Answer:
a. Compute the amount of funds Ms. Bragg needs to borrow for June.
$101,800b. Determine the amount of interest expense the restaurant will report on the June pro forma income statement.
$0c. What amount will the restaurant report as interest expense on the July pro forma income statement?
$763.50Explanation:
beginning balance AR $53,000
cash sales $148,000
credit sales $586,000 (70% collected in current month and 30% collected next month)
cash outflows = ($713,000)
minimum desired cash balance $31,000
Cash balance June 30 = $31,000 (beginning cash balance) + $53,000 (collected from May's AR) + $148,000 (cash sales) + $410,200 ($586,000 x 70%) = $642,200
Ending cash balance + outflows = $31,000 + $713,000 = $744,000
June's cash deficit = $744,000 - $642,200 = $101,800
interest expense due on July 31 = $101,800 x 9% x 1/12 = $763.50
Marshall Company purchases a machine for $200,000. The machine has an estimated residual value of $80,000. The company expects the machine to produce four million units. The machine is used to make 440,000 units during the current period. If the units-of-production method is used, the depreciation expense for this period is:
Answer:
The depreciation expense for this period is: $13,200
Explanation:
The depreciation charge using units of production is calculated as follows :
Depreciation Expense = (Cost - Salvage Value) × (Period`s Production / Total Expected Production)
= ($200,000 - $80,000) × 440,000 units / 4,000,000 units
= $13,200
Conclusion:
The depreciation expense for this period is: $13,200
You are tasked with composing a program to compute the payroll earnings for the sales force at the Arctic Ice company. All sales employees are on a straight commission basis of 12.5% of gross sales. The sales manager calculates the bonuses separately. Your program is needed to calculate the withholdings and deductions from the employee’s gross pay. Your program must calculate the federal and state withholdings (taxes) and also the retirement contribution of each employee
A. 25% Federal withholding
B. 10% State withholding
C. 8% Retirement plan
Salesperson Sales Bonus
1 53,500 425
2 41,00 300
3 56,800 350
4 36,200 175
Answer:
Programming language: C
Code:
#include<stdio.h>
double fed_with(double total){ //declaring the functions
return 0.25*total;
}
double ste_with(double total){
return 0.1*total;
}
double ret_plan(double total){
return 0.08*total;
}
int main(){
double sales[4][2],total,fw,sw,rp; //variables to be used
int i,j;
for(i=0;i<4;i++){ //taking input loop
printf("Salesperson %d: (Sales + Bonus)\t", i+1);
scanf("%lf %lf",&sales[i][0],&sales[i][1]);
printf("\n");
}
for(i=0;i<4;i++){ //printing payroll loop
printf("Salesperson %d: Statement\n", i+1);
total = 0.125*sales[i][0]+sales[i][1];
printf("Sales + Bonus: %lf\n",sales[i][0]+sales[i][1]);
printf("Total: %lf\n",total);
fw=fed_with(total);
printf("Federal Withholding: %lf\n",fw);
sw=ste_with(total);
printf("State Withholding: %lf\n",sw);
rp=ret_plan(total);
printf("Retirement Plan: %lf\n",rp);
printf("Final: %lf\n",total-fw-sw-rp);
printf("\n");
}
return 0;
}
Explanation:
Mary Willis is the advertising manager for Flint Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $30,400 in fixed costs to the $272,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Mary’s ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.
A: Compute the current break-even point in units, and compare it to the break-even point in units if Mary’s ideas are used. (Round answers to 0 decimal places, e.g. 1,225.)B: Compute the margin of safety ratio for current operations and after Mary’s changes are introduced. (Round answers to 0 decimal places, e.g. 15%.)C: Prepare a CVP income statement for current operations and after Mary’s changes are introduced. Would you make the changes suggested?
Answer:
A. Current = 17,000, After Mary Ideas = 21,600
B. Current = 15% After Mary Ideas = 10%
C.
Current After Mary Ideas
Sales 800,000 912,000
Less Variable Costs (480,000) (576,000)
Contribution 320,000 336,000
Less Fixed Costs (272,000) (302,400)
Net Income/(Loss) 48,000 33,600
Conclusion :
No will not make the changes
Because they result in decrease in net income by $14,400
Explanation:
A: Compute the current break-even point in units
Current
break-even point in units = Fixed Costs / Contribution per unit
= $272,000 / ($40 - $24)
= 17,000 pairs of shoes
Mary ideas
break-even point in units = Fixed Costs / Contribution per unit
= ($272,000 + $30,400) / ($38 - $24)
= 21,600 pairs of shoes
B: Compute the margin of safety ratio
Current
margin of safety ratio = Expected Sales - Break even Sales / (Expected Sales)
= (20,000 - 17,000) / 20,000
= 15%
Mary Ideas
margin of safety ratio = Expected Sales - Break even Sales / (Expected Sales)
= (24,000 - 21,600) / 24,000
= 10%
In large high rise condominiums, each unit is owned by individual owners. The elevators, parking garage, and swimming pool are called: A. proprietary elements B. common area elements C. separate property D. community property
Answer:
B. common area elements
Explanation:
Common Area elements are those spaces in real estate that are meant for general use. They are not owned exclusively by one person but are rather shared by the people who live within the area. The people pay some maintenance fee to keep the common area elements in good conditions.
In condominiums, the elevators, parking garage, and swimming pools are collectively shared by residents, and they all pay for the maintenance of these properties. Therefore, they can be said to be Common Area elements. Common Area elements can be found in residential, business and Government-owned properties.
Answer:
B. common area elements
Explanation:
-Proprietary elements refer to something that has a trademark or it is protected by property rights and can only be used or sold by the owner.
-Common area elements refer to the parts of a condominium that can be used by all the people living there and that belong to all the owners.
-Separate property refers to a property that people get before marriage and doesn't count as part of the marital property.
-Community property refers to property purchased during marriage that is considered marital property.
According to this, the answer is that the elevators, parking garage, and swimming pool are called common area elements.
2. The managerial grid only provides a framework for conceptualizing leadership
style
A True
B False
Answer:
The correct answer to the following question will be "True".
Explanation:
The managerial or management design model or principles seems to be a self-assessment tool that allows people and communities to probably decide the aesthetic of a manager or supervisor.This proposed model described 5 various types of leadership styles premised on compassion for individuals and concern for manufacturing.So that the given statement is true.
As the information technology advances and consumers buy products requiring more and more technology, the wages of people with high level programming and other technical skills would a. increase as the supply of high tech skills increases. b. increase as the demand for high tech skills increases. c. not be affected by consumers’ purchases d. decrease as the supply of high tech skills increases.
Answer:
b. increase as the demand for high tech skills increases.
Explanation:
Due to the fact that the demand for technological products is increasing, the demand for people who possess high tech skills would also increase as firms would want to provide more tech products to satisfy the demand of consumers.
This would lead to an increase the demand for people with high tech skills. When demand exceeds supply, wages would rise.
I hope my answer helps you
A consumer expenditure survey reports the following information on consumer protein spending:201820192020PQPQPQFish$2.001000$2.501200$3.00900Beef$5.0050$4.0075$6.00100Rent$800.00100$850.0075$900.00105Car$20,000.0050$18,000.0048$22,000.0060Movie$8.00160$10.00180$10.00200Sugar$3.002000$2.002100$2.501800Hamburger$4.00200$4.50250$3.50300a.Using 2018as the base year, by how much does a "cost of living" index increase between 2018and 2019; 2018 and 2020; and 2019 and 2020
Answer:
(a) "Cost of living" index decrease by 14.42% between 2018 and 2019.
(b) "Cost of living" index increase by 30.73% between 2018 and 2020.
(c) "cost of living" index increase by 45.05% between 2018 and 2020.
Explanation:
Note: See the attached excel file for the calculations of the "cost of living" index for eash of 2018, 2019, and 2020 using 2018 as the base year.
(a) by how much does a "cost of living" index increase between 2018 and 2019.
Cost of living index in 2018 = 100%
Cost of living index in 2019 = 85.68%
Increase (decrease) in cost of living index = Cost of living index in 2019 - Cost of living index in 2018 = 85.68% - 100% = (14.42%)
Therefore, "cost of living" index decrease by 14.42% between 2018 and 2019.
(b) by how much does a "cost of living" index increase between 2018 and 2020.
Cost of living index in 2018 = 100%
Cost of living index in 2020 = 130.73%
Increase (decrease) in cost of living index = Cost of living index in 2020 - Cost of living index in 2018 = 130.73% - 100% = 30.73%
Therefore, "cost of living" index increase by 30.73% between 2018 and 2020.
(c) by how much does a "cost of living" index increase between 2019 and 2020
Cost of living index in 2019 = 85.68%
Cost of living index in 2020 = 130.73%
Increase (decrease) in cost of living index = Cost of living index in 2020 - Cost of living index in 2018 = 130.73% - 85.68% = 45.05%
Therefore, "cost of living" index increase by 45.05% between 2018 and 2020.
Consider how Hunter Valley, a popular ski resort, could use capital budgeting to decide whether the $9 million River Park Lodge expansion would be a good investment.
Assume that Hunter Valley uses the straight-line depreciation method and expects the lodge expansion to have a
Assume that Hunter Valley's managers developed the following estimates concerning a planned expansion to its River Park Lodge(all numbers assumed):
Number of additional skiers per day 122
Average number of days per year that weather
conditions allow skiing at Flint Valley 162
Useful life of expansion (in years) 9
Average cash spent by each skier per day $245
Average variable cost of serving each skier per day $142
Cost of expansion $9,000,000
Discount rate 12%
residual value of $500,000 at the end of its nine-year life. Requirement 1. Compute the average annual net cash inflow from the expansion. 2. Compute the average annual operating income from the expansion. First enter the? formula, then compute the average annual operating income from the expansion.? (Round your answer to the nearest? 3. Compute the payback period. 4. Compute the ARR.
Answer:
1.$2,035,692
2.$1,091,248
3.8.24 years
4.22.97%
Explanation:
Hunter Valley
1. Computation for the average annual net cash inflow from the expansion.
Formula for Average annual net cash inflow from operation
= Numbers of skiers day * Contribution margin per skier
(122*162) * ($245 - $142)
=19,764*$103
= $2,035,692
2.Computation for the average annual operating income from the expansion
Formula for Average annual operating income from expansion
= Annual cash inflow - Depreciation
= $2,035,692 - ($9,000,000 - $500,000) / 9
= $2,035,692-$8,500,000/9
$1,091,248
3.Computation for the Payback period
Payback period = Initial investment / Annual cash inflows
= $9,000,000 / $1,091,248
= 8.24 years
4.Computation for the ARR
ARR = Average annual income / Average investment
Hence:
Average investment = (Cost +Residual value) / 2
= ($9,000,000 +$500,000) / 2
=$9,500,000/2
= $4,750,000
ARR = $1,091,248 / $4,750,000
=0.2297×100
= 22.97%
Bartman, Corp. observes that the Swiss franc (SF) is quoted at $0.6164/SF, while the Swedish krona (SK) is quoted at $0.1981/SK. What is the SK/SF cross rate? (Round your final answer to four decimal places.
Answer: SK is 3.1116/SF
Explanation:
If 1 Franc = $0.6164 and 1 krona = $0.1981 then the expression can be also be expressed as,
1 Franc = 1 krona
$0.6164 = $0.1981.
Then if,
0.6164 = 0.1981
What is 1 Krona in terms of a Franc
0.6164 : 0.1981
x : 1
0.1981x = 0.6164
x = 0.6164 / 0.1981
x = 3.11155981827
x = 3.1116
This means that 1 krona is 3.1116 Franc or,
SK is 3.1116/SF
Journalize the entries to record the following:
Check is issued to establish a petty cash fund of $750.
The amount of cash in the petty cash fund is now $176.
Check is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $248; miscellaneous selling expense, $212; miscellaneous administrative expense, $96. (Because the amount of the check to replenish the fund plus the balance in the fund do not equal $750,
Record the discrepancy in the cash short and over account.) .
a. Journalize the entry to establish the petty cash fund.
b. Journalize the entry to replenish the petty cash fund.
Answer: Please see below
Explanation:
a. Journal to record the entry to establish the petty cash fund.
Account Particulars Debit Credit
Petty Cash $750
Cash $750
b. Journal to record the entry to replenish the petty cash fund.
Account Particulars Debit Credit
Office Supplies $248
Misc Selling Expense $212
Miscellaneous administrative expense, $96.
Cash Short and Over $18
Cash $574
To calculate Cash Short and Over= $750-(248+212+ 96)= 750 -556= $194
but the money in the pettycash fund On April 1 is $212.
therefore Cash short and over = $212-$194 = $18
Operating data for Martinez Corp. are presented below. 2022 2021 Sales revenue $842,600 $639,100 Cost of goods sold 529,000 410,400 Selling expenses 123,900 76,300 Administrative expenses 73,000 52,400 Income tax expense 37,700 23,100 Net income 79,000 76,900 Prepare a schedule showing a vertical analysis for 2022 and 2021
Answer:
Martinez Corp.
Schedule showing a vertical analysis for 2022 and 2021:
2022 % 2021 %
Sales revenue $842,600 100 $639,100 100
Cost of goods sold 529,000 62.8 410,400 64.2
Gross Profit 313,600 37.2 228,700 35.8
Selling expenses 123,900 14.7 76,300 11.9
Administrative expenses 73,000 8.7 52,400 8.2
Income before Taxes 189,700 22.5 100,000 15.6
Income tax expense 37,700 4.5 23,100 3.6
Net income 79,000 9.4 76,900 12
Explanation:
a) Vertical analysis is a method of analyzing financial statements in which each line item is listed as a percentage of a base figure within the statement. Usually, the base figure used is the Sales Revenue for the Income Statement and Total Assets for the Balance Sheet.
b) The formulas for the Vertical Analysis are as follows:
Vertical Analysis formula = Individual Item / Base Amount *100
i) Vertical Analysis Formula (Income Statement) = Income Statement Item / Total Sales * 100.
ii) Vertical Analysis Formula (Balance Sheet) = Balance Sheet Item / Total Assets (Liabilities) * 100.
Solomon Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow: Basco Boards Shimano Boards Production costs Direct materials $ 25.40 $ 38.80 Direct labor $ 31.40 $ 53.80 Allocated overhead $ 15.70 $ 20.80 Total units produced and sold 5,400 9,400 Total sales revenue $ 491,400 $ 1,259,600 Solomon allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $61,000 per quarter, to the two products equally. Required Compute the per-unit cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Compute the profit for each product.
Answer:
The Basco per unit cost is $5.65
The Shimano per unit cost is $3.24
The profit of Basco is $99,900. The profit of Shimano is $193,640
Explanation:
In order to calculate the per-unit cost for each product we would have to make the following calculations according to the given data:
Basco boards Shimano boards
Direct material $25.40 $38.80
Direct labor $31.40 $53.80
Allocated overhead $15.70 $20.80
Delivery expenses and sales commission $5.65 $3.24
Unit cost $78.15 $116.64
Allocation of delivery expenses and sales commission on an equal basis = $61,000 / 2 = $30,500.
Basco per unit cost = $30,500 / 5,400 = $5.65
Shimano per unit cost = $30,500 / 9,400 = $3.24
To calculate the profit for each product we would have to make the following calculations:
Basco Shimano
Sales $491,400 $1,259,600
Cost of goods sold $391,500 (5,400 * 72.5) $1,065,960 (9,400 * 116.64)
Profit $99,900 $193,640
Russ and Linda are married and file a joint tax return claiming their three children, ages 4, 7, and 18, as dependents. Their adjusted gross income for 2019 is $415,300. What is Russ and Linda's total child and other dependent credit for 2019?
Answer:
$3,700
Explanation:
Given that
Adjusted gross income for the year 2019 = $415,300
Children ages = 4, 7, and 18 as dependents
Based on the given information, Russ and Linda's total child and other dependent credit for the year 2019 is
= (Maximum amount per qualifying child + non-refundable tax credit) - (deductible amount × age)
= ($2,000 × 2 + $500) - ($50 × 16)
= $4,500 - $800
= $3,700
After $400,000 the $50 is decreased for each and every $1,000
Fallon Osmond is chairperson of the board of Simple Treats, Inc. Suppose Osmond has just founded Simple Treats, and assume that she considers her home and other personal assets as part of Simple Treats. Answer these questions about the evaluation of Simple Treats, Inc 1. Which accounting assumption governs this situation? assumption gve Osmond and others a realistic view of Simple Treats, Inc? Explain in detail 2. How can the proper application of this 1. Which accounting assumption governs this situation? The entity assumption applies The entity assumption The going-concern assumption The stable-monetary-unit assumption
Answer:
The correct answer will be "The entity assumption ". The further explanation is given below.
Explanation:
The entity hypothesis or assumptions that are also considered separate legal entity hypothesis claims that a corporation is regarded as something of an autonomous organization.Therefore a separate entity that has it's own finance importance and position that would be independent of the legislature as well as any company data is separated from its owner's accounts.So that the above is the right answer.
Scratch Miniature Golf and Driving Range Inc. was opened on March 1 by Scott Verplank. The following selected events and transactions occurred during March. Mar. 1 Invested $50,000 cash in the business in exchange for common stock. 3 Purchased Michelle Wie's Golf Land for $38,000 cash. The price consists of land $10,000, building $22,000, and equipment $6,000. (Make one compound entry). 5 Advertised the opening of the driving range and miniature golf course, paying advertising expenses of $1,600. 6 Paid cash $1,480 for a one‐year insurance policy. 10 Purchased golf equipment for $2,500 from Singh Company, payable in 30 days. 18 Received golf fees of $1,200 in cash. 25 Declared and paid a $500 cash dividend. 30 Paid wages of $900. 30 Paid Singh Company in full. 31 Received $750 of fees in cash.Scratch uses the following accounts: Cash, Prepaid Insurance, Land, Buildings, Equipment, Accounts Payable, Common Stock, Dividends, Service Revenue, Advertising Expense, and Salaries and Wages Expense. Instructions: Journalize the March transactions.
Answer and Explanation:
The Journal entry is shown below:-
1. Cash Dr, 50,000
To Common Stock 50,000
(Being issuance of common stock is recorded)
2. Land Dr, 10,000
Buildings Dr, 22,000
Equipment Dr, 6,000
To Cash 38,000
(Being fixed assets is recorded)
3. Dr. Advertising Expense Dr, 1,600
To Cash $1,600
(Being advertisement expenses is recorded)
4. Prepaid Insurance Dr, $1,480
To Cash $1,480
(Being prepaid insurance is recorded)
5.Equipment Dr, $2,500
To Accounts Payable $2,500
(Being purchase of equipment is recorded)
6. Cash $1,200
To Service Revenue $1,200
(Being service revenue is recorded)
7. Dividends Dr, $500
To Cash $500
(Being dividend is recorded)
8. Salaries and Wages Expense Dr, $900
To Cash 900
(Being salaries and wages expenses is recorded)
9. Accounts Payable Dr, 2,500
To Cash 2,500
(Being accounts payable is recorded)
10. Cash Dr, $750
To Service Revenue $750
(Being service revenue is recorded)
Darian and Ivan have been friends since college. They started a limousine rental business from scratch in Philadelphia. They are now contemplating opening an additional location for their business in Baltimore. They have crunched the numbers and discover it would mean adding $2 million more in expenses, and their profit would increase by $250,000 each year for the next 5 years (all other things equal). Darian and Ivan decide
Answer: c) to not open in a new city because the marginal costs prove to be too high.
Explanation:
This decision depends on if the new location will be worth the investment of $2,000,000 put into it. To check whether it will be worth it, the total Revenue expected over the amount of time that the location would be making revenue should be added up. If the sum is greater than $2 million then it is a viable Investment. If it is not, it should not be picked.
The prospective location is estimated to be able to add $250,000 per year in revenue over 5 years.
In 5 years that means
= 250,000 * 5
= $1,250,000 would be made in revenue.
This Revenue of $1,250,000 is far short of the $2 million that will be added in Expenses and so the Investment is not viable.
Darian and Ivan should not open in the new city because the Marginal Cost of Investment is too high to be covered by the Marginal Revenue.
A Canadian subsidiary of a U.S. parent firm is instructed to bill an export to the parent in U.S. dollars. The Canadian subsidiary records the accounts receivable in Canadian dollars and notes a profit on the sale of goods. Later, when the U.S. parent pays the subsidiary the contracted U.S. dollar amount, the Canadian dollar has appreciated 10% against the U.S. dollar. In this example, the Canadian subsidiary will record a
Answer:
10% foreign exchange loss on the U.S. dollar accounts receivable
Explanation:
Based on the information provided within the question it can be said that in this example the Canadian subsidiary will record a 10% foreign exchange loss on the U.S. dollar accounts receivable. That is because as the Canadian dollar has appreciated 10% against the U.S. dollar, it means that it has lost 10% of it's buying power due to its foreign exchange price change, thus resulting in a loss which needs to be recorded.
Identify the correct statement regarding reasonable accommodation.
A. Reasonable accommodation is typically provided in situations involving individuals with disabilities or different religious needs.
B. Reasonable accommodation is the same as reverse discrimination.
C. Reasonable accommodation exclusively compensates for the poor educational background that hampers the progress of employees.
D. Reasonable accommodation is provided by an organization even if the requisite changes create undue hardship on the organization.
E. Reasonable accommodation is provided on a homogeneous basis without the provisions being tailored to the individual needs of employees.
Answer:
A. Reasonable accommodation is typically provided in situations involving individuals with disabilities or different religious needs.
Explanation:
Reasonable accommodation is typically provided in situations involving individuals with disabilities or different religious needs.
For instance, in an organization having employees with disabilities, reasonable accommodations usually varies depending on the needs of these individuals. A person with special needs or disabilities may provide his or her own accommodation, which is necessary that employer allows. Also, in some cases, the accommodation may be provided by the employer based on equal employment opportunity rights.
Under employment law, reasonable accommodations refers to an employer's obligation to ensure employees with disabilities are provided with assistance that would enable them perform their duties efficiently and effectively.
Examples of reasonable accommodations are modified work schedules, job or policy restructuring, interpretations, modifications of equipment and training materials.
An insurance company must pay liabilities of 99 at the end of one year, 102 at the end of two years and 100 at the end of three years. The only investments available to the company are the following three bonds. Bond A and Bond C are annual coupon bonds. Bond B is a zero-coupon bond.
Bond Maturity (in years) Yeild to Maturity(Annualized) Coupon Rate
A 1 6% 7%
B 2 7% 0%
C 3 9% 5%
All three bonds have a par value of 100 and will be redeemed at par. Calculate the number of units of Bond A that must be purchased to match the liabilities exactly
a. 0.8807
b. 0.8901
c. 0.8975
d. 0.9524
e. 0.9724
Answer:
The correct answer is option (a) 0.8807
Explanation:
Solution
Given that:
We start from the liability of bond in 3 years.
Thus, the $100 liability can be an offset by Bond C.
The cash flow of Bond C and the payment of final coupon in year 3 is given as:
100 + (5%*100) = 105
Now,
the number of Bond C which will offset a liability of $100 which is = 100/105 = 0.9524 (All cash flows of Bond C is multiplied by this)
So, the remaining liability becomes
Time Liabilities cash flow Cash flow from Bond C Remaining liabilities
1 99 4.76 94.24
2 102 4.76 97.24
3 100 100.00
Thus,
The year 2 liability offset is $97.24
For Bond B, this can be the offset which contains a cash flow of $100 (which is a zero coupon bond)
The Bond number which are required for this offset is = 97.24/100 =0.974
The remaining cash flow is computed as follows:
Time = 1 ,2, 3
Liabilities cash flow = 99, 102, 100
Cash flow from Bond C =4.76, 4.76. 100.00
Remaining liabilities = 94.24, 97.24
Cash flow from Bond B = 0, 97.24
Remaining liabilities = 97.24
What this suggest is that The Bond A has to offset at approximately $94.24 in year 1.
The Cash flow from Bond A = 100 + (7%*100) = 107
Hence,
The number of Bond A's needed = 94.24/107 = 0.8807
The HNH Corporation will pay a constant dividend of $ 2.00$2.00 per share, per year, in perpetuity. Assume all investors pay a 20 %20% tax on dividends and that there is no capital gains tax. Suppose the other investments with equivalent risk to HNH stock offer an after-tax return of 12 %12%. a. What is the price of a share of HNH stock? b. Assume that management makes a surprise announcement that HNH will no longer pay dividends but will use the cash to repurchase stock instead. What is the price of a share of HNH stock now?
Answer:
a. The price of a share of HNH stock is $13.33 per share
b. The price of a share of HNH stock now is $16.66 per share
Explanation:
a. According to the given, in order to calculate the price of a share of HNH stock we would have to use the following formula:
Price of the stock = Constant Dividend * (1-T) / Required Return
Price of the stock= 2 * (1-.20)/0.12
Price of the stock= $13.33 per share
b. If management will not pay dividend but will use the cash to repurchase stock, so now the only change to the cash flows will be that there will be no tax. Share repurchase equals dividend per share without taxes.
Now, the price of the stock = 2 / 0.12 = $16.66 per share
At the end of the fiscal year, the following adjusting entries were omitted:
a. No adjusting entry was made to transfer the $1,750 of prepaid insurance from the asset account to the expense account.
b. No adjusting entry was made to record accrued fees of $525 for services provided to customers.
Assuming that financial statements are prepared before the errors are discovered, indicate the effect of each error, considered individually, by inserting the dollar amount in the appropriate spaces.
Answer:
The answers of the both parts are well explained below:
Explanation:
Part A.
The double entry to record the prepaid insurance would be:
Dr Insurance Expense $1750
Cr Prepaid Insurance $1750
Both prepaid insurance is a current asset which means that not decreasing the current asset at December 31 would overstate it by $1,750 and increase the profit by the same amount because the expenses are understated by $1750. It will also affect the tax calculated for the year.
Part B.
The double entry to record the expense that have been accrued, will be:
Dr Fees Accrued $525
Cr Fees Payable $525
Both the current liabilities and the expenses would be understated and would result in increase in the Profit which will increase the tax calculated.
On January 1, 2018, Earnest Company purchased equipment and signed a sixminusyear mortgage note for $ 80 comma 000 at 15%. The note will be paid in equal annual installments of $ 21 comma 139, beginning January 1, 2019. Calculate the portion of principal paid on the third installment. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
Answer:
$12,086
Explanation:
Mortgage installment payment includes the payment of interest on the outstanding balance of mortgage and Principal Payment. Principal payment is calculated by deducting the interest payment from total installment payment. Gradually the interest payment decreases as the outstanding balance of mortgage decreases and Principal payment increases.
First Payment
Installment = 21,139
Interest Payment = $80,000 x 15% = 12,000
principal Payment = $21,139 - 12000 = $9,139
Closing Balance of Mortgage = $80,000 - $9,139 = $70,861
Second Payment
Installment = 21,139
Interest Payment = $70,861 x 15% = $10,629
principal Payment = $21,139 - $10,629 = $10,510
Closing Balance of Mortgage = $70,861 - $10,510 = $60,351
Third Payment
Installment = 21,139
Interest Payment = $60,351 x 15% = $9,053
principal Payment = $21,139 - $9,053 = $12,086
Closing Balance of Mortgage = $60,351 - $12,086 = $48,265
Suppose that you hold a piece of land in the City of London that you may want to sell in one year. As a U.S. resident, you are concerned with the dollar value of the land. Assume that, if the British economy booms in the future, the land will be worth £2,000 and one British pound will be worth $1.40. If the British economy slows down, on the other hand, the land will be worth less, i.e., £1,500, but the pound will be stronger, i.e., $1.50/£. You feel that the British economy will experience a boom with a 60% probability and a slow-down with a 40% probability.
Required:
a. Estimate your exposure b to the exchange risk.
b. Compute the variance of the dollar value of your property that is attributable to the exchange rate uncertainty.
c. Discuss how you can hedge your exchange risk exposure and also examine the consequences of hedging.
Answer and Explanation:
(A) E(P) = (0.6) × ($2800) + (0.4) × ($2250)
= $1680+$900
= $2,580
E(S) = (0.6) × (1.40)+(0.4) × (1.5)
= 0.84 + 0.60
= $1.44
Var(S) = (0.6)(1.40 - 1.44)² + (.4)(1.50 - 1.44)²
= .00096+.00144
= 0.0024.
Cov(P,S) = (0.6)(2800-2580)(1.4-1.44) + (0.4)(2250-2580)(1.5-1.44)
= -5.28-7.92
= -13.20
b = Cov(P,S)/Var(S)
= -13.20/.0024
= -£5,500.
there is a negative exposure. as the pound gets stronger/weaker against the dollar the dollar value of british holding goes higher.
(B) b²Var(S) = (-5500)²(.0024) = 72,600($)²
(C). i would Buy 5,500 forward to hedge exchange risk exposure. By doing this, i can eliminate the volatility of the dollar value of your British asset that is due to the volatility of the exchange rate
An adjusting entry should never include Group of answer choices a debit to an expense account and a credit to a liability account a debit to an expense account and a credit to a revenue account a debit to a liability account and a credit to revenue account a debit to a revenue account and a credit to a liability account
Answer:
A debit to an expense account and a credit to a revenue account.
Explanation:
These are journal entries that makes accounting of a business to be properly arranged or said to be in order. Just like in the above sentence, it is should never include a debit to an expense account and a credit to a revenue account.
In certain scenarios, adjusting these journal entries are needed before the financial statements are been issued.
Sometimes when nothing has been inputed in the accounting records for an expenses or revenues in a period, but those expenses and/or revenues did occur and must be included in the current period's income statement and balance sheet. Also something has already been entered in the accounting records, but the amount needs to be divided up between two or more accounting periods.
Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number of Units Labor Hours Per Unit Machine Hours Per Unit Blinks 1,000 4 5 Dinks 2,000 2 8 All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $72,000. Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs. The single plantwide rate, if it is based on machine hours instead of labor hours, is a.$7.43 per machine hour b.$19.50 per machine hour c.$9.00 per machine hour d.$4.00 per machine hour
Answer:
OAR = $4 per machine hour
Explanation:
Plant wide overhead absorption rate (OAR)
= Estimated overhead/Estimated total machine hours
Estimated machine hours = (5 × 1000) +( 8× 2000) = 21,000 machine hours
OAR = $84,000/21,000 machine hour= $4 per machine hour
OAR = $4 per machine hour
Make-or-Buy Decision Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $24 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $8.00 Direct labor 12.00 Factory overhead (40% of direct labor) 4.80 Total cost per unit $24.80 If Somerset Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 25% of the direct labor costs.
a. Prepare a differential analysis dated April 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If an amount is zero, enter "0".
Answer:
Differential analysis as at April 30
Make (Alternative 1) Buy (Alternative 2)
Purchase Price $0.00 $24.00
Direct materials $8.00 $0.00
Direct labor $12.00 $0.00
Variable Costs - Case related $3.00 $0.00
Total Cost $23.00 $24.00
Conclusion
Company should make carrying cases instead of purchasing as this is cheaper by $1.00
Explanation:
There is a choice to be made between Make (Alternative 1) and Buy (Alternative 2). Compute the Total costs for these choices.
Ignore the fixed overheads as they are the same for both alternatives and hence irrelevant.
Choose the alternative with lower costs.
At the end of the quarter, a company did an adjusting entry to record $5,000 of depreciation on the fleet of automobiles used by the sales force. Which of the following items would be increased by this depreciation adjusting entry? (check all that apply)
a. Cost of Goods Sold
b. Cash from Operations
c. Total Assets
d. Retained Earnings
e. Depreciation Expense
Answer:
The answer is Option B and E which are Cash from operations and Depreciation expense
Explanation:
Solution
Given that:
The adjusted entry in recording depreciation is stated below:
Date Account Title Debit Credit
xxx Depreciation Expenses A/c 5,000
Accumulated Depreciation A/c 5,000
Thus,
The Accumulated depreciation will increase or goes higher
Depreciation is on Automobile used by the sales force, The administrative expenses with the selling General expenses will be increased.
Now, the Depreciation here is seen as a Non- Cash Expense, and much later it will be included back in Net Income for computing Cash From Operation, so Cash From Operations would also be increased.
Therefore, the following items that would increase are Cash From Operation, Accumulated Depreciation, Depreciation expense
In preparing a company's statement of cash flows for the most recent year, the following information is available: Loss on the sale of equipment Purchase of equipment Proceeds from the sale of equipment Repayment of outstanding bonds Purchase of treasury stock Issuance of common stock Purchase of land Increase in accounts receivable during the year Decrease in accounts payable during the year Payment of cash dividends $ 15,800 163,000 144,000 96,000 71,000 105,000 133,000 52,000 84,000 44,000 Net cash flows from investing activities for the year were:________ A. $136,200 of net cash used. B. $152,000 of net cash provided. C. $248,000 of net cash provided. D. $152,000 of net cash used. E. $288,000 of net cash used.
Answer:
Net cash flows from investing activities for the year were $152,000 of net cash used
Explanation:
According to given data, in order to calculate the Net cash flows from investing activities for the year we would have to calculate the following:
Cash Flow from investing activities= Purchase of equipment+ Proceeds from the sale of equipment-Purchase of land
Cash Flow from investing activities=-163,000+$144,000-$133,000
Cash Flow from investing activities=-$152,000
Net cash flows from investing activities for the year were $152,000 of net cash used
Happy Feet Shoe Company makes loafers. During the most recent year, Happy Feet incurred total manufacturing costs of $26, 100,000. Of this amount, $2, 100,000 was direct materials used and $19, 800,000 was direct labor. Beginning balances for the year were Raw Materials Inventory, $500,000; Work-in-Process Inventory, $1,000,000; and Finished Goods Inventory, $500,000. At the end of the year, balances were Raw Materials Inventory, $600,000; Work-in-Process Inventory, $1, 400,000; and Finished Goods Inventory, $920,000.
Requirements
Analyze the inventory accounts to determine:
1. Cost of raw materials purchased during the year.
2. Cost of goods manufactured for the year.
3. Cost of goods sold for the year.
4. Cost of raw materials purchased during the year.
Direct Materials
Direct Materials Used
Beginning Raw Materials Inventory
Ending Raw Materials Inventory
Purchases
Answer:
Instructions are below.
Explanation:
Giving the following information:
Manufacturing costs= $26,100,000
Direct materials used= $2,100,000
Direct labor= $19,800,000
Beginning inventory:
Raw Materials= $500,000
Work-in-Process= $1,000,000
Finished Goods= $500,000
Ending inventory:
Raw Materials= $600,000
Work-in-Process= $1, 400,000
Finished Goods= $920,000.
1) First, we need to calculate the raw materials purchased during the period:
Direct material used= beginning inventory + purchases - ending inventory
2,100,000= 500,000 + purchases - 600,000
2,200,000= purchases
2) We need to determine the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 1,000,000 + 26,100,000 - 1,400,000
cost of goods manufactured= $25,700,000
3) To calculate the cost of goods sold, we need to use the following formula:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 500,000 + 25,700,000 - 920,000
COGS= 25,280,000
"The owner of a small restaurant that sells take-out fried chicken and biscuits pays $2,500 in rent each month, $500 in utilities, $750 interest on his loan, insurance premium of $200, and advertising on local bus $250 a month. A small bucket of take-out chicken, the only menu item, is priced at $9.50. Unit variable costs for the bucket of chicken are $5.50. At what level of sales of dollars of revenue will the restaurant break-even
Answer:
Break-even point (dollars)= $9,976.25
Explanation:
Giving the following information:
Fixed costs:
Rent $2,500
Utilities $500
Interest $750
An insurance premium of $200
Advertising on local bus $250 a month
Total= $4,200
A small bucket of take-out chicken, the only menu item, is priced at $9.50. Unit variable costs for the bucket of chicken are $5.50.
To calculate the break-even point in dollars, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 4,200/ [(9.5 - 5.5)/9.5]
Break-even point (dollars)= 4,200/0.421
Break-even point (dollars)= $9,976.25
