Answer: b. . If someone deliberately understates costs and thereby causes reported profits to increase, this can cause the stock price to rise above its intrinsic value. The stock will probably fall in the future. Both those who participated in the fraud and the firm itself can be prosecuted.
Explanation:
Ethics in business ad organization is very vital towards the accomplishment of goals in every organization. Ethical behavior can be influenced by training and auditing procedures.
It should be noted that when someone understates the cost intentionally maybe with the person trying to steal from the company. This can lead to the reported profits of the company to increase, and thereby cause the stock price to rise above its intrinsic value.
If eventually the stock will fall in the future, everyone who took part in this fraudulent activity and even the company itself can be prosecuted. Performing in fraudulent activities by a company or its workers will make the individuals or the company lose the trust of its clients.
Option B is the correct answer.
Suppose that Country A has 200 workers and Country B has 100 workers. Given their workforce,Country A can produce 200 bushels of corn or 800 barrels of maple syrup. Similarly, with their workforce, Country B can produce 250 bushels of corn or 500 barrels of maple syrup. Suppose the two countries trade with each other. Which of the following are true?
I. Country A has an absolute advantage in maple syrup.
II. Country B has an absolute advantage in maple syrup.
III. Country A specializes in corn.
IV. Country B specializes in corn.
A. I and III.
B. I and IV.
C. II and III.
D. II and IV.
Answer:
D. II and IV.
Explanation:
A country has absolute advantage in the production of a good if it produces more quantity of the good when compared with other countries.
A country should specialise in the production of a good for which it has comparative advantage.
A country has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries.
For country A,
One worker would produce = 200 / 200 = 1 bushel of corn
One worker would produce = 800 / 200 = 4 barrels of maple syrup.
For country B,
One worker would produce = 250 / 100 = 2.5 bushels of corn
One worker would produce = 500 / 100 = 5 barrels of maple syrup.
It can be seen that country B has absolute advantage in the production of both products because it produces more quantities of the good when compared to country A.
For country A
Opportunity cost of producing 1 bushel of corn = 4 / 1 = 4
Opportunity cost of producing 1 barrel of syrup = 1 / 4 = 0.25
For country B
Opportunity cost of producing 1 bushel of corn = 5 / 2.5 = 2
Opportunity cost of producing 1 barrel of syrup = 0.5
Country b has a lower opportunity cost when compared with country A in the production of corn. So, country B should specialise in the production of corn.
I hope my answer helps you
A company is obligated to pay its creditors $6,100 at the end of the year. If the value of the company's assets equals $5,800 at that time, what is the value of shareholders' equity
Answer:
The value of shareholders' equity is -$300
Explanation:
Shareholders' equity is the corporation's owners' residual claim on assets after debts have been paid.
Total assets= Total liability + shareholders' equity
Shareholders' equity = Total assets - Total liability
Shareholders' equity = $5,800 - $6,100
Shareholders' equity = -$300
Bradley's Miniature Golf and Driving Range Inc. was opened on March 1 by Bob Dean. These selected events and transactions occurred during March.
Mar. 1 Stockholder invested $59,000 cash in the business in exchange for common stock of the corporation
3 Purchased Snead's Golf Land for $41,200 cash. The price consists of land $22,900, building $8,310, and equipment $9,990. (Record this in a single entry.)
5 Advertised the opening of the driving range and miniature golf course, paying advertising expenses of $1,560 cash
6 Paid cash $3,500 for a 1-year insurance policy.
10 Purchased golf clubs and other equipment for $4,800 from Tahoe Company, payable in 30 days
18 Received golf fees of $1,550 in cash from customers for golf services performed
19 Sold 105 coupon books for $10 each in cash. Each book contains 10 coupons that enable the holder to play one round of miniature golf or to hit one bucket of golf balls. (Hint: The revenue should not be recognized until the customers use the coupons.)
25 Paid a $420 cash dividend. 30 Paid salaries of $810.
30 Paid Tahoe Company in full for equipment purchased on March 10.
31 Received $800 in cash from customers for golf services performed
Journalize the March transactions. Bradley's records golf fees as service revenue. (Record journal entries in the order presented in the problem.)
Answer:
Mar. 1
Cash $59,000 (debit)
Common Stock $59,000 (credit)
Mar. 3
Land $22,900 (debit)
Building $8,310 (debit)
Equipment $9,990 (debit)
Cash $41,200 (credit)
Mar. 5
Advertising expenses $1,560 (debit)
Cash $1,560 (credit)
Mar. 6
Prepaid Insurance $3,500 (debit)
Cash $3,500 (credit)
Mar. 10
Equipment $4,800 (debit)
Account Payable : Tahoe Company $4,800 (credit)
Mar. 18
Cash $1,550 (debit)
Sales Revenue $1,550 (credit)
Mar. 19
Cash $1,050 (debit)
Unearned Revenue $1,050 (credit)
Mar. 25
Dividend $420 (debit)
Cash $420 (credit)
Mar. 30
Salaries Expenses $810 (debit)
Cash $810 (debit)
Mar. 30
Account Payable : Tahoe Company $4,800 (debit)
Cash $4,800 (credit)
Mar. 31
Cash $800 (debit)
Service Revenue $800 (credit)
Explanation:
Note the following :
1.The cash earned from coupon books is posted to a Liability account : Unearned Revenue instead of Sales Revenue Account. This is because revenue is recognized until customers use the coupons.
2. Repayment of an Account Payable decreases both the Assets of Cash and the Liability of Accounts Payables.
A stock has an expected return of 10.2 percent, the risk-free rate is 3.9 percent, and the market risk premium is 7.2 percent. What must the beta of this stock be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Beta= 0.88
Explanation:
The Capital Asset pricing Model (CAPM) can be used to determined the beta.
According to the Capital Asset pricing Model the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio.
These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.
Under CAPM, Ke= Rf + β(Rm-Rf)
Rf-risk-free rate (treasury bill rate), β= Beta, Rm= Return on market.
Ke- expected return.
Note that (Rm-Rf) is known as equity risk premium
Using this model,
10.2%= 3.9% + β× (7.2%)
0.102=0.039 + 0.072β
collect like terms
0.072β = 0.102 -0.039
0.072β = 0.063
Divide both sides by 0.072
β = 0.063 /0.072
β= 0.875
Beta= 0.88
Nine years ago the Templeton Company issued 15-year bonds with a 12% annual coupon rate at their $1,000 par value. The bonds had an 8% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.
Answer:
12.39%
Explanation:
in order to determine the realized rate of return we need to calculate the yield to call:
YTC formula = {coupon + [(call price - market price)/n]} / [(call price + market price)/2]
YTC = {$120 + [($1,080 - $1,000)/9]} / [($1,080 + $1,000)/2]
YTC = $128.89 / $1,040 = 0.1239 = 12.39%
In this case, the investor's realized rate of return was actually higher than the expected yield to maturity (YTM = 12% since bonds were sold at face value).
Wilt's has earnings per share of $2.98 and dividends per share of $0.35. What is the firm's sustainable rate of growth if its return on assets is 14.6% and its return on equity is 18.2%?
Answer:
16.06%
Explanation:
According to the given situation the computation of sustainable rate of growth is shown below:-
Sustainable Growth Rate = Return on equity × (1 - Dividend payout ratio)
= 18.2% × ( 1 - 0.35 ÷ 2.98)
= 18.2% × ( 1 - 0.1174)
= 16.06%
Therefore for computing the sustainable rate of growth we simply applied the above formula.
Red Sun Rising Corp. has just signed a lease for its new manufacturing facility. The lease agreement calls for annual payments of $1,600,000 for 20 years with the first payment due today. If the interest rate is 3.45 percent, what is the value of this liability today
Answer:
The present value of the liability today is $23,631,155.52
Explanation:
The lease payments form an annuity due as the lease payments meet the criteria of the annuity due. The lease pays equal amount of payments, after equal intervals of time and for a definite period of times. Besides, the payments made are at the start of the period. Thus, it is an annuity due.
The formula to calculate the present value of an annuity due is attached and using this formula we can calculate the present value of the lease liability today.
PV = 1600000 + 1600000 * [ (1 - (1+0.0345)^-19) / 0.0345 ]
PV = $23,631,155.52
Miramar Tire and Rubber Company has capacity to produce 119,000 tires. Miramar presently produces and sells 91,000 tires for the North American market at a price of $99.00 per tire. Miramar is evaluating a special order from a South American automobile company, Ria Motors. Rio Motors is offering to buy 11,000 tires for $83.25 per tire. Miramar's accounting system indicates that the total cost per tire is as folows: Direct materials Direct labor Factory overhead (70% variable) Selling and administrative expenses (30% variable) Total 538 23 20 $95 Miramar pa s a sales commiss on equal to 5% of t e seling price on North American arders, whichis n uded in the variable portion of the selling and adm?n strative expenses. However, this special order would not havea sales comm saan. If the order was accepted, the tires would be shipped overseas for an additional shipping cost of $5.00 per tire. In addition, Rio has made the order conditional on Miramar Tire and Rubber Company receiving a Brazilian safety certification. Rio estimates that this certification would cost Miramar Tire $72,800
a. Prepare a differential analysis report for the proposed sale to Rio Motors, Round your answers to the nearest cent.
b. What is the minimum price per unit that would be financially acceptable to mirama?Round your answers to the nearest cent.
Answer:
a) spare capacity = 119,000 - 91,000 = 28,000 tires
normal sales price $99 per tire
special order for 11,000 at $83.25
Direct materials $38
Direct labor $14
Factory overhead (70% variable) $23
Selling and administrative expenses (30% variable) $20
Total $95
total avoidable costs = ($23 x 30%) + ($20 x 70%) = $20.90
total unavoidable costs = $74.10
additional costs related to the special order $5 per tire (shipping costs) + $72,800 in total
accept special reject special differential
order order amount
sales revenue $915,750 $0 $915,750
variable prod. costs ($815,100) $0 ($815,100)
variable costs ($55,000) $0 ($55,000)
associated to special order
certification costs ($72,800) $0 ($72,800)
associated to special order
total ($27,150) $0 ($27,150)
b) minimum price per unit = ($27,150 / 11,000) + $83.25 = $85.7182 ≈ $85.72
Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. Its assets totaled $4 million at the end of 2016. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 6%, and the forecasted retention ratio is 45%. Use the AFN equation to forecast the additional funds Carlsbad will need for the coming year. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest cent.
Answer:
$538,000
Explanation:
EFN = [(assets/sales) x ($ Δ sales)] - [(liabilities/sales) x ($ Δ sales)] - [profit margin x forecasted sales x (1 - dividend payout)]
current sales = $5,000,000
change in sales = $1,000,000
assets $4,000,000
profit margin = 6%
1 - dividend payout = 45%
current liabilities that change in proportion to sales = $500,000
forecasted sales = $6,000,000
EFN = [($4,000,000/$5,000,000) x ($1,000,000)] - [($500,000/$5,000,000) x ($1,000,000)] - (6% x $6,000,000 x 0.45)
EFN = $800,000 - $100,000 - $162,000 = $538,000
Billy Thornton borrowed $20,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360-day year. How much interest would Billy have to pay in a 30-day month
Answer:
Interest for a 30 day month = $120.83
Explanation:
Interest rate rate is the price paid by a borrower for the use of money and the return earned by a lender for postponing his consumption in favour of investment.
Interest is computed in two ways; Simple interest and compound interest
Simple interest: This is the interest paid on the principal invested or borrowed. To calculate simple interest, we use the formula below:
Annual Simple interest= Principal × interest Rate (%) × Time.
Monthly simple interest =Principal ×interest Rate (%)× 30/360
= 20,000 × 7.25% × 30/360= 120.833
Interest for a 30 day month = $120.83
This year, Nancy, a single taxpayer, paid $12,300 of real estate taxes on her personal residence and $7,500 of state income taxes. Assuming Nancy itemizes her deductions, what amout can she deduct for taxes this year
Answer:
$12,500
Explanation:
Nancy can deduct both her real estate taxes and state income taxes from her gross income. This way, she will end up paying less federal income taxes. The exact amount that she saves depends on her tax bracket, which is not given.
Assuming Nancy doesn't take the standard deduction, she can deduct 100% of her state income taxes ($7,500) and up to $5,000 in real estate taxes since she is a single taxpayer. Her total deduction on these two items will be $12,500.
Some studies done by economists have found that the original inventor receives _________________________________________________ from innovations, while other businesses and new product users receive the rest of the benefit.
Answer:
one-third to one-half of the total economic benefits
Explanation:
It has been found that although most inventors put in a lot of time, money, energy, and intellect into discovering new products, they most times do not make much gains from their discoveries. The rate at which other competing firms copy the new innovations, make it such that the innovative company might lose the sole right to market the product and make any gains from the sale.
Economists from their own research have also found that the original inventor just makes one-third to one-half of the total economic benefits from the new product, while other businesses receive the remaining benefits because of their ability to copy the original. Sometimes the innovators go through legal battles to secure patent rights, and even after this, they may not make enough money to cover all the expenses.
Dusty would like to buy a new car in six years. He currently has $13,500 saved. He’s considering buying a car for around $17,500 but would like to add a Turbo engine to increase the car’s performance. This would increase the price of the car to $21,500.If dusty can earn 9% interest compounded anually will he be able to get a car with a turbo engine in six years?
Answer:
yes he will
Explanation:
with a compund intrest of 9 percent and he didnt put in any money after the 13,500 he will have $22,640.85 in 6 years, so now he can go buy his car and also buy a new exhaust system
Answer: Yes he can
with a compound interest of 9 percent and he didn't put in any money after the $13,500 he will have $22,640.85 in 6 years, so now he can go buy his car and also buy with a turbo engine.
What is an example of compound interest?Compound interest definition
When you add money to a savings account or a similar account, you receive interest based on the amount that you deposited. For example, if you deposit $1,000 in an account that pays 1 percent annual interest, you'd earn $10 in interest after a year.
How do we calculate compound interest?
Compound interest, or 'interest on interest', is calculated using the compound interest formula. The formula for compound interest is A = P(1 + r/n)^nt, where P is the principal balance, r is the interest rate, n is the number of times interest is compounded per time period and t is the number of time periods.
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Examples of cash equivalents include all of the following except:
a. U.S. Treasury bills.
b. notes issued by major corporations (referred to as commercial paper).
c. currency and coins.
d. long-term notes receivable.
Answer:
d. Long-term Notes Receivable.
Explanation:
Cash and cash equivalent are those financial instruments which can be converted into cash easily and within a short period of time. Cash and cash equivalent includes the treasury bills, commercial papers( notes issued by major corporation), bills, currencies and coins but it does not include the long term notes receivable.
All the equivalents are easy to convert to cash easily except the Long term notes receivables because it requires to wait for some long period before such note can be converted into money.
A publishing company sells 450 comma 000 copies of certain books each year. It costs the company $ 1 to store each book for a year. Each time it must print additional copies, it costs the company $ 1 comma 000 to set up the presses. How many books should the company produce during each printing in order to minimize its total storage and setup costs?
Answer:
The company produce 30,000 books during each printing in order to minimize its total storage and setup costs.
Explanation:
The quantity that minimizes total storage and setup costs is known as Economic Order Quantity, in this case it is called the Optimum Batch Quantity.
Optimum Batch Quantity = √((2 × Annual demand × Setup cost per process) / Holding Cost per book.)
= √( (2 × 450,000 × $1,000) / $1)
= 30,000
Conclusion :
The company produce 30,000 books during each printing in order to minimize its total storage and setup costs.
In 2017, Costello Company performs work for a customer and bills the customer $10,000; it also pays expenses of $3,000. The customer pays Costello in 2018. If Costello uses the accrual-basis of accounting, then Costello will report:_____
a. revenue of $10,000 in 2018.
b. revenue of $10,000 in 2017.
c. net income of $7,000 in 2018.
d. expenses of $3,000 in 2018.
Answer: revenue of $10,000 in 2017
Explanation:
Accrual basis of accounting is a method that is used in accounting whereby the revenue or expenses have to be recorded when the transaction is made and not when the payment dor the transaction is made or received.
Since we are told that Costello Company performs work for a customer and bills the customer $10,000 in 2017, therefore if Costello uses the accrual-basis of accounting, then Costello will report revenue of $10,000 in 2017.
Consider two bonds, a 3-year bond paying an annual coupon of 6.90% and a 10-year bond also with an annual coupon of 6.90%. Both currently sell at a face value of $1,000. Now suppose interest rates rise to 12%.
Required:
a. What is the new price of the 3-year bonds?
b. What is the new price of the 10-year bonds?
Answer:
a.
$877.51
b.
$711.84
Explanation:
Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Both of these cash flows discounted and added to calculate the value of the bond.
According to given data
Face value of the bond is $1,000
Coupon payment = C = $1,000 x 6.9% = $69 annually
Market Rate = 12% annually
Price of the bond is calculated by following formula:
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
a.
Numbers of period = 3
Placing values in the formula
Price of the Bond = $69 x [ ( 1 - ( 1 + 12% )^-3 ) / 12% ] + [ $1,000 / ( 1 + 12% )^3 ]
Price of the Bond = $165.73 + $711.78
Price of the Bond = $877.51
b.
Numbers of period = 10
Placing values in the formula
Price of the Bond = $69 x [ ( 1 - ( 1 + 12% )^-10 ) / 12% ] + [ $1,000 / ( 1 + 12% )^10 ]
Price of the Bond = $389.87 + 321.97
Price of the Bond = $711.84
The number of support staff needed to handle the volume of incidents in a help desk operation is a similar problem to the number of cashiers a grocery store needs to keep checkout lines from getting too long.
a. True
b. False
Answer:
a. True
Explanation:
The number of support staff needed to handle the volume of incidents in a help desk operation depends on the amount of calls that are received at different times and according to that a number of staff is defined to handle the calls without having customers waiting for a long time on the phone which is the same that happens with the number cashiers at a grocery store which is determined based on the amount of people in the store to avoid long lines and we can see that the stores have more cash registers open when they are full of people.
Universal Containers (UC) has a custom, internal-only, mobile billing application for users who are commonly out of the office. The app is configured as a Connected App in Salesforce. Due to the nature of this app, UC would like to take the appropriate measures to properly secure access to the app.Which two solutions should be recommended? (Choose two.)A. Use Google Authenticator as an additional part of the login process.B. Require High Assurance sessions in order to use the Connected App.C. Disallow the use of Single Sign-on for any users of the mobile app.D. Set Login IP Ranges to the internal network for all of the app users’ Profiles.
Answer:
A,D
Explanation:
The two solutions that should be recommended when a app is configured as a Connected App in Salesforce. In regards to the nature of this app, UC would prefer to take the suitable or right measures to properly secure access to the app are as follows:
A. The Use Google Authenticator as an added part of the login process.
D. Also Setting Login IP Ranges to the internal network for every of the app users’ Profiles.
A connected app is known as a framework that authorize or allow an external application to merge or blend with Salesforce using APIs and also standard protocols, such as OpenID Connect, SAML, OAuth.
Connected apps make use of these protocols to perform some actions such as authenticate, authorize, and also provide single sign-on (SSO) for external apps.
g Jack and Jill borrow $21,000 at 7.2% amortized over 6 years to drill a well and renovate their kitchen and bathrooms. Assuming that the monthly principal and interest payments are made as agreed, what is the loan balance at the end of 3 years
Answer:
The loan balance at the end of 3 years is $11,626.26.
Explanation:
Prepare an Amortization Table to determine the loan balance at end of year 3
First, enter the following data in Financial Calculator to find the PMT, payment per month:
Pv = $21,000
r = 7.2%
n = 6 × 12 = 72
P/yr = 12
Fv = $0
PMT = ? - $360.0493
Thus the payment PMT per month is $360.0493.
Year 3
The following are balances extracted from Amortization schedule for Year 3.
Note : 36 months would have expired at end of year 3.
Principle = $ 3,619.94
Interest = $1,060.70
Balance = $11,626.26
Conclusion :
The loan balance at the end of 3 years is $11,626.26
A factory currently manufactures and sells 800 boats per year. Each boat costs $5,000 to produce. $4,000 of the per-boat costs are for materials and other variable costs, while the per-boat fixed costs (incurred on yearly rent, administrative, and other fixed costs) are $1,000. If boat orders increase to 1000 boats per year, how do per-unit costs change?
Answer:
Total unitary cost= $4,800
Explanation:
Giving the following information:
Actual units= 800
Total fixed costs= 1,000*800= 800,000
UNitary variable cost= $4,000
Units increase= 200
On unitary bases, variable costs remain constant. On the contrary, fixed costs vary at a unitary level. Now, the same amount of costs is divided by a larger number of units.
Unitary fixed overhead= 800,000/1,000= $800
Total unitary cost= 4,000 + 800= $4,800
2014 ending inventory was overstated by $25,000, but it was too late to correct the financial statements. Which of the following describes the effect of the inventory error on the 2014 financial statements?A. Net income and stockholders' equity are both understated.
B. Net income is understated and stockholders' equity is correct.
C. Net income and stockholders' equity are both overstated.
D. Net income and stockholders' equity are both unaffected.
Answer:
C. Net income and stockholders' equity are both overstated.
Explanation:
In the income statement , ending inventory is deducted from the addition of the beginning inventory and net purchases to arrive at the cost of goods sold. Therefore, the cost of goods can be stated as an equation stated as follows:
Cost of goods sold = Beginning inventory + Net purchases - Ending inventory
From the above equation, it can be observed that if the ending inventory is overstated, cost of goods sold will be understated by that amount.
Since gross income is determined by deducting cost of goods sold from the net sales, an understated cost of goods sold will result in an overstated gross income and subsequently overstated net income.
Since net income is one of the components of the stockholders' equity, an overstated net income will leads to an overstated stockholders' equity.
Therefore, the correct option is C. Net income and stockholders' equity are both overstated.
imhoff company leases a new building form noble construction, inc. The present value of the lease payments is $700000. The lease is a finance lease. Prepare the journal entry that the lesse should make to record this transaction.
Answer:
Dr right-of-use asset $700,000
Cr lease liability $700,000
Explanation:
The company upon entering into the finance lease would have to show the lease as an asset(right-of-use asset) as well as the lease liability(present value of lease obligations owed to the lessor).
As a result, the company would debit right-of-use asset with $700,000 while lease liability is also credited with the same amount
Ellen, as a manager, has always been driven by scheduling, directing group activities, planning, and trying out new ideas. For her, meeting deadlines is critical and she always gives explicit standards of performance. Ellen can be described as high on which of these?
a. Transformation
b. Delegating
c. Consideration
d. Participating
Answer: Delegating
Explanation:
Delegation is a concept of a managerial leadership which involves the transfer and directing of specific and explicit duties or activities on what needs to be accomplished and how it should be carried out usually by an experienced manager to his or her subordinates especially for the outcome of work which he or she is accountable for.
Here, Ellen is always scheduling, directing and gives explicit standard of performance shows she is high on Delegating duties.
Below are amounts (in millions) from three companies' annual reports. Beginning Accounts Receivable Ending Accounts Receivable Net SalesWalCo $1,795 $2,742 $320,427 TarMart 6,066 6,594 65,878 CostGet 609 645 66,963 Required:1. Calculate the receivables turnover ratio and the average collection period for WalCo, TarMart and CostGet. (Do not round intermediate calculations. Enter your answers in millions. Round your "Average accounts receivable" and "Receivables turnover ratio" answers to one decimal place.)2.Which company appears most efficient in collecting cash from sales?a) WalCob) TarMartc) CostGetWalCo TarMart CostGet WalCo TarMart CostGet Net sales Receivables Turnover Ratio Average accounts receivable Receivables turnover ratio times times times Average Collection Period Average collection period days days days
Answer:
1. Calculate the receivables turnover ratio and the average collection period for WalCo, TarMart and CostGet.
WalCo = 70.63TarMart = 10.41CostGet = 106.802.Which company appears most efficient in collecting cash from sales?
CostGet because its average collection period is shortestExplanation:
Beginning Accounts Ending Accounts Net Sales
Receivable Receivable
WalCo $1,795 $2,742 $320,427
TarMart $6,066 $6,594 $65,878
CostGet $609 $645 $66,963
accounts receivable turnover ratio = net sales / average accounts receivable
WalCo = $320,427 / [($1,795 + $2,742)/2] = 70.63
TarMart = $65,878 / [($6,066 + $6,594)/2] = 10.41
CostGet = $66,963 / [($609 + $645)/2] = 106.80
average collection period = 365 / accounts receivable turnover ratio
WalCo = 365 / 70.63 = 5.17 days
TarMart = 365 / 10.41 = 35.06 days
CostGet = 365 / 106.80 = 3.42 days
Sam owns 60 percent of the stock of Club Corporation. Unrelated individuals own the remaining 40 percent. For a stock redemption of Sam's stock to be treated as an exchange under the "substantially disproportionate" test, what percentage of Club stock must Sam own after the redemption
Answer: c. Any percentage less than 48 percent.
Explanation:
For a shareholder's distribution to be considered to be Substantially Disproportionate it needs to be the lesser of 2 criteria;
80% of their shares before the distribution50% of the total sharesSam owns 60% and 80% of that is;
= 80% * 60%
= 48%
Sam should own less than 48% after the redemption.
Suppose that Larimer Company sells a product for $24. Unit costs are as follows:
Direct materials $4.98
Direct labor 2.10
Variable factory overhead 1.00
Variable selling and administrative expense 2.00
Total fixed factory overhead is $26,500 per year, and total fixed selling and administrative expense is $15,260.
Requried:
a. Calculate the variable cost per unit and the contribution margin per unit.
b. Calculate the contribution margin ratio and the variable cost ratio.
c. Calculate the break-even units.
Answer:
a)
Variable cost per unit=$10.08
Contribution per unit=$13.92
b)
Contribution margin ratio=58%
Variable cost ratio= 42%
c) Break-even units=3,000 units
Explanation:
Variable cost per unit
= 4.98 + 2.10 + 1.00 + 2.00 = $10.08
Variable cost per unit=$10.08
Contribution per unit = Selling price per unit - Variable cost per unit
= 24 - 10.08 =13.92
Contribution per unit=$13.92
b)
Contribution margin ratio= contribution/selling price= 13.92/24 × 100=58%
Contribution margin ratio=58%
Variable cost ratio = variable cost/selling price= 10.08 /24× 100 = 42%
Variable cost ratio=42%
c)
Break-even units = Total general fixed cost/contribution per unit
= (26,500 + 15,260)/ 13.92 = 3000 units
Break-even units=3,000 units
Chutes & Co. has interest expense of $ 1.25 million and an operating margin of 10.8 % on total sales of $ 30.7 million. What is Chutes' interest coverage ratio?
Answer:
2.7 times
Explanation:
Chutes and co. has an interest expense of 1.25 million
Operating margin of 10.8%
Total sales of 30.7 million
The first step is to calculate the operating income
Operating income= Sales×operating margin
= $30,700,000×10.8/100
= $30,700,000×0.108
= $3,315,600
Therefore, the interest coverage ratio can be calculated as follows
Interest coverage ratio= Operating income/Interest expense
= $3,315,600/$1,250,000
= 2.65
= 2.7 times
Hence Chutes' interest coverage ratio is 2.7 times
Big-Mouth Frog Corporation had revenues of $200,000, expenses of $120,000, and dividends of $30,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a Group of answer choices debit of $50,000. debit of $80,000. credit of $50,000. credit of $80,000.
Answer:
Credit of $80,000
Explanation:
Big-Mouth Frog Corporation Calculation for Retained earnings
Using this formula
Retained earnings =Revenue- Expenses
Where,
Revenue =$200,000
Expenses =$180,000
Let plug in the formula
Retained earnings =$200,000-$180,000
Retained earnings =$80,000
Therefore when the Income Summary is closed to Retained Earnings, the amount of the credit to Retained Earnings will be $80,000
The capital accounts of Hawk and Martin have balances of $160,000 and $140,000, respectively, on January 1, the beginning of the current fiscal year. On April 10, Hawk invested an additional $10,000. During the year, Hawk and Martin withdrew $86,000 and $68,000, respectively, and net income for the year was $258,000. The articles of partnership make no reference to the division of net income. Based on this information, the statement of partners' equity would show what amount in the capital account for Martin on December 31?
Answer:
$213,000
Explanation:
We will figure out first Hawk's share of profit to reach the capital account is shown below:-
Hawk's share of profit = $258,000 ÷ 2
= $129,000
Capital account of Hawk as on December 31 = Opening Balance + Capital Introduced + Profit Share - Drawings
= $160,000 + $10,000 + $129,000 - $86,000
= $213,000
So, we have got the answer after solve the below formula.