Answer:
The main difference between preferred and common stock is that preferred stock gives no voting rights to shareholders while common stock does.
Explanation:
Preferred shareholders have priority over a company's income, meaning they are paid dividends before common shareholders. hope this helps you :)
EVA/MVA The financial statements reflect historical data, but managers' performance must be evaluated on the basis of values. To provide this information, financial analysts have developed two measures: Market Value Added (MVA) and Economic Value Added (EVA). Market Value Added represents the difference between the money stockholders have invested in the firm versus the cash they could receive if the firm were sold. The equation for MVA is:
Answer:
MVA = (Shares outstanding * Stock price) - Total common equity
Explanation:
Market value added is the excess of equity over its book value. It is the difference between money invested by stockholders and the cash they will receive if the company is sold. The higher MVA of a company means performance of the company management is good and is in the favor of stockholders.
g if 1 British pound can be exchanged for 180 cents of U.S. currency, what fraction should be used to compute the indirect quotation of the exchange rate expressed in British pounds?
Answer: 1/1.8
Explanation:
From the question, we are informed that 1 British pound can be exchanged for 180 cents of U.S. currency. To get the fraction that should be used to compute the indirect quotation of the exchange rate expressed in British pounds, we have to change the 180 cents to dollars first.
Since 100 cents = 1 dollar, 180 cents = 1.8 dollars. Therefore, fraction should be used to compute the indirect quotation of the exchange rate expressed in British pounds will be:
= 1/1.8
The Fed increased the supply of US dollars at an average rate of 6 percent per year over the 1980-2005 period. Based on the theory of production capacity, if the Fed had instead increased the money supply at the rate of 7 percent per year during that period, given other policies: (Select all that apply.)
Answer:
These are the options for the question:
A. The average inflation rate during 1980-2005 would have been one percentage point higher than it actually was in that period.
B. The economy would have enjoyed a much higher level of output in the mid-2000s.
C. The price level in 2005 would have been about 28 percent higher than what it actually reached in that year.
D. The output of the economy in the mid-2000s would not have been very different from the levels it actually reached.
And this is the correct answer:
A. The average inflation rate during 1980-2005 would have been one percentage point higher than it actually was in that period.
Explanation:
According to the production capacity theory, if the money supply is increased, but the quantity of output is not, or is not increased at the same rate, then, inflation will set in.
In this case, the question is telling us that the Fed would have increased the money supply by one percentage point, but output (GDP growth) would have stayed the same.
For this reason, all else being equal, this higher amount of money supply would have simply created more inflation.
Marwick Corporation issues 8%, 5 year bonds with a par value of $1,210,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6%. What is the bond's issue (selling) price, assuming the following Present Value factors: n
Answer:
$1,313,222.68
Explanation:
Calculation for the bond's issue (selling) price
First step
Interest expense = Par value *Interest rate× ½
Let plug in the formula
Interest Expense = $1,210,000 * .08 * ½ = 40,000 (this is an annuity)
Interest expense =96,800×½
Interest expense = 48,400
Second step
Calculation for the bonds issues
($1,210,000 * .7441) + (48,400 * 8.5302) = $1,085,308
=$900,361+$412,861.68
=$1,313,222.68
Therefore the bond's issue (selling) price will be $1,313,222.68
On November 1, 2019, a firm accepted a 5-month, 10 percent note for $1,080 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended December 31, 2019, is
Answer: $18
Explanation:
From the question, we are informed that On November 1, 2019, a firm accepted a 5-month, 10 percent note for $1,080 from a customer with an overdue balance.
The accrued interest recorded for this note for the year ended December 31, 2019 goes thus:
The value of notes receivable is $1080, then the interest for 5 months will be:
= ($1080 × 10% ×5)/100 × 12
= $54000/1200
= $45
We are further told that the interest accrued from November 1, 2019 to December 31, 2019. This means that it was for 2 months. The accrued interest will now be:
= $45 × 2/5
= $90/5
= $18
On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $2,000. During the first year, the band performs 45 concerts. Compute the first-year depreciation using the units-of-production method. g
Answer:
Annual depreciation= $14,355
Explanation:
Giving the following information:
Original cost= $65,800
Number of units= 200
Salvage value= $2,000
During the first year, the band performs 45 concerts.
To calculate the annual depreciation under the units-of- production method, we need to use the following formula:
Annual depreciation= [(original cost - salvage value)/useful life of production in units]*units operated
Annual depreciation= [(65,800 - 2,000)/200]*45
Annual depreciation= $14,355
Darell Hair Stylists's adjusted trial balance and statement of owner's equity follow.
Balance
Account Balance Debit Credit
Cash $1,000
Accounts Receivable 900
Office Supplies 600
Equipment 19,700
Accumulated Depreciation - Equipment $2,000
Accounts Payable 900
Interest Payable 550
Notes Payable 3,400
Common Stock 10,650
Dividends 700
Service Revenue 14,100
Rent Expense 5,200
Supplies Expense 100
Depreciation Expense - Equipment 2,000
Interest Expense 1,400
Total $31,600 $31,600
Daniel Hair Stylists Statement of Retained Earnings Year Ended December 31, 2018
Retained Earnings, January 1, 2018 $0
Net Income for the year 5,400
5,400
Dividends (700)
Retained Earnings, December 31, 2018 $4,700
Required:
Prepare Darell's unclassifed balance sheet at December 31, 2018.
Answer:
Total Assets = Total Liabilities and Stockholder's Equity = $20,200
Explanation:
An unclassified balance sheet is a type of balance sheet that does not present assets and liabilities under different categories. It only presents all assets in order of liquidity and liabilities in order of the shortness of their terms.
This can be prepared for this question as follows:
Darell Hair Stylists
Unclassifed Balance Sheet
At December 31, 2018
Particulars Amount ($)
Cash 1,000
Accounts Receivable 900
Office Supplies 600
Equipment 19,700
Accumulated Dep. - Equipment (2,000)
Total Assets 20,200
Accounts Payable 900
Interest Payable 550
Notes Payable 3,400
Common Stock 10,650
Retained Earnings, Dec. 31, 2018 4,700
Total Liabilities and Stockholder's Equity 20,200
Since Total Assets and Total Liabilities and Stockholder's Equity as it is normally required, that indicates that the unclasified balance sheet has been prepared accurately.
Trails End Vacations has a $2,200 account receivable from the Sun City Kiwanis. On March 11, the Kiwanis makes a partial payment of $1,050 to Trails End. The journal entry made on March 11 by Trails End to record this transaction includes:
Answer:
Cash $1,050 (debit)
Accounts Receivable :Sun City Kiwanis $1,050 (credit)
Explanation:
When Kiwanis makes a partial payment to settle their account, in Trails Ends records, we recognize (1) an the increase in the assets of cash and (2) recognize a decrease in the assets of accounts receivable.
There are two techniques of egg production: free range (where hens roam around the farm) or factory (where hens are fed and watered in wire cages). The free range technique has a much more elastic supply curve than the factory technique. When the demand for eggs falls:________.
a. egg production falls by a smaller percentage in the factory technique than in the free range technique.
b. egg production falls by a larger percentage in the factory technique than in the free range technique.
c. the production using both techniques falls by the same percentage.
d. the factory egg producers supply curve shifts inward.
e. the free range egg producers supply curve shifts inward.
Answer:
a. egg production falls by a smaller percentage in the factory technique than in the free range technique.
Explanation:
Elasticity of supply is defined as the degree of responsiveness of supply to changes in price. Highly elastic supply responds more to change in price than low elastic supply.
In the given scenario where eggs are produced using factory and free range techniques, as demand falls price consumers are willing to pay also falls.
Since factory technique has a lower elasticity of supply, the fall in supply as a result of fall in price will be small.
However the fall in supply of free range will be higher because of its higher elasticity
How do you feel as a customer? What are your alternatives as a customer when you find the bookstore has "stocked-out"? What are the possible causes of the stock-out situation? What can be done by the bookstore manager to prevent future stock-outs?
Answer with its Explanation:
1. When I find the the bookstore is stocked-out the first thing I feel is that I must had went to the bookstore which has never disappointed me.
2. When the bookstore who has always welcomed customers with its products is always my priority to visit. So I will opt to other bookstore nearby or opt to order books online which is more suitable for me. Their are chances that I can visit the libraries depending upon my finance budget and how urgent I need the book.
3. The delay might be because of mismanagement of the bookstore inventory, transporting delay of the books, high demand which results in quickly stock-out, etc
4. The first thing that the manager of the bookstore must do is to forecast the sales for the period of each seasonal and every season product which will assist them to place the right order at the right time. Furthermore, the inventory management must be incorporated in the policies of the bookstore which will result in maintaining the minimum stock balance.
Sun-Jun is the executive general manager of a U.S.-based multinational corporation. Marisol is a manager in a similar position but works for an American company that operates only in the U.S. and does not engage in international business. In this context, which business function will be most typically exclusive to Sun-Jun
Answer: A. choosing an appropriate mode for entering a particular foreign country
Explanation:
The options to the question are:
A. choosing an appropriate mode for entering a particular foreign country
B. developing a business strategy
C. marketing a product or service
D. adhering to labor and environmental standards
E. maintaining healthy relations with the U.S. government.
From the question, we are told that Sun-Jun is the executive general manager of a U.S.-based multinational corporation while Marisol is a manager in a similar position but works for an American company that operates only in the U.S. and does not engage in international business.
Since Marisol's company does not engage in international business, while Sun-Jun works in a multinational corporation, this means that the business function will be most typically exclusive to Sun-Jun will be choosing an appropriate mode for entering a particular foreign country.
Project A had an initial investment of $4 million, out of which $2 million has already been spent. A new Project B needs $1.5 million to complete and will meet the same objectives as Project A. Which project should you select? You can only pick one. DEVELOP PROJECT CHARTER T&T Question You're managing a software project for a manufacturing company. A new computer, which costs $50,000 including shipping and installation, will speed up the development process and cause a gross savings of $100,000 after one year of purchase of the computer. Assuming an interest rate of 10% per annum, what's the NPV of the savings?
A. $90,000
B. $40,909
C. $45,555
D. $91,110
Answer:
A
Decision: Project A should be selected.
B
NPV =$40,909.09
Explanation
A
Since the two projects would achieve the same objectives, the project with the lowest initial cost should be selected.
Kindly note that the $2 million already spend on project A is not a relevant cash flow because it is sunk cost. Hence, the initial cos outlay of project A will be $2 million which will be spent should the project be undertaken.
Project B on the other hand would cost $1.5 million in initial cost which is $500,000 cheaper than project A.
Decision: Project A should be selected.
B
The NPV is the difference between the PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.
NPV of an investment:
NPV = PV of Cash inflows - PV of cash outflow
Initial cost = 50,000
The NPV of the savings
NPV = 100,000× 1.1^(-1) - 50,000= 40,909.09
NPV =$40,909.09
Company X uses the accounts receivable ageing approach to estimate bad debt expense. Please calculate the December 31, 2018 allowance for doubtful accounts using the following information: The estimated loss rate for uncollectibility for each category is as follows: Up to 30 days due 3%, Up to 31 to 60 days due 6% and Over 60 days due 10%.
Before the December 31, 2018 calculations were made the allowance for doubtful accounts had a $500 Debit balance in it. The balances in the December 31, 2018 accounts receivable ageing schedule are as follows:
Up to 30 days due $100,000
Up to 31 to 60 days due $40,000
Over 60 days due $20,000
Answer:
Company X
Calculation of the December 31, 2018 Allowance for Doubtful Accounts:
Accounts Receivable balances Allowance for Doubtful Accounts
Up to 30 days due $100,000 $3,000 (100,000 x 3%)
Up to 31 to 60 days due $40,000 $2,400 (40,000 x 6%)
Over 60 days due $20,000 $2,000 (20,000 x 10%)
Total Allowance for Doubtful Accounts $7,400
Explanation:
The 2018 Uncollectible Expenses will be $7,900 ($7,400 + 500).
Using the ageing method, each class of account receivable balance is applied the estimated rate of uncollectible. Then, these are summed to give the amount estimated as the Allowance for Doubtful Accounts for the year. The resulting figure is compared with the balance in the Allowance for Doubtful Accounts to determine the amount of the Uncollectible Expenses which is taken to the income summary for the period.
On your way home from Super Groceries, your car breaks down. It is a hot summer day and you have nobody to call. With little time before the food spoils, you decide to prioritize what to carry on the walk home. You choose to take three items with you. Since you will need all five items today, you will replace the two abandoned items at the corner store near your house, Convenient Grocers.The table below contains the prices you paid for each good at Super Groceries and the prices you will need to pay at Conveniant Grocers to replace the goods Which three items should you save? Place them in the bin. Leave the rest of the items unplaced Items that you save item Super Grocers Convenient Groceries eggs $3.65 $4.25turkey $3.60 $2.75milk $2.75 $5.15vegetables $4.00 $3.00fruits $2.75 $3.60
Answer:
Which three items should you save?
eggs, milk and fruits
Explanation:
Item Super Convenient Difference
Grocers Groceries in price
eggs $3.65 $4.25 -$0.60
turkey $3.60 $2.75 $0.85
milk $2.75 $5.15 -$2.40
vegetables $4.00 $3.00 $1.00
fruits $2.75 $3.60 -$0.85
you should take with you the three items that cost more in the Convenient Groceries store near your house: eggs, milk and fruits
if you purchase the turkey and the vegetables in the Convenient Groceries store you will pay less money than what you paid in the Super Grocers store.
Angus Company agreed to sell goods for Longhorn Company on consignment, but wasn't willing to take ownership of the goods in case they were difficult to sell. Which of the following statements is true?
A. Angus owns the inventory and should report It on its balance snoot.
B. Long hum owns the inventory but should not report it on its balance sheet because Angus actually holds the inventory
C. Angus owns the inventory since possession is nineteenths of the law. but should not report it on its balance sheet.
D. Longhorn owns the inventory and should report it on its balance sheet.
Answer: D. Longhorn owns the inventory and should report it on its balance sheet.
Explanation:
Goods to be sold on consignment for a company means a company is selling goods for another company and will be paid for their services.
In that case, the company being sold for will retain the ownership of the goods because the company that is selling it for them is simply providing a service.
Angus in this scenario are simply holding the goods to sell it and so do not own the goods. Longhorn should therefore record it in their own books as inventory.
What are cash flow financing activities
Answer: Cash flow from financing activities (CFF) is a section of a company's cash flow statement, which shows the net flows of cash that are used to fund the company. Financing activities include transactions involving debt, equity, and dividends.
Explanation:
Jay received the following fair market value amounts during the current year: Interest on Montgomery County bonds (used to build a bridge) $100 Interest on U.S. Treasury notes $200 Gain on sale of Montgomery County bonds $300 Common stock dividend in IBM Corporation common stock (no cash option) $400 What amount of taxable income should Jay report from these amounts
Answer:
$300
Explanation:
Given that :
Jay received the following fair market value amounts during the current year:
Interest on Montgomery County bonds
(used to build a bridge) $100
Interest on U.S. Treasury notes $200
Gain on sale of Montgomery County bonds $300
Common stock dividend in IBM Corporation
- common stock (no cash option) $400
From the above amounts that Jay received during the current year;
The following are free from an obligation and liability imposed as a result of tax.
1. Interest on Montgomery County bonds (used to build a bridge)
2. Interest on U.S. Treasury notes
3. Common stock dividend in IBM Corporation common stock (no cash option)
So; we can say they are not taxable
BUT only Gain on sale of Montgomery County bonds which is $300 only taxable
Thus, The amount of taxable income Jay should report from the above amounts is $300
"Given the fact that both the Navy and the Air Force regularly fly pilotless aircraft for surveillance and combat missions, the idea of a driverless fork truck seems somewhat of a no-brainer. Why not pilotless cargo aircraft such as FedEx and UPS? Why not semi-trucks moving intercity without drivers? How would your answer differ if we had high-ways that were dedicated to truck-only traffic, either on an exclusive or time-allocated basis? Where do you think the concept of probotics will eventually end up? "
Answer:
If we had highways available to truck-only traffic then the question will need to contemplate on is if the truck-only highways will enable only driver less trucks or the conventional trucks as well.
Also humans are susceptible to error. while machines usually follow strict rules.
These two different methods to driving and could cause problems and also accidents. the only method accomplish driver less trucks is to ensure truck-only highways exclusive to driver less trucks.
The idea of robotics and automations will keep growing. we may have, automated vehicles on the road in the next 20 years.
Similarly automation is set to change our home, roads, cars and how we do business today.
Explanation:
Solution
There are different reasons why we do not see driver less fork truck or pilot less cargo aircraft. but the key reasons behind them can be is stated below:
(1)Technology: The technology behind driver less truck or pilot less aircraft are still very fresh. This implies that the use of this technology is extremely high. at some point it may even include national security concern. this is the reason why the technology is not available openly to public and business organization cannot use them for their customers.
(2)Safety: Pilot less aircraft for surveillance carries a particular risk. we need to know that the workmanship of Navy and Air Force is part of these risk. Thus, the normal everyday jobs like businesses and operations do not take such high risk.
A pilot less aircraft’s crash could result in damage to lives and property and brings other issues. with the new technology the risks we go higher and best not used for mass/public consumption.
(3)Regulations: Any new design of operation often needs the government approval. Driver less cars as of now are only at its initial stage of creation. But, before this becomes a common mode of transportation, the government consent may be required.
The infrastructure needs to be present for such vehicles. These requires a lot of effort and preparation, which is not available at the moment.
Now
If we had highways assigned to truck-only traffic then the question will still be if the truck-only highways will permit only driver less trucks or the conventional trucks as well.
The problem is if we mix them. humans are liable to error and also capable of improvisation. while machines do follow strict rules. these two different methods to driving and could cause confusion and also accidents. the only way to accomplish driver less trucks is to ensure truck-only highways exclusive to driver less trucks.
The idea of robotics and automations will keep growing. we may have, automated vehicles on the road in the next 20 years (in some countries). Similarly automation is set to change our home, roads, cars and how we run business today.
For Instance, in future we could be living in a completely automated house, being taken to work by automated public/private transport and even travelling to other countries in a pilot less airplanes.
Rubina is the director of procurement at Baines Corporation. She plans to send a memo to the employees in her department outlining some changes in the company's personnel policies. She believes that most of the employees will view the changes favorably. Therefore, Rubina is most likely to:
Answer: describe the bottom line of the policy changes at the beginning of the memo
Explanation:
The options to the question are:
a. describe the bottom line of the policy changes at the beginning of the memo.
b. include an apology at the end of the memo stating the inconveniences that could be caused due to the new policy.
c. present the rationale for the new policies at the memo's beginning.
d. highlight controversial issues, which could arise after the new policies have been implemented, in the memo.
From the question, we are informed that Rubina is the director of procurement at Baines Corporation and that she plans to send a memo to the employees in her department outlining some changes in the company's personnel policies as she believes that most of the employees will view the changes favorably.
Since she is of the opinion that most of the employees will view the changes favorably, she can describe the bottom line of the policy changes at the beginning of the memo. This is because she believes the memo will get a favourable audience. In a situation whereby she is not sure if it will be favourable, in the begining of the memo, she may have to offer and apology and tell them the rationale behind the memo before going into further details.
Todrick Company is a merchandiser that reported the following information based on 1,000 units sold:
Sales $210,000
Beginning merchandise inventory $14,000
Purchases $140,000
Ending merchandise inventory $7,000
Fixed selling expense $?
Fixed administrative expense $12,000
Variable selling expense $ 15, 000
Variable administrative expense $?
Contribution marain $60,000
Net operating income 18,000
Required:
1. Prepare a contribution format income statement.
Todrick Company
Contribution Format Income Statement
Sales $300,000
Variable expenses:
Cost of goods sold $213,000
Selling expense 15,000
Administrative expense 228,000
Contribution margin 60,000
Fixed expenses
Selling expense $12,000
Administrative expense $30,000
42,000
Net operating income $60,000
2. Prepare a traditional format income statement.
3. Calculate the selling price per unit.
4. Calculate the variable cost per unit.
5. Calculate the contribution margin per unit.
6. Which income statement format (traditional format or contribution format) would be more useful to managers in estimating how net operating income will change in responses to changes in unit sales?
Prepare a contribution format income statement.
Answer:
1. Todrick Company
Contribution format income statement
Sales $210,000
Less Variable Expenses
Cost of goods sold $161,000
Selling Expenses $15,000
Administrative Expenses $12,000
$188,000
Contribution margin $22,000
Less: Fixed Expenses
Selling Expenses $68,000
Administrative Expenses $12,000
Total Fixed Expenses $80,000
Net Operating Income (Loss) $62,000
Working
Cost of goods sold=Beginning inventory + Purchases − Ending inventory
=$14,000 + $140,000 − $7,000
=$161,000
Variable administrative = Sales - Cost of goods sold - Variable expense - Contribution margin
= $210,000 - $161,000 - $15,000 - $60,000
= -$26,000
Fixed selling expenses = Contribution margin - Administrative margin - Net Income
= $60,000 - (-$26,000) - $18,000
= $68,000
2. Todrick Company
Traditional format income statement.
Sales $210,000
Less: Cost of goods sold $161,000
Gross Profit $49,000
Selling and administrative expenses
Variable selling expenses $15,000
Fixed selling expenses $68,000
Variable administrative expenses $12,000
Fixed administrative expenses $12,000 $107,000
Net Operating Income (Loss) $58,000
3. Selling price per unit = Sales / No of units
= $210,000 / 1000 unit
= $210
4. Variable cost per unit = Variable expenses / No of units
= $188,000 / 1000 unit
= $188
5. Contribution margin per unit = Contribution margin / No of units
= $22,000 / 1000 unit
= $22
6. In the contribution income statement, the income is calculated in a detailed manner. The expense is evaluated at each step. It will be useful for the managers to estimate the changes in net operating income.
New Gadgets, Inc., currently pays no dividend but is expected to pay its first annual dividend of $4.90 per share exactly 7 years from today. After that, the dividends are expected to grow at 3.5 percent forever. If the required return is 11.3 percent, what is the price of the stock today
Answer:
Price of stock today =$33.045
Explanation:
The price of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.
This model would be applied as follows
PV of the first dividend =
Dividend in year 7 × (1+r)^(-n)
r- 11.3%, n- 7
PV = 4.90× 1.113^(-7) = 2.315
Dividend in year 8 and beyond
PV (in year 7 terms) =4.90× 1.035/(0.113- 0.035)= 65.019
PV of dividend in year 0
=PV in year 7 × 1.113^(-7)
=65.019 × 1.113^(-7) = 30.73
Price of stock today = 2.315+ 30.73 = 33.045
Price of stock today =$33.045
In 2020, a self-employed person earning $100,000, who also has $100,000 of investment income, wishes to open a Keogh Plan. Their maximum permitted contribution is:
Answer:
$20,000
Explanation:
Calculation for the maximum permitted contribution of Keogh Plan.
Based on the information given the maximum permitted contribution for Keogh Plan will be based only on their personal service income and wont be based on their investment income.
Based on this let find the maximum permitted contribution for Keogh Plan
$100,000 *20% Effective contribution rate = $20,000
Therefore their maximum permitted contribution is: $20,000
Suppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will . The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will . The temporary unemployment resulting from such sectoral shifts in the economy is best described as unemployment.
Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.
a. Extending the number of weeks for which unemployed workers are eligible for unemployment insurance benefits from the government
b. Taxing the price of placing a resume or posting a job opening on job-search website
c. Establishing government-run employment agencies to connect unemployed workers to job vacancies
Answer:
Suppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will DECREASE. The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will INCREASE. The temporary unemployment resulting from such sectoral shifts in the economy is best described as STRUCTURAL unemployment.
Structural unemployment is a non voluntary type of unemployment and it occurs because the skills of the workers are not the ones needed by the employers. In this case, labor that was used for producing cotton in Texas is no longer needed due to shifts in the world price of cotton.
Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.
c. Establishing government-run employment agencies to connect unemployed workers to job vacancies
: Narda Corporation agreed to sell all of its capital stock to Effie Corporation for three monthly payments of $200,000. After Effie made the first required payment, it ceased making other payments. The stock subscription agreement states that Effie, thus, forfeits its payments and is entitled to no other future consideration. How should Narda record the $200,000 forfeited payment
Answer:
Since Effie Corporation forfeited their stock subscription, then they will lose their stocks and the money they invested in Narda Corporation.
In this case, Narda was being completely acquired by Effie Corporation and the whole operation went down, then the initial payment must be recorded as additional paid in capital. It should not be included as part of operating income since it wasn't a normal business activity.
Using college students as the market segment, describe the most relevant reference group(s) and indicate the probable degree of influence on decisions for each of the following:_________.
A) Brand of toothpaste.
B) Purchase of a hybrid car.
C) Purchase of breakfast cereal.
D) Becoming a vegetarian.
E) Choice of a computer tablet such as the iPad.
Answer and Explanation:
A. Toothpaste brand: Toothpaste is a commonly used, inexpensive, and very popular product. These decisions are governed mainly by the reference group such as family , friends or primary group with whom a student has regular face to face experiences. Hence the purchase decision is affected by a low degree of comparison community.
B. Buying a hybrid car: A hybrid car is sometimes described as expensive and luxury products. It's moreover a non-necessity commodity for a college student. These decisions are therefore usually affected by secondary community. And a high degree of control in the comparison community will only inspire a student to buy a car.
C. Buying cereal for breakfast: This is a simple requirement of a lifetime. Therefore, even without consulting any reference group a student can buy such product. Often such transactions are rules by family group control. So it needs a low degree of control.
D. Becoming a vegetarian: It takes a high degree of influence and motivation to become a vegetarian.
Thus the aspirational group influences a student. So they opt for vegetarianism to become part of such a community. Such decision taking involves a high degree of control.
E. Option of a computer tablet like the iPod: these products are a luxury commodity sold at regular prices. Typically refer to their families , friends, magazines before making a purchase student to get an idea about the output and price of these products. These goods are the weak product with a strong brand and a strong purchase is controlled by a strong reference community impact.
A theater on Broadway recently increased the price of a ticket for a popular play by 8%. The attendance went down by 3%. What is the price elasticity of demand for tickets for this play
Answer:
0.375
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
= 3% / 8% = 0.375
I hope my answer helps you
Expenses payable always treated as current/ fixed assets. Is it true or false?
Answer:
False
Explanation:
This is an example of a current liability and not assets.
To explain this , assets are anything owned as a result of past activities that result into inflow of economic benefits while liabilities are obligation that arose as a result of pat activities that result into outflow of economic benefit.
Current assets or liabilities are expected to be settles within twelve months / a normal operating cycle of the business activities while the non - current are for a longer period.
Expenses payable are liabilities that are current in nature as it is expected to be settled within a business year.
Under optimal monetary policy, the central bank adjusts its policy based on anticipated rather than current inflation and output gaps because:
Answer: Monetary policy has a long outside lag.
Explanation:
The options are that:
a. It wants to avoid time inconsistency problems.
b. It takes time for the Central Bank to implement its policy decisions.
c. Monetary policy has a long outside lag.
d. Forecast errors are often rather large.
Monetary policy is the use of interest rate and the supply of money to control the economy. Optimal monetary policy helps to maximizes the welfare of individuals and firms given the frictions that occur in the economic environment.
Under optimal monetary policy, the central bank adjusts its policy based on anticipated rather than current inflation and output gaps because monetary policy has such long outside lags. It has a long outside lag because they mainly affect the investment plans of business and a change in the rate of interest might not really have a full effect on the spending on investment for several years.
On December 20, the company paid cash for equipment, $272,300, subject to a 2% cash discount, and freight on equipment of $11,410. Prepare entries on the books of Concord Company for these transactions. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answer:
Dr equipment $ 278,264.00
Cr cash $278,264.00
Explanation:
The amount of cash paid for equipment=$272,300*(1-2%)=$266,854.00
The cash paid for freight on equipment is $11,410
The cash paid on freight would also be debited to the equipment's account since the cost of an asset includes the amount spent bringing it to its present location and condition .
Total cost of equipment =$266,854.00+$11,410.00
Lattimer Company had the following results of operations for the past year: Sales (15,000 units at $12) $ 180,000 Variable manufacturing costs $ 97,500 Fixed manufacturing costs 21,000 Selling and administrative expenses (all fixed) 36,000 (154,500 ) Operating income $ 25,500 A foreign company whose sales will not affect Lattimer's market offers to buy 5,000 units at $7.50 per unit. In addition to existing costs, selling these units would add a $0.25 selling cost for export fees. Lattimer’s annual production capacity is 25,000 units. If Lattimer accepts this additional business, the special order will yield a:
Answer:
Effect on income= $3,750 increase
Explanation:
Giving the following information:
Variable manufacturing costs $ 97,500
A foreign company whose sales will not affect Lattimer's market offers to buy 5,000 units at $7.50 per unit.
In addition to existing costs, selling these units would add a $0.25 selling cost.
Because it is a special offer, we will not take into account the fixed costs.
Unitary variable manufacturing costs= 97,500/15,000= $6.5 + 0.25= $6.75
Now, we can calculate the effect on income:
Effect on income= 5,000*(7.5 - 6.75)
Effect on income= $3,750 increase