Answer:
c. Interest Payable, $1,200.
Explanation:
Based on the information given in a situation where the company keeps its records on a calendar year, an adjustment is needed on December 31 to increase: INTEREST PAYABLE, by $1,200
Increase in Interest payable=6%*30,000*8/12
Increase in Interest payable=$1,200
(May 1 to December 31=8 months)
Trust incurred $10,000 of portfolio income. Its corporate trustee paid fiduciary fees of $1,000 therefrom, and also paid $1,000 in premiums for a life insurance policy on Marcia, the grantor of the trust. How much gross income does Marcia include with respect to these trust activities?
A) $800.
B) $1,000.
C) $8,000.
D) $9,000.
E) $10,000.
Answer:
$1,000
Explanation:
Based on the information given the
GROSS INCOME amount that Marcia will include with respect to these trust activities will be the amount of $1,000 because we were told that the amount of $1,000 was paid in premiums for a LIFE INSURANCE POLICY ON MARCIA who is the GRANTOR OF THE TRUST, although The trust is not categorized as a grantor trust reason been that the TRUSTEE was authourized to pay the life insurance premiums
Pasadena Candle Inc. projected sales of 800,000 candles for January. The estimated January 1 inventory is 35,000 units, and the desired January 31 inventory is 20,000 units. What is the budgeted production (in units) for January?
Answer:
785,000
Explanation:
Calculation to determine the budgeted production (in units) for January
BUDGETED PRODUCTION (in units) FOR JANUARY
Expected units to be sold 800000
Add Desired ending inventory, Dec 31 20000
Total units available 820000
(800,000+20,000)
Less Estimated beginning inventory, Jan 1 (35000)
Total units to be produced 785000
(820,000-35,000)
Therefore the budgeted production (in units) for January is 785,000
A ______ strategy aims at securing a competitive advantage by serving buyers in the target market niche at a lower cost and lower price than rivals. Multiple choice question. focused low-cost overall low-cost resource-based cost best-cost
Answer:
focused low-cost
Explanation:
Competitive advantage can be defined as conditions, factors or circumstances that allow a business firm (organization) to manufacture finished goods or services better and perhaps cheaper than other (rival) firms in the same industry. Thus, it's responsible for putting a business firm in a superior or more favorable position than rival firms.
This ultimately implies that, a competitive advantage has a significant impact on a business because it increases its level of sales, revenue generation and profit margin when compared to rival firms in the same industry.
A focused low-cost strategy is a strategic business model that's typically focused on a narrow or small customer base (segment) while providing low-cost goods and services to the customers. Thus, it is a business strategy that involves lowering the price of goods and services in order to generate more revenue and gain a competitive advantage over competitors or rivals in the same industry.
Hence, a focused low-cost strategy is typically aimed at securing a competitive advantage by means of serving buyers or consumers in the target market niche at a lower cost and lower price than rivals in the same industry.
Star Corp., an accrual-method C corporation, incurred the following expenses in 2020 (all of which are ordinary and neccessary unless the facts indicate otherwise): Office rent: $50,000 CEO compensation: $1,500,000 Salary paid to janitor $250,000 Business meals: $60,000 (100% of the amount paid) Client entertainment $100,000 (100% of the amount paid) Traffic fines: $5,000 Advertising $70,000 Taxes & licenses (state, local & payroll) $30,000 Life insurance policy on CEO - premiums: $12,000 Average office rents in the area run $50,000-$55,000/year for similar office space. Star Corp's janitor is the CEO's sister. Reasonable salary for a janitor with similar experience, job description and work hours is $20,000/year. The CEO often runs late to important meetings, and he has a tendency to speed (and get speeding tickets) on his way. Star Corp. pays the speeding tickets. Star Corp. is the beneficiary on the life insurance policy. What is Star Corp.'s total deductible business expenses for the year?
Answer:
$1,842,000
Explanation:
Calculation to determine Star Corp.'s total deductible business expenses for the year
STAR CORP.'S total deductible business expenses
Office rent $50,000
CEO Compensation $1,500,000
Salary paid to Janitor $20,000
Business meals $60,000
Client entertainment $100,000
Advertising $70,000
Taxes & Licenses $30,000
Life insurance policy on CEO-Premium $12,000
Total $1,842,000
Therefore Star Corp.'s total deductible business expenses for the year is $1,842,000
On January 1, Great Designs Company had a debit balance of $2,183 in the office supplies account. During the month, Great Designs purchased $515 and $500 of office supplies and journalized them to the asset account upon purchasing. On January 31, an inspection of the office supplies cabinet shows that only $774 of office supplies remains. Journalize the January 31 adjusting entry for office supplies. If an amount box does not require an entry, leave it blank. Jan 31 ________ _______ ________ ________
Answer: Dr Office supplies expense $2,424
Cr Office supplies $2,424
Explanation:
Based on the information given in the question, the January 31 adjusting entry for office supplies goes thus:
Journal entry on Jan 31st-
Dr Office supplies expense $2,424
Cr Office supplies $2,424
Working:
Total office supplies available = $2183 + $515 + $500 = $3198
Total supplies available on January, 31st = $774
Therefore, supplies consumed will be:
= $3198 - $774
= $2424
Which of the following assets purchased in the current year are eligible to be expensed under Section 179 assuming the cost does NOT exceed the limitations?
Rex’s Wrecks purchased $561,000 in new equipment during 2017. Rex wants to use Section 179 to expense the maximum amount of the purchase. How much will Rex get to expense under Section 179 and what will be the adjusted basis of the assets for calculating MACRS depreciation expense?
Question 1 Completion with Options:
A. used equipment
B. storage warehouse
C. land for future building site
D. new office furniture
E. apartment complex
F. new delivery truck
Answer:
1. The assets purchased in the current year that are eligible to be expensed under Section 179 assuming the cost does NOT exceed the limitations are:
A. used equipment
D. new office furniture
F. new delivery truck
2. $561,000 is the maximum to be expensed with an adjusted basis of 100% for MACRS
Explanation:
There is a maximum deduction of $1,050,000 under section 179. The section affords eligible taxpayers the opportunity to reduce their tax burden in the first year that they purchase eligible properties.
Menning Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed out to cost of goods sold at the end of the month. The company has provided the following data for June:
Direct materials $78,750
Direct labor cost $94,000
Manufacturing overhead cost incurred $61,275
Manufacturing overhead cost applied $65,800
Inventories: Beginning Ending
Work in process $17,500 $19,850
Finished goods $61,500 $38,250
The cost of goods sold that appears on the income statement for August and that has been adjusted for any underapplied or overapplied overhead is closest to: __________
a. $254,925
b. $263,975
c. $236,200
d. $259,450
Answer:
Adjusted COGS= $254,925
Explanation:
First, we need to calculate the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 17,500 + 78,750 + 94,000 + 65,800 - 19,850
cost of goods manufactured= $236,200
Now, the COGS:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 61,500 + 236,200 - 38,250
COGS= $259,450
Finally, the over/under applied overhead and the adjustment:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 61,275 - 65,800
Overapplied overhead= $4,525
As overhead was overapplied, COGS must be reduced:
Adjusted COGS= 259,450 - 4,525
Adjusted COGS= $254,925
You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T. The betas for these four stocks are 1.63, 1.35, 2.56, and 0.68, respectively. What is the portfolio beta? Enter the answer with 4 decimals (e.g. 1.1234)
Answer:
Beta= 1.4886
Explanation:
Giving the following information:
You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T.
The betas for these four stocks are 1.63, 1.35, 2.56, and 0.68, respectively.
To calculate the portfolio beta, we need to use the following formula:
Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B)
Beta= (0.32*1.63) + (0.22*1.35) + (0.19*2.56) + (0.27*0.68)
Beta= 1.4886
Một doanh nghiệp sản suất hai loại hàng hóa là G1 và G2 , bán ra thị trường
với giá tương ứng là 70 USD và 50 USD. Tổng chi phí cho bởi
[tex]TC=Q1^{2} + Q1Q2 +Q2^{2}[/tex]
trong đó Q1 và Q2 lần lượt tương ứng là số lượng hàng hóa G1 và G2 . Tìm số lượng hàng hóa Q1 và Q2 để tối ưu lợi nhuận.
Answer:
Một doanh nghiệp sản suất hai loại hàng hóa là G1 và G2 , bán ra thị trường
với giá tương ứng là 70 USD và 50 USD. Tổng chi phí cho bởi
trong đó Q1 và Q2 lần lượt tương ứng là số lượng hàng hóa G1 và G2 . Tìm số lượng hàng hóa Q1 và Q2 để tối ưu lợi nhuận.
Explanation:
Prepare the Statement of Retained Earnings from the Adjusted Trial Balance and Income Statement. Within each section of the statement, use the drop-down menus to enter the accounts in Chart of Accounts order and select the account balances. SMART TOUCH LEARNING SMART TOUCH LEARNING Adjusted Trial Balance December 31, 2016 Income Statement Month Ended December 31, 2016 Balance Debit Credit Revenue: Account Title Service Revenue 51,300 Cash 16,900 Accounts Receivable 9,300 Expenses: 2,200 Office Supplies 200 Depreciation Expense--Furniture Interest Expense 300 Prepaid Rent 11,200 3,300 Rent Expense Furniture 19,700 Salaries Expense 3,900 Accumulated Depreciation--Furniture 6,700 Accounts Payable 900 2,200 Supplies Expense Total Expenses 10,600 Salaries Payable 500 Net Income Interest Payable 40,700 300 Unearned Revenue 5,600
Notes Payable 7,900 Common Stock 11,000 Retained Earnings 11,200 Dividends 28,800 Service Revenue 51,300 Depreciation Expense-- Furniture 2,200 Interest Expense 300 Rent Expense 3,300 Salaries Expense 3,900 Retained Earnings, December 31, 2016 23,100 Supplies Expense 900 Total 96,700 96,700
Answer:
SMART TOUCH LEARNING
Statement of Retained Earnings
For the Month Ended, December 31, 2016
Particulars Amount
Retained earning Dec 1, 2016 $11,200
Add: Net Income $40,700
$51,900
Less: Dividend $28,800
Retained earning Dec 31, 2016 $23,100
You are planning to save for retirement over the next 25 years. To do this, you will invest $1,000 a month in a stock account and $700 a month in a bond account. The return of the stock account is expected to be 9 percent, and the bond account will pay 6 percent. When you retire, you will combine your money into an account with a return of 7 percent. How much can you withdraw each month from your account assuming a 20-year withdrawal period
Answer:
Monthly withdraw= $12,452.6
Explanation:
First, we need to calculate the total accumulated at the moment of retirement. We will use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Stock:
Monthly investment= $1,000
Interest rate= 0.09/12= 0.0075
Number of periods= 25*12= 300 months
FV= {1,000*[(1.0075^300) - 1]} / 0.0075
FV= $1,121,121.94
Bond:
Monthly investment= $700
Interest rate= 0.06/12= 0.005
Number of periods= 25*12= 300 months
FV= {700*[(1.005^300) - 1]} / 0.005
FV= 485,095.77
Total FV= 1,121,121.94 + 485,095.77
Total FV= $1,606,217.71
Now, the annual withdrawal:
Interest rate= 0.07/12= 0.005833
Number of months= 12*20= 240
Monthly withdraw= (FV*i) / [1 - (1+i)^(-n)]
Monthly withdraw= (1,606,217.71*0.005833) / [1 - (1.005833^-240)]
Monthly withdraw= $12,452.6
、HowTotalRevenueChangesWhenPriceChanges？PleaseusetheElasticityandDemand 订curvetoexplainit.
The present value of a perpetual tax shield increases as the firm's tax rate ________ and as the amount of the debt ________.
a. increases; increases
b. increases; decreases
c. decreases; decreases
d. decreases; increases
Answer:
B
Explanation:
The value of tax shield is simply given as corporate tax rate times the cost of debt times the market value of debt.
If the debt is constant and perpetual, the company’s tax shield depends only on the corporate tax rate and the value of debt. Then the present value of tax shield equals the discounted value of debt
On October 29, Lobo Co. began operations by purchasing razors for resale. The razors have a 90-day warranty. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is $15 and its retail selling price is $70. The company expects warranty costs to equal 6% of dollar sales. The following transactions occurred.
2012
Nov.
11 Sold 60 razors for $4,800 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec.
9 Replaced 12 razors that were returned under the warranty.
16 Sold 180 razors for $14,400 cash.
29 Replaced 24 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2013
Jan.
5 Sold 120 razors for $9,600 cash.
17 Replaced 29 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
Required:
Prepare journal entries to record above transactions and adjustments.
Answer:
1. Cash (Dr.) $4,800
Sales (Cr.) $4,800
2. Warranty Expense 6% * $4800 (Dr.) $288
Estimated warranty Liability (Cr.) $288
3. Estimated warranty liability $15 * 12 razors (Dr.) $180
Inventory (Cr.) $180
4. Cash (Dr.) $14,400
Sales (Cr.) $14,400
5. Warranty Expense 6% * $14,400 (Dr.) $864
Estimated warranty Liability (Cr.) $864
6. Warranty liability $15 * 24 razors (Dr.) $360
Inventory (Cr.) $360
7. Cash (Dr.) $9,600
Sales (Cr.) $9,600
8. Warranty Expense 6% * $9600 (Dr.) $576
Estimated warranty Liability (Cr.) $576
9. Estimated warranty liability $15 * 29 razors (Dr.) $435
Inventory (Cr.) $435
Explanation:
Lobo Co sells razors to customer. It provides 90 day return warranty. The estimated returns are 6% of sales made. The estimated warranty liability is recognized at the time of sales. The expense for return of razor is recognized as warranty expense as company discards the returned razors which costs it $15 per razor.
A certain smelting plant operates 24 hours per day, with three shifts of 200 workers per shift. Due to a flu epidemic, 1/4 of the workers on the first shift, 10 percent of the workers on the second shift, and 100 of the workers on the third shift are unable to work on a given day. If each worker and each shift has the same productivity, what is the approximate percent decrease in productivity due to the flu epidemic?
Answer:
35
Explanation:
12/1-34÷1 I just need points
financial lit Banks offer other types of services such as safe deposit boxes for customers to store valuable documents. List at least two other types of non-account services that the provider makes available to customers, either for a fee or at no cost.
Answer and Explanation:
Banks offer agency services too such as being trustees, executors, or financial advisors to their customers. They can also stand as guarantee for their customers.
Banks also offer reference services. They provide information on the financial position or strength of their customers for the purpose of a customer's business dealing. This is usually done confidentially and with the permission of the customer
Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true?A) BBB bonds usually have the lowest yields in the bond markets.B) US government bonds usually have the lowest yields in the bond markets.
Answer: US government bonds usually have the lowest yields in the bond markets.
Explanation:
Based on the understanding of bond ratings and bond-rating criteria, it should be noted that the US government bonds usually have the lowest yields in the bond markets.
The statement that "BBB bonds usually have the lowest yields in the bond markets" is incorrect.
Journalize the following selected transactions of Miramax Rentals. Omit explanations.
Aug. 1 Purchased two new saws on credit at $425 each. The saws are added to Mirmax's rental inventory. Payment is due in 30 days.
8 Accepted advance deposits of $125 for tool rentals that will be applied to the cash rental when the tools are returned.
20 Charged customers $1,250 on account for tool rentals. Payment is due within 30 days.
31 Paid utility bill for the month, $180.
31 Received $600 in payments from the customers that were billed for rentals on August 20.
Answer and Explanation:
The journal entries are shown below:
On Aug 1
Inventory Dr $850
To Accounts payable $850
(Being inventory purchased on account)
On Aug 8
Cash Dr $125
To Advance deposit a/c $125
(Being cash receipts is recorded)
On Aug 20
Accounts Receivable Dr $1250
To Rental Revenue $1250
(Being revenue is recorded)
On Aug 31
Utility expense Dr $180
To Cash $180
(Being cash paid is recorded)
On Aug 31
Cash Dr $600
To Accounts Receivable a/c $600
(Being cash received is recorded)
Baylor Service Corp. redeemed $1,000 of gift cards that customers used to pay for services that were performed by the company. The related adjusting entry would include a debit to: A. Accounts Receivable and a credit to Service Revenue. B. Unearned Revenue and a credit to Service Revenue. C. Cash and a credit to Service Revenue. D. Cash and a credit to Unearned Revenue.
Answer:
B. Unearned Revenue and a credit to Service Revenue.
Explanation:
The adjusting entry is given below:
Unearned revenue $1,000
To Service revenue $1,000
(Being service revenue is recorded)
Here unearned revenue is debited as it decreased the liabilities and credited the service revenue as it increased the revenue
Therefore the option b is correct
Paul's Papers is a large distributor of paper used in copy machines and printers. The manufacturer of Paul's most popular product, Perfect Printing Paper, is located just three miles from Paul's DC, and has a lead time of zero days. Hence, for this product Paul's Papers holds no safety stock. In order to get the best prices Paul's Papers orders 22 pallets (a full truckload) of Perfect Printing Paper every time it places an order. Paul's Papers pays $17.00 holding cost per pallet per year for this product.
Required:
How much will Paul's Papers pay in total annual holding costs for Perfect Printing Paper?
Answer:
$187
Explanation:\
Average cycle inventory = Average of maximum inventory and minimum inventory = (22 + 0) / 2 = 11 pallets
Annual holding cost for Perfect Printing Paper = Average cycle inventory * Holding cost per pallet per year
Annual holding cost for Perfect Printing Paper = 11 pallets * $17.00
Annual holding cost for Perfect Printing Paper = $187
When you ask the controller to look into federal reimbursements to see if he can find the cause of the reduction, how might he respond? (Select all that apply) Federal reimbursements are not part of the revenue cycle, the problem lies in revenue. Since federal reimbursements are part of the revenue cycle, we might find the problem there. The problem lies in revenue so it’s possible that charges are not being generated. The problem lies in revenue so there could be a problem in claims.
Answer:
Federal reimbursements are not part of the revenue cycle, the problem lies in revenue.
The problem lies in revenue so its possible that charges are not being generated.
Explanation:
Federal reimbursements are not revenue. These reimbursements are treated separately other than revenue. The charges are not generated because federal funds are not part of revenue cycle.
The three steps which will create triangular arbitrage profit are as follows: first step, convert ____; second step, convert _______, and third step, convert ______.
a) USD to GBP; CHF to GBP; CHF to USD
b) USD to GBP; GBP to CHF; CHF to USD
c) USD to CHF; GBP to CHF; GBP to USD
d) USD to CHF; CHF to GBP; GBP to USD
Answer:
The correct option is b) USD to GBP; GBP to CHF; CHF to USD.
Explanation:
A triangular arbitrage can be described as the act of taking advantage of a foreign exchange market arbitrage opportunity created by a pricing difference between three different currencies.
A triangle arbitrage method entails three deals, with the first currency being converted to a second, the second currency being converted to a third, and the third currency being converted to the first.
In the question, USD is the first currency, GBP is the second currency, and CHF is the third currency. Based on the explanation above, the three steps which will create triangular arbitrage profit are as follows: first step, convert USD to GBP; second step, convert GBP to CHF, and third step, convert CHF to USD.
Therefore, the correct option is b) USD to GBP; GBP to CHF; CHF to USD.
The Orange Lily Law Firm prepays for advertising in the local newspaper. On January 1, the law firm paid $2,880 for six months of advertising. Orange Lily Law Firm recorded $2,880 in the Prepaid Advertising account.
Required:
If Orange Lily Law Firm had recorded their expenses using the other method, how much advertising expense would they have recorded for the two months ending February 28?
Answer:
$2880;$960
Explanation:
Calculation to determine how much advertising expense would they have recorded for the two months ending February 28
UNDER THE CASH BASIS, the Law Firm will record $2,880 of advertising expense for the two months ending February 28
UNDER THE ACCRUAL BASIS, the Law Firm will record $960 of advertising expense for the two months ending February 28.l Calculated as:
Advertising expense=$2,880/6*2
Advertising expense=$960
A Consumer Expenditure Survey in the city of Firestorm shows that people buy only firecrackers and bandages. s AConsumer Expenditure Survey in 2016 shows that the average household spent $216 on firecrackers and $18 on bandages. In 2016, the reference base year, the price of a firecracker was $6, and the price of bandages was $2 a pack. In the current year, 2017, firecrackers are $5 each and bandages are $3 a pack Calculate the CPI market basket and the percentage of a household's budget spent on firecrackers in the base year.
The CPI market basket is nothing ______ and nothing _______ packs of bandages dollars worth of bandages . The percentage of a household's budget spent on firecrackers in the base year is_______ percent.
Answer: 92.3%
Explanation:
The total budget which is the sum of all the expenditure by the household will be the addition of the $216 spent on firecrackers and $18 on bandages. This will be:
= $216 + $18
= $234
Price of a firecracker = $6
Price of bandages = $2 a pack
Number of firecrackers = $216/$6 = 36
Number of bandages = $18/$2 = 9
CPI market basket is 36 firecrackers and 9 bandages.
Therefore, the percentage of a household's budget spent on firecrackers in the base year will be:
= Expenditures on firecrackers/Total expenditure
= $216 / $234
= 92.3%
When making business changes in the short run, management sometimes gets locked in to certain costs arising from previous decisions. This is type of cost is best known as:_______.
a. controllable.
b. differential.
c. uncontrollable.
d. sunk.
Answer: This is the type of cost known as Sunk.
sunk cost is a cost that has already been incurred and cannot be recovered. Sunk costs are contrasted with prospective costs, which are future costs that may be avoided if action is taken.A sunk cost refers to money that has already been spent and which cannot be recovered. ... Sunk costs are excluded from future business decisions because the cost will remain the same regardless of the outcome of a decision.The sunk cost effect is manifested in a greater tendency to continue an endeavor once an investment in money, effort, or time has been made. Evidence that the psychological justification for this behavior is predicated on the desire not to appear wasteful is presented.cho ví dụ về tái định vị ( trừ viettel, bitis, vinamilk..)
Answer:
Ví dụ như Samsung, xuất phát điểm là một công ty bán mỳ gạo, vì thế, tên của công ty lúc đầu là Tam tinh nghĩa là ba ngôi sao. Logo của họ l
Explain whether each of the following statements is true or false.
The marginal rate of substitution (MRS) diminishes as an individual moves downward along the demand curve. Assume the statement refers to good X with price Upper P Subscript Upper X , where good X is measured on the horizontal axis of an indifference map and good Y is measured on the vertical axis.
Answer:
1. True
Explanation:
Marginal rate of substitution is quantity of good which a consumer will need to have in order to leave another good. The MRS equals to Px/Py. This will decrease when the demand curve decreases.
Statement of Cash Flows (Indirect Method)
Use the following information regarding the Lund Corporation to (a) prepare a statement of cash flows using the indirect method and (b) compute Lund's operating-cash-flow-to-current-liabilities ratio.
Accounts payable increase $13,500
Accounts receivable increase 6,000
Accrued liabilities decrease 4,500
Amortization expense 9,000
Cash balance, January 1 33,000
Cash balance, December 31 22,500
Cash paid as dividends 43,500
Cash paid to purchase land 135,000
Cash paid to retire bonds payable at par 90,000
Cash received from issuance of common stock 52,500
Cash received from sale of equipment 25,500
Depreciation expense 43,500
Gain on sale of equipment 6,000
Inventory decrease 19,500
Net income 114,000
Prepaid expenses increase 3,000
Average current liabilities 150,000
a. Use negative signs with cash outflow answers.
LUND CORPORATION
Statement of Cash Flows
For Year Ended December 31
Cash Flow from Operating Activities
Net Income Answer
Add (deduct) items to convert net income to cash basis
Depreciation Answer
Amortization Answer
Gain on Sale of Equipment Answer
Accounts Receivable Increase Answer
Inventory Decrease Answer
Prepaid Expenses Increase Answer
Accounts Payable Increase Answer
Accrued Liabilities Decrease Answer
Cash Flow Provided by Operating Activities Answer
Cash Flow from Investing Activities
Sale of Equipment Answer
Purchase of Land Answer
Cash Used by Investing Activities Answer
Cash Flow from Financing Activities
Issuance of Common Stock Answer
Retirement of Bonds Payable Answer
Payment of Dividends Answer
Cash Used by Financing Activities Answer
Net Decrease in Cash Answer
Cash at Beginning of Year Answer
Cash at End of Year Answer
b. Operating-cash-flow-to-current-liabilities ratio (Round answers to two decimal places.)
Answer:
Cash Flow from Operating Activities
Net Income $114,000
Items to convert net income to cash basis
Depreciation $43,500
Amortization $9,000
Gain on Sale of Equipment -$6000
Accounts Receivable Increase -$6000
Inventory Decrease $19500
Prepaid Expenses Increase -$3000
Accounts Payable Increase $13500
Accrued Liabilities Decrease -$4500
Cash Flow Provided by Operating Activities A $180,000
Cash Flow from Investing Activities
Sale of Equipment $25,500
Purchase of Land -$135,000
Cash Used by Investing Activities B -$109,500
Cash Flow from Financing Activities
Issuance of Common Stock $52,500
Retirement of Bonds Payable -$90,000
Payment of Dividends -$43,500
Cash Used by Financing Activities C -$81,000
Net Decrease in Cash(A+B+C) -$10,500
Cash at Beginning of Year $33,000
Cash at End of Year $22,500
b. Operating cash flow to Current liabilities ratio = Operating Activities Cash Flow / Average current liabilities
Operating cash flow to Current liabilities ratio = $180,000 / $150,000
Operating cash flow to Current liabilities ratio = 1.2
On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $590 million. The fair value of Harman's identifiable tangible and intangible assets totaled $631 million, and the fair value of liabilities assumed by Pesky was $169 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information:
Fair value of Harman, Inc. $570 million
Fair value of Harman's net assets (excluding goodwill) 510 million
Book value of Harman's net assets (including goodwill) 594 million
Required:
a. Determine the amount of goodwill that resulted from the Harman acquisition.
b. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2021, if any.
c. If an impairment loss is required, prepare the journal entry to record the loss.
Answer:
Explanation:
Calculation of Goodwill -
$ in Million $ in Million
Consideration given $ 590
Less: F.V of Harman's net assets
Assets
631
Less: F.V of Liabilities
(169) (462)
Goodwill on acquisition $ 128
2. The impairment loss Pesky would recognize at the end of year 2021 is $ 68 million , since the book value of the net assets exceeds its fair value.
Calculation :-
$ in million $ in million
Goodwill 128
Less Implied value of goodwill
F.V of Harman's, Inc
570
F.V of Harman's net assets (excluding Goodwill)
(510) (60)
Impairment Loss $ 68
3. Journal entry to record loss:
Dr Cr
Loss on impairment of goodwill Dr $ 68 million
Goodwill
$ 68 million
(To record the impairment loss
You have decided to invest in two bonds. Bond X is an n-year bonod with semiannual coupons, while bond Y is zero-coupon bond, which is re- deemable in 2 years. The desired yield rate is the same for both bonds. You also have the following information:
Bond X:
Par value is 1000.
The ratio of the semi-annual bond rate to the desired semi-annual yield rate, that is is r/i 1.03125.
b. The present value of the redemption amount is 381.50.
Bond Y:
Redemption value is the same as that of bond X.
Price to yield is 647.80.
What is the price of bond X?
Answer:
The price of the bond X is 1055.09.
Explanation:
The price of Bond X can be determined as follows:
Let:
R = Present value of the Redemption amount of X and Y
i = yield of both Bond X and Bond Y
For Bond X, we have:
381.5 = R / (1+i)n ………………… (1)
For Bond Y, we have:
647.80. = R/(1+i)(n/2) ……………….. (2)
Use equation (2) to divide equation (1), we have:
381.5/647.8 = 1/ (1+i)(n/2) ……………………….. (3)
0.588916332201297= 1/ (1+i)(n/2)
(1+i)(n/2) = 1 / 0.588916332201297
(1+i)(n/2) = 1.69803407601573
647.80 = R / 1.69803407601573
R = 647.80 * 1.69803407601573 = 1,099.99, or 1,100
Now, also let:
r = coupon rate of Bond X
P= present value of Cash flows of Bond X
Therefore, we have:
P = 1000 * (r/2) / (1+i)0.5 + 1000*(r/2)/ (1+i)1+....+1000 * (r/2) /(1+i)n+ 1100/(1+i)n
It can be observed that we have 2n terms indicating present value of 2n semiannual coupon payments and last term is present value of Redemption amount.
Applying GP formula, we have:
P = 1000 *(r/2) * (1- (1+i)-n) / ((1+i)(1/2) -1) + 1100 * (1+i)-n
Looking at equation (3), we it can be observed that we can have:
(1+i)-(n/2) = 381.5/647.8 = 0.588916
Therefore, we have:
(1+i)-n = 0.5889162= 0.346822
By employing the Binomial approximation, we have:
(1+i)(1/2)= 1+i/2+... very small terms = 1 + i/2
This indicates that:
(1+i)(1/2)-1 = i/2
If we substitute this into the price equation, we will have
P = 1000 *(r/2) * (1-0.346822) / ( i/2) + 1100 * 0.346822 = 1000 * (r/i) * 0.653178 + 381.504
Since r/i = 1.03125, we have:
P = 653.178 * 1.03125 + 381.504 = 1055.09
Therefore, the price of the bond X is 1055.09.
