Answer:
usually complements to the gas sales
Explanation:
Complementary products are those that their demand increases with the increased demand of other products.
Complementary products are usually used together. For example tea and sugar are consumed together, so an increase in tea consumption should result in an increase in sugar consumption.
In this scenario when the price of the convenience store products falls, their demand will increase. If there is an increase in gas sales too it is logical to conclude that the convenience store goods are complements of gas sales.
The following is information for Palmer Co.:
2017 2016 2015
Cost of goods sold $643,825 $426,650 $391,300
Ending inventory 97,400 87,750 92,500
Required:
(a) Use the above information to compute inventory turnover for 2016, and its days' sales in inventory at December 31, 2016.
Numerator / Denominator = Ratio
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory ?
(b) Use the above information to compute inventory turnover for 2017, and its days' sales in inventory at December 31, 2017.
Numerator / Denominator = Ratio
Inventory turnover $643,825 / $92,575 = 7.0times
Days' sales in inventory ?
Answer:
a.
i. 4.7 times
ii. 77.1 days
b
i. 7 times
ii. 52.1 days
Explanation:
Inventory turnover = cost of goods sold / average inventory
average inventory for 2016 = ( 87,750 + 92,500 ) / 2 = $90,125
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory = 365 / inventory turnover = 77.1 days
for 2017
inventory turnover = cost of goods sold / average inventory
average inventory for 2017 = ( 97,400 + 87,750 ) / 2 = $92,575
Inventory turnover $643,825 / $92,575 = 7.0 times
Days' sales in inventory = 365 / inventory turnover = 52.1 days
When a country produces on its production possibilities curve, then this country's unemployment is expected to be at one of its lowest rates, however, prices in this country are not expected to be relatively low.
a. True
b. False
Answer:
TRUE
Explanation:
the production possibility curve shoes the number of goods that can be produced in an economy when its resources are fully employed.
if a country produces on its production possibilities curve, it means that its resources are fully employed and so unemployment would be at its lowest.
4. Sales tax is taken on
O A. selling price minus trade discount.
B. shipping charges.
O c. trade discounts.
0 D. cash discounts.
Answer:
A. selling price minus trade discount.
Explanation:
The following selected transactions relate to cash collections for a firm that maintains a $100 change fund at all times. Present entries to record the transactions for each of the two days of cash receipts from sales.
(a) Actual cash in cash register, $5,412.36; cash receipts per cash register tally, $5,413.07.
(b) Actual cash in cash register, $3,712.95; cash receipts per cash register tally, $3,712.16.
What will be an ideal response?
Answer:
a, Journal Entries to record transactions
Account Titles Debit Credit
Cash $5,412.36
Cash Short and Over $0.71
($5,413.07 - $5,412.36)
Sales $5,413.07
The actual cash in cash register is debited to cash account and cash receipts per cash register tally is credited to sales account and the balancing figure is debited or credited to Cash short and over account.
b. Journal Entries to record transactions
Account Titles Debit Credit
Cash $3,712.95
Cash Short and Over $0.79
(3,712.95 - 3,712.16)
Sales $3,712.16
Kant Corporation retires its $100,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $96,250. The entry to record the redemption will include a
Answer:
Refer to the explanation below
Explanation:
Please see the journal entry below;
Dr Bonds payable $100,000
Dr Loss on retirement of bonds
$5,750
( $102,000 + $3,750 - $100,000)
To Cash $102,00( $100,000 × 1.02)
To Discount on bonds payable
$3,750( $100,000 - $96,250)
(Being redemption that is recorded)
Because bonds payable and loss on retirement of bonds decreases the liability and increased the loss, hence were debited. Cash and discount on bonds payable were credited because it decreases the assets and increased liabilities respectively.
Use the following information for Jett Co. to answer the following question: 2015 2014 Sales 1,200 1,000 COGS 850 700 Operating Expenses 200 200 Income Taxes 30 35 Jett Co.'s average tax rates for 2015 and 2014 are: A. 15.5% and 10.0% B. 20.0% and 35.0% C. 25.8% and 35.4%. D. 31.4% and 36.8%.
Answer:
B. 20.0% and 35.0%
Explanation:
Jett Co.'s Average tax rates for 2015 = Income taxes paid / Taxable income
When, Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,200 - $850 - $200
= $150
Hence, Jett Co.'s Average tax rates for 2015 = $30 / $150
= 20%
Jett Co.'s Average tax rates for 2014 = Income taxes paid / Taxable income
When Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,000 - $700 - $200
= $100
Hence, Jett Co.'s Average tax rates for 2014 = $35 / $100
= 35%
On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date. Sales Company's stockholders' equity consisted of common stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value.
During 2014 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company.
Required:
1. Prepare the investment-related entries on Pert Company's books for 2014.
2. Prepare the working paper eliminating entries for a working paper on December 31, 2014.
Answer and Explanation:
The journal entries are shown below:
a. For investment related entries
Investment in sales Dr $350,000
To cash $350,000
(being the investment is recorded)
Investment in sales Dr ($148,000 × 85%) $125,800
To Subsidiary income $125,800
(Being the investment in sales is recorded)
Cash Dr $42,500
To Dividend income $42,500
(Being the dividend income is recorded)
b. For work paper eliminating entries
Equity income ($148,000 × 85%) $125,800
To Dividend $42,500
To investment in sales $83,300
(Being the equity income is recorded)
Common stock Dr $100,000
Other contributed capital Dr $40,000
Retained earnings Dr $140,000
Difference between implied and book value Dr $131,765 (Bal figure)
To Investment in S Company $350,000
To Non controlling interest $61,765 ($350,000 ÷ 0.85 × 0.15)
(Being the consolidated items are recorded)
Land Dr $131,765
To Difference between implied and book value Dr $131,765
(Being the land is recorded)
Working note:
Particulars Parent share Non-conrolling interest Total value
Purchase price
& implied value $350,000 $61,765 $411,765
Less:
Book value -$238,000 -$42,000 -$280,000
Difference
amount $112,000 $19,765 $131,765
Less:
Land value -$112,000 -$19,765 -$131,765
Balance $0 $0 $0
The balanced scorecard approach relies not only on financial performance measures, but includes customers, internal business processes, and organizational learning and growth.
a. True
b. False
Suppose the economy is in a recession. The economy needs to expand by at least $300 billion, and the marginal propensity to consume is 0.6. What is the least amount the government can spend to overcome the $300 billion gap
Answer: $120 billion
Explanation:
Fron the question, we are told that an economy is in a recession and needs to expand by at least $300 billion, and the marginal propensity to consume is 0.6.
The least amount the government can spend to overcome the $300 billion gap goes thus:
Since MPC = 0.6, then the multiplier will be:
= 1/(1-MPC)
= 1/(1-0.6)
= 1/0.4
=2.5
We are also informed that the required change in the money supply is $300 billion. Then, the investment needed will be:
= Expansion/Multiplier
= $300 billion/2.5
= $120 billion
What would you pay for a bond that pays an annual coupon of $70, paid semiannually, par value, matures in 6 years, and has a yield to maturity of 8%
Answer:
Price per bond is $953.77
Explanation:
The price to be paid for the bond can be computed using pv excel function as below:
=-pv(rate,nper,pmt,fv)
rate is the yield to maturity of 8%
nper is number of coupons that the bond would pay i.e 6 annual coupons in 6 years
pmt is the annual coupon of $70
fv is the face value of $1000 by default
=-pv(8%,6,70,1000)=$953.77
Given the following cash flows for a capital project, calculate its payback period and discounted payback period. The required rate of return is 8 percent.
Year
0 1 2 3 4 5
Glass Flows $51100 $13150 $16050 $23900 $12400 $3050
The discounted payback period is:________.
a. 0.39 year longer than the payback period.
b. 0.64 year longer than the payback period.
c. 0.76 years longer than the payback period.
d. 0.25 years longer than the payback period.
Answer:
c. 0.76 years longer than the payback period.
Explanation:
Payback period calculates how long it takes to recover the amount invested in a project from its cumulative cash flows.
the amounted invested in the project = $-51100
In year 1, the amount recovered = $-51,100 + $13150 = $-37,950
In year 2, the amount recovered = $-37,950 + $16050 = $-21,900
In year 3, the amount recovered = $-21,900 + $23900 = $2000
the amount invested is recovered in 2 + 21,900 / 23900 = 2.92 years
Discounted payback period calculates how long it takes to recover the amount invested in a project from its cumulative cash flows.
discounted cash flows
$13150 / 1.08 = $12,175.93
$16050 / 1.08^2 = $13,760.29
$23900 / 1.08^3 = $18972.59
$12400 / 1.08^4 = $9114.37
the amount is recovered in 3 + 6191.19 / 9114.37 = 3.68 years
the discounted payback is longer than the payback period by 3.68 years - 2.92 years = 0.76 years
A break-even analysis includes operating expenses and total monthly debt payments,
plus
school costs
gross profit margin.
Onet profit margin
zero term margin.
Answer: Gross profit margin.
Explanation:
Break-Even Analysis enables a business to know how much cash it has under given situations by helping it know how much sales it needs in order to have a certain amount of cash.
It is calculated by the formula;
(Operating Expenses + Annual Debt Service)/Gross Profit Margin = Break-Even Sales
Operating Expenses in this equation is net of Depreciation as depreciation is a non-cash expense.
At July 31, Farmer Company has this bank information: cash balance per bank $8,344; outstanding checks $804; deposits in transit $1,383; and a bank service charge $58.
Determine the adjusted cash balance per bank at July 31.
The adjusted cash balance per bank at July 31:___________.
Answer:
The adjusted balance per bank is $8923
Explanation:
Adjusted cash balance per bank
Cash balance per bank (unadjusted) 8344
(+) Deposits in transit 1383
(-) Outstanding checks (804)
Cash balance per bank (adjusted) 8923
The adjusted cash balance per bank is calculated by adjusting the transactions that do not appear on the current bank statement.
The deposits in transit is the amount of cash deposited in the bank, that will increase the bank balance, which is still in process and has not been added to the bank account as of now. Thus, we will add this amount to calculate the adjusted bank balance.
The outstanding checks amount is the amount of checks that have been issued by the business but which are yet to be presented by the recipients of checks and will result in a reduction in the bank balance. Thus, we deduct them to calculate the adjusted balance.
The bank charge is deducted by the bank itself thus we assume that it has already been deducted. So, no adjustment is made for this.
Galvatron Metals has a bond outstanding with a coupon rate of 6.1 percent and semiannual payments. The bond currently sells for $947 and matures in 23 years. The par value is $1,000 and the company's tax rate is 40 percent. What is the company's aftertax cost of debt
Logan and Johnathan exchange land, and the exchange qualifies as like kind under § 1031. Because Logan's land (adjusted basis of $193,000) is worth $231,600 and Johnathan's land has a fair market value of $183,350, Johnathan also gives Logan cash of $48,250. a. Logan's recognized gain is $ . b. Assume that Johnathan's land is worth $208,440 and he gives Logan $23,160 cash. Logan's recognized gain is $ .
Answer:
a. Logan's recognized gain is $38,600
b. Logan's recognized gain is $23,160
Explanation:
a. If the worth of the land for Jonathan is $183,350, then the gain recognized by Logan would be;
the lower of the realized gain between the amount realized of $231,600 - adjusted basis of $193,000 = $38,600
or the fair market worth of the received boot i.e $48,250.
Therefore, Logan's recognized gain is $38,600
b. Suppose Jonathan's land is worth, $208,440, then we can calculate Logan's recognized gain to be ;
the lower of the realized gain I.e amount realized of $231,600 - adjusted basis $193,00 = $38,600
or the fair market value of the received boot I.e $23,160 .
Therefore, Logan's recognized gain is $23,160
Q 11.26: The board of directors of Testa Incorporated has decided that they would like to declare a $400,000 cash dividend at some point in the near future. The company currently has Retained Earnings of $2,419,000 and a Cash balance of $827,000. They also have current liabilities totaling $436,000. What is missing in order for Testa to be able to pay a cash dividend
Answer: B. : a healthy cash reserve
Explanation:
For the company to be able to declare a Dividend, it's cash reserve needs to be healthy. For this to happen use the following formula;
Free cash balance = Available cash balance - Current Liabilities payable
= 827,000 - 436,000
= $391,000
After taking out the money that will be needed to pay the Current Liabilities, there would be an insufficient balance to pay off the Dividends of $400,000.
Their cash reserve is not healthy enough for the dividends to be declared.
The thing that is missing in order for Testa to be able to pay a cash dividend is a healthy cash reserve.
It should be noted that for the company to be able to declare a dividend, it's important that the cash reserve is healthy.
The free cash balance can be calculated as:
= Available cash balance - Current Liabilities payable
= $827,000 - $436,000
= $391,000
When the current liabilities are paid, there would be an insufficient balance to pay off the dividends of $400,000. Therefore, a healthy cash reserve is required.
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Bryant Co. has $2.7 million of debt, $1 million of preferred stock, and $2.1 million of common equity. What would be its weight on preferred stock
Answer:
0.172
Explanation:
The computation of the weight on the preferred stock is shown below:
Weight on preferred stock is
= Preferred stock ÷(Debt + preferred stock + common equity)
= $1 million ÷ ($2.7 million + $1 million + $2.1 million)
= $1 million ÷ $5.8 million
= 0.172
By applying the above formula we can easily determine the weight on preferred stock
Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:________.
Pendleton Company
Income Statement
For Year Ending December 31, 2014
Gross sales $2,000,000
Less: Estimated uncollectible accounts (40,000)
Net sales 1,960,000
Cost of goods sold (1,100,000)
Gross profit 860,000
Operating expenses (including $25,000
depreciation) (500,000)
Net income $360,000
The following are management's goals and forecasts for 2015:________.
1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent.
2. The cost of merchandise will increase by 3 percent.
3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation.
4. The estimated uncollectibles are 2 percent of budgeted sales.
Answer and Explanation:
The Preparation of budgeted functional income statement for 2015 is shown below:-
Pendleton Company
Budgeted functional income statement
For the year ended 2015
Particulars Amount
Sales revenue $2,204,800
($2,000,000 × 106% × 104%)
Less:
Estimated uncollectible accounts at 2% $44,096
Net sales revenue $2,160,704
Less: Cost of goods sold $1,178,320
($1,100,000 × 103% × 104%)
Gross Profit $982,384
Less: Operating expense $575,000
($500,000 + 10%) + $25,000
Net income $407,384
We simply deduct all expenses from the sales revenue so that the net income could come
Suppose that borrowing is restricted so that the zero-beta version of the CAPM holds. The expected return on the market portfolio is 17%, and on the zero-beta portfolio it is 8%. What is the expected return on a portfolio with a beta of .6?
Answer:
10.4%
Explanation:
The computation of expected return on a portfolio is shown below:-
Expected return = Risk Free return + 5%Beta ( Market Return - Risk Free return)
= 5% + 0.60 × (17% - 8%)
= 5% + 5.4%
= 10.4%
Therefore for computing the expected return on a portfolio with a beta of .6 we simply applied the above formula.
The market return less risk free return is known as market risk premium
Jamesway Corporation has two separate divisions that operate as profit centers. The following information is available for the most recent year: White divisionGrey division Sales (net)$270,000 $540,000 Salary expense37,800 64,800 Cost of goods sold135,000 202,500 The White Division occupies 25,000 square feet in the plant. The Grey Division occupies 25,000 square feet. Rent is an indirect expense and is allocated based on square footage. Rent expense for the year was $50,000. Gross profit for the White and Grey Divisions is: WhiteGrey A.$97,200 $272,700 B.$232,200 $475,200 C.$135,000 $337,500 D.$72,200 $247,700 E.$97,200 $247,700
Answer:
White Division Gross Profit = $72,200
Grey Division Gross Profit = $247,700
Explanation:
White Division Grey division
Sales (net) $270,000 $540,000
Less: Cost of goods sold $135,000 $202,500
Gross Margin $135,000 $337,500
Less: Salary Expenses $37,800 $64,800
Rent $25,000 $25,000
Gross Profit $72,200 $247,700
The White Division occupies 25,000 square feet in the plant. The Grey Division occupies 25,000 square feet. Hence, the rent expenses will be shared equally. Rent = $50,000 hence, both division will pay $25,000 each for rent
Joe wants to start an SEP-IRA that will have $460,000 in it when he retires in 15 years. How much should he invest semiannually in his IRA to do this if the interest is 15% compounded semiannually?
Answer:
$4,448.77
Explanation:
time until retirement = 15 years x 2 semiannual contributions = 30 payments
interest rate =15% / 2 = 7.5%
future value = $460,000
we can use the future value of an annuity formula:
future value = payment x annuity factor
FV annuity factor 7.5%, 30 periods = 103.3994
payment = future value / annuity factor
payment = $460,000 / 103.3994 = $4,448.77
The amount that should be invested is $4,448.77.
Calculation of the amount:Since
time until retirement = 15 years x 2
= 30 payments
And,
interest rate =15% / 2 = 7.5%
Also,
future value = $460,000
Now we can use the future value of an annuity formula:
Here,
future value = payment x annuity factor
where,
FV annuity factor 7.5%, 30 periods = 103.3994
So,
payment = future value / annuity factor
= $460,000 / 103.3994
= $4,448.77
hence, The amount that should be invested is $4,448.77.
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Lincoln Park Co. has a bond outstanding with a coupon rate of 5.66 percent and semiannual payments. The yield to maturity is 6.3 percent and the bond matures in 16 years. What is the market price if the bond has a par value of $2,000?
Answer:
Market price of Bond = $1872.135629 rounded off to $1872.14
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 2000 * 0.0566 * 1/2 = $56.6
Total periods (n)= 16 * 2 = 32
r = 6.3% * 1/2 = 3.15% or 0.0315
The formula to calculate the price of the bonds today is attached.
Bond Price = 56.6 * [( 1 - (1+0.0315)^-32) / 0.0315] + 2000 / (1+0.0315)^32
Bond Price = $1872.135629 rounded off to $1872.14
You experiment by offering free warranties for your product in market A but not in market B. Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430. The Difference-in-difference estimate of the effect of the free warranty is:
Answer:
Difference in difference estimate = 50 - 5% = 45 %
Explanation:
a) Data and Calculations:
Market A Market B
Sales 240 410
Sales rise 360 430
Rise difference 120 20
Percentage of rise 50% 5%
120/240 x 100 = 50%
20/41 x 100 = 4.878% or 5%
Therefore, the Difference in difference estimate = 50 - 5% = 45 %
One can then say that the free warranties in market A brought about a difference in difference of 45% in Market A when compared to the no warranties in Market B. This can be seen from the presented data. Sales in A rose from 240 units to 360 units, an increase of 120 units or 50%. Sales in market B only rose from 410 to 430, an increase of 20 units or 5%. This difference in difference estimator shows the effect of the free warranty on market A and market B. This means that the firm could do better by introducing the free warranties for its product in market B, all things being equal.
Constanza, who is single, sells her current personal residence (adjusted basis of $262,500) for $735,000. She has owned and lived in the house for 30 years. Her selling expenses are $36,750. What is Constanza’s realized and recognized gain? Constanza’s realized gain is $ and her recognized gain would be $ .
Answer:
Realized gain $435,750
Recognized gain$ 185,750
Explanation:
Calculation for Constanza’s realized and recognized gain
The realized gain will be calculated as :
Amount realized $698,250
($735,000 − $36,750)
Less the Adjusted basis ($262,500)
Realized gain $435,750
Constanza’s Recognised gain
Realized gain $435,750
Less Section 121 exclusion ($250,000)
Recognized gain$ 185,750
Therefore Constanza’s realized gain is $435,750 and her recognized gain would be $186,750 .
Suppose the price level and value of the U.S. Dollar in year 1 are 1 and $1, respectively. Instructions: Round your answers to 2 decimal places. a. If the price level rises to 1.55 in year 2, what is the new value of the dollar
Answer: $0.65
Explanation:
The Price Level and the value of a currency are inversely related because inflation erodes the value of the currency. Therefore if the price level increases, the value of the currency drops. The reverse is true.
The formula therefore is is;
New Value = [tex]\frac{1}{Price Level}[/tex]
New Value = [tex]\frac{1}{1.55}[/tex]
New Value = 0.6452
New Value = $0.65
"Alou Company has 20,000 beginning finished goods units. Budgeted sales units are 160,000. If management desires 15,000 ending finished goods units, what are the required units of production
Answer:
155,000
Explanation:
The computation of the required units of production is shown below:-
Required units of production = Sales units + Ending finished goods - Beginning finished goods
= 160,000 units + 15,000 units - 20,000 units
= 155,000
Therefore for computing the required units of production we simply applied the above formula.
True or False: Firms operating in more price-competitive industries, or exhibiting lower levels of market power, generally exhibit lower levels of business risk, all other things being equal. This statement is: True False
Answer:
The statement is false
Explanation:
Determining the profitability depends on market power. At a higher market power, the level of profitability will be high.
Conversely, a company operating in a system where its market power is low which results into inability to compete with other companies will cause a low probability.
The American car battery industry boasts that its recycling rate now exceeds 95%, the highest rate for any commodity. However, with changes brought about by specialization and globalization, parts of the recycling system are moving offshore. This is particularly true of automobile batteries, which contain lead. The Environmental Protection Agency (EPA) is contributing to the offshore flow with newly implemented standards that make domestic battery recycling increasingly difficult and expensive. The result is a major increase in used batteries going to Mexico, where environmental standards and control are less demanding than they are in the U.S. One in five batteries is now exported to Mexico. There is seldom difficulty finding buyers because lead is expensive and in worldwide demand. While U.S. recyclers operate in sealed, mechanized plants, with smokestacks equipped with scrubbers and plant surroundings monitored for traces of lead, this is not the case in most Mexican plants. The harm from lead is legendary
The correct answer to this open question is the following.
The question is incomplete. There are parts of the question missing. Indeed, there is no question posted, it is just a statement.
However, we can do research and comment on the following.
We are facing two scenarios here. Both, ethical dilemmas that need to be solved.
1) as an independent auto repair shop owner that tries to safely dispose of a few old batteries each week. (Your battery supplier is an auto parts supplier who refuses to take your old batteries.)
In this case, I would check the original agreement with the supplier to see if there is a clause on old batteries management. If not, I would ask it to help me solve this issue because I am his client and has to take care of me and the environment. Otherwise, I would have to contemplate the option of changing supplier.
2) I am the manager of a large retailer responsible for the disposal of thousands of used batteries each day.
In this other case, I would follow the Environmental Department rules and regulations to comply with the correct procedures. This means to ask for support and orientation to get all the revisions to work properly. Because I know all the consequences of not recycling correctly or the damage done to humans and the environment. So although it could be more money, and would modernize my equipment to better manage the disposal of batteries. It would be an investment, not an expense.
Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Answer:
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Explanation:
The price of Common Stock is equivalent to the price required to settle the Market Cost of Land and Buildings.
Also note that the Common Stocks have a par vale of $7, this means that any amount paid in excess of the par value is accounted in the Share Premium Reserve.
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Land $45,000
Building $85,000
To Common stock $49,000 (7,000 shares × $7)
To Premium on issue of common stock 81,000
(Being recording of the issuance of the stock in exchange for the land and building)
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Justin hires Miguel to sell his baseball glove for $560. As part of their contract, Justin will pay him $100 to conduct the sale. Justin is a _______________________. Group of answer choices
Answer: Factee
Explanation:
This is a factorage transaction in which Justin will pay Miguel to act as an intermediary who will sell the baseball glove and receive a commission. That commission is known as a Factorage.
In a Factorage transaction, the intermediary being paid to sell the product is considered to be the Factor and the person who will pay for the product to be sold is the Factee. Justin in this scenario is paying for the baseball glove to be sold and so is the Factee.