Answer:
62.5% and 37.5%.
Explanation:
The computation of percentage is shown below:-
Let us assume the X be the weight in Risky Asset
And, 1 - X is the weight in Risk Free asset.
SO,
Particulars Rate Weight Weighted rate
Stock 11.00% X 0.11X
Risk free assets 3% 1 - X 0.03 - 0.03X
So, the equation will be
0.03 + 0.08 X = 0.08
0.08 X = 0.08 - 0.03
0.08 X = 0.05
X = 0.05 ÷ 0.08
= 0.625
What would you pay for a bond that pays an annual coupon of $70, paid semiannually, par value, matures in 6 years, and has a yield to maturity of 8%
Answer:
Price per bond is $953.77
Explanation:
The price to be paid for the bond can be computed using pv excel function as below:
=-pv(rate,nper,pmt,fv)
rate is the yield to maturity of 8%
nper is number of coupons that the bond would pay i.e 6 annual coupons in 6 years
pmt is the annual coupon of $70
fv is the face value of $1000 by default
=-pv(8%,6,70,1000)=$953.77
Bryant Co. has $2.7 million of debt, $1 million of preferred stock, and $2.1 million of common equity. What would be its weight on preferred stock
Answer:
0.172
Explanation:
The computation of the weight on the preferred stock is shown below:
Weight on preferred stock is
= Preferred stock ÷(Debt + preferred stock + common equity)
= $1 million ÷ ($2.7 million + $1 million + $2.1 million)
= $1 million ÷ $5.8 million
= 0.172
By applying the above formula we can easily determine the weight on preferred stock
Suppose that borrowing is restricted so that the zero-beta version of the CAPM holds. The expected return on the market portfolio is 17%, and on the zero-beta portfolio it is 8%. What is the expected return on a portfolio with a beta of .6?
Answer:
10.4%
Explanation:
The computation of expected return on a portfolio is shown below:-
Expected return = Risk Free return + 5%Beta ( Market Return - Risk Free return)
= 5% + 0.60 × (17% - 8%)
= 5% + 5.4%
= 10.4%
Therefore for computing the expected return on a portfolio with a beta of .6 we simply applied the above formula.
The market return less risk free return is known as market risk premium
Wells Fargo & Company, headquartered in San Francisco, is one of the nation’s largest financial institutions. Suppose it reported the following selected accounts (in millions) as of December 31, 2017.
Retained earnings $41,563
Preferred stock 8,485
Common stock—$12/3 par value, authorized 6,000,000,000 shares; issued 5,245,971,422 shares 8,743
Treasury stock—67,346,829 common shares (2,450)
Paid-in capital in excess of par value—common stock 52,878
Required:
Prepare the stockholders’ equity section of the balance sheet for Wells Fargo as of December 31, 2017
Answer:
EQUITY AND LIABILITIES
EQUITY
Retained earnings $ 41,563
Preferred stock $ 8,485
Common stock - Issued $ 8,743
Treasury stock $ 2,450
Share Premium $ 52,878
Total Equity $114,119
Explanation:
The the stockholders’ equity section of the balance sheet shows the amount of capital invested by the shareholders in the business as well as the reserves that have been allocated to them.
Logan and Johnathan exchange land, and the exchange qualifies as like kind under § 1031. Because Logan's land (adjusted basis of $193,000) is worth $231,600 and Johnathan's land has a fair market value of $183,350, Johnathan also gives Logan cash of $48,250. a. Logan's recognized gain is $ . b. Assume that Johnathan's land is worth $208,440 and he gives Logan $23,160 cash. Logan's recognized gain is $ .
Answer:
a. Logan's recognized gain is $38,600
b. Logan's recognized gain is $23,160
Explanation:
a. If the worth of the land for Jonathan is $183,350, then the gain recognized by Logan would be;
the lower of the realized gain between the amount realized of $231,600 - adjusted basis of $193,000 = $38,600
or the fair market worth of the received boot i.e $48,250.
Therefore, Logan's recognized gain is $38,600
b. Suppose Jonathan's land is worth, $208,440, then we can calculate Logan's recognized gain to be ;
the lower of the realized gain I.e amount realized of $231,600 - adjusted basis $193,00 = $38,600
or the fair market value of the received boot I.e $23,160 .
Therefore, Logan's recognized gain is $23,160
Consider the following limit-order book for a share of stock. The last trade in the stock occurred at a price of $50. Limit Buy Orders Limit Sell Orders Price Shares Price Shares $ 49.75 500 $ 50.25 100 49.50 800 51.50 100 49.25 500 54.75 300 49.00 200 58.25 100 48.50 600 a. If a market buy order for 100 shares comes in, at what price will it be filled?
Answer:
$50.25
Explanation:
The below data given in the question will help to determine the price will it be filled, if the market buy order for 100 shares comes in
Limit Buy Orders Limit Sell Orders
Price Shares Price Shares
$ 49.75 500 $ 50.25 100
49.50 800 51.50 100
49.25 500 54.75 300
49.00 200 58.25 100
48.50 600
Therefore in a situation where a market buy order for 100 shares comes in, it will be filled at the amount of $50.25 which will be the best price reason been that the amount of $50.25 is the lowest amount for the limit sell order when compared with other price listed under the limits sell order.
A break-even analysis includes operating expenses and total monthly debt payments,
plus
school costs
gross profit margin.
Onet profit margin
zero term margin.
Answer: Gross profit margin.
Explanation:
Break-Even Analysis enables a business to know how much cash it has under given situations by helping it know how much sales it needs in order to have a certain amount of cash.
It is calculated by the formula;
(Operating Expenses + Annual Debt Service)/Gross Profit Margin = Break-Even Sales
Operating Expenses in this equation is net of Depreciation as depreciation is a non-cash expense.
The owner of a small business borrowed $70,000 with an agreement to repay the loan with quarterly payments over a five year time period. If the interest rate is 12% per year compounded quarterly, his loan payment each quarter is nearest to
Answer:
His loan payment each quarter is nearest to $4,705.10.
Explanation:
Using a Financial Calculator enter the following data and find PMT, the loan payment each quarter
Pv = $70,000
n = 4 × 5 = 20
r = 12%
P/yr = 4
Fv = $0
Pmt = ? - $4,705.10
Thus PMT, the loan payment each quarter will be $4,705.10.
Fischer Company identified the following activities, costs, and activity drivers.
Activity Expected Costs Expected Activity
Handling parts $425,000 25,000 parts in stock
Inspecting product $390,000 940 batches
Processing purchase orders $220,000 440 orders
Designing packaging $230,000 5 models
1. Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours.
B. Compute separate rates for each of the four activities using the activity-based costing.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Activity Expected Costs Expected Activity
Handling parts $425,000 25,000 parts in stock
Inspecting product $390,000 940 batches
Processing purchase orders $220,000 440 orders
Designing packaging $230,000 5 models
Total overhead= $1,265,000
First, we need to calculate a plantwide predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,265,000/70,000
Predetermined manufacturing overhead rate= $18.07 per direct labor hour
Now, we can determine the overhead rate for each activity:
Handling parts= 425,000/25,000= $17 per part
Inspecting product= 390,000/940= $414.89 per batch
Processing purchase orders= 220,000/440= $500 per order
Designing packaging= 230,000/5= $46,000 per model
The accounts receivable turnover measures a. the fair market value of accounts receivable b. how frequently during the year the accounts receivables are converted to cash c. the efficiency of the accounts payable function d. the number of days of accounts receivable outstanding
Answer:
b. how frequently during the year the accounts receivables are converted to cash
Explanation:
Accounts receivable turnover is an example of activity ratios.
Accounts receivable turnover = revenue / average receivables
it calculates how frequently receivables are converted into revenues.
On September 1, 2021, Middleton Corp. lends cash and accepts a $1,700 note receivable that offers 7% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021
Answer:
The interest revenue in 2021 is $39.44.
Explanation:
The amount of lending cash and accepting = $1700
Interest rate = 7% per annum
Therefore the interest rate per month = 7% / 12 = 0.58%
Now find the interest revenue by multiplying 1700 with per month interest rate and the number of months. Since the lending and accepting date is 1st September. So only 4 months remain in 2021.
The interest revenue in 2021 = 1700 × 0.58 ×4 = $39.44
When a country produces on its production possibilities curve, then this country's unemployment is expected to be at one of its lowest rates, however, prices in this country are not expected to be relatively low.
a. True
b. False
Answer:
TRUE
Explanation:
the production possibility curve shoes the number of goods that can be produced in an economy when its resources are fully employed.
if a country produces on its production possibilities curve, it means that its resources are fully employed and so unemployment would be at its lowest.
Because Toyota's investment eventually increases the level of R&D spending for his given level of sales revenue what would the effect on Toyota's return on invested capital (ROIC)?
Available Options Are:
a. Increasing ROIC by increasing return on sales
b. Decreasing ROIC by increasing return on sales
c. Decreasing ROIC by decreasing return on sales
d. Increasing ROIC by decreasing return on sales
Answer:
Option C. Decreasing ROIC by decreasing return on sales
Explanation:
The return on sales would be reduced as the research expenses have increased substantially. The implications of increased research expenses on the ROIC can be understood by analyzing the ROIC formula which is given as under:
ROCI = Operating Income (1 - Tax Rate) / Book Value of Invested Capital
As revenue expenditure (Research and Development expenses) of the company has increased, this would decrease the operating income of the company which means that the numenator would be decreased and as a result the ROCI would decrease.
Johnson's Plumbing's fixed costs are $700,000 and the unit contribution margin is $17. What amount of units must be sold in order to realize an operating income of $100,000
Answer:
Target profit in units = 47058.82 rounded off to 47059 units
Explanation:
The break even units of sales are the number of units that must be sold in order for the company to have enough total revenue to cover its total costs. It is a point in the number of units where there is no profit or no loss.
We can use the break even analysis and formulas to calculate the number of units required to earn a certain target profit. Thus, we will just need to add the target profit amount to the fixed costs in the break even in units formula. The formula to calculate the target profit in units is,
Target profit in units = (Fixed costs + Target profit) / Contribution margin per unit
Target profit in units = (700000 + 100000) / 17
Target profit in units = 47058.82 rounded off to 47059 units
Requirement 2. How will Bargain Central Furniture, Inc. report treasury stock on its balance sheet as of December 31, 2016? Bargain Central Furniture, Inc. will report treasury stock ▼ on the balance sheet as ▼ to total stockholders' equity.
Answer:
Treasury stock is a contra equity account that decreases stockholders' equity. It is generally reported at the end of the stockholders' equity section on the balance sheet with a negative amount (treasury stock has a debit balance and it is reported in the credit side). In this case, the balance of treasury stock = ($3,600)
Explanation:
Some information was missing and I decided to look it up. Hopefully it will be the same exact question, but if not, you can use it as an example and just adjust the numbers.
Bargain Central Furniture, Inc., completed the following treasury stock transactions:
a. purchased 1,300 shares of the company's $1 par common stock as treasury stock, paying cash or $6 per share.
b. sold 700 shares of the treasury stock for cash of $9 per share.
The journal entries should be:
Dr Treasury stock 7,800
Cr Cash 7,800
Dr Cash 6,300
Cr Treasury stock 4,200
Cr Additional paid in capital 2,100
Treasury stock balance $3,600
The management team of Wickersham Brothers Inc. is preparing its annual financial statements.
The statements are complete, except for the Statement of Cash Flows.
The completed comparative Balance Sheets and Income Statements are summarized:
Balance Sheet
Assets: Current Year Prior Year
Cash $95,700 $114,900
Accounts receivable 124,000 108,500
Merchandise inventory 93,000 100,750
Property and equipment 176,000 93,000
Less: Accumulated
depreciation (50,640) (26,000)
Total assets $438,060 $391,150
Liabilities:
Accounts payable $15,500 $18,600
Salaries and Wages Payable 3,100 1,550
Notes payable, long-term 77,500 93,000
Stockholders' Equity:
Common stock 144,000 124,000
Retained earnings 197,960 154,000
Total Liabilities and
Stockholders' Equity $438,060 $391,150
Income Statement
Sales $420,000
Cost of goods sold 220,000
Depreciation expense 24,640
Other expenses 105,000
Net income $70,360
Other information from the company's records includes the following:
a. Bought equipment for cash, $83,000.
b. Paid $15,500 on long-term note payable.
c. Issued new shares of common stock for $20,000 cash.
d. Cash dividends of $26,400 were declared and paid to stockholders.
e. Accounts Payable arose from inventory purchases on credit.
f. Income tax expense ($17,590) and interest expense ($4,650) were paid in full at the end of both years and are included in Other Expenses.
Required:
Prepare the Statement of Cash Flows, using the indirect method. Include any supplemental disclosures.
(Enter any deductions and cash outflows as a negative value)
Answer:
Wickersham Brothers Inc.
Statement of Cash Flows, indirect method:
Operating Activities:
Adjustment of Net Income $70,360
Add Depreciation 24,640
Cash from operations $95,000
Working capital adjustments:
Accounts receivable -$15,500
Inventory 7,750
Accounts Payable -$3,100
Salaries & Wages Payable 1,550
Income Tax expense -$17,590
Interest expense -$4,650
Cash flow from operating activities $64,460
Financing Activities:
Long-term note payable -$15,500
Common Stock $20,000
Dividend -$26,400
Cash flow from financing activities -$21,900
Investing Activities:
Equipment -$83,000
Net Cash flows ($40,440)
Explanation:
a) Balance Sheet
Assets: Current Year Prior Year
Cash $95,700 $114,900
Accounts receivable 124,000 108,500
Merchandise inventory 93,000 100,750
Property and equipment 176,000 93,000
Less: Accumulated
depreciation (50,640) (26,000)
Total assets $438,060 $391,150
Liabilities:
Accounts payable $15,500 $18,600
Salaries & Wages Payable 3,100 1,550
Notes payable, long-term 77,500 93,000
Stockholders' Equity:
Common stock 144,000 124,000
Retained earnings 197,960 154,000
Total Liabilities and
Stockholders' Equity $438,060 $391,150
b) Income Statement
Sales $420,000
Cost of goods sold 220,000
Depreciation expense 24,640
Other expenses 105,000
Net income $70,360
c) Operating Activities:
Accounts receivable -$15,500
Inventory 7,750
Accounts Payable -$3,100
Salaries & Wages Payable 1,550
Income Tax expense -$17,590
Interest expense -$4,650
Net Income $70,360
Add Depreciation 24,640
Cash from operations $95,000
d) Financing Activities:
Long-term note payable -$15,500
Common Stock $20,000
Dividend -$26,400
e) Investing Activities:
Equipment -$83,000
f) The indirect method is one of the two methods for preparing the Statement of Cash Flows. This method takes the net income and adjusts non-cash flow expenses, like depreciation. It is prepared through a reconciliation of balances, of inflows and outflows during two periods.
Which term is defined as the most appealing trade-off or item given up as the result of an
economic decision?
Increasing cost
Opportunity cost
Recycled trade off
Economic trade off
Answer:
it could be the increase in cost due to economical well-being either the increase in debt or credit
You experiment by offering free warranties for your product in market A but not in market B. Sales in A rise from 240 to 360 units per week while sales in B rise from 410 to 430. The Difference-in-difference estimate of the effect of the free warranty is:
Answer:
Difference in difference estimate = 50 - 5% = 45 %
Explanation:
a) Data and Calculations:
Market A Market B
Sales 240 410
Sales rise 360 430
Rise difference 120 20
Percentage of rise 50% 5%
120/240 x 100 = 50%
20/41 x 100 = 4.878% or 5%
Therefore, the Difference in difference estimate = 50 - 5% = 45 %
One can then say that the free warranties in market A brought about a difference in difference of 45% in Market A when compared to the no warranties in Market B. This can be seen from the presented data. Sales in A rose from 240 units to 360 units, an increase of 120 units or 50%. Sales in market B only rose from 410 to 430, an increase of 20 units or 5%. This difference in difference estimator shows the effect of the free warranty on market A and market B. This means that the firm could do better by introducing the free warranties for its product in market B, all things being equal.
The overhead costs for a company are presently $X per month. The management team of the company in cooperation with the employees is ready to implement a comprehensive improvement program to reduce these costs. If you (a) consider an observation of actual overhead costs for one month analogous to an output unit, (b) estimate the overhead costs for the first month of program implementation to be 1.15X due to extra front-end effort, and (c) consider a 90% improvement curve applicable to the situation, what is your estimate of the percentage reduction in present overhead costs per month after 30 months of program implementation
Answer:
31.42%
Explanation:
The computation of the estimate of the percentage reduction in present overhead costs per month is shown below:-
n = log s ÷ log2
= log 0.90 ÷ log 2
= -0.152
Now we will use the learning curve equation which is here below:
Z30 = 1.15X × 30^(-0.152)
= 0.685765148
So, the cost is reduced by
= 1 - 0.685765148
= 0.314234852
or
= 31.42%
Veronica Mars, a recent graduate of Bell’s accounting program, evaluated the operating performance of Dunn Company’s six divisions. Veronica made the following presentation to Dunn’s board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $26,500." The Other Five Divisions Percy Division Total Sales $1,663,000 $100,000 $1,763,000 Cost of goods sold 978,100 76,800 1,054,900 Gross profit 684,900 23,200 708,100 Operating expenses 529,000 49,700 578,700 Net income $155,900 $ (26,500 ) $129,400 In the Percy Division, cost of goods sold is $60,500 variable and $16,300 fixed, and operating expenses are $29,100 variable and $20,600 fixed. None of the Percy Division’s fixed costs will be eliminated if the division is discontinued. Is Veronica right about eliminating the Percy Division? Prepare a schedule to support your answer.
Use the following information for Jett Co. to answer the following question: 2015 2014 Sales 1,200 1,000 COGS 850 700 Operating Expenses 200 200 Income Taxes 30 35 Jett Co.'s average tax rates for 2015 and 2014 are: A. 15.5% and 10.0% B. 20.0% and 35.0% C. 25.8% and 35.4%. D. 31.4% and 36.8%.
Answer:
B. 20.0% and 35.0%
Explanation:
Jett Co.'s Average tax rates for 2015 = Income taxes paid / Taxable income
When, Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,200 - $850 - $200
= $150
Hence, Jett Co.'s Average tax rates for 2015 = $30 / $150
= 20%
Jett Co.'s Average tax rates for 2014 = Income taxes paid / Taxable income
When Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,000 - $700 - $200
= $100
Hence, Jett Co.'s Average tax rates for 2014 = $35 / $100
= 35%
Two equal-sized newspapers have an overlap circulation of 10% (10% of the subscribers subscribe to both newspapers). Advertisers are willing to pay $24 to advertise in one newspaper but only $45 to advertise in both, because they're unwilling to pay twice to reach the same subscriber. Suppose the advertisers bargain by teling each newspaper that they're going to reach agreement with the other newspaper, whereby they pay the other newspaper $21 to advertise. According to the nonstrategic view of bargaining, each newspaper would earn ____________ with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement _____________.
Suppose the two newspapers merge. As such, the advertisers can no longer bargain by telling each newspaper that they're going to reach agreement with the other newspaper. Thus the total gains for the two parties (the advertisers and the merged newspapers) from reaching an agreement with the advertisers are $21.
According to the nonstrategi argaining, each merged newspaper will earn ___________in an agreement with the advertisers. This gain to the merged newspaper is_____________than the total gains to the individual newspapers pre-meger.
Answer:
Each newspaper would earn $10.50 with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement $21
Each merged newspaper will earn $22.50 in an agreement with the advertisers.
The merged newspapes is GREATER
Explanation:
Each newspaper would earn $10.50 with the advertisers. The total gain for the two newspapers from reaching an agreement is $ of the $21 in value added by reaching an agreement $21
Each merged newspaper will earn $22.50 in an agreement with the advertisers.
The merged newspaper is GREATER
Below is the calculation:
1.$21/2=$10.50
2.$10.50+$10.50=$21
3.$45/2=$22.50
4. GREATER because $22.50 is greater than the total gains to the individual newspapers pre-meger of $21
Pendleton Company, a merchandising company, is developing its master budget for 2015. The income statement for 2014 is as follows:________.
Pendleton Company
Income Statement
For Year Ending December 31, 2014
Gross sales $2,000,000
Less: Estimated uncollectible accounts (40,000)
Net sales 1,960,000
Cost of goods sold (1,100,000)
Gross profit 860,000
Operating expenses (including $25,000
depreciation) (500,000)
Net income $360,000
The following are management's goals and forecasts for 2015:________.
1. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent.
2. The cost of merchandise will increase by 3 percent.
3. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation.
4. The estimated uncollectibles are 2 percent of budgeted sales.
Answer and Explanation:
The Preparation of budgeted functional income statement for 2015 is shown below:-
Pendleton Company
Budgeted functional income statement
For the year ended 2015
Particulars Amount
Sales revenue $2,204,800
($2,000,000 × 106% × 104%)
Less:
Estimated uncollectible accounts at 2% $44,096
Net sales revenue $2,160,704
Less: Cost of goods sold $1,178,320
($1,100,000 × 103% × 104%)
Gross Profit $982,384
Less: Operating expense $575,000
($500,000 + 10%) + $25,000
Net income $407,384
We simply deduct all expenses from the sales revenue so that the net income could come
Kant Corporation retires its $100,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $96,250. The entry to record the redemption will include a
Answer:
Refer to the explanation below
Explanation:
Please see the journal entry below;
Dr Bonds payable $100,000
Dr Loss on retirement of bonds
$5,750
( $102,000 + $3,750 - $100,000)
To Cash $102,00( $100,000 × 1.02)
To Discount on bonds payable
$3,750( $100,000 - $96,250)
(Being redemption that is recorded)
Because bonds payable and loss on retirement of bonds decreases the liability and increased the loss, hence were debited. Cash and discount on bonds payable were credited because it decreases the assets and increased liabilities respectively.
The balanced scorecard approach relies not only on financial performance measures, but includes customers, internal business processes, and organizational learning and growth.
a. True
b. False
Which of the following describes the effect of the purchases that consumers
make?
A. provide jobs for distributors
B. increase producers costs
C. indicate their desires to producers
D. are not taxed in a free-market system
Answer: C) indicate their desires to producers
Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Answer:
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Explanation:
The price of Common Stock is equivalent to the price required to settle the Market Cost of Land and Buildings.
Also note that the Common Stocks have a par vale of $7, this means that any amount paid in excess of the par value is accounted in the Share Premium Reserve.
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Land $45,000
Building $85,000
To Common stock $49,000 (7,000 shares × $7)
To Premium on issue of common stock 81,000
(Being recording of the issuance of the stock in exchange for the land and building)
Learn more: brainly.com/question/17429689
On January 1, 2020, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Instructions
a. Prepare the journal entry at the date of the bond purchase.
b. Prepare a bond amortization schedule.
c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.
d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.
Answer:
a. Prepare the journal entry at the date of the bond purchase.
January 1, 2020, bonds purchased at a premium
Dr Bonds receivable 300,000
Dr Premium on bonds receivable 22,744.44
Cr Cash 322,744.44
b. Prepare a bond amortization schedule.
Date Interest Cash Premium Unamortized Carrying
revenue received amortization premium value
1/1/20 - -322,744.44 - 22,744.44 277,255.56
1/1/21 32,274.44 36,000 3,725.56 19,018.88 280,981.12
1/1/22 31,901.89 36,000 4,098.11 14,920.77 285,079.23
1/1/23 31,492.08 36,000 4,507.92 10,412.85 289,587.15
1/1/24 31,041.23 36,000 4,958.77 5,454.08 294,545.92
1/1/25 30,545.92 336,000 5,454.08 0 0
c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.
Dr Interest receivable 36,000
Cr Interest revenue 32,274.44
Cr Premium on bonds receivable 3,725.56
(322,744.44 x 10%) - (300,000 x 12%) = 32,274.44 - 36,000 = 3,725.56
d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.
Dr Interest receivable 36,000
Cr Interest revenue 31,901.89
Cr Premium on bonds receivable 4,098.11
(319,018.88 x 10%) - (300,000 x 12%) = 31,901.89 - 36,000 = 4,098.11
amortization year 3:
(314,920.77 x 10%) - (300,000 x 12%) = 31,492.08 - 36,000 = 4,507.92
amortization year 4:
(310,412.85 x 10%) - (300,000 x 12%) = 31,041.23 - 36,000 = 4,958.77
amortization year 5:
5,454.08
The following is information for Palmer Co.:
2017 2016 2015
Cost of goods sold $643,825 $426,650 $391,300
Ending inventory 97,400 87,750 92,500
Required:
(a) Use the above information to compute inventory turnover for 2016, and its days' sales in inventory at December 31, 2016.
Numerator / Denominator = Ratio
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory ?
(b) Use the above information to compute inventory turnover for 2017, and its days' sales in inventory at December 31, 2017.
Numerator / Denominator = Ratio
Inventory turnover $643,825 / $92,575 = 7.0times
Days' sales in inventory ?
Answer:
a.
i. 4.7 times
ii. 77.1 days
b
i. 7 times
ii. 52.1 days
Explanation:
Inventory turnover = cost of goods sold / average inventory
average inventory for 2016 = ( 87,750 + 92,500 ) / 2 = $90,125
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory = 365 / inventory turnover = 77.1 days
for 2017
inventory turnover = cost of goods sold / average inventory
average inventory for 2017 = ( 97,400 + 87,750 ) / 2 = $92,575
Inventory turnover $643,825 / $92,575 = 7.0 times
Days' sales in inventory = 365 / inventory turnover = 52.1 days
Loreal-American Corporation purchased several marketable securities during 2021. At December 31, 2021, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2020, and all are considered securities available-for-sale. Cost Fair Value Unrealized Holding Gain (Loss) Short term: Blair, Inc. $ 512,000 $ 389,000 $ (123,000 ) ANC Corporation 466,000 512,000 46,000 Totals $ 978,000 $ 901,000 $ (77,000 ) Long term: Drake Corporation $ 512,000 $ 576,000 $ 64,000 Aaron Industries 704,000 676,000 (28,000 ) Totals $ 1,216,000 $ 1,252,000 $ 36,000 Required: 1. Prepare appropriate adjusting entries at December 31, 2021. 2. What amount would be reported in the income statement at December 31, 2021, as a result of the adjusting entry
Answer:
Loreal-American Corporation
1. Adjusting Journal Entries;
Debit Unrealized Loss: Short-term Investments $123,000
Credit Investment in Blair Inc. $123,000
To record the unrealized loss on Investment in Blair Corporation.
Debit Investment in ANC Corporation $46,000
Credit Unrealized Gain: Short-term Investments $46,000
To record the unrealized loss on Investment in ANC Corporation.
Debit Investment in Drake Corporation $64,000
Credit Unrealized Gain on Long-term Investments $64,000
To record the unrealized gain on Investment in Drake Corporation.
Debit Unrealized Loss on Long-term Investments $28,000
Credit Investment in Aaron Industries $28,000
To record the unrealized loss on Investment in Aaron Industries.
2. Amount reported in the Income Statement at December 31, 2021 from the adjusting entry:
Unrealized Loss on Short-term Investments $77,000
Unrealized Gain on Long-term Investments $36,000
Unrealized Loss on Available for sale Investments $41,000
Explanation:
Cost Fair Value Unrealized Holding
Gain (Loss)
Short term: Blair, Inc. $ 512,000 $ 389,000 $ (123,000)
ANC Corporation 466,000 512,000 46,000
Totals $ 978,000 $ 901,000 $ (77,000)
Long term:
Drake Corporation $ 512,000 $ 576,000 $ 64,000
Aaron Industries 704,000 676,000 (28,000)
Totals $ 1,216,000 $ 1,252,000 $ 36,000