On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $300 million. The bonds mature on September 30, 2041 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30.Required:Determine the price of the bonds on September 30, 2021.
Answers
Answer:
Bond Price = $248.5227409 million rounded off to $248.523 million
Explanation:
To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 300 * 0.08 * 6/12 = 12 million
Total periods (n) = 20 * 2 = 40
r or YTM = 0.10 * 6/12 = 0.05 or 5%
The formula to calculate the price of the bonds today is attached.
Bond Price = 12 * [( 1 - (1+0.05)^-40) / 0.05] + 300 / (1+0.05)^40
Bond Price = $248.5227409 million rounded off to $248.523 million
Related Questions
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2021, S&L purchased Coca-Cola bonds at par for $965,000 and sold the bonds on January 3, 2022, for $968,500. At December 31, the bonds had a fair value of $960,000, and S&L has the intent and ability to hold the investment until fair value recovers. What pretax amounts did S&L include in its 2021 and 2022 net income as a result of this investment
Answers
Answer:
2021= $0 gain/loss
2022= $3,500 gain
Explanation:
S and L financial buys and sells securities
On December 27, 2021 S&L purchased coca-cola bonds at par for $965,000
The bonds were sold for $968,500 at January 3 2022
At December 31, the bonds had a fair value of $960,000
Since the amount of fair value has reduced greatly below the value at which it was bought on December 31 then, this implies that there will be no gain/loss that will be recognised in the earnings
Therefore,
The Pretax amount that S&L include in its net income as a result of this investment in 2021 is
= $0 gain/loss in earnings
The pretax amount that S&L include in its net income as a result in this investment in 2022 is
= $968,500-$965,000
= $3,500 gain
To address a rise in inflation, a government may
A. invest in programs like unemployment benefits to help people in
need.
B. reduce the amount of money it puts into circulation.
C. lower interest rates to allow businesses to borrow more money.
D. raise interest rates to allow businesses to borrow more money.
Answers
It should be B. I took the quiz.
To address a rise in inflation, a government may reduce the amount of money it puts into circulation.Thus the correct answer is B.
What is inflation?When the prices of goods and services increase during a given period of time which affects the purchasing parity of individuals is known as inflation. This results in an increase in the cost of living in the country as the price rise and gives rise to economic inequality.
To address a rise in inflation, a government may reduce the amount of money it puts into circulation which results in a fall in the prices of goods and services and reduce the inflation rate.
Therefore, option B is appropriate.
Learn more about inflation, here:
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The objective of maximizing value for the shareholders provides an important theme in corporate finance. This objective is not without criticism. Which of the following is NOT a criticism. Select one: a. The objective is blind to social and ethical costs associated with value maximization. b. The objective does not well account for the fact that managers are naturally inclined to act in their own best interests, which are not always in line with that shareholders. c. It assumes that accrual based profits are superior to cash flows. d. It assumes some level of market efficiency.
Answers
Answer:
D
Explanation:
Agency conflicts arises when the objectives of managers isn't aligned with that of shareholders.
Due to the objective of maximising value for shareholders, managers might be induced to engage in aggressive accounting practices in order to present a higher profits than might actually exist. This practice is unethical. This places more emphasis on profits than cash flows.
QUESTION 3 of 10: You worked the following hours this week: Monday 8 AM to 5 PM, Tuesday 9 AM to 3 PM, Thursday 8:30 AM to 2:15 PM. You get a 30-minute unpaid lunch break every work day. How many hours will you be paid for this week?
Answers
Answer:
19 hours
Explanation:
8 and a half
5 and a half
5 and 15
Kroger, a grocery store chain, sells thousands of products from hundreds of
different producers that are shipped through a variety of shipping companies
and stored at various warehouses facilities. The coordinated efforts with each
channel partner at each touch point takes efficiency and communication. In
order for the process to run smoothly, which three functions do channel
partners need to perform to efficiently flow products and titles to the
consumer to get payments back to producers?
O transactional, logistical, and facilitating functions
o facilitating, commercial, and institutional functions
logistical, commercial, and transactional functions
Answers
Answer:
transactional, logistical, and facilitating functions
Explanation:
Ferrar Corporation has two major business segments-Consumer and Commercial. Data for the segment and for the company for March appear below: In addition, common fixed expenses totaled $210,000 and were allocated as follows: $122,000 to the Consumer business segment and $88,000 to the Commercial business segment The contribution margin of the Commercial business segment is: Select one: a. $137,000 b. $184,000 c. $62,000 d. $423,000
Answers
Answer:
Contribution margin of the Commercial business segment = $137,000
Explanation:
Given:
Fixed expenses = $210,000
Consumer business segment = $122,000
Commercial business segment = $88,000
Note:
Missing input
Sales revenue of Commercial business segment = $280,000
Variable expenses of Commercial business segment = $143,000
Find:
Contribution margin of the Commercial business segment
Computation:
Contribution margin = Sales revenue - Variable expenses
Contribution margin of the Commercial business segment = $280,000 - $143,000
Contribution margin of the Commercial business segment = $137,000
A multiconcept restaurant incorporates two or more restaurants, typically chains, under one roof. Sharing facilities reduces costs of both real estate and labor. The multiconcept restaurants typically offer a limited menu compared to full-sized, stand-alone restaurants. For example, KMAC operates a combination Kentucky Fried Chicken (KFC)/Taco Bell restaurant. The food preparation areas are separate, but orders are taken at shared point-of-sale (POS) stations. If Taco Bell and KFC share facilities, they reduce fixed costs by 30 percent; however, sales in joint facilities are 20 percent lower than sales in two separate facilities. What do these numbers imply for the decision of when to open a shared facility versus two separate facilities
Answers
Answer: The Multiconcept restaurant is beneficial to both restaurant chains
Explanation:
If they share resources then they are saving 30% in fixed costs even though they are losing 20% in sales.
If the losses in sales are subtracted from the savings in fixed costs, it means that both Taco Bell and KFC are benefitting by 10%.
This shows that the decision to open a shared facility versus two separate facilities is beneficial to both restaurants on a net benefits basis as the savings in fixed costs from sharing facilities outweighs the losses in sales probably resulting from not offering a full menu.
Suppose we can divide all the goods produced by an economy into two types:
consumption goods and capital goods.
Capital goods, such as machinery, equipment, and computers, are goods used to produce other goods. Suppose a technological advance occurs that affects the production of consumption goods but not capital goods. If a technological advance occurs that affects the production of consumption goods but not capital goods, then the production possibilities frontier will:_______.
Answers
Answer: C. shift outward along the consumption goods axis.
Explanation:
The Production Possibilities Frontier is used to graph the optimal production quantities of 2 types goods in an economy given the limited resources in the economy.
This means that the frontier represents the combination of both goods can be produced given available resources and if one produces more of one good they would have to give up producing some of the other good.
If there was a technological advance that could increase the amount of consumption goods given the same resources then the PPF would shift outward along the consumption good axis to reflect this.
g In Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $19,500 during August 2021. $5,000 of cards were redeemed in September 2021, $3,390 in October, $3,080 in November, and $2,380 in December 2021. In 2022 an additional $1,250 of cards were redeemed in January and $680 in February. How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?
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Answer:
2021
Due to the Accrual principle in Accounting, the revenue for 2021 will be the gift cards that were earned (redeemed) in 2021.
= 5,000 + 3,390 + 3,080 + 2,380
= $13,850
2022
Any gift cards that have not been redeemed within 12 months are not likely to be redeemed so the remaining gift cards can be said to be redeemed in 2022 which would mean that the revenue in 2022 is;
= 19,500 - 13,850
= $5,650
A body of the letter is composed of the:
Answers
Answer: Introduction, supporting details, and conclusion.
Answer:
Introduction, supporting details, and conclusion.
Explanation:
Number the following in the order of the flow of manufacturing costs for a company.
A. Closing under/overapplied factory overhead to Cost of Goods Sold.
B. Materials purchased.
C. Factory labor used and factory overhead incurred in production.
D. Completed jobs moved to finished goods.
E. Factory overhead applied to jobs according to the predetermined overhead rate.
F. Materials requisitioned to jobs.
G. Selling of finished product.
H. Preparation of financial statements to determine gross profit.
Answers
Answer:
B. Materials purchased.
F. Materials requisitioned to jobs.
C. Factory labor used and factory overhead incurred in production.
E. Factory overhead applied to jobs according to the predetermined overhead rate.
D. Completed jobs moved to finished goods.
A. Closing under/overapplied factory overhead to Cost of Goods Sold.
G. Selling of finished product.
H. Preparation of financial statements to determine gross profit.
Explanation:
Manufacturing costs can be defined as the overall costs associated with the acquisition of resources such as materials and the cost of converting these raw materials into finished goods. Manufacturing costs include direct labor costs, direct materials cost and manufacturing overhead costs.
The order of the flow of manufacturing costs for a company in an ascending order is;
1. Materials purchased.
2. Materials requisitioned to jobs.
3. Factory labor used and factory overhead incurred in production.
4. Factory overhead applied to jobs according to the predetermined overhead rate.
5. Completed jobs moved to finished goods.
6. Closing under/overapplied factory overhead to Cost of Goods Sold.
7. Selling of finished product.
8. Preparation of financial statements to determine gross profit.
"Ramon runs the marketing department at his company. His department gets a budget every year, and every year, he must spend the entire budget without going over. If he spends less than the budget, then his department gets a smaller budget the following year. At the beginning of this year, Ramon got $2.5 million for the annual marketing budget. He must spend the budget such that 2,500,000−x=0. What property of addition tells us what the value of x must be?"
Answers
Answer:
Property of additive inverse
Explanation:
Given: Ramon got $2.5 million for the annual marketing budget such that he must spend the budget such that [tex]2,500,000-x=0[/tex]
To find: property of addition that help us to know what the value of x must be
Solution:
1 million is equal to [tex]1,000,000[/tex]
So,
[tex]2.5\,\,million=2.5(1,000,000)=2,500,000[/tex]
According to property of additive inverse,
[tex]a+(-a)=0[/tex]
Given equation is [tex]2,500,000-x=0[/tex]
This equation can be written as [tex]2,500,000+(-x)=0[/tex]
So,
[tex]x=2,500,000[/tex]
A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price $ 160 Units in beginning inventory 100 Units produced 16,000 Units sold 15,800 Units in ending inventory 300 Variable costs per unit: Direct materials $ 51 Direct labor $ 46 Variable manufacturing overhead $ 8 Variable selling and administrative expense $ 5 Fixed costs: Fixed manufacturing overhead $560,000 Fixed selling and administrative expense $173,800 What is the total period cost for the month under variable costing
Answers
Answer:
Period costs= $813,800
Explanation:
Giving the following information:
Units produced 16,000
Variable selling and administrative expense $5
Fixed manufacturing overhead $560,000
Fixed selling and administrative expense $173,800
The period costs are the costs not directly involved in the production.
Period costs= fixed overhead + total variable selling and administrative costs
Period costs= 560,000 + 5*16,000 + 173,800
Period costs= $813,800
Ravenna Company is a merchandiser that uses the indirect method to prepare the operating activities section of its statement of cash flows. Its balance sheet for this year is as follows:
Ending Balance Beginning Balance
Cash $64,400 $76,900
Accounts receivable 53,200 57,200
Inventory 71,400 65,000
Total current assets 189,000 199,100
Property, plant, and equipment 192,000 182,000
Less accumulated depreciation 64,000 45,500
Net property, plant, and equipment 128,000 136,500
Total assets $317,000 $335,600
Accounts payable $41,600 $74,000
Income taxes payable 32,400 39,600
Bonds payable 78,000 65,000
Common stock 91,000 78,000
Retained earnings 74,000 79,000
Total liabilities and stockholders’ equitY$317,000 $335,600
During the year, Ravenna paid a $7,800 cash dividend and it sold a piece of equipment for $3,900 that had originally cost $8,400 and had accumulated depreciation of $5,600. The company did not retire any bonds or repurchase any of its own common stock during the year.
Required:
1. What is the amount of the net increase or decrease in cash and cash equivalents that would be shown on the company’s statement of cash flows?
7-a. What is the combined amount and direction (+ or −) of the inventory and accounts payable adjustments to net income in the operating activities section of the statement of cash flows?
7-b. What does this amount represent?
Cash paid to suppliers > Cost of goods sold
Cash paid to suppliers > Purchases
Cash paid to suppliers < Cost of goods sold
8-a. If the company debited income tax expense and credited income taxes payable $940 during the year, what is the total amount of the debits recorded in the Income Taxes Payable account?
9-a. What is the amount and direction (+ or −) of the income taxes payable adjustment to net income in the operating activities section of the statement of cash flows?
9-b. What does this adjustment represent?
Tax paid < Income tax expenses
No taxes are payable
Tax paid > Income tax expenses
11. What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?
10. Would the operating activities section of the company’s statement of cash flows contain an adjustment for a gain or a loss? What would be the amount and direction ( + or − ) of the adjustment?
8-b. What does the amount of these debits represent?
Tax refunds
Cash paid for income taxes
Taxes payable
12.What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?
13.What is the company’s net cash provided by (used in) investing activities?
14.What is the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows?
15.What is the company’s net cash provided by (used in) financing activities?
Answers
Answer:
1. What is the amount of the net increase or decrease in cash and cash equivalents that would be shown on the company’s statement of cash flows?Answer: Net decrease:$12,500
7-a. What is the combined amount and direction (+ or −) of the inventory and accounts payable adjustments to net income in the operating activities section of the statement of cash flows?
Answer: $-38,800
7-b. What does this amount represent?
Cash paid to suppliers > Cost of goods sold
Cash paid to suppliers > Purchases
Cash paid to suppliers < Cost of goods sold
Answer: Cash paid to suppliers>Purchases
8-a. If the company debited income tax expense and credited income taxes payable $940 during the year, what is the total amount of the debits recorded in the Income Taxes Payable account?
Answer: $8,140 (cash paid )
8-b. What does the amount of these debits represent?
Tax refunds
Cash paid for income taxes
Taxes payable
Answer: cash paid for income taxes
9-a. What is the amount and direction (+ or −) of the income taxes payable adjustment to net income in the operating activities section of the statement of cash flows?
Answer: Add back income tax expense $940 and subtract tax paid $-8,140
9-b. What does this adjustment represent?
Tax paid < Income tax expenses
No taxes are payable
Tax paid > Income tax expenses
Answer: Tax paid >Income tax expense
10. Would the operating activities section of the company’s statement of cash flows contain an adjustment for a gain or a loss? What would be the amount and direction ( + or − ) of the adjustment?
Answer: Deduct the gain on disposal $-1,100
11. What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?
Answer: Net cash used in operating activities: $-3,200
12.What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?
Answer: $18,400 on account of PPE purchased ($192,000+$8,400-$192,000)
13.What is the company’s net cash provided by (used in) investing activities?
Answer: $-14,500
14.What is the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows?
Answer: $13,000
15.What is the company’s net cash provided by (used in) financing activities?
Answer: Net cash inflow from financing activities $5,200
How does a business owner confirm that their pricing strategy was successful?
a. It is a success if the business can avoid paying corporate income taxes.
b. It is a success if the customers don't complain about the price.
c. It is a success if the Price X Quantity = The Maximum Total Revenue
d. There is no true method to measure a successful pricing strategy.
Answers
The market value: Group of answer choices of accounts receivable is generally higher than the book value of those receivables. of fixed assets will always exceed the book value of those assets. of an asset is reflected in the balance sheet. of an asset is lowered each year by the amount of depreciation expensed for that asset. of an asset tends to provide a better guide to the actual worth of that asset than does the book value.
Answers
Answer:
Option E would be the appropriate response.
Explanation:
Market value seems to be the fair market rate of a commodity and is widely often used the reference to something like the capital structure of the economy. An underlying asset fair value seems to have been a clearer reference to the true valuation of even a commodity than that of the market value, so users apparently can't get the power compared or equality to the market price if someone attempt to sell an investment, otherwise you get the cost is equivalent to the valuation.Some other options aren't tied to something like the valuation of the sector. The last alternative, then, seems to be the right answer.
Harrington Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on machine-hours in the Machining Department and direct labor cost in the Assembly Department. At the beginning of the year, the company made the following estimates: Machining Assembly Direct labor hours 16,000 12,000 Direct labor cost $ 20,000 $ 15,000 Machine-hours 5,000 1,000 Manufacturing overhead $ 25,000 $ 30,000 What predetermined overhead rates would be used in the Machining and Assembly Departments, respectively?
Answers
Answer
Machining Department Assembly department
POAR = $5 per machine hour 200% of direct labor cost
Explanation:
Under absorption costing, overheads are charged to products using pre-determined overhead absorption rate. With this rate, overhead are included in the cost of every unit produced.
The rated is computed follows:
Predetermined overhead absorption rate (POAR)
= Estimated overhead for the period/Estimated activity level
Machining Department
POAR =25,000/ 5,000 machine hours=$5 per machine hour
Assembly department
PIAR = $30,000/15,000× 100 = 200% of labor cost
I need to select the items that are needs for my bank statement
Answers
Answer: Get a cell phone plan can insurance and a backpack. If u dont live in home im guessing
If u live in home, Cell Phone Plan, Car insurance, Electric Bill,
Explanation: Since you have 230 dollars
Harris Company must set its investment and dividend policies for the coming year. It has three independent projects from which to choose, each of which requires a $3 million investment. These projects have different levels of risk, and therefore different costs of capital. Their projected IRRs and costs of capital are as follows: Project A: Cost of capital = 18%; IRR = 21% Project B: Cost of capital = 14%; IRR = 11% Project C: Cost of capital = 7%; IRR = 10% Harris intends to maintain its 35% debt and 65% common equity capital structure, and its net income is expected to be $6,288,000. If Harris maintains its residual dividend policy (with all distributions in the form of dividends), what will its payout ratio be? Round your answer to two decimal places. %
Answers
Answer:
Dividend payout ratio = 37.98%
Explanation:
Residual dividend policy means where a company uses residual equity to fund dividend payments.
We will accept Project A & C because Project B has lesser IRR than its Cost of Capital
Total investment = $3,000,000 * 2
Total investment = $6,000,000
Dividends = Earnings - Investment
Dividends = $6,288,000 - 65%*($6,000,000)
Dividends = $6,288,000 - 0.65($6,000,000)
Dividends = $6,288,000 - $3,900,000
Dividends = $2,388,000
Dividend payout ratio = Dividend / Total earnings
Dividend payout ratio = $2,388,000 / $6,288,000
Dividend payout ratio = 0.379771
Dividend payout ratio = 37.98%
Farrar Corporation has two major business segments-Consumer and Commercial. Data for the segment and for the company for March appear below: In addition, common fixed expenses totaled $210,000 and were allocated as follows: $122,000 to the Consumer business segment and $88,000 to the Commercial business segment. A properly constructed segmented income statement in a contribution format would show that the segment margin of the Consumer business segment is: Select one: a. $164,000 b. $62,000 c. $394,000 d. $184,000
Answers
Answer:
d. $184,000
Explanation:
Some information is missing, so I looked for similar questions:
Sales revenues, Consumer $ 680,000
Sales revenues, Commercial $ 280,000
Variable expenses, Consumer $ 394,000
Variable expenses, Commercial $ 143,000
Traceable fixed expenses, Consumer $ 102,000
Traceable fixed expenses, Commercial $ 45,000
Consumer Commercial Total
Revenue $680,000 $280,000 $960,000
Variable expenses ($394,000) ($143,000) ($537,000)
Contribution margin $286,000 $137,000 $423,000
Traceable fixed exp. ($102,000) ($45,000) ($147,000)
Segment margin $184,000 $92,000 $276,000
Common fixed exp. ($210,000)
Operating income $66,000
Miller Corporation has a premium bond making semiannual payments. The bond has a coupon rate of 8 percent, a YTM of 6 percent, and 12 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond has a coupon rate of 6 percent, a YTM of 8 percent, and also has 12 years to maturity. Both bonds have a par value of $1,000. What is the price of each bond today? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) Price of Miller bond $ 1169.36 Price of Modigliani bond $ 847.53 If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 3 years? In 7 years? In 11 years? In 12 years?
Answers
Answer:
Miller-bond:
today: $ 1,167.68
after 1-year: $ 1,157.74
after 3 year: $ 1,136.03
after 7-year: $ 1,084.25
after 11-year: $ 1,018.87
at maturity: $ 1,000.00
Modigliani-bond:
today: $ 847.53
after 1-year: $ 855.49
after 3 year: $ 873.41
after 7-year: $ 918.89
after 11-year: $ 981.14
at maturity: $ 1,000.00
Explanation:
We need to solve for the present value of the coupon payment and maturity of each bonds:
Miller:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 80.000
time 12
rate 0.06
[tex]80 \times \frac{1-(1+0.06)^{-12} }{0.06} = PV\\[/tex]
PV $670.7075
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 12.00
rate 0.06
[tex]\frac{1000}{(1 + 0.06)^{12} } = PV[/tex]
PV 496.97
PV c $670.7075
PV m $496.9694
Total $1,167.6769
In few years ahead we can capitalize the bod and subtract the coupon payment
after a year:
1.167.669 x (1.06) - 80 = $1,157.7375
after three-year:
1,157.74 x 1.06^2 - 80*1.06 - 80 = 1136.033855
If we are far away then, it is better to re do the main formula
after 7-years:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 80.000
time 5
rate 0.06
[tex]80 \times \frac{1-(1+0.06)^{-5} }{0.06} = PV\\[/tex]
PV $336.9891
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 5.00
rate 0.06
[tex]\frac{1000}{(1 + 0.06)^{5} } = PV[/tex]
PV $747.26
PV c $336.9891
PV m $747.2582
Total $1,084.2473
1 year before maturity:
last coupon payment + maturity
1,080 /1.06 = 1.018,8679 = 1,018.87
For the Modigliani bond, we repeat the same procedure.
PV
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 30.000
time 24
rate 0.04
[tex]30 \times \frac{1-(1+0.04)^{-24} }{0.04} = PV\\[/tex]
PV $457.4089
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 24.00
rate 0.04
[tex]\frac{1000}{(1 + 0.04)^{24} } = PV[/tex]
PV 390.12
PV c $457.4089
PV m $390.1215
Total $847.5304
And we repeat the procedure for other years
Bostonian Company provided the following information related to its defined benefit pension plan for 2017: PBO on 1/1 $ 2,500,000 Fair value of plan assets on 1/1 2,000,000 Service cost 120,000 Actual return on plan assets 320,000 Payments made to retirees on 12/31 100,000 Amortization of prior service cost 40,000 Recognized actuarial losses 50,000 Contributions made to plan at 12/31 80,000 Interest rate for discounting pension obligations 6 % Expected return on plan assets 8 % Required: What amount of pension expense should Bostonian report for 2017
Answers
Answer:
$200,000
Explanation:
The computation of the amount of pension expense is shown below:
= Service cost + interest cost - expected return + amortization + actuarial gain
= $120,000 + $2,500,000 × 6% - $2,000,000 × 8% + $40,000 + $50,000
= $120,000 + $150,000 - $160,000 + $40,000 + $50,000
= $200,000
Hence, the amount of pension expense is $200,000 and the same is to be considered
A financial instation formed by a large organizacion for its members is a savings and loan
Answers
Answer:
Credit Unions
Explanation:
Credit unions are non-profit making institutions established by large corporations or other entities to cater to their employee's financial welfare. They provide traditional banking services, although they operative like cooperatives societies. Credit unions are created, managed, and belong to their members.
Credit unions mainly offer credit facilities to its members. Because they are not for profits, they provide loans at very competitive terms compared to banks.
Jeff Kaufmann’s machine shop sells a variety of machines for job shops. A customer wants to purchase a model XPO2 drilling machine from Jeff’s store. The model XPO2 sells for $180,000, but Jeff is out of XPO2s. The customer says he will wait for Jeff to get a model XPO2 in stock. Jeff knows that there is a wholesale market for XPO2s from which he can purchase an XPO2. Jeff can buy an XPO2 today for $150,000, or he can wait a day and buy an XPO2 (if one is available) tomorrow for $125,000. If at least one XPO2 is still available tomorrow, Jeff can wait until the day after tomorrow and buy an XPO2 (if one is still available) for $110,000. There is a 0.40 probability that there will be no model XPO2s available tomorrow. If there are model XPO2s available tomorrow, there is a 0.70 probability that by the day after tomorrow, there will be no model XPO2s available in the wholesale market. Three days from now, it is certain that no model XPO2s will be available on the wholesale market.a. What is the maximum expected profit if Jeff makes the purchase today?b. What is the maximum expected profit if Jeff makes the purchase tomorrow?c. What is the maximum expected profit if Jeff makes the purchase two days from now?d. What is the maximum expected profit if Jeff makes the purchase three days from now?e. What should Jeff do?
Answers
Answer:
a) If Jeff purchases today, then he can expect to earn $30,000.
b) If Jeff decides to wait and try to purchase tomorrow, his expected profit is $22,000.
c) If Jeff decides to wait even more and buy the day after tomorrow, then his expected profit is $8,400.
d) Three days form now there will be no XPO2 available, so his profit is $0.
e) Jeff should purchase the XPO2 today and earn $30,000.
Explanation:
selling price $180,000
buys today, then profit = $180,000 - $150,000 = $30,000buys tomorrow, then profit = $180,000 - $125,000 = $55,000 x 40% = $22,000if he buys the day after tomorrow, then profit = $180,000 - $110,000 = $70,000 x 40% x 30% = $8,400if he waits 3 days, then his profit is $0 because there are no XPO2s available.The fiscal year ends December 31 for Lake Hamilton Development. To provide funding for its Moonlight Bay project, LHD issued 7% bonds with a face amount of $570,000 on November 1, 2016. The bonds sold for $513,591, a price to yield the market rate of 8%. The bonds mature October 31, 2036 (20 years). Interest is paid semiannually on April 30 and October 31.Required:1. What amount of interest expense related to the bonds will LHD report in its income statement for the year ending December 31, 2016?Interest Expense $6,8482. What amount(s) related to the bonds will LHD report in its balance sheet at December 31, 2016?Bonds Payable $513,789Interest Payable 3. What amount of interest expense related to the bonds will LHD report in its income statement for the year ending December 31, 2017?Interest Expense 4. What amount(s) related to the bonds will LHD report in its balance sheet at December 31, 2017?Bonds Payable Interest Payable
Answers
Answer:
1. What amount of interest expense related to the bonds will LHD report in its income statement for the year ending December 31, 2016?
Interest expense 6,847.882. What amount(s) related to the bonds will LHD report in its balance sheet at December 31, 2016?
carrying value of bonds payable = $513,591 + $197.88 = $513,788.88
interest payable $6,650
3. What amount of interest expense related to the bonds will LHD report in its income statement for the year ending December 31, 2017?
total interest expense = $13,701.04 + $20,567.60 + $6,864.10 = $41,132.74
4. What amount(s) related to the bonds will LHD report in its balance sheet at December 31, 2017?
carrying value of bonds payable = $515,021.62
interest payable $6,650
Explanation:
the journal entry to record the purchase:
November 1, 2016, bonds issued at a discount
Dr Cash 513,591
Dr Discount on bonds payable 56,409
Cr Bonds payable 570,000
journal entry to record accrued interests:
December 31, 2016
Dr Interest expense 6,847.88
Cr Interest payable 6,650
Cr Discount on bonds payable 197.88
bond discount amortization (December 31, 2016) = (513,591 x 8% x 2/12) - (570,000 x 7% x 2/12) = 6,847.88 - 6,650 = 197.88
journal entry to record first coupon payment:
April 30, 2017
Dr Interest expense 13,701.04
Dr Interest payable 6,650
Cr Cash 19,950
Cr Discount on bonds payable 401.04
bond discount amortization (December 31, 2016) = ($513,788.88 x 8% x 4/12) - (570,000 x 7% x 4/12) = 13,701.04 - 13,300 = 401.04
journal entry to record second coupon payment:
October 31, 2017
Dr Interest expense 20,567.60
Cr Cash 19,950
Cr Discount on bonds payable 617.60
bond discount amortization (December 31, 2016) = ($514,189.92 x 4%) - (570,000 x 3.5%) = 20,567.60 - 19,950 = 617.60
journal entry to record accrued interests:
December 31, 2017
Dr Interest expense 6,864.10
Cr Interest payable 6,650
Cr Discount on bonds payable 214.10
bond discount amortization (December 31, 2016) = (514,807.52 x 8% x 2/12) - (570,000 x 7% x 2/12) = 6,864.10 - 6,650 = 214.10
Use the business transactions below to:
1. Stockholders invest $40,000 in cash in starting a real estate office operating as a corporation.
2. Purchased $500 of supplies on credit.
3. Purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day, $21,500, note payable.
4. Real estate commissions billed to clients amount to $4,000.
5. Paid $700 in cash for the current month's rent.
6. Paid $250 cash on account for office supplies purchased in transaction 2.
7. Received a bill for $800 for advertising for the current month.
8. Paid $2,500 cash for office salaries.
9. Paid $1,200 cash dividends to stockholders.
10. Received a check for $2,000 from a client in payment on account for commissions billed in transaction 4.
Answers
Answer:
We have to journalize the transactions:
1. Stockholders invest $40,000 in cash in starting a real estate office operating as a corporation.
Account Debit Credit
Cash 40,000
Common Stock 40,000
2. Purchased $500 of supplies on credit.
Account Debit Credit
Supplies 500
Accounts Payable 500
3. Purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day, $21,500, note payable.
Account Debit Credit
Equipment 25,000
Cash 3,500
Accounts Payable 3,500
4. Real estate commissions billed to clients amount to $4,000.
Account Debit Credit
Accounts Receivable 4,000
Service Revenue 4,000
5. Paid $700 in cash for the current month's rent.
Account Debit Credit
Cash 700
Rent Expense 700
6. Paid $250 cash on account for office supplies purchased in transaction 2.
Account Debit Credit
Cash 250
Accounts Payable 250
7. Received a bill for $800 for advertising for the current month.
Account Debit Credit
Advertising Expense 800
Accounts Payable 800
8. Paid $2,500 cash for office salaries.
Account Debit Credit
Cash 2,500
Wages Expense 2,500
9. Paid $1,200 cash dividends to stockholders.
Account Debit Credit
Cash 1,200
Dividends 1,200
10. Received a check for $2,000 from a client in payment on account for commissions billed in transaction 4.
Account Debit Credit
Cash 2,000
Accounts Receivable 2,000
Alinger Company estimates that total factory overhead costs will be $132,000 for the year. Direct labor hours are estimated to be 22,000.
A. For Salinger Company, determine the pre-determined factory overhead rate using direct labor hours as the activity base.
B. During May, Salinger Company accumulated 530 hours of direct labor costs on Job 200 and 770 hours on Job 305. Determine the amount of factory overhead applied to Jobs 200 and 305 in May. C. Prepare the journal entry to apply factory overhead to both jobs in May according to the pre-determined overhead rate.
CHART OF ACCOUNTSAlmerinda CompanyGeneral Ledger
ASSETS110 Cash121 Accounts Receivable125 Notes Receivable126 Interest Receivable131 Materials132 Work in Process133 Factory Overhead134 Finished Goods141 Supplies142 Prepaid Insurance143 Prepaid Expenses181 Land191 Factory192 Accumulated Depreciation-FactoryLIABILITIES210 Accounts Payable221 Utilities Payable231 Notes Payable236 Interest Payable241 Lease Payable251 Wages Payable252 Consultant Fees PayableEQUITY311 Common Stock340 Retained Earnings351 Dividends390 Income Summary REVENUE410 Sales610 Interest RevenueEXPENSES510 Cost of Goods Sold520 Wages Expense531 Selling Expenses532 Insurance Expense533 Utilities Expense534 Office Supplies Expense540 Administrative Expenses560 Depreciation Expense-Factory590 Miscellaneous Expense710 Interest EA. For Almerinda Company, determine the predetermined factory overhead rate using direct labor hours as the activity base.
B. During April, Almerinda Company accumulated 20,000 hours of direct labor costs on Job 50 and 24,000 hours on Job 51. Determine the amount of factory overhead applied to Jobs 50 and 51 in April.
C. Prepare the journal entry on Apr.30 to apply factory overhead to both jobs in April according to the pre-determined overhead rate.
Answers
Answer:
A. Salinger Company
1. Predetermined factory overhead rate, using direct labor hours:
= $6
2. Factory overhead applied to Jobs 200 and 305:
Job 200 Job 305
Overhead rate $6 $6
Direct labor hours 530 770
Overhead applied $3,180 $4,620
3. Journal Entries:
Date Description Debit Credit
May 31 Job 200 $3,180
Job 305 $4,620
Factory Overhead 134 $7,800
To record the overhead applied to Jobs 200 and 305 respectively.
B. Almerinda Company
Question Completion:
Almerinda Company estimates that total factory overhead costs will be $1,750,000 for the year. Direct labor hours are estimated to be 500,000.
1. Predetermined factory overhead rate, using direct labor hours:
= $3.50
2. Determination of factory overhead applied to Job 50 and Job 51 in April:
Factory overhead applied to Jobs 200 and 305:
Job 50 Job 51
Overhead rate $3.50 $3.50
Direct labor hours 20,000 24,000
Overhead applied $70,000 $84,000
3. Journal Entries:
Date Description Debit Credit
April 30 Job 50 $70,000
Job 51 84,000
Factory Overhead $154,000
To record the overhead applied to Jobs 50 and 51 respectively.
Explanation:
a) Salinger Company
Data and Calculations:
Total factory overhead = $132,000
Direct labor hours (estimate) = 22,000
Predetermined factory overhead rate = Factory overhead divided by direct labor hours
= $132,000/22,000
= $6
b) Almerinda Company
Data and Calculations:
Total factory overhead = $1,750,000
Direct labor hours (estimate) = 500,000
Predetermined factory overhead rate = Factory overhead divided by direct labor hours
= $1,750,000/500,000
= $3.50
7. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q? (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)
Answers
Answer:
What selling price would the company have established for Jobs P and Q?
Job P = $84,996Job Q = $61,632What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q?
Job P = $4,250 per unitJob Q = $2,054 per unitExplanation:
a lot of information is missing, so I looked for a similar question in order to determine the costs of Jobs P and Q:
Molding Fabrication Total
machine-hours used 2,500 1,500 4,000
fixed manufacturing overhead $10,000 $15,000 $25,000
variable man. overhead $1.40 $2.20
per machine-hour
Job P Job Q
Direct materials $13,000 $8,000
Direct labor cost $21,000 $7,500
Machine-hours used:
Molding 1,700 800 Fabrication 600 900 Total 2,300 1,700variable overhead $3,220 $3,740
fixed overhead $10,000 $15,000
total costs $47,220 $34,240
cost per unit $2,2361 $1,141.33
total markup $37,776 $27,392
total selling price $84,996 $61,632
selling price per unit $4,249.80 $2,054.40
Identify the accounting concept that describes each situation below. Do not use any concept more than once. a. Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.) choose the accounting concept b. Indicates that personal and business recordkeeping should be separately maintained. choose the accounting concept c. Ensures that all relevant financial information is reported. choose the accounting concept d. Assumes that the dollar is the "measuring stick" used to report on financial performance. choose the accounting concept e. Requires that accounting standards be followed for all items of significant size. choose the accounting concept f. Separates financial information into time periods for reporting purposes. choose the accounting concept g. Requires recognition of expenses in the same period as related revenues. choose the accounting concept h. Indicates that fair value changes subsequent to purchase are not recorded in the accounts.
Answers
Answer:
a. Is the rationale for why plant assets are not reported at liquidation value. (Do not use the historical cost principle.) - Going concern assumption
The going concern assumption, as the name implies, assumes that the firm will continue to operate in the foreseable future, and that it will be able to meet its financial obligations.
b. Indicates that personal and business recordkeeping should be separately maintained - Economic entity assumption
The economic entity assumption assumes that the firm is a separate entity from the owner, even if legally it is not so. For example, in accounting, a sole proprietorship is a separate entity even if under legal terms it is not so.
c. Ensures that all relevant financial information is reported - Full disclosure principle
This principle establishes that all financial information that may be relevant for the stockholders of the firm should be disclosed.
d. Assumes that the dollar is the "measuring stick" used to report on financial performance - Monetary unit assumption
This principle establishes that the value of all financial information should be expressed in monetary terms (for example, the dollar).
e. Requires that accounting standards be followed for all items of significant size - Materiality
The principle of materiality establishes that all financial information related to relevant items or transactions should be disclosed.
When the item or transaction is not considered to be relevant, then, it does not have to be disclosed.
For example, for a large multinational corporation, the purchase of a few pencils is not relevant, and does not have to be disclosed under the principle of materiality.
f. Separates financial information into time periods for reporting purposes - Periodicity
The periodicity principle relates to the fact that financial information is organized in specific periods of time, and these periods are carried out over time. These periods can go from daily to yearly.
g. Requires recognition of expenses in the same period as related revenues. choose the accounting concept - Matching principle
The matching principle establishes that revenues should be recognized when the associated expenses have been spent.
h. Indicates that fair value changes subsequent to purchase are not recorded in the accounts. - Measurement principle
The measurment principle of accounting focuses on past values, not on current values, although current market values may be also recognized.
Bratt's Bed and Breakfast, in a small historic New England town, must decide how to subdivide (remodel) the large old home that will become their inn. There are three alternatives: Option A would modernize all baths and combine rooms, leaving the inn with four suites, each suitable for two to four adults. Option B would modernize only the second floor; the results would be six suites, four for two to four adults, and two for two adults only. Option C (the status quo option) leaves all walls intact. In this case, there are eight rooms available, but only two are suitable for four adults, and four rooms will not have private baths. Below are the details of profit and demand patterns that will accompany each option. Which option has the highest expected value?Annual profit under various demand patterns Capacity p Average pA (Modernize all) $90,000 .5 $25,000 .5B (Modernize 2nd) $80,000 .4 $70,000 .6C (Status Quo) $60,000 .3 $55,000 .7
Answers
Answer:
Option B (Modernize 2nd) has the highest expected value which $74,000.
Explanation:
Note: The data in the question are merged together. They are therefore sorted before anwering the question as follows:
Annual profit under various demand patterns
Capacity p Average p
A (Modernize all) $90,000 .5 $25,000 .5
B (Modernize 2nd) $80,000 .4 $70,000 .6
C (Status Quo) $60,000 .3 $55,000 .7
The explanation to the answer is now provided as follows:
The expected value is estimated as the addition of the multiplication of each possible outcomes by the probability of occurrence of each outcome.
The expected value for each of the options in the question can therefore be estimated using the following formula:
Expected value = (Capacity * p of Capacity) + (Average * p of Average)
This formula is therefore applied to each options as follows:
Option A expected value = ($90,000 * 0.5) + ($25,000 * 0.5) = $45,000 + $12,500 = $57,500
Option B expected value = ($80,000 * 0.4) + ($70,000 * 0.6) = $32,000 + $42,000 = $74,000
Option C expected value = ($60,000 * 0.3) + ($55,000 * 0.7) = $18,000 + $38,500 = $56,500
Based on the calculations above, Option B (Modernize 2nd) has the highest expected value which $74,000.
