Answer:
a1) Agency problem refers to conflict of interest between a company's management and its company's stakeholders.
a2) No
b) YES
c) Creditor Agency Problem
d) Agency Cost of Debt
Explanation:
a. What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? Explain your answer.
Answer
a1) Agency problem refers to conflict of interest between a company's management and its company's stakeholders.
a2) When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflicts exist? NO, because based on the definition above, there will be no stakeholders, hence no possibility of conflict of interest if there is just one person.
b. If you expanded and hired additional people to help you, might that give rise to agency problems?
ANSWER
YES, because based on the definition, conflict of interest will become possible when agents are recruited and expected to act on behalf of the owner of the company; they might just start doing their own thing by pursuing their own interest against that of the owner.
c. Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?
ANSWER
This will give rise to a Creditor Agency Problem which is different from Management Agency problem. In the Creditor Agency Problem, Creditors are the principal and the shareholders are the agent because they get the money from outside investors on a promise that they will use it in projects that are low in risk and sure in returns BUT after getting the funds, shareholders might approve that the money be used in High Risk High Return projects which is not in the best interest of the outside investors who do have a controlling interest.
d. Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?
ANSWER
Agency cost of debt will occur, this refers to an increase in the cost of debt in the event that the interests of shareholders differs from that of management.
How might lenders mitigate the agency costs?
Lenders are aware that management is in full control of their money and they can mitigate the agency costs by imposing certain restrictions on the companies called bond indentures, to reduce the agency-cost issue. Indentures are legally binding agreements surrounding the use of the money and what happens in the case of bankruptcy.
Agency relationship arises when one party acts on behalf of another. At the start of your business, conflicts are unlikely but as the firm expands and more employees or investors are involved, agency problems and conflicts might appear. Employing external lenders could result in agency costs, which can be mitigated with loan agreement constraints.
Explanation:An agency relationship exists when one party (the agent) acts on behalf of another party (the principal). At the initial stages of your business, if you're the only employee and solely invested in the business, there would be no agency conflicts because your interests (as both the owner and worker) align perfectly.
If you expanded and hired additional people, you might indeed face agency problems. These occur when the interests of employees (agents) do not necessarily align with the interests of the business owner (principal) or when they have more information than the principals; this is known as information asymmetry.
If you raise further capital to expand by selling stock to outside investors yet maintain enough shares to control the company, you could experience another type of agency conflict. This happens when the interests of the shareholders differ from those of the controlling owner. Shareholders might prefer safer investments and higher dividends, while you might prefer riskier strategies that you believe would boost the company's value and growth.
If you gather funds from lenders (external), some agency costs might occur. These costs include the interest payable on the loan and the monitoring expense incurred by lenders to ensure that the borrowed funds are used as intended. Lenders can mitigate agency costs by devising constraints in loan agreements, like requiring regular audit reports or restricting what the borrowed funds can be used for.
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GHI Co. is planning to pay a dividend of $3.20 in the next year and expects to grow the dividend at a constant rate of 4% per year, indefinitely. If the required rate of return buy shareholders is 12%, then the price the price of this stock should be:
Answer:
The price of this stock = $41.6
Explanation:
Explanation:
The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.
So if an asset (e.g a stock) promises some cash flows in the future, those cash flows need to be brought to their present values and then be added to arrive at the value of the asset.
This model is based on the concept of the time of money. The idea that $1 today is not the same as $1 tommorow. The $1 of today is worth more than that of tomorrow; and because of the opportunity to earn interest. So to determine the worth of a future cash flow, we compute its worth today- its present value.
The Present Value of a future cash flow is the amount that needs to be invested today at a particular rate of return to equal the same cash flow in the future. Present value means the value in year 0 or now
The process of calculating the present value of a future sum is called discounting. So to calculate the stock price in this question, we shall discount the future dividends using the required rate of return and then add them together.
Applying this model, the price of the stock
P =D (1+g)/(r-g)
D in year 0 (i.e now), r = required rate of return, g- growth rate
D- 3.20, r- 0.12, g -0.04
P = (3.20 × (1+0.04))/(0.12-0.04)
P = $41.6
The price of the stock = $41.6
Planter Corporation used debentures with a par value of $566,000 to acquire 100 percent of Sorden Company's net assets on January 1, 20X2. On that date, the fair value of the bonds issued by Planter was $550,000. The following balance sheet data were reported by Sorden:
Balance Sheet Item Historical Cost Fair Value
Assets
Cash & Receivables $59, 000 $53, 000
Inventoy 101, 000 203, 000
Plant & Equipment 413,000 310,000
Less: Accunulat ed Depreciation (168,000)
Goodwill 13,000
Total Assets $480, 000 $675, 000
Liabilities and Equities
Accounts Payable $47,000 $47,000
Common Stock 89,000
Additional Paid-In Capital 60, 000
Retained Eamings 284, 000
Total Liabilities& Equities $ 480,000
Required:
1. Determine the amount Planter Corporation would record as a gain on bargain purchase and prepare the journal entry Planter would record at the time of the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
$78,000
Explanation:
The journal entry is shown below:
Cash & Receivables A/c Dr $53,000
Inventory A/c Dr $203,000
Land A/c Dr $109,000
Plant & Equipment A/c Dr $310,000
Discount on Bonds payable A/c Dr $16,000 ($566,000 - $550,000)
To Account payable $47,000
To Bond payable $566,000
To gain on purchase $78,000
(Being the exchange is recorded and the balancing figure is credited to gain on purchase account)
The computation of gain on purchase account would be
= Fair value of assets - fair value of account payable - fair value of the bonds issued by Planter
= $675,000 - $47,000 - $550,000
= $78,000
Note: The land historical cost and fair value is $62,000 and $109,000 respectively
This information is not given in the question
There are four basic principles of finance. Which principle correctly describes the following statement: "A dollar today is worth more than a dollar received in the future. Conversely, a dollar received in the future is worth less than a dollar received today"?
Answer:
Time value of money
Explanation:
The ability of money kept in a savings deposit to earn interest over time and the increase in the total interest in line with the length of time, brought us to a conclusion that an amount of money to be received now, that is in the present, is worth more than the same amount if received in the future.
The increase in the value of money as a result of interest earned on it, increases the value of money, this concept is what is referred to time value of money.
An online investment blogger advises investing in mutual funds that have performed badly the past year because 'regression to the mean tells us that they will do well next year.'
Is he correct?
Answer:
The correct answer is: No, he is not correct.
Explanation:
Regression to the mean is a statistical phrase that tries to explains that is something happened at the first attempt, it is likely to happen again at a second attempt and if it happens at the second attempt it is because it almost happened at the first attempt.
Then, following the concept of regression to the mean, if a mutual fund performed badly on the last period, it is likely to perform even worse in the current period. Thus, the online investment blogger is wrong.
Regression to the mean doesn't assure a poorly performing mutual fund will do well in the subsequent year. Investment decisions should be based on thorough research, and an understanding of the investment vehicle and market conditions.
Explanation:The advice given by the online investment blogger is based on a concept in statistics referred to as 'regression to the mean.' This phrase says that a variable will often be less distant from the average on its subsequent measurement if it is severe on its first measurement. However, applying this principle to stock market investments is not always accurate. The performance of mutual funds in a previous year does not necessarily predict their performance in the subsequent year.
Mutual fund performance is dependent on numerous factors, including the expertise of the fund manager, the state of the economy, company performance, and sector trends. A fund doing poorly one year might improve the following year, but it could also continue to do poorly. So, it's crucial to consider more than just past performance when choosing investments.
Investment decisions should be based on thorough research and a comprehensive understanding of the investment vehicle and the market conditions, not solely on statistical phenomena like 'regression to the mean.'
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Richard runs a supermarket chain. All his stores have been experiencing declining sales for the past one year. Richard blames this depletion in sales on the increasing competition in the market. Which of the following theories best explains Richard's behavior in this scenario?
a. Attribution theory
b. Two-factor theory
c. Equity theory
d. Expectancy theory
Answer:
Letter a is correct. Attribution theory.
Explanation:
Attribution theory is defined as a theory of social psychology that explains the way in which people attribute causes of behavior to themselves, other individuals and events to external factors.
In this theory, cognitive perception is affected by the collection of information to arrive at causal explanations for events, which impacts their social and professional conduct, which can generate negative behaviors such as errors of judgment and prejudice.
Several years ago MMM Company borrowed money through a bond issue with the following features. Each individual bond has a $1,000 par value and a 9% annual coupon interest rate, with interest paid semi-annually (twice per year), and will mature five years from today.
What price should someone who requires an 8% annual rate of return (yield to maturity) be willing to pay for one of these bonds?
Answer:
$1040.56
Explanation:
A bond is debt instrument issued by a borrower which promises to pay the holder regular interest for the holding period and the terminal value at the end of the period.
According to the discounted cash flow model, the value of an asset is the present value of the future cash flows arising from the assets discounted at the required rate of return.
Present value is the worth today of an amount expected in the future.The process of calculating the present value is called discounting
To calculate the price of this bond, we shall discount the future cash flows using the required return of 8% per annum, which is the same as 4% per six-month
Interest payment per 6 month = (9% × $1000)/2= $45
PV of interest payment = 45 × (1- (1.04)^(-2×5))/0.04)= 364.995
PV of redemption value = 1000 × 1.04^(-2× 5) = 675.56
Price of the bond 1040.56
Parts of Speech. Choose the correct answer. Words such as slowly, very, and tomorrow that answer the questions How? and When? are (a) adverbs, (b) adjectives, (c) nouns, (d) conjunctions:________
Answer:
(a) adverbs,
Explanation:
Words like slowly, very, quickly, fastly and tomorrow that gives the answer to the questions How? are Adverbs. An adverb is a word tells more about a verb, and most of the time answers the questions how often? how? when? what way? where?
Usually, there are five kinds of the adverb, and when the word indicates that how something is done as the question is being asked here, it is called Adverbs of Manner.
The words 'slowly', 'very', and 'tomorrow' that answer 'How?' and 'When?' are adverbs. The correct answer is a.
Explanation:Words such as slowly, very, and tomorrow that answer the questions How? and When? are (a) adverbs. Adverbs are parts of speech that describe a verb, an adjective, or another adverb. They commonly provide more details about how an action is performed, the extent or degree of an action or quality, and time-related aspects.
For example:
The man walked slowly (How did he walk?)The homework was very hard (To what extent was the homework hard?)She will leave tomorrow (When will she leave?)Adverbs often, but not exclusively, end in -ly. However, words like very do not follow this pattern and are still considered adverbs because they modify adjectives or other adverbs.
In the past 5 years, the cost of producing 4K televisions has decreased. At the same time, many consumers are opting to watch television programs on their smartphones, tablets or laptops. Considering these two facts, assess the following claim: "The price of 4K TVs are decreasing, but it is not clear whether the quantity of 4K televisions bought and sold have increased or decreased." a. Correctb. Incorrect
Answer:
Correct.
Explanation:
If the cost of production of 4K televisions decreases then as a result this will increase the supply of 4K televisions and shifts the supply curve of 4K televisions rightwards.
At the same time, there is a unfavorable change in the consumer preference. Now, consumers prefer to watch television programs on their smartphones, tablets or laptops. This will shift the demand curve of 4K televisions leftwards.
Therefore, there is a fall in the equilibrium price level and the effect on equilibrium quantity is ambiguous because it depends upon the magnitude of the shifts of demand and supply curve.
3F − is bigger than F because
1. F − has one more electron so there is less effective shielding of the nuclear charge.
2. F − has one more electron which causes greater electron repulsions in the outer orbitals, thus expanding the electron cloud.
3. F − has one less electron so there is more effective shielding of the nuclear charge.
4. F − has one more electron which causes less electron repulsions in the outer orbitals, thus expanding the electron cloud.
5. F − has one less electron so there is less effective shielding of the nuclear charge
The fluoride ion (F-) is larger than the neutral fluorine atom due to increased electron repulsion from an extra electron and less effective nuclear charge.
Explanation:The ion F− or fluoride ion is larger than the neutral fluorine atom (F), primarily due to two reasons. The first reason is the addition of one extra electron into the outer orbitals of the F− ion which causes greater electron repulsion, expanding the electron cloud and making it larger than the neutral F atom. The second reason is due to the fact that the F−ion now has a greater number of electrons compared to protons, leading to less effective nuclear charge and fewer forces pulling the electrons close to the nucleus, thus increasing the size.
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Which process is recommended for those products with the highest volume and the highest standardization on the product continuum?
Answer:
correct answer is Continuous flow
Explanation:
highest volume and the highest standardization is Continuous flow
because in the Continuous-flow process it involve moving of 1 work unit at a time between the every step of the process without break in the time and sequence and substances
simply continuous flow save the time, energy and the cost with high volume and the high standard
so here the correct answer is Continuous flow
A loan's principal contains the assets you promise to give the bank if you do not repay a loan as agreed.
True or false?
Answer:
The statement is: False.
Explanation:
For banks, the principal refers to the amount due on a loan and it is used to calculate interest payments. In other words, it represents the amount of money individuals borrow. The assets individuals promise to give to banks if they cannot repay a loan is called collateral and they include houses, vehicles, investment accounts or any other valuable object.
Economists speaking like scientists make a. positive statements. b. prescriptive statements. c. claims about how the world should be. d. More than one of the above is correct.
Answer:
a. positive statements.
Explanation:
Positive statements is a statement from the field of positive economics that deals with measurement and explanation of economic phenomena, it deals with or studies 'what is' or how the various economics problems of what to produce, how to produce, when to produce and for whom to produce are actually solved. it uses relevant fact for its analysis.
Economists, like scientists, primarily make positive statements, based on observable and measurable facts. They also make normative statements that describe how they believe the world should be, based on values and opinions.
Explanation:When economists speak like scientists, they make positive statements that describe the world as it is, based on observable and measurable facts that can be tested. This approach is rooted in the economic way of thinking which is meant to understand human behavior and how people, firms, and governments act. On the other hand, prescriptive statements or normative statements are those that describe how the world should be, based on subjective opinions and values, and these can't be tested for validity.
Therefore, in answer to your question, more than one option is correct. Economists speaking like scientists make both a. positive statements and b. prescriptive statements. However, they predominantly make positive statements, and their analysis is mostly based on these.
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Martinez Mining Company purchased land on February 1, 2020, at a cost of $1,031,100. It estimated that a total of 54,000 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $99,900. It believes it will be able to sell the property afterwards for $111,000. It incurred developmental costs of $222,000 before it was able to do any mining. In 2020, resources removed totaled 27,000 tons. The company sold 19,800 tons.Compute the following information for 2020.
(a) Per unit mineral cost
$enter a dollar amount
(b)
Total material cost of December 31, 2020, inventory
$enter a dollar amount
(c)
Total material cost in cost of goods sold at December 31, 2020
$enter a dollar amount
Answer:
a. $23
b. $165,600
c. $455,400
Explanation:
The computation is shown below:
a. Per unit cost
= Cost of depreciation ÷ estimated number of tons
where,
Cost of depreciation = Purchase value of land + fair value of this restoration obligation + developmental costs incurred - residual value
= $1,031,000 + $99,900 + $222,000 - $111,000
= $1,241,900
And the estimated number of tons is 54,000 tons
So, the per unit cost would be
= $1,241,900 ÷ 54,000 tons
= $23
b. The total material cost for ending inventory would be
= (27,000 tons - 19,800 tons) × $23
= 7,200 tons × $23
= $165,600
c. The total material cost for ending cost of goods sold would be
= 19,800 tons × $23
= $455,400
What do you think would be the greatest challenge in maintaining a Job-Order Costing system for a manufacturing company?
Answer:
To calculate the predetermine overhead rate
Explanation:
As we know that
Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours or estimated machine hours)
Plus if we talk about the manufacturing overhead, it is an indirect cost which could not be easy to trace the cost to a specific job or task
And the fixed cost would remain unchanged although the number of production units changes and the average cost per unit also changes due to changes in the production level
These reasons could be the greatest challenge.
Eagle Corp. operates Magnetic Resonance Imaging (MRI) clinics throughout the Northeast. At the end of the current period, the company reports the following amounts: Assets = $34,000; Liabilities = $19,000; Dividends = $1,400; Revenues = $10,800; Expenses = $7,400. Required: 1. Calculate net income.
Final answer:
Eagle Corp.'s net income is calculated by subtracting the expenses from the revenues. With revenues at $10,800 and expenses at $7,400, the net income comes out to be $3,400.
Explanation:
The student is asking how to calculate the net income for Eagle Corp., a company that operates MRI clinics. To find the net income, we subtract the total expenses from the total revenues. Given the revenues of $10,800 and expenses of $7,400, the net income can be calculated as follows:
Total Revenues: $10,800
Total Expenses: $7,400
Net Income: $10,800 - $7,400 = $3,400
Therefore, Eagle Corp's net income for the current period is $3,400.
Tyare Corporation had the following inventory balances at the beginning and end of May:
May 1 May 30
Raw materials $ 32,500 $ 44,000
Finished Goods $ 82,000 $ 80,000
Work in Process $ 20,500 $ 17,578
During May, $65,500 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 440 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,750 of direct materials cost. The Corporation incurred $44,100 of actual manufacturing overhead cost during the month and applied $43,800 in manufacturing overhead cost.
The amount of direct labor cost in the May 30 Work in Process inventory was:
a. $5,460
b. $9,828
c. $4,368
d. $5,020
The amount of direct labor cost(DLC) in the May 30 Work in Process inventory was $4,368. Thus, option C is appropriate.
In this question, we are given the following information: Raw materials on May 1 = $32,500Raw materials on May 30 = $44,000Direct material used = $58,500Predetermined overhead rate = $12 per direct labor-hourDirect labor rate = $15 per hour direct labor cost(DLC) = 300Direct materials cost in the ending Work in Process inventory account = $7,050Actual manufacturing overhead cost = $42,000Manufacturing overhead cost applied = $39,600Work in Process on May 1 = $20,500Work in Process on May 30 = $17,578We can calculate the total manufacturing cost by adding the direct materials cost, direct labor cost, and manufacturing overhead cost. Then, we can subtract the cost of goods completed from the total manufacturing cost to get the cost of goods in process.
A direct labor cost(DLC) is a component of the wage bill or salary that can be specifically consistently attributed to or related to the production of a good, the completion of completing a specific task, or providing a service.
The term "direct labor cost"(DLC) describes the compensation and benefits paid to employees that may be directly linked to certain goods or services. It covers the price of standard working hours, extra work hours, payroll taxes, jobless tax, Medicare, employment coverage, etc.
Thus, option C is correct.
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Which of the following is not involved with the demographic component of an organization's external environment?
A) gender
B) income
C) values
D) race
Answer:
The correct answer is letter "C": values.
Explanation:
The demographic components of an organization's external environment are composed of those features of the people that do not belong to the firm. Those features can be measured and represent information from where companies can determine what their target population could be.
In that case, as values cannot be measured, they do not fall into this category. Gender, income, and race do.
There are different aspects or component of demographic environment. The option that is not involved with the demographic component of an organization's external environment is values.
Demographic analysis is simply known to be the study of a population using the factors such as age, race, and sex.
Demographic data are therefore any socioeconomic information that is often shown statistically such as employment, education, income, etc.
Some examples of demographics are age, race, ethnicity, gender, marital status, income, etc. and therefore values is not one of them.
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W. Glass & Company reported the following information in its recent annual report: 2015 2016Cost of goods sold $4,000,000 $4,600,000Beginning inventory $900,000 860,000Ending inventory 860,000 640,000Calculate the company’s inventory turnover and days’ sales in inventory for both years.
Answer:
2015 inventory turnover is 4.5
2016 inventory turnover is 6.1
Explanation:
Inventory turnover is computed by dividing Cost of goods sold over average inventory.
First step: Compute the Average inventory for the period. Average inventory is simply Beginning inventory plus Ending inventory divided by 2.
2015:
($900,000 + $860,000) / 2 = $880,000
2016:
($860,000 + $640,000) / 2 = $750,000
Finally, we can now compute the inventory turnover by dividing Cost of Goods Sold over Average inventory.
2015:
$4,000,000 / $880,000 = 4.5
2016:
$4,600,000 / $750,000 = 6.1
According to the Flow of Funds Accounts of the United States, the largest financial asset of U.S. households is ____.
Answer
Real estate
Explanation:
Real estate comprises of land and upgrades, which incorporate structures, apparatuses, streets, structures, and utility frameworks.
Business property alludes to land and structures that are utilized by organizations to do their activity.
It is the property, land, structures, air rights over the land and underground rights beneath the land. The term land implies genuine, or physical, property. "Genuine" originates from the Latin root res, or things.
The U.S. Constitution at first confined democratic rights to just proprietors of land.
The work of the Holy Spirit in the life of the individual believer regarding the interpretation and application of Scripture is known as ________
Answer:
illumination.
Explanation:
The work of illumination of the holy spirit corresponds to the divine assistance of the ministry of the Holy Spirit so that the believer may have wisdom to understand and apply in his life the information and revelations contained in the sacred scriptures.
Reading the Bible is extremely important for believers, but according to the scripture, human understanding is not sufficient for understanding the word, so the holy spirit illuminates what is already revealed in the scriptures, so that in a reading and biblical study, there is divine interference to enter the minds of believers and provide knowledge and interpretation of the word of God, so that the bible is an instrument of salvation and faith.
You would like to have enough money saved after your retirement such that you and your heirs can receive $100,000 per year in perpetuity. How much would you need to have saved at the time of your retirement in order to achieve this goal? (Assume that the perpetuity payments start one year after the date of your retirement. The annual interest rate is 12.5 percent.)
Answer:
$900,000
Explanation:
Given that,
Perpetuity payment = $100,000
Annual interest rate = 12.5 percent
Total value of investment should be:
= Perpetuity payment ÷ Annual interest rate
= $100,000 ÷ 0.125
= $800,000 (should be as balance on the date of retirement)
The first payment of $100,000 should be on the date of retirement
Therefore,
Total investment on the date of retirement should be:
= $800,000 + $100,000
= $900,000
To receive $100,000 annually in perpetuity with an interest rate of 12.5%, you would need to have saved $800,000 at the time of your retirement. This is calculated by dividing the desired annual payment by the interest rate.
Explanation:The subject of this question relates to finance, particularly the concept of perpetuity. Perpetuity is an infinite series of payments or cash flows that occur at regular intervals. In this case, the student wants to find out how much they need to save by retirement to receive $100,000 every year indefinitely, with an annual interest rate of 12.5%.
To calculate this, we can use the formula of Perpetuity Value = Payment / Interest rate. Here the payment is $100,000 and the interest rate is 12.5% or 0.125. Let's plug these into the formula:
Perpetuity Value = 100,000 / 0.125 = $800,000.
So you would need to have saved $800,000 by retirement to achieve your goal of getting $100,000 per year in perpetuity.
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Students in the United States consistently score ________ on international assessments of mathematics and science than do students in other industrialized and even some nonindustrialized nations.
Answer: The correct answer is "lower".
Explanation: Students in the United States consistently score lower on international assessments of mathematics and science than do students in other industrialized and even some nonindustrialized nations.
Buzzard Bicycle specializes in custom painting and design of bicycles. December 31 is the company’s fiscal year-end. Information necessary to prepare the year-end adjusting entries appears below.
1) A three-year fire insurance policy was purchased on July 1, 2021, for $18,000. The company debited Prepaid Insurance for the entire amount.
6) Buzzard borrowed $36,000 on March 1, 2021. The principal is due to be collected in five years. Interest is receivable each March 1 at an annual rate of 10%.
Record the necessary adjusting entries on December 31, 2021. (Do not round intermediate calculations. If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
If someone could explain this I'd be eternally grateful
Answer:
See explanation section
Explanation:
Adjusting Entries
Requirement 1
December 31 Insurance Expense Debit $3,000
Prepaid Insurance Credit $3,000
Note: As the company purchased a 3-year life insurance on July 1, 2021, the insurance policy will be expired on June 30, 2024. However, the insurance expense for December 31, 2021 will be for 6 months (July 1, 2021 to December 31, 2021).
Calculation:
Prepaid Insurance (3 years policy) = $18,000, so each year insurance policy will be expired = $18,000 ÷ 3 = $6,000.
Since the insurance will be expired for 6 months in 2021, the insurance expense will be = ($6,000 × 6 months) ÷ 12 months = $3,000
Requirement 6
December 31 Interest expense Debit $3,000
Interest payable Credit $3,000
Note: As the company borrowed $36,000 for five years, the interest is to be paid on March 1, 2022. Therefore the interest expense will be accrued for 10 months (March 1, 2021 to December 31, 2021).
Interest expense will be = $36,000 × 10% × (10/12) = $3,000. Whichever the maturity date to be paid the entire amount will not be affected in that case.
Final answer:
The adjusting entries for Buzzard Bicycle include recording an insurance expense of $3,000 and debiting Prepaid Insurance, along with recording an interest expense of $3,000 and crediting Interest Payable.
Explanation:
To record the necessary adjusting entries on December 31, 2021, for Buzzard Bicycle, you need to consider the two different transactions separately. Here are the adjusting entries:
Insurance: Since the fire insurance policy was purchased on July 1, 2021, for $18,000 and it covers a three-year period, this means that from July 1, 2021, to December 31, 2021, the policy has been in effect for 6 months. To calculate the insurance expense for this period: $18,000 / 36 months * 6 months = $3,000. The adjusting entry will involve debiting Insurance Expense for $3,000 and crediting Prepaid Insurance for $3,000.Interest on Borrowed Funds: For the interest on the borrowed amount of $36,000 at an annual rate of 10%, the interest for the period from March 1, 2021, to December 31, 2021, (10 months) would be: $36,000 * 10% / 12 months * 10 months = $3,000. The adjusting entry will involve debiting Interest Expense for $3,000 and crediting Interest Payable for $3,000.
You express your concern for Alexei's girlfriend and her family without asking personal questions. When Alexei seems surprised that you didn't know about the situation, you are confused. Don't you know?
Answer:
You heard from someone and you were not sure.
Explanation:
In case that you did knew about the situation but you are not telling that to Alexei, you need to come up with a plausible explanation. The best explanation is that you had heard of the situation briefly from a friend or a colleague at work. However, you weren't completely sure of the situation and found it impolite to inquire from Alexei. Being certain that there is a problem, you are expressing your concern and well wish for Alexei's girlfriend and her family.
The basic competencies of selling that are required of top professional salespeople include selling skills and _________.a. Accounting knowledgeb. Product knowledgec. Ethical social responsibilityd. Interpersonal communication
Answer:
The correct answer is (d)
Explanation:
Interpersonal communication skills are considered vital for marketing professionals, and companies usually arrange workshops and seminars to improve the interpersonal skills of their marketing employees. Apart from selling skills, interpersonal skills are vital to become a top professional salesman. The face to face communication is all about interpersonal skills which include verbal and non-verbal actions that help to attract more customers.
Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation.
Which of the following scenarios is either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply.
a. The loss of enjoyment people incur when scenic land is converted to commercial use
b. The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government
c. Expenditures on federal highways
d. The variety of goods available to consumers
Answer:
A. The loss of Enjoyment People incur when scenic land is converted for commercial use
B. The value of baby sitting services when the baby sitter is paid cash and the transaction isn't reported to the government
D. The variety of goods available to the consumers
Explanation:
The Gross Domestic Product (GDP) represents the total market value monetarily of all finished products or all services that are produced in a country, within its borders and it is measured for a period of time.
The GDP broadly measures this market value and since it represents a broad measurement, there are apparently transactions and productions or even services that won't be adequately measured or accounted for
1. The loss of enjoyment people incur when scenic land is converted to commercial use is a cost that cannot be monetarily valued hence it won't be accounted for
2. The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government- This will not be measured accurately because not all persons who hire baby sitters will report the transaction
3. The variety of goods available to consumers are numerous and the government will not be able to account for every single one
Final answer:
GDP does not include non-market transactions like the loss of enjoyment from converting scenic land to commercial use or underground economic activities like unreported cash payments for babysitting. However, it does include government expenditures such as spending on federal highways and the total market value of goods but not their variety.
Explanation:
Gross Domestic Product (GDP) is the primary indicator used to gauge the health of a country's economy. However, it has certain limitations and does not capture all economic transactions. The following scenarios are those that GDP, either via the income or the expenditure methods, does not account for accurately:
The loss of enjoyment people incur when scenic land is converted to commercial use, which is not a market transaction and thus not included in GDP.The value of babysitting services, when the babysitter is paid in cash and the transaction isn't reported to the government, represents underground economic activity, which is not included in GDP because it's often unreported.Expenditures on federal highways are accounted for in GDP as government spending.The variety of goods available to consumers does not directly impact GDP as it measures the total market value, not the diversity of products.If the price of good A decreases by 10 percent and the quantity demanded of good B increases by 10 percent, this is evidence that goods A and B are :
a. substitute goods
b. complement goods
c. inferior goods
d. normal goods
e. not related
Answer:
b. complement goods
Explanation:
Complement goods -
These are the type of goods , that are related to each other in a certain manner , is referred to as complement goods.
These type of good are also referred to as paired goods or associated goods .
In case of complement goods , if a person buys first good , then he might require the second good too.
These goods can even alters the prices of each other .
For example ,
people buying a CD player , need to buy the corresponding CD too , and hence ,
CD player and CD are complement goods.
Hence , from the given scenario of the question,
The correct option is b. complement goods .
A complementary good is a good whose use is related to the use of an associated or paired good. Two goods (A and B) are complementary if using more of good A requires the use of more of good B.
Consider the economy of Arcadia. Its households spend 75% of increases in their income. There are no taxes and no foreign trade. Its currency is the are. Potential output Is 600 billion arcs (Scenario: Fiscal Policy) Look at the scenario Fiscal Policy. If actual output Is 500 billion arcs, to restore the economy to potential output government should by 25 billion arcs.
a. increase spending
b. increase taxes
c. decrease spending
d. decrease taxes
Answer:
Consider the economy of Arcadia. Its households spend 75% of increases in their income. There are no taxes and no foreign trade. Its currency is the are. Potential output Is 600 billion arcs (Scenario: Fiscal Policy) Look at the scenario Fiscal Policy. If actual output Is 500 billion arcs, to restore the economy to potential output government should by 25 billion arcs.
increase taxes
Explanation:
Selene owns a craft store. Her total costs are $1.2 million per year, and her variable costs are $750,000 per year. This means that her fixed costs are
Answer:
fixed costs = $450000
Explanation:
given data
total costs = $1.2 million per year
variable costs = $750,000 per year
solution
we get her fixed costs that is express here as
fixed costs = total costs - variable costs ...........................1
put here value and we will get fixed costs
fixed costs = $1.2 million - $750,000
fixed costs = $1200000 - $750,000
fixed costs = $450000
On November 30, 2019, Constance purchased an apartment building for $750,000 (assume this is the Depreciable Cost excluding any Land valuation). Determine her cost recovery deduction for 2019 rounded to the nearest dollar.
Answer:
$3,412.5
Explanation:
Since the property is purchased by Constance in the month of November, therefore it was not in service for the whole year of 2019 and accordingly the cost deduction rate for the month of november which is 0.455% shall be used for the purpose of calculating Constance cost recovery deduction for the year ended 2019.
Cost recovery deduction for 2019=Purchased amount*0.455%
=$750,000*0.455%=$3,412.5