Answer:
Explanation:
1)
xij = barrels of component i used in grade j per day for i = A, B, C and j = R, P, D
2)
Max Z = 18 (x AR + x BR + x CR) + 25 (x AP + x BP + x CP) + 15 (x AD + x BD + x CD) – 9 (x AR + x AP + x AD) – 7 (x BR + x BP + x BD) – 10 (x CR + x CP + x CD)
or,
Max Z = 9 x AR + 11 x BR + 8 x CR + 16 x AP + 18 x BP + 15 x CP + 6 x AD + 8 x BD + 5 x CD
3)
Subject to,
x AR + x AP + x AD <= 6000
x BR + x BP + x BD <= 3000
x CR + x CP + x CD <= 4500
x Aj + x Bj + x Cj >= 5000 for j = R, P, D
x AR >= 30%*(x AR + x BR + x CR) or, 0.7 x AR - 0.3 x BR - 0.3 x CR >= 0
x BR <= 30%*(x AR + x BR + x CR) or, -0.3 x AR + 0.7 x BR - 0.3 x CR <= 0
x CR >= 30%*(x AR + x BR + x CR) or, -0.3 x AR - 0.3 x BR + 0.7 x CR >= 0
x CP >= 60%*(x AP + x BP + x CP) or, -0.6 x AP - 0.6 x BP + 0.4 x CP >= 0
x BD <= 50%*(x AD + x BD + x CD) or, -0.5 x AD + 0.5 x BD - 0.5 x CD <= 0
xAD >= 10%*(xAD + xBD + xCD) or, 0.9 xAD - 0.1 xBD - 0.1 xCD >= 0
xij >= 0 for i = A, B, C and j = R, P, D
Misty and John formed the MJ Partnership. Misty contributed $50,000 of cash in exchange for her 50% interest in the partnership capital and profits. During the first year of partnership operations, the following events occurred: the partnership had a net taxable income of $20,000; Misty received a distribution of $12,000 cash from the partnership; and Misty had a 50% share in the partnership's $60,000 of recourse liabilities on the last day of the partnership year. Misty's adjusted basis for her partnership interest at year end is:
Answer:
$78,000
Explanation:
The computation of interest at year end is shown below:-
Interest at year end = Cash contribution + Income of partnership + Share of partnership liabilities - Cash from the partnership
= $50,000 + $20,000 × 50% + $60,000 × 50% - $12,000
= $90,000 + $10,000 + $30,000 - $12,000
= $78,000
Therefore for computing the partnership interest at year end we simply applied the above formula by considering all the items given in the question
Using these data from the comparative balance sheet of Sunta Fe Spice Company, perform horizontal analysis. (Round percentages to 0 decimal place, e.g. 17%.)
Increase or (Decrease)
December 31, 2017 December 31, 2016 Increase or (Decrease) Amount Percentage
Accounts receivable $ 375,000 $ 300,000 $ __________ ___________ %
Inventory 780,000 600,000 ____________ ___________ %
Total assets 3,220,000 2,800,000 __________ __________ %
Answer:
75000,25%;
18000, 30%.
420000, 15%.
Explanation:
From the question above we are given the following parameters Accounts receivable for year 2017 = $ 375,000,
Inventory for the year 2017 = 780,000 and the Total assets for the year 2017 = 3,220,000.
Accounts receivable for year 2016 = $ 300,000, inventory for the year 2016 = 600,000 and the Total assets for the year 2016 = 2,800,000.
Therefore, we have the following simple arithmetic(which is subtraction between the variables in the two years) to determine the solution to the question:
(375,000 - 300,000) = 75,000 = 25%(increase).
(780,000 - 600,000) = 180,000 = 30%(Increase).
(3,220,000 - 2,800,00) = 420,000 = 15%(increase).
Answer:
25%30%15%Explanation:
Accounts receivables
December 31 2017 = $375000
December 31 2016 = $300000
difference = $75000 ( 25%) { increase}
Inventory
December 31 2017 = 780000
December 31 2016 = 600000
difference = 180000 ( 30% ) { increase}
Total assets
December 31 2017 = 3220000
December 31 2016 = 2800000
difference = 420000 ( 15% ) { increase }
Data from Dunshee Corporation's most recent balance sheet appear below: Year 2 Year 1 Current assets: Cash $ 130 $ 100 Accounts receivable, net 270 290 Inventory 90 110 Prepaid expenses 10 10 Total current assets $ 500 $ 510 Total current liabilities $ 230 $ 220 Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730. The average collection period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
Answer:
50 days
Explanation:
THE average collection period for Year 2 is closest to 50 days
Year 2:
cost of goods sold = $730
opening inventory = $110
closing inventory = $90 therefore total inventory = 110 + 90 = $200
Average inventory = $100
to calculate inventory turnover ratio = cost of goods sold / average inventory
= 730 / 100 = 7.30
The average collection period = 365 days / inventory turnover ratio
= 365/7.30 = 50 days
A marketing manager wants to build a strong relationship with the customers and to customize messages without high costs. He understands that relationship building and message customization would require constant updating of the database due to the reliance on CRM and he plans to hire staff to make sure the database stays up to date. Based on the manager's consideration, ________ will be the most appropriate promotion mix element.
Answer:
Direct marketing and interactive marketing.
Explanation:
In a case of direct marketing here, they do research, identify customers, select media (TV, direct mail, internet), and create a campaign. But rather than guess whether the message worked, they track the consumer's response. How many people (and of what age, ethnic group, income level) called the number in the catalog, clicked the button on the website, or went to the store for their gift with purchase. This is because direct marketers can measure the results, they can make the next campaign even better.
While in the other hand, interactive marketing explained to be the fastest growing form of marketing where sellers do chats and explanations that comes off as convincing approach of their products to their buyers, this could be physically or online.
We learned in class that Starbucks uses its baristas as front line “brand ambassadors”. This is an example of ________________?
A.
top management not doing their jobs
B.
Inverted Organization Structure
C.
Management by Objectives MBO
D.
Giving uneducated employees too much responsibility
Answer:
Inverted Organization Structure
Explanation:
An Inverted Organization Structure is a structure where the employees are given more autonomy. Employees are given more prominent and important roles in the business.
I hope my answer helps you
Option B is correct because it is an example of inverted organization structure.
An Inverted Organization Structure is a organizational structure where employees are given more autonomy in their operation, that is, they are given more prominent and important roles in the company.
This type of structure is beneficial because the top hierarchy have lesser work and employee get more experience because of decision-makings.
In conclusion, the Option B is correct because it is an example of inverted organization structure
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Net income was $469,000. Issued common stock for $76,000 cash. Paid cash dividend of $14,000. Paid $115,000 cash to settle a note payable at its $115,000 maturity value. Paid $124,000 cash to acquire its treasury stock. Purchased equipment for $90,000 cash. Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
The company's cash flows from financing activities is ($177,000).
Explanation:
The company
Statement of cash flows (extract)
Proceed from issue of common stock $76,000
Dividends paid ($14,000)
Repayment of note payable ($115,000)
Purchase of treasury stock ($124,000)
Net cash flows from financing activities ($177,000)
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. The system has an installation cost of $150,000 and an additional cost of $50,000 at year 10. The annual software maintenance cost is $5,000 for the first 4 years and $8,000 thereafter. If the new system will be used for the indefinite future, find the equivalent present value at a discount rate of 5%.
Answer:
Equivalent annual cost = $16,502.89
Explanation:
Equivalent annual cost = Present Value of cost / Annuity factor
Present value of cost:
PV of additional cost =50,000 ×1.05^(-10)=30,695.66
PV of maintenance cost
First four years= 5,000× (1-1.05^(-4))/0.05=17,729.75
From year 5 to infinity = (8,000/0.05)× 1.05^(-4)=131,632.39
PV of maintenance cost = 17,729.75 + 131,632.396= 149,362.14
PV of costs = 150,000 + 30,695.66 + 149,362.14= 330,057.8112
Annuity factor = 1/r = 1/0.05= 20
Equivalent annual cost = 330,057.8112 /20=$16,502.89
Equivalent annual cost = $16,502.89
During June, Zinc Company produced 10,000 chainsaw blades. The standard quantity of material allowed per unit was 2 pounds of steel per blade at a standard cost of $5 per pound. Zinc determined that it had a favorable materials usage variance of $1,500 for June. Calculate the actual quantity of materials used by Zinc Company in June.
Answer:
actual quantity= 19,700 pounds
Explanation:
Giving the following information:
Units= 10,000
The standard quantity of material allowed per unit was 2 pounds of steel per blade at a standard cost of $5 per pound.
Favorable materials usage variance of $1,500 for June.
To calculate the actual material quantity, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
1,500= (20,000 - actual quantity)*5
1,500= 100,000 - 5 actual quantity
-98,500/(-5)= actual quantity
19,700= actual quantity
Using the details provided, we can calculate that the actual quantity of materials used by Zinc company was 19,700 pounds
We are given the material usage variance which is calculated as;
= (Standard quantity - Actual quantity) x Standard cost per unit
Standard quantity:
= 2 x 10,000
= 20,000 pounds
We can therefore solve for actual quantity as:
1,500 = (20,000 - A) x 5
20,000 - A = 1,500 / 5
20,000 - 300 = A
A = 19,700 pounds
In conclusion, 19,700 pounds was the actual quantity.
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In 2020, Sheffield Corp., issued for $102 per share, 97000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Sheffield's $20 par value common stock at the option of the preferred stockholder. In August 2021, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $25 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock
Answer:
Additional paid-in capital is $4,074,000.
Explanation:
In 2020, Sheffield issued $102 per share and there were 97,000 shares of convertible preferred stock.
Preferred stock = 97,000 shares × $102 = $9,894,000
Also we were told that one preferred stock can be converted to 3 common stock i.e. 3 × Preferred stock = Common stock
Therefore, Common stock = [(97000 shares × 3 shares) × $20] = $5,820,000
Additional paid-in capital = $9,894,000 - $5,820,000 = $4,074,000.
John, a limited partner of Candy Apple, LP, is allocated $30,000 of ordinary business loss from the partnership. Before the loss allocation, his tax basis is $20,000 and his at-risk amount is $10,000. John also has ordinary business income of $20,000 from Sweet Pea, LP, as a general partner and ordinary business income of $5,000 from Red Tomato as a limited partner. How much of the $30,000 loss from Candy Apple can John deduct currently
Answer: $5,000
Explanation:
First of all John's tax basis in Candy Apple is $20,000 and the losses are $30,000. $10,000 of the loss will therefore be suspended as it is more than his tax basis.
Of the remaining $20,000, a further $10,000 will be deducted due to his at-risk amount being $10,000 which means he can only be charged that $10,000.
As John is a limited partner in both Candy Apple and Red Tomato, this means that these are Passive incomes or losses for him and he can use then to offset one another. He will therefore use the $5,000 gained from Red Tomato to offset some of the losses from Candy Apple.
This leaves him with $5,000.
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $74,000. The machine would replace an old piece of equipment that costs $19,000 per year to operate. The new machine would cost $9,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $31,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine
Answer:
$7,400 per year
Explanation:
Data provided for computing the annual depreciation expense is here below:-
Automated bottling machine = $74,000
Useful life = 10 years
The calculation of annual depreciation expense is given below:-
Annual depreciation expense = Automated bottling machine ÷ Useful life
= $74,000 ÷ 10
= $7,400 per year
Therefore for computing the annual depreciation expense we simply divide the automated bottling machine by useful life.
What is the difference between change in quantity supplied and change in supply?
Answer:
A change in quantity supplied is a movement along the supply curve in response to a change in price. A change in supply is a shift of the entire supply curve in response to something besides price.
Explanation:
Freeman, Inc., reported net income of $40,000 for 20A. The income tax return excluded a revenue item of $3,000 (reported on the income statement) because under the tax laws the $3,000 would not be reported for tax purposes until 20B. Assuming a 30% income tax rate, this situation would cause a 20A deferred tax amount of A) $3,000 (debit). B) $3,000 (credit). C) $ 900 (debit). D) $ 900 (credit).
Answer:
The correct option is D,$900(credit)
Explanation:
The revenue omitted would be increase revenue in the year 20B ,as result net income would also be increased,hence the tax impact of it in the future that should be taken record of now is a deferred tax liability,a tax payable in the year 20B.
The amount of tax deferred is the omitted revenue multiplied by the tax rate of 30% i.e
deferred tax =$3000*30%=$900
This would be credited to deferred tax liability and debited income tax expense.
The southern division of Pryto Corporation uses a part much like Part D in one of its products. The southern division can buy this part from an outside supplier for $78.25 per unit. However, the southern division could use Part D instead of this part that it purchases from outside suppliers. What's the most that the southern division would be willing to pay the western division for Product D
Answer: $78.25
Explanation:
The Southern Division is willing to pay $78.25 to an outside company for this part that it needs.
In the same vein, the maximum therefore that they would be willing to pay for the Western Division should be $78.25 as well because anything higher than that would constitute an Opportunity Cost loss.
They should go for the cheaper option and if buying from the Western Division exceeds the $78.25 then it is loss on their part. Western Division should charge the same or less.
A production line is to be designed for a product whose completion requires 19 minutes of work. The factory works 400 minutes per day. Can an assembly line with five workstations make 100 units per day? A. yes, with exactly 250 minutes to spare B. no, but four workstations would be sufficient C. no, it will fall short even with a perfectly balanced line D. yes, with high line efficiency E. cannot be determined from the information given
Answer:
C. No, it will fall short even with a perfectly balanced line.
Explanation:
It is clearly seen here that the workforce does not tally with the target production desired, so it is explained that making the target unit of 100 will certainly fall short, even with a perfectly balanced line.
They could rely on the numbers to make intelligent estimates of the magnitude, timing, and uncertainty of future cash flows and to judge whether the resulting estimate of value was fairly represented in the current stock price. And they could make wise decisions about whether to invest in or acquire a company, thus promoting the efficient allocation of capital.
The Collins Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on machine hours in Dept. A and labor cost in Dept. B. At the beginning of the year, the company made the following estimates: Dept A Dept B Direct labor cost $65,000 $42,000 Manufacturing overhead $91,000 $48,000 Direct labor-hours 8,000 10,000 Machine-hours 3,000 12,000 What predetermined overhead rates would be used in Dept A and Dept B, respectively
Answer:
Predetermined overhead rate for department A = 1.4
Predetermined overhead rate for department B = $4
Explanation:
The computation of predetermined overhead rates would be used in Dept A and Dept B, is shown below:-
The predetermined overhead rate for department A = Manufacturing overhead ÷ Machine hours
= $91,000 ÷ $65,000
= 1.4
The predetermined overhead rate for department B = Manufacturing overhead ÷ Machine hours
= $48,000 ÷ 12,000 hours
= $4
So, we have applied the above formula.
Swifty Corporation is indebted to Blossom under a $1020000, 11%, three-year note dated December 31, 2019. Because of Swifty's financial difficulties developing in 2021, Swifty owed accrued interest of $112200 on the note at December 31, 2021. Under a troubled debt restructuring, on December 31, 2021, Blossom agreed to settle the note and accrued interest for a tract of land having a fair value of $920000. Swifty's acquisition cost of the land is $723000.
Ignoring income taxes, on its 2021 income statement Swifty should report as a result of the troubled debt restructuring_______.
Answer:
On its 2021 income statement Swifty should report as a result of the troubled debt restructuring...
Gain on disposal = $197,000
Restructuring gain = $212,200
Explanation:
We need to find the gain on disposal. Let's use:
Gain on disposal = fair value of land - cost of land.
Where,
Fair value = $920,000
Cost of land = $723,000
Therefore,
Gain on disposal = $920,000 - $723,000 = $197,000
Let's find the gain on restructuring.
Restructuring gain = Loan amount + Accured interest - fair value of land
Where,
Loan amount = $1,020,000
Accured interest = $112,200
Fair value of land = $920,000
Therefore,
Restructuring gain = $1,020,000 + $112,200 - $920,000 = $212,200
On its 2021 income statement Swifty should report as a result of the troubled debt restructuring...
Gain on disposal = $197,000
Restructuring gain = $212,200
Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp rise in the stock market, an increase in government purchases, an increase in the money supply and a decline in the value of the dollar. In the short run a. the price level and real GDP will both rise. b. the price level and real GDP will both fall. c. neither the price leave nor real GDP will change. d. All of the above are possible.
Answer:
All of the above are possible.
Explanation:
Discussions here center on equilibrium of an economy in a long run, and here after the government activities, their is a decline in dollar value; therefore in the short run, the price level and real GDP will both rise in as much as the price level and real GDP will also both fall. It is also gathered that neither the price leave nor real GDP will change.
The transition from the short run to the long run may be done by considering some short run equilibrium that is also a long run equilibrium as to supply and demand, then comparing that state against a new short run and long run equilibrium state from a change that disturbs equilibrium, say in the sales tax rate, tracing out the short run adjustment first, then the long run adjustment.
Carl invested $100,000 in a fund, which earned 8% over the next year. At the end of the year, he invested an additional $50,000 and the fund earned 18% over the next year. Carl withdrew no money from the fund. Which of the following statements about time-weighted return (TWR) and money-weighted return (MWR) is most accurate? Group of answer choices TWR is greater than MWR, and MWR is the more appropriate measure for Carl. MWR is greater than TWR, and MWR is the more appropriate measure for Carl. TWR is greater than MWR, and TWR is the more appropriate measure for Carl. MWR is greater than TWR, and TWR is the more appropriate measure for Carl.
Answer:
(d)MWR is greater than TWR, and TWR is the more appropriate measure for Carl
Explanation
since he is investing in between the year and he is earning 18% return which is higher than the 8% return on his early initial investment so time weighted return would be lower than that of the money weighted return because he is making money on the initial investment at interest that is lower than the interest rate which has been made by him in the middle of the investment period.
money weighted return is not as appropriate as time weighted written because time weighted return always takes into account the proper withdrawals and amount invested in between.
This is a partial adjusted trial balance of Pharoah Company. PHAROAH COMPANY Adjusted Trial Balance January 31, 2022 Debit Credit Supplies $760 Prepaid Insurance 1,620 Salaries and Wages Payable $1,080 Unearned Service Revenue 780 Supplies Expense 870 Insurance Expense 540 Salaries and Wages Expense 1,770 Service Revenue 4,350 Prepare the closing entries at January 31, 2022. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answer and Explanation:
The closing entries are shown below:
1. Service revenue $4,350
To Income summary 4,350
(Being the closing of service revenue is recorded)
For recording this we debited the sales revenue as it has normal credit balance so to close it we debited it and credited the income summary
2. Income summary $3,180
To Supplies Expense $870
To Insurance Expense $540
To Salaries and Wages Expense $1,770
(Being the closing of all expenses is recorded)
For recording this we debited the income summary and credited all expenses as it has normal debit balance so to close it we credited it
3. Income summary $1,170 ($4,350 - $3,180)
To Retained earnings $1,170
(Being the net income or loss is closed)
Since the revenue is more than the expenses so it would leads to net income and for recording this we debited the income summary and credited the retained earning so that the closing of the net income is recorded
Which of the following is a manufacturing cost?
A. Indirect materials
B. Advertising expense
C. Depreciation of the office equipment used by the sales staff
D. Salary of clerical workers
Answer:
A and C
Explanation:
A manufacturing cost is the depreciation of the office supplies utilized by the sales team and indirect materials. As a result, choices (A) and (C) are the correct stuff.
What is manufacturing cost?The cost of all the resources used to produce a product, collectively referred to as the manufacturing cost, is what is considered. Direct labor, direct material costs, and manufacturing overhead make up the three areas that make up the cost of production. The whole cost of delivery is affected by it.
The raw materials known as "direct materials" are those that are included into the finished good. Applying a chain of processes to maintain a deliverable product provides value to raw materials in manufacturing. For example, welding, cutting, and painting are just a few of the many processes that can be used on raw materials. The difference between direct and indirect materials must be understood.
Hence, option (C) is accurate.
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If a company is concerned about extending credit to a risky customer, it could do any of the following except: Select one: a. require the customer to pay cash in advance. b. require the customer to provide a letter of credit or a bank guarantee. c. contact references provided by the customer, such as banks and other suppliers. d. provide the customer a lengthy payment period to increase the chance of paying.
Answer:
D. Provide the customer a lengthy payment period to increase the chance of paying.
Explanation:
This is explained to be one of the working ethics found in some working and recruiting bodies or companies.
This trade payables’ payment period ratio here is said to represents the time lag between a credit purchase and making payment to the supplier. As trade payables relate to credit purchases so credit purchases figure should be used in calculating this ratio.
However as the amount of credit purchase is usually not separately available in the income statement so in that case total purchases could be used.
Like other ratios, this ratio is observed over a period of time and compared with the other businesses in the same industry.
During January, a company incurs employee salaries of $2.6 million. Withholdings in January are $198,900 for the employee portion of FICA, $390,000 for federal income tax, $162,500 for state income tax, and $26,000 for the employee portion of health insurance (payable to Company B). The company incurs an additional $161,200 for federal and state unemployment tax and $78,000 for the employer portion of health insurance. Required: 1.-3. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)
Answer:
The journal entries to record would be the following:
Jan-31 Debit Credit
Salaries Expenses $2,600,000
Income Tax payable ($390,000+$162,500) $522,500
FICA Tax payable $198,900
Accounts payable $26,000
Salaries payable Balance $1,822,600
Jan-31 Debit Credit
Salaries Expenses $78,000
Accounts payable $78,000
Jan-31 Debit Credit
Payroll Tax expense $360,100
FICA Tax Payable $198,900
Unemployment Tax Payable $161,200
Explanation:
The journal entries to record would be the following:
To record employee salary expense and withholdings
Jan-31 Debit Credit
Salaries Expenses $2,600,000
Income Tax payable ($390,000+$162,500) $522,500
FICA Tax payable $198,900
Accounts payable $26,000
Salaries payable Balance $1,822,600
To record fringe benefit provided by employer
Jan-31 Debit Credit
Salaries Expenses $78,000
Accounts payable $78,000
To record employer payroll taxes
Jan-31 Debit Credit
Payroll Tax expense $360,100
FICA Tax Payable $198,900
Unemployment Tax Payable $161,200
Fallow Corporation has two separate profit centers. The following information is available for the most recent year: West Division East Division Sales (net) $ 400,000 $ 550,000 Salary expense 46,000 60,000 Cost of goods sold 140,000 255,000 The West Division occupies 10,000 square feet in the plant. The East Division occupies 6,000 square feet. Rent, which was $ 80,000 for the year, is an indirect expense and is allocated based on square footage. Compute operating income for the West Division.
Answer:
Operating Income WEST division 164,000
Explanation:
Fallow Corporation
Income Statement
West Division East Division
Sales (net) $ 400,000 $ 550,000
Cost of goods sold 140,000 255,000
Gross Profit 260,000 295,000
Less Indirect Expenses
Salary expense 46,000 60,000
Rent * 50000 30,000
Operating Income 164,000 205,000
Rent is apportioned on the basis of the square footage.The west division has 10,000 square feet in the plant. The East Division occupies 6,000 square feet.
Rent of West Division = Area of the West/ Total Area (* RENT)
= 10,000/16,000* 80,000= $ 50,000
Rent of East Division = 6,000/16,000* 80,000= $ 30,000
Recent financial statement data for Harmony Health Foods (HHF) Inc. is shown below.
Current liabilities $ 197
Income before interest and taxes $ 116
10% Bonds, long-term 370
Interest expense 37
Total liabilities 567
Income before tax 79
Shareholders' equity
Income tax 22
Capital stock 210
Net income $ 57
Retained earnings 291
Total shareholders' equity 501
Total liabilities and equity $1,068
HHF's times interest earned ratio is (Round your answer to two decimal places.):
a. 10.00.
b. 3.14.
c. 1.54.
d. 2.14.
Current liabilities $ 180
Income before interest and taxes $ 118
10% Bonds, long-term 360
Interest expense 36
Total liabilities 540
Income before tax 82
Shareholders' equity
Income tax 20
Capital stock 201
Net income $ 62
Retained earnings 283
Total shareholders' equity 484
Total liabilities and equity $1,024
HHF's debt to equity ratio is:_____________. (Round your answer to two decimal places.):
a. 0.74.
b. 0.56.
c. 1.12.
d. 1.90.
Answer:
1. B. 3.14
2. C. 1.12
Explanation:
1. Times Interest Earned ratio
Measures how well a company is able to cover it's debt obligations using it's earnings.
The formula is simply,
= Earning before Interest and Tax / Interest Expense
Therefore,
Times Interest Earned ratio = 116/37
= 3.14
HHF's times interest earned ratio is Option B, 3.14.
2. Debt to Equity Ratio
This ratio compares the debt used to fund a company vs it's equity. It measures how much of either way used to fund the company.
The formula is,
= Total Debt / Total Equity
= 540/484
= 1.12
HHF's Debt to Equity ratio is 1.12, Option C.
Use the following information for Problems 35 through 40 A potential investor is seeking to invest $1,000,000 in a venture, which currently has 2 million shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce 1 million dollars in income per year at year 5. It is known that a similar venture recently produced $2,000,000 in income and sold shares to the public for $20,000,000. What is the percent ownership of our venture that must be sold in order to provide the venture investor’s target return?
Answer:
0.3797 or 37.97%
Explanation:
According to the scenario, computation of the given data are as follow:-
Wants Rate on return on investment = 50%
Expected value of return on investment = invested amount × (1+g)^t
= $1,000,000 × (1+50%)^5
= $1,000,000 × 7.59375
= $7,593,750
Similar venture would achieve valuation of $20,000,000 for $2,000,000. We can expect that company would achieve similar valuation of $20,000,000 in 5 years from now.
Investor’s share value at 5 years = $7,593,750 ÷ $20,000,000
= 0.3797 or 37.97%
Consider the oil-producing countries of A, B, and C. Each has a marginal cost of zero. World demand is given by Q = 1430 - P. Suppose the three countries form a cartel, and that none of them has an incentive to deviate from the cartel. By how many units lower is the total output of oil under the cartel relative to the Cournot solution?
Answer: 357.50
Explanation:
Under Cournot model that has three firms, each firm produces at
q = (1430 – 0)/((3+1)×1)
= 1430/4
= 357.5 units
Total output = 357.5 × 3
= 1072.5 units
Under cartel, the marginal revenue equals to the marginal cost.
MR = MC = 0
1430 – 2Q = 0
Q = 1430/2
Q = 715 units
Difference= 1072.5 units - 715 units
= 357.5 units
Hence the units are 357.50 units lower in cartel compared to Cournot.
Scranton, Inc. reports net income of $232,000 for the year ended December 31. It also reports $88,600 depreciation expense and a $5,100 gain on the sale of equipment. Its comparative balance sheet reveals a $35,900 decrease in accounts receivable, a $15,950 increase in accounts payable, and a $12,650 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.
Answer:
Cash flow form operating activities $359,800
Explanation:
$
Net income 232,000
Add depreciation expense 88,600
Add Decrease in receivable 35,900
Increase in account payable 15,950
Decrease in wages ( 12,650)
Cash flow form operating activities 359,800
Increase in payable and decrease in receivable represent cash inflow while decrease in payable and increase in receivables represent cash outflow
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $69, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6 percent, and sells for 94 percent of par. The second issue has a face value of $55 million, a coupon rate of 5 percent, and sells for 106 percent of par. The first issue matures in 24 years, the second in 9 years.Suppose the most recent dividend was $4.25 and the dividend growth rate is 4.4 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 25 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
10.83%
Explanation:
The simplest way to determine the if we use the Gordon growth model for determining the company's stock price:
stock price = [dividend x (1 + growth rate)] / (WACC - growth rate)
dividend = $4.25g = 4.4%stock price = $69WACC - g = [dividend x (1 + g] / price
WACC = {[dividend x (1 + g] / price} + g
WACC = {[$4.25 x (1 + 4.4%] / $69} + 4.4% = 0.1083 or 10.83%
A law firm received $1600 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause:
Answer and Explanation:
In the first situation, the journal entry is
Cash Dr $1,600
To Unearned revenue $1,600
(Being the unearned revenue is recorded)
For this we debited the cash as it increased the assets and credited the unearned revenue as it also increased the liabilities
The adjusting entry is
Unearned Service Revenue XXXXX
To Service Revenue XXXXX
(Being the adjusting entry is recorded)
If this entry is not recorded than it would leads to understated of revenue and overstated of liabilities
