An individual is planning to set-up an education fund for his grandchildren. He plans to invest $17,500 annually at the end of each year. He expects to withdraw money from the fund at the end of 10 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 10 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Answers
Answer:
Pv=$8105.86
Fv=$37,781.18
Pva=$691,014.62
Fva=$117426.42
Explanation:
Kindly check the attached picture for detailed explanation
Related Questions
Job 397 was recently completed. The following data have been recorded on its job cost sheet. Direct materials $59,400 Direct labor-hours 1,254 DLHs Direct labor wage rate $11 per DLH Number of units completed 3,300 units The company applies manufacturing overhead on the basis of direct labor-hours. The predetermined overhead rate is $37 per direct labor-hour. Required: What's the unit product cost that would appear on the job cost sheet for this job
Answers
Answer:
$36.24
Explanation:
The computation of unit product cost is shown below:-
Unit product cost = Direct material + Direct labor + Manufacturing overhead) ÷ Unit completed
= ($59,400 + (1254 × $11) + (1254 × $37)) ÷ 3,300
= ($59,400 + $13,794 + $46,398) ÷ 3,300
= $119,592 ÷ 3,300
= $36.24
Therefore for computing the units product cost we simply applied the above formula.
n the Month of March, Chester Corporation received orders of 180 units at a price of $15.00 for their product Cid. Chester uses the accrual method of accounting and offers 30 day credit terms. Chester delivers 120 units in March and the balance of 60 units in April. They received payment for 60 units in March, 60 units in April, and 60 units in May. How much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands)
Answers
Answer:
Explanation:
Under accrual basis, revenue will recognize only after order delivered. so in march they didn't deliver any order. so income statement will report 0. in April they delivered 180 units. they can recognize a revenue of $15*180 = $2,700 in their April income statement.
So, answer will be. 0, $2,700
A well-known financial writer argues that he can earn 148 percent per year buying wine by the case. Specifically, he assumes that he will consume one $12 bottle of fine Bordeaux per week for the next 12 weeks. He can either pay $12 per week or buy a case of 12 bottles today. If he buys the case, he receives a 9 percent discount and, by doing so, earns the 148 percent. Assume he buys the wine and consumes the first bottle today. Calculate the EAR.
Answers
Answer:
EAR = 148%
Explanation:
calculating the EAR ( applying the formula for present value of annuity )
cost of case = 12 * 12 * ( 1 - 0.09 ) = 131.04
Pv = 131.04
cost per case = $12
no of weeks = 12 weeks
rate of the wine per ( IRR ) = IRR(57;56;55;;;;1)= 1.76319
rate of the wine per week = 1.76319%
therefore EAR = ( 1 + 0.0176319) ^52 - 1 = 148.15% ≈ 148%
On January 1, 2020, Martinez Company makes the two following acquisitions. 1. Purchases land having a fair value of $330,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $483,153. 2. Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $380,000 (interest payable annually). The company has to pay 10% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Martinez Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method.
Answers
Answer:
Explanation:
a)
Date Account Titles and Explanation Debit Credit
January 1, 2020 Land $360,000.00
Discount on notes payable $246,621.00
Notes payable $ 606,621.00
(To record purchase of land by issuing note payable)
PV of $606,621 discounted at 11% =606,621/(1.11)^5 = $ 360,000
2.
Computation of the discount on notes payable:
Maturity value $560,000
Present value of $560,000 due in 8 years at 11% = $560,000 * 0.43393 = $ 243,000
Present value of $39,200 payable annually for 8 years at 11% annually—$39,200 * 5.14612 = $ 201,728
Present value of the note = $ 243,000 + $ 201,728 = $ 444,728
Discount = $ 560,000 - $ 444,728 = $ 115,272
Date Account Titles and Explanation Debit Credit
January 1, 2020 Equipment $444,728.00
Discount on notes payable $115,272.00
Notes payable $ 560,000.00
(To record purchase of equipment by issuing note payable)
b)
1.
Date Account Titles and Explanation Debit Credit
December 31, 2020 Interest expense ($ 360,000*11%) $39,600
Discount on notes payable $39,600
(To record the interest expense recorded and discount amortized)
2.
Date Account Titles and Explanation Debit Credit
December 31, 2020 Interest expense ($444,728 * 11%) $48,920
Discount on notes payable $9,720
Interest Payable ( $ 560,000 * 7%) $39,200
(To record the interest expense recorded)
Which of the following would shift the long-run aggregate supply curve right? a. both an increase in the capital stock and an increase in the price level b. an increase in the capital stock, but not an increase in the price level c. an increase in the money supply, but not an increase in the capital stock d. neither an increase in the money supply nor an increase in the capital stock
Answers
Answer:
b. an increase in the capital stock, but not an increase in the price level.
Explanation:
In order to understand both short-run economic fluctuations and how the economy movement from short to long run, we need the aggregate supply and aggregate demand model.
An increase in the capital stock, but not an increase in the price level would shift the long-run aggregate supply curve right.
The long-run aggregate supply curve would shift rightward when immigration from foreign countries rises or technology improves.
When the price level rises, the wealth effect and the interest-rate effect provide incentives for consumers to spend less. The price level of goods and services in an economy influences the exchange rate, imports and exports
Final Examination Hide or show questions Calculator Problem 9-23 (b) (LO. 2) Ricardo, who is self-employed, uses his automobile 85% for business and during 2019 drove a total of 32,200 business miles. Information regarding his car expenses is listed below. Business parking $345 Auto insurance 2,800 Auto club dues (includes towing service) 275 Toll road charges (business-related) 205 Oil changes and engine tune-ups 180 Repairs 1,890 Depreciation allowable 3,600 Fines for traffic violations (incurred during business use) 95 Gasoline purchases 4,125 What is Ricardo's deduction in 2019 for the use of his car if he uses:
Answers
Answer:
Explanation:
a) actual cost method:-
=deductions × percentage
= 345 + 205 + 85% (2800 + 275 + 180 + 1890 +3600 +4125 )
=550 + 10939.5
=11489.5 = 11490
Note :- fines are not taken.
b) automatic mileage method:-
=total number of business miles × standard rate
=32200×0.58 +345+205
=19226
Warren Buffet opposes stock splits to lower the share price because he believes:________.
a. lower share price will encourage other companies to try to take over the company from existing shareholders.
b. lower stock price encourages short term investing, whereas he is looking for long-term investors.
c. stock splits encourage long-term investing, which is detrimental to his firm's investment policy.
d. lower share price indicates poor growth prospects..
Answers
Answer:. b. lower stock price encourages short term investing, whereas he is looking for long-term investors.
Explanation:
Warren Buffet has stated that he does not want to split Berkshire Hathaway's stock because he believes that it would attract short term investors whereas he is looking for long term investors. He believes that a stock being split makes it susceptible to investors who just want to buy it for the meantime, wait for it to appreciate a bit and then sell. He however prefers Companies with a long term potential so he prefers people investing for the long run.
Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $27,000. Budgeted cash receipts total $104,000 and budgeted cash disbursements total $87,000. The desired ending cash balance is $70,000. The company can borrow up to $90,000 at any time from a local bank, with interest not due until the following month. Required: Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.
Answers
Answer:
Zolezzi Inc.
Cash budget for March
Amount in $'000
Opening balance 27
Add;
Cash receipts 104
Less;
Cash disbursements (87)
Ending balance 44
Amount to be borrowed 26
Desired ending balance 70
Explanation:
The cash budget a forecast of the expected movement in cash balance. This is as a result of expected cash receipts and disbursements and may be expressed mathematically as
opening cash balance + cash receipts - Cash disbursed = closing cash balance
27 + 104 - 87 = ending balance
Ending balance = 44
Desired ending balance = 70
Amount to be borrowed = 70 - 44
= 26
In January 2020, Sunland Company, a newly formed company, issued 10300 shares of its $8 par common stock for $13 per share. On July 1, 2020, Sunland Company reacquired 1030 shares of its outstanding stock for $10 per share. The acquisition of these treasury shares decreased total stockholders' equity. increased total stockholders' equity. did not change total stockholders' equity. decreased the number of issued shares.
Answers
Answer:
The correct option is the acquisition of these treasury shares decreased total stockholders' equity.
Explanation:
Initially the total stockholders' equity is $133,900 ($13*10,300) which comprised of $82,400 common stock ($8*10,300) $51,500 paid in capital in capital in excess of par value.
By repurchasing 1,030 treasury stock at $10,the total stockholders' equity decrease by $10,300,which leaves a balance of $123,600 ($133,900-$10,300).
In other words,the first option is the correct choice of answer
niversal Studios sold the Mamma Mia! DVD around the world. Universal charged $21.40 in Canada and $32 in Japanlong dashmore than the $20 it charged in the United States. Assume Universal's marginal cost of production (m) is $1.20. Determine what the elasticities of demand must be in Canada and in Japan if Universal is profit maximizingLOADING.... The elasticity of demand in Canada must be epsilon Subscript Upper Cequals nothing. (Enter a numeric response using a real
Answers
Answer:
Explanation:
Lerner Index = -1 / Elasticity of demand = (P - MC) / P
(1) Canada:
- 1 / Ec = (21.4 - 1.20) / 21.4
- 1 / Ec = 20.2 / 21.4
- 1 / Ec = 0.9344
Ec = -1 / 0.9344
Ec = - 1.059
(2) Japan:
Lerner Index = -1 / Elasticity of demand = (P - MC) / P
- 1 / Ej = (32 - 1.2) / 32
- 1 / Ej = 30.8 / 32
- 1 / Ej = 0.9625
Ej = -1 / 0.9625
Ej = - 1.039
Mills Corporation's balance sheet included the following information: Accounts Receivable $ 580,000 Less: Allowance for Doubtful Accounts 73,000 Accounts Receivable, Net of Allowance $ 507,000 If the Allowance account had a credit balance of $31,500 immediately before the year-end adjustment for bad debts and no accounts were written-off or allowed for during the year, what was the amount of Bad Debt Expense recognized during the year
Answers
Answer:
The amount of Bad Debt Expense recognized during the year is $41,500.
Explanation:
Bad debt expense is an estimate of the accounts receivable that is deemed uncollectible. At times, it is determined by percentage of credit method or aging method.
If the allowance account had an opening balance of $31,500 before adjustment and there was no rite-off during the period, with a closing balance of $73,000, the bad debt expense is simply the difference between the closing balance and the opening balance, that is , $73,000 - $31,500 = $41,500.
Ellie (a single taxpayer) is the owner of ABC, LLC. The LLC (a sole proprietorship) reports QBI of $900,000 and is not a specified services business. ABC paid total W-2 wages of $300,000, and the total unadjusted basis of property held by ABC is $30,000. Ellie's taxable income before the QBI deduction is $740,000 (this is also her modified taxable income). What is Ellie's QBI deduction for 2019
Answers
Answer:
QBI deduction for 2019 is $148,000
Explanation:
Description Amount
Taxable income before QBI deduction
exceed $207,500 threshold.
Capital investment limit is considered
QBI deduction is lesser of:
1) 20% of qualified business income $180,000
($900,00 × 20%)
or Greater of
2) 50% 0f W-2 wages $150,000
($300,000 × 50%)
or
25% 0f W-2 wages + 2.5% of unadjustment
basis pf qualified property
($300,000 × 25%) + ($300,000 × 2.5%) $75,750
3)Not more than 20% of modified taxable income
($740,000 × 20%) $148,000
Therefore, QBI deduction for 2019 is $148,000
All of the following statements regarding leases are true except _______.
Multiple Choice:
A) For a finance lease, the lessee records the leased item as its own asset.
B) For a finance lease, the lessee amortizes the right-of-use asset acquired under the lease.
C) Finance leases create a liability on the balance sheet.
D) Finance leases do not transfer ownership of the asset under the lease, but operating leases often do.
E) For a short-term lease of a few days or weeks, the lessee records payments as rental expense.
Answers
Answer:
I think its D
Explanation:
Hpe this helps.
All of the following statements regarding leases are true except finance leases do not transfer ownership of the asset under the lease, but operating leases often do. Thus, option (d) is correct.
What is finance?
Finance includes borrowing money to go through tough times, saving money, and investing money. Finance is the provision of funds for credit against anything. Personal, public, and business finance are the three different categories.
Capital leases and finance leases are both common terms for the same thing. The duration of long-term leases is usually anticipated. When the operating lease expires, the leasing firm will return the asset.
Therefore, option (d) is correct.
Learn more about on finance, here:
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A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 86000 units on hand, the sales department budgeted sales of 370000 units in June, and the company desires to have 160000 units on hand on June 30. The budgeted cost of goods sold for June would be
Answers
Answer:
The budgeted cost of goods sold for June would be $ 13,320,000
Explanation:
Budgeted cost per unit = $30
Sales budget = 370,000 units
Less: Beginning inventory = 86,000 units
Add: Ending inventory = 160,000 units
Therefore budgeted cost of goods sold for June = (370,000 - 86,000 + 160,000) × $30
= 444,000 × $30
= $13,320,000
According to a summary of the payroll of Mountain Streaming Co., $110,000 was subject to the 6.0% social security tax and the 1.5% Medicare tax. Also, $25,000 was subject to state and federal unemployment taxes. a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%. $ b. Journalize the entry to record the accrual of payroll taxes. If an amount box does not require an entry, leave it blank.
Answers
Answer:
a. Calculate the employer's payroll taxes, using the following rates: state unemployment, 5.4%; federal unemployment, 0.8%.
$9,800b. Journalize the entry to record the accrual of payroll taxes. If an amount box does not require an entry, leave it blank.
Dr FICA Social Security expense 6,600Dr FICA Medicare expense 1,650Dr Federal unemployment tax expense 200Dr State unemployment tax expense 1,350 Cr FICA Social Security payable 6,600 Cr FICA Medicare payable 1,650 Cr Federal unemployment tax payable 200 Cr State unemployment tax payable 1,350Explanation:
payroll taxes should be:
social security $110,000 x 6% = $6,600
Medicare $110,000 x 1.5% = $1,650
federal unemployment $25,000 x 0.8% = $200
state unemployment $25,000 x 5.4% = $1,350
total = $9,800
Both employees and employers must pay equal amounts of FICA taxes (social security and medicare), but only employees pay unemployment taxes.
Assume that you are a retail customer. Use the information below to answer the following question. Bid Ask Borrowing Lending S0($/€) $1.42 = €1.00 $1.45 = €1.00 i$ 4.25% APR 4% APR F360($/€) $1.48 = €1.00 $1.50 = €1.00 i€ 3.10% APR 3% APR If you borrowed $1,000,000 for one year, how much money would you owe at maturity? A. $1,450,352 B. $1,042,500 C. € 1,024,500 D. $1,525,400
Answers
Answer:
$1,042,500.
Explanation:
From the question above, we are given the following parameters; under the bid, we have $1.42 = €1.00 and $1.48 = €1.00; the borrowing and lending are $ 4.25% and 4% APR respectively for S0($/€).
Also, for F360($/€), the bid and ask values are: $1.48 = €1.00 and $1.50 = €1.00 respectively; the borrowing and lending values are 3.10% APR and 3% APR.
Therefore, the Borrowing rate is ($) 4.25% in $ . Thus, $1,000,000 for one year, one we owe
$1,000,000 × (1 + 0.0425) = $1,042,500 at maturity.
Indicate the effect—Understate, Overstate, No Effect—that each of the following errors has on 2020 net income and 2021 net income. 2020 2021 (a) Equipment (with a useful life of 5 years) was purchased and expensed in 2018. Select an option Select an option (b) Wages payable were not recorded at 12/31/20. Select an option Select an option (c) Equipment purchased in 2020 was expensed. Select an option Select an option (d) 2020 ending inventory was overstated. Select an option Select an option (e) Patent amortization was not recorded in 2021. Select an option Select an option
Answers
Answer: The answer is provided below
Explanation:
The net income is excess of revenues over expenses after the adjustment for depreciation expense and the income tax expense. Net income is also called the net profit.
(a) Equipment (with a useful life of 5 years) was purchased and expensed in 2018.
2020 : It will be overstated in the net income.
2021: It will be overstated in the net income.
b. Wages payable were not recorded at 12/31/20.
2020: It will be overstated in the net income.
2021: It will be understated in the net income.
c. Equipment purchased in 2020 was expensed.
2020: It will be understated in the net income.
2021: It will be overstated in the net income
d. 2020 ending inventory was overstated.
2020: It will be overstated in the net income.
2021: It will be understated in the net income.
e. Patent amortization was not recorded in 2021.
2020: It will be no effect in the net income.
2021: It will be overstated in the net income
Exercise 24-5 Payback period computation; even cash flows LO P1 Compute the payback period for each of these two separate investments: A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation.
Answers
Answer and Explanation:
The computation of the payback period is shown below:
1. Payback period = Initial investment ÷ Net cash flow
where,
Initial investment is $520,000
Net cash flow is = incremental after-tax income + depreciation expense
= $150,000 + $85,000
= $235,000
The depreciation expense is
= ($520,000 - $10,000) ÷ (6 years)
= $85,000
Now the payback period is
= $520,000 ÷ $235,000
= 2.21 years
2. Payback period = Initial investment ÷ Net cash flow
where,
Initial investment is $380,000
Net cash flow is = incremental after-tax income + depreciation expense
= $60,000 + $45,000
= $105,000
The depreciation expense is
= ($380,000 - $20,000) ÷ (8 years)
= $45,000
Now the payback period is
= $380,000 ÷ $105,000
= 3.62 years
An acquisition premium is the amount by which the price offered for an existing business exceeds the Select one: a. amount paid as a down payment to be held in escrow until closing. b. difference between the amount that was offered and the amount that is escrowed c. comparable value of similar companies within the same market. d. preacquisition market value of the target company e. fair market value of similar companies in the same geographic locale.
Answers
Answer:
d. pre-acquisition market value of the target company.
Explanation:
An acquisition premium is the amount by which the price offered for an existing business exceeds the pre-acquisition market value of the target company.
An acquisition premium gives the difference between the actual amount of money paid in acquiring a target firm and the estimated real value of obtaining the firm before the acquisition.
Acquisition premium are usually recorded on the balance sheet as "goodwill."
Beerbo purchased a patent from Mitter Lite Co. for $1,000,000 on January 1, 2018. At that time, the patent's useful life was 10 years, expiring on December 31, 2027. In early 2020, Beerbo determined that the economic benefits of the patent would not last longer than 4 more years (6 years from the date of acquisition). Given the revised useful life, Beerbo expects the useful life of the patent to expire on December 31, [a1]. (Input year; e.g. "2020") At the end of 2019 / beginning of 2020, what was the value / net book value of the patent in Beerbo's books
Answers
Answer:
$800,000
Explanation:
As per the data given in the question,
Beerbo expects patent's useful life to expire on Dec-31 2023.
At the beginning of 2020 / end of 2019, the value of the patent in Beerbo's book = $1,000,000 - ($1,000,000 ÷ 10×2))
= $800,000
Amortix patent year = 4
Patent amortization expense at the end of 2020 = $800,000 ÷ 4
=$200,000
Windsor Co. is building a new hockey arena at a cost of $2,420,000. It received a down payment of $510,000 from local businesses to support the project, and now needs to borrow $1,910,000 to complete the project. It therefore decided to issue $1,910,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 9%.
Prepare the journal entry to record the issuance of the bonds on January 1, 2019.
Answers
Answer:
Dr Cash $2,032,577.26
Cr premium on bonds payable $122,577.26
Cr bonds payable $1,910,000
Explanation:
First and foremost the proceeds received from the bond issuance needs to determine the pv formula in excel as follows:
=-pv(rate,nper,pmt,fv)
rate is the yield to maturity of 9%
nper is the number of annual coupons payable by the bond which is 10
pmt is the amount of annual coupon i.e $1,910,000*10%=$191000
fv is the face value of the bond which is $1,910,000
=-pv(9%,10,191000,1910000)=$2,032,577.26
premium on bonds issuance= 2,032,577.26-1,910,000.00= $122,577.26
Company A sells paper coffee cups to all Caribou Coffee locations in the US. Company B sells dinner plates to Applebee’s. Company A charges $1 for a pack of 100 cups and Company B charges $3 for 1 dinner plate. Tell us exactly what information you would need to determine whether Company A or Company B has higher annual revenue and explain how you would calculate these two figures.
Answers
Answer:
Company A and Company B
Determination of annual revenue:
a) The information needed to determine which company has higher annual revenue include:
i) The annual quantities of packs of paper coffee cups sold to the Caribou Coffee locations in the US for a number of years.
ii) The annual quantities of dinner plates sold to Applebee's for the same years as above.
b) The annual revenues can be calculated by multiplying the price for a pack of 100 cups by the annual quantity sold.
Explanation:
Revenue is a function of price and quantity sold. The price is unit selling price and the quantity depends on the period for which revenue is being computed.
Revenue is the earnings from the sale of goods and services. The excess of revenue over cost of sales gives the gross profit, from which expenses would be deducted to arrive at net income after adding other incomes from non-operational activities.
A domestic manufacturer of watches purchases quartz crystals from a Swiss firm. The crystals are shipped in lots of . The acceptance sampling procedure uses randomly selected crystals. a. Construct operating characteristic curves for acceptance criteria of , , and (to 4 decimals). b. If is and , what are the producer's and consumer's risks for each sampling plan in part (a) (to 4 decimals)? c At Producer's Risk At Consumer's Risk
Answers
Answer:
The curve and calculation are attached below
Guarder Consulting enters into a contract with Smith Co. to restructure some of Smith's processes with a goal of cost savings. The contract states that Guarder will earn a fixed fee of $35,000 and earn an additional $10,000 bonus if Smith achieves $100,000 of cost savings. Guarder estimates a 55% chance that Smith will achieve $100,000 of cost savings. Assuming that Guarder determines the transaction price as the expected value of consideration, what transaction price will Guarder estimate for this contract
Answers
Answer:
The transaction price that Guarder will estimate for this contract is $40,500
Explanation:
In order to calculate what transaction price will Guarder estimate for this contract Assuming that Guarder determines the transaction price as the expected value of consideration, we would have to calculate the expected value of expected consideration as follows:
expected value of expected consideration=Fixed Fee + Additional Income
expected value of expected consideration=$35,000+($10,000*55%)
expected value of expected consideration=$35,000+$5,500
expected value of expected consideration=$40,500
The transaction price that Guarder will estimate for this contract is $40,500
Vandy Corporation's balance sheet and income statement appear below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 31 $ 29 Accounts receivable 61 73 Inventory 59 61 Property, plant, and equipment 684 550 Less accumulated depreciation 349 319 Total assets $ 486 $ 394 Liabilities and stockholders' equity: Accounts payable $ 53 $ 54 Accrued liabilities 20 21 Income taxes payable 52 48 Bonds payable 203 190 Common stock 61 60 Retained earnings 97 21 Total liabilities and stockholders' equity $ 486 $ 394 Income Statement Sales $ 807 Cost of goods sold 492 Gross margin 315 Selling and administrative expense 182 Net operating income 133 Gain on sale of equipment 16 Income before taxes 149 Income taxes 45 Net income $ 104 The company sold equipment for $18 that was originally purchased for $14 and that had accumulated depreciation of $12. It paid a cash dividend of $28 during the year and did not retire any bonds payable or repurchase any of its own common stock. Required: Prepare a statement of cash flows for the year using the indirect method.
Answers
Answer:
See below the statement of Cash flow from Vandy Corporation.
Explanation:
Vandy Corporation
Statement of Cash Flow
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $104
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation on Fixed Assets ($349-$319+$12) $42
Gain on Sale of Equipment ($16)
(Increase) Decrease in Current Assets:
Accounts Receivables $12
Inventory $2
Increase (Decrease) in Current Liabilities:
Accounts Payable ($1)
Accrued Liabilities ($1)
Income taxes payable $4
Net Cash provided by Operating Activities $146
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of Equipment $18
Purchase of Property, plant and equipment ($684-$550+$14) ($148)
Net Cash Flow from Investing Activities ($130)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bonds Payable $13
Issuance of Common Stock $1
Payment of Dividends ($28)
Net Cash from Financing Activities ($14)
Net Increase (Decrease) in Cash $2
Opening Cash Balance $29
Ending Cash Balance $31
Consider a portfolio manager with a $20,500,000 equity portfolio under management. The manager wishes to hedge against a decline in share values using stock index futures. Currently a stock index future is priced at 1250 and has a multiplier of 250. The portfolio beta is 1.25. Calculate the number of contracts required to hedge the risk exposure and indicate whether the manager should be short or long.
Answers
Answer:
Assume that a month later the equity portfolio has a market value of $20,000,000 and the stock index future is priced at 1150 with a multiplier of 250. Calculate the profit on the equity position.
Calculate the overall profit.
$1,550,000
Explanation:
Assume that a month later the equity portfolio has a market value of $20,000,000 and the stock index future is priced at 1150 with a multiplier of 250. Calculate the profit on the equity position.
Calculate the overall profit.
The manager should be short on the stock index futures because the position on the equity portfolio is long.
Number of contracts required to hedge
= [$20,500,000/(1250*250)] * 1.25 = 82 contracts
Profit on the equity portfolio
= $20,000,000 - $20,500,000 = -$500,000
Profit on the stock index future
= [(1250)(250) – (1150)(250)] x 82 = $2,050,000
Overall profit
= $2,050,000 - $500,000
= $1,550,000
therefore, the overall profit is $1,550,000
Use of the marginal cost of capital
a. None of these options are correct.
b. recognizes that the return from the last dollar of funds generated should be greater than or equal to the cost of the last dollar of funds raised.
c. acknowledges that when retained earnings are used up as a source of equity, the cost of capital rises as new common stock is sold to support more growth and recognizes that the return from the last dollar of funds generated should be greater than or equal to the cost of the last dollar of funds raised.
d. acknowledges that when retained earnings are used up as a source of equity, the cost of capital rises as new common stock is sold to support more growth.
Answers
Answer:
The correct answer is the option B: recognizes that the return from the last dollar of funds generated should be greater than or equal to the cost of the last dollar of funds raised.
Explanation:
To begin with, the concept of ''marginal cost of capital'' refers to the composite rate of return that is required by the shareholders and the debt-holders in order to establish a new investment in the actual company. Moreover, this type of cost relates to the weighted average cost of the last dollar of new capital raised by the company and is has the necessity of being greater than or at least equal to the cost of the last dollar of funds raised due to the fact that only in that way the investors will consider to invest again in a new project for the company.
Brownley Company has two service departments and two operating (production) departments. The Payroll Department services all three of the other departments in proportion to the number of employees in each. The Maintenance Department costs are allocated to the two operating departments in proportion to the floor space used by each. Listed below are the operating data for the current period: Service Depts. Production Depts. Payroll Maintenance Cutting Assembly Direct costs $ 20,400 $ 25,500 $ 76,500 $ 105,400 No. of personnel 15 15 45 Sq. ft. of space 10,000 15,000 The total cost of operating the Maintenance Department for the current period is:
Answers
Answer:
The total cost of operating the Maintenance Department for the current period is $29,580
Explanation:
In order to calculate The total cost of operating the Maintenance Department for the current period we would have to calculate first the Overhead allocated to Maintenance from Payroll department as follows:
Overhead allocated=Payroll overhead×(Maintenance payroll personnel/Total personnel)
Overhead allocated=$ 20,400×(15/15+15+45)
Overhead allocated=$4,080
Therefore, to calculate the The total cost of operating the Maintenance Department for the current period we would have to use the following formula:
Total cost of operating Maintenance Department=Overhead allocated+Direct overhead incurred
Total cost of operating Maintenance Department=$4,080+$25,500
Total cost of operating Maintenance Department=$29,580
The total cost of operating the Maintenance Department for the current period is $29,580
Whiplash Ltd. makes a single product and only one type of direct material is used to make this product. Whiplash uses a standard costing system and has provided the following data concerning the production of output in July: Actual number of units of output produced 7,800 units Materials quantity variance $2,609 Favorable (F) Materials spending variance $3,744 Favorable (F) Standard amount of materials used per unit of output 5.0 grams per unit Actual total materials purchased/used 37,830 grams Actual price per gram purchased/used $2.20 per gram Assume there were no beginning or ending inventories of direct materials. The standard price per gram for Whiplash, Ltd. is closest to:
Answers
Answer:
$2 per gram.
Explanation:
We are given the following parameters in the question above; the production of output in July: Actual number of units of output produced = 7,800 units, the Materials quantity variance = $2,609, the favorable (F) Materials spending variance = $3,744, the Favorable (F) Standard amount of materials used per unit of output = 5.0 grams per unit , the Actual total materials purchased/used = 37,830 grams and the Actual price per gram purchased/used = $2.20 per gram.
(37,830 × standard price) - (37,830 × 2.2 ) =$3,744.
Thus, (37,830 × standard price) = 79482.
Approximately, standard price = $2 per gram
Answer:
The standard price per gram for Whiplash, Ltd. is closest to $2.23 per gram
Explanation:
In order to calculate the The standard price per gram for Whiplash, Ltd we would have to use the following formula:
Material quantity variance=(standard quantity-Actual quantity)×standard price
$2,609=(5 grams×7,800-37,830)×standard price
$2,609=(39,000-37,830)×standard price
$2,609=1,170 grams×standard price
standard price=$2,609/1,170 grams
standard price=$2.23 per gram
The standard price per gram for Whiplash, Ltd. is closest to $2.23 per gram
Sheffield Corp. issued $7080000 of 11%, ten-year convertible bonds on July 1, 2020 at 96.1 plus accrued interest. The bonds were dated April 1, 2020 with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1416000 of these bonds were converted into 600 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. If "interest payable" were credited when the bonds were issued, what should be the amount of the debit to "interest expense" on October 1, 2020
Answers
Answer:
The amount of the debit to "interest expense" on October 1, 2020 is $194,700
Explanation:
According to the given data we have the following:
Bond face value=$7,080,000
interest rate=11%
There are 3 months interest recognized from july to september, therefore, to calculate the amount of the debit to "interest expense" on October 1, 2020 we would have to make the following calculation:
amount of the debit to "interest expense" on October 1, 2020=$7,080,000*11%*3 months / 12 months
amount of the debit to "interest expense" on October 1, 2020=$194,700
The amount of the debit to "interest expense" on October 1, 2020 is $194,700
