Answer:
a. Annual dividend on TXS preferred stock is $6.12 per share.
b. The price of TXS preferred stock is $153 per share.
c. The value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return is $164.77 per share.
Explanation:
These can be calculated as follows:
a. What is the annual dividend on TXS preferred stock?
The formula for calculating the annual dividend on preferred stock is given as follows:
Annual dividend on preferred stock = Par value of preferred stock * annual dividend rate
Since we have the following for TXS:
Par value of preferred stock = $68 per share
Annual dividend rate = 9%
Therefore, we have:
Annual dividend on preferred stock = $68 * 9% = $6.12 per share
Therefore, annual dividend on TXS preferred stock is $6.12 per share.
b. If investors require a return of 4% on this stock and the next dividend is payable one year from now, what is the price of TXS preferred stock?
The formula for calculating the price of preferred stock is given as follows:
Price of preferred stock = Dividend per share / Preferred stock required rate of return
Since for TXS, we have
Dividend per share = $6.12 per share
Preferred stock required rate of return = 4%, or 0.04
Therefore, we have:
Price of preferred stock = $6.12 / 0.04 = $153 per share
Therefore, the price of TXS preferred stock is $153 per share.
c. Suppose that TXS has not paid dividends on its preferred shares in the past two years, but investors believe that it will start paying dividends again in one year. What is the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return?
Cumulative preferred stock implies that unpaid previous dividends can be carried forward as arrears to when the dividend is paid.
Since TXS has not paid dividends on its cumulative preferred shares in the past two years, but will start paying dividends again in one year implies that preferred stockholders will receive the dividends in arrears of one year together with the next dividend payment.
Based on this, we have
TXS preferred stock value = PV of two dividends + Preferred stock price
PV of two dividends = Present value of two dividends in arrears to paid now = M / (1 + r)^n
Where,
M = 2 * Annual dividend on TXS preferred stock = 2 * $6.12 = $12.24
r = 4%, or 0.04
n = 1 year
Therefore, we have:
PV of two dividends = $12.24 / (1 + 0.04)^1 = $11.77
Since from part b. preferred stock price is $153 per share, we therefore have:
TXS preferred stock value = $11.77 + 153 = $164.77 per share
Therefore, the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return is $164.77 per share.
As per the question, the TXS company has outstanding preferred stock issues with a value that is parred USD 68 per share and prefers to pay the dividend at an annual rate of 9%.
Thus the yearly dividend of the TXS on preferred stock is a. total dividend on TXS stock is of $6.12 per share. If the investors gained four percent on this stock and next is made payable 1 year from now, then the prices of TXS stock will be $153/share. If the TXS is not being paid then the preferred share for the two-year period is total and if investors require at 4% rate of return which is at $164.77 per share.Learn more about the TXS Manufacturing has an outstanding.
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Your company rents computers to local businesses and schools. You have 1,600 computers with a book value of $163,000. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $123,500 because of their outdated technology. Your company should report an asset impairment loss of:
Answer:
Your company should report an asset impairment loss of : $39,500
Explanation:
Impairment loss is recognized when the Carrying Amount of an Asset exceed its Recoverable Amount.
Carrying Amount
Carrying Amount is the Cost of Asset less its Accumulated Depreciation
Carrying Asset of Computers = $163,000
Recoverable Amount
Recoverable Amount is the Higher of :
Value in Use of Asset orFair Value less Cost to Sale the AssetIn this case the Recoverable amount is $123,500
Analysis for impairment loss
Carrying Amount : $163,000 > Recoverable Amount : $123,500,
Thus we have an impairment situation.
Impairment loss is $39,500 ($163,000 - $123,500)
Star Corp. has a rate of return on assets of 10% and a debt/equity ratio of 2 to 1 before entering into an operating lease. Not including any indirect effects on earnings, when Star Corp. records the operating lease, the immediate impact on these ratios is a(an):
Answer:
The return on assets and debt/equity ratio does not change
Explanation:
An operating lease does not affect assets and liabilities. From the formula:
Equity = Assets - Liabilities, since both assets and liabilities are not affected (they remain unchanged) therefore the equity is also the same.
The debt/ equity ratio = total liabilities/total equity. Since liabilities and equity remain unchanged, therefore The debt/ equity ratio is the same.
Also the return of assets (earnings/assets) remain the same
You come across different kinds businesses every day. The following sentences describes some businesses. Using the description of each business, classify it as a sole proprietorship, a partnership, a corporation, or a Limited liability company/limited liability partnership.
a. Anthony started a tutoring website. After a few months, a publishing company filed a lawsuit against his company for copyright infringement. Anthony had to shut down his business and lost all his personal assets in the process.
b. Willie started a business, based in a different state, with his unde. Due to the business's underperformance, they had to dose the business. Willie, however, ended up losing his house due to a litigation claim.
c. James, the CEO of a beverage company, is required to certify the accuracy of information provided in the company's quarterly reports.
Answer:
The correct answers are:
A - Sole propietorship
B - Partnership
C - Corporation
Explanation:
A) The name of "Sole Propietorship" is refered to a type of enterprise whose main characteristics reside in the fact that the ownership belongs to one person only and that person receives all the profits and is also fully unlimited liable for the debts of the business. Therefore that in that case Anthony started a sole propietorship
B) The name of "Partnership" is refered to a type of enterprise that is characterized for the fact of being a business that is operated and managed by two or more parties that have made a formal arregenment in order to work together and both obtain profits equally and also share the responsibility of the debts and its liability together equally. Therefore that in that case Willie has started a partnership.
C) The name of "Corporation" is refered to a type of enterprise that basically is characterized by the fact of being a different legal person that itw owners and therefore that the ones that own the business do not take unlimited responsibility for the actions of the company and its debts. The most common in this type of companies is that the owners hire many employees, among them, CEOs.
Which of the following statements is most correct? a. All else equal, if a bond’s yield to maturity increases, its price will fall. b. All else equal, if a bond is down graded by the rating agencies its yield to maturity will increase. c. If a firm has two bond issues that are identical except one is subordinate to the other, the subordinate issue will have a higher yield to maturity than the other issue. d. A B and C are correct. e. None of the above are correct
Answer: d. A B and C are correct.
Explanation:
A bond's price and it's Yield to Maturity (YTM) are inversely related such that when Yield to Maturity rises, the price of the bond falls. This is a because a higher YTM signifies that the bond is riskier so it will compensate by being cheaper.
If a bond is downgraded by Ratings agencies then it means that the bond is now riskier. As it is riskier investors will charge more interest for taking on the risk. The interest is the YTM and so it rises.
A Subordinate bond means that if the company were to go into bankruptcy for instance, the Subordinate bond would only be paid for after the bond that is not Subordinated. This means that there is a chance that Subordinate bond holders will not get anything from the liquidation of the company. Investors will therefore charge a higher YTM to cater for the risk that this happens.
In May direct labor was 40% of conversion cost. If the manufacturing overhead for the month was $120,600 and the direct materials cost was $29,200, the direct labor cost was:
Answer:
direct labor= $80,400
Explanation:
Giving the following information:
In May direct labor was 40% of conversion cost. The manufacturing overhead for the month was $120,600.
The conversion costs are the sum of direct labor and manufacturing overhead.
Conversion costs= 120,600/0.6= 201,000
direct labor= 210,000*0.4= 80,400
On January 1 of the current year (Year 1), our company acquired a truck for $75,000. The estimated useful life of the truck is 5 years or 100,000 miles. The residual value at the end of 5 years is estimated to be $5,000. The actual mileage for the truck was 22,000 miles in Year 1 and 27,000 miles in Year 2. What is the depreciation expense for the second year of use (Year 2) if we use the units of production method
Answer:
The depreciation expense for the second year of use (Year 2) if we use the units of production method is $18,900.
Explanation:
Units of production method is depreciation method that considers the number of units that an asset produces more closely relevant than the number of economic useful life of the assets. The method therefore produces a greater depreciation expenses in years when the assets is heavily put into use.
Under the units of production method, the depreciation expenses for a particular is the original cost of the equipment minus its salvage value, and this is then multiplied by the ratio of the expected number of units the asset should produce in that year to the number of units the asset is expected to produce in its useful life. Mathematically, this can be stated as follows:
Depreciation expenses for a particular = (Cost - Salvage/Residual value) * (Units produced in the year / Total units expected to produce throughout useful life)
To calculate the depreciation expense for the second year of use (Year 2) in this question, use the above formula as follows:
Depreciation expenses in Year 2 = ($75,000 - $5,000) * (27,000 / 100,000) = $70,000 * 0.27 = $18,900
Therefore, the depreciation expense for the second year of use (Year 2) if we use the units of production method is $18,900.
NB - Extra Information that can assist your learning:
Although this is not part of the question, but we can also compute the depreciation expenses for Year 1 in order to compare it with Year 2 as follows:
Depreciation expenses in year 1 = ($75,000 - $5,000) * (22,000 / 100,000) = $70,000 * 0.22 = $15,400.
We can see that the depreciation expenses of $18,900 for Year 2 is greater than the depreciation expenses of $15,400 for Year 1. The reason is that the truck is more heavily used in Year 2 at 27,000 miles than in Year 1 at just 22,000 miles.
In 2010, the BowWow Company purchased 11,752 units from its supplier at a cost of $ 11.73 per unit. BowWow sold 18,971 units of its product in 2010 at a price of $ 24.86 per unit. BowWow began 2010 with $ 864,593 in inventory (inventory is carried at a cost of $ 11.73 per unit). Using this information, compute BowWow's 2010 ending inventory balance (in dollars).
Answer:
Ending inventory balance is $ 779,914.13
Explanation:
The cost of goods sold formula can be used to determine the ending inventory by rearranging the formula and making the ending inventory the subject of the formula:
cost of goods=beginning inventory+inventory purchased-ending inventory
ending inventory=beginning inventory+inventory purchased-costs of goods sold
ending inventory=$864,593+(11,752*$11.73)-(18971*$11.73)=$ 779,914.13
ABC Appliance offers a warranty requiring an annual fee. The warranty may be purchased at the time of sale or at any time within the first year after the appliance was purchased. The warranty fee after the date of purchase is twice the time-of-purchase fee. When asked why the fee was higher after the date of purchase, ABC's president said, "Buying a warranty is voluntary. We've noted that those who buy the warranty after the purchase date have a greater need for service." Charging the same rate or a lower rate after the date of purchase would expose ABC to what problem that also impacts private insurers?
Answer: adverse selection
Explanation:
Adverse selection is a situation whereby the sellers possesses information that the buyers do not have. It may also be the other way round whereby the buyers have information which the sellers don't have regarding the quality of a product.
There is information failure between both parties; typically, it's usually the sellers who has more information. Therefore, base on the scenario above, charging same rate or lower rate after the date of the purchase would expose ABC to adverse selection problems.
Last winter, your service fraternity volunteered at an elementary school in a lower income neighborhood in your city. You noticed many of the children did not have hats or mittens to wear in the cold weather. You decided to start a business that will provide hats and mittens to children in need. You quickly realize you will need help in this venture and set out to find a cofounder. Which of the following characteristics and traits would you like to see in a cofounder?
A) Persistent.
B) Economically motivated.
C) Hard working.
D) Creative.
Answer:
A) Persistent.
C) Hard-working.
D) Creative.
Explanation:
In the given situation, it is mentioned that an individual wants to start a business that deals in hats and mittens so the needs of the children could be fulfilled. But for that, we need to find out a cofounder that should be have following traits and characteristics
a. Persistent: The person should be trying his best o achieve it rather than escape from it
b. he should be hardworking so that every child's need could be fulfillled
c. He should be creative or we can say who bring innovative ideas to the firm so that the people get attracted to the company products so that the sale of the firm could rise up
Three identical units of merchandise were purchased during July, as follows: Date Product Basic H Units Cost July 3 Purchase 1 $35 10 Purchase 1 36 24 Purchase 1 37 Total 3 $108 Average cost per unit $36 Assume one unit sells on July 28 for $45. Determine the gross profit, cost of merchandise sold, and ending inventory on July 31 using the (a) first-in, first-out, (b) last-in, first-out, and (c) average cost flow methods.
Answer and Explanation:
The computation is shown below:
Particulars Gross profit Cost of merchandise sold Ending inventory
a. FIFO $10 $35 $73
($45 - $35) ($108 - $35)
It takes the first cost per unit
b. LIFO $8 $37 $71
($45 - $37) ($108 - $37)
It takes the last cost per unit
c. Average cost $9 $36 $72
($45 - $36) ($45 - $36)
It takes the average cost per unit
If the government began providing free textbooks to college students who would otherwise have bought their books from the private sector, the government's action would result in:_______
A) a Ricardian dilemma.
B) a direct expenditure offset.
C) an increase in real Gross Domestic Product (GDP).
D) a reduction of the government deficit.
Answer:
Option (B) is the correct answer to this question.
Explanation:
As the government spends more money, businesses within the private sector typically spend less.
Specific budget offsets refer to the private-sector expenditures through which compensation was generated as a result of expansionary budgetary policy decisions becoming implemented. The private sector activities in investment profits that counter government spending behavior by the state. Some income from federal spending in an environment competing with corporate companies must be offset by any government expenditure.
Other options are incorrect because they are not related to the given scenario.
A company applies overhead at a rate of 150% of direct labor cost. Actual overhead cost for the current period is $1,150,000, and direct labor cost is $565,000. Determine whether there is over- or underapplied overhead using the T-account below. Factory OverheadActual Overhead 950,000 Overapplied overhead 950,000
Answer:
Under applied overheads= $302,500
Explanation:
Overheads are charged to units produced by the means of an estimated overhead absorption rate. This rate is computed using budgeted overhead and budgeted activity level.
As a result of this, overhead charged to total units product might be over or under absorbed compared to the actual amount incurred.
Overhead absorption rate
=budgeted Overhead/Budgeted labour cost × 100
This already given in the question as 150% of the direct labour rate
= 150% of direct labour cost
Applied overhead= OAR× actual labour cost
= 150% × $565,000=$847,500
Under applied overhead = is the difference between actual overhead and applied overhead
$1,150,000 - $847,500 = $302,500
Under applied overheads= $302,500
Here it is under applied because the applied is less than the actual overhead cost
Hall Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory 1,000
Materials costs $7,100
Conversion costs $6,400
Percent complete with respect to materials 65%
Percent complete with respect to conversion 30%
Units started into production during the month 13,600
Units transferred to the next department during the month 12,300
Materials costs added during the month $137,224
Conversion costs added during the month $215,050
Ending work in process inventory:
Units in ending work in process inventory 2,300
Percent complete with respect to materials 60%
Percent complete with respect to conversion 25%
The total cost transferred from the first processing department to the next processing department during the month is closest to:______
a. $356,256
b. $380,435
c. $341,325
d. $349,856
Answer:
c. $341,325
Explanation:
First determine the Equivalent Units of Production
Materials
Units completed and transferred (12,300 × 100%) = 12,300
Units in Ending Work In Process Inventory ( 2,300 ×60%) = 1,380
Equivalent Units of Production = 13,680
Conversion
Units completed and transferred (12,300 × 100%) = 12,300
Units in Ending Work In Process Inventory ( 2,300 ×25%) = 575
Equivalent Units of Production = 12,875
Next Determine the Total Cost Incurred during the period
Materials
Cost in Units of Opening Work In Process = $7,100
Incurred during the period = $137,224
Total Cost = $144,324
Conversion
Cost in Units of Opening Work In Process = $6,400
Incurred during the period = $215,050
Total Cost = $221,450
Then Determine the Total Cost per Equivalent unit of Production
Cost per Equivalent unit = Total Cost / Total Equivalent Units
Materials = $144,324 / 13,680
= $10.54
Conversion = $221,450 / 12,875
= $17.20
Total = $10.54 + $17.20 = $27.74
Finally calculate total cost transferred from the first processing department to the next processing department
total cost transferred = Units transferred × Total cost per equivalent unit of production.
= 12,300 × $27.74
= $341,202
Conclusion :
The total cost transferred from the first processing department to the next processing department during the month is closest to $341,325
Platen purchased inventory on August 17 and received an invoice with a list price amount of $5,900 and payment terms of 4/10, n/30. Platen uses the net method to record purchases. For what amount should Platen record the purchase
Answer:
$5,664
Explanation:
Calculation of the amount that Platen should record the purchase.
Using this formula
List price -(Percentage of payment term × list price)
Let plug in the formula
$5,900 -(4%×5,900 )
=$5,900-$236
=$5,664
Therefore Platen should record the purchase on August 17 as a:
Debit to Purchases (periodic system) and a Credit to Accounts Payable for $5,664
Therefore the amount that Platen should record the purchase will be $5,664
United Apparel has the following balances in its stockholders' equity accounts on December 31, 2021: Treasury Stock, $850,000; Common Stock, $600,000; Preferred Stock, $3,600,000; Retained Earnings, $2,200,000; and Additional Paid-in Capital, $8,800,000.
Required:
Prepare the stockholders' equity section of the balance sheet for United Apparel as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
The answer is $14,350,000
Explanation:
UNITED CAPITAL
BALANCE SHEET
(STOCKHOLDERS' EQUITY SECTION)
DECEMBER 31, 2021
Preferred Stock $3,600,000
Common Stock. $600,000
Additional Paid-in Capital $8,800,000
Total Paid-in Capital. $13,000,000
Retained Earnings $2,200,000
Treasury Stock,. -$850,000
Total Stockholders'equity $14,350,000
g Suppose the banking system has $100,000 in outstanding deposits and actual reserves of $50,000. Using the simple money multiplier formula (i.e., individuals hold no cash), if the required reserve ratio is 40%, the maximum possible amount that the banking system can now add to the money supply is:Group of answer choices$15,000$20,000$25,000$40,000
Answer: $25,000
Explanation:
The Money Multiplier allows us to calculate how much money banks can create in an economic given a certain reserve ratio.
The formula is;
Money Multiplier = 1 /reserve ratio
= 1/ 0.4
= 2.5
The reserve ratio is 40% which means the bank should be holding 40% of deposits as reserves.
= 100,000 * 40%
= $40,000
Yet they are holding $50,000. They are holding $10,000 more than required. Should they release that $10,000 then they will create;
= 10,000 * money Multiplier
= 10,000 * 2.5
= $25,000
For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.
a. The adjustment for accrued wages of $5,200 was journalized as a debit to Wages Expense for $5,200 and a credit to Accounts Payable for $5,200.
b. The entry for $1,125 of supplies used during the period was journalized as a debit to Supplies Expense of $1,125 and a credit to Supplies of $1,152.
Answer:
a) The debit and credit side of the unadjusted trial balance would be increased by $ 5200.
b) The debit side would remain unchanged. No effect will be seen in the adjusted trial balance.
Explanation:
Effect of adjustments on adjusted Trial Balance.
This first entry would increase the wages expense and increase the liability account in the adjusted trial balance. Both debit and credit side would be increased by an equal amount.
b) This would decrease the Supplies account and increase the supplies expense in the unadjusted account. As both are on the debit side there would be no effect in the debit total.
Sr No Account Debit Credit
Original Entries
a. Wages Expense 5200
Accounts Payable 5200
b. Supplies Expense 1125
Supplies Account 1125
Correct Entries
a. Wages Expense 5200
Accrued Wages Account Payable 5200
b. Supplies Expense 1125
Supplies Account 1125
Difference:
a) We see that the first entry which was original passed the debit side is correct but the credit side would have been of accrued wages instead of accounts payable . This is to raise the amount by which wages are still outstanding by an amount 5200 at the end of the month.
This would decrease the accounts payable increase the wages payable . If the adjustment is not made it the salaries payable is understated .
b)This adjusting entry is correct.
Cotton On Ltd. currently has the following capital structure: Debt: $3,500,000 par value of outstanding bond that pays annually 10% coupon rate with an annual before-tax yield to maturity of 12%. The bond issue has face value of $1,000 and will mature in 20 years.
Answer and Explanation:
This question is incomplete. Kindly find the incomplete question here
Ordinary shares: $5,500,000 book value of outstanding ordinary shares. Nominal value of each share is $100. The firm plan just paid a $8.50 dividend per share. The firm is maintaining 4% annual growth rate in dividends, which is expected to continue indefinitely.
Preferred shares: 45,000 outstanding preferred shares with face value of $100, paying fixed dividend rate of 12%
The firm's marginal tax rate is 30%.
Required:
a) Calculate the current price of the corporate bond?
b)Calculate the current price of the ordinary share if the average return of the shares in the same industry is 9%?
c) Calculate the current price of the preferred share if the average return of the shares in the same industry is 10%
The computation is shown below:
a. For the current price of the corporate bond
Before that first we have to determine the after tax yield to maturity i.e
After tax YTM = Before tax YTM × (1 - tax rate)
= 12% × ( 1 - 30%)
= 12% × (1 - 0.3)
= 12% × (0.7)
= 8.4%
Now
Price of bond = Interest × PVIFA(YTM%,n) + Redemption value × PVIF(YTM%,n)
Interest = 1000 × 10% = $100
YTM% = 8.4%
n = 20
PVIFA(YTM%,n) = [1 - (1 ÷ (1 + r)^n ÷ r ]
PVIFA(8.4%,20) = [1 - (1 ÷ (1 + 8.4%)^20 ÷ 8.4%]
= [1 - (1 ÷ (1 + 0.084)^20 ÷ 0.084]
= [1-(1 ÷ (1.084)^20 ÷ 0.084]
= [1 - 0.1993 ÷ 0.084]
= 0.8007 ÷ 0.084
= 9.5327
PVIF(8.4%,20) = 1 ÷ (1 + 8.4%)^20
= 1 ÷ (1.084)^20
= 0.19926
So, the price of bond is
= $100 × 9.5327 + $1000 × 0.19926
= $953.27 + $199.26
= $1,152.52
b)Price of stock = Dividend of next year ÷ (Required rate of return - growth rate )
where,
Growth rate = 4%
Required rate of return = 9%
The Dividend of next year = Dividend paid × (1 + growth rate)
= 8.50 × (1 + 4%)
= 8.50 × (1 + 0.04)
= 8.50 × (1.04)
= $8.84
Thus the price of the stock is
= $8.84 ÷ (9% - 4%)
= $8.84 ÷ 5%
= $176.80
c) Price of preference shares is
= Dividend ÷ Required rate of return
where,
Dividend = 100 × 12% = $12
And, the Required rate of return = 10%
So, the price of preference shares is
= 12 ÷ 10%
= $120
The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Jan. 1 Inventory $ 360,000 Jan. 1 to Dec. 31 Purchases (net) 2,870,000 Sales 4,470,000 Estimated gross profit rate 30% A. Estimate the cost of the inventory destroyed. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. B. In which situations would the gross profit method be useful
Answer:
A. Estimate the cost of the inventory destroyed is $101,000
B. Gross profit method would be useful in estimating the cost of merchandise destroyed by the fire.
Explanation:
Particulars Debit ($) Credit ($)
Beginning merchandise inventory 360,000
Add: Net purchase 2,870,000
Merchandise available for sale 3,230,000
Less: Net sales 4,470,000
Estimated gross profit (30%) (1,341,000)
Estimated cost of merchandise sold 3,129,000
Estimate the cost of the inventory destroyed 101,000
Carla Vista Electronics reported the following information at its annual meetings: The company had cash and marketable securities worth $1,235,455, accounts payables worth $4,159,357, inventory of $7,184,800, accounts receivables of $3,472,300, short-term notes payable worth $1,136,100, and other current assets of $121,455. What is the company's net working capital
Answer:
$6,718,553
Explanation:
Working capital is the net of current assets (Inventory, account receivables, Cash etc) and current liabilities (Accounts payable, short term notes payable etc).
It is a financial measure that gives insight into how liquid a company is. .
As such, the company's working capital
= $1,235,455 - $4,159,357 + $7,184,800 + $3,472,300 - $1,136,100 + $121,455
( the signs are positive for assets and negative for liabilities)
= $6,718,553
Kansas Company acquired a building valued at $151,000 for property tax purposes in exchange for 12,000 shares of its $3 par common stock. The stock is widely traded and selling for $18 per share. At what amount should the building be recorded by Kansas Company
Answer:
The building would be recorded by Kansas Company for an amount of $216,000
Explanation:
In order to calculate the amount should the building be recorded by Kansas Company we would have to calculate the value of the building with the following formula:
value of the building= shares exchanged*Market value per share
shares exchanged=12,000 shares
Market value per share=$18
Therefore, value of the building=12,000*$18
value of the building=$216,000
The building would be recorded by Kansas Company for an amount of $216,000
CMS Corporation's balance sheet as of today is as follows: Long-term debt (bonds, at par) $10,000,000 Preferred stock 2,000,000 Common stock ($10 par) 10,000,000 Retained earnings 4,000,000 Total debt and equity $26,000,000 The bonds have a 4.0% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm's debt
Answer:
$5,412,000
Explanation:
Given:
Long-term debt (bonds, at par):$10,000,000
Preferred stock :2,000,000
Common stock ($10 par): 10,000,000
Retained earnings: 4,000,000
Total debt and equity :$26,000,000
Coupon rate = 4%(semi annually)
Par value = $1000
YTM = 12%
Required:
Find the current market value of the firm's debt.
Find the bond price:
Bond price [tex] = (C * (\frac{1 - (\frac{1}{(1+i)^n})}{i}) + (\frac{m}{(1+i)^n}) [/tex]
[tex] = (C * (\frac{1 - (\frac{1}{(1+0.06)^2^0})}{0.06}) + (\frac{1000}{(1+0.06)^2^0}) [/tex]
[tex] = 541.20 [/tex]
Bond price = $541.20
Find number of bonds:
Number of bonds [tex] = \frac{10,000,000}{1,000} = 10,000[/tex]
Now, to find the current market value of the firm's debt, use:
Current market value of debt = number of bonds × bond price
= 10,000 × 541.20
= $5,412,000
Current market value of the firm's debt = $5,412,000
Conroy Copper Mines has $940 million in total liabilities and $620 million in shareholder's equity. It discloses operating lease commitments over the next five years with a present value of $120 million. If the lease commitments are treated as debt, the debt-to-total-capital ratio is closest to:
Answer:
0.63
Explanation:
Total debt = 940 + 120 =1060
Total sharesholder's equity = $620 million
We can find the debt to total capital ratio by dividing debt by total capital
Debt-to-total-capital ratio = Debt / Total capital = 1060 / (1060+620)
Debt-to-total-capital ratio = 0.63
sadik inch's bonds currently sell for $1,300 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call
Answer:
5.31%
Explanation:
For computing the yield to call we need to use the RATE formula i.e shown in the attachment below:
Given that,
Present value = $1,300
Future value or Face value = $1,100
PMT = 105
NPER = 5 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the yield to call is 5.31%
A supermarket displays featured items at the ends of aisles. These displays
are called
Answer:
These are the options for the question:
A. exteriors
B. endcaps
C. merchandisers
D. props.
And this is the correct answer:
B. endcaps
Explanation:
The small billboards that display items at the end of aisles are called endcaps.
They are usually used to display items that are on discount. Other times, they are simply used to sign the category of products that can be found in the respective aisle.
Answer:
endcaps
Explanation:
Deborah Lewis, general manager of the Northwest Division of Berkshire Co., has significant authority over pricing decisions as well as programs that involve cost reduction/control. The data that follow relate to upcoming divisional operations:
Average invested capital: $15,000,000
Annual total fixed costs: $3,900,000
Variable cost per unit: $80
Number of units expected to be sold: 120,000
Assume the unit selling price is $132 and that Berkshire has a 16% imputed interest charge.
Top management will promote Deborah to corporate headquarters if her division can generate $200,000 of residual income (RI). If Deborah desires to move to corporate, what adjustment must the division do to the amount of annual total fixed costs?
Answer:
The revised fixed costs = $3,640,000
Explanation:
Calculation of Residual Income:
Residual Income = Net income - (Invested capital * Minimum required rate of return)
Net Income = Sales - Variable costs - Fixed costs
Net Income = (120,000*132) - (120,000*80) - 3,900,000
Net Income = $2,340,000
Invested capital = $15,000,000
Minimum required rate of return = 16%
Therefore, residual income = $2,340,000 - ($15,000,000 * 16%)
= -$60,000
Hence, adjustment to be made to the amount of fixed costs so that residual income becomes $200,000 = $200,000+$60,000 = $260,000
Therefore, revised fixed costs = $3,900,000 - $260,000 = $3,640,000
Closet Links Clothing Company provided the following manufacturing costs for the month of June. Direct labor cost $ 132 comma 000 Direct materials cost 83 comma 000 Equipment depreciation (straightminusline) 20 comma 000 Factory insurance 18 comma 000 Factory manager's salary 10 comma 000 Janitor's salary 3 comma 000 Packaging costs 19 comma 800 Property taxes 16 comma 000 From the above information, calculate Closet Link's total variable costs.
Answer:
Closet Link's total variable costs is $234,800
Explanation:
Given:
Direct labor cost = $ 132,000
Direct materials cost = $83,000
Equipment depreciation (straight-line) = $20,000
Factory insurance = $18,000
Factory manager's salary = $10,000
Janitor's salary = $3,000
Packaging costs = $19,800
Property taxes = $16,000
Total variable costs = Direct materials cost + Direct labor cost + Packaging costs
= $83,000 + $132,000 + $19,800 = $234,800
Which of the following is not descriptive of external environmental scanning? used as a tool for corporations to avoid strategic surprise used to monitor, evaluate, and disseminate information relevant to the organizational development of strategy used to identify major stockholders used to determine a firm's competitive advantage used as a tool to ensure a corporation's long-term health
Answer:
used to identify major stockholders
Explanation:
Environmental scanning is a management strategy that focuses on systematically acquiring informations about occasions, trends, events or patterns through surveys and analysis of these information in an organisation's external and internal environment. The informations acquired through environmental scanning is then used by the executive management in strategically planning the organisation's future and exploitation of available opportunities for the success of the organization.
The internal environmental scanning offers an organization strength and weakness while the external environmental scanning provides information about opportunities and threats.
Generally, the external environmental scanning gives an overview of the opportunities in the market as well as potential threats to an organization.
Hence, the following are descriptive of an external environmental scanning;
1. Used as a tool for corporations to avoid strategic surprise.
2. Used to monitor, evaluate, and disseminate information relevant to the organizational development of strategy.
3. Used to determine a firm's competitive advantage.
4. Used as a tool to ensure a corporation's long-term health.
Cullumber Company purchased machinery on January 1 at a list price of $320000, with credit terms 4/10, n/30. Payment was made within the discount period. Cullumber paid $21750 sales tax on the machinery and paid installation charges of $5900. Prior to installation, Cullumber paid $11200 to pour a concrete slab on which to place the machinery. What is the total cost of the new machinery
Answer:
the total cost of the new machinery is $302,550
Explanation:
Cost of a Property Plant and Equipment (PPE) item includes Purchase price of asset and other costs directly incurred in bringing the asset in the location and condition required by management for operation excluding taxes that can be claimed.
Thus the Cost of this Machinery Can be Calculated as :
List Price $320,000
Less Cash Discount at 4% ($12,800)
Purchase Price $307,200
Less Sales Tax ($21,750)
$285,450
Add installation charges $5,900
Add Cost of concrete slab $11,200
Total Cost of Machinery $302,550
Which of the following is a major difference between Internet banks and traditional banks? The government does not regulate Internet banks. Traditional banks are prohibited from having ATMs. Internet banks have lower overhead costs. Traditional banks offer less personal care and attention to customers.
Answer:
Internet Banks have lower overhead costs.
Explanation:
Online Banks and traditional banks are basically the same with the main difference being that Internet Banks have lower overhead costs. These are costs on the income statement usually including accounting fees, advertising, insurance, interest, legal fees, labor burden, rent, repairs, supplies, taxes, telephone bills, travel expenditures, and utilities. Since Internet Banks do not need many physical locations they save on many of these overhead fees.