours that liquor stores can sell alcohol on Sundays. This restriction could actually help liquor stores by
Answer: decreasing sales and increasing prices.
Explanation:
From the question, we are informed that some towns limit the number of hours that liquor stores can sell alcohol on Sundays. This restriction could actually help liquor stores reduce their sales and thereby lead to the increment of prices.
Since there has been a reduction I the number of hours, it means lesser alcohol will be sold and this can invariably lead to price increase.
Suppose that, in a two-year interest rate swap, the floating rate for each year is determined as the one-year rate at the beginning of the year, but payments are made at the end of the year. According to the relevant yield curve for the swap, the one-year spot rate of interest is 6%. Find the appropriate fixed rate for the two-year swap.
Answer:
¿Hablas español porque no entiendo esto? Si lo haces, ¿puedes decirme en español?
Explanation:
A customer buys a variable annuity and elects a payout option of Life Income with a 20 year period certain. This means that payments will continue for:
Answer:
the annuitant's life, but if he dies before 20 years elapse, payments continue to his heir(s)
Explanation:
An annuity life payment is a financial option that continues until the annuitant dies. a lump sum payment is made by this annuitant which he uses in securing a payout option of Life Income with a 20 year period certain . This annuity would continues for as long as the customer or annuitant is alive, but if he dies before that certain period, Someone else, that is a beneficiary or heir would be entitled to the payment until that period of 20 years elapses.
Angie Pereira and Ferro Schwartz are employees of Free Star, Inc. In February 2019. Angie's gross pay was $6000, and Ferro's gross pay was $7400. All earnings are subject to FICA-OASDI Tax of 6.296 and FICA--Medicare Tax of 1.4596. Which of the following would be included in the entry to record the salaries expense for February?
A. a credit to Salaries Expense for 5830.80
B. a credit to FICA-OASDI Taxes Payable for $830.80
C. a debit to FICA-Medicare Taxes Payable for $830.80
D. a debit to Salaries Payable to employees for $830.80
Answer:
B. a credit to FICA-OASDI Taxes Payable for $830.80
Explanation:
Free Star, Inc. In February 2019.
Angie's gross pay was $6000,
Ferro's gross pay was $7400
Total gross pay $ 13400
FICA-OASDI Tax 6.296 %
$ 13400 * 6.2% = $ 830.80
The recording of the journal entry would require a debit to FICA tax and credit to FICA tax payable .
The FICa tax is 6.2 % which equals to $ 830.80 of the two gross pays.
All the other three options are incorrect.
A job has an observed cycle time of four minutes, a performance rating of 80 percent, and an allowance that is 20 percent of job time. Normal time for the job in minutes is
Answer:
1600 time minutes
Explanation:
80×20=1600
According to the CAPM, what is the market risk premium given an expected return on a security of 15.8%, a stock beta of 1.1, and a risk-free interest rate of 7%? Multiple Choice 7.70% 6.05% 7.00% 8.00%
Answer:
The risk premium on market is 8%
Explanation:
The CAPM or Capital Asset Pricing Model is used to calculate the required rate of return on a stock which is the minimum return that is expected or required by the investors to invest in a stock based on its systematic risk as measured by the beta of the stock.
The formula to calculate r under the CAPM is,
r = rRF + Beta * rpM
Where,
rRF is the risk free raterpM is the risk premium on marketTo calculate the risk premium on market, we will input the available values for r, rRF and beta in the equation above.
0.158 = 0.07 + 1.1 * rpM
0.158 - 0.07 = 1.1 * rpM
0.088 / 1.1 = rpM
rpM = 0.08 or 8%
So, the risk premium on market is 8%
Which of the following statements are TRUE regarding the sale of a long position in a restricted long margin account?
I. 50% of the proceeds of the sale are credited to SMA
II. 100% of the proceeds of the sale are credited to SMA
III. There is a 0% retention requirement of the sale for a restricted account
IV. There is a 50% retention requirement of the sale for a restricted account
a. I and III
b. I and IV
c. II and III
d. II and IV
Answer:
b
Explanation:
50% of the proceeds of the sale are credited to SMA
and
There is a 50% retention requirement of the sale for a restricted account
A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability. The manager believes there is a 75 percent chance the recession will end in six months and profits will return to $400 million. However, there is a 25 percent chance the recession will not end in six months, resulting in a $5 million loss. The expected profits over the next six months are:
Answer:
Expected profit = $298.75 million
Explanation:
To calculate the expected return or expected profits, we will simply multiply the probability of each event by the return expected in that event and take a sum the answers. Thus, the expected profit can be calculated as follows,
Expected profit = Probability of recession ending * Profit if recession ends + Probability of recession not ending * profit or loss if recession does not end
Expected profit = 0.75 * 400 + 0.25 * -5
Expected profit = $298.75 million