Answer:
A. Firms can charge a higher price.
C. Firms can hold down industry output.
Explanation:
As we know that
There is only one seller in the monopoly market which determinant of the overall market. The vendor demanded the heavy price and there's no competition because of this. This market contains free to enter and exit
so the first option satisfy this condition also it hold down the output of an industry
Therefore the option A and C is correct
Hence, the option B is incorrect
Mullineaux Corporation has a target capital structure of 41 percent common stock, 4 percent preferred stock, and 55 percent debt. Its cost of equity is 17 percent, the cost of preferred stock is 6.5 percent, and the pre-tax cost of debt is 8.3 percent. What is the firm's WACC given a tax rate of 33 percent?
Answer:
the weighted average cost of capital is 10.29%
Explanation:
The computation of the weighted average cost of capital is shown below;
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of common stock)
= 0.55 × 8.3% × (1 - 0.33) + (0.04 × 6.5%) + (0.41 × 17%)
= 3.058% + 0.26% + 6.97%
= 10.29%
Hence, the weighted average cost of capital is 10.29%
We simply applied the above formula
What is the difference between economies of scale, constant returns to scale, and diseconomies of scale
Answer:
Economies of scale: occur when total costs for the firm go down as the firm increases output. This is why in some industries, large firms are more profitable that small firms.
Constant returns to scale: the property that occurs when increasings in factors or production (labor, capital) lead to the same increase the amount of goods or services produced.
Diseconomies of scale: this is the opposite to economies of scale. Occurs when firms experience higher costs due to larger production. They mostly occur due to coordination issues that arise when firms become to large to manage well.
Assume the total cost of a college education will be $200,000 when your child enters college in 16 years. You presently have $67,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?
Answer:
you must earn an annual rate of interest of 7.07 %
Explanation:
The annual rate of interest, r on the investment is calculated as follows :
Pv = - $67,000
Pmt = $ 0
P/yr = 1
N = 16
Fv = $200,000
r = ?
Using a Financial Calculator, annual rate of interest, r on the investment is 7.07 % .
Which 3 features should you suggest to your clients to build their brand recognition? a) Get choosy with your fonts and use a font type that matches the company's branding scheme b) Add company logo to customer sales forms Use the standard template with no customization c) Add a splash of color that matches the company's branding scheme d) Select a default payment method
Answer:
a) Get choosy with your fonts and use a font type that matches the company's branding scheme
b) Add a company logo to customer sales forms Use the standard template with no customization
c) Add a splash of color that matches the company's branding scheme
Explanation:
Brand recognition refers to the recognition of the company brand by identifying with the product tag line, logo, advertising, packaging, etc
It could be identified with the help of audio and video clip so that the people could aware of it
Now for building the brand recognition, the following attributes needed
1. Selection of font that matches with the branding
2. Added a logo also the standard template is required
3. Add color splashes
Consider the way that you use financial services and the way in which you embrace technology. Have you any preferences of continuing to use paper-based systems? If yes, Why?
Answer:
No, I don't have any preference for using any paper based systems.
Explanation:
The reason why I don't have any preference for paper based system is as under:
It is time to embrace technological advancements and managing our financial records using softwares, fintech technology and accounting softwares has made the record keeping much easier than before. The biometric technology can help in authenticating the records and physical presence can also be authenticated via a video of the person using the biometric system. This has enabled the companies to lower its paper usage significantly and now, we can rely on a new green technology that would resolve our numerous issues along with deforestation. Other factors are Editing issues, cost of transporting data, ethical trading, Accuracy of record keeping, Correction traceable, Cost of managing information, etc.Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.)
Answer:
Phone Corporation
1. Return on equity, (Use AVG balance sheet figures %?)
= Net Income/Equity * 100
= $1,225/$10,672.5 * 100
= 11.48%
2. Return on assets (Use AVg balance sheet figures %?)
= Net Income/Average Assets
= $1,225/$27,938.5 * 100
= 4.38
3. Return on Capital Use AVg balance sheet figures %?
= Net Income/Liabilities + Equity * 100
= $1,225/$27,938.50 * 100
= 4.38%
4. Day in Inventory use start of year balance sheet Days?
= Average Inventory/Cost of goods sold * 365
= $212/$4,310 * 365
= 17.95 days
5. Inventory Turnover use start of year balance sheet
= Cost of goods sold/Average Inventory
$4,310/$212
= 20.33 times
6. Average collection period use start of year balance sheet Days?
= Average Accounts Receivable/Net Sales * 365
= $2,632/$13,600 * 365
= 70.64 days
7. Operating Profit margin %?
= Net Income/Sales * 100
= $1,225/$13,600 * 100
= 9%
8. Long term debt ratio (Use end of the year balance sheet):
= Long-term Debts/Total Assets
= $12,137/$27,758
= 0.44
9. Total debt ratio (Use end of the year balance sheet):
= Total Liabilities/Total Assets
= $17,637/$27,758
= 0.64
10. Time interest earned:
= EBIT/Interest Expense
= $2,460/$710
= 3.46 times
11. Current ratio (Use end of the year balance sheet):
= Current Assets/Current Liabilities
= $3,973/$5,500
= 0.72
12. Quick ratio (Use end of the year balance sheet):
= (Current Assets - Inventory)/Current Liabilities
= ($3,973 - 263)/ $5,500
= 0.67
Explanation:
a) Data:
Phone Corporation Income Statement
(Figures in $ millions)
Net sales $13,600
Cost of goods sold 4,310
Other expenses 4,162
Depreciation 2,668
Earnings before interest
and taxes (EBIT) $2,460
Interest expense 710
Income before tax $1,750
Taxes (at 30%) 525
Net income $1,225
Dividends $906
BALANCE SHEET
(Figures in $ millions)
a) Averages Balance Figures:
End Start Average
Year Year Figures
Assets
Cash and marketable securities $94 $163 $128.5
Receivables 2,632 2,590 $2,611
Inventories 212 263 $237.5
Other current assets 892 957 $924.5
Total current assets $3,830 $3,973 $3,901.5
Net property, plant, and equipment 20,023 19,965 $19,994
Other long-term assets 4,266 3,820 $4,043
Total assets $28,119 $27,758 $27,938.5
Liabilities and shareholders’ equity
Payables $2,614 $3,090 $2,852
Short-term debt 1,444 1,598 $1,521
Other current liabilities 836 812 $824
Total current liabilities $4,894 $5,500 $5,197
Long-term debt and leases 5,773 5,938 $5,855.5
Other long-term liabilities 6,228 6,199 $6,213.5
Total long-term liabilities $12,001 $12,137 $12,069
Total liabilities $16,895 $17,637 $17,266
Shareholders’ equity 11,224 10,121 $10,672.5
Total liabilities & shareholders’ equity $28,119 $27,758 $27,938.5
b) Days in Inventory is an efficiency ratio that measures the average number of days the company holds its inventory before selling it. The ratio measures the number of days funds are tied up in inventory.
c) Inventory turnover is a ratio that measures the number of times inventory is sold or consumed in a given time period.
d) The average collection period is calculated by dividing the average balance of accounts receivable by total net credit sales for the period and multiplying the quotient by the number of days in the period.
e) For lack of space, other ratios are equally defined by the formulas for calculating them.
Lee Industry sales are $525,000, variable costs are 53% of sales, and operating income is $19,000. What is the contribution margin ratio?
Answer:
47%
Explanation:
Lee industry have a sale of $525,000
Variable cost is 53% of sales
= 53/100 × $525,000
= 0.53×$525,000
= $278,250
The operating income is $19,000
The first step is to calculate the contribution margin
Contribution margin= sales-variable cost
= $525,000-$278,250
= $246,750
Therefore the contribution margin ratio can be calculated as follows
= contribution margin/sales
= $246,750/$525,000
= 0.47 × 100
= 47%
Hence the contribution margin ratio is 47%
The Herfindahl index and the concentration ratio fail to give a complete picture of an economy's competitiveness because:
Answer:
many corporations are conglomerates, spanning a variety of different industries.
Explanation:
Here are the options to this question :
they measure each firm's share of sales rather than each firm's share of profits.
many corporations are conglomerates, spanning a variety of different industries.
they don't account for mergers within an industry.
they are based on market share, not market size.
The Herfindahl index and the concentration ratio are measures used to determine the concentration ratios of firms in an industry
The of concentration ratio is calculated by adding the market shares of firms in the industry. e.g. the four firm concentration ratio calculates the concentration ratio of the 4 largest firms in an industry by adding their market shares together
The HHI is calculated by squaring the market share of each firm in the industry.
Because these measures only measure the concentration of firms in a particular industry, they do not account for conglomerates that exist in different industries
Which of the following tools can the Fed use to contract the money supply? To expand the money supply?
A
is a plan in which an individual balances available resources and expenses.
Answer:
A "budget" is a plan in which an individual balances available resources and expenses.
Explanation:
Budgeting is the essential way that you can take control of your accounts. Basically, a budget is a composed arrangement for how you will spend your cash.
The term "budget" refers to a strategy used to balance costs and resources.
What is meant by a resources?
A resource is any substance that is available to us in our surroundings that is economically viable, technologically accessible, and culturally sustainable and that helps us meet our needs and desires. Resources can be divided into renewable and non-renewable categories based on their availability.
They can also be divided into actual and potential resources based on their level of development and use, origin (biotic or abiotic), and distribution (universal or localized) (private, community-owned, national, or international resources).
With the passage of time and technological advancement, an object becomes a resource. Utilizing resources effectively can lead to increased wealth, effective system operation, or improved wellbeing. When viewed from a human perspective,
Learn more about resources , from :
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A communication plan is a key component for giving guidelines on how to track project:________a. Issues.b. Costs.c. Defects.d. Both costs and defects.
Answer: a. Issues
Explanation:
A Communication plan for a project allows for easier information flow between the stakeholders in the project including the client, the company and the workers.
By setting standards on how and what should be communicated the plan will let the stakeholders know how to communicate any issues affecting the project. The plan will also let the stakeholders know how to track issues that will be reported.
On January 1st, 2019, Pizza Company awarded 5 million of its no par common shares to key personal. The award is subject to forfeiture if employment is terminated within five years. On the grant date the market price of the shares was $10 per share. Which of the following journal entries is correctly made on December 31st, 2019 if any?
A. Debit Compensation Expense $10,000,000
Credit PIC-Excess Par $10,000,000
B. Debit Compensation Expense $10,000,000
Credit PIC-Restricted Stock $10,000,000
C. None of the above
D. Debit Compensation Expense $10,000,000
Credit Common Stock $10,000,000
Answer:
A. Debit Compensation Expense $10,000,000
Credit PIC-Excess Par $10,000,000
Explanation:
The total cost of the stock options granted is allocated to the respective years in which the stock compensation relates as below:
Total stock compensation=market value per share on grant date*number of stock options
Total stock compensation=$10*5,000,000=$50,000,000
compensation expense allocated per year=$50,000,000/5
compensation expense per year=$10,000,000
TRV is expecting to purchase a new manufacturing line. It is expected to cost 119,000 and will require an additional 12,000 to set-up. It will generate $25,000 annually for the next 5 years. What is the modified internal rate of return if the cost of capital is 12% and the expected rate on reinvestments is equal to 8%?
Answer:
2.28%
Explanation: Given the following :
Expected cost = 119,000
Additional cost = 12,000
Cash Inflow = $25,000
Number of years = 5 years
Cost of capital = 12%
Reinvestment rate = 8%
The Modified Internal rate of return is used to evaluate the yield on an investment over a certain period of time. The Modified Internal rate of return is similar to the internal rate of return, however, the difference between the lies in the fact that MIRR takes into account that profit accrued each year is reinvested at a steady rate called the Reinvestment rate.
MIRR can be calculated using excel or the online calculators by taking into account the value range, the financing rate and the Reinvestment rate.
Using the Omni MIRR calculator :
Cash inflow of 25,000 over 5 years
Reinvestment rate of 8%
Financing rate of 12%
Total initial investment of (119,000 + 12000) = 131,000
MIRR value = 2.28%
An entry in QuickBooks Online has been made, but you need to double check the debit and credit entries. What is the quickest way to do this?
Answer: Open the transaction, and look at the transaction journal from within the “more” options
Explanation:
QuickBooks is simply a software package that is used in accounting. It should be noted that QuickBooks products are usually geared for the businesses that are small and medium-sized.
An entry in QuickBooks Online has been made, but you need to double check the debit and credit entries. The quickest way to do this is to Open the transaction, and look at the transaction journal from within the “more” options.
Dean brings up the ambiguity branch managers at First National Bank face. He believes senior leadership needs to make the managers' most important priorities clear. This thinking most closely resembles which principles?
Answer:
Functional Principles
Explanation:
When it comes to proper organization in businesses, there are several principles that should be adhered to in order to achieve proper functioning. The functional principle indicates that the roles of every person in a department, be it managers or subordinates, must be properly explained to them in order to achieve smooth operations in the business.
When roles and responsibilities are properly explained, each person becomes aware of the expectations from him at every point in time. This in turn allows for efficiency in the discharge of duties. So, when Dean explains that the role of the manager should be properly explained, he is making reference to the functional principle.
Outstanding debt of Home Depot trades with a yield to maturity of %. The tax rate of Home Depot is . What is the effective cost of debt of Home Depot?
Answer:
5.6%
Explanation:
A lot of information is missing, so I looked for similar questions to fill in the blanks:
"Outstanding debt of Home Depot trades with a yield to maturity of 8%.
The tax rate of Home Depot is 30%.
What is the effective cost of debt of Home Depot?"
the effective cost of debt or after tax cost of debt = debt's yield to maturity x (1 - tax rate) = 8% x (1 - 30%) = 8% x 0.7 = 5.6%
Interest is tax deductible, therefore, it creates a tax shield that lowers net interest expense.
What needs would you strive to satisfy on the job? Why? What role would your manager play in helping you satisfy these needs?
Answer:
Please see explanations below
Explanation:
Need is what one requires or basic necessity that bring survival.
According to Abraham Maslow, there are five basic needs of human beings which are arranged according to how they are valued. They are physiological, security, social, esteem and self actualization.
The needs I would strive to satisfy on the job are security, physiological and social needs. This is because once my job is safe, then my survival is fine because my job is what provides money for me to fend for myself. Another need is physiological need such as having time to rest, have clothing, food and shelter etc. If I have job security, then my physiological needs will be met while I should be able to interact or have relationship with people within my immediate environment ; which is my social need.
Before a manager could play any role in helping me satisfying these needs, the manager must first identify what my needs on the job are, after which he can motivate me so that I can perform at a higher level. Also, for optimal performance, my manager must be able to align my interest, including my team member's interest to that of the organization.
What are the portfolio weights for a portfolio that has 134 shares of Stock A that sell for $44 per share and 114 shares of Stock B that sell for $34 per share? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)
Answer:portfolio weights -A=0.6034; B=0.3966
Explanation:
Total value of stock A = no. of shares * market value per share
= 134 x $44= $5,896
Total value of stock B = 114 x $34 = $3,876
Weight of stock A = Total value of stock A / ( Total value of stock A+Total M value of stock B)
= 5,896/ (5896+3,876 )
= 5,896/9,772
= 0.6034
Weight of stock B =Total value of stock B / ( Total value of stock A+Total value of stock B) OR 1 - Weight of stock A
=3,876 / (5896+3,876 )
=3,876 //9,772
= 0.3966
OR 1-0.6034 =0.3966
Which of the following is an example of a type of inventory management activity? a) JIT or just-in-time inventory control system, b) RFI or radio frequency identification systems, c) EOQ or economic order quantity formulas, d) All of the above
Answer: All of the above
Explanation:
Inventory management system simply means managing inventory in a way that its cost will be reduced while output will be maximized. Just in time simply has to do with when sticks are provided by the supplier at the particular time they're needed.
Radio frequency identifications system helps track a product from a location to another. EOQ is used to is calculate order cost so as to choose the lead and affordable one.
Therefore, all the options are right.
Ford Motor Company had realized returns of 5%, 15%, −15%, and −5% over four quarters. What is the quarterly standard deviation of returns for Ford?
a. 32.86%.
b. 24.65%.
c. 30.12%.
d. 27.39%.
Answer: 12.91%
Explanation:
The mean is;
= (5% + 15% - 15% - 5%)/4
= 0
Standard deviation = √((∑(Return-mean)^2)/[time period-1])
= (√((5-0)^2 + (15-0)^2 + (-15-0)^2 + (-5-0)^2)/ (4 -1))
= √((25% + 225% + 225% + 25% ) / 3 )
= √(500/3)
= 12.91%
NB - Options are for a different question.
If Cute Camel ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders. This statement is , because:
Answer: incorrect; This is because the common shareholders are typically treated as being residual investors.
Explanation:
From the question, we are informed that if Cute Camel ever goes bankrupt, its common stockholders will be paid off first, then its debtholders and preferred stockholders.
This above scenario is untrue. It should be noted that common shareholders are typically treated as being residual investors and therefore won't be paid off first.
When St Jude’s advertises "Finding Cures. Saving Children" it is marketing:_________a. a concept. b. a service. c. an idea. d. an action. e. a good.
Answer: c. an idea
Explanation:
St Jude's is a Not-for-profit children's research hospital that aims to help children as much they can. They specialise in trying to treat childhood cancer and other terminal illnesses.
When they advertise their goal which is to find cures and thus save children, they are advertising the idea behind their organization so that people can understand what they are about and reach out to them to either support or receive their services.
Vulture Sporting Goods reported the following data at March 31, 2010, with amounts adapted in thousands:
Vulture Sporting Goods Company
Income Statement
For the Year Ended March 31, 2010
(Amounts in thousands)
Net revenues........................ $174,000
Cost of goods sold................ 136,800
All other expenses................ 26,000
Net income........................... $ 11,200
Vulture Sporting Goods Company
Statement of Retained Earnings
For the Year Ended March 31, 2010
(Amounts in thousands)
Retained earnings, March 31, 2009............... $ 2,000
Add: Net income............................................ 11,200
Retained earnings, March 31, 2010............... $13,200
Vulture Sporting Goods Company
Balance sheet
For the Year Ended March 31, 2010
Assets
Current
Cash ............................... 1300
Account recievable ....................28200
Inventories............................... 37000
Other current assets.................5200
Total current assets.................71700
Property and equipment net..............6000
Other assets ..............................28000
Total assets..........................105700
Liabilities
Current liabilities.........................53000
Long term liabilities.....................12500
Total liabilities.............................65500
Stockholder,s equity
Common stock.....................27000
Retained earnings...............13200
Total stockholder's equity........................40200
Total liabilities and stockholder's equity.................105700
1. Compute Vultures current ratio. Round to two decimal places.
2. Compute Vultures debt ratio. Round to two decimal places.
Do these ratio values look strong, weak, ormiddle-of-the-road?
Answer:
1. 1.35
2. 0.62
Explanation:
1. Current ratio is Total current assets / Total current liabilities
= $71,700 / $53,000
= 1.35
2. Debt ratio is Total liabilities / Total assets
= $65,500 / $105,700
= 0.62
The above ratios are neither weak nor strong. They are middle-of-the-road values.
What QuickBooks activity comes next in this series of business activities: Create Invoice > Receive Payments >
Answer:
Deposit
Explanation:
QuickBooks is generally, a computer application which is mainly used for the purpose of carrying out business' accounting operation. It can perform various accounting business functions, amongst which is the deposit of funds.
The activity process described above indicates how to carry out the Deposit of funds in Quickbooks.
Hence, in this case, the QuickBooks activity that comes next in this series of business activities: Create Invoice > Receive Payments > DEPOSIT.
The Discount on Bonds Payable account is: A. A liability. B. A contra liability. C. A contra expense. D. An expense. E. A contra equity.
Answer:
B. A contra liability
Explanation:
A contra liability account is an account that is paired with another liability account and used to reduce the liability in that account. The Discount on Bonds Payable, decreases the Value of Bonds.
1. Stock Values. Integrated Potato Chips paid a $2 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4 percent per year. a. What is the expected dividend in each of the next 3 years? b. If the discount rate for the stock is 12 percent, at what price will the stock sell? c. What is the expected stock price 3 years from now? d. If you buy the stock and plan to hold it for 3 years, what payments will you receive? What is the present value of those payments? Compare your answer to (b).
Answer and Explanation:
The computation of each point is shown below:-
a. Expected dividend in each of the next 3 years is
Dividend in year 1 = Current Dividend × (1 + growth rate)
= 2 × (1 + 0.04)
= 2.08
Dividend in year 2 = Dividend in year 1 × (1 + growth rate)
= 2.08 × (1 + 0.04)
= 2.1632
Dividend in year 3 = Dividend in year 2 × (1 + growth rate)
= 2.1632 × (1 + 0.04)
= 2.249728
b Price the stock will sell
Current Price = Dividend in year 1 ÷ (Discount rate - growth rate)
= 2.08 ÷ (0.12 - 0.04)
= 26
c. Expected Price 3 years from now is
Price in Year 3 = Dividend in year 4 ÷ (Discount rate - growth rate)
= [2 × (1 + 0.04)^4] ÷ (0.12 - 0.04)
= 2.33971712 ÷ 0.08
= 29.246464
d. The present value of payments received is
Year Dividend ÷ Price PVF at 12% Present Value of Dividend ÷ Price
0 2 1
1 Dividend 2.08 0.892857143 1.857142857
2 Dividend 2.1632 0.797193878 1.724489796
3 Dividend 2.249728 0.711780248 1.601311953
3 Price at
year 3 29.246464 0.711780248 20.81705539
Total 26
Note
Here the present value is the same as we have calculated in part b.
Tulip Midwifery's cost formula for its wages and salaries is $3,390 per month plus $480 per birth. For the month of January, the company planned for activity of 156 births, but the actual level of activity was 163 births. The actual wages and salaries for the month was $82,141. The wages and salaries in the flexible budget for January would be closest to:______.a. $82,141.b. $108,711.
c. $109,151.
d. $108,630.
e. $104,202.
Answer:
$81,630
Explanation:
Cost formula for the wages and salaries = $3,390 per Month + $480 per Birth
Where;
Planned number of activity = 156 births
Actual level of activity = 163 births
Therefore, the wages and salaries in the flexible budget for January is calculated below;
= ($3,390 * 1) + ($480 * 163)
= $3,390 + $78,240
= $81,630
Answer:
Total cost= $81,630
Explanation:
Giving the following information:
Tulip Midwifery's cost formula for its wages and salaries is $3,390 per month plus $480 per birth. The actual level of activity was 163 births.
The flexible budget will show the standard costs and actual activity.
Flexible budget:
Total cost= 3,390 + 480*163
Total cost= $81,630
The financial statements for Myers Service Company include the following items
asked Sep 23, 2015 in Business by Katia
2017 2016
Cash $51,500 $49,000
Short-term Investments 27,000 13,500
Net Accounts Receivable 55,000 52,000
Merchandise Inventory 131,000 47,000
Total Assets 528,000 553,000
Accounts Payable 129,500 124,000
Salaries Payable 23,000 19,000
Long-term Note Payable 60,000 60,000
Compute the acid-test ratio for 2016. (Round your answer to two decimal places)
A) 0.88
B) 0.80
C) 0.92
D) 0.71
Strategic Review Process Element
We have to consider how our actions will affect local neighborhoods. Last year there were three "occupy" protests downtown. a. Scenario building
b. Stakeholder mapping
c. New strategic projects
d. Trend Analysis
If banking regulations start to tighten up, we will work on developing our remote deposit and other services that will allow banking customers easier access to us. But if banking regulations get looser, we will branch out into other types of financial services, including insurance, venture capital, and underwriting new bond issues. a. Scenario building
b. Stakeholder mapping
c. Contextual intelligence
d. Contingency planning
We’ve seen a 3% increase in the amount of money held in our bank’s liquid accounts every year since the recession began in 2008.
a. Scenario building
b. Stakeholder mapping
c. Trend analysis
d. Contingency planning
Answer:
b. Stakeholder mappingd. Contingency planningc. Trend analysisExplanation:
1. Stakeholder mapping refers to looking into the the parties that have an interest in a project whether internally or externally. The narrator speaks of how their actions will affect local neighborhoods thereby acknowledging the people in the neighborhood as stakeholders whose interests they need to be mindful of.
2. Contingency planning refers to making alternative plans in case one fails. This is what the narrator alludes to in the text by posing solutions to the tightening or loosening of banking regulations.
3. Trend analysis is used to measure the change in variables overtime. The narrator here speaks on how the amount of money in the bank has increased by 3% every year since 2008 which means they are comparing variables overtime.
a. On January 1, 2018, ARC issued no par common stock for $450,000.
b. Early in January, ARC made the following cash payments:_________.
1. For store fixtures, $53,000
2. For merchandise inventory, $340,000
3. For rent expense on a store building, $20,000
c. Later in the year, ARC purchased merchandise inventory on account for $239,000. Before year-end, ARC paid $139,000 of this accounts payable.
d. During 2018, ARC sold 2,400 units of merchandise inventory for $275 each. Before year-end, the company collected 85% of this amount. Cost of goods sold for the year was $250,000, and ending merchandise inventory totaled $329,000.
e. The store employs three people. The combined annual payroll is $96,000, of which ARC still owes $3,000 at year-end.
f. At the end of the year, ARC paid income tax of $17,000. There are no income taxes payable.
g. Late in 2018, ARC paid cash dividends of $44,000. h. For store fixtures, ARC uses the straight-line depreciation method, over five years, with zero residual value. Print Print Done Done American Rare Coins (ARC) was formed on January 1, 2018. Additional data for the year follow: (Click the icon to view the data.) Read the requirements.
Requirement 1. What is the purpose of the statement of cash flows? The purpose of the statement of cash flows is to show where cash came from and how cash was spent during the period.
Requirement 2. Prepare ARC's income statement for the year ended December 31, 2018. Use the single-step format, with all revenues listed together and all expenses listed together. American Rare Coins Income Statement Year Ended December 31, 2018
Requirements
1. What is the purpose of the statement of cash flows?
2. Prepare ARC's income statement for the year ended December 31, 2018. Use the single-step format, with all revenues listed together and all expenses listed together.
3. Prepare ARC's balance sheet at December 31, 2018.
4. Prepare ARC's statement of cash flows using the indirect method for the year ended December 31, 2018.
American Rare Coins
Income Statement
Year Ended December 31, 2018
Revenue:
Expenses:
Total Expenses
Net Income
Answer:
1.The statement of cash flows purpose is to enable us know how Cash are been spent as well as how cash flows which is why statement of Cash flows is an important part of financial accounting.
2.$266,400
3.Total Assets $775,400
Total Liabilities & Stockholder's Equity $775,400
4.Closing Balance of Cash $305,000
Explanation:
1. The statement of cash flows purpose is to enable us know how Cash are been spent as well as how cash flows which is why statement of Cash flows is an important part of financial accounting.
2. Preparation of the income statement
ARC INCOME STATEMENT
Revenue
Sales Revenue 660,000 (2,400×275)
Less :Expenses
Cost of Goods Sold 250,000
Salaries Expense 96,000
Depreciation 10,600
(53,000/5)
Rent Expense 20,000
Income tax expenses 17,000
Total Expens ( 393,600)
Net Income 266,400
(660,000-393,600)
3.Preparations of ARC balance sheet at December 31, 2018.
ARC BALANCE SHEET
Assets
Current Assets
Cash 305,000
Accounts Receivable 99,000 (660,000×15%)
Merchandise Inventory 329,000
Property, Plant and Equipment
Store Fixtures 53,000
Less : Accumulated Depreciation (10,600)
TOTAL ASSETS 775,400
Liabilities
Current Liabilities
Accounts Payable 100,000
(239,000-139,000)
Salaries Payable 3,000
Stockholder's Equity
Common Stock 450,000
Retained Earnings 222,400
(266,400-44,000)
Total Stockholder's Equity 672,400
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY 775,400
4.Preparation of statement of cash flows
ARC CASH FLOW STATEMENT for the year ended December 31, 2018.
INDIRECT METHOD
CASH FLOW FROM OPERATING ACTIVITIES:
Cash Collected from Customers 561,000
(660,000×85%)
Cash paid for inventory (479,000) -(340,000+139,000)
Cash paid for Salaries (93,000) -(96,000-3000)
Cash paid for Rent (20,000)
Cash paid for Income tax (17,000)
CASH FLOW FROM OPERATING ACTIVITIES (48,000)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of Store Fixtures (53,000)
NET CASH USED IN INVESTING ACTIVITIES (53,000)
CASH FLOW FROM FINANCING ACTIVITIES
Issue of Common Stock 450,000
Dividend Paid (44,000)
NET CASH USED IN FINANCING ACTIVITIES 406,000
Increase in Cash 305,000
(406,000-53,000-48,000)
Opening Balance of Cash 0
CLOSING BALANCE OF CASH 305,000
Current Assets
Cash Calculation 305,000
(450,000-53,000-340,000-20,000+660,000×85%-139,000-44,000-93,000-17,000)=305,000