Answer:
Please find the detailed explanation below.
Explanation:
1. Authorized stock:
This is the total(maximum) number of shares a corporation can issue. This can be found in its articles of incorporation or memorandum of association.
2. Issued stock:. This is the summation of all company's shares that have been sold and are held by shareholders.
3. Outstanding stock:
Outstanding stock or shares are all shares of a corporation that have been authorized, issued and purchased by shareholders and are held by them.
4. Preferred stock:
This share is an hybrid stock i.e it has a feature of both the equity and debt in it. Holders of this shares are entitled to fixed dividend payment and are usually paid before common shareholders if the company liquidates.
5. Treasury stock.:
Treasury shares are the shares that are repurchased by the corporation issuing them and thereby, reducing the total number of outstanding shares.
The auditors are concerned that these practices are inadequate and that more secure alternatives should be explored. Management has expressed counter concerns about the high cost of purchasing new equipment and relocating its data center. Required: What risks currently exist that are of concern to the auditors
Answer:
Audit Risk
Explanation:
Auditors could be Internal or External auditors, however, they both perform similar function in accessing company financial statements or reports. If the auditors are unable to find out financial misstatement and flag the report as correct, meanwhile, the report in actual sense contain errors, it is termed Audit Risk. It comprises of three components which are Detection risk, Inherent Risk, and Control risk
A business received an offer from an exporter for 10,000 units of product at $13.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable 12 Fixed 5 What is the amount of the gain or loss from acceptance of the offer
Answer:
Effect on income= $15,000 increase
Explanation:
Giving the following information:
A business received an offer from an exporter for 10,000 units for $13.50 per unit.
Unit manufacturing costs:
Variable 12
Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.
Effect on income= number of units*unitary contribution margin
Effect on income= 10,000*(13.5 - 12)
Effect on income= $15,000 increase
A sinking fund is established by a working couple so that they will have $60,000 to pay for part of their daughter's education when she enters college. If they make deposits at the end of each 3-month period for 8 years, and if interest is paid at 10%, compounded quarterly, what size deposits must they make
Answer:
quarterly deposit= $12,460.99
Explanation:
Giving the following information:
FV= $60,000
Number of periods= 4*8= 32
i= 0.10/4= 0.025
To calculate the quarterly deposit required, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= quarterly deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (60,000*0.025) / [(1.025^32) - 1]
A= 12,460.99
Agency conflicts between managers and shareholders An agency relationship can degenerate into an agency conflict when an agent acts in a manner that is not in the best interest of his or her principal. In business, these conflicts most frequently involve the enrichment of the firm's executives or managers (in the form of money and perquisites or power and prestige) at the expense of the shareholders. This usurping of shareholder wealth is most likely to occur when shareholders do not have sufficient information about the decisions and actions being made by the firm's management. Consider the following scenario and determine whether an agency conflict exists: Daniel owns Daniel's Tantalizing Tees, a T-shirt shop in a small college town in Kansas. With a staff of three part-time employees, Daniel operates the business in accordance with his personal goals, dreams, and capabilities.
Does Daniel have an agency conflict to deal with?
A. No; by having part-time, as opposed to full-time, employees, Daniel is prevented from experiencing an agency conflict.
B. Yes; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has created the necessary agency relationship through which an agency conflict can exist.
C. No; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has not created the necessary agency relationship through which an agency conflict can exist.
D. Yes; there is always an inherent conflict of interest between owners and operators (managers). Consider the following scenario and determine whether an agency conflict exists: Five years ago, Li created a plant-care business that grew, stocked, and maintained fresh plants in office buildings throughout Denver. Over time, The Green Zone Inc. (TGZ) has grown from a proprietorship into a corporation, now reaching far beyond Denver. To finance and support this growth, TGZ issued shares that were sold to TGZ employees, Li's family members, and selected outsiders. Li is TGZ's chairman of the board of directors and CEO, but he is no longer the largest shareholder. At the latest annual meeting, two mutually exclusive proposals were placed on the ballot for discussion and vote. The first was put forth by Li and TGZ's management team, and the second was proposed by a small group of other shareholders. Both groups are adamantly opposed to the other group's proposal, even though both proposals would likely have the same effect on TGZ's value and riskiness.
Does an agency conflict exist between TGZ's management and the small group of opposing shareholders?
A. Yes; an agency relationship exists, and an agency relationship always gives rise to agency conflicts, regardless of the actual behavior of the participants.
B. Yes; any conflict or disagreement between the firm's managers and its shareholders constitutes an agency conflict.
C. No; although an agency relationship exists between TGZ's management-including Li as TGZ's chairman and CEO and the firm's shareholders-there is no agency conflict, because no expropriation or wasting of the shareholders' wealth has occurred.
D. No; Li was the original owner of TGZ, so he would always be sensitive to the concerns of the firm's current owners (shareholders) and would not engage in an agency conflict. For the past 40 years, companies have attempted to attract, retain, and encourage managers by developing attractive compensation packages. These compensation packages have also been intended to reduce potential agency conflicts between these managers and the firm's shareholders. In the best interest of shareholders, compensation packages should be structured in a way such that managers have an incentive to maximize the____value of the company's common stock price. Great Fortunes Baking Company's stockholders are mostly individual investors, and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Great Fortunes Baking Company's stock, direct shareholder intervention would be likely to motivate the firm's management. Katz Investment Group's stock price is currently trading at $20 per share. The consensus among market analysts is that the stock should trade for $27.5 per share, given the amount, timing, and riskiness of the company's dividends. Is Katz Investment Group more or less likely to receive a hostile takeover bid?
1. Less likely
2. More likely
Answer:
1. C. No; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has not created the necessary agency relationship through which an agency conflict can exist.
For an agency problem to exist, the owners and the managers must be two different sets of people. If they are the same person, then practically speaking, they cannot usurp their own wealth.
2. C. No; although an agency relationship exists between TGZ's management-including Li as TGZ's chairman and CEO and the firm's shareholders-there is no agency conflict, because no expropriation or wasting of the shareholders' wealth has occurred.
Indeed there is an Agency relationship in effect because some shareholders are not in management. However, it cannot be said that there is a agency conflict because there is no evidence shown that shareholder wealth is being expropriated.
3. Intrinsic
The Intrinsic value of a stock is the value that an investor believes the stock is worth. A Manager should therefore get incentives that will inspire them to take investor perception of stock high. When this happens it increases shareholder wealth primarily through capital gain.
4 ... direct shareholder intervention would be more likely to motivate the firm's management.
Institutional Investors such as Pension and Mutual funds usually have more say in a company as they represent several shareholders and have expertise in the field. Should they get involved, their direct intervention would motivate the firm's management.
5. More likely
If investors believe that the stock should be trading for higher than it actually is, this is incentive to try to lay their hands on the stock to take advantage of this undervaluation. They would be able to offer the current shareholders more money than what it is currently worth which will most likely get them the shares they want. This is classified as a Hostile takeover.
Sexton Corp. has current liabilities of $510,000, a quick ratio of .93, inventory turnover of 6.9, and a current ratio of 1.5. What is the cost of goods sold for the company?
Answer:
The cost of goods sold for the company is $2,005,830.
Explanation:
This can be calculated from the available information using the following steps:
Step 1: Calculation of Current Assets
To do this, we use the current ratio formula as follows:
Current ratio = Current Assets / Current Liabilities
Substituting the values in the question into the equation above and solve for Current Assets, we have:
1.5 = Current Assets / $510,000
Current Assets = $510,000 * 1.5 = $765,000
Step 2: Calculation of Inventory
To do this, we use the Quick Ratio formula as follows:
Quick ratio = (Current Assets - Inventory) / Current Liabilities
Substituting the values in the question and from Step 1 into the equation above and solve for Inventory, we have:
0.93 = ($765,000 - Inventory) / $510,000
0.93 * $510,000 = $765,000 - Inventory
$474,300 = $765,000 - Inventory
$474,300 + Inventory = $765,000
Inventory = $765,000 - 474,300 = $290,700
Note that this inventory of $290,700 is the ending inventory.
Step 3: Calculation of Cost of Goods Sold
To do this, we use the Inventory Turnover formula as follows:
Inventory turnover = Cost of goods sold / Average Inventory
Note that average Average Inventory is the addition of the beginning and closing inventory divided by 2. But since the beginning inventory is not available, the practice is to use the ending inventory in place of the average inventory. This is what we do here below.
Substituting the values in the question and from Step 2 into the equation above and solve for Cost of goods sold, we have:
6.9 = Cost of goods sold / $290,700
Cost of goods sold = 6.9 * $290,7000 = $2,005,830
Therefore, the cost of goods sold for the company is $2,005,830.
Use the information below to answer the following question. Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 3 Purchase 5 $20 10 Sale 3 17 Purchase 10 24 20 Sale 6 23 Sale 3 30 Purchase 10 30 Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.
Answer:
Boxwood Company
Determination of the Ending Inventory, using the FIFO method:
Date Blankets Units Unit Cost Total cost
May 17 Purchase 3 24 $72
May 30 Purchase 10 30 $300
Total cost of Ending Inventory = $372 ($72 + 300)
Explanation:
a) Inventory Records during May:
Date Blankets Units Cost
May 3 Purchase 5 $20
May 10 Sale 3
May 17 Purchase 10 24
May 20 Sale 6
May 23 Sale 3
May 30 Purchase 10 30
May 31 Ending Balance 13
FIFO method of costing inventory is based on the assumption that a business entity sells older stock of goods first before the latest goods brought into the store. FIFO means First-in, First-out. It is one of the methods of costing inventory. Others include LIFO, Weighted Average, and Specific Identification.
Williamson Industries has $7 billion in sales and $2 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity. What level of sales could Williamson Industries have obtained if it had been operating at full capacity
Answer: Williamson industries would have obtained $7.78 billion in sales
Explanation: According to the question, the company is having a total of $2 billion in fixed assets. The fixed assets are currently operating at 90% (0.9) of its total capacity. At his level, the company is able to achieve a sales figure of $7 billion. The implication is as follows;
Fixed assets (at 100%) = 2 billion
Fixed assets (at 90%) = 2 * 0.9
Fixed assets (at 90%) = 1.8
If the company utilizes $1.8 billion to achieve a $7 billion sales figure, then operating at full capacity (100%) would yield the following;
7/x = 90/100
(Where x equals sales level at 100% capacity)
7/x = 0.9
Cross multiply
x = 7/0.9
x = 7.7777...
x ≈ 7.78
Therefore, if Williamson Industries had been operating at full capacity, it would have obtained a sales level of $7.78 billion
Return to questionItem 12Item 12 Part 2 of 2 0.62 points Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Daley Company prepared the following aging of receivables analysis at December 31. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 585,000 $ 399,000 $ 93,000 $ 39,000 $ 21,000 $ 33,000 Percent uncollectible 1 % 2 % 5 % 7 % 10 % Exercise 9-9 Percent of receivables method LO P3 a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 6% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method. b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $12,300 credit. c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,300 debit.
Answer:
total accounts receivable = $585,000 + $399,000 + $93,000 + $39,000 + $21,000 + $33,000 = $1,170,000
a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 6% of total accounts receivable to estimate uncollectibles, instead of the aging of receivables method.
bad debt = $1,170,000 x 6% = $70,200
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $12,300 credit.
= $70,200 - $12,300 = $57,900
Dr Bad debt expense 57,900
Cr Allowance for doubtful accounts 57,900
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $1,300 debit.
= $70,200 + $1,300 = $71,500
Dr Bad debt expense (= $70,200 + $1,300) 71,500
Cr Allowance for doubtful accounts 71,500
Since the allowance for doubtful accounts has a credit balance, any previous debit balance must be cancelled by crediting the amount.
The January 1, Year 1 trial balance for the Tyrell Company is found on the trial balance tab. The beginning balances are assumed. Tyrell Co. entered into the following transactions involving short-term liabilities in Year 1 and Year 2.
Year 1
Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms n/30.
May 19 Replaced the April 20 account payable to Locust with a 90-day, 10%, $35,000 note payable along with paying $5,250 in cash.
July 8 Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9%, $80,000 note payable.
Aug. 17 Paid the amount due on the note to Locust at the maturity date.
Nov. 5 Paid the amount due on the note to NBR Bank at the maturity date.
Nov. 28 Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8%, $42,000 note payable.
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Year 2
Jan. 27 Paid the amount due on the note to Fargo Bank at the maturity date.
Requirement General General Trial Schedule of Calculation of Year 2
Journal Ledger Balance Payables Interest Payment
1. General Journal tab- Prepare the 2016 journal entries related to the notes and accounts payable of Tyrell Co
2. Calculation of interest tab - Use the interest formula (P x Rx T) to verify the amount of interest recorded in your entries. Verify that total interest expense agrees with the trial balance.
3. Year 2 payment tab - Prepare the January 27, 2017 entry to record the re-payment of the note at maturity
Answer: Please see explanatory column
Explanation:
Tyrell Company for 2016
Journal to record the purchase of merchandise inventory
Date Account Title Debit Credit
April 20 Merchandise inventory $40,250
2016 Accounts payable - Locust $40250
Journal to record the replacement of account with 10% notes payable
Date Account Title Debit Credit
March 19 Accounts payable - Locust $40,250
2016 10%notes payable $35,000
Cash $5,250
Journal to record the Borrowing of $80,000 cash in 120-days at 9%,
Date Account Title Debit Credit
July 8 Cash $80,000
2016 9%notes payable $80,000
Journal to record the 10%, notes payable at maturity date
Date Account Title Debit Credit
Aug 17 10% notes payable $35,000
2016 interest expense $875
Cash $35,875
Using Interest = P X R X T
= 35,000 X 10% X 90/360=$875
Journal to record the 9%, notes payable at maturity date
Date Account Title Debit Credit
Nov 5 9% notes payable $80,000
2016 interest expense $2,400
Cash $82,400
Using Interest = P X R X T
= 80,000 X 9% X 120/360=$2,400
Journal to borrowing of 42,000 for 60 days at 8% interest payable at maturity date
Date Account Title Debit Credit
Nov 28 Cash $42,000
2016 8% notes payable $42,000
Journal to record the interst accrued on the notes payable
Date Account Title Debit Credit
Dec 31 Interest expense $308
2016 interest payable $308
Using Interest = P X R X T
= 42,,000 X 8% X 33/360=$308
33 days because the note payable was issued on November 28 but interest was accrued on December 31 making the accrued interest expense to be calculated for 33 days
Tyrell Company for 2017
Journal to record the payment of 8% payable at maturity date
Date Account Title Debit Credit
Jan 31 8%notes payable $42,000
2017 interest payable $308
Interest expense $252
Cash $42,560
Using Interest = P X R X T
= 42,,000 X 8% X 27/360=$252
27 days because from december to january 27th,
On 12/31/X4, Zoom, LLC, reported a $55,500 loss on its books. The items included in the loss computation were $27,000 in sales revenue, $12,000 in qualified dividends, $19,000 in cost of goods sold, $47,000 in charitable contributions, $17,000 in employee wages, and $11,500 of rent expense. How much ordinary business income (loss) will Zoom report on its X4 return
Answer:Ordinary Business income loss =-$20,500.
Explanation:
Ordinary business Expenses are the expenses generally accepted according to the industry standards associated with running of a business.
Here, the ordinary business expenses for Zoom include
cost of good sold= $19,-000
employee wages= $17,000
rent expense = $11,500 and therefore will be deducted from its sales revenue.
charitable contributions and qualified dividends, do not cut across all industries and so are not classified under Ordinary Buisness expences.
Ordinary Business income loss = Sales revenue - cost of good sold, -employee wages- rent expense.
$27,000- $19,000-$`17,000-$11,500= -$20,500. to be reported on its X4 return
You want to go to grad school 3 years from now, and you can save $5,000 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 9% per year. Under these conditions, how much will you have just after you make the 3rd deposit, 3 years from now
Answer:
$16,390.50
Explanation:
For computing the amount after you make the 3rd deposit we need to use the future value formula i.e to be shown in the attachment
Provided that,
Present value = $0
Rate of interest = 9%
NPER = 3 years
PMT = $5,000
The formula is shown below:
= -FV(Rate;NPER;PMT;PV;type)
So, after applying the above formula, the future value is $16,390.50
Tri Fecta, a partnership, had revenues of $364,000 in its first year of operations. The partnership has not collected on $45,100 of its sales and still owes $38,400 on $220,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $28,300 in salaries. The partners invested $46,000 in the business and $25,000 was borrowed on a five-year note. The partnership paid $3,000 in interest that was the amount owed for the year and paid $9,400 for a two-year insurance policy on the first day of business. Ignore income taxes.Compute the cash balance at the end of the first year for Tri Fecta.
a) $ 332,110
b) $ 161,640
c) $ 166,290
d) $ 155,440
Answer:
$167,600
Explanation:
Net income:
Sales revenue $364,000
- COGS $220,000
- Salaries $28,300
- Interest $3,000
- Insurance $4,700
Net Income $108,000
Cash flow from operating activities:
Net income $108,000
adjusting entries:
accounts receivable ($45,100)accounts payable $38,400prepaid insurance ($4,700)Net cash flow from operating activities $96,600
Cash flow from financing activities:
capital invested $46,000
money borrowed $25,000
Net cash flow from financing activities $71,000
Cash balance $167,600
Alex expects to incur personal costs of $3,800 in Year 1, and $4,300, $5,200 and $4,600 in costs over the following three years, respectively. What is the present value of these costs at 7 percent
Answer:
$15,061.26
Explanation:
The computation of the present value for these costs are shown below:
Year Expected cash flow Discount factor at 7% Present value
1 $3,800 0.9345794393 $3,551.40
2 $4,300 0.8734387283 $3,755.79
3 $5,200 0.8162978769 $4,244.75
4 $4,600 0.762895212 $3,509.32
Total $15,061.26
Refer to the discount factor table
An investor is considering the purchase of a residential rental property that has an asking price of $400,000. The property has four rental units that are expected to rent for $1,200 each per month. Operating expenses and vacancy allowances are expected to be 45% of gross income. An 5% interest only mortgage loan is available for 5 years at 100% of the purchase price. How much cash income will the investor receive each month of the first year after paying the monthly mortgage payment
Answer:
The answer is $973
Explanation:
Solution
Given that:
A residential rental property asking price = $400,000
Property expected to rent = $1200
Operating expenses expected = 45%
Interest =5%
Mortgage loan available for =5 years
Purchase price =100%
Now, we find out the cash income the investor receive each month of the first year after paying the monthly mortgage payment
Thus
Rental income (1200*4 units)=$4800
Less: operating expenses (4800*45%)=$2160
The Net income per month=$2640
So,
Less:Monthly mortgage interest payment=$1667 [(400000*5%)
=20000/12=1667]
The Cash income =$973
Therefore the investor will receive $973 each month of the first year.
2. (20 points) A couple plans to purchase a home for $320,000. Property taxes are expected to be $1,200 per year while insurance premiums are estimated to be $1400 per year. Annual repair and maintenance are estimated at $1,950. An alternative is to rent a house of about the same size for $2,150 per month [approximate using $25,800 per year]. If an 8.0% return before-taxes is the couple's minimum rate of return, what must the resale value be 10 years from today for the cost of ownership to equal the cost of renting
Answer:
$371,200
Explanation:
For the computation of annual price escalation first we need to follow some steps which are shown below:-
Future value of payment if the property purchased is
= Property taxes + Insurance premium + Annual repair and maintenance
= $1,200 + $1,400 + $1,950
= $4,550
Future value = (1 + K)^n
= (1 + 0.08)^10
= 2.158924997
or
= 2.16
Future value of annuity factor = (1 + K)^n -1 ÷ K
= ((1 + 0.08)^10 - 1) ÷ 0.08
= 1.158924997
÷ 0.08
= 14.487
Future value of the cost of property = Purchase amount of a home × Future value
= $320,000 × 2.16
= $691,200
Future value of recurring cost = Future value of payment if property purchased × Future value of annuity factor
= $4,550 × 14.487
= $65,915.85
Total value of payment = Future value of the cost of property + Future value of recurring cost
= $691,200
+ $65,915.85
= $75,7115.85
Future value of the payment in property taken on rent
The Total value of the payment in 10 year when the property taken on rent = Amount using per year × Future value of annuity factor
= $25,800 × 14.487
= $373,764.6
The amount incurred in both the methods will be the same if the property can be sold = Total value of payment - Total value of the payment in 10 year when the property was taken on rent
= $75,7115.85 - $373,764.6 0
= 383351.25
finally,
The annual price escalation = Future value of the cost of the property - Purchase amount of home
= $691,200 - $320,000
= $371,200
Harry has a Personal Auto Policy (PAP) with liability limits of 100/$300/$50 and medical payments limits of $5,000 insuring his SUV. Harry also has other than collision and collision coverages with deductibles of $250 and $500, respectively. The local taxicab drivers are on strike and Harry decides to capitalize on the situation by transporting persons in his SUV for a fee. While transporting a businessman, Harry loses control of his SUV and hits a parked car. The damages are as follows:
Harry's medical costs - $2,000The businessman's medical costs - $1,000Damage to the parked car - $14,000Damage to Harry's car - $12,000How much, if any, will Harry's PAP insurer pay for damages under Part A—Liability Coverage?A. $0B. $14,000C. $17,000D. $29,000
Answer:
A) $0
Explanation:
The personal automobile policy (PAP) is an automobile insurance contract which most people purchase in order to protect their automobile from costs that may arise due to auto accidents.
Under the Part A—Liability Coverage, there are exclusions whereby the insurer won't pay for any damage, and one of the exclusions states that "for that “insured’s” liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance, no liability coverage would be provided."
In this case, since Harry used his SUV to transport people for a fee, Harry's PAP insurer won't pay for damages under Part A—Liability Coverage because he used his SUV for livery conveyance.
Some quotes were stated from "Types of Automobile Policies and the Personal Automobile Policy"
Pratt Corp. started the Year 2 accounting period with total assets of $37,000 cash, $15,500 of liabilities, and $12,000 of retained earnings. During the Year 2 accounting period, the Retained Earnings account increased by $14,550. The bookkeeper reported that Pratt paid cash expenses of $29,500 and paid a $2,700 cash dividend to stockholders, but she could not find a record of the amount of cash revenue that Pratt received for performing services. Pratt also paid $10,000 cash to reduce the liability owed to a bank, and the business acquired $8,500 of additional cash from the issue of common stock. Assume all transactions are cash transactions.Requried:a. Prepare an income statement for the 2018 accounting period.b. Prepare a statement of changes in stockholders’ equity for the 2018 accounting period.c. Prepare a period-end balance sheet for the 2018 accounting period.d. Prepare a statement of cash flows for the 2018 accounting period.
Answer:
a) Revenue = $46,750
b) Stockholder's equity $35,050
c) Net Total Assets = Stockholder's equity = $35,050
d) Net cash generated for the year is $13,050; and Ending cash balance is $50,050
Explanation:
a. Prepare an income statement for the 2018 accounting period
To prepare this, cash revenue is first determined as follows:
Revenue = Retained earning for the year + Expenses + dividend = $46,750
The income statement can now be prepared as follows:
Pratt Corp.
Income statement
For the 2018 accounting period
Particulars $
Revenue 46,750
Expenses (29,500)
Net income 17,250
Dividend paid (2,700)
Retained Earnings for the year 14,550
b. Prepare a statement of changes in stockholder's equity for the 2018 accounting period
Pratt Corp.
Statement of changes in stockholder's equity
For the 2018 accounting period
Particulars $
Issue of common stock 8,500
Beginning retained earnings 12,000
Retained Earnings for the year 14,550
Stockholder's equity 35,050
c. Prepare a period-end balance sheet for the 2018 accounting period
Pratt Corp.
Balance Sheet
For the 2018 accounting period
Particulars $
Total Assets
Ending cash balance 50,050
Total Liability
Liability (15,500)
Net Total Assets 35,050
Financed By:
Issue of common stock 8,500
Beginning retained earnings 12,000
Retained Earnings for the year 14,550
Stockholder's equity 35,050
Note: Since both the Net Total Assets and Stockholder's equity are both equal to $35,050 as normally require, it shows the balance sheet is accrurately prepared.
d. Prepare a statement of cash flows for the 2018 accounting period
Pratt Corp.
Statement of Cash Flows
For the 2018 accounting period
Particulars $ $
Net income 17,250
Cash flow from operating activities 17,250
Changes in Financing Activities:
Decrease in liability (10,000)
Issue of common stock 8,500
Dividend paid (2,700)
Cash flow from financing activities (4,200)
Net cash generated for the year 13,050
Beginning cash balance 37,000
Ending cash balance 50,050
Dave Ryan is the CEO of Ryan's Arcade. At the end of its accounting period, December 31, Ryan's Arcade has assets of $643,800 and liabilities of $244,230. Using the accounting equation, determine the following amounts: a. Stockholders' equity as of December 31 of the current year. $ b. Stockholders' equity as of December 31 at the end of the next year, assuming that assets increased by $83,730 and liabilities increased by $18,540 during the year.
Answer and Explanation:
As we know that
Total assets = Total liabilities + total stockholder equity
a. Stockholder equity s of December 31 of the current year is
$643,800 = $244,230 + total stockholder equity
So, the total stockholder equity is
= $643,800 - $244,230
= $399,570
b. Now in the case of increased, the total stockholder equity at the end of the year is
($643,800 + $83,730) = ($244,230 + $18,540) + total stockholder equity
$727,530 = $262,770 + total stockholder equity
So, the total stockholder equity is
= $727,530 - $262,770
= $464,760
Preferred stock valuation TXS Manufacturing has an outstanding preferred stock issue with a par value of $68 per share. The preferred shares pay dividends annually at a rate of 9%. a. What is the annual dividend on TXS preferred stock? b. If investors require a return of 4% on this stock and the next dividend is payable one year from now, what is the price of TXS preferred stock? c. Suppose that TXS has not paid dividends on its preferred shares in the past two years, but investors believe that it will start paying dividends again in one year. What is the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return?
Answer:
a. Annual dividend on TXS preferred stock is $6.12 per share.
b. The price of TXS preferred stock is $153 per share.
c. The value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return is $164.77 per share.
Explanation:
These can be calculated as follows:
a. What is the annual dividend on TXS preferred stock?
The formula for calculating the annual dividend on preferred stock is given as follows:
Annual dividend on preferred stock = Par value of preferred stock * annual dividend rate
Since we have the following for TXS:
Par value of preferred stock = $68 per share
Annual dividend rate = 9%
Therefore, we have:
Annual dividend on preferred stock = $68 * 9% = $6.12 per share
Therefore, annual dividend on TXS preferred stock is $6.12 per share.
b. If investors require a return of 4% on this stock and the next dividend is payable one year from now, what is the price of TXS preferred stock?
The formula for calculating the price of preferred stock is given as follows:
Price of preferred stock = Dividend per share / Preferred stock required rate of return
Since for TXS, we have
Dividend per share = $6.12 per share
Preferred stock required rate of return = 4%, or 0.04
Therefore, we have:
Price of preferred stock = $6.12 / 0.04 = $153 per share
Therefore, the price of TXS preferred stock is $153 per share.
c. Suppose that TXS has not paid dividends on its preferred shares in the past two years, but investors believe that it will start paying dividends again in one year. What is the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return?
Cumulative preferred stock implies that unpaid previous dividends can be carried forward as arrears to when the dividend is paid.
Since TXS has not paid dividends on its cumulative preferred shares in the past two years, but will start paying dividends again in one year implies that preferred stockholders will receive the dividends in arrears of one year together with the next dividend payment.
Based on this, we have
TXS preferred stock value = PV of two dividends + Preferred stock price
PV of two dividends = Present value of two dividends in arrears to paid now = M / (1 + r)^n
Where,
M = 2 * Annual dividend on TXS preferred stock = 2 * $6.12 = $12.24
r = 4%, or 0.04
n = 1 year
Therefore, we have:
PV of two dividends = $12.24 / (1 + 0.04)^1 = $11.77
Since from part b. preferred stock price is $153 per share, we therefore have:
TXS preferred stock value = $11.77 + 153 = $164.77 per share
Therefore, the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return is $164.77 per share.
As per the question, the TXS company has outstanding preferred stock issues with a value that is parred USD 68 per share and prefers to pay the dividend at an annual rate of 9%.
Thus the yearly dividend of the TXS on preferred stock is a. total dividend on TXS stock is of $6.12 per share. If the investors gained four percent on this stock and next is made payable 1 year from now, then the prices of TXS stock will be $153/share. If the TXS is not being paid then the preferred share for the two-year period is total and if investors require at 4% rate of return which is at $164.77 per share.Learn more about the TXS Manufacturing has an outstanding.
brainly.com/question/13739586.
A group of investors has formed SandInn Corporation to purchase a small hotel. The price is $200,000 for the land and $800,000 for the hotel building. If the purchase takes place in June, com- pute the MACRS depreciation for the first three calendar years. Then assume the hotel is sold in June of the fourth year, and compute the MACRS depreciation in that year also.
Answer:
1. Land is not to be depreciated under the Modified Accelerated Cost Recovery System (MACRS) depreciation schedule.
The Building however will be depreciated over a period of 39 years as it is considered an place of business and not a residential property.
The depreciation for such assets is 1.3% in year 1 and 40, and 2.6% for the years in-between.
Year 1 = 1.3% * 800,000
= $10,400
Year 2 = 2.6% * 800,000
= $20,800
Year 3 = 2.6% * 800,000
= $20,800
The total for the first 3 years is,
= 10,400 + 20,800 + 20,800
= $52,000
2. Depreciation in Year 4
= 800,000 * 2.6%
= $20,800
Roman Mfg.'s July production involved actual direct labor costs of $41,514 for 3,400 direct labor hours. The budget for the July level of production called for 3,500 direct labor hours at $12.20 per hour, using a standard cost system.
1. Roman's labor rate variance for July is ____________
2. Roman's labor efficiency variance for July is _______________
Answer:
Instructions are below.
Explanation:
Giving the following information:
Roman Mfg.'s July production involved actual direct labor costs of $41,514 for 3,400 direct labor hours. The budget for the July level of production called for 3,500 direct labor hours at $12.20 per hour.
To calculate the direct labor efficiency and rate variance, we need to use the following formulas:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (3,500 - 3,400)*12.2
Direct labor time (efficiency) variance= $1,220 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 41,514/3,400= $12.21
Direct labor rate variance= (12.20 - 12.21)*3,400
Direct labor rate variance= $34 unfavorable
Gizmos, Inc. produces gizmos at an average total cost of $15 and an average variable cost of $12. The only fixed input used in the production of gizmos costs $240. How many gizmos does Gizmos, Inc. produce?
Answer:
80
Explanation:
Total cost = fixed cost + variable cost
Average total cost = average fixed cost + average variable cost.
Average total cost = Total cost / quantity
Average fixed cost = fixed cost / quantity
Average variable cost = variable cost/ quantity
$15 = average fixed cost + $12
Average fixed cost = $3
Total fixed cost = $240
$3 = $240 / q
Q = 80
I hope my answer helps you
Parino Company has three product lines in its retail stores: books, videos, and music. The allocated fixed costs are based on units sold and are unavoidable. Demand of individual products is not affected by changes in other product lines. Results of the fourth quarter are presented below:
Books Music Videos Total
Units sold 1,000 2,000 2,000 5,000
Revenue $ 24,000 $ 48,000 $ 30,000 $102,000
Variable departmental costs 15,000 22,000 23,000 60,000
Direct fixed costs 3,000 6,000 4,000 13,000
Allocated fixed costs 4,400 8,800 8,800 22,000
Net income (loss) $ 1,600 $11,200 $ (5,800) $ 7,000
Prepare an incremental analysis of the effect of dropping the Video product line. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Incremental revenue 42000 Incremental savings on variable costs -14000 Incremental savings on direct fixed costs -5000 Incremental decrease in profit to drop video line 9800
Answer:
($3,000)
Explanation:
Preparation of the incremental analysis of the effect of dropping the Video product line.
Incremental analysis:
Incremental revenue($30,000)
Incremental savings on variable costs +23,000
Incremental savings on direct fixed costs +4000
The Incremental decrease in profit to drop the video line($3,000)
Incremental analyses tend to only show the differences that occured in revenues and costs. While the comparative income statements, tend to show the net amounts to be reported after the drop are not incremental analyses.
Therefore the incremental analysis of the effect of dropping the Video product line will be ($3,000)
The trial balance of Kroeger Inc. included the following accounts as of December 31, 2021: Debits Credits Sales revenue 8,340,000Interest revenue 56,000Gain on sale of investments 116,000 Gain on debt securities 138,000 Loss on projected benefit obligation 156,000Cost of goods sold 144,000Selling expense 740,000Goodwill impairment loss 520,000Interest expense 26,000General and administrative expense 460,000The gain on debt securities represents the increase in the fair value of debt securities and is classified a component of other comprehensive income. Kroeger had 300,000 shares of stock outstanding throughout the year. Income tax expense has not yet been recorded. The effective tax rate is 25%.Required: Prepare a 2021 separate statement of comprehensive income for Kroeger Inc.
Answer:
Kroeger Inc.
Statement of Comprehensive Income for the year ended December 31, 2021:
Income after taxes $4,966,500
Gain on debt securities 138,000
Loss on projected benefit obligation (156,000)
Net Income $4,948,500
Explanation:
a) Kroeger Inc. Trial Balance as of December 31, 2021:
Debits Credits
Sales revenue 8,340,000
Interest revenue 56,000
Gain on sale of investments 116,000
Gain on debt securities 138,000
Loss on projected benefit obligation 156,000
Cost of goods sold 144,000
Selling expense 740,000
Goodwill impairment loss 520,000
Interest expense 26,000
General and administrative expense 460,000
b) Kroeger Inc. Income Statement for the year ended December 31, 2021:
Sales revenue $8,340,000
less Cost of goods sold 144,000
Gross Profit $8,196,000
General & Admin. Expense 460,000
Selling expenses 740,000 1,200,000
Operating Income $6,996,000
Interest Revenue 56,000
Interest Expense (26,000)
Goodwill impairment loss (520,000)
Gain on sale of investments 116,000
Income before taxes $6,622,000
Income Tax (25%) $1,655,500
Income after taxes 4,966,500
c) According to the corporate finance institute, "the Statement of Comprehensive Income provides a summary of a company's net assets over a given period of time. It highlights the adjustments on equity and other comprehensive income (OCI). Other comprehensive income includes net after taxes and other unrealized incomes minus unrealized losses, such as unrealized gains or losses on hedge/derivative financial instruments and foreign currency transaction gains or losses.
d) Goodwill impairment is recognized as a loss on the income statement under other operating expenses and as a reduction in the goodwill account.
e) Investopedia.com says that "projected benefit obligation (PBO) is an actuarial measurement of what a company will need at the present time to cover future pension liabilities." Under U.S. GAAP, the adjustments for PBO are recorded through other comprehensive income in shareholders' equity and are amortized into the income statement over time.
f) A gain on sale of investments is the amount by which the proceeds from the sale of investments exceed the carrying amount of the investments. It is reported as a non-operating gain in the income statement.
g) Securities that are held-for-trading are recorded on the balance sheet at their fair value, and the unrealized gains and losses are recorded on the income statement. According to strategiccfo.com "Unrealized income or losses are recorded in an account called accumulated other comprehensive income, which is found in the owner's equity section of the balance sheet." They are gains and losses from changes in the value of assets or liabilities that have not yet been settled and recognized.
Reiss has invested $5,000 at the end of every year for the past 22 years and earns 8 percent annually. If he continues doing this, how much will his investment account be worth 12 years from now
Answer:
Total amount will be = $856584.02
Explanation:
Annual invested amount by Reiss = $5000
Interest rate earned on the invested amount = 8 percent annually or 0.08.
Total number of years the amount invested, 22 + 12 = 34 years
Now we have to find the total amount if the total investment years are 34 years. Below is the calculation.
[tex]\text{Total amount} =Annuity [ \frac{(1+r)^{n} - 1}{r}] \\= 5000 [ \frac{(1 + 0.08 )^{34} - 1}{0.08}] \\= 856584.02 \ dollars[/tex]
Required: Prepare journal entries to record the December transactions in the General Journal Tab in the excel template file "Accounting Cycle Excel Template.xlsx". Use the following accounts as appropriate: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation, Accounts Payable, Wages Payable, Common Stock, Retained Earnings, Dividends, Service Revenue, Depreciation Expense, Wages Expense, Supplies Expense, Rent Expense, and Insurance Expense. 1-Dec Began business by depositing $10500 in a bank account in the name of the company in exchange for 1050 shares of $10 per share common stock. 1-Dec Paid the rent for the current month, $950 . 1-Dec Paid the premium on a one-year insurance policy, $600 . 1-Dec Purchased Equipment for $3600 cash. 5-Dec Purchased office supplies from XYZ Company on account, $300 . 15-Dec Provided services to customers for $7200 cash. 16-Dec Provided service to customers ABC Inc. on account, $5200 . 21-Dec Received $2400 cash from ABC Inc., customer on account. 23-Dec Paid $170 to XYZ company for supplies purchased on account on December 5 . 28-Dec Paid wages for the period December 1 through December 28, $4480 . 30-Dec Declared and paid dividend to stockholders $200 .
Answer:
journal entries to record the December transactions
1-Dec
Cash $10500 (debit)
Common Stock $10500 (credit)
1-Dec
Rent Expense $950 (debit)
Cash $950 (credit)
1-Dec
Prepaid Insurance $600 (debit)
Cash $600 (credit)
1-Dec
Equipment $3600 (debit)
Cash $3600 (credit)
5-Dec
Supplies Expense $300 (debit)
Accounts Payable $300 (credit)
15-Dec
Cash $7200 (debit)
Service Revenue $7200 (credit)
16-Dec
Accounts Receivable $5200 (debit)
Service Revenue $5200 (credit)
21-Dec
Cash $2400 (debit)
Accounts Receivable $2400 (credit)
23-Dec
Accounts Payable $170 (debit)
Cash $170 (credit)
28-Dec
Wages Expense $4480 (debit)
Cash $4480 (credit)
30-Dec
Dividends $200 (debit)
Cash $200 (credit)
Explanation:
The General Journal consists of Entries of Expenses, Capital Expenditures and Receipts and Payments in Cash.
Calculate the effective annual interest rate for the following: a. A 3-month T-bill selling at $97,270 with par value $100,000. (Round your answers to 2 decimal places.) b. A 13% coupon bond selling at par and paying coupons semiannually. (Round your answers to 2 decimal places.)
Answer:
(a) The effective annual interest rate for a 3-month T-bill selling at $97,270 with par value $100,000 is 11.71%
(b) The effective annual interest rate for a 13% coupon bond selling at par and paying coupons semiannually is 13.42%
Explanation:
(a) A 3-month T-bill selling at $97,270 with par value $100,000
EAR =[tex][par value /price]^n-1}[/tex]
n = 3 months or 12/3 = 4 times in a year
= [tex][100,000/97,270]^4 - 1[/tex]
=[tex][1.028066]^4 -1[/tex]
= 1.1171 - 1
= .1171 or 11.71%
b) EAR(coupon bond) = [tex][1+.13/2]^2 -1[/tex]
=[tex][1+.065]^2 -1[/tex]
= [tex][1.065]^2 -1[/tex]
= 1.1342 - 1
= .1342 or 13.42%
Witt Oil issued 100,000 shares of cumulative, nonparticipating preferred stock with a par value of $100 and a stated dividend of 7%. The shares sold for $96 per share. The journal record for this transaction would be
Answer:
Dr Cash$9,600,000
Dr Paid-in Capital in Excess of Par -Preferred Stock$400,000
Cr Preferred Stock$10,000,000
Explanation:
Since Witt Oil issued 100,000 shares and preferred stock with a par value of $100 in which the shares sold for $96 per share this means we have to Debit Cash with $9,600,000, Debit Paid-in Capital in Excess of Par -Preferred Stock $400,000 and Credit Preferred Stock$10,000,000
Dr Cash$9,600,000
(100,000 Shares × $96 per shares)
Dr Paid-in Capital in Excess of Par -Preferred Stock$400,000
(10,000,000 -$9,600,000)
Cr Preferred Stock$10,000,000
($100,000× per value 100)
Answer:
Dr Cash$9,600,000
Dr Paid-in Capital in Excess of Par -Preferred Stock$400,000
Cr Preferred Stock$10,000,000
Explanation:
You have just bought a 10-year security that pays $500 every six months. Another equally risky security also has a maturity of 10 years, and pays 10%, compounded monthly (that is, the nominal rate is 10%). What price should you have paid for the security that you just purchased
Answer:
PV= $6,178.61
Explanation:
Giving the following information:
Number of years= 10
Cash flow= 500 semiannually
Discount rate= 10% compounded monthly
First, we need to calculate the semiannual interest rate:
i= 0.10/12= 0.00833
i= (1.00833^6) - 1= 0.051
Now, we need to calculate the final value of security:
FV= {A*[(1+i)^n-1]}/i
A= cash flow
FV= {500*[(1.051^20) - 1] / 0.051
FV= $16,708.79
Finally, the present value:
PV= FV/(1+i)^n
PV= 16,708.79/1.051^20
PV= $6,178.61
Bodin Company manufactures finger splints for kids who get tendonitis from playing video games. The firm had the following inventories at the beginning and end of the month of January.
January 1 January 31
Finished goods $126,000 $117,000
Work in process 235,000 251,000
Raw material 134,000 124,000
The following additional data pertain to January operations.
Raw material purchased $190,000
Direct labor 400,000
Actual manufacturing overhead 170,000
Actual selling and administrative expenses 115,000
The company applies manufacturing overhead at the rate of 60 percent of direct-labor cost. Any overapplied or underapplied manufacturing overhead is accumulated until the end of the year.
Required:
1. Compute the company's prime cost for January.
2. Compute the total manufacturing cost for January.
3. Compute the cost of goods manufactured for January.
4. Compute the cost of goods sold for January.
5. Compute the balance in the manufacturing overhead account on January 31.
Answer:
1. Prime Costs $ 600,000
2. Total Manufacturing Costs $ 770,000
3. Cost of goods manufactured $ 754,000
4. Cost of Goods Sold $ 763,000
5: Over applied Overhead= $ 70,000
Explanation:
Add ing Direct Materials and Direct Labor gives Prime Costs.
Bodin Company
January 1 Raw material 134,000
Add Raw material purchased $190,000
Less January 31 Raw material 124,000
Direct Materials Used $ 200,000
Direct labor 400,000
1.Prime Costs $ 600,000
Actual manufacturing overhead 170,000
2. Total Manufacturing Costs $ 770,000
Adding Prime Costs to the Actual Manufacturing Overhead gives Total Manufacturing Costs.
2. Total Manufacturing Costs $ 770,000
Add January 1 Work in process 235,000
Cost of Goods Available for Manufacture $ 1005,000
Less January 31 Work in process 251,000
3. Cost of goods manufactured $ 754,000
Adding Opening Work in Process to Total Manufacturing Costs and Subtracting Closing Work in Process from Total Manufacturing Costs the gives Cost of goods manufactured .
3. Cost of goods manufactured $ 754,000
Add January 1 Finished goods $126,000
Cost of Goods Available for Sale $ 880,000
Less January 31 Finished goods $117,000
4. Cost of Goods Sold $ 763,000
Adding Opening Finished goods to Cost of Goods Manufactured and Subtracting Closing Finished goods from Cost of Goods Manufactured the gives Cost of goods sold .
Applied Manufacturing Overhead= 60% of 400,000= $ 240,000
Actual Overhead $ 170,000
5: Over applied Overhead= Applied Overhead Less Actual Overhead
= 240,000- 170,000= $ 70,000
Overheads Debit Credit
Actual Applied $240,000
$ 170,000
Over Applied
$ 70,000
$ 240,000 $ 240,000