Answer:
1.Alllowance for uncollectible accounts 2,400
2.Dr Bad Debt Expense 2700
Cr Allowance for Doubtful Account 2700
3.Dr Allowance for Doubtful account 400
Cr Accounts receivable 400
4) Dr Cash 100
Cr Allowance for Doubtful account 100
Explanation:
Calculation of the allowance for uncollectible accounts
Using this formula
Alllowance for uncollectible accounts=(Not Yet Due)+(0-30 days past due)+(30-60 days past due)+(More than 60 days pst due)
Let plug in the formula
Alllowance for uncollectible accounts=
(30,000 *2% )+ (10,000* 5%) + (7,000* 10 %)+(3,000* 20% )
Alllowance for uncollectible accounts =600+500+700+600
Alllowance for uncollectible accounts = 2,400
2)Record of the he December 31, 2018 adjusting entry
300 debit balance+ 2,400
=2,700 Adjustment
Dr Bad Debt Expense 2,700
Cr Allowance for Doubtful Account 2 700
3) Journal entry to record the write off.
Dr Allowance for Doubtful account 400
Cr Accounts receivable 400
4) Journal entry to Record the cash collection
Dr Cash 100
Cr Allowance for Doubtful account 100
Required information
Hart Company made 3,260 bookshelves using 22,260 board feet of wood costing $298,284. The company's direct materials standards for one bookshelf are 8 board feet of wood at $13.30 per board foot.
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
1) Compute the direct materials price and quantity variances and classify each as favorable or unfavorable.
2) Hart applies management by exception by investigating direct materials variances of more than 5% of actual direct materials costs. Which direct materials variances will Hart investigate further?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Production= 3,260 bookshelves using 22,260 board feet of wood costing $298,284.
The company's direct materials standards for one bookshelf are 8 board feet of wood at $13.30 per board foot.
First, we need to calculate the direct material price and quantity variance, using the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
actual price= 298,284/22,260= $13.4
Direct material price variance= (13.3 - 13.4)*22,260
Direct material price variance= $2,226 unfavorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
standard quantity= 8*3,260= 26,080
Direct material quantity variance= (26,080 - 22,260)*13.3
Direct material quantity variance= $50,806 favorable
Finally, we need to calculate which of the variations should be looked at:
Price= (13.4/13.3)-1]*100= 0.75% is between the standards
Quantity= (22,260/26,080)-1]*100= 14.65% It should be studied further.
26. Currently, Bruner Inc.'s bonds sell for $1,250. They pay a $120 annual coupon, have a 15-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between this bond's YTM and its YTC
Answer:
2.11%
Explanation:
From the information given; we use the Excel spreadsheet to compute the difference between this bond's YTM(Yield to maturity) and its YTC(Yield to call).
From the diagram; we will see that the
YTM(Yield to maturity) = 8.91%
YTC(Yield to call).= 6.81%
Therefore the difference between this bond's YTM and its YTC = (8.91 - 6.81)%
the difference between this bond's YTM and its YTC = 2.11%
Courtney Meehan has trouble keeping her debits and credits equal. During a recent month, Courtney made the following accounting errors:
a. In preparing the trial balance, Courtney omitted a $5,000 Notes Payable. The debit to Cash was correct
b. Courtney posted a $11000 Utilities Expense as $100. The credit to Cash was correct.
c. In recording a $600 payment on account, Courtney debited Furniture instead of Accounts Payable-
d. In journalizing a receipt of cash for service revenue, Courtney debited Cash for $50 instead of the correct amount of $500. The credit was correct.
e. Courtney recorded a $210 purchase of office supplies on account by debiting Office Supplies for $120 and crediting Accounts Payable for $120.
Required:
a. For each of these errors, state whether total debits equal total credits on the trial balance.
b. Identify each account that has an incorrect balance and the amount and direction of the error.
Answer:
a. In preparing the trial balance, Courtney omitted a $5,000 Notes Payable. The debit to Cash was correct
Liabilities (credit balance) are understated by $5,000 ⇒ TOTAL DEBITS DO NOT EQUAL TOTAL CREDITSb. Courtney posted a $11000 Utilities Expense as $100. The credit to Cash was correct.
Expenses (debit balance) are understated by $10,900 ⇒ TOTAL DEBITS DO NOT EQUAL TOTAL CREDITSc. In recording a $600 payment on account, Courtney debited Furniture instead of Accounts Payable-
Assets (debit balance) are understated by $600 and liabilities (credit balance) are overstated by $600. ⇒ TOTAL DEBITS DO NOT EQUAL TOTAL CREDITSd. In journalizing a receipt of cash for service revenue, Courtney debited Cash for $50 instead of the correct amount of $500. The credit was correct.
Assets (debit balance) are understated by $450 ⇒ TOTAL DEBITS DO NOT EQUAL TOTAL CREDITSe. Courtney recorded a $210 purchase of office supplies on account by debiting Office Supplies for $120 and crediting Accounts Payable for $120.
both assets (debit balance) and liabilities (credit balance) are understated by $90. ⇒ TOTAL DEBITS EQUAL TOTAL CREDITSAlien Corp. has been considering building an adult resort on a site originally purchased as investment property. Alien paid a consultant $275,000 to determine whether the plan is feasible, and has recently found that the site is worth $2.75 MM. The original purchase price was $1.75 MM. If the expected outlay for building and staffing the resort is $5.0 MM.
Required:
What is the Net Investment when running an NPV?
Answer:
$7,025,000
Explanation:
the net investment is equal to the sum of the cash outlays - the amount spent .$275,000 + $1,750,000 + $5,000,000 = $7,025,000
The payroll register of Seaside Architecture Company indicates $910 of Social Security and $250 of Medicare tax withheld on total salaries of $15,000 for the period. Federal withholding for the period totaled $3,245.
Required:
1. Provide the journal entry for the period's payroll.
CHART OF ACCOUNTS
Seaside Architecture Company
General Ledger
ASSETS
110 Cash
111 Accounts Receivable
112 Interest Receivable
113 Notes Receivable
115 Inventory
116 Supplies
118 Prepaid Insurance
120 Land
123 Building
124 Accumulated Depreciation-Building
125 Office Equipment
126 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
213 Interest Payable
214 Notes Payable
221 Salaries Payable
222 Social Security Tax Payable
223 Medicare Tax Payable
224 Employees Federal Income Tax Payable
225 State Withholding Tax Payable
226 Federal Unemployment Tax Payable
227 State Unemployment Tax Payable
228 State Disability Insurance
231 Medical Insurance Payable
232 Retirement Savings Deductions Payable
233 Union Dues Payable
234 Vacation Pay Payable
235 Unfunded Pension Liability
241 Product Warranty Payable
242 EPA Fines Payable
243 Litigation Claims Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
525 Delivery Expense
526 Repairs Expense
531 Rent Expense
533 Insurance Expense
534 Supplies Expense
535 Cash Short and Over
536 Product Warranty Expense
541 Vacation Pay Expense
542 Pension Expense
543 Payroll Tax Expense
544 Federal Income Tax Expense
545 State Income Tax Expense
561 Depreciation Expense-Building
562 Depreciation Expense-Office Equipment
570 Damage Awards and Fines
590 Miscellaneous Expense
710 Interest Expense
2. Prepare the journal entry for the period’s payroll on December 31.
Answer and Explanation:
The journal entries are shown below:
Salaries expense Dr $15,000
To Social security tax payable $910
To Medicare tax payable $250
To Employees federal income tax payable $3,245
To Salaries payable $10,595 (Balancing figure)
(Being the payroll expense is recorded)
For recording this we debited the salaries expense as it increased the expenses and credited all payable account as it also increased the liabilities
Due to a recession in the United States and abroad, ski resorts have suffered from a lack of guests during the peak season. These ski resorts have felt a direct impact from ____ force.
A) competitive
B) technological
C) sociocultural
D) economic
E) legal and regulatory
Answer:
D) economic.
Explanation:
These are seen to be factors which play vital roles in bringing/affects the competitiveness of the environment of operation of a said firm.
These forces in a business are said to primarily affect the distribution of production activities across the globe and also within a smaller region. These effects of economic forces are easily been felt by the mass/population around the region where these forces are present and also where these enterprises are been sited/located.
Factors ranging from interest rate, employment, inflation rate, government fiscal and monetary policy are generally known to make up these factors been talked about.
In the article, the graph labeled "Gas Guzzling" shows how the quantity demanded of gasoline varies each year. The graph depicts the quantity demanded that occurs at each year's equilibrium price. Therefore, the best way to interpret the numbers on the y axis is to assume that they represent an equilibrium when both the quantity of gas demanded and the quantity of gas supplied are the same. At this equilibrium, the price is the one that occurs at the intersection of the demand and supply curves.
We can turn to the textbook to understand why there were fluctuations in the quantity of gasoline sold over time. In particular, the textbook mentions several factors that shift a demand curve, as well as several factors that shift a supply curve. When either of these curves shifts, there will be a new equilibrium price and a new equilibrium quantity in the market.
Consider the following factor and indicate whether it increases or decreases the equilibrium price of gasoline and the equilibrium quantity of gasoline sold. In this problem, assume that gasoline is a normal good.
When income increases, the
Choose one:
A. supply curve shifts to the left.
B. demand curve shifts to the left.
C. supply curve shifts to the right.
D. demand curve shifts to the right.
As a result,
Choose one:
A. price increases and quantity increases.
B. price decreases and quantity increases.
C. price increases and quantity decreases.
D. price decreases and quantity decreases
Answer:
The correct answers are the options D and A. The demand curve shifts to the right and the price increases and the quantity increases.
Explanation:
To begin with, the income of the consumers is a variable that only affects the demand and therefore that, as the gasoline is a normal good, when the income of the consumers increase then the quanitity demanded of the product will increase as well due to the fact that now the people have more money to use and when this happens the demand curve shifts to the right causing that the in the new equilibrium the price is higher and the quantity is higher as well too.
The Library is a new bar in town. Unlike the other bars in town, it charges no cover charge. The new bar has also priced its beer at $3 less per pitcher than its competition. Given what you know about pricing strategies, which pricing strategy is the owner of the new bar using
Answer: B. Penetration pricing
Explanation:
Penetration pricing is a strategy that is used by new companies in a market to capture market share from more established competitors. The process is for the new company to charge a lesser price than the amount that the other companies are charging which will bring people to the new firm for patronage.
It will thus capture market share and due to the high demand, be able to make profits due to Economies of Scale.
By charging less than its competitors, the new bar's owner is most likely pursuing a Penetration Strategy.
Dorpac Corporation has a dividend yield of 1.3 %1.3%. Its equity cost of capital is 7.4 %7.4%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price?
Answer:
(A) 6.1%
(B) 6.1%
Explanation:
Dorpac corporation has a dividend yield of 1.3%
Its equity cost of capital is 7.4%
(a) The expected growth rate of Dorpac dividend can be calculated as follows
= Equity cost of capital-Dividend yield
= 7.4%-1.3%
= 6.1%
(b) Since the dividend is expected to grow at a constant growth rate then, the expected growth rate of Dorpac's share price is 6.1%
The formula for the simple deposit multiplier is :______
a. Simple Deposit Multiplier = 1/RR
b. Simple Deposit Multiplier = 1/1-RR
c. Simple Deposit Multiplier = -RR/1-RR
d. Simple Deposit Multiplier = (1-RR)/RR
If the required reserve ratio is 0.15, the maximum increase in checking account deposits that will result from an increase in bank reserves of $5,000 is $________
The formula for the simple deposit multiplier is:
B. Simple Deposit Multiplier = 1 / (1 - RR)
Where RR is the required reserve ratio.
How to explainIn your example, the required reserve ratio is 0.15, which means that banks are required to keep 15% of their deposits in reserve. This means that for every $1 in deposits, banks can lend out $0.85.
The maximum increase in checking account deposits is therefore equal to the simple deposit multiplier times the initial increase in bank reserves. In your example, the initial increase in bank reserves is $5,000. So, the maximum increase in checking account deposits is:
$5,000 * 1.176 = $5,882.35
Therefore, the maximum increase in checking account deposits that will result from an increase in bank reserves of $5,000 is $5,882.35
Option B is correct.
Read more about Deposit Multiplier here:
https://brainly.com/question/15397793
#SPJ2
In the United States, the standard methodology for consumers with respect to privacy is to _______________, whereas in the EU it is to ______________.
Answer:
In the United States, the standard methodology for consumers with respect to privacy is opt-out with respect to the United States and her Privacy Law, whereas in the EU it is opt-in.
Explanation:
Privacy laws are laws that provide protection and regulation against storing, using data that might be considered private to an individual or any organisation. such laws act as a guard against any usage of information by governments, public or private organisations, or even other individuals in any part of the world without the owner of such data giving their consent.
Privacy laws, rules, and policies are different from one country to another which all depends on their legal framework and cultural sensitivities in such a nation.
In the United States, the standard methodology for consumers with respect to privacy is opt-out with respect to the United States and her Privacy Law, whereas in the EU it is opt-in.
Opting-out laws cover a spectrum that consists of methods used by an individual to avoid receiving unsolicited service information. When receiving unsolicited service information as a result of data collection a consumer might seek an out way to stop it and to opt-out require affirmative steps to prevent unsolicited service and products. Under opt-out a user can be signed up much more easily.
Opt-In is when an individual chooses to join or participate in something and acknowledging interest in a product or service. Opt-in is used under European data protection rules which grant individuals more control of their data when the person agrees to receive the specified services.
Relevant financial information for Gordon, Inc. andJordan, Inc. for the current year is provided below. ($ in millions) Net sales Net income Total assets, beginning Total assets, ending Gordon, Inc. $3,280 118 1,420 Jordan, Inc. $6,540 132 1,600 2,230 2,020 Based on these data, which of the following is a correct conclusion?
A) Return on Assets is 7.4% for Gordon and 6.5% for Jordan. Thus, Gordon is more profitable than Jordan
B) Return on Assets is 7.4% for Gordon and 6.5% for Jordan. Thus, Gordon is less profitable than Jordan
C) Return on Assets is 7.8% for Gordon and 6.2% for Jordan. Thus, Gordon is more profitable than Jordan
D) Return on Assets is 7.8% for Gordon and 6.2% for Jordan. Thus, Gordon is less profitable than Jordan
Answer:
C) Return on Assets is 7.8% for Gordon and 6.2% for Jordan. Thus, Gordon is more profitable than Jordan
Explanation:
please find attached a clear image of the table used in answering this question
Return on assets = net income / average total assets
average total assets = (beginning assets + ending asset) / 2
for gordon
average total assets = (1420 + 1600) / 2 = 1510
ROA = 118 / 1510 = 0.078146 = 7.8%
For Jordan,
average total assets = (2,230 + 2,020) / 2 = 2125
ROA = 132 / 2125 = 0.062118 = 6.2118%
The ROA figure shows how well a company converts assets into net income. The higher the ROA number, the better as it means the firm earns more money on less investment
Sarah used the Hide command on her Excel worksheet. What would be the most likely reason to use this command?
O Sarah hid the cells to delete them from the worksheet.
O Sarah hid the cells to erase the formula they were part of
O Sarah hid the cells because the information they contained wasn't relevant to her task.
O Sarah hid the cells to highlight their importance.
Answer:
Sarah hid the cells because the information they contained wasn't relevant to her task.
Explanation:
Hiding the cells does not delete them from the worksheet, and it does not erase them from the formula that they are part of. Also, hiding cells does not highlight their importance, because they are hidden.
Answer: C
Explanation: cause i am right
ROI: Fill in the Unknowns Provide the missing data in the following situations: North American Division Asian Division European Division Sales Answer $5,000,000 Answer Net operating income $80,000 $200,000 $168,000 Operating assets Answer Answer $700,000 Return on investment 16% 10% Answer Return on sales 0.04 Answer 0.16 Investment turnover Answer Answer 1.5
Answer and Explanation:
The computation of the missing data is shown below:
Particulars North American Asian European
division Division Division
Sales $2,000,000 $5,000,000 $1,050,000
Net Operating
Income $80,000 $200,000 $168,000
Operating
assets $500,000 $2,000,000 $700,000
Return on
Investment 16% 10% 24%
Return on sales 0.04 0.04 0.16
Investment
turnover 4 2.5 1.5
Working notes :
1. For North American division
Sales is
= Net operating income ÷ return on sales
= $80,000 ÷ 0.04
= $2,000,000
Operating assets is
= Net Operating income ÷ return on investment
= $80,000 ÷ 16%
= $500,000
Investment turnover is
= Sales ÷ operating assets
= $2,000,000 ÷ $500,000
= 4
For Asian Division
Operating assets is
= Net operating income ÷ return on investment
= $200,000 ÷ 10%
= $2,000,000
Return on sales is
= Net Operating income ÷ sales
= $200,000 ÷ $5,000,000
= 0.04
Investment turnover is
= Sales ÷ operating assets
= $5,000,000 ÷ $2,000,000
= 2.5
For European division:
Sales is
= Operating assets × investment turnover
= $700,000 × 1.5
= $1,050,000
Return on investment is
= Net operating income ÷ operating assets × 100
= $168,000 ÷ $700,000
= 24%
Ted failed to disaffirm a contract during his minority or within a reasonable time after reaching majority. The contract was automatically:
Answer:
Ratified
Explanation:
Fern Corporation manufacturers a single product that has a selling price of $25.00 per unit. Fixed expenses total $50,000 per year, and the company must sell 5,000 units to break even. If the company has a target profit of $15,500, sales in units must be:
Answer:
Sales unit to achieve target profit =6,550 units
Explanation:
Break-even point is the level of activity that achieves no profit or loss. At this level profit is zero because the the total revenue is equal to total cost.
The break-even point is calculated as
Break -even in units = total general fixed cost/(selling price - variable cost)
ley represent tah variable cost per unit with letter "y"
5,000 = 50,000 / (25 - y)
cross multiply
5000× (25 - y) = 50,000
125000 - 5000 y = 50,000
collect like terms
125,000 - 50,000 = 5000 y
75000 = 5,000y
divide both sides by 5,000
y = 75,000/5000 = 15
Variable cost per unit = 15
Sales units to achieve target profit = Fixed cost + target profit/(selling price - variable cost per unit)
Sales unit to achieve target profit
= (50,000 + 15,500)/(25-15)
= 6,550
Sales unit to achieve target profit =6,550 units
Forest Company sells a product for $120 per unit. The variable cost is $50 per unit, and fixed costs are $392,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units required for the company to achieve a target profit of $152,880.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling price per unit= $120
Unitary variable cost= $50
Fixed costs= $392,000
First, we need to calculate the break-even point in units and dollars, using the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 392,000/ (120 - 50)
Break-even point in units= 5,600 units
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 392,000 / (70/120)
Break-even point (dollars)= $672,000
Now, we need to determine the number of units to be sold for the desired profit of $152,880:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (392,000 + 152,880) / 70
Break-even point in units= 7,784 units
g Delta of a call option is 0.85. How many units of the underlying stock should you hold to hedge a short position in 100 call option contracts
Answer: a.85,000
Explanation:
When using Delta to determine how many units of the underlying stock one should hold to hedge a short position, the following formula is used;
= Delta * No. of positions
= 0.85 * ( 100 * 100)
= 8,500
8,500 units of the underlying stock should be held to hedge a short position in 100 call option contracts with a contract multiplier of 100.
Green Moose Industries is a company that produces iBooks, among several other products. Suppose that Green Moose Industries considers replacing its old machine used to make iBooks with a more efficient one, which would cost $1,800 and require $250 annually in operating costs except depreciation. After-tax salvage value of the old machine is $600, while its annual operating costs except depreciation are $1,100. Assume that, regardless of the age of the equipment, Green Moose Industries’s sales revenues are fixed at $3,500 and depreciation on the old machine is $600. Assume also that the tax rate is 40% and the project’s risk-adjusted cost of capital, r, is the same as weighted average cost of capital (WACC) and equals 10%.
Based on the data, net cash flows (NCFs) before replacement are___________ and they are constant over four years.
Answer:
Based on the data, net cash flows (NCFs) before replacement are $1,680 and they are constant over four years.
Explanation:
annual operating costs before replacement = $1,100
sales revenue = $3,500
depreciation of old machine = $600
tax rate = 40%
net cash flow = [(revenues - current cost - depreciation) x (1 - tax rate)] + depreciation = [($3,500 - $1,100 - $600) x (1 - 40%)] + $600 = $1,680 per year
Joey's Lawn cutting Service rents office space from Joey's dad for $300 per month. Joey's dad is thinking of increasing the rent to $400 per month (but will not change the cost of mowing an additional lawn). As a result, after the rent hike, Joey's marginal cost of cutting grass will a. increase by $100 divided by the amount of grass cut. b. increase by $100. c. decrease by $100. d. not change.
Answer:
not change
Explanation:
marginal cost is the change in cost by increasing production by one unit. Joey's marginal cost would be unaffected by the increase in rent because Joey has not increased the amount of grass he cuts.
the rents constitutes a fixed cost. Fixed cost is cost that does not vary with production
Suppose the real rate is 2.1 percent and the inflation rate is 3.4 percent. What rate would you expect to see on a Treasury bill? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
5.57%
Explanation:
The real rate is 2.1 percent
The inflation rate is 3.4 percent
To find the rate which is to be expected on a treasury bill we have to apply the fishers equation
1+R= (1+r)(1+h)
Therefore, the rate on the treasury bill can be calculated as follows
1+R= (1+r)(1+h)
r= 2.1%
= 2.1/100
= 0.021
h= 3.4%
= 3.4/100
= 0.034
R= (1+r)(1+h)-1
= (1+0.021)(1+0.034)-1
= (1.021×1.034)-1
= 1.0557-1
= 0.0557×100
= 5.57%
Hence the rate expected on the treasury bill is 5.57%
Kant Corporation retires its $500,000 face value bonds at 102 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date is $481,250. The entry to record the redemption will include a
Answer and Explanation:
The Journal entry is shown below:-
Bonds payable Dr, $500,000
Loss on retirement of bonds Dr, $28,750
($510,000 + $18,750 - $500,000 )
To Cash $510,000 ($500,000 × 1.02)
To discount on bonds payable $18,750 ($500,000 - $481,250)
(Being redemption is recorded)
Here we debited the bonds payable and loss on retirement of bonds as it decreased the liabilities and increased the loss and we credited the cash and discount on bonds payable as it decreased the assets and increased the liabilities
Evaluate the following statement using economic reasoning “a monopolist can charge whatever she wants because she is the only source available”
Answer:
The question is kind of self explanatory. The monopolist controls a monopoly. A monopoly is the exclusive control of supplies or trade for services. If the monopolist is the only source for a product, she can charge whatever she wants. There is a demand for the product and she is the only source, therefore she will charge what she wants.
Explanation:
The statement "a monopolist could charge whatever she wants as she is the only available source" should be evaluated below:
The following information related to the monopoly is to be considered:
It is a single seller marketOnly one seller is available in the market.Substitutes of the goods are not available in the market.Having strong barriers to entry.Do not enter other firms.Therefore we can conclude that as a monopolist they have full control over the price as they are price maker.
Learn more about the monopolist here: brainly.com/question/5992626
Westbrook's Painting Co. plans to issue a $1,000 par value, 20-year noncallable bond with a 7.00% annual coupon, paid semiannually. The company's marginal tax rate is 25%, but Congress is considering a change in the corporate tax rate to 15%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted
Answer:
The component cost of debt used to calculate the WACC will change by 0.70% if the new tax rate was adopted.
Explanation:
This can be calculated using the formula for calculating the component cost of debt used to calculate the WACC as follows:
CD = WD * PCD * (1 - t) ........................ (1)
Where;
CD = Component of cost of debt in WACC
WD = Weight of debt
PCD = Pretax cost of debt
t = tax rate
Note: Since information is provided for only the 20-year noncallable bond in the question, we assume that WD is 100% for simplicity purpose.
We can therefore proceed as follows:
a. CD When tax rate is 25%
Based on equation (1) and the assumption in the note, we have:
CD when t is 25% = Component of cost of debt in WACC = ?
WD = Weight of debt = 100%
PCD = Pretax cost of debt = 7%
t = tax rate = 25%
Substituting into equation (1), we have:
CD when t is 25% = 100% * 7% * (1 - 25%) = 5.25%
b. CD When tax rate is 15%
Based on equation (1) and the assumption in the note, we have:
CD when t is 15% = Component of cost of debt in WACC = ?
WD = Weight of debt = 100%
PCD = Pretax cost of debt = 7%
t = tax rate = 15%
Substituting into equation (1), we have:
CD when t is 15% = 100% * 7% * (1 - 15%) = 5.95%
c. the WACC change if the new tax rate was adopted
Change in WACC = CD when t is 15% - CD when t is 25% = 5.95% - 5.25% = 0.70%
Therefore, the component cost of debt used to calculate the WACC will change by 0.70% if the new tax rate was adopted.
Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred.
Sept. 6 Purchased calculators from Green Box Co. at a total cost of $1,620, terms n/30.
9 Paid freight of $50 on calculators purchased from Green Box Co.
10 Returned calculators to Green Box Co. for $38 credit because they did not meet specifications.
12 Sold calculators costing $520 for $690 to University Book Store, terms n/30.
14 Granted credit of $45 to University Book Store for the return of one calculator that was not ordered. The calculator cost $34.
20 Sold calculators costing $570 for $760 to Campus Card Shop, terms n/30.
Required:
Journalize the September transactions.
Answer and Explanation:
The journal entries are shown below:
1. Merchandise Inventory $1,620
To Accounts Payable $1,620
(Being the calculators purchased on account)
2. Merchandise Inventory $50
To Cash $50
(Being freight expenses paid for cash)
3. Accounts Payable $38
To Merchandise Inventory $38
(being the returned inventory is recorded)
4. Accounts Receivable $690
To Sales Revenues $690
(Being the sales is recorded)
Cost of Goods Sold $520
To Merchandise Inventory $520
(Being the cost is recorded)
5. Sales returns $45
To Accounts Receivable $45
(being the sales return is recorded)
Merchandise Inventory $34
To Cost of Goods Sold $34
(Being the cost of returned is recorded)
6. Accounts Receivable $760
To Sales Revenues $760
(being the sale is recorded)
Cost of Goods Sold $570
To Merchandise Inventory $570
(Being the cost is recorded)
Andrew founded and operated a wedding planning agency, which specialized in celebrity weddings. When he died, his business was dissolved because there was no plan for control after his death.
Type of business:___________
Answer:
Sole proprietorship
Explanation:
The sole proprietor is a single owner of a business. He bears the loss of From the business alone and also enjoys gains from the business alone. There is no distinction between the business and it's owner. Such a business is easy to form and dismantle because the government has no involvement in it.
From the question since Andrews business was dissolved when he because there was no plan for control after his death, this signifies a sole proprietorship.
You founded your own firm three years ago. You initially contributed $200,000 of your own money and in return you received 2 million shares of stock. Since then, you have sold an additional 1 million shares of stock to angel investors. You are now considering raising capital froma venture capital firm. This venture capital firm would invest $6 million and would receive 3 million newly issued shares in return.
Suppose you sold the 1 million shares to the angel investor for $500,000. What was the post-money valuation of your shares immediately following the angel investor's investment?
A. 1.0$ million
B. 500,000$
C. 2.5$ million
D. 2.0$ million
Answer:
A. $1.0 million
Explanation:
total shares outstanding immediately after you sold stocks to the angel investors = 2 million (your own) + 1 million (angel investors) = 3 million
the angel investors paid $500,000 for 1 million stocks, that means that your 2 million shares are worth twice as much = $500,000 x 2 = $1,000,000
the company's total value = $1,000,000 + $500,000 = $1,500,000
Marigold Corp. sells equipment on September 30, 2019, for $17,000 cash. The equipment originally cost $71,600 and as of January 1, 2019, had accumulated depreciation of $42,100. Depreciation for the first 9 months of 2019 is $5,350. Prepare the journal entries to (a) update depreciation to September 30, 2019, and (b) record the sale of the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answer:
Only two entries are required.
Explanation:
Marigold Corporation
General Journal
Date Particulars Debit Credit
September 30 Depreciation Expense $5,350 Dr
Accumulated Depreciation $5,350 Cr
Updating the depreciation expense by $5350 and crediting accumulated depreciation account.
Recording the sale of the equipment.
September 30 Accumulated Depreciation $47,450 Dr
Cash $17,000 Dr
Loss on Sale $ 7150 Dr
Equipment $71,600 Cr
The equipment is sold for $ 17,000 cash and there's a loss of $ 7150.
After reviewing his budget, Josh realizes he can't spend more than $40 on a pair of new shoes, so he decides to shop only at stores that carry shoes in his price range. What is this an example of? A. A rational choice B. A value-added motivation C. An emotional choice D. An impulsive selection
Answer:
A. A rational choice
Explanation:
I think that this is an example of a rational choice because there is a logical reason that Josh wants to buy shoes that cost less than $40. Value-added wouldn't work, because there is no added value. Emotional choice wouldn't work either because the question does not say that Josh wants a specific type of shoes. Lastly, impulsive selection doesn't fit because the reason Josh doesn't want to spend more than $40 dollars is not random.
"A customer purchases 3M of Chicago Water Authority 9% revenue bonds maturing in 2042 at 87. The interest payments are Mar 15th and Sept 15th. The trade took place on Tuesday, April 15th. How much accrued interest will the customer be required to pay the seller?"
Answer:
$24
Explanation:
Given the following variables:
3M stands for $3,000 face amount of bonds (M is Latin for $1,000).
The day count is = 32 days interest
The bonds = 3 bonds
The interest rate = $90
The day basis = 360 days. (Considering that each month has 30 days)
Hence, using the formula
Accrued Interest = [Interest Rate X (Time Period / 365)] X Loan Amount
= 9% x (32 days / 360) x $3000
= $23.9999997 ≈ $24.
Therefore the final answer for accrued interest the customer will be required to pay seller = $24.