Stellar Corporation began operations on January 1, 2014. During its first 3 years of operations, Stellar reported net income and declared dividends as follows.Net incomeDividends declared2014 $49,500 $ –0– 2015 128,600 59,600 2016 161,000 58,800 The following information relates to 2017.Income before income tax $231,000 Prior period adjustment: understatement of 2015 depreciation expense (before taxes) $32,000 Cumulative decrease in income from change in inventory methods (before taxes) $44,800 Dividends declared (of this amount, $32,000 will be paid on January 15, 2018) $118,400 Effective tax rate 40 %Prepare a 2017 retained earnings statement for Stellar Corporation. (List items that increase adjusted retained earnings first.)

Answer:

$194,820  

Explanation:

Retained earnings at the end of 2017 is computed thus:

2014 net income                                                        $49,500

2014 dividends                                                           ($0)

2014 retained earnings                                             $49,500

2015 net income                                                       $128,600

2015 dividends                                                         ($59,600)    

2015 retained earnings                                            $118,500  

2016 net income                                                       $161,000

2016 dividends                                                         ($58,800)

2016 retained earnings                                           $220,700  

understatement of depreciation expense

after tax impact $32,000-(40%*$32,000)              ($19,200)

After tax impact of decrease in net income due

to inventory  method $44,800-($44,800*40%)    ($26,880)

Adjusted retained earnings for 2016                    $174,620  

net income for 2017 $231,000-($231,000*40%)   $138,600

dividends declared for 2017                                  ($118,400)              

Retained earnings  for 2017 year end                    $194,820  

Retained earnings in the adjustment in each is the retained earnings brought forward plus the net income for the current year minus dividends declared for the year            

8. Kidder Corporation hired Louis as a stockbroker. The employment contract provided that all disputes between the parties would be decided by arbitration. The employment agreement was a standardized form prepared by the corporation. Does Louis have a valid challenge to the legality of the contract

If a perpetual inventory system is in use _____. a physical inventory count is not required because the Inventory account is updated for each purchase and sale. a physical inventory count is not required because the Inventory account is updated every time a transaction or event occurs. a physical inventory count should be taken at least annually. a physical inventory count is required because the Inventory account is not updated when inventory is purchased or sold.

Calculate the firm’s WACC (using 2018 numbers). (You will need to collect information on the long-term debt and common stock equity from the Balance Sheet. The firm has no preferred stock).
Use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects. Assume the projects are mutually exclusive and the firm has the money available to fund the project
A 7.5% percent annual coupon bond with 20 years to maturity, selling for 104 percent of par. The bonds make semiannual payments. What is the before tax cost of debt? If the tax rate is 40%, what is the after-tax cost of debt?
The firm’s beta is 1.2. The risk-free rate is 4.0% and the expected market return is 9%. What is the cost of equity using CAPM?

Jamal just inherited some money from a distant cousin overseas. He would like to put some of it in a bond and is looking at two choices. Bond A has five years to maturity, a semiannual coupon of 6% and a face value of $1,000. Bond B has ten years to maturity, an annual coupon of 4% and a face value of $1,000. Jamal knows that the rate expected in the marketplace for investments similar to these is 5%.
1. What is the present value of the coupon stream on each bond?
2. What is the present value of the face value on each bond?
3. What is the total value of each bond?
4. If Jamal sees the two bonds in the Wall Street Journal and they are both priced at 99, which bond should he buy?

Accounts Receivable Analysis A company reports the following: Sales $1,182,600 Average accounts receivable (net) 43,800 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. a. Accounts receivable turnover b. Number of days' sales in receivables days

Journalize the following transactions that occurred in November 2018 for May's Adventure Park. Assume May's uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name
Julie's Fun World estimates sales returns at the end of each month.
Nov.
4 Purchased merchandise inventory on account from Vera Company, $5,000. Terms 3/10, n/EOM, FOB shipping point.
6 Paid freight bill of $100 on November 4 purchase.
8 Returned half the inventory purchased on November 4 from Vera Company
10 Sold merchandise inventory for cash, $1,100. Cost of goods, $400. FOB destination.
11 Sold merchandise inventory to Geary Corporation, $11,100, on account, terms of 2/10, n/EOM. Cost of goods, $6,105. FOB shipping point.
12 Paid freight bill of $20 on November 10 sale.
13 Sold merchandise inventory to Caldwell Company, $9,500, on account, terms of n/45. Cost of goods, $5,225. FOB shipping point.
14 Paid the amount owed on account from November 4, less return and discount
17 Received defective inventory as a sales return from the November 13 sale, $500. Cost of goods, $275
18 Purchased inventory of $3,600 on account from Rainman Corporation. Payment terms were 2/10, n/30, FOB destination.
20 Received cash from Geary Corporation, less discount.
26 Paid amount owed on account from November 18, less discount.
28 Received cash from Caldwell Company, less return.
29 Purchased inventory from Sandra Corporation for cash, $12,300, FOB shipping point. Freight in paid to shipping company,
$170.

On November 4, 2016, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2016 and 2017, respectively, Blue took $642 and $5,128 of cost recovery. These amounts were incorrect; Blue applied the wrong percentages (i.e., those for 39-year rather than 27.5-year assets). Blue should have taken $910 and $7,272 cost recovery in 2016 and 2017, respectively. On January 1, 2018, the asset was sold for $180,000. Enter the values for each item below. If required, round all computations to the nearest dollar.a. The adjusted basis of the asset at the end of 2017 is $.b. The cost recovery deduction for 2018 is $.c. The__________ on the sale of the asset in 2018 is $

Which of the following statements is NOT CORRECT? a. Accruals are "free" in the sense that no explicit interest is paid on these funds. b. A conservative approach to working capital management will result in most, if not all, permanent current operating assets being financed with long-term capital. c. Bank loans generally carry a higher interest rate than commercial paper. d. Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate. e. The risk to a firm that borrows with short-term credit is usually greater than if it borrowed using long-term debt. This added risk stems from the greater variability of interest costs on short-term debt and possible difficulties with rolling over short-term debt.

Nenn Co.'s allowance for uncollectible accounts was $190,000 at the end of 2024 and $200,000 at the end of 2023. For the year ended December 31, 2024, Nenn reported bad debt expense of $26,000 in its income statement. What amount did Nenn debit to the appropriate account in 2024 to write off actual bad debts?

Suppose that Congress passes a law requiring employers to provide employees some benefit (such as healthcare) that raises the cost of an employee by $4 per hour. Assume that firms were not providing such benefits prior to the legislation. On the following graph, use the green line (triangle symbol) to show the effect this employer mandate has on the demand for labor.On the previous graph, use the purple line (diamond symbol) to show the effect this employer mandate has on the supply of labor. Suppose the wage is free to balance supply and demand. Use the black point (plus symbol) to indicate the equilibrium wage and level of employment before this law, and use the grey point (star symbol) to indicate the equilibrium wage and level of employment after this law is implemented.
True or False: Employers and employees are made worse off by this law.
True False Suppose that, before the mandate, the wage in this market was $3 above the minimum wage. In this case, the employer mandate will decrease the equilibrium wage rate from $10 per hour to $6 per hour, causing employment to increase V and unemployment to decrease 'V' . Now suppose that workers do not value the mandated benefit at all. Which of the following statements are true under this circumstance?
1. The wage rate will decline by less than $4.
2. Employers are worse off than before the mandated benefit.
3. The equilibrium quantity of labor will decline.
4. The supply curve of labor doesn't shift at all.
5. Employees are worse off than before the mandated benefit.

A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts receivable $ 345,000 debit Allowance for uncollectible accounts 700 debit Net Sales 790,000 credit All sales are made on credit. Based on past experience, the company estimates that 0.6% of net credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

Byer, a plastics processor, is considering the purchase of a high-speed extruder as one option. The new extruder would cost $50,000 and would have a residual value of $3000 at the end of its 6-year life. The annual operating expenses of the new extruder would be $5000. The other option that Byer has is to rebuild its existing extruder. The rebuilding would require an investment of $30,000 and would extend the life of the existing extruder by 6 years. The existing extruder has annual operating costs of $13,000 per year and does not have a residual value. Byer's discount rate is 12%. Using net present value analysis, which option is the better option and by how much? Present Value of $1 Periods 12% 14% 16% 6 0.507 0.456 0.410 8 0.404 0.351 0.305 10 0.322 0.270 0.227 12 0.257 0.208 0.168Present Value of Annuity of $1 Periods 12% 14% 16% 6 4.111 3.889 3.685 8 4.968 4.639 4.344 10 5.650 5.216 4.833 12 6.194 5.660 5.197

Quality Move Company made the following expenditures on one of its delivery trucks: Mar. 20. Replaced the transmission at a cost of $5,430. June 11. Paid $1,705 for installation of a hydraulic lift. Nov. 30. Paid $41 to change the oil and air filter. Prepare the journal entries for each expenditure.

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials $70,000 Direct labor 20,000 Variable factory overhead 10,000 Fixed factory overhead 2,000 $102,000 Operating expenses: Variable operating expenses $17,000 Fixed operating expenses 1,000 18,000 If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of operating income reported on the absorption costing income statement would be

Exercise 4-7 (Algo) Income statement presentation; discontinued operations; restructuring costs [LO4-1, 4-3, 4-4] Esquire Comic Book Company had income before tax of $1,650,000 in 2021 before considering the following material items: Esquire sold one of its operating divisions, which qualified as a separate component according to generally accepted accounting principles. The before-tax loss on disposal was $405,000. The division generated before-tax income from operations from the beginning of the year through disposal of $630,000. The company incurred restructuring costs of $70,000 during the year. Required: Prepare a 2021 income statement for Esquire beginning with income from continuing operations. Assume an income tax rate of 25%. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)

A decrease in operating expenses would have which of the following effects on a company's profit margin? Multiple Choice There is not enough information given to determine the effect. Net profit margin would increase. Net profit margin would decrease. Net profit margin would remain unchanged.

The Federal Reserve System (the 'Fed') was created by the Federal Reserve Act, passed by Congress in 1913, and began operations in 1914. Like all central banks, the Federal Reserve is a government agency. All of the following statements are true about the Fed except:
a. the Federal Reserve is the "lender of last resort.
b. it promotes public goals such as economic growth, low inflation, and the smooth operation of financial markets.
c. it focuses on making a profit like commercial banks.
d. it has the power to supervise and regulate banks.

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: January February March $ 3 Material purchases 14,870 11,690 12,760 Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $7,200. The budgeted cash payments for materials in January are
A. $13,580.
B. $13,815
C. $9,980
D. $7,200.
E. $19,960.

If 4 million kegs of beer are sold, , which means that: It would be fairer for society to devote fewer resources to the production of beer. It would be fairer for society to devote more resources to the production of beer. Society is currently devoting the efficient quantity of resources to the production of beer. It would be more efficient for society to devote more resources to the production of beer. If 12 million kegs of beer are sold, , which means that: It would be fairer for society to devote more resources to the production of beer. Society is currently devoting the efficient amount of resources to the production of beer. It would be fairer for society to devote fewer resources to the production of beer. It would be more efficient for society to devote fewer resources to the production of beer. The efficient allocation of resources would result in the production of kegs of beer.

Luis and Amy are programmers employed by X Corp. They work in cubicles next to each other. Both have M.Sc. degrees in computer science (Luis also has a Ph.D. in philosophy). They are about the same age, and have been with the company since its birth. Luis codes games, while Amy codes a variety of projects. Although their work is different, both jobs require the same skill level. Luis makes $100,000 a year, while Amy makes $80,000. If Amy sues X Corp. because of the pay differential, what must she show? What might the company argue in defense? Who should win?

Tipton Processing maintains its internal inventory records using average cost under a perpetual inventory system. The following information relates to its inventory during the year: Jan. 1 Inventory on hand—80,000 units; cost $4.25 each. Feb. 14 Purchased 120,000 units for $4.50 each. Mar. 5 Sold 150,000 units for $14.00 each. Aug. 27 Purchased 50,000 units for $4.80 each. Sep. 12 Sold 60,000 units for $14.00 each. Dec. 31 Inventory on hand—40,000 units. Required: 1. Determine the amount Tipton would calculate internally for ending inventory and cost of goods sold using average cost under a perpetual inventory system. 2. Determine the amount Tipton would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. 3. Determine the amount Tipton would report for its LIFO reserve at the end of the year. 4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $8,000.

Jace is an executive at a large but decentralized corporation that uses the balanced scorecard. It would be reasonable for her to suggest using scorecard cascading to help her large company more effectively ensure that individuals throughout the company support its overriding strategy.A) TrueB) False

The Blaine Development Corporation (BDC) is reconsidering the Lummi Resort Hotel project. It would be located on the picturesque banks of Birch Bay and have its own championship-level golf course. The cost to purchase the land would be $1 million, payable immediately. Construction costs would be approximately $2 million, due at the end of year 1. However, the construction costs are uncertain. These costs could be up to 20 percent higher or lower than the estimate of $2 million with an equal chance (uniform distribution). BDC’s best estimate for the annual operating profit to be generated in years 2, 3, 4, and 5 is $700,000. Due to the great uncertainty, the estimate of the standard deviation of the annual operating profit in each year also is $700,000. Assume that the yearly profits are statistically independent and follow the normal distribution. After year 5, BDC plans to sell the hotel. The selling price is likely to be somewhere between $4 and $8 million (assume a uniform distribution), and revenue will be received in year 5. Interest has been r = 5% (and you can ignore inflation), so you can simplify your net present value (NPV) calculation to be
NPV = summation of [ (pi(t)-c(t)) / ( (1-r)^t )] where t varies from 0 to 5
where pi(t) is operating profit and ct is cost of land and construction, both in period t. Simulate the NPV 1000 times. What is the mean and standard deviation of the NPV of the project?

A medium of exchange, by definition, is Group of answer choices the method used to buy and sell, be it barter or personal checks. paper bills and coins that are used to buy goods and services. precious metals that hold inherent value. what people trade for goods and services. the infrastructure used to transport and sell goods and services.

Researchers have identified the tendency for increasing diversity among team members to create difficulties even as it offers improved potential for problem solving is known as the __________.

a. positive-negative dilemma
b. enhancement-enactment dilemma
c. upside-downside dilemma
d. good news-bad news dilemma
e. diversity-consensus dilemma

Terry's father loaned her $15,000 for college expenses. Terry agreed to repay the $15,000 in a lump sum 5 years after graduation. No interest was to be charged. Terry, who is now a senior, has the prospects of marrying a rather wealthy man and wishes to repay the loan on graduation day. Assuming that father can invest the money at 12% interest, how much should he be willing to accept on graduation day rather than waiting 5 years for his money

Drivers of the growth of international acquisitions include all of the following except:_________.
1. the need to grow the business to compete with other global firms.
2. to acquire assets and resources needed to compete.
3. a faster way to develop a presence in the local market.
4. the desire to develop all of the required resources internally.

Chen Inc.'s cash balance in the accounting records, before receiving the bank statement, at June 30th was $16,170. During June the company recorded $10,000 of deposits but the bank only showed $7,900 on the June statement. Some of the company's deposits were made on the last day of the month. The company's records also showed that the company wrote checks totalling $3,600 that had not yet cleared the bank. The June 30th bank statement showed a balance of $16,750. The company was surprised to see that the bank statement showed the following items that the company was not aware of until the bank statement arrived: NSF check for $935, bank fee of $10, and interest income totalling $25. What is the total amount of cash that should be reported on Chen Inc.'s balance sheet at June 30th?

a. $15,250
b. $17,120
c. $14,670
d. $17,850

. Eric has another​ get-rich-quick idea, but needs funding to support it. He chooses an​ all-debt funding scenario. He will borrow ​$1 comma 823 from​ Wendy, who will charge him 4​% on the loan. He will also borrow ​$1 comma 533 from​ Bebe, who will charge him 6​% on the​ loan, and ​$644 from​ Shelly, who will charge him 12​% on the loan. What is the weighted average cost of capital for​ Eric? What is the weighted average cost of capital for​ Eric?

Bloom Corporation purchased $1,000,000 of Taylor Company 5% bonds at par with the intent and ability to hold the bonds until they matured in 2025, so Bloom classifies their investment as HTM. Unfortunately, a combination of problems at Taylor Company and in the debt market caused the fair value of the Taylor investment to decline to $600,000 during 2018.

Required:

For each of the following scenarios, prepare appropriate entry(s) at December 31, 2018, and indicate how the scenario will affect the 2018 income statement (ignoring income taxes).

1. Bloom now believes it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $400,000 decline in fair value, Bloom attributes $250,000 to credit losses, and $150,000 to noncredit losses.

2. Bloom does not plan to sell the Taylor bonds prior to maturity, and does not believe it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $400,000 decline in fair value, Bloom attributes $250,000 to credit losses, and $150,000 to noncredit losses.