Answer:
A. difference between the demand price and the supply price at the quota limit.
Explanation:
In Economics, there are primarily two (2) factors which affect the availability and the price at which goods and services are sold or provided, these are demand and supply.
The law of demand states that, the higher the demand for goods and services, the higher the price it would be sold all things being equal. On the other hand, law of supply states that the higher the price of goods and services, the lower the supply.
A quota rent can be defined as the economic rent that is typically being received by the owner of the imported goods subjected to quota.
The quota rent is the difference between the demand price and the supply price at the quota limit.
There are currently 499 students enrolled in Webster Elementary School, and the number of students is increasing at the rate of 15 students per year. Currently the annual expense to educate one student is $1,252, and the expense to educate one student is decreasing at the rate of $43 per year. Use the product rule to determine the rate at which the total expense to educate the students at Webster Elementary School is currently changing per year.
Answer: Cost is decreasing at $2,677 per year.
Explanation:
The number of students in the school is increasing by 15 students a year.
The cost of that is:
= 15 * 1,252
= $18,780
The cost is also decreasing at a rate of $43 per student per year. There are currently 499 students. The total decrease is therefore:
= 43 * 499
= $21,457
The change is:
= Increase in cost - Decrease in cost
= 18,780 - 21,457
= - $2,677
Cost is decreasing at $2,677 per year.
During 2020 the Pharoah Company had a net income of $85100. In addition, selected accounts showed the following changes: Accounts Receivable $2700 increase Accounts Payable 900 increase Buildings 3900 decrease Depreciation Expense 1400 increase Bonds Payable 7900 increase What was the amount of cash provided by operating activities
Answer:
Cash provided by operating activities $84,700
Explanation:
The computation of the amount of cash provided by operating activities is shown below:
Net income $85,100
Add: depreciation expense $1,400
Less: increase in account receivable -$2,700
Add: Increase in account payable $900
Cash provided by operating activities $84,700
How is the economy measured using the circular flow model in the resource market?
A. National Income Accounting
B. Consumer Price Index
C. Gross Domestic Product
D. Revenue and Taxes
A(n) _____ is a situation in which moral implications shape an individual’s decisions.
ethical issue
revelatory issue
moral dilemma
situational imperative
A building with an appraisal value of $136,787 is made available at an offer price of $157,859. The purchaser acquires the property for $34,148 in cash, a 90-day note payable for $27,610, and a mortgage amounting to $58,126. The cost basis recorded in the buyer's accounting records to recognize this purchase is
Answer:
the cost basis recorded to recognize this purchase is $119,884
Explanation:
The computation of the cost basis recorded to recognize this purchase is shown below:
= Acquired property in cash + note payable + mortgage
= $34,148 + $27,610 + $58,126
= $119,884
Hence, the cost basis recorded to recognize this purchase is $119,884
Ana and Shen need to decide which one of them will need to take time off work to complete the rather urgent task of shearing their llamas. Ana is pretty good with a pair of shears; she can shear the llamas in one hour. Shen is somewhat slow; it takes him six hours to shear the llamas. Ana earns $120 per hour as a business consultant, while Shen earns $15 per hour as a lifeguard.
Keeping in mind that either Ana or Shen must take time off work to shear the llamas, who has the lowest opportunity cost of completing the task?
A. Ana
B. Shen
C. Ana and Shen face identical opportunity costs
Answer:
B
Explanation:
We have to consider the opportunity cost of both parties
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
If Ana chooses to shear, she would be forgoing an income $120
If Shen chooses to shear for 6 hours, she would be forgoing an income ($15 x 6) = 90
Shen has a lower opportunity cost and should shear
You invest $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04. What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 0.20
Answer:
50%, 50%
Explanation:
% of money invested in risky asset = Portfolio standard deviation/Standard deviation of risky asset
% of money invested in risky asset = 0.20/0.40
% of money invested in risky asset = 50.00%
% of money invested in risk free asset = 1 - 50.00%
% of money invested in risk free asset = 50.00%
The following December 31, 2021, fiscal year-end account balance information is available for the Stonebridge Corporation:
Cash and cash equivalents $5,800
Accounts receivable (net) 28,000
Inventory 68,000
Property, plant, and equipment (net) 160,000
Accounts payable 47,000
Salaries payable 19,000
Paid-in capital 140,000
The only asset not listed is short-term investments. The only liabilities not listed are $38,000 notes payable due in two years and related accrued interest of $1,000 due in four months. The current ratio at year-end is 1.6:1.
Required:
Determine the following at December 31, 2021:
1. Total current assets.
2. Short-term investments.
3. Retained earnings.
Answer and Explanation:
The calculations are given below:
1. Total current assets
we know that
Current ratio = Current assets ÷ current liabilities
where,
Current liabilities is
= Accounts payable + Accrued interest + Salaries payable
= $47,000 + $1,000 + $19,000
= $67,000
And,
Current ratio = 1.6:1
So,
Total current assets is
= 1.6 × $67,000
= $107,200
b. Short term investment is
Short term investment = Total current assets - Cash and cash equivalents - Accounts receivables - Inventories
= $107,200 - ($5,800 + $28,000 + $68,000)
= $5,400
c. Now retained earning is
Total assets
= Total current assets + Property, plant and equipment
= $107,200 + $160,000
= $267,200
Total liabilities is
= Current liabilities + Notes payable
= $67,000 + $38,000
= $105,000
Now Retained earnings is
= Total assets - Total liabilities - Paid in capital
= $267,200 - $105,000 - $140,000
= $22,200
Market Inc. has two divisions, Talbot and Heather. Following is the income statement for the past month: Talbot Heather Total Sales$280,000 $168,000 $448,000 Variable Costs 168,000 67,000 235,000 Contribution Margin 112,000 101,000 213,000 Fixed Costs (allocated) 112,500 67,500 180,000 Profit Margin$(500) $33,500 $33,000 What would Market's profit margin be if the Talbot division was dropped and all fixed costs are unavoidable
Answer:
$(79,000)
Explanation:
Calculation to determine What would Market's profit margin be if the Talbot division was dropped and all fixed costs are unavoidable
Using this formula
Market's profit margin =Contribution margin - Fixed costs
Let plug in the formula
Market's profit margin=$101,000-$180,000
Market's profit margin=$(79,000)
Therefore What would Market's profit margin be if the Talbot division was dropped and all fixed costs are unavoidable is $(79,000)
A condensed income statement for Gilbert, Inc. follows: (amounts are shown in thousands) Products F G H Total Sales (total) $ 285 $ 188.5 $ 405 $ 878.5 Total Unit-level Costs (154 ) (161.7 ) (217 ) (532.7 ) Contribution Margin 131 26.8 188 345.8 Company-wide Facility-Level Costs (26.7 ) (31.7 ) (57 ) (115.4 ) Income (Loss) $ 104.3 $ (4.9 ) $ 131 $ 230.4 Gilbert's management is considering whether to eliminate manufacturing product G at the beginning of the next year. The elimination will have no effect on the sales or unit-level costs of products F and H. The change in income that would result from eliminating product G is
Answer:
Gilbert, Inc.
The change in income that would result from eliminating product G is:
= $26,800.
Explanation:
a) Data and Calculations:
Products F G H Total
Total Sales (total) $ 285 $ 188.5 $ 405 $ 878.5
Total Unit-level Costs (154 ) (161.7 ) (217 ) (532.7 )
Contribution Margin 131 26.8 188 345.8
Company-wide Facility-Level Costs (26.7 ) (31.7 ) (57 ) (115.4 )
Income (Loss) $ 104.3 $ (4.9 ) $ 131 $ 230.4
b) The company-wide income will reduce from $230.4 to $203.6 (a difference of $26.8) as a result of the Contribution Margin of product G that will also be eliminated. Note that product G's facility-level cost of $31.7 cannot be eliminated.
In other words, the company-wide total income will be $203.6 ($319 - $115.4). This proves that product G should not be eliminated. It was actually contributing to the fixed expenses. However, the company-wide facility costs should be analyzed further to determine how much can be attributed to product G before a final decision is reached.
ims Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 5,000 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 68,500 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 33,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month
Answer:
60,300
Explanation:
Calculation to determine the equivalent units for conversion costs in the Assembly Department for the month
Conversion
Units transferred to the next department 40,500
(5,000 + 68,500 - 33,000 )
Add Ending work in process 19,800
Conversion: (33,000 units × 60%)
Equivalent units of production 60,300
(40,500+19,800)
Therefore the equivalent units for conversion costs in the Assembly Department for the month is 60,300
Which is the most important factor on which motor carriers compete?
Answer:
The correct response is "railroad". A further explanation is given below.
Explanation:
The other passenger transport market is railways, is because rail services are easier and have already been commonly used instead of motor carriers as well as providers.Railways don't always occupy all geographic locations of the nation, but in certain areas of the country, they were a theme or a trend.Lopez Corporation incurred the following costs while manufacturing its product.
Materials used in product $122,200 Advertising expense $49,900
Depreciation on plant 69,200 Property taxes on plant 17,600
Property taxes on store 8,590 Delivery expense 28,300
Labor costs of assembly-line workers 113,100 Sales commissions 44,400
Factory supplies used 34,000 Salaries paid to sales clerks 51,300
Work in process inventory was $13,300 at January 1 and $17,200 at December 31. Finished goods inventory was $68,800 at January 1 and $47,900 at December 31.
Required:
a. Compute cost of goods manufactured.
b. Compute cost of goods sold.
Answer:
a. $352,200
b. $372,100
Explanation:
The cost of goods manufactured
Consider only the manufacturing costs
Cost of goods manufactured = $122,200 + $69,200 + $17,600 + $113,100 + $34,000 + $13,300 - $17,200
=$352,200
Cost of goods sold
Add Cost of goods manufactured to the net of Finished inventory balance
Cost of goods sold = $47,900 $68,800 + $352,200 - $47,900
= $372,100
These are selected account balances on December 31, 2017.
Land $150,000
Land (held for future use) 225,000
Buildings 1,200,000
Inventory 300,000
Equipment 675,000
Furniture 150,000
Accumulated Depreciation 450,000
What is the total amount of property, plant, and equipment that will appear on the balance sheet?
a. $2,250,000
b. $1,950,000
c. $2,700,000
d. $1,725,000
Answer:
D. $1,725,000
Explanation:
Given the above information,
Total amount of property, plant and equipment = land (location of the office building) + office building + equipment + office furniture - Accumulated depreciation
= $150,000 + $1,200,000 + $675,000 + $150,000 - $450,000
= $1,725,000
Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity:
Sales (350,000 units) $4,375,000
Cost of goods sold 2,600,000
Gross profit 1,775,000
Operating expenses 840,000
Net income $ 935,000
Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed. In September, Moonbeam receives a special order for 15,000 toasters at $7.60 each from Luna Company. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed costs.
Instructions
a. Prepare an incremental analysis for the special order.
b. Should Moonbeam accept the special order?
Answer:
Moonbeam Company
a) Incremental Analysis for the Special Order:
Sales (15,000) at $7.60 $114,000
Variable cost of sales 5.20 78,000
Variable overhead 1.92 28,800
Total variable costs ($106,800)
Contribution $7,200
b) Moonbeam should accept the special order. It makes a contribution of $7,200 to the defraying of the fixed costs.
Explanation:
a) Data and Calculations:
operating results while operating at 75% of plant capacity:
Total Unit
Sales (350,000 units) $4,375,000 $12.50
Cost of goods sold 2,600,000
Variable (70%) $1,820,000 5.20
Fixed (30%) 780,000
Gross profit 1,775,000
Operating expenses 840,000
Variable (80%) $672,000 1.92
Fixed (20%) 168,000
Net income $ 935,000
Incremental Analysis for the Special Order:
Sales (15,000) at $7.60 $114,000
Variable cost of sales 5.20 78,000
Variable overhead 1.92 28,800
Total variable costs ($106,800)
Contribution $7,200
b) Incremental analysis concentrates on the variable elements of costs. The method disregards all fixed costs as they are regarded as sunk or past costs, and therefore, irrelevant to the decision at hand.
Flood damage in the Brush Creek area averages $7,000 annually. Civil engineers with floodplain expertise have designed a series of small dams to restrain the flow. They will cost $25,000 and will involve annual maintenance charges of $500. What is the anticipated benefit/cost ratio if the interest rate is 6 %, the service life is 10 years, and the salvage value is $5,000
Answer:
1.89
Explanation:
The benefit cost ratio is used to determine the profitability of an investor. It is determined by dividing the present value of benefit by the present value of cost
Benefit cost ratio (BC) = present value of benefits / present value of costs
if BC is greater than 1, the project is profitable
If BC is less than 1, the project is not profitable
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Present value of benefitsCash flow each year from year 1 to 9 = $7,000
Cash flow in year 10 = $7000 + 5000 = $12,000
I = 6%
PV = $54,312.58
Present value of costsCash flow in year 0 = $25,000
Cash flow each year from year 1 to 10 = $500
I = 6%
PV = $28,680.04
Benefit cost ratio = $54,312.58 / $28,680.04 = 1.89
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Assume a market is currently at the equilibrium price and quantity, and a price ceiling is set below equilibrium price. Which of the following statements is true:
Select the correct answer below:
A. The quantity demanded will rise and the quantity supplied will fall, causing a shortage.
B. There is nothing causing the price to fall from the equilibrium level.
C. There is nothing preventing the price from rising to its equilibrium level.
D. The quantity supplied will rise and the quantity demanded will fall, causing a surplus.
Answer:
Option A: The quantity demanded will rise and the quantity supplied will fall, causing a shortage.
Explanation:
Price ceilings helps to hinder a price from rising above a known level. The assumption under it is that if a price ceiling is fixed (set) below the equilibrium price of the goods, this will definitely lead to quantity demanded exceeding quantity supplied. And when this happens, the result will be excess demand or shortages will come about. The use of Price floors hinders a price from going down below a certain level.
Energy Manufacturing Inc. provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $200,000 4,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $717,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 4,200 hours 2,700 hours Account billing lines 900,000 lines 750,000 lines Account verification accounts 8,000 accounts 6,000 accounts Correspondence letters 1,400 letters 1,800 letters How much of the account inquiry cost will be assigned to Department A
Answer: $84,000
Explanation:
Cost per hour for Account inquiry = Account inquiry cost / Activity cost - drivers
= 320,000 / 16,000 hours
= $20 per hour
Department A has 4,200 hours of account inquiry. Cost will be:
= 4,200 * 20
= $84,000
The dictator of Turan has recently begun to arbitrarily seize farms belonging to his political opponents, and he has given the farms to his friends. His friends don't know much about farming. The courts in Turan have ruled that the seizures are illegal, but the dictator has ignored the rulings. Other things equal, we would expect that the growth rate in Turan will:_______.
a. fall and remain lower for a long time.
b. increase because the total amount of human capital in the country will increase as the new owners learn how to farm.
c. fall temporarily, but will return to where it was when the new owners learn how to farm.
d. not be affected unless widespread civil disorder or civil war results.
Answer:
A
Explanation:
Stewart Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plant-wide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. From the following information, using a single plant-wide rate, determine the overhead rate per unit for Product A:
Overhead Direct Labor Product
Hours (dlh) A B
Painting Dept. $248,000 10,000 dlh 16 dlh 4 dlh
Finishing Dept. 72,000 10,000 4 16
Totals $320,000 20,000 dlh 20 dlh 20 dlh
======== ========== ====== ======
a. $496.00 per unit
b. $320.00 per unit
c. $144.00 per unit
d. $640.00 per unit
Answer:
Allocated MOH= $320
Explanation:
Giving the following information:
Overhead Direct Labor Product
Hours (dlh) A B
Painting Dept. $248,000 10,000 dlh 16 dlh 4 dlh
Finishing Dept. 72,000 10,000 4 16
Totals $320,000 20,000 dlh 20 dlh 20 dlh
First, we need to calculate the plantwide overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 320,000 / 20,000
Predetermined manufacturing overhead rate= $16 per direct labor hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 16*20
Allocated MOH= $320
Applying Closing Procedures Assume you are in the process of closing procedures for Echo Corporation. You have already closed all revenue and expense accounts to the Retained Earnings account. The total debits to Retained Earnings equal $308,800 and total credits to Retained Earnings equal $347,400. The Retained Earnings account had a credit balance of $99,000 at the start of this current year. What is the post-closing ending balance of Retained Earnings at the end of this current year
Answer:
See below
Explanation:
Given the above details, post closing ending balance of retained earnings would be calculated by
= Debit balance in the retained earning + credit in the retained earnings - Credit balance in the retained earnings
= $308,800 + $99,000 - $347,400
= $60,400
Indigo Company sold 10,000 Super-Spreaders on during 2017, at a total price of $885,200, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $350,500. The assurance warranties extend for a 3-year period and are estimated to cost $65,100. During 2017, warranty related costs amounted to $15,600. Indigo also sold extended warranties (service-type warranties) related to 3,000 spreaders for 2 years beyond the 2-year period for $25,200. Given this information, determine the amounts to report for the following at December 31, 2017: sales revenue, cost of goods sold, warranty expense, unearned warranty revenue, warranty liability, and cash.
Answer:
Indigo Company
Sales Revenue = $885,200
Cost of goods sold = $350,500
Warranty Expense = $65,100
Unearned warranty revenue = $25,200
Warranty liability = $49,500 ($65,100 - $15,600)
Cash = $544,300 ($885,200 + $25,200 - $350,500 - $15,600)
Explanation:
a) Data and Calculations:
Income Statement for the year ended December 31, 2017 (Partial)
Sales Revenue $885,200
Cost of goods sold 350,500
Gross profit $534,700
Warranty Expense 65,100
Net income $469,600
Balance Sheet as of December 31, 2017 (Partial)
Assets:
Cash $544,300
Liabilities:
Retained earnings $469,600
Unearned warranty revenue 25,200
Warranty liability 49,500
Total liabilities $544,300
4. What would be the best pricing strategy for a deli opening in a competitive business
district where the lunchtime rush is the bulk of the business? Explain your answer
Answer:
During the times of opening, the business can offer lucrative and attractive discounts and deals such as buy one get one free deals or opening offers or different deals and discounts to gain competitive business advantage.
Explanation:
Suppose there is one firm in a market with linear demand function. The firm has a constant marginal cost of $9. The firm is currently charging $15 per unit, where the elasticity of demand is 3. The new CEO of this firm suspects that the current pricing strategy of this firm might not be profit maximizing. He hires you as an economic consultant to offer advice to this firm. Base on the information given, is the firm currently maximizing profits (choosing a monopoly price and quantity)? If not, should the firm raise its price or lower its price? Explain.
Answer:
We employ the fact that Pprofit Maximizing Price = Marginal cost * (ed/ed + 1)
Price = $9 * (-3 / (-3 + 1))
Price = $9 * (-3/-2)
Price = $9 * 1.5
Price = $13.5
As we can see that the profit maximizing price is 13.5. Whereas, the current price of $15 which is not profit maximizing. So the firm should reduce the price to 13.5 per unit so as to be maximizing profit.
Bryant leased equipment that had a retail cash selling price of $750,000 and a useful life of six years with no residual value. The lessor spent $605,000 to manufacture the equipment and used an implicit rate of 8% when calculating annual lease payments of $150,219 beginning January 1, the beginning of the lease. Lease payments will be made January 1 each year of the lease. Incremental costs of consummating the lease transaction incurred by the lessor were $22,500. What is the effect of the lease on the lessor’s earnings during the first year, not including any effect of depreciation no longer required on the asset under lease (ignore taxes)? (Input decreases to income as negative amounts. Round Interest revenue to the nearest whole dollar.)
Answer: $170,482.48
Explanation:
Effect of lease:
= Sales - Cost of goods sold (cost to manufacture) + Interest revenue - Selling expense
Interest revenue = (Selling price - Interest paid) * Interest rate
= (750,000 - 150,219) * 8%
= $47,982.48
Effect of lease = 750,000 - 605,000 + 47,982.48 - 22,500
= $170,482.48
On January 1, 2021, Red Flash Photography had the following balances: Cash, $25,000; Supplies, $9,300; Land, $73,000; Deferred Revenue, $6,300; Common Stock $63,000; and Retained Earnings, $38,000. During 2021, the company had the following transactions:
1. February 15 Issue additional shares of common stock, $33,000.
2. May 20 Provide services to customers for cash, $48,000, and on account, $43,000.
3. August 31 Pay salaries to employees for work in 2021, $36,000.
4. October 1 Purchase rental space for one year, $25,000.
5. November 17 Purchase supplies on account, $35,000.
6. December 30 Pay dividends, $3,300.
The following information is available on December 31, 2021:
a. Employees are owed an additional $5,300 in salaries.
b. Three months of the rental space has expired.
c. Supplies of $6,300 remain on hand.
d. All of the services associated with the beginning deferred revenue have been performed.
Required:
a. Record each of the transactions listed above.
b. Record the adjusting entries.
c. Prepare an income statement for the year ended December 31, 2022, in the 'Income Statement'
d. Prepare the statement of Stockholder's Equity For the year ended December 21, 2021.
Answer:
Red Flash Photography
a. Journal Entries:
1. Feb. 15:
Debit Cash $33,000
Credit Common Stock $33,000
2. May 20:
Debit Cash $48,000
Debit Accounts Receivable $43,000
Credit Service Revenue $91,000
3. Aug. 31:
Debit Salaries Expense $36,000
Credit Cash $36,000
4. Oct. 1:
Debit Prepaid Rent $25,000
Credit Cash $25,000
5. Nov. 17:
Debit Supplies $35,000
Credit Account Payable $35,000
6. Dec. 30:
Debit Dividends $3,300
Credit Cash $3,300
b. Adjusting Journal Entries:
a. Debit Salaries Expense $5,300
Credit Salaries Payable $5,300
b. Debit Rent Expense $6,250
Credit Prepaid Rent $6,250
c. Debit Supplies Expense $38,000
Credit Supplies $38,000
d. Debit Deferred Revenue $6,300
Credit Service Revenue $6,300
c. Income Statement for the year ended December 31, 2022:
Service Revenue $97,300
Salaries Expense 41,300
Rent Expense 6,250
Supplies Expense 38,000
Dividends 3,300 $88,850
Net Income $8,450
d. Statement of Stockholders' Equity
For the year ended December 31, 2022:
Common Stock $96,000
Beginning retained earnings 38,000
Net Income 8,450
Dividends (3,300)
Ending Equity $139,150
Explanation:
a) Data and Calculations:
Trial balance
Account Titles Debit Credit
Cash $25,000
Supplies $9,300
Land $73,000
Deferred Revenue $6,300
Common Stock $63,000
Retained Earnings $38,000
Totals $107,300 $107,300
Analysis of Transactions:
1. Feb. 15: Cash $33,000 Common Stock $33,000
2. May 20: Cash $48,000 Accounts Receivable $43,000 Service Revenue $91,000
3. Aus. 31: Salaries Expense $36,000 Cash $36,000
4. Oct. 1: Prepaid Rent $25,000 Cash $25,000
5. Nov. 17: Supplies $35,000 Account Payable $35,000
6. Dec. 30: Dividends $3,300 Cash $3,300
Adjustments:
a. Salaries Expense $5,300 Salaries Payable $5,300
b. Rent Expense $6,250 Prepaid Rent $6,250
c. Supplies Expense $38,000 Supplies $38,000 ($9,300+35,000-6,300)
d. Deferred Revenue $6,300 Service Revenue $6,300
T-accounts:
Cash
Account Titles Debit Credit
Beginning balance $25,000
Common stock 33,000
Service Revenue 48,000
Salaries $36,000
Prepaid Rent 25,000
Dividends 3,300
Ending balance 41,700
Prepaid Rent
Account Titles Debit Credit
Cash $25,000
Rent Expense $6,250
Ending balance 18,750
Accounts Receivable
Account Titles Debit Credit
Service Revenue $43,000
Supplies
Account Titles Debit Credit
Beginning balance $9,300
Accounts payable 35,000
Supplies Expense $38,000
Ending balance $6,300
Land
Account Titles Debit Credit
Beginning balance $73,000
Deferred Revenue
Account Titles Debit Credit
Beginning balance $6,300
Service Revenue $6,300
Accounts Payable
Account Titles Debit Credit
Supplies $35,000
Salaries Payable
Account Titles Debit Credit
Salaries expense $5,300
Common Stock
Account Titles Debit Credit
Beginning balance $63,000
Cash 33,000
Ending balance $96,000
Retained Earnings
Account Titles Debit Credit
Beginning balance $38,000
Service Revenue
Account Titles Debit Credit
Cash $48,000
Accounts Receivable 43,000
Deferred Revenue 6,300
Income Summary $97,300
Salaries Expense
Account Titles Debit Credit
Cash $36,000
Salaries Payable 5,300
Income Summary $41,300
Rent Expense
Account Titles Debit Credit
Prepaid Rent $6,250
Income Summary $6,250
Supplies Expense
Account Titles Debit Credit
Supplies $38,000
Income Summary $38,000
Dividends
Account Titles Debit Credit
Cash $3,300
Retained earnings $3,300
Adjusted Trial Balance
Account Titles Debit Credit
Cash $41,700
Prepaid Rent 18,750
Accounts receivable 43,000
Supplies 6,300
Land 73,000
Accounts payable $35,000
Salaries payable 5,300
Common Stock 96,000
Retained earnings 38,000
Service Revenue 97,300
Salaries Expense 41,300
Rent Expense 6,250
Supplies Expense 38,000
Dividends 3,300
Totals $271,600 $271,600
Charlotte's Crochet Shoppe has 11,300 shares of common stock outstanding at a price per share of $65 and a rate of return of 11.21 percent. The company also has 340 bonds outstanding, with a par value of $1,000 per bond. The pretax cost of debt is 5.93 percent and the bonds sell for 94.2 percent of par. What is the firm's WACC if the tax rate is 39 percent
Answer:
Please see below
Explanation:
Given that;
Common stock outstanding = 11,300
Price per share = $65
Number of bonds outstanding = 340
Bonds sell for $94.2 percent of par
Par value per bond = $1,000
Market value of common stock = Common stock outstanding × Price per share
= 11,300 × $65
= $734,500
Market value of debt:
Number of bonds outstanding × [Percent of par × Par value]
= 340 × [0.942 × $1,000]
= 340 × $942
= $320,280
Total market value:
= Market value of common stock + Market value of debt
= $734,500 + $320,280
= $1,054,780
WACC:
= [(Market value of debt ÷ Total market value) × Pretax cost of debt × (1 - Tax rate)] + [(Market value of common stock ÷ Total market value) × Rate of return]
= [($320,280 ÷ $1,054,780) × 0.00593 × (1 - 0.39)] + [($734,500 ÷ $1,054,780) × 0.1121]
= [(0.303646258) × 0.0036173 + [0.00780612545]
= 0.0010983796 + 0.00780612545
= 0.008904505
= 0.89%
Question 10 of 10
Which of the following is a true statement based upon the principle of the
time value of money?
A. The value of money does not increase or decrease as time
passes.
B. Money loses value over time if not used.
C. It is always best to receive money at a later point in time rather
than an earlier point in time.
O D. Money increases in value as time passes so long as it is not
invested.
Answer:
B. Money loses value over time if not used.
Explanation:
Money loses value over time and the reason why is inflation.
Inflation is the general increase in the price of the goods and services within an economy. Inflation causes money to lose value over time if not used because it reduces the purchasing power of money. This is why money should be used if it is not to be spent, mainly as a form of investment with the goal of earning an interest rate that is higher than inflation, or at least, equal to inflation.
Answer:
B. Money loses value over time if not used.
Explanation:
Money loses value over time and the reason why is inflation. Inflation is the general increase in the price of the goods and services within an economy. Inflation causes money to lose value over time if not used because it reduces the purchasing power of money. This is why money should be used if it is not to be spent, mainly as a form of investment with the goal of earning an interest rate that is higher than inflation, or at least, equal to inflation.
Consider a mutual fund with $219 million in assets at the start of the year and with 12 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $6 million. The stocks included in the fund's portfolio increase in price by 7%, but no securities are sold, and there are no capital gains distributions. The fund charges 12b-1 fees of 0.50%, which are deducted from portfolio assets at year-end. a. What is the net asset value at the start and end of the year
Answer:
Missing word "What is the Rate of return"
a. Asset at the end of the year = (Asset at the start of the year + Increase in value) * 12b-1 charges
Asset at the end of the year = ($219 million+ ($219 million * 7%)) * (1-0.50%)
Asset at the end of the year = ($219 million + $15.33 million) * 0.9950
Asset at the end of the year = $234.33 million * 0.9950
Asset at the end of the year = $233.16 million
Net asset value at the end of the year = Asset at the end of the year / Number of shares
Net asset value at the end of the year = $233.15835 million / 12 million
Net asset value at the end of the year = $19.430
b. Rate of return = (Net asset value at the end of the year + dividend per share - Net asset value at the start of the year) / Net asset value at the start of the year
Rate of return = ($19.430 + ($6 / 12) - $18.250) / $18.250
Rate of return = ($19.430 + $0.50 - $18.250) / $18.250
Rate of return = $1.68 / $18.250
Rate of return = 9.20%
Crane Company uses the periodic inventory system. For the current month, the beginning inventory consisted of 485 units that cost $60 each. During the month, the company made two purchases: 720 units at $63 each and 355 units at $65 each. Crane Company also sold 1200 units during the month. Using the FIFO method, what is the amount of cost of goods sold for the month? $72000. $75935. $74145. $75024.
Answer:
COGS= $74,145
Explanation:
Giving the following information:
Beginning inventory= 485 units that cost $60 each.
Purchases:
720 units at $63 each
355 units at $65 each.
Units sold= 1,200
To calculate the cost of goods sold (COGS) under the FIFO (first-in, first-out), we need to use the cost of the last units incorporated into inventory:
COGS= 485*60 + 715*63
COGS= $74,145