Answer:
The answer is 15%
Explanation:
(P1 - Po) / Po + D
Where P1 is the price of the share at the end of the year
Po is the price of the share at the beginning of the year
D is the Dividend receceived
P1 is $110
Po is $100
And Dividend is 5%
($110 - $100) / $100 + 5 %
$10/100 + 5%
10% + 5%
= 15%
The total return will you have earned over the year for the purchase of a share of SPCC is 15%
On December 31, 2017, Jerome Company has an accounts receivable balance of $316,000 before any year-end adjustments.
The Allowance for Doubtful Accounts has a $1,000 credit balance. The company prepares the following aging schedule for accounts receivable:
Total Balance 1-30 days 31-60 days 61-90 days over 90 days
$316,000 $152,000 $87,000 $50,000 $27,000
Percent uncollectible 1% 2% 3% 21%
What is the Allowance for Uncollectible Accounts at December 31, 2017?
A. $1,000
B. $11,430
C. $9,430
D. $10,43
Answer:
The Allowance for Uncollectible Accounts at December 31, 2017 is $10,430
Explanation:
In order to calculate the Allowance for Uncollectible Accounts at December 31, 2017 we would have to make the following calculation:
Allowance for Uncollectible Accounts at December 31, 2017=Estimated Allowance 1-30 days+Estimated Allowance 31-60 days+Estimated Allowance 61-90 days+Estimated Allowance over 90 days
Estimated Allowance 1-30 days=Balance*% Uncollectible
Estimated Allowance 1-30 days=$152,000*1%=$1,520
Estimated Allowance 31-60 days=$87,000*2%=$1,740
Estimated Allowance 61-90 days=$50,000*3%=$1,500
Estimated Allowance over 90 days=$27,000*21%=$5,670
Allowance for Uncollectible Accounts at December 31, 2017=$1,520+$1,740+$1,500+$5,670
Allowance for Uncollectible Accounts at December 31, 2017=$10,430
Diego owns 30 % of Azul Corporation. Azul Corporation owns 50 % of Verde Corporation. Under the attribution rules applying to stock redemptions, Diego is treated as owning 15 % of Verde Corporation.
A. True
B. Flase
Answer:
Option A,true is correct
Explanation:
The indirect interest of Diego in Verde Corporation is the percentage holding in Azul Corporation multiplied by percentage holding that Azul Corporation owns in Verde Corporation as further illustrated below:
Holding in Verde Corporation=30%*50%
Holding in Verde Corporation=15.00%
In other words, the statement that Diego is treated as owning 15 % of Verde Corporation is true
Which of the following is NOT an element of organizational structure? A) Well-articulated mission, vision, and value statements. B) Formal reporting relationships. C) Grouping together of individuals into departments. D) Systems designed to ensure effective communication
Answer:
A) Well-articulated mission, vision, and value statements.
Explanation:
An organizational structure can be defined as a system that states how business activities such as standard rules, task allocation or roles of employees, coordination, responsibilities and supervision of these activities are directed so as to enhance the achievement of the goals, aims and objectives of the organization.
Simply stated, an organizational structure usually defines a hierarchy, which is used to determine how information, roles and responsibilities flow from one level to another in an organization. Generally, the flow of information are usually from top to bottom.
Furthermore, the organizational structure can be divided into four (4) distinct categories and these are;
1. Matrix organizational structure.
2. Functional organizational structure.
3. Divisional organizational structure.
4. Flat organizational structure.
The following are the elements of organizational structure;
A. Formal reporting relationships. This is enhanced by assigning a hierarchy, where informations are reported to the right individual and in a timely manner as well.
B. Grouping together of individuals into departments. This is to increase the level of output and enhance building good, coordinated development through division of labor.
C. Systems designed to ensure effective communication.
Hence, a well-articulated mission, vision, and value statements isn't an element of organizational structure. It could be regarded as an organization's center of gravity.
An organizational structure is a system that specifies how business operations, such as standard norms, task distribution or personnel roles, coordination, responsibilities, and supervision, are directed in order to help the organization achieve its goals, aims, and objectives.
So, Option A is the correct option which is not true about organizational structure.
The other options are incorrect as:
Option B is incorrect as Relationships of formal reporting. This is aided by establishing a hierarchy in which information is reported to the appropriate person and in a timely manner.
Option C is incorrect as Individuals are organized into departments. This is to raise output and improve the development of good, coordinated development by dividing labor.
Option D is incorrect as yes designing system to ensure effective communication is element of organizational structure.
Thus option A isn't a part of the company's structure. It's possible to think of it as the organization's center of gravity.
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12. A company has an EPS of $2.00, a book value per share of $20, and a market/book ratio of 1.2x. what is its P/E ratio
Answer:
P/E Ratio = 12x or 12 times
Explanation:
We know that the P/E ratio is calculated by dividing the price per share by the earnings per share or EPS.
P/E = Price per share / Earnings per share
We already have EPS. We need to calculate the price per share.
It is given that book value per share is $20 and the market to book ratio is 1.2x or 1.2 times. Using the formula for market to book ratio, we calculate the market price per share to be,
M/B = Market price per share / Book value per share
1.2 = Market price per share / 20
20 * 1.2 = Market price per share
Market price per share = $24
So, P/E ratio = 24 / 2
P/E Ratio = 12x or 12 times
Question 3
You are the Chief Operations Officer responsible for overall company operations in ATCHULO Company Ltd, a large courier company in Ghana. Your company has 16 regional offices (terminals) scattered around the country in each of the regional capitals and a main office (hub) located in the capital city of the country. Your operations are strictly domestic. You do not accept international shipments.
The day at each terminal begins with the arrival of packages from the hub. The packages are loaded onto trucks for delivery to customers during morning hours. In the afternoon, the same trucks pick up packages that are returned to the terminal in late afternoon and then shipped to the hub where shipments arrive from the terminals into the late evening and are sorted for delivery early the next day for the terminals.
Examiner: Dr. Abubakari Atchulo Page 1 of 2
Each terminal in your company is treated as an investment centre and prepares individual income statements each month. Each terminal receives 30% of the revenue from packages that it picks up and 30% of the revenue from the packages it delivers. The remaining 40% of the revenue from each transaction goes to the hub. Each terminal accumulates its own costs. All costs relating to travel to and from the hub are charged to the hub. The revenue per package is based on size and service type and not the distance the package travels. (There are two services: overnight and ground delivery, which takes between 1 and 7 days, depending on the distance traveled).
All customer service is done through a central service group located in the hub. Customers access this service centre through a toll-free telephone number. The most common calls to customer service include requests for package pickup, requests to trace an overdue package, and requests for billing information. The company has invested in complex and expensive package tracking equipment that monitors the package’s trip through the system by scanning the bar code placed on every package. The bar code is scanned when the package is picked up, enters the originating terminal, leaves the originating terminal, arrives at the hub, leaves the hub, arrives at the destination terminal, and is delivered to the customers. All scanning is done with hand held wands that transmit the information to the regional and then central computer.
The major staff functions in each terminal are administrative (accounting, clerical, and executive), marketing (the sales staff), courier (the people who pick up and deliver the shipments and the equipment they use), and operations (the people and equipment who sort packages in the terminal).
This organisation takes customer service very seriously. The revenue for any package that fails to meet the organisation’s service commitment to the customer is not assigned to the originating and destination terminals.
All company employees receive a wage and a bonus based on the terminal’s economic value added. This system has promoted many debates about the sharing rules for revenues, the inherent inequity of the existing system, and the appropriateness of the revenue share for the hub. Service problems have arisen primarily relating to overdue packages. The terminals believe that most of the service problems relate to wrong sorting in the hub, resulting in packages being sent to the wrong terminals.
Required:
A) Explain why an investment centre is or not an appropriate organisational design in ATCHULO Company Ltd. (15 marks)
B) Assuming that ATCHULO Company Ltd is committed to the current design, how would you improve it? (15 marks)
C) Assuming that ATCHULO Company Ltd has decided that the investment centre model is
unacceptable, what model to performance evaluation would you recommend and why? (15 marks)
Answer:
ATCHULO Company Ltd
A) ATCHULO Company Ltd, as it is currently being operated should not be using an investment center as the appropriate organizational design when a profit center structure could have been applied. However, if it wants to continue the use of the investment center model as a preferred organizational structure, then it should implement the structure fully. For one, an investment center is a division in ATCHULO company that is supposed to be in control of all its investment activities (assets), and is responsible for generating profits (revenue and costs) for its sustenance. Its performance will then be evaluated based on the revenue it generates less the expenses, including the capital costs incurred for generating the revenue.
B) For a better operation of the investment center, revenues generated by the investment centers should be assigned to the investment centers and all their costs will be assigned as well. The investment centers should have their operational assets and make the necessary decisions regarding their use.
The hub should not be sorting packages for the investment centers as each investment center could handle the sorting at their various centers and route packages to appropriate destinations, accordingly. The investment centers should operate their own trucks or outsource such services at some costs. Since packages are sent from one center to the other and vice versa, they can charge for the services they provide for one another. In this way, each investment center's performance will be more accurately evaluated.
C) The investment center approach would have been the best for ATCHULO Company Ltd if it were being properly implemented, both in terms of operational activities and performance evaluation.
However, since ATCHULO Company has decided to change the model, I recommend the centers to be operated as profit centers, because this is the next best thing in terms of performance evaluation. However, each center must be able to make its own revenue and cost decisions, so that it can be assessed based on profit performance.
Explanation:
An investment center in ATCHULO Company should be a unit of the firm that is responsible for its revenue, cost, and investment decisions, with its performance judged based on the overall outcome achieved or the value added to the company.
A profit center in ATCHULO Company is a unit that is only responsible for its revenue and cost decisions, while investment activities are handled from the headquarters. Its performance is evaluated on profits without consideration of the capital costs incurred in generating the profits.
Aspen Ski Resorts has 100 employees, each working 40 hours per week and earning $20 an hour. Although the company does not pay any health or ree tirement benefits, one of the perks of working at Aspen is that employees are allowed freskiing on their days off. Federal income taxes are withheld at 15% and state income taxes at
Answer:
1. a. Total Salary Expense
= No. Of Employees * Hourly rate * Hours worked
= 100 * 20 * 40
= $80,000
b. Total Witholdings from Employee Salaries
This will include all Taxes.
= Federal Income Taxes + FICA Taxes + States Income Taxes
= (80,000 * 15%) + (80,000 * 7.65%) + (80,000 * 5%)
= 12,000 + 6,120 + 4,000
= $22,120
c. Actual Direct Deposit of Payroll.
This refers to the actual amount that will be paid to Employees.
= Total Salary Expense - Taxes
= 80,000 - 22,120
= $57,880
In practice, the gross income (wages or salaries) of an employee is entitled to some compulsory deductions such as States Taxes, Federal Taxes, Federal Payroll tax, Benefit, Insurance Etc.
Here, various information of Tax rate have been given, therefore, the computations of the requirement goes as followsTotal Salary Expense = Number Of Employees * Hourly rate * Hours worked
Total Salary Expense = 100 * $20 * 40
Total Salary Expense = $80,000
Total Withholding from Employee Salaries = Federal Income Taxes + FICA Taxes + States Income Taxes
Total Withholding from Employee Salaries = ($80,000 * 15%) + ($80,000 * 7.65%) + ($80,000 * 5%)
Total Withholding from Employee Salaries = $12,000 + $6,120 + $4,000
Total Withholding from Employee Salaries = $22,120
Actual Direct Deposit of Payroll = Total Salary Expense - Taxes
Actual Direct Deposit of Payroll = $80,000 - $22,120
Actual Direct Deposit of Payroll = $57,880
Missing question includes "Aspen Ski Resorts has 100 employees, each working 40 hours per week and earning $20an hour. Although the company does not pay any health or retirement benefits, one of the perks of working at Aspen is that employees are allowed free skiing on their days off. Federal income taxes are withheld at 15% and state income taxes at 5%. FICA taxes are 7.65% of the first $113,700 earned per employee and 1.45% thereafter. Unemployment taxes are 6.2% of the first $7,000 earned per employee Compute the total salary expense, the total withholdings from employee salaries and the actual direct deposit of payroll for the first week of January"
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Rasheed works for Company A, earning $299,000 in salary during 2019. Assuming he is single and has no other sources of income, what amount of FICA tax will Rasheed pay for the year
Answer:
$13,466
Explanation:
For 2019, the wage limit for Social Security tax is $132900
Thus;
Social Security tax $132,900x 6.2% = $8,239.80
Medicare tax = $299,000 x 1.45% = $4335.50
Additional Medicare Tax ($299,000 - $200000) x 0.9% = $891
therefore,
Amount of FICA Tax = $8239.80 + $4335.50 + $891 = $13,466.30 which is approximately $13,466
The following transactions and events occurred during the year. Assuming that this company uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an X in the appropriate column.
Statement of Cash Flow Noncash Investing & Financing Activities Not Reported on Statement or in Notes
Operating Activities Investing Activities Financing Activities
a. Declared and paid a cash dividend
b. Recorded depreciation expense
c. Paid cash to settle long-term note payable
d. Prepaid expenses increased in the year
e. Accounts receivable decreased in the year
f. Purchased land by issuing common stock
g. Inventory increased in the year
h. Sold equipment for cash, yielding a loss
i. Accounts payable decreased in the year
j. Income taxes payable increased in the year
Answer: i ii iii iv v
a. Declared and paid a cash dividend X
b. Recorded depreciation expense X
c. Paid cash to settle long-term note payable X
d. Prepaid expenses increased in the year X
e. Accounts receivable decreased in the year X
f. Purchased land by issuing common stock X
g. Inventory increased in the year X
h. Sold equipment for cash, yielding a loss X
i. Accounts payable decreased in the year X
j. Income taxes payable increased in the year X
Note:
i. Operating activities
ii. Investing activities
iii. Financing activities
iv. Non cash Investing & Financing
v. Not reported on statement or Notes
Based on the information given where each item would appear on its statement of cash flows are:
a. Declared and paid a cash dividend.
Statement of cash flow: Financing activities
b. Recorded depreciation expense.
Statement of cash flow: Operating activities
c. Paid cash to settle long-term note payable.
Statement of cash flow: Financing activities
d. Prepaid expenses increased in the year.
Statement of cash flow: Operating activities
e. Accounts receivable decreased in the year.
Statement of cash flow: Operating activities
f. Purchased land by issuing common stock.
Statement of cash flow: Non cash investing and financing activities
g. Inventory increased in the year.
Statement of cash flow: Operating activities
h. Sold equipment for cash, yielding a loss.
Statement of cash flow: Investing activities
i. Accounts payable decreased in the year.
Statement of cash flow: Operating activities
j. Income taxes payable increased in the year.
Statement of cash flow: Operating activities
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three examples of foreign companies operating in Fiji and a type of service they provide
Answer:
Three foreign companies operating in Fiji:
Bank of Baroda: a multinational, financial services companies from India. It offers banking services in Fiji, and is one of the five international banks that operate in that country.Coca Cola: this American multinational beverages corporation from Atlanta, Georgia, also operates in Fiji. It sells consumer goods, specially beverages.Marriott: the American multinational hotel corporation has one hotel in Fiji: the Fiji Marriott Resort Momi Bay.
You want to have $18,000 in 9 years for a dream vacation. If you can earn an interest rate of .5 percent per month, how much will you have to deposit today
Answer:
$10,503.59
Explanation:
This question requires us to find how much you have to deposit today if:
Fv = 18,000
Time = 9 years
PV= fv/(1 + i)^n
N = 9 X 12 = 108
I/y = 0.5%
PV = $18,000 / 1.005^108
= $10,503.59
Therefore what you have to deposit today is $10,503.59
Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2011. The note, along with interest at 6%, is due on June 30, 2012. On September 30, 2011, Ireland discounted the note at Cloverdale bank. The bank's discount rate is 10%. What amount of cash did Ireland receive from Cloverdale Bank
Answer:
$39,220
Explanation:
The maturity value of the note receivable on June 30, 2012
= Principal + Interest
= $40,000 + $40,000 x 6%
= $40,000 + $2,400
= $ 42,400
The note is discounted on September 30, 2011. Time period remaining to go till maturity as on September 30, 2011
= 12 - 3 months ( July, Aug and Sep)
= 9 months.
Amount of deduction
= $ 42,400 x 10% x 9/12
= $ 3,180
Finally, the Cash received by Ireland will be
= Maturity value - Discount
= $42,400 - $ 3,180
= $39,220
The journal entry to record the transfer of 1,600 units of part number 1177 with a value of $2.50 each, to work in process is Group of answer choices Work in Process 4,000 Materials 4,000 Work in Process 4,000 Factory Overhead 4,000 Work in Process 4,000 Cash 4,000 Materials 4,000 Work in Process 4,000
Answer:
The correct option is:
Work in Process 4,000 Materials 4,000
Explanation:
The total cost of the part= $2.50*1,600 units
The total cost of the part=$4,000
Going by the rule of the double which requires receiving account to debited while giving account is credited, we debit work-in-process with $4,000 while materials(inventory in the balance sheet) is credited with the same amount of $4,000.
Factory Overhead Rate, Entry for Applying Factory Overhead, and Factory Overhead Account Balance The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be $3,150,000, and total direct labor costs would be $1,800,000. During February, the actual direct labor cost totaled $160,000, and factory overhead cost incurred totaled $283,900.
Required:
a. What is the predetermined factory overhead rate based on direct labor cost? Enter your answer as a whole percent not in decimals.
b. Journalize the entry to apply factory overhead to production for February.
c. What is the February 28 balance of the account Factory Overhead—Blending Department?
d. Does the balance in part (c) represent overapplied or underapplied factory overhead?
Answer:
a. 175%
b.
Journal Entry to apply factory overhead to production for February.
Work In Process $280,000 (debit)
Overheads $280,000 (credit)
c. $3,900
d. Under-applied Overheads
Explanation:
Predetermined Overhead rate = Total Budgeted Overheads /Total Budgeted Activity
= $3,150,000 / $1,800,000
= $1.75 per direct labor cost. or
= 175% (1.75 × 100)
Applied factory overhead = Predetermined Overhead rate × Actual Activity
= $160,000 × 175 %
= $280,000
Journal Entry to apply factory overhead to production for February.
Work In Process $280,000 (debit)
Overheads $280,000 (credit)
over-applied or under-applied factory overhead
Over-applied Overheads = Actual Overheads < Applied Overheads
Under-applied Overheads = Actual Overheads > Applied Overheads
Actual Overheads (given) = $283,900
Applied Overheads = $280,000
Actual Overheads: $283,900 > Applied Overheads :$280,000
Thus we have an Under-application situation of $3,900 ($283,900 - $280,000)
You are developing the project charter for a new project. Which of the following
is NOT part of the enterprise environmental factors?
✓
A) Lessons learned from previous projects
B) The work authorization system
C) Government and industry standards that affect your project
D) Knowledge of which departments in your company typically work on projects
Answer: A) Lessons learned from previous projects
Explanation:
Enterprise Environmental Factors (EEF) refers to all environmental factors that have a say in whether a project is successful or not. They include both internal factors such as company infrastructure, knowledge and capability (departments with the knowledge on project design and implementation) and internal project authorization systems as well as external factors such as Government standards and market conditions.
Lessons learned from previous projects, while important, are not included in this list and are not Enterprise Environmental Factors.
Boatler Used Cadillac Co. requires $890,000 in financing over the next two years. The firm can borrow the funds for two years at 11 percent interest per year. Ms. Boatler decides to do forecasting and predicts that if she utilizes short-term financing instead, she will pay 7.25 percent interest in the first year and 12.55 percent interest in the second year. Assume interest is paid in full at the end of each year.
A. Determine the lot al two-year interest cost under each plan.
Interest Cost
Long term fixed-rate plan
Short term variable-rate
B. Which plan is less costly?
1. Long term fixed-rate plan
2. Short-term variable-rate plan
Answer:
A. Total two-year interest cost under long term fixed-rate plan is $195,800; while total two-year interest cost under short term variable-rate is $176,220.
B. Short-term variable-rate plan is less costly.
Explanation:
A. Determine the total two-year interest cost under each plan.
This can be determined for each of the plan as follows:
For Long term fixed-rate plan
Total two-year interest cost under long term fixed-rate plan = Amount required * Interest rate per year * Number of years = $890,000 * 11% * 2 = $195,800
For Short term variable-rate
First year interest cost under short term variable-rate = Amount required * First year interest rate = $890,000 * 7.25% = $64,525
Second year interest cost under short term variable-rate = Amount required * Second year interest rate = $890,000 * 12.55% = $111,695
Total two-year interest cost under short term variable-rate = First year interest cost + Second year interest cost = $64,525 + $111,695 = $176,220
Therefore, we have:
Interest Cost
Long term fixed-rate plan $195,800
Short term variable-rate $176,220
B. Which plan is less costly?
Since the total two-year interest cost under short term variable-rate of $176,220 is less than $195,8000 total two-year interest cost under long term fixed-rate plan, the Short-term variable-rate plan is therefore less costly.
According to the liquidity premium theory of the term structure of interest rates, if the one-year bond rate is expected to be 4%, 5%, and 6% over each of the next three years, what is the interest rate on a three-year bond if the liquidity premium on a three-year bond is 0.5%
Answer:
Interest rate on the a three year bond =5.5%
Explanation:
one-year bond rate expected = 4%, 5%, 6% for the next three years
liquidity premium on a three year bond = 0.5%
number of years = 3
The interest rate on the a three year bond can be calculated as
= liquidity premium + ( summation of bond rates for the next three years/number of years )
= 0.5 + ( (4+5+6)/3)
= 0.5 + ( 15/3)
= 0.5 + 5 = 5.5%
When delivering bad news to customers, use an indirect strategy as you would with other bad news messages, and maintain a positive tone. Occasionally, companies disappoint their customers. Whenever possible, these problems should be addressed immediately. Choose the best answer for the following question about handling customer problems.
What is the first step you should take when a problem arises?
1. Call the individual customer.
2. Disguise the problem as a "technical error."
3. Explain to the customer what they did that caused the problem
Answer:
1
Explanation:
Well, the focus of an indirect strategy is to create a new peak of satisfaction, when dealing with a disappointing situation. So the key is leaving a positive tone after all. Since maintaining a regular customer is always cheaper than getting a new one.
So, it's important to have an honest conversation with the customer and and offer a good compensation and provide a follow up until the problem is solved, so that the customer be enchanted by the respect shown. In addition to this, make this a turning point. By doing that the customer will regain confidence.
In producing jelly beans, 1,000 hours of direct labor were used at a rate of $12 per hour. The standard was 1,100 at $12.25 per hour. What is the direct labor efficiency variance
Answer:
Efficiency variance = $1,225 favorable
Explanation:
Labour efficiency variance is the difference between the actual time taken to achieve a given production output less the standard hours allowed for same multiplied by the standard labour rate .
It occurs as result of workers working faster or slower than expected (i.e standard hour )
Hours
standard hours 1, 100
Actual hours 1,000
efficiency varainec in Labour hour 100 favorable
Standard labour rate × $12.25f
Efficiency variance $1,225 favorable
Efficiency variance = $1,225
Data from the financial statements of Crafty Crafts and Hobbies, Inc. are presented below (in millions): Crafty Crafts Hobbies, Inc. Total liabilities, 2016 $31,957 $25,461 Total liabilities, 2015 36,104 30,046 Total assets, 2016 46,186 32,872 Total assets, 2015 46,514 35,208 Net sales, 2016 161,466 81,702 Net income, 2016 1,040 1,766 To the nearest hundredth of a percent, what is the 2016 return on assets ratio for Crafty Crafts
Answer:
Crafty Crafts:
Return on Assets Ratio = Net Income/Average Assets x 100
= $1,040/46,350 x 100
= 2.2%
Explanation:
a) Data
Crafty Crafts Hobbies, Inc.
Total liabilities, 2016 $31,957 $25,461
Total liabilities, 2015 36,104 30,046
Total assets, 2016 46,186 32,872
Total assets, 2015 46,514 35,208
Net sales, 2016 161,466 81,702
Net income, 2016 1,040 1,766
b) Average Assets:
Crafty Crafts = (2016 + 2015 assets)/2 = ($46,186 + 46,514)/2 = $46,350
c) The Return on Assets Ratio: This financial performance ratio shows how much of the earnings is generated from the assets of the company in a particular period. It shows the efficiency of management to generate profit from the assets. Usually, the average assets value is used to even the variations over the period.
During 2018, its first year of operations, Pave Construction provides services on account of $142,000. By the end of 2018, cash collections on these accounts total $101,000. Pave estimates that 25% of the uncollected accounts will be bad debts.
Required:
Record the adjustment for uncollectible accounts on December 31, 2018.
Answer:
Dr Bad Debt Expense 10,250
Cr Allowance for Uncollectible Accounts 10,250
Explanation:
Preparation of the Journal entry to Record the adjustment for uncollectible accounts on for Pave Construction
Since we were told that the company provides services on account of the amount of $142,000 in which by the end of the year 2018, the cash collections total the amount of $101,000 which means we have to less $101,000 from $142,000 which gave us $41,000.
We were as told that Pave estimates that 25% of the uncollected accounts will be bad debts this means we have to find the 25% of $41,000 which gave us $10,250.
Therefore the transaction will be recorded as:
Dr Bad Debt Expense 10,250
Cr Allowance for Uncollectible Accounts 10,250
($41,000 x 25%)
Service provided $142,000- Cash collection $101,000=$41,000
Indicate whether each scenario wll affect the GDP deflator or the CPI for the United States,
Shows up in the.
GDP Scenario
A decrease in the price of a Treewood Equipment feller buncher, which is a commercial forestry machine made in the U.S. but not bought by U.S. consumers
An increase in the price of a German-made phone that is popular among U.S. consumers Deflator CPI.
Answer:
1st scenario shows the GDP deflator and second shows the CPI.
Explanation:
The consumer price index (CPI) is determined by dividing the market price of commodities (basket) with the base year prices of that basket or commodity and then multiply with a hundred. The CPI reflects only the price of goods and services brought by the consumer.
Therefore, the first scenario price of a treewood is the GDP deflator and the second scenario is CPI.
A push strategy is favorable when a company Multiple Choice wants to advertise consumer goods. has long distribution channels. needs to explain complex new products. faces high inflation rates. has sufficient print or electronic media available.
Answer:
wants to advertise consumer goods.
The push strategy of marketing helps if the company is new, or if the company wants to advertise a new consumer good.
The new company or the new consumer good is probably not well-known among consumers, and for this reason, pushing the product to them is likely to be more helpful in obtaining sales than a pull strategy.
Needs to explain complex new products.
Complex products like some consumer electronics often need to be sold under a push strategy in which the salesperson explains the product in detail to the potential customer.
This is done because otherwise, consumers may feel intimidated by the complexity of the product, and desist from acquiring it.
Square Hammer Corp. shows the following information on its 2018 income statement: Sales = $264,000; Costs = $170,000; Other expenses = $7,900; Depreciation expense = $14,500; Interest expense = $13,300; Taxes = $20,405; Dividends = $10,000. In addition, you’re told that the firm issued $4,800 in new equity during 2018 and redeemed $3,300 in outstanding long-term debt. a. What is the 2018 operating cash flow
Answer:
The 2018 operating cash flow is $86,100.
Explanation:
Operating Cash flow is different from Income as it only involves movement in cash.
Thus our first step is to find the Operating Income then adjust it with non-cash items to reach an Operating Cash flow amount.
Sales = $264,000
Less Costs = ($170,000)
Less Other expenses = ($7,900)
Depreciation expense = ($14,500)
Operating Income = $71,600
Adjust for non-cash item - depreciation
Operating Income = $71,600
Add back depreciation = $14,500
Operating Cash flow = $86,100
Interest expenses and taxes are not part of operating income as they arise out of secondary activities of the company.
Conclusion :
The 2018 operating cash flow is $86,100.
A firm sells peanuts in a perfectly competitive market. Upon increasing production output from 60 packages to 75 packages, the total revenue increased from $300to $375. What was the marginal revenue of this increase in production
Answer:
$5
Explanation:
The computation of marginal revenue is shown below:-
Marginal revenue = Change in total revenue ÷ Change in output
= ($375 - $300) ÷ (75 - 60)
= $75 ÷ 15
= $5
The marginal revenue could be computed by dividing the change in total revenue from the change in output so that the increased in production could come
Use the following information to answer questions 4a.1-4a.5 Gerrell Corp. is comparing two different capital structures. Plan I would result in 18,000 shares of stock and $95,000 in debt. Plan II would result in 14,000 shares of stock and $190,000 in debt. The interest rate on the debt is 5 percent. Compare both of these plans to an all-equity plan assuming that EBIT will be $90,000. The all-equity plan would result in 22,000 shares of stock outstanding. Assuming that the corporate tax rate is 40 percent, what is the EPS for each of these plans
Answer:
Gerrel Corp.
EPS (Earnings per share) = Earnings after Tax/Number of outstanding shares
Plan I:
EBIT = $90,000
Interest = $4,750 ($95,000 x 5%)
Pre-Tax Income = $85,250
Income Tax Exp. 34,100 ($85,250 x 40%)
After Tax Income $51,150
EPS = $51,150/18,000 = $2.84 per share
Plan II:
EBIT = $90,000
Interest = $9,500 ($190,000 x 5%)
Pre-Tax Income = $80,500
Income Tax Exp. 32,200 ($80,500 x 40%)
After Tax Income $48,300
EPS = $48,300/14,000 = $3.45 per share
Plan III:
EBIT = $90,000
Pre-Tax Income = $90,000
Income Tax Exp. 36,000 ($90,000 x 40%)
After Tax Income $54,000
EPS = $54,000/22,000 = $2.45 per share
Explanation:
a) Data and Calculations:
Plan I = 18,000 shares + $95,000 debt
Plan II = 14,000 shares + $190,000 debt
Difference = 4,000 shares + $95,000 debt
Share price = $95,000/4,000 = $23.75
EBIT = $90,000
Interest Rate = 5%
Corporate Tax Rate = 40%
b) Capital Structure:
Plan I: (Equity and Debt)
Shares of 18,000 x $23.75 + $95,000 debt = $522,500 in total capital
Plan II: (Equity and Debt)
Shares of 14,000 x $23.75 + $190,000 debt = $522,500 in total capital
Plan III: (All-equity plan):
Shares of 22,000 x $23.75 = $522,500 in total capital
c) The Earnings per share is the measurement of the Net Income to stockholders divided by the number of outstanding shares. It gives an idea about the profitability of the entity, especially with regard to the profit made for common stockholders. The EPS is also one of the metrics used in the calculation of the P/E ratio to indicate whether a company's shares are undervalued or overvalued.
Harvey is planning to file a case against a petrochemical giant that has a plant in his town. The petrochemical plant is dumping toxic wastes into its surrounding areas. Harvey is mobilizing the residents of the town, all of whom have suffered from various health problems due to the activities of the plant. Which of the following would be of most help to Harvey and the other residents?
A. Affirmative defense
B. Class action
C. Demurrer
D. Directed verdict
Answer:
B. Class action
Explanation:
In this scenario, Harvey is planning to file a case against a petrochemical giant that has a plant in his town because the petrochemical plant is dumping toxic wastes into its surrounding areas. Sequel to this, Harvey is mobilizing the residents of the town, all of whom have suffered from various health problems due to the activities of the plant.
Hence, a class action would be of most help to Harvey and the other residents.
In Law, a class action is a type of lawsuit in which a collective group of people (plaintiffs) having similar injuries or suffering similar damages caused by a particular company's product or action sue the defendant on behalf of a larger group. This simply means that, the group of people (plaintiffs) have a common interest as a result of sharing similar actions from an event.
Hence, the larger group that is being represented by Harvey is referred to as the "class" in business law.
Additionally, it is required by law that the class attest to the fact that they were affected by the actions of the petrochemical plant (defendant).
Victor Rumsfeld Inc.'s dividend policy is under review by its board. Its projected capital budget is $2,000,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $600,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out? Select the correct answer. a. $7,560 b. $1,890 c. $0 d. $5,670 e. $3,780
Answer:
The residual dividend is -$200,000, therefore If the company follows a residual dividend policy the total dividends will be $0
Explanation:
In order to calculate the total dividends, if any, will it pay out, we would have to calculate first the residual dividend a follows:
residual dividend=forecasted net income-(percentage equity*capital budget)
According to the given data we have the following:
forecasted net income=$600,000
percentage equity=40%
capital budget=$2,000,000
Therefore, residual dividend=$600,000-(40%*$2,000,000)
residual dividend=-$200,000
The residual dividend is -$200,000, therefore If the company follows a residual dividend policy the total dividends will be $0
Duluth Ranch, Inc. purchased a machine on January 1, 2018. The cost of the machine was $35,000. Its estimated residual value was $11,000 at the end of an estimated 5-year life. The company expects to produce a total of 20,000 units. The company produced 1,300 units in 2018 and 1,750 units in 2019.
Required:
a. Calculate depreciation expense for 2018 and 2019 using the straight-line method.
b. Calculate the depreciation expense for 2018 and 2019 using the units-of-production method.
c. Calculate depreciation expense for 2018 through 2022 using the double-declining balance method.
Answer:
Duluth Ranch, Inc.
a. Depreciation Expense for 2018 and 2019, using the straight-line method:
2018: $24,000/5 = $4,800
2019: $24,000/5 = $4,800
b. Depreciation Expense for 2018 and 2019, using the units-of-production method:
2018 = 1,300 x $1.20 = $1,560
2019 = 1,750 x $1.20 = $2,100
c. Depreciation Expense for 2018 through 2022, using the double-declining balance method:
Depreciation Rate = 100%/5 x 2 = 40%
Beginning Bal. Depreciation Declining balance
2018: $35,000 $14,000 ($35,000 x 40%) $21,000 ($35,000 - 14,000)
2019: $21,000 $8,400 ($21,000 x 40%) $12,600 ($21,000 - $8,400)
2020: $12,600 $1,600 ($12,600 x 40%)* $11,000 ($12,600 - $1,600)
2021: $11,000 $0
2022: $11,000 $0
*NB: The calculated depreciation expense for 2020 is $5,040. But, the balance after depreciation must not be below the residual value. So, only the difference is expensed.
Explanation:
a) Data and Calculations:
Cost of machine = $35,000
Residual value = 11,000
Depreciable amount $24,000
Useful life = 5 years
Straight-line depreciation per year = $24,000/5 = $4,800
Expected production unit = 20,000
Depreciation rate per unit = $24,000/20,000 = $1.20
b) The straight-line method of depreciation simply divides the depreciable amount ($24,000) by the useful life of 5 years to determine a straight-line depreciation expense of $4,800 per year.
c) The unit-of-production method calculates the depreciation rate per unit (Depreciable amount divided by total expected production units) and applies this rate, $1.20, to the total units produced in each period to determine the depreciation expense.
d) The double-declining balance method divides 100% by the useful life of the asset and then multiplies this 2, to obtain the depreciation rate. This rate is then applied to the cost and declining balance each year. The double-declining balance method, initially does not take into cognizance the residual value of the asset. It only considers this salvage value towards the end when it adjusts the depreciation charge for the last year so that the declined balance will equal to the residual value.
g "A company with an operating income of $88,000 and a contribution margin ratio of 70% has a margin of safety of: "
Answer:
$125,714
Explanation:
Calculation for A company margin of safety
Using this formula
Margin of safety =Operating net income ÷contribution margin ratio
Let plug in the formula
Margin of safety =$88,000 ÷ 0.70
Margin of safety= $125,714
Therefore A company margin of safety will be $125,714
The manager of a canned-food processing plant has two labeling machine options. On the basis of a rate of return analysis with a MARR of 20% per year, determine (a)
The manager of a canned-food processing plant has two labeling machine options. on the basis of a rate of return analysis with a marr of 20% per year, determine (a) which model is economically better, and (b) if the selection changes, provided both options have a 4-year life and all other estimates remain the same.
Answer:
The answer is below
Explanation:
First, compare the present values (PV) of all the expenses of all the investments to make an investment decision.
Given the formula of PV = ((C1/(1+r)1) + ((C2/(1+r)2) + ((C3/(1+r)3) +…….+ ((Cn/(1+r)n) + present value of investment – present value of the salvage value
Where, Cn equals to the expense incurred in the nth period and r is the rate of interest per period.
Therefore, for Machine A, present value of the expenses is
= ((1600/(1+0.20)1) + ((1600/(1+0.20)2) + 15,000 – ((3000/(1+0.20)2)
= 1333.33 + 1111.11 + 15000 – 2083.33
= 15361.11
For Machine B, present value of the expenses is
= ((400/(1+0.20)1) + ((400/(1+0.20)2) + ((400/(1+0.20)3) + ((400/(1+0.20)4) + 25,000 - ((4000/(1+0.20)2)
= 333.33 + 277.77 + 25,000 – 2777.77
= 22833.33
Therefore, it is shown that, Machine A is the least cost alternative and should be selected.