Answer and Explanation:
The journal entries are shown below:
On Mar 1
Notes Receivable $60,000
To Accounts Receivable $60,000
(Being the note receivable is recorded)
On Mar 18
Notes Receivable $25,000
To Accounts Receivable $25,000
(Being the note receivable is recorded)
On Apr 30
Accounts Receivable $60,600
To Notes Receivable $60,000
To Interest Revenue ($60,000 × 2 ÷ 12 × 6%) $600
(Being the note receivable and interest revenue is recorded)
On May 17
Accounts Receivable $25,375
To Notes Receivable $25,000
To Interest Revenue ($25,000 × 9% × 2 ÷ 12) $375
(Being the note receivable and interest revenue is recorded)
On Jul 29
Cash $61,812
To Accounts Receivable $60,600
To Interest Revenue (60,600 × 8% × 90 ÷ 360) $1,212
(Being the note receivable and interest revenue is recorded)
On Aug 23
Allowance for Doubtful Accounts $25,375
To Accounts Receivable $25,375
(Being the allowance for doubtful debts is recorded)
The founder of alchemy products inc. discovered a way to turn gold into lead and patented this new technology. he then formed a corporation and invested $200,000 in setting up a production plant. he believes that he could sell his patent for $50 million.
a. What are the book value and market value of the firm?
b. If there are 1 million shares of stock in the new corporation, what would be the price per share and the book value per share?
Answer:
Explanation:
a. What are the book value and market value of the firm?
The book value is $200,000 which is the amount invested in setting up the production plant.
The market value of the firm is the addition of the book value and the patent. This will be:
= $50,000,000 + $200,000
= $50,200,000
b. If there are 1 million shares of stock in the new corporation, what would be the price per share and the book value per share?
The book value per share is the book value divided by the outstanding shares. This will be:
= $200,000/1,000,000
= $0.2 pee share
Price per share will be:
= $50,200,000/1,000,000
= $50.2
Sarah, the controller of a large beverage supplier, supervises two employees. Her boss, Vladimir, instructs her to increase the company's inventory balance for an amount that is material to the financial statements by crediting several small "miscellaneous" expense accounts. She does not understand why he wants her to make these entries but immediately directs one of her staff to make them because she has been instructed to do so. Which of the following statements best describes Sarah's actions?
Answer:
Sarah failed to evaluate a potential ethical issue
Explanation:
According to the given scenario, Ethical concerns occur as workers face pressure from their employers to inflate profits or expenditures that include manipulating financial statements. Workers should be morally responsible and not participate in any dishonest behavior that modify the financial statements.
So, the correct answer is Sarah failed to evaluate a potential ethical issue .
Stu deposited $400 in an account three years ago. Last year, he deposited $250 and plans to deposit $300 next year. The rate is 3 percent. Which one of these correctly states a portion of the formula needed to compute the future value five years from today
Answer and Explanation:
Future value = Present value x (1+i)^n, where
n = number of years
I = interest rate
From the question n = 8 years for the amount $400 ,
n= 7years for $250 ,
n=4years for $300
interest = 3%= 0.03
Future value of $400 = 400 (1 + 0.03)^8 = $506.71
Future value of $ 250 = 250 (1+0.03)^7 = $307.47
Future value of $ 300 =300(1+0.03)^4 = $337.65
If a customer is reluctant to try a new product because she's afraid it might make her ill, the company offering it is most likely facing ________ barrier.
Answer: Risk barrier
Explanation:
With every new product or innovation, there is a risk that things will not work well. This risk is divided into 4 types;
Physical risk where the product might be harmful physicallyEconomic risk depending on the cost of the productPerformance risk Social Risk where a person wonders how the public will perceive them for using the product.The customer is facing a Physical risk barrier when she encountered the new product. As it has not been tried and tested by others, using it as a pioneer means that she will not know what she is getting into and so she worries that there is a chance it will harm her physically and make her ill.
Differential Analysis Report for Machine Replacement
Lone Wolf Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $60,400, the accumulated depreciation is $24,200, its remaining useful life is five years, and its residual value is zero. A proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $113,800. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on current and proposed operations:
Current Operations Proposed Operations
Sales $191,500 $191,500
Direct materials $65,200 $65,200
Direct labor 45,300 15,100
Power and maintenance 4,200 7,200
Taxes, insurance, etc. 1,500 5,000
Selling and administrative
expenses 45,300 45,300
Total expenses $161,500 $137,800
Prepare a differential analysis report for the proposal to replace the machine. Include in the analysis both the net differential change in costs anticipated over the five years and the net annual differential change in costs anticipated.
LONE WOLF TECHNOLOGIES
Replace Machine
Differential Analysis Report
Annual costs and expenses—present machine $
Annual costs and expenses—new machine
Annual differential decrease in costs and expenses
Number of years applicable
Total differential decrease in costs and expenses
Cost of new machine
Net differential decrease in costs and expenses, five-year total
Annual net differential decrease in costs and expenses—new machine
Answer:
The machine of Lone wolf Technologies should be replaced judging by the differential analysis report.
Explanation:
Annual costs and expenses (present machine) = $161,500
Annual costs and expenses (new machine) = $13,7800
Annual differential decrease in costs and expenses = $23,700
Number of years applicable = 5 years
Total differential decrease in costs and expenses, five-year total = $118,500
Cost of new machine = $113,800
Net differential decrease in costs and expenses, five-year total = $4,700
The machine should be replaced!
A corporation has 50,000 shares of $25 par stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be a.50,000 shares b.100,000 shares c.150,000 shares d.16,666 shares
Answer:
Option C
Number of shares outstanding after split = 150,000 units
Explanation:
A stock split occurs where a company creates additional shares in units such the total nominal value of the outstanding shares remains the same. With a stock split, the total outstanding shares increases without a change in the total nominal value while the nominal value per share reduces.
Total shares before the split = 50,000
Total outstanding shares after split
= 50,000 × 3 = 150,000
Number of shares outstanding after split = 150,000 units
Cheyenne Corp. had the following transactions during the current period.
Mar. 2 Issued 4,000 shares of $4 par value common stock to attorneys in payment of a bill for $21,200 for services performed in helping the company to incorporate.
June 12 Issued 56,400 shares of $4 par value common stock for cash of $305,500.
July 11 Issued 1,950 shares of $100 par value preferred stock for cash at $130 per share.
Nov. 28 Purchased 2,560 shares of treasury stock for $78,500.
Journalize the transactions.
Answer:
Mar. 2 Issued 4,000 shares of $4 par value common stock to attorneys in payment of a bill for $21,200 for services performed in helping the company to incorporate.
Dr Incorporation expenses 21,200
Cr Common stock 16,000
Cr Additional paid in capital - common stocks 5,200
June 12 Issued 56,400 shares of $4 par value common stock for cash of $305,500.
Dr Cash 305,500
Cr Common stocks 225,600
Cr Additional paid in capital - common stocks 79,900
July 11 Issued 1,950 shares of $100 par value preferred stock for cash at $130 per share.
Dr Cash 253,500
Cr Preferred stocks 195,000
Cr Additional paid in capital - preferred stocks 58,500
Nov. 28 Purchased 2,560 shares of treasury stock for $78,500.
Dr Treasury stocks 78,500
Cr Cash 78,500
Treasury stocks account is a contra equity account which decreases the value of stockholders' equity.
What are the most challenging concepts for you to understand? Have you found any supplemental resources or websites that have helped you to better comprehend the material? T- Accounts
Answer:
finding every form of verbs is difficult. spanishdict is very helpful
Explanation:
www.spanishdict.com
The balance sheet of Subsidiary Co. shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. Parent Co. paid Subsidiary $95,000 to acquire it. Parent should record goodwill on this purchase of:
Answer: $20,000
Explanation:
The following information can be gotten from the question:
Investment in Subsidiary Co. = $95,000
Less: Net asset value = $71,400
Less: Balance sheet adjustment = $3,600
Goodwill = $95,000 - $71,400 - $3,600
= $20,000
Note that:
Net asset value = Asset with book value - Liability with book value
= $86,400 - $15,000
= $71,400
Balance sheet adjusted = Fair value of asset - book value of asset
= $90,000 - $86,400
= $3,600
Many companies secure financing from various sources with various payback periods. Not all funding sources are the same, and in fact, some can come with a pretty high cost to the firm. These costs could include high interest rates, long payback periods, and increased ownership in the firm which could result in lost control.
Please analyze the funding options listed, and determine if the option is usually a short-term or long-term strategy.
a. Line of credit
b. Commercial paper
c. Trade credit Bank loan of 10 months
d. Bond
e. Stock
f. Bank loan of 20 months
Answer:
a. Line of credit - Long-term strategy
A line of credit is a long-term strategy because businesses obtain lines of credit for their use over long periods of time. The particular characteristic is that a line of credit is only used when the business decides to do so, so it works almost like a credit card.
b. Commercial paper - Short-term strategy
Commercial paper is a short-term debt that is issued by firms when they have problems to pay operating expenses. They are unsecured, and pay a specific amount of interest.
c. Trade credit Bank loan of 10 months - Short-term strategy
In financial accounting, loans that last for less than a year are categorized as short-term liabilities, therefore, a trade credit bank loan of 10 months is a short-term strategy.
d. Bond - Long-term strategy
While some bonds are issued for the short-term, the majority of them are issued for the long-term, with some of them lasting 10 years or more.
e. Stock - Long-term strategy
Buying or issuing stock is also a long-term strategy, specially because the dividend of the stock is only paid out once every year, unlike other debt instruments that pay interest immediately.
f. Bank loan of 20 months - Long-term strategy
A bank loan of more than 1 years is considered a long-term liability in financial accounting, therefore, a bank loan of 20 months is part of a long-term strategy.
Analyzing the given funding options and placing them in their right categories would be:
A. Line of credit - Long-term strategy B. Commercial paper - Short-term strategy C. Trade credit Bank loan of 10 months - Short-term strategy D. Bond - Long-term strategy E. Stock - Long-term strategy F. Bank loan of 20 months - Long-term strategyA long term strategy is one which financial institutions use to secure their assets for the foreseeable future while a short term strategy is used for short term gains on stocks and finances.
With this in mind, we can see that there are different funding options which are short or long term as the case may be, which depends on the amount of profit which the business wants to accrue.
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Your portfolio is comprised of 40 percent of stock X, 15 percent of stock Y, and 45 percent of stock Z. Stock X has a beta of 1.24, stock Y has a beta of 1.49, and stock Z has a beta of 0.41. What is the beta of your portfolio?
Answer:
Portfolio beta = 0.904
Explanation:
The portfolio beta is the weighted average of all the beta associated with each of the different stock making up the portfolio. The betas are weighted using the probability associated with each of the stock.
Portfolio beta = WaRa + Wb+Rb + Wn+Rn
W- weight of the beta, R- Stock beta -
W- Probability of the beta, R- stock beta
Note that the sum of the probability of different outcomes should equal to one. Hence, the probability of economy being normal is
Portfolio beta = (0.4 × 1.24) + (0.15 × 1.49) + ( 0.45 ×0.41) =0.904
Portfolio beta = 0.904
Bendel Incorporated has an operating leverage of 7.3. If the company's sales volume increases by 3%, its net operating income should increase by about:
Answer:
21.9%
Explanation:
Given that
Operating leverage = 7.3
Increase in sales = 3%
According to the given situation, the computation of net operating income is shown below:-
Increase in operating income = Operating leverage × Increase in sales
= 7.3 × 3 %
= 21.9%
Therefore for computing the increase in operating income we simply applied the above formula.
The Polishing Department of Bonita Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 1,580 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 41,200; ending inventory of 6,600 units 10% complete as to conversion costs.
Manufacturing costs: Beginning inventory costs, comprised of $20,600 of materials and $14,674 of conversion costs; materials costs added in Polishing during the month, $186,883; labor and overhead applied in Polishing during the month, $127,600 and $257,440, respectively.
Required:
a. Compute the equivalent units of production for materials and conversion costs for the month of September.
b. Compute the unit costs for materials and conversion costs for the month.
c. Determine the costs to be assigned to the units transferred out and in process.
Answer:
a. materials = 42,780 and conversion costs = 36,840
b. materials = $4.85 and conversion costs = $10.85
c. units transferred out = $568,026 and in process = $39,171
Explanation:
First calculate the number of units completed and transferred out of the Polishing Department.
Units completed and transferred out = 1,580 + 41,200 - 6,600
= 36,180
Calculation of equivalent units of production for materials and conversion costs for the month of September
materials
Units completed and transferred out (36,180 × 100%) = 36,180
Units of Ending Work In Process (6,600 × 100%) = 6,600
Total equivalent units of production for materials = 42,780
conversion costs
Units completed and transferred out (36,180 × 100%) = 36,180
Units of Ending Work In Process (6,600 × 10%) = 660
Total equivalent units of production for conversion costs = 36,840
Calculate the unit costs for materials and conversion costs for the month
Unit costs for materials = Total Cost for materials / Total equivalent units of production for materials
= ( $20,600 + $186,883) / 42,780
= $4.85
Unit costs for conversion costs = Total Cost for conversion costs / Total equivalent units of production for conversion costs
= ( $14,674 + $127,600 + $257,440) / 36,840
= $10.85
Total unit cost = $4.85 + $10.85
= $15.70
Calculate the costs to be assigned to the units transferred out and in process.
Cost units transferred out = Number of Units Transferred out × Total Unit Cost
= 36,180 × $15.70
= $568,026
Cost of Units In Process Calculation :
Material Cost ( 6,600 × $4.85) = $32,010
Conversion Costs ( 660 × $10.85) = $7,161
Total Cost of Units In Process = $39,171
Listed below are five procedures followed by Eikenberry Company.
1. Several individuals operate the cash register using the same register drawer.
2 .A monthly bank reconciliation is prepared by someone who has no other cash responsibilities.
3. Joe Cockrell writes checks and also records cash payment journal entries.
4 .One individual orders inventory, while a different individual authorizes payments.
5 .Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.
Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated.
Procedure IC Good or Weak Related Internal Control Principle
1.
2.
3.
4.
5.
Answer:
1. Several individuals operate the cash register using the same register drawer. Weak Internal Control. Establishment of Responsibility Internal control violated.
Having many individuals have access to the cash register can lead to theft. Establishment of Responsibility is an internal control that calls for the minimal amount of people being able to do one task. This way issues can be traced faster.
2 .A monthly bank reconciliation is prepared by someone who has no other cash responsibilities. Good Internal Control. Independent Internal Verification control followed.
Independent Verification occurs when a person who is an employee of a company but not related to a task, audits that task to find out if any irregularities are present. It ensures unbiased review.
3. Joe Cockrell writes checks and also records cash payment journal entries. Weak Internal Control. Segregation of Duties Internal control violated.
Segregation of duty calls for the division of a job process into tasks that different people are to accomplish especially in relation to cash. It can help avoid fraud because people will not be able to approve payments for themselves which is what Joe Cockrell can do in this scenario. Joe can withdraw and decide not to record it.
4 .One individual orders inventory, while a different individual authorizes payments. Good Internal Control. Segregation of Duties Internal control followed.
Segregation of duty calls for the division of a job process into tasks that different people are to accomplish especially in relation to cash. By having one individual order inventory and the other authorizing payments, fraud can be better avoided.
5 .Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording. Weak Internal Control. Documentation Procedures Internal control violated.
Documentation procedures in a company ensure that the paper trail is efficiently recorded so that transactions can be followed up speedily. By sending unnumbered sales invoices to the Accounting department as well as taking so long to do so, the company is running an inefficient documentation process that will make tracking transactions more difficult.
Calculate the cost of goods manufactured using the following information: Direct materials used $ 298,700 Direct labor used 132,200 Factory overhead costs 264,200 General and administrative expenses 85,700 Selling expenses 49,000 Work in Process inventory, January 1 118,700 Work in Process inventory, December 31 126,100 Finished goods inventory, January 1 232,300 Finished goods inventory, December 31 238,900
Answer:$687,700
Explanation:
$
Direct Materials 298,700
Add: Direct Labour 132,200
--------------
Prime Cost 430,900
Factory Overhead 264,200
Add: Opening WIP 118,700
Less: Closing WIP 126,100
--------------
256,800
--------------
Cost of Good Manufacture 687,700
----------------
A perfectly competitive firm has a. A perfectly elastic demand for its products b. A perfectly inelastic demand for its products c. A downward sloping demand for its products d. None of the above
Answer: a. A perfectly elastic demand for its products
Explanation:
In a Perfect Competition, the market sets the price at which firms are able to sell their goods and services. As a result, this price that is set is equal to the demand for goods and services thereby making the Demand curve a horizontal line which signifies perfect elasticity. What this shows is that if another firm attempts to sell the same good at a higher price, they will be unable to sell.
With Price being equal to demand it will also be equal to both Marginal and Average revenue for the good because the company receives the same additional revenue for every unit sold.
The result of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was to:_______
a. Make it obligatory for companies to adopt a zero-tolerance approach toward grease payments.
b. Make grease payments mandatory in order to obtain exclusive preferential treatment in a host nation.
c. Consider payment of speed money to be moral, but illegal.
d. Make bribery of foreign officials a criminal offense but not consider facilitating payments a criminal offense.
e. Make it mandatory for companies to adhere to the pollution control standards of their home country in all the nations in which they do business.
Answer: d. Make bribery of foreign officials a criminal offense but not consider facilitating payments a criminal offense.
Explanation:
In December 1997, signatories accounting for around 70% of World Trade adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions which stated that countries must install Legislative laws that would prohibit the bribing of foreign officials as well as strict penalties for parties who engage in such. This was done to ensure that the playing field was level so to speak instead of one company getting special treatment because they paid for it.
One concern however was that the Convention did not consider Facilitating Payments a criminal offence which means that it could be used as a bypass for the bribery of foreign officials to still happen.
Salty Sensations Snacks Company manufactures three types of snack foods: tortilla chips, potato chips, and pretzels. The company has budgeted the following costs for the upcoming period:
Factory depreciation $13,645
Indirect labor 33,817
Factory electricity 3,856
Indirect materials 8,010
Selling expenses 18,985
Administrative expenses 10,679
Total costs $88,992
Factory overhead is allocated to the three products on the basis of processing hours. The products had the following production budget and processing hours per case:
Budgeted Volume (Cases) Processing Hours Per Case
Tortilla chips 1,500 0.15
Potato chips 3,600 0.12
Pretzels 2,700 0.10
Total 7,800
Required:
a. Determine the single plant-wide factory overhead rate.
b. Use the factory overhead rate in (a) to determine the amount of total and per-case factory overhead allocated to each of the three products under generally accepted accounting principles.
Answer:
a. $64 per hour
b. Tortilla chips = $9.60, Potato chips = $7.68 , Pretzels = $6.40
Explanation:
Plant-wide factory overhead rate = Budgeted Overhead / Budgeted Activity
Calculation of Budgeted Overheads :
Hint : Consider only Indirect Manufacturing Costs
Factory depreciation $13,645
Indirect labor $33,817
Factory electricity $3,856
Indirect materials $8,010
Total $59,328
Calculation of Budgeted Hours :
Tortilla chips (1,500 × 0.15) = 225
Potato chips (3,600 × 0.12) = 432
Pretzels (2,700 × 0.10 ) = 270
Total = 927
Plant-wide factory overhead rate = $59,328 / 927
= $64 per hour
Factory overhead allocated to each of the three products :
Tortilla chips (0.15 × $64) = $9.60
Potato chips 0.12 × $64) = $7.68
Pretzels (0.10 × $64) = $6.40
You recently began a job as an accounting intern at Raymond Adventures.
Your first task was to help prepare the cash budget for February and March.
Unfortunately the computer with the budget file crashed and you did not have a backup or even a hard copy.
You ran a program to salvage bits of data from the budget file.
After entering the following data in the budget, you may have just enough information to reconstruct the budget.
Raymond Adventures eliminates any cash deficiency by borrowing the exact amount needed from State Street Bank where the current interest rate is 7 %.
Raymond Adventures pays interest on its outstanding debt at the end of each month.
The company also repays all borrowed amounts at the end of the month as cash becomes available.
Raymond Adventures
Combined Cash Budget
February and March
February March
Beginning cash balance 16,500 ??
Plus: Cash collections ?? 80,200
Plus: Cash from sale of plant assets 0 2,100
Total cash available 107,100 ??
Less: Cash payments
(purchase inventory) ?? 41,500
Less: Cash payments
(operating expenses) 47,900 ??
Total cash payments 98,700 ??
(1) Ending cash balance before
financing ?? 22,900
Minimum cash balance desired 20,000 20,000
Cash excess (deficiency) ?? ??
Financing:
Plus: New borrowings ?? ??
Less: Debt repayments ?? ??
Less: Interest payments ?? ??
(2) Total effects of financing ?? ??
Ending cash balance (1) + (2) ?? ??
Answer:
Beginning cash balance for March= $20,000
Cash collections for February =$90,600
Total cash available for March =$102,300
Cash payments (purchase inventory) for February =$50,800
Cash payments (operating expenses) for March =$37,900
Total cash payments for March =$79,400
Ending cash balance before
financing for February =$8,400
Cash excess (deficiency) for February and March =$- 11,600 $2,900
New borrowings for February and March
=$11,600 $0
Debt repayments for February and March
=$0 -$2,900
Interest payments for February and March
=$0 $0
Ending cash balance for February and March (1) + (2) =$20,000 $20,000
Explanation
Preparation of Raymond Adventures
Combined Cash Budget for February and March
Raymond Adventures Combined Cash Budget for February and March
Beginning cash balance 16,500 20,000
Plus: Cash collections 90,600 80,200
Plus: Cash from sale of plant assets 0 2,100
Total cash available 107,100 102,300
Less: Cash payments
(purchase inventory) 50,800 41,500
Less: Cash payments
(operating expenses) 47,900 37,900
Total cash payments 98,700 79,400
(1) Ending cash balance before
financing 8,400 22,900
Minimum cash balance desired 20,000 20,000
Cash excess (deficiency) -11,600 2,900
Financing:
Plus: New borrowings 11,600 0
Less: Debt repayments 0 -2,900
Less: Interest payments 0 0
(2) Total effects of financing 11,600 -2,900
Ending cash balance (1) + (2) 20,000 20,000
Beginning cash balance for March
Minimum cash balance desired March 20,000
Calculation for Cash collections for February
Total cash available 107,100-Beginning cash balance 16,500=90,600
Calculation for Total cash available for March
Beginning cash balance 20,000
Plus: Cash collections 80,200
Plus: Cash from sale of plant assets 2,100
=102,300
Calculation for Cash payments (purchase inventory) for February
Total cash payments 98,700 -Cash payments
(operating expenses) 47,900
=50,800
Calculation for Cash payments (operating expenses) for March
Total cash payments for March 79,400-Cash payments(purchase inventory) for March 41,500
=37,900
Calculation for Total cash payments for March
Total cash available for March 102,300-Ending cash balance before
financing for March 22,900
=79,400
Calculation for the Ending cash balance before
financing for February
Total cash available 107,100-Total cash payments 98,700
=8,400
Calculation for Cash excess (deficiency) for February and March
Ending cash balance before
financing 8,400 22,900
Less Minimum cash balance desired 20,000 20,000
=- 11,600 2,900
New borrowings for February and March
11,600 0
Debt repayments for February and March
0 -2,900
Interest payments for February and March
0 0
Calculation for Ending cash balance for February and March (1) + (2)
(1) Ending cash balance before
financing 8,400 22,900
Add (2) Total effects of financing 11,600 -2,900
=20,000 20,000
Avril Synchronistics will pay a dividend of $ 1.40 per share this year. It is expected that this dividend will grow by 7% each year in the future. What will be the current value of a single share of Avril's stock if the firm's equity cost of capital is 15%?
Answer:
$18.73 per stock
Explanation:
we need to calculate the company's terminal value and we can use the dividend growth model:
P₀ = Div₁ / (Re - g)
Div₁ = $1.40 x (1 + 7%) = $1.498Re = 15%g = 7%P₀ = $1.498 / (15% - 7%) = $1.498 / 8% = $18.725 ≈ $18.73 per stock
When a negative amount is in the base period and a positive amount is in the analysis period (or vice versa), a meaningful percent change cannot be calculated.
A. True
B. False
Answer:
false
Explanation:
for example, the base year has a value of -10 and the period of analysis as a value of 5, percentage change is -1.5 or 150%
the base year has a value of 5 and the period of analysis as a value of -10 percentage change is -300%
____________the market school aruges that forward exchange rates do the best possible job for forecasting future spot exchange rates, so investing in exchagne rate forecasting services would be a waste of time.
Answer:
Efficient market school.
Explanation:
Efficient market school is the market school which argues that forward exchange rates do the best possible job for forecasting future spot exchange rates, so investing in exchange rate forecasting services would be a waste of time because it is impossible to have a consistent alpha generation on a risk adjusted excess returns basis as market prices are only affected by new informations.
The efficient market school also known as the efficient market hypothesis (EMH) is a hypothesis that states that asset (share) prices reflect all information and it is very much impossible to consistently beat the market.
Also, forward exchange rates are exchange rates controlling foreign exchange transactions at a specific future date or time.
Hence, according to the efficient market school it would be a waste of time investing in exchange rate forecasting services because all the information about an asset or security is already factored into their prices and as a result of the randomness of the market.
Oriole Company reports the following for the month of June. Date Explanation Units Unit Cost Total Cost June 1 Inventory 390 $6 $2,340 12 Purchase 780 7 5,460 23 Purchase 585 8 4,680 30 Inventory 195 Assume a sale of 858 units occurred on June 15 for a selling price of $9 and a sale of 702 units on June 27 for $10. Calculate cost of goods available for sale. The cost of goods available for sal
Answer:
Cost of goods available for sale = $12,480
Explanation:
The cost of goods available for sale is the sum of the value of the opening inventory plus the cost of new purchase. The cost of new purchase would include carriage inward cost if any.
For Oriole company , the cost of goods available for sale would be computed as follows:
$
Opening inventory 2,340
Purchases
June 12 5,460
June 23 4,680 10,140
Cost of goods available for sale 12,480
Note that the sales made are not relevant for the purpose of determining the cost of goods available for sale. Also, the closing inventory would have been deducted from the cost of goods available for sale to arrive at the cost of goods sold should the question require it.
Forner, Inc., manufactures and sells two products: Product Z1 and Product Z8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product Z1 Product Z8 Total Labor-related DLHs $ 145,000 4,000 2,000 6,000 Machine setups setups 68,360 1,100 300 1,400 Order size MHs 1,069,190 2,700 3,100 5,800 $ 1,282,550 The activity rate for the Order Size activity cost pool under activity-based costing is closest to:
Answer:
$184.34
Explanation:
The computation of activity rate for the Order Size activity cost pool is shown below:-
The Activity rate for Order size = Estimated order size overhead cost ÷ Total machine hours
= 1,069,190 ÷ 5,800
= $184.34
Therefore for computing the activity rate for the Order Size activity cost pool we simply applied the above formula and ignore all other value.
1. Calculate the growth rate between 2010 and 2014 for a company with the following revenue. Year Revenue 2010 735 2011 985 2012 1152 2013 1347 2014 1658 2015 1895
Answer: 230.75 (units/ year)
Explanation:
To compute the growth rate between 2010 and 2014, we use the following formula :
Growth rate = [(Revenue in 2014) -(Revenue in 2010)]÷ [Difference between 2010 and 2014]
From the table, Revenue in 2010 = 735
Revenue in 2014= 1658
Then, Growth rate = (1658 -735)÷ (2014-2010)
= 923÷ 4
= 230.75
Hence, the growth rate between 2010 and 2014 = 230.75 (units/ year)
The board of directors of Capstone Inc. declared a $0.60 per share cash dividend on its $1 par common stock. On the date of declaration, there were 54,000 shares authorized, 15,000 shares issued, and 4,000 shares held as treasury stock. What is the entry when the dividends are declared
Answer:
DR Dividends $6,600
CR Dividends Payable $6,600
Explanation:
Out of 54,000 shares, 15,000 are issued. Of those 15,000, 4,000 are held as Treasury stock.
Dividends will be;
= (15,000 - 4,000) * $0.6
= $6,600
The perceived demand for a monopolistic competitor
A disadvantage of the centralized organization is that it: lengthens response times by those closest to the market conditions because they must seek approval for their actions. does not encourage responsibility among lower-level managers and rank-and-file employees. discourages lower-level managers and rank-and-file employees from exercising any initiative. diverts authority away from those closest to, and most knowledgeable about, the situation for actions. results in higher-level managers being unaware of actions taken by empowered personnel under their supervision.
Answer:
results in higher-level managers being unaware of actions taken by empowered personnel under their supervision.
Explanation:
PROBLEM 1:
Equipment A Equipment B
cost $100,000 $63,000
Accumulated depreciation(1/1) $ 42,000 $36,000
Useful life 8 years 5 years
Depreciation method straight line straight line
Date sold 7/1/12 9/1/12
Sales price $ 39,000 $ 20,000
Journalize all entries required to update deprecition and record thesales of the two assets in 2012.accumulated depreciation includes depreciation recorded through 12/31/11.
Answer:
Equipment A
Journal Entry - update depreciation
Depreciation expense $6,250 (debit)
Accumulated depreciation $6,250 (credit)
Journal Entry - to record the sale
Accumulated depreciation ($ 42,000 + $6,250) $48,250 (debit)
Cash $ 39,000 (debit)
Profit and Loss $12,750 (debit)
Equipment $100,000 (credit)
Equipment B
Journal Entry - update depreciation
Depreciation expense $6,300 (debit)
Accumulated depreciation $6,300 (credit)
Journal Entry - to record the sale
Accumulated depreciation ($36,000 + $6,300) $42,300 (debit)
Cash $ 20,000 (debit)
Profit and Loss $700 (debit)
Equipment $63,000 (credit)
Explanation:
Straight line method charges a fixed amount of depreciation for the time the asset is in use in the business.
Depreciation Expense = (Cost - Residual Value) / Estimated Useful Life
Equipment A
Depreciation Expense = $100,000 / 8 years
= $12,500
Depreciation Expense for 2012 = $12,500 × 6/12
= $6,250
Journal Entry - update depreciation
Depreciation expense $6,250 (debit)
Accumulated depreciation $6,250 (credit)
Journal Entry - to record the sale
Accumulated depreciation ($ 42,000 + $6,250) $48,250 (debit)
Cash $ 39,000 (debit)
Profit and Loss $12,750 (debit)
Equipment $100,000 (credit)
Equipment B
Depreciation Expense = $63,000 / 5 years
= $12,600
Depreciation Expense for 2012 = $12,600 × 6/12
= $6,300
Journal Entry - update depreciation
Depreciation expense $6,300 (debit)
Accumulated depreciation $6,300 (credit)
Journal Entry - to record the sale
Accumulated depreciation ($36,000 + $6,300) $42,300 (debit)
Cash $ 20,000 (debit)
Profit and Loss $700 (debit)
Equipment $63,000 (credit)
Mary just bought a 20-year bond with an 8% coupon rate (paid semi-annually) and $1000 par value for $1050. She is expecting an effective annual yield (EAY) of
Answer:
7.65%
Explanation:
Calculation for Mary effective annual yield (EAY)
The first step is to find the Semiannual coupon payment using this formula
Semiannual coupon payment=(Par value×Coupon rate percentage/2)
Let plug in the formula
Semiannual coupon payment =($1,000 × 8%) ÷2
Semiannual coupon payment= $80 ÷ 2 = $40
Second step is to find The total number of compounding period will be 20 years bond × The number of the compounding period er year which is 2
Hence,
The total number of compounding period will= 2 periods per year × 20 years = 40 periods.
Third step is to use the financial calculator which calculated the rate as 3.76% which means that:
Semiannual yield will be :3.76%
Therefore the Annual yield will be calculatedas = 3.76% ×2
Annual yield= 7.51%
The last step is to find the effective annual yield (EAY) using this formula
EAY = [1+(Quoted interest rate / m]m -1
Let plug in the formula
EAY = [1+(0.0751÷2)]2 -1
EAY= 7.65%.
Therefore the effective annual yield (EAY) will be 7.65%