Answer:
2,080 units
$686,400
Explanation:
The computation of the number of camera sales in units is shown below:-
Number of camera sales in units = Sold units + (Sold units × Percentage of growth in units sales)
= 2,000 + (2,000 × 4%)
= 2,000 + 80
= 2,080 units
The computation of the amount of camera sales is shown below:-
Amount of camera sales = Number of units × Selling price per unit
= 2,080 × $330
= $686,400
A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.
A. True
B. False
Answer:
false
Explanation:
BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form. Form Type Mix of Forms Form Cost A 0.5 $3.75 B 0.5 $1.25 The expected cost of digitizing a form is $ . Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected cost of the form that you calculated in the previous part of the problem. Suppose that after the agreement, the client sends only forms of type A. The expected digitization cost per form of the forms sent by the client is $ . This leads to an expected loss of $ per form for BPO. (Hint: Do not round your answers. Enter the loss as a positive number.)
Answer:
BPO Servicesa. The expected cost of digitizing a form is $2.50
b. The expected digitization cost per form of the forms sent by the client is $3.75, without a mix of forms.
c. This leads to an expected loss of $1.25 per form for BPO.
Explanation:
1. Data:
Form Type Mix of Forms Form Cost
A 0.5 $3.75
B 0.5 $1.25
b. Calculation of Expected Cost of digitizing a form:
Form Type Mix of Forms Form Cost Expected Cost
A 0.5 $3.75 $1.875 (0.5 * $3.75)
B 0.5 $1.25 $0.625 (0.5 * $1.25)
Total expected costs $2.50
c. Calculation of Expected cost of Form actually sent by Client without a mix of forms:
A 01 $3.75 $3.75 (1 * $3.75)
Total expected costs $3.75
d. Calculation of Expected Loss:
Expected Price = $2.50
Expected cost = $3.75
Expected loss = $1.25
e. The expected value (cost, price, or gain or loss) from the form digitization is the sum of all possible values from the mix of forms, each multiplied by the probability of its occurrence.
Transactions are typically processed either [A] all together for a defined time window (e.g. end of a day or week) or [B] processed as each transaction occurs. The second method [B] is called ________ processing.
Answer: real time processing
Explanation:
Real time processing is when transactions are processed as each transaction occurs. In real time processing, the transactions are processed in a little period of time.
Good examples of real-time processing systems are traffic control systems. Real time processing is different from the batch processing which involves when transactions are processed all together for a defined time window.
Which of the following is a characteristic of a firm’s optimal dividend policy? It maximizes the firm’s stock price. It maximizes the firm’s return on equity. It maximizes the firm’s earnings per share. It maximizes the firm’s total assets.
Answer:
It maximizes the firm’s stock price.
Explanation:
The correct answer is “it maximizes the firm’s stock price” because the optimal dividend policy allows the variable risk parameters and it maximizes the firm’s value. Moreover, the dividend policy attracts the shareholders and it maintains the firm’s or the company’s worth in the market. Therefore, the optimal payment of dividend increases or maximizes the stock price.
The holder of a promotional permit may:
Provide alcohol to a minor
Serve an intoxicated person
Offer in-store wine and beer samples
Sell alcohol to members in a private club
Answer:
Offer in-store wine and beer samples.
Explanation:
Promotional permit was established to allow a person promote sale of alcoholic beverages on behalf of the manufacturer. Such alcoholic beverage must however be sold on the premises of the licenced holder.
A promotional permit holder, according to the Texas Alcoholic Beverage Commission,which was established in 1935, may involve in the sales of alcoholic beverages in a state or premises of the license holder. It is to be noted that the license holder must qualify enough before being granted the permit and must also pay some fees before carrying on such activities.
As a holder of a promotional permit, you are allowed to offer in-store wine and beer samples.
A person with a promotional permit:
Is allowed to promote the sale of a certain brand of alcohol Must be in a contract with the brand they are promotingIn order to promote the brand of alcohol, the person may use sales strategies such as offering in-store wine and beer samples to people to get them to try out the brand that they are promoting.
In conclusion, a holder of a promotional permit can offer in-store wine and beer samples.
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Suppose the economy was experiencing a negative real shock and high unemployment and high inflation at the same time. Furthermore suppose the Federal Reserve decided to address the problem by decreasing the money supply money. Assuming the policy is effective what can we expect to occur as a result (in the short run)
Answer: b. We should expect less inflation but more unemployment
Explanation:
A high supply of money leads to higher inflation. This is because the citizens will have more money to spend on goods and services and so will demand more of them. As a result, the increased demand pulls prices upward. Reducing the money supply therefore will have the effect of reducing the amount of money that people have on hand. This will reduce their demand for goods and services which will then see their prices decrease as a result.
High money supply in the market however means that loans are easier to get because there is more money to give. This means that companies can embark on more projects. With a lower money supply, companies as well as individuals will reduce their borrowing. This will mean less capital projects which create employment. Lowering the money supply will therefore lead to higher unemployment.
One measure of ____ is the extent to which the work of the department affects the final output of the organization.
Answer:
Centrality
Explanation:
Remember, a less central organization means more freedom. However, when the work of the departments in an organization can adversely affects the final output of the organization it tells us how central the organization is.
This Implies that the organization is following a structured system in which flexibility is not possible, and as a result any issues at other departments might affect output.
"A technical analyst has identified a resistance level for ABC stock at $81 and a support level at $75. The stock is currently trading at $77 and the analyst expects the stock to break the resistance level. Which order is appropriate to profit if the resistance level is broken?"
Answer:
Buy 100 ABC at $82 Stop
Explanation:
In the financial markets a resistance is an upper limit block on the market moving upward (buy). While the support is the lower limit on the market moving down (sell).
In this scenario we have a support of $75, resistance of $81 and the stock.is currently trading at $77. Just below the resistance.
If the analyst expects the stock to break the resistance of $81 then he should set a trade that is a buy since the market will go above $81.
When the market breaks a resistance it is expected to sky rocket, so the analyst will set a trade stop at $82, so that when the market is coming back down to the resistance level it will stop before it gets to $81.
On the other hand if a support is expected to be broken a sell trade is placed.
To retain high-performing engineers, a large semiconductor company provides corporate stock as part of the compensation package. In one particular year, the company offered 1000 shares of either class A or class B stock. The class A stock was selling for $30 per share at the time, and stock market analysts predicted that it would increase at a rate of 6% per year for the next 5 years. The class B stock was selling for $20 per share, but its price was expected to increase by 12% per year. At an interest rate of 8% per year, which stock should the engineers select on the basis of present worth analysis and a 5-year planning horizon?
Answer:
class A stocks
Explanation:
in 5 years, class A stock will be worth = $30 x (1 + 6%)⁵ = $40.15
in 5 years, class B stock will be worth = $20 x (1 + 12%)⁵ = $35.25
now we need to determine the present value if each stock:
class A stock present value = $40.15 / (1 + 8%)⁵ = $27.33
class B stock present value = $35.25 / (1 + 8%)⁵ = $23.99
since the present value of class A stock is higher, then the engineers should select that type of stocks.
Nissan’s all-electric car, the Leaf, has a base price of $32,780 in the United States, but it is eligible for a $7500 federal tax credit. A consulting engineering company wants to evaluate the purchase or lease of one of the vehicles for use by its employees traveling to job sites in the local area. The cost for leasing the vehicle will be $4200 per year (payable at the end of each year) after an initialization charge of $2500 paid now. If the company purchases the vehicle, it will also purchase a home charging station for $2200 that will be partially offset by a 50% tax credit. If the company expects to be able to sell the car and charging station for 40% of the base price of the car alone at the end of 3 years, should the company purchase or lease the car? Use an interest rate of 10% per year and annual worth analysis.
Answer:
Nissan's all-electric car, the Leaf
PV cost of Leaf Purchase = $16,529
PV cost of Leasing = $12,944.78
The company should lease the car.
Explanation:
a) Costs incurred to purchase the Leaf:
Base price $32,780
less Federal tax credit ($7,500)
Charging station 2,200
less 50% tax credit (1,100)
Cash paid $26,380
Sales value after 3 yrs (9,851) ( $26,380 - 40% of base discounted to PV)
Net PV Investment $16,529
b) Calculation of Discounted Present Values of Payments under Leasing, using online financial calculator:
PV (Present Value) $12,944.78
N (Number of Periods) 3.000
I/Y (Interest Rate) 10.000%
PMT (Periodic Payment) $4,200.00
Starting Investment $2,500.00
Total Principal $15,100.00
Total Interest $2,129.50
c) The purchase of the Leaf would involve a present value cost of $26,380 after deducting all the savings from tax. The 40% sales value of the car at the end of 3 years = $13,112 ($32,780 x 40%). When this sales value is discounted to PV of $9,851, the PV of the car investments becomes $16,529 ($26,380 - $9,851). On the other hand, leasing will cost in PV the sum of $12,944.78
.
The following data concerns a proposed equipment purchase: Cost$144,000 Salvage value$4,000 Estimated useful life 4years Annual net cash flows$46,100 Depreciation methodStraight-line Ignoring income taxes, the annual net income amount used to calculate the accounting rate of return is:
Answer: $74,000
Explanation:
The Average Investment refers to the average cash invested into a particular project and is useful in calculating the rate of return. The simple formula is to add the beginning value of the asset to its ending value and divide this by 2.
The ending value in this case would be the salvage value;
Average Investment = [tex]\frac{Beginning Cost of Machine + Salvage Value}{2}[/tex]
= [tex]\frac{144,000 + 4,000}{2}[/tex]
= $74,000
In May direct labor was 35% of conversion cost. If the manufacturing overhead for the month was $116,350 and the direct materials cost was $20,200, the direct labor cost was:
Answer:
Direct labor= $62,650
Explanation:
Giving the following information:
In May direct labor was 35% of conversion cost.
The manufacturing overhead for the month was $116,350.
The conversion costs are the sum of the direct labor and the manufacturing overhead:
Overhead= 65%= 116,350
Direct labor= 35%= ?
First, we need to determine the total amount of conversion costs:
Conversion costs= 116,350/0.65= 179,000
Now, the direct labor cost:
Direct labor= 179,000*0.35
Direct labor= $62,650
adjustments that increase or decrease earnings should be investigated with more skepticism.
Answer:
True of financial account auditors.
Explanation:
A financial account auditor often act as skeptics (having suspicion and lack of trust) when reviewing financial transactions.
Thus financial accounts adjustments that increase or decrease earnings are usually investigated with more skepticism by auditors. Such increased skepticism is important because it enables the auditor undo errors and better position the business for success.
Wikipedia's engagement of readers and the public in developing content, with an emphasis on timeliness and the breadth of content, exemplifies this type of value innovation:
Answer: Raise
Explanation:
The options for the question are:
a. Raise
b. Create
c. Reduce
d. Eliminate
Wikipedia is used by people that are involved in academics or anyone that is seeking information as it gives information regarding different topics and issues.
Wikipedia's engagement of readers and the public in developing content, with an emphasis on timeliness and the breadth of content, exemplifies this type of value innovation raise.
Wikipedia is utilized by academicians and anybody looking for knowledge since it provides information from a wide range of topics and situations.
This form of value innovation raising is shown by Wikipedia's participation of users and the public in producing content, with a concentration on immediacy and breadth of material.
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An estimated demand curve does not necessarily match actual data perfectly because A. it is not possible to accurately calculate the coefficients of the curve. B. demand is unpredictable. C. some factors that are not measured or observed may affect the curve. D. the random error term has too large of a range.
Answer:
C. some factors that are not measured or observed may affect the curve.
Explanation:
a lot of unforeseen circumstances might occur. these occurrences would not be measured in the estimated demand curve. this would lead to the estimated demand curve not matching the actual demand curve.
for example, the factors affecting the demand for bread are ; price, income, price of a substitutes. these are included in estimating the demand curve for bread. Assume that a study comes out stating that bread is harmful to the health.this reduces the demand for bread. this study wasn't anticipated and included in estimating the demand curve. as a result, the actual data would differ from the estimated data
You purchased a bond 69 days ago for $891.26. You received an interest payment of $24.00 56 days ago. Today the bond’s price is $884.89. What is the holding period return (HPR) on the bond as of today?
Answer:
1.97%
Explanation:
The formula to calculate the holding period return is:
HPR=(Income generated+(ending value-initial value)/Initial value)*100
Income generated= $24
Ending value= $884.89
Initial value= $891.26
HPR=(24+(884.89-891.26)/891.26)*100
HPR=(24+(-6.37)/891.26)*100
HPR=(17.63/891.26)*100
HPR=0.0197*100
HPR= 1.97%
According to this, the holding period return (HPR) on the bond as of today is 1.97%.
At the end of the first year of operations, Gaur Manufacturing had gross accounts receivable of $412,000. Gaur's management estimates that 8% of the accounts will prove uncollectible. What journal entry should Gaur record to establish an allowance for uncollectible accounts
Answer:
Dr bad debt 32,960
Cr Allowance for uncollectible account 32,960
Explanation:
Preparation of the journal entry that Gaur should record to establish an allowance for uncollectible accounts
Since we were told that he had gross accounts receivable of the amount of $412,000 in which 8% of the accounts will prove uncollectible this means the transaction will be recorded as:
Dr Bad debt 32,960
Cr Allowance for uncollectible account 32,960
($412,000×8%)
Ansara Company had the following abbreviated income statement for the year ended December 31, 20Y2:
(in millions)
Sales $25,790
Cost of goods sold $21,920
Selling, administrative, and other expenses 2,320
Total expenses $24,240
Income from operations $1,550
Assume that there were $5,620 million fixed manufacturing costs and $1,280 million fixed selling, administrative, and other costs for the year. The finished goods inventories at the beginning and end of the year from the balance sheet were as follows:
January 1 $3,060 million
December 31 $3,570 million
Assume that 20% of the beginning and ending inventory consists of fixed costs. Assume work in process and materials inventory were unchanged during the period.
Prepare an income statement according to the variable costing concept for Ansara Company for 20Y2.
Ansara Company
Variable Costing Income Statement
For the Year Ended December 31, 20Y2 (in millions)
Sales $ 21,920
Variable cost of goods sold:
Beginning inventory $ 1,841
Variable cost of goods manufactured 12,710
Ending inventory 2,149
Total variable cost of goods sold 18,670
Manufacturing margin $ 3,250
Variable selling and administrative expenses 870
Contribution margin $ 2,380
Fixed costs:
Fixed manufacturing costs $ 4,820
Fixed selling and administrative expenses 1,100
Total fixed costs 5,920
Income from operations $
Answer:
Ansara Company
Variable Costing Income Statement
For the Year Ended December 31, 20Y2 (in millions)
Sales $25,790
Variable cost of goods sold:
Beginning inventory ($3,060 × 80%) $2,448
Variable cost of goods manufactured ($21,920 × 80%) $17,536
Ending inventory ($3,570 × 80%) ($2,856)
Total variable cost of goods sold ($17,128 )
Contribution margin $ 8,662
Less (Period) Expenses :
Fixed manufacturing costs ($5,620)
Selling and administrative expenses :
Fixed selling and administrative expenses ($1,280)
Variable selling and administrative expenses ($1,040)
Income from operations $772
Explanation:
Variable Costing :
Product Cost = Only Variable Manufacturing Cost
= This is 80% of Cost of Goods Sold from our senario.
Period Cost = Fixed Manufacturing Costs + All Non - Manufacturing Cost (Variable and Fixed)
Note : Variable selling and administrative expenses is what remains after fixed selling, administrative, and other costs are removed from the total of selling, administrative, and other costs.
OPR finds its cases through all of the following except which one? A. The investigation division of OPR.
Answer:
The investigation division of OPR.
Explanation:
OPR stands for Office of Professional Responsibility. It is a section of department of justice whose task is to monitor any misconduct in the government departments. It is responsibility of OPR to find any allegations that result in misconduct in department of attorney. The OPR finds its cases through all except the own division. There will be chance of familiarity and self review threats in such monitoring.
If a firm raises capital by selling new bonds, it could be called the "issuing firm," and the coupon rate is generally set equal to the required rate on bonds of equal risk.
1. True
2. False
Answer: True
Explanation:
An issuing firm is an organization which registers, and then sells security like bonds and stocks on the primary market.
It should be noted that when a firm raises capital through the sale of new bonds, they can be also referred to a the issuing firm, and the coupon rate is usually set to be equal to the required rate on bonds of equal risk.
Which of the following entries would be made to record $20,800 of labor-80% of which is direct, and 20% of which is indirect-to jobs?
A. Work in Process Inventory 20,800
Wages Payable 20,800
B. Manufacturing Overhead 20,800
Manufacturing Wages 20,800
C. Work in Process Inventory 16,640
Manufacturing Overhead 4,160
Wages Payable 20,800
D. Wages Payable 20,800
16,640
WIP Inventory
Manufacturing Inventory 4,160
Answer:
Option C
Explanation:
Entry: DEBIT CREDIT
Work in Process Inventory 16,640
Manufacturing Overhead(w) 4,160
Wages Payable 20,800
Working: Manufacturing Overhead = 20,800 x 40% = $4,160
Note: In order to find out the work in progress and manufacturing Overhead we will consider sum of all direct cost as Work in progress and allocate the sum of indirect to Manufacturing Overheads.
Peyton sells an office building and the associated land on May 1 of the current year. Under the terms of the sales contract, Peyton is to receive $1,763,800 in cash. The purchaser is to assume Peyton's mortgage of $1,058,280 on the property. To enable the purchaser to obtain adequate financing, Peyton is to pay the $105,828 in points charged by the lender. The broker's commission on the sale is $70,552. What is Peyton's amount realized? The amount realized by Peyton is $ .
Answer:
$2,645,700
Explanation:
realized amount = cash received + assumed mortgage - points paid by seller - broker's commission = $1,763,800 + $1,058,280 - $105,828 - $70,552 = $2,645,700
The amount realized includes all the money received and any debts assumed by the buyer, minus any expenses paid by the seller that are related to the transaction.
Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the:_________.
a. investor sells the investment
b. investee declares a dividend
c. investee pays a dividend
d. earnings are reported by the investee in its financial statements
Answer: Earnings are reported by the investee in its financial statements
Explanation:
Equity method is when investments are being treated in associate companies and it is usually applied in cases whereby an investor entity holds about twenty to fifty percent of the associate company's voting stock. Due to this reason, it has a strong say in the associate company's management.
Under the equity method of accounting for investments, an investor recognizes its share of the earning in the period in which the earnings are reported by the investee in its financial statements.
Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: Estimated machine-hours 72,700 Estimated variable manufacturing overhead $ 3.30 per machine-hour Estimated total fixed manufacturing overhead $ 838,730 The predetermined overhead rate for the recently completed year was closest to:
Answer:
The predetermined overhead rate for the recently completed year was closest to: $11.54 per machine-hour
Explanation:
Predetermined Overheads = Budgeted Fixed Overheads / Budgeted Activity
= $ 838,730 / 72,700
= $11.536864 or $11.54 per machine-hour.
New Era Cleaning Service, Inc. opened for business on July 1, 2010. During the month of July, the following transactions occurred:
July 1: Issued $18,000 of common stock for $18,000 cash.
July 1: Purchased a truck for $11,000. Paid $4,000 in cash and borrowed the remainder (long term) from the bank.
July 3: Purchased cleaning supplies for $900 on account.
July 5: Paid $1,800 on a one-year insurance policy, effective July 1.
July 12: Billed customers $4,800 for cleaning services.
July 18: Paid $1,500 of the amount owed on the truck.
July 18: Paid $500 of the amount owed on cleaning services.
July 20: Paid $1,700 for employee salaries.
July 21: Collected $1,200 from customers billed on July 12.
July 25: Billed customers $1,900 for cleaning services.
July 31: Paid gas and oil for the month on the truck, $500.
July 31: Paid a $800 dividend.
Please complete the following tasks: Post the July transactions to the general journal and the general ledger "T" account
repare an unadjusted trial balance; Post the following adjustments:
(a) Earned but unbilled fees at July 31 were $1,400
(b) Depreciation for the month was $200
(c ) One-twelfth of the insurance expired
(d) An inventory count showed $300 of cleaning supplies remaining on July 31
Answer:
New Era Cleaning Service, Inc.
a) General Journal:
July 1:
Debit Cash Account $18,000
Credit Common Stock $18,000
To record the issue of common stock for cash.
July 1:
Debit Truck $11,000
Credit Cash $4,000
Credit Bank Loan $7,000
To record the purchase of a truck.
July 3:
Debit Supplies $900
Credit Accounts Payable $900
To record the purchase of cleaning supplies on account.
July 5:
Debit Prepaid Insurance $1,800
Credit Cash Account $1,800
To record the payment of insurance for a year.
July 12:
Debit Accounts Receivable $4,800
Credit Service Revenue $4,800
To record services rendered on account.
July 18:
Debit Bank Loan $1,500
Credit Cash Account $1,500
To record payment on bank loan.
July 18:
Debit Accounts Payable $500
Credit Cash Account $500
To record payment on account.
July 20:
Debit Salaries $1,700
Credit Cash Account $1,700
To record payment of salaries.
July 21:
Debit Cash Account $1,200
Credit Accounts Receivable $1,200
To record receipt of cash on account.
July 25:
Debit Accounts Receivable $1,900
Credit Service Revenue $1,900
To record services rendered on account.
July 31:
Debit Automobile Fuel $500
Credit Cash Account $500
To record payment for gas and oil for the month.
July 31:
Debit Dividends $800
Credit Cash Account $800
To record payment for dividends.
b) General Ledger "T-account":
Cash Account
July 1 Common Stock $18,000 July 1 Truck $4,000
July 21 Accounts Receivable 1,200 July 5 Insurance 1,800
July 18 Bank Loan 1,500
July 18 Accounts Payable 500
July 20 Salaries 1,700
July 31 Automobile Fuel 500
July 31 Dividend 800
July 31 Balance c/d 8,400
19,200 19,200
Balance b/d 8,400
Common Stock
July 1 Cash account $18,000
Bank Loan
July 18 Cash 1,800 July 1 Truck $7,000
July 31 Balance c/d 5,200
7,000 7,000
Balance b/d 5,200
Truck
July 1 Cash $4,000 July 31 Balance c/d $11,000
July 1 Bank loan 7,000
11,000 19,200
Balance b/d 11,000
Supplies
July 3 Cash 900
Accounts Payable
July 18 Cash 500 July 3 Supplies 900
July 31 Balance c/d 400
900 900
Balance b/d 400
Prepaid Insurance
July 5 Cash 1,800
Service Revenue
July 31 Balance c/d 6,700 July 12 Accounts Receivable $4,800
July 25 Accounts Receivable $1,900
6,700 6,700
Balance b/d 6,700
Accounts Receivable
July 12 Service Revenue $4,800 July 21 Cash $1,200
July 25 Service Revenue 1,900 July 31 Balance c/d 5,500
6,700 6,700
Balance b/d 5,500
Salaries
July 20 Cash $1,700
Automobile Fuel
July 31 Cash $500
Dividend
July 31 Cash $800
Trial Balance as of July 31:
Description Debit Credit
Cash $8,400
Common Stock $18,000
Bank Loan 5,200
Truck 11,000
Supplies 900
Accounts Payable 400
Prepaid Insurance 1,800
Service Revenue 6,700
Accounts Receivable 5,500
Salaries 1,700
Automobile Fuel 500
Dividends 800
Total
c) Adjusting Journal Entries at July 31:
a) Debit Accounts Receivable $1,400
Credit Service Revenue $1,400
To record unbilled fees.
b) Debit Depreciation Expense $200
Credit Accumulated Depreciation $200
To record depreciation expense for the month.
c) Debit Insurance Expense $150
Credit Prepaid Insurance $150
To record a month's insurance expense.
d) Debit Supplies Expense $300
Credit Supplies $300
To record supplies expense.
Explanation:
Journal entries initially record transactions on a day-to-day basis. From the journal, the transactions are posted to the ledger accounts (e.g. T-accounts) and a trial balance is extracted to check if the two sides are in agreement. At the end of the accounting period, adjusting entries are recorded in the general journal to ensure that accounts are based on the accrual concept and not on cash basis.
The tri-star company currently use an old lathe that was purchase 2 years ago at $6000. This machine is being depreciatin on a MACRS five year (20%, 32%, 19%, 12%, 11%, 6%). The current market value for this machine is $3,000. The proposed new improved lathe cost $10,000 and additional installation fee of $1,000. The new lathe would require that inventories be increased by $800 and account receivable increase $600, but accounts payable would simultaneously increase by $700. Tri-Star's marginal federal-plus-state tax rate is 30%. What is the initial investment of company when evaluating the replacement of old lathe by the new one?
Answer:
$8,736
Explanation:
initial investment = capital expenditures (machine's purchase cost + installation costs) + any increase in working capital - disposal of old machine
capital expenditures = $10,000 + $1,000 = $11,000
after tax salvage value = market value + taxes on disposal
the current book value of the old machine = $6,000 - $1,200 - $1,920 = $2,880
taxes on salvage value = (book value - market value) x tax rate = ($2,880 - $3,000) x 30% = -$36
after tax salvage value = $3,000 - $36 = $2,964
net working capital = current liabilities - current assets
change in working capital = $800 + $600 - $700 = $700
initial investment = $11,000 + $700 - $2,964 = $8,736
Salary expense was 15.5% of sales this year. If sales this year are $1,300,000 and are forecasted to be $1,500,000 next year, what is forecasted salary expense next year if all expenses maintain a constant percent of sales?
Answer:
Salary expense next year=$232,500
Explanation:
The ratio of expense to ales is an important which helps in the management and control overhead.
We can be predict the Salary expense using the information given about the relationship between salary expense and sales .
If salary expense is 15.5% of sales, then Salary expense this year =
15.5% × 1,300,000=$201,500
Salary expense next year = 15.5% × foretasted sales next year
= 15.5% × 1,500,000 = $232,500
We use 15.5% because the relationship between the expenses and the sales in proportion is expected to remain the same
Salary expense next year=$232,500
You have just turned 40 years old and are trying to decide who much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on your sixty-fifth birthday. After that point, you can make withdrawals as you see fit. You decide that you will plan to live to 95 and work until your turn 65. You estimate that to live comfortably in retirement, you will need $250,000 per year starting at the end of the first year of retirement and ending on your 95th birthday. You already have $200,000 in the retirement plan. You will contribute the same amount to the plan at the end of every year that you work, starting next year. How much do you need to contribute each year to fund your retirement
Answer:
$31,886.09
Explanation:
years until retirement = 65 - 40 = 25 years
interest earned 7%
retirement age 65
expected life span after retiring = 95 - 65 = 30 years
financial needs during retirement $250,000 per year
current account balance $200,000
we must first determine how much money you will need when you are 65:
present value = $250,000 x 12.409 (PV annuity, 30 years, 7%) = $3,102,250
your $200,000 will be worth $200,000 x (1 + 7%)²⁵ = $1,085,486.53 in 25 years
so you need $3,102,250 - $1,085,486.53 = $2,016,763.47 extra
using the FV formula for an annuity:
$2,016,763.47 = payment x 63.249 (FV annuity, 25 years, 7%)
payment = $2,016,763.47 / 63.249 = $31,886.09
Fortune Enterprises is an all-equity firm that is considering issuing $13.5 million of perpetual debt. The interest rate is 10%. The firm will use the proceeds of the bond sale to repurchase equity. Fortune distributes all earnings available to stockholders immediately as dividends. The firm will generate $3 million of earnings before interest and taxes (EBIT) every year into perpetuity. Fortune is subject to a corporate tax rate of 40%. Suppose the personal tax rate on interest income is 55%, and the personal tax rate on equity income is 20%.
What is the annual after-tax cash flow to debt holders under each plan in Q7?
A. Debt holders get $0 mil. under the unlevered plan vs. 1.2 mil. under the levered plan
B. Debt holders get $1.2 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
C. Debt holders get $0 mil. under the unlevered plan vs. 0.66 mil. under the levered plan
D. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Answer:
D. Debt holders get $0 mil. under the unlevered plan vs. 0.6075 mil. under the levered plan
Explanation:
interests paid to debt holders = $13,500,000 x 10% = $1,350,000
generally, interest revenue is taxed as ordinary revenue = corporate income tax rate (if debt holder is a business) or personal income tax (if debt holder is an individual).
under the first plan, debt holders get nothing because there is no outstanding debt since the company is an all equity firm.
under the second plan, if the personal tax rate on interest income is 55%, which is really high, the debt holders will earn $1,350,000 x (1 - 55%) = $607,500
Jacobsen Corporation prepares its financial statements applying U.S. GAAP. During its 2016 fiscal year, the company reported before-tax income of $621,000. This amount does not include the following two items, both of which are considered to be material in amount: Unusual gain $201,000 Loss on discontinued operations (301,000) The company's income tax rate is 30%. In its 2016 income statement, Jacobsen would report income from continuing operations of:
Answer:
Jacobsen Corporation
Income from continuing operations of $621,000 will be reported.
Explanation:
The income from continuing operations is the same thing as the operating income. It is the pre-tax income that is reported on Jacobsen Corporation's income statement for the year ended December 31, 2016. The tax rate of 30% is applied on this figure to obtain the income tax expense for the year. But, for Jacobsen that has other unusual items, these are taken into consideration before the income tax is imputed to obtain the after-tax income.