Answer:
Project X maximizes shareholder value (highest NPV) and has a MIRR of 14.27%.
Explanation:
year cash flow project X cash flow project Y
0 -1,000 -1,000
1 100 1,000
2 320 110
3 400 55
4 700 45
WACC = 13%
Using an excel spreadsheet I calculated the projects' NPV, IRR and MIRR
NPV IRR MIRR
project X $45.65 15% 14.27%
project Y $36.82 16% 14.03%
The modified internal rate of return (MIRR) considers that the project's cash inflows are invested at the company's WACC and the initial investment is financed at a certain debt rate (in this case the same WACC).
your investment has a 20% chance of earning 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing 7%. what is your expected return on investment
Answer:
8.9%
Explanation:
From the question above
- The investment has 20% chance of earning 30% rate of return
= 20/100
Number or chances= 0.2
- The investment has a 50% chance of earning 10% rate of return
= 50/100
Number of chances = 0.5
- The investment has 30% chance of losing 7%
= 30/100
Number of chances= 0.3
Therefore, the expected return on investment can be calculated as follows
=0.2(30) + 0.5(10) + 0.3(-7)
=6 + 5 - 2.1
= 11-2.1
= 8.9%
Hence the expected return on investment is 8.9%
An annual insurance policy is paid in advance by a company. How will the company treat this initial payment and the subsequent expiration of a portion of the policy over time?
A. The initial payment will be recorded as an increase to a Prepaid Insurance account.
B. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset.
C. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account.
D. This prepayment of the policy will initially be treated as an expense and over time, the expired portion will be treated as an asset.
Answer:
The question requires the answering party to pick all that apply as found in the attached.
A. The initial payment will be recorded as an increase to a Prepaid Insurance account.
B. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset.
C. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account.
Explanation:
The initial payment will be recorded as increase to an asset account,prepaid insurance is a correct statement,pending when the insurance cost is cost,
Subsequently,the expired the portion of the prepayment would be removed from the account,hence point B is also correct.
Finally,when the expired portion is removed from prepaid insurance account,it is transferred to insurance expense account,point C is also on point.
Presented below are two independent situations: A) Sandhill Inc. acquired 10% of the 420,000 shares of common stock of Schuberger Corporation at a total cost of $15 per share on June 17, 2020. On September 3, Schuberger declared and paid a $120,000 dividend. On December 31, Schuberger reported net income of $520,000 for the year. B) Blue Corporation obtained significant influence over Hunsaker Company by buying 30% of Hunsaker’s 120,000 outstanding shares of common stock at a cost of $18 per share on January 1, 2020. On May 15, Hunsaker declared and paid a cash dividend of $120,000. On December 31, Hunsaker reported net income of $220,000 for the year. Prepare all necessary journal entries for 2017 for (a) Edelman and (b) Wen.
Answer:
The journal entries for both corporations is prepared below
A)
Date: June 17
Accounts title and Explanations: Stock investment, dr. (420,000*$15*10%) 630,000
Accounts title and Explanations: Cash, Cr. 630,000
____________________________
Date: Sept 3.
Accounts title and Explanations: Cash, dr. (120,000*10%) 12,000
Accounts title and Explanations: Dividend revenue, Cr. 12,000
______________________________
Date: Dec 31.
Accounts title and Explanations: Stock investments, dr. (520,000*10%) 52,000
Accounts title and Explanations: Investment revenue, Cr. 52,000
____________________________
B)
Date: Jan 1
Accounts title and Explanations: Stock investment, dr. (120,000*$18*30%) 648,000
Accounts title and Explanations: Cash, Cr. 648,000
____________________________
Date: May 15
Accounts title and Explanations: Cash, dr. (120,000*30%) 36,000
Accounts title and Explanations: Dividend revenue, Cr. 36,000
______________________________
Date: Dec 31.
Accounts title and Explanations: Stock investments, dr. (220,000*30%) 66,000
Accounts title and Explanations: Investment revenue, Cr. 66,000
____________________________
A local radio commercial costs $600 and reaches an estimated 10,250 listeners. A local cable commercial costs $1000 and reaches an estimated 18,500 viewers. Which medium provides the lowest CPM?
a. The radio commercial
b. The cable commercial
c. The radio and cable commercials have the same CPM
d. The CPM cannot be calculated given the limited information provided
e. None of the above
Answer:
b. The cable commercial
Explanation:
CPM or cost per mille is a measure used in advertising to determine how effectively a promotional message is getting to its audience. It is the cost of getting an advert in front of 1,000 people.
In this scenario when we calculate CPM for the radio station
$600 = 10,250 listeners
x= 1,000 listeners
Cross multiply
x= (600 * 1,000) ÷ 10,250 = $58.54
For the local cable commercial
$1000 = 18,500 viewers
y = 1,000 viewers
Cross multiply
y= (1,000 * 1,000) ÷ 18,500= $54.05
Peterson Corporation wanted to run an ad campaign that featured popular songs sung by the original singer. The aim was to make an emotional connection with people who remembered the songs. When Bette was approached to sing for the commercial, she refused saying she did not "do" commercials. Peterson Corporation still wanted to use the song, so they hired a backup singer for Bette and she was told to "sound as much as possible like the Bette record." The backup singer did the commercial, and people, even close acquaintances of Bette, thought it was her. Bette sued Peterson Corporation for wrongfully appropriating her likeness.
Required:
Is this a valid example of misappropriation. Why or why not.
Answer:
Misappropriation refers to the use of another person's intellectual property including their name or likeness without prior permission from the person which can then cause harm to that person.
This is indeed an example of misappropriation because the company tried to use Bette's likeness in the commercial. After being rebuffed by Bette saying that she does not do commercials for whatever business or personal reasons known to her, they still sought to use her popularity and image to make their products more popular.
To do so they hired a backup singer and told her to sing as much like Bette as she could so much so that even Bette's close acquaintances thought that it was Bette. If her close acquaintances could think it was her, imagine the general public.
They therefore made it seem as though Bette did their commercial which then would mean that Bette does in fact do commercials which would do damage her assertion that she does not do same. This would bring harm to her business relationships if for instance she had rebuffed other companies in the past when they sought her to do their commercials.
This is a case of Misappropriation and Bette should sue.
A company currently pays a dividend of $3.4 per share (D0 = $3.4). It is estimated that the company's dividend will grow at a rate of 17% per year for the next 2 years, and then at a constant rate of 5% thereafter. The company's stock has a beta of 1.3, the risk-free rate is 6.5%, and the market risk premium is 1.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
Answer:
Current price of stock =$128.06
Explanation:
The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.
The model is given as
P = D× g/(r-g)
P- price, D- dividend payable in year 1, r -cost of equity, g - growth rate in dividend
Cost of equity
The cost of equity can be calculated using the Capital Asset Model (CAPM).
Ke= Rf +β(Rm-Rf)
Ke =? , Rf- 6.5%, (Rm-Rf)- 1.5, β- 1.3
Ke=6.5% + 1.3× (1.5)= 8.45%
Stock price
PV of dividend in year 1 = 3.4× 1.17× 1.0845^(-1)=3.668
PV of dividend in year 2 = 3.4× 1.17^2× 1.0845^(-2) = 3.9572
PV of dividend in year 3
This will be done in two(2) steps:
Step 1- PV in year 2 terms
3.4× 1.17^2× 1.05/(0.0845- 0.05)= 141.651
Step 2- PV in year 0
141.6513913× 1.0845^(-2)= 120.4375
Current piece of stock = 3.668 + 3.957 + 120.4375 = 128.062
Current price of stock =$128.062
Select the best closing paragraph of a bad-news letter. a. Once again, we want to express how sorry we are that we are not able to offer you the position. b. We wish you the best in your job search. c. If you have further questions about this decision, please feel free to call me immediately. d. We regret that we are unable to consider your application
Answer:b
Explanation:
Calisto Launch Services is an independent space corporation and has been contracted to develop and launch one of two different satellites. Initial equipment will cost $750,000 for the first satellite and $850,000 for the second. Development will take 5 years at an expected cost of $150,000 per year for the first satellite; $120,000 per year for the second. The same launch vehicle can be used for either satellite and will cost $275,000 at the time of the launch 5 years from now. At the conclusion of the launch, the contracting company will pay Calisto $2,500,000 for either satellite. Calisto is also considering whether they should consider launching both satellites. Because Calisto would have to upgrade its facilities to handle two concurrent projects, the initial costs would rise by $150,000 in addition to the first costs of each satellite. Calisto would need to hire additional engineers and workers, raising the yearly costs to a total of $400,000. An additional compartment would be added to the launch vehicle at an additional cost of $75,000. As an incentive to do both, the contracting company will pay for both launches plus a bonus of $1,000,000. Using a present worth analysis with a MARR of 10 percent/year, what should Calisto Launch Services do?
Answer:
The three different alternatives have positive NPVs. The alternative with the highest NPV is alternative 3, to develop and launch both satellites (NPV = $241,891). This alternative also has the highest IRR (12.1%). So Calisto should work on both satellites.
Explanation:
satellite 1 satellite 2
initial cost $750,000 $850,000
if 2 satellites developed $150,000
development cost year 1 $150,000 $120,000
if 2 satellites developed $130,000
development cost year 2 $150,000 $120,000
if 2 satellites developed $130,000
development cost year 3 $150,000 $120,000
if 2 satellites developed $130,000
development cost year 4 $150,000 $120,000
if 2 satellites developed $130,000
development cost year 5 $150,000 $120,000
if 2 satellites developed $130,000
launch vehicle cost year 5 $275,000
if 2 satellites developed $75,000
revenue from launching $2,500,000 $2,500,000
bonus for launching both $1,000,000
MARR = 10%
since there is not enough room here, I used an excel spreadsheet to calculate NPVs of launching satellite 1, satellite 2 or both.
Identify the financial statement (or statements) that each account would appear on. Use I for Income Statement, RE for Statement of Retained Earnings, B for Balance Sheet, and C for Statement of Cash Flows.
1. Accounts Payable
2. Cash
3. Common Stock
4. Accounts Receivable
5. Rent Expense
6. Service Revenue
7. Office Supplies
8. Dividends
9. Land
10. Salaries Expense
Answer: Please refer to Explanation
Explanation:
1. Accounts Payable - Balance Sheet
This is a balance sheet item under Current Liabilities. It shows the firm's or people that the company owes for buying goods on account.
2. Cash - Balance Sheet Item.
It shows the amount of cash that the company has. It is a Current Asset.
3. Common Stock - Balance Sheet Item
This is a balance sheet item that shows the amount of common stock in the company. It is reporters in the Stockholders' Equity section along with Retained Earnings, Treasury Stock and Preferred stock.
4. Accounts Receivable - Balance Sheet item
Reported in the balance sheet under the Current Assets section. It is used to denote those customers who bought goods on account from the company.
5. Rent Expense - Income Statement
This is an expense and as such is treated in the Income statement and subtracted from the revenue.
6. Service Revenue - Income statement
The company gets this when they provide a service and as such it is revenue which will be added to the company's total revenue.
7. Office Supplies - Income Statement
They should be recorded in the income statement if they are used in the period in question as they will be expenses used in the upkeep of the office.
8. Dividends - Statement for Retained Earnings
These will be reflected in the statement for retained earnings as they are subtracted from the Retained Earnings. The Retained Earnings balance reported will then be Net of Dividends.
9. Land - Balance Sheet
Land is a fixed asset and as such will appear on the balance sheet of a company.
10. Salaries Expense - Income Statement item.
As an expense, this goes to the Income statement and will be deducted fro the revenue for the period. Bear in mind that this and all other expenses should only be deducted if they are from the period in question.
Mountain High Ice Cream Company transferred $63,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,300). Mountain High anticipates a $3,300 recourse obligation. The bank charges a 3% fee (3% of $63,000), and requires that amount to be paid at the start of the factoring arrangement. Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Journal entries for Mountain high Ice cream is given below
Explanation:
Journal entries:
Debit Credit
Cash 54810(w1)
Loss on receivables 6190
Factoring amount 5300(fair value)
Recourse liability 3300
Receivables 63000
Workings 1
63000 x 90%-3% = 54810
Stritch Company is trying to decide how many units of merchandise to order each month. The company's policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 24,000 units, 14,000 units, and 34,000 units, respectively. How many units must be purchased in September
Answer:
Purchases budget = 18,000 units
Explanation:
Purchases budget = Sales + closing inventory - opening inventory
Closing inventory for September = 20% of august sales = 20% × 34,000=6,800
Opening inventor for September = 20%× September = 20% × 14,000= 2800
Purchases budget for September = 14,000 + 6,800 - 2,800 = 18,000
Purchases budget = 18,000 units
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Smiley issued $1,400,000 of 5-year, 6% bonds at a market (effective) interest rate of 3%, receiving cash of $1,593,666. Interest is payable semiannually on April 1 and October 1.
Required:
a. Journalize the entries to record the following.
1. Issuance of bonds on April 1, Year 1.
2. First interest payment on October 1, Year 1, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.)
b. Explain why the company was able to issue the bonds for $22,282,220 rather than for the face amount of $21,300,000.
Answer:
a. Journalize the entries to record the following.
1. Issuance of bonds on April 1, Year 1.
Dr Cash 1,593,666
Cr Bonds payable 1,400,000
Cr Premium on bonds payable 193,666
2. First interest payment on October 1, Year 1, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.)
premium per coupon = $193,666 / 10 coupons = $19,366.60
Dr Interest expense 22,633.40
Dr Premium on bonds payable 19,366.60
Cr Cash 42,000
b. Explain why the company was able to issue the bonds for $1,593,666 (not $22,282,220) rather than for the face amount of $1,400,000 (not $21,300,000).
Since the bond's coupon rate was higher than the market rate, investors were willing to pay more for the bond (premium) than its face value. At $1,593,666, the actual returns will equal the returns of a $1,400,000 bond issued at market rate.
Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed costs are $ 60 comma 000 for proposal A and $ 75 comma 000 for proposal B. The variable cost is $ 12.00 for A and $ 10.00 for B. The revenue generated by each unit is $ 22.00.
Required:
a. What is the break-even point in units for proposal A?
b. What is the break-even point in units for proposal B?
Answer:
Break-event point
Product A 6,000 units
Product B 6,250 units
Explanation:
The break-even point is the level of activity that a business must operate to equate total revenue to total cost . At the break even point, the business makes no profit or loss., and the total contribution is equal to total fixed cost
The break-even point is calculated as follows:
Total general fixed cost/(selling price - variable cost)
Break-even point = 60,000/(22-12)=6000 units
Product B
Beak-even point = 75,000/(22-10)=6250 units
Break-event point
Product A 6,000 units
Product B 6,250 units
Ma Barker Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $100,000 and 40,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $5,000 in direct materials and $2,400 in direct labor. The labor rate is $6 per hour. If Job #334 contained 200 units, the unit product cost on the completed job cost sheet would be:___________.
a) $42.00
b) $39.50
c) $41.90
d) $37.00
Answer:
The correct answer is option (A) $42.00
Explanation:
Solution
Given that:
The established rate is given as = 100,000/40,000
= $2.5 per hour
Thus
The cost of the job is shown is shown below:
The direct material = $5,000
The direct labor = $2400
Then
The manufacturing overheard is = 400 * 2.5 = $1,000
So,
The total cost is = $5,000 + $2400 + $1000 = $8,400
To get our unit cost,
Unit cost = $8400/200 = $42.00
It is important to know that, the number of labor hours used in jobs = Total labor cost/Rate per hour
=2,400/6 = 400 hours
Suppose that the Federal Reserve decides to increase the money supply with a $300 purchases of Treasury bills. Complete the tables that represent the financial position of the Federal Reserve and commercial banks after this open-market operation. Be sure to use a negative sign for reduced values.For the Federal Reserve, what are assets? What are liabilities?
Answer:
The correct answer to the following question will be "Treasury bills, Monetary Base ". The further explanation is given below.
Explanation:
(A)...
Assets: $300 (tax bills)
If it's bought by Federal Reserve, it's going to be the asset portion.
(B)...
Reserves: $300 (Commercial Banking liabilities)
Based mostly on reserve requirements, banks would then deposit funds to Federal Reserve. All of the lenders will carry through.
(C)...
Treasury Deposits or bills = -$300
Certain bills would go down by $300 as either a result of Federal Reserve purchases.
(D)...
Bookings or Reserves: + $300
This would be growing by $300 because of the sale of treasury bills. It won't bring any changes to the aspect of liability.
If researchers add financial treasury obligations with reserves as well as circulating documents, so it becomes a financial basis. Such that the answer given is indeed the appropriate one.
How is each of the following likely to be affected by a recession:
a. the natural unemployment rate.
b. the cyclical unemployment rate.
c. the inflation rate.
d. the poll ratings of the president
Each of the following likely to be affected by a recession is the cyclical unemployment rate. The correct option is b.
What is a recession?The term "recession" is used in economics to describe the economic downturn brought on by a reduction in supply or demand. The production, employment, and income of domestic economies generally diminish, which in turn results in additional drops in demand and investment, lengthening the recessive process.
Because of this, when demand or production falls, the recession tends to last longer, deepen, and speed up, signaling that the affected nation's domestic economy will be in decline.
A recession is a time in the economy when growth is generally slow, yet inflation is also high. It is crucial that market forces operate independently, without interference from the government, in order to prevent a recession.
Therefore, the correct option is b. the cyclical unemployment rate.
To learn more about the recession, refer to the link:
https://brainly.com/question/17001440
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Work Place Products Inc., a wholesaler of office products, was organized on July 1 of the current year, with an authorization of 50,000 shares of preferred 2% stock, $40 par and 750,000 shares of $7 par common stock. The following selected transactions were completed during the first year of operations:
Journalize the transactions.
a. July 1. Issued 400,000 shares of common stock at par for cash.
b. July. 1. Issued 1,000 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.
c. Aug. 7. Issued 80,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $250,000, $400,000, and $70,000, respectively. For a compound transaction, if an amount box does not require an entry, leave it blank.
d. Sept. 20. Issued 25,000 shares of preferred stock at $44 for cash. For a compound transaction, if an amount box does not require an entry, leave it blank.
Answer and Explanation:
The Journal entries are shown below:-
1. Cash Dr, $2,800,000 (400,000 × $7)
To Common stock $2,800,000
(Being issue of common stock is recorded)
Here we debited the cash as as it increased the assets and we credited the common stock as it also increased stockholder equity
2. Organisation expenses Dr, $7,000 (1,000 × $7)
To Common stock $7,000
(Being issue of common stock for organisation expenses is recorded)
Here we debited the organization expenses as it increased the expenses and we credited the common stock as it also increased stockholder equity
3. Land Dr, $250,000
Building Dr, $400,000
Equipment $70,000
To Common stock $560,000
To Paid in capital in excess of par value- Common stock $160,000
(Being exchange of common stock with Land, building and equipment is recorded)
Here we debited the land, building, equipment as it increased the assets and we credited the common stock and paid in capital in excess of par value as it also increased stockholder equity
4. Cash Dr, $1,100,000 (25,000 × $44)
To Preferred stock $1,000,000 (25,000 × $40)
To Paid in capital in excess of par value-preferred stock $100,000
(Being issue of preferred stock is recorded)
Here, we debited the cash as it increased the assets and we credited the preferred stock and paid in capital in excess of par value as it also increased stockholder equity
Strait Co. manufactures office furniture. During the most productive month of the year, 3,300 desks were manufactured at a total cost of $82,000. In the month of lowest production, the company made 1,130 desks at a cost of $59,000. Using the high-low method of cost estimation, total fixed costs are
Answer:
Using the high-low method of cost estimation, total fixed costs are $47,020
Explanation:
Cost at highest level of activity = $82,000.00
Cost at Lowest level of activity = $59,000.00
Highest level of activity = 3,300
Lowest Level of activity = 1,130
Variable cost per unit = $(82,000 - 59,000) ÷ (3,300 -1,130)
Variable cost per unit = $23,000 ÷ 2,170
Variable cost per unit = $10.60
Fixed Costs = $82,000 - (3,300 × 10.60)
Fixed Costs = $47,020
Data related to the inventories of Kimzey Medical Supply are presented below: Surgical Equipment $ 260 170 Surgical Supplies $ 120 Selling price Cost Replacement cost Costs to sell Normal gross profit ratio 90 Rehab Equipment $ 340 250 235 25 30 % Rehab Supplies $ 165 162 158 240 80 30 30% 10 30 % 20 % In applying the lower of cost or market rule, the inventory of surgical equipment would be valued at:_________
A) $170.
B) $152.
C) $230.
D) $240.
Answer: A) $170
Explanation:
In applying the Lower of Cost or Market Value, inventory is valued at the amount that is lower between the current market value or the cost of the inventory and recorded in the balance sheet.
Market Value can be calculated as the current value minus the cost to sell.
From the above question, the value of the Surgical Equipment is $260 and the cost to sell is $30.
That means that the Market Value is,
= 260 - 30
= $230
This figure is larger than the cost of the Surgical Equipment which is $170 so to record the inventory according to the Lower of cost or market rule, the $170 is picked as it is lower.
You buy a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years.
A. Calculate the growth rate in dividends.
B. Calculate the expected dividend yield .
C. Assuming the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to get the expected total rate of return. What is the stock
Answer:
A. the growth rate in dividends = 7.00%
B. Expected dividend yield = 4.67%
C. Stock's xpected total rate of return = 11.67%
Explanation:
A. Calculate the growth rate in dividends
Current dividend growth rate = (Current year dividend - Previous year dividend) / Previous year dividend
Therefore,
Year 2 dividend growth rate = ($1.1449 - $1.07) / $1.07 = 0.0700, or 7.00%
Year 3 dividend growth rate = ($1.2250 - $1.1449) / $1.1449 = 0.0700, or 7.00%
This shows that;
Year 2 dividend growth rate = Year 3 dividend growth rate = 7.00%
B. Calculate the expected dividend yield
Dividend yield = Dividend per share / Market price per share
Therefore,
Expected dividend yield = Expected dividend per share in year 3 / Expected market price per share in year 3 = $1.2250 / $26.22 = 0.0467, or 4.67%
C. Assuming the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to get the expected total rate of return. What is the stock
Note: The complete statement is "What is this stock’s expected total rate of return?"
Stock's xpected total rate of return = Growth rate + Expected dividend yield in 3 = 7.00% + 4.67% = 11.67%.
Here are comparative statement data for Ivanhoe Company and Pharoah Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016.
2017 2016 2017 2016
(Ivanhoe (Ivanhoe (Pharoah (Pharoah
Company) Company) Company) Company)
Net sales $1,865,000 $595,000
Cost of goods sold 1,064,000 279,000
Operating expenses 252,000 84,000
Interest expense 8,000 1,800
Income tax expense 70,900 35,000
Current assets 583,495 $559,214 149,171 $142,246
Plant assets (net) 942,972 895,000 250,113 225,203
Current liabilities 118,722 135,709 63,273 54,203
Long-term liabilities 204,042 161,100 53,020 44,750
Common stock, $10 par 895,000 895,000 214,800 214,800
Retained earnings 308,703 262,405 68,192 53,696
Required:
Prepare a vertical analysis of the 2017 income statement data for Ivanhoe Company and Pharoah Company.
Answer:
Condensed Income Statement
For the Year Ended December 31, 2017
Ivanhoe Company Pharaoh Company
Net sales $1,865,000 100% $595,000 100%
Cost of goods sold ($1,064,000) 57% ($279,000) 47%
Gross profit $801,000 43% $316,000 53%
Operating expenses ($252,000) 14% ($84,000 ) 14%
EBIT $549,000 29% $232,000 39%
Interest expense ($8,000) 0.4% ($1,800 ) 0.3%
Income tax expense ($70,900) 3.8% ($35,000) 5.9%
Net income after taxes $470,100 25.2% $195,200 32.8%
A vertical analysis of an income statement uses net sales as the reference for all the other accounts. The other accounts are shown as a % of total net sales.
Suppose you have a linear integer optimization problem. You solve the problem as a linear optimization problem by ignoring the integer constraints and obtain an integer optimal solution (i.e., your model did not require the variables to be integer, but it turned out when you solved the problem Solver found an optimal answer where the variables are integer).
Which of the statements below are correct (choose only one):
A. You can categorically state that you have the optimal solution to the integer optimization problem.
B. You can categorically state that you do not have the optimal solution to the integer optimization problem.
C. None of the above.
Answer:
Option(A) is the correct answer to the given question .
Explanation:
The integer programming problem is also known as the computational optimization or the functionality method that main objective to limits the some or many of the parameters may be integer. The objective of linear optimization problem to make the objective function as well as integer constraints linear .
The integer programming problem conclusively specify of the optimised solution to the issue of the integral optimisation.All the other option are not correct for the linear integer optimization problem because they are not give objective function as well as integer constraints as linear .Atkinson Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support). Direct labor-hours is the allocation base for assembly support costs. In December 2016, Atkinson budgets 2017 assembly-support costs to be $8,800,000 and 2017 direct labor-hours to be 220,000.At the end of 2017, Atkinson is comparing the costs of several jobs that were started and completed in 2017.Laguna Model Mission ModelConstruction period Feb-June 2017 May-0ct 2017Direct material costs $106,550 $127,450Direct labor costs $ 36,250 $41,130Direct labor-hours 970 1,000Direct materials and direct labor are paid for on a contract basis. The costs of each are known when direct materials are used or when direct labor-hours are worked. The 2017 actual assembly-support costs were $8,400,000, and the actual direct labor-hours were 200,000.Required:1. Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate. Why do they differ?2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing and (b) actual costing?3. Why might Atkinson Construction prefer normal costing over actual costing?
Answer:
1. Compute the
(a) budgeted indirect-cost rate
$40 per labor hour
and (b) actual indirect-cost rate.
$42 per labor hour
Why do they differ?
Because total assembly support costs and labor hours were different.They both were actually lower than expected, but the labor hours were 9% lower while the costs were around 5% lower. That is why the actual rate increased (denominator decreased more than numerator).
2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing
Laguna Model Mission Model
assembly-support cost $38,800 $40,000
and (b) actual costing?
Laguna Model Mission Model
assembly-support cost $40,7400 $42,000
3. Why might Atkinson Construction prefer normal costing over actual costing?
The problem with actual costing is that they cannot be budgeted, you can only budget normal costing. Any business has to prepare budgets in order to control how their operations are being carried out and then they need to adjust them to the actual costs incurred.
Explanation:
Laguna Model Mission Model
Construction period Feb-June 2017 May-0ct 2017
Direct material costs $106,550 $127,450
Direct labor costs $36,250 $41,130
Direct labor-hours 970 1,000
budgeted indirect cost rate:
assembly-support costs $8,800,000
direct labor-hours 220,000
budgeted assembly-support cost per labor hour = $8,800,000 / 220,000 = $40 per hour
Laguna Model Mission Model
assembly-support cost $38,800 $40,000
actual indirect cost rate:
assembly-support costs $8,400,000
direct labor-hours 200,000
actual assembly-support cost per labor hour = $8,400,000 / 200,000 = $42 per hour
Laguna Model Mission Model
assembly-support cost $40,7400 $42,000
Swiss Group reports net income of $26,000 for 2017. At the beginning of 2017, Swiss Group had $184,000 in assets. By the end of 2017, assets had grown to $234,000. What is Swiss Group's 2017 return on assets?
Answer:
12.44%
Explanation:
The computation of the return on assets is shown below:
As we know that
Return on asset = Net income ÷ Average of total asset
= ($26,000) ÷ ($184,000 + $234,000) ÷ 2
= ($26,000) ÷ ($209,000)
= 12.44%
We simply applied the above formula so that the return on assets could be determined
Therefore we considered all the information given in the question
Answer:
12.44
Explanation:
Chen Company's account balances at December 31, 2017 for Accounts Receivable and the Allowance for Doubtful Accounts are $800,000 debit and $1,500 credit. Sales during 2017 were $2,750,000. It is estimated that 1% of sales will be uncollectible. The adjusting entry would include a credit to the allowance account for:___________.
A) $29,000.
B) $27,500.
C) $26,000.
D) $8,000.
Answer:
B) $27,500.
Explanation:
The computation of the amount credited to the allowance account is shown below:
= Sales during the 2017 year × estimated uncollectible percentage
= $2,750,000 × 1%
= $27,500
By multiplying the sales with the estimated uncollectible percentage we can get the amount credited to the allowance account and the same is to be considered
Hence, the correct option is B
g The Esposito Import Company had 1 million shares of common stock outstanding during 2021. Its income statement reported the following items: income from continuing operations, $7 million; loss from discontinued operations, $2.0 million. All of these amounts are net of tax. Required: Prepare the 2021 EPS presentation for the Esposito Import Company
Answer:
$5.00
Explanation:
Preparation of the 2021 EPS presentation for the Esposito Import Company
Earnings per share:
Income from continuing operations$7.00
Less Loss from discontinued operations(2.0)
Net income $5.00
Therefore the Net income after the Preparation of the 2021 EPS presentation for the Esposito Import Company is $5.00
Required: Using the adjusted trial balance on the next page for Buttross Manufacturing, Inc., prepare statements for the fiscal year ended September 30, 2020, in good form:
Part 1: Prepare a Statement of Cost of Goods Manufactured
Part 2: Prepare a Multiple-Step Income Statement
Aside: The general ledger would usually include a factory overhead control account and the detail of factory overhead would be in a subsidiary ledger. However, the detail of factory overhead has been put into the adjusted trial balance mixed with the other accounts to make sure you can distinguish accounts going into cost of goods manufactured from those going into the income statement.
Find the given attachments for answer.
Note: The adjusted trial balance is added.
Cost of Goods Sold = Beginning finished goods inventory + COGM - Ending Finished Goods Inventory = 69,000 + 311,000 -100,000 = 280,000.
Cost of goods available for sale = Beginning finished goods inventory + COGM
COGS = Cost of goods available for sale - Ending finished goods inventory.
Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?a) Bev's total explicit costs are $25,300.
b) Bev's total implicit costs are $300.
c) Bev's accounting profits exceed her economic profits by $300.
d) Bev's economic profit is $4,700.
Answer:
Bev's total explicit costs are $1000
Bev's total implicit costs are $25,300
Bev's accounting profits exceed her economic profits by $25,300
Bev's economic profit is $3,700.
Explanation:
Accounting profit is total revenue less total explicit cost.
Explicit cost is actual cost incurred.
Accounting profit = Total revenue - Total explicit cost
Total explicit cost = $1,000
Total revenue = $30,000
Accounting profit = $30,000 - 1,000 = $29,000
Economic profit is accounting profit less implicit cost or opportunity cost.
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
Implicit cost = $300 + $25,000 = $25,300
Economic profit = $29,000 - $25,300 = $3,700
I hope my answer helps you
Assume the Macro Islands can produce 25 fishing boats or 150 jars of guava jelly in one hour. The Micro Islands can produce 30 fishing boats or 300 jars of guava jelly in the same time period. This data tells an economist that:________. a. the Macro Islands have an absolute advantage in producing fishing boats and the Micro Islands have an absolute advantage in producing guava jelly. b. the Micro Islands have an absolute advantage in producing fishing boats and the Macro Islands have an absolute advantage in producing guava jelly. c. the Macro Islands have a comparative advantage in producing fishing boats and the Micro Islands have a comparative advantage in producing guava jelly. d. the Micro Islands have a comparative in producing fishing boats and the Macro Islands have a comparative advantage in producing guava jelly. the Micro Islands have a comparative and absolute advantage in producing fishing boats.
Answer:
The correct answer is the option C: the Macro Islands have a comparative advantage in producing fishing boats and the Micro Islands have a comparative advantage in producing guava jelly.
Explanation:
To begin with the term of ''comparative advantage'' is refer to the quality of one country in comparison with another to produce in a better way, a more eficient way, a good. Therefore that when a country has a comparative advantage over another country it means that the first country can produce more of a good with less resources that the second country.
That is why, that the Macro Islands have a comparative advantage in producing fishing boats over the Micro islands due to the fact that there is a very little difference with the other country meanwhile the Micro Islands have a comparative advatange in the production of guava jelly due to the amount of goods that it can produce in the same amount of time with the great amount difference in comparison with the Macro Islands. Therefore that one country chooses to produce the good in which it is better in comparison with the other.
The evaluation of a firm's strengths, weaknesses, opportunities, and threats is called a SWOT analysis. A SWOT analysis can be a valuable tool in the development of a marketing plan, but too often the SWOT analysis is not well thought out and proves to be an ineffective waste of time. Perhaps the most common mistake when conducting a SWOT analysis is the failure to separate internal issues from external issues. The strengths and weaknesses aspects of the SWOT analysis focus on internal capabilities. The opportunities and threats aspects focus on the external environment. Select the most appropriate category for the descriptors below.1. Post office closings2. JPM has the superior information technology infrastructure3. Increasing demand for international packages4. JPM has an excellent workforce and human resource department5. Potential global economic recession6. JPM has increasing labor costs7. JPM has less fuel-efficient planes8. Increasing fuel costs due to turmoil in the Middle East
Answer: Please refer to Explanation
Explanation:
SWOT ANALYSIS is indeed a very useful matrix for evaluating a firm's strong points.
The Strengths and Weaknesses portion focus on the internal Environment with the Strengths looking at what the company does better than other companies and has a competitive advantage in while weaknesses look at where the company is lacking.
The Threats and Opportunities focus on the External Environment. The Threats refer to any and every potential source of negative effects on the company while Opportunities are the potential chances that a company can capitalise on to make themselves more profitable.
Classifying the above,
1. Post office closings. OPPORTUNITIES
This is because JPM as a Delivery Service can then take over the customers that can no longer use the closed Post Offices.
2. JPM has the superior information technology infrastructure. STRENGTHS.
This is an area that JPM excels in making it a strength.
3. Increasing demand for international packages. OPPORTUNITIES.
This is a chance for JPM to grow as they can capitalise on this increased demand to increase profitability.
4. JPM has an excellent workforce and human resource department. STRENGTH.
JPM has a strength in this area because this is something that they are good at.
5. Potential global economic recession. THREATS.
This is a Threat to JPM as it could potentially affect their business negatively.
6. JPM has increasing labor costs. WEAKNESSES.
This is an internal problem that is a weakness for JPM. Rising labour costs means lower profits so they should be careful.
7. JPM has less fuel-efficient planes. WEAKNESSES.
Less fuel efficient planes means that they burn more fuel to deliver goods around the world so they have more expenses. This is a weakness that needs to be curtailed.
8. Increasing fuel costs due to turmoil in the Middle East. THREATS.
This is a threat because it is from the External Environment but threatens to increase the costs of deliveries for JPM.