Answer:
c.income from operations before service department charges was $1,650,000
Explanation:
We can see from the information in the question, that income from operations and service department charges sum a total of $1,650,000
Gross income before service department charges = $975,000 + $675,000
= $1,650,000
What would you pay for a bond that pays an annual coupon of $70, paid semiannually, par value, matures in 6 years, and has a yield to maturity of 8%
Answer:
Price per bond is $953.77
Explanation:
The price to be paid for the bond can be computed using pv excel function as below:
=-pv(rate,nper,pmt,fv)
rate is the yield to maturity of 8%
nper is number of coupons that the bond would pay i.e 6 annual coupons in 6 years
pmt is the annual coupon of $70
fv is the face value of $1000 by default
=-pv(8%,6,70,1000)=$953.77
Loreal-American Corporation purchased several marketable securities during 2021. At December 31, 2021, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2020, and all are considered securities available-for-sale. Cost Fair Value Unrealized Holding Gain (Loss) Short term: Blair, Inc. $ 512,000 $ 389,000 $ (123,000 ) ANC Corporation 466,000 512,000 46,000 Totals $ 978,000 $ 901,000 $ (77,000 ) Long term: Drake Corporation $ 512,000 $ 576,000 $ 64,000 Aaron Industries 704,000 676,000 (28,000 ) Totals $ 1,216,000 $ 1,252,000 $ 36,000 Required: 1. Prepare appropriate adjusting entries at December 31, 2021. 2. What amount would be reported in the income statement at December 31, 2021, as a result of the adjusting entry
Answer:
Loreal-American Corporation
1. Adjusting Journal Entries;
Debit Unrealized Loss: Short-term Investments $123,000
Credit Investment in Blair Inc. $123,000
To record the unrealized loss on Investment in Blair Corporation.
Debit Investment in ANC Corporation $46,000
Credit Unrealized Gain: Short-term Investments $46,000
To record the unrealized loss on Investment in ANC Corporation.
Debit Investment in Drake Corporation $64,000
Credit Unrealized Gain on Long-term Investments $64,000
To record the unrealized gain on Investment in Drake Corporation.
Debit Unrealized Loss on Long-term Investments $28,000
Credit Investment in Aaron Industries $28,000
To record the unrealized loss on Investment in Aaron Industries.
2. Amount reported in the Income Statement at December 31, 2021 from the adjusting entry:
Unrealized Loss on Short-term Investments $77,000
Unrealized Gain on Long-term Investments $36,000
Unrealized Loss on Available for sale Investments $41,000
Explanation:
Cost Fair Value Unrealized Holding
Gain (Loss)
Short term: Blair, Inc. $ 512,000 $ 389,000 $ (123,000)
ANC Corporation 466,000 512,000 46,000
Totals $ 978,000 $ 901,000 $ (77,000)
Long term:
Drake Corporation $ 512,000 $ 576,000 $ 64,000
Aaron Industries 704,000 676,000 (28,000)
Totals $ 1,216,000 $ 1,252,000 $ 36,000
On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date. Sales Company's stockholders' equity consisted of common stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value.
During 2014 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company.
Required:
1. Prepare the investment-related entries on Pert Company's books for 2014.
2. Prepare the working paper eliminating entries for a working paper on December 31, 2014.
Answer and Explanation:
The journal entries are shown below:
a. For investment related entries
Investment in sales Dr $350,000
To cash $350,000
(being the investment is recorded)
Investment in sales Dr ($148,000 × 85%) $125,800
To Subsidiary income $125,800
(Being the investment in sales is recorded)
Cash Dr $42,500
To Dividend income $42,500
(Being the dividend income is recorded)
b. For work paper eliminating entries
Equity income ($148,000 × 85%) $125,800
To Dividend $42,500
To investment in sales $83,300
(Being the equity income is recorded)
Common stock Dr $100,000
Other contributed capital Dr $40,000
Retained earnings Dr $140,000
Difference between implied and book value Dr $131,765 (Bal figure)
To Investment in S Company $350,000
To Non controlling interest $61,765 ($350,000 ÷ 0.85 × 0.15)
(Being the consolidated items are recorded)
Land Dr $131,765
To Difference between implied and book value Dr $131,765
(Being the land is recorded)
Working note:
Particulars Parent share Non-conrolling interest Total value
Purchase price
& implied value $350,000 $61,765 $411,765
Less:
Book value -$238,000 -$42,000 -$280,000
Difference
amount $112,000 $19,765 $131,765
Less:
Land value -$112,000 -$19,765 -$131,765
Balance $0 $0 $0
The constant growth valuation formula has dividends in the numerator. Dividends are divided by the difference between the required return and dividend growth rate as follows:
P0=D1/(rs−g)
If you were analyzing the consumer goods Industry, for which kind of company in the industry would the constant growth model work best?
a. Young companies with unpredictable earnings
b. Mature companies with relatively predictable earnings
c. All companies
A selection model in which an applicant moves on to the next stage in the process on the condition that she or he satisfies a score criterion on previous parts of the process is referred to as a _____ model. Group of answer choices
Answer:
multiple hurdle
Explanation:
The term is described in the question is known as a multiple hurdle model. In this specific approach, the individual applying needs to pass each step in the selection process in order to continue to the next one. Failure at any of the steps results in an automatic disqualification of the applicant from further consideration. Each step needs to be passed by meeting the minimum score that has been pre-set before starting the step.
Fuji film was also able to succeed in the US due to their history of catering to a sophisticated Japanese photo market in their native market. Which aspect of the diamond of national competitive advantage does this draw from
Answer:
Option B. Demand conditions
Explanation:
The demand conditioning is the domestic demand of the product that forms greater impact on the demand and innovation of the product in its domestic market. This great domestic demand of Fuji film products stipulated greater innovation which not only differentiated the product but also increased the demand in other markets like US and Europe.
This increased Demand conditions enabled the company to gain competitive advantage.
Kant Corporation retires its $100,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $96,250. The entry to record the redemption will include a
Answer:
Refer to the explanation below
Explanation:
Please see the journal entry below;
Dr Bonds payable $100,000
Dr Loss on retirement of bonds
$5,750
( $102,000 + $3,750 - $100,000)
To Cash $102,00( $100,000 × 1.02)
To Discount on bonds payable
$3,750( $100,000 - $96,250)
(Being redemption that is recorded)
Because bonds payable and loss on retirement of bonds decreases the liability and increased the loss, hence were debited. Cash and discount on bonds payable were credited because it decreases the assets and increased liabilities respectively.
True or False: Firms operating in more price-competitive industries, or exhibiting lower levels of market power, generally exhibit lower levels of business risk, all other things being equal. This statement is: True False
Answer:
The statement is false
Explanation:
Determining the profitability depends on market power. At a higher market power, the level of profitability will be high.
Conversely, a company operating in a system where its market power is low which results into inability to compete with other companies will cause a low probability.
Merchandise with a sales price of $5,000 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a
Answer:
Debit to sales discounts for $100
Explanation:
Please see journal entry to record the sales below;
a. Dr accounts receivable $5,00
To sales revenue account $5,000
(Being merchandise that is sold on credit basis)
Suppose payment is made within 10 days, the journal entry will be;
Dr Cash account $4,900
Sales discount account $100
(5,000 × 2%)
To accounts receivable $5,000
(Being cash that is received)
Which of the following describes the effect of the purchases that consumers
make?
A. provide jobs for distributors
B. increase producers costs
C. indicate their desires to producers
D. are not taxed in a free-market system
Answer: C) indicate their desires to producers
When a country produces on its production possibilities curve, then this country's unemployment is expected to be at one of its lowest rates, however, prices in this country are not expected to be relatively low.
a. True
b. False
Answer:
TRUE
Explanation:
the production possibility curve shoes the number of goods that can be produced in an economy when its resources are fully employed.
if a country produces on its production possibilities curve, it means that its resources are fully employed and so unemployment would be at its lowest.
Which term is defined as the most appealing trade-off or item given up as the result of an
economic decision?
Increasing cost
Opportunity cost
Recycled trade off
Economic trade off
Answer:
it could be the increase in cost due to economical well-being either the increase in debt or credit
Joe wants to start an SEP-IRA that will have $460,000 in it when he retires in 15 years. How much should he invest semiannually in his IRA to do this if the interest is 15% compounded semiannually?
Answer:
$4,448.77
Explanation:
time until retirement = 15 years x 2 semiannual contributions = 30 payments
interest rate =15% / 2 = 7.5%
future value = $460,000
we can use the future value of an annuity formula:
future value = payment x annuity factor
FV annuity factor 7.5%, 30 periods = 103.3994
payment = future value / annuity factor
payment = $460,000 / 103.3994 = $4,448.77
The amount that should be invested is $4,448.77.
Calculation of the amount:Since
time until retirement = 15 years x 2
= 30 payments
And,
interest rate =15% / 2 = 7.5%
Also,
future value = $460,000
Now we can use the future value of an annuity formula:
Here,
future value = payment x annuity factor
where,
FV annuity factor 7.5%, 30 periods = 103.3994
So,
payment = future value / annuity factor
= $460,000 / 103.3994
= $4,448.77
hence, The amount that should be invested is $4,448.77.
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The owner of a small business borrowed $70,000 with an agreement to repay the loan with quarterly payments over a five year time period. If the interest rate is 12% per year compounded quarterly, his loan payment each quarter is nearest to
Answer:
His loan payment each quarter is nearest to $4,705.10.
Explanation:
Using a Financial Calculator enter the following data and find PMT, the loan payment each quarter
Pv = $70,000
n = 4 × 5 = 20
r = 12%
P/yr = 4
Fv = $0
Pmt = ? - $4,705.10
Thus PMT, the loan payment each quarter will be $4,705.10.
Galvatron Metals has a bond outstanding with a coupon rate of 6.1 percent and semiannual payments. The bond currently sells for $947 and matures in 23 years. The par value is $1,000 and the company's tax rate is 40 percent. What is the company's aftertax cost of debt
To reduce product development time, Caterpillar connected its engineering and manufacturing divisions with its active suppliers, distributors, overseas factories, and customers, through ________.
Answer: an extranet
Explanation:
An extranet is a private network that is controlled that gives access to vendors, suppliers, partners, vendors or a group of customers that are authorized.
Therefore, to reduce product development time, Caterpillar connected its engineering and manufacturing divisions with its active suppliers, distributors, overseas factories, and customers, through an extranet.
Because Toyota's investment eventually increases the level of R&D spending for his given level of sales revenue what would the effect on Toyota's return on invested capital (ROIC)?
Available Options Are:
a. Increasing ROIC by increasing return on sales
b. Decreasing ROIC by increasing return on sales
c. Decreasing ROIC by decreasing return on sales
d. Increasing ROIC by decreasing return on sales
Answer:
Option C. Decreasing ROIC by decreasing return on sales
Explanation:
The return on sales would be reduced as the research expenses have increased substantially. The implications of increased research expenses on the ROIC can be understood by analyzing the ROIC formula which is given as under:
ROCI = Operating Income (1 - Tax Rate) / Book Value of Invested Capital
As revenue expenditure (Research and Development expenses) of the company has increased, this would decrease the operating income of the company which means that the numenator would be decreased and as a result the ROCI would decrease.
Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Answer:
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Explanation:
The price of Common Stock is equivalent to the price required to settle the Market Cost of Land and Buildings.
Also note that the Common Stocks have a par vale of $7, this means that any amount paid in excess of the par value is accounted in the Share Premium Reserve.
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Land $45,000
Building $85,000
To Common stock $49,000 (7,000 shares × $7)
To Premium on issue of common stock 81,000
(Being recording of the issuance of the stock in exchange for the land and building)
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Clarissa wants to fund a growing perpetuity that will pay $ 9 comma 000 per year to a local museum, starting next year. She wants the annual amount paid to the museum to grow by 6% per year. Given that the interest rate is 9%, how much does she need to fund this perpetuity?
Answer:
$300,000.00
Explanation:
The present value of a growing perpetuity can be computed using the below present value formula specifically meant for growing annuity:
Present value=cash flow/interest rate-growth rate
cash flow is the initial amount per year which is $9000
interest rate is 9%
growth rate of the annuity payment is 6%
present value=$9000/(9%-6%)=$300,000.00
Wells Fargo & Company, headquartered in San Francisco, is one of the nation’s largest financial institutions. Suppose it reported the following selected accounts (in millions) as of December 31, 2017.
Retained earnings $41,563
Preferred stock 8,485
Common stock—$12/3 par value, authorized 6,000,000,000 shares; issued 5,245,971,422 shares 8,743
Treasury stock—67,346,829 common shares (2,450)
Paid-in capital in excess of par value—common stock 52,878
Required:
Prepare the stockholders’ equity section of the balance sheet for Wells Fargo as of December 31, 2017
Answer:
EQUITY AND LIABILITIES
EQUITY
Retained earnings $ 41,563
Preferred stock $ 8,485
Common stock - Issued $ 8,743
Treasury stock $ 2,450
Share Premium $ 52,878
Total Equity $114,119
Explanation:
The the stockholders’ equity section of the balance sheet shows the amount of capital invested by the shareholders in the business as well as the reserves that have been allocated to them.
The employer amount of FICA taxes that Red Mountain is required to pay is equal to the amount that it withholds from its employees. Assume no other payroll taxes are incurred at this time. What is Red Mountain's total expense with regards to this payroll
Answer:
$189,000
Explanation:
The computation of total expense with regards to this payroll is shown below:-
Total expense = Salaries and wages earned by employees + Employer's portion of FICA taxes
= $180,000 + $9,000
= $189,000
Therefore for computing the total expenses with regards to this payroll we simply applied the above formula and we ignore all other values as they are not relevant.
At July 31, Farmer Company has this bank information: cash balance per bank $8,344; outstanding checks $804; deposits in transit $1,383; and a bank service charge $58.
Determine the adjusted cash balance per bank at July 31.
The adjusted cash balance per bank at July 31:___________.
Answer:
The adjusted balance per bank is $8923
Explanation:
Adjusted cash balance per bank
Cash balance per bank (unadjusted) 8344
(+) Deposits in transit 1383
(-) Outstanding checks (804)
Cash balance per bank (adjusted) 8923
The adjusted cash balance per bank is calculated by adjusting the transactions that do not appear on the current bank statement.
The deposits in transit is the amount of cash deposited in the bank, that will increase the bank balance, which is still in process and has not been added to the bank account as of now. Thus, we will add this amount to calculate the adjusted bank balance.
The outstanding checks amount is the amount of checks that have been issued by the business but which are yet to be presented by the recipients of checks and will result in a reduction in the bank balance. Thus, we deduct them to calculate the adjusted balance.
The bank charge is deducted by the bank itself thus we assume that it has already been deducted. So, no adjustment is made for this.
Assume a budget constraint is given by 10 = x + y For each of the following utility function calculate the utility maximizing x and y and the resulting level of utility.
(a) U x/y
(b) U In(x) + In(y)
(c) U 2x2y
Answer:
A) y = 0 , x = 10
B) x = 5 = y
c) x = 6.667, y = 3.333
Explanation:
Budget constraint = x + y = 10
calculate the utility maximizing x and y and the resulting level of utility
attached is the detailed solution
Johnson's Plumbing's fixed costs are $700,000 and the unit contribution margin is $17. What amount of units must be sold in order to realize an operating income of $100,000
Answer:
Target profit in units = 47058.82 rounded off to 47059 units
Explanation:
The break even units of sales are the number of units that must be sold in order for the company to have enough total revenue to cover its total costs. It is a point in the number of units where there is no profit or no loss.
We can use the break even analysis and formulas to calculate the number of units required to earn a certain target profit. Thus, we will just need to add the target profit amount to the fixed costs in the break even in units formula. The formula to calculate the target profit in units is,
Target profit in units = (Fixed costs + Target profit) / Contribution margin per unit
Target profit in units = (700000 + 100000) / 17
Target profit in units = 47058.82 rounded off to 47059 units
The balanced scorecard approach relies not only on financial performance measures, but includes customers, internal business processes, and organizational learning and growth.
a. True
b. False
The overhead costs for a company are presently $X per month. The management team of the company in cooperation with the employees is ready to implement a comprehensive improvement program to reduce these costs. If you (a) consider an observation of actual overhead costs for one month analogous to an output unit, (b) estimate the overhead costs for the first month of program implementation to be 1.15X due to extra front-end effort, and (c) consider a 90% improvement curve applicable to the situation, what is your estimate of the percentage reduction in present overhead costs per month after 30 months of program implementation
Answer:
31.42%
Explanation:
The computation of the estimate of the percentage reduction in present overhead costs per month is shown below:-
n = log s ÷ log2
= log 0.90 ÷ log 2
= -0.152
Now we will use the learning curve equation which is here below:
Z30 = 1.15X × 30^(-0.152)
= 0.685765148
So, the cost is reduced by
= 1 - 0.685765148
= 0.314234852
or
= 31.42%
On January 1, 2020, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.
Instructions
a. Prepare the journal entry at the date of the bond purchase.
b. Prepare a bond amortization schedule.
c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.
d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.
Answer:
a. Prepare the journal entry at the date of the bond purchase.
January 1, 2020, bonds purchased at a premium
Dr Bonds receivable 300,000
Dr Premium on bonds receivable 22,744.44
Cr Cash 322,744.44
b. Prepare a bond amortization schedule.
Date Interest Cash Premium Unamortized Carrying
revenue received amortization premium value
1/1/20 - -322,744.44 - 22,744.44 277,255.56
1/1/21 32,274.44 36,000 3,725.56 19,018.88 280,981.12
1/1/22 31,901.89 36,000 4,098.11 14,920.77 285,079.23
1/1/23 31,492.08 36,000 4,507.92 10,412.85 289,587.15
1/1/24 31,041.23 36,000 4,958.77 5,454.08 294,545.92
1/1/25 30,545.92 336,000 5,454.08 0 0
c. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.
Dr Interest receivable 36,000
Cr Interest revenue 32,274.44
Cr Premium on bonds receivable 3,725.56
(322,744.44 x 10%) - (300,000 x 12%) = 32,274.44 - 36,000 = 3,725.56
d. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.
Dr Interest receivable 36,000
Cr Interest revenue 31,901.89
Cr Premium on bonds receivable 4,098.11
(319,018.88 x 10%) - (300,000 x 12%) = 31,901.89 - 36,000 = 4,098.11
amortization year 3:
(314,920.77 x 10%) - (300,000 x 12%) = 31,492.08 - 36,000 = 4,507.92
amortization year 4:
(310,412.85 x 10%) - (300,000 x 12%) = 31,041.23 - 36,000 = 4,958.77
amortization year 5:
5,454.08
Consider the following limit-order book for a share of stock. The last trade in the stock occurred at a price of $50. Limit Buy Orders Limit Sell Orders Price Shares Price Shares $ 49.75 500 $ 50.25 100 49.50 800 51.50 100 49.25 500 54.75 300 49.00 200 58.25 100 48.50 600 a. If a market buy order for 100 shares comes in, at what price will it be filled?
Answer:
$50.25
Explanation:
The below data given in the question will help to determine the price will it be filled, if the market buy order for 100 shares comes in
Limit Buy Orders Limit Sell Orders
Price Shares Price Shares
$ 49.75 500 $ 50.25 100
49.50 800 51.50 100
49.25 500 54.75 300
49.00 200 58.25 100
48.50 600
Therefore in a situation where a market buy order for 100 shares comes in, it will be filled at the amount of $50.25 which will be the best price reason been that the amount of $50.25 is the lowest amount for the limit sell order when compared with other price listed under the limits sell order.
Use the following information for Jett Co. to answer the following question: 2015 2014 Sales 1,200 1,000 COGS 850 700 Operating Expenses 200 200 Income Taxes 30 35 Jett Co.'s average tax rates for 2015 and 2014 are: A. 15.5% and 10.0% B. 20.0% and 35.0% C. 25.8% and 35.4%. D. 31.4% and 36.8%.
Answer:
B. 20.0% and 35.0%
Explanation:
Jett Co.'s Average tax rates for 2015 = Income taxes paid / Taxable income
When, Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,200 - $850 - $200
= $150
Hence, Jett Co.'s Average tax rates for 2015 = $30 / $150
= 20%
Jett Co.'s Average tax rates for 2014 = Income taxes paid / Taxable income
When Taxable Income = Sales - Cost of goods sold - Operating expenses
= $1,000 - $700 - $200
= $100
Hence, Jett Co.'s Average tax rates for 2014 = $35 / $100
= 35%
A break-even analysis includes operating expenses and total monthly debt payments,
plus
school costs
gross profit margin.
Onet profit margin
zero term margin.
Answer: Gross profit margin.
Explanation:
Break-Even Analysis enables a business to know how much cash it has under given situations by helping it know how much sales it needs in order to have a certain amount of cash.
It is calculated by the formula;
(Operating Expenses + Annual Debt Service)/Gross Profit Margin = Break-Even Sales
Operating Expenses in this equation is net of Depreciation as depreciation is a non-cash expense.