Answer:
36.83 years
16.85 years
$63,710.88
$ 71,490.43
Explanation:
We can use the nper formula in excel to compute the doubling time for the capital real GDP of both countries
=nper(rate,pmt,-pv,fv)
FV is the future real GDP which $28,900*2=$57,800 for France while that of Korea is $25,400 ($12,700*2)
PV is the present real GDP
rate is the economic growth rate of 4.2% in Korea and 1.9% in France
France=nper(1.9%,0,-28900,57800)= 36.83
Korea=nper(4.2%,0,-12700,25400)= 16.85
In 2045 ,which is 42 years from now the real GDP are shown thus:
=fv(rate,nper,pmt,-pv)=fv(1.9%,42,0,-28900)=$63,710.88
=fv(rate,nper,pmt,-pv)=fv(4.2%,42,0,-12700)=$ 71,490.43
Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $30,000 and $20,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $38,000. a. What is the amount of a gain or loss on realization
Answer:
$12,000
Explanation:
The amount of a gain or loss on realization is the difference between the sum of capital balances of partners and cash balance after settling all liabilities.
Total capital balances = $30,000 + $20,000 = $50,000
Total loss = Cash balance - Total capital balances = $38,000 - $50,000 = $12,000 loss.
Therefore, the amount of loss on realization is $12,000.
Letts Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 7,000 units, but its actual level of activity was 6,970 units. The company has provided the following data concerning the formulas to be used in its budgeting: Fixed element per month Variable element per unit Revenue − $ 30.40 Direct labor $ 0 $ 6.10 Direct materials 0 8.70 Manufacturing overhead 46,700 1.80 Selling and administrative expenses 27,800 0.20 Total expenses $ 74,500 $ 16.80 The selling and administrative expenses in the planning budget for January would be closest to:
Answer:
Total Selling and administrative expenses $29200
Explanation:
Letts Corporation Manufacturers
Fixed element per month Variable element per unit
Revenue − $ 30.40
Direct labor $ 0 $ 6.10
Direct materials 0 8.70
Manufacturing overhead 46,700 1.80
Selling & admin. expenses 27,800 0.20
Total expenses $ 74,500 $ 16.80
We multiply the variable cost per unit with the planned number of units to get the variable budgeted cost. Fixed cost will however remain unchanged.
Cost = Fixed Cost + Variable Cost per unit * No Of units
Fixed Selling and administrative expenses $ 27,800
Variable Selling and administrative expenses 0.20*7000= $ 1400
Total Selling and administrative expenses $29200
"Donald is a 21-year-old full-time college student. During 2019, he earned $2,550 from a part-time job and $1,150 in interest income. If Donald is a dependent of his parents, what is his standard deduction amount
Answer:
His standard deduction amount would be of $ 2,900
Explanation:
In order to calculate his standard deducion amount If Donald is a dependent of his parents we would have to make the following calculation:
Since His earned income is more than $1,150, therefore, Standard Deduction would be= $2,550 + $350
Standard Deduction would be= $2,900
Therefore, If Donald is a dependent of his parents, his standard deduction amount would be of $ 2,900
Burrito King (a new fast-food franchise opening up nationwide) has successfully automated burrito production for its drive-up fast-food establishments. The Burro-Master 9000 requires a constant 30 seconds to produce a batch of burritos. It has been estimated that customers will arrive at the drive-up window according to a Poisson distribution at an average of one every 45 seconds. To help determine the amount of space needed for the line at the drive-up window
A. What is the average line length (in cars)?
B. What is the average number of cars in the system (both in line and at the window)?
C. What is the expected average time in the system?
Answer:
(A)0.6600 (B) 1.325 (C) 0.997 or 1 minute
Explanation:
Solution
Given that:
The constant rate = 30 seconds
The arrival rate according to Poisson distribution is = 45 seconds
Now,
(A) We solve for the average length line of cars
The formula is given below:
Lq = λ²/ 2μ ( μ -λ)
Here,
λ = this is the mean time of arrival rate
μ = This is the mean service rate
Thus we compute for the mean time arrival rate which is given below:
The mean arrival rate λ = arrival rate/ 60 seconds
= 60/45
= 1.33 customer per minute
Then we solve for the means service rate which is given below
The mean service rate μ = 60 seconds/ mean rate
= 60/30 = 2 customer per minute
We will now solve for the average line length in cars which is shown below:
Lq = λ²/ 2μ ( μ -λ)
Lq = 1.33²/2*2 (2-1.33)
Lq = 1.7689/4 (0.67)
Lq = 1.7689/2.68
Lq = 0.6600
Therefore the average length in line for cars is 0.6600 cars
(B) We solve for the average number of cars in the system
Ls =Lq + λ /μ
Ls =0.600 + 1.33/2
Ls =0.6600 + 0.665
Ls = 1.325
(C) Finally we need to find the expected average time in the system which is shown below:
Ws = Ls/λ
Ws= 1.325/1.33 = 0.997 or 1.00
The expected time average in the system is 0.997 or 1.00 minutes.
(A) The average length in line for cars is 0.6600 cars
(B) Ls = 1.325
(C)The predicted time standard in the system is 0.997 or 1.00 minutes.
What is Average Time?The constant rate = 30 seconds
The arrival rate according to Poisson disbandment is = 45 seconds
(A) We solve for the average stature line of cars
The formula is given below:
Lq = λ²/ 2μ ( μ -λ)
Here,
λ = this is the meantime of arrival rate
μ = This is the mean service rate
Thus we compute for the meantime arrival rate which is given below:
The mean formation rate λ = arrival rate/ 60 seconds
= 60/45
= 1.33 customer per minute
Then we solve for the concessions service rate which is given below
The mean service rate μ = 60 seconds/ mean rate
= 60/30 = 2 consumer per minute
We will now solve for the average line length in cars which is shown below:
Lq = λ²/ 2μ ( μ -λ)
Lq = 1.33²/2*2 (2-1.33)
Lq = 1.7689/4 (0.67)
Lq = 1.7689/2.68
Lq = 0.6600
Hence the average length in line for cars is 0.6600 cars
(B) We solve for the average number of cars in the system
Ls =Lq + λ /μ
Ls =0.600 + 1.33/2
Ls =0.6600 + 0.665
Ls = 1.325
(C) Finally we need to find the anticipated average time in the system which is shown below:
Ws = Ls/λ
Ws= 1.325/1.33 = 0.997 or 1.00
The predicted time standard in the system is 0.997 or 1.00 minutes.
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A firm wishes to issue new shares of its stock, which already trades in the market. The current stock price is $24, the most recent dividend was $3 per share, and the dividend is expected to grow at a rate of 4% forever. Flotation costs for this issue are expected to be 6%. What is the required rate of return (or financing cost) in this new issue?
Answer:
17.83%
Explanation:
The computation of required rate of return is shown below:-
Required rate of return = ((Expected dividend ÷ (Current Stock price × (1 - Flotation cost as a percentage of issue price)) + Growth rate)) × 100
= ((Dividend × (1 + Growth rate)) ÷ Current Price of stock × (1 - Flotation cost as a percentage of issue price)) + Growth rate))) × 100
= ($3 × (1.04) ÷ $24 × (1 - 0.06) + 0.04) × 100
= ($3.12 ÷ $22.56 + 0.04) × 100
= (0.138297872 + 0.04) × 100
= 17.82978723
or
= 17.83%
Therefore we have applied the above formula.
Homestead Jeans Co. has an annual plant capacity of 67,000 units, and current production is 45,700 units. Monthly fixed costs are $54,400, and variable costs are $30 per unit. The present selling price is $40 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 19,600 units of the product at $33 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co.
Required:
a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
b. Briefly explain the reason why accepting this additional business will increase operating income.
c. What is the minimum price per unit that would produce a positive contribution margin?
a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
Answer:
Homestead Jeans Co.
a) Differential Analysis dated November 12
Options Reject (Alternative 1) Special Order Accept (Alternative 2)
Units sold 45,700 19,600 65,300
Revenue $1,828,000 $646,800 $2,474,800
Variable Cost -1,371,000 -588,000 -1959,000
Contribution $457,000 $58,800 $515,800
Fixed Costs 652,800 $0 652,800
Net Income/(Loss) -$195,800 $58,800 -$137,000
b) Accepting this order will reduce operating loss from $195,800 to $137,000, making a difference of $58,800. The reason is that the special order will make a contribution towards offsetting the fixed cost with a sum of $58,800.
c) Minimum price per unit to produce positive contribution margin:
The contribution margin per unit = Selling price minus variable cost per unit = $40 - $30 = $10 per unit.
To produce positive contribution margin, selling price must be more than variable cost. Selling price will be at least $31.
Therefore, the minimum price per unit to produce positive contribution is $31.
Explanation:
a) In differential analysis, only relevant costs are considered. Fixed costs are regarded as sunk and therefore irrelevant in making any differential decision.
b) The revenue is a function of selling price and quantity sold. While the variable costs equal units sold multiplied by the unit variable cost.
A city issued bonds on July 1. Interest of $600,000 is payable the following January 1. On December 31, the city transfers the required $600,000 from its general fund to its debt service fund. On its December 31 debt service fund statement of revenues, expenditures, and changes in fund balance, the city :______
a. Must report interest expenditure of $0
b. Must report interest expenditure of $600,0000
c. Must report interest expenditure of $500,000
d. May report interest expenditure of either $0 or $600,000
Answer:
d. May report interest expenditure of either $0 or $600,000
Explanation:
Government entities used modified accrual accounting system and one of the main difference with accrual accounting system used by private businesses is that they do not have to report accrued interests on their end of year balance sheets. They can choose to report them or not, it is optional.
Kingbird Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.
KingBird Resort Trial Balance August 31, 2020
Debit Credit
Cash $25,900
Prepaid Insurance 10,800
Supplies 8,900
Land 22,000
Buildings 122,000
Equipment 18,000
Accounts Payable $10,800
Unearned Rent Revenue 10,900
Mortgage Payable 62,000
Common Stock 99,300
Retained Earnings 9,000
Dividends 5,000
Rent Revenue 78,200
Salaries and Wages Expense 44,800
Utilities Expenses 9,200
Maintenance and Repairs Expense 3,600
$270,200 $270,200
Other data:
1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020.
2. An inventory count on August 31 shows $443 of supplies on hand.
3. Annual depreciation rates are (a) buildings (4%) (b) equipment (10%). Salvage value is estimated to be 10% of cost.
4. Unearned Rent Revenue of $3,472 was earned prior to August 31.
5. Salaries of $392 were unpaid at August 31.
6. Rentals of $873 were due from tenants at August 31.
7. The mortgage interest rate is 8% per year.
A. Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
No. Date Account Titles and Explanation Debit Credit
1. Aug. 31
2. Aug. 31
3a. Aug. 31
3b. Aug. 31
4. Aug. 31
5. Aug. 31
6. Aug. 31
7. Aug. 31
B. Prepare an adjusted trial balance on August 31.
Answer:
A. Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020.
prepaid insurance expense per month = $10,800 / 12 = $900 x 3 months = $2,700
Dr Insurance expense 2,700
Cr Prepaid insurance 2,700
2. An inventory count on August 31 shows $443 of supplies on hand.
supplies expense = $8,900 - $443 = $8,457
Dr Supplies expense 8,457
Cr Supplies 8,457
3. Annual depreciation rates are (a) buildings (4%) (b) equipment (10%). Salvage value is estimated to be 10% of cost.
depreciation expense per month:
buildings = ($122,000 x 90%) x 4% x 1/12 = $366 x 3 = $1,098
equipment = ($18,000 x 90%) x 10% x 1/12 = $135 x 3 = $405
Dr Depreciation expense 1,503
Cr Accumulated depreciation building 1,098
Cr Accumulated depreciation equipment 405
4. Unearned Rent Revenue of $3,472 was earned prior to August 31.
Dr Unearned revenue 3,472
Cr Rent revenue 3,472
5. Salaries of $392 were unpaid at August 31.
Dr Wages expense 392
Cr Cash 392
6. Rentals of $873 were due from tenants at August 31.
Dr Accounts receivable 873
Cr Rent revenue 873
7. The mortgage interest rate is 8% per year.
interest expense per month = $62,000 x 8% x 1/12 = $413.33 x 3 = $1,240
Dr Interest expense 1,240
Cr Interest payable 1,240
B. Prepare an adjusted trial balance on August 31.
first we must calculate the quarter's profit:
Rent Revenue $82,545
Salaries and Wages Expense ($45,192)
Utilities Expenses ($9,200 )
Maintenance and Repairs Expense ($3,600)
Insurance expense ($2,700)
Supplies expense ($8,457)
Depreciation expense ($1,503)
Interest expense ($1,240)
net income = $10,653
retained earnings = $9,000 - $5,000 + $10,653 = $14,653
Kingbird Resort
Balance Sheet
For the Year Ended August 31, 202x
Assets:
Cash $25,508
Accounts receivable $873
Prepaid Insurance $8,100
Supplies $443
Land $22,000
Buildings $120,902
Equipment $17,595
Total assets: $195,421
Liabilities and Stockholders' Equity:
Accounts Payable $10,800
Unearned Rent Revenue $7,428
Interest payable $1,240
Mortgage Payable $62,000
Common Stock $99,300
Retained Earnings $14,653
Total liabilities and stockholders' equity: $195,421
During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 80,000 mini refrigerators, of which 72,000 were sold. Operating data for the month are summarized as follows: 1 Sales $10,800,000.00 2 Manufacturing costs: 3 Direct materials $6,400,000.00 4 Direct labor 1,600,000.00 5 Variable manufacturing cost 1,280,000.00 6 Fixed manufacturing cost 320,000.00 9,600,000.00 7 Selling and administrative expenses: 8 Variable $1,080,000.00 9 Fixed 180,000.00 1,260,000.00Required:
1. Prepare an income statement based on the absorption costing concept.*
2. Prepare an income statement based on the variable costing concept.*
3. Explain the reason for the difference in the amount of income from operations reported in (1) and (2).
Answer:
Absorption Costing Net Income 1008,000
Variable Costing Net Income 976,000
Explanation:
Kodiak Fridgeration Company
Units Produced = 80,000
Units Sold = 72,000
Ending Inventory = 8000
Per Units Cost
Direct materials $6,400,000/80,000 = $ 80
Direct labor 1,600,000 /80,000= $ 20
Variable manufacturing cost 1,280,000/80,000= $ 16
Fixed manufacturing cost 320,000 /80,000 = $ 4
Absorption Manufacturing Cost per unit= 9,600,000/80,000= $ 120
Variable Manufacturing Costs per unit = $ 116
Kodiak Fridgeration Company
Income Statement
Absorption Costing
Sales $10,800,000
Manufacturing costs:
Direct materials $6,400,000
Direct labor 1,600,000
Variable manufacturing cost 1,280,000
Fixed manufacturing cost 320,000 9,600,000
Less Ending Inventory (8000*120) (960,000)
Cost of Goods Sold 86,40,000
Gross Profit 2160,000
Selling and administrative expenses:
Variable $ 72,000* 13.5= 972,000
Fixed 180,000
Net Income 1008,000
Kodiak Fridgeration Company
Income Statement
Variable Costing
Sales $10,800,000
Variable manufacturing cost
(80,000*116) 9280,000
Less Ending Inventory ( 8000*116) 928,000
Cost of Goods Sold 83,52,000
Gross Contribution Margin 2448,000
Variable Selling and administrative expenses
(72000 * $1,080,000/80,000) 972,000
Contribution Margin 1476,000
Less Fixed Expenses
Fixed manufacturing cost 320,000
Fixed 180,000 500,000
Net Income 976,000
3. The difference in absorption and variable costing income is because in absorption costing the fixed costs are treated as unit cost and in variable costs the fixed costs are treated as period costs. Also the fixed costs of the ending units is deducted in absorption costing where it is not deducted in variable costing.
Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 108,000 shares of Silva Company directly from one of the founders for a price of $48 per share. Silva has 300,000 shares outstanding including the Daniels shares. On July 2, Year 1, Silva paid $292,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $971,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva
a. Provide the Ferguson Company journal entries for the transactions Involving its Investment In Sllva Company durlng Year 1 Year 1 Jan. 4 Year 1 July 2 Year 1 Dec. 31
b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock
Answer:
a)
January 4, year 1, investment in Silva Company (36% of outstanding stocks)
Dr Investment in Silva Company 5,184,000
Cr Cash 5,184,000
July 2, year 1, distributed dividends ( $292,000 x 36%)
Dr Cash 104,400
Cr Investment in Silva Company 104,400
December 31, year 1, net income reported by Silva Company ($971,000 x 36%)
Dr Investment in Silva Company 349,560
Cr Revenue from investment in Silva Company 349,560
b)
Balance of Investment in Silva Company = $5,184,000 - $104,400 + $349,560 = $5,429,160
Explanation:
Since Ferguson exercises significant influence over Silva Company, they must record the investment using the equity method.
S13-15 (similar to) Young Corporation discovered in 2019 that it had incorrectly recorded in 2018 a cash payment of $ 95 comma 000 for utilities expense. The correct amount of the utilities expense was $ 20 comma 000. Requirements 1. Determine the effect of the error on the accounting equation in 2018. 2. How should this error be reported in the 2019 financial statements?
Answer and Explanation:
1. The effect of the error on the accounting equation in 2018 is shown below:-
Error utilities expenses = Correct utilities expenses in 2018 - Wrongly entered utilities expenses
= $95,000 - $20,000
= $75,000
Here due to an increase in utilities expenses, so the net income will be decreased.
Now, the Decrease in net income, there will be decrease in stockholders equity
2. The error should be reported for the year 2019 financial statements as a prior period adjustment. It is an adjustment to the beginning balance in the retained earning account
And it will be an addition of the $20,000
Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $483,000, has an estimated useful life of 10 years and an estimated residual value of $63,000. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation?
Answer: $42,000
Explanation:
Using a straight line Depreciation method means that the Equipment will be depreciated uniformly throughout it's life. i.e by the same amount.
Depreciation = (Cost - Residual Value) / Useful Life
= (483,000 - 63,000) / 10
= 420,000/10
= $42,000
The annual Depreciation amount for Year 1 - 3 is $42,000 and will be the same as long as the Equipment is in service.
Suppose there are 11 buyers and 11 sellers, each willing to buy or sell one unit of a good, with values {$14, $13, $12, $11, $10, $9, $8, $7, $6, $5, $4,}. Assume no transaction costs and a competitive market. If there is a market maker in this market. What is the profit maximizing bid-ask spread per unit for a market maker? a. $9 bid; $9 ask b. $6 bid; $12 ask c. $8 bid; $10 ask d. $7 bid; $11 ask
Answer:
Explanation:
From the question given; The objective here is to determine the profit maximizing bid-ask spread per unit for a market maker. In order to achieve that; The demand supply schedule of the number of units bought and sold need to be computed which is shown in the table below.
Price Quantity demanded by buyers Quantity sold by sellers
$14 1 11
$13 2 10
$12 3 9
$11 4 8
$10 5 7
$9 6 6
$8 7 5
$7 8 4
$6 9 3
$5 10 2
$4 11 1
However; As the two transactions are happening simultaneously; There are 11 people participating in buying of a good and selling from one person to the other.
But the maximum even number of people that can be part of this trade is only 10 people.
So; for the individual having an higher value for the good will be able to afford it and which are those that falls into the category of $14,$13,$12,$11,$10,$9 can place bid for the good.
On the other hand, the individual having a lower value for the good will sell it and which are those that falls into the category of $4,$5,$6,$7,$8,$9 and would want to sell it for the ask price of the good.
In this trend, we understand that the individual valuing the good for $9 won't be able to participate due to the fact that He appears on both trends because in the demand side , he have the lowest willingness to pay and at the seller's side he has the the highest value for the good and that the equilibrium price in this market is $ 9 because at this price the quantity demanded equals quantity supplied .
Thus; we can conclude that there are 5 transactions in the maximizing bid-ask spread per unit for a market maker.
an investment that in today's dollars returns 12% of your investment in year 1, 18% in year 2, 11% in year 3, and the remainder in year 4. Rounded to two places, what is the Duration of this investment
Answer:
3.17 years
Explanation:
We can calculate the duration of Investment by duration formula,
Duration= Sum of (PV of each cashflow x year)
PV of each cash flow can be understood as Dolar return % given in the Question.
Year1 Year2 Year3 Year4
Duration= (12% x 1) + (18% x 2) + (11% x 3) + (59% x 4)
Duration= 0.12 + 0.36 + 0.33 + 2.36
Duration= 3.17 years
Note: (100%-12%-18%-11%)59% can be calculated as the remainder of 100% after deducting each year's %.
In January 2020, the management of Sheridan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred.
Feb. 1 Purchased 500 shares of Muninger common stock for $27,500.
Mar. 1 Purchased 700 shares of Tatman common stock for $17,500.
Apr. 1 Purchased 40 $1,050, 6% Yoakem bonds for $42,000. Interest is payable semiannually on April 1 and October 1.
July 1 Received a cash dividend of $0.50 per share on the Muninger common stock.
Aug. 1 Sold 167 shares of Muninger common stock at $65 per share.
Sept.1 Received a $1 per share cash dividend on the Tatman common stock.
Oct. 1 Received the semiannual interest on the Yoakem bonds.
Oct. 1 Sold the Yoakem bonds for $41,000.
Required:
At December 31, the fair value of the Muninger common stock was $56 per share. The fair value of the Tatman common stock was $24 per share. Prepare the adjusting entry at December 31, 2020, to report the investment securities at fair value. All securities are considered to be trading securities.
Answer:
Sheridan Company
Adjusting Entries for reporting fair values of investments:
December 31, 2020:
Debit Investment in Muninger $333
Credit Unrealized Gains on Investment $333
To record the fair value of common stock investment.
Debit Unrealized Loss on Investment $700
Credit Investment in Tatman $700
To record the fair value of common stock investment.
Explanation:
a) Feb. 1, Muniger Common Stock 500 shares at $55 for $27,500
August 1, Sold 167 shares at $65 for $10,855
December 31 Remaining at fair value, 333 shares at $56 for $18,648
Fair Value Gain = $1 x 333 shares = $333
b) Tatman Common Stock 700 shares for $17,500
March 1, Common Stock 700 shares at $25 for $17,500
December 31, Remaining at fair value, 700 shares at $24 for $16,800
Fair Value Loss = $1 x 700 = $700
c) Trading Investments are held for short-term purposes to take advantage of dividends and changes in the market price of the investments. These securities are accounted for at fair value. The requirement is that at the end of the accounting period, the fair value is determined and used to value the investment. Unrealized Gains or Losses are recorded, depending on their fair values. The gains or losses become realized when the investments are sold.
HAW, Inc. plans to pay a $1.10 dividend per share in 3 months and a $1.15 dividend in 6 months. HAW's share price today is $45.60 and the continuously compounded quarterly interest rate is 2.1%. What is the price of a forward contract, which expires immediately after the second dividend?
Answer:
$45.28
Explanation:
The computation of price of a forward contract is shown below:-
Cash flows Future Value Amount Amount
A $45.60 $45.6 × exponential(0.021 × 2) $47.55599
B $1.10 $1.10 × exponential(0.021 × 1) $1.123344
C $1.15 $1.15 × exponential(0.021 × 0) $1.15
So, The value of forwards contract = Amount of A - Amount of B - Amount of C
= $47.55 - $1.12334 - $1.15
= $45.28
Sundance systems has the following transactions during July.
July 5- Purchases 58 LCD televisions on account from Red River Supplies for $3,400 each, terms 2/10. n/30.
July 8- Returns to Red RIver two televisions that had detective sound.
July 13- Pays the full amount due to Red River.
July 28- Sells remaining 56 televisions purchased on July 5 fpr $3,900 each on account.Record the transactions of Sundance systems, assuming the company uses a perpetual inventory system.
Answer: Please see below for answers
Explanation:
Journal to record Purchase of goods.
Date General Journal Debit Credit
5TH July Inventory ( 58 x 3400) $197, 200
Accounts Payable $197,200
journal to record goods returned
Date General Journal Debit Credit
8TH July Accounts Payable (2 x 3400) $6,800
inventory $ 6,800
journal to record payment made to supplier
Date General Journal Debit Credit
13TH July Accounts Payable (197,200-6,800) $190,400
inventory ( 190,400 x2%) $3808
Cash( 190,400 - 3,808) $186,592
From the question, the conditions for payment states 2/10 and n/30 meaning that the company will get 2% discount if they pay for products in 10 days of payment. the company paid on 13th and therefore will get a discount which is $3,808.
journal to record sale of goods
Date General Journal Debit Credit
28TH July Accounts receivable(56x 3900) $218,400
Sales revenue $218,400
Journal to record cost of good sold
Date General Journal Debit Credit
28TH July cost of good sold $186,592
inventory $186,592
A local government awards a landscaping company a contract worth $1.5 million per year for five years for maintaining public parks. The landscaping company will need to buy some new machinery before they can take on the contract. If the cost of capital is 6%, what is the most that this equipment could cost if the contract is to be worthwhile for the landscaping company
Answer:
The equipment should not cost more than $6,318,545.68
Explanation:
The most that the land scrapping equipment could cost is the present of the 1.5 million annuity discounted at 6% p.a.
Present Value of Annuity = A × ( 1- (1+r)^(-n))/r
A- 1,500,000, n- 5, r- 6%
=1, 500,000 × ((1.06)^(-5))/0.06
= $6,318,545.68
The equipment should not cost more than $6,318,545.68
Krisp Systems decides to move production to a developing country where they are free to pump pollutants into the atmosphere without legal restriction. By doing this, the company is contributing to:_______
a. corporate social responsibility.
b. corruption.
c. cultural relativism.
d. the global tragedy of the commons.
e. sustainability
Answer: the global tragedy of the commons
Explanation:
The tragedy of the commons is a term that is used to refer to a situation whereby resources that are held in common by everyone but owned by no one and is therefore overused by individuals which results in degradation.
Krisp Systems moves production to a developing country where they can pump pollutants into the atmosphere without any legal restriction will lead to
global tragedy of the commons. Here, the global tragedy is that Krisp system will only work in their own interest and exploit the resources at the detriment of the people which will lead to pollution.
Answer:
d. the global tragedy of the commons.
Explanation:
The tragedy of the commons is a situation that arises as a result of the selfish interest of people who exploit the shared economic resources at the expense and detriment of other users of the resources in the environment. Activities which result in Tragedy of the commons would cause pollution of the environment, excessive consumption, as well as the depletion of resources. A way to curb this sort of exploitation is by the regulation of the activities of companies by the government. This would ensure that certain limits are not overstepped.
When Krisp Systems decides to bypass this regulation by moving to a developing country where they are free to pump pollutants into the atmosphere, they are in effect contributing to the tragedy of the commons.
A firm has fixed assets of $28,000, long-term debt of $12,000, current liabilities of $4,000, current assets of $5,000 and equity of $17,000. What is the total of the assets side of the balance sheet of the firm
Answer:
$33,000
Explanation:
assets = liabilities + stockholders' equity
assets include current assets + non current or fixed assets = $5,000 + $28,000 = $33,000
liabilities and stockholders' equity include current liabilities + long term liabilities + equity = $4,000 + $12,000 + $17,000 = $33,000
both sides of the accounting equation must always be equal, that is meant by balance.
Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $10,500 beginning one year from today. The interest rate on the note is 5%.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What amount did Canliss borrow
Answer:
The amount that Canliss borrowed is $45,459.51
Explanation:
The amount borrowed is the present value of $10,500 for five years using the discount factor applicable to each to each year as shown below
The formula for discount factor=1/(1+r)^n
r is the rate of interest on the loan which is 5%
n is the year relating to each cash flow ,for instance 1 for year one
present value of the loan=$10,500/(1+5%)^1+$10,500/(1+5%)^2+$10,500/(1+5%)^3+$10,500/(1+5%)^4+$10,500/(1+5%)^5=$45,459.51
Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 20% weight in equity, 10% in preferred stock, and 70% in debt. The cost of equity capital is 14%, the cost of preferred stock is 10%, and the pretax cost of debt is 9%. What is the weighted average cost of capital for Ford if its marginal tax rate is 30%?
Answer: 8.21%
Explanation:
The Weighted Average Cost of Capital(WACC) simply put, is the rate at which a company pays those who have invested in it and financed it be it debt holders or equity holders.
The rates in question are averaged according to the proportion by which the company uses the said capital. This results in the following formula,
WACC= [(Wd*Rd) * (1-Tax) + (We * Re) +(Wp * Rp )]
Where,
Wd is the Weight of debt
We is the weight of common Equity
Wp is the weight of preferred Equity
Rd is the Pre-tax cost of debt
Re is the cost of common Equity
Rp is the cost of Preferred equity.
Note: Sometimes you will be given the After - tax cost of debt. In which case you will not need to include the tax adjustment of (1 - tax).
Calculating,
= [( 70% * 9%) * ( 1 - 30%) + (20% * 14%) + (10% * 10%) ]
= 0.0441 + 0.028 + 0.01
= 0.0821
= 8.21%
The Colson Company issued $407,000 of 9% bonds on January 1, 2014. The bonds are due January 1, 2020, with interest payable each July 1 and January 1. The bonds are issued at face value.
Prepare Colson’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.
Answer:
Dr cash $407,000
Cr bonds payable $407,000
July 1
Dr interest expense $ 18,315.00
Cr cash $ 18,315.00
December 31
Dr interest expense $ 18,315.00
Cr interest payable $ 18,315.00
Explanation:
The bond was issued at face value of $407,000 which means that cash of $407,000 was received which is to be debited to cash account and bonds payable account credited for the same amount.
On July1 ,interest coupon of $ 18,315.00 ($407,000*8%*6/12) was paid which means that interest expense is debited with $ 18,315.00 while cash is credited.
On 31 December ,interest coupon of $ 18,315.00 ($407,000*8%*6/12) was due which means that interest expense is debited with $ 18,315.00 while interest payable is credited.
Allowing a tax credit for certain solar energy property can be justified: a.Based on the wherewithal to pay concept. b.As helping small businesses. c.As promoting administrative feasibility. d.As promoting a government policy to use alternative energy sources. e.None of these choices are correct.
Answer: As promoting a government policy to use alternative energy sources.
Explanation:
A tax credit is a form of tax incentive which can help in the reduction of the amount of money that a taxpayer is owing the government. Here, the taxpayer can just deduct the tax credit from the total amount of taxes that the individual owe thereby leading to him paying a lower amount as tax.
In this case, allowing tax credit for certain solar energy property may be a way the government wants to make people start using other forms of energy. Giving tax credit will lead to a cheaper price for the solar energy products.
Jardine Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fes Earned, Rent Expense, Advertising Expense, Utility Expense, Miscellaneous Expense.Journalize the following selected transactions for March 2016 in a two-column journal. Journal entry explanations may be omitted.Mar.1. Paid rent for the month, $2,500.3. Paid advertising expense, $675.5. Paid cash for supplies, $1,250.6. Purchased office equipment on account, $9,500.10. Received cash form customers on account, $16,550.15. Paid creditor on the account, $3,180.27. Paid cash for repairs to office equipment, $540.30. Paid telephons bill for the month, $375.31. Fees earned and billed to customers for the month, $49,770.31. Paid electricity bill for the month, $830
Answer:
Mar.1
Rent Expense $2,500 (debit)
Cash $2,500 (credit)
Mar.3
Advertising Expense $675 (debit)
Cash $675 (credit)
Mar.5
Supplies $1,250 (debit)
Cash $1,250 (credit)
Mar.6
Office equipment $9,500 (debit)
Accounts Payable $9,500 (credit)
Mar.10
Cash $16,550 (debit)
Accounts Receivable $16,550 (credit)
Mar.15
Accounts Payable $3,180 (debit)
Cash $3,180 (credit)
Mar.27
Miscellaneous Expense $540 (debit)
Cash $540 (credit)
Mar.30
Utility Expense $375 (debit)
Cash $375 (credit)
Mar. 31
Accounts Receivable $49,770 (debit)
Fees Earned $49,770 (credit)
Mar. 31
Utility Expense $830 (debit)
Cash $830 (credit)
Explanation:
Telephone Bill and Electricity Bill are both utilities used for operations hence entered under Utility Expense Account.
Repairs to Office Equipment was entered in the Account Title Miscellaneous Expense because of all the Account Titles for this Company, this is the most appropriate.
Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise:
a. A suitable location in a large shopping mall can be rented for $4,500 per month.
b. Remodeling and necessary equipment would cost $378,000. The equipment would have a 10-year life and a $37,800 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation.
c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $480,000 per year. Ingredients would cost 20% of sales.
d. Operating costs would include $88,000 per year for salaries, $5,300 per year for insurance, and $45,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 13.0% of sales.
Required:
1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet
2-a. Compute the simple rate of return promised by the outlet
2-b. If Mr. Swanson requires a simple rate of return of at least 21%, should he acquire the franchise?
3-a. Compute the payback period on the outlet
3-b. If Mr. Swanson wants a payback of three years or less, will he acquire the franchise?
Answer:
1.) check attached picture
2a)Simple rate of return = 25.2%
2b) Yes
3a)2.92 years
3b) Yes
Explanation:
Kindly check attached picture
You have been hired to design a relational database for a convenience store which is located within an apartment complex. The goal of the database is to keep track of the inventory sold in hopes of using the data to better meet the customer's convenience store needs. Up until your arrival, the store kept track of each customer’s purchases using a flat database log, as shown in the following table. Using the information provided, build a relational database that will allow for querying things such as products sold, customer purchases, total apartment purchases, and total spent per apartment. Include any created tables and identify the keys and key types that are used. Identify all relationships, labeling them 1:1, 1:N, or M:N.
Name Apt # Products Price Quantity
Joseph Anthony 1125 Orange Juice 4.59 1
Joseph Anthony 1125 Bread Loaf 2.29 1
Yolanda Burns 3221 Milk 3.67 1
Yolanda Burns 3221 Candy Bar 1.19 3
Francis Jordan 1138 Gum 0.99 2
Steve Miller 2221 Gum 0.99 1
Cho Lin 2239 Bread Loaf 2.29 1
Answer:
Apartment (1)=====> (N) Purchases (M) =====> Product(1).
Explanation:
So, in this question we are given the following; Name, Apt # , Products, Price and Quantity. With this data or parameters or information we will be able to know that there should be another parameters in a table which are;
=> Apartment: with this parameter and the apt # each person or Individual can be Identifed.
=> Purchases: this table will be about the details of the person or Individuals the bought the products and what quantity was bought.
=> Product: here, this parameter can be used in saving or storing the name of each products and the prices of each one of them.
Hence;
(1). APARTMENT = Apt#, Name => where Apt# will be the primary key because it is unique.
(2). PRODUCTS= Products, Price => where product is the unique key.
(3). PURCHASES = Apt #, product quantity => where Apt # is a foreign key and an attribute of product in the ''purchases" table.
Kindly check the attachment for the diagram
An inexperienced accountant for Cheyenne Corp. showed the following in the income statement: income before income taxes $371,000 and unrealized gain on available-for-sale securities (before taxes) $88,700. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 35% tax rate. Prepare a correct statement of comprehensive income.
Answer:
An correct statement was prepared for a comprehensive income which is given below.
Explanation:
Solution
Given that:
Cheyenne Corporation
Correct Statement of Comprehensive/General Income
Income before income taxes $371,000
The less Tax ($371,000 * 35%) $129,850
The Net Income $241,150
Other Comprehensive income
Unrealized profit on present for
sales securities, net of tax $57,655
The comprehensive income
($241,150 +$57,655) $298,805
Note:
The Unrealized profit on present for sales securities, net of tax is given as
=($88,700 * (100% -35%))
=$88,700 * 65%
=$57,655
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 157,000 Fixed manufacturing overhead cost $ 650,000 Variable manufacturing overhead cost per machine-hour $ 4.40 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials $ 320 Direct labor cost $ 230 Machine-hours used 37 Compute the total manufacturing cost assigned to Job 400. 3. If Job 400 includes 50 units, what is the unit product cost for this job
Answer:
Instructions are below.
Explanation:
Giving the following information:
Estimated machine-hours= 157,000
Estimated fixed manufacturing overhead= $650,000
Variable manufacturing overhead cost per machine-hour $4.40
First, we need to calculate the predetermined overehad rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (650,000/157,000) + 4.4
Predetermined manufacturing overhead rate= $8.54 per machine-hour
Job 400:
Direct materials $320
Direct labor cost $230
Machine-hours used 37
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated overhead= 8.54*37= $315.98
Finally, we need to determine the unitary cost for Job 400:
Total cost= 320 + 230 + 315.98= $865.98
Unitary cost= 865.98/50= $17.32
SmartTalk, Inc, makes and markets cell phones and related accessories. When problems develop with SmartTalk products or sales, the company may be liable in product liability for any of the following except:___________A) a manufacturing defectB) a design defect.C) an inadequate warning.D) an ineffective marketing plan.
Answer:
D) an ineffective marketing plan.
Explanation:
Product liability is defined as the liability that manufacturer bears when he puts defective product in the hands of the consumer.
Manufacturers are liable for damages that occur from the use of their products. They are also responsible for providing adequate instructions on use of the product and warning of adverse effects a user can experience.
SmartTalk, Inc produces cell phones and related accessories. They have product liability when there is a manufacturing defect, design defect, and inadequate warning on use of the product.
However the company does not have product liability for ineffective marketing as this is related to how well the company sells the product and not if the product is defective.