Answer:
It will take exactly 6 full years to cover for the initial investment.
Explanation:
Giving the following information:
Cash flow= $56,600
Initial investment= 339,600
The payback period is the time required for the cash flow to cover the initial investment:
Year 1= 56,600 - 339,600= -283,000
Year 2= 56,600 - 283,000= -226,400
Year 3= 56,600 - 226,400= -169,800
Year 4= 56,600 - 169,800= -113,200
Year 5= 56,600 - 113,200= -56,600
Year 6= 56,600 - 56,600= 0
It will take exactly 6 full years to cover for the initial investment.
A year ago, you purchased 300 shares of Stellar Wood Products, Inc. stock at a price of $8.62 per share. The stock pays an annual dividend of $0.10 per share. Today, you sold all of your shares for $4.80 per share. What is your total dollar return on this investment
Answer:
Total Dollar Return -$1,116
Explanation:
Calculation for the total dollar return on this investment
First step is to find the Total Selling Price using this formula
Total Selling Price= Shares purchased *Price per share sold
Let plug in the
Total Selling Price= 300*4.80
Total Selling Price= $1,440
The next step is to calculate for the total dollar return the investment using this formula
Total Dollar Return = Selling Price +Annual Dividend - Purchase Price
Let plug in the formula
Total Dollar Return = $1,440 + (300 shares ×$0.10 per share) - (300 shares *$8.62 per share)
Total Dollar Return=$1,440+$30-$2,586
Total Dollar Return = -$1,116
Therefore the total dollar return on this investment will be -$1,116
In trial balance, which accounts with normal balance is recorded at the credit side?
g The company plans a 4-for-1 stock split. How many shares will you own and what will the share price be after the stock split?
Answer: 14,400; $17
Explanation:
Stock splits are a strategy by firms to increase the liquidity of their shares especially when they are trading at a high price. The firm divides the stock by a certain number thus increasing the number of shares by the multiple of the number. This action will divide the price of the stock and thus allow for more trade as they are cheaper.
A 4-for- stock split means that each share will become 4.
Your total number of share will become;
= 4 * 3,600
= 14,400 shares
The new price will be;
= 68/4
= $17 per share
Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2015, 125 shares of preferred stock and 2,700 shares of common stock have been issued. The following transactions affect stockholders� equity during 2015:
March 1 Issue 2,700 additional shares of common stock for $13 per share.
April 1 Issue 175 additional shares of preferred stock for $37 per share.
June 1
Declare a cash dividend on both common and preferred stock of $0.40 per share to all stockholders of record on June 15.
June 30 Pay the cash dividends declared on June 1.
August 1 Repurchase 175 shares of common treasury stock for $10 per share.
October 1 Reissue 125 shares of treasury stock purchased on August 1 for $12 per share.
Nautical has the following beginning balances in its stockholders� equity accounts on January 1, 2015: Preferred Stock, $1,250; Common Stock, $2,700; Paid-in Capital, $19,200; and Retained Earnings, $11,200. Net income for the year ended December 31, 2015, is $7,500.
Required:
1. Record each of these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Select whether each of these transactions would increase (+), decrease (?), on total assets, total liabilities, and total stockholders� equity by completing the following table. (If none of the categories apply for a particular item, leave the cell blank.)
Transaction Total Assets Total Liabilities Total Stockholders Equity
Issue common stock
Issue preferred stock
Declare cash divedens
Pay cash divedens
Repurchase treasury stock
Reissue treasury stock
Answer:
Nautical1. Journal Entries:
March 1:
Debit Cash Account $35,100
Credit Common Stock $35,100
To record the issue of 2,700 shares of common stock for $13 per share.
April 1:
Debit Cash Account $6,475
Credit Preferred STock $6,475
To record the issue of 175 shares of preferred stock for $37 per share.
June 1:
Debit Dividends $2,280
Credit Dividends Payable $2,280
To record dividends of $0.40 per share to all stockholders of record.
June 30:
Debit Dividends Payable $2,280
Credit Cash Account $2,280
To record the payment of cash dividends.
August 1:
Debit Treasury Stock $1,750
Credit Cash Account $1,750
To record the repurchase of 175 shares of common stock for $10 per share.
October 1:
Debit Cash Account $1,500
Credit Treasury Stock Account $1,500
To record the reissue of 125 shares of treasury stock for $12 per share.
2. Selection of whether each of these transactions would increase (+), decrease (?), on total assets, total liabilities, and total stockholders' equity:
Transaction Assets Liabilities Stockholders
Total Total Total Equity
Issue common stock $35,100 +$35,100 +$35,000
Issue preferred stock $6,475 +$6,475 +$6,475
Declare cash dividends $2,280 +$2,280 ?$2,280
Pay cash dividends $2,280 ?$2,280 ?$2,280
Repurchase treasury stock $1,750 ?$1,750 ?$1,750
Reissue treasury stock $1,500 +$1,500 +$1,500
Explanation:
a) Data and Calculations:
Authorized share capital:
$10 par preferred
$1 par value common
Issued, beginning of 2015:
Preferred = 125 shares
Common = 2,700 shares
b) The issue of 2,700 additional shares of common stock for $13 per share totalled $35,100. This amount is credited to the Common Stock and the receipt of cash debited to the Cash Account. The same is applicable with respect to the 175 additional shares issued at $37 per share.
c) When a cash dividend is declared, the stockholders of record on the record date of June 15 are noted, since they are the only ones that will participate in the dividends. The accounting records are debit to the dividend account and a credit to the Dividends Payable account, establishing the liability. The payment for the declared dividend is recorded with a debit to the Dividends Payable account to close the liability and a credit to the Cash Account.
d) Treasury stock is a stock of common stock repurchased by the company. The issue and reissue of treasury stock are treated in the treasury stock account if the costing method is used, otherwise, the par-value method would be operational.
You have gathered the following information on your investments. What is the expected return on the portfolio? Stock Number of Shares Price per Share Expected Return F 310 $ 40 13.32 % G 315 $ 26 10.05 % H 255 $ 52 10.59 %
Answer:
Expected return on the portfolio = $3,879.00
Explanation:
a) Data and Calculations:
Stock Number of Shares Price per Share Expected Return Expected
Value
F 310 $ 40 13.32 % $1,651.68
G 315 $ 26 10.05 % $823.09
H 255 $ 52 10.59 % $1,404.23
Total 880 $3,879.00
b) The expected return on the portfolio is the addition of the expected returns of each class of shares. This is obtained by multiplying the number of shares in each class with the price and the expected return in percentage. This gives a weighted value for the class of shares, which are then added to obtain the expected return on the portfolio.
"It can be difficult to understand the nature of competition between firms in a market which is driven by change factors like technology, and capital driven mergers. Because of this the Federal Trade Commission has begun to look less at market share and more at the data on actual ______________________________.
Answer: competition between the businesses.
Explanation:
The Federal Trade Commission was put in place to protect the consumers in the marketplace. This was done by stopping deceptive, fraudulent and unfair practices that exist in the marketplace.
Based on the above analysis in the question, the Federal Trade Commission has begun to look less at market share and more at the data on actual competition between businesses.
Half of all your potential customers would pay $10 for your product but the other half would only pay $8. You cannot tell them apart. Your marginal costs are $4. If you set the price at $10, the expected profit is:
Answer:
The expected profit is:
$5.
Explanation:
a) Calculations:
Profit from customers paying $10 = $6 ($10 - $4)
Profit from customers paying $8 = $4 ($8 - $4)
Expected profit from customers paying $10, = $6 x 0.5 = $3
Expected profit from customers paying $8, = $4 x 0.5 = $2
Total expected profit = $5.
The expected profit is the profit from customers paying $10 weighted with probability plus the weighted profit from customers paying $8. Adding the expected profit from each class of customers gives the overall expected profit combined.
Answer:
Expected Profit is $4
Explanation:
Price = $8
Marginal Cost = $4
The formula to derive the expected profit is Expected Profit = Price - Marginal Cost------equ(1)
Using equation (1) and given information, expected profit is calculated as
Expected Profit = Price - Marginal Cost
Expected Profit = 8 - 4
Expected Profit = $4
Thus, the Expected Profit is $4
You purchased 1,000 shares of stock in Natural Chicken Wings, Inc., at a price of $43.37 per share. Since you purchased the stock, you have received dividends of $.95 per share. Today, you sold your stock at a price of $46.62 per share. What was your total percentage return on this investment?
Answer:
9.68%
Explanation:
Percent Return on Investment is calculated as Net Profit / Cost of Investment x 100
Net Profit= $46,620 (1,000 x $46.62 per share) + $950 (1,000 x $.95 per share) - $43,370 (1,000 x $43.37 per share) = $4,200
Cost of Investment= $43,370 (1,000 x $43.37 per share)
Percent Return on Investment= $4,200 / $43,370 x 100 = 9.68%
In the two-country model of international labor mobility:________
A) the long-run equilibrium assumes countries' policies place significant restrictions on migration.
B) the long-run equilibrium assumes that desired migration exceeds actual migration.
C) the long-run equilibrium assumes that actual migration exceeds desired migration.
D) the long-run equilibrium is the result of a divergence of the real wages in the two countries.
E) the long-run equilibrium assumes that desired and actual migration are equal.
Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the a.fixed factory overhead volume variance b.direct labor rate variance c.variable factory overhead controllable variance d.direct labor time variance
Answer: a.fixed factory overhead volume variance.
Explanation:
Fixed overhead costs are the costs that are incurred by an organization that doesn't change even when the lre is a change in the volume of production activity. The fixed overhead costs are vital in order for the effective operation of the company.
When the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the a.fixed factory overhead volume variance.
Variance is the data analysis tool that helps in measuring the gap between the actual and budgeted or the standard data. The standards are set based on past records and performances. There are various types of variances such as cost variance, efficiency variance, rate variance, volume variance, and many more.
The cost of available but unused productivity capacity is indicated by fixed factory overhead volume variance.
When the standard fixed overhead rate or can be said as the fixed overhead cost is constant and remains at full capacity irrespective of the changes in the volume of production activity.
In this case, the cost of productive capacity can be determined by using the fixed factory overhead volume variance. This is because it determines the difference between the fixed cost based upon the budgets and the production capacity.
To know more about fixed overhead variance, refer to the link:
https://brainly.com/question/25801623
The Project Evaluation and Review Technique (PERT) was developed as a means of scheduling and controlling projects with constant activity times. Group of answer choices False True
Answer: False
Explanation:
The Program Evaluation and Review Technique (PERT) is used to know the schedule tasks and also know the critical path variation. It is useful to know the length of time that'll be needed for the completion of every task and how it relates to others in order to know the entire time needed to complete the particular project.
The Project Evaluation and Review Technique (PERT) is not a means of scheduling and controlling projects with constant activity times. The activity time normally varies.
. In the step-by-step deployment of MIS in a business, which (and why) of the following will you consider as a Foundation Step for Stock broker.
a. Enterprise Resource Planning Module
b. Supply Chain Management Module
c. Customer Relationship Management Module
Answer:
C
Explanation:
Customer Relationship Management Module
Hope it helps
People had been expecting the price level to be 140 but it turns out to be 138. Johnson Family Restaurants increases the number of workers it employs. What could explain this
Answer:
neither sticky wage theory nor sticky price theory
Explanation:
People had been expecting the price level to be 140 but it turns out to be 138. Johnson Family Restaurants increases the number of workers it employs. Sticky wage theory nor sticky price theory could explain this.
What makes wages and prices sticky?Sticky wages are a result of a number of factors, including the minimum wage, employee contracts, labor unions, the efficiency wage theory, and the expense of hiring and terminating employees. It is challenging to exit a recession when wages and prices are stuck, creating a vicious cycle.
A theoretical market condition known as "stickiness" occurs when a certain nominal price resists change. Stickiness, also known as price stickiness, is a term that is frequently used to describe market prices even though it frequently refers to wages.
Many economists think that prices are "sticky" and that they change gradually. According to them, this stickiness indicates that changes in the money supply have an effect on the real economy, causing changes in investment, employment, output, and consumption. Policymakers can take advantage of this effect.
Learn more about stickiness here:
https://brainly.com/question/15451888
#SPJ6
Sloan Transmissions inc.,has the following estimates for its new gear assembly project: price=$2,200 per unit., variable cost= $440 per unit., fixed costs = $1.6 million., quantity = 90,000 units. suppose the company believes all of its estimates are accurate only to
Answer:
Best case
Price 2,640
Variable cost per unit 352
Fixed cost 1.28 million
Quantity 108,000 units
Worst case
Price 1,760
Variable cost per unit 528
Fixed cost 1.92 million
Quantity 72,000 units
Explanation:
Based on the information given in the best case expenses would be 20% lower while the incomes will be 20% higher.
Calculation for the price
Price = 2,200 ×(1+0.20)
Price=2,200×1.2
Price = 2,640
Calculation for Variable cost per unit
Variable cost per unit = 440× (1-0.20)
Variable cost per unit=440×0.80
Variable cost per unit= 352
Calculation for fixed cost
Fixed cost = 1.60 million ×(1-0.20)
Fixed cost=1.60 million× 0.80
Fixed cost= 1.28 million
Calculation for the Quantity
Quantity = 90,000 × (1+0.20)
Quantity =90,000×1.2
Quantity=108,000units
Therefore, Best case will be:
Price 2,640
Variable cost per unit 352
Fixed cost 1.28 million
Quantity 108,000units
Based on the information given in the worst case expenses would be 20% higher while incomes would be 20% lower.
Calculation for the price
Price = 2,200 × (1-0.20) = 1080
Price=2,200 ×0.8
Price=1,760
Calculation for the Variable cost per unit
Variable cost per unit = 440 × (1+0.20)
Variable cost per unit=440× 1.2
Variable cost per unit= 528
Calculation for Fixed cost
Fixed cost = 1.60 million × (1+0.20)
Fixed cost=1.60 million×1.2
Fixed cost= 1.92 million
Calculation for the Quatity
Quantity = 90,000 ×(1-0.20)
Quantity=90,000×0.8
Quantity= 72,000 units
Therefore Worst case will be:
Price 1,760
Variable cost per unit 528
Fixed cost 1.92 million
Quantity 72,000 units
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $23.00 million. The plant and equipment will be depreciated over 10 years to a book value of $2.00 million, and sold for that amount in year 10. Net working capital will increase by $1.46 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $9.03 million per year and cost $1.93 million per year over the 10-year life of the project. Marketing estimates 17.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 22.00%. The WACC is 14.00%.
Required:
Find the NPV (net present value).
Answer:
Net cash flow in year 0 = initial investment + increase in working capital
Net cash flow in years 1 to 9 = income after taxes + depreciation
Net cash flow in year 10 = income after taxes + depreciation + recovery of working capital
the percentage of buyers shifting from regular to diet drink is irrelevant for this project
IRR is calculated using the IRR function in Excel, with the inputs of values being the array of cells containing the net cash flows
IRR = 16.7627%
The interest income received from older Industrial revenue bonds may be taxable to the holder at regular income tax rates if the holder is:
Answer:
the "substantial user" of the facility built with the proceeds of the issue.
Explanation:
An Industrial revenue bond (IRB) can be defined as any municipal debt security issued by a local or state government agency with respect to a private firm which intend to undergo a particular project such as building facilities, purchasing heavy machinery or equipments.
The interest income received from older Industrial revenue bonds (IRB) may be taxable to the holder at regular income tax rates if the holder is the "substantial user" of the facility built with the proceeds of the issue because in the true sense it is only beneficial to the holder and not the larger community.
Sue purchased a house for $89,000, spent $56,000 upgrading it, and currently had it appraised at $212,900. The house is being rented to a family for $1,200 a month, the maintenance expenses average $200 a month, and the property taxes are $4,800 a year. If she sells the house she will incur $20,000 in expenses. She is considering converting the house into professional office space. What opportunity cost, if any, should she assign to this property if she has been renting it for the past two years?
Answer:
Opportunity cost = $192,900
Explanation:
The opportunity cost is the "cost" incurred by not enjoying the benefit associated with the best alternative choice
DATA
Current value = $212,900
Selling expense = $20,000
Opportunity cost = Current value - selling expense
Opportunity cost = $212,900 - $20,000
Opportunity cost = $192,900
Here Sue is Decide to convert the house into professional office space she would lose te opportunity cost of $192,000
Suppose Happy Dog Soap Company is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $3,225,000. The project is expected to generate the following net cash flows:
Year Cash Flow
Year 1 $275,000
Year 2 $475,000
Year 3 $400,000
Year 4 $500,000
Happy Dog Soap Company's weighted average cost of capital is 8%, and project Beta has the same risk as the firm's average project. Based on the cash flows, what is project Beta's NPV?
a. -$5,056,663
b. -$1,831,663
c -$2,106,412
d. -$2,197,996
Answer:
-$1,878,086.608
Explanation:
The computation of the net present value is shown below;
(in dollars) (in dollars)
Year Cash flows Discount factor Present value
0 -3225000 1 -3225000 (A)
1 275000 0.9259259259 254629.630
2 475000 0.8573388203 407235.940
3 400000 0.793832241 317532.896
4 500000 0.7350298528 367514.926
Total 1346913.392 (B)
Net present value -$1,878,086.608 (A - B)
This is the answer but the same is not provided in the given options
Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its inventory to provide a cooler weather option. The tops would sell for $53 each with expected sales of 4,300 tops annually. By adding the fleece tops, management feels the firm will sell an additional 285 pairs of jeans at $65 a pair and 420 fewer T-shirts at $26 each. The variable cost per unit is $36 on the jeans, $16 on the T-shirts, and $31 on the fleece tops. With the new item, the depreciation expense is $33,000 a year and the fixed costs are $76,000 annually. The tax rate is 35 percent. What is the project's operating cash flow?
Answer: $26,282.25
Explanation:
The operating cash-flow will be the amount of cash the company got from sales less the amount they would have to pay on taxes.
Cash from tops
= (Sales price - Variable costs) * quantity
= ( 53 - 31) * 4,300
= $94,600
Cash from jeans
= ( 65 - 36) * 285
= $8,265
Cash from jeans
= (26 - 16) * -420
= -$4,200
As this deals with cash, a tax adjusted depreciation will need to be added back because it is a non cash expense and fixed costs will have to be deducted.
Pre-tax operating cash-flow = 94,600 + 8,265 - 4,200 - 76,000
= $22,665
Post-tax Project Operating cash-flow
= $22,665 * ( 1 - 0.35) + (depreciation * tax)
= $22,665 * ( 1 - 0.35) + (33,000 * 0.35)
= $14,732.25 + 11,550
= $26,282.25
Which item below is an incorrect statement about the difference between the discount rate and the federal funds rate? a) The federal funds rate has a higher interest rate than the discount rate to encourage borrowing b) The discount rate is the interest rate at which the Fed charges the bank for loans c) The federal funds rate is the interest rate at which banks charge each other for loans d) The discount rate is directly changed by the Fed while the federal funds rate is changed indirectly.
Answer:
a) The federal funds rate has a higher interest rate than the discount rate to encourage borrowing
Explanation:
The Feds fund rate is the rate at which banks borrow from each other usually overnight, while the discount rate is the interest rate charged by the Fed to commercial banks for borrowing directly from the Fed.
These borrowings help the commercial banks meet up their liquidity requirements.
The discount rate is higher than the Fed funds rate. This is to encourage banks to borrow from each other instead of borrowing directly from the Federal Reserve.
The Fed fund rate also tends to affect the prime lending rate (rate at which banks lend money to their clients).
So the statement - The federal funds rate has a higher interest rate than the discount rate to encourage borrowing. Is not correct
Suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1912. It is now 2016. a. If someone invested $1,000 in 1912, how much would that investment be worth today?
Answer:
FV= $159,840.60
Explanation:
Giving the following information:
Initial investment= $1,000
Number of years= 2016 - 1912= 104
Interest rate= 5%
To calculate the value of the investment today, we need to use the following formula:
FV= PV*(1+i)^n
FV= 1,000*(1.05^104)
FV= $159,840.60
If own price elasticity of demand for your market is -1.2, and your marginal cost is flat at 10, what is the optimal price for your monopoly firm
Answer: $60
Explanation:
The optimal price for a monopoly firm is expressed by;
Price = Marginal Cost * ( Own Price Elasticity/ (1 + Own Price Elasticity))
Price = 10 * ( -1.2 /( 1 - 1.2)
Price = 10 * (-1.2/-0.2)
Price = 10 * 6
Price = $60
A stock is bought for $24.00 and sold for $26.00 one year later, immediately after it has paid a dividend of $1.50. What is the capital gain rate for this transaction?
Answer:
8.33%
Explanation:
A stock is bought for $23.00
The stock is sold for $26 after one year
The dividend paid is $1.50
Therefore, the capital gain rate can be calculated as follows
Capital gain= P1-Po/Po
= 26-24/24
= 2/24
= 0.0833 ×100
= 8.33%
Hence the capital gain rate for this transaction is 8.33%
In a(n) _____ decision, there may be several "right" answers, and there is no precise way to get a right answer. A. recurring B. ad hoc C. nonstructured D. structured
Answer:
C. nonstructured
Explanation:
-Recurring decision refers to a decision that has to be made regularly.
-Ad hoc decision refers to a decision made for a specific situation.
-Nonstructured decision is a decision that can have multiple solutions that are correct and you don't have a form to define which one is the right option.
-Structured decision is when you make a decision using a process that has been established to manage a specific situation.
According to this, the answer is that in a(n) nonstructured decision, there may be several "right" answers, and there is no precise way to get a right answer.
A local restaurant increases the prices on its burgers as soon as it begins a promotional campaign. Which of the following is most likely to be true?
a) The promotional campaign featured how much better their burgers are.
b) The promotional campaign focused on the value per dollar.
c) The promotional campaign made demand more elastic.
d) All of the above.
Answer: The promotional campaign featured how much better their burgers are
Explanation:
The most likely reason why a local restaurant will increase the prices on its burgers as soon as it begins a promotional campaign is that the promotional campaign featured how much better their burgers are.
Through the promotional campaign, the message has been passed to the customers and anyone interested that the burgers are better and customers will enjoy value for their money.
Danny owns two companies where he has recently made changes. The margin of safety ratio for Company X is 42% and the margin of safety ratio for Company Y is 25%. What does this imply about the two companies?
Answer: Company X could lose more business before it will begin experiencing financial difficulties when it is being compared to company Y
Explanation:
Margin of safety ratio simply helps to understand the extent to which there'll be drop in sales before a company will begins to make a loss.
Since the margin of safety ratio for Company X is 42% and the margin of safety ratio for Company Y is 25%, it means that Company X could lose more business before it begins experiencing financial difficulties when it is compared to company Y.
Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, Allowance for Doubtful Accounts had a credit balance of $3,700. During the year, Abbott wrote off accounts receivable totaling $2,500 and made credit sales of $115,000. There were no sales returns during the year. After the adjusting entry, the December 31 balance in Bad Debt Expense will be
Answer:Bad debts expense = $3,450
Explanation:Bad debt expense is the expense of account receivable that a business understands will not be paid due to the inability of a customer to pay its outstanding debt. Bad debt can be calculated using the direct write off method and the allowance method.
Here Abbot company uses the allowance method by taking into consideration a reserve which is an estimated percentage of the sales known as an adjusted risk for its customers who may not pay.
Credit sales revenue 115, 000
Estimated Bad debt 3%
Bad debts expense 3% x 115,000 = $3,450
Technology helps managers to monitor and control business activities and includes each of the following except:
a. Reduced processing errors
b. Less extensive testing of records
c. New evidence of processing
d. Separation of duties
Answer:
Correct Answer:
b. Less extensive testing of records
Explanation:
Technology which is the use of machines or electronical devices to make work easier is applied in most organizations by organizational managers. Unfortunately, less extensive testing of records is not one of its uses but rather detailed and extensive testing in order to check if there is any error in the records.
Harry forms the Nectarine Corporation during the 2019 tax year. To form the corporation, Harry transfers assets having a fair market value of $650,000 to Nectarine Corporation for 100 percent of the corporation's stock. Harry's adjusted basis in the assets transferred was $350,000 and Nectarine Corporation assume a $200,000 mortgage on the assets. If the fair market value of the stock received by Harry is $450,000, what is his basis in the stock received from the corporation
Answer:
150000
Explanation:
The question says that Harry received a fair market value = 450000 dollars
Meanwhile he transferred 650000 dollars of assets
Fair value of assets = 650000 - 200000 = 450000
Harry's adjusted basis = 350000
Therefore the share received will be:
350,000 - 200,000
= 150,000 dollars.
Harry's basis in the stock received from the corporation is $150,000.
Thank you!
June finds an ad on Craigslist for a used car at a price she is willing to pay in cash. She emails the seller and offers to pay $200 extra more the asking price. She asks the seller to call her immediately to work out a deal. The seller calls June and they orally agree that June will pay $5200 for the car. June is to drop by sellers house in two days with cash in hand. They do not sign a formal agreement or otherwise follow-up by email or any other writing. The next day, another buyer offers seller $5500 for the car. Seller calls June to tell her that he will sell the car to the other buyer unless she can match the price. She tells him that they already have an agreement, and refuses. June receives an email from seller later that day. The email states:
Hey:
I spoke with my cousin, who is an attorney. He stated that I do not have to sell you my car because we didn’t sign anything, so it is not enforceable. Sorry our deal did not work out.
Cheers!
Required:
Can June still enforce the agreement, or is it unenforceable under the Statute of Frauds? Discuss.
Answer:
The Statute of Frauds requires that any contract involving the sale of goods worth more than $500 must be in writing and signed by all the participating parties.
In this case, the seller is right. Since there is no written and signed contract, then there is no contract at all. All that June has is an oral contract that cannot be enforced.