Answer:
$3.72
Explanation:
Francis incorporation stock has a required rate of return of 10.25%
The stock is sold at $87.50 per share
The growth rate is 6% per year
Therefore, the expected dividend can be calculated as follows
= Po(rs-g)
= $87.50(10.25%-6%)
= $87.50×4.25
= $3.72
Hence the expected year end dividend is $3.72
Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year. The amount of cash for the payment of dividends during the year is
Answer:
$40,000
Explanation:
Dividend Payable
Opening Dividend $10,000
Add: Dividend Liability made $45,000
after Dividend declared
Less: Closing Dividend $15,000
Dividend to pay in Current year $40,000
On January 2, 2019, Konrad Corporation acquired equipment for . The estimated life of the equipment is 5 years or hours. The estimated residual value is . If Konrad Corporation uses the units of production method of depreciation, what will be the debit to Depreciation Expense for the year ended December 31, 2020, assuming that during this period, the asset was used hours?
The question is incomplete. The complete question is,
On January 2, 2019, Konrad Corporation acquired equipment for $500,000. The estimated life of the equipment is 5 years or 18,000 hours. The estimated residual value is $14,000. If Konrad Corporation uses the units of production method of depreciation, what will be the debit to Depreciation Expense for the year ended December 31, 2020, assuming that during this period, the asset was used 6,000 hours?
A. $166,667
B. $97,200
C. $162,000
D. $171,333
Answer:
The depreciation expense for the year is $162000. Thus, option C is the correct answer
Explanation:
The depreciation expense is the systematic allocation of the cost of the asset over its estimated useful life. The depreciation can be calculated using various methods. Under the units of production method, the depreciation expense for the period is calculated using the following formula,
Depreciation expense = [(Cost - Residual value) / Total estimated production units] * Units produced in a particular period
Depreciation expense = [(500000 - 14000) / 18000] * 6000
Depreciation expense = $162000
Caribou Gold Mining Corporation is expected to pay a dividend of $6 in the upcoming year. Dividends are expected to decline at the rate of 3% per year. The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%. The stock of Caribou Gold Mining Corporation has a beta of .5. Using the constant-growth DDM, the value of the stock is _________. A. $150 B. $50 C. $100 D. $200
The question is incomplete. Here is the complete question.
Caribou Gold Mining Corporation is expected to pay a dividend of $6 in the upcoming year. Dividends are expected to decline at the rate of 3% per year. The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%. The stock of Caribou Gold Mining Corporation has a beta of .5. Using the constant-growth DDM, the intrinsic value of the stock is _________. A. $150 B. $50 C. $100 D. $200
Answer:
$50
Explanation:
Caribou Gold mining corporation is expected to make a dividend payment of $6 next year
Dividend are expected to decline at a rate of 3%
= 3/100
= 0.03
The risk free rate of return is 5%
= 5/100
= 0.05
The expected return on the market portfolio is 13%
= 13/100
= 0.13
The beta is 0.5
The first step is to calculate the expected rate of return
= 0.05+0.5(0.13-0.05)
= 0.05+0.5(0.08)
= 0.05+0.04
= 0.09
Therefore, the intrinsic value of the stock using the constant growth DDM model can be calculated as follows
Vo= 6/(0.09+0.03)
Vo= 6/0.12
Vo= $50
Hence the intrinsic value of the stock is $50
A monopolist faces a
A. a two-tiered demand curve.
B. a perfectly elastic demand curve.
C. the market demand curve.
D. a perfectly inelastic demand curve.
Answer:
C
Explanation:
The Sherman Antitrust Act of 1890 was successful enough in reducing the power of cartels and monopolies that no further legislation to curb monopoly power has ever been needed.
a. True
b. False
Answer:
False
Explanation:
After the Sherman Antitrust Act of 1890 , the Clayton Act was passed in 1914. the purpose of this act was to strengthen the anti trust law
As the leader of your newly formed 9-person team, one of your key concerns is that the team performs as a cohesive unit. Which of the following descriptions is most likely to indicate that your team is cohesive?
A. There is very little conflict between team members.
B. Team members prioritize the team’s goals over their own goals.
C. Whenever tackling a new team task, members typically divide into the same 3 subgroups.
D. Team members have no problem working independently or alone.
Answer:
b. Team members prioritize the team’s goals over their own goals.
Explanation:
Team cohesiveness is mostly seen in teams that perform highly. People in such teams are usually more likely to cooperate and they have an effective way of achieving their set objectives.
Team cohesiveness would have members of a team acting together rather than individually. It is an interpersonal relationship that is alive within members of the group and this pushes and motivates them to participate more and do what is necessary to achieve all of their objectives.
As the workforce becomes more diverse, why does performance appraisal become a more difficult process?
Answer: The diversification of the employees in the organization will bring about a larger difference between the workers and raters and could invariably lead to bias at the workplace.
Explanation:
Performance appraisal is also called performance evaluation and it is when the performance of a worker in a company is being appraised or evaluated so as to improve efficiency and output.
The diversification of the employees in the organization will bring about a larger difference between the employees and the raters who are rating them. Hence, the above situation can lead to biases and unfairness in the workplace.
Jay owns Gatsby Islands and wants to convey it to his good friends, Nick and Daisy. Nick lives next door to Jay while Daisy lives across the waters. He conveys an interest in Gatsby Islands "to Nick as tenants by the entirety." Two months later, he makes a corresponding conveyance to Daisy. Jay created the following:_______
a. tenancy in common
b. severalty community property
c. joint tenancy with rights of survivorship
d. tenancy by entirety
Answer:
Correct Answer:
c. joint tenancy with rights of survivorship
Explanation:
The property Jay owes on Gatsby Island belongs to him but he wishes to share th ownership with his 2 good friends. His conveyance of the message to both which reads "tenants by the entirety" shows that he and his friends has equal ownership and rights to the Gatsby Island property.
In the event that either him or one of the friends dies, the full title of the property automatically passes to the surviving person.
The_________for a soft drink manufacturer would include other manufacturers of soft drinks, fruit juices, bottled water, sports drinks, caffeine-free colas, and dairy beverages.
a. competitive environment
b. technological environment
c. cooperative environment
d. economic environment
Answer:
The answer is A
Explanation:
Competitive environment is an environment where competitors compete with one another for customers.
For example, Westpac, NAB, Commonwealth Bank and ANZ are in the same competitive environment. These are banks in Australia.
Types of competition are perfect competition, monopoly, monopolistic competition, oligopoly etc.
Suppose you own 5% of Coastal Corporation's 400,000 outstanding common shares. The stock was trading for $165 per share before Coastal executives announced a 3-for-2 stock split. After the split, you will own _____ shares worth _____ per share.Group of answer choices
Answer: 30,000; $110
Explanation:
From the question, we are informed that someone own 5% of Coastal Corporation's 400,000 outstanding common shares and that the stock was trading for $165 per share before Coastal executives announced a 3-for-2 stock split.
The share owned after the split will be:
= 5% × 400,000 × (3/2)
= 0.05 × 400,000 × 1.5
= 30,000
The price after the split will be the current price divided by the split ratio. Tgis will be:
= $165/1.5
= $110
Sweet Acacia Industries reported net income of $1.40 million in 2022. Depreciation for the year was $224,000, accounts receivable decreased $490,000, and accounts payable decreased $392,000.
Required:
Compute net cash provided by operating activities using the indirect approach.
Answer:
Net Cash flow from operating = $ 1,722,000
Explanation:
To determine the net cash flow from operating activities. We will adjust the net income as follows; all decrease in assets and increase in liabilities are added and all increase in assets and decrease in liabilities are subtracted.
All non- cash expenses would be added back and all non-cash income would be deducted from the net income. Notable here is depreciation a non-cash expense which must be added back to the net income
This principle is applied below:
$
Net Income 1,400,000
Adjustments:
Add depreciation expense 224,000
Add decrease in current asset 490,000
less decrease in current liabilities (392,000)
Net Cash flow from operating 1,722,000
Net Cash flow from operating = $ 1,722,000
How would you make a convincing case that open trade in goods and services as well as free flow of foreign direct investment will enhance the well-being of (a) consumers, (b) pro-ducers, and (c) the government of countries? Give specific examples to prove your position.
Answer:
(a) consumers
Consumers are those who benefit the most from open trade and foreign direct investment. This is because these two economic policies increase the producion and delivery of goods and services, making them cheaper.
(b) producers
While some producers would be affected by open trade, most producers would benefit. Firms are allowed to specialize in producing those goods and services for which they have a competitive advantage, and they can also profit from increased foreign investment.
(c) the government of countries
Governments also benefit from these economic policies. They higher well-being of society means more government credibility, and the higher economic growth means more government revenue in the form of taxes.
The case that open trade in goods and services, as well as free flow of foreign direct investment, should be described below:
Consumers, producers, and government:Consumers are those who benefit the most from open trade and foreign direct investment. While some producers would be affected by open trade, most producers would benefit. Governments also benefit from these economic policies. The higher well-being of society means more government credibilitylearn more about the investment here: https://brainly.com/question/16822436?referrer=searchResults
Jensen performed legal services to assist Balm Co. in accomplishing its initial organization. Jensen accepted 1,000 shares of $5 par common stock in Balm as payment for his services. The Balm shares were not yet publicly traded, but they had a book value of $4 per share. Jensen provided 48 hours of service, which is normally billed at $125 per hour. By what amount should the common stock account increase?
Answer: $5,000
Explanation:
The Common Stock account of a company will record stock only at the Par Value so that the Balance sheet is more accurate.
As such, the common stock account here will increase by;
= 1,000 * $5 par value
= $5,000
Kate is in the 15% tax bracket and has $29,000 available for investment during her current tax year. Assume that she remains in the same tax bracket over the next 11 years, and determine the accumulated amount of her investment after taxes if she puts the$29,000 into the following. (Round your answers to the nearest cent.)(a) a tax-deferred annuity that pays 4%/year, tax deferred for 11 years$ (b) a taxable instrument that pays 4%/year for 11 years
Answer and Explanation:
The computation is shown below:
a. The Accumulated amount of her investment atter taxes is
Before that first we have to determine the future value which is shown below:
As we know that
Future value = Present value × (1 + interest rate)^number of years
= $29,000 × (1 + 0.04)^11
= $44,644.17
And, the tax rate is 15%
So, the after tax value is
= $44,644.17 × (1 - 0.15)
= $37,947.54
b. Now for the second part it is
= Annual cash flows × Annuity factor at 3.4% for 11 years
= $29,000 × 10.638
= $308,502
four (4) ways to harvest an investment in a business.
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.
How can you assist the ProServices team in serving Pro customers in your
department? Select all that apply.
A. Pull orders for Pro customers in advance and have them ready to pick-up
B. Call Pro customers to maintain relationships and proactively seek out business
C. Monitor inventory levels to make sure key Pro items are in-stock
D. Price match other retailers to give Pro the best price
E. Identify pro customers and introduce them to the ProServices team
Answer:
ProServices Team and Pro CustomersAssisting the ProServices Team in serving Pro customers in my department. Here I have assumed that my department manages and coordinates the relationship with Pro customers:
A. Pull orders for Pro customers in advance and have them ready to pick-up
B. Call Pro customers to maintain relationships and proactively seek out business
C. Monitor inventory levels to make sure key Pro items are in-stock
D. Price match other retailers to give Pro the best price
E. Identify pro customers and introduce them to the ProServices team.
Explanation:
“Pro” customers are a group of independent contractors, repair remodelers, specialty tradesmen, property management, and facility maintenance professionals who are afflicted to an organization offering ProServices. They are not the end customers. Between my organization and the customers, they are middlemen and women who are organized by my ProServices organization to offer specialty services to the general public in a professional manner that guarantees customer satisfaction and payment to the professionals for services rendered. In doing this, the ProService organization charges the Pro customers a fixed fee, which is deducted from the payments made by the end-customers.
The declaration, record, and payment dates in connection with a cash dividend of $77,000 on a corporation's common stock are October 1, November 7, and December 15.
Required:
Journalize the entries required on each date.
Answer:
Oct 1
Dr Cash Dividend $77,000
Cr Dividend Payable $77,000
Nov 7
No Entry required on the record date
Dec 15
Dr Dividend Payable $77,000
Cr Cash
Explanation:
Preparation of the Journal entries for each date
Based on the information given we were told that the cash dividend of the amount of $77,000 was a corporation's common stock are October 1, November 7, and December 15 which means that the transaction will be recorded as:
Oct 1
Dr Cash Dividend $77,000
Cr Dividend Payable $77,000
Nov 7
No Entry required on the record date
Dec 15
Dr Dividend Payable $77,000
Cr Cash
Michigan Corporation manufactured inventory in the United States and sold the inventory to customers in Canada. Gross profit from sale of the inventory was $500,000. Title to the inventory passed FOB: Destination. How much of the gross profit is treated as foreign source income for purposes of computing Michigan Corporation’s foreign tax credit in the current year?
Answer:
50% of gross profit = $250,000
Explanation:
The Tax Cuts and Jobs Act of 2017 changed some aspects of Section 863(b), but aspects regarding US companies producing locally and exporting their production to foreign countries remains the same. US companies can allocate 50% of gross profit as foreign source income, while the other 50% must be allocated as domestic income due to production related activities.
g Sheffield Corp. purchased a truck at the beginning of 2017 for $109200. The truck is estimated to have a salvage value of $3800 and a useful life of 131750 miles. It was driven 23000 miles in 2017 and 31000 miles in 2018. What is the depreciation expense for 2018
Answer:
$24,800
Explanation:
Calculation for the depreciation expense for 2018 for Sheffield Corp.
Using this formula
Depreciation expense = (Purchased at the beginning-Salvage value/Useful life)* Driven miles
Let plug in the formula
Depreciation expense=($109,200-$3,800/131,750)*31,000
Depreciation expense=($105,400/131,750)*31,000
Depreciation expense=0.80*31,000
Depreciation expense=$24,800
Therefore the depreciation expense for 2018 will be $24,800
Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows: Current Year Previous Year Sales $4,000,000 $3,600,000 Cost of goods sold 2,280,000 1,872,000 Selling expenses 600,000 648,000 Administrative expenses 520,000 360,000 Income tax expense 240,000 216,000 a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round to the nearest whole percentage. Innovation Quarter Inc. Comparative Income Statement For the Years Ended December 31 Current year Amount Current year Percent Previous year Amount Previous year Percent Sales $4,000,000 % $3,600,000 % Cost of goods sold (2,280,000) % (1,872,000) % $ % $ % Selling expenses $(600,000) % $(648,000) % Administrative expenses (520,000) % (360,000) % $ % $ % $ % $ % Income tax expense (240,000) % (216,000) % $ % $ % b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 3 percentage points, and administrative expenses by 3 percentage points. Thus, net income as a percent of sales by 5 percentage points.
Answer:
Innovation Quarter Inc.
a) Comparative Vertical Analysis of Income Statement
Current Year % Previous Year %
Sales $4,000,000 100% $3,600,000 100%
Cost of goods sold 2,280,000 57% 1,872,000 52%
Gross profit $1,720,000 43% $1,728,000 48%
Selling expenses 600,000 15% 648,000 18%
Administrative expenses 520,000 13% 360,000 10%
Income tax expense 240,000 6% 216,000 6%
After Tax Income $360,000 9% $504,000 14%
b. The vertical analysis indicates that the cost of goods sold as a percent of sales increased by 5 percentage points, while selling expenses decreased by 3 percentage points, and administrative expenses increased by 3 percentage points. Thus, net income as a percent of sales decreased by 5 percentage points.
Explanation:
Data and Calculations:
Vertical Analysis of Income Statement Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
Current Year Previous Year
Sales $4,000,000 $3,600,000
Cost of goods sold 2,280,000 1,872,000
Selling expenses 600,000 648,000
Administrative expenses 520,000 360,000
Income tax expense 240,000 216,000
Innovation Quarter Inc. can use this vertical analysis to express the relationship between each line item and the sales revenue. The vertical analysis helps in ascertaining the percentage increases in each variable. With the analysis, the management of Innovation Quarter Inc. can undertake further investigations to learn the causes of the different performances and learn ways to control them.
Simon Company's year-end balance sheets follow.
At December 31 2015 2014 2013
Assets
Cash $25,267 $30,131 $31,387
Accounts receivable, net 75,450 50,642 41,435
Merchandise inventory 92,074 68,299 44,128
Prepaid expenses 8,301 8,066 3,418
193,532
Plant assets, net 231,487 215,775
Total assets $432,579 372,913 313,900
Liabilities and Equity
Accounts payable $106,635 $62,392 $41,849
Long-term notes payable secured by
mortgages on plant assets 79,698 84,912 71,453
Common stock, $10 par value 163,500 163,500 163,500
Retained earnings 82,746 62,109 37,098
Total liabilities and equity $432,579 $372,313 313,900
Express the balance sheets in common-size percents.
Answer:
Simon Company
Common-size percents Balance Sheet as of the years ended December 31 2015 2014 2013:
2015 % 2014 % 2013 %
Assets
Cash $25,267 5.8% $30,131 8.1% $31,387 10%
Accounts receivable, net 75,450 17.4% 50,642 13.6% 41,435 13.2%
Merchandise inventory 92,074 21.3% 68,299 18.3% 44,128 14.1%
Prepaid expenses 8,301 1.9% 8,066 2.2% 3,418 1.1%
201,092 46.5% 157,138 42.1% 120,368 38.3%
Plant assets, net 231,487 53.5% 215,775 57.9% 193,532 61.7%
Total assets $432,579 100% 372,913 100% 313,900 100%
Liabilities and Equity
Accounts payable $106,635 24.7% $62,392 16.7% $41,849 13.3%
Long-term notes payable secured by mortgages
on plant assets 79,698 18.4% 84,912 22.8% 71,453 22.8%
Total Liabilities $186,333 43.1% $147,304 39.5 $113,302 36.1%
Common stock, $10
par value 163,500 37.8% 163,500 43.8% 163,500 52.1%
Retained earnings 82,746 19.1% 62,109 16.7% 37,098 11.8%
Total liabilities and
equity $432,579 100% $372,913 100% 313,900 100%
Explanation:
Simon Company's balance sheets in common-size percents shows the relative values of assets and liabilities and equity in numeric and percentage terms to enable comparison. The company's balance sheet line items are expressed as percentages of the total, usually the total assets in each period. From the analysis, the management, investors, and other parties of Simon Company can understand the changes in the line items from year to year, thus making it possible for Simon Company to undertake a trend analysis.
A customer owns a long-term negotiable CD. If the customer wishes to tender the CD prior to maturity, the registered representative should inform the customer that:
Complete Question:
A customer owns a long-term negotiable CD. If the customer wishes to tender the CD prior to maturity, the registered representative should inform the customer that:
A. a prepayment penalty will be charged
B. he or she will receive par value of the principal plus accrued interest
C. the CD may not be redeemed prior to maturity
D. the customer will receive the market value plus accrued interest
Answer:
D. the customer will receive the market value plus accrued interest.
Explanation:
In this scenario, a customer owns a long-term negotiable certificate of deposit (CD). If the customer wishes to tender the CD prior to maturity, the registered representative should inform the customer that the customer will receive the market value plus accrued interest.
Generally, in the stock markets when a customer wishes to withdraw his or her funds on any brokered CD, there are no penalties for such actions or choice. The registered representative should pro-rate the amount of interest earned by the customer over the period of time for the deposit.
You observe a portfolio for five years and determine that its average return is 11.3% and the standard deviation of its returns in 19.7%. Would a 30% loss next year be outside the 95% confidence interval for this portfolio?
Answer:
-28.1%
Explanation:
Calculation for what would a 30% loss next year be outside the 95% confidence interval for the portfolio
The standard deviation of 95% confident will be 2
The first step is to find the Upper tail using this formula
Upper tail= Average return percentage +(Standard deviation of 95% confident *Standard deviation of its returns)
Let plug in the formula
Upper tail=0.113+(2*0.197)
Upper tail =0.113+0.394
Upper tail=0.507*100
Upper tail =50.7%
Second step is to find the Lower tail using this formula
Lower tail=Average return percentage -(Standard deviation of 95% confident *Standard deviation of its returns)
Let plug in the formula
Upper tail=0.113-(2*0.197)
Upper tail =0.113-0.394
Upper tail=-0.281*100
Upper tail =28.1%
Based on the above calculation the lower tail was -28.1% which means that it wouldn't in any way loss more than the 30% of it value next year outside the 95% confidence interval for the portfolio
Geese Company utilizes the LIFO retail inventory method. Its cost-to-retail percentage is 60% based on beginning inventory and 64% based on current-period purchases. The company determined that beginning inventory at retail was $200,000 and that during the current period a new layer was added with retail value of $50,000. The cost of ending inventory should be
Answer:
$152,000
Explanation:
Calculation for the cost of the ending inventory
First step is to calculate the cost-to-retail percentage of the beginning inventory amount
Using this formula
Beginning Inventory =Cost-to-retail percentage*Beginning inventory at retail
Let plug in the formula
Beginning Inventory =60%*$200,000
Beginning Inventory =$120,000
Second step is to calculate current-period purchases percentage of the new layer amount
Using this formula
Current period purchases= Purchases percentage* New layer
Let plug in the formula
Current period purchases=64%*50,000
Current period purchases=$32,000
The last step is to find the cost of the ending inventory using this formula
Ending inventory cost=Beginning Inventory+Current period purchases
Let plug in the formula
Ending inventory cost=$120,000+$32,000
Ending inventory cost=$152,000
Therefore the cost of the ending inventory will be $152,000
When entering a foreign market, Montain stream brewery purchases a manufacturing plant and sets up a new brewery. Instead of using their signature name, the product produced in the foreign market is labeled as “Everest Prak Brew” This is an example of?
it's an example of brand localization
On January 1, 2018, Frontier World issues $40.7 million of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride. rev: 11_03_2016_QC_CS-68413 Required: 1-a. If the market rate is 8%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
Answer:
$44,728,243.62
Explanation:
face value $40,700,000
coupon rate 9%, semiannual 4.5%
maturity 20 years x 2 = 40 periods
market interest rate 8%
issue price?
present value of face value = $40,700,000 / (1 + 4%)⁴⁰ = $8,477,364.12
present value of coupon payments = $1,831,500 x 19.793 (PV annuity factor, 4%, 40 periods) = $36,250,879.50
market price = $8,477,364.12 + $36,250,879.50 = $44,728,243.62
Journal entry to record issuance of the bonds:
January 1, 2018, bonds are issued at a premium
Dr Cash 44,728,243.62
Cr Bonds payable 40,700,000
Cr Premium on bonds payable 4,028,243.62
If the economy is normal, Charleston Freight stock is expected to return 16.5 percent. If the economy falls into a recession, the stock's return is projected at a negative 11.6 percent. The probability of a normal economy is 70 percent while the probability of a recession is 30 percent. What is the variance of the returns on this stock
Answer:
Variance of the returns of this stock is 0.01658177
Explanation:
Mean return = 0.7 * 16.5% + 0.3*-11.6%
Mean return = 0.1155 - 0.0348
Mean return = 0.0807
Mean return = 8.07%
Variance of the return = 0.7 * (16.5%-8.07%)^2 + 0.3 * (-11.6%-8.07%)^2
Variance of the return = 0.7 * (8.43%)^2 + 0.3 * (-19.67%)^2
Variance of the return = 0.7 * (0.0843)^2 + 0.3 * (-0.1967)^2
Variance of the return = 0.0049745 + 0.011607267
Variance of the return = 0.01658177
"When The Bank of Bank County borrows funds from the Federal Reserve; the rate the Fed charges the commercial bank is called the _____ rate."
Answer: Bank Rate/ Discount Rate
Explanation:
The Bank Rate is the interest rate that the Fed as the country's Central Bank charges commercial banks when they borrow money from it. The loans given are usually short term in nature.
The Bank Rate is a very useful tool in Monetary Policy by the Central Bank. If the Fed for instance would like to increase Economic activity by injecting cash into the economy, they can lower the bank rate and thus encourage more banks to loan money from them which will then be loaned to the public. If the Fed wanted to decrease Economic activity, the reverse would hold true.
Rather than crediting the Unearned rent account for $400 of prepaid rent received from a customer, which explains an alternate recording procedure to journalize this receipt?
Answer:
Record receipt with a credit to the rent revenue account
Any unused portion of the prepayment still existing at the end of the period will be transferred to the Unearned rent account
Explanation:
Prepaid rent is an income that is to be earned at a future date. Since income is normally recorded as a revenue when it is earned, we usually credit Unearned Rent account.
However financial statements are made at end of a defined period (for example monthly, quarterly, biannually, or yearly).
The journal entry can be credited to the Rent Revenue account directly. At the end of the period the amount earned is retained in the account, and the unearned portion of the prepaid rent is transferred to the Unearned Rent account.
So financial statements will only recognise earned income when prepared.
[The following information applies to the questions displayed below.]
Allied Merchandisers was organized on May 1. Macy Co. is a major customer (buyer) of Allied (seller) products.
May 3 Allied made its first and only purchase of inventory for the period on May 3 for 2,000 units at a price of $10 cash per unit (for a total cost of $20,000).
5 Allied sold 1,500 of the units in inventory for $14 per unit (invoice total: $21,000) to Macy Co. under credit terms 2/10, n/60. The goods cost Allied $15,000.
7 Macy returns 125 units because they did not fit the customer’s needs (invoice amount: $1,750). Allied restores the units, which cost $1,250, to its inventory.
8 Macy discovers that 200 units are scuffed but are still of use and, therefore, keeps the units. Allied sends Macy a credit memorandum for $300 toward the original invoice amount to compensate for the damage.
15
Allied receives payment from Macy for the amount owed on the May 5 purchase; payment is net of returns, allowances, and any cash discount.
Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method. (Allied estimates returns using an adjusting entry at each year-end.)
Answer:
Allied Merchandisers
Journal Entries
Date General Journal Debit Credit
03-May Merchandise Inventory $20,000
To Cash $20,000
05-May Accounts Receivable $21,000
To Sales $21,000
05-May Cost of goods sold $15,000
To Merchandise Inventory $15,000
07-May Sales Returns and allowances $1,750
To Accounts Receivable $1,750
07-May Merchandise Inventory $1,250
To Cost of goods sold $1,250
08-May Sales Returns and allowances $300
To Accounts Receivable $300
15-May Cash $18,571
Sales Discounts $379
($18950*2%)
To Accounts receivable $18,950
($21000-$1750-$300)
In order to document a business transaction in the accounting records of the company, a journal entry is employed. A journal entry is often made in the general ledger, but it can also be made in a subsidiary ledger and subsequently rolled forward into the general ledger after being summarised.
The journal entry has been attached below:
Allied Merchandisers
Journal Entries
Date General Journal Debit Credit
03-May Merchandise Inventory $20,000
To Cash $20,000
05-May Accounts Receivable $21,000
To Sales $21,000
05-May Cost of goods sold $15,000
To Merchandise Inventory $15,000
07-May Sales Returns and allowances $1,750
To Accounts Receivable $1,750
07-May Merchandise Inventory $1,250
To Cost of goods sold is $1,250
08-May Sales Returns and allowances $300
To Accounts Receivable $300
15-May Cash $18,571
Sales Discounts $379
($18950*2%)
To Accounts receivable $18,950
($21000-$1750-$300)
After then, the general ledger is utilized to produce the company's financial statements. The idea behind a journal entry is to use double-entry accounting, which requires that every company transaction be recorded at least twice.
For instance, when you make a cash sale, the revenue account and the cash account are both increased. Alternatively, if you purchase items on credit, this raises both the accounts payable and inventory accounts.
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