Answer: A. Par
Explanation:
While US Government bonds are usually sold at auction which means a price different from Par, Federal Agency bonds operate much like Corporate Bonds in their selling procedure. They engage a group of Underwriters called a Selling group which can be made up of large banks and brokers.
These underwriters will then handle everything that have to do with the sale and sell it to the public. Like a Corporate listing, they get a commission from this.
Because of this direct sale by the Underwriter to the public, the Public is most likely to get the offering at Par.
Among the best-known companies that use customer satisfaction surveys to evaluate service quality in various industries is:___________
a) J.D. Power and Associates
b) McDonald’s
c) American Express
d) Alaska Airlines
e) None of the above"
Answer: a) J.D. Power and Associates
Explanation: As there is an undue emphasis on measuring objective output performance by companies and organizations, data is collected and analysed. This data helps measure customer satisfaction which is a major predictor of repurchase of products or services. However, customer satisfaction is to a greater extent, largely influenced by performance evaluations of product, of quality, and of value. J.D. Power and Associates, a marketing firm is well known among the best-known companies as one that uses customer satisfaction surveys to evaluate service quality in various industries. Through its automotive research, it collects consumer responses for a variety of surveys which it uses to award car models rankings.
Demographic studies show that the proportion of teenagers and minorities in the U.S. population is likely to increase in the near future. In your opinion, what implications, if any, will this trend have on the unemployment rate?
Answer:
Demographic Studies and Increased Proportion of Teenagers and Minorities
Implications of the Trend on the Unemployment Rate:
a) Labor Force Participation Rate: If the population of teenagers and minorities increase proportionately in the near future, there will be an increase in the labour force participation rate. This means that more people are vying for the available jobs. This puts pressure on the economy to create more sustainable jobs. However, this holds true if all other things are held constant. Obviously, the increased population of these demographic groups will push industries to create jobs in pursuit of the huge demand placed by the groups for more goods and services.
b) Increased Industrial growth reduces the unemployment rate. The resulting increased demand for goods and services required by these groups will increase industrial growth. This will in its turn reduce the unemployment rate.
c) Another implication of the trend on the unemployment rate is that the increased population of these groups will lead to social mobility. Social mobility happens when people move out of their social class to lower or better social classes. Social mobility affects the unemployment rate in any demography. When educated people accept menial jobs, while it may appear that they are working, they are obviously still within the unemployment bracket because they will be searching for jobs.
Explanation:
a) Unemployment rate is the number of unemployed people as a percentage of the labor force. The labor force comprises those who are unemployed plus those who are in paid or self employment.
b) Demographic studies are the studies conducted about a population based on factors such as age, race, and sex.
A bond was issued three years ago at a price of $1,050 with a maturity of six years, a yield-to-maturity (YTM) of 6.50% compounded semi-annually, and a face value of $1,000 with semi-annualy coupons. What is the price of this bond today immediately after the receipt of today's coupon if the YTM has risen to 7.75% compounded semi-annually
Answer:
$967.20
Explanation:
the YTM formula = {coupon + [(face value - present value)/time]} / [(face value + present value)/2]
to determine the coupon rate we fill the equation with the known factors:
0.065 = {coupon + [(1,000 - 1,050)/12]} / [(1,000 + 1,050)/2]
0.065 = (coupon - 41.67) / 1,025
66.625 = coupon - 4.167
coupon = 66.625 + 4.167 = $70.792
three years later, the YTM = 7.5%, what is the PV? Again we use the YTM formula:
0.0775 = {70.792 + [(1,000 - x)/6]} / [(1,000 + x)/2]
0.0775(500 + 0.5x) = 70.792 + 166.67 - 0.1667x
38.75 + 0.03875x = 237.462 - 0.1667x
0.20545x = 198.712
x = 198.712 / .20545
x = $967.20
Macro-economiscs college level .
Answer/Explanation:
A. Increase in import WOULD NOT lead to a decrease in national income because it would lead to increase in revenue derived from import duties.
B. A decrease in interest (leakage) WOULD lead to decrease in national income because it will increase borrowing and reduces investment.
C. A decrease in money supply (money available in an economy) WOULD NOT lead to decrease in national income because it reduces inflational rate.
D. An increase in exchange rate WOULD lead to decrease in national income because it would encourage capital flight.
E. A decrease in foreign income WOULD lead to decrease in national income because it reduces revenue earnings.
During the year, direct labor costs of $30,000 were incurred, manufacturing overhead totaled $42,000, materials purchased were $27,000, and selling and administrative costs were $22,000. Champagne sold 25,000 units of product during the year at a sales price of $5.00 per unit. What were the total manufacturing costs for the year assuming $2 comma 080 of indirect materials were used during the period?
Answer:
Using the models for total manufacturing cost that includes just direct labour costs, direct materials cost and overhead costs, total manufacturing cost = $99,000
Using the model that includes selling and administrative costs & indirect materials cost, total manufacturing cost = $123,080
Explanation:
Total manufacturing cost is a sum of the amount of cost incurred by a business to produce goods in a reporting period.
It usually consists of direct labour costs, direct materials cost and overhead costs.
In some models, the selling and administrative costs & cost of indirect materials are included.
Direct labour cost = $30,000
Manufacturing overhead costs = $42,000
Direct materials cost = $27,000
Total manufacturing cost = 30000 + 42000 + 27000 = $99,000
Selling and Administrative costs = $22,000
Indirect materials cost = $2,080
Total materials cost including selling and administrative costs & indirect materials cost = 99000 + 22000 + 2080 = $123,080
Hope this Helps!!!
Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions):
Investor Services Institutional Services
Revenues $3,016 $1,523
Income from operations 847 523
Depreciation 133 54
A. How does a brokerage company like Schwab define the "Investor Services" and "Institutional Services" segments? Use the Internet to develop your answer
The segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual investors. The segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators
B. Provide a specific example of a variable and fixed cost in the "Investor Services" segment.
Variable costs in the "Investor Services" segment include: Check all that apply.
Depreciation on brokerage office equipment, such as computers and computer networks
Depreciation on brokerage offices
Property taxes on brokerage offices
Commissions to brokers
Fees paid to exchanges for executing trades
Transaction fees incurred by Schwab mutual funds to purchase and sell shares
Fixed costs in the "Investor Services" segment include: Check all that apply.
Depreciation on brokerage office equipment, such as computers and computer networks
Commissions to brokers
Property taxes on brokerage offices
Depreciation on brokerage offices
Fees paid to exchanges for executing trades
Transaction fees incurred by Schwab mutual funds to purchase and sell shares
C. Estimate the contribution margin (in millions) for each segment, assuming depreciation represents the majority of fixed costs.
Investor Services Institutional Services
Estimated contribution margin $_____________ $________________
D. If Schwab decided to sell its "Institutional Services" accounts to another company, estimate how much operating income would decline (in millions). $___________
Answer: The answer is provided below
Explanation:
A. A brokerage company such as Schwab will define the "Investor Services" and the "Institutional Services" segments like this:
Investor services- This will be:
• Real brokerage and also banking services to the individual investors.
• Other retirement plan to the corporations.
Institutional services- This will be:
• Marketing support to the independent investment advisors.
• Trading tools to the independent investment advisors.
B. The variable costs in the "Investor Services" segment will include:
• Fees paid to exchanges for executing trades
• Transaction fees incurred by Schwab mutual funds to buy and sell shares
• Commissions to brokers.
The fixed costs in the "Investor Services" segment will include:
• Depreciation on brokerage offices.
• Depreciation on the brokerage office equipment, like computers and computer networks.
The explanation for C and D has been attached. For D, the operating income would decline by $577 million.
Your financial investments consist of U.S. government bonds maturing in 10 years and shares in a start-up company doing research in pharmaceuticals. How would you expect each of the following news items to affect the value of your assets?
a. Interest rates of newly issued government bonds rise
A. Stock and bond prices will rise
B. Stock and bond prices will fall
C. Stock prices will fall and bond prices could remain unchanged or rise
D. Stock prices will fall
E. Stock prices will increase
b. Inflation is forecasted to be much lower than previously expected in Recall the Fisher effect Assume for simplicity that this Information does not affect your forecast of the dollar value of the pharmaceutical company's future dividends and stock price
A. Stock prices will fall
B. Stock and bond prices will fall
C. Stock prices will increase
D. Stock and bond prices will rise
c. Large swings in the stock market increase mancalvestors concerns about market risk. (Assume that interest rates on neaty issued government bonds remain unchanged)
A. Stock and bond prices will fall
B. Stock and bond prices will rise
C. Stock prices will fall
D. Stock prices will increase
E. Stock prices will and bond prices could remam unchanged or rise
Answer: 1. B. Stock and bond prices will fall
2. D. Stock and bond prices will rise
3. E. Stock prices will fall and bond prices could remam unchanged or rise
Explanation:
1. When interest rates on Government bonds rise, this signifies a general rise in interest in the economy. When interest rates rise, consumers and companies such as the Pharmaceutical Research Company will have to cut back on spending because borrowing is now more expensive. This reduction in spending reduces Investment and therefore profits which will reduce the price of the company stock.
When interest rates rise, it is a standard principle that bond prices drop. This is because bonds pay a fixed rate therefore when interest rates rise, it signifies that bonds are not paying enough and so the demand reduces as people are always looking for better returns which leads to a drop in price.
2. As a result of inflation being less than previously thought, it means that bonds and stocks are providing a better return per dollar because inflation will not erode the value of the returns. When the market realises this they will flock to purchase both stocks and bonds which will lead to a price increase.
3. When there are large swings in the stock market, this signifies Market volatility. Market volatility signifies risk and when this happens risk averse investors will flee from the stock market which will have the effect of reducing the prices of stock as they are sold off. If interest rates on the newly issued Government bonds remain unchanged, people that are fleeing the stock market might invest in the bonds instead which will cause their price to rise as more are bought. However, there is a chance that the investors fleeing might not view the interest rates offered by the government bonds and so will not invest leading to the price of the bonds not changing dude to stable demand.
A company would like to produce 5000 products per week for 30 weeks. The Direct Material Cost for the raw materials used in the product is $1.50 per product. After producing 500 products, the company must stop production to replace a filter on the machine (the filter is replaced after producing every 500 products). The filter costs $50.00. What is the Total Cost Per Product
Answer:
Total Cost Per Product is $1.60
Explanation:
From the question the following information are derived:
Direct raw material cost per product = $1.50
The cost of the filter for producing 500 products = $50
Hence, the cost of the filter per product = $(50 / 500) = $0.10
In this question, No cost of labor is given, we can now decide the following
Total Cost per product = $(1.50 + 0.10)
= $1.60
Total Cost Per Product in this account is $1.60
If a company would like to produce 5000 products per week for 30 weeks. The Direct Material Cost for the raw materials used in the product is $1.50 per product. The Total Cost Per Product is $1.60.
Using this formula
Total cost per product=Direct raw material cost per product +( Filter costs/Production)
Where:
Direct raw material cost per product = $1.50
Costs of filter =$50
Production=500
Let plug in the formula
Total cost per product=$1.50+($50 / 500)
Total cost per product=$1.50+$0.10
Total cost per product=$1.60
Inconclusion if a company would like to produce 5000 products per week for 30 weeks. The Direct Material Cost for the raw materials used in the product is $1.50 per product. The Total Cost Per Product is $1.60.
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The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Suppose selected data from recent consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc. are presented here (in millions).
Coca-Cola PepsiCo
Total current assets $17,551 $12,571
Total current liabilities 13,721 8,756
Net sales 30,990 43,232
Cost of goods sold 11,088 20,099
Net income 6,824 5,946
Average (net) accounts
receivable for the year 3,424 4,654
Average inventories
for the year 2,271 2,570
Average total assets 44,595 37,921
Average common
stockholders’ equity 22,636 14,556
Average current liabilities 13,355 8,772
Average total liabilities 21,960 23,466
Total assets 48,671 39,848
Total liabilities 23,872 23,044
Income taxes 2,040 2,100
Interest expense 355 397
Net cash provided by
operating activities 8,186 6,796
Capital expenditures 1,993 2,128
Cash dividends 3,800 2,732
Collapse question part
(a1)
Compute the following liquidity ratios for Coca-Cola and for PepsiCo. (Round current ratio to 2 decimal places, e.g. 6.25 and all other answers to 1 decimal place, e.g. 15.1.)
Coca-Cola PepsiCo
(1) Current ratio : 1 : 1
(2) Accounts receivable turnover times times
(3) Average collection period days days
(4) Inventory turnover times times
(5) Days in inventory days days
Answer:
Please find the detailed answer in the explanation section.
Explanation:
1. Current ratio = total current assets ÷ total current liabilities
For Coca-cola: $17,551 ÷ 13,721
= 1.28
For Pepsi : $12,571 ÷ $8,756
= 1.44
2.Accounts receivable turnover times times = Net sales ÷ average (net) accounts receivable
For Coca-cola: $30,990 ÷ $3,424
= 9.1
For Pepsi : $43,232 ÷ $4,654
= 9.3
3. Average collection period days days = (Accounts Receivable ÷ Net sales ) x 365 days
For coca-cola: ($3,424 ÷ 30,990) x 365 days
=40.3 days
For pepsi: ($4,654 ÷ $43,232) x 365 days
= 39.3 days
4. Inventory turnover times = Sales ÷ Inventory
For Coca-cola: $30,990 ÷ $2,271
=13.6
For Pepsi: $43,232 ÷ $2,570
=16.8
5.Days in inventory days = (Average Inventory ÷ Cost of sales) x 365 days
For Coca-cola: ($2,271 ÷ $11,088 ) x365 days
=74.8 days
For Pepsi: ($2,570 ÷ $20,099 ) x365 days
=46.7days
Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August, the company's records show the following accounts and amounts for the month of August.Cash 25,370Accounts receivable 22,370Office supplies 5,260Land 44,010Office equipment 20,020Accounts payable 10,540Dividends 6,020Consulting fees earned 27,010Rent expense 9,570Salaries expense 5,620Telephone expense 880Miscellaneous expenses 530Conmon stock 102,100Use the above information to prepare an August statement of retained earnings for Help Today (Hint Net income: $10,410)
Answer:
Help Today
Statement of Retained Earnings
For the Month Ended on August 31, 202X
Retained earnings at the beginning of the period: $0
Net income: $10,410
Dividends: ($6,020)
Retained earnings at the end of the period $4,390
Explanation:
Balance Sheet
Assets:
Cash $25,370
Accounts receivable $22,370
Office supplies $5,260
Land $44,010
Office equipment $20,020
Total assets: $117,030
Liabilities and Equity:
Accounts payable $10,540
Common stock $102,100
Total liabilities and equity: $112,640
Retained earnings ⇒ assets - (liabilities + equity) = $117,030 - $112,640 = $4,390
Another way to calculate retained earnings = net income - dividends = $10,410 - $6,020 = $4,390
Dividends 6,020
Summary balance sheet data for Greener Gardens Co. is shown below (in thousands of dollars). The company is in a highly seasonal business, and the data show its assets and liabilities at peak and off-peak seasons: Peak Off-Peak Cash $ 50 $ 30 Marketable securities 0 20 Accounts receivable 40 20 Inventories 100 50 Net fixed assets 500 500 Total assets $690 $620 Payables and accruals $ 30 $ 10 Short-term bank debt 50 0 Long-term debt 300 300 Common equity 310 310 Total claims $690 $620 From this data we may conclude that a. Without cash flow data, we cannot determine the aggressiveness or conservatism of the company's current asset financing policy. b. Greener Gardens' current asset financing policy calls for exactly matching asset and liability maturities. c. Greener Gardens' current asset financing policy is relatively aggressive; that is, the company finances some of its permanent assets with short-term discretionary debt. d. Without income statement data, we cannot determine the aggressiveness or conservatism of the company's current asset financing policy. e. Greener Gardens follows a relatively conservative approach to current asset financing; that is, some of its short-term needs are met by permanent capital.
Answer: E.) Greener Gardens follows a relatively conservative approach to current asset financing; that is, some of its short-term needs are met by permanent capital.
Explanation: From the data given above, it could be inferred that Greener gardens Co. due to the seasonal nature of its business takes a conservative and measured approach into financing its current asset such as cash, account receivables, inventory, short term liability or debt
using permanent capital in other to shore up running cost or fluctuation which could result due to low revenue during the off peak period and cut the company's spending on certain short term needs.
Answer:
The answer is E. Gardens follows a relatively conservative approach to current asset financing; that is, some of its short-term needs are met by permanent capital.
Explanation:
The current asset financing policy concentrates on determining the most appropriate method of financing both temporary and permanent current assets.
There are 3 types of working capital financing policy - matching, conservative and aggressive.
In conservative financing policy, a business is required to maintain high levels of current assets in relation to its sales so as to absorb any sudden changes in the sales and thus avoid disruption in the production plans.
Working capital equals total current asset minus total current liability.
For peak period:
Current assets:
Cash. $50
Marketable securities. -
Account receivables. $40
Inventories $100
Total current assets. $190
Current liabilities:
Payables and accruals. $30
Short term bank debt. $50
Total current liabilities. $80
Therefore, working capital is:
$190 - $80
=$110
So Greener Gardens co. has excess working capital to cover for any sudden change in price.
Also for off peak:
Current assets:
Cash. $30
Marketable securities. $20
Account receivables. $20
Inventories $50
Total current assets. $120
Current liabilities:
Payables and accruals. $10
Short term bank debt. -
Total current liabilities. $10
Therefore, working capital is:
$120 - $10
=$110
For both on peak and off peak, the working capital is the same, meaning it is maintain a conservative policy that is dependent on its assets for financing.
Isabella files her income tax return 35 days after the due date of the return without obtaining an extension from the IRS. Along with the return, she remits a check for $40,000, which is the balance of the tax she owes.Note: Assume 30 days in a month.Disregarding the interest element, enter Isabella's failure to file penalty and and failure to pay penalty.
Answer:
a. Failure to pay penalty = 400
b. Failure to file penalty = $4,000
Explanation:
The monthly rate for failure to pay penalty is 0.5% while the failure to file penalty.
Since it is assumed that there are 30 days in a month, the 35 days after the due date of the return without obtaining an extension from the IRS is will be counted as 2 months regardless of the fact that the second month is just 5 files when she filed.
Therefore, we have:
a. Failure to pay penalty = $40,000 * 0.5% * 2 = 400
b. Failure to file penalty = ($40,000 * 5% * 2) = $4,000
c. Total penalties = (Failure to file penalty - failure to pay penalty for the same period) + Failure to pay penalty = ($4,000 - $400) + $400 = $4,000.
Therefore, the total penalty Isabella will pay is $4,000.
Marina had an accident with her car and the repair bill came to $900. She didn't have any emergency fund money and no extra
money in her monthly budget, so she ended up borrowing from a pay-day loan company. As long as she can pay the loan back at
the end of the 30 day period she won't be charged any interest, technically. However, she did have to pay an $18 processing fee
per $100 that she borrowed.
If she were to consider the processing fee to represent interest paid in her formula, what would she discover to
be the annual interest rate she was charged on her short term loan?
Answer:
216%
Explanation:
Ordinary interest is computed on the basis of a 360-day year, so Marina's borrowing period is 1/12 of a year. The annual rate is then 12 times the rate Marina pays for 30 days:
12 × 18/100 = 216/100 = 216%
Marina would discover the annual interest rate is 216%.
Novak Corporation is preparing its 2014 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2014 statement of cash flows.
Code Letter
Effect
A Added to net income in the operating section
D Deducted from net income in the operating section
R-I Cash receipt in investing section
P-I Cash payment in investing section
R-F Cash receipt in financing section
P-F Cash payment in financing section
N Noncash investing and financing activity
(a) Purchase of land and building.
AR-I and DR-IR-F and ADR-F and DP-FP-IR-FNR-I and A
(b) Decrease in accounts receivable.
R-F and AR-FNR-I and DR-I and ADR-F and DAP-FR-IP-I
(c) Issuance of stock.
R-FAR-IDP-FR-F and AP-IR-F and DNR-I and DR-I and A
(d) Depreciation expense.
R-IP-FP-IR-F and DR-FNR-F and AR-I and AR-I and DAD
(e) Sale of land at book value.
R-F and DP-IADR-FR-IP-FNR-I and DR-I and AR-F and A
(f) Sale of land at a gain.
DR-I and DNR-IR-FR-F and AR-I and AR-F and DP-IAP-F
(g) Payment of dividends.
R-I and AP-IP-FDNAR-I and DR-IR-FR-F and DR-F and A
(h) Increase in accounts receivable.
R-F and ANAP-FP-IR-FR-I and DR-IR-I and AR-F and DD
(i) Purchase of available-for-sale investment.
ADR-I and DR-I and AR-F and DR-F and AP-FR-FNR-IP-I
(j) Increase in accounts payable.
R-F and DDR-F and AAR-IP-IR-FNR-I and DP-FR-I and A
(k) Decrease in accounts payable.
R-I and DNP-FR-F and AR-IR-I and AR-F and DDAP-IR-F
(l) Loan from bank by signing note.
R-I and DR-I and ANP-IDP-FR-F and DR-F and AAR-IR-F
(m) Purchase of equipment using a note.
R-F and DP-IR-FR-I and ANR-F and AP-FR-IR-I and DAD
(n) Increase in inventory.
NR-IP-FR-FP-IDR-I and DR-I and AAR-F and AR-F and D
(o) Issuance of bonds.
AP-FR-F and DNR-I and DR-F and ADR-FR-IP-IR-I and A
(p) Redemption of bonds payable.
R-I and DR-I and AR-IR-F and DP-FR-F and ADP-IANR-F
(q) Sale of equipment at a loss.
R-F and DNR-F and AR-I and DADR-I and AR-FR-IP-IP-F
(r) Purchase of treasury stock.
Answer: The answers are provided below
Explanation:
a) Purchase of land and building = P-I
This will be a cash payment in investing section
b) Decrease in accounts receivable = A
This will be added to the net income in the operating section
c) Issuance of stock = R-F
This will be a cash receipt in financing section
d) Depreciation expense = A
This will be added to the net income in the operating section
e) Sale of land at book value = R-I
This will be a cash receipt in investing section.
f) Sale of land at a gain = R-I and D
This will be a cash receipt in investing section and deducted from the net income in the operating section
g) Payment of dividends = P-F
This will be a cash payment in financing section
h) Increase in accounts receivable = D
This will be deducted from net income in the operating section
i) Purchase of available-for-sale investment = P-I
This will be a cash payment in investing section
j) Increase in accounts payable = A
This will be added to the net income in the operating section
k) Decrease in accounts payable = D
This will be deducted from net income in the operating section
l) Loan from bank by signing note = R-F
This will be a cash receipt in financing section
m) Purchase of equipment using a note = N
This will be a noncash investing and financing activity
n) Increase in inventory = D
This will be deducted from net income in the operating section
o) Issuance of bonds = R-F
This will be a cash receipt in financing section
p) Retirement of bonds payable = P-F
This will be a cash payment in financing section
q) Sale of equipment at a loss = R-I and A
This will be a cash receipt in investing section and will be added to the net income in the operating section
r) Purchase of treasury stock = P-F
This will be a cash payment in financing section
Which of the following statements is CORRECT? a. If a company follows a policy of "matching maturities," this means that it matches its use of short-term debt with its use of long-term debt. b. If a company follows a policy of "matching maturities," this means that it matches its use of common stock with its use of long-term debt as opposed to short-term debt. c. Net working capital is defined as current assets minus the sum of payables and accruals, and any decrease in the current ratio automatically indicates that net working capital has decreased. d. Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing. e. Net working capital is defined as current assets minus the sum of payables and accruals, and any increase in the current ratio automatically indicates that net working capital has increased.
Answer: d. Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing.
Explanation:
Using short term financing is generally considered to be an aggressive strategy and is more often than not frowned upon by investors.
This is because of the reputational risk involved. A company that keeps using short term financing gives off the impression that it is barely keeping afloat and therefore relying on short term loans to continue functioning.
Other risks involved include, short term loans are usually given in small quantities so they cannot be used effectively as they will bareky go anywhere in terms of investment and their payback installment schedule can be in weeks instead of months like long term financing which can be detrimental to survival.
This is as opposed to a Conservative Approach that uses long term financing to finance most of it's Working Capital.
a. On February 15, paid $130,000 cash to purchase GMI's 90-day short-term notes at par, which are dated February 15 and pay 6% interest (classified as held-to-maturity).
b. On March 22, bought 1,000 shares of Fran Inc. common stock at $35 cash per share. Cancun's stock investment results in it having an insignificant influence over Fran.
c. On May 15, received a check from GMI in payment of the principal and 90 days' interest on the notes purchased in part a.
d. On July 30, paid $39,000 cash to purchase MP Inc.'s 5% , six-month notes at par, dated July 30 (classified as trading securities).
e. On September 1, received a $0.42 per share cash dividend on the Fran Inc. common stock purchased in part b.
f. On October 8, sold 500 shares of Fran Inc. common stock for $41 cash per share.
g. On October 30, received a check from MP Inc. for three months’ interest on the notes purchased in part d.
Prepare journal entries to record the above transactions involving both the short-term and long-term investments of Cancun Corp., all of which occurred during the current year. (Use 360 days in a year. Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)
Answer:
a. On February 15, paid $130,000 cash to purchase GMI's 90-day short-term notes at par, which are dated February 15 and pay 6% interest (classified as held-to-maturity).
Dr Investment in GMI's notes - HTM 130,000
Cr Cash 130,000
b. On March 22, bought 1,000 shares of Fran Inc. common stock at $35 cash per share. Cancun's stock investment results in it having an insignificant influence over Fran.
Dr Investment in Fran inc. stocks 35,000
Cr Cash 35,000
c. On May 15, received a check from GMI in payment of the principal and 90 days' interest on the notes purchased in part a.
Dr Cash 131,950
Cr Investment in GMI's notes - HTM 130,000
Cr Interest revenue 1,950
d. On July 30, paid $39,000 cash to purchase MP Inc.'s 5% , six-month notes at par, dated July 30 (classified as trading securities).
Dr Trading securities - MP Inc.'s notes 39,000
Cr Cash 39,000
e. On September 1, received a $0.42 per share cash dividend on the Fran Inc. common stock purchased in part b.
Dr Cash 420
Cr Dividends revenue 420
f. On October 8, sold 500 shares of Fran Inc. common stock for $41 cash per share.
Dr Cash 20,500
Cr Investment in Fran inc. stocks 17,500
Cr Gain on investment 3,000
g. On October 30, received a check from MP Inc. for three months’ interest on the notes purchased in part d.
Dr Cash 487.50
Cr Interest revenue 487.50
From the following list of steps in the accounting cycle, identify what two steps are missing: Transactions are analyzed and recorded in the journal. An unadjusted trial balance is prepared. Adjustment data are assembled and analyzed. An optional end-of-period spreadsheet is prepared. Adjusting entries are journalized and posted to the ledger. An adjusted trial balance is prepared. Closing entries are journalized and posted to the ledger. A post-closing trial balance is prepared. Select the steps in the accounting cycle in their proper order in order and include the two missing steps.
Answer:
The Accounting Cycle refers to the process of recording and analyzing the transactions of a business into it's books so that proper financial statements may be recorded and used.
It happens in 10 steps which are;
1. Transactions are analyzed and recorded in the journal.
2. Transactions are posted to the ledger. ( Missing)
3. An unadjusted trial balance is prepared.
4. Adjustment data are assembled and analyzed.
5. An optional end-of-period spreadsheet (work sheet) is prepared.
6. Adjusting entries are journalized and posted to the ledger.
7. An adjusted trial balance is prepared.
8. Financial statements are prepared. (Missing)
9. Closing entries are journalized and posted to the ledger.
10. A post-closing trial balance is prepared.
Step 2
After posting transactions to their journals, the transactions go to the General ledger.
Step 8.
Using the details from the adjusted trial balance, the Financial Statements can then be prepared with the correct figures.
Which two answers identify the two middle core processes, i.e. core process 3 and 4? (choose two)
a. Build and test the system
b. Plan and monitor the project
c. Understand the details of the problem
d. Design the components
Answer:
c. Understand the details of the problem
d. Design the components
Explanation:
Systems development life cycle (SDLC) consists of six main phases:
System planningSystem analysis: involves understanding the details of the problem to be solved by the proposed system. What are the end-users' requirements and expectations?System design: involves designing the components, elements interfaces and architecture of the proposed system. System implementation and deploymentSystem testing and integrationSystem maintenanceYou are given the following information concerning a noncallable, sinking fund debenture: Principal: $1,000 Coupon rate of interest: 7 percent Term to maturity: 15 years Sinking fund: 5 percent of outstanding bonds retired annually; the balance at maturity If you buy the bond today at its face amount and interest rates rise to 12 percent after three years have passed, what is your capital gain or loss
Answer:
Explanation:
A) If you buy the bond today at its face amount and interest rates rise to 12% after three years have passed what is your capital gain or loss?
B) If you hold the bond 15 years what do you recive at maturity?
C) What is the bond current yield as of right now?
D) Given your price in a, what is the yield of maturity
E) Is there any reason to believe that the bond will be called after three years have elapsed if interest rates decline
F) what proportion of the total debt issue is retired by the sinking fund
G) What assets secure this bond?
h) If the final payment to retire this bond is $1,000,000 how much must the firm invest to accumulate this sum if the firm is able to earn 7% on the invest funds.
A) If the interest rates rise to 12%, the price of the bond assuming semi-annual interest payments, will be
1000*pvif(6,24) + 35*pvifa(6,24)
= 1000*0.2470 +35*12.5504
= 247 + 439.26 = $686.26
The capital gain would be 1000 - 686.26 = $313.74.
B) Bond face value is $1000 and coupon rate is 7%. Half yearly interest = 1000*7%/2 = $35.
Maturity value of $1000, plus half yearly interest of $35.
C) The bonds current yield = 7%, assuming the price of the bond is $1000 today.
D) The yield to maturity is 12%.
E) No, the bonds are not callable.
F) 5% of the bonds are retired every year. So 14 years * 5 = 70%. Balance 30% is paid full at EOY 15.
5%*14 = 70%.
G) Debentures are not secured by any specific asset.
H) It is not specified as to how the money would be invested; whether its a
lump sum invested on day 0 or equal amounts invested at each year end
If it a lump sum to be invested now, the amount should be 1000000/107^15 = $362,446
If it in equal amounts to be invested each year end the annual investments is given by 1,000,000/fvifa(7,15)
= 1000000/25.1290
= $3979.
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2016. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2016 was $210 million.
Required:
1. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2016.
2. Prepare the journal entry by Tanner-UNF to record interest on December 31, 2016, at the effective (market) rate.
3. At what amount will Tanner-UNF report its investment in the December 31, 2016, balance sheet? Why?
4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2017, for $190 million. Prepare the journal entry to record the sale.
Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and "OH rate and cost per unit" answers to 2 decimal places.)
Product A Product B
Number of units produced 11,500 units 1.700 units
Direct labor cost ($29 per DLH) 0.16 DLH per unit 0.24 DLH per unit
Direct materials cost $2.10 per unit $3.10 per unit
Activity Overhead costs
Machine setup $94,104
Materials handling 53,000
Quality control inspections 73.200
$220,304
Required
a. Using direct labor hours as the basis for assigning overhoad costs, determine the total production cost per unit for each product line.
b. If the market price for Product A is $28.68 and the market price for Product B is $58, determine the profit or loss per unit for each.
c. Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to what is the cost per unit for Product A and for Product B?
Answer:
a. Product A $257,830 , Product B $57,086
b. Product A $71,990 , Product B $41,514
c. Hie, for this part of the question there is missing information regarding the Activities for the two Products for each Activity Center.
However the Procedure to deal with the required is explained below :
Step 1 : Determine the Overhead Absorption Rate for Each Activity Center
(We have three Activity Centers: Machine setup, Materials handling: Quality control inspections )
Overhead Absorption Rate = Total Overhead (for each) / Total Number of Activity
Step 2: Absorb the Costs in the products using the Rate for each cost center and the number of activity incurred in each cost center for the two Products
Overhead (Activity Center) = Overhead Absorption Rate× Activity Specific to the Product.
Step 3 : Determine the Total Costs
Total Cost for one Product would include the Total Costs for each Activity Center (which are your overheads) plus the Direct Labor and Direct Material Costs as Calculated in Part b.
Explanation:
Part a
Total Production Cost = Direct Costs + Indirect costs (overheads)
First determine the predetermined rate based on direct labor hours.
Total direct labor hours.
Product A (11,500×0.16) = 1,840
Product B (1.700×0.24) = 408
Total = 2,248
Predetermined rate = total overhead cost / total direct labor hours
= $220,304 / 2,248
= $98 per labor hour
Assigning Overhead Cost
Total Overhead Costs
Product A (1,840×$98) = 180,320
Product B (408×$98) = 39,984
Total = 220,304
Total Costs
Product A Product B
Direct labor cost
Product A ( 1,840×$29) 53,360
Product B (408×$29) 11,832
Direct materials cost
Product A ( 11,500×$2.10) 24,150
Product B (1.700×$3.10) 5,270
Overheads
Product A 180,320
Product B 39,984
Total Costs 257,830 57,086
Part b.
Profit = Selling Price - Expenses
Product A Product B
Sales
Product A ( 11,500×$28.68) 329,820
Product B (1.700×$58) 98,600
Manufacturing Costs (257,830) (57,086)
Profit 71,990 41,514
The objectives of labor unions have Multiple Choice always placed the greatest emphasis on increasing wages and benefits. shifted with social and economic conditions. frequently taken global competition into account. consistently favored policies that would move the U.S. economy toward a command system.
Assume that the economy has three types of people. 20% are fad followers, 75% are passive investors and 5% are informed traders. The portfolio consisting of all informed traders has a beta of 1.4 and an expected return of 12.4%. The market has an expected return of 10% and the risk-free rate is 4%. The expected return for the fad follower's portfolio is closest to:__________.
a. 11.5%
b. 13.6%
c. 16%
d. 12.4%
Answer: a. 11.5%
Explanation:
Fad followers are those investors who follow a trend when it emerges and as such their betas will be less than that of informed traders because the informed traders would have acted first.
Using the Capital Asset Pricing Model to calculate expected return.
Er = Rf + b( Rm - Rf)
Er = Expected return
Rf = Risk Free Rate
b = Beta
Rm = Market Return.
The Expected Return for the Informed Investors is,
= 4% + 1.4 ( 10% - 4%)
= 4% + 1.4 ( 6%)
= 12.4%
With the Fad followed expected to have a lower beta and therefore a lower expected return than the Informed Investors, the only suitable option is the 11.5%.
Time Remaining 39 minutes 48 seconds00:39:48 eBookItem 1Item 1 Time Remaining 39 minutes 48 seconds00:39:48 A private, not-for-profit hospital received contributions of $50,000 from donors on June 15, 20X9. The donors stipulated that their contributions be used to purchase equipment for the hospital. As of June 30, 20X9, the end of the hospital's fiscal year, $12,000 of the contributions had been spent on equipment acquisitions. In the hospital's general fund, what account would be credited to recognize the release of the restrictions on the temporarily restricted contributions used to acquire equipment
Answer: Net Assets Released from Equipment Acquisition Restriction.
Explanation:
When the stipulations by a donor have been satisfied, the assets involved can be removed from being restricted to now being unrestricted. The account credited to recognize this is known as the Net assets released from *asset name* acquisition restriction.
In the above case, the company purchased some equipment with the money they were donated which means that the equipment had satisfied the stipulation for which they were donated funds for. The Net Assets Released from Equipment Acquisition Restriction thus needs to be credited.
Find the present value of $10,000 received at the start of every year for 20 years if the interest rate is J1 = 12% p.a. and if the first payment of $10,000 is received at the end of 10 years
Answer:
$ 26,935.56
Explanation:
The key to this question is that present value of those cash flows in year ten is the future value today.
PV=PMT*(1/i-1/i*(1+i)^n)*(1+i)
PMT is the annual amount receivable which is $10,000
i is 12% or 0.12
n is 20 years
1/i*(1+i)^=1/0.12*(1+0.12)^20=1/(0.12*9.646293093 )=0.863889709
1/i=1/0.12=8.333333333
1+i=1+0.12=1.12
PV=10,000*(8.333333333 -0.863889709 )*1.12
PV=10,000*7.469443624*1.12=$83,657.77
The PV In ten years' time is future value today, hence we need to discount that future value to today's terms
PV=FV*(1+r)^-n
n is ten
r is 12%
PV=$83,657.77*(1+12%)^-10=$ 26,935.56
What are the advantages and disadvantages to Qantas’s international cooperative alliances?
Answer:
Qantas's International cooperative alliance is a strategic move by Quanta with respect to acquiring the best business opportunities and growth.
The advantages and disadvantages are listed below:
Advantages:1) It will develop a strong base for Quanta in international market.
2) It will help Qantas to reach more costumers and expand their business, providing huge profit and growth to Qantas.
3) It will help Quanta in enhancing their cost base, aircraft utilization and redesigning Quanta's network to high growth in international market.
Disadvantages:1) Qantas i highly focused on Asia, putting their 50% efforts towards Asian market. If their prediction goes wrong, they'll suffer a huge loss.
2) Qantas has multiple partners, and making them agree on the same thing can be a difficult task. Huge conflicts among them can result in huge losses.
3) As each partner has equal importance, they may have different views. This can effect Qantas's decision making policies.
Consumption (household sector) spending is the largest component of:_______
a. Aggregate output
b. Aggregate income
c. Aggregate employment
d. Aggregate supply
e. Aggregate demand
Answer:
a. Aggregate output
Explanation:
Aggregate output can also be referred to as GDP. Gross domestic product is the sum of all final goods and services produced in an economy within a given period which is usually a year.
GDP calculated using the expenditure approach:
GDP = Consumption spending + Investment spending by businesses + Government Spending + Net Export
Consumption spending usually represents 70% of aggregate output.
I hope my answer helps you
Acme Products manufactures and markets a product called Grow Tall. Acme claims in its advertising that Grow Tall will make its users grow a minimum of six inches taller than their current height. The Federal Trade Commission (FTC) will likely find that the ad is
Answer: a. deceptive, and the FTC may issue a cease-and-desist order.
Explanation:
A product that can increase human height by 6 inches sounds highly improbable and so is deceptive to people.
The Federal Trade Commission in it's role as a protector of Consumers from.unfair and deceitful practices in Commerce can act against Acme to stop them from deceiving the consumer.
One of the ways that the FTC can do this is by issuing a Cease and Desist order to Acme and if they fail to do so, can then take them to Court.
How long can foodborne illnesses last
Answer: Symptoms begin 2 to 10 days after becoming infected, and may last 1 to 2 weeks.
Explanation:
g On January 1, 2020, Marigold Company issued 10-year, $1,890,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Marigold common stock. Marigold’s net income in 2020 was $470,000, and its tax rate was 20%. The company had 94,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020.
Answer:
$3.78
Explanation:
The First step is to calculate basic earning per share then making the adjustments to the basic earning per share to arrive to a diluted earning per share.
Basic Earning per Share = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Stock Holders.
Earnings Attributable to Holders of Common Stock Calculation :
Net Income $470,000
Less Bond Interest ($1,890,000×6%×80%) ($90,720)
Earnings Attributable to Holders of Common Stock $379,280
Weighted Average Number of Common Stock Holders Calculation :
Outstanding Common Shares 94,000
Weighted Average Number of Common Stock Holders 94,000
Basic Earning per Share = $379,280 / 94,000 = $4.03
Diluted Earnings per Share = Adjusted Earnings Attributable to Holders of Common Stock / Adjusted Weighted Average Number of Common Stock Holders.
Adjusted Earnings Attributable to Holders of Common Stock Calculation :
Earnings Attributable to Holders of Common Stock $379,280
Add Back Bond Interest ($1,890,000×6%×80%) $90,720
Adjusted Earnings Attributable to Holders of Common Stock $470,000
Adjusted Weighted Average Number of Common Stock Holders.
Outstanding Common Shares 94,000
Add Convertible Bonds ($1,890,000/$1,000×16) 30,240
Adjusted Weighted Average Number of Common Stock Holders 124,240
Diluted Earnings per Share = $470,000 / 124,240 = $3.78