Congratulations! You were the 10th caller on the KMTH morning show and you just won $4,000.00. After you calm down, you decide to put the money into a bank account so that you will have even more money for a trip to Europe. Snurling Bank tells you that they will pay 7% per year compounded monthly. How much money will you have for your trip in 7 years
Answers
Answer:
$6,519.98
Explanation:
According to the scenario, computation of the given data are as follows:
Present value = $4,000
Rate = 7%
Rate compounded monthly = 7% ÷ 12
Time period = 7 × 12 = 84
So, we can calculate the future value by using financial calculator.
The attachment is attached below:
FV = $6,519.98
Related Questions
"Pawprints Paint recently went public in a best efforts offering. The company offered 160,000 shares of stock for sale at an offer price of $26 per share. The administrative costs associated with the offering were $400,000 and the underwriter's spread was 8 percent. After completing their sales efforts, the underwriters determined that they sold a total of 153,700 shares. What were the net proceeds to the company
Answers
Answer:
Net proceeds $3,356,808
Explanation:
The net proceeds to the company would be the gross proceeds from the issue less the underwriting costs and the administrative cost
$
Gross proceeds (153,700 × $26) 3,996,200
Underwriting spread( 8%× 3,996,200) (319,696)
Administrative cost ( 400,000)
Net proceeds 3,356,808
In its first year of operations, Woodmount Corporation reported pretax accounting income of $640 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $480 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be reduced under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be:
Answers
Answer:
At the end of the current year, the deferred tax liability related to the excess depreciation will be 144 million
Explanation:
In order to calculate At the end of the current year, the deferred tax liability related to the excess depreciation we would have to use the following formula:
Deferred tax liability = ($160 million * 25%) + ($160 million * 30%) + ($160 million * 35%)
Deferred tax liability =$40 million + $48 million + $56 million
Deferred tax liability = $144 million
At the end of the current year, the deferred tax liability related to the excess depreciation will be 144 million
To find the deferred tax liability due to excess depreciation, calculate the temporary difference and apply future tax rates, resulting in a liability of $312 million.
Deferred tax liability:
1. Calculate the temporary difference due to excess depreciation: $480 million - $0 million = $480 million.
2. Calculate the tax effect at the different tax rates for the next three years: $480 million x 30% = $144 million, $480 million x 35% = $168 million.
3. The deferred tax liability related to the excess depreciation at the end of the current year will be $144 million + $168 million = $312 million.
Our Lady of Sorrows Church, a not-for-profit entity, operates a school in connection with the Church. This year members of the Church decided to construct a new wing on the school with six classrooms. The Church hired an architect and a construction supervisor. The bulk of the labor for construction was donated by Church members who were willing workers but not necessarily skilled carpenters. Materials for the construction cost $600,000 and the paid labor was $200,000. The fair value of the completed building is $2 million. When the building is completed what should be the balance in the asset account "Building" and the account "Contribution Revenue"? A. Building $800,000; Contribution Revenue $0. B. Building $800,000; Contribution Revenue $1,200,000. C. Building $2 million; Contribution Revenue $1,200,000. D. Building $2 million; Contribution Revenue $0.
Answers
Answer:
C) Building $2 million; Contribution Revenue $1,200,000.
Explanation:
Volunteer work must be recorded in the In-Kind Contributions account, which is used to record contributions received as volunteer work:
E.g.
Dr Wages and salaries - masonry 1,200,000
Cr In-kind contributions 1,200,000 (or contribution revenue)
Volunteer work does not accumulate revenue, since it must be expensed immediately against the appropriate account. The finished building must be recorded at fair value.
Rugged Sports Enterprises LP is organized as a limited partnership consisting of two individual partners: Hockey LP and Football LP. Hockey LP Football LP Total Beginning-year balance $ 345,000 $ 1,414,500 $ 1,759,500 Annual net income 36,664 751,612 788,276 Cash distribution — (120,000 ) (120,000 ) Ending-year balance $ 381,664 $ 2,046,112 $ 2,427,776 Compute partner return on equity for each limited partnership (and the total) for the year using the above data from Rugged Sports Enterprises LP.
Answers
Answer:
Find the answers in the explanation section below
Explanation:
The return on equity for each of the partners and the firm in total is the net income for the year divided by average capital invested in the business in the year.
Average capital or equity is the beginning balance plus ending balance divided by 2:
Hockey LP:
Annual net income is $36,664
average equity=($345,000+$381,664)/2=$363,332
return on equity= $36,664/$363,332 =10.09%
Football LP:
Annual net income is $751,612
average equity=($1,414,500+ $2,046,112)/2=$1,730,306
return on equity=$751,612/$1,730,306 =43.44%
Rugged sports:
Annual net income is $788,276
average equity=($1,759,500+ $2,427,776)/2=$2093638
return on equity=$788276/$2093638 =37.65%
Final answer:
Explanation of calculating partner return on equity for Rugged Sports Enterprises LP.
Explanation:
Partner return on equity (ROE) is a financial metric used to evaluate the profitability of a partner's investment in a partnership.
To calculate ROE for each partner in Rugged Sports Enterprises LP, divide the annual net income by the beginning-year balance and then multiply by 100 to get a percentage:
Hockey LP ROE: (36664 / 345000) * 100Football LP ROE: (751612 / 1414500) * 100Adding the individual ROEs will give you the total partnership ROE for Rugged Sports Enterprises LP for the year.
Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $400,000 of net income, declared no dividends, and the following selected transactions occurred in the order given:
1) Issued 100,000 shares of the common stock at $55 cash per share.
2) Reacquired 25,000 shares at $50 cash per share.
3) Reissued 10,000 shares from the treasury for $51 per share.
4) Reissued 10,000 shares from the treasury for $49 per share.
Required:
Prepare the stockholders' equity section of the balance sheet at December 31, 2013. (Amounts to be deducted should be indicated by a minus sign.)
Answers
Answer:
Total equity of stock holder = $5,650,000
Explanation:
As per the data given in the question,
Balance sheet Equity of Stock holder
Capital Contribution Amount
Common stock = $500,000 ((100,000 × $55) - ( 1,000,000 × $5))
Additional paid in capital = $5,000,000 ($5,000,000 + 10,000 - 10,000)
Retained earnings = $400,000
Total = $5,900,000 ($500,000 + $5,000,000 + $400,000)
Treasury stock at cost = $250,000 ($1,250,000 - $500,000 - $500,000)
Total equity of stock holder = $5,650,000 ($5,900,000 - $250,000)
Final answer:
To prepare the stockholders' equity section, account for the common stock issued, treasury stock transactions, and retained earnings of Global Marine. The balance sheet will include common stock, additional paid-in capital, treasury stock, and retained earnings.
Explanation:
Stockholders' Equity Section
To prepare the stockholders' equity section of Global Marine's balance sheet, we need to account for the common stock issued, treasury stock transactions, and retained earnings for the year. Here's a breakdown:
Common Stock: 100,000 shares were issued at $55 per share, but the par value of the stock is $5. The excess over par ($50 per share) is recorded in the additional paid-in capital account.
Treasury Stock: 25,000 shares were reacquired at $50 cash per share and later, 10,000 shares were reissued at $51 per share and another 10,000 at $49 per share.
Retained Earnings: The company earned $400,000 net income and declared no dividends.
Based on these transactions, the stockholders' equity section would appear as follows:
Common Stock (100,000 shares issued and outstanding at $5 par value): $500,000
Additional Paid-In Capital (100,000 shares × $50 excess over par): $5,000,000
Treasury Stock (25,000 shares reacquired at $50 per share): -$1,250,000 (Net of 20,000 shares reissued at $51 and $49 per share)
Retained Earnings from Net Income: $400,000
The treasury stock reissued at a different price affects the balance of treasury stock and additional paid-in capital. The total treasury stock is computed by subtracting the cost of reissued shares from the cost of acquired treasury stock.
Kim placed an order with her broker for 700 shares of each of three IPOs being offered this week. Each of the IPOs has an offer price of $23. The number of shares allocated to Kim along with the closing prices on the first trading day are: Stock Shares Allocated Price A 700 $ 22.15 B 360 26.43 C 240 28.87 What is Kim's total profit on these three stocks at the end of the first day of trading?
Answers
Answer:
$2,049
Explanation:
The profit or loss on a stock portfolio can be determined by by comparing the stock closing value at a specific date and the purchase price.
As per given data
Stock Shares Allocated Price
A 700 $22.15
B 360 $26.43
C 240 $28.87
Purchase price = (700 + 360 + 240 ) shares x $23 = $29,900
First day Closing Value of Portfolio
Stock Shares Allocated Price Value
A 700 $22.15 $15,505
B 360 $26.43 $9,514.8
C 240 $28.87 $6,928.8
Total $31,948.6
Profit on the first day closing = Closing price of Portfolio - Purchase price
Profit on the first day closing = $31,948.6 - $29,900 = $2,048.6
Linwood is making an equipment change at his company. An old piece of equipment, with a salvage value of $60,000, is being replaced by new equipment. The new equipment costs $980,000 and would have a 10 year useful life and no salvage value. By replacing the equipment, Linwood will save $164,000 per year in cash operating costs. The simple rate of return on this investment is
Answers
Answer:
The simple rate of return is 0.178 or 17.8%
Explanation:
From the given question, we solve for the simple rate return on this investment
Solution
Recall that, the simple rate of return is defined as:
The simple rate of return = The operating net cash savings / Cash net investment
Thus,
The operating net cash savings = $164000 and
The cash net investment = $980000- $60000 = $920000
Then,
The Simple rate of return = $164000 / $920000 = 0.178 i.e. 17.8%
Therefore the simple rate of return on this investment is 0.178 or 17.8%
The simple rate of return for Linwood's new equipment investment is approximately 6.7%. Thus, option (b) is correct.
Let's calculate it step-by-step:
The cost of the new equipment: $980,000Annual savings in cash operating costs: $164,000The useful life of the new equipment: 10 yearsTo calculate the simple rate of return, we use the formula:
Simple Rate of Return = (Annual Incremental Net Operating Income) / Initial InvestmentSince the new equipment has no salvage value, the annual depreciation is:
Annual Depreciation = Initial Investment / Useful Life = $980,000 / 10 = $98,000Next, we calculate the annual incremental net operating income:
Annual Incremental Net Operating Income = Annual Cost Savings - Annual Depreciation = $164,000 - $98,000 = $66,000Finally, the simple rate of return is:
Simple Rate of Return = $66,000 / $980,000 ≈ 6.7%Complete Question:
Linwood is making an equipment change at his company. An old piece of equipment, with a salvage value of $60,000, is being replaced by new equipment. The new equipment costs $980,000 and would have a 10-year useful life and no salvage value. By replacing the equipment, Linwood will save $164,000 per year in cash operating costs. The simple rate of return on this investment is:
a. 7.2%
b. 6.7%
c. 16.7%
d. 17.8%
Which one of the following statements is correct? Question 19 options: A longer payback period is preferred over a shorter payback period. The payback rule states that you should accept a project if the payback period is less than one year. The payback period ignores the time value of money. The payback rule is biased in favor of long-term projects. The payback period considers the timing and amount of all of a project's cash flows.
Answers
Answer:
The payback period ignores the time value of money.
Explanation:
This could primarily be classified to be amongst the major disadvantages of the payback period that it ignores the time value of money which is a very important business concept. In the other hand, the payback period disregards the time value of money. It is determined by counting the number of years it takes to recover the funds invested. Some analysts favor the payback method for its simplicity. Others like to use it as an additional point of reference in a capital budgeting decision framework.
The payback period does not account for what happens after payback, ignoring the overall profitability of an investment.
The correct statement here is that the payback period ignores the time value of money.
Contrary to what is obtainable in other ways of capital budgeting, the payback period is known to not have the need for the time value of money.
The time value of money can be described as the idea that the money that is at hand today has more value than the same amount of money in the future.
This is due to the potential that the money has today in terms of earnings.
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You are the treasurer of Arizona Corp. and must decide how to hedge (if at all) future receivables of 350,000 Australian dollars (A$) 180 days from now. Put options are available for a premium of $.02 per unit and an exercise price of $.50 per Australian dollar. The forecasted spot rate of the Australian dollar in 180 days is:
Answers
Answer:
50%
Explanation:
The computation of the probability for put option will be exercised is shown below:
She will exercise at the time when the exercise price i.e $.50 is bigger than the future spot price i.e (20% + 30% = 50%)
So in this case the probability should be 50%
Hence, the correct answer is option c.
All other information which is given is not relevant. Hence, ignored it
Moe ’s Electric sales vacuum cleaners with a one-year warranty to fix any defects. For the current year, 200 vacuums have been sold. By the end of the year 12 ovens have been repaired for an average cost of $45 dollars. Management estimates that 8 more vacuums of the 200 sold will need to be repaired next year at the same amount. How much should Paul’s Electric report warranty expense for the current year?
Answers
Answer:
$900
Explanation:
Given that
Total repair up to end of year = 12
Estimated need to be repaid = 8
Average cost = $45
The computation of warranty expense for the current year is shown below:-
For computing the warranty expense for the current year first we need to find out the total repaired cost which is here below
Total repaired cost = Total repair up to end of year + Estimated need to be repaid
= 12 + 8
= 20
Warranty expense for the current year = Average cost × Total
= $45 × 20
= $900
Therefore for computing the warranty expense for the current year we simply applied the above formula.
Refer to the payoff matrix at right for the profits (in $ millions) of two firms (A and B) and two pricing strategies (high and low). Which of the following is the outcome of the dominant strategy without cooperation? A. Both firm A and firm B choose the low price. B. Firm A chooses the high price while firm B chooses the low price. C. Firm A chooses the low price while firm B chooses the high price. D. Both firm A and firm B choose the high price.
Answers
Answer:
A. Both firm A and firm B choose the low price.
Explanation:
In a strategy of this form, it is said that both firm A and B chose the same pricing strategies which is of high and low.
In other words , a payoff matrix is defined as a visual representation of all the possible outcomes that can occur when two people or groups have to make a strategic decision. The decision is referred to as a strategic decision because each decision maker has to take into consideration how their choice will affect their opponent's choice and how their opponent's choice will affect their own choice. The payoff matrix illustrates each possible strategy that one side can choose, as well as every combination of outcomes that are possible based on each opponent's choice.
A plant asset acquired on October 1, 2018, at a cost of $400,000 has an estimated useful life of 10 years. The salvage value is estimated to be $40,000 at the end of the asset's useful life. Collapse question part (a) Determine the depreciation expense for the first two years using the Straight-line method. Year 1Year 2 Straight-line method
Answers
Final answer:
To calculate depreciation using the straight-line method for a plant asset with a cost of $400,000, a salvage value of $40,000, and a useful life of 10 years, we find that the annual depreciation expense is $36,000. This amount is the same for the first two years of the asset's use.
Explanation:
The question involves calculating the depreciation expense of a plant asset using the straight-line method. The formula to calculate straight-line depreciation is: (Cost of the asset - Salvage value) / Useful life. The cost of the asset is $400,000, the salvage value is $40,000, and the useful life is 10 years.
First, calculate the total depreciation over the asset's life: $400,000 - $40,000 = $360,000. Then, divide this by the useful life: $360,000 / 10 years = $36,000 per year.
For year 1 (October 1, 2018, to September 30, 2019), the depreciation expense is $36,000. As the asset was acquired at the beginning of October, you would depreciate it for the full year.
For year 2 (October 1, 2019, to September 30, 2020), the depreciation expense is also $36,000.
Under its executive stock option plan, National Corporation granted 15 million options on January 1, 2021, that permit executives to purchase 15 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $32 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose that the options are exercised on April 3, 2024, when the market price is $36 per share. Ignoring taxes, what journal entry will National record?
Answers
Answer and Explanation :
As per the data given in the question,
Before passing the journal entries we need to do the following calculations which are shown below
Total compensation expense = Options granted × Fair value per option
= 15 million × $4 per options
= $60 million
Compensation expense to be recognized each year = $60 million ÷ 3 years
= $20 million
Now
Journal Entries are as follows
On Dec-31,2021
Compensation expense A/c Dr. $20 million
To Paid in capital stock options Cr. $20 million
(Being the compensation expense is recorded )
On Dec-31,2022
Compensation expense A/c Dr. $20 million
To Paid in capital stock options Cr. $20 million
(Being the compensation expense is recorded )
On Apr-3,2024
Cash A/c Dr. $480 million (15 million × $32)
Paid in capital stock options A/c Dr. $60 million
To Common stock Cr. $15 million
To Paid in capital in excess of par Cr. $525 million
(Being the exercise of options is recorded)
Individuals derive utility from picnics, p, and kayak trips, k. Assuming that an individual's utility is U(p,k) = k Superscript 0.5k0.5p Superscript 0.5p0.5 and income is $100, what is the marginal rate of substitution (MRS) between picnics and kayak trips? A. MRS = minus−1. B. MRS = 1. C. MRS = minus−one half 1 2 D. There is no substitution because picnics and kayak trips are perfect complements.
Answers
Answer:
B) MRS = 1
Explanation:
In this question, we have been given the options as follows:
A) MRS = -1
B) MRS = 1
C) MRS = -1/2
D) There is no substitution because picnics and Kayak trips are perfect complements.
Where, MRS stands for = Marginal Rate of Substitution
First of all, we have to calculate the marginal utility with respect to kayak trips (k) and with respect to picnics (p).
Marginal Utility with respect to P = [tex]\frac{0.5k^{0.5} }{p^{0.5} }[/tex]
Now, calculate with respect to K
Marginal Utility with respect to K = [tex]\frac{0.5p^{0.5} }{k^{0.5} }[/tex]
Now, the formula for MRS is as follows:
Marginal Rate of Substitution = (Marginal Utility with respect to P ÷ Marginal Utility with respect to K)
MRS = [tex]\frac{0.5k^{0.5} }{p^{0.5} }[/tex] ÷ [tex]\frac{0.5p^{0.5} }{k^{0.5} }[/tex] = 1
Hence, the right answer is B) MRS = 1
Final answer:
The marginal rate of substitution (MRS) between picnics and kayak trips, given the utility function U(p,k) = k^0.5p^0.5, is -1, which means the consumer is willing to give up one picnic for one additional kayak trip without changing the level of utility.
Explanation:
The student's question revolves around the concept of the marginal rate of substitution (MRS), which is a pivotal idea in microeconomics and consumer behavior. The given utility function is U(p,k) = k0.5p0.5, and we want to find the MRS between picnics (p) and kayak trips (k). To compute the MRS, we need to find the negative of the slope of the indifference curve at a given point, which is derived by finding the ratio of the marginal utilities of both goods.
The marginal utility with respect to picnics is 0.5k0.5p-0.5 and with respect to kayak trips is 0.5k-0.5p0.5. Thus, the MRS, which is the absolute value of the ratio of marginal utilities, will be:
MRS = -(0.5k0.5p-0.5) / (0.5k-0.5p0.5)
This simplifies to MRS = -1, which is option A. Therefore, the marginal rate of substitution between picnics and kayak trips is -1.
Rick Co. had 30 million shares of $1 par common stock outstanding at January 1, 2018. In October 2018, Rick Co.'s Board of Directors declared and distributed a 1% common stock dividend when the market value of its common stock was $54 per share. In recording this transaction, Rick would:
Answers
Answer and Explanation:
The journal entry to record the given transaction is as follows
Retained earning Dr (0.30 million × $54) $16.2 million
To Common stock (0.30 million × $1) $0.3 million
To Additional paid in capital in excess of par (0.30 million × $53) $15.9 million
(Being the stock dividend is declared)
The computation of the shares after declaring the dividend is
= 30 million × 1%
= 0.30 million
Peter's Plants, Inc., specializes in growing Pink Tuberous Begonia flowers. Peter's enters into a contract to deliver 1,000 of its genetically modified pink begonias to Lester's Flowers for $5 a plant. Relying on the contract, Lester's enters into a second contract with a large apartment complex to plant 1,000 pink begonias around its property. A large ice storm demolishes all of Peter's begonia flowers. In turn, Peter's didn't meet its supply to Lester's, and Lester's didn't plant the flowers at the apartment complex. The apartment complex sues Lester's for breach of contract, and Peter's is brought as a cross-claim defendant. What are the arguments Lester's and Peter's should make in defense of not performing under their respective contracts
Answers
Answer:
Explanation:
This incident occurred as a result of natural disaster which was beyond the control of the parties involved. Moreover , this incident would have been covered by so many news media and channels which would serve as evidences to buttress their claim.
Therefore , it is easier to make a defense in the fact that the breach occurred due to the natural disaster that was neither forseen nor could be prevented by their effort.
Lester's Flowers and Peter's Plants, Inc. can argue that they were unable to perform their contracts due to the ice storm.
Explanation:In this scenario, both Lester's Flowers and Peter's Plants, Inc. can make arguments in defense of not performing under their respective contracts due to the unforeseeable event of an ice storm. Lester's Flowers can argue that the ice storm prevented them from receiving the pink begonias from Peter's Plants, Inc. and therefore they could not fulfill their contract with the apartment complex. Peter's Plants, Inc. can argue that the ice storm destroyed their flowers and prevented them from meeting their supply obligations to Lester's Flowers.
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For which capital component must you make a tax adjustment when calculating a firm’s weighted average cost of capital (WACC)? Equity Preferred stock Debt Water and Power Company (WPC) can borrow funds at an interest rate of 10.20% for a period of seven years. Its marginal federal-plus-state tax rate is 25%. WPC’s after-tax cost of debt is (rounded to two decimal places). At the present time, Water and Power Company (WPC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,050.76 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 6.53% 7.51% 5.22% 7.84%
Answers
Answer:
Debt
7.65%
6.53%
Explanation:
The debt finance has its capital component adjusted for tax when computing weighted average cost of capital.
The after tax cost of borrowing =pretax cost of debt*(1-t)
t is the tax rate of 25% or 0.25
The after tax cost of borrowing =10.20%*(1-0.25)=7.65%
The pretax cost of bond=rate(nper,pmt,-pv,fv)
nper is the duration of bond which is 5 years
pmt is the annual interest=$1000*10%=$100
pv is the current price of $1,050.76
fv is the face value of $1000
=rate(5,100,-1050.76,1000)=8.70%
After tax cost of bond=8.70% *(1-0.25)=6.53%
ou have an outstanding student loan with required payments of $ 550 per month for the next four years. The interest rate on the loan is 9 % APR (compounded monthly). Now that you realize your best investment is to prepay your student loan, you decide to prepay as much as you can each month. Looking at your budget, you can afford to pay an extra $ 250 a month in addition to your required monthly payments of $ 550, or $ 800 in total each month. How long will it take you to pay off the loan? (Note: Be careful not to round any intermediate steps less than six decimal places.)
Answers
Answer:
Approx 34 months are required to payoff the loan
Explanation:
In order to calculate How long will it take you to pay off the loan we would have to calculate first the Loan amount outstanding as follows:
Loan amount outstanding = 600 *4 *12 = $ 28,800
Therefore, to calculate How long will it take you to pay off the loan we use the following formula:
Amount =Payment (1+ r/n)^t
28,800 = 775 (1+ .09/12)^t
28,800 /775 = (1 +.0075 ) ^t
37.16 = (1.0075)^ t
when we used it and trial method the compounded value comes to be 37.85 when t= 34 months
Hence, approx 34 months are required to payoff the loan
Mr. Bass transferred a building that had an adjusted basis to him of $300,000 and a fair market value of $500,000, to Corporation C solely in exchange for 100% of C’s only class of stock. The building was subject to a mortgage of $100,000, which C assumed for bona fide business purposes. The fair market value of the stock on the date of transfer was $550,000. What is the amount of gain to be recognized by Mr. Bass?
Answers
Answer:
$0
Explanation:
This transaction classifies as a § 351 exchange since Mr. Bass is exchanging his asset for 100% of Corporation C's stock.
§ 351 establishes that no gain or loss must be recognized when property is transferred in exchange for stock in a corporation. In order for this exchange to classify as § 351, the new stockholder must assume immediate control of the corporation as established by § 368 (c). This means that at least 80% of the stocks must be exchanged.
12/31/15 12/31/14 Prepaid Insurance 1,700 1200 Prepaid Rent 3500 4200 Interest Receivable 4200 6,320 Unearned Revenue 6700 8200 Interest Payable 3800 2200 Salaries Payable 11500 15600 Insurance Expense 4800 Rent Expense 9,400 Interest Revenue 22680 Sales revenue earned current period paid in prior periods 15900 Interest Expense ? Salary expense 22290 Insurance Payments 5300 Rent payments 8700 Interest Received 24800 Revenue payments received in advance ? Interest Paid 6530 Salaries Paid ?
Answers
Answer:
Revenue payments received in advance $ 14,400
Interest expense for the year $ 8,130
Salaries Paid for the year $ 26,390
Explanation:
Revenue payments received in advance
beginning 8,200
+ received during the period XXX
- earned during the period -15,900
ending unearned revenue 6,700
received: 6,700 + 15,900 - 8,200 = 14,400
Interest expense
Interest Payable beginning 2,200
+ interest expense XXX
- interest paid for the year - 6,530
Interest Payable ending 3,800
expense: 3,800 + 6,530 - 2,200 = 8,130
Beg Salaries Payable 15,600
+Salary expense 22,290
-salaries paid XXX
End Salaries Payable 11,500
paid salaries:
15,600 + 22,290 - 11,500 = 26,390
Gitano Products operates a job-order costing system and applies overhead cost to jobs on production (not on the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated $124,600 of manufacturing overhead for an estimated allocation base of $89,000 direct material dollars to be used in production. The basis of direct materials used in the company has provided the following data for the just completed year
Purchase of raw materials 139,000
Direct labor cost $85,000
Manufacturing overhead costs:
Indirect labor $ 127,800
Property taxes $8,880
Depreciation of equipment $18,000
Maintenance $ 12,000
Insurance $ 11,300
Rent, building $ 40,000
Beginning Ending
Raw Materials $ 27,000 $ 13,000
Work in Process $ 46,000 $36,000
Finished Goods $71,000 $56,000
Required:
1. Compute the predetermined overhead rate for the year
2. Compute the amount of underapplied or overapplied overhead for the year
3. Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials
4. Compute the unadjusted cost of goods sold for the year. Do not include any underapplied or overapplied overhead in your answer
Answers
Answer:
1.predetermined overhead rate for the year = $1.40
2.the amount of underapplied or overapplied overhead for the year = $3,780
3.schedule of cost of goods manufactured for the year
Raw Materials ($ 27,000+$139,000 -$ 13,000) 153,000
Direct labor cost 85,000
Applied Overheads 214,200
Add Opening Inventory - Work in Process 46,000
Less Closing Inventory - Work in Process (36,000)
cost of goods manufactured for the year 462,200
4.the unadjusted cost of goods sold for the year = $477,200
Explanation:
1.predetermined overhead rate for the year
predetermined overhead rate = Budgeted Fixed Overheads / Budgeted Activity
= $124,600/$89,000
= $1.40
2.the amount of underapplied or overapplied overhead for the year
Actual Fixed Overheads > Applied Fixed Overheads = Underapplied
Actual Fixed Overheads < Applied Fixed Overheads = Overapplied
Applied Fixed Overheads = $1.40×($ 27,000+$139,000 -$ 13,000)
= $214,200
Actual Fixed Overheads Calculation :
Indirect labor $ 127,800
Property taxes $8,880
Depreciation of equipment $18,000
Maintenance $12,000
Insurance $11,300
Rent, building $40,000
Total $217,980
Note that : Actual Fixed Overheads > Applied Fixed Overheads
Therefore we have an Underapplied
Underapplied = $217,980 - $214,200 = $3,780
3.schedule of cost of goods manufactured for the year
Raw Materials ($ 27,000+$139,000 -$ 13,000) 153,000
Direct labor cost 85,000
Applied Overheads 214,200
Add Opening Inventory - Work in Process 46,000
Less Closing Inventory - Work in Process (36,000)
cost of goods manufactured for the year 462,200
4.the unadjusted cost of goods sold for the year
Opening Inventory - Finished Goods $71,000
Add Cost of Goods Manufactured $462,200
Less Closing Inventory - Finished Goods ($56,000)
Cost of Goods Sold $477,200
On December 31, Year 1, Mr. and Mrs. Wise purchased 50% of Cobra’s only class of stock outstanding for $300,000. Cobra is an electing S corporation. On November 30, Year 2, they purchased the other 50% of Cobra’s stock for $300,000. For the year, Cobra incurred an ordinary loss of $474,500. How much of the loss can Mr. and Mrs. Wise deduct on their individual income tax return for the year
Answers
Answer:
$257400
Explanation:
Under Sec. 1366(a) and Sec. 1377(a), a pro rata share is the tax payers hare of loss determined on a per-day and then a per-share basis. Cobra shareholder includes his or her pro rata share of loss from the cobra.
The ordinary loss for the whole year was $474,500, Therefore the loss per day was $1300 per day ( $474,500 ÷ 365 days).
Since Mr. and Mrs. Wise owned 50% of the stock for the full year and the other 50% for 31 days, their share of loss = [ $474,500/2 + (31 days × $1300 × 50%)] = $237250 + $20150 = $257400
What is ecotourism? Write a short essay that includes the following information:
1. your own definition
2. definitions provided by other people and/or organizations; select the one you consider most accurate and complete
3. the main guidelines or requirements for ecotravelers
4. a statement indicating whether you think ecotourism is a good way to protect the environment; why or why not?
Answers
Explanation:
1. For me, ecotourism seeks to protect the natural resources that we have in the present so that future generations have the opportunity to take advantage of them, while promoting social, cultural and economic growth of the local population. According to other definitions, ecotourism is an environmentally responsible tourist modality. Its purpose is to visit and enjoy relatively unalterable natural areas as well as any cultural manifestation of the present or past, with the active participation of local populations. Ecotourism includes educational and interpretive content and tries to reduce negative impacts on the natural and socio-cultural environment as much as possible.
-The Ministry of Tourism in Mexico defines Ecotourism in the following way: "they are the trips that have the purpose of carrying out recreational activities of appreciation and knowledge of nature through contact with it." From another perspective, it is a tourist product aimed at those tourists who enjoy natural history, and who want to actively support and participate in the conservation of the environment.
-The environmentalist architect and international consultant of Mexican origin, Héctor Ceballos Lascuráin, popularized in 1993 when he was included in the book “Ecotourism. The Potential and the Pitfalls ”:
"Ecotourism is an environmentally responsible tourist modality, consisting of traveling to or visiting natural areas relatively undisturbed in order to enjoy, appreciate and study the natural attractions (landscape, wild flora and fauna) of said areas, as well as any cultural manifestation ( of the present and the past) that can be found there, through a process that promotes conservation, has a low negative environmental and cultural impact and fosters an active and socioeconomically beneficial involvement of local populations. ”
Ecotourism aims to achieve the preservation and maintenance of natural ecosystems; tourism plays its role as a supplier of oil economic that directly benefits local residents. Community will provide their knowledge and services to tourists and they will benefit economically.
- Ecotourism provides jobs and income to the local population.
-Provide environmental education to tourists.
-Create funds for purchase and supplies for improvement and protection of natural areas. This is beneficial to attract future tourism.
- Motivates the preservation of the environment and the creation of new or larger national parks, biosphere reserve, preservation of forests, recreation areas, beaches and natural attractions.
Third world countries are important recipients of ecotourism. In Brazil nature trips have become one of the new and more great markets of economic income of the country. In south-central Africa, the Rwanda's ecotourism is the third largest source of resources economic.
Final answer:
Ecotourism is conscious travel that conserves environments and benefits locals. It's important for economic development and environmental protection, but it requires strict adherence to sustainability to avoid greenwashing. Ecotourism can be a powerful conservation tool if managed responsibly.
Explanation:
Ecotourism refers to a form of tourism that is directed towards exotic natural environments, intended to support conservation efforts and observe wildlife. My own definition of ecotourism is the practice of visiting natural areas with the intention to learn, appreciate, and participate in conservation while striving to have minimal impact on the ecosystem. This form of tourism generates revenue for conservation, educates the traveler, and directly benefits the economic development of local communities. The International Ecotourism Society provides a more formal definition, describing ecotourism as 'responsible travel to natural areas that conserves the environment, sustains the well-being of the local people, and involves interpretation and education'. Jonathan Tourtellot's concept of geotourism complements this by emphasizing the 'stewardship of place'.
The main guidelines for ecotravelers include respecting local cultures and natural habitats, participating in conservation efforts, minimizing environmental impact, and supporting local economies. It is crucial that ecotourism maintains ethical standards and is accessible, not just to wealthy tourists but also to local residents.
In my opinion, ecotourism is an effective tool for environmental protection as it provides economic incentives to preserve natural areas, engages local communities and travelers in conservation, and fosters greater environmental awareness. However, without rigorous standards, there is a risk of greenwashing, where claims of sustainability are made without substantive actions to back them up. Therefore, the success of ecotourism as a conservation strategy depends on robust management and genuine commitment to sustainability principles.
How does a payroll accountant use the information in the General Ledger? (You may select more than one answer. The account balances form the basis for accounting reports. Payroll expenses contained in the General Ledger are not used to make personnel decisions. General Ledger account balances aggregate data to determine payroll costs. The payroll accountant uses General Ledger balances to determine the effectiveness of individual employees.
Answers
A payroll accountant uses the General Ledger to manage payroll expenses, prepare accounting reports, and ensure accurate financial statements. They do not assess individual employee effectiveness but focus on overall payroll cost aggregation and reconciliation.
A payroll accountant primarily utilizes information within the General Ledger to manage and analyze the company's payroll expenses. The account balances found in the General Ledger serve as the foundation for various accounting reports and are crucial for accurate financial statement preparation.
Contrary to assessing individual employee effectiveness, which is not the role of a payroll accountant, the General Ledger helps in aggregating data to determine overall payroll costs, ensuring that payroll is correctly accounted for as an expense of the organization in line with the accounting recognition principles.
In practice, the payroll accountant might also use the General Ledger to reconcile payroll expenses and ensure that they are accurately reported in those financial statements, which include the income statement and balance sheet.
They aim to verify that expenses align with budgeted amounts and to check for accuracy in employee compensation, taxes, benefits, and other associated costs. It's important to understand that the personnel decisions or assessing individual employee performance are generally not derived from payroll accounting but rather from human resources management metrics and performance evaluations.
Prahm Corp. wants to raise $4.7 million via a rights offering. The company currently has 530,000 shares of common stock outstanding that sell for $48 per share. Its underwriter has set a subscription price of $23 per share and will charge the company a spread of 5 percent. If you currently own 6,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answers
If you choose not to participate in Prahm Corp.'s rights offering and sell your 6,000 rights, you can receive approximately $37,500 based on a subscription price of $23 per share and an ex-rights price of $12.50.
To calculate the value of the rights, you can follow these steps:
1. Determine the Subscription Ratio:
[tex]\[ \text{Subscription Ratio} = \frac{\text{Number of New Shares Issued}}{\text{Number of Existing Shares}} \][/tex]
In a rights offering, the subscription ratio is usually 1:1, meaning for every existing share, shareholders can buy one new share.
2. Calculate the Number of Rights You Hold:
[tex]\[ \text{Number of Rights} = \text{Number of Existing Shares You Own} \times \text{Subscription Ratio} \] \[ \text{Number of Rights} = 6,000 \times 1 \][/tex]
3. Determine the Ex-Rights Price:
[tex]\[ \text{Ex-Rights Price} = \frac{\text{Market Price - Subscription Price}}{1 + \text{Subscription Ratio}} \] \[ \text{Ex-Rights Price} = \frac{\$48 - \$23}{1 + 1} \][/tex]
4. Calculate the Value of One Right:
[tex]\[ \text{Value of One Right} = \text{Ex-Rights Price} - \text{Subscription Price} \] \[ \text{Value of One Right} = \frac{\$48 - \$23}{1 + 1} - \$23 \][/tex]
5. Calculate the Total Value of Your Rights:
[tex]\[ \text{Total Value of Rights} = \text{Number of Rights} \times \text{Value of One Right} \][/tex]
Now, you can substitute the values and calculate:
[tex]\[ \text{Ex-Rights Price} = \frac{\$48 - \$23}{1 + 1} = \frac{\$25}{2} = \$12.50 \]\[ \text{Value of One Right} = \frac{\$25}{2} - \$23 = \$6.25 \]\[ \text{Total Value of Rights} = 6,000 \times \$6.25 \]\[ \text{Total Value of Rights} = \$37,500 \][/tex]
Therefore, if you decide not to participate in the rights offering and choose to sell your rights, you can potentially receive $37,500.
Which of the following questions would most likely be important for ABC managers to evaluate as they consider expanding into the Asian market? What U.S. firms have successfully partnered with Asian companies? Where will ABC management locate the staff needed to oversee an Asian plant? What are the pricing strategies followed by competitor firms in Asia? How much control does ABC management want to have over their Asian operations?
Answers
Answer:
What are the pricing strategies followed by competitor firms in Asia?
Explanation:
In simple words, any corporate entity willing to expand its business to a new market should first evaluate the existing business players. By doing so, the subject entity can get a significant level of understanding of the threats and opportunities available in the market.
Thus, ABC managers should first evaluate the strategies used by the existing participants of the market as after that they can make their plan to how attract other's customers towards ABC.
Inflation in the Philippines was 6.7% in September, far above the central bank’s target of 2 – 4%. Suppose the central bank decides to raise interest rates. (a) Using the money market, describe the type of monetary policy (increase or decrease in the money supply) that would achieve higher interest rates. (b) The central bank's goal is to reduce inflation. Using the IS-LM-FE model, explain whether the policy of higher interest rates is appropriate or not. (c) Use the AD-AS model to predict the short-run and long-run effects of the central bank’s policy on Philippine inflation, output, and unemployment. Does it matter whether wages are flexible or not? Explain. (d) Suppose the demographic transition of the Philippines causes labor supply to grow more rapidly than usual. How does this affect your answer about unemployment and wages in (c)? Use the labor market.
Answers
Answer:
plsyes
Explanation:
A division is considering the acquisition of a new asset that will cost $2,520,000 and have a cash flow of $700,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes. Required: a. & b. What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 8 percent? (Enter "ROI" answers as a percentage rounded to 1 decimal place (i.e., 32.1). Negative amounts should be indicated by a minus sign.)
Answers
Answer:
initial investment = $2,520,000
cash flow for years 1 - 4 = $700,000
ROI = (cash flow - depreciation) / investment
depreciation for year 1-4 using straight-line basis = $2,520,000 / 4 = $630,000
ROI year 1 = (700,000 - 630,000) / 2,520,000 = 70,000 / 2,520,000 = 2.8%
ROI year 1 = 70,000 / 1,890,000 = 3.7%
ROI year 1 = 70,000 / 1,260,000 = 5.6%
ROI year 1 = 70,000 / 630,000 = 11.1%
cost of capital year 1 = $2,520,000 x 8% = $201,600
cost of capital year 2 = $1,890,000 x 8% = $151,200
cost of capital year 3 = $1,260,000 x 8% = $100,800
cost of capital year 4 = $630,000 x 8% = $50,400
residual income = excess income - cost of capital
residual income year 1 = $70,000 - $201,600 = -$131,600
residual income year 2 = $70,000 - $151,200 = -$81,200
residual income year 3 = $70,000 - $100,800 = -$30,800
residual income year 4 = $70,000 - $50,400 = $19,600
year net investment cash flow - dep. ROI residual income
1 $2,520,000 $70,000 2.8% ($131,600)
2 $1,890,000 $70,000 3.7% ($81,200)
3 $1,260,000 $70,000 5.6% ($30,800)
4 $630,000 $70,000 11.1% $19,600
Omicron Technologies has $ 40 million in excess cash and no debt. The firm expects to generate additional free cash flows of $ 32 million per year in subsequent years and will pay out these future free cash flows as regular dividends. Omicron's unlevered cost of capital is 11% and there are 8 million shares outstanding. Omicron's board is meeting to decide whether to pay out its $ 40 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock. Assume that Omicron uses the entire $ 40 million to repurchase shares. The number of shares that Omicron will have outstanding following the repurchase is closest to:
Answers
Answer:
$4.55 million
Explanation:
The calculation of number of shares repurchased is shown below:-
Market value = Enterprise value + Cash
= $32 million ÷ 0.11 + $40 million
= $330.909 million
Share price = Market value ÷ Outstanding shares
= $330.909 million ÷ $8 million
= $41.36 million
Number of shares repurchases = $40 million ÷ $41.36 million × 1,000,000
= 967,118 shares
Outstanding shares = 8 million - $967,118 shares
= $7,032,882
Dividend = Enterprise value ÷ Outstanding shares
= $32 million ÷ $7,032,882
= $4.55 million
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $519,000 cost with an expected four-year life and a $23,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Expected annual sales of new product $ 1,870,000 Expected annual costs of new product Direct materials 495,000 Direct labor 678,000 Overhead (excluding straight-line depreciation on new machine) 337,000 Selling and administrative expenses 167,000 Income taxes 38 % Required: 1. Compute straight-line depreciation for each year of this new machine’s life. 2. Determine expected net income and net cash flow for each year of this machine’s life. 3. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year. 4. Compute this machine’s accounting rate of return, assuming that income is earned evenly throughout each year. 5. Compute the net present value for this machine using a discount rate of 6% and assuming that cash flows occur at each year-end. (Hint: Salvage value is a cash inflow at the end of the asset’s life.)
Answers
Answer:
Explanation:
Base on the scenario been describe in the question, we can use the following method to solve the given problem with the image attached below
The question involves several calculations pertaining to a business decision on purchasing a machine including calculating the straight-line depreciation, expected net income and cash flow, payback period, accounting rate of return, and net present value.
Explanation:
1. The straight-line depreciation for each year of the machine’s life is computed by subtracting the salvage value from the total cost and then dividing it by the machine’s expected life. In this case, it would be ($519,000 - $23,000) / 4 = $124,000 per year.
2. To calculate the expected net income, we subtract all costs associated with the product from the expected sales revenue, and then account for the income tax. That is, [(1,870,000 - 495,000 - 678,000 - 337,000 - 167,000 - $124,000)* (1-.38)]. The net cash flow on the other hand, is the net income plus depreciation.
3. The payback period is calculated by dividing the total cost of the machine by the annual net cash flow. With the given information, this cannot be computed.
4. The accounting rate of return is the average annual profit divided by Investment. To calculate this, the annual net income would be divided by the cost of the machine, [(Expected net income / $519,000)* 100]
5. To compute the net present value (NPV), the future net cash flows are discounted at the given rate and summed up. Then the initial cost of the machine is subtracted. The salvage value is also accounted for by discounting it back to the present value. This cannot be computed with the information given.
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