Answer:
D. $ 3,039 million
Explanation:
Net Operating Assets = Operating Assets - Operating Liabilities
Net Operating Assets = $6,566 million - 3,527 million
Net Operating Assets = $3,039 million
In preparing for the upcoming holiday season, Fresh Toy Company (FTC) designed a new doll called The Dougie that teaches children how to dance. The fixed cost to produce the doll is $100,000. The variable cost, which includes material, labor, and shipping costs, is $34 per doll. During the holiday selling season, FTC will sell the dolls for $42 each. If FTC over produces the dolls, the excess dolls will be sold in January through a distributor who has agreed to pay FTC $10 per doll. Demand for new toys during the holiday selling season is uncertain. The normal probability distribution with an average of 60,000 dolls and a standard deviation of 15,000 is assumed to be a good description of the demand. FTC has tentatively decided to produce 60,000 units (the same as average demand), but it wants to conduct an analysis regarding this production quantity before finalizing the decision.
Create a what-if spreadsheet model using formulas that relate the values of production quantity, demand, sales, revenue from sales, amount of surplus, revenue from sales of surplus, total cost, and net profit. What is the profit when demand is equal to its average (60,000 units)?
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Final answer:
To calculate total revenue, multiply the price per unit by the quantity sold. To calculate marginal revenue, subtract the total revenue of the previous level from the total revenue of the current level. The profit maximizing quantity is where marginal revenue equals marginal cost.
Explanation:
To calculate total revenue, multiply the price per unit by the quantity sold. In this case, the price of one dog coat is $72. To calculate marginal revenue, subtract the total revenue of the previous level from the total revenue of the current level. Total cost is the sum of fixed costs and variable costs. Marginal cost is the change in total cost divided by the change in quantity. The profit maximizing quantity is where marginal revenue equals marginal cost.
Quantity | Total Revenue | Marginal Revenue | Total Cost | Marginal Cost
1 | $72 | $72 | $164 | $100
2 | $144 | $72 | $248 | $84
3 | $216 | $72 | $362 | $114
4 | $288 | $72 | $546 | $184
5 | $360 | $72 | $816 | $270
On one diagram, plot the total revenue curve starting at zero quantity and increasing with each unit sold. Plot the total cost curve starting at the fixed cost and increasing with the variable cost for each unit sold. On another diagram, plot the marginal revenue curve as a horizontal line since the price is constant. Plot the marginal cost curve starting at the first unit and increasing with each additional unit. The profit maximizing quantity is where marginal revenue equals marginal cost, which is at a quantity of 4 units.
Problem 10-3A On January 1, 2017, Evers Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $37,500. Related expenditures included: sales tax $3,600, shipping costs $100, insurance during shipping $50, installation and testing costs $120, and $150 of oil and lubricants to be used with the machinery during its first year of operations. Evers estimates that the useful life of the machine is 5 years with a $5,950 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $180,000. Evers estimates that the useful life of the machine is 4 years with a $9,800 salvage value remaining at the end of that time period.
Prepare the following for Machine A. (Round answers to 0 decimal places, e.g. 5,125. 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.)
(1) The journal entry to record its purchase on January 1, 2017.
(2) The journal entry to record annual depreciation at December 31, 2017.
Answer:
Please see the solution below:
Explanation:
Machine A:
(i) Total Machine A Cost
Purchase Price = $37,500
Sales Tax = $3,600
Shipping Cost = $100
Insurance during shipping = $50
Installation and Testing Cost = $120
Total Machine A cost = $41,370
(ii) Depreciation
Recorded Cost = $41,370
Less: Salvage Value = $5,950
Useful Life = 5 years
Straight Line Method is used to find depreciation per yer will be:
Depreciation = $7,084
(1) The Journal Entry to record purchase of equipment (Machine A)
January 1, 2017
Dr. Equipment $41,370
Cr. Cash $41,370
(2) The Journal Entry to record annual depreciation (Machine A)
December 3, 2017
Dr. Depreciation $7,084
Cr. Accumulated Depreciation - Equipment $7,084
The total cost of Machine A is recorded as $41,370. The depreciation expense for the year end 2017 is calculated to be $7,084.
Explanation:The subject matter involves the calculation and recording of purchase and depreciation of assets, a core part of business accounting.
First, to figure out the cost of machine A, we add up the related costs to the purchase price: $37,500 + $3,600 + $100 + $50 + $120 = $41,370. The cost of lubricants is not included as it is an operational cost, not a purchase cost.
(1) Therefore, the journal entry on January 1, 2017, is Debit: Machinery (account title) for $41,370 which is the total cost of machine A.
To calculate annual depreciation, we use the straight-line method. Take the total cost of the machine ($41,370), subtract the salvage value ($5,950), and then divide by the useful life of the machine (5 years): ($41,370 - $5,950) / 5 = $7,084 (rounded to the nearest dollar).
(2) The journal entry on December 31, 2017, to record annual depreciation is Debit: Depreciation Expense for $7,084, and Credit: Accumulated Depreciation for $7,084.
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Item Prior year Current year Accounts payable 8,120.00 7,915.00 Accounts receivable 6,002.00 6,603.00 Accruals 1,020.00 1,571.00 Cash ??? ??? Common Stock 11,862.00 12,878.00 COGS 12,799.00 18,209.00 Current portion long-term debt 5,011.00 5,066.00 Depreciation expense 2,500 2,760.00 Interest expense 733 417 Inventories 4,243.00 4,814.00 Long-term debt 14,938.00 13,767.00 Net fixed assets 50,217.00 54,795.00 Notes payable 4,346.00 9,870.00 Operating expenses (excl. depr.) 13,977 18,172 Retained earnings 28,963.00 29,912.00 Sales 35,119 46,835.00 Taxes 2,084 2,775 What is the firm's cash flow from financing? Assignment is past due:
Answer:
$2,321
Explanation:
For computing the net cash flow from financing activities, first we have to determine the net income and then the dividend amount which is shown below:
Net income = Sales - Cost of Goods Sold - Operating Expenses - Depreciation Expense - Interest Expense - Taxes
= $46,835 - $18,209 - $18,172 - $2,760 - $417 - $2,775
= $4,052
Now the dividend would be computed below:
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
$29,912 = $28,963 + $4,052 - dividend paid
$29,912 = $33,015 - dividend paid
So, the dividend would be
= $33,015 - $29,912
= $3,103
Cash flow from Financing activities
Add: Increase in Common Stock $1,016 ($12,878 - $11,862)
Add: Current Portion Long-term Debt $55 ($5,066 - $5,011)
Less: Decrease in Long-term Debt -$1,171 ($13,767 - $14,938)
Add: Increase in Notes Payable $5,524 ($9,870 - $4,346)
Less: Dividend Paid $3,103
Net Cash flow from Financing activities $2,321
It is August 14th and John has just purchased 100 shares of Cash Cow Inc. for $1,200 with a settlement date of August 16th. Cash Cow recently declared a dividend of $1.00 per share payable to shareholders of record as of August 15th. How much money did John pay for the right to the recently declared dividend? A. John paid $0.00 for the dividend because he was not the shareholder of record on August 15th. Therefore, the dividend payment went to the previous owner of the stock. B. John paid $100.00 for the dividend because he purchased the stock prior to the dividend record date. C. John paid $50.00 for the dividend because the record date was between purchase date of August 14th and the settlement date of August 16th. Therefore, the dividend payment is shared equally between the previous owner of the stock and John. D. This is a complicated issue and not easily answered. Thus, there is not enough information to answer this question.
Answer:
A. John paid $0.00 for the dividend because he was not the shareholder of record on August 15th. Therefore, the dividend payment went to the previous owner of the stock.
Explanation:
Settlement date is the date on which ownership of share transfer to buyer of stock, it is normally two days after trade date.
Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.
John paid $0.00 for the right to the Cash Cow Inc. dividend because the settlement date of his purchase was after the record date for the dividend.
Explanation:When John purchased shares of Cash Cow Inc., he paid for the stock itself and any dividends that would be coming from that purchase. In this case, John bought the shares on August 14th, but the shares have a settlement date of August 16th. Because the record date for the dividend is August 15th, to be eligible to receive the dividend, John needed to be the shareholder of record by that date. As the settlement date is after the record date, John will not be considered the shareholder of record and thus will not receive the dividend. To answer the question, John paid $0.00 for the right to the recently declared dividend, as the entitlement to the dividend remains with the previous owner of the shares.
Ayayai Corporation purchases a patent from Blossom Company on January 1, 2020, for $40,000. The patent has a remaining legal life of 12 years. Ayayai feels the patent will be useful for 10 years. Prepare Ayayai’s journal entries to record the purchase of the patent and 2020 amortization
Answer:
Explanation:
The journal entries are shown below:
1. Patent A/c Dr $40,000
To Cash A/c $40,000
(Being patent is purchase in cash is recorded)
2. Amortization expense A/c Dr $4,000
To Patent A/c $4,000
(Being amortization expense is recorded)
The computation is shown below:
= Patent ÷ useful life
= $40,000 ÷ 10 years
= $4,000
Final answer:
To record the purchase of a patent, Ayayai Corporation would debit 'Patent' and credit 'Cash' for $40,000. The 2020 amortization would be recorded by debiting 'Amortization Expense' and crediting 'Accumulated Amortization—Patent' for $4,000, assuming a straight-line amortization over its 10-year useful life.
Explanation:
The student's question involves recording the purchase of a patent and its subsequent amortization in accounting records. On January 1, 2020, Ayayai Corporation purchases a patent from Blossom Company for $40,000, which has a legal life of 12 years but Ayayai estimates its useful life to be 10 years. To record the purchase, Ayayai would make the following journal entry:
Patent 40,000
Cash 40,000
To record the 2020 amortization of the patent, Ayayai would use the straight-line method, which spreads the cost evenly over its useful life. With a useful life of 10 years, the annual amortization expense would be $4,000 ($40,000 / 10 years). The journal entry for the 2020 amortization would be:
Amortization Expense 4,000
Accumulated Amortization—Patent 4,000
This entry would be made at the end of the accounting period (e.g., December 31, 2020). As a result of this entry, Ayayai's income statement for 2020 would reflect the amortization expense, and the balance sheet would show the patent net of accumulated amortization.
Gion Company is considering eliminating its windows division, which reported an operating loss for the recent year of $105,000. Division sales for the year were $1,110,000 and its variable costs were $975,000. The fixed costs of the division were $220,000. If the windows division is dropped, 65% of the fixed costs allocated to it could be eliminated. The impact on Gion’s operating income from eliminating this business segment would be:
If Gion eliminates the Windows division, the impact on its operating income would be a negative $8,000.
Explanation:In order to determine the impact on Gion's operating income from eliminating the Windows division, we need to calculate the division's contribution margin. The contribution margin is the division's sales minus its variable costs.
The contribution margin for the windows division would be -
= $1,110,000 - $975,000
= $135,000.
If the division is dropped and 65% of the fixed costs allocated to it are eliminated, the impact on Gion's operating income would be:
Operating income impact = Division's contribution margin - 65% of its fixed costs
Operating income impact = $135,000 - (65% * $220,000)
= $135,000 - $143,000
= -$8,000
Therefore, the elimination of the Windows division would result in a negative impact of $8,000 on Gion's operating income.
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One of the ways Mark and Sue can prevent having a balance due next year is to use the Tax Withholding Estimator at IRS.gov and then adjust their withholding.
a. True
b. False
Answer:
a. True
Explanation:
They can check their withholding using the Tax Withholding Estimator at IRS.gov and adjust accordingly.
Answer:
True ( A )
Explanation:
Mark and sue can prevent having a balance due next year by making very good use of the tax withholding Estimator. this will help them update your current year income and other important factors that has a very significant effect on your tax.
A withholding estimator is an estimator found in the IRS website, it is used to help employees to do a checkup on their paycheck i.e to ensure that taxes been held from their paycheck is the right amount.
using an estimator you will require to enter an estimate of your yearly income and other forms of income and also your number of dependents if it has changed over the year this will help you know how your current year taxes will affect you while filing for your tax next year.
Telicia, a single taxpayer, purchased a famous painting for $69,000. Several years later, she sold it for $99,000. Telicia's marginal tax rate is 35%. Telicia's gain on the sale of the painting will be taxed at a rate of
Answer:
28%
Explanation:
Please see attachment
On January 1, 2017, Lynn Company borrows $3,000,000 from National Bank at 11% annual interest. In addition, Lynn is required to keep a compensatory balance of $300,000 on deposit at National Bank which will earn interest at 5%. The effective interest that Lynn pays on its $3,000,000 loan is a. 10.0%. b. 11.0%. c. 11.5%. d. 11.6%.
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 400 bikes were produced and 240 were sold; this left 160 bikes in ending inventory. The income statement information under variable costing follows.
Sales (240 × $1,650) $ 396,000
Variable product cost (240 × $650) 156,000
Variable selling and administrative expenses (240 × $55) 13,200
Contribution margin 226,800
Fixed overhead cost 72,000
Fixed selling and administrative expense 85,000
Net income $ 69,800
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
For its first month of operations, 400 bikes were produced and 240 were sold; this left 160 bikes in ending inventory. The income statement information under variable costing follows.
Sales (240 × $1,650) $ 396,000
Variable product cost (240 × $650) 156,000
Variable selling and administrative expenses (240 × $55) 13,200
Contribution margin 226,800
Fixed overhead cost 72,000
Fixed selling and administrative expense 85,000
Net income $ 69,800
Under absorption costing the fixed costs are allocated to the production costs for the period.
Unitary cost= variable cost per unit + unitary fixed costs
Unitary cost= 650 + (72,000/400)= $830
Income statement:
Sales (240 × $1,650) $ 396,000
COGS= (240*830)= (199,200)
Gross profit= $196,800
Variable selling and administrative expenses= (13,200)
Fixed selling and administrative expense= (85,000)
Net operating income= $98,600
According to the modern view of the Phillips curve, expansionary macroeconomic policy that leads to inflation will reduce unemployment
a. only if people underestimate the inflationary side effects of the policy.
b. only if people overestimate the inflationary side effects of the policy.
c. if people accurately anticipate the inflationary side effects of the policy.
d. only if monetary policy provides the macroeconomic stimulus.
Answer:
a. only if people underestimate the inflationary side effects of the policy.
Explanation:
The modern Phillips curve suggests that as inflation increases, unemployment reduces and vice versa dependent on two factors; the level of inflation and the excess of growth rate of wages over the expected inflation. The larger the excess, the greater the effect of the expansionary monetary policy. Thus, if it is underestimated, then the unemployment will greatly reduce.
Buffalo in the United States almost became extinct while cattle, an animal that provides similar products, never has been close to extinction. The difference is due to
Question 1 options:
the greater marginal value of a buffalo relative to a steer, leading to the overharvesting of buffalo.
the greater marginal value of a head of cattle relative to buffalo, leading to over-hunting of buffalo.
the use of private property rights on cattle and common property rights on buffalo.
cattle existing in Europe also while buffalo were specific to North America.
Answer:
The greater marginal value of a buffalo relative to a steer, leading to the over harvesting of buffalo.
Explanation:
Marginal value looks at the increased amount of value that can be achieved by providing an additional source of output. So as the marginal value of Buffalo relative to a steer increases, people tends to over harvest it leading to its extinction.
Madison Corporation purchases an investment in Lake Geneva, Inc. at a purchase price of $10 million cash, representing 40% of the book value of Lake Geneva, Inc. During the year, Lake Geneva reports net income of $1,700,000 and pays $419,000 of cash dividends. At the end of the year, the market value of Madison’s investment is $12.0 million. What is the year-end balance of the equity investment in Lake Geneva? Select one: A. $12,000,000 B. $18,910,000 C. $10,480,000 D. $10,512,000 E. $10,000,000
Answer:
$ 10512000
Explanation:
The market value of Madison investment which is the aggregate value of the company's investment =$ 12 million
The book value = assets - liabilities = (1700000 - 419000) ×0.4 = $ 51240
The year-end balance = $ 51240 + $ 10 million = $ 10512000 approx
Nachman Industries just paid a dividend of D 0 = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value?
a. $41.59
b. $42.65
c. $43.75
d. $44.87
e. $45.99
Answer:
option D
Explanation:
End of PV Calculation PV of Dividend
Year (Div x PVIF9%,n)
1 $1.32(1.30) = $1.716 x 0.9174 $1.574
2 $1.716(1.10) = $1.8876 x 0.8417 $ 1.588
$3.162
Value of stock at the end of year 2 = $1.9820/0.04 = $49.55
P V of $38.275 at the end of year 2 = $49.55(PVIF 9%,2) = $41.71
∴ V = $3.162 + $41.71 = $44.87
Hence, the correct answer is option D
The free cash flow hypothesis states:
a. that firms with higher levels of free cash flow should reward their managers with bonuses.
b. that firms with greater free cash flow will pay more in dividends thereby reducing the risk of financial distress.
c. that issuing debt requires interest and principal payments to be paid thereby reducing the potential of management to waste resources.
d. that firms will higher levels of free cash flow should reduce their debt levels.
e. that firms with greater free cash flow should issue new equity to help minimize the wasting of resources by managers.
Answer:
C. that issuing debt requires interest and principal payments to be paid thereby reducing the potential of management to waste resources.
Explanation:
Free Cash Flow is the cash generated by an organisationafter it has accounted for the outflows to capital assets maintenance costs and operating activities. Free Cash flow is a measure of a company's profitability after non-cash expenses in the account statement have been deducted. It is the cash flow an organisation has when it has limited or no debt obligations in its portfolio
The Hypothesis of free cash flow states that an organisation with a large amount of free cash will display less financial or spending discipline compared with an organisation that has debts obligations to spend cash on.
Based on the hypothesis, it becomes essential for such organisations to issue debts so that as the legal obligations (debts, principal and interest) increases, the potential to waste money as a result of fre cash flow reduces.
The guidance for having infant sleep on their back to reduce the incidence of SIDS has a grade of A. Group of answer choices Problem Description Etiology Recommendations Implementation and Evaluation
Answer:
The correct answer is letter "D": Recommendations.
Explanation:
Evidence-based public health (EBPH) practice is the application, and assessment of effective public health programs and policies by applying scientific reasoning principles. It includes several recommendations on basic practices that should be followed to avoid future medical conditions.
Kaplan purchased 2500 shares of its own previously issued $10 par common stock for $62500. As a result of this event,
a. Kaplan’s Common Stock account decreased $25000.
b. Kaplan’s total stockholders’ equity decreased $62500.
c. Kaplan’s Paid-in Capital in Excess of Par Value account decreased $37500.
d. All of these answer choices are correct.
Answer:
b. Kaplan’s total stockholders’ equity decreased $62500.
Explanation:
In the given scenario, the previously issued common stock was purchased for $62,500 which reflects the treasury stock and as we know that, the treasury stock reduces the balance of the total stockholder equity.
While computing the stockholder equity balance, we deduct the treasury stock
So, the total stockholders’ equity would decreased by $62,500
The correct answer is d. All of these answer choices are correct.
Explanation:The correct answer is d. All of these answer choices are correct.
When a company repurchases its own shares, it reduces the amount of shares outstanding. This results in a decrease in the Common Stock account, as the company buys back its own stock. Additionally, the repurchase of shares using more than their par value results in a reduction in Paid-in Capital in Excess of Par Value account. Finally, repurchasing shares also decreases the total stockholders' equity, as stock is being taken out of circulation.
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Consider the following situations for Shocker:
a. On November 28, 2018, Shocker receives a $4,500 payment from a customer for services to be rendered evenly over
the next three months. Deferred Revenue is credited.
b. On December 1, 2018, the company pays a local radio station $2,700 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited.
c. Employee salaries for the month of December totaling $8,000 will be paid on January 7, 2019.
d. On August 31, 2018, Shocker borrows $70,000 from a local bank. A note is signed with principal and 9% interest to be
paid on August 31, 2019.
Required:
Record the necessary adjusting entries for Shocker at December 31, 2018. No adjusting entries were made during the year
Answer:
Explanation:
1. 28/11 Debit: Bank. $4,500
Credit: deferred Rev $4,500
Being advance pmt for services
2. 01/12 Debit: advert exp $900
Debit: Ad Prepaym. $1,800
Credit: Bank. $2,700
Being payment for advert
3. 31/12 Debit: Salary payable$8000
Credit: Salary Exp. $8000
Being Accrued salaries
4 31/08 Debit: Bank. $70,000
Credit: Loan A/c. $70,000
Being bank loan borrowed
5. 31/12 Debit: into on loan $2,100
Credit: Bank. $2,100
Being accrued interest on loan borrowed.
Answer:
1. GENERAL JOURNAL
ACCOUNT TITLE DEBIT CREDIT
DEC 31,2018
a Deferred Revenue 1,500
Service Revenue 1500
b Advertising Expense 900
Prepaid Advertising 900
c Salaries Expense 8000
Salaries Payable 8000
d. Interest Expense 2100
interest Payable 2100
(to adjust for accrued interest expense)
2 a,$1500 for the next three months
b.$900
c.Salaries Expense will be recorded as accrual, so there wont be any computation
d.I=$2100
Explanation:
GENERAL JOURNAL
ACCOUNT TITLE DEBIT CREDIT
DEC 31,2018
a Deferred Revenue 1,500
Service Revenue 1500
b Advertising Expense 900
Prepaid Advertising 900
c Salaries Expense 8000
Salaries Payable 8000
d. Interest Expense 2100
interest Payable 2100
(to adjust for accrued interest expense)
2. Service Revenue is credited and the deferred revue is on the debit side
therefore
$4500*1/3
=$1500 for the next three months
b. one-third of advertisement(10/30) has been aired. Advertising expenses is debited while prepaid advertising is credited
$2700*10/30
$900
c.Salaries Expense will be recorded as accrual, so there wont be any computation
d.Interest for four month from September 1 to December 31
I=principal *rate *time
I=70000*9%*4/12
I=$2100
Which of the following is NOTa consideration when making tradeoffs among various functional areas to achieve a balanced design?
A. Environmental concerns
B. Machinery
C. Materials
D. Profits from manufacturing
Profits from manufacturing is NOT a consideration when making trade-offs among various functional areas to achieve a balanced design
Explanation:
Profit means the income produced more than the production cost or the cost of selling products more than the investment capital. The estimated average profit proportion of the manufacturer differs from 25% to 35%.
The concept of trade-off is an exchange in which one thing you give up to have something that you want. An example of a deal is when you want to travel a half-hour to make more cash.
To take decisions, one product against someone else needs to be traded. In business, the term "business off" is often used as a cost of chance, the preferred alternative. A deal involves a sacrifice to achieve a product or experience.
On January 23, 10,000 shares of Tolle Company are acquired at a price of $30 per share plus a $100 brokerage commission. On April 12, a $0.50-per-share dividend was received on the Tolle Company stock. On June 10, 4,000 shares of the Tolle Company stock were sold for $34 per share less a $100 brokerage commission. Journalize the transaction.
Answer:
January 23rd
Dr Investment in Tolle 300,100
Cr Cash 300,100
(to record the acquired of 10,000 Tolle's shares at $30 each and a brokerage cost of $100)
April 12th
Dr Cash 5,000
Cr Dividend Revenue 5,000
(to record dividend revenue from 10,00 Tolle's shares at $0.5 each)
June 10th
Dr Cash 135,900
Cr Investment on Tolle 120,040
Cr Gain on investment disposal 15,860
(to record the sales of 4,000 Tolle's shares at $34 plus $110 commission fees incurred).
Explanation:
All the explanation is given at the end of each transaction. Further explanation as below:
Given there is no information mentioned whether the share acquired is fro 20% to above and the partial disposal of the investment comes quite near to the time of first acquire; we apply the Cost Method for accounting these transactions.
In the June 10th transaction, we have:
- The actual selling price per share = (Selling price x share sold - Brokerage commission) / share sold = ( 34 x 4,000 - 100) / 4,000 = $33.975;
- The cost of share sold per share = ( Purchasing price x share purchase - Brokerage commission)/ share purchased = ( 30 x 10,000 + 100) / 10,000 = $30.01
=> Cost of share recorded ( Cr Investment account) = 30.01 x 4,000 = 120,040;
=> Gain on investment disposal = ( 33.975 - 30.01) x 4,000 = 15,860.
=> Cash receipt = 4,000 x 34 - 100 = $135,900.
Your firm has just issued five-year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4 percent. What is the amount of the first coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is currently 7.2 percent?
Answer:
The first coupon payment is 37.25 dollars.
Explanation:
This problem require us to calculate the first coupon payment that the firm will make. This can be easily calculated by multiplying the applicable interest rate with face value of notes issued.
The applicable interest rate is six month libor + 0.25% (1/4)
so
First coupon payment = (7.45%)'/2 * 1000 = 37.25 dollars
'7.25% + 0.25% = 7,45%
Fortune, Inc. holds 50 shares of treasury stock purchased for $20 per share. In March, Fortune sold 10 shares at $50 per share. In December, Fortune sold another 5 shares at only $10 per share. The journal entry to record the transaction in December will include a (debit/credit) to the Paid-In Capital, Treasury Stock account in the amount of $________.
Answer:
Debit, $50
Explanation:
As the journal entry to record the December transaction, we will see how many shares at what prices the company has sold during December.
Fortune sold five shares at $10 per share.
As the company reacquired the shares for $20 per share, the company incurred a loss of $10 per share. Generally, additional paid-in-capital is a credit entry. As the company is selling at lower prices than reacquired prices, the paid-in Capital becomes debit.
As it sold five shares, the amount to be debited $10 × 5 shares = $50.
Final answer:
A journal entry for the sale of treasury stock at a loss will include a debit to Paid-In Capital, Treasury Stock for the loss amount if there are sufficient funds from previous sales at a profit, and any remaining loss not covered would be debited to Retained Earnings.
Explanation:
The journal entry to record the transaction in December when Fortune, Inc. sold 5 shares of treasury stock at $10 per share will include a debit to the Paid-In Capital, Treasury Stock account. Since the shares were originally purchased for $20 per share, and sold for $10 per share, this represents a loss of $10 per share. However, if there was any balance in the Paid-In Capital, Treasury Stock account from previous sales at higher prices, like the sale in March for $50 per share, it should be used to absorb the loss. If there was not enough balance in the Paid-In Capital, Treasury Stock account, the remaining loss should be debited to Retained Earnings.
Thus, if after the previous transactions in March, there was a balance in the Paid-In Capital, Treasury Stock account, part or all of the $50 loss ($10 loss per share for 5 shares) would be a debit to that account. A full entry would also include a debit to Cash for $50 (5 shares at $10 each) and a credit to Treasury Stock for $100 (5 shares at the original cost of $20 each). If the Paid-In Capital, Treasury Stock account has insufficient funds, the Retained Earnings would then be debited for the remaining loss.
Your company does not want its employees to use the Internet to exchange personal e-mail during work hours. What is the best tool to use to ensure the company does not violate an employee’s right to privacy?
There is a way that you can implement to prevent employees to use Internet to exchange personal e-mail during work hours: Use of monitoring tool for IT admins and people and let employees sign the consent. Most common misinterpretation when employers use monitoring tools to see if their employees are violating their policies is privacy issues. This is wrong. Monitoring tools are needed for safety of both parties (company and employees). For employees, they could use these as an evidence that they are really following the rules and not violating anything. As for employers, this is their safeguard against violators.
Holt Company purchased a computer for $8,000 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,000 salvage value. In 2021, the estimates are revised. Holt now feels the computer will be used until December 31, 2022, when it can be sold for $500?
Answer:
$2,350
Explanation:
On January 1, 2019
Cost of computer = $8,000
Useful life = 5 years
Salvage value = $1,000
Annual Depreciation = (8000 - 1000)/5
= 7000/5
= $1,400
In 2021 estimates are revised i.e after 2 years of use
Carrying value = 8000 - (2 × 1400)
= 8000 - 2800
= $5,200
Remaining Useful life after revised estimate = 2 years
Revised salvage value = 500
Annual depreciation = (5200 - 500)/2
= 4700/2
= $2,350
The Latimore Company invested $8.5 million in a new plant in Italy when the exchange rate was 1.1500 euros to the dollar. At the end of the year, the rate was 1.2000 euros to the dollar. (Indirect quotes.)
a. Did Latimore make or lose money on the exchange rate movement? If so, how much?
b. What kind of exchange rate gain or loss was it?
c. What was the tax impact if Latimore’s marginal tax rate is 40%?
Answer:
Latinmore made money on the exchange rate movement. It was an exchange rate gain of $369,566. The marginal tax impact was $147,826.
Explanation:
Since the standard practice in accounting is to reflect the current situation of the company, any change in the exchange rate that affects the assets of the company abroad must be recognized. The financial income of exchange gains are registered in the Income Statement and affects the base to pay income tax.
The accounting equation is assets = liabilities + owner’s equity.
Please explain the relationship between economic resources and claims to economic resources.
a. Why must this equation always balance?
b. What transactions increase or decrease owner’s equity?
c. How does net income or loss affect owner’s equity?
d. Please give an example of a transaction, applied to the accounting equation.
The accounting equation, assets = liabilities + owner’s equity, denotes the relationship between a company's resources and the claims to these resources. The equation must always balance due to the dual effect of each transaction. Transactions affect owner's equity, and net income or loss directly impacts this equity.
Explanation:The accounting equation, assets = liabilities + owner’s equity, is a fundamental concept in financial accounting. This equation shows the relationship between economic resources and the claims to these resources. Assets represent economic resources of the company. Liabilities represent claims of creditors and owner’s equity represents the claims of the owners.
a. The accounting equation always must balance because every financial transaction has an equal effect on both sides of the equation.
b. Transactions that increase owner's equity include revenues and injection of capital by owners, while expenses or withdrawal of capital by owners decrease owner's equity.
c. Net income or loss directly affects owner’s equity. If the company has a net income, it increases owner’s equity. Conversely, a net loss decreases owner’s equity.
d. For instance, if a business takes a loan of $20,000, its assets (cash) increase by $20,000 and its liabilities (loan) also increase by $20,000. Hence, the accounting equation is balanced.
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Your uncle offers you a choice of $115,0 in 10 years or $52,000 today, if the money is discounted at 9%, which should you do ose? 2. If you invest $9,500 per period or the fotioning number of periods how much would you have? A. 10years at 10% B. 15years at 9%
Answer:
1) we would choose the second offer i.e. $52,000 today
2) For A) 10 years at 10%
Future value = $151,405.53
For B) 15 years at 9%
Future value = $278,928.70
Explanation:
1) Future value = $115,000
Time, n = 10 years
Discount rate, r = 9% = 0.09
Now,
Present value of the money provided after 10 years
= Future Value ÷ [ ( 1 + r )ⁿ ]
= $115,000 ÷ [ ( 1 + 0.09 )¹⁰ ]
= $48,577.24
Since,
The Present value of $115,000 is less than the money to offered today i.e $52,000
Hence, we would choose the second offer i.e. $52,000 today
2) Payment per period = $9,500
Future value = Yearly Payment × [ { ( 1 + r ) ⁿ - 1 } ÷ r ]
Thus,
For A) 10 years at 10%
Future value = $9,500 × [ { ( 1 + 0.1 )¹⁰ - 1 } ÷ 0.1 ]
= $151,405.53
For B) 15 years at 9%
Future value = $9,500 × [ { ( 1 + 0.09 )¹⁵ - 1 } ÷ 0.09 ]
= $278,928.70
"A triangle has a perimeter of 13 and one side of length 3. If the lengths of the other two sides are equal, what is the length of each of them?"
Answer:
The length of each is 5
Explanation:
Perimeter of triangle = sum of three sides
Assuming the length of each of the equal sides is y
13 = y+y+3
13-3 = 2y
2y = 10
y = 10/2 = 5
Describe three different types of organizational cultures. When would each be most and least effective for a research and development company dependent on employee innovation?
Explanation:
Organizational culture is the set of values, policies, beliefs that is shared by all employees of an organization in order to drive the behavior of all organizational parts.
Some types of organizational culture may be:
Power Culture: In this model of organizational culture, the focus is on leadership, usually attributed to the entrepreneur or a manager. It is more centralized and focused on results. There are also barriers to the development of skills and competencies among employees, due to the difficulty of implementing innovation in organizational processes, which is only incumbent on the leader.Role Culture: The focus is on employee performance, but there are still well-structured and inflexible processes that make it difficult for employees to implement innovation.People Culture: The focus of this type of culture is the employees, they are well valued, there is greater interaction between teams and there is a great chance for professional growth and development, as this is the most relevant type of culture for workers to collaborate with. innovative ideas and creative solutions to aid in organizational processes.Wendell Company provided the following pertaining to its recent year of operation:
• Common stock with a $10,000 par value was sold for S50,000 cash.
• Cash dividends totaling S20,000 were declared, of which S15,000 were paid.
• Net income was S70,000.
• A 5% stock dividend resulted in a common stock distribution, which had a S5,OOO par value and a S23,000 market value.
• Treasury stock costing 9,000 was sold for $7,000.
How much did Wendell's total stockholders' equity increase during the recent year of operation?
A. S107,000.
B. $84,000.
c. S98,000.
D. $112,000.
Answer:
Option (B) is correct.
Explanation:
Wendell's total stockholders' equity increase during the recent year of operation:
= Issued common stock - Cash dividend declared + Net Income - Stock dividend distributed + Sale of treasury stock below cost
= $50,000 - $20,000 + $70,000 - $23,000 + $7,000
= $84,000
Therefore, Wendell's total stockholders' equity increase by $84,000.