Answer: C. inefficiently low; inefficiently high
Explanation:
If the cotton farmers are not made to pay for the damage that their pesticides cost then they will maintain production at a relatively high level because their input costs will be relatively low. As a result of this high level of production, the price of the goods will be relatively low as well. The point at which both market equilibrium quantity and price are at in this scenario are considered inefficient because they are not taking into account, the true cost of production being the effects of the pesticides being used.
However, if they are made to pay for this negative externality that they are the cause of, it will increase their production cost and force them to reduce production to keep these costs low. As they reduce production, the market price will increase as supply is less.
Harpeth Valley Water District has a bond outstanding with a coupon rate of 3.63 percent and semiannual payments. The bond matures in 23 years, with a yield to maturity of 4.17 percent, and a par value of $5,000. What is the market price of the bond
Answer:
Market price of Bond = $4603.116669 rounded off to $4603.12
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 5000 * 0.0363 * 1/2 = $90.75
Total periods (n)= 23 * 2 = 46
r = 4.17% * 1/2 = 2.085% or 0.02085
The formula to calculate the price of the bonds today is attached.
Bond Price = 90.75 * [( 1 - (1+0.02085)^-46) / 0.02085] + 5000 / (1+0.02085)^46
Bond Price = $4603.116669 rounded off to $4603.12
The Oriole Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $100 a night. Operating costs are as follows:
Salaries $7,500 per month
Utilities $1,500 per month
Depreciation $1,300 per month
Maintenance $1,760 per month
Maid service $24 per room
Other costs $46 per room
Determine the inn’s break-even point in number of rented rooms per month.
Answer:
Break-even point in units= 402 rooms a month
Explanation:
Giving the following information:
The inn has 50 rooms that it rents at $100 a night. Operating costs are as follows:
Salaries $7,500 per month
Utilities $1,500 per month
Depreciation $1,300 per month
Maintenance $1,760 per month
Maid service $24 per room
Other costs $46 per room
First, we need to calculate the total fixed costs and the unitary variable cost.
Total fixed costs= salaries + utilities + depreciation + maintenance
Total fixed costs= $12,060
Unitary variable cost= 24 + 46= $70
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 12,060/ (100 - 70)
Break-even point in units= 402 rooms a month
Based on the following information for Builtrite, calculate the current value of its stock if the current dividend is $3.00, a projected super normal growth for three years at 20%, the growth rate after year 3 should remain constant at 9% and you want to earn a 16% annual return. What would you be willing to pay for Builtrite stock?
Answer:
$61.35
Explanation:
The computation of the current value of the stock is shown below:
Current Dividend = D0 = $3.00
Super Normal growth for next 3 years = g1 = 20% or 0.20
Growth Rate after 3 year = g2 = 9% or 0.09
Required rate of Return = r = 16% or 0.16
Now
as we know that
Value of Share (P0) is
= [D1 ÷ (1 + r)] + [D2 ÷ (1 + r)^2] + [D3 ÷ (1 + r)^3] + [P3 ÷ (1 +r )^3]
Where
D1 = Dividend in year 1
D2 = Dividend in year 2
D3 = Dividend in year 3
P3 = Value of share at the end of year 3
Now first we have to compute the P3 value which is
P3 = D4 ÷ (r - g2)
= D0 × (1 + g1)^3 (1 + g2) ÷(r - g2)
= $3.00 × (1 + 0.20)^3 (1 + 0.09) ÷ (0.16-0.09)
= $5.65056
Now
Value of Share (P0) is
= [D1 ÷ (1 + r)] + [D2 ÷ (1 + r)^2] + [D3 ÷ (1 + r)^3] + [P3 ÷ (1 + r)^3]
= [D0 × (1 + g1) ÷ (1 + r)^1] + [D0 × (1 + g1)^2 ÷ (1 + r)^2] + [D0 × (1 + g1)^3 ÷ (1 + r)^3] + [P3 ÷ (1 + r)^3]
= [$3.00 × (1 + 0.20) ÷ (1 + 0.16)^1] + [$3.00 × (1 + 0.20)^2 ÷ (1 + 0.16)^2] + [$3.00 × (1 + 0.20)^3 ÷ (1 + 0.16)^3] + [$5.65056 ÷ (1 + 0.16)^3]
= $3.10 + $3.21 + $ 3.32 + $51.72
= $61.35
The Closed Fund is a closed-end investment company with a portfolio currently worth $200 million. It has liabilities of $3 million and 5 million shares outstanding. a. What is the NAV of the fund?
Answer:
$39.40
Explanation:
According to the situation, the solution is as follows
The Net asset value of the fund is
= (Current worth of portfolio - liabilities) ÷ (outstanding shares)
= ($200 million - $3 million) ÷ (5 million shares)
= $39.40
Basically we applied the above formula in order to determine the net asset value of the fund.
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 70,000 units of RX5 follows.
Direct materials $ 4.00
Direct labor 8.00
Overhead 9.00
Total costs per unit 21.00
Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 70,000 units of RX5 for $20.00 per unit.
Required:
1. Calculate the incremental costs of making and buying component RX5.
Total incremental costs of: Making the units Buying the units
Total direct materials $ 244,000 $ 0
Total direct labor 488,000 0
Variable overhead costs 122,000 0
Cost to buy the units 1,159,000
Total costs $ 854,000 $ 1,159,000
Should the company continue to manufacture the part,
or should it buy the part from the outside supplier? Make the units
Answer:
1.Incremental cost of making and buying the RX5 is $434,000
2. Since the cost of buying is more than the cost of producing by $305,000, therefore, the company should continue to produce the component parts.
Explanation:
1.We need to first compute the cost of making the component part.
Cost of making are;
Direct material = 70,000 units × $4
= $280,000
Direct labor = $70,000 units × $8
= $560,000
Variable over head cost = 70,000 units × $9 × 20%
= $126,000
Therefore, total cost of making the components = direct material cost + direct labor cost + variable overhead cost
= $280,000 + $560,000 + $126,000
= $966,000
Also, total cost of buying the components
= Units × RX5 per unit
= 70,000 × $20
= $1,400,000
Therefore,
Incremental cost = Cost of making - Cost of buying
= $966,000 - $1,400,000
=$434,000
2. Total costs of making the units = Total direct material cost + Total direct labor costs + Variable overhead costs
= $244,000 + 488,000 + $122,000
= $854,000
Since total cost to buy is $1,159,000
Total incremental cost = Total cost of making the units - Total cost of buying the units
= $854,000 - $1,159,000
= $305,000
causes of child labor
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Marcie and her husband, Franklin, each own 50 shares of Chestnut, Inc. Sally, Marcie's old high school friend, owns the remaining 50 shares (150 total shares outstanding). Chestnut redeems 40 of Marcie's shares for $38,000 (her adjusted basis was $5,000). What is the tax treatment of the basis of the shares redeemed
Answer:
$38,000 Dividend
Explanation:
Based on the information given the tax treatment of the redemption to Marcie will be $38,000 dividend reason been that her husband shares was been attributed to her, and Since she owns 60 shares her remaining 10 shares including that of her husband 50 shares of Chestnut's will be 110 shares calculated as 150 shares - 40 shares outstanding.
Therefore when we look at this 60 shares/110 shares is greater than 50% which means that Marcie fails the 50% test which makes the redemption to be treated as a dividend.
Hence, the tax treatment of the basis of the shares redeemed will be $38,000 Dividend.
Cammie received 100 NQOs (each option provides a right to purchase 10 shares of MNL stock for $10 per share) at the time she started working for MNL Corporation (5/1/Y1) four years ago when MNL’s stock price was $8 per share. Now that MNL’s stock price is $40 per share (8/15/Y5), she intends to exercise all of her options. After acquiring the 1,000 MNL shares with her options, she held the shares for over one year (10/1/Y6) and sold them at $60 per share.
b. What are MNL Corporation’s tax savings on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6)?
Answer:
b. What are MNL Corporation’s tax savings on the grant date (5/1/Y1), exercise date (8/15/Y5), and sale date (10/1/Y6)?
MNL Corporation will have no tax effects on the grant date and (5/1/Y1) and the date that Cammie sold the stocks (10/1/Y6).
The only tax effect results from the exercise date (8/15/Y5). Tax savings = (total amount of stocks exercised x market price at the time) x marginal tax rate = (1,000 stocks x $40) x tax rate = $40,000 x tax rate
Since no marginal tax rate is given in the question, we can calculate it for different options:
if tax rate = 21%, then tax savings = $40,000 x 21% = $8,400if tax rate = 35%, then tax savings = $40,000 x 35% = $14,000Raymond Autobody Shop has the following accounts
Accounts Payable Service Revenue
Cash Equipment
Utilities Expense Common Stock
Automotive Supplies Advertising Expense
Dividends Unearned Revenue
Retained Earnings
Create a chart of accounts for Raymond Autobody Shop using the standard numbering system.
Each account is separated by a factor of 10. For example, the fist asset account be 100 and the net asset account will 110. Use the first available under each section, Asset Liabilities, etc, when selecting the accounts.
Answer and Explanation:
The creation of the chart of the account by applying the standard numbering system is presented below:
For the assets it would be started by 100
For the liabilities it would be started by 200
For the owner equity it would be started by 300
For the revenue it would be started by 400
And, for the expenses it would be started by 500
Now the creation is as follows
Balance sheet
Assets Liabilities Stockholder equity
100 Cash 200 Account payable 300 R. capital
110 Automotive supplied 210 unearned revenue 300 R. withdrawal
120 equipment
Income statement
Revenue Expenses
400 service revenue 500 utilities expense
510 advertising expense
All of the following are examples of market segments except a.sales territories. b.advertising. c.customers. d.products.
Answer:
b.advertising
Explanation:
Market segment is a strategy that a organisation decides which market to appease.
Market Segments can be drawn from sales territories , groups of customers. and products but not advertising
A company's board of directors votes to declare a cash dividend of $1.00 per share of common stock. The company has 20,000 shares authorized, 15,000 issued, and 14,500 shares outstanding. The total amount of the cash dividend is:
Answer:
$14,500
Explanation:
From the above, the below details are given;
Authorized share capital , which represent maximum number of shares that a company is allowed to issue.
Issued shares, which is the number of shares issued by a company including shares purchased and backed by a company(treasury stock).
There is also outstanding shares which is treasury stock less issued shares.
We do also know that treasury stock does not have any right of dividend because the shares are held by the company hence cannot pay dividend to itself.
Therefore, the total amount of the cash dividend is = 14,500 × $1.00
= $14,500
Considering the added value chain, backward integration refers to acquiring capabilities toward suppliers, while forward integration refers to acquiring capabilities toward distribution or even customers.
a) true
b) false
Answer:
a) true.
Explanation:
Backward integration can be defined as a process in which companies use a strategy of integrating with their suppliers in order to add value to their value chain. The advantages of this process are increased production efficiency, decreased costs, increased quality, increased profitability.
Forward integration refers to a company's control process in its supply chain. It is the process that a company acquires some resources to improve essential elements of the supply chain until the product or service reaches the final customer. The benefits are: increased market share, creation of competitive barriers, maintenance of process quality, etc.
If the supplies on hand at the end of January totaled $500 and the Supplies on Hand account before adjustment is $900, what should be the adjustment at month-end
Answer:
The adjustment at month-end is :
Supplies Expense $400 (debit)
Supplies $400 (credit)
Explanation:
The Supplies Account is an asset Account that decreases as the supplies are used in the business.
The use of supplies prompts the recognition of an expense and de-recognition of an asset as follows :
Supplies Expense $400 (debit)
Supplies $400 (credit)
Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $12,000 cash and $51,600 of photography equipment in the company in exchange for common stock. 2 The company paid $2,300 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $2,280 cash. 20 The company received $3,250 cash in photography fees earned. 31 The company paid $870 cash for August utilities. Prepare general journal entries for the above transactions.
Answer:
Aug. 1
Cash $12,000 (debit)
Equipment $51,600 (debit)
Common Stock $63,600 (credit)
Aug. 2
Prepaid Insurance $2,300 (debit)
Cash $2,300 (credit)
Aug. 5
Office Supplies $2,280 (debit)
Cash $2,280 (credit)
Aug. 20
Cash $3,250 (debit)
Fees Earned $3,250 (credit)
Aug. 31
Utilities Expenses $870 (debit)
Cash $870 (credit)
Explanation:
Aug. 1
Recognize the Cash, Equipment as well as the Equity element : Common Stock
Aug. 2
Recognize the Asset : Prepaid Insurance and de-recognize the Cash Assets
Aug. 5
Recognize the Asset : Office Supplies and de-recognize the Cash Assets
Aug. 20
Cash $3,250 (debit)
Fees Earned $3,250 (credit)
Recognize the Asset : Cash and also recognize the Revenue : Fees Earned.
Aug. 31
Recognize the Expense : Utilities Expenses and de-recognize the Cash Assets
Kelly Woo, owner of Flower Mode, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Woo wants to set the delivery fee based on the distance driven to deliver the flowers. Woo wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past seven months:_______.
LOADING...
(Click the icon to view the data.)
Use the high-low method to determine
Flower Paradise's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 15,000 miles.
Let's begin by determining the formula that is used to calculate the variable cost (slope).
Change in cost / Change in volume = Variable cost (slope)
Now determine the formula that is used to calculate the fixed cost component.
Total operating cost - Total variable cost = Fixed cost
Use the high-low method to determine
Flower Paradise's operating cost equation. (Round the variable cost to the nearest cent and the fixed cost to the nearest whole dollar.)
y = $
x + $
Enter any number in the edit fields and then click Check Answer.
Data Table
Month Miles Driven Van Operating Costs
January. . . . . .
. . . . . . . . . 15,500 $5,390
February. . . . . . .
. . . . . . . . 17,400 $5,280
March. . . . . . . . .
. . . . . . . . 15,400 $4,960
April. . . . . . . . .
. . . . . . . 16,300 $5,340
May. . . . . . . .
. . . . . . . . 16,500 $5,450
June. . . . . . . .
. . . . . . . . 15,200 $5,230
July. . . . . . . . .
. . . . . . . . . . 14,400 $4,680
Answer:
Use the high-low method to determine Flower Paradise's cost equation for van operating costs.
y = $ 0.20x + $1,800
Use your results to predict van operating costs at a volume of 15,000 miles.
y = ($0.20 x 15,000) + $1,800 = $4,800
Explanation:
Month Miles Driven Van Operating Costs
January 15,500 $5,390
February 17,400 $5,280
March 15,400 $4,960
April 16,300 $5,340
May 16,500 $5,450
June 15,200 $5,230
July 14,400 $4,680
In order to calculate the fixed and variable costs using the high-low method, we must take the month with the highest activity (February) and the month with the lowest activity (July):
variable costs = ($5,280 - $4,680) / (17,400 - 14,400) = $600 / 3,000 = $0.20 per mile driven
fixed costs = $4,680 - (14,400 x $0.20) = $4,680 - $2,880 = $1,800
Eppich Corporation has provided the following data for the most recent month: Raw materials, beginning balance $ 20,500 Work in process, beginning balance $ 32,800 Finished Goods, beginning balance $ 50,800 Transactions: (1) Raw materials purchases $ 79,100 (2) Raw materials used in production (all direct materials) $ 77,900 (3) Direct labor $ 52,800 (4) Manufacturing overhead costs incurred $ 92,500 (5) Manufacturing overhead applied $ 72,800 (6) Cost of units completed and transferred from Work in Process to Finished Goods $ 190,000 (7) Any overapplied or underapplied manufacturing overhead is closed to Cost of Goods Sold ? (8) Finished goods are sold $ 221,700 Required: Complete the following T-accounts by recording the beginning balances and each of the transactions listed above.
Answer:
Raw Materials T - Account
Debit :
Beginning Balance $ 20,500
Raw materials purchases $ 79,100
Total $99,600
Credit :
Raw materials used in production $ 77,900
Closing Balance $ 21,700
Total $99,600
Overheads T - Account
Debit :
Manufacturing overhead costs incurred $ 92,500
Totals $ 92,500
Credit :
Manufacturing overhead applied $ 72,800
Understatement of Overheads $ 19,700
Totals $ 92,500
Work In Process T - Account
Debit :
Beginning Work In Process $ 32,800
Raw materials $ 77,900
Direct Labor $ 52,800
Manufacturing overhead applied $ 72,800
Totals $236,300
Credit :
Transferred to Finished Goods $ 190,000
Ending Work In Process $46,300
Totals $236,300
Finished Goods T - Account
Debit :
Beginning Balance $ 50,800
Transferred from Work In Process $ 190,000
Totals $240,800
Credit :
Trading Account $ 221,700
Ending Balance $ 19,100
Totals $240,800
Cost of Goods Sold = $241,400
Explanation:
Cost of Goods Sold = $ 221,700 + $ 19,700 (under-applied overheads)
= $241,400
Prescott Bank offers you a five-year loan for $55,000 at an annual interest rate of 7.25 percent. What will your annual loan payment be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Annual loan payment = $13,146.78
Explanation:
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
The monthly equal installment is calculated as follows:
Monthly equal installment= Loan amount/Monthly annuity factor
Monthly annuity factor
=( 1-(1+r)^(-n))/r
r- Monthly interest rate (r)
= 7.25%/12= 0.604 %
n- Number of months ( n) in 5 years
= 12* 6 = 60
Annuity factor
= ( 1- (1.00604)^(-60)/0.00604= 50.2024
Monthly installment= 55,000 /50.2024 = $1,095.56
Monthly installment = $1,095.56
Annual loan payment = monthly installment × 12
Annual loan payment =$1,095.56 ×12=13,146.78
Annual loan payment = $13,146.78
ABG Corporation has the following dividend forecasts for the next three years: Year Expected Dividend 1 $ .25 2 $ .50 3 $ 1.25 After the third year, the dividend will grow at a constant rate of 5% per year. The required return is 10%. What is the price of the stock today?
Answer:
Price of share today = $21.302
Explanation:
The price of a share can be calculated using the dividend valuation model
According to this model the value of share is equal to the sum of the present values of its future cash dividends discounted at the required rate of return.
If dividend is expected to grow at a given rate , the value of a share is calculated using the formula below:
Price=Do (1+g)/(k-g)
Do - dividend in the following year, K- requited rate of return , g- growth rate
Step 1 : PV of dividend from year 1 to 3
Year PV of Dividend
1 0.25 × 1.1^(-1) = 0.227
2 0.50 × 1.1^(-2) = 0.413
3 1.25 × 1.1^(-3) = 0.939
Strep 2 : PV of dividend from year 4 to infinity
PV (in year 3 terms) of dividend= 1.25 × 1.05/(0.1-0.05) = 26.25
PV in year 0 terms = 26.25 × 1.1^(-3) = 19.72
Present Value = 0.227 + 0.413 + 0.939 + 19.72 = 21.302
Price of share today = $21.302
The American Recovery and Reinvestment Act introduced a large amount of government spending into the economy—$789 billion! Suppose the marginal propensity to consume in the United States is 0.85. How much would the program increase total spending in the economy?
Answer:
$5,262.63
Explanation:
The computation of the program increase in total spending in economy is shown below:
But before that we need to find out the government spending multiplier is '
= 1 ÷ (1 - MPC)
= 1 ÷ (1 - 0.85)
= 6.67
Now
The increase in total spending is
= increase in spending × spending multiplier
= $789 billion × 6.67
= $5,262.63
Hence it would be increased by $5,262.63
Compute the payback period for each of these two separate investments: A new operating system for an existing machine is expected to cost $240,000 and have a useful life of five years. The system yields an incremental after-tax income of $69,230 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $9,000. A machine costs $170,000, has a $13,000 salvage value, is expected to last nine years, and will generate an after-tax income of $38,000 per year after straight-line depreciation.
Answer:
Investment Payback period(in years)
A 2.08
B 3.066
Explanation:
The payback period is the length of time in years it will take the net cash inflow of a project to recoup its initial cost
Payback period = Initial cost of investment /Annual net cash inflow
Investment A
Annual depreciation = (Cost - Salvage value)/Number of years
= (240,000 - 9,000)/5 =
Annul cash inflow = 69,230 + 46200 = 115,430
Payback period = Initial cost of investment /Annual net cash inflow
= 240,000/ 115,430 = 2.079
Investment B
Annual depreciation = (Cost - Salvage value)/Number of years
= (170,000 - 13,000)/9 = 17,444.444
Annul cash inflow= 38,000 + 17,444.44= 55,444.44
Payback period = 170,000 /55,444.44 =3.067
Investment Payback period(in years)
A 2.08
B 3.066
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were later reacquired. what is the number of shares outstanding?
Answer:
The answer is 25,000 shares.
Explanation:
The 100,000 shares is the authorised shares which is the maximum number of shares an entity is permittee to issue to investors as being stipukated in its articles of incorporation.
The 30,000 shares is the outstanding shares which is the total number of shares issued to existing shareholders.
The 5,000 shares reacquired is known as treasury stock. Companies repurchased the shares.
So total number of outstanding shares is:
30,000 shares - 5,000 shares
= 25,000 shares
The number of shares outstanding is 25,000.
The calculation is as follows:
= Originally issued - reacquired shares
= 30,000 - 5,000
= 25,000
Therefore we can conclude that The number of shares outstanding is 25,000.
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On January 1, 2017, Sophie's Sunlounge owned 4 tanning beds valued at $20,000. During 2017, Sophie's bought 3 new beds at a total cost of $10 comma 00010,000. At the end of the year, the market value of all of Sophie's beds was $26 comma 00026,000. Calculate Sophie's gross investment and depreciation during 2017. Sophie's gross investment during 2017 was $nothing. Sophie's depreciation during 2017 was $nothing.
Answer:
Net Investment = 4,000
Explanation:
Gross Investment = 10,000
Depreciation = Market Value - Book value
Depreciation =26,000 - 20,000
Depreciation = 6,000
Net Investment = Gross Investment - Depreciation
Net Investment = 10,000 - 6,000
Net Investment = 4,000
NOTE: Gross investment for 2017 will be the 3 new beds that Sophie bought during 2017 at a total cost of 10,000. To calculate Net investment we should calculate depreciation first by deducting book value from market value.
The city of Oak Ridge is considering the construction of a four kilometer (km) greenway walking trail. It will cost $1 comma 000 per km to build the trail and $340 per km per year to maintain it over its 22-year life. If the city's MARR is 11% per year, what is the equivalent uniform annual cost of this project? Assume the trail has no residual value at the end of 22 years.
Answer:
equivalent uniform annual cost = $1,849.25
Explanation:
Initial cost $4,000
then 22 cash outflows of $1,360
discount rate 11%
using a financial calculator, we determine the NPV = -$15,119.01
EAC = (NPV x r) / [1 - (1 + r)⁻ⁿ]
EAC = (-$15,119.01 x 11%) / [1 - (1 + 11%)⁻²²] = -$1,663.09 / 0.89933 = -$1,849.25
Psymon Company, Inc. sells construction equipment. The annual fiscal period ends on December 31. The following adjusted trial balance was created from the general ledger accounts on December 31:________.
Account Titles Debits Credits
Cash $ 45,190
Accounts Receivable 19,200
Inventory 69,500
Property and Equipment 53,000
Accumulated Depreciation $ 22,300
Liabilities 32,100
Common Stock 96,000
Retained Earnings, January 1 12,200
Sales Revenue 195,500
Sales Returns and Allowances 7,300
Sales Discounts 8,600
Cost of Goods Sold 105,200
Salaries and Wages Expense 18,200
Office Expense 19,200
Interest Expenses 2,300
Income Tax Expense 10,410
Totals $ 358,100 $ 358,100
Prepare a multistep income statement that would be used for internal reporting purposes. Treat Sales Discounts and Sales Returns and Allowances as contra-revenue accounts. TIP: Some of the accounts listed will appear on the balance sheet rather than the income statement.
Prepare a multistep income statement that would be used for external reporting purposes, beginning with the amount for Net Sales.
Compute the gross profit percentage.
Answer:
Prepare a multi-step income statement that would be used for internal reporting purposes.
Psymon Company, Inc.
Income Statement
For the year ended December 31, 202x
Sales revenue $195,500
Sales discounts $8,600
Sales returns and allowances $7,300
Net sales $179,600
Cost of goods sold $105,200
Gross profit $74,400
Expenses:
Salaries and Wages Expense $18,200
Office Expense $19,200
Income from operations $37,000
Interest Expenses $2,300
Income Tax Expense $10,410
Net income $24,290
Prepare a multi-step income statement that would be used for external reporting purposes
Psymon Company, Inc.
Income Statement
For the year ended December 31, 202x
Net sales $179,600
Cost of goods sold ($105,200)
Gross profit $74,400
Gross profit margin 41.43%
Operating expenses:
Salaries and Wages Expense $18,200 Office Expense $19,200 ($37,400)Income from operations (EBIT) $37,000
Other revenues and expenses:
Interest Expenses $2,300Earnings before taxes $34,700
Income Tax Expense $10,410
Net income $24,290
Company A has an internal cost of capital of 7% annually. It is evaluating its investment options against its internal costs and has identified three potential investments:
Answer:
c. A and C only
Explanation:
Here is the full question :
Company A has an internal cost of capital of 7% annually. It is evaluating its investment options against its internal costs and has identified three potential investments:
Investment A: Bond with annual returns of 8%
Investment B: Bond with annual returns of 4%
Investment C: Bond with annual returns of 12%
Which of the above investments should the company consider taking on given its internal cost of capital?
Select one:
a. A only
b. C only
c. A and C only
d. B only
since the cost of capital is 7%, the investment the company chooses should generate returns more than 7% so that the company can earn profits.
It is only investment a and c that would be suitable based on this criteria
Wine and Roses, Inc., offers a bond with a coupon of 5.0 percent with semiannual payments and a yield to maturity of 5.90 percent. The bonds mature in 10 years. What is the market price of a $1,000 face value bond?
Answer:
$932.7
Explanation:
First step
Semi- annual coupon rate = 5.0%/2 = 2.5%
Interest payment = 2.5% × $1,000 = $25
Semi annual yield = 5.90%/2 = 2.95%
PV of interest payment
= A × [1-(1+r)^(-n)]/r
A means interest payment of $25
n means to maturity -10×2 = 20 periods
= $25 × [1-(1+0.0295)^(-10×2)]/0.0295
= $25 × [1-(1.0295)^(-20)]/0.0295
= $25 × 14.94648325
= $373.6620813
Second step
PV of redemption value RV
= RV × (1+r)^(-n)
= 1,000 × (1+0.0295)^(-10×2)
= 1,000 × 0.5590787441
= $559
Third step
Price of bond
= $373.7 + $559
= $932.7
Smith Services, Inc., was a trucking company established in 2000 and owned by Tony Smith as the sole shareholder. Smith Services, Inc., had an account with Laker Express, a fuel provider, and often would charge fuel purchases for the company trucks to that account. Smith’s employees would fuel their vehicles and sign the account slip with a notation that the purchase was for Smith Services, Inc. Laker Express would bill Smith Services regularly for the charges on the account. After several months of low business, Smith Services ceased doing business and was dissolved in 2013, with its assets being distributed to creditors. Laker Express only recovered a small part of the amount owed by Smith Services, Inc. Tony Smith then opened up a new trucking service business as a sole proprietor. Laker Express sought to recover Smith Services' unpaid fuel charges, which amounted to about $35,000, from Smith. He argued that he was not personally liable for a corporate debt. Should a court hold Tony Smith personally liable?
Assume that in addition to the facts given, that evidence was presented to the court that Smith, his wife, and their kids regularly used the account at Laker Express to fill up their personal vehicles. Does this change the outcome?
1. Given this new evidence, a court likely (would, would not) find that Laker Express was tricked or misled into dealing with the corporation rather than the individual.
2. The court likely (would, would not) find that the corporation was undercapitalized.
3. The court likely (would, would not) find that the corporation was created to evade an existing legal obligation.
4. The court likely (would, would not) find that the corporation failed to comply with the required corporate formalities and meetings.
5. The court likely (would, would not) find that the personal and corporate interests were commingled to such an extent that the corporation had no separate identity with regard to the relationship with Laker Express.
6. Because of these findings, the court likely (would, would not) pierce the corporate veil and hold Tony Smith personally responsible for the debt to Laker Express.
Answer:
Smith Services, Inc. and Laker Express
a. A court should not hold Tony Smith personally liable for the corporate debt of Smith Services, Inc to the tune of $35,000 representing unpaid fuel charges to Laker Express. This decision is given based on the facts presented in the case, so far.
b. Assuming that in addition to the given facts, evidence was presented to the court that Smith, his wife, and their kids regularly used the account at Laker Express to fill up their personal vehicles, then this evidence changes the outcome. Smith Service, Inc. has met one of the conditions for piercing the corporate veil. This condition is commingling the corporate account with personal expenses and use of corporate assets. This may also question if proper accounting records were being kept at the Smith Services.
c. Therefore,
1. Given this new evidence, a court likely (would, would not) find that Laker Express was tricked or misled into dealing with the corporation rather than the individual.
2. The court likely (would, would not) find that the corporation was undercapitalized.
3. The court likely (would, would not) find that the corporation was created to evade an existing legal obligation.
4. The court likely (would, would not) find that the corporation failed to comply with the required corporate formalities and meetings.
5. The court likely (would, would not) find that the personal and corporate interests were commingled to such an extent that the corporation had no separate identity with regard to the relationship with Laker Express.
6. Because of these findings, the court likely (would, would not) pierce the corporate veil and hold Tony Smith personally responsible for the debt to Laker Express.
Explanation:
To protect the legal status of corporations like Smith Services Inc. as limited liability entities, State courts reluctantly pierce the corporate veil, unless the requirements, which vary from state to state, are met. If Tony Smith does not the court to pierce the corporate veil of Smith Services, Inc., his former company should have used corporate assets only for corporate purposes. Based on the unpaid fuel charges, Tony Smith did not maintain the separation of ownership from his Smith Services, Inc. since he, his wife, their kids, and apparently the employees fuelled their personal cars on fuel charge to Laker Express for Smith Services, Inc. to offset.
1. Given this new evidence, a court would likely find that Laker Express was tricked or misled into dealing with the corporation rather than the individual.
2. The court would not likely find that the corporation was undercapitalized.
3. The court would not likely find that the corporation was created to evade an existing legal obligation.
4. The court likely would not find that the corporation failed to comply with the required corporate formalities and meetings.
5. The court likely would find that the personal and corporate interests were commingled to such an extent that the corporation had no separate identity with regard to the relationship with Laker Express.
6. Because of these findings, the court likely would pierce the corporate veil and hold Tony Smith personally responsible for the debt to Laker Express.
According to the case in hand, Tony Smith, the sole owner of Smith Services, a trucking company was accused of misappropriation of fuel for several years, up to the tune of $35, 000 which may or may not be the reason why the company went bankrupt.
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A firm contemplating foreign expansion must make three basic decisions: which markets to enter, when to enter those markets, and on what scale. Once a firm decides to enter a foreign market, the question arises as to the best mode of entry. Firms can use six different modes to enter foreign markets: exporting, turnkey projects, licensing, franchising, establishing joint ventures with a host-country firm, or setting up a new wholly owned subsidiary in the host country. Each entry mode has advantages and disadvantages.
Read each advantage and disadvantage listed below and then match it to corresponding mode.
a. Development cost and operational Strategy
b. Costs, risks, and profits
c. Manufacturing and transportation costs
d. Host country and controls
e. FDI and foreign country
f. Risks and capital investment
1. Exporting
2. Turnkey Contracts
3. Licensing
4. Franchising
5. Joint Ventures
6. Who Ply-own
7. Subsidiaries
Answer:
1. Exporting - c. Manufacturing and transportation costs
2. Turnkey Contracts e. FDI and foreign country
3. Licensing f. Risk and Capital investment
4. Franchising d. Host country and controls
5. Joint Venture - a. Development cost and Operational Strategy
6. Who Ply-own - Risks and profits
7. Subsidiaries - b. Costs, risks and profits
Explanation:
Exporting is beneficial for a country as it brings money to the country but it has many disadvantages. There is high manufacturing and transportation cost. There can be trade barriers in some countries which will restrict the trade benefit. Owing a subsidiary is beneficial when it is profitable but when subsidiary incurs loss the parent has to bear it. It involves high risk investment.
The advantage and disadvantage listed below and their matches in their corresponding mode.
Exporting- Manufacturing and transportation costs Turnkey Contracts- FDI and foreign country Licensing - Risk and Capital investment Franchising- Host country and controls Joint Venture - Development cost and Operational Strategy Who Ply-own (wholly owned subsidiary)- Risks and profits Subsidiaries - Costs, risks and profitsFirms can often use different modes to enter foreign markets. They can use exporting, turnkey projects, licensing, franchising, establishing joint ventures with a host-country firm etc.
Turnkey project : the contractor is in good terms and agrees to handle every detail of the project for a foreign client.
Licensing agreement : licensor often gives the rights to intangible property to another entity for time period under a fee. Franchising is involve longer-term commitments than licensing.
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❗️❗️can anyone help me out with BIM PLEASE ❗️❗️(banking & credit cards)❗️Which terms describe an account that does not have sufficient funds to cover all the charges made to it? Select all that
apply.
Overdrawn
Non-sufficient funds
Insufficient funds
Loan
Overdraft
Answer:
Overdrawn
Insufficient funds
Explanation:
An account that doesn't have sufficient funds to cover all charges made against it, has special terms which bankers use to describe it. They include:
i. Insufficient funds: this refers to situation where the amount in the account is less than amount drawn on it or charges made against it.
ii. Account overdrawn: this doesn't have a special bank permit to withdraw more than what is in the account.
Julie is a sales associate for ABC Realty. She sold a house that was listed in the MLS from XYZ REALTORS®. The list price was $340,000 and the property sold at 95% of list. The commission rate to the seller was 7% and the brokers divided the commission--55% to 45%--with Julie's broker getting 45%. Julie and her broker split the commission equally. How much did Julie make in commission on this sale?
Answer:
Julie made $5,087.25 in commission on this sale.
Explanation:
Selling price of the property = Listed price * Percentage of listed at which the property is sold = $340,000 * 95% = $323,000
Commission on sales of the property = Selling price of the property * Commission rate = $323,000 * 7% = $22,610
Amount of the commission to Julie's broker = Commission on sales of the property * Commission share percentage to Julie's broker = $22,610 * 45% = $10,174.50
Since Julie and her broker split the commission equally, we have:
Commission made by Julie from the property sale = Amount of the commission to Julie's broker / 2 = $10,174.50 / 2 = $5,087.25
Therefore, Julie made $5,087.25 in commission on this sale.