The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation. Information about each firm is given here:

Answers

Answer 1

Answer:

The answer is "$4.311".

Explanation:

Calculating the EPS after the merger:

[tex]\text{Stultz Corp Post Merger Earnings} = 220,000 + 1,000,000 \\\\[/tex]

                                                      [tex]= \$1,220,000[/tex]

[tex]\to \text{Number of Shares Post Merger:} \\\\=\frac{99,000}{3} + 250,000\\\\ = 283,000\\\\\text{EPS Post Merger} =\frac{\text{Stultz Corp Post Merger Earnings}}{\text{Number of Shares Post Merger}} \\\\[/tex]

                            [tex]= \frac{1,220,000}{283,000} \\\\= \$4.311[/tex]

The Shareholders Of Flannery Company Have Voted In Favor Of A Buyout Offer From Stultz Corporation. Information

Related Questions

Dave's Duds reported cost of goods sold of $1,600,000 this year. The inventory account increased by $130,000 during the year to an ending balance of $465,000. What was the cost of merchandise that Dave's purchased during the year?

Answers

Answer:

$1,730,000

Explanation:

Calculation to determine the cost of merchandise that Dave's purchased during the year

COGS $1,600,000

Add: Increase in inventories $130,000

Purchases $1,730,000

($1,600,000+$130,000)

Therefore the cost of merchandise that Dave's purchased during the year is $1,730,000

A small business sold an equipment for $30,000 after depreciating the equipment using the MACRS depreciation method. The applicable federal tax rate for the company is 39%. The federal tax liability on this depreciation recapture is $10,200 if the company also had other taxable income of $200,000 in that year.

a. True
b. False

Answers

Answer::::: is false

The following items are reported on a company's balance sheet: Cash $160,000 Marketable securities 75,000 Accounts receivable (net) 65,000 Inventory 140,000 Accounts payable 200,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio fill in the blank 1 b. Quick ratio fill in the blank 2

Answers

Answer and Explanation:

a. The current ratio is

We know that

Current ratio = Current Assets ÷ Current Liabilities

= $440,000 ÷ $200,000

= 2.2

Cash $160,000

Marketable Securities $75,000

Account receivable $65,000

Inventory $140,000

Current Assets $440,000

Account Payable $200,000

current liabilities $200,000

b

Quick ratio =( Current assets - inventory ) ÷ Current Liabilities

= ($440,000 - $140,000 ) ÷ $200,000

= 1.5

what is the future value of ordinary annuity makes 2000 every month 10 years interest rate is 7% g

Answers

Answer:

The future value of the ordinary annuity is:

= $346,169.61.

Explanation:

a) Data and Calculations:

Ordinary annuity receipt/payment = $2,000

Payment is made monthly for 10 years (120 months)

Interest rate = 7%

From an online financial calculator, the future value is:

N (# of periods)  120

I/Y (Interest per year)  7

PV (Present Value)  0

PMT (Periodic Payment)  2000

 

Results

FV = $346,169.61

Sum of all periodic payments $240,000.00

Total Interest $106,169.61

Miracle Clean's variable costs are $3.00 per bottle and Fixed Expenses are $350,000 per year. The company currently sells 150,000 bottles for $6.50 which results in profit of $175,000. The company is considering raising the selling price to $7.00 per bottle which is expected to decrease sales by 20%. If the price is raised, the number of units that must be sold to keep the profits unchanged is

Answers

Answer:

131,250= number of units

Explanation:

Giving the following information:

We need to calculate the number of units to be sold to maintain a profit of $175,000.

Unitary variable cost= $3

Fixed expenses= $350,000

Selling price= $7

Net income= total contribution margin - fixed cost

175,000= number of units*(7 - 3) - 350,000

525,000 = number of units*4

525,000 / 4= number of units

131,250= number of units

______ consists of the activities that managers perform to plan for, attract, develop, and retain an effective workforce.
a) Arbitration
b) Formal appraisal
c) Human capital
d) Orientation
e) Human resource management

Answers

Human resource management.

incurred $10,000 of portfolio income. Its corporate trustee paid fiduciary fees of $1,000 therefrom, and also paid $1,000 in premiums for a life insurance policy on Marcia, the grantor of the trust. How much gross income does Marcia include with respect to these trust activities

Answers

Answer:

$1000

Explanation:

Portfolio income = $10,000

Fiduciary fees = $1,000

premiums paid for life insurance on Marcia  = $1000

Fiduciary fees are fees charged by trustees and executors for services that they rendered

Therefore The amount of gross income Marcia  will include being the grantor of the trust = $1000 ( 10% of portfolio income )

An entity had the following opening and closing inventory balances during the current year: 1/1 12/31 Finished goods $ 90,000 $260,000 Raw materials 105,000 130,000 Work-in-progress 220,000 175,000 The following transactions and events occurred during the current year: $300,000 of raw materials were purchased, of which $20,000 were returned because of defects. $600,000 of direct labor costs were incurred. $750,000 of production overhead costs were incurred. The cost of goods sold for the current year ended December 31 would be A. $1,500,000 B. $1,480,000 C. $1,650,000 D. $1,610,000

Answers

Answer:

B. $1,480,000

Explanation:

The computation of the cost of the goods sold is shown below:

Direct material consumed:    

beginning Inventory of RM  $105,000  

Add: Net Purchase ($300,000 - $20,000) $280,000  

Total material available  $385,000  

Less: ending inventory  -$130,000  

Direct material consumed $255,000

Now  

Cost of goods manufactured:    

Beginning inventory of Wip  $220,000  

Current cost:    

Direct material $255,000  

Direct labor $600,000  

Manufacturing OH $750,000  

Total current cost $1,605,000  

Total cost of WIP $1,825,000  

Less: Ending inventory of Wip $175,000  

Cost of goods manufactured $1,650,000  

Cost of goods sold:    

Beginning inventory of FG $90,000  

Add: Cost of goods manufactured $1,650,000  

Total  cost of goods available for sale 1740000  

Less: Ending inventory of FG -$260,000  

Cost of goods sold $1,480,000

Ramble On Co. wishes to maintain a growth rate of 13.6 percent per year, a debt-equity ratio of 1.8, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .98. What profit margin must the firm achieve

Answers

Answer: 5.99%

Explanation:

Based on the question,

Dividend payout ratio = 30%

Therefore, the retention ratio will be:

= 1 - 30%

= 70%

Growth rate = 13.6%

We'll the use the sustainable growth rate formula which will be:

0.136 = (ROE x 0.7)/ (1-(ROE x 0.7))

0.136(1 - (0.7ROE)) = 0.7ROE

ROE = 0.136/0.7952

ROE = 0.171026

Then, the Profit margin will be:

ROE = Profit Margin x Asset Turnover x Equity multiplier

0.171026 = PM x (1/0.98) x (1 + 1.8)

0.171026 = PM x (1/0.98) x 2.8

PM = 0.171026 x 0.98/2.8

PM = 0.0598591

Profit margin = 5.99%

Josiah's team missed a crucial deadline and lost a major client due to poor communication. As a result, his team is experiencing trust issues. Josiah is looking for ways to improve trust across the team as a whole and has generated a few ideas. All of the following are likely to increase trust except:________.
a. Josiah creates a poster board with team goals, indicating the roles of each team member.
b. Josiah plans to provide his team with more project training sessions to help improve their efficiency both as dividuals and as a group.
c. Josiah conducts individual performance reviews in front of the whole group so no one feels singled out
d. Josiah has individual check-ins with his team members to provide feedback

Answers

C, talking about individual issues in front of a group can make team members feel uncomfortable. Talking with team members individually and providing feedback privately will create a more comfortable environment.

You sell one December futures contracts when the futures price is $1,010 per unit. Each contract is on 100 units and the initial margin per contract that you provide is $2,000. The maintenance margin per contract is $1,500. During the next day the futures price falls to $1,008 per unit. What is the balance of your margin account at the end of the day? a. $3,700b. $1,800c. $2,200d. $1,500

Answers

Answer:

b. $1800

Explanation:

Calculation to determine the balance of your margin account at the end of the day

Margin account balance=$2,000-[100*($1008-$1010)]

Margin account balance=$2,000-(100*$2)

Margin account balance=$2,000-$200

Margin account balance=$1,800

Therefore the balance of your margin account at the end of the day is $1,800

Cape Corp. will pay a dividend of $3.60 next year. The company has stated that it will maintain a constant growth rate of 5 percent a year forever. a. If you want a return of 17 percent, how much will you pay for the stock

Answers

Answer:

$30

Explanation:

according to the constant dividend growth model

price = d1 / (r - g)

d1 = next dividend to be paid

r = cost of equity

g = growth rate

$3.6 / (0.17 - 0.05)

$3.60 / 0.12  = $30

A consumer has $180 in monthly income to spend on two goods, D and G, where D is on the y-axis. The price of good D, PD is $6, and the marginal rate of transformation is -2. How many units of good G can be purchased if all income is used to purchase good G

Answers

Answer:

The number of units of good G that can be purchased if all income is used to purchase good G is 15 units.

Explanation:

Since D is on the y-axis, indicating G is on the x-axis, the formula for calculating the marginal rate of transformation (MRT) is given as follows:

MRT = - PG / PD …………………. (1)

Where:

MRT = Marginal rate of transformation = -2

PG = Price of good G = ?

PD = Price of good D = $6

Substituting the relevant values into equation (1) and solve for PG, we have:

-2 = - PG / $6

PG = -2 * (-6) = $12

Therefore, we have:

Number units of good G if all income is spent on it = Monthly income / PG = $180 / $12 = 15

Therefore, the number of units of good G that can be purchased if all income is used to purchase good G is 15 units.

Which element of a command economy is also used in a mixed economy

Answers

Answer:

Governments can regulate businesses

Explanation:

I hope that this helped :)

Answer:

Prices also are dictated by supply and demand rather than by the government, as in the command economy. The profitability of producer and innovation are also key elements of the mixed economic system.

Explanation:

Which theory would most likely explain why a commercial bank, which usually focuses on short-term securities, would switch to long-term securities due to a change in interest rates. pure expectation liquidity premium segmented market preferred habitat

Answers

Answer:

preferred habitat

Explanation:

According to the preferred habitat theory, if the expected returns from investment of a particular investment maturity is large enough, investors would shift from their preferred maturities.

In this question, there is a shift from the preferred maturity (short-term securities) to a long-term securities when interest rate changes

The pure expectations theory assumes that bonds of any maturity are perfect substitutes for each other. For example, if an investor buys a 10 year bond and holds it for 1 year, the return is the same as buying a 1 year bond. The theory also assumes that risk premium does not exist and a security only earns its risk free rate

Liquidity premium theory states that risk premium increases with the maturity of a bond. The theory predicts that the yield curve is upward sloping due to liquidity premium

According to the segmented market theory, each bond maturity segment can be thought of as a segment market in which yield are a function of the demand and supply for funds in that maturity.

Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk aversion in is A = 4: a. What would be a reasonable guess for the expected market risk premium? b. What value of A is consistent with a risk premium of 9%? (Round your answer to 2 decimal places.) c. What will happen to the risk premium if investors become more risk tolerant?

Answers

Answer:

a) 16%

b) 2.25

c) Increase in expected market risk premium

Explanation:

Expected standard deviation of market return = 20%

measure of risk aversion ( A ) = 4

a) Determine a reasonable  expected market risk premium

= A * ( std ) ^2

= 4 * ( 20%)^2

=  16%

b) determine Value of A

market risk premium = A * ( std )^2

∴ A = 9% / ( 20% ) ^2

      = 0.09 / 0.04

      = 2.25

c) If investors become more risk tolerant the expected market risk premium will increase

Wieters Industries manufactures several products including a basic case for a popular smartphone. The company is considering adopting an activity-based costing approach for setting its budget. The company's production activities, budgeted activity costs, and cost drivers for the coming year are as follows:

Activity Activity Overhead $ Cost Driver Cost Driver Quantity
Machine setup $200,000 # of setups    800
Inspection   120,000 # of quality tests    400
Materials receiving    252,000 # of purchase orders   1,800

The budgeted data for smartphone case production are as follows.

Direct materials $2.50 per unit
Direct labor $0.54 per unit
Number of setups 92
Number of quality tests 400
Number of purchase orders 50
Production 15,000 units

Required
a. Calculate the activity rate for each cost pool.
b. Calculate the activity-based unit cost of the smartphone case.

Answers

Answer:

Wieters Industries

a. Activity Rates:

Machine setup =    $250

Inspection =              300

Materials receiving   140

b. The activity-based unit cost of the smartphone case is:

= $13.04

Explanation:

a) Data and Calculations:

Activity             Activity Overhead $   Cost Driver      Cost Driver Quantity

Machine setup             $200,000        # of setups                   800

Inspection                      120,000       # of quality tests           400

Materials receiving      252,000       # of purchase orders   1,800

Total overhead costs  $572,000

Activity Rates:

Machine setup =    $250 ($200,000/800)

Inspection =              300 ($120,000/400)

Materials receiving   140 ($252,000/1,800)

Budgeted data for smartphone case production:

Direct materials $2.50 per unit

Direct labor $0.54 per unit

Number of setups 92

Number of quality tests 400

Number of purchase orders 50

Production 15,000 units

Overhead Applied to Smartphone Case:

Number of setups 92 * $250 =             $ 23,000

Number of quality tests 400 * $300 =    120,000

Number of purchase orders 50 * $140 =   7,000

Total overhead applied =                      $150,000

Overhead per unit = $10 ($150,000/15,000)

Unit Cost of Smartphone Case:

Direct materials per unit  $2.50

Direct labor per unit        $0.54

Overhead per unit         $10.00

Total unit cost =             $13.04

Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?a. $27,000b. $32,000c. $34,800d. $37,400

Answers

Answer:

See below

Explanation:

Given the above information,

= ($110,000 × 12 + $30,000 × 5) / 60,000 × 1,000

= ($1,320,000 + $150,000) / 60,000,000

= $1,470,000 / 60,000,000 + $300,000/60,000) × 1,000

= $0.0245 + $5,000

= $5,000

Consider single-server Q with LIFO (last-infirst-out) services. Suppose that three customers show up at times 5, 6, and 8, and that they all have service times of 4. When does customer 2 leave the system?

a. 3
b. 9
c. 13
d. 17
e. 19a

Answers

Answer:

d. 17

Explanation:

The computation is shown below;

Here the time started i.e. t=0

Therefore there was no customer upto t=5 hour

At t=5

The client first came and as there was no other customer available so we begins service to customer 1

Now  

As service off is 4 hour so service to client 1 will end at

t=9 hour.

Also mid-time at t = 6

That means the client 2 came and at t = 8 the  client 3 came.

Now at t = 9 the service begins for client 3 and end at t = 13 ( 9 + 4)

At t=13 hour, so after four hours it should be 17  

Discussion Week 3 х + -mccneb.edu/courses/16958/discussion_topics/147424 The second posting provides students an opportunity to interact with one another, simulating classroom discussion, with respect to the postings of others. This response should include a critical and respectful review of other postings. The second posting must be no less than 200 words in length to be considered for grade assessment. Any posting less than 200 words in length will not be reviewed and a grade of -- will be assigned. Subsequent postings (in addition to the aforementioned first and second posting) are invited. There is no length requirement for subsequent postings. Please note, attachments will not be opened or reviewed for grade consideration Any postings after the due date has past will not be considered for grading. Discussion 3: Please explain the difference between express and implied easements giving an example of each. Then tell us, if you wanted to know if there was ar easement that involved a property, what are the ways you could find out - i.e. where would you look and what would you look at? Then discuss the importance o implied easements to our society and provide an example. Search entries or author Unread Subscrib Reply Brianna Ferrero Sunday An express easement is created by an agreement or document, it must be in writing. For example, one neighbor may want to build a parking pad or basketball court off their driveway, but not have enough room on their lot to do so because their driveway already butts up against the property line. This individual may offer to pay the neighbor for his consent to grant an express easement for them to build a parking pad and a basketball court off their driveway that extends or the neighbors land.​

Answers

aAnswer:ya

Explanation:ya

An investment opportunity requires a payment of $910 for 12 years, starting a year from today. If your required rate of return is 6.5 percent, what is the value of the investment to you today

Answers

Answer:

PV= $7,424.44

Explanation:

Giving the following information:

Annual payment (A)= $910

Number of periods (n)= 12 years

Rate of return (i)= 6.5%

To calculate the value of the investment today (PV), we need to use the following formula:

PV= A*{(1/i) - 1/[i*(1 + i)^n]}

PV= 910*{(1/0.065) - 1/ [0.065*(1.065^12)]}

PV= $7,424.44

If the best operating level of a process X is 1026 bottles per day and the actual output during a day is 786 bottles, then what is the capacity utilization rate for process X

Answers

Answer:

greater than 70% but less than or equal to 90%

Explanation:

The computation of the capacity utilization rate for process X is shown below:

As we know that

Capacity Utilization = (Actual Output ÷ Design Capacity) × 100

=  (786 ÷ 1026) × 100

= 76.61%

So, it is greater than 70% but less than or equal to 90%

E-Eyes has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. If you require a return of 9.75 percent on this stock, how much should you pay today

Answers

Answer:

You would pay approximately $35.00 today

Explanation:

The cost of the stock at the beginning of the year 20

= 20/9.75%

= 20/0.0975

= 205.13 dollars

We find the current price of the stock

= Fv/(1+r)^n

= 205.13/(1+9.75%)¹⁹

= 205.13/1.0975¹⁹

= 205.13/5.86

= $35.00

From this calculation you have to pay 35 Dollars today.

True of false are collaboration and teamwork the same thing

Answers

Answer:

I'm pretty sure its false

Explanation:

team is multiple people

while collaboration is at least 1 or 2 people

if you play video games think of squads as teammates and think of collaboration as duos, its completely different right.

More than 99% of all U.S. firms are classified as small businesses, and they employ about half of private workers. A small business is defined as any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people. Understanding the advantages and disadvantages of small business ownership is crucial for any potential entrepreneur.
Match each statement or scenario with the appropriate advantage or disadvantage of small business
i. ownership.ii. Focusiii. Reputationiv. High stress levelv. Inexperience/Incompetencevi. Flexibilityvii.Inability to cope with growthviii.Costsix. Independencex. High failure rateMatch each of the options above to the items below.1. One of the leading reasons for becoming your own boss. 2. A 20-employee factory does not have a designated accounting or advertising department.3. The pizzas offered on the Patrick’s Pizza menu are often based on the types of produce in season.4. Mike’s trucking business provides specific information and products to commercial truck drivers.5. Brandy’s nursery offers delivery and expert installation of their trees at no extra cost to the customer and will replace any defective one up to 3 years after purchase.6. Sue works more than 60 hours a week at her construction business and cannot find reliable suppliers for lumber inventory.
7. Half of all new employer firms fail within the first five years.8. As a fitness expert, Tyler is having difficulties understanding the accounting requirements for his bank business loan for his workout facility.9. Circumstances such as products not arriving on time due to limited capacity affect the reputation of a company more than any other factor.

Answers

Answer:

A

Explanation:

Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with four years to maturity (YTM) has a coupon rate of 6%. The yield to maturity of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:_________.
a.) $841,635.85
b.) $715,390.47
c.) $530,230.59
d.) $1,009,963.02

Answers

Answer:

a.) $841,635.85

Explanation:

The value of the Treasury note is the present value of its future cash flows, its semiannual coupon payments and the face value receivable by the investors in the T-note at maturity.

Semiannual coupon=face value*coupon rate*6/12

face value=$1,000,000

coupon rate=6%

semiannual coupon=$1,000,000*6%*6/12

semiannual coupon=$30,000( there would 8 semiannual coupons in 4 years)

The present value of the cash flows can be determined using a financial calculator bearing in mind that the calculator would be set to its default end mode before making the following inputs:

N=8(semiannual coupons)

PMT=30000(amount of each semiannual coupon)

I/Y=5.50%(semiannual yield to maturity=11.00%*6/12)

FV=1000000(the face value of T-note)

CPT

PV=$841,635.85  

Favre and Carter Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?
a. $27,000
b. $32,000
c. $34,800
d. $37,400

Answers

Answer:

Billed costs= $32,000

Explanation:

Giving the following information:

Total estimated cost attorney= 12*100,000= $1,200,000

Total estimated cost paraprofessional= 5*30,000= $150,000

Estimated Indirect costs= $250,000

Estimated number of hours= 50,000

First, we need to calculate the allocation rate:

Allocation rate= total estimated costs for the period/ total amount of allocation base

Allocation rate=   (1,200,000 + 150,000 + 250,000) / 50,000

Allocation rate= 1,600,000/50,000

Allocation rate= $32

Now, for 1,000 hours:

Billed costs= 1,000*32= $32,000

An outside supplier offers to provide Epsilon with all the units it needs at $63.05 per unit. If Epsilon buys from the supplier, the company will still incur 35% of its overhead. Epsilon should choose to:

Answers

Answer:

Make since the relevant cost to make it is $59.05

Explanation:

Calculation to determine what Epsilon should choose to:

Relevant costs to make = 8.20 + 24.20 + [41*(100%-35%)]

Relevant costs to make = 8.20 + 24.20 + (41*65%)

Relevant costs to make = 8.20 + 24.20 + 26.65

Relevant costs to make =$59.05

Therefore Epsilon should choose to: MAKE SINCE THE RELEVANT COST TO MAKE IT IS $59.05

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 42,000 units and sold 34,000 units at a price of $120 per unit.
Manufacturing costs
Direct materials per unit $ 48
Direct labor per unit $ 18
Variable overhead per unit $ 6
Fixed overhead for the year $ 420,000
Selling and administrative cost
Variable selling and administrative cost per unit $ 12
Fixed selling and administrative cost per year $ 110,000
1a. Assume the company uses absorption costing. Determine its product cost per unit.
1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.
2a. Assume the company uses variable costing. Determine its product cost per unit.
2b.
Assume the company uses variable costing. Prepare its income statement for the year under variable costing.

Answers

Answer:

1a. Product cost per unit if absorption costing is used by the company is $82 per unit.

1b. Net operating income if absorption costing is used by the company is $774,000.

2a. Product cost per unit if variable costing is used by the company is $72 per unit.

2b. Net operating income if variable costing is used by the company is $694,000.

Explanation:

1a. Assume the company uses absorption costing. Determine its product cost per unit.

Fixed overhead per unit = Fixed overhead for the year / Units produce for the year = $420,000 / $42,000 = $10

Product cost per unit = Direct materials per unit + Direct labor per unit + Variable overhead per unit + Fixed overhead per unit = $48 + $18 + $6 + $10 = $82

Therefore, product cost per unit if absorption costing is used by the company is $82 per unit.

1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.

Note: See number 1b of the attached excel file for the income statement for the year under absorption costing.

From number 1b of the attached excel file, we have:

Net operating income = $774,000

Therefore, net operating income if absorption costing is used by the company is $774,000.

2a. Assume the company uses variable costing. Determine its product cost per unit.

Product cost per unit = Direct materials per unit + Direct labor per unit + Variable overhead per unit = $48 + $18 + $6 = $72

Therefore, product cost per unit if variable costing is used by the company is $72 per unit.

2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing.

Note: See number 2b of the attached excel file for the income statement for the year under variable costing.

From number 2b of the attached excel file, we have:

Net operating income = $694,000

Therefore, net operating income if variable costing is used by the company is $694,000.

Legacy issues $630,000 of 9.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $571,310 when the market rate is 12%.

Required:
a. Prepare the January 1, 2018, journal entry to record the bonds' issuance.
b. Prepare the journal entries to record the first two interest payments.

Answers

Solution :

a). Prepare the journal entry to record the bonds' issuance as shown below:

Interest paid = [tex]$\$630,000 \times 9\%\times \frac{1}{2}$[/tex]

                      = $ 28,350

   Date           Accounts titles and explanation             Debit ($)       Credit($)

1 Jan 2018      Cash                                                         571,310

                       Discount on bonds payable                    58,690

                        ($ 630,000 - $ 571,130)

                      Bonds payable                                                              630,000

b). Preparing the journal entries to record the first two interest payments :

        Date      Accounts Titles and explanation     Debit($)        Credit($)

 30/6/2018   Interest expense                              35,686.25

                      Discount on bonds payable                                  7,336.25

                      Cash                                                                        28,350

31/12/2018     Interest expense                            35,686.25

                      Discount on bonds payable                                     7,336.25

                       Cash                                                                           28,350                          

                     

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