Solution :
a). The current market value of the unlevered equity
[tex]$=\frac{75\% \times \$52 \text{ million} + 25\% \times \$22 \text{ million}}{1+10 \%}$[/tex]
= $ 40.45 million
b). The market value of the equity one year from now is
[tex]$=(75\% \times \$52 \text{ million} + 25\% \times \$22 \text{ million})- \$18 \ \text{million}$[/tex]
= $ 44.5 million - $ 18 million
= $ 26.5 million
c). The expected return on the equity without the leverage = 10%
The expected return on the equity with the leverage = [tex]$=10\% +\frac{ \$22 \text{ million}}{\$ 26.5 \text{ million}}$[/tex]
= 0.93 %
d). The lowest possible value of equity without the leverage = $20 million - $ 18 million
= $ 2 million
The lowest return on the equity without the leverage = 10%
The lowest return on the equity with the leverage = 2 % as the equity is eroded.
Q4) The price of a luxury car increased from 42.000 euros to 44.000 euros. Then the demand for
this car declined from 100 units to 20 units. Calculate the price elasticity of demand for the car.
Answer:
Price elasticity of demand = 28.67 (Approx.)
Explanation:
Given:
Old price of car = 42.000 euros
New price of car = 44.000 euros
Quantity of car old = 100 units
Quantity of car new = 20 units
Find:
Price elasticity of car
Computation:
Price elasticity of demand = (Percentage change in quantity)/(Percentage change in price)
Price elasticity of demand = [{(Q2-Q1)100}/{(Q1+Q2)/2}] / [{(P2-P1)100}/{(P1+P2)/2}]
Price elasticity of demand = [{(20-100)100}/{(20+100)/2}] / [{(44000-42000)100}/{(44000+42000)/2}]
Price elasticity of demand = [{-8000}/{60}] / [{200000}/{(43000}]
Price elasticity of demand = 133.33 / 4.65
Price elasticity of demand = 28.67 (Approx.)
The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta of 1.70. It plans to maintain indefinitely its traditional plowback ratio of 2/3. This year's earnings were $3.6 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 15%, and T-bills currently offer a 5% return. a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
$7.95
Explanation:
The computation of the price at which the stock should sell is shown below;
But before we need to determine the following calculations
Sustainable growth rate, g is
= ROE × b
= 9% × (2 ÷3)
= 6%
Now
Cost of Equity = Rf + beta × (Rm - Rf)
= 5% + 1.70 ×(15% - 5%)
= 22%
Now finally the Price is
= D1 ÷ (r - g)
= $3.6 × 1 ÷ 3 × (1 + 6%) ÷ (22% - 6%)
= $7.95
Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a qualified trade or business. During the current year, ABC has net income of $325,000 after deducting Robert’s $100,000 salary. In addition to his compensation, ABC pays Robert dividends of $250,000. What is Robert’s qualified business income? Would your answer to part (a) change if you determined that reasonable compensation for someone with Robert’s experience and responsibilities is $200,000? Why or why not
Answer and Explanation:
a. The calculation of the robert qualified business income is shown below:
Since robert is the sole shareholder and CEO of the ABC Inc and earned the income of $325,000 after subtracting the deduction of $100,000 salary
Also their is a dividend of $250,000
But the qualified business income should be equivalent to the net income i.e. $325,000
b. In the case when there is $200,000 so the net income would be decreased by $100,000
Now the qualified business income is
= $325,000 - $100,000
= $225,000
Vaughn Manufacturing purchased land as a factory site for $1345000. Vaughn paid $116000 to tear down two buildings on the land. Salvage was sold for $8100. Legal fees of $5500 were paid for title investigation and making the purchase. Architect's fees were $46900. Title insurance cost $3900, and liability insurance during construction cost $4200. Excavation cost $15860. The contractor was paid $4300000. An assessment made by the city for pavement was $9500. Interest costs during construction were $260000.
1. The cost of the land that should be recorded by Wilson Co. is:_____.
a. $989,880.
b. $980,480.
c $996,280.
d. $986,880.
2. The cost of the building should be recorded by Wilson Co. is:_____.
a. 2,804,840.
b. 2,813,200.
c. 2,803,800.
d. 3,014,240.
Answer:
Cost of Land = $1,471,800
Cost of Building = $4,626,960
Explanation:
Note: "The options attached to the question are incorrect because its belongs to another question entirely and this can be seen as attached as picture below"
1. Cost of Land = Purchase Value + Cost Incurred to Tear Down two Buildings - Salvage + Legal Fees + Title Insurance Cost + Assessment Cost
Cost of Land = $1345000 + $116000 - $8100 + $5500 + $3900 + $9500
Cost of Land = $1,471,800
2. Cost of Building = Architect's Fees + Liability Insurance Cost + Excavation Cost + Contractor's Payment + Interest Cost
Cost of Building = $46900 + $4200 + $15860 + $4300000 + 260000
Cost of Building = $4,626,960
Jane Tucker is the ethics officer for a publicly traded company. She is concerned that the company does not have a mechanism for anonymous reports of issues by employees. The CEO is not inclined to spend the money required to set up a hotline or any other reporting mechanism. Which of the following statements is true about this situation?
A) As long as the company has an ethics officer to whom employees can report concerns, it has done everything necessary to enjoy the protections under the Federal Sentencing Guidelines.
B) With Jane as an ethics officer and adding in a code of ethics, the company has met the two required prongs for the Federal Sentencing Guidelines.
C) Without an anonymous reporting system, the company does not meet the minimum requirements for the protections of the Federal Sentencing Guidelines.
D) The Federal Sentencing Guidelines protections do not apply to publicly traded companies under Dodd-Frank.
Answer: C) Without an anonymous reporting system, the company does not meet the minimum requirements for the protections of the Federal Sentencing Guidelines.
Explanation:
Based on the information given, it should be noted that since there's no anonymous reporting system, the minimum requirements for the protections of Federal Sentencing Guidelines isn't met by the company.
The Federal Sentencing Guidelines simply refers to the rules that with regards to the uniform policy through which the individuals and the organizations that have been convicted of felonies and every other misdemeanors are set up. In this case, the requirements hasn't been met since there is no anonymous reporting system.
Think about an organizational change that recently affected you. This could be a change at work in which jobs or procedures were changed, or it could be a change at school, such as a change in curriculum requirements or major revisions in registration procedures. How effectively did the organization manage the change? What could the organization have done differently to reduce resistance to the change? Your post should reflect the terms and concepts in Chapter 15.
Explanation:
One good example is the recent change in the way we learn at school (remote learning). For many students, it was the first time they had to receive instructions from a teacher via videoconferencing.
Many organizations tried to adjust to this new normal, however, most organizations were confused about what training to provide, how long to should they plan for, etc.
Reports say that many teachers found it difficult to adapt to this method of teaching, hence, some were resistant to this change. However, if proper enlightenment were carried out, as well as employing some motivational factors, such resistance to change would have been minimal.
Wesley, who is single, listed his personal residence with a real estate agent on March 3 of the current year at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, he and the purchaser signed a contract to sell for $363,000. The sale (i.e., closing) took place on September 7. The closing statement showed the following disbursements:
Real estate agent's commission $21,780
Appraisal fee 600
Exterminator's certificate 300
Recording fees 800
Mortgage to First Bank 305,000
Cash to seller 34,520
Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2017, Wesley purchases another residence for $325,000.
a. Wesley's recognized gain on the sale is __________
b. Wesley's adjusted basis for the new residence is ___________
c. Assume instead that the selling price is $800,000.
Wesley's recognized gain is _____________, and his adjusted basis for the new residence is __________
Answer:
a. Wesley's recognized gain on the sale is $0.
b. Wesley's adjusted basis for the new residence is $325,000
c. Assume instead that the selling price is $800,000.
Wesley's recognized gain is $326,520, and his adjusted basis for the new residence is $325,000.
Explanation:
Wesley's actual gain = $363,000 - $21,780 - $600 - $300 - $800 - $200,000 = $139,520, but it can all be excluded using section 121.
If the selling price is $800,000;
Wesley's actual gain = $800,000 - $21,780 - $600 - $300 - $800 - $200,000 = $576,520, but he can exclude $250,000, so his recognized gain = $326,520
1. Prepare general journal entries for the transactions.
Mitchell Parts Co. had the following plant asset transactions during the year:
1. Assets discarded or sold:
Jan. 1 Motor #12, which had a cost of $2,890 and accumulated depreciation of
$2,890, was discarded.
8 Motor #8, which had a cost of $4,440 and accumulated depreciation of
$4,020, was sold for $260.
14 Motor #16, which had a cost of $5,730 and accumulated depreciation of
$5,490, was sold for $470.
2. Assets exchanged or traded in:
Feb. 1 Motor #6, which had a cost of $5,860 and accumulated depreciation of
$4,590, was traded in for a new motor (#22) with a fair market value of
$6,800. The old motor and $5,300 in cash were given for the new motor.
9 Motor #9, which had a cost of $5,420 and accumulated depreciation of
$4,940, was traded in for a new motor (#23) with a fair market value of
$6,450. The old motor and $6,170 in cash were given for the new motor.
Answer:
1. Accumulated Depreciation (Dr.) $2,890
Motor #12 (Cr.) $2,890
2. Cash (Dr.) $260
Accumulated Depreciation (Dr.) $4,020
Loss on Sale (Dr.) $160
Motor #8 (Cr.) $4,440
3. Cash (Dr.) $470
Accumulated Depreciation (Dr.) $5,490
Gain on Sale (Cr.) $230
Motor #16 (Cr.) $5,730
Explanation:
1. New Motor #22 (Dr.) $6,800
Accumulated Depreciation (Dr.) $4,590
Gain on Sale (Cr.) $230
Motor #6 (Cr.) $5,860
Cash (Cr.) $5,300
2. New Motor #23 (Dr.) $6,450
Accumulated Depreciation (Dr.) $4,940
Loss on Sale (Dr.) $200
Motor #9 (Cr.) $5,420
Cash (Cr.) $6,170
Beloved Baby Company manufactures and sells children's strollers. Each stroller requires eight screws. For September, Beloved Baby Company will begin September with 360 screws in its beginning inventory. Beloved Baby Company has budgeted stroller sales of 560 strollers, while 590 strollers are scheduled to be produced. How many screws should Beloved Baby Company purchase in September
Answer:
4,360
Explanation:
Calculation to determine How many screws should Beloved Baby Company purchase in September
Using this formula
Screws to purchased in September=(Production* per screws required)- Beginning Inventory
Let plug in the formula
Screws to purchased in September=(590 × 8)-360
Screws to purchased in September= 4,720 - 360 Screws to purchased in September= 4,360
Therefore The numbers of screws that Beloved Baby Company should purchase in September is 4,360
Free Flight Corporation, located in Denver, Colorado, produces bicycle accessories, including bicycle helmets which requires a rigid, crushable foam. During the quarter ending June 30, the company manufactured 3,800 helmets, using 2,736 kilograms of foam. The foam cost the company $18,058. According to the standard cost card, each helmet should require 0.66 kilograms of foam, at a cost of $7.00 per kilogram.
Required:
1. What is the standard quantity of kilograms of foam (SQ) that is allowed to make 3,800 helmets?
2. What is the standard materials cost allowed (SQ * SP) to make 3,800 helmets?
3. What is the materials spending variance?
4. What is the materials price variance and the materials quantity variance?
(For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)
1. Standard quantity of kilograms allowed
2. Standard cost allowed for actual output
3. Materials spending variance
4. Materials price variance
Materials quantity variance
Answer:
1. Standard quantity of kilograms allowed 2508kg
2. Standard cost allowed for actual output $17,556
3. Materials spending variance $502 Unfavorable
4. Materials price variance $1094Favorable
Materials quantity variance $1596 unfavorable
Explanation:
1. Calculation to determine the standard quantity of kilograms of foam
Standard quantity of kilograms allowed = 0.66*3800
Standard quantity of kilograms allowed =2508kg
2. Calculation to determine the standard materials cost allowed
Standard cost allowed for actual output = 2508kg *7
Standard cost allowed for actual output=$17,556
3. Calculation to determine the materials spending variance using this formula
Material spending variance = Standard cost - Actual cost
Let plug in the formula
Material spending variance= $17,556- $18,058
Material spending variance= $502 Unfavorable
4. Calculation to determine the materials price variance and the materials quantity variance
Material price variance = (7- $18,058/2,736)*2,736
Material price variance = $1094Favorable
Material quantity variance =(2508kg-2,736)*7
Material quantity variance= $1596 unfavorable
Therefore:
1. Standard quantity of kilograms allowed 2508kg
2. Standard cost allowed for actual output $17,556
3. Materials spending variance $502 Unfavorable
4. Materials price variance $1094Favorable
Materials quantity variance $1596 unfavorable
Andy derives utility from two goods, potato chips (Qp) and Cola (Qc). Andy receives zero utility unless he consumes some of at least one good. The marginal utility that he receives from the two goods is given as follows:
Qp MUp Qc MUc
1 12 1 24
2 10 2 22
3 8 3 20
4 6 4 18
5 4 5 16
6 2 6 14
7 -2 7 12
8 4 8 10
Refer to Scenario, what is the total utility that Andy will receive if he consumes 5 units of potato chips (Qp) and no Cola drink (Qc)?
Answer:
TU = 40
Explanation:
Total utility is the sum of marginal utility obtained by consuming different units of the good. So at 5 units of potato chips (Qp) and 0 units of Cola drink (Qc) , we can find total utility by adding marginal utility till 5th unit of Qp.
[tex]Total utility = 12 + 10 + 8 + 6 + 4 \\ = 40[/tex]
Thus, total utility from 5 units of potato chips and no cola is 40 utils.
The total utility that Andy will receive if he consumes 5 units of potato chips (Qp) and no Cola drink (Qc) is 40.
The calculation is as follows:= 12 + 10 + 8 + 6 + 4
= 40 utils
Therefore we can conclude that The total utility that Andy will receive if he consumes 5 units of potato chips (Qp) and no Cola drink (Qc) is 40.
Learn more: brainly.com/question/16911495
When a company uses a
allocation rate there is only one base for allocating all overhead costs to products or other cost objects.
Answer:
company-wide
Explanation:
Using a single company-wide allocation rate implies that only one cost driver (or cost base) is used to allocate all the overhead costs to the product units, batches, departments, or divisions, and other cost objects. This single rate is the plant-wide or company-wide allocation rate. It is opposed to the use of multiple allocation rates, where different rates are calculated and used to allocate overhead costs from different cool pools to the units or activities consuming the services. The company-wide allocation rate is typical with traditional costing method, while the multiple allocation rates are used with ABC costing method.
MedTech Corp. stock was $55.25 per share at the end of last year. Since then, it paid a $0.45 per share dividend. The stock price is currently $62.50. If you owned 500 shares of MedTech, what was your percent return
Answer:
Percentage Return = 0.13936651584 or 13.936651584% rounded off to 13.94%
Explanation:
To calculate the return percentage, we need to take the total return provided by the share in form of both dividends and capital gains. The total yield or return for the holding period can be calculated as follows,
Percentage Return = [Dividend + P1 - P0] / P0
Where,
P1 is price todayP0 is the purchase pricePercentage Return = [0.45 + 62.50 - 55.25] / 55.25
Percentage Return = 0.13936651584 or 13.936651584% rounded off to 13.94%
Novak Corp. has 6000 shares of 5%, $100 par value, cumulative preferred stock and 12000 shares of $1 par value common stock outstanding at December 31, 2020. There were no dividends declared in 2018. The board of directors declares and pays a $55800 dividend in 2019 and in 2020. What is the amount of dividends received by the common stockholders in 2020
Answer:
See below
Explanation:
Given the above data,
Preferred shares = 6,000 shares × $100 = $600,000
Dividend on preference shares = $600,000 × 5% = $30,000 per year
Dividend declared in 2019
= $55,800
Preferred dividend in 2019 = $30,000 × 2 = $60,000
Dividend declared in 2020 =$55,800
Preferred dividend declared in 2020 = $30,000 + $4,200 = $34,200
Dividend paid to common stock holders = $55,800 - $34,200 = $21,600
The following information is available for Sweet Acacia Industries for the year ended December 31, 2022. $38,400 Beginning cash balance Accounts payable increase 9,120 Depreciation expense 65,600 Accounts receivable decrease 7,680 Inventory decrease 4,960 Net income 91,520 Cash received for sale of land at book value 166,400 Cash dividends paid 60,800 Income taxes payable decrease 6,240 129,600 Cash used to purchase land 105,600 Cash used to redeem bonds 256,000 Cash received from issuing stock
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a -sign e.g. -15,000 or in parenthesis eg. (15,000).)
Answer:
Sweet Acacia Industries
Statement of Cash Flows
For the Year Ended December 31, 2022
Cash Flows from Operating Activities:
Net income $91520
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense 65600
Decrease in Accounts Receivable 7680
Decrease in inventory 4960
Increase in accounts payable 9120
Decrease in Income tax payable -6240 $81120
Net cash provided by operating activities $172,640
Cash Flows from Investing Activities:
Sale of Land 166400
Purchase of Land -129600
Net Cash Provided by Investing Activities $36,800
Cash Flows from Financing Activities:
Payment of Dividends -60800
Issuance of Stock 256000
Redemption of Bonds -105600
Net Cash provided by Financing Activities $89,600
Net Increase in Cash $299,040
Cash at Beginning of Period $38,400
Cash at End of Period $337,440
Ahnberg Corporation had 660,000 shares of common stock issued and outstanding at January 1. No common shares were issued during the year, but on January 1, Ahnberg issued 280,000 shares of convertible preferred stock. The preferred shares are convertible into 560,000 shares of common stock. During the year Ahnberg paid $168,000 cash dividends on the preferred stock. Net income was $1,950,000.
What were Ahnberg's basic and diluted earnings per share for the year? (Round your answers to 2 decimal places.)
Answer:
Basic Earnings per share=$2.70
Diluted earnings per share(EPS)=$1.50
Explanation:
Earnings per share is the total earnings attributable to ordinary shareholders divided by the number of units of common stock .
It represents profit per unit of stock unit held by common stock holder investor. The higher, the more profitable and the better.
Earnings per share = Earnings attributable to ordinary shareholders / units of common stock
Earnings attributable to ordinary shareholders= Net income after tax - preference dividend
Net Income for the year $1,950,000
Preference Dividend $168,000
Earnings attributable to ordinary shareholders for 2021= 1,950,000-168,000=1,782,000
Basic Earnings per share=$1,782,000/660,000shares=$2.70
Basic Earnings per share=$2.70
Diluted earnings per share(EPS)=Earnings attributable to ordinary shareholders/ Total number of shares assuming conversion
Diluted earnings per share(EPS)=$1,782,000/(660,000+560,000) units
Diluted earnings per share(EPS)=$1.50
Policy is designed to shift the aggregate B) curve by the federal government changing its C) and D) policies. An E) fiscal policy would attempt to speed up the economy by shifting this curve to the F) . This would be accomplished by the government spending G) than it took received in taxes. Such a policy would result in a budgetary H) . Such a policy would be employed to get the economy out of a I) and fight the undesirable economic phenomenon of J).
Answer:
There are no options included so I will give the answers as beat I can based on economic knowledge.
FISCAL policy is designed to shift the aggregate DEMAND curve by the federal government changing its SPENDING and TAXATION policies.
The government can influence the economy through fiscal policy. It does this by changing its taxation and spending policies to either increase economic growth or reduce overheating.
An EXPANSIONARY fiscal policy would attempt to speed up the economy by shifting this curve to the RIGHT. This would be accomplished by the government spending MORE than it took received in taxes. Such a policy would result in a budgetary DEFICIT .
With an expansionary policy, the government would increase it's spending such that it would be more than the taxation imposed. With the government spending more than they brought it from taxes, a budget deficit will result.
Such a policy would be employed to get the economy out of a RECESSION and fight the undesirable economic phenomenon of UNEMPLOYMENT.
When the economy is going through a recession, the economy will be facing a decline so in order to renew growth, the government would spend more to bring it out of a decline and therefore prevent or reduce unemployment.
Finerly Corporation sells cosmetics through a network of independent distributors. Finerly shipped cosmetics to its distributors and is considering whether it should record $220,000 of revenue upon shipment of a new line of cosmetics. Finerly expects the distributors to be able to sell the cosmetics, but is uncertain because it has little experience with selling cosmetics of this type. Finerly is committed to accepting the cosmetics back from the distributors if the cosmetics are not sold. How much revenue should Finerly recognize upon delivery to its distributors
Answer:
The amount of revenue Finerly should recognize upon delivery to its distributors is $0.
Explanation:
From the question, the following two very important points can be observed:
1. Finerly expects the distributors to be able to sell the cosmetics, but is uncertain because it has little experience with selling cosmetics of this type.
2. Finerly is committed to accepting the cosmetics back from the distributors if the cosmetics are not sold.
Since there is an uncertainty that the the distributors will be able to sell the cosmetics and Finerly is committed to accepting them back from the distributors if they are not sold, these imply that the amount of sales revenue cannot be known or reasonably estimated until when the distributors actually sell the cosmetics.
Therefore, the amount of revenue Finerly should recognize upon delivery to its distributors is $0.
The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta of 1.65. It plans to maintain indefinitely its traditional plowback ratio of 2/3. This year's earnings were $2.8 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 14%, and T-bills currently offer a 6% return. a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Calculate the P/E ratio.
Answer:
a.
P0 = $7.49494949492 rounded off to $7.49
b.
P/E ratio = 2.67676767676 times rounded off to 2.68 times
Explanation:
a.
The constant growth model of dividend discount model (DDM) can be used to calculate the price of the stock today. DDM calculates the price of a stock based on the present value of the expected future dividends from the stock. The formula for price today under constant growth DDM is,
P0 = D0 * (1+g) / (r - g)
Where,
D0 * (1+g) is the dividend expected in Year 1 or next year g is the constant growth rate in dividends r is the discount rate or required rate of returnWe first need to calculate the values for D0, g and r.
D0 can be calculate by multiplying the earnings per share by (1 - Plowback Ratio)
D0 = 2.8 * (1 - 2/3)
D0 = $0.93333333333 rounded off to $0.93
To calculate the value of g, we need to multiply the ROE by the Plowback ratio.
g = 0.09 * 2/3
g = 0.06 or 6%
To calculate the value of r, we will use the CAPM equation.
r = risk free rate + Beta * (Market return - risk free rate)
r = 0.06 + 1.65 * (0.14 - 0.06)
r = 0.192 or 19.2%
P0 = 0.93333333333 * (1+0.06) / (0.192 - 0.06)
P0 = $7.49494949492 rounded off to $7.49
b.
The P/E ratio can be calculated by dividing the price per share by the earnings per share.
P/E = 7.49494949492 / 2.8
P/E ratio = 2.67676767676 times rounded off to 2.68
Jasmine Corporation purchased inventory costing $125,000 and sold 75% of the goods for $163,750. All purchases and sales were on account. Jasmine later collected 25% of the accounts receivable. Assume that sales returns are nonexistent.
1. Journalize these transactions for Jasmine, which uses the perpetual inventory system.
2. For these transactions, show what Jasmine will report for inventory, revenues, and expenses on its financial statement at the end of the month. Report gross profit on the appropriate statement. Assume beginning inventory is $0.
Answer:
Part 1
Purchase journal
Debit : Merchandise Inventory $125,000
Credit : Accounts Payable $125,000
Sales journal
Debit : Accounts Receivable $163,750
Debit : Cost of Sales ($125,000 x 75%) $93,750
Credit : Sales Revenue $163,750
Credit : Inventory $93,750
Collection of Payments journal
Debit : Cash ($163,750 x 25%) $40,938
Credit : Accounts Receivable $40,938
Part 2
Inventory = $31,250
revenues = $163,750
expenses = $93,750
gross profit = $70,000
Explanation:
inventory = Purchases - Cost of sales
= $125,000 - $93,750
= $31,250
revenues = Sales to Customers paid up or not
= $163,750
expenses = Cost of sales
= $93,750
gross profit = Sales - Cost of sales
= $163,750 - $93,750
= $70,000
Why should you be able to create, share, and maintain documents?
Answer:
it helps the business run smoother
Explanation:
Tara incorporates her sole proprietorship, transferring it to newly formed Black Corporation. The assets transferred have an adjusted basis of $290,000 and a fair market value of $300,000. Also transferred by Tara was $50,000 in liabilities, all related to the business. In return for these transfers, Tara receives all of the stock in Black Corporation.
a. Black Corporation has a basis of $241,000 in the property.
b. Black Corporation has a basis of $240,000 in the property.
c. Tara’s basis in the Black Corporation stock is $241,000.
d. Tara’s basis in the Black Corporation stock is $249,000.
e. None of the above.
Answer:
Black Corporation
e. None of the above.
Explanation:
a) Data and Calculations:
Adjusted basis of assets = $290,000
Fair market value of assets = $300,000
Liabilities transferred = $50,000
Black Corporation's basis = $250,000 ( $300,000 - $50,000)
Tara's basis in the Black Corporation = $240,000
b) According to U.S. Code 351, no gain or loss shall be recognized for Tara if property is transferred to Black Corporation by Tara solely in exchange for stock in Black Corporation, and immediately after the exchange, Tara comes into the control of Black Corporation.
Use the following information for VPI Co. to prepare a statement of cash flows for the year ended December 31 using the indirect method.
Cash balance at prior year-end $40,000
Gain on sale of machinery $2,000
Increase in inventory 5,000
Cash received from sale of machinery 9,500
Depreciation expense 4,000
Increase in accounts payable 1,500
Cash received from issuing stock 8,000
Net income 23,000
Cash paid for dividends 1,000
Decrease in accounts receivable 3,000
Answer:
VPI CO
Statement of Cash flows
For the Current year ended December 31
Cash flow from Operating activities
Net Income $23,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation Expense $4,000
Gain on sale of Machinery $(2,000)
Changes in Current Operating assets and liabilities
Decrease in Accounts Receivable $3,000
Increase in Inventory $(5,000)
Increase in Accounts Payable $1,500
Net cash Provided by operating activities $24,500
Cash flows from Investing Activities
Cash Received from Sale of Machinery $9,500
Net cash Provided by Investing activities $9,500
Cash flows from financing Activities
Cash Received from Issuing Stock $8,000
Cash Paid for Dividend $(1,000)
Net cash Provided by financing activities $7,000
Net increase in Cash $41,000
Cash Balance at Prior Year-end $40,000
Cash Balance at Current Year-end $81,000
The Jenkins Corporation has purchased an executive jet. The company has agreed to pay $200,000 per year for the next 10 years and an additional $1,000,000 at the end of the 10th year. The seller of the jet is charging 6% annual interest. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) Determine the liability that would be recorded by Jenkins.'
Answer:
Present value of liability = $2,030,412.1871 rounded off to $2,030,412.19
Explanation:
To calculate the amount that would be recorded as a liability, we need to find the present value of the jet. The present value can be calculated by discounting the cash flows provided in the question. The 200000 cash flows that will be payable every year are in the form of an ordinary annuity and their present value will be calculated using the attached formula. The present value of 1000000 that is payable at the end of the 10th year will be calculated as follows,
Present Value of Cash flow = Cash Flow / (1+r)^t
Where,
r is the discount rate t is the time periodPresent value of liability = 200000 * [(1 - (1+0.06)^-10) / 0.06] +
1000000 / (1+0.06)^10
Present value of liability = $2,030,412.1871 rounded off to $2,030,412.19
One day, Barry the Barber, Inc., collects $400 for haircuts. Over this day, his equipment depreciates in value by $50. Of the remaining $350, Barry sends $30 to the government in sales taxes, takes home $220 in wages, and retains $100 in his business to add new equipment in the future. From the $220 that Barry takes home, he pays $70 in income taxes.
a. gross domestic product
b. net national product
c. national income
d. personal income
e. disposable personal income
Answer: See explanation
Explanation:
a. gross domestic product
The GDP is $400 which is the money that Barry collects for haircut.
b. net national product
Net National Product:
= GDP – Depriciation
= $400 - $50
= $350
c. national income
The national income is the total income that the residents of the country earns and this will be same as Net National Product which is $350
d. personal income
Personal income:
= National income – Retained earnings
= $350 - $100 - $30
= $220
e. disposable personal income
Disposable personal income:
= Personal income – Personal tax
= $220 - $70
= $150
Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the $26.10 million cost of the patent on a straight-line basis since it was acquired at the beginning of 2017. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the end of 2021 (before adjusting and closing entries.
Required:
Prepare the appropriate adjusting entry for patent amortization in 2013 to reflect the revised estimate.
Answer:
Original Cost = $26.10
Annual Amortization (Old) = $26.10 / 9 years
Annual Amortization (Old) = $2.9 million
Amortization till Date (2017 - 2021) = $2.9*4 = $11.6 million
Unamortized Value = $26.10 million - $11.6 million
Unamortized Value = $14.5 million
Remaining Life = 6 - 4
Remaining Life = 2 Years
New Amortization = Unamortized Value/Remaining Life
New Amortization = $14.5/2
New Amortization = $7.25 million
Journal Entry
Amortization Expense Debit - $7.25 million
Patent Credit - $7.25 million
Which of these investments may be long term? Choose four answers.
savings accounts
mutual funds
bonds
retirement funds
commodities
These long-term investments are the asset size of company balance sheets i.e shown by a company's investments it including stocks, bonds, and real estate these are long-term as they are kept for one than one year.
The long-term investment includes mutual funds, bonds, retirement funds, commodities. These are investments that are made for the long term periods and may be for long-term goals of the individual or the organization.
Thus the options B, C, D, and E are correct.
Learn more about the investments may be of long-term.
brainly.com/question/18641093.
The investments may be long term is bonds and retirement funds.
What is long term investment?A long-term investment is an investment owned by an individual or company for more than three year.
This could be a company or an individual asset such as real estate and bonds that takes a long time to mature because they do not generate income immediately.
Therefore, The investments may be long term is bonds and retirement funds
Learn more on investment here,
https://brainly.com/question/417234
Recently, some college alumni started a moving service for students living on campus. They have 3 employees and are debating hiring one more. The hourly wage for an employee is $30 per hour. An average moving job takes 4 hours. The company currently does 3 moving jobs per week, but with one more employee, the company could manage 5 jobs per week. The company charges $100 for a moving job.
Instructions:
Round your answers to the nearest whole number.
a. The new employee's marginal product of labor is ______.
b. The value of that merginal product is ______.
c. The moving service should moving jobs ______- hire another worker.
Answer: a. 2
b. $200
c. Should not
Explanation:
a. The new employee's marginal product of labor is ______.
This will be:
= 5 - 3
= 2 moving jobs
b. The value of that marginal product is ______..
Since the company charges $100 for a moving job, the value of the marginal product will be:
= 2 × $100
= $200
c. The moving service should moving jobs ______- hire another worker
Marginal cost of moving 2 jobs will be:
= $30 × 4 × 2
= $240
Since the marginal cost is more than the marginal product, the company should not hire another worker.
In its most recent annual report, Appalachian Beverages reported current assets of $54,000 and a current ratio of 1.80. Assume that the following transactions were completed: (1) purchased merchandise for $6,000 on account, and (2) purchased a delivery truck for $10,000, paying $1,000 cash and signing a two-year promissory note for the balance.
Compute the updated current ratio (round answers to 2 decimal places)
Transaction (1) ________________
Transaction (2) ________________
Answer:
Current Ratio - Transaction 1 = 1.6666 rounded off to 1.67
Current Ratio - Transaction 2 = 1.6388 rounded off to 1.64
Explanation:
The current ratio is a measure of liquidity which measures the amount of current assets a business has to pay off each $1 of current liability. It is calculated as follows,
Current Ratio = Current Assets / Current Liabilities
We know the initial current ratio and current assets. The initial current liabilities will be,
1.8 = 54000 / Current Liabilities
Current Liabilities = 54000 / 1.8
Current Liabilities = $30000
Transaction 1
The result of transaction 1 will be that the current assets will increase by $6000 as inventory increases and the current liabilities will also increase by $6000 as accounts payable are increasing. The new current ratio will be,
Current Ratio - Transaction 1 = (54000 + 6000) / (30000 + 6000)
Current Ratio - Transaction 1 = 1.6666 rounded off to 1.67
Transaction 2
The result of transaction 2 will be that the current assets will decrease by $1000 as payment for truck which is a fixed asset is made partly by cash and the current liabilities will not increase as the note signed for the remaining payment of the truck is due after 2 years thus it is a non current liability. The new current ratio will be,
Current Ratio - Transaction 2 = (54000 + 6000 -1000) / (30000 + 6000)
Current Ratio - Transaction 2 = 1.6388 rounded off to 1.64
A firm has current assets that could be sold for their book value of $22 million. The book value of its fixed assets is $60 million, but they could be sold for $90 million today. The firm has total debt with a book value of $40 million, but interest rate declines have caused the market value of the debt to increase to $50 million. What is this firm's market-to-book ratio
Answer:
the firm market to book ratio is 1.48
Explanation:
The computation of the market to book ratio is shown below:
The Market values is
= $22 million + $90 million - $50 million
= $ 62 million
And, the Book values is
= $22 million + $60 million - $40 million
= $42 million
Now the firm market to book ratio is
= $62 million ÷ $42 million
= 1.48
Hence, the firm market to book ratio is 1.48
