Answer:
a. Computation of cash flow
Earnings before depreciation and taxes $123,000
Less: Depreciation $41,000
Earnings before taxes $82,000
Less: Taxes ($82,000*35%) $28,700
Earnings after taxes $53,300
Add: Depreciation $41,000
Cash Flow $94,300
b. If Depreciation = 21,000
Computation of cash flow
Earnings before depreciation and taxes $123,000
Less: Depreciation $21,000
Earnings before taxes $102,000
Less: Taxes($102,000*35%) $35,700
Earnings after taxes $66,300
Add: Depreciation $21,000
Cash Flow $87,300
intext:"Gideon Company uses the direct write-off method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is"
Answer:
Dr Allowance for Doubtful Accounts 2,000
Cr Accounts Receivable - A. Hopkins 2,000
Explanation:
Preparation of the Journal entry that Gideon will makes in order to record the write off of the account on May 3
Based on the information given we were told that on May 3 the Company wrote off the amount of $2,000 a uncollectible account of its customer which was A. Hopkins, this means that the Journal entry will be recorded as:
May 3
Dr Allowance for Doubtful Accounts 2,000
Cr Accounts Receivable - A. Hopkins 2,000
In Shanghai, China, sellers of various fake watches have historically approached tourists as they exited tour buses, offering to sell the watches. The sellers then attempted to haggle with each of the tourists individually. What pricing strategy does this behavior resemble
Answer:
Price Discrimination
Explanation:
Price discrimination defines that when one seller sells one product at different prices to different customers.
According to the given situation, Sellers of different fake watches contacted visitors as they were leaving bus tours and offering to sell them. The sellers then personally tried to haggle for each of the visitors, here sellers wants to sell the same product at different prices for his benefit. This indicates the price discrimination.
The Medicare Supplement Right of Return Provision (Free Look Period) allows the buyer a period of ________ to return a policy and receive a full refund.
Answer:
30 days
Explanation:
This right of return provision allows the buyer a period of 30 days. This period is referred to as the free look period. It is a must that these Medicare supplement policies have notices that that are boldly written on the number one page of the policy that states that the policy holder have the right to return the policy during a period of 30 days from when it was delivered and for the person to receive full refund.
The risk-free rate of return is 3.2 percent and the market risk premium is 4.6 percent. What is the expected rate of return on a stock with a beta of 2.12
Answer:
12.95%
Explanation:
The risk free rate of return is 3.2%
The market risk premium is 4.6%
The beta is 2.12
Therefore, the expected rate of return on a stock can be calculated as follows
= 3.2% + (2.12×4.6%)
= 3.2% + 9.752
= 12.95%
Hence the expected rate of return on a stock is 12.95%
A share of stock is now selling for $120. It will pay a dividend of $10 per share at the end of the year. Its beta is 1. What must investors expect the stock to sell for at the end of the year? Assume the risk-free rate is 6% and the expected rate of return on the market is 18%. (Round your answer to 2 decimal places.)
Answer:
P1 = 131.6566627 rounded off to $131.66
Explanation:
To calculate the price of the stock at the end of the year or P1, we first need to determine the required rate of return on the stock and the growth rate in dividends.
The required rate of return can be found using the CAPM equation. The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate rM is the return on market
r = 0.06 + 1 * (0.18 - 0.06)
r = 0.18 or 18%
Now we assume that the stock is a constant growth stock which means that the growth in dividends is expected to be constant throughout. The price of such a stock is found using the constant growth model of DDM. The formula for price today under the constant growth model is,
P0 = D1 / (r - g)
Where,
P0 is price today D1 is expected dividend for the next period g is the growth rate in dividends
Plugging in the available variables, g is,
120 = 10 / (0.18 - g)
120* (0.18 - g) = 10
21.6 - 120g = 10
g = (10 - 21.6) / -120
g = 0.096667 or 9.6667% rounded off to 9.67%
So to calculate the price at the end of the year or P1, we will use D2.
P1 = 10 * (1+0.0967) / (0.18 - 0.0967)
P1 = 131.6566627 rounded off to $131.66
Determine fixed cost, F; average variable cost, AVC; average cost, AC; marginal cost, MC; and average fixed-cost, AFC. The fixed cost function (F) is
Answer:
Fixed Cost Function = Average Cost - Average Variable cost
Explanation:
A fixed cost is the one which does not changes with the level of production. These cost are irrelevant to number of units production. It is not affected by the units produced and sold. The change in fixed cost does not affect the marginal cost. The marginal cost is the variable cost that is incurred by producing one more unit. These costs are affected by the level of production.
Ten years ago, Kronan Corporation earned $0.50 per share. Its earnings this year were $2.20. What was the growth rate in earnings per share (EPS) over the 10-year period?
Answer:
The growth rate in earnings per share (EPS) is 15.97%
Explanation:
Assuming annual growth rate is r%, hence
$0.5 x (1 + r)^10 = $2.20
(1 + r)10 = $2.20 / $0.5
(1 + r)10 = $4.4
Taking 10th root at each side,
(1 + r)10 = $4.4
[tex]\sqrt[10]{1 + r}[/tex] = [tex]\sqrt[10]{4.4}[/tex]
1+r = 1.1597
r = 1.1597 - 1
r = 0.1597
r= 15.97%
Red Sun Rising just paid a dividend of $2.43 per share. The company said that it will increase the dividend by 15 percent and 10 percent over the next two years, respectively. After that, the company is expected to increase its annual dividend at 4.1 percent. If the required return is 11.5 percent, what is the stock price today
Answer:
P0 = $39.76
Explanation:
The dividend discount model or DDM can be used to calculate the price of the share today. The DDM values a stock based on the present value of the expected future dividends from the stock. The price of this stock under this model can be calculated as follows,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1) * (1+g2) / (1+r)^2 +
[ (D0 * (1+g1) * (1+g2) * (1+g3) / (r - g3)) / (1+r)^2 ]
Where,
g1 is the growth rate in the first year which is 15% g2 is the growth rate in the second year which is 10% g3 is the constant growth rate which is 4.1% r is the required rate of return P0 is the stock price today
P0 = 2.43 * (1+0.15) / (1+0.115) + 2.43 * (1+0.15) * (1+0.1) / (1+0.115)^2 +
[ (2.43 * (1+0.15) * (1+0.1) * (1+0.041) / (0.115 - 0.041)) / (1+0.115)^2 ]
P0 = $39.76
Suppose the following financial data were reported by 3M Company for 2019 and 2020 (dollars in millions). 3M Company Balance Sheets (partial) 2020 2019 Current assets Cash and cash equivalents $ 3,008 $1,899 Accounts receivable, net 3,110 3,065 Inventories 2,675 3,017 Other current assets 1,890 1,542 Total current assets $10,683 $9,523 Current liabilities $ 4,974 $5,821 (a) Calculate the current ratio and working capital for 3M for 2019 and 2020.
Answer:
Current ratio = Current Assets / Current Liability
Current ratio 2019 = 9,523 / 5,821
Current ratio 2019 = 1.64 : 1
Current ratio 2020 = 10,683 / 4,974
Current ratio 2020 = 2.15 : 1
Working Capital = Current asset - Current liability
Working capital 2019 = $9,523 - $5,821
Working capital 2019 = $3,702
Working capital 2020 = $10,683 - $4,974
Working capital 2020 = $5,709
How and When to accomplish all Assistant Manager responsibilities in a shift in a fast food restaurant.
Answer:
Researching new wholesale food suppliers and negotiating prices
Calculating future needs in kitchenware and equipment and placing orders, as needed
Managing and storing vendors’ contracts and invoices
Overseeing restaurant staff performance, ensuring quality dining
Explanation:
Responsibilities
Research new wholesale food suppliers and negotiate prices
Calculate future needs in kitchenware and equipment and place orders, as needed
Manage and store vendors’ contracts and invoices
Coordinate communication between front of the house and back of the house staff
Prepare shift schedules
Process payroll for all restaurant staff
Supervise kitchen and wait staff and provide assistance, as needed
Keep detailed records of daily, weekly and monthly costs and revenues
Arrange for new employees’ proper onboarding (scheduling trainings and ordering uniforms)
Monitor compliance with safety and hygiene regulations
Gather guests’ feedback and recommend improvements to our menus
Given a stock index with a value of $1,200, an anticipated dividend of $45, and a risk-free rate of 6%, what should be the value of one futures contract on the index
Answer: $1,227
Explanation:
The value of the futures contract should be calculated by the formula;
= Stock Index Value * ( 1 + risk free rate ) - dividends
= 1,200 * ( 1 + 0.06) - 45
= $1,227
a project that will last for 8 years is expected to have equal annual cash flows of $97,900. If the required return is 7.6 percent, what maximum initial cash flows of $97,900
Question:
MC algo 5-28 Calculating NPV A project that will last for 8 years is expected to have equal annual cash flows of $97,900. If the required return is 7.6 percent, what maximum initial investment would make the project acceptable?
Multiple Choice $516,751.56 $571,237.51 $1,026,395.85 $482,301.46 $550,008.71
Answer:
PV of cash inflow = $571,237.5
Explanation:
The maximum initial investment amount to be paid is the present value of the series of the annual cash inflow discounted at the opportunity cost rate of 7.6% per annum.
In other words,the maximum to be paid for the investment should be equal to the value today of the series of eight equal annual cash flow of $97,900 discounted at 7.6%
This is given in the relationship below:
PV of cash inflow = A ×( 1- (1+r)^(-n))/r )
A- equal annual cash - 97,900. r-rate of return - 7.6%, n-number of years- 8
PV = 97,900 × ( 1 - (1+0.076)^(-8)/0.76)= 571,237.5
PV of cash inflow = $571,237.5
If workers are more productive, the increase may not be reflected on the static budget variance if there were also:__________
A. Greater sales than planned
B. Less sales than planned
C. Greater production than planned
D. Less production than planned
E. None of the above Clear my choice
Answer:
abcde
Explanation:
abcde...................................................
Journalize the following entries for the month:
a. Materials are purchased to produce 960 units.
b. Conversion costs are applied to 910 units of production.
c. The cell completes 860 units, which are placed into finished goods.
Answer:
Journal Entries without $ amounts:
a. Debit Materials Inventory for 960 units
Credit Cash Account or Accounts Payable for 960 units.
To record the purchase of materials for the production of 960 units
Debit Work in process for 960 units
Credit Materials Inventory for 960 units
To record the transfer of materials to work in process.
b. Debit Conversion Costs for 910 units
Credit Cash Account for 910 units
To record conversion expenses.
Debit Work in process for conversion costs
Credit Conversion Costs
To record the transfer of conversion costs to WIP.
c. Debit Finished Goods Inventory for 860 units
Credit Work in Process for 860 units
To record the transfer of 860 units out of WIP, (materials and conversion costs).
Explanation:
Journals serve multi-purposes for the initial recording of business transactions. They also play important roles for period-end and other adjustments. Journals come in hand for closing entries of transactions. Importantly, they identify the accounts that are debited and credited respectively. There are many kinds of journals for various purposes, from the general to so many of the specialized kinds. We can even use journal entries to record exchange of quantities, not only dollar amounts, as demonstrated above.
A catering company prepared and served 375 meals at an anniversary celebration last week using 3 workers. The week before, 2 workers prepared and served 225 meals at a wedding reception
a1. Calculate the labor productivity for each event. (Round your answers to 1 decimal place.) Anniversary Wedding meals/worker meals/worker
a2. For which event was the labor productivity higher?
Anniversary
Wedding
Answer:
for anniversary = 125
for wedding = 112.5
anniversary
Explanation:
Labour productivity = number of meals / total number of workers
for anniversary = 375 / 3 = 125
for wedding = 225 / 2 = 112.5
labour productivity is higher for the anniversary because one unit of labour produces more meals when compared to the wedding.
Long-term debt ratio 0.3
Times interest earned 10.0
Current ratio 1.2
Quick ratio 1.0
Cash ratio 0.4
Inventory turnover 3.0
Average collection period 73 days
Use the above information from the tables to work out the following missing entries, and then calculate the company’s return on equity.
Net sales _____$
Cost of goods sold
Selling, general, and administrative expenses 20.00
Depreciation 30.00
Earnings before interest and taxes (EBIT) _____$
Interest expense
Income before tax _____$
Tax (35% of income before tax)
Net income _____$
Courtney's Caffeine Castle is investigating the feasibility of adding a new espresso maker to its line-up of products. The marketing department believes that 15,000 units can be sold at $90 each. Courtney's requires a 30% profit margin (i.e. cost is 70% of selling price) on all products. To achieve its goal, Courtney's must keep total costs equal to or below:
A. $675,000.
B. $900,000.
C. $661,500.
D. $945,000.
Answer:
D. $945,000.
Explanation:
Jordan issued 10-year, 11% bonds with a par value of $110,000. Interest is paid semiannually. The market rate on the issue date was 10%. Jordan received $116,855 in cash proceeds. Which of the following statements is True? Multiple Choice Suring must pay $116,855 at maturity and no interest payments.
Answer:
$110,000 on maturity
Interest of $6,050 semiannually
Explanation:
Jordan will pay $110,000 at maturity date with 20 payments of $6050 as interest
11% bonds at par value = $110,000
Interest paid = Semiannually
Market rate = 10%
At maturity, the par value will be paid as the par value of Jordan issued bonds is 110,000, therefore, Jordan will pay 110,000 on the maturity date.
As the bonds are issued for 10 years with semiannual payments that will be like 20 payments of $6,050 (110,000 x 10% x 6/12)
Suppose that the residents of Vegi-Topia spend all of their income on cauliflower, broccoli, and carrots. In 2013, they buy 50 heads of cauliflower for $2 each, 60 bunches of broccoli for $1.5 each, and 200 carrots for $0.10. In 2014, they buy 75 heads of cauliflower for $2 each, 70 bunches of broccoli for $1.50 each, and 500 carrots for $0.20 each. In 2015, they buy 80 heads of cauliflower for $3, 90 bunches of broccoli for $2, and 500 carrots for $0.25 each. If the base year is 2015, what is the inflation for 2014
Answer:
Inflation for 2014 is 11%
Explanation:
Inflation refers to a quantitative measure of the rate of an increase in the average price level of a selected basket of commodities in an economy over a specified period of time.
The inflation rate for 2014 can be calculated as follows:
Since 2015 is the base year, the it implies that the basket we are going to use contains 80 heads of cauliflower, 90 bunches of broccoli, and 500 carrots.
Therefore, cost of basket for each year can be determined as follows:
2013 cost of basket = ∑(Unit price in 2014 * Quantity in 2015) = ($2 * 80) + ($1.50 * 50) + ($0.10 * 500) = $285
2014 cost of basket = ∑(Unit price in 2014 * Quantity in 2015) = ($2 * 80) + ($1.50 * 50) + ($0.20 * 500) = $335
2015 cost of basket = ∑(Unit price in 2015 * Quantity in 2015) = ($3 * 80) + ($2 * 50) + ($0.25 * 500) = $465
The CPI for each year can be determined using the following for formula:
CPI of a year = Current period cost of basket / Base year cost of basket …………… (1)
As 2015 is the base year, using equation (1), we have:
2013 CPI = (2013 cost of basket / 2015 cost of basket) * 100 = $285 / $465 = 0.61 * 100 = 61
2014 CPI = (2014 cost of basket / 2015 cost of basket) * 100 = $335 / $465 = 0.72 * 100 = 72
2015 CPI = (2015 cost of basket / 2015 cost of basket) * 100 = $465 / $465 = 1 * 100 = 100
The inflation for a year can be determined as follows:
Inflation = (CPI in the current year - CPI in previous year) / CPI in the base year ..................... (2)
Using equation (2), we have:
Inflation for 2014 = (CPI in 2014 - CPI in 2013) / CPI in 2015 = (72 - 61) / 100 = 11 / 100 = 0.11, or 11%
Lawrence Industries' most recent annual dividend was $2.28 per share (D0=$2.28), and the firm's required return is 13%. Find the market value of Lawrence's shares when dividends are expected to grow at 8% annually for 3 years, followed by a 7% constant annual growth rate in years 4 to infinity.
Answer:
Value of stock = $41.75
Explanation:
The price of a stock using the dividend valuation model is the present value of the the future dividend expected from the stock discounted at the required rate of return.
value of dividend from year 1 to 3
Year Present Value
1 2.28× 1.08^1 × 1.13^(1-) = 2.179
2 2.28× 1.08^2 × 1.13^(-2) = 2.083
3. 2.28 × 1.08^3 × 1.13^(-3)= 1.991
Present value of Dividend in Year 4 and beyond
This will be done in two steps
Step 1 :PV in year 3 terms
= Dividend in year 4× (1.06)/(0.1-0.06)
2.28 × 1.08^3 × 1.07/(0.13-0.07)= 51.220
step 2 : PV in year 0 terms =
PV in year 3 × 1.1^(-3)
=51.220 × 1.13^(-3)= 35.498
Value of stock = 2.179 +2.083 +1.991 + 35.498 = 41.75
Value of stock = $41.75
Indicate the proper accounting treatment for a change in the rate used to compute warranty costs.
a. Accounted for prospectively
b. Accounted for retrospectively
Answer:
a. Accounted for prospectively
Explanation:
Warranty cost is an expense i.e. to be incurred for the repair or replacement of the goods comes under the warranty given by the company.
Here if there is a change in the rate i.e. used for determining the warranty cost so it would be accounted in prospectively manner i.e. it would be changed in the current period and also the amount should be estimated or predicted
Hence, the correct option is a.
The twentieth century saw an accelerating shift from traditional manufacturing activities to production procedures requiring large investments in raw materials and labor.
a. True
b. False
Answer:
true
Explanation:
The owners of a landscaping business decide they need insurance to cover their trucks in case of accidents , injuries caused by flying debris from their trimmers and blowers, and property damage caused by falling tree limbs. What type of policy should the owners consider to cover all of these risk?
A business owners policy
Answer:
it is a business owners policy
Explanation:
APEX
11. Garth Corporation sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: A. profit will go up 10% B. profit will go up more than 10% C. profit will go down by less than 10% D. profit will not change
Answer:
D
Explanation:
Profit = Revenue - cost
Cost = fixed cost + variable cost
if variable cost increases by 10%, cost would increase by 10%.
Revenue also increases by 10%
So, the increase in revenue would be cancelled by the increase in cost and profit would not change
what are the competitive advantages of international businesses
Answer:
I think the above information will help you.....
Suppose the country of Stan has fixed its exchange rate to the dollar. The official exchange rate is 0.50 U.S. dollars per rupee. Suppose market conditions are such that the actual equilibrium exchange rate is 0.25 U.S dollars per rupee.
1. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price at official exchange rates? ___________ Are products bought from Stan a good deal?
2. You are a tourist in Stan. Something you wish to buy costs 100 rupees. What is the price if you could buy at the equilibrium exchange rate?
3. Will foreigners want to demand Stan’s rupees to buy goods at the official rate? Explain.
4. Will people in Stan want to buy U.S. goods at the official exchange rates? Will they being supplying or demanding their rupees?
5. Will the monetary authorities in Stan have to buy up a surplus of their currency or sell their currency to meet a shortage of their currency to keep the exchange rate at 0.50 dollars per rupee?
Answer and Explanation:
1. At 0fficial exchange rate:
100 * 0.5 = $50
what I want to buy would be purchased at $50
at market exchange rate:
0.25 x 100 = $25
products bought from this place are not a good deal as I am paying more than the market exchange rate.
2. at equilibrium exchange rate:
100 x 0.25% = $25
the price is $25
3. from answers 1 and 2, I will not want demand Stan's rupees. the products are costly to get.
4. Stan's currency is obviously overvalued. the people from this country now has increased purchasing power so they can purchase goods in dollars, therefore they would be supplying their currency.
5. They will have to buy up the surplus of rupees so that they can easily keep up with maintaining the rupee at half a dollar.
A(n) ________ is designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company's products directly.
Answer: a corporate website
Explanation: A corporate website is one that is designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company's products directly. It is also known as a brand website. However, a marketing website will engage consumers in interactions that will move them closer to a direct purchase or some other marketing outcome .
Badger Corporation declared a stock distribution to all shareholders of record on March 25 of this year. Shareholders will receive one share of Badger stock for each 10 shares of stock they already own. Madison Cheesehead owns 1,000 shares of Badger stock with a tax basis of $100 per share. The fair market value of the Badger stock was $110 per share on March 25 of this year.Required:a. What amount of taxable dividend income, if any, does Madison recognize in 2009? b. What is Madison's income tax basis in her new and existing stock in Badger Corporation, assuming the distribution is non-taxable? c. How would you answer questions a and b if Madison was offered the choice between 1 share of stock in Badger for each 10 shares she owned or $100 cash for each 10 shares she owned in Badger?
Answer:
a. What amount of taxable dividend income, if any, does Madison recognize in 2009?
Madison doesn't have to recognize any income because she is not getting any. Only after Madison decides to sell his stocks will he recognize any taxable income if she makes a gain.
b. What is Madison's income tax basis in her new and existing stock in Badger Corporation, assuming the distribution is non-taxable?
Madison current basis is $100 per stock, and after the stock dividend it will be $100 / 1.1 = $90.91 per stock
c. How would you answer questions a and b if Madison was offered the choice between 1 share of stock in Badger for each 10 shares she owned or $100 cash for each 10 shares she owned in Badger?
then the cash dividend would be $10 per stock, which results in $10 x 1,000 = $10,000 taxable income. Her basis in the stock will remain not change.
The Golden Company issues of %, 10year bonds at on March 31, 2019. The bonds pay interest on March 31 and September 30. Assume that the company uses the straightline method for amortization. The journal entry to record the issuance includes a
Answer:
Debit to Cash for $560,560
Explanation:
Based on the information given we were told that the Company issues the amount of $539,000 at 104 on March 31 2019 this means that the journal entry to record the issuance will includes a:
Debit to Cash for $560,560.
Calculated as :
Cash received = $539,000 × 104%
Cash received = $560,560
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 55,000 units of RX5 follows. Direct materials $ 5.00 Direct labor 9.00 Overhead 10.00 Total costs per unit 24.00 Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 55,000 units of RX5 for $20.00 per unit. Required: 1. Calculate the incremental costs of making and buying component RX5.
Answer:
If the company makes the component, $165,000 will be saved.
Explanation:
Giving the following information:
Units production= 55,000 units
Production costs:
Direct materials $5
Direct labor $9
Avoidable Overhead= 3
Direct materials and direct labor are 100% variable.
An outside supplier has offered to supply the 55,000 units of RX5 for $20.00 per unit.
We need to determine the total cost of making in-house and buying.
We will take into account only the variable cost (avoidable cost).
Make in-house:
Total cost= 55,000*(5 + 9 + 3)= $935,000
Buy:
Total cost= 55,000*20= $1,100,000
If the company makes the component, $165,000 will be saved.