Answer:
a. Private Property Rights
b. Political Stability and Rule of Law
c. Open and Competitive Market
d. Private Property Rights
Explanation:
a. By defining private property Rights and giving people a chance to own resources, Individuals will strive to own more and more of such rights and so will produce as much as they can so as to afford such rights.
b. When a nation is Politically stable and respects the Rule of Law, investment payoffs are easier to predict than in a country where instability can threaten to degrade investments such that the payoffs will be lost. For example, think of all the Western firms that lost money when the Shah of Iran was overthrown by the Ayatollah.
c. Specialization is more likely to occur in nations with Open and Competitive Market. An Open Market means that goods can come in from the outside easily. This will have the effect of the country being able to import goods that cost a lot to produce locally and instead focus on producing those goods that they are well adept at producing. This is Specialization. Also as a result of competition, companies will strive to find better ways to make profit above competitors and come up with more efficient ways of Production as a result.
d. The Xiaogang Agreement refers to an agreement by farmers in Xiaogang to subdivide their lands in secret so that they would each own a small part of it. As a result, the farmers had an incentive to produce for themselves as they now owned resources that they could benefit from. This right to Private Property led to a huge boom in Agriculture.
In May direct labor was 35% of conversion cost. If the manufacturing overhead for the month was $116,350 and the direct materials cost was $20,200, the direct labor cost was:
Answer:
Direct labor= $62,650
Explanation:
Giving the following information:
In May direct labor was 35% of conversion cost.
The manufacturing overhead for the month was $116,350.
The conversion costs are the sum of the direct labor and the manufacturing overhead:
Overhead= 65%= 116,350
Direct labor= 35%= ?
First, we need to determine the total amount of conversion costs:
Conversion costs= 116,350/0.65= 179,000
Now, the direct labor cost:
Direct labor= 179,000*0.35
Direct labor= $62,650
Suppose an American buys stock issued by an Argentinian corporation. The Argentinian firm uses the proceeds from the sale to build a new office complex. This is an example of foreign ___________ in Argentina.
1. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries?
a. Protecting property rights and enforce contracts
b. Providing tax breaks and patents for firms that pursue research and development in health and sciences.
c. Increasing taxes on income from savings
d. Imposing restrictions on foreign ownership of domestic capital.
2. In less developed countries, what does the brain drain refer to?
a. The emigration of highly skilled workers to rich countries
b. Lower productivity due to a malnourished workforce
c. Rapid population growth that increases the burden on the educational system
d. Rapid population growth that lowers the stock of capital per worker
Answer:
Suppose an American buys stock issued by an Argentinian corporation. The Argentinian firm uses the proceeds from the sale to build a new office complex. This is an example of foreign PORTFOLIO INVESTMENT in Argentina.
1. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries?
a. Protecting property rights and enforce contracts b. Providing tax breaks and patents for firms that pursue research and development in health and sciences.Both A and B are essential for increasing economic growth. E.g. if Coke was not able to keep its formula secret in certain country, it will not engage in business there. Investment in R&D is essential for future economic growth.
2. In less developed countries, what does the brain drain refer to?
a. The emigration of highly skilled workers to rich countriesBrain drain refers to the immigration of highly skilled workers from poor countries into rich countries. E.g. a doctor moves from mexico to the US because he/she can earn a much higher salary. But at the same time, all the money and time spent educating the doctor is lost by Mexico and its economy.
Jacobsen Corporation prepares its financial statements applying U.S. GAAP. During its 2016 fiscal year, the company reported before-tax income of $621,000. This amount does not include the following two items, both of which are considered to be material in amount: Unusual gain $201,000 Loss on discontinued operations (301,000) The company's income tax rate is 30%. In its 2016 income statement, Jacobsen would report income from continuing operations of:
Answer:
Jacobsen Corporation
Income from continuing operations of $621,000 will be reported.
Explanation:
The income from continuing operations is the same thing as the operating income. It is the pre-tax income that is reported on Jacobsen Corporation's income statement for the year ended December 31, 2016. The tax rate of 30% is applied on this figure to obtain the income tax expense for the year. But, for Jacobsen that has other unusual items, these are taken into consideration before the income tax is imputed to obtain the after-tax income.
3. What techniques would you use as alternatives to traditional discipline? What do such alternatives have to do with organizational justice? Why do you think alternatives like these are important, given industry’s need today for highly committed employees?
Answer & Explanation: Traditional discipline refers to correctional strategies. Often times, this form of discipline is punitive in nature hence the use of alternatives.
Some alternatives to traditional discipline include the use of MEDIATION, FACILITATION, COUNSELLING.
The use of alternatives to traditional discipline is important to organizational justice when it is complied with across board all employees so that they have a perception of fairness. Also such alternatives are seen to be ethically right, leads to employees being committed, reduces employee turnover and prevents avoidable litigation.
OPR finds its cases through all of the following except which one? A. The investigation division of OPR.
Answer:
The investigation division of OPR.
Explanation:
OPR stands for Office of Professional Responsibility. It is a section of department of justice whose task is to monitor any misconduct in the government departments. It is responsibility of OPR to find any allegations that result in misconduct in department of attorney. The OPR finds its cases through all except the own division. There will be chance of familiarity and self review threats in such monitoring.
A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.
A. True
B. False
Answer:
false
Explanation:
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,700 and has $350,700 of accumulated depreciation to date, with a new machine that has a purchase price of $484,500. The old machine could be sold for $62,600. The annual variable production costs associated with the old machine are estimated to be $155,100 per year for eight years. The annual variable production costs for the new machine are estimated to be $102,300 per year for eight years. a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effects (Alternative 2) Revenues: Proceeds from sale of old machine $ $ $ Costs: Purchase price Variable productions costs (8 years) Profit (Loss) $ $ $ a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. b. What is the sunk cost in this situation
Answer:
1.Incremental loss $300
2.Alternative II Replacing the Old Machine is beneficial because we have Incremental Profit of $300
2b.$250,000
Explanation:
1. Preparation of the differential analysis dated May 29
Differential Analysis
Continue with old machine (Alternative I ) or Replace old machine (Alternative II )
Continue with Replace the Differential effect
Old Machine Old Machine
Alternative 1 Alternative 2 Alternative 2
Revenue:
Revenue from Sale of Old Machine
$0 $62,600 $62,600
Cost:
Purchase Cost
$0 $484,500 $484,500
Variable Production (8 Years)
$1,240,000 $818,400 -$422,400
Profit / (Loss) ($1,240,000) ($1,240,300) -$300
Incremental loss = $300
2. Calculation to Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine.
Alternative II Replacing the Old Machine is not beneficial because we have Incremental loss of $300
2b. Calculation for the sunk cost in this situation
The Sunk Cost will be the Book Value of Old Machine = $600,700-$350,700
= $250,000
Variable production workings
($155,100×8=1,240,800)
($102,300×8= 818,400)
A 4% loan of $20,000 is to be repaid by level annual installments. The principal in the 4th installment is $450. Find the amount of each installment.
Answer:
Explanation:
Please note that this question we have to do by hit and trail method. Every annual payment has 2 components,
Interest and Principal repayment
Interest is higher at the beginning and principal repayment is lower. We have not been given the time for the loan.
So i will tell you how to calculate the Total annual installment by hand
and then we will make table of payments to see if we are getting 450 principal repayment in month 4
We will do 3-4 iterations to get the answer
Loan Amount = 20,000
Rate = 4%
Principal repayment in year 4 = 450
Let say time = n years
Annual installment = Loan amount * ( rate * ( 1+rate ) ^n ) / ( ( 1 + rate ) ^n -1 )
assume n = 25 years
Annual installment = 20,000 * ( 0.04* ( 1.04 ) ^ 25 ) / ( ( 1.04 ) ^25 -1 ) = 1280.24
Suppose a bank has $500 million in deposits and $35 million in required reserves, and it is holding no excess reserves. What is the required reserve ratio
Answer:
The required reserve ratio is $17500 million.
Explanation:
The given deposit with the banks = $500 million
Required reserves = $35 million
We already have the deposits with the bank and the required reserves. Now we have to calculate the required reserve ratio and it can be calculated by multiplying the bank deposit with required reserves.
Required reserve ratio = Bank deposits × Required reserve
= 500 × 35
= $17500 million
Wikipedia's engagement of readers and the public in developing content, with an emphasis on timeliness and the breadth of content, exemplifies this type of value innovation:
Answer: Raise
Explanation:
The options for the question are:
a. Raise
b. Create
c. Reduce
d. Eliminate
Wikipedia is used by people that are involved in academics or anyone that is seeking information as it gives information regarding different topics and issues.
Wikipedia's engagement of readers and the public in developing content, with an emphasis on timeliness and the breadth of content, exemplifies this type of value innovation raise.
Wikipedia is utilized by academicians and anybody looking for knowledge since it provides information from a wide range of topics and situations.
This form of value innovation raising is shown by Wikipedia's participation of users and the public in producing content, with a concentration on immediacy and breadth of material.
Learn more:
https://brainly.com/question/12102265?referrer=searchResults
adjustments that increase or decrease earnings should be investigated with more skepticism.
Answer:
True of financial account auditors.
Explanation:
A financial account auditor often act as skeptics (having suspicion and lack of trust) when reviewing financial transactions.
Thus financial accounts adjustments that increase or decrease earnings are usually investigated with more skepticism by auditors. Such increased skepticism is important because it enables the auditor undo errors and better position the business for success.
BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form. Form Type Mix of Forms Form Cost A 0.5 $3.75 B 0.5 $1.25 The expected cost of digitizing a form is $ . Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected cost of the form that you calculated in the previous part of the problem. Suppose that after the agreement, the client sends only forms of type A. The expected digitization cost per form of the forms sent by the client is $ . This leads to an expected loss of $ per form for BPO. (Hint: Do not round your answers. Enter the loss as a positive number.)
Answer:
BPO Servicesa. The expected cost of digitizing a form is $2.50
b. The expected digitization cost per form of the forms sent by the client is $3.75, without a mix of forms.
c. This leads to an expected loss of $1.25 per form for BPO.
Explanation:
1. Data:
Form Type Mix of Forms Form Cost
A 0.5 $3.75
B 0.5 $1.25
b. Calculation of Expected Cost of digitizing a form:
Form Type Mix of Forms Form Cost Expected Cost
A 0.5 $3.75 $1.875 (0.5 * $3.75)
B 0.5 $1.25 $0.625 (0.5 * $1.25)
Total expected costs $2.50
c. Calculation of Expected cost of Form actually sent by Client without a mix of forms:
A 01 $3.75 $3.75 (1 * $3.75)
Total expected costs $3.75
d. Calculation of Expected Loss:
Expected Price = $2.50
Expected cost = $3.75
Expected loss = $1.25
e. The expected value (cost, price, or gain or loss) from the form digitization is the sum of all possible values from the mix of forms, each multiplied by the probability of its occurrence.
Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the:_________.
a. investor sells the investment
b. investee declares a dividend
c. investee pays a dividend
d. earnings are reported by the investee in its financial statements
Answer: Earnings are reported by the investee in its financial statements
Explanation:
Equity method is when investments are being treated in associate companies and it is usually applied in cases whereby an investor entity holds about twenty to fifty percent of the associate company's voting stock. Due to this reason, it has a strong say in the associate company's management.
Under the equity method of accounting for investments, an investor recognizes its share of the earning in the period in which the earnings are reported by the investee in its financial statements.
Because you can adapt to your audience while you are speaking, don't worry about analyzing the audience for an oral presentation.
A. True
B. False
Answer:
B. False.
Explanation:
This statement is false, due to the fact that a good oral presentation must be prepared before the presentation in accordance with all the procedures to be covered in the presentation. Therefore, the ideal is to know your audience before the presentation, so that there is a preparation aligned with their values and behaviors, in order to retain the attention and interaction of the participants, which makes the presentation more interesting and effective.
Scripting the presentation also avoids possible unforeseen events, in addition to being ideal to also be open to interactions, to provide important and impactful information, to prepare supporting material such as slides, and to always practice before the presentation, to be prepared and interacted on the subject addressed.
You decide to borrow $100,000 at the riskless interest rate, and you then invest all $300,000 ($200,000 of your own cash and the $100,000 borrowed cash) in the market index fund. Calculate the expected return and standard deviation of this investment portfolio
You have $200,000 of cash. The riskless interest rate is 3%. The market index fund has an expected return of 10% and a standard deviation of 20%
You decide to borrow $100,000 at the riskless interest rate, and you then invest all $300,000 ($200,000 of your own cash and the $100,000 borrowed cash) in the market index fund. Calculate the expected return and standard deviation of this investment portfolio
Answer:
The expected return of this portfolio = 13.50%
standard deviation of this portfolio = 30.00%
Explanation:
From the information given:
The percentage of riskless = -100000/200000
The percentage of riskless = -0.50%
Now; the investment in market index = 1.50%
The expected return of this portfolio = 1.50 × 10% + ( - 0.5 ×3 %)
The expected return of this portfolio = 1.50 × 0.1 - 0.5 × 0.03
The expected return of this portfolio = 0.15 - 0.015
The expected return of this portfolio = 0.135
The expected return of this portfolio = 13.50%
standard deviation of this portfolio = the investment in market index × market index standard deviation
standard deviation of this portfolio = 1.50 × 20%
standard deviation of this portfolio = 30.00%
Nissan’s all-electric car, the Leaf, has a base price of $32,780 in the United States, but it is eligible for a $7500 federal tax credit. A consulting engineering company wants to evaluate the purchase or lease of one of the vehicles for use by its employees traveling to job sites in the local area. The cost for leasing the vehicle will be $4200 per year (payable at the end of each year) after an initialization charge of $2500 paid now. If the company purchases the vehicle, it will also purchase a home charging station for $2200 that will be partially offset by a 50% tax credit. If the company expects to be able to sell the car and charging station for 40% of the base price of the car alone at the end of 3 years, should the company purchase or lease the car? Use an interest rate of 10% per year and annual worth analysis.
Answer:
Nissan's all-electric car, the Leaf
PV cost of Leaf Purchase = $16,529
PV cost of Leasing = $12,944.78
The company should lease the car.
Explanation:
a) Costs incurred to purchase the Leaf:
Base price $32,780
less Federal tax credit ($7,500)
Charging station 2,200
less 50% tax credit (1,100)
Cash paid $26,380
Sales value after 3 yrs (9,851) ( $26,380 - 40% of base discounted to PV)
Net PV Investment $16,529
b) Calculation of Discounted Present Values of Payments under Leasing, using online financial calculator:
PV (Present Value) $12,944.78
N (Number of Periods) 3.000
I/Y (Interest Rate) 10.000%
PMT (Periodic Payment) $4,200.00
Starting Investment $2,500.00
Total Principal $15,100.00
Total Interest $2,129.50
c) The purchase of the Leaf would involve a present value cost of $26,380 after deducting all the savings from tax. The 40% sales value of the car at the end of 3 years = $13,112 ($32,780 x 40%). When this sales value is discounted to PV of $9,851, the PV of the car investments becomes $16,529 ($26,380 - $9,851). On the other hand, leasing will cost in PV the sum of $12,944.78
.
Peyton sells an office building and the associated land on May 1 of the current year. Under the terms of the sales contract, Peyton is to receive $1,763,800 in cash. The purchaser is to assume Peyton's mortgage of $1,058,280 on the property. To enable the purchaser to obtain adequate financing, Peyton is to pay the $105,828 in points charged by the lender. The broker's commission on the sale is $70,552. What is Peyton's amount realized? The amount realized by Peyton is $ .
Answer:
$2,645,700
Explanation:
realized amount = cash received + assumed mortgage - points paid by seller - broker's commission = $1,763,800 + $1,058,280 - $105,828 - $70,552 = $2,645,700
The amount realized includes all the money received and any debts assumed by the buyer, minus any expenses paid by the seller that are related to the transaction.
Suppose the economy was experiencing a negative real shock and high unemployment and high inflation at the same time. Furthermore suppose the Federal Reserve decided to address the problem by decreasing the money supply money. Assuming the policy is effective what can we expect to occur as a result (in the short run)
Answer: b. We should expect less inflation but more unemployment
Explanation:
A high supply of money leads to higher inflation. This is because the citizens will have more money to spend on goods and services and so will demand more of them. As a result, the increased demand pulls prices upward. Reducing the money supply therefore will have the effect of reducing the amount of money that people have on hand. This will reduce their demand for goods and services which will then see their prices decrease as a result.
High money supply in the market however means that loans are easier to get because there is more money to give. This means that companies can embark on more projects. With a lower money supply, companies as well as individuals will reduce their borrowing. This will mean less capital projects which create employment. Lowering the money supply will therefore lead to higher unemployment.
You have just turned 40 years old and are trying to decide who much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on your sixty-fifth birthday. After that point, you can make withdrawals as you see fit. You decide that you will plan to live to 95 and work until your turn 65. You estimate that to live comfortably in retirement, you will need $250,000 per year starting at the end of the first year of retirement and ending on your 95th birthday. You already have $200,000 in the retirement plan. You will contribute the same amount to the plan at the end of every year that you work, starting next year. How much do you need to contribute each year to fund your retirement
Answer:
$31,886.09
Explanation:
years until retirement = 65 - 40 = 25 years
interest earned 7%
retirement age 65
expected life span after retiring = 95 - 65 = 30 years
financial needs during retirement $250,000 per year
current account balance $200,000
we must first determine how much money you will need when you are 65:
present value = $250,000 x 12.409 (PV annuity, 30 years, 7%) = $3,102,250
your $200,000 will be worth $200,000 x (1 + 7%)²⁵ = $1,085,486.53 in 25 years
so you need $3,102,250 - $1,085,486.53 = $2,016,763.47 extra
using the FV formula for an annuity:
$2,016,763.47 = payment x 63.249 (FV annuity, 25 years, 7%)
payment = $2,016,763.47 / 63.249 = $31,886.09
Fortune Enterprises is an all-equity firm that is considering issuing $13.5 million of perpetual debt. The interest rate is 10%. The firm will use the proceeds of the bond sale to repurchase equity. Fortune distributes all earnings available to stockholders immediately as dividends. The firm will generate $3 million of earnings before interest and taxes (EBIT) every year into perpetuity. Fortune is subject to a corporate tax rate of 40%. Suppose the personal tax rate on interest income is 55%, and the personal tax rate on equity income is 20%.
What is the annual after-tax cash flow to debt holders under each plan in Q7?
A. Debt holders get $0 mil. under the unlevered plan vs. 1.2 mil. under the levered plan
B. Debt holders get $1.2 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
C. Debt holders get $0 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
D. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Answer:
D. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Explanation:
interests paid to debt holders = $13,500,000 x 10% = $1,350,000
generally, interest revenue is taxed as ordinary revenue = corporate income tax rate (if debt holder is a business) or personal income tax (if debt holder is an individual).
under the first plan, debt holders get nothing because there is no outstanding debt since the company is an all equity firm.
under the second plan, if the personal tax rate on interest income is 55%, which is really high, the debt holders will earn $1,350,000 x (1 - 55%) = $607,500
Recently, the Boeing Commercial Airline Group (BCAG) recorded orders for more than 15,000 jetliners and delivered more than 13,000 airplanes. To maintain is output volume, this Boeing division combines efforts of capital and more than 90,000 workers. Suppose the European company, Airbus, enjoys a similar production technology and produces a similar number of air craft, but that labor costs (including fringe benefits) are higher in Europe than in the United states. Would you expect workers at Airbus to have the same marginal product as workers at Boeing? Explain carefully.
Answer: Airbus Employees have a Higher Marginal Product than Boeing
Explanation:
Marginal Product of Labor refers to the extra unit produced by adding an extra unit of labor. For firms to maximise their profits, they produce at a mix of labor and Capital where [tex]\frac{MPK}{r} = \frac{MPL}{w}[/tex] with MPK being Marginal Product of capital and r being cost of capital and w being cost of labor.
Assuming both Boeing and Airbus are producing at the maximising expression. It is said that Airbus has the same [tex]\frac{MPK}{r}[/tex] as Boeing. They however has a higher w than Boeing which means that for it to equal the Capital side of the expression, the w must be dividing a higher Marginal Product of labor which shows that Airbus has a higher Marginal Product of labor.
For example,
Boeing MPK = 12
Boeing r = 4
Boeing MPL = 9
Boeing w = 3
Maximising level = 3
Airbus MPK = 12
Airbus r = 4
Airbus w = 6
Airbus MPL = ??
With a labor cost of 6, Airbus MPL will have to be 18 to be able to get to the equilibrium maximising level of 3.
If the government guarantees sugar farmers a price of $1 per pound when the market equilibrium price is actually $0.50 per pound, which of the following will occur?
a) A shortage of sugar will occur, increasing inefficiency.
b) A shortage of sugar will occur, decreasing inefficiency.
c) A surplus of sugar will occur, increasing inefficiency.
d) A surplus of sugar will occur,decreasing inefficiency.
Answer:
C
Explanation:
A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.
the price per pound of sugar is above equilibrium price, as a result the supply of sugar would increase while the demand for sugar would decrease. this would lead to a surplus. because at $1, supply would exceed demand, there would be an increase in inefficiency
Answer:
A surplus of sugar will occur, increasing inefficiency.
Explanation:
When the price of sugar is set above the market equilibrium price, the quantity supplied will be greater than the quantity demanded by consumers. Therefore, a surplus of sugar occurs that increases the level of inefficiency.
Transactions are typically processed either [A] all together for a defined time window (e.g. end of a day or week) or [B] processed as each transaction occurs. The second method [B] is called ________ processing.
Answer: real time processing
Explanation:
Real time processing is when transactions are processed as each transaction occurs. In real time processing, the transactions are processed in a little period of time.
Good examples of real-time processing systems are traffic control systems. Real time processing is different from the batch processing which involves when transactions are processed all together for a defined time window.
You purchased a bond 69 days ago for $891.26. You received an interest payment of $24.00 56 days ago. Today the bond’s price is $884.89. What is the holding period return (HPR) on the bond as of today?
Answer:
1.97%
Explanation:
The formula to calculate the holding period return is:
HPR=(Income generated+(ending value-initial value)/Initial value)*100
Income generated= $24
Ending value= $884.89
Initial value= $891.26
HPR=(24+(884.89-891.26)/891.26)*100
HPR=(24+(-6.37)/891.26)*100
HPR=(17.63/891.26)*100
HPR=0.0197*100
HPR= 1.97%
According to this, the holding period return (HPR) on the bond as of today is 1.97%.
"A technical analyst has identified a resistance level for ABC stock at $81 and a support level at $75. The stock is currently trading at $77 and the analyst expects the stock to break the resistance level. Which order is appropriate to profit if the resistance level is broken?"
Answer:
Buy 100 ABC at $82 Stop
Explanation:
In the financial markets a resistance is an upper limit block on the market moving upward (buy). While the support is the lower limit on the market moving down (sell).
In this scenario we have a support of $75, resistance of $81 and the stock.is currently trading at $77. Just below the resistance.
If the analyst expects the stock to break the resistance of $81 then he should set a trade that is a buy since the market will go above $81.
When the market breaks a resistance it is expected to sky rocket, so the analyst will set a trade stop at $82, so that when the market is coming back down to the resistance level it will stop before it gets to $81.
On the other hand if a support is expected to be broken a sell trade is placed.
New Era Cleaning Service, Inc. opened for business on July 1, 2010. During the month of July, the following transactions occurred:
July 1: Issued $18,000 of common stock for $18,000 cash.
July 1: Purchased a truck for $11,000. Paid $4,000 in cash and borrowed the remainder (long term) from the bank.
July 3: Purchased cleaning supplies for $900 on account.
July 5: Paid $1,800 on a one-year insurance policy, effective July 1.
July 12: Billed customers $4,800 for cleaning services.
July 18: Paid $1,500 of the amount owed on the truck.
July 18: Paid $500 of the amount owed on cleaning services.
July 20: Paid $1,700 for employee salaries.
July 21: Collected $1,200 from customers billed on July 12.
July 25: Billed customers $1,900 for cleaning services.
July 31: Paid gas and oil for the month on the truck, $500.
July 31: Paid a $800 dividend.
Please complete the following tasks: Post the July transactions to the general journal and the general ledger "T" account
repare an unadjusted trial balance; Post the following adjustments:
(a) Earned but unbilled fees at July 31 were $1,400
(b) Depreciation for the month was $200
(c ) One-twelfth of the insurance expired
(d) An inventory count showed $300 of cleaning supplies remaining on July 31
Answer:
New Era Cleaning Service, Inc.
a) General Journal:
July 1:
Debit Cash Account $18,000
Credit Common Stock $18,000
To record the issue of common stock for cash.
July 1:
Debit Truck $11,000
Credit Cash $4,000
Credit Bank Loan $7,000
To record the purchase of a truck.
July 3:
Debit Supplies $900
Credit Accounts Payable $900
To record the purchase of cleaning supplies on account.
July 5:
Debit Prepaid Insurance $1,800
Credit Cash Account $1,800
To record the payment of insurance for a year.
July 12:
Debit Accounts Receivable $4,800
Credit Service Revenue $4,800
To record services rendered on account.
July 18:
Debit Bank Loan $1,500
Credit Cash Account $1,500
To record payment on bank loan.
July 18:
Debit Accounts Payable $500
Credit Cash Account $500
To record payment on account.
July 20:
Debit Salaries $1,700
Credit Cash Account $1,700
To record payment of salaries.
July 21:
Debit Cash Account $1,200
Credit Accounts Receivable $1,200
To record receipt of cash on account.
July 25:
Debit Accounts Receivable $1,900
Credit Service Revenue $1,900
To record services rendered on account.
July 31:
Debit Automobile Fuel $500
Credit Cash Account $500
To record payment for gas and oil for the month.
July 31:
Debit Dividends $800
Credit Cash Account $800
To record payment for dividends.
b) General Ledger "T-account":
Cash Account
July 1 Common Stock $18,000 July 1 Truck $4,000
July 21 Accounts Receivable 1,200 July 5 Insurance 1,800
July 18 Bank Loan 1,500
July 18 Accounts Payable 500
July 20 Salaries 1,700
July 31 Automobile Fuel 500
July 31 Dividend 800
July 31 Balance c/d 8,400
19,200 19,200
Balance b/d 8,400
Common Stock
July 1 Cash account $18,000
Bank Loan
July 18 Cash 1,800 July 1 Truck $7,000
July 31 Balance c/d 5,200
7,000 7,000
Balance b/d 5,200
Truck
July 1 Cash $4,000 July 31 Balance c/d $11,000
July 1 Bank loan 7,000
11,000 19,200
Balance b/d 11,000
Supplies
July 3 Cash 900
Accounts Payable
July 18 Cash 500 July 3 Supplies 900
July 31 Balance c/d 400
900 900
Balance b/d 400
Prepaid Insurance
July 5 Cash 1,800
Service Revenue
July 31 Balance c/d 6,700 July 12 Accounts Receivable $4,800
July 25 Accounts Receivable $1,900
6,700 6,700
Balance b/d 6,700
Accounts Receivable
July 12 Service Revenue $4,800 July 21 Cash $1,200
July 25 Service Revenue 1,900 July 31 Balance c/d 5,500
6,700 6,700
Balance b/d 5,500
Salaries
July 20 Cash $1,700
Automobile Fuel
July 31 Cash $500
Dividend
July 31 Cash $800
Trial Balance as of July 31:
Description Debit Credit
Cash $8,400
Common Stock $18,000
Bank Loan 5,200
Truck 11,000
Supplies 900
Accounts Payable 400
Prepaid Insurance 1,800
Service Revenue 6,700
Accounts Receivable 5,500
Salaries 1,700
Automobile Fuel 500
Dividends 800
Total
c) Adjusting Journal Entries at July 31:
a) Debit Accounts Receivable $1,400
Credit Service Revenue $1,400
To record unbilled fees.
b) Debit Depreciation Expense $200
Credit Accumulated Depreciation $200
To record depreciation expense for the month.
c) Debit Insurance Expense $150
Credit Prepaid Insurance $150
To record a month's insurance expense.
d) Debit Supplies Expense $300
Credit Supplies $300
To record supplies expense.
Explanation:
Journal entries initially record transactions on a day-to-day basis. From the journal, the transactions are posted to the ledger accounts (e.g. T-accounts) and a trial balance is extracted to check if the two sides are in agreement. At the end of the accounting period, adjusting entries are recorded in the general journal to ensure that accounts are based on the accrual concept and not on cash basis.
The tri-star company currently use an old lathe that was purchase 2 years ago at $6000. This machine is being depreciatin on a MACRS five year (20%, 32%, 19%, 12%, 11%, 6%). The current market value for this machine is $3,000. The proposed new improved lathe cost $10,000 and additional installation fee of $1,000. The new lathe would require that inventories be increased by $800 and account receivable increase $600, but accounts payable would simultaneously increase by $700. Tri-Star's marginal federal-plus-state tax rate is 30%. What is the initial investment of company when evaluating the replacement of old lathe by the new one?
Answer:
$8,736
Explanation:
initial investment = capital expenditures (machine's purchase cost + installation costs) + any increase in working capital - disposal of old machine
capital expenditures = $10,000 + $1,000 = $11,000
after tax salvage value = market value + taxes on disposal
the current book value of the old machine = $6,000 - $1,200 - $1,920 = $2,880
taxes on salvage value = (book value - market value) x tax rate = ($2,880 - $3,000) x 30% = -$36
after tax salvage value = $3,000 - $36 = $2,964
net working capital = current liabilities - current assets
change in working capital = $800 + $600 - $700 = $700
initial investment = $11,000 + $700 - $2,964 = $8,736
If a firm raises capital by selling new bonds, it could be called the "issuing firm," and the coupon rate is generally set equal to the required rate on bonds of equal risk.
1. True
2. False
Answer: True
Explanation:
An issuing firm is an organization which registers, and then sells security like bonds and stocks on the primary market.
It should be noted that when a firm raises capital through the sale of new bonds, they can be also referred to a the issuing firm, and the coupon rate is usually set to be equal to the required rate on bonds of equal risk.
The following data concerns a proposed equipment purchase: Cost$144,000 Salvage value$4,000 Estimated useful life 4years Annual net cash flows$46,100 Depreciation methodStraight-line Ignoring income taxes, the annual net income amount used to calculate the accounting rate of return is:
Answer: $74,000
Explanation:
The Average Investment refers to the average cash invested into a particular project and is useful in calculating the rate of return. The simple formula is to add the beginning value of the asset to its ending value and divide this by 2.
The ending value in this case would be the salvage value;
Average Investment = [tex]\frac{Beginning Cost of Machine + Salvage Value}{2}[/tex]
= [tex]\frac{144,000 + 4,000}{2}[/tex]
= $74,000
An estimated demand curve does not necessarily match actual data perfectly because A. it is not possible to accurately calculate the coefficients of the curve. B. demand is unpredictable. C. some factors that are not measured or observed may affect the curve. D. the random error term has too large of a range.
Answer:
C. some factors that are not measured or observed may affect the curve.
Explanation:
a lot of unforeseen circumstances might occur. these occurrences would not be measured in the estimated demand curve. this would lead to the estimated demand curve not matching the actual demand curve.
for example, the factors affecting the demand for bread are ; price, income, price of a substitutes. these are included in estimating the demand curve for bread. Assume that a study comes out stating that bread is harmful to the health.this reduces the demand for bread. this study wasn't anticipated and included in estimating the demand curve. as a result, the actual data would differ from the estimated data