Answer:
$46,240
Explanation:
Calculation to determine the amount of interest expense Sunland will show with relation to these bonds for the year ended December 31, 2020
Interest expense=($704,000 × .06)+[($704000-$664000)/10]
Interest expense= $42,240+($40,000/10)
Interest expense=$42,240+$4,000
Interest expense=$46,240
Therefore the amount of interest expense Sunland will show with relation to these bonds for the year ended December 31, 2020 is $46,240
Good Night manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $51,000, $28,000, and $33,000, respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $48,000, $35,000, and $29,000, respectively. Direct material purchases were $555,000. Direct labor was $252,000 for the year. Factory overhead was $176,000. Prepare a cost of goods sold budget for Good Night, Inc. Good Night, Inc. Cost of Goods Sold Budget For the Year Ending December 31 Finished goods inventory, January 1 $fill in the blank 1 Work in process inventory, January 1 $fill in the blank 2 Direct materials: Direct materials inventory, January 1 $fill in the blank 3 Direct materials purchases fill in the blank 4 Cost of direct materials available for use $fill in the blank 5 Less direct materials inventory, December 31 fill in the blank 6 Cost of direct materials placed in production $fill in the blank 7 Direct labor fill in the blank 8 Factory overhead fill in the blank 9 Total manufacturing costs fill in the blank 10 Total work in process during the period $fill in the blank 11 Less work in process inventory, December 31 fill in the blank 12 Costs of good manufactured fill in the blank 13 Cost of finished goods available for sale $fill in the blank 14 Less finished goods inventory, December 31 fill in the blank 15 Costs of goods sold $fill in the blank 16
Answer:
See below
Explanation:
1. Step 1
Determine the direct materials used in production
Beginning materials inventory
$33,000
Add materials purchases
$555,000
Less ending materials inventory
($29,000)
Direct materials used in production
$559,000
Step 2
Determine the cost of goods manufactured
Beginning work in process inventory
$28,000
Add manufacturing costs;
Direct materials used
$559,000
Direct labor
$252,000
Factory overhead
$176,000
Less ending work in process inventory
($35,000)
Cost of goods manufactured
$980,000
3. Step 3
Prepare the cost of goods sold
Beginning finished good inventory
$51,000
Add cost of goods sold
$980,000
Less ending finished goods inventory
($48,000)
Cost of goods sold
$947,000
The Northern Ring Company manufactures 2,000 telephones per year. The full manufacturing costs per telephone are as follows: Direct materials $ 2 Direct labor 8 Variable manufacturing overhead 6 Average fixed manufacturing overhead 6 Total $22 The Texas Ring Company has offered to sell Northern Ring Company 2,000 telephones for $15 per unit. If Northern Ring Company accepts the offer, $10,000 of fixed overhead will be eliminated. Northern Ring should: Select one: A. Buy the telephones; the savings is $12,000 B. Make the telephones; the savings is $2,000 C. Buy the telephones; the savings is $24,000 D. Make the telephones; the savings is $12,000
Answer:
A. Buy the telephones; the savings is $12,000
Explanation:
The computation is shown below;
Particulars Without offer with offer
Direct material $4,000 $0
(2,000 × $2)
Direct labor $16,000 $0
(2,000 × $8)
Variable manufacturing overhead $12,000 $0
(2,000 × $6)
Fixed manufacturing overhead $12,000 $2,000
($12,000 - $10,000)
Purchase cost $30,000
($2,000 × $15)
Total cost $44,000 $32,000
Therefore the option A is correct
What is the primary characteristic that differentials a zero based budget from a conventional budget. A. A zero based budget does not take inflation into account. B. The zero based budget requires managers to re-justify every planned expenditure every year. C. A zero based budget rolls historical data forward. D. A zero based budget uses a fixed volume growth rate.
Answer:
B. The zero based budget requires managers to re-justify every planned expenditure every year.
Explanation:
A zero based budget is one that does not take into account historical data when it is considering the present year budget. Each departmental requirement is re-evaluated and a new amount is assigned as budget for the year.
However conventional budgets carryover the previous year's expenses as a base data point. This results in similar budgeting across years.
So the main difference between the two is that zero based budget requires managers to re-justify every planned expenditure every year.
Saul is a manager at Holden Apparels Inc. and is friends with the company's CEO. This privilege gives Saul the information that Holden Apparels is in the midst of talks to take over a leading rival. Saul buys stocks of Holden with the expectation that its stocks will appreciate. But the deal falls through and the stocks of Holden depreciate in the following months. Are Saul's actions unethical
Answer:
D) Yes, because it is unethical to trade stocks based on insider information
irrespective of the final outcome.
Explanation:
THIS ARE THE OPTIONS FOR THE QUESTION;
A) Yes, because it is illegal and unethical for Saul to possess any kind of insider
information.
B) No, because Saul did not make any profits from trading stocks using this
information.
C) No, because Saul did not ask the CEO to disclose such information to him.
D) Yes, because it is unethical to trade stocks based on insider information
irrespective of the final outcome.
From the question,we are told about Saul who is a manager at Holden Apparels Inc. and is friends with the company's CEO. This privilege gives Saul the information that Holden Apparels is in the midst of talks to take over a leading rival. Saul buys stocks of Holden with the expectation that its stocks will appreciate. But the deal falls through and the stocks of Holden depreciate in the following months. In this case, Saul's actions are unethical
because it is unethical to trade stocks based on insider information irrespective of the final outcome. Stock trading can be regarded as buying as well as selling of shares in a specific company. Unethical behavior in stock market are actions that falls outside morally right practice/trading in stock market. Unethical trading of stock could be a process of purchasing shares in particular firm that engages herself in some questionable operational as well as recruitment activities. In some cases it should be noted that stocks trading could be unethical as a result of trader engaging in trading because they are getting information from insider in order to influence their trading.
Fiat money has value based on:
O A. the role it plays in traditional religious ceremonies.
O B. the type of material that was used to make it.
O C. a government declaring that it is a legal currency.
O D. an agreement that it can be exchanged for something else.
Answer:
D.an agreement that it can be exchanged for something else.
Explanation:
The value is given thanks to the people who trust the group or gov. that is emmiting this money.
XYZ is considering two proposed machinery investments. Proposals A and B each cost $600,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal A is expected to provide equal annual net cash flows of $125,000 while the net cash flows for Proposal B are as follows: Year 1 $250,000 Year 2 $200,000 Year 3 $150,000 Year 4 $ 75,000 Year 5 $ 50,000 Year 6 $ 25,000 Determine the cash payback period for Proposal A and B. Show all calculations. Rounds answers to 1 decimal place.
Answer:
Payback period for Proposal A = 4.8 years
Payback period for Proposal B = 3 years
Explanation:
Calculation of Payback period for Proposal A:
Year Investment Net Annual Cash Flow
0 $600,000 $125,000
1 $125,000
2 $125,000
3 $125,000
4 $125,000
5 $125,000
6 $125,000
Cash Payback period = Cost of Capital investment/Net Annual cash flow
Cash Payback period = $600,000/$125,000
Cash Payback period = 4.8 years
Calculation of Payback period for Proposal B:
Year Investment Net Annual Cash Flow Cumulative Net Cash Flows
0 $600,000 $250,000 $250,000
1 $200,000 $450,000
2 $150,000 $600,000
3 $75,000 $675,000
4 $50,000 $725,000
5 $25,000 $750,000
6
The Cumulative net cash flow of $600,000 is equal to investment cost of $600,000 for 3 years. So, payback period for proposal B is 3 years.
The following selected transactions relate to liabilities of Rocky Mountain Adventures. Rocky Mountain's fiscal year ends on December 31.
January 13: Negotiate a revolving credit agreement with First Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $10 million at the bank's prime rate.
February 1: Arrange a three-month bank loan of $4.3 million with First Bank under the line of credit agreement. Interest at the prime rate of
7% is payable at maturity.
May 1: Pay the 7% note at maturity.
Record the appropriate entries, if any, on January 13, February 1, and May 1.
Answer: See explanation
Explanation:
The appropriate entries will be recorded thus:
13 Jan No entry
1 Feb Debit Cash account $4,300,000
Credit Note payable $4,300,000
(For note issued on borrowing)
1 May Debit Interest Expense $4,300,000 × 7% × 3/12 = $75250
Debit Notes payable $4,300,000
Credit Cash account $4,375,250
(For amount paid on maturity)
Suppose the world price is $20. a. Is this country an exporter or an importer? A. exporter B. importer b. How many units of the good are exported/imported? nothing units c. Fill in the chart below. If your answer is negative, put a minus sign in front of the number. Area Before Trade Value After Trade Value Change Value Consumer Surplus $ nothing $ nothing $ nothing Producer Surplus $ nothing $ nothing $ nothing Total Welfare $ nothing $ nothing $ nothing d. Who gains when the country allows free international trade? A. consumers and the government B. consumers C. no one gains D. consumers and producers E. consumers, producers, and the government F. producers G. producers and the government H. the government Who loses from free trade in this case? A. the government B. no one gains C. consumers and the government D. producers E. consumers F. consumers, producers, and the government G. producers and the government H. consumers and producers Overall, is there a net gain or a net loss when the country moves from No Trade to Free Trade? A. net gain B. net loss What is the overall value of the gain or loss? $ nothing (if your answer is negative, put a minus sign before your answer).
Question Completion:
Answer:
1. This country is an
B. importer.
2. The units of the good that are exported/imported are 200.
3. Chart filling
Area Before Trade After Trade Change Value
Value Value
Consumer Surplus $4,000 $9,000 $5,000
Producer Surplus $4,000 $1,000 $−3,000
Total Welfare $8,000 $10,000 $2,000
4. The group that gains when the country allows free international trade.
B. consumers
5. The group that loses from free trade in this case is:
D. producers
6. A. net gain
7. The overall value of the gain is $2,000
Explanation:
a) Data and Calculations:
Area Before Trade After Trade Change
Value Value Value
Consumer Surplus $? $? $?
Producer Surplus $? $? $?
Total Welfare $ ? $? $?
Consumer surplus = Total quantity demanded at consumer's price minus equilibrium quantity * equilibrium price
Producer surplus = Total quantity supplied at supplier's price minus equilibrium quantity * equilibrium price
Change value at consumer surplus = $5,000 ($9,000 - $4,000)
Change value at producer surplus = $-3,000 ($1,000 - $4,000)
Total welfare before trade = $8,000 ($4,000 + $4,000)
Total welfare after trade = $10,000 ($9,000 + $1,000)
The net gain from free international trade is the difference between the total welfare value after trade and before trade = $2,000 ($10,000 - $8,000)
Whispering Company is planning to produce 1,100 units of product in 2020. Each unit requires 2.60 pounds of materials at $4.80 per pound and a half-hour of labor at $14.00 per hour. The overhead rate is 90% of direct labor. (a) Compute the budgeted amounts for 2020 for direct materials to be used, direct labor, and applied overhead. Direct materials $ Direct labor $ Overhead $ (b) Compute the standard cost of one unit of product. (Round answer to 2 decimal places, e.g. 2.75.) Standard cost $
Answer:
Explanation:
a. The answer to question (a) goes thus:
Direct materials will be:
= (1,100 × $2.60) × $4.80
= $13,728
Direct labor will be:
= (1,100 × 1/2) × $14.00
= $7,700
Overhead will be:
= $7,700 × 90%
= $7700 × 0.9
= $6,930
b. The standard cost of one unit of product will be calculated as follows:
Direct materials = ($2.60 × $4.80) = $12.48
Add: Direct labor (1/2 × $14.00) = $7.00
Add: Overhead = ($7.00 × 90%) = $6.30
Standard cost = $12.48 + $7.00 + $6.30 = $25.78
Data for Divisions A, B, C, D, and E are as follows:
Div.
Sales
Income from
Operations
Inv.
Assets
Rate of
Return
on Inv.
Profit
Margin
Invest.
Turnover
A
(1)
$35,000
$200,000
(2)
(3)
1.6
B
$455,000
(4)
$284,375
16%
(5)
(6)
C
$525,000
$73,500
(7)
(8)
(9)
1.2
D
$800,000
(10)
(11)
(12)
13.0%
2.5
E
(13)
(14)
$250,000
(15)
16.0%
2.0
(a) Determine the missing items, identifying each by number.
(b) Which division is most profitable in terms of income from operations?
(c) Which division is most profitable in terms of rate of return on investment?
Round percentage values to one decimal point.
Answer:
1. A
2. B WHICH DIVISONS IS MUST PROFITABLE IN TERM OF RACE OF TURN ON ENVRONMENT
Lorenzo schedules work, and sends workers and vehicles to different locations. His job title is best described as _____ .
1. Chauffeur
2. Dispatcher
3. Streetcar Operator
4. Copilot
Abraham assists and monitors airline passengers during a trip. His job title is best described as ____ .
1. Flight Attendant
2. Dispatcher
3. Airline Pilot
4. Air Traffic Controller
Dani monitors and directs many different airplanes at an airport. Her job title is best described as ____ .
1. Dispatcher
2. Air Traffic Controller
3. Flight Attendant
4. Flight Engineer
Answer:
2)DIspatcher
1) Flight attendant
2)Air traffic controller
Explanation:
I just answered the question on Edge and they were all right :)
The correct options are:
2)DIspatcher.1) Flight attendant.2)Air traffic controller.What is the job title?
A job title is the name of the position you hold at your company, typically associated with a specific set of tasks and responsibilities. A job title often denotes a person's level of seniority within a company or department. It also gives insight into what an employee contributes to a company.
What is a job title example?
A job title can describe the responsibilities of the position, the level of the job, or both. For example, job titles that include the terms “executive,” “manager,” “director,” “chief,” “supervisor,” etc. are typically used for management jobs.
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Swifty Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $26 per year. During November 2019, Swifty sells 27,120 subscriptions beginning with the December issue. Swifty prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue.
1. Prepare the entry in November for the receipt of the subscriptions (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
2. Prepare the adjusting entry at December 31, 2015, to record sales revenue recognized in December 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
A. Dr Cash $705,120
Cr Unearned subscription revenue
B. Dr Unearned subscription revenue $58,760
($705,120 *1/12)
Cr Subscription revenue $58,760
Explanation:
a) Preparation of the entry in November for the receipt of the subscriptions
Dr Cash $705,120
(27,120*$26)
Cr Unearned subscription revenue $705,120
(To record the receipt of the subscriptions)
b) Preparation of the adjusting entry at December 31, 2015, to record sales revenue recognized in December 2015
Dr Unearned subscription revenue $58,760
($705,120 *1/12)
Cr Subscription revenue $58,760
(To record sales revenue recognized)
The Wiz Co. owes $60 to its bondholders for the payment of principal and interest. The company expects to have a cash flow of $136 if the economy continues as it is but that cash flow will decrease to $54 if the economy enters a recession. Should the company ever face the real possibility of bankruptcy, it will incur legal and other fees of $30. What amount will the bondholders be paid in the case of a recession
Answer:
$24
Explanation:
Cashflow If economy as it is = $136
Cashflow if economy in recession = $54
In the event that the company goes bankrupt due to the recession, it will have to pay $30 in legal and other costs, so the company will set aside $30.
So, Bondholders payment = Cashflow in recession - legal & other cost
= $54 - $30
= $24
Hence, the bondholders will be paid $24 in the case of a recession.
Write a professional 1 page memo that responds to this problem.
Jack Jones is an employee who performs below expected levels. You hired Jack because he was highly qualified for the job, and he used to be an excellent worker. He has a personality that fits well in your company, and you want to keep him. Lately, Jack has been regularly late to work, misses work often, and spends a lot of time away from his desk when he is at work. As the department manager, you are in charge of communicating the news to Jack as well as providing him a feasible plan for improving his work performance.
Solution :
Memo
From : Department Manager
Date : 01 May 2021
Subject : Improvement of Performance
This is to inform you that I have lately noticed that you have not able to meet the goal for the last 6 months and your average is average. I see that you are an excellent worker and have doing good but lately your performance level is not up to the mark. Also you are not punctual at your job which may hamper your appraisal or your incentives.
So going forward, I would like to ask you to be regular to work and work effectively for your overall growth. I would suggest you to be on time at work at complete your daily task for the day to achieve your targets. Your can also seta goal for the day so that your targets are achieved.
You are a true asset to the organization and we believed that your efforts will help you to grow and learn more.
I have attached a file which shows your performance for the last 6 months and also a feedback on how to improve.
Revert if there is any query.
Best Regards
Department Manager
Which economist most supported the idea that poor workers would
eventually overthrow market economies and establish command economies?
Karl Marx was the person who supported this theory.
What theory was propounded by the Karl Marx?Karl Marx was the famous philosopher, who found the labor theory of value.
He talks about the social distance and the struggle between the different classes of the society.
He states that the value of a commodity can be measured by the number of hours given by the labor.
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At the beginning of 2020, Concord Company acquired a mine for $3,251,600. Of this amount, $124,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 12,100,000 units of ore appear to be in the mine. Concord incurred $210,800 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $49,600. During 2020, 2,634,000 units of ore were extracted and 1,894,000 of these units were sold.
Required:
a. Compute the total amount of depletion for 2020.
b. Compute the amount that is charged as an expense for 2014 for the cost of the minerals sold during 2020.
Answer:
A. $737,520
B. $530,320
Explanation:
a. Computation for the total amount of depletion for 2020.
First step is to calculate the Depletion Rate
Depletion Rate = ($3,251,600 - $124,000 + $49,600 + $210,800)/12,100,000
Depletion Rate= $3,388,000/ 12,100,000
Depletion Rate= 0.28
Now let calculate the total amount of depletion for 2020.
2020 Total amount of depletion= 0.28 × $2,634,000
2020 Total amount of depletion= $737,520
Therefore the total amount of depletion for 2020 is $737,520
B. Computation for the amount that is charged as an expense for 2014 for the cost of the minerals sold during 2020.
Expense amount charged= ($737,520/$2,634,000)* 1,894,000
Expense amount charged=0.28 *1,894,000
Expense amount charged=$530,320
Therefore the amount that is charged as an expense for 2014 for the cost of the minerals sold during 2020 is $530,320
how market forces would act to return the market to state of equilibrium at the new equilibrium position.
Answer:
market forces would shift upwards or downwards
Explanation:
during a situation of high demand, supply would shift to the right in order to achieve more sales or in a situation of high supply the demand can be shifted to the right by decreasing prices. At low supply demand can be shifted leftwards by increasing prices and when demand is lower, supply falls due to lower sales
Market factors would change to the upside or downside would act to return the market to state of equilibrium at the new equilibrium position.
What do you mean by equilibrium?When economic forces are in balance, there is said to be an economic equilibrium. In the absence of outside influences, economic variables essentially hold true to their equilibrium levels. Market equilibrium and economic equilibrium are two different concepts.
The set of economic factors that the economy is normally driven toward by supply and demand and other conventional economic processes is known as economic equilibrium.
The concept of economic equilibrium can also be used to describe a wide range of elements, including interest rates or overall consumer spending.
The point of equilibrium denotes a theoretical state of rest where all economic activities that "should" occur have actually happened, given the initial conditions of all significant economic variables.
Economists who think of economic processes as akin to physical phenomena like velocity, friction, heat, or fluid pressure draw the notion of equilibrium from the physical sciences. Nothing else changes once a system's physical forces are in equilibrium.
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On January 1, Year 1, Parker Company issued bonds with a face value of $77,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 10 percent at the time the bonds were issued. The bonds sold for $71,162. Parker used the effective interest rate method to amortize the bond discount. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)
Required
a. Prepare an amortization table. Date Cash Payment Interest Expense Discount Amortization Carrying Value 71,162 72,118 6,1607 ,116 January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 December 31, Year 4 December 31, Year 5 Totals 6,1607 ,116
b. What is the carrying value that would appear on the Year 4 balance sheet?
c. What is the interest expense that would appear on the Year 4 income statement?
d. What is the amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows? b. Carrying value
c. Interest expense
d. Cash outflow for interest
Answer: See explanation
Explanation:
a. Prepare an amortization table.
The ammortization table has been prepared and attached.
Note that:
Cash paid = $77000 × 7%
Interest expense was calculated as:
= Last year’s Bond Carrying value × 10%
Discount ammortization = Interest Expense - Cash Paid
b. What is the carrying value that would appear on the Year 4 balance sheet?
The carrying value will be $75600.
c. What is the interest expense that would appear on the Year 4 income statement?
The interest expense will be $7433.
d. What is the amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows?
The cash outflow for interest be $6160.
Carrying Value = $75600
Interest Expense = $7433
Cash Outflow for Interest = $6160
Carla Vista Company reports the following operating results for the month of August: sales $385,000 (units 5,500), variable costs $250,000, and fixed costs $94,000. Management is considering the following independent courses of action to increase net income. 1. Increase selling price by 10% with no change in total variable costs or units sold. 2. Reduce variable costs to 56% of sales. Compute the net income to be earned under each alternative. 1. Net Income $ 2. Net Income $ Which course of action will produce the higher net income
Answer and Explanation:
The computation is shown below:
1.
Selling Price = Sales ÷ Units Sold
Current Selling Price = $385,000 ÷ 5500
= $70
Now
Expected Selling Price per unit = $70 + ($70× 10%)
= $77
Now
Expected Sales = 5500 × $77
= $423,500
Now
Net Income = Sales - Variable Cost - Fixed Cost
= $423,500 - $250,000 - $94,000
2.
Sales = $385000
Variable cost = $385,000 × 56% = $215,600
Sales $385,000
Less: variable cost -$215,600
Contribution Margin $169,400
Les: fixed cost -$94,000
Net Income $75,400
As we can see that if there is an increase in Selling Price by 10% so it would produce highest Net Income.
Oriole Corporation has retained earnings of $682,100 at January 1, 2020. Net income during 2020 was $1,558,700, and cash dividends declared and paid during 2020 totaled $81,300. Prepare a retained earnings statement for the year ended December 31, 2020. Assume an error was discovered: land costing $89,160 (net of tax) was charged to maintenance and repairs expense in 2019.
Answer:
$2,248,660
Explanation:
According to the scenario, computation of the given data are as follows,
Particulars Amount
Retained Earning $682,100
Correction of repairs expense (Add) $89,160
Net income (Add) $1,558,700
Dividend Paid (Less) $81,300
Net retained earning $2,248,660
As a condition of being allowed to apply for a job with Good Hands Industries, Charles is asked to waive his right to object to workplace searches. After signing the waiver, he is offered a job, and he accepts it. Sometime later, he is subjected to a search. If Charles seeks legal redress on the grounds that the search violated his privacy rights, his employer:_________-
A. will be unable to successfully assert the waiver as a defense because it was not given voluntarily.
B. will be unable to successfully assert the waiver as a defense because Charles did not grant it intentionally.
C. will be unable to successfully assert the waiver as a defense because it was given by Charles prior to his job offer.
D. will be able to successfully assert the waiver as a defense because it was given in exchange for valuable consideration.
Answer:
The answer is C (will be unable to successfully assert the waiver as a defense because it was given by Charles prior to his job offer).
Explanation:
In the employment setting, there are instances where an employer could violate an employee privacy right. For instance, the Fourth Amendment’s prohibition on unreasonable search and seizure could be very strict on a public employer compared to a private employer where the private employers are given some degree of power too. Searching employees without their consent would be directly proportional to their breach of privacy that they have right to. Charles seeking legal redress is permitted since he initially signed to waive his right to object to workplace searches prior to his job offer. At every point where workplace searches is required by the employer especially when the searches are not done at public open places, the employee consent should be required too.
Chesapeake Inc. acquired a registered trademark for $600,000. The trademark has a remaining legal life of 5 years but can be renewed every 10 years for a nominal fee. Chesapeake does not expect to renew the acquired trademark when the legal life is over. What amount of amortization expense should Chesapeake record for the trademark in the current year?
a. $0
b. $15,000
c. $40,000
d. $120,000
Answer:
d. $120,000
Explanation:
Amortization expense = Cost ÷ Estimated useful life
therefore
Amortization expense = $600,000 ÷ 5 = $120,000
Note ; In this case the legal life is the same as the useful life.
You borrow money on a self liquidating installment loan (equal payments at the end of each year, each payment is part principal part interest)
Loan amount $670,000
Interest Rate 11.4%
Life 54 years
Date of Loan January 1, 2021
Use the installment method - not straight line
Do NOT round any interrmediate numbers.
Do NOT turn this into a monthly problem.
Do NOT put in minus signs, answer all positive numbers.
Required:
1. What is the annual payment (round to the nearest $)?
$ ____
2. What are the total interest payments (round to the nearest $)?
$ _____
3. After 34 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)?
____ %
4. After 34 payments have been made, what percentage of the total principal has been paid (round to the nearest percentage point)?
____ %
Redo the problem if the interest rate is 2%
(for a well designed spreadsheet this should take 30 seconds)
Required:
5. What is the annual payment (round to the nearest $)?
____$
6. What are the total interest payments (round to the nearest $)?
____$
7. After 34 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)?
____ %
8. After 34 payments have been made, what percentage of the total principal has been paid (round to the nearest percentage point)?
____ %
Answer:
Loan = $670,000
Interest Rate = 11.4%
Years (Life) = 54 years
1. Loan = Annual installment * (1-(1+i)^-n)/i
$670,000 = Annual installment * (1-(1+11.4%)^-54)/11.4%
$670,000 = Annual installment * 8.74614912
Annual installment = $670,000 /8.74614912
Annual installment = 76605.14257
Annual installment = $76,605
2. Total interest payment = Total installments - Original loan
Total interest payment = $76605.14*54 - $670,000
Total interest payment = $4,136,677.56 - $670,000
Total interest payment = $3,466,677.699
Total interest payment = $3,466,678
3. Capital o/s after 34 payments = 76605.14257 × (1-(1+11.4%)^-20)/11.4%
= $594412.8888
Capital repaid = $670000 - $594412.8888 = $75587.11123
Total interest paid till 34 installments = $76605.14257*34 - $75587.11123 = $2528987.736
Percentage of interest = ($2528987.736/ ($76605.14257*54- $670000)) * 100
Percentage of interest = 0.7295133715
Percentage of interest = 72.95133715%
4. Percentage of principal = (75587.11123/670000)*100
Percentage of principal = 0.1128165839
Percentage of principal = 11.28165839%
Percentage of principal ≈ 11%
Green Manufacturing, Inc., plans to announce that it will issue $2 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 6%. Green is currently an all-equity firm worth $6.3 million with 400,000 shares of common stock outstanding. After the sale of the bonds, Green will maintain the new capital structure indefinitely. Green currently generates annual pretax earnings of $1.5 million. This level of earnings is expected to remain constant in perpetuity. Green is subject to a corporate tax rate of 40%.
A) What is the expected return on Green?s equity before the announcement of the debt issue?
B) Construct Green's market value balance sheet before the announcement of the debt issue. What is the price per share of the firm's equity?
C) Construct Green's market value balance sheet immediately after the announcement of the debt issue. What is Green's stock price per share immediately after the repurchase announcement?
D) How many shares will Green purchase as a result of the debt issue? How many shares of common stock will remain after the repurchase?
E) Construct a market value balance sheet after the restructuring. What is the required return on Green's equity after the restructuring?
Answer: See explanation and attachment
Explanation:
a. Return on equity:
= Pre tax earnings × (1 - Tax rate) / Total equity
= 1.5 million × (1 - 40%) / 6.3 million
= 1.5 million × (1 - 0.4) / 6.3 million
= (1.5 million × 0.6) / 6.3 million
= 0.9 million / 6.3 million
= 14.29%
b. Check attachment for Green's market value balance sheet before the announcement of the debt issue.
The price per share of the firm's equity will be:
= Equity / Number of shares
= $6300000 / 400000
= $15.75 per share
c. Check Green's market value balance sheet immediately after the announcement of the debt issue.
Green's stock price per share immediately after the repurchase announcement will be calculated thus:
We need to know the value of tax shield which will be:
= 40% × $2,000,000
= $800,000
Value of firm = $6,300,000 + $800,000
= $7,100,000
Price per share will be:
= Equity / Number of shares
= 7100000 / 400000
= $17.75 per share
d. The number of shares that Green will purchase as a result of the debt issue will be:
= Debt issue / Price per share
= 2,000,000 / 17.57
= 112,676
The number of shares of common stock that will remain after the repurchase will be:
= 400000 - 112676
= 287324
e. Check attachment for market value balance sheet after the restructuring.
The required return on Green's equity after the restructuring will be:
= 14.29% + (2000000/5100000) × (14.29% - 6%) × (1 - 40%)
= 14.29% + 0.3921 × 8.29% × 0.6
= 14.29% + 1.95%
= 16.24%
if the market price of common stock increases substantially, bondholders with convertible bonds benefit. convertible bonds can be converted into common stock at the option of the issuing company. bondholders with convertible bonds receive interest on the bonds until conversion. convertible bonds sell at a higher price and pay a lower rate of interest than those without the conversion option.
Answer:
if the market price of common stock increases substantially,
bondholders with convertible bonds benefit.
Explanation:
A convertible bond is a fixed interest debt security. The number of common shares into which it can be converted is predetermined at the issuance date. While the conversion can be done at certain time in the life of the bond, the decision to convert is usually at the discretion of the bondholder. As investors, bondholders opt to convert when it would be most profitable. This happens when the market price of the common stock increases.
Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 474,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 500 of these units each year. The cost of the unit is $13.26. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,369, and the cost of producing the units would be $10.00 a unit. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should (buy/Make) the fitting. Incremental cost / (savings) will be ____________$
Answer:
Particulars Make Buy Incremental cost
Manufacturing cost $474,000 $474,000
Purchase $393,420 ($393,420)
(474,000*$0.83)
Fixed Cost $94,800 ($94,800)
(474,000*$0.20)
Total relevant cost $474,000 $488,220 ($14,220)
Conclusion: The company should make the fitting and the incremental savings will be $14,220
In a two-player, one-shot simultaneous-move game each player can choose strategy A or strategy B. If both players choose strategy A, each earns a payoff of $400. If both players choose strategy B, each earns a payoff of $200. If player 1 chooses strategy A and player 2 chooses strategy B, then player 1 earns $100 and player 2 earns $600. If player 1 chooses strategy B and player 2 chooses strategy A, then player 1 earns $600 and player 2 earns $100.
Required:
a. Write the above game in normal form.
b. Find each player’s dominant strategy, if it exists.
c. Find the Nash equilibrium (or equilibria) of this game.
d. Rank strategy pairs by aggregate payoff (highest to lowest).
e. Can the outcome with the highest aggregate payoff be sustained in equilibrium? Why or why not?
Answer:
a) attached below
b) Player 1 dominant strategy = when he chooses strategy B
Player 2 dominant strategy = when he chooses strategy B
c) Strategy A is the Nash equilibrium
d) AA = $800
AB , BA = $700
BB = $400
e) Yes
Explanation:
A) The Game written in Normal form
attached below
B) Determine each player dominant strategy
Player 1 dominant strategy = when he chooses strategy B
Player 2 dominant strategy = when he chooses strategy B
C) The Nash Equilibrium of the game is when Both players choose strategy A because when they both choose Strategy they both earn $400 each
D) Ranking strategy pairs from Highest to lowest
AA = $800
AB , BA = $700
BB = $400
E) The outcome can be sustained
because The Nash equilibrium is the same as the highest ranking strategy pair ( i.e. AA = $800 )
Though unions can negotiate pay increases for their members, their actions can have unintended consequences for workers. Identify all such possible ones from the list below. It is possible that there is more than one correct answer.
(a) Firms could possibly respond to unions demands for higher wages by hiring fewer workers.
(b) Firms could possibly respond to unions demands for higher wages by substituting capital for labor.
(c) Unions always drive down firms profits.
(d) Higher rates of union membership always diminish aggregate levels of economic output.
Answer:
(a) Firms could possibly respond to unions demands for higher wages by hiring fewer workers.
(b) Firms could possibly respond to unions demands for higher wages by substituting capital for labor.
Explanation:
Unions are formed to work toward better working conditions and welfare of staff.
Workers act collectively to negotiate better terms of employment with the employers.
However when unions try to negotiate for increased pay the employer may take different actions that will bad for the employee.
The employer may decide to actually pay the higher wage but hire fewer workers. This is usually the case when higher wages for many employees will result in loss for the employer.
Secondly the employer may substitute capital for labour. For example investing more in use of machines and reducing labour.
From the employer's viewpoint this will result in lower labour cost due to higher wage payment
Ganon Co. applies overhead based on direct labor hours. They have an applied overhead of $48,000 and actual overhead of $66,500 for the month of March. In March, the total number of direct labor hours was 1,200 and the total number of machine hours was 5,910. Overhead for the year was estimated to be $690,000. How many direct labor hours were estimated for the year
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Explanation:
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Terra Corporation purchased equipment with a 10-year useful life and zero residual value for $100,000. At the end of the fourth year, the equipment is exchanged for new equipment worth $110,000. Terra gets a trade-in allowance of $70,000 on the exchange, with the remaining $40,000 paid in cash. Which of the following is true of the net effect of this transaction? Assume the straight-line depreciation method is used.
A. Assets decrease by $10,000
B. Assets increase by $10,000
C. Liabilities increase by $10,000
D. Total stockholders' equity decreases by $10,000
E. Total stockholders' equity increases by $10,000
Answer:
Assets increase by $10,000
Total stockholders' equity decreases by $10,000
Explanation:
Assets increase =($110,000-$100,000)
Assets increase=$10,000
Total stockholders' equity decreases=$100,000-$110,000
Total stockholders' equity decreases= -$10,000
Therefore Based on the information given what is true of the net effect of the transaction are :
Assets increase by $10,000
Total stockholders' equity decreases by $10,000
