Answer:
Income Summary 280,000 debit
Piper Account 140,000 credit
Tyler Account 140,000 credit
--under no agreement--
Income Summary 280,000 debit
Piper Account 112,000 credit
Tyler Account 168,000 credit
--under capital share --
Income Summary 280,000 debit
Piper Account 112,000 credit
Tyler Account 168,000 credit
--under 2:3 ratio with 6% interest rate --
Income Summary 280,000 debit
Piper Account 134,000 credit
Tyler Account 146,000 credit
--under salaries and equal share of the remainder --
Income Summary 280,000 debit
Piper Account 132,320 credit
Tyler Account 147,680 credit
--under interest, salaries and equal share of the remainder --
Explanation:
If the partners made the proper accounting the income will be stored under income summary account then split accordingly
A) If there is no agreement then, they share equally
b) 112,000 + 168,000 = 280,000
participation
Tyler 112,000/280,000 = 40%
Piper 168,000/280,000 = 60%
application
Tyler 280,000 x 40% 112,000
Piper 280,000 x 60% = 168,000
c)
6% interest
112,000 x 6% = 6,720
168,000 x 6% = 10,080
Remainder: 280,000 - 6,720 - 10,080 = 263,200
ratio:
Tyler 40% (2 / (2+3)) = 105280
Piper 60% (3 / (2+3)) = 157920
Total
Tyler: 105,280 + 6,720 = 112,00
Piper 157,920 + 10,080 = 168,000
with salaries:
280,000 - 36,000 - 48,000 = 196,000
equally divided in 98,000
Tyler 98,000 + 36,000 = 134,000
Piper 98,000 + 48,000 = 146,000
with slaries and interest:
112,000 x 6% = 6,720
168,000 x 6% = 10,080
280,000 - 6,720 - 10,080 - 36,000 - 48,000 = 179,200
Divided equally in 89,600
Tyler 89,600 + 6,720 + 36,000 = 132,320
Piper 89,600 + 10,080 + 48,000 = 147,680
With perfect price discrimination the monopoly a. charges each customer an amount equal to the monopolist's marginal cost of production. b. eliminates all price discrimination by charging each customer the same price. c. eliminates profits and increases consumer surplus. d. eliminates deadweight loss.
Answer:
Option D, Eliminates the dead-weight loss.
Explanation:
Option D is correct because there is dead-weight loss under monopoly because it produces less as compared to perfect competition. Therefore, a monopolist eliminates this dead-weight loss by producing at the level where the marginal cost curve cuts the marginal revenue curve and charging each consumer their willingness to pay the amount
The Department of Housing and Urban Development (HUD) would like to test the hypothesis that the average size of a newly constructed house in 2010 is different from the average size of a newly constructed house in 2000. The following data summarizes the sample statistics for house sizes, in square feet, for both years. Assume that the population variances are equal.
2000 2010
Sample mean 2,180 2,390
Sample size 15 12
Sample standard deviation 300 320
If Population 1 is defined as homes built in 2000 and Population 2 is defined as homes built in 2010, which one of the following statements is true?
A. Because the
95
%
confidence interval includes zero, HUD cannot conclude that the average size of a newly constructed house in 2010 is different from the average size of a newly constructed house in 2000.
B. Because the
95
%
confidence interval does not include zero, HUD can conclude that the average size of a newly constructed house in 2010 is different from the average size of a newly constructed house in 2000.
C. Because the
95
%
confidence interval includes zero, HUD can conclude that the average size of a newly constructed house in 2010 is equal to the average size of a newly constructed house in 2000.
D. Because the
95
%
confidence interval does not include zero, HUD can conclude that the average size of a newly constructed house in 2010 is not different from the average size of a newly constructed house in 2000.
Answer:
B. Because the
95
%
confidence interval does not include zero, HUD can conclude that the average size of a newly constructed house in 2010 is different from the average size of a newly constructed house in 2000.
Explanation:
Here,
Null and alternative hypotheses are:
H0: u1 = u2
H1: u1 ≠ u2
Calculate test statistics:
[tex] t = \frac{x'1 - x'2}{\sqrt{\frac{(n_1 - 1) (\sigma_1)^2 + (n_2 - 1)(\sigma_2)^2}{n_1 + n_2 - 2} * (\frac{1}{n_1} + \frac{1}{n_2})}} [/tex]
[tex] = \frac{2180 - 2390}{\sqrt{\frac{(14)(300)^2 + (11)(320)^2)}{15 +12 - 2} * (\frac{1}{15} + \frac{1}{12})}} [/tex]
[tex] = \frac{-210}{\sqrt{\frac{(1260000) + (1126400)}{25} * (0.15)}} [/tex]
[tex] t = -1.7549 [/tex]
At 95% confidence interval, find t observed:
Significance level = 100% - 95% = 5% = 0.05
Degrees of freedom = 15 + 12 - 2 = 25
[tex] t_o = t_\alpha_/_2_, _d_f = t_0_._0_5_/_2_, _2_5 = t_0_._0_2_5, _2_5 = 2.06 [/tex]
T calculated = -1.76
T observed(critical) = -2.06
Since t calculated is bigger than t critical, reject null hypothesis H0.
Because the
95
%
confidence interval does not include zero, HUD can conclude that the average size of a newly constructed house in 2010 is different from the average size of a newly constructed house in 2000.
Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Cuenca Company is considering the purchase of new equipment that will speed up the process for producing flash drives. The equipment will cost $7,200,000 and have a life of 5 years with no expected salvage value. The expected cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $8,000,000 $6,000,000 2 8,000,000 6,000,000 3 8,000,000 6,000,000 4 8,000,000 6,000,000 5 8,000,000 6,000,000 Kathy Shorts is evaluating an investment in an information system that will save $240,000 per year. She estimates that the system will last 10 years. The system will cost $1,248,000. Her company's cost of capital is 10%. Elmo Enterprises just announced that a new plant would be built in Helper, Utah. Elmo told its stockholders that the plant has an expected life of 15 years and an expected IRR equal to 25%. The cost of building the plant is expected to be $2,880,000. Required: 1. Calculate the IRR for Cuenca Company. The company's cost of capital is 16%. Round your answer to the nearest percent
Answer:
1. Calculate the IRR for Cuenca Company. The company's cost of capital is 16%.
12%Explanation:
Cuenca Company
Equipment cost $7,200,000
useful life 5 years, no salvage value
Year Cash Cash Net cash flows
revenues expenses
0 $7,200,000 -$7,200,000
1 $8,000,000 $6,000,000 $2,000,000
2 $8,000,000 $6,000,000 $2,000,000
3 $8,000,000 $6,000,000 $2,000,000
4 $8,000,000 $6,000,000 $2,000,000
5 $8,000,000 $6,000,000 $2,000,000
using a financial calculator, the internal rate of return (IRR) = 12.05% = 12%
The IRR for Cuenca Company is 12%.
The internal rate of return is a capital budgeting method that is used to determine the profitability of a project. Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested.
Cash flows of the project
Cash flow in year 0 = $-7,200,000Cash flow in year 1 = $8,000,000 - $6,000,000 = $2 million Cash flow in year 2 = $8,000,000 - $6,000,000 = $2 million Cash flow in year 3 = $8,000,000 - $6,000,000 = $2 million Cash flow in year 4 = $8,000,000 - $6,000,000 = $2 million Cash flow in year 5 = $8,000,000 - $6,000,000 = $2 millionThe IRR can be determined using a financial calculator, the IRR is 12%.
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According to the basic quantity equation of money, if price and output fall while velocity increases, then: Group of answer choices
Answer:
The quantity of money will fall as well.
Explanation:
According to the quantity theory of money, money supply (M) and price level (P) in an economy are in direct proportion to one another.
In other words, the percentage change in price level is proportionate to the percentage change in Money Supplied.
The formula is given as:
M*V= P*T
where, V = Velocity of money and T = volume of the transactions.
Cheers!
The December 31, 2018, balance sheet of Whelan, Inc., showed long-term debt of $1,420,000, $144,000 in the common stock account, and $2,690,000 in the additional paid-in surplus account. The December 31, 2019, balance sheet showed long-term debt of $1,620,000, $154,000 in the common stock account and $2,990,000 in the additional paid-in surplus account. The 2019 income statement showed an interest expense of $96,000 and the company paid out $149,000 in cash dividends during 2019. The firm's net capital spending for 2019 was $1,000,000, and the firm reduced its net working capital investment by $129,000.
What was the firm's 2019 operating cash flow, or OCF? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
Operating cash flow
Answer:
$606,000
Explanation:
For the computation of operating cash flow first we need to follow some steps which is shown below:-
Net New borrowing = Long-term Debt, 2019 - Long-term Debt, 2018
= $1,620,000 - $1420,000
= $200,000
Cash flow to creditors = Interest expense - Net new borrowings
= $96,000 - $200,000
= -$104,000
Net new equity = Common stock 2019 + Additional paid in surplus 2019 - Common stock 2018 + Additional paid in surplus 2018
= $154,000 + $2,990,000 - $144,000 - $2,690,000
= $310,000
Cash flow to stockholders = Dividend 2019 - Net new equity
= $149,000 - $310,000
= -$161,000
Cash flow from assets = Cash flow to creditors + Cash flow to stockholders
= -$104,000 + (-$161,000)
= -$265,000
and finally
Operating cash flow = cash flow from assets + Net capital spending + Change in Net working capital
= (-$265,000) + $100,000 + (-$129,000)
= $606,000
Joe was moving from California to Michigan to attend college. Joe answered an advertisement on the web and signed a lease for an apartment without ever seeing the apartment. Joe found the premises filled with an abundance of debris, rats and insects. Also, the plumbing in the apartment was inoperable. These conditions:________
Answer:
Most likely constitute a breach of the implied warranty of habitability.
Explanation:
A warranty of habitability specifies that a property for rent is up to standard, that is it meets basic living and safety standards. This warranty is only implied for leases and rentals of residential properties. Since Joe found the premises filled with an abundance of debris, rats and insects and the plumbing in the apartment inoperable, then this property is not up to standard and therefore constitute a breach of the implied warranty of habitability
Consider the following hypothetical data for an open economy (in millions):
Assets owned inside the U.S. by U.S. citizens = $140, 000140,000
Assets owned outside the U.S. by U.S. citizens = $23,35723,357
Assets owned outside the U.S. by foreign citizens = $110,000110,000
Assets owned inside the U.S. by foreign citizens = $22,78622,786
The value of the International Investment Position (IIP) of the U.S. is__________ $ nothing million.
Answer: $571 million
Explanation:
International Investment Position (IIP) is an Economic measure that is calculated to see the assets owned by the citizens of a country outside the country versus the assets owned by foreigners in the country in question. It is informally referred to as a nation's Balance Sheet with other countries.
It is calculated by;
Value of the International Investment Position of the US = Assets owned outside the US by the US citizens - Assets owned inside the US for the foreign citizens
= 23,357 - 22,786
= $571 million
In a supermarket, a vendor's restocking the shelves every Monday morning is an example of:________
a. safety stock replenishment
b. economic order quantities
c. reorder points
d. fixed order interval
e. blanket ordering
Answer:
it may be fixed order interval because the vendor is restocking every monday only.
Credit ratings affect the yields on bonds. Based on the scenario described in the following table, determine whether yields will increase or decrease and whether it will be more expensive or less expensive, as compared to other players in the market, for a company to borrow money from the bond market.
Cost of Borrowing Money from
Scenario Impact on Yield Bond Markets
A company's financial health improves.
There is an increase in the perceived
market ability of a company's bonds,
so the liquidity premium decreases.
XYZ Co.’s credit rating was downgraded
from AA to BBB.
A company uses debt to buy another company.
Such an event is called a leveraged buyout.
Answer:
Please find the detailed answer in the explanation section
Explanation:
1. A company's financial health improves -
In this situation, The yield will decrease.
Cost of borrowing will be less expensive.
2. There is an increase in the perceived market ability of a company's bonds, so the liquidity premium decreases -
The yield decreases
The cost of borrowing money from bond markets is less expensive
3. XYZ Co.’s credit rating was downgraded from AA to BBB -
The yield will increase.
Cost of borrowing will be more expensive
4. A company uses debt to buy another company such an event is called a leveraged buyout -
The yield will increase.
Cost of borrowing will be more expensive
Your company is trying to decide which of the two following devices should be selected.
Device A: costs $1,000 but can save $300 annually
Device B: costs $1,350 but can save $300 the first year, but savings is increased $50 annually thereafter.
Both devices have 5-year useful life and no salvage value
a) Draw cash flow diagram for each option
b) If interest rate is 7%, which device should your company purchase?
Answer:
a) Find the attached jpeg file for the cash flow diagram
b) The company should purchase Device B.
Explanation:
a) Draw cash flow diagram for each option
A project cash flow diagram is a tool that is used to present a visual representation of the cost of a project and cash it is expected to generate over a specified period of time. On the diagram, x-axis represents the year, and y-axis represents cash out flows and/or inflows.
Note: See the attached jpeg for the cash flow diagram.
b) If interest rate is 7%, which device should your company purchase?
To determine this, we compare the Net Present Value (NPV) of the 2 devices.
Note: See the attached excel file for the calculation of the NPVs of the two devices.
From the attached excel file, we have:
NPV of Device A = $230
NPV of Device B = $262
Decision: Since $262 NPV of Device B is greater than the $230 NPV of Device A, the company should purchase Device B.
On January 1 of year 1, Arthur and Aretha Franklin purchased a home for $1.5 million by paying $200,000 down and borrowing the remaining $1.3 million with a 7 percent loan secured by the home.
a. What is the amount of the interest expense the Franklins may deduct in year 1?
b. Assume that in year 2, the Franklins pay off the entire loan but at the beginning of year 3, they borrow $300,000 secured by the home at a 7 percent rate. They make interest-only payments on the loan during the year. What amount of
interest expense may the Franklins deduct in year 3 on this loan (the Franklins do not use the loan proceeds to improve the home)?
c. Assume the same facts as in (b), except that the Franklins borrow $80,000 secured by their home. What amount of interest expense may the Franklins deduct in year 3 on this loan (the Franklins do not use the loan proceeds to improve the home)?
Answer:
a. What is the amount of the interest expense the Franklins may deduct in year 1?
this will depend on the total interest paid during the year, since we are not told how long their mortgage is, we cannot know exactly how much interest expense they will pay. Generally mortgages require monthly payments, so I prepared a simulated amortization schedule for the first year assuming that the mortgage lasts 30 years and a monthly payment of $8,648.93.
year beg. scheduled principal interest ending
balance payment balance
1 1300000 8649 1066 7583 1298934
2 1298934 8649 1072 7577 1297863
3 1297863 8649 1078 7571 1296785
4 1296785 8649 1084 7565 1295700
5 1295700 8649 1091 7558 1294609
6 1294609 8649 1097 7552 1293512
7 1293512 8649 1103 7545 1292409
8 1292409 8649 1110 7539 1291299
9 1291299 8649 1116 7533 1290183
10 1290183 8649 1123 7526 1289060
11 1289060 8649 1129 7520 1287931
12 1287931 8649 1136 7513 1286795
total interest $90,582
The total interest that can be deducted in this case would be $90,582 during year 1.b. Assume that in year 2, the Franklins pay off the entire loan but at the beginning of year 3, they borrow $300,000 secured by the home at a 7 percent rate. They make interest-only payments on the loan during the year. What amount of interest expense may the Franklins deduct in year 3 on this loan (the Franklins do not use the loan proceeds to improve the home)?
$0, interests from home equity loans used for personal expenses are not deductible.c. Assume the same facts as in (b), except that the Franklins borrow $80,000 secured by their home. What amount of interest expense may the Franklins deduct in year 3 on this loan (the Franklins do not use the loan proceeds to improve the home)?
$0, interests from home equity loans used for personal expenses are not deductible.Explanation:
Steven Corporation uses the FIFO method in its process costing system. Department A's beginning work in process inventory consisted of 15,000 unit, 100% complete with respect to materials and 40% complete with respect to conversion costs. The total cost of this inventory was $31,000. A total of 40,000 units were transferred out during the month. The costs per equivalent unit were computed to be $1.30 for materials and $2.20 for conversion costs. What was the cost of the units completed and transferred out?
A. $140,000
B. $131,700
C. $138,300
D. $118,500
Answer:
The cost of the units completed and transferred out is C. $138,300
Explanation:
FIFO method means that the units that were incomplete at the beginning of the period are the first to be completed followed by those started during the year.
The cost of of units completed and transferred is calculated as follows :
Cost in Opening Work In Process $31,000
Cost to Finish Opening Work In Process :
Raw Materials ( $1.30 × 0) $0
Conversion ($2.20 × (15,000 × 60%)) $19,800
Started and Completed ((40,000 - 15,000) × ($1.30 + $2.20)) $87,500
Total Cost of of units completed and transferred $138,300
Conclusion :
The cost of the units completed and transferred out is $138,300.
A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is: (Use 360 days a year.)
Answer:
50
Explanation:
1,500x.10x120/360 = 50 i believe?
A firm is given a $1,500, 10%, 120-day note. 50 is the total amount of interest due on the maturity date.
What is maturity?Age is not a factor in maturity; rather, maturity is determined by the way you decide to behave and react to different life experiences. It is essentially a stage of mental maturity or wisdom that affects every aspect of a person's life, from behavior to interpersonal relationships.
A firm is given a $1,500, 10%, 120-day note. 50 is the total amount of interest due on the maturity date.
1,500x.10x120/360 = 50 i believe
Therefore, the total amount of interest due on the maturity date.
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Physical Units Work in process, beginning 0 Completed and transferred out 89000 Work in process, ending 6000 Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period?
Answer:
Total equivalent units= 95,000 units
Explanation:
Giving the following information:
Work in process, beginning 0
Completed and transferred out 89,000
Work in process, ending 6,000
Materials are added at the beginning of the process.
Because the materials are added at the beginning of the process, the equivalent units are the same as units started and completed.
Total equivalent units= 89,000 + 6,000= 95,000 units
A company was formed with $60,000 cash contributed by its owners in exchange for common stock. The company borrowed $30,000 from a bank. The company purchased $10,000 of inventory and paid cash for it. The company also purchased $70,000 of equipment by paying $10,000 in cash and issuing a note for the remainder.
Use the information above to answer the following question. What is the amount of the total assets to be reported on the balance sheet?
a. $150,000.
b. $160,000.
c. $90,000.
d. $80,000.
Which of the following actions would be likely to encourage a firm's managers to make decisions that are in the best interests of shareholders?A. The percentage of the firm's stock that is held by investors such as mutual funds, pension funds and hedge funds rather than by small individual investors rises from 10% to 60%. B. The percentage of executive compensation that in the form of cash is increased and the percentage coming from long-term stock options is reduced. C. The firm's founder, who is also president and chairman of the board, sells 90% of her shares. D. The state passes a law that makes it more difficult to successfully complete a hostile takeover.E. The firm's board of directors gives the firm's managers greater freedom to take whatever actions they think without obtaining board approval.
Answer:
A. The percentage of the firm's stock that is held by investors such as mutual funds, pension funds and hedge funds rather than by small individual investors rises from 10% to 60%.
Explanation:
As we know that the shareholders are the person who buys the stock of the company we can treat as an owner of their shares
For the interest of shareholders, the actions that should be taken is that the firm stock percentage i.e held by investors like mutual funds instead of small investors increased by 10% to 60% as it created the values and build a confidence
Hence, the correct option is A
Suppose you are a manager at an advertising agency who is eager to utilize Covey’s advice about delegation. Today, you need to work on a presentation for a potential new client. This requires delegating a routine status report about an ongoing advertising campaign to Patricia. You ask Patricia to complete the status report, making her haveresponsibility for its completion. Which of the following are true after you delegate the status report to Patricia? Check all that apply. You should guide Patricia through each step of the assignment to serve as a mentor. Patricia must have authority over the resources and personnel needed to complete the status report. You should help Patricia with the status report, to the extent you have time. Patricia will be held accountable for the results of the assignment. The advertising agency recently reorganized. Patricia now reports to both the regional sales manager and a senior product manager which means there unity of command. Unity of command in matrix organizations. Lower-level employees have the authority to act without first seeking approval for activities in a company. Continue without saving
Answer and Explanation:
In the first situation, the accounting and responsibility is chosen as of the superior assigned the work to the subordinate so there would be accounting and responsibility that the given work should be completed within the prescribed time and under the full responsibility
In the second situation, there is a unity of command but it does not exist in the matrix organization. Here unity of command is reporting to one boss.
In the third situation, decentralization is there as there are the authority to take independent decisions by middle level and lower level employees
The following statements that are true after you delegate the status report to Patricia are:
A. You should guide Patricia through each step of the assignment to serve as a mentor.B. Patricia must have authority over the resources and personnel needed to complete the status report. D. Patricia will be held accountable for the results of the assignment.According to Stephen Covey’s advice about delegation, he stated that when duties or responsibilities are delegated to a person that does not have the capacity to properly handle them, then the output may be disastrous.
Furthermore, Covey also said that when delegating to someone, it is important to give them space to work and not to interfere too much and hold them accountable to the results.
As a result of this, we can see that Patricia is in charge of the routine status report as a part of the ongoing advertisement campaign and she should have not only full authority, but also be held accountable for the outcome of the assignment.
Therefore, the correct answers are options A, B and D
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Because ________ often make it possible for young firms to provide services that are equivalent or superior to an incumbent, a new entrant may be able to serve a market more effectively, with more personalized services and greater attention to product details.
Answer:
B. Digital Technologies
Explanation:
The term that goes in the blank line is Digital Technologies. These technologies are various different electronic tools, systems, devices, and resources that allow the firm to generate, store, and process data. These devices and systems give the firms the ability to compete and have an edge over the bigger firms of the industry by using them in a unique and more effective way towards accomplishing their end-goal and improving the customer's experience.
Kerch Co. had beginning net fixed assets of $216,510, ending net fixed assets of $211,680, and depreciation of $40,435. During the year, the company sold fixed assets with a book value of $7,966. How much did the company purchase in new fixed assets?
Answer:
$43,571
Explanation:
The computation of the purchase in a new fixed asset is shown below:
Beginning net fixed assets $216,510
Less: depreciation expenses -$40,435
Net fixed assets -$176,075
Less: book value of sold assets -$7,966
Net fixed assets $168,109
Closing net fixed assets $211,680
purchases of net assets during the year $43,571 ($211,680 - $168,109)
We simply applied the above format
explain the link between scarcity and opportunity cost.
Answer:
Resources are limited in supply(scarcity) while wants are unlimited thus one has to make a choice to satisfy a need.Some choices are forgone(opportunity cost)
Which of the following is a typical complaint of host-country competitors (such as GM, Ford etc) against foreign firms (such as KIA in the US)?a) foreign firms burden the host-country with infrastructure requirements.b) foreign firms lure local workers away from host-country businesses.c) foreign firms do not have to obey host-country law and regulations.d) foreign firms receive financial support from host-country governments.
Answer:
Option (d) is the correct answer to this question.
Explanation:
The nation in which those State members or organizations are involved at the request of the state and/or foreign negotiation.
A foreign country 's government, in which a representative and foreign embassies live while on duty. The diplomat and staff serve their own country's values and policies while being host country guests.
Other options are incorrect because they are not related to the given scenario.
The company XOXO is specialized in producing treadmills. The company allocates manufacturing overhead based on direct labor hours. XOXO estimated a total of $4,600 of manufacturing overhead that can be dispatched on all jobs. Moreover, the total direct labor hours that has been recorder during the period raises up to 460 hours. Job 12 consists of 30 sets of treadmills. The company’s records show that the following direct costs were requisitioned for Job 12: • Electronic parts: 40 units at $20 per unit • Plastic: 10 kilograms at $10 per kilogram • Labor hours: 60 hours at $25 per hour Requirement: 1. Calculate the predetermined manufacturing overhead (MOH) rate.
Answer:
Predetermined manufacturing overhead rate= $10 per direct labor hour
Explanation:
Giving the following information:
The company allocates manufacturing overhead based on direct labor hours.
Estimated a total overhead= $4,600
Direct labor hours= 460
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 4,600/460= $10 per direct labor hour
The intrinsic value of a company’s stock, also known as its fundamental value, refers to the stock’s "true" value based on accurate risk and return data. The value perceived by stock market investors determines the market price of a stock. A stock trading at a price below its intrinsic value is considered to be undervalued. A stock trading at a price above its intrinsic value is considered to be overvalued.
The goal of the managers of a publicly owned company should be to maximize the firm's_______
An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimations, the value of Mandalays Inc.'s stock should be $37.32 per share, but Mandalays Inc.'s stock is trading at $45.59 per share on the New York Stock Exchange (NYSE). Considering the analyst's expectations, the stock is currently:
a. in equilibrium
b. undervalued
c. overvalued
Answer:
The goal of the managers of a publicly owned company should be to maximize the firm's INTRINSIC VALUE.
The board of directors' and upper management's main goal is to maximize the corporation's value in order to maximize stockholders' wealth.
An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimations, the value of Mandalays Inc.'s stock should be $37.32 per share, but Mandalays Inc.'s stock is trading at $45.59 per share on the New York Stock Exchange (NYSE). Considering the analyst's expectations, the stock is currently:
c. overvaluedIf the analyst considers that the stock's intrinsic price is $37.32 and the market price is $45.59, this means that currently the stock is overvalued.
O'Brian's Department Stores allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture. In addition to providing services to the operating departments, Personnel and Payroll provide services to each other. O'Brian's allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis of gross payroll. Cost and allocation information for June is as follows:
Personnel Payroll Housewares Clothing Furniture
Direct department cost $ 7,800 $ 3,200 $ 12,200 $ 20,000 $ 16,750
Number of employees 5 4 8 16 4
Gross payroll $ 6,000 $ 3,300 $ 10,600 $ 17,400 $ 8,100
(a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.)
(b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer one decimal place.)
(c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming O'Brian's uses the step method.
Do not round until your final answers. Round answers to the nearest dollar.
Service Departments Producing Departments
Payroll Personnel Housewares Clothing Furniture
Total costs
Answer:
a. Department No of employee
Payroll 4
Housewares 8
Clothing 16
Furniture 4
Total 32
Personnel department cost allocated to payroll department
= (Direct department cost of personnel * No of payroll employees) / Total no of employees
= $7,800 * 4/32
=$975
Percentage of total personnel department services that was provided to the payroll Department is
= Cost allocated to payroll department/ Personnel direct cost
= $975/$7,800
=0.125
=12.5%
b. Department Gross payroll $
Personnel 6,000
Housewares 10,600
Clothing 17,400
Furniture 8,100
Total 42,000
Payroll department cost allocated to personnel department
= (Direct department cost of payroll * Gross payroll of personnel department) / Total gross payroll
= $3,200 * $6,000 / $42,100
=$456
Percentage of total payroll department services that was provided to the Personnel Department is
= Cost allocated to personnel department / Payroll direct cost
=$456 / $3,200
= 0.143
=14.3%
c. Allocation of personnel department cost is on basis of no of employee
Department No of Employee Proportion Percentage
Payroll 4 4/32 12.50%
Housewares 8 8/32 25%
Clothing 16 16/32 50%
Furniture 4 4/32 12.50%
Total 32
Allocation of personnel department cost is on basis of Gross payroll
Department Gross payroll Proportion Percentage
Housewares $10,600 10,600/36,100 29.36%
Clothing $17,400 17,400/36,100 48.20%
Furniture $8,100 8,100/36,100 22.44%
Total $36,100
Schedule showing Personnel Department and Payroll Department cost allocations to the operating departments
Service Dept. Producing Dept.
Personnel Payroll Housewares Clothing Furniture
Direct dept $7,800 $3,200 $12,700 $20,000 $16,750
cost
Allocation ($7,800) $975 $1,950 $3,900 $975
of personnel
cost
Allocation - ($4,175) $1,226 $2,012 $937
of Payroll
cost
Total $0 $0 $15,376 $25,912 $18,662
The accourtant for Mega Stores, Inc, should have recorded the following correct entry Jan 15 Notes Receivable 243 Equipment 243he misunderstood the transaction and recorded an incorrect entry, Which of the following w rong entries pertaining to this transaction could have been detected as erroneous when using a trial balance? A) Jan 15 Equipment 243 Notes Receivable 243B) Jan 15 Notes Payable 243 Cash 243C) Jan 15 Notes Receivable 243 Equipment 234 D) Jan 15 Notes Receivable 234 Equipment 234
Answer:
C) Jan 15 Notes Receivable 243 Equipment 234
Explanation:
The trial balance is a summary of all the balances of the various transactions used by an entity. It is expected that the credits should equal the debits in a trial balance as the saying goes, "for every credit, there must be a corresponding debit"
A review of the options given shows that option C) Jan 15 Notes Receivable 243 Equipment 234 would show an error detectible by a trial balance as the credit does not correspond to the debit.
Direct Materials Purchases Budget
Langer Company produces plastic items, including plastic housings for humidifiers. Each housing requires about 15 ounces of plastic costing $0.08 per ounce. Langer molds the plastic into the proper shape. Langer has budgeted production of the housings for the next four months as follows:
Units
July 3,500
August 4,400
September 4,900
October 6,300
Inventory policy requires that sufficient plastic be in ending monthly inventory to satisfy 30% of the following month's production needs. The inventory of plastic at the beginning of July equals exactly the amount needed to satisfy the inventory policy.
Required:
Prepare a direct materials purchases budget for July, August, and September, showing purchases in units and in dollars for each month and in total.
Langer Company
Direct Materials Purchases Budget
For July, August and September
July August September Total
Units to be produced
Direct materials per unit (ounces)
Production needs
Desired ending inventory (ounces)
Total needs
Less: Beginning inventory
Direct materials to be purchased (ounces)
Cost per ounce $0.1 $0.1 $0.1 $0.1
Total purchase cost $ $ $ $
Answer:
Direct Materials Purchases Budget For July, August and September
July August September
Units to be produced 3,500 4,400 4,900
Direct materials per unit (ounces) 15 15 15
Production needs 52,500 66,000 73,500
Desired ending inventory (ounces) 19,800 22,050 28,350
Total needs 72,300 88,050 101,850
Less: Beginning inventory 0 (19,800) (22,050)
Direct materials to be purchased 72,300 68,250 79,800
Cost per ounce $0.1 $0.1 $0.1
Total purchase cost $7,230 $6,825 $7,980
Explanation:
A purchases budget budget is used to determine the quantities and cost of purchases required for resale or use in production.
Thus shows quantities that must be purchased to meet expected production plus any increase in inventory levels that might be required.
On December 31 of the current year, Sam Company was merged into Paul Company. In carrying out the business combination, Paul Company issued 60,000 shares of its $10 par value common stock, with a fair value of $15 per share, for all of Sam Company's outstanding common stock. The stockholders' equity section of the two companies immediately before the business combination was:
Complete Question:
On December 31 of the current year, Sam Company was merged into Paul Company. In carrying out the business combination, Paul Company issued 60,000 shares of its $10 par value common stock, with a fair value of $15 per share, for all of Sam Company's outstanding common stock. The stockholders' equity section of the two companies immediately before the business combination was:
Paul Sam
Common Stock $500,000 $400,000
Additional Paid-in Capital 200,000 100,000
Retained Earnings 300,000 200,000
Assume that the transaction is accounted for using the acquisition method. In the consolidated balance sheet at the end of the next year, the Additional Paid-In Capital account should be reported at
A) $400,000.
B) $300,000.
C) $500,000.
D) $200,000.
Answer:
Option C. $500,000
Explanation:
The reason is that the new additional Paid In Capital will be calculated by taking the stock issuing company's Addition Paid-In Capital and the additional paid in capital arising from stock issue, which means that:
Addition Paid-In Capital after merger = Addition Paid-In Capital of Paul Company + Addition Paid-In Capital arising from shares issues
Here
Addition Paid-In Capital of Paul Company = $200,000
Addition Paid-In Capital arising from shares issues = 60,000 shares * ($15 per share - $10 per share) = $300,000
By putting above values in the equation, we have:
Addition Paid-In Capital after merger = $200,000 + $300,000
Addition Paid-In Capital after merger = $500,000
clarissa wants to fund a growing perpetuity that will pay $5000 per year to a local museum, starting next year. She wants the annual amount paid to the museum to grow by 5% per year. Given that the interest rate is 8%, how much does she need to fun this perpetuity
Answer:
$166,666.67
Explanation:
Clarissa wants to take charge of finding a growing perpetuity that will pay a total amount of $5,000 per year to a local museum
She wants the annual amount paid to the museum to grow by 5% per year
= 5/100
= 0.05
The interest rate is 8%
= 8/100
= 0.08
Therefore, the amount used to fund the perpetuity can be calculated as follows
Pvo= $5,000/(0.08-0.05)
= $5,000/0.03
= $166,666.67
Hence Clarissa needs $166,666.67 to fund the perpetuity.
Today you purchase a $600 face-value, 8% coupon bond for $600. This bond matures over 10 years. What is the value of the cash flow in year 5?
Answer:
the value of the cash flow in year 5 is -$48
Explanation:
Cash flow in year 5 include a capital repayment and interest expense.This can be determined by constructing an amortization schedule from the data given.
The first step in constructing the amortization schedule is to find the Yield to Maturity.
Pv = -$600
Pmt = $600 × 8% = $48
P/yr = 1
N = 10
Fv = $600
YTM = ?
Using a Financial Calculator the Yield to Maturity is 8%.
then to determine the cash flow for year 5, we need the coupon amount (interest) and the amount of capital repayment.
Coupon $48
Capital $0
Total $48
Therefore the cash flow in year 5 is -$48.
Warwick's Co., a women's clothing store, purchased $22,000 of merchandise from a supplier on account, terms FOB destination, 1/10, n/30. Warwick's returned $3,300 of the merchandise, receiving a credit memo.
a. Journalize Warwick's Co.'s entry to record the purchase.
b. Journalize Warwick's Co.'s entry to record the merchandise return.
c. Journalize Warwick's Co. entry to record the payment within the discount period of ten days.
d. Journalize Warwick's Co. entry to record the payment beyond the discount period of ten days. If an amount box does not require an entry, leave it blank.
Answer and Explanation:
The Journal entry is shown below:-
a. Inventory Dr, $21,780 $22,000 - ($22,000 × 1%)
To Accounts payable $21,780
(Being purchase is recorded)
b. Accounts payable Dr, $3,267 ($3,267 - ($3,267 × 1%))
To Inventory $3,267
(Being merchandise return is recorded)
c. Accounts payable Dr, $18,513 ($22,000 - $3,300 × 99%)
To Cash $18,513
(Being payment within the discount period of ten days is recorded)
d. Accounts Payable Dr, $18,513 ($21,780 - $3,267)
Inventory Dr, $187 ($18,700 - $18,513)
To Cash $18,700 ($22,000 - $3,300)
(to record payment beyond discount term)