Answer:
powerpoint.
Explanation:
I WISH ITS CORRECT༼ つ ◕‿◕ ༽つ
Classify the following topics as relating to microeconomics or macroeconomics.
Topic Microeconomics Macroeconomics
The effect of rent control on the housing market.
The effect of an increase in income tax on national income.
A firm's decision on which production method to use.
The effect of externality on the quantity produced by the market.
A student's decision about how to allocate his time between studying two subjects.
Answer and Explanation:
Microeconomics is the study of the individual regarding the decision related to market demand and supply
While the macroeconomics would deals with the country like gross domestic product, national income etc
Based on this, the classification is as follows:
1. Microeconomics
2. Macroeconomics
3. Microeconomics
4. Microeconomics
5. Microeconomics
An animator needs a laptop for audio/video editing, and notices that he can pay $2600 for a Dell XPS laptop, or lease from the manufacturer for monthly payments of $75 each for four years. The designer can borrow at an interest rate of 14% APR compounded monthly. What is the cost of leasing the laptop over buying it outright
Answer:
C) Leasing costs $145 more than buying
Explanation:
Calculation for the cost of leasing the laptop over buying it outright
First step is to get find the Present value (PV) using financial calculator
Rate =1.17% ( ⁴ 14% ÷ 12 months)
NPER=48 months ( 4 years × 12 month)
PMT=$75
FV=$0.00
Hence,PV will be :.
PV=$2,744.59
Now let calculate the cost of leasing
Cost of leasing= $2,744.59 - $2,600
Cost of leasing= $144.59
Cost of leasing=$145 Approximately
Therefore the cost of leasing the laptop over buying it outright will be $145
Miller Corporation has a premium bond making semiannual payments. The bond has a coupon rate of 8 percent, a YTM of 6 percent, and 18 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond has a coupon rate of 6 percent, a YTM of 8 percent, and also has 18 years to maturity. Both bonds have a par value of $1,000.
Required:
a. What is the price of each bond today?
b. If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 9 years? In 13 years? In 17 years? In 18 years?
Answer:
The function/formula for PV is PV(Rate,Nper,PMT,FV) where Rate = YTM, Nper = Period, PMT = Coupon Payment and FV = Face Value of Bonds.
a. Miller Bond
Here, Rate = 6%/2 = 3%, Nper = 18*2 = 36, PMT = 1,000*8%*1/2 = $40 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(3%,36,40,1000)
Bond Price = $1,218.32
Modigliani Bond
Here, Rate = 8%/2 = 4%, Nper = 18*2 = 36, PMT = 1,000*6%*1/2 = 30 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(4%,36,30,1000)
Bond Price = $810.92
b. 1 Year from Now
Miller Bond
Here, Rate = 6%/2 = 3%, Nper = 18*2 = 34, PMT = 1,000*8%*1/2 = $40 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(3%,34,40,1000)
Bond Price = $1,211.32
Modigliani Bond
Here, Rate = 8%/2 = 4%, Nper = 17*2 = 34, PMT = 1,000*6%*1/2 = 30 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(4%,34,30,1000)
Bond Price = $815.89
9 Years from Now
Miller Bond
Here, Rate = 6%/2 = 3%, Nper = 9*2 = 18, PMT = 1,000*8%*1/2 = $40 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(3%,18,40,1000)
Bond Price = $1,137.54
Modigliani Bond
Here, Rate = 8%/2 = 4%, Nper = 9*2 = 18, PMT = 1,000*6%*1/2 = 30 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(4%,18,30,1000)
Bond Price = $873.41
13 Years from Now
Miller Bond
Here, Rate = 6%/2 = 3%, Nper = 5*2 = 10, PMT = 1,000*8%*1/2 = $40 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(3%,10,40,1000)
Bond Price = $1,085.30
Modigliani Bond
Here, Rate = 8%/2 = 4%, Nper = 5*2 = 10, PMT = 1,000*6%*1/2 = 30 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(4%,10,30,1000)
Bond Price = $918.89
17 Years from Now
Miller Bond
Here, Rate = 6%/2 = 3%, Nper = 1*2 = 2, PMT = 1,000*8%*1/2 = $40 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(3%,2,40,1000)
Bond Price = $1,019.13
Modigliani Bond
Here, Rate = 8%/2 = 4%, Nper = 1*2 = 2, PMT = 1,000*6%*1/2 = 30 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(4%,2,30,1000)
Bond Price = $981.14
18 Years
Miller Bond
Here, Rate = 6%/2 = 3%, Nper = 1*2 = 2, PMT = 1,000*8%*1/2 = $40 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(3%,0,40,1000)
Bond Price = $1,000
Modigliani Bond
Here, Rate = 8%/2 = 4%, Nper = 0, PMT = 1,000*6%*1/2 = 30 and FV = $1,000 [we use 2 since the bond is semi-annual]
Bond Price = PV(4%,0,30,1000)
Bond Price = $1,000
Gutierrez Company reported net income of $196,100 for 2020. Gutierrez also reported depreciation expense of $47,400 and a loss of $5,600 on the disposal of plant assets. The comparative balance sheet shows a decrease in accounts receivable of $10,900 for the year, a $12,900 increase in accounts payable, and a $3,200 decrease in prepaid expenses.
Required:
Prepare the operating activities section of the statement of cash flows for 2020.
Answer:
$276,100
Explanation:
Preparation of the operating activities section of the statement of cash flows for 2020
GUTIERREZ COMPANY Statement of Cash FlowsFor Year Ended December 31, 2020
Cash flows – operating activities
Net income $196,100
Add Reconciling adjustments to net income to netcash provided by activities:
Depreciation expense$47,400
Loss on Disposal of plant assets $5,600
Increase in Accounts payable $12,900
Decrease in Accounts receivable $10,900
Decrease in Prepaid expenses $3,200
Net cash – operating activities $276,100
Therefore the operating activities section of the statement of cash flows for 2020 will be $276,100
Mechem Corporation produces and sells a single product. In April, the company sold 1,900 units. Its total sales were $152,000, its total variable expenses were $79,800, and its total fixed expenses were $56,700.
Required:
a. Construct the company's contribution format income statement for April. (Do not round intermediate calculations.)
b. Redo the company's contribution format income statement assuming that the company sells 1,800 units.
Answer:
1. $15,500
2. $11,700
Explanation:
Given the following information,
the company sold 1,900 units
Total sales were $152,000
Total variable expenses were $79,800
Total fixed expenses were $56,700
The structure for Contribution income margin format is seen below;
Income statement:
Sales
- Total Variable cost
= Contribution margin
- Fixed costs
= Net Operating income
1. Income statement
Sales = $152,000
Less Total variable cost = ($79,800)
Contribution margin = $72,200
Less Total Fixed costs = ($56,700)
Net operating income = $15,500
2. Here, we need to calculate the unitary selling price and the unitary variable cost
Selling price = $152,000 ÷ 1,900 units = $80
Unitary Variable cost = $79,800 ÷ 1,900 units = $42
Therefore,
Sales = 1,800 units × $80
$144,000
Less total variable cost = 1,800 units × $42
$75,600
Contribution margin
$68,400
Less total fixed costs
$56,700
Net operating income
$11,700
Mulkeen Service Company, Inc., was incorporated by Conor Mulkeen and five other managers. The following activities occurred during the year:
a. Received $48,000 cash from the managers; each was issued 1,200 shares of common stock.
b. Purchased equipment for use in the business at a cost of $8,400; one-fourth was paid in cash and the company signed a note for the balance (due in six months).
c. Signed an agreement with a cleaning service to pay it $70 per week for cleaning the corporate offices, beginning next year.
d. Conor Mulkeen borrowed $15,000 for personal use from a local bank, signing a one-year note.
Required:
a. Create T-accounts for the following accounts: Cash, Equipment, Note Payable, and Contributed Capital.
b. Using the balances in the T-accounts, fill in the following amounts for the accounting equation:
Assest $_______ = Liabilities$ _______ + Stockholders Equity $_______
c. Explain your response to events (c) and (d).
Answer:
a)
cash common stock
48,000 48,000
2,100
45,900
equipment note payable
8,400 6,300
b)
Assets = Liabilities + Equity
$54,300 $6,300 $48,000
c)
there is no transaction in (c) and the corporation is a separate entity and Conor's personal accounts are not part of it.
Will Mark as Brainliest!!! +40 extra points Spending money on medical expenses is part of this expenditures approach for calculating the GDP.
a. consumer spending
b. gross exports
c. sum of all the country's businesses spending on capital
d. sum of government spending
e. gross imports
Answer A
Explanation:
Which description applies to the middle class in American society?
A. They tend to lack a high school education.
B. They tend to live off wealth that their parents accumulated.
C. They tend to live comfortably as long as they have jobs.
D. They tend to live without the means to find shelter.
Answer:
(C).They tend to live comfortably as long as they have jobs
Answer:
C. "They tend to live comfortably as long as they have jobs."
Based on your focus group, you ask your product research team to propose different formulas for turmeric meal replacement shakes. Keeping in mind that all In Fine Fettle's products use ingredients that are of higher quality than the competition's, your food scientists offer you three different formulations. Choose the formula that would be most attractive to the target market.
A. Has the highest turmeric content and anti—inflammatory properties
Made with quality ingredients
Taste rated as 5/10
B. Has the second-highest turmeric content and anti—inflammatory properties
Made with superior quality ingredients
Taste rated as 7/10
C. Has the lowest turmeric content and anti—inflammatory properties
Made with quality ingredients
Taste rated as 9/10
Answer: B. Has the second-highest turmeric content and anti-inflammatory properties
Made with superior quality ingredients
Taste rated as 7/10
Explanation:
The formula in B would be the most attractive because it is a compromise between the first and the second more 'extreme' formulas.
The first one for instance has the highest turmeric content but is lacking in taste. The third has the lowest content and is sweet. Consumers would most probably go for a compromise and pick the formula with the second highest content and not to bad taste wise whilst still being made of superior ingredients.
Robert Rogers, CPA performed accounting services for a client in December. A bill was mailed to client on December 30. Roberts received a check in the mail on January 5. The revenue principle would require that which of the following accounts appear on the income statement for the year ended December 31?
a. Accounts payable
b. Prepaid expense
c. Unread revenue
d. Service revenue
Answer:
D) Service Revenue
Explanation:
From the question we are informed about the Robert Rogers, CPA who performed accounting services for a client in December. A bill was mailed to client on December 30. Roberts received a check in the mail on January 5. The revenue principle would require that which of the following accounts appear on the income statement for the year ended December 31 is Service revenue.
Service revenue can be regarded as
the income that is been generated by a company through the service they provide. This amount can be seen on the top of the company's income statement, and there is addition of this amount to the revenue gotten from
product earnings so that total revenue of company can be calculated for a specific period of time.
An income statement reports the revenues earned minus expenses incurred by a business over a period of time.
True or false ?
Answer:
True
Explanation:
This is an income statement. Ex: Rent expenses, salaries expense, total revenues, etc.
Merchandise inventory includes:__________
a. costs to purchase
b. costs to sell
c. shipping costs
d. costs to prepare for sale
e. cost of goods sold
Answer:
a. costs to purchase
c. shipping costs
d. costs to prepare for sale
Explanation:
Merchandise inventory is a commodity offered for sale. It is the cost of goods that is readily available at hand which is ready for sale From the options; the Merchandise inventory includes: costs to purchase, shipping costs and costs to prepare for sale.
The remaining options are addressed in the income statement.
From the following list, identify those that are likely to serve as source documents. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
Sales ticket
Trial balance
Balance sheet
Telephone bill
Invoice from supplier
Company revenue account
Income statement
Bank statement
Prepaid insurance
Answer:
The Source Documents include:
Sales ticket
Telephone bill
Invoice from supplier
Bank statement
Explanation:
Source documents are the original documents through which business transactions are initiated. They include receipts, bills, invoices, statements, checks, etc. They usually document or initiate a transaction. Any time a business spends or receives money or enters into a contract with another party, a source document is created. Source documents form an integral part of the accounting and bookkeeping process, and auditors need them to trace records to the underlying transactions.
The following table describes the production possibilities of two cities in the country of Baseballia:
Pairs of Red Socks per Worker per Hour Pairs of White Socks per Worker per Hour
Boston 3 6
Chicago 5 4
Without trade, the price of a pair of white socks (in terms of red socks) in Boston is_______ of red socks, and in Chicago it is ___________ of red socks. _________has an absolute advantage in the production of red socks, and _________ has an absolute advantage in the production of white socks. ___________has a comparative advantage in the production of red socks, and______ has a comparative advantage in the production of white socks.
If the cities trade with each other, Boston will export _________socks, and Chicago will export _________socks.
The price of white socks can be expressed in terms of red socks. The highest price at which white socks can be traded that would make both cities better off is _________of red socks per pair of white socks, and the lowest price that makes both cities better off is ________of red socks per pair of white socks.
Answer:
All the blanks are filled with explanation below.
Explanation:
Solution:
Let's extract the meaning of data from the data given.
Boston produces 3 red socks per worker per hour and 6 white socks per worker per hour
B = 1 worker = 1 hour = produces 3 pairs Red Socks
B = 1 worker = 1 hour = produces 6 pairs white socks
Boston = whites socks in terms of red socks
6 white socks = 3 red socks
white socks = 3/6 red socks
white socks = 0.5 pairs of red socks.
Chicago = white socks in terms of red socks
4 white socks = 5 red socks
white socks = 5/4 red socks
white socks = 1.25 red socks
C = 1 worker = 1 hour = produces 5 pairs Red socks
C = 1 worker = 1 hour = produces 4 pairs white socks
It means in Boston, we have advantage of producing white socks and in Chicago we have advantage of producing red socks.
Fill in the blanks: (Note: Bold words are blanks filled)
1. The price of pair of white socks (in terms of red socks) in Boston is 0.5 pairs of red socks of red socks, and in Chicago it is 1.25 red socks of red socks.
2.Chicago has an absolute advantage in the production of red socks, and Boston has an absolute advantage in the production of white socks.
3. Chicago has a comparative advantage in the production of red socks, and Boston has a comparative advantage in the production of white socks.
4. If the cities trade with each other, Boston will export white socks, and Chicago will export red socks.
5. The price of white socks can be expressed in terms of red socks. The highest price at which white socks can be traded that would make both cities better off is 1.25 of red socks per pair of white socks, and the lowest price that makes both cities better off is 0.5 of red socks per pair of white socks.
You are working at the campus bookstore, earning $9.00 per hour. Your manager tells you that in the upcoming year, you will get a 2% raise.
a. What is the approximate change in your real wage if inflation is 1%?
b. What is the approximate change in your real wage if inflation is 2%?
c. What is the approximate change in your real wage if inflation is 3%?
Answer:
a. $0.09
b. $0
c. -$0.09
Explanation:
Real rate = Nominal rate - inflation rate
a. Real rate = 2% - 1%
= 1%
Change in real wage = 9 * 1% = $0.09
b. = 2% -2% = 0%
Change in real wage = 9 * 0% = 0
c. = 2% - 3%
= -1%
Change in real wage = 9 * -1% = -$0.09
What is one of the Agile Release Train sync meetings?
a. Iteration Review
b. Solution DemoIteration
c. Retrospective
d. Scrum of Scrum
Answer:
D. Scrum of scrums
Explanation:
When groups are divided into Agile teams of 5persons to 10 persons, . Every daily scrum that is within each of these sub-team is usually ended by making one member in the sub team as ambassador. The ambassador would then participate in a daily meeting with other appointed ambassadors from other sub-teams. This Is what is known as the Scrum of Scrums.
Berkshire Inc. uses a periodic inventory system. At the end of 2017, it missed counting some inventory items, resulting in an inventory understatement by $610,000. Assume that Berkshire has a 30% income tax rate and that this was the only error it made. If undetected, what is the effect of this error on Berkshire's December 31,2017 balance sheet
Answer:
Since the inventory was understated, that means that the cost of goods sold was overstated. Since the COGS was higher, gross profits and operating income were lower. This results in lower than income taxes, and lower net income.
Lower net income results in understated retained earnings (by $427,000), also taxes payable, a liability, will also be understated by $183,000. On the other side of the balance sheet, assets ill be understated by $610,000.
Explanation:
how does coved-19 effect in how mangers make decisions?
Answer:
1. not all people want to wear a mask when they walk into their store
2. a lot of their workers probaly quit or have corona, this would make it harder to make decisions with not a lot people to work!
Explanation:
What do price controls give us?
Answer:
Price controls are government-mandated minimum or maximum prices set for specific goods and are typically put in place to manage the affordability of the goods. ... Over the long term, price controls can lead to problems such as shortages, rationing, inferior product quality, and black markets.
Explanation:
hope you get it right! ✋
Hardigree Corporation uses a job-order costing system. Beginning balance in Work in Process $ 36,000 (1) Raw materials purchased on account $207,000 (2) Direct materials requisitioned for use in production $161,000 (3) Indirect materials requisitioned for use in production $ 42,000 (4) Direct labor wages incurred $ 87,000 (5) Indirect labor wages incurred $101,000 (6) Depreciation recorded on factory equipment $ 42,000 (7) Additional manufacturing overhead costs incurred $ 57,000 (8) Manufacturing overhead costs applied to jobs $219,000 (9) Cost of jobs completed and transferred from Work in Process to Finished Goods $403,000 The total amount of manufacturing overhead actually incurred was: Multiple Choice
Answer:
$242,000
Explanation:
Calculation of the total amount of manufacturing overhead actually incurred:
Particulars Amount
Indirect Materials $42,000
Indirect labor $101,000
Depreciation On factory equipment $42,000
Additional Manufacturing Overhead $57,000
Total Manufacturing Overhead incurred $242,000
Consolidation among fuel providers serving airport facilities is viewed in the five forces model of competition as a(n): a. reduction of the airlines' ability to benefit from economies of scale. b. increase in switching costs because the airlines have no choice but to use jet fuel and other oil products. c. increase in the bargaining power of suppliers of a critical input. d. increase in the intensity of rivalry among airlines for scarce resources.
Answer:
c: increase in the bargaining power of suppliers of a critical input
Explanation:
Five Forces Framework by Porter's can be regarded as a method involving analysis of competition in a business. It's analysis dream through
industrial organization economics determine forces that are responsible for competitive intensity. The forces are;
✓potential new market entrants
✓number and power of a company's competitive rivals
✓ influence of suppliers, customers,on company's profitability.
It should be noted that Consolidation among fuel providers serving airport facilities is viewed in the five forces model of competition as a increase in the bargaining power of suppliers of a critical input.
A loan of $12,000 is to be repaid within one year with level monthly payments, due at the beginning of each month. The 12 payments equal $1,000 each. A finance charge of $632 is also due with the first payment. Which of the following is closest to the effective annual interest rate on the loan?
a. 12.7%
b. 12.9%
c.13.1%
d. 13.3%
e. 13.5%
Solution :
It is given : loan amount = $12,000
Time to repay = 12 months
Finance charge = $ 632
AT the interest rate, outflow = inflow
The present value of the loan amounts = loan amount
[tex]$1000+632+[1000 \times (PVAF (r ,11))]=12000$[/tex]
[tex]$1000 \times PVAF(r,11)=12000-1632$[/tex]
[tex]$PVAF(r,11)=\frac{10368}{1000}$[/tex]
[tex]$PVAF(r,11)=10.368$[/tex]
Now using the annuity table we get
PVAF(1%, 11)=10.9676
This is equal to 10.368 (approximately)
∴ [tex]$r=1$[/tex] % per month of compounded monthly
So the annual interest rate is :
[tex]$=[(1+0.01)^{12}]-1$[/tex]
[tex]$r=[(1.01)^{12}]-1$[/tex]
[tex]$r = 12.68$[/tex] %
= 12.70 %
Hence the correct option is (a).
[tex]\text{It is given : loan amount} = $12,000\\\text{Time to repay} = 12 months\text{Finance charge} = $ 632\\\text{At the interest rate, outflow = inflow}\\\text{The present value of the loan amounts = loan amount}[/tex]
[tex]1000 + 632 + [ (P.V (r.11))] = 12,000\\\\1000 \text { x } P.V (r,11) = 12,000 - 1,632\\\\P.V (r.11) = \frac{10,368}{1000}\\\\P.V (r,11) = 10.368[/tex]
[tex]\text{Now using the annuity table we get} \\P.V (0.01, 11) =10.9676\\\text{This is equal to 10.368 (approximately)}[/tex]
[tex]r = 0.01 \text{ per month}\\\text{ Annual Interest rate}:\\r= [(1+0.01}^{12}] - 1\\r= [(1.01}^{12}] - 1\\r= 12.68\\[/tex]
Therefore, the closest option among the following choices is an option (a), i.e., 12.7%
For more information about the annual interest rate, refer below
https://brainly.com/question/16544946
The following is a list of account balances for Pick-A-Pet, Inc., as of June 30, Year 3:
Accounts Payable $ 349,200
Accounts Receivable 419,200
Cash 732,600
Common Stock 662,100
Equipment 58,400
Logo and Trademarks 421,600
Long-term Notes Payable 268,900
Retained Earnings 470,100
Software 118,500
The company entered into the following transactions during July, Year 3. Stockholders contribute $300,000 cash for additional ownership shares and the company borrows $150,000 in cash from a bank to buy new equipment by signing a formal agreement to repay the loan in 2 years. No other transactions took place during July, Year 3.
Required:
a. Prepare a classified balance sheet for the company at June 30, Year 3.
b. Show the effects of the July transactions on the basic accounting equation.
c. Prepare the journal entries that would be used to record the transactions.
Answer:
Pick-A-Pet, Inc
a. Classified Balance Sheet as of June 30, Year 3:
Assets
Current Assets:
Cash $1,182,600
Accounts Receivable 419,200 $1,601,800
Equipment 58,400
Software 118,500
Logo & Trademarks 421,600 $598,500
Total assets $2,200,300
Liabilities and Equity:
Current Liabilities:
Accounts Payable $ 349,200
Long-term Liabilities:
Long-term Notes Payable $418,900
Total liabilities $768,100
Equity:
Common Stock 962,100
Retained Earnings 470,100 $1,4322,200
Total liabilities + equity $2,200,300
b. Effects of the July transactions on the basic accounting equation:
Assets = Liabilities + Equity
1. Stockholders contribute $300,000 cash for additional ownership shares
Assets (Cash + $300,000) = Liabilities + Equity (Common Stock + $300,000)
2. Company borrows $150,000 in cash from a bank to buy new equipment by signing a formal agreement to repay the loan in 2 years.
Assets (Cash + $150,000) = Liabilities (Long-term Notes Payable + $150,000) + Equity
c. Journal Entries to record the July transactions:
1. Debit Cash $300,000
Credit Common Stock $300,000
To record the additional capital contribution by stockholders.
2. Debit Cash $150,000
Credit Long-term Notes Payable $150,000
To record the borrowing of cash from a bank, repayable in 2 years.
Explanation:
a) Data and Calculations:
Accounts Payable $ 349,200
Accounts Receivable 419,200
Cash 732,600
Common Stock 662,100
Equipment 58,400
Logo and Trademarks 421,600
Long-term Notes Payable 268,900
Retained Earnings 470,100
Software 118,500
July Year 3 Transactions and Effects on accounts:
Cash 732,600
Common Stock 300,000
Notes Payable 150,000
Cash 1,182,600
Common Stock 662,100
Cash 300,000
Common Stock 962,100
Long-term Notes Payable 268,900
Cash 150,000
Long-term Notes Payable 418,900
Modified account balances:
Cash 1,182,600
Accounts Receivable 419,200
Equipment 58,400
Software 118,500
Logo and Trademarks 421,600
Accounts Payable $ 349,200
Long-term Notes Payable 418,900
Common Stock 962,100
Retained Earnings 470,100
Suppose you are deciding whether you should go to college. If you go to college, you will pay $10,000 total in tuition, textbooks, and room and board every year for 4 years, with the first payment being made immediately and then the next three payments 1 year apart. Upon graduating, you expect to get a job earning $50,000 per year for the next 40 years. Assume that your first paycheck arrives exactly 1 year after you start working and you continue getting paid annually thereafter. Also assume that there are no raises in that particular field. If you do not go to college, you can start working immediately. The pay, however, is lower. You would expect to work for 44 years and earn $34,000 per year, with your first paycheck arriving exactly 1 year from now, and you continue getting paid annually thereafter. For the questions below, round all numbers to two decimals.
Part 1 Assume the interest rate is 7%. If you were to attend college, the present value of your tuition payments would total _______ $
Part 2 Suppose you go to college and graduate after 4 years. Because you will work for 40 years after you graduate, and because 40 years is a long time, treating the stream of payments as a perpetuity will provide a reasonable approximation of the present value of the payment stream. The present value of your annual earnings of $50,000 as a college graduate is _______$
Part 3 The net present value of going to college is _____$
Part 4 If you do not go to college, you will be working even longer than before. Once again, you may treat the stream of income from your job as a consol or perpetuity. The present value of your annual earnings of $34,000 if you don't go to college is ________$
Answer:
Part 1. If you were to attend college, the present value of your tuition payments would total _______
$33,870.00
Part 2. The present value of your annual earnings of $50,000 as a college graduate is _______
$741,407.10
Part 3 The net present value of going to college is _____
$707,537.10
Part 4. The present value of your annual earnings of $34,000 if you don't go to college is ________
$719,270
Explanation:
a) Data and Calculations:
Annual Tuition, etc = $10,000
Number of college years = 4
Interest rate = 7%
Present Value Annuity Factor = 3.387
PV of $10,000 = $10,000 * 3.387 = $33,870
Annual salary after college in 4 years' time = $50,000
Number of years earning salary = 40 years
Present value annuity factor = 19.434 * 0.763 = 14.828142 (reduced to earnings after 4 years)
PV of $50,000 = $50,000 * 14.828142 = $741,407.10
NPV of going to college = $741,407.10 - $33,870 = $707,537.10
Annual salary without college = $34,000
Number of years earning salary without college = 44 years
Present value annuity factor = 21.155
PV of $34,000 in perpetuity = $34,000 * 21.155 = $719,270
In 2017, Randa Merchandising, Inc., sold its interest in a chain of wholesale outlets, taking the company completely out of the wholesaling business. The company still operates its retail outlets. Indicate where each of the following income-related items for this company appears on its 2017 income statement.
1. Net sales
2. Gain on state's condemnation of company property, net of tax
3. Cost of goods sold
4. Income taxes expense
5. Depreciation expense
6. Gain on sale of wholesale business segment, net of tax
7. Loss from operating wholesale business segment, net of tax
8. Loss of assets from a meteor strike, net of tax
Required:
Prepare the income statement for the calendar year 2017.
Answer:
Randa Merchandising, Inc.
1. Indication of where each of the following income-related items for this company appears on its 2017 income statement.
Income Statement
1. Net Sales
2. Cost of goods sold
3. Depreciation expense
4. Income taxes expense
5. Gain on state's condemnation of company property, net of tax
6. Gain on sale of wholesale business segment, net of tax
7. Loss from operating wholesale business segment, net of tax
8. Loss of assets from a meteor strike, net of tax
Explanation:
Randa's income statement is prepared using a step-by-step approach. It starts with the net sales from which the cost of goods sold is deducted to arrive at the gross profit. Thereafter, the operating expenses are deducted to obtain the operating income. Based on this, income taxes are computed before arriving at the operating income after taxes. And then, the extraordinary items are disclosed (net of taxes) before arriving at the net income.
The following information is available for Aikman Company.
January 1, 2017 December 31, 2017
Raw materials inventory $21,000 $30,000
Work in process inventory 13,500 17,200
Finished goods inventory 27,000 21,000
Materials purchased $150,000
Direct labor 220,000
Manufacturing overhead 180,000
Sales revenue 910,000
Required:
1. Compute cost of goods manufactured.
2. Prepare an income statement through gross profit.
Answer:
$537,300
$378,700
Explanation:
1. Cost of goods manufactured
Direct material Jan 1 2017
$21,000
Add purchases of raw materials
$150,000
Less raw materials December 2017
($30,000)
Materials used in production
$141,000
Direct labor
$220,000
Manufacturing overhead
$180,000
Total manufacturing cost
$541,000
Add work in process inventory at Jan
$13,500
Less ending work in process inventory
($17,200)
Cost of goods manufactured
$537,300
2. Income statement through gross profit
Sales revenue
$910,000
Less cost of goods sold:
Cost of goods manufactured
$537,300
Add: finished goods at 1 Jan 2017
$27,000
Less: finished goods at 31 2017
($21,000)
Gross profit
$378,700