Answer and Explanation:
The computation is shown below:
The amount of consolidated sales balance is
Proform Sales 820,000
Cliprite Sales 640,000
Less: Intra-entity Sales -270,000
Consolidated Sales Balance $1,190,000
The amount of consolidated cost of goods sold balance is
Proform's Cost of Goods Sold Book Value 545,000
Cliprite's Cost of Goods Sold Book Value 410,000
Less: Intra-Entity Transfers -270,000
Adjusted Gross Profit Deferred in 2017 [(110,000 - 71,000) × 30%] -11,700
Deferral of 2018 Intra-Entity Gross Profit [(270,000 - 210,000) × 10%] 6,000
Consolidated Cost of Goods Sold Balance $679,300
The amount of consolidated operating expenses balance is
Proform's Operating Expenses Book Value 120,000
Cliprite's Operating Expenses Book Value 110,000
Amortization of Intangible Assets 12,000
Consolidated Operating Expenses Balance $242,000
The amount of consolidated dividends balance is $0 as there is an elimination in consolidation.
The amount of net income attributed is
Cliprite's Reported Income for 2018 120,000
Less: Amortization of Intangible Assets -12,000
Cliprite's Adjusted Net Income 108,000
Net Income Attributable to Non Controlling Interest (108,000 × 30%) $32,400
The amount of consolidated inventory balance is
Proform's Operating Expenses Book Value 310,000
Cliprite's Operating Expenses Book Value 720,000
Intra-Entity Gross Profit [(270,000 - 210,000) × 10%] -6,000
Consolidated Inventory Balance $1,024,000
The value of noncontrolling interest in subsidiary is
30% of Opening Book Value [(870,000 + 300,000) × 30%) 351,000
Excess January 1 Intangible Allocation [(450,000 - 12,000 ÷ 2) × 30%)] 133,200
Net Income Attributable to Noncontrolling Interest 32,400
Dividends (70,000 × 30%) -21,000
Non Controlling Interest, 12/31/18 $495,600
Saginaw Steel Corporation has a precredit U.S. tax of $105,000 on $500,000 of taxable income in 2018. Saginaw has $200,000 of foreign source taxable income and paid $60,000 of income taxes to the German government on this income. All of the foreign source income is treated as foreign branch income for foreign tax credit purposes. Saginaw's foreign tax credit on its 2018 tax return will be:
Answer: $42000
Explanation:
Saginaw's foreign tax credit on its 2018 tax return will be calculated thus:
= Foreign source taxable income × precredit U.S tax/Taxable income
= 200000 × 105000/500000
= 200000 × 0.21
= 42000
Therefore, the foreign tax credit will be the least between $60,000 paid to the German government or $42000. In this case, the answer is $42000
At 60,000 machine hours, Boris Company static budget for variable overhead costs is $180,000. At 60,000 machine hours, the company's static budget for fixed overhead costs is $300,000. Machine hours are the cost driver of all overhead costs. The static budget is based on 60,000 machine hours. At 60,000 machine hours, the company produces 40,000 units. The following data is available:
Actual units produced and sold 42,000
Actual machine hours 64,000
Actual variable overhead costs $185,600
Actual fixed overhead costs $302,400
What is the fixed overhead spending variance?
A) $2,400 Favorable
B) $2,400 Unfavorable
C) $1,000 Unfavorable
D) $1,000 Favorable
Answer:
$2,400 unfavorable
Explanation:
The computation of the fixed overhead spending variance is shown below;
We know that
fixed overhead spending variance = actual fixed overhead - budgeted fixed overhead
= $302,400 - $300,000
= $2,400 unfavorable
As actual fixed overhead is more than the standard fixed overhead so it should be unfavorable else it is favorable
Holbrook, a calendar year S corporation, distributes $89,500 cash to its only shareholder, Cody, on December 31. Cody's basis in his stock is $107,400, Holbrook's AAA balance is $40,275, and Holbrook has $13,425 AEP before the distribution. According to the distribution ordering rules, complete the chart below to indicate how much of the $89,500 is from AAA and AEP as well as how Cody's stock basis is affected. If an amount is zero, enter "0".
Distribution from Account Affect on Stock Basis Balance after Distribution
From AAA Account $8000 $8000 $0
From AEP Account $2500 $0 $0
From Cody's stock basis $ $ $
Answer:
Explanation:
........................
Joe Sullivan and Mark Holland, members of the top management at EuAir, a European airlines, were preparing for a meeting to discuss strategies to combat the recent rise in fuel prices. Before the meeting began, Joe and Mark were discussing how oil prices significantly impact the health of the world economy. Joe spoke of how higher oil prices since 1999, partly the result of OPEC supply management policies, contributed to the global economic downturn in 2000-2001 and have not been stable since. Mark agreed but added that the right kind of strategy could help them overcome this challenge, and that they could even use the situation to hike fares and generate additional revenues. Which of the following statements, if true, would denote the occurrence of groupshift in Mark's opinions during the meeting?
A) Mark proposed that the prices be hiked and additional customer service measures be included so costumers have the best experience flying with EuAir.
B) Mark encouraged the top-management team to consider laying off surplus employees and rightsizing EuAir to enhance its efficiency and lower costs.
C) Mark agreed with Joe's opinion that providing the best service possible, even if it meant incurring a loss in the short run, would be the best strategy.
D) Mark felt that EuAir should suspend some of its less profitable flights in the short run in favor of the routes that have greater demand among consumers.
E) Mark proposed that this was an opportunity for EuAir to use its brand name effectively and diversify into other products and services.
The statement that would denote the occurrence of group shift in mark's opinions during the meeting is that Mark proposed that the prices be hiked and additional customer service measures be included so customers have the best experience flying with EuAIR
What is customer service?Customer service can be defined as the one-on-one interaction between the person buying the product and the person that is the representative of the seller. Most retailers consider this interaction as the most important and critical one as it ensures the buyer satisfaction and encouraging repeat business. Even today when the customer service option is becoming automated the option to talk to a human representative is still present as business consider it service leadership.
At many companies, the customer service representatives are the ones who meet or greet the people who buy the products from the organization. They are the ones that have the direct contact with the consumers. The buyer's perception of the company and the product are shaped in part by their experience in dealing with that person. For this reason, many companies work hard to increase their customer satisfaction levels.
Customer service should be a single-step process for the consumer. If a customer calls a helpline, the representative should whenever possible follow the problem through to its resolution.
What is price hike?
Price hiking is an normal economic phenomenon that typically happens when there is a dramatic increase in demand and/or a dramatic decrease in supply for a good or service. Usually this is due to a short run situation
The best remedy is to increase the supply. The market will respond to high prices for a good or service by producing more of the product. The price hike will encourage firms to innovate and increase production. Again, this may not be possible or may be difficult in the short run.
The alternative is for government to install rationing and/or price controls. This will inevitably require some sort of legal enforcement; for example fines for “price gouging” and such. It is also a fertile ground for the creation of black markets: where consumers and sellers get together illegally, and negotiate a price that is usually somewhat higher (due to increased risks) than what would be the market price.
Hence, option A is the correct answer
To learn more about customer services here,
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The EPBO for a particular employee on January 1, 2018, was $30,000. The APBO at the beginning of the year was $6,000. The appropriate discount rate for this postretirement plan is 5%. The employee is expected to serve the company for a total of 25 years with 5 of those years already served as of January 1, 2018. What is the APBO at December 31, 2018? Group of answer choices $7,200. $6,300. $7,560. $7,500.
Answer:
$7,560
Explanation:
Calculation to determine APBO at December 31, 2018.
Using this formula
December 31 APBO=(Beginning EPBO*Discount rate)*6/25
Let plug in the formula
December 31 APBO=($30,000 * 1.05) * 6/25
December 31 APBO= $7,560
Therefore APBO at December 31, 2018 is $7,560
Which of the following would be classified as a short-run decision? A restaurant's decision to increase the number of patrons it can accommodate by adding on a new dining room. A firm's decision to decrease the amount of electricity used in day-to-day operations by encouraging employees to adopt conservation strategies, e.g., shut off lights when leaving a room. A university's decision to add a new residence hall. A trucking firm's decision to move to a smaller facility.
Answer:
A university's decision to add a new residence hall. A trucking firm's decision to move to a smaller facility.
Explanation:
Short run decision affects variable factor only. Adding a new facility is a long run decision. Hence a firm's decision to decrease the amount of electricity used in day-to-day operations by encouraging employees to adopt conservation strategies is a short run decision.
Hence, the correct answer would be:
A university's decision to add a new residence hall. A trucking firm's decision to move to a smaller facility.
Why do you think most companies make use of celebrities in their marketing promotional activities?
Answer:
Celeberties get a lot of attension, companies want attension to sell the goods or serveicef they see a celebirty they feel safe in buying their things.
Explanation:
Answer:
Celebrity endorsement builds credibility and can expose a brand to new markets, The celebrity effect is ability of famous people to influence other companies. Companiesn can use that star power and influence to boost their own products and services, celebrities can add credibility and glamour to a brand
Santorino Company produces two models of a component, Model K-3 and Model P-4. The unit contribution margin for Model K-3 is $6; the unit contribution margin for Model P-4 is $14. Each model must spend time on a special machine. The firm owns two machines that together provide 4,000 hours of machine time per year. Model K-3 requires 15 minutes of machine time; Model P-4 requires 30 minutes of machine time. What is the amount of machine time for model P-4 in terms of percent of a machine hour?
a. 50%
b. 25%
c. 30%
d. 20%
e. 10%
Answer:
a. 50%
Explanation:
Model P-4 requires 30 minutes of machine time.
A machine hour consists of 60 minutes
Calculating the machine time of Model P-4 in terms of percent of machine hour:
= (Model P-4 Machine time/Machine Hour)*100
= (30/60)*100
= 0.5 * 100
=50%
So, the percent of Model P-4 machine time in terms of a machine hour is 50%.
If the demand for labor falls from D to D' and wages are sticky on the downward side, there will be unemployment of ________ million. a. 75 b. 100 c. 25 d. None of the above
Answer:
There will be unemployment of 100 million. The correct option is b. 100.
Explanation:
Note: This question is not complete because the graph is not attached. The graph is therefore provided before answering the question. See the attached photo for the graph.
From the attached graph, we have:
Equilibrium units of labor at D = 300 million
Equilibrium units of labor at D’ = 200 million
Employment If the demand for labor falls from D to D' = Equilibrium units of labor at D’ - Equilibrium units of labor at D = 300 million - 200 million = 100 million
Therefore, there will be unemployment of 100 million. The correct option is b. 100.
Distributing Cash Dividends to Preferred and Common Shareholders Dechow Company has outstanding 20,000 shares of $50 par value, 6% cumulative preferred stock, and 80,000 shares of $10 par value common stock. The company declares and pays cash dividends amounting to $160,000. a. If no arrearage on the preferred stock exists, how much in total dividends, and in dividends per share, is paid to each class of stock
Answer:
Preferred Stock = $60,000 and $3.00
Common Stock = $100,000 and $1.25
Explanation:
Dividends
Preferred Stock has preference when it comes to dividends payments. The remaining dividends are then paid to Common Stockholders.
Preferred Stock dividend = 20,000 x $50 x 6% = $60,000
Common Stock dividend = $160,000 - $60,000 = $100,000
Dividends per share
Preferred Stock dividend = $60,000 ÷ 20,000 shares = $3.00
Common Stock dividend = $100,000 ÷ 80,000 shares = $1.25
Your friend Harold is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option but is not sure how to compare the alternatives. Purchasing a new vehicle will cost $28,500, and Harold expects to spend about $700 per year in maintenance costs. He would keep the vehicle for five years and estimates that the salvage value will be $11,300. Alternatively, Harold could lease the same vehicle for five years at a cost of $3,705 per year, including maintenance. Assume a discount rate of 10 percent.
Requirement:
1. Calculate the net present value of Harold’s options. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amounts should be indicated by a minus sign. Round your final answers to 2 decimal places.
2. Advise Harold about which option he should choose.
Lease Option
Purchase Option
Answer:
$-24,137.14
$-14,044.86
He should choose the lease option
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Purchase option
Cash flow in year 0 = $-28,500
Cash flow in year 1 - 4 = -700
Cash flow in year 2 = 11,300 - 700 = 10,600
I = 10%
NPV= -24,137.14
Lease option
Cash flow in year 1 - 5 = 3705
I = 10%
NPV= -14,044.86
the lease option is less expensive and should be chosen
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
At the end of 2020, Pharoah Co. has accounts receivable of $762,200 and an allowance for doubtful accounts of $60,300. On January 24, 2021, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $5,800. On March 4, 2021, Pharoah Co. receives payment of $5,800 in full from Megan Gray. Prepare the journal entries to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
To reverse the transaction, the journal entry is:
Date Account title Debit Credit
March 4, 2021 Accounts receivable - Megan Gray $5,800
Allowance for doubtful accounts $5,800
To record the receipt of cash:
Date Account title Debit Credit
March 4, 2021 Cash $5,800
Accounts receivable - Megan Gray $5,800
The master budget at Western Company last period called for sales of 225,000 units at $8.60 each. The costs were estimated to be $4.00 variable per unit and $270,000 fixed. During the period, actual production and actual sales were 230,000 units. The selling price was $8.70 per unit. Variable costs were $4.75 per unit. Actual fixed costs were $270,000. Required: Prepare a flexible budget for Western.
Answer:
$765,000
Explanation:
Particulars Amount
Sales revenue = (225,000*$8.60) = $1,935,000
Less: Variable Cost = (225,000*$4) = $900,000
Contribution Margin $1,035,000
Less: Fixed Costs $270,000
Operating Profits $765,000
Would you rather be able to scream as loud as you want in your house without getting in trouble or would you rather be able to break stuff in anger without getting punished?
I would pick scream as loud as I want in my house without getting punished because I never get to scream.
The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.
Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $510,000 at face value.
Sep. 1 Acquired $1,230,000 of American Instruments' 10% bonds at face value.
Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds.
Oct. 2 Sold the Distribution Transformers bonds for $590,000.
Nov. 1 Purchased $1,950,000 of M&D Corporation 6% bonds at face value.
Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are:
American Instruments bonds$1,181,000
M&D Corporation bonds$2,021,000
(Hint: Interest must be accrued.)
Required:
Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end.
Answer:
1. Mar.31
Dr Investment in Distribution Transformers bonds $510,000
Cr Cash $510,000
2. September 01,
Dr Investment in American Instruments bonds
$1,230,000
Cr Cash $1,230,000
3 September 30
Dr Cash $20,400
Cr Interest revenue $20,400
4 October 02
Dr Fair value adjustment $80,000
Cr Unrealized holding gain—NI $80,000
5.October 02
Dr Cash $590,000
Cr Investment in Distribution Transformers bonds $510,000
Cr Fair value adjustment $8,000
6. November 01
Dr Investment in M&D Corporation bonds $1,950,000
Cr Cash $1,950,000
7 December 31
Dr Interest receivable $41,000
Cr Interest revenue $41,000
8 December 31
Dr Interest receivable $19,500
Cr Interest revenue $19,500
9. December 31
Dr Fair value adjustment $22,000
Cr Unrealized holding gain—NI $22,000
Explanation:
Preparation of the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end
1. Mar.31
Dr Investment in Distribution Transformers bonds $510,000
Cr Cash $510,000
2. September 01,
Dr Investment in American Instruments bonds
$1,230,000
Cr Cash $1,230,000
3 September 30
Dr Cash $20,400
Cr Interest revenue $20,400
(8%/2*$510,000)
4 October 02
Dr Fair value adjustment $80,000
Cr Unrealized holding gain—NI $80,000
($590,000-$510,000)
5.October 02
Dr Cash $590,000
Cr Investment in Distribution Transformers bonds $510,000
Cr Fair value adjustment $8,000
6. November 01
Dr Investment in M&D Corporation bonds $1,950,000
Cr Cash $1,950,000
7 December 31
Dr Interest receivable $41,000
Cr Interest revenue $41,000
($1,230,000 x 10% x 4/12)
8 December 31
Dr Interest receivable $19,500
Cr Interest revenue $19,500
($1,950,000* 6% x 2/12)
9. December 31
Dr Fair value adjustment $22,000
Cr Unrealized holding gain—NI $22,000
Available for sale securities Cost Fair market Value Profit/Loss
M & D Corporation shares
$1,950,000 $2,021,000 $ -71,000
American Instruments bonds $1,230,000 $1,181,000 $49,000
Totals $3,180,000 $3,202,000 $22,000
If direct materials are added at the beginning of a process, the equivalent units completed of direct materials will be: Group of answer choices Equal to equivalent units completed of conversion costs Equal to the physical units completed Less than physical units completed None of the above
Answer:
Equal to the physical units completed
Explanation:
If direct materials are added at the beginning of a process, the equivalent units completed of direct materials will be Equal to the physical units completed. This is because at the end of the process the equivalent units will be 100% complete as to direct materials.
A company buys a machine for $69,000 that has an expected life of 7 years and no salvage value. The company uses straight-line depreciation. The company anticipates a yearly net income of $3,300 after taxes of 38%, with the cash flows to be received evenly throughout each year. What is the accounting rate of return
Answer:
9.57%
Explanation:
Accounting rate of return = Annual after tax net income/Average investment
Accounting rate of return = $3,300 / ($69,000/2)
Accounting rate of return = $3,300 / $34,500
Accounting rate of return = 0.095652174
Accounting rate of return = 9.57%
Power Inc. has two divisions, Windsor and Ridge. Following is the income statement for the past month: Windsor Ridge Total Sales $ 360,200 $ 320,100 $ 680,300 Variable Costs 280,200 150,200 $ 430,400 Contribution Margin $ 80,000 $ 169,900 $ 249,900 Fixed Costs (allocated) 121,700 128,200 $ 249,900 Profit Margin $ (41,700 ) $ 41,700 $ 0 What would Power's profit margin be if the Windsor division was dropped and all fixed costs are unavoidable?.
Answer:
- $ 80,000
Explanation:
The existing Power's profit margin is $0 ($41,700 - $41,700 + $0).
Dropping Windsor division has the following effect :
Increase in cost - opportunity cost of $ 80,000
The opportunity is due to lost contribution
Fixed costs are unavoidable thus, they are irrelevant when doing this calculation.
thus,
Power's profit margin will be - $ 80,000 if the Windsor division was dropped.
On January 1, 2018, UML Company leased a machine to UMB Corporation. The lease qualifies as a sales-type lease. UML paid $240,000 for the machine and is leasing it to UMB for $34,000 per year, an amount that will return 10% to UML. The present value of the lease payments is $240,000. The lease payments are due each December 31, beginning in 2018. What is the appropriate interest entry of UML on December 31, 2018
Answer:
Date Account Title Debit Credit
Dec 11, 2018 Interest receivable $20,600
Interest revenue $20,600
Explanation:
The interest receivable on December 31, 2018 would be based on the lease amount at the end of the year which will be the present value of the lease less the lease amount paid for the year:
Lease amount = 240,000 - 34,000
= $206,000
Interest receivable = 206,000 * 10%
= $20,600
Your firm has a contract to build one custom-designed machine that costs $100,000,000. This machine will operate at a paper recycling plant. It will take 1,000,000 pieces of paper per day, shred them into tiny fragments, grind them into paper dust, and create pulp used to make recycled paper envelopes. You need a gear motor to run at 10 horsepower with an output speed of 10 RPM. Your other option is buy a 10 horsepower, 1750 RPM motor, and design your own transmission system to reduce the speed to 10 RPM. Your firm has 10 engineers, and 2 of them would work full-time for six months to get the transmission system designed and built. The purchased gear motor would cost $10,000 and the purchase motor would cost $3,000. The transmission parts would cost another $3,000, saving you $4,000. Time is of the essence. You have only 6 months to design and build your machine.
Which makes more sense to you, buy the gear motor, or buy an AC motor and design and build your own gear transmission system?
Answer:
Buy the gear motor
Explanation:
Given that form the question Time is very important factor to be considered hence it will make more sense to buy the gear motor rather than buying the an AC motor because you cannot rely on the two engineers working fulltime for 6 months because of the factor of uncertainty which might lead to delay in shipment . also the difference in cost is not much compared to the value of the contract ( $1 billion )
Cost of Gear motor = $10,000
cost of AC motor = $3000 + $3000 = $6000
At the beginning of the current year, Max Corp. granted restricted stock units (RSUs) representing 30 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $12 per share on the grant date. Ignoring taxes, what is the effect on earnings(net income) in the current year after the shares are granted to executives
Answer:
$90 million
Explanation:
Calculation to determine the effect on earnings (net income) in the current year after the shares are granted to executives
First step is to calculate the fair value of shares represented by RSUs
Using this formula
Fair value of shares represented by RSUs=Fair value per share*Shares represented by RSUs shares granted
Let plug in the formula
Fair value of shares represented by RSUs=$12 *30 million
Fair value of shares represented by RSUs=$360 million
Now let calculate the Effect on earnings
Using this formula
Effect on earnings=Fair value of shares represented by RSUs/Vesting period
Let plug in the formula
Effect on earnings=$360 million/4 years
Effect on earnings=$90 million
Therefore the effect on earnings (net income) in the current year after the shares are granted to executives is $90 million
Your firm is preparing to open a new retail strip mall and you have multiple businesses that would like lease space in it. Each business will pay a fixed amount of rent each month plus a percentage of the gross sales generated each month. The cash flows from each of the businesses has approximately the same amount of risk. The business names, square footage requirements, and monthly expected cash flows for each of the businesses that would like to lease space in your strip mall are provided below:
Square Feet Expected Monthly
Business Name Required Cash Flow
Videos Now 4,000 70,000
Gords Gym 3,500 52,500
Pizza Warehouse 2,500 52,500
Super Clips 1,500 25,500
30 1/2 Flavors 1,500 28,500
S-Mart 12,000 180,000
WalVerde Drugs 6,000 147,000
Multigular Wireless 1,000 22,250
If your new strip mall will have 15,000 square feet of retail space available to be leased, to which businesses should you lease and why?
Answer:
I would like to lease spaces to the following businesses:
Square Feet Expected Monthly
S-Mart 12,000 $180,000
WalVerde Drugs 6,000 147,000
Videos Now 4,000 70,000
They have the highest monthly expected cash flows to be able to pay the monthly rent. Another reason is that the variable part of the rent depends on each business's monthly gross sales. The higher the gross sales, the higher the rent. They also require the highest square space on which the fixed element of the rent depends.
Explanation:
a) Data and Calculations:
Square Feet Expected Monthly
Business Name Required Cash Flow
Videos Now 4,000 $70,000
Gords Gym 3,500 52,500
Pizza Warehouse 2,500 52,500
Super Clips 1,500 25,500
30 1/2 Flavors 1,500 28,500
S-Mart 12,000 180,000
WalVerde Drugs 6,000 147,000
Multigular Wireless 1,000 22,250
Space available for leasing = 15,000 square feet
S-Mart 12,000 $180,000
WalVerde Drugs 6,000 147,000
Videos Now 4,000 70,000
Belmont Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $230,000. The equipment will have an initial cost of $1,000,000 and have an 8 year life. If there is no salvage value of the equipment, what is the accounting rate of return? Multiple Choice 18.0% 15.5% 46.0% 23.0%.
Answer:
23.0%
Explanation:
According to the problem, computation of given data are as follows,
Initial cost of equipment = $1,000,000
Net income after tax = $230,000
So, we can calculate the accounting rate of return by using following formula,
Accounting rate of return = Net income after tax ÷ Initial cost of equipment
By putting the value, we get
Accounting rate of return = $230,000 ÷ $1,000,000
= 0.23 or 23%
Hence, accounting rate for the given data is 23%.
Chicken Can has net sales revenue of $1,420,000, cost of goods sold of $761,700, and all other expenses of $307,000. The beginning balance of stockholders' equity is $417,000 and the beginning balance of fixed assets is $378,000. The ending balance of stockholders' equity is $617,000 and the ending balance of fixed assets is $406,000. The fixed asset turnover ratio is closest to:
Answer:
The fixed asset turnover ratio is closest to 3.62.
Explanation:
The fixed asset turnover ratio can be calculated using the following formula:
Fixed asset turnover ratio = Net sales revenue / Average fixed assets …….. (1)
Where:
Net sales revenue = $1,420,000
Average fixed assets = (Beginning balance of fixed assets + Ending balance of fixed assets) / 2 = ($378,000 + $406,000) / 2 = $392,000
Substituting the values into equation (1), we have:
Fixed asset turnover ratio = $1,420,000 / $392,000 = 3.62
Therefore, the fixed asset turnover ratio is closest to 3.62.
Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,300,000 in 2021 for the mining site and spent an additional $660,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving of roads and replacing a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs:
Cash Outflow Probability
1 $360,000 20%
2 460,000 45%
3 660,000 35%
To aid extraction. Jackpot purchased some new equipment on July 1, 2021, for $180,000. After the copper Is removed from this mine, the equipment will sold. The credit-adjusted. risk-free rate of interest is 12%.
Required:
a. Determine the cost Of the copper mine.
b. Prepare the Journal entries to record the acquisition costs of the mine and the purchase of equipment.
Answer and Explanation:
The computation is shown below;
a. The Cost of Copper Mine is
Mining Site $1,300,000
Development Cost $660,000
Restoration Cost $324,115
Cost of Copper Mine $2,284,115
working note
Restoration Cost
$360,000 × 20% = $72,000
$ 4,60,000 × 45% = $207,000
$ 6,60,000 × 35% = $231,000
Total $510,000
Present Value of Restoration Cost = $3,24,115
($510000 × 0.63552)
Present Value of $ 1, n = 4, i=12%
b. The journal entries are given below:
1 Copper mine $2,284,115 ($1300,000 + $6,60,000)
To Cash $1,960,000
To Assets retirement liability $324,115
(Being acquisition of mine recorded)
2 Equipment $180,000
To Cash $180,000
(Being Equipment purchased recorded)
Here I Sit Sofas has 6,600 shares of common stock outstanding at a price of $89 per share. There are 950 bonds that mature in 25 years with a coupon rate of 6.3 percent paid semiannually. The bonds have a par value of $1,000 each and sell at 106 percent of par. The company also has 5,500 shares of preferred stock outstanding at a price of $42 per share. What is the capital structure weight of the debt
Answer:
55.17 %
Explanation:
We use the Market Values of Sources of Capital to determine their Weight in Capital Structure.
Weight of the debt = Market Value of Debt / Total Market Value x 100
where,
Market Value of Debt = 950 x $1,000 x 106% = $1,007,000
Market Value of Common Stock = 6,600 x $89 = $587,400
Market Value of Preferred Stock = 5,500 x $42 = $231,000
therefore,
Weight of the debt = $1,007,000 / $1,825,400 x 100
= 55.17 %
thus,
The capital structure weight of the debt is 55.17 %
If the financial markets are strong form efficient, then: Question 22 options: 1) only the most talented analysts can consistently outperform the market. 2) technical analysis provides the best tool to use to gain a marketplace advantage. 3) only individuals with private information have a marketplace advantage. 4) no one individual has an advantage in the marketplace.
Answer:
4) no one individual has an advantage in the marketplace.
Explanation:
Strong form efficiency in a market is defined as a situation where prices are already influenced by public and insider information.
No one person or group have an advantage as a result of insider information.
So they can't predict future price movements accurately.
Price is a function of market forces. Fundamental and technical analysis cannot be used as prediction tools.
In this situation no one individual has an advantage in the marketplace.
Indiana Co. began a construction project in 2021 with a contract price of $162 million to be received when the project is completed in 2023. During 2021, Indiana incurred $40 million of costs and estimates an additional $84 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed.
Suppose that, in 2022, Indiana incurred additional costs of $65 million and estimated an additional $52 million in costs to complete the project. Indiana (Do not round your percentage calculated):
A) Recognized $8.91 million gross profit on the project in 2022.
B) Recognized $11.91 million gross profit on the project in 2022.
C) Recognized $3.00 million loss on the project in 2022.
D) Recognized $8.91 million loss on the project in 2022.
Answer:
D) Recognized $8.91 million loss on the project in 2022.
Explanation:
The computation is shown below:
For Year 2021:
Percentage of work completed in the year 2021 is
= $40 ÷ ($40 + $84)× 100
= $40 ÷ $124 × 100
= 32.26%
Profit on the contract is
= Contract price - Already incurred cost - Expected cost
= $162 - $40 - $84
= $38
Profit to be recognized in the year 2016 is
= profit × percentage of completion
= $38 × 32.26%
= $12.256
For Year 2022:
Percentage of work completed in the year 2017 is
= ($40 + $65) ÷ ($40 + $65 + $52)
= $105 ÷ $157 × 100
= 66.88%
Profit on the contract is
= Contract price - Already incurred cost - Expected cost
= $162 - $40 - $65 - $52
= $5
Profit that should be recognized till the year 2017 is
= profit × percentage of completion
= $5 × 66.88%
= $3.344
Profit to be recognized in the year 2017 is
= $3.344 - $12.256
= 8.91 million loss
Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. Beginning Inventory Ending Inventory Raw material* 30,000 40,000 Finished goods 70,000 60,000 * Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 510,000 units during next year, the number of units it would have to manufacture during the year would be:
Answer:
500,000 units
Explanation:
Giving the following information,
Beginning inventory = 70,000 units
Ending inventory = 60,000 units
Sales = 510,000 units
We will make use of the formula below to calculate the production required.
Production = Sales + Desired ending inventory - Beginning inventory
Production = 510,000 + 60,000 - 70,000
Production = 500,000 units
Question 1(Multiple Choice Worth 10 points)
(04.04 LC)
Which is a possible effect of identity theft?
Increased mental stress
O Increased purchasing power
Decreased loan balances
Decreased debt to credit load
Answer:
Option A, Increased mental stress
Explanation:
Increased mental stress is one of the possible effect of identity theft.
It can cause following negative impacts on the mental and physical health of an individual
a) It causes sleep disturbance
b) Physical symptoms such as aches and pains, heart palpitations, sweating and stomach issues arises
c) Post stress disorder
d) Anxiety
Hence, option A is correct
Answer:
Option A, Increased mental stress
Explanation:
took the test