Answer:
Harvesting an investment in a business
Four ways to harvest:
a. Outright sale of a company or the investment
b. Issue of Initial Public Offering (IPO)
c. Gradual elimination of a product, especially after the cow stage.
d. Withdrawal of additional investment and earning of profits.
Explanation:
These strategies can be employed by a business to reap the fruits from an investment. The purpose for the investment and the risk profile of the investor determines the actual strategy or combination of strategies used by the investor.
Salah’s net income for the year ended December 31, Year 2 was $191,000. Information from Salah’s comparative balance sheets is given below. Compute the cash paid for dividends during Year 2. At December 31 Year 2 Year 1 Common Stock, $5 par value $ 506,000 $ 455,400 Paid-in capital in excess of par 954,000 858,400 Retained earnings 694,000 587,400
Answer:
Cash Dividends - Year 2 = $84400
Explanation:
The net income of the business is usually appropriated or used for two purposes at the end of the year. It is either used to pay dividends or is retained in the business and is added to the retained earnings or both.
Thus, to calculate the dividends paid by the business in a particular year, we can calculate the change in retained earnings and deduct it from the net income.
Change in retained earnings = Ending balance of retained earnings - Beginning balance of retained earnings
Change in retained earnings = 694000 - 587400
Change in retained earnings = $106600
Thus, out of the net income of $191000, $106600 were transferred to retained earnings. So, the amount of dividends paid for the year is,
Cash Dividends - Year 2 = 191000 - 106600 = $84400
Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships.Required:a. The likelihood of a payment occurring is probable, and the estimated amount is $1.17 million. b. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.97 to $1.17 million. c. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.17 million. d. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.17 million.
Answer:
a. The likelihood of a payment occurring is probable, and the estimated amount is $1.17 million.
THE CONTINGENT LIABILITY NEEDS TO BE RECORDED SINCE IT IS PROBABLE THAT IT WILL OCCUR AND THE AMOUNT CAN BE ESTIMATED.
b. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.97 to $1.17 million.
YOU ONLY HAVE TO DISCLOSE THE LIABILITY IN THE NOTES OF THE FINANCIAL STATEMENTS SINCE THE AMOUNT CANNOT BE DETERMINED.
c. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.17 million.
YOU ONLY HAVE TO DISCLOSE THE LIABILITY IN THE NOTES OF THE FINANCIAL STATEMENTS SINCE THE EVENT IS ONLY REASONABLY POSSIBLE AND NOT PROBABLE.
d. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.17 million.
NO RECORDING NOR DISCLOSING IS REQUIRED SINCE THE POSSIBILITY OF OCCURRING IS REMOTE.
Jesse Livermore, Human Resources Director of GA Trading Company recently read a report on "The state of the Baby Boomer generation between the years 2011-2030," that he believes to be factually correct. To respond to this growing trend, he has created an employee program that hopes to attract and retain _____ workers through flexible schedules, training opportunities, and creative pay schedules.
Answer: younger
Explanation:
From the question, we are informed that Jesse Livermore, Human Resources Director of GA Trading Company recently read a report on "The state of the Baby Boomer generation between the years 2011-2030," that he believes to be factually correct.
To respond to this growing trend, Jesse has created an employee program that hopes to attract and retain younger workers through a flexible schedule, training opportunities, and creative pay schedules.
The _________ price is the price at which a dealer is willing to sell a security. A. bid B. ask C. clearing D. settlement
Answer: B. ask
Explanation:
The ask also known as the offer price is the price at which seller is willing to sell a security after which the buyer must have stated a bid price of how much he or she wants to pay for the security. The bid price is known to be always lower than the ask price , of which the difference between both prices is called a bid-ask spread.
For example, if an investor wants to buy a security, he or she will first determine how much the seller is willing to sell it for, which is the ask price--- least price the seller is willing to sell the security for. However on the other hand, the seller in order to sell his or her security will first determine the highest price at which a buyer would be willing to pay for the security.
You put up $40 at the beginning of the year for an investment. The value of the investment grows 5% and you earn a dividend of $4.50. Your HPR was ____. A. 5.0% B. 4.5% C. 11.3% D. 16.3%
Answer:
16.3%
Explanation:
$40 was put at the beginning of the year for an investment
The investment grows by 5%
= 5/100
= 0.05
The dividend is $4.50
The first step is to calculate the dividend yield
= $4.50/40
= 0.1125
Therefore, the HPR can be calculated as follows
= 0.1125+0.05
= 0.163×100
= 16.3%
Hence the HPR was 16.3%
Waterway Industries expects to purchase $260000 of materials in July and $270000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be
Answer:
Total cash disbursement= $267,500
Explanation:
Giving the following information:
Purchase:
July= $260,000
August= $270,000
Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase.
Cash disbursement August:
Purchase in cash from August= 270,000*0.75= 202,500
Purchase on account July= 260,000*0.25= 65,000
Total cash disbursement= $267,500
The health care workforce during the current market-driven changes is experiencing: A. Significant expansion at professional levels B. Experimentation and variation in staffing C. Continued stability in numbers and staffing patterns D. Substantial reductions
Answer:
A. Significant expansion at professional level.
Explanation:
The hospitals provide health care facilities to the public. It is crucial place where one mistake by a doctor or other staff could lead to death of a patient. The patients coming in he hospital need to be treated carefully and timely. The professional and experience will have the skills and expertise to treat the patient carefully and diagnose the problem quickly. There are increased number of professional today than in the previous years. The education has now become more common and people understand the importance of gaining technical education before practical experiments.
A proposed new investment has projected sales of $543,000. Variable costs are 46 percent of sales, and fixed costs are $129,500; depreciation is $50,250. Prepare a pro forma income statement assuming a tax rate of 21 percent. What is the projected net income? (Input all amounts as positive values. Do not round intermediate calculations.)
Answer:
Pro forma Income Statement
Projected Sales $543,000
Variable costs 249,780
Contribution $293,220
Sales /Fixed costs 129,500
Depreciation 50,250
Pre-tax Income $113,470
Income Tax (21%) 23,828.70
After-tax Income $89,641.30
Explanation:
This company's pro forma income statement shows the contribution to be made by a project and the projected after-tax income. With it management can decide whether to accept the project or not. Preparing this pro forma income statement also enables management to know the impact on profits that the project will make. When the project is complete, this pro forma income statement becomes a basis for reviewing the actual income statement to understand variances.
Lucas Corp. has a debt-equity ratio of .8. The company is considering a new plant that will cost $115 million to build. When the company issues new equity, it incurs a flotation cost of 8.5 percent. The flotation cost on new debt is 4 percent.
A. What is the initial cost of the plant if the company raises all equity externally?
B. What is the initial cost of the plant if the company typically uses 55 percent retained earnings?
C. What is the initial cost of the plant if the company typically uses 100 percent retained earnings?
Answer:
$122,475,000; $119,489,600; $117,047,000
Explanation:
Given the following :
Cost of new plant = $115m
Debt to equity ratio =. 0.8
After issuing new equity:
Floatation cost incurred (equity) = 8.5%
Floatation on new debt = 4%
Calculating weighted return of debt and equity:
Debt: = [0.8/(1 + 0.8)] × 4% = 0.0178
Equity : [1 / (1+ 0.8)] * 8.5% = 0.0472
A) all equity raised externally:
Weighted average Floatation cost:
0.0178 + 0.0472 = 0.065
Initial cash flow will the be :
(1 + 0.065) * cost of new plant
1.065 * $115,000,000 = $122,475,000
B.) company uses 55% Retained earning:
Weighted return on equity will the be :
0.0472 * (1 - 55%) = 0.02124
Weighed Floatation cost = 0.02124 + 0.0178 = 0.03904
(1+0.03904) * $115,000,000 = $119,489,600
C.) Company uses 100% Retained earnings :
Equity return will be 0%
(1 + 0.0178) * 115000000
= $117,047,000
If someone has a power of attorney to sign the purchase agreement on behalf of the seller, which of the following would be the proper way to sign?
a. Philip Adams, seller
b. Philip Adams, by Alice Jackson, his attorney in fact
c. Alice Jackson, attorney in fact for the seller
d. Philip Adams, by his attorney in fact
Answer:
b. Philip Adams, by Alice Jackson, his attorney in fact
Explanation:
A power of attorney is the legal document in which it allows someone to act on behalf of you. In this, the person has the authority to act on behalf of the other person with respect to the legal, financial matters, etc
Here the proper way to sign is the option B
Philip Adams, by Alice Jackson, his attorney in fact
Therefore all the other options are wrong
A firm is expected to have net earnings of $1,480,000 three years from now. There are 500,000 shares of stock outstanding. The firm's current P/E ratio is 18 and it is expected to remain at that level. What is the firm's expected stock price for year 3
Answer:
Stock price = $53.28
Explanation:
DATA
Earnings = $1,480,000
Shares outstanding = 500,000
P/E ratio = 18
Stock price = ?
he firm's expected stock price for year 3 can be calculated by using Price earning ratio formula
Formula:
P/E ratio = Stock price / EPS
Stock price = P/E ratio x EPS
Stock price = 18 x $2.96(w)
Stock price = $53.28
Workings
EPS = Earning per share
EPS = Earning /Shares
EPS = $1,480,000 /500,000
EPS = $2.96
In the past year, TVG had revenues of $3 million, cost of goods sold of $2.5 million, and depreciation expense of $200,000. The firm has a single issue of debt outstanding with book value of $1 million on which it pays an interest rate of 8%. What is the firm’s times interest earned ratio?
Answer:
TVG
Times Interest Earned Ratio (TIER) = Earnings Before Interest & Taxes divided by Interest Expense
= $300,000/$$80,000 = 3.75 times
Explanation:
a) TVG Income Statement:
Revenue $3,000,000
Cost of goods sold 2,500,000
Gross profit $500,000
Depreciation 200,000
EBIT $300,000
Interest Expense 80,000
Pre-tax Income $220,000
b) TVG's TIER shows the number of times that its earnings before interest and taxes covers the interest expense. It shows the ability of the TVG to settle its maturing debt obligations from current earnings. It is an important financial performance measure which potential investors in TVG will use to gauge the ability of TVG to meet financial obligations from the earnings it generates.
Lindley Corp.'s stock price at the end of last year was $33.50, and its book value per share was $25.00. What was its market/book ratio
Answer:
1.34
Explanation:
Computation for the market/book ratio
Using this formula
Market/book ratio=Stock price/Book value per share
Let plug in the formula
Market/book ratio=$33.50/$25.00
Market/book ratio=1.34
Therefore the Market/book ratio will be 1.34.
The earliest time that an activity can be completed is equal to the latest time it can begin minus the time to perform the activity. Group of answer choices True False
Answer: False
Explanation:
The earliest time of an activity os necessary in order to reduce the duration of a project. The earliest start time of an activity is the time that is earliest where an activity can begin.
The earliest finish time is the addition of the early time with the completion time of the activity.
a project that costs 25500 today will generate cash flows of 8800 per year for seven years. what is the project's payback
Answer:
d
Explanation:
d on edg
The managerial accountant at Space Right Office Cubicles calculates fixed overhead variances to complete the August report. The actual fixed overhead cost in the month of August was and the budgeted fixed overhead cost was . The standard hours in August were and the standard rate per machinehour was . Calculate the standard fixed overhead cost allocated to production, the fixed overhead budget variance, and the fixed overhead volume variance. A. ; F; U B. ; F; U C. ; F; U D. ; F; U
Answer: d. $36,400; $1700 F; $500 U
Explanation:
1. Standard fixed overhead cost allocated to production
= Standard Hours * Standard rate per machine hour
= 2,600 * 14
= $36,400
2. Fixed overhead budget variance
= Budget overhead cost - Actual overhead cost
= 36,900 - 35,200
= $1,700 favorable
3. Fixed Overhead Volume Variance
= Standard fixed overhead cost - Budgeted overhead
= 36,400 - 36,900
= -$500
= $500 Unfavorable
The owner of a large machine shop has just finished its financial analysis from the prior fiscal year. Following an excerpt from the final report:
Net revenue $375000
Cost of goods sold 322000
Value of production materials on hand 42500
Value of work-in-progress inventory 37000
Value of finished goods on hand 12500
a. Compute the inventory turnover ratio (ITR). (Round your answer to 1 decimal place.)
Inventory turnover ratio ......... per year
b. Compute the weeks of supply (WS). (Do not round intermediate calculations. Round to 1 decimal place.)
Weeks of supply ........
Answer:
a. Inventory turnover ratio = Cost of goods sold / Average Aggregate Inventory Value
Inventory turnover ratio = $322,000 / $42,500 + $37,000 + $12,500
Inventory turnover ratio = $322,000 / $92,000
Inventory turnover ratio = 3.5
Therefore, the inventory turnover ratio is 3.5
b. Weeks of supply = Average Aggregate Inventory Value / Cost of Goods Sold * 52 (weeks)
Weeks of supply = $42,500 + $37,000 + $12,500 / $322,000 * 52
Weeks of supply = $92,000 / $322,000 * 52 weeks
Weeks of supply = 14.85 weeks
Therefore, the weeks of supply is 14.85 weeks
Central to agency theory is the concern with problems that can arise between the principals who are the owners of the firm and the agents who are the people who are paid by outside consultants to perform a job on their behalf.
a. True
b. False
Answer:
Correct Answer:
a. True
Explanation:
Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents in any given company's establishment. In addition, the relationship could be one that is between shareholders, as principals on one hand, and company executives, as agents.
Agency problem is that many authors have found that include separations of ownership from control, conflict of interest and risk adverseness etc.
What is the term agency theory about?
Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents in any given company's establishment.
In addition, the relationship could be one that is between shareholders, as principals on one hand, and company executives, as agents.
Therefore, correct option is True.
Learn more about agency theory, refer to the link:
https://brainly.com/question/26253714
In a production bottleneck situation, the product with the highest contribution margin per unit should be given priority over a product that has the highest contribution margin per bottleneck hour.
a. True
b. False
Answer:
b. false
Explanation:
A bottleneck is a point at which there is the stoppage in the system of production. The inefficiencies that are generated through the bottleneck developed the delays and leads to the high cost of production
Here in the given situation, since there is the highest contribution margin per unit that gives more priority as compared with the contribution margin per bottleneck hour i.e. totally wrong as it should give the priority to the contribution margin per bottleneck hour
Therefore the given statement is false
The understatement of the ending inventory balance causes: Multiple Choice Cost of goods sold to be understated and net income to be overstated. Cost of goods sold to be overstated and net income to be correct. Cost of goods sold to be overstated and net income to be understated.
Answer:
Cost of goods sold to be overstated and net income to be understated.
Explanation:
Ending Inventory are deducted from the cost of sales figure to reach the gross profit amount in the trading account.
Understatement of Inventory means that Cost of goods sold will overstated and gross profit understated, consequently, net income will be also understated.
Analyze global labor supply factors in terms of quality and quantity. In your own words, present an example of how it varies in quality.
Explanation:
The supply of labor in terms of quality and quantity will be influenced by micro and macroeconomic factors.
The labor market is constituted by a relationship of labor supply and demand for employees, which is totally influenced by the economic context that a particular country is experiencing. For example, if there is an economic downturn, then there is likely to be less labor supply and less demand.
Looking at the global labor market, we can see how it varies from country to country.
In terms of quality, we can mention China for example, which is a country where there is a lot of work, but the labor force is one of the cheapest in the world, which makes this an extremely attractive labor market for the international market, but due to poor working conditions, there is often no quality in the work process for these employees.
"A tender offer has been made for PDQ common shares. The brokerage firm department that would handle the tendering of shares is the:"
Answer: Re-organization department
Explanation:
A tender offer is a public takeover bid that consists of an offer to buy either some or all of the shares that are available in a corporation.
When a tender offer has been made for PDQ common shares. The re-organization department is the brokerage firm department that would handle the tendering of shares.
McConnel corporation has bonds on the market with 16.5 years to maturity, a YTM of 7.7 percent, a par value of 1000 and current price of 1065. The bonds make semiannual payment and have a par value of $1,000.Required:What must the coupon rate be on these bonds?
Answer:
Coupon rate = 0.08402 or 8.402%
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = x
Total periods (n)= 16.5 * 2 = 33
r or YTM = 7.7% * 1/2 = 3.85% or 0.0385
The formula to calculate the price of the bonds today is attached.
Using the bond price formula and the available values, we calculate the coupon rate to be,
1065 = x * [( 1 - (1+0.0385)^-33) / 0.0385] + 1000 / (1+0.0385)^33
1065 = x * (18.50739407) + 287.4653284
1065 - 287.4653284 = x * 18.50739407
777.5346716 / 18.50739407 = x
x = 42.012 rounded off to $42.01
If the semi annual coupon payment is $42.01, the annual coupon payment will be 42.01 * 2 = $84.02
The coupon rate on bonds is = 84.02 / 1000
Coupon rate = 0.08402 or 8.402%
Abica Roast Coffee Company produces Columbian coffee in batches of 6,000 pounds. The
standard quantity of materials required in the process is 6,000 pounds, which cost $5.00per pound. Columbian coffee can be sold without further processing for $8.40 per pound.
Columbian coffee can also be processed further to yield Decaf Columbian, which can
be sold for $10.00 per pound. The processing into Decaf Columbian requires additional
processing costs of $9,450 per batch. The additional processing will also cause a 5% loss
of product due to evaporation.
Columbian coffee can be sold without further processing for $8.40 per pound.
Columbian coffee can also be processed further to yield Decaf Columbian, which can
be sold for $10.00 per pound. The processing into Decaf Columbian requires additional
processing costs of $9,450 per batch. The additional processing will also cause a 5% loss
of product due to evaporation.
a. Prepare a differential analysis dated August 28, 2012, on whether to sell regular
Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2).
b. Should Abica Roast sell Columbian coffee or process further and sell Decaf
Columbian?
c. Determine the price of Decaf Columbian that would cause neither an advantage or
disadvantage for processing further and selling Decaf Columbian.
Answer:
A)
no further further differential
processing processing amount
price per pound $8.40 $10.00 $1.60
materials $5 $5.25 ($0.25)
processing costs $0 = $9,450 / ($1.66)
5,700 = $1.66
operating profit per $3.40 $3.09 ($0.31)
pound
B)
The company should sell coffee without any further processing, just sell it as normal Colombian coffee.
C)
In order to eliminate the financial disadvantage of processing further the decaf coffee, the the price should be $10 + $0.31 = $10.31 per pound.
Net Present Value Method
The following data are accumulated by Geddes Company in evaluating the purchase of $150,000 of equipment, having a four-year useful life:
Net Income Net Cash Flow
Year 1 $42,500 $80,000
Year 2 27,500 65,000
Year 3 12,500 50,000
Year 4 2,500 40,000
Present Value of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162
a. Assuming that the desired rate of return is 15%, determine the net present value for the proposal. If required, round to the nearest dollar. Use the table of the present value of $1 presented above.
Present value of net cash flow $
Amount to be invested
Net present value $
b. Would management be likely to look with favor on the proposal?
Yes , because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%.
Answer:
year net cash flow
0 -$150,000
1 $80,000
2 $65,000
3 $50,000
4 $40,000
A) NPV = -$150,000 + ($80,000 x .87) + ($65,000 x .756) + ($50,000 x .658) + ($40,000 x .572) = -$150,000 + $69,600 + $49,140 + $32,900 + $22,880 = -$150,000 + $174,520 = $24,520
B) Yes , because the net present value indicates that the return on the proposal is greater than the minimum desired rate of return of 15%. Since the NPV is positive ($24,520), it means that the cash inflows are higher than the cash outflows when we use a 15% discount rate.
Masterson, Inc., has 3.6 million shares of common stock outstanding. The current share price is $85.50, and the book value per share is $9.25. The company also has two bond issues outstanding. The first bond issue has a face value of $73 million, a coupon rate of 5.3 percent, and sells for 95.7 percent of par. The second issue has a face value of $45 million, a coupon rate of 5.9 percent, and sells for 104.9 percent of par. The first issue matures in 23 years, the second in 11 years. The most recent dividend was $4.04 and the dividend growth rate is 4.3 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 23 percent.
1. What is the company's cost of equity?
2. What is the company's aftertax cost of debt?
3. What is the company's weight of equity?
4. What is the company's weight of debt?
5. What is the company's WACC?
Answer:
1. 9.03 %
2. 7.56 %
3. 72.45 %
4. 27.55 %
5. 8.63 %
Explanation:
Cost of equity is the return that is required by holders of Common Stocks
Cost of equity = Recent year`s dividend / Current Market Price + Expected Growth Rate
= $4.04 / $85.50 + 0.043
= 0.0903 or 9.03 %
1st bond issue
PV = $69,861,000
Pmt = ($73,000,000 × 5.30%) ÷ 2 = - $1,934,500
p/y = 2
n = 23 × 2 = 46
Fv = 0
i = ?
Cost of the 1st Bond Issue, i is : 2.1571 %
After tax cost = 2.1571 % × 77 %
= 1.66%
2nd Bond Issue
PV = $47,205,000
Pmt = ($45,000,000 × 5.90%) ÷ 2 = - $1,327,500
p/y = 2
n = 11 × 2 = 22
Fv = 0
i = ?
Cost of the 2nd Bond Issue, i is : 7,6681 %
After tax cost = 7,6681 % × 77 %
= 5.90%
Total Cost of Debt = 1.66% + 5.90%
= 7.56 %
Market Values :
Market Value of Equity = 3,600,000 shares × $85.50
= $307,800,000
Market Value of Bonds
1st Issues = $69,861,000
2nd Issue = $47,205,000
Total = $117,066,000
Weight of equity = Market Value of Equity ÷ Total Market Value
= $307,800,000 ÷ ($307,800,000 + $117,066,000)
= 72.45 %
Weight of debt = Market Value of Bonds ÷ Total Market Value
= $117,066,000 ÷ ($307,800,000 + $117,066,000)
= 27.55 %
WACC = Weighted Cost of Debt + Weighted Cost of Equity
= 27.55 % × 7.56 % + 72.45 % × 9.03 %
= 8.63 %
When selecting the best alternative in a cost-benefit analysis, what are the issues to be considered?
Answer: Analyse cost, risk with impacts and project benefits.
Explanation:
The best alternative in a cost-benefit analysis situation are the following;
•The cost types should be analyzed
•Potential risk and their impacts should be looking into
•It is recommended to weigh all the risk even when there is a lot of project benefits.
Moped, Inc. purchased machinery at a cost of $44,000 on January 1, 2017. The expected useful life is 5 years and the asset is expected to have salvage value of $4,000. Moped depreciates its assets using the double-declining balance method. What is the firm's depreciation expense for the year ended December 31, 2017?
Answer:
Annual depreciation= $16,000
Explanation:
Giving the following information:
Purchase price= $44,000
Useful life= 5 years
Salvage value= $4,000
To calculate the depreciation expense under the double-declining balance, we need to use the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
Annual depreciation= 2*[(44,000 - 4,000) / 5]
Annual depreciation= 16,000
Mary Martin, the owner of Martin Consulting, Inc., started the business by investing $48,000 cash. Identify the general journal entry below that Martin Consulting, Inc. will make to record the transaction.
A
Cash 48,000
Increased Equity 48,000
B
Investments 48,000
Cash 48,000
C
Cash 48,000
Common stock 48,000
D
Common stock 48,000
Cash 48,000
E
Investments 48,000
Common stock 48,000
Expert Answer
Answer:
The correct option is C.
Cash 48,000
Common stock 48,000
Explanation:
When the owner of a business introduces or invests cash into his own company, it is regarded as a capital or common stock.
The cash invested is therefore recorded in the owner's equity account or as a common stock in order to the stake of the owner in the business. That is, the equity or common stock account show the amount of the assets of the company that are owned by the owner but not by the creditors.
The investment of $48,000 in Martin Consulting, Inc. by Mary Martin, the owner, implies that Martin Consulting, Inc. receives cash from the owner and this will be recorded in the Common Stock of owner.
Therefore, the account the general journal entry to be made in the book of Martin Consulting, Inc. to record this transaction is as follows:
Debit Cash for $48,000
Credit Common stock for $48,000
This will appear as follows:
Particulars Dr ($) Cr ($)
Cash 48,000
Common Stock 48,000
(To record cash investment by the owner.)
Therefore, the correct option is C.
The government wants to set the socially optimal level of nitrogen runoff, and government regulators believe that the actual marginal benefit of pollution (MBP) is given by the estimated MBP curve. The deadweight loss associated with a quota is _____, w
Answer:
Hello your question is incomplete attached below is the complete question
Explanation:
Dead weight loss = 0.5 [( Δp ) * ( ΔD ) ]
D = DEMAND
P = PRICE
DWL with quota = 0.5 [ ( $10 -$6 ) * (12 - 8 ) ]
= 0.5 ( 4*4 ) = $8
DWL with pigouvian tax = 0.5 [ ($10- $6 )*(9 - 8 ) ]
= 0.5 [ 4 * 1 ] = $2
