Answer:
[tex](a)[/tex] [tex]A_n = A_{n-1}(1.005) - 600[/tex] where [tex]A_0 = 30000[/tex]
(b) Above $150
Explanation:
Given
[tex]Loan = \$30000[/tex]
[tex]Rate =6\%[/tex] --- annually
Solving (a): Recursion for the amount at the end of n month
The base case is:
[tex]A(0) = 30000[/tex]
Next, we calculate the monthly rate (r)
[tex]r = \frac{Annual\ Rate}{12}[/tex]
[tex]r = \frac{6\%}{12}[/tex]
[tex]r = 0.5\%[/tex]
[tex]r = 0.005[/tex]
The loan amount remaining at the end of month n is then calculated as:
[tex]A_n = A_{n-1}*(1 + r) - 600[/tex] ---[The 600 represents the monthly payment]
[tex]A_n = A_{n-1}*(1 + 0.005) - 600[/tex]
[tex]A_n = A_{n-1}(1.005) - 600[/tex]
Solving (b):
Suppose the borrower requests for a lower monthly payment, then the following condition will exist:
[tex]P > A_{n-1} *0.005[/tex]
i.e. the monthly payment will exceed the monthly interest
Let [tex]n= 1[/tex]
[tex]P > A_{1-1} *0.005[/tex]
[tex]P > A_0 *0.005[/tex]
Substitute 30000 for [tex]A_0[/tex]
[tex]P > 30000 *0.005[/tex]
[tex]P > 150[/tex]
His monthly payment must exceed $150
If in the textile markets we know that two brands, X and Z, are substitutes. Suppose that the supply of X increases and, at the same time, the supply of the Z decreases. Other things being equal, what would be the expectations for the change in the equilibrium quantities in the two markets
Answer:
Equilibrium quantity of X increases and that of z decreases.
Explanation:
If two goods are substitutes then 1 can be used in the place of the other. As supply of Z falls, we would have market demand to be greater than supply. This brings about a price rise. The price rise will make consumers of Z to want it less and opt for a cheaper good X. Increase in the demand for X causes its supply to rise in the market.
So we would have increase in equilibrium quantity of X and that of Z would fall.
Part U16 is used by Mcvean Corporation to make one of its products. A total of 16,500 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $ 3.60 Direct labor $ 8.20 Variable manufacturing overhead $ 8.70 Supervisor's salary $ 4.10 Depreciation of special equipment $ 2.50 Allocated general overhead $ 7.70 An outside supplier has offered to make the part and sell it to the company for $27.50 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part U16 could be used to make more of one of the company's other products, generating an additional segment margin of $28,500 per year for that product. The annual financial advantage (disadvantage) for the company as a result of buying part U16 from the outside supplier should be:
Answer:
Financial disadvantage = 45,750
Explanation:
First of all, we need to sort out the data given in this question.
Data Given:
Per Unit Direct materials = $ 3.60
Direct labor = $ 8.20
Variable manufacturing overhead = $ 8.70
Supervisor's salary = $ 4.10
Depreciation of special equipment = $ 2.50
Allocated general overhead = $ 7.70
Offer by outside supplier = $27.50
So,
Cost of making = [(3.60+8.20+8.70+2.50)*16,500]+28,500 (Opportunity cost)
Cost of Making = (23*16,500)+28,500
Cost of Making = 408,000
Cost of buying = 16,500*27.50
Cost of buying = 453,750
Financial disadvantage = Cost of making - Cost of buying
Financial disadvantage = 453,750 - 408,000
Hence,
Financial disadvantage = 45,750
There are many concerns for risk-averse lenders. Consider the following: 1. Lenders are concerned that borrowers with the greatest risk are the ones most likely to actively pursue loans. 2. Lenders are concerned that real GDP will decline leading to reduced corporate profits. 3. Lenders are concerned that products produced by certain corporations will become obsolete. a. 1 is market risk; 2 is firm-specific risk b. 2 is market risk; 3 is firm-specific risk c. 3 is market risk; 1 is firm-specific risk d. 2 is firm-specific risk; 3 is market risk
Answer:
b. 2 is market risk ; 3 is firm specific risk.
Explanation:
Market risk is the one which is not in the control of the organization and it can not be avoided. Firm specific risk is the business internal risk which a company chooses with it will. In the given scenario the market risk is the concern that real GDP will decline and the profit will be reduced. The product obsolete risk is business specific risk.
How should you prepare for a behavioral-based interview?
Review as many interview questions as possible
O Have a list of example stories
O Make up answers in advance for questions you don't have experience with
Preparation is not possible for behavioral interviews
Answer:
O Have a list of example stories
Explanation:
Behavioral-based interview is distinct from the traditional form of interview. In this type of interview, the behavior, performance and real achievements of the candidate are considered. The experiences of the candidate and the list of examples of past situations are analyzed. The problem-solving nature and the pressure handling techniques of the candidate helps in enhancing the possibility of getting the job. references from the past life experiences and rea life examples helps the recruiter build confidence on the candidate.
The four primary areas of U.S. legislation dealing with human resource management concern labor relations, compensation and benefits, health and safety, and equal employment opportunity.
a. True
b. False
Answer: True
Explanation:
The statement that the four primary areas of the U.S. legislation deals with the human resource management concern labor relations, the compensation and benefits, the health and safety, and also equal employment opportunity" is true.
Employees should be managed properly and given the necessary conditions for them to thrive and succeed. The health and safety of workers is vital and should be adequately taken care of. Also, their benefits and compensation should be regularly reviewed and looked into in order to motivate workers and maximize productivity.
The journal entry to record the transfer of partially completed work in process to the next process in process costing is a(n): Multiple choice question. increase in assets and an increase in liabilities decrease in assets and a decrease in liabilities decrease in one asset and an increase in another asset increase in assets and an increase in equity
Answer:
decrease in one asset and an increase in another asset increase.
Explanation:
Work-in-process inventories can be defined as a number of partially completed goods which are still in the process of being transformed into finish products that meets the needs of consumers.
Generally, the work-in-process inventories include the following raw materials cost, direct labor cost and factory overhead cost.
These category of products are only partially completed and as such are waiting for further processing, still undergoing fabrication or kept in a buffer storage.
A journal entry involves the process of keeping the records of business transactions made by an organization.
The journal entry is used by bookkeepers and accountants. Ideally, it is important that a journal has all of following informations; date, reference number, debit balance, credit balance and transaction description.
Hence, the journal entry to record the transfer of partially completed work in process to the next process in process costing is a decrease in one asset and an increase in another asset increase.
Marcy's, Inc., operates department stores located primarily in the Southwest, Southeast, and Midwest. In its 2016 third-quarter report, the company reported Cost of Goods Sold of $2,100 million, ending inventory for the third quarter of $3,200 million, and ending inventory for the previous quarter of $2,800 million. Estimate merchandise purchases for the third quarter.
Answer:
$2,500 million
Explanation:
Calculation to Estimate merchandise purchases for the third quarter
Using this formula
Third quarter merchandise purchases= Ending inventory + Cost of goods sold - Beginning inventory
Let plug in the formula
Third quarter merchandise purchases= $3,200 million + $2,100 million - $2,800 million
Third quarter merchandise purchases= $2,500 million
Therefore The Estimated merchandise purchases for the third quarter will be $2,500 million
Thomas entered a four-year sales-type lease with a lessee. The lease is for equipment with a fair value of $40,000, a cost of $34,000, and a residual value of $7,000. The lease has an implicit rate of 6%. The present value factor of a single sum for four periods at 6% is .79209, and the present value factor of an ordinary annuity for four periods at 6% is 3.46511. What amount of gross profit will Thomas report if the lease has a(n) Guaranteed Residual Value Unguarantee
Answer: $6,000 for both guaranteed and unguaranteed residual value.
Explanation:
Gross Profit = Selling price - Cost of sales
Selling price = Fair value - Present value of residual value
= 40,000 - (7,000 * present value factor, 6%, 4 periods)
= 40,000 - (7,000 * 0.79209)
= $34,455.37
Cost of sales = Cost - Present value of residual value
= 34,000 - (7,000 * 0.79209)
= $28,455.37
Gross Profit = 34,455.37 - 28,455.37
= $6,000
A company must repay the bank a single payment of $20,000 cash in 3 years for a loan it entered into. The loan is at 8% interest compounded annually. The present value of 1 (single sum) at 8% for 3 years is 0.7938. The present value of an annuity (series of payments) at 8% for 3 years is 2.5771. The present value of the loan (rounded) is: Multiple Choice $15,876. $20,000. $25,195. $7,761. $51,542.
Answer:
Present Value of the loan = $19999.36 rounded off to $20000
Explanation:
The present value of loan will comprise of the present value of the principal amount of loan plus the present value of the interest that the loan will charge for the 3 year time period for which it is outstanding. As the interest payments are fixed and occur after equal intervals of time, they are considered an annuity.
To calculate the present value of the loan, we must discount the interest payments using the present value factor of annuity given in the question as 2.5771 and we must discount the principal to present value using the present value factor given in question as 0.7938.
We will first calculate the annual interest payment on loan.
Annual Interest payment = 20000 * 0.08 = 1600
Present value of the Interest payment - annuity = 1600 * 2.5771
Present value of the Interest payment - annuity = $4123.36
Present value of the Principal loan = 20000 * 0.7938
Present value of the Principal loan = $15876
Present Value of the loan = 15876 + 4123.36
Present Value of the loan = $19999.36 rounded off to $20000
On November 2, 2020, Ellie purchased and placed in service a building that cost $5,600,000. An appraisal determined that 15% of the total cost was attributed to the value of the land. The bottom floor of the building is leased annually to a retail business for $80,000. The other floors of the building are rental apartments with an annual rent of $350,000.A. How is the property classified for MACRS? B. What is the life of the asset for MACRS?C. Ellie's cost recovery for 2018 is_____.
Answer:
Ellie
A. The property is classified for 27.5-year MACRS since more than 80% of the gross rental income emanates from residential dwellings.
B. The life of the asset for this type of MACRS is 27.5 years.
C. Ellie's cost recovery for 2020/2018 is $28,848.
Explanation:
a) Data and Calculations:
Cost of building and land = $5,600,000
Appraised cost of land = $840,000 ($5,600,000 * 15%)
Appraised cost of building = $4,760,000 ( ($5,600,000 * 85%)
Rent from the bottom floor leased to a retail business = $80,000
Rent from the other floors as rental apartments = $350,000
Total value of rental income = $430,000
Retail business % of rental income = 19%
Residential apartments % of rental income = 81%
Cost recovery = $173,091 ($4,760,000/27.5) per annum
For 2 months, the cost recovery = $28,848 ($173,091 * 2/12)
Cascade Company was started on January 1, Year 1, when it acquired $151,000 cash from the owners. During Year 1, the company earned cash revenues of $90,600 and incurred cash expenses of $62,000. The company also paid cash distributions of $13,000.
Required:
Prepare a Year 1 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows under each of the following assumptions. (Consider each assumption separately.)
Answer:
Cascade Company
Income statement for the year ended year 1
Sales Revenue $90,600
Less Expenses $62,000
Net Income $28,600
Cascade Company
Statement of changes in equity for the year ended year 1
Capital Retained Income Total
Beginning of the Year :
Opening Balance $151,000 $ 0 $151,000
During the Year :
Profit for the year - $28,600 $28,600
Dividends paid - ($13,000) ($13,000)
Total $151,000 $15,600 $166,600
Cascade Company
Balance Sheet as at year 1
ASSETS
Cash ($151,000 + $90,600 - $62,000 - $13,000) $166,600
Total Assets $166,600
EQUITY AND LIABILITIES
Equity $166,600
Total Equity and Liabilities $166,600
Cascade Company
Statement of Cashflow for the year ended year 1
Cash flow from Operating Activities
Cash receipts from customers $90,600
Cash payments to suppliers and employees ($62,000)
Net Cash from Operating Activities $28,600
Cash flow from Investing Activities
No Investment activities
Net Cash from Investing Activities $0
Cash flow from financing Activities
Capital Invested $151,000
Dividends Distributions ($13,000)
Net Cash from Investing Activities $138,000
Movement during the year $166,600
Beginning Cash and Cash Equivalents $0
Ending Cash and Cash Equivalents $166,600
Explanation:
The income statement, statement of changes in equity, balance sheet, and statement of cash flows for Cascade Company have been prepared above.
Note : Make sure to take note of the format and appropriate heading of each statement.
Quantity of Flower A Total Utility Marginal Utility Quantity of Flower B Total Utility Marginal Utility 1 16 16 1 30 30 2 30 14 2 46 16 3 42 12 3 61 15 4 52 10 4 75 14 5 60 8 5 88 13 6 66 6 6 100 12 7 70 4 7 111 11 Your mother needs help deciding how many of two kinds of flowers to purchase for a bouquet she is making. She wants to purchase two kinds of flowers: Flower A and Flower B. If the price of Flower A is $2 and the price of Flower B is $3, how many of Flower A should your mother purchase for her bouquet to maximize her utility if she can spend at most $17 on flowers
Answer:
she should buy 4 As and 3 Bs
Explanation:
utility per dollar
flower A flower B total money spent
1 flower 8 10 $5
2 flowers 7.5 7.67 $10
3 flowers 7 6.78 $15
4 flowers 6.5 $17
total 29 24.45 $17
(Land’s End) Geoff Gullo owns a small firm that manufactures "Gullo Sunglasses." He has the opportunity to sell a particular seasonal model to Land’s End. Geoff offers Land’s End two purchasing options: ∙ Option 1. Geoff offers to set his price at $65 and agrees to credit Land’s End $53 for each unit Land’s End returns to Geoff at the end of the season (because those units did not sell). Since styles change each year, there is essentially no value in the returned merchandise. ∙ Option 2. Geoff offers a price of $55 for each unit, but returns are no longer accepted. In this case, Land’s End throws out unsold units at the end of the season. This season’s demand for this model will be normally distributed with mean of 200 and standard deviation of 125. Land’s End will sell those sunglasses for $100 each. Geoff ’s production cost is $25. a. How much would Land’s End buy if they chose option 1? [14.3] b. How much would Land’s End buy if they chose option 2? [14.3] c. Which option will Land’s End choose? [14.4] d. Suppose Land’s End chooses option 1 and orders 275 units. What is Geoff Gullo’s expected profit? [14.4]
Answer:
Answer is explained in the explanation section below.
Explanation:
a)
Answer-a with option-1
the land end sale price is $100, purchase cost is $65 and salvege valu is $53
So the underage cost = Cu = 100-65 = 35 and overage cost = Co = 65-53 = 12
the critical ratio = Cu/(Cu+Co) = 35/47 = 0.7422
From the standard normal distribution function The Z value at 0.7422 = 0.66
The optimal order quantity = 200 + 0.66 x 125 = 282.5
The optimal order quantity = 282.5
b)
Answer-b with option-1
the land end sale price is $100, purchase cost is $55 and salvage value is $0
So the underage cost = Cu = 100-55 = 45 and overage cost = Co = 55-0 = 55
the critical ratio = Cu/(Cu+Co) = 45/100 = 0.45
From the standard normal distribution function The Z value at 0.45 = -0.12
the optimal order quantity = 200 - 0.12 x 125
The optimal order quantity = 185
c)
We have to calculate the expected profit in each case to determine which option Lands Ends should choose.
With option-1 Geoff's sells 282.5 units at $65 for total revenue of 18363 and production cost of 282.5 = 7063
Geoff credits Lands ends for each returned sunglass so we need to evaluate how many sunglasses Land Ends return.
Expected lost sales = 125 x 0.1528 = 19.1
Expected sales = 200 - 19.1 = 180.9
expected left over inventory = 282.5 - 180.9 = 101.6
Expected profit = (100-65) x 180.9 - (65-53)x 101.6 = 5112
Expected profit = 5112
Similarly with option 2 the Expected profit = 4053
So option-1 is preferred.
d)
If the Land chooses option-1 and orders 275 units Then Geoff earn = 275 x $65 = $17875
and production cost = $25 x 275 = $6875
With order quantity 275 the z statistics = 0.6
and expected lost sales = 125 x 0.6 = 21.09
Expected left over inventory = 275-200+21.09 = 96.09
So the Geoff's buy back cost = 96.09 x 53 = $5093
and expected profit = $17875 - $5093 = $5907
expected profit = $5907
(A)The optimal order quantity = 282.5
(B) The optimal order quantity = 185
(C) Expected profit = 4053
(D) Expected profit = $5907
What is Optical order quantity?a) Answer-a with option-1
When the land end sale price is $100, the purchase cost is $65 and also the salvage value is $53
So the underage cost is = Cu = 100-65 = 35 and
overage cost is = Co = then is 65-53 = 12 the critical ratio = Cu/(Cu+Co) = 35/47 = 0.7422
From the quality Gaussian distribution function The Z value at 0.7422 is = 0.66
Then, The optimal order quantity is = 200 + 0.66 x 125 = 282.5
Thus, The optimal order quantity = 282.5
b) Answer-b with option-1
When the land end sale price is $100, the purchase cost is $55 and also the salvage value is $0
So the underage cost is = Cu = 100-55 = 45 and overage cost is = Co = 55-0 = 55
the critical ratio = Cu/(Cu + Co) = 45/100 = 0.45
From the quality Gaussian distribution function The Z value at 0.45 = -0.12
Then the optimal order quantity = 200 - 0.12 x 125
Thus, The optimal order quantity is = 185
c) Then We have to calculate the expected profit in each case to work out which option Lands Ends should choose.
With option-1 Geoff's sells 282.5 units at $65 for total revenue of 18363 and a cost of 282.5 = 7063
When Geoff credits Lands ends for every returned sunglass so we want to judge what number of sunglasses Land Ends returns.
Then the Expected lost sales is = 125 x 0.1528 = 19.1
After that Expected sales is = 200 - 19.1 = 180.9
Then expected left over inventory is = 282.5 - 180.9 = 101.6
After that Expected profit is = (100-65) x 180.9 - (65-53)x 101.6 = 5112
Thus, Expected profit is = 5112
Similarly, with option 2, the Expected profit is = 4053
So option-1 is preferred.
d) If the Land chooses option-1 and also orders 275 units Then Geoff earn = 275 x $65 = $17875 and also the cost is = $25 x 275 = $6875
With order quantity 275 the z statistics = 0.6 and also expected lost sales = 125 x 0.6 = 21.09
Then Expected left over inventory is = 275-200+21.09 = 96.09
So the Geoff's repurchase cost = 96.09 x 53 = $5093
and also expected profit is = $17875 - $5093 = $5907
Thus, Expected profit is = $5907
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A summary of cash flows for Adventure Travel Service for the year ended April 30, 2019, follows:
Cash Flows
Cash receipts:
Cash receipts from customers $2,080,000
Cash receipt from owner as investment 60,000
Cash payments:
Cash payments for operating expenses 1,706,000
Cash payment for purchase of land 400,000
Cash withdrawals by owner 40,000
The cash balance as of May 1, 2018, was $203,000.
Prepare a statement of cash flows for Adventure Travel Service for the year ended April 30, 2019. Refer to the cash receipts and cash payments information given in the instructions and to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) and the word "Deduct" will automatically appear if they are required. Enter amounts that represent cash outflows as negative numbers using a minus sign.
Answer:
Adventure Travel Service
Statement of cash flows for the year ended April 30, 2019
Cash flow from Operating Activities
Cash receipts from customers $2,080,000
Cash payments for operating expenses ($1,706,000)
Net Cash from Operating Activities $374,000
Cash flow from Investing Activities
Purchase of land ($400,000)
Net Cash from Investing Activities ($400,000)
Cash flow from Financing Activities
Cash receipt from owner as investment $60,000
Drawings ($40,000)
Net Cash from Financing Activities $20,000
Movement in Cash and Cash Equivalents ($6,000)
Beginning Cash and Cash Equivalents $203,000
Ending Cash and Cash Equivalents $197,000
Explanation:
The Statement of Cash flows shows the results of cash from the following sources : Cashflow from Operating Activities, Cashflow from Investing Activities and Cashflow from Financing Activities.
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation: Beginning inventory 0 Units produced 47,000 Units sold 42,000 Selling price per unit $ 84 Selling and administrative expenses: Variable per unit $ 4 Fixed (per month) $ 560,000 Manufacturing costs: Direct materials cost per unit $ 17 Direct labor cost per unit $ 7 Variable manufacturing overhead cost per unit $ 3 Fixed manufacturing overhead cost (per month) $ 893,000
Management is anxious to assess the profitability of the new camp cot during the month of May.
Required:
1. Assume that the company uses absorption costing.
a. Calculate the unit product cost.
b. Prepare an income statement for May.
2. Assume that the company uses variable costing.
a. Calculate the unit product cost.
b. Prepare a contribution format income statement for May.
Answer:
Results are below.
Explanation:
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
Unitary product cost= 17 + 7 + 3 + (893,000 / 47,000)
Unitary product cost= 27 + 19
Unitary product cost= $46
Now the income statement:
Sales= 42,000*84= 3,528,000
COGS= (42,000*46)= (1,932,000)
Gross profit= 1,596,000
Total Selling and administrative expenses= (42,000*4) + 560,000= (728,000)
Net operating profit= 868,000
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).
Unitary variable product cost= 17 + 7 + 3
Unitary variable product cost= $27
Now, the income statement:
Sales= 3,528,000
Total variable cost= 42,000*(27 + 4)= (1,302,000)
Total contribution margin= 2,226,000
Total fixed manufacturing cost= (893,000)
Total Selling and administrative expenses= (560,000)
Net operating profit= 773,000
How are private loans different than federal loans?
Answer:
When comparing federal loans vs private loans, the key difference is that federal loans are provided by the government and private loans are provided by banks, credit unions, and other financial institutions. Each has its own student loan eligibility criteria, application process, and terms and conditions.
Explanation:
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Southern Tours is considering acquiring Holiday Vacations. Management believes Holiday Vacations can generate cash flows of $218,000, $224,000, and $238,000 over the next three years, respectively. After that time, they feel the business will be worthless. If the desired rate of return is 14.5 percent, what is the maximum Southern Tours should pay today to acquire Holiday Vacations?
Answer:
$519,799.59
Explanation:
Discount rate = R = 14.50%
Year Cash flows Discount factor PV of cash flows
1 218,000.00 0.873362 190,393.0131
2 224,000.00 0.762762 170,858.6793
3 238,000.00 0.666168 158,547.9011
Total of PV = NPV = $519,799.59
Note:
Df = 1/(1+R)^Year
PV of cash flows = Cash flows x Df
Patricia and Joe Payne are divorced. The divorce settlement stipulated that Joe pay $550 a month for their daughter Suzanne until she turns 18 in 3 years. Interest is 6% a year. How much must Joe set aside today to meet the settlement? (Do not round intermediate calculations. Round your answer to the nearest cent.)
Answer:
Present Value= $18,079.05
Explanation:
Giving the following information:
Monthly payment= $550
Number of months= 3*12= 36 months
Interest rate= 0.06/12= 0.005
To calculate the lump sum to set aside to pay the settlement, first, we need to calculate the future value:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
FV= {550*[(1.005^36) - 1]} / 0.005
FV= $21,634.85
Now, the present value:
PV= FV / (1+i)^n
PV= 21,634.85 / (1.005^36)
PV= $18,079.05
Marcy's, Inc., operates two well-known high-end department store chains in North America. Marcy's and Bloomingdale's. The following simplified data (in millions) were taken from its recent annual report for the year ended February 1: Cost of sales $ 15,651 Federal, state, and local income tax expense 365 Interest expense 377 Interest income 6 Net sales 25,988 Other operating expenses 587 Selling, general, and administrative expenses 8,285 Required: Prepare a complete classified (multiple-step) consolidated statement of income for the company (showing gross margin, operating income, and income before income taxes). (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Say you are planning to start a new business. You expect to have losses for the first 2 years and then achieve significant profits. But, in order to grow, you will need to be able to keep the after-tax earnings. You also want to limit your liability. How will you structure your business regarding issuing debt versus increasing equity and why
Answer:
Answer is explained in the explanation section below.
Explanation:
Solution:
It is perfectly natural that the loss will occur at the start. Since it is not able to pay fixed interest obligations, a preferential or equity capital increase is recommended. The debt fund will create a financial crisis in the capital structure because it will be difficult for the company to fulfil its payment obligation on the initial stage.
The composition of debt capital will contribute to a certain tax savings, but it will certainly increase the overall outflow of the fund.
For Example:
Total Capital is 1,000,000 costing of 500,00 debt and 500,000 equity and 40 % tax bracket.
Suppose total return is 10% on capital.
Earnings for the year : 1,000,000 * 10 % = 100,000
Interest obligation (assume borrowed at 12 % ) = 60,000
Profit before tax = 40,000
Tax at the rate 40% = 16,000
Earning after tax available for growth = 24,000
Total capital only consists of equities in this example.
The earnings will be same = 100,000
Less tax at the rate 40 % = 40,000
Net earnings available for future growth = 60,000
We have an extra earnings available for future growth is 36,000 (60,000 - 24,000).
Ignore tax saving 24,000 (40,000 - 16,000) Because the enterprise requires more for future growth following tax earnings at the initial stage.
So,
The business was structured to maximize the use of own resources instead of borrowing the fund.
Identification of Audits and Auditors. Audits may be characterized as (a) financial statement audits, (b) compliance audits, (c) economy and efficiency audits, and (d) program audits. The work can be done by independent (external) auditors, internal auditors, or governmental auditors (including IRS auditors and federal bank examiners). Following is a list of the purpose or products of various audit engagements. [Students may need to refer to Chapter 1.]
a. Analyze proprietary schools’ spending to train students for oversupplied occupations.
b. Determine the fair presentation in conformity with GAAP of an advertising agency’s financial statements.
c. Study the Department of Defense’s expendable launch vehicle program.
d. Determine costs of municipal garbage pickup services compared to comparable service subcontracted to a private business.
e. Audit tax shelter partnership financing terms.
f. Study a private aircraft manufacturer’s test pilot performance in reporting on the results of test flights.
g. Periodically have U.S. comptroller of currency examine a national bank for solvency.
h. Evaluate the promptness of materials inspection in a manufacturer’s receiving department.
i. Report on the need for the states to consider reporting requirements for chemical use data.
j. Render a public report on the assumptions and compilation of a revenue forecast by sports stadium/racetrack complex.
Required:
Prepare a three-column schedule showing (1) each of the engagements listed, (2) the type of audit (financial statement, compliance, economy and efficiency, or program), and (3) the
kind of auditors you would expect to be involved.
Answer:
Audit Engagements Type of Audit Kind of Auditors
a. Economy and efficiency Governmental auditors
b. Financial statement audit External auditors
c. Economy and efficiency Governmental auditors
d. Economy and efficiency Internal auditors
e. Compliance audit Governmental auditors
f. Compliance audit Internal auditors
g. Compliance audit Governmental auditors
h. Economy and efficiency Internal auditors
i. Program audit Governmental auditors
j. Financial statement audit External auditors
Explanation:
a) Data and Analysis:
Types of audit:
(a) financial statement audits = check conformity with standards.
(b) compliance audits = ensure that laid-down rules are being followed.
(c) economy and efficiency audits = resource and process improvement.
(d) program audits = performance analysis to determine effective achievement of goals.
Kind of auditors:
1. independent (external) auditors = independent consultants
2. internal auditors are company employees
3. governmental auditors (including IRS auditors and federal bank examiners)
The following is a list of accounts and adjusted amounts for Rollcom, Inc., for the fiscal year ended September 30, 2018. The accounts have normal debit or credit balances.
Accounts Payable $39,100
Accounts Receivable 66,500
Accumulated Depreciation 21,500
Cash 80,300
Common Stock 94,800
Equipment 90,700
Income Tax Expense 10,500
Notes Payable (long-term) 1,500
Office Expenses 6,300
Rent Expense 164,200
Retained Earnings 99,900
Salaries and Wages Expense 128,700
Sales Revenue 325,600
Supplies 35,200
Prepare the closing entry required at September 30, 2018.
Answer:
30-Sep-18
Dr Sales revenue 325,600
Cr Income tax expense 10,500
Cr Office expenses 6,300
Cr Rent expense 164,200
Cr Salaries and wages expense 128,700
Retained earnings $15,900
Explanation:
Preparation of the closing entry required at September 30, 2018
30-Sep-18
Dr Sales revenue 325,600
Cr Income tax expense 10,500
Cr Office expenses 6,300
Cr Rent expense 164,200
Cr Salaries and wages expense 128,700
Retained earnings $15,900
(325,600-10,500-6,300-164,200-128,700)
(To record closing entries)
B. Federal Reserve Chair Jerome Powell has hinted that a long run inflation rate target of 2% is the guide he uses for monetary policy in the long run Appealing to the Quantity Theory of Money, Rep. Doro Green advises Chair Powell to therefore set a money growth rate target of 2% to achieve this long run inflation goal. i.) If the Chair takes the Representative's advice, he_________achieve his long run inflation goal because__________ A. Will not; economic growth is positive in the long run. B. Will not; velocity growth is positive in the long run. C. will real economic growth is positive in the long run. D. Wil; velocity growth is positive in the long run.Why might we have reason to believe that Representative Green received the backing of those in the banking industry in the latest election? Explain with reference to your conclusion above about the results of Chair Powell's taking Representative Green's advice. ii) If Chair Powell takes Representative Green's advice, inflation in the long run will bethan expected, transferring wealth from :________.A. Lower; creditors to debtors B. Higher; debtors to creditors C. Higher; creditors to debtors D. Lower; debtors to creditors
Answer:
will, real economic growth is positive in the long run.
Lower; creditors to debtors.
Explanation:
Theory of money is the economical view that the inflation is dependent on the money supply in the country. When the money supply is higher then inflation will be lowered and purchasing power of the consumer will be high. When inflation is set to a minimum possible rate then real economic growth will be positive in the long run and negative in the short run.
On December 30, 2014, Yang Corporation granted compensatory stock options for 5,000 shares of its $1 par value common stock to certain of its key employees. The options may be exercised after 2 years of employment. Market price of the common stock on that date was $30 per share and the option price was $30 per share. Using a fair value option pricing model, total compensation expense is determined to be $80,000. The options are exercisable beginning January 1, 2017, providing those key employees are still in the employ of the company at the time the options are exercised. The options expire on January 1, 2018.
Required:
Prepare the following selected journal entries for the company
a. December 30, 2014.
b. December 31, 2015.
c. January 1, 2017, assuming 90% of the options were exercised at that date.
d. January 1, 2018, for the 10% of the options that expired
Answer: See explanation
Explanation:
The selected journal entries for the company has been prepared and attached. Note that:
Cash on January 1, 2017 was calculated as: = (30 × 5000 × 90%)
= 30 × 5000 × 0.9
= $135000
Paid in capital - stock options was calculated as:
= (80000 × 90%)
= $80000 × 0.9
= $72000
Common stock was gotten as: (5000× 90% × 1)
= $5000 × 0.9 × 1
= $450
Check the attachment for further details
In the production of a wooden chair within the circular flow model, what would the resource market include?
A
furtniture company
B
office supply company
forest
D
wooden chairs
Answer:
forest/trees
Explanation:
Suppose you are an aide to a U.S. Senator who is concerned about the impact of a recently proposed excise tax on the welfare of her constituents. You explained to the Senator that one way of measuring the impact on her constituents is to determine how the tax change affects the level of consumer surplus enjoyed by the constituents. Based on your arguments, you are given the go-ahead to conduct a formal analysis, and obtain the following estimates of demand and supply:
Qd=500-5P
Qs-2P-60
(a) What are the equilibrium quantity and equilibrium price? Graph your solution.
(b) If a $2 excise tax is levied on this good, what will happen to the equilibrium price and quantity? Show the changes in your graph from part (a).
(c) How much tax revenue does the government earn with the $2 tax?
Answer:
(a) P = 80 and Q= 100
(b) P = 80.57 and Q= 97.15
(c) Tax revenue = 194.3
Explanation:
Qd= 500 - 5P
Qs = 2P - 60
(a)
In equilibrium
[tex]Qd = Qs \\500 - 5P = 2P - 60 \\7P = 560 \\P = 80 \\[/tex]
Putting this value of P back into the Qd or Qs equation
[tex]Qd = 500 - 5p\\Q = 500 - 5 (80) \\Q = 500 - 400 \\Q = 100[/tex]
Thus, equilibrium price is 80 and equilibrium quantity is 100
(b)
When a tax is imposed the supply curve shifts up to the left by the amount of the tax. The new supply curve is given by
[tex]Qs = 2(P-2) - 60 \\Qs = 2p - 4 - 60 \\Qs = 2P - 64[/tex]
The new equilibrium is
[tex]Qd = Qs \\500 - 5P = 2P - 64 \\7P = 564\\P = 80.57 \\[/tex]
Substitute it into Qs or Qd we get
[tex]Q = 500 - 5 (80.57 ) \\Q = 97.15[/tex]
(c)
[tex]Tax revenue = Tax rate * Quantity \\ = 2 * 97.15\\ = 194.3[/tex]
a. At equilibrium the quantity demanded is equal to the quantity that was supplied.
Qd = Qs
500 - 5p = 2p - 60
We collect like terms from here
500+60 = 2p+5p
560 = 7p
p = 560/7
p = 80 dollars.
Therefore the equilibrium price is 80 dollars.
The equilibrium quantity
Qd = 500 - 5p
= 500-5*80
= 500-400
= 100
The equilibrium quantity is 100
b. Qs = 2p+60
2p = Qs + 60
divide through by 2
p = 0.5Qs + 30
P = 0.5Qs + 30 + t
where we have tax = t = 2
= 0.5Qs + 30 + 2
= 0.5Qs + 32
p - 32 = 0.5Qs
divide through by 0.5
Qs = 2p - 64
The demand function is still the same at Qd = 500 - 5P.
At equilibrium: Qd = Qs
2P- 64 = 500-5P
collect like terms
7P = 500+64
7P = 564
divide through by 7
P = 564/7
P = $80.57
When we put this in the demand function
Q = 500-5P
Q = 500-5*80.57
Q = 97.14
This is the equilibrium quantity
500-5*80.57
= 400-402.85
= 97.15 dollars
c. the tax revenue = 2x97.15
= 194.3 dollars
Read more on https://brainly.com/question/24096086?referrer=searchResults
Prepared by:
CA Meghraj Aryal
Gurukul CA
of
pulb
.
Lucky does not maintain proper books of accounts. However, he maintains a record of his bank transactions and also is able
to give the following information from which you are requested to prepare his final accounts for the year ended December
31. 2012:
1.1.2012 (Rs).
1,02,500
31.12.2012 (Rs)
Debtors
Creditors
Stock
50,000
Bank Balance
Fixed Assets
46,000
62,500
50,000
9,000
7,500
S000
500
poco
Details of his bank transactions were as follows:
Rs.
Received from debtors
3,40,000
Additional capital brought in
5,000
Sale of fixed assets (book value Rs. 2,500)
1,750
Paid to creditors
2,80,000
Expenses paid
49,250
Personal drawings
25,000
Purchase of fixed assets
assets/
5,000
No cash transactions took place during the year. Goods are sold at cost plus 25%. Cost of goods sold was Rs. 2,60,000.
Elliptical Consulting is a consulting firm owned and operated by Jayson Neese. The following end-of-period spreadsheet was prepared for the year ended June 30, 20Y6: Elliptical Consulting End-of-Period Spreadsheet For the Year Ended June 30, 20Y6 Unadjusted Adjusted Trial Balance Adjustments Trial Balance Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash 15,780 15,780 Accounts Receivable 37,570 37,570 Supplies 3,980 (a) 3,340 640 Office Equipment 30,810 30,810 Accumulated Depreciation 4,170 (b) 1,990 6,160 Accounts Payable 10,140 10,140 Salaries Payable (c) 490 490 Jayson Neese, Capital 38,320 38,320 Jayson Neese, Drawing 4,880 4,880 Fees Earned 71,580 71,580 Salary Expense 28,180 (c) 490 28,670 Supplies Expense (a) 3,340 3,340 Depreciation Expense (b) 1,990 1,990 Miscellaneous Expense 3,010 3,010 124,210 124,210 5,820 5,820 126,690 126,690
Question Completion:
Prepare income statement, statement of owners' equity, and a balance sheet.
Answer:
Elliptical Consulting
1. ELlIPTICAL CONSULTING
Income Statement for the year ended June 30, 2076:
Fees Earned $71,580
Salary Expense 28,670
Supplies Expense 3,340
Depreciation Exp. 1,990
Miscellaneous Exp. 3,010 37,010
Net Income $34,570
Statement of Owners' Equity for the year ended June 30, 20Y6:
Jayson Neese, Capital $38,320
Net Income 34,570
Jayson Neese, Drawing (4,880)
Jayson Neese, Equity $68,010
Balance Sheet as of June 30, 20Y6:
Assets:
Cash $15,780
Accounts Receivable 37,570
Supplies 640 $53,990
Office Equipment 30,810
Accumulated Depreciation 6,160 $24,650
Total assets $78,640
Liabilities + Equity:
Accounts Payable $10,140
Salaries Payable 490
Total liabilities $10,630
Jayson Neese, Capital $68,010
Total liabilities and equity $78,640
Explanation:
a) Data and Calculations:
Elliptical Consulting End-of-Period Spreadsheet For the Year Ended June 30, 20Y6
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Dr. Cr. Dr. Cr. Dr. Cr.
Cash 15,780 15,780
Accounts Receivable 37,570 37,570
Supplies 3,980 (a) 3,340 640
Office Equipment 30,810 30,810
Accumulated Depreciation 4,170 (b) 1,990 6,160
Accounts Payable 10,140 10,140
Salaries Payable (c) 490 490
Jayson Neese, Capital 38,320 38,320
Jayson Neese, Drawing 4,880 4,880
Fees Earned 71,580 71,580
Salary Expense 28,180 (c) 490 28,670
Supplies Expense (a) 3,340 3,340
Depreciation Exp. (b) 1,990 1,990
Miscellaneous Exp. 3,010 3,010
Totals 124,210 124,210 5,820 5,820 126,690 126,690
Adjusted
Trial Balance
Account Title Dr. Cr.
Cash 15,780
Accounts Receivable 37,570
Supplies 640
Office Equipment 30,810
Accumulated Depreciation 6,160
Accounts Payable 10,140
Salaries Payable 490
Jayson Neese, Capital 38,320
Jayson Neese, Drawing 4,880
Fees Earned 71,580
Salary Expense 28,670
Supplies Expense 3,340
Depreciation Exp. 1,990
Miscellaneous Exp. 3,010
Totals 126,690 126,690
4. The real interest rate is 3 percent, and the nominal interest rate is 5 percent. What is the anticipated rate of inflation? 1
pt.
Chino Company manufactures fabric and clothing. Managers can either sell the unfinished fabric to other clothing manufacturers or incur additional conversion costs to create a finished garment. The costs incurred to produce the unfinished fabric are $400,000, which are allocated to the products based on the sales value of the unfinished fabric. Following is information concerning the clothing that can be produced from the fabric:
Product # of units Selling price of Unfinished Fabric Selling price after processing further Addtional Processing cost
Pants 6,000 $20.00 $30.00 $28,450
Shirts 12,000 $23.20 $32.40 $64,400
Coats 4,000 $38.80 $43.20 $18,300
Required:
a. Calculate the increase or decrease in profit if the products are processed further.
b. Assume that the $400,000 in costs is allocated based on the number of units of output. Which products should be sold as unfinished fabric and which should be further processed?
Answer:
a. we have:
Increase in profit of Pants if processed further = $31,550
Increase in profit of Shirts if processed further = $46,000
Decrease in profit of Coats if processed further = -$700
b. We have:
1. Both Pants and Shirts should be processed further.
2. Coats should should be sold as unfinished fabric.
Explanation:
a. Calculate the increase or decrease in profit if the products are processed further.
Note: See the part (a) of the attached excel file for calculation of the increase or decrease in profit if the products are processed further.
In the attached excel file, we have:
Increase in profit of Pants if processed further = $31,550
Increase in profit of Shirts if processed further = $46,000
Decrease in profit of Coats if processed further = -$700
b. Assume that the $400,000 in costs is allocated based on the number of units of output. Which products should be sold as unfinished fabric and which should be further processed?
Note: See the part (b) of the attached excel file for calculation of the increase or decrease in profit if the products are processed further.
In the attached excel file, we have:
Increase in profit of Pants if processed further = $31,550
Increase in profit of Shirts if processed further = $46,000
Decrease in profit of Coats if processed further = -$700
Since both there are increases in the profits of both Pants and Shirts if they are processed further, this implies that both Pants and Shirts should be processed further.
Since there is a decrease in the profits of Coats if it is processed further, this implies that Coats should should be sold as unfinished fabric.