Answer:
a. How many Alphas and Deltas should the company produce each month to maximize monthly profit?
150 Alphas80 Deltasb. If the company produces at the level found in requirement (a), how much will monthly profit increase over the current production schedule?
$480 increase (or 75% increase)Explanation:
Alpha Delta
Price $120 $150
Variable costs per unit :
Material $20 $35 Labor $26 $37 Overhead $14 $14Contribution margin per unit $60 $64
Fixed costs :
Manufacturing $8,000 Marketing and administrative $5,000 total $13,000Machine hours per unit 2.0 2.5
Machine hours used 495
Machine hours available 500
Quantity produced 110 110
Maximum demand 150 150
Profit $640
Contribution margin per machine hour:
$30 $25.60
this means you should produce as many Alphas as possible = 150. Production of 150 Alphas will consume 300 machine hours and the remaining 200 hours can be used to produce 80 Deltas.
Monthly profit:
[(150 x $60) + (80 x $64)] - 13,000 = $9,000 + $5,120 - $13,000 = $1,120, which represents a $480 increase (or 75% increase)
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2013, net credit sales totaled $4,500,000, and the estimated bad debt percentage is 1.5%. The allowance for uncollectible accounts had a credit balance of $42,000 at the beginning of 2013 and $40,000, after adjusting entries, at the end of 2013.
Required:
1. What is bad debt expense for 2013?
2. Determine the amount of accounts receivable written off during 2013.
3. If the company uses the direct write-off method, what would bad debt expense be for 2013?
Answer:
1. The Bad debt expense for 2013 is $67,500
2. The amount of accounts receivable written off during 2013 is $69,500
3. If the company uses the direct write-off method, the bad debt expense for 2013 would be $69,500
Explanation:
1. In order toCalculate the bad debt expense for 2013 we would have to make the following calculation:
Bad debt expense=1.5% of Net Credit Sales
=1.5%×$4,500,000
=$67,500
The Bad debt expense for 2013 is $67,500
2. In order to Determine the amount of accounts receivable written off during 2013 we would have to make the following calculation:
amount of accounts receivable written off=$42,000+$67,500-$40,000
amount of accounts receivable written off=$69,500
The amount of accounts receivable written off during 2013 is $69,500
3. Using direct write off method, the bad debt expense is recognized only when the actual bad debt is incurred. The actual bad expense would be the amount of accounts receivable written off during the year. Accounts receivable written off during the year would be same in both the methods.
Thus, the bad debt expense for the year 2013 would be $69,500.
Handy Home sells windows and doors in the ratio of 7:3 (windows:doors). The selling price of each window is $111 and of each door is $261. The variable cost of a window is $68.00 and of a door is $180.50. Fixed costs are $515,375.
Required:
1. Determine the selling price per composite unit.
2. Determine the variable cost per composite unit.
3. Determine the break-even point in composite units.
4. Determine the number of units of each product that will be sold at the breakeven point.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Handy Home sells windows and doors in the ratio of 7:3 (windows:doors).
Window:
Selling price= $111
Unitary variable cost= $68
Door:
Selling price= $261
Unitary variable cost= $180.5
Fixed costs are $515,375.
1) Selling price per composite unit:
Selling price= 0.7*111 + 0.3*261= $156
2) Composite variable cost:
Variable cost per unit= 0.7*68 + 0.3*180.5= 101.75
3) To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 515,375/ ( 156 - 101.75)
Break-even point in units= 9,500 units
4) Units for each product:
Windows= 0.7*9,500= 6,650
Door= 0.3*9,500= 2,850
Assume that Corn Co. sold 7,500 units of Product A and 2,500 units of Product B during the past year. The unit contribution margins for Products A and B are $33 and $56, respectively. Corn has fixed costs of $328,000. The break-even point in units is
Answer:
Break-even point (units)= 8,464 units
Explanation:
Giving the following information:
Assume that Corn Co. sold 7,500 units of Product A and 2,500 units of Product B during the past year. The unit contribution margins for Products A and B are $33 and $56, respectively. Corn has fixed costs of $328,000.
First, we need to calculate the proportion of sales:
Product A= 7,500/10,000= 0.75
Product B= 2,500/10,000= 0.25
Now, using the following formula, we can determine the break-even point in units:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Break-even point (units)= 328,000/ (0.75*33 + 0.25*56)
Break-even point (units)= 328,000/38.75
Break-even point (units)= 8,464 units
g On January 1, 2020, Marigold Company issued 10-year, $1,890,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Marigold common stock. Marigold’s net income in 2020 was $470,000, and its tax rate was 20%. The company had 94,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020.
Answer:
$3.78
Explanation:
The First step is to calculate basic earning per share then making the adjustments to the basic earning per share to arrive to a diluted earning per share.
Basic Earning per Share = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Stock Holders.
Earnings Attributable to Holders of Common Stock Calculation :
Net Income $470,000
Less Bond Interest ($1,890,000×6%×80%) ($90,720)
Earnings Attributable to Holders of Common Stock $379,280
Weighted Average Number of Common Stock Holders Calculation :
Outstanding Common Shares 94,000
Weighted Average Number of Common Stock Holders 94,000
Basic Earning per Share = $379,280 / 94,000 = $4.03
Diluted Earnings per Share = Adjusted Earnings Attributable to Holders of Common Stock / Adjusted Weighted Average Number of Common Stock Holders.
Adjusted Earnings Attributable to Holders of Common Stock Calculation :
Earnings Attributable to Holders of Common Stock $379,280
Add Back Bond Interest ($1,890,000×6%×80%) $90,720
Adjusted Earnings Attributable to Holders of Common Stock $470,000
Adjusted Weighted Average Number of Common Stock Holders.
Outstanding Common Shares 94,000
Add Convertible Bonds ($1,890,000/$1,000×16) 30,240
Adjusted Weighted Average Number of Common Stock Holders 124,240
Diluted Earnings per Share = $470,000 / 124,240 = $3.78
Colleague responsibilities related to compliance include which of the following:________. A. Report if you have been placed on a state or federal exclusion list B. Report if you have been convicted of a minor traffic violation C. Report when your employment-related professional licenses have been renewed D. Report when you complete annual continuing education
Answer:
A. Report if you have been placed on a state or federal exclusion list
Explanation:
While working in an organization you have some responsibilities which are related to compliance, integrity, honesty, etc are as follows
1. They have to report if they are placed on a state or federal exclusion list that also includes Officer of Inspector General (OIG), General Service Administration (GSA)
2. Instant report the criminal offense if you are convicted other than the minor traffic violation
The conviction excludes the following things
a. Arrest or charges
b. Judicially dismissed
c. That does not consider except felony convictions that also includes controlled substances should always be reported
hence, the correct option is a.
In a company, individuals have roles and responsibilities which should be fulfilled. It can include truthfulness, virtue, compliance's etc.
The correct answer is:
Option A. Report if you have been placed on a state or federal exclusion list.
This can be explained as:
The colleague should report if they were on the state or national exclusion list.The exclusion list can also contain General Service Administration or Officer of Inspector General.If the charges were other than minor traffic violations like criminal offences should be reported instantly.The convictions do not include charges, arrests, court dismissals etc.Therefore, if placed on the exclusion list should be reported.
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The board of directors of Capstone Inc. declared a $0.80 per share cash dividend on its $1 par common stock. On the date of declaration, there were 48,000 shares authorized, 16,000 shares issued, and 5,000 shares held as treasury stock. What is the entry when the dividends are declared
Answer and Explanation:
The journal entry when the dividend is declared is shown below:
Cash Dividend A/c Dr $8,800 {(16,000 shares - 5,000 shares) × $0.80}
To Dividend payable A/c $8,800
(Being the dividend is declared)
for recording this we debited the cash dividend as it increased the balance of dividend and credited the dividend payable as it also increased the liabilities
what are the 8 core subject areas that employer expect all employees to know
Answer:
Communication. More than two-thirds of recruiters across all industries say communication is the most important skill they look for. ... Decision-Making. Flexibility. Commitment. Innovation. Integrity. Leadership. Life-long Learning.Explanation:
Have a good day and stay safe!
Outline the steps that you would take to ensure a successful conversion from the existing call center system to the new EHR-compatible system. Defend your response. Who should be involved in the conversion planning and implementation
Answer:
I. The steps to be taken are:
Scoping the project: Every project must have a scope. That is a scope of what needs to be achieved. Engaging a conversion expert: One must look out for someone experienced and whose prices are affordable. It's best to seek out references before engaging a conversation specialist and if possible, background checks done as he or she will be handling very sensitive data.Execution of the Project: Usually, the first version of the project will have some bugs which will necessitate upgrades and updates. These updates and upgrades are part of the process.Collaborating with the Conversion Specialist: During projects of this nature, one will need to work with other professionals outside of ones normal workforce. This human to human interaction may look simple but is critical as the specialist cannot do his or her job if they are not guided by someone internal who knows the process very well.Testing, Validating, and IteratingAfter the old records have been installed onto the new EHR system, it will be time to see if it really works. At this stage, debugging is very frequent. What works will be noted and what doesn't is fixed. Then the system is tested all over again.
6. Ensure that Import and Extraction work as planned.
Extraction and Importation are key features of an efficient EHR system. Data needs to be imported into the database, and reports/ information need to be extracted at one point or the other.
7. Tidying up Work Flow
The EHR is built to ease the administration of patients. If there are any errors or inadequacies, it will be highlighted at this stage. The conversion specialist will be available to ensure that any correction in this regard is effected.
8. Launch: This simply means going live with the new system.
II Those who will be responsible for the conversion planning and implementation are:
1. Internal Staff. Depending on the organisation, Heads of teams and key members of staff whose opinions are valued and who understand the system and the big picture (in terms of what the strategic objective of the new system) will be on the conversion, planning and implementation team.
2. Conversion Specialist will also be required. This person most likely will be a third party and is very crucial to the project.
Cheers!
The balance sheet of Sand Sportswear reports total equity of $500,000 and $650,000 at the beginning and end of the year, respectively. The return on equity for the year is 20%. What is Sand Sportswear's net income for the year
Answer:
Sand Sportswear's net income for the year is $115,000
Explanation:
In order to calculate the net income for the year we would have to us the following formula:
Return on equity = Net income / Average total equity
Return on equity=20%
Average total equity=($500,000 + $650,000) / 2 = $575,000
Therefore, Net income=Average total equity*Return on equity
Net income=$575,000*20%
Net income=$115,000
Sand Sportswear's net income for the year is $115,000
Screening Model. Assume that the following criteria relevant to the process of screening various project opportunities are weighted in importance as follows:
• Quality (5)
• Cost (3)
• Speed to Market (7)
• Visibility (5)
• Reliability (1)
Our company has four project alternatives that satisfy these key feature as follows:
Alpha Bete Gamma Delta
Quality 1 3 3 5
Cost 7 7 5 3
Speed 5 5 3 5
Visibility 3 1 5 1
Reliability 5 5 7 7
Construct a project screening matrix to identify among these four projects the most likely candidates to be implemented.
Answer:
Project Alpha 81
Project Beta 81
Project Gamma 83
Project Delta 81
Among the four projects the most likely candidates to be implemented will
be Project Gamma .
Explanation:
Screening Model
1.Calculation for Project Alpha
Important Weight×Weight Score = Weighted Score
Quality 5 × 1 =5
Cost 3 ×7 =21
Speed 7 ×5 =35
Visibility 5 ×3= 15
Reliability 1× 5 =5
Total Score =81
2.Important Weight ×Weight Score = Weighted Score
Calculation for Project Beta
Quality 5 × 3 =15
Cost 3 ×7 =21
Speed 7× 5 =35
Visibility 5×1 =5
Reliability 1 ×5 =5
Total Score =81
3.Important Weight ×Weight Score = Weighted Score
Calculation for Project Gamma
Quality 5 ×3 =15
Cost 3 ×5 =15
Speed 7× 3= 21
Visibility 5×5 =25
Reliability 1×7 =7
Total Score=83
4.Important Weight ×Weight Score = Weighted Score
Calculation for project Delta
Quality 5 ×5 =25
Cost 3 ×3 =9
Speed 7× 5 =35
Visibility 5×1 =5
Reliability 1 ×7 =7
Total Score =81
Therefore among the four projects the most likely candidates to be implemented will
be Project Gamma because it has the highest
score with a score of 83.
The Field, Brown & Snow partnership was begun with investments by the partners as follows: Field, $131,700; Brown, $167,700; and Snow, $155,400. The partners decide to liquidate, sharing all losses equally. On May 31, after all assets were sold and all creditors were paid, only $47,100 in partnership cash remained.
Required:
a. Compute the capital account balance of each partner after the liquidation of assets and the payment of creditors.
b. Assume that any partner with a deficit agrees to pay cash to the partnership to cover the deficit. Present the journal entries on May 31 to record (a) the cash receipt from the deficient partner(s) and (b) the final
disbursement of cash to the partners.
c. Assume that any partner with a deficit is not able to reimburse the partnership. Present journal entries (a) to transfer the deficit of any deficient partners to the other partners and (b) to record the final disbursement of cash to the partners.
Answer:
a. The capital account balance of each partner after the liquidation of assets and the payment of creditors would be as follows:
Field Brown Snow
Capital Balance -4,200 31,800 19,500
b. a
Debit Credit
Cash 4,200
Field capital 4,200
b. Debit Credit
Brown capital 31,800
Snow capital 19,500
Cash 51,300
c. a Debit Credit
Brown capital 2100
Snow capital 2100
Field Capital 4,200
b. Debit Credit
Brown capital 29,700
Snow capital 17,400
Cash 47,100
Explanation:
a. In order to calculate the capital account balance of each partner after the liquidation of assets and the payment of creditors we would have to make the following calculations:
Field Brown Snow Total
Initial Investment $131,700 $167,700 $155,400 454,800
Allocation of all losses: 135,900 135,900 135,900 407,700
(454,800-47,100)/3
Capital Balance -4,200 31,800 19,500 47,100
b. a. The record of the cash receipt from the deficient partner(s) would be as follows:
Debit Credit
Cash 4,200
Field capital 4,200
b. The record the final disbursement of cash to the partners would be as follows:
Debit Credit
Brown capital 31,800
Snow capital 19,500
Cash 51,300
c. a Record to transfer the deficit of any deficient partners to the other partners would be as follows:
Debit Credit
Brown capital 2100
Snow capital 2100
Field Capital 4,200
Brown capital= 4,200/2=2100
Snow capital=4,200/2=2100
b. Record the final disbursement of cash to the partners would be as follows:
Debit Credit
Brown capital 29,700
Snow capital 17,400
Cash 47,100
Brown capital=31,800-2,100 =29,700
Snow capital=19,500-2,100=17,400
The Whitewater LLP is equally owned by three partners and has the following balance sheet at the end of the current tax year:
Basis FMV
Cash $60,000 $60,000
Unrealized 0 15,000
receivables Land $15,000 $45,000
$75,000 $120,000
Petula, capital $25,000 $40,000
Prudence, capital $25,000 $40,000
Primrose, capital $25,000 $40,000
$75,000 $120,000
Petula is an active partner retiring from me service-oriented partnership. She receives $60,000 cash, none of which is stated to be for goodwill.
a) How much of the payment is for "unstated goodwill"?
b) How is the $60,000 allocated between a 736(a) income payment and a 736(b) property payment?
Answer:
A.) $20,000
Explanation:
Kindly check attached picture for detailed explanation
Harry agreed to pay $100 to rent a rooftop spot in Seattle to watch the New Year's Eve festivities. The festivities were canceled at the last minute due to many of the guests' concern over news of a potential terrorist attack in a different section of the city. Harry is likely:
Answer:
Not obligated to pay under the frustration of purpose doctrine
Explanation:
In this specific scenario, Harry is likely Not obligated to pay under the frustration of purpose doctrine. This doctrine states that an individual does not need to abide by his/her contractual duties if a later unforeseen event impedes the buyer's initial purpose for entering into the contract, if and only if the seller knew of the buyer's purpose at the time of entering the contract. Therefore since Harry entered into the agreement for the sole reason of watching the New Year's Eve festivities and it was cancelled due to an unforeseen event (terrorist threat) he does not have to pay.
Problem 15-10 The term structure for zero-coupon bonds is currently: Maturity (Years) YTM (%) 1 4.1 % 2 5.1 3 6.1 Next year at this time, you expect it to be: Maturity (Years) YTM (%) 1 5.1 % 2 6.1 3 7.1 a. What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond? (Round your answer to 1 decimal place.) b-1. Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year? (Round your answers to 2 decimal places.) b-2. Is the market's expectation of the return on the 3-year bond greater or less than yours? Greater Less rev: 09_14_2018_QC_CS-134332
Answer:
Explanation:
a.) What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Expect the rate of return to be over the coming year on a 3-year zero-coupon bond = 6.1%
b) Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year?(Round your answers to 2 decimal places. Omit the "%" sign in your response
Yields to maturity does the market expect to observe on 1-year at the end of the year = (1+5.1%)^2/(1+4.1%) - 1 = 6.11%
Yields to maturity does the market expect to observe on 1-year at the end of the year = 6.11%
Yields to maturity does the market expect to observe on 2-year at the end of the year = ((1+6.1%)^3/(1+4.1%))^(1/2) - 1
= 7.11%
Yields to maturity does the market expect to observe on 2-year at the end of the year = 7.11%
2b) Is the market's expectation of the return on the 3-year bond greater or less than yours?
Greater
At the annual meeting of the HR division at an insurance company, the vice president of HR noted that pay compression was a problematic phenomenon for certain jobs for which there was high demand but low supply. This problem was especially acute for jobs in actuarial science and legal services. The vice president of HR has hired you as a compensation consultant to help them formulate an action plan for dealing with this situation. What would you say is the best solution to this situation?
Answer:
Prepare high performing employees for promotions to jobs at higher salary levels.
Explanation:
Pay compression occurs when there is little difference in pay between employees regardless of experience and skill they possess. This leads to low motivation ong employees to perform above others since compensation is the same.
In the given instance this is the problem in actuarial science and legal jobs where there is high demand and low supply of talent.
To remedy this there needs to be a framework to compensate high performers.
Promoting them to jobs that have higher salary will be a great way to recognise and motivate high fliers
Burrito King (a new fast-food franchise opening up nationwide) has successfully automated burrito production for its drive-up fast-food establishments. The Burro-Master 9000 requires a constant 30 seconds to produce a batch of burritos. It has been estimated that customers will arrive at the drive-up window according to a Poisson distribution at an average of one every 45 seconds. To help determine the amount of space needed for the line at the drive-up window
A. What is the average line length (in cars)?
B. What is the average number of cars in the system (both in line and at the window)?
C. What is the expected average time in the system?
Answer:
(A)0.6600 (B) 1.325 (C) 0.997 or 1 minute
Explanation:
Solution
Given that:
The constant rate = 30 seconds
The arrival rate according to Poisson distribution is = 45 seconds
Now,
(A) We solve for the average length line of cars
The formula is given below:
Lq = λ²/ 2μ ( μ -λ)
Here,
λ = this is the mean time of arrival rate
μ = This is the mean service rate
Thus we compute for the mean time arrival rate which is given below:
The mean arrival rate λ = arrival rate/ 60 seconds
= 60/45
= 1.33 customer per minute
Then we solve for the means service rate which is given below
The mean service rate μ = 60 seconds/ mean rate
= 60/30 = 2 customer per minute
We will now solve for the average line length in cars which is shown below:
Lq = λ²/ 2μ ( μ -λ)
Lq = 1.33²/2*2 (2-1.33)
Lq = 1.7689/4 (0.67)
Lq = 1.7689/2.68
Lq = 0.6600
Therefore the average length in line for cars is 0.6600 cars
(B) We solve for the average number of cars in the system
Ls =Lq + λ /μ
Ls =0.600 + 1.33/2
Ls =0.6600 + 0.665
Ls = 1.325
(C) Finally we need to find the expected average time in the system which is shown below:
Ws = Ls/λ
Ws= 1.325/1.33 = 0.997 or 1.00
The expected time average in the system is 0.997 or 1.00 minutes.
(A) The average length in line for cars is 0.6600 cars
(B) Ls = 1.325
(C)The predicted time standard in the system is 0.997 or 1.00 minutes.
What is Average Time?The constant rate = 30 seconds
The arrival rate according to Poisson disbandment is = 45 seconds
(A) We solve for the average stature line of cars
The formula is given below:
Lq = λ²/ 2μ ( μ -λ)
Here,
λ = this is the meantime of arrival rate
μ = This is the mean service rate
Thus we compute for the meantime arrival rate which is given below:
The mean formation rate λ = arrival rate/ 60 seconds
= 60/45
= 1.33 customer per minute
Then we solve for the concessions service rate which is given below
The mean service rate μ = 60 seconds/ mean rate
= 60/30 = 2 consumer per minute
We will now solve for the average line length in cars which is shown below:
Lq = λ²/ 2μ ( μ -λ)
Lq = 1.33²/2*2 (2-1.33)
Lq = 1.7689/4 (0.67)
Lq = 1.7689/2.68
Lq = 0.6600
Hence the average length in line for cars is 0.6600 cars
(B) We solve for the average number of cars in the system
Ls =Lq + λ /μ
Ls =0.600 + 1.33/2
Ls =0.6600 + 0.665
Ls = 1.325
(C) Finally we need to find the anticipated average time in the system which is shown below:
Ws = Ls/λ
Ws= 1.325/1.33 = 0.997 or 1.00
The predicted time standard in the system is 0.997 or 1.00 minutes.
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In its first month of operations, Concord Corporation made three purchases of merchandise in the following sequence: (1) 250 units at $6, (2) 350 units at $8, and (3) 450 units at $9. Assuming there are 150 units on hand at the end of the period, compute the cost of the ending inventory under (a) the FIFO method and (b) the LIFO method. Concord Corporation uses a periodic inventory system.
Answer:
FIFO - $1350
LIFO - $900
Explanation:
Total inventory = 250 + 350 + 450 = 1050
Total inventory sold = 1050 - 150 = 900
FIFO means first in , first out. It means that it is the first purchased inventory that is the first to be sold. So the ending inventory would consist of the last purchased inventory. So the cost of the ending inventory would be allocated to the 3rd purchase of inventory
150 x $9 = $1350
LIFO means last in first out. It means that it is the last purchased inventory that is the first to be sold. So the ending inventory would consist of the first purchased inventory. So the cost of the ending inventory would be allocated to the 1st purchase of inventory
150 x $6 = $900
I hope my answer helps you
Preston Woods has 17,500 shares of stock outstanding along with $408,000 of interest bearing debt. The market and book values of the debt are the same. The firm has sales of $697,000 and a profit margin of 6.8 percent. The tax rate is 35 percent, the debt-equity ratio is 40 percent, and the price-earnings ratio is 11.8. The firm has $130,000 of current assets of which $41,200 is cash. What is the enterprise value
Answer:
$ 926,072.80
Explanation:
The company's market capitalization can be computed using the price-earnings ratio of 11.8.
Net income(earnings after tax)=sales* profit margin=$697,000*6.8%=
$ 47,396.00
P/E ratio=market capitalization/net income
11.8=market capitalization/$ 47,396.00
market capitalization=11.8*$47,396.00
market capitalization=$ 559,272.80
Enterprise value=market capitalization+debt-cash
enterprise value=$ 559,272.80+$408,000.00-41,200=$ 926,072.80
A company excludes from the current assets section, the amount of cash restricted for purposes other than payment of current obligations or for use in current operations.
1. True
2. False
Land held for speculation is reported in the long-term investment section of the balance sheet.
1. True
2. False
Financial flexibility measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows
1. True
2. False
Companies determine cash provided by operating activities by converting net income on an accrual basis to a cash basis. 1. True
2. False
Answer:
1. True.
2. True.
3. True.
4. True.
Explanation:
1. True: A company excludes from the current assets section, the amount of cash restricted for purposes other than payment of current obligations or for use in current operations.
2. True: Land held for speculation is reported in the long-term investment section of the balance sheet because they are fixed assets.
3. True: Financial flexibility measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows.
4. True: Companies determine cash provided by operating activities by converting net income on an accrual basis to a cash basis.
Charles Underwood Agency Inc. has an expected net operating profit after taxes, EBIT(1 – T), of $14,200 million in the coming year. In addition, the firm is expected to have net capital expenditures of $2,130 million, and net operating working capital (NOWC) is expected to increase by $35 million. How much free cash flow (FCF) is Charles Underwood Agency Inc. expected to generate over the next year?
Answer:
The free cash flow (FCF) is Charles Underwood Agency Inc. expected to generate over the next year is $12,035 million
Explanation:
According to the given data we have the following:
net operating profit after taxes=$14,200 million
net capital expenditures= $2,130 million
net operating working capital = $35 million.
Therefore, free cash flow (FCF) is Charles Underwood Agency Inc. expected to generate over the next year would be calculated as follows:
FCF= net operating profit after taxes-net capital expenditures- net operating working capital
FCF=$14,200 million-$2,130 million- $35 million
FCD=$12,035 million
The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $36,016. During October, the total cash deposited was $138,030, and checks written totaled $138,571. The bank statement indicated a balance of $43,940 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: A. Checks outstanding totaled $6,281. B. A deposit of $1,796 representing receipts of October 31, had been made too late to appear on the bank statement. C. The bank had collected for Coastal Bike Co. $5,670 on a note left for collection. The face of the note was $5,400. D. A check for $570 returned with the statement had been incorrectly charged by the bank as $750. E. A check for $210 returned with the statement had been recorded by Coastal Bike Co. as $120. The check was for the payment of an obligation to Rack Pro Co. on account. F. Bank service charges for October amounted to $26. G. A check for $1,394 from Bay View Condos was returned by the bank due to insufficient funds.
Answer:
Explanation:
This is an incomplete question and the missing part is as listed.
A) Prepare a bank reconciliation as at October 31, 20Y9
B)Jornalize the necessary entry
C)If a balanced sheet was prepared for Coastal Bike Co., what amount should be reported as cash?
Solution
Opening cash balance - 36,016
Cash deposited - 138,030
Check written - (138,571)
35,475
Bank reconciliation for Coastal bike as at October 31 20Y9
Cash balance according to Bank statement - 43,940
Unrecorded deposit 1796
Bank error (750-570) 180
Outstanding checks 6281
Total adjustment 4,305
Adjusted balance 39,635
Cash balance after considering the month,s transaction 35,475
Note collected by bank 5670
Bank charges 26
Returned checks 1,394
Error in recording check(210-120) 90
Total adjustment 4160
Adjusted balance 39,635
B
Entries that increase cash
Description Debit Credit
Cash 5670
Note receivable 5400
Interest Income 270
Accounts payable (Rack pro) 90
Accounts receivable (Bay view) 1394
Bank charges 26
Cash 1510
c
Amount to be recorded as cash in balanced sheet
Opening cash balance - 36,016
Cash deposited - 138,030
Check written - (138,571)
35,475
Assuming no employees are subject to ceilings for their earnings, Harris Company has the following information for the pay period of January 15 - 31.
Gross payroll $19,676
Federal income tax withheld $3,438
Social security rate 6%
Federal unemployment tax rate 0.8%
Medicare rate 1.5%
State unemployment tax rate 5.4%
Salaries Payable would be recorded in the amount of
a) $15,018.09
b) $13,542.39
c) $14,762.30
d) $19,676.00
Answer:
The correct answer is B. Salaries Payable would be recorded in the amount of 13,542.39.
Explanation:
Given that the company's gross payroll is $19,676, and that a discount of $3,438 must be applied by the Federal Income Tax, a 6% social security rate, a 0.8% federal unemployment rate, a 1.5% rate Medicare and 5.4% state unemployment rate, the following gross discounts must be made to gross payroll to determine wages to be paid after taxes:
3,438 (Federal Income Tax)
19,676 x 0.06 = 1,180.56 (social security rate)
19,676 x 0.008 = 157.408 (federal unemployment rate)
19,676 x 0.015 = 295.14 (Medicare rate)
19,676 x 0.054 = 1,062.5 (state unemployment rate)
Therefore, those discounts should be subtracted from the gross payroll in order to get the Salaries Payable:
19,676 - 3,438 - 1,180.56 - 157.4 - 295.14 - 1,062.5 = 13,542.39.
Montclair Company earns an average contribution margin ratio of 40% on its sales. The local store manager estimates that he can increase monthly sales volume by $45,000 by spending an additional $7,000 per month for direct mail advertising. Compute the monthly increase in operating income if the manager's estimate about the increased sales volume is accurate.
Answer:
$11,000
Explanation:
The computation of the monthly increase in operating income is shown below:
= Sales volume × contribution margin ratio - additional spending done on the direct mail advertising
= $45,000 × 40% - $7,000
= $18,000 - $7,000
= $11,000
We simply applied the above formula so that the monthly increase in operating income could be determined.
Your Competitive Intelligence team reports that a wave of product liability lawsuits is likely to cause Baldwin to pull the product Bat entirely off the market this year. Assume Baldwin scraps all capacity and inventory this round, completely writing off those assets and escrowing the proceeds to a settlement fund, and assume these lawsuits will have no effect on any other products of Baldwin or other companies. Without Baldwin's product Bat how much can the industry currently produce in the Core segment
Answer:
11550
Explanation:
The computation of industry current produced in the core segment is shown below:
As there are five companies in the core segment i.e Abby, Brat, Bat, Cent , and Clack
First, we have to compute the total production capacity which is
Companies Primary Segment Capacity Next Round
Abby Core 2150
Brat Core 1250
Bat Core 1500
Cent Core 1098
Clack Core 1027
Total Capacity 7025
Now
segment without Brat.
So,
Production Capacity
= 7025 - 1250
= 5775
Moreover, the company work in two shifts
So, the production capacity is
= 5775 × 2
= 11550
Maria Am Corporation uses a process costing system. The Baking Department is one of the processing departments in its strudel manufacturing facility. In June in the Baking Department, the cost of beginning work in process inventory was $3,570, the cost of ending work in process inventory was $2,860, and the cost added to production was $43,120. Required: Prepare a cost reconciliation report for the Baking Department for JuneBanking DeparmentBost ReconciliationCosts to be accounted forBlank blank blank amountBlank blank blank amountTotal costs to be accounted forCosts accounted for as followsBlank blank blank amountBlank blank blank amountTotal cost accounted for
Answer:
Explanation:
The following information can be derived from the question above:
The cost of the beginning work in the process inventory = $3,570
The cost of the ending work in the process inventory = $2,860
The cost that is added to the production = $43,120.
In the attached document, it should be noted that the cost of goods that were transferred out was calculated as:
The total cost to be accounted for minus the cost of the ending work in the process inventory. This is:
= 46690 - 2860
= 43830
The cost reconciliation report for the Baking Department for June has been solved and attached.
Blossom Corp. has collected the following data concerning its maintenance costs for the past 6 months.
Units Produced Total Cost
July 18,070 $41,663
August 32,128 48,192
September 36,144 55,220
October 22,088 44,580
November 40,160 74,798
December 38,152 62.248
Compute the variable cost per unit using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.)
Variable cost per unit $ e
Compute the fixed cost elements using the high-low method. Fixed costs $
Answer:
Variable cost per unit = $1.5 per unit
Fixed cost = $14,558
Explanation:
Variable cost per unit
= cost at high activity - cost at low activity/High activity -low activity
=$(74,798- $41,663) / (40,160 -18,070) units
= $1.5 per unit
Fixed cost
Total fixed cost = cost at high activity - ( vc per unit × high activity)
= 74,798 - (1.5 × 40,160)
= $14,558
Variable cost per unit = $1.5 per unit
Fixed cost = $14,558
Hewlett-Packard introduced its HP Tablet a few years after Apple launched its original iPad, about the same time Apple introduced its next-generation iPad2. HP Tablet sales were very disappointing, and Hewlett-Packard eventually killed the product. According to the text, the primary reason for the HP Tablet’s failure was due in large part to:_____
a. poor product quality
b. not satisfying customer needs on critical factors.
c. an insignifanct point of difference
d. bad timing
Answer:
d. bad timing
Explanation:
Remember the principle of first entry advantage which says that the first entrant to a market has better advantage of gaining more market share over late entrants.
This was true in the Tablet market which saw Apple's iPad been the very first commercially sold tablet devices. Because of wrong/late timing when Apple introduced its next-generation iPad2 the HP tablet came in struggling to get a part of the already captured tablet market by Apple's iPad.
Beasley, Inc., reports the following amounts in its December 31, 2021, income statement. Sales revenue $ 350,000 Income tax expense $ 39,000 Interest expense 12,000 Cost of goods sold 125,000 Salaries expense 37,000 Advertising expense 23,000 Utilities expense 43,000 Prepare a multiple-step income statement.
Answer and Explanation:
The preparation of the multiple-step income statement is presented below:
Beasley, Inc.
Multiple-step income statement
December 31, 2021
Sales revenue $350,000
Less: Cost of goods sold -$125,000
Gross profit $225,000
Less: Operating expenses
Salaries expense -$37,000
Advertising expense -$23,000
Utilities expense -$43,000
Operating income $122,000
Less: interest expense -$12,000
Income before income tax $110,000
Less: income tax expense -$39,000
Net income $71,000
We simply deduct all the expenses from the sales revenue so that the net income could arrive
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $70,000 or $200,000 with equal probabilities of .5. The alternative risk-free investment in T-bills pays 6% per year.
Required:
a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio?
b. Suppose that the portfolio can be purchased for the amount you found in (a) What will be the expected rate of return on the portfolio?
c. Now suppose that you require a risk premium of 12%. What is the price that you will be willing to pay?
d. Comparing your answers to (a) and id. what do you conclude about the relationship between the required risk premium on a portfolio and the price at which the portfolio will sell?
Answer:
(a) $118,421 (b) $135,000 (c) $114,407 (d) The portfolio that has a risk higher will sell at a lower price rate. The discount additional value is regarded as a risk of consequence
Explanation:
Solution
(a) If you require a risk premium of 8%, the total return expected on the risky portfolio is given as follows:
E(r) =Risk premium + rf
= 8% + 6% = 14%
Thus
The portfolio is given as follows:
Probability Return
0.5 $70,000
0.5 $200,000
Hence the dollar return that is expected is computed as follows:
E(r) =∑p(s)r(s)
=Now, 0.5 x 70,000 + 0.5 x 200,000
=$135,000
Now,
we want 135,000 to be 14% of our initial investment, so, the portfolio present value is:
Present value = $135,000/1.14
=$118,421
(b)The expected rate of return on the portfolio, suppose that the portfolio can be bought or the amount 118,421
Then
The expected rate of return =[ E(r) ] = $118,421 * [ 1 + E(r)]
= $118,421 *(1+ 0.14) = $135,000
(c) The price that you are willing to pay when the premium is 12%, then the risk free rate is given by 6%
Thus,
E(r) =Risk premium + rf
=12% + 6% = 18%
The dollar expected return is stated as follows:
E(r) =∑p(s)r(s)
Now, 0.5 x 70,000 + 0.5 x 200,000
=$135,000
we want 135,000 to be 18% of our initial investment, so, the portfolio present value is:
Present value = $135,000/1.18
= $114,407
(d) The portfolio that has a risk higher will sell at a lower price rate. The discount additional value is regarded as a risk of consequence.
Federal Semiconductors issued 11% bonds, dated January 1, with a face amount of $800 million on January 1, 2021. The bonds sold for $739,814,813 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $730 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2022 had risen to $736 million.
Required:
1. Prepare the journal entry to record their issuance by Federal on January 1, 2021.
2. Prepare the journal entry to record interest on June 30, 2021 (at the effective rate).
3. Prepare the journal entry to record interest on December 31, 2021 (at the effective rate).
4. At what amount will Federal report the bonds among its liabilities in the December 31, 2021, balance sheet?
Answer:
1. Prepare the journal entry to record their issuance by Federal on January 1, 2021.
Date Account title Debit ($) Credit ($)
Jan 1, 2021 Cash 739,814,813
Discount on bonds payable 60,185,187
Bonds payable 800,000,000
(To record issue of bonds)
2. Prepare the journal entry to record interest on June 30, 2021 (at the effective rate).
Date Account title Debit ($) Credit ($)
June 30, 2021 Interest expense 44,388,889
Discount on bonds payable 388,889
Cash 44,000,000
(To record payment of semi-annual interest)
3. Prepare the journal entry to record interest on December 31, 2021 (at the effective rate).
Date Account title Debit ($) Credit ($)
Dec 31, 2021 Interest expense 44,412,222
Discount on bonds payable 412,222
Cash 44,000,000
(To record payment of semi-annual interest)
4. The amount that Federal will report for the bonds among its liabilities in the December 31, 2021, balance sheet is $740,615,924
Explanation:
1. Discount on bonds payable = $800 million - $739,814,813 = $60,185,187
2. Cash paid = Face value × stated interest × interest time period
= $800,000,000 × 11% × 0.5
= $44,000,000
Interest expense = price of bonds × market interest rate × interest time period
= $739,814,813 × 12% × 0.5
= $44,388,889
Discount on bonds payable = $44,388,889 - $44,000,000 = $388,889
3. Cash paid = Face value × stated interest × interest time period
= $800,000,000 × 11% × 0.5
= $44,000,000
Interest expense = price of bonds × market interest rate × interest time period
= ($739,814,813 + $388,889) × 12% × 0.5
= $ 44,412,222
Discount on bonds payable = $44,412,222 - $44,000,000 = $412,222
4. Long term liabilities = Bonds payable + Discount on bonds payable June 30 + Discount on bonds payable December 31
= $739,814,813 + $388,889 + $412,222
= $740,615,924
