Answer:
See the journal entries with narration below.
Explanation:
a. For the first set of transactions, the journal entries will look as follows:
Date Details Dr ($) Cr ($)
April 1 Account Receivable - J. Dobbs 6,800
Sales 6,800
To record sale of merchandising on account to Jim Dobbs.
April 1 Cost of goods sold 6,700
Inventory 6,700
To record cost of goods sold to Jim Dobbs.
June 10 Cash 1,400
Allow. for doubtful acct. (B. debt) 5,400
Account Receivable - J. Dobss 6.800
To record cash receipt J. Dobbs and amount written off.
Oct. 11 Account Receivable - J. Dobbs 5,400
Allowance for doubtful accounts 5,400
To reinstate Jim Dobbs' account receivable.
Oct. 11 Cash 5,400
Account Receivable 5,400
To record cash received from Jim Dobbs' in full.
b. For the first set of transactions, the journal entries will look as follows:
Date Details Dr ($) Cr ($)
April 1 Account Receivable - J. Dobbs 7,200
Sales 7,200
To record sale of merchandising on account to Jim Dobbs.
April 1 Cost of goods sold 5,400
Inventory 5,400
To record cost of goods sold to Jim Dobbs.
June 10 Cash (1/3 * 7,200) 2,400
Allow. for doubtful acct. (B. debt) 4,800
Account Receivable - J. Dobss 7,200
To record cash receipt J. Dobbs and amount written off.
Oct. 11 Account Receivable - J. Dobbs 4,800
Allowance for doubtful accounts 4,800
To reinstate Jim Dobbs' account receivable.
Oct. 11 Cash 4,800
Account Receivable 4,800
To record cash received from Jim Dobbs' in full.
If the price of chocolate-covered peanuts decreases from $1.15 to $0.90, the quantity demanded does not change, and other things are unchanged, the absolute value of the price elasticity of demand, using the midpoint method, is:
Answer:
price-elasticity = 0
Explanation:
The formula for mid-point elasticity will be as follows:
[tex]\frac{q_1-q_2}{\frac{q_1+q_2}{2}} \div\frac{p_1-p_2}{\frac{p_1+p_2}{2}}[/tex]
Now, as quantity did not change we get:
q1 = q2
thus q1 + q2 = 2q1
and q1 - q2 = 0
[tex]\frac{0}{\frac{2q_1}{2}} \div\frac{1.15-0.90}{\frac{1.15+0.90}{2}}[/tex]
As we are getting a zero the end result will be zero which makes complete sense as there was no change in quantity the demand is completely inelastic.
The income statement and selected balance sheet information for Direct Products Company for the year ended December 31 are presented below. Income Statement Sales Revenue $ 48,600 Expenses: Cost of Goods Sold 21,000 Depreciation Expense 2,000 Salaries and Wages Expense 9,000 Rent Expense 4,500 Insurance Expense 1,900 Interest Expense 1,800 Utilities Expense 1,400 Net Income $ 7,000 Selected Balance Sheet Accounts Ending Balances Beginning Balances Accounts Receivable $ 560 $ 580 Inventory 990 770 Accounts Payable 420 460 Prepaid Rent 25 20 Prepaid Insurance 25 28 Salaries and Wages Payable 100 60 Utilities Payable 20 15 Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
Cash flow from Operating Activities
Cash Receipts from Customers $48,620
Cash Paid to Suppliers and Employees ($17,017)
Cash Generated from Operations $31,603
Interest Paid ($1,800)
Cash flow from Operating Activities $29,803
Explanation:
Cash flow from Operating Activities relate to cash movement as a result of trading in the course of business.
Cash Receipts from Customers Calculation :
Prepare a Total Trade Receivables T - Account as follows :
Debit :
Beginning Balance $ 580
Sales Revenue $ 48,600
Totals $49,180
Credit :
Ending Balance $ 560
Cash Receipt (Balancing Figure) $48,620
Totals $49,180
Cash Paid to Suppliers and Employees Calculation :
Cost of Goods Sold 21,000
Add Other Expenses
(Excluding Depreciation and Interest Expense)
Salaries and Wages Expense 9,000
Rent Expense 4,500
Insurance Expense 1,900
Utilities Expense 1,400
Increase in Inventory 220
Decrease in Accounts Payable 40
Decrease in Prepaid Insurance (3)
Increase in Prepaid Rent 5
Increase in Wages Payable (40)
Increase in Utilities Payable (5)
Cash Paid to Suppliers and Employees 17,017
Presented below is information related to Marin Company. Cost Retail Beginning inventory $103,820 $278,000 Purchases 1,402,000 2,152,000 Markups 93,600 Markup cancellations 13,900 Markdowns 34,600 Markdown cancellations 5,000 Sales revenue 2,206,000 Compute the inventory by the conventional retail inventory method.
Answer:
The ending inventory for Marin comapny is $1664460
Explanation:
Solution
An Inventory is computed by using the conventional retail inventory method. which is statted belwo:
Inventory computed for Marin Company
Cost Retail
Beginning of Inventory $103,820 $278,000
Purchases 1,402,000 2,152,000
Total 1505820 243,000
Add: Net Markups
Markups 93,600
Markup cancellations -13,900
79700
Total 1505820 2509700
Deduct: Net Markdown
Markdown 34,600
Markdown cancellation -5,000
29,600
Sales price of goods 2480100
Sales revenue 2,206,000
The retail ending is 274,100
Thus,
The retail cost ratio is = 1505820 /2509700 = 60%
Hence, the cost of Ending inventory becomes = 274,100 * 60%
= $1664460.
A mine is for sale for $240,000. It is believed the mine will produce a profit of $65,000 the first year, but the profit will decline $5,000 a year after that, eventually reaching zero, whereupon the mine will be worthless. What rate of return would this $240,000 investment produce for the purchaser of the mine
Answer:
60.4%
Explanation:
Initial cost = $240,000
profit of first year = $65,000
this is reduced subsequently until it reaches zero
Note that this value reduces in an arithmetic progression from $65,000 , $60,000, ... , 0
the first term A1 = 65,000
the common difference d is 60,000 - 65,000 = -5000
the last term is An = 0
we calculate for number of terms
An = A1 + (n - 1)d
0 = 65,000 + (n - 1)(-5000)
0 = 65,000 - 5000n +5000
5000n = 70,000
n = 14
using the equation for summation of terms in an arithmetic progression Sn, we solve as
Sn = [tex]\frac{n}{2}[/tex][2A1 + (n - 1)d]
Sn = [tex]\frac{14}{2}[/tex][2(60,000) + (14 - 1)(-5000)]
Sn = 7[120,000 - 65,000]
Sn = 7 x 55,000
Sn = $385,000. This is the total profit on the mine
rate of return = (385,000 - 240,000)/240,000 = 145,000/240,000 = 0.604
i.e 60.4%
The independent cases are listed below includes all balance sheet accounts related to operating activities: Net income Depreciation expense Accounts receivable increae 100,000 (200,000) (20,000) Case ACase B Case C $310,000 15,000 $420,000 40,000 150,000 80,000 (decrease) Inventory increase (decrease) Accounts payable increase (50,000) (50,000) 120,00070,000 60,000 (220,000) (40,000) 35,000 50,000 decrease) Accrued liabilities increase (decrease) Show the operating activities section of cash flows for each of the given cases (Amounts to be deducted should be indicated with a minus sign.) Case A Case B Case C Net Income Adjustments to Reconcile Net Income to net Cash provided by operating activities Depreciation Changes in Assets and Liabilities Accounts Receivable Inventory Accounts Payable Accrued Liabilities Net Cash Provided by OperatingActivities
Answer: Please see below
Explanation: The values from the question are scattered, but here is how they should appear
Case A Case B Case C
Net income $310,000 15,000 $420,000
Depreciation expense 40,000 150,000 80,000
Accounts receivable increase
(decrease 100,000 (200,000) (20,000)
Inventory increase (decrease) (50,000) 35,000 50,000
Accounts payable increase (50,000) 120,000 70,000
Accrued liabilities increase
(decrease) 60,000 (220,000) (40,000)
To calculate the operating activities section of cash flows for each of the given cases,
we use the Indirect method formula
Net cash flow from operating actvities = Net Income + Non-Cash Expenses – Increase in Working Capital
Net cash flow from operating actvities =Net Income +/- Changes in Assets & Liabilities + Non-Cash Expenses
Net cash flow from operating actvities = Net Income + Depreciation + Stock Based Compensation + Deferred Tax + Other Non Cash Items – Increase in Accounts Receivable – Increase in Inventory + Increase in Accounts Payable + Increase in Accrued Expenses + Increase in Deferred Revenue
Following the formulae above, we can determine what expense should be added or subtracted to give the operating activities of cash flow below as
Case A Case B Case C
Net Income $310,000 15,000 $420,000
Net Income Adjustments to Reconcile Net Income to net Cash provided by operating activities
Depreciation 40,000 150,000 80,000
Changes in Assets and Liabilities
Accounts Receivable - 100,000 200,000 20,000
Inventory 50,000 -35,000 - 50,000
Accounts Payable -50,000 120,000 70,000
Accrued Liabilities 60,000 - 220,000 -40,000
Net Cash Provided by Operating Activities
$310,000 $230,000 $500,000
Several studies indicate that the use of collaborative research agreement (between several firms, research centers, suppliers, competitors, universities, etc.) is increasing around the world. What are some reasons collaborative research is becoming more prevalent?
Answer & Explanation: Collaborative research refers to a research or study done by different independent bodies. Take for instance a scientist intends to undertake a study, he sorts the collaboration of a university.
Several benefits exist in collaborative research some of which includes;
1). It creates opportunity for an individual to develop as a scholarly author. This is because in working together the work gets more attention and recognition.
2). It makes the work to be done reduced. Considering the fact that people will handle different aspects of the research, the work per person will be less.
3). There will be variety of techniques. Having people work on same research enhances the research as different techniques are bound to be used to achieve result.
4). It gives room for more creativity. Because of the increased number of people working on the same tasks, diverse ideas will be brought forward, there will be knowledge sharing and this in turn will improve the creativity.
You are considering buying common stock in Grow On, Inc. The firm yesterday paid a dividend of $7.80. You have projected that dividends will grow at a rate of 9.0% per year indefinitely. If you want an annual return of 24.0%, what is the most you should pay for the stock now
Answer:
The answer is $56.68
Explanation:
Solution
We recall that:
The firm paid a dividend of =$7.80
The projected growth of dividends is at a rate = 9.0%
The annual return = 24.0%
Now,
V = ($7.80 * (1.09)/(.24 - 0.9)
= (8.502)/(.24-0.9)
= (8.502) * (-0.66)
= $56.68
Therefore, this would be the most we would pay for the stock. If we paid less than that, our return would be above the 24%.
Winganon Company began 2020 with 6,500 units of its principal product. The cost of each unit is $8.25. Merchandise transactions for the month of January 2020 are as follows:
Purchases
Date of Purchase Units Unit Cost Total Cost
Jan. 7 9,000 $ 8 $ 72,000
Jan. 21 10,000 $ 9 $ 90,000
Totals 19,000 $ 162,000
Includes purchase price and cost of freight.
Sales
Date of Sale Units
Jan. 2 6,000
Jan. 13 9,000
Jan. 25 8,500
Total 23,500
required:
compute the number and total cost of unit available for sale in the year 2020?
Answer:
25,500 units
Cost of goods available for sale is $215,625.00
Explanation:
The available for sale units in the year is the sum of opening stock of inventory and purchases made in the course of the year as spelt below:
Quantity Price per unit $ total value $
Opening stock 6,500 8.25 53,625.00
Purchases(Jan7) 9,000 8.00 72,000.00
Purchases(Jan 21) 10,000 9.00 90,000.00
Total 25,500 215,625.00
The total number of goods available for sale is 25,500 units
The total cost of goods available for sale is $215,625
The cost of goods sold would then be the costs of goods available for sale less the value of closing stock of inventory
Waterway Enterprises reported cost of goods sold for 2020 of $1,385,600 and retained earnings of $5,415,900 at December 31, 2020. Waterway later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $103,320 and $38,040, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings.
Answer:
b. Corrected 2020 cost of goods sold = $ 1,320,320.
b. Corrected retained earnings = $5,377,860.
Explanation:
a. Determine the corrected amounts for 2020 cost of goods sold
An overstatement of the beginning inventory has to be deducted from the reported cost of good sold since the amount of the overstatement was added to the cost of goods sold initially.
On the other hand, an overstatement of the ending inventory has to be added to the reported cost of good sold since the amount of the overstatement was deducted to the cost of goods sold initially.
Therefor, we have:
Corrected 2020 cost of goods sold = $1,385,600 - $103,320 + $38,040 = $ 1,320,320.
b. Determine the corrected amounts for December 31, 2020, retained earnings
In this case, the amount of overstatement of the ending inventory has to be deducted from the reported retained earning since the retained earning was initially overstated by that amount.
Therefore, we have:
Corrected retained earnings = $5,415,900 - $38,040 = $5,377,860
At NikeID, you can design your own athletic shoes by selecting the material, choosing the color and even adding other personal touches. This method of using machines to do multiple tasks to produce a variety of products is known as _______ manufacturing.
Answer: flexible manufacturing
Explanation: Flexible manufacturing is the type of manufacturing system employed at NikelD, wherein customers through customization can design their own athletic shoes. As such, there is usually equipment and computerized systems configured to manufacture a variety of parts and handling changing levels of production. Doing this serves to improve efficiency while lowering the company's production costs significantly and is a characteristic feature of make-to-order strategies requiring a high degree of customization by customers. This system of manufacturing also creates a method of production designed to adapt to changes in the type and quantity of the product being manufactured very easily.
Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild. In recent years, nonprofit organizations such as Sterile Feral have turned to marketing to help:__________.
a. receive additional government funding.
b. expand its business to stray dogs.
c. maintain its nonprofit status.
d. achieve organizational goals.
e. compete with other similar organizations.
Answer:
d. achieve organizational goals.
Explanation:
Sterile Feral, Inc. being a non-profit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild.
If Sterile Feral Inc. then turns to marketing, this simply means that they're more interested in achieving organizational goals of saving endangered cats.
Also, as a non-profit organization, Sterile Feral Inc. isn't operating solely to make money or profits, it is rather literally trying to impact positively the cat world.
The objectives of labor unions have Multiple Choice always placed the greatest emphasis on increasing wages and benefits. shifted with social and economic conditions. frequently taken global competition into account. consistently favored policies that would move the U.S. economy toward a command system.
Porter's Five Forces framework has been around since the 1980's and has been very effective in evaluating industry attractiveness. Changes in the dynamic nature of industries has not impacted the usefulness of the tool. The tool has no limitations. Group of answer choices
Answer:
False
Explanation:
Porter's Five Forces framework is a list of factors which provide an explanation to the forces affecting competition in industries. These five forces include;
1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products
Over the years, these five forces have been used in explaining the structure of certain industries. The framework however has limitations, some of which include,
1. It is not in terms with current realities, such as new advancements in technology which were not available as at the time the framework was formed.
2. Some companies operate different structures, whereas, the framework classifies each industry under one structure.
3. There is the possibility of industries to give equal consideration to all five factors, whereas in reality only some of the factors might be applicable to them.
4. Individual companies instead of industries now use the framework to make their business analysis which is not the real reason for the development of the framework. It was meant for industries as a whole.
Calculate the firm’s WACC (using 2018 numbers). (You will need to collect information on the long-term debt and common stock equity from the Balance Sheet. The firm has no preferred stock).
Use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects. Assume the projects are mutually exclusive and the firm has the money available to fund the project
A 7.5% percent annual coupon bond with 20 years to maturity, selling for 104 percent of par. The bonds make semiannual payments. What is the before tax cost of debt? If the tax rate is 40%, what is the after-tax cost of debt?
The firm’s beta is 1.2. The risk-free rate is 4.0% and the expected market return is 9%. What is the cost of equity using CAPM?
Answer:
Before tax cost of debt is 7.12%
After tax cost of debt is 4.27%
Cost of equity is 10%
Explanation:
The before-tax cost of debt can be determined using excel rate formula as found below:
=rate(nper,pmt,-pv,fv)
nper is the number of semiannual payments the bond has i.e 20*2=40
pmt is the amount of semiannual payment=$1000*7.5%*6/12=$ 37.50
pv is the current price =$1000*104%=$1,040.00
fv is the face value of $1000
=rate(40,37.50,-1040,1000)=3.56%
The 3.56% is semiannual yield, hence 7.12% per year (3.56%*2)
After-tax cost of debt=7.12%*(1-t) where is the tax rate of 40% or 0.4
after-tax cost of debt=7.12%*(1-0.40)=4.27%
Cost of equity is determined using the below CAPM formula:
Ke=Rf+Beta*(Mr-Rf)
Rf is the risk free rate of 4%
Beta is 1.2
Mr is the market return of 9%
Ke=4%+1.2(9%-4%)=10.00%
James Company began the month of October with inventory of $19,000. The following inventory transactions occurred during the month:
A. The company purchased merchandise on account for $28,000 on October 12. Terms of the purchase were 3/10, n/30. James uses the net method to record purchases. The merchandise was shipped f.o.b. shipping point and freight charges of $540 were paid in cash.
2. On October 31, James paid for the merchandise purchased on October 12.
3. During October merchandise costing $18,600 was sold on account for $28,800.
4. It was determined that inventory on hand at the end of October cost $28,100.
Required:
1. Assuming that the James Company uses a periodic inventory system, prepare journal entries for the above transactions including the adjusting entry at the end of October to record cost of goods sold.
2. Assuming that the James Company uses a perpetual inventory system, prepare journal entries for the above transactions.
Answer:
1. Entries using periodic inventory system
October 12
J1
Purchases $28,000 (debit)
Trade Payable$28,000 (credit)
j2
Freight Charges $540 (debit)
Cash $540 (credit)
October 31
Trade Payable $28,000 (debit)
Cash $28,000 (credit)
October 31
Trade Receivable $28,800 (debit)
Revenue $28,800 (credit)
October 31
Inventory $28,100 (debit)
Cost of Goods Sold $28,100 (credit)
2. Entries using periodic inventory system
October 12
J1
Merchandise $28,000 (debit)
Trade Payable$28,000 (credit)
j2
Freight Charges $540 (debit)
Cash $540 (credit)
October 31
Trade Payable $28,000 (debit)
Cash $28,000 (credit)
October 31
J1
Trade Receivable $28,800 (debit)
Revenue $28,800 (credit)
J2
Cost of Sales $18,600 (debit)
Merchandise $18,600 (credit)
October 31
Merchandise $28,100 (debit)
Cost of Goods Sold $28,100 (credit)
Explanation:
1. Entries using periodic inventory system
With periodic system, inventory valuation is done at end of a specific period.
2. Entries using periodic inventory system
Perpetual system is the method of recalculating the value of goods held after each transaction
True or False : When you are thinking of something you want to predict, measure, or change in your business, you are probably thinking of a dependent variable.
Answer:
True
Explanation:
Dependent variables are variables which are altered by the changes to the independent factors or variables.
The following are instances of dependent and independent variables:
Dependent Variable (DV): Profit, Product Quality, Staff Attrition during a recession.
Profit (DV) depends on sales, expenses, the economy, the proficiency of the sales staff, the quality of the product.
The Quality of the Product (DV) depends on the production process, product design, quality of raw materials etc
So, many of the factors highlighted above, which affect the dependent variables are called Independent variable.
Profit, for instance, can be forecasted or changed IF changes are made to sales.
It is possible to measure the quality of a product or service. It can also be altered by increasing or decreasing the quality of raw material input.
Cheers!
Faber Products has $35 million of sales and $9.75 million of net income. Its total assets are $150 million. Assume the company’s total assets equal total invested capital, and its capital structure consists of 40% debt and 60% common equity. The firm’s interest rate is 4%, and its tax rate is 21%. What would happen if this firm used less leverage (debt)?
Answer:
If the firm uses less leverage, its ROE will decrease since the cost of equity is much higher than the cost of debt. If all debt is eliminated, then ROE will decrease to 7.764% from 10.83%.
Explanation:
net income = $9.75 million
capital structure:
$90 million equity$60 million debtinterest rate = 4% and tax rate = 21%
current return on equity (ROE) = $9.75 / $90 = 10.83%
current return of assets (ROA) = $9.75 / $150 = 6.5%
cost of debt = 4% x (1 - 21%) = 3.16%
if the company issues more equity to lower debt to 0, then:
net income = $9.75 + [$60 million x 4% x (1 - 21%)] = $9.75 + $1.896 = $11.646 million
return on equity (ROE) = $11.646 / $150 = 7.764%
return of assets (ROA) = $11.646 / $150 = 7.764%
Elegant Limited sells restored classic cars. Most of its customers are private buyers who buy cars for themselves. However, some of them are investors who buy multiple cars and hold them for resale. All sales of Elegant Limited are for cash.
Depict the association and cardinality for the sales of cars at Elegant Limited based on REA model. (10 marks, maximum 300 words)
Answer:
Elegant Limited
Depiction of the Association and Cardinality for the sales of cars:
1. Association: At Elegant Limited, for a car to be sold, a relationship must be established between Elegant Limited and some of its customers (private buyers and investors). A sale of car involve the exchange of economic resources. While Elegant Limited exchanges the cars for cash receipts, the customers exchange their cash for cars. Two economic resources are involved in the sale of cars, which are exchanged between two economic agents (Elegant Limited and customers) in a business event.
2. Cardinality: In each of the economic events involving the sale of cars to customers and the receipt of cash from customers, two elements are involved, which are the exchanges of resources. Cars and Cash are the elements that show their cardinality in the economic event. These elements are known as economic resources.
Explanation:
a) The REA Model is a tool for modelling business processes. In the sales process, one event would be the “sales of cars,” occasioning the giving of cars for “cash receipt,” the other event. These two events are linked as a cash receipt occurs in exchange for a sale, and vice versa. The REA Model was originally proposed in 1982 by William E. McCarthy as a generalized accounting model, and contained the concepts of resources, events and agents, according to wikipedia.com.
b) Association refers to the relationship existing when an event takes place. At least, two persons are impacted by any event, the giver and the receiver. For an economic event involving the exchange of resources to happen, two economic agents are involved. Otherwise, no transaction can take place. The seller of cars (Elegant Limited) and the buyers (Customers both private and investors).
c) Cardinality refers to the elements that make up an economic event, for example. The sale of cars and receipt of cash are economic events happening in a business relationship between Elegant Limited and Customers. The elements that make up the events are the resources (cars and cash), which are exchanged.
Sweet, Inc. issued a $140,000, 4-year, 12% note at face value to Flint Hills Bank on January 1, 2017, and received $140,000 cash. The note requires annual interest payments each December 31.
Required:
Prepare Coldwell's journal entry record:
a. the issuance of the note
b. the December 31 interest payment.
Answer:
The double entry is given below alongwith its explanation
Explanation:
On January 1, 2017, the receipt of money by the issuance of the 12% note would be recorded as increase in liability which would be credited and increase in cash receipt is increase in asset which must be debited. The entry to record the issuance of note is as under:
Dr Cash $140,000
Cr Loan Note $140,000
On December 31, 2017, the Payment of interest of 12% on note would be recorded as increase in expense which must be debited and decrease in cash due to payment is decrease in asset and it must be credited. The entry to record the payment of interest is as under:
Dr Interest Expense $16,800
Cr Cash Account $16,800
At the beginning of July, CD City has a balance in inventory of $2,950. The following transactions occur during the month of July.July 3 Purchase CDs on account from Wholesale Music for $1,850, terms 2/10, n/30. July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $4,900, that had a cost of $2,550. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,650, terms 2/10, n/30. July 22 Sell CDs to customers for cash, $3,750, that had a cost of $2,050. July 28 Return CDs to Music Supply and receive credit of $210. July 30 Pay Music Supply in full.Assuming that CD City uses a perpetual inventory system, record the transactions.
Answer and Explanation:
The Journal entries is shown below:-
1. Merchandise Inventory Dr, $1,850
To Accounts payable $1,850
(Being inventory is recorded)
2. Merchandise Inventory Dr, $110
To Cash $110
(Being cash paid is recorded)
3. Accounts payable Dr, $200
To Merchandise Inventory $200
(Being return inventory is recorded)
4. Accounts Payable Dr, $1,650 ($1,850 - $200)
Inventory Dr, $33 ($1,650 × 2%)
To Cash $1,617
(Being cash paid is recorded)
5. Accounts receivable Dr, $4,900
To Sales revenue $4,900
(Being sales revenue is recorded)
6. Cost of goods sold Dr, $2,550
To Merchandise Inventory $2,550
(Being cost of goods sold is recorded)
7. Cash Dr, $4,900
To Accounts receivable $4,900
(Being cash receipt is recorded)
8. Inventory Dr, $2,650
To Accounts payable $2,650
(Being inventory is recorded)
9. Cash Dr, $3,750
To Sales revenue $3,750
(Being cash receipt is recorded)
10. Cost of goods sold Dr, $2,050
To Merchandise Inventory $2,050
(Being cost of goods sold is recorded)
11. Accounts payable Dr, $210
To Merchandise Inventory $210
(Being inventory is recorded)
12. Accounts payable Dr, $2,440 ($2,650 - $210)
To Cash $2,440
(Being cash is recorded)
Executives at Barbco, a pharmaceutical manufacturer, are preparing to introduce Betatron, a new vitamin into the market. The following cost information pertains to new vitamin:Chemical compound $1.25/bottlePackaging/label $0.35/bottleDeveloper royalties $1.00 bottleAdvertising and promotion $675,000Barbco overhead $500,000Selling price per bottle to distributor $9.00Based on the above, answer the following three questions.Based on the information provided above:Dollar contribution per bottle?Based on the information provided above:Net profit if 1 million bottles are sold?Based on the information provided above:Necessary unit volume to achieve a $200,000 profit.
Answer:
$6.4
$ 5,225,000
214,844 units
Explanation:
Contribution per unit is the selling price per unit minus the variable cost
selling price per bottle is $9.00
variable cost=cost of chemical compound per bottle+ packaging/label+ cost of royalties
variable cost=$1.25+$0.35+$1.00=$2.6
Contribution per unit=$9.00-$2.60=$6.4
net profit of 1 million:
Sales ($9*1000,000) $9,000,000
variable cost($2.6*1,000,000) ($2,600,000)
contribution $6,400,000
Fixed costs($675,000+$500,000) ($1,175,000)
Net profit $ 5,225,000
Unit volume to achieve profit of $200,000=fixed cost+ target profit/contribution per unit=($1,175,000+$200,000)/6.4= 214,844
You purchased GARP stock one year ago at a price of $67.67 per share. Today, you sold your stock and earned a total return of 18.79 percent. The stock paid dividends of$2.92 per share over the year. What was the capital gains yield on your investment
Answer:
14.48%
Explanation:
The capital gains yield on the investment is increase in share price divided by the initial price paid to acquire the share a year ago.
The total return formula can be used to figure the price the stock was when sold as below:
total return =P1-Po+D/Po
P1 is the current price which is unknown
Po is the initial price of $67.67
total return is 18.79%
D is the dividend of $2.92
0.1879=P1-67.67+2.92/67.67
0.1879*67.67=P1-64.75
12.72=P1-64.75
P1=12.72+64.75
P1=77.47
Capital gains yield=(77.47 -67.67)/67.67=14.48%
Which of the following comes closest to the value at the end of year 6 of investing $600 today (year 0) and then investing another $600 at the end of year 5 if the interest rate is 3%?
a. $ 1,434
b. $ 1,334
c. $ 1,542
d. $ 1,383
e. $ 1,487
Answer:
The correct answer is B.
Explanation:
Giving the following information:
Investment= $600 today and $600 at the end of year 5
Interest rate= 3%
To calculate the final value, we need to apply the following formula on each investment:
FV= PV*(1+i)^n
FV= 600*(1.03^6)= $716.43
FV= 600*(1.03^1)= $618
Total FV= $1,334.43
Logan Company can sell all of the standard and premier products they can produce, but it has limited production capacity. It can produce 8 standard units per hour or 4 premier units per hour, and it has 36,600 production hours available. Contribution margin per unit is $20.00 for the standard product and $23.00 for the premier product. What is the total contribution margin if Logan chooses the most profitable sales mix
Answer:
The most profitable sales mix is 288,000 standard units and 0 premier units.
Explanation:
8 standard units per hour
4 premier units per hour
36,600 production hours available
For standard units, contribution margin per hour = 8 x $20 = $160
For premier units, contribution margin per hour = 4 x $23 = $92
Therefore, most profitable sales mix = 36,000 hours x 8 units per hour of standard product
= 288,000 standard units and 0 premier units.
You plan to borrow money from your grandmother to start a new chocolate candy business. You agree to make one payment of $100,000 at the end of 6 years and negotiate an interest rate of 7%. Your grandmother has offered to reduce either the interest rate or the number of years before the $100,000. Assuming your grandmother will lend you the present value of the final payment and that you want to borrow as much as possible today, which option would you prefer?
Answer:
future payment $100,000 in 6 years
agreed interest rate 7%
the present value of the $100,000:
PV = $100,000 / (1 + 7%)⁶ = $66,634
if your grandmother really likes you and offers to either reduce the interest rate or the number of years, you should choose a reduction in the interest rate:
PV at 6% = $100,000 / (1 + 6%)⁶ = $66,634
PV at 5% = $100,000 / (1 + 5%)⁶ = $74,622
PV at 4% = $100,000 / (1 + 4%)⁶ = $79,031
PV at 3% = $100,000 / (1 + 3%)⁶ = $83,748
PV at 2% = $100,000 / (1 + 2%)⁶ = $88,797
PV at 1% = $100,000 / (1 + 1%)⁶ = $94,205
the less the interest rate, the higher the present value of the $100,000
Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3.50 per unit. Bluebird currently produces and sells 75,000 units at $7.50 each. This level represents 80% of its capacity. These bird feeders would be marketed under the wholesaler's name and would not affect Bluebird's sales through its normal channels. Production costs for these units are $4.25 per unit, which includes $2.50 variable cost and $1.75 fixed cost. If Bluebird accepts this additional business, the effect on net income will be:
Answer:
Effect on income= $15,000 increase
Explanation:
Giving the following information:
Offer= 15,000 bird feeders at $3.50 per unit.
Production costs:
$2.50 variable cost
Because it is a special offer that won't affect actual sales and there is unused capacity, we will not take into account the fixed costs.
Effect on income= 15,000*(3.5 - 2.5)
Effect on income= $15,000 increase
Trudy is Jocelyn's friend. Trudy looks after Jocelyn's four-year-old son during the day so Jocelyn can go to work. During the year, Jocelyn paid Trudy $4,180 to care for her son. What is the amount of Jocelyn's child and dependent care credit if her AGI for the year was $31,800
Answer:
The answer is $810
Explanation:
Solution
Child and dependent care credit is certain percentage of qualifying care expenses based on the adjusted gross income. The maximum qualifying amount of daycare expenses is $3,000 per qualifying person.
Now from this example, Jocelyn had paid $4,180 to take care of her son and so,the qualifying amount of care expenses will be $3,000.
Since GI for the year is $31,800, the child and dependent care credit will be 27% of the qualifying care expenses that is,. $3,000 * 27% = $810
To a greater or lesser degree, many governments can be considered pragmatic nationalists when it comes to foreign direct investment (FDI); this means it has both benefits and costs. FDI can benefit a host country by bringing capital, technology, and jobs, and it can also have a negative effect on a country's balance of payments. Accordingly, government policies are shaped by a consideration of these costs and benefits of FDI.
Home countries can adopt policies designed to both encourage and restrict FDI. Host countries try to attract FDI by offering incentives and try to restrict FDI by dictating ownership restraints and requiring that foreign multinational enterprises (MNE) meet specific performance requirements.
Roll over each item on the left to read its description. Determine whether the scenario represents a benefit or cost to the home or host country, and then drag it to the appropriate place on the chart.
HOST-COUNTRY BENEFIT HOST-COUNTRY COST
HOME-COUNTRY BENEFIT HOME-COUNTRY COST
-outflow of earnings from a foreign subsidiary
a- loss of jobs
b-inflows of foreign earnings
c-substitute for imports
d-loss of economic independence
e-increase in direct and indirect empolyment
f-skills that can be leveraged internationally
g-loss of local entreprenurship
h-Host country limits profit expatriation
i-transfer of new technology
Answer:
Home Country Benefit
b - inflows of foreign earnings.
The Company operating in the Host Country will send some of it's profits back to it's Home Country and this will be treated as Foreign Earnings.
f-skills that can be leveraged internationally.
The Home Country will gain skills from their experience in the Host Country. These skills can then be used to be competitive on the global market.
Home Country Cost
a- loss of jobs
The Home Country would lose the jobs that it's companies created in the Host Country. These are jobs that could have employed people in the Home Country but now employ people in the Host Country.
h-Host country limits profit expatriation
In order that they don't lose too much money to the Home Country, the Host Country might come up with laws that limit the amount of money that can be taken out from the country this limiting the amount of foreign Earnings that the Home country gets.
Host Country Benefit
c-substitute for imports
The products that the companies founded by FDI are producing could have been products that the Host Country used to import. Now that the goods are being made in the Host Country, there will be no need for imports.
e-increase in direct and indirect employment
The companies founded by FDI in the Host Countries will create employment for people in the company which is direct employment. Many auxiliary services such as drivers and caterers as an example will also spring up to take care of these newly employed folk thereby creating indirect employment.
i-transfer of new technology
The Company formed from FDI will bring with them technology from the Home Country that could be very beneficial to the Host Country.
Host Country Costs.
- Outflow of earnings from a foreign subsidiary
The Companies established through FDI will send some of their profits back to their home Countries. This means that the earnings would leave the Host Country instead of being reinvested in them.
d-loss of economic independence
These FDI companies tend to get very influential and powerful in the Host Country and can sometimes dictate policies. This would mean the companies have significant control over the resources of the Host Country which will lead to a loss of Economic independence. This is the main reason most people believe that China is interested in Africa.
g-loss of local Entrepreneurship
These companies created by FDI will bring with them better technology and capital that will enable them to be very competitive in the local Economy. This will discourage local Entrepreneurs who do not have the economic nor the financial backing to challenge the companies without making huge losses.
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gummies raskels, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies increases by 5%, the quantity of raskels sold decreases by 4% and the quantity of cannes sold increases by 5%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together Complete the first column of the following table by computing the cross-price elasticity between guppy gummies and raskels, and then between guppy gummies and cannies. In the second column, determine if guppy gummies are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with guppy gummies. Relative to Guppy Gummies Cross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Guppy Gummies Raskels Cannies
Answer:
See explanation below
Explanation:
Here, when the price of guppy gummies increases by 5%, the quantity of raskels sold decreases by 4% and the quantity of cannes sold increases by 5%.
i.e, % change in price of guppy grummies = 5%
% change in quantity of raskels = -4%
% change in quantity of cannes = 5%
i) Find the Cross price elasticity of demand between guppy grummies and raskels. Use the expression below.
% change in quantity demanded of raskels / % change in price of guppy gummies
= -4% / 5%
= -0.8
Substitute goods have a negative cross price elasticity of demand. Since, the cross price elasticity of demamd here is negative, the goods are substitute.
It is recommended not to advertise raskels with guppy grummies
ii) Find the Cross price elasticity of demand between guppy grummies and cannes. Use the expression below.
% change in quantity demanded of cannes / % change in price of guppy gummies
= 5% / 5%
= 1
Complement goods have a positive cross price elasticity of demand. Since, the cross price elasticity of demamd here is positive, the goods complement each other.
It is recommended to advertise cannes with guppy grummies.
You own shares in Yahoo that were purchased at a price of $ 24 per share. Microsoft has offered to purchase Yahoo and buy your shares at a price of $ 34 per share. What will be your return if you tender your shares to Microsoft and the deal is completed
Answer:
Return = 41.67%
Explanation
The return on a share is the sum of e capital gains and the dividend received all expressed as a percentage of the of the amount invested.
In the absence of the payment of dividend, the return
Return = capital gain/ Price of share × 100
Capital gain= Price of shares now - cost of shares
Capital gain = 34- 24 = 10
Return = 10/24 × 100 = 41.66666667
Return (%) = 41.67%
