Answer:
$122,475,000; $119,489,600; $117,047,000
Explanation:
Given the following :
Cost of new plant = $115m
Debt to equity ratio =. 0.8
After issuing new equity:
Floatation cost incurred (equity) = 8.5%
Floatation on new debt = 4%
Calculating weighted return of debt and equity:
Debt: = [0.8/(1 + 0.8)] × 4% = 0.0178
Equity : [1 / (1+ 0.8)] * 8.5% = 0.0472
A) all equity raised externally:
Weighted average Floatation cost:
0.0178 + 0.0472 = 0.065
Initial cash flow will the be :
(1 + 0.065) * cost of new plant
1.065 * $115,000,000 = $122,475,000
B.) company uses 55% Retained earning:
Weighted return on equity will the be :
0.0472 * (1 - 55%) = 0.02124
Weighed Floatation cost = 0.02124 + 0.0178 = 0.03904
(1+0.03904) * $115,000,000 = $119,489,600
C.) Company uses 100% Retained earnings :
Equity return will be 0%
(1 + 0.0178) * 115000000
= $117,047,000
Janitor Supply produces an industrial cleaning powder that requires 48 grams of material at $0.10 per gram and 0.15 direct labor hours at $11.00 per hour. Overhead is applied at the rate of $10 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card
Answer:
Unitary cost= $7.95
Explanation:
Giving the following information:
48 grams of material at $0.10 per gram
0.15 direct labor hours at $11.00 per hour
Overhead is applied at the rate of $10 per direct labor hour.
We need to calculate the unitary production cost:
Unitary cost= 48*0.1 + 0.15*11 + 0.15*10
Unitary cost= $7.95
(a) What alternative formats could P&G have adopted for its balance sheet? Which format did it adopt? (b) Identify the various techniques of disclosure P&G might have used to disclose additional pertinent financial information. Which technique does it use in its financials? (d) What were P&G's cash flows from its operating, investing, and financing activities for 2017? What were its trends in net cash provided by operating activities over the period 2015 to 2017? Explain why the change in accounts payable and in accrued and other liabilities is added to net income to arrive at net cash provided by operating activities.
Answer:
P&G 2017 K-10:
a) Alternative formats for P&G Balance Sheet:
1. Report Format: Assets and Liabilities and Equity are listed from up to down.
2. Account Format: Assets and Liabilities and Equity are stated side by side.
3. Liquidity Format: The most liquid assets are listed first and then followed by permanent assets, and the same for liabilities.
4. Permanency Format: Noncurrent assets are stated first before current assets, and the same for liabilities.
P&G reported under US GAAP adopted the Report Format and listed balance sheet items according to their liquidity.
b) Techniques of disclosure of additional financial information:
1. Parenthetical Explanation
2. Notes to the Financial Statements
3. Cross-referencing
4. Valuation Allowances, e.g allowances for doubtful accounts, accumulated depreciation, etc.
5. Supporting Schedules
6. Comparative Statements, with about three years of financial statements.
c) P&G used Notes to the Financial Statements with supporting schedules and comparative statements.
d) 2017 Cash flows from:
1. Operating Activities = $12,753 million
2. Investing Activities = ($5,689 million)
3. Financing Activities = ($8,568 million)
e. Trends in net cash provided by operating activities over the period 2015 to 2017:
Net cash provided by operating activities:
2015 = $14,608 million
2016 = $15,435 million
2017 = $12,753 million
It increased from 2015 to 2016 and decreased in 2017 as stated above.
f) The change in accounts payable, accrued, and other liabilities is added to net income to arrive at net cash provided by operating activities because they involve cash outflows for the payment of purchases for goods and services used in generating the revenue that produces the net income.
Explanation:
P&G as a US headquartered entity reported under US GAAP with the adoption of Balance Sheet instead of reporting under IFRS with the adoption of Statement of Financial Position. P&G called its Income Statement "Consolidated Statement of Earnings" instead of the IFRS "Consolidated Income Statement." Apart from nomenclature, the formats and disclosures are similar.
HSS Company provides security services to senior executives of prominent corporations when they travel outside the United States. HSS applies both fixed and variable overhead using direct labor hours. The annual budget for one if its customers is as follows: Budgeted hours 800 hours Direct labor $50.00 per hr. Variable overhead $30.00per hr. Fixed overhead $15.00 per hr. During the year, HSS had the following activity related to this customer: Actual hours were 850 at a total cost of $44,200. Actual fixed overhead was $12,750. Actual variable overhead was $22,950. What is the Variable Overhead Flexible Budget Variance?
a. U $2,550
b. U $1,050
c. F $2,550
d. F $1,050
Answer:
Variable overhead variance = $2,550 favorable
Explanation:
Flexible budget is that which is that which recognizes the cost behavior and is used for control purpose. It is prepared based on the actual level of activity achieved.
The variable overhead rate variance is the difference between the actual variable overhead cost and the actual hours multiplied by the standard variable overhead rate.
Actual hours of labour should have cost
($30× 850) 25500
but did cost 22,950
Variable overhead variance 2,550 favorable
Variable overhead rate variance = $2,550 favorable
Variable overhead deficiency variance
ABC Industries is a division of a major corporation. Data concerning the most recent year appears below: Sales $ 17,910,000 Net operating income $ 1,199,970 Average operating assets $ 4,250,000 The division's return on investment (ROI) is closest to:
Answer:
28.23%
Explanation:
ABC corporation has a sales of $17,910,000
The net operating income is $1,199,970
The average operating assets is $4,250,000
Therefore, the ROI can be calculated as follows
ROI= Net operating income/Average operating assets
= $1,199,970/$4,250,000
= 0.2823×100
= 28.23%
Hence the division's return on investment is closest to 28.23%
Suppose you invest $20,000 by purchasing 200 shares of Abbott Labs (ABT) at $50 per share, 200 shares of Lowes (LOW) at $30 per share, and 100 shares of Ball Corporation (BLL) at $40 per share. Suppose over the next year Ball has a return of %, Lowes has a return of %, and Abbott Labs has a return of . The return on your portfolio over the year is:
Answer:
3.8%
Explanation:
There are some important parts missing:
Suppose over the next year Ball has a return of 12.5%, Lowes has a return of 21%, and Abbott Labs has a return of -10%.
We must first determine the weight of each stock in the portfolio:
ABT = ($50 x 200) / $20,000 = 50%LOW = ($30 x 200) / $20,000 = 30%BLL = ($40 x 100) / $20,000 = 20%the expected return of the portfolio = (ABT x return) + (LOW x return) + (BLL x return) = (50% x -0.1) + (30% x 0.21) + (20% x .125) = -5% + 6.3% + 2.5% = 3.8%
Andrea Apple opened Apple Photography, Inc. on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
1. Andrea, the stockholder, invested $13,800 cash in the business.
2. Andrea contributed $23,000 of photography equipment to the business.
3. The company paid $2,400 cash for an insurance policy covering the next 24 months.
4. The company received $6,000 cash for services provided during January.
5. The company purchased $6,500 of office equipment on credit.
6. The company provided $3,050 of services to customers on account.
7. The company paid cash of $1,800 for monthly rent.
8. The company paid $3,400 on the office equipment purchased in transaction #5 above.
9. Paid $305 cash for January utilities.
Based on this information, the balance in the A. Apple, Capital account reported on the Statement of Owner's Equity at the end of the month would be:
a. $31,400.
b. $39,200.
c. $31,150.
d. $40,175.
e. $30,875.
Answer:
$43,745
Explanation:
Calculation for what the Capital account reported on the Statement of Owner's Equity at the end of the month would be
Using this formula
Ending Capital Balance = Cash (1)+ Photography equipment (2) +Cash for services provided (4)+Services to customers on account (6)- Monthly rent(7)- Utility (9)
Let plug in the formula
Ending Capital Balance = $13,800 + $23,000 + $6,000 + $3,050 - $1,800 - $305
Ending Capital Balance= $43,745
Therefore the balance in the Capital account reported on the Statement of Owner's Equity at the end of the month would be: $43,745
The_________for a soft drink manufacturer would include other manufacturers of soft drinks, fruit juices, bottled water, sports drinks, caffeine-free colas, and dairy beverages.
a. competitive environment
b. technological environment
c. cooperative environment
d. economic environment
Answer:
The answer is A
Explanation:
Competitive environment is an environment where competitors compete with one another for customers.
For example, Westpac, NAB, Commonwealth Bank and ANZ are in the same competitive environment. These are banks in Australia.
Types of competition are perfect competition, monopoly, monopolistic competition, oligopoly etc.
In a partnership liquidation, the final cash distribution to the partners should be made in accordance with the
Answer: B) balances of the partners' capital accounts.
Explanation:
Final cash distributions should be made proportionally to partners based on what they have in their Capital Accounts.
The balance in the Capital accounts of Partners shows the level of contribution that each partner has made to the business as well as their ownership proportion. When cash is to be distributed finally, it should therefore be based on the proportion of these Capital account balances to reflect the contribution and ownership.
Michael's Mattress Warehouse is planning to hire a new sales representative , so Sarak interviewing the sales manager to leam more about the skills, responsibilities, and behaviors associated with the positionAfter the interview, Sarah will observe one of the present sales representatives doing his job to get an even better idea of what the job involves Once she is done, she will use the informaation gathered to write a job description for the opes position Based on Sarah's actions , we can conclude that she is conducting a
compensation classification job analysis
employment comparison performance appraisal
From what Sarah is doing we can conclude that she is performing a job analysis.
Given that she is observing and trying to learn about requirements of this job.
When performing a job analysis, the analyst is trying to get relevant information about the details of a job as well as the requirements of the job.
Job analysis are carried out most of the time to determine job placements.
In conclusion We can see this from what Sarah is doing, she is observing and asking questions on what the job entails in order to write a description for the job.
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Hudson Co. reports the contribution margin income statement for 2015. Assume sales remain constant at 10.000 units.HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2015Sales (10,000 units at $244 each) $2,440,000Variable costs (10,000 units at $195 each) 1,950,000Contribution margin 490,000Fixed costs 327,600Pretax Income $162,400Assume the company is considering investing in a new machine that will increase its fixed costs by $37,000 per year and decrease its variable costs by $8 per unit. Required:Prepare a forecasted contribution margin income statement for 2018 assuming the company purchases this machine.
Answer:
Results are below.
Explanation:
Giving the following information:
Selling price= $244
Unitary variable cost= 195 - 8= $187
Fixed costs= 327,600 + 37,000= $364,600
We need to determine the new pre-tax income:
Sales= 244*10,000= 2,440,000
Total variable cost= 187*10,000= (1,870,000)
Total contribution margin= 570,000
Fixed costs= (364,600)
Pre-tax income= 205,400
Stock price is $150. You see an at-the-money call option trading at $15, and at-the-money put trading at $5. The options have the same expiration date. You decide to buy a straddle. What will be the breakeven points of the strategy, i.e., at what stock prices will your profit will be exactly zero?a. Two breakeven points, S* = 145 and S* = 165b. Two breakeven points, S* = 135 and S* = 155c. One breakeven point, S* = 150d. Two breakeven points, S* = 130 and S* = 170
Answer:
D) Two break even points, S* = 130 and S* = 170
Explanation:
option a)
if the stock price is $145,
put option ⇒ you win $5 - $5 (option price) = no gain
call option ⇒ you lose $15 (option price)
WRONG ANSWER
option b)
if the stock price is $155,
put option ⇒ you lose $5 (option price)
call option ⇒ you win $5 - $15 (option price) = -$10 loss
WRONG ANSWER
option c)
if the stock price is $150,
put option ⇒ you lose $5 (option price)
call option ⇒ you lose $15 (option price)
WRONG ANSWER
option d)
if the stock price is $170,
put option ⇒ you lose $5 = -$5 loss
call option ⇒ you win $20 - $15 (option price) = $5 gain
total gain/loss = $0
if the stock price is $130,
put option ⇒ you win $20 - $5 (option price) = $15 gain
call option ⇒ you lose $15 (option price)
total gain/loss = $0
CORRECT ANSWER
You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.97.
Year Fund Market Risk-Free
2008 -15.2% -24.5% 1%
2009 25.1 19.5 3
2010 12.4 9.4 2
2011 6.2 7.6 4
2012 -1.2 -2.2 2
What are the Sharpe and Treynor ratios for the fund?
Answer:
Sharpe ratio = 0.20
Treynor ratio = –0.005
Explanation:
Note: See the attached excel file for the calculations of average rate of returns, standard deviations and beta used in the calculation below.
a. Calculation of Sharpe ratio
Sharpe ratio refers to a investment measurement that employed to measure the an investment actual that has been adjusted for the risk associated with the investment.
Sharpe ratio can be calculated using the following formula:
Sharpe ratio = (Average fund rate - Average Risk Free rate) / Standard deviation of fund rate = (5.46% - 2.40%) / 15.05% = 0.20
a. Calculation of Treynor ratio
Treynor ratio refers to investment measurement that is calculated to show the risk of certain investments after the volatility of the market has been taking into consideration.
Treynor ratio can be calculated using the following formula:
Treynor ratio = (Average market return rate - Average Risk Free rate) / Beta = (1.96% - 2.40%) / 87.53% = –0.005
In response to the financial crisis, the Fed and the U.S. Treasury took all of the following policy actions except _______.
a. lowering tax rates on commercial bank profits
b. The Troubled Asset Relief Program
Answer: lowering tax rates on commercial bank profits
Explanation:
The financial crisis which is also widely called the global meltdown was caused as a result of the financial indutry deregulation.
The goal of TARP was to strengthen the banks, and improve market stability. Lowering tax rates on commercial bank profits wasn't part of the action used by the government.
Copy equipment was acquired at the beginning of the year at a cost of $36,600 that has an estimated residual value of $3,300 and an estimated useful life of 5 years. It is estimated that the machine will output an estimated 1,110,000 copies. This year, 252,000 copies were made. a. Determine the depreciable cost. $ 33,300 b. Determine the depreciation rate. $ per copy c. Determine the units-of-output depreciation for the year. $
Answer:
a. $33,300
b. $0.03 per copy
c. $7,560
Explanation:
Units of Output = (Cost - Residual Value) × ( Period`s Production / Total Expected Production)
Depreciable Cost = Cost - Residual Value
= $36,600 - $3,300
= $33,300
Depreciation Rate = Depreciable cost ÷ Expected Production
= $33,300 ÷ 1,110,000 copies
= $0.03 per copy
Depreciation for the year = Depreciation Rate × Period`s Production
= $0.03 × 252,000 copies
= $7,560
TB MC Qu. 6-101 Data concerning Bedwell Enterprises ... Data concerning Bedwell Enterprises Corporation's single product appear below: Selling price per unit $ 160.00 Variable expense per unit $ 91.50 Fixed expense per month $ 429,490 The unit sales to attain the company's monthly target profit of $19,000 is closest to: (Do not round intermediate calculations.) Brewer 8e Rechecks 2018-06-19
Answer:
Break-even point in units= 6,547 units
Explanation:
Giving the following information:
Selling price per unit $160
Variable expense per unit $91.50
Fixed expense per month $429,490
Desired profit= $19,000
To calculate the number of units to be sold, we need to use the break-even point formula:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (429,490 + 19,000) / (160 - 91.5)
Break-even point in units= 6,547 units
Which method of evaluating capital investment proposals uses present value concepts to compute the rate of return from the net cash flows
Answer:
Internal rate of return
Explanation:
The internal rate of return is that return in which the net present value equivalent to zero
i.e.
Net present value = 0
That means
Initial investment = Present value of cash inflows after charging the discounting factor like 10% 12% etc
So as per the given situation, the internal rate of return is the correct answer
Sea Blue manufactures flotation vests in Charleston, South Carolina. Sea Blue's contribution margin income statement for the month ended December 31, 2018, contains the following data:
Sea Blue
Income Statement
For the Month Ended December 31, 2018
Sales in Units 32,000
Net Sales Revenue $608,000
Variable Costs:
Manufacturing 96,000
Selling and Administrative 108,000
Total Variable Costs 204,000
Contribution Margin 404,000
Fixed Costs:
Manufacturing 124,000
Selling and Administrative 94,000
Total Fixed Costs 218,000
Operating Income $186,000
Suppose Overboard wishes to buy 4,600 vests from Sea Blue. Sea Blue will not incur any variable selling and administrative expenses on the special order. The Sea Blue plant has enough unused capacity to manufacture the additional vests. Overboard has offered $15 per vest, which is below the normal sales price of $19.
1. Identify each cost in the income statement as either relevant or irrelevant to Sea Blue's decision.
a. Variable Manufacturing Costs
b. Variable Selling and Administrative Costs
c. Fixed Manufacturing Costs
d. Fixed Selling and Administrative Costs
2. Prepare a differential analysis to determine whether Sea Blue should accept this special sales order.
3. Identify long-term factors Sea Blue should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Sea Blue's managers also should consider the following:
A. Will Sea Blue's other customers find out about the lower sale price Sea Blue accepted from Overboard? If so, will these other customers demand lower sale prices?
B. Will the special order customer come back again and again, asking for the same reduced price?
C. How will Sea Blue's competitors react? Will they retaliate by cutting their prices and starting a price war?
D. All of the above
E. None of the above
Answer:
1. Variable Cost
Manufacturing 96,000 ( Relevent )
Selling and administrative 108,000 ( Irrelevent )
Fixed Cost
Manufacturing 124,000 ( Irrelevent )
Selling and administrative 94,000 (Irrelevent )
2. $55,200
3. A. If the regular customer found out about this order and will demand a lower price?
B. Will this order customer come back again and again asking the same reducted price?
C. Will this order price will start a price war with the competitors?
Explanation:
1. Calculation to Identify each cost in the income statement as either relevant or irrelevant to Sea Blue's decision.
Variable Cost
Manufacturing 96,000 ( Relevent )
Selling and administrative 108,000 ( Irrelevent )
Fixed Cost
Manufacturing 124,000 ( Irrelevent )
Selling and administrative 94,000 (Irrelevent )
2. Preparation of a differential analysis to determine whether Sea Blue should accept this special sales order.
Differential analysis
Expected increase in income in revenue
( 4,600 vest * $15 per vest ) 69,000
Less :Expected increase in Variable manufacturing
( 4,600 vest * $3 per vest) (13,800)
=$55,200
Variable manufacturing cost of $96,000 / divide by 32,000 units will give us $3
Based on the above calculation Sea blue should accept this order reason been that the order will increase their operating income by the amount of $55,200.
3. The manager of Sea blue should know that the sale might affect their regular sale in long run.
Therefore In addition to determining the special order's effect on operating profits, Sea Blue's managers also should consider:
A. If the regular customer found out about this order and will demand a lower price?
B. Will this order customer come back again and again asking the same reducted price?
C. Will this order price will start a price war with the competitors?
Answer the following questions. 1. A company has an inventory of 1,200 assorted parts for a line of missiles that has been discontinued. The inventory cost is $71,000. The parts can be either (a) remachined at total additional costs of $24,000 and then sold for $32,000 or (b) sold as scrap for $5,000. Which action is more profitable? Show your calculations. 2. A truck, costing $104,000 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $15,500 cash and replaced with a similar truck costing $105,500 or (b) rebuilt for $85,500, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations.
Answer:
1) the $71,000 is considered a sunk cost because it cannot be recovered.
option A yields $32,000 - $24,000 = $8,000 (this is more profitable)
option B yields $5,000
2) the $104,000 is also considered a sunk cost because it cannot be recovered
option A results in $105,500 - $15,500 = $90,000 in costs
option B costs $85,500 (this option is less costly)
Provo, Inc., had revenues of $10 million, cash operating expenses of $5 million, and depreciation and amortization of $1 million during 2008. The firm purchased $500,000 of equipment during the year while increasing its inventory by $300,000 (with no corresponding increase in current liabilities). The marginal tax rate for Provo is 40 percent. Free cash flow: What is Provo's free cash flow for 2008
Provo's free cash flow for 2008 is $2,600,000
Income Statement
Revenue $10,000,000
Operating expenses - $5,000,000
Depreciation - $1,000,000
EBIT $4,000,000
Interest expenses - $0
Taxes - $1,600,000 (40% * $4,000,000)
Net Income $2,400,000
Depreciation +$1,000,000
Operating cash flow $3,400,000
Free cash flow = Operating Cash flow - Purchase of equipment - Increase in Inventory
Free cash flow = $3,400,000 - $500,000 - $300,000
Free cash flow = $2,600,000
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"The principle stating that assets acquired by the business should be recorded at their actual cost on the date of purchase is:"
Answer:
The answer is historical cost principle
Explanation:
Historical cost principle is a principle in which the asset and the liability are being reported at the actual money in which they were purchased. This actual amount in which they were purchased is their historical cost.
For example, a company bought a machinery five years ago for $2million and the expected life of the machinery is five years. After there years, the machine has a carrying amount of $1.2 million on the balance sheet. The historical cost of this asset is $2million.
Target costing is arrived at by taking a.the selling price and adding desired profit b.the selling price minus desired profit c.the budget standard cost and reducing it by 10% d.the selling price and subtracting the budget standard cost
Answer:
The answer is B. the selling price minus desired profit
Explanation:
The formula for target costing is:
Selling price minus desired profit(profit margin).
Target costing is one of the tools used by management to determine the cost at which a product will be sold for at every stage of its life-cycle.
One of the advantages of target costing is that it enables firms to think about the best way to produce a product at the lowest possible costs
Lake Incorporated purchased all of the outstanding stock of Huron Company, paying $1,000,000 cash. Lake assumed all of the liabilities. Book values and fair values of acquired assets and liabilities were: Book Value Fair Value Current assets (net) $ 190,000 $ 125,000 Property, plant, equip. (net) 650,000 765,000 Liabilities 255,000 255,000 Lake would record goodwill of
Answer:
Lake would record goodwill of $365,000
Explanation:
Fair value of net assets = Fair value of current asset + Fair value of property, plant and equipment
Fair value of net assets = $125,000 + $765,000
Fair value of net assets = $890,000
Fair market value = Fair value of net assets - Liabilities assumed
Fair market value = $890,000 - 255,000
Fair market value = $635,000
Goodwill = Consideration - Fair market value
= $1,000,000 - $635,000
= $365,000
Hence, the amount of goodwill is $365,000.
Recently, the Google team announced its fleet of driverless cars had completed over 1 million miles of "autonomous driving." The Google driverless car is at which stage of the new-product development process?
Answer:
Product Development (stage five)
Explanation:
Sometimes companies make moves towards introducing new products in the market space. To do this there are different stages that must be passed in the new-product development process. The product development stage is the stage where a prototype version of the product is produced. This version of the product would have the required features of the end product and the effect the product is expected to produce. After this stage, the product undergoes market testing. For products that took in a lot of investment, more intense test marketing should be done in order to ascertain what would really translate to higher sales for the product.
When the Google team announced that its fleet of driverless cars had completed over 1 million miles of 'autonomous driving', it means that they had produced the prototype of the product and it has undergone testing. The next stage would entail testing the product in the market and then commercialization.
On October 10, the stockholders? equity of Sherman Systems appears as follows:
Common stock?$10 par value, 72,000 $ 720,000
shares authorized, issued, and outstanding
Paid-in capital in excess of par value, common stock 216,000
Retained earnings 864,000
Total stockholders equity $ 1,800,000
Prepare journal entries to record the following transactions for Sherman Systems.
1a. Purchased 5,000 shares of its own common stock at $25 per share on October 11.
1b. Sold 1,000 treasury shares on November 1 for $31 cash per share.
1c. Sold all remaining treasury shares on November 25 for $20 cash per share.
2. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase.
Answer: Please find answers in explanation column
Explanation:
Common stock?$10 par value, 72,000
shares authorized, issued, and outstanding $ 720,000
Paid-in capital in excess of par value, common stock $216,000
Retained earnings $864,000
Total stockholders equity $1,800,000
a)journal entry to record the purchase of shares on Oct 11
Date Account Debit Credit
Oct 11 Treasury stock $125,000
Cash $125,000
Calculation
value of the Treasury stock=No.of shares×Value per share
=5,000×$25 =$125,000
b. journal entry to record the sales of treasury shares.
Date Account Debit Credit
Oct 11 Cash $31,000
Treasury stock $25,000
Paid in capital from the sale of the stock
(31,000 - 25,000) $6,000
Calculation
Cash =No.of shares×Value per share
=1,000×$31 =$31,000
Treasury stock=No.of shares× purchased value of share
=1,000×$25 =$25,000
1c)journal entry to record the sales of the remaining treasury shares
Date Account Debit Credit
Nov 1 Cash $80,000
Paid in capital from the sale of the stock $6,000
Retained earning $14,000
Treasury stock $100,000
Calculation
Remaining treasury shares = 5000-1000= $4000
Cash =No.of shares×Value per share
=4, 000× 20 =$80 ,000
Treasury stock=No.of shares× purchased value of share
=4,000×$25 =$100,000
recall paid in capital from sale = $6000
retained earnings = treasury stock - cash- paid in capital= 100,000- 80,000 - 6,000= $14,000
2) Revised equity of the balance sheet to show new total stockholders’ equity
Account /Particulars Amount
Common stock $ 720,000
Paid-in capital $216,000
Retained earnings $864,000
less Treasury stock ($125,000)
Balance $739,000
Total stockholders equity $1,675,000
MacKenzie Company sold $180 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 4% service charge for sales on its credit cards. MacKenzie electronically remits the credit card sales receipts to the credit card company and receives payment immediately. The journal entry to record this sale transaction would be
Answer:
DR Cash................................................ $172.8 0
DR Credit card expense.......................$7.2 0
CR Sales.................................................................... $180
Explanation:
The bank will deduct a service charge of 4% before remitting the money so;
Cash = 180 * ( 1 - 0.04)
= $172.80
Credit Card expense
= 180 - 172.80
= $7.20
Jacob Corcoran bought 10,000 shares of Grebe Corporation stock two years ago for $24,000. Last year, Jacob received a nontaxable stock dividend of 2,000 shares in Grebe Corporation. In the current tax year, Jacob sold all of the stock received as a dividend for $18,000.
Required:
a. Complete the letter to Jacob describing the tax consequences of the stock sale.
b. Prepare a memo for the tax research file describing the tax consequences of the stock sale.
c.
Answer:
Jacob purchased 10000 shares form Grebe corporation two years ago for $24000
last year Jacob received a non taxable stock dividend of 2000 shares from Grebe corporation
In the current year tax year Jacob sold all stock received as dividend that's 2000 shares for $18000
The gain of the sale of 2000 shares can be calculated by subtracting the basis in the shares from the cost price. the cost of shares = ( $24000 / 12000 ) = $2 per share
profit made from the sales of 2000 shares is calculated as follows ; selling price ( $18000 ) - cost price of 2000 shares ( $2 * 2000) , the profit is $14000 and it is in the long term because the original shares bought has been held for at least 1 year
Explanation:
Jacob purchased 10000 shares form Grebe corporation two years ago for $24000
last year Jacob received a non taxable stock dividend of 2000 shares from Grebe corporation
In the current year tax year Jacob sold all stock received as dividend that's 2000 shares for $18000
The gain of the sale of 2000 shares can be calculated by subtracting the basis in the shares from the cost price. the cost of shares = ( $24000 / 12000 ) = $2 per share
profit made from the sales of 2000 shares is calculated as follows ; selling price ( $18000 ) - cost price of 2000 shares ( $2 * 2000) , the profit is $14000 and it is in the long term because the original shares bought has been held for at least 1 year
The production planning department has developed the forecast for End Item A for periods 1-7 as 240, 345, 320, 275, 315, 330, 340. You can use the tables provided on the following pages. (a) Determine the planned order releases for Component B, which is planned on a lot-for-lot basis. Indicate your answer here.
Answer:
.........................................................
Explanation:
..............................................
Brorsen, Inc., has just designed a new product with a target cost of $64. Brorsen requires new product to have a profit of 20%. What is the target price for the new product
Answer:
$80
Explanation:
Brosen incorporation has just designed a new product.
The target cost of the new product is $64
Let y represent the target price
Broken requires the new product to have a profit of 20%
= 20/100 × y
= 0.2×y
= 0.2y
Therefore, the target price can be calculated as follows
Target cost+ Target profit= Target price
64 + 0.2y= y
64= y-0.2y
64= 0.8y
y= 64/0.8
y= 80
Hence the target price for the new product is $80
Archie Co. purchased a framing machine for $60,000 on January 1, 2021. The machine is expected to have a four-year life, with a residual value of $5,000 at the end of four years. Using the sum-of-the years'-digits method, depreciation for 2022 and book value at December 31, 2022, would be: (Do not round intermediate calculations.)
Answer:
$16,500
Explanation:
Depreciation is a method used in expensing the cost of an asset.
sum-of-the years'-digits method = (useful life remaining / sum of years) x (cost of asset - residual value)
sum of the years = 1 + 2 + 3 + 4 = 10
(3 / 10) x ($60,000 - $5,000) = $16,500
Kohler Corporation reports the following components of stockholders’ equity at December 31, 2018. Common stock—$10 par value, 100,000 shares authorized, 40,000 shares issued and outstanding $ 400,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 460,000 Total stockholders' equity $ 920,000 During 2019, the following transactions affected its stockholders’ equity accounts. Jan. 2 Purchased 4,500 shares of its own stock at $25 cash per share. Jan. 5 Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. July 6 Sold 1,688 of its treasury shares at $29 cash per share. Required: 1. Prepare journal entries to record each of these transactions.
Answer:
Kohler Corporation
Journal Entries:
Jan. 2:
Debit Treasury Stock $45,000
Debit Paid-in Capital In Excess of Par $67,500
Credit Cash Account $112,500
To record the purchase of 4,500 shares of its own stock at $25 per share.
Jan. 5:
Debit Dividends $71,000
Credit Dividends Payable $71,000
To record the declaration of $2 per share cash dividend.
Feb. 28:
Debit Dividends Payable $71,000
Credit Cash Account $71,000
To record the payment of cash dividend on 35,500 shares at $2 per share.
July 6:
Debit Cash Account $48,952
Credit Treasury Stock $16,880
Credit Paid-in Capital In Excess of Par $32,072
To record the sale of treasury stock shares at $29 per share.
Explanation:
a) Data and Calculations:
Common stock—$10 par value, 100,000 shares authorized,
40,000 shares issued and outstanding $ 400,000
Paid-in capital in excess of par value,
common stock 60,000
Retained earnings 460,000
Total stockholders' equity $ 920,000
b) The purchase on Jan. 2 of its own stock of 4,500 shares, the cash receipt is credited to the Cash Account while the Treasury Stock is debited, but only with the par value of the repurchased shares if the par value method is adopted. If the costing method is adopted, the value to be debited to the Treasury Stock account would have $112,500 without any debit to the Paid-in Capital In Excess of Par. This is also followed when the sale of 1,688 treasury shares at $29 per share takes place on July 6, but with opposite entries.
c) To compute the dividend payable, the treasury stock shares of 4,500 are deducted from the outstanding shares of 40,000. This means that the shareholders of record have shares outstanding totalling 35,500 (40,000 - 4,500).
d) The general journal is used in these cases to record the transactions initially in the books of Kohler Corporation. They show the accounts to be debited and the others to be credited, since two accounts or more are usually involved in any business transaction.