Explanation:
The primacy effect entails an individual's perceived memory priority, and so may negatively impact an individual's job performance as he may bigin to recall details of only earlier job task over later ones, or may recall earlier company policies on a list over those mentioned last.
This tendency if found in an individual may reduce his job performance as most employers require their employees to pay close attention to details.
An estate provides a perpetuity with payments of X at the end of each year. Seth, Susan, and Lori share the perpetuity such that Seth receives the payments of X for the first n years and Susan receives the payments of X for the next m years, after which Lori receives all the remaining payments of X. Which of the following represents the difference between the present value of Seth's and Susan's payments using a constant rate of interest?
a. X[an-vnam]
b. X[¨an-vn¨am]
c. X[an-vn+1am]
d. X[an-vn-1am]
e. X[van-vn+1am]
Answer: a. [tex]X[a_{n} -v^{n} a_{m} ][/tex]
Explanation:
The Present Value of the perpetuity for Seth is denoted by;
= [tex]X * a_{n}[/tex] because Seth receives it for n years.
The Present Value of the perpetuity for Susan is denoted by;
= [tex]Xv^{n} * a_{m}[/tex] because it is the value after n periods multiplied by the payments received for m periods.
The result is;
= [tex]X * a_{n}[/tex] - [tex]Xv^{n} * a_{m}[/tex]
= [tex]X[a_{n} -v^{n} a_{m} ][/tex]
Prepare journal entries to record the following four separate issuances of stock. A corporation issued 8,000 shares of $20 par value common stock for $192,000 cash. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $47,000. The stock has a $1 per share stated value. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $47,000. The stock has no stated value. A corporation issued 2,000 shares of $100 par value preferred stock for $247,000 cash.
Answer:
Journal Entries
1. A corporation issued 8,000 shares of $20 par value common stock for $192,000 cash:
Debit Cash Account $192,000
Credit Common Stock $160,000
Credit Paid-in In Excess of Par $32,000
To record the issue of 8,000 shares of $20 par value.
2. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $47,000. The stock has a $1 per share stated value:
Debit Retained Earnings $4,000
Credit Common Stock $4,000
To record the issue of 4,000 shares of $1 stated value.
3. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $47,000. The stock has no stated value:
Debit Retained Earnings $47,000
Credit Common Stock $47,000
To record the issue of 4,000 shares of no stated value.
4. A corporation issued 2,000 shares of $100 par value preferred stock for $247,000 cash:
Debit Cash $247,000
Credit Preferred Stock $200,000
Credit Paid-in In Excess of Par $47,000
To record the issue of 2,000 shares of $100 par value.
Explanation:
Shares can be issued at par value, above, or below par value. When they are issued at par value, the Cash Account or Retained Accounts or Asset Account is debited, while the Stock account is credited. If they are above par value, the difference in at par and above is credited to the Paid-in In Excess of Par account or Additional Paid-in Capital account. When they are issued below the par value, the difference between cash received and the stock account is debited to Paid-in In Excess of Par account.
The stated value of a share is like the par value. Some shares have no stated value and are recorded at whichever value is prevailing at the time of the issue.
The perceived demand for a monopolistic competitor
Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $58,000, and it estimates that 5% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $986 credit balance before the adjustment. (b) a $290 debit balance before the adjustment.
Answer:
(a) a $986 credit balance before the adjustment.
$2,900 - $986 = $1,914
Dr Bad debt expense 1,914
Cr Allowance for doubtful accounts 1,914
(b) a $290 debit balance before the adjustment.
$2,900 + $290 = $3,190
Dr Bad debt expense 3,190
Cr Allowance for doubtful accounts 3,190
Explanation:
outstanding accounts receivable $58,000 x 5% = $2,900 in bad debt
A consumer values a car at $30,000 and a producer values the same car at $20,000. What amount of tax will result in unconsummated transaction
The question is incomplete:
A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, what level of sales tax will result in unconsummated transaction?
a. 0%
b. 25%
c. 20%
d. 40%
Answer:
d. 40%
Explanation:
The unconsummated transaction would occur when the price that the customer has to pay is higher than the value that he gave to the car. According to that, the answer would be the tax that would increase the final price to more than $30,000:
0%: $24,000
25%: 24,000*1.25= $30,000
20%: 24,000*1.20= $28,800
40%: 24,000*1.40= $33,600
The answer is that the amount of tax will result in an unconsummated transaction is 40%.
Q 7.34: At the end of a shift, the sales clerk turned over $21,476.38 in cash, checks, and credit card receipts to the cashier. When the supervisor looked at the cash register tape for that shift, the tape stated that the sales clerk had sold $21,478.23 in merchandise. What should the company do as a result of this difference
Answer:
A cash shortage of $1.85 has occurred. The sales clerk must have taken away more in tips than she should.
The company can ask the sales clerk to refund the sum of $1.85 shortage provided it allows the sales clerk also to take away overages. If not, the shortage can be taken from the overtages, if any.
Explanation:
In handling cash, shortages and overages occur. The best policy is to prevent such shortfall and excess in cash handling as they can lead to other problems. But, where the shortages and overages are tolerable, the company should accommodate them by creating clear company policies about the issues. Policies provide guides to employees so that they know what they are ordinarily expected to do.
Gingrich Corporation issued $2,000,000 in bonds on January 1, 2020. The bonds have a coupon rate of 1.5% and pay interest semi-annually on July 1st and January 1st. The bonds have a 10 year term. The market rate at the issue date is 3.9%. What amount of interest expense will be recorded on July 1, 2020 (the first interest payment)
Answer:
$31,310.35
Explanation:
Face value = 2,000,000
Semiannual interest = 2,000,000 *0.015 * 6/12= 15,000
Semiannual yield = 3.9*6/12= 1.95%
Semiannual months = 10*2= 20
Issue price =[PVA 1.95%,20 * Interest] + [PVF 1.95%,20 * Face value]
Issue price = [16.43061*15,000]+ [ .67960* 2,000,000]
Issue price = 246459.10+ 1,359,200
Issue price = $1,605,659.10
The amount of interest expense to be recorded on July 1, 2020 (the first interest payment = Issued price * Semi annual yield
= $1,605,659.10 * 1.95%
=$1,605,659.10 * 1.95%
=$31,310.35
Thus, the amount of $31,310.35 will be recorded as the interest expense on July 1, 2020
Levine Company uses the perpetual Inventory system.
Apr. 8 Sold merchandise for $5,700 (that had cost $4,212) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee.
12 Sold merchandise for $5,600 (that had cost $3,629) and accepted the customer's Continental Card. Continental charges a 2.5% fee.
Prepare journal entries to record the above credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)
Answer:
Journal entries are given below
Explanation:
April 8
Sales
DEBIT CREDIT
Cash $5,472
Credit Expense (5700x4%) $228
Sales Revenue $5,700
Cost of Sales
DEBIT CREDIT
Cost of goods sold $4,212
Inventory $4,212
April 12
Sales
DEBIT CREDIT
Cash $5,460
Credit card expense (5600x2.5%) $140
Sales Revenue $5,600
Cost of sales
DEBIT CREDIT
Cost of goods sold $3,629
Inventory $3,629
If the rate of inflation is 4.8 %4.8%, what nominal interest rate is necessary for you to earn a 2.2 %2.2% real interest rate on your investment? (Note: Be careful not to round any intermediate steps less than six decimal places.
Answer:
Nominal rate of return= 7.11%
Explanation:
Inflation is the increase in the price level.It erodes the value of money.rise in the price of money
Nominal interest is that quoted for investment or loan transactions. It has not been been adjusted for inflation.
Real interest rate is the amount of interest in terms of the the quantity of good and services that can be purchased. It is the nominal interest rate adjusted for inflation.
The relationship between inflation, real interest and nominal interest rate is given using the Fishers Effect;
N = ( (1+R) × (1+F)) - 1
N- nominal rate, R-real rate, F- inflation
real rate - 2.2%, inflation - 4.8%
Nominal rate of return =(1.022)× (1.048) - 1 = 0.071056
Nominal rate of return = 0.071056 × 100 = 7.1056 %
Nominal rate of return= 7.11%
As the manager of Margarita Mexican Restaurant, you must deal with a variety of business transactions. Provide an explanation for the following transactions:
A. Debit Equipment and credit Cash.
B. Debit Dividends and credit Cash.
C. Debit Wages Payable and credit Cash.
D. Debit Equipment and credit Common Stock.
E. Debit Cash and credit Unearned Revenue.
F. Debit Advertising Expense and credit Cash.
G. Debit Cash and credit Service Revenue.
Answer:
A. Debit Equipment and credit Cash.
You purchase equipment and you pay in cash.B. Debit Dividends and credit Cash.
You paid cash dividends.C. Debit Wages Payable and credit Cash.
You paid wages that you owed to your employees. Generally wages are paid at the end of the week and not all months end on a weekend. So you must record wages payable until you actually pay the wages.D. Debit Equipment and credit Common Stock.
You received equipment in exchange for common stock.E. Debit Cash and credit Unearned Revenue.
You received cash in advance for some food that you will deliver in the future.F. Debit Advertising Expense and credit Cash.
You incurred in advertising costs and you paid them in cash.G. Debit Cash and credit Service Revenue.
You sold meals and your clients paid you in cash.Multiple Product Performance Report Storage Products manufactures two models of DVD storage cases: regular and deluxe. Presented is standard cost information for each model:
Cost Components Regular Deluxe
Direct materials
Lumber 2 board feet × $3 = $6.00 3 board feet × $3 = $9.00
Assembly kit = 2.00 = 2.00
Direct labor 1 hour × $4 = 4.00 1.25 hours × $4 = 5.00
Variable overhead 1 labor hr. × $2 = 2.00 1.25 labor hrs. × $2 = 2.50
Total $14.00 $18.50
Budgeted fixed manufacturing overhead is $13,000 per month. During July, the company produced 5,000 regular and 2,000 deluxe storage cases while incurring the following manufacturing costs:
Direct materials $70,000
Direct labor 31,000
Variable overhead 11,500
Fixed overhead 15,500
Total $128,000
Prepare a flexible budget performance report for the July manufacturing activities.
Answer:
Flexible budget performance report for the July manufacturing activities
Direct Materials : $62,000
Lumber :
Regular ($6.00 × 5,000) $30,000
Deluxe ($9.00 × 2,000) $18,000
Assembly kit :
Regular ($2.00 × 5,000) $10,000
Deluxe ($2.00 × 2,000) $4,000
Labor : $30,000
Regular ($4.00 × 5,000) $20,000
Deluxe ($5.00 × 2,000) $10,000
Variable overhead : $15,000
Regular ($2.00 × 5,000) $10,000
Deluxe ($2.50 × 2,000) $5,000
Fixed manufacturing overhead $13,000
Total $120,000
Explanation:
A Flexed Budget is a Master budget that has been adjusted to reflect the Actual Level of Operation.
Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?
a. debit Bad Debt Expense, $21,800; credit Allowance for Doubtful Accounts, $21,800
b. debit Allowance dfor Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600
c. debit Allowance for Doubtful Accounts, $21,800; credit Debt Expense, $21,800
d. debit Bad Debt Expense, $17,600; crdit Allowance for Doubful Accounts, $17,600
Other receivables includes all of the followoing EXCEPT:
a. taes receivable
b. interest receivable
c. receivables from employees
d. notes receivabe
Answer:
1. Analysis of accounts receivables Allowance Required $19,700
Less: Credit balance available in Allowance account $2,100
Additional allowance required $17,600
The journal entry will be as follows
DEBIT CREDIT
Bad debt expenses $17,600
Allowance for doubtful accounts $17,600
Hence, the correct option is D.
2. Other receivables include all except "Notes Receivables"
Hence, the correct option is D
Jenny promises National Bank that she will repay the loan that National Bank makes to Garrett if Garrett fails to pay it. In this instance, Jenny is the:
Answer: b. guarantor.
Explanation:
Guarantors who can also be called Sureties, are people who promise to pay the debt of another person if that person fails to honor the debt obligation. To be a Guarantor, you must have assets that will be able to cover the debt and you will probably have to pledge the assets to be collateral for the debt. Having a Guarantor increases the trust that the lender has in the lendee.
Jenny is a Guarantor as she has promised to repay the loan should Garrett default on it.
The primary objective of financial accounting is to: Multiple Choice Provide information on both the costs and benefits of looking after products and services. Monitor consumer needs, tastes, and price concerns. Provide accounting information that serves external users. Know what, when, and how much product to produce. Serve the decision-making needs of internal users.
Answer:
Provide accounting information that serves external users.
Explanation:
Financial accounting is can be defined as the field of accounting involving specific processes such as recording, summarizing, analysis and reporting of financial transactions with respect to business operations over a specific period of time. Financial experts or accountant uses either the cash basis or accrual basis of accounting.
The primary objective of financial accounting is to provide accounting information that serves external users.
In Accounting, the external users of a financial accounting information includes customers, creditors, investors shareholders and government regulators.
The information that are found in a financial statement are revenues, expenses, liability, equity and assets.
Hence, financial accounting is aimed at providing information to external users, who are outside an organization.
Which of the following is NOT an option for remedying a cost disadvantage associated with activities performed by forward channel allies (wholesale distributors and retail dealers)?
a. Change to a more economical distribution strategy such as putting more emphasis on cheaper distribution channels (perhaps direct sales via the Internet) or perhaps integrating forward into company-owned retail outlets
b. Enhance differentiation through activities such as cooperative advertising) at the forward end of the value chain
c. Pressure distributors/dealers and other forward-channel allies to reduce their costs and markups
d. Insisting on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in- house, and those performed by distributors/dealers
e. Collaborate with forward channel allies to identify win-win opportunities to reduce costs
Answer: d. Insisting on across-the-board cost cuts in all value chain activities—those performed by suppliers, those performed in- house, and those performed by distributors/dealers
Explanation:
The cost disadvantage is from the forward channel allies and not an across the board problem which involves all value chain activities. As such, the solution should be garnered towards the forward channel allies.
Insisting on cuts in areas that could be already functioning efficiently could lead to a loss of that efficiency.
Insisting on across-the-board cost cuts in all value chain activities is therefore not an option for remedying a cost disadvantage associated with activities performed by forward channel allies.
After significant market research Dan is evaluating his business compared another local business offering a similar service. His observations tell him that the other business offers lower prices but that his own services are higher quality and result in greater customer satisfaction. What activity is Dan engaging in with his market research?
A. Qualitative analysis
B. Forecasting
C. Competitive analysis
D. Secondary research
Competitive analysis is an activity is Dan engaging in with his market research. Hence, option C is correct.
A comparative analysis contrasts the advantages and disadvantages of your business with those of your rivals' products, services, and marketing plans.
A competitive analysis is a strategy that involves looking into your primary competitors to find out more about their products, sales, and marketing plans. A competitive market study can help businesses create stronger corporate strategies, fend off competitors, and increase market share, among other benefits.
A company's competitive position can be evaluated using the SWOT analysis, which is also used to develop strategic planning. It represents advantages, dangers, opportunities, and weaknesses. The SWOT analysis analyzes both internal and external factors as well as the current condition and any predicted future events.
Thus, option C is correct.
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"A municipality has a tax rate of 18 mills. A piece of real property in the municipality is assessed at $180,000 and has a fair market value of $165,000. The annual tax liability on the property is:"
Answer:
$3,240
Explanation:
Calculation for the annual tax liability on the property
Using this formula
Annual tax liability= (Tax rate× Real property )
Where= Tax rate =18 million
Real property=180,000
Let plug in the formula
Annual tax liability=( .018x180000)
Annual tax liability=$3,240
Therefore the annual tax liability on the property is $3,240
Q 10.25: Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1st. Givens Brick Company signs a $600,000, 8%, 9-month note. Assuming that interest has already been accrued to September 30th, what entry will Givens Brick Company make to pay off the note and interest at maturity
Answer:
Entry is given below
Explanation:
As Givens brick company is paying off the liability of note payable and the interest amount therefore, it will be debited as it is a decrease in liability. Cash will be credited as it is our asset and its decreasing.
Entry DEBIT CREDIT
Notes payable $600,000
Interest $36,000(w)
Cash $636,000
Working
Interest = $600,000 x 8% x9/12
Interest = $36,000
Wolfpack Construction has the following account balances at the end of the year. Accounts Balances Equipment $ 19,000 Accounts payable 1,600 Salaries expense 26,000 Common stock 12,000 Land 11,000 Notes payable 13,000 Service revenue 32,000 Cash 4,600 Retained earnings ?
Answer:
$6,000
Explanation:
Net income for the year = Service revenue - Salaries
= $32,000 - $26,000
= $6,000
Since Net income = retained earnings,
Therefore, retained earnings = $6,000
Absolute Manipulation Manufacturing's (AMM) standards anticipate that there will be 4 pounds of raw material used for every unit of finished goods produced. AMM began the month of May with 3,500 pounds of raw material, purchased 18,700 pounds for $16,830 and ended the month with 1,900 pounds on hand. The company produced 4,700 units of finished goods. The company estimates standard costs at $1.30 per pound. The materials price and efficiency variances for the month of May were:
Answer:
Instructions are below.
Explanation:
Giving the following information:
Standard:
Quantity= 4 pounds per unit
Cost= $1.3 per pound
Actual:
Purchase= 18,700
Used= 3,500 + 18,700 - 1,900= 20,300
Cost= 16,830/18,700= $0.9 per pound
Units produced= 4,700 units
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (1.3 - 0.9)*18,700
Direct material price variance= $7,480 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (4*4,700 - 20,300)*1.3
Direct material quantity variance= $1,950 unfavorable
The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 9%. Management calculated a weightedminusaverage cost of capital (WACC) of 7%. Allied's corporate tax rate is 30.
Sales $700,000
Operating income $175,000
Total Assets $1,500000
Current liabilities $600,000
What is the division's Return on Investment (ROI)?
A) 25.00%.
B) 11.67%.
C) 40.00%.
D) 46.67%.
Answer:
Return n investment = 11.67%
Explanation:
Return on Investment is the proportion investment that is earned as operating income.
For the division, the return on investment would be the proportion of te investment in assets that is earned as net income.
This would be determined as follows;
Return n investment = (Net income÷ Operating assets) × 100
Return n investment = (175,000 ÷ 1,500,000) × 100= 11.67%
Return n investment = 11.67%
Which of the following stages in a buying sequence will result in a specific option or set of options from which price, delivery, system compatibility, and other characteristics can be determined?
a. Determine the characteristics
b. Establish specifications
c. Search for and qualify potential suppliers
d. Request proposals
Answer:
C.
Explanation:
Since determine of characteristics has already been established the next would be to search.
At the beginning of the current fiscal year, the balance sheet of Hughey Inc. showed stockholders' equity of $523,000. During the year, liabilities increased by $28,000 to $232,000; paid-in capital increased by $37,000 to $174,000; and assets increased by $259,000. Dividends declared and paid during the year were $46,000.
Required:
Calculate net income or loss for the year.
Stockholders’ Equity
Assets = Liabilities + PIC + RE
Beginning = + + $260,000 SE
Changes 130,000 = 11,000 + 20,000 +
Ending = $116,000 + $90,000 +
Answer:
net income = $240,000
Explanation:
beginning stockholders' equity $523,000
beginning liabilities $204,000, ending liabilities $232,000 ($28,000 increase)
beginning paid in capital $137,000, ending $174,000 ($37,000 increase)
assets increased by $259,000
dividends $46,000
assets = liabilities + equity
beginning assets = $204,000 + $523,000 = $727,000
ending assets = $727,000 + $259,000 = $986,000
ending equity = ending assets - ending liabilities = $986,000 - $232,000 = $754,000
beginning equity = beginning paid in capital + retained earnings
beginning retained earnings = $523,000 - $137,000 = $386,000
ending equity = ending paid in capital + retained earnings
ending retained earnings = $754,000 - $174,000 = $580,000
ending retained earnings = beginning retained earnings + net income - dividends
$580,000 = $386,000 + net income - $46,000
net income = $580,000 + $46,000 - $386,000 = $240,000
Toyota will bring hybrid electric automobiles to market next year priced at $27 comma 000 (this includes a $6 comma 750 federal tax credit). At $1.89 per gallon of gasoline, it will take 11 years to recoup the difference in price between a base model Toyota Camry and its four-cylinder gasoline-only counterpart. The price difference is $4 comma 180. If the hybrid vehicle is driven for 15 years, what is the internal rate of return on the extra investment in the hybrid?
Answer:
4.15%
Explanation:
In order to determine the annual saving we must divide the extra cost of the hybrid by the amount of years it takes to recoup our investment.
annual savings = $4,180 / 11 years = $380 per year
our initial investment = -$4,180
since we are going to use the car during 15 years, then we have 15 positive cash flows of $380
using a financial calculator or excel spreadsheet, the internal rate of return (IRR) on our investment = 4.15%
Swing Co. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $1,130.35. However, Swing Co. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (YTC) on Swing Co.’s bonds?
Answer:
YTM = 7.77%
YTC = 7.62%
Explanation:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
YTM = {90 + [(1,000 - 1,130.35)/18]} / [(1,000 + 1,130.35)/2]
YTM = 82.758333 / 1,065.175 = 0.07769 = 7.77%
YTC = {coupon + [(call value - market value)/n]} / [(call value + market value)/2]
YTC = {90 + [(1,060 - 1,130.35)/8]} / [(1,000 + 1,130.35)/2]
YTC = 81.20625 / 1,065.175 = 0.07623 = 7.62%
Buhao Construction currently is all-equity-financed. It has 17,000 shares of equity outstanding, selling at $100 a share. The firm is considering a capital restructuring. The low-debt plan calls for a debt issue of $270,000 with the proceeds used to buy back stock. The debt will pay an interest rate of 11%. The firm pays no taxes.
a. What will be the debt-to-equity ratio if it borrows $220,000? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Debt-to-equity ratio
b. If earnings before interest and tax (EBIT) are $130,000, what will be earnings per share (EPS) if Reliable borrows $220,000? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
EPS $
c. What will EPS be if it borrows $420,000? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
EPS $
Answer:
Buhao Construction
a) Debt-to-Equity Ratio if it borrows $220,000
= Debit/Equity
= $220,000/$1,700,000
= 12.94%
b. EPS = $195,800/17,000
= $11.52
c. EPS = $173,800/17,000
= $10.22
Explanation:
a) Data and Calculations:
Outstanding Equity = 17,000 shares x $100 = $1,700,000
Interest rate = 11%
It is assumed that Buhao Construction pays no taxes
EBIT = $130,000
Debit = $220,000
Interest Expense = $24,200
Net Income = $195,800 ($220,000 - 24,200)
Debit = $420,000
Interest Expense = $46,200
Net Income = $173,800 ($220,000 - 46,200)
b) Debt-to-Equity Ratio of Buhao Construction is the relationship in ratio terms between debts and equity of the company. It shows the percentage of debts over the stockholders' equity.
c) EPS or Earnings per share shows the net income of Buhao Construction that can be attributed to each share. Stockholders use this measure to learn the profits that are generated for each share by the company during the period. A high EPS indicates that the business is profitable for stockholders.
A company discarded a computer system originally purchased for $18,000. The accumulated depreciation was $17,200. The company should recognize a(an):
Answer:
The company should recognize a $800 loss.
Explanation:
Depreciation is the loss of value of an asset over its useful life, and because of the accrual principle, this depreciation is matched, as an expense, with the revenues that the asset produces in a specific period of time.
In this case, the company has expensed $17,200 over the computer system useful life. When the computer system was finally discarded, $800, representing the difference between the accumulated depreciation and the original cost of the system, where not expensed. For this reason, this $800 have to be recognized as a loss.
The Allowance for Doubtful Accounts: Multiple Choice Is credited when bad debts expense is estimated and recorded. All of the options are correct. Is a contra asset account. Is used instead of reducing accounts receivable directly.
Answer: All of the options are correct.
Explanation:
The Allowance for Doubtful Account is a contra account because it reduces the value of the Accounts Receivable Account and does so in order to account for the possibility that some customers will not pay the amounts they owe.
It is credited when Bad debts are estimated and recorded; that way this reduction in Accounts receivable does not have to go out of the Accounts Receivable account directly.This will ensure that the Accounts Receivable Account is not volatile as it attempts to keep up with all the bad debts incurred.
DIP LLC reports ordinary income (before guaranteed payments) of $120,000, rent expense of $40,000, and interest income of $4,000 for the year. In addition, DIP paid guaranteed payments to partner Percy of $20,000. If Percy owns a 40% capital and profits interest, how much income will he report for the year and what is its character?
Answer:
$24,000 ordinary income
$1,600 interest income
$20,000 guaranteed payment.
Explanation:
Calculation for what how much income will Percy report for the year and what is its character
Calculation for Percy Ordinary income: 120,000 - 40,000 - 20,000
= 60,000 x 40%
= 24,000.
Calculation for Percy Interest income:
4,000 x 40%
= 1,600
Guaranteed Payment: 20,000
Therefore what Percy will report will be: $24,000 ordinary income
$1,600 interest income
$20,000 guaranteed payment.
Which of the following is approximately the Value at Risk at 5 percent of a portfolio of $10 million of asset A, whose expected return is 10 percent and volatility is 20 percent, and $10 million of asset B, whose expected return is 16 percent and volatility is 25 percent, where the correlation between the two assets is 0.1.
A. $5.6 million
B. $10 million
C. $15 million
D. $1.25 million
E. none of the above
Answer:
A. $5.6 million
Explanation:
Value at risk is the minimum value of portfolio that is considered to lose in case of certain event or volatility. There are two assets in the given scenario and both of them have worth of $10 million. The correlation between them is 0.1 which means there is low strength relationship between the two assets. The value at risk can be found by:
($10 * 5% * 20%) + ($10 * 16% * 25%) * log 1.65
= 5.6 million