Your firm has net income of $260 on total sales of $1,160. Costs are $650 and depreciation is $110. The tax rate is 35 percent. The firm does not have interest expenses. What is the operating cash flow
Answer:
The answer is $650
Explanation:
Net income = $260
Total sales = $1,160
Costs = $650
Depreciation = $110
Earnings before Interest and tax(EBIT) =
Total sales - Cost - depreciation
$1,160 - $650 - $110
= $400
Tax =[260 ÷ (1 - 0.35)] - 260
$400 - $260
$140
Operating cash flow is therefore,
Earnings before Interest and tax(EBIT) + depreciation + tax
$400 + $110 + $140
= $650
Technology can be used to leverage __________ and _____________ within organizations as well as with customers and suppliers beyond their boundaries.
Answer: human capital; knowledge
Explanation:
Technology plays an important role in the economy. Every businesss needs to make use of technology in order to achieve efficiency and effectiveness at work.
Technology can be used to leverage both human capital and knowledge within organizations as well as with customers and suppliers beyond their boundary. Technology helps to improve relationship with customers
Twist Corp. has a current accounts receivable balance of $457,615. Credit sales for the year just ended were $2,940,600.a. What is the company's receivables turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
b. What is the company's days' sales in receivables? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
c. How long did it take on average for credit customers to pay off their accounts during the past year? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
Answer and Explanation:
The computations are as follows
a. For company receivable turnover
As we know it is
= Credit Sales ÷ current account receivable balance
= $2,940,600 ÷ $457,615
= 6.43 times
b.
Now
company's days' sales in receivables is
= 365 ÷ Receivables turnover ratio
= 365 ÷ 6.43
= 56.77 days
c. Therefore the average collection period is the same as days sales in receivable i.e 56.77 days
Lincoln Restaurants reported net income in 2019 of $48.10 million and depreciation expense of $51.00 million. It also reported additions to property and equipment of $165.10 million. Using the indirect method of preparing the statement of cash flows, how will these items impact the 2019 statement of cash flows
Answer and Explanation:
The impact of each item is as follows
Net income reported = shown in the operating activities
Depreciation expense = added to the net income and shown in the operating activities
Additions to the property and equipment = Since there is an addition that means the property and equipment are purchased so it would be shown in the investing activities under the negative sign as it is cash outflow
The main goal of monetary policy is to shift Choose one or more: A. aggregate demand. B. short-run aggregate supply. C. long-run aggregate supply.
Answer: aggregate demand
Explanation:
Monetary policy, is the demand side of an economic policy that is used by the government through the central bank in order to control the money supply that is available in the economy so as to achieve macroeconomic goals that will bring about economic growth.
The main goal of monetary policy is to shift the aggregate demand. Increase or decrease in money supply can either shift the aggregate demand to the right or to the left depending on whether the government wants to use the expansionary or the contractionary method.
An investor has sold short stock worth $20,000 in a margin account, depositing the Regulation T margin requirement. If the market value of the stock falls to $16,000, what is the Selling Power in the account
Answer:
The selling power in the account is $20,000.
Explanation:
Credit - Short market value = Equity %
Sale $20,000 $20,000
Margin $10,000 $10,000
Total $30,000 $20,000 $10,000 50%
If the market value falls to $16,000, the account will show;
Credit - Short market value = Equity %
$30,000 $16,000 $14,000
To support a $16,000 stock position at 50% margin, equity of $8,000 is required. Since the account has $14,000 of equity, the excess of $10,000 may be borrowed and it's the
SMA amount. With $10,000 of SMA amount, twice this amount may be purchased or sold short in other marginal securities.
You short-sell 600 shares of Rock Creek Fly Fishing Co., now selling for $38 per share. If you want to limit your loss to $3,600, you should place a stop-buy order at ___.A. A. $32.00 B. $38.00 C. $44.00 D. $64.00
Answer:
$44.00
Explanation:
You are required to find where to place a stop-buy order
Amount received from short sale
= 600 x $38
= $22,800
Loss = $3,600 = 600p - 22,800
=3,600 + 22800 = 600p
26400 = 600p
P = 26400/600
P = $44.00
you should place a stop-buy order at $44.00
Henri earned a salary of $50,000 in 2001 and $70,000 in 2006. The consumer price index was 177 in 2001 and 265.5 in 2006. Henri's 2006 salary in 2001 dollars is
Answer:
Henri's 2006 salary in 2001 dollars =$46,666.66
Explanation:
A rise in the price index implies inflation
Inflation is the increase in the general price level. Inflation erodes the value of money.
This price index is the weighted average price of a basket of goods and services consumed by a typical consumer. It is used to measure the rate of inflation.
So we can determine the salary in the base year value as follows:
2006 Salary in the base year terms=
CPI base year/CPI in the current year × salary in the current year
CPI base year- 177, CPI in the current yea- 256.5,
Salary in the current year - 70,000
Henri 2006 Salary in 2001 Dollar
=177/265.5 ×70,000/265.5 = 46,666.66
Henri's 2006 salary in 2001 dollars =$46,666.66
g "Which philosophy in setting budgeted amounts assumes both the complete elimination of inefficiencies and a level of absolute efficiency?"
Answer:
The total quality management approach
Explanation:
This philosophy is the total quality management approach.
Total quality management has to do with the efforts to enforce and make sustainable climate where employees can continuous to improve their ability to provide on demand products and give those services that customers perceive to be of particular value when they demand for them.
Richards Corporation uses the weighted-average method of process costing. The following information is available for October in its Fabricating Department:
Units:Beginning Inventory: 90,000 units, 70% complete as to materials and 20% complete as to conversion.Units started and completed: 270,000.Units completed and transferred out: 360,000.Ending Inventory: 35,000 units, 40% complete as to materials and 15% complete as to conversion.Costs:Costs in beginning Work in Process - Direct Materials: $47,200.Costs in beginning Work in Process - Conversion: $89,700.Costs incurred in October - Direct Materials: $759,920.Costs incurred in October - Conversion: $929,300.Calculate the cost per equivalent unit of materials.
a. $2.80b. $2.50c. $2.04d. $2.36e. $2.16
Answer:
e. $2.16
Explanation:
Richards Corporation
Weighted-Average Method
Fabricating Department:
Particulars Units % of Completion Equivalent Units
Materials Conversion Materials Conversion
Completed &
transferred out: 360,000 100 100 360,000 360,000
Ending Inv: 35,000 40% 15% 14000 5250
Equivalent Units 374,000 365250
Costs Direct Materials Conversion
Beg. Work in Process - : $47,200 $89,700
Costs incurred in October - $759,920 $929,300
Total Costs 807,120 1,019,000
Cost Per Equivalent Unit = Total Costs/ Equivalent Units
Cost Per Equivalent Unit Materials = 807120/ 374,000= $ 2.158 ≅$ 2.16
We divide the total costs of Materials with the total Equvilant units of Materials to get Cost Per Equivalent Unit of Materials which is 2.16
Identify the internal control weakness in the following situations. State how the person can hurt the company.
A. Jerry Miller works as a security guard at ALTEX parking in Denver. Miller has a master key to the cash box where commuters pay for parking. Each night Miller prepares the cash report that shows (a) the number of cars that parked on the lot and (b) the day’s cash receipts. Sandra Covington, the ALTEX treasurer, checks Miller’s figures by multiplying the number of cars by the parking fee per car. Covington then deposits the cash in the bank.
B. Sharon Fisher is the purchasing agent for Manatee Golf Equipment. Fisher prepares purchase orders based on requests from division managers of the company. Fisher faxes the purchase order to suppliers who then ship the goods to Manatee. Fisher receives each incoming shipment and checks it for agreement with the purchase order and the related invoice. She then routes the goods to the respective division managers and sends the receiving report and the invoice to the accounting department for payment.
C. The external auditor for Mattson Financial Services takes a global view of the audit. To form his professional opinion of Mattson’s financial statements, the auditor runs no tests of Mattson’s financial statements or of the underlying transactions. Instead, the auditor computes a few ratios and compares the current-year ratio values to the ratio values a year ago. If the ratio values appear reasonable, the auditor concludes that Mattson’s financial statements are okay.
Answer:
Identification of the Internal Control Weaknesses:
A. There is no segregation of duties and there is lack of access control. Jerry Miller as a security guard is not expected to have a master key to the cash box. With this he can pilfer the cash. If he prepares the report that shows the number of cars that parked on the lot, he is not supposed to also prepare the day's cash receipts. Otherwise, he can state any number of cars as parked that he likes, and which corresponds to the cash he might leave in the Cash box since he also has a master key.
B. There is no segregation of duties and there is lack of supervision, proper reconciliations, and assets audit. Sharon Fisher handles purchase transactions from the beginning to the close all alone with a third party. This exposes the company to procurement frauds and collusion with suppliers. She can purchase assets for the company at prices that would enrich her personally.
C. Forming an audit opinion on the basis of ratio analysis of last year's comparative financial statements exposes the company to audit risks. While ratio analysis is part of the basis for forming audit opinions, it is surely not the first audit procedure to obtain audit evidence to support his audit opinion on the financial statements. An auditor is expected to obtain sufficient audit evidence and perform audit substantive tests of financial statement assertions. He or she is also expected to review the internal control system to ensure that it is operating effectively after establishing its existence and reviewing changes in internal controls.
Explanation:
Internal Controls are controls established by management in order to help it achieve business goals. There are many internal controls, including Separation of Duties, Access Controls , Authorization and Approvals, Asset Audits, Reconciliations, and Data Backups. The purposes of internal controls are to establish the reliability of financial reporting, ensure timely feedback on the achievement of operational or strategic goals, and achieve compliance with financial management laws, and accounting regulations.
2. Consumption and saving definitions Suppose Ana gets a sales bonus at her place of work that gives her an extra $600 of disposable income. She chooses to spend $480 and save the remaining $120. From this, you can tell that Ana's marginal propensity to consume (MPC) is , and her marginal propensity to save (MPS) is . Mathematically, it must always be true that: Consumption = Therefore, it must also be true that: MPC =
Answer:
From this, you can tell that Ana's marginal propensity to consume (MPC) is 0.80, and her marginal propensity to save (MPS) is 0.20. Mathematically, it must always be true that: Consumption = Therefore, it must also be true that: MPC = 1 - MPS.
Explanation:
Marginal propensity to consume refers to amount that a household decides to spend of every extra dollar that they earn. Since you either spend or save money, the marginal propensity to save is the portion that you decided not to spend, and therefore, save.
g "At the current exchange rate of $1.40 per British pound, a one-day pass to Worldwide Theme Park of Florida sells for 54 pounds at travel agencies throughout Great Britain. If the exchange rate increases to $1.70 per pound, what will happen to the price of a one-day pass sold in Great Britain?"
Answer:
The price will fall to 44.47 pounds
Explanation:
Calculation for what will happen to the price of a one-day pass sold in Great Britain
Using this formula for the First step
Sales pounds × Current exchange rate
54 pounds x $1.40 = $75.6
Second step
75.6/Increase in exchange rate of $1.70
= 44.47 pounds
Therefore the price will fall to 44.47 pounds
You have an opportunity to invest in Australia at an interest rate of 8%. Moreover, you expect the Australian dollar (A$) to appreciate by 2%. Your effective return from this investment is
Answer:
10.16%
Explanation:
The computation of the effective return for this investment is shown below:
Let us assume that we invested an amount in Australian dollars 100
The return is 8%
After one year, the amount is 108
Now the converting amount is 110.16 (108 × 102%)
Now the effective rate for this investment is
= 110.16 - 100
= 10.16%
The implication of the expectations theory that expected returns for a holding period must be the same for bonds of different maturities depends on the assumption that________.
1. Yiels curves usually slope downward
2. Yiels curves usually slope downward
3. Instruments with different maturities are perfect subtitute
4. Savers are usually risk averse
Answer:
i think the answer is intruments with different matuirties are perfect subtitute. i'm not sure but i think this is the answer.
Explanation:
Gmeiner Co. had the following current assets and liabilities on December 31 of two recent years: Current Year Previous Year Current assets: Cash $683,000 $649,000 Accounts receivable 605,000 305,000 Inventory 374,000 258,000 Total current assets $1,662,000 $1,212,000 Current liabilities: Current portion of long-term debt $90,000 $80,000 Accounts payable 179,000 159,000 Accrued and other current liabilities 291,000 291,000 Total current liabilities $560,000 $530,000 a. Determine the quick ratio for December 31 of both years. If required, round your answers to one decimal place. Quick Ratio Previous year: Current year: b. How did the quick ratio change between the two balance sheet dates?
Answer:
a. Previous year Quick Ratio is 1.8, while Current year Quick Ratio is 2.3.
b. The quick ratio has increased by 0.5 in abos0lute term which indicates an increase of 27.8% in percentage term between the two balance sheet dates.
Explanation:
a. Determine the quick ratio for December 31 of both years. If required, round your answers to one decimal place.
The quick ratio is a ratio that indicates the ability of company to employ its quick, most liquid or near cash assets to meets its short-term or current liabilities. The ratio is also known as the acid-test test ratio and can be estimated using the following formula:
Quick ratio = (Total Current assets - Inventory) / Total current liabilities
Using the formula above, we have:
Previous year Quick Ratio = ($1,212,000 - $258,000) / $530,000 = 1.8
Current year Quick Ratio = ($1,662,000 - $374,000) / $560,000 = 2.3
b. How did the quick ratio change between the two balance sheet dates?
This can be determined both in absolute term and in percentage term as follows:
Absolute change = Current year Quick Ratio - Previous year Quick Ratio = 2.3 - 1.8 = 0.5 increase
Percentage change = (Current year Quick Ratio - Previous year Quick Ratio) / Previous year Quick Ratio = [(2.3 - 1.8) / 1.8] * 100 = 27.8%
From the above, the quick ratio has increased by 0.5 in abos0lute term which indicates an increase of 27.8% in percentage term between the two balance sheet dates.
A risky portfolio pays a 15% rate of return with probability 60% in a good state or a 5% return with probability 40% in a bad state, and a T-bill pays 5%. The risk premium on the risky investment is
Answer:
The risk premium on the risky investment is 8%
Explanation:
The first portfolio pays 15% rate of return with probability 60% in a good
The second portfolio 5% return with probability 40% in a bad state
The risk port-folio expected return = 60% * 15% + 40% * 5%
Expected return = 0.6 * 15% + 0.4* 5%
Expected return = 0.09 + 0.02
Expected return = 0.11
Expected return = 11%
Risk premium on the risky investment = Expected return - Risk free rate
= 11% - 5%
= 8%
The risk premium on the risky investment is 8%
How can Growing Minds attract the best applicants for jobs at its new retail outlets? On what groups, if any, should the company’s recruiting efforts focus? How should the recruiting be done?
Answer:
Hi your question is incomplete here is the complete question
Growing Minds, Inc. is a national chain of retail outlets specializing in creative toys and innovative learning materials for children. The company caters to the upper end of the market and focuses on customer service for a competitive advantage. It provides workshops for parents and children on topics such as learning with the computer and indoor gardening and offers crafts classes ranging fropapier-mâché to pottery. Growing Minds plans to expand and to open five new retail outlets in the coming quarter. This may mean up to 200 new hires, and the executive team wants to make sure that the best people are hired and retained. It has issued a challenge to its retail management personnel to design a staffing process that will accomplish these goals. The children’s market in which Growing Minds operates demands service personnel who are endlessly patient; knowledgeable about children, toys, and learning; and, perhaps most important, sociable,enthusiastic, and engaging. Excellent customer service is the top priority at Growing Minds, and obtaining the desired performance from personnel has meant a major investment in training. Unfortunately, new workers often leave within a year of being hired. This means that the company barely gets an adequate return on the training it has invested in its new hires. Apparently, turnover is due (at least in part) to the demanding nature of the job. Recently, Growing Minds has been emphasizing the establishment of work teams to improve the quality of its services, identify and fix any problems in service delivery, and brainstorm new opportunities. This approach has yielded better-than-anticipated results, so the team concept will be central to the new outlets.
Answer :
The company should post its vacancies ad on social media sites and career pages and also offer competitive salary structureGrowing minds should focus on The Millennial with sound behavioral competencies and Technological knowledgerecruiting should be done through; planning,sourcing, selecting and welcoming the new employeesExplanation:
Growing Minds been a chain of retail outlets that are specialized in creative toys and other innovative learning materials for children. catering to the upper end of the market and focusing on customer service for a competitive advantage. hence Growing minds needs to get the best hands to successfully satisfy their customer and one way to do that is ;
posting its vacancies ad on social media sites and career pages and also offer competitive salary structure : this is because the technological advanced applicants who can fit into the job of properly handling and understanding the creative toys and other innovative learning materials can be found there ( social media sites and career pages ) the group of people they should focus on are Millennial with the technology know how and also with the sound behavioral competencies
You have just taken out a $ 23 comma 000 car loan with a 4 % APR, compounded monthly. The loan is for five years. When you make your first payment in one month, how much of the payment will go toward the principal of the loan and how much will go toward interest? (Note: Be careful not to round any intermediate steps less than six decimal places.)
Answer:
Interest = $75.90
Principal = $347.64
Explanation:
First find the payment that is required per month. It will be an Annuity payment as the present value of the loan is given.
The loan is for 5 years compounded monthly so period is;
= 5 years * 12 months
= 60
Interest = 4/12
Present Value of Annuity= Payment * (1 - (1 + r) ^ -n)/r
23,000 = Payment * (1 - ( 1 + 4/12%) ^ -⁶⁰)/ 4/12%
23,000 = Payment * 54.304
Payment = 23,000/54.304
= $423.54
Interest Payment is;
= 4/12% * 23,000
= $75.90
Amount going towards Principal;
= 423.54 - 75.90
= $347.64
A coin collector treasures his 1969minusS doubled die obverse Lincoln cent because he found it in his pocket change, rather than purchasing it. He can sell it on the open market for $35,000, but would only sell it for at least twice that price, due to its sentimental value to him. It is anticipated that the coin will increase in market value in the foreseeable future. What is the value of the coin?
Answer:
$35,000
Explanation:
The value of the coin is equivalent to the selling price i.e $35,000
As it is mentioned in the question that coin would be sell in the open market instead of purchasing it
Since the coin is sold at the open market so the same is to be considered
And, therefore the value of the coin is $35,000
Hence, the first option is correct
The sales budget for Perrier Inc. is forecasted as follows:
Month Sales Revenue
May $130,000
June 150,000
July 200,000
August 130,000
To prepare a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales: 60 percent in the month of sale. 20 percent in the month following sale. 15 percent in the second month following sale.
5 percent uncollectible.
60 percent in the month of sale.
20 percent in the month following sale.
15 percent in the second month following sale.
The company gives a 2 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $22,000, of which $7,000 represents uncollected March sales and $15,000 represents uncollected April sales. Prepare a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections.
Answer:
budgeted cash collections
May June July
sales revenue 130,000 150,000 200,000
cash sales (60% x 0.98) 76,440 88,200 117,600
accounts receivable (March) 5,250
accounts receivable (April) 7,500 5,625
accounts receivable (May) 26,000 19,500
accounts receivable (June) 30,000
total cash collections 219,190 269,825 367,100
I used net accounts receivables, that means I already discounted the 5% of collectibles.
A bakery sells individual cupcakes for $3, and boxes of 12 cupcakes for $30. A customer enters the bakery.This customer purchases 15 cupcakes—1 box for $30, and 3 individual cupcakes for $3 each. Which of the following must be true of the customer’s willingness to pay?
1) The customer would not have purchased the cupcakes if the price for all 15 had been $45.
2) The customer’s willingness to pay for the 15 cupcakes is $39.
3) The customer’s willingness to pay for 12 cupcakes is $30.
4) The customer’s willingness to pay for 16 cupcakes is less than $42.
Answer:
2) The customer’s willingness to pay for the 15 cupcakes is $39.
3) The customer’s willingness to pay for 12 cupcakes is $30.
Explanation:
The willingness to pay for a good is the highest amount a consumer is willing to pay for a good or service.
The price of 15 cupcakes purchased = $30 + $9 = $39
Companies can and often do use different costing methods for financial reporting and tax reporting. An exception to this is the:
Answer:
LIFO conformity rule.
Explanation:
LIFO refers to the Last in first out method. In this inventory system, the firm sells last units at first stage and then sells according to that
According to the given situation, the LIFO conformity rule requires that the taxpayer follow the same inventory cost flow as used for tax reporting purposes in the financial statement.
Therefore the correct answer is LIFO conformity rule.
You have just received an offer in the mail from Friendly Loans. The company is offering to loan you $4,250 with low monthly payments of $90 per month. If the interest rate on the loan is an APR of 15.3 percent compounded monthly, how long will it take for you to pay off the loan
Answer:
73 months
approximately 6 years
Explanation:
The period of time it would take to pay off the loan can be determined using excel nper function as below:
=nper(rate,pmt,-pv,fv)
rate is the interest expressed in monthly terms which is 15.3%/12
pmt is the amount payment per month i.e $90
pv is the amount of loan which is $4250
fv is the balance of the loan after all payments have been made i.e $0
=nper(15.3%/12,90,-4250,0)= 73 months
73 months/12 months=approximately 6 years
Tanner-UNF Corporation acquired as a long-term investment $200 million of 7% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 9% for bonds of similar risk and maturity. Tanner-UNF paid $160 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management is holding the bonds in its trading portfolio. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $170 million.
Required:
1. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate.
2. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.
3. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $150 million. Prepare the journal entries to record the sale.
Answer:
1. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate.
July 1, investment in UNF bonds
Dr Investment in bonds HTM 200,000,000
Cr Cash 160,000,000
Cr Discount on bonds 40,000,000
December 31, interest revenue from investment in bonds
Dr Cash 7,000,000
Dr Discount on bonds 200,000
Cr Interest revenue 7,200,000
Discount on bonds = ($160,000,000 x 4.5%) - ($200,000,000 x 3.5%) = $7,200,000 - $7,000,000 = $200,000
2. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.
Investment in bonds HTM = $200,000,000 (face value) - $39,800,000 (discount on bonds) = $160,200,000
Changes in the market value of bonds held to maturity are not considered by the company.
4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $310.0 million. Prepare the journal entry to record the sale.
Dr Cash 150,000,000
Dr Dr Discount on bonds 39,800,000
Dr Loss on investment in bonds HTM 10,200,000
Cr Investment in bonds HTM 200,000,000
Company A is a manufacturer with current sales of $3,700,000 and a 60% contribution margin. Its fixed costs equal $1,810,000. Company B is a consulting firm with current service revenues of $3,800,000 and a 20% contribution margin. Its fixed costs equal $330,000.Compute the degree of operating leverage (DOL) for each company.Identify which company benefits more from a 20% increase in sales.Company ACompany B
Answer:
Company A 5.41
Company B 1.76
Company A benefits more from a 20% increase in sales.
Explanation:
The computation of the degree of operating leverage is shown below:-
Particulars Company A Company B
Sales $3,700,000 $3,800,000
Less:
Variable cost $1,480,000 $3,040,000
($3,700,000 × 40%) ($3,800,000 × 80%)
Contribution
margin $2,220,000 $760,000
($3,700,000 × 60%) ($3,800,000 × 80%)
Less:
Fixed cost $1,810,000 $330,000
Pretax income $410,000 $430,000
After this we need to go further so that we can find out the degree of operating leverage For both company
For Company A
= Contribution margin ÷ Pretax income
= $2,220,000 ÷ $410,000
= 5.41
For company B
= Contribution margin ÷ Pretax income
= $760,000 ÷ $430,000
= 1.76
So, from the above calculation we can see that Company A is higher than Company B.
Formal proposals are different from informal proposals in that they are used to respond to large projects and are therefore often longer. Formal proposals contain special components in addition to the six basic components of informal proposals.
a. True
b. False
Common Stockholders' Profitability Analysis A company reports the following:
net income : $375,000
Preferred dividends : 75,000
Average stockholders' equity 2,500,000
Average common stockholders' equity : 1,875,000
Determine :
(a) the rate earned on stockholders' equity
(b) the rate earned on common stockholders' equity.
Answer:
(A) Rate earned on stockholder's equity=15%
(B) Rate earned on common stockhloder's equity= 16%
Explanation:
A company reports the following profitability analysis
Net income of $375,000
Preferred dividend of $75,000
Average stockhloder's equity of $2,500,000
Average common stockhloder's equity of $1,875,000
(A) The rate earned on stockholder's equity can be calculated as follows
= Net income/Average stockholders equity
= $375,000/$2,500,000
= 0.15×100
= 15%
(B) The rate earned on common stock holder's equity can be calculated as follows
= Net income-Preferred dividend/Average common equity
= $375,000-$75,000/$1,875,000
= $300,000/$1,875,000
= 0.16×100
= 16%
Hence the rate earned on stockholder's equity and common stockhloder's equity is 15% and 16% respectively.
On January 1, 2019, Woodstock, Inc. purchased a machine costing $37,850. Woodstock also paid $1,950 for transportation and installation. The expected useful life of the machine is 7 years and the residual value is $4,100. How much is the annual depreciation expense, assuming use of the straight-line depreciation method
Answer:
Annual depreciation expense=$5,100
Explanation:
Using the straight line method , an equal amount is charged as depreciation for each each over the estimated useful life of the asset.
Annual depreciation = (Cost - residual value)/Estimated number of years
Cost of the machine= 37,850 + 1,950 = 39,800
Annual depreciation expense= (39,800-4,100)/7= 5,100
Annual depreciation expense=$5,100
Knowledge Check 01 Assume that salaried employees of Mayer, Inc., earn 2 weeks of vacation per year. The salaried employees accrue a total of $160 each pay period. Mayer's first payroll of the year is on January 7. Prepare the January 7 journal entry for Mayer by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
Vacation Benefits Expense $160
To Vacation Benefits Payable $160
Explanation:
The journal entry is shown below:
Vacation Benefits Expense $160
To Vacation Benefits Payable $160
(Being vacation pay expense is recorded)
For recording this we debited the vacation benefits expense as it increased the expense and credited the vacation benefit payable as it also increased the liabilities