Answer:
Hello your question has some missing figures here is the complete question with the missing figures
Creating own dividend policy. Carmen owns shares of Wiseguy Entertainment. Wiseguy has just declared a $0.30 per share dividend on a stock selling at $24.3. What must Carmen do if she wants no cash dividends at this time, $82000 worth of dividends, or $107000 worth of dividends? Show her wealth in paper and cash under each scenario. Assume a world of no taxes. First, if Carmen does not want an annual "dividend income" from his stock holdings, what must she do to get this level of income? (Select the best response.)
Answer: Wealth in cash = $107000 , wealth in paper = $8160000
since her annual dividend received = ($102000) Carmen needs to purchase 4250 more shares of stock to get to this level of income
Explanation:
Given data
shares held = 340000
dividend = $0.3
stock price = $24.3
Stock price - dividend = $24 ( dividend price )
A) what Carmen must do if she doesn't want cash dividends
Based on shares held the annual dividend of Carmen = 340000 * 0.3 = $102000
If Carmen doesn't want the cash dividend she can use it to purchase more shares for Wiseguy entertainment which will be = dividend received / dividend price = 102000 / 24 = 4250 shares
when the Annual dividend required is $82000
she can buy shares worth = $20000 ( 102000 - 82000 )
= 20000 / 24 = 833.33
when the Annual dividend required is $107000
Carmen can sell shares worth = $5000 ( 107000 - 102000 )
= 5000 / 24 = 208.33
therefore wealth in cash would be
= $107000
wealth in paper would be
= dividend price * number of shares held
= $24 * 340000 = $8160000
Lola, age 67, began receiving a $1,000 monthly annuity in the current year upon the death of her husband. She received seven payments in the current year. Her husband contributed $48,300 to the qualified employee plan.
Use the Simplified Method Worksheet below to calculate Lola's taxable amount from the annuity.
If your answer is zero, enter "0". If required, round your answers to the nearest whole dollar.
Simplified Method Worksheet
1. Enter total amount received this year.
1. $________
2. Enter cost in the plan at the annuity starting date.
2. $_______
3. Age at annuity starting date
Enter
55 and under 360
56–60 310
61–65 260
66–70 210
71 and older 160
3.________
4. Divide line 2 by line 3.
4. $______
5. Multiply line 4 by the number of monthly payments this year. If the annuity starting date was before 1987, also enter this amount on line 8, and skip lines 6 and 7. Otherwise, go to line 6.
5. $______
6. Enter the amount, if any, recovered tax-free in prior years.
6. $______
7. Subtract line 6 from line 2.
7. $______
8. Enter the smaller of line 5 or 7.
8. $______
9. Taxable amount this year: Subtract line 8 from line 1. Do not enter less than zero.
9. $______
Answer:
1.$7,000
2.$48,300
3.210
4.$230
5.$1,610
6.$0
7.$48,300
8.$1,610
9.$5,390
Explanation:
1. The total amount lola will received this year will be:
$1,000 monthly annuity*7 payments in the current year
=$7,000
2. The cost in the plan at the annuity starting date will be :
$48,300
3. The Age at annuity starting date will be 210 because Lola age is 67 in which age 66–70 is 210
4. When we Divide line 2 by line 3 we would have $230 calculated as
$48,300/210=$230
5. In a situation where we Multiply line 4 by the number of monthly payments this year we would have $1,610 calculated as:
$230*7=1,610
6. We have $0 recovered tax-free in prior years.
7. When we Subtract line 6 which is $0 from line 2 which is $48,300 we would have $48,300.
$48,300-$0=$48,300
8. The smaller of line 5 which is 1,610 or 7 which is $48,300 will be $1,610
9. The Taxable amount this year will be calculated as the Subtraction of line 8 which is $1,610 from line 1 which is $7,000 we would have $5,390
$7,000-$1,610=$5,390
Villalpando Winery wants to raise $20 million from the sale of preferred stock. If the winery wants to sell one million shares of preferred stock, what annual dividend will it have to promise if investors demand a return of a. 12%? b. 15%? c. 8%? d. 7%? e. 6%? f. 3%? a. What annual dividend will it have to promise if investors demand a return of 12%?
Answer:
$2.4/share
Explanation:
In order to calculate annual dividend we have to find the price per share first
Price per share = Total Capital raised/Number of shares
Price per share = $20,000,000/1,000,000
Price per share = $20
The annual dividend can be calculated by the following formula
Formula: Expected Return = Annual dividend/ price per share
NOTE: To find Annual dividend we need to adjust the formula accordingly
Annual dividend = Expected Return x Price per share
If Expected return is 12%
Annual dividend = 12% x $20 = $2.4/share
If Expected return is 15%
Annual dividend = 15% x $20 = $3/share
If Expected return is 8%
Annual dividend = 8% x $20 = 1.6/share
If Expected return is 7%
Annual dividend = 7% x $20 = $1.4/share
If Expected return is 6%
Annual dividend = 6% x $20 = $1.2/share
If Expected return is 3%
Annual dividend = 3% x $20 = $0.6/share
In #31, Kathryn and Jose decide to try mediation instead of arbitration. They can select one of the following, which are the typical types of mediation (select one):
Answer: e. two of the above.
Explanation:
The typical types of mediation in the options include both Facilitative and Evaluative;
Facilitative mediating is the most common and basic of mediation techniques. It involves the use of mediators who create an environment for negotiations. In other words they facilitate negotiations amongst the parties in conflict in the hopes that both parties can come to an agreement that favors the both of them and results in lasting peace. Evaluative Mediating on the other hand emulates Settlement conferences which is like a pre-trial where a Judge attempts to get both parties to settle a case before they go to court. Evaluative mediating therefore involves the use of a mediator who will act like a judge and show the parties where they are both falling short and then attempt to settle the issue they way they think a Judge would.direct materials $34, direct labor $27, variable manufacturing overhead $15, fixed manufacturing overhead $43, variable selling and administrative expenses $20, and fixed selling and administrative expenses $28. Its desired ROI per unit is $31. Compute the markup percentage using absorption-cost pricing.
Answer:
Mark- up = 26.05%
Explanation:
Absorption costing is method of costing where overheads are charged to units produced using volume-based bases. e.g machine hours, labour hours e.t.c. Units are valued using full cost per unit
Full cost per unit= Direct material cost + direct labor cost + variable manufacturing overhead + fixed manufacturing overhead
Note that the selling and administrative expenses are period cost which are not to be considered as production cost, hence they are excluded.
Full cost per unit= 34 + 27 +15 +43 = 119
ROI per unit/profit per unit = 31
Mark- up under absorption costing is profit expressed as a percentage of of the full cost.
Mark- up = 31/119 × 100 = 26.05%
Mark- up = 26.05%
Larry’s Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $32,000 per year forever. Assume the required return on this investment is 7.2 percent.
How much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$444,444.44
Explanation:
Larry's life insurance corporation is trying to sell an investment policy that will pay you and your heirs a total amount of $32,000 per year
The required return on this investment is 7.2%
= 7.2/100
= 0.072
Since the cash flow is a perpetuity then, the amount that will be paid for the policy can be calculated as follows
PV= C/r
= $32,000/0.072
= $444,444.44
Hence the amount of money that will be paid for the policy is $444,444.44
"The cash flow is a perpetuity then, the amount that will be paid for the policy is = $444,444.44". To understand the calculations, check below".
What is Investment policy?
When Larry's life insurance corporation is trying to sell an investment policy that will pay you and also your heirs a total amount of $32,000 per year
Then The required return on this investment is 7.2%
After that = 7.2/100
Then = 0.072
Since that when the cash flow is perpetuity then, the amount that will be paid for the policy can be calculated as follows:
The formula is PV= C/r
Then = $32,000/0.072
Therefore, = $444,444.44
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On the first day of 2016, Holthausen COmpany acquired the assets of Leftwich Company including several intangible assests. These include a patent on Ledtwicj's primary product, a device called a plentiscope. Leftwich carried the patent on its book for $1,500, but Holthausen believes that the fair value is $200,000. The patent expires in seven years, but companies can be expected to develop competing patents within three years. Holthausen believes that, with expected technlogical improvements, the product is marketable for a t least 20 years.
The registration of the trademark for the Leftwich name is scheduled to expire in 15 years. However, the Leftwich brand name, which Holthausen believes is worth $500,000, could be applied to related products for many years beyond that.
As part of the acquisition, Leftwich's principal researcher left the company. As part of the acquisition, he signed a five-year noncompetition agreement that prevents him from developing competing products. Holthausen paid the scientist $300,000 to sign the agreement.
a. What amount should be capitalized for each of teh identifiable intangible assets?
b. What amount of amortization expense should Holthausen record in 2016 for each asset?
Answer:
Holthausen Company and Leftwich Company
Intangible Assets:
a) Amount to be capitalized:
1) Patent: $200,000
2) Trademark: $500,000
3) Non-competition Agreement: $300,000
b) Amount of Amortization Expense for 2016:
1) Patent: $200,000/7 years = $28,571.43
2) Trademark: $500,000/15 years = $33,333,33
3) Non-competition Agreement: $300,000/5 = $60,000
Explanation:
The fair values of the "plentiscope" patent and Leftwich's branded trademark should be capitalized as intangible assets, while the cost of the non-competition agreement with Leftwich's principal researcher should be capitalized.
For the amortization of the Leftwich-connected intangibles, we have adopted the straight-line method, in the absence of any prescribed method. The patent expiration in 7 years was used as the basis for its useful life, despite Holthausen belief that the product could be marketable for at least 20 years.
The trademark was amortized over its remaining useful life of 15 years as given, while the non-competition agreement was amortized for 5 years when the agreement remains effective.
On November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $27,000. What is the maturity value of the note on March 1
Answer: $27,900
Explanation:
From the question, we are informed that on November 1, Alan Company signed a 120-day, 10% note payable, with a face value of $27,000.
The maturity value of the note on the note on March 1 will be the face value plus the interest. This will be:
= $27,000 + [($27,000 × 10%)/360 × 120]
= $27,000 + [($2700/360) × 120]
= $27,000 + ($7.5 × 120)
= $27,000 + $900
= $27,900
1. A small-scale businessman deposits money at the beginning of each year into his savings account, depending on the level of the business’ returns. He deposits $1000 in the first year, $3000 in the second year, $5000 in the third and $7000 in the fourth year and annual interest rate of 7%. What is the value of the investment at the time of his first deposit?
Answer:
The value of the investment at the time of his first deposit is $13,855.
Explanation:
The Value of the Investment at the time of his first deposit is its Net Present Value.
Calculation of the Net Present Value of this Investment is as follows ;
Hint : Find the Present Value of individual deposits and sum them up
PV = FV / (1 + r) ^n
Year 0 = $1000 / (1.07)^0
= $1,000
Year 1 = $3000 / (1.07)^1
= $2,804
Year 2 = $5000 / (1.07)^2
= $4,367
Year 2 = $7000 / (1.07)^3
= $5,714
Net Present Value = $1,000 + $2,804 + $4,367 + $5,714
= $13,855
The price level increases. The short-run aggregate supply curve will Choose one: A. shift to the right. B. shift to the left. C. remain unchanged.
Answer:
Option C, remain unchanged, is the right answer.
Explanation:
Option C is correct because the increase in the price level will result in the movement along with the given supply curve but in the question, option A says shifts to the right and in option B it says the shift to the left. Therefore these options are wrong. However, the supply curve remains the same because due to an increase in the price level the supply curve does not shift. Therefore option C will be the right option.
Zeus wanted to convey Mount Olympus to Artemis, Ares, Aphrodite, and Athena in equal shares. On July 1, he saw Artemis, Aphrodite, and Athena and gave them their conveyance stating to Artemis, Ares, Aphrodite, and Athena a 1/4 interest in Mount Olympus as joint tenants with rights of survivorship. On July 4, Zeus gave Ares his corresponding conveyance. Two months later, Ares died in battle, leaving two sons. The following month Athena transferred her share in Mount Olympus to Dionysos. How do Artemis, Aphrodite, Athena, and Ares hold title when Zeus conveyed them Mount Olympus?
Answer:
Joint Tenancy
Explanation:
Each tenant was given an equal share.
The conveyance deed was completed on a specific date passing all the land fairly to all tenants.
The Hera, Aphrodite, Athena and Ares also bear the title of Mutual Tenancy as Zeus transmitted Mount Olympus to them.
Therefore the correct option is Joint Tenancy and the same is to be considered
Clinton and Trump on fiscal policy In the 2016 Presidential election campaign, both Hillary Clinton and Donald Trump committed to big government infrastructure spending and tax cuts. Source: The Wall Street Journal, July 27, 2016 Consider an increase in infrastructure spending and a tax cut of the same magnitude. What policy will change aggregate demand the most: an increase in infrastructure spending or a cut in taxes?
Answer:
Clinton and Trump on fiscal policy In the 2016 Presidential election campaign
The policy that will change aggregate demand (AD) the most is a cut in taxes.
Explanation:
Aggregate demand is fueled mostly by household consumption. A cut in taxes increases the marginal propensity to consume (MPC) and reduces the marginal propensity to save (MPS), but at the same time fuels the marginal propensity to invest by firms trying to meet the new aggregate demand, thereby increasing the aggregate supply (AS) which is the real GDP output.
Suppose a ten firm industry has total sales of $35 million per year. The largest firm have sales of $10 million, the third largest firm has sales of $4 million, and the fourth largest firm has sales of $2 million. If fifth through tenth largest firms combined have annual sales of $12 million, the fourfirm concentration ratio for this industry is
Answer:
0.66
Explanation:
the fourfirm concentration ratio is the sum of the concentration ratio of the four largest firms in the industry.
The sales of the second largest firm = $35 million - ( $10 million + $4 million+ $2 million + $12 million ) = $7 million
concentration ratio of firm 1 = $10 million / $35 million = 0.29
concentration ratio of firm 2 = $7 million / $35 million = 0.2
concentration ratio of firm 3 = $4 million / $35 million = 0.11
concentration ratio of firm 4 = $2 million / $35 million = 0.06
Adding the ratios together = 0.66
Perteet Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.70 Direct labor $ 3.25 Variable manufacturing overhead $ 1.60 Fixed manufacturing overhead $ 3.00 Fixed selling expense $ 0.70 Fixed administrative expense $ 0.40 Sales commissions $ 0.50 Variable administrative expense $ 0.55 If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to
Answer:
Total overhead= $21,400
Explanation:
Giving the following information:
Variable manufacturing overhead per unit= $1.60
Fixed manufacturing overhead= $3.00*5,000= $15,000
4,000 units are produced
Because the production level is between the relevant range, the total fixed costs remain constant.
Total overhead= 1.6*4,000 + 15,000
Total overhead= $21,400
Monica has a Roth IRA to which she contributed $15,000. The IRA has a current value of $37,500. She is 54 years old and takes a distribution of $25,000. How much of the distribution will be taxable to Monica? Group of answer choices
Answer:
$10,000
Explanation:
Monica has a Roth IRA in which she contributed $15,000
The IRA has a current value of $37,500
Monica is 54 years old
She takes a distribution of $25,000
Therefore, the amount of distribtion that will be taxable can be calculated as follows
Amount of taxable distribution= $25,000-$15,000
= $10,000
Hence the amount of distribution that will be taxable to Monica is $10,000
Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Activity Cost Activity Base Procurement $308,500 Number of purchase orders Scheduling $244,500 Number of production orders Materials handling $419,700 Number of moves Product development $720,200 Number of engineering changes Production $1,538,300 Machine hours Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours Number of Units Disk drives 4,080 450 1,320 11 2,400 1,600 Tape drives 2,300 155 520 4 8,200 4,400 Wire drives 11,300 740 4,300 23 10,600 2,500 Determine the activity rate per production order for scheduling. a.$72.56 b.$17.45 c.$229.37 d.$181.78
Answer:
d.$181.78
Explanation:
The formula used for activity rate is activity cost divided by the activity base cost.
Panamint Systems Corporation
Activity Cost Activity Base
Procurement $308,500 Number of purchase orders
Scheduling $244,500 Number of production orders
Materials handling $419,700 Number of moves
Product development $720,200 Number of engineering changes
Production $1,538,300 Machine hours
Disk drives Tape drives Wire drives
Number of Purchase Orders 4,080 2,300 11,300
Number of Production Orders 450 155 740
Number of Moves 1,320 520 4300
Number of Engineering Changes 11 4 23
Machine Hours 2,400 8,200 10,600
Number of Units 1600 4,400 2,500
As there are three kinds of drives the total activity base cost is obtained by adding the base cost of each drive.
Scheduling per production= Scheduling Cost/ Number of production orders
=$244,500 / 450+ 155 +740
= $244,500 / 1345= 181.78
At Emmerson Company, one bookkeeper prepares the cash deposits while the other bookkeeper enters the collections in the journal and ledger. Which of the following is the best explanation of this type of internal control principle over cash reciepts?
a. mechanical controls
b. physical controls
c. documentation procedures
d. segregation of duties
Answer:
d. segregation of duties
Explanation:
Segregation of duties defines that when a different number of people doing their duties for the same purpose. For example a person receives an envelope of cheque and another person records in accounting system.
According to the given situation, one person who is bookkeeper prepared cash deposit and another person records the collection of journal and ledger. So, this indicates the segregation of duties
A current liability is a debt that is reasonably expected to be paid a. out of cash currently on hand b. within one year c. out of currently recognized revenues d. between 6 months and 18 months
Answer: within one year
Explanation:
Current liabilities are the liabilities that are incurred by a firm and must be settled within a year.
Typically, the current liabilities are settled by using the current assets. Examples of current liabilities are the accounts payable, noted payable, dividends and the short-term debt.
An asset is said to be illiquid when: Group of answer choices it cannot be used to settle debts. it cannot act as a store of value. it is an illegal tender. it cannot be readily exchanged for goods. it lacks purchasing power.
Answer:
it cannot be used to settle debts
Explanation:
The assets are said to be liquid when it is convertible into cash and the liquid asset we called as a current asset. The liquidity of an asset is important to pay off the short term debt or obligations arise.
It can be in terms of account payable, inventory, prepaid insurance, etc
The asset that said to be illiquid when it is not be used for settling the debts
Hence, the first option is correct
"If bookstore ABC Books determines it is going to sell books at its profit-maximizing price of $16 in a market facing monopolistic competition, calculate total profit for the store. ABC Books Revenue and Cost Quantity Price Total Revenue Marginal Revenue Total Cost Marginal Cost 0 $26 $0 - $300 - 10 $23 $230 $23 $340 $4 20 $20 $400 $17 $400 $6 30 $18 $540 $14 $480 $8 40 $16 $640 $10 $580 $10 50 $14 $700 $6 $700 $12 60 $12 $720 $2 $840 $14"
Answer:
40 books revenue is maximized
Explanation:
Profit is maximized where Marginal cost equals Marginal Revenue. The revenue is maximized where 40 books are sold for the price of $16. The marginal revenue at this point equals the marginal cost. Profit will be maximized for the ABC Books if it sells 40 books at the price of $16 per book. Here Marginal cost is $10 and marginal revenue is also $10. This is profit maximizing point.
Suppose that, in an attempt to combat severe unemployment, the government decides to increase the amount of money in circulation in the economy.
This monetary policy ___________ the economy's demand for goods and services, leading to ____________ product prices. In the short run, the change in prices induces firms to produce __________ goods and services. This, in turn, leads to a _________ level of unemployment.
In other words, the economy faces a trade-off between inflation and unemployment: Higher inflation leads to ____________ unemployment.
Answer:
increases
higher
more
lower
lower
Explanation:
If the money supply is increased. individuals would have more money and consumption would increase. Increase in consumption would lead to a rise in demand.
when demand exceeds supply, prices rise,
When there is a rise in price, it encourages producers to increase production in order to increase their profit margin.
In order to expand production, more factors of production would be needed. So, more labour would be hired. thus, unemployment would fall.
it can be seen that higher inflation lowers unemployment
Santana Mortgage Company uses a process cost system to accumulate costs in its Application Department. When an application is completed, it is forwarded to the Loan Department for final processing. The following processing and cost data pertain to September.
1. Applications in process on September 1, 170
2. Applications started in September, 930
3. Completed applications during September, 660
4. Applications still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs.
Beginning WIP:
Direct materials $1,310
Conversion costs 4,140
September costs:
Direct materials $5,114
Direct labor 12,820
Overhead 7,581
Materials are the forms used in the application process, and these costs are incurred at the beginning of the process. Conversion costs are incurred uniformly during the process.
Required:
a. Determine the equivalent units of service (production) for materials and conversion costs.
b. Compute the unit costs and prepare a cost reconciliation schedule.
Answer: a) The equivalent units for material = 1,100
The equivalent units for conversion cost = 924.
b) The unit cost for material and conversion cost is $5.84 and $26.56 respectively.
c) cost reconciliation schedule is in the explanation column
Explanation:
first , we calculate units in process
Units in Process = Units of applications Opened + units of application started - units of application completed
= 170 + 930 - 660 = 440 units
Equivalent units of production for materials =application units completed + Application units in process x its percentage complete
660 + (440 x 100%)=660+440= 1,100
Equivalent units of production for conversion = application units completed + Application units in process x its percentage complete
660 + (440 x 60%)=660+264=924
Computing the unit costs
Units of cost as per material
Number of application units during the month = 660units
Wor in process unit = 440units
Material cost during ,month -=$5,114
Beginning work in progress cost for materials =$1,310
Equivalent unts of production for materials = 1,100
Unit cost for material = Material cost during the month +Begining work in progress cost for materials/Equivalent units of production for materials = $5,114 + $1,310=$6,424/ 1100= $5.84
Units of cost as per conversion
Number of application units during the month = 660units
Work in progess unit = 440units
conversion cost during ,month -= direct labour + overhead = $12,820 + $7,581= $20, 401
Beginning work in progress cost for materials =$4,140
Equivalent unts of production for materials = 924
Unit cost = Material cost during the month +Beginning work in progress cost for materials/Equivalent units of production for materials = $20,401 + 4,140=$24,541 / 924= $26.56
Cost Reconciliation schedule
Particulars no of units materials conversion Total
units transferred 660 $5,114 $20,401 $25,515
ending WIP 440 $6,424 $24, 541 $30,965
Total $11,538 $44,942 $56,480
Ariel T. Corporation reported the following data for the month of February:
Inventories: Beginning Ending
Raw materials (Direct and Indirect) $40000 $24000
Work in process $23000 $17000
Finished goods $50000 $72000
Additional information:
Raw materials purchases $63000
Direct labor cost $73700
Manufacturing overhead cost actually incurred: $55000
Raw materials included in manufacturing overhead costs incurred as indirect materials $5000. Manufacturing overhead cost applied to Work in Process $48000.
Required:
The adjusted cost of goods sold that appears on the income statement for February is:________
Answer:
Cost of goods sold = $191,700
Explanation:
a) Cost of production:
Beginning Inventory: Raw Materials $40,000
Purchase of Raw materials $63,000
Ending inventory: Raw materials ($24,000)
Cost of raw materials used $79,000
Beginning Work in process $23,000
Cost of raw materials used $79,000
Direct labor cost $73,700
Manufacturing overhead $55,000
less Ending Work in process ($17,000)
Cost of production $213,700
Beginning Finished goods $50,000
Cost of production $213,700
Ending Finished goods ($72,000)
Cost of goods sold $191,700
b) The adjusted cost of goods sold takes into consideration the cost of raw materials used, the direct labor costs, and the manufacturing overhead, before adjusting for the beginning inventory and ending inventory.
The U.S. Congress passed a stimulus bill in February 2009 to help remove the economy from a recessionary gap. This is an example of the use of
Answer: expansionary fiscal policy
Explanation:
Expansionary fiscal policy is used to
boost the aggregate demand, and this will lead to increase in output and also employment.
Expansionary fiscal policy methods include, transfer payments, reduction in taxes, rebates, increase in government spending.
The U.S. Congress passed a stimulus bill in February 2009 to help remove the economy from a recessionary gap. This is an example of the use of expansionary fiscal policy.
On June 10, 20X8, Playoff Corporation acquired 100 percent of Series Company's common stock. Summarized balance sheet data for the two companies immediately after the stock acquisition are as follows:
Playoff Corp. Series Company
Item Book Value Fair Value
Cash $ 15,000 $ 5,000 $ 5,000
Accounts Receivable 30,000 10,000 10,000
Inventory 80,000 20,000 25,000
Buildings & Equipment (net) 120,000 50,000 70,000
Investment in Series Stock 100,000
Total $ 345,000 $ 85,000 $ 110,000
Accounts Payable $ 25,000 $ 3,000 $ 3,000
Bonds Payable 150,000 25,000 25,000
Common Stock 55,000 20,000
Retained Earnings 115,000 37,000
Total $ 345,000 $ 85,000 $ 28,000
Required:
a. Prepare the consolidating entries required to prepare a consolidated balance sheet immediately after the acquisition of Series Company shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Record the excess value (differential) reclassification entry.
Answer:
a. Consolidating Journal Entries:
Description Debit Credit
June 10, 20X8:
Cash $5,000
Accounts receivable 10,000
Inventory 25,000
Building & Equipment 70,000
Unrealized Gain on fair value $25,000
Accounts payable 3,000
Bonds payable 25,000
Investment in Series Stock 100,000
Excess Value (differential) 43,000
To record consolidating entries in the consolidated parent.
Goodwill 43,000
Excess Value (differential) 43,000
To record the reclassification of the excess value as Goodwill on acquisition.
Explanation:
a) Summarized balance sheet data
Playoff Corporation Series Company
Item Book Value Fair Value
Cash $ 15,000 $ 5,000 $ 5,000
Accounts Receivable 30,000 10,000 10,000
Inventory 80,000 20,000 25,000
Buildings & Equipment (net) 120,000 50,000 70,000
Investment in Series Stock 100,000
Total $ 345,000 $ 85,000 $ 110,000
Accounts Payable $ 25,000 $ 3,000 $ 3,000
Bonds Payable 150,000 25,000 25,000
Common Stock 55,000 20,000
Retained Earnings 115,000 37,000
Total $ 345,000 $ 85,000 $ 28,000
b) Consolidated entries are made for assets and liabilities acquired of the subsidiary using fair values. An unrealized gain on fair value account is created to account for the differences in fair values. Any excess or differential after consolidation and above the fair values is regarded as Goodwill arising from the acquisition.
Tamarisk Corporation issued 115,000 shares of $18 par value, cumulative, 8% preferred stock on January 1, 2018, for $2,530,000. In December 2020, Tamarisk declared its first dividend of $730,000. Prepare Tamarisk’s journal entry to record the issuance of the preferred stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answer:
Dr Cash $2,530,000
Cr Preferred stock $2,070,000
Cr Additional Paid-in-Capital (Preferred Stock) $460,000
(To record issuance of Preferred Stock)
Explanation:
Preferred Stock
= 115,000 shares * $18 par value
= $2,070,000
Additional Paid-in-Capital (Preferred Stock)
= 2,530,000 - 2,070,000
= $460,000
The manager of a large commercial building became preoccupied with paperwork and did not inspect the premises as he should have, which resulted in lots of wear and tear from the tenants. The loss of value due to postponing repairs is called
Answer:
deferred repairs
Explanation:
In this scenario, the term being mentioned is known as deferred repairs. As mentioned in the question this term refers to the practice of postponing any and all maintenance activities, such as repairs on real property or personal property all with the hopes of saving costs, meeting budget funding levels, or realign available budget monies. This can also occur by accident due to neglect, such as in this specific scenario. Deferring repairs ultimately leads to higher costs due to worsening conditions.
The owners decide to take the company public through an IPO, issuing additional 1 million new shares. Assuming that they successfully complete the IPO, the net income for the next year is estimated to be $6 million. The price of shares is set using average price-earnings ratios for similar businesses of 15. What portion of the company will be owned by the angel investor after the IPO
Answer:
15.79% = 300,000 stocks = $14,210,526
Explanation:
The question is incomplete, you are missing the following:
"The founders and owners of a private company have funded it through the following rounds of investment: Round Source Price Number of Shares Class A Self $1.00 200,000 Class B Angel $1.00 300,000 Class C Venture Capital $1.25 400,000"
total number of outstanding stocks after the IPO = 200,000 + 300,000 + 400,000 + 1,000,000 = 1,900,000
angel investors own 300,000 / 1,900,000 = 0.157895 = 15.79%
price earnings ratio = stock price / earnings per stock
EPS = net income / total outstanding stocks = $6,000,000 / 1,900,000 = $3.1579
15 = stock price / $3.1579
stock price = 15 x $3.1579 = $47.3684
angel investors own 300,000 stocks x $47.3684 = $14,210,526
What is the stock price per share for a stock that has a required return of 12%, an expected annual dividend of $3.15 per share in the first year, and a constant (sustainable) growth rate of dividends of 8%
Answer:
Price per share = $78.75
Explanation:
The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.
If dividend is expected to grow at a given rate , the value of a share is calculated using the formula below:
Price=Do (1+g)/(k-g)
Where Do- Dividend now, g- growth rate, k- required rate of return(cost of equity)
Note Do (1+g) represents the expected dividend in the first year
DATA:
Do (1+g) = 3.15
g= 8%
k= 12%
Price per share = 3.15/(0.12- 0.08) = $78.75
Price per share = $78.75
debit Product Warranty Expense; credit Cash b. debit Product Warranty Expense; credit Product Warranty Payable c. debit Product Warranty Payable; credit Cash d. debit Product Warranty Payable; credit Product Warranty Expense
Answer:
b. debit Product Warranty Expense; credit Product Warranty Payable
Explanation:
The journal entry for recording the estimated product warranty liability is shown below;
Product Warranty expense Dr XXXXX
To Product warranty payable XXXXX
(being the estimated product warranty liability is recorded)\
For recording this we debited the product warranty expense as it increased the expenses and credited the product warranty payable as it also increased the liabilities
kerch co. had beginning net fixed assets of $216,566, ending net fixed assets of $211,729, and deperciation of $40,477. During the year, the company sold fixed assets with a book value of $8,014. How much did the company purchase in new fixed assets?
a) $32,224
b) $43,639
c) $41,476
d) $35,625
e) $34,293
Answer:
The closest option is B,$43,639
Explanation:
The formula for ending net fixed assets can be used to determine the value of new purchase as shown below:
ending net fixed assets= beginning net fixed assets-depreciation-cost of asset sold+new purchase
$211,729=$216,566-$40,477-$8,014+x
$211,729=$168075 +x
x=$211,729-$168075
x=$43654
The closest option is B