Answer:
May's Adventure Park
Journal Entries for November 2018:
Nov. 4: Debit Inventory $5,000
Credit Accounts Payable (Vera Company) $5,000
Nov. 6: Debit Freight-in $100
Credit Cash $100
Nov. 8: Debit Accounts Payable (Vera Company) $2,500
Credit Inventory Returns $2,500
Nov. 10: Debit Cash Account $1,100
Credit Sales $1,100
Nov. 10: Debit Cost of Goods Sold $400
Credit Inventory $400
Nov. 11: Debit Accounts Receivable (Geary Corporation) $11,100
Credit Sales $11,100
Nov. 11: Debit Cost of Goods Sold $6,105
Credit Inventory $6,105
Nov. 12: Debit Freight-out $20
Credit Cash Account $20
Nov. 13: Debit Accounts Receivable (Caldwell Company) $9,500
Credit Sales $9,500
Nov. 13: Debit Cost of Goods Sold $5,225
Credit Inventory $5,225
Nov. 14: Debit Accounts Payable (Vera Company) $2,500
Credit Cash Discount $75
Credit Cash Account $2,425
Nov. 17: Debit Sales Returns $500
Credit Accounts Receivable (Caldwell Company) $500
Nov. 17: Debit Inventory $500
Credit Cost of Goods Sold $500
Nov. 18: Debit Inventory $3,600
Credit Accounts Payable (Rainman Corporation) $3,600
Nov. 20: Debit Cash Account $10,878
Debit Cash Discount $222
Credit Accounts Receivable (Geary Corporation) $11,100
Nov. 26: Debit Accounts Payable (Rainman Corporation) $3,600
Credit Cash Discount $72
Credit Cash Account $3,528
Nov. 28: Debit Cash Account $9,000
Credit Accounts Receivable (Caldwell Company) $9,000
Nov. 29: Debit Inventory $12,300
Credit Accounts Payable (Sandra Corporation) $12,300
Nov. 29: Debit Freight-in $170
Credit Cash Account $170
Explanation:
Journal entries are made to debit and credit the accounts involved in each business transaction. They are the first accounting records made to capture transactions after they have been analyzed to know the accounts affected and which accounts in the ledger will be debited or credited. They are usually accompanied with short explanations, e.g. the trade terms.
People are willing to pay more for a diamond than for a bottle of water because a. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water. b. producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices. c. the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water. d. water prices are held artificially low by governments, since water is necessary for life.
Answer:
the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
Explanation:
The paradox of value also known as the diamond–water paradox stares that although water is more useful than diamond because it is needed for survival, diamonds are more expensive than water. This is so because the marginal value of a diamond is higher than the marginal value of water.
I hope my answer helps you
On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $16,800; Accounts Receivable, $7,050; Supplies, $700; Equipment, $11,750; Accounts Payable, $9,000. What is the amount of owner's equity as of May 31 of the current year?
Answer:
$27,300
Explanation:
Riser Inc. had the following liabilities and assets on May 31 of the current year
Cash= $16,800
Account receivables= $7,050
Supplies= $700
Equipment= $11,750
Account payable= $9,000
Since Assets = Liabilities+ stockholder's equity
The stockholder's equity can be calculated as follows
Cash+Account receivables+Supplies+Equipment= Account payable+stockholder's equity
$16,800+$7,050+$700+$11,750=$9,000+stockholder's equity
$36,300=$9,000+stockholder's equity
Stockholder's equity= $36,300-$9,000
Stockholder's equity= $27,300
Hence the amount of owner's equity as of May 31 of the current year is $27,300
Masters Corp. issues two bonds with 20-year maturities. Both bonds are callable at $1,050. The first bond is issued at a deep discount with a coupon rate of 4% and a price of $580 to yield 8.4%. The second bond is issued at par value with a coupon rate of 8.75%.
a. What is the yield to maturity of the par bond? Why is it higher than the yield of the discount bond?
b. If you expect rates to fall substantially in the next two years, which bond has the higher expected rate of return?
c. In what sense does the discount bond offer "implicit call protection"?
Answer:
Explanation:
a)
The YTM of the bond at par value is equals to its coupon rate, 8.75%. Other things being equal, this 4% coupon rate bond will be more eye-catching as the coupon rate is lower than the current market yields, and its price is far below the call price. So, if yields drop, capital gains on the bond will not be restricted by the call price.
b)
If an investor foresees that yields will fall considerably, the 4% bond proposes a better expected return.
c)
Implicit call protection is offered in the sense that any likely fall in yields would not be nearly enough to make the firm consider calling the bond. In this sense, the call feature is almost irrelevant
The phone bill for a corporation consists of both fixed and variable costs. Refer to the fourminusmonth data below and apply the highminuslow method to answer the question. Minutes Total Bill January 470 $ 4 comma 500 February 200 $ 2 comma 695 March 180 $ 2 comma 650 April 320 $ 2 comma 830 If the company uses 390 minutes in May, how much will the total bill be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)
Answer:
Total cost= $3,989.65
Explanation:
Giving the following information:
Minutes Total Bill
January 470 $4,500
February 200 $2,695
March 180 $2,650
April 320 $2,830
First, we need to calculate the unitary variable cost and fixed costs:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (4,500 - 2,650) / (470 - 180)
Variable cost per unit= $6.37931
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 4,500 - (6.37931*470)
Fixed costs= $1,501.72
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 2,650 - (6.37931*180)
Fixed costs= $1,501.72
If the company uses 390 minutes in May:
Total cost= 1,501.72 + 6.37931*390
Total cost= $3,989.65
At the Millbrook High School cafeteria, students proceed along a series of stations in a single line: (1) get tray and utensils, (2) choose food, (3) select beverage, (4) pay. The school is concerned that students are taking too long to get their meal. The school has analyzed the capacities of each of the four steps in isolation and found there exists sufficient capacity at each resource in isolation. Which of the following is most likely to be causing the congestion?a. The bottleneck is probably at the last station because capacity is reduced the most when the bottleneck is at the end of the process. b. The implied utilization of the bottleneck is too low. c. Due to variability in processing times, both blocking and starving could be occurring. d. The process must be demand-constrained. e. The stations have similar utilizations.
Answer:
c. Due to variability in processing times, both blocking and starving could be occurring.
Explanation:
The problem here is that students take a long time to get their meal. It is understood that at each of the four stations there is ample space and so the most likely cause of delays is different processing times at four stations.
The problem of either blocking or starving arises when the processing times are very small or very large at one or two of the stations, which will significantly increase the cycle time of the operation.
hence, the correct option is c.
Which two answers identify the two middle core processes, i.e. core process 3 and 4? (choose two)
a. Build and test the system
b. Plan and monitor the project
c. Understand the details of the problem
d. Design the components
Answer:
c. Understand the details of the problem
d. Design the components
Explanation:
Systems development life cycle (SDLC) consists of six main phases:
System planningSystem analysis: involves understanding the details of the problem to be solved by the proposed system. What are the end-users' requirements and expectations?System design: involves designing the components, elements interfaces and architecture of the proposed system. System implementation and deploymentSystem testing and integrationSystem maintenanceStock A has an expected return of 17.8 percent, and Stock B has an expected return of 9.6 percent. However, the risk of Stock A as measured by its variance is 3 times that of Stock B. If the two stocks are combined equally in a portfolio, what would be the portfolio's expected return
Answer:
13.70%
Explanation:
The expected return of a portfolio is said to be the weighted average of the returns of the individual components,
Given that:
Stock A has an expected return = 17.8%
Stock B has an expected return = 9.6%
the risk of Stock A as measured by its variance is 3 times that of Stock B.
If the two stocks are combined equally in a portfolio;
Then :
The weight of both stocks will be 50% : 50 %
So the portfolio's expected return can be determined as follows:
Expected return for stock A = 50% × 17.8%
Expected return = 0.50 × 17.8%
Expected return = 8.9 %
Expected return for stock B = 50 % × 9.6 %
Expected return for stock B = 0.50 × 9.6%
Expected return for stock B = 4.8%
Expected return of the portfolio = summation of the expected return for both stocks
Expected return of the portfolio = 8.9 % + 4.8%
Expected return of the portfolio = 13.70%
A jewelry firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8.20 per stone for quantities of 600 stones or more, $8.60 per stone for orders of 400 to 599 stones, and $9.10 per stone for lesser quantities. The jewelry firm operates 101 days per year. Usage rate is 19 stones per day, and ordering costs are $39. a. If carrying costs are $2 per year for each stone, find the order quantity that will minimize total annual cost. (Do not round intermediate calculations. Round your final answer to the nearest whole number.) Order quantity stones b. If annual carrying costs are 21 percent of unit cost, what is the optimal order size
Answer:
a. 274
b. 295
Explanation:
a. Optimum Order
Optimum Order = √( (2×Total Annual Demand×Ordering cost per order) / Holding Cost per unit)
= √ ((2×101×19×$39) / $2)
= 273.57
= 274
b. Optimum Order
Optimum Order = √( (2×Total Annual Demand×Ordering cost per order) / Holding Cost per unit)
= √ ((2×101×19×$39) / $8.20 ×0.21)
= 294.83
= 295
Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $30 each. His total cost each day is $320, of which $70 is a fixed cost. He mows 10 lawns a day. In the short run, Bob should____________ . In the long run, Bob should__________ the industry.
Answer:
In the short run, as long as the contribution margin is positive he should continue in the industry. In the long run, if the company keeps losing money, he should leave the industry.
Explanation:
Giving the following information:
Bob mows lawns for $30 each. His total cost each day is $320, of which $70 is a fixed cost. He mows 10 lawns a day.
First, we need to calculate the unitary variable cost:
Total variable cost= 320 - 70= 250
Unitary varaible cost= 250/10= $25
Contribution margin= 30 - 25= $5
In the short run, as long as the contribution margin is positive he should continue in the industry. In the long run, if the company keeps losing money, he should leave the industry.
Journalize the following transactions using the allowance method of accounting for uncollectible receivables.
April 1 Sold merchandise on account to Jim Dobbs, $6,800. The cost of the merchandise is $6,700.
June 10 Received $1,400 from Jim Dobbs and wrote off the remainder owed of $5,400.
Oct. 11 Reinstated the account of Jim Dobbs and received $5,400 cash in full payment.
April 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of the merchandise is $5,400.
June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.
Oct. 11 Reinstated the account of Jim Dobbs for and received cash in full payment.
Answer:
See the journal entries with narration below.
Explanation:
a. For the first set of transactions, the journal entries will look as follows:
Date Details Dr ($) Cr ($)
April 1 Account Receivable - J. Dobbs 6,800
Sales 6,800
To record sale of merchandising on account to Jim Dobbs.
April 1 Cost of goods sold 6,700
Inventory 6,700
To record cost of goods sold to Jim Dobbs.
June 10 Cash 1,400
Allow. for doubtful acct. (B. debt) 5,400
Account Receivable - J. Dobss 6.800
To record cash receipt J. Dobbs and amount written off.
Oct. 11 Account Receivable - J. Dobbs 5,400
Allowance for doubtful accounts 5,400
To reinstate Jim Dobbs' account receivable.
Oct. 11 Cash 5,400
Account Receivable 5,400
To record cash received from Jim Dobbs' in full.
b. For the first set of transactions, the journal entries will look as follows:
Date Details Dr ($) Cr ($)
April 1 Account Receivable - J. Dobbs 7,200
Sales 7,200
To record sale of merchandising on account to Jim Dobbs.
April 1 Cost of goods sold 5,400
Inventory 5,400
To record cost of goods sold to Jim Dobbs.
June 10 Cash (1/3 * 7,200) 2,400
Allow. for doubtful acct. (B. debt) 4,800
Account Receivable - J. Dobss 7,200
To record cash receipt J. Dobbs and amount written off.
Oct. 11 Account Receivable - J. Dobbs 4,800
Allowance for doubtful accounts 4,800
To reinstate Jim Dobbs' account receivable.
Oct. 11 Cash 4,800
Account Receivable 4,800
To record cash received from Jim Dobbs' in full.
The comparative balance sheet of ConnieJo Company, for December 31, Years 1 and 2 ended December 31 appears below in condensed form: Year 2 Year 1 Assets Cash $45,000 $53,500 Accounts receivable (net) 51,300 58,000 Inventories 147,200 135,000 Investments 0 60,000 Equipment 493,000 375,000 Accumulated depreciation—equipment (113,700) (128,000) Total Assets $622,800 $553,500 Liabilities and Stockholders' Equity Accounts payable $61,500 $42,600 Bonds payable, due Year 4 0 100,000 Common stock, $10 par 250,000 200,000 Paid-in capital in excess of par—common stock 75,000 50,000 Retained earnings 236,300 160,900 Total liabilities and stockholders' equity $622,800 $553,500 The income statement for the current year is as follows: Sales $629,700 Cost of goods sold 341,800 Gross profit $287,900 Operating expenses: Depreciation expense $24,700 Other operating expenses 75,300 Total operating expenses 100,000 Income from operations $187,900 Other income: Gain on sale of investment $5,000 Other expense: Interest expense 12,000 (7,000) Income before income tax $180,900 Income tax 64,100 Net income $116,800 Additional data for the current year are as follows: a. Fully depreciated equipment costing $39,000 was scrapped, no salvage, and equipment was purchased for $157,000. b. Bonds payable for $100,000 were retired by payment at their face amount. c. 5,000 shares of common stock were issued at $15 for cash. d. Cash dividends declared were paid $41,400.
Answer:
Kindly check attached picture
Explanation:
Kindly check attached picture for detailed statement using the direct method
Sunset Corporation (a C corporation) had operating income of $200,000 and operating expenses of $175,000. In addition, Sunset had a $30,000 long-term capital gain, a $52,000 short-term capital loss, and $5,000 tax-exempt interest income. What is Sunset Corporation's taxable income for the year
Answer:
Sunset Corporation's taxable income is $3,000
Explanation:
Calculation of Sunset Corporation's taxable income is as worked below
Taxable Income = Operating Income - Operating Expenses + Capital Gains - Capital Losses
Taxable Income = $200,000 - $175,000 + $30,000 - $52,000
Taxable Income = $3,000. Hence, Sunset Corporation's taxable income is $3,000
Note that taxable income is the amount of income used to calculate how much tax an individual or a company owes or is going to pay the government in a particular tax year.
Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. Variable manufacturing overhead should be $5.80 per standard direct labor-hour and fixed manufacturing overhead should be $3,087,000 per year.
The company’s product requires 4 pounds of material that has a standard cost of $12.50 per pound and 1.5 hours of direct labor time that has a standard rate of $13.90 per hour.The company planned to operate at a denominator activity level of 315,000 direct labor-hours and to produce 210,000 units of product during the most recent year. Actual activity and costs for the year were as follows:
Number of units produced 252,000
Actual direct labor-hours worked 409,500
Actual variable manufacturing overhead cost incurred $ 1,351,350
Actual fixed manufacturing overhead cost incurred $ 3,276,000
Required:
1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements.(Round your answers to 2 decimal places.)
Predetermined Overhead Rate = $15.60 per DLH
Variable Rate = $5.80 per DLH
FIxed Rate = $9.80 per DLH
3a. Compute the standard direct labor-hours allowed for the year’s production.
3b. Complete the following Manufacturing Overhead T-account for the year:
4. Determine the reason for the underapplied or overapplied overhead from (3) above by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances.(Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Answer:
1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements.
total standard overhead rate = $15.60standard variable overhead rate = $5.80standard fixed overhead rate = $9.803a. Compute the standard direct labor-hours allowed for the year’s production.
1.5 direct labor hours x 252,000 units = 378,000 hours
3b. Complete the following Manufacturing Overhead T-account for the year:
Manufacturing overhead
Debit Credit
Actual variable cost $1,351,350 Applied variable cost $2,192,400
Actual fixed costs $3,276,000 Applied fixed costs $3,704,400
$1,269,450
Adjustment for over applied
overhead expense $1,269,450
0 0
4. Determine the reason for the underapplied or overapplied overhead from (3)
two different factors affected the overhead costs:
Actual labor hours were higher than budgeted, since 378,000 should have been used to produce the 252,000 units, but 409,500 were used instead. That results in an unfavorable variance of 31,500 labor hours (8.3% variance). Even though labor hour variance was unfavorable, the actual overhead costs incurred were much lower than expected. The favorable variance regarding overhead costs was much larger than the unfavorable variance in labor hours. The actual total overhead per labor hour = $11.30 vs. $15.60 (standard), which represents a 27.6% favorable variance.Explanation:
variable overhead $5.80 per direct labor hour
fixed overhead $3,087,000
each unit requires:
4 pounds of materials at standard cost of $12.50 per pound
1.5 direct labor hours at standard rate of $13.90 per hour
fixed overhead per direct labor hour = $9.80
total budgeted production 210,000 units
total budgeted direct labor hours 315,000
actual units produced 252,000
actual direct labor hours 409,500
actual variable manufacturing $1,351,350
actual fixed manufacturing $3,276,000
applied variable cost = $5.80 x 378,000 labor hours = $2,192,400
applied fixed costs = $9.80 x 378,000 labor hours = $3,704,400
against the foregoing background obtain any road road traffic policy and demonstrate your understanding of that particular policy in relation to its level. in your discussion indicate your role as traffic a prospective traffic law enforcement personnel
Answer:
road traffic policy is the application if safety measures to keep both vehicle owners and pedestrians safety or ensures safety in the road.
Explanation:
hope it helps .
The owner of a downtown parking lot has employed a civil engineering consulting frim to advise him on the economic feasibility of constructing an office building on the site. bill samuels, a newly hired civil engineer, has been assigned to make the analysis. he has assembled the following data
alternative total investment total net annual revenue
sell parking lot 0 0
keep parking lot 200,000 22,000
build 1 story building 400,000 60,000
build 2 story building 555,000 72,000
build 3 story building 750,000 100,000
build 4 story building 875,500 105,000
build 5 story building 1,000,000 120,000
The analysis period is be 15 years. for all alternatives, the property has an estimated resale(salvage) value at the end of 15 years equal to the present total investement.
(a) constuct a choice table for interest rate from 0% to 100%
(b) if the MARRR is 10%, what recommendation should bill make?
Answer: The answer has been attached
Explanation:
Base on the MARR been 10%, I'll recommend 3 storey building.
Further explanation has been attached. In the explanation, note that:
I = A/P e.g.
Interest rate for build 1 storey building:
= 60/400 × 100
= 15%
Montana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine costing $213,500, which will be abandoned when the ore is completely mined. Montana mines and sells 166,200 tons of ore during the year. Prepare the year-end entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine’s depletion.
Answer:
Ore deposit depletion and Mining machinery depreciation Journal entries
Dr Depletion charge (Ore deposits) 405,528
Cr Accumulated depreciation 405,528
Dr Depletion charge (Ore deposits) 23,268
Cr Accumulated depreciation 23,268
Explanation:
Preparation of the year-end entries to record both the ore deposit depletion and the mining machinery depreciation of Montana Mining Co
Depletion of natural resources can be defined as the way in which the cost of natural resources is apportioned upto the period when it will be utilized which is why they are shown at cost in balance sheet.
The entry is to record depreciation charged on ore deposit depletion. Therefore To record this entry we have to debit depletion charges, and credit accumulated depreciation
Dr Depletion charge (Ore deposits) 405,528
Cr Accumulated depreciation 405,528
Computation of depletion cost per unit:
The depletion cost per unit can be calculated by dividing the net cost of the ore with the total units of capacity :
Depletion/units = Cost - Salvage/ Total unit of capacity
$3,721,000/1,525,000 tons
=$2.44
Hence, depletion per unit is $2.44.
Computation depletion amount on ore deposit:
The depletion amount on ore deposit can be calculated by multiplying the cost per depletion unit with the number of units utilized:
Depletion =Cost/Unit ×Units Utilized
$2.44×166,200 tones
=$405,528
Hence, depletion expenses on ore deposit amounts to $405,528.
The pass entry to record depreciation charged on mining machine :
Dr Depletion charge (Ore deposits) 23,268
Cr Accumulated depreciation 23,268
Computation of depreciation cost per unit:
The depletion cost per unit can be calculated by dividing the net cost of the ore with the total units of capacity :
Depletion/units = Cost - Salvage/ Total unit of capacity
$213,500/1,525,000 tons
=$0.14
Hence, depreciation per unit is $0.14.
Computation of depreciation amount on ore deposit:
The depletion amount on ore deposit can be calculated by multiplying the cost per depletion unit with the number of units utilized:
Depletion =Cost/Unit ×Units Utilized
$0.14×166,200 tones
=$23,268
Therefore the depreciation expenses on ore deposit amounts to $23,268
Prepare the adjusting journal entries for the following transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Supplies for office use were purchased during the year for $700, of which $200 remained on hand (unused) at year-end. Interest of $350 on a note receivable was earned at year-end, although collection of the interest is not due until the following year. At year-end, salaries and wages payable of $4,600 had not been recorded or paid. At year-end, one-half of a $3,000 advertising project had been completed for a client, but nothing had been billed or collected. Redeemed a gift card for $700 of services.
Answer:
Adjusting Journal Entries:
Debit Supplies Expense $500
Credit Supplies $500
To record supplies used during the year.
Debit Interests on Note Receivable $350
Credit Interest on Note $350
To record interest earned, but not received.
Debit Salaries & Wages Expense $4,600
Credit Salaries & Wages Payable $4,600
To record accrued salaries and wages.
Debit Account Receivable (Advertising Project) $1,500
Credit Service Revenue (Advertising Project) $1,500
To record one-half of advertising project completed.
Debit Cash Account $700
Credit Gift Card $700
To record redemption of a gift card of services.
Explanation:
Adjusting entries are made at the end of an accounting period to record accrued expenses and revenue, depreciation charge, deferred expenses and revenue. These adjustments bring the accounts to agree with the accrual concept which insists that transactions which do not impact cash flows must be recognized in the period they occur.
The bond has a coupon rate of 6.83 percent, it makes semiannual payments, and there are 4 months to the next coupon payment. A clean price of $1,049 and the par value is $1,000. What is the invoice price
Answer:
The invoice price for the bond is $1,060.38
Explanation:
Given the following:
PV= Par value = $1,000 ,
CV= Clean Price = $1,049
Coupon Rate per annum = 6.83%
To calculate the Semiannual Coupon Rate= Coupon Rate per annum/2= 3.415%
To calculate Semiannual Coupon= Semiannual Coupon Rate*PV
= 3.415% * $1,000 = $34.15
With an interest accured over 2 months, we calculate it thus:
Accrued Interest = $34.15 * 2/6 = $11.38
To calculate Invoice price:
Invoice Price = CP + Accrued Interest
Invoice Price = $1,049.00 + $11.38
Invoice Price = $1,060.38
The W.C. Pruett Corp. has $200,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 11%. In addition, it has $700,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $1 million, its average tax rate is 35%, and its profit margin is 8%. What are its TIE ratio and its return on invested capital (ROIC)? Round your answers to two decimal places.
Answer:
a. Times Interest Earned (TIE) Ratio = 6.59 times
b. Return on invested capital (ROIC) = 10.48%
Explanation:
To estimate these, we have to first calculate the following:
Interest expenses = $200,000 * 11% = $22,000
Net income = Profit margin * Annual sales = 8% * $1,000,000 = $80,000
Income before tax = Net income / (1 - Average tax rate) = $80,000 / (1 - 35%) = 123,076.92
Tax = Income before tax * Tax rate = $123,076.92 * 35% = $43,076.92
Earning before interest and tax (EBIT) = Net income + Interest expenses + Tax = $80,000 + $22,000 + $43,076.92 = $145,076.92
Net operating profit after tax (NOPAT) = EBIT * (1 - Average tax rate) = $145,076.92 * (1 - 35%) = $94,300
Invested capital = Common stock + Interest-bearing debt outstanding = $200,000 + $700,000 = $900,000
a. What are its TIE ratio?
Times Interest Earned (TIE) Ratio = EBIT / Interest expenses = $145,076.92 / $22,000 = 6.59 times
This indicates that the income of the W.C. Pruett Corp. is 6.59 times greater than its annual interest expense.
b. What are its return on invested capital (ROIC)?
ROIC = NOPAT / Invested capital = $94,300 / $900,000 = 0.1048, or 10.48%
Identify and discuss an issue confronting 21st century businesses today, and explain how you would analyze and resolve the issue. For example, what questions and/or research would you employ, and on what basis would you make your determination?
Answer:
Because of the rapidly developing technology and new innovations, the business world underwent a rapid change in the 21st century. The Internet has a major influence on business.
Small businesses are in a huge loss as the online market is expanding rapidly with the advent of the internet. Door distribution is easy for many people after ordering the sitting at home.
With this online company street retailers are in a deficit. In these online sites the rates are indeed being decreased and therefore people will prefer these much more. We have several instances, such as amazon .
The May transactions of Concord Corporation were as follows. May 4 Paid $860 due for supplies previously purchased on account. 7 Performed advisory services on account for $7,490. 8 Purchased supplies for $840 on account. 9 Purchased equipment for $1,940 in cash. 17 Paid employees $500 in cash. 22 Received bill for equipment repairs of $810. 29 Paid $1,190 for 12 months of insurance policy. Coverage begins June 1. Journalize the transactions
Answer:
May 4
Debit Accounts Payable $860
Credit Bank/Cash account $860
Being entries to record payment for supplies purchased previously on Account
May 7
Debit Accounts Receivable $7,490
Credit Service revenue $7,490
Being entries to recognize service revenue made on accounts
May 8
Debit Supplies account $840
Credit Accounts Payable $840
Being entries to recognize supplies purchased on account
May 9
Debit Fixed assets account $1,940
Credit Cash account $1,940
Being entries to record equipment purchased with cash
May 17
Debit Salaries expense $500
Credit Cash account $500
Being entries to record payment of salaries
May 22
Debit Maintenance and repairs $810
Credit Accounts Payable $810
Being entries to recognize repairs expense
May 29
Debit Prepaid Insurance $1,190
Credit Cash account $1,190
Being entries to recognize advance payment for insurance
Explanation:
To purchase items on account is to purchase on credit. This creates a liability in the form of accounts payable. An increase in assets or expenses is a debit entry while a decrease is a credit entry. For liability or an income, a credit is an increase while a debit is a decrease.
Business Calculators Inc. will pay an annual dividend of $2.25 per share next year. The company just announced that future dividends will be increasing by 0.75 percent annually. How much are you willing to pay for one share of this stock if you require a rate of return of 12.25 percent?
Answer: $19.57
Explanation:
You should be willing to pay for the what the stock is valued at the moment and you can use the Gordon Growth Model to value this stock.
Formula is,
Vs = D1/ Re - g
Vs = Value of stock
D1 = the next dividend
Re = Required Return
g = growth rate
Value of stock is,
= 2.25 / ( 12.25% - 0.75%)
= $19.565
= $19.57
Tharaldson Corporation makes a product with the following standard costs:
Standard Quantity Standard Price Standard Cost
or Hours or Rate Per Unit
Direct materials 7.7 ounces $ 2.00 per ounce $ 15.40
Direct labor 0.8 hours $ 11.00 per hour $ 8.80
Variable overhead 0.8 hours $ 4.00 per hour $ 3.20
The company reported the following results concerning this product in June.
Originally budgeted output 3,100 units
Actual output 2,500 units
Raw materials used in production 22,300 ounces
Purchases of raw materials 23,400 ounces
Actual direct labor-hours 3,600 hours
Actual cost of raw materials purchases $ 45,100
Actual direct labor cost $ 13,100
Actual variable overhead cost $ 3,550
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for June is:_________.
Garrison 16e Rechecks 2017-10-31
Answer:
Direct material price variance= $1,638 favorable
Explanation:
Giving the following information:
Direct materials 7.7 ounces $ 2.00 per ounce $ 15.40
Purchases of raw materials 23,400 ounces
Actual cost of raw materials purchases $ 45,100
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Actual price= 45,100/23,400= $1.93
Direct material price variance= (2 - 1.93)*23,400
Direct material price variance= $1,638 favorable
Sammy's Shovels had sales of $ 90,880 in 2010. The cost of goods sold was $ 34,863 , operating expenses (excluding depreciation) were $ 11,490 , interest expenses were $ 1,317 , depreciation expense was $ 7,961 , and dividends paid were $ 3,415 . The firm's tax rate is 27 percent. What did Sammy's Shovels report as net income (or, net profit) in 2010
Answer: $25731.77
Explanation:
The attached picture explains the way to solve the question. It would be noted that the expenses like the operating, depreciation, interest expense and the cost of good sold were all subtracted from the sales revenue.
Then the income before tax was $35249. Then the tax expense of 27% was deducted.
Income Tax expense = 27% of $35249 = $9517.23
Net profit = $35249 - $9517.23 = $25731.77
The net profit for Sammy Shovels is $25731.77.
The city football stadium is dangerous and there is a need to build a new city football stadium for both safety and size reasons. The city must have land adjoining the current stadium to enlarge. A condemnation proceeding to take the land is initiated against the land owner. This is an example of:
Answer:
Police power.
Explanation:
This form of power is sternly found in the law of the united states of america. It was been arranged and strongly enforced in the tenth amendment of the constitution. This law is said to be carried out by the higher authorities or state to protect and enforce order within their range for benefit of the environment, people and inhabitants.
And it is generally known that the states/authorities can possibly come all out to enforce this law no matter how hard they seem to come against the individual, provided his/her humans rights are not been tampered.
Management is considering using a new component that would increase the unit variable cost by $50. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected
Answer:
Because fixed costs will not change, the overall effect on the company's monthly net operating income will be equal to the contribution margin of the product once the new component is added.
Explanation:
The contribution margin is equal to: Revenue - Variable Costs.
We already know that the variable cost will be increased by $50 once new component is added, and that monthly sales are expected to increase by 500 units after that.
Depending on the price of the product, the amount sold, and the variable costs, we get the contribution margin, and this contribution margin will be exactly the same as the overall effect on the net operating income.
Compared with diversification based on intangible resources, diversification based on financial resources is: a. less imitable and more likely to create value on a long-term basis. b. more imitable and less likely to create value on a long-term basis. c. less imitable and less likely to create value on a long-term basis. d. more imitable and more likely to create value on a long-term basis.
Answer:
b. more imitable and less likely to create value on a long-term basis.
Explanation:
In Finance, diversification can be defined as an investment technique that focuses on distributing capital or portfolio across various investments.
Basically, the aim of adopting a diversification is to lessen or mitigate the degree of uncertainty of the portfolio by enhancing its high long-term returns.
Diversification helps financial experts or investors to complement or annul the losses associated with an asset class by the benefits of another asset class in a portfolio.
Compared with diversification based on intangible resources, diversification based on financial resources is more imitable or copied by rivals in the industry and less likely to create value on a long-term basis.
Diversification based on intangible resources, includes intellectual property, brand recognition, human resources, patents, customer lists, trademarks, copyrights, and goodwill etc.
Diversification based on financial resources, includes shares, money, bond, gold, debentures, checks, and promissory notes.
On the grant date, January 1st, 2015, the stock was quoted on the stock exchange at $63 per share. The fair value of the options on the grant date was estimated at $15 per option. The amounts of compensation expense ABC should recognize with respect to the options during 2015, 2016, and 2017 are:
Answer:
2015 $31,500
2016 $31,500
2017 $31,500
Explanation:
Number of Options in total × Fair Value of the Stock per option
Where
Number of Options in total = 63
Fair Value of the Stock per option =15
Hence:
(63*100) ×$15
=$6,300 ×$15
= $ 94,500
Compensation expense will be:
2015, 2016, and 2017 will give us 3 years
= $94,500/3
= $31,500 for 2015, 2016, and 2017
Fair value of the options is said to be evaluated on grant date and expenditure is been recognised in 3 years because the employee will be working for 3 years which is from year 2015 to 2017
An ordinary annuity selling at $14,130.15 today promises to make equal payments at the end of each year for the next twelve years (N). If the annuity’s appropriate interest rate (IN) remains at 8.00% during this time, the annual annuity payment (PMT) will be
Answer:
PMT = $1875.00
Explanation:
The annuity refers to a series of fixed payments made after an equal interval of time and for a definite time period. The formula for the present value of annuity is,
For ordinary annuity
PV of annuity = PMT * [(1 - (1+IN)^-n) / IN]
Plugging in the values for the available variables. We calculate the PMT to be,
14130.15 = PMT * [(1 - (1+0.08)^-12) / 0.08]
14130.15 = PMT * 7.536078017
14130.15 / 7.536078017 = PMT
PMT = $1875.000493 rounded off to $1875.00
On January 1, a company purchased a five-year insurance policy for $2,200 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
Answer:
Debit Insurance Expense 440
Credit Prepaid Insurace 440
Explanation:
Since on January 1, the company purchased a five year insurance policy for $2,200 that means we have to divide the insurance policy amount of $2,200 by the numbers of year which is 5 years .
Hence:
$2,200/5 years
=440
Therefore the adjusting entry at the end of the first year is:
Debit Insurance Expense 440
Credit Prepaid Insurace 440
