Answer:
The answer is 13%
Explanation:
Solution
Recall that:
A stock sells for =$50
The next dividend is = $5 per share
The rate of return = 15%
Company reinvests a constant of =20%
What is the rate of discount = ?
Now
The first step is to calculate the rate of growth which is shown below:
g = equity return * retention rate
g = 15% * 0.2 = 3%
Thus,
The Gordon growth model is stated below:
Stock price = dividend in following year/ (discount - g)
So,
50 = 5/ (discount - g)
The discount - g = 5/50
Discount - g = 10%
The discount = 10 + 3 = 13%
Therefore the discount rate =13%
g "At the start of the current year, Minuteman Corporation had a credit balance in the Allowance for Doubtful Accounts of $3,500. During the year a monthly provision of 3% of sales was made for uncollectible accounts. Sales for the year were $1,110,000, and $7,200 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the year. The year-end financial statements should show:"
Answer: Allowance for the doubtful accounts with a credit balance of $29,600
Explanation:
From the information that is provided in the question, the following can be deduced and the year-end financial statements should show:
Allowance for the doubtful accounts with a credit balance will be calculated as: the beginning allowance for the doubtful accounts + (the sales × Provision % ) - accounts receivable that were written off.
= $3,500 + ($1,110,000 × 3%) - $7,200
= $3500 + $33300 - $7200
= $36800 - $7200
= $29,600
On January 1, Guillen Corporation had 91,500 shares of no-par common stock issued and outstanding. The stock has a stated value of $4 per share. During the year, the following occurred. Apr. 1 Issued 20,000 additional shares of common stock for $16 per share. June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30. July 10 Paid the $1 cash dividend. Dec. 1 Issued 1,000 additional shares of common stock for $20 per share. 15 Declared a cash dividend on outstanding shares of $4.10 per share to stockholders of record on December 31.
Prepare the entries to record these transactions. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
Apr. 1 Issued 20,000 additional shares of common stock for $16 per share.
Dr Cash 320,000 (= 20,000 x $16)
Cr Common stock 320,000
June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30.
Dr Retained earnings 42,875 (= 42,875 x $1)
Cr Dividends payable 42,875
July 10 Paid the $1 cash dividend.
Dr Dividends payable 42,875
Cr Cash 42,875
Dec. 1 Issued 1,000 additional shares of common stock for $20 per share.
Dr Cash 20,000 (= 1,000 x $20)
Cr Common stock 20,000
Dec. 15 Declared a cash dividend on outstanding shares of $4.10 per share to stockholders of record on December 31.
Dr Retained earnings 179,887.50 (= 43,875 stocks x $4.10)
Cr Dividends payable 179,887.50
Susan wants to prepare a presentation that will calculate the total cost of ownership for the system. What financial analysis tools are available to her, and what are the advantages (and possible disadvantages) of each tool
Personal Trainer, Inc. owns and operates fitness centers in a dozen Midwestern cities. The centers have done well, and the company is planning an international expansion by opening a new “supercenter” in the Toronto area. Personal Trainer’s president, Cassia Umi, hired an IT consultant, Susan Park, to help develop an information system for the new facility. During the project, Susan will work closely with Gray Lewis, who will manage the new operation. Background
During data and process modeling, Susan Park developed a logical model of the proposed system. She drew an entity-relationship diagram and constructed a set of leveled and balanced DFDs. Now Susan is ready to consider various development strategies for the new system. She will investigate traditional and Web-based approaches and weigh the pros and cons of in-house development versus other alternatives.
Susan wants to prepare a presentation that will calculate the total cost of ownership for the system.
What financial analysis tools are available to her, and what are the advantages (and possible disadvantages) of each tool?
Answer:
The answer is below
Explanation:
The financial tools available to her,
NPV: Net Present Value
1. It is the total value benefit minus the total value of the costs.
2. It adjusts the value of future costs and benefits to account for the time value of money.
3. The systems can be compared more accurately and consistently.
ROI: Return On Investment.
Advanatge
1. It is a % rate that compares total net benefits received from a project to the total costs of the project.
2. Companies set a minimum ROI that all projects must match or exceed.
3. Disadvantage of this tool is that it expresses only an overall average rate of the return. It is not accurate for a given time period
PAY BACK ANALYSIS
1. It determines the time it takes for an information system to pay for itself.
2. Total development and operating costs are compared with total benefits.
3. Disadvantage of this method is that pay back analyzes on costs and benefits incurred at the beginning of a system’s useful life.
A jeweler can potentially use two inputs in her handcrafted jewelry: copper or bronze. She finds that when she minimizes her costs, she either uses copper or bronze but not both. This means that copper and bronze are perfect substitutes and that her isoquant curve is right-angled.
Answer: straight lines that are parallel to each other
Explanation: Q: A jeweler can potentially use two inputs in her handcrafted jewelry: copper or bronze. She finds that when she minimizes her costs, she either uses copper or bronze but not both. What must her isoquants look like?
An isoquant curve is defined as a line of equal or constant economic production on a graph, chart or map which describes all the combinations of inputs that produce the same level of output. If the jeweler either uses copper or bronze but not both, it means that the copper and bronze are perfect substitutes, that is, they are two inputs that can be substituted for each other at a constant rate and at the same time maintaining the same output level. Her isoquants would appear as straight lines that are parallel to each other because all that matters is the sum of the two variables (copper and bronze), and not their individual values.
Division A does not have excess capacity to produce Product XX. The division can sell Product XX for $10 per unit outside the company. Variable costs are $6 per unit. Division B wants to purchase Product XX from Division A to use in Product ZZ. The selling price of Product ZZ is $25 per unit and variable costs to finish the product after the transfer are $12 per unit. An outside supplier will sell Product XX for $12 per unit. What is the minimum transfer price for Division A
Answer:
Minimum transfer price = $10
Explanation:
The Division A is operating at full capacity, hence it has no excess capacity
This implies that it can not produce enough to meet both the internal demand (from Division B) and external buyers.
Hence, it implies that Division A can not accommodate the demands of the Division B at a price lower than the external price of $10. Any price lower than $10 would result into a loss in contribution.
To maximize and optimize the group profit
Minimum transfer price = External selling price at which Division A can sell product XX
Minimum transfer price = $10
You are CEO of Rivet Networks, maker of ultra-high performance network cards for gaming computers, and you are considering whether to launch a new product. The product, the Killer X3000, will cost $900,000 to develop up front (year 0), and you expect revenues the first year of $790,000, growing to $1.43 million the second year, and then declining by 45% per year for the next 3 years before the product is fully obsolete. In years 1 through 5, you will have fixed costs associated with the product of $91,000 per year, and variable costs equal to 50% of revenues.
a. What are the cash flows for the project in years 0 through5?
b. Plot the NPV profile for this investment using discount rates from 0% to 40% in 10% increments.
c. What is the project's NPV if the project's cost of capital is 10.3%?
d. Use the NPV profile to estimate the cost of capital at which the project would become unprofitable; that is, estimate theproject's IRR.
Answer:
A)
year cash inflows cash outflows net cash flows
0 0 -900,000 -900,000
1 790,000 -486,000 304,000
2 1,430,000 -806,000 624,000
3 786,500 -484,250 302,250
4 432,575 -307,288 125,287
5 68,908 -125,454 -56,546
B)
NPV 0% discount rate = $398,991
NPV 10% discount rate = $169,613
NPV 20% discount rate = -$725
NPV 30% discount rate = -$130,712
NPV 40% discount rate = -$232,241
C)
NPV 10.3% discount rate = $163,760
D)
almost 20%, since the IRR is the discount rate where NPV = $0
Actual IRR = 19.95%
commission earned but not received is debit or credit?
The demand curve for the new computer game, Rock and Roll Trivia, is given as follows: Q = 200 - 5P - .1Pc - .5Pd + .2A - I Where P is the price of the game, Pc is the price of a computer, Pd is the price of a diskette, A is the level of advertising, and Q is the level of income. Suppose P = 10, Pc = 100, Pd = 2, A = 5, and I = 50. What is the price elasticity of demand?
Answer:
Income elasticity of demand = - 0.56
Explanation:
Given,
P=10, Pc=100, Pd=2, A=5, and I=50.
So,
Q=200-5(10)-.1(100)-.5(2)+.2(5)-(50).
Q=90 (level of income)
Computation:
Given , I = 50, Q = 90.
ΔQ / ΔI = -1
Income elasticity of demand = (ΔQ / ΔI) x (I / Q)
Income elasticity of demand = - 1 x (50 / 90)
Income elasticity of demand = - 0.56
Electra Company purchased $50,000 worth of office supplies on January 1. Electra expects to use 60 percent of the supplies in the first year and the remainder in the second year. How much should Electra show in its Supplies Expense account at the end of the first fiscal year (ending December 31st)
Answer:
$30,000
Explanation:
Data provided in the question
Purchase value of the office supplies = $50,000
Expected to use supplies in the first year = 60%
So expected to use supplies in the second year = 40%
Based on the above information, the supplies account balance at the end of the first fiscal year is
= Purchase value of the office supplies × Expected to use supplies in the first year
= $50,000 × 60%
= $30,000
We simply multiplied the purchased value with the expected supplies use in the first year so that the balance of the supplies for the first year could come
Prepare three income statements for the year assuming that revenue is to be recognized when:_________.
1. Crocodiles have been caught (i.e. production complete).
2. Crocodiles have been sold and delivered
3. Cash collections are complete
Answer:
3
Explanation:
The right answer is "cash collections are complete"
Revenue can only be recognized when the amount of earning of whole year completes basically it's the total amount of money which is earned by the customer and income is the profit which can be calculated by subtracting the revenue and what remains after the expenses.
Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 7 hours to process, Tales take 4 hours, and Wales take 1 hour. What is the contribution margin per machine hour for Bales
Answer:
$5/h
Explanation:
The contribution margin for Bales is ...
$55 -20 = $35
The machine hours for Bales is 7.
The contribution margin per machine hour is ...
$35/(7 h) = $5/h
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 11 years because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $13.75 per share 12 years from today and will increase the dividend by 5.5 percent per year thereafter. If the required return on this stock is 13.5 percent, what is the current share price
Answer:
$42.69
Explanation:
From the question above Metallica Bearings Inc. is expected to pay a dividend of $13.75 pet share for a period of 12 years
The dividend will increase by 5.5 percent per year
= 5.5/100
= 0.055
The required rate of return is 13.5 percent
= 13.5/100
= 0.135
The first step is to calculate the price at 11 years
Price at 11 years= 13.75/ 0.135-0.055
= 13.75/0.08
= $171.87
The next step in to find the current price by applying the following formular
Current share price= Future value/ (1+r)^n
= $171.875/ (1+0.135)^11
= $171.87/ 1.135^11
= $171.87/ 4.026
= $42.69
Current share price= $42.69
Hence the current share price is $42.69
Work Place Products Inc., a wholesaler of office products, was organized on July 1 of the current year, with an authorization of 50,000 shares of preferred 2% stock, $40 par and 750,000 shares of $7 par common stock. The following selected transactions were completed during the first year of operations:
Journalize the transactions.
a. July 1. Issued 400,000 shares of common stock at par for cash.
b. July. 1. Issued 1,000 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.
c. Aug. 7. Issued 80,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $250,000, $400,000, and $70,000, respectively. For a compound transaction, if an amount box does not require an entry, leave it blank.
d. Sept. 20. Issued 25,000 shares of preferred stock at $44 for cash. For a compound transaction, if an amount box does not require an entry, leave it blank.
Answer and Explanation:
The Journal entries are shown below:-
1. Cash Dr, $2,800,000 (400,000 × $7)
To Common stock $2,800,000
(Being issue of common stock is recorded)
Here we debited the cash as as it increased the assets and we credited the common stock as it also increased stockholder equity
2. Organisation expenses Dr, $7,000 (1,000 × $7)
To Common stock $7,000
(Being issue of common stock for organisation expenses is recorded)
Here we debited the organization expenses as it increased the expenses and we credited the common stock as it also increased stockholder equity
3. Land Dr, $250,000
Building Dr, $400,000
Equipment $70,000
To Common stock $560,000
To Paid in capital in excess of par value- Common stock $160,000
(Being exchange of common stock with Land, building and equipment is recorded)
Here we debited the land, building, equipment as it increased the assets and we credited the common stock and paid in capital in excess of par value as it also increased stockholder equity
4. Cash Dr, $1,100,000 (25,000 × $44)
To Preferred stock $1,000,000 (25,000 × $40)
To Paid in capital in excess of par value-preferred stock $100,000
(Being issue of preferred stock is recorded)
Here, we debited the cash as it increased the assets and we credited the preferred stock and paid in capital in excess of par value as it also increased stockholder equity
A scrambled list of accounts from the income statement and balance sheet of Belmond, Inc. is found here:
a. How much is the firm's net working capital?
b. Complete an income statement and a balance sheet for Belmond.
c. If you were asked to respond to parts (a) and (b) as part of a training exercise, what could you tell your boss about the company's financial condition based on your answers?"
Answer:
a. How much is the firm's net working capital?
net working capital = current assets - current liabilities = (cash + accounts receivable + inventory) - (accounts payable + short term notes payable) = ($16,540 + $9,580 + $6,450) - ($4,770 + $600) = $27,200
b. Complete an income statement and a balance sheet for Belmond.
Belmond Inc.
Income Statement
For the Year Ended December 31, 202x
Sales $12,830
Cost of goods sold ($5,790)
Gross Profit $7,040
Operating Expenses ($1,330)
General and Administrative Expense ($870)
Interest Expense ($920)
Depreciation Expense ($540)
Operating Income $3,380
Taxes ($1,460)
Net Income $1,920
Belmond Inc.
Balance Sheet
For the Year Ended December 31, 202x
ASSETS
Cash $16,540
Accounts Receivable $9,580
Inventory $6,450
Building and Equipment $122,110
Accumulated Dep. ($34,370)
TOTAL ASSETS $120,310
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $4,770
Short-Term Notes Payable $600
Long-Term Debt $55,230
Common Stock $44,900
Retained Earnings $14,810
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $120,310
c. If you were asked to respond to parts (a) and (b) as part of a training exercise, what could you tell your boss about the company's financial condition based on your answers?"
The financial condition of the company can be considered healthy, since its profit margin is almost 15%, although its debt to equity ratio is high = $60,600 / $59,710 = 101.5%. The company has too much debt, even though it makes enough money to pay its obligations.
"The Price King Auto Mall pays their sales staff by commission. They are paid a percent of the profit the dealership makes on each sold car. If the profit is $900 or less, the commission rate is 18%. If the profit is great than $900 and less than or equal to $1,500, the commission rate is 20% of the profit. If the profit is higher than $1,500, the rate is 25% of the profit. Jared sold a car that made a profit of $2500. What is the amount of commission he will receive
Answer:
$625
Explanation:
He made a profit of $2500 which is greater than $1500, so he would earn a 25% commmision
25% of $2500 = $625
I hope my answer helps you
The bookkeeper for Riverbed Company has prepared the following balance sheet as of July 31, 2017.
RIVERBED COMPANY
BALANCE SHEET
AS OF JULY 31, 2017
Cash $ 72,350 Notes and accounts payable $ 47,350
Accounts receivable (net) 43,850 Long-term liabilities 78,350
Inventory 63,350 Stockholders’ equity 158,850
Equipment (net) 84,000 $284,550
Patents 21,000
$ 284,550
The following additional information is provided.
1. Cash includes $1,200 in a petty cash fund and $12,050 in a bond sinking fund.
2. The net accounts receivable balance is comprised of the following two items: (a) accounts receivable $47,350 and (b) allowance for doubtful accounts $3,500.
3. Inventory costing $5,110 was shipped out on consignment on July 31, 2017. The ending inventory balance does not include the consigned goods. Receivables in the amount of $5,110 were recognized on these consigned goods.
4. Equipment had a cost of $115,350 and an accumulated depreciation balance of $31,350.
5. Income taxes payable of $6,000 were accrued on July 31. Riverbed Company, however, had set up a cash fund to meet this obligation. This cash fund was not included in the cash balance, but was offset against the income taxes payable amount.
Prepare a corrected classified balance sheet as of July 31, 2017, from the available information, adjusting the account balances using the additional information.
Answer: The answer has been attached
Explanation:
A balance sheet also referred to as the statement of financial position is a summary of financial balances of an organization.
Kindly note that in the attached diagram, an asset are the resources owned by the company which have future economic value while a liability is something that a person or a company owes usually a sum of money.
The solution has been attached.
Which of the following statements is CORRECT? a. The advantage of the basic earning power ratio (BEP) over the return on total assets for judging a company's operating efficiency is that the BEP does not reflect the effects of debt and taxes. b. The price/earnings (P/E) ratio tells us how much investors are willing to pay for a dollar of current earnings. In general, investors regard companies with higher P/E ratios as being more risky and/or less likely to enjoy higher future growth. c. Other things held constant, the less debt a firm uses, the lower its return on total assets will be. d. Suppose you are analyzing two firms in the same industry. Firm A has a profit margin of 10% versus a margin of 8% for Firm B. Firm A's total debt to total capital ratio is 70% versus 20% for Firm B. Based only on these two facts, you cannot reach a conclusion as to which firm is better managed, because the difference in debt, not better management, could be the cause of Firm A's higher profit margin.
Answer: The advantage of the basic earning power ratio (BEP) over the return on total assets for judging a company's operating efficiency is that the BEP does not reflect the effects of debt and taxes
Explanation:
a. This is correct.
The advantage of basic earning power ratio over the return on the total assets for judging a firm's operating efficiency is that the basic earning power does not reflect effects of debt and taxes.
b. This is incorrect.
Only the price/earnings ratio of the company will tell us nothing about a company. When we compare the price/earnings of a company with the peers, we would know whether such company is under valued, or over valued or maybe fairly valued.
c. This is incorrect.
The total assets is made up of total liabilities plus the shareholders equity, when other things are held constant, less debt simply means less liabilities. To balance both sides, the total assets should reduce as the shareholder's equity is constant. When total assets decreases, the return on the assets will increase.
d. This is incorrect.
We can reach a conclusion on which firm is better managed based on the facts given. The debt ratio is the total liabilities divided by total assets, and a lower ratio is known to be good in comparison to a higher ratio. Similarly, the profit margin is the profit divided by the sales, and low profit margin shows high expenses and also a need for the management to decrease the expense.
During the year, Lillie rented her vacation home for three months and spend one month there. Gross rental income from the property was $5,000. Lillie incurred the following expenses: mortgage interest, $3,000; real estate taxes $1,500; utilities, $800; and depreciation, $4,000. Compute Lillie's allowable deductions for the vacation home.
Answer:
$8,100
Explanation:
The home was rented for more than 14 days, you must pay taxes for the rental income
Since Lille used the house for more than 15 days herself, limits her deduction. The home cannot be treated as rental home nor personal use vacation home.
total days used = (30 x 3) + 30 = 120 days
rental days = 90/120 = 75% (this doesn't apply to mortgage interest nor real estate taxes, they are still 100% deductible)
mortgage interest and real estate taxes still qualify as personal expenses = $3,000 + $1,500 = $4,500
utilities and depreciation will be deducted only 75% = ($800 + $4,000) x 75% = $3,600
total deductions = $4,500 + $3,600 = $8,100
he credit union will have $1.6 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). Furniture loans plus other secured loans may not exceed the automobile loans. Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $1.6 million be allocated to each of the loan/investment alternatives to maximize total annual return
Here is the full question.
The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue producing investments together with annual rates of return are as follows:
Type of Loan/Investment Annual Rate of Return (%)
Automobile loans 8
Furniture loans 10
Other secured loans 11
Signature loans 12
Risk-free securities 9
The credit union will have $1.6 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments.
Risk-free securities may not exceed 30% of the total funds available for investment.
Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans).
Furniture loans plus other secured loans may not exceed the automobile loans.
Other secured loans plus signature loans may not exceed the funds invested in risk-free securities.
How should the $1.6 million be allocated to each of the loan/investment alternatives to maximize total annual return? Round your answers to the nearest dollar.
Automobile Loans $
Furniture Loans $
Other Secured Loans $
Signature Loans $
Risk Free Loans $
What is the projected total annual return? Round your answer to the nearest dollar.
$
Answer:
Explanation:
Let the amount invested in:
Automobile loans be Xa,
Furniture Loans be Xf,
Other Secured Loans be Xo,
Signature loans be Xs, &;
Risk-free loans be Xr
In reference on the Annual returns rate given;
Total annual returns = 8%×Xa + 10%×Xf + 11%×Xo + 12%×Xs + 9%×Xr
The various constraints given can be written as follows:
Xa + Xf + Xo + Xs + Xr = 1,600,000-----Constraint for amount available for investment
Xr = 30%*1,600,000 ----- Constraint for maximum risk free investment
Xs = 10%*(Xa + Xf + Xo + Xs) ----- Constraint for maximum amount in signature loans
Xf + Xo = Xa ------- Constraint for Furniture and other secured loans
Xo + Xs = Xr ------ Constraint for other secured loans and signature loans
Using the Excel Formula for solving this;
we have the following result.
Automobile Loans $ 504,000
Furniture Loans $ 136,000
Other Secured Loans $ 368,000
Signature Loans $ 112,000
Risk-Free Loans $ 480,000
The projected total annual return = $ 151,040
The computation of the excel formula on how we arrived at those valid figures above is shown in the attached files below.
Thanks!
The price of coffe beans use to make coffee has decreased. At the same time, the price of cream (a compliment good) has increased. Given these two effects, what will happen to the current equilibrium quantity and price of coffee?
A. Equilibrium quantity will increase, equilibrium price will increase.
B. Equilibrium price will increase; the effect on quantity is ambiguous.
C. Equilibrium quantity will decrease; the effect on price is ambiguous.
D. Equilibrium price will decrease; the effect on quantity is ambiguous.
Answer:
The correct answer is:
Equilibrium price will decrease; the effect on quantity is ambiguous. (D)
Explanation:
First, note that if the price of coffee beans, used in the manufacture of coffee decreases, the price of coffee sold to consumers will decrease, because it takes a lesser amount in manufacturing than it used to, therefore this reduction in manufacturing costs is reflected in the selling price.
Next, it is hard to tell whether this reduction in equilibrium price will affect quantity demanded, because, at the same time, the price of cream ( a complementary good) increases, and since both goods are complementary, they are bought together, and the effect of the reduction in the price of coffee might not necessarily caused an increase in the quantity demanded because this effect is cancelled out by the increase in the price of cream, hence the effect on quantity is ambiguous.
On November 1, Bahama National Bank lends $3.8 million and accepts a six-month, 6% note receivable. Interest is due at maturity. Record the acceptance of the note and the appropriate adjustment for interest revenue at December 31, the end of the reporting period. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)
Answer and Explanation:
The journal entries are shown below:
a. Note receivable Dr $3,800,000
To Cash $3,800,000
(Being the acceptance of the note is recorded)
For recording this we debited the note receivable as it increased the assets and credited the cash as it decreased the liabilities
b. Interest receivable Dr $38,000
To Interest revenue $38,000
(Being the interest revenue is recorded)
For recording this we debited the interest receivable as it increased the assets and credited the interest revenue as it increased the revenue
The computation is shown below:
= $3,800,000 × 6% × 2 months ÷ 12 months
= $38,000
,
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2018, net credit sales totaled $5,800,000, and the estimated bad debt percentage is 1.40%. The allowance for uncollectible accounts had a credit balance of $55,000 at the beginning of 2018 and $46,500, after adjusting entries, at the end of 2018. Required: 1. What is bad debt expense for 2018 as a percent of net credit sales
Answer:
Bad debt expense for 2018 is $81,200
Explanation:
2018 net credit sales = $5,800,000
Estimated bad debt percentage = 1.40%.
The allowance for uncollectible accounts had a credit balance of $55,000 at the beginning of 2018 and $46,500, after adjusting entries, at the end of 2018.
Bad debt expense = Estimated bad debt percentage × net credit sales
= 1.40% × $5,800,000
= $ 81,200
Leonard Technologies invests $ 62,000 to acquire $ 62,000 face value, 8%, fiveminusyear corporate bonds on December 31, 2014. The bonds will mature on December 31, 2019. The bonds pay interest semiannually on December 31 and June 30 every year until maturity. Assume Leonard Technologies uses a calendar year. Based on the information provided, which of the following will be included in the journal entry for the transaction on December 31, 2018?
a. a debit to Interest Revenue for $5,400
b. a credit to Interest Revenue for $2,700
c. a debit to Interest Revenue for $2,700
d. a credit to Interest Revenue for $5,400
Answer:
Find attached correct question that matches the options provided in this question:
The correct option is B, a credit to Interest Revenue for $2,700
Explanation:
The semiannual coupon interest receivable from the bond investment is the face value of $54,000 multiplied by 10% adjusted to reflect a six month revenue rather than a year a shown below:
semiannual interest receipt=$54,000*10%*6/12=$2,700
The $2,700 would be debited to cash as an income while also being credited to interest revenue ,hence option B is correct
g The model of aggregate demand and aggregate supply explains the relationship between a. the price and quantity of a particular good. b. unemployment and output. c. wages and employment. d. real GDP and the price level.
Answer:
The correct answer is the option D: real GDP and the price level.
Explanation:
To begin with, the "model of aggregate demand and aggregate supply" is the name given to an economy model created by John Keynes many years ago and whose main purpose is to show in a graphic the existing relationship established by Keynes between the price level and the production level. Therefore that, as it is known, the GDP comprehends the production level in this model and it is used in order to try to predict the possible effects that some external factors may have in both the real GDP and the price level.
Answer:
The correct answer is (A)
Explanation:
The model of aggregate demand and aggregate supply explains the relationship between the price of a good and the quantity of same good.
What do we mean by quantity? Quantity here could be quantity demanded or quantity supplied.
The model of Aggregate Demand explains how price of a good affects the general or aggregate demand for that goods and how demand in turn affects price. The law of demand states that, all other things being equal, the higher the price of a good, the lower the quantity demanded of that good and vice versa.
The model of Aggregate Supply explains how the price of a good affects the quantity supplied and the law of supply states that if there's an increase in the price of a good, producers will be encouraged to supply more and vice versa; ceteris paribus!
For the other options, there are macro theories or models that explain them.
Fleet Delivery Corporation is a public company with a market capitalization of less than $75 million. Fleet is poised to issue securities in a transaction that, under the Securities Act of 1933, is "exempt." This enables Fleet to ______________.
Answer:
This enables Fleet to reduce costs of regulatory compliance in relation to the security issue
Explanation:
When a company is exempt under the Securities Act of 1993,this implies that when issuing securities in the market place,the stock exchange ,the company is not required to produce audited financial statements.
Auditing financial statements sometimes cost fortunes especially when it is also required that one of the Big-4 professional firms is to be consulted.
By not requiring audited financials,the costs of audit is saved,hence cost of compliance with exchange rules is reduced overall
The assumptions of the production order quantity (EPQ) model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 20 and the daily production rate is 100. What is the optimal order and setup cost?
A) 139.B) 174.C) 184.D) 365.E) 548.
Answer:
C) 184
Explanation:
Options are inconsistent with data given.
Optimal Order is the level of order that is made to keep the setup cost to a minimum level.
It can be calculated by using following formula.
EPQ = [tex]\sqrt{\frac{2 X K X D}{h X ( 1 - x )}}[/tex]
K = Setup Cost = $50
D = Annual demand = 3,650 units
h = Holding cost = $12
x = daily demand rate/ daily production rate = 20 / 100 = 0.2
Placing values in the formula
EPQ = [tex]\sqrt{\frac{2 X 50 X 3650}{12 X ( 1 - 0.2 )}}[/tex]
EPQ = 194.99 units = 195 units
Answer according to correct data
Question
The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. The production order quantity for this problem is approximately
Answer
Options are inconsistent with data given.
Optimal Order is the level of order that is made to keep the setup cost to a minimum level.
It can be calculated by using following formula.
EPQ = [tex]\sqrt{\frac{2 X K X D}{h X ( 1 - x )}}[/tex]
K = Setup Cost = $50
D = Annual demand = 3,650 units
h = Holding cost = $12
x = daily demand rate/ daily production rate = 10 / 100 = 0.1
Placing values in the formula
EPQ = [tex]\sqrt{\frac{2 X 50 X 3650}{12 X ( 1 - 0.1 )}}[/tex]
EPQ = 183.84 units = 184 units
Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $30 each. His total cost each day is $320, of which $70 is a fixed cost. He mows 10 lawns a day. In the short run, Bob should____________ . In the long run, Bob should__________ the industry.
Answer:
In the short run, as long as the contribution margin is positive he should continue in the industry. In the long run, if the company keeps losing money, he should leave the industry.
Explanation:
Giving the following information:
Bob mows lawns for $30 each. His total cost each day is $320, of which $70 is a fixed cost. He mows 10 lawns a day.
First, we need to calculate the unitary variable cost:
Total variable cost= 320 - 70= 250
Unitary varaible cost= 250/10= $25
Contribution margin= 30 - 25= $5
In the short run, as long as the contribution margin is positive he should continue in the industry. In the long run, if the company keeps losing money, he should leave the industry.
When the government sets an effective price floor suppliers are helped and consumers are helped. suppliers are hurt and consumers are helped. suppliers are helped and consumers are hurt. This is an incorrect answer. Have a nice day! supply increases due to the increase in price.
Answer:
suppliers are helped and consumers are hurt.
Explanation:
A price floor is when the government or an agency of the government sets the least price a good or service can be purchased.
A price floor is usually set above equilibrium price. As a result, the profit earned by sellers increase while the good becomes more expensive for consumers.
I hope my answer helps you
Bramble Corp. is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6300000 on March 1, $5270000 on June 1, and $8950000 on December 31. Bramble Corp. borrowed $3180000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year, $6380000 note payable and an 11%, 4-year, $12550000 note payable. What amount of interest should be charged to expense? $7850132 $1088532 $2010500 $1470132
Answer:
$1,470,132
Explanation:
Expenditures:
March 1, $6,300,000
June 1, $5,270,000
December 31, $8,950,000
the weighted average interest rate:
$6,380,000 x 10% = $638,000
$12,550,000 x 11% = $1,380,500
total debt = $18,930,000
total interest = $2,018,500
weighted average interest rate = $2,018,500 / $18,930,000 = 10.663%
weighted average accumulated expenditures:
March 1, $6,300,000 x 10/12 = $5,250,000
June 1, $5,270,000 x 7/12 = $3,074,167
December 31, $8,950,000 x 0/12 = $0
total = $8,324,167
interests on the specific loan = $3,180,000 x 12% = $381,600
interests on remaining expenditures = ($8,324,167 - $3,180,000) x 10.663% = $548,520
total interest capitalized = $930,120
total interest expensed = total interests on other loans - interests capitalized on remaining expenditures = $2,018,500 - $548,520 = $1,469,980 ≈ $1,470,132 which we can match to the nearest option due since during the procedure we rounded a couple of times.
Omaha Beef Co. purchased a delivery truck for $50,000. The residual value at the end of an estimated eight-year service life is expected to be $10,000. The company uses straight-line depreciation for the first six years. In the seventh year, the company now believes the truck will be useful for a total of 10 years (four more years), and the residual value will remain at $10,000. Calculate depreciation expense for the seventh year.
Answer:
2500
Explanation:
First depreciate for 6 years using regular method: (Cost - Salvage Value)/Initial Useful life
(50,000-10,000)/8 = 5000 <- this is annual depreciation
For 6 years, $30,000 accumulated depreciation
Now to calculate change in useful life, you do (Cost - Accumulated Depreciation - Salvage Value)/Remaining Useful life
Remaining Useful life = 10-6 = 4
(50,000-30,000-10,000)/4 = 2500
