Answer:
a borrowing portfolio.
Explanation:
A borrowing portfolio is a portfolio to the right of the market portfolio. It is on the right half of the line. It shows that an investor can purchase the market portfolio and still borrow money so as to purchase more.
CML is known as the the capital market line. It shows the most advantageous portfolios that are a combination of risk and return.
Answer:
a borrowing portfolio.
Explanation:
A borrowing portfolio is a portfolio to the right of the market portfolio. It is on the right half of the line. It shows that an investor can purchase the market portfolio and still borrow money so as to purchase more.
CML is known as the the capital market line. It shows the most advantageous portfolios that are a combination of risk and return.
Explanation:
TB MC Qu. 8-119 Bramble Corporation is a small wholesaler ...
Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
Sales are budgeted at $310,000 for November, $290,000 for December, and $280,000 for January.
Collections are expected to be 60% in the month of sale and 40% in the month following the sale.
The cost of goods sold is 65% of sales.
The company would like to maintain ending merchandise inventories equal to 55% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $23,700.
Monthly depreciation is $ 14,700.
Ignore taxes.
Balance Sheet
October 31
Assets
Cash $ 21,500
Accounts receivable 71,500
Merchandise inventory 110,825
Property, plant and equipment, net of 1,095,500
$573,500 accumulated depreciation
Total assets $ 1,299,325
Liabilities and Stockholders' Equity
Accounts payable $ 255,500
Common stock 821,500
Retained earnings 222,325
Total liabilities and stockholders' equity $ 1,299,325
The cost of December merchandise purchases would be:_________.
Answer:
The cost of December merchandise purchases would be $184,825
Explanation:
budgeted sales December $290,000
cost of goods sold 65% of sales revenue = $290,000 x 65% = $188,500
+ desired ending inventory = $280,000 x 65% x 55% = $100,000
total goods required = $288,500
- beginning inventory = $290,000 x 65% x 55% = $103,675
total merchandise purchases = $184,825
Direct Labor Variances Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October are available: Quantity of direct labor used 5,000 hrs. Actual rate for direct labor $22.75 per hr. Bicycles completed in October 800 bicycles Standard direct labor per bicycle 6.0 hrs. Standard rate for direct labor $24.00 per hr. a. Determine for October the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Answer:
a) i. Direct labor rate variance = Quantity of direct labor used * (Actual rate for direct labor - Standard rate for direct labor)
= 5,000*(22.75-24)
= -6,250 (Favorable)
ii. Direct labor time variance = Standard rate for direct labor * (Quantity of direct labor used - Bicycles completed in October * Standard direct labor per bicycle)
= 24 * (5000 - 800 * 6)
= 4,800 (Unfavorable)
iii. Total Direct labor cost variance = (Quantity of direct labor used * Actual rate for direct labor) - (Bicycles completed in October * Standard direct labor per bicycle * Standard rate for direct labor)
= (5000 * 22.75) - (800 * 6 * 24)
= -1450 (Favorable)
Answer:
The total cost variance of labor will be "-1,450 (favorable)". The further explanation is given below.
Explanation:
According the question,
Direct labor rate variance will be:
⇒ [tex]5000\times (22.75-24)[/tex]
⇒ [tex]5000\times (-1.25)[/tex]
⇒ [tex]-6,250 \ (favorable)[/tex]
Direct labor time variance will be:
⇒ [tex]24\times (5000-800\times 6)[/tex]
⇒ [tex]24\times 200[/tex]
⇒ [tex]4,800 \ (unfavorable)[/tex]
Now,
The Total Direct labor cost variance will be:
⇒ [tex](5000\times 22.75)-(800\times 6\times 24)[/tex]
⇒ [tex](113,750)-(115,200)[/tex]
⇒ [tex]-1,450 \ (favorable)[/tex]
Chapter 7 of the Bankruptcy Act is designed to do which of the following? a. Establish the rules of reorganization for firms with projected cash flows that eventually will be sufficient to meet debt payments. b. Allow the firm to negotiate with each creditor individually. c. Provide safeguards against the withdrawal of assets by the owners of the bankrupt firm and allow insolvent debtors to discharge all of their obligations and to start over unhampered by a burden of prior debt. d. Ensure that the firm is viable after emerging from bankruptcy. e. Protect shareholders against creditors.
Answer: c. Provide safeguards against the withdrawal of assets by the owners of the bankrupt firm and allow insolvent debtors to discharge all of their obligations and to start over unhampered by a burden of prior debt.
Explanation:
When a person or entity files for Chapter 7 Bankruptcy, a trustee is appointed that will sell off the assets of the entity to enable repayment of debt to the creditors. As such, the entity will not be allowed to touch the assets thereby providing safeguards against their withdrawals by same.
After all assets are sold, any remaining debt is forgiven so that the debtor owes no more debt. This will then given them a chance to start over without having to worry about the previous debts they accumulated.
Products is a manufacturer of large flower pots for urban settings. The company has these standards:
Direct materials (resin) 9.6 pounds per pot at a cost of $4.55 per pound
Direct labor 1 .0 hour at a cost of $15.80 per hour
Standard variable manufacturing overhead rate $3.40 per direct labor hour
Predetermined fixed manufacturing overhead rate $6.00 per direct labor hour
Required:
a. Compute the standard cost of each of the following inputs per pot: direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead.
b. Determine the standard cost of one flower pot.
Answer:
Results are below.
Explanation:
First, we need to determine the standard production costs:
Direct materials= 9.6*4.55= $43.68
Direct labor= 1*15.80= $15.8
Variable manufacturing overhead rate= 3.40*1= $3.4
Predetermined fixed manufacturing overhead rate= 6*1= $6
Finally, the standard cost per unit:
Total unitary cost= 43.68 + 15.8 + 3.4 + 6= $68.88
For the quarter ended March 31, 2017, Croix Company accumulates the following sales data for its newest guitar, The Edge: $314,000 budget; $300,800 actual. In the second quarter, budgeted sales were $381,000, and actual sales were $391,000.
Prepare a static budget report for the second quarter and for the year to date.
CROIX COMPANY
Sales Budget Report
For the Quarter Ended June 30, 2017
Second Quarter Year to Date
Product Line Budget Actual Difference Budget Actual Difference
Answer:
CROIX COMPANY
Sales Budget Report
For the Quarter Ended June 30, 2017
Second Quarter Year to Date
Product Line Budget Actual Difference Budget Actual Difference
The Edge 381,000 391,000 10,000 695,000 691,800 3,200 U
Explanation:
Croix's sales budget gives a forecast of the sales figure over the future period in order to help Croix plan its production or purchase of the newest guitar, The Edge so that customers' demand can be met and profit objectives of the company is achieved.
What's the present value of $4,500 discounted back 5 years if the appropriate interest rate is 4.5%, compounded semiannually?
Answer:
The present value = $3,602.30
Explanation:
To calculate this, we will use the formula for calculating the future value for an amount invested, compounded semiannually at a certain interest rate. This is done as follows:
[tex]FV\ =\ PV(1+\frac{r}{n})^{(n\times t)}\\[/tex]
where:
FV = Future value = $4,500
PV = Present value = ??
r = interest rate = 4.5% = 4.5/100 = 0.045
n = number of compunding period per year = semiannually = 2
t = time = 5
[tex]4,500\ =\ PV(1+\frac{0.045}{2})^{(2\times 5)}\\\\4,500 = PV( 1+0.0225)^{10}\\4,500 = PV(1.0225)^{10}\\4,500 = PV (1.249203)\\Dividing\ both\ sides\ by\ 1.249203\ and\ making\ PV\ the\ subject\ of\ the\ formula\\\PV = \frac{4,500}{1.249203} \\PV= 3,602.297[/tex]
Therefore, the present value = $3,602.30
The following data was collected from the manufacturing of an auto component. It represents the diameter (in mm) of that component. What is the LCL for a control chart using this data (z=3)?Sample Obs 1 Obs 2 Obs 3 Obs 41 10 12 12 142 12 11 13 163 11 13 14 144 11 10 7 85 13 12 14 13
Answer:
9.37
Explanation:
The computation of LCL for a control chart is shown below:-
Sample Obs 1 Obs 2 Obs 3 Obs 4 Mean observation Range
1 10 12 12 14 12 4
2 12 11 13 16 13 5
3 11 13 14 14 13 3
4 11 10 7 8 9 4
5 13 12 14 13 13 2
For computing the mean observation and range we will use the below formulas
Mean observation = ( Obs 1 + Obs 2 + Obs 3 + Obs 4) ÷ 4
Range = Highest value - Lowest value
[tex]LCL = \bar{\bar{X}} - A2 \bar{R}[/tex]
[tex]\bar X[/tex] = ( 12 + 13 + 13 + 9 + 13 ) ÷ 5
= 12
[tex]\bar R[/tex] = ( 4 + 5 + 3 + 4 + 2 ) ÷ 5
= 3.6
Since we found the value of A2 with the help of constants table for control charts for a 4 subgroup size.
A2 = 0.729
[tex]LCL = \bar{\bar{X}} - A2 \bar{R}[/tex]
12 - 0.729 × 3.6
= 9.37
Common stock is called a hybrid security because it takes on the attributes of both preferred stock and bonds.
a. True
b. False
Answer:
false
Explanation:
examples of hybrid stocks is convertible preferred shares
A common stock is a stock that entitles owners of the stock to a fixed amount of shares and holders of the stock are owners of the company where the stock is bought.
Answer:
a. True
Explanation:
In most stocks that attributes of both bonds and preferred stock, it is referred to as a hybrid security. Most organisations and the government recognized it as a medium of security in situations of seeking for loan.
"DEF Corporation, after many profitable years, declares a one-time special cash dividend of $5.00 per share. After the announcement, the stock is trading at $50 per share. Your customer holds 1 DEF Jan 55 Call. As of the ex date, the customer will have:"
Answer: B. 1 DEF Jan 50 Call
Explanation:
The Options Clearing Corporation (OCC) acting under its mandate of being an issuer and guarantor for options and futures contracts can alter options prices but does not do so for prices based on normal dividends as they are more regular and their effects are already accounted for in the price of the call.
When a company calls a one-time special cash dividend, this is new to the market which would not have incorporated it into the price of the call. The OCC will then adjust the price to account for this.
In this case it will do so by subtracting the dividend from the call;
= 55 - 5
= $50
The customer will then have 1 DEF Jan 50 Call .
If a firm's projects differ in risk, then one way of handling this problem is to evaluate each project with the appropriate risk-adjusted discount rate.
A. True
B. False
Answer:
True
Explanation:
the discount rate used for a project should reflect the risk of the project so as to make accurate predictions. if the discount rate used for a project is the same as that of the firm and the risks of the project differs, the predictions made with this project would be inaccurate. the risk adjusted discount rate has to be calculated.
To be responsible in financial planning you must set goals. To reach these goals you must create a plan. What is a specific financial goal that you have
Answer and Explanation:
As we know that planning is the most important part of everyone life. Without planning, no one could able to accomplish its goals and objectives.
There are various steps to study about yourself and based on this you can do the planning and reach your goals which are shown below:
1. The most important part of your life find that and always do practical thinking
2. How much time it takes to reach your goals
3. Now use the SMART strategy which gives you the way to accomplish it
4. Make a roadmap so that you get to know how the things could be happen
5. How much money is required to execute it
6. And at last check your progress
These above steps helps you to develop a financial plan
The Peabody Company has 7 year MACRS property with an original cost basis of $1,700,000. Calculate the ending book value at Year 4.
Answer: $531,080
Explanation
The Modified Accelerated Cost Recovery System (MACRS) is a depreciation schedule for assets and can be based on various year denominations. This one is of a 7 year type and the rates are specified below;
The ending book value at the end of year 4 would be;
= Original Cost - Accumulated Depreciation
= 1,700,000 - (1,700,000 * ( 14.29% + 24.49% + 17.49% + 12.49%))
= 1,700,000 - (1,700,000 * 68.76%)
= 1,700,000 - 1,168,920
= $531,080
Which clause in a mortgage allows a lender to increase the interest rate? A.) Defeasance B.) Escalation C.) Acceleration D.) Exculpatory
Answer:
A
Explanation:
Winnwbagel corp. currently sells 25,200 motor homes per year at 37,800 each, and 10,080 luxury motor coaches per year at $71,400 each. The company wants to introduce a new portable camper to fill out its product line., it hopes to sell 15,960 of these campers per year at $10,080 each. An independent consultant has determined that if the company introduces the new campers, it should boost the sales of its existing motor homes by 3,780 units per year, and reduce the sales of its motor coaches by 756 units per year. What is the amount to use as the annual sales figure when evaluating this project?
a. $237,293,280.
b. $262,271,520.
c. $357,739,200.
d. $95739200.
e. $160,876,800.
f. $249,782,400.
Answer:
Option C is correct
Annual sales figure =$ 357,739,200
Explanation:
Annual sales figure for Winnebago corp after the introduction f the new portable campers would be the sum of the annual sales figure for motor homes, luxury homes (after the introduction of new product) and the camper.
Note that the only the impact of the introduction of the new product would be considered on sales would . The existing sales figures are not not relevant because they are not incremental.
Also,any reduction in sales figure as result of the introduction of a new product would be deducted.
These explanations are incorporated into the analysis below:
Product type Quantity Price Sales figure ($'000)
Motor homes 3780 37,800 142,884
Luxury homes 756 71,400 (53,978.4)
Camper 15,969 (10,080 ) 160,967.52
Total sales 357,739.20
Annual sales figure =$ 357,739,200
1.1. Which of the following ratios are key components in measuring a company's operating efficiency? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
a. Profit margin
b. Equity ratio
c. Return on total assets
d. Total asset turnover
1.2. Which ratio summarizes the components applicable in 11?
a. Debt ratio
b. Profit margin
c. Return on total assets
d. Total asset turnover
2. What measure reflects the difference between current assets and current liabilities?
a. Gross margin
b. Day's sales uncollected
c. Retun on total assets
3. Which of the following short-term liquidity ratios measure how frequently a company collects its accounts? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
a. Days' sales uncollected
b. Days' sales in inventory
c. Accounts receivable turnover
d. Acid test rato
Answer:
1.1 The ratio from the list below which measures the efficiency of the operations of a company is D - Total Asset Turnover Ratio.
Explanation:
Total Asset Turn Over Ratio is calculated by dividing Net Sales by Average Total Assets.
For example, if company CDH is reporting a value of $499,650 as initial total assets and $387,656 as ending total assets. Within the same period, the company generated sales of $250,655, with sales returns of $17,000.
This means that, the asset turnover ratio for Company CDH is calculated as follows:
($250,655-$17,000)/(($387,656+$499,650)/2)
The answer is 0.52667
Thus, every dollar in total assets generates $0.52667 in sales.
Efficiency ratios are important for rating the operations of the business. They are also used by investors and lenders when conducting financial analysis of businesses to decide whether the companies are a good investment.
1.2 The component which summarises the components applicable in 1.1 is D Total Asset Turnover
2. Working capital is the variance between current assets and current liabilities.
. This is simply the capital that an organisation uses in its day-to-day business operations.
3. The short-term liquidity ratios which calculate how frequently a company collects its accounts are:
A) Days' sales Uncollected and
C) Accounts receivable turnover.
A) Days' sales Uncollected is calculated by
(Accounts receivable/Net annual credit sales) x 365
It is the number of days before receivables are collected.
The lower the ratio the more liquid the company is likely to be. High Days' Sales Uncollected Ratios are bad for business.
C) Accounts receivable turnover is the annual rate at which a business collects its average accounts receivable.
Cheers!
Moorcroft sales are 40% cash and 60% credit. Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase.Prepare a schedule of expected collections from customers for June.
Answer:
The budgeted sales are missing, so I looked for them. I found the following question, hopefully it will be similar:
Month Sales
April $300,000
May $320,000
June $370,000
Schedule of expected collections
For the month of June, 202x
Cash sales during June = $370,000 x 40% = $148,000
Collection from June's credit sales = $222,000 x 20% = $44,400
Collection from May's credit sales = $192,000 x 50% = $96,000
Collection from April's credit sales = $180,000 x 26% = $46,800
Total cash collections during June = $335,200
"The interest rate charged from the banks to broker-dealers on loans where securities are collateral is the:"
Answer: broker loan rate
Explanation:
The broker loan rate is also refered to the call loan rate and it is the interest rate that is charged from the banks to broker-dealers on loans where securities are collateral.
It should be noted that the iterest rates that are given on broker loan rates are just a little above the short term interest rates.
Which of the following terms pertains to registration with the Administrator of a mutual fund, closed-end investment company, or unit investment trust that is registered under the Securities Act of 1933 and also registered as an investment company under the Investment Company Act of 1940?
a. Qualification
b. Prevarication
c. Coordination
d. Notice filing
Answer: Notice filing
Explanation:
The term that pertains to registration with the Administrator of a mutual fund, closed-end investment company, or unit investment trust that is registered under the Securities Act of 1933 and also registered as an investment company under the Investment Company Act of 1940 is the notice filing.
It should be noted that federal covered securities are exempted from State registration and thereby a notice filing may be required.
a project that costs 25500 today will generate cash flows of 8800 per year for seven years. what is the project's payback
Answer:
d
Explanation:
d on edg
On July 9, Mifflin Company receives a $8,600, 90-day, 12% note from customer Payton Summers as payment on account. What entry should be made on July 9 to record receipt of the note
Answer:
Mifflin Company
Journal Entry:
Debit Notes Receivable (Payton Summers)$8,600
Credit Accounts Receivable (Payton Summers)$8,600
To record the receipt of a 90-day, 12% note.
Explanation:
Mifflin Company uses this journal entry to record the receipt of a note receivable from Payton Summers in payment on account. This effectively transfers the debit from Accounts Receivable account to a Notes Receivable account. By this action, the debt is formalized while Mifflin Company is now able to charge interest on the unsettled balance at the agreed rate per annum.
Norris Co. has developed an improved version of its most popular product. To get this improvement to the market, will cost $48 million and will return an additional $13.5 million for 5 years in net cash flows. The firm's debt-equity ratio is .25, the cost of equity is 13 percent, the pretax cost of debt is 9 percent, and the tax rate is 30 percent. What is the net present value of this proposed project?
Answer:
NPV = $1.49 million
Explanation:
The NPV is the difference between the PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.
NPV of an investment:
NPV = PV of Cash inflows - PV of cash outflow
But we will need to work out the discount rate to be used for discounting the cash flows. Hence, we need to determine the cost of capital as follows:
Step 1: After-tax cost of debt
After tax cost of debt = pre-tax cost of debt × (1-tax rate rate)
= 9%× (1--0.3)=6.3%
Step 2 : Weighted Average cost of capital (WACC)
WACC=( 0.25×6.3%) + (0.75× 13%) =11.325 %
Step 3:Net Present Value (NPV)
PV of cash inflow= (1- (1.11325^-5)/0.11325)× 13.5 = 49.49 million
Initial cost = $48 million
NPV = 49.49 million - $48 million =$1.49 million
NPV = $1.49 million
Finding operating and free cash flows Consider the following balance sheets and selected data from the income statement of Keith Corporation.
Keith Corporation Balance Sheets December 31
Assets 2015 2014
Cash $ 1,500 $ 1,000
Marketable securities 1,800 1,200
Accounts receivable 2,000 1,800
Inventories 2,900 2,800
Total current assets $ 8,200 $ 6,800
Gross fixed assets $ 29,500 $ 28,100
Less: Accumulated depreciation 14,700 13,100
Net fixed assets $ 14,800 $ 15,000
Total assets $ 23,000 $ 21,800
Liabilities and stockholders' equity
Accounts payable $ 1,600 $ 1,500
Notes payable 2,800 2,200
Accruals 200 300
Total current liabilities $ 4,600 $ 4,000
Long-term debt 5,000 5,000
Total liabilities $ 9,600 $ 9,000
Common stock $ 10,000 $ 10,000
Retained earnings 3,400 2,800
Total stockholders' equity $ 13,400 $ 12,800
Total liabilities and stockholders' equity $ 23,000 $ 21,800
Keith Corporation Income Statement Data (2015)
Depreciation expense $1,600
Earnings before interest and taxes (EBIT) 2,700
Interest expense 367
Net profits after taxes 1,400
Tax rate | 40%
Required
a. Calculate the firm's net operating profit after taxes (NOPAT) for the year ended December 31, 2015
b. Calculate the firm?s operating cash flow (OCF) for the year ended December 31, 2015
c. Calculate the firm?s free cash flow (FCF) for the year ended December 31, 2015
d. Interpret, compare, and contrast your cash flow estimates in parts b and c.
Answer:
a. NOPAT = EBIT * (1-t)
NOPAT = $2,700 * (1-0.40)
NOPAT = $1,620
b. OCF = NOPAT + Depreciation
OCF = $1,620 + $1,600
OCF = $3,220
c. FCF = Net fixed asset investment - Net current asset investment
FCF = $3,320 - $1,400 - $1,400
FCF = $420
Note:
Net fixed asset investment = Change in net fixed assets + depreciation
= ($14,800- $ 15,000) + $1,600
= $1,400
Net current asset investment = Change in current assets - Change in accounts payable and accurals
= ($8,200 - $6,800) - {($1,600 + $200) - ($1,500 - $300)}
= $1,400
d. FCF is meaningful as it shows that OCF is able to cover Operating expenses as well as Investment in Fixed and Current Assets
You currently have $3,000 in an account and plan on depositing $2,500 into the account each year, starting in one year. If the account earns an annual interest rate of 6.70%, how much will be in the account in 5 years, after making your final deposit?
Answer: $15,940.03
Explanation:
Principle Add Deposit Interest Total
Year 1 3000.00 201.00 3201.00
Year 2 3201.00 2500 381.97 6082.97
Year 3 6082.97 2500 575.06 9158.03
Year 4 9158.03 2500 781.09 12439.11
Year 5 12439.11 2500 1000.92 15940.03
After making deposits in a bank account as stated in the conditions given above, it can be inferred that an amount of approximately $15,940 will be available in the account after the end of 5 years.
What is the significance of deposits?Deposits can be referred to or considered as such engagement of monies with any commercial bank that also provides a predetermined rate of interest to the customers making such deposit. Interest acts like a return on investment in this case.
The above condition is a case of making recurring deposits at regular intervals. Upon satisfying the conditions given above, the amount of monies in the account can be computed as below,
At the end of year 1, the Total deposit after interest earned will be
3000 + 6.70% = $3,201.
At the end of two years,
(3201 + 2500) + 6.70% = $6,083.
At the end of three years,
(6083 + 2500) + 6.70% = $9,158.
At the end of four years,
(9158 + 2500) + 6.70% = $12439.
At the end of five years,
(12439 + 2500) + 6.70% = $15,940.
Thus, it can be concluded that at the end of five years the deposits made after earning the interest will be $15,940.
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Which of the following statements is true?
A. Investment in another company's common stock is classified as a cash outflow from financing activities in the statement of cash flows.
B. Losses on the sale of long-term assets are an adjustment reported in the operating activities section of the statement of cash flows under the indirect method.
C. Dividends paid are classified as a cash outflow from operating activities in the statement of cash flows.
D. Re-payment of long-term debt is classified as a cash outflow from investing activities in the statement of cash flows.
Answer:
The answer is B.
Explanation:
Loss on the sale of long-term assets is an adjustment which will be added back to the net income. This is under the cash flow from operations when preparing cash flow using an indirect method.
Option A is incorrect because investment in another company is under investing activities.
Option C is incorrect because dividend paid are usually under financing activities (cash outflow)
Option D is incorrect because repayment of long term debt is a cash outflow under financing activities.
If the government wants to raise tax revenue, which of the following items are good candidates for an excise tax? Why?
a. granola bars.
b. cigarettes.
c. toilet paper.
d. automobile tires.
e. bird feeders.
Answer:
B,C
Explanation:
An excise tax is actually a tax that is levied on a good at purchase.
Cigarettes and tissue paper are good candidates for excise duty. This is because of the fact that both goods are inelastic. There would be no decrease in their consumption if an excise tax is placed on them. People would still purchase them. Tissue paper has no substitute while cigarette would still have buyers regardless of an increase in price.
g On July 1, Shady Creek Resort borrowed $320,000 cash by signing a 10-year, 11.5% installment note requiring equal payments each June 30 of $55,480. What amount of interest expense will be included in the first annual payment
Answer:
Interest portion for one year = $320,000 * 11.5% = $36,800
Total installment paid = $55,480
So, principal portion repaid = $55,480 - $36,800 = $18,680
Journal entry
Date General journal Debit Credit
Interest expense $36,800
Notes payable $18,680
To Cash $55,480
On January 4, 2021, Runyan Bakery paid $344 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan received dividends of $4.50 per share on December 15, 2021, and Lavery reported net income of $250 million for the year ended December 31, 2021. The market value of Lavery's common stock at December 31, 2021, was $32 per share. On the purchase date, the book value of Lavery's identifiable net assets was $900 million and: The fair value of Lavery's depreciable assets, with an average remaining useful life of seven years, exceeded their book value by $70 million. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: 1. Prepare all appropriate journal entries related to the investment during 2021, assuming Runyan accounts for this investment by the equity method. 2. Prepare the journal entries required by Runyan, assuming that the 10 million shares represent a 10% interest in the net assets of Lavery rather than a 30% interest.
Answer:
1. Dr Investment in LL $344
Cr Cash $344
Dr Investment in LL $75
Cr Investment Revenue $75
Dr Cash $45
Cr Investment in LL $45
2. Dr Investment in LL $344
Cr Cash $344
Dr Cash $45
Cr Investment in LL $45
Dr Net Unrealized loss -OC1 $24
Cr Fair value adjustment $24
Explanation:
1.
Preparation of the Journal entry to record the invoice made from 10million shares
Dr Investment in LL $344
Cr Cash $344
(To record the invoice made from 10million shares)
Preparation of the Journal entry to record the share in net income
Dr Investment in LL $75
($250×30%)
Cr Investment Revenue $75
(To record the share in net income)
Preparation of the Journal entry to record the dividend income
Dr Cash $45
(10×$4.50 per share)
Cr Investment in LL $45
(To record the dividend income)
2.
Preparation of the Journal entry to record the invoice made from 10million shares
Dr Investment in LL $344
Cr Cash $344
(To record the invoice made from 10million shares)
Preparation of the Journal entry to record the dividend income
Dr Cash $45
(10×$4.50 per share)
Cr Investment in LL $45
(To record the dividend income)
Preparation of the Journal entry to record the adjusting entry
Dr Net Unrealized loss -OC1 $24
(10×$32 per share)-$344
(320-344=-$24)
Cr Fair value adjustment $24
(To record the adjusting entry)
In the process of conversion from the equity method to the fair value method, the earnings or losses that the investor previously recognized under the equity method should
Answer: remain as a part of the carrying amount of the investment
Explanation:
Equity method is simply the process whereby investments are treated in associate companies. It usually occurs when the investor entity holds about twenty to fifty percent of the voting stock of the other company.
It should be noted that in a process of conversion from the equity method to the fair value method, the earnings or losses that the investor previously recognized under the equity method should remain as a part of the carrying amount of the investment.
Jolly Company produces hula hoops. Jolly Company has the following sales projections for the upcoming year: First quarter budgeted hula hoop sales in units Second quarter budgeted hula hoop sales in units Third quarter budgeted hula hoop sales in units Fourth quarter budgeted hula hoop sales in units Jolly Company wants to have % of the next quarter's sales in units on hand at the end of each quarter. Inventory at the beginning of the year was hula hoops. How many hula hoops should Jolly Company produce during the first quarter?
Answer: 27,200 units
Explanation:
The ending inventory is calculated as;
Desired Ending Inventory = Beginning Inventory + Inventory produced - Sales in the quarter
(40,000 * 20%) = 3,600 + Inventory produced - 22,800
Inventory produced = 8,000 - 3,600 + 22,800
Inventory Produced = 27,200 units
_____ is the tendency of managers to miss the significance of disruptive changes because they are focused on investing in and making incremental improvements to their core profitable businesses.
Answer:
The Innovator's Dilemma
Explanation:
The innovator dilemma refers to the confusion related to the decision with respect to applying new innovation, technologies, meeting the current customers needs that beneficial to the company
Here in the given situation, the dilemma with respect to the innovator would made the importance related to changes that can disturb it as they focused on investing part, incremental improvements, etc
Therefore it is an innovator's dilemma