Answer:
decision support system.
Explanation:
A decision support system can be defined as a technological program used by organizations to assist in decision making.
This system works by analyzing essential data for decision making, such as sales reports, revenues, operations and projections, and after the analysis, it gathers the most important information, which will help a manager to find relevant standards and make an important decision of more quickly and effectively.
This system guarantees the analysis of a high volume of information and synthesizes it in a flexible and easy way, allowing the analysis of data from graphs, for example, which facilitates decision making. Because it is an intelligent computer system, it can be developed to deliver better performance and assist in organizational decision making.
Using the financial data below, prepare a statement of cash flows for the year ended December 31, 2014 for Summer Peebles, Inc. using the indirect method.
Summer Peebles, Inc.
Income Statement
Year Ending December 31, 2014
Sales $1,000.00
Cost of Goods Sold -$650.00
Depreciation Expense -$100.00
Sales and General Expense-$100.00
Interest Expense -$50.00
Income Tax Expense - $40.00
Net Income $60.00
Summer Peebles, Inc.
Balance Sheets as of December 31, 2013 and 2014
Assets 2013 2014
Cash $50.00 $60.00
Accounts Receivable, Net $500.00 $520.00
Inventory $750.00 $770.00
Current Assets $1,300.00 $1,350.00
Fixed Assets, Net $500.00 $550.00
Total Assets $1,800.00 $1,900.00
Liabilities and Equity
Notes Payable to Banks $100.00 $75.00
Accounts Payable $590.00 $615.00
Interest Payable $10.00 $20.00
Current Liabilities $700.00 $710.00
Long-Term Debt $300.00 $350.00
Deferred Income Tax $300.00 $310.00
Capital Stock $400.00 $400.00
Answer:
Summer Peebles, Inc.
Statement of cash flows for the year ended December 31, 2014
Cash Flow From Operating Activities
Net Income before tax and interest $150.00
Adjustment for non-cash items :
Depreciation Expense $100.00
Adjustment for changes in working capital items :
Increase in Accounts Receivable ($20.00)
Increase in Inventory ($20.00)
Decrease in Notes Payable to Banks ($25.00)
Increase in Accounts Payable $25.00
Interest Paid ($10.00 + $50.00 - $20.00) ($40.00)
Income taxes Paid ($300.00 + $40.00 - $310.00) ($30.00)
Net Cash flow from Operating Activities $140.000
Cash Flow From Investing Activities
Purchase of Fixed Assets ($50.00)
Net Cash flow from Investing Activities ($50.00)
Cash Flow From Financing Activities
Long term debt issue $50.00
Net Cash flow from Financing Activities $50.00
Movement During the year $10.00
Cash and Cash Equivalents at Beginning of the year $50.00
Cash and Cash Equivalents at the End of the Year $60.00
Explanation:
Under the Indirect method, Cash flow from Operating Activities is determined by adjusting the Net Profit / Income before tax and interest with non-cash items previously deducted or add to it and any changes in working capital items.
According to the Uniform Prudent Investors Act , it is NOT a breach of fiduciary duty if investment advisers do not inquire into a client's A) investment objectives B) specific financial needs C) Social Security or tax ID number D) financial situation
Answer: C) Social Security or tax ID number
Explanation:
The Uniform Prudent Investors Act lists guidelines to be followed by investment advisers and trustees when they invest assets. The guiding principle of this Act is the Prudent Man Rule which is that when investing, the investor should invest like a Prudent person would invest their assets.
As such, an investor should be sure to find out some details about the client to enable them better recommend an investment trajectory. Details such as their specific financial needs, their investment objectives and their financial situation will enable the advisers better know what investment strategies and vehicles to use and therefore not inquiring about them would be a breach of fiduciary duty.
Knowing about a client's Social Security or tax ID number will not help the adviser chart an investment course better so does not need to be known.
All of the following are assumptions facing opposing forces of reducing costs and adapting to local markets that international business people should be aware of except? Homogenous customer needs worldwide People around the world are willing to sacrifice preferences for lower prices and higher quality Economies of scale can be obtained in production and marketing through supplying worldwide Lowering international synergy and cost via the value chain matrix
Answer: Lowering international synergy and cost via the value chain matrix
Explanation:
Theodore Levitt came up with some assumptions facing opposing forces of reducing costs and adapting to local markets that international business people should be aware of which include;
On a global scale, customer needs are beginning to become homogeneous.People are willing to sacrifice their preferences for better quality products at a cheaper quality which gives Multinational Companies a chance to offer them better products than local producers due to their large sizes and Economies of scale.Having to supply the world can lead to Economies of scale in production and marketing due to the larger market.Lowering international synergy and cost via the value chain matrix is not one of the assumptions espoused by Theodore Levitt and so is the correct answer.
For the following enumerative induction, identify following three components:_______.
(i) target group, (ii) sample, and (iii) relevant property:
University fraternities are magnets for all sorts of illegal activity. Last year several frat brothers were arrested at a frat-house party. And this year a fraternity was actually kicked off campus for violating underage drinking laws.
Answer:
i. Target Group - University Fraternities
The focus of the statement is all University fraternities as the person making the statement did not limit the number of Fraternities included by saying some or most.
ii. Sample - Several Frat Brothers and a Fraternity
In coming to their conclusion, the author of the text used a sample of several frat brothers who were arrested at a frat-house party as well as a fraternity which was kicked off campus for violating underage drinking laws.
iii. Relevant property - Illegal Activity
The relevant property that all University Fraternities seem to have in come is illegal activity and the author gets this from the several frat brothers as well fraternity that were punished for actions contravening the law.
Gullett Corporation had $26,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $75,000 of raw materials. The journal entry to record the purchase of raw materials would include a:
Answer:
debit to Raw Materials of $75,000
Explanation:
In this scenario, the journal entry to record the purchase of raw materials would include a debit to Raw Materials of $75,000. A debit is an entry recording a sum owed, listed on the left-hand side or column of an account. Therefore in accounting, since Gullet Corporation's purchase was for an "additional" $75,000 worth of raw material, they owe that money to the company and must make it up through sales that those materials should generate in the future. That is why it is recorded as a debit.
a sole proprietor with a tentative loss may deduct which of the following for qualified business use of home expenses?
Complete Question:
A sole proprietor with a tentative loss may deduct which of the following for qualified business use of home expenses?
a. depreciation
b. mortgage interest
c. rent
d. Utilities
Answer:
b. mortgage interest
Explanation:
The sole proprietor with a tentative loss may deduct expenses for mortgage interest, mortgage insurance premiums, and real estate taxes under the normal rules. The sole proprietor is not allowed to deduct other expenses that are normally tax-exempt expenses, including depreciation, rent, and utilities. The amount to be deducted for mortgage interest should not exceed the percentage for business use.
rockwell corp just paid a dividend of .50. analysts expect their dividends to increase by 7% every year for the next 3 years, and then have a constant dividend growth rate of 2% after year 3. If your required return is 8% what is the present value of the stock?
Answer:
Price of share today = $9.74
Explanation:
The price of a share can be calculated using the dividend valuation model
According to this model the value of share is equal to the sum of the present values of its future cash dividends discounted at the required rate of return.
If dividend is expected to grow at a given rate , the value of a share is calculated using the formula below:
Price=Do (1+g)/(k-g)
Do - dividend in the following year, K- requited rate of return , g- growth rate
Step 1 : PV of dividend from year 1 to 3
PV = D × (1+r)^(-n)
D- dividend receivable in a particular year, r- required rate of return, n- year
Year PV of Dividend
1 0.50 × 1.07^1 ×1.08^(-1) = 0.495
2 0.50 × 1.07^2 ×1.08^(-2) = 0.491
3 0.50× 1.07^3× 1.08^(-3) = 0.486
Step 2 : PV of dividend from year 4 to infinity
PV (in year 3 terms) of dividend= 0.50× 1.07^3 ×1.02/(0.08-0.02) = 10.41
PV in year 0 terms = 10.41 × 1.08^(-3) = 8.27
Total Present Value = 0.495 + 0.491 + 0.486 + 8.27 = 9.738
Price of share today = $9.74
Mary just bought a 20-year bond with an 8% coupon rate (paid semi-annually) and $1000 par value for $1050. She is expecting an effective annual yield (EAY) of
Answer:
7.65%
Explanation:
Calculation for Mary effective annual yield (EAY)
The first step is to find the Semiannual coupon payment using this formula
Semiannual coupon payment=(Par value×Coupon rate percentage/2)
Let plug in the formula
Semiannual coupon payment =($1,000 × 8%) ÷2
Semiannual coupon payment= $80 ÷ 2 = $40
Second step is to find The total number of compounding period will be 20 years bond × The number of the compounding period er year which is 2
Hence,
The total number of compounding period will= 2 periods per year × 20 years = 40 periods.
Third step is to use the financial calculator which calculated the rate as 3.76% which means that:
Semiannual yield will be :3.76%
Therefore the Annual yield will be calculatedas = 3.76% ×2
Annual yield= 7.51%
The last step is to find the effective annual yield (EAY) using this formula
EAY = [1+(Quoted interest rate / m]m -1
Let plug in the formula
EAY = [1+(0.0751÷2)]2 -1
EAY= 7.65%.
Therefore the effective annual yield (EAY) will be 7.65%
Moraine, Inc., has an issue of preferred stock outstanding that pays a 3.50 dividend in perpetuity. If this issue currently sells for 85 per share, what is the required return
Answer:
4.12%
Explanation:
Given that:
Payment of dividend per year = $3.50
Issue price of preferred stock = $85
(Note: Assumed that $85 is the face value of the preferred stock)
Hence, the formula for Required return = Dividend per year/ face value of the stock
= $3.5/ $85 = 0.0411764705
Then converting the answer to percentage, we have
0.0411764705 * 100% = 4.1764705
Therefore, the required return is = 4.12% (approximately)
21. Preferred stock pays quarterly dividend of $3 a share. If investors require 12% return on a stock of a similar risk level, what is the price
Answer: $100
Explanation:
A value of a Preferred Stock is calculated like a perpetuity which means that it is derived by dividing the cash-flow by the annual interest rate.
This Stock pays $3 per quarter. It will pay _____ per year;
= $3 * 4
= $12
Value of Preferred Stock = [tex]\frac{Annual Cash-flow}{Annual Interest}[/tex]
= [tex]\frac{12}{0.12}[/tex]
= $100
Psymon Company, Inc. sells construction equipment. The annual fiscal period ends on December 31. The following adjusted trial balance was created from the general ledger accounts on December 31:________.
Account Titles Debits Credits
Cash $ 45,190
Accounts Receivable 19,200
Inventory 69,500
Property and Equipment 53,000
Accumulated Depreciation $ 22,300
Liabilities 32,100
Common Stock 96,000
Retained Earnings, January 1 12,200
Sales Revenue 195,500
Sales Returns and Allowances 7,300
Sales Discounts 8,600
Cost of Goods Sold 105,200
Salaries and Wages Expense 18,200
Office Expense 19,200
Interest Expenses 2,300
Income Tax Expense 10,410
Totals $ 358,100 $ 358,100
Prepare a multistep income statement that would be used for internal reporting purposes. Treat Sales Discounts and Sales Returns and Allowances as contra-revenue accounts. TIP: Some of the accounts listed will appear on the balance sheet rather than the income statement.
Prepare a multistep income statement that would be used for external reporting purposes, beginning with the amount for Net Sales.
Compute the gross profit percentage.
Answer:
Prepare a multi-step income statement that would be used for internal reporting purposes.
Psymon Company, Inc.
Income Statement
For the year ended December 31, 202x
Sales revenue $195,500
Sales discounts $8,600
Sales returns and allowances $7,300
Net sales $179,600
Cost of goods sold $105,200
Gross profit $74,400
Expenses:
Salaries and Wages Expense $18,200
Office Expense $19,200
Income from operations $37,000
Interest Expenses $2,300
Income Tax Expense $10,410
Net income $24,290
Prepare a multi-step income statement that would be used for external reporting purposes
Psymon Company, Inc.
Income Statement
For the year ended December 31, 202x
Net sales $179,600
Cost of goods sold ($105,200)
Gross profit $74,400
Gross profit margin 41.43%
Operating expenses:
Salaries and Wages Expense $18,200 Office Expense $19,200 ($37,400)Income from operations (EBIT) $37,000
Other revenues and expenses:
Interest Expenses $2,300Earnings before taxes $34,700
Income Tax Expense $10,410
Net income $24,290
Your task is to take this _______and construct a graphical representation of the data. In doing so, you determine that as the price of soda rises, the quantity of soda demanded decreases. This confirms the _______ .
Answer:
1. Demand Schedule
2. Law Of Demand
Explanation:
A demand schedule in economics is a tabular representation that describes the quantity demanded of a good or service at different price levels.
In other words, demand schedule depicts the quantity or units of a good or service will be purchased at various price points.
On the other hand, the law of demand states that, given that, all things being equal, as the price of a good increases, quantity demanded decreases; and at the same time, as the price of a good decreases, quantity demanded increases.
Hence, it is can be concluded that, in this case, Your task is to take this DEMAND SCHEDULE and construct a graphical representation of the data. In doing so, you determine that as the price of soda rises, the quantity of soda demanded decreases. This confirms the LAW OF DEMAND.
Answer:
Given the data, a graphical representation of an increase in price of soda resulting in a decrease in quantity demanded of soda, ceteris paribus, is given below in the attachment.
Explanation:
This confirms the law of demand, which states that, all other things being equal, the higher the price of a commodity, the lower the quantity demanded of it.
Other things that are held equal or constant include:
- taste of the consumer
- income level of the consumer
- interest rate in the economy
- level of production or supply of the commodity; etc.
View attachment below, for the graph illustrating THE LAW OF DEMAND.
- DD represents the demand curve
- The vertical axis represents the prices
- The horizontal axis represents the quantities demanded
- The equilibrium point is also seen at D4.
. Identify each of the following as (i) part of an expansionary fiscal policy, (ii) part of a contractionary fiscal policy, or (iii) not part of fiscal policy. a. The personal income tax rate is lowered. b. Congress cuts spending on defense. c. College students are allowed to deduct tuition costs from their federal income taxes. d. The corporate income tax rate is lowered. e. The state of Nevada builds a new tollway in an attempt to expand employment and ease traffic in Las Vegas.
Answer:
Option, A , D, E = expansionary fiscal policy.
Option B = Contractionary fiscal policy
Option C = not a part of fiscal policy
Explanation:
The expansionary fiscal policy occurred when there is a decrease in taxes and an increase in government expenditure (spendings). While contractionary fiscal policy occurs when taxes are increased by the government and there is a fall or decrease in government spendings. Therefore, Option A, Option D, and Option E are part of the expansionary fiscal policy.
Option B is a contractionary fiscal policy. While option C is not a part of fiscal policy
You are given the following information for Watson Power Co. Assume the company’s tax rate is 40 percent.
Debt: 5,000 7.2 percent coupon bonds outstanding, $1,000 par value, 30 years to maturity, selling for 108 percent of par; the bonds make semiannual payments.
Common stock: 440,000 shares outstanding, selling for $62 per share; the beta is 1.05.
Preferred stock: 22,000 shares of 3 percent preferred stock outstanding, currently selling for $82 per share.
Market: 11 percent market risk premium and 5.2 percent risk-free rate.
What is the company's WACC?
Answer:
14.06%
Explanation:
The computation of the company WACC is shown below:
Particulars After tax Market value Weights WACC
(cost % × weights)
Common stock 16.75% $27,280,000 0.79 13.25%
(440,000 shares × $62)
Preferred stock 3.66% $1,804,000 0.05 0.19%
(22,000 shares × $82)
Debt 3.95% $5,400,000 0.16 0.62%
(5,000 shares × $1,000 × 108%)
Total $34,484,000 1
WACC 14.06%
Working note
Cost of common equity is
= Risk free rate of return + Beta × market risk premium
= 5.2% + 1.05 × 11%
= 5.2% + 11.55%
= 16.75%
Cost of preferred stock is
= Annual dividend ÷ Market price per share
= 0.03 ÷ $82
= 3.65%
And, the cost of debt is calculated by using the RATE formula i.e
= RATE(NPER,PMT,-PV,FV)
= RATE(30 × 2, $1,000 × 7.2% ÷ 2, -$1,080, $1,000)
After calculated this, the rate of interest should be multiplied by 2 and then applied the tax rate of (1 - 0.40)
So, the rate is 3.95%
Accounts payable are: Multiple Choice Amounts received in advance from customers for future services. Always payable within 30 days. Estimated liabilities. Amounts owed to suppliers for products and/or services purchased on credit. Not usually due on specific dates.
Answer:
Amounts owed to suppliers for products and/or services purchased on credit
Explanation:
Amounts owed to suppliers for products and/or services purchased on credit
Accounts Payable are due to a particular creditor when it order goods or services without paying immediately which means that you bought goods on credit.
T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2.00 each. At this level of output, the average total cost is 2.50 and the average variable cost is $2.20. Based on these data, the firm should
Answer:
shutdown in the short run
Explanation:
A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
A firm should shut down in the short run if price is less than average variable cost.
for T-Shirt Enterprises, price is $2 which is less than average variable cost
Use the information for the question(s) below. Project A Project B Time 0 −10,000 −10,000 Time 1 5,000 4,000 Time 2 4,000 3,000 Time 3 3,000 10,000 If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest?
Answer:
PROJECT B
Explanation:
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
IRR can be calculated using a financial calculator
For project A,
Cash flow in year 0 = -10,000
cash flow in year 1 = 5,000
cash flow i year 2 - 4,000
cash flow in year 3 = 3,000
IRR = 10.65%
For project B,
Cash flow in year 0 = -10,000
cash flow in year 1 = 4,000
cash flow i year 2 - 3,000
cash flow in year 3 = 10,000
IRR = 26.37%
Project B would be ranked higher because it has a higher IRR
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button
The valuation of marketable securities on the balance sheet requires the securities on the balance sheet requires the separation of investment securities into three categories: held to maturity: trading securities and securities available for sale trading and securities available for sale.
a. True
b. False
Answer: True
Explanation:
The valuation of marketable securities on the balance sheet requires the securities on the balance sheet requires the separation of investment securities into three categories.
The categories are held to maturity which are the securities that are bought and then kept until they mature; the trading securities and then the securities that are available for sale.
The marketing department of a reputable firm wants to improve strategic decision making, track the actions of other players in the market, and provide early warning of opportunities and threats. Which of the following would help the firm achieve its objectives?
A) Data warehousing
B) strategic planning competitive marketing intelligence
D) customer relationship management
E) ethnographic research
Answer:
The answer is C. competitive marketing intelligence
Explanation:
Competitive marketing intelligence may be a powerful research-based method employed by a company to collect, analyze, and use information collected on competitors, economic conditions, customers etc to a achieve business's competitive advantage.
The information-gathering analysis process can help a corporation develop its strategy or identify competitive gaps. It identifies threats and opportunities within the business
Patricia is a business owner who is trying to determine the cost of goods sold for 2019. She bought 20 units of inventory at $11, then 26 units at $9, and finally 18 units at $14. She sold 30 units in 2019 and uses FIFO for her inventory valuation. What was her cost of goods sold in 2019, assuming that there was no inventory at the beginning of the year?
Answer:
COGS= $310
Explanation:
Giving the following information:
She bought 20 units of inventory at $11, then 26 units at $9, and finally 18 units at $14.
She sold 30 units in 2019.
Under the FIFO (first-in, first-out) valuation method, the cost of goods sold is calculated using the cost of the firsts units incorporated into inventory.
COGS= 20*11 + 10*9
COGS= $310
ohnson, LLC’s bonds have exhibited a substantial trading volume in the past few years. Its bonds would be referred to a
Answer:
Seasonal issue
Explanation:
The seasoned issue or seasonal issue is that issue which is made for extra securities held from the company i.e established and it considered those securities who are already traded in the secondary market. The bond which are outstanding and traded in the secondary markets is known as seasoned issued
Since in the question it is mentioned that there is a substantial trading volume in the past few years so this represents the seasoned issue
Aggregate supply is best described as the
total output of all products and services.
point of equilibrium.
nation’s real gross national product.
excess supply in the market.
Answer:
Total output of all products and services.
Explanation:
Aggregate supply is defined as the total amount of goods and services that firms are willing to sell, at a specific price, within a particular economy.
Aggregate supply is a macroeconomic concept, an aggregate variable, that is used in Keynesian and Neoclassical economics, often in models that put it together with aggregate demand, in what is known as the Aggregate Supply-Aggregate Demand model (AS-AD model).
Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2017. HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2017 Sales (11,500 units at $225 each) $ 2,587,500 Variable costs (11,500 units at $180 each) 2,070,000 Contribution margin $ 517,500 Fixed costs 360,000 Pretax income $ 157,500 1. Compute Hudson Co.'s break-even point in units and. 2. Compute Hudson Co.'s break-even point in sales dollars.
Answer:
1) Break-even point in units =8000 units
2) Break-even point (sales) = $1,800,000
Explanation:
Break-even point is the level of activity at which a firm must operate such that its total revenue will equal its total costs. At this point, the company makes no profit or loss because the total contribution exactly equals the total fixed costs.
Break even point in units is calculated using this formula:
Break even point in units = Total general fixed cost/ (selling price - Variable cost)
Break-even point in units = 360,000/(225- 180) = 8000 units
Break-even point in units =8000 units
2) Break-even point (sales) is computed as follows:
Break-even point (sales) = Total general fixed cost/C/S ratio.
C/s ratio = (Selling price - variable cost)/Selling price × 100
= (225 - 180)/225 × 100 = 20%
Break-even point (sales) = 360,000/20% = $1,800,000
Break-even point (sales) = $1,800,000
1) Break-even point in units =8000 units
2) Break-even point (sales) = $1,800,000
Maria is an investment adviser who is working through investment objectives and risk tolerance with a new client, Bobby. Bobby indicates that he'd like to see some capital appreciation, achieve at least some income, and wants to maintain a relatively high level of safety and principal protection. The BEST recommendation that Maria can make to Bobby is that Bobby invest in
Answer:
The best recommendation that Maria can make to Bobby is that Bobby should invest in Federal Government Bonds and Treasury Bills.
However, it all depends on what his investments priorities and approach are. For a relatively high level of safety and principal protection, Federal Government Bonds and Treasury Bills are the best bet.
Any other investment that will offer some income will be too risky for safety.
Explanation:
Risk appetite determines a person's investment profile. However, it must be clear that higher returns on investment go with higher risks. Every high return investment compensates for the high risks. It is even the riskiest not to invest. Risk should be studied and accepted when it cannot be avoided. We usually say, "you cannot eat your cake and have it."
Suppose that, during a recession, the government borrows money to provide free movies as a distraction from the poor economy. Which of the following statements are correct?
A. The free movies as a distraction from the poor economy will likely raise interest rates as the government borrows more money to finance the purchase.
B. This policy will likely be accompanied by an impact lag as the policy takes time to make its way to the people.
C. The provision of free movies is an example of an automatic stabilizer.
D. The government is engaging in contractionary fiscal policy.
E. Crowding-out will occur as individuals choose to rely on free movies instead of purchasing their own.
Answer: A. . The free movies as a distraction from the poor economy will likely raise interest rates as the government borrows more money to finance the purchase.
B. This policy will likely be accompanied by an impact lag as the policy takes time to make its way to the people.
E. Crowding-out will occur as individuals choose to rely on free movies instead of purchasing their own
Explanation:
We are informed that during a recession, the government borrows money to provide free movies as a distraction from the poor economy.
The effect of this is that there will be a likely increase in the interest rates because the government borrows more money to finance the purchase of tickets.
Also, due to the free movies, there'll be an impact lag as the policy will take time before it make its way to the people and there will also be crowding-out because the individuals will rely on free movies instead of purchasing their own.
You’ve just secured a new client in your accounting practice, Peter's Pool Corporation (PPC), a brand new small business specializing in pool service. The owner, Peter Peck, is a terrific swimmer and pool repair specialist, but definitely not an accountant. Your job is to help Peter put his affairs in order. Luckily, Peter has only been in operation for a month and things have not gotten too out of hand yet! Peter has to submit his financial statements to his investors and doesn’t know where to begin. It’s your job to go through the complete Accounting cycle to prepare the financial statements for the PPC.
Answer: just give what u know the business is small so it can’t manage
Explanation:
Assume an investor purchases the net assets of an investee for the cash purchase price is $50,400. The investor is willing to purchase the investee's business for this amount because the fair value of PPE is $47,040 and the fair value of a (previously unrecognized) customer list is $10,080 (the fair values of all other assets and liabilities are equal to their book values). The investee company reports the following balance sheet on the acquisition date:
Cash $1,680 Accounts payable 3,360
Accounts receivable $3,360 Accrued liabilities 5,040
Inventories 6,720
Current assets 11,760 Current liabilities 8,400
Long-tem liabilities 6,720
PPE, net 16,800 Stockholders' equity 13,440
Total liabilities & equity $28,560 Total assets $28,560
Parts A and B are independent of each other.
A. Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company.
B. Provide the journal entry if the investor pays cash and purchases all of the stock of the investee's shareholders.
Answer and Explanation:
The Journal entries are shown below:-
A. Cash Dr, $1,680
Accounts receivable Dr, $3,360
Inventories Dr, $6,720
PPE, net Dr, $16,800
To Accounts payable $3,360
To Accrued liabilities $5,040
To Long-term liabilities $6,720
To Cash $13,440
(Being purchase of the assets and assumption of the liabilities is recorded)
B. Equity investment Dr, $13,440
To Cash $13,440
(Being purchase of the assets and assumption of the liabilities is recorded)
The Keynesian link between the money market and the goods and services market is __________. Changes in the money market must affect the __________ market before the goods and services market is affected.
Answer:
Indirect; investment.
Explanation:
John Maynard Keynes was a British economist born on the 5th of June, 1883 in Cambridge, England. He was famous for his brilliant ideas on government economic policy and macroeconomics which is known as the Keynesian theory. He later died on the 23rd of April, 1946 in Sussex, England.
The Keynesian link between the money market and the goods and services market is indirect. Changes in the money market must affect the investment market before the goods and services market is affected.
According to the Keynesian Transmission Mechanism, the link between the money market and the goods and services market is indirect; because at first, short-term interest rates are lowered by an increase in the supply of reserves and then with time both the bond and bank loan rates falls. Consequently, this would make investments and aggregate demand (AD curve shifts rightward) to rise or increase as a result of the low cost of capital for investors and by extension it boost the level of production or quantity of output (real gross domestic product or Real GDP).
This ultimately implies that, the interest rates affects the real and costs of capital (monetary changes).
You are given the following information on Parrothead Enterprises: Debt: 9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 105.5. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 255,000 shares of common stock selling for $65.10 per share. The stock has a beta of .96 and will pay a dividend of $3.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Preferred stock: 8,600 shares of 4.55 percent preferred stock selling at $94.60 per share. The par value is $100 per share. Market: 11.4 percent expected return, risk-free rate of 3.9 percent, and a 21 percent tax rate. Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Activity-based costing for a service company
Crosswinds Hospital plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital indirect costs:
Activity Activity Rate
Room and meals $240 per day
Radiology $215 per image
Pharmacy $50 per physician order
Chemistry lab $80 per test
Operating room $1,000 per operating room hour
The activity usage information associated with the two patients is as follows:
Patient Putin Patient Umit
Number of days 6 days 4 days
Number of images 4 images 3 images
Number of physician orders 6 orders 2 orders
Number of tests 5 tests 4 tests
Number of operating room hours8 hours 4 hours
Complete the Activity Table:
A. Determine the activity rate for each activity. Enter these rates in the Activity Rate columns.
B. Use the activity rates in (A) to determine the total and per-unit activity costs associated with patient.
Answer:
A.
Room and meals= $240 per day
Radiology = $215 per image
Pharmacy = $50 per physician order
Chemistry lab = $80 per test
Operating room = $1,000 per operating room hour
B.
Patient Putin
Unit = $1,585
Total = $10,640
Patient Umit
Unit = $1,585
Total = $6,025
Explanation:
Activity rate = Total Overhead Cost / Total Activity
Room and meals= $240 per day
Radiology = $215 per image
Pharmacy = $50 per physician order
Chemistry lab = $80 per test
Operating room = $1,000 per operating room hour
Patient Putin
Unit Total
Room and meals $240 $1,440
Radiology $215 $860
Pharmacy $50 $300
Chemistry lab $80 $40
Operating room $1,000 $8,000
Total $1,585 $10,640
Patient Umit
Unit Total
Room and meals $240 $960
Radiology $215 $645
Pharmacy $50 $100
Chemistry lab $80 $320
Operating room $1,000 $4,000
Total $1,585 $6,025