Answer:
Suppose the Finnish government undertakes a program that relaxes immigration but only for highly skilled workers. This policy changes will result in an increase in the _population of immigrants_______, causing __increased economic performance resulting from increased supply of highly skilled labor, productivity, and GDP and not to forget increased diversity with its attendant benefits and costs_____.
Explanation:
Immigration is the movement of non-natives or citizens into a country from other countries. If the number of immigrants outnumber those emigrating, the population of the country will increase relatively. To boast population, increase diversity, and energize an economy, some countries deliberately embark on programed immigration and acceptance of highly skilled workers. As they come in, they come with their families, some will bear more children, and there will be increased relationships between the immigrants and the domiciled citizen population. The economy of the country will be revitalized since they are highly skilled workers, and there will be increased productivity and beneficial changes in the GDP. Human diversity has many attendant benefits and burdens. Whichever one that outweighs the other depends on factors prevalent in the particular country.
a new hockey arena at a cost of $2,500,000. It received a downpayment of $500,000 from local businesses to support the project and now needs to borrow $2,000,000 to complete the project. It therefore decides to issue $2,000,000 of 11%, callable, 10-year bonds. These bonds were issued on January 2018 and pay interest on January 1 and July 1. The bonds yield 10%. Instructions: a. Prepare the journal entry to record the issuance of the bonds on January 1, 2018 b. Prepare a bond amortixation schedule up to and including January 1, 2022 c. Prepare the journal entries to record the interest payments on January 1, 2020 and January 1, 2021. d. Prepare the journal entry to record the bond called on January 2021 at 106
Answer:
a. Prepare the journal entry to record the issuance of the bonds on January 1, 2018
we must first determine the market price of the bonds:
PV of face value = $2,000,000 / (1 + 5%)²⁰ = $753,778.97 ≈ $753,779
PV of coupon payments = $110,000 x 12.462 (PV annuity factor, 5%, 20 periods) = $1,370,820
market value of the bonds = $753,779 + $1,370,820 = $2,124,599
January 1, 2018, bonds are issued at a premium
Dr Cash 2,124,599
Cr Bonds payable 2,000,000
Cr Premium on bonds payable 124,599
b. Prepare a bond amortization schedule up to and including January 1, 2022
since we are not told which amortization method to use, I will use the straight line method.
Date Interest Cash Premium Carrying
expense paid amortization value
7/2018 $103,770 $110,000 $6,230 $2,118,369
1/2019 $103,770 $110,000 $6,230 $2,112,139
7/2019 $103,770 $110,000 $6,230 $2,105,909
1/2020 $103,770 $110,000 $6,230 $2,099,679
7/2020 $103,770 $110,000 $6,230 $2,093,449
1/2021 $103,770 $110,000 $6,230 $2,087,219
7/2021 $103,770 $110,000 $6,230 $2,080,989
1/2022 $103,770 $110,000 $6,230 $2,074,759
c. Prepare the journal entries to record the interest payments on January 1, 2020 and January 1, 2021.
bond premium amortization per coupon = 124,599 / 20 = $6,229.95 ≈ $6,230
January 1, 2020, coupon payment
Dr Interest expense 103,770
Dr Premium on bonds payable 6,230
Cr Cash 110,000
January 1, 2021, coupon payment
Dr Interest expense 103,770
Dr Premium on bonds payable 6,230
Cr Cash 110,000
d. Prepare the journal entry to record the bond called on January 2021 at 106
Dr Bonds payable 2,000,000
Dr Premium on bonds payable 87,219
Dr Loss on retirement of debt 32,781
Cr Cash 2,120,000
Refer to the following selected financial information from McCormik, LLC. Compute the company's days' sales in inventory for Year 2. (Use 365 days a year.)
Year 2 Year 1
Cash $39,100 $33,850
Short-term investments 106,000 68,000
Accounts receivable, net 93,500 87,500
Merchandise inventory 129,000 133,000
Prepaid expenses 13,700 11,300
Plant assets 396,000 346,000
Accounts payable 105,400 115,800
Net sales 719,000 684,000
Cost of goods sold 398,000 383,000
a) 53.8.
b) 85.7.
c) 47.5.
d) 45.9.
e) 118.3.
Answer:
e) 118.3.
Explanation:
days' sales in inventory = (average inventory x 365 days) / cost of goods sold year 2
cost of goods sold year 2 = $398,000inventory year 2 = $129,000days' sales in inventory = ($129,000 x 365 days) / $398,000 = 118.30 days
Days' sales in inventory measures how much time it takes on average for a company to sell its inventory.
Tropetech Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $2,400 million in the coming year. In addition, the firm is expected to have net capital expenditures of $360 million, and net operating working capital (NOWC) is expected to increase by $45 million. How much free cash flow (FCF) is Tropetech Inc. expected to generate over the next year?
Answer:
FCF = $1,995 million
Explanation:
DATA
EBIT(1-T) = $2,400 million
Net Capital Expenditure = $360 million
Net operating working capital (NOWC) = $45 million
Free cash flow (FCF) expected to generate over next year can be calculated as
FCF = EBIT(1-T) - Capital Expenditure - Net operating working capital (NOWC)
FCF = $2,400 million - $360 million - $45million
FCF = $1,995 million
Telegraphic Solution's completed worksheet at November 30, 2018 is as follows:
Revenues:
Service Revenue $9,600
Expenses:
Salaries Expense $2,750
Rent Expense 700
Depreciation Expense-Equipment $350
Supplies Expense 550
Utilities Expense $700
Total Expenses $5,050
Net Income $4,550
Required:
a. Complete the income statement for the month ended November 30, 2018.
b. Complete the statement of owner's equity for the month ended November 30, 2018. Assume there were no contributions made by the owner during the month.
c. Complete the classified balance sheet as of November 30, 2018
Answer:
a. Complete the income statement for the month ended November 30, 2018.
Telegraphic Solution's
Income Statement
For the month ended November 30, 2018
Service Revenue $9,600
Expenses:
Salaries Expense $2,750 Rent Expense 700 Depreciation Expense-Equipment $350 Supplies Expense 550 Utilities Expense $700 ($5,050)Net Income $4,550
b. Complete the statement of owner's equity for the month ended November 30, 2018. Assume there were no contributions made by the owner during the month.
Telegraphic Solution's
Statement of Owner's Equity
For the month ended November 30, 2018
Pryor, capital, November 1, 2018 $32,900
Investments during the month $0
Net income $4,550
Subtotal $37,450
Withdrawals during the month ($2,900)
Pryor, capital, November 30, 2018 $34,550
c. Complete the classified balance sheet as of November 30, 2018
Assets:
Current assets
Cash $4,400
Accounts receivable $3,900
Prepaid rent $1,100
Office supplies $2,550
Total current assets $11,950
Non-current assets
Equipment net $28,350
Total non-current assets $28,350
Total assets: $40,300
Liabilities and equity:
Liabilities:
Current liabilities
Accounts payable $5,100
Salaries payable $650
Total current liabilities $5,750
Equity:
Pryor, capital $34,550
Total liabilities and equity: $40,300
A stock has an expected return of 12.6 percent, the risk-free rate is 7 percent, and the market risk premium is 10 percent. What must the beta of this stock be
Answer:
0.56
Explanation:
In this question we used the Capital Asset Pricing Model formula i.e shown below:
As we know that
Expected rate of return = Risk free rate of return + Beta × market risk premium
12.6% = 7% + Beta × 10%
12.6% - 7% = Beta × 10%
5.6% = Beta × 10%
So, the beta is
= 5.6% ÷ 10%
= 0.56
Hence, the beta of the stock is 0.56
What is Tesla’s long-term portion of capital lease obligations as of December 31, 2013 (in $ thousands)? Please provide your answer without comma separator or decimal (Ex: 23456)
Answer:
Tesla's long-term portion of capital lease obligations as of December 31, 2013 (in $ thousands)
= 10460
This figure was obtained from the sec.gov/Archives/edgar/data.com.htm site.
Explanation:
A capital lease obligation is the amount of lease for capital assets under a capital lease agreement. Generally, lease agreements are usually classified as either operating lease or capital lease. The portion of capital lease obligations that are maturing within the current accounting period or within the next 12 months are classified as current. The reminder which matures after the next 12 months are classified as long-term.
Accounting for leases are currently under the purview and guidance of IFRS 16 Leases or FASB's ASC 842 Leases.
A random sample of 10 parking meters in a beach community showed the following incomes for a day. Assume the incomes are normally distributed. $3.60 $4.50 $2.80 $6.30 $2.60 $5.20 $6.75 $4.25 $8.00 $3.00 Find the 95% confidence interval for the true mean. (Be sure to indicate your calculations for mean and standard deviation)
Answer:
The 95% confidence interval for the true mean would be between 3.39 and 6.01
Explanation:
In order to calculate the 95% confidence interval for the true mean we would have to calculate first the mean and standard deviation as follows:
mean=∑Xi/n
mean=$3.60 $4.50 $2.80 $6.30 $2.60 $5.20 $6.75 $4.25 $8.00 $3.00/10
mean=4.7
standard deviation=√∑(Xi-mean)∧2/n-1
standard deviation=1.83
t critical=2.262
The confidence interval=mean +/- t critical*standard deviation/√10
The confidence interval=4.7 +/- 2.262*1.8338/√10
The confidence interval=(3.39, 6.01)
The 95% confidence interval for the true mean would be between 3.39 and 6.01
Promoters of an LLC are Select one: a. are never personally liable on pre-formation debt. b. always liable on pre-formation debt. c. only liable on pre-formation debt until a novation occurs.
Answer:
The answer is C. only liable on pre-formation debt until a novation occurs.
Explanation:
The corporation and the third-party agree to release the promoter from liability and to substitute the corporation in place of the promoter as the party liable on the contract. May be express or implied.
Green Wave Company plans to own and operate a storage rental facility. For the first month of operations, the company has the following transactions.
1. January 1 Issue 10,000 shares of common stock in exchange for $38,000 in cash.
2. January 5 Purchase land for $22,000. A note payable is signed for the full amount.
3. January 9 Purchase storage container equipment for $8,600 cash.
4. January 12 Hire three employees for $2,600 per month.
5. January 18 Receive cash of $12,600 in rental fees for the current month.
6. January 23 Purchase office supplies for $2,600 on account.
7. January 31 Pay employees $7,800 for the first month's salaries.
Required:
1. Record each transaction. Green Wave uses the following accounts: Cash, Supplies, Land, Equipment, Common Stock, Accounts Payable, Notes Payable, Service Revenue, and Salaries Expense.
2. Post each transaction to T-accounts and compute the ending balance of each account. Since this is the first month of operations, all T-accounts have a beginning balance of zero.
3. After calculating the ending balance of each account, prepare a trial balance.
Answer:
1. January 1 Issue 10,000 shares of common stock in exchange for $38,000 in cash.
Dr Cash 38,000
Cr Common stock 38,000
2. January 5 Purchase land for $22,000. A note payable is signed for the full amount.
Dr Land 22,000
Cr Notes payable 22,000
3. January 9 Purchase storage container equipment for $8,600 cash.
Dr Equipment 8,600
Cr Cash 8,600
4. January 12 Hire three employees for $2,600 per month.
no journal entry required
5. January 18 Receive cash of $12,600 in rental fees for the current month.
Dr Cash 12,600
Cr Service revenue 12,600
6. January 23 Purchase office supplies for $2,600 on account.
Dr Supplies 2,600
Cr Accounts payable 2,600
7. January 31 Pay employees $7,800 for the first month's salaries.
Dr Salaries expense 7,800
Cr Cash 7,800
cash common stock
debit credit debit credit
38,000 38,000
8,600
12,600
7,800
34,200
land notes payable
debit credit debit credit
22,000 22,000
equipment service revenue
debit credit debit credit
8,600 12,600
supplies accounts payable
debit credit debit credit
2,600 2,600
salaries expense
debit credit
7,800
Green Wave Company
trial balance
debit credit
Cash $34,200
Supplies $2,600
Land $22,000
Equipment $8,600
Accounts payable $2,600
Notes payable $22,000
Common stock $38,000
Service revenue $12,600
Salaries expense $7,800
total $75,200 $75,200
Jounal enteries are :
1) Dr Cash 38,000
Cr Common stock 38,000
2) Dr Land 22,000
Cr Notes payable 22,000
3) Dr Equipment 8,600
Cr Cash 8,600
4) No journal entry required
5) Dr Cash 12,600
Cr Service revenue 12,600
6. Dr Supplies 2,600
Cr Accounts payable 2,600
7. Dr Salaries expense 7,800
Cr Cash 7,800
Answer 2:cash common stock
debit credit debit credit
38,000 38,000
8,600
12,600
7,800
34,200
land notes payable
debit credit debit credit
22,000 22,000
equipment service revenue
debit credit debit credit
8,600 12,600
supplies accounts payable
debit credit debit credit
2,600 2,600
salaries expense
debit credit
7,800
Answer 3: Green Wave Company Trial balanceEnteries debit credit
Cash $34,200
Supplies $2,600
Land $22,000
Equipment $8,600
Accounts payable $2,600
Notes payable $22,000
Common stock $38,000
Service revenue $12,600
Salaries expense $7,800
Total $75,200 $75,200
Learn more about "Trial Balance":
https://brainly.com/question/18558772?referrer=searchResults
Which of the following costs would be applied to manufactured inventory under variable costing? Select one: A. Cost of raw materials B. Salary of factory manager C. Rental payments on administrative offices D. Commissions to sales persons E. Rental payments on factory
Select the most appropriate answer about bringing components from other continents.
A. It never affects innovation of the final product.
B. It potentially results in better products for the customer.
C. It always increases the cost of the final product.
D. It always lowers the quality of the final product.
E. It has no impact on the production lines in the home country.
Answer: B. It potentially results in better products for the customer.
Explanation:
Importation of components for the production of a good might lead to a potentially better product for consumers because the knowledge base of a superior country in manufacturing the said component would be utilized.
One benefit of Globalization is that better products than can be made locally can be sourced from outside countries so that products are better and stronger.
If a company imports components it could be because they are trying to save costs or it could be that they found Superior products than they did at home. Should the latter be the case then there is a chance that they will make better products because of these better components.
Westchester Corp. is considering two equally risky, mutually exclusive projects, both of which have normal cash flows. Project A has an IRR of 11%, while Project B's IRR is 14%. When the WACC is 8%, the projects have the same NPV. Given this information, which of the following statements is CORRECT?a. If the WACC is 9%, Project A's NPV will be higher than Project B's. b. If the WACC is greater than 14%, Project A's IRR will exceed Project B's. c. If the WACC is 13%, Project A's NPV will be higher than Project B's. d. If the WACC is 9%, Project B's NPV will be higher than Project A's. e. If the WACC is 6%, Project B's NPV will be higher than Project A's.
Answer:
d. If the WACC is 9%, Project B's NPV will be higher than Project A's.
Explanation:
The internal rate of return is the return in which the NPV is zero i.e cash inflows equal to the initial investment
While the WACC refers to the cost of capital by considering the capital structure i.e cost of equity, cost of preferred stock and cost of debt by taking their weightage
Now if the WACC is 9% so project B NPV would be higher as compared to project A as we can see that project B IRR is greater than the project A IRR
Therefore option d is correct
Can you explain answer below:
#28 The Canadian subsidiary of a U.S. company reported cost of goods sold of 50,000 C$, for the current year ended December 31. The beginning inventory was 15,000 C$, and the ending inventory was 10,000 C$. Spot rates for various dates are as follows:
Date beginning inventory was acquired $1.08 = 1C$
Rate at beginning of the year $1.10 = 1C$
Weighted average rate for the year $1.12 = 1C$
Date ending inventory was acquired $1.13 = 1C$
Assuming the Canadian dollar is the functional currency of the Canadian subsidiary, the translated amount of cost of goods sold that should appear in the consolidated income statement is
Answer is C. $56,000
Answer:
$56,000
Explanation:
Data:
Cost of good sold (single) = $50,000
Weighted average rate of the year = $1.12
Cost of good sold consolidated = ???????
Solution:
In order to find the translated amount of cost of goods sold that should appear in the consolidated income statement, we will multiply the cost of goods sold given for Canadian subsidiary with the weighted average rate of the year.
Calculation:
Cost of good sold (consolidated) = $50,000 x $1.12
Cost of good sold (consolidated) = $56,000
The next dividend payment by Savitz, Inc., will be $2.12 per share. The dividends are anticipated to maintain a growth rate of 8 percent forever. If the stock currently sells for $43 per share, what is the required return?
Answer:
The answer is 12.9%
Explanation:
This question will be solved using the Dividend Discount Model(DDM).
Po = D1/r - g
Po is the current worth of stocks
D1 is the next dividend paid
r is the rate of return
g is the growth rate
$43 = $2.12/ r - 0.08
43r - 3.44 = 2.12
43r = 5.56
r = 5.56/43
=0.129
Expressed as a percentage:
The required return for Savitz, Inc., is therefore 12.9%
Cost centers are evaluated primarily on the basis of their ability to control costs and:_______.
A) Their return on assets.
B) Residual income.
C) The quantity and quality of the services they provide.
D) Their contribution margin ratio.
Answer:
C.
The quality and quantity of the services they provide
Explanation:
When we talk of cost centers in an organization, we refer to such as departments that does not contribute to the overall profitability of the organization but still cost the organization some amount to operate.
What this means is that although, they give no profit to the organization, they add to the total bill of the organization.
So how do we evaluate them?
Since they are not here for profitability, the measure of how they are relevant to the company is measured on two basis.
They are evaluated on their ability to control costs and also the quality and quantity of the services these centers provide
E-Eyes just issued some new preferred stock. The issue will pay an annual dividend of $13 in perpetuity, beginning 11 years from now. If the market requires a 6 percent return on this investment, how much does a share of preferred stock cost today
Answer:
The cost of preferred stock today is $114.14
Explanation:
To calculate the cost of preferred stock today, we first need to determine the cost of each share of preferred stock 11 years from now when it starts paying dividends and then discount it back to today's value.
The preferred stock pays a constant dividend and after equal interval of time for an indefinite period. Thus, it is like a perpetuity. The present value of perpetuity is,
Present value = Dividend / r
Where,
r is the required rate of return
Value Year 11 = 13 / 0.06
Value Year 11 = 216.6666667
The present value is,
Present value = 216.6666667 / (1+0.06)^11
Present value = $114.137 rounded off to $114.14
"Smokers are more likely to be murdered than nonsmokers." This statement is an example of: Select one: a. the fallacy of unintended consequences:. b. a positive economic statement. c. a normative economic statement. d. a value judgment.
Answer:
positive economic statement
Explanation:
positive economic statement are statements based on facts. they are objective, descriptive and measurable.
The information that smokers are liable to die young is based on extensive research on the effects of smoking on smokers
The calculated cost of trade credit for a firm that buys on terms of 2/10, net 30, is lower (other things held constant) if the firm plans to pay in 40 days than in 30 days.
A. True
B. False
Answer:
A. True
Explanation:
The terms of 2/10, net 30 implies that the firm is entitled to receive a 2 percent discount if it makes payment within 10 days for the goods it bought on term but the seller expects to pay full amount of the amount due in 30 days if it fails to pay within 10 days.
However, since there will be no more discount after the discount period, the cost of trade credit will continue to fall longer the payment is extended. For this question this can be demonstrated using the formula for calculating the cost of trade discount as follows:
Cost of trade discount = {[1 + (discount rate / (1 - discount rate))]^(365/days after discount)} - 1 ................... (1)
We can now applying equation (1) as follows:
For payment in 40 days
Cost of trade credit (payment in 40 days)= {[1 + (0.02 / (1 - 0.02))]^(365/40)} - 1 = 0.202436246672765, or 20%
For payment in 30 days
Cost of trade credit (payment in 30 days) = {[1 + (0.02 / (1 - 0.02))]^(365/30)} - 1 = 0.278643315029666, or 28%
Conclusion
Since the 20% calculated cost of trade credit for payment in 40 days is lower than 28% calculated cost of trade credit for payment in 30 days, the correct option is A. True. That is, the calculated cost of trade credit for a firm that buys on terms of 2/10, net 30, is lower (other things held constant) if the firm plans to pay in 40 days than in 30 days.
As a Cost and Management Consultant in the banking industry in Ghana, one of your highly esteemed clients, a top tier banking institution in Ghana has required of you to advise them as to whether target costing can be applied to the banking industry in Ghana. They further require you to advise them on what products or services can target costing be applied
Answer with its Explanation:
The target costing is a costing technique that helps to reduce the cost of the company operations by setting cost targets for the operations. The first step under target costing is to set a selling price for the product and the second step is to set the target profit margin. Now at this position we are able to derive the target cost by taking the difference of profit margin and the selling price of the product. At this stage the actions and reforms required to achieve this target cost are determined and implemented in the current operating activities. The best part of the target costing is that it says that the pricing though matters but the main aspect of a product success is its cost controls. If the company is able to control the cost of the product then it can control the movement of prices in the market. So target costing specially focuses and stresses upon cost control procedures.
As Target costing is all about cost controlling and can be applied to any sector. In Ghana, target costing will help to control the cost of the services that the banking sector renders to its customers. This reduction in services cost can be achieved by automation, installation of new softwares, Investing in automated teller machines, etc. By gaining efficiencies, the banking sector will substantially reduce its cost thus achieving its target cost.
By achieving the target cost the bank will have to sell at the same rate as the bank had invested its time and money in efficiency gaining activities. There are a lot of activities and products that can be automated and that can help to achieve the target cost. For example, promoting internet banking will reduce the cost of ATM management, paper cost, management time, additional branch opening or extension of building, etc. We can see how easily internet banking will assist the banking sector to achieve its target costs.
the 360 degree feedback performance appraisal system tries to improve performance ratings by forcing managers to :
Answer:
Include information from a wide range of sources in their reviews.
Explanation:
Performance appraisal refers to the evaluation of employees' performance by the human resource managers in an organization. The 360-degree feedback performance appraisal system is a type of performance appraisal that sources information about an employee from various sources, which ranges from subordinates, lateral and supervisory sources. This implies that the manager seeks to gain insight about the employee from his fellow employees, from his supervisors, his subordinates, and sometimes from external sources such as the customers who interact with that employee on a daily basis.
Most managers use this system of appraisal for developmental purposes and evaluation of an employee's performance. Information sourced can then be used to help the employees improve on their skills or promote/demote them.
Government officials have hired your consulting firm to encourage more people to use the theater . In the initial meeting, you discussed several options for increasing demand. Three suggestions are listed below. Based on your knowledge of the law of demand, what is your recommendation for each suggestion?
Suggestion 1: Reduce the price of public transportation
Choose one:
a. Not recommend
b. Recommend
Suggestion 2: Increase the prices of private transportation by increasing the price of parking and gasoline
Choose one:
a. Not recommend
b. Recommend
Suggestion 3: Offer monthly and yearly passes that reduce the price per ride
Choose one:
a. Not recommend
b. Recommend
Answer:
Suggestion 1: Not Recommended
Suggestion 2: Recommended
Suggestion 3: Not Recommended
Explanation:
The law of demand says that the increase in the price of the commodity will result in decrease in the utility derived from that product and as a result the consumption of the product falls.
So by keeping the law of demand in view, we can say that the:
Reduction in price of public transportation is not recommended because every transporter will start investing in public transport and we will have higher number of buses per person.The increase in the price of parking and gasoline is recommended as the increase in parking fees and gasoline cost will discourage people to buy private transportation.Offer of monthly and yearly passes to reduce the price per ride is not recommended as it encourages the cyclists to travel via bus. Hence it is not recommended.Simkin Corporation purchased land for $420,000. Later in the year, the company sold a different piece of land with a book value of $155,000 for $110,000.How are the effects of these transactions reported on the statement of cash flows? Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank.
Answer:
Transaction Amount Statement of cash-flow
Purchase of land 420000 Investing activities
Sale of land 110000 Investing activities
Loss on sale of land 45000 Operating activities
The nominal interest rate in Fiji is 3%, while the nominal interest rate in the U.S. is 5%. Real interest rates in both countries are 2%. According to purchasing power parity (PPP), the Fijian dollar (F$) may be expected to ________ by ________%.
Answer:
1.98%
Explanation:
The computation is shown below:-
As we know that
PPP equation i.e
Nominal Interest rate = Real interest rate + Inflation rate
Now
The Inflation rate for Fiji is
= 5% - 2%
= 3%
And, the Inflation rate for US is
= 3% - 2%
= 1%
As we can see that the inflation rate for Fiji is more than the inflation rate for US so we should be depreciated the currency by considering the inflation differential which is shown below:
= (1 + 3%) ÷ (1 + 1%) -1
= 1.98%
Aspin Corporation’s charter authorizes issuance of
2,000,000 shares of common stock. Currently, 1,400,000 shares are outstand-
ing, and 100,000 shares are being held as treasury stock. The firm wishes to
raise $48,000,000 for a plant expansion. Discussions with its investment bankers
indicate that the sale of new common stock will net the firm $60 per share.
Answer and Explanation:
The calculation of the sale of new common stock is shown below:-
a. Not issued = Authorized shares - Outstanding shares - Treasury stock
= 2,000,000 - 1,400,000 + 100,000
= 500,000
Now
Maximum shares = Not issued + Treasury stock
= 500,000 + 100,000
= 600,000
b. Since if we find out the number of shares that should be issued is
= $48,000,000 ÷ $60 per share
= 800,000
But the maximum shares is 600,000 so this shares would only be issued upto this limit only
Therefore the funds should not be raised
c. Now The firm could also develop extra 200,000 shares together it get amortized also.
Hence, it can sell 800,000 shares and the amount could rise to $48,000,000
No Doubt Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, No Doubt Company purchased 8,800 premiums at 80 cents each and sold 110,000 boxes of soap powder at $3.30 per box; 44,000 coupons were presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be presented for redemption.
Instructions
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Answer:
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2014.
Explanation:
ere presented for redemption in 2014. It is estimated that 60% of the coupons will eventually be prese
Rodriguez Company pays $310,000 for real estate plus $16,430 in closing costs. The real estate consists of land appraised at $215,000; land improvements appraised at $86,000; and a building appraised at $129,000.Required:1. Allocate the total cost among the three purchased assets.2. Prepare the journal entry to record the purchase.
Answer:
Required 1.
Land = $163,215
Land improvements = $65,286
Buildings = $97,929
Required 2.
Land $163,215 (debit)
Land improvements $65,286 (credit)
Buildings $97,929 (credit)
Cash $310,000 (credit)
Explanation:
Allocation of the purchase cost must be made on the bases appraisal value.
Total Appraisal Value = $215,000 + $86,000 + $129,000
= $430,000
Land = $215,000 / $430,000 × $326,430
= $163,215
Land improvements = $86,000 / $430,000 × $326,430
= $65,286
Buildings = $129,000 / $430,000 × $326,430
= $97,929
Chamberlain Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 6 percent coupon bonds on the market that sell for $1,083, make semiannual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?
Answer:
5.36%
Explanation:
We would need to calculate the yield to maturity of the current bonds:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
coupon = $1,000 x 6% x 1/2 = $30face value = $1,000market value = $1,083n = 20 x 2 = 40YTM = {$30 + [($1,000 - $1,083)/40]} / [($1,000 + $1,083)/2] = $27.925 / $1,041.50 = 0.026812 x 2 = 0.05362 = 5.36%
Since the bond's coupon rate is higher than the market rate, the bonds are sold at a premium. In order to sell bonds at the par value, you must lower the coupon rate.
Targaryen Corporation has a target capital structure of 70 percent common stock, 5 percent preferred stock, and 25 percent debt. Its cost of equity is 10 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 6 percent. The relevant tax rate is 23 percent.1. What is the company's WACC?2. What is the aftertax cost of debt?
Answer:
1. 8.41 %
2.4.62 %
Explanation:
Weighted Average Cost of Capital (WACC) is the cost of capital for all company projects.It shows the risk of the company.
WACC = Ke×(E/V) + Kp×(P/V) + Kd×(D/V)
= 0.10 × 70% + 0.05 × 5% + 0.06 × 77%× 25%
= 8.405 or 8.41 %
After tax cost of debt = Market Interest × ( 1 - tax rate)
= 0.06 × (1 - 0.23)
= 4.62 %
Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2020. During 2020, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of fair value allocations totaled $60,000 in 2020. Not including its investment in Harbor, Femur Co. had its own revenues of $4,500,000 and expenses of $3,000,000 for the year 2020. The noncontrolling interest's share of the earnings of Harbor Corp. for 2020 is calculated to be
Answer:
The answer is $132,000
Explanation:
Solution
Given that:
Harbor revenues = $2,500,000
Expenses = $2,000,000
The amortization of fair value allocations = $60,000
Femur corporation revenues =$4,500,000
expenses = $3,000,000
Now,w e have to compute for the non controlling interest's share of the earnings of Harbor Corp which is given below:
=[revenue of harbor - expenses of harbor - amortization of fair value allocations] 30%
= [$2,500,000 - $2,000,000- $60,000] * 30%
=[$500000 - $60000]* 30%
=$132,000
Therefore the non controlling interest's share of the earnings of Harbor Corp is $132,000
An analysis in which all the components of an income statement are expressed as a percentage of net sales is called blank___________ .
Answer:
Common Size Income Statement
Explanation:
In a common size income statement, each line item of the Income statement is expressed as a percentage of the sales amount for that period.
This helps in comparing performance of companies in different sectors or industries.