Answer:
Differentiation opportunities can exist in activities all along an industry's value chain
Explanation:
-Product R&D activities that aim at improved product designs and performance features,expanded end uses and applications and selection, added user safety,greater recycling capability or enhanced environmental protection.
2. What is dy/dx if y=6x'/12+0.4x
Show the effect of each transaction on the three basic accounting elements by indicating the dollar amount of the increase or decrease under the proper element heading. Compute the resulting accounting equation.
a. Owner invested $16,500 cash in the business.
b. Paid premium for two-year insurance policy, $1,500.
c. Purchased a van valued at $35,000 with $5,000 down payment; the balance to be paid over three years.
d. Paid the rent for the month, $900.
e. Purchased $470 of supplies for cash.
f. Cash sales for the month, $8,750.
g. Billed credit customers $14,200 for monthly services.
Answer:
Assets = Liabilities + Owner’s Equity = $67,800
Explanation:
Note: See the attached excel file for the Effect of Each Transaction on the Three Basic Accounting Elements.
From attached excel file, the resulting accounting equation can be computed as follows
Assets = Total Cash + Total Insurance Prepaid + Total Van + Total Supplies + Total Accounts Receivable = $17,380 + $750 + $35,000 + $470 + $14,200 = $67,800
Liabilities = Total Accounts Payable = $30,000
Owner’s Equity = Total Capital + Total Retained earnings = $16,500 + $21,300 = $37,800
Liabilities + Owner’s Equity = $30,000 + $37,800 = $67,800
Therefore, we have:
Assets = Liabilities + Owner’s Equity = $67,800
Lumberton Home Maintenance Company (LHMC) earned operating income of $6,000,000 on operating assets of $62,500,000 during Year 2. The Tree Cutting Division earned $1,000,000 on operating assets of $10,000,000. LHMC has offered the Tree Cutting Division $1,250,000 of additional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $112,500. LHMC has a desired return on investment (ROI) of 8 percent.
Required
a. Calculate the return on investment for LHMC, the Tree Cutting Division, and the additional investment opportunity.
b. Calculate the residual income for LHMC, the Tree Cutting Division, and the additional investment opportunity
Answer:
Lumberton Home Maintenance Company (LHMC)
LHMC Tree Cutting Additional
Division Investment
a. Return on Investment 9.6% 10% 9%
b. Residual income $1,000,000 $200,000 $12,500
Explanation:
a) Data and Calculations:
LHMC Tree Cutting Additional
Division Investment
Operating income $6,000,000 $1,000,000 $112,500
Operating assets $62,500,000 $10,000,000 $1,250,000
a. Return on Investment 9.6% 10% 9%
b. Residual income $1,000,000 $200,000 $12,500
Return on investment = Operating income/Operating assets * 100
Residual income = Operating income Minus (Desired ROI * Operating assets)
Desired Return on Investment (ROI) = 8%
Selected current year company information follows: Net income $ 16,753 Net sales 720,855 Total liabilities, beginning-year 91,932 Total liabilities, end-of-year 111,201 Total stockholders' equity, beginning-year 206,935 Total stockholders' equity, end-of-year 133,851 The total asset turnover is: (Do not round intermediate calculations.)
Answer:
the total asset turnover is 2.65 times
Explanation:
The computation of the total asset turnover is shown below;
As we know that
Total assets turnover is
= Net sales ÷ average of total assets
= $720,855 ÷ ($91,932 + $206,935 + $111,201 + $133,851) ÷ 2
= $720,855 ÷ $271,959.50
= 2.65 times
Hence, the total asset turnover is 2.65 times
Jane is a very intelligent graduate of FIN 3601. As such, she knows she should will start contributing into her company's retirement plan. She decides to allocate $250 at the end of each month into her 401(k). However, her company offers a fairly generous matching program. For every dollar that Jane saves in her 401(k), her firm will add $0.50 to her account. If she is employed by this firm for 30 years and earns an average of 10.50% on her retirement savings per year, how much will Jane have in her retirement account 30 years from now? Report your answer rounded to two decimal places.
Answer:
The amount that Jane will have in her retirement account 30 years from now is $943,650.37.
Explanation:
Jane’s monthly savings = $250
Amount added monthly by Jane’s firm = Jane’s monthly savings * Amount added by Jane’s firm for every dollar = $250 * $0.50 = $125
Total monthly savings to Jane’s 401(k) = Jane’s monthly savings + Amount added monthly by Jane’s firm = $250 + 125 = $375
Since Jane decides to allocate $250 at the end of each month into her 401(k), this implies the relevant formula to use to calculate the amount Jane will have in her retirement account 30 years from now is the formula for calculating the Future Value (FV) of an Ordinary Annuity as follows:
FV = M * (((1 + r)^n - 1) / r) ................................. (1)
Where,
FV = Future value or the amount that Jane will have in her retirement account 30 years from now = ?
M = Total monthly savings to Jane’s 401(k) = $375
r = Average monthly interest rate = Average annual interest rate / 12 = 10.50% / 12 = 0.1050 / 12 = 0.00875
n = number of months = number of years * number of months in a year = 30 * 12 = 360
Substituting the values into equation (1), we have:
FV = $375 * (((1 +0.00875r)^360 - 1) / 0.00875) = $375 * 2,516.40 = $943,650.37
Therefore, the amount that Jane will have in her retirement account 30 years from now is $943,650.37.
The provision of accounting information for internal users is known as
Answer:
managerial accounting
Explanation:
Blanchard Company manufactures a single product that sells for $ 180 per unit and whose total variable costs are $ 126 per unit . The company's annual fixed costs are $ 842,400 . ( 1 ) Prepare a contribution margin Income statement for Blanchard Company showing sales , variable costs , and fixed costs at the break even point . ( 2 ) Assume the company's fixed costs increase by $ 141.000 . What amount of sales ( dollars ) is needed to break even
Answer:
Part 1
Income Statement at 15,600 units
Sales ($ 180 x 15,600) $2,808,000
Less Variable Costs ($126 x 15,600) ($1,965,600)
Contribution $842,400
Less Fixed Costs ($842,400)
Net Income $0
Part 2
$3,278,000
Explanation:
Break even (units) = Fixed Cost ÷ Contribution per unit
= $ 842,400 ÷ ($ 180 - $126)
= 15,600 units
Assume the company's fixed costs increase by $ 141.000
Break even (units) = Fixed Cost ÷ Contribution per unit
= ($ 842,400 + $ 141.000) ÷ ($ 180 - $126)
= 18,212 units
Break even Revenue = 18,212 x $ 180 = $3,278,000
Erica Shotwell's company pays her $18.92 per hour for regular time up to 40 hours, and time-and-a-half for overtime. Her time card for Monday through Friday last week had 8.3 8.8, 7.9, 9.4, and 10.6 hours. What was Erica's gross pay?
Answer:
Erica Shotwell's Company
Erica's gross pay for working 45 hours during the last week is:
= $898.70
Explanation:
a) Data and Calculations:
Regular pay per hour = $18.92
Overtime pay per hour = $28.38 ($18.92 * 1.5)
Week Day Hours worked
Monday 8.3
Tuesday 8.8
Wednesday 7.9
Thursday 9.4
Friday 10.6
Total hours worked 45
Regular pay = 40 * $18.92 = $756.80
Overtime pay = 5 * $28.38 = 141.90
Erica's gross pay for the week = $898.70
why is eskom a monopoly?
Answer:
I don't know We will know that soon
Answer:
Eskom is South Africa's monopoly power supplier. As the result of the lack of productive and allocational inefficiency, Eskom is considered an undesirable monopoly market structure.
Explanation:
Productive efficiency takes place at a point in which the marginal cost is equal to the average cost and where the allotment efficiency is equal to the marginal cost.
The monopoly of Eskom also generates extravagant costs that reduce the output by higher prices.
Analysts estimate that a bond has a 40 percent probability of being priced at $950 and a 60 percent probability of being priced at $1,050 one year from today. The bond is also callable at any time at $1,010. What is the expected value of this bond in one year?
A) $1,000
B) $980
C) $1,010
D) $995
E) $986
Answer:
E) $986
Explanation:
The computation of the expected value of the bond in one year is shown below;
= (Probability × Price of bond) + (Probability × Callable price bond)
= (0.4 × $950) + (0.60 × $1,010)
= $986
Hence, the expected value of the bond in one year is $986
Therefore the correct option is E.
please who can help with this
its very urgent
Answer:
_______________________
During its 2019 fiscal year, a city receives a grant from the state to use on a worthy city project as determined by the city council. No other eligibility requirements exist, but the state requires that the grant proceeds not be spent before the city's 2020 fiscal year. The city council decides to hire a police officer who is to educate young people about the dangers of using illegal drugs. The grant is for $75,000. The state pays the city $75,000 for the grant during its 2019 fiscal year. How should the city report the receipt of the grant proceeds from the state in its Special Revenue Fund?
Answer:
Dr Cash $75,000
Cr Deferred inflows of resources--grant $75,000
Explanation:
Based on the information given we were told that The GRANT is for the amount of $75,000 in which the The state pays the city the amount of $75,000 for the GRANT during its 2019 fiscal year. Therefore the city should report the RECEIPT OF THE GRANT PROCEEDS from the state in its Special Revenue Fund as:
Dr Cash $75,000
Cr Deferred inflows of resources--grant $75,000
(To record receipt of the grant proceeds)
The following selected transactions apply to Topeca Supply for November and December Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month.
a. Cash sales for November Year 1 were $65,500 plus sales tax of 9 percent.
b. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1.
c. Cash sales for December Year 1 were $79,500 plus sales tax of 9 percent.
Required:
Record the effect of the given transactions in a horizontal statements model.
Answer:
Note: See attached excel file for the record of the effect of the given transactions in a horizontal statements model.
In the attached excel file, we have:
Assets = Liabilities + Stockholders' Equity = $152,155
Explanation:
In the attached excel file, we have:
Sales tax payable on sales for November Year 1 = $65,500 * 9% = $5,895
Sales tax payable on sales for December Year 1 = $79,500 * 9% = $7,155
Assets = $152,155
Liabilities + Stockholders' Equity = $7,155 + $145,000 = $152,155
Therefore, the accounting equation is proved as follows:
Assets = Liabilities + Stockholders' Equity = $152,155
Politicalization of Accounting Standards
Some accountants have said that politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. Think about the term more broadly to mean the compromise that results when the bodies responsible for developing generally accepted accounting principles (FASB) are pressured by interest groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on).
Required:
a. The Committee on Accounting Procedure of the AICPA was established in the mid to late 1930s and functioned until 1959, at which time the Accounting Principles Board came into existence. In 1973, the Financial Accounting Standards Board was formed, and the APB went out of existence. Do the reasons these groups were formed, their methods of operation while in existence, and the reasons for the demise of the first two indicate an increasing politicalization (as the term is used in the broad sense) of accounting standard setting? Explain.
b. What arguments can be raised to support the politicalization of accounting standard setting?
c. What arguments can be raised against the politicalization of accounting standard setting?
Answer: Some accountants have said that politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. Some use the term “politicization” in a narrow sense to mean the influence by governmental agencies, particularly the Securities and Exchange Commission, on the development of generally accepted accounting principles. Others use it more broadly to mean the compromise that results when the bodies responsible for developing generally accepted accounting principles are pressured by interest groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on).
Instructions
(a) The Committee on Accounting Procedure of the AICPA was established in the mid- to late 1930s
and functioned until 1959, at which time the Accounting Principles Board came into existence. In
1973, the Financial Accounting Standards Board was formed and the APB went out of existence.
Do the reasons these groups were formed, their methods of operation while in existence, and the
reasons for the demise of the first two indicate an increasing politicization (as the term is used in
the broad sense) of accounting standard-setting? Explain your answer by indicating how the CAP,
the APB, and the FASB operated or operate. Cite specific developments that tend to support your
answer.
(b) What arguments can be raised to support the “politicization” of accounting rule-making?
(c) What arguments can be raised against the “politicization” of accounting rule-making?
Solution
a) CAP. The Committee on Accounting Procedure, CAP, which was in existence from 1939 to 1959, was a natural outgrowth of AICPA committees which were in existence during the period 1933 to 1938. The committee was formed in direct response to the criticism received by the accounting profession during the financial crisis of 1929 and the years thereafter. The authorization to issue pronouncements on matters of accounting principles and procedures was based on the belief that the AICPA had the responsibility to establish practices that would become generally accepted by the profession and by corporate management.
Explanation:
Boston Consulting Group (BCG) is a management consulting, technology services and outsourcing organization. Which of the following actions should managers take when there is evidence that a fixed-rate contract is over budget and will generate a loss for the firm?
a. Use the percentage of completion method and pro rate the loss over the entire term of the engagement
b. Restate the financial statements and recognize the loss in the earliest period of the engagement
c. Use the percentage of completion method to recognize the loss over the remaining term of the engagement.
d. Recognize the loss in the current period rather than over the remaining term of the engagement
e. None of the above
Answer: D. Recognize the loss in the current period rather than over the remaining term of the engagement
Explanation:
A fixed rate contract is the contract whereby the payment amount isn't dependent on the resources or the time that were used.
Since there's evidence that a fixed-rate contract is over budget and will generate a loss for the firm, the manager should recognize the loss in the current period rather than over the remaining term of the engagement.
Therefore, the correct option is D.
giá trị của hàng hóa được quyết định bởi đâu?
Answer:
Giá trị của hàng hóa được quyết định bởi: ► Lao động của người sản xuất hàng hóa kết tinh trong hàng hóa. ► Sự hao phí sức óc, bắp thịt, thần kinh của con người. ☺ Lao động trừu tượng của người sản xuất hàng hóa kết tinh trong hàng hóa. ► Quan hệ cung cầu về hàng hóa ở trên thị trường.
Explanation:
Analyzing the Impact of Selected Transactions on the Current Ratio [LO 13-4, LO 13-5]
In its most recent annual report, Sunrise Enterprises reported current assets of $1,090,000 and current liabilities of $602,000.
Required:
Determine for each of the following transactions whether the current ratio, and each of its two components, for Sunrise will increase, decrease, or have no change: (1) sold long-term assets for cash, (2) accrued severance pay for terminated employees, (3) wrote down the carrying value of certain inventory items that were deemed to be obsolete, and (4) acquired new inventory by signing an 18-month promissory note (the supplier was not willing to provide normal credit terms).
Answer:
Sunrise Enterprises
Impact of Selected Transactions on the Current Ratio:
Current Ratio Current Assets Current Liabilities
(1) increase increase no change
(2) decrease no change increase
(3) decrease decrease no change
(4) increase increase no change
Explanation:
a) Data and Calculations:
Current assets = $1,090,000
Current liabilities = $602,000
Current ratio = 1.8 ($1,090,000/$602,000)
b) The current ratio (the ratio of current assets to current liabilities) is affected by increases or decreases in current assets without equal increases or decreases in current liabilities and vice versa.
The following information is available for Trinkle Company for the month of June:
a. The unadjusted balance per the bank statement on June 30 was $56,193.
b. Deposits in transit on June 30 were $2,350.
c. A debit memo was included with the bank statement for a service charge of $8.
d. A $4,862 check written in June had not been paid by the bank.
e. The bank statement included a $600 credit memo for the collection of a note.
f. The principal of the note was $545, and the interest collected amounted to $55.
Required:
Determine the true cash balance as of June 30.
Answer:
Following are the solution the given question:
Explanation:
[tex]\text{Trinkle Company}\\\\ \text{Bank Reconciliation Statement(Partly)}\\\\ \text{As on June 30}[/tex]
[tex]\text{Balance as per Bank statement} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$56,193\\\\\text{Add : deposit in transit} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$2,350\\\\[/tex]
[tex]\$58,543[/tex]
[tex]\text{Less: Outstanding Checks} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$4,862\\\\\text{Adjusted Bank Balance} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$53,681\\\\[/tex]
[tex]\text{The true cash balance on June 30 is} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$53,681[/tex]
Suppose that a bank has $80 in checkable deposits, reserves of $15 , and a reserve requirement of 10%. Also assume that the the bank suffers a $6 deposit outflow. If the bank chooses to borrow from the Fed to meet its reserve requirement, then the bank would need to borrow $nothing . (Round your response to the nearest two decimal place.)
Answer: See explanation
Explanation:
Based on the information given in the question, the amount of borrowing that's required will be:
= [ rr * ( D - O)] - (R-O)
where,
rr = reserve requirement = 10% = 0.1
D = checkable deposits = $80
R = reserves = $15
O = deposits outflow = $6
= [ 0.10 × ($80 - $6)] - ($15 - $6)
= [ 0.10 × $74 ] - $9
= $7.4 - $9
= -$1.60
If interest rates on the euro are consistently below U.S. dollar interest rates, then for the International Fisher Equation (IFE) to hold between the US and the Eurozone:_________
a) The nominal exchange rate for the euro will remain constant.
b) The euro will depreciate against the dollar The euro will appreciate against the dollar.
c) Purchasing power parity must hold between the dollar and the euro.
d) The euro will remain constant with respect to the dollar.
Answer:
The euro will appreciate against the dollar.
Explanation:
Since in the given situation it is mentioned that the rate of interest is consistently less than the interest rate of US so here in the IFE, the euro normally appreciated or increased as against the dollar
So as per the given option, the above should be the answer and the same should be relevant
Therefore the rest of the options are considered to be wrong
The supplies account had a beginning balance of $1,693. Supplies purchased during the period totaled $4,413. At the end of the period before adjustment, $445 of supplies were on hand. Prepare the adjusting entry for supplies. If an amount box does not require an entry, leave it blank.
Answer:
Debit Supplies expense $5,661
Credit Supplies account $5,661
Explanation:
At the time of purchasing supplies, the entries includes a debit to supplies accounts, and a credit to cash or accounts payable which is dependent on whether the cash purchased was done via cash or an account
For supplies used, debit supplies expense and credit supplies account. The movement in supplies account over a period is due to purchases and its expressed as;
Opening balance + Purchases - Supplies used = closing balance
$1,693 + $4,413 - Supplies used = $445
$6,106 - Supplies used = $445
Supplies used = $6,106 + $445
Supplies used = $5,661
Assume that Parker Company will receive SF100,000 in 360 days. Assume the following interest rates: U.S. Switzerland 360-day borrowing rate 7% 5% 360-day deposit rate 6% 4% Assume the forward rate of the Swiss franc is $1.0455 and the spot rate of the Swiss franc is $1.0037. If Parker Company uses a Money Market Hedge, it will receive _____in 360 days.
Answer:
$99,414
Explanation:
Calculation to determine how much he will receive If Parker Company uses a Money Market Hedge,
First step is to determine the amount borrowed
Borrowed=(SF100,000/1.05)
Borrowed= SF95,238
Second step is convert SF95,238 to dollar
SF 95,238*$1.0037
=$95,590.38
Now let determine the amount to receive
Amount received=$95,590.38*1.04
Amount received=$99,414
Therefore If Parker Company uses a Money Market Hedge, it will receive $99,414 in 360 days.
The case explains that newly-hired CEO Ron Johnson quickly ordered the alteration of all stores to remove discount racks and add premium items. According to the case, that change and others signaled the move from a _________ strategy to a ________ strategy.
Answer:
cost-leadership; blue ocean
Explanation:
From the question we are informed about the case explains that newly-hired CEO Ron Johnson quickly ordered the alteration of all stores to remove discount racks and add premium items. According to the case, that change and others signaled the move from a cost-leadership strategy to a blue ocean strategy.
Cost leadership can be regarded as strategy where there is establishment of a competitive advantage as a result of having the lowest cost of operation in a particular the industry by a firm, in this case, it is possible for a firm to be
lowest cost producer but at same time it doesn't offer lowest-priced products or services.
Blue Ocean Strategy can be regarded as a strategy used in a market in a case whereby where there exist no competition or there is very less competition for a particular product market. This strategy involves searching for a business whereby few firms operate it and pricing pressure is minimal or doesn't exist.
1000 par value 5 year bond with 8% semiannual coupons was boughtto yield 7.5% convertible semiannually. Determine the amount of premiumamortized in the six
Answer:
$2.08
Explanation:
First calculate the price of the bond
Price of the bond = [ ( 1000 x 8% x 6/12 ) x ( ( 1 - ( 1 + (7.5%x6/12) )^-(5x2) )/(7.5%x6/12) ] + { 1000 / (7.5%x6/12) ]
Price of the bond = $1,020.53
Now calculate the premium
Premium on the bond = Price of the bond - Face value of the bond = $1,020.53 - $1,000 = $20.53
Now prepare the amortization schedule to calculate the premium amortization in 6th payment.
The amortization schedule is attached with this answer please find that.
Hence, In the sixth payment the premium amortization is $2.08
The following transactions were completed by the company.
a. The owner invested $17,200 cash in the company in exchange for its common stock.
b. The company purchased supplies for $1,050 cash.
c. The owner invested $11,100 of equipment in the company in exchange for more common stock.
d. The company purchased $310 of additional supplies on credit.
e. The company purchased land for $10,100 cash.
Required:
Write the impact of each transaction on individual items of the accounting equation.
Answer:
Account Equation Impact:
Assets = Liabilities + Equity
a. Cash $17,200 Common stock $17,200
b. Supplies $1,050 Cash ($1,050)
c. Equipment $11,100 Common stock $11,100
d. Supplies $310 Accounts Payable $310
e. Land $10,100 Cash ($10,100)
Total assets $48,610 = $310 + $28,300
Explanation:
a) Data and Analysis According to Accounting Equation Impact:
a. Cash $17,200 Common stock $17,200
b. Supplies $1,050 Cash ($1,050)
c. Equipment $11,100 Common stock $11,100
d. Supplies $310 Accounts Payable $310
e. Land $10,100 Cash ($10,100)
BBB Leasing purchased a machine for $280,000 and leased it to Jack Tupp Auto Repair on January 1, 2021. Lease description: Quarterly rental payments $16,427 at beginning of each period Lease term 5 years (20 quarters) No residual value; no BPO Economic life of machine 5 years Implicit interest rate 7% Fair value of asset $280,000 What is the balance in the lease payable account after the April 1, 2021, lease payment
Answer: $251758.53
Explanation:
Based on the information given in the question,
Total lease liability = $280,000
Then, the balance in the lease payable account when the first lease payment takes place on January 1, 2021 will be:
= $280,000 - $16,427
= $263573
The, the interest that is included in the lease payment that's made on April 1, 2021 Will be:
= $263573 x 7% x 1/4
= $4612.53
Then, the principal amount that's included in the lease payment made on April 1, 2021 will be:
= $16,427 - $4612.53
= $11814.47
Therefore, the balance in the lease payable account after the April 1, 2021, lease payment will be:
= $263573 - $11814.47
= $251758.53
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 5.8 percent, how much will you pay for the policy
Answer:
the amount that should be paid for the policy is $431,034.48
Explanation:
The computation of the amount that should be paid for the policy is given below:
Present value of perpetual cash flow = Perpetual cash flow ÷ Rate of return
= $25,000 ÷ 5.8%
= $431,034.48
Hence, the amount that should be paid for the policy is $431,034.48
The same should be considered and relevant
The May transactions of Bramble Corp. were as follows:
May 4 Paid $610 due for supplies previously purchased on account.
7 Performed advisory services on account for $6,840.
8 Purchased supplies for $870 on account.
9 Purchased equipment for $1,930 in cash.
17 Paid employees $700 in cash.
22 Received bill for equipment repairs of $800.
29 Paid $1,280 for 12 months of insurance policy. Coverage begins June 1.
Required:
Journalize the transactions.
Answer and Explanation:
The journal entries are given below:
On May 4
Account payable $610
To cash $610
(To record the cash paid)
On May 7
Account receivable $6,840
To service revenue $6,840
(To record the service on account)
On May 8
Supplies $870
To Account payable $870
(To record supplies purchased on account)
On May 9
Equipment $1,930
To cash $1,930
(To record the equipment purchase)
On May 17
Salary expense $700
To cash $700
(To record the salaries expense)
On May 22
Repair expense $800
To Account payable $800
(To record the received bill for repairing of an equipment)
On May 29
Prepaid rent $1,280
To cash $1,280
(To record the cash paid)
Permabilt Corp. was incorporated on January 1, 2019, and issued the following stock for cash: 2,000,000 shares of no-par common stock were authorized; 750,000 shares were issued on January 1, 2019, at $35 per share. 800,000 shares of $100 par value, 7.5% cumulative, preferred stock were authorized; 540,000 shares were issued on January 1, 2019, at $105 per share. No dividends were declared or paid during 2019 or 2020. However, on December 22, 2021, the board of directors of Permabilt Corp. declared dividends of $15,000,000, payable on February 12, 2022, to holders of record as of January 8, 2022.
Required:
a. Use the horizontal model for the issuance of common stock and preferred stock on January 1, 2019. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)
b. Use the horizontal model for the declaration of dividends on December 22, 2021. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)
c. Use the horizontal model for the payment of dividends on February 12, 2022. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.)
Answer:
Permabilt Corp.
Financial Statement Effects:
Balance Sheet Statement of
Assets = Liabilities + Equity Cash Flows
a. January 1, 2019:
Cash $26,250,000
Common stock $26,250,000 FA cash inflow
b. December 22, 2021:
Dividends -$15,000,000
Dividends Payable $15,000,000
c. February 12, 2022:
Dividends Payable -$15,000,000
Cash -$15,000,000 FA cash outflow
Total $11,250,000 = 0 + $11,250,000
Explanation:
a) Data and Analysis:
January 1, 2019
Cash $26,250,000 Common stock $26,250,000
Cash $56,700,000 7.5% Cumulative Preferred Stock $54,000,000 Additional Paid-in Capital - Preferred $2,700,000
December 22, 2021:
Preferred Stock Dividends $4,050,000 ($54,000,000 * 7.5%)
Common Stock Dividends $10,950,000 ($15,000,000 - $4,050,000)
Dividends Payable $15,000,000
February 12, 2022:
Dividends Payable $15,000,000
Cash $15,000,000
Assume that the one-year interest rate is on the vertical axis of the IS-LM model and that the yield curve is initially upward sloping. Suppose that financial market participants expect that the central bank will pursue an open market purchase of bonds in the future. Given this information, we would expect which of the following to occur?
A. The yield curve will become flatter.
B. The yield curve will become vertical.
C. The yield curve will become steeper.
D. The yield curve will become downward sloping.
Answer: A. The yield curve will become flatter.
Explanation:
With the information given in the question, then it should be expected that the yield curve should be flatter.
On the other hand, if the participants that are in the financial market expect the central bank to pursue a contractionary monetary policy in the future, then the yield curve will become steeper.
