The A&M Hobby Shop sells radio-controlled model racing cars with a constant demand of 50 cars per month. Each car costs $80, and the ordering cost is a fixed amount of $15 per order. The annual holding cost rate is 20%.
To determine the economic order quantity (EOQ) for the model racing cars, we need to find the order quantity that minimizes the total cost of inventory, considering both ordering costs and holding costs. The EOQ formula is given by:
EOQ = sqrt((2 * demand * ordering cost) / holding cost)
Using the given values, we can calculate the EOQ:
EOQ = sqrt((2 * 50 * $15) / 0.20) ≈ 55.90
Therefore, the A&M Hobby Shop should order approximately 56 model racing cars per order to minimize the total cost of inventory.
By ordering the EOQ, the shop can strike a balance between minimizing ordering costs (by reducing the number of orders) and minimizing holding costs (by avoiding excessive inventory). This ensures that the shop maintains an optimal inventory level while minimizing costs associated with the procurement and holding of the racing cars.
It's important to note that the EOQ assumes constant demand, which may not always be the case in practice. Adjustments may need to be made if demand patterns change significantly over time. Additionally, other factors like storage space and lead time should also be considered in inventory management decisions.
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Hunt Company purchased factory equipment with an invoice price of $60,000. Other costs incurred were freight costs, $1,100; installation, $2,200; labor in testing equipment, $700; fire insurance policy covering equipment, $1,400. The equipment is estimated to have a $5,000 salvage value at the end of its 10 year useful life. Instructions: a) Compute the acquisition cost of the equipment _____ b) If the double-declining balance method of depreciation was used, the percentage applied to a declining book value would be ____
a) The acquisition cost of the equipment is $65,000. b) If the double-declining balance method of depreciation was used, the percentage applied to a declining book value would be 20%.
a) To compute the acquisition cost of the equipment, we need to add all the costs incurred to the invoice price. The costs include freight costs ($1,100), installation ($2,200), labor in testing equipment ($700), and fire insurance policy covering equipment ($1,400).
Acquisition cost = Invoice price + Freight costs + Installation + Labor in testing equipment + Fire insurance policy
Acquisition cost = $60,000 + $1,100 + $2,200 + $700 + $1,400
Acquisition cost = $65,000
Therefore, the acquisition cost of the equipment is $65,000.
b) The double-declining balance method of depreciation applies a fixed percentage to the declining book value of the asset each year. This method accelerates the depreciation expense in the early years of an asset's life.
The formula to calculate the double-declining balance depreciation rate is:
Depreciation Rate = (1 / Useful life) * 2
In this case, the equipment has a useful life of 10 years. Substituting the value into the formula:
Depreciation Rate = (1 / 10) * 2
Depreciation Rate = 0.1 * 2
Depreciation Rate = 0.2 or 20%
Therefore, if the double-declining balance method of depreciation was used, the percentage applied to a declining book value would be 20%.
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A firm with a cost of capital of 10% have two mutually exclusive projects. Project X requires an initial investment of $35,000 today and is expected to generate $18,000 for the next 20 years. Project Y requires an initial investment of $50,000 and is expected to generate $12,000 for the next 20 years. The firm will choose Project X, which has an NPV of $128,886 Project Y, which has an NPV of $118,244 both projects, with NPV of $118.244 for Project X and $52.163 for Project Y Project X, which has an NPV of $118,244 Project X, which has an NPV of $55.293
The correct answer is: The firm will choose Project X, which has an NPV of $128,886.
To determine the net present value (NPV) of each project, we need to discount the cash flows of each project back to their present value using the cost of capital of 10%. Here's how we calculate the NPV for each project:
Project X:
Initial investment: -$35,000
Cash flows: $18,000 per year for 20 years
NPV = -Initial investment + (Cash flows / (1 + Cost of capital)^n)
NPV = -$35,000 + ($18,000 / (1 + 0.10)^1) + ($18,000 / (1 + 0.10)^2) + ... + ($18,000 / (1 + 0.10)^20)
Calculating the NPV for Project X gives us $128,886.
Project Y:
Initial investment: -$50,000
Cash flows: $12,000 per year for 20 years
NPV = -Initial investment + (Cash flows / (1 + Cost of capital)^n)
NPV = -$50,000 + ($12,000 / (1 + 0.10)^1) + ($12,000 / (1 + 0.10)^2) + ... + ($12,000 / (1 + 0.10)^20)
Calculating the NPV for Project Y gives us $118,244.
Since Project X has a higher NPV of $128,886 compared to Project Y's NPV of $118,244, the firm would choose Project X as it would result in a higher value for the firm.
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Which of the following work-life initiatives is a direct service?
A) elder care resources
B) adoption assistance
C) job sharing
D) direct financial assistance
E) onsite child care
D) direct financial assistance among the options provided, direct financial assistance is the work-life initiative that qualifies as a direct service.
Direct financial assistance is a work-life initiative that directly provides monetary support or financial aid to employees to help them manage their work-life balance. It typically involves offering financial assistance or subsidies to employees for various purposes, such as paying for childcare, education expenses, housing costs, healthcare expenses, or other personal needs. Unlike the other options listed, direct financial assistance does not involve providing specific services or programs but rather offers financial support directly to employees to address their work-life needs.
Onsite child care refers to the provision of child care services within or near the workplace to support employees with childcare needs. While it is a valuable work-life initiative, it is not categorized as a direct service since it primarily involves providing a physical infrastructure and service rather than direct financial assistance.
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Low unit production cost is crucial for generating a positive gross margin. Which strategy below is NOT helpful to lower unit cost?
Group of answer choices
A) Utilizing production capacity
B) Higher product variety
C) Shorter setup time
D) Larger batch size
You are a production manager. You intend to convert the planned orders to production orders through CO41. However, the command cannot go through and there is a red cross on the planned order. Which one could be the reason?
Group of answer choices
A) You did not run MRP.
B) Raw materials have not been delivered.
C) You run out of cash.
D) There are too many scheduled production orders.
Based on the Hershey case, which one is not a system that Hershey planned to implement?
Group of answer choices
A) Manugistics
B) Siebel
C) SAP
D) Microsoft Dynamics
The strategies that are not helpful for lowering unit cost are higher product variety, having too many scheduled production orders, and not implementing Microsoft Dynamics in the Hershey case.
1) The strategy that is NOT helpful to lower unit cost is (Option B) Higher product variety. Higher product variety often leads to increased complexity, customization, and smaller batch sizes, which can result in higher production costs due to additional setup time, inventory management, and resource allocation.
2) The reason for the red cross on the planned order in CO41 could be (Option D) There are too many scheduled production orders. When there are too many scheduled production orders, it can create scheduling conflicts and resource constraints, leading to issues with converting the planned order to a production order.
3) Based on the Hershey case, the system that Hershey did not plan to implement is (Option D) Microsoft Dynamics. The case mentions Manugistics, Siebel, and SAP as the systems planned for implementation, but Microsoft Dynamics is not mentioned.
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One of Ed's favorite bands is playing in Philadelphia. Ed purchases a ticket ($50.00) and takes a day off work to get ready for the concert (Ed earn $75.00). While standing on line to get into the venue, someone offers Ed $160 for his ticket, but he turns them down. From this, we can infer that the benefit Ed gets from attending the concert is at least dollars (please record your answer without a dollar sign). 10 points
One of Ed's favorite bands is playing in Philadelphia. Ed purchases a ticket ($50.00) and takes a day off work to get ready for the concert (Ed earns $75.00). While standing in line to get into the venue, someone offers Ed $160 for his ticket, but he turns them down. From this, we can infer that the benefit Ed gets from attending the concert is at least $160 dollars.
When Ed turned down the offer of $160 for his ticket, it implies that he values attending the concert more than the amount he could have received by selling the ticket. By rejecting the offer, Ed demonstrates that the benefit he derives from attending the concert exceeds the monetary value of $160.
Considering the costs and opportunity cost involved, Ed spent $50 to purchase the ticket and also took a day off work, which would have earned him $75.
This indicates that Ed was willing to forgo $125 ($50 for the ticket + $75 lost wages) to attend the concert. Since Ed declined an offer of $160, which is higher than $125, it suggests that the benefit Ed receives from the concert is greater than $160.
In conclusion, based on Ed's decision to reject an offer of $160 for his concert ticket, we can infer that the benefit he gets from attending the concert is at least 160 dollars, as he values attending the concert more than the monetary amount offered.
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You shorted 390 shares of MMM for $85 per share using an inital margin of 74%. At the moment the stock is trading for $88. What is the equity in the account (in $ )?
The equity in the account is $25,350.
To calculate the equity in the account, we need to determine the current value of the shorted shares and subtract any borrowed funds.
1. Calculate the current value of the shorted shares:
Current value = Number of shares * Current stock price
Current value = 390 shares * $88 per share
2. Calculate the initial borrowed funds (initial margin):
Initial borrowed funds = Number of shares * Initial stock price * (1 - Initial margin)
Initial borrowed funds = 390 shares * $85 per share * (1 - 0.74)
3. Calculate the equity in the account:
Equity = Current value - Initial borrowed funds
Let's calculate the values:
1. Current value = 390 shares * $88 per share = $34,320
2. Initial borrowed funds = 390 shares * $85 per share * (1 - 0.74) = $8,970
3. Equity = $34,320 - $8,970 = $25,350
Therefore, the equity in the account is $25,350.
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The following are the credit sales transactions of Queen Trading for the month of May: May 3 Queen Trading sold merchandise on credit to Camote Enterprises, P 16,000 exclusive of 12% VAT, Terms: 1/15, n/30 4 9 10 Merchandise was sold on credit to Gosh Merchants, P 10,000 exclusive of 12 % VAT, Terms: 2/10, n/30. Merchandise was sold on credit to Ma. Reclamo Shop, P 8,000 exclusive of 12% VAT, Terms: 3/15, n/30. Queen Trading sold merchandise on account to Snow Fur Merchants, P 30,000 exclusive of 12 % VAT. Terms: 2/10, n/30. 12 Queen Trading sold merchandise on account to Patch Trading, P 25,000 exclusive of 12% VAT. Terms: 1/15, n/30. Record the Transactions in the sales journal.
To record the credit sales transactions in the sales journal, we need to include the following information: date, customer name, invoice number, sales amount, VAT amount, and terms.
Sales Journal:
Date Customer Name Invoice No. Sales Amount VAT Amount Terms
May 3 Camote Enterprises 16,000 1,920 1/15, n/30
May 4 Gosh Merchants 10,000 1,200 2/10, n/30
May 9 Ma. Reclamo Shop 8,000 960 3/15, n/30
May 10 Snow Fur Merchants 30,000 3,600 2/10, n/30
May 12 Patch Trading 25,000 3,000 1/15, n/30
Explanation:
The sales journal is a specialized accounting journal used to record credit sales transactions.
Each transaction is recorded in a separate row, and the relevant details such as the date, customer name, invoice number, sales amount, VAT amount, and terms are entered.
The sales amount is exclusive of the 12% VAT, so it needs to be calculated by multiplying the net sales amount by (1 + VAT rate). For example, for the transaction with Camote Enterprises on May 3, the VAT amount is 16,000 * 12% = 1,920.
The terms column indicates the credit terms offered to each customer, such as the discount percentage and the net payment period.
By recording the credit sales transactions in the sales journal, Queen Trading can track its sales activities, calculate VAT amounts, and monitor the credit terms provided to each customer. This helps in maintaining accurate records and managing accounts receivable effectively.
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which parties must recognize a taxable gain (or loss) when a current partner sells her interest in the partnership to new partner?
a. the partnership
b. the current partner selling the shares
c. Only A abs B must recognized a taxable gain(loss)
d. the new partnership purchasing the shares
e. each of the above(a. b. and d)
The correct answer is e. each of the above (a, b, and d) must recognize a taxable gain (or loss) when a current partner sells her interest in the partnership to a new partner. Let's break down the reasons for this:
a. The partnership: When a partner sells their interest in the partnership, the partnership itself may recognize a gain or loss. This is because the selling price of the interest might differ from the adjusted basis of the partnership's assets. The gain or loss is allocated among the partners based on their respective profit-sharing ratios.
b. The current partner selling the shares: The partner selling their interest in the partnership will recognize a gain or loss on the sale. This gain or loss is calculated as the difference between the selling price of the interest and their adjusted basis in the partnership.
d. The new partnership purchasing the shares: The new partnership that purchases the shares will also have to recognize any gain or loss on the acquisition. The gain or loss is determined by comparing the purchase price of the interest with the fair market value of the assets acquired.
Therefore, all three parties involved in the transaction (the partnership, the current partner selling the shares, and the new partnership purchasing the shares) must recognize a taxable gain or loss. Each party will report their respective gains or losses on their tax returns in accordance with the applicable tax laws and regulations.
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- Post the example on the Discussion Board. You might find an example right in your home or office. Look around. 2. Give a brief summary of the facts and court's holding in a recent case (no more than 5 years old) dealing with one of these subjects (patents, trademark and copyright) Do you agree with the court's decision? 1. Post some current legal case or article or problem that is being confronted with the Uniform Electronic Transactions Act (UETA). Answer as well: - Were there any objections to the Act's passage? - What implications are there for trademarks, patents and copyrights with internet use. - Is there any protection for the patent, trademark or copyright holder? If so, what were they?
The UETA was first proposed in 1999 and came into effect in 2000. It was created to facilitate the growth of electronic commerce by ensuring the validity and enforceability of electronic signatures and records.
The Act has since been adopted by 47 states and the District of Columbia, with New York and Illinois being the only two states that have not yet adopted it. However, they have their own versions of the UETA. The UETA was introduced to address some of the legal issues surrounding the use of electronic transactions and signatures, such as the validity and enforceability of electronic signatures, the formation of electronic contracts, and the admissibility of electronic records in court. The UETA was first proposed in 1999 and came into effect in 2000. It was created to facilitate the growth of electronic commerce by ensuring the validity and enforceability of electronic signatures and records.
It ensures that electronic records and signatures are treated the same as their paper counterparts.The UETA has implications for patents, trademarks, and copyrights because it provides a legal framework for the creation, use, and enforcement of electronic signatures and records related to these areas. It ensures that electronic records and signatures related to patents, trademarks, and copyrights are legally binding and enforceable in court.There is protection for patent, trademark, and copyright holders under the UETA. Electronic signatures and records related to these areas are treated the same as their paper counterparts.
This means that patent, trademark, and copyright holders can use electronic signatures and records to create, sign, and enforce agreements, licenses, and other legal documents. Overall, the UETA has been successful in providing a legal framework for electronic transactions and signatures. It has also ensured that electronic records and signatures related to patents, trademarks, and copyrights are legally binding and enforceable in court.
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When discussing and evaluating professional ethics, it is essential to understand the purpose, terminology, and repercussions of professional misconduct. The American Institute of Certified Public Accountants (AICPA) code of professional conduct is the gold standard for defining professional conduct in accounting; it is therefore important for business professionals to be familiar with. In this discussion, you will explore one principle in depth and discuss it and others with your peers.
First, select one of the following principles of professional conduct to examine in the AICPA Code of Professional Conduct document:
Responsibilities
Public interest
Integrity
Objectivity and independence
Due care
Scope and nature of services
Then, for your initial post, reflect on what appropriate practice of your selected principle would look like in the field, and also on some potential examples of violations of the principle. Use the following questions to help guide your reflections:
How would you define and describe your selected principle in your own words?
What value does the principle bring to practitioners, businesses, and clients?
What is an example of a difficult situation that a practitioner may face related to your selected principle, and what would an ethical response to the situation be? Why might a practitioner be tempted to, or accidentally, not take an ethical course of action?
The selected principle of professional conduct to examine in the AICPA Code of Professional Conduct document is 'Integrity'.
Integrity, a principle of professional conduct, means "to be straightforward and truthful in all professional and business relationships." This principle necessitates that you behave in a manner that is ethical, honest, and that you are not willing to compromise in any way. Ethical principles are essential to the accounting profession, and a lack of integrity might damage the public trust in accounting and auditing. The value of this principle for practitioners, businesses, and clients is as follows:
Integrity is critical in developing trust and confidence in the business environment. In the accounting industry, this is particularly important because it encourages investors to invest their money in reliable enterprises. Clients will rely on the accountant's honesty and transparency when conducting audits or other services, and if they find these characteristics lacking, they will not engage the accountant's services. A difficult situation that a practitioner may face related to the integrity principle is when they become aware of fraudulent financial reporting by a client. The practitioner may be tempted to turn a blind eye to the situation and keep the information confidential to avoid losing the client. However, this would not be ethical since the client's deceit would harm other stakeholders, and the practitioner has a professional obligation to disclose such information and prevent further harm.Therefore, in an ethical response to the situation, the practitioner would report the fraudulent activity to the appropriate authorities, such as the SEC, and withdraw from the client's service. The practitioner would be motivated to not take an ethical course of action because of the desire to keep the client, which would result in a loss of income. However, such behavior would damage the practitioner's integrity, credibility, and reputation in the long run.
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The used to Sant's Of Food Adventures of December 31, 2020, the nd of its focal years present bo Click the icon to view the unadjusted trial balance. Data need to the aquinos (Cack the icon to view the adjusting entry data Prepare the wake of Sapis Road Adventures for the your ended Deconter 31, 2020 entity each adining entry by the compending to the data gen Entertaines the adds come of the worksheet Kiy using erties by er total the diet and coedt column of a bes is not used in the worksheet leave the box empty; do not select a label er A used: tuntuiture; budbuilding) Sign Off Road Adventures Wiki December 31, 2 Adjustments Ad Trial Balance Detit Account Cad Deb Clear All Check Calculator That Balanc Debit 4000 52000 100 10,000 Ask my instructor Media Cred O Chap POD
Sign Off Road Adventures' trial balance as of December 31, 2020, provides the foundation for the year-end adjusting entries. The trial balance reveals the following account balances: Supplies ($4,000), Prepaid Rent ($10,000), Equipment ($52,000), Accumulated Depreciation - Equipment ($100), Salaries and Wages Payable ($2,300), Salaries and Wages Expense ($40,500), Insurance Expense ($1,200), Insurance Payable ($700), Rent Expense ($800), Interest Payable ($500), and Interest Expense ($300).
The adjusting entries for year-end are as follows:
Debit Salaries and Wages Expense and credit Salaries and Wages Payable for $2,300.
Debit Insurance Expense and credit Insurance Payable for $500.
Debit Depreciation Expense and credit Accumulated Depreciation - Equipment for $100.
Debit Rent Expense and credit Prepaid Rent for $10,000.
Debit Interest Expense and credit Interest Payable for $300.
The adjusted trial balance is prepared by incorporating the adjusting entries into the respective accounts. The trial balance columns are adjusted to reflect the adjustments made. The adjusted trial balance is then used to prepare the income statement and balance sheet.
The income statement and balance sheet show the financial results and financial position of Sign Off Road Adventures at the end of the fiscal year.
Check Figures:
Net Income: $24,000
Total Current Assets: $17,400
Total Assets: $65,400
Total Current Liabilities: $3,100
Total Liabilities: $3,100
Total Equity: $62,300
Total Liabilities and Equity: $65,400
Please note that the figures provided in the "Adjusted Trial Balance" column are not explicitly mentioned in the original information provided and have been calculated based on the adjusting entries and the trial balance figures.
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At year-end December 31, Chan Company estimates its bad debts as 0.60% of its annual credit sales of $695,000. Chan records its bad debts expense for that estimate. On the following February 1, Chan decides that the $348 account of P Park is uncollectible and writes it off as a bad debt. On June 5, Park unexpectedly pays the amount previously written off. Prepare Chan's journal entries to record the transactions of December 31, February 1, and June 5
To record the transactions of Chan Company regarding bad debts, we need to account for the estimated bad debts expense on December 31, the write-off of the uncollectible account on February 1, and the subsequent payment received on June 5.
December 31:
Chan Company estimates its bad debts expense based on the 0.60% estimate of its annual credit sales of $695,000. The journal entry to record this transaction will be:
Bad Debts Expense $4,170 (($695,000 * 0.60%)
Allowance for Doubtful Accounts $4,170
This entry recognizes the estimated amount of bad debts as an expense and simultaneously increases the allowance for doubtful accounts, which is a contra-asset account.
February 1:
Chan determines that P Park's $348 account is uncollectible and writes it off as a bad debt. The journal entry will be:
Allowance for Doubtful Accounts $348
Accounts Receivable - P Park $348
This entry reduces the allowance for doubtful accounts, representing the elimination of the specific uncollectible account, and also reduces the accounts receivable.
June 5:
Unexpectedly, P Park pays the amount that was previously written off. The journal entry to record this transaction will be:
Accounts Receivable - P Park $348
Allowance for Doubtful Accounts $348
Cash $348
This entry reinstates the accounts receivable from P Park, as the payment is received, and reduces the allowance for doubtful accounts. Additionally, the cash account is increased by the amount received.
These journal entries accurately record the bad debts transactions of Chan Company, reflecting the estimated expense, write-off, and subsequent payment received. It is important to consult with a professional accountant or refer to company policies to ensure accurate financial recording.
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When using a periodic inventory system, Cost of Goods Sold and the Inventory accounts are updated:
a. when cash is received.
b. when revenue is earned.
c. when a sale is made.
d. when a count is taken.
In a periodic inventory system, the Cost of Goods Sold (COGS) and Inventory accounts are updated when a physical count of inventory is conducted. This is typically done at the end of an accounting period, such as monthly, quarterly, or annually.
The purpose of the count is to determine the quantity of inventory on hand, which is then used to calculate the cost of goods sold and the ending inventory.
During the physical count, the inventory is typically valued using a cost flow assumption, such as First-In, First-Out (FIFO) or Last-In, First-Out (LIFO). Once the count is completed, the cost of the goods sold during the period can be calculated by subtracting the beginning inventory from the sum of the purchases and then subtracting the ending inventory. The COGS is then recorded as an expense in the income statement.
The Inventory account is adjusted based on the cost of the ending inventory determined during the count. This updated inventory value is carried forward to the next accounting period and becomes the beginning inventory for that period.
d. when a count is taken.
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Which of the following terms can be used to describe unsystematic risk? 1. asset-specific risk II. diversifiable risk III. market risk IV. unique risk
Select one: a. I and IV only b. Il and Ill only c. I, II, III, and IV d. I, II, and IV only e. II, III, and IV only
Option d. I, II, and IV only is the correct answer. The terms that can be used to describe unsystematic risk include asset-specific risk, diversifiable risk, and unique risk. Unsystematic risk is the risk which is unique to a specific company or industry, whereas, systematic risk is the risk that applies to the entire market or market segment.
Therefore, option d. I, II, and IV only is the correct answer. Unsystematic risk is also known as a diversifiable risk, firm-specific risk, or idiosyncratic risk. It can be reduced or eliminated by investing in more than one asset. Some factors that may lead to unsystematic risk include management decisions, labor strikes, and environmental accidents.Asset-specific risk is a type of unsystematic risk that only affects a specific asset or security. This type of risk is dependent on the specific characteristics of the asset or security.
Unique risk is another name for unsystematic risk. This type of risk is specific to a particular company or industry and cannot be eliminated by diversification. On the other hand, systematic risk is the risk that cannot be eliminated through diversification. It is the risk that affects the entire market or market segment.
It is also known as non-diversifiable risk or market risk. Some factors that may lead to systematic risk include wars, political instability, and natural disasters.
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A Computer Outlet Stores bond has a 10 percent coupon rate and a $1,000 face value. Interest is paid quarterly, and the bond has 10 years to maturity. If investors require a 12 percent yield, what is the bond's value? Round your final answer to two decimal places. Question 11 3 pts A Kroger Inc. bond carries an 8 percent coupon, paid annually. The par value is $1,000, and the bond matures in five years. If the bond currently sells for $911.37, what is its yield to maturity? Round your final answer to two decimal places and enter your answer as a percentage (e.g., enter 5.25% as 5.25 ).
A Computer Outlet Stores bond has a 10 percent coupon rate and a $1,000 face value. Interest is paid quarterly, and the bond has 10 years to maturity. If investors require a 12 percent yield, what is the bond's value? Round your final answer to two decimal places.Calculation: To calculate the bond's value, we use the formula for bond valuation using the semi-annual coupon rate and yield to maturity. The formula is as follows:Bond Value = (C / 2) / (1 + (YTM / 2))n + (F / (1 + (YTM / 2))nWhere:C = Coupon payment F = Face Value YTM = Yield to Maturity n = number of years The bond's coupon rate is 10%, and the face value is $1,000.C = $1,000 x 0.10 / 4 = $25F = $1,000n = 10 years x 4 quarters per year = 40 quarters YTM = 12% / 4 = 3% per quarter Bond Value = ($25 / (1 + 0.03)¹⁰⁹ⁿ) + ($1,000 / (1 + 0.03)⁴⁰) = $574.8419, which rounds to $574.842. Hence, the bond's value is $574.842.2. A Kroger Inc. bond carries an 8 percent coupon, paid annually. The par value is $1,000, and the bond matures in five years. If the bond currently sells for $911.37, what is its yield to maturity? Round your final answer to two decimal places and enter your answer as a percentage (e.g., enter 5.25% as 5.25 ).Calculation: We need to calculate the yield to maturity of the bond given its current market price. To calculate the yield to maturity, we use an iterative approach.Bond Value = (C / YTM) x (1 - (1 / (1 + YTM)n)) + (F / (1 + YTM)n)Where:C = Coupon paymentF = Face ValueYTM = Yield to Maturityn = number of yearsThe bond's coupon rate is 8%, and the face value is $1,000.C = $1,000 x 0.08 = $80F = $1,000n = 5 yearsThe bond currently sells for $911.37, which is less than the face value. Therefore, we expect that the yield to maturity will be higher than the coupon rate.Start by assuming a yield to maturity of 10%:Bond Value = ($80 / 0.10) x (1 - (1 / (1 + 0.10)⁵)) + ($1,000 / (1 + 0.10)⁵) = $1,001.53The bond value calculated is higher than the market price. Therefore, we need to lower the yield to maturity.Lower the yield to maturity to 8%:Bond Value = ($80 / 0.08) x (1 - (1 / (1 + 0.08)⁵)) + ($1,000 / (1 + 0.08)⁵) = $911.37The bond value calculated is the same as the market price. Therefore, the yield to maturity is 8%, which is the coupon rate. Hence, the yield to maturity is 8%.
Columbus Security Corp. has a ROE of 25 percent, profit margin of 7.2 percent, and total asset turnover of 1.8. What is the firm's debt-equity ratio? (Round it to two decimal place
To find the debt-equity ratio of Columbus Security Corp., we need additional information. The given information about ROE (Return on Equity), profit margin, and total asset turnover doesn't directly provide the debt and equity values.
The debt-equity ratio is calculated as the ratio of total debt to total equity. It represents the proportion of a company's financing that comes from debt compared to equity.
If we have the values for total debt and total equity, we can calculate the debt-equity ratio using the formula:
Debt-Equity Ratio = Total Debt / Total Equity
Without the specific values for total debt and total equity, we cannot calculate the debt-equity ratio. If you have additional information regarding the company's balance sheet or specific debt and equity figures, please provide them so that I can assist you further in calculating the ratio.
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In general, planned buying is a(n): a. five-step OR b. seven-step process that is intended to result in: a. deliberate OR b. impulse and a. thoughtless OR b. well-considered purchasing decisions: a. after OR before making the acquisition.
In general, planned buying is a seven-step process that is intended to result in well-considered purchasing decisions after making the acquisition. The correct option is B.
Planned buying is a conscious and intentional consumer behavior that is done to meet specific wants and needs. It is a purchasing process that involves selecting a product that best meets an individual's needs and preferences, thereby promoting rational decision-making.
Planned buying generally involves a seven-step process that culminates in a well-thought-out purchasing decision. These seven steps are as follows:
1. Recognizing a need
2. Identifying options
3. Evaluating the options
4. Selecting the best option
5. Evaluating the selected option
6. Deciding to buy
7. Post-purchase evaluation.
Therefore, planned buying is a seven-step process that is intended to result in well-considered purchasing decisions after making the acquisition.
Therefore, the correct option is B.
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Lee Company offers its top executives the opportunity to purchase its $1 par value common stock at 2% discount to the market price. The employees have 3 weeks to elect to participate in the plan. The current market price of the stock is $81 per share. Employees purchased a total of 2000 shares. What journal entry will the company make on the date the employees purchase the shares?
The journal entry that the company will make on the date the employees purchase the shares is as follows: Debit: Employee Stock Purchase Plan Expense (2000 shares * $81 * 2% discount), Credit: Common Stock (2000 shares * $1 par value).
The company will debit the "Employee Stock Purchase Plan Expense" account to record the cost associated with offering the discounted stock to employees. The expense is calculated based on the number of shares purchased (2000 shares), the market price of the stock ($81 per share), and the discount rate (2%).
The credit entry is made to the "Common Stock" account to record the issuance of shares to the employees. The credit amount is calculated by multiplying the number of shares purchased (2000 shares) by the par value of the stock ($1 per share).
This journal entry reflects the impact of the employee stock purchase plan on the company's financial records. It recognizes the cost of providing the discounted shares to employees and records the corresponding increase in the company's equity through the issuance of common stock.
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BUSINESS ECONOMICS
ASSIGNMENT NO 3
GDP ASSIGNMENT
The assignment requires you to prepare a 6 Slide PowerPoint Deck (A deck is another term for a PowerPoint presentation). Select a country that starts with the same letter as the first letter of your last name.
For example, my last name is MERCHANT, I would select a country starting with the letter M e,g, Malaysia, If not a single country starts with the first letter of your last name, select a country that starts with the first letter of your first name. For me it would be Zimbabwe.
Items to research
Research GDP data of said country from 2012 to 2021.
Research the product base for the country including
What is the country’s highest export?
What is the country’s highest import
Did the GDP change substantially over the 10 year period, is there a reason?
Research or calculate the GDP per Capita, compare the GDP % change to GDP per Capita change, are there any observations to be made.
Presentation Breakdown
Slide 1: Title, Chosen Country, Name
Slide 2: Country information, GDP, export, import Etc.
Slide 3: Change in GDP over 10 years, and drivers for change (Why did the change happen)
Slide 4: Changes in GDP per capita over 10 years, comparison to changes in GDP. Key Observations
Slide 5: GDP outlook
Slide 6: Conclusions Slide: What have you learned about the country you researched
The selected country for this assignment is Germany. Over the period of 2012 to 2021, Germany experienced a substantial change in GDP, driven by various factors. The country's highest export is motor vehicles, while its highest import is machinery and electrical equipment.
Germany, the chosen country for this assignment, witnessed notable changes in its GDP from 2012 to 2021. The country's GDP experienced fluctuations during this period, influenced by factors such as global economic conditions, domestic policies, and industry performance. Germany's highest export is motor vehicles, which includes renowned automotive brands like Volkswagen, BMW, and Mercedes-Benz. The country's engineering prowess and quality manufacturing contribute to the success of its automotive industry.
Regarding imports, Germany's highest import category is machinery and electrical equipment. This highlights the country's reliance on advanced machinery for its industrial and manufacturing sectors. Germany's import of machinery and electrical equipment supports the growth and modernization of its industries.
Comparing the changes in GDP to GDP per capita, interesting observations can be made. While GDP measures the total value of goods and services produced in a country, GDP per capita reflects the average income per person. If the GDP per capita growth outpaces GDP growth, it suggests that the population is experiencing a relatively higher standard of living. Conversely, if GDP per capita lags behind GDP growth, income inequality or population growth may be factors to consider.
The GDP outlook for Germany is influenced by various factors such as global economic trends, domestic policies, and technological advancements. As one of the largest economies in the world, Germany aims to maintain its competitive edge in sectors like automotive manufacturing, engineering, and renewable energy.
In conclusion, researching Germany's GDP data and related factors provides insights into the country's economic performance. The analysis of GDP changes, highest exports and imports, GDP per capita, and the overall outlook reveals the dynamics of Germany's economy and its strategic priorities.
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a) Positive Mindset Limited (PML) is evaluating financing options as they finalize plans to expand into South America. They have decided to issue a 38-year bond series as per the approval of the board of directors. The bonds will be issued on January 1, 2023 and will mature on December 31, 2060. The bonds will have a $1,000 par value and will pay semi-annual coupons at a rate of 6.5% per annum. Coupons will be paid semi-annually.
i.) On what dates will the final four coupon payments be made (month, day, and year)? (2 Marks)
ii.) What would be the value of the bonds on July 1, 2042, if the interest rates had risen to 9%? How would the bond be classified? (9 Marks)
iii.) Calculate the current yield and yield to maturity on the bonds on January 1, 2048, if they were selling for $877.50 at that time. (9 Marks) b) On January 1, 2017, Tasheka purchased 30-year bond which matures on December 31, 2046. She is now desirous of selling the bond, but interest rates have risen and the bond value has fallen significantly. Explain to Tasheka, in terms of supply and demand, why the bond value has fallen.
The final four coupon payments will be made semi-annually until the bond's maturity on December 31, 2060. Since the bond pays coupons semi-annually, we need to determine the dates that fall six months before each maturity date.
The bond matures on December 31, 2060. Therefore, the final four coupon payments will be made on:
June 30, 2059
December 31, 2059
June 30, 2060
December 31, 2060
ii.) To calculate the value of the bonds on July 1, 2042, if the interest rates had risen to 9%, we need to calculate the present value of the remaining coupon payments and the maturity value. We will discount each cash flow using the new interest rate of 9% and sum them up.
Given:
Par value = $1,000
Coupon rate = 6.5% (per annum)
Coupon payment frequency = Semi-annual
Maturity date = December 31, 2060
Interest rate = 9% (as of July 1, 2042)
We first need to determine the number of remaining coupon payments and the number of periods until maturity on July 1, 2042.
Number of remaining coupon payments = (Years to maturity) * 2 (since coupons are paid semi-annually)
Years to maturity = (Maturity year - Current year) = (2060 - 2042) = 18 years
Number of remaining coupon payments = 18 * 2 = 36
Using the formula to calculate the present value of an ordinary annuity:
PV = (Coupon payment * (1 - (1 + r)^(-n))) / r + (Maturity value / (1 + r)^n)
PV = (($1,000 * 6.5% / 2) * (1 - (1 + 9%)^(-36))) / 9% + ($1,000 / (1 + 9%)^36)
Calculating this will give us the value of the bonds on July 1, 2042.
iii.) To calculate the current yield and yield to maturity on the bonds on January 1, 2048, when they were selling for $877.50, we need to use the formulae for current yield and yield to maturity.
Current Yield = (Annual coupon payment / Market price) * 100
Yield to Maturity is the rate that makes the present value of all future cash flows (coupons and the maturity value) equal to the market price.
Given:
Par value = $1,000
Coupon rate = 6.5% (per annum)
Coupon payment frequency = Semi-annual
Market price = $877.50
Maturity date = December 31, 2060
We first need to determine the number of remaining coupon payments and the number of periods until maturity on January 1, 2048.
Number of remaining coupon payments = (Years to maturity) * 2 (since coupons are paid semi-annually)
Years to maturity = (Maturity year - Current year) = (2060 - 2048) = 12 years
Number of remaining coupon payments = 12 * 2 = 24
Using the formula for the current yield:
Current Yield = (($1,000 * 6.5% / 2) / $877.50) * 100
To calculate the yield to maturity, we need to find the interest rate that solves the equation:
$877.50 = (($1,000 * 6.5% / 2) / (1 + r/2)^1) + (($1,000 * 6.5% / 2) / (1 + r/2)^2) + ... + (($1,000 * 6.5% / 2) / (1 + r/2)^24) + ($1,000 / (1 + r/2)^24)
We can use iterative methods or financial calculators to find the yield to maturity.
b) The bond value has fallen due to the increase in interest rates. This can be explained by the relationship between bond prices and interest rates, known as the supply and demand dynamics in the bond market.
When interest rates rise, newly issued bonds offer higher coupon rates, making them more attractive to investors. As a result, the demand for existing bonds with lower coupon rates decreases. To compensate for the lower demand, the price of existing bonds falls.
Additionally, when interest rates rise, the fixed coupon payments of existing bonds become less attractive compared to new bonds with higher coupon rates. Investors can earn a higher return by investing in newly issued bonds rather than holding onto existing bonds with lower coupon rates. This increased supply of existing bonds in the market further contributes to the decline in their prices.
Overall, the fall in bond prices is driven by the inverse relationship between bond prices and interest rates and the changing supply and demand dynamics in the bond market.
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What is the goal of the trade-off theory? What major assumption
from Modigliani and Miller's work was the trade-off theory trying
to refute?
The goal of the trade-off theory is to provide insights into the capital structure decisions of a firm, specifically determining the optimal mix of debt and equity financing. It seeks to find a balance or trade-off between the benefits and costs of using debt in a company's capital structure.
The major assumption from Modigliani and Miller's work that the trade-off theory attempts to refute is the irrelevance of capital structure. Modigliani and Miller's propositions, known as the Modigliani-Miller theorems, suggested that, under certain assumptions, the value of a firm is independent of its capital structure. They argued that in perfect capital markets with no taxes, bankruptcy costs, or information asymmetry, the market value of a firm is determined solely by its earning potential and the risk of its underlying assets.
The trade-off theory challenges this assumption and argues that there are various factors, such as tax advantages of debt, financial distress costs, agency costs, and signaling effects, that influence a firm's capital structure decisions. It recognizes that there is an optimal level of debt for each firm that balances the benefits, such as tax shields and lower cost of debt, with the costs, such as increased financial risk and potential bankruptcy. The trade-off theory acknowledges that the choice of capital structure can impact the value and financial health of a firm.
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Ethical Practice in Real Estate
b. Ethical practice standards for privacy, confidentiality and security of customer information
In general terms describe what ethical considerations you would take account of when considering the issues of privacy, confidentiality and security of customer information and then discuss what the legislation requires you to do when handing customer information (make special reference to the Privacy Principles)
Ethical considerations in real estate include privacy, confidentiality, and security of customer information, while legislation mandates consent, limited data collection, accuracy, and protection.
Ethical considerations regarding privacy, confidentiality, and security of customer information in real estate require practitioners to prioritize and respect clients' privacy rights.
This involves obtaining informed consent from clients before collecting any personal information, ensuring transparency in how the information will be used, and providing options for clients to control the use and disclosure of their data.
Confidentiality is essential in real estate transactions, as sensitive information such as financial records, credit histories, and personal circumstances may be shared. Practitioners must maintain strict confidentiality, only disclosing information as required by law or with the explicit consent of the client.
Legislation, including privacy principles, imposes specific obligations on practitioners when handling customer information. These principles typically include obtaining consent for data collection, limiting the collection of information to what is necessary for the transaction, ensuring the accuracy of the information, and implementing appropriate security measures to protect against unauthorized access, loss, or misuse.
By adhering to these ethical considerations and complying with legislation, real estate practitioners can demonstrate their commitment to safeguarding customer information and promoting trust and integrity in their professional practice.
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What is the formula for equity?
Question 14 options:
A)Total assets minus total liabilities.
B)Current assets minus current liabilities,
C)Total assets minus current assets.
D)Total assets minus fixed assets.
Option A is the correct answer. Equity represents the residual interest in the assets of a company after deducting all its liabilities. It is essentially the ownership interest or the net worth of the company.
Total assets refer to the sum of all the resources owned by the company, including both current assets (assets expected to be converted into cash within a year) and fixed assets (assets with a longer-term use, such as property, plant, and equipment).
Total liabilities, on the other hand, encompass all the financial obligations and debts owed by the company, including both current liabilities (obligations due within a year) and long-term liabilities (obligations with a longer repayment period, such as loans or bonds).
By subtracting total liabilities from total assets, we arrive at the equity value. This represents the amount that would remain to the owners or shareholders of the company if all its liabilities were settled. Equity can also be seen as the book value of the company, reflecting the owners' stake in the business. The formula for equity is calculated by subtracting total liabilities from total assets, as represented in Option A: Equity = Total assets - Total liabilities.
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Jolly Cleaners offets residential and commerclal cleaning services, Clients pay a fixed monthly fee for the service, but can cancel the service at the end of any month. In addition to the employees who do the actual cleaning. the firm includes two managers who handie the administrative tasks (human resources, accounting. and so on) and one dispatcher, who assigns the cleaning employees to jobs on a dally basis. On average, residential clients pay $320 per month for cleaning services and the commercial clients pay $1,800 per month. A typical residential client requires 10 hours a month for cleaning and a typical commercial client requires 50 hours a month. in March, Jolly Cleaners had 40 commercial clients and 190 residential clients. Cleaners are paid $15 per hour and are only paid for the hours actually worked. Supplies and other variable costs are estimated to cost. 55 per hour of cleaning. Other monthly costs (all fixed) are $56,000.5G8A, including managerial and dispatcher salaries, and $3.600 in other expenses. For July. Jolly Cleaners has budgeted profit of $4.000 based on 60 commercial clients. Required: How many residential clients are budgeted for July?
Jolly Cleaners is budgeting for 171 residential clients and 60 commercial clients in July to achieve a profit of $4,000.
To calculate the number of residential clients budgeted for July, we first need to determine the total revenue and total costs for July. Then we can use this information to calculate the number of residential clients needed to achieve the budgeted profit of $4,000.
Total revenue from commercial clients:
60 clients x $1,800 per month = $108,000
Total revenue from residential clients:
We don't know how many residential clients there will be in July, but we do know that the average residential client pays $320 per month for cleaning services and requires 10 hours of cleaning per month. Therefore, each hour of cleaning for a residential client is worth $32 ($320/month ÷ 10 hours/month). Let's call the number of residential clients R:
Total revenue from residential clients = R x 10 hours/month x $32/hour
Total costs:
Variable costs:
Commercial clients: 50 hours of cleaning per month x $15/hour + $0.55/hour = $775 per month per client
Residential clients: 10 hours of cleaning per month x $15/hour + $0.55/hour = $160.55 per month per client
Fixed costs:
$56,000.5G8A + $3,600 = $59,600.5G8A
Total costs = (40 commercial clients x $775/month/client) + (R x $160.55/month/client) + $59,600.5G8A
Profit:
Total revenue - Total costs = Profit
$108,000 + (R x 10 hours/month x $32/hour) - [(40 x $775/month/client) + (R x $160.55/month/client) + $59,600.5G8A] = $4,000
Simplifying and solving for R gives us:
R = (4,000 + $59,600.5G8A - $108,000 + (40 x $775/month/client)) ÷ ($32/month/hour x 10 hours/month - $160.55/month/client)
R = 171.15
Since we can't have a fractional number of residential clients, the answer is rounded to 171 residential clients.
Therefore, Jolly Cleaners is budgeting for 171 residential clients and 60 commercial clients in July to achieve a profit of $4,000.
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Jolly Cleaners is budgeting for 171 residential clients and 60 commercial clients in July to achieve a profit of $4,000.
To calculate the number of residential clients budgeted for July, we first need to determine the total revenue and total costs for July. Then we can use this information to calculate the number of residential clients needed to achieve the budgeted profit of $4,000.
Total revenue from commercial clients:
60 clients x $1,800 per month = $108,000
Total revenue from residential clients:
We don't know how many residential clients there will be in July, but we do know that the average residential client pays $320 per month for cleaning services and requires 10 hours of cleaning per month. Therefore, each hour of cleaning for a residential client is worth $32 ($320/month ÷ 10 hours/month). Let's call the number of residential clients R:
Total revenue from residential clients = R x 10 hours/month x $32/hour
Total costs:
Variable costs:
Commercial clients: 50 hours of cleaning per month x $15/hour + $0.55/hour = $775 per month per client
Residential clients: 10 hours of cleaning per month x $15/hour + $0.55/hour = $160.55 per month per client
Fixed costs:
$56,000.5G8A + $3,600 = $59,600.5G8A
Total costs = (40 commercial clients x $775/month/client) + (R x $160.55/month/client) + $59,600.5G8A
Profit:
Total revenue - Total costs = Profit
$108,000 + (R x 10 hours/month x $32/hour) - [(40 x $775/month/client) + (R x $160.55/month/client) + $59,600.5G8A] = $4,000
Simplifying and solving for R gives us:
R = (4,000 + $59,600.5G8A - $108,000 + (40 x $775/month/client)) ÷ ($32/month/hour x 10 hours/month - $160.55/month/client)
R = 171.15
Since we can't have a fractional number of residential clients, the answer is rounded to 171 residential clients.
Therefore, Jolly Cleaners is budgeting for 171 residential clients and 60 commercial clients in July to achieve a profit of $4,000.
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Perfect Picture inc. (PPi) experienced the following transactions during Year 2 . The transactions are summarized (transaction data pertain to the full year) and limited to those that affect the company's current liabilities.
1. PPI had cash sales of $820,000. The state requires that PPI charge customers an 8 percent sales tax (ignore cost of goods sold).
2. PPI paid the state sales tax authority $63,000.
3. On March 1. PPi issued a note payable to the County Bank. PPI received $50,000 'cash (principal balance). The note had a one-year term and a 6 percent annual interest rate.
4. On December 31, PPI recognized accrued interest on the note issued in Event 3.
5. On December 31, PPl recognized warranty expense at the rate of 3 percent of sales.
6. PPI paid $22,000 cash to settle warranty ciaims.
7. On January 1, Year 1, PPI issued a $100,000 installment note. The note had a 10-year term and an 8 percent interest rate. PPI agreed to repay the principal and interest in 10 annual interest payments of $14,902.94 at the end of each year. While the note was issued in Year 1, the effects of interest appear in the Year 2 balance sheet.
Required:
Prepare the liabilities section of the December 31 , Year 2 , balance sheet (Do not round intermediate calculations and round final answers to nearest whole dollar.)
To summarize, the impact on Perfect Picture Inc.'s current liabilities based on the given transactions is as follows: Increase in current liabilities: Sales tax on cash sales, Accrued interest on the note payable, Warranty expense
To meet the standards, we shall evaluate each transaction and ascertain how it affects the present obligations of Perfect Picture Inc. (PPI). Here is how the transactions are broken down:
1. Cash Sales: Because PPI will have to collect and send sales tax to the state, the $820,000 in cash transactions will raise its current obligations.
2. Payment of Sales Tax: PPI's current obligations will be reduced as a result of the $63,000 payment made to the state's sales tax authority, which will also satisfy its sales tax obligation.
3. Issuance of Note Payable: Because the note payable to County Bank is a long-term debt, its issuance has no immediate effect on current liabilities. However, the main balance of the note due will go up as a result.
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Additional $1.3 million, but it allowed PRS to continue to offer a full line of services. PS's accountant, Jill Linsey, initially recorded the cash payments as "Loss from Lawsuit" and "Product Development," respectively. However, Jack Meyer, the controller, instructed Jill to create an intangible asset, named
"Goodwill" and charge both costs to this account.
"We're protected from another lawsuit as long as this agreement is in effect," he says. "It's about as close to goodwill as we'll ever get from our competitors. We might as well amortize the cost rather than take the full hit to income, anyway." To receive full credit, answer both:
What are the ethical issues?
What should Jill do?
Recording cash payments as "Goodwill" is not ethical accounting practice. Accountants should prioritize integrity and report concerns to the controller for accurate and transparent financial reporting.
The situation described presents several ethical issues. First, there is a potential misrepresentation of financial information. Jill Linsey, the accountant, was initially recording the cash payments accurately as "Loss from Lawsuit" and "Product Development," reflecting the actual nature of the expenses.
However, she is now being instructed by Jack Meyer, the controller, to create an intangible asset called "Goodwill" and charge both costs to this account. This creates a misleading representation of the company's financial position by understating expenses and artificially inflating the value of the intangible asset.
Secondly, there is a question of proper accounting treatment. Charging the costs to an intangible asset called "Goodwill" is not in line with generally accepted accounting principles (GAAP).
Goodwill typically represents the excess of the purchase price over the fair value of identifiable assets acquired in a business combination, and it is not appropriate to use it to account for unrelated expenses.
In light of these ethical issues, Jill should consider her responsibilities as an accountant and adhere to the principles of integrity and professional conduct. She should express her concerns to Jack Meyer and explain why the current approach violates accounting standards and misrepresents financial information.
It is important for her to uphold the principles of accuracy and transparency in financial reporting. If necessary, Jill may escalate the issue to higher management or seek guidance from relevant professional bodies to ensure ethical accounting practices are followed.
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Out of 3 types of economic system (market economy, centrally planned economy, or mixed economy), which is implemented in that country. Describe in detail the country's economic system.
To determine which economic system is implemented in a specific country, it is necessary to consider various factors such as the role of government, the allocation of resources, and the degree of private ownership and control in the economy. Without specifying a particular country, I cannot provide an accurate description of its economic system. However, I can briefly explain the three types of economic systems you mentioned:
1. Market Economy: In a market economy, the allocation of resources and production decisions are primarily determined by the interactions of supply and demand in the marketplace. Private individuals and businesses own and control the majority of resources, and the government's role is typically limited to enforcing laws, protecting property rights, and regulating market competition. Prices are determined by market forces, and the pursuit of profit drives economic decisions.
2. Centrally Planned Economy: In a centrally planned economy, the government has significant control over the allocation of resources and production decisions. The state or central planning authority determines what goods and services are produced, how they are produced, and who receives them. The government may own and control major industries and resources, and prices may be set by the government rather than through market forces. The main goal is typically to achieve specific social or economic objectives as determined by the government.
3. Mixed Economy: A mixed economy combines elements of both market and centrally planned economies. It involves a mix of private and public ownership of resources and a combination of market forces and government intervention. In a mixed economy, the government plays a role in regulating and overseeing economic activities, providing public goods and services, and addressing market failures. However, there is also space for private individuals and businesses to operate and make economic decisions.
The specific economic system implemented in a country can vary based on its historical, cultural, political, and social factors. Many countries today have mixed economies, where both market mechanisms and government intervention coexist to varying degrees. It is important to note that the classification of an economic system can be subjective, and countries may exhibit characteristics of multiple economic systems in practice.
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ayokenny2001
The economy systems that most align with consumerism is Market Economic System.
What is Market Economic System?
A market economy is an economic system where the prices of goods are and economic decisions are based on the interactions of the individual people in the economy.
The goal of a market economy may be described as wanting to limit the government involvement in economic decisions.
Hence, the economy systems that most align with consumerism is Market Economic System.
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1. Water Works Plumbing Company is a small owner-managed plumbing services company that serves the greater Miami metropolitan area. Identify each of the following costs as either a variable, a fixed, or a quasi-fixed cost and give a detailed explanation. a) Gasoline expense for the service van. b) Cost of the owner's time to run the plumbing business. c) Cost of a complete set of tools needed to be a plumber. d) Labor expense for an assistant plumber who is hired on an hourly basis and works with the owner-manager of the firm when the owner needs a helper. HSave Assignment Submitted Back e) Monthly lease payment for a drain-line auger, which contractually binds WW Plumbing to pay $75 per month for the next 12 months, regardless of how much or how little the company uses the leased piece of plumbing equipment. Subleasing is prohibited and there will be no refund if the machine is returned before the 12 month period expires. f) Expense for plumbing service consumables: plumbers' putty, Teflon tape, pipe lubricant, sandpaper, PVC glue, butane for torch, etc.
Variable cost is a cost that fluctuates with the changes in the level of production output. Fixed cost is a cost that does not fluctuate with changes in the level of production output.
Quasi-fixed cost is a cost that appears fixed within a certain production range but may fluctuate significantly when the range is passed. In this question, the cost of gasoline expense for the service van, labor expense for an assistant plumber, and expense for plumbing service consumables are variable costs. The cost of the owner's time to run the plumbing business.
The monthly lease payment for a drain-line auger is a quasi-fixed cost since it is fixed for a certain period of time, regardless of how much or how little the company uses the leased piece of plumbing equipment. Since all of these costs are associated with the business activity of Water Works Plumbing Company, they are considered as business expenses.
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If interest rates increase from 3% to 4%, a $100,000 10 year bond with a duration of 8 years would ______. in price by approximately ____. O a. increase; 7.8% O b. decrease; 9.7% O c. increase; 9.7% O d. decrease; 7.8%
If interest rates increase from 3% to 4%, a $100,000 10 year bond with a duration of 8 years would decrease in price by approximately 7.8%, the answer is Option D.
Interest rate changes have a significant effect on bond prices, which is why bond investors monitor changes in interest rates closely. Interest rates and bond prices have an inverse relationship, meaning when one goes up, the other goes down.
That is, when interest rates rise, bond prices fall. The duration of a bond is a measure of its sensitivity to changes in interest rates.
The answer to this question is given by the formula, and the formula is as follows:Approximate Price Change = -Duration x ΔYield / (1 + Yield)Where:-Duration is 8-Yield is 3 to 4 percent change, which is 0.01.
We'll substitute the values in the formula and solve:Approximate Price Change = -8 x 0.01 / (1 + 0.03)Approximate Price Change = -0.08 / 1.03Approximate Price Change = -0.0776The price change for this bond is -7.76 percent, or approximately 7.8 percent. Therefore, the answer is Option D: decrease; 7.8%.
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Kinko Ltd designs and produces Vessel parts. The company has three main departments that consume overhead resources: design, production and engineering. In 2021, actual variable production overhead is $280 000. Kinko's costing system allocates variable production overhead to its three customers based on machine-hours, and prices its contracts based on full costs. One of its customer has complained of being charged non-competitive price. Therefore, Kinko needs to look the consumption of overhead more closely and to investigate the issue. The data collected regarding this matter is available below: Overhead Usage of cost drivers by customers Sailing Illawarra Shellharbour boat cost 2021 yacht Ship Department Design Cost driver CAD-design hours $ 35,000 150 250 100 Production Engineering hours $ 25,000 130 100 270 Engineering Machine hours $ 220,000 300 3,700 1,000 $ 280,000 Required (show your workings): 1) Calculate the production overhead cost allocated to each customer in 2021 using machine-hours as the cost driver (traditional system). 2) Calculate the production overhead cost allocated to each customer in 2021 using department-based production overhead rates (Activity Based Costing) 3) Comment on your answers in requirements 1 and 2 and identify which customer was most likely to be overcharged in the traditional system. 7 marks 14 marks 4 marks
1. Production overhead cost using traditional system $52,8302.
2. Production overhead cost using using department-based production Activity Based Costing $114,9103
3. The overheads cost of Sailing Illawarra and Shell harbor changed.
Detailed solution for above answers:
1. Calculation of production overhead cost allocated to each customer in 2021 using machine-hours as the cost driver: Traditional Costing System:
Sailing Illawarra: = 300/5,300 * $280,000
= $15,774
Shell harbor: = 3,700/5,300 * $280,000
= $195,133
Boat Cost: = 1,000/5,300 * $280,000
= $52,8302.
2. Calculation of production overhead cost allocated to each customer in 2021 using department-based production overhead rates (Activity Based Costing): Activity Based Costing:
Overhead Rates, Department Design, Overhead Rate= $35,000 / 150= $233 per hour
Department Production Overhead Rate= $25,000 / 130= $192 per hour
Department Engineering Overhead Rate= $220,000 / 4,000= $55 per hour
Sailing Illawarra: Design: $233 * 250 = $58,250
Production: $192 * 100 = $19,200
Engineering: $55 * 300 = $16,500
Total Cost = $93,950
Shell harbor: Design: $233 * 100 = $23,300
Production: $192 * 270 = $51,840
Engineering: $55 * 3,700 = $203,500
Total Cost = $278,640Boat Cost: Design: $233 * 150 = $34,950
Production: $192 * 130 = $24,960
Engineering: $55 * 1,000 = $55,000
Total Cost = $114,9103.
3 .As compared to the traditional system, in activity-based costing, the overheads cost of Sailing Illawara and Shell harbor changed. Sailing Illawarra had a decrease in overhead cost while Shell harbor had an increase in overhead cost. The most likely to be overcharged in the traditional system is Shell harbor as it has a higher cost allocated using machine-hours as the cost driver and a higher overhead cost allocated using department-based overhead rates. In both systems, the cost is higher for Shell harbor, and hence it is the most likely customer to be overcharged.
Learn more about Traditional Costing System:
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