Answer:
B. Any threat can induce a change in strategy in your opponent.
Explanation:
In a sequential negotiation games, the players move one by one and do not move at the same time.
In this game any threat can change the strategy in your opponent to prevent the threat and continue the game with new strategy.
Hence, the correct option is B.
Gaines Corporation invested $126,000 to acquire 26 comma 000 shares of Owens Technologies, Inc. on March 1, 2018. On July 2, 2019, Owens pays a cash dividend of $ 3.25 per share. The investment is classified as equity securities with no significant influence. Which of the following is the correct journal entry to record the transaction on July 2, 2019?
a. Cash 78,000
Equity Investments 78,000
b. Cash 78,000
Retained Equipment 78,000
c. Equity Investments 78,000
Cash 78,000
d. Cash 78,000
Dividend Revune 78,000
Answer:
Cash Dr, $84,500
Dividend revenue $84,500
Explanation:
The Journal entry is shown below:-
Cash Dr, $84,500 (26,000 × $3.25)
To Dividend revenue $84,500
(Being dividend is recorded)
To record the dividend, we debited the cash as it increased the assets and we credited the dividend revenue as it also increased the revenue
Therefore the above entry is the right and the same is not given in the option.
A classified income statement has four major sections—operating revenues, cost of goods sold, operating expenses, and non-operating revenues and accounts receivables.
A. True
B. False
Answer: False
Explanation:
The statement in the question that a classified income statement has four major sections which are the operating revenues, cost of goods sold, operating expenses, and non-operating revenues and accounts receivables is not true.
It should be noted that a classified income statement is made up of the revenue, the expenses and the non operating revenues and expenses.
Forest Company sells a product for $120 per unit. The variable cost is $50 per unit, and fixed costs are $392,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units required for the company to achieve a target profit of $152,880.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling price per unit= $120
Unitary variable cost= $50
Fixed costs= $392,000
First, we need to calculate the break-even point in units and dollars, using the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 392,000/ (120 - 50)
Break-even point in units= 5,600 units
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 392,000 / (70/120)
Break-even point (dollars)= $672,000
Now, we need to determine the number of units to be sold for the desired profit of $152,880:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (392,000 + 152,880) / 70
Break-even point in units= 7,784 units
Below are several amounts reported at the end of the year.
Currency located at the company 800
Supplies 2200
Short-term investments that mature within three months 1700
Accounts receivable 2500
Balance in savings account 7500
Checks received from customers but not yet deposited 400
Prepaid rent 1200
Coins located at the company 100
Equipment 8400
Balance in checking account 5200
Required: Calculate the amount of cash to report in the balance sheet.
Answer:
Calculation of the amount of cash to report in the balance sheet
Particulars Amount
Currency located at the company $800
Short-term investments that mature $1,700
within three months
Balance in savings account $7,500
Checks received from customers $400
but not yet deposited
Coins located at the company $100
Balance in checking account $5,200
Cash at the end of the year $15,700
Thus, the amount of cash to report in the balance sheet is $15,700,
Note: Supplies ,account receivables and prepaid rent are current asset of the company other than cash. Equipment are non cash
You purchased a call option for $3.45 17 days ago. The call has a strike price of $45, and the stock is now trading for $51. If you exercise the call today, what will be your holding-period return
Answer:
73.9%
Explanation:
Calculation for what will be your holding-period return
You purchased a call option for $3.45 17 days ago. The call has a strike price of $45 and the stock is now trading for $51. If you exercise the call today, what will be your holding period return?
First step is to find the Gross profit
Using this formula
Gross profit=Strike price- Stock Trading amount
Let plug in the formula
Gross profit =$51 - 45
Gross profit= $6
Second step is to find the Net profit
Using this formula
Net profit=Gross profit-Call option
Let plug in the
Net profit is $6 - 3.45
Net profit= $2.55
The last step is to find the Holding period return
Using this formula
Holding period return =Net profit/Call option
Let plug in the formula
Holding period return=$2.55/$3.45
Holding period return= 0.739*100
Holding period return =73.9%
Therefore what will be your holding-period return is 73.9%
You are trying to decide how much to save for retirement. Assume you plan to save $5,000 per year with the first investment made one year from now. ou think you can earn 11.0% per year on your investments and you plan to retire in 41 years, immediately after making your last $5,000 investment.
a. How much will you have in your retirement account on the day you retire?
b. If, instead of investing $5,000 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be?
c. If you hope to live for 28 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 28th withdrawal (assume your savings will continue to earn 11.0% in retirement)?
d. If, instead, you decide to withdraw $647,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings?
e. Assuming the most you can afford to save is $ 1 comma 000$1,000 per year, but you want to retire with
$1,000,000 in your investment account, how high of a return do you need to earn on your investments?
Answer:
a. How much will you have in your retirement account on the day you retire?
future value of the annuity = annual payment x (FV annuity factor, 11%, 40 periods) = $5,000 x 581.826 = $2,909,130b. If, instead of investing $5,000 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be?
present value = future value / (1 + interest rate)ⁿ = $2,909,130 / 1.11⁴¹ = $40,320.04c. If you hope to live for 28 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 28th withdrawal (assume your savings will continue to earn 11.0% in retirement)?
payment = present value / annuity factor (PV annuity factor, 11%, 28 years) = $2,909,130 / 8.60162 = $338,207.22d. If, instead, you decide to withdraw $647,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings?
We can first try to get an approximate answer. The annuity factor = $2,909,130 / $647,000 = 4.49633694. Now looking at an annuity table we can look at the closest amount for 11%. The answer is between 6 years (annuity factor 4.2305) and 7 years (annuity factor 4.7122). This means that in less than 7 years you will have no more money left.e. Assuming the most you can afford to save is $ 1 comma 000$1,000 per year, but you want to retire with $1,000,000 in your investment account, how high of a return do you need to earn on your investments?
Again we must use the future value to determine the annuity factor. Annuity factor = $1,000,000 / $1,000 = 1,000. Using an annuity calculator to determine the closest rate (for 40 periods) = 12.9515% ≈ 12.95%Principal-principal conflicts occur within one class of principals, such as a disagreement among certain majority stockholders and other majority stockholders.
a. True
b. False
Answer: False
Explanation:
The principal to principal conflict typically exists between the two main categories of shareholders, which are the controlling shareholders and the second one which is the minority shareholders
Therefore, the analysis in the question that the principal-principal conflicts occur within one class of principals, such as a disagreement among certain majority stockholders and other majority stockholders is not true.
Thomas Textiles Corporation began November with a budget for 60,000 hours of production in the Weaving Department. The department has a full capacity of 75,000 hours under normal business conditions. The budgeted overhead at the planned volumes at the beginning of November was as follows:
Variable overhead $450,000
Fixed overhead 262,500
Total $712,500
The actual factory overhead was $725,000 for November. The actual fixed factory overhead was as budgeted. During November, the Weaving Department had standard hours at actual production volume of 64,500 hours.
Determine the variable factory overhead controllable variance and the fixed factory overhead volume variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.
a. Variable factory overhead controllable variance: $
b. Fixed factory overhead volume variance: $
Answer:
a) $12,500 unfavorable
b) 0
Explanation:
variable factory overhead controllable variance = actual variable overhead expense - (standard variable overhead per unit x standard number of units)
actual variable overhead expense = $725,000
standard variable overhead per unit = $712,500 / 60,000 = $11.875
standard number of units = 60,000
variable factory overhead controllable variance = $725,000 - $712,500 = $12,500 unfavorable
Controllable factory overhead is not related to any changes in the actual volume or quantity produced.
Fixed factory overhead volume variance = actual fixed overhead - standard fixed overhead = $262,500 - $262,500 = 0
Fixed overhead was exactly the same as the standard or budgeted overhead.
For each of the following scenarios, determine if there is an increase or a decrease in supply for the good in italics.
a. The price of silver increases.
b. Growers of tomatoes experience an unusually good growing season.
c. New medical evidence reports that consumption of organic products reduces the incidence of cancer.
d. The wages of low-skill workers, a resource used to help produce clothing, increase.
Answer:
a. The price of silver increases. - Supply Increase
As the price of silver increases, it will make silver more profitable therefore producers will increase production to take advantage of the higher prices to make more profit in total.
b. Growers of tomatoes experience an unusually good growing season. - Supply Increase
If growers of tomatoes experience a good season, it means that there will be more tomatoes to harvest. This will increase the supply of tomatoes.
c. New medical evidence reports that consumption of organic products reduces the incidence of cancer. - Supply Increase.
Supply of organic products will increase as a result of an anticipated and an actual increase in the demand for organic products as more people will buy them to avoid getting cancer.
d. The wages of low-skill workers, a resource used to help produce clothing, increase. - Supply Decrease
When inputs into the production process increase, producers will tend to cut down production to enable them save cost and maintain profitability. If the wages of low-skill workers increase, it will mean that an input is now more expensive so production of clothing will reduce thereby reducing its supply.
Suppose the price level and value of the U.S. Dollar in year 1 are 1 and $1, respectively. Instructions: Round your answers to 2 decimal places. a. If the price level rises to 1.55 in year 2, what is the new value of the dollar
Answer: $0.65
Explanation:
The Price Level and the value of a currency are inversely related because inflation erodes the value of the currency. Therefore if the price level increases, the value of the currency drops. The reverse is true.
The formula therefore is is;
New Value = [tex]\frac{1}{Price Level}[/tex]
New Value = [tex]\frac{1}{1.55}[/tex]
New Value = 0.6452
New Value = $0.65
A business entity operated and taxed like a partnership, but with limited liability for the owners, is called a:
Answer: A. limited liability company.
Explanation:
A Limited Liability Company (LLC) is a type of company that is operated and taxed like a partnership for instance, profits that flow to the partners are taxed on the partner's income but not on the firm to prevent double taxation. This is called Flow-Through Taxation.
They operate with limited Liability for the owners because the owners are only personally liable for the debts and liabilities the company has up until the capital they invested. Anything past this and they cannot be held liable.
Chester Corp. is downsizing the size of their workforce by 10% (to the nearest person) next year from various strategic initiatives. How much will the company pay in separation costs if each worker receives $5,000 when separated?
Answer:
$293,500
Explanation:
The computation of the amount pay in separation cost is shown below:
As there are 587 employees
but 10% are downsized
So, separation cost is
= Current employees × downsized percentage × received amount by workers
= 587 employees × 10% × $5,000
= $293,500
We simply applied the above formula so that the amount pay by the company with respect to the separation cost could arrive
Which of the following is true for a company that doesn't adjust their WACC for project risk? a. The company would accept more average risk projects than they should otherwise. b. The company's risk would decrease. c. The company would accept more less than average risk projects than they should otherwise. d. The company would accept more riskier than average projects than they should otherwise.
Answer: d. The company would accept more riskier than average projects than they should otherwise.
Explanation:
A company's Weighted Average Cost of Capital can enable it know the calibre of risk to accept from new project because it shows the business risk of funding current business operations.
If a project will bring more risk to the company, the WACC should be adjusted so that the company will get a fair rate of return from the new project. If they do not adjust the new project for risk, not only will the company not get a fair return but they might also accept riskier projects because they will accept projects that they think have a lower risk than their WACC even though they are higher because they did not adjust their WACC.
The budgeted finished goods inventory and cost of goods sold for a manufacturing company for the year 2017 are as follows: January 1 finished goods, $765,000; December 31 finished goods, $540,000; cost of goods sold for the year, $2,560,000. The budgeted cost of goods manufactured for the year is a.$1,255,000. b.$2,335,000. c.$2,785,000. d.$3,100,000.
Answer:
$2,335,000= cost of goods manufactured
Explanation:
Giving the following information:
January 1 finished goods, $765,000
December 31 finished goods, $540,000
Cost of goods sold for the year, $2,560,000
To calculate the cost of goods manufactured, we need to use the following formula:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
2,560,000 = 765,000 + cost of goods manufactured - 540,000
2,335,000= cost of goods manufactured
The five forces are not meant to replace __________ and __________ economic philosophies, which are part of making thorough decisions from a business perspective.
Answer:
analyzing and accepting.
Explanation:
Porter's Five Forces, is a model of competitive analysis developed by Michael Porter, whose main objective is to assist the positioning of an organization in the market in which it operates.
For Porter, the five forces that can help a company to position itself in the market are:
Competitive Rivalry. Supplier Power. Buyer Power. Threat of Substitution. Threat of New Entry.According to the author, these five forces will be decisive for a company to align its strategy appropriately to the market in which it operates, adapting its microenvironment to the macroenvironment and then achieving essential competitive advantages to increase organizational profit.
Therefore, this tool is used as an analysis differential for companies to know their potential, correct the flaws and identify opportunities. But it is not able to replace economic philosophies, which continue to be an essential business assessment tool for decision making.
As the name suggests, convertible bonds allow the owner the option to convert the bonds into a fixed number of shares of common stock.
Innovative Energy LLC is a start-up company that just raised $100,000 to conduct a third-party feasibility study on its business model. the company agreed to treat the $100,000 investment as debt at 10% interest rate; however, the investor has the right to exchange the debt for common stock during the company's next financing round. Which of the following terms best describes the $100,000 investment?
Convertible bond
Warrant
Consider the case of an investor, Nazem:
Nazem wants to include bonds in his investment portfolio, but he wants the option to sell the bond to the issuer at a specified price at a certain date before the maturity of the bond. Which of the following bond redemption features should he pick?
Warrants
Puttable bond
Nazem also recently bought bonds that have their interest rate tied to the consumer price index (CPI) so that he will be protected if inflation rates increase. Nazem has invested in:_________
Answer: 1. Convertible bond
2. Putable bond
3. Purchasing power bond.
Explanation:
The $100,000 investment is a convertible bond. This is a fixed-income debt security which yields interest payments. It should be noted that it can also be converted to equity shares or common stock.
Nazeem should pick a putable bond. This is because the puttable bond has a put option that is embedded ans he can also demand his principal to be paid early.
Nazem also recently bought bonds that have their interest rate tied to the consumer price index (CPI) so that he will be protected if inflation rates increase. Nazem has invested in purchasing power bond .
The number of new domestic wind turbine generators installed each year in a particular country has been forecast to increase at a constant multiplicative rate of 15% per annum for the foreseeable future. This year (t = 0) 100 new generators were installed. What is the total number of new generators including this year's, that would have been installed within the next ten years (that is up to and including year t = 9)? Use a discrete model for the growth process.
a. 2030
b. 235
c. 1679
d. 900
Answer:
2030
Explanation:
The computation of the total number of new generators including this year is shown below
Given that
(A) = 100
Common Ratio (r) = 1.15
n = 10
Now
Sum of 10 terms Sn is
= A × (r n - 1) ÷ (r - 1)
= 100 × (1.1510 - 1) ÷ (1.15 - 1)
= 100 × 3.0456 ÷ 0.15
= 2030
We simply applied the above formula so that the total number of new generators could come
Mason Automotive is an automotive parts company that sells car parts and provides car service to customers. This is Mason's first year of operations and they have hired you as their CPA to prepare the income statement and balance sheet for their company. As such, January 1st , 2018 was the first day that Mason was in business. For the month of January, record all the necessary journal entries for transactions that occurred during the month. In addition, please prepare all necessary adjusting journal entries as of the end of the month.
From the information below, please fill out the "journal entries tab" for all the necessary journal entries. Furthermore, please complete the "T-Accounts" tab for the individual accounts so that the trial balance tab can be updated (automatically). I prepared the first journal entry for you in the journal entries tab and T-Accounts tab. Ensure you label the entries similar to how I have shown in Entry #1.
Once all entries are recored and the T-Accounts tab is updated, please prepare the financial statements (income statement and balance sheet) for the month of January.
Journal Entry #1
Mason Automotive sells 10,000,000 shares at $5 par for $30 on January 1st, 2018.
Journal Entry #2
Ed Mason, the CEO, hires 3,000 employees, whom will receive a combined salary of $12 Million on a monthly basis. The employees started on January 1st and will be paid for the month of January on February 5th. Employee's withholdings are as follows: 10% for federal income taxes 5% for state income taxes and 7% for FICA. Record the necessary entry as of January 1st, 2018.
Journal Entry #3
Mason Automotive issues a bond payable on January 1st, 2018 with a face value of $200 Million at 102. The bond will have a useful life of 5 years and interest is paid out monthly based on a rate of 5% APR. Record the necessary journal entry as of January 1st 2018.
(Note: Assume straight line amortization for the bond discount/premium).
Journal Entry #4
Mason Automotive purchased $80 Million dollars worth of inventory on account on January 2nd, 2018. Mason notes that it will use a perpetual inventory system to track inventory.
Journal Entry #5
Mason Automotive purchases fixed assets of $120 Million that will have a useful life of 10 years and no salvage value on January 2, 2018. $20 million was paid with cash with the remaining balance on account. These assets are depreciated using the straight-line method.
Journal Entry #6
On January 2nd, Mason Automotive shipped an order to Corby Panther Company. The shipping terms were FOB shipping point and the value of the order was $50 Million and the inventory cost was $20 Million. Assume that this sale was made on account.
Journal Entry #7
On January 3rd, Mason Automotive receives $75 Million advance payment from a customer, Michael Scott Paper Company, to manufacture 7,500 cars.
Journal Entry #8
Mason Automotive buys a patent from Apple for $24 Million on January 3rd, 2018. The patent has a legal life of 20 years, but a useful life of 10 years. Record the necessary entry as of January 3rd, 2018. Assume the patent was purchased using cash.
Journal Entry #9
Mason Automotive purchased $2 Million dollars worth of supplies January 4th, 2018. $1.5 Million was paid with cash with the remaining balance on account.
Journal Entry #10
Mason Automotive pre-pays for Rent Expense for the next year of $12 Million and Insurance Expense of $2.4 Million on January 4th, 2018
Journal Entry #11
On January 20th, Mason Automotive decides to purchase 2,000,000 shares of Treasury stock at $25 per share.
Month End Adjusting Entries
There are 10 applicable adjusting entries that need to be made as of the end of the month based on the information provided above. When recording these adjusting entries consider the following facts:
1) Interest expense will be recorded as a operating expense items on the income statement.
2) Record the necessary adjusting entries related to pre-paid expense as separate journal entries.
3) When reviewing the supply room as of the end of the month, Mason Automation noted that it had $1.5 Million worth of supplies still on hand.
4) As of the end of the month, 4,000 cars were completed for Michael Scott Paper Company and the performance obligation had been met on those 4,000 cars. As such, revenue was determined to be earned on those 4,000 vehicles and it was noted that each vehicle costed $8,000 to manufacture.
5) Mason Automation uses the balance sheet approach in estimating the allowance for doubtful accounts as of the end of the period. Based on industry average, Mason noted that it will use 5% of receivables as an estimation.
6) When preparing the balance sheet, close out net income to retained earnings.
Answer:
1) Mason Automotive sells 10,000,000 shares at $5 par for $30 on January 1st, 2018.
Dr Cash 300,000,000
Cr Common stock 50,000,000
Cr Additional paid in capital 250,000,000
2) Ed Mason, the CEO, hires 3,000 employees, whom will receive a combined salary of $12 Million on a monthly basis. The employees started on January 1st and will be paid for the month of January on February 5th. Employee's withholdings are as follows: 10% for federal income taxes 5% for state income taxes and 7% for FICA. Record the necessary entry as of January 1st, 2019.
No journal entry required
Adjusting entry:
January 31, 2018, wages expense
Dr Wages expense 12,000,000
Dr FICA taxes expense 840,000
Cr Federal income taxes withheld payable 1,200,000
Cr State income taxes withheld payable 600,000
Cr FICA taxes withheld payable 840,000
Cr FICA taxes payable 840,000
Cr Wages payable 9,360,000
3) Mason Automotive issues a bond payable on January 1st, 2018 with a face value of $200 Million at 102. The bond will have a useful life of 5 years with an interest payment of 5% (Annual Percentage Rate) due at the end of the month. Record the necessary journal entry as of January 1st, 2018.
Dr Cash 204,000,000
Cr Premium on bonds payable 4,000,000
Cr Bonds payable 200,000,000
(Note: When considering the amortization of the discount or premium, assume the straight line method is used).
Adjusting entry
January 31, 2018, interest expense
Dr interest expense 766,666.66
Dr Premium on bonds payable 66,666.67
Cr Interest payable 833,333.33
4) Mason Automotive purchased $80 Million dollars worth of inventory on January 2nd, 2018. $80 Million was paid with cash with the remaining balance on account. Mason notes that it will use a perpetual inventory system to track inventory.
Dr Inventory 80,000,000
Cr Accounts payable 80,000,000
5) Mason Automotive purchases fixed assets of $120 Million that will have a useful life of 10 years and no salvage value on January 2, 2018. $20 million was paid with cash with the remaining balance on account. These assets are depreciated using the straight-line method.
Dr Fixed assets 120,000,000
Cr Cash 20,000,000
Cr Accounts payable 100,000,000
Adjusting entry:
January 31, 2019, depreciation expense
Dr Depreciation expense 1,000,000
Cr Accumulated depreciation - fixed assets 1,000,000
6) On January 2nd, Mason Automotive shipped an order to Corby Panther Company. The shipping terms were FOB shipping point and the value of the order was $50 Million and the inventory cost was $20 Million. Assume that this sale was made on account.
Dr Accounts receivable 50,000,000
Cr Sales revenue 50,000,000
Dr Cost of goods sold 20,000,000
Cr Inventory 20,000,000
Adjusting entry:
January 31, 2018, allowance for doubtful accounts (5%)
Dr Bad debt expense 2,500,000
Cr Allowance for doubtful accounts 2,500,000
7) On January 3, Mason Automotive receives $75 Million advance payment from a customer, Michael Scott Paper Company, to manufacture 7,500 cars.
Dr Cash 75,000,000
Cr Deferred revenue 75,000,000
Adjusting entry:
January 31, 2019, 4,000 cars were finished and delivered
Dr Deferred revenue 40,000,000
Cr Sales revenue 40,000,000
Dr Cost of goods sold 32,000,000
Cr Inventory: finished cars 32,000,000
8) Mason Automotive buys a patent from Apple for $24 Million on January 3rd, 2018. The patent has a legal life of 20 years, but a the useful life of 10. Record the necessary entry as of January 3rd, 2018. Assume the patent was purchased using cash.
Dr Patent 24,000,000
Cr Cash 24,000,000
Adjusting entry:
January 31, 2018, patent amortization expense
Dr Patent amortization expense 200,000
Cr Patent 200,000
9) Mason Automotive purchased $2 Million dollars worth of supplies on account on January 4, 2018.
Dr Supplies 2,000,000
Cr Cash 1,500,000
Cr Accounts payable 500,000
Adjusting entry
January 31, 2018, supplies expense
Dr Supplies expense 500,000
Cr Supplies 500,000
10) Mason Automotive pre-pays for Rent Expense for the next year of $12 Million and Insurance Expense of $2.4 Million on January 4, 2018.
Dr Prepaid rent 12,000,000
Dr Prepaid insurance 2,400,000
Cr Cash 14,400,000
Adjusting entries:
January 31, 2019, rent expense
Dr Rent expense 1,000,000
Cr Prepaid rent 1,000,000
January 31, 2019, insurance expense
Dr Insurance expense 200,000
Cr Prepaid insurance 200,000
11) On January 20th, Mason Automotive decides to purchase 2,000,000 shares of Treasury stock at $25 per share.
Dr Treasury stock 50,000,000
Cr Cash 50,000,000
Closing journal entries:Dr Sales revenue 90,000,000
Cr Income summary 90,000,000
Dr Income summary 71,006,66.66
Cr Wages expense 12,000,000
Cr FICA taxes expense 840,000
Cr interest expense 766,666.66
Cr Depreciation expense 1,000,000
Cr Cost of goods sold 52,000,000
Cr Bad debt expense 2,500,000
Cr Patent amortization expense 200,000
Cr Supplies expense 500,000
Cr Rent expense 1,000,000
Cr Insurance expense 200,000
Dr Income summary 18,993,333.34
Cr Retained earnings 18,993,333.34
Answer:
i think this is correct
Explanation:
Longevo, a watch manufacturing company, offers watches in a wide range of designs to suit all age groups. To adequately cover its wide and diversified consumer base, the company makes use of all the traditional and new age media platforms for its promotions. The promotional strategy used by Longevo is _____.
Answer:
Integrated marketing communication.
Explanation:
In this scenario, Longevo, a watch manufacturing company, offers watches in a wide range of designs to suit all age groups. To adequately cover its wide and diversified consumer base, the company makes use of all the traditional and new age media platforms for its promotions. The promotional strategy used by Longevo is integrated market communication.
An integrated marketing communication is a marketing strategy which involves branding, promotion and coordination of marketing tools across traditional and digital communication channels such as webinar, blog, billboards, television, newspapers, radio etc in an organization. The marketing tools used in business are online marketing, direct marketing, advertising, social media, sales promotion, personal selling, public relations etc.
Hence, Longevo makes use of all the traditional and new age media platforms for the promotion of its watches, to adequately cover its wide and diversified consumer base.
The company is considering the purchase of machinery and equipment to set up a line to produce a combination washer-dryer. They have given you the following information to analyze the project on a 5-year timeline:
Initial cash outlay is $150,000, no residual value.
Sales price is expected to be $2,250 per unit, with $595 per unit in labor expense and $795 per unit in materials.
Direct fixed costs are estimated to run $20,750 per month.
Cost of capital is 8%, and the required rate of return is 10%.
They will incur all operational costs in Year 1, though sales are expected to be 55% of break-even.
Break-even (considering only direct fixed costs) is expected to occur in Year 2.
Variable costs will increase 2% each year, starting in Year 3.
Sales are estimated to grow by 10%, 15%, and 20% for years 3 - 5.
Then to calculate:
The product’s contribution margin
Break-even quantity
NPV
IRR
Finally:
Explain how the project analyses do or do not support this decision.
In either case, what are the factors that should have been considered in management’s decision?
Answer:
Break-even quantity = 290 units
NPV = -$150,038.78
IRR = -12.07%
This project should be rejected because it has a negative NPV and IRR. You would not be able to even recover your own investment, the sales output is too small.
Explanation:
initial outlay -$150,000
selling price per unit $2,250
production costs:
labor $595materials $795total fixed costs $20,750
contribution margin per unit = $2,250 - ($595 + $795) = $860
contribution margin year 3 = $2,250 - $1,417.80 = $832.20
contribution margin year 4 = $2,250 - $1,446.16 = $803.84
contribution margin year 4 = $2,250 - $1,475.08 = $774.92
in order to calculate the break even point in units we must determine the total fixed costs per year = $20,750 x 12 = $249,000
break even point in units = $249,000 / $860 = 289.5 ≈ 290 units
sales during first year = 290 x 55% = 159.5 ≈ 160 units
sales during second year = 290 units
sales during third year = 290 x 1.1 = 319 units
sales during fourth year = 319 x 1.15 = 366.85 ≈ 367 units
sales during fifth year = 367 x 1.2 = 440.4 ≈ 440 units
net cash flow year 1 = $137,600 - $249,000 = -$111,400
net cash flow year 2 = $249,400 - $249,000 = $400
net cash flow year 3 = $265,471.80 - $249,000 = $16,471.80
net cash flow year 4 = $295,009.28 - $249,000 = $46,009.28
net cash flow year 5 = $340,964.80 - $249,000 = $91,964.80
using a financial calculator and a 10% discount rate, NPV = -$150,038.78 and IRR = -12.07%
In this exercise we have to use finance knowledge to calculate the quantity and taxes calculated on the product, so we have to:
1) [tex]Break-even \ quantity = 290 units\\NPV = -$150,038.78 \\IRR = -12.07%[/tex]
2) This project should be rejected because it has a negative NPV and IRR. You would not be able to even recover your own investment, the sales output is too small.
Given the values in the text of:
Initial outlay [tex]\$150,000[/tex] Selling price per unit [tex]\$2,250[/tex] Labor [tex]\$595[/tex] Materials [tex]\$795[/tex] Total fixed costs [tex]\$20,750[/tex]
Now calculating the margin for each unit we find that:
Contribution margin per unit: [tex]\$2,250 - (\$595 + \$795) = \$860[/tex] Contribution margin year 3: [tex]\$2,250 - \$1,417.80 = \$832.20[/tex] Contribution margin year 4: [tex]\$2,250 - \$1,446.16 = \$803.84[/tex] Contribution margin year 5: [tex]\$2,250 - \$1,475.08 = \$774.92[/tex]Knowing that break even point in units it is worth it 290, we have to:
Sales during year 1: [tex]290 * 55\% = 159.5 = 160 \ units[/tex] Sales during year 2: [tex]290 \ units[/tex]Sales during year 3: [tex]290 * 1.1 = 319 \ units[/tex] Sales during year 4: [tex]319 * 1.15 = 366.85 = 367 \ units[/tex] Sales during year 5: [tex]367* 1.2 = 440.4= 440\ units[/tex]
So to calculate the net cash we found that:
Net cash flow year 1: [tex]\$137,600 - \$249,000 = -\$111,400[/tex] Net cash flow year 2: [tex]\$249,400 - \$249,000 = \$400[/tex] Net cash flow year 3: [tex]\$265,471.80 - \$249,000 = \$16,471.80[/tex] Net cash flow year 4: [tex]\$295,009.28 - \$249,000 = \$46,009.28[/tex] Net cash flow year 5: [tex]\$340,964.80 - \$249,000 = \$91,964.80[/tex]
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On July 23 of the current year, Dakota Mining Co. pays $6,110,400 for land estimated to contain 8,040,000 tons of recoverable ore. It installs machinery costing $723,600 that has a 10-year life and no salvage value and is capable of mining the ore deposit in eight years. The machinery is paid for on July 25, seven days before mining operations begin. The company removes and sells 414,250 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined.
Required:
Prepare entries to record:
a. the purchase of the land
b. the cost and installation of machinery
c. the first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.
d. the first five months' depreciation on the machinery.
Answer:
a.Purchase of Land
Land $6,110,400 (debit)
Cash $6,110,400 (credit)
b.Machinery Costs
Land $723,600 (debit)
Accounts Payable $723,600 (credit)
c. $314,830
d. $37,282.50
Explanation:
Purchase of Land
Land $6,110,400 (debit)
Cash $6,110,400 (credit)
Machinery Costs
Land $723,600 (debit)
Accounts Payable $723,600 (credit)
Depletion Expense = Cost of Asset / Expected Total Contents in Units × Number of Units taken in the Period.
= $6,110,400 / 8,040,000 tons × 414,250 tons
= $314,830
Depreciation Expense = Cost of Asset / Expected Total Contents in Units × Number of Units taken in the Period.
= $723,600 / 8,040,000 tons × 414,250 tons
= $37,282.50
Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company’s total stockholders’ equity amounted to $480,500. Income and dividend distributions for Song Company from 2014 through 2016 are as follows: 2014 2015 2016 Net Income (loss) $60,600 $53,900 ($57,200 ) Dividend distribution 23,800 50,600 36,300 Required:Prepare journal entries on the books of Percy Company from the date of purchase through 2016 to account for its investment in Percy Company.
Answer:
since Percy Company's owns 80% of Song Company's stocks, we must use the equity method to record its investment in Song Company
Beginning 2014, investment in Song Company
Dr Investment in Song Company 406,000
Cr Cash 406,000
2014, to record Song's net income
Dr Investment in Song Company 48,480
Cr Investment revenue 48,480
2015, to record Song's net income
Dr Investment in Song Company 43,120
Cr Investment revenue 43,120
2016, to record Song's net loss
Dr Loss on investment 45,760
Cr Investment in Song Company 45,760
2014, to record Song's dividends
Dr Cash 19,040
Cr Investment in Song Company 19,040
2015, to record Song's dividends
Dr Cash 40,480
Cr Investment in Song Company 40,480
2016, to record Song's dividends
Dr Cash 29,040
Cr Investment in Song Company 29,040
In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the cost of goods manufactured is computed according to which of the following equations?
A. Cost of goods manufactured = Total manufacturing costs + Beginning finished goods inventory – Ending finished goods inventory.
B. Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory – Ending work in process inventory.
C. Cost of goods manufactured = Total manufacturing costs + Ending work in process inventory – Beginning work in process inventory.
D. Cost of goods manufactured = Total manufacturing costs + Ending finished goods inventory – Beginning finished goods inventory.
Answer:
B
Explanation:
The cost of goods manufactured calculates the total production cost of manufactured goods in a particular period
Speedster Bicycles, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. If sales are budgeted to be $250,000 for March and $280,000 for April, what are the budgeted cash receipts from sales on account for April
Answer:
Total cash April= $257,500
Explanation:
Giving the following information:
Speedster Bicycles, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale.
Sales:
March= $250,000
April= $280,000
Cash budget of April:
Sales on account from April= 280,000*0.25= 70,000
Sales on account from March= 250,000*0.75= 187,500
Total cash April= $257,500
In a duopoly game we observe the following payouts: if the two firms collude they will each earn $50,000. If one firm cheats then he earns $60,000 and the other firm earns -$10,000. If both firms cheat then they each earn zero economic profit. In this game what is the Nash equilibrium?
Answer:
the Nash equilibrium for both players is to collude
Explanation:
A duopoly is when there are two firms operating in an industry.
Game theory looks at the interactions between participants in a competitive game and calculates the best choice for the player.
Dominant strategy is the best option for a player regardless of what the other player is playing.
Nash equilibrium is the best outcome for players where no player has an incentive to change their decisions.
the Nash equilibrium for both players is to collude because it is the best outcome for both players. if, a player cheats, there is a chance that the other player would cheat and both firms would end up earning a zero economic profit
Based on the various payoffs to be made, the Nash Equilibrium for this game would be that both firms should collude.
The Nash Equilibrium is the outcome that would be most beneficial for both firms to stay in. If either of them leave, they would incur losses.
If both firms decide to collude and one cheats, the other firm would cheat as well to avoid making a loss which would lead to both of them making zero economic profit.
Both firms will therefore collude so as to make $50,000 a piece.
In conclusion, the Nash Equilibrium is collusion between the two firms.
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An important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is:
Answer:
Cost-volume-profit analysis.
Explanation:
An important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is cost-volume-profit analysis. It is an important tool in accounting that is used to determine how changes in differing levels of activities such as costs and volume affect a company's operating financial statements, both income and net income. It is also an accounting concept known as the break even analysis.
In order to use this cost-volume-profit analysis, accountants usually make some assumptions and these are;
1. Sales price per unit product is kept constant.
2. Variable costs per unit product are kept constant.
3. Total fixed costs of production are kept constant.
4. All the units produced are sold.
5. The costs accrued are as a result of change in business activities.
6. A company selling more than a product should simply sell in the same mix.
Fritz, Inc.'s unit selling price is $75, the unit variable costs are $45, fixed costs are $150,000, and current sales are 10,000 units. How much will operating income change if sales increase b
The question is incomplete. Here is the complete question.
Fritz, Inc.'s unit selling price is $75, the unit variable costs are $45, fixed costs are $150,000, and current sales are 10,000 units. How much will operating income change if sales increase by 5,000 units
Answer:
$150,000 increase
Explanation:
Fritz has a unit selling price of $75
The unit variable cost is $45
The fixed costs are $150,000
The current sales are 10,000 units
The first step is to calculate the contribution margin
Contribution margin= sales price - variable cost
= $75-$45
= $30 per unit
Therefore, the change in the operating income when sales increase by 5,000 units can be calculated as follows
= 5,000 units × $30
= $150,000 increase
Hence the operating income will increase by $150,000 when there is an increase in the sales by 5,000 units
A company issues a ten-year bond at par with a coupon rate of 6.4% paid semi-annually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 9.1%. What is the new price of the bond?
Answer:
[tex]\mathbf{current \ price \ of \ the \ bond= \$848.78}[/tex]
Explanation:
The current price of the bond can be calculated by using the formula:
[tex]current \ price \ of \ the \ bond= ( coupon \times \dfrac{ (1- \dfrac{1}{(1+YTM)^{no \ of \ period }})}{YTM} + \dfrac{Face \ Value }{(1+YTM ) ^{no \ of \ period}}[/tex]
[tex]current \ price \ of \ the \ bond= ( \dfrac{0.064 \times \$1000}{2} \times \dfrac{ (1- \dfrac{1}{(1+ \dfrac{0.091}{2})^{8 \times 2}})}{\dfrac{0.091}{2}} + \dfrac{\$1000 }{(1+\dfrac{0.091}{2} ) ^{8 \times 2}})[/tex]
[tex]current \ price \ of \ the \ bond= \$32 \times $11.19 + \$490.70[/tex]
[tex]current \ price \ of \ the \ bond= \$358.08+ \$490.70[/tex]
[tex]\mathbf{current \ price \ of \ the \ bond= \$848.78}[/tex]
Allison Cobb sells homemade knit scarves for $ 25 each at local craft shows. Her contribution margin ratio is 60%. Currently, the craft show entrance fees cost Allison $ 900 per year. The craft shows are raising their entrance fees by 10% next year. How many extra scarves will Allison have to sell next year just to pay for rising entrance fee costs? Begin by identifying the general formula to compute the breakeven sales in units.
Allison will have to sell 6 extra scarves next year just to pay for rising entrance fee costs.
Explanation:Formula :
Break-Even point ( in units)= Fixed Costs ÷ (Sales price per unit – Variable costs per unit)
Given, Price of knit scarves = $25
Contribution margin ratio = 60%
Contribution margin per unit = (Price of knit scarves) x (Contribution margin ratio )
= $(25 x 0.60 )
= $15
Current entrance fees = $900
Percentage in increase in entrance fees = 10%
Increase in entrance fees = 10% of $900 = $90
Extra scarves to be sold [tex]=\dfrac{\text{Increase in extrnace fees}}{\text{Contribution margin per unit}}[/tex]
[tex]\\\\=\dfrac{90}{15}=6[/tex]
Allison will have to sell 6 extra scarves next year just to pay for rising entrance fee costs.
intext:"The description of the relation between a company’s assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the"
Answer:
Accounting equation
Explanation:
The accounting equation is the basis of the double-entry accounting system.
The accounting equation ensures that each entry made on the debit side of the balance sheet should have a corresponding entry on the credit side. This ensures that the balance sheet remains balanced