Answer:
A. Adjusting Journal Entries:
Dec. 31, 2019:
Debit Accounts Receivable $22,650
Credit Service Fee Revenue $22,650
To record fees earned, but not yet billed to clients.
B. No. If the cash basis rather than the accrual basis had been used, an adjusting entry would not have been necessary.
Explanation:
Adjusting entries are only required to align the cash-basis accounting records to the accrual basis. Adjustments are made for prepayments of expenses, unpaid expenses, deferred revenue, unearned earned and earned revenue, and depreciation charges. For an entity operating on a cash basis, adjusting entries are not required.
Adjusting entries ensure that accounting records comply with the accrual concept and matching principle of generally accepted account practises. The requirement under this concept with the matching principle is to accrue and match expenses and revenue to the related revenue and expenses and period.
Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of $195,000. The debt-to-total-assets ratio was 27%, the interest rate on the debt was 8.2%, and the firm's tax rate was 25%. The new CFO wants to see how the ROE would have been affected if the firm had used a 45% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change in response to the change in the capital structure
Answer:
The correct option is D
There is increase in ROE by 2.86%
d. 2.86%
EXPLANATION:
THIS IS THE COMPLETE QUESTION BELOW;
Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of $195,000. The debt-to-total-assets ratio was 27%, the interest rate on the debt was 8.2%, and the firm's tax rate was 37%. The new CFO wants to see how the ROE would have been affected if the firm had used a 45% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change in response to the change in the capital structure?
a. 2.08%
b. 2.32%
c. 2.57%
d. 2.86%
e. 3.14%
CHECK THE ATTACHMENT BELOW FOR DETAILED EXPLANATION
You are a new summer intern working for a major professional services firm. during your lunch break each day, you and a fellow intern, bob, eat at a local sandwich shop. one day, bob’s girlfriend joins you for lunch. when the bill arrives, bob pays with a company credit card and writes the meal off as a business expense. bob and his girlfriend continue to be "treated" to lunch for a number of days. you know bob is well aware of a recent memo that came down from management stating casual lunches are not valid business expenses. when you ask bob about the charges, he replies, "hey, we’re interns. those memos don’t apply to us. we can expense anything we want. does bob really believe that what he is doing is not wrong? does it matter? what are you going to do about it?
Answer:
1. Bob is aware of what he is doing. He knows it is wrong.
2. It matters.
Explanation:
Bob is committing fraud against the firm. Because he received the memo from the business organization that casual lunches are not business expenses.. Bob acted on purpose as he and his girlfriend who is not an employee are enjoying benefit from the firm by making the meals to be business expenses, when he is aware that they are not. Thus, it can be said that Bob is committing fraud against the business.
2. Yes it matters and as an employee of the business, I'm going to speak to Bob and explain to him that he is going against company policy. And it could constitute as employee embezzlement.
Since the expenses that he is writing off as business expenses is completely invalid. The fraud would be reported to the management because failure to might put me at risk by making me an accomplise to the fraud.
Esposito, Inc. uses a just-in-time costing system. During the month, Esposito incurred $700,000 as direct labor and $8000 as overhead. Wages were not paid. Which of the following is the correct journal entry to record the conversion costs?A.Conversion Costs 708,000 Wages Payable 708,000B.Manufacturing Overhead 708,000 Conversion Costs 708,000C.Conversion Costs 708,000 Wages Payable, Accumulated Depreciation, etc. 708,000D.Conversion Costs 708,000 Accounts Payable 708,000
Answer:
C.Conversion Costs 708,000 Wages Payable, Accumulated Depreciation, etc. 708,000
Explanation:
The Journal entry is shown below:-
Conversion Costs Dr, 708,000
To Wages Payable, Accumulated Depreciation, etc. $708,000
(Being conversion costs is recorded)
Here to record the conversion costs we simply debited the conversion costs as it increased the expenses and we credited the Wages Payable, Accumulated Depreciation, etc. as it increased the liabilities and decreased the assets
At December 31, 2018, you obtained the following data relating to supplies. Unadjusted balance in Supplies on December 31, 2018 $ 1,813 Unadjusted balance in Supplies Expense on December 31, 2018 7,271 Supplies on hand, counted on December 31, 2018 310 What amount should be reported on the 2018 income statement as Supplies Expense?
Answer:
The supplies expense to be reported on Income Statement for 2018 is $8774
Explanation:
To calculate the supplies expense, we first need to adjust the balance in the supplies account by deducting the supplies expense that has not been deducted yet. This can be calculated by taking the difference between the supplies balance in supplies account and the supplies on hand balance at 31 December 2018.
Supplies expense yet to be adjusted = 1813 - 310 = $1503
This expense will be recorded to the supplies account and will increase the balance of supplies expense account to:
Supplies expense adjusted = 7271 + 1503 = $8774
The Porter Beverage Factory owns a building for its operations. Porter uses only half of th ebuilding and is considering two options for the unused space. The Popcorn Store would like to purchase the half of the building that is not being used for $390,000. A 9% commission would have to be paid at the time of purchase. Salty Snacks would like to lease the half of the building for the next 5 years at $103,000 each year. Stewart would have to continue paying $38,600 of property taxes each year and $7,400 of yearly insurance on the property, according to the proposed lease agreement.
Determine the differential income or loss from the lease alternative.
Enter a loss as a negative number.
Answer:
The differential loss from the lease alternative would be -$69,900
Explanation:
In order to calculate the differential income or loss from the lease alternative we would have to make the following calculations:
Alternative I ( Sale) Alternative II ( Lease)
Sale proceeds net of commission $354,900
Total lease rentals $515,000
Property taxes and insurance ($230,000)
Net proceeds $354,900 $285,000
Difference loss from the lease alternative would be - $69,900
The differential loss from the lease alternative would be -$69,900
A one-month European call option on Bitcoin is with the strike price of $8,505, $8,705, and $8,905 are trading at $600, $500, and $415, respectively. An investor implements a butterfly spread (i.e., she buys one call with the strike price of $8,505, sells two calls with the strike price of $8,705, and buys one call with the strike price of $8,905. If at the maturity, the Bitcoin price is $8,605, what is the investor's profit
Answer:
The investor profit will be $85
Explanation:
Kindly check attached picture for detailed calculation
For a certain good we have LaTeX: q=f\left(p\right)=200e^{-0.4p}q = f ( p ) = 200 e − 0.4 p. a) Find the elasticity of demand at price p = $50. b) At p = $50, is the demand elastic, inelastic, or does it have unit elasticity? Explain what this means for this product. c) Find the elasticity of demand at price p = $20. d) At p = $20, is the demand elastic, inelastic, o
Answer:
a) 20
b) elastic
c) 8
d) elastic
Explanation:
Given that q = f ( p ) = [tex]200e^{-0.4p}[/tex]
[tex]\frac{dq}{dp} = -80e^{-0.4p}[/tex]
a) The elasticity of demand is given as:
Elasticity of demand = [tex]\frac{dq}{dp}*\frac{p}{q}[/tex]
At p =$50, [tex]\frac{dq}{dp} = -80e^{-0.4p}=-80e^{-0.4*50}=-1.65*10^{-7}[/tex]
q = f ( p ) = [tex]200e^{-0.4p}[/tex] = [tex]200e^{-0.4*50}=-4.12*10^{-7}[/tex]
Elasticity of demand = [tex]\frac{dq}{dp}*\frac{p}{q}[/tex] = [tex]-1.65*10^{-7}*\frac{50}{-4.12*10^{-7}}=20[/tex]
b) At p = $50, it is elastic Since Elasticity of demand is greater than 1 it is elastic. That is the price have a big effect on the quantity
c) The elasticity of demand is given as:
Elasticity of demand = [tex]\frac{dq}{dp}*\frac{p}{q}[/tex]
At p =$20, [tex]\frac{dq}{dp} = -80e^{-0.4p}=-80e^{-0.4*20}=-0.027}[/tex]
q = f ( p ) = [tex]200e^{-0.4p}[/tex] = [tex]200e^{-0.4*20}=-0.067[/tex]
Elasticity of demand = [tex]\frac{dq}{dp}*\frac{p}{q}[/tex] = [tex]-0.027*\frac{20}{-0.067}=8.0[/tex]
d) At p = $20, it is elastic Since Elasticity of demand is greater than 1 it is elastic
Shirley Paul's 2-stock portfolio has a total value of $100,000. $37,500 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42. What is her portfolio's beta
Answer:
Beta= 1.17
Explanation:
Giving the following information:
Shirley Paul's 2-stock portfolio has a total value of $100,000. $37,500 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42.
To calculate the Beta of the portfolio, we need to use the following formula:
Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B)
Beta= (37,500/100,000)*0.75 + (62,500/100,000)*1.42
Beta= 1.17
Andrew Industries purchased $172,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $23,400, and the materials used to complete jobs during the month were $147,300 of direct materials and $13,700 of indirect materials. What is the ending Raw Materials Inventory balance for March?
Answer:
ending inventory= $34,400
Explanation:
Giving the following information:
Purchase= $172,000
Beginning Raw Materials= $23,400
Materials used= $147,300 of direct materials and $13,700 of indirect materials. (161,000)
To calculate the raw materials ending inventory, we need to use the following formula:
Direct material used= beginning inventory + purchases - ending inventory
161,000= 23,400 + 172,000 - ending inventory
ending inventory= 23,400 + 172,000 - 161,000
ending inventory= $34,400
Spiffy Sandals (Scenario) Spiffy Sandals is a Canadian footwear firm. Spiffy is planning to enter into a contract with an international producer to lower costs of production. On paper the figures look very good. However, Spiffy management has learned that the producer's factories are sweatshop conditions. Benito is the key Spiffy executive involved in the contract. He adheres to the relativist view regarding ethical standards and in meetings often says "When in Rome, do as the Romans do." Which of the following do you think Benito agrees with most strongly?
a. Freedom should not partner with foreign business entities.
b. Freedom should passively accept the practices that prevail in countries where it does business.
c. Freedom should not hire foreign managers.
d. Freedom should institute a single global code of conduct for all its employees and suppliers.
Answer:
Option B. Freedom should passively accept the practices that prevail in countries where it does business.
Explanation:
The Spiffy Executive knows that the a norm or ritual or common practice can be ethical in one country whereas not acceptable in the other one. So when he says that "when in Rome, do as the Romans do", so he literally means that we are going to accept the cultural diffences and get maximum out of it. This means he is not concerned about the sweatshop conditions as it is acceptable in that country.
At the beginning of July, CD City has a balance in inventory of $3,400. The following transactions occur during the month of July.
July 3 Purchase CDs on account from Wholesale Music for $2,300, terms 1/10, n/30.
July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110.
July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200.
July 11 Pay Wholesale Music in full.
July 12 Sell CDs to customers on account, $5,800, that had a cost of $3,000.
July 15 Receive full payment from customers related to the sale on July 12.
July 18 Purchase CDs on account from Music Supply for $3,100, terms 1/10, n/30.
July 22 Sell CDs to customers for cash, $4,200, that had a cost of $2,500.
July 28 Return CDs to Music Supply and receive credit of $300.
July 30 Pay Music Supply in full.
Required:
1. Assuming that CD City uses a perpetual inventory system, record the transactions.2. Prepare the top section of the multiple-step income statement through gross profit for the month of July.
Answer:
Journal Entries
July 3
CDs Inventory $2,300 (debit)
Trade Payable - Wholesale Music $2,300 (credit)
July 4
Freight Charges $110 (debit)
Cash $110 (credit)
July 9
Trade Payable - Wholesale Music $200 (debit)
CDs Inventory $200 (credit)
July 11
J1
Trade Payable - Wholesale Music $2,079 (debit)
Cash $2,079 (credit)
J2
Trade Payable - Wholesale Music $21 (debit)
Discount Received $21 (credit)
July 12
J1
Trade Receivable $5,800 (debit)
Revenue $5,800 (credit)
J2
Cost of Goods Sold $3,000 (debit)
Inventory CDs $3,000 (credit)
July 15
Cash $5,800 (debit)
Trade Receivable $5,800 (credit)
July 18
Inventory CDs $3,100 (debit)
Trade Payable - Music Supply $3,100 (credit)
July 22
J1
Cash $4,200 (debit)
Revenue $4,200 (credit)
J2
Cost of Goods Sold $2,500 (debit)
Inventory CDs $2,500 (credit)
July 28
Trade Payable - Music Supply $300 (debit)
CDs Inventory $300 (credit)
July 30
J1
Trade Payable - Wholesale Music $2,772 (debit)
Cash $2,772 (credit)
J2
Trade Payable - Wholesale Music $28 (debit)
Discount Received $28 (credit)
multiple-step income statement
Revenue ($4,200+$5,800) $10,000
Less Cost of Goods Sold :
Opening Stock $3,400
Add Purchases ( $2,300 + $3,100) $5,400
Less Returns Outwards ( $200 + $300) ($500)
Add Freight Charges $110
$8,190
Less Closing Stock (Balancing figure) ($190)
Cost of Goods Sold ($3,000+ $2,500) $8,000
Gross Profit $2,000
Explanation:
The Income Statement is Prepared on Accrual Basis of Accounting meaning that Revenues and Expenses are recorded when they occur or incur not when cash is paid or received.
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer.
Month Occupancy- Days Electrical Costs
January 3,250 $9,660
February 3,470 $10,185
March 3,660 $10,360
April 1,760 $6,160
May 1,350 $4,725
June 4,350 $11,575
July 3,280 $9,765
August 1,610 $5,635
September 700 $2,450
October 1,300 $4,550
November 1,640 $5,740
December 2,220 $7,770
Required:
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.
2. What other factors other than occupacy-days are likely to affect the variation in electrical costs from month to month?
Answer:
1) Variable cost = $2.5
Fixed cost per month = $700
2) Factors like location, weather conditions, nature of clients, number of equipments used are other factors other than occupacy-days that are likely to affect the variation in electrical costs from month to month.
Explanation:
1) Find the fixed cost and variable cost using high-low method.
For the occupancy days electric cost, let's check for the high & low activity level, i.e months with the highest and lowest costs.
High activity level = June 4,350 $11,575
Low activity level = September 700 $2,450
Change = high - low
= 3650 (4350 - 700), $9125 ($11,575 - $2450)
Change = 3650, $9125
It means that Change in cost = $9125
Also, Change in activity = 3650
For variable cost, we'll use the formula:
Variable cost = change in cost / change in activity
= $9125 / 3650
= $2.5
Variable cost = $2.5
For fixed cost:
Fixed cost = Total cost - variable cost element
= 11575 - (2.5 * 4350)
= 11575 - 10875
= $700
Fixed cost per month = $700
2) Factors like location, weather conditions, nature of clients, number of equipments used are other factors other than occupacy-days that are likely to affect the variation in electrical costs from month to month.
On January 1, 2021, White Water issues $600,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.
Required:
Assuming the market interest rate on the issue date is 7%, the bonds will issue at $600,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal entry required" in the first account field.)
Answer and Explanation:
The Journal entries are shown below:-
1. Cash Dr, $600,000
To Bonds Payable $600,000
(Being Bonds issued is recorded)
Here we debited the cash as increased the assets and we credited the bonds payable as it also increased the liabilities
2. Interest Expense Dr, $21,000 ($600000 × 7% × 6 ÷ 12)
To Cash $21,000
(Being first semi annual interest paid is recorded)
Here we debited the interest expenses as it increased the expenses and we credited the cash as it decreased the assets
3. Interest Expense Dr, $21,000 ($600,000 × 7% × 6 ÷ 12)
To Cash $21,000
(Being second semi annual interest paid is recorded)
Here we debited the interest expenses as it increased the expenses and we credited the cash as it decreased the assets
Here, we are going to prepare the entry for the bond in the question.
Date Accounts title and explanation Debit Credit
01-Jan-21 Cash $600,000
Bonds Payable $600,000
(Bonds issued)
30-Jun-21 Interest Expense $21,000
[600000 x 7% x 6/12]
Cash $21,000
(First semi annual interest paid)
31-Dec-21 Interest Expense $21,000
[600000 x 7% x 6/12]
Cash $21,000
(Second semi annual interest paid)
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Leichter Auto Parts, a family-owned auto parts store, began January with $ 10,500 cash. Management forecasts that collections from credit customers will be $ 11,000 in January and $ 15,200 in February. The store is scheduled to receive $ 8,500 cash on a business note receivable in January. Projected cash payments include inventory purchases ($ 15,600 in January and $ 14,800 in February) and selling and administrative expenses ($ 2,900 each month).).Leichter Auto Parts's bank requires a $10,000 minimum balance in the store's checking account. At the end of any month when the account balance falls below $10,000, the bank automatically extends credit to the store in multiples of$1,000. Leichter Auto Parts borrows as little as possible and pays back loans in quarterly installments of $2,500, plus 33% APR interest on the entire unpaid principal. The first payment occurs three months after the loanprepare Northeast AutoParts's cash budget for January and February.
Answer:
Northeast AutoParts's
Cash Budget
January February
Cash inflows:
Customers' credits $11,000 $15,200Business note $8,500Total cash inflows $19.500 $15,200
Cash outflows:
Inventory purchases ($15,600) ($14,800)selling and adm. expenses ($2,900) ($2,900)Total cash outflows ($18,500) ($17,700)
Monthly cash flow $1,000 ($2,500)
Initial cash balance $10,500 $11,500
Ending cash balance $11,500 $9,000
Required bank loan $0 $1,000
Total $11,500 $10,000
Explanation:
January 1, beginning cash $10,500
cash collections from customers' credits:
January $11,000February $15,200also a business note for $8,500 in Januaryestimated cash outflows:
January $15,600February $14,800S&A expenses $2,900 each monthBank's minimum balance $10,000
loans in multiples of $1,000
Horizontal analysis evaluates a series of financial statement data over a period of time:
A. that has been arranged from the highest number to the lowest number.
B. to determine which items are in error.
C. to determine the amount and/or percentage increase or decrease.
D. that has taken place that has been arranged from the lowest number to the highest number.
Answer:
C. to determine the amount and/or percentage increase or decrease.
Explanation:
Horizontal analysis is a method used in financial statement analysis to compare financial ratios, or line items, over a number of accounting periods.
Financial information can be compared with a benchmark.
By making this comparison, one can determine if financial information been compared have increased or deceased.
I hope my answer helps you
Martinez Company has three cost pools and two doggie products (leashes and collars). The activity cost pool of ordering has the cost driver of purchase orders. The activity cost pool of assembly has a cost driver of parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data relative to those cost drivers is as follows: Cost Drivers Total Expected Estimated Leashes Collars Cost Drivers Overhead Purchase Orders 130,000 orders $260,000 70,000 60,000 Parts 800,000 parts 400,000 300,000 500,000 Labor Hours 25,000 hours 300,000 15,000 10,000 $960,000The costs assigned to leashes for supervising are:_______.a. $90.000b. $180.000c. $120.000d. $60.000
Answer:
The cost assigned to leashes for supervising is $180,000
Explanation:
Estimated Overhead Cost Drivers Overhead Rates
$ 260,000.00 130,000 $ 2.00 Per Order
$ 400,000.00 800,000 $ 0.50 per Part
$ 300,000.00 25,000 $ 12.00 Per Hour
Labor hours for the leashes is 15,000 hours
Cost assigned to leashes for supervising = 15,000 x 12 = $180,000
During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows:
Resource Airplane Flight Hours Total Cost
Airplane depreciation:
High 44,000 $ 18,000,000
Low 28,000 18,000,000
Fuel:
High 44,000 445,896,000
Low 28,000 283,752,000
Airplane maintenance:
High 44,000 15,792,000
Low 28,000 11,504,000
Required:
1. Develop an annual cost formula for airplane depreciation.
Total annual cost of airplane depreciation = ________ x $________
Develop an annual cost formula for fuel.
Total annual cost of fuel = $________ x (Select: Airplane depreciation, Fuel, or Annual number of airplane flights))
Develop an annual cost formula for airplane maintenance.
Total annual cost of airplane maintenance = $________ + ($_____ x (Select: Airplane depreciation, Fuel, or Annual number of airplane flights))
2. Using the three annual cost formulas that you developed, predict the cost of each resource in a year with 480,000 airplane flight hours.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Airplane depreciation:
High 44,000 $ 18,000,000
Low 28,000 $18,000,000
Fuel:
High 44,000 $445,896,000
Low 28,000 $283,752,000
Airplane maintenance:
High 44,000 $15,792,000
Low 28,000 $11,504,000
Required:
1.
A) Depreciation expense remains constant on both flight hours. Therefore, the depreciation expense is calculated using the straight-line method. In this method, depreciation is constant.
Depreciation expense= $18,000,000
B) To calculate the fuel cost, we need to use the high low method:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (445,896,000 - 283,752,000) / (44,000 - 28,000)
Variable cost per unit= $10,134 per hour of flight.
Fuel is a variable cost.
C) We need to calculate the variable and fixed component of maintenance.
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (15,792,000 - 11,504,000) / (44,000 - 28,000)
Variable cost per unit= $268
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 15,792,000 - (268*44,000)
Fixed costs= $4,000,000
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 11,504,000 - (268*28,000)
Fixed costs= $4,000,000
2. Hours= 480,000
Depreciation= 18,000,000
Fuel= 10,134*480,000= $4,864,320,000
Maintenance= 268*480,000 + 4,000,000= $132,640,000
Total= $5,014,960,000
Moody Farms just paid a dividend of $3.05 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a return of 12 percent for the first three years, a return of 10 percent for the next three years, and a return of 8 percent thereafter. What is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
The price of the stock today is $96.06
Explanation:
The price of a stock whose earnings are expected to grow at a constant rate forever can be calculated using the dividend discount model which bases the price of a stock on the present value of the expected future dividends from the stock.
As the required rate of return is changing, we will calculate the price in three stages.
The formula for price today under this model is in the given situation is,
P0 = D1 / (1+r1) + D2 / (1+r1)^2 + D3 / (1+r1)^3 + D4 / (1+r2)^4 + D5 / (1+r2)^5 +
D6 / (1+r2)^6 + [ D7 / (r3 - g) ] / (1+r2)^6
Where,
D1, D2, ... D7 represents the dividend in year 1,2, ... 7 (till Year 7)r represents the required rate of returnr1 is 12%r2 is 10%r3 is 8%So, price of the stock today is,
P0 = 3.05 * (1+0.05) / (1+0.12) + 3.05 * (1+0.05)^2 / (1+0.12)^2 +
3.05 * (1+0.05)^3 / (1+0.12)^3 + 3.05 * (1+0.05)^4 / (1+0.10)^4 +
3.05 * (1+0.05)^5 / (1+0.10)^5 + 3.05 * (1+0.05)^6 / (1+0.10)^6 +
[3.05 * (1+0.05)^7 / (0.08 - 0.05)] / (1+0.10)^6
P0 = $96.06
Congratulations! You have just won the State Lottery. The lottery prize was advertised as an annuitized $80 million paid out in 20 equal annual payments beginning immediately. The annual payment is determined by dividing the advertised prize by the number of payments. You now have up to 60 days to determine whether to take the cash prize or the annuity A. If you were to choose the annuitized prize, how much would you receive each year? B. The cash prize is the present valuc of the annuity payments. If the interest rate used to calculate the cash prize is 70%, how much will you receive if you choose the cash prize option? C. Now suppose that, as many lotteries do, the annuitized cash flows will grow by 3% per year to keep up. with inflation, but they still add up to $80 million. If you took the annuitized cash prize instead, how much would you receive (before taxes)?
Answer:
(a) $4,000,000 (b) $45,342,380.97 (c) 2,977,256.60
Explanation:
Solution:
(A) The annual payment is determined by dividing the advertised prize by the number of payments which is stated as follows:
Amount of annuitized prize = $80,000,000/20 = $4,000,000
(B) Since, cash prize is present value of annuity payments discounted at an interest rate of 7%,
Amount of cash prize can be calculated using the formula:
P * [(1-((1+r)^(-n))/r] * (1+r)
= $4000000 * [(1-((1+7%)^(-20))/7%] * (1+7%) = $45,342,380.97
Amount of cash prize = $45,342,380.97
(C) Now, let make an assumption that the amount received at time 0 is x
The Amount received at time 1 = (1+3%) * x = 1.03 x
Amount received at time 2 = (1+3%)2 * x = 1.032 x
So, on till amount received at time 19 = (1+3%)19 * x = 1.0319 x
Then
The Sum of this series can be find using the formula is shown below:
A(1-rn)/(1-r)
A is the first term i.e. A = x
r is the common ration i.e. r = 1.03
n is number of terms i.e. n = 20
Hence, sum of the payments = x * (1-1.0320)/(1-1.03) = 26.8703745*x
Since sum of series of payments is $80,000,000
Therefore, 26.8703745*x = 80,000,000
x = 80,000,000/26.8703745
x = 2,977,256.60
Therefore as a graduated annuity payment, first amount received is $2,977,256.60
Question I - Debbie Debtor borrowed $1,000.00 from First Big Bank. Debbie Debtor agreed to repay the $1,000.00 over eight months plus interest. Debbie Debtor loses her job and stops making payments to First Big Bank after two months. What is the source of law that governs the subsequent remedies that may be available to First Big Bank? Question II - Eddie Embezzler has worked for Betty Boss for many years as an accountant. During his employment, Eddie has taken thousands of dollars from Betty’s business. As a result, Betty has suffered. Did Eddie violate a criminal law, a civil law, or both? Explain.
Answer:
(1). Check Explanation.
(2). Under both laws.
Explanation:
(1). Many times, things do not go as one wishes as this is the case of Debbie Debtor in the question above. Debbie Debtor is unable to repay her debt and no matter what the First Big Bank must collect their money back. The ways in which First Big Bank will collect their money back is governed by the Fair Debt Collection Practices Act (FDCPA).
The money can be collected ( if the loan is secured) from the the guarantors or if the bank has taken a mortgage on the loan, the property can be collected by the bank.
(II). Eddie violated both the criminal law and the civil law because embezzlement( a statutory offence) is different from theft(so, we can't really say that it is a criminal case or it violates the criminal law).
Embezzlement is about converting another's person properties into your own. The judgement depends on the kind of property or the situation in which the fund or the properties are embezzled.
Flow Company has provided the following information for the year ended December 31, 2014:Cash paid for interest $20,000Cash paid for dividends $6,000Cash dividends received $4,000Cash proceeds from bank loan $29,000Cash purchase of treasury stock $11,000Cash paid for equipment purchase $27,000Cash received from issuance of common stock $37,000Cash received from sale of land with a $32,000 book value $25,000Acquisition of land costing $51,000 in exchange for preferred stock issuance Payment of a $100,000 note payable by exchanging used machinery with a $77,000 book value and $100,000 fair value Required:How much was Flow's net cash flow from investing activities:_________a) A net outflow of $2,000.b) A net inflow of $2,000.c) A net outflow of $53,000.d) A net inflow of $49,000.
Answer:
The correct option is B,A net inflow of $2,000
Explanation:
The net cash flow from investing activities is the cash dividends received minus cash paid for equipment purchase plus cash received from sale of land
Cash dividends received is $4,000
cash paid for equipment purchase is $27,000
Cash received from the sale of land is $25,000
Net cash flow from investing activities=$4000-$27,000+$25,000=$2000
The correct option ,therefore, is B, a net cash inflow of $2000 from investing activities
Culver Corporation purchased machinery on January 1, 2022, at a cost of $288,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $33,800. The company is considering different depreciation methods that could be used for financial reporting purposes.
Required:
Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Purchasing price= $288,000
Useful life= 4 years
Salvage value= $33,800
First, we will calculate the depreciation expense using the straight-line method:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (288,000 - 33,800)/4
Annual depreciation= $63,550
Now, using the double-declining balance:
Annual depreciation= 2*[(book value)/estimated life (years)]
Year 1= 2*63,550= 127,100
Year 2= [(254,200 - 127,100)/4]*2= $63,550
Year 3= [(127,100 - 63,550)/4]*2= $31,775
Year 4= [(63,550 - 31,775)/]*2= $15,887.5
A company allocates overhead at a rate of 160% of direct labor cost. Actual overhead cost for the current period is $1,020,000, and direct labor cost is $525,000.
a. Determine whether there is over- or underapplied overhead using the T-account.
b. Prepare the entry to close over- or underapplied overhead to cost of goods sold.
Answer:
(A) $180,000 (B) A journal entry was prepared for over- or under applied overhead to cost of goods sold.
Explanation:
Solution
Now,
Let us recall from the statement from the example as follows:
A company gives an overhead at =1 60% rate
The actual overhead cost for the present period is =1020,000
Direct cost of labor = $525,000
Then,
(a) For the under applied overhead using T account we have the following:
The direct labor cost overhead = 525,000 * 160% (allocated overhead)
=$ 840,000
Thus
The Under applied overhead becomes,
Under applied overhead =The actual overhead - applied overhead
In other words we deduct the actual overhead for applied overhead
=$1020,000 - $840,000 = $180,000
(B) A Journal entry is carried out for the close over or under applied overhead.
Date Particulars Debit Credit
Cost of goods sold A/c $180,000
Manufacturing overheads $180,000
Texas Instruments builds a large plant to produce a great quantity of products, hoping that as prices decline, sales volume increases and thus costs decline. This market-penetration pricing is dependent upon three conditions existing in the marketplace. Which one of the following is NOT one of these conditions?
a. Low price discourages competition from entering the market.
b. Production and distribution costs actually fall with increases in production.
c. Low prices does not increase consumer demand but increases retailer competition.
d. The market is stimulated by lower prices.e. The market is highly price sensitive.
Answer:
c. Low prices does not increase consumer demand but increases retailer competition.
Explanation:
Penetration pricing is a marketing strategy employed for a new product. The price of the new product is initially set relatively low in order to attract customers to the new product.
The goal of penetration pricing is to attract customers through the low prices. If penetration fails to achieve this goal, the firm would most likely incur losses.
Also, if a price war erupts among retailers, it would lead to losses and the goal of penetration pricing would not be achieved.
I hope my answer helps you
For the strategy that Texas Instruments wants to embark on to work, it is not ideal that c. Low prices does not increase consumer demand but increases retailer competition.
For the strategy to work:
More people have to buy the product when the price drops Less competitors should come into the market because they would be worried about low profits Costs reduce with higher productionIf a situation arises where people don't buy regardless of the small prices and more competitors enter thereby reducing market share, Texas Instruments will make a loss.
In conclusion, it is best that there is little competition and increased demand for this strategy to work.
Find out more at https://brainly.com/question/18613754.
Clinton Corporation has two decentralized divisions, Alpha and Beta. Alpha always has purchased certain units from Beta at $95 per unit. Beta plans to raise the price to $133 per unit, the price it receives from outside customers. As a result, Alpha is considering buying these units from outside suppliers for $95 per unit. Beta’s costs follow: Variable costs per unit $ 88 Annual fixed costs $ 140,000 Annual production of these units sold to Alpha 10,000 units Required: a. If Alpha buys from an outside supplier, the facilities that Beta uses to manufacture these units will remain idle. What will be the result if Clinton enforces a transfer price of $133 per unit between Alpha and Beta?
Answer:
a. As a result of this policy the Clinton corporation will loss the contribution margin
Contribution Margin = (Selling price – variable cost) * Number of units
= (95 – 88) * 10,000
= $77,000
b.The cost incurred by Clinton corporation by following this policy is Opportunity cost which is cost of forgone opportunity.
Opportunity cost = (Outside selling price – variable cost ) Number of units
=(133 – 88) * 10,000
= $450,000.
Suppose that on Valentine's Day, the demand for both roses and greeting cards increases by the same percentage amount. However, the price of roses increases by more than the price of greeting cards. Based on this information, you can conclude that the supply of Valentine's cards is sensitive to price than the supply of roses?
Answer:
Based on the information supply of cards is more elastic (price sensitive) than that of roses
Explanation:
Price elasticity of supply is defined as the sensitivity of quantity supplied to changes in price.
The formula is given below
Price elasticity of supply= Change in quantity supplied ÷ Change in price
In this scenario the demand for both roses and cards increases, however the price of roses increases more.
This implies that the denominator in the formula is higher in roses resulting in smaller price elasticity of supply.
The elasticity of supply for cards is higher than that of roses, so it is more sensitive to changes in price.
Cards can be stored from year to year so the labour for maintaining a stock of cards is low with resultant low price.
On the other hand roses require care to grow. It requires watering, application of chemicals to treat infestation and so on. So suppliers tend to push the extra cost of growing roses to the buyers
Answer:
Yes , Valentine cards are more price sensitive.
Explanation:
When Demand exceeds supply, prices rise. As a result of the increase in price, supply increases.
The increase in supply is in line with the law of supply which says, the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied.
If there's an increase in the demand for roses and cards, it is expected that prices would rise. However, if supply for these items increases, prices would fall and if supply doesn't increase, price would not decrease.
So if the price of roses increases by more than the price of greeting cards it indicates that the supply of rose didn't increase as much as the increase in supply of cards.
This means that the supply of roses is less price sensitive when compared to greeting cards.
What is the correct way to dispose of used oil filter
2. Beachcomer, a coin dealer, sues to rescind a purchase by Boskett, who paid $50 for a dime both parties thought was minted in San Francisco. In fact, it was a very valuable dime minted in Denver. Beachcomer asserts a mutual mistake of fact regarding the genuineness of the coin as San Francisco-minted. Boskett contends that the mistake was as to value only. Explain who should win.
Answer and Explanation:
Beachcomer will withdraw its complaint (university of technology Legal Proceedings) to eliminate the deal, as Boskett acknowledges the poor interest. In actuality, Beachcomer claims that there is a consensual error in trying to measure the dime significance. Sue to revoke was the method used mostly by Beachcomer could assert the quality of Dime.As well as, if Beachcomer brings the suit back but rather resolves the deal with each other, all of them seem to be in a win-win situation. When Beachcomer decides to withdraw and Boskett can pay for its true worth, therefore Boskett will win, because the deal has indeed actually occurred.So that the above seems to be the right answer.
Camrim Inc., experienced the following events in 2018, its first year of operation: Performed counseling services for $21,700 on account. On May 1, 2018, paid $5,600 cash to rent office space for the next 12 months.. Adjusted the accounts to reflect the amount of rent used during the year. Based on these three events, net income is
Answer:
Net income is $ 17,966.67
Explanation:
The net income for the year is the revenue for counselling services of $21,700 minus the eight-month rent expense which is from May 2018 to December 2018, even though rent was paid for 12 months, only eight months relate to the current year.
Net income=$21,700-($5,600*8/12)=$21,700-$3,733.33 =$ 17,966.67
The net income after deducting rent expense related to the current year from the counselling revenue is $ 17,966.67
Salad Express exchanged land it had been holding for future plant expansion for a more suitable parcel of land along distribution routes. Salad Express reported the old land on the previously issued balance sheet at its original cost of $79,000. According to an independent appraisal, the old land currently is worth $150,000. Salad Express paid $23,500 in cash to complete the transaction.
Required
1. What is the fair value of the new parcel of land received by Salad Express?
2. Record the exchange.
Answer:
1. $173,500
2. $ 71,000
Explanation:
Requirement 1: Solution
We can calculate the fair value of new parcel of land just by adding the current market price with additional cash paid to complete the transaction
Fair Value = Current market price + cash paid additionally
Fair Value = $150,000+$23,500
Fair value = $173,500
Requirement 2: Solution
We need to calculate Gain/loss on exchange first in order to record them on books. This can be done by just subtracting the land's book value from the current market price of land
Gain/loss on exchange = Current market price - book value
Gain/loss on exchange = $150,000 - $79,000
Gain/loss on exchange = $71,000
Entries: Debit Credit
New land $173,500
Old land $79000
Cash $23,500
Gain $71,000
