On January 1, 2017, Marin Company purchased 12% bonds, having a maturity value of $320,000, for $344,260.74. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Marin Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows. 2017 $342,000 2020 $330,700 2018 $329,700 2021 $320,000 2019 $328,700 (a) Prepare the journal entry at the date of the bond purchase. (b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2017. (c) Prepare the journal entry to record the recognition of fair value for 2018.

Answers

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

1. Debt Investment Dr, $344,260.74  

       To Cash $344,260.74

(Being cash paid is recorded)

2. Interest Receivable Dr, $38,400  

       To Debt Investment $3,973.93

        To Interest Revenue $34,426.07

(Being interest received is recorded)  

Fair Value Adjustment  Dr, $1,713.19  ($342,000 -$340,286.81)

     To Unrealized Holding Gain or Loss - Equity $1,713.19

(Being fair value adjustment is recorded)

3. Unrealized Holding Gain or Loss - Equity  $7928.68

($335,915.49 - $329,700 + $1,713.19)

       To Fair Value Adjustment 7,928.68

(Being unrealized loss or gain is recorded)

Working note

 Book value of    Interest         Interest     Amortization  Book value

  debt beginning  Revenue   Receivable   (d = c - d)       of debt

        (a)                    b=(a × 10%)      c                                    at the end

                                             ($320,000 × 12%)                   (e - d)

$344,260.74      $34,426.07    $38,400      $3,973.93  $340,286.81

$340,286.81      $34,028.68    $38,400       $4,371.32   $335,915.49


Related Questions

Jason has a loan that requires a single payment of $6,000 at the end of 3 years. The loan's interest rate is 10%, compounded semiannually. How much did Jason borrow? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answers

Answer:

Jason borrowed $4,4,77.29

Explanation:

In order to calculate this, let we will use the formula for the future value on an invested amount, semiannually, yielding interest at a certain interest rate. This is done as follows:

[tex]FV\ =\ PV(1+\frac{r}{n} )^{(n\times t)}[/tex]

where:

FV =  future value = $6,000 (loan repayment)

PV = present value = amount borrowed = ??

r = interest rate = 10% = 10/100 = 0.1

n = number of compounding periods per year = 2

t = time = 3 years

[tex]6,000\ =\ PV(1+\frac{0.1}{2} )^{(2\times 3)}\\6,000\ =\ PV(1+ 0.05)^{6}\\6,000\ =\ PV(1.05)^{6}\\6,000\ =\ PV (1.340096)\\diving\ both\ sides\ by\ 1.340096\\PV = \frac{6,000}{1.340096} \\PV = \$4,477.29[/tex]

Therefore, Jason borrowed $4,4,77.29

LLP Company had the following stockholders’ equity as ofJanuary 1, 2017.
Common stock, $1 par value, 120,000 shares issued$120,000
Paid-in capital in excess of par—common stock833,000
Retained earnings408,000
Total stockholders’ equity$1,361,000
During 2017, the following transactions occurred.
Feb. 16LLP repurchased 5,000 shares of treasury stock at a price of $15 per share.
Mar. 8200 shares of treasury stock repurchased above were reissued at $16 per share.
Apr. 11800 shares of treasury stock repurchased above were reissued at $12 per share.
May. 82,000 shares of treasury stock repurchased above were reissued at $18 per share
Instructions:
a. Prepare the journal entries to record the treasury stock transactions in 2017, assuming Clemson uses the cost method.
b. Prepare the stockholders’ equity section as of April 30, 2017. Net income for the first 4 months of 2017 was $130,000.

Answers

Complete Question:

Clemenson LLP Company had the following stockholders’ equity as of January 1, 2017.

Common stock, $1 par value, 120,000 shares issued$120,000

Paid-in capital in excess of par—common stock 833,000

Retained earnings 408,000

Total stockholders’ equity$1,361,000

During 2017, the following transactions occurred.

Feb. 16: LLP repurchased 5,000 shares of treasury stock at a price of $15 per share.

Mar. 8: 2,000 shares of treasury stock repurchased above were reissued at $16 per share.

Apr. 11: 800 shares of treasury stock repurchased above were reissued at $12 per share.

May. 8: 2,000 shares of treasury stock repurchased above were reissued at $18 per share

Instructions:

a. Prepare the journal entries to record the treasury stock transactions in 2017, assuming Clemson uses the cost method.

b. Prepare the stockholders’ equity section as of April 30, 2017. Net income for the first 4 months of 2017 was $130,000.

Answer:

Clemson LLP Company

a. Journal Entries

Feb. 16:

Debit Treasury Stock account $75,000

Credit Cash Account $75,000

To record the repurchase of 5,000 shares of treasury stock at a price of $15 per share.

March 8:

Debit Cash Account $32,000

Credit Treasury Stock account $32,000

To record the resale of 2,000 shares of treasury stock at $16 per share.

April 11:

Debit Cash Account $9,600

Credit Treasury Stock account $9,600

To record the resale of 800 shares of treasury stock at $12 per share.

May 8:

Debit Cash Account $36,000

Credit Treasury Stock account $36,000

To record the resale of 2,000 shares of treasury stock at $18 per share.

b. Stockholders' Equity Section as of April 30, 2017:

Common stock, $1 par value, 120,000 shares issued  $120,000

Treasury Stock, 200 shares                                                 2,600

Paid-in capital in excess of par—common stock             833,000

Retained earnings                                                            538,000

Total stockholders’ equity                                           $1,493,600

Explanation:

a) Data and Calculations:

Stockholders’ equity as of January 1, 2017:

Common stock, $1 par value, 120,000 shares issued  $120,000

Paid-in capital in excess of par—common stock             833,000

Retained earnings                                                            408,000

Total stockholders’ equity                                            $1,361,000

b) Retained Earnings:

Jan. 1, 2017 balance $408,000

Net Income               $130,000

April 30, 2017 bal.    $538,000

c) Since Clemenson accounts for the Treasury Stock transactions using the cost method, it means that all treasury transactions are recorded directly in the Treasury Stock account based on their cost and not the par value.  This method of using the cost is one of the two methods for accounting for treasury stock transactions.  The other method, which Clemenson can use is the par value method.  Under this second method, Clemenson will record the above and below par value differences in the Paid-in Capital in excess of par account instead of the Treasury Stock account.  While the treasury stock account is a contra account to the Common Stock account, in Clemenson's case, the Treasury Stock balance is not a debit but a credit balance.

Jerry deposited $10,000 in a bank account, and 10 years later he closes out the account, which is worth $18,000. The annual rate of interest that Jerry has earned over the 10 years is closest to:

Answers

Answer:

r=  6.054% per year

Explanation:

given that

principal P=  $10,000

final amount A= $18,000

time t= 10 years

To find the annual rate we will use the formula below and solve for r

[tex]r = [(\frac{A}{P} )^\frac{1}{t} - 1][/tex]

Substituting our data into the expression and solving for r we have

[tex]r = [(\frac{18000}{10000} )^\frac{1}{10} - 1]\\\\r = [(1.8 )^\frac{1}{10} - 1]\\\\r = [(1.8 )^0^.^1 - 1]\\\\r = [(1.8 )^0^.^1 - 1]\\r={1.06054-1}\\\\r= 0.06054[/tex]  

Calculate rate of interest in percent

r = 0.06054* 100

r=  6.054% per year

Redford's salary was $123,000 in 2019. What would his total combined FICA tax (OASDI & Medicare) withheld from his salary be for the year?

Answers

Answer:

$9,409.50

Explanation:

Calculation for the total combined FICA tax (OASDI & Medicare) withheld from Redford's salary for the year

For the year 2019 the total FICA tax rate is 7.65%

Which are :

OASDI tax = 6.2%

+ Medicare tax =1.45%

Now let calculated the amount of OASDI tax for Redford's salary

Using this formula

OASDI tax =Salary ×OASDI tax rate

Let plug in the formula

OASDI tax =$123,000×6.2%

OASDI tax =$7,626

Let let calculated the amount of the Medicare tax for Redford's salary

Using this formula

Medicare tax =Salary ×Medicare tax rate

Let plug in the formula

Medicare tax=$123,000*1.45%

Medicare tax=$1,783.50

Total combined FICA tax

OASDI tax =$7,626

Medicare tax=$1,783.50

Total=$9,409.50

Therefore what the total combined FICA tax (OASDI & Medicare) withheld from his salary will be for the year is $9,409.50

A setback of affirmative action is that: a. those benefitting from affirmative action begin to experience self-doubts about their competence and merit. b. women and minorities usually feel deprived. c. employees start to overpower the management. d. people who are the subject of affirmative action are viewed as being more qualified than they actually are.

Answers

Answer: those benefitting from affirmative action begin to experience self-doubts about their competence and merit.

Explanation:

Affirmative action is a policy whereby the sex, color, national origin, religion etc are taken into consideration in order to increase the opportunities that are given to a particular set of people. It is used to create fairness.

A setback of affirmative action is that those benefitting from affirmative action begin to experience self-doubts about their competence and merit.

Your parents put $300 into an account paying 11 percent interest for you when you were ten. Ten years later they tell you that you can take the money out of the account. What is the balance to the nearest penny

Answers

Answer:

The balance in the account = $851.8

Explanation:

The future value of a lump sum is the amount expected at a future date when a sum of money is invested today at a particular rate of interest for certain number of years

.

This implies compounding the initial amount invested ($300) at the given interest rate(11%) for 10 years.This will be done as follows:

FV = PV × (1+r)^(n)

FV-Future value

r- rate of return per period

n- Number of period

PV - 300

r-11%

DATA

FV- ?

PV - 300

n- 10

FV= 300 × 1.11^10 = 851.83

The balance in the account = $851.8

What term means managing the entire organization so that it excels on all dimensions of products and services that are important to customers?

Answers

Answer:

Total Quality Management

Explanation:

Total Quality Management is an approach in which all the employees of the company work to improve the entire process to offer a good customer experience. According to this, the answer is that the term that means managing the entire organization so that it excels on all dimensions of products and services that are important to customers is Total Quality Management.

Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of 8,588. The FICA tax for social security is 6.2% of the first $118,500 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,424.97. Her net pay for the month is: (Round your intermediate calculations to two decimal places.)
a) $7,038.50
b) $5,141.03
c) $6,072.04
d) $6,566.00
e) $6,506.04

Answers

Answer: e) $6,506.04

Explanation:

Employees do not pay FUTA or SUTA. Employers pay those.

Ms. Grant's net pay for the month therefore is;

= Gross earnings - FICA Social Security - FICA Medicare - Federal Income tax withheld

= 8,588 - (6.2% * 8,588) - ( 1.45% * 8,588) - 1,424.97

= 8,588 - ‭532.46 - ‭124.53 - 1,424.97

= $6,506.04‬

At first glance, the research reported in the Washington Post article Why We've Been Hugely Underestimating the Overfishing of the Oceans may appear to be only bad news for the world's stock of fish. However, researchers believe that their discovery of how much overfishing has been underestimated could also be good news. Determine whether each statement should be considered good news or bad news based on the information in the article.
Good news Bad news
a. Fisheries may be able to feed more people than previously thought.
b. Policy made using FAO data could be poorly made because FAO data does not match reality.
c. Severe declines in catches since the 1990s may be due to unsustainable fishing.
d. Sustainable food production may be more at risk than scientists thought due to the fishing industry catching far more fish than previously believed
e. Declines in catches have been even greater than FAO data suggests.
f. When catches peaked, fisheries were actually much more productive than previously thought

Answers

Answer:

According to the article, the following statements is classified under the following headings:

Good News:

a. Fisheries may be able to feed more people than previously thought.

b. Policy made using FAO data could be poorly made because FAO data does not match reality.

f. When catches peaked, fisheries were actually much more productive than previously thought

Bad News:

c. Severe declines in catches since the 1990's may be due to unsustainable fishing.

d. Sustainable food production may be more at risk than scientists thought due to the fishing industry catching far more fish than previously believed

e. Declines in catches have been even greater than FAO data suggests.

Explanation:

Data regarding four different products manufactured by an organization are presented below. The manufacturer has a constrained resource - machine hours.
Product A Product B Product Product D
Selling price per unit $20.00 $25.00 $23.00 $15.00
Variable cost per unit $10.00 $16.00 $11.00 $7.00
Hours to make each unit 5 hours 25 hours 2 hours 35 hours
Rank these four products in order of profitability.
1
2
3
4

Answers

How many mono-, di- and

The manager of a crew that installs carpeting has tracked the crew’s output over the past several weeks, obtaining these figures:


Week Crew Size Yards Installed
1 4 97
2 3 71
3 4 98
4 2 54
5 3 63
6 2 52


a. Compute the labor productivity for each of the weeks. (Round your answers to 2 decimal places.)


Week Crew size Labor productivity
(Yards/Person)
1 4
2 3
3 4
4 2
5 3
6 2



b. Which crew size works best?

Answers

Answer:

a. Labor productivity is calculated as: Labor productivity = Total Yards Installed / Total Crew Size

Hence, the labor productivity for each week is;

Week 1 = 97 / 4 = 24.25

Week 2 = 71 / 3 = 23.67

Week 3 = 98 / 4 = 24.5

Week 4 = 54 / 2 = 27

Week 5 = 63 / 3 = 21

Week 6 = 52 / 2 = 26

b. A crew of size 2 works the best as they generate the highest labor productivity of 27. The crew with highest number generate a labor productivity of 24.5

Assuming you are a rational investor, the amount you should be willing to pay for a 20-year ordinary annuity that makes payments of $4,000 per year and you require a 6% rate of return per year is closest to:

Answers

Answer:

PV= $45,879.68

Explanation:

Giving the following information:

Cash flow= $4,000 annually

n= 20

i= 6% compunded annually

The maximum that an investor should pay is the present value (PV).

First, we need to calculate the future value using the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual cash flow

FV= {4,000*[(1.06^20) - 1]} / 0.06

FV= $147,142.36

Now, we can calculate the present value, we need to use the following formula:

PV= FV/(1+i)^n

PV= 147,142.36/(1.06^20)

PV= $45,879.68

On January 2 2018, Maxwell Furniture purchased display shelving for $8,100 cash, expecting the shelving to remain in service for five years. Maxwell depreciated the shelving on a double-declining-balance basis, with $1,800 estimated residual value. On October 31, 2019, the company sold the shelving for $2,700 cash.
Requirement:
Record both the depreciation expense on the shelving for and its sale in . Also show how to compute the gain or loss on the disposal of the shelving.

Answers

Answer: Please find answers in explanation column

Explanation:

Double declining depreciation rate = 1/n x 2

= 1/5 x 2= 2/5 = 0.4 x 100 = 40 %

Carrying value = if depreciation rate = 40 % , then begining value = 100-40=60%

 Depreciation expense for 2019 =  Carrying value x depreciation nrate x period(jan- oct) = $8,100 x 60% x 40% x 10/12 = $1,620

Journal entry to record Depreciation expense  

Accounts                                      Debit                          Credit

Depreciation expense                   $1,620

Accumulated depreciation--Display shelving                 $1,620

Carrying value / Ending balance of shelving at October, 2019= cost - depreciation

8,100  - 8,100 x 40% + 1620 = 8,100 - 4,860= $3240

Gain/ Loss =  Sale -  the ending balance of the carrying value of the asset

                   $2700 - $3240= -540= $540 loss

Journal to record shelving for and its sale in .

Accounts                                                       Debit               Credit

Cash                                                               $2700

Accumulated depreciation--

Display shelving (3240 +1620)                       $4860

loss on sale of asset                                       $540

Shelving                                                                                $8,100

Concord Corporation had 2020 net income of $809,000. During 2020, Concord paid a dividend of $2 per share on 60,500 shares of preferred stock. During 2020, Concord had outstanding 215,000 shares of common stock.

Required:
Compute Concord's 2020 earnings per share.

Answers

Answer:

$3.2 per share

Explanation:

Earnings per share = Net income - (preferred stock shares × dividend paid] ÷ Outstanding shares of common stock

= [($809,000 - ( 60,500 × $2 per share)] ÷ 215,000

= [$809,000 - ( $121,000)] ÷ 215,000

= $809,000 - $121,000 ÷ 215,000

= $688,000 ÷ 215,000

= $3.2 per share

A couple thinking about retirement decide to put aside $3,000 each year in a savings plan that earns 8% interest. In 5 years they will receive a gift of $10,000 that also can be invested. a. How much money will they have accumulated 30 years from now

Answers

Answer:

Total future value= $408,334.38

Explanation:

Giving the following information:

A couple thinking about retirement decide to put aside $3,000 each year in a savings plan that earns 8% interest. In 5 years they will receive a gift of $10,000 that also can be invested.

First, we will determine the future value of the annual deposit investment. We need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {3,000*[(1.08^30) - 1]} / 0.08

FV= $339,849.63

Now, for the $10,000:

FV= PV*(1+i)^n

FV= 10,000*(1.08^25)

FV= $68,484.75

Total future value= 339,849.63 + 68,484.75

Total future value= $408,334.38

The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corporation. Even before making the calculations, she assumes the aftertax cost of debt is at least 3 percent less than that for preferred stock.

Debt can be issued at a yield of 11.0 percent, and the corporate tax rate is 20 percent. Preferred stock will be priced at $60 and pay a dividend of $6.40. The flotation cost on the preferred stock is $6.

a. Compute the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
b. Compute the aftertax cost of preferred stock. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
c. Based on the facts given above, is the treasurer correct?

Answers

Answer:

a. Compute the after tax cost of debt.

after tax cost of debt = 11% x (1 - tax rate) = 11% x 0.8 = 8.8%

b. Compute the after tax cost of preferred stock.

after tax cost of preferred stock = cost of preferred stock (no taxes are deducted for paying preferred dividends since they are paid in capital)

cost of preferred stocks = $6.40 / ($60 - $6) = $6.40 / $54 = 11.85%

c. Based on the facts given above, is the treasurer correct?

the difference = 11.85% - 8.8% = 3.05%, so the treasurer was right

The 2016 annual report for Mega Mills disclosed that 1 billion shares of common stock have been authorized. At the end of 2015, 760 million shares had been issued and the number of shares in treasury stock was 101 million. During 2016, the only common share transactions were that 18 million common shares were reissued from treasury and 24 million common shares were purchased and held as treasury stock.Required: Determine the number of common shares a. Issued b. In treasuryc. Outstanding at the end of 2016.

Answers

Answer:

a. 760 million shares

b. 107 million shares

c. 653 million shares

Explanation:

a. The number of Issued stock is unchanged because Issued stock encompasses both outstanding and treasury stock.

b. Treasury Stock = Beginning balance - Reissued from treasury + repurchased for treasury

= 101 - 18 + 24

= 107 million shares

c. Outstanding stock = Issued Stock - Treasury Stock

= 760 - 107

= 653 million shares

Ball Bearings, Inc., faces costs of production as follows:Quantity Total Fixed Costs (Dollars) Total Variable Costs (Dollars)0 100 01 100 502 100 703 100 904 100 1405 100 2006 100 360(a.) Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production.
(b.) The price of a case of ball bearings is $50. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations.The firm's profit in this case is...(c.) True or False: This was a wise decision.(d.) Vaguely remembering his introductory economics course, the company's chief financial officer tells the CEO it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity.At this level of production, the firm's profit is...True or False: This is the best decision the firm can make.

Answers

Answer:

Ball Bearings, Inc.

a) Calculations of Costs of Production:

Qty Total Fixed   Total       Total    Marginal  Average  Average   Average

       Costs ($)  Variable  Costs ($) Costs ($)   Fixed      Variable     Total

                        Costs ($)                                Costs ($)  Costs ($) Costs ($)

 0      100             0            100         100          100              0            100

 1       100           50            150         50           100             50           150

2       100           70            170          20            50             35            85

3       100           90           190          20            33              30            63

4       100          140          240          50            25              35           60

5       100         200         300          60             20             40            60

6       100         360         460         160             17              60             77

b)  For the first ball bearings, the profit in this case is a loss of $100 (Revenue - Total costs; $150 - 50).

c) False

d) At this level of production, the firm's profit, is a loss of $100.  This is the best decision the firm can make: False.

Explanation:

a) Data:

Costs of production as follows:

Quantity   Total Fixed Costs ($) Total  Variable Costs ($)

   0                        100                                   0

   1                         100                                 50

  2                         100                                 70

  3                         100                                 90

  4                         100                                140

  5                         100                              200

  6                         100                              360

a) Ball Bearings, Inc. can become profitable when the total revenue exceeds the total costs (variable and fixed).  Ball's marginal cost is the additional cost that the corporation incurs for producing one additional unit of ball bearings.  Its average fixed, variable, and total costs are computed by dividing the total fixed, variable, and total costs by the number of ball bearings produced.

Dermody Snow Removal's cost formula for its vehicle operating cost is $2,960 per month plus $326 per snow-day. For the month of December, the company planned for activity of 20 snow-days, but the actual level of activity was 18 snow-days. The actual vehicle operating cost for the month was $9,770. The spending variance for vehicle operating cost in December would be closest to: rev: ________

a. $290 U
b. $290 F
c. $942 U

Answers

Answer:

c. $942 U

Explanation:

Spending variance = Standard cost at 20 snow days - Actual operating cost.

Spending variance = [$2,960 + ($326*18)] - $9,770

Spending variance = $8,828 - $9,770

Spending variance = $942 (Unfavorable).

Note: The actual level of activity = 18 snow-days.

The cash register tape for Bluestem Industries reported sales of $28,372.00.

Record the journal entry that would be necessary for each of the following situations. (a) Cash to be accounted for exceeds cash on hand by $52.00. (b) Cash on hand exceeds cash to be accounted for by $26.50. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.)

Answers

Answer:

Bluestem Industries

Journal Entries

a) Cash to be accounted for exceeds cash on hand by $52.00

Debit Cash Shortage $52.00

Credit Cash Account $52.00

To record the cash shortage.

b) Cash on hand exceeds cash to be accounted for by $26.50

Debit Cash Account $26.50

Credit Cash Overage $26.50

To record the cash overage.

Explanation:

Handling cash in Bluestem Industries will occasionally give rise to cash shortages and cash overages.  The best practise is to enact a company policy to guide actions and decisions with respect to cash shortages and overages.  And then the accounting for these will be in accordance with the policy.  However, the problem of shortages and overages may be pointing at other underlying problems involved in cash handling.  Where only the shortages are reported frequently, then the company may need to find ways to minimize cash handling, e.g. using credit cards to receive payments and refunding employees for expenses through bank accounts.

Galactic Inc. is considering an investment in new equipment that will be used to manufacture a smartphone. The phone is expected to generate additional annual sales of 4,500 units at $212 per unit. The equipment has a cost of $418,500, residual value of $31,500, and an eight-year life. The equipment can only be used to manufacture the phone. The cost to manufacture the phone follows: Cost per unit: Direct labor $36.00 Direct materials 140.00 Factory overhead (including depreciation) 24.00 Total cost per unit $200.00 Determine the average rate of return on the equipment. If required, round to the nearest whole percent. 18 %

Answers

Answer:

24%

Explanation:

The computation of the average rate of return is shown below;

As we know that

The Average rate of return = Net income ÷ Average investment

where,

Net income is

= (Selling price per unit - totat cost per unit) × additional units sales

= ($212 - $200) × $4,500 units

= $54,000

And, the average investment is

= (cost price + equipment) ÷ 2

= ($418,500 + $31,500) ÷ 2

= $225,000

So, the average rate of return is

= $54,000 ÷ $225,000 × 100

= 24%

Answer:

Galactic Inc.

Average Rate of Return: = Annual Net Income/Average Investment cost

= $54,000/$225,000 x 100

= 24%

Explanation:

Galactic Inc. Income Statement:

Sales Revenue, 4,500 x $212 = $954,000

Cost, 4,500 x $200 =                   900,000

Annual Net Income =                   $54,000

Average Investment in equipment = $225,000 ($418,500 + 31,500)/2

b) Galactic Inc.'s average rate of return (ARR) on the equipment is average (annual) net income that the equipment generates divided by the average cost of the investment, and then multiplied by 100.  The average cost of the investment equals the (initial book value + the residual value)/2.  The ARR also known as the Accounting Rate of Return does not take into consideration the time value of money.  As such, the net income is not discounted to the present value before the computation of the ratio.

Explain how to use the decision trees and Monte Carlo analysis for quantifying risk. Give an example of how you would use each technique on an IT project.

Answers

Answer:

The answer is below

Explanation:

Decision Tree Analysis is a form or type of quantitative risk assessment tool and techniques that involves a diagram that indicates the significances of choosing one or other alternatives.

In other words, the purpose of the tool is to assist you to select between several courses of action.

For example, lines are drawn towards the right for each possible solution, and then the solution is written along the line. Then evaluation of each alternative can be easily considered.

On the other hand, Monte Carlo Analysis is also a form or type of quantitative risk assessment tools and techniques that utilizes optimistic, most probable, and cynical estimates to infer the total project cost and project completion dates.

For example, an estimate of the probability of completing a project at a cost of $100M can be carried out using Monte Carlo Analysis

x

I am buying a firm with an expected perpetual cash flow of $700 but am unsure of its risk. If I think the beta of the firm is 0, when the beta is really 1, how much more will I offer for the firm than it is truly worth? Assume the risk-free rate is 7% and the expected rate of return on the market is 14%. (Input the amount as a positive value.)

Answers

Answer:

$50

Explanation:

using the CAPM,

The expected rate of return = risk free rate + beta(market rate of return - risk free rate)

if beta is 0,

7% + 0 X(14% - 7%) = 7%

If beta is 1,

7% + 1 X(14% - 7%) = 14%

Present value of a perpetuity = amount / expected rate of return

if beta is 0, present value = $700 / 7% = $100

if beta is 1, present value = $700 / 14% = $50

the amount offered will differ by $100 - $50 = $50

Speedy Runner makes running shoes and they have gathered the following data for the month of​ October: Data Cash on​ 10/1 Expected Cash Collections Direct Materials Cash Disbursements Direct Labor Cash Disbursements MOH Cash Disbursements Operating Expenses Cash Disbursements Capital Expenditures Cash Disbursements Speedy Runner requires an ending cash balance of at least​ $12,000 and can borrow from a line of credit in​ $1,000 increments. How much will Speedy Runner need to borrow at the end of​ October?

Answers

Answer: $9,000

Explanation:

Speedy Runner will need to borrow the amount of cash disbursements that will exceed their cash receipts.

= Opening Cash + Cash Receipts - Cash Disbursements

= Opening Cash + Expected Cash Collections - Direct Labor Cash - Direct Materials Cash Disbursements - Operating Expenses Cash Disbursements - MOH Cash Disbursements - Capital Expenditures Cash Disbursements ​- Ending cash balance requirement

= 15,300 + 435,000 - 32,000 - 80,000 - 110,000 - 25,000 - 200,000 - 12,000

= $8,700

They can borrow in incremental terms of $1,000 so to cover the cash requirements they should borrow $9,000.

Company XYZ has 2 fixed price contracts for 2 different clients. The company has enough capacity for both contracts but is uncertain whether they will be profitable. Using the information below, a) calculate the activity-based costs and profits for each contract (this requires more than one step) and b) calculate the profit for each job using absorption costing, absorbing overheads using molding hours: Enter all answers in number format without commas, decimals, or dollar signs. Customer AAA BBB Component Type A999 B999 Contract Value ($) $27,000 $100,000 Contract Quantity 1,000 unit 2,000 unit Material cost/unit $15 $20 Molding time/batch 5 hours 7.5 hours Batch size 100 units 50 unitsAnnual Budgeted overheads as follows:Activity Cost Driver Cost driver CostMolding Molding hours 2,000 $150,000Inspection Batches 150 $75,000Production Mgmt Contracts 20 $125,000 Required:Calculate the activity-based costs and profits for each contract.

Answers

Answer:

The contract A yields a loss under ABC but Contract B yields a profit.

ABC Profit  contract A  $ (3000) contract B  $ 11250

Under absorption costing both contract yield profits.

Absorption Profit    contract A  $ 3250 contract B    $7500  

Management should make decisions using ABC and reject Contract A and accept Contract B.

Explanation:

Customer                         AAA               BBB

Component Type           A999                B999

Contract Value ($)       $27,000            $100,000

Contract Quantity         1,000 unit        2,000 unit

Material cost/unit              $15                        $20

Molding time/batch          5 hours            7.5 hours

Batch size                       100 units                50 units

Activity Based Rate= Cost per Unit of Cost Driver

Activity                Cost driver         Cost                 Rate

Molding                2,000              $150,000        $150,000 / 2,000 = 75

Inspection            150                   $75,000        $75,000/150 = 500

Production             20                 $125,000        $125,000/20=  6250        

Total                                             $ 350,000                                          

Cost Drivers Consumed

Activity                              A999                                      B999

Molding time/batch          5 hours* 10                    7.5 hours *40

                                            50                                   300

Batch size              1,000 unit/ 100 units          2,000 unit/50 units

                                     = 10                                      =40

ABC  Profits for Each Contract

                                         A999                                      B999

Selling Price                  $27,000                              $100,000

Materials                      15*1000                                  20 * 2000  

                                    =   15000                                   =   40,000

Molding                   50 hours *75                               300* 75

                                    3750                                       22500

Inspection             10 batches *500                       40 batches *500

                                 $ 5000                                    $ 20000

Management Contracts    $ 6250                             $ 6250

Total                            $ 30,000                               $ 88,750

Profit                            $ (3000)                                $ 11250

Overhead Rate  Absorption Costing

Total Overheads= ( 150,000 + 125,000+ 75000) = $ 350000

Annual Molding Hours = 2000

Rate= $ 350,000/2000=$ 175 per molding hour

Absorption Costing

Profit For each Contract

                                         A999                                      B999

Selling Price                  $27,000                              $100,000

Materials                      15*1000                                  20 * 2000  

                                    =   15000                                   =   40,000

Overheads                50 hours *175                           300 Hours *175

                               =  8750                                            = 52,500

Total Cost                    23750                                      92500            

Profit                             3250                                            7500        

The contract A yields a loss under ABC but Contract B yields a profit.

Under absorption costing both contract yield profits.

Management should make decisions using ABC and reject Contract A and accept Contract B.

You are an investor who wants to form a portfolio that lies to the right of the "optimal" minimum standard deviation portfolio on the efficient frontier. You must: 0 / 1 puntos Invest only in risky securities. Borrow money at the risk-free rate, invest in the minimum standard deviation portfolio and, in addition, only in risky securities. Borrow money at the risk-free rate and invest everything in the minimum standard deviation portfolio. Invest only in risk-free securities.

Answers

Answer:

Correct Answer:

invest in the minimum standard deviation portfolio and, in addition, only in risky securities.

Explanation:

For an investor aiming to invest in a portfolio so that, his minimum standard deviation would lie towards the optimal right, he or she would need to invest in extremely risky securities. And, also, there will be need to maintain minimum standard deviation portfolio.

Suppose a stock had an initial price of $54 per share, paid a dividend of $1.30 per share during the year, and had an ending share price of $51. Compute the percentage total return. What was the dividend yield and the capital gains yield?

Answers

Answer:

Use the equation for total return:

total stock return= (P1-P0)+D/P0

P0=Initial Stock Price

P1=Ending Stock Price (Period One)

D=Dividends

-3.15%---Percentage of total return

Dividend Yield-2.41%

Capital Gains-- -5.56%

Pattison Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.

Fixed Element per Month Variable Element per Customer Served
Revenue $ 5,500
Employee salaries and wages $ 46,300 $ 1,000
Travel expenses $ 500
Other expenses $ 32,500
When the company prepared its planning budget at the beginning of May, it assumed that 20 customers would have been served. However, 17 customers were actually served during May.

The activity variance for "Travel expenses" for May would have been closest to:

A. $1,500 U

B. $1,500 F

C. $2,000 F

D. $2,000 U

Answers

Answer:

B. $1,500 F

Explanation:

                                          Flexible    Planning     Activity  

                                          Budget     Budget      Variance

Customer served (q)             17             20  

Travel expense ($500q)   $8,500     $10,000     $1,500 (Favorable)

Workings

Travel Expense at 500q

Flexible budget = 500 * (17) = $8,500

Planning budget = 500 * (20) = $10,000

Vince offers to buy a book owned by Sun-Hi for twice what Sun-Hi paid for it. She accepts and hands the book to Vince. Sun-Hi's delivery of the book is

Answers

Answer:

Vince and Sun-Hi's Book

With Sun-Hi's delivery of the book, the offer by Vince is accepted by Sun-Hi.

Acceptance of an offer is necessary to make a contract.

Explanation:

An offer by Vince is not a contract, but its acceptance by Sun-Hi without a counter-offer makes it a valid contract that can be enforced in law if other ingredients for a valid contract are present.  Acceptance establishes the agreement between Vince and Sun-Hi.  Once Sun-Hi accepts Vince's offer with valid considerations (the book and double the price), the agreement for a business transaction between them is consummated.  It is acceptance that completes the exchange of promises in this simple contract.

Brian Hickey uses his credit card in August to purchase the following college supplies: books for $425, your long bus pass for $175, food service meal ticket for $450, and season tickets to the basketball games for $125,. On September 1, he uses 650 of his financial aid check to reduce the balance. The issuing bank charges 1.2% interest per month and requires full payment within 36 months. Brian had a previous balance is zero and he makes no other purchases with his card. What is the minimum payment due September 1, and what is the balance due on October 1?

Answers

Answer:

Brian Hickey

a. Minimum due on September 1 is:

$510.90

b. Balance due on October 1 is:

$516.13

Explanation:

a) Data and Calculations:

Purchases in August:

Books =                    $425

Long bus pass =         175

Meal ticket =              450

Basketball games =   125

Total purchases = $1,175

Interest rate = 1.2% per month

Interest accrued         14.10

Total in debt       $1,160.90

September 1:

b) Debt reduction 650.00

Balance =            $510.90

Interest accrued       6.13

Ending Balance  $516.13

c) The credit card interest is calculated on the remaining debt after each transaction.  This interest is then added back to the debt to obtain the balance due.  If Brian Hickey does not carry out any other transaction with his credit card, the debt will continue to increase by 1.2% compounded monthly until the expiration of the 36-months period.

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