Answer:
$576,000
Explanation:
Calculation for what The cumulative effect of this accounting change to be reported for the year ended 12/31/18, assuming a 40% tax rate, is
Accounting change cumulative effect= ($960,000 × (1 - .40)
Accounting change cumulative effect= ($960,000×0.6)
Accounting change cumulative effect= $576,000
Therefore The cumulative effect of this accounting change to be reported for the year ended 12/31/18, assuming a 40% tax rate, is $576,000
HELP A company can have a competitive advantage if it
produces a comparable product at the same cost as others in the market.
builds the best reputation for quality of all companies in the market.
has about the same manufacturing costs as other companies in the market.
All of the above.
Grimm Manufacturing is trying to determine the equivalent units for conversion costs with 15,000 units of ending work in process at 40% completion when there is a total 45,000 physical units. There are no beginning units in the department. Conversion costs occur evenly throughout the entire production period. What are the equivalent units for conversion costs for the current period
Answer: 36000 units
Explanation:
Ending work in process = 15,000 units
Completion rate = 40%
Total physical units = 45,000
The units completed will be:
= Total Units - Ending working in process
= 45,000 - 15,000
= 30,000
Since only 40% of the ending work in process inventory units has been completed, the completed units will then be:
= 15,000 × 40%
= 15000 × 0.4
= 6,000 units.
Then, the equivalent units for conversion costs for the current period will be:
= 30,000 + 6,000
= 36,000 units.
Limited Liability Companies (LLCs) are gaining in popularity over sub-chapter S corporations because:_____.
A. LLCs offer better liability protection to their members.
B. Sub-chapter S corporations are being phased out by the government which is promoting.
C. LLCs as they requires less paperwork on the part of the IRS.
D. Sub-chapter S corporations are being taxed at a higher rate by the IRS.
E. They are simpler when it comes to paperwork, offer some of the same tax advantages and also protect members from unlimited financial exposure.
Answer:
E. They are simpler when it comes to paperwork, offer some of the same tax advantages and also protect members from unlimited financial exposure
Explanation:
Limited liability companies are set up to protect the owners from liability. The business is a seperate entity from the individual owners and their assets are not used to settle debts of the business.
This type of business is gaining more use than S corporation. S corporation in addition to having liability advantages also requires more rigid requirements to set up. They do not pay corporate tax, but rather are taxed as sole proprietorship or a partnership.
Because of the ease of setting up an LLC more people prefer it to an S corporation. It also protects owners from unlimited financial liability
Which phrase best completes the list?
Characteristics of the U.S. Economy
Free market with some government regulation
Competition between businesses encouraged
A. No centralized banking system
B. Banks owned mostly by the government
o o
Ο Ο
C. Tax rates set by private companies
D. Individuals and businesses given economic freedom
Answer:
d
Explanation:
I took the quiz
On January 1, Year 1, a contractor began work on a $3.2 million construction contract that is expected to be completed in 3 years. The contractor concludes that it is appropriate to recognize revenue over time using the input method based on costs incurred (cost-to-cost method). At the inception date, the estimated cost of construction was $2.4 million. The following data relate to the actual and expected construction costs:
Year 1 Year 2 Year 3
Costs incurred $720,000 $1,170,000 $1,110,000
Expected future costs $1,680,000 $810,000 $0
For this long-term construction contract, the contractor needs to calculate the estimated dollar values of the revenue and gross profit (loss) to be recognized each year. Complete the contractor's long-term construction contract using the information above. Write the appropriate amounts in the associated cells. Indicate losses by using a leading minus (-) sign. Round all amounts to the nearest dollar. If no entry is necessary, enter a zero (0).
Revenue Gross profit (loss)
Year 1
Year 2
Answer:
Revenue Costs Incurred Gross profit (loss)
Year 1 $768,000 $720,000 $48,000
Year 2 $1,248,000 $1,170,000 78,000
Year 3 $1,184,000 $1,110,000 74,000
Total $3,200,000 $3,000,000 $200,000
Explanation:
a) Data and Calculations:
Construction contract = $3.2 million
Completion period = 3 years
Estimated cost of construction = $2.4 million
Construction costs:
Year 1 Year 2 Year 3 Total Costs
Costs incurred $720,000 $1,170,000 $1,110,000 $3 million
% of annual costs to total 24% 39% 37% 100%
Expected future costs $1,680,000 $810,000 $0
Annual Revenue $768,000 $1,248,000 $1,184,000 $3.2 million
Revenue Calculation:
Costs incurred/Total costs * $3,200,000
Revenue Costs Incurred Gross profit (loss)
Year 1 $768,000 $720,000 $48,000
Year 2 $1,248,000 $1,170,000 78,000
Year 3 $1,184,000 $1,110,000 74,000
Total $3,200,000 $3,000,000 $200,000
b) The revenue for each year is based on the costs incurred, as determined by the contractor.
Kara files her income tax return 64 days after the due date of the return without obtaining an extension from the IRS. Along with the return, she remits a check for $15,400, which is the balance of the tax she owes. Note: Assume 30 days in a month.
Required:
Disregarding the interest element, enter Kara's penalty amount for each, failure to file and failure to pay.
Failure to pay________$
Failure to file________$
Answer:
failure to file :$2079
failure to pay:$231
Explanation:
given data
remits a check = $15,400
days in a month = 30
return = 64 days
solution
computation of Kara's penalty amount for failure to pay
failure to pay will be
failure to pay = 0.5% of tax owed × number of months .......................1
failure to pay = 0.5% × $15400 × 3
failure to pay = $231
and
Computation of Kara's penalty amount for failure to file
failure to file will be
failure to file = (5% of tax owed × number of months or part thereof) - failure to pay penalty .......................2
failure to file = (5% × $15400 × 3) - $231
failure to file = $2310 - $231
failure to file = $2079
An outside supplier has offered to sell the component for $17. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $10,000. If Damon purchases the component from the supplier instead of manufacturing it, the effect on income would be:
Answer:
C. a $10,000 decrease.
Explanation:
Calculation for what the effect on income would be
First step is to calculate Make
Make=$100,000 + $160,000 + $60,000
Make = $320,000
Second step is to calculate Buy
Buy= $20,000 × $17 = $340,000 – $10,000
Buy = $330,000
Now let calculate the effect on income
Effect on income = $320,000 – $330,00
Effect on income = –$10,000 decrease
Therefore the effect on income would be –$10,000 decrease
Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files:
Cost of goods sold $88,250
Work in process inventory, January 1, 2016 21,800
Work in process inventory, December 31, 2016 17,250
Selling and Administrative Expenses 20,400
Net Income 35,500
Factory overhead 21,650
Direct materials inventory, January 1, 2016 28,200
Direct materials inventory, December 31, 2016 15,375
Cost of goods manufactured 107,350
Finished goods inventory, January 1, 2016 35,675
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount in the finished goods inventory at December 31, 2016?
Answer:
$54,775
Explanation:
The computation of the finished goods inventory is shown below:
As we know that
Cost of Goods sold = Cost of goods manufactured + Opening stock of Finished goods - Closing stock of Finished goods
Now
Ending Stock of Finished goods = Cost of goods manufactured + Opening stock of Finished goods - Cost of Goods sold
So,
Ending Stock of Finished goods is
= $107,350 + $35,675 - $88,250
= $54,775
you are in a 98 story building taking the elevator to the top from the bottom. Each story is 15 feet. The elevator travels at 20 miles per hour. There are 5,280 feet in a mile. How long do you have for your elevator pitch ?
Answer: 50 seconds
Explanation:
I took the test just now.
You are in a 98-story building taking the elevator to the top from the bottom. Each story is 15 feet. The elevator travels at 20 miles per hour. There are 5,280 feet in a mile. Around 50 seconds you can have for your elevator pitch.
What is an elevator pitch?An elevator pitch, elevator speech, or elevator statement is a short description of an idea, product, or company that explains the concept in a way such that any listener can understand it in a short period.
This description typically explains who the thing is for, what it does, why it is needed, and how it will get done. When explaining a person, the description generally explains one's skills and goals, and why they would be a productive and beneficial person to have on a team or within a company or project.
An elevator pitch does not have to include all of these components, but it usually does at least explain what the idea, product, company, or person is and their value.
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Portions of the financial statements for Peach Computer are provided below. PEACH COMPUTER Income Statement For the year ended December 31, 2021 Net sales $ 1,725,000 Expenses: Cost of goods sold $ 1,020,000 Operating expenses 530,000 Depreciation expense 47,000 Income tax expense 37,000 Total expenses 1,634,000 Net income $ 91,000 PEACH COMPUTER Selected Balance Sheet Data December 31 2021 2020 Increase (I) or Decrease (D) Cash $ 99,000 $ 83,500 $ 15,500 (I) Accounts receivable 46,300 50,500 4,200 (D) Inventory 72,000 53,500 18,500 (I) Prepaid rent 2,700 4,400 1,700 (D) Accounts payable 42,000 35,500 6,500 (I) Income tax payable 4,700 8,500 3,800 (D) Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the indirect method.
Answer:
PEACH COMPUTER
Operating Activities Section of Cashflow Statement
Cash flows from operating activities: $91,000
Adjustments to reconcile net income to
net cashflows from operating activities:
Add: Depreciation $47,000
Changes in operating assets and liabilities:
Increase in Inventory ($18,500)
Decrease in accounts receivable $4,200
Increase in Accounts Payable $6,500
Decrease in Prepaid rent $1,700
Decrease in Income tax payable ($3,800) $37,100
Net Cash from Operating activities $128,100
Mijka Company was started on January 1, Year 1. During Year 1, the company experienced the following three accounting events: (1) earned cash revenues of $30,400, (2) paid cash expenses of $13,800, and (3) paid a $2,100 cash dividend to its stockholders. These were the only events that affected the company during Year 1.
Required:
a. Record the effects of each accounting event under the appropriate general ledger account headings.
b. Prepare an income statement, statement of changes in stockholdersâ equity, and a balance sheet dated December 31, 2018, for Mijka Company.
Answer:
Mijka Company
a. Journal Entries
Debit Cash $30,400
Credit Service Revenue $30,400
To record the proceeds for services provided.
Debit Expenses $13,800
Credit Cash $13,800
To record the payment of cash for services.
Debit Dividend $2,100
Credit Cash $2,100
To record the payment of cash dividend.
b. Income Statement for the year ended December 31, 2018:
Service Revenue $30,400
Expenses 13,800
Net Income $16,600
Dividends (2,100)
Retained earnings $14,500
Statement of Changes in Stockholders' Equity as of December 31, 2018:
Retained Earnings $14,500
Balance Sheet as of December 31, 2018:
Assets:
Cash $14,500
Equity:
Retained Earnings $14,500
Explanation:
a) Data and Calculations:
Cash revenue $30,400
Cash expense (13,800)
Cash dividend (2,100)
Cash balance $14,500
Iris, a calendar year cash basis taxpayer, owns and operates several TV rental outlets in Florida, and wants to expand to other states. During 2018, she spends $14,000 to investigate TV rental stores in South Carolina and $9,000 to investigate TV rental stores in Georgia. She acquires the South Carolina operations, but not the outlets in Georgia. As to these expenses, Iris should: Group of answer choices Expense $9,000 for 2018 and capitalize $14,000. Capitalize $23,000. Capitalize $14,000 and not deduct $9,000. None of the above. Expense $23,000 for 2018.
Answer:
e. Expense $23,000 for 2018.
Explanation:
In this given case, Iris owns and operate TV rentals outlets, the investigation expenses which are deductible for 2018 are:
= $14,000 + $9,000
= $23,000
$23,000 should be charged off as expense for 2018.
An economic profit includes implicit costs and accounting profit does not. A distinction between them is important because an accounting profit is a relative amount of money. Some amount of accounting profit may or may not be a sufficient amount of profit to keep an entrepreneur in:________
Answer:
his/ her present line of business
Explanation:
Economic profit is accounting profit less implicit cost
Accounting cost is total revenue less explicit cost
Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives
Explicit cost is the actual cost incurred in carrying out an activity.
In determining profit, it is essential to consider implicit cost to determine if the business is earning economic profit
Tom is comparing two printers for his small business. The purchase price for Printer A is $1,000, with maintenance and operations costs of $400. Printer B increases productivity by $100, and reduces the maintenance and operations costs by half. The expected lifetime value is one year for both printers. What is the economic value to the customer (EVC) of Printer B
Answer:
EVC = $1300
Explanation:
In this question, we need to find the economic value to the customer (EVC) of Printer B.
First of all we need to know the basics of Economic value of a product,
It is basically starts with evaluating the additional values of the product first which are associated with it and then, those values are added to the next best product in the market. In this case, Printer A is the next best product whose price is $1000.
We know that, Printer B increase productivity by $100
Reduce the maintenance and operations costs by half, which means $400/2 = $200.
Additional value of the product = $100 + $200
Cost of the next best product = $1000
So,
According to the EVC definition and understandings, we must add the additional values of the product to value of the next best product.
Hence,
EVC = $1000 + $100 + $200
EVC = $1300
Sandier company had no treasury stock transactions. Then, on June 1, the company paid $5,000 to purchase 100 shares common stock on the open market. On July 1, the company sold 50 of these shares at $52 per share. Then, on August 1, the company sold remaining 50 shares at $46 per share. Complete the journal entry for the sale of the treasury stock on July 1.
Answer:
July 1
Debit : Treasury Stock (50 shares x $52) $2,600
Credit: Cash (50 shares x $52) $2,600
Explanation:
Purchase of Company`s own shares is known as Treasury Stock this purchase is done at cost.
The Sale however is done at the selling prices on the respective sales dates and number of shares. This sale results in Cash increase and Decrease in Treasury Stock as shown above for July 1 Sale.
After graduating from college, you are hired by the Ford automobile company as an economic analyst. For your first project, you are asked to estimate what would happen to the sales of Ford Mustangs as a result of a change in (i) the price of a Chevrolet Camaro, (ii) the price of gasoline, and (iii) consumer incomes. You are given the following elasticities:
price elasticity Of demand for Ford Mustangs= -2.5
Cross-price elasticity between Ford Mustangs and Camaros =1.5
Cross-price elasticity between Ford Mustangs and gasoline= -0.80
Income elasticity of demand for Ford Mustangs= 3.00
a. Suppose the price Of a Camaro falls by 10%. With all else being equal, sales of Ford Mustangs would______ by_______%
b. If the price of gasoline increases by 20%, the quantity of Ford Mustangs would _________by_______%
Answer:
a. Decrease by 15%
b. decrease by 16%
Explanation:
a. As we know that
Camaro and ford mustangs would be considered as a substitute goods as the cross price elasticity of demand comes in positive so in the case when the price of camaro decrease so the quantity of Mustang would also decreased by 1.5 ×10% = 15%
b. As we know that Gasoline and mustang would be considered as complementary goods so if the price of gasoline would increase by 20% so the quantity of mustang be decreased by 0.80 × 20% = 16%
The next dividend payment by Zone, Inc., will be $2.08 per share. The dividends are anticipated to maintain a growth rate of 6 percent forever. If the stock currently sells for $42 per share, what is the required return
Answer:
10.95%
Explanation:
According to the gordon growth model,
the value of stock (price) = dividend / required return - growth rate
42 = 2.08/ r - 0.06
42(r-0.06) = 2.08
2.08/42 = r - 0.06
r = 10.95%
On November 1, Arvelo Corporation had $34,500 of raw materials on hand. During the month, the company purchased an additional $75,500 of raw materials. During November, $90,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $3,500. Prepare journal entries to record these events. Use those journal entries to answer the following questions:
Answer:
The credits to Raw material account for the month of November total is $90,000
Explanation:
Missing word "The credits to the Raw Materials account for the month of November total:"
Journal entry
Date Accounts title and Explanation Debit Credit
Work in process inventory $86,500
(90,000 - 3,500)
Manufacturing overheads $3,500
Raw material inventory $90,000
The transactions completed by PS Music during June 2018 were described at the end of Chapter
1. The following transactions were completed during July, the second month of the business's operations:
July 1. Peyton Smith made an additional investment in PS Music in exchange for common stock by depositing $5,000 in PS Music's checking account.
1 Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, $1,750. 1. Paid a premium of $2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period.
2. Received $1,000 on account.
3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600. Any additional hours beyond 80 will be billed to KXMD at $40 per hour. In accordance with the contract, Peyton received $7,200 from KXMD as an advance payment for the first two months. 3. Paid $250 on account.
4. Paid an attorney $900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense)
5. Purchased office equipment on account from Office Mart, $7,500.
8. Paid for a newspaper advertisement, $200.
11 Received $1,000 for serving as a disc jockey for a party
13. Paid $700 to a local audio electronics store for rental of digital recording equipment.
14. Paid wages of $1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal:
16. 18. 21. 22. Received $2,000 for serving as a disc jockey for a wedding reception. Purchased supplies on account, $850. Paid $620 to Upload Music for use of its current music demos in making various music sets. Paid $800 to a local radio station to advertise theservices of PS Music twice daily for the remainder of July 23. Served as disc jockey for a party for $2500. Received $750, with the remainder due August 4, 2018
27. Paid electric bill, $915.
28. Paid wages of $1200 to receptionist and part-time assistant.
29. Paid miscellaneous expenses, $540. 30. Served as a disc jockey for a charity ball for $1,500. Received $500, with the remainder due on August 9, 2018. 31 Received $3,000 for serving as a disc jockey for a party 31. Paid $1,400 royalties (music expense) to National Music Clearing for use of various artists' music during July. Paid dividends, $1,250. 31.
Question Completion:
Journalize the transactions.
Answer:
PS Music
Journal Entries:
July 1 Debit Cash $5,000
Credit Common Stock $5,000
To record the additional investment by Peyton Smith.
July 1: Debit Rent Expense $1,750
Credit Cash $1,750
To record the payment of rent for July.
July 1: Debit Prepaid Insurance $2,700
Credit Cash $2,700
To record the prepayment of insurance premium for one year.
July 2: Debit Cash $1,000
Credit Service Revenue $1,000
To record the receipt of cash on account.
July 3: Debit Cash $7,200
Credit Service Revenue $3,600
Credit Unearned Service Revenue $3,600
To record the receipt of service revenue for July and August.
July 3: Debit Accounts Payable $250
Credit Cash $250
To record payment on account.
July 4: Debit Miscellaneous Expense $900
Credit Cash $900
To record the payment contract review by an attorney.
July 5: Debit Office Equipment $7,500
Credit Accounts Payable (Office Mart) $7,500
To record purchase of office equipment on account.
July 8: Debit Advertising Expense $200
Credit Cash $200
To record the payment for a newspaper advertisement.
July 11: Debit Cash $1,000
Credit Service Revenue $1,000
To record the receipt of cash for services.
July 13: Debit Equipment Rental Expense $700
Credit Cash $700
To record the payment for rental of digital recording equipment.
July 14: Debit Wages Expense $1,200
Credit Cash $1,200
To record the payment of wages.
July 16: Debit Cash $2,000
Credit Service Revenue $2,000
To record the receipt of cash for services.
July 18: Debit Supplies $850
Credit Accounts Payable $850
To record the purchase of supplies on account.
July 21: Debit Music Expense $620
Credit Cash $620
To record the payment of cash for uploading music.
July 22: Debit Advertising Expense $800
Credit Cash $800
To record the payment for advertising expense.
July 23: Debit Cash $750
Debit Accounts Receivable $1,750
Credit Service Revenue $2,500
To record service revenue earned for cash and on account.
July 27: Debit Utilities Expense $915
Credit Cash $915
To record the payment of electric bill.
July 28: Debit Wages Expense $1,200
Credit Cash $1,200
To record the payment of wages.
July 29: Debit Miscellaneous Expense $540
Credit Cash $540
To record the payment of miscellaneous expense.
July 30: Debit Cash $500
Debit Accounts Receivable $1,000
Credit Service Revenue $1,500
To record service revenue earned for cash and on account.
July 31: Debit Cash $3,000
Credit Service Revenue $3,000
To record the receipt of cash for services.
July 31: Debit Music Expense $1,400
Credit Cash $1,400
To record the payment of royalties.
July 31: Debit Dividends $1,250
Credit Cash $1,250
To record the payment of dividends to the stockholder.
Explanation:
Journal entries are the first records made to record business transactions as they occur on a daily basis. They identify the accounts involved in each transaction and the ones to be debited and credited respectively.
Journal entries are the first records made to record business transactions as they occur on a daily basis. They identify the accounts involved in each transaction and the ones to be debited and credited respectively.
What are business's operations?Business operations is a term used to define a broad range of activities. In essence, it refers to everything a firm does day-to-day to keep running and making money. Those activities, therefore, can differ hugely from one company to the next.
Business operations also include the technologies, systems, processes, equipment, and workflows essential to deliver value to customers. Planning operations management allows decision-makers to supervise business activities and assign responsibilities to authorized individuals.
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The following information is available for the first year of operations of Engle Inc., a manufacturer of fabricating equipment:
Sales $7,270,000
Gross profit 1,450,000
Indirect labor 330,000
Indirect materials 195,000
Other factory overhead 90,000
Materials purchased 5,100,000
Total manufacturing costs for the period 6,170,000
Materials inventory, end of period 480,000
Using this information, determine the following missing amounts:
A. Cost of goods sold.
B. Direct materials cost.
C. Direct labor cost.
Answer:
A. $5,820,000
B. $4,425,000
C. $1,130,000
Explanation:
A. Cost of goods sold.
Cost of goods sold = Sales - Gross Profit
= $7,270,000 - $1,450,000
= $5,820,000
B. Direct materials cost.
Direct materials cost = Material Purchases - Ending Material Inventory - Indirect Materials
= $5,100,000 - $480,000 - $195,000
= $4,425,000
C. Direct labor cost.
Direct labor cost = Total Manufacturing Cost - Indirect labor - indirect materials - direct materials - other factory overheads
= $6,170,000 - $330,000 - $195,000 - $4,425,000 - $90,000
= $1,130,000
On January 2, 2021, Miller Properties paid $28 million for 1 million shares of Marlon Company's 6 million outstanding common shares. Miller's CEO became a member of Marlon's board of directors during the first quarter of 2021.
The carrying amount of Marlon's net assets was $117 million. Miller estimated the fair value of those net assets to be the same except for a patent valued at $36 million above cost. The remaining amortization period for the patent is 10 years.
Marlon reported earnings of $54 million and paid dividends of $6 million during 2021. On December 31, 2021, Marlon's common stock was trading on the NYSE at $27.50 per share.
Required: 2. Assume Miller accounts for its investment in Marlon using the equity method. Ignoring income taxes, determine the amounts related to the investment to be reported in its 2021. (Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal places, (i.e., 5,500,000 should be entered as 5.5).):
a. Income statement million
b. Balance sheet million
c. Statement of cash flows
Operating cash flow million
Investing cash flow million
Answer:
A. Income statement $8.4 million
B. Balance sheet million $35.4 million
C. Operating cash flow million $1 million
Investing cash flow million=$28 million
Explanation:
a. Calculation for Income statement million
Using this formula
Income statement=Investment revenue -Patent amortization adjustment
Let plug in the formula
Income statement= ($54 million × 1/6)-([$36 million] × 1/6]÷10 years)
Income statement=$ 9.0-$0.6
Income statement=$8.4 million
Therefore Income statement million will be $8.4 million
b. Preparation of the Balance sheet million
Cost $28 million
Add Investment revenue $9.0 million
($54 million × 1/6)
Less Dividend ($1 million)
($6 million × 1/6)
Less Patent amortization adjustment ($0.6 million)
([$36 million] × 1/6]÷10 years)
Balance sheet million $35.4 million
($28 million+$9.0 million-$1 million-$0.6 million)
Therefore Balance sheet million will be $35.4 million
c. Preparation of the Statement of cash flows
Operating cash flow million=($6 million × 1/6)
Operating cash flow million= $1 million
Investing cash flow million=$28 million
Therefore Operating cash flow million will be $1 million while the Investing cash flow million will be $28 million.
The following information describes the investment portfolio of Stevens, Incorporated. All of the securities were purchased on 3/1/19, and are held with the intention of appreciation. Tlet, Loxat, and Barnes each have more than 1,000,000 common shares issued and outstanding throughout 2019 and 2020. No dividends have been received by Stevens, Inc. on these investments. On 5/1/2020, when Loxat was trading at $81 per share, Stevens Inc. sold 1000 shares.
Security Cost at 12/31/19 / share FMV at 12/31/2019 /share FMV at 12/31/2020/share
Tlet Inc (1000 sh) $23,000 28,500 37,000
Loxat Co (2000 sh) 100,000 142,500 96,500
Barnes Inc (2000 sh) 46,000 39,000 42,000
Total $169,000 210,000 175,500
Required:
a. Prepare the Necessary Journal Entries for 2019 and 2020
b. Complete a fair value adjustment
Answer:
a. 3/1/2019
Dr Investment in Tlet Inc $23,000
Dr Investment in Loxat Co $100,000
Dr Investment in Barnes Inc $46,000
Cr Cash $169,000
12/31/2019
Dr Fair value adjustment $41,000
Cr Unrealised holding gain or loss,Net $41,000
5/1/2020
Dr Cash $81,000
Cr Investment in Loxat Co $50,000
Cr Recognized gain on sale $31,000
12)31/2020
Dr Fair value adjustment $15,500
Cr Unrealised holding gain or loss,Net $15,500
b. Fair value adjustment $41,000
Fair value adjustment $15,500
Explanation:
a. Preparation of the Necessary Journal Entries for 2019 and 2020
3/1/2019
Dr Investment in Tlet Inc $23,000
Dr Investment in Loxat Co $100,000
Dr Investment in Barnes Inc $46,000
Cr Cash $169,000
12/31/2019
Dr Fair value adjustment $41,000
Cr Unrealised holding gain or loss,Net $41,000
($169,000-$210,000)
5/1/2020
Dr Cash $81,000
( $81 per share*1,000 shares)
Cr Investment in Loxat Co $50,000
[($100,000/2,000 shares=50 shares)
[($50*1,000 =$50,000)
Cr Recognized gain on sale $31,000
($81,000-$50,000)
12)31/2020
Dr Fair value adjustment $15,500
Cr Unrealised holding gain or loss,Net $15,500
[($119,000-$175,500)-$41,000]
($23,000+$50,000+$46,000=$119,000)
b.Calculation to Complete the fair value adjustment
A. Fair value adjustment =$169,000-$210,000
Fair value adjustment $41,000
B. Fair value adjustment=[($119,000-$175,500)-$41,000]
Fair value adjustment=$56,500-$41,000
Fair value adjustment= $15,500
Therefore the Fair value adjustment will be:
A. $41,000
B. $15,500
The bonds in our model have a maturity close to zero; they just pay the current interest rate, i, as a flow over time. We could consider, instead, a discount bond, such as a U.S. Treasury Bill. This type of asset has no explicit interest payments (called coupons) but pays a principal of, say, $1000 at a fixed date in the future. A Bill with one- year maturity pays off one year from the issue date, and similarly for 3-month or 6-month Bills. Let PB be the price of a discount bond with one-year maturity and principal of $1000. a. Is PB greater than or less than $1000.
a. Is P^B greater than or less than $1000?
b. What is the one-year interest rate on these discount bonds?
c. If prises, what happens to the interest rate on these bonds?
d. Suppose that, instead of paying $1000 in one year, the bond pays $1000 in two years. What is the interest rate per year on this two-year discount bond?
Answer:
Answer is explained in the explanation section below.
Explanation:
Part a.
[tex]P^{B}[/tex] will be less than $1000.
Reason: [tex]P^{B}[/tex] + interest = $1000, since interest >0 (Cannot be negative)
Hence,
[tex]P^{B}[/tex] < $1000
Part b.
Assuming the amount of interest to be i, [tex]P^{B}[/tex] would be $1000 - I
Rate of interest would be:
($1000 - ($1000-i)) / ($1000 - i) = i / ($1000 - i)
Rate of interest = i / ($1000 - i)
Part c.
If [tex]P^{B}[/tex] rises, the interest rate on these bonds would come down. Going back to a. [tex]P^{B}[/tex] = $1000 - i, and if [tex]P^{B}[/tex] rises, it implies that i reduces, which means that rate of interest will be reduced.
Part d.
If $1000 is a payment two years later, it implies that i (refer to b.) is the interest for two years. Assuming annual compounding, let's calculate rate of interest as follows:
Interest for two year (i) = $1000 - [tex]P^{B}[/tex] at the rate of i per year
= [tex]P^{B}[/tex] X i / 100 + ([tex]P^{B}[/tex] X (1+i/100))X i/100
We can solve for i to get annual rate of interest.
The standard deviation of monthly changes in the spot price of live cattle is (in cents per pound) 1.2. The standard deviation of monthly changes in the futures price of live cattle for the closest contract is 1.4. The correlation between the futures price changes and the spot price changes is 0.7. It is now October 15. A beef producer is committed to purchasing 200,000 pounds of live cattle on November 15. The producer wants to use the December live cattle futures contracts to hedge its risk. Each contract is for the delivery of 40,000 pounds of cattle. What strategy should the beef producer follow?
Answer:
The answer is below
Explanation:
The optimal hedge ratio shows the degree of correlation between an asset or liability and the final product.
The optimal hedge ratio = correlation * (standard deviation of monthly changes in the spot price) / (standard deviation of monthly changes in the futures price)
The optimal hedge ratio = 0.7 * (1.2/1.4) = 0.6
The beef producer requires a long position = 0.6 * 200000 lbs = 120000 lbs of cattle.
The beef producer should take a long position in 3 December contracts closing out the position on November 15.
In the market for financial capital,
a. those who supply financial capital pay interest on loans.
b. those who demand financial capital receive interest on loans.
c. the demand for financial capital comes from savings, and the supply goes to making loans.
d. the supply of financial capital comes from savings, and the demand goes to making loans.
Answer:
d. the supply of financial capital comes from savings, and the demand goes to making loans.
Explanation:
Capital markets refer to the areas where deposits and investment are transferred between the capital providers and others in need of capital. Capital markets consist of the main market, where new shares are released and exchanged, and the secondary market, where already issued securities are exchanged by investors.
Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 13.80%. Assuming that both investments have equal risk and Ericâs investment time horizon is flexible, which of the following investment options will exhibit the lower price?
a. An investment that matures in four years
b. An investment that matures in five years
Answer:
The second option which 5 years to maturity exhibited a lower price of
$523.95
Explanation:
In order to ascertain the option with lower, it is important we determine the price of each investment based on the fact the price of an investment opportunity today is the present value of its future cash flow is the maturity value of $1000 in both cases:
a.
PV=FV/(1+r)^n
PV=price of investment
FV=future value=$1000
r= 13.80%.
n=4 years
PV=$1000/(1+13.80%)^4
PV=$596.25
b.
PV=FV/(1+r)^n
PV=price of investment
FV=future value=$1000
r= 13.80%.
n=5 years
PV=$1000/(1+13.80%)^5
PV= $523.95
The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:
Jul. 3 Charged 175 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $150 per hour.
10 Reimbursed travel costs to employees for depositions related to the Obsidian case, $12,500.
14 Charged 260 hours of professional time for the Obsidian trial at a rate of $185 per hour.
18 Received invoice from consultants Wadsley and Harden for $30,000 for expert testimony related to the Obsidian trial.
27 Applied office overhead at a rate of $62 per professional hour charged to the Obsidian case.
31 Paid administrative and support salaries of $28,500 for the month.
31 Used office supplies for the month, $4,000.
31 Paid professional salaries of $74,350 for the month.
31 Billed Obsidian $172,500 for successful defense of the case.
Required:
A. Provide the journal entries for each of these transactions.
B. How much office overhead is over- or underapplied?
C. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
Answer:
3-July
Dr Work in process 25,500
Cr Salaries payable 25,500
10-Jul
Dr Work in process 12,500
Cr Cash 12,500
14-Jul
Dr Work in process 48,100
Cr Salaries payable 48,100
18-Jul
Dr Work in process 30,000
Cr Consultant fees payable 30,000
27-Jul
Dr Work in process 26,660
Cr Office overhead 26,660
31-Jul
Dr Office overhead 28,500
Cr Cash 28,500
31-Jul
Dr office overhead 4,000
Cr Supplies 4,000
31-Jul
Dr Salaries payable 74,350
Cr Cash 74,350
31-Jul
Dr Accounts receivable 172,500
Cr Fees earned 172,500
31-Jul
Dr Cost of services 142,760
Cr Work in process 142,760
b. $5,840 Over applied
c. $35,580
Explanation:
Preparation of the journal entries for each of these transactions.
3-Jul
Dr Work in process 25,500
Cr Salaries payable 25,500
(170 hours ×150 per hour)
10-Jul
Dr Work in process 12,500
Cr Cash 12,500
14-Jul
Dr Work in process 48,100
Cr Salaries payable 48,100
(260 hours ×185 per hour)
18-Jul
Dr Work in process 30,000
Cr Consultant fees payable 30,000
27-Jul
Dr Work in process 26,660
Cr Office overhead 26,660
(170 hours +260 hours)*62
31-Jul
Dr Office overhead 28,500
Cr Cash 28,500
31-Jul
Dr office overhead 4,000
Cr Supplies 4,000
31-Jul
Dr Salaries payable 74,350
Cr Cash 74,350
31-Jul
Dr Accounts receivable 172,500
Cr Fees earned 172,500
31-Jul
Dr Cost of services 142,760
(25,500+12,500+48,100+30,000+26,660)
Cr Work in process 142,760
b. Calculation for the office overhead
Office overhead =(28,500+4,000)-26,660
Office overhead=32,500-26,660
Office overhead=$5,840 Over applied
Therefore the office overhead is $5,840 over applied w
C. Calculation to Determine the gross profit
Fees earned 172,500
Less Cost of services (136,920)
(142,760-5,840)
Gross profit $35,580
Therefore the gross profit will be $35,580
Damon Industries manufactures 20,000 components per year. The manufacturing cost of the components was determined as follows:
Direct materials $100,000
Direct labor 160,000
Variable manufacturing overhead 60,000
Fixed manufacturing overhead 80,000
An outside supplier has offered to sell the component for $17. If Damon purchases the component from the outside supplier, the manufacturing facilities would be unused and could be rented out for $10,000. If Damon purchases the component from the supplier instead of manufacturing it, the effect on income would be:
a. a $30,000 increase.
b. a $50,000 decrease.
c. a $70,000 increase.
d. a $10,000 decrease.
Answer:
d. a $10,000 decrease.
Explanation:
The computation of the impact on the income is given below:
In case of making the product
= Direct material + direct labor + variable manufacturing overhead + rented
= $100,000 + $160,000 + $60,000 + $10,000
= $330,000
And, in case of buying the product
= 20,000 × $17
= $340,000
So there is a decrease of $10,000
Hi, please help me
A garage band wants to hold a concert. The expected crowd has a Normal distribution with the mean of 3000 and standard deviation of 200. The average expenditure on concessions is Uniformly distributed with a minimum of $10 and maximum of 25 dollars. Tickets sell for $10 each, and the band’s profit is 80% of the gate (ticket sale) and concession sales, minus a fixed cost of $12,000. Use the provided spreadsheet model and conduct a Monte Carlo simulation with 500 trials to analyze the band profit.
In your analysis,
a. find the minimum, maximum, average, and standard deviation for band profit.
b. create the frequency distribution (using FREQUENCY function) and the histogram for
band profit.
c. Find the probability that band profit will be greater than $62000.
Global Tek is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 16 percent a year for the next four years and then the growth slows down to a rate of 3.5 percent per year indefinitely. The company just paid its annual dividend in the amount of $0.20 per share. What is the current value of one share of this stock if the required rate of return is 15.5%?
Answer:
The value of the stock is $2.558
Explanation:
We need to calculate the present value of future cash flows to calculate the Stock value
First Calculate each year's Dividend
Use the following formula to calculate the expected dividend
Expected Dividend = Current Dividend x ( 1 + Growth rate )^n
Year ______ Working _________ Dividend
1 ______ $0.20 x ( 1 + 16% )^1 ____ $0.232
2______ $0.20 x ( 1 + 16% )^2 ____ $0.269
3______ $0.20 x ( 1 + 16% )^3 ____ $0.312
4______ $0.20 x ( 1 + 16% )^4 ____ $0.362
5______$0.362 x ( 1 + 3.5% ) _____$0.375
Now calculate the present value of each year's dividend using following formula
PV = Dividend / ( 1 + required rate of return )^numbers of years
Year _____ Working ______________________ PRESENT VALUES
1 ______ $0.232 / ( 1 + 15.5% )^1 _____________ $0.201
2______ $0.269 / ( 1 + 15.5% )^2 _____________$0.202
3______ $0.312 / ( 1 + 15.5% )^3 _____________ $0.203
4______ $0.362 / ( 1 + 15.5% )^4 _____________$0.203
5______$0.375 / (15.5% - 3.5% ) ) / ( 1 + 15.5% ) __$1.749
Now calculate the sum of present value of all the dividends
Value of stock = $0.201 + $0.202 + $0.203 + $0.203 + $1.755
Value of stock = $2.558