Answer and Explanation:
1. The amount of goodwill is shown below:
= Purchase price - the market value of net assets
= $6,000,000 - ($17,000,000 + $13,000,000)
= $2,000,000
2. Now the journal entry for purchase is
Assets $17,000,000
Goodwill $2,000,000
To Liabilities $13,000,000
To Cash $6,000,000
(Being the purchase is recorded)
For recording this we debited the assets and goodwill as it increased the assets and credited the liabilities and cash as it also increased the liabilities and decreased the assets
A bond with a coupon rate of "5.96" percent and semiannual coupon payments matures in 18 years. The YTM is 6.97 percent. What is the effective annual yield?
Available Options Are:
(A) 7.38%
(B) 5.96%
(C) 6.05%
(D) 7.09%
(E) 6.97%
Answer:
Effective Annual Yield is 7.09%
Explanation:
The Effective Annual Yield can be calculated as under:
Effective Annual Yield = (1 + YTM / n)^n - 1
Here,
YTM is 6.97%
n is 12/6 for semi annual coupon payments
By putting values, we have:
Effective Annual Yield = (1 + 6.97% / 2)^2 - 1
Effective Annual Yield = (1.03485)^2 - 1 = 0.0709145 = 7.09%
Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual bond three years ago. The bond currently sells for 93 percent of its face value. The company’s tax rate is 22 percent. a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
6.46%b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
5.04%Explanation:
we must first determine the bond's yield to maturity:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2] = {30 + [(1,000 - 930)/60]} / [(1,000 + 930)/2] = 31.17 / 965 = 3.23% x 2 = 6.46%
after tax cost of debt = 6.46% x (1 - tax rate) = 6.46% x (1 - 22%) = 6.46% x 78% = 5.04%
During an economic crisis many financial managers and corporate officers have been criticized for: Poor decisions Lack of ethical behavior Large salaries Lucrative severance packages worth millions of dollars Extravagant lifestyles Is this criticism justified
Answer:
for having large salaries.
Explanation:
These financial managers and corporate officers were criticized for having large salaries. This is mainly because during the financial crisis the stocks of these companies plummeted while compensation was still exorbitant. Compensation was supposed to be an incentive given to talent for maximizing the overall value of the firm through their work. Since this is not being done by the shareholders and officers then they should not be enjoying these compensations.
During March, Pendergraph Corporation incurred $65,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $67,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:
Answer:
debit to Manufacturing Overhead of $65,000
Explanation:
Manufacturing overhead cost are those that are shared to different processes that do not contribute directly to product being manufactured.
For example raw materials is a direct contributor to goods, while labour is a overhead cost that indirectly contributed to the good.
On the given scenario it is the actual amount incurred that will be debited to the books of the company.
So there will be a debit to Manufacturing Overhead of $65,000
A pound of steak costs $10 in the U.S. and 56.25 riyals (the currency of Saudi Arabia) in Saudi Arabia. If the real exchange rate is 2/3, what is the nominal exchange rate
Answer: 3.75 Riyals / USD
Explanation:
The Real Exchange rate is different from the Nominal exchange rate as it takes into account, the differences between the 2 nations being compared in terms of prices of goods and services.
As such it can be used to calculate the Nominal rate;
Real Exchange Rate = (Cost in U.S. x Nominal Exchange Rate) / Cost in Saudi Arabia
2/3 = (10 x Nominal Exchange Rate) / 56.25
2/3 x 56.25 = 10 x Nominal Exchange Rate
10 x Nominal Exchange Rate = 37.50
Nominal Exchange Rate = 37.50 / 10
Nominal Exchange Rate = 3.75 Riyals / USD
The nominal exchange rate is 3.75 Riyals for every $1.
During lunch time, customers arrive at a postal office at a rate of lambda equals 36 per hour. The interarrival time of the arrival process can be approximated with an exponential distribution. Customers can be served by the postal office at a rate of mu equals 45 per hour. The service time for the customers can also be approximated with an exponential distribution. For each of the following questions, show your work and use the right notation. Determine the utilization factor.
a. po = 4/5
b. po = 5/4
c. po = 1/5
d. po = 1/9
e. none of these
Answer:
a. po = 4/5
Explanation:
Customer arrives at the rate of λ equal 36 per hour
Customers can be served by the postal office at a rate of μ equals 45 per hour
λ = 36 / hour
μ = 45 / hour
P = λ / μ
P= 36 / 45
P= 4/5
Thus, the utilization factor is 4/5
Johnson Industries manufactures a popular interactive stuffed animal for children that requires four computer chips inside each toy. The company pays $ 3 for each computer chip. To help to guard against stockouts of the computer chip, Johnson Industries has a policy that states that the ending inventory of computer chips should be at least 25% of the following month's production needs. The production schedule for the first four months of the year is as follows:
Stuffed animals to be produced
January 6,000
February 4,600
March 4,600
April 4,200
Requirement:
1. Prepare a direct meterials budget for the first quarter that shows both the number of computer chips needed and the dollar amount of the purchases in the budget.
2. Prepare the direct materials budget by first calculating the total quartile needed, than complete the budget.
Answer:
January February March
Budgeted Materials Purchase (units) 28,600 18,400 18,000
Budgeted Materials Purchase $85,800 $55,200 $54,000
Explanation:
Direct materials budget for the first quarter
January February March
Budgeted Production 6,000 4,600 4,600
Budgeted Material 24,000 18,400 18,400
Add Budgeted Closing Inventory 4,600 4,600 4,200
Materials Needed 28,600 23,000 22,600
Less Budgeted Opening Inventory 0 (4,600) (4,600)
Budgeted Materials Purchase 28,600 18,400 18,000
Cost of computer chip $3 $3 $3
Budgeted Materials Purchase $85,800 $55,200 $54,000
Gonyo Inc., which produces and sells a single product, has provided the following contribution format income statement for December appears below:
Sales (5,000 units) $ 330,000
Variable expenses 175,000
Contribution margin 155,000
Fixed expenses 104,900
Net operating income $50,100
Required:
Redo the company's contribution format income statement assuming that the company sells 5,200 units.
Net Operating Income _______.
Answer:
Net income= 56,300
Explanation:
Giving the following information:
Fixed expenses 104,900
First, we need to determine unitary values:
Selling price= 330,000/5,000= $66
Unitary variable expenses= 175,000/5,000= $35
Now, we can redo the contribution margin income statement for 5,200 units:
Sales= 66*5,200= 343,200
Total variable cost= 35*5,200= (182,000)
Total contribution margin= 161,200
Fixed costs= (104,900)
Net income= 56,300
Decision-making and problem-solving skills are essential for those working in emergency management, but what are the traits of effective decision-makers and problem-solvers?
Explanation:
Remember, a decision maker is someone who is faced with the task of chosing among available course of action the best option. Furthermore, a decision maker can also be a problem-solver if the decision made provides relieve or a solution to a pending problem.
A common trait among decision makers and problem-solvers includes having communication skills like– listening attentively and providing feedback. Also, a decision making process of
1. Identifying the problem.
2. Searching for available options.
3. Analyzing the advantages and disadvantages of each alternative option.
4. Selecting the best option
5. Finally, implementation of the solution
6. Feedback on solution to determine whether the solution is effective.
ABC Gardening operates a commercial plant nursery where it propagates plants for garden centers throughout the region. ABC Gardening has $ 3.5 million in assets. Its yearly fixed costs are $ 470 comma 000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-sized plant total $ 1.60. ABC Gardening's volume is currently 500 comma 000 units. Competitors offer the same quality plants to garden centers for $ 3.30 each. Garden centers then mark them up to sell to the public for $ 8 to $ 9, depending on the type of plant.
Requirement 1. Nature Place owners want to earn a 10% return on the company's assets. What is Nature Place's target full cost? Calculate the target full cost for Nature Place. Select the formula labels and enter the amounts. Less: Target full cost.
Requirement 2. Given Nature Place's current costs, will its owners be able to achieve their target profit? Calculate Nature Place's current total full cost.
Requirement 3. Assume that Nature Place has identified ways to cut its variable costs to $1.50 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit?
Requirement 4. Nature Place started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Nature Place doesn't expect volume to be affected, but it hopes to gain more control over pricing. If Nature Place has to spend $94,000 this year to advertise and its variable costs continue to be $1.50 per unit, what will its cost-plus price be? Do you think Nature Place will be able to sell its plants to garden centers at the cost-plus price? Why or why not? Determine its cost-plus price.
Answer:
ABC Gardening / Nature Place
1. Nature Place's target full cost, with return on assets = 10%
Sales revenue = $1,650,000 (500,000 x $3.30)
Expected Return on Asset = $350,000 ($3.5 million x 10%)
Target full cost = $1,300,000
Fixed cost = $470,000
Variable cost = $830,000 ($1.66 x 500,000)
2. Nature Place's current total full costs; will its owners achieve their target profit:
Sales revenue = $1,650,000 (500,000 x $3.30)
Current full costs:
Variable cost = $800,000 (500,000 x $1.60)
Fixed costs = $470,000
Current full costs = $1,270,000
Current profit = $380,000
Target profit = $350,000
Excess over target = $30,000
The owners will achieve target profit and make an excess of $30,000
3. With variable costs cut to $1.50 per unit, New target fixed cost. Will it achieve its target profit?
Sales revenue = $1,650,000 (500,000 x $3.30)
Variable costs = $750,000 (500,000 x $1.50)
Annual Fixed costs = $470,000
Profit = $430,000
It will exceed its target profit of $350,000 by $80,000.
4.Advertising cost of $94,000 with variable costs of $1.50 per unit, cost-plus price:
Variable costs = $750,000 (500,000 x $1.50)
Annual Fixed costs = $564,000 ($470,000 + 94,000)
Total cost = $1,314,000
Cost plus = $1,664,000 ($1,314,000 + $350,000)
Cost plus price = $3.33 ($1,664,000/500,000)
Do you think Nature Place will be able to sell its plants to garden centers at the cost-plus price?
It will not be able to sell to garden centers at the cost-plus price.
Why or why not?
The garden centers currently buy at $3.30, a little less than its cost-plus price with advertising cost of $94,000. It will be losing $15,000 if it sells its products to garden centers at their current buying price.
Explanation:
a) Data:
Assets = $3.5 million
Target profit on assets = $350,000 = ($3.5 million x 10%)
Annual Fixed costs = $470,000
Variable costs = $1.60
Volume = 500,000
Competitors price to garden centers = $3.30 each
Selling price to the public = $8 to $9
Total costs and Profit:
Sales revenue = $1,650,000 (500,000 x $3.30)
Variable costs = $800,000 (500,000 x $1.60)
Annual Fixed costs = $470,000
Profit = $380,000
b) In target profit costing, the starting point for calculating costs is the selling price and the target profit. When the profit is deducted from the selling price, a full cost per unit is determined. This determined figure will be the ceiling for costs. Any overrun negatively affects the target profit. Instead of overrunning the target cost, management must work toward a full cost that is less than the established target cost.
Carter's preferred stock pays a dividend of $1.00 per quarter. If the price of the stock is $45.00, what is its nominal (not effective) annual rate of return?
Answer:
8.89%
Explanation:
The answer is 8.89%
Here is how we arrived at this.
Dividend = 1$ times 4
= $4 annually
Then we calculate for the nominal rate of return.
This is equal to dividend / price.
= $4/ $45
= 0.0889
To convert this to percentage
0.089 x 100
= 8.89% is the nominal annual rate of return.
b. Suppose Tom has $5 to spend on Batman and Superman comic books (nothing else matters to Tom). If Tom wants to maximize his utility, how many of each should he buy
Answer:
But 1 Batman comics book, and 2 Superman comics book
Explanation:
Remember, Tom has only $5 to spend on the two books, with the goal of deriving maximum utility. Thus, if he spends on 2 quantity of Superman comics he deeives total marginal utility of 150 (58+92). Then, he may proceed to Batman comics, which gives him a marginal utility of 40.
At one point, Kodak had 90% of the film market, and 85% of the camera market in the United States. It was almost a monopoly. Ironically, this may have hurt them in the global market, i.e. outside the US. This speaks to what aspect of the diamond of national competitive advantage
Answer: Strategy and rivalry
Explanation:
Porter's Diamond Theory of National Competitive Advantage intends to explain to companies how they can gain a competitive advantage in an industry.
Under the Strategy and Rivalry section, it is shown that a company tends to benefit more when it has strong domestic competitions because it can then develop efficient strategies to help it compete in this domestic market and thus survive this competition.
These strategies learnt, can then be implemented on the global stage when the company attempts to become a multinational firm. Kodak as a virtual monopoly in the US market, did not have to worry about competition and so did not develop the strategies that would enable them compete with other companies outside the US when they tried to break into the markets of other countries.
The owner of Kat Motel wants to develop a time standard for the task of cleaning a cat cage. In a preliminary study, she observed one of her workers perform this task six times, with the following results:Observation 1 2 3 4 5 6Time (secs) 109 117 117 128 125 129Required:What is the normal time for this task if the employee worked at a 32 percent slower pace than average and an allowance of 14 percent of job time is used?
Answer:
Standard Time = 206.6 secs
Explanation:
In order to calculate the time for this task if the employee worked at a 32 percent slower pace than average, we need to calculate the normal time first by using the following formula
Normal Time = Average element-time / performance rating
Average element time = Sum of observations / No. of observations
Average element time = 109 +117 +117 +128 +125 +129 / 6
Average element time = 725/6 = 120.83
Performance rating = 100 - 32 = 68%
Normal Time = 120.83 / 0.68 = 177.7 secs
Standard Time = Normal Time / (1-Allowance)
Standard Time = 177.7 / (1-0.14)
Standard Time = 206.6 secs
An organization is required to know, track, and record the location of all hazardous materials that it owns, controls, or generates. Group of answer choices True False
Answer: True
Explanation:
An organization is required to know, track, and record the location of all hazardous materials that it owns, controls, or generates.
It is important for the organizations to track, know and record the location of every hazardous materials it uses in order to keep the individuals in the society safe and also keep the company active.
On June 1, 2015, the Crocus Company began construction of a new manufacturing plant. The plant was completed on October 31, 2016. Expenditures on the project were as follows ($ in millions): July 1, 2015 54 October 1, 2015 22 February 1, 2016 30 April 1, 2016 21 September 1, 2016 20 October 1, 2016 6 On July 1, 2015, Crocus obtained a $70 million construction loan with a 6% interest rate. The loan was outstanding through the end of October, 2016. The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8%. This note was outstanding during all of 2015 and 2016. The company's fiscal year-end is December 31.
What is the amount of interest that Crocus should capitalize in 2016, using the specific interest method (rounded to the nearest thousand dollars)?
Answer:
$7,117,000
Explanation:
There is some information missing that I looked up, hopefully the numbers are the same, but if not you can adjust them.
Weighted average expenditures:
July 1, 2015, $54 million
October 1, 2015, $22 million
February 1, 2016, $30 million
April 1, 2016, $21 million
September 1, 2016, $20 million
October 1, 2016, $6 million
we must first determine the amount of interest for 2015:
[($54 x 6/6) + ($22 x 3/6)] x 6% / 6/12 = $1.95 million
weighted average expenditures 2016:
($54 + $22 + $1.95 = $77.95) x 10/10 = $77.95$30 x 9/10 = $27$21 x 7/10 = $14.7$20 x 2/10 = $4$6 x 1/10 = $0.6total $124.25 millioninterests:
$70 x 6% x 10/12 = $3,500,000($124.25 - $70) x 8% x 10/12 = $3,617,000 (rounded to nearest thousand)Total = $7,117,000Which of the following is the surest way to verify the reliability of information from a new or unknown source?
1. Determine how well the material fits the goals of the research
2. Decide if the author is known and published in a variety of fields
3. Look for bias in the writing
4. Corroborate the information with other sources
5. Determine the purpose of the material
Answer:
4. Corroborate the information with other sources
Explanation:
The surest way to verify the reliability of information from a new or unknown source is to corroborate the information with other sources.
This simply means that, if you got an information (data) from a new source such as newspaper, website, television, books, radio or anywhere else, you should confirm the credibility and reliability of these information by verifying from one or more sources.
Hence, if the information gotten from a new source is in tandem or accordance with what you find elsewhere, then that information is accurate, reliable and credible.
Answer:
4.
Explanation:
The best way to verify the reliability of information from an unknown source would be to Corroborate the information with other sources. To corroborate means to take an action or information to make it more certain/valid. This is done by gathering similar information from various unconnected sources that provide the same information as the original source.
Presented here are the comparative balance sheets of Hames Inc. at December 31, 2020 and 2019. Sales for the year ended December 31, 2020, totaled $580,000.
HAMES INC.
Balance Sheets
December 31, 2020 and 2019
2020 2019
Assets
Cash $ 24,000 $ 21,000
Accounts receivable 78,000 72,000
Merchandise inventory 103,000 99,000
Total current assets $ 205,000 $ 192,000
Land 50,000 40,000
Plant and equipment 125,000 110,000
Less: Accumulated depreciation (65,000) (60,000)
Total assets $ 315,000 $ 282,000
Liabilities
Short-term debt $ 18,000 $ 17,000
Accounts payable 66,000 76,000
Other accrued liabilities 20,000 18,000
Total current liabilities $ 104,000 $ 111,000
Long-term debt 22,000 30,000
Total liabilities $ 126,000 $ 141,000
Stockholders’ Equity
Common stock, no par, 100,000 shares authorized
40,000 and 25,000 shares issued, respectively $ 74,000 $ 59,000
Retained earnings:
Beginning balance $ 82,000 $ 85,000
Net income for the year 53,000 2,000
Dividends for the year (20,000) (5,000)
Ending balance $ 115,000 $ 82,000
Total stockholders’ equity $ 189,000 $ 141,000
Total liabilities and stockholders’ equity $ 315,000 $ 282,000
Required:
1. Calculate ROI for 2020. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
2. Calculate ROE for 2020. (Round your answer to 1 decimal place.)
3. Calculate working capital at December 31, 2020.
4. Calculate the current ratio at December 31, 2020. (Round your answer to 2 decimal places.)
5. Calculate the acid-test ratio at December 31, 2020. (Round your answer to 2 decimal places.)
Answer:
1. 16.83%
2. 28.04%
3. $101,000
4. 1.97
5. 0.98
Explanation:
Return On Investment (ROI) = Net Profit After Tax / Total Assets × 100
= $53,000 / $ 315,000 × 100
= 16.825 or 16.83%
Return On Equity (ROE) =Net Profit After Tax / Total Shareholders Funds × 100
= $53,000 / $ 189,000 × 100
= 28.0423 or 28.04 %
Working Capital = Current Assets - Current Liabilities
= $ 205,000 - $ 104,000
= $101,000
Current Ratio = Current Assets / Current Liabilities
= $ 205,000 / $ 104,000
= 1.9712 or 1.97
Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities
= ($ 205,000 - $ 103,000) / $ 104,000
= 0.98077 or 0.98
You have a $4 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.1. You are considering selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds to purchase another stock with a beta of 1.4. What will the portfolio’s new beta be after these transactions? Show your work.
Answer:
1.1125
Explanation:
the relative weight of the stocks that you are selling is $100,000/$4,000,000 = 0.025 = 2.5% of the portfolio
this means that their effect on the portfolio's beta was 0.9 x 0.025 = 0.0225
the new stocks that you want to purchase have a beta of 1.4 and their relative effect on the portfolio's beta will be 1.4 x 0.025 = 0.035
the difference between both stocks = 0.035 - 0.0225 = 0.0125
that means that the portfolio's new beta = 1.1 + 0.0125 = 1.1125
Transactions are typically processed either [A] all together for a defined time window (e.g. end of a day or week) or [B] processed as each transaction occurs. The second method [B] is called ________ processing.
Answer: real time processing
Explanation:
Real time processing is when transactions are processed as each transaction occurs. In real time processing, the transactions are processed in a little period of time.
Good examples of real-time processing systems are traffic control systems. Real time processing is different from the batch processing which involves when transactions are processed all together for a defined time window.
Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $59, and the book value per share is $5. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $99 million, has a 8 percent coupon, and sells for 92 percent of par. The second issue has a face value of $81.2 million, has a 8 percent coupon, and sells for 95.5 percent of par. The first issue matures in 10 years, the second in 5 years. What is Filer's capital structure weight of equity on a book value basis? (Do not round your intermediate calculations.) What is Filer's capital structure weight of debt on a book value basis? (Do not round your intermediate calculations.) What is Filer's capital structure weight of equity on a market value basis? (Do not round your intermediate calculations.) What is Filer's capital structure weight of debt on a market value basis?
Answer:
a. Filer's capital structure weight of equity on a book value basis is 24%.
b. Filer's capital structure weight of debt on a book value basis is 76%.
c. Filer's capital structure weight of equity on a market value basis is 80%.
d. Filer's capital structure weight of debt on a market value basis is 20%.
Explanation:
a. What is Filer's capital structure weight of equity on a book value basis? (Do not round your intermediate calculations.)
Equity book value = Equity book value per share * Number of shares = 11,600,000 * $5 = $58,000,000
Debt book value = Debt face value = First bond face value + Second face value = $99,000,000 + $81,200,000 = $180,200,000
Total book value = $58,000,000 + $180,200,000 = $238,200,000
Book value weight of equity = Equity book value / Total book value = $58,000,000 / $238,200,000 = 0.24, or 24%
Therefore, Filer's capital structure weight of equity on a book value basis is 24%.
b. What is Filer's capital structure weight of debt on a book value basis? (Do not round your intermediate calculations.)
From part a, we have:
Debt book value = $180,200,000
Total book value = $238,200,000
Therefore, we have:
Book value weight of debt = Debt book value / Total book value = $180,200,000 / $238,200,000 = 0.76, or 76%
Therefore, Filer's capital structure weight of debt on a book value basis is 76%.
c. What is Filer's capital structure weight of equity on a market value basis? (Do not round your intermediate calculations.)
Equity market value = Current share price * Number of shares = $59 * 11,600,000 = $684,400,000
Debt market value = Bond price quote * Par value of the bond
Debt market value = First bond market value + Second bond market value = (92% * $99,000,000) + (95.5% * $81,200,000) = $168,626,000
Total market value = Equity market value + Debt market value = $684,400,000 + $168,626,000 = $853,026,000
Market value weight of equity = Equity market value / Total market value = $684,400,000 / $853,026,000 = 0.80, or 80%
Therefore, Filer's capital structure weight of equity on a market value basis is 80%.
d. What is Filer's capital structure weight of debt on a market value basis?
From part c, we have:
Debt market value = $168,626,000
Total market value = $853,026,000
Market value weight of debt = Debt market value / Total market value = $168,626,000 / $853,026,000 = 0.20, or 20%.
Therefore, Filer's capital structure weight of debt on a market value basis is 20%.
2. A Treasury bill with a par value of £100,000 due in two months from now is selling today for £98,039, what is the effective annual rate of interest
Answer:
Effective annual rate = 12.62%
Explanation:
The Effective annual rate of return is the equivalent rate earned where compounding is done frequently at period or interval less than a year.
The EAR can be worked out as follows
EAR = ( (1+r)^n - 1 ) × 100
r- interest rate per period
m- number of periods in a year
EAR - Effective annual rate
So we apply this model to the questions as follows:
Cash return = 100,000- 98,039 =1,961
Return over two months = cash return /price today × 100 =
= 1,961/98,039 × 100 =2.0%
Interest per 2 month = 2.0%
DATA:
r- 2%
n - number of two months in a year = 6
Effective annual rate = ((1+0.02)^6 - 1) × 100= 12.6162 %
Effective annual rate = 12.62%
Under the constant-money-growth-rate rule, the annual money supply will be constant at the average annual growth rate of:________.
Answer:
real GDP
Explanation:
The above rule was proposed by Milton Friedman that the money supplied by the central bank be increased by constant percentage on annual basis. In other words, constant money growth rate rule suggested money supply growth rate be equal to GDP growth rate annually.
According to Friedman, monetary policy contributes to fluctuation in an economy. He suggested that the best way to stabilize a fluctuating economy is to allow the central bank increase money supply in the long run by a targeted amount annually irrespective of the situation of the economy.
On September 1, the board of directors of Colorado Outfitters, Inc., declares a stock dividend on its 15,000, $6 par, common shares. The market price of the common stock is $35 on this date.
Required: 1. 2. & 3. Record the necessary journal entries assuming a small (10%) stock dividend, a large (100%) stock dividend, and a 2-for-1 stock split. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Sept 1,
DR Stock dividends $52,500
CR Common stock $9,000
CR Additional paid in capital $43,500
Sept 1,
DR Stock dividends $90,000
CR Common stock $90,000
Sept 1,
No journal entry required.
Workings
Small Dividends
Stock dividends
= 15,000 * 10% * $35
= $52,500
Common stock
= 15,000*10%* $6
= $9,000
Additional paid in capital
= 52,500 - 9000
= $43,500
Large Dividends
Stock dividends
= 15,000 * $6
= $90,000
Common stock
= 15,000 * $6
= $90,000
No entry for stock splits.
All of the following are employer payroll taxes except: Multiple Choice Social Security tax equal to that withheld from employees. Medicare tax equal to that withheld from employees. State unemployment tax. Federal unemployment tax. Federal income tax equal to that withheld from employees.
Answer: Federal income tax equal to that withheld from employees.
Explanation:
Federal Income Tax equal is a withholding Tax that the employer takes from an Employee's salary and pays it directly to the Government in form of income taxes.
It will therefore count towards the Income Taxes that the person is to pay during the year.
This is an Employee Payroll Tax because it comes from the Employees's salary.
Consider a potential merger between two hypothetical beer companies. Prior to the merger, the first, Ann Hy, is worth $150 billion and the second, Czar Bosch, is worth $100 billion. If they merge, they will gain $30 billion in increased value from reduced costs and additional sales (in present discounted value). Thus the combined value of the new entity (called Ann Hy-Czar Bosch) would be $280 billion. How much more could Czar Bosch hope to get by using the theory of the pie instead of proportional division
Answer:
$3 billion more
Explanation:
Calculation of the amount that Czar Bosch could hope to get by using the theory of the pie instead of proportional division
If we are to use the theory of the pie instead of the proportional division this means that when using the proportional division, their would be likelihood that Czar Bosch would get an amount that is proportional to their market cap, 40% of the $30 billion, or $12 billion and in a situation where the they decide to split the pie this means that Czar Bosch would either get$15 billion or $3 billion more
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You are working at a practice that has a very busy daily schedule and needs to standardize the times when statements are handled and payments are due. What type of billing practice should use?
Answer: Cycle Billing
Explanation:
Cycle billing refers to a billing practice where the individual customer is billed on a certain schedule based on the day you started paying or the day the contract kicked in. For instance, your cellular network provider billing you on the same day every month.
This ensures that not all customers are billed on the same day which will reduce the workload at the practice which already has a busy schedule. Rather with customers being billed on different days, the workload decreases.
Also it will then be known for certain which dates one can expect payments as well as when statements will be handled.
A proposed new project has projected sales of $95,200, costs of $48,160, and depreciation of $3,360. The tax rate is 22 percent. Calculate operating cash flow using the four different approaches. The EBIT approach
Answer:
Approach 1
“EBIT + Depreciation – Taxes” approach:
EBIT = Sales – Cost – Depreciation = $95,200 - $48,160 - $3,360 = $43,680
Tax = EBIT × Tax rate = $43,680 × 0.22 = $9,607
EBIT + Depreciation – Taxes = $43,680 + $3,360 - $9,607 = $37,433
Approach 2
Top-down approach = Sales – Cost – Tax
= $95,200 - $48,160 - $9,607
= $37,433
Approach 3
Tax-shield approach = (Sales – Cost) (1 – tax rate) + (Depreciation × tax rate)
= ($95,200 - $48,160) (1 – 0.22) + ($3,360 × 0.22)
= $36691.2 + $739.2
= $37430.4
Approach 4
Bottom-up approach = (Sales – Cost – Depreciation) (1 – tax rate) + Depreciation
= ($95,200 - $48,160 - $3,360 ) (1 – 0.22) + $3,360
= $34,070.4 + $$3,360
= $37,430.4
In many larger U.S. based firms the __________ match(es) the overall strategy of the firm and reinforce(s) the culture emerging from day-to-day activities.
Answer:
Reward system
Explanation:
The reward system is the mechanism that a company uses to provide a compensation to their employees that can include salary, bonuses, equity and perks to keep them happy, maintain loyalty and increase motivation. This allows the company to have a strong team that is willing to work hard in their daily activities to achieve the company's goals.
According to this, the answer is that in many larger U.S. based firms the reward system match(es) the overall strategy of the firm and reinforce(s) the culture emerging from day-to-day activities because the reward system is established in a way in which it contributes to the appropiate implementation of the strategy to achieve the goals and it also helps strengthen the way in which people perform their activities.
The following data are for Paso Robles Company for the year ended 2009 December 31: Costs: Direct material $ 90,000 Direct labor 130,000 Manufacturing overhead: Variable 45,000 Fixed 90,000 Sales commissions (variable) 25,000 Sales salaries (fixed) 20,000 Administrative expenses (fixed) 35,000 Selling price per unit $ 10 Units produced and sold 60,000 Assume direct materials and direct labor are variable costs. Prepare a contribution margin income statement and a traditional income statement.
Answer:
Net operating income= 165,000
Explanation:
Giving the following information:
We need to make a contribution format income statement.
First, we will calculate the total variable cost:
Direct material= 90,000
Direct labor= 130,000
Variable overhead= 45,000
Sales commissions (variable)= 25,000
Total variable cost= 290,000
Contribution margin income statement:
Sales= 60,000*10= 600,000
Total variable cost= (290,000)
Total contribution margin= 310,000
Fixed overhead= (90,000)
Sales salaries (fixed)= (20,000)
Administrative expenses (fixed)= (35,000)
Net operating income= 165,000