Answer:
$5.31
Explanation:
Earnings per share = Earnings Attributable to Holders of Common Stock ÷ Weighted Average Number of Common Stocks Outstanding
where,
Earnings Attributable to Holders of Common Stock is :
Net Income $650,000
Less Preference Stock dividend ($71,000)
Earnings Attributable to Holders of Common Stock $579,000
and
Weighted Average Number of Common Stocks Outstanding :
Common Stocks at Beginning outstanding 100,000
Stocks Sold at Weighted Average (18,000 / 2) 9,000
Weighted Average Number of Common Stocks Outstanding 109,000
therefore,
Earnings per share = $579,000 ÷ 109,000
= $5.31
The 2021 basic earnings per share is $5.31.
What is the present value of 4360 to be received at the beginning of each of 30 periods discounted at 5% compound interest
Answer:
The right solution is "70375.08".
Explanation:
Given that,
Present value,
= 4360
Interest rate,
= 5%
Time period,
= 30
Now,
The present value of inflows will be:
= [tex](1+rate)\times \frac{Present \ value[1-(1+Interest \ rate)^{-time \ period}]}{rate}[/tex]
= [tex]1.05\times 4360\times \frac{[1-(1.05)^{-30}]}{0.05}[/tex]
= [tex]4360\times 16.1410736[/tex]
= [tex]70375.08[/tex]
Pransit, a truck driver, was involved in a truck collision with a passenger car driven by Sanjay. He sued Sanjay for negligence and Sanjay defended by claiming that Pransit was negligent in his driving. The jury heard both sides of the case and was instructed by the judge on the rules of negligence and defense of pure comparative negligence. The jury verdict concluded that Pransit suffered $60,000 damages and Sanjay was 75% negligent and Pransit was 25% negligent in contributing to his own harm. Pransit will recover: A. $15,000. B. $45,000 C. $60,000 D. nothing.
Answer:
Pransit will recover:
B. $45,000
Explanation:
a) The rules of negligence and defense of pure comparative negligence will ensure that Pransit recovers some damages arising from the negligent deriving. However, the extent of the amount he will recover depends on the percentage of the defendant's fault. The implication is that Sanjay will be responsible for 75% of the damage while Pransit bears the remaining 25% (100% - 75%).
b) Amount of damages suffered by Pransit = $60,000
Percentage of Sanjay's negligence = 75%
Therefore, the damage liable to be paid by Sanjay to Pransit = $45,000 ($60,000 * 75%).
Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2020, Clark earned a salary of $32,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2020. Before considering any limitation due to tax liability, how much can Clark claim as a child and dependent care credit in 2020
Answer:
$,1,326
Explanation:
Calculation to determine how much can Clark claim as a child and dependent care credit in 2020
Using this formula
Amount to claim=Tax rate*(Housekeeper salary+ Amount paid to Kiddie play camp)
Let plug in the formula
Amount to claim=26% *($3,600 + $1,500)
Amount to claim=26%*$5,100
Amount to claim=$1,326
Therefore The amount that Clark can claim as a child and dependent care credit in 2020 is $1,326
Orin creates an irrevocable living trust to pass his 1/3rd of his assets, including stock in Petro Oil Company and other business investments, to his heirs. One advantage of this arrangement is that A. the trust earnings become public. B. the assets are doubled. C. Orin avoids having to pay death taxes on these assets. D. the assets can be transferred without going through probate.
Answer:
C. Except it isn't Orin that will avoid the taxes, but his heirs.
Explanation:
Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net income (exclusive of any investment income) of $520,000. Primus has 50,000 shares of common stock outstanding. Sonston reports net income of $120,000 for the period with 40,000 shares of common stock outstanding. Sonston also has 10,000 stock warrants outstanding that allow the holder to acquire shares at $15.00 per share. The value of this stock was $30 per share throughout the year. Primus owns 5,900 of these warrants. What amount should Primus report for diluted earnings per share? (Round your intermediate percentage value to the nearest whole number and the final answer to 2 decimal places.) Diluted earnings per share
Answer:
Primus, Inc.
Diluted earnings per share is:
= $14.51.
Explanation:
a) Data and Calculations:
Primus, Inc. Sonston, Inc. Consolidated
Current net income $520,000 $120,000 $640,000
Outstanding common stock 40,000 40,000 40,000
Outstanding stock warrants 4,100 4,100
Total outstanding stock 44,100
Diluted earnings per share = Total current net income/Total outstanding stock
= $640,000/44,100
= $14.51
b) Diluted EPS is an important capital ratio for stockholders as it shows the earnings that a stockholder will be entitled to if convertible shares such as employee stock options, warrants, and debts are actually converted into common stock.
Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment used in the operations of Delaware Company. The following information pertains to the exchange.
Santana Co. | Delaware Co.
Equipment (cost) $28,000 | $18,000
Accumulated depreciation 9,000 | 10,000
Fair value of equipment 14,000 | 16,000
Cash given up 2,000
Please indicate whether an account is an asset (A), liability (L), or equity (E) for journal entries, adjusting entries, and closing entries.
Prepare the journal entries to record the exchange on the book of Santana Co. and Delaware Co. Assume that the exchange lacks commercial substance.
Solution :
We know that the exchange takes place when the FMV receive is equal to the FMV given up.
Where the FMV = fair market value
The commercial substance means the future cash flows exchange.
The non monetary exchange refers to the cash which is less than 25% of the fair value exchange.
The journal entries for the Santana Corp. when the exchange lack the commercial substance are reported as :
Transaction Debit ($) Credit ($)
Asset(new) 11,000
Accumulated depreciation(old) 9,000
Asset (old) 28,000
Cash 2000
The journal entries for Delaware Corp. when the exchange lacks the commercial substance.
Transaction Debit ($) Credit ($)
Asset(new) 16,000
Accumulated depreciation (old) 10,000
Loss 2500
Assets (old) 28,000
The coffee shop across the street from your tiny apartment is your haven away from home -- great beverages, healthy snacks, an atmosphere that is convivial but not so lively that you can't focus on homework, and free wifi. It lacks only one thing: some way to print out your homework and other files when you need hard copy. Your college's libraries and computer labs provide printers, but you live three miles from campus, and it's a long walk or an inconvenient bus ride.
Required:
Write a letter to the owner of the coffee shop, encouraging her to set up a printing service to complement the free wireless access. Propose that the service run at break-even prices, just enough to pay for paper, ink cartridges, and the cost of the printer itself. The benefit to the shop would be enticing patrons to spend more time and therefore more of their coffee and tea money in the shop. You might also mention that you had to take the bus to campus to print this letter, so you bought your afternoon late somewhere else.
Answer: See explanation
Explanation:
Dear Mrs Parker,
I'm one of your numerous customers at your coffee shop and I must say it's really an amazing place and you're really doing a great job.
The purpose of writing this letter is to inform you about the few changes that you could make that'll bring further revenue to you and also be of immense benefit to your customers.
Firstly, I believe that you are aware that most of your customers are young people especially college students like myself. Printing out our school works and other printing works are really a challenge to us. There are no printing shops around and we've to take a bus back to the campus anytime we want to print and this is really costly and Tien consuming.
It'll be worth it if you consider setting up a printing service to complement the free wireless access. Apart from the fact that the printing service runs at break even price, the benefit to the shop would be enticing patrons to spend more time and therefore more of their coffee and tea money in the shop.
When the printing shop is opened, the college students among us will find it beneficial as we won't have to go back to the school campus in order to print.
Furthermore, when people come to the printing shop, they'll also realize that there's a coffee shop there as well, and this can bring about an increase in the demand for coffee which ultimately increases the revenue generated from the sale of coffee.
In conclusion, I hope this letter catches your attention which will be beneficial to everyone.
Peter Williams.
Horatio Alger has just become product manager for Brand X. Brand X is a consumer product with a retail price of $1.00. Retail margins on the product are 33%, while wholesalers take a 12% margin. Brand X and its direct competitors sell a total of 20 million units annually; Brand X has 24% of this market. Variable manufacturing costs for Brand X are $0.09 per unit. Fixed manufacturing costs are $900,000. The advertising budget for Brand X is $500,000. The Brand X product manager's salary and expenses total $35,000. Salespeople are paid entirely by a 10% commission. Shipping costs, breakage, insurance, and so forth are $0.02 per unit.
1. What is the unit contribution for Brand X?
2. What is Brand X's break-even point?
3. What market share does Brand X need to break even?
4. What is Brand X's profit impact? Industry demand is expected to increase to 23 million units next year. Mr. Alger is considering raising his advertising budget to $1 million.
a. If the advertising budget is raised, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell in order for it to achieve the same profit impact that it did this year?
c. What will Brand X's market share have to be next year for its profit impact to be the same as this year?
d. What will Brand X's market share have to be for it to have a $1 million profit impact?
5. Upon reflection, Mr. Alger decides not to increase Brand X's advertising budget. Instead, he thinks he might give retailers an incentive to promote Brand X by raising their margins from 33% to 40%. The margin increase would be accomplished by lowering the price of the product to retailers. Wholesaler margins would remain at 12%.
a. If retailer margins are raised to 40% next year, how many units will Brand X have to sell to break even?
b. How many units will Brand X have to sell to achieve the same profit impact next year as it did this year?
c. What would Brand X's market share have to be for its profit impact to remain at this year's level?
d. What would Brand X's market share have to be for it to generate a profit impact of $350,000?
Answer:
Horatio Alger
1. The unit contribution for Brand X is = $0.79
2. Brand X's break-even point (in units) = 1,816,456 (in sales dollars) = $1,816,456
3. The market share that Brand X needs to break-even
= 9.1%
4. Brand X's profit impact is 48.9% or $2,347,000
a. If the advertising budget is raised, units that Brand X have to sell to break-even is:
= 2,449,367 units
b. The units that Brand X have to sell in order for it to achieve the same profit impact that it did this year is:
= 5,865,886 units
c. Brand X's market share have to be 25.5% next year for its profit impact to be the same as this year.
d. Brand X's market share have to be 16.2% for it to have a $1 million profit impact.
5. a. Break-even sales units = 2,474,138 units
b. Break-even sales units = 6,520,690 units
c. Brand X's market share have to be 32.6% for its profit impact to remain at this year's level.
d. Brand X's market share have to be 15.4% to generate a profit impact of $350,000.
Explanation:
a) Data and Calculations:
Retail price of Brand X = $1.00
Units sold = 24% of 20 million = 4,800,000 units
Total sales revenue = $1.00 $4,800,000
Variable costs:
Manufacturing $0.09
Selling commision (10% of $1) $0.10
Other selling expense $0.02
Total variable costs per unit $0.21 $1,008,000
Contribution margin per unit $0.79 $3,782,000
Fixed costs:
Manufacturing $900,000
Advertising 500,000
Brand X manager's salary 35,000 $1,435,000
Net income = $2,347,000
Fixed costs/Contribution margin per unit = $1,435,000/$0.79 = 1,816,456 units
The market share that Brand X needs to break-even
= 1,816,456/20,000,000
= 9.1%
Brand X's profit impact = 48.9% ($2,347,000/$4,800,000 * 100)
With increase in advertising budget to $1 million next year,
a. Units to break-even = $1,935,000/$0.79 = 2,449,367 units
b. Units to achieve same profit impact:
Sales increased by 15% (3/20 * 100)
Net income will increase to = $2,699,050 ($2,347,000 * 1.15) to make the same impact
Therefore, the units to achieve same profit impact = ($1,935,000 + $2,699,050)/$0.79
= $4,634,050/$0.79
= 5,865,886 units
Market share next year = 25.5% (5,865,886/23,000,000)
Market share to achieve $1 million profit impact
= (FC + Profit target)/$0.79
= $1,935,000 + $1,000,000)/$0.79
= $2,935,000/$0.79
= $3,715,190
= $3,715,190/$23,000,000 * 100 = 16.2%
Fixed costs = $1,435,000
Retailer's margin raise = 40% from 33%, a 21.2% increase or decrease in price
Therefore, the new selling price = $1.00 * (1 - 0.212) = $0.79
Variable cost = $0.21
Contribution margin = $0.58
To break-even, FC/Contribution margin per unit
= $1,435,000/$0.58
= 2,474,138 units
Break-even units to achieve profit of $2,347,000 = ($1,435,000 + $2,347,000)/$0.58
= 6,520,690 units
Sales = $5,151,345 (6,520,690 * $0.79)
Market sales revenue = $15,800,000 (20,000,000 * $0.79)
= $5,151,345/$15,800,000 * 100
= 32.6%
Market impact of $350,000
Break-even units ($1,435,000 + $350,000)/$0.58
= 3,077,586 units
Sales revenue = $2,431,293 (3,077,586 * $0.79)
Market revenue = $15,800,000 (20,000,000 * $0.79)
Market share = $2,431,293/$15,800,000 * 100
= 15.4%
The roles of money
Alex just graduated from college and is now in the market for a new car. He has saved up $4,000 for a down payment. He's deciding between a Super and a Duper. The Super is priced at $23,599, and the Duper is priced at $18,999. After agonizing over the decision, he decides to buy the Duper. He writes the dealership a check for $4,000 and takes out a loan for the remainder of the purchase price. Identify what role money plays in each of the following parts of the story. (Medium of exchange, unit of account, or store of value)
A. Sean writes a check for $4,000.
B. Sean can easily determine that the price of the Super is more than the price of the Duper.
C. Sean has saved $4,000 in his checking account.
Answer:
Medium of exchange
unit of account
store of value
Explanation:
Money is anything that is generally accepted as a means of payment for goods and services and for repayment of debt.
Functions of money
1. Medium of exchange : money can be used to exchange for goods and services. For example, by writing the check, he is exchanging money for a car
2. Unit of account : money can be used to value goods and services, For example, price was used to determine which was more expensive between the super and the duper
3. Store of value : money can retain its value over the long term, this it can be used as a store of value.
Rebecca Bennett is an 8-year-old who was recently diagnosed with diabetes mellitus. She is hospitalized with diabetic ketoacidosis, and she is beginning to learn about the disease process. Her parents are with her continually. She has an identical twin sister who is staying with her maternal grandparents.
Mrs. Bennett is concerned that Rebecca’s sister will also develop diabetes. Based on the preceding information, an acceptable response for the nurse to make would be to:________.
a. reassure the parents that the disease is not contagious.
b. discuss the hereditary and viral factors of type 1 diabetes.
c. discuss the hereditary factors of type 1 diabetes.
d. discuss the viral factors of type 1 diabetes.
Answer:
C
Explanation:
Abell and Creek, LLC has prepared the following flexible budget figures for the current period and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. Flexible Budget Price Variance Efficiency Variance Product A311 (total costs) $58,000 $1,500 F $3,000 U Product A325 (total costs) $42,000 $1,750 U $1,500 F Direct manufacturing labor only $71,000 $2,000 U $2,500 F Calculate the actual amount spent for Product A325 during the current period:
Answer:
Abell and Creek, LLC
The actual amount spent for Product A325 during the current period is:
= $42,250.
Explanation:
a) Data and Calculations:
Flexible Price Efficiency
Budget Variance Variance
Product A311 (total costs) $58,000 $1,500 F $3,000 U
Product A325 (total costs) $42,000 $1,750 U $1,500 F
Direct manufacturing labor only $71,000 $2,000 U $2,500 F
Actual amount spent for Product A325:
Flexible budget $42,000
Price variance 1,750 U
Efficiency variance 1,500 F
Actual = $42,250
A museum of natural history opened a gift shop that operates throughout the year. Top-selling product is a bird feeder. Annual demand for the bird feeder is 933 units. Cost per order is $55. Annual holding cost per unit is $19. Assuming that the shop uses the EOQ as the order size, what would be the total holding cost for the bird feeder
Answer:
$1396.5
Explanation:
EOQ or economic order quantity formula is given as:
[tex]EOQ = \sqrt{\frac{2DC_o}{H_c}}[/tex]
Where, D = demand per year
C_0 = ordering cost and H_c = holding cost per unit per year
[tex]EOQ = \sqrt{\frac{2\times933\times55}{19}}[/tex]
EOQ= 73.5 units
Since, the order size is EOQ then, total holding cost
= holding cost per unit per year × EOQ
=73.5×19
=$1396.5
Nelson Won wants to withdraw $25,000 (including principal) from an investment fund at the end of each year for five years. How should he compute his required initial investment at the beginning of the first year if the fund earns 10% compounded annually
Answer:
Initial Investment= $94,769.7
Explanation:
Giving the following information:
Annual payment (A)= $25,000
Interest rate (i)= 10%
Number of periods (n)= 5 years
To calculate the initial investment, we need to use the following formula:
PV= A*{(1/i) - 1/[i*(1 + i)^n]}
PV= 25,000*{(1/0.1) - 1/[0.1*(1.1^5)]}
PV= $94,769.7
Why wages differ
For each of the scenarios in the following table, indicate the most likely reason for the difference in earnings. Differences Differences in Human Capital Compensating in Natural Differential Labor
Scenario Ability Unions
1. A law firm hires Dina, a recent graduate from law school, and pays her an annual wage of $40,000. It also hires Ana, a second-year law student, and pays her an annual wage of $30,000. Dina and Ana were born in the same country, attended the same university, and studied in the same graduate program.
2. Major league soccer players earn more than minor league soccer players.
3. Three engineers have the same amount of schooling and work experience, but earn different wages. One is a computer engineer who designs and tests new computers for an annual wage of $55,000 per year. Another is a chemical engineer who works in a nuclear lab and performs experiments on radioactive materials for an annual wage of $70,000 per year. The third is a civil engineer who performs daily inspections of cables on a suspension bridge for an annual wage of $93,000 per year
Answer:
Differences in human capital
Differences in Natural Ability
Compensating differentials
Explanation:
Human capital is an example of an intangible asset. It is the economic value attached to labours' skills and expertise.
Qualities of human capital includes
• Education.
• on-the-job training.
• Hard work
• experience
• Mental and emotional well-being.
• People management.
• Communication skills.
In case 1, the law graduate is more educated than the student. thus, differences in human capital accounts for the pay difference
In case 2, the skills of the players differs and this accounts for pay differences
In case 3, pay differs by riskiness of the job. thus compensating differential is responsible for pay differences
Tamarisk, Inc. is authorized to issue 2,250,000 shares of $1 par value common stock. During 2020, the company has the following stock transactions.
Jan. 15 Issued 880,000 shares of stock at $7 per share.
Sept. 5 Purchased 28,000 shares of common stock for the treasury at $8 per share.
Dec. 6 Declared a $0.50 per share dividend to stockholders of record on December 20, payable January 3, 2021.
Journalize the transactions for Tamarisk, Inc.
Answer:
Date Account Titles and Explanation Debit$ Credit$
Jan.15 Cash (880,000*$7) 6,160,000
Common Stock , $1 Par value 880,000
Paid in capital in excess of par value 5,280,000
Sept.5 Treasury Stock 224,000
Cash (28,000*8) 224,000
Dec.6 Retained earnings 440,000
Cash Dividend Payable 440,000
(880,000*0.50)
On January 1, 2021, Pine Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Pine to make annual payments of $800,000 at the beginning of each year for five years beginning on January 1, 2021 with the title passing to Pine at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Pine uses the straight- line method of depreciation for all of its fixed assets. Pine accordingly accounts for this lease transaction as a finance lease. The lease payments were determined to have a present value of $3,335,888 at an effective interest rate of 10%. In 2021, Pine should record interest expense of:______.
a. 333,589
b. 253,589
c. 466,411
d. 546,411
Answer:
b. 253,589
Explanation:
According to the scenario, computation of the given data are as follows,
Present value of lease payment = $3,335,888
Payment in 2021 = $800,000
Interest rate = 10%
So, we can calculate the interest expense by using following formula,
Interest expense = (Present value of lease payment - Payment in 2021 ) × interest rate
Interest expense = ($3,335,888 - $800,000) × 10%
= $2,535,888 × 10%
= $253,588.8 or $253,589
In 2021, Pine should record interest expense of $253,589
Accounts Debits Credits
Cash $ 17,000
Accounts Receivable 7,400
Supplies 3,400
Equipment 12,000
Accumulated Depreciation $ 3,800
Salaries Payable 5,800
Common Stock 22,000
Retained Earnings 8,200
Totals $ 39,800 $ 39,800
The following is a summary of the transactions for the year:
1. March 12 Provide services to customers, $54,000, of which $20,400 is on account.
2. May 2 Collect on accounts receivable, $17,400.
3. June 30 Issue shares of common stock in exchange for $6,000 cash.
4. August 1 Pay salaries of $5,800 from 2020 (prior year).
5. September 25 Pay repairs and maintenance expenses, $12,400.
6. October 19 Purchase equipment for $7,400 cash.
7. December 30 Pay $1,100 cash dividends to stockholders.
The following information is available for the adjusting entries.
Accrued salaries at year-end amounted to $20,700.
Depreciation for the year on the equipment is $4,400.
Office supplies remaining on hand at the end of the year equal $1,200.
a. Prepare an unadjusted trial balance(Please write out).
b. Prepare an adjusted trial balance(Please write out).
3. Prepare the income statement for the year ended December 31, 2021 (Please Write out).
4. Prepare a post-closing trial balance.
Answer:
a. Unadjusted Trial Balance
Accounts Debits Credits
Cash $ 47,300
Accounts Receivable 10,400
Supplies 3,400
Equipment 19,400
Accumulated Depreciation $ 3,800
Salaries Payable
Common Stock 28,000
Retained Earnings 8,200
Dividend 1,100
Service revenue 54,000
Repairs and
maintenance exp $12,400
Totals $ 94,000 $ 94,000
b. Adjusted Trial Balance
Accounts Debits Credits
Cash $ 47,300
Accounts Receivable 10,400
Supplies 1,200
Equipment 19,400
Accumulated Depreciation $ 8,200
Salaries Payable 20,700
Common Stock 28,000
Retained Earnings 8,200
Dividend 1,100
Service revenue 54,000
Repairs and
maintenance exp 12,400
Salaries expense 20,700
Depreciation Exp 4,400
Office supplies exp 2,200
Totals $119,100 $ 119,100
3. Income Statement for the year ended December 31, 2021
Service revenue 54,000
Repairs and
maintenance exp 12,400
Salaries expense 20,700
Depreciation Exp 4,400
Office supplies exp 2,200 39,700
Net income $14,300
4. Post-closing Trial Balance
Accounts Debits Credits
Cash $ 47,300
Accounts Receivable 10,400
Supplies 1,200
Equipment 19,400
Accumulated Depreciation $ 8,200
Salaries Payable 20,700
Common Stock 28,000
Retained Earnings 21,400
Totals $78,300 $78,300
Explanation:
a) Data and Calculations:
Accounts Debits Credits
Cash $ 17,000
Accounts Receivable 7,400
Supplies 3,400
Equipment 12,000
Accumulated Depreciation $ 3,800
Salaries Payable 5,800
Common Stock 22,000
Retained Earnings 8,200
Totals $ 39,800 $ 39,800
1. March 12 Accounts receivable $20,400 Cash $33,600 Service revenue $54,000
2. May 2 Cash $17,400 Accounts receivable $17,400
3. June 30 Cash $6,000 Common stock $6,000
4. August 1 Salaries Payable $5,800 Cash $5,800
5. September 25 Repairs and maintenance expenses, $12,400 Cash $12,400
6. October 19 Equipment $7,400 Cash $7,400
7. December 30 Cash dividends $1,100 Cash $1,100
Adjusting entries:
Salaries expense $20,700 Salaries payable $20,700
Depreciation Expense $4,400 Accumulated Depreciation $4,400
Office supplies expenses $2,200 Supplies $2,200
ProForm acquired 70 percent of ClipRite on June 30, 2017, for $770,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $450,000 was recognized and is being amortized at the rate of $12,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $330,000 at the acquisition date. The 2018 financial statements are as follows:
ProForm ClipRite
Sales $(820,000) $(640,000)
Cost of goods sold 545,000 410,000
Operating expenses 120,000 110,000
Dividend income (49,000) 0
Net income $ (204,000) $ (120,000)
Retained earnings, 1/1/18 $(1,100,000) $(870,000)
Net income (204,000) (120,000)
Dividends declared 120,000 70,000
Retained earnings, 12/31/18 $(1,184,000) $(920,000)
Cash and receivables $420,000 $320,000
Inventory 310,000 720,000
Investment in ClipRite 770,000 0
Fixed assets 1,200,000 700,000
Accumulated depreciation (400,000) (300,000)
Totals $ 2,300,000 $ 1,440,000
Liabilities $ (816,000) $ (220,000)
Common stock (300,000) (300,000)
Retained earnings, 12/31/18(1,184,000) (920,000)
Totals $(2,300,000) $(1,440,000)
ProForm sold ClipRite inventory costing $71,000 during the last six months of 2017 for $110,000. At year-end, 30 percent remained. ProForm sells ClipRite inventory costing $210,000 during 2018 for $270,000. At year-end, 10 percent is left.
Determine the consolidated balances for the following accounts:
Consolidated Balance
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income attributable to noncontrolling interest
Inventory
Noncontrolling interest in subsidiary, 12/31/18
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
A company is considering issuing long-term debt. The debt would have a thirty-year maturity and a ten percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of five percent of face value. In addition, the company would have to pay flotation costs of five percent of face value. The firm's tax rate is 21 percent. Given this information, the annualized after-tax cost of debt for the company would be ________.
Answer:
Find detailed explanations below
Explanation:
First and foremost, the issue price of the bond is the face value minus adjustments for discount and flotation costs
issue price=$1000*(1-5%-5%)
issue price=$900
semiannual coupon=face value*coupon rate/2
semiannual coupon=$1000*10%/2
semiannual coupon=$50
number of semiannual coupons in 30 years=30*2=60
Using a financial calculator, pretax cost of debt is computed thus:
N=60(number of semiannual coupons)
PMT=50(semiannual coupon)
PV=-900(price)
FV=1000(face value)
CPT
I/Y=5.58%(semiannual yield)
annual yield=5.58%*2=11.16%
after-tax cost of debt=annual yield*(1-tax rate)
tax rate=21%
after-tax cost of debt=11.16%*(1-21%)
after-tax cost of debt=8.82%
Alternative approach
Yield to Maturity [YTM] = Coupon Amount + [(Par Value – Bond Price) / Maturity Years] / [(Par Value + Bond Price)/2]
semiannual YTM=50+(1000-900)/30/(1000+900)/2
semiannual YTM=(50+3.33)/950
semiannual YTM=5.61%
annual YTM=5.61%*2=11.22%
after-tax cost of debt=11.22%*(1-21%)
after-tax cost of debt=8.86%
Under the good neighbor rule, a buyer of consumer goods, who gives value and does not have
actual or constructive knowledge of the security interest, acquires clear title if there has been no filing
a. True
b. False
The Dorilane Company specializes in producing a set of wood patio furniture consisting of a table and four chairs. The set enjoys great popularity, and the company has ample orders to keep production going at its full capacity of 2,000 sets per year. Annual cost data at full capacity follow:
Direct labor $ 118,000
Advertising $ 50,000
Factory supervision $ 40,000
Property taxes, factory building $ 3,500
Sales commissions $ 80,000
Insurance, factory $ 2,500
Depreciation, administrative office equipment$4,000
Lease cost, factory equipment $ 12,000
Indirect materials, factory $ 6,000
Depreciation, factory building $ 10,000
Administrative office supplies (billing) $ 3,000
Administrative office salaries $ 60,000
Direct materials used (wood, bolts, etc.) $ 94,000
Utilities, factory $ 20,000
Required:
1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, as variable or fixed with respect to the number of units produced and sold; and second, as a selling and administrative cost or a product cost. (If the item is a product cost, it should also be classified as either direct or indirect.)
Cost Behavior
Selling or Administrative
Product Cost
Cost Item
Variable Fixed Cost Direct Indirect Direct labor$118,000$118,000Advertising50,00050,000Factory supervisionProperty taxes, factory buildingSales commissionsInsurance, factoryDepreciation, administrative office equipmentLease cost, factory equipmentIndirect materials, factoryDepreciation, factory buildingAdministrative office supplies (billing)Administrative office salariesDirect materials used (wood, bolts, etc.)Utilities, factoryTotal costs$118,000
2. Compute the average product cost of one patio set.
Average product cost per set = ????
3. Assume that production drops to only 1,000 sets annually. Would you expect the average product cost per set to increase, decrease, or remain unchanged?
Increase
Decrease
Remain unchanged
Answer:
1.COST BEHAVIOUR
Variable Fixed
$321,000 $182,000
SELLING OR ADMINISTRATIVE
Cost $197,000
PRODUCT COST
Direct Indirect
$212,000 $94,000
2. $153 per set
3. I would expect the average product cost per set to increase.
Explanation:
1. Calculation to Enter the dollar amount of each cost item under the appropriate headings
COST BEHAVIOUR
VARIABLE FIXED
Direct labor $118,000 $0
Advertising $0 $50,000
Factory supervision $0 $40,000
Property taxes, factory building$0 $3,500
Sales commissions$80,000 $0
Insurance, factory $0 $2,500
Depreciation, administrative office equipment$0 $4,000
Lease cost, factory equipment$0 $12,000
Indirect materials, factory $6,000 $0
Depreciation, factory building $0 $10,000
Administrative office supplies (billing) $3,000 $0
Administrative office salaries $0 $60,000
Direct materials used (wood, bolts, etc.)$94,000 $0
Utilities, factory $20,000 $0
TOTAL COSTS $321,000 $182,000
SELLING OR ADMINISTRATIVE
COST
Direct labor $0
Advertising $50,000
Factory supervision $0
Property taxes, factory building $0
Sales commissions $80,000
Insurance, factory $0
Depreciation, administrative office equipment $4,000
Lease cost, factory equipment $0
Indirect materials, factory $0
Depreciation, factory building $0
Administrative office supplies (billing) $3,000
Administrative office salaries$60,000
Direct materials used (wood, bolts, etc.) $0
Utilities, factory $0
TOTAL COSTS $197,000
PRODUCT COST
DIRECT INDIRECT
Direct labor $118,000 $0
Advertising $0 $0
Factory supervision $0 $40,000
Property taxes, factory building$0 $3,500
Sales commissions $0 $0
Insurance, factory $0 $2,500
Depreciation, administrative office equipment $0 $0
Lease cost, factory equipment$0 $12,000
Indirect materials, factory$0 $6,000
Depreciation, factory building $0 $10,000
Administrative office supplies (billing) $0 $0
Administrative office salaries $0 $0
Direct materials used (wood, bolts, etc.)$94,000 $0
Utilities, factory$0 $20,000
TOTAL COSTS $212,000 $94,000
Therefore the dollar amount of each cost item under the appropriate headings will be :
COST BEHAVIOUR
Variable Fixed
$321,000 $182,000
SELLING OR ADMINISTRATIVE
Cost $197,000
PRODUCT COST
Direct Indirect
$212,000 $94,000
2. Computation to determine the average product cost of one patio set.
Using this formula
Average product cost of one patio set =(Direct costs +Indirect costs)/Capacity set per year
Let plug in the formula
Average product cost of one patio set=($212,000+$94,000)/2,000 sets
Average product cost of one patio set =$306,000/2,000 sets
Average product cost of one patio set = $153 per set
Therefore The Average product cost of one patio set will be $153 per set
3. In a situation were the production drops I Would expect the average product cost per set to INCREASE, reason been that the fixed costs would extend over few units which will inturn cause the average cost per unit to increase.
For this question, use the Grove Analytics Financials. Calculate 2018 cash from financing activities for Grove Analytics. Hint: Remember to capture dividends. Also, remember that stock based compensation expense is a credit to common stock & APIC.
Below is income statement and balance sheet data for Grove Analytics. ($ in millions) Income statement 12/31/2018 Revenue 230 Operating expenses 68 Depreciation 20 Stock based compensation 13 Operating profit 129 Interest expense 5 Taxes 31 Net income 93 Balance sheet 12/31/2017 12/31/2018 Cash 50 Not provided Accounts receivable 20 25 Inventory 15 18 PP&E 30 40 Total assets 115 83 Accounts payable 8 11 Short term debt 20 22 Long term debt 48 60 Treasury stock (30) (40) Common stock & APIC 25 40 Retained earnings 44 95 Total liabilities & equity 115 188
Answer: -36
Explanation:
The 2018 cash from financing activities for Grove Analytics will be calculated as:
Issued short term debt = 22 - 20 = 2
Add: Issued long term debt = 60 - 48 = 12
Less: Purchase of treasury stock = 10
Add: Issue of common stock = (40 - 13 - 25) = 2
Less: Dividend paid = (44 + 93 - 95) = 42
Net cash used by financing activities = -36
Haley is expanding her tax preparation business and wants to reorganize it. She wants to better protect her personal assets from any liabilities associated with the business, and she wants to pay a lower tax rate on her business income. She also believes her business will benefit from oversight from a board of directors. Which form of business structure would clearly meet Haley's needs
Answer: Corporation
Explanation:
The form of business structure that would clearly meet Haley's needs is the corporation.
A corporation will give her limited liability therefore, her personal assets will be protected from any liabilities that's associated with the business.
Also, the tax rates for corporations are lower and also the business will benefit from oversight from a board of directors.
Which of the following is an example of a positive economic statement? a. If crime rates reduced, the world would be a better place to live in. b. An increase in the price of gasoline will cause a reduction in the amount of gasoline purchased. c. Workers with families should be paid at least the minimum wage. d. Corrupt politicians ought to be voted out of office. e. Marginal tax rates should be reduced for individuals in the highest tax bracket.
Answer: An increase in the price of gasoline will cause a reduction in the amount of gasoline purchased.
Explanation:
An example of a positive economic statement is "when the price of gasoline should increase so this result in a decrease in the value of gasoline purchased.
The following information regarding the positive economic statement is as follows:
It disclosed the real situation. In this, the statement should be verified and begins with what scenarios i.e. what would be, what is, etc.It should depend upon the evidence and facts that should be measurable.Therefore, all the other options are incorrect.
Thus we can conclude that an example of a positive economic statement is "when the price of gasoline should increase so this result in a decrease in the value of gasoline purchased.
Learn more about economics here: brainly.com/question/17408105
13. A firm hires its labor in a perfectly competitive factor (or resource) market and sells its product in a perfectly competitive product market. a. Using correctly labeled side-by-side graphs, show each of the following: i. The equilibrium wage rate in the market ii. The labor supply curve the firm faces iii. The demand curve the firm faces iv. The number of workers that the firm hires
Answer:
Attached below are the graphs
Explanation:
i) The Equilibrium wage rate in the market is determined by the Intersection of the labor demand and supply curve as seen in the graph attached
ii) The Labor supply curve the firm faces is perfectly elastic in a perfectly competitive resource market
iii) The demand curve of the firm is perfectly elastic because in competitive market a slight change in price will cause a massive change in demand
iv) The firm will continue hiring as long as MRP ≥ MFC
( MRP = marginal revenue product , MFC = marginal factor cost )
Your Competitive Intelligence team is predicting that the Chester Company will invest in adding capacity to their Cent product this year. Assume Chester's product Cent invests in increasing its capacity by 10% this year. Because of this new information, your company anticipates all other products in the Core segment will increase their capacity by the same amount. How much can the industry produce in the Core segment the next year
Question Completion:
Product Segment Capacity Next Round
Attic Core 1,130
Axe Core 1,200
City Core 1,300
Cent Core 1,550
Dome Core 1,145
Dug Core 1,023
Answer:
Competitive Intelligence Team
The industry can produce 8,083 units in the Core segment next year.
Explanation:
a)Data and Calculations:
Product Segment Capacity Increasing New Capacity
Next Round by 10% next year
Attic Core 1,130 113 1,243
Axe Core 1,200 120 1,320
City Core 1,300 130 1,430
Cent Core 1,550 155 1,705
Dome Core 1,145 115 1,260
Dug Core 1,023 102 1,125
Total industry capacity 7,348 735 8,083
b) A Competitive Intelligence is an analysis for decision-makers that uncovers competitive gaps, products, and services. It uses information about a firm's industry, business environment, and competitors' strategies to develop strategic initiatives and identify opportunities and threats facing the firm in the marketplace.
Swifty Co. had purchased 230 shares of Washington Co. for $38 each this year (Oregon Co. does not have significant influence). Swifty Co. sold 115 shares of Washington Co. stock for $44 each. At year-end, the price per share of the Washington Co. stock had dropped to $33. Prepare the journal entries for these transactions and any year-end adjustments.
Answer:
Swifty Co.
Journal Entries:
1. Investment in Washington Co. $8,740
Credit Cash $8,740
To record the purchase of 230 shares of Washington Co. for $38 each this year
2. Cash $5,060
Credit Investment in Washington $4,370
Credit Gain from Sale of Investment in Washington $690
To record the sale of 115 shares for $44 and the realized gain.
3. Debit Unrealized Loss $575
Credit Investment in Washington Co. $575
To record the change in price of 115 shares at year-end.
Explanation:
a) Data and Analysis:
1. Investment in Washington Co. $8,740 Cash $8,740
purchased 230 shares of Washington Co. for $38 each this year
2. Cash $5,060 Investment in Washington $4,370 Gain from Sale of Investment in Washington $690
sale of 115 shares for $44.
3. Unrealized Loss $575 Investment in Washington Co. $575
Price per share dropped to $33 (230 - 115) * ($38 - $33)
On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.
Answer:
July 1, 20Y1
Debit : Cash $42,309,236
Credit : Bonds Payable $42,309,236
Explanation:
Debit the Cash Account and Credit the Bonds Payable Account with the amount of Cash received as a result of the issue. In this case the issue price is $42,309,236.
Roll over the items and match the examples to the sales promotion type.PromotionExamplesAdvantagesDisadvantagesCouponPremiumsContestsSweepstakesSamplesLoyalty ProgramsPOP DisplaysRebatesStimulates demandBuilds goodwillGenerates excitementIncreases involvementEncourages trialCreates loyaltyProvides visibilityLow redemption ratesBuy for premiumMust be monitoredSales declineHigh cost and risk to firmDifficult to get a good locationMay be copied by competitors
Answer:
Coupon ⇒ 20% off
Premiums ⇒ Free Keychain
Contests ⇒ 50-yard dash around the store
Sweepstakes ⇒ Win a trip to the Olympics
Samples ⇒ Ride the bike around the lot
Loyalty Programs ⇒ Buy 9, get the 10th one free.
POP Displays ⇒ Cash register display
Rebates ⇒ Mail-in for $20 off
During 2020, Lincoln Company hires 12 individuals who are certified to be members of a qualifying targeted group. Each employee works in excess of 600 hours and is paid wages of $13,600 during the year. Lincoln Company's work opportunity credit is_____.
Answer:
The work opportunity credit is $28,800
Explanation:
As we can see that the employees work more than 400 hours so here the company would be eligible for taking the full credit
The credit should be claimed till 40% of the first $6,000 that could allowed maximum credit of $2,400 per employee
Work opportunity credit is
= (6000 × 40%) × 12 individuals
= $28,800
Hence, the work opportunity credit is $28,800