Answer:
$663
Explanation:
Answer:663
Explanation:
For the year ended December 31, 2021, Norstar Industries reported a net income of $920,000. On January 1, 2021, the company had 780,000 common shares outstanding. The following changes in the number of shares occurred during 2021: Apr. 30 Sold 40,000 shares in a public offering. May 24 Declared and distributed a 5% stock dividend. June 1 Issued 36,000 shares as part of the consideration for the purchase of assets from a subsidiary. Compute Norstar's earnings per share for the year ended December 31, 2021.
Answer:
$1.06 per share
Explanation:
The computation of the earning per share is shown below:
Earning per share = Net income reported ÷ Weighted number of outstanding shares
where,
Net income reported is $920,000
And, the weighted number of outstanding shares is
= 780,000 shares + (780,000 shares × 5%) + (40,000 shares × 8 ÷ 12) + (40,000 shares × 8 ÷ 12 × 5%) + (36,000 shares × 7 ÷ 12)
= 780,000 shares + 39,000 shares + $26,667 + $1,333 + 21,000 shares
= 868,000 shares
So, the earning per share is
= $920,000 ÷ 868,000 shares
= $1.06 per share
We simply applied the above formula
Mather Company purchased equipment on January 1, 2018 at a total invoice cost of $336,000; additional costs of $6,000 for freight and $30,000 for installation were incurred. The equipment has an estimated salvage value of $12,000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2019 if the straight-line method of depreciation is used is
Answer:
$144,000
Explanation:
The computation of accumulated depreciation is shown below:-
Total cost = Invoice cost + Freight + Installation
= $336,000 + $6,000 + $30,000
= $372,000
Depreciation as per SLM = (Total Cost - Salvage Value) ÷ Estimated useful life
= (372,000 - 12,000) ÷ 5
= $72,000
The amount of accumulated depreciation (after 2 years) = Depreciation as per SLM × Years
= 72,000 × 2
= $144,000
So, for computing the accumulated depreciation we simply applied the above formula.
bank run is ____________.A.an extraordinarily large volume of withdrawals driven by a concern that a bank will run out of liquid assets with which to pay withdrawals.B.an unexpected attempt of one bank to initiate a hostile takeover of another, usually smaller, bank.C.a sudden desire on the part of a bank's shareholders to sell their bank stock.D.an extraordinarily large volume of withdrawals from all b
Answer:
Option A
Explanation:
In simple words, Bank runs refers to the scenario when a significant amount of individuals begin to make bank withdrawals since they are afraid the organizations will run out of liquidity. Usually a run on the banks is the product of confusion instead of a true bankruptcy.
Bank run caused by panic that drives a bank into real bankruptcy provides a traditional example of a prediction that fulfills itself. The institution does defaults risk, as customers are continuing to withdraw money. So what starts out as fear will ultimately turn into some kind of true fallback situation.
The following transactions for March have been journalized and posted to the proper accounts. Mar. 1 The business received a $10,000 cash contribution from the owner. Mar. 2 Paid the first month's rent of $800. Mar. 3 Purchased equipment by paying $4,000 cash and executing a note payable for $6,000. Mar. 4 Purchased office supplies for $500 cash. Mar. 5 Billed a client for $14,000 of design services completed. Mar. 6 Received $6,000 on account for the services previously recorded. What is the ending balance in the Service Revenue account
Answer:
$14,000
Explanation:
As we can see that all the entries accept March 5 represents the payment, receipts, expense, etc
Moreover, the service revenue is recognized on due basis not on receipt basis so this case only March 5 transaction is considered i.e billed a client for design completion of service
Hence, the ending balance is $14,000
Niosoki Auto Parts sells new parts for foreign automobiles to auto dealers. Company policy requires that a prenumbered shipping document be issued for each sale. At the time of pickup or shipment, the shipping clerk writes the date on the shipping document. The last shipment made in the fiscal year ended August 31, 2016, was recorded on document 2167. Shipments are billed in the order that the billing clerk receives the shipping documents. For late August and early September, shipping documents are billed on sales invoices as follows: Shipping Document No. Sales Invoice No. 2163 5437 2164 5431 2165 5432 2166 5435 2167 5436 2168 5433 2169 5434 2170 5438 2171 5440 2172 5439 The August and September sales journals have the following information included: SaLeS JOUrNaL — aUGUSt 2016 Day of Month Sales Invoice No. amount of Sale 30 5431 $ 726.11 30 5434 4,214.30 31 5432 419.83 31 5433 1,620.22 31 5435 47.74 SaLeS JOUrNaL — SepteMBer 2016 Day of Month Sales Invoice No. amount of Sale 1 5437 $2,541.31 1 5436 106.39 1 5438 852.06 2 5440 1,250.50 2 5439 646.58 a. What are the accounting requirements for a correct sales cutoff? b. Which sales invoices, if any, are recorded in the wrong accounting period? Prepare an adjusting entry to correct the financial statement for the year ended August 31, 2016. Assume that the company uses a periodic inventory system (inventory and cost of sales do not need to be adjusted).
Sales cutoff requires properly recording sales in the period in which goods were shipped. Sales invoices 5437 and 5436 were recorded in the wrong period and need to be adjusted into the August 2016 period.
Explanation:The accounting requirements for a correct sales cutoff involve ensuring that sales are recorded in the proper accounting period and revenues are matched with the expenses thus incurred. This means sales should be recorded in the period in which the goods were shipped or services were rendered irrespective of when the payment was received.
On examining the data, it appears that sales invoices 5437 and 5436 related to shipping documents 2163 and 2167 respectively should not have been recorded in the September 2016 period. This is because the goods corresponding to these invoices were shipped in August 2016, as per the shipping document numbers. Therefore, these sales were recorded in the wrong accounting period.
To correct this, an adjusting journal entry should be prepared to move these sales to the correct accounting period. The entry would be to debit Accounts Receivable for the total of invoices 5437 and 5436 ($2,541.31 + $106.39 = $2,647.70) and credit Sales for the same amount.
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The correct sales cutoff requires aligning revenue recording with the period when goods are shipped, not when they're paid for. Sales invoices 5437 and 5431 were recorded in the incorrect period and should be adjusted through an adjusting entry to reflect the correct revenue for fiscal year ended August 31, 2016.
Explanation:The accounting requirements for a correct sales cutoff ensure that sales are recorded in the period in which the goods are shipped and the revenue is earned, regardless of when the payment is received. This practice aligns with the revenue recognition principle which mandates that revenue should be recognized in the accounting period in which it is earned.
Upon reviewing the shipping documents and sales invoices, certain sales have been incorrectly recorded in the wrong accounting period. Shipping documents 2163 and 2164, with their respective sales invoices 5437 and 5431, were billed on September 1st. However, these sales should have been recorded in the August accounting period as they are associated with the last shipments made in the fiscal year ended August 31, 2016.
To correct this error, the following adjusting entry should be made to the financial statements for the year ended August 31, 2016:
Debit Accounts Receivable for the total amount of sales incorrectly recorded in September ($3,267.42).Credit Sales Revenue for the same amount ($3,267.42).The adjusting entry will correct the sales revenue to match the sales activity occurring up to August 31, 2016.
Learn more about Sales Cutoff here:ay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 23,000 units at a price of $350 each. Product costs include: Direct materials $74.00 Direct labor $42.00 Variable overhead $11.00 Total fixed factory overhead $549,200 Variable selling expense is a commission of 6 percent of price; fixed selling and administrative expenses total $97,200. Required: 1. Calculate the sales commission per unit sold. If required, round your answers to the nearest dollar. Use rounded answers in subsequent computations.
Answer:
$21
Explanation:
The computation of the sales commission per unit sold is shown below:
= Selling price per unit × sales commission percentage
= $350 × 6%
= $21
By multiplying the selling price per unit with the sales commission percentage we can get the sales commission per unit and the same is shown above in the calculation part.
All other information is not relevant. Hence, ignored it
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 1) The term "plant assets" refers to long-lived assets acquired for use in business 1) operations, rather than for resale to customers. 2) If a piece of equipment is dropped and damaged during installation, the cost of 2) repairing the damage should be added to the cost of the equipment. 3) Sales tax on equipment is not part of the acquisition cost and should not be 3) capitalized. 4) To "capitalize" an expenditure means to charge it to an asset account. 4) 5) A revenue expenditure is recorded in an expense account. 5)
Answer:
1. T
2. T
3. F
4. T
5. T
Explanation:
Cost of equipment usually contains the cost in acquiring the equipment and the cost accumulated in putting the equipment into work( such include installation and an repairs done during that).
Sale tax is a part of acquisition cost.
item are usually capitalized when it is recorded as an asset, instead of an expense. What this shows is that expenditure would be in the balance sheet, instead on the income statement.
Answer: 1. True
2. False
3. False
4. True
5. True
Explanation:
1) The term "plant assets" refers to long-lived assets acquired for use in business operations, rather than for resale to customers.
- True.
These are fixed assets that are to be used in the business for operations and not assets to be sold to the public.
2) If a piece of equipment is dropped and damaged during installation, the cost of repairing the damage should be added to the cost of the equipment.
- False
Only expenses related to the Acquisition and Installation of the asset should be capitalized as well as extraordinary repairs. Every other expense should be treated as revenue Expenditure and taken to the income statement.
3) Sales tax on equipment is not part of the acquisition cost and should not be capitalized.
- False
Sales Tax should be capitalized as it is considered a cost of Acquisition as it is part of the money a company pays for an asset.
4) To "capitalize" an expenditure means to charge it to an asset account.
-True
When an expenses is said to be Capitalized, it is to be charged or rather debited to an asset account as part of the asset.
5) A revenue expenditure is recorded in an expense account.
- True
Revenue Expenditure are meant to serve an asset for a short period of time and as such are expensed in the period they are incurred. They are expensed normally and put into an Expense account.
Common stock, $1 par value Shares outstanding, 1/1/2021 60,000 2-for-1 stock split, 4/1/2021 Shares issued, 7/1/2021 30,000 Preferred stock, $10 par value, 6% cumulative Shares outstanding, 1/1/2021 12,000 How many shares should Tb use to calculate 2021 basic earnings per share?
Answer:
75,000 shares
Explanation:
earnings per share (EPS) = (net income - preferred dividends) / weighted average shares outstanding
net income = ???preferred dividends = $10 x 6% x 12,000 = $7,200weighted average shares outstanding = [60,000 + (120,000 x 9/12)] / 2 = (60,000 + 90,000) / 2 = 75,000 sharesSince the shares split to 120,000 on April, their relative weight at the end of the year is 9/12 x 120,000 = 90,000. That is why the average shares = (beginning number of outstanding shares + ending number of outstanding shares) / 2 = 75,000
Answer:
120,000 shares
Explanation:
We will use weighted average numbers of outstanding shares.
Outstanding numbers of shares are those share which are issued in the market by the company and still being traded in the market. Treasury stock is excluded from the total issued share to calculate the total outstanding numbers of share.
Stock split increase the numbers of shares with a specific given ratio but the common equity value remains same that's why the par value of the share decreases with respective ratio.
4/1/2021
Shares after stock split
Outstanding numbers of shares = 60,000 shares x 2 / 1 = 120,000
7/1/2021
Shares after issuance
Outstanding numbers of shares = 120,000 shares + 30,000 shares = 150,000 shares
Now calculate the weighted average numbers of shares
1/1/2021-3/31/2021 60,000 x 3/12 = 15,000
4/1/2021-6/30/2021 120,000 x 3/12 = 30,000
7/1/2021-12/31/2021 150,000 x 6/12 = 75,000
Weighted average outstanding shares 120,000
Wildhorse Co. purchases a patent for $333,000 on January 2, 2019. Its estimated useful life is 10 years. Prepare the journal entry to record amortization expense for the first year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answer:
Debit Amortization expense $33,300
Credit Accumulated amortization $33,300
(To record amortization expense for the first year)
Explanation:
Using the straight-line amortization, the applicable formula is: Cost / Estimated useful life
Amortization = $333,000 / 10 years = $33,300
The accumulated amortization and the amortization expense will be the same in the first year. So, the net book value of the patent is $333,000 - $33,300 = $299,700
The owners of a chain of fast-food restaurants spend $ 25 million installing donut makers in all their restaurants. This is expected to increase cash flows by $ 10 million per year for the next five years. If the discount rate is 6%, were the owners correct in making the decision to install donut makers?
Answer:
yes as it net present value is $24.17 million
Explanation:
In this question we have to find out the net present value which is shown below
(In millions) (In millions)
Year Cash flows Discount rate 6% PV of cash inflows
0 -$25 1 -$25 (A)
1 $10 0.9434 $9.43
2 $10 0.8900 $8.90
3 $10 0.8396 $8.40
4 $10 0.7921 $7.92
5 $10 0.7473 $7.47
6 $10 0.7050 $7.05
Present value $49.17 (B)
Net present value $24.17 (A - B)
As we can see that the net present value comes in positive which means it generated the return in near future so the decision should be yes
. For this project, assume that an organization has five servers. Server 1 has a TCO of $25,000, Server 2 and 3 have a TCO of $37,000 each, and the remaining two Servers, 4 and 5, has a TCO of $42,000 each. (TCO is the Total Cost of Ownership, the asset value, and includes, the total cost of hardware, software, training support and other costs of maintaining the system.) The servers are not used by internal employees but are used by Web visitors. The total income that all five servers brings in is $5 million a year (equally provided by all five servers). Compute the total asset value for each of the five servers.
Answer:
$5,183,000
Explanation:
Total Asset Value = TCO + Income Server brings each year
Server 1:
Total Asset Value = $25,000 + $1,000,000
Total Asset Value = $1,025,000
Server 2 & 3:
Total Asset Value = 2 x ($37,000 + $1,000,000)
Total Asset Value = 2 x $1,037,000
Total Asset Value = $2,074,000
Server 4 & 5:
Total Asset Value = 2 x ($42,000 + $1,000,000)
Total Asset Value = 2 x $1,042,000
Total Asset Value = $2,084,000
Grand Total = $1,025,000 + $2,074,000 + $2,084,000
Grand Total = $5,183,000
Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $125,000. The appraised fair market value of the warehouse was $75,000, and the appraised value of the land was $100,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Answer:
What is Bob’s basis in the warehouse and in the land?
warehouse basis = $53,571land basis = $71,429Explanation:
since the total appraisal value was $75,000 + $100,000 = $175,000, we must allocate the basis using a coefficient = $125,000 / $175,000 = 0.714285
warehouse basis = appraised value x coefficient = $75,000 x 0.714285 = $53,571land basis = appraised value x coefficient = $100,000 x 0.714285 = $71,429total = $53,571 + $71,429 = $125,000 (total purchase price)Since the transaction price was lower than the appraised value, we must adjust the basis for both the land and the warehouse in the same proportion.
A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 13,000 defective units that cost $6.00 per unit to manufacture. The units can be a) sold as is for $3.10 each, or b) reworked for $5.00 each and then sold for the full price of $9.10 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.)
Answer:
The company should rework and sell defective products because profits are higher
Explanation:
We need to find the profit that will be generated when the defective goods are sold as scrap and when they are reworked.
Selling as scrap
Profit from scrap= Unit sales price * quantity
Profit from scrap= 3.10 * 13,000
Profit from scrap= $40,300
Reworking the defective products
Profit from rework= Sales revenue - cost of rework
Profit from rework= (9.1* 13,000) - (5* 13,000)
Profit from rework= 118,300 - 65,000
Profit from rework= $53,300
As profit from rework is higher we should rework and sell the defective products
The exclusive Swink Golf Driving Range has had a standard price of $16.00 per hour. The facility has 30 golfing stations, with average usage of 40%, 9 hours a day, 7 days a week. Morgan Swink, the owner, would like to enhance revenue. He proposes new pricing at $12 per hour on weekdays and $23 per hour on weekends. He estimates that weekday usage will increase to 50% and weekend usage will remain at 40%, even with the price increase. Variable cost is a consistent $3 per hour. Which strategy is better? Total revenue under the current pricing is $ nothing (round your response to the nearest dollar).
Answer:
The strategy of total revenue under new pricing is better because it has $ 972 more than current pricing policy
Explanation:
Total revenue under current pricing per week = Average usage % * Number of golfing station* Price per hour * number of hours per day * number of days per week
= [tex]\frac{40}{100}[/tex] * 30 * $16 * 9 * 7
= $ 12,096
Total revenue under new pricing per week = Weekday revenue + Weekend revenue
= (Average usage % * Number of golfing station* Price per hour * number of hours per day * number of weekdays per week) + (Average usage % * Number of golfing station* Price per hour * number of hours per day * number of weekends per week)
= ([tex]\frac{50}{100}[/tex] * 30 * $12 * 9 * 5) + ([tex]\frac{40}{100}[/tex] * 30 * $23 * 9 * 2)
= $ 8,100 + $ 4,968
= $ 13, 068
The following information is available to reconcile Branch Company’s book balance of cash with its bank statement cash balance as of July 31.
1) On July 31, the company’s Cash account has a $25,699 debit balance, but its July bank statement shows a $28,207 cash balance.
2) Check No. 3031 for $1,570, Check No. 3065 for $561, and Check No. 3069 for $2,338 are outstanding checks as of July 31. Check No. 3056 for July rent expense was correctly written and drawn for $1,260 but was erroneously entered in the accounting records as $1,250.
3) The July bank statement shows the bank collected $9,000 cash on a note for Branch. Branch had not recorded this event before receiving the statement.
4) The bank statement shows an $805 NSF check. The check had been received from a customer, Evan Shaw. Branch has not yet recorded this check as NSF.
5) The July statement shows a $14 bank service charge. It has not yet been recorded in miscellaneous expenses because no previous notification had been received.
6) Branch’s July 31 daily cash receipts of $10,132 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.
Required:
1. Prepare the bank reconciliation for this company as of July 31, 2017.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Bank Reconciliation Statement as of July 31, 2017
Balance at Bank as per cash book (up to date) $35,480
Add Unpresented Cheques :
No. 3031 $1,570
No. 3065 $561
No. 3069 $2,338
Less Lodgements not yet credited ($10,132)
Balance as per Bank Statement $29,817
Explanation:
Step 1 Bring the Cash Book (Bank Balance ) up to date
Debit :
Balance as at July 31 $25,699
Note Payable $9,000
Evan Shaw $805
Totals $35,504
Credit:
Check No. 3056 Understated $10
Bank service charge $14
Balance (Up to date) $35,480
Totals $35,504
Step 2 Prepare a bank reconciliation for this company
Bank Reconciliation Statement as of July 31, 2017
Balance at Bank as per cash book (up to date) $35,480
Add Unpresented Cheques :
No. 3031 $1,570
No. 3065 $561
No. 3069 $2,338
Less Lodgements not yet credited ($10,132)
Balance as per Bank Statement $29,817
Division A makes a part with the following characteristics: Production capacity in units 32,900 units Selling price to outside customers $ 22 Variable cost per unit $ 18 Total fixed costs $ 103,400 Division B, another division of the same company, would like to purchase 15,200 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $20 each. Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division A refuses to accept the $20 price internally and Division B continues to buy from the outside supplier, the company as a whole will be:
If Division A does not agree to the $20 internal transfer price and Division B continues to purchase from an external supplier, the company fails to maximize its overall profit. Division A could sell the parts internally at $20 each, covering its variable cost and contributing to fixed costs and profit.
If Division A refuses to accept the $20 price internally and Division B continues to purchase the parts from an outside supplier at $20 each, the company as a whole will not optimize its overall potential profit. Since Division A has ample idle capacity, it could provide the parts to Division B without incurring additional fixed costs and without impacting its external sales.
Accepting the internal transfer at $20 per unit would still cover Division A's variable cost of $18 per unit, contributing an additional $2 per unit to cover fixed costs and profit. Refusing to do this means the company is effectively paying more for the parts than necessary, and losing the potential profit from intra-company transfers.
Furthermore, setting the transfer price equal to the marginal cost (which is the variable cost per unit) might be theoretically ideal if Division B were the only buyer of the product and the external market didn't exist or wasn't accessible.
However, considering the external market options for both divisions, it would make sense for Division A to agree to the $20 transfer price in this scenario since it is above the marginal cost of $18 and below the external market price of $22, providing a better decision basis for Division B and improving the profitability of the company as a whole.
Suppose Billy Bud's Bucking Broncos employs 20 workers at a daily wage rate of $60 each. The average product of labor is 30 bucking broncos per day; the marginal product of the last worker is 12 bucking broncos per day; and total fixed cost is $3,600 for equipment. What is the marginal cost of the last bucking bronco produced?
a. $5.00
b. $240.00
c. $720.00
d. $0.20
Answer:
a. $5.00
Explanation:
Marginal cost is the cost of each extra unit sold or produced.
Average total cost is the average cost of all the units which is sold or produced during the period.
Marginal cost can be calculate by the total cost divided by the numbers of unit.
Marginal Cost of last bucking = Daily Wage / Marginal Product of Last worker
Marginal Cost of last bucking = $60 / 12 bucking
Marginal Cost of last bucking = $5 per bucking
Answer:
a
Explanation:
Payback Period Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. Colby Hepworth has just invested $400,000 in a book and video store. She expects to receive a cash income of $120,000 per year from the investment. Kylie Sorensen has just invested $1,400,000 in a new biomedical technology. She expects to receive the following cash flows over the next 5 years: $350,000, $490,000, $700,000, $420,000, and $280,000. Carsen Nabors invested in a project that has a payback period of 4 years. The project brings in $960,000 per year. Rahn Booth invested $1,300,000 in a project that pays him an even amount per year for 5 years. The payback period is 2.5 years. Required: 1. What is the payback period for Colby
Answer:
3 years and 4 months
Explanation:
Colby payback period = Investment in book and store / Annual cash income = $400,000 / $120,000 = 3.33 years = 3 years and (0.33 *12) months = 3 years and 4 months.
Therefore, the payback period for Colby is 3 years and 4 months.
Real GDP per capita is not a perfect measure of the well-being of a country's individual citizens because: Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. it does not account for inflation. checked it does not measure quality-of-life factors such as crime, pollution, and literacy. checked it tends to favor countries with a larger population over those with a smaller population. unanswered it does not account for distribution of wealth. checked it fails to measure activities such as home production, which can have a significant impact on individual well-being. checked higher GDP correlates to a better healthcare system.
Answer:
it does not measure quality-of-life factors ; it does not account for distribution of wealth ; it fails to measure non monetary (home production) activities
Explanation:
Real GDP is the total value of goods & services produced in an economy, during a period of time. But it is not correct measure of welfare level.
It does not measure non monetary production, like hobby production eg kitchen gardening, self made paintings, music. But, they increase welfare It does not take into consideration the qualitative factors affecting welfare like pollution, crime & literacy. Externalities cause extra benefit or harm to welfare level, but are excluded from GDP. Inequitable distribution of per capita (average) GDP increases rich poor standard of living divide. So, the distribution effect ignored make GDP an inapt measure of average welfare level.Real GDP adjusts the value of goods & services for price change (Inflation), it is a correct measure of increase in real flow of goods & services. GDP & health positive correlation is a favouring point for GDP as a measure of welfare. So, these options are incorrect.
Real GDP per capita does not perfectly capture the well-being of a country's individual citizens because it does not account for inflation, quality of life factors, wealth distribution, and activities like home production.
Explanation:Real GDP per capita is indeed an important measure of economic activity within a country, but it is not a perfect measure of the well-being of a country's individual citizens. Firstly, as you've mentioned, it does not account for inflation. A high GDP may reflect high prices rather than output of goods and services.
Secondly, Real GDP per capita does not measure quality-of-life factors such as crime, pollution, and literacy, which significantly impact citizens' well-being. It also fails to account for the distribution of wealth. Even if a country's GDP is high, this wealth could be concentrated in the hands of a few, leaving the majority of the population poor.
Thirdly, activities such as home production that impacts individual well-being significantly are not captured in the Real GDP. Solution to this inadequacies lies in supplementing GDP data with other social and economic indicators to get a more holistic picture of a nation’s well-being.
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Village Bank has $350 million worth of assets with a duration of 12 years and liabilities worth $301 million with a duration of six years. In the interest of hedging interest rate risk, Village Bank is contemplating a macrohedge with interest rate T-bond futures contracts now selling for 103-22 (30nds). The T-bond underlying the futures contract has a duration of nine years. If the spot and futures interest rates move together, how many futures contracts must Village Bank sell to fully hedge the balance sheet
Answer:
-2591.
Explanation:
From the question, we are given that Village Bank's assets,A = $350 million, duration for the assets,DA = 12 years, Village Bank's liabilities,L = $301 million, duration for the liabilities,DL = six years and the interest rate T-bond futures contracts now selling for 103-22 (30nds) and T-bond underlying the futures contract has a duration of nine(9) years.
The numbers of futures contracts must Village Bank sell to fully hedge the balance sheet is;
= - [ DA - (L/A) DL × A].
= - [ 12 - (301/350) × 6] × 350,000,000.
= - [ 12 - (0.86 × 6] × 350,000,000.
= - [ 12 - 5.16] × 350,000,000.
= - 2394000000.
Also, T-bond underlying the futures contract duration × price of future contract.
[ price of future contract = 100000 × 102 (20/30) = 102666.66667].
= 9 × 102666.66667 = 924000.00003.
Then, the numbers of futures contracts must Village Bank sell to fully hedge the balance sheet is;
= - 2394000000 ÷ 924000.00003.
= -2590.90909082497.
= - 2591.
Staley Inc. reported the following data: Net income $300,200 Depreciation expense 76,000 Loss on disposal of equipment 20,600 Increase in accounts receivable 27,600 Increase in accounts payable 10,100 Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
Answer:
Explanation:
The Preparation of Cash Flows from Operating Activities is shown below:-
Net income $300,200
Depreciation expense $76,000
Loss on disposal of equipment $20,600
Increase in accounts receivable -$27,600
Increase in accounts payable $10,100
Net cash provided by
operating activities $379,300
The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the:
a. Weighted average inventory method.
b. First-in, first-out method.
c. Last-in, first-out method.
d. Specific identification method.
e. Retail inventory method.
Answer:
d. Specific identification method.
Explanation:
The specific indentification method relies on the specific categorization of the ending inventory, by attaching the date or purchase and the exact cost to every item of the ending inventory.
As it can be seen, the method is very accurate, because it can give the real value of ending inventory at the end of the year. However, it is also very time-consuming and difficult to keep up with, and for this reason most companies only use this method for items that are valuable, or that can be easily categorized in a specific date and price.
Most companies use other inventory valuation methods like LIFO, FIFO, and weighted average.
Employers want workers that provide the _____.
1) highest returns
2)lowest productivity
3) fewest references
MC Qu. 47 Chang Industries has... Chang Industries has 1,800 defective units of product that have already cost $13.80 each to produce. A salvage company will purchase the defective units as they are for $4.80 each. Chang's production manager reports that the defects can be corrected for $6.20 per unit, enabling them to be sold at their regular market price of $20.60. The incremental income or loss on reworking the units is: Multiple Choice $17,280 loss. $25,920 income. $11,160 loss. $28,440 income. $17,280 income.
Answer:
The correct answer is:
$17,280 income
Explanation:
First, let us lay out the relevant information:
Total defective units = 1800
salvage company price per unit = $4.80
Total income expected from salvage company = 4.8 × 1800 = $8,640
Reworking cost per unit = $6.20
selling price per unit after reworking = $20.60
Net selling price per unit after reworking = selling price - reworking cost
= 20.60 - 6.20 = $14.40
∴ Total income from selling after reworking = 14.4 × 1800 = $25,920
To calculate for the increment or loss on the income gotten from both options, we will calculate the difference between both options as follows:
Increment or loss on income from reworking = total income from reworking - total income from salvage company
= 25,920 - 8,640 = $17,280 income. (note that a loss is not made from reworking because the total income from reworking is greater than that gotten from the salvage company)
An investor is short 3 ABC July 50 call options and 3 ABC July 45 put options. Currently, ABC stock is selling for $47.50 and the investor has a small profit. The investor should consider closing the options position if ABC stock is likely to: (A) remain between $45 and $50 (B) be the target of a takeover bid (C) continue to exhibit low volatility (D) have unchanged earnings per share
Answer:
B. Be the target of a takeover bid.
Explanation:
It is gathered from analysis and in the cause of the risk management involved that it is likely to be the target of a takeover bid.
This investor has put on a Short Combination. The reason for a Short Combination would be the investor expecting the market price of the stock to remain neutral and expects to gain from the premiums received by selling both options. If the investor hears about a takeover bid, chances are that ABC's stock will fluctuate either above or below the 45 and 50 mark which would lead to a loss for the investor. Thus the reason that the investor would likely close both options positions upon hearing such rumors.
Identify the type of unemployment for the following scenarios:
1) Caroline just graduated from college and is looking for a full-time position with an investment banking firm.
2) Frances is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job.
3) Antonio recently lost his job as a waiter at a local restaurant. A recent increase in the minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job, but he's considering going back to school for vocational training.
a) Structural
b) Frictional
c) Cyclical
Final answer:
Caroline's job search represents frictional unemployment, Frances's job loss in a recession is an example of cyclical unemployment, and Antonio's unemployment due to changes in legislation is structural unemployment.
Explanation:
Each scenario described represents a different type of unemployment:
Caroline searching for a job post-graduation is an example of frictional unemployment. This occurs as she takes the time to find a position that matches her qualifications and desires.
Frances, the real estate agent experiencing a downturn due to a recession, is facing cyclical unemployment. This is linked to the economic cycle and temporary downturns in demand within her industry.
Antonio, who lost his job due to a rise in the minimum wage and is considering additional training, is experiencing structural unemployment. This is due to changes in the economic structure that affect the demand for certain skills, such as wage legislation influencing employer hiring practices.
These scenarios are all based on key concepts in understanding the labor market and economic health. Frictional unemployment reflects short-term transitions, cyclical unemployment is tied to economic downturns, and structural unemployment stems from deeper changes in the economy.
Zero Corp. suffered a loss having a material effect on its financial statements as a result of a customer’s bankruptcy that rendered a trade receivable uncollectible. This bankruptcy occurred suddenly because of a natural disaster 10 days after Zero’s balance sheet date but 1 month before the issuance of the financial statements and the auditor’s report. Under these circumstances, theA.Financial Statement should be adjusted B.No action C.Events require footnote disclosure, but not adjustment to financial statements D.Auditor report should be modified for a lack of consistency
Answer:
Events require footnote disclosure, but not adjustment to financial statements.
Explanation:
A balance sheet is the statement of the financial position of a business at a particular period in time. So in this scenario if the balance sheet has already been prepared and bankruptcy occurred suddenly because of a natural disaster 10 days after Zero’s balance sheet date but 1 month before the issuance of the financial statements and the auditor’s report.
This requires a disclosure of the event after the balance sheet date. The event is a subsequent occurence and as such does not affect the balance sheet report.
The exception is when a subsequent event provides additional evidence of financial position as at the balance sheet date.
This is not the case here so only disclosure will be made.
Answer:
C. Event require footnote disclosure, but not adjustment to financial statement
Explanation:
IAS 10 represents the accounting standard that govern the scenario under analysis - events after the reporting date.
Zero Corp suffered a loss having a material effect on their books, owning to customers bankruptcy. However, this bankruptcy erupted suddenly after the balance sheet date, but one month before the issuance of the financial statements and the auditor's report.
The scenario under consideration is a non adjusting event simply because it existed just after the balance sheet date. Going by IAS 10 stipulations, a non adjusting event only require a disclosed, especially seeing that the implications have s material effect on the going concern of the organization. Thus, the disclosure in this case, will ensure a description of:
1. The nature of the event
2. The effect on the financial statement.
The organization will do well to update its disclosure requirements, and ensure it take cognizance of any other conditions that existed after the balance sheet date, but before issuance.
There are two closing entries. The first one is to close revenues and expenses to_____. and the second one is to close _____ to Retained Earnings. r
Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars): Year 1 Year 2 Revenues 129.5 151.4 COGS and Operating Expenses (other than depreciation) 32.9 65.7 Depreciation 20.4 36.7 Increase in Net Working Capital 2.7 7.4 Capital Expenditures 33.1 40.1 Marginal Corporate Tax Rate 35% 35% a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for years 1 and 2?
Answer:
a)
incremental earnings year 1 = $49.53 million
incremental earnings year 2 = $31.85 million
b)
free cash flow year 1 = $34.13 million
free cash flow year 2 = $21.05 million
Explanation:
Year 1 Year 2
Revenues 129.5 151.4
COGS & Oper. Exp. (not depreciation) 32.9 65.7
Depreciation 20.4 36.7
Increase in Net Working Capital 2.7 7.4
Capital Expenditures 33.1 40.1
Marginal Corporate Tax Rate 35% 35%
incremental earnings year 1 = (revenues - COGS - depreciation) x (1 - tax rate) = (129.5 - 32.9 - 20.4) x (1 - 35%) = $49.53 million
incremental earnings year 2 = (revenues - COGS - depreciation) x (1 - tax rate) = (151.4 - 65.7 - 36.7) x (1 - 35%) = $31.85 million
free cash flow year 1 = incremental earnings + depreciation - increase in net working capital - capital expenditures = [(129.5 - 32.9 - 20.4) x (1 - 35%)] + 20.4 - 2.7 - 33.1 = $34.13 million
free cash flow year 2 = incremental earnings + depreciation - increase in net working capital - capital expenditures = [(151.4 - 65.7 - 36.7) x (1 - 35%)] + 36.7 - 7.4 - 40.1 = $21.05 million
Year 1 and Year 2 incremental earnings are 49.53 million and 31.85 million respectively. Year 1 and Year 2 free cash flows are 31.83 million and 1.47 million respectively.
Explanation:To calculate the incremental earnings, you need to subtract the operating expenses and taxes from the revenue. Similarly, free cash flows can be calculated as an after-tax profit plus depreciation minus any increase in net working capital and capital expenditure.
For Year 1, the incremental earnings are 129.5 million (revenues) - 32.9 million (COGS and operating expenses) - 20.4 million (depreciation) = 76.2 million pre-tax. After applying the 35% marginal corporate tax rate, the net earnings are 49.53 million.
For Year 2, the calculations yield incremental earnings of 151.4 - 65.7 - 36.7 = 49 million pre-tax. After applying the 35% tax rate, the net earnings are 31.85 million.
To calculate free cash flows, firstly, we find the after-tax profit by multiplying the pre-tax profit by (1 - tax rate). Then, we add depreciation, and finally subtract the increase in net working capital and capital expenditures. For Year 1, the free cash flows are (76.2 * (1 - 0.35)) + 20.4 - 2.7 - 33.1 = 31.83 million. For Year 2, the free cash flows come out to be 1.47 million.
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Jan is 62 and is considering retiring soon. She has $680,000 in a fund paying interest at an annual rate of 4.2% compounded continuously. She would like to withdraw a fixed amount continuously after she retires, and have a balance of $80,000 when she is 90 years old. Assume a continuous money flow, then she can spend $ _______ each month. (Round the answer to an integer at the last step.)
Answer:
She can spend $ 3,323 each month
Explanation:
Jan's current age = 62 years, Retirement age = 90 years, n = 90 - 62 = 28 years
The total amount of balance she should have at 90 years = $80,000
PV is Present Value
PV of this amount = 80,000 x e-r x n = 80,000 x e-4.2% x 28 = 24,680.83
PV of amount available for withdrawal = 680,000 - 24,680.83 = $ 655,319.17
Effective monthly rate, rm = er x 1/12 - 1 = e4.2% x 1/12 - 1 = 0.3506%
If Q is the amount she can spend each month till 28 years i.e. 28 x 12 = 336 months, then PV of Q as annuity = $ 655,319.17
Q / rm x [1 - (1 + rm)-336] = Q / 0.3506% x [1 - (1 + 0.3506%)-336] = 655,319.17
Q x 197.2229383 = 655,319.17
Q = 3,322.73
Therefore, she can spend $ 3,322.73 each month