Answer:
Step Activities
1 Determine how expensive a car you can afford.
2. Identify the car that meets your needs and wants in terms of size, styling, performance, and safety and obtain online quotes for three target cars.
3. Negotiate the lowest price by getting bids from at least three dealers and hold firm to your target price when selecting the source of your car.
4. Change the oil, rotate the tires, and replace the windshield wipers as needed.
Explanation:
The steps above are arranged to ensure that the next step follows from the last sequentially. The sequence started with making purchase decisions to maintenance activities after the purchase of a car had been completed successfully.
Presented is basic financial information (in millions) from the annual reports of Nike Nike Sales revenue $18,627 Allowance for doubtful accounts, Jan. 1 71.5 Allowance for doubtful accounts, Dec. 31 78.4 Accounts receivable balance (gross), Jan 1 2,566.2 Accounts receivable balance (gross), Dec. 31 2,873.7 Instructions: Calculate the average collection period (DAYS) for Nike. Only record the number and round to one decimal.
Answer:
See below
Explanation:
Average collection period is computed as
= [Average accounts receivables / Net sales] × 365
Average accounts receivables = [(2,566.2 + 2,873.7)/2] = 2,720
Net sales = 18,627
Average collection period = [2,720/18627] × 365
= 53 days
A company's income statement showed the following: net income, $134,000; depreciation expense, $30,000; and gain on sale of plant assets, $4,000. An examination of the company's current assets and current liabilities showed the following changes: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses increased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.
Answer:
The net cash provided or used by operating activities is equal to $148,600.
Explanation:
The net cash provided or used by operating activities can be calculated using the indirect method as follows:
XTZ Co,
Calculation of The Net Cash Provided or Used by Operating Activities
(Indirect Method)
For the Year ....
Particular Amount ($)
Net income 134,000
Adjustment to reconcile net income:
Depreciation expense 30,000
Gain on sale of plant assets (4,000)
(Increase) decrease in current assets:
Decrease in accounts receivable 9,400
Increase in merchandise inventory (18,000)
Increase in prepaid expenses (6,200)
Increase (decrease) in current liabilities:
Increase in accounts payable 3,400
Net cash provided or used by operating activities 148,600
Therefore, the net cash provided or used by operating activities is equal to $148,600.
Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete liquidation of the company. In the exchange, Red Blossom received land with a fair market value of $637,500. The corporation's basis in the Tea Company stock was $302,500. The land had a basis to Tea Company of $672,500. What amount of gain does Red Blossom recognize in the exchange and what is its basis in the land it receives
Answer: $335,000 gain recognized and a basis in the land of $637,500
Explanation:
We should realise that this is a taxable exchange, therefore, the amount of gain that Red Blossom recognize in the exchange will be the difference between the fair market value of $637,500 and the corporation's basis in the Tea Company stock which was $302,500. This will be:
= $637500 - $302500
= $335000
Its basis in the land will be the value of the fair value which will be $637500
Based on the segment income statement below, Chips, Inc. is considering eliminating its Barbecue Division line. Revenue from Barbecue Division sales $ 528,000 Salaries for Barbecue Division workers (128,000 ) Direct material (342,000 ) Sunk costs (equipment depreciation) (82,000 ) Allocated company-wide facility-sustaining costs (64,000 ) Net loss $ (88,000 ) If the Division is eliminated, what is the total amount of avoidable cost?
Answer:
$470,000
Explanation:
Calculation to determine the total amount of avoidable cost
Salaries for Barbecue Division workers $128,000
Add Direct material $342,000
Avoidable Cost $470,000
($128,000+$342,000)
Therefore the total amount of avoidable cost will be $470,000
Partial income statements for Sherwood Company summarized for a four-year period show the following: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error.2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction.2-b. Does the pattern of gross profit percentages lend confidence to your corrected amounts? 29,000.
Answer:
1. The corrected gross profit are as follows:
2015 = $704,000
2016 = $836,000
2017 = $859,000
2018 = $1,024,000
2-a Gross profit percentage before and after correction are as follows:
Particulars 2015 2016 2017 2018
Before correction 32% 33% 31% 32%
After correction 32% 32% 32% 32%
2-b. Yes. This is because the gross profit percentage for the years are approximately the same at 32% after the correction was made.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Partial income statements for Sherwood Company summarized for a four-year period show the following:
2015 2016 2017 2018
Net Sales $2,200,000 $2,600,000 $2,700,000 $3,200,000
COGS 1,496,000 1,742,00 1,863,000 2,176,000
Gross Profit $704,000 $858,000 $837,000 $1,024,000
An audit revealed that in determining these amounts, the ending inventory for 2016 was overstated by $22.000. The inventory balance on December 31, 2017, was accurately stated. The company uses a periodic inventory system.
Required: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error, 2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction 2-b. Does the pattern of gross profit percentages lend confidence to your corrected amounts?
The explanation of the answer is now given as follows:
1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error
Note: See the attached excel file for the fixing the inventory error and the restated partial income statements to reflect the correct amounts, after fixing the inventory error.
The effect of the overstatement of closing inventory is reducing the 2016 cost of goods sold. To correct this in the attached excel file, the opening balance is reduced by $22,000 and this makes cost of goods sold of 2016 to increase and the cost of goods sold of 2017 to decrease by $22,000.
2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction
Note: See the attached excel file for the computed the gross profit percentage for each year (a) before the correction and (b) after the correction.
In the attached excel file, the following formula is used:
Gross Profit percentage = Gross profit / Net Sales) * 100
2-b. Does the pattern of gross profit percentages lend confidence to your corrected amounts?
Yes. This is because the gross profit percentage for the years are approximately the same at 32% after the correction was made.
Bonita Industries had the following bank reconciliation at March 31, 2020: Balance per bank statement, 3/31/20 $74600 Add: Deposit in transit 20400 95000 Less: Outstanding checks 25300 Balance per books, 3/31/20 $69700 Data per bank for the month of April 2020 follow: Deposits $87600 Disbursements 99300 All reconciling items at March 31, 2020 cleared the bank in April. Outstanding checks at April 30, 2020 totaled $12500. There were no deposits in transit at April 30, 2020. What is the cash balance per books at April 30, 2020
Answer:
$50,400
Explanation:
Cash Balance as per bank statement $62,900
[$69700+$25300-$20400+$87600-$99300]
Less: Outstanding checks at April 30, 2020 $12,500
Adjusted Cash balance per bank $50,400
So, the cash balance per books at April 30, 2020 is $50,400
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A patent with a 10-year remaining legal life was purchased for $350,000. The patent will be commercially exploitable for another eight years. A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $52,300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 10 years and is currently worth $400,000. A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for five years was obtained at a cost of $70,000. Satisfactory sales performance over the five years permits renewal of the franchise for another three years (at an additional cost determined at renewal).
Answer:
(a) Debit Amortization expense - Patents for $43,750; and Credit Patents for $43,750.
(b) Debit Amortization expense - Patents for $5,230; and Credit Patents for $5,230.
(c) Debit Amortization expense - Franchise for $14,000; and Credit Franchises for $14,000.
Explanation:
(a) A patent with a 10-year remaining legal life was purchased for $350,000. The patent will be commercially exploitable for another eight years.
Annual amortization expenses = Purchase cost of the patent / Number of commercially exploitable years = $350,000 / 8 = $43,750
Therefore, the journal entries will look as follows:
General Journal
Description Debit ($) Credit ($)
Amortization expense - Patents 43,750
Patents 43,750
(To record patent amortization.)
(b) A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $52,300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 10 years and is currently worth $400,000.
Annual amortization expenses = Legal fees / Remaining legal life = $52,300 / 10 = $5,230
Therefore, the journal entries will look as follows:
General Journal
Description Debit ($) Credit ($)
Amortization expense - Patents 5,230
Patents 5,230
(To record patent amortization.)
(c) A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for five years was obtained at a cost of $70,000. Satisfactory sales performance over the five years permits renewal of the franchise for another three years (at an additional cost determined at renewal).
Annual amortization expenses = Cost of acquiring the franchise / Number of years acquired = $70,000 / 5 = $14,000
Therefore, the journal entries will look as follows:
General Journal
Description Debit ($) Credit ($)
Amortization expense - franchise 14,000
franchise 14,000
(To record franchise amortization.)
Blossom Choice sells natural supplements to customers with an unconditional sales return if they are not satisfied. The sales returns period extends 60 days. On February 10, 2018, a customer purchases $2700 of products (cost $1350). Assuming that based on prior experience, estimated returns are 10%. The journal entry to record the actual return of $120 of merchandise includes a
Answer:
Debit to Returned Inventory for $60
Explanation:
The journal entries are as follows;
a. Sales Returns and Allowance A/c Dr $120
........................ To Account Receivable Cr $120
(To record the account receivable)
b. Returned inventory A/c Dr $60
.......................... To Cost of goods sold Cr $60
(To record the actual return)
Workings;
Returned inventory = $120 × (1,350 ÷ 2,700) = $60
Newton Corporation was organized on January 1, 2017. On that date, it issued 200,000 shares of its $10 par-value common stock at $15 per share (400,000 shares were authorized). During the period from January 1, 2017, through December 31, 2019, Newton reported net income of $750,000 and paid cash dividends of $380,000. On January 5, 2019, Newton purchased 12,000 shares of its common stock at $12 per share. On December 31, 2019, the company sold 8,000 treasury shares at $8 per share.
Required:
What is the book value of total shareholders’ equity as of December 31, 2019?
Answer:
$30,290,000
Explanation:
Calculation for the book value of total shareholders’ equity as of December 31, 2019
First step is to calculate the Paid up share capital
Paid up share capital =200000*10
Paid up share capital=20,00,000
Second step is to calculate the Securities premium
Securities premium=2,00,000*5
Securities premium=10,00,000
Third step is to calculate the Net income after dividend
Net income after dividend=750,000-3,80,000
Net income after dividend=370,000
Fourth step is to calculate the Treasury stock at par value
Treasury stock at par value =8,000*10
Treasury stock at par value=80,00
Now let calculate the total shareholders’ equity as of December 31, 2019
Total Equity share holders Fund=20,00,000+10,00,000+370,000-80,000
Total Equity share holders Fund=$30,290,000
Therefore the book value of total shareholders’ equity as of December 31, 2019 is $30,290,000
Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years. Number of Visitors per Year(thousands) Maintenance Costs ($000) 1,875 $ 4,110 2,055 4,515 3,385 7,281 Required: a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor. b. The company expects a record 2,900,000 visitors next year. What would be the estimated maintenance costs
Answer:
Part a
Variable Cost = $1.50 per visitor
Fixed Cost = $187,500
Part b
$4,087,500
Explanation:
Step 1 : Identify the High and Low Point
High : 2,375,000 visitors at $3,750,000
Low : 1,825,000 visitors at $2,925,000
Step 2 : Determine Variable Cost
Variable Cost = Diff in Overheads ÷ Diff in Visitors
= ($3,750,000 - $2,925,000) ÷ ( 2,375,000 - 1,825,000)
= $825,000 ÷ 550,000
= $1.50
Step 2 : Determine the Fixed Cost
Fixed Cost = Total Overheads - Variable Costs
Choosing the High point
= $3,750,000 - $1.50 x 2,375,000
= $187,500
Step 3 : Determine Maintenance Cost on 2,600,000 visitors
Cost formula : Maintenance Cost = $187,500 + $1.50 per visitor
therefore,
for 2,600,000 visitors,
Maintenance Cost = $187,500 + $1.50 x 2,600,000
= $4,087,500
Creativity within organizations can be enhanced by Group of answer choices employing only those individuals from environments that nurture creativity. encouraging employees to have less risk propensity. making it part of the organization's culture. setting ambiguous goals and objectives. training individuals to have an external locus of control.
Answer:
making it part of the organization's culture.
Explanation:
Creativity can be defined as the ability of an employee or group of employees (teams) working in an organization to use imagination and skills set to create (produce) a product or novel idea that solves a particular problem in the society.
Creativity within organizations can be enhanced by making it part of the organization's culture.
Culture can be defined as the general way of life of a group of people living or working together in a particular organization, location or society.
Basically, culture comprises of beliefs, values, behaviors, language, dressing, cuisine, music, symbols, arts, social habits, knowledge, customs, laws pertaining to a particular group of people living together in a society.
This ultimately implies that, culture are acquired and passed from one generation to another.
Pedro sells port wine for $32 per bottle. His fixed costs are $769. Variable costs are $15 per bottle. Lori approaches Pedro about creating a special wine for her daughter's upcoming wedding. Lori will buy 50 bottles of Pedro's wine, but the order will have fixed costs for special labeling and delivery of $300. Pedro wants to go into the negotiations with Lori knowing the minimum price he can charge per bottle and not lose money on the order. What is that minimum price
Answer:
$17
Explanation:
Calculation for that minimum price
Sales of port wine $32 per bottle
Less Variable costs ($15 per bottle)
Minimum price $17
($32-$15)
Therefore that minimum price is $17
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 20% of sales. The income statement for the year ending December 31, 2020, is as follows.
BONITA BEAUTY CORPORATION
Income Statement For the Year Ended December 31, 2020
Sales $79,500,000
Cost of goods sold
Variable $33,390,000
Fixed 8,670,000 42,060,000
Gross margin $37,440,000
Selling and marketing expenses
Commissions $15,900,000
Fixed costs 10,159,000 26,059,000
Operating income $11,381,000
The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 8% and incur additional fixed costs of $9,540,000.
Under the current policy of using a network of sales agents, calculate the Bonita Beauty Corporation's break-even point in sales dollars for the year 2020.
Answer:
$80,940,000
Explanation:
Calculation for the estimated sales volume in sales dollars that would generate an identical net income for the year ending December 31, 2020
First step is to calculate New Sales commission
New Sales commission = $79,500,000*8%
New Sales commission= 6,360,000
Second step is to calculate Cm ratio
Cm ratio = (79,500,000-6,360,000-33,390,000)/79,500,000 = 50%
Now let calculate the Estimated sales revenue
Estimated sales revenue = (8,670,000+10260000+ 10,159,000+$11,381,000)/.50 = $80,940,000
Therefore the estimated sales volume in sales dollars that would generate an identical net income for the year ending December 31, 2020 will be $80,940,000
Summit Services Co. offers its services to individuals desiring to improve their personal images. After the accounts have been adjusted at May 31, the end of the fiscal year, the following balances were taken from the ledger of Summit Services: Fees Earned $1,150,000 Dividends 5,000 Rent Expense 200,000 Retained Earnings 450,000 Supplies Expense 19,300 Wages Expense 915,000 Miscellaneous Expense 31,900 Journalize the closing entries required to close the accounts. If an amount box does not require an entry, leave it blank.
Answer:
Dr Fees earned $1,150,000
Dr Retained earnings - Bal. Fig. $16,200
(1,166,200-1150000)
Cr Rent expense 200,000
Cr Supplies expense 19,300
Cr Wages expense 915,000
Cr Miscellaneous expense 31,900
May-31
Dr Retained Earnings 5,000
Cr Dividends 5,000
Explanation:
Preparation of the closing entries required to close the accounts.
May-31
Dr Fees earned $1,150,000
Dr Retained earnings - Bal. Fig. $16,200
(1,166,200-1150000)
Cr Rent expense 200,000
Cr Supplies expense 19,300
Cr Wages expense 915,000
Cr Miscellaneous expense 31,900
(To close the Expenses )
May-31
Dr Retained Earnings 5,000
Cr Dividends 5,000
(To close the dividends )
What are human resources that can help you save for a house? What are nonhuman resources that can help you save for a house?
Answer:
Using cash money for the downpayment is the human resource and maintaining a good credit score is the nonhuman resource.
When a firm declares bankruptcy, Group of answer choices the claims of preferred shareholders are honored before those of the common shareholders. the maximum that shareholders can lose is their original investment in the firm's stock. bond holders have claim to what is left from the liquidation of the firm's assets after paying the shareholders. the maximum that shareholders can lose is their original investment in the firm's stock AND the claims of preferred shareholders are honored before those of the common shareholders. the owners of common stock are the first in line to receive their claims on the firm's assets.
Answer:
the maximum that shareholders can lose is their original investment in the firm's stock AND the claims of preferred shareholders are honored before those of the common shareholders.
Explanation:
Bankruptcy may be defined as the legal proceedings that involves a person or a business where the person or the business firm is not able to repay the debts that are outstanding. When a firm or a person files a bankruptcy, there is an automatic stay put by the court that blocks the debts.
In case of bankruptcy the different shareholders of the firm losses a maximum of their original investment that they have done in the firm while purchasing the stocks. And also the claims of the preferred shareholders are being honored first than those of common shareholders.
Cardinal Corporation is a trucking firm that operates in the mid-Atlantic states. One of Cardinalâs major customers frequently ships goods between Charlotte and Baltimore. Occasionally, the customer sends last-minute shipments that are outbound for Europe on a freighter sailing from Baltimore. To satisfy the delivery schedule in these cases, Cardinalâs drivers must substantially exceed the speed limit. Cardinal pays for any related speeding tickets. During the past year, two drivers had their licenses suspended for 30 days each for driving at such excessive speeds. Cardinal continues to pay each driverâs salary during the suspension periods. Cardinal believes that it is necessary to conduct its business in this manner if it is to be profitable, maintain the support of the drivers, and maintain the goodwill of customers.
Required:
Evaluate Cardinalâs business practices.
Answer:
cardinal corporation is unethical in its business operation.
Explanation:
From my own point of view, this business practice is far from being ethical. Encouraging drivers to violate traffic laws and these drivers still get rewarded at the end for the unethical behaviors.
the utilitarianism theory of ethics is being violated. The action of these drivers cannot be of benefits to everybody because by over speeding, they could cause accidents and deaths of people as well as themselves. The countrys law is clearly being violated.
the altruism theory is also being violated. The end result of over speeding by the driver is only of advantage to the company and its customers. The driver could die due to over speeding.
Cardinal Corporation is clearly just about the profit. They are not morally or socially responsible. They may face the loss of goodwill if this is allowed to continue and there is a fatal accident causing loss of lives because they would be made faced with lawsuits.
Paparo Corporation has provided the following data from its activity-based costing system:
Activity Cost Pool Total Cost Total Activity
Assembly $ 926,800 56,000 machine-hours
Processing orders 68,310 1,800 orders
Inspection $ 103,360 1,360 inspection-hours
Data concerning the company's product Q79Y appear below:
Annual unit production and sales 700
Annual machine-hours 1060
Annual number of orders 80
Annual inspection hours 20
Direct materials cost 51.00 per unit
Direct labor cost $41.17 per unit
According to the activity-based costing system, the average cost of product Q79Y is closest to:_______.
Answer:
Unitary total cost= $123.74
Explanation:
First, we need to calculate the activities rates to allocate costs:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Assembly= 926,800/56,000= $16.55 per machine-hour
Processing orders= 68,310 / 1,800= $37.95 per order
Inspection= 103,360 / 1,360= $76 per inspection-hour
Now, we can allocate costs based on actual activity:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Assembly= 16.55*1,060= 17,543
Processing orders= 37.95*80= 3,036
Inspection= 76*20= 1,520
Total allocated costs= $22,099
Unitary allocated costs= 22,099/700= $31.57
Finally, the unitary total cost:
Unitary total cost= 31.57 + 51 + 41.17
Unitary total cost= $123.74
Which of the following generate the type of externality previously described?
a. Carlos has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season.
b. The city where you live has granted a permit to put a movie theater in your neighborhood, causing traffic jams at night and on weekends.
c. A leading electronics manufacturer has discovered a new technology that dramatically improves the picture quality of plasma televisions.
d. Firms of all brands have free access to this technology. Your roommate Felix has bought a bird that keeps you up at night with its chirping.
Answer:
Positive externality
Negative externality
positive externality
negative externality
Explanation:
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation. Taxation increases the cost of production and therefore discourages overproduction. Tax levied on externality is known as Pigouvian tax. Government can regulate the amount of externality produced by placing an upper limit on the amount of negative externality permissible
Same facts as #16, except that Jessica files her lawsuit outside the US in a country that uses a "loser pays" rule. Instead of hiring her attorney on a contingency fee, she agrees to pay the attorney a fixed fee of 90,000. Based on a decision tree calculation, the value of Jessica’s litigation BATNA based on these revised facts is (select one):
Answer:
so when the cats eats the dog the dogs take the bone
Vaughn uses the periodic inventory system. For the current month, the beginning inventory consisted of 7200 units that cost $14.00 each. During the month, the company made two purchases: 3000 units at $15.00 each and 12200 units at $15.50 each. Vaughn also sold 13100 units during the month. Using the FIFO method, what is the ending inventory?
Answer:
Ending inventory= $144,150
Explanation:
Giving the following information:
Beginning inventory consisted of 7200 units that cost $14.00 each.
Purchase:
3000 units at $15.00 each
12,200 units at $15.50 each.
Vaughn also sold 13,100 units during the month.
To calculate the ending inventory using the FIFO (first-in, first-out) method, we need to use the cost of the lasts units incorporated into inventory:
Ending inventory= 9,300*15.5
Ending inventory= $144,150
volume_upclosed_captiondescriptionfullscreen According to Mikey, the founder of Holden Outerwear, manufacturing products at five different factories in China resulted in: a.increased paperwork at every step of the shipping process. b.streamlined one-time paperwork to clear customs. c.low-cost shipping and distribution of finished products. d.consolidated shipments which had to be sorted and distributed locally.
Answer: a. increased paperwork at every step of the shipping process.
Explanation:
There is no excerpt attached but this should be the answer.
Having five different factories in China means that Holden Outwear would have to transport things to and fro all five factories including raw materials, intermediate goods and finished goods.
This represents a lot of shipping and shipping comes with paperwork. It would therefore be no surprise if the Holden Outwear is having to go through the bane of increased paperwork for manufacturing at five different factories.
On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 4,893,518 1 280,000 293,611 13,611 4,907,129 2 280,000 294,428 14,428 4,921,557 3 280,000 295,293 15,293 4,936,850 4 280,000 296,211 16,211 4,953,061 5 280,000 297,184 17,184 4,970,245 6 280,000 298,215 18,215 4,988,460 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 280,000 397,547 117,547 6,743,328 39 280,000 404,600 124,600 6,867,928 40 280,000 412,072 132,072 7,000,000
Required:
1. What is the face amount of the bonds?
2. What is the initial selling price of the bonds?
3. What is the term to maturity in years?
4. Interest is determined by what approach?
5. What is the stated annual interest rate?
6. What is the effective annual interest rate?
7. What is the total cash interest paid over the term to maturity?
8. What is the total effective interest expense recorded over the term to maturity?
Answer:
1. $7,000,000
2. $4,893,518
3. 20 years
4. Effective interest method
5. 8%
6.12%
7.$11,200,000
8. $13,306,482
Explanation:
1. Based on the information given the Face amount of bonds will be $7,000,000
2. Based on the information given the initial selling price of the bonds will be $4,893,518
3.Calculation for the term to maturity in years
Term to maturity = 40/2
Term to maturity = 20 years
4. Based on the information given the Interest will be determined by using Effective interest method
5. Calculation for the stated annual interest rate
Stated annual interest rate = 280,000/7,000,000 = 4*2
Stated annual interest rate = 8%
6. Calculation for the effective annual interest rate
Effective interest rate = 293,611/4,893,518
Effective interest rate= 6*2
Effective interest rate= 12%
7. Calculation for the total cash interest paid over the term to maturity
Total cash paid for interest = 280000*40
Total cash paid for interest = $11,200,000
8. Calculation for the total effective interest expense recorded over the term to maturity
Total effective interest expense = $11,200,000+2,106,482
Total effective interest expense=$ 13,306,482
(4,893,518-7,000,000=2,106,482)
Think Critically
1. Do you think the museum should
have a limited commercial broadcast
contract? Why or why not?
How might this contract impact
independent filmmakers? Discuss
your opinion
Answer:
no
Explanation:
If a country's nominal interest rate is zero, then Group of answer choices the country's economy is in a liquidity trap. monetary policy is likely to be very effective in stimulating the economy. exchange rates with other countries are likely to increase. exchange rates with other countries are likely to decline. the country's economy has achieved monetary equilibrium.
Answer:
the country's economy is in a liquidity trap.
Explanation:
A liquidity trap exists when interest rate are close to or equal to zero.
When there is a liquidity trap, expansionary monetary supply would not work because people would prefer to hold cash due to the believe that a negative economic event is about to occur e.g. deflation
When there is a liquidity trap, individuals prefer to save their monies rather than buy bonds
Liquidity trap was first discovered by John M. Keynes
Solutions to liquidity trap
1. Policies that would make savings less attractive
2, Increased government spending
Liquidity trap occurred in Japan in the 1990s and this led to a deflation
In the United States, citizens are individuals who are willing to take risks and make quick business decisions, which leads to a thriving entrepreneurial culture. In Middle Eastern countries such as Kuwait and Egypt, taking risks and making daring decisions is not common, and business deals are carefully thought through and examined before any decision can be made. This is an example of opposing cultures in which of the cultural dimensions identified in the GLOBE studies
Answer:
uncertainty avoidance
Explanation:
People in the Middle East tend to follow strict rules and follow established procedures. this makes them less willing to take risks, and entrepreneurship is about following a dream, and dreams are risky. Middle eastern business people like to avoid risk, therefore, being an entrepreneur and defying established procedures is not common.
On December 31, 2020, Swifty Corporation sold for $152000 an old machine having an original cost of $265000 and a book value of $113000. The terms of the sale were as follows: $39000 down payment $56500 payable on December 31 each of the next two years The agreement of sale made no mention of interest; however, 8% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2020 rounded to the nearest dollar
Answer:
the amount of the note receivable net of the unamortized discount is $100,754
Explanation:
The computation of the amount of the note receivable net of the unamortized discount is shown below:
= $56,500 × present value of an ordinary annuity for 2 years at 8%
= $56,500 × 1.783265
= $100,754
hence, the amount of the note receivable net of the unamortized discount is $100,754
Marigold Corp. uses the periodic inventory system. For the current month, the beginning inventory consisted of 477 units that cost $65 each. During the month, the company made two purchases: 715 units at $68 each and 364 units at $70 each. Marigold Corp. also sold 1197 units during the month. Using the LIFO method, what is the amount of cost of goods sold for the month?
Answer:
COGS= $81,770
Explanation:
Giving the following information:
Beginning inventory= 477 units that cost $65 each.
Purchases:
715 units at $68 each
364 units at $70 each.
Units sold= 1,197
To calculate the cost of goods sold under the LIFO (last-in, first-out) method, we need to use the cost of the lasts units incorporated into inventory:
COGS= 364*70 + 715*68 + 118*65
COGS= $81,770
Match the measures of worth in the first column with an appropriate definition from the list below.
Annual worth
Discounted payback period
Capitalized worth
External rate of return
Future worth Internal rate of return
Present worth
1. Converts all cash flows to a single sum equivalent at t-(planning horizon) usingiMARR
2. Converts all cash flows to a single sum equivalent at t = 0 using i = MARR
3. Converts all cash flows to an equivalent uniform series over the planning horizon
4. Determines an interest rate that yields a PW (or FW or AW) of O
5. Determines how long it takes for the cumulative present worth to be positive at iMARR
6. Determines the interest rate that equates the future worth of invested capital to the future worth of recovered capital invested at i MARR
7. Determines the PW when the planning horizon is infinitely long
Answer:
1. Future worth.
2. Present worth.
3. Annual worth.
4. Internal rate of return.
5. Discounted payback period.
6. External rate of return.
7. Capitalized worth.
Explanation:
Rate of return can be defined as the percentage of interest or dividends earned on money that is invested.
In Financial accounting, a return refers to the amount of profit generated by an investor on an investment over a specific period of time.
Basically, the rate of return which is typically expressed as a percentage of the initial costs of an investment can either be a gain or a loss on an investment. Therefore, a positive rate of return on an investment over a specific period of time, simply means that an investor is making a profit (gains) while a negative rate of return on an investment over a specific period of time, indicates that the investor is running at a loss.
The measures of worth with an appropriate definition is listed below;
1. Future worth: converts all cash flows to a single sum equivalent at t-(planning horizon) using i = MARR.
2. Present worth: converts all cash flows to a single sum equivalent at t = 0 using i = MARR
3. Annual worth: converts all cash flows to an equivalent uniform series over the planning horizon
4. Internal rate of return: determines an interest rate that yields a PW (or FW or AW) of O
5. Discounted payback period: determines how long it takes for the cumulative present worth to be positive at i = MARR.
6. External rate of return: Determines the interest rate that equates the future worth of invested capital to the future worth of recovered capital invested at i = MARR
7. Capitalized worth: Determines the PW when the planning horizon is infinitely long
An increase in the price of a good will cause suppliers / producers to__________the amount of the good (quantity supplied). the
Answer:
increase
Explanation: