Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment systems. Its earnings and dividends have been growing at a rate of 36.0%, and the current dividend yield is 8.00%. Its beta is 1.32, the market risk premium is 14.00%, and the risk-free rate is 2.80%.

Required:
a. Use the CAPM to estimate the firm’s cost of equity. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. Now use the constant growth model to estimate the cost of equity. (Do not round intermediate calculations. Enter your answer as a whole percent.)
c. Which of the two estimates is more reasonable?

Answers

Answer 1

Answer:

a. Calculation of the firm's cost of equity using CAPM

Required rate of return (Cost of equity) = Risk free rate + Beta*Market risk premium

Cost of equity = 2.80% + 1.32*14%

Cost of equity = 2.80% + 18.38%

Cost of equity = 21.28%

b) Calculation of the cost of equity using constant growth model:

Cost of equity = Dividend yield + Growth rate(Capital gain yield)

Cost of equity = 8.00% + 36.00%

Cost of equity = 44.00%


Related Questions

Wallaby Kite Company, a small Melbourne firm that sells kites on the Web, wants a master budget for the three months beginning January 1, 2012. It desires an ending minimum cash balance of $20,000 each month. Sales are forecast at an average wholesale selling price of $8 per kite. Merchandise costs average $4 per kite. All sales are on credit, payable within 30 days, but experience has shown that 60 percent of current sales are collected in the current month, 30 percent in the next month, and 10 percent in the month thereafter. Bad debts are negligible.
In January, Wallaby Kite is beginning just-in-time (JIT) deliveries from suppliers, which means that purchases will equal expected sales. On January 1, purchases will cease until inventory decreases to $24,000, after which time purchases will equal sales. Purchases during any given month are paid in full during the following month. Monthly operating expenses are as follows:
Wages and salaries....$60,000
Insurance expired...........500
Depreciation.................1,000
Miscellaneous.............10,000
$1,000/month + 10% of quarterly sales over
Rent...........................$40,000
Cash dividends of $6,000 are to be paid quarterly, beginning January 15, and are declared on the 15th of the previous month. All operating expenses are paid as incurred, except insurance, depreciation, and rent. Rent of $1,000 is paid at the beginning of each month, and the additional 10 percent of sales is paid quarterly on the 10th of the month following the end of the quarter. The next rent settlement date is January 10.
The company plans to buy some new fixtures for $12,000 cash in March.
Money can be borrowed and repaid in multiples of $2,000. Management wants to minimize borrowing and repay rapidly. Simple interest of 10 percent per annum is computed monthly but paid when the principal is repaid. Assume that borrowing occurs at the beginning, and repayments at the end, of the months in question. Compute interest to the nearest dollar.

Answers

Answer:

ask brainly lol

Explanation:

Which of the following characteristics implies that a quantitative model is probabilistic in nature?
(a)The fact that it uses random variables.
(b)The fact that it uses an exponential function.
(c)The fact that it measures time in discrete steps.
(d)The fact that it is based on theory rather than data.

Answers

Answer:

(a)The fact that it uses random variables

Explanation:

Quantitative models can be regarded as a compact representations in which

single differential or difference equation may be used in describing performance of the system as regards large set of input functions as well as initial states.Quantitative data can be measured and also can be expressed using numbers and can also be counted. Quantitative methods is based on objective measurements as well as statistical and mathematical, it could be base on numerical analysis of data which is been collected through polls or surveys. It should be noted that one of the characteristics that implies that a quantitative model is probabilistic in nature is the fact that it uses random variables

Boswal Company uses the weighted-average method in its process costing system. The Assembly Department started the month with 6,000 units in its beginning work in process inventory that were 80% complete with respect to conversion costs. An additional 52,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 18,000 units in the ending work in process inventory of the Assembly Department that were 20% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month

Answers

Answer:

Boswal Company

The the equivalent units for conversion costs in the Assembly Department for the month are:

= 43,600 units.

Explanation:

a) Data and Calculations:

                                                                Units   Materials Conversion

Beginning work in process inventory    6,000     100%         80%

Units added during the month            52,000

Total units available for processing    58,000

Ending work in process inventory       18,000      100%         20%

Units completed and transferred out 40,000

Equivalent units of production:

                                                         Units    Materials           Conversion

Units completed and transferred  40,000   40,000 (100%)  40,000 (100%)

Ending work in process inventory 18,000    18,000 (100%)     3,600 (20%)

Total equivalent units of production            58,000              43,600

Firm K is planning on merging with Firm L. Firm K currently has 5,500 shares of stock outstanding at a market price of $28 a share. Firm L has 500 shares outstanding at a price of $16 a share. The merger will create $600 of synergy. Firm K plans to offer a sufficient number of its shares to acquire Firm L at an acquisition cost of $8,200. How many total shares will be outstanding in the merged firm

Answers

Answer:

5,792 shares

Explanation:

Value of share of K = $28

Increase in value of share due to synergy = $600 / 5,500 shares

Increase in value of share due to synergy = $0.11

New share value = $28 + $0.11

New share value = $28.11

Number of shares to be issued = $8,200 / $28.11

Number of shares to be issued = 291.71

New shares of Firm K = 5,500 shares + 291.71 shares

New shares of Firm K =  5791.71 shares

New shares of Firm K =  5,792 shares

Mark owns a driving range in New York City. He has taken notice of the three competitors who are located very close to his business. Mark decides to look at his competitors' pricing and then determine his best pricing strategy based on all of the information. In this scenario, Mark is utilizing ________.

Answers

Answer:

competitor-based pricing

Explanation:

Since in the given situation, it is mentioned that mark look to the competitor pricing and them measures it pricing startegy

So here Mark is utilizing competitor based pricing as the mark has decided the price that depend upon his competiton. It is mainly applied for those products who are almost same with the competitor products.

Therefore the above should be the answer for the given scenario.

Assume a pro rata reinsurance agreement with a 35% retention. Further assume a primary insurance contract with limits of $2,500,000, premiums of $20,000 and deductible $10,000. a)How much premium will the primary insurance company retain

Answers

Answer: $7000

Explanation:

Since there is a pro rata reinsurance agreement with a 35% retention, primary insurance contract with limits of $2,500,000, premiums of $20,000 and deductible $10,000, then the amount of premium that the primary insurance company will retain will be:

= Retention rate × Premium

= 35% × $20000

= 0.35 × $20000

= $7000

Using the money demand and money supply model, an open market purchase of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to

Answers

Answer:

C. decrease

Explanation:

In the case when the money demand and the money supply model is used so the open market purchase would result the interest rate of equilibrium to decrease as if there is an open market purchase so it rise the money supply due to which the supply curve of the money move shiftward

Therefore the rate of interest should be decreased

Fraternity is protected under the ..
-Federal law
-Provincial law
-none of them
-Charter of rights and freedoms.

Answers

None of them is the answer

Fraternity is protected under the federal law.

As a social association, a Fraternity is protected with first amendment rights. The first amendment has a right to freedom of association while the fourteenth amendment offers equal protection rights.

A fraternity by definition are a group of people that have common interests. These interests could be religious or secular.

The first amendment offers protection to associations formed for speech, assembly, religion or to take care of grievances.

Therefore a fraternity is protected by Federal law.

Read more at https://brainly.com/question/17194501?referrer=searchResults

If variances are recorded in the accounts at the time the manufacturing costs are incurred, what does a debit balance in Direct Materials Price Variance represent?

Answers

Answer:

unfavorable variance

Explanation:

In such situation, a debit balance in Direct Materials Price Variance represents

unfavorable variance. This is an accounting term that explains situations when the actual cost of the project is higher than the standard or projected cost.

It means that the actual price at which the materials are bought is higher than the standard price / budgeted price / estimated price and therefore, more amount has to be paid than expected.

You need to have $32,250 in 9 years. You can earn an annual interest rate of 4 percent for the first 5 years, and 4.6 percent for the next 4 years. How much do you have to deposit today? A. 23341.12 B. 20769.78 C. 22142.99 D. 24936.86

Answers

Answer:

The deposit today is:

C. 22142.99

Explanation:

a) Data and Calculations:

Future expected value = $32,250

Time period = 9 months

Annual interest rate = 4% for the first 5 years

Annual interest rate = 4.6% for the next 4 years

Today's deposit to earn the above future value is calculated from an online financial calculator as follows:

N (# of periods)  5

I/Y (Interest per year)  4

PMT (Periodic Payment)  0

FV (Future Value)  26940.33

Results

PV = $22,142.99

Total Interest $4,797.34

N (# of periods)  4

I/Y (Interest per year)  4.6

PMT (Periodic Payment)  0

FV (Future Value)  32250

PV = $26,940.33

Total Interest $5,309.67

Labor power is a special commodity right or wrong?

Answers

Right my mom taught me not to be afraid

Answer:

Right.

Explanation:

The labor market is as much a commodity as the materials are to be processed.

Labor power is a unique commodity in that it is a characteristic of living people who own it in their own bodies. They cannot permanently sell it to someone else because they own it within themselves; otherwise, they would be a slave, and a slave does not own himself.

The prepaid insurance account had a beginning balance of $7,560 and was debited for $810 for premiums paid during the year.

Required:
Journalize the adjusting entry required at the end of the year.

Answers

Answer: See explanation

Explanation:

Debit Insurance Expenses = $8370

Credit Prepaid insurance = $8370

(To record insurance expense for the current year)

Note that:

Opening prepaid Insurance = $7560

Add: Insurance premium = $810

Insurance expense = $8370

What are the desirable personal characteristics, attributes, lifestyles, skills, and traits of a prospective entrepreneur? Why are these important?​

Answers

Answer:

The answer is below

Explanation

1. There are various desirable personal characteristics, attributes, lifestyles, skills, and traits of a prospective entrepreneur, some of them include

Competency,

Hardworking,

Risk-taking

Innovation

Perception

2. These characteristics or attributes of an entrepreneur are important because they guide and lead the entrepreneur in making the right decision. It also helps entrepreneurs to solve issues like conflicts, hire and fire where necessary, etc.

A car dealer leases a small computer with software for $5,000 per year. As an alterative he could buy the computer for $7,500 and lease the software for $3,500 per year. Any time he would decide to switch to some other computer he could cancel software lease and sell the computer for $500.
If he buys the computer nad leases the software, what is the payback period?
a. 3 years
b. 4 years
c. 5 years
d. 6 years
If he kept the computer and software for 8 years, what would be the benefit-cost ratio, based on a 5% interest rate.
a. 1.5
b. 1.4
c. 1.3
d. 1.2

Answers

Answer:

1. The payback period is:

= 3 years

2. The benefit-cost ratio is:

= 1.1

Explanation:

a) Data and Calculations:

                                   Leasing Computer    Buying Computer &

                                        with Software       Leasing Software

Annual lease payment     $5,000                      $3,500

Cost of computer                                                $7,500

Salvage value of computer                                   $500

Usage period                       8 years                   8 years

Interest rate                         5%                           5%

Present value annuity factor 6.463                    6.463

Present value factor for salvage                        0.677

Present value of annuity    $32,315                $29,782 ($22,621 + $7,500 - 339)

$22,782 = ($3,500 * 6.463 + $7,500 - ($500 * 0.677))

Benefit-cost ratio = $32,315/$29,782 = 1.1

The demand for personal computers has been estimated to be Q = 500,000 – 700P +200I - 500S. Assume that per capita income I is $13,000 and the average price ofsoftware S is $400.When the price of personal computers is P = $3,000, the priceelasticity of demand is:________.a. –2.625b. –7.0c. –1.0d. –21.0e. –4.25

Answers

Answer:

The price elasticity of demand is: -2.625

Explanation:

Given

[tex]Q = 500000 - 700P +200I - 500S[/tex] --- the demand

[tex]I =\$13000[/tex] --- per capita income

[tex]S = \$400[/tex] --- average price of software

[tex]P = \$3000[/tex] --- price of computer

Required

The price elasticity of demand

Substitute values for I and S in: [tex]Q = 500000 - 700P +200I - 500S[/tex]

[tex]Q = 500000 - 700P +200*13000 - 500*400[/tex]

Collect like terms

[tex]Q = 500000 +200*13000 - 500*400- 700P[/tex]

[tex]Q = 2900000- 700P[/tex]

The price elasticity (n) is then calculated using:

[tex]n =\frac{P}{Q} * \frac{dQ}{dP}[/tex]

[tex]Q = 2900000- 700P[/tex]

Differentiate

[tex]\frac{dQ}{dP} = -700[/tex]

Calculate Q when [tex]P = \$3000[/tex]

[tex]Q = 2900000- 700*3000[/tex]

[tex]Q = 800000[/tex]

So, we have:

[tex]n =\frac{3000}{800000} * -700[/tex]

[tex]n =-\frac{3000* 700}{800000}[/tex]

[tex]n =-\frac{2100000}{800000}[/tex]

[tex]n =-\frac{21}{8}[/tex]

[tex]n =-2.625[/tex]

The price elasticity of demand is going to be –2.625.

The equation has

Q = 500,000 – 700P +200I - 500S.

p =  $3,000

I = $13,000

S = $400

We have to put in these values in the equation that we have here:

Q =  500,000 – 700*3000 +200*13000 - 500*400

= 800000

We have to find dQ/dP

=  500,000+200*13000 - 500*400 – 700P

= 2900000-700p

= -700p

The price elasticity =

-700*3000/800000

= -2.625

The price elasticity =   -2.625

Read more on price elasticity here:

https://brainly.com/question/8729849

In assembly-line balancing, cycle time (the ratio of available production time to scheduled production) is the: minimum time that a product is allowed at each workstation. maximum time that a product is allowed at each workstation. inverse of the minimum number of workstations needed. sum of all the task times divided by the maximum number of workstations. equivalent of the maximum task time among all tasks.

Answers

Answer:

maximum time that a product is allowed at each workstation

Explanation:

The cycle time represent the maximum time for each and every workstation

Also,

Theoretical number of workstation = Total task time ÷ Cycle time

The cycle time is the vital concept with regard to the line balancing to give assurance related to the production happen according to the demand. Also it help in allocation of the resources in the proper way.

Therefore the above statement should be considered  

Types of Financial Assets Match the description of the security to the type of financial asset. A security that provides a payoff that depends on the values of other assets. Multiple Choice equity security debt security derivative security None of these

Answers

Answer: Derivative security

Explanation:

Derivative security is referred to as the security that provides a payoff which depends on the values of other assets.

A derivative security is referred to as the financial instrument whereby the value depends on the value of another asset. There are different types of derivatives such as options, swaps, futures, and forwards. Example of derivative security is convertible bond.

Use the following tax rates and income brackets to answer the following question(s).
Tax Rate Individual Returns Joint Returns
10% $0 to $8,350 $0 to $16,700
15% $8,351 to $33,950 $16,701 to $67,900
25% $33,951 to $82,250 $67,901 to $137,050
28% $82,251 to $171,550 $137,051 to $208,850
33% $171,551 to $372,950 $208,851 to $372,950
35% Over $372,951 Over $372,951
Josh earned $89,700 in taxable income and files an individual tax return. What is the amount of Josh's taxes for the year?

Answers

Answer: $18,836

Explanation:

Josh is in the $82,251 to $171,550 bracket so in calculating the taxes owed, we need to calculate the maximum taxes from the previous brackets to find Josh's taxes.

This is done as follows:

= (8,350 * 10%) + ( (33,950 - 8,350) * 15%) + ( (82,250 - 33,950) * 25%) + ( (89,700 - 82,250) * 28%)

= 835 + 3,840 + 12,075 + 2,086

= $18,836

You want to borrow $85,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,450, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 72-month APR loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answers

Answer:

7.02% per annum

Explanation:

The computation of the highest rate is shown below;

Given that

Present value be $85,000

PMT is $1,450

NPER is 72

Future value be $0

The formula is

=RATE(NPER,PMT,-PV,FV,TYPE)

After applying the above formula, the rate should be 0.59% per month

Annually, it should be

= 0.59% × 12 months

= 7.02% per annum

Weekly demand figures at Hot Pizza are as follows:
Week Demand($)
1 108
2 116
3 118
4 124
5 96
6 119
7 96
8 102
9 112
10 102
11 92
12 91
Using the Hot Pizza weekly demand figures provided, estimate demand for Week 4 to Week 12 by using a 3-week moving average as well as simple exponential smoothing with α = 0.2. Evaluate the MAD, MAPE, MSE, bias, and TS in each case. Which of the two methods do you prefer? Why? Include all calculations as well as your narrative explanation and summary.

Answers

Answer:

MAD:  10.04,  11.53

MAPSE: 10% ,  12%

MSE : 146.33,  178.72

Bias : -0.56 , -0.96

3-week moving average method is better

Explanation:

i ) Evaluate MAD ( average of absolute errors )

using  3 week moving average

= 10.04

using simple exponential smoothing

= 11.53

ii) MAPSE ( average of absolute percentage error )

using 3 week moving average

= 10%

using simple exponential smoothing

= 12%

iii) MSE ( average of Squared Errors )

3 week MV = 146.33 ,  Simple exponential smoothing = 178.72.

iv) Bias

3 week MV = -5/9 = -0.56,  Simple exponential smoothing = -8.69/9 = -0.96.

v) TS  ( Total error / MAD )

3 week MV = -5 / 10.04 = -0.49 ,

simple exponential smoothing  = -8.69 / 11.53 = -0.75

b) I prefer 3-week moving average based on the values of MAD , MAPE, MSE, bias and TS which shows that there is a better estimate when using the 3 -weeks moving average.

Attached below is the Tabular calculations of the required parameters for the  question

What is one of the key phases of procurement processes that employ competitive bidding mechanisms?

Answers

Wisely oversee and screen outsiders with AI-driven bits of knowledge. Settle on sure choices about your outsider business connections. Get a free preliminary. Hazard Asessment. Information Management. In-Tool Reporting. Work process Management. Client Screening

Imagine you are reviewing a business plan. In which section of the business plan would you expect to find the answers to the following questions?
Question Financial Statements Marketing & Sales Management Service or Product Line
How much money will the owners invest in the business start-up?
How will the salespeople for this business be compensated?
What are the unique features of this business’s merchandise?

Answers

Answer:

Hence,

The money which the owners invest in the business start-up is by Financial statements.

The salespeople for this business be compensated is by Marketing & sales management.

The unique features of this business’s merchandise are by Service or product line.

Explanation:

Financial statements show how much money will the owners invest in the business start-up.

Marketing & sales management shows how will the salespeople for this business be compensated.

Service or product line shows What are the unique features of this business’s merchandise

Describe TWO ways in which the above law protects citizens against human
rights violations.

Answers

Answer:



1. Protection of Human Rights Act 1993: declares the rights pertaining to life, equality, liberty,and dignity of an individual that is guaranteed by the Constitution of India.

2. The Universal Declaration of Human Rights (UDHR)- declared by the United Nations General Assembly in the year 1948.

Explanation:

Why should you stay organized when doing a research paper

Answers

Answer:

cuz if u don't stay organized then the information may lost

Answer:

Staying organized is one of the most important skills when a student first learns

how to write a research paper. It will help your stress levels as well as make the writing process go much faster.

The following data relate to Lebeaux Corporation for the year just ended: Sales revenue $ 750,000 Cost of goods sold: Variable portion 370,000 Fixed portion 110,000 Variable selling and administrative costs 50,000 Fixed selling and administrative cost 75,000 Which of the following statements is correct?
A) Lebeaux's variable-costing income statement would show a gross margin of $270,000.
B) Lebeaux's variable costing income statement would show a contribution margin of $330,000.
C) Lebeaux's absorption-costing income statement would show a contribution margin of $330,000.
D) Lebeaux's absorption costing income statement would show a gross margin of $330,000.
E) Lebeaux's absorption-costing income statement would show a gross margin of $145,000.

Answers

Answer:

B) Lebeaux's variable costing income statement would show a contribution margin of $330,000.

Explanation:

See below the Statements that are produced under Absorption and Variable Costing methods.

Absorption Costing

Sales revenue                                                        $750,000

Less Cost of goods sold :

Variable portion                           $370,000

Fixed portion                                  $110,000      ($480,000)

Gross Profit                                                            $270,000

Variable Costing

Sales revenue                                                                           $750,000

Less Variable Costs :

Variable portion - Cost of Sales                          $370,000

Variable selling and administrative costs            $50,000   ($420,000)

Contribution                                                                              $330,000

therefore,

The only correct statement is : Lebeaux's variable costing income statement would show a contribution margin of $330,000

The following activities occur at Greenwich Corporation. a company that manufactures a variety of products.a. Various individuals manage the parts inventories.b. A clerk in the factory issues purchase orders for a job.c. The personnel department trains new production workers.d. The factory’s general manager meets with other department heads such as marketing to coordinate plans.e. Direct labor workers assemble products.f. Engineers design new products.g. The materials storekeeper issues raw materials to be used in jobs.h. The maintenance department performs periodic preventive maintenance on general-use equipment.Required:Classify each of the activities above as either a unit-level, batch-level, Product-level, or organizationsustaining activity.

Answers

Answer:

Product level activities have to do with the individual products themselves and issues concerning them.

Batch level activities are related to uses that concern a group of products including their sales and raw material acquisition.

Unit level activities are those that concern the production volumes of units and include direct materials and direct labor.

Organization sustaining or Facility level entails issues that relate to the general facility used in production and is more of an administrative measure.

Batch Level Activities

b. A clerk in the factory issues purchase orders for a job.

g. The materials storekeeper issues raw materials to be used in jobs.

Product Level Activities

a. Various individuals manage the parts inventories.

f. Engineers design new products.

Unit Level Activities

e. Direct labor workers assemble products.

Organization sustaining Level

c. The personnel department trains new production workers.

d. The factory’s general manager meets with other department heads such as marketing to coordinate plans.

h. The maintenance department performs periodic preventive maintenance on general-use equipment.

Explain the 5 marketing objectives?

Answers

Answer:

creation of demand

customer satisfaction

market share

generation for profits

public image

You have decided to buy a used car. The dealer has offered you two options: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) Pay $620 per month for 20 months and an additional $12,000 at the end of 20 months. The dealer is charging an annual interest rate of 24%. Make a one-time payment of $16,864, due when you purchase the car. 1-a. Determine how much cash the dealer would charge in option (a). (Round your answer to 2 decimal places.) 1-b. In present value terms, which offer is clearly a better deal

Answers

Answer:

1. In option (a), the dealer would charge $18,213.54.

b. In present value terms, the one-time payment (option (b) is a better deal for the purchaser.

Explanation:

a) Data and Calculations:

Monthly payment for a used car = $620

Payment period = 20 months

Additional payment at the end of 20 months = $12,000

Annual interest rate = 24%

One-time payment for the car purchase = $16,864

From an online financial calculator, the present value of the payments is:

N (# of periods)  20

I/Y (Interest per year)  24

PMT (Periodic Payment)  620

FV (Future Value)  12000

Results

PV = $18,213.54

Sum of all periodic payments = $12,400.00

Total Interest = $6,186.46

A company's perpetual preferred stock currently trades at $87.50 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm's cost of preferred stock?
a. 8.25%
b. 9.14%
c. 8.69%
d. 9.62%

Answers

Answer:

9.62%

Explanation:

The firm cost of preferred stock can be calculated as follows

Dividend= $8

Price= $87.50

Floation cost= 5%

= 5/100

= 0.05

= 8/87.50(1-0.05)

= 8/87.50(0.95)

= 8/83.125

= 0.0962×100

= 9.62%

Hence the firm cost of preferred stock is 9.62%

Using the following transactions, record journal entries, create financial statements, and assess the impact of each transaction on the financial statements.
Jun. 1 Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment to launch the company in exchange for common stock.
Jun. 2 The company purchased land worth $49,000 for an office by paying $6,300 cash and signing a long-term note payable for $42,700.
Jun. 3 The company purchased a portable building with $55,000 cash and moved it onto the land acquired on June 2.
Jun. 4 The company paid $3,000 cash for the premium on an 18-month insurance policy.
Jun. 5 The company completed and delivered a set of plans for a client and collected $6,200 cash.
Jun. 6 The company purchased $20,000 of additional drafting equipment by paying $9,500 cash and signing a long-term note payable for $10,500.
Jun. 7 The company completed $14,000 of engineering services for a client. This amount is to be received in 30 days.
Jun. 8 The company purchased $1,150 of additional office equipment on credit.
Jun. 9 The company completed engineering services for $22,000 on credit.
Jun. 10 The company received a bill for rent of equipment that was used on a recently completed job. The $1,333 rent cost must be paid within 30 days.
Jun. 12 The company collected $7,000 cash in partial payment from the client billed on June 9.
Jun. 14 The company paid $1,200 cash for wages to a drafting assistant.
Jun. 17 The company paid $1,150 cash to settle the account payable created in on June 8.
Jun. 20 The company paid $925 cash for minor maintenance of its drafting equipment.
Jun. 23 The company paid $9,480 cash in dividends.
Jun. 28 The company paid $1,200 cash for wages to a drafting assistant.
Jun. 29 The company paid $2,500 cash for advertisements on the web during June.

Required:
Journalize the above entires.

Answers

Answer:

1 - Cash (Dr.) $100,000

Office equipment (Dr.) $5,000

Drafting equipment (Dr.) $60,000

Capital (Cr.) $165,000

2- Land (Dr.) $49,000

Cash (Cr.) $6,300

Long term notes payable (Cr.) $42,700

3- Portable building (Dr.) $55,000

Cash (Cr.) $55,000

4- Insurance premium (Dr.) $3,000

Cash (Cr.) $3,000

5- Cash (Dr.) $6,200

Service Revenue (Cr.) $6,200

Explanation:

6- Drafting equipment (Dr.) $20,000

Cash (Cr.) $9,500

Long term notes payable (Cr.) $10,500

7- Accounts Receivable (Dr.) $14,000

Service revenue (Cr.) $14,000

8- Office equipment (Dr.) $1,150

Accounts Payable (Cr.) $1,150

9- Accounts Receivable (Dr.) $22,000

Engineering Service (Cr.) $22,000

10- Cash (Dr.) $9,000

Accounts Receivable (Cr.) $9,000

11- Wages expense (Dr.) $1,200

Cash (Cr.) $1,200

12- Accounts Payable (Dr.) $1,150

Cash (Cr.) $1,150

13- Maintenance expense (Dr.) $925

Cash (Cr.) $925

14- Dividends (Dr.) $9,480

Cash (Cr.) $9,480

15- Wages expense (Dr.) $1,200

Cash (Cr.) $1,200

16- Advertising expense (Dr.) $2,500

Cash (Cr.) $2,500

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