Answer:
Option A is riskier
Explanation:
In this question, we want to know which of the two stocks is riskier.
To answer this, we can use the standard deviation of returns as a risk measure.
For a security with a big value for standard deviation of returns, its per period returns are wider making its range per day large.
Hence, what this means is that out of the two stocks, the one with a larger value of standard deviation of returns will guarantee more risk as it is expected to give a better ranges of price
Now back to the values in the question, we can see that the standard deviation of returns of stock A is greater than that of stock B which this makes it a more risky option
From an AIDA model perspective, ________ advertising seeks to gain awareness and initial interest and is used mostly in the early growth stages of a product.
Answer:
Pioneering advertising
Explanation:
In this question, the term that is being mentioned is known as Pioneering advertising. This type of advertising refers to the launch campaign of a new product category, instead of actually marketing for a single specific product in an existing marketplace. This is used in the early growth stages of a product when it initially launches in order to make customers aware of its arrival and explain what the product can offer.
Stellar Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory280$31$ 8,680 April 15 purchase4503716,650 April 23 purchase 270 40 10,800 1,000 $36,130 Compute the April 30 inventory and the April cost of goods sold using the LIFO method.
Answer:
inventory - $13,120
cost of goods sold - $23,010
Explanation:
LIFO means last in first out. It means that it is the last purchased inventory that is the first to be sold.
the cost of goods sold would be taken from the cost of the newest purchases.
April 23 purchase 270 x 40 = $ 10,800
600 - 270 = 330
April 15 purchase ; 330 x $37 = $12,210
cost of goods sold = $12,210 + $ 10,800 = $23,010
Inventory = the remaining part of the April 15 purchase and beginning inventory
450 - 330 = 120 x $37 = $4440
$4440 + 8,680 = $13,120
Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investment at $150,650 and $165,300 at December 31, 2020, and December 31, 2021, respectively. During 2021 Clor recognized $75,600 of net income and paid dividends of $20,500. Assuming that Bloomfield owned the same percentage of Clor throughout 2021, its percentage ownership must have been: (Round your answer to the nearest whole percent):
Answer:
Suppose that in year 2021, Bloomfield had equal share of percentage of ownership in Clor as they had in previous year i.e 2020, it means that in 2021, the share of percentage that will be held by Bloomfield in Clor will be 26.59%
Explanation:
From the above, we will assume that Bloomfield stake in Clor using equity method and also investment in 2020 was $150,650 and $165,300 in 2021.
Inorder to calculate the percentage , we can make it Y hence we will add amount in 2020 with Y% of (Net income - Dividend declared) inorder to arrive at the total amount in 2021.
Solution.
$150,650 + Y% (75,600 - $20,500) = $165,300
$150,650 + $55,100Y = $165,300
$55,100Y = $165,300 - $150,650
$55,100Y = $14,650
Y% = $14,650/$55,100
Y% = 0.26588
Y = 0.26588 × 100
Y = 26.59
A $ 1 comma 000 bond with a coupon rate of 6.2% paid semiannually has two years to maturity and a yield to maturity of 6%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond?
Answer:
As a result of a fall in interest and YTM, the bond price will increase by $15.04
Explanation:
To calculate the change in price due to fall in interest rate, we must first calculate the price of the bond before and after the fall of interest rates.
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 1000 * 0.062 * 0.5 = $31
Total periods (n)= 2 * 2 = 4
r or YTM = 6% * 1/2 = 3% or 0.03
The formula to calculate the price of the bonds today is attached.
Before Interest rates Fell
Bond Price = 31 * [( 1 - (1+0.03)^-4) / 0.03] + 1000 / (1+0.03)^4
Bond Price = $1003.717098 rounded off to $1003.72
After Interest Rates Fell
New YTM = 6% - 0.8% = 5.2% or 0.052
Semi Annual YTM = 0.052 * 0.5 = 0.026
Bond Price = 31 * [( 1 - (1+0.026)^-4) / 0.026] + 1000 / (1+0.026)^4
Bond Price = $1018.764647 rounded off to $1018.76
Change in Bond Price = 1018.76 - 1003.72 = $15.04
As a result of a fall in interest and YTM, the bond price increased by $15.04
Monochronic time is a Question 34 options: preference for multitasking. desire to do as little as possible for a period of time. time for the open discussion of problems or challenges. time when little is accomplished. preference for doing one thing at a time.
Answer:
Preference for doing one thing at a time.
Explanation:
Monochronic time has a simple direct explanation which means the preference of doing one thing at a time. This is directly seen in a managerial and business organisation system or bodies; as it affects working patterns and output of employees. In a world that is seen to be globalized, cultural attitudes and behaviours of people play a crucial role in business and role of output or success of a person. This is said to be so because of time perception tend to change peoples orientation and personal organisations towards meeting, work and some other social functions. The time a European appears to a meeting(on time or minutes before) is different from that of an African(minutes or hours behind schedule).
The payroll register of Seaside Architecture Company indicates $910 of Social Security and $250 of Medicare tax withheld on total salaries of $15,000 for the period. Federal withholding for the period totaled $3,245.
Required:
1. Provide the journal entry for the period's payroll.
CHART OF ACCOUNTS
Seaside Architecture Company
General Ledger
ASSETS
110 Cash
111 Accounts Receivable
112 Interest Receivable
113 Notes Receivable
115 Inventory
116 Supplies
118 Prepaid Insurance
120 Land
123 Building
124 Accumulated Depreciation-Building
125 Office Equipment
126 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
213 Interest Payable
214 Notes Payable
221 Salaries Payable
222 Social Security Tax Payable
223 Medicare Tax Payable
224 Employees Federal Income Tax Payable
225 State Withholding Tax Payable
226 Federal Unemployment Tax Payable
227 State Unemployment Tax Payable
228 State Disability Insurance
231 Medical Insurance Payable
232 Retirement Savings Deductions Payable
233 Union Dues Payable
234 Vacation Pay Payable
235 Unfunded Pension Liability
241 Product Warranty Payable
242 EPA Fines Payable
243 Litigation Claims Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
610 Interest Revenue
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
525 Delivery Expense
526 Repairs Expense
531 Rent Expense
533 Insurance Expense
534 Supplies Expense
535 Cash Short and Over
536 Product Warranty Expense
541 Vacation Pay Expense
542 Pension Expense
543 Payroll Tax Expense
544 Federal Income Tax Expense
545 State Income Tax Expense
561 Depreciation Expense-Building
562 Depreciation Expense-Office Equipment
570 Damage Awards and Fines
590 Miscellaneous Expense
710 Interest Expense
2. Prepare the journal entry for the period’s payroll on December 31.
Answer and Explanation:
The journal entries are shown below:
Salaries expense Dr $15,000
To Social security tax payable $910
To Medicare tax payable $250
To Employees federal income tax payable $3,245
To Salaries payable $10,595 (Balancing figure)
(Being the payroll expense is recorded)
For recording this we debited the salaries expense as it increased the expenses and credited all payable account as it also increased the liabilities
The benefits of comparing actual performance of the operations against planned goals include all of the following except:_______
a) providing prompt feedback to employees about their performance relative to the goal.
b) preventing unplanned expenditures.
c) helping to establish spending priorities.
d) determining how managers are performing against prior years' actual operating results.
Answer:
c. determining how managers are performing against prior year's operating results.
Explanation:
Management compare actual performance against planned goals to enable them evaluate deficiencies in the actual performance which can give directions to areas that should be improved upon. Moreover, comparing actual performance and planned goals expose deficiencies in the system which management would take into consideration when making future plan hence eliminate unplanned expenditures.
Again, there is also identification of priorities to accomplish objectives when actual performance are compared against planned goals.
The organization's leadership should establish the flow-down objectives to set the stage for establishing the guiding principles such as the vision and mission for an organization before developing the strategic objectives. a. True b. False
Answer:
True
Explanation:
Vision, mission, objective, strategy, and action plan (VMOSA) is a management techique that is used to a clear vision of objectives to be achieved and develop ways to formulate effective action plans.
In this process the Vision is the dream of what the organisation wants to achieve. This should be passed along to the team to develop an alignment with the organisation's focus.
The Mission is the what and why. It defines what the organisation wants to do and why it wants to do it.
These 2 steps must be in place before developing strategic objectives according to VMOSA.
Strategies are the how. It details a variety of ways the organisation can meet its goals and objectives.
On March 1, Pina Colada Corp. sold merchandise on account to Amelia Company for $30,200, terms 2/10, net 45-On March 6, Amelia returns merchandise with a sales price of 900. On March 11, Pina Colada Corp. receives payment from Amelia for the balance due.
Prepare journal entnes to record the March transactions on Pina Colada Corp.'s books. (You may ignore cost of goods sold entries and explanations.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Date Account Titles and Explanation Debit Credit
Mar. 11
Answer:
March 1,
DR Accounts Receivable - Amelia $30,200
CR Sales revenue $30,200
March 6,
DR Sales return and allowances $900
CR Accounts Receivable $900
March 11,
DR Cash $28,714
DR Sales discounts $586
CR Accounts Receivable - Amelia $29,300
Workings
Sales Discounts - 2/10 net 45 means a disount of 10% if Amelia pays within 45 days. She did.
= 29,300 * 2%
= $586
A Quality Analyst wants to construct a control chart for determining whether three machines, all producing the same product, are under control with regard to a particular quality variable. Accordingly, he sampled four units of output from each machine, with the following results:
Machine Measurements
Number1 17 15 15 17
Number2 16 25 18 25
Number3 23 24 23 22
What is the estimate of the process mean for whenever it is under control?
a. 16
b. 19
c. 20
d. 21
e. 23
Answer:
c. 20
Explanation:
The summary of the given information shows that a Quality Analyst sampled four units of output from each machine, with the following results:
Machine Measurements
Number 1 17 15 15 17
Number 2 16 25 18 25
Number 3 23 24 23 22
In order to determine the estimate of the process mean for whenever it is under control, we need to find the mean of each Machine and find the average of the three machines together
i.e
For Machine Number 1 ;
Mean = (17+15+15+17)/4
Mean = 64/4
Mean = 16
For Machine Number 2 ;
Mean = (16+25+18+25)/4
Mean = 84/4
Mean = 21
For Machine Number 3;
Mean = ( 23+24+23+22)/4
Mean = 92/4
Mean = 23
∴
The estimate of the process mean for whenever it is under control
= (16 + 21 + 23)/3
The estimate of the process mean for whenever it is under control = 60/3
The estimate of the process mean for whenever it is under control = 20
If during the process of negotiating a transaction a real estate licensee discourages a buyer from seeking legal advice on the grounds that the licensee will look into the problem, that licensee is acting:________.
Answer: illegally
Explanation:
One of the requirements in real estate agency regulations is that every listing agreement should have an expiration date.
If during the process of negotiating a transaction a real estate licensee discourages a buyer from seeking legal advice on the grounds that the licensee will look into the problem, that licensee is acting illegally. The licensee has no right to discourage the buyer from seeking legal advice.
Q3) At an output level of 45,000 units, you calculate that the degree of operating leverage is 2.79. If output rises to 48,000 units, what will the percentage change in operating cash flow be
Answer: 18.6%
Explanation:
Degree of operating leverage = % change in Operating cash flow / % change in output
% change in Output
= [tex]\frac{48,000 - 45,000}{45,000}[/tex]
= 6.7%
Degree of operating leverage = % change in Operating cash flow / % change in output
2.79 = % change in Operating cash flow/ 6.7%
% change in Operating cash flow = 2.79 * 6.7%
% change in Operating cash flow = 18.6%
A HEADLINE article in the textbook is titled "Hurricane Damage to Gulf Ports Delays Deliveries, Raises Costs." Increased costs are likely to cause:
Answer: Equilibrium price level increases, real equilibrium output decreases
Explanation:
An equilibrium price increase would cause an upward shift in supply and demand curve affecting price and quantity of the product.
When there's a drop in supply and demand there would be a drop in real equilibrium output. Increase in cost as regards the headlines are likely to cause an Equilibrium price level increases and a drop in real equilibrium output.
If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________ Group of answer choices
Answer:
Shortage
Explanation:
At equilibrium, the quantity demanded equals the quantity supplied.
When the quantity demanded will exceed the quantity supplied, there is a shortage.
when the quantity supplied exceeds the quantity demanded, there is a surplus.
Answer: shortage
Explanation:
Poe Company is considering the purchase of new equipment costing $80,000. The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of $1 and present value of an annuity of $1 for different periods is presented below. Compute the net present value of the machine. 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7514 2.4869 4 0.6830 3.1699
Answer:
$23,773.65
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested
NPV can be calculated using a financial calculator :
cash flow in year 0 = $-80,000.
Cash flow in year 1 and 2 = $35,000.
Cash flow in year 3 and 4 = $30,000.
I = 10%
NPV = $23,773.65
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
If Sweet Catering had recorded transactions using the Accrual method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign.
Answer:
-$1,390
Explanation:
The computation of net income using the accrual method is shown below:-
Net income = Received cash meals to customers + Served a banquet account - Received and paid electricity bill - Accrued salary expense - Prepaid insurance expired
= $470 + $1,530 - $250 - $3,000 - $140
= -$1,390
Therefore for computing the net income using the accrual method we simply applied the above formula.
A loan is to be paid off in twenty annual installments of $100, with the first payment due one year after the loan is made. What is the total amount of principal paid in the even numbered installments, if the effective rate of interest is 4%?
Answer:
Total amount of principal paid = $ 1,359.03
Explanation:
This method of loan repayment is known as loan amortization
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
The value of the loan can be worked as follows:
Loan amount = A× (1- (1+r)^(-n))/r
A- annual installment
r - annual interest rate
n- number of years,
Loan amount = ?
Loan amount = 100 × (1 - (1+0.04)^(-20) )/ 0.04
Loan amount = 1,359.032
Total amount of principal paid = $ 1,359.03
A company issues $60,000 of 6%, 5-year bonds dated January 1 that pay interest semiannually on June 30 and December 31 each year. If the issuer accepts $62,000 for the bonds, the premium on bonds payable will _________________ total interest expense recognized over the life of the bond by $ ______________.
Answer:
The premium on the bonds payable will decrease the total interest expense recognized over the life bond by $2000
Explanation:
The premium on bonds payable is the excess of cash proceeds received from the bond's issuance over the face value.
cash proceeds=$62,000
face value=$60,000
premium on bonds payable=$62,000-$60,000
premium on bonds payable=$2000
This will decrease the total interest expense recognized over the life bond by $2000
For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce.
Price Quantity Total Revenue Fixed Cost Variable Cost Profit
(Dollars per polo) (Polos) (Dollars) (Dollars) (Dollars) (Dollars)
25.00 520,000
40.00 520,000
65.00 520,000
If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $520,000 per day. In other words, if it shuts down, the firm would suffer losses of $520,000 per day until its fixed costs end (such as the expiration of a building lease).
This firm's __________ that is, the price below which it is optimal for the firm to shut down is:________
Answer:
This firm's Shut down price, That is, the price below which it is optimal for the firm to shut down is $40.
Explanation:
Shut down point is the point at which a firm or business is not able to gain any profit or benefit from the operations. Firm try to stay in the market until they reach the shut down point in business. It is a point where a business revenue just covers the variable expenses.
Think about the dwelling type that your target consumers are most likely to live in. As you make your selection, keep the following descriptions in mind:
The average American house is 2600 square feet, with 85% having washer and dryer hookups.
The average American apartment is 940 square feet, with 67% having washer and dryer hookups.
The average American condominium is 1750 square feet, with 91% having washer and dryer hookups.
Select an option from the choices below.
a. Condominium
b. House
c. Apartment
Answer:
Apartment
Explanation:
From the different market segmentations here, we have chosen apartment as the dwelling type where our target consumers reside mostly since they have the lowest washer and dryer hookups. This is because their low percentage here shows us that this group are in more need of our products than any of the other groups who already have them in higher percentages and therefore do not require our washers and dryer hookups as much as the apartment group
Yarim corporation produces and sells 6500 units per month of a single product for a price of $170 per unit variable costs are $24 per unit and monthly fixed costs are $120 per unit.
Per Unit Percent of Sales
Selling price $180 100%
Variable expenses 54 30%
Contribution margin $126 70%
The company is currently selling 5,500 units per month. Fixed expenses are $383,300 per month. The marketing manager believes that a $6,500 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?
A. Decrease of $6,500.
B. Increase of $4,700.
C. Increase of $11,200.
D. Decrease of $4,700.
Answer:
Effect on income= $11,140 increase
Explanation:
Giving the following information:
Contribution margin $126
The marketing manager believes that a $6,500 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales.
To calculate the effect on income, we need to use the following formula:
Effect on income= total contribution margin increase - fixed costs increase
Effect on income= 140*126 - 6,500
Effect on income= $11,140 increase
While examining cash receipts information, the accounting department determined the following information: opening cash balance $180, cash on hand $1,350.89, and cash sales per register tape $1,186.34. Prepare the required journal entry based upon the cash count sheet.
Answer:
Cash $1,170.89
Cash Over/Short $15.45
To Sales Revenue $1,186.34
(Beingthe cash is recorded)
Explanation:
Before passing the journal entry first we have to determine the ending cash balance which is shown below:
Ending Cash Balance is
= Opening Cash Balance + Sales
= $180 + $1,186.34
= $1,366.34
Short cash is
= Ending cash balance - cash on hand
= $1,366.34 - $1,350.89
= $15.45
And, the actual cash is
= Cash on hand - opening cash balance
= $1,350.89 - $180
= $1,170.89
Now the journal entry is
Cash $1,170.89
Cash Over/Short $15.45
To Sales Revenue $1,186.34
(Being the cash is recorded)
You are a data mining consultant hired by your organization to implement a data mining process. What challenges does your organization face in ensuring that the data mining models are receiving clean data?
Answer and Explanation:
1.We have to ensure that data is being received from a reliable source
2.The wrong data would lead to wrong interpretation and prediction of customer's needs
3. The data mining algorithm must be effective enough to clean data that has alot of errors
4.incoporating background knowledge of the data in reducing complexity and finding data pattern
5. Data privacy and security issues present the challenge of getting needed data from data sources or resorting to other means that mayalr data less reliable
Which of these would most likely be funded through a Community Facilities District?
Answer:
what ones there's only the question not the answers
If per capita output falls by 2 percent and population grows by 3 percent, output: Multiple Choice grows by 1 percent. grows by 5 percent. falls by 1 percent. falls by 5 percent.
Answer:
grows by 1 percent.
Explanation:
The Growth rate of per capita output refers to the relationship between the growth rate of output and the growth rate of population i.e by taking the difference between them
In mathematically,
The Growth rate of per capita output = Growth rate of output - a growth rate of population
-2% = growth rate of output - 3%
So, the growth rate of output is 1%.
Therefore it grows by 1%
"The "circuit breaker" on the domestic equities markets to reduce price volatility is INITIATED when the Standard and Poor's 500 Index falls by:"
Answer:
7%
Explanation:
In Microeconomics, circuit breaker can be defined as a financial regulatory measure or instrument used by stock exchange organizations to temporarily halt trading on an exchange and to prevent stock market crash. The circuit breaker is also referred to as trading curb and it is used to curb panic selling in the stock markets, which eventually prevents collosal losses and speculative profits in a very short period of time.
The "circuit breaker" on the domestic equities markets to reduce price volatility is INITIATED when the Standard and Poor's 500 Index falls by 7%. The circuit breaker rule states that, if the Standard and Poor's 500 Index falls by 7% from the closing price of the previous day: the listed equity on the domestic equities markets will be shut down for 15 minutes, so as to mitigate price volatility. The 7% is the level one (1) of the circuit breaker levels for the the Standard and Poor's 500 Index (S&P 500 Index) on the stock markets.
On January 1, 2018, Dunbar Echo Co. sells a machine for $23,600. The machine was originally purchased on January 1, 2016 for $41,200. The machine was estimated to have a useful life of 5 years and a residual value of $0. Dunbar Echo uses straight-line depreciation. In recording this transaction:
Answer:
The answer is
Dunbar Echo Co will report a loss of $1,120
Explanation:
Straight-line depreciation = (cost of asset - salvage/residual value) ÷ number of useful life
Cost of asset - $41,200
Salvage/residual value - $0
Number of useful life - 5 years
$41,200/5
= $8,240
January 1, 2016 through January 1, 2018 is two years. So accumulated depreciation = $16,480($8,240 x 2)
Carrying value of the asset as at January 1, 2018 is
$41,200 - $16,480
=$24,720.
On this date, the asset was sold for $23,600.
Therefore, Dunbar Echo Co made a loss of $1,120($23,600 - $24,720)
In recording the transaction by Dunbar Echo Co. on January 1, 2018, the following journal entries will be made:
Journal Entries:
Debit Sale of Equipment $41,200
Credit Equipment $41,200
To transfer the Equipment to Sale of Equipment account.
Debit Accumulated Depreciation $16,480
Credit Sale of Equipment $16,480
To transfer the Accumulated Deprciation to Sale of Equipment.
Debit Cash $23,600
Credit Sale of Equipment $23,600
To record the cash receipts from the sale of equipment.
Debit Loss on Sale of Equipment $1,120
Credit Sale of Equipment $1,120
To record the loss on the sale of equipment.
Data and Calculations:
Selling price = $23,600
Cost of machine = $41,200
Estimated useful life = 5 years
Estimated residual value = $0
Accumulated depreciation = $16,480 ($8,240 x 2)
Sale of Equipment $41,200 Equipment $41,200
Accumulated Depreciation $16,480 Sale of Equipment $16,480
Cash $23,600 Sale of Equipment $23,600
Loss on Sale of Equipment $1,120 Sale of Equipment $1,120
Learn more: https://brainly.com/question/20347226
3. Individual Problems 20-3 Lightweight personal locator beacons are now available to hikers, making it easier for the Forest Service's rescue teams to locate those lost or in trouble in the wilderness. True or False: Forest Service costs will likely fall due to moral hazard. True False
Answer: False
Explanation:
Moral Hazard refers to the tendency of people or entities to take on more risk if they know they will be saved from it.
With the Forest Service now making locator beacons available for hikers, the result will be that more hikers will be emboldened to hike further in the wilderness or into more dangerous areas knowing that should they get in trouble, the rescue teams will locate them faster. It will also mean that more hikers will start coming to the forest because they feel they can hike and be found easily if they get into trouble.
These 2 things will mean that the Forest Service will both have to conduct more rescue missions and maybe hire more personnel as a result of the increased number both of which will increase their costs not reduce them.
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $126,000 and then sells it to Watkins for $180,000. At the end of the year, Watkins still holds only $26,400 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method
Answer:
The gross profit that will be deferred is $2376
Explanation:
The cost of inventory = $126000
Selling price of inventory (revenue) = $180000
The remaining inventory with Watkins = $26400
Gross profit percentage = (revenue – cost) / revenue
Gross profit percentage = (180000 – 126000) / 180000 = 0.3 or 30%
Remaining value = $26400 × 30% = 7920
Ownership = 7920 × 30% = $2376
The gross profit that will be deferred is $2376
A $200,000 loan amortized over 12 years at an interest rate of 10% per year requires payments of $21,215.85 to completely remove the loan when interest is charged on the unrecovered balance of the principal. If interest is charged on the original principal instead of the unrecovered balance, what is the loan balance after 12 years provided the same $21,215.85 payments are made each year?
Answer:
loan balance after 12 years = $185409.8
Explanation:
Loan principal = $200000
interest = 10% of principal
amount paid yearly = $21215.85
For 1st year
principal for the first year = $200000
required interest to be paid = 10% of 200000 = $20000
amount paid = $21215.85
Loan Balance after first year = (principal for first year) - (amount paid - 10% of principal ) = $198,784.15
For 2nd year
principal for the 2nd year = Loan balance after first year = $198,784.15
loan balance after 2nd year = 198784.15 - ( 21215.85 - 10% of 198784.15)
= $197568.30
same applies for the different years until the 12th year
using this formula :
Loan Balance after Nth year = [ Loan balance after (n-1) year - ( amount paid - 10% of loan balance after (n-1) year ) ]