Answer:
the number of people involved is small.
Explanation:
Coase theorem was developed in 1960 by a British economist and author named Ronald Coase.
Coase theorem states that when the actions of a party (X) negatively affects or harm another party (Y), then party Y should be able to create an incentive for party X to stop or limit the action creating such harm.
Generally, when transaction cost are low, the two parties are able to bargain and reach a mutual agreement in the presence of an externality such as a pollution.
The Coase theorem will apply only if the number of people involved is small, the cost of negotiation is low and there are well defined property rights.
these are the choices fill in the blanks.
asset backed security.
bank run
credit default swap.
capital
bond.
credit
common stock.
credit crunch
mortgage-backed securities.
debt
mutual fund.
default
option.
equity
futures contract.
foreclosure
subprime mortgage.
leverage
central bank.
liquidity
commercial bank.
liquidity risk
hedge fund.
moral hazard
investment bank.
mortgage
fannie mae/ freddie mac.
nationalization
federal deposit insurance corporation.
regulation
federal reserve system.
return
private equity fund
risk
securitization
A company received 500 applications for a specific position.30 were given an assignment test. Only 15 were invited to an interview. The yield ratio of passing the interview is
a.
75%
b.
20%
c.
50%
d.
25%
You plan to retire in 28 years. You would like to maintain your current level of consumption which is $52,672 per year. You will need to have 30 years of consumption during your retirement. You can earn 5.03% per year (nominal terms) on your investments. In addition, you expect inflation to be 2.82% inflation per year, from now and through your retirement. How much do you have to invest each year, starting next year, for 13 years, in nominal terms to just cover your retirement needs?
Answer:
The amount to invest each year for 13 years is $5,617.37.
Explanation:
This can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)
Where;
PV = current level of consumption = $52,672
P = amount to invest each year = ?
r = annual nominal interest rate = 5.03%, or 0.0503
n = number of years = 13
Substituting the values into equation (1) and solve for n, we have:
$52,672 = P * ((1 - (1 / (1 + 0.0503))^13) / 0.0503)
$52,672 = P * 9.37662983027493
P = $52,672 / 9.37662983027493
P = $5,617.37
Therefore, the amount to invest each year for 13 years is $5,617.37.
Seth Erkenbeck, a recent college graduate, has just completed the basic format to be used in preparing the statement of cash flows (indirect method) for ATM Software Developers. All amounts are in thousands (000s).
ATM SOFTWARE DEVELOPERS Statement of Cash Flows For the year ended December 31, 2021
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash flows from operating activities:
Net cash flows from operating activities
Cash Flows from Investing Activities
Net cash flows from investing activities
Cash Flows from Financing Activities
Net cash flows from financing activities
Net increase (decrease) in cash $1,725
Cash at the beginning of the period 8,215
Cash at the end of the period $9,940
Listed below in random order are line items to be included in the statement of cash flows.
Cash received from the sale of land $8,590
Issuance of common stock 12,925
Depreciation expense 5,435
Increase in account receivable 4,030
Decrease in account payable 1,730
Issuance of long-term notes payable 16,345
Purchase of equipment 39,715
Decrease in inventory 1,445
Decrease in prepaid rent 875
Payment of divivdends 6,310
Net income 11,800
Purchase of treasury stock 2,585
Required:
Prepare the statement of cash flows for ATM software developers using the indirect method. List cash outflows and any decrease in cash as negative amounts. Enter the answer in thousands.
Answer:
See below
Explanation:
Statement of cash flow for ATM SOFTWARE
• The figures seems to be in thousands already.
Cash flow from operating activities
Net income
$11,800
Increase in Account receivable
($4,030)
Decrease in Account payable
($1,730)
Depreciation expense
$5,435
Decrease in inventory
$1,445
Decrease in prepaid rent
$875
Net cash flow from operating activities
$13,795
Cash flow from investing activities
Sale of land
$8,590
Purchase of equipment
($39,715 )
Net cash flow from financing activities
($31,125)
Cash flow from financing activities
Issuance of stock
$12,925
Long term note payable
$16,345
Purchase of treasury stock
($2,585 )
Payments of dividends
($6,310)
Net cash flow from financing activities
$20,375
Net increase in cash
$1,725
Cash at the beginning
$8,215
Cash at the end
$9,940
On August 5, 2021, Carla Vista Furniture shipped 30 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $420 each. The cost of shipping the dining sets amounted to $4300 and was paid for by Carla Vista Furniture. On December 30, 2021, the consignee reported the sale of 20 dining sets at $920 each. The consignee remitted payment for the amount due after deducting a 7% commission, advertising expense of $670, and installation and setup costs of $850. The amount cash received by Carla Vista furniture is
Answer:
$15,592
Explanation:
Calculation to determine what The amount of cash received by Carla Vista furniture is
Cash received =[(20 × $920)*(100%-7%)] - $670 - $850
Cash received=($18,400*93%)-$670-$850
Cash received=17,112-$670-$850
Cash received=$15,592
Therefore The amount of cash received by Carla Vista furniture is $15,592
On September 12, Vander Company sold merchandise in the amount of $3,950 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $2,725. Vander uses the periodic inventory system and the gross method of accounting for sales. On September 14, Jepson returns some of the merchandise. The selling price of the merchandise is $340 and the cost of the merchandise returned is $240. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Vander makes on September 18 is:
Answer:
Date Account Debit Credit
September 18 Cash $3,537.80
Sales discount $ 72.20
Accounts Receivable $3,610
Explanation:
Net merchandise sold = 3,950 - 340
= $3,610
Sales discount is 2% if paid in 10 days which Jepson did.
= 2% * 3,610
= $72.20
Cash = Net sales - discount
= 3,610 - 72.20
= $3,537.80
Mark Brandt, an employee of Mueller Corp., earned 3 weeks of compensated vacation time during the current year, but only took 2 weeks of vacation. His employer permits that 1 week of vacation can be carried forward to the following year. Mark fully intends to remain at his current employer and plans to take his vacation during the following year. His current weekly salary is $2,000. Mueller Corp. expects to grant a general salary increase of 5% effective at the beginning of the next year. What amount should Mueller accrue during the current year relating to Mark Brandt's carried-forward vacation
Answer:
Mark Brandt of Mueller Corporation
The amount that Mueller should accrue during the current year relating to Mark Brandt's carried-forward vacation is:
= $2,100
Explanation:
a) Data and Calculations:
Current weekly salary = $2,000
Expected general salary increase = 5%
The amount that Mueller should accrue during the current year relating to Mark Brandt's carried-forward vacation is:
= $2,000 * 1.05
= $2,100
b) $2,100 is the amount that will be paid in cash for cash settlement of Mark Brandt's carried-forward vacation, assuming he does not take it the following year.
It is now January 1, 2018, and you are considering the purchase of an outstanding bond that was issued on January 1, 2016. It has a 9% annual coupon and had a 20-year original maturity. (It matures on December 31, 2035.) There is 5 years of call protection (until December 31, 2020), after which time it can be called at 109-that is, at 109% of par, or $1,090. Interest rates have declined since it was issued, and it is now selling at 114.12% of par, or $1,141.20. What is the yield to maturity
Answer:
YTM is 7.54%.
Explanation:
The yield to maturity can be calculated using the following RATE function in Excel:
YTM = RATE(nper,pmt,-pv,fv) .............(1)
Where;
YTM = yield to maturity = ?
nper = number of periods = number of years to maturity = original maturity number of years - number of years between January 1, 2016 and January 1, 2018 = 20 - 2 = 18
pmt = annual coupon payment = face value * annual coupon rate = 1000 * 9% = 90 (Note: This is an inflow to the bondholder and it is therefore a positive figure).
pv = present value = current bond price = -1141.20 (Note: This is an outflow to the buyer of the bond and it is therefore a negative figure).
fv = face value of the bond = 1000 (Note: This is an inflow to the bondholder and it is therefore a positive figure).
Substituting the values into equation (1), we have:
YTM = RATE(18,90,-1141.20,1000) ............ (2)
Inputting =RATE(18,90,-1141.20,1000) into excel (Note: as done in the attached excel file), the YTM is obtained as 7.54%.
Therefore, YTM is 7.54%.
Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 20,500 units of one of its most popular products. Grant currently manufactures 41,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $13 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price.
Units 41,000 61,500
Manufacturing costs:
Direct materials $123,000 $184,500
Direct labor 164,000 246,000
Factory overhead 328,000 430,500
Total manufacturing costs$615,000 $861,000
Unit cost $15 $14
Required:
1. What is the relevant cost per unit and the bid price?
2. What would the total opportunity cost be if by accepting the special order the company lost sales of 6,500 units to its regular customers?
Answer:
Missing word "What would the total opportunity cost be if by accepting the special order the company lost sales of 6,500 units to its regular customers? Assume the above facts plus a normal selling price of $24 per unit."
Variable factory overhead per unit = (430,500 - 328,000) / 20,500 = $5
Direct materials per unit = $123,000 / 41,000 = $3
Direct labor per unit = 164,000 / 41,000 = $4
1. Relevant cost per unit = Direct materials per unit + Direct labor per unit + Variable factory overhead
Relevant cost per unit = $5 + $4 + $3
Relevant cost per unit = $12
So, the bid price should be above $10 per unit
2. Total opportunity cost would be the total contribution margin lost for the lost sales to the regular customer
Total opportunity cost = Loss of regular sales revenue - Total relevant cost for lost sales
Total opportunity cost = (6,500*$24) - (6,500*$12)
Total opportunity cost = $156,000 - $78,000
Total opportunity cost = $78,000
1. The relevant cost per unit for Grant Industries is $7.00 ($123,000 + $164,000)/41,000 or ($184,500 + $246,000)/61,500.
2. The total opportunity cost of accepting the special order when the company lost sales of 6,500 units from its regular customers is $12,500.
What are the relevant costs and opportunity costs?The relevant costs describe the avoidable costs that could be stopped if a decision is taken.
For example, if Grant Industries decides to take the special order, the relevant decision-making cost is $7 per unit and not $14 per unit.
The opportunity costs are costs that are not incurred based on taking an alternative decision. It also describes the lost revenue when some sales are lost for the special order.
For example, the total opportunity costs incurred by Grant Industries for taking the special order instead of attending to the regular customers with 6,500 units demand is $12,500.
Data and Calculations:Special order = 20,500 units
Current production = 41,000 units
Current operational capacity = 50%
Total capacity = 82,000 (41,000/50%)
Bid price = $13 per unit
New production based on special order = 61,500 (41,000 + 20,500)
Production Data Per Unit Per Bid
Units 41,000 61,500
Manufacturing costs:
Direct materials $123,000 $184,500
Direct labor 164,000 246,000
Factory overhead 328,000 430,500
Total manufacturing costs $615,000 $861,000
Unit cost $15 $14
Question 2 Completion:Assume the above facts plus a normal selling price of $24 per unit."
The opportunity cost of lost sales:Lost sales units = 6,500
Contribution per unit = $17 ($24 - $7)
Total contribution margin = $110,500 ($6,500 x $17)
Contribution margin from special order = $123,000 ($13 - $7 x 20,500)
Thus, the opportunity cost of lost sales is $12,500 ($123,000 - $110,500).
Learn more about relevant and opportunity costs at https://brainly.com/question/14184614 and https://brainly.com/question/8846809
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 130 shares of its common stock on May 1 for $6,500. On July 1, it reissued 65 of these shares at $53 per share. On August 1, it reissued the remaining treasury shares at $48 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2
Answer:
Fortune Company
There is a balance of ($65) in the Paid-in Capital, Treasury Stock account on August 2.
However, this balance will be transferred to the Additional Paid-in Capital account at year-end, since there are no outstanding shares for the Treasury Stock account.
Explanation:
a) Data and Calculations:
May 1 Repurchase of 130 shares (Treasury Stock) = $6,500
July 1 Reissue of 65 shares at $53 per share = (3,445)
August 1 Reissue of 65 shares at $48 per share = (3,120)
August 2, Balance in the Paid-in Capital = ($65)
b) The Treasury Stock account is a contra Paid-in Capital account which records transactions involving the repurchase and reissue of treasury shares. Treasury shares represent the company's own shares which are repurchased from its investors.
A-Rod Manufacturing Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr. Jeter, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.
The company currently has outstanding a bond with a 10.6 percent coupon rate and another bond with an 8.2 percent rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield 11.5 percent. The common stock has a price of $60 and an expected dividend (D1) of $1.80 per share. The historical growth pattern (g) for dividends is as follows:
1.35
1.49
1.64
1.80
The preferred stock is selling at $80 per share and pays a dividend of $7.60 per share. The corporate tax rate is 30 percent. The flotation cost is 2.5 percent of the selling price for preferred stock. The optimum capital structure for the firm is 25 percent debt, 10 percent preferred stock, and 65 percent common equity in the form of retained earnings.
(a) Compute the historical growth rate. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole percent. Omit the "%" sign in your response.)
Growth rate %
(b) Compute the cost of capital for the individual components in the capital structure. (Round growth rate to nearest whole percent. Round your answers to 2 decimal places. Omit the "%" sign in your response.)
Cost of capital
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
(c) Calculate the weighted cost of each source of capital and the weighted average cost of capital. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)
Weighted cost
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
Weighted average cost of capital (Ka) %
Answer:
PV = 1.35
FV = 1.8
n = 3
a. Growth rate = Rate(N, -PV, FV)
Growth rate = Rate(3, -1.35, 1.8)
Growth rate = 0.10
Growth rate = 10%
B. Cost of debt Kd (After tax) = 11.5%*(1-0.30) = 8.05%
Cost of preference share Kp = Dividend/Price = 7.6 /[80*(1 - 0.025)] = 9.74%
Cost of equity Ke = D1/P0+g = 1.8/60 + 0.1 = 0.03+0.1 = 0.13 = 13%
c. Source Weight A COC(%)(B) Weight cost of capital(A*B)
Debt 25% 8.05% 2.01%
Preferred stock 10% 9.74% 0.97%
Common stock 65% 13.00% 8.45%
Weighted average cost of capital 11.44%
Three accuracy problems with the consumer price index (CPI) are Group of answer choices price confusion, substitution, and quality changes. substitution, quality changes, and the money illusion. substitution, quality changes, and the availability of new goods and services. the availability of new goods and services, substitution, and traditional bundle bias. the income effect, substitution effect, and money illusion.
Answer:
Option b (Substitution.....services) is the appropriate choice.
Explanation:
The above leads to calculating difficulties as well as the failure throughout the Index to identify better products and services contributing to less precise inflation outcomes.It does not take account of the replacement facilities, which arise when an increase throughout the price of one promising recommendation to a replacement including its good by another, which often increases the costs of one quality.The other options are not related to the given scenario. So the above is the correct choice.
Hughes Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 12 percent and the company just paid a $2.35 dividend, what is the current share price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Answer: $53.94
Explanation:
Current share price is the present value of the dividends for the next 3 years and the terminal value in year 3.
Terminal value = D₄ / ( required return - growth rate)
= (2.35 * 1.22³ * 1.05) / (12 % - 5%)
= $64
D₁ = 2.35 * 1.22 = $2.867
D₂ = 2.867 * 1.22 = $3.49774
D₃ = 3.49774 * 1.22 = $4.2672428
Share price = (2.867 / (1 + 12%)) + (3.49774 / 1.12²) + (4.2672428 / 1.12³) + (64/1.12³)
= $53.94
Ann lives in Princeton, New Jersey, and commutes by train each day to her job in New York City (20 round trips per month). When the price of a round trip goes up from $10 to $20, she responds by consuming exactly the same number of trips as before, while spending $200 per month less on restaurant meals. Does the fact that her quantity of train travel is completely unresponsive to the price increase imply that Ann is not a rational consumer
Answer:
Yes
Explanation:
The following trial balance was taken from the records of Fairport Manufacturing Company at the beginning of 2019:
Cash $ 20,000
Raw materials inventory 1,800
Work in process inventory 2,400
Finished goods inventory 4,200
Property, plant, and equipment 15,000
Accumulated depreciation $ 6,000
Common stock 16,800
Retained earnings 20,600
Total $ 43,400 $ 43,400
Transactions for the Accounting Period:
Fairport purchased $11,400 of direct raw materials and $600 of indirect raw materials on account. The indirect materials are capitalized in the Production Supplies account. Materials requisitions showed that $10,800 of direct raw materials had been used for production during the period. The use of indirect materials is determined at the end of the year by physically counting the supplies on hand.
By the end of the year, $10,500 of the accounts payable had been paid in cash.
During the year, direct labor amounted to 950 hours recorded in the Wages Payable account at $21 per hour.
By the end of the year, $18,000 of wages payable had been paid in cash.
At the beginning of the year, the company expected overhead cost for the period to be $12,600 and 1,000 direct labor hours to be worked. Overhead is allocated based on direct labor hours, which, as indicated in Event 3, amounted to 950 for the year.
Selling and administrative expenses for the year amounted to $1,800 paid in cash.
Utilities and rent for production facilities amounted to $9,300 paid in cash.
Depreciation on the plant and equipment used in production amounted to $3,000.
There was $24,000 of goods completed during the year.
There was $25,500 of finished goods inventory sold for $36,000 cash.
A count of the production supplies revealed a balance of $178 on hand at the end of the year.
Any over- or underapplied overhead is considered to be insignificant.
Required
a) Prepare T-accounts with the beginning balances shown in the preceding list and record all transactions for the year including closing entries in the T-accounts.
b) Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet.
Answer:
Fairport Manufacturing Company
T-accounts
Cash
Account Titles Debit Credit
Beginning balance $ 20,000
Accounts payable $10,500
Wages payable 18,000
Selling and distribution expense 1,800
Utilities and Rent for production 9,300
Sales Revenue 36,000
Ending balance $16,400
Raw materials inventory
Account Titles Debit Credit
Beginning balance $ 1,800
Accounts Payable 11,400
Work-in-Process $10,800
Ending balance $2,400
Work in process inventory
Account Titles Debit Credit
Beginning balance $ 2,400
Raw materials 10,800
Wages Payable 19,950
Overhead Applied 11,970
Finished Goods Inventory $24,000
Ending balance $21,120
Finished goods inventory
Account Titles Debit Credit
Beginning balance $ 4,200
Work-in-Process 24,000
Cost of goods sold $25,500
Ending balance $2,700
Property, plant, and equipment
Account Titles Debit Credit
Beginning balance $ 15,000
Accumulated depreciation
Account Titles Debit Credit
Beginning balance $ 6,000
Depreciation expense 3,000
Ending Balance $9,000
Accounts Payable
Account Titles Debit Credit
Raw materials $12,000
Cash $10,500
Ending balance $1,500
Wages Payable
Account Titles Debit Credit
Work-in-Process $19,950
Cash $18,000
Ending balance $1,950
Common stock
Account Titles Debit Credit
Beginning balance $ 16,800
Retained earnings
Account Titles Debit Credit
Beginning balance $ 20,600
Production Supplies
Account Titles Debit Credit
Accounts Payable $600
Overhead $422
Ending balance $178
Overhead Expenses
Account Titles Debit Credit
Work-in-Process $11,970
Cash (Utilities) 9,300
Depreciation expense 3,000
Production supplies 422
Cost of goods sold (Underapplied) 752
Sales Revenue
Account Titles Debit Credit
Cash $36,000
Income Summary $36,000
Cost of Goods Sold
Account Titles Debit Credit
Finished Goods Inventory $25,500
Overhead (underapplied) 752
Income Summary $26,252
Selling and Distribution Expense
Account Titles Debit Credit
Cash $1,800
Utilities and Rent
Account Titles Debit Credit
Cash $9,300
Overhead $9,300
Depreciation Expense - Plant & Equipment
Account Titles Debit Credit
Accumulated Depreciation $3,000
Overhead $3,000
b) Schedule of Cost of Goods Manufactured and Sold:
WIP Beginning Inventory $ 2,400
Raw materials 10,800
Direct labor 19,950
Overhead Applied 11,970
Cost of goods in production $45,120
Ending WIP Inventory 21,120
Cost of manufactured $24,000
Finished Goods Inventory $ 4,200
Cost of manufactured 24,000
Cost of goods available $28,200
Ending FG Inventory 2,700
Cost of goods sold $25,500
Income Statement for the year ended December 31, 2019:
Sales Revenue $36,000
Cost of Goods Sold 26,252
Gross profit 9,748
Selling and distribution exp. 1,800
Net income $7,948
Retained Earnings, January 1, 2019 $20,600
Net income 7,948
Retained Earnings, December 31, $28,548
Balance Sheet as of December 31, 2019:
Assets:
Cash $ 16,400
Raw materials inventory 2,400
Work in process inventory 21,120
Finished goods inventory 2,700
Production Supplies 178 $42,798
Property, plant, and equipment 15,000
Accumulated depreciation 9,000 $6,000
Total assets $48,798
Liabilities and Equity:
Accounts Payable $1,500
Wages Payable 1,950
Total liabilities $3,450
Common stock $16,800
Retained earnings 28,548 $45,348
Total liabilities and equity $48,798
Explanation:
a) Data and Calculations:
Trial Balance at January 1, 2019:
Account Titles Debit Credit
Cash $ 20,000
Raw materials inventory 1,800
Work in process inventory 2,400
Finished goods inventory 4,200
Property, plant, and equipment 15,000
Accumulated depreciation $ 6,000
Common stock 16,800
Retained earnings 20,600
Total $ 43,400 $ 43,400
Analysis of Transactions for the period:
1. Raw materials $11,400 Production Supplies $600 Accounts payable $12,000
2. Work-in-Process $10,800 Raw materials $10,800
3. Accounts payable $10,500 Cash $10,500
4. Work-in-Process $19,950 Wages Payable $19,950
5. Wages Payable $18,000 Cash $18,000
6. Work-in-Process $11,970 Overhead Applied $11,970 ($12,600 * 950/1,000)
7. Selling and Administrative expense $1,800 Cash $1,800
8. Utilities and Rent for production $9,300 Cash $9,300
9. Depreciation Expense-Plant and Equipment $3,000 Accumulated Depreciation $3,000
10. Finished Goods Inventory $24,000 Work-in-Process $24,000
11. Cost of Goods Sold $25,500 Finished Goods Inventory $25,500
12. Cash $36,000 Sales Revenue $36,000
13. Overhead $422 Production Supplies $422 ($600 - $178)
14. Cost of Goods Sold $752 Underapplied Overhead $752
Adjusted Trial Balance at December 31, 2019:
Account Titles Debit Credit
Cash $ 16,400
Raw materials inventory 2,400
Work in process inventory 21,120
Finished goods inventory 2,700
Property, plant, and equipment 15,000
Accumulated depreciation $ 9,000
Accounts Payable 1,500
Wages Payable 1,950
Common stock 16,800
Retained earnings 20,600
Production Supplies 178
Sales Revenue 36,000
Cost of Goods Sold 26,252
Selling and distribution exp. 1,800
Totals $85,850 $85,850
Sheffield Corp. assigned $1601000 of accounts receivable to Pharoah Company as security for a loan of $1344000. Pharoah charged a 2% commission on the amount of the loan; the interest rate on the note was 9%. During the first month, Sheffield collected $404000 on assigned accounts after deducting $1480 of discounts. Sheffield accepted returns worth $5400 and wrote off assigned accounts totaling $11910. The amount of cash Sheffield received from Pharoah at the time of the assignment was
Answer:
$1,317,120
Explanation:
Cash received by Sheffield Corporation at the time of assignment = Amount borrowed - Commission paid
= $1,344,000 - ($1,344,000 * 2%)
= $1,344,000 - $26,880
= $1,317,120
So, the amount of cash Sheffield received from Pharoah at the time of the assignment was $1,317,120
Selected information from Peridot Corporation's accounting records and financial statements for 2021 is as follows ($ in millions): Cash paid to acquire machinery $ 35 Reacquired Peridot common stock 56 Proceeds from sale of land 97 Gain from the sale of land 55 Investment revenue received 72 Cash paid to acquire office equipment 84 In its statement of cash flows, Peridot should report net cash outflows from investing activities of:
Answer:
Peridot should report net cash outflows from investing activities of $22 million.
Explanation:
Peridot corporation
Statement of cash flows
$ in millions
Purchase of machinery
($35)
Proceeds from sale of land
$97
Cash paid to acquire office
($84)
Net cash outflows from investing activities
($22)
• We ignored required common stock because it belongs to financing activities section of cash outflows. Gain from sale of land and investment revenue is for operating activities section of the cash flow
Described below are certain transactions of Edwardson Corporation. The company uses the periodic inventory system.1. On February 2, the corporation purchased goods from Martin Company for $70,000 subject to cash discount terms of 2/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26.2. On April 1, the corporation bought a truck for $50,000 from General Motors Company, paying $4,000 in cash and signing a one-year, 12% note for the balance of the purchase price.3. On May 1, the corporation borrowed $83,000 from Chicago National Bank by signing a $92,000 zero-interest-bearing note due one year from May 1.4. On August 1, the board of directors declared a $300,000 cash dividend that was payable on September 10 to stockholders of record on August 31.Make all the journal entries necessary to record the transactions above using appropriate dates.Edwardson Corporation
Answer:
Edwardson Corporation
Journal Entries:
February 2:
Debit Purchases $68,600
Credit Accounts Payable $68,600
To record credit purchases, net ($70,000 * 98%) with terms of 2/10, n/30.
February 26: Debit Purchases $1,400
Credit Accounts Payable $1,400
To revise the cash discounts not taken.
February 26: Debit Accounts Payable $70,000
Credit Cash $70,000
To record the full settlement for cash
April 1: Debit Truck $50,000
Credit Cash $4,000
Credit Notes Payable $46,000
To record the purchase of truck with a 12% note.
May 1: Debit Cash $83,000
Debit Interest Expense $9,000
Credit Notes Payable $92,000
To record zero-interest-bearing note due on May 1.
August 1: Debit Dividends $300,000
Credit Dividends Payable $300,000
To record the declaration of dividends.
Explanation:
a) Data and Analysis:
February 2: Purchases $68,600 Accounts Payable $68,600 ($70,000 * 98%)
February 26: Purchases $1,400 Accounts Payable $1,400
Accounts Payable $70,000 Cash $70,000
April 1: Truck $50,000 Cash $4,000 Notes Payable $46,000
May 1: Cash $83,000 Interest Expense $9,000 Notes Payable $92,000
August 1: Dividends $300,000 Dividends Payable $300,000
b) Note that the Interest Expense of $9,000 will be split between the current year and the following year. Specific information for the split is not available.
Adams Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Super Supreme Sales price $ 95 $ 124 Variable cost per unit (58 ) (74 ) Contribution margin per unit $ 37 $ 50 Adams expects to incur annual fixed costs of $227,880. The relative sales mix of the products is 60 percent for Super and 40 percent for Supreme. Required Determine the total number of products (units of Super and Supreme combined) Adams must sell to break even. How many units each of Super and Supreme must Adams sell to break even
Answer:
Expected contribution as per sales mix = $37*0.60 + $50*0.40
= $22.20 + $20
= $42.20 per unit
Total number of products in total at break even point = Total fixed cost / Contribution per unit
= $227,880 / $42.20 per unit
= 5,400 units
How many units each of Super and Supreme must Adams sell to break even?
According to sales mix:
Super = 5,400 * 60% = 3,240 units
Supreme = 5,400 * 40% = 2,160 units.
A company is forecasted to generate free cash flows of $25 million next year and $29 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 12.0%. The company has $34 million in debt, $19 million of cash, and 23 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 17, what's your estimate of the company's stock price
Answer:
$18.41
Explanation:
Equity value = FCF next year / (1 + cost of capital) + FCF in year 2 / (1 + cost of capital)^2 + 1 / (1 + cost of capital)^2 * [ (FCF in year 2 * exit multiple)]
= $25 million/1.12 + $29 million/1.12^2 + 1 / 1.12^2*[($29 million*17)]
= $25 million/1.12 + $29 million/1.12^2 + $493 million/1.12^2
= $25 million / 1.12 + $522 million / 1.12^2
= $438.4566327 million
The stock price = ($438.4566327 million - Debt + Cash) / Number of shares outstanding
= ($438.4566327 million - $34 million + $19 million) / 23 million shares
= $423.4566327 million / 23 million shares
= 18.4111579435
= $18.41
Hull Company reported the following income statement information for the current year: Sales $ 423,000 Cost of goods sold: Beginning inventory $ 151,500 Cost of goods purchased 286,000 Cost of goods available for sale 437,500 Ending inventory 157,000 Cost of goods sold 280,500 Gross profit $ 142,500 The beginning inventory balance is correct. However, the ending inventory figure was overstated by $33,000. Given this information, the correct gross profit would be:
Answer:
$109,500
Explanation:
Calculation to determine the correct gross profit would be:
Sales $ 423,000
Less: Corrected Cost of goods sold:($313,500)
(280,500 + $33,000)
Gross Profit $109,500
Therefore the correct gross profit would be:$109,500
On March 10, 2017, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2017, Barr returned 6 tool sets and received a credit to its account.
Prepare journal entries for Steele to record (1) the sale on March 10, 2017, (2) the return on March 25, 2017, and (3) any adjusting entries required on March 31, 2017 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Answer:
Date Account Titles Debit Credit
March, 10 Accounts Receivables $10,000
Sales Revenue $10,000
Cost of Good sold $6,000
Inventory $6,000
Working
Receivables = 200 tool sets * 50 = $10,000
COGS = 200 * 30 = $6,000
Date Account Titles Debit Credit
March, 25 Sales Returns and Allowances $300
Accounts Receivable $300
Returned Inventory $180
Cost of Goods sold $180
Working:
Sales returns = 6 * 50 = $300
Cost of goods = 6 * 30 = $180
Estimated that 10 sets would be returned but only 6 were.
Date Account Titles Debit Credit
March, 25 Sales Returns and Allowances $200
Allowance for Sales Returns $200
and Allowances
Returned Inventory $120
Cost of goods sold $120
Working:
Sales returns = 4 * 50 = $200
COGS = 4 * 30 = $120
Since EBIT is not necessarily indicative of cash flow, many financial analysts adjust the formulation by: a. adding unpaid taxes to EBIT in the TIE formula b. adding unpaid taxes and interest to EBIT in the formula c. adding depreciation to EBIT in the TIE formula d. adding unpaid taxes, interest and depreciation to EBIT in the TIE formula
Answer: c. adding depreciation to EBIT in the TIE formula
Explanation:
The Times Interest Earned Ratio is used to measure the ease by which a company can pay its interest charges using its earnings before tax.
As depreciation is a non-cash expense, the amount apportioned to depreciation can be used when paying for interest so adding it back to the EBIT ensures that the cash resources of the company are included in the analysis of whether a company can pay back debt.
elisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $528,000 $142,000 $386,000 Variable expenses 319,460 72,420 247,040 Contribution margin 208,540 69,580 138,960 Traceable fixed expenses 109,920 29,400 80,520 Segment margin 98,620 $ 40,180 $ 58,440 Common fixed expenses 55,370 Net operating income $ 43,250 The break-even in sales dollars for Division Q is closest to:
Answer:
the break even point in sales dollars is $223,667
Explanation:
The computation of the break even point in sales dollars is shown below:
= Fixed cost ÷ contribution margin ratio
= $80,520 ÷ ($138,960 ÷ $386,000)
= $80,520 ÷ 36%
= $223,667
Hence, the break even point in sales dollars is $223,667
Assume that a company cannot determine the market value of equipment acquired by reference to a similar purchase for cash. Explain how the company determines the cost of equipment purchased by exchanging it for each of the following 3 items: Bonds having an established market price. Bonds that do not have an established market price. Common stock not having an established market price. Similar equipment having a determinable market value.
Solution :
Let us suppose that a company cannot predict the market value of an equipment that acquired by the reference to the similar purchase for the cash. Thus the company finds cost of purchased of the equipment by exchanging :
-- the market price of the bonds when they have an established price in the market.
-- the market price of the bonds when the common stocks does not have a established market price.
-- market price of the equipment when the similar kind of an equipment have a determinable value in the market.
Rusty has been experiencing serious financial problems. His annual salary was $100,000, but a creditor garnished his salary for $20,000; so the employer paid the creditor (rather than Rusty) the $20,000. To prevent creditors from attaching his investments, Rusty gave his investments to his 21-year-old daughter, Rebecca. Rebecca received $5,000 in dividends and interest from the investments during the year. Rusty transferred some cash to a Swiss bank account that paid him $6,000 interest during the year. Rusty did not withdraw the interest from the Swiss bank account. Rusty also hid some of his assets in his wholly owned corporation that received $150,000 rent income but had $160,000 in related expenses, including a $20,000 salary paid to Rusty. Rusty reasons that his gross income should be computed as follows:
Salary received $80,000
Loss from rental property ($150,000-$160,000) (10,000)
Gross income $70,000
Compute rustys correct gross income for the year, and explain any differences between your calculation and rusty
Answer:
Rusty annual salary was $100,000.
Rusty will not be taxed on the interest and dividend amount of $5,000 as Rebecca is the owner of the assets that is producing this income.
Secondly, Rusty will also need to report the $6,000 interest income. This has to be reported even though it has not been withdrawn.
Thirdly, he received $20,000 as salary from his wholly owned corporation.
Salary from employer $100,000
Salary from wholly owned corporation $20,000
Dividends and interest from the investments $0
Interest from Swiss bank account $6,000
Rental loss incurred $0
Gross income $126,000
makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.20 hours $ 26.00 per hour $ 5.20 Variable overhead 0.20 hours $ 6.20 per hour $ 1.24 In November the company's budgeted production was 6500 units, but the actual production was 6300 units. The company used 1550 direct labor-hours to produce this output. The actual variable overhead cost was $8990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:
Answer:
See
Explanation:
Given that;
Direct labor hours used to produce this output = 1,550
Actual variable overhead cost = $8,990
Variable overhead per hour = $6.2
The variable overhead rate variance for July is;
= Direct labor hours used to produce this out put × (Actual variable overhead rate per hour - Variable overhead per hour)
= 1,550 × ($8,990/1,550 - $6.2)
= 1,550 × ($5.8 - $6.2)
= 1,550 × (-$0.4)
= $620 favorable
Organizations exchange information internally and externally. External messages go to customers, vendors, the government, and other business partners. Internal messages travel upward to supervisors, downward to employees, and horizontally among workers. Understanding the different types of business messages and following the 3-x-3 writing process will help you write more effective professional messages.
Match the message content area with the correct types of messages.
a. Sales pitches, requests for favors
b. Replies, goodwill messages, direct claims
c. Bad news, refusals
1. persuasive
2. positive
3. negative
Answer:
1. persuasive: a. Sales pitches, requests for favors
2. positive: b. Replies, goodwill messages, direct claims
3. negative: c. Bad news, refusals
Explanation:
a) A persuasive speech is one whose goal is to convince someone of something, so it is correct to say that in an organizational message where there are sales speeches and requests for favors, there is a need for a persuasive speech, whose message seeks to convince the sender of the benefits of make a sale for example.
b) A positive speech is one whose intention is to motivate, give praise, offer positive feedback, etc. Therefore, in responses, messages of goodwill, direct claims, positive speech will help in better understanding of the sender and in the positive positioning of the company.
c) A negative discourse occurs when there is bad news to be shared, it is necessary that this message is written in a soft way, with damping words and indirectly, because this way the acceptability can be greater.
Two important group outcomes or consequences of the interactive
process that unfolds between a leader, follower, and the situation
include:
Answer:
task performance and group maintenance.
Explanation:
Leadership can be defined as a process which typically involves motivating, encouraging and inspiring employees working under an individual to be innovative and create positive changes that will foster growth and enhance the success of a business firm or company in the future.
This ultimately implies that, beyond an individual possessing the traits or qualities of a leader, leadership in itself is a process that revolves around the activities or happenings between the leader and those who he or she is leading, which are the followers. Thus, leadership is simply a continuous process and it's transactional in nature because it occurs between a leader and the followers.
A leader can be defined as an individual who is saddled with the responsibility of controlling, managing and maintaining a group of people under him or her.
Some types of power expressed by leaders are referent power, coercive power, etc.
Hence, two important group outcomes or consequences of the interactive process that unfolds between a leader, follower, and the situation include task performance and group maintenance.
Leaders are saddled with the responsibility of ensuring that the follower performs his or her duties or tasks as stated in the contract and to foster cohesion among the various team members.
During May, Salinger Company accumulated 740 hours of direct labor costs on Job 200 and 900 hours on Job 305. The total direct labor was incurred at a rate of $20 per direct labor hour for Job 200 and $23 per direct labor hour for Job 305.Journalize the entry to record the flow of labor costs into production during May. If an amount box does not require an entry, leave it blank.
Answer:
May
Dr Work in Process $35,500
Cr Wages Payable $35,500
Explanation:
Preparation of the Journal entry to record the flow of labor costs into production during May
Based on the information given the Journal entry to record the flow of labor costs into production during May will be :
May
Dr Work in Process $35,500
Cr Wages Payable $35,500
Calculated as:
Labor costs = (740*20)+(900*23)
Labor costs=14,800+20,700
Labor costs=$35,500