Answer:
Current yield is 6.35%
YTM is 6.40%
Effective annual yield is 6.50%
Explanation:
Current yield =coupon amount/price=6.3%*$1000/$1000*99.2%=6.35%
Yield to maturity can be computed using excel rate formula as below:
=rate(nper,pmt,-pv,fv)
nper is the number of coupon payments of the bond which is 13*2
pmt is the annual coupon=6.3%*$1000=$63/2=$31.5
pv is the current price=99.2%*$1000=$992
fv is the face value of $1000
=rate(13*2,31.5,-992,1000)=3.20%
Semiannual yield =3.20%
annual yield=3.20%*2=6.40%
effective annual yield=(1+YTM/2)^2-1
effective annual yield=(1+6.40%/2)^2-1=6.50%
Your grandmother asks for your help in choosing a certificate of deposit (CD) from a bank with a one-year maturity and a fixed interest rate. The first certificate of deposit, CD #1, pays 1.95 percent APR compounded monthly, while the second certificate of deposit, CD #2, pays 2.00 percent APR compounded weekly. What is the effective annual rate (the EAR) of each CD, and which CD do you recommend to your grandmother?
Answer:
1.97% and 2.01%
Explanation:
The computation of the effective annual rate is shown below:-
Effective annual rate = (1 + Annual percentage rate ÷ n)^n -1
For CD 1
= (1 + 0.0195 ÷ 12)^12 - 1
= (1 + 0.001625 )^12 - 1
= (1.001625 )^12 - 1
= 1.97%
For CD 2
= (1 + 0.02 ÷ 2)^2 - 1
= (1 + 0.01 )^2 - 1
= (1.01)^2 - 1
= 2.01%
CD 2 will recommend to the grandmother
Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions):
Investor Services Institutional Services
Revenues $3,016 $1,523
Income from operations 847 523
Depreciation 133 54
A. How does a brokerage company like Schwab define the "Investor Services" and "Institutional Services" segments? Use the Internet to develop your answer
The segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual investors. The segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators
B. Provide a specific example of a variable and fixed cost in the "Investor Services" segment.
Variable costs in the "Investor Services" segment include: Check all that apply.
Depreciation on brokerage office equipment, such as computers and computer networks
Depreciation on brokerage offices
Property taxes on brokerage offices
Commissions to brokers
Fees paid to exchanges for executing trades
Transaction fees incurred by Schwab mutual funds to purchase and sell shares
Fixed costs in the "Investor Services" segment include: Check all that apply.
Depreciation on brokerage office equipment, such as computers and computer networks
Commissions to brokers
Property taxes on brokerage offices
Depreciation on brokerage offices
Fees paid to exchanges for executing trades
Transaction fees incurred by Schwab mutual funds to purchase and sell shares
C. Estimate the contribution margin (in millions) for each segment, assuming depreciation represents the majority of fixed costs.
Investor Services Institutional Services
Estimated contribution margin $_____________ $________________
D. If Schwab decided to sell its "Institutional Services" accounts to another company, estimate how much operating income would decline (in millions). $___________
Answer: The answer is provided below
Explanation:
A. A brokerage company such as Schwab will define the "Investor Services" and the "Institutional Services" segments like this:
Investor services- This will be:
• Real brokerage and also banking services to the individual investors.
• Other retirement plan to the corporations.
Institutional services- This will be:
• Marketing support to the independent investment advisors.
• Trading tools to the independent investment advisors.
B. The variable costs in the "Investor Services" segment will include:
• Fees paid to exchanges for executing trades
• Transaction fees incurred by Schwab mutual funds to buy and sell shares
• Commissions to brokers.
The fixed costs in the "Investor Services" segment will include:
• Depreciation on brokerage offices.
• Depreciation on the brokerage office equipment, like computers and computer networks.
The explanation for C and D has been attached. For D, the operating income would decline by $577 million.
If the price of chocolate-covered peanuts decreases from $1.15 to $0.90, the quantity demanded does not change, and other things are unchanged, the absolute value of the price elasticity of demand, using the midpoint method, is:
Answer:
price-elasticity = 0
Explanation:
The formula for mid-point elasticity will be as follows:
[tex]\frac{q_1-q_2}{\frac{q_1+q_2}{2}} \div\frac{p_1-p_2}{\frac{p_1+p_2}{2}}[/tex]
Now, as quantity did not change we get:
q1 = q2
thus q1 + q2 = 2q1
and q1 - q2 = 0
[tex]\frac{0}{\frac{2q_1}{2}} \div\frac{1.15-0.90}{\frac{1.15+0.90}{2}}[/tex]
As we are getting a zero the end result will be zero which makes complete sense as there was no change in quantity the demand is completely inelastic.
Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 5 in 2009, then the GDP deflator in 2009, using a base year of 2002, was approximately:________.
A) 1.5.
B) 1.7.
C) 1.9.
D) 2.0.
Answer:
B) 1.7
Explanation:
GDP deflator simply shows the occurring event of the level of prices in the economy which is why It is often the ratio of nominal GDP to real GDP.
GDP deflator in 2009 will be:
Norminal GDP
Cost of apple= $1 in 2009
Apple produced =5 in 2009
Cost of oranges= $1.50 in 2009.
Orange produce= 5 in 2009
$1.00*(5)+$1.50*(5)
=5+7.5
=$12.50
Real GDP
Cost of apple= $0.50 in 2002
Apple produced =5 in 2002
Cost of oranges= $1 in 2002
Orange produce= 5 in 2002
0.50*(5)+$1.00*(5)
=2.5+5
=$7.50
GDP deflator = Nominal GDP/Real GDP)
=$12.50/$7.50
=1.666
approximately 1.7
The following information is available for Marigold Corp.: Allowance for doubtful accounts at December 31, 2019 $23000 Credit sales during 2020 1250000 Accounts receivable deemed worthless and written off during 2020 26800 As a result of a review and aging of accounts receivable in early January 2021, it has been determined that an allowance for doubtful accounts of $16700 is needed at December 31, 2020. What amount should Marigold record as "bad debt expense" for the year ended December 31, 2020?
Answer: $20500
Explanation:
Bad debt is the amount of money that a credit owes the company and is not willing to be paid hence may not be collected.
The amount that Marigold should record as "bad debt expense" for the year ended December 31, 2020 goes thus:
Bad debt allowance balance needed =
$16700
Add: Bad debt that are written off = $26800
Less: Allowance for doubtful accounts = $23000
Bad debt expense will now be:
= $16700 + $26800 - $23,000
= $43500 - $23000
= $20500
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with five years to maturity (YTM) has a coupon rate of 3%. The yield to maturity of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
Answer:
Value of treasury Note =$698,494.97
Explanation:
The value of the notes is the present value of the future cash inflows discounted at its YTM of 11%
Value of Notes = PV of interest + PV of RV
The value of Note can be worked out as follows:
Step 1 :Calculate the PV of Interest payment
Present value of the interest payment
PV = Interest payment × (1- (1+r)^(-n))/r
r-Yield to Maturity, n- number of years
Interest payment = 3% × $1,000,000 × 1/2= $15,000 .
Semi-annual interest yield = 11%/2 =5.5%
PV = 15,000 × (1 - (1.055)^(-5×2)/0.055) = 113,064.3874
Step 2 :PV of redemption Value
PV of RV = RV × (1+r)^(-n)
= 1000,000 × (1.055)^(-5×2)
= 585,430.57
Step 3
Calculate Value of the Notes
=113,064.3874 + 585,430.57
= $698,494.96
Value of treasury Note =$698,494.97
The Universal Containers company thinks it knows everything about business. However, Einstein Discovery surfaces an unexpected pattern that is concerning. They call in department experts and hold a meeting to discuss next steps with an Einstein Consultant. What should the consultant advise as the next action?A. Determine if the pattern is a data issue or a new insightB. Filter out the data that causes the unexpected pattern and analyze the new resultsC. Accept the new pattern and have confidence that Einstein knows the business accurately to the customerD. Consult a Data Scientist for further analysis
Answer:
C. Accept the new pattern and have confidence that Einstein knows the business accurately to the customer.
Explanation:
The business consultants are experts in the field of business and they provide suggestions about certain issue. The Universal Containers Company thinks that they know everything about business but an unexpected pattern is observed. They call a meeting with Einstein Consultant and the consultant will advise to accept the new pattern and observe the customers. The company should have confidence that the consultant knows business accurately.
Abe and Bea each have some money to invest in a CD (Certificate of Deposit). Abe has $5,000 and Bea has $20,000. Both are interested in making a 6-month investment at Synchrony Bank. The CD rates for Synchrony Bank (as of July 8, 2015) are as listed below. With 0.41% interest, Abe would get $5,010 in six months. With 0.50% interest, Bea would get $20,050 at the end of six months. If they pool their funds, they will be able to purchase a $25,000 CD, which pays a higher interest rate. The 0.60% interest will return $25,075 at the end of six months. Obviously, Abe gets back his $5,000 principle, and Bea gets back her $20,000 principle. How should the $75 interest be divided between the two of them
Answer:
Abe = $17.5
Bae = $57.5
Explanation:
Abe's principle = $5,000
Bea's principle = $ 20,000
Abe individual investment yield at 0.41% = (5010-5000) = $10
Bae's individual investment yield at ) 0.50%= (20000-20050) $50
Combined investment yield at 6 % = (25,075 - (20,000+5000) = $75
Extra interest yield = (75-(50+10) = $15
The extra interest yield of $15 should be shared equally among Abe and Bae as a result of joint effort
= 15/2 - $7.5
Therefore , the $75 interest is shared as below
Abe = $10 (interest on individual principle)+$7.5 = $17.5
Bae = $50 (interest on individual principle)+$7.5 = $57.5
A summary of selected ledger accounts appears below for Alberto's Plumbing Services for the current calendar year-end. Alberto, Capital 12/31 8,500 1/1 6,500 12/31 15,000 Alberto, Drawing 6/30 3,500 12/31 8,500 11/30 5,000 Net income for the period is a.$15,000 b.$18,500 c.$33,500 d.$13,000
Answer: a.$15,000
Explanation:
The Net Income for the year is usually credited to the Capital Account on the last day of the year as Retained Earnings for the year.
The only amount credited to the capital account in the above question is the $15,000 that came in on the 12th of December so it must be the Net Income for the period.
Karla Tanner opens a web consulting business called Linkworks and recorded the following transactions in its first month of operations.
Apr. 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock.
Apr. 2 The company prepaid $9,000 cash for twelve months' rent for office space. The company's policy is record prepaid expenses in balance sheet accounts.
Apr. 3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days.
Apr. 6 The company completed services for a client and immediately received $4,000 cash.
Apr. 9 The company completed a $6,000 project for a client, who must pay within 30 days.
Apr. 13 The company paid $11,600 cash to settle the account payable created on April 3.
Apr. 19 The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts.
Apr. 22 The company received $4,400 cash as partial payment for the work completed on April 9.
Apr. 25 The company completed work for another client for $2,890 on credit.
Apr. 28 The company paid $5,500 cash in dividends.
Apr. 29 The company purchased $600 of additional office supplies on credit.
Apr. 30 The company paid $435 cash for this month's utility bill.
Descriptions of items that require adjusting entries on April 30, 2015, follow.
a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.
b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy; the policy's coverage began on April 1.
c) Office supplies on hand as of April 30 total $1,200.
d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.
e) The company has completed work for a client, but has not yet billed the $1,800 fee.
f) Wages due to employees, but not yet paid, as of April 30 total $2,600.
Use the 3-step adjusting entry process to prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred:
Step 1: Determine what the current account balance equals (See General Ledger tab)
Step 2: Determine what the current account balance should equal.
Step 3: Prepare an adjusting entry to get from Step 1 to Step 2.
Generally Accepted Accounting Principles (GAAP):
The GAAP is a blend of recommendations from government bodies and widely accepted accounting principles for reporting information. It promotes openness in the exchange of economic data and makes clear and consistent financial reporting possible across organizations.
Answer:
a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.
Step 1:
Prepaid rent $9,000
Step 2:
Prepaid rent $9,000 - $750 = $8,250
Step 3:
Dr Rent expense 750
Cr Prepaid rent 750
b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy; the policy's coverage began on April 1.
Step 1:
Prepaid insurance $2,400
Step 2:
Prepaid rent $2,400 - $200 = $2,200
Step 3:
Dr Insurance expense 200
Cr Prepaid expenses 200
c) Office supplies on hand as of April 30 total $1,200.
Step 1:
Office supplies $3,600 + $600 = $4,200
Step 2:
Office supplies $4,200 - $3,000 = $1,200
Step 3:
Dr Office supplies expense 3,000
Cr Office supplies 3,000
d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.
Step 1:
Office equipment $26,000 + $8,000 = $34,000
Step 2:
Office supplies $34,000 - $500 = $33,500
Step 3:
Dr Depreciation expense 500
Cr Accumulated depreciation - equipment 500
e) The company has completed work for a client, but has not yet billed the $1,800 fee.
Step 1:
Service revenue $4,000 + $6,000 + $2,890 = $12,890
Step 2:
Service revenue $12,890 + $1,800 = $14,690
Step 3:
Dr Accrued receivable 1,800
Cr Service revenue 1,800
f) Wages due to employees, but not yet paid, as of April 30 total $2,600.
Step 1:
Wages expense $0
Step 2:
Wages expense $0 + $2,600 = $2,600
Step 3:
Dr Wages expense 2,600
Cr Wages payable 2,600
Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
1. Andrea invested $13,500 cash in the business.
2. Andrea contributed $20,000 of photography equipment to the business.
3. The company paid $2,100 cash for an insurance policy covering the next 24 months.
4. The company received $5,700 cash for services provided during January.
5. The company purchased $6,200 of office equipment on credit.
6. The company provided $2,750 of services to customers on account.
7. The company paid cash of $1,500 for monthly rent.
8. The company paid $3,100 on the office equipment purchased in transaction #5 above.
9. Paid $275 cash for January utilities.
Based on this information, the balance in the A. Apple, Capital account reported on the Statement of Owner's Equity at the end of the month would be:
A. $31,400.
B. $39,200.
C. $31,150.
D. $40,175.
E. $30,875.
Answer: D. $40,175
Explanation:
The balance in the Capital account reported on the Statement of Owner's Equity will include the Capital contributions of Andrea Apple to the business as well as the Net income from operations also known as Retained Earnings.
The Net Income for the month will be revenue less expenses.
Revenue
$5,700 cash and $2,750 on account for services provided in January.
Revenue is therefore,
= 5,700 + 2,750
= $8,450
Expenses
Expenses include the rent paid of $1,500 and the $275 paid for January Utilities.
= 1,500 + 275
= $1,775
Net Income = Revenue - Expenses
Net Income = 8,450 - 1,775
Net Income = $6,675
The Capital that Mr. Apple brought into the business refers to anything he contributed to the business whether in cash or otherwise.
The Capital therefore is,
- The $13,500 cash and the $20,000 worth of equipment.
The Capital Mr. Apple brought into the business is therefore,
= 13,500 + 20,000
= $33,500
The balance on the capital account will therefore be,
= Capital + Net Income
= 33,500 + 6,675
= $40,175
Option D. is correct.
Jackson has the choice to invest in city of Mitchell bonds or Sundial, Inc. corporate bonds that pay 5.6 percent interest. Jackson is a single taxpayer who earns $47,500 annually. Assume that the city of Mitchell bonds and the Sundial, Inc. bonds have similar risk. What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial, Inc. bonds for 2019
Answer: 4.37%
Explanation:
As interest is tax deductible, the Sundial Interest needs to be adjusted for tax to find out the true return.
Jackson as a single tax payer earning $47,500 in 2019 has a tax rate of 22% according to the IRS Tax bracket for that year.
That means that the interest that true interest that Sundial is offering him is,
= 5.6 * ( 1 - tax rate)
= 5.6 * ( 1 - 0.22)
= 5.6 * 0.78
= 0.04368
= 4.37%
To make Jackson indifferent with the same amount of risk, the city of Mitchell would have to offer him the same interest that Sundial is offering net of tax which is 4.37%.
Category killers compete primarily on the basis of a. low prices and enormous product availability. b. enormous product selection and sales expertise. c. convenient locations and customer services. d. rock-bottom prices and moderate selections. e. one-stop shopping and product availability.
Answer:
A. Low prices and enormous product availability.
Explanation:
This is a chain of retail stores or a retail outlet that sells different kinds of goods or products that in a way that seems cheap and affordable to consumers. They also look and facilitate quick form of buying and selling. Their main goal stands primarily on cheap, fast enormous sales of the product.
They possibly can create a compelling shopping experience. In a bid to do that, they need to compress instant gratification, unique assortments and a reasonable showroom experience that aids social lifestyles.
g edna had an accident while competing in a rodeo. She sustained facial injuries that required cosmetic surgery. While having the surgery done to restore her appearance, she had additional surgery done to reshape her chin, which was not injured in the accident. The surgery to restore her appearance cost $ 9,000 and the surgery to reshape her chin cost $ 6,000. How much of Edna's surgical fees will qualify as a deductible medical expense (before application of the 10% -of-AGI floor)?
Answer:
$9000 is a deductible medical expense.
Explanation:
Cosmetics surgery is necessary and deductible if the reason it was done was to enhance her appearance arising from a form or kind of abnormality, personal injury or a disease that disfigures.The $9000 cost that was paid because of the surgery due to the accident is deductible because the surgery was necessary while the $6000 paid for the unnecessary cosmetic surgery to reshapen the chin is not a deductible medical expense.
Sophia provides you with a list of business transactions that occurred during the year. You must use these transactions to demonstrate the first four steps in the accounting cycle: analyzing each transaction, using double entry accounting to record these transactions in the general journal, and posting them to their respective accounts. Finally, you prepare a trial balance, the fourth step in the accounting cycle, which ensures that the first three steps in the accounting cycle have been completed currently.
A. The Sisters invest $15,000 in cash in Happy Home Environmental Cleaning (HHEC)
B. HHEC buys a building for $10,000 in cash.
C. HHEC buys office equipment for $1,800 for cash.
D. HHEC buys cleaning supplies for $2,800, agreeing to pay the upplier in 30 days.
E. HHEC earns cleaning revenues of $16,460 in cash.
F. HHEC earns cleaning revenues of $2,200 on account.
G. HHEc paid the following expenses in cash:
Wages $4275
Utilities $985
Miscellaneous $195
H. HHEC pays $950 in cash to creditors on account.
I. HHEC purchases a two year insurance policy for $2,400 in cash
J. At the end of the year, the cost of cleaning supplies on hand is $2040.
K. The sisters withdrew $2,000 in cash.
Answer:
Happy Home Environmental Cleaning
Demonstration of the first four steps in accounting cycle:
1) Analyzing each transaction:
A) Cash + $15,000 and Owners' Equity + $15,000
B) Building + $10,000 and Cash -$10,000
C) Office Equipment + $1,800 and Cash - $1,800
D) Cleaning Supplies + $2,800 and Accounts Payable + $2,800
E) Cash + $16,460 and Equity (Retained Earnings) + $16,460
F) Accounts Receivable + $2,200 and Equity (Retained Earnings) + $2,200
G) Cash - Wages $4,275, Utilities $985, Miscellaneous $195 and Equity (Retained Earnings) - $4,275, $985, $195
H) Cash - $950 and Liabilities - $950
I) Cash - $2,400, Prepaid Insurance + $1,200, and Equity (Retained Earnings) - $1,200
J) Cleaning Supplies -$760 and Equity (Retained Earnings) - $760
K) Cash - $2,000 and Equity - $2,000
2) Using double entry accounting to record transactions in the general journal:
A) Debit Cash Account $15,000
Credit Owners' Equity $15,000
To record capital contributed to the business.
B) Debit Building $10,000
Credit Cash Account $10,000
To record purchase of building.
C) Debit Office Equipment $1,800
Credit Cash Account $1,800
To record purchase of office equipment.
D) Debit Cleaning Supplies $2,800
Credit Accounts Payable $2,800
To record purchase of cleaning supplies on account.
E) Debit Cash $16,460
Credit Service Revenue $16,460
To record cash sales of services.
F) Debit Accounts Receivable $2,200
Credit Service Revenue $2,200
To record sale of services on account.
G) Debit Wages $4,275
Debit Utilities $985
Debit Miscellaneous $195
Credit Cash Account $5,455
To record payment of expenses.
H) Debit Accounts Payable $950
Credit Cash Account $950
To record payment on account.
I) Debit Prepaid Insurance $2,400
Credit Cash $12,400
To record insurance prepaid.
I) Debit Insurance Expense $1,200
Credit Prepaid Insurance $1,200
To record insurance expense for the period.
J) Debit Cleaning Supplies Expense $760
Credit Cleaning Supplies $760
K) Debit Drawings Account $2,000
Credit Cash Account $2,000
To record cash drawings.
3) Posting transactions to the Ledger accounts:
Debit Credit Balance
Cash Account:
Owners' Equity 15,000 15,000
Building 10,000 5,000
Office Equipment 1,800 3,200
Service Revenue 16,460 19,660
Wages 4,275 15,385
Utilities 985 14,400
Miscellaneous 195 14,205
Accounts Payable 950 13,255
Prepaid Insurance 2,400 10,855
Drawings 2,000 8,855
Debit Credit Balance
Owners' Equity:
Cash 15,000 15,000
Debit Credit Balance
Service Revenue Account:
Cash 16,460 16,460
Accounts Receivable 2,200 18,460
Debit Credit Balance
Building Account:
Cash 10,000 10,000
Debit Credit Balance
Office Equipment Account:
Cash 1,800 1,800
Debit Credit Balance
Wages Expense:
Cash 4,275 4,275
Debit Credit Balance
Utilities Expense:
Cash 985 985
Debit Credit Balance
Miscellaneous Expense:
Cash 195 195
Debit Credit Balance
Cleaning Supplies:
Accounts Payable 2,800 2,800
Cleaning Supplies Expense 760 2,040
Debit Credit Balance
Cleaning Supplies Expense:
Cleaning Supplies 760 760
Debit Credit Balance
Accounts Payable:
Cleaning Supplies 2,800 2,800
Cash 950 1,850
Debit Credit Balance
Prepaid Insurance:
Cash 2,400 2,400
Insurance Expense 1,200 1,200
Debit Credit Balance
Insurance Expense:
Prepaid Insurance 1,200 1,200
Debit Credit Balance
Drawing Account:
Cash 2,000 2,000
4) Preparation of a Trial Balance:
Debit Credit
Cash $8,855
Owners' Equity $15,000
Building 10,000
Office Equipment 1,800
Cleaning Supplies 2,040
Cleaning Supplies Expense 760
Accounts Payable 1,850
Service Revenue 18,660
Accounts Receivable 2,200
Prepaid Insurance 1,200
Insurance Expense 1,200
Wages 4,275
Utilities 985
Miscellaneous 195
Drawings 2,000
Total $35,510 $35,510
Explanation:
The steps in the accounting cycle are:
a) Analyzing each transaction from source documents, e.g. from Sales Invoice. This shows the accounts affected and even the effect of the transaction on the accounting equation.
b) Journal Entries: This involves using the doubt entry system of accounting to record transactions in the general journal. This is the first accounting record. It shows the accounts to be debited and the ones to be credited in the General Ledger.
c) General Ledger: Each transaction is posted to their respective accounts in the ledger, depending on journal entries. Usually, two accounts are affected by each transaction, just like in the journal.
d) The fourth step is the extraction of a Trial Balance. This is an accounting tool for checking that the first three steps have been completely and correctly followed.
Consider a country where all money is currently held as cash and the money supply has a value of $2,200. A banking system is developed, and the residents of the country deposlt the $2,200 of cash into the banking system and decide they no longer want to hold any cash. If the reserve ratio is equal to 4%, then the banking system has the ability to create $_________ money supply in the economy will be equal to $__________
Answer: the banking system has the ability to create $52,800 of new money and the money supply in the economy will be equal to $55,000
Explanation:
To find out how much new money was created or rather how much can be created you can use the Money Multiplier. The money multiplier enables one to see how much money can be created in an economy given a certain reserve ratio.
The Money Multiplier is calculated by,
= 1/reserve requirement
Multiplying the Money Multiplier with the initial deposit in the bank gives the amount that that deposit can create.
With a Reserve Requirement of 4%, the Money Multiplier is,
= 1/4%
= 25
The Amount of money created in the economy is therefore,
= 25 * 2,200
= $55,000
The amount of New Money created will be the amount created less the initial deposit,
= 55,000 - 2,200
= $52,800
The University of Puhonicks hires several professors that specialize in accounting, management, and economics and clusters each into one of three departments. The dean has obviously decided to group employees by:________
a) Project.
b) Function.
c) Product.
d) Geography.
Answer:
b) Function
Explanation:
The Dean placed professors in departments based on the subjects they teach or based on their functions in the school. So all professors that function as economics professors are placed in the same department. This is an example of grouping employees by functions.
In geographic grouping, professors would be grouped based on the different regions they teach.
In product grouping, employees are placed in groups based on the product they produce.
I hope my answer helps you
Vaughn Corporation has retained earnings of $706,100 at January 1, 2017. Net income during 2017 was $1,638,400, and cash dividends declared and paid during 2017 totaled $83,100. Prepare a retained earnings statement for the year ended December 31, 2017. Assume an error was discovered: land costing $89,100 (net of tax) was charged to maintenance and repairs expense in 2014. (List items that increase retained earnings first.)
Answer: Please see below for answer
Explanation: Retained earnings is the portion of net income accumulated in a company which can be used for future reinvestment purposes after the cumulative amount of dividends declared have been deducted.
Solution- Using items that increase retained earnings first before any deduction
Vaughn Corporation
Retained earnings statements
Ended December 31st, 2017.
Retained Earnings as Reported on January 1st $706,100
Correction for Overstatement of expenses $89.100
Retained earnings as adjusted = $795,200
(Add) Net income/loss $1, 638,400
Net cash dividend (less) -$83, 100
Retained Earnings in December 31st 2017 $2,350,500
Columbia Corporation produces a single product. The company's variable costing income statement for November appears below: Columbia Corporation Income Statement For the Month ended November 30 Sales ($18 per unit) $ 765,000 Variable expenses: Variable cost of goods sold 467,500 Variable selling expense 127,500 Total variable expenses 595,000 Contribution margin 170,000 Fixed expenses: Manufacturing 105,360 Selling and administrative 35,120 Total fixed expenses 140,480 Net operating income $ 29,520 During November, 35,120 units were manufactured and 8,650 units were in beginning inventory. Variable production costs per unit, total fixed manufacturing expenses, and the number of units produced were the same in prior months. Under absorption costing, for November the company would report a:__________.
(A) $4,850 profit(B) $4,850 loss(C) $35,750 profit(D) $19,400 profit
Answer:
Hie, there is no correct answer from the Options provided.
The Net Profit Under absorption costing, for November would be $7,460.
This is can be calculated from reconciling the Variable Costing profit to Absorption Costing profit or Alternatively from Preparing Absorption costing statement as shown below:
Absorption Costing Income Statement for November.
Sales 765,000
Less Costs of Goods Sold
Opening Stock (8,650×14) 121,100
Add Cost of Manufacture (35,120×14) 491,600
Less Closing Stock (1270×14) (17,780) 594,920
Gross Profit 170,080
Less Expenses
Variable selling expense 127,500
Fixed Selling and administrative 35,120
Net Income / loss 7,460
Trio Company reports the following information for the current year, which is its first year of operations.
Direct materials $15 per unit
Direct labor $15 per unit
Overhead costs for the year
Variable overhead $3 per unit
Fixed overhead $120,000 per year
Units produced this year 20,000 units
Units sold this year 14,000 units
Ending finished goods inventory in
units 6,000 units
1. Compute the cost per unit using absorption costing and then using variable costing2. Determine the cost of ending finished goods inventory using absorption costing and then using variable costing3. Determine the cost of goods sold using variable costing and then using variable costing
Answer:
Instructions are below.
Explanation:
Giving the following information:
Direct materials $15 per unit
Direct labor $15 per unit
Overhead costs for the year
Variable overhead $3 per unit
Fixed overhead $120,000 per year
Units produced this year 20,000 units
Units sold this year 14,000 units
Ending finished goods inventory in
units 6,000 units
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).
1) Absorption costing method:
Unitary fixed overhead= 120,000/20,000= 6
Unit product cost= direct material + direct labor + total unitary overhead
Unit product cost= 15 + 15 + 3 + 6= 39
Variable costing:
Unit product cost= direct material + direct labor + variable overhead
Unit product cost= 33
2) Ending inventory:
Absorption costing= 6,000*39= $234,000
Variable costing= 6,000*33= $198,000
3) Cost of goods sold:
Absorption costing= 14,000*39= 546,000
Variable costing= 14,000*33= 462,000
he Petteys family plans to buy a home for $224,900, and has been offered a 30-year mortgage with a rate of 5.5% if they make a 20% down payment . Calculate the down payment. (Do not include a dollar sign with your answer)
Answer:
44,980
Explanation:
20 % of $224,900 = (20/100) × $224,900 = $44,980
Larson, Inc. is an integrated marketing solutions company. Whenever a client comes to it wondering why a product was not welcomed by its target audience or why customers have stopped buying another product, Impiric always suggests the marketing research process begins with:________.
Answer:
Defining the problem
Explanation:
In this scenario clients come to Larson Inc wondering why a product was not welcomed by its target audience or why customers have stopped buying another product.
According to Impiric a marketing solutions company the first step in marketing research process is defining the problem.
Why are products not being welcomed by their target audience?
This will give insight and help in formulating a solution to tackle the challenge
Bookmark question for later Zoey is the CEO of a corporation she organized herself, and the corporation has 15 shareholders. The company operates in several states, as well as outside of the U.S. Her business consists mostly of training services for in-home medical care personnel. Her company would be a __________ corporation
Answer:
Professional corporation
Explanation:
A professional corporation is a type of corporation that is established by professional, majorly licensed individuals; they could include doctors, attorneys or architects. They mostly provide services that are related to the profession they practice. For example, architects establish an architectural firm to provide architectural services.
Professional corporations are usually established based on the laws binding the profession or the laws of the state. Most professional entrepreneurs can set up a professional corporation and can be established by one or more professionals.
In most professional corporations, the shareholders are usually only licensed individuals of the service rendered by the professional company.
Therefore, considering the information, Zoey's corporation would be a professional corporation.
Problem 15-12 Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) Price of $1,000 Par Bond (Zero-Coupon) 1 $ 974.85 2 882.39 3 847.70 a. A 5.6% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? (Round your answer to 2 decimal places.) b. If at the end of the first year the yield curve flattens out at 6.5%, what will be the 1-year holding-period return on the coupon bond? (Round your answer to 2 decimal places.)
Answer:
a. 5.63%
b. 5.72%
Explanation:
to calculate YTM of zero coupon bonds:
YTM = [(face value / market value)¹/ⁿ] - 1
YTM₁ = [(1,000 / 974.85)¹/ⁿ] - 1 = 2.58%YTM₂ = [(1,000 / 882.39)¹/ⁿ] - 1 = 6.46%YTM₃ = [(1,000 / 847.70)¹/ⁿ] - 1 = 5.66%a. A 5.6% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be?
the bond's current market price:
$1,000 / 1.0566³ = $847.75$56/1.0258 + 56/1.0646² + 56/1.0566³ = $54.59 + $49.41 + $47.47 = $151.47current market price = $999.22YTM = [C + (FV - PV)/n] / [(FV + PV)/2] = [56 + (1,000 - 999.22)/3] / [(1,000 + 999.22)/2] = (56 + 0.26) / 999.61 = 5.63%
b. If at the end of the first year the yield curve flattens out at 6.5%, what will be the 1-year holding-period return on the coupon bond?
the bond's current market price:
$1,000 / 1.065³ = $827.85$56/1.0258 + 56/1.065² + 56/1.065³ = $54.59 + $49.37 + $46.36 = $150.32current market price = $978.17you invest $978.17 in purchasing the bond and you receive a coupon of $56, holding period return = $56 / $978.17 = 5.72%
A steel company manufactures heavy-duty brackets for the shelving industry. The company has budgeted for the production and sale of 1,000,000 brackets and has no beginning or ending inventory. Relevant operational, revenue, and cost data is as follows: Unit selling price of a bracket $22.50 Direct material required per unit 4 pounds Direct labor required per unit 0.15 hours Cost of material per pound $1.75 Direct labor cost per hour $9.00 Total variable selling costs $2,250,000 Total fixed costs $1,500,000 Based on the data provided, what is the unit contribution margin per bracket
Answer:
Contribution margin per unit = $11.90
Explanation:
Given:
Total unit sale = 1,000,000
Unit selling price of a bracket = $22.50
Direct material required = 4 pounds per unit
Direct labor required = 0.15 hours per unit
Cost of material per pound = $1.75
Direct labor cost per hour = $9.00
Total variable selling cost = $2,250,000
Find:
Contribution margin per unit = ?
Computation:
Direct material per unit = 4 pounds per unit × $1.75
Direct material per unit = $7
Direct labor per unit = 0.15 hours per unit × $9.00
Direct labor per unit = $1.35
Variable selling cost per unit = Total variable selling cost / Total unit sale
Variable selling cost per unit = $2,250,000 / 1,000,000
Variable selling cost per unit = $2.25
Contribution margin per unit = Sales per unit - Variable cost per unit
Contribution margin per unit = Sales per unit - [Direct material per unit + Direct labor per unit + Variable selling cost per unit]
Contribution margin per unit = $22.50 - [$7 - $1.35 - $2.25]
Contribution margin per unit = $22.50 - [$10.6]
Contribution margin per unit = $11.90
Toxemia Salsa Company manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount):
Wimpy Mild Medium Hot Atomic
Contribution margin $(2000) $45,000 $35,000 $50,000 $162,000
Segment margin $(16,000) $(5000) $7000 $10,000 $94,000
Segment margin less
allocated common fixed
expenses $(26,000) $(15,000) $(3000) $0 $84,000
Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue? A no flavors should be discontinued B wimpy C wimpy and mild D wimpy, mild, and medium
Answer:
C wimpy and mild
Explanation:
The Allocated fixed Common overhead is irrelevant for this Decision because the expense is a head office expense which is managed by a Head office department.
Of our interest is the Incremental Revenues and Expenses that result from existence of a Segment (Segment Margin).
The segment margin consists of controllable Fixed and Variable costs attributable to a particular segment.
Discontinue flavor giving a negative Segment Margin that is : Wimpy and Mild
The law of diminishing marginal productivity states that:________.
a. As you expand output, your marginal productivity eventually increases
b. As you expand output, your marginal productivity eventually declines
c. As you expand output, the total product eventually increases
d. None of the above
2. What are economies of scale?
a. decreasing average costs as production increases
b. increasing average costs as production increases
c. increasing fixed costs as production increases
d. none of the above
3. What are economies of scope?
a. lower average costs when multiple different products are produced
b. higher average costs when multiple different products are produced
c. Constant average costs when multiple different products are produced
d. none of the above
Answer:
b. As you expand output, your marginal productivity eventually declines
a. decreasing average costs as production increases
a. lower average costs when multiple different products are produced
Explanation:
The law of diminishing marginal returns states that as more unit of variable factors of production are added to production, output would increase at first but after a period, it would increase at a negative rate.
Economies of scale is the reduction in cost thay accrue to firms as they increase production. For example, a supplier might give a firm a discount for buying in bulk.
Economies of scope states that average cost would fall as the production of similar products increases. For example, a fashion designer who makes women's clothings decides to make scarfs with the scraps of clothes left.
I hope my answer helps you
Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 $ 379,697 06/30/2021 $ 16,000 $ 18,985 $ 2,985 382,682 12/31/2021 16,000 19,134 3,134 385,816 06/30/2022 16,000 19,291 3,291 389,107 12/31/2022 16,000 19,455 3,455 392,562 06/30/2023 16,000 19,628 3,628 396,190 12/31/2023 16,000 19,810 3,810 400,000 THA buys back the bonds for $384,446 immediately after the interest payment on 12/31/2021 and retires them. What gain or loss, if any, would THA record on this date
Answer:
THA would record a gain of $1,370 on 12/31/2021
Explanation:
Particulars Amount ($)
Carrying value of bonds after the interest payment on 12/31/2021 385,816
Less: Amount paid on redemption on 12/31/2021 (384,446)
Gain on redemption of bonds 1,370
Entry would be-
Date Account titles and Explanation Debit ($) Credit ($)
12/31/2021 Bonds payable 385,816
Cash 384,446
Gain on redemption of bonds 1,370
(To record redemption of bonds)
An annual insurance policy is paid in advance by a company. How will the company treat this initial payment and the subsequent expiration of a portion of the policy over time?
A. The initial payment will be recorded as an increase to a Prepaid Insurance account.
B. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset.
C. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account.
D. This prepayment of the policy will initially be treated as an expense and over time, the expired portion will be treated as an asset.
Answer:
The question requires the answering party to pick all that apply as found in the attached.
A. The initial payment will be recorded as an increase to a Prepaid Insurance account.
B. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset.
C. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account.
Explanation:
The initial payment will be recorded as increase to an asset account,prepaid insurance is a correct statement,pending when the insurance cost is cost,
Subsequently,the expired the portion of the prepayment would be removed from the account,hence point B is also correct.
Finally,when the expired portion is removed from prepaid insurance account,it is transferred to insurance expense account,point C is also on point.
Your financial investments consist of U.S. government bonds maturing in 10 years and shares in a start-up company doing research in pharmaceuticals. How would you expect each of the following news items to affect the value of your assets?
a. Interest rates of newly issued government bonds rise
A. Stock and bond prices will rise
B. Stock and bond prices will fall
C. Stock prices will fall and bond prices could remain unchanged or rise
D. Stock prices will fall
E. Stock prices will increase
b. Inflation is forecasted to be much lower than previously expected in Recall the Fisher effect Assume for simplicity that this Information does not affect your forecast of the dollar value of the pharmaceutical company's future dividends and stock price
A. Stock prices will fall
B. Stock and bond prices will fall
C. Stock prices will increase
D. Stock and bond prices will rise
c. Large swings in the stock market increase mancalvestors concerns about market risk. (Assume that interest rates on neaty issued government bonds remain unchanged)
A. Stock and bond prices will fall
B. Stock and bond prices will rise
C. Stock prices will fall
D. Stock prices will increase
E. Stock prices will and bond prices could remam unchanged or rise
Answer: 1. B. Stock and bond prices will fall
2. D. Stock and bond prices will rise
3. E. Stock prices will fall and bond prices could remam unchanged or rise
Explanation:
1. When interest rates on Government bonds rise, this signifies a general rise in interest in the economy. When interest rates rise, consumers and companies such as the Pharmaceutical Research Company will have to cut back on spending because borrowing is now more expensive. This reduction in spending reduces Investment and therefore profits which will reduce the price of the company stock.
When interest rates rise, it is a standard principle that bond prices drop. This is because bonds pay a fixed rate therefore when interest rates rise, it signifies that bonds are not paying enough and so the demand reduces as people are always looking for better returns which leads to a drop in price.
2. As a result of inflation being less than previously thought, it means that bonds and stocks are providing a better return per dollar because inflation will not erode the value of the returns. When the market realises this they will flock to purchase both stocks and bonds which will lead to a price increase.
3. When there are large swings in the stock market, this signifies Market volatility. Market volatility signifies risk and when this happens risk averse investors will flee from the stock market which will have the effect of reducing the prices of stock as they are sold off. If interest rates on the newly issued Government bonds remain unchanged, people that are fleeing the stock market might invest in the bonds instead which will cause their price to rise as more are bought. However, there is a chance that the investors fleeing might not view the interest rates offered by the government bonds and so will not invest leading to the price of the bonds not changing dude to stable demand.
