Answer:
Weighted Average Equivalent Units Materials 4960 Conversion 5200
Fifo Equivalent Units Materials 4850 Conversion 5140
Explanation:
Normally weighted average method is used when not specified.
Production Flow Percent Complete
Units Materials Conversion
WIP beginning inventory 200 55% 30%
Units started this period 5,000
Total units: 5,200
Completed and transferred 4,800 100%
Work IP, ending inventory 400 40%
Using Weighted Average method for Equivalent Units we add the completed units with the ending inventory
Particulars Units Materials Conversion
Completed 4800 4800 4800
+ WIP Ending 400 160 400
Equivalent Units 4960 5200
Materials EWIP = 400*40%= 160
Conversion EWIP= 400*100 %=400
If we use FIFO method then we deduct the beginning inventory from the weighted average method equivalent unit production
Particulars Units Materials Conversion
Completed 4800 4800 4800
+WIP Ending 400 160 400
- BWIP 200 110 60
Equivalent Units 4850 5140
Materials BWIP = 200*55%= 110
Conversion EWIP= 200*30%= 60
What are the sources of economic profits for a company or an industry?
This can be seen by noting three reasons for economic profit: (1) market control, (2) risk, and (3) innovation. Market Control: One of the most common reasons for economic profit is market control by a firm. A firm has market control if it can exert some degree of influence, or control, over the market price.
Explanation:
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An asset group is being evaluated for an impairment loss. The following financial information is available for the asset group: Carrying value $100,000,000 Sum of the undiscounted cash flows $95,000,000 Fair value $80,000,000 What amount of impairment loss, if any, should be recognized
Answer:
The amount of the impairment loss that should be recognized is:
$20,000.
Explanation:
a) Data and Calculations:
Undiscounted cash flows = $95,000
Carrying value = $100,000
Fair value = 80,000
Impairment loss = $20,000
b) Impairment loss for the asset group is the difference between the fair value and the carrying value. It is recognized when the fair value declines from the carrying value. This implies that the calculation to determine the impairment loss is achieved by deducting the fair value from the carrying value.
The Prince-Robbins partnership has the following capital account balances on January 1, 2015:
Prince, Capital $130,000
Robbins, Capital 120,000
Prince is allocated 80 percent of all profits and losses with the remaining 20 percent assigned to Robbins after interest of 7 percent is given to each partner based on beginning capital balances. On January 2, 2021, Jeffrey invests $40,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 6 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2021, the partnership reports a net income of $10,000.
Required:
a. Prepare the journal entry to record Jeffrey entrance into the partnership on January 2, 2015.
b. Determine the allocation of income at the end of 2015.
Answer:
The Prince-Robbins-Jeffrey Partnership
a) Journal entry to record Jeffrey entrance into the partnership on January 2, 2015:
Debit Capital Account - Prince $72,000
Debit Capital Account - Robbins $18,000
Credit Goodwill $90,000
To record the negative goodwill arising at Jeffry entrance into the partnership.
Debit Cash Account $40,000
Credit Capital Account - Jeffrey $40,000
To record the investment by Jeffrey into the partnership.
b) Allocation of income at the end of 2015:
Prince Robbins Jeffrey Total
Interest 6% $3,480 $6,120 $2,400 $12,000
on new capital
Loss sharing -1,000 -600 -400 -2,000
Net income $2,480 $5,520 $2,000 $10,000
Explanation:
a) Data and Calculations:
January 1, 2015: Capital Old Profit sharing ratio
Prince, Capital $130,000 80%
Robbins, Capital 120,000 20%
Total $250,000 100%
Interest on capital = 7% based on beginning capital balances.
b) Calculation of Negative Goodwill arising from Jerry's admission:
New capital after Jerry's admission = $290,000
Implied capital at Jerry's admission = $40,000/20% = $200,000
Negative goodwill arising = $200,000 - $290,000 = -$90,000
This negative goodwill will be shared by Prince and Robbins to reduce their capital:
Prince = $72,000 ($90,000 * 80%)
Robbins - $18,000 ($90,000 * 20%)
c) New Capital on January 2, 2015:
Capital Negative Goodwill New Profit sharing ratio
Jerry, Capital $40,000 20%
Prince, Capital $58,000 ($130,000 - 72,000) 50%
Robbins, Capital $102,000 ($120,000 - 18,000) 30%
Total capital $200,000 100%
Interest on capital = 6%
d) Jeffrey's admission and ownership of 20% reduced the capital balances of Prince and Robbins by $90,000. There was a negative goodwill arising from his admission into the partnership. This negative goodwill is shared between the old partners in their old profit-sharing ratio.
Sammy, a calendar year cash basis taxpayer who is age 66, has the following source of income and expenses: Salary $90,000 IRA Distribution - Roth IRA $10,000 Medical expenses ($8,000) Sammy also made a charitable contribution of ABC Shares. The FMV at the date of the contribution was $5,000. Sammy inherited the shares 5 years ago. At that time the FMV of the shares was $3,500. Based on this information, Sammy has:
Answer:
Adjusted Gross income of $90,000
Explanation:
The computation of the adjusted gross income is as follows:
Salary income- 90,000
IRA Distribution $0
Adjusted Gross Income $90,000.
We assume the IRA distribution is a tax free
Therefore the sammy has the adjusted gross income of $90,000 and the same is to be considered
Explain what is meant by a balanced scorecard.
A balanced scorecard is a strategic management performance metric used to identify and improve various internal business functions and their resulting external outcomes. Balanced scorecards are used to measure and provide feedback to organizations.
Explanation:
have a good day <3
If it is estimated that 30 persons will be living in this new chapter house, what would be the Skulls' annual cost savings by selecting the less costly location, rather than the more costly
Answer: B. $1,500
Explanation:
Cost of using Alpha Avenue
= 5,000 + (200 * 30 people)
= $11,000
Cost of using Beta Blvd.
= 8,000 + (150 * 30 people)
= $12,500
Cost savings = 12,500 - 11,000
= $1,500
an underwriter enters into a firm commitment to sell 1 million shares at 20 each including a 2 spread. how much does the issuing firm receive if only 500000 shares are sold
Answer:
the issuing firm received is $9,000,000 or $9 million
Explanation:
The computation of the issuing firm received is shown below;
= Number of shares sold × (sale price per share - spread)
= 500,000 shares × ($20 - $2)
= $500,000 shares × $18
= $9,000,000 or $9 million
Hence, the issuing firm received is $9,000,000 or $9 million
We simply applied the above formula so that the accurate value could come
And, the same is to be considered
Suppose that in 2020 the expected dividends of the stocks in a broad market index equaled $240 million when the discount rate was 8% and the expected growth rate of the dividends equaled 6%. Using the constant-growth formula for valuation, if the discount rate increases to 9%, the value of the broad market index will change by ________.
Answer:
-33.33%
Explanation:
This is the The formula for this solution:
Value of Market = Expected Dividend divided by (Discount Rate-Growth rate of Dividend)
The Expected Dividend is 240
Then Value of Market = 240/(8% - 6%)
= 12,000,000,000
Then we get Value of market when discount rate = 9%
The Value of Market = 240/(9% - 6%)
= 8,000,000,000
the market value has changed.
We then get the percentage change will be = (
= (12,000,000,000 - 8,000,000,000) / 12,000,000,000
= 33.33%
The market value has fallen by -33.33%
Mcniff Corporation makes a range of products. The company's predetermined overhead rate is $19 per direct labor-hour, which was calculated using the following budgeted data: Variable manufacturing overhead $ 32,000 Fixed manufacturing overhead $ 272,000 Direct labor-hours 16,000 Management is considering a special order for 730 units of product O96S at $67 each. The normal selling price of product O96S is $78 and the unit product cost is determined as follows: Direct materials $ 40.00 Direct labor 15.00 Manufacturing overhead applied 19.00 Unit product cost $ 74.00 If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order. Required: The financial advantage (disadvantage) for the company as a result of accepting this special order would be:
The cost of equity for a firm is 20%. If the real interest rate is 5%, the inflation premium is 3%, and the market risk premium is 2%, what is the investment risk premium for the Firm
Answer: 10%
Explanation:
Investment risk premium is used to determine the returns an investor makes in excess of real interest rates, inflation and the market return;
= Cost of Equity - Real interest rate - Inflation premium - Market risk premium
= 20% - 5% - 3% - 2%
= 10%
During 2020, Sandeep had the following transactions: Salary $ 80,000 Interest income on City of Baltimore bonds 1,000 Damages for personal injury (car accident) 100,000 Punitive damages (same car accident) 200,000 Cash dividends from Chevron Corporation stock 7,000 Sandeep's AGI is: a.$387,000. b.$285,000. c.$287,000. d.$187,000.
Answer: c.$287,000.
Explanation:
City of Baltimore bonds are Municipal so their interest are tax exempt and so are Damages for personal injury.
Sandeep's AGI is therefore;
= Salary + Punitive damages + Cash dividends from Chevron
= 80,000 + 200,000 + 7,000
= $287,000
g Metlock, Inc. purchased office supplies costing $6300 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2250 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be:
Answer:
Dr Supplies Expense $4050
Cr Supplies $4050
Explanation:
Preparation for the appropriate adjusting journal entry to be made at the end of the period
Based on the information given we were told that the company made purchased of office supplies of the amount of $6300 in which the full supplies amount was debited which means that if at the end of the accounting period the physical count of office supplies shows the amount of $2250 The appropriate adjusting journal entry to be made at the end of the period would be:
Dr Supplies Expense $4,050
Cr Supplies $4,050
($6300-$2250)
An aging of a company's accounts receivable indicates that $13900 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1230 credit balance, the adjustment to record bad debts for the period will require a
Answer:the adjustment to record bad debts for the period will require a
Debit on Bad debt expenses for $ 12,670 and a credit To Allowance for doubtful accounts for $ 12,670
Explanation:
Account receivables for uncollectibles= $13,900
Allowance for Doubtful Accounts = credit balance of $1230
Adjusting entry for bad debts expense =Account receivables - credit balance of $1230
= $13,900- $1,230
=$12,670
Adjusting entry for the record of bad debts expense
Accounts titles Debit Credit
Bad debt expenses $ 12,670
To Allowance for doubtful accounts $ 12,670
The owner of Kat Motel wants to develop a time standard for the task of cleaning a cat cage. In a preliminary study, she observed one of her workers perform this task six times, with the following results: Observation 1 2 3 4 5 6 Time (secs) 99 87 90 81 93 90 What is the normal time for this task if the employee worked at a 50 percent faster pace than average
Answer:
a. 150 seconds
Explanation
Missing word "than average, and an allowance of 10 percent of the workday is used?"
Multiple choice: 150 seconds , 99 seconds , 90 seconds , 168.8 seconds , 100 seconds
σ (Recorded Time) = 99 + 87 + 90 + 81 + 93 + 90 = 540
Observation = n = 6
Performance rating = 100% + 50% = 150%
Observed Time = σ (Recorded Time) / n
Observed Time = 540 * 6
Observed Time = 90
Normal time = Observed Time * Performance rating
Normal time = 90 * (150 / 100)
Normal time = 90 * 1.5
Normal time = 135
Standard Time = Normal time / (1 - Allowance factor)
Standard Time = 135 / (1 - (10 / 100))
Standard Time = 135 / (1 - 0.1)
Standard Time = 135 / 0.9
Standard Time = 150 seconds.
Melvin receives stock as a gift from his uncle. The adjusted basis of the stock is $30,000 and the fair market value is $38,000. Melvin trades the stock for bonds with a fair market value of $35,000 and $3,000 cash. What is his recognized gain on the sale of stock and the basis for the bonds
Answer: None of the above
Explanation:
The options are:
a $0, $30,000.
b. $5,000, $33,000.
c. $5,000, $30,000.
d. $8,000, $33,000.
e. None of the above.
The information below can be deduced from the question:
Amount realized = $35000 + $3000 = $38000
Less: Adjusted basis = ($30000)
Realized gain = $8000
Based on the explanation above, the realized gain is $8,000 and the basis of the bond is $35,000.
arrugia Corporation produces two intermediate products, A and B, from a common input. Intermediate product A can be further processed into Product X. Intermediate product B can be further processed into Product Y. The common input is purchased in batches that cost $90 each and the cost of processing a batch to produce intermediate products A and B is $36. Intermediate product A can be sold as is for $53 or processed further for $33 to make Product X that is sold for $80. Intermediate product B can be sold as is for $113 or processed further for $66 to make Product Y that is sold for $160. Required: a. Assuming that no other costs are involved in processing the common input or in selling products, what is the profit (loss) from processing one batch of the common input into the products X and Y
Answer:
if the firm processes A and B into X and Y, it will lose $25
Explanation:
total costs of producing product A and B = $90 (common input) + $36 (processing) = $126
selling price of A and B = $53 + $113 = $166
profit of selling A and B = $166 - $126 = $40
if A and B are processed further, the cost of X and Y = $126 + $33 + $66 = $225
selling price of X and Y = $80 + $160 = $240
profit of selling X and Y = $240 - $225 = $15
if the firm processes A and B into X and Y, it will lose $40 - $15 = $25
Shelton, Inc., has sales of $20 million, total assets of $18.2 million, and total debt of $9.1 million. Assume the profit margin is 9 percent. What is the company's net income
Answer:
$1,800,000
Explanation:
Shelton incorporation has sales of $20,000,000
Total assets is $18.2 million
Total debt is $9.1 million
Profit margin is 9%
Therefore the company net income can be calculated as follows.
= sales × profit margin
= 20,000,000 × 9/100
= 20,000,000 × 0.09
= 1,800,000
Hence the company net income us $1,800,000
In the early 1900s, Henry Ford introduced a a. high-wage policy, and this policy produced none of the effects predicted by efficiency-wage theory. b. low-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory. c. high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory. d. low-wage policy, and this policy produced none of the effects predicted by efficiency-wage theory.
Answer:
high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory
In the early 1900s, Henry Ford introduced a high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory. The correct option is c.
In 1914, Henry Ford implemented a high-wage program known as the "Five Dollar Day" that considerably raised the earnings of his employees. This action was taken to increase production, decrease turnover, and recruit and keep a skilled team.
The high-wage theory, which contends that paying higher wages may result in a number of advantages for employers, was in line with this high-wage policy's expectations.
Thus, the ideal selection is option c.
Learn more about Henry Ford here:
https://brainly.com/question/28286176
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A suburban specialty restaurant has developed a single drive-thru window. Customers order, pay, and pick up their food at the same window. Arrivals follow a Poisson distribution, while service times follow an exponential distribution. If the average number of arrivals is 6 per hour and the service rate is 2 every 15 minutes.
What is the average number of customers in the system?
a. 0.50
b. 1.00
c. 2.25
d. 3.00
e. None of the above
What is the average number of customers waiting in line behind the person being served?
a. 0.50
b. 0.75
c. 2.25
d. 3.00
e. None of the above
What proportion of the time is the server busy?
a. 0.25
b. 0.50
c. 0.75
d. 2.25
e. 3.00
Solution :
The average number of the arrivals, λ = 6 per hour
Average service rate, [tex]$\mu = \frac{60 \times 2}{15}$[/tex]
= 8
Average number of the customers in the system is given by,
[tex]$= \frac{\lambda}{\mu - \lambda }$[/tex]
[tex]$= \frac{6}{8 - 6 }$[/tex]
= 3
Average number of the customers that are waiting in the line behind the person who are being served is,
[tex]$=\frac{\left(\frac{\lambda}{\mu}\right)^2}{1-\frac{\lambda}{\mu}} $[/tex]
[tex]$=\frac{\left(\frac{6}{8}\right)^2}{1-\frac{6}{8}} $[/tex]
[tex]$=\frac{(0.75)^2 }{0.25} $[/tex]
= 2.25
Proportion of the time the server is busy,
[tex]$=\frac{\lambda}{\mu}$[/tex]
[tex]$=\frac{6}{8}$[/tex]
= 0.75
Randy W. recently won the Western States Lottery. The lottery pays either a total of twenty $325,000 payments per year with the first payment today (i.e., an annuity due), or $3,500,000 today. At what interest rate would Randy be financially indifferent between these two payout choices?
Answer: 8.92%
Explanation:
The interest rate that would make Randy indifferent is the one that will discount the twenty payments of $325,000 to $3,500,000 today.
Use Excel's Rate function to find this rate;
=RATE (No of periods, annual payments, present value, future value, Annuity due = 1)
=RATE(20,350000,-3500000,0,1)
= 8.92%
Green Valley Exporters USA has $100,000 of before tax foreign income. The host country has a corporate income tax rate of 25% and the U.S. has a corporate income tax rate of 35%. If the U.S. has a bilateral trade agreement with the host country that calls for the total tax paid to be equal to the maximum amount that could be paid in the highest taxing country, what is the total amount of income taxes Green Valley Exporters will pay to the host country, and how much will they pay in U.S income taxes on the foreign earned income?A) $25,000
B) $35,000
C) $51,250
D) $60,000
Answer:
a. A) $25,000
b. $10,000
Explanation:
A. Calculation for what is the total amount of income taxes Green Valley Exporters will pay to the host country
Total amount of income taxes to pay host country=$100,000*corporate income tax rate of 25%
Total amount of income taxes to pay host country=$25,000
Therefore the total amount of income taxes Green Valley Exporters will pay to the host country will be $25,000
B. Calculation for how much will they pay in U.S income taxes on the foreign earned income
First step is to calculate tax amount in US
Tax amount in US=$100,000*35%
Tax amount in US=$35,000
Second step is to calculate host country corporate income tax rate
Host country corporate income tax rate =$100,000*25%
Host country corporate income tax rate=$25,000
Last step is to calculate how much will they pay in U.S income taxes on the foreign earned income
U.S income taxes on the foreign earned income=$35,000-$25,000
U.S income taxes on the foreign earned income=$10,000
Therefore how much will they pay in U.S income taxes on the foreign earned income is $10,000
What investment per quarter does Luisa need to make at the end of each quarter into her savings account over 8 quarters to reach her vacation goal of $10,000 if she is getting a 24% APR on her account?
Answer:
c. $1,010.36
Explanation:
Options " ) $1,610.36 2) $522.93 3) $1,010.36 4) $110.02"
Future value = Pmt * ((1+r)^n - 1) / r
Pmt = FV / ((1+r)^n - 1) / r
Size of the deposit = 10,000 / ((1.06^8) - 1) / 0.06
Size of the deposit = 10,000 / (1.59384807453 - 1) / 0.06
Size of the deposit = 10,000 / (0.59384807453/0.06)
Size of the deposit = 10,000 / 9.897467908833333
Size of the deposit = 1010.359426482723
Size of the deposit = $1,010.36
Perfect competition is characterized by all of the following except I - Many producers and consumers II - Homogeneous products III - Heavy advertising by individual sellers IV - Each firm is a price taker
Answer:
III - Heavy advertising by individual sellers
Explanation:
Perfect competition occurs when producers supply relatively homogeneous products and consumers have all information relevant for making a purchase.
So no single entity has the power to control price of commodities in the market.
All forms are price takers meaning the prevailing price in the market will apply to all forms.
Entry and exit of firms is also free for firms.
In perfect competition heavy advertising is not necessary because funds will be wasted in promoting a homogeneous product.
Average accumulated expenditures: Multiple Choice Is an approximation of the average debt a firm would have outstanding if it financed all construction through debt. Is computed as a simple average if all construction expenditures are made at the end of the period. Are irrelevant if the company's total outstanding debt is less than total costs of construction. All of these answer choices are true statements.
Answer:
A. Is an approximation of the average debt a firm would have outstanding if it financed all construction through debt.
Explanation:
Average accumulated expenditure can be regarded as the product of incurred expenditure on qualifying asset and par capitalization per unit for the period of that time in years. It should be noted that Average accumulated expenditures Is an approximation of the average debt a firm would have outstanding if it financed all construction through debt.
Maxim Corp. has provided the following information about one of its products: Date Transaction Number of Units Cost per Unit 1/1 Beginning Inventory 255 $ 151 6/5 Purchase 455 $ 171 11/10 Purchase 155 $ 211 During the year, Maxim sold 510 units. What is cost of goods sold using the average cost method
Answer:
$87,858.55
Explanation:
Date Transaction Number of Units Cost per Unit
1/1 Beg. 255 $151
6/5 Purchase 455 $171
11/10 Purchase 155 $211
total 865
total purchases + beginning inventory = (255 x $151) + (455 x $171) + (155 x $211) = $149,015
average cost per unit = $149,015 / 865 units = $172.27
COGS = $172.27 x 510 units = $87,858.55
Mauro Products distributes a single product, a woven basket whose selling price is $15 and whose variable expense is $12 per unit. The company's monthly fixed expense is $4,200. The company wants to have a profits of $12,000, how many units are required to be sold
Answer:
The number of units required to be sold are 5,400 units.
Explanation:
The following are given in the question:
Selling price per unit = $15
Variable expense per unit = $12
Monthly fixed expense = $4,200
Targeted profits = $12,000
Therefore, we have:
Contribution margin per unit = Selling price - Variable cost = $15 - $12 = $3
Units required to be sold = (Targeted profit + Monthly fixed expense) / Contribution margin per unit = ($12,000 + $4,200) / $3 = $16,400 / $3 = 5,400 units
Therefore, the number of units required to be sold are 5,400 units.
Michonne Corp.'s Free Cash Flow (FCF) for the most recent year (year 0) is $730 (million). FCF is expected to grow by 14% next year (1 year from now), by 10% the year after that (2 years from now), and by 5% per year thereafter. Michonne's WACC is estimated at 8%. The estimated Enterprise Value (Value of Operations) for Michonne is $____________(million).
Answer:
enterprise value = $29,024.26 million
Explanation:
first we must calculate the terminal value in year 2:
terminal value = FCF₃ / (WACC - g)
FCF₃ = $730 x 1.14 x 1.1 x 1.05 = $961.191WACC = 8%g = 5%terminal value = $961.191 / (8% - 5%) = $32,039.70
enterprise value = $832.2/1.08 + $915.42/1.08² + $32,039.70/1.08² = $770.556 + $784.825 + $27,468.879 = $29,024.26 million
Question 1: Peking Duct Tape Company has outstanding a $1,000-face-value bond with a 14 percent coupon rate and 3 years remaining until final maturity. Interest payments are made semiannually. What value should you place on this bond if your nominal annual required rate of return is 14 percent?
Answer:
Price Value of bond = $1,000
Explanation:
Given:
Face value = $1,000
Coupon rate = 14% yearly
Semi-annual rate = 14 / 2 = 7%
Number of year = 3
Semi-annual year = 3 x 2 = 6
Computation:
pmt(Semi-annual) = (coupon rate x face value)/2
pmt(Semi-annual) = (14% x 1000)/2
pmt(Semi-annual) = 140/2
pmt(Semi-annual) = $70
By using PV formula
=PV(rate,nper,pmt,fv,type) , [Semi-annual]
=PV(7%,6,70,1000,0)
Price Value of bond = $1,000
In meeting the gross income test for claiming his father as a dependent, James must consider the income received by his father. This income included gross rents of $3,000 (expenses were $2,000), municipal bond interest of $1,000, dividends of $1,500, and Social Security of $4,000. What is James' father's gross income for the qualifying relative test purposes in 2019
Answer:
Explanation:
In 2019, the gross income test is an official order that all dependents have no right to earn more than a given amount of income each year which is ($4200).
To compute the gross income for James Father, we have:
Description Amount
Gross income for rents $3000
Municipal Bond Interest 0
Dividend Income $1500
Social Security: 0
(since social security is exempted from the gross-income dependency test;
The total gross income = $4500
Thus, the gross income for James Father is $4500 as such he is not qualified to be dependent.
Amber Corporation purchases 40,000 shares of its own $20 par value common stock for $80 per share. What will be the effect on stockholders' equity?
a. decrease $800,000
b. increase $3,200,000
c. increase $800,000
d. decrease $3,200,000
Answer:d. decrease $3,200,000
Explanation:
Outstanding shares = 40,000
Price per share = $80
Amount to be paid to purchase its own shares = Number of outstanding shares x Price per share
= 40,000 x 80
= $3,200,000
When a company buys its own share , it is termed as Treasury stock, Having known that Treasury stock tends to decrease stockholders equity.
The stockholders equity of Amber Corporation will be decreased by $3,200,000.