Answer:
b. are changes in taxes or government spending that increase aggregate demand without requiring policy makers to act when the economy goes into recession.
Explanation:
Automatic stabilizers are changes in taxes or government spending that increase aggregate demand without requiring policy makers to act when the economy goes into recession.
In Economics, it is also referred to as built-in stability and this means that with given tax rates and expenditures policies such as fiscal and monetary policy; an increase in domestic income will reduce a budget deficit or produce a budget surplus, while a decline in income will result in a deficit or a lower budget surplus.
Hence, an automatic stabilizer is an economic system or policies that automatically shore up or strengthen the Gross Domestic Products (GDP) without specific government intervention for sustenance or creation of stability in the economic cycle of a country.
For example, personal and corporate income tax usually decline in the event of recession in a country because individuals and business owners or entities make less, thus leading to unemployment and an increase in social security funds or welfare.
Pearce Corporation exchanges old equipment for new equipment. The original cost of the old equipment was $120,000, and its accumulated depreciation at the date of exchange was $40,000. The new equipment received had a fair value of $50,000 and a book value of $32,000. The journal entry to record this exchange will include which of the following entries?
Debit equipment $50,000
Debit loss on exchange $30,000
Credit equipment $120,000
Debit accumulated depreciation $40,000
Answer:
It should include all the options, assuming that the debit on equipment account is for the new equipment, while the credit is for the old equipment.
Debit equipment $50,000 Debit loss on exchange $30,000 Credit equipment $120,000 Debit accumulated depreciation $40,000Explanation:
original purchase price $120,000
accumulated depreciation $40,000
book value $80,000
price of "new" equipment $50,000
with a book value of $32,000
if we assume that this transaction has commercial value, then we must use the fair market value of the "new" equipment in our journal entry:
Dr Accumulated depreciation - equipment: old 40,000
Dr Equipment: new 50,000
Dr Loss on exchange 30,000
Cr Equipment: old 120,000
If the transaction lacked commercial substance, then the journal entry would be different:
Dr Accumulated depreciation - equipment: old 40,000
Dr Equipment: new 80,000
Cr Equipment: old 120,000
Through coordinating partnerships with dedicated suppliers, Warby Parker have ensured quality, built a lean manufacturing operation, and built an organization that keeps buyers happy. This is an example of which triple bottom line performance metric? Multiple Choice planet/people planet/environment profit/economic profit/environment people/social Question 3 linked to 4 of 4 Total 3 4 of 4
Answer:
B. Profit / Economic
Explanation:
The triple bottom line addresses three factors that a socially responsible company must adhere to. The People / Social factor discusses the importance of the social needs of the customers which the customer must fulfill. The Planet / Environment factors are the factors that discusses about the responsiblity of the company to manufacture environmental friendly products that do not harm the environment and is sustainable. The Profit / Economic factor is one of the three factor which company must try to earn profit to keep the business running and thus benefits by earning profit to a lot of stakeholders.
The quality product is a reason why the customer prefer the company's product which helps the company in making profit. So the profit / economic factor is the right option.
Kingbird Company leased equipment from Costner Company, beginning on December 31, 2019. The lease term is 4 years and requires equal rental payments of $32,230 at the beginning of each year of the lease, starting on the commencement date (December 31, 2019). The equipment has a fair value at the commencement date of the lease of $120,000, an estimated useful life of 4 years, and no estimated residual value. The appropriate interest rate is 5%. Prepare Kingbird's 2019 and 2020 journal entries, assuming Kingbird depreciates similar equipment it owns on a straight-line basis.
Date Account Titles and Explanation Debit Credit
Answer:
Kingbird's 2019 and 2020 journal entries, assuming Kingbird depreciates similar equipment it owns on a straight-line basis is prepared in the table below.
_____________________________
Date: 12/31/2019
Account: Right of use asset. Debit: $120,000
Account: Lease liability. Credit: $120,000
(To record lease liability)
_____________________________
Date: 12/31/2019
Account: Lease liability. Debit: $32,230
Account: Cash. Credit: $32,320
(To record lease payment)
_____________________________
Date: 12/31/2020
Account: Interest Expense ($120,000-$32,230)*5%. Debit: $4,389
Account: Lease Liability (Plug in) ($32,320 - $4,389). Debit: $27,841
Account: Cash. Credit: $32,320
______________________________
Date: 12/31/2020
Account: Amortization Expense. Debit: $30,000
Account: Right of use asset. Credit: $30,000
(To record amortization) $120,000/4 years
_____________________________
In this paper, please discuss the three costing methods of job order costing, process costing, and activity-based costing. Define each method and explain when it is best suited to be used. Compare and contrast the methods and consider their benefits and shortfalls. Use the information provided to propose which cost method should be used to allocate costs. Wet Suit World is a company that manufactures wet suits for use with water sports such as snorkeling and scuba diving. The suits are made in sizes small through 3x extra large with levels of insulation layers of 2 millimeters, 5 millimeters, and 7 millimeters. They come in black with the Wet Suit World logo imprinted across the chest. The materials are the same for all of the suits, though they vary in thickness. All suits undergo the same production and quality inspection processes. There is no one "correct" answer to the proposed cost allocation method as long as the answer is well-supported based on the week’s learning. Superior papers will include the following when responding to the assignment question: Define the three costing methods. Explain when each is most appropriately used. Compare and contrast the methods, considering both benefits and shortfalls. Provide a well-supported proposal for the cost method Wet Suit World should use.
Answer:
Check below for the Answer and Explanation
Explanation:
A. All the three costing which are Job order costing, process costing and activity based costing are the different types of concepts of costing as well as the different methods of costing.
B. JOB ORDER COSTING is a method of either assigning or allocating a cost to a specific unit product .
PROCESS COSTING is a method for assigning allocation of cost for mass quantity of product .
In ACTIVITY BASED COSTING cost is calculated on the basis of the activity, number of the activities and on the basis of classification of the activities.
C.Each of the three costing method which are job order costing, process costing and activity costing are costing that has their own benefits and shortfall in which No one can replace another or fulfill the deficiency of another because each of them costing method has their own different benefits and shortfalls.
The benefit is that for calculating the cost for a particular task or job the job order costing is been applied and for calculating cost on particular process the process costing is been applied while on calculating the cost of particular activity the activity based costing is been applied .
The shortfall of all these three are that no one can replace another one.
D. A well-supported proposal for the cost method Wet Suit World should use will be JOB ORDER COSTING.
Answer :
The three costing methods of jobs are :
Job order costingProcess costingActivity based costing1. Job Order Costing :
It is a method of allocating or allocating costs to a specific unit product.2. Process Costing:
It is a method of assigning costs to the bulk quantity of a product.3. Activity based costing :
It calculates costs based on activity, the number of activities, and a classification of activities.Compare and contrast the methods and consider their benefits and shortfall are :
The benefit is that for calculating the cost for a particular task or job the job order costing is been applied and for calculating cost on particular process the process costing is been applied while on calculating the cost of particular activity the activity based costing is been applied . The shortfall of all these three are that no one can replace another one.
A well-supported proposal for the cost method is the Job Order Costing.
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On March 31, 2019, Home Decorating Pavilion received a bank statement showing a balance of $9,780. The balance in the firm's checkbook and Cash account on the same date was $10,008. The difference between the two balances is caused by the items listed below.
a. A $2,935 deposit made on March 30 does not appear on the bank statement.
b. Check 358 for $515 issued on March 29 and Check 359 for $1,710 published on March 30 have not yet been paid by the bank.
c. A credit memorandum shows that the bank has collected a $1,200 note receivable and interest of $120 for the firm.
d. A service charge of $31 appears on the bank statement.
e. A debit memorandum shows an NSF check for $555. The check was Issued by Dane Jarls, a credit customer.)
f. The firm's records indicate that Check 341 of March 1 was issued for $900 to pay the month's rent. However, the canceled check and the listing on the bank statement show that the actual amount of the check was $800.
g. The bank made an error by deducting a check for $590 issued by another business from the balance of Home Decorating Pavilion's account.
Required:
1. Prepare a bank reconciliation statement for the firm as of March 31, 2019.
2. Prepare a bank reconciliation statement for the firm as of March 31, 2019. (Enter all amounts as positive values.)
Answer:
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Using both the supply and demand for bonds and liquidity preference framework, show how interest rate are affected when the riskiness of bonds rises. Are the results the same in the two frame works
Answer:
Yes, the results are the same in both frameworks. Please see below for explanation.
Explanation:
With regards to the bond supply and demand framework, people will look to buy more bonds since they are more wealthy now. Hence, the supply of bonds will increase. The supply curve and the demand curve will both move to the right, with the former shifting more than the latter. The equilibrium interest rate will increase.
With regards to the liquidity preference framework, once the economy experiences a positive shift, there will also be an increase in the demand for money. People will make an increased number of transactions as well and hence, the demand curve will move towards the right. The equilibrium interest rate will rise too.
Suppose the economy is in a liquidity trap. True or false. A monetary contraction will not have any effect on the nominal interest rate, though a monetary expansion may have an effect on the nominal interest rate.
Answer:
False
Explanation:
When a country is in a liquidity trap , monetary policy both contractionary and expansionary would have an effect on interest rate
From 2010 to 2011, nation A's real GDP increased from $100 billion to $106 billion and its population grew from 50 million to 51 million. As a result, real GDP per capita _____ because real GDP rose _____ than the population.
Answer:
As a result, real GDP per capita WILL INCREASE because real GDP rose MORE than the population.
Explanation:
increase in real GDP = $106 - $101 = $5 billion, or 4.95%
population increase = 51 - 50 = 1 million people, or 2%
real GDP per capita 2010 = $101,000 / 50 = $2,020
real GDP per capita 2011 = $106,000 / 51 = $2,078
since the real GDP increased by almost 5%, while the population increased only by 2%, the real GDP per capita will increase by 2.9%
The following information is available for Tomlin Company.
April 1 April 30
Raw materials inventory $10,000 $14,400
Work in process inventory 4,830 3,290
Materials purchased in April $97,900
Direct labor in April 80,300
Manufacturing overhead in April 155,000
Prepare the cost of goods manufactured schedule for the month of April.
Answer:
cost of goods manufactured= $330,340
Explanation:
Giving the following information:
April 1 April 30
Raw materials inventory $10,000 $14,400
Work in process inventory 4,830 3,290
Materials purchased in April $97,900
Direct labor in April 80,300
Manufacturing overhead in April 155,000
To calculate the cost of goods manufactured, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 10,000 + 97,900 - 14,400= $93,500
cost of goods manufactured= 4,830 + 93,500 + 80,300 + 155,000 - 3,290
cost of goods manufactured= $330,340
Outpuit AFC AVC ATC MC 1 $300 $100 $400 $100 2 150 75 225 50 3 100 70 170 60 4 75 73 148 80 5 60 80 140 110 6 50 90 140 140 7 43 103 146 180 8 38 119 156 230 9 33 138 171 290 10 30 160 190 360 These are cost data for a firm that is selling under pure competition. If output price is $290, the per-unit economic profit at the profit-maximizing output is:__________
Answer:
The answer is $119
Explanation:
Solution:
The firm is working in a competitive market that is seen as perfect.
Thus,
The profit the condition for maximizing profit is given below:
P = MR =MC
Now,
The market price of the product is =$290
So,
P = $290
From the given table, we noticed that the profit maximizing output level is 9 units when P = MC
The profit (π) = total revenue - cost total
= ( P * Q) - ( ATC * Q)
= 290 * 9 - 171 * 9
= 2610 - 1539
= 1071
Therefore, the per-unit economic profit at the profit-maximizing output is
=$1071/9
=$119
Indicate the effect that the following will have on the operating cycle. Use the letter "I" to indicate an increase, the letter "D" for a decrease, and the letter "N" for no change.
(a) average receivables goes up.
(b) credit repayment times for customers are increased
(c) inventory turnover goes from 3 times to 6 times.
(d) payable turnover goes from 6 times to 11 times.
(e) receivables turnover goes from 7 times to 9 times.
(f) payments to suppliers are accelerated.
Answer: a. Increase
b. Increase
c. Decrease
d. No change
e. Decrease
f. No change
Explanation:
The Operating cycle refers to the amount of time it will take a business to source or produce inventory, sell that inventory and then receive the money for the sold inventory.
a. If the Average Receivables goes up, then that means there are more people to collect money from. This will increase the amount of time it will take to collect thereby increasing the operating cycle.
b. If the credit repayment times for the customers are increased, this means that the time they have to take to pay the company increases and this will definitely increase the Operating cycle.
c. If the inventory turnover increases, it means that inventory is being purchased more times in the period. This means that the operating cycle has decreased because the company is having to replace inventory more to begin a new cycle.
d. The Payables turnover rate does not feature in the operating cycle so no effect will be recorded.
e. If the Receivables turnover rate increases, it means that the company is getting paid by receivables faster. This will decrease the operating cycle because it means that the business is receiving its money faster.
f. Payments to suppliers is just another way of saying Account Payables and as stated already, it has nothing to do with the Operating Cycle so No effect will be recorded.
An Operating cycle refers to period it might take a business to produce, sell and receive money for the sold inventory.
a. For when average receivables goes up : I
b. For when credit repayment times for customers are increased : I
c. For when inventory turnover goes from 3 times to 6 times : D
d. For when payable turnover goes from 6 times to 11 times : N
e. For when receivables turnover goes from 7 times to 9 times : D
g. For when payments to suppliers are accelerated : N
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Monson sells 29 units for $50 each on December 15. Monson uses a perpetual inventory system. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round your per unit costs to 2 decimal places.)
The complete question:
Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 29 units for $50 each.
Purchases on December 7 20 units at $20.00 each
Purchases on December 14 34 units at $30.00 each
Purchases on December 21 30 units at $36.00 each
Monson uses a perpetual inventory system. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round your per-unit costs to 2 decimal places.)
Answer:
Trey MonsonDetermination of the cost of Ending Inventory based on the Weighted Average Method:Date Quantity Unit Cost Total Cost
Dec. 7 Purchase 20 $20 $400
Dec. 14 Purchase 34 30 1,020
Total 54 26.30 $1,420 .20
Dec. 15 Sale -29 26.30 -762.70
Dec 15 Balance 25 26.30 $657.50
Dec. 21 Purchase 30 36 1,080
Dec. 21 Available 55 31.59 $1,737.50
Dec. 31 Ending Inventory 55 $31.59 $1,737.50
Explanation:
To use the weighted average method, we divide the cost of goods available for sale by the number of units available for sale, which yields the weighted-average cost per unit. The cost of goods available for sale is the sum of beginning inventory and net purchases.
Athena Company provides employee health insurance that costs $15,100 per month. In addition, the company contributes an amount equal to 4% of the employees' $151,000 gross salary to a retirement program. The entry to record the accrued benefits for the month would include a:
Answer:
Debit to Employee Benefits Expense $21,140
Explanation:
Preparation of Athena Company entry to record the accrued benefits for the month
Using this formula
Accrued Expenses = Gross salary ×Percentage of the amount contributed+ Insurance cost
Let plug in the formula
Accrued Expenses= $151,000 × 0.04
= $6,040 + $15,100
= $21,140
Debit to Employee Benefits Expense $21,140.
Therefore the entry to record the accrued benefits for the month would include a: Debit to Employee Benefits Expense $21,140.
A company had net sales of $21,500 and ending accounts receivable of $2,700 for the current period. Its days' sales uncollected equals: (Use 365 days a year.) Multiple Choice 8.0 days. 58.9 days. 45.8 days. 7.4 days. 45.2 days.
Answer:
45.8 days
Explanation:
The computation of the days sales uncollected is shown below:
But before that first we need to find out the inventory turnover ratio which is
Inventory turnover ratio = Sales ÷ Accounts receivable
= $21,500 ÷ $2,700
= 7.96 times
Now Days sales uncollected is
= 365 ÷ Inventory turnover ratio
= 365 ÷ 7.96
= 45.8 days
We simply applied the above formulas
At the beginning of her current tax year, Angela purchased a zero-coupon corporate bond at original issue for $51,500 with a yield to maturity of 6 percent. Given that she will not actually receive any interest payments until the bond matures in 8 years, how much interest income will she report this year assuming semiannual compounding of interest
Answer:
Angela's income interest is $772,500
Explanation:
Income interest at 1st Semiannual duration
Semi annual interest = $51,500*6%*(6/12)= $154,500
Income interest at 2nd Semiannual duration
Note New Principal for 2nd year will be =$51,500+$154,500= $206,000
Semi annual interest = ($51,500+$154,500)*6%*(6/12)= $618,000
There fore Total income = $154,500+$618,000= $772,500
Oxygen combines with nitrogen in the air to form NOx at about
Answer:
2500° F
Explanation:
Oxygen combines with nitrogen in the air to form NOx at about 2500 degrees Fahrenheit.
Stock A has a beta of 1.19 and an expected rate of return of 13.42 percent. The market risk premium is 8.2 percent and the risk-free rate is 4.1 percent. Which one of the following statements related to Stock A is correct? WHY?
a) stock A is overpriced?
b) Stock A is underpriced?
Answer:
The correct answer is (a) stock A is overpriced, this is because the actual rate of return is lesser than the intrinsic return rate.
Explanation:
Solution
Given that:
Stock A has beta of =1.19
Expected rate of return =13.42%
Market premium risk =8.2%
Risk free rate is =4.1%
Now
The expected rate return = risk-free rate + beta * (market risk premium)
=4.1+ 1.19*8.2
= 13.858%
Therefore, the stock A is overpriced because the actual rate of return is lower than the intrinsic return rate.
Given the following information for the year ended December 31, what is the ratio of cash to monthly cash expenses? Negative cash flow from operations $(540) Cash and cash equivalents as of year-end.
a. 10.0
b. 12.0
c. 14.4
d. None of these choices are correct.
Answer:
d. None of these choices are correct.
Explanation:
For computation of ratio of cash to monthly cash expenses first we need to find out the monthly cash expenses which is shown below:-
Monthly Cash Expenses = Negative cash Flow ÷ Number of Months in a year
= $540 ÷ 12
= $45
The ratio of Cash To Monthly Cash Expenses = Cash and cash equivalents at Year End ÷ Monthly Cash Expenses
= $495 ÷ $45
= 11
Therefore for computing the ratio of Cash To Monthly Cash Expenses we simply applied the above formula.
The accounts in the ledger of Monroe Entertainment Co. are listed below. All accounts have normal balances. Accounts Payable $465 Fees Earned $3,123 Accounts Receivable 858 Insurance Expense 486 Prepaid Insurance 2,148 Land 2,660 Cash 1,964 Wages Expense 780 Dividends 536 Common stock 5,844 Total assets are: a. $7,630 b. $3,123 c. $5,844 d. $3,287
Answer:
a. $7,630
Explanation:
According to the given situation the computation of total assets is shown below:-
Total assets = Accounts receivable + Prepaid insurance + Cash + Land
= $858 + $2,148 + $1,964 + $2,660
= $7,630
Therefore for computing the total assets we simply applied the above formula and ignore all other values as they are not relevant.
The following four employees all feel committed to the organization they work for. Jennifer feels it will be difficult to find a similar pension plan she has at another job. Mark has a high level of seniority at his current job. James feels his organization makes great contributions to the community. Susan wants to ensure her family receives medical insurance. Based on this information, who is the most likely to display organizational citizenship behavior?
Answer:
James
Explanation:
Because James feels his organization makes great contributions to the community, he is most likely to display organizational citizenship behavior
Organizational citizenship behaviors (OCB) are voluntary behaviors employees perform to help others and benefit the organization. An employee who engages in OCB may not even be a top performer, he could just be a person who can go the extra mile or go above and beyond the minimum efforts required to do a satisfactory job.
g A particular brand of toothpaste costs 4 British pounds in London. The nominal exchange rate is .80 and the real exchange rate is about 1.16. These numbers imply that the U.S. price of the same toothpaste is about a. $5.79 b. $4.29 c. $3.70 d. $2.76
Answer:
The answer is option (d)$2.76
Explanation:
Solution
Given that:
The cost of a particular brand of toothpaste = 4 pounds
The exchange rate = .80
Real exchange rate = 1.16
Now
Real exchange rate is given as:
R = real exchange rate
e = nominal exchange rate
PF = foreign price
P = domestic price
Suppose we say that U.S. is a domestic country and British is a foreign country we have the following formula below:
R = e(PF/P)
R = 1.16
e = 0.80
PF = 4
Thus
R = e(PF/P)
1.16 = 0.80(4/P)
P = 3.2/1.16
= 2.7586207
= $2.76
Therefore, The U.S rice of the same toothpaste is about $2.76
Use the information below for Harding Company to answer the question that follow. Harding Company Accounts payable $ 40,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 110,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 30,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 Based on the data for Harding Company, what is the amount of quick assets
Answer:
$131,000
Explanation:
The computation of the amount of quick assets is shown below:
Quick asset = Account Receivable + Cash + marketable securities
= $65,000 + $30,000 + $36,000
= $131,000
We simply added the account receivable, cash and the marketable securities so that the quick assets could come plus it contains more liquidity that converted into cash in a very short period of time and the rest of the items are ignored as there are not relevant
LeBron James (LBJ) Corporation agrees on January 1, 2020, to lease equipment from Wildhorse, Inc. for 3 years. The lease calls for annual lease payments of $21,000 at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. This lease is properly classified as an operating lease. The credit to Lease Liability on December 31, 2020 is ________.
Answer:
interest expense 4,881.08 debit
lease liability 4,881.08 credit
Explanation:
We solve for the present value of the lease payment and with that we solve forthe interest accrued during the period which will be interest expense debit and lease liability credit.
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 21,300
time 3
rate 0.06
[tex]21300 \times \frac{1-(1+0.06)^{-3} }{0.06} = PV\\[/tex]
PV $60,351.2638
lease: +60,351.26
less: 21,000.00 payment
81,351.26 before interest
interest over the year 81,351.26 x 0.06 = 4,881.08
Missing Information: 6% implicit rate
Suppose a firm’s sales for the year = $1200 and its average receivables balance is $200. What is the firm’s Accounts Receivable Turnover Ratio, expressed in days (not times per year)?
Answer:
61 days
Explanation:
Accounts receivable turn over ratio is an efficiency ratio that is used to calculate how efficiently a company is receiving its sales on account payments . This measures the number of times in a period that a company collects its average accounts receivable.
When expressed in days , it reveals the number of days it takes a sales on account customer to make payment
Workings
Annual sales = 1200
Average receivable balance = 200
Receivable turnover ratio = Annual sales /average receivable balance
1200/ 200 = 6
Account receivable turnover ratio in days = 365/receivable turnover ration
365/6 = 60.8 days = approximately 61 days
This shows that it takes a customer approximately 61 days to pay their purchase on account which
Roy Company manufactures a product in Departments A and B. Materials are added at the beginning of the process in Department B. Roy uses the weighted-average method in its process costing system. Conversion costs for Department B were 50% complete with respect to the 6,000 units in the beginning work in process and 75% complete with respect to the 8,000 units in the ending work in process. A total of 12,000 units were completed and transferred out of Department B during February. An analysis of the costs in Department B for February follows: The total cost per equivalent unit during February was closest to:_________
a. $2.75
b. $2.78
c. $2.82
d. $2.85
Answer:
Number of equivalent units= 18,000
Explanation:
Giving the following information:
Conversion costs for Department B were 50% complete concerning the 6,000 units in the beginning work in process and 75% complete for the 8,000 units in the ending work in process. A total of 12,000 units were completed and transferred out of Department B during February.
With the information provided, we can calculate the number of equivalent units of the period.
Beginning work in process = 6,000*0.5= 3,000
Units started and completed = 12,000 - 3,000= 9,000
Ending work in process completed= 8,000*0.75= 6,000
Number of equivalent units= 18,000
On November 1, Vacation Destinations borrows $1.57 million and issues a six-month, 9% note payable. Interest is payable at maturity. Record the issuance of the note and the appropriate adjusting entry for interest expense at December 31, the end of the reporting period. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Enter your answers in dollars, not in millions. Round your answers to the nearest dollar amount.)
Answer:
(a) To Record the issuance of the note
Debit Cash $1.57 million
Credit Notes payable $1.57 million
(To record notes payable issuance)
(b) Adjusting entry for interest expense at December 31:
Debit Interest expense $23,550
Credit Interest payable $23,550
(To record interest expense on notes payable as at Dec 31)
Explanation:
Note payable is a promissory note with a written promise made by the borrower to the lender (payee) to pay a certain, definite sum at a specified date.
Interest expense on the notes is calculated as: Principal x Interest Rate x Time
In this case, the total interest expense is $1.57 million x 9%/12 x 6 months = $70,650.
Total interest expense to the Company as at December 31 is therefore $70,650 / 6 months x 2 months = $23,550.
Suppose that you are the manager and sole owner of a highly leveraged company. All the debt will mature in one year. If at that time the value of the company is greater than the face value of the debt, you will pay off the debt. If the value of the company is less than the face value of the debt, you will declare bankruptcy and the debt holders will own the company.
a) Express your position as an option on the value of the company.
b) Express the position of the debt holders in terms of options on the value of the company.
c) What can you do to increase the value of your position?
Answer:
From my position as an option on the value of the company, the stance or view of the owner is a call option on value of company strike face of debt
Secondly, debt holders have systematically sold a put option value of company strike at face of debt.
Now, to be able to increase or raise the value call option it includes he following, In making sure to raise the value of the company, To boost the unpredictability of the company.
Explanation:
Solution
(a) The position of the owner is a call option on value of company strike at face of debt
(b)The debt holders have efficiently sold a put option on value of company strike at face of debt.
(c) To be able to increase the value option call the following are listed below:
Endeavor or make sure to raise the value of the companyBoost the volatility of the company.On September 1, Sky Mountain Co. borrowed $68,000 on a 6%, 9-month note payable to Coast National Bank. Given no previous adjusting entries have been recorded, Sky Mountain's adjusting entry four months later at December 31 would include a:
Answer and Explanation:
The journal entry is shown below:
Interest expense ($68,000 × 9% × 4 months ÷ 12 months) $2,040
To Interest payable $2,040
(Being the interest expense is recorded)
For recording this we debited the interest expense as it increased the expenses and credited the interest payable as it also increased the liabilities so that the proper journal entries could be recorded
Identify whether the following activities Ere examples Of business-level or corporate level strategy.
a. A company's managers ask, "Should we increase the size of our Bluetooth wireless speaker and sell it at a higher cost?"
b. Never previously known as a computer hardware company, Microsoft decides to enter the tablet manufacturing business, producing the Microsoft Surface.
c. Managers for IBM's SPSS statistics software meet to determine how they Will market the product in the upcoming year. Their decision is to show potential clients how effective SPSS is at analyzing extremely large data sets, and how
the "Direct Marketing" part Of the program helps identify which customers will respond to advertisements.
d. The manufacturer of Chobani Yogurt decided to open a flagship store in Soho, where customers can order special yogurt creations, such as fig and walnut or cucumber and olive oil. Though it was in the business of manufacturing
yogurt for 7 years, the company never tried to run a restaurant before.
Answer: A. Business Level.
B. Corporate Level.
C. Business Level.
D. Corporate Level.
Explanation:
Business level strategies are used by a company to engage in transactions that will enable it to sell it's products and bring in profit to the company. It therefore focuses on the customers the business has.
Corporate Level strategies on the other hand are at organizing level of the Organization. In other words they deal with decisions meant to progress the company to make it bigger or more profitable. For example by selling or buying companies/ business units.
A. This is a business level activity as it focuses on the sales of their Bluetooth products.
B. This is a Corporate Level Strategy as it deals with Microsoft as an Organization entering a new market i.e diversifying for growth.
C. This is a Business level strategy as it deals with the product that the company wants to improve sales of which is SPSS.
D. This is a Corporate Level Strategy because as the text shows, the company has never tried to run a restaurant before. They are therefore diversifying and entering into a new market.
Big Canyon Enterprises has bonds on the market making annual payments, with 17 years to maturity, a par value of $1,000, and a price of $969. At this price, the bonds yield 8.1 percent. What must the coupon rate be on the bonds?
Answer:
7.8%
Explanation:
For computing the coupon rate first we have to determine the PMT by using the PMT formula which is shown in the attachment below:
Given that,
Present value = $969
Future value or Face value = $1,000
RATE =8.1%
NPER = 17 years
The formula is shown below:
= PMT(RATE;NPER;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the PMT is $77.58
Now the coupon rate is
= $77.58 ÷ $1,000
= 7.8%