Answer:
(c) deglobalization and the shift of production from places outside the U.S. to places within the U.S.
Explanation:
The secular aspect of a trend is the main driver of that trend, and the secular aspect of the slowness in increases in U.S. labor productivity is not deglobalization and the shift of production from outside the U.S. to inside the U.S., since what has been happening in the latest decades is exactly the opposite.
Globalization has led many U.S. jobs, specially in manufacturing, to be shipped away from the country to other places where labor costs are cheaper, like China, Vietnam and Malasya.
Presented below are certain account balances of Oriole Products Co.
Rent revenue $6,520 Sales discounts $8,240
Interest expense 13,460 Selling expenses 99,440
Beginning retained earnings 114,900 Sales revenue 407,700
Ending retained earnings 134,130 Income tax expense 25,015
Dividend revenue 71,910 Cost of goods sold 188,927
Sales returns and allowances 12,910 Administrative expenses 75,820
Allocation to noncontrolling interest 20,040
From the foregoing, compute the following:
a.Total net revenue:_________
b. Net income:__________
c. Income attributable to controlling stockholders:___________
Answer:
a. Sales revenue 407700
Sales discounts 8240
Sales returns and allowances 12910 (21150)
Net sales 386,550
Rent revenue 6520
Dividend revenue 71910
Total net revenue $464980
b. Total net revenue $464980
Less: Expenses
Cost of goods sold 188927
Selling expenses 99440
Administrative expenses 75820
Interest expense 13460
Income tax expense 25015 $402662
Net income $62318
(c) Total consolidated net income $62318
Less: Allocation to noncontrolling interest $20040
Income attributable to controlling $42278
stockholders
Sutton Pointers Corporation expects to begin operations on January 1, 2015; it will operate as a specialty sales company that sells laser pointers over the Internet. Sutton expects sales in January 2015 to total $300,000 and to increase 15 percent per month in February and March. All sales are on account. Sutton expects to collect 66 percent of accounts receivable in the month of sale, 23 percent in the month following the sale, and 11 percent in the second month following the sale.
Required:
a. Prepare a sales budget for the first quarter of 2015.
b. Determine the amount of sales revenue Sutton will report on the first 2015 quarterly pro forma income statement.
c. Prepare a cash receipts schedule for the first quarter of 2015. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
d. Determine the amount of accounts receivable as of March 31, 2015. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Answer:
a. January= $300,000, February = $345,000 and March = $396,750
b. $1,041,750
c. January= $198,000, February = $296,700 and March = $374,205
d. $22,545
Explanation:
Sales Budget [to determine sales revenue]
January = $300,000
February ($300,000 × 1.15) = $345,000
March ($300,000 × 1.15^2) = $396,750
Revenue for the quarter = $1,041,750
Cash Receipts Schedule [to determine receipts and receivables balance]
January February March
Sales $300,000 $345,000 $396,750
Receipt - 66% ($198,000) ($227,700) ($261,855)
Receipt - 23 % - ($69,000) ($79,350)
Receipt - 11 % - - ($33,000)
Total Receipts ($198,000) ($296,700) ($374,205)
Account Receivable $102,000 $48,300 $22,545
The text presents five signs of organizational culture: mission statement, stories & language, physical layout, rules & policies, and rituals. Select an organization where you have worked or are familiar with and identify an example of each sign of organizational culture. How do you think each of these things conveyed the organizational culture to employees and customers/clients.
Answer:
Face book
mission statement: give people the power to build community and bring the world closer together.
physical layout: How Face book is constructed.
rules & policies: The employees are required to act honestly, lawfully, ethically and in favor of the company they represent.
rituals: Face book looks for innovation and breaking the status quo, and to do so Face book employees are invited to paint, create and decore their offices and public spaces with own made art.
Explanation:
Organizational culture is what we call the mix of core values and actions that make up an organization, it's mostly and widely used for companies but it also applies to schools, governments, non-profits, and any group of people working together towards a goal.
The mission statement is basically what the organization wants to achieve, or its dreamed goal.
Stories and language are the speech that the organization communicates to the audience or anyone interacting with it.
The physical layouts are the colors and buildings, apps, or any way of direct interaction that any person could have with the organization.
Rules and policies are what dictate the behavior of all the employees and people related to the organization.
And rituals are the activities that the organization does in order to reinforce the values and policies they try to live day by day, doing your own painting is one example of these rituals.
Mattola Company is giving each of its employees a holiday bonus of $200 on December 13, 20-- (a nonpayday). The company wants each employee's check to be $200. The supplemental tax percent is used.
Nobody has capped for OASDI prior to the bonus check.
a. What will be the gross amount of each bonus if each employee pays a state income tax of 2.8% (besides the other payroll taxes)? You may need to add one penny to the gross so that net bonus exactly equals $200. Round your calculations and final answers to the nearest cent.
b. What would the net amount of each bonus check be if the company did not gross-up the bonus? Round your intermediary calculations to the nearest cent.
Answer:
a. Gross amount of each bonus = $309.84
b. Net amount of each bonus = $129.10
Explanation:
Since the supplemental tax percent is used, the following are the relevant tax rates to be applied in the calculations:
STP = Supplemental tax percent = 25%
FICASO = Federal Insurance Contributions Act (FICA) social security tax = 6.2%
FICAM = Federal Insurance Contributions Act (FICA) Medicare tax = 1.45%.
SIT = State income tax = 2.8%
We therefore proceed as follows:
a. What will be the gross amount of each bonus if each employee pays a state income tax of 2.8% (besides the other payroll taxes)? You may need to add one penny to the gross so that net bonus exactly equals $200. Round your calculations and final answers to the nearest cent.
Given the tax rates above, the following formula is used to calculate the gross amount of each bonus:
Gross amount of each bonus = Holiday bonus amount / (100% - STP - FICASO - FICAM - SIT) …… (1)
Substituting the relevant values into equation (1), we have:
Gross amount of each bonus = $200/ (100% - 25% - 6.20% - 1.45% - 2.8%)
Gross amount of each bonus = $200 / 64.55%
Gross amount of each bonus = $309.837335398916
To the nearest cent which implies to two decimal places, we have:
Gross amount of each bonus = $309.84
b. What would the net amount of each bonus check be if the company did not gross-up the bonus? Round your intermediary calculations to the nearest cent.
The net amount of each bonus can be calculated using the following formula:
Net amount of each bonus = Holiday bonus amount * (100% - STP - FICASO - FICAM - SIT) …… (2)
Substituting the relevant values into equation (2), we have:
Net amount of each bonus = $200 * (100% - 25% - 6.20% - 1.45% - 2.8%)
Net amount of each bonus = $200 * 64.55%
Net amount of each bonus = $129.10
BMW’s vehicle-assembly facility in South Carolina represents a direct investment inside the United States by the German manufacturer. This facility is an example of:
Answer:
Foreign direct investment.
Explanation:
BMW’s vehicle-assembly facility in South Carolina represents a direct investment inside the United States by the German manufacturer. This facility is an example of foreign direct investment.
A foreign direct investment (FDI) can be defined as an investment made by an individual or business entity (investor) into an investment market (industry) located in another country. The investor here, shares a different country of origin from the country where his investment is located.
In a foreign direct investment (FDI), an investor must establish his business, factory and operations in a foreign country or acquire assets in a business that is being operated in a foreign country.
Additionally, foreign direct investment (FDI) are categorized into three (3) main types and these are;
1. Vertical FDI: it involves establishing a different business that is however similar to the main business owned by the investor.
2. Horizontal FDI: it involves establishing the same type of business in a foreign country as owned in the investor's country.
3. Conglomerate FDI: it involves establishing a business that is completely different in another (foreign) country.
Cost of Goods Sold and Income Statement Schuch Company presents you with the following account balances taken from its December 31 adjusted trial balance:
Inventory, January 1 $40,000 Purchases returns $3,500
Selling expenses 35,000 Interest expense 4,000
Purchases 110,000 Sales discounts taken 2,000
Sales 280,000 Gain on sale of property (pretax) 7,000
General and administrative expenses 22,000 Freight-in 5,000
Additional data:
1. A physical count reveals an ending-inventory of $22,500 on December 31.
2. Twenty-five thousand shares of common stock have been outstanding the entire year.
3. The income tax rate is 30% on all items of income.
Required:
a. As a supporting document for Requirements 2 and 3, prepare a separate schedule for Schuch's cost of goods sold.
b. Prepare a 2013 multiple-step income statement.
c. Prepare a 2013 single-step income statement.
Answer:
Schuch Company
a) Schedule of Cost of Goods Sold
Inventory, January 1 $40,000
Purchases 110,000
Purchases returns -3,500
Freight-in 5,000
Cost of goods available for sale $151,500
less Inventory, December 31 22,500
Cost of goods sold $129,000
b) Multi-step Income Statement
For the year ended December 31, 2013:
Net Sales Revenue $278,000
Cost of Goods Sold 129,000
Gross profit $149,000
Expenses:
Selling expenses 35,000
General & admin exp. 22,000 57,000
Operating profit $92,000
Interest expense 4,000
Income after interest expense $88,000
Gain on sale of property (pretax) 7,000
Comprehensive income before tax $95,000
Income Tax (30%) 28,500
Net income $66,500
EPS = $2.66
c) Single-step Income Statement
For the year ended December 31, 2013:
Net Sales Revenue $278,000
Gain on sale of property (pretax) 7,000
Total revenue and gains $285,000
Cost of Goods Sold 129,000
Selling expenses 35,000
General & admin exp. 22,000
Interest expense 4,000
Total expenses $190,000
Income before taxes $95,000
Income Taxes (30%) 28,500
Net income $66,500
EPS = $2.66
Explanation:
a) Data and Calculations:
December 31 adjusted trial balance:
Inventory, January 1 $40,000
Purchases returns $3,500
Selling expenses 35,000
Interest expense 4,000
Purchases 110,000
Sales discounts taken 2,000
Sales 280,000
Gain on sale of property (pretax) 7,000
General and administrative expenses 22,000
Freight-in 5,000
Additional data:
Ending Inventory $22,500
Common Stock outstanding = 25,000
Income tax rate = 30%
Sales $ 280,000
Sales discounts taken 2,000
Net Sales Revenue $278,000
Blago Wholesale Company began operations on January 1, 2017, and uses the average cost method in costing its inventory. Management is contemplating a change to the FIFO method in 2018 and is interested in determining how such a change will affect net income. Accordingly, the following information has been developed:
2017 2018
Final inventory:
Average cost $150,000 $255,000
FIFO 160,000 270,000
Condensed income statements for Blago Wholesale appear below:
2017 2018
Sales $1,000,000 $1,200,000
Cost of goods sold 600,000 720,000
Gross profit 400,000 480,000
Selling, general, and administrative 250,000 275,000
Net income $150,000 $205,000
Required:
Based on this information, what would 2018 net income be after the change to the FIFO method?
Answer:
Blago Wholesale Company
New Net income for 2018 = $220,000
Explanation:
Data and Calculations:
Final inventory: 2017 2018
Average cost $150,000 $255,000
FIFO 160,000 270,000
Difference $10,000 $15,000
2017 2018
Sales $1,000,000 $1,200,000
Cost of goods sold 600,000 720,000
Gross profit 400,000 480,000
Selling, general, and
administrative 250,000 275,000
Net income $150,000 $205,000
2018 Net Income after the change to the FIFO method:
Cost of goods sold (weighted average) 720,000
less adjustment for change of method 15,000
Adjusted cost of goods sold 705,000
Income Statement after the change
Sales $1,200,000
Cost of goods sold 705,000
Gross profit 495,000
Selling, general, and
administrative 275,000
Net income $220,000
Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system.
A hastily prepared report for the Mixing Department for April appears below:
Units to be accounted for:
Work in process, April 1 (materials 90% complete; conversion 80% complete) 5,700
Started into production 34,100
Total units to be accounted for 39,800
Units accounted for as follows:
Transferred to next department 29,400
Work in process, April 30 (materials 70% complete; conversion 50% complete) 10,400
Total units accounted for 39,800
Cost Reconciliation Cost to be accounted for:
Work in process, April 1 $15,276
Cost added during the month 96,248
Total cost to be accounted for $111,524
Cost accounted for as follows:
Work in process, April 30 $20,384
Transferred to next department 91,140
Total cost accounted for $111,524
Required:
a. What were the Mixing Department's equivalent units of production for materials and conversion for April?
b. What were the Mixing Department's cost per equivalent unit for materials and conversion for April? The beginning inventory consisted of the following costs: materials, $10,545; and conversion cost, $4,731. The costs added during the month consisted of: materials, $64,649; and conversion cost, $31,599.
c. How many of the units transferred out of the Mixing Department in April were started and completed during that month?
d. The manager of the Mixing Department stated, "Materials prices jumped from about $1.65 per unit in March to $2.15 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.15 per unit for the month." Should this manager be rewarded for good cost control?
Answer:
a. EU:
materials = 29,400 + 7,280 = 36,680
conversion = 29,400 + 5,200 = 34,600
b. cost per EU:
materials = $75,194 / 36,680 = $2.05
conversion = $36,330 / 34,600 = $1.05
c. units started and completed during April = 23,700
d. no, he didn't do anything, When a company uses the weighted average process costing method, the cost of beginning WIP is used to determine the cost per equivalent unit. On the other hand, FIFO process costing method doesn't, it only considers costs incurred during the month to calculate cost per equivalent unit.
Explanation:
beginning WIP 5,700 $15,276
materials, $10,545
conversion cost, $4,731
units started 34,100
costs added during the month = $96,248
materials, $64,649
conversion cost, $31,599
units transferred out 29,400 $91,140
ending WIP 10,400 $20,384
materials 70% = 7,280 EU
conversion 50% = 5,200 EU
EU:
materials = 29,400 + 7,280 = 36,680
conversion = 29,400 + 5,200 = 34,600
total cost for materials = $64,649 + $10,545 = $75,194
total cost for conversion = $31,599 + $4,731 = $36,330
cost per EU:
materials = $75,194 / 36,680 = $2.05
conversion = $36,330 / 34,600 = $1.05
units started and completed during April = 29,400 - 5,700 = 23,700
Leach Inc. experienced the following events for the first two years of its operations:
Year 1:
Issued $10,000 of common stock for cash.
Provided $78,000 of services on account.
Provided $36,000 of services and received cash.
Collected $69,000 cash from accounts receivable.
Paid $38,000 of salaries expense for the year.
Adjusted the accounting records to reflect uncollectible accounts expense for the year.
Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible.
Closed the revenue account. Closed the expense account.
Year 2:
Wrote off an uncollectible account for $650.
Provided $88,000 of services on account.
Provided $32,000 of services and collected cash.
Collected $81,000 cash from accounts receivable.
Paid $65,000 of salaries expense for the year.
Adjusted the accounts to reflect uncollectible accounts expense for the year.
Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible.
Required
a. Record the Year 1 and Year 2 events in general journal form and post them to T-accounts.
b. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1 and Year 2.
c. What is the net realizable value of the accounts receivable at Year 1 and Year 2?
Answer:
a.1) year 1
Issued $10,000 of common stock for cash.
Dr cash 10,000
Cr common stock 10,000
Provided $78,000 of services on account.
Dr accounts receivable 78,000
Cr service revenue 78,000
Provided $36,000 of services and received cash.
Dr cash 36,000
Cr service revenue 36,000
Collected $69,000 cash from accounts receivable.
Dr cash 69,000
Cr accounts receivable 69,000
Paid $38,000 of salaries expense for the year.
Dr wages expense 38,000
Cr cash 38,000
Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible.
Dr bad debt expense 450
Cr accounts receivable 450
Closed the revenue account. Closed the expense account.
Dr service revenue 114,000
Cr income summary 114,000
Dr income summary 38,450
Cr wages expense 38,000
Cr bad debt expense 450
Dr income summary 75,550
Cr retained earnings 75,550
b.1) income statement year 1Service revenue $114,000
Expenses:
Wages $38,000Bad debt $450 ($38,450)Net income $75,550
balance sheet year 1Assets:
Cash $77,000
Accounts receivable $8,550
total assets $85,550
Equity:
Common stock $10,000
Retained earnings $75,550
total equity $85,550
statement of cash flows year 1Cash flows form operating activities:
Net income $75,550
adjustments:
Increase in accounts receivable ($8,550)
net cash from operating activities $67,000
Cash flow from financing activities:
Common stocks issued $10,000
Net cash increase $77,000
beginning cash balance $0
Ending cash balance $87,000
a.2) Year 2:
Wrote off an uncollectible account for $650.
Dr bad debt expense 650
Cr accounts receivable 650
Provided $88,000 of services on account.
Dr accounts receivable 88,000
Cr service revenue 88,000
Provided $32,000 of services and collected cash.
Dr cash 32,000
Cr service revenue 32,000
Collected $81,000 cash from accounts receivable.
Dr cash 81,000
Cr accounts receivable 81,000
Paid $65,000 of salaries expense for the year.
Dr wages expense 65,000
Cr cash 65,000
Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balance will be uncollectible.
Dr bad debt expense 745
Cr accounts receivable 745
b.2) income statement year 2Service revenue $120,000
Expenses:
Wages $65,000Bad debt $1,395 ($38,450)Net income $53,605
balance sheet year 2Assets:
Cash $125,000
Accounts receivable $14,155
total assets $139,155
Equity:
Common stock $10,000
Retained earnings $129,155
total equity $139,155
statement of cash flows year 2Cash flows form operating activities:
Net income $53,605
adjustments:
Increase in accounts receivable ($5,605)
net cash from operating activities $48,000
Net cash increase $48,000
beginning cash balance $77,000
Ending cash balance $125,000
c) net realizable value of accounts receivable at year 1 = $8,550
net realizable value of accounts receivable at year 2 = $14,155
a. Recording the Year 1 and Year events in general journal form and posting to T-accounts for Leach Inc. are as follows:
General JournalYear 1:
Debit Cash $10,000
Credit Common stock $10,000
Debit Accounts Receivable $78,000
Credit Service Revenue $78,000
Debit Cash $36,000
Credit Service Revenue $36,000
Debit Cash $69,000
Credit Accounts Receivable $69,000
Debit Salaries Expense $38,000
Credit Cash $38,000
Adjustment:
Debit Bad Debts Expense $450
Credit Uncollectible Allowance $450
Year 2:
Debit Accounts Receivable $650
Credit Uncollectible Allowance $650
Debit Accounts Receivable $88,000
Credit Service Revenue $88,000
Debit Cash $32,000
Credit Service Revenue $32,000
Debit Cash $81,000
Credit Accounts Receivable $81,000
Debit Salaries Expense $65,000
Credit Cash $65,000
Adjustment:
Debit Bad Debts Expense $968
Credit Uncollectible Allowance $968
T-accounts:Year 1:
Cash AccountCommon stock $10,000
Service Revenue $36,000
Accounts Receivable $69,000
Salaries Expense $38,000
Balance $77,000
Uncollectible AllowanceBad debts Expense $450
Common Stock
Cash account $10,000
Accounts Receivable
Service Revenue $78,000
Cash $69,000
Balance $9,000
Service RevenueAccounts Receivable $78,000
Cash $36,000
Income Summary $114,000
Salaries ExpenseCash $38,000
Income Summary $38,000
Bad Debts Expense
Uncollectible Allowance $450
Income Summary $450
Year 2:
Cash AccountBalance $77,000
Service Revenue $32,000
Accounts Receivable $81,000
Salaries Expense $65,000
Balance $125,000
Uncollectible AllowanceBalance $450
Accounts Receivable $650
Bad debts expense $968
Balance $768
Common StockBalance $10,000
Accounts Receivable
Balance $9,000
Service Revenue $88,000
Uncollectible allowance $650
Cash $81,000
Balance $15,350
Service RevenueAccounts Receivable $88,000
Cash $32,000
Income Summary $120,000
Salaries ExpenseCash $65,000
Income Summary $65,000
Bad Debts Expense
Uncollectible Allowance $968
Income Summary $968
b. The preparation of the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for Year 1 and Year 2 are as follows:
Leach Inc.
Income Statements for Year 1 and Year 2:Year 1 Year 2
Service Revenue $114,000 $120,000
Salaries Expense 38,000 $65,000
Bad Debts Expense 450 38,450 968 65,968
Net income $75,550 $54,032
Leach Inc.
Statements of Changes in Stockholders' Equity for Year 1 and Year 2:Year 1 Year 2
Beginning balance $10,000 $85,550
Net income 75,550 54,032
Ending balance $85,550 $139,582
Leach Inc.
Balance Sheets at Year 1 and Year 2:Year 1 Year 2
Assets:
Cash $77,000 $125,000
Accounts Receivable 9,000 15,350
Uncollectible Allowance (450) (768)
Total assets $85,550 $139,582
Equity:
Ending balance $85,550 $139,582
Leach Inc.
Statements of Cash Flows for Year 1 and 2:Operating Activities: Year 1 Year 2
Net income $75,550 $54,032
Changes in working capital:
Accounts receivable (8,550) (6,032)
Operating cash flows $67,000 $48,000
Financing Activities:
Common Stock $10,000 $0
Increase in cash flows $77,000 $48,000
c. The net realizable value of the accounts receivable at Year 1 is $8,550 ($9,000 - $450) and Year 2 is $14,582 ($15,350 - $768).
Data Analysis:Year 1:
Cash $10,000 Common stock $10,000
Accounts Receivable $78,000 Service Revenue $78,000
Cash $36,000 Service Revenue $36,000
Cash $69,000 Accounts Receivable $69,000
Salaries Expense $38,000 Cash $38,000
Adjustment:
Bad Debts Expense $450 Uncollectible Allowance $450
Year 2:
Uncollectible Allowance $650 Accounts Receivable $650
Accounts Receivable $88,000 Service Revenue $88,000
Cash $32,000 Service Revenue $32,000
Cash $81,000 Accounts Receivable $81,000
Salaries Expense $65,000 Cash $65,000
Adjustment:
Bad Debts Expense $968 Uncollectible Allowance $968
= $968 ($650 + $768 - $450)
$768 ($15,350 x 5%)
Learn more about preparing financial statements at https://brainly.com/question/735261
Key figures for Apple and Google follow.
$ millions Apple Google
Cash and equivalents. . . . . . . $20,484 $12,918
Accounts receivable, net. . . . . 15,754 14,137
Inventories. . . . . . . . . . . . 2,132 268
Retained earnings. . . . . . . . . 96,364 105,131
Cost of sales. . . . . . . . . . . 131,376 35,138
Revenues. . . . . . . . . . . . . . 215,639 90,272
Total assets. . . . . . . . . . . . 321,686 167,497
Required:
a. Compute common-size percents for each of the companies using the data provided.
b. If Google decided to pay a dividend, would retained earnings as a percent of total assets increase or decrease
Answer:
a. Common-size analysis Income statement figures expresses them as a percentage of Sales while for Balance sheet figures, entries are expressed as a percentage of Total Assets.
Cash and Cash Equivalents
Apple Google
= 20,484/321,686 = 6.37 % = 12,918/167,497 = 7.71%
Accounts Receivables
Apple Google
= 15,754/321,686 = 4.90 % = 14,137/167,497 = 8.44%
Inventories
Apple Google
= 2,132/321,686 = 0.66 % = 268/167,497 = 0.16%
Retained Earnings
Apple Google
= 96,364/321,686 = 29.96 % = 105,131/167,497 = 62.77%
Cost of Sales
Apple Google
= 131,376/215,639 = 60.92 % = 35,138/90,272 = 38.92%
Apple Google
Cash and equivalents 6.37% 7.71%
Accounts receivable, net 4.90% 8.44%
Inventories 0.66% 0.16%
Retained Earnings 29.96% 62.77%
Cost of Sales 60.92% 38.92%
Revenues 100% 100%
Total Assets 100% 100%
b. Dividends are paid from Retained Earnings so Retained earnings as a percent of total assets WILL DECREASE.
On December 31, 2021, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $15 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $13 million. The loss from operations of the segment during 2021 was $4.8 million. Pretax income from continuing operations for the year totaled $7.8 million. The income tax rate is 25%.
Prepare the lower portion of the 2021 income statement beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted and negative amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions.)
Answer and Explanation:
The preparation of the lower portion is presented below:
Income from the continuing operation
before income tax $7,800,000
Less: Income tax expenses ($7,800,000 × 25%) (1,950,000)
Income from continuing operation(A) 5,850,000
Discontinued operation:
Loss from operation discontinued components
($15 - $13 - $4.8) ($2,800,000)
Income tax benefits ($2,800,000 × 25%) $700,000
Loss on discontinued operation(B) ($21,000,000)
Net loss (A - B) -$15,150,000
I WILL GIVE BRAIN
After seviewing the technical skills required to perform tasks in the manufacturing industry, do you think these skills are
more or less important than the interpersonal skills we discussed in previous units?
On July 1, 2020, Buffalo Inc. made two sales.
1. It sold land having a fair value of $904,290 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,422,914. The land is carried on Buffalo's books at a cost of $591,300.
2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $408,830 (interest payable annually).
Buffalo Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest.
Required:
Record the two journal entries that should be recorded by Vaughn Inc. for the sales transactions above that took place on July 1, 2020.
Answer:
Journal 1
July 1
Note Receivable $1,422,914 (debit)
Profit and Loss $851,614 (credit)
Land $591,300 (credit)
Sale of land on credit
Journal 2
July 1
Note Receivable $861,394 (debit)
Service Revenue $861,394 (credit)
Rendered Services on credit
Explanation:
Journal 1
Sale of land on credit :
De-recognise the Land in Buffalo Inc. books at cost, Recognise the Assets of Note Receivable and a Profit from sale. Proceeds are measured at the future value
Future Value :
PV = $1,422,914
n = 4
pmt = $0
p/yr = 1
fv = ?
Using a financial calculator the future value is $1,422,914.
Journal 2
Rendered Services on credit :
Recognize the Assets of Note Receivable and Recognise the Revenue at the future value.
Future Value :
pv = - $408,830
n = 8
pmt = 3% × $408,830 = $12,264.90
i = 12%
p/yr = 1
fv = ?
Using a financial calculator, the future value is $861,394
Sara’s Salsa Company produces its condiments in two types: Extra Fine for restaurant customers and Family Style for home use. Salsa is prepared in department 1 and packaged in department 2. The activities, overhead costs, and drivers associated with these two manufacturing processes and the company’s production support activities follow.
Process Activity Overhead cost Driver Quantity
Department 1 Mixing $4,500 Machine hours 1,500
Cooking 11,250 Machine hours 1,500
Product testing 112,500 Batches 600
$128,250
Department 2 Machine calibration $250,000 Production runs 400
Labeling 12,000 Cases of output 120,000
Defects 6,000 Cases of output 120,000
$268,000
Support Recipe formulation $90,000 Focus groups 45
Heat, lights, and water 27,000 Machine hours 1,500
Materials handling 65,000 Container types 8
$182,000
Additional production information about its two product lines follows.
Extra Fine Family Style
Units produced 20,000 cases 100,000 cases
Batches 200 batches 400 batches
Machine hours 500 MH 1,000 MH
Focus groups 30 groups 15 groups
Container types 5 containers 3 containers
Production runs 200 runs 200 runs
Required:
Using ABC, compute the total cost per case for each product type if the direct labor and direct materials cost is $6 per case of Extra Fine and $5 per case of Family Style.
Answer:
Extra Fine= $26
Family Style= $12.98
Explanation:
First, we need to calculate the activities rate for each department and support:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Department 1:
Mixing= 4,500/1,500= $3 per machine hour
Cooking= 11,250/1,500= $7.5 per machine hour
Product testing= 112,500/600= $187.5 per batch
Department 2:
Machine calibration= 250,000/400= $625 per production run
Labeling= 12,000/120,000= $0.1 per cases of output
Defects= 6,000/120,000= $0.05 per cases of output
Support:
Recipe formulation= 90,000/45= $2,000 per focus group
Heat, lights, and water= 27,000/1,500= $18 per machine hour
Materials handling= 65,000/8= $8,125 per container types
Now, we can allocate overhead to each product:
Extra Fine:
Department 1:
Mixing= 3*500= $1,500
Cooking= 7.5*500= $3,750
Product testing= 187.5*200= $37,500
Department 2:
Machine calibration= 625*200= 125,000
Labeling= 0.1*20,000= 2,000
Defects= 0.05*20,000= 1,000
Support:
Recipe formulation= 2,000*30= 60,000
Heat, lights, and water= 18*500= 9,000
Materials handling= 8,125*5= 40,625
Total allocated overhead= $280,375
Unitary cost= 280,375/20,000= $14
Family Style:
Department 1:
Mixing= 3*1,000= $3,000
Cooking= 7.5*1,000= $7,500
Product testing= 187.5*400= $75,000
Department 2:
Machine calibration= 625*200= 125,000
Labeling= 0.1*100,000= 10,000
Defects= 0.05*20,000= 5,000
Support:
Recipe formulation= 2,000*15= 30,000
Heat, lights, and water= 18*1,000= 18,000
Materials handling= 8,125*3= 24,375
Total allocated overhead= $297,875
Unitary cost= 297,875/100,000= $2.98
Finally, the total unitary cost:
Extra Fine= 6 + 6 + 14= $26
Family Style= 5 + 5 + 2.98= $12.98
Select the qualitative characteristics for the following statements.
a. Quality of information that permits users to identify similarities in and differences between two sets of economic phenomena. select a qualitative characteristic.
b. Having information available to users before it loses its capacity to influence decisions.
c. Information about an economic phenomenon that has value as an input to the processes used by capital providers to form their own expectations about the future.
d. Information that is capable of making a difference in the decisions of users in their capacity as capital providers.
e. Absence of bias intended to attain a predetermined result or to induce a particular behavior.
Answer:
Options includes the followings: Relevance, Faithful representation, Predictive value, Confirmatory value, Comparability, Completeness, Neutrality, Timeliness.
a. Quality of information that permits users to identify similarities in and differences between two sets of economic phenomena. select a qualitative characteristic.
Qualitative characteristics: Comparability
b. Having information available to users before it loses its capacity to influence decisions.
Qualitative characteristics: Timeliness
c. Information about an economic phenomenon that has value as an input to the processes used by capital providers to form their own expectations about the future.
Qualitative characteristics: Predictive Value
d. Information that is capable of making a difference in the decisions of users in their capacity as capital providers.
Qualitative characteristics: Relevance
e. Absence of bias intended to attain a predetermined result or to induce a particular behavior.
Qualitative characteristics: Neutrality
The following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2021:
Penske Stanza
Revenues $(842,000 ) $(568,000 )
Cost of goods sold 299,700 142,000
Depreciation expense 207,000 304,000
Investment income Not given 0
Dividends declared 80,000 60,000
Retained earnings, 1/1/21 (668,000 ) (222,000 )
Current assets 572,000 566,000
Copyrights 1,076,000 449,500
Royalty agreements 604,000 1,180,000
Investment in Stanza Not given 0
Liabilities (546,000 ) (1,631,500 )
Common stock (600,000 )($20 par) (200,000 ) ($10 par)
Additional paid-in capital 150,000 80,000
On January 1, 2013, Penske acquired all of Stanza's outstanding stock for $680,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition copyrights (with a six-year remaining life) have a $440,000 book value but a fair value of $560,000.
a. As of December 31,2013, what is the consolidated copyrights balance?
b. For the year ending December 31,2013, what is consolidated net income?
c. As of December 31,2013, what is the consolidated retained earnings balance?
d. As of December 31,2013, what is the consolidated balance to be reported for goodwill?
Answer:
a. $1,625,500
b. $437,300
c. $1,025,300
d. $58,000
Explanation:
a. As of 31, December 2013, what is the consolidated copy rights balance
b. For the year ending, December 31, 2013, what is consolidated net income
c. As of December 31, 2013, what is the consolidates retained earnings balance
d. As of December 31, 2013 what is the consolidated balance to be reported for Goodwill.
Please find attached detailed explanations to the above questions and answers.
Last month Empire Company had a $35,280 profit on sales of $287,000. Fixed costs are $68,040 a month. By how much would sales be able to decrease for Empire to still break even
Answer:
sales might decrease by $287,000 - $189,000 = $98,000 and the company will still break even
Explanation:
gross profit = net income + fixed costs = $35,280 + $68,040 = $103,320
COGS = total sales - gross profit = $287,000 - $103,320 = $183,680
contribution margin ratio = $103,320 / $287,000 = 36%
break even point in $ = $68,040 / 36% = $189,000
sales might decrease by $287,000 - $189,000 = $98,000 and the company will still break even
Cash flows from operations may not be sufficient for a firm to keep up with growth-related financing needs, or the firm may not be able to always generate enough cash flow to maintain a surplus of cash. Firms prefer to borrow now to fulfill their capital requirements through means of short-term financing or long-term financing. Both methods have their advantages and disadvantages.
The following statement identifies a possible characteristic of short-term financing.
Consider this case:
Short-term loans usually have a lower cost than long-term loans. Identify whether the preceding statement is true or false.
a. This statement is false and a disadvantage of short-term financing.
b. This statement is true and an advantage of short-term financing.
Firms use a variety of short-term financing sources to support working capital. Use the descriptions in the following table to identify the short-term financing source.
Description Short-Term Financing Source
A formal, committed line of credit extended by a bank or other lending institution.
An obligation backed by collateral, often inventories or accounts receivable.
Answer:
1. Consider this case:
Short-term loans usually have a lower cost than long-term loans. Identify whether the preceding statement is true or false.
a. This statement is false and a disadvantage of short-term financing.
2. Identify the short-term financing source:
An obligation backed by collateral, often inventories or accounts receivable.
Explanation:
Some organizations regularly require short-term financing to ease uneven cash flows. It is also called working capital financing. Its duration is less than 12 months, unlike long-term financing that can last more than two years. Most of this financing is arranged with banks in the form of bank overdraft.
Following are several figures reported for Allister and Barone as of December 31, 2015:
Allister Barone
Inventory $50,000 $300,000
Sales 1,000,000 8,00,000
Investment income Not given
Cost of goods sold 500,000 400,000
Operating expenses 230,000 300,000
Allister acquired 90 percent of Barone in January 2020. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $66,000 that was unrecorded on its accounting records and had a six-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2021, Barone sells inventory costing $135,000 to Allister for $190,000. Of this amount, 20 percent remains unsold in Allister's warehouse at year-end.
Determine balances for the following items that would appear on Allister's consolidated financial statements for 2015:
a. Inventory
b. Sales
c. Cost of Goods Sold
d. Operating Expenses
e. Net Income Attributable to Non-controlling Interest
Answer:
a. $344,500
b. $1,610,000
c. $405,500
d. $530,000
e. $9,550 loss
Explanation:
First, Eliminate the Intragroup transactions as follows :
Elimination Journal for the Intragroup Sale :
Sales (Barone) $190,000 (debit)
Cost of Sales (Allister) $190,000 (credit)
Elimination of unrealized profit in closing inventory :
Cost of Sales (Barone) $5,500 (debit)
Inventory (Allister) $5,500 (credit)
Unrealized Profit in Inventory ($190,000 - $135,000) × 10% = $5,500
Then, Consolidate the Financial Statements taking into account the elimination journals
Note : Consolidation is 100% of Parent + 100% of Subsidiary.
Note : A firm that is exercising control (> 50% Voting Rights) is required to prepare Consolidated Financial Statements - IFRS 3.
Consolidated Income Statement
Sales (1,000,000 + 8,00,000 - $190,000) $1,610,000
Cost of Sales ( $500,000 + 400,000 - $190,000 + $5,500) ($715,500)
Gross Profit $894,500
Less Operating Expenses ($230,000 + $300,000) ($530,000)
Net Income $364,500
Consolidated Financial Statement (Extract)
Inventory ($50,000 + $300,000 - $5,500) $344,500
Subsidiary Profit
Net Income Attributable to Non-controlling Interest
Net Income Attributable to Non-controlling Interest = Net Subsidiary Income × % Non Controlling Interest
Net Subsidiary Income - Barone
Sales (800,000 - 190,000) $610,000
Less Cost of Sales ( 400,000 + 5,500) ($405,500)
Gross Profit $204,500
Less Operating Expenses ($300,000)
Net Income/ (loss) ($95,500)
Therefore,
Net Income Attributable to Non-controlling Interest = ($95,500) × 10%
= $9,550 loss
Banana Computer Company sells Banana Computers both in the domestic and foreign markets. Because of the differences in the power supplies, a Banana computer purchased in one market cannot be used in the other market. This means that the company can use third degree price discrimination in order to maximize profits. Let’s suppose that it costs $1,000 to produce each computer (this is marginal and average cost). Let’s suppose further that the domestic and foreign demand curves are given as follows (the subscript "F" denotes "foreign" while the subscript "D" is used to denote "domestic"):
PD=13,000 -20QD
PF= 17,000-40QF
Required:
a. What prices maximize profits for this firm? How many computers do they sell in each market? How much profit does the company earn?
b. Now, suppose that somebody figured out a wiring trick that allows a Banana computer built for either market to be costlessly converted so that it works in the other market. This destroys the company's ability to practice third degree price discrimination and forces them to charge the same price in both markets. What price maximizes the company's profits now? How many computers will they sell in each location? How much profit does the company earn?
Answer:
with price discrimination
Domestic Price 7,000 Quantity 300
Profit (7,000 - 1,000) * 300 = 1,800,000
Foreing Price 9,000 Quantity 200
Profit (9,000 - 1,000) * 200 = 1,600,000
Total 1,600,000 + 1,800,000 = 3,400,000
no price discrimination:
Price 7,667 Quantity 500
Profit (7,667 - 1,000) x 500 = 3,333,500
Explanation:
Sales Revenue (Domestic)
[tex]R = P \times Q_d = (13,000 - 20Q_d) \times Q_d = -20Q_d^2 + 13,000Q_d\\R' = \frac{dR_{(q)}}{dq} = 13,000 - 40Q_d[/tex]
We now equalice against Marginal Cost:
13,000 - 40Qd = 1,000
Qd = 12,000/40 = 300
Price: 13,000 - 20(300) = 7,000
We do the same process with Foreing demand:
(17,000 - 40Qf) x Qf = -40Qf^2 + 17,000Qf
R' = -80Qf + 17,000
-80Qf + 17,000 = 1,000
Qf = 16,000/80 = 200
Pf = 17,000 - 40(200) = 9,000
If the company cannot do price discrimination then:
We solve for the inverse of both market:
PD=13,000 -20QD
QD = 650 - PD/20
we take the price restrictions:
PD < 13,000
PF= 17,000-40QF
QF = (17,000 - PF)/40 = 425
QF = 425 - PF/40
PF < 17,000
Now, we aggregate the demands:
(650 -P/20 ) + (425 -P/40) =
Q= 1,075 - 0.075P
Make the inverse
P = (1,075 - Q ) / 0.075 = 14.333,33 -13.33Q
And solve for the Quantiy and Price that maximize profit
R = (14.333,33 -13.33Q) x Q = -13.33Q^2 + 14,333.33Q
R' = R(q)/dq = -26.66Q + 14,333.33
-26.66Q + 14,333.33 = 1,000
Q = 500
P = 14,333.33 - 13.33(500) = 7,667
Which best describes the role that government and business play in investments?
O They both use taxes to support a country's growth.
They both invest money to earn a profit.
They both receive capital to use for growth.
They both act as angel investors for start-ups.
Answer:
They both receive capital to use for growth.
Explanation:
The government received the capital in the form of tax that being paid by the citizens. After collecting the tax income, the government allocated it to make a couple of investments such as building the country's infrastructure, providing aid for people to pursue education, and investing in scientific research/development.
Business on the other hand could receive their capital from either reallocating their profit or receiving capital injection from the investors. They use the capital for growth by reinvesting it to increase the scope of their business operation or putting it under investment accounts.
Statement that best describes the role that government and business play in investments is They both receive capital to use for growth
What is an investment?Investment can be regarded as the input that is been put into some business in order to generate revenue.
however, this also applies to the government because they use the public funds as investment for the betterment of the economy and the public.
Learn more about investments at;
https://brainly.com/question/200850
Your client, Bob, is the CEO of a corporation that has 12 stockholders who are also the only employees of the business. The corporation operates a boat dealership in Sherman, Texas. The corporation has accumulated earnings and profits of $3,000,000, not including the current year’s taxable income, which is expected to be $800,000. No dividends have been paid to stockholders. Bob has been very pleased with the corporation’s performance and he wants to reward the stockholders.
1. Why should Bob declare a cash dividend over giving stockholders a bonus?2. Why should Bob not consider paying a larger year-end bonus to his employee/stockholders’
Answer:
1. Why should Bob declare a cash dividend over giving stockholders a bonus?
Bob should not declare a cash dividend, instead he should give the employees/stockholders a bonus. A corporation distributes dividends with their after tax income, while bonuses actually decrease net income and lowers taxes. it is always better to pay less taxes.
2. Why should Bob not consider paying a larger year-end bonus to his employee/stockholders’.
In this case, if you have to choose between declaring a dividend or paying a bonus, Bob should definitely pay a bonus. But the bonus should not be larger than the corporation's expected income. It is not a good idea to incur in an operating loss due to huge bonuses.
Presented below is information from Headland Computers Incorporated.
July 1 Sold $22,600 of computers to Robertson Company with terms 3/15, n/60. Headland uses the gross method to record cash discounts. Headland estimates allowances of $1,334 will be honored on these sales.
10 Headland received payment from Robertson for the full amount owed from the July transactions.
17 Sold $256,100 in computers and peripherals to The Clark Store with terms of 2/10, n/30.
30 The Clark Store paid Headland for its purchase of July 17.
Answer:
July 1
Dr Accounts receivable $22,600
Cr Cash $22,600
Dr Sales returns and allowances $1,334
Cr Allowances for Sales returns and allowances $1,334
July 10
Dr Cash $21,922
Dr Sales Discount $678
Cr Accounts Receivable $22,600
July 17
Dr Accounts receivable $256,100
Cr Sales revenue $256,100
July 30
Dr Cash $256,100
Cr Accounts receivable $256,100
Explanation:
Preparation of Journal entry
July 1
Dr Accounts receivable $22,600
Cr Cash $22,600
Dr Sales returns and allowances $1,334
Cr Allowances for Sales returns and allowances $1,334
July 10
Dr Cash $21,922
(97%×$22,600)
Dr Sales Discount $678
(3%×$22,600)
Cr Accounts Receivable $22,600
($21,922+$678)
July 17
Dr Accounts receivable $256,100
Cr Sales revenue $256,100
July 30
Dr Cash $256,100
Cr Accounts receivable $256,100
In 2009, an 1893 Morgan silver dollar sold for $6,450. Required: What was the rate of return on this investment? (Do not include the percent sign (%). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Answer: 7.86%
Explanation:
Using the Future Value formula;
= Amount * ( 1 + r)^n
The question is looking for the rate so making that the subject would be;
Assuming the car was $1 in 1893,
And n = 2009 - 1893 = 116 years
FV = Amount * ( 1 + r)^n
( 1 + r)^n = FV/ Amount
1 ^n + r^n = FV / Amount
r = n√((FV/ Amount) / 1^n)
r = n√(FV/ Amount)
r = 116√(6,450/ 1)
= 1.07855
Subtract 1 for the percentage;
= 1.07855 - 1
= 7.86%
In 1998, the Russian government defaulted on its bonds. According to the open-economy macroeconomic model, this should have
Answer:
An increase in the net export and Russian interest rate.
Explanation: An open economy is an economy where all players which includes traders, investors and other stakeholders in the economy both within and outside the economy freely conduct their businesses and are controlled by market forces with minimal interference by Government agencies.
According to the open-economy macroeconomic model with the defaulting by the Russian government in 1998 will definitely lead to an increase in net export and an increase in Russian Interest rate.
Question 5 of 10
Why do business often add fees to their invoices?
O A. To help pay for business expenses
B. To attract new customers
C. To reward customers' for their loyalty
D. To make more profit than their competitors
Answer: I think it's A
Explanation:
Answer:
Its A!
Explanation:
Just took the quiz
The number of people or subordinates that a manager effectively controls and directs is called the manager's span of:
Answer: Span of Control
Explanation:
A Manager's span of control refers to all the subordinates that report to that manager. The manager therefore effectively controls and directs them and as such is answerable for them.
Spans of Control are different depending on the type of company it is. A manager with a lot of people in their span of control is said to have a Wide span of control and the reverse is a Narrow Span of control.
A very important part of management is determining the largest number of subordinates that can be in a span of control without overwhelming the manager.
How much would the Gerrards have to put down if the lender required a minimum 20 percent down payment
Answer:
the first part of the question is missing, so I looked for similar questions to fill in the blanks:
Ben and Marie Gerrard, both in their mid-20s, have been married for 4 years and have two preschool-age children. Ben has an accounting degree and is employed as a cost accountant at an annual salary of $63,000. They're now renting a duplex but wish to buy a home in the suburbs of their rapidly developing city. They've decided they can afford a $210,000 house and hope to find one with the features they desire in a good neighborhood.
If the Gerrards are required to make a minimum 20% down payment, then they need to pay at least $210,000 x 20% = $42,000.
Many lenders require a minimum down payment for a mortgage loan and others charge different interest rates depending on the down payment percentage, e.g. if your down payment represents 30% of the house's value, the interest rate will be lower than a loan with a 20% down payment. The logic behind this is that the higher the down payment, the safer the loan.
Wilson Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Wilson Products develops its manufacturing overhead rate from the current annual budget. The manufacturing overhead budget for 2014 is based on budgeted output of 672,000 units, requiring 3,360,000 DLH. The company is able to schedule production uniformly throughout the year.
A total of 72,000 output units requiring 321,000 DLH was produced during May 2014. Manufacturing overhead (MOH) costs incurred for May amounted to $ 355,800. The actual costs, compared with the annual budget and 1/12 of the annual budget, are as follows:
Calculate the following amounts for Wilson Products for May 2014:
Total Amount Per Output Unit Per DLH Input Unit Monthly MOH Budget May 2017 Actual MOH Costs for May 2017
Variable MOH
Indirect manufacturing labor $1,008,000 $1.50 $0.30 $84,000 $84,000
Supplies 672,000 1.00 0.2 56,000 117,000
Fixed MOH
Supervision 571,200 0.85 0.17 47,600 41,000
Utilities 369,600 0.55 0.11 30,800 55,000
Depreciation 705,600 1.05 0.21 58,800 88,800
Total $33,26,400 $4.95 $0.99 $277,200 $355,800
Required:
a. Total manufacturing overhead costs allocated.
b. Variable manufacturing overhead spending variance.
c. Fixed manufacturing overhead spending variance.
d. Variable manufacturing overhead efficiency variance.
e. Production-volume variance Be sure to identify each variance as favorable (F) or unfavorable(U).
Answer:
Please see attached solution
Explanation:
a. Total manufacturing overhead costs allocated $356,400
b. Variable manufacturing overhead spending variance $40,500U
c. Fixed manufacturing overhead spending variance $17,600U
d. Variable manufacturing overhead efficiency variance $19,500F
e. Production volume variance $39,200F
Please find attached detailed solution to the above questions
Last week, an investigative reporter for a major metropolitan newspaper discovered that the doctors conducting clinical trials of a new cancer treatment drug are also the principal shareholders in Cancer Solutions Inc. (CSI). CSI is the company developing and attempting to market the drug. Upon being interviewed by federal authorities, the doctors acknowledged their conflict of interest but reported that they were sold the shares at a 75% discount by CSI's chief financial officer. The CFO was concerned that CSI might not be able to meet its annual performance objectives and in turn pay his anticipated multimillion-dollar bonus.
Does an agency conflict exist between CSI's CFO and the company's shareholders?
a. Yes; CSI's CFO engaged in unethical conduct to manipulate the firm's short-term earnings and improve the likelihood of receiving his annual bonus.
b. Yes; the shares should not have been sold at a 75% discount, which is price discrimination.
c. No; professionals, such as doctors and professional money managers, would not participate in unethical activities.
d. No; in general, shareholders are satisfied with company officers engaging in any type of legal or illegal activity to ensure the chances of them receiving greater dividend payments.
Which of the following actions will help ease agency conflicts and better align managers' objectives with the firm's shareholder wealth?
a. Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.
b. Pay the manager a large base salary with a huge stock option package that matures on a single date.
Amalgamated Metals Corporation's stockholders are mostly individual investors, and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Amalgamated Metals Corporation's stock, direct shareholder intervention would be___________ likely to motivate the firm's management.
Answer:
FIRST QUESTION
A)Yes; CSI's CFO engaged in unethical conduct to manipulate the firm's short-term earnings and improve the likelihood of receiving his annual bonus.
SECOND QUESTION
A)Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.
LAST QUESTION
MORE likely
Explanation:
We are informed from the question about an investigative reporter for a major metropolitan newspaper discovery about the doctors conducting clinical trials of a new cancer treatment drug are also the principal shareholders in Cancer Solutions Inc. And how The CFO was concerned that CSI might not be able to meet its annual performance objectives and in turn pay his anticipated multimillion-dollar bonus.
In this case there is an agency conflict that exist between CSI's CFO and the company's shareholders, this is because the, CSI's CFO engaged in unethical conduct to manipulate the firm's short-term earnings and improve the likelihood of receiving his annual bonus.
Agency conflict in finance, is also regarded as conflict of interest, usually occur between the management and the shareholders of that company, it is conflict that usually emerge when those that are required for certain responsibility like interest of principal decide to divert the the authority for their own benefits. However,agency conflict can be minimized by allowing transparency and some ways.
It should be noted here that the CSI's CFO engaged in unethical conduct to manipulate the firm's short-term earnings and improve the likelihood of receiving his annual bonus which is the reason behind the conflict because he act on his own interest.
SECOND QUESTION,
Which of the following actions will help ease agency conflicts and better align managers' objectives with the firm's shareholder wealth?
From the explanation of Agency conflict from First question it should be noted that there are some actions that will help to ease agency conflicts and better align managers' objectives with the firm's shareholder wealth such as
Payment of the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.
The payment of the stock options to the manager will allow selling of stock at agreed price as well as date.
LAST QUESTION
Amalgamated Metals Corporation's stockholders are mostly individual investors, and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Amalgamated Metals Corporation's stock, direct shareholder intervention would be__MORE__ likely to motivate the firm's management.