Answer:
$1,087.27
Explanation:
The new value of the bond is the new price of the bond calculated using yield to maturity of 7.75% instead of the original yield of 7.9% using excel pv formula provided thus:
=-pv(rate,nper,pmt,fv)
Before that we need to determine the pmt which is the annual coupon on the bond.
=pmt(rate,nper,-pv,fv)
rate is the original yield ot 7.9%
nper is the duration of 7 years
pv is the initial market price of $1,079
fv is the face value of $1000
=pmt(7.9%,7,-1079,1000)=$ 94.12
The new price is computed thus:
=-pv(7.75%,7,94.12,1000)=$1,087.27
Lily wants to build a business. She has very little capital. She does, however, have a partner with which she could run a business. Lily wants to be able to avoid being held personally liable for any problems the business has. Which of the following would lead Lily to choose a sole proprietorship organization for her business?
a. Possession of a partner
b. Little capital
c. Avoidance of personal liability
d. None of the above
Answer:
The correct answer is option (b) Little capital
Explanation:
Solution
With a little capital this will help Lily to choose a sole proprietorship organization for her business. a sole proprietorship can begin with a little capital.
The option (a) is not correct as possession of a partner will not lead her to start a sole proprietorship business.
Also the option (c) is not correct the avoidance of personal liability is not the reason because in sole proprietorship, Lily will be liable for her debts.
What are the principles of logic and critical thinking?
A semi-variable cost:
A. Increases and decreases directly and proportionately with changes in volume.
B. Changes in response to a change in volume, but not proportionately.
C. Increases if volume increases, but remains constant if volume decreases.
D. Changes inversely in response to a change in volume.
Answer:
B. Changes in response to a change in volume, but not proportionately.
Explanation:
A semi variable cost (or mixed cost) is a cost or expense that is partially fixed (does not change according to production output) and is also partially variable (changes according to production output). An example of semi variable costs are utilities which have a fixed minimum level per month and they increase as production output increases. Another example is the cost of a car, where insurance and lease payments are fixed but gas and maintenance expenses vary according to the number of miles driven.
Use exponential smoothing with trend adjustment to forecast deliveries for period 10. Let alpha = 0.4, beta = 0.2, and let the initial trend value be 4 and the initial forecast be 200.
Period- Actual Demand
1- 200
2- 212
3- 214
4- 222
5- 236
6- 221
7- 240
8- 244
9- 250
10- 266
Answer:
254.02
Explanation:
Relevant data provided
Forecast delivers for period 10
Alpha = 0.4
Beta = 0.2
Trend value = 4
Initial forecast = 200
For period 10 please look into the spreadsheet which has been attached which contains formulas and values.
Forecast including trends
The smoothed forecast is calculated below:
[tex]F_{t}=\alpha A_{t-1}+(1-\alpha )(F_{t-1}+T_{t-1})[/tex]
Smoothed trend formula is shown below:
[tex]T_{t}=\beta (F_{t}-F_{t-1})+(1-\beta )T_{t-1}[/tex]
Forecast including trend formula is calculated with the help of below formula:-
[tex]FIT_{t}= F_{t}+T_{t}[/tex]
Mojo Mining has a bond outstanding that sells for $1,061 and matures in 25 years. The bond pays semiannual coupons and has a coupon rate of 6.1 percent. The par value is $1,000. If the company's tax rate is 39 percent, what is the aftertax cost of debt
Answer:
3.44%
Explanation:
For computing the after tax cost of debt we need to apply the RATE formula i.e shown in the attachment below:
Provided that,
Present value = $1,061
Future value or Face value = $1,000
PMT = 1,000 × 6.1% ÷ 2 = $30.5
NPER = 25 years × 2 = 50 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula,
1. The pretax cost of debt is 2.82% × 2 = 5.64%
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 5.64% × ( 1 - 0.39)
= 3.44%
Artville is deciding whether to purchase a new statue for the center of town. The statue will cost the city $17,000 and will only be purchased if the costs are covered. The city is asking for households to help cover the cost of the statue, but households are not forced to contribute.
Required:
a. If households are asked to contribute $5 each to help cover the cost of the statue, how many households will need to contribute?
b. If the population of Artville is 4,000 households, of which 3,000 households are expected to free ride, will the city be able to afford the statue if it charges each household $14?
Answer: a. $3,400 households
b. No.
Explanation:
a. The cost of the statue is $17,000 and each household is asked to contribute $5 to help cover the cost. To find out how many families one can divide the amount needed by the amount asked of the households,
= 17,000/5
= 3,400 households
If 3,400 households each pay $5 then the town of Artville will be able to afford the statue.
b. This question speaks to a social problem referred to a the Free-rider problem. This is when people in society benefit from something without contributing fairly towards the benefit they are accruing from the thing. 3,000 households out of 4,000 are expected to be free-riders. This means that only 1,000 will cover the cost of the statue.
If those 1,000 households pay the $14 required, the town would only raise,
= 1,000 * 14
=$14,000
$14,000 is less than the cost of the statue which is $17,000 and so the town of Artville will have to do without a statue as they simply cannot afford one.
Dell Computer buys computer chips from Intel for the purpose of making computers to be sold to consumers and other organizations. Dell is an example of which type of organizational buyer?
a. Intermediary
b. Producer
c. Wholesaler
d. Institution
Answer:
b. Producer.
Explanation:
Organizational buying deals with the process of purchasing products and services after duly identifying, evaluating and choosing which company to buy from.
Organizational buying is mainly classified into four categories, these are;
1. Producer.
2. Intermediary or Retailers.
3. Wholesaler.
4. Institution.
In this scenario, Dell Computer buys computer chips from Intel for the purpose of making computers to be sold to consumers and other organizations. Dell is an example of a producer organizational buyer because it bought computer chips, so it can be used to manufacture a computer.
Hence, the producers usually buy raw materials, components or other parts, from other manufacturers to use in producing goods for their consumers or end users.
The Titan retires a $24.6 million bond issue when the carrying value of the bonds is $22.2 million, but the market value of the bonds is $28.3 million. The entry to record the retirement will include: Multiple Choice A credit to cash for $22.2 million. A credit of $6.1 million to a gain account. A debit of $6.1 million to a loss account. No gain or loss on retirement.
Answer:
A debit of $6.1 million to a loss account
Explanation:
The answer is A debit of $6.1 million to a loss account.
To calculate this:
the carrying value of the bonds $22.2 million is subtracted from the market value of the bonds $28.3 million.
Carrying value, $22.2 million, less cash paid to retire the bonds of $28.3 million
= $28.3 - $22.2
= $6.1 million to a loss account.
"Cincinnati Supply, Co. is a local supplier to the Kraft Heinz Company, which is the third-largest food and beverage company in North America and the fifth-largest food and beverage company in the world. Cincinnati Supply, Co. purchased new furniture at a cost of $33,000 on January 1. The furniture is estimated to have a useful life of 6 years and a $3,000 salvage value. The company uses the straight-line method of depreciation. What is the amount of depreciation expense reported on December 31
Answer:
Annual depreciation= $5,000
Explanation:
Giving the following information:
Purchasing price= $33,000
Salvage value= $3,000
Useful life= 6 years
To calculate the depreciation expense under the straight-line method, we need to use the following formula:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (33,000 - 3,000)/6
Annual depreciation= $5,000
Find the nominal annual rate of interest compounded monthly if $1200 accumulates to $1618.62 in five years.
Answer:
The nominal annual interest rate is 6%
Explanation:
The future value of a sum of money an be calculated as follows,
FV = PV (1+i)^n
Where,
PV is present value i is the interest raten is the number of compounding periodsAs we already know the FV, the PV and the number of compounding periods, we can calculate the value of i. The value of i here represents the nominal annual interest rate denominated in monthly terms.
Annual interest rate denominated in monthly terms = Annual i / 12
As the total period in years is 5 years, the total period in monthly terms will be 5 * 12 = 60. So n is 60.
Plugging in the available values, we get the following expression which should be solved to get the monthly i.
1618.62 = 1200 * (1+i)^60
1618.62 / 1200 = (1+i)^60
1.34885 = (1+i)^60
Taking the 60th root of both sides.
(1.34885)^1/60 = (1+i)^60/60
1.004999998 = 1 + i
1.00499998 - 1 = i
i = 0.00499998 rounded off to 0.005 or 0.5%
If the annual interest rate denominated in monthly terms is is 0.005 or 0.5%, then the annual interest rate is,
Annual interest rate = 0.005 * 12 = 0.06 or 6%
Barry, a solvent individual but a recovering alcoholic, embezzled $6,000 from his employer. In the same year that he embezzled the funds, his employer discovered the theft. His employer did not fire him and told him he did not have to repay the $6,000 if he would attend Alcoholics Anonymous. Barry met the conditions and his employer canceled the debt.
A. Barry did not realize any income because his employer made a gift to him.
B. Barry must include $6,000 in gross income from discharge of indebtedness.
C. Barry must include $6,000 in gross income under the tax benefit rule.
D. Barry may exclude the $6,000 from gross income because the debt never existed.
E. None of these.
Answer: Barry must include $6,000 in gross income from discharge of indebtedness
Explanation:
Feom the question above, we are told that Barry embezzled $6,000 from his employer and that even though his employer discovered the theft, the employ did not fire him and told him that he did not have to repay the $6,000 if he attend Alcoholics Anonymous. Barry met the conditions and the employer canceled the debt.
In this case, Barry will have to include the $6,000 he stole in gross income from discharge of indebtedness. The gross income has to do with the sum of the wages, profits, salaries, rents, interest payments, and every other earnings, before the deductions of taxes or other deductions. Since Barry stole the money and.he.has been forgiven, the $6,000 has to be included in the gross income from discharge of indebtedness.
Honey Corporation, a merchandising company, reported the following results for January:
Number of units sold 5,800
Selling price per unit $892
Unit cost of goods sold $517
Variable selling expense per unit $31
Total fixed selling expense $152,600
Variable administrative expense
per unit $48
Total fixed administrative expense $390,200
Cost of goods sold is a variable cost in this company.
a. Prepare a traditional format income statement for January.
b. Prepare a contribution format income statement for January.
Answer:
Results are below.
Explanation:
Giving the following information:
Number of units sold 5,800
Selling price per unit $892
The unit cost of goods sold $517
Variable selling expense per unit $31
Total fixed selling expense $152,600
Variable administrative expense per unit $48
Total fixed administrative expense $390,200
1) Traditional income statement:
Sales= 5,800*892= 5,173,600
GOGS= 5,800*517= (2,998,600)
Gross profit= 2,175,000
Selling expense= (31*5,800) + 152,600= (332,400)
Administrative expense= (48*5,800) + 390,200= (668,600)
Net operating income= 1,174,000
2) Contribution margin income statement:
Sales= 5,800*892= 5,173,600
Total variable cost= 5,800*(517 + 31 + 48)= (3,456,800)
Contribution margin= 1,716,800
Total fixed selling expense= (152,600)
Total fixed administrative expense= (390,200)
Net operating income= 1,174,000
Mystic Lake Inc. bottles and distributes spring water. On July 9 of the current year, Mystic Lake reacquired 60,000 shares of its common stock at $42 per share. On September 22, Mystic Lake sold 45,000 of the reacquired shares at $51 per share. The remaining 15,000 shares were sold at $40 per share on November 23.
Required:
A. Journalize the transactions of July 9, September 22, and November 23. Refer to the Chart of Accounts for exact wording of account titles.
B. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
C. For what reasons might Mystic Lake have purchased the treasury stock?
Answer:
A. Journalize the transactions
July 9, purchase of 60,000 treasury stocks
Dr Treasury stocks 2,520,000
Cr Cash 2,520,000
September 22, 45,000 treasury stocks sold
Dr Cash 2,295,000
Cr Treasury stocks 1,890,000
Cr Additional paid in capital 405,000
November 23
Dr Cash 600,000
Dr Additional paid in capital 30,000
Cr Treasury stocks 630,000
B. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year?
Additional paid in capital = $405,000 - $30,000 = $375,000
December 31 balance:
Additional paid in capital $375,000
C. For what reasons might Mystic Lake have purchased the treasury stock?
management believed that the stock was underpricedthey have excess cash and no immediate projects to invest init is a way to increase the price of stocks since lower equity with the same profits means that each remaining stock will earn more returnsAs of December 31, 2019, Armani Company’s financial records show the following items and amounts. Cash $ 10,300 Accounts receivable 9,300 Supplies 6,300 Equipment 5,300 Accounts payable 11,600 Common stock 14,300 Retained earnings, Dec. 31, 2018 3,300 Retained earnings, Dec. 31, 2019 5,300 Dividends 13,300 Consulting revenue 33,600 Rental revenue 22,600 Salaries expense 20,300 Rent expense 12,300 Selling and administrative expenses 8,300 Required: Prepare the 2019 year-end income statement for Armani Company.
Answer:
Net income is $15,300
Explanation:
The income statement for Armani Company as at 31st December is shown below:
$ $
Consulting revenue 33,600.00
Rental revenue 22,600.00
Total revenue 56,200.00
Salaries expense 20,300.00
rent expense 12,300.00
selling and administrative expense 8,300.00
Total expenses ( 40,900.00 )
Net income for the year 15,300.00
The net income is total revenue less all expenses incurred in the year.
The total revenue comprises of consulting and rental revenue while expenses consist of salaries,rent as well as selling and administrative expenses.
Our Lady of the Lake Hospital has assembled a group of employees to engage in planning activities. If the group comprises top executives such as the Chief Executive Officer, Chief Financial Officer, and Chief Marketing Officer, they would likely create
Answer: a. long-term plans.
Explanation:
Long term plans in a business are considered Strategic Plans. Strategic plans aim to formulate general long term goals and visions for what the company aims to do in future and what level they aim to be at.
These types of goals are usually for the policy makers in a company being the Top Executives who are tasked with the long term growth of the company.
The Top Executives come up with these plans and then the Mid and lower level managers come up with tactical and operational plans to meet the objectives of the plans.
Susan wants to prepare a presentation that will calculate the total cost of ownership for the system. What financial analysis tools are available to her, and what are the advantages (and possible disadvantages) of each tool
Personal Trainer, Inc. owns and operates fitness centers in a dozen Midwestern cities. The centers have done well, and the company is planning an international expansion by opening a new “supercenter” in the Toronto area. Personal Trainer’s president, Cassia Umi, hired an IT consultant, Susan Park, to help develop an information system for the new facility. During the project, Susan will work closely with Gray Lewis, who will manage the new operation. Background
During data and process modeling, Susan Park developed a logical model of the proposed system. She drew an entity-relationship diagram and constructed a set of leveled and balanced DFDs. Now Susan is ready to consider various development strategies for the new system. She will investigate traditional and Web-based approaches and weigh the pros and cons of in-house development versus other alternatives.
Susan wants to prepare a presentation that will calculate the total cost of ownership for the system.
What financial analysis tools are available to her, and what are the advantages (and possible disadvantages) of each tool?
Answer:
The answer is below
Explanation:
The financial tools available to her,
NPV: Net Present Value
1. It is the total value benefit minus the total value of the costs.
2. It adjusts the value of future costs and benefits to account for the time value of money.
3. The systems can be compared more accurately and consistently.
ROI: Return On Investment.
Advanatge
1. It is a % rate that compares total net benefits received from a project to the total costs of the project.
2. Companies set a minimum ROI that all projects must match or exceed.
3. Disadvantage of this tool is that it expresses only an overall average rate of the return. It is not accurate for a given time period
PAY BACK ANALYSIS
1. It determines the time it takes for an information system to pay for itself.
2. Total development and operating costs are compared with total benefits.
3. Disadvantage of this method is that pay back analyzes on costs and benefits incurred at the beginning of a system’s useful life.
Moonlight Bay Inn is incorporated on January 2, 2014, by its three owners, each of whom contributes $20,000 in cash inexchange for shares of stock in the business. In addition to the sale of stock, the following transactions are entered into during the month ofJanuary:
January 2: A Victorian inn is purchased for $50,000 in cash. An appraisal performed on this date indicates that the land is worth $15,000, and the remaining balance of the purchase price is attributable to the house. The owners estimate that the house will have an estimated useful life of 25 years and an estimated salvage value of $5,000.
January 3: A two-year, 12%, $30,000 promissory note was signed at the Second State Bank. Interest and principal will be repaid on the maturity date of January 3, 2019.
January 4: New furniture for the inn is purchased at a cost of $15,000 incash. The furniture has an estimated useful life of 10 years and no salvage value.
January 5: A 24-month property insurance policy is purchased for $6,000 in cash.
January 6: An advertisement for the inn is placed in the local newspaper. Moonlight Bay pays $450 cash for the ad, which will run in the paper throughout January.
January 7: Cleaning supplies are purchased on account for $950. The bill is payable within 30 days.
January 15: Wages of $4,230 for the first half of the month are paid in cash.
January 16: A guest mails the business $980 in cash as a deposit for a room to be rented for two weeks. The guest plans to stay at the inn during the last week of January and the first week of February.
January 31: Cash receiptsfrom rentals of rooms for the month amount to $8,300.
January 31: Cash receiptsfrom operation of the restaurant for the month amount to $6,600.
January 31:. Each stockholder is paid $200 in cash dividends.
Required 1. Prepare journal entries to record each of the preceding transactions. Don’t forget the stock.
2. Post each of the journal entries to T accounts.
3. Prepare adjusting journal entries for each of the following transactions as of January 31.
a. Depreciation of the house
b. Depreciation of the furniture
c. Interest on the promissory note
d. Recognition of the expired portion of the insurance
e. Recognition of the earned portion of the guests’ deposit
f. Wages earned during the second half of January amount to $520 and will be paid on Feb. 3
g. Cleaning supplies on hand on January 31 amount to $230
h. A utility bill is received amounts to $740 and is payable by Feb. 5
i. Income taxes are to be accrued at a rate of 30% of income before taxes
4. Post each adjusting journal entry to T accounts
5. Prepare the following financial statements: a. Income statement for month ended January 31 b. Statement of retained earnings for the month ended January 31 c. Balance sheet at January 31
6. What are your reactions to Moonlight’s first month of operations? Is the bank comfortable with the loan it made?
Answer:
1. Prepare journal entries to record each of the preceding transactions.
January 2, 2014, Moonlight Bay Inn is incorporated
Dr Cash 60,000
Cr Common stock 60,000
January 2, 2014, a Victorian Inn is purchased
Dr Land 15,000
Dr Building 35,000
Cr Cash 50,000
January 3, 2014, promissory note signed at bank
Dr Cash 30,000
Cr Notes payable 30,000
January 4, 2014, furniture is purchased
Dr Furniture 15,000
Cr Cash 15,000
January 5, 2014, insurance policy is purchased
Dr prepaid insurance 6,000
Cr cash 6,000
January 6, 2014, advertisement is placed in the local newspaper
Dr Advertising expense 450
Cr Cash 450
January 7, 2014, cleaning supplies purchased on account
Dr Cleaning supplies 950
Cr Accounts payable 950
January 15, 2014, wages for first 15 days are paid
Dr Wages expense 4,230
Cr Cash 4,230
January 16, 2014, check received form customer
Dr Cash 980
Cr Unearned revenue 980
January 31, 2014, cash receipts from room rentals are accounted for
Dr Cash 8,300
Cr Rental revenue 8,300
January 31, 2014, cash receipts from restaurant are accounted for
Dr Cash 6,600
Cr Restaurant revenue 6,600
January 31, 2014, dividends are distributed
Dr Retained earnings 600
Cr Dividends payable 600
Dr Dividends payable 600
Cr Cash 600
2. Post each of the journal entries to T accounts.
I used an excel spreadsheet to post the T accounts (attached file).
3. Prepare adjusting journal entries for each of the following transactions as of January 31.
a. Depreciation of the house
depreciation expense per month = $30,000 x 1/25 x 1/12 = $116.67 ≈ $117
Dr Depreciation expense 117
Cr Accumulated depreciation - building 117
b. Depreciation of the furniture
depreciation expense per month = $15,000 x 1/10 x 1/12 = $125
Dr Depreciation expense 125
Cr Accumulated depreciation - furniture 125
c. Interest on the promissory note
interest expense per month = $30,000 x 12% x 28/365 = $276.16 ≈ $276
Dr Interest expense 276
Cr Interest payable 276
d. Recognition of the expired portion of the insurance
insurance per month = $6,000 /24 = $250
Dr insurance expense 250
Cr Prepaid insurance 250
e. Recognition of the earned portion of the guests’ deposit
Dr Unearned revenue 490
Cr Rental revenue 490
f. Wages earned during the second half of January amount to $520 and will be paid on Feb. 3
Dr Wages expense 520
Cr Wages payable 520
g. Cleaning supplies on hand on January 31 amount to $230
cleaning supplies expense = $950 - $230 = $720
Dr Cleaning supplies expense 720
Cr Cleaning supplies 720
h. A utility bill is received amounts to $740 and is payable by Feb. 5
Dr Utilities expense 740
Cr Accounts payable 740
i. Income taxes are to be accrued at a rate of 30% of income before taxes
Dr Income taxes expense
Cr income taxes payable
4. Post each adjusting journal entry to T accounts
I used an excel spreadsheet to post the T accounts (attached file).
5. Prepare the following financial statements: a. Income statement for month ended January 31
Income Statement
Rental revenue $8,790
Restaurant revenue $6,600
Wages expense ($4,750)
Advertising expense ($450)
Depreciation expense ($242)
Insurance expense ($250)
Cleaning supplies expense ($720)
Utilities expense ($740)
EBIT $8,238
Interest expense ($276)
Net income before taxes $7,962
Income taxes ($2,389)
Net income after taxes $5,573
b. Statement of retained earnings for the month ended January 31
Retained earnings at the beginning of the period: $0
Net income: $5,573
Dividends distributed: ($600)
Retained earnings at the end of the period $4,973
c. Balance sheet at January 31
Assets:
Cash $29,600
Prepaid insurance $5,750
Cleaning supplies $230
Furniture $14,875
Land $15,000
Building $34,883
Total Assets: $100,338
Liabilities and Stockholders' Equity:
Accounts payable $1,690
Unearned revenue $490
Wages payable $520
Interest payable $276
Income tax payable $2,389
Notes payable $30,000
Common stock $60,000
Retained earnings $4,973
Total Liabilities and Stockholders' Equity: $100,338
6. What are your reactions to Moonlight’s first month of operations? Is the bank comfortable with the loan it made?
Yes, the bank should be OK with the loan since the Inn was able to make a profit during the first month of operations (something very uncommon).
Financial aspects of employment
Wang Min and Roger are friends from college and both have received offers for entry level positions at a San Francisco corporation in their related fields. Wang Min and Roger would like to room together in San Francisco.
Consider Wang Min and Roger’s personal situations, assuming the city indices are:
Boston: 151
San Francisco: 135
Cleveland: 99
Consider the following scenarios:
Wang Min
Wang Min Wang Min is from Boston, where the cost of living is higher than it is in San Francisco. Wang Min’s parents are discouraging her from taking the position because they would like her to live at home for a while, find a job in the area, and save some money. Wang Min has already convinced her parents that she will live on her own even if she finds a job in Boston. Wang Min took a personal finance course and knows how to compare salaries in different cities. Wang Min has been offered $25,000 to work in San Francisco.
Roger
Roger is from Cleveland, where the cost of living is lower than it is in San Francisco. Roger’s parents are encouraging him to take the position because jobs are hard to come by in Cleveland and he will be able to get a good start to his career and save some money. Now, he wants to make sure that the offer in San Francisco is worth the move. Roger has been offered $30,000 to work in San Francisco.
Answer:
Wang Min's situation:
Boston: 151
San Francisco: 135
If Wang Min wishes to consider a similar offer in Boston, the offer should be for at least = ($25,000/135) x 151 = $27,963. Since San Francisco is "cheaper" than Boston, she should earn more money in Boston in order to consider a comparable offer.
Roger's situation:
Cleveland: 99
San Francisco: 135
If Roger wishes to consider a similar offer in Cleveland, the offer should be for at least = ($30,000/135) x 99 = $22,000. Since San Francisco is "more expensive" than Cleveland, he should earn less money in Cleveland in order to consider a comparable offer.
A customer wishes to open an account to fund payment of private middle school tuition. If the customer does not wish to deposit more than $2,000 per year and wishes to get a tax benefit, the best advice is for the customer to open a:
Answer: Coverdell Education Savings Account (ESA)
Explanation:
A Coverdell Education Savings Account (ESA) is a type of Trust account created by the US Government to help families fund the educational expenses of their members who are aged 18 or below.
This account is not Taxable as the US Government wants to use it as a way to encourage Educational Expenditure.
The account however is limited to a maximum deposit of $2,000 per year per beneficiary and so is perfect for the customer in question.
California Surf Clothing Company issues 1,000 shares of $1 par value common stock at $32 per share. Later in the year, the company decides to Purchase 100 shares at a cost of $35 per share. Record the transaction if California Surf resells the 100 shares of treasury stock at $37 per share
Answer:
Debit= $3,700
Credit= $200
Credit= $3,500
Explanation:
The following transactions are recorded in California Surf clothing company
1) Cash debit is acquired through the reissuance of 100 shares of treasury stock at the rate of $37 per share
= $37 per share × 100 shares
= $3,700
2) Credit from the additional paid in capital
= $37 per share - $35 per share
= $2 per share × 100 shares
= $200
3) Credit gotten from the required stock
= $3,700 - $200
= $3,500
On December 31, 2017, Reggit Company held the following short-term investments in its portfolio of available-for-sale securities. Reggit had no short-term investments in its prior accounting periods. Prepare the December 31, 2017, adjusting entry to report these investments at fair value.
Complete Question:
Fair Value Adjustment Journal General Computation of fair value adjustment. Fair Value Adjustment Computation - Available for Sale Portfolio Cost Fair ValueUnrealized Verrizano Corporation bonds payable Preble Corporation notes payable Lucerne Company common stock Total $ 66,500 S 61,900 46,400 85,100 $ 208,400 $ 193,400 54,000 87,900 Fair Value Adjustment General Journal
Answer:
Dr Unrealized loss — Equity $15,000
Cr Available-For-Sale Securities $15,000
Explanation:
The difference of the cost and fair value of the portfolio gives us the loss of $15,000 which must be accounted for in accounting books as under:
Dr Unrealized losses $15,000
Cr Available-For-Sale Securities $15,000
Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August, the company's records show the following accounts and amounts for the month of August.Cash 25,370Accounts receivable 22,370Office supplies 5,260Land 44,010Office equipment 20,020Accounts payable 10,540Dividends 6,020Consulting fees earned 27,010Rent expense 9,570Salaries expense 5,620Telephone expense 880Miscellaneous expenses 530Conmon stock 102,100Use the above information to prepare an August statement of retained earnings for Help Today (Hint Net income: $10,410)
Answer:
Help Today
Statement of Retained Earnings
For the Month Ended on August 31, 202X
Retained earnings at the beginning of the period: $0
Net income: $10,410
Dividends: ($6,020)
Retained earnings at the end of the period $4,390
Explanation:
Balance Sheet
Assets:
Cash $25,370
Accounts receivable $22,370
Office supplies $5,260
Land $44,010
Office equipment $20,020
Total assets: $117,030
Liabilities and Equity:
Accounts payable $10,540
Common stock $102,100
Total liabilities and equity: $112,640
Retained earnings ⇒ assets - (liabilities + equity) = $117,030 - $112,640 = $4,390
Another way to calculate retained earnings = net income - dividends = $10,410 - $6,020 = $4,390
Dividends 6,020
To sum up international trade theory, we can say that the primary reason for trade is
Answer:
The primary reason for trade is for the economic development of a country.
Explanation:
Trade makes a significant and necessary contribution to the economy and the country's development particularly in underdeveloped countries. The rapid progress of underdeveloped countries in the Industrial field is due to their exports. In most countries, such would represent a significant share of their gross domestic product (GDP).
Given the series of demand data below Period: 1 2 3 4 5 6 7 8 9 10 Demand: 42 35 58 42 27 49 40 41 27 41 a. Calculate the forecasts for periods 7 through 11 using moving average models with n = 2, n = 4, and n = 6. (Round your intermediate calculations and final answers to 1 decimal place.)
Answer:
Kindly check Explanation
Explanation:
Given :
Period: 1 2 3 4 5 6 7 8 9 10
Demand: 42 35 58 42 27 49 40 41 27 41
Using n = 2
Week - - - - - - - - - - n = 2
7 - - - - - - ( 27 + 49)/2 = 38
8 - - - - - - (49 + 40)/2 = 44.5
9 - - - - - - -(40 + 41)/2 = 40.5
10 - - - - - - (41 + 27)/2 =34
11 - - - - - - - (27 + 41)/2 34
Using n = 4
Week - - - - - - - - - - n = 4
7 - - - - - - (58 + 42 + 27 + 49)/4 = 44
8 - - - - - - (42 + 27 + 49 + 40)/4 = 39.5
9 - - - - - - -(27 + 49 + 40 + 41)/4 = 39.3
10 - - - - - - (49 + 40 + 41 + 27)/4 =39. 3
11 - - - - - - - (40 + 41 + 27 + 41)/2 = 37.3
Using n = 6
Week - - - - - - - - - - n = 6
7 - - - - - - (42 + 35 + 58 + 42 + 27 + 49)/6= 42.2
8 - - - - - - (35 + 58 + 42 + 27 + 49 + 40)/6 = 41.8
9 - - - - - - -(58 + 42 + 27 + 49 + 40 + 41)/6= 42.8
10 - - - - - - (42 + 27 + 49 + 40 + 41 + 27)/6 =39.7
11 - - - - - - - (27 + 49 + 40 + 41 + 27 + 41)/6 = 37.5
The moving average model is the measurement tool that determines the cumulative average of certain period based upon the records and data of previous periods.
Based upon the previous records the forecasts for the future periods can be predicted and determined.
The moving average model is used to forecast the future values using the estimating trend cycles of the past time values.
The forecasts for periods 7 through 11 is shown in the tables attached below, while taking three different values of n.
The "n" is the time value based upon which the data of previous records are taken.
To know more about moving average model, refer to the link:
https://brainly.com/question/19863583
Congress wishes to impose regulations on the insurance industry. What test would the United State Supreme Court use to determine whether such regulations would violate the substantive due process rights of insurance companies that would be subject to the regulations? What is the likely outcome of the case?
Answer:
Three part test.
The outcome: if the three requirements are not met, then there is not point the Government should interfere.
At the end, the law will be held.
Explanation:
In some cases, the courts are allowed to protect individual, company or business organization from Government interrupting with these individuals or business organization "fundamental right" and this is the "substantive due process rights " of insurance companies as mentioned in the question above.
The test that the United State Supreme Court can use to determine whether the regulations they want to enact would violate the substantive due process rights of insurance companies is what is known as the THREE PARR TEST.
THE THREE PART TEST has its root from cases such as that of Pasgraf V Long Island Railroad co. The three part test involves three main subjects and they are;
=> foreseeability: are the policies in which insurance companies work going to affect the consumers in the future?
=> proximity: what kind of relationship do the insurance companies have with there consumers?
=> fairness: are these policies just and fair?
CONCLUSION: if the three requirements are not met, then there is not point the Government should interfere.
The Aberdeen Development Corporation (ADC) is considering an Aberdeen Resort Hotel project. It would be located on the picturesque banks of Grays Harbor and have its own championship-level golf course. The cost to purchase the land would be $1 million, payable now. Construction costs would be approximately $2 million, payable at the end of year 1. However, the construction costs are uncertain. These costs could be up to 20 percent higher or lower than the estimate of $2 million. Assume that the construction costs would follow a triangular distribution. ADC is very uncertain about the annual operating profits (or losses) that would be generated once the hotel is constructed. Its best estimate for the annual operating profit that would be generated in years 2, 3, 4, and 5 is $700,000. Due to the great uncertainty, the estimate of the standard deviation of the annual operating profit in each year also is $700,000. Assume that the yearly profits are statistically independent and follow the normal distribution. After year 5, ADC plans to sell the hotel. The selling price is likely to be somewhere between $4 and $8 million (assume a uniform distribution). ADC uses a 10 percent discount rate for calculating net present value. (For purposes of this calculation, assume that each year's profits are received at year-end.) Use Analytic Solver to perform 1,000 trials of a computer simulation of this project on a spreadsheet.
(a) What is the mean net present value (NPV) of the project?
(b) What is the estimated probability that the project will yield an NPV greater than $2 million?
(c) ADC also is concerned about cash flow in years 2, 3, 4, and 5. Generate a forecast of the distribution of the minimum annual operating profit (undiscounted) earned in any of the four years. What is the mean value of the minimum annual operating profit over the four years?
(d) What is the probability that the annual operating profit will be at least $0 in all four years of operation?
Umatilla Bank and Trust is considering giving Pohl Company a loan. Before doing so, it decides that further discussions with Pohl’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $275,000. Discussions with the accountant reveal the following.
1. Pohl Company sold goods costing $55,000 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2. The physical count of the inventory did not include goods costing $95,000 that were shipped to Pohl Company FOB destination on December 27 and were still in transit at year-end.
3. Pohl Company received goods costing $25,000 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
4. Pohl Company sold goods costing $51,000 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Pohl Company physical inventory.
5. Pohl Company received goods costing $42,000 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $275,000.
Required:
Determine the correct inventory amount on December 31.
Answer: $309,000
Explanation:
First it is important to note the difference between the Shipping terms.
FOB (Free on Board) Shipping Point means that the goods being sold belong to the owner as soon as the seller leaves it at shipping point. Shipping point being as soon as the Carrier delivering it has picked it up from the seller. At this point it should no longer be included in the Seller's books but in the buyer's.
FOB Destination means that the goods only become that of the buyer when the buyer receives it. Until then, the goods are under the ownership of the Seller and need to be recorded in the books as such until the buyer receives it.
Reconciling the balance therefore,
Year end Balance is $275,000
1. Sales to Hemlock $55,000 not included in final balance is fine because it is FOB shipping point and as so it is not to be included in inventory.
2. Sales to Pohl FOB Destination of $95,000 not included in inventory count is fine because it should only be included when it is received as it was shipped FOB Destination.
3. Pohl company should have INCLUDED this $25,000 because it was shipped FOB Shipping point meaning that Pohl gets ownership as soon as Yanice Co sent it on December 26 which is within the period.
4. Pohl should INCLUDE the $51,000 because it shipped the goods FOB Destination meaning that it only relinquishes Ownership when Ehler of Canada receives it which was in the next period.
5. Pohl SHOULD NOT HAVE INCLUDED the $42,000 balance in the inventory amount because it was shipped FOB Destination which means that they only get Ownership when they receive it. They received it in the next period and as such should not include it in there period in question.
Calculating the inventory amount then gives,
= 275,000 + 25,000 + 51,000 - 42,000
= $309,000
The correct inventory amount on December 31 is $309,000
The correct inventory amount on December 31 is = $309,000
What is the Inventory amount?
Preferably, it is important to note the distinction between the Shipping terms.
FOB (Free on Board) Shipping Point suggests that the goods being sold belong to the proprietor as soon as the seller vamooses them at the shipping point. The shipping point is as soon as the Carrier delivering it has picked it up from the seller. At this moment, it should no longer be included in the Seller's books but in the buyer's.
FOB Terminus indicates that the goods only become that of the buyer when the buyer receives them. Until then, the goods are under the ownership of the Seller and also they need to be recorded in the books as such until the buyer receives them.
Negotiating the balance, therefore,
The year-end Balance is $275,000
1. Sales to Hemlock $55,000 not included in last balance is fine because it is FOB shipping point and as so it is not to be contained in inventory.
2. Sales to Pohl FOB Destination of $95,000 not retained in inventory count is fine because it should only be included when it is received as it was shipped to FOB Destination.
3. Pohl company should have INCLUDED this $25,000 because it was shipped FOB Shipping point definition that Pohl gets ownership as shortly as Janice Co sent it on December 26 which is within the time.
4. Pohl should INCLUDE the $51,000 because it shipped the goods FOB Destination suggesting that it only relinquishes Right when Ehler of Canada receives it which was in the next period.
5. Pohl SHOULD NOT HAVE INCLUDED the $42,000 reward in the stock amount because it was shipped FOB Terminus which suggests that they only get Ownership when they accept it. They received it in the next period and as such should not enclose it in their period in question.
Now the Calculating of the inventory amount then gives,
= 275,000 + 25,000 + 51,000 - 42,000
= $309,000
Therefore, The correct inventory amount on December 31 is $309,000
Find more information about Inventory amount here:
https://brainly.com/question/1180423
A firm has issued 40,000 shares of stock whose current price is $81 per share. Shareholders expect an annual return of 15%. The firm also has a two-year loan of $1,800,000 at 6.4% annual interest. It has also issued 8,500 bonds with a face value of $1,000 each, with 15 years left to maturity, semi-annual compounding, and a coupon interest rate of 5%. The bonds are currently worth (have a current market price of) $1,100 each on the market.(a) Using market values for its debt and equity, calculate the firm's weighted-average cost of capital (WACC) before taxes. Round to tenths place (e.g., 12.8%) (b) Assume a tax rate of 38% applies. Calculated the WACC after accounting for the impact taxes have with same rounding)
Answer:
(a) WACC before tax is 7.43%
(b) WACC after tax is 5.89%
Explanation:
WACC = Value of equity * cost of equity/ (Value of equity & debt) + Value of debt * cost of debt/ (Value of equity & debt)
Value of equity = number of share * current price = 40,000 * $81 = $3,240,000
Market value of bond = $1,100 * 8,500 = $9,350,000
Market value of equity & debt = $3,240,000 + $1,800,000 + $9,350,000 = $14,390,000
(a) WACC before tax = 3,240,000 * 15%/ 14,390,000 +1,800,000 * 6.4%/ 14,390,000 + 9,350,000 * 5%/ 14,390,000 = 7.43%
(b) If tax rate is 38%, then cost of debt is changed as below:
Cost of two-year loan = 6.4%* (1-38%) = 3.97%
Cost of bond = 5% * (1-38%) = 3.1%
WACC after tax = 3,240,000 * 15%/ 14,390,000 +1,800,000 * 3.97%/ 14,390,000 + 9,350,000 * 3.1%/ 14,390,000 = 5.89%
Alain Mire files a single tax return and has adjusted gross income of $309,000. His net investment income is $48,000. What is the additional tax that Alain will pay on his net investment income for the year
Answer: $1,824
Explanation:
According to the IRS, Net Investment Income tax is the lesser figure of either,
i. The net investment income or,
ii. Modified adjusted gross income less the threshold of $200,000 of the person.
The lesser figure is then multiplied by 3.8% to find the tax.
Alain Mire's net Investment Income is $48,000.
His Modified adjusted gross income less the threshold of $200,000 is,
= 309,000 - 200,000
= $109,000
The lesser figure is his Net Investment Income so Additional Tax is,
= 48,000 * 3.8%
= $1,824
Laworld Inc. manufactures small camping tents. Last year, 200,000 tents were made and sold for $60 each. Each tent includes the following costs: Direct materials $18 Direct labor 12 Manufacturing overhead 16 The only selling expenses were a commission of $2 per unit sold and advertising totaling $100,000. Administrative expenses, all fixed, equaled $300,000. There were no beginning or ending finished goods inventories. There were no beginning or ending work-in-process inventories. Required: 1. Calculate (a) the product cost for one tent and (b) the total product cost for last year. 2. CONCEPTUAL CONNECTION: (a) Prepare an income statement for external users. (b) Did you need to prepare a supporting statement of cost of goods manufactured? Explain. 3. CONCEPTUAL CONNECTION: Suppose 200,000 tents were produced (and 200,000 sold) but that the company had a beginning finished goods inventory of 10,000 tents produced in the prior year at $40 per unit. The company follows a first-in, first-out policy for its inventory (meaning that the units produced first are sold first for purposes of cost flow). (a) What effect does this have on the income statement? (b) Prepare a cost of goods sold statement.
Answer:
1. Calculate (a) the product cost for one tent
$46and (b) the total product cost for last year.
$9,200,0002. (a) Prepare an income statement for external users.
Laworld Inc.
Income Statement
Total revenue $12,000,000
Cost of goods sold:
Direct materials $3,600,000Direct labor $2,400,000Manufacturing overhead $3,200,000Total COGS ($9,200,000)
Gross profit $2,800,000
Operating expenses:
Sales commissions $400,000Advertising expenses $100,000Administrative expenses $300,000Total operating expenses ($800,000)
Net profit from operations $2,000,000
(b) Did you need to prepare a supporting statement of cost of goods manufactured? Explain.
No, since the COGS were fairly simple (no beginning or ending inventory) you can just squeeze the information.3. Suppose 200,000 tents were produced (and 200,000 sold) but that the company had a beginning finished goods inventory of 10,000 tents produced in the prior year at $40 per unit. The company follows a first-in, first-out policy for its inventory (meaning that the units produced first are sold first for purposes of cost flow). (a) What effect does this have on the income statement?
Both gross profit and net profit would increase since COGS would be lower: COGS = (10,000 x $40) + (190,000 x $46) = $9,140,000, which is $60,000 less.(b) Prepare a cost of goods sold statement.
Incurred costs:
Direct materials $3,600,000
Direct labor $2,400,000
Manufacturing overhead $3,200,000
Cost of goods manufactured $9,200,000
Beginning inventory of finished units $400,000
Ending inventory of finished units ($460,000)
Cost of goods sold $9,140,000
Explanation:
revenue = 200,000 x $60 = $12,000,000
manufacturing costs:
Direct materials $18 x 200,000 = $3,600,000Direct labor $12 x 200,000 = $2,400,000Manufacturing overhead $16 x 200,000 = $3,200,000total = $9,200,000product cost per unit = $18 + $12 + $16 = $46
S&A expenses:
sales commission of $2 x 200,000 = $400,000advertising totaling $100,000administrative expenses $300,000total $800,000