Answer:
$60.75
Explanation:
your question seems incomplete. here is the full question used in answering this question
Free Spirit Industries Inc. is considering a project that will have fixed costs of $10,000,000. The product will be sold for $41.50 per unit, and will incur a variable cost of $10.75 per unit. p na r so Free Spirit's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she believes that the firm will be able to sell only about 200,000 units. However, she also thinks that the demand for Free Spirit's product is relatively inelastic (so the firm can increase the sales price without significantly decreasing the volume of product sold). Assuming that the firm can sell 200,000 units, what price must it set to break even? O $57.71 per unit O $72.90 per unit O $60.75 per unit O $66.83 per unit
Breakeven price = (fixed cost / quantity sold) + variable price per unit
($10,000,000 / 200,000) + $10.75 = $60.75
For a stock to be in equilibrium, that is, for there to be no long-term pressure for its price to depart from its current level, then a.the expected future return must be less than the most recent past realized return. b.the past realized return must be equal to the expected return during the same period. c.the expected future returns must be equal to the required return. d.the required return must equal the realized return in all periods. e.the expected return must be equal to both the required future return and the past realized return.
Answer:
c.the expected future returns must be equal to the required return.
Explanation:
When the stock is at equilibrium than the intrinsic value of the stock is equivalent to the market price of the stock that depicts that the expected returns which held in the future should be equivalent to the required return
Therefore the option c is correct
And, the other options that are mentioned in the question are incorrect
For a stock to be in equilibrium, the expected future returns must be equal to the required return.
The correct answer to this question is answer option c. At the equilibrium position there is a balance between the expected returns and the required returns.
At this point the intrinsic value is the same thing as the market value. Telling us that the rate the investor is expecting is the same as the actual required rate of return.
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If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, there can be mutual gains from trade if:
This question is incomplete because the options are missing; here are the options:
A. The USA specializes in potatoes because of its comparative advantage in producing potatoes.
B. The USA specializes in wheat because of its absolute advantage in producing wheat.
C. The USA specializes in wheat because of its comparative advantage in producing wheat.
D. There can be no mutual gains from trade.
The correct answer to this question is A. The USA specializes in potatoes because of its comparative advantage in producing potatoes.
Explanation:
In economics, a country has a comparative advantage, if it can produce a specific good at a lower opportunity cost, which implies the loss of choosing the product over others is low. Also, mutual gains are possible if each country specializes in the product with a comparative advantage. Moreover, to know which country has an opportunity advantage you need to calculate the opportunity cost of 1 unit, or, in this case, 1 ton of the product.
In the case of the U.S. you already know 1 ton of potatoes is equivalent to 0.5 tons of wheat, which is the opportunity cost. Now, let's calculate this factor for the production of 1 ton of potatoes in Ireland
3 tons of potatoes = 2 tons of wheat 1. Use 3 (tons of potatoes) and divide both numbers into three
3 tons of potatoes/ 3 = 2 tons of wheat / 3
1 ton of potatoes = 0.66
This shows the opportunity cost in the USA is lower and this represents a comparative advantage as less is lost when potatoes are chosen over wheat. Thus, to benefit both countries the USA should specialize in potatoes due to the higher comparative advantage or lower opportunity cost.
Calculate the forecasted cost at completion if the total budgeted cost is $15,000, the cumulative actual cost is $10,000, and the cumulative earned value is $12,000.
Answer:
$13,000
Explanation:
The total budgeted cost is $15,000
The cumulative actual cost is $10,000
The cumulative earned value is $12,000
Therefore, the forecasted cost at completion can be calculated as follows
= Cumulative actual cost + ( Budgeted cost-Cumulative earned value)
= $10,000 + ($15,000-$12,000)
= $10,000 + $3,000
= $13,000
Hence the forecasted cost at completion is $13,000
Bonita Industries applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job No. 130, the only job still in process at the end of August, has been charged with manufacturing overhead of $5100. What was the amount of direct materials charged to Job 130 assuming the balance in Work in Process inventory is 45000?
Answer:
Direct Materials $ 33525
Explanation:
Bonita Industries
Job No. 130,
Manufacturing overhead $5100.
Direct Labor = $ 6375
5100 80
x 100
Using cross product direct labor = 5100 *100/80= 6375.
We have
Work in Process inventory $ 45000
Less
Manufacturing overhead $5100.
Direct Labor $ 6375
Direct Materials $ 33525
The Work in Process is debited with Direct Materials, Direct Labor and Manufacturing Overheads.
As we know the Direct Labor and Manufacturing Overheads we can find out the Direct Materials by subtracting the Direct Labor and Manufacturing Overheads from the Work In Process Inventory balance.
If a country produces only two products, then by looking at the country's production possibilities curve (PPC), one can see that the opportunity cost of producing one of the products is the same as (equal to) the marginal cost of producing that product.
A. True
B. False
Answer:
A. True
Explanation:
Marginal cost is the cost of the good or service is the opportunity cost of producing one or one of the units of it. It's the cost of producing one r ore unit of good. Marginal cost includes the cost included the producing of every unit. Opportunity cost is the alternative cost incurred by not using the opportunity cost of the other product.Mr. and Ms. Kingsley owned acre as joint tenants in fee simple absolute. Ms Kingsley secretly conveyed her interest to herself in an instrument that added, "I hereby terminate the joint tenancy in Black-acre with Mr. Kingsley." Ms. Kingsley thereafter leased a portion of the property to Mr. Matthew, over the objections of Mr. Kingsley for Mr. Matthew to use for holding boxing matches. Their lease provided that Mr. Matthew would pay $1000.00 on the first day of each month during which he was permitted to use the property. Mr. Kingsley demanded from Ms. Kingsley one-half of the rents received from Mr. Matthew.
Required:
Describe the property relations between the parties and Mr. Kingsley's rights and remedies.
Answer:
Mr. and Ms. Kingsley as Joint Tenants
1. Property Relations between Mr. and Ms. Kingsley: The titles show that the Kingsleys are living together but not married partners. However, the Black-acre is jointly owned by these partners. Each has equal rights and obligations over the acre. Ms. Kingsley does not have absolute right to sell or lease any part of the acre without the consent of Mr. Kingsley or without obtaining a court permit to sell or lease, especially upon Mr. Kingsley's objections. She also lacks the legal right to secretly "terminate the joint tenancy in Black-acre" without the knowledge of Mr. Kingsley or without going through the applicable court process.
2. Mr. Kingsley's Rights and Remedies: Having leased a portion of the acre to Mr. Matthew, Mr. Kingsley is entitled to half of the monthly lease payments. He also has the right to demand from Ms. Kingsley one-half of the rents from the lease. He can, in the absence of Ms. Kingsley's refusal, initiate a court process to enforce his joint-tenancy rights.
Explanation:
Joint-tenancy can exist between Mr. Kingsley and Ms. Kingsley, whether they are legally married or not. Joint-tenancy can also exist between two or more parties without the intention of marriage. The term is a legal term that describes an equally shared ownership interest in a property. Joint-tenancy deeds are established in order to avoid the need for a probate in the case of a party's death.
The Grondas, who owned a party store along with land, fixtures, equipment, and a liquor license, entered into a contract to sell their liquor license and fixtures to Harbor Park Market in an agreement that was expressly conditioned on approval by the Grondas' attorney. The Grondas submitted the contract to their attorney but before the attorney had approved it, they received a second, better offer and submitted that contract to the attorney as well. The attorney reviewed both agreements and approved the second one. Harbor Park Market sued the Grondas for breach of contract. Will their suit succeed?
Answer:
No the suit will not succeed as their is no agreement
Explanation:
The contract was conditional contract. As the condition explicitly said that, the right to agree on terms and conditions is explicitly attorney's right. When the attorney has not agreed on the terms and conditions of Harbor Park, the company hasn't formed any contract. Furthermore, there is no limitation on Grondas to consider other available options and attorney is also not obliged to agree to Harbor's offer.
Thus the suit that says Grondas has breached the contract is meaningless and will not succeed in the court.
The Freeman Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.
a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)
b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?
Complete question is given at the end of the question.
Answer with Explanation:
Requirement 1:
Net Income is an accounting profits which includes both cash flow items and non cash flow items. It can be calculated as under:
Net Income = (Sales - Cost - Depreciation) - (Income Before Tax * Tax Rate)
The computation is given in the Second excel sheet attached.
Requirement 2:
According to relevant costing principles if the cost is relevant then it must satisfy following conditions:
Must be cash flow in nature.Must be Future related (no past commitments).Differential or must be incrementalSo this means that the depreciation would not be taken into account as it is not a relevant cost and thus must not be included as an incremental cost.
Incremental Cash flow can be calculated using the following formula:
Incremental Cash Flow = Net Income + Depreciation (Removing its impact) - Working Capital Injection + Working Capital Withdrawal
The calculation for each year is shown in the second attachment.
Requirement 3:
The NPV can be calculated by discounting each year cash flow by the rate of return which in this case is 12%.
The formula for calculating the NPV is as under:
NPV = Investment in year zero - Net Cash Flow of Y1 / (1 + r)^1 - Net Cash Flow of Y2 / (1 + r)^2 - Net Cash Flow of Y3 / (1 + r)^3 - Net Cash Flow of Y4 / (1 + r)^4
The computation of NPV is given in the second attachment given below:
Rizio Co. purchases a machine for $12,500, terms 210, n60, FOB shipping point. Rizio paid within the discount period and took the $250 discount. Transportation costs of $360 were paid by Rizio. The machine required mounting and power connections costing $895. Another $475 is paid to assemble the machine, and $40 of materials are used to get it into operation. During installation, the machine was damaged and $180 worth of repairs were made. Compute the cost recorded for this machine.
Answer:
Cost of machine= $14,200
Explanation:
According to International Accounting standards(IAS) 16 property plan and equipment (PPE), the cost of an asset is the purchase cost plus other costs of bringing it to the intended working conditions.
So we will add the purchase cost to the installation cost , freight charges.
Note that the cost of the power connections, assembling and material used for installations all represent cost associated to bring the machine into ready for use.
Cost of machine = (12,500 - 250) + 360 + 895 + 475 + 40 + 180= 14,200
Cost of machine= $14,200
James is an agreeable and emotionally stable person. A _______ , he inspires his employees to believe in the changes he wants to make to the organization.
a) transformational leader
b) transactional leader
Answer:
transformational leader
Galaxy Corp. is considering opening a new division to make iToys that it expects to sell at a price of $15,250 each in the first year of the project. The company expects the cost of producing each iToy to be $6,700 in the first year; however, it expects the selling price and cost per iToy to increase by 3.00% each year.
Based on the preceding information and rounding dollar amounts to the nearest whole dollars, the company expects the selling price in the fourth year of the project to be_______ , and it expects the cost per unit in the fourth year of the project to be _______.
Answer:
Selling price= $17,164
Unitary variable cost= $7,541
Explanation:
Giving the following information:
Selling price in the first year= $15,250
Unitary variable cost on the first year= $6,700
Increase rate= 3%
To calculate the selling price and variable cost per unit in the fourth year, we need to use the following formula:
FV= PV*(1+i)^n
PV= current value
i= increase rate
n= number of years
Selling price= 15,250*(1.03^4)= $17,164
Unitary variable cost= 6,700*(1.03^4)= $7,541
The aggregate demand and aggregate supply model is a useful simplification of the macroeconomy used to explain short-run fluctuation in economic activity around its long-run trend.
a) The vertical axis of a diagram of the aggregate demand and aggregate supply curves measures which of the following?
A. An economy's price level.
B. The amount of a particular representative good produced in the economy.
C. The price of a particular representative good produced in the economy.
b) Which of the following are reasons that the short-run aggregate supply curve slopes upward?
A. As the price level rises, firms expand their production because they can sell their output for more money.
B. As the price level rises, firms find it more profitable to hire workers at any given wage.
C. As the price level rises, firms decrease their investment, because it is more expensive to purchase capital.
Answer:
The correct answers are:
a) A. An economy's price level.
b) A. As the price level rises, firms expand their production because they can sell their output for more money.
Explanation:
On the one hand, in this type of economic model, the aggregate supply and demand represent the economy's price and quantity level regarding the output of the country as a whole. Therefore that in the vertical axis of the diagram the curves measures the price level of the economy and in the horizontal axis the curves measure the output that the economy produces at that given price.
On the other hand, the slope of the aggregate supply is upward because of the same reason as it is in the supply curve, because of the law of the supply, that states that there is a direct relationship between the price of the good an its quantity offered. Thefore that when the price level rises the firms will produce more because they can sell their production at a higher price.
a friend wants to borrow money from you. He states that he will pay you $3000 every 6 months for 12 years with the first payment exactly 3 years and six months from today. The interest rate is an APR of 5.3 percent with semiannual compounding. What is the value of the payments today?
Answer:
$45,111.41
Explanation:
For calculation of value of the payments today first we need to find out the value at 3 years which is shown below:-
Value at 3 years = PMT × (1 - (1 ÷ (1 + r^n))) ÷ r
= $3,000 × (1 - (1 ÷ (1.0265 ^24))) ÷ 0.0265
= $52,776.45
Now, The value of the payment today = Value at 3 year ÷ (1 + r^n)
= $52,776.45 ÷ (1.0265^6)
= $45,111.41
Therefore we have applied the above formula.
10. You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of:
Answer:
A secondary market transaction
Explanation:
Secondary market transaction: In this transaction, the transaction which is already issued to the public are sold by another investors.
In this type market, the investors buy and sell securities which are theirs . It is what most people typically think of as the "stock market," though stocks are also sold on the primary market when they are first issued.
So in the question, the transfer was made through a broker which implies it deals in the secondary market.
Primary market transaction: In this transaction, the company directly sells the new stocks, bonds, etc to the public for the first time.
Future market transaction: This is the transaction which occurs in the near future to buy some specific quantities at the future price.
Calculate the earnings of workers A, B and C under the Straight Piece
Rate System and Merrick’s Differential Piece Rate System from the
following particulars.
Normal rate per hour: Rs. 5.40
Standard time per unit: 1 minute
Output per day is as follows.
Worker A – 390 units
Worker B – 450 units
Worker C – 600 units.
Working hours per day are 8
Answer:
Earnings of Workers:
Rates Systems
Worker Straight Piece Merrick's Differential Piece
A $35.10 $28.08
B $40.50 $32.40
C $54.00 $64.80
Explanation:
a) Data:
Normal rate per hour: Rs. 5.40
Standard time per unit: 1 minute
Output per day is as follows.
Worker A – 390 units
Worker B – 450 units
Worker C – 600 units
Working hours per day are 8
b) Calculations:
i) Standard units per day = 8 x 60 minutes = 480 units
ii) Earnings per day is as follows.
Worker A – 390 units :
Straight piece Wages = 390 / 60 x $5.40 = $35.10
Merrick's Earnings = 390/60 x $5.40 x 0.8 = $28.08
Worker B – 450 units :
Straight piece Wages = 450 / 60 x $5.40 = $40.50
Merrick's Earnings = 450/60 x $5.40 x 0.8 = $32.40
Worker C – 600 units:
Straight piece Earnings = 600 / 60 x $5.40 = $54
Merrick's Earnings = 600/60 x $5.40 x 1.2 = $64.80
c) The factor for multiplying the rate is obtained by dividing the units produced by the number of minutes in an hour, in order to convert output to a rate based on the hour.
d) The standard output per day helps Merrick in calculating the weights to be assigned to each worker and differentiate the slow worker from the superior worker (hence, the name: Merrick's Differential Piece Rate). The slow workers (those who produce below the standard output) are paid a rate lower than the standard rate by adding a weight of 0.8 as a punishment while the superior worker is assigned a weight of 1.20 as a reward for good performance. Meanwhile, a standard performer who produced 480 units will be paid the normal rate or weighed as 1.0.
App Holdings is expected to pay dividends of $1.50 every six months for the next three years. If the current price of App Holdings stock is $22.60, and App Holdings' equity cost of capital is 18%, what price would you expect App Holdings' stock to sell for at the end of three years
Answer:
The answer is $34.36
Explanation:
FV = PV x (1 + R x ((1 + r))^T = $22.6 x (1 + {($1.5 / $22.60) x [1 + (18% / 2)]}^6 = $34.36
Wagner Enterprises and Stone Services both disposed of an old asset. When completing the journal entry, Wagner Enterprises included a debit to Cash, but Stone Services did not. Why would the companies have this difference in the journal entry
Answer:
Wagner Enterprises and Stone Services
Disposal of old asset:
It could be that Stone Services exchanged its old asset with a new one with a company. In that situation, the debit goes to New Equipment, while the credit is to the old Equipment. Another reason could be that Stone Services sold the old asset on account. In this situation, the debit goes to the Accounts Receivable account, while the old asset is credited accordingly.
Explanation:
When a company disposes of an old asset, it credits the asset account and transfers the amount to the Sale of Asset account. The same is done for the accumulated depreciation, in reverse. When cash is realized from the disposal, the Sale of Asset account is credited, while Cash account is debited. Then, the difference in the Sale of Asset account will be a gain or a loss, depending on the net book value and the cash realized from the sale.
Suppose that you take $50 in currency out of your pocket and deposit it in your checking account. If the required reserve ratio is 8%, what is the largest amount (in dollars) by which the money supply can increase as a result of your action?
Answer:
The largest amount (in dollars) by which the money supply can increase as a result of the action is $625.
Explanation:
This is an example of money multiplier.
Money multiplier refers to the maximum amount of money that commercial bank can create or generate with each dollar of reserves.
Reserves or required reserves refer to the amount of money or portion of deposit that the central bank such as the Federal Reserve requires banks to hold and not lend.
In order to determine the largest amount (in dollars) by which the money supply can increase as a result of $50 deposit, money multiplier is used to multiply the $50 deposit.
The formula for the money multiplier is given as follows:
Money multiplier = 1/r
Where;
r = required reserve ratio = 8%, or 0.08.
Therefore, we have:
Money multiplier = 1 / 0.08 = 12.50
Largest amount of increase = Amount of deposit * Money multiplier = $50 * 12.50 = $625.
Therefore, the largest amount (in dollars) by which the money supply can increase as a result of the action is $625.
eal per capita GDP in Singapore in 1961 was about $450, but it doubled to about $900.00 by 1978. a. What was the average annual economic growth rate in Singapore over the 17.00 years from 1961 to 1978
Answer:
The answer is 4.16%
Explanation:
Per capita GDP is the average income earned per person in a given country during a given period of time usually a year.
Per capita GDP in Singapore in 1961 equals $450
Per capita GDP in Singapore in 1978 equals $900
Difference between 1978 and 1961 is 17 years.
The formula for economic growth rate is;
[(End value/beginning value)^1)/17] - 1
[($900/$450)^1/17] - 1
1.041613 - 1
0.0416
Expressed as a percentage:
4.16%
rojects A and B are mutually exclusive and have an initial cost of $78,000 each. Project A provides cash inflows of $32,000 a year for three years while Project B produces a cash inflow of $44,400 a year for two years. Which project(s) should be accepted if the discount rate is 10 percent
Answer:
Project A should be accepted.
Explanation:
The initial investment of project A = $78000
The initial investment of project B = $78000
The cash inflows of project A = $32000
The time period for project A = 3 years
The cash inflow of project B = $44400
The time period for project B = 2 years.
Interest rate (r ) = 10%
Now find the net present value of both project and then decide which one has to accept.
The net present value of project A:
[tex]=\frac{A(1-(1+r)^{-n})}{r} - \text{initial investment} \\= \frac{32000(1-(1+0.1)^{-3})}{0.1} - 78000 \\= 79579.26 – 78000 \\= $1579.26[/tex]
The net present value of project B:
[tex]=\frac{A(1-(1+r)^{-n})}{r} - \text{initial investment} \\= \frac{44400(1-(1+0.1)^{-2})}{0.1} - 78000 \\= - 942.14[/tex]
Project A should be accepted because project B has a negative net present value.
Alpaca Corporation had revenues of $260,000 in its first year of operations. The company has not collected on $19,300 of its sales and still owes $26,300 on $90,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,000 in salaries. Owners invested $10,000 in the business and $10,000 was borrowed on a five-year note. The company paid $4,900 in interest that was the amount owed for the year, and paid $6,000 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. Compute net income for the first year for Alpaca Corporation.
Answer:
$89,460
Explanation:
The computation of the net income is shown below:
Sales $260,000
Less: Cost of goods sold -$90,000
Gross margin $170,000
Less:
Salaries -$13,000
Insurance payment -$3,000 ($6,000 ÷ 2 years)
Interest -$4,900
profit before tax $149,100
Less: tax expense -$59,640
Net income $89,460
We simply deducted all expenses from the revenues so that the net income could arrive and the same is to be considered
"If the regulations for environmental protection were strictly adhered to and industries, cities, and individuals considered the environment crucial for survival and a thriving market, what would be the benefits from this change
Explanation:
The benefits arising from complying with an environmental protection regulation would be diverse for society, for companies and for the environment as a whole.
It is ideal to recognize the scarcity of natural resources, and knowing how to preserve them as citizens is everyone's duty. Environmental awareness and compliance with regulations would lead to significant changes in quality of life, air, water, decrease the greenhouse effect, decrease respiratory diseases, etc.
For the industry, complying with environmental regulation makes it better positioned in the market, attracts more investors, motivates employees more, reduces unnecessary risks and costs in addition to enhancing the continuous improvement of processes as a whole.
The city of Oak Ridge is considering the construction of a four kilometer (km) greenway walking trail. It will cost $1 comma 000 per km to build the trail and $340 per km per year to maintain it over its 22-year life. If the city's MARR is 11% per year, what is the equivalent uniform annual cost of this project? Assume the trail has no residual value at the end of 22 years.
Answer:
equivalent uniform annual cost = $1,849.25
Explanation:
Initial cost $4,000
then 22 cash outflows of $1,360
discount rate 11%
using a financial calculator, we determine the NPV = -$15,119.01
EAC = (NPV x r) / [1 - (1 + r)⁻ⁿ]
EAC = (-$15,119.01 x 11%) / [1 - (1 + 11%)⁻²²] = -$1,663.09 / 0.89933 = -$1,849.25
1. Stock A has an expected return of 7%, a standard deviation of expected returns of 35%, a correlation coefficient with the market of -0.3, and a beta coefficient of -0.5. Stock B has an expected return of 12% a standard deviation of returns of 10%, a 0.7 correlation with the market, and a beta coefficient of 1.0. Which security is riskier
Answer:
Option A is riskier
Explanation:
In this question, we want to know which of the two stocks is riskier.
To answer this, we can use the standard deviation of returns as a risk measure.
For a security with a big value for standard deviation of returns, its per period returns are wider making its range per day large.
Hence, what this means is that out of the two stocks, the one with a larger value of standard deviation of returns will guarantee more risk as it is expected to give a better ranges of price
Now back to the values in the question, we can see that the standard deviation of returns of stock A is greater than that of stock B which this makes it a more risky option
On April 29, Welllington Co. paid $1,760 to repair the transmission on one of its delivery vans. In addition, Welllington paid $52 to install a GPS system in its van.
Journalize the entries for the transmission and GPS system expenditures. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTSGarcia Associates Co.General Ledger
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
114 Interest Receivable
115 Notes Receivable
116 Merchandise Inventory
117 Supplies
119 Prepaid Insurance
120 Land
123 Delivery Van
124 Accumulated Depreciation-Delivery Van
125 Equipment
126 Accumulated Depreciation-Equipment
130 Mineral Rights
131 Accumulated Depletion
132 Goodwill
133 Patents
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Owner, Capital
311 Owner, Drawing
312 Income Summary
REVENUE
410 Sales
610 Interest Revenue
620 Gain on Sale of Delivery Van
621 Gain on Sale of Equipment
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Delivery Van
523 Delivery Expense
524 Repairs and Maintenance Expense
529 Selling Expenses
531 Rent Expense
532 Depreciation Expense-Equipment
533 Depletion Expense
534 Amortization Expense-Patents
535 Insurance Expense
536 Supplies Expense
539 Miscellaneous Expense
710 Interest Expense
720 Loss on Sale of Delivery Van
721 Loss on Sale of Equipment
Answer:
April 29,
DR Accumulated Depreciation - Delivery Van $1,760
CR Cash $1,760
(To record repair of van)
April 29,
DR Delivery Van $52
CR Cash $52
(To record installation of GPS system in Van)
Explanation:
The transmission being faulty in the Van is part of the depreciation of the van and so when it is fixed, it reduces the depreciation of the van. The amount needs to be debited to the Accumulated Depreciation Account to signal that it is a reduction.
Installing a new GPS in a Van is an additional benefit to the van that will last for a period of more than a year hence it should be capitalised and added to the cost of the Delivery Van.
An investor considers investing $10,000 in the stock market. He believes that the probability is 0.30 that the economy will improve, 0.40 that it will stay the same, and 0.30 that it will deteriorate. Further, if the economy improves, he expects his investment to grow to $15,000, but it can also go down to $8,000 if the economy deteriorates. If the economy stays the same, his investment will stay at $10,000.a. What is the expected value of his investment?b. Should he invest the $10,000 in the stock market if he is risk neutral?c. Is the decision clear-cut if he is risk averse? Explain.
Answer:
a. What is the expected value of his investment?
$10,900b. Should he invest the $10,000 in the stock market if he is risk neutral?
If the investor is risk neutral, then he pays little attention to market risk, therefore, he/she should invest because the expected value is higher than the investment.c. Is the decision clear-cut if he is risk averse?
If the investor is risk averse, it means that he/she is afraid of market risk and likes to make decisions that involve the least possible risk. In this case, the possibility of losing money is not that large (in my opinion) and the expected value is relatively high, but a risk averse investor would probably prefer an investment that yields a lower rate but is more secure, e.g. US securities.Explanation:
total investment $10,000
if economy improves = 0.30 x $15,000 = $4,500if economy remains the same = 0.40 x $10,000 = $4,000if economy deteriorates = 0.30 x $8,000 = $2,400total expected value = $10,900
Builtrite bonds have the following: 5 ½% coupon, 11 years until maturity, $1000 par and are currently selling at $1054. If you want to make an 5% return, what would you be willing to pay for the bond?
Answer:
$1,041.53
Explanation:
The price that a rational investor would pay for the bond yearning for 5% rate of return can be determined using excel pv function below:
=-pv(rate,nper,pmt,fv)
rate is the yield expected by the investor
nper is the number of annual coupons remaining i.e 11
pmt is the amount of annual coupon=face value*coupon rate=$1000*5.5%=$55
fv is the face value of $1000
=-pv(5%,11,55,1000)=$1,041.53
Which of the following is not considered to be a liability? Answers: a. Wages Payable b. Unearned Revenues c. Accounts Payable d. Accounts Receivable
Answer:
d. Accounts Receivable.
Explanation:
In Financial accounting, liability can be defined as the amount of money being owed by an individual or organization to another.
Simply stated, liability is a debt being owed and as such it usually has "payable" in its account title on the balance sheet.
Generally, liabilities are recorded on the right side of the balance sheet and it comprises of financial informations such as warranties, bonds, loans, deferred revenues, mortgages, account payable etc.
Accounts Receivable is not considered to be a liability because it is the payment a business firm would receive from its customers for goods purchased or services taken on credit. Accounts Receivable are recorded in the current assets section of the balance sheet because they add value to a business firm.
Suppose a stock has an expected return of 12% and a standard deviation of 6%. What is the likelihood that this stock returns between 12% and 18%
Answer: 34.13%.
Explanation:
Given : Expected return : [tex]\mu=12\%=0.12[/tex]
Standard deviation: [tex]\sigma=6\%=0.06[/tex]
Let x be the stock returns.
Then, the probability that stock returns between 12% and 18%:
[tex]P(0.12<x<0.18)=P(\dfrac{0.12-0.12}{0.06}<\dfrac{x-\mu}{\sigma}<\dfrac{0.18-0.12}{0.06})\\\\=P(0<Z<1)\ \ \ [\because z=\dfrac{x-\mu}{\sigma}]\\\\=P(Z<1)-P(Z<0)\\\\=0.8413-0.5\ \ \ \text{[By z-table]}\\\\=0.3413[/tex]
Hence, the likelihood that this stock returns between 12% and 18% is 34.13%.
A dry cleaner uses exponential smoothing to forecast equipment usage. The August forecast was 88% and the actual was 89.6%. Use a smoothing constant of 0.1.
A. Prepare a forecast for September.
B. Assuming actual September usuage of 92 %, prepare a forecast for October usage
Answer:
1. 88.16%
2. 88.54%
Explanation:
a. Prepare a forecast for September
Smoothing constant (a) is 0.1
Forecast for August (Ft) is 88%
Actual usage for August (At) is 89.6%
Forecast for September(Ft +1) will therefore be;
Using the formulae
= Ft+a (At-Ft)
= 88% + 0.1(89.6% - 88%)
= 88% + 0.16%
= 88.16%
b. Assuming actual September usage of 92% , prepare a forecast for October usage.
Since we have the following,
Smoothing constant(a) 0.1
Then forecast for September(Ft) is 88.16%
Also, actual usage for September (At) is 92%
Therefore, forecast for October (Ft + 1) will be,
Using the formula
= Ft+a(At - Ft)
= 88.16% + 0.1(92% - 88.16%)
= 88.16% + 0.384%
= 88.54%