Answer:
Thomson Co.
Journal entries:
May 1:
Debit Cash Account $240,000
Credit Bonds Payable $240,000
To record the issue of 10-year, 9% bonds at face value.
Nov. 9:
Debit Interest on Bonds $10,800
Credit Cash Account $10800
To record the payment of 6-months interest.
Dec. 31:
Debit Interest on Bonds $3,600
Credit Interest on Bonds Payable $3,600
To record two-months interest accrued.
Explanation:
The journal entries made by Thomson Co. are to record the bond transactions. For example, when the bonds were issued, cash was received. This transaction gives rise to a debit to the Cash Account that received the value and a credit to the Bonds Payable Account that gave the value. The bonds payable account represents the liability that is contracted by the bonds issue. Recording these transactions in the journal show their effects on the accounting equation that requires assets to be equal to liabilities and owner's' equity following each transaction.
You are given the following information for Bowie Pizza Co.: Sales = $64,000; Costs = $30,700; Addition to retained earnings = $5,700; Dividends paid = $1,980; Interest expense = $4,400; Tax rate = 22 percent. Calculate the depreciation expense. (Do not round intermediate calculations and round your answer to the nearest dollar.)
Answer:
$18554
Explanation:
The formula for addition to retained earnings can be used to determine the amount of depreciation expense as shown below:
addition to retained earnings=sales-costs-depreciation expense-interest expense-tax paid-dividends
addition to retained earnings=net income-dividends
5700=net income-1980
net income=5700+1980=7680
if tax 22%,net income is 1-22%=0.78
profit before tax=7680 /0.78= 9,846.15
tax = 9,846.15*22%= 2,166.15
using the long formula,we have depreciation expense
5700=64000-30700-depreciation expense-4400-2666.15-1980
depreciation expense=64000-30700-4400-2666.15-1980-5700
depreciatio expense=$18553.85
Acme Inc. has the following information available:
Actual price paid for material $1.00
Standard price for material $0.90
Actual quantity purchased and used in production 100
Standard quantity for units produced 110
Actual labor rate per hour $ 15
Standard labor rate per hour $ 16
Actual hours 200
Standard hours for units produced 220
1. Compute the material price and quantity, and the labor rate and efficiency variances.
2. Describe the possible causes for this combination of favorable and unfavorable variances.
Answer:
1. Computation of variances
a. Material Price Variance = (Actual Price - Standard Price) x Actual Quantity
= ($1 - $0.9) x 100
= $10 U
b. Material Quantity Variance = (Actual Quantity - Standard Quantity) x Standard Price
= (100 - 110) x $0.9
= $9 F
c. Labor Rate Variance = (Actual Rate - Standard Rate) x Actual hours
= ($15 - $16) x 200
= $200 F
d. Labor Efficiency Variance = (Actual hours - Standard hours) x Standard Rate
= (200 - 220) x $16
= $320 F
2. Description of the possible causes for this combination of these variances
a. This could be due to scarcity of resources or major demand for this material, thus prices increasing in the market. Or could be purchase of high quality material than budgeted.
b. This could be because of purchase of higher quality material thus lower damages and could also be due to the efficiency of manufacturing plants.
c.This could be because of the use of less qualified cheap labor.
d.This could be due to good management of labors and strict overseeing, co-ordination of their work activities.
Determine the number of widgets that you should try to sell in order to maximize revenue. What is the maximum revenue. Be sure to answer in complete sentences and to include units. Explain how you found the results.
Answer:
Hello some important parts of your question is missing ( Table ) attached below is the table
Answer : Number of widgets = 50
Explanation:
The number of widgets that you should sell to maximize revenue can be calculated as
= ( demand for widgets * price per widget ) - Total cost
from the table:
i) ( 10 * 141 ) - 609 = 1410 - 609 = $801
ii) ( 20 *133 ) - 1103 = 2660 - 1103 =$1557
iii) (30 *126) - 1618 = 3780 - 1618 = $2162
iv) (40*128) - 2109 = 5120 - 2109 =$3011
v) (50*113) - 2603 = 5650 -2603 = $3047
vi) (60*97) - 3111 = 5820 - 3111 = $2709
vii) (70*90) - 3619 = 6300 - 3619 =$2681
viii) ( 80*82) - 4103 = 6560 - 4103 = $2457
ix) (90*79) - 4601 = 7110 - 4601 = $2509
From the calculation above the number of widgets that should be sold in other to maximize revenue is : 50. this is because the revenue made is $3047 which is the highest when compared to other revenues generated
Judd Corporation has a weighted average cost of capital of 10.25%, and its value of operations is $57.50 million. Free cash flow is expected to grow at a constant rate of 6.00% per year. What is the expected year-end free cash flow, FCF1 in millions? a. $2.44 b. $2.96 c. $3.25 d. $2.20 e. $2.69
Answer:
The answer is $2.44 millions option (a) is correct
Explanation:
Solution
Recall that:
Weighted average cost of capital =10.25%
The value of operations = $57.50 million
Constant rate = 6.00%
Now we have to find the expected year-end free cash flow.
Thus
The value of operations = $57.50 million
WACC =10.25%
Growth rate = 6.00%
So
The value of operation = free cash flow/( WACC-growth rate )
$57.50 = free cash flow / 0.1025-0.06
$ 57.50 = free cash flow/0.425
Free cash flow = $ 57.50*0.0425
= $2.44 millions
Hence the expected ear-end free cash flow is $2.44 millions
Answer:
A. $2.44
Explanation:
Hope this helps
As of December 31, Bayer, Inc., agrees to provide a bonus of $50,000 to its employees (to be equally shared by all). The bonus will be paid in January.
Requried:
Prepare the December 31 adjusting entry for Bayer by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
Dr Bonus expense $50,000
Cr Bonus payable $50,000
Explanation:
Preparation of Bayer, Inc., Journal entry
Since we were told that on December 31, Bayer, Inc agrees to provide a bonus of $50,000 to its employees this means we have to Debit bonus expenses with the amount of $50,000 and Credit Bonus payable with the same amount.
Dec. 31
Dr Bonus expense $50,000
Cr Bonus payable $50,000
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 4.4%. The probability distribution of the risky funds is as follows:
Expected Return Standard Deviation
Stock fund (S) 14% 34%
Bond fund (B) 5 28
The correlation between the fund returns is 0.14.
Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the "%" sign in your response.)
Portfolio invested in the stock %
Portfolio invested in the bond %
Expected return %
Standard deviation %
Answer:
The answer to this question can be defined as follows:
Explanation:
The risk-free rate of T-bill is (r f), which is 4.4% = 0.044. The fund for stocks (S) An expected 14% = 0.14 return and the value of the standard deviation is 34% = 0.34. The Announcement fund of (B) and the estimated 5% = 0.05 return, with a standard deviation 28% = 0.28 .
following are the formula for the equation is:
[tex]E(R)=E(r)-r_f \ \ \ \ \ \ \ \ \ \ \ \ where, \\\\E(R)= \ Expected \ return\\E (r) = \ Expected \ return \ on \ stock \\(r_f)= \ Risk-free \ rate[/tex]
Using the formula to measure the projected return for bond and stock fund:
[tex]E(R_s)=E(r_s)-r_f\\[/tex]
[tex]=0.14-0.044\\ =0.096\\[/tex]
[tex]E(R_B)=E(r_B)-r_f[/tex]
[tex]= 0.05-0.044\\= 0.006[/tex]
Measure mass with optimized risk for stock index fund (S) and Bond Fund (B), Introduce to investment as follows:
[tex]W_s=\frac{E(R_s)\sigma_{B}^2-E(R_B) Cov(r_s,r_s)}{E(R_s)\sigma_B^2+E(R_B)\sigma_s^2-[E(R_s)+E(R_s)]Cov(r_s,r_s)}[/tex]
[tex]W_s = \ Stock \ Fund \ weight \\ W_B = \ Bond \ Fund \ weight \\[/tex]
[tex]\sigma_s[/tex][tex]= \ de fault \ stock \ found \ variance\\[/tex]
[tex]\sigma_{B}= \ Bond \ Fund \ standard \ deviation \\r_s = \ Stock \ fund \ planned \ return \\r_B = \ Bond \ fund's \ projected \ return\\ Cov(r_s, r_B)= \ Pension \ and \ bond \ fund \ covariance\\[/tex]
Measure the portfolio and bond fund covariance according to:
Bond and equity fund covariance [tex]= \ Bond \ and \ stocks \ fund \ correlation \times \sigma_s \times \sigma_B[/tex]
[tex]= 0.14 \times 0.34 \times 0.28\\= 0.013328\\[/tex]
Measure the mass of the stock and bond fund as follows:
[tex]W_s=\frac{E(R_s)\sigma_{B}^2-E(R_B) Cov(r_s,r_s)}{E(R_s)\sigma_B^2+E(R_B)\sigma_s^2-[E(R_s)+E(R_s)]Cov(r_s,r_s)}[/tex]
[tex]=\frac{0.096 \times 0.28^2-0.006\times 0.013328}{0.096 \times 0.28^2+0.006\times 0.34^2-[0.096+0.006]\times 0.013328}[/tex]
[tex]=\frac{0.0075264-0.000079968}{0.0075264+0.0006936-0.001359456}\\\\=\frac{0.007446432}{0.006860544}\\\\=1.085\\[/tex]
[tex]W_B=1-W_s\\\\[/tex]
[tex]=1-1.085\\\\=-0.85[/tex]
The correspondence(p) here is 0.14. Calculate the norm for the maximum risky as follows:
[tex]\ deviation \ of \ portfolio \ =\sqrt{(W_s)^2 (\sigma_s)^2+(W_B)^2 (\sigma_B)^2+ 2(W_s)(W_B)(\sigma_s) (\sigma_B) (P)}[/tex]
[tex]=\sqrt{(1.05)^2 (0.34)^2+(-0.0854)^2 (0.28)^2+ 2(1.0854)(-0.0854)(0.34) (0.28) (0.14)}\\=\sqrt{0.13428852416704}\\=0.366453986\\=36.65%[/tex]
The standard deviation for the optimal risky portfolio is 36.65%
[tex]\ Expected \ return \ portfolio = (\ mass \ of \ stock \ found \times \ expected \ return \ on\ stock)+ ( mass \ of \ bond\ found \times \ expected \ return \ on\ bond)[/tex][tex]=(1.085\times 0.14)+(-0.0854 \times 0.05)\\= 0.151956-0.00427\\=0.1477\\=14.77%\\[/tex]
The optimal risk portfolio is 14.77%
three examples of foreign companies operating in Fiji and a type of service they provide
Answer:
Three foreign companies operating in Fiji:
Bank of Baroda: a multinational, financial services companies from India. It offers banking services in Fiji, and is one of the five international banks that operate in that country.Coca Cola: this American multinational beverages corporation from Atlanta, Georgia, also operates in Fiji. It sells consumer goods, specially beverages.Marriott: the American multinational hotel corporation has one hotel in Fiji: the Fiji Marriott Resort Momi Bay.
The merger of two firms producing personal computers is an example of a __________ merger. Group of answer choices
Answer:
Horizontal merger
Explanation:
The merger of two firms producing personal computers is an example of a horizontal merger
A horizontal merger is a merger or business collaboration that happens between firms that operate in the same industry. The products being sold are similar and in the same market
Bailliere Company recorded cash sales of $300,000 and cost of goods sold relating to those sales of $120,000 on its Excel spreadsheet during the month of June. At the end of June, the company closed its underapplied overhead in the amount of $5,000 to cost of goods sold and reflected that transaction on its spreadsheet. What is the amount of cost of goods sold that will be reported on the company's income statement for the month of June?
a) $120,000
b) $125,000
c) $115,000
d) $175,000
Answer:
Option B
Cost of goods reported =$ 125,000
Explanation:
Overheads are charged to units produced by the means of using an estimated overhead absorption rate. This rate is computed using budgeted overhead and budgeted activity level.
As a result of this, overhead charged to total units product might be over or under absorbed compared to the actual amount incurred.
The under applied overhead implies that the applied overhead is less than the actual overhead.
This implies that the cost of the goods are under valued. Hence, to accurately valued them, the under applied overhead would be added to the cost of the goods.
Cost of goods reported = cost of goods + under applied overhead
= 120,000 + 5,000 = 125,000
Cost of goods reported =$ 125,000
An investment adviser is opening that day's mail and receives a check from a customer for $8,000, however the adviser shows no balance due from the customer - the check was mailed in error to the adviser. 5 business days later, the investment adviser mails the check back to the customer. Under NASAA rules, the investment adviser:
Answer: has not taken custody of the fund of the customer and must also keep a record of the check he or she received.
Explanation:
From the question, we are told that an investment adviser is opening the mail and receives a check from a customer for $8,000, however the adviser shows no balance due from the customer - the check was mailed in error to the adviser. We are further told that five business days later, the investment adviser mails the check back to the customer.
Under NASAA rules, the investment adviser has not taken custody of the fund of the customer and must also keep a record of the check he or she received. The check was received but has been returned. He must also have a copy of the check in case there is argument of further explanation to be made.
Factory Overhead Rate, Entry for Applying Factory Overhead, and Factory Overhead Account Balance The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be $3,150,000, and total direct labor costs would be $1,800,000. During February, the actual direct labor cost totaled $160,000, and factory overhead cost incurred totaled $283,900.
Required:
a. What is the predetermined factory overhead rate based on direct labor cost? Enter your answer as a whole percent not in decimals.
b. Journalize the entry to apply factory overhead to production for February.
c. What is the February 28 balance of the account Factory Overhead—Blending Department?
d. Does the balance in part (c) represent overapplied or underapplied factory overhead?
Answer:
a. 175%
b.
Journal Entry to apply factory overhead to production for February.
Work In Process $280,000 (debit)
Overheads $280,000 (credit)
c. $3,900
d. Under-applied Overheads
Explanation:
Predetermined Overhead rate = Total Budgeted Overheads /Total Budgeted Activity
= $3,150,000 / $1,800,000
= $1.75 per direct labor cost. or
= 175% (1.75 × 100)
Applied factory overhead = Predetermined Overhead rate × Actual Activity
= $160,000 × 175 %
= $280,000
Journal Entry to apply factory overhead to production for February.
Work In Process $280,000 (debit)
Overheads $280,000 (credit)
over-applied or under-applied factory overhead
Over-applied Overheads = Actual Overheads < Applied Overheads
Under-applied Overheads = Actual Overheads > Applied Overheads
Actual Overheads (given) = $283,900
Applied Overheads = $280,000
Actual Overheads: $283,900 > Applied Overheads :$280,000
Thus we have an Under-application situation of $3,900 ($283,900 - $280,000)
In a long-run equilibrium where firms have identical costs, it is possible that some firms in a competitive market are making a positive economic profit.
a) true
b) false
Identify the trade-restraining practice that this example demonstrates.
Company A and Company B both work in the candy industry. They agree that Company A will only sell chocolate to Company C and Company B will only sell fruit candies to Company C.
it demonstrates Division of Markets
2. Source attractiveness encompasses similarity, familiarity, and likability. How persuasive do you think this campaign is to its receivers, based on these characteristics
Answer:
highly persuasive
Explanation:
In simple words, Desirability, which includes resemblance, knowledge, and liability, is a source indicative routinely used by marketers. Source attraction contributes to convincing via an association mechanism, in which the recipient is encouraged to pursue some kind of connexion mostly with source but therefore also embraces similar values , behaviours, desires, or behaviour.
Marketers agree that compelling messages recipients are much more interested in attending and associate with individuals they consider likeable or close to oneself.
In cell N2, enter a formula using the IF function and a structured reference to determine if Alison Simoneau is eligible for tuition remission.
a. The IF function should first determine if the staff member's Service Years 11 is greater than 1. Remember to use a structured reference to the Service Years column.
b. The function should return the text Eligible if the staff member's Service Years is greater than 1.
c. The function should return the text Not Eligible if the staff member's Service Years is not greater than 1.
Answer:
In cell N2, enter a formula using the IF function and a structured reference to determine if Alison Simoneau is eligible for tuition remission.
=IF([Service Years]>
a. The IF function should first determine if the staff member’s Service Years is greater than 1. A structured reference to the Service Years column:
=IF([Service Years]>1,
b. The function should return the text Eligible if the staff member’s Service Years is greater than 1.
=IF([Service Years]>1,"Eligible"
c. The function should return the text Not Eligible if the staff member’s Service Years is not greater than 1.
=IF([Service Years]>1,"Eligible","Not Eligible")
Suppose in 2012 in New Zealand, there are deflationary pressures and prices drop by 20 percent throughout the economy. All else being equal, expectations of increasing deflation should:
Answer: B. shift the AD curve to the left
Explanation:
When people expect that deflation which is the general reduction in prices, will occur, they will try to take advantage of it by reducing their consumption in the present so that they can resume consumption when prices are lower so as to reduce their cost of consumption.
This will have the effect of reducing Aggregate Demand which will force the Aggregate Demand curve to the Left which will further exacerbate the effects because prices will then fall to the new point of intersection between AD and the Aggregate Supply curve.
When the prices are fall by 20 percent throughout the economy so here it should be shifted to AD curve to the left hand side.
Impact on deflation:In the case when there is deflation that means reduction in the price so here there should be decreased in the consumption also it decrease the consumption cost.
Due to this the Aggregate Demand should be decreased due to this, it should be shifted to the left hand side because of the decreasing in the price
Therefore, When the prices are fall by 20 percent throughout the economy so here it should be shifted to AD curve to the left hand side.
This question is incomplete.The options for this question are;
A. Cause a movement along an AD curve or a change in quantity of AD
B. shift the AD curve to the left
C. leave the AD curve unchanged
D. shift the AD curve to the right
Learn more about price here: https://brainly.com/question/24304293
1. A stock has an expected return of 10.2 percent, the risk-free rate is 4.1 percent, and the market risk premium is 7.2 percent. What must the beta of this stock be?
Answer:
Beta is 0.85
Explanation:
The value of Beta can de derived from the CAPM formula of expected return
expected return=risk-free rate+Beta*market risk premium
expected return is 10.2%
risk-free rate is 4.10%
market risk premium is 7.2%
Beta is unknown
10.20%=4.10%+Beta*7.20%
10.20%-4.10%=Beta*7.20%
6.10% ==Beta*7.20%
Beta=6.10% /7.20%
Beta= 0.85
On January 1, 20X5, Playa Company acquires 90 percent ownership in Seaside Corporation for $180,000. The fair value of the noncontrolling interest at that time is determined to be $20,000. Seaside reports net assets with a book value of $200,000 and fair value of $200,000. Playa Company reports net assets with a book value of $480,000 and a fair value of $525,000 at that time, excluding its investment in Seaside. What will be the amount of consolidated net assets that would be reported immediately after the combination?
Answer:
$680,000
Explanation:
Since Playa Company owns 90% of Seaside Corporation, it is considered Seaside's parent company and it must include all of Seaside's assets when it presents its consolidated balance sheet.
Total net assets reported = $480,000 (Playa's net assets at book value) + $200,000 (Seaside's net assets) = $680,000
In December 2015, General Electric (GE) had a book value of equity of $ 98.2 billion, 9.6 billion shares outstanding, and a market price of $ 28.32 per share. GE also had cash of $ 103.4 billion, and total debt of $ 199.1 billion.
A. What was GE's market capitalization? What was GE's market-to-book ratio?
B. What was GE's book debt-equity ratio? What was GE's market debt-equity ratio?
C. What was GE's enterprise value?
Answer:
A. Market capitalization =$272 billion
Market-to-book ratio=2.76%
B.Book debt-equity ratio=2.02%
Market debt-equity ratio=0.731
C.GE's enterprise value=$367.7 billion
Explanation:
A. Computation for GE's market capitalization
Using this formula
($billion)
Market capitalization= Share outstanding*Market price per share
Let plug in the formula
9.6 billion*$ 28.32 per share
Market capitalization =$272
Computation for GE's market-to-book ratio
Using this formula
Market-to-book ratio=Market capitalization /book value of equity
Let plug in the formula
Market-to-book ratio=$272/$98.2 billion
Market-to-book ratio=2.76%
B. Computation for GE's book debt-equity ratio
Using this formula
Book debt-equity ratio=Total debt /book value of equity
Let plug in the formula
Book debt-equity ratio=$ 199.1 billion/$98.2
Book debt-equity ratio=2.02%
Computation for market debt-equity ratio
Market debt-equity ratio
=Total debt/Market Capitalization
Let plug in the formula
Market debt-equity ratio=$199.1 billion/272
Market debt-equity ratio=0.731
C. Computation for GE's enterprise value
Using this formula
GE's enterprise value= Market capitalization +Total debt -Cash
Let plug in the formula
GE's enterprise value=$272+$199.1-$ 103.4
GE's enterprise value=$367.7 billion
The CEOs of two pharmaceutical companies are having lunch. They discuss the unfair costs of ordering from a manufacturer that supplies to both companies. The CEOs decide that they will no longer work with the unfair pricing of the manufacturer. What is this strategy called?
Answer:
Group boycott
Explanation:
Group boycott is when competitors agree to not buy or sell to a supplier or customer or do it only under certain conditions. According to this, the answer is that the strategy is called group boycott because the CEOs of the two companies agree not to work with the manufacturer.
Symon's Suppers Co. has announced that it will pay a dividend of $4.27 per share one year from today. Additionally, the company expects to increase its dividend by 4.6 percent annually. The required return on the company's stock is 10.8 percent. What is the current share price
Answer:
The price of the stock today is $65.02
Explanation:
The current price of the stock can be calculated using the constant growth model of DDM. The DDM values the stock based on the present value of the expected future dividends from the stock.
The formula for the price of the stock today under the constant growth model is,
P0 = D1 / (r - g)
Where,
D1 is the dividend expected to be paid next periodr is the required rate of returng is the growth rate in dividendsTo calculate the price today, we use the dividend for the next period. Thus, we will use D2 to calculate the price of the stock at Year 1 and will discount it back to today to calculate the price today.
P0 = [(4.27 * (1+0.046)) / (0.108 - 0.046)] / (1+0.108)
P0 = $65.017 rounded off to $65.02
g Unearned revenues are classified as: Group of answer choices Assets. Liabilities. Revenues. Stockholders' equity.
Answer:
Liabilities
Explanation:
Unearned revenues are written as liabilities in the balance sheet of a firm. They are regarded as liabilities because the revenue is still unearned. An example is advance rent payment.
It is a prepayment for a good or service that has not been rendered to the customer yet by the provider. The provider or seller now has a liability equal to the revenue they have received till they provide that service for which they were paid
HUD, Co. had a beginning retained earnings of $30,995. For the year, the company had net income of $7,590 and paid dividends of $3,120. The company also issued $5,320 in new stock during the year. What is the ending retained earnings balance?
Answer:
$35,465
Explanation:
Calculation for Ending Retained Earnings
Using this formula
Retained earnings = Beginning retained earnings +(Net income- Dividend)
Let plug in the formula
Retained earnings = $30,995 + ($7,590 − $3,120)
Retained earnings =$30,995 +$4,470
Retained earnings =$35,465
Therefore the the ending retained earnings balance will be $35,465
Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2011. The note, along with interest at 6%, is due on June 30, 2012. On September 30, 2011, Ireland discounted the note at Cloverdale bank. The bank's discount rate is 10%. What amount of cash did Ireland receive from Cloverdale Bank
Answer:
$39,220
Explanation:
The maturity value of the note receivable on June 30, 2012
= Principal + Interest
= $40,000 + $40,000 x 6%
= $40,000 + $2,400
= $ 42,400
The note is discounted on September 30, 2011. Time period remaining to go till maturity as on September 30, 2011
= 12 - 3 months ( July, Aug and Sep)
= 9 months.
Amount of deduction
= $ 42,400 x 10% x 9/12
= $ 3,180
Finally, the Cash received by Ireland will be
= Maturity value - Discount
= $42,400 - $ 3,180
= $39,220
Splish Brothers Inc. issues $257,000, 10-year, 8% bonds at 99. Prepare the journal entry to record the sale of these bonds on March 1, 2022.
Answer:
Par value of bonds = $257,000
Issue price of bonds = 99
Cash receipts from issue of bonds = 257,000 x 99% = 254,430
Discount on bonds payable = Par value of bonds - Cash receipts from issue of bonds
= 257,000-254,430
= $2,570
Date Account Titles and Explanation Debit Credit
March 1 Cash $254,430
Discount on bonds payable $2,570
Bonds payable $257,000
(To record issuance of bonds)
The tables show the spending and revenue for Littleland in 2010. Use the tables and other information to answer the questions. Spending category Value (millions) education $320 welfare and Social Security $890 health care $270 defense $120 payments on debt $170* other $240 *This payment covers total interest owed only. Revenue category Value (millions) income tax $800 sales tax $270 corporate tax $300 social insurance $340 GDP in 2010: $7.3 billion Total debt as of 2009: $3.5 billion How much money (in millions) did Littleland need to borrow in 2010 to finance its government spending
Answer:
$300 million
Explanation:
The computation of debt is shown below:-
But before that we need to determine the following amounts
Total Expenditure = Spending on Education + Spending on Welfare and social security + Spending on Healthcare + Spending on Defense + Payments on Debt + Other Spending
= $320 + $890 + $270 + $120 + $170 + $240
= $2,010 million
Total Revenue = Income Tax + Sales Tax + Corporate Tax + Social Insurance
= $800 + $270 + $300 + $340
= $1710 million
Debt or borrowed amount =Total expenditure - Total revenue
= $2,010 - $1,710
= $300 million
Consider a market for a specific kind of used cars, say 2009 Honda Civic. Suppose that in use these cars have proved to be either trouble free and reliable (peach) or have many things go wrong (lemon). The buyers are willing to pay $8,000 for a peach and $4,000 for a lemon. Each seller, on the other hand, values his/her car at $6,000 if it is a peach, and $2,000 if it is a lemon. The information about quality of any given car is not symmetric between its owner and potential buyers. The owner of the car knows perfectly well whether it is a peach or a lemon, whereas potential buyers don’t. The buyers only know that 60% of the Civics are peaches and the remaining 40% are lemons.
Required:
a. What will be the market price for a Civic? Which cars will be traded? (For definiteness, suppose that there is a limited stock of used Civics and a larger number of potential buyers.) Assume that the example above takes place in month 0. Every month that passes, all sellers of Civics – regardless of type – are willing to accept $100 less than they were the month before. Also, with every passing month buyers are willing to pay $400 less for a peach than they were the previous month and $200 less for a lemon.
b. What will be the market price for a Civic in month 1? Which cars will be traded?
c. What will be the market price for a Civic in month 2? Which cars will be traded?
Answer:
a. What will be the market price for a Civic? Which cars will be traded?
market price = $6,400all cars would be traded since the market price exceeds the selling price of peaches (and lemons).b. What will be the market price for a Civic in month 1? Which cars will be traded?
market price = $6,080all cars would be traded since the market price exceeds the selling price of peaches (and lemons).c. What will be the market price for a Civic in month 2? Which cars will be traded?
market price = $5,760only lemons would be traded since the market price exceeds the selling price of lemons but not peaches.Explanation:
month 0
buyers expected cost:
peaches $8,000 x 60% = $4,800
lemons $4,000 x 40% = $1,600
total expected cost = $6,400
sellers expected price:
peaches $6,000
lemons $4,000
month 1
buyers expected cost:
peaches $7,600 x 60% = $4,560
lemons $3,800 x 40% = $1,520
total expected cost = $6,080
sellers expected price:
peaches $5,900
lemons $3,900
month 2
buyers expected cost:
peaches $7,200 x 60% = $4,320
lemons $3,600 x 40% = $1,440
total expected cost = $5,760
sellers expected price:
peaches $5,800
lemons $3,800
Tibbs Inc. had the following data for the year ending 12/31/07: Net income = $300; Net operating profit after taxes (NOPAT) = $400; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and Total operating capital = $2,300. What was its return on invested capital (ROIC)?
Answer:
17.39%
Explanation:
ROIC = NOPAT / Total net operating capital
ROIC = $400 / $2,300
ROIC = 0.17391304
ROIC = 17.391304%
Hence, the ROIC is 17.39%
Graphical Designs is offering 10-10 preferred stock. The stock will pay an annual dividend of $10 with the first dividend payment occurring 10 years from today. The required return on this stock is 5.20 percent. What is the price of the stock today
Answer:
PV of the stock today = $115.83
Explanation:
We will use the discounted cash flows approach to calculate the price of the stock today. This approach values the stock by accumulating the present value of all the expected future cash flows from the stock/asset.
As the preferred stock pays a constant dividend after equal intervals of time and for an indefinite period, it can also be treated as a perpetuity. Thus, the formula for the present value of perpetuity will be used to calculate the price of the stock at year 10 that we will discount back to today.
Present value of perpetuity = Cash flow / expected rate of return
PV of stock at Year 10 = 10 / 0.052
PV of stock at Year 10 = 192.3076923
The value of the today will be,
PV of the stock today = 192.3076923 / (1+0.052)^10
PV of the stock today = $115.83
Martin Company paid $900,000 for equipment. Martin uses straight-line depreciation. Currently the Accumulated Depreciation account shows a balance of $180,000. If the asset has no residual value and an estimated life of 10 years, how many years has the asset been depreciated? (Round your final answer to the nearest year.)
Answer:
2 years
Explanation:
900,000/10=90,000
180,000/90,000=2