Answer:
1. B. 3.14
2. C. 1.12
Explanation:
1. Times Interest Earned ratio
Measures how well a company is able to cover it's debt obligations using it's earnings.
The formula is simply,
= Earning before Interest and Tax / Interest Expense
Therefore,
Times Interest Earned ratio = 116/37
= 3.14
HHF's times interest earned ratio is Option B, 3.14.
2. Debt to Equity Ratio
This ratio compares the debt used to fund a company vs it's equity. It measures how much of either way used to fund the company.
The formula is,
= Total Debt / Total Equity
= 540/484
= 1.12
HHF's Debt to Equity ratio is 1.12, Option C.
A bidding firm, A, is worth $27,000 as a stand-alone entity. A target firm, B, is worth $12,000 as a stand-alone entity, but $18,000 if it is acquired and integrated with Firm A. Several other firms are interested in acquiring Firm B, and Firm B is also worth $18,000 if it is acquired by these other firms. If A acquired B, would this acquisition create value? If yes, how much? How much of this value would the equity holders of A receive? How much would the equity holders of B receive?
Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
Firm A’s worth as a stand-alone entity = $27,000
Firm B’s worth as a stand-alone entity = $12,000
But if Firm A acquired Firm B it’s increase worth of Firm B at $18000.
Firm A is acquired Firm B, this acquisition create value of
= $18,000 - $12000
= $6000.
With this acquisition equity holders of Firms received $18,000 which is $6,000 more than Firm B stand alone.
Check all true statements regarding CMBS:
a.CMBS have less exposure to prepayment risk than RMBS
b.Loans in a CMBS deal are recourse loans The multifamily/apartment CRE sector never uses CMBS for financing as it relies on RMBS
c.CMBS are the main source of financing for commercial real estate loans
d.The number of commercial mortgages in a CMBS deal are usually lower than the number of residential mortgage in a RMBS deal
Answer: A and D only
Explanation:
CMBS Loan are also referred to as a Conduit Loan, this is a type of real estate loan usually commercial, which is secured by a first-position mortgage on a commercial property. These loans are usually packaged, and sold by a Conduit Lender, commercial banks, investment banks, and syndicates of banks.
Loans in a CMBS are always bigger so they are less in a CMBS deal. Sometimes it’s onlyone loan in a Single Asset (SA) CMBS deal
Prepayments are discouraged in CMBS through defeasance,prepayment penalties or yield maintenance fees.
Answer:
a.CMBS have less exposure to prepayment risk than RMBS
d. The number of commercial mortgages in a CMBS deal are usually lower than the number of residential mortgage in a RMBS deal
Explanation:
Commercial Mortgage-Backed Securities (CMBS) as the name implies are mortgage backed securities that are secured with commercial mortgages while Residential Mortgage-Backed Securities (RMBS) are mortgage backed securities secured by residential property.
a) CMBS are based on mortgages which usually have a fixed term contract in place meaning that prepayment is less of a thing with CMBS than with RMBS so the former does indeed have a less exposure to prepayment risk than the latter.
d) This is indeed true because both packages have to look appealing to investors but can only use different amounts to reach the minimum threshold. This is because Commercial Mortgages pay more than Residential Mortgages so more RMBS have to be pulled together to form an attractive investment as opposed to CMBS. This is why the number in CMBS are usually less than that of RMBS.
How long do foodbourne illnesses last
Answer:
5-7 days
Explanation:
Immune-comprised individuals may experience a more serious illness. Severe diarrhea (often bloody diarrhea), abdominal cramps, and vomiting. Usually little or no fever. Can begin 2 to 8 days, but usually 3-4 days after consumption of contaminated food or water and last about 5 to 7 days depending on severity.
Answer:
about a week
Explanation:
Can begin 2 to 8 days, but usually 3-4 days after consumption of contaminated food or water and last about 5 to 7 days depending on severity.
The student-run newspaper asks students to visit a web page and respond to questions regarding a proposed tuition increase. Only responses to the questions are recorded. Summary statistics based on the survey responses are used in an article published the following week, and no one outside of the newspaper has access to the individual responses. The newspaper's survey is considered to be A) confidential. B) anonymous. C) both anonymous and confidential. D) neither anonymous nor confidential.
Answer:
C) both anonymous and confidential
Explanation:
As the student-run, the new paper and ask other students to visit a link firm the new paper and respond to those questions and the responses for only those questions were recorded. This indicates that the newspaper survey is anonymous and confidential as the ant student can fill the survey and the information that is confidential as none outside the newspaper has access to those responses.Andrews Corporation has income from operations of $253,000. In addition, it received interest income of $25,300 and received dividend income of $28,900 from another corporation. Finally, it paid $13,000 of interest income to its bondholders and paid $47,400 of dividends to its common stockholders. Using the 2013 corporate tax schedule, what is the firm’s federal income tax? Round your intermediated and final answers to the nearest cent. $
Answer:
$107,122
Explanation:
corporate tax rate during 2013 = 39.1%
Andrews Corporation net taxable income:
from operations $253,000from interests $25,300from dividends $28,900 - dividends received deductions $20,230 = $8,670Deductions on net taxable income*:
interest paid to bondholders = $13,000Net taxable income = $286,970 - $13,000 = $273,970
federal income tax = $273,970 x 39.1% = $107,122
*Dividends are paid with retained earnings which include after tax net income. They are not tax deductible.
Martinez Company received the following selected information from its pension plan trustee concerning the operation of the company’s defined benefit pension plan for the year ended December 31, 2020.
January 1, 2020 December 31, 2020
Projected benefit obligation $1,517,000 $1,545,000
Market-related and fair value of plan assets 803,000 1,132,300
Accumulated benefit obligation 1,580,000 1,698,300
Accumulated OCI (G/L)—Net gain 0 (201,700 )
The service cost component of pension expense for employee services rendered in the current year amounted to $78,000 and the amortization of prior service cost was $118,300. The company’s actual funding (contributions) of the plan in 2020 amounted to $249,000. The expected return on plan assets and the actual rate were both 10%; the interest/discount (settlement) rate was 10%. Accumulated other comprehensive income (PSC) had a balance of $1,183,000 on January 1, 2020. Assume no benefits paid in 2020.
Determine the amounts of the components of pension expense that should be recognized by the company in 2020.
Answer:
$1,337,700
Explanation:
The computation of the amounts of the components of pension expense is shown below:
Service cost $78,000
Amortization of Prior Service cost $1,183,000 ($1,698,300 - $1,580,000)
Interest on PBO $157,000 ($1,517,000 ×10%)
Less: Expected return on plant assets $80,300 ($803,000 × 10%)
Pension expense $1,337,700
We simply applied the above formula so that the amount of pension expense could come
Stone Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent? A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be restated. A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported. A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be presented as previously reported. A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be restated.
Answer:
A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported.
Explanation:
Since the accounting method is being changed from FIFO to LIFO, any adjusting of prior year balances would be impractical. If the change is from LIFO to FIFO, then it makes more sense to adjust prior year balances. By impractical, it means that any changes would be too difficult and expensive to determine, and the value of the change is insignificant (materiality principle).
Generally US GAAP rules require that changes from FIFO to LIFO be disclosed in the footnotes only.
Marcellus Company is involved in a lawsuit. Footnote disclosure of the contingent liability which could arise does not have to be presented if the probability of Marcellus owing money as a result of the lawsuit is A) reasonably possible and the amount cannot be reasonably estimated. B) probable and the amount cannot be reasonably estimated. C) reasonably possible and the amount can be reasonably estimated. D) remote and the amount can be reasonably estimated.
Answer:
The answer is option B) probable and the amount cannot be reasonably estimated.
Explanation:
Contingency liability is the likelihood that a liability might occur sometimes in the future in the face of uncertain circumstances. To validate a contingency liability, the fa cts presented has to be reasonably possible and reasonably estimated.
in the case of Marcellus Company, footnote disclosure of the contingent liability which could arise does not have to be presented if the probability of Marcellus owing money as a result of the lawsuit is probable and the amount cannot be reasonably estimated.
Discuss economic theory related to the quote above. Be sure to include a definition of Labor Force Participation Rate (LFPR) within your discussion. Locate and incorporate outside research that gives evidence and explanation as to the possible causes of these declines in the Labor Force Participation rate. Integrate biblical insights into your discussion board thread. In what way does scripture influence our decision to work
Answer:
The labor force is the group of individuals for employment. The labor force investment rate is the proportion of labor force partitioned by all out populace of the applicable age. As per month to month work survey, the labor force support rate keeps on falling. As indicated by different market analysts, this wonder is because of the blend of segment, basic, and repetitive elements. Also, due to LFPR , the support of youth and the primary age bunch is required to decay. Likewise, the investment paces of laborers of more seasoned age are additionally anticipated to increment, yet remain essentially lower than those of the prime age group. These aspects have applied descending weight on the general labor force support proportion over the 2012–2022 time period and the proportion is relied upon to decrease further, to 61.6% in 2022.
The drawn out issue of joblessness is because of repetitive and auxiliary reasons, when numerous individuals the segment organization of a nation mirrors the portions of men, ladies, and the distinctive age, race, and ethnic gatherings inside that populace. The case of the time of increased birth rates age in segment change influences the labor force investment rate. Consistently after 2000, the portion of the time of increased birth rates populace has moved into the 55-years-and-more seasoned age bunch which transfers from the principal age gathering to one with considerable lesser investment proportions, origins the general cooperation of the labor force to decay.
A division is considering the acquisition of a new asset that will cost $2,950,000 and have a cash flow of $740,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes. Required: a. & b. What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 8 percent?
Answer and Explanation:
The computation of ROI for each year of the asset's life and residual income each year is shown below:-
Year Investment base ROI Residual income
1 $2,950,000 8% -$233,500
2 $2,212,500 11% -$233,500
3 $1,475,000 17% -$115,500
4 $737,500 34% -$56,500
ROI = Net income ÷ Total investment × 100
Net Income = Cash flow - Depreciation
Residual income = Net income - (Investment × Cost of capital)
Depreciation = Investment base ÷ 4 years
The return on investment and the residual income can be find out by using the excel spreadsheet. Kindly find it in the attachment
One of the key functions of human resource management is
Answer: recruiting.
Explanation:
Recruiting is one of the most important aspects of human resource management. Hence, Option B is correct.
What is the meaning of Recruiting?Finding, vetting, recruiting, and eventually onboarding qualified job prospects is the process of recruitment. The process of finding, vetting, shortlisting, and employing potential resources to fill open jobs in a company is known as recruitment.
It serves as a fundamental part of human resource management. The act of selecting the best candidate for a position at the ideal time is known as recruitment.
Simply announcing that you are hiring is all that hiring entails. The deliberate technique of locating and attracting the best individuals for the position is known as recruiting.
Therefore, Option B is correct.
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The complete question has been attached in text form:
One of the key functions of human resource management is:
a. departmentalizing.
b. recruiting.
c. budgeting.
d. auditing.
Consider two independent firms, BU1 and BU2, which transact with each other through spot market transactions in a competitive market. In a typical year, BU1 incurs total costs of $2 million in producing goods that BU2 buys. BU2 would be willing to pay up to $7.5 million for these goods, but because of the competitive market, ends up paying $5 million. What is the value captured by BU1 from these transactions?
Answer:
Value captured by BU1 = $5.5 million
Explanation:
Given:
Two firm = BU1 , BU2
BU1 cost of production = $2 million
BU2 will able to pay up-to = $7.5 million
BU2 will pay = $5 million:
Find:
Value captured by BU1 = ?
Computation:
⇒ Value captured by BU1 = BU2 will able to pay up-to - BU1 cost of production
⇒ Value captured by BU1 = $7.5 million - $2 million
⇒ Value captured by BU1 = $5.5 million
Based on the information given the value captured by BU1 from these transactions is $3 million.
The value captured by the seller (BU1)
Seller value =Value BU1 is willing to sell -Value at which he sold
Where:
Value BU1 is willing to sell=$5 million
Value at which he sold=$2 million
Let plug in the formula
Seller value=$5 million-$2 million
Seller value= $3 million
Inconclusion the value captured by BU1 from these transactions is $3 million.
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All of the following are correct statements about transfers between divisions located in countries with different tax rates except that
A. differences in tax rates across countries complicate the determination of the appro-priate transfer price
B. a decreasing number of transfers are between divisions located in different countries
C. companies must pay income tax in the country where income is generated
D. many companies prefer to report more income in countries with low tax rates.
All of the following are correct statements about transfers between divisions located in countries with different tax rates except that the companies must pay income tax in the country where income is generated. Thus option (C) is correct.
What is tax?Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional, or national.
Tax revenues finance government activities, including public works and services such as roads and schools, or programs such as Social Security and Medicare.
In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, such as a business, or the end consumers of the business’s goods.
From an accounting perspective, there are various taxes to consider, including payroll taxes, federal and state income taxes, and sales taxes.
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Assume that the economy is in long-run equilibrium. Now, assume that there is an unexpected increase in the price of oil. As a result of higher oil prices, the A. short-run aggregate supply curve will shift left. B. long-run aggregate supply curve will shift left. C. short-run aggregate supply curve will shift right. D. aggregate demand curve will shift left. The new short-run equilibrium will be
Answer:
The correct answer is D)
The aggregate demand curve will shift left.
Aggregate supply is stimulated only by labour, capital, and technology.
Equilibrium refers to the price point where demand or supply intersect.
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If the distribution of water is a natural monopoly, then a. a single firm cannot serve the market at the lowest possible average total cost. b. multiple firms would likely each have to pay large fixed costs to develop their own network of pipes. c. allowing for competition among different firms in the water-distribution industry is efficient. d. average cost increases as the quantity of water produced increases.
Answer:
The correct option is C) If the distribution of water is a natural monopoly, average cost increases as the quantity of water produced increases.
Explanation:
Natural monopoly occurs when there is a hig cost of entry into a particular market niche. The high cost is usually caused by expensive equipment and infrastructural set up for manufacturing as well as maintenance costs.
Therefore, If the distribution of water is a natural monopoly, average cost increases as the quantity of water produced increases.
Distribution of water falls into the category of natural monopoly. Due to the prevailing circumstances, Fixed cost is larger comparable to variable cost such that it is cheaper for a single firm to serve the market.
On January 1, 2021, the Blackstone Corporation purchased a tract of land (site number 11) with a building for $600,000. Additionally, Blackstone paid a real estate brokerâs commission of $36,000, legal fees of $6,000, and title insurance of $18,000. The closing statement indicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition, the building was razed at a cost of $75,000.
Blackstone entered into a $3,000,000 fixed-price contract with Barnett Builders, Inc., on March 1, 2021, for the construction of an office building on land site 11. The building was completed and occupied on September 30, 2022. Additional construction costs were incurred as follows:
Plans, specifications, and blueprints .....................$ 12,000
Architectsâ fees for design and supervision ............95,000
To finance the construction cost, Blackstone borrowed $3,000,000 on March 1, 2021. The loan is payable in 10 annual installments of $300,000 plus interest at the rate of 14%. Blackstoneâs average amounts of accumulated building construction expenditures were as follows:
For the period March 1 to December 31, 2021 ...........$ 900,000
For the period January 1 to September 30, 2022 .......2,300,000
Required:
1. Prepare a schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022.
2. Prepare a schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022.
Answer:
Blackstone Corporation
1. A schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022:
Cost of Land = $600,000
Broker's Commission = $36,000
Legal Fees = $6,000
Title Insurance = $18,000
Razing of old building = $75,000
Total = $735,000
2. A schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022:
Payment to contractor for building = $3,000,000
Plans, specifications, and blueprints = $12,000
Architect's fees (design & supervision = $95,000
Capitalized Interest ($3m x14%/10 x 2) = $84,000
Total = $3,191,000
Explanation:
a) The cost of land to recognize includes the actual cost for the parcel of land, including the building which was razed. All other expenses incurred ordinarily and necessarily in order to put the land to its intended use are also capitalized. The costs for the broker's commission, legal fees, title insurance, and razing of old building were incurred ordinarily and necessarily for the land and are therefore capitalized in determining the value of the land.
b) The capitalized interest portion for the building is the interests paid to date. The contractor's fee, payments for plans, architect's fee, and interests are included as costs of the building.
Frederick Company has two service departments (Cafeteria Services & Maintenance). Frederick has two production departments (Assembly Department & Packaging Department.) Frederick uses a step allocation method where Cafeteria Services is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Cafeteria Services has costs of $255,000 and Maintenance has costs of $175,000 before any allocations. What amount of Maintenance total cost is allocated to the Packaging Department? (round to closest whole dollar) Employees are: Cafeteria Services 4 Maintenance 5 Assembly Department 10 Packaging Department 10
Answer:
The Total allocation of maintenance cost of packaging department is $87,500
Explanation:
According to the given data we have the following:
The Total Maintenance cost is $175,000 before allocation.
Total employees of in Production Department is= 10 Assembly + 10 Packaging= 20
Hence, Total maintenance cost per employee = $175,000 / 20
Total maintenance cost per employee =$8,750
Therefore, the Total allocation of maintenance cost of packaging department= Total maintenance cost per employee× Employees Packaging Department
Total allocation of maintenance cost of packaging department=$ 8,750 X 10 employees= $87,500
Suppose that the standard deviation of monthly changes in the price of commodity A is $2. The standard deviation of monthly changes in a futures price for a contract on commodity B (which is similar to commodity A) is $3. The correlation between the futures price and the commodity price is 0.9. What hedge ratio should be used when hedging a one month exposure to the price of commodity A
Answer:
0.6
Explanation:
Correlation r = 0.9,
Standard deviation of monthly change in price of commodity A, σA = 2,
Standard deviation of monthly change in price of commodity B, σB = 3
The hedge ratio will be calculated using the formula
Hedge ratio=r×σA÷σB
Hedge ratio=0.9×2÷3
Hedge ratio = 0.6
Therefore, the hedge ratio used when hedging a one month exposure to the price of commodity A is 0.6.
Fultz Company has accumulated the following budget data for the year 2020.
1. Sales: 31,410 units, unit selling price $85.
2. Cost of one unit of finished goods: direct materials 1 pound at $6 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $7 per direct labor hour.
3. Inventories (raw materials only): beginning, 10,120 pounds; ending, 15,480 pounds.
4. Selling and administrative expenses: $170,000; interest expense: $30,000.
5. Income taxes: 30% of income before income taxes.
Prepare a schedule showing the computation of cost of goods sold for 2020.
Answer:
COST OF Goods SOLD $ 1,1539,110
Explanation:
Fultz Company
Schedule of Cost of Goods Sold for 2020
As there are no beginning and ending finished goods inventories the total units produced are sold. (Finished Goods required 31410 Units)
Inventories raw materials : beginning, 10,120 pounds
Add Direct Materials Purchases 36770 pounds
Less Inventories ending raw materials , 15,480 pounds
Direct Materials Used 31410 pounds
Materials 1 pound at $6 per pound= $ 6* 31410 Units= $ 188460
Direct labor 3 hours at $12 per hour= $ 36* 31410 Units= $ 1130780
Manufacturing Overhead $7 per direct labor hour= $ 7* 31410 Units=
$ 219870
Total Manufacturing Costs $ 1,1539,110
There are no beginning and ending work in process inventories so the total manufacturing cost gives us the COST OF Goods SOLD.
Markley Manufacturing calculated its predetermined overhead rate to be 120% of direct labor cost. During June, the company incurred $90,000 of factory labor costs, of which $85,000 is direct labor and $5,000 is indirect labor. Actual overhead incurred was $84,000. Compute the amount of manufacturing overhead applied during the month. Determine the amount of under- or over-applied manufacturing overhead.
Answer:
Applied Manufacturing Overheads are $102,000
Overapplied Manufacturing overheads are $18,000
Explanation:
Under or over applied manufacturing overhead can be determined by comparing the actual and applied manufacturing overheads.
Applied overheads can be calculated by multiplying pre-determined overhead rate and actual level of quantity. Predetermined overhead rate is calculated using estimated overhead and estimated activity on which overheads are applied.
In this question the predetermined overhead rate is 120% of direct labor cost.
Applied overhead = Direct labor cost x 120% = $85,000 x 120% = $102,000
Actual overheads incurred = $84,000
Overapplied Manufacturing overheads = $102,000 - $84,000 = $18,000
Medallion Cooling Systems, Inc., has total assets of $9,800,000, EBIT of $2,050,000, and preferred dividends of $201,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment:
Capital structure/debt Cost of debt Number of stock shares Rate of return
0% 0% 200,000 12.3%
15 7.8 175,000 13.1
30 9.1 140,000 14.2
45 12.1 111,000 16.3
60 15.2 75,000 20.1
Calculate earnings per share for each level of indebtedness.
Answer:
Earnings per share:
0% debt = $5.145 per share
15% debt = $5.487 per share
30% debt = $6.203 per share
45% debt = $6.386 per share
60% debt = $6.570 per share
Explanation:
The earnings per share is the monetary value of how much each share of common stock outstanding has earned. The earnings per share can be calculated by dividing the Net Income attributable to common stockholders by the number of common stock shares outstanding.
Net Income attributable to Common stockholders = Net Income - Preferred stock dividends
Thus, Earnings per share = (Net Income - Preferred stock dividends) / Number of common stock shares outstanding
To calculate Earnings per share at each level of indebtedness, we first need to calculate the net income at each debt level. The net income will change as interest is deducted before calculating net income.
Net Income = EBIT - interest - tax
Total debt = Total assets * weightage of debt in capital structure
Tax = EBT * tax rate
a. 0% debt
Net Income = 2,050,000 - 0 - (2050000 * 0.4) = $1,230,000
Earnings per share = (1230000 - 201000) / 200000 = $5.145 per share
b. 15% debt
Total debt = 9,800,000 * 0.15 = 1470000
EBT = 2,050,000 - (1470000 * 0.078) = $1935340
Net Income = 1935340 - ( 1935340 * 0.4) = $1161204
Earnings per share = (1161204 - 201000) / 175000 = $5.487 per share
c. 30% debt
Total debt = 9,800,000 * 0.30 = 2940000
EBT = 2050000 - (2940000 * 0.091) = $1782460
Net Income = 1782460 - (1782460 * 0.4) = $1069476
Earnings per share = (1069476 - 201000) / 140000 = $6.203 per share
d. 45% debt
Total debt = 9,800,000 * 0.45 = 4410000
EBT = 2050000 - (4410000 * 0.121) = $1516390
Net Income = 1516390 - (1516390 * 0.4) = $909834
Earnings per share = (909834 - 201000) / 111000 = $6.386 per share
e. 60% debt
Total debt = 9,800,000 * 0.60 = 5880000
EBT = 2050000 - (5880000 * 0.152) = $1156240
Net Income = 1156240 - (1156240 * 0.4) = $693744
Earnings per share = (693744 - 201000) / 75000 = $6.570 per share
Hardware is adding a new product line that will require an investment of $ 1 comma 476 comma 000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $ 300 comma 000 the first year, $ 290 comma 000 the second year, and $ 240 comma 000 each year thereafter for eight years. Assume the project has no residual value. Compute the ARR for the investment. Round to two places
Answer:
42,51%
Explanation:
Accounting Rate of Return (ARR) = Average Profits / Average Investment
Calculation of Average Profits
Average Profit = Sum of Profits / Number of Years
= (300,000+290,000+240,000×8)/10
= $2,510,000 / 8
= $313,750
Calculation of Average Investment
Average Investment = Initial Investment + Scrape Value / 2
= $1,476,000/2
= $738,000
Accounting Rate of Return (ARR) = $313,750/$738,000×100
= 42,51%
Matrix Corporation's balance sheet and income statement appear below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 23 $ 22 Accounts receivable 39 40 Inventory 43 44 Property, plant, and equipment 587 500 Less accumulated depreciation 359 347 Total assets $ 333 $ 259 Liabilities and stockholders' equity: Accounts payable $ 30 $ 26 Accrued liabilities 15 18 Income taxes payable 39 40 Bonds payable 109 120 Common stock 51 50 Retained earnings 89 5 Total liabilities and stockholders' equity $ 333 $ 259 Income Statement Sales $ 972 Cost of goods sold 620 Gross margin 352 Selling and administrative expense 200 Net operating income 152 Gain on sale of equipment 14 Income before taxes 166 Income taxes 50 Net income $ 116 The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method.
Answer:
Check the explanation
Explanation:
Cash flow from operating activities:
Net income $116
Adjustment to reconcile net income to cash basis:
Depreciation expense ($359+1-347) $13
Gain on sale of equipment (14)
Decrease in account receivable (40-39) $1
Decrease in inventory (44-43) $1
Increase in account payable (30-26) $4
Decrease in accrued liabilities (18-15) (3)
Decrease in income tax payable (40-39) (1)
Net cash flow from operating activities $117
Brooke and John formed a partnership. Brooke received a 40% interest in partnership capital and profits in exchange for contributing land (basis of $30,000 and fair market value of $120,000). John received a 60% interest in partnership capital and profits in exchange for contributing $180,000 of cash. Three years after the contribution date, the land contributed by Brooke is sold by the partnership to a third party for $150,000. What gain must Brooke recognize on the land contribution when establishing the partnership
Answer:
$102,000
Explanation:
According to 26 US code Section 704(c) - Partner's distributive share :
Taxable gain to be recognized from sale = Sale value - ( Partner's share * Fair market value )
Brooke contributed the land, the gain realized before the land was contributed = $120,000 - $90,000 will be allocated entirely to her. She will also be allocated 40% of the gain after the contribution was made = ($150,000 - $120,000) x 40% = $30,000 x 40% = $12,000.
So the total gain recognized by Brooke will be $90,000 + $12,000 = $102,000.
Partnerships are pass through entities, the partners are taxed, not the partnership itself.
If a firm has retained earnings of $2.7 million, a common shares account of $4.7 million, and additional paid-in capital of $9.4 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity.
Answer:
Change in retained earnings = $1.02 million (Decrease)
Change in common shares account = $5.17 million (Increase)
Change in additional paid-in capital = $10.61 million (Increase)
Explanation:
Given:
Retained earnings = $2.7 million
Common shares account = $4.7 million
Additional paid-in capital = $9.4 million
Stock dividend = 10%
Find:
Changes in account.
Computation:
1. Change in retained earnings
Change in retained earnings = Retained earnings - (Retained earnings - Common shares account - Additional paid-in capital)Stock dividend
Change in retained earnings = $2.7 million - ($2.7 million - $4.7 million - $9.4 million)10%
Change in retained earnings = $2.7 million - 1.68 million
Change in retained earnings = $1.02 million (Decrease)
2. Change in common shares account
Change in common shares account = Common shares account (1+Stock dividend)
Change in common shares account = $4.7 million (1+10%)
Change in common shares account = $5.17 million (Increase)
3. Change in additional paid-in capital
Change in additional paid-in capital = Additional paid-in capital + (Additional paid-in capital + Retained earnings)Stock dividend
Change in additional paid-in capital = $9.4 million + ($9.4 million + $2.7 million)10%
Change in additional paid-in capital = $9.4 million + 1.21 million
Change in additional paid-in capital = $10.61 million (Increase)
Blossom Companyhad the following transactions during 2022: 1. Issued $182500 of par value common stock for cash. 2. Recorded and paid wages expense of $87600. 3. Acquired land by issuing common stock of par value $73000. 4. Declared and paid a cash dividend of $14600. 5. Sold a long-term investment (cost $4380) for cash of $4380. 6. Recorded cash sales of $584000. 7. Bought inventory for cash of $233600. 8. Acquired an investment in Zynga stock for cash of $30660. 9. Converted bonds payable to common stock in the amount of $730000. 10. Repaid a 6-year note payable in the amount of $321200. What is the net cash provided by investing activities
Answer:
($26,280)
This represents net cash used up by investing activities
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow and vice versa.
Hence net cash provided by investing activities
= $4380 - $30660
= ($26,280)
Other activities are operating and financing activities.
The classical dichotomy and the neutrality of money
The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.
Maria spends all of her money on paperback novels and beignets. In 2011 she earned $27.00 per hour, the price of a paperback novel was $9.00, and the price of a beignet was $3.00.
Which of the following give the nominal value of a variable?
1-The price of a beignet is $3.00 in 2011.
2-Maria's wage is $27.00 per hour in 2011.
3-The price of a beignet is 0.33 paperback novels in 2011.
Which of the following give the real value of a variable?
1-The price of a paperback novel is 3 beignets in 2011.
2-Maria's wage is 9 beignets per hour in 2011.
3-The price of a paperback novel is $9.00 in 2011.
Suppose that the Fed sharply increases the money supply between 2011 and 2016. In 2016, Maria's wage has risen to $54.00 per hour. The price of a paperback novel is $18.00 and the price of a beignet is $6.00.
In 2016, the relative price of a paperback novel is _________
Between 2011 and 2016, the nominal value of Maria's wage (increases/decreases/remains the same) and the real value of her wage ____________
Monetary neutrality is the proposition that a change in the money supply ________ nominal variables and ______ real variables.
Answer:
1. Relative price = $3
2. Increases
3. affects , not affect
Explanation:
As per the data given in the question,
1) The relative price of a paperback novel in 2016 = Maria,s wage ÷ Price of a paperback novel
= $54÷$18
= $3
2) Between 2011 and 2016, the nominal value increases and the real value of Maria's wage remains the same.
3)Monetary neutrality is proposition that the change in the money supply affects the nominal variables but it does not affect the real variables.
On 3/1/14 Fox Corp bought back 1,000 shares of their common stock for $15 per share. There were no shares in the treasury prior to that. On 5/23/14 they sold 200 of those shares for $17 each. On 6/19/14 they sold another 400 shares of those shares for $10 per share. Consider writing out all of your entries on scratch paper to assist you in answering questions 31 and 32. What will the remaining balance in the treasury stock account be after all of the above transactions have been recorded
Answer:
For question (31) $ 6000 (32) The net impact on retained earning is 1600 (Which is a negative
Explanation:
Question 31
No. Rate Value
Purchase of Treasury Stock 1000 15 15000
Less: Sold on 5/23/14 200 15 3000
Less: Sold on 6/19/14 400 15 6000
Net remaining value 6000
Note: to calculate the closing value of treasury stock, rate of selling stock need to be taken same as of date of purchase.
For question 31 the answer is $ 6000
Question 32
Impact on retained earning on first sale
No. Rate Value
Sale VALUE 200 17 3400
Less: Purchase of Treasury Stock 200 15 3000
Credit Retained earning 400
Impact on retained earning on second sale
No. Rate Value
Sale VALUE 400 10 4000
Less: Purchase of Treasury Stock 400 15 6000
Debit Retained earning -2000
Net Impact on retained earning 1600 (Negative i.e. Debit)
Therefore the remaining balance in the treasury stock account be after all of the above transactions have been recorded is $6000
Note: Kindly find an attached copy of the complete question to this solution
Oklahoma enacts a law requiring all businesses in the state to donate 10 percent of their profits to Protestant churches that provide services to indigent persons. Price-Lo Mart files a law suit to block the enforcement of the law. The court will probably decide that this law violates: a. the Free Exercise clause. b. the Supremacy clause. c. the Equal Protection clause. d. the Establishment clause.
Answer: d. the Establishment clause.
Explanation:
The Establishment Clause was put in place as a limitation by the United States Congress to prevent excesses or stop it from passing legislation forcing an establishment, religion, which broadly made it illegal for the government to promote theocracy or promote a specific religion with taxes. As this is the case with the state asking business to donate 10% of their profit to Protestant.
Answer:
The establishment clause.
Explanation:
Establishment clause, also called establishment-of-religion clause, clause in the First Amendment to the U.S. Constitution forbidding Congress from establishing a state religion. It prevents the passage of any law that gives preference to or forces belief in any one religion. It is paired with a clause that prohibits limiting the free expression of religion.
As the citizenry became more diverse, however, challenges arose to existing laws and practices, and eventually, the Supreme Court was called upon to determine the meaning of the establishment clause.
Though not explicitly stated in the First Amendment, the clause is often interpreted to mean that the Constitution requires the separation of church and state.
Dexter Industries purchased packaging equipment on January 8 for $116,600. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,600. The equipment was used for 8,700 hours during Year 1, 7,380 hours in Year 2, and 3,920 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three years ended December 31 by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. (Note: For STRAIGHT-LINE ONLY, round the first two years to the nearest whole dollar, then round the third year as necessary. For DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar.) 2. What method yields the highest depreciation expense for Year 1
Answer:
Straight-line method: $36,667 yearly depreciation expense for 3 years. Unit-of-production method: Year 1 - $47,850, Year 2 - $40,590, Year 3 - $21,560Double-declining method: Year 1 - $77,737, Year 2 - $25,910, Year 3 - $6,353Total for 3 years is $110,000 for all the depreciation methods.
Explanation:
(A) Under straight-line method, depreciation expense is (cost - residual value) / Estimated useful life = ($116,600 - $6,600) / 3 years = $36,667 yearly depreciation expense.
Accumulated depreciation for 3 years is $36,667 x 3 years is $110,000.
(B) The unit-of-production method is used when the asset value closely relates to the units of output it is able to produce. It is expressed with the formula below:
(Original Cost - Salvage value) / Estimated production capacity x Units/year
At Year 1, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 8,700 hours = $47,850
At Year 2, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 7,380 hours = $40,590
At Year 3, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 3,920 hours = $21,560
Accumulated depreciation for 3 years is $47,850 +$40,590 + $21,560 = $110,000.
Note that this depreciation method results in higher depreciation charge when the asset is heavily used, at this time, it was in Year 1.
(C) The double-declining method is otherwise known as the reducing balance method and is given by the formula below:
Double declining method = 2 X SLDP X BV
SLDP = straight-line depreciation percentage
BV = Book value
SLDP is 100%/3 years = 33.33%, then 33.33% multiplied by 2 to give 66.67% or 2/3
At Year 1, 66.67% X $116,600 = $77,737
At Year 2, 66.67% X $38,863 ($116,600 - $77,737) = $25,910
At Year 3, 66.67% X $12,953 ($38,863 - $25,910) = $8,636. This depreciation will decrease the book value of the asset below its salvage value $12,953 - $8,636 = $4,317 < $6,600. Depreciation will only be allowed up to the point where the book value = salvage value. Consequently the depreciation for Year 3 will be $6,353.
Accumulated depreciation for 3 years is $77,737 + $25,910 + $6,353 = $110,000.
