Answer:
1.Dr Interest expense $8million
Cr Cash $8 million
2.Dr Interest expense $8 million
Cr Cash 8 million
3. Dr Bonds Payable $12million
Cr Adjustment in fair value $12 million
Explanation:
Preparation of Journal entries
1) June 30, 2021 Preparation of Journal entry for interest payment
Dr Interest expense $8million
Cr Cash $8 million
[($200 million * 8%) *6/12]
The reason why it was multipled with 6/12 was because the payments are half yearly.
2) Dec 31, 2021 Preparation of Journal entry for interest payment
Dr Interest expense $8 million
Cr Cash 8 million
[($200 million * 8%) *6/12]
3) Dec 31, 2021 Preparation of Fair value adjustment
Dr Bonds Payable $12million
Cr Adjustment in fair value $12 million
($200 million - $188 million)
During 2018, Mayfair Enterprises had the following securities outstanding: 1. 250,000 shares of common stock with an average market price of $25 per share. 2. 9.5% convertible preferred, which had been sold at its par value of $100. The preferred stock is convertible into three shares of common stock and 3,000 preferred shares are currently outstanding. During 2018, Mayfair Enterprises earned net income after income taxes of $3.2 million. Calculate the (a) basic earnings per share and (b) diluted earnings per share for Mayfair Enterprises for 2018.
Answer and Explanation:
The computation of the earning per share and the diluted per share is shown below:
But before that following calculations need to be computed
Preference dividend is
= 3,000 shares × $100 × 9.5%
= $28,500
a. Now the earning per share is
= (Net income - preference dividend) ÷ (number of weighted outstanding shares)
= ($3.2 million - $28,500) ÷ (250,000 shares)
= $12.69 per share
b. Now diluted per share is
= Earning after tax ÷ (number of weighted outstanding shares)
= $3.2 million ÷ (250,000 shares + 3,000 × 3)
= $12.36 per share
Month Income Price Coke Price Pepsi Q^D Coke Q^D Pepsi
Jan 300 2.40 2.40 14 10
Feb 300 3.00 2.40 10 14
Mar 500 2.40 2.40 20 14
Apr 300 3.00 1.20 8 16
Calculate the e D of coke and Income Elasticity Demand of Coke using the midpoint method. Hint: We need to be careful about the data we choose to calculate these. To calculate e D we need a change in price of Coke and quantity demanded for Coke but we need everything else that affects the demand to remain the same. Similarly, to calculate Income Elasticity Demand of coke, need two months such that there is a change in income, but no other changes.
(a) Price Elasticity of Demand (e D) of coke.
i) What are the two months you pick? Why?
ii) Calculate eD of coke.
(b) Income Elasticity of Demand (IED) of Coke.
i) What are the two months you pick? Why?
ii) Calculate IED of coke
Answer:
midpoint method for income elasticity of demand = {ΔQD / [(QD₀ + QD₁)/2]} / {ΔI / [(I₀ + I₁)/2]}
midpoint method for price elasticity of demand = {ΔQD / [(QD₀ + QD₁)/2]} / {ΔP / [(P₀ + P₁)/2]}
a) I will use the information from January and February to calculate the price elasticity of demand of Coke. I cannot use March instead of January because income increased during that month.
QD₀ = 14
QD₁ = 10
P₀ = 2.40
P₁ = 3
PED = {(10 - 14) / [(14 + 10)/2]} / {(3 - 2.4) / [(3 + 2.4)/2]}
PED = {-4 / 12} / {0.6 / 2.7} = -0.3333 / 0.2222 = -1.5 or |1.5| in absolute terms
Coke's PED is elastic since a 1% change in price will result in a larger proportional change in the quantity demanded.
b) I will use the information from January and March to calculate the income elasticity of demand of Coke. These are the two months where income changes but price of Coke remains the same.
QD₀ = 14
QD₁ = 20
I₀ = 300
I₁ = 500
PED = {(20 - 14) / [(14 + 20)/2]} / {(500 - 300) / [(300 + 500)/2]}
PED = {6 / 17} / {200 / 400} = 0.3529 / 0.5 = 0.71
Coke's IED is positive, therefore, Coke is a normal good.
Quick Computing currently sells 10 million computer chips each year at a price of $20 per chip. It is about to introduce a new chip, and it forecasts annual sales of 12 million of these improved chips at a price of $25 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 3 million per year. The old chips cost $6 each to manufacture, and the new ones will cost $8 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?
Answer:
Annual cashflow for the decision= $162 million
Explanation:
The proper cashflow would be determined as follows:
Contribution per unit = Sales price - variable cost
Contribution per unit of new chip = 25-8 = $17 per unit
Contribution per unit of old chip = 20 - 6 = 14 per unit.
Contribution form the sale of the new chip = contribution per unit × annual sales in unit
=17 × 12 million units = $204 million
lost Contribution from the old chip = contribution per unit × lost annual sales in unit
Lost contribution from old chip= $14 × 3 million unit = $42 million
Note that the lost contribution is an opportunity cost occasioned as a result of the introducing the new chip, hence the contribution should be deducted
Annual cashflow for the decision= $204 million -$42 million = $162 million
Annual cashflow for the decision= $162 million
Last month, Bergen Incorporated’s Fabrication Department had 5,800 units in beginning work in process inventory that were 70% complete. These units had $24,012 of materials cost and $24,766 of conversion cost. All materials are added at the beginning of the process and conversion costs are added uniformly throughout the process. Over the course of the month, 12,200 units were completed and transferred to Finished Goods Inventory. At the end of the month, there were 4,900 units that were 60% complete in ending work in process inventory. The unit materials cost was $5.00 and the unit conversion cost was $4.00 for the month. What was the total cost for units started into production during the month?
Answer: Option D $97,282 is correct
Explanation:
Materials Conversion
Units completed and transferred 12200 12200
Ending work in process 4900 2940 =4900*60%
Equivalent units 17100 15140
Materials Conversion Total
Equivalent units 17100 15140
X Cost per Equivalent unit 5.00 4.00
Total costs 85500 60560 146060
Total costs 146060
Less: Cost of beginning work in process 48778 =24012+24766
Cost of units started into production 97282
Using the worksheet you completed in Part 1, revise the given year end information with the following values and then answer the questions below:
Select year end company accounts and additional information:
Account Name Account Balance Account Name Account Balance
Supplies $13,500 Service revenue $146,200
Interest receivable 0 Interest revenue 0
Salaries payable 0 Supplies expense 0
Deferred revenue 8,100 Salaries expense 65,300
1. Supplies remaining at the end of the year. $ 5,100
2. Services remaining to be provided to customers who paid in advance. 2,500
3. Employees are owed additional salaries at the end of the year. 6,200
4. A note receivable was accepted on March 31. 6,600 Interest rate on note 8 %
Required: Prepare the adjusting journal entries based on the results of your revised spreadsheet.
Answer:
Adjusting Journal Entries:
1. Debit Supplies Expense $8,400
Credit Supplies $8,400
To adjust for supplies expenses for the year.
2. Debit Deferred Revenue $5,600
Credit Service Revenue $5,600
To adjust for services provided to customers.
3. Debit Salaries Expense $6,200
Credit Salaries Payable $6,200
To adjust for unpaid salaries at the end of the year.
4. Debit Interest Receivable $396
Credit Interest Revenue $396
To adjust for unreceived interest due for 9 months.
Explanation:
a) Data and Calculations:
Supplies = $13,500
Service revenue = $151,800 ($146,200 + 5,600)
Interest receivable = $396
Interest revenue = $396
Salaries payable = $6,200
Supplies expense = $8,400 ($13,500 - $5,100)
Deferred revenue = 2,500 ($8,100 - 5,600)
Salaries expense = 71,500 (65,300 + 6,200)
b) Interest Revenue is computed at 8% of $6,600 for 9 months only. This results to $396 ($6,600 * 8% * 9/12).
Southern California Publishing Company is trying to decide whether to revise its popular textbook, Financial Psychoanalysis Made Simple. The company has estimated that the revision will cost $65,000. Cash flows from increased sales will be $20,000 the first year. These cash flows will increase by 3 percent per year. The book will go out of print four years from now. Assume that the initial cost is paid now and revenues are received at the end of each year. If the company requires a return of 8 percent for such an investment, calculate the present value of the cash inflows of the project.
Answer:
Present value of the cash inflow= $69,086.97
Explanation:
An annuity is a series of annual cash outflows or inflows which payable or receivable for a certain number of periods. If the annual cash flow is expected to increase by a certain percentage yearly, it is called a growing annuity.
To work out the the present value of a growing annuity, we use the formula:
PV = A/(r-g) × (1- (1+g/1+r)^n)
A- annual cash flow - 20,000
r- rate of return - 8%
g- growth rate - 3%
n- number of years- 4
I will break out the formula into two parts to make the workings very clear to follow. So applying this formula, we can work out the present value of the growing annuity (winnings) as follows.
A/(r-g) = 20,000/(0.08-0.03) = $400,000
(1- (1+g/1+r)^n) = 1 -(1.03/1.08)^4 =0.17271
PV = A/(r-g) × (1- (1+g/1+r)^n) =400,000 × 0.17271 =69,086.97
Present value of the cash inflow = $69,086.97
William Brown, the CFO of Oriole Automotive, Inc., is putting together this year's financial statements. He has gathered the following balance sheet information: The firm had a cash balance of $23,015, accounts payable of $163,257, common stock of $311,300, retained earnings of $512,159, inventory of $213,100, goodwill and other assets equal to $78,656, net plant and equipment of $710,100, and short-term notes payable of $21,115. It also had accounts receivable of $141,258 and other current assets of $11,223. How much long-term debt does Oriole Automotive have?
Answer:
$169,521
Explanation:
The computation of long-term debt is shown below:-
Total asset = Cash + Inventory + Goodwill + Net plant and equipment + Receivables + Current assets
= $23,015 + $213,100 + $78,656 + $710,100 + $141,258 + $11,223
= $1,177,352
Long-term debt = Total asset - Account payable - Common stock - Retained earnings - Short term notes
= $1,177,352 - $163,257 - $311,300 - $512,159 - $21,115
= $169,521
Hence, we have applied the above formula for determining the long term debt.
For each item described: Identify the type of account (Asset, Liability, Equity, Revenue or Gain, Expense or Loss), normal balance (Debit, Credit), financial statement (Balance Sheet, Income Statement), and whether the account is closed at the end of the period (Yes, No) by selecting the letter that best describes those attributes. If an account is a contra account, the answer will show the account type in parentheses. Answer items may be used once, more than once, or not at all.
Sales & Services
Allowance to for Doubtful Accounts
Office Salaries Paid
Notes Payable
Cash
Sales Returns & Allowances
1. Expense or Loss, Debit, Income Statement, Yes
2. Revenue or Gain, Credit, Income Statement, Yes
3. Asset, Debit, Income Statement, Yes
4. Liability, Credit, Income Statement, Yes
5. Revenue, Credit, Balance Sheet, No
6. (Asset), Credit, Balance Sheet, No
7. (Revenue or Gain), Credit, Income Statement, Yes
8. Asset, Debit, Balance Sheet, No
9. Asset, Debit, Balance Sheet, No
Answer:
Identification of Type of Account, etc.:
Letter Account
2. Sales & Services
6. Allowance to for Doubtful Accounts - 6. (Asset), Credit, Balance Sheet, No
1. Office Salaries Paid - Expense or Loss, Debit, Income Statement, Yes
Notes Payable
8. Cash - Asset, Debit, Balance Sheet, No
1. Sales Returns & Allowances - Expense or Loss, Debit, Income Statement, Yes
Explanation:
NB: Notes Payable are Liabilities, Credit, Balance Sheet, No.
The normal balance of Assets is debit. Assets are stated in the balance sheet and are not closed at the end of the period. The normal balance of Liabilities and Equity is credit. Liabilities and Equity are stated in the balance sheet and are not closed at the end of the period. The normal balance of Revenue or Gain is credit. Revenue or Gain is stated in the Income Statement and is closed at the end of the period. The normal balance of Expense or Loss is debit. Expense or loss is closed at the end of the period.
your company will need a business plan in order to do what?
A. Increase revenue.
B. Identify an opportunity.
C. Pay taxes.
D. Get funding.
Answer: D. Get Funding
Explantion: You company will need a business plant in order to get funding because you'd need to present your investors with the future of your business and what it's there to do. I also happened to take the assessment and it was marked correctly.
I hope this helped!
Good luck <3
Your company will need a business plan in order to get funding. Hence, the correct answer is option D.
What is a business plan?A business plan is a formal document that outlines a company's goals, strategies, and projected outcomes. One of the primary reasons for creating a business plan is to secure funding from investors or financial institutions. By presenting a well-written and comprehensive business plan, a company can demonstrate its viability and potential for success, which can increase its chances of obtaining the necessary funding to start or grow the business.
While a business plan can help a company increase revenue and identify opportunities, those outcomes are not the primary purpose of a business plan. Paying taxes is a legal requirement for all companies, but a business plan is not directly related to tax obligations.
Therefore, a company will need a business plan in order to get funding. Hence, the correct answer is option D.
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Theresa owes $9,000 on her car loan. If the value of her car is $15,000, what is her equity in the car?
Answer:
Theresa has $6,000 in equity.
Explanation:
To get this answer, you take the value of her car ($15,000) and subtract the amount that she owes from it ($15,000-$9,000). This gives you $6,000.
Hope this helps!
Her equity in the car is $6,000
Equity is the assets that a person or individual own.
Using this formula
Equity=Assets-Liability
Where:
Assets=$15,000
Liabilities=$9,000
Let plug in the formula
Equity=$15,000-$9,000
Equity=$6,000
Inconclusion Her equity in the car is $6,000
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Company analysis. Given the financial data in the popup window, for Disney (DIS) and McDonald's (MCD), compare these two companies using the following financial ratios: debt ratio, current ratio, total asset turnover, financial leverage component (equity miltiplier), profit margin, and return on equity. Which company would you invest in, either as a bondholder or as a stockholder?
Disney McDonald's
Sales $48,719 $28,049
EBIT $12,291 $8,143
Net Income $7,523 $5,521
Current Assets $15,078 $5,019
Total Assets $84,121 $36,669
Current Liabilities $13,295 $3,066
Total Liabilities $39,228 $20,583
Equity $44,993 $16,058
Answer:
1. Debt ratio=Total liabilities/Total assets
Disney = 39,228/84,121 =0.466328
McDonald's=20583/36669 =0.561319
Based on this ratio, Disney is a better investment option because Disney is less leveraged than McDonald's which means it is has taken lesser risk than McDonald's.
2. Current ratio = Current assets/Current liabilities
Disney = 15078/13295 = 1.1341
McDonald's=5019/3066 =1.6369
Based on this ratio, McDonald's is a better investment option because of higher ratio, its ability to pay its current liabilities with its current assets is better than Disney.
3. Total asset turnover=Sales/total assets
Disney = 48719/84121 = 0.5791
McDonald's = 28049/36669 = 0.7649
Based on this ratio, McDonald's is a better investment option because of higher ratio, it shows that McDonald's is generating more revenues per dollar of assets which implies better performance.
4. Financial leverage= Total debt/total equity
Disney = 39228/44993 = 0.8718
McDonald's = 30583/16058 = 1.2817
Based on this ratio, Disney is a better investment ratio because McDonald's ratio is more than 1, which means it has more debt than equity and it shows higher burden on the company to repay principal and interest.
5. Profit margin= Net income/Sales
Disney= 7523/48718 = 0.1544
McDonald's= 5521/28049 = 0.1968
Based on this ratio, McDonald's is a better option as it has earner more income per dollar of sales, which means it is more profitable and is performing better
6. Return on equity= Net income/Equity
Disney= 7523/44993 = 0.1672
McDonald's= 5521/16058 = 0.3438
Based on this ratio, McDonald's is a better option as is it is providing higher return to its shareholders.
Final Conclusion: McDonald looks a better investment option for both a bond holder and a shareholder.
Yuma, Inc. manufactures teddy bears and dolls. Currently, Yuma makes 2,100 teddy bears each month. Each teddy bear uses $3.50 in direct materials and $1.00 in direct labor. Yuma uses two activities in manufacturing the teddy bears: Sewing and Processing. The cost associated with Sewing is $15,750 a month, allocated on the basis of direct labor hours. The cost associated with Processing is $10,500 a month, allocated on the basis of batches. Teddy bears use 1/2 of the direct labor hours, and 35% of total batches. What is the total manufacturing cost for one teddy bear?
Answer:
$10.00
Explanation:
Calculation for the total manufacturing cost for one teddy bear
Total manufacturing cost=$3.50 + $1.00 + [($15,750 × 1/2)/2,100] + [($10,500 × 35%)/2,100]
Total manufacturing cost=$3.50 + $1.00 + ($7,875/2,100) + ($3,675/2,100)
Total manufacturing cost=$3.50 + $1.00 + $3.75+ $1.75
Total manufacturing cost=$10.00
Therefore the total manufacturing cost for one teddy bear will be $10.00
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $68, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6 percent, and sells for 97 percent of par. The second issue has a face value of $40 million, a coupon rate of 6.5 percent, and sells for 108 percent of par. The first issue matures in 21 years, the second in 6 years. Both bonds make semiannual payments.a. What are the company's capital structure weights on a book value basis?b. What are the company's capital structure weights on a market value basis?
Answer:
a) book value weights:
equity = 33.73%debt = 66.27%b) market value weights:
equity = 81.08%debt = 18.92%Explanation:
total shares outstanding 7,000,000
market price $68 x 7,000,000 = $476,000,000
book price $8 x 7,000,000 = $56,000,000
bond 1:
book value = $70,000,000
market value = $67,900,000
bond 2:
book value = $40,000,000
market value = $43,200,000
total book value = $56 + $70 + $40 = $166,000,000
equity = $56 / $166 = 33.73%
debt = 66.27%
total market value = $476 + $67.9 + $43.2 = $587,100,000
equity = $476 / $587.1 = 81.08%
debt = 18.92%
Wildhorse Co. entered into these transactions during May 2022, its first month of operations.
1. Stockholders invested $31,500 in the business in exchange for common stock of the company.
2. Purchased computers for office use for $33,800 from Ladd on account.
3. Paid $4,100 cash for May rent on storage space.
4. Performed computer services worth $18,600 on account.
5. Performed computer services for Wharton Construction Company for $6,400 cash.
6. Paid Western States Power Co. $8,000 cash for energy usage in May.
7. Paid Ladd for the computers purchased in (2).
8. Incurred advertising expense for May of $3,100 on account.
9. Received $11,000 cash from customers for contracts billed in (4).
Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders' Equity in the far right column. (Ifa transaction causes a decrease in Assets, Liabilities or Stockholders' Fquity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Fquity item that was reduced. See Illustration 3-3 for example.
Assets Liabilities + Cash + Accounts Receivable + Equipment + Accounts Payable Common Stock $ $ $+ Stockholders' Equity Common Stock Retained Earnings Revenues - Expenses
Answer:
Amounts that reduce the respective balances have a negative sign in front of them.
A blank is something a person want to get out of a job or that bring them job satisfaction
Answer:
A work value is something a person wants to get out of a job or that brings them job satisfaction. Correct answer: B
Work values include talents, motives, values and attitudes which provide stability and direction for the chosen career. That is why it is very important to choose your career for the right reasons, goals and motivation.
Explanation:
As of December 31, 2021, Cady Construction has one construction job for which the construction in prog-ress (CIP) account has a balance of $20,000 and the billings on construction contract account has a balance of $14,000. Cady has another construction job for which the construction in progress account has a balance of $3,000 and the billings on construction contract account has a balance of $5,000. Indicate the amount of contract asset and/or contract liability that Cady would show in its December 31, 2021, balance
Answer:
According to "AS 7 - Construction Contracts",Gross amounts receivable / payable from / by customers should be recognized as contract asset / liability in the balance sheet.
For the first job, construction work in progress is greater than the bills raised. Hence there exists contract asset.
Contract asset = Cost incurred - Billing done
= $20,000 - $14,000
= $6,000
For the second job, construction in progress is less than the bills raised. Hence there exists contract liability.
Contract liability = Bills raised - Cost incurred
= $5,000 - $3,000
= $2,000
Hence, Contract asset = $6000 , Contract Liability = $2000
Big-Pear Corp. is considering replacing its existing equipment that is used to produce smart cell phones. This existing equipment was purchase 2 years ago at a base price of $48,000. Installation costs at the time for the machine were $7,000. The existing equipment is considered a 5-year class for MACRS. The existing equipment can be sold today for $60,000 and for $30,000 in 4 years. The new equipment has a purchase price of $145,000 and is also considered a 5-year class for MACRS. Installation costs for the new equipment are $8,000. The estimated salvage value of the new equipment in year 4 is $70,000. This new equipment is more efficient than the existing one and thus savings before taxes using the new equipment are $12,000 a year. Due to these savings, inventories will see a one time reduction of $3,000 at the time of replacement. The company's marginal tax rate is 33% and the cost of capital is 12%. For this project, what is the incremental cash flow in year 3
Answer:
-$7,525.44
Explanation:
MACRS 5 year depreciation
20%32%19.20%11.52%11.52%5.76%if project is carried out:
initial outlay = {[$60,000 - ($55,000 x 52%)] x (1 - 33%)} - $145,000 - $8,000 + $3,000 = -$128,962
cash flow year 1 = [$12,000 - ($154,000 x 20%)] x 0.67 = -$12,596
cash flow year 2 = [$12,000 - ($154,000 x 32%)] x 0.67 = -$24,977.60
cash flow year 3 = [$12,000 - ($154,000 x 19.2%)] x 0.67 = -$11,770.56
cash flow year 4 = {[$12,000 - ($154,000 x 11.52%)] x 0.67} + {[$70,000 - ($154,000 x 17.28%)] x (1 - 33%)} = -$3,846.34 + $29,070.50 = $25,224.16
if project is not carried out:
cash flow year 1 = -$10,506 x 0.67 = -$7,0752.20
cash flow year 2 = -$6,336 x 0.67 = -$4,245.12
cash flow year 3 = -$6,336 x 0.67 = -$4,245.12
cash flow year 4 = (-$3,168 x 0.67) + ($30,000 x 0.67) = $17,977.44
incremental cash flow year 3 = -$11,770.56 - (-$4,245.12) = -$7,525.44
Sun Devil Hair Design has the following transactions during the month of February.(1) February 2 Pay $700 for radio advertising for February.(2) February 7 Purchase beauty supplies of $1,300 on account.(3) February 14 Provide beauty services of $2,900 to customers and receive cash.(4) February 15 Pay employee salaries for the current month of $900.(5) February 25 Provide beauty services of $1,000 to customers on account.(6) February 28 Pay utility bill for the current month of $300.Records each transaction
Answer:
Sun Devil Hair Design
Journal Entries:
February 2:
Debit Advertising Expense $700
Credit Cash Account $700
To record the payment for advertising for the month of February.
February 7:
Debit Supplies $1,300
Credit Accounts Payable $1,300
To record the purchase of supplies on account.
February 14:
Debit Cash Account $2,900
Credit Service Revenue $2,900
To record the provision of beauty services to customers for cash.
February 15:
Debit Salaries Expense $900
Credit Cash Account $900
To record the payment of employee salaries for the month.
February 25:
Debit Accounts Receivable $1,000
Credit Service Revenue $1,000
To record the provision of beauty services on account.
February 28:
Debit Utility Expense $300
Credit Cash Account $300
To record the payment of utility bill.
Explanation:
Sun Devil Hair Design uses the general journal to record the its daily business transactions. The entries are made to reflect the accounting equation of Assets being equal to Liabilities + Equity at all times. When entering transactions in the general journal, the first step is to identify the accounts that are affected by each transaction. The account to be debited is recorded first followed by the account to be credited. Note that more than two accounts can be involved. However, with the double entry system of accounting, the accounting equation is always in balance.
A certificate of ownership in a corporation is called
Which of the following statements about the below paraphrase is correct?
Paraphrase: After the training, fourteen students could tell the difference between viral and bacterial infections, while only two could not. This result was better than prior experiments (Gray 52).
a. The author's name is not cited.
b. Wording and sentence structure follow the source too closely.
c. The paraphrase skews the meaning intended by the author of the original document.
Answer:
B.
Explanation:
The original text of the given paraphrase is taken from an article written by Omar Gray found on page 52.
The statement which is correct about the given paraphrase is that the wordings and sentence structure is very much similar to the original text.
Paraphrasing means to summarize something in your own words, using different wordings.
But in the given case, the writer has used the wordings and sentence structures that resembles the original text, though the writer did rephrased wordings of the second sentence, yet first half of the sentence is not paraphrased.
Thus the correct answer is option B.
How much would it cost for Chester Corporation to repurchase all its outstanding shares if new brokerage fees totaled 1% of the underlying transaction?
Select: 1
$85.3 million
$76.4 million
$83.7 million
$78.0 million
Answer:
$78.0 million
Explanation:
Cost of repurchase = Number of shares*Share price/(1-1%)
Cost of repurchase = $3,352,720 * $23.02/(1-1%)
Cost of repurchase = $3,352,720 * $23.02/(1 - 0.01)
Cost of repurchase = $3,352,720 * $23.02/0.99
Cost of repurchase = $3,352,720 * $23.25
Cost of repurchase = $ 77,950,740
Cost of repurchase = $78.0 million
The corporation would cost $78.0 million to repurchase all its shares back from the market.
The new brokerage fees are given as 1% of the transaction. The cost of purchase would be derived out of the given formula:
[tex]c= \frac{n*Sp}{1-1 percent} \\=\frac{3,352,720 * 23.02}{1 - 0.01} \\=78.0[/tex]
Here, c is the repurchase cost, n is the number of shares, and Sp is the share price. Finally, the repurchase cost is computed as $78 million.
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Comprehensive Ratio Analysis
Data for Lozano Chip Company and its industry averages follow.
Lozano Chip Company: Balance Sheet as of December 31, 2013 (Thousands of Dollars)
Cash $ 225,000 Accounts payable $601,866
Receivables 1,575,000 Notes payable 326,634
Inventories 1,125,000 Other current liabilities 525,000
Total current assets $2,925,000 Total current liabilities $1,453,500
Net fixed assets 1,350,000 Long-term debt 1,068,750
Common equity 1,752,750
Total assets $4,275,000 Total liabilities and equity $4,275,000
Lozano Chip Company: Income Statement for Year Ended December 31, 2013 (Thousands of Dollars)
Sales $7,500,000
Cost of goods sold 6,375,000
Selling general and administrative expenses 825,000
Earnings before interest and taxes (EBIT) $ 300,000
Interest expense 111,631
Earnings before taxes (EBT) $ 188,369
Federal and state income taxes (40%) 75,348
Net income $ 113,022
Calculate the indicated ratios for Lozano. Round your answers to two decimal places.
Ratio Lozano Industry Average
Current assets/Current liabilities 2.0
Days sales outstanding* days 35.0 days
COGS/Inventory 6.7
Sales/Fixed assets 12.1
Sales/Total assets 3.0
Net income/Sales % 1.2%
Net income/Total assets % 3.6%
Net income/Common equity % 9.0%
Total debt/Total assets % 30.0%
Total liabilities/Total assets % 60.0%
*Calculation is based on a 365-day year.
Construct the extended Du Pont equation for both Lozano and the industry. Round your answers to two decimal places.
For the firm, ROE is %
For the industry, ROE is %
Outline Lozano's strengths and weaknesses as revealed by your analysis
Answer and Explanation:
The computation of Construction of the extended Du Pont equation for both Lozano and the industry is shown below:-
Current asset ÷ current liability = 2
Days sales outstanding =35 days
Sales ÷ Inventory = 6.67
Sales ÷ Fixed assets = 5.55
Sales ÷ Total assets = 1.754
Net income ÷ Sales = 1.5%
Net income ÷ Total assets = 2.64%
Net income ÷ common equity = 6.45%
Total liabilities ÷ Total assets =59%
b. the computation of firm and industry ROE is shown below:-
Du Pont
Lozano
ROI = [(net profit ÷ sales) × (sales ÷ Total assets)]
= [(113,022 ÷ 7,500,000) × (7,500,000 ÷ 4,275,000)]
= 0.0264
or
= 2.64%
For Industry
ROI = 1.2% × 3
= 0.036
or
= 3.6%
c. Lozano's strengths
1. ROI determined the profit at the time when a firm earned on investing a capital unit
2. Also, the net income or sales figured out the efficiency level so that it could maintain the business affairs
Lozano's Weakness
1. If we compare the fixed asset turnover with the average of an industry than the investment made in fixed assets would not be a good judgment
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $28,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $28,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 11 percent on her investments. a. What is the after-tax cost if Isabel pays the $28,000 bill in December
Answer:
A. $17,640
B.$18,666
Explanation:
a. Calculation for the after-tax cost if Isabel pays the $28,000 bill in December
First step is to find the Tax savings in current year
Tax savings in current year = $28,000*37%
Tax savings in current year = $10,360
Last step is to calculate for the After tax cost using this formula
After tax cost = Cost of bill - Tax savings
Let plug in the formula
After tax cost= $28,000-$10,360
After tax cost=$17,640
Therefore the after-tax cost if Isabel pays the $28,000 bill in December will be $17,640
b. Calculation for the after-tax cost if Isabel pays the $20,000 bill in January
First step is to find the Tax savings in next year
Tax savings in current year = $28,000*37%
Tax savings in current year = $10,360
Second step is to find the present value of $1 ($28,000/$28,000) at 11% for one year using present value table
Present value of $1 at 11% for one year = 0.901
Present value of tax savings = $10,360* .901
Present value of tax savings =$9,334.36
Last step is to calculate for the After tax cost using this formula
After tax cost = Cost of bill - Tax savings
Let plug in the formula
After tax cost = $28,000-$9,334.36
After tax cost=$18,665.64 approximately $18,666
Therefore the after-tax cost if Isabel pays the $28,000 bill in January will be $18,666
When Sony released the PlayStation 4, it was reported that Sony was taking a loss of $60 on every PS4. However, Sony expected to make this up with sales of PS subscriptions and increased royalties from video games. Use the interdependence principle to help explain this strategy.
The PS subscriptions allow PS4 owners to play their games online, receive new games monthly to download at no charge, and receive additional special discounts on other items. Therefore, the PS4 and PS subscriptions are _________ in consumption. Decreasing the price of the PS4 will the demand for PS subscriptions. Sony expects that revenue from recurring PS4 _________ will be larger than the loss in revenue from PS4 sales.
Answer: Complimentary; Increase
Explanation:
Therefore, the PS4 and PS subscriptions are complimentary in consumption. Decreasing the price of the PS4 will increase the demand for PS subscriptions. Sony expects that revenue from recurring PS4 will be larger than the loss in revenue from PS4 sales.
When goods are said to be complimentary it means that they are used along with each other. Like coffee and sugar. The PS4 and and the PS subscriptions are complimentary because owners of the PS4 use the PS subscriptions to play online.
By reducing the price of the PS4, more people will be able to buy it and then will have to make PS subscriptions so that they can play the PS4s thereby giving Sony revenue which might be higher than the amount they lost by reducing the PS4 price.
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 126,000 100 % Variable expenses 50,400 40 % Contribution margin 75,600 60 % Fixed expenses 23,000 Net operating income $ 52,600 Required: 1. What is the company’s degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 27% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 27% increase in unit sales.
Answer:
See answer below
Explanation:
1. Degree of operating leverage
Selling price $126,000
Variable cost $50,400
Contribution margin $75,600
Fixed cost $23,000
Net operating income $52,600
Degree of operating leverage = Contribution margin / operating income = $75,600 / $52,600
= 1.44
The local supermarket buys lettuce each day to ensure really fresh produce. Each morning, any lettuce that is left from the previous day is sold to a dealer that resells it to farmers who use it to feed their animals. This week, the supermarket can buy fresh lettuce for $6.00 a box. The lettuce is sold for $18.00 a box and the dealer that sells old lettuce is willing to pay $3.60 a box. Past history says that tomorrow's demand for lettuce averages 254 boxes with a standard deviation of 37 boxes. How many boxes of lettuce should the supermarket purchase tomorrow
Answer:
The appropriate answer will be "289 boxes".
Explanation:
The given values are:
Cost
= $6
Sales price
= $18
Salvage price
= $3.60
Average daily demand (d)
= 254 boxes
Standard deviation ([tex]\sigma d[/tex])
= 37 boxes
Now,
Overage of cost will be:
⇒ [tex]Co=Cost-Salvage \ price[/tex]
[tex]= 6-3.60[/tex]
[tex]=2.4[/tex] ($)
Underage of cost will be:
⇒ [tex]Cu=Price-cost[/tex]
[tex]=18-6[/tex]
[tex]=12[/tex] ($)
⇒ Service Level = [tex]\frac{Cu}{Cu+Co}[/tex]
On substituting the given values in the above formula, we get
= [tex]\frac{12}{12+2.4}[/tex]
= [tex]0.83 \ i.e.,\ 83 \ Percent[/tex]
The service level value of Z at 83% is = 0.954
⇒ Order quantity = [tex]d+(Z\times \sigma d)[/tex]
= [tex]254+(0.954\times 37)[/tex]
= [tex]289.298 \ OR \ 289 \ boxes[/tex]
James Grunig, professor emeritus of public relations at the University of Maryland, listed the following possible objectives for a communicator _________.
Answer: See explanation
Explanation:
According to James Grunig, professor emeritus of public relations at the University of Maryland, the five possible objectives for a communicator are:
• Message Exposure - This refers to situation when the intended people get exposed to the message that is being shared. Here, materials are provided to the mass media by the PR personel.
• Accurate dissemination of message - Messages must be passed across and communicated as clearly as possible without giving out false information or witholding back some information which is vital for the accuracy of the information delivered.
• Acceptance of the message - The message passed must be accepted by the person that's being addressed.
• Attitude change - There must be an attitude change after the message has been delivered as these shows acceptance and products should be purchased.
• Change in overt behavior - Overt behavior is openly seen and hence, there will be change in overt behavior and the goods will be purchased.
Molin Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year:
Estimated total manufacturing overhead at the beginning of the year Estimated direct labor-hours at the beginning of the year S638,750 35,000 direct labor-hours Results of operations: 40,000 direct labor-hours Actual direct labor-hours Manufacturing overhead: Indirect labor cost Other manufacturing overhead costs incurred $166,000 $595,000 $1,570,000 Cost of goods sold (unadjusted)
Required
a. What is the total amount of manufacturing overhead applied to production during the year?
b. Is manufacturing overhead overapplied or underapplied for the year? By how much?
c. What is the adjusted cost of goods sold for the year?
Answer:
A. 730,000
B. 31,000
C. 1,601,000
Explanation:
We can calculate the total amount of manufacturing overhead applied during the year by first calculating the predetermined overhead rate
DATA
Estimated Total Manufacturing overhead at the beginning of the year = 638,750
Estimated direct Labour hours at the beginning of the year = 35,000
Predetermined Overhead Rate = 638,750 /35,000
Predetermined Overhead Rate 18.25
Actual Direct Labour Hours = 40,000
Requirement A
Total Manufacturing Overhead applied = Predetermined Overhead Rate x Actual Direct Labour Hours
Total Manufacturing Overhead applied = 18.25 x 40,000
Total Manufacturing Overhead applied = 730,000
Requirement B
Actual Manufacturing Overhead (166000 + 595000) = 761,000
Over/Under applied = Actual Manufacturing Overhead - Total Manufacturing Overhead applied
Over/Under applied = 761,000 - 730,000
Manufacturing Overhead is underapplied = 31,000
Requirement C
Cost of Goods sold (adjusted) = Manufacturing Overhead is underapplied + Cost of Goods sold (unadjusted)
Cost of Goods sold (adjusted) = 31,000 + 1,570,000
Cost of Goods sold (adjusted) = 1,601,000
For 2019, Gourmet Kitchen Products reported $21 million of sales and $17 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 10% and its federal-plus-state income tax rate was 25%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2019? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary.
Answer:$1,500,000
Explanation:
Economic value added (EVA) can be calculated as:
Net operating profit after taxes - The Invested capital × The cost of capital
Slotting the values into the above formula will be:
= ($21,000,000 - $17,000,000) × (1 - 25%) - ($15,000,000 × 10%)
= $4,000,000 × 75% - ($15,000,000 × 0.1)
= ($4,000,000 × 0.75) - $1,500,000
= $3,000,000 - $1,500,000
= $1,500,000
Therefore, the firm's economic value added (EVA) is $1,500,000.
A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $25 per hour per employee. Each employee identifies an average of 3,000 potential leads a week from a list of 5,000. An average of 4 percent of potential leads actually sign up for the service, paying a one-time fee of $70. Material costs are $1,000 per week, and overhead costs are $9,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.) Multifactor productivity
Answer:
1.938/lead
Explanation:
To calculate multifactor productivity we need to divide total output by total input. To find total output and total input we need to go through some minor workings as shown below.
DATA
Number of employees = 3
Total hours worked = 40
Hourly rate = 25/hr
Material cost = 1000/week
Overhead cost = 9000/week
[tex]multifactor productivity = \frac{Out put}{In put}[/tex]
[tex]multifactor productivity = \frac{25,200}{13,000}[/tex]
[tex]multifactor productivity = 1.938/lead[/tex]
INPUT
Total Inputs = labor cost + Material cost + Overhead cost
Total inputs = 3000 + 1000 + 9000
Total inputs = $13,000
working
Total labor cost = No. of labor x no. of hours worked x hourly rate
Total labor cost = 3 x 40 x 25
Total labor cost = $3000
OUTPUT
Total output = No. of leads x subscription fee
Total output = 360 x 70
Total Output = $25,200
working
Average potential lead = 3000
Total potential lead =3 x 3000 = 9000
Actual signup lead = 4% of 9000 = 360
Subscription fee per lead = 70
