Solution :
a). The capital asset that can be found as any type of property which is held by the assessee for a long period of time and it costs more than the useful day to day costs of operation, whether it is connected with the business or the profession of the assessee. It includes that all types of the properties which is movable, tangible, fixed or circulating.
The classic automobile sold by George in the year 2017 is considered not as a depreciable property which was being used in the business and had a determined a lifetime which was held for more than a year.
The depreciation property is any type of asset which is eligible for depreciation. The IRS Publication 96 requires a depreciable asset to meet the following requirements :
1. It must be any property that a person owns or possesses.
2. It is used for the business and the income of the producing activity.
3. It must have a determined useful life.
4. It is expected to last for more than a month.
b). The computation of the present value of the automobile :
Present value = future value x present value factor
PV = FV x PVF
= 1500000 x 0.7130
= $ 1,069,500
It is given that:
FV = $ 1,500,000
N = 5 years
The rate of return = 7%
So the PVF at N = 5 years and the rate of return = 7% is 0.7130
Thus, George should have invested his money for 5 year ago with a value of $ 1,039,5000 instead of putting $750,000 into a car.
governor of central bank of Nigeria
Answer:
Godwin Emefiele
Explanation:
Governor - Since 6/3/2014. Godwin Emefiele is the Governor of the Central Bank of Nigeria (CBN).
Select the correct answer from each drop-down menu.
What techniques can you use to control inventory costs?
(economic order, Just in time, Carrying) ______ quantity indicates the minimum quantity of goods to reach before reordering inventory.
(Reliable Stock, Safety Stock, Scheduled Stock) _____ is the quantity of goods to keep as a buffer to utilize in times of emergency.
Answer:
First one: Economic Order; Second One: Safety Stock
Explanation:
I know the second one's right because it frequently shows up on PLATO modules for business. The first one is economic order according to investopedia.com. I looked up both carrying quantity and just in time quantity, too-- it seems as carrying quantity isn't a thing, and just in time quantity focuses on decreasing waste. See my comments on your question for quotes from the source.
Hope this helps you!!
Company Z is just starting to make a brand new product it has never made before. It has completed two units so far. The first unit took 19 hours to complete and the next unit took 15 hours. Based only on this information, what would be the estimate of the learning percentage in this process
Answer:
the learning percentage is 78.95%
Explanation:
The computation of the learning percentage is shown below;
= The next unit ÷ first unit
= 15 hours ÷ 19 hours
= 78.95%
We simply divided the two items with each other so that the correct percentage could arrive
hence, the learning percentage is 78.95%
Skip and Trace decide to start a business. They sign a partnership agreement providing that Skip will contribute $6,000 toward the necessary $10,000 in start-up capital and Trace will contribute $4,000. If the agreement is silent as to management and profits, Skip should receive:
Answer: 50% of the profit and share equal management.
Explanation:
Since the agreement is silent as to management and profits, Skip should receive 50% of the profit and share equal management.
It should be noted that when profit sharing and the management related isn't defined, profits and management will be divided equally among the partners. Therefore, in this case, profit will be shared equally.
Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be reported in the consolidated income statement for 20X8?
a. $2,765,000
b. $1,620,000
c. $1,422,000
d. $2,963,000
Answer: c. $1,422,000
Explanation:
The Cost of Goods that goes into the Consolidated income statement would be the goods that were sold to unaffiliated companies. The original cost of production would apply:
= Quantity sold to unaffiliated companies in 20X8 * Cost for Pepper
= 18,000 * 79
= $1,422,000
a 12- year bond with a par value of 1,000 and interest rate of 12 percent interst (6percent semiannyally). The current maret price of the bond is $700. This bonds expected rate of return will be g
Answer:
18.34 %
Explanation:
Bond holders usually expect to receive a rate that is offered on the market for similar bonds. this rate is the same as the Bond Yield and can be determined using financial calculator as follows ;
PV = - $700
FV = 1,000
N = 12
PMT = 1,000 x 12 % = $120
P/YR = 1
I/YR = ??
Inputting the values in the financial calculator as set above gives a required rate (I/YR ) for similar bonds of 18.34 %
In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in your analysis.
Recall the components that makeup GDP. National income (Y) equals total expenditure on the economy's output of goods and services. Thus, where C= consumption, I= investment, G =government purchases, X=exports, M =imports, and NX= net exports.
Y= _____
Also, national saving is the income of the nation that is left after paying for _____. Therefore, national saving (S) equals:
S=_____
Rearranging the previous equation and solving for Y yields, Y= _____ Plugging this into the original equation showing the various components of GDP results in the following relationship:
S=_____
Answer:
Y = C + I + G + NX
S = Y - C
S = I + G + NX
Explanation:
National Income Y = C + I + G + NX ; {where consumption, investment, government purchases, net exports ie exports - imports are corresponding expenditure of households, firms, government, rest of the world}
National Saving (S) is income (Y) left after paying for consumption (C) . So, S = Y - C
Using above equations, Y = C + S , Y = C + I + G + NX
C + S = C + I + G + NX
So, S = I + G + NX
The controller of Carla Vista Production has collected the following monthly expense data for analyzing the cost behavior of electricity costs.
Total Electricity Costs Total Machine Hours
January $2,650 200
February 3,100 320
March 3,570 450
April 4,750 695
May 3,160 500
June 4,910 750
July 4,130 630
August 3,810 580
September 5,060 680
October 4,390 610
November 3,290 320
December 8,920 770
(a) Determine the fixed and variable cost components using the high-low method.
(b) What electricity cost does the cost equation estimate for a level of activity of 450 machine hours?
(c) What electricity cost does the cost equation estimate for a level of activity of 750 machine hours?
Answer:
Results are below.
Explanation:
Giving the following information:
January $2,650 200
February 3,100 320
March 3,570 450
April 4,750 695
May 3,160 500
June 4,910 750
July 4,130 630
August 3,810 580
September 5,060 680
October 4,390 610
November 3,290 320
December 8,920 770
To calculate the variable and fixed components using the high-low method, we need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (8,920 - 2,650) / (770 - 200)
Variable cost per unit= $11
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 8,920 - (11*770)
Fixed costs= $450
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 2,650 - (11*200)
Fixed costs= $450
Now, the total cost if the machine hours equals 450:
Total cost= 11*450 + 450= $5,400
Finally, 750 hours:
Total cost= 11*750 + 450= $8,700
When applying for the FAFSA, which of the following is not true?
Answer:
it provides early admission
Explanation:
thats my answer
When applying for FAFSA, the following is not true : The earliest one can apply and submit for FAFSA is January 1st of each year.
FAFSAFAFSA stands for Free Application for Federal Students Aid.
FAFSA is financial aid eligibility form for the students of United States of America. The FAFSA provides aids such as federal grants, loans, federal students aid, etc. to the college students.
The earliest one can submit for FAFSA is 1st of October every year.
FAFSA can be filled online or on paper.
Both dependent and independent students can fill for FAFSA.
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One out of every ten jobs falls into the marketing category.
True
False
Answer:
true
Explanation:
one out of every ten jobs falls into the marketing category
Lamping, Inc., is considering the purchase of a machine that would cost $520,000 and would last for 7 years, at the end of which, the machine would have a salvage value of $52,000. The machine would reduce labor and other costs by $112,000 per year. Additional working capital of $6,000 would be needed immediately, all of which would be recovered at the end of 7 years. The company requires a minimum pretax return of 14% on all investment projects. (Ignore income taxes).
Required:
Determine the net present value of the project.
Answer:
Lamping, Inc.
The net present value of the project is:
= ($22,544)
Explanation:
a) Data and Calculations:
Cost of machine = $520,000
Useful life of machine = 7 years
Salvage value = $52,000
Cost savings = $112,000 per year
Initial working capital $6,000
Recovered working capital = $6,000
Minimum required pretax return = 14%
PV of initial costs = $526,000 ($520,000 + $6,000)
PV of costing savings (annuity) = $480,256 ($112,000 * 4.288)
PV of salvage and recovered working capital = $23,200 ($58,000 * 0.400)
Total savings/benefits = $503,456 ($480,256 + $23,200)
NPV = ($22,544)
Margaret Lindley paid $15,160 of interest on her $301,600 acquisition debt for her home (fair market value of $501,600), $4,160 of interest on her $30,160 home-equity debt, $1,160 of credit card interest, and $3,160 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,160 of interest income this year and no investment expenses. How much of the interest expense may she deduct this year
Answer:
Margaret Lindley
Margaret Lindley can deduct $12,320 of the interest expense this year.
Explanation:
a) Data and Calculations:
Interest on $301,600 acquisition debt for her home = $15,160
Fair market value of home = $501,600
Interest on her $30,160 home-equity debt = $4,160
Credit card interest = $1,160
Margin interest expense = $3,160
Interest income received = $10,160
Deductible interest expense:
Interest on debt for her home = $15,160
Interest on home-equity debt = $4,160
Margin interest expense = $3,160
Interest income received = ($10,160)
Deductible interest expense = $12,320
b) Margaret cannot deduct her credit card interest because it is considered as a type of personal consumer finance interest. This type of interest expense is not tax-deductible.
Which best describes the future growth potential of the Marketing, Sales, and Service career cluster?
Growth is expected to decline.
Growth is expected to grow less quickly than average.
Growth is expected to be about average.
Growth is expected to grow much more quickly than average.
Answer:
I believe your answer is D
Explanation:
Growth is expected to grow much more quickly than average is best describes the future growth potential of the Marketing, Sales, and Service career cluster. Hence, option D is correct.
What is growth potential marketing?The development of new product lines, the use of more effective marketing strategies, or other strategies that transform a company from a specialized market to a greater volume operation can all be used to determine an organization's potential for growth.
The pace of growth that an economy may sustain over the medium term without experiencing excessive inflation is known as potential growth. The advanced countries' potential growth has decreased in recent decades as a result of slower increases in the labor force, capital stock, and productivity.
From technical-based marketing to anticipation marketing, there will be a mental shift. This will allow marketers to foresee what consumers will want and then incorporate that information into automation processes. This fresh perspective will now only improve productivity.
Thus, option D is correct.
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ack purchased 200 shares of Apple stock earlier this month at the price of $210 per share. Apple stock is trading at $218 today and will pay a dividend of $2/share with tomorrow being the ex-date. Jack faces an ordinary income tax rate of 35% and a capital gain tax rate of 18.8%. How much unrealized capital gains will he have after the dividend payment
Answer:
The amount of unrealized capital gains he will have after the dividend payment is $1,200.
Explanation:
Apple stock price per share today = $218
Dividend per share = $2
Apple stock ex-date price per share = Apple stock price per share today - Dividend per share = $218 - $2 = $216
Unrealized capital gains = Number of Apple stock shares purchased * (Apple stock ex-date price per share - Price per share at which Apple stock shares were purchased) = 200 * ($216 - $210) = 200 * $6 = $1,200
Therefore, the amount of unrealized capital gains he will have after the dividend payment is $1,200.
A company's weighted average cost of capital: Multiple Choice is equivalent to the aftertax cost of the outstanding liabilities. should be used as the required return when analyzing any new project. is the return investors require on the total assets of the firm. remains constant when the debt-equity ratio changes. is unaffected by changes in corporate tax rates.
Answer:
is the return investors require on the total assets of the firm
Explanation:
The weighted average cost of capital is to computed by multiplying the cost of the capital structure with their weights
Here the company would predicted to pay on an average for the security holders in order to finance the assets
Therefore as per the given scenario, the above represent the answer
And, the same is relevant
Maestro Inc has a $1,000, 6% coupon bond with interest payable semiannually and a remaining term of 20 years. The market yield on similar bonds is 10%. What percentage of face value is the bond selling for today
Answer:
65.682%
Explanation:
The computation of the percentage is shown below;
But before that first determine the present value i.e.
Given that
Future value = $1,000
PMT = $1,000 × 6% ÷ 2 = $30
RTAE = 10% ÷ 2 = 5%
NPER = 20 × 2= 40
the formula is shown below;
= -PV(RATE,NPER,PMT,FV,TYPE)
After applying the above formula, the present value is $656.82
Now the percentage is
= $656.82 ÷ $1,000
= 65.682%
Old Economy Traders opened an account to short-sell 1,900 shares of Internet Dreams at $58 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $58 to $60, and the stock has paid a dividend of $3.50 per share. a. What is the remaining margin in the account
Answer:
45.67%
Explanation:
Calculation to determine the remaining margin in the account
First step is to calculate the 1 year price
1 year price=1900 shares*$58 per share
1 year price = $110,200
Second step is to calculate the Equity
Margin requirement is 50% so equity = 50%*$110,200
Margin requirement is 50% so equity =$55,100
Third step is to calculate the 1 year later price increase of 60
1 year later price increase to 60
$1900 shares*$60 per share =114,000
Fourth step is to calculate the Dividend
Dividend =$3.50 *1900
Dividend=$6,650
Now let calculate the Margin
Margin = $55,100/($114,000+$6,650)
Margin =$55,100/$120,650
Margin= 45.67%
Therefore the remaining margin in the account is 45.67%
Over/Under: Alpha failed to record AJEs for $500 interest earned from a note receivable and $700 interest incurred from a note payable. None of the interest will be paid or received until next year. This has what effect on assets, liabilities, and net income
Answer:
Alpha
The effects on assets, liabilities, and net income are as follows:
Assets are understated by $500
Liabilities are understated by $700
Net income is overstated by $200
Explanation:
a) Data and Calculations:
Interest earned from a note receivable = $500
Interest incurred from a note payable = $700
Failure to record these has the following effects:
Assets are understated by $500 (< $500)
Liabilities are understated by $700 (< $700)
Net income is overstated by $200
b) Adjusting Journal Entries (AJEs) ensure that the accounts are up-to-date in accordance with the accrual concept of financial accounting. The accrual concept requires that transactions affecting a financial period must be reported in the affected period. This implies that expenses incurred must be recognized in the period they are incurred and not when cash is paid. Similarly, revenue earned must be recognized in the period they are earned and not when cash is received.
Since Glo-Brite Paint Company withholds the city of Philadelphia income tax, you must deposit the taxes with the Department of Revenue. The deposit rule that affects Glo-Brite Paint Company states that if the withheld taxes are between $350 and $16,000 per month, the company must deposit the tax monthly by the 15th of the following month. The withheld taxes for the October payrolls were $1,209.18.
Required:
Prepare the journal entry to record the deposit of the taxes, and post to the appropriate ledger accounts.
Answer:
Glo-Brite Paint Company
1. Journal Entry:
Nov. 15:
Debit Withheld Taxes Liability $1,209.18
Credit Cash $1,209.18
To record the payment of withheld taxes to the Department of Revenue.
2. T-accounts:
Withheld Taxes Liability
Account Titles Debit Credit
Cash $1,209,18
Cash Account
Account Titles Debit Credit
Withheld Taxes Liability $1,209,18
Explanation:
a) Data and Calculations:
October withheld taxes = $1,209.18
b) Withheld taxes are government-mandated taxes withheld from employees for remittance directly to the tax authorities. Once they are withheld, they form a liability to the employer until remittance is made to the taxation authorities affected.
Prosperous Production makes two products from a common input. Joint processing costs up to the split-off point total $42,300 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below: Product AE Product CJ Total Allocated joint processing costs $ 25,600 $ 16,700 $ 42,300 Sales value at split-off point $ 32,200 $ 21,500 $ 53,700 Costs of further processing $ 16,700 $ 17,300 $ 34,000 Sales value after further processing $ 48,500 $ 40,200 $ 88,700 What is the minimum amount the company should accept for Product AE if it is to be sold at the split-off point
Answer:
Prosperous Production
The minimum amount the company should accept for Product AE if it is to be sold at the split-off point is:
= $ 32,200.
Explanation:
a) Data and Calculations:
Annual joint processing costs up to split-off = $42,300
Product AE Product CJ Total
Allocated joint processing costs $ 25,600 $ 16,700 $ 42,300
Sales value at split-off point $ 32,200 $ 21,500 $ 53,700
Costs of further processing $ 16,700 $ 17,300 $ 34,000
Sales value after further processing $ 48,500 $ 40,200 $ 88,700
b) If the company accepts any amount that is less than the sales value at the split-off point, it will not make enough profit as offered by the market. A further review shows that the company will lose $400 if it processes Product AE further than the split-off point. At the split-off point, it will make a gain of $6,600. After further processing, it will only record a gain of $6,200.
If you have PhP 5,000.00, which of the following investment alternatives would provide the greatest ending wealth for your one-year investment?
7/10 percent compounded annually
7/10 percent compounded semi-annually
72/100 percent simple interest
7/10 percent compounded quarterly
NO FILES AND CHAIN MESSAGE OR ELSE I'LL REPORT YOUR ACCOUNT.
Answer:
7/10 percent compounded quarterly
Explanation:
The formula for calculating future value:
FV = P (1 + r/m)^mn
m = number of compounding
FV = Future value
P = Present value
R = interest rate
N = number of years
Simple interest = principal x time x interest rate
1. 5000 x (1.007) = 5035
2. 5000 x (1 + 0.007/2)^2 = 5035.06
5000 x (1 + 0.007/4)^4 = 5035.09
Part A. Sarah has a credit card with a 21% interest rate and has a current balance of $838. What would her estimated interest be monthly? (Use APR formula or calculator if needed.)
Part B. If Sarah has an estimated monthly interest rate of $15.45 how much money in interest would she pay to the credit card company after one year of only paying the minimum payments?
The 1-year, 2-year. 3-year,and 4-year risk-free zero rates are 4%, 4.5%, 4.75%, and 5% with continuous compounding. What is the forward rate for the one year period beginning in two years
Answer:
5.25%
Explanation:
Mathematically, investing at the 3-year risk-free zero rate should be the same as investing at a 2-year risk-free zero rate and one-year forward rate beginning in two years as shown thus
(1+S3)^3=(1+S2)^2*(1+y2y1)^1
S3=4.75%
S2=4.5%
y2y1=unknown
(1+4.75%)^3=(1+4.5%)^2*(1+y2y1)
1+y2y1=(1+4.75%)^3/(1+4.5%)^2
y2y1=((1+4.75%)^3/(1+4.5%)^2)-1
y2y1=5.25%
You wish to earn a return of 13% on each of two stocks, X and Y. Stock X is expected to pay a dividend of $3 in the upcoming year while Stock Y is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X______
a. cannot be calculated without knowing the market rate of return
b. will be greater than the intrinsic value of stock Y
c. will be the same as the intrinsic value of stock Y
d. will be less than the intrinsic value of stock Y
e. none of the above is a correct answer.
Answer: D. will be less than the intrinsic value of stock Y
Explanation:
Based on the information given above, the intrinsic value of Stock X will be calculated thus:
D1 = Dividend in next year = $3
g = growth rate = 7%
r = = 13%
Therefore, intrinsic value of Stock X will be:
= D1 / (r-g)
= 3 / (13% - 7%)
= 3/6%
= 3 / 0.06
= $50
Therefore, the intrinsic value of stock X is $50.
Intrinsic value of Stock Y will b calculated thus:
D1 = $4
g = 7%
r = 13%
Intrinsic value of Stock Y will be:
= D1 / (r-g)
= 4 / (13% - 7%)
= 4/6%
= 4 / 0.06
= 66.67
Intrinsic value of Stock Y is $66.67
Therefore, the intrinsic value of Stock X will be less than the intrinsic value of Stock Y
Journalize the following transactions, using the allowance method of accounting for uncollectible receivables
Mar. 17: Received $2,700 from Keith MacPhearson and wrote off the remainder owed of $6,370 as uncollectible.
Mar. 17 July 29: Reinstated the account of Keith MacPhearson and received $6,370 cash in full payment.
Answer:
Journal entry
Date Account & Explanation Debit Credit
Mar 17. Cash $2,700
Allowance for doubtful accounts $6370
Account receivable $9,070
Jul 29 Account receivable $6,370
Allowance for doubtful accounts $6,370
(To record amount reinstated)
Cash $6,370
Account receivable $6,370
(To record amount received)
a customer comes into your store and makes a large purchase, which she pays in full. Which of these should you provide to her? A. A receipt B. A purchase order C. An Installment plan D. An invoice
Answer:
A receipt
Explanation:
All the other choice wouldn't apply since layaway is a form of payment per month, installment plan has nothing to do with the question so that eliminated, and invoice and purchase order wouldn't be it since it wouldn't sound right
A customer enters in a shop and makes a substantial purchase, pay in whole then receipt in accounting shall be issued to that customer. Option A is correct.
What is a Receipt in Accounting?
An accounting document that a company gives to a customer as evidence of full or partial payment toward a good or service is known as a payment receipt, also known as a receipt for payment.
The following details regarding the transaction are commonly given on payment receipts: Business name.
Furthermore receipt contains details about your transaction, including the date, what you bought, how you paid, and how much you spent. If you paid sales tax, it is most likely also indicated on the receipt. Receipts serve as proof of the transaction. They give the seller crucial accounting and tax information.
Thus seller issue a cash receipt on receiving of full payment.
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Simone Company is considering the purchase of a new machine costing $50,000. It is expected to save $9,000 cash per year for 10 years, has an estimated useful life of 10 years, and no salvage value. Management will not make any investment unless at least an 18% rate of return can be earned. Using the net present value method, determine if the proposal is acceptable and Calculate the time-adjusted rate of return. Assume all tax effects are included in these numbers.
Answer:
Project not acceptable as NPV is negative at -$9,553.10Time-adjusted rate of return = 12.41%Explanation:
The Net Present value works by deducting the cost from the present value of benefits. If this amount is positive then the project is a good one.
= Present value of benefits - Present value of cost
Benefits are $9,000 a year for 10 years. This is constant so is annuity.
Cost is the $50,000 purchase price.
= (9,000 * Present value interest factor of annuity, 10 years, 18%) - 50,000
= (9,000 * 4.4941) - 50,000
= -$9,553.10
Project is not acceptable because NPV is negative.
Time-adjusted rate of return is the Internal Rate of Return which is the return that brings NPV to zero.
Use Excel or a Financial calculator for it(Worksheet attached):
= 12.41%
Revenues generated by a new fad product are forecast as follows:
Year Revenues
1 $40,000
2 30,000
3 20,000
4 10,000
Thereafter 0
Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $45,000 in plant and equipment.
a. What is the initial investment in the product? Remember working capital.
b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm’s tax rate is 40%, what are the project cash flows in
each year?
c. If the opportunity cost of capital is 12%, what is project NPV?
d. What is project IRR?
Answer:
a. The initial investment in the product = $53,000
b. The project cash flows in each year:
Year Annual Net
Cash Inflow
1 $12,900
2 11,300
3 9,700
4 11,250
c. The NPV is ($18,435).
Explanation:
a) Data and Calculations:
Year Revenues Cost Working Expenses Depreciation Net Income
Capital Expenses Income Tax
0 $45,000 $8,000 $0 $0
1 $40,000 6,000 16,000 11,250 $12,750 $5,100
2 30,000 4,000 12,000 11,250 6,750 2,700
3 20,000 2,000 8,000 11,250 750 300
4 10,000 0 4,000 11,250 -5,250 -5,250
Total $100,000 $45,000 $20,000 $40,000 $45,000 $15,000 $2,850
Year Revenues Cash Expenses Working Income Tax Annual Net
Capital Cash Inflow
1 $40,000 $16,000 $6,000 $5,100 $12,900
2 30,000 12,000 4,000 2,700 11,300
3 20,000 8,000 2,000 300 9,700
4 10,000 4,000 0 -5,250 11,250
Opportunity cost of capital = 12%
Year Initial Cost Annual Net PV Factor Present Value
of equipment Cash inflow
0 $45,000 1 -$53,000
1 12,900 0.893 11,520
2 11,300 0.797 8,984
3 9,700 0.712 6,906
4 11,250 0.636 7,155
Total NPV ($18,435)
Jiminy's Cricket Farm issued a 30-year, 6.5 percent semiannual bond 9 years ago. The bond currently sells for 108.5 percent of its face value. The book value of this debt issue is $151 million. In addition, the company has a second debt issue, a zero coupon bond with 13 years left to maturity; the book value of this issue is $97 million, and it sells for 62.4 percent of par. The company’s tax rate is 21 percent.
1) what is the total book value of debt?
2) what is the total market value of debt?
3) what is the after tax cost of the 6.5 percent coupon bond?
4) what is the after tax cost of the zero coupon bond?
5) What is the after tax cost of debt?
Answer:
1 151 million 2 97 million
3 22.785 million 4 20.37 million 5 76.63 million
Petty Cash Fund Entries
Journalize the entries to record the following:
Check No. 12-375 is issued to establish a petty cash fund of $500.
The amount of cash in the petty cash fund is now $40. Check No. 12-476 is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $212; miscellaneous selling expense, $156; miscellaneous administrative expense, $61. (Because the amount of the check to replenish the fund plus the balance in the fund do not equal $500, record the discrepancy in the cash short and over account.)
Petty Cash Fund Entries
Journalize the entries to record the following:
Check No. 12-375 is issued to establish a petty cash fund of $500.
The amount of cash in the petty cash fund is now $40. Check No. 12-476 is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $212; miscellaneous selling expense, $156; miscellaneous administrative expense, $61. (Because the amount of the check to replenish the fund plus the balance in the fund do not equal $500, record the discrepancy in the cash short and over account.)
a. Journalize the entry to establish the petty cash fund. If an amount box does not require an entry, leave it blank.
b. Journalize the entry to replenish the petty cash fund. If an amount box does not require an entry, leave it blank.
Answer:
A. Dr Petty cash fund $500
Cr Cash $500
B. Dr Office supplies expenses $212
Dr miscellaneous selling expense $156
Dr miscellaneous administrative expense $61
Dr Cash short and over 31
Cr Petty cash fund $460
Dr Petty cash fund $460
Cr Cash $460
Explanation:
A. Preparation of the journal entry to establish the petty cash fund.
Dr Petty cash fund $500
Cr Cash $500
(To establish the petty cash fund)
B. Preparation of the journal entry to replenish the petty cash fund.
Dr Office supplies expenses $212
Dr miscellaneous selling expense $156
Dr miscellaneous administrative expense $61
Dr Cash short and over 31
($500-$212+$156+61+$40)
Cr Petty cash fund $460
($212+$156+$61+$31)
(To replenish the petty cash fund)
Dr Petty cash fund $460
($212+$156+$61+$31)
Cr Cash $460