Answer:
7.29%
Explanation:
The computation of simple rate of return on the new machine is shown below:-
For computing thee simple rate of return first we need to find out the annual accounting return and investment which is here below:-
Annual accounting return = Savings - Cost - Depreciation
= $95,000 -$ 54,000 - (320,000 ÷ 16)
= 95,000 - 54,000 - 20,000
= $21,000
Investment = 320,000 - 32,000
= 288,000
Simple rate of return = Annual accounting return ÷ Investment
= $21,000 ÷ $288,000
= 7.29%
If you wanted your organizational unit to create a new product that is essentially an entirely new industry, what type of innovation would you encourage? A radical innovation A systems innovation An incremental innovation Choose the answer that best completes each sentence. Because workgroups develop their own , intranets build a common cultural foundation that can help unify employees in different units and locations around common company values.
Answer:
1. A radical innovation.
2. Subcultures
Explanation:
If you wanted your organizational unit to create a new product that is essentially an entirely new industry, you will encourage a radical innovation.
A radical innovation also known as the disruptive innovation is an innovative approach aimed at destroying or supplanting old business strategies and models with an invention to breakthrough and change the whole industries by creating new products.
Because workgroups develop their own subcultures, intranets build a common cultural foundation that can help unify employees in different units and locations around common company values.
The risk-free rate, average returns, standard deviations, and betas for three funds and the S&P 500 are given below. Fund Avg Std Dev Beta A 17.5 % 26.5 % 1.35 B 12.5 % 23.5 % 1.10 C 13.5 % 20.5 % 1.15 S&P 500 10 % 15 % 1 rf 4.0 % If these portfolios are subcomponents that make up part of a well-diversified portfolio, then portfolio ______ is preferred.
Answer:
Portfolio A is preferred.
Explanation:
Given the following sorted data from the question:
Fund Avg Std Dev Beta
A 17.5% 26.5% 1.35
B 12.5% 23.5% 1.10
C 13.5% 20.5% 1.15
S&P 500 10% 15% 1
rf 4.0%
To determine the preferred portfolio, the Treynor measure for each portfolio is estimated as follows:
Treynor measure = (Avg - rf rate) / beta
Therefore, we have:
Treynor measure of Portfolio A = (17.5% - 4.0%) / 1.35 = 10.00%
Treynor measure of Portfolio B = (12.5% - 4.0%) / 1.10 = 7.73%
Treynor measure of Porfolio C = (13.5% - 4.0%) / 1.15 = 8.26%
Since the 10% Treynor measure of Portfolio A is the highest, Portfolio A is preferred.
A chocolatier, Alain, in Belgium conducted extensive market research and focus groups, to understand the perfect chocolate for a distinct group of consumers. The perfect piece of chocolate would have a target weight of 60 grams. The voice of the specific consumers prefers a specification of +/- 2 grams. Alain has targeted a selling price of 15 Euros a piece. A box of dozen would be 150 Euros, gift wrapped for special occasions. Alain searched for a depositor that would give the most accurate fill weight, with a tight tolerance, a machine that would not only make elegant shapes of chocolate with precise caramel filling and clean impression. A confectionery machinery maker, Mod d’Art has several models. Model A. costs $5,000 and could produce fill weights at average of 60.50 grams, and standard deviation of 1.5 grams. Model B. costs $15,000, but with a standard deviation of 0.95 grams, with 59.95 grams average fill weight. Model C. runs $25,000; this deluxe model has standard deviation of 0.60 grams, average fill weight of 60.15 grams.
Answer :
Voice of consumer = 4
Cpk of Model A= 0.333
Cpk of Model B= 0.7017
Cpk of Model C= 1.1388
Explanation :
As per the data given in the question,
Voice of consumer = Upper limit - Lower limit
= 62 - 58
= 4
Cp of Model A = Voice of consumer ÷ (6 × Standard deviation)
= 4 ÷ (6 × 1.5)
= 0.4444
Cpk of Model A = Min(Cpl, Cpu)
and Cpl = (Mean-lower limit) ÷ (3 × standard deviation)
Cpu = (Upper limit- Mean) ÷ (3 × standard deviation)
So, Cpk of Model A = Min((60.5 - 58) ÷ (3 × 1.5), (62 - 60.5) ÷ (3 × 15))
= Min(0.555, 0.333)
Hence, , Cpk of Model A = 0.333
Cp of Model B = (62-58) ÷ (6 × 0.95)
= 0.7017
Cpk of Model B = Min((59.95 - 58) ÷ (3 × 0.95), (62 - 59.95) ÷ (3 ×0.95))
Cpk of Model B = 0.6842
Cp of Model C = (62 - 58) ÷ (6 × 0.60)
= 1.111
Cpk of Model C = Min((60.15 - 58) ÷ (3 × 0.60), (62 - 59.95) ÷ (3 ×0.60))
= 1.1388
At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg’s was quoted as saying, " . . . for the past several years, our individual company growth has come out of the other fellow’s hide." Kellogg’s has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg’s and its largest rival advertise, each company earns $2 billion in profits. When neither company advertises, each company earns profits of $16 billion. If one company advertises and the other does not, the company that advertises earns $56 billion and the company that does not advertise loses $4 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising?
Answer: i ≤ 23% Collision is profitable under usual trigger strategy
Explanation:
Given Data;
When both advertise = $2 billion
When neither advertise = $16 billion
When one advertise ( cheats )= 54 billion
The other loses = $4 billion
Period for each cheating = 1
Therefore:
Cheat - Collision / Collision - period for each cheating
= 54 - 16 / 16 - 1
= 38 / 15
= 2.533 ≤ ( 1/i )
Collusion is profitable under usual trigger strategies
A company began construction of a new warehouse on Jan 1, 2018. The building was finished and ready for use on Sept 30, 2019. Expenditures on the project were as follows: January 1, 2018 $ 313,000 September 1, 2018 $ 465,000 December 31, 2018 $ 465,000 March 31, 2019 $ 465,000 September 30, 2019 $ 313,000 The company had $5,500,000 in 15% bonds outstanding through both years. The capitalized interest in 2018 was:
Answer:
$70,200
Explanation:
the formula to determine the amount of interest capitalized is:
$313,000 x 15% x 1 (whole 2018) = $46,950$465,000 x 15% x 4/12 (Sept.-Dec.) = $23,250total $70,200US GAAP allows companies to treat the cost of borrowing (interests) during the project's inception period as part of the original capital investment amount.
Dave Krug contributed $1,800 cash along with inventory and land to a new partnership. The inventory had a book value of $1,600 and a market value of $3,600. The land had a book value of $2,200 and a market value of $6,600. The partnership also accepted a $3,800 note payable owed by Krug to a creditor. Prepare the partnership’s journal entry to record Krug’s investment.
Answer and Explanation:
The Journal entry is shown below:-
Cash Dr, $1,800
Inventory Dr, $3,600
Land Dr, $6,600
To Notes payable $3,800
To Krug's Capital $8,200
(Being Krug’s investment is recorded)
Therefore to record the
Here the assets are increasing so we debited the cash, inventory and land while the liabilities and stakeholder equity also increase so we credited the notes payable and Krug's capital.
What was the original purpose of the English jail, as conceived by King Henry II?
a. To confine offenders awaiting execution
b. To house offenders awaiting transfer to prison
c. To house suspects awaiting trial
d. To punish individuals convicted of crimes
Answer:
c. To house suspects awaiting trial
Explanation:
King Henry II established jails in the 12th century during his reign for the primary purpose of housing suspects awaiting trial. People who were already convicted of crimes but awaiting punishment were also kept in jails before their fate as decided. The King put in place a county Sheriff who oversaw the collection of rent for the King and also had a say on people who who went to jail. This was among the early forms of jails established.
Today, the current jails have the same model with the first jails, albeit with several other functions. People who commit crimes are kept in jails, those awaiting trials, parole and probation violators, are also kept in jails.
The original purpose of the English jail, as introduced by King Henry II, was to house suspects who were awaiting trial. This represented the shift from immediate punishment without a formal trial to a more centralized, formal justice system.
Explanation:
The original purpose of the English jail, as conceived by King Henry II, was c. To house suspects awaiting trial. This marked a significant shift from previous practices of self-regulation in communities towards the centralized system of justice we see today. Prior to this development, punishments were typically carried out immediately, without a formal trial process. However, Henry II introduced the concept of holding alleged offenders in a 'gaol' or jail until they could be brought to a formal trial. Hence, the inception of the practice of jailing suspects pending their trial.
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The town of Podunk is considering building a new downtown parking lot. The land will cost $25,000 and the construction cost of the lot is estimated to be $150,000. Each year costs associated with the lot are estimated to be $17,500. The income from the lot is estimated to be $18,000 the first year and increase by $3,500 each year for the twelve year expected life of the lot. Determine the B/C ratio if Podunk uses a cost of money of 4%.
Answer:
The B/C ratio if Podunk uses a cost of money of 4% is 0.99
Explanation:
In order to calculate the B/C ratio if Podunk uses a cost of money of 4%, we would have to use the following formula:
B/C ratio = PW BENEFITS / PWCOSTS
PW BENEFITS = $18,000 (P/A, 4%,12) + $3,500(P/G, 4%, 12) = $334,298
PW COSTS = $175,000 + $17,500(P/A. 4%,12) = $339,238
Therefore, B/C ratio = $334,298 / $339,238
B/C ratio = 0.99
Answer:
The B/C ratio if Podunk uses a cost of money of 4% is going to be $ 0.99
Explanation:
Base on the scenario been described in the question, we can be able to use the following formula in calculation of the B/C ratio if Podunk uses a cost of money.
B/C ratio = Benefits of PW/ Costs of PW
Substituting the values we have ;
Benefits of PW = $18,000 (P/A, 4%,12) + $3,500(P/G, 4%, 12)
Benefits of PW = $334,298
Costs of PW = $175,000 + $17,500(P/A. 4%,12)
Costs of PW = $339,238
B/C ratio = Benefits of PW/ Costs of PW
B/C ratio = $334,298 / $339,238
B/C ratio = $0.99
The manufacturing overhead budget at Rost Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,800 direct labor-hours will be required in September. The variable overhead rate is $7.00 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,120 per month, which includes depreciation of $3,640. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
Answer:
Total overhead cash disbursement= $59,080
Explanation:
Giving the following information:
Estimated direct labor hours= 2,800
The variable overhead rate is $7.00 per direct labor-hour.
Estimated fixed manufacturing overhead= $43,120 per month
Includes depreciation of $3,640
To calculate the cash disbursement, we need to deduct from the fixed manufacturing overhead the depreciation expense because it is not a cash disbursement.
Variable overhead= 7*2,800= 19,600
Fixed overhead= 43,120-3,640= 39,480
Total overhead cash disbursement= $59,080
Final answer:
The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be $62,720.
Explanation:
The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be calculated by multiplying the budgeted direct labor-hours by the variable overhead rate and adding the fixed manufacturing overhead.
In this case, the budgeted direct labor-hours for September is 2,800 and the variable overhead rate is $7.00.
So, the variable overhead cost is 2,800 x $7.00 = $19,600.
The fixed manufacturing overhead is $43,120 per month, which includes depreciation of $3,640.
So, the September cash disbursements for manufacturing overhead will be $19,600 + $43,120 = $62,720.
Since we use GDP to determine a nation’s health, we can only add the market value of the goods and services produced in the United States (domestic production) for a single year. We also do not add the value of intermediate goods, ingredients/items used to produce final products. We only count the value of final goods and services which have been produced within the year. Including the value of both the intermediate goods and the final goods and services would lead to double counting and increase the value of GDP.Directions: For each item place either an "I" if the scenario is an intermediate product, or an "F" if it is a final product.
a. Shampoo is bought and used by a hair stylist in the mall.
b. A family buys some finger paint for their child to use.
c. A person buys a tire to replace to flat one on their car.
d. A hotel chain buys a box of pens.
e. Flour is bought and used to bake a cake to be sold at a bakerySomeone buys a steak to grill at home.
f. An accounting firm buys calculators for its accountants.
g. A person buys shampoo to use at home.
h. Flour is bought and used to bake a cake for a birthday.
i. A student buys a pack of pens to do their homework.
j. A restaurant prepares a steak for its customers.
k. A factory buys tires to place on their cars.
l. An artist buys paints for a painting, with the intention of keeping it.
m. A calculator is bought and used for mathematics homework.
n. An artist buys paints for a landscape painting, with the intention of selling it.
Answer:
a. Shampoo is bought and used by a hair stylist in the mall. - F
It is a final product bought by the final consumer (the hair sytlist). It is part of GDP.
b. A family buys some finger paint for their child to use. - F
It is a final product bought by the final consumer (the family). It is part of GDP.
c. A person buys a tire to replace to flat one on their car. - F
It is a final product bought by the final consumer (the person who will replace the flat tire). It is part of GDP.
d. A hotel chain buys a box of pens. - F
It is a final product bought by the final consumer (the hotel). It is part of GDP.
e. Flour is bought and used to bake a cake to be sold at a bakerySomeone buys a steak to grill at home. - I
It is an intermediate product, because the flour will be made into cakes, that will then be sold, taking into account the value of the flour itself. It is not part of GDP.
f. An accounting firm buys calculators for its accountants. - F
It is a final product bought by the final consumer (the firm). It is part of GDP.
g. A person buys shampoo to use at home. - F
It is a final product bought by the final consumer (the person). It is part of GDP.
h. Flour is bought and used to bake a cake for a birthday. - F
It is final good because the flour will be made into a birthday cake, but the cake will be conumed at home. If the birthday cake is later sold, then, the flour is an intermediate good.
i. A student buys a pack of pens to do their homework. - F
It is a final product bought by the final consumer (the student). It is part of GDP.
j. A restaurant prepares a steak for its customers. - F
The steak is a final product, it will be consumed by customers for a value that the restaurant has set. This value is part of GDP.
k. A factory buys tires to place on their cars. -I
The tires are intermediate goods because they will be put in cars that they factory will later sell. The tires are not part of GDP.
l. An artist buys paints for a painting, with the intention of keeping it. - F
The painting is a final good because they customer has bought it to keep it a home. It is part of GDP.
m. A calculator is bought and used for mathematics homework. - F
It is a final product bought by the final consumer (the person doing math work). It is part of GDP.
n. An artist buys paints for a landscape painting, with the intention of selling it. - I
The paints are intermediate because their value will be put into the making of the landscape painting, which will be sold for a price that will take into account the cost of the paints. The paints are not part of GDP.
Final answer:
In GDP calculations, it is essential to differentiate intermediate goods, which are used in producing other goods, from final goods that are ready for consumption. This measure prevents double counting in the economy and reflects the true size of a nation's output and income.
Explanation:
When calculating the Gross Domestic Product (GDP), it is crucial to differentiate between intermediate and final goods to avoid the problem of double counting. GDP measures the value of all final goods and services produced in a nation in a year.
F - Shampoo bought and used by a hair stylist in the mall (final consumer)
F - A family buys some finger paint for their child to use (final consumer)
F - A person buys a tire to replace the flat one on their car (final consumer)
I - A hotel chain buys a box of pens (intermediate, pens will be used in business operations)
I - Flour bought and used to bake a cake to be sold at a bakery (intermediate, the cake is the final product)
F - Someone buys a steak to grill at home (final consumer)
I - An accounting firm buys calculators for its accountants (intermediate, used in providing services)
F - A person buys shampoo to use at home (final consumer)
I - Flour is bought and used to bake a cake for a birthday (intermediate, the cake is the final product)
F - A student buys a pack of pens to do their homework (final consumer)
F - A restaurant prepares a steak for its customers (final product)
I - A factory buys tires to place on their cars (intermediate, the car is the final product)
F - An artist buys paints for a painting, with the intention of keeping it (final consumer)
F - A calculator is bought and used for mathematics homework (final consumer)
I - An artist buys paints for a landscape painting, with the intention of selling it (intermediate, the painting is the final product).
Final goods are those that are at the furthest stage of production and are ready for sale to the end consumer, while intermediate goods are used to produce final goods and are not included in GDP calculations.
The Assembly Department started the month with 78,000 units in its beginning Work in Process Inventory. An additional 254,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 21,000 units in the ending Work in Process Inventory of the Assembly Department.
How many units were transferred to the next processing department during the month?
Answer:
Outflow from assembly= 311,000 units
Explanation:
The assembly department in this scenario handles the work in process part of production.
Production involves different stages that includes: Raw material, work in process, finished goods.
Products flow through these different stages.
To calculate the amount transferred out we need to first calculate total WIP within the month
Total WIP= Inflow of product + Beginning inventory
Total WIP= 254,000 + 78,000
Total WIP= 332,000
Outflow from assembly= Total WIP - Ending WIP
Outflow from assembly= 332,000 - 21,000
Outflow from assembly= 311,000 units
Final answer:
To calculate the number of units transferred to the next processing department, subtract the Ending Work in Process Inventory from the sum of the Beginning Work in Process Inventory and the units added. A total of 311,000 units were transferred out during the month.
Explanation:
To determine the number of units transferred to the next processing department during the month, we should use the following formula for units in production:
Units Transferred Out = Units at the beginning + Units added - Ending Work in Process Inventory
In this case:
Units at the beginning (Beginning Work in Process Inventory) = 78,000 unitsUnits added (transferred in from the prior department) = 254,000 unitsEnding Work in Process Inventory = 21,000 unitsTo calculate:
Units Transferred Out = 78,000 + 254,000 - 21,000
Units Transferred Out = 311,000 units
Therefore, 311,000 units were transferred to the next processing department during the month.
Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2020, Moreno sells 15,000 subscriptions beginning with the December issue. Moreno prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue.
A. Prepare the entry in November for the receipt of the subscriptions
B. Prepare the adjusting entry at December 31, 2020, to record sales revenue recognized in December 2020.
C. Prepare the adjusting entry at March 31, 2021, to record sales revenue recognized in the first quarter of 2021.
Answer and Explanation:
The journal entries are shown below:
A. Cash $300,00
To Unearned Subscription Revenue $300,000
(Being the receipts of the subscription is recorded)
For recording this we debited the cash as it increased the assets and also increased the liability so unearned subscription revenue is credited
B. Unearned Subscription Revenue $300,000
To Subscription Revenue $300,000
(Being the sales revenue is recorded)
For recording this we debited the unearned subscription revenue as it reduced the liabilities and at the same time it increase the revenue so the subscription revenue is credited
C. Unearned Subscription Revenue $75,000
To Subscription Revenue $75,000
(Being the sales revenue is recorded)
The computation is shown below:
= $300,000 × 3 months ÷ 12 months
= $75,000
For recording this we debited the unearned subscription revenue as it reduced the liabilities and at the same time it increase the revenue so the subscription revenue is credited
The three months are calculated from December 31 to March 31
Consider the following balance sheet for TD. Assets Liabilities Reserves 493 Deposits 2900 Loans 2407 4. Suppose that TD is a typical bank and keeps only the required reserves. Given this data, what is the money multiplier? 5. Suppose that TD is a typical bank and keeps only the required reserves. In addition, suppose that someone deposited $700. Given this data, what is the total change in the M1 Money Supply? 6. Suppose that someone deposited $700 at TD Bank. Given this data, what is the minimum amount by which the money supply will increase?
The money multiplier represents how much money the banking system can generate from each dollar of bank reserves. The money multiplier in this case is 2900. The total change in the M1 money supply when someone deposits $700 at TD Bank is $2,030,000.
Explanation:The money multiplier is a concept that shows how much money the banking system can generate from each dollar of bank reserves. It is calculated by dividing 1 by the reserve ratio, which is the fraction of deposits that a bank keeps as reserves. In this case, since the bank keeps only the required reserves, the reserve ratio is 1/2900. Therefore, the money multiplier would be 1 divided by 1/2900, which is equal to 2900.
To calculate the total change in the M1 money supply when someone deposits $700 at TD Bank, we use the formula:
Total Change in the M1 Money Supply = New Deposits x Money Multiplier
So, the total change in the M1 money supply would be $700 x 2900 = $2,030,000.
The minimum amount by which the money supply will increase when someone deposits $700 at TD Bank is $700 x 1 = $700, as the money multiplier is always greater than or equal to 1.
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The money multiplier is calculated as 1 divided by the reserve ratio. For TD Bank, which keeps only the required reserves, the money multiplier would be 1. Depositing $700 can lead to an increase in the M1 money supply by the same amount, though the final increase can vary due to several factors.
Explanation:To calculate the money multiplier, we use the formula 1 / reserve ratio. In this case, given that the bank only keeps the required reserves, we can assume a reserve ratio of 1 (if all reserves are kept), so the money multiplier would be 1.
With regard to the changes in the M1 money supply due to a deposit of $700, it will affect how much the bank can lend out. Since TD keeps only required reserves, it can lend out all of the $700. As a result, bank credit (and therefore the M1 money supply) could increase by $700.
The minimum increase in the money supply is harder to define due to several factors, including withdrawal of cash from the banking system. However, at least the amount deposited ($700) will be added to the money supply immediately.
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You are a professional financial analyst that is employed to help evaluate possible merger and acquisition candidates. You have already reviewed the numbers, and the company seems solid on paper. You are unable to make a visit to the company yourself and are instead sending one of your direct reports to conduct the visit on your behalf. This is his first site visit, and he wants to review the work you have already done to familiarize himself with the company and asks for advice on things to look for. You offer to give advice on ways to find out if the company is "cooking its books" and what to look for when you conduct a "smell test."
What financial ratios should he be looking at and what do they tell you?
Answer:
Explanation:
Below are some of the financial ratios he should consider:
a) Financial leverage ratios: This is used to measure the company earnings to service debt payments.
b) Return on investment: This is the ratio that is used to evaluate the profitability of the firm and the profit that is available to the stakeholders after all payments have been made.
c) Price to Earnings Ratio: This is an indicator of the price of the company's stock concerning the earnings per share. It is used to analyze if the stock price is over-priced or under-priced.
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 10 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,060. Further assume Ms. Bright paid 40 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to cover the interest costs on the loan.
a. What is the current price of the bond? (Input answer to 2 decimal places.)
b. What is her dollar profit based on the bond's current price? (Do not round intermediate calculations and round answer to 2 decimal places.)c. How much of the purchase price of $1,060 did Ms. Bright pay in cash? (Do not round intermediate calculations and round answer to 2 decimal places.)
Answer:
A.) $1,152.12
B.) $92.12
C.) $424.00
Explanation:
Given
period (t) = 15 years
Coupon rate = 12%
Rate (r) = 10%
Par value = $1000
Purchase price = $1060
A.) Current price of bond :
Price = Coupon payment × [(1 - (1 + r)^-t) /r] + [par value / (1+r)^t]
Coupon payment = 12% × 1000 = $120
Plugging our values
Price = 120 × [(1-(1+0.1)^-15)/0.1] + [1000/1.1^15]
Price = $1,152.12
B.) Dollar profit on bond
Dollar profit = Current price - Purchase price
Dollar profit = $1,152.12 - $1060 = $92.12
C.)Amount paid in cash
40% of purchase amount was paid in cash
0.4 × 1060 = $424.00
Answer:
a) $1,153.72
b) $93.72
c) $424
Explanation:
Given:
Original bond was issued at 12%
YTM = 10%
Years left, N = 15 years.
a) The current price of bond:
Using Excel function, we have:
=PV(10%/2,2*15,-12%*1000/2,-1000)
= $1153.72
The current price of bond is $1,153.72
b) Dollar profit based on bond's current price will be calculated as:
Bond's current price - purchase price
= $1,153.72 - $1,060
= $93.72
Dollar profit = $93.72
c) The purchase price of $1,060 Ms. Bright paid in cash will be:
$1,060 * 40%
= $424
Pretzelmania, Inc., issues 7%, 10-year bonds with a face amount of $64,000 for $64,000 on January 1, 2021. The market interest rate for bonds of similar risk and maturity is 7%. Interest is paid annually on December 31. Required: 1. & 2. Record the bond issue and first interest payment on December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer and Explanation:
The Journal entries is shown below:-
The Journal entry to record the bond issue is here below:-
January 1, 2021
Cash Dr, $64,000
To Bonds payable $64,000
(Being issue of bonds is recorded)
The Journal entry to record the interest payment is shown below:-
December 31, 2021
Interest Expenses Dr, $2,240
($64,000 × 7% × 6 ÷ 12)
To Cash $2,240
(Being interest payment of bond is recorded)
The Paris Company provides catering services. The cost of catering supplies is $300 per month plus $100 per job catered plus $25 per meal served. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company budget for May was 27 jobs to be catered and 160 meals to be served. The actual activity for May was 26 jobs catered and 192 meals served, and the actual cost of catering supplies was $7,620.
The cost of catering supplies in Paris' planning budget for the month of May was:
a. $6,700
b. $7,700
c. $7,400
d. $7,000
Answer:
d. $7,000
Explanation:
The computation of the cost of catering supplies in case of planning budget is shown below:
= Cost of catering supplies + cost per job × number of jobs + cost per meal served × number of meals
= $300 + $100 × 27 jobs + $25 × 160 meals
= $300 + $2,700 + $4,000
= $7,000
We simply applied the above formula so that the cost of catering supplies for planning budget could come
Powell Warehouse distributes hardback books to retail stores and extends credit terms of 4/10, n/30 to all of its customers. During the month of June, the following merchandising transactions occurred.
June 1 Purchased books on account for $2,840 (including freight) from Catlin Publishers, terms 4/10, n/30.
3 Sold books on account to Garfunkel Bookstore for $1,050. The cost of the merchandise sold was $700.
6 Received $40 credit for books returned to Catlin Publishers.
9 Paid Catlin Publishers in full.
15 Received payment in full from Garfunkel Bookstore.
17 Sold books on account to Bell Tower for $1,050. The cost of the merchandise sold was $750.
20 Purchased books on account for $700 from Priceless Book Publishers, terms 2/15, n/30.
24 Received payment in full from Bell Tower.
26 Paid Priceless Book Publishers in full.
28 Sold books on account to General Bookstore for $2,600. The cost of the merchandise sold was $750.
30 Granted General Bookstore $260 credit for books returned costing $65.
Journalize the transactions for the month of June for Powell Warehouse, using a perpetual inventory system
Answer:
June 1
Dr Inventory 2840
Cr Accounts Payable 2840
June 3
Dr Accounts receivable 1050
Cr sales revenue 1050
Dr Cost of goods sold 700
Cr nventory 700
June 6
Dr Accounts payable40
Cr Inventory40
June 9
Dr Accounts payable 2,800
Cr Cash 2,744
Cr Inventory 56
June 15
Dr Cash 1050
Cr Accounts receivable 1050
June 17
Dr Accounts receivable 1050
Cr Sales revenue 1050
Dr Cost of Goods sold 750
Cr Inventory 750
June 20
Dr Inventory 700
Cr Accounts payable 700
June 24
Dr Cash 1029
Dr sales discounts 21
Cr Account receivable 1050
June 26
Dr Account payable 700
Cr Inventory 14
Cr Cash 686
June 28
Dr Account Receiveable 2600
Cr Sales Revenue 2600
Dr Cost of goods sold 750
Cr Inventory 750
June 30
Dr Sales return and allowance 260
Cr Account receivable 260
Dr Inventory 65
Cr Cost of goods sold 65
Explanation:
Powell Warehouse Journal entries
June 1
Dr Inventory 2840
Cr Accounts Payable 2840
June 3
Dr Accounts receivable 1050
Cr sales revenue 1050
Dr Cost of goods sold 700
Cr nventory 700
June 6
Dr Accounts payable40
Cr Inventory40
June 9
Dr Accounts payable 2,800
(2,840-40)
Cr Cash 2,744
Cr Inventory 56
(2%×2,800)
June 15
Dr Cash 1050
Cr Accounts receivable 1050
June 17
Dr Accounts receivable 1050
Cr Sales revenue 1050
Dr Cost of Goods sold 750
Cr Inventory 750
June 20
Dr Inventory 700
Cr Accounts payable 700
June 24
Dr Cash 1029
Dr sales discounts 21
(2%×1050)
Cr Account receivable 1050
June 26
Dr Account payable 700
Cr Inventory (2%×700) 14
Cr Cash 686
June 28
Dr Account Receiveable 2600
Cr Sales Revenue 2600
Dr Cost of goods sold 750
Cr Inventory 750
June 30
Dr Sales return and allowance 260
Cr Account receivable 260
Dr Inventory 65
Cr Cost of goods sold 65
On January 1, 2017, Shay issues $330,000 of 12%, 15-year bonds at a price of 97.00. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104.50. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 7. Prepare the journal entry to record the bond retirement at January 1, 2023.
Answer and Explanation:
As per the data given in the question, Journal entries are as follows:
Jan 1
Bonds payable A/C Dr. $66,000
Loss on bonds' redemption A/c Dr. $4,158
To Discount on bonds payable A/c $1,188
($5,940*20%)
To Cash A/c $68,970
($66,000*104.5%)
(To record retirements of bonds before maturity)
Computation
Discount on bonds = $330,000 × 3% = $9,900
Amortized bond discount = $9,900 ÷ 15 × 6
= $3,960
Unamortized bond discount = $9,900 - $3,960
= $5,940
Face value of bonds retired = $330,000 × 20%
= $66,000
Drew Corp had a beginning balance on January 1, 2019 in Accounts Receivable of $200,000 and a beginning credit balance in the Allowance for Doubtful Accounts of $4,000. During 2019, Drew sold $1,000,000 of goods on credit and collected $800,000. If Drew estimates that 2% of their ending accounts receivable will eventually not be collected, the adjusting journal entry for the Bad Debt Expense will include a credit to Allowance for Doubtful Accounts of A. $ 4,000 B. $ 8,000 C. $ 16,000 D. $ 6,980 E. none of the listed choices
Answer:
The adjusting journal entry for the Bad Debt Expense will include a credit to Allowance for Doubtful Accounts of A. $ 4,000
Explanation:
Ending balance in Accounts Receivable = Beginning balance in Accounts Receivable + Sales on credit - Cash Collected = $200,000 + $1,000,000 - $800,000 = $400,000
Drew estimates that 2% of their ending accounts receivable will eventually not be collected.
Estimated uncollectible = 2% x $400,000 = $8,000
Drew Corp had a beginning credit balance in the Allowance for Doubtful Accounts of $4,000. Bad debts expense = $8,000 - $4,000 = $4,000
The adjusting journal entry for the Bad Debt Expense:
Debit Bad debts expense $4,000
Credit Allowance for Doubtful Accounts $4,000
Sandhill Co. had the following account balances: Sales revenue $ 431000 Cost of goods sold 226000 Salaries and wages expense 33500 Depreciation expense 64000 Dividend revenue 11400 Utilities expense 23100 Rent revenue 58800 Interest expense 36100 Sales returns and allow. 33200 Advertising expense 38100 What would Sandhill report as total revenues in a single-step income statement?
Answer:
$468,000
Explanation:
The computation of the total revenues in case for single-step income statement is shown below:
= Sales revenue - sales return and allowances + dividend revenue + rent revenue
= $431,000 - $33,200 + $11,400 + $58,800
= $468,000
We simply added all the revenues which increased the sales for the company after considering the sales return and allowances
Concord Corporation sells a product for $50 per unit. The fixed costs are $760000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $120000 and variable costs will be 50% of the selling price. The new break-even point in units is:
Answer:
35,200
Explanation:
The BEP which is the break even point is the point where the company's sales or revenue generated is equal to the cost incurred. As such, the BEP is the number of units that must be sold for the company to make neither a profit nor a loss.
Both sales and variable cost are dependent on the number of units sold.
The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.
With the purchase of the new equipment,
Fixed costs = $760000 + $120000
= $880,000
Variable cost per units
= 50% * $50
= $25
Let the number of units to break even be t
t(50 - 25) = 880,000
t = 880,000/25
= 35,200 units
During 2020 the Blossom Company had a net income of $84000. In addition, selected accounts showed the following changes: Accounts Receivable $2500 increase Accounts Payable 800 increase Buildings 3800 decrease Depreciation Expense 1300 increase Bonds Payable 7000 increase What was the amount of cash provided by operating activities? $91800. $85300. $83600. $84000.
Answer:
The amount of cash provided by operating activities was $83,600
Explanation:
The amount of cash provided by operating activities is calculating by using following formula:
Net Income + Non-Cash Expenses (Depreciation, Depletion & Amortization Expense) + Non-Operating Losses (Loss on Sale of Non-Current Assets) − Non-Operating Gains (Gain on Sale of Non-Current Assets) + Decrease in Current Assets − Increase in Current Assets + Increase in Current Liabilities − Decrease in Current Liabilities.
In the Blossom Company,
The amount of cash provided by operating activities = Net Income + Depreciation Expense - Increase in Accounts Receivable + Increase in Accounts Payable = $84,000 + $1,300 - $2,500 + $800 = $83,600
You are given the following information about Palmer Golf Shop, Inc. The 2018 balance sheet of Palmer Golf Shop, Inc., showed long-term debt of $2.5 million, and the 2019 balance sheet showed long-term debt of $2.35 million. The 2019 income statement showed an interest expense of $175,000. What was the firm’s cash flow to creditors during 2019? The 2018 balance sheet of Palmer Shop, Inc., showed $725,000 in the common stock account and $3.75 million in the additional paid-in surplus account. The 2019 balance sheet showed $955,000 and $3.6 million in the same two accounts, respectively. If the company paid out $635,000 in cash dividends during 2019, what was the cash flow to stockholders for the year? What is cash flow from assets? Suppose you also know that the firm’s net capital spending for 2019 was $500,000 and that the firm increased its net working capital investment by $65,000. What was the firm’s 2019 operating cash flow, or OCF?
Answer and Explanation:
The computation is shown below:
a. Cash Flow to Creditors
Cash Flow to Creditors = Interest Expenses Paid – Net Increase in Long term debt
= Interest Expenses Paid – [Long term debt at the end – Long term Debt at the Beginning]
= $175,000 – [$2,350,000 - $2,500,000
= $175,000 - (-$150,000)
= $325,000
b. Cash Flow to Stockholders
Cash Flow to Stockholders = Dividend Paid – Net New Equity
= Dividend Paid – [(Ending common stock balance + Additional paid-in surplus account at the end) - (Beginning common stock balance + Additional paid-in surplus account at the beginning)
= $635,000 – [($955,000 + $3,600,000) – ($725,000 + $3,750,000)]
= $635,000 – [$4,555,000 - $4,475,000]
= $635,000 - $80,000
= $555,000
c. Cash Flow from assets
Cash Flow from assets = Cash Flow to Creditors + Cash Flow to Stockholders
= $325,000 + $555,000
= $880,000
d. Operating Cash Flow
As We know that,
Cash flow from assets = Operating Cash flows – Change in Net Working capital – Net Capital Spending
$880,000 = Operating cash flow - ($65,000) - $500,000
So,
Operating cash flow = $880,000 + $65,000 + $500,000
= $1,445,000
You will receive annual payments of $20,000 to be paid at the end of each of the next 4 years. The appropriate discount rate is 15% What is the present value of the payments? Future Value of 1 (15%, 4 periods) = 1.74901 Future Value of an Annuity of 1 (15%, 4 periods) = 4.99338 Present Value of 1 (15%, 4 periods) = 0.57175 Present Value of an Annuity of 1 (15%, 4 periods) = 2.85498 Group of answer choices $57,099.60 $80,000.00 $31,470.30 $72,095.60
Answer:
Present Value = $57,099.57
Explanation:
The Present Value of a series of future equal amount is the amount the sum in today's terms that would make one to be indifferent . It is the future series of cash flows discounted at the opportunity cost rate of return.
Present Value = A × ( 1-(1+r)^(-n))/r
A- annual cash flow- 20,000, r- discount rate - 15%, n number of years- 4
PV = 20,000 × (1- 1.15^(-4))/0.15
= 20,000 × 2.85498
= $57,099.57
You have been asked by the CEO of your company to manage a really important project. The CEO suggested five employees to be on your project team. You now think about the right organizational structure. Under what project management structure would these five employees face the least trade-offs with their current responsibilities?
a. A dedicated project team
b. A heavyweight project manager
c. An advisory team
d. A matrix organization
Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $29,000. Budgeted cash receipts total $187,000 and budgeted cash disbursements total $186,000. The desired ending cash balance is $51,000. The excess (deficiency) of cash available over disbursements for June will be:
Answer:
The excess cash available will be $30,000
Explanation:
The following information were given:
beginning cash balance = $29,000
budgeted cash receipt = $187,000
budgeted cash disbursement = $186,000
desired ending cash balance = $51,000
required = excess (deficiency) of cash available over disbursement.
To calculate the excess (deficiency) of cash available over disbursement, disbursements will be deducted from all the cash received and available, if the difference is positive, then the cash available is excess, if negative, then the cash available is deficiency. This is calculated as follows
Total cash available = beginning cash balance + budgeted cash receipt
= 29,000 + 187,000 = $216,000
Total disbursements = $186,000
∴Excess (deficiency) of cash available = 216,000 - 186,000 =$30,000 (excess)
Coronado Industries has 4760000 shares of common stock outstanding on December 31, 2020. An additional 198000 shares are issued on April 1, 2021, and 477000 more on September 1. On October 1, Coronado issued $6050000 of 8% convertible bonds. Each $1,000 bond is convertible into 40 shares of common stock. No bonds have been converted. The number of shares to be used in computing basic earnings per share and diluted earnings per share on December 31, 2021 is
Answer:
BEPS Shares = 5,067,500
DEPS Shares = 5,309,500
Explanation:
Basic Earnings per Share (BEPS) = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Shares.
Weighted Average Number of Common Shares
Outstanding Common Shares 4,760,000
Additional Shares: April( 9/12 × 198000) 148,500
Additional Shares: April( 4/12 × 477000) 159,000
Total Weighted Average Number of Common Shares 5,067,500
Diluted Earnings per Share (DEPS) =Adjusted Earnings Attributable to Holders of Common Stock /Adjusted Weighted Average Number of Common Shares.
Adjusted Weighted Average Number of Common Shares
Basic Earnings per Share Common Shares 5,067,500
Convertible Bonds ($6,050,000/$1,000 × 40) 242,000
Total Weighted Average Number of Common Shares 5,309,500
Trini Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,100 direct labor-hours will be required in May. The variable overhead rate is $1.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,440 per month, which includes depreciation of $8,910. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
Answer:
$102,870
Explanation:
The computation of Total cash disbursements is shown below:-
Variable overhead = Direct labor budget × Variable overhead rate
= 8,100 × $1.40
= $11,340
Fixed expenses incurred in cash = Total fixed expenses - Depreciation
= $100,440 - $8,910
= $91,530
Total cash disbursements = Total variable manufacturing overhead + Fixed cash overhead
= $91,530 + $11,340
= $102,870
Therefore for computing the Total cash disbursements we simply applied the above formula.
Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $3.20 and total fixed costs are $10,000. The cat food can be sold as it is for $8.55 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,600 cost. The additional processing will yield 10,000 bags of Premium Green and 3,600 bags of Green Deluxe, which can be sold for $7.55 and $5.55 per bag, respectively. If Green Health is processed further into Premium Green and Green Deluxe, the total gross profit would be:
Answer: $92,880
Explanation:
The Gross Profit can be calculated by simply removing the cost from the sales amount.
It is stated that the additional processing will yield 10,000 bags of Premium Green and 3,600 bags of Green Deluxe, which can be sold for $7.55 and $5.55 per bag.
Sales figure is therefore,
= (10,000 * 7.55) + (3,600 * 5.55)
= 75,500 + 19,980
= $95,480
Subtracting the cost to get,
= 95,480 - 2,600
= $92,880
The total gross profit would is $92,880.