Answer:
Explanation:
a. This is the premium that reflects the risk associated with changes in interest rates for a long-term security.
(determinants<>Nominal risk free rate)
( The Symbol<> rRF)
b. Over the past several years, Germany, Japan, and Switzerland have had lower interest rates than the United States due to lower values of this premium.
( Determinant<>Inflation premium)
(Symbol<>IP)
c. It is based on the bond’s marketability and trading frequency; the less frequently the security is traded, the higher the premium added, thus increasing the interest rate.
( Determinant<>Liquidity risk premium)
( Symbol<> LRP)
d. This is the rate for a short-term riskless security when inflation is expected to be zero.
(Determinant<> Real risk free rate)
( Symbol<>r)
e. This is the premium added as a compensation for the risk that an investor will not get paid in full.
(Determinant<> Default risk premium)
( Symbol<> DRP)
Selected transactions for Therow Corporation during its first month in business are presented below.
Sept. 1 Issued common stock in exchange for $20,000 cash received from investors.
5 Purchased equipment for $9,000, paying $3,000 in cash and the balance on account.
8 Performed services on account for $18,000.
14 Paid salaries of $1,200.
25 Paid $4,000 cash on balance owed for equipment.
30 Paid $500 cash dividend.
Required:
a. Prepare a tabular analysis of the transactions.
b. Journalize the transactions. Do not provide explanations.
c. Post the transactions to T-accounts.
Answer:
Therow Corporation
a) Tabular Analysis of Transactions:
Assets = Liabilities + Equity
1. Cash $20,000 = + Common Stock $20,000
2. Cash -$3,000
Equipment $9,000 = $6,000
3. Accounts
Receivable $18,000 = + Retained Earnings $18,000
4. Cash -$1,200 + Retained Earnings -$1,200
5. Cash -$4,000 -$4,000
6. Cash -$500 + Retained Earnings -$500
b. Sept. 1:
Debit Cash $20,000
Credit Common Stock $20,000
Sept. 5:
Debit Equipment $9,000
Credit Cash $3,000
Credit Accounts Payable $6,000
Sept. 8:
Debit Accounts Receivable $18,000
Credit Service Revenue $18,000
Sept. 14:
Debit Salaries Expense $1,200
Credit Cash $1,200
Sept. 25:
Debit Accounts Payable $4,000
Credit Cash $4,000
Sept. 30:
Debit Dividends $500
Credit Cash $500
c. T-accounts:
Cash
Account Titles Debit Credit
Common Stock $20,000
Equipment $3,000
Salaries Expense 1,200
Accounts payable 4,000
Dividends 500
Accounts Receivable
Account Titles Debit Credit
Service Revenue $18,000
Common Stock
Account Titles Debit Credit
Cash $20,000
Equipment
Account Titles Debit Credit
Cash $3,000
Accounts payable 6,000
Accounts Payable
Account Titles Debit Credit
Equipment $6,000
Cash $4,000
Service Revenue
Account Titles Debit Credit
Accounts receivable $18,000
Salaries Expense
Account Titles Debit Credit
Cash $1,200
Dividends
Account Titles Debit Credit
Cash $500
Explanation:
a) Data and Analysis:
Sept. 1: Cash $20,000 Common Stock $20,000
Sept. 5: Equipment $9,000 Cash $3,000 Accounts Payable $6,000
Sept. 8: Accounts Receivable $18,000 Service Revenue $18,000
Sept. 14: Salaries Expense $1,200 Cash $1,200
Sept. 25: Accounts Payable $4,000 Cash $4,000
Sept. 30: Dividends $500 Cash $500
Savers make deposits and investments in order to earn what?
Why don't savers invest their money directly with the businesses?
Answer:
Savers make deposits and investment in order to earn interest on their money. This often works very well because they do not earn only interest as a percentage of their money, but also interest as a percentage of previously accrued interest, something known as compound interest.
Savers do not invest their money directly with the businesses because real economic activity tends to be riskier (although it could also be more profitable for this same reason). This is why they often prefer to invest the money on financial instruments.
Striker Company estimates its expected cash receipts for the period to be $80,000 and its expected cash disbursements to be $70,000. The beginning cash balance for the period was $5,000. The management wants to maintain a minimum cash balance of $40,000. Knowledge Check 01 How much cash will the company need to borrow
Answer:
$25,000
Explanation:
Calculation for How much cash will the company need to borrow
Cash needed to borrow=$40,000 - (($80,000 - $70,000) + $5,000).
Cash needed to borrow=$40,000+$10,000-$5,000
Cash needed to borrow=$25,000
Therefore How much cash will the company need to borrow is $25,000
Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 5%. The company's weighted average cost of capital is 16%. What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.) Round your answer to the nearest cent. $ Calculate the value of Kendra's operations. Do not round intermediate calculations. Round your answer to the nearest cent. $
Answer:
$856,376.30
Explanation:
What is the terminal, or horizon, value of operations?
2 years, FCF 1 = 80,000, FCFC 2 = 100,000, Growth rate= 5%, WACC = 16%
==> 100,000*(1+0.05)/(0.16-0.05)
==> 100,000*(1.05/0.11)
==> 100,000*(9.545454(
==> 954,545
Calculating the value of Kendra's operations.
Years Cash-flows PVF at 16% Present value
1 800,000 0.86206 68964.80
2 105,000 0.74316 78031.80
2 954,545 0.74316 709379.70
Total value 856,376.30
Different compounding periods, are used for different types of investments. In order to properly compare investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The ____________ interest rate is quoted by borrowers and lenders, and it is also called the annual percentage rate (APR). If the compounding periods for different securities is the same, then you -Select- use the APR for comparison. If the securities have different compounding periods, then the __________ must be used for comparison.Here, M is the number of compounding periods per year and INOM/M is equal to the periodic rate (IPER). If a loan or investment uses ____________ compounding, then the nominal interest rate is also its effective annual rate. However, if compounding occurs more than once a year, EAR is _____________ INOM.
Answer:
Nominal
EAR
annual
higher than
Explanation:
The Nominal interest rate is quoted by borrowers and lenders, and it is also called the annual percentage rate (APR).
If the securities have different compounding periods, then the EAR must be used for comparison.
If a loan or investment uses annual compounding, then the nominal interest rate is also its effective annual rate.
However, if compounding occurs more than once a year, EAR is higher than INOM.
A company with various segments (referred to as "divisions") is considering whether to drop its Orange County division. For each the costs described below, indicate whether the cost is avoidable or unavoidable by choosing the related drop-down menu item.
1. Wages paid to the Orange County division employees who work directly for this division and will be discharged if the division is dropped.
2. General administrative expenses allocated to the Orange County division on the basis of sales dollars.
3. Depreciation expense on previously purchased machinery that is used in the Orange County division; the machinery will have no other use or resale value if the division is dropped.
4. Rent paid for the building that houses only the Orange County division.
5. The amount of rent paid to lease a private jet for use by the company's management that is allocated to the Orange County division.
Answer:
1. Avoidable.
These wages are avoidable because they will stop being paid if the division is dropped.
2. Unavoidable.
These are general administrative expenses which means that they will still be incurred regardless of if the division is dropped. They are therefore unavoidable.
3. Unavoidable.
As the machine has no other use or resale value if the division is dropped, the depreciation expense will still be incurred even if the division is dropped so this cost is unavoidable.
4. Avoidable.
Company will no longer have to pay rent if the division is dropped so this expense is an avoidable cost.
5. Unavoidable.
This cost will still be incurred by the company regardless of if the division is dropped because it is an administrative cost at company level. It is therefore unavoidable.
Elana's Traveling Veterinary Services, Inc., completed its first year of operations on December 31. All of the year's entries have been recorded except for the following:
On March 1 of the current year, the company borrowed $60,000 at a 10 percent interest rate to be repaid in five years.
On the last day of the current year, the company received a $360 utility bill for utilities used in December. The bill will be paid in January of next year.
1. Prepare the required adjusting entry for transactions
2. Record the interest accrued at year-end.
3. Record the utilities incurred at year-end.
Answer:
A. Dr Interest expense $5,000
Cr Interest payable $5,000
B. Dr Utilities expense $360
Cr Utilities payable$360
Explanation:
A. Preparation of the Journal entry to Record the interest accrued at year-end.
Dec 31
Dr Interest expense $5,000
Cr Interest payable $5,000
($60,000 principal × .10 rate × 10 months/12 months = $5,000)
(To record interest accrued at year-end)
B. Preparation of the Journal entry to Record the utilities incurred at year-end.
Dec 31
Dr Utilities expense $360
Cr Utilities payable$360
(To record utilities incurred at year-end)
what is the difference between capital and drawings ?
n January 1, 2022, Smeder Company, an 80% owned subsidiary of Collins, Inc. transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $104,000 cash. At the date of transfer, Smeder's records carried the equipment at a historical cost of $140,000 less accumulated depreciation of $58,000. Straight-line depreciation is used. Smeder reported net income of $28,000 for 2022 and 2023, respectively. Prepare the consolidation entries related to the equipment for year 2022 and year 2023
Answer:
2022
Dr. Equipment _________ $22,000
Cr.Reserve Account _____$19,800
Cr. Depreciation expenses $2,200
2022
Dr. Depreciation Expense ___ $14,000
Cr. Accumulated Depreciation $14,000
2023
Dr. Depreciation Expense ___ $14,000
Cr. Accumulated Depreciation $14,000
Explanation:
2022
Calculate the net book value
Net book value = Historical cost - Accumulated depreciatin = $140,000 - $58,000 = $82,000
Unrealised profit on the sale of the asset = Cash receipt - Nreet book value = $104,000 - $82,000 = $22,000
Annual Depricaiton = Historical cost / remaining life = $140,000 / 10 = $14,000
Excess depreciation charged = Unrealised profit / Remaining life = $22,000 / 10 = $2,200
Ursula, a conventional advertising manager, allocates a sizeable amount of funds toward advertising budgets. She is primarily concerned with the sales figures at the end of every quarter and calculates return on investment for her company's product portfolio. Based on these characteristics, which of the following approaches to advertising does Ursula follow?
a. The marketing management approach
b. The generalist viewpoint
c. The specialist viewpoint
d. The consumer attrition perspective
Answer:
b. The generalist viewpoint
Explanation:
From the question we are informed about Ursula, a conventional advertising manager, allocates a sizeable amount of funds toward advertising budgets. She is primarily concerned with the sales figures at the end of every quarter and calculates return on investment for her company's product portfolio. Based on these characteristics, the approaches to advertising Ursula followed was the generalist viewpoint. Generalist can be regarded as social workers which view problems from context, and they combine some practice techniques that are best fit the situation, so some implement skills needed to intervene can be made available. They are available for well being of the clients since they knows problems can develop at any level of daily living.
Indicate the missing amount for each letter.
Case
1 2
Direct materials used $9,780
Direct labor 5,950 8,300
Manufacturing overhead 8,870 4,880
Total manufacturing costs 16,210
Beginning work in process inventory1,510
Ending work in process inventory 3,650
Sales revenue 25,780
Sales discounts 2,810 2,070
Cost of goods manufactured 17,970 22,620
Beginning finished goods inventory 4,030
Goods available for sale 22,860
Cost of goods sold 19140
Ending finished goods inventory 3,720 3,110
Gross profit 8,100
Operating expenses 3,510
Net income 5,330
1. Prepare a condensed cost of goods manufactured schedule for case 1.
2. Prepare an income statement for case 1.
Answer:
See below
Explanation:
Case 1.
Total manufacturing costs
= Direct material + Direct labor + Manufacturing overhead
= $9,780 + $5,950 + $8,870 = $24,000
Ending work in process inventory
= Opening work in process + total manufacturing cost - cost of goods manufacturing
= $1,510 + $24,600 - $17,970 = $8,140
Beginning finished goods inventory
= Cost of goods sold - cost of goods manufactured + closing finished goods inventory
= $19,140 - $17,970 + $3,720 = $4,890
Cost of goods sold
= Opening finished good inventory + cost of goods manufactured - closing finished goods inventory
= $4,890 + $17,970 - $3,720 = $19,140
Gross profit
= Sales - cost of goods sold
= $25,780 - $2,810 - $19,140 = $3,830
Net income
= Gross profit - Operating expense
= $3,830 - $3,510 = $320
*Condensed cost of goods manufactured schedule
Opening work in process $1,510
Direct material
9,780
Direct labor
$5,950
Manufacturing overhead
$8,870
Total manufacturing cost $24,600
Cost of goods manufactured available
$26,110
Less:
Closing work in process
($8,140)
Cost of goods manufactured
$17,970
* Income statement
Sales
$25,780
Less:
Discount
($2,810)
Net sales $22,970
Less:
Cost of goods sold
Beginning finished goods inventory
$4,890
Add:
Cost of goods manufactured
$17,970
Cost of goods available for sale
$22,860
Less:
Closing finished goods inventory
($3,720)
Cost of goods sold $19,140
Gross profit
$3,830
Less:
Operating expenses
($3,510)
Net income
$320
Joe Corporation produces and sells two products. In the most recent month, Product C90B had sales of $19,950 and variable expenses of $5,985. Product Y45E had sales of $26,190 and variable expenses of $10,476. The fixed expenses of the entire company were $17,000. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:
Answer:
Decrease
Explanation:
Calculation to determine overall break-even point for the entire company
Contribution margin for C90B = ($19,950-
$5,985)/$19,950
Contribution margin for C90B = 70%
Contribution margin for Y45E =( $26,190- $10,476)/$26,190
Contribution margin for Y45E= 60%
Therefore Based on the above calculation if the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company
Would DECREASE reason been that C90B have more contribution margin ratio of 70% compare to Y45E which had contribution margin ratio of 60%
Suppose the labor force stays constant, and the working age population stays constant, but some people who were unemployed become employed. As a result, the labor force participation rate will A. not change in way that can be predicted. B. remain constant. C. decrease. D. increase.
Answer:
b
Explanation:
Labour force is the sum of the employed and the unemployed in the economy.
Labour force participation rate is
On January 2, 2020, Howdy Doody Corporation purchased 18% of Ranger Corporation's common stock for $52,000. Based on its ownership, Howdy Doody Corp. cannot exert significant influence over the operations of Ranger Corp. Ranger's net income for the years ended December 31, 2020, and December 31, 2021, were $11,000 and $52,000, respectively. During 2020, Ranger declared and paid a dividend of $68,000. On December 31, 2020, the fair value of the Ranger stock owned by Howdy Doody had increased to $74,000. How much should Howdy Doody show in the 2020 income statement as income from this investment
Answer:
The Total amount is shown in the income statement $34,240
Explanation:
The computation of the amount that should be presented in the 2020 income statement is shown below:
Dividend collected by Howdy Doody corporation (18% of $68,000) $12,240
rise in Fair value of Stock credited to the income statement ($74,000 - $52,000) $22,000
The Total amount is shown in the income statement $34,240
You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a one-time cash of $200,000 today or receive payments of $1,400 a month starting at the end of this month for 20 years. Assuming the APR is 6 percent with monthly compounding, which option should you take and why
Answer:
Option 1 PV lumpsum = $200000
Option2 PV of Annuity = $195413.08035 rounded off to $195413.08
Based on the present value of both the options, Option 1 should be chosen as it has a higher present value than option 2.
Explanation:
To decide on the best option to choose among the given two, we need to find the present value of both the options.
As the first option is to receive a lumpsum payment of $200000 today, the present value of this option is also equal to $200000 as it will be received today.
Option two, on the other hand, is an annuity as fixed payments will be received after equal intervals of time and for a limited time period and at the end of the period which satisfies the criteria of annuity ordinary. We will use the formula for the present value of annuity which is,
PV of Annuity = C * [( 1 - (1+r)^-n) / r]
Where,
C is the periodic paymentr is the rate of return of discount raten is the number of periodsThe periodic payment is provided as $1400. We are also provided with and APR of 6% which is the Annual rate. We will have to convert it into monthly rate by dividing it by 12. We are also provided with the number of years which we will need to convert into number of months by multiplying it by 12.
Monthly r = 6%/12 = 0.5%
Number of periods = 20 * 12 = 240
PV of Annuity = 1400 * [( 1 - (1+0.5%)^-240) / 0.5%]
PV of Annuity = $195413.08035 rounded off to $195413.08
Tony runs a sales and marketing research firm. He is very hands-on and participates in various client meetings. In almost all his conversations, Tony repeats or rephrases what a person has said. Which crucial aspect of good listening skills does Tony demonstrate? A. questioning B. negotiation C. reflecting D. confronting
Answer:
C. Reflecting
Explanation: it is correctomando
Helppppp pleaseeee!!!!!!!!!
On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $559,946 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $3.8 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. Determine the present value of the lease payments at June 30, 2021 that Georgia-Atlantic uses to record the right-of-use asset and lease liability.
2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2021?
3. What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2021?
(For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest whole dollar.)
1. Present value
2. Pretax amount for liability Pretax amount for right-of-use asset
3. Pretax amount for interest expense Pretax amount for amortization expense
Answer:
1. $3,800,001
2. Pretax amount of liability $2,842,112
Pre tax amount of right to use asset $3,325,000
3. Pre tax amount of interest expense $162,003
Pre tax amount of amortization expenses $475,000
Explanation:
1. Calculation for the Present value
Using this formula
PV of minimum lease payments used to record right to use assets = Semi Annual lease payments * Cumulative PV Factor of annuity due for 8 periods at 5%
Where,
Semiannual lease payment = $559,946
Total semiannual payments = 4*2 = 8
Incremental borrowing rate = 10%, 5% semiannual
Let plug in the formula
PV of minimum lease payments used to record right to use assets= $559,946 * 6.78637
PV of minimum lease payments used to record right to use assets= $3,800,001
Therefore the Present value will be $3,800,001
2. Calculation for the Pretax amount for liability and Pretax amount for right-of-use asset
Calculation for Pretax amount of liability
First step is to calculate the Pretax amount of liability on 30.06.2021
Pretax amount of liability on 30.06.2021 = ($3,800,001 - $559,946)
Pretax amount of liability on 30.06.2021= $3,240,055
Second step is to calculate the Interest expense for 31.12.2021
Interest expense for 31.12.2021 = $3,240,055 * 5%
Interest expense for 31.12.2021= $162,003
Now let calculate the Pre tax amount for liability December 31, 2021
Pre tax amount for liability December 31, 2021 = $3,240,055 + $162,003 - $559,946
Pre tax amount for liability December 31, 2021= $2,842,112
Therefore The Pre tax amount for liability December 31, 2021 will be $2,842,112
Calculation for Pre tax amount of right to use asset
First step is to calculate the Depreciation on right to use assets for 2021
Depreciation on right to use assets for 2021 = $3,800,000 / 4 * 6/12
Depreciation on right to use assets for 2021 = $475,000
Now let calculate the Pre tax amount of right to use asset to be reported for 2021
Pre tax amount of right to use asset to be reported for 2021 = $3,800,000 - $475,000
Pre tax amount of right to use asset to be reported for 2021 = $3,325,000
Therefore Pre tax amount of right to use asset to be reported for 2021 will be $3,325,000
3. Calculation for Pretax amount for interest expense Pretax amount for amortization expense
Calculation for Pretax amount for interest expense
Pre tax amount of interest expense = $3,240,054 * 5%
Pre tax amount of interest expense= $162,003
Therefore the Pre tax amount of interest expense will be $162,003
Calculation for Pre tax amount of amortization expenses
Pre tax amount of amortization expenses = $3,800,000 / 4 * 6/12
Pre tax amount of amortization expenses = $475,000
Therefore The Pre tax amount of amortization expenses will be $475,000
Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers: Date Transaction Number of Units Cost per Unit 1/1 100 $ 800 5/5 Purchase 200 $ 900 8/10 Purchase 300 $ 1,000 10/15 Purchase 200 $ 1,100 During the year, Lauer sold 750 laptop computers. What was cost of goods sold using the LIFO cost flow assumption
Answer:
$740,000
Explanation:
LIFO assumes that the recent goods bought will be sold first. The Cost of Goods Sold is then calculated on the cost of the recent goods bought.
Cost of Goods Sold = 200 x $1,100 + 300 x $1,000 + 200 x $900 + 50 x $800
= $740,000
Therefore,
Cost of goods sold using the LIFO is $740,000.
Financial analysis Group of answer choices uses historical financial statements and is thus useful only to assess past performance uses historical financial statements and is thus useful only to assess past performance uses historical financial statements to measure a company's performance and in making financial projections of future performance. is accounting record-keeping using generally accepted accounting principles
Answer:
uses historical financial statements to measure a company's performance and in making financial projections of future performance.
Explanation:
Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP) and financial accounting standards board (FASB).
Financial analysis uses historical financial statements to measure a company's performance and in making financial projections of future performance.
In Financial accounting, the horizontal financial analysis can be defined as an analysis and evaluation of a financial statement which illustrates or gives information about changes in the amount of corresponding financial statement items, benchmarks or financial ratio over a specific period of time. It is one of the most important technique that is used to measure how a business is doing financially. Hence, it is also referred to as the trend analysis.
Under the horizontal analysis of financial statement, we use the financial statements of two or more periods; earliest and latter periods.
Generally, the earliest is chosen as the base period while all other items on the statement for a latter period will be compared with the items on the statement of the base period.
This information is available for Pronghorn Inc. for the current year.
Beginning inventory $10,620
Ending inventory 13,430
Cost of goods sold 84,175
Sales 146,100
Calculate the inventory turnover, days in inventory, and gross profit rate for Pronghorn Inc. for the current year. (Round gross profit rate to 2 decimal places, e.g. 12.51 and other answers to 1 decimal place, e.g. 15.2. Use 365 days for calculation.)
Inventory turnover enter inventory turnover in times times
Days in inventory enter days in inventory days
Gross profit rate enter days in inventory
Answer:
Pronghorn Inc.
Inventory Turnover = 7 times
Days in inventory = 52.14 days
Gross profit rate = 47.86%
Explanation:
a) Data and Calculations:
Beginning inventory $10,620
Ending inventory 13,430
Average inventory = $12,025 ($10,620 + $13,430)/2
Cost of goods sold 84,175
Sales 146,100
Gross profit = $69,925 ($146,100 - $84,175)
Inventory Turnover = Cost of Goods Sold/Average Inventory
= $84,175/$12,025
= 7 times
Days in inventory = 365/7 = 52.14 days
Gross profit rate = Gross profit/Sales * 100
= $69,925/$146,100 * 100
= 47.86%
Sally is looking to invest in Agricon Products when its P/E ratio is lower than 15. Each share is currently projected to earn $1.30 this year. Which
of the stock prices listed below would give the P/E ratio she is looking for?
1. $18 a share
II. $19 a share
III. $20 a share
Select the best answer from the choices provided.
А.
I only
В.
III only
Ос.
I and II only
OD. III, and III
Answer:
C
Explanation:
P/E ratio is a method of valuing a company. It is derived by dividing price of the stock by earnings
1. $18/1.3 = 13.8
2. 19/1.3 = 14.6
3. 20 / 1.3 = 15.4
The first and second stock have a P/E ratio is lower than 15.
Deviations from informational efficiency would result in a large cost that will be borne by all participants, namely inefficient resource allocation. Corporations with overpriced securities, for example, would be able to obtain capital too expensively while undervalued companies might forgo investment opportunities because the cost of raising capital would be too low.
a. True
b. False
Answer: False
Explanation:
Deviations from informational efficiency does in fact result in a large cost for all participants however the effects given in the question are false.
If there is a deviation from informational efficiency, overpriced companies would be viewed as performing well enough to get capital at a cheaper rate because they would be viewed as less of a risk.
Undervalued companies would get capital at a higher cost because they would be viewed as less likely to pay back the capital when in fact they are not valued at their proper value which would have shown that they would be able to pay off the capital acquired.
Finch Modems has excess production capacity and is considering the possibility of making and selling paging equipment. The following estimates are based on a production and sales volume of 1,600 pagers. Unit-level manufacturing costs are expected to be $26. Sales commissions will be established at $1.60 per unit. The current facility-level costs, including depreciation on manufacturing equipment ($66,000), rent on the manufacturing facility ($56,000), depreciation on the administrative equipment ($13,800), and other fixed administrative expenses ($74,950), will not be affected by the production of the pagers. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (pagers) on the basis of the number of units of product made (i.e., 5,600 modems and 1,600 pagers). Required a. Determine the per-unit cost of making and selling 1,600 pagers. (Do not round intermediate calculations. Round your answer to 3 decimal places.) b. Assuming the pagers could be sold at a price of $40 each, should Finch make the pagers
Answer:
a). Per unit cost = $ 159.31
b). Yes, Finch Modems should make the pagers.
Explanation:
a). Facility level cost proposed to be allocated to the pager line
[tex]$=\frac{1600}{5600+1600} \times (66,000+56,000+13,800+74,950)$[/tex]
= 0.22 + 210750
= $ 210750.22
Facility cost per unit of pager = [tex]$\frac{210750.22}{1600}$[/tex] = $ 131.71
Cost per unit of pager = $ 26 + $ 1.60 + $ 131.71
= $ 159.31
b). At the selling price of $ 40 per unit, the pager line will result in an operational loss, the profit for the company as a whole will increase if it decides to manufacture the pagers.
Contribution margin per unit of pager = $ 40 - ( $ 26 + $ 1.60)
= $ 15.6
Total contribution margin per unit of pager = 1600 x $ 15.6
= $ 24,960
The net operating income for the company would increase by $ 24.960 if the pagers are added to its product portfolio.
Hence Finch Modems should make the pagers.
On June 30, 2021, the High Five Surfboard Company had outstanding accounts receivable of $720,000. On July 1, 2021, the company borrowed $570,000 from the Equitable Finance Corporation and signed a promissory note. Interest at 10% is payable monthly. The company assigned specific receivables totaling $720,000 as collateral for the loan. Equitable Finance charges a finance fee equal to 1.2% of the accounts receivable assigned.
Required: Prepare the journal entry to record the borrowing on the books of High Five Surfboard. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Dr Cash$561,360
Dr Finance charge expense $8,640
Cr Finance arrangement $570,000
Explanation:
Preparation of the journal entry to record the borrowing on the books of High Five Surfboard.
Dr Cash$561,360
[$570,000-($720,000*1.2%)]
$570,000-$8,640
=$561,360
Dr Finance charge expense $8,640
($720,000*1.2%)
Cr Finance arrangement $570,000
(Being to record the borrowing on the books of High Five Surfboard )
On January 1, the company purchased equipment that cost $10,000. The equipment is expected to be worth about (or has a salvage value of) $1,000 at the end of its useful life in five years. The company uses straight-line depreciation. It has not recorded any adjustments relating to this equipment during the current year.
Required:
Complete the necessary December 31 journal entry.
Answer:
December 31
Debit : Depreciation $1,800
Credit : Accumulated Depreciation $1,800
Explanation:
Straight line method charges a fixed amount of depreciation based on the formula :
Depreciation Expense = Cost - Salvage Value ÷ Estimated Useful Life
Depreciation Expense = ($10,000 - $1,000) ÷ 5 = $1,800
A year ago, you graduated from college and decided to open your own computer software company. Over the past year, your firm generated $500,000 in revenue. You hired two software engineers and paid each of them $150,000 over the past year. You also purchased computer equipment that cost a total of $30,000. To save money, you decided to use the basement of your house for the business. Previously, you had rented this space to a tenant for $6,000 per year. Instead of opening your own business, you could have gone to work for Microsoft and earned $200,000 over the past year.
Required:
a. What were your accounting profits of your firm over the past year?
b. What were the economic profits of your firm over the past?
Answer:
170,000
$-36,000
Explanation:
Accounting profit= total revenue - explicit cost
Total revenue =price x quantity sold
Explicit cost includes the amount expended in running the business. They include rent , salary and cost of raw materials
Economic profit = accounting profit - implicit cost
Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives
Accounting profit = $500,000 - [( $150,000 x 2) + $30,000] = $170,000
Economic profit = $170,000 - ($200,000 + $6000) = -36,000
Presented below is information related to Shamrock Corp., which sells merchandise with terms 2/10, net 60. Shamrock Corp. records its sales and receivables net. July 1 Shamrock Corp. sold to Warren Harding Co. merchandise having a sales price of $15,000. 5 Accounts receivable of $14,300 (gross) are factored with Andrew Jackson Credit Corp. without recourse at a financing charge of 9%. Cash is received for the proceeds; collections are handled by the finance company. (These accounts were all past the discount period.) 9 Specific accounts receivable of $14,300 (gross) are pledged to Alf Landon Credit Corp. as security for a loan of $6,500 at a finance charge of 6% of the amount of the loan. The finance company will make the collections. (All the accounts receivable are past the discount period.) Dec. 29 Warren Harding Co. notifies Shamrock that it is bankrupt and will pay only 10% of its account. Give the entry to write off the uncollectible balance using the allowance method. (Note: First record the increase in the receivable on July 11 when the discount period passed.)
Answer:
Shamrock Corp.
Entry to write off the uncollectible balance of Warren Harding Co.:
Debit Allowance for Uncollectible accounts $13,500
Credit Accounts Receivable $13,500
To write off the uncollectible account.
Explanation:
a) Data and Calculations:
Credit terms = 2/10, net 60. This means that 2% discount is allowed to each customer for making payment within 10 days and the longest credit is 60 days.
Sales to Warren Harding Co = $15,000
Amount debited to Accounts Receivable = 14,700 ($15,000 * 98%)
Amount paid by Warren (10%) = $1,500
Amount to be written off as uncollectible = $13,500
Discount of $300 will be reversed with a debit to the Accounts Receivable and a credit to Discount Allowed (since the Shamrock Corp. records its sales and receivables net.)
Cash of $1,500 will be debited and Accounts Receivable credited to record the 10% of $15,000 cash receipt from Warren Harding Co. The remaining amount, which is $13,500 will be written off with a debit to Allowance for Uncollectible accounts and a credit to Accounts Receivable.
Identify which situation will lead to a fall in the net exports.
a.
More government spending than taxation
b.
More taxation than government spending
c.
More exports than imports
d.
More imports than exports
Help Fast please
Answer:
Use the drop-down menus to answer the questions.
In this circular flow mode, what does the letter A present?
✔ financial sector
What does the letter B represent?
✔ government sector
What does the letter C represent?
✔ foreign sector
What does the letter D represent?
✔ leakages
Explanation:
got it right on edge
At Bargain Electronics, it costs $30 per unit ($20 variable and $10 fixed) to make an MP3 player at full capacity that normally sells for $55. A foreign wholesaler offers to buy 4,960 units at $24 each. Bargain Electronics will incur special shipping costs of S4 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Reject Accept Net Income
Order order Increase
(Decrease)
Revenues $ $ $
Cost-Manufacturing
Shipping
Net Income $ $ $
The special order should be:______.
Answer:
Effect on income= $0
Explanation:
Because the company has excess capacity and it is a special offer that would not affect normal sales, we will not include the fixed costs.
Effect on income= total sales revenue - total variable cost
Effect on income= 24*4,960 - (20 + 4)*4,960
Effect on income= $0