Answer:
$1,500
Explanation:
For the computation of effect of the transaction first we need to find out the book value sold for which is shown below:-
Book Value sold for = Original cost of the furniture - Accumulated depreciation
= $18,000 - $10,000
= $8,000
Gain = $9,500 - $8,000
= $1,500
Therefore for computing the effect of the transaction we simply applied the above formula and as we can see that there is gain of $1,500
Angie Baden is studying for her accounting midterm examination. Identify for Angie the advantages and disadvantages of the corporate form of business organization.
Answer:
Find them and explanation below.
Explanation:
A corporation is a type of business that is collectively owned by shareholders. There are two types of corporations, namely; the C and S corporations.
The general advantages of the corporate form of business organization are;
1. Ease in sourcing capital: Capital can be easily gotten from shareholders who pool resources into the business.
2. Limited liability: The shareholders can only be affected up to the amount they contributed to the business. They would not be held accountable for the general loss in the business.
3. Continuous existence: Since the business is not owned by just one person, the death or exit of a shareholder would not affect the continued existence of the business.
4. Ease in transferring ownership: Stocks and bonds can be easily sold by a shareholder to another investor.
5. Absence of double taxation (for S corporation): Taxes are only charged at personal rates.
The disadvantages of a corporate form of business include:
1. Secluded management: The investors in the business may not be actively involved in decision making, thus leaving the business to just the managers.
2. Double taxation (for C corporation): Both the federal and state governments tax the income made the corporation. The shareholders are also taxed on the profit which they made from the business.
3. Expensive startup: It is quite expensive to start up a corporation.
4. Rigorous tax fillings: A lot of paperwork on tax filing is required by the state government.
5. The S corporation has a limited number of shareholders (just 100).
MSG Corporation issued $100,000 of 3-year, 6% bonds outstanding on December 31, 2020 for $106,000. The bonds pay interest annually and MSG uses straight-line amortization. On May 1, 2021, $10,000 of the bonds were retired at 112. As a result of the retirement, MSG will report:
Answer:
loss of $667
Explanation:
The solution of gain or loss is shown below:-
Value of $10,000 bonds = Bonds outstanding ÷ Issued amount × Bonds
= $106,000 ÷ $100,000 × $10,000
= $10,600
Premium = $10,600 - $10,000
= $600
Carrying value =Value of bonds - Premium × 4 ÷ 36
= $10,600 - $600 × 4 ÷ 36
= $10,533
Gain/ Loss on retirement = Bonds × Retired percentage - Carrying value
= $10,000 × 112% - $10,533
= $667
So, there will be loss of $667
Efficiency means everyone in the economy should receive an equal share of the goods and services produced.
a. True
b. False
Answer:
true
Explanation:
i agree thats equal rights
i think
Answer: False
Explanation:
Efficiency does not mean equality. Efficiency is quantity over quality, using as many resources possible to make the most amount of output. Where as equality is making sure theres an equal share of the goods anf services produced.
Match each description 1 through 4 with the characteristic of preferred stock that it best describes in the dropdown next to each description.
Description Characteristics
1. Holders of the stock are entitled to receive current and all past dividends before common stookholders receive any dividends
2. Holders of the stock can receive dividends exceeding the stated rate under certain conditions
3. Holders of the stook are not entitled to receive dividends in excess of the stated rate.
4. Holders of the stook lose any dividends that are not declared in the current year
Answer:
1. Holders of the stock are entitled to receive current and all past dividends before common stockholders receive any dividends - Cumulative Shares
Holders of Cumulative Shares will always receive the dividends owed to them because even if they do not get it in a particular period, the dividends will accrue until the company is able to pay them.
2. Holders of the stock can receive dividends exceeding the stated rate under certain conditions - Participating Shares
Participating Shareholders are eligible to receive an extra dividend provided that there is surplus profit after all the other dividends have been paid off.
3. Holders of the stock are not entitled to receive dividends in excess of the stated rate. - Non- Participating Shares
Even if there are surplus profits after all other dividends have been paid off, these holders are not entitled to that profit.
4. Holders of the stock lose any dividends that are not declared in the current year - Non- Cumulative Shares
If their dividend is not declared in a certain period, they will forfeit that dividend for the period.
Oriole Company plans to sell 9000 purple lawn chairs during May, 3700 in June, and 9000 during July. The company keeps 15% of the next month’s sales as ending inventory. How many units should Oriole produce during June?
Answer:
Production= 4,495 units
Explanation:
Giving the following information:
Sales (in units):
June= 3,700
July= 9,000
The company keeps 15% of the next month’s sales as ending inventory.
To calculate the production required, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
Production= 3,700 + (9,000*0.15) - (3,700*0.15)
Production= 4,495 units
Suppose the economy had been producing at potential output but is now experiencing a recession. Which of the following are discretionary fiscal policies that could bring the economy closer to potential output?
a. .Raising interest rates
b. A tax increase
c. Additional spending on national park facilities
d. A tax cut
Answer: c. Additional spending on national park facilities
d. A tax cut
Explanation:
Recession is a contraction in the business cycle. During recession, there is a decline in the economic activity as aggregate demand will be reduced and spending by households also reduces.
The discretionary fiscal policies that could bring the economy closer to potential output is tax cut and an additional spending on national park facilities
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $86,670. The equlpment was expected to have a useful life of three years, or 6,480 operating hours, and a residual value of $2,430. The equipment was used for 1,200 hours during Year 1, 2,300 hours in Year 2, 1,900 hours in Year 3, and 1,080 hours in Year 4 Required:Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method. r A. Straight-line method Year AmountYear 1 21,060 Year 2 28,080Year 3 28,080Year 4 7,020 B. Units-of-output method Year Amount Year 1 15,600Year 2 29,900Year 3 24,700
Answer:
purchase cost $86,670
useful life 3 years, 6,480 operating hours
residual value $2,430
a. the straight-line method
depreciation expense per year = ($86,670 - $2,430) / 3 = $28,080
depreciation year 1 = $28,080 x 9/12 = $21,060 depreciation year 2 = $28,080 depreciation year 3 = $28,080 depreciation year 4 = $28,080 x 3/12 = $7,020b. units-of-output method.
depreciation per hour = ($86,670 - $2,430) / 6,480 = $13
depreciation year 1 = 1,200 x $13 = $15,600 depreciation year 2 = 2,300 x $13 = $29,900 depreciation year 3 = 1,900 x $13 = $24,700 depreciation year 4 = 1,080 x $13 = $14,040c. the double-declining-balance method.
depreciation year 1 = 2 x 1/3 x $86,670 x 9/12 = $43,335 depreciation year 2 = $14,445 + (2 x 1/3 x $28,890 x 9/12) = $28,090 depreciation year 3 = $4,815 + (2 x 1/3 x $9,630 x 9/12) = $9,630 depreciation year 4 = $1,605 + ($3,210 - $2,430) = $2,385. The property manager’s relationship with the owner is most similar to that of a a. tenant with a landlord. b. cashier with the owner of a store. c. stockholder with the board of directors of a corporation. d. salesperson with his or her broker.
Answer: salesperson with his or her broker.
Explanation:
The relationship that exist between the property manager and the owner is simply referred to as the agency relationship whereby the property manager is referred to as the agent while the property owner will be the principal.
This can be likened to the relationship that exist between the salesperson with his or her broker. They both act as agent and must make profit for the owner.
You just won the lottery, which promises you $200,000 per year for the next 20 years. You receive the first payment today (hint: annuity due). If your discount rate is 9.25%, what is the present value of your winnings?
Answer:
The present value of your winnings is $1,959,555.65.
Explanation:
Since this is an annuity due as already hinted in the question, the formula for calculating the present value (PV) of an annuity is used as follows:
PV = P × [{1 - [1 ÷ (1 + r)]^n} ÷ r] × (1 + r) .................................. (1)
Where ;
PV = Present value of winnings =?
P = Annual payment = $200,000
r = interest rate = 9.25%, or 0.0925
n = number of years = 20
Substituting the values into equation (1) above, we have:
PV = $200,000 × [{1 - [1 ÷ (1 + 0.0925)]^20} ÷ 0.0925] × (1 + 0.0925)
PV = 200,000 ×8.96821807613347 × 1.0925
PV = $1,959,555.65
Therefore, the present value of your winnings is $1,959,555.65.
Which of the following accounting concepts states that an accounting transaction should be supported by sufficient evidence to allow two or more qualified individuals to arrive at similar measures
a. Matching
b. Stable monetary unit
c. Verifiability
d. Periodicty
Answer:
The correct answer is the option C: Verifiability.
Explanation:
To begin with, the accounting concept of "Verifiability" indicates that the accounts of a company are verifiable in the cases when those accounts are reproducible so that indicates that given the same data and assumpitions it is understandable that an independent accountant can produce the same result the company actually did. Therefore that the verifiability is the concept that states that an accounting transaction should be supported by sufficient evidence to allow two or more qualified accountants to arrive at similar measures as it said before.
The accounting concepts states that an accounting transaction should be option c. Verifiability
What is Verifiability?It represents that the accounts of a company are verifiable at the time when those accounts are produced again in order to provide the same data and assumption. So, that verifiability is the concept that states that an accounting transaction should be supported by enough evidence to permit two or more qualified accountants.
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Assume that the U.S. one-year interest rate is 3 percent and the one-year interest rate on Australian dollars is 6 percent. The U.S. expected annual inflation is 5 percent, while the Australian inflation is expected to be 7 percent. You have $100,000 to invest for one year and you believe that PPP holds. The spot exchange rate of an Australian dollar is $0.689. What will be the yield on your investment if you invest in the Australian market
Answer:
4%
Explanation:
you invest $100,000 today and purchase A$145,137.88
in one year, you will have A$152,394.78
since the PPP stands, the spot rate in one year should be:
0.703 US$ per A$ (since Australia's inflation rate is 2% higher than the US inflation rate, the Australian dollar will depreciate by 2%)
with your A$152,394.78, you can purchase $107,133.53
if you invested in the US instead, you would have $103,000
this means that your Australian investment yielded ($107,133.53 / $103,000) - 1 = 0.04 or 4%
Denmark Corporation's variance report for the purchasing department reports 1,000 units of material A purchased and 2,400 units of material B purchased. It also reports standard prices of $2 for Material A and $3 for Material B. Actual prices reported are $2.10 for Material A and $2.80 for Material B. Denmark should report a total price variance of
Answer:
Total material price variance= $380 favorable
Explanation:
Giving the following information:
Material A:
Purchase= 1,000 units
Purchase price= $2.1
Standard price= $2
Material B:
Purchase= 2,400 units
Purchase price= $2.8
Standard price= $3
To calculate the total material price variance, we need to use the following formula on each material:
Direct material price variance= (standard price - actual price)*actual quantity
Material A:
Direct material price variance= (2 -2.1)*1,000
Direct material price variance= $100 unfavorable
Material B:
Direct material price variance= (3 - 2.8)*2,400
Direct material price variance= $480 favorable
Total material price variance= -100 + 480
Total material price variance= $380 favorable
You have $100,000 to invest in either Stock D, Stock F, or a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 10.7 percent. Assume D has an expected return of 14.2 percent, F has an expected return of 10.1 percent, and the risk-free rate is 5.6 percent. If you invest $50,000 in Stock D, how much will you invest in Stock F
Answer:
You will invest $18,000 in Stock F.
Explanation:
This can be calculated using the portfolio return formula as follows:
PR = (wD * rD) + (wF * rF) + (wR * rR) ............................ (1)
Where;
PR = Portfolio expected return = 10.7%, or 0.107
wD = Weight of the amount invested in Stock D = Amount invested in Stock D / Total amount invested = $50,000 / $100,000 = 0.50
rD = Expected Return from Stock D = 14.2%, or 0.142
wF = Weight of the amount invested in Stock F = Amount invested in Stock F / Total amount invested = ?
rF = Expected Return from StocK F = 10.1%, or 0.101
wR = Weight of the amount invested in risk free = 1 - wD - wF = 1 - 0.50 - wF = 0.50 - wF
rR = Expected Return from Risk free = 5.6%, or 0.056
Substitute all the values into equation (1), we have:
0.107 = (0.50 * 0.142) + (wF * 0.101) + ((0.50 - wF) * 0.056)
0.107 = 0.071 + (wF * 0.101) + ((0.50 * 0.056) - (wF * 0.056))
0.107 - 0.071 = (wF * 0.101) + 0.028 - (wF * 0.056)
0.036 - 0.028 = (wF * 0.101) - (wF * 0.056)
0.008 = wF(0.101 - 0.056)
0.008 = wF0.045
wF = 0.008 / 0.045
wF = 0.18
Since,
wF = Amount invested in Stock F / Total amount invested
We then substitute and solve for Amount invested in Stock F as follows:
0.18 = Amount invested in Stock F / $100,000
Amount invested in Stock F = 0.18 * $100,000 = $18,000
Therefore, you will invest $18,000 in Stock F.
You decide to use your department store charge card .. a lot! After seven weeks you have racked up $1,400 of debt. Your minimum monthly payment is $45, and is paid at the end of each month. If the APR is 16.80%, how long will it take you to pay the loan off? (Assume that you make the minimum payment until the debt is entirely paid off.)
Answer:
41 months
Explanation:
For computing the time period we have to use the NPER formula i.e shown in the attachment
Given that,
Present value = $0
Future value = $1,400
Rate of interest = 16.80% ÷ 12 months = 1.4%
PMT = $45
The formula is shown below:
= NPER(Rate;PMT;PV;-FV;type)
The future value come in negative
So, after applying the above formula, the time period is 41 months
Procurement's historical focus in many organizations was to ____. Group of answer choices minimize loss and damage achieve the lowest possible cost incur minimal supply disruptions use a limited number of suppliers
Answer:
achieve the lowest possible cost
Explanation:
Procurement refers to the purchase of goods, materials and services that a company needs to be able to operate. Procurement's historical focus has been to buy from the supplier that offers the cheapest price which results in suppliers competing to provide a low price and sometimes a supplier ends up having struggles to fulfill the contract and the company can suffer problems like late deliveries and poor quality. Because of that, procurement has shifted to a different focus in which companies also take into account other aspects to guarantee that the right products or services would be available at the right times to avoid issues.
According to this, the answer is that procurement's historical focus in many organizations was to achieve the lowest possible cost.
The other options are not right because companies historical focus was on finding the cheapest price to get a higher profit and not on minimizing loss and damage or incur minimal supply disruptions. Also, a limited number of suppliers was not the focus as companies were interested in finding a good price.
A structural engineering consulting company is examining its cash flow requirements for the next 6 years. The company expects to spend $18,000 two years from now, $22,000 three years from now, and $8,000 five years from now. What is the present worth of the planned expenditures at an interest rate of 10% per year, compounded semiannually
Answer:
The total present value of the expenditures= $36,136.7
Explanation:
Giving the following information:
Cash flows:
Cf2= $18,000
Cf3= $22,000
Cf5= $8,000
We need to calculate the present value of the planned expenditures at an interest rate of 10% per year, compounded semiannually.
i= 0.10/2= 0.05
We will use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf2= 18,000/(1.05^4)= $14,808.65
Cf3= 22,000/(1.05^6)= $16,416.74
Cf5= 8,000/(1.05^10)= $4,911.31
The total present value of the expenditures= $36,136.7
Ionic Charge, is a newly organized manufacturing business that plans to manufacture and sell 60,000 units per year of a new product. The following estimates have been made of the company’s costs and expenses (other than income taxes).
Fixed Variable per Unit
Manufacturing costs:
Direct materials $25
Direct labor $15
Manufacturing overhead $500,000 $8
Period costs:
Selling expenses $2
Administrative expenses $300,000
Totals $800,000 $50
Required:
a. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year of operations? (Hint: First compute the required contribution margin per unit.)
b. At the unit sales price computed in part a, how many units must the company produce and sell to break even? (Assume all units produced are sold.)
c. What will be the margin of safety (in dollars) if the company produces and sells 60,000 units at the sales price computed in part a?
Answer:
a. What should the company establish as the sales price per unit if it sets a target of earning an operating income of $700,000 by producing and selling 60,000 units during the first year of operations?
$64.50b. At the unit sales price computed in part a, how many units must the company produce and sell to break even?
55,173 unitsc. What will be the margin of safety (in dollars) if the company produces and sells 60,000 units at the sales price computed in part a?
$311,341.50Explanation:
variable costs per unit:
direct materials $25
direct labor $15
manufacturing overhead $8
selling expenses $2
total $50
fixed costs per unit:
manufacturing overhead $500,000
administrative expenses $300,000
total $800,000
assuming the company actually produces and sells the 60,000 units
units sold = (fixed costs + expected profits) / contribution margin
60,000 = $870,000 / contribution margin
contribution margin = $870,000 / 60,000 = $14.50
contribution margin = sales price - variable costs
$14.50 = sales price - $50
sales price = $50 + $14.50 = $64.50
break even point = fixed costs / contribution margin = $800,000 / $14.50 = 55,172.41 ≈ 55,173 units
margin of safety = current sales - break even point = (60,000 x $64.50) - (55,173 x $64.50) = $311,341.50
Briefly describe variable, fixed, mixed, and step costs, and indicate how the total cost function of each changes as activity increases within a time period. Give 3 examples of each type of cost (only one example of step costs).Minimum 200 words
Answer:
Explanation:
• Variable costs are costs that varies with activity level. It means that these costs changes as more and more goods and services are produced by a company. Total variable cost changes with change in output produced by a firm in the long run.
Examples of variable costs are costs of raw materials used in producing goods, direct labor costs, sales commission etc.
• Fixed costs are costs that does not vary with activity level. This means that these costs remains the same as more and more goods are produced by a company. The total fixed cost does not change with changes in output produced by a company in the short run.
Examples are rent payments, salaries, depreciation.
•Mixed costs are costs that have components of both fixed and. variable costs. The fixed part of mixed cost remains unchanged as activity level increases or decrease while the variable part changes with activity level. The fixed part of a total cost function of a mixed cost remains the same as activity level increases in the short run, while the variable part changes with output level in the long run.
Examples are utilities, insurance, operating license
•Step costs. These are costs that remains the same at an activity level but increases or decreases when the threshold of an activity is achieved.
Example is a factory production supervisor salary
Freshmart, Inc., began the year with 250 units of inventory at a cost of $55 per unit using variable costing, produced 1,000 units, and sold 1,250 units at a selling price of $100 per unit. Fixed overhead costs totaled $30,000 and fixed selling and administrative expenses were $15,000. Variable production costs were $25.00 per unit while variable selling and administrative expenses were $10.00 per unit. Using variable costing, net income was:
Answer:
The net income will be "$36,250".
Explanation:
The given values are:
Administrative expenses
= $15,000
Fixed overhead costs
= $30,000
According to the question:
The sales will be:
= [tex]1250 \ units\times 100 \ per \ units[/tex]
= [tex]125000[/tex]
The production cost of the variable will be:
= [tex]1250 \ units \times 25 \ per \ units[/tex]
= [tex]31250[/tex]
Variable selling will be:
= [tex]1250 \ units\times 10 \ per \ units[/tex]
= [tex]12500[/tex]
The net income will be:
⇒ [tex]Sales-Production \ cost \ of \ variable-admin \ expenses-fixed \ costs-fixed \ selling[/tex]
On substituting the values, we get
⇒ [tex]125000-31250-12500-30000-15000[/tex]
⇒ [tex]36250[/tex] ($)
Exercise 13-08 On December 31, 2020, Sweet Company had $1,232,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,500 shares of its common stock for $48 per share, receiving $1,224,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by an additional $8,000 cash, are used to liquidate the $1,232,000 debt. The December 31, 2020, balance sheet is issued on February 23, 2021. Show how the $1,232,000 of short-term debt should be presented on the December 31, 2020, balance sheet. (Enter account name only and do not provide descriptive information.) Sweet Company Partial Balance Sheet select a balance sheet section : enter a balance sheet item $enter a dollar amount Click if you would like to Show Work for this question: Open Show Work
Answer:
Tamarisk Company
Partial Balance Sheet
December 31, 2020
Current Liabilities:
Notes Payable $8,000
Long term debt
Notes payable refinanced in February 2021 $1,224,400
($1,232,000 - $8,000)
At May 31, 2017, the accounts of Lopez Company show the following.
1. May 1 inventories - finished goods $12,600, work in process $14,700, and raw materials $8,200.
2. May 31 inventories - finished goods $9,500, work in process $15,900, and raw materials $7,100.
3. Debit postings to work in process were direct materials $62,400, direct labor $50,000, and manufacturing overhead applied $40,000.
4. Sales revenue totaled $215,000.
a. Prepare a condensed cost of goods manufactured schedule.
b. Prepare an income statement for May through gross profit
c. Indicate the balance sheet presentation of the manufacturing inventories on May 31, 2017
Answer:
a. cost of goods manufactured schedule.
Direct materials $62,400
Direct labor $50,000
Manufacturing overhead applied $40,000
Add Opening work in process Inventory $14,700
Less Closing work in process Inventory ($15,900)
Cost of goods manufactured $151,200
b. income statement for May
Sales Revenue $215,000
Less Cost of Goods Sold :
Opening finished goods Inventory $12,600
Add Cost of goods manufactured $151,200
Less Closing finished goods Inventory ($12,600) ($176,400)
Gross Profit $38,600
c.presentation of the manufacturing inventories
raw materials $7,100
work in process $15,900
finished goods $9,500
Total Inventory $32,500
Explanation:
a.Cost of Goods Manufactured schedule included all the manufacturing costs incurred during production.
b.The Income statement is used to calculate gross profit as Sale less Cost of Sales.
c.The manufacturing inventories are presented in the balance sheet in their older of liquidity starting with the least liquid category.
A customer wishes to place a buy order for a security that has not been registered with the SEC. The security may be purchased if the security:
Complete Question:
A customer wishes to place a buy order for a security that has not been registered with the SEC. The purchase order can be filled if the security:
A. is exempt from SEC registration
B. is traded by at least 2 market makers
C. has been trading in the market for at least 1 year
D. is sold to professional investors
Answer:
Is exempt from SEC registration
Explanation:
The Securities and Exchange Commission (SEC) is a regulatory agency that is saddled with the responsibility of regulating the capital market and ensuring investors are well protected by making sure standard rules are followed.
If a customer wishes to place a buy order for a security that has not been registered with the Securities and Exchange Commission (SEC). The security may be purchased if the security is exempt from SEC registration.
By standard, the SEC states and implore investors to purchase only securities that are registered with the securities and exchange commission (SEC) or only when an exemption is made available. If securities have been trading for about a year or is being traded by a minimum of two companies, no exemption would be given by the SEC.
Also, there isn't any exemption for securities that is sold only to professional investors.
However, investors can purchase municipal and government securities even without it being registered with the securities and exchange commission.
In a nutshell, the customer can only purchase a security that has not been registered only if it is exempted from SEC registration.
Both Bond Sam and Bond Dave have 8 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 18 years to maturity. If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Sam
Answer:
$875.80
Explanation:
Bond Sam has an 8% semiannual coupon rate, matures in 4 years and is sold at par value ($1,000)
if market interest rates increase by 4%, then Bond Sam's market value = PV of face value + PV of coupon payments
PV of face value = $1,000 / (1 + 6%)⁸ = $627.41PV of coupon payments = coupon x PV annuity factor = $40 x 6.2098 (6%, n = 8) = $248.39Bond Sam's market value = $627.41 + $248.39 = $875.80
A start-up internet service provider expects to gain money in each of the first four years. Gains are projected to be $50 million in year one, $60 million in year two, $70 million in year three and $100 million in year four. An interest rate of 10% per year is used.
A. Draw the cash flow diagram.
B. What is the present worth of the gains for the first three years?
C. What is the present worth of the gains for all four years?
D. What is the equivalent uniform annual worth of the gains through year four?
Answer:
A. Draw the cash flow diagram.
since the site doesn't include a drawing tool I just prepared a table to depict cash flows associated to years one through four:
Year Cash inflows
1 $50 million
2 $60 million
3 $70 million
4 $100 million
B. What is the present worth of the gains for the first three years?
the present value of the first three cash flows = $50/1.1 + $60/1.1² + $70/1.1³ = $45.45 + $49.59 + $52.59 = $147.63 millionC. What is the present worth of the gains for all four years?
the present value of the first three cash flows = $50/1.1 + $60/1.1² + $70/1.1³ + $100/1.1⁴ = $45.45 + $49.59 + $52.59 + $68.30 = $215.93 millionD. What is the equivalent uniform annual worth of the gains through year four?
equivalent annual worth = (NPV x r) / [1 - (1 + r)⁻ⁿ] = ($215.93 x 0.1) / [1 - (1 + 0.1)⁻⁴] = 21.593 / 0.31699 = $68.12 millionLotharan Corp. has yearly sales of $28.4 million and costs of $12.7 million. The company’s balance sheet shows debt of $54.4 million and cash of $38.4 million. There are 1,960,000 shares outstanding and the industry EV/EBITDA multiple is 7.9.What is the company’s enterprise value?
Answer:
The company's Enterprise value is $124.03 million.
Explanation:
Earnings before interest , depreciation, taxes and amortization (EBITDA) = Sales - Cost
= $28.4 million -$12.7 million
= $15.7 million
Since Enterprise Value ÷ EBITDA = 7.9
Therefore,
Enterprise Value = EBITDA × 7.9
= $15.7 million × 7.9
= $124.03 million
Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank. a. 20Y1 June 30 Cash Notes Receivable Interest Revenue b. June 30 Accounts Payable-Skyline Supply Co. Miscellaneous Expense Cash Feedback 3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
There is some information missing and I looked up it. If the numbers are not exactly the same, you adjust them to your question.
The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $166,436.The bank collected $26,500 on a $25,000 note, including interest of $1,500.A check for $4,000 returned with the statement had been incorrectly recorded by Pala Medical Co. as $400. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account. Bank service charges for June amounted to $55.Answer:
June 30, 20Y1
Dr Cash 26,500
Cr Notes receivable 25,000
Cr Interest revenue 1,500
Dr Cash 3,600
Cr Accounts receivable 3,600
Dr Bank fees expense 55
Cr Cash 55
If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?
$166,436 + $26,500 + $3,600 - $55 = $196,481
Del Gato Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2017, its Cash account shows an $14,211 debit balance. Del Gato Clinic’s June 30 bank statement shows $13,671 on deposit in the bank. Outstanding checks as of June 30 total $2,105. The June 30 bank statement lists a $15 service charge. Check No. 919, listed with the canceled checks, was correctly drawn for $689 in payment of a utility bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $698. The June 30 cash receipts of $2,639 were placed in the bank’s night depository after banking hours and were not recorded on the June 30 bank statement.
Required:
Prepare the adjusting journal entries that Del Gato Clinic must record as a result of preparing the bank reconciliation.
Answer:
1. Bank Reconciliation - Book Balance
Book Balance $14,211
Add: Error in Check No. 919 $9
Less: Bank Service Charge $15
Adjusted Book Balance $14,205
2. Bank Reconciliation - Bank
Bank Balance $13,671
Add: Deposit of June 30 $2,639
Less: Outstanding Checks $2,105
Adjusted Bank Balance $14,205
3. Journal Entries required.
DR Miscellaneous Expenses $15
CR Cash $15
(To record bank service charge)
DR Cash $9
CR Utilities Expense $9
(To correct error in check)
Harvey Hotels has provided a defined benefit pension plan for its employees for several years. At the end of the most recent year, the following information was available with regard to the plan: service cost: $7.5 million, expected return on plan assets: $2.5 million, actual return on plan assets: $2.3 million, interest cost: $2.7 million, payments to retired employees: $3.3 million, and amortization of prior service cost (created when the pension plan was amended causing a drop in the projected benefit obligation): $2.4 million. What amount should Harvey Hotels report as pension expense in its income statement for the year
Answer:
$10.1 million
Explanation:
The computation of pension expense is shown below:-
Pension expense = Service cost + Interest cost + Amortization of prior service cost - Expected return on plan assets
= $7.5 million + $2.7 million + $2.4 million - $2.5 million
= $10.1 million
Therefore for computing the pension expenses we simply applied the above formula.
The American chocolate wafer and cream cookie most of us know (and love?) is made by Nabisco and sold under the name
Oreo. But an earlier brand of chocolate wafer cream-filled cookie called HydroxTM was sold from 1908 until around 1999.
In 2008 a company called Leaf Brands that specializes in reviving disappeared food items decided to try to bring Hydrox
cookies back. The trademark by that time was owned by the cereal maker Kellogg. Someone from Leaf contacted Kellogg's
consumer affairs office and explained that he was a big fan of Hydrox cookies. He asked if the company had any plans to
bring it back. Kellogg's consumer affairs representative said "Sorry- no plans to ever revive the Hydrox brand." Does this
mean that Leaf Brands is free to use the Hydrox name? Please explain whether trademark law protects (or doesn't) a
trademark that is owned but no longer being used by a company.
Answer:
Leaf Brands is free to use the Hydrox name.
Explanation:
Trademark law protects the trademark that is registered and in use. However, it is not enough to use the trademark, it must be renewed every 10 years if it is in use. Whereas the trademark law allows the trademark to last in perpetuity, unlike copyrights and patents, Kellogg can only enjoy the protection of its trademark if it is renewed every 10 years as long as it continues to be in use.
By practice and in utterance, Kellogg had abandoned its Hydrox trademark. As such Leaf Brands is free to take it up and re-register and use it.
For each of the following situations, select the best answer that applies to consolidating financial information subsequent to the acquisition date:
(A) Initial value method.
(B) Partial equity method.
(C) Equity method.
(D) Initial value method and partial equity method but not equity method.
(E) Partial equity method and equity method but not initial value method.
(F) Initial value method, partial equity method, and equity method.
_____1. Method(s) available to the parent for internal record-keeping.
_____2. Easiest internal record-keeping method to apply.
_____3. Income of the subsidiary is recorded by the parent when earned.
_____4. Designed to create a parallel between the parent's investment accounts and changes in the underlying equity of the acquired company.
_____5. For years subsequent to acquisition, requires the *C entry.
_____6. Uses the cash basis for income recognition.
_____7. Investment account remains at initially recorded amount.
_____8. Dividends received by the parent from the subsidiary reduce the parent's investment account.
_____9. Often referred to in accounting as a single-line consolidation.
_____10. Increases the investment account for subsidiary earnings, but does not decrease the subsidiary account for equity adjustments such as amortizations.
Answer:
1. Method(s) available to the parent for internal record-keeping - (A) Initial value method
2. Easiest internal record-keeping method to apply. - (F) Initial value method, partial equity method, and equity method.
3. Income of the subsidiary is recorded by the parent when earned. - (E) Partial equity method and equity method but not initial value method.
4. Designed to create a parallel between the parent's investment accounts and changes in the underlying equity of the acquired company. - (C) Equity method.
5. For years subsequent to acquisition, requires the *C entry. - (B) Partial equity method.
6. Uses the cash basis for income recognition. - (D) Initial value method and partial equity method but not equity method
7. Investment account remains at initially recorded amount. - (C) Equity method.
8. Dividends received by the parent from the subsidiary reduce the parent's investment account. - (E) Partial equity method and equity method but not initial value method.
9. Often referred to in accounting as a single-line consolidation. - (A) Initial value method
10. Increases the investment account for subsidiary earnings, but does not decrease the subsidiary account for equity adjustments such as amortizations - (A) Initial value method