Answer:
d. The tax due on the sale is $14,830.80
Explanation:
Calculation to Determine Which of these statements is correct if your tax rate is 34 percent
First step is to calculate the Book value
Book value = $135,000 × (1 −.20 −.32 −.192)
Book value= $38,880
Second step is to calculate the Taxable amount
Taxable amount = $82,500 - 38,880
Taxable amount = $43,620
Now let calculate the tax due on the sale
Tax = $43,620 × .34
Tax= $14,830.80
Therefore The statements that is correct if your tax rate is 34 percent will be :
The tax due on the sale is $14,830.80
Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 5%. The company's weighted average cost of capital is 16%. What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.) Round your answer to the nearest cent. $ Calculate the value of Kendra's operations. Do not round intermediate calculations. Round your answer to the nearest cent. $
Answer:
$856,376.30
Explanation:
What is the terminal, or horizon, value of operations?
2 years, FCF 1 = 80,000, FCFC 2 = 100,000, Growth rate= 5%, WACC = 16%
==> 100,000*(1+0.05)/(0.16-0.05)
==> 100,000*(1.05/0.11)
==> 100,000*(9.545454(
==> 954,545
Calculating the value of Kendra's operations.
Years Cash-flows PVF at 16% Present value
1 800,000 0.86206 68964.80
2 105,000 0.74316 78031.80
2 954,545 0.74316 709379.70
Total value 856,376.30
ounie Corporation has two divisions: the South Division and the West Division. The corporation's net operating income is $95,400. The South Division's divisional segment margin is $45,100 and the West Division's divisional segment margin is $185,500. What is the amount of the common fixed expense not traceable to the individual divisions
Answer:
$135,200
Explanation:
With regards to the above information, both sales and variable cost are dependent on the number of units sold.
The contribution margin is arrived at by deducting the variable cost from sales. Also, the contribution margin minus the fixed cost gives net operating income.
Therefore, total fixed cost of the corporation not traceable to individual division
= $185,500 + $45,100 - $95,400
= $135,200
Joe Corporation produces and sells two products. In the most recent month, Product C90B had sales of $19,950 and variable expenses of $5,985. Product Y45E had sales of $26,190 and variable expenses of $10,476. The fixed expenses of the entire company were $17,000. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:
Answer:
Decrease
Explanation:
Calculation to determine overall break-even point for the entire company
Contribution margin for C90B = ($19,950-
$5,985)/$19,950
Contribution margin for C90B = 70%
Contribution margin for Y45E =( $26,190- $10,476)/$26,190
Contribution margin for Y45E= 60%
Therefore Based on the above calculation if the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company
Would DECREASE reason been that C90B have more contribution margin ratio of 70% compare to Y45E which had contribution margin ratio of 60%
Suppose the labor force stays constant, and the working age population stays constant, but some people who were unemployed become employed. As a result, the labor force participation rate will A. not change in way that can be predicted. B. remain constant. C. decrease. D. increase.
Answer:
b
Explanation:
Labour force is the sum of the employed and the unemployed in the economy.
Labour force participation rate is
Financial analysis Group of answer choices uses historical financial statements and is thus useful only to assess past performance uses historical financial statements and is thus useful only to assess past performance uses historical financial statements to measure a company's performance and in making financial projections of future performance. is accounting record-keeping using generally accepted accounting principles
Answer:
uses historical financial statements to measure a company's performance and in making financial projections of future performance.
Explanation:
Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP) and financial accounting standards board (FASB).
Financial analysis uses historical financial statements to measure a company's performance and in making financial projections of future performance.
In Financial accounting, the horizontal financial analysis can be defined as an analysis and evaluation of a financial statement which illustrates or gives information about changes in the amount of corresponding financial statement items, benchmarks or financial ratio over a specific period of time. It is one of the most important technique that is used to measure how a business is doing financially. Hence, it is also referred to as the trend analysis.
Under the horizontal analysis of financial statement, we use the financial statements of two or more periods; earliest and latter periods.
Generally, the earliest is chosen as the base period while all other items on the statement for a latter period will be compared with the items on the statement of the base period.
Rudyard Corporation had 110,000 shares of common stock and 11,000 shares of 7%, $100 par convertible preferred stock outstanding during the year. Net income for the year was $420,000 and dividends were paid to both common and preferred shareholders. Rudyard's effective tax rate is 25%. Each share of preferred stock is convertible into four shares of common stock. What is Rudyard's diluted EPS (rounded)
Answer:
$2.73
Explanation:
Diluted Earnings Per Share = Earnings Attributed to Common Stockholders ÷ Weighted Average Number of Common Stockholders Outstanding
where,
Earnings Attributed to Common Stockholders = $420,000
and
Weighted Average Number of Common Stockholders Outstanding = 110,000 + (11,000 x 4) = 154,000
therefore,
Diluted Earnings Per Share = $420,000 ÷ 154,000 = $2.73
Conclusion
Rudyard's diluted EPS is $2.73
Seeing a movie at a theatre would be considered a(n)
want.
O unlimited
O economic
noneconomic
limited
Answer:
economic
Explanation:
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The 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $6.4 million, and the 2018 balance sheet showed long-term debt of $6.6 million. The 2018 income statement showed an interest expense of $225,000. During 2018, the company had a cash flow to creditors of $25,000 and the cash flow to stockholders for the year was $80,000. Suppose you also know that the firm’s net capital spending for 2018 was $1,490,000, and that the firm reduced its net working capital investment by $93,000. What was the firm’s 2018 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Answer:
$1,452,000
Explanation:
Calculation for the firm’s 2018 operating cash flow
First step is to calculate the Cash flow from assets using this formula
Cash flow from assets= Cash flow to creditors + Cash flow to stockholders
Let plug in the morning
Cash flow from assets=-$25,000 + $80,000= $55,000
Now let calculate Cash flow from assets using this formula
Cash flow from assets = OCF capital - Net capital spending-Change in Net Capital spending
Let plug in the formula
$55,000=OCF-$1,490,000-($93,000)
OCF=$1,490,000+$55,000-$93,000
OCF=$1,452,000
Therefore the firm’s 2018 operating cash flow is $1,452,000
Antoine transfers property with a tax basis of $524 and a fair market value of $647 to a corporation in exchange for stock with a fair market value of $569 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $78 on the property transferred. What is Antoine's tax basis in the stock received in the exchange
Answer: $446
Explanation:
Antoine will receive the same basis in the stock that was in the property.
The Corporation however, assumed $78 of the liability of the property transferred which would reduce Antoine's basis in that property
Antoine's basis = Property base - Liability assumed by corporation
= 524 - 78
= $446
What would happen to management without the planning function
Answer:
Without a solid objective created by virtue of plans a business will not be able to scrutinize where it went wrong and thus will not be able to take corrective action to ensure success. Similarly without planning within departments coordination will not be possible.
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A business cannot grow or develop if management of its resources are not well arranged or not following a proper planning function. Soon the whole business will come down and vanished.
What is a planning function?Planning is the most important function because other management functions depend on having a good plan. If a business is running with a good plan, then only it will develop accordingly.
The plan should also include a specific "to-do" list that keeps everyone informed of the necessary actions and resources, as well as listing who is responsible for the all the tasks.
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On January 1, the company purchased equipment that cost $10,000. The equipment is expected to be worth about (or has a salvage value of) $1,000 at the end of its useful life in five years. The company uses straight-line depreciation. It has not recorded any adjustments relating to this equipment during the current year.
Required:
Complete the necessary December 31 journal entry.
Answer:
December 31
Debit : Depreciation $1,800
Credit : Accumulated Depreciation $1,800
Explanation:
Straight line method charges a fixed amount of depreciation based on the formula :
Depreciation Expense = Cost - Salvage Value ÷ Estimated Useful Life
Depreciation Expense = ($10,000 - $1,000) ÷ 5 = $1,800
Selected transactions for Therow Corporation during its first month in business are presented below.
Sept. 1 Issued common stock in exchange for $20,000 cash received from investors.
5 Purchased equipment for $9,000, paying $3,000 in cash and the balance on account.
8 Performed services on account for $18,000.
14 Paid salaries of $1,200.
25 Paid $4,000 cash on balance owed for equipment.
30 Paid $500 cash dividend.
Required:
a. Prepare a tabular analysis of the transactions.
b. Journalize the transactions. Do not provide explanations.
c. Post the transactions to T-accounts.
Answer:
Therow Corporation
a) Tabular Analysis of Transactions:
Assets = Liabilities + Equity
1. Cash $20,000 = + Common Stock $20,000
2. Cash -$3,000
Equipment $9,000 = $6,000
3. Accounts
Receivable $18,000 = + Retained Earnings $18,000
4. Cash -$1,200 + Retained Earnings -$1,200
5. Cash -$4,000 -$4,000
6. Cash -$500 + Retained Earnings -$500
b. Sept. 1:
Debit Cash $20,000
Credit Common Stock $20,000
Sept. 5:
Debit Equipment $9,000
Credit Cash $3,000
Credit Accounts Payable $6,000
Sept. 8:
Debit Accounts Receivable $18,000
Credit Service Revenue $18,000
Sept. 14:
Debit Salaries Expense $1,200
Credit Cash $1,200
Sept. 25:
Debit Accounts Payable $4,000
Credit Cash $4,000
Sept. 30:
Debit Dividends $500
Credit Cash $500
c. T-accounts:
Cash
Account Titles Debit Credit
Common Stock $20,000
Equipment $3,000
Salaries Expense 1,200
Accounts payable 4,000
Dividends 500
Accounts Receivable
Account Titles Debit Credit
Service Revenue $18,000
Common Stock
Account Titles Debit Credit
Cash $20,000
Equipment
Account Titles Debit Credit
Cash $3,000
Accounts payable 6,000
Accounts Payable
Account Titles Debit Credit
Equipment $6,000
Cash $4,000
Service Revenue
Account Titles Debit Credit
Accounts receivable $18,000
Salaries Expense
Account Titles Debit Credit
Cash $1,200
Dividends
Account Titles Debit Credit
Cash $500
Explanation:
a) Data and Analysis:
Sept. 1: Cash $20,000 Common Stock $20,000
Sept. 5: Equipment $9,000 Cash $3,000 Accounts Payable $6,000
Sept. 8: Accounts Receivable $18,000 Service Revenue $18,000
Sept. 14: Salaries Expense $1,200 Cash $1,200
Sept. 25: Accounts Payable $4,000 Cash $4,000
Sept. 30: Dividends $500 Cash $500
Ayayai Inc. had the following balance sheet at December 31, 2019.
AYAYAI INC.
BALANCE SHEET
DECEMBER 31, 2019
Cash $ 21,940 Accounts payable $ 31,940 Accounts receivable 23,140 Bonds payable 42,940 Investments 32,000 Common stock 101,940 Plant assets (net) 82,940 Retained earnings 25,140 Land 41,940 $201,960 $201,960 During 2020, the following occurred.
1. Ayayai liquidated its available-for-sale debt investment portfolio at a loss of $6,940.
2. A tract of land was purchased for $39,940.
3. An additional $30,000 in common stock was issued at par.
4. Dividends totaling $11,940 were declared and paid to stockholders.
5. Net income for 2020 was $36,940, including $13,940 in depreciation expense.
6. Land was purchased through the issuance of $31,940 in additional bonds.
7. At December 31, 2020, Cash was $72,140, Accounts Receivable was $43,940, and Accounts Payable was $41,940.
In an Excel spreadsheet:Prepare a statement of cash flows for the year 2015 for Lander.Prepare the balance sheet as it would appear as of December 31, 2015.
Answer:
(a) Increase in cash = $50,200
(b) Total Assets = Liabilities and Stockholders' Equity = $298,900
Explanation:
Note: There are errors as date and name inconsistency in the requirements in this question. The requirements are therefore correctly stated before answering the question as follows:
(a) Prepare a statement of cash flows for the year 2020 for Ayayai Inc.
(b) Prepare the balance sheet as it would appear as of December 31, 2020.
The explanation of the answer is now provided as follows:
(a) Prepare a statement of cash flows for the year 2020 for Ayayai Inc.
Note: See part (a) of the attached excel file for the statement of cash flows for the year 2020 for Ayayai Inc.
In the attached excel file, we have:
Increase in cash = $50,200
(b) Prepare the balance sheet as it would appear as of December 31, 2020.
Note: See part (b) of the attached excel file for the balance sheet as it would appear as of December 31, 2020.
In the attached excel file, we have:
Total Assets = Liabilities and Stockholders' Equity = $298,900
Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $401,400; materials of $413,000 and direct labor of $223,000. During the year Adams incurred $424,000 in materials costs, $418,900 in overhead costs and $227,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.
Answer:
an under applied of $10,300
Explanation:
The computation of the over applied or under applied is shown below;
Difference in overhead = Actual overhead - applied overhead
= $418,900 - ($227,000 × ($401,400 ÷ $223,000))
= $418,900 - $408,600
= $10,300
Since actual overhead is more than the applied overhead so it is an under applied of $10,300
Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers: Date Transaction Number of Units Cost per Unit 1/1 100 $ 800 5/5 Purchase 200 $ 900 8/10 Purchase 300 $ 1,000 10/15 Purchase 200 $ 1,100 During the year, Lauer sold 750 laptop computers. What was cost of goods sold using the LIFO cost flow assumption
Answer:
$740,000
Explanation:
LIFO assumes that the recent goods bought will be sold first. The Cost of Goods Sold is then calculated on the cost of the recent goods bought.
Cost of Goods Sold = 200 x $1,100 + 300 x $1,000 + 200 x $900 + 50 x $800
= $740,000
Therefore,
Cost of goods sold using the LIFO is $740,000.
Finch Modems has excess production capacity and is considering the possibility of making and selling paging equipment. The following estimates are based on a production and sales volume of 1,600 pagers. Unit-level manufacturing costs are expected to be $26. Sales commissions will be established at $1.60 per unit. The current facility-level costs, including depreciation on manufacturing equipment ($66,000), rent on the manufacturing facility ($56,000), depreciation on the administrative equipment ($13,800), and other fixed administrative expenses ($74,950), will not be affected by the production of the pagers. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (pagers) on the basis of the number of units of product made (i.e., 5,600 modems and 1,600 pagers). Required a. Determine the per-unit cost of making and selling 1,600 pagers. (Do not round intermediate calculations. Round your answer to 3 decimal places.) b. Assuming the pagers could be sold at a price of $40 each, should Finch make the pagers
Answer:
a). Per unit cost = $ 159.31
b). Yes, Finch Modems should make the pagers.
Explanation:
a). Facility level cost proposed to be allocated to the pager line
[tex]$=\frac{1600}{5600+1600} \times (66,000+56,000+13,800+74,950)$[/tex]
= 0.22 + 210750
= $ 210750.22
Facility cost per unit of pager = [tex]$\frac{210750.22}{1600}$[/tex] = $ 131.71
Cost per unit of pager = $ 26 + $ 1.60 + $ 131.71
= $ 159.31
b). At the selling price of $ 40 per unit, the pager line will result in an operational loss, the profit for the company as a whole will increase if it decides to manufacture the pagers.
Contribution margin per unit of pager = $ 40 - ( $ 26 + $ 1.60)
= $ 15.6
Total contribution margin per unit of pager = 1600 x $ 15.6
= $ 24,960
The net operating income for the company would increase by $ 24.960 if the pagers are added to its product portfolio.
Hence Finch Modems should make the pagers.
n the hybrid method is used to record the withdrawal of a partner, the partnershipMultiple Choicerevalues assets and liabilities and records goodwill to the continuing partner but not to the withdrawing partner.revalues liabilities but not assets, and no goodwill is recorded.can recognize goodwill but does not revalue assets and liabilities.revalues assets but not liabilities, and records goodwill to the continuing partner but not to the withdrawing partner.revalues assets and liabilities but does not record good
Answer:
revalues assets and liabilities but does not record goodwill.
Explanation:
A partnership can be defined as a type of business ownership in which two or more individuals come together to start up a business and share the profits made together.
When the hybrid method is used to record the withdrawal of a partner, the partnership revalues assets and liabilities but does not record goodwill.
Explain the purposes of companies act
Answer:
The purposes of the Act and King 111 are, inter alia, to promote compliance with the Bill of Rights as provided for in the Constitution in the application of company law, to encourage transparency and high standards of corporate governance and provide for the balancing of rights and obligations of shareholders
The Companies Act guides the method of incorporation, registration, and management of companies.
What is the Companies Act?The Companies Act is a legislation that regulates how corporations, investors, shareholders, employees, creditors etc can operate in the country's territory.
Some purpose of the Companies Act in every country includes:
provides guide for incorporation, registration, organisation and management of companies,states the level of capitalization of profit companies,provide registration guides for offices of foreign companies doing business etcRead more about Companies Act
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What are some possible explanations for why these loans are popular despite the fact that they create a cycle of debt for many borrowers?
Steve and Craig have been shipwrecked on a deserted island in the South Pacific. Their economic activity consists of either gathering pineapples or fishing. We know Steve can catch four fish in one hour or harvest two baskets of pineapples. In the same time Craig can reel in two fish or harvest two baskets of pineapples. Assume Craig and Steve both operate on straight-line production possibilities curves. What is Steve's opportunity cost of producing a basket of pineapples
Answer:
His opportunity cost of a basket of pineapples is 2 fish
Explanation:
Opportunity cost is defined as the forgone alternative that a person must make when he makes a decision to do something.
So in economics apart from the cost of a product being purchased there is also consideration of the alternative that was ignored.
In the given scenario there are two activities they undertake. That is gathering pineapples or fishing.
Steve can either catch four fish or gather two baskets of pineapples in one hour.
This can be simplified as:
2 baskets of pineapples ÷ 4 fish = 1 basket of pineapples per 2 fish
So if Steve gathers 1 basket of pineapples he is letting go of opportunity to get 2 fishes
On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $559,946 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $3.8 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. Determine the present value of the lease payments at June 30, 2021 that Georgia-Atlantic uses to record the right-of-use asset and lease liability.
2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2021?
3. What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2021?
(For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest whole dollar.)
1. Present value
2. Pretax amount for liability Pretax amount for right-of-use asset
3. Pretax amount for interest expense Pretax amount for amortization expense
Answer:
1. $3,800,001
2. Pretax amount of liability $2,842,112
Pre tax amount of right to use asset $3,325,000
3. Pre tax amount of interest expense $162,003
Pre tax amount of amortization expenses $475,000
Explanation:
1. Calculation for the Present value
Using this formula
PV of minimum lease payments used to record right to use assets = Semi Annual lease payments * Cumulative PV Factor of annuity due for 8 periods at 5%
Where,
Semiannual lease payment = $559,946
Total semiannual payments = 4*2 = 8
Incremental borrowing rate = 10%, 5% semiannual
Let plug in the formula
PV of minimum lease payments used to record right to use assets= $559,946 * 6.78637
PV of minimum lease payments used to record right to use assets= $3,800,001
Therefore the Present value will be $3,800,001
2. Calculation for the Pretax amount for liability and Pretax amount for right-of-use asset
Calculation for Pretax amount of liability
First step is to calculate the Pretax amount of liability on 30.06.2021
Pretax amount of liability on 30.06.2021 = ($3,800,001 - $559,946)
Pretax amount of liability on 30.06.2021= $3,240,055
Second step is to calculate the Interest expense for 31.12.2021
Interest expense for 31.12.2021 = $3,240,055 * 5%
Interest expense for 31.12.2021= $162,003
Now let calculate the Pre tax amount for liability December 31, 2021
Pre tax amount for liability December 31, 2021 = $3,240,055 + $162,003 - $559,946
Pre tax amount for liability December 31, 2021= $2,842,112
Therefore The Pre tax amount for liability December 31, 2021 will be $2,842,112
Calculation for Pre tax amount of right to use asset
First step is to calculate the Depreciation on right to use assets for 2021
Depreciation on right to use assets for 2021 = $3,800,000 / 4 * 6/12
Depreciation on right to use assets for 2021 = $475,000
Now let calculate the Pre tax amount of right to use asset to be reported for 2021
Pre tax amount of right to use asset to be reported for 2021 = $3,800,000 - $475,000
Pre tax amount of right to use asset to be reported for 2021 = $3,325,000
Therefore Pre tax amount of right to use asset to be reported for 2021 will be $3,325,000
3. Calculation for Pretax amount for interest expense Pretax amount for amortization expense
Calculation for Pretax amount for interest expense
Pre tax amount of interest expense = $3,240,054 * 5%
Pre tax amount of interest expense= $162,003
Therefore the Pre tax amount of interest expense will be $162,003
Calculation for Pre tax amount of amortization expenses
Pre tax amount of amortization expenses = $3,800,000 / 4 * 6/12
Pre tax amount of amortization expenses = $475,000
Therefore The Pre tax amount of amortization expenses will be $475,000
On October 1, 2018, Jarvis Co. sold inventory to a customer in a foreign country, denominated in 100,000 local currency units (LCU).Collection is expected in four months. On October 1, 2018, a forward exchange contract was acquired whereby Jarvis Co. was to pay 100,000 LCU in four months (on February 1, 2019) and receive $78,000 in U.S. dollars. The spot and forward rates for the LCU were as follows:
Rate DescriptionExchange Rate .83-1 LCU 5.85 1 LCU Spot rate: Spot rate: 1-Month Forward Rate $.be = 1 LCU Spot rate: October 1, 2018 December 31, 2018 February 1, 2019 .86 1 LCU The,company's borrowing rate is 12%. The present value factor for one month is .9901. Any discount or premium on the contract is amortized using the straight-line method , Assuming this is a cash flow hedge:
prepare journal entries for this sales transaction and forward contract.
Answer:
10/1/2018
Dr Accounts receivable $83,000
Cr Sales $83,000
12/31/2018
Dr Accounts receivable $2,000
Cr Foreign exchange gain $2,000
12/31/2018
Dr Loss on forward contract $1,980
Cr Forward contract $1,980
2/1/2018
Accounts receivable $1000
Cr Foreign exchange gain $1000
2/1/2018
Dr Loss on forward contract $6,020
Cr Forward contract $6,020
2/1/2018
Dr Foreign currency
$86,000
Accounts receivable $86,000
2/1/2018
Dr Cash $78,000
Dr Forward contract $8,000
Cr Foreign currency $86,000
Explanation:
Preparation of the journal entries for the sales transaction and forward contract.
10/1/2018
Dr Accounts receivable (100000*0.83) $83,000
Cr Sales $83,000
12/31/2018
Dr Accounts receivable $2,000
[100,000*(0.85-0.83)]
Cr Foreign exchange gain $2,000
12/31/2018
Dr Loss on forward contract $1,980
[((0.80-0.78)*100000)*2000*0.9901]
Cr Forward contract $1,980
2/1/2018
Accounts receivable $1000
[100000*(0.86-0.85)]
Cr Foreign exchange gain $1000
2/1/2018
Dr Loss on forward contract $6,020
(78000/100000 = 0.78)
[ ((0.78-0.86)*100000) = 8000-1980=6020]
Cr Forward contract $6,020
2/1/2018
Dr Foreign currency (100000*0.86)
$86,000
Accounts receivable $86,000
2/1/2018
Dr Cash $78,000
Dr Forward contract $8,000
($86,000-$78,000)
Cr Foreign currency (100000*0.86) $86,000
You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a one-time cash of $200,000 today or receive payments of $1,400 a month starting at the end of this month for 20 years. Assuming the APR is 6 percent with monthly compounding, which option should you take and why
Answer:
Option 1 PV lumpsum = $200000
Option2 PV of Annuity = $195413.08035 rounded off to $195413.08
Based on the present value of both the options, Option 1 should be chosen as it has a higher present value than option 2.
Explanation:
To decide on the best option to choose among the given two, we need to find the present value of both the options.
As the first option is to receive a lumpsum payment of $200000 today, the present value of this option is also equal to $200000 as it will be received today.
Option two, on the other hand, is an annuity as fixed payments will be received after equal intervals of time and for a limited time period and at the end of the period which satisfies the criteria of annuity ordinary. We will use the formula for the present value of annuity which is,
PV of Annuity = C * [( 1 - (1+r)^-n) / r]
Where,
C is the periodic paymentr is the rate of return of discount raten is the number of periodsThe periodic payment is provided as $1400. We are also provided with and APR of 6% which is the Annual rate. We will have to convert it into monthly rate by dividing it by 12. We are also provided with the number of years which we will need to convert into number of months by multiplying it by 12.
Monthly r = 6%/12 = 0.5%
Number of periods = 20 * 12 = 240
PV of Annuity = 1400 * [( 1 - (1+0.5%)^-240) / 0.5%]
PV of Annuity = $195413.08035 rounded off to $195413.08
Santana Rey receives the March bank statement for Business Solutions on April 11, 2018. The March 31 bank statement shows an ending cash balance of $67,666. A comparison of the bank statement with the general ledger Cash account, No. 101, reveals the following.
S. Rey notices that the bank erroneously cleared a $530 check against her account in March that she did not issue. The check documentation included with the bank statement shows that this check was actually issued by a company named Business Systems.
On March 25, the bank lists a $59 charge for the safety deposit box expense that Business Solutions agreed to rent from the bank beginning March 25.
On March 26, the bank lists a $103 charge for printed checks that Business Solutions ordered from the bank.
On March 31, the bank lists $31 interest earned on Business Solutions’s checking account for the month of March.
S. Rey notices that the check she issued for $138 on March 31, 2018, has not yet cleared the bank.
S. Rey verifies that all deposits made in March do appear on the March bank statement.
The general ledger Cash account, No. 101, shows an ending cash balance per books of $68,189 as of March 31 (prior to any reconciliation).
Required:
1. Prepare a bank reconciliation for Business Solutions for the month ended March 31, 2018.
BUSINESS SOLUTIONS
Bank Reconciliation
March 31, 2018
Bank statement balance Book balance
Add: Add:
Deduct: Deduct:
Adjusted bank balance Adjusted book balance
2. Prepare any necessary adjusting entries. Use Miscellaneous Expenses, for any bank charges. Use Interest Revenue, for any interest earned on the checking account for the month of March. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record journal entry related to the $530 check charged erroneously to Business Solutions' account, if any.
Record the journal entry related to the $59 debit memorandum, if any.
Record the journal entry related to the $103 debit memorandum for printed checks.
Record the journal entry for the $31 interest earned.
S. Rey verifies that all deposits made in March do appear on the March bank statement.
Answer:
See below
Explanation:
Bank reconciliation statement
1.
Bank balance statement
$67,666
Add:
Bank error
$530
Deduct:
Outstanding check
($138)
Adjusted bank balance
$68,058
Cash book balance
$68,189
Add:
Bank interest
$31
Deduct:
Safety deposit rental
($59)
Charge for checks
($103)
Adjusted cash balance
$68,058
2. Journal entries
March-31 Cash a/c Dr $530
To Bank errors Cr $530
March-31 Outstanding checks a/c Dr $138
To Cash Cr $138
March-31 Miscellaneous expense a/c Dr $162
To Cash Cr $162
March-31 Cash a/c Dr $31
To Interest revenue Cr $31
Item8 4 points Time Remaining 44 minutes 36 seconds00:44:36 Item 8 Time Remaining 44 minutes 36 seconds00:44:36 Information for Kent Corp. for the year 2021: Reconciliation of pretax accounting income and taxable income: Pretax accounting income $ 180,000 Permanent differences (15,000 ) 165,000 Temporary difference-depreciation (12,000 ) Taxable income $ 153,000 Cumulative future taxable amounts all from depreciation temporary differences: As of December 31, 2020 $ 13,000 As of December 31, 2021 $ 25,000 The enacted tax rate was 25% for 2020 and thereafter. What should Kent report as the current portion of its income tax expense in the year 2021
Answer: $38,250
Explanation:
Current portion of tax is the amount of tax payable on the current taxable income:
= Taxable income * tax rate
= 153,000 * 25%
= $38,250
A cell-phone repair shop consists of three processes. Step 1 requires 6 minutes per unit, step 2 requires 5 minutes per unit and step 3 requires 7 minutes per unit. 30% of units that complete the third step require rework, which means those units must start the process over at step 2 (processing times are the same for units being reworked) and rework is always successful. Demand at the shop is 0.5 units per minute Instruction: Round your answer to three decimal places What is the capacity of the shop in units per units per minute)?
Answer:
Step 2 = 6 minutes
Step 2 = 5 minutes
Step 3 = 7 minutes
30 percent of 3 needs rework
Total time = 6+5+7 = 18 minutes
We start over from step 2
5+7 = 12
0.3 x 12 = 3.6 minutes
Total time = 18 + 3.6 = 21.6 minutes
Units per minute = 1/21.6 = 0.046
This is the capacity
A company with various segments (referred to as "divisions") is considering whether to drop its Orange County division. For each the costs described below, indicate whether the cost is avoidable or unavoidable by choosing the related drop-down menu item.
1. Wages paid to the Orange County division employees who work directly for this division and will be discharged if the division is dropped.
2. General administrative expenses allocated to the Orange County division on the basis of sales dollars.
3. Depreciation expense on previously purchased machinery that is used in the Orange County division; the machinery will have no other use or resale value if the division is dropped.
4. Rent paid for the building that houses only the Orange County division.
5. The amount of rent paid to lease a private jet for use by the company's management that is allocated to the Orange County division.
Answer:
1. Avoidable.
These wages are avoidable because they will stop being paid if the division is dropped.
2. Unavoidable.
These are general administrative expenses which means that they will still be incurred regardless of if the division is dropped. They are therefore unavoidable.
3. Unavoidable.
As the machine has no other use or resale value if the division is dropped, the depreciation expense will still be incurred even if the division is dropped so this cost is unavoidable.
4. Avoidable.
Company will no longer have to pay rent if the division is dropped so this expense is an avoidable cost.
5. Unavoidable.
This cost will still be incurred by the company regardless of if the division is dropped because it is an administrative cost at company level. It is therefore unavoidable.
Psychologists have observed that: Multiple Choice once investors have made a loss, they become much more willing to take risks. investors tend to place too much faith in their ability to spot mispriced stocks. when forecasting the future, people tend to place too little weight on recent events. investors like stocks of companies whose names begin with letters that occur early in the alphabet.
Answer:
investors tend to place too much faith in their ability to spot mispriced stocks.
Explanation:
Risk management can be defined as the process of identifying, evaluating, analyzing and controlling potential threats or risks present in a business as an obstacle to its capital, revenues and profits. This ultimately implies that, risk management involves prioritizing course of action or potential threats in order to mitigate the risk that are likely to arise from such business decisions.
Psychologists have observed that investors tend to place too much faith in their ability to spot mispriced stocks.
This ultimately implies that, investors usually feel they can tell a mispriced stock caused by the behavior of market participants.
Kelsey's Kleening provides cleaning services for Clinton Inc., a business with four buildings. Kelsey's assigned different cleaning charges for each building based on the amount of square feet to be cleaned. The charges for the four buildings are $35,000, $27,000, $45,000, and $10,000. Clinton secured this amount by signing a note bearing 7% interest on March 1, 2019.
Required:
a. Prepare the journal entry to record the sale on March 1, 2019.
b. Determine how much interest Kelsey will receive if the note is repaid on December 1, 2019.
c. Prepare Kelsey's journal entry to record the cash received to pay off the note and interest on December 1, 2019.
Answer:
A. Dr Note receivable $117,000
Cr Sales revenue $117,000
B. $6,143
C. Dr Cash $123,143
Cr Interest revenue $6,143
Cr Note receivable $117,000
Explanation:
A. Preparation of the journal entry to record the sale on March 1, 2019.
Dr Note receivable $117,000
Cr Sales revenue $117,000
($35,000+ $27,000+ $45,000+$10,000)
B. Calculation to Determine how much interest Kelsey will receive if the note is repaid on December 1, 2019.
Using this formula
Interest = Face value * interest rate *n/12
Note is outstanding for period of 1 March -1Dec 2019 = 9 months
Let plug in the formula
Interest = $117,000 *.07 *9/12
Interest = $6,143
C. Preparation of Kelsey's journal entry to record the cash received to pay off the note and interest on December 1, 2019.
Dr Cash $123,143
($117,000+$6,143)
Cr Interest revenue $6,143
Cr Note receivable $117,000