Answer:
elastic
16%
32%
decrease
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
Feldpausch Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost Total Activity Assembly $1,372,578 61,800 machine-hours Processing orders $63,235 2,010 orders Inspection $151,316 2,090 inspection-hours The company makes 600 units of product W26B a year, requiring a total of 1,200 machine-hours, 78 orders, and 34 inspection-hours per year. The product's direct materials cost is $49.55 per unit and its direct labor cost is $12.44 per unit. The product sells for $128.70 per unit. According to the activity-based costing system, the product margin for product W26B is:_____.a. $8,458.52.b. $10,920.12.c. $40,026.00.d. $10,912.40.
Answer:
The correct answer is A.
Explanation:
First, we need to calculate the activities rates:
Assembly= 1,372,578/61,800= $22.21 per machine-hour
Processing orders= 63,235/2,010= $31.46 per order
Inspection= 151,316/2,090= $72.4 per inspection-hour
Now, we allocate costs to W26B:
Assembly= 22.21*1,200= 26,652
Processing orders= 31.46*78= 2,453.88
Inspection= 72.4*34= 2,461.6
Total allocated costs= $31,567.48
Finally, the unitary cost and margin for W26B:
Unitary allocated cost= 31,567.48/600= $52.61
Unitary total cost= 49.55 + 12.44 + 52.61= $114.6
Product margin= 128.7*600 - 114.6*600= $8,460
Of the following statements, which best describes a legitimate disadvantage of cost-based pricing:
a. Marginal costs and revenues are difficult to measure
b. Determining the amount a customer is will to pay may require estimation
c. Most cost drivers are not readily available
d. Customers may not be willing to pay the price determined by the procedure
Ivanhoe Company buys merchandise on account from Metlock Company. The selling price of the goods is $1,290 and the cost of the goods sold is $770. Both companies use perpetual inventory systems.
Journalize the transactions on the books of both companies. (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 amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Ivanhoe
Enter an account title
Enter a debit amount
Enter a credit amount
Enter an account title
Enter a debit amount
Enter a credit amount
Metlock
Enter an account title to record sale of merchandise
Enter a debit amount
Enter a credit amount
Enter an account title to record sale of merchandise
Enter a debit amount
Enter a credit amount
(To record sale of merchandise)
Enter an account title
Enter a debit amount
Enter a credit amount
Enter an account title
Enter a debit amount
Enter a credit amount
Answer and Explanation:
The journal entries are shown below:
Ivanhoe Company
Merchandise Inventory $1,290
Accounts payable $1,290
(Being Merchandice purchased on the account is recorded)
Metlock Company
Accounts Receivable $1,290
Sales $1,290
(Being Merchandise sold on account is recorded)
Cost of goods sold $770
Merchandise inventory $770
(Being the Change in stock for the sale of merchandise is recorded)
10. Which of the following is NOT a reason that real GDP is a poor measure of a nation's
economic welfare?
A)Real GDP omits measures of political freedom.
b) Real GDP does not consider the value of people's leisure time.
c) Real GDP does not include the underground economy.
D) Real GDP omits household production.
Answer:
A)Real GDP omits measures of political freedom.
Explanation:
The Real Gross Domestic Product is a measure of all the goods produced in an economy within a year but with changes in price levels triggered by inflation factored in. Political freedom does not affect economic freedom. People may be restricted politically but still, go about their normal economic activities.
Because the Real GDP basically focuses on transactions done in the markets, it might not accurately measure the growth rate because some people conduct illegal businesses underground that are not captured by the government, while some produce their goods at home. Also, leisure time is not factored and it is important because an increase in leisure time will affect time spent in activities that improve the economy.
Trevor heard a burglar entering through a living room window.He grinned as he picked up his gun. Crouching behind the sofa in his darkened home,he ambushed and killed the intruder with several well placed shots.He then added another notch in his trusty side-arm.Trevor most probably:____________
a. has exercised his constitutional right of self-defense.
b. has acted legally,because the shooting took place inside his home.
c. has acted legally if,but only if,the burglar was armed with a gun.
d. is guilty of a homicide,or at least voluntary manslaughter.
Answer: D. guilty of a homicide, or at least voluntary manslaughter.
Explanation:
Homicide is the act whereby a human being kills another person. A homicide can be reckless or accidental. Voluntary manslaughter is when someone else is killed unlawfully such as for self-defense.
Therefore, Trevor most probably be guilty of a homicide, or at least voluntary manslaughter.
Hollyfield Corporation sold a piece of equipment on September 30, 2018 for $201,000 cash. The equipment had been purchased on January 1, 2012 for $450,000. It had an estimated useful life of 10 years and a $50,000 residual value. Hollyfield Corp. has been using the straight-line method of depreciation and has a year-end of December 31st. Compute the gain or loss on disposal.
Answer:
$2,000
Explanation:
the gain or loss on disposal is
Zoey Bella Company has a payroll of $10,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Journalize the adjusting entry required on December 31, assuming the year ends on a Thursday. If an amount box does not require an entry, leave it blank.
Date Description Post. Ref. Debit Credit
Answer:
Wages Expense debit $8,000
Wages Payable credit $8,000
Explanation:
At the end of December 31, which is a Thursday, workers would have worked 4 days out of a 5-day week, which implies we need to recognize wages for the 4 days because it has been incurred even not yet paid
Wages for 4-days=$10,000*4/5
Wages for 4-days=$8,000
We would debit wages account with $8,000 since an increase in an expense account is a debit entry while wages payable would be credited since it is an increase in liabilities
Compute the future value of a $105 cash flow for the following combinations of rates and times.
a. r = 8%; t = 10 years
b. r = 8%; t = 20 years
c. r = 4%; t = 10 years
d. r = 4%; t = 20 years
Answer:
The answer is
A. $226.69
B. $489.40
C. $155.43
D. $230.07
Explanation:
A.
PV = 105
i = 8%
N = 10years
FV =. ?
Using texas BA II plus
PV -105; I/Y = 8; N = 10; CPT FV= 226.69
Therefore, future value of $105 is $226.69
B.
PV = 105
i = 4%
N = 10years
FV =. ?
Using texas BA II plus
PV -105; I/Y = 8; N = 20; CPT FV= 489.40
Therefore, future value of $105 is $489.40
C.
PV = 105
i = 4%
N = 10years
FV =. ?
Using texas BA II plus
PV -105; I/Y = 4; N = 10; CPT FV= 155.43
Therefore, future value of $105 is $155.43
D.
PV = 105
i = 4%
N = 20years
FV =. ?
Using texas BA II plus
PV -105; I/Y = 4; N = 20; CPT FV= 230.07
Therefore, future value of $105 is $230.07
The controller of Sandhill Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month Total Maintenance Costs Total Machine Hours January $2,880 3,820 February 3,273 4,364 March 3,928 6,546 April 4,632 8,619 May 3,491 5,455 June 4,844 8,730 (a1) Determine the variable-cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.)
Answer:
Variable cost per unit= $0.4
Explanation:
Giving the following information:
Month Total Maintenance Costs Total Machine Hours
January $2,880 3,820
February 3,273 4,364
March 3,928 6,546
April 4,632 8,619
May 3,491 5,455
June 4,844 8,730
To calculate the variable component using the high-low method, we need to use the following formula:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (4,844 - 2,880) / (8,730 - 3,820)
Variable cost per unit= $0.4
Favaz began business at the start of this year and had the following costs: variable manufacturing cost per unit, $9; fixed manufacturing costs, $60,000; variable selling and administrative costs per unit, $2; and fixed selling and administrative costs, $220,000. The company sells its units for $45 each. Additional data follow.
Planned production in units 10,000
Actual production in units 10,000
Number of units sold 8,500
There were no variances. The net income (loss) under absorption costing is:
a. (7500)
b. 9,000
c. 15,00
d. 18,000
e. Some other amount
Answer:
I think it might be b. 9,000
The data is D = 50,000/year, S= $500 per order, H = $0.25 per unit per year. Assume a lead time of 3 days.
Fill in the following table. Write out the formulas you are using.
Annual demand
Holding cost (units per year)
Ordering cost
Ordering quantity (EOQ)
Number of orders per year
Average inventory
Maximum inventory
Reorder level
Length of order cycle
Annual holding cost
Annual ordering cost
Annual Affected Inventory Cost
b. Suppose a mistake was made in the data and the correct data is D = 60,000 per year, S = $400 per order, H = $0.20 per unit per year. Calculate the correct EOQ and affected inventory cost.
c. Now suppose we used the incorrect EOQ (based on the first set of data) instead of the correct EOQ. Calculate the affected inventory cost.
d. Compute the percentage error in the EOQ and in the inventory cost.
e. Moral of the story is that incorrect estimation of costs or demand (does or does not) result in substantial deviation from the optimal cost (circle the right answer).
Answer:
Annual demand 50,000 units
Holding cost $0.25 per year
Ordering Cost $500 per order
EOQ : 14,142
Number of orders per year 4
Average inventory 14,142 units
Maximum inventory 14,500 units
Reorder level 410 units
Length of order cycle 3 days
Annual Holding cost $12,500
Annual ordering cost $2000
Annual affected inventory cost $14,500
Explanation:
EOQ = [tex]\sqrt{\frac{2 * D * S}{H} }[/tex]
EOQ = [tex]\sqrt{\frac{2 * 50000 * 500}{0.25} }[/tex]
EOQ = 14,142 units
Number of Order : Annual demand / EOQ
Number of order : 50,000 / 14,142 = 3.53 or approximately 4
Annual Ordering cost : No. of order * cost per order
Annual ordering cost : 4 * $500 = $2,000
Annual Holding Cost : Demand * Holding cost per unit
Annual holding cost = 50,000 * $0.25 per unit = $12,500
Reorder level : Daily demand * lead time
Reorder level : [ 50000 / 365 ] * 3 = 410 units
why is Denel seen as a monopoly? discuss for 20
Answer:
Absence of the competition decreases production and that increases prices.
Explanation:
Hope this helps
You want to buy a house and will need to borrow $295,000. The interest rate on your loan is 6.37 percent compounded monthly and the loan is for 30 years. What are your monthly mortgage payments?
Answer:
$1,839.45
Explanation:
PV = P * [1-(1+r)^-n / r]
n = 30*12=360 months, r = 6.37%/12 = 0.5308% (monthly)
295,000 = P*[1 - (1+0.005308)^-360 / 0.005308}
295,000 = P * $160.3739
P = $295,000 / $160.3739
P = $1,839.45
So, the monthly mortgage payments is $1,839.45.
Suppose that Raphael, an economist from an AM talk radio program, and Susan, an economist from a school of industrial relations, are arguing Over saving incentives. The following dialogue Shows an excerpt from their debate:
Susan: I think it's safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain an improvement in living standards.
Raphael: I think a switch from the income tax to a consumption tax would bring growth in living standards.
Susan: You really think households would change their saving behavior enough in response to this to make a difference? Because I don't.
The disagreement between these economists is most likely due to_____________ . Despite their differences, with which proposition are two economists chosen at random most likely to agree?
a. Rent ceilings reduce the quantity and quality of available housing.
b. Immigrants receive more in government benefits than they contribute in taxes.
c. Having a single income tax rate would improve economic performance.
Answer:
a. Difference in values
b. a. Rent ceilings reduce the quantity and quality of available housing.
Explanation:
The disagreement between these economists is most likely due to difference in values.
Economists are known to disagree a lot with each other and this is down to them having different values and perspectives with regards to several economic decisions. This is why there are different economic theories subscribed to by economists such as Keynesian and New Classical theories.
Despite these disagreements however, there are certain things they would always agree on and one of those is that rent ceilings reduce the quantity and quality of available housing.
The logic behind this is that imposing a rent ceiling would dissuade real estate investors from putting in more money to develop properties because the rent ceiling would limit the returns that they can get.
Supply of real estate would also fall because less investors would go into the market because they would fear being unable to recoup adequate returns on account of the rent ceiling.
Sandhill Warehouse distributes hardback books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. During the month of June, the following merchandising transactions occurred.
June
1 Purchased books on account for $2,575 (including freight) from Catlin Publishers, terms 2/10, n/30.
3 Sold books on account to Garfunkel Bookstore for $1,300. The cost of the merchandise sold was $900.
6 Received $75 credit for books returned to Catlin Publishers.
9 Paid Catlin Publishers in full.
15 Received payment in full from Garfunkel Bookstore.
17 Sold books on account to Bell Tower for $1,150. The cost of the merchandise sold was $750.
20 Purchased books on account for $900 from Priceless Book Publishers, terms 3/15, n/30.
24 Received payment in full from Bell Tower.
26 Paid Priceless Book Publishers in full.
28 Sold books on account to General Bookstore for $1,900. The cost of the merchandise sold was $970. 30 Granted General Bookstore $130 credit for books returned costing $90.
Required:
Journalize the transactions for the month of June for Sandhill Warehouse, using a perpetual inventory system.
Answer:
01-Jun
Dr Inventory $2,575
Cr Accounts Payable $2,575
03-Jun
Dr Accounts Receivable $1,300
Cr Sales $1,300
03-Jun
Dr Cost of goods sold $900
Cr Inventory $900
06-Jun
Dr Accounts Payable $75
Cr Inventory $75
09-Jun
Dr Accounts Payable $2,500
Cr Cash $2,450
Cr Inventory $50
15-Jun
Dr Cash $1,300
Cr Accounts Receivable $1,300
17-Jun
Dr Accounts Receivable $1,150
Cr Sales $1,150
17-Jun
Dr Cost of goods sold $ 750
Cr Inventory $ 750
20-Jun
Dr Inventory $ 900
Cr Accounts Payable $ 900
24-Jun
Dr Cash $1,127
Dr Sales Discounts $ 23
Cr Accounts Receivable $1,150
26-Jun
Dr Accounts Payable $ 900
Cr Cash $873
Cr Inventory $27
28-Jun
Dr Accounts Receivable $1,900
Cr Sales $1,900
28-Jun
Dr Cost of goods sold $970
Cr Inventory $970
30-Jun
Dr Sales Returns & Allowances $130
Cr Accounts Receivable $130
30-Jun
Dr Inventory $90
Cr Cost of goods sold $90
Explanation:
Preparation of the journal entries for the month of June for Sandhill Warehouse, using a perpetual inventory system.
01-Jun
Dr Inventory $2,575
Cr Accounts Payable $2,575
03-Jun
Dr Accounts Receivable $1,300
Cr Sales $1,300
03-Jun
Dr Cost of goods sold $900
Cr Inventory $900
06-Jun
Dr Accounts Payable $75
Cr Inventory $75
09-Jun
Dr Accounts Payable $2,500
($2,575-$75)
Cr Cash $2,450
($2,500-$50)
Cr Inventory $50
($2,500*2%)
15-Jun
Dr Cash $1,300
Cr Accounts Receivable $1,300
17-Jun
Dr Accounts Receivable $1,150
Cr Sales $1,150
17-Jun
Dr Cost of goods sold $ 750
Cr Inventory $ 750
20-Jun
Dr Inventory $ 900
Cr Accounts Payable $ 900
24-Jun
Dr Cash $1,127
($1,150-$23)
Dr Sales Discounts $ 23
($1,150*2%)
Cr Accounts Receivable $1,150
26-Jun
Dr Accounts Payable $ 900
Cr Cash $873
($900-$27)
Cr Inventory $27
(900*3%)
28-Jun
Dr Accounts Receivable $1,900
Cr Sales $1,900
28-Jun
Dr Cost of goods sold $970
Cr Inventory $970
30-Jun
Dr Sales Returns & Allowances $130
Cr Accounts Receivable $130
30-Jun
Dr Inventory $90
Cr Cost of goods sold $90
Given the accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, a firm will only be successful today if its:
a. resource advantage is maintained for a short period of time.
b. internal strengths change with its external environment in a dynamic fashion.
c. resource advantage is not causally ambiguous or socially complex.
d. competitive advantage is derived from static resource or market advantages.
Answer:
Option b. Internal strengths change with its external environment in a dynamic fashion.
Explanation:
The main forces driving industry evolution all over the world are Technology and demand.
Technological change is a form of social and institutional compiled or embedded process. It is limited by their social and economic views. The choices and technologies used are affected by the drive for profit, capital accumulates and investment etc. has compressed greatly as the pace of technological change has also increased or accelerated.
The accelerated pace of technological change, in combination with deregulation, globalization, and demographic shifts, dynamic markets today are the rule. As response, a firm may create, deploy, modify, reconfigure, or upgrade resources so as to give value to customers and/or lower costs.
Types of technological change
1. Incremental innovations:
2. Radical innovations
3. Changes of technology system
4. Changes in the techno-economic paradigm
US Corp. is charged with determining which small projects should be funded. Along with this assignment, she has been granted the use of $15,000 for a maximum of two years. She is considering three projects. Project A costs $7,500 and has cash flows of $4,000 a year for Years 1 to 3. Project B costs $8,000 and has cash flows of $3,000, $4,000, and $3,000 for Years 1 to 3, respectively. Project C costs $2,000 and has a cash inflow of $2,500 in Year 2. What decisions should she make regarding these projects if she assigns them a mandatory discount rate of 8.5 percent
Answer:
Project A and C given a budgetary constraint of $15,000.Pick all projects if there was not constraint as they all have positive NPVs.Explanation:
Find the NPVs of the various projects.
Project A:
= Present value of inflows - Cost
= 4,000 / 1.085 + 4,000 / 1.085² + 4,000 / 1.085³ - 7,500
= $2,716.09
Project B:
= 3,000 / 1.085 + 4,000 / 1.085² + 3,000 / 1.085³ - 8,000
= $511.52
Project C:
= 2,500 / 1.085² - 2,000
= $123.64
Seeing as she has only $15,000 to embark on projects, she should pick projects A and C.
Project A should be picked because it has the highest NPV and Project C should be picked because it can still be invested in after Project A given budgetary constraints.
Flexible Budgeting
At the beginning of the period, the Fabricating Department budgeted direct labor of $9,280 and equipment depreciation of $2,300 for 640 hours of production. The department actually completed 600 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting.
Flexible Budgeting
At the beginning of the period, the Grinding Department budgeted direct labor of $55,200 and property tax of $30,000 for 2,400 hours of production. The department actually completed 2,900 hours of production. Determine the budget for the department, assuming that it uses flexible budget.
Answer:
Results are below.
Explanation:
Giving the following information:
The flexible budget is adapting the standard costs to the actual quantity.
Fabricating Department:
Depreciation= $2,300
Standard hourly rate= 2,300/640= $3.594
The department completed 600 hours of production.
Actual budget:
Depreciation= 2,300
Direct labor= 3.594*600= 2,156.4
Total cost= $4,456.4
Grinding Department:
Property tax= $30,000
Standard hourly rate= 55,200/2,400= $23
The department completed 2,900 hours of production.
Actual budget:
Property tax= $30,000
Direct labor= 23*2,900= 66,700
Total cost= $96,700
A five-year note payable would appear on the balance sheet as a(n) a.disclosure in the notes only. b.long-term liability for the entire amount owed. c.current liability for any portion due within one year. d.intangible asset.
Answer: current liability for any portion due within one year
Explanation:
Notes payable are referred to as the written agreements whereby one party agrees to pay the other party a certain amount of money.
It should be noted that on the balance sheet, notes payable will appear as liabilities. In a situation when the amount is due within a year, then it's considered to be current liabilities while it's regarded as a long-term liability when it's more than a year,
It should be noted that a five-year note payable would appear on the balance sheet as current liability for any portion due within one year.
Suppose that Dmitri, an economist from a research institute in Texas, and Frances, an economist from a public television program, are arguing over saving incentives. The following dialogue shows an excerpt from their debate: Frances: I think it's safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain an improvement in living standards. Dmitri: I think a switch from the income tax to a consumption tax would bring growth in living standards. Frances: You really think households would change their saving behavior enough in response to this to make a difference.Because I don't. The disagreement between these economists is most likely due to _____. Depite their differences, with which proposition are two economists chosen at random most likely to agree? A. Employers should not be restricted from outsourcing work to foreign nations. B. Central banks should focus more on maintaining low unemployment than on maintaining low inflation. C. Business managers can raise profit more easily by reducing costs than by raising revenue.
Answer:
Difference in scientific judgementsA. Employers should not be restricted from outsourcing work to foreign nations.Explanation:
The difference in opinion between these two is based on a difference between in scientific judgments because they believe that different things will happen in response to implementing a different form of taxes.
Regardless of what they think in the above regard, these economists are most likely to support the outsourcing of work if it is cheaper to do so because economists generally believe that the most efficient method of production should be undertaken.
A physical count of merchandise inventory on November 30 reveals that there are 96 units on hand. Cost of goods sold (rounded) under FIFO is
Answer: $1,712
Explanation:
If the company uses FIFO it means that they sell their earlier inventory first. If there are 96 units on hand, it means that these 96 units would be the latest inventory.
That means that these 96 units comprise of:
86 units purchased on November 25 at $6.30 each and,10 units from the November 17 purchase of 58 units at $6.05 each which means 48 units were sold from this purchase.The units sold were therefore:
= (29 * 5.80) + (115 * 6.20) + (48 * 6.05)
= 168.20 + 713 + 290.40
= $1,171.60
= $1,712
Assume that a $1,00,000 par value, semiannual coupon U.S. Treasury note with five years to maturity (YTM) has a coupon rate of 5%. The yield to maturity of the bond is 11.00%. Using ths information and ignoring the other costs involved, the value of the T-note is calculated as $773,871.23
Based on this calculation and an understanding of semiannual coupon bonds, complete the following statements:
1. Assuming the interest rates remain constant, the T-notes price is expected to _____________. (Increase or Decrease) Please Explain Why.
2. The T-note described is selling at a ________________. (Premium or Discount) Please Explain Why.
3. When valuing a semiannual coupon bond, the time period N in the present value formula used to calculate the price of the bond is treated in terms of ____________ periods. (Annual, 6 month, 4 month, 12 month)
Answer:
Completing the following statements based on the calculations and an understanding of semiannual coupon bonds:
1. Assuming the interest rates remain constant, the T-notes price is expected to _____________. (Increase or Decrease).
The reason for the increase in the T-notes price is the addition of the amortization for the 6-month period of $17,563.
2. The T-note described is selling at a ________________. (Premium or Discount)
The T-note sells at a discount because the face value is greater than the price. This implies that at the end of the maturity period of 5 years, the amount that will be received or paid is $1,000,000 and not the price that was initially received or paid.
3. When valuing a semiannual coupon bond, the time period N in the present value formula used to calculate the price of the bond is treated in terms of ____________ periods. (Annual, 6 month, 4 month, 12 month)
Semiannual = 6 months (12/2).
Explanation:
a) Data anc Calculations:
Face value of semiannual coupon U.S. Treasury note = $1,000,000
T-note price = $773,871.23
Discount on the note = $226,128.77 ($1,000,000 - $773,871.23)
Maturity period = 5 years
Coupon rate = 5%
Yield rate = 11%
Semiannual coupon payment = $25,000 ($1,000,000 * 2.5%)
Semiannual interest expense = $42,563 ($773,871.23 * 5.5%)
Amortization of discount = $17,563 ($42,563 - $25,000)
Required information
[The following information applies to the questions displayed below.]
The general ledger of Jackrabbit Rentals at January 1, 2021, includes the following account balances:
Accounts Debits Credits
Cash $ 48,500
Accounts Receivable 32,700
Land 117,800
Accounts Payable 16,000
Notes Payable (due in 2 years) 37,000
Common Stock 107,000
Retained Earnings 39,000
Totals $ 199,000 $ 199,000
The following is a summary of the transactions for the year:
1. January 12 Provide services to customers on account, $69,400.
2. February 25 Provide services to customers for cash, $78,800.
3. March 19 Collect on accounts receivable, $46,400.
4. April 30 Issue shares of common stock in exchange for $37,000 cash.
5. June 16 Purchase supplies on account, $13,500.
6. July 7 Pay on accounts payable, $12,000.
7. September 30 Pay salaries for employee work in the current year, $71,200.
8. November 22 Pay advertising for the current year, $23,200.
9. December 30 Pay $3,600 cash dividends to stockholders.
The following information is available for the adjusting entries.
Accrued interest on the notes payable at year-end amounted to $3,200 and will be paid January 1, 2022. Accrued salaries at year-end amounted to $2,200 and will be paid on January 5, 2022. Supplies remaining on hand at the end of the year equal $3,000.
8-a. Prepare an income statement for the year ended December 31, 2021.
Answer:
Jackrabbit Rentals
Jackrabbit Rentals
Income Statement
For the ended December 31, 2021.
Service Revenue $148,200
Salaries Expenses $73,400
Advertising Expenses 23,200
Interest Expense 3,200
Supplies Expenses 10,500 110,300
Net income $37,900
Explanation:
a) Data and Calculations:
Beginning Balances at January 1, 2021:
Accounts Debits Credits
Cash $ 48,500
Accounts Receivable 32,700
Land 117,800
Accounts Payable $16,000
Notes Payable (due in 2 years) 37,000
Common Stock 107,000
Retained Earnings 39,000
Totals $ 199,000 $ 199,000
Transaction Analysis:
1. January 12 Accounts Receivable $69,400 Service Revenue $69,400
2. February 25 Cash, $78,800 Service Revenue $78,000
3. March 19 Cash $46,400 Accounts receivable, $46,400
4. April 30 Cash $37,000 Common stock $37,000
5. June 16 Supplies $13,500 Accounts Payable $13,500
6. July 7 Accounts payable, $12,000 Cash $12,000
7. September 30 Salaries Expenses $71,200 Cash $71,200
8. November 22 Advertising Expenses $23,200 Cash $23,200
9. December 30 Dividends $3,600 Cash $3,600
Adjusting entries:
Interest Expense $3,200 Interest Payable $3,200
Salaries Expenses $2,200 Salaries Payable $2,200
Supplies Expenses $10,500 $10,500
Service Revenue $148,200
Accounts receivable $69,400
Cash, 78,800
Salaries Expenses
Cash $71,200
Salaries Payable 2,200 73,400
Advertising Expenses 23,200
Interest Expense 3,200
Supplies Expenses 10,500
Truck-Or-Treat specializes in leasing trucks to delivery companies. It is considering adding 25 more trucks to its available stock. Doing so will not change the risk of the company's business. The trucks depreciate over five years under the straight-line depreciation method, all the way to zero. Truck-Or-Treat believes that these newly added trucks would be able to bring the company $220,000 in annual earnings before taxes and depreciation (i.e., sales revenue minus costs of goods sold) for five years. The company is unlevered. It is in 21 percent tax rate bracket. The required annual rate of return on Truck-Or-Treat's unlevered equity is 15 percent. The risk-free rate, e.g., the Treasury bill rate, is 6 percent per year.
Required:
Calculate the maximum price that Truck-or-Treat should be willing to pay for the purchase of the new trucks if it remains an unlevered company. (In other words, what should be the "initial investment" of this unlevered truck project such that the project's NPV equals $0?
Answer:
The maximum price that Truck-or-Treat should be willing to pay for the purchase of the new trucks if it remains an unlevered company is $510,702.49.
Explanation:
Let:
x = Maximum price for the new truck = initial investment = ?
AEBTD = Annual earnings before taxes and depreciation = $220,000
T = Tax rate = 21%, or 0.21
n = Number of years = 5
Since the it is assumed that Truck-or-Treat remains an unlevered company, this implies the required annual rate of return on Truck-Or-Treat's unlevered equity of 15 percent is the relevant rate of return to use.
Therefore, we have:
r = required annual rate of return = 15%, or 0.15
D = Annual depreciation = Maximum price for the new truck / Number of useful years = x / 5 = 0.2x
P = Annual cash flow = ((AEDTD - D) * (1 - T)) + D = ((220000 - 0.2x) * (1 - 0.21)) + 0.2x = ((220000 - 0.2x) * 0.79) + 0.2x = 173,800 - 0.158x + 0.2x = 173,800 - 0.042x
Using the formula for calculating the present value (PV) of an ordinary annuity, we have:
PVP = Present value of annual cash flow = P * ((1 - (1/(1 + r))^n) / r) = (173,800 - 0.042x) * ((1 - (1/(1 + 0.15))^5) / 0.15) = (173,800 - 0.042x) * 3.3521550980114 = 582,604.56 - 0.140790514116479x
For the NPV of this unlevered truck project to be equal to $0, we must have:
x = PVP
That is:
x = 582,604.56 - 0.140790514116479x
Solving for x, we have:
x + 0.140790514116479x = 582,604.56
x(1 + 0.140790514116479) = 582,604.56
x1.140790514116479 = 582,604.56
x = 582,604.56 / 1.140790514116479 = $510,702.49
Therefore, the maximum price that Truck-or-Treat should be willing to pay for the purchase of the new trucks if it remains an unlevered company is $510,702.49.
Your dream is about to come true! You are about to buy your first classic sports car. To do so, you have arranged to borrow $65,000 from your local credit union. The interest rate on the loan is 6.00%. To simplify the calculations, assume that you will repay your loan over the next four years by making annual payments at the end of each year. According to the loan officer at the credit union, you must answer the following questions before you can go pick up your new car.
a. How much is the annual payment on your new car loan?
b. How much of your Year 2 payment will constitute interest on your loan?
c. How much of your Year 3 payment will be used to repay principal on the loan?
d. How much will you pay in total interest to finance the purchase of your $65,000 car?
Answer:
Car Loan
a. The annual payment on the new car loan = $18,758.45.
b. Year 2 payment that is interest on the loan = $3,008.49.
c. Year 3 payment that is principal repayment = $16,694.95
d. The total interest to be paid to finance the purchase of the $65,000 car is:
= $10,033.79.
Explanation:
Data and Calculations:
Loan Amount 65000
Loan Term 4 years 0 months
Interest Rate 6
Compound Annually (APY)
Pay Back Every Year
Results:
Payment Every Year $18,758.45
Total of 4 Payments $75,033.79
Total Interest $10,033.79
Principal 87%
Interest 13%
Amortization Schedule
Beginning Balance Interest Principal Ending Balance
1 $65,000.00 $3,900.00 $14,858.45 $50,141.55
2 $50,141.55 $3,008.49 $15,749.95 $34,391.60
3 $34,391.60 $2,063.50 $16,694.95 $17,696.65
4 $17,696.65 $1,061.80 $17,696.65 -$0.00
During its first year of operations, Indigo Corporation had credit sales of $3,213,200, of which $361,300 remained uncollected at year-end. The credit manager estimates that $16,880 of these receivables will become uncollectible. Prepare the journal entry to record the estimated uncollectibles. (Assume an unadjusted balance of zero in Allowance for Doubtful Accounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit LINK TO TEXTLINK TO TEXT INTERACTIVE TUTORIAL INTERACTIVE TUTORIAL Prepare the current assets section of the balance sheet for Indigo Corporation, assuming that in addition to the receivables it has cash of $91,990, merchandise inventory of $189,180, and supplies of $12,580. (List current assets in order of liquidity)
Answer and Explanation:
The journal entry is given below;
Bad debts expense $16,880
To Allowance for doubtful accounts $16,880
(Being the bad debt expense is recorded)
The preparation of the current asset section of the balance sheet is presented below:
Cash $91,990
Accounts receivable $361,300
less:allowance for doubtful accounts-$16,880 $344,420
Merchandise inventory $189,180
Supplies $12,580
total current assets $638,170
ABC and XYZ are all-equity firms. ABC has 1,750 shares outstanding at a market price of $20 a share while XYZ has 2,500 shares outstanding at a price of $28 a share. ABC is acquiring XYZ for $75,000 in cash. The incremental value of the acquisition is $8,000. What is the net present value of acquiring XYZ to ABC
Answer:
the net present value is -$32,000
Explanation:
The computation of the net present value is shown below;
= (Number of oustanding shares × market price per share) + incremental value of acquisition - acquiring value in cash
= (1,750 × $20) + $8,000 - $75,000
= $43,000 - $75,000
= -$32,000
Hence, the net present value is -$32,000
A bond has a modified duration of 8 and a price of 112,955 calculated using an annual effective interest rate of 6.4%. EMAC is the estimated price of this bond at an interest rate of 7.0% using the first-order Macaulay approximation. EMOD is the estimated price of this bondat an interest rate of 7.0% using the first-order modified approximation.Calculate EMAC - EMOD A. 91 B. 102 C. 116 D. 127 E. 143
Answer:
8.4%
Explanation:
On September 30, 2018, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $280 million. The bonds mature on September 30, 2038 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. ((FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
Determine the price of the bonds on September 30, 2018. (Enter your answers in whole dollars. Round your final answers to nearest whole dollar amount.)
Table values are based on: 40 5% Amount Present Value Cash Flow Interest Principal Price of bonds $ 220,000,000
Answer:
the price of the bond is $231,955,808
Explanation:
The computation of the price of the bond is shown below:
= Interest + principal
= ($280,000,000 × 8% × 6 months ÷ 12 months) × PVIFA factor at 5% for 40 years + ($280,000,000 × PVF factor at 5% for 40 years)
= 192,181,808+ $39,774,000
= $231,955,808
hence, the price of the bond is $231,955,808
Pet Supply purchased some fixed assets two years ago at a cost of $43,800. It no longer needs these assets so it is going to sell them today for $32,500. The assets are classified as five-year property for MACRS. The MACRS rates are 20%, 32% 19.2%, 11.52%, 11.52%, 5.76%, for years 1 to 6, respectively. What is the net cash flow (A-T Salvage Value) from this sale if the firm's tax rate is 35 percent
Answer:
$28,483.4
Explanation:
The computation of the net cash flow is shown below;
Asset cost $43,800
MACRS Rate 0.2 0.32
8760 14016
So total depreciation is
= $8,760 + $14,016
= $22,776
Now
Book Value of the company is
= oriignal value - depreication
= $43,800 - $22,776
= $21,024
And,
Sale price = 32500
So,
Gain is
= $32,500 - $21,024
= $11,476
So,
Tax = 0.35% of 11476
= $4,016
And, finally
Net cashflows is
= Sale price - tax
= $28,483.4
Answer:
The correct solution is "28483".
Explanation:
According to the question,
Given:
Sales price,
= 32500
MARCS rates,
= [tex]43800\times 0.2[/tex]
= [tex]8760[/tex]
Or,
= [tex]43800\times 0.32[/tex]
= [tex]14016[/tex]
Now,
The total depreciation will be:
= [tex]8760+14016[/tex]
= [tex]22776[/tex]
The company's book value will be:
= [tex]Original \ value-Depreciation[/tex]
= [tex]43800-22776[/tex]
= [tex]21024[/tex]
Gain will be:
= [tex]32500-21024[/tex]
= [tex]11476[/tex]
Tax,
= [tex]35\times 11476[/tex]
= [tex]4016[/tex]
hence,
The net cashflows will be:
= [tex]Sale \ price-Tax[/tex]
= [tex]32500-4016[/tex]
= [tex]28483[/tex]
