Answer:
A
Explanation:
must be in writing
hope it helps
Pizza is a normal good if the demand Group of answer choices
a. for pizza rises when income rises.
b. for pizza rises when the price of pizza falls.
c. curve for pizza slopes upward.
d. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.
Answer:
Option A, For Pizza rise when income rises.
Explanation:
Option A is correct because the income of the consumer and the demand for normal goods are positively related. So when consumer's income increases then the demand for normal goods also increases. If the income falls then the demand for normal goods also falls. Therefore, the movement in the same direction shows that there is a direct relationship between normal goods and the income of the consumer.
On January​ 1, 2018, the Prepaid Insurance account of​ Dogwood, Inc. had a beginning balance of $ 1,800. Three months of insurance premiums remain in this beginning balance. On February​ 21, 2018, the company paid an annual insurance premium in the amount of $ 4,100 for the period beginning March 1. On February​ 28, 2018, the balance in Prepaid Insurance is $ 1,200.A. TrueB. False
Answer:
B. False
Explanation:
Beginning balance
-Period of policy= expired 2 months
-Period of unexpired insurance = 1 month (Out of 3 month, Insurance premium for period "Jan 1 to Feb 28" is expired)
Amount in prepaid insurance insurance= $1800 * 1/3 = $600
Current balance
Period = "0" since period of coverage will start from 1 march
Period of unexpired insurance = 12
Amount in prepaid insurance = 4,100
Thus, Total amount in prepaid insurance for the beginning and Current period= $600 + $4,100 = $4,700
The amount in prepaid insurance is $4700, hence the balance as stipulated as Prepaid Insurance = $ 1,200 is false
Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 700,000 units are expected to be produced taking 0.75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?
Estimated: Department 1 Department 2
Manufacturing overhead costs $3,141,500 $1,571,000
Direct labor hours 167,000 DLH 267,000 DLH
Machine hours 267,000 MH 192,000 MH
a. $10.86 per unit
b. $8.73 per unit
c. $4.22 per unit
d. $11.77 per unit
e. $10 per unit
Answer:
$7.70 per unit
Explanation:
For computing the overhead rate per unit we first need to compute the estimated amount which is as follows
Total manufacturing cost
= Department 1 + department 2
= $31,41,500.00 + $15,71,000.00
= $47,12,500.00
Total machine hours
= Department 1 + department 2
= 267,000 MH + 192,000 MH
= 459000 MH
Now predetermined overhead rate is
= Total manufacturing cost ÷ Total machine hours
= $4,712,500 ÷ 459,000 MHs
= $10.27 per MH
Now overhead per unit is
= Pre-determined overhead rate per MH × Machine Hours required per unit
= $10.27 per MH × 0.75 MHs per unit
= $7.70 per unit
This is the answer but the same is not provided in the given options
Blythe and Cali do business as Diamond Investments. In acting on the firm's behalf,Blythe makes an honest error in overestimating the value of a particular stock purchase. To her firm,Blythe is:__________.
A) liable for breach of the duty of care.
B) liable for breach of the duty of accounting.
C) liable for breach of the duty of accounting.
D) not liable.
Answer:
D) not liable.
Explanation:
Duty of Care is the legal expectation from individuals and businesses in the course of discharging their duties, not to engage in conduct that could be foreseen to predispose others to danger or harm. The Duty of Accounting or accounting responsibility requires an accurate record of transactions. Liability implies being legally answerable. In business transactions, businessmen owe it to their customers to provide their services and products in the best possible way so as to prevent causing harm to them. Employees also owe it to the organization they work for to discharge their duties carefully to avoid causing them loss.
Blythe's honest error in overestimating the value of a particular stock purchase is a mistake that anyone can make and can be easily corrected. Her company would not go the long route of taking her to court over such a mistake. Therefore, Blythe is not liable to her company.
Implicit transaction
Answer:
Dear user,
Answer to your query is provided below
Implicit Transaction are like Rent of owned building, Interest of own capital etc.
Explanation:
These transactions deals with the expenditure incurred on the intangible items.
Implicit transaction refers to the opportunity transaction of using firm's own resources.
Eastern University had the following transactions at the beginning of its academic year: Student tuition and fees were billed in the amount of $7,150,000. Of that amount $4,620,000 was collected in cash. Pell Grants in the amount of $2,012,000 were received by the university. The Pell Grants were applied to student accounts. Student scholarships, for which no services were required, amounted to $570,000. These were applied to student tuition bills at the beginning of each semester. Required: Prepare journal entries to record the above transactions assuming: a. Eastern University is a public university. b. Eastern University is a private university.
Answer:
100
Explanation:
hope this helps
company is considering the purchase of a new piece of equipment for $90,000. Predicted annual net cash inflows from the investment are $36,000 (Year 1), $30,000 (Year 2), $18,000 (Year 3), $12,000 (Year 4), and $6,000 (Year 5). The average operating income generated from the investment over its 5-year life is $20,400. The cash payback period is 3.5 years true false
Answer:
The cash payback period is 3.5 years. The answer is True.
Explanation:
According to the given data we have the following:
Year Cash flows Cumulative Cash flows
0 (90,000) (90,000)
1 36,000 (54,000)
2 30,000 (24,000)
3 18,000 (6000)
4 12000 6000
5 6000 12,000
To calculate the cash payback period we use the following formula:
Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).
Payback period=3+($6,000/$12,000)
Payback period=3.5 years
The cash payback period is 3.5 years. True
At December 31, Folgeys Coffee Company reports the following results for its calendar year. Cash sales $ 901,000 Credit sales 301,000 Its year-end unadjusted trial balance includes the following items. Accounts receivable $ 126,000 debit Allowance for doubtful accounts 5,100 debit Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be (a) 4% of credit sales, (b) 2% of total sales and (c) 7% of year-end accounts receivable.
Answer:
Please find the detailed answer in the explanation section.
Explanation:
A. 4% of credit sales
Bad Debts Expense is 4% of $301,000
0.04 x $301,000
=$12,040
Adjusting entry
Dec. 31
Dr Bad debt expense $12,040
Cr Allowance for Doubtful allowance $12,040.
B. 2% of total sales
Total sales = cash sales + credit sales
$ 901,000 + $ 301,000
=$1,202,000
Bad Debts Expense is 2% of 1,202,000
0.02x $1,202,000
=$24,040
Adjusting entry
Dec. 31
Dr Bad debt expense $24,040
Cr Allowance for Doubtful allowance $24,040.
C. 7% of year-end accounts receivable.
Unadjusted balance is $5,100
Estimated balance = $8,820(7% of $126,000)
Adjusted balance is $13,920($5,100 + $8,820)
Adjusting entry
Dec. 31
Dr Bad debt expense $8,820
Cr Allowance for Doubtful allowance $8,820
Green Company is planning to introduce a new product with a 75 percent incremental unit-time learning curve for production in batches of 1,500 units. The variable labor costs are $55 per unit for the first 1,500-unit batch. Each batch requires 200 hours. There are $15,000 in fixed costs not subject to learning. What is the cumulative total time (labor hours) to produce 3,000 units
Answer:
210 hours
Explanation:
The learning curve rate can be found by log75%
Ln0.75 = 0.12249
1 batch requires 200 hours
The 1500 units batch will require 200 hours
For 3000 units there will be two batches of 1500 units each
200 hours * 2 batches * 0.12249 * 4.5 = 210 hours
After examining a planning gap, firms typically attempt to decide if the time horizon should be increased or decreased. perform a SWOT analysis with their major competitor as the focus. use statistical trend analysis to interpret the results. exploit a positive deviation and correct a negative deviation. adopt a product-market focus.
Answer: exploit a positive deviation and correct a negative deviation
Explanation:
A planning gap is the difference that occurs in revenue or profits gap when current strategies are not changed. The gap analysis can help in the identification of gaps in the market. Therefore, when an organization compares its forecast profits to the company's desired profits, the planning gap will be shown.
When the actual results are lesser than the planned result, the organization would have to fill the gap with a marketing program which has been revised and sometime with new goals. Therefore, the firm can then decide whether to exploit wither a positive deviation and correct a negative deviation.
The next dividend payment by Savitz, Inc., will be $1.68 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $32 per share, what is the required return
Answer:
The answer is 11.25%
Explanation:
Solution
Given that:
The next step to take is to calculate the required rate of return which is shown below:
The required rate = D₁/P₀₀ + g
Thus,
$1.68/$32 + 0.06%
=0.0525 + 0.06
=0.1125 or 11.25%
Therefore, the required rate of return is 11.25%
Required information [The following information applies to the questions displayed below.] Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $8,200 cash and $35,200 of photography equipment in the company in exchange for common stock. 2 The company paid $3,800 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $1,050 cash. 20 The company received $5,031 cash in photography fees earned. 31 The company paid $845 cash for August utilities. Prepare general journal entries for the above transactions.
Answer:
Pose-for-Pics
General Journal Entries:
Aug. 1:
Debit Cash $8,200
Debit Equipment $35,200
Credit Common Stock $43,400
To record the issue of common stock for cash and equipment.
Aug. 2:
Debit Prepaid Insurance $3,800
Credit Cash Account $3,800
To record the payment of insurance covering 24 months.
Aug. 5:
Debit Office Supplies $1,050
Credit Cash Account $1,050
To record the payment for office supplies.
Aug. 20:
Debit Cash Account $5,031
Credit Photography Fees $5,031
To record fees earned.
Aug. 31:
Debit Utilities $845
Credit Cash Account $845
To record payment for August Utilities.
Explanation:
General Journal entries are made to record business transactions as they occur on a daily basis. Journal entries show the General Ledger accounts to be debited and the ones to be credited. They form the initial records of any business transactions.
Merck & Company reported the following from its 2016 financial statements. $ millions 2013 2014 2015 2016 Accounts receivable, net $7,184 $6,626 $6,484 $7,018 Allowance for doubtful accounts 146 153 165 195 a. Compute accounts receivable gross for each year. $ millions 2013 2014 2015 2016 Accounts receivable, gross b. Determine the percentage of allowance to gross account receivables for each year. Round answers to two decimal places (ex: 0.02345 = 2.35%). 2013 2014 2015 2016 % allowance c. Assume that we want to reformulate the balance sheet and income statement to reflect a constant percentage of allowance to gross accounts receivables for each year. Compute the four-year average and then reformulate the balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 5.2 and assume a tax rate of 35%. Four- year average of percentage of allowance to gross accounts receivables. Round answer to two decimal places (ex: 0.02345 = 2.35%)
Answer:
a. Compute accounts receivable gross for each year.
2013 $7,3302014 $6,7792015 $6,6492016 $7,213b. Determine the percentage of allowance to gross account receivables for each year.
2013 1.99%2014 2.26%2015 2.48%2016 2.70%c. 2013 2014 2015 2016
adjusted allowance for $173 $160 $157 $170
doubtful accounts
Balance sheet adjustments:
allowance for doubtful accounts $27 $7 -$8 -$25
accounts receivable net $7,157 $6,633 $6,476 $6,993
deferred tax liability -$9.45 -$2.45 $2.8 $8.75
retained earnings $9.45 $2.45 -$2.8 -$8.75
Income statement adjustments:
bad debt expense $27 $7 -$8 -$25
income tax expense -$9.45 -$2.45 $2.8 $8.75
net income $9.45 $2.45 -$2.8 -$8.75
Explanation:
2013 2014 2015 2016
Accounts receivable, net $7,184 $6,626 $6,484 $7,018
Allowance for doubtful accounts $146 $153 $165 $195
four year average of allowance for doubtful accounts = (1.99 + 2.26 + 2.48 + 2.7) / 4 = 2.36%
3. If the average price of an airline ticket on a certain route rises from $200 to $250, the number of tickets sold drop from 800 to 600. Calculate the price elasticity of demand. Is the demand elastic or inelastic?
Answer:
-Price elasticity of demand=0.77
-The demand is inelastic because the elasticity is 0.77 and this number is less than 1.
Explanation:
The formula to calculate the price elasticity of demand is:
Price elasticity of demand=% change in the quantity demanded/% change in the price
To use this formula you have to calculate the % change in the quantity demanded and % change in the price:
% change in the quantity demanded=(Q2-Q1/((Q2+Q1)/2))*100
% change in the quantity demanded=(250-200/((250+200)/2))*100
% change in the quantity demanded=(50/(450/2))*100
% change in the quantity demanded=(50/225)*100
% change in the quantity demanded=22.22%
% change in the price=(P2-P1/((P2+P1)/2))*100
% change in the price=(600-800/((600+800)/2))*100
% change in the price=(-200/(1400/2))*100
% change in the price=(-200/700)*100
% change in the price=-28.57%
Now, you can replace the values in the formula to to calculate the price elasticity of demand:
Price elasticity of demand= 22.22%/-28.57%
Price elasticity of demand=0.77
The price elasticity of the demand is 0.77. An elastic demand is when the elasticity is greater than 1 and an inelastic demand is when the elasticity is less than one. So, according to this, the demand is inelastic because the elasticity is 0.77 and this number is less than 1.
If all you knew about a production system was that total daily output was 400 units and the total labor necessary to produce the 400 units was 350 hours, and the total materials used were 425 units, what kind of productivity measure could you use to compute productivity?
Answer:
partial measure
Explanation:
Based on the information provided it can be said that the kind of productivity measure that can be used would be a partial measure. Partial Productivity measure relates output to a single input unit. For example, capital productivity deals with output per unit of capital while energy productivity relates output per joule of energy used. In this scenario, we would need labor productivity which is output per hour worked.
For each separate case below, follow the three-step process for adjusting the Accumulated Depreciation account at December 31.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step 2.
Assume no other adjusting entries are made during the year.
A. The Krug Company's Accumulated Depreciation account has a $13,500 balance to start the year. A review of depreciation schedules reveals that $14,600 of depreciation expense must be recorded for the year Accumulated depreciation
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
B. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to be valuedd at the end of the seven years.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
Answer:
The three-step process for adjusting the Accumulated Depreciation account at December 31.
A. The Krug Company's Accumulated Depreciation account has a $13,500 balance to start the year. A review of depreciation schedules reveals that $14,600 of depreciation expense must be recorded for the year Accumulated depreciation
Steps:
1. Determine what the current account balance equals.
The Accumulated Depreciation account has $13,500 credit balance.
2. Determine what the current account balance should equal.
The Accumulated Depreciation account should equal $28,100 ($13,500 + $14,600) = balance + depreciation charge for the year.
3. Record the December 31 adjusting entry to get from step 1 to step 2
Debit Depreciation Expenses $14,600
Credit Accumulated Depreciation $14,600
To record the depreciation charge for the period.
B. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years.
1. Determine what the current account balance equals.
Accumulated Depreciation account should equal zero.
2. Determine what the current account balance should equal.
The Accumulated Depreciation account, credit balance should equal $8,800.
3. Record the December 31 adjusting entry to get from step 1 to step.
Debit Depreciation Expenses $8,800
Credit Accumulated Depreciation $8,800
To record depreciation charge for the period.
Explanation:
Adjusting entries are prepared at the end of an accounting period to being the accounts to the accrual basis from the state of the cash basis. The purpose is to reflect on transactions that took place instead of emphasizing the receipt and payment of cash. These entries, therefore, agree with the accrual concept which requires that transactions be recognized based on the period to which the expense or revenue is incurred or earned instead of when cash payment or receipt takes place.
Super Carpeting Inc. just paid a dividend of $2.64 and its dividend is expected to grow at a constant rate of 5.50% per year. If the required return on Super's stock is 13.75% what is the intristic value of Super's shares?
A- $48.00 per share
B- $32.00 per share
C- $33.76 per share
D- $38.40 per share
Which of the following statements is true about the constant growth model?
A- the constant growth model can be used if a stock's expected constant growth rate is more than its required return
B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return
Use the constant growth model to calculate the appropriate values to complete the following statements about Super Carpeting Inc.
If Super stock is equilibrium, the current expected dividend yield on the stock will be ______ per share
Super's expected stock price one year from today will be ____ per share
If Super's stock is in equilibrium, the current expected capital gains yield on Supers stock will be _____
Answer:
1. C. $33.76 per share
2. B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return
3. 8.25% ; $35.62 ; 5.5%
Explanation:
1. Using the Constant Growth Model to calculate the intrinsic value would be best given the above values.
The formula is;
Value = Next Dividend / (Required Return - Growth rate)
Value = (2.64 * ( 1 + 5.5%)) / ( 13.75% - 5.5%)
Value = 2.7852/8.25%
Value = $33.76
2. Going by the formula, if the expected growth rate is more than the required return, the intrinsic value would be a negative number and a stock's price cannot go below 0. The growth rate has to be less than the required return for this to work.
3. At Equilibrium, the stock dividend is growing as it should.
Dividend Yield should therefore be;
= Next Dividend / Stock Value * 100
= (2.7852 / 33.76) * 100
= 8.25%
Stock Price should grow at the growth rate so;
= 33.76 * ( 1 + 0.055)
= $35.62
Gains yield refers to what rate the stock will change in value. Growth rate is 5.5% so that will be the answer.
Vernon is a cash basis taxpayer with a calendar tax year. On October 1, 2019, Vernon entered into a lease to rent a building for use in his business at $3,000 a month. On that day Vernon paid 18 months' rent on the building, a total of $54,000 ($3,000 × 18 months). How much may Vernon deduct for rent expense on his 2019 tax return?
Answer:
$9,000
Explanation:
Calculation of the amount Vernon deduct for rent expense on his 2019 tax return will be :
Rent(lease)×Numbers of months used
Where:
Rent (lease)= 3,000
Numbers of months=3
Hence:
3,000×3=$9,000
Therefore the amount Vernon deduct for rent expense on his 2019 tax return is $9,000 which is 3000×3 month.
The 3 months is from 1st October to 31st December.
The fiscal year-end unadjusted trial balance for Collins Company is found on the trial balance tab. Collins Company uses a perpetual inventory system. It categorizes the following accounts as selling expenses: depreciation expense—store equipment, sales salaries expense, rent expense—selling space, store supplies expense, advertising expense. It categorizes the remaining expenses as general and administrative.
Descriptions of items that require adjusting entries on January 31 follow.
A) Store supplies still available at fiscal year-end amount to $2,950.
B) Expired insurance, an administrative expense, for the fiscal year is $1,880.
C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.
D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.
Missing information:
Cash 1,000
Merchandise inventory 12,500
Store supplies 5,800
Prepaid insurance 2,400
Store equipment 42,900
Accumulated depreciation - Store equip. 15,250
Accounts payable 10,000
Common stock 5,000
Dividends 2,200
Retained earnings 27,000
Sales 111,950
Sales discounts 2,000
Sales returns and allowances 2,200
Cost of goods sold 38,400
Salaries expense 35,000
Rent expense 15,000
Advertising expense 9,800
Total 169,200 169,200
Answer:
the closing entries should be:
Dr Sales revenues 107,750
Cr Income summary 107,750
Dr Income summary 110,270
Cr Cost of goods sold 39,340
Cr Salaries expense 35,000
Cr Rent expense 15,000
Cr Advertising expense $9,800
Cr Supplies expense 2,950
Cr Insurance expense 1,880
Cr Depreciation expense 6,300
Dr Retained earnings 2,520
Cr Income summary 2,520
Dr Retained earnings 2,200
Cr Dividends 2,200
Explanation:
A) Store supplies still available at fiscal year-end amount to $2,950.
Dr Supplies expense 2,950
Cr Supplies 2,950
B) Expired insurance, an administrative expense, for the fiscal year is $1,880.
Dr Insurance expense 1,880
Cr Prepaid insurance 1,880
C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.
Dr Depreciation expense 6,300
Cr Accumulated depreciation - Store equip. 6,300
D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.
Dr Shrinkage expense or COGS (I prefer to use COGS) 940
Cr Merchandise inventory 940
the adjusted income statement:
Revenues:
Sales $111,950 Sales discounts ($2,000) Sales returns and allowances ($2,200) $107,750Cost of goods sold ($39,340)
Gross profit $68,410
Operating expenses:
Salaries expense ($35,000) Rent expense ($15,000) Advertising expense ($9,800) Supplies expense ($2,950)Insurance expense ($1,880)Depreciation expense ($6,300) ($70,930)Net loss ($2,520)
Ronald is an assistant librarian at the local public library but hopes to be able to become a head librarian in the near future. For him to accomplish this, he must move to another location. To help him find openings in other locations, he has joined the American Library Association and will be attending their national conference next month. He is excited about meeting and talking with fellow librarians about their jobs across the United States. This is an illustration of
Answer:
Ronald, the Librarian
What Ronald is doing "is an illustration of" Networking in practise.
Explanation:
According to investopedia.com, "Networking is the exchange of information and ideas among people with a common profession or special interest, usually in an informal social setting. Networking often begins with a single point of common ground."
The advantages of networking include, strengthening connections through information sharing, acquisition of fresh ideas, knowledge, and perspectives, avenue for career advancement and access to job opportunities, and the reception of career advice and support. It also builds one's confidence through the process of interaction with more knowledgeable professionals. Those who seek, find. And "iron sharpens iron," as people rob minds.
Networking also helps to develop and improve skill set, stay on top of the latest trends in your industry, keep a pulse on the job market, meet prospective mentors, partners, and clients, and gain access to the necessary resources that will foster your career development.
. Nestle Co. paid $130,000 for a machine used to mill oats. The annual contribution margin from oat sales is $60,000. The machine could be sold for $80,000. The opportunity cost of producing the oats is ________. Question 20 options: $130,000 $0 $80,000 $20,000 $60,000
Answer:$80,000
Explanation:
Opportunity cost refers to an alternative forgone that is the value one could have received but declined to take the next best alternative according to his or her preference.
Here , Nestle has two choices to make, it can decide to produce oats or sell the machine, but taking the option of producing oats leaves the option of selling the machine at $80,000 as the Opportunity cost.
Under which conditions would a plant manager elect to use a fixed-order quantity model as opposed to a fixed-time period model? What are the disadvantages of using a fixed-time period ordering system?
Answer: The answers are provided below
Explanation:
The fixed order quantity system is an arrangement whereby the inventory level is typically continuously monitored and also the replenishment stock is ordered based on the previously-fixed quantities while for a fixed time period model, the inventory levels are checked on regular basis for the items e.g every week.
A plant manager may elect to use a fixed-order quantity model as opposed to a fixed-time period model when the holding cost is much higher. Typically, fixed order quantity model is typically used for the costly items.
The disadvantages of using a fixed-time period ordering system are:
i. It doesn't consider market structure changes
ii. There should be a high level of inventory in order to avoid stock out.
iii. It leads to rigidity in the system as it makes the decision on time period complex when there's need for urgency.
Edison has just paid an annual dividend of $3 per share. If the expected growth rate for Con Ed is 10%, and your required rate of return is 16%, how much are you willing to pay for this stock
Answer:
$55 per share
Explanation:
This can be calculated using the dividend discount model (DDM) formula as follows:
P = D1/(r - g) ............................ (1)
Where,
P = Current stock price or the amount you are willing to pay today
D1 = Next dividend = Current dividend * (1 + Growth rate) = $3 * (1 + 0.10) = $3.30
r = required return = 16%. or 0.16
g = growth rate = 10% = 0.10
Substituting the values into equation (1), we have:
P = $3.30 / (0.16 - 0.10) = $55 per share
Therefore, you are willing to pay $55 per share for this stock.
Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. The Tannenhill Company data are expressed in dollars. The electronics industry averages are expressed in percentages.
1 Tannenhill Company Electronics Industry Average
2 Sales $4,000,000 100%
3 Cost of goods sold $2,120,000 60%
4 Gross profit $1,888,000 40%
5 Selling expenses $1,080,000 24%
6 Administrative expenses $640,000 14%
7 Total operating expenses $1,720,000 38%
8 Income from operations $160,000 2%
9 Other income $120,000 3%
10 $280,000 5%
11 Other expense $80,000 2%
12 Income before income tax $200,000 3%
13 Income tax expense $80,000 2%
14 Net income $120,000 1%
A. Prepare a common-size income statement comparing the results of operations for Tannenhill Company with the industry average. Enter all amounts as positive numbers.
B. As far as the data permit, comment on significant relationships revealed by the comparisons. As far as the data permit, comment on significant relationships revealed by the comparisons.
Answer:
Explanation:
Tannenhill % Industry
Sales 4,000,000 100 100
Cost of goods 2,120,000 53 60
Gross profit 1,880,000 47 40
Selling Expenses 1,080,000 27 24
Admin Expenses 640,000 16 14
Operating Expenses 1,720,000 43 38
Operating profit 160,000 4 2
Other income 120,000 3 3
Total income 280,000 7 5
Other Expenses 80,000 2 2
Income before tax 200,000 5 3
Income tax 80,000 2 2
Net Income 120,000 3 1
B)
Despite the fact that the selling and admin expenses pf Tannenhill was higher than the industry average , it had a better performance in the cost of goods management which in effect caused Tannenhill to record a greater net income percentage compared to the industry performance.
The other income and expenses was the same with the industry average , hence no impact on the overall performance.
Exercise 5-10 Lower of cost or market LO P2 Martinez Company's ending inventory includes the following items. Product Units Cost per Unit Market per Unit Helmets 36 $ 58 $ 54 Bats 29 76 82 Shoes 50 95 99 Uniforms 54 40 40 Compute the lower of cost or market for ending inventory applied separately to each product.
Answer:
Helmets $ 1,944
Bats $ 2,204
Shoes $ 4,750
Uniforms $ 2,000
Explanation:
We will compare between the cost and the proceeds from sale of the units. As accounting wants to represent reality it cannot value the company goods higher than it can acceess to it in the market regardless of the purchase cost.
This may generate losses to represent the decrease in the overall value of the good.
Helmets 36 $ 58 $ 54
Helmets cost is higher than market so we recognize a loss an valued at $54
36 units x $54 = $1,944
Bats 29 $76 $82
Bats productions cost is lower so we keep it.
29 units x $76 = $2,204
Shoes 50 $95 $99
Shoes also has a lower production cost
50 units x $95 = $4,750
Uniforms 54 $40 $40
As they are the same we just leave with $40
50 units x $40 = $2000
Five years ago you took out a 30-year mortgage with an APR of 6.5% for $200,000. If you were to refinance the mortgage today for 20 years at an APR of 4.25%, how much would your monthly payment change by?
Answer:
-$104.79
Explanation:
Current Mortgage Payment:
P/Y = 12,
N = 360,
I/Y = 6.5,
PV = $200,000,
Solve
for PMT = $1,264.14
Current Mortgage Balance:
P/Y = 12,
N = 300,
I/Y = 6.5,
PMT = $1,264.14,
Solve
for PV = $187,221.9
New Mortgage Payment:
P/Y = 12,
N = 240,
I/Y = 4.25,
PV = $187,222.54,
Solve
for PMT = $1,159.35
Current Payment - New Payment
= $1,159.35- $1,264.14
= -$104.79
On January 2, 2021, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $50,125. The expenditures made to acquire the asset were as follows:
Purchase price $220,000
Freight charges 6800
Installation charges 10,000
Jackson's policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment's life and then switch to straight line halfway through the equipment's life.
Required:
Calculate depreciation for each year of the asset's eight-year life.
Answer:
Jackson Company
Calculation of the Depreciation for each year:
a) Using the double-declining-balance (DDB) method of depreciation:
1st year, the depreciation charge = $59,200 ($236,800 x 25%)
2nd year, the depreciation charge = $44,400 ($236,800 - 59,200) x 25%
3rd year, the depreciation charge = $33,300 ($236,800 - 103,600) x 25%
4th year, the depreciation charge = $24,975 ($236,800 - 136,900) x 25%
5th year, the usage of straight-line method commences:
Depreciation charge = $58,100/4 = $14,525
6th year, depreciation charge = $14,525
7th year, depreciation charge = $14,525
8th year, depreciation charge = $14,525
Explanation:
a) Asset's recognized cost:
Purchase price $220,000
Freight charges 6,800
Installation charges 10,000
Total cost = $236,800
b) Useful life = 8 years, with salvage value of $50,125.
c) Double-declining balance depreciation rate = 25% (100/8 * 2)
d) Accumulated Depreciation at the end of:
1st year = $59,200
2nd year = $103,600 ($59,200 + 44,400)
3rd year = $136,900 ($103,600 + 33,300)
4th year = $128,575 ($136,900 + 24,975)
5th year = $143,100 ($128,575 + 14,525)
6th year = $157,625 ($143,100 + 14,525)
7th year = $172,150 ($157,625 + 14,525)
8th year = $186,675 ($172,150 + 14,525)
e) Book value of asset at the end of the fourth year:
Cost = $236,800
Accumulated depreciation $128,575
Book value = $108,225
Salvage value = $50,125
Straight-line depreciable amount = $58,100
f) The double-declining-balance depreciation method is an accelerated depreciation method that expenses the cost of an asset more rapidly by multiplying the straight-line method's rate by 2 and applying this rate on the reducing balance. On the other hand, the straight-line depreciation method uses the same amount of depreciation each year over an asset's useful life. The double-declining balance method does not take into consideration the salvage value unlike the straight-line depreciation method until towards the end of the useful life of the asset.
Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC, is $7,000. This includes his $1,900 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $14,000. If Tom bought Bob's LLC interest for $11,000, what would Tom's outside basis be in Freedom, LLC
Answer: $12,900
Explanation:
From the question, we are told that Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about buying his LLC interest. Bob's outside basis in Freedom, LLC, is $7,000 which includes his $1,900 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $14,000. We are further told that Tom bought Bob's LLC interest for $11,000.
Tom's outside basis be in Freedom, LLC will be the amount that he paid for Bob's LLC interest plus the share of LLC’s debt. This will be:
= $11,000 + $1,900
= $12,900
Crane Company incurs these expenditures in purchasing a truck: cash price $23,030, accident insurance (during use) $1,690, sales taxes $1,380, motor vehicle license $670, and painting and lettering $2,140. What is the cost of the truck
Answer:
$27,220
Explanation:
Cost of the truck includes : Cash price + sales tax + motor vehicle license + painting and lettering
accident insurance would not be added because its a revenue expenditure as it will reoccur after a year.
$23,030 + $670 + $2,140 + $1,380 = $27,220
I hope my answer helps you
Answer:
$27,220
Explanation:
From the question above Crane company incurs the following expenditures in purchasing a truck
Cash price = $23,030
Accident insurance during use= $1,690
Sales tax= $1,380
Motor vehicle license= $670
Painting and lettering= $2,140
Therefore, the cost of the truck can be calculated as follows
= $23,030+$1,380+$670+$2,140
= $27,220
The accident insurance is not added to find the cost of the truck because it doesn't add any value and can happen again the following year.
Hence the cost of the truck is $27,220
Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows:
Direct materials $54.00
Direct labor 35.00
Variable overhead 40.00
Fixed overhead 34.00
Total $163.00
Crayola Technologies Inc. has contacted Rubium with an offer to sell 6,000 of the subassemblies for $144.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives?
Answer:
If the company buys the units, income will decrease by $1,000.-
Explanation:
Giving the following information:
Direct materials $54.00
Direct labor 35.00
Variable overhead 40.00
Crayola Technologies Inc. has contacted Rubium with an offer to sell 6,000 of the subassemblies for $144.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal.
First, we need to determine the total cost of making the units:
Total cost= total variable costs + avoidable fixed costs
Total costs= (54 + 35 + 40)*6,000 + 89,000= $863,000
Now, the cost of buying:
Total cost= 6,000*144= $864,000
If the company buys the units, income will decrease by $1,000.-