Upscale hotels in the United States recently cut their prices by 20 percent in an effort to bolster dwindling occupancy rates among business travelers. A survey performed by a major research organization indicated that businesses are wary of current economic conditions and are now resorting to electronic media, such as the Internet and the telephone, to transact business. Assume a company’s budget permits it to spend $5,000 per month on either business travel or electronic media to transact business. Graphically illustrate how a 20 percent decline in the price of business travel would impact this company’s budget set if the price of business travel was initially $1,000 per trip and the price of electronic media was $500 per hour. Suppose that, after the price of business travel drops, the company issues a report indicating that its marginal rate of substitution between electronic media and business travel is 1. Is the company allocating resources efficiently? Explain
Answers
The graphical illustration is given in the attachment. It shows how a 20 percent decline in the price of business travel would impact this company’s budget set if the price of business travel was initially $1,000 per trip and the price of electronic media was $500 per hour. This exercise is about budgeting.
Suppose that, after the price of business travel drops, the company issues a report indicating that its marginal rate of substitution between electronic media and business travel is 1. Is the company allocating resources efficiently?
No. The company is not allocating resources efficiently.
What is the explanation for the above?The new price of business travel when the cost of business travel is lowered by 20% is derived as follows:
1000 * 20%
= $200
New price =
1,000 - 200
= $800
Recall that the budget limit is $5,000:
Number of travel units assuming the budget is fully allotted for travel
= 5000/800
= 6.25 journeys
Number of travel units assuming the funding is entirely devoted to media
= 5000/500
= 10 media
From the above, we can create a budget line B2 with media on the y-axis and travel on the x-axis.
When the price is dropped, the budget line shifts to the right, reading the slope and steepness of the budget line.
It is to be noted that the Marginal Rate of Substitution (MRS) is the gradient of the budget line. This line is derived by the change in y-axis and by the change in the x-axis.
Thus:
Budget line = - dy/dx
= - 10/6.25
= -1.6
This indicates that for every unit of business trip, we must sacrifice 1.6 units of media.
Remember that the MRS is -1, which implies that for every unit of business trip, the corporation gives away one unit of media.
In other words, they are paying the same price as for business travel, resulting in an inefficient use of resources.
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Related Questions
what is the meaning of gpp in poultry industry
Answers
Answer:
five year ghana poultry program
Explanation:
Lmk if right or not
Suman said that, "she didn't understand the
direct and indirect speech
Answers
Explanation:
Indirect speech, also known as reported speech or indirect discourse (US), is a means of expressing the content of statements, questions or other utterances, without quoting them explicitly as is done in direct speech. For example, He said "I'm coming" is direct speech, whereas He said (that) he was coming is indirect speech. Indirect speech should not be confused with indirect speech acts.
The Puck and Pawn Company manufactures hockey sticks and chess sets. Each hockey stick yields an incremental profit of $2 and each chess set, $4. A hockey stick requires 4 hours of processing at machine center A and 2 hours of processing at machine center B. A chess set requires 6 hours at machine center A, 6 hours at machine center B, and 1 hour at machine center C. Machine Center A has a maximum of 120 hours of available capacity per day, machine center B has 72 hours, and machine center C has 10 hours. If the company wishes to maximize profit, how many hockey sticks and chess sets should be produced per day
Answers
Answer:
For number of units of hockey stick = 24
For number of units of chess sets = 4
Maximum possible profit = $64
Explanation:
Decision Variables:
Number of units of Hockey sticks and chess sets
Number of Units Hockey Sticks Chess Sets
H C
Objective Function:
Maximize the total profit:
Max P = 2H + 4C
Constraints:
4H + 6C [tex]\leq[/tex] 120 hours ---> A
2H + 6C [tex]\leq[/tex] 72 hours ---->B
C [tex]\leq[/tex] 10 hours -----> C
H, C [tex]\geq[/tex] 0
For this question to solve, we need to draw a feasible region diagram, which I have attached in the attachment. Please refer to it.
So,
Points According to the feasible region are:
D(0,10) ; A(6,10) ; B(24,4) ; C(30,0) ;
Value of objective function at corner points:
At D(0,10) ; P = 2H + 4C = 2x0 + 4 x 10 = $40
At A(6,10); P = 2H + 4C = 2x6 + 4x10 = $52
At B((24,4) : P = 2H + 4C = 2 x 24 + 4x4 = $64
At C(30,0) ; P = 2H +4C = 2x30 + 4x0 = $60
Hence,
P is maximum at corner point B(24,4)
For number of units of hockey stick = 24
For number of units of chess sets = 4
Maximum possible profit = $64
Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments-Molding and Fabrication. It started, completed, and sold only two jobs during March- Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):
Molding Fabrication Total
Estimated total machine-hours used 2,500 1,500 4,000
Estimated total fixed manufacturing overhead $ 14,000 $ 17,400 $ 31,400
Estimated variable manufacturing overhead per machine-hour $ 3.00 $ 3.80
Job P Job Q
Direct materials $ 29,000 $ 16,000
Direct labor cost $ 33,800 $ 13,900
Actual machine-hours used:
Molding 3,300 2,400
Fabrication 2,200 2,500
Total 5,500 4,900
Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.
What was the company's plantwide predetermined overhead rate? (Round your answer to 2 decimal places.)
Answers
Answer:
Predetermined manufacturing overhead rate= $11.15 per machine hour
Explanation:
Molding Fabrication Total
Estimated total machine-hours used 2,500 1,500 4,000
Estimated total fixed manufacturing overhead $ 14,000 $ 17,400 $ 31,400
Estimated variable manufacturing overhead per machine-hour $ 3.00 $ 3.80
To calculate a single plantwide predetermined overhead rate, we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Total fixed overhead= $31,400
Total variable overhead= (3*2,500) + (3.8*1,500)= $13,200
Total Machine hours= 4,000
Predetermined manufacturing overhead rate= (31,400 + 13,200) / 4,000
Predetermined manufacturing overhead rate= $11.15 per machine hour
Steinberg Company produces commercial printers. One is the regular model, a basic model that is designed to copy and print in black and white. Another model, the deluxe model, is a color printer-scanner-copier. For the coming year, Steinberg expects to sell 100,000 regular models and 20,000 deluxe models. A segmented income statement for the two products is as follows:
Regular Model Deluxe Model Total
Sales $12,000,000 $10,720,000 $22,720,000
Less: Variable costs 7,200,000 6,432,000 13,632,000
Contribution margin $4,800,000 $4,288,000 $9,088,000
Less: Direct fixed costs 1,200,000 960,000 2,160,000
Segment margin $3,600,000 $3,328,000 $6,928,000
Less: Common fixed costs 1,702,400
Operating income $5,225,600
Required:
a. Compute the number of regular models and deluxe models that must be sold to break even.
b. Using information only from the total column of the income statement, compute the sales revenue that must be generated for the company to break even.
Answers
Answer:
Results are below.
Explanation:
First, we need to calculate the sales proportion of each product:
Regular= 12,000,000/22,720,000= 0.53
Deluxe= 10,720,000/22,720,000= 0.47
Now, we will determine the break-even point for the company as a whole:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Total fixed costs= 2,160,000 + 1,702,400= $3,862,400
Unitary contribution margin:
Regular= 4,800,000/100,000= $48
Delux= 4,288,000/20,000= $214.4
Weighted average contribution margin= (0.53*48) + (0.47*214.4)
Weighted average contribution margin= $128.35
Break-even point (units)= 3,862,400/128.35
Break-even point (units)= 30,093
For each product:
Regular= 0.53*30,093= 15,949
Deluxe= 0.47*30,093= 14,144
Finally, we need to calculate the break-even point in dollars for the whole company:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 3,862,400/ (9,088,000/22,720,000)
Break-even point (dollars)= 3,862,400/0.4
Break-even point (dollars)= $9,206,000
Wayne is working at the overseas branch of his organization. He needs some clarification about a project. He approaches a senior manager thinking he would get a good explanation. However, he is instructed to follow protocol and sent away. Also, he is informed that only team leads are allowed to approach senior managers. This implies that the organization has a ______ score.
A) high Individualism/Collective Index
B) high Power Distance Index
C) low Individualism/Collective Index
D) low Power Distance Index
E) high Uncertainty Avoidance Index
Answers
Answer:
B)High Power Distance Index
Explanation:
From the question, we are informed about Wayne who is working at the overseas branch of his organization. He needs some clarification about a project. He approaches a senior manager thinking he would get a good explanation. However, he is instructed to follow protocol and sent away. Also, he is informed that only team leads are allowed to approach senior managers. In this case, the organization has a High Power Distance Index score. The power-distance index can be regarded as way to measure acceptance of hierarchy of wealth/power by some people in a nation, business as well as culture. power-distance index helps to know how well citizen can accept authority or challenge authority of those in power.
A company sells 500 shirts at a price of $15 each with a cost of goods sold of $2 per shirt. The company has selling and administrative expenses of $2,500, depreciation expenses of $500, interest expenses of $1,000, and a tax rate of 35%. Calculate the operating (EBIT)
Answers
Answer:
EBIT= $3,500
Explanation:
EBIT is the earnings before interest and taxes.
First, we need to calculate the sales revenue and cost of goods sold:
Sales= 500*15= $7,500
COGS= 500*2= $1,000
Now, we can determine the EBIT:
Sales= 7,500
COGS= (1,000)
Gross profit= 6,500
Selling and administrative expense= (2,500)
Depreciation expense= (500)
EBIT= $3,500
If we want to determine the net income:
EBIT= 3,500
Interest= (1,000)
EBT= 2,500
Tax= 2,500*0.35= (875)
Depreciation= 500
Net income= 2,125
Coronado Corporation had income from continuing operations of $10,661,000 in 2020. During 2020, it disposed of its restaurant division at an after-tax loss of $190,500. Prior to disposal, the division operated at a loss of $321,600 (net of tax) in 2020 (assume that the disposal of the restaurant division meets the criteria for recognition as a discontinued operation). Coronado had 10,000,000 shares of common stock outstanding during 2020. Prepare a partial income statement for Coronado beginning with income from continuing operations
Answers
Answer and Explanation:
The preparation of the partial income statement for Coronado beginning with income from continuing operations is presented below:
Income from continuing operations $10,661,000
Discontinued Operations :
Loss from operations of discontinued restaurant division ($321,600)
After tax Loss from disposal of restaurant division ($190,500)
Net Income $10,148,900
Earning Per Share :
Income from continuing operations [$10,661,500 ÷ 10,000,000] $1.07
Discontinued Operations [$521,100 ÷ 10,000,000] ($0.05121)
Net Income [$10,148,900 ÷ 10,000,000] $1.01489
What is the difference between Absolute Advantage and Compartive Advantage?
Answers
Answer: See explanation
Explanation:
Absolute advantage simply means when an economic entity such as individuals or the firms can produce a particular good more efficiently than others who produce similar good. In this case, a larger quantity is produced when compared to others.
Comparative advantage is when an economic agent can actually produce goods at an opportunity cost that's lower than the opportunity cost of its competitors. Due to this, such economic agent can sell its good at a cheaper price than others and therefore make more revenue.
It's best if you share the details of a personal appointment when you need to request time off work. True Or False
Answers
Answer:
False
Explanation:
White Corporation’s budget calls for the following sales for next year.
Quarter 1 90,000 units Quarter 3 68,000 units
Quarter 2 76,000 units Quarter 4 96,000 units
Each unit of product requires 3 pounds of direct materials. The companypolicy is to begin each quarter with an inventory of product equla to 5% of that quater's estimaged sales requirements and an inventory of direct materials equal to 20% of that quarter’s estimated direct materials requirements for production.
Required:
Determine the production and materials purchases budgets for the second quarter.
Answers
Solution :
Production Budget Quarter 2 Quarter 3
Sales 76000 68000
Add:desired closing inventory 3400 4800
Less: opening inventory 3800 3400
Production budget 75600 69400
Material Budget Quarter 2
Consumption 226800 (3 units x 75600)
Add:desired closing inventory 41640 (20% of the subsequent quarter)
(69400 x 3 x 0.20)
Less:opening inventory 45360 (20% of the current quarter)
Raw material to be purchased 223080
Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $5,000 under each of the following situations:
1. The first payment is received at the end of the first year, and interest is compounded annually.
2. The first payment is received at the beginning of the first year, and interest is compounded annually.
3. The first payment is received at the end of the first year, and interest is compounded quarterly.
Depoosite date: 12/31/17, i=?, n=?, Deposit= $4100, PV - 12/31/16: ?
Deposite date 12/31/18, i=?, n=?, Deposit=$4100, PV -12/31/16: ?
Deposite date: 12/31/19, i=?, n=?, Deposit= $4100, PV- 12/31/16: ?
Deposti date: 12/31/20, i=?, n=?, Depostie= $4100, PV - 12/31/16: ?
Deposit date: 12/31/21, i=?, n=?, deposite=$ 4100, PV - 12/31/16: ?
Answers
Solution :
Annual payment = [tex]$\$ 5000$[/tex]
1. The rate of interest annually = 12%
Present value [tex]$=\$5000 \times \text{PVA of} \ \$1(12\%, 5)$[/tex]
[tex]$=\$5000 \times 3.60478$[/tex]
= $ 18,023.90
2. The rate of interest annually = 12%
Present value [tex]$=\$5000 \times \text{PVAD of} \ \$1(12\%, 5)$[/tex]
[tex]$=\$5000 \times 4.03735$[/tex]
= $ 20,186.75
3. The rate of interest annually = 12%
The rate of interest quarterly = 3%
Present value = [tex]$\$5000 \times \text{PV of} \ \$1(3\%, 4) + \$5000 \times \text{PV of} \ \$1(3\%, 8) +\$5000 \times \text{PV of} \ \$1(3\%, 12) $[/tex] [tex]$+\$5000 \times \text{PV of} \ \$1(3\%, 16) + \$5000 \times \text{PV of} \ \$1(3\%, 16)$[/tex]
[tex]$= \$5000 \times 0.88849 + \$5000 \times 0.78941 + \$5000 \times 0.70138 + \$5000 \times 0.62317 + \$5000 \times 0.55368$[/tex][tex]$=\$ 17,780.65$[/tex]
On January 1, 2021, Teal Corp. had 502,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account.
February 1 Issued 125,000 shares
March 1 Issued a 10% stock dividend
May 1 Acquired 98,000 shares of treasury stock
June 1 Issued a 3-for-1 stock split
October 1 Reissued 58,000 shares of treasury stock
The weighted-average number of shares outstanding. Assume that Indigo Corp. earned net income of $3,605,000 during 2021. In addition, it had 104,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2021. Compute earnings per share for 2018, using the weighted-average number of shares.
Assume that Indigo Corp. earned net income of $3,605,000 during 2021. In addition, it had 104,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2021. Compute earnings per share for 2018, using the weighted-average number of shares determined in part (a).
Answers
Answer:
a. The weighted-average number of shares for 2021 is 1,853,225 shares.
b. Earnings per share for 2021 = $1.95 per share
Explanation:
Note: The correct year in the requirement is 2021 not 2018 as erroneously stated parts a and b.
The explanation of the answers is now given as follows:
a. Compute earnings per share for 2021, using the weighted-average number of shares.
Note: See the attached excel file for the computation of the weighted-average number of shares.
From the attached excel file (see the bold red color), the total weighted-average number of shares for 2021 is 1,853,225 shares.
b. Assume that Indigo Corp. earned net income of $3,605,000 during 2021. In addition, it had 104,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2021. Compute earnings per share for 2021, using the weighted-average number of shares determined in part (a).
To calculate earnings per share for 2021, the following formula is used:
Earnings per share for 2021 = Net income of $3,605,000 during 2021 / Weighted-average number of shares for 2021
Therefore, we have:
Earnings per share for 2021 = $3,605,000 / 1,853,225 = $1.95 per share
Suppose that a project has a depreciable investment of $600,000 and falls under the following accelerated depreciation schedule for tax purposes (standard linear depreciation in the books): year 1: 20 percent; year 2: 32 percent; year 3: 19.2 percent; year 4: 11.5 percent; year 5: 11.5 percent; and year 6: 5.8 percent. Tax rate is 35%. Calculate the annual depreciation schedule and depreciation tax-shield.
Answers
Solution :
Depreciation rates 16.67% 16.67% 16.67% 16.67% 16.67% 16.67%
(books)
Depreciation $100000 $100000 $100000 $100000 $100000 $100000
(books)
Depreciation $35000 $35000 $35000 $35000 $35000 $35000
tax shield (books)
Depreciation rate 20% 32% 19.20% 11.50% 11.50% 5.80%
(tax)
Depreciation $120000 $192000 $115200 $69000 $69000 $34800
(tax)
Depreciation $42000 $67200 $40320 $24150 $24150 $12180
tax shield (tax)
The ultimate goal of operations management is to provide high-quality goods and services instantaneously in response to customer demand.
a. True
b. False
Answers
Answer:
a. True
Explanation:
The ultimate goal of operations management is to provide, in a timely and successful manner, goods and/or services to the final customer.
In this sense, operation management is customer-focused, and for this reason, its main task is to ensure the successful production and/or delivery of a good or service, from the moment the inputs enter the firm, to the moment the output exits the firm and reaches the final customer.
Which of the following statements is true? Group of answer choices When you invest money, you are taxed each year on any capital gains even if you do not sell the asset. Both when you invest money, you are taxed each year on any capital gains even if you do not sell the asset and you will be taxed each year that you receive a dividend from an investment are correct. You will be taxed each year that you receive a dividend from an investment. Interest earned on an investment is considered to be tax free until you sell the investment.
Answers
Answer:
Interest earned on an investment is considered to be tax free until you sell the investment.
Explanation:
Time Value of Money is Simply know as to the truth or fact that money received today is worth more money received next year or the year after it.
Future Value is the rate or amount of money an investment will grow to over some period of time at some given interest rate. Investment is simply known as the buying or purchase of assets with the aim of increasing future income and interest.
After-tax rate of returns of investments depends on Before-tax rate of return., When investment income and gains are taxed,Taxed annually, e.t.c.
Which of the following about writing and revising business documents is most accurate? a. Experienced business writers rarely need to revise. b. Revision is not necessary for informal documents such as internal memos or e-mail messages. c. The real work of revision should happen in the writing stage as you select words and form sentences.
Answers
When the message is to be evaluated so it includes an analysis of whether the message attains its motive so this represents the accurateness of writing & revising the business documents.
The following information should be relevant:
Since revision is important so option a and option b is not considered.It can't be done in the writing stage and should be in the flow. So, option c should not be selected. Therefore, option d should be considered.Therefore we can conclude that when the message is to be evaluated so it includes an analysis of whether the message attains its motive so this represents the accurateness of writing & revising the business documents.
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The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $61,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine
Answers
Answer:
1. $6,100
2. $3,000
3.$41,000
4.7.3%
Explanation:
1. Calculation for What is the annual depreciation expense associated with the new bottling machine
Depreciation expense= 61,000/10
Depreciation expense=$6,100
2. Calculation for What is the annual incremental net operating income provided by the new bottling machine
Reduction in Operating costs 9,000 ($15,000-$6,000)
Less: Depreciation expense $6000
Incremental net operating income $3,000
3. Calculation for What is the amount of the initial investment
Purchase cost $61,000
Less: Salvage value of old machine $20,000
Initial Investment $41,000
4. Calculation for What is the simple rate of return on the new bottling machine
Incremental net operating income 3000
÷ Initial Investment 41000
Simple rate of return 7.3%
(3,000÷41,000)
What is another term for the buying and selling of stocks?
A.) Entrepreneurial ability.
B.) Trading.
C.) Shares.
D.) Lack of scarcity.
Answers
Identify the correct order of the four steps used to prepare a production cost summary (report). 1)Summarize the cost flow of physical units; (2) Compute the total cost of equivalent units of production; (3) Compute the cost per equivalent unit of production; and (4) Assign costs to units completed and units in process. (1)Summarize the flow of physical units; (2) Compute the equivalent units of production output; (3) Assign costs to units completed and units in process; and (4) Compute the cost per equivalent unit of production. (1)Summarize the flow of physical units; (2) Compute the equivalent units of production output; (3) Compute the cost per equivalent unit of production; and (4) Assign costs to units completed and units in process. (1)Summarize the flow of physical units; (2) Compute the equivalent units of production output; (3) Compute the total cost of equivalent units of production; and (4) Assign costs to units completed and units in process.
Answers
Answer:
The answer is "Option C".
Explanation:
The Costs of production relate to the price of a company producing or producing a service, which can include the range of expenditures, like labor, manufactured goods, supplies of items, and expenses. It has mainly four steps that can be defined as follows:
Complete the physical unit flow.Measure the production unit's equivalent.Compare the value per unit for output equivalent.Assign costs to finished units and manufactured units.Lee Financial Services pays employees monthly. Payroll information is listed below for January 2018, the first month of Lee's fiscal year. Assume that none of the employees exceeded any relevant wage base.
Salaries $470,000
Federal income taxes to be withheld 94,000
Federal unemployment tax rate 0.60%
State unemployment tax rate (after
FUTA deduction) 5.40%
Social security tax rate 6.20%
Medicare tax rate 1.45%
Required:
1. Calculate the income and payroll taxes for the January 2018 pay period.
2. Prepare the appropriate journal entries to record salaries and wages expense (not paid) and payroll tax expense for the January 2018 pay period.
Answers
Answer and Explanation:
1. The computation is shown below:
As we know that employee taxes involved the social security tax, medicare tax and the income tax
Social security tax
= Gross pay × 6.2%
= $470,000 × 6.2%
= $29,140
Medicare tax
= Gross pay × 1.45%
= $470,000 × 1.45%
= $6,815
And,
Income tax withheld = $94,000
Now payroll taxes involved social security tax, Medicare tax, Federal unemployment tax, and state unemployment tax.
Social security tax
= Gross pay × 6.2%
= $470,000 × 6.2%
= $29,140
Medicare tax
= Gross pay × 1.45%
= $470,000 × 1.45%
= $6,815
Federal unemployment tax is
= Gross pay × 0.6%
= $470,000 × 0.6%
= $2,820
State unemployment tax
= Gross pay × 5.40%
= $470,000 × 5.40%
= $25,380
2. Now the journal entries are
On January, 2018
Salaries wages expense $470,000
To Withholding income tax payable $94,000
To Social security tax payable $29,140
To Medicare tax payable $6,815
to Salaries and wages payable $340,045
(being salaries and wages expense is recorded)
On Jan 2018
Payroll tax expense $64,155
To Social security tax payable $29,140
To Medicare tax payable $6,815
To Federal unemployment tax payable $2,820
To State unemployment tax payable $25,380
(being tax liabilities is recorded)
what is the main difference between regular work hours and overtime
Answers
Answer:
regular work hour- employee are expected to on the basis of their employment contract.
overtime- hours worked exceed normally scheduled working hours.
management accounting is accounting for effective management. Explain this statement.
Answers
Explanation:
Management is the process of organizing, commanding, coordinating and controlling administrative resources. When we talk about management accounting, we relate to a company's financial resources, which are essential for profitability, payments, investments, etc., that is, so that the business can flow effectively.
Therefore, it is correct to say that managerial accounting is the accounting for effective management because accounting is an instrument of control and management for organizing financial accounts and indexes, these being essential instruments in helping to better decision making in a period of time, giving subsidies for managers to adapt and anticipate negative financial situations for example.
Mather Company purchased equipment on January 1, 2012 at a total invoice cost of $224,000; additional costs of $4,000 for freight and $20,000 for installation were incurred. The equipment has an estimated salvage value of $8,000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2013 if the straight-line method of depreciation is used is:
Answers
Answer:
$96,000
Explanation:
Note that December 2013 is the end of the second year since the equipment was purchased, hence, the accumulated depreciation is 2-year accumulated depreciation which is shown thus:
Annual depreciation=(cost of equipment-salvage value)/useful life
The cost of equipment includes total invoice cost, freight, and installation costs
The cost of equipment=$224,000+$4,000+$20,000
The cost of equipment=$248,000
salvage value=$8,000
useful life= 5 years
Annual depreciation=($248,000-$8000)/5
Annual depreciation=$240,000/5
Annual depreciation=$48,000
Accumulated depreciation for 2 years=$48,000*2
Accumulated depreciation for 2 years=$96,000
Yale Corporation issued to Zap Corporation $70,000, 10% (cash interest payable semiannually on June 30 and December 31) 10-year bonds dated and sold on January 1, 2020. Assume that the company uses the effective interest method for amortization. If the bonds were sold at 97, yielding 10.5%. What is true for journal entries to be made at June 30, 2020, for interest payment if Effective interest method is used?
Answers
Answer:
Journal Entry
June 30, 2020
Dr. Interest expense __$3,564.75
Cr. Discount on bonds_$64.75
Cr. Cash ___________$3,500
[To record interest]
Explanation:
First, we need to calculate the issuance price of the bond
Issuance price of the bond = Face value x Seling rate = $70,000 x 97/100 = $67,900
Now we need to calculate the discount value as follow
Discount = Face value - Isuance vaue = $70,000 - $67,900 = $2,100
Now, need to calculate the discount amortization as follow
Discount amortization = ( Carrying value of bond x Effective interest rate x 6/12 ) - ( Face value x Coupon rate x 6/12 ) = ( $67,900 x 10.5%x 6/12 ) - ( $70,000 x 10% x 6/12 = $3,564.75 - $3,500 = $64.75
Now calculate the interest payment
Interst payment = Face value x Coupon rate x 6/12 = $70,000 x 10% x 6/12 = $3,500
The bonds would expire on the date of maturity, and the issuing company will pay the debt holder the face value of the bond.
The issue price is termed as the price at which the issuer of the bond sells the bonds for the first time.
The Journal entry has been attached below.
The calculation of the issuance price of the bond:
Issuance price of the bond = [tex]\text{Face value} \times \text{Seling rate} = \$70,000 \times \frac{97}{100}[/tex] = $67,900
Calculation of the discount value:
Discount = Face value - Isuance vaue = $70,000 - $67,900 = $2,100
Calculation of the discount amortization:
Discount amortization = [tex]( \text{Carrying value of bond} \times \text{Effective interest rate} \itimes \frac{6}{12} ) - ( \text{Face value} \times \text{Coupon rate} \times \frac{6}{12})[/tex]
= [tex]( \$67,900 \times 10.5\%\times \frac{6}{12}) - ( \$70,000 \times 10\% \times \frac{6}{12})[/tex]
= $3,564.75 - $3,500 = $64.75
Calculation of the interest payment:
Interst payment =[tex]\text{ Face value} \times \text{Coupon rate} \times \frac{6}{12} = \$70,000 \times 10\% \times \frac{6}{12}[/tex]= $3,500
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Presented below is information related to Wyrick Company:(1.) The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock.(2.) 8,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $300,000. The board establishes a stated value of $5 per share for the common stock.(3.) 5,000 shares of preferred stock are sold for cash at $120 per share.(4.) The company issues 100 shares of common stock to its attorneys for costs associated with starting the company. At that time, the common stock was selling at $60 per share.Instructions:Prepare the general journal entries necessary to record these transactions.
Answers
Answer and Explanation:
The journal entries are shown below:
1. No journal entry is required
2. Land 300,000
Common Stock 40,000
Paid-in Capital in Excess
of Stated Value 260,000
(Being the land is purchased by the issue of the shares)
3. Cash 600,000
Preferred Stock 500,000
Paid-in Capital in Excess
of Par—Preferred Stock 100,000
(Being the preferred stock is issued for cash)
4. Organization Expense 6,000
Common Stock 500
Paid-in Capital in Excess
of Stated Value 5,500
(Being organizaiton expense is recorded)
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows:
FMV Adjusted Basis Appreciation
  Cash $32,250 $32,250
  Receivables 18,600 18,600
  Building 136,000 68,000 68,000
  Land 269,250 89,750 179,500
Total $456,100 $208,600 $247,500
Payables $27,200 $27,200
  Mortgage* 135,750 135,750
Total $162,950 $162,950
Ernesto was asking for $408,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales price was an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($68,000) will be recorded as goodwill. Required:
a. What amount of gain or loss does BLI recognize if the transaction is structured as a direct asset sale to Amy and Brian? What amount of corporate level tax does BLI pay as a result of the transaction, assuming a tax rate of 34 percent?
b. What amount of gain or loss does Ernesto recognize if the transaction is structured as a direct asset sale to Amy and Brian, and BLI distributes the after-tax proceeds (computed in question a) to Ernesto in liquidation of his stock?
c. What is the nature of tax benefits to Amy and Brian as a result of structuring the acquisition as a direct asset purchase?
d. What is the tax basis in the assets received by Amy and Brian?
Answers
Answer:
Bottom Line, Inc. (BLI)
a. The amount of gain that BLI should recognize if the transaction is structured as a direct asset sale to Amy and Brian is:
= $199,400
BLI will a corporate tax of $ 67,796 ($199,400 * 34%) as a result of the transaction.
b. The amount of gain that Ernesto recognizes when BLI distributes the after-tax proceeds to Ernesto in liquidation of his stock is:
= $190,204
c. Amy and Brian can step up the tax basis of the assets to their fair market values.
d. The tax basis in the assets received by Amy and Brian is:
= $408,000
Explanation:
a) Data and Calculations:
FMV Adjusted Basis Appreciation
Cash $32,250 $32,250
Receivables 18,600 18,600
Building 136,000 68,000 68,000
Land 269,250 89,750 179,500
Total $456,100 $208,600 $247,500
Payables $27,200 $27,200
Mortgage* 135,750 135,750
Total $162,950 $162,950
Net Value $293,150 $45,650
Sales price for the company = $408,000
Ernesto tax basis in BLI stock = 150,000
Difference = $258,000
Unrecognized customer list = 150,000
Unallocated Goodwill = $108,000
Gain to be recognized if transaction is a direct asset sale:
Sales price = $408,000
Adjusted basis 208,600
Capital gain = $199,400
After-tax proceeds:
Sales price = $408,000
Corporate tax on capital gain = $ 67,796
After-tax proceeds = $340,204
Ernesto's tax basis = 150,000
Capital gain for Ernesto = $190,204
Toby Toy Store has noticed the following items that need to be considered for its income statement for the year ended December 31, 2019: Commissions of $3,000 for salespeople who made sales in December will be paid on January 3, 2020.
The phone bill of $400 for December was received and will be paid on January 20, 2020.
The store rent of $2,000 for January 2020 was paid on December 28, 2019.
At the beginning of November, Toby paid $1,500 for advertising in a monthly magazine that is distributed in November and December of 2019, and January of 2020.
What is the proper amount of expenses to be included in the income statement for the year?
a. $4,400.
b. $6,900.
c. $6,400.
d. $5,900.
Answers
Answer: $4400
Explanation:
The proper amount of expenses to be included in the income statement for the year will be calculated as:
Commissions for salespeople who made sales in December = $3000
Add: Phone bill = $400
Add: Advertisement = $1000
Total expense = $3000 + $400 + $1000 = $4400
N.B: The commission and telephone charge were incurred in December 2019 and should be added.
The store rent of $2,000 for January 2020 was paid on December 28, 2019. This won't be added since it was for 2020.
Advertisiment of $1,500 was paid for November 2019, December 2019 and January 2020. We are concerned with that of November and December 2019. This will be: $1500 × 2/3 = $1000
Each scenario below gives some information about price elasticity of demand for a firm. Use this information to answer the questions. Round answers to two places after the decimal where applicable. Honest Abe's Used Cars estimates the price elasticity of demand for their cars to be 4.60 . Last month, Abe tried a new marketing scheme which decreased the number of cars sold by 67 %.
Abe must have_________ prices. Therefore, Abe's total revenue ____________ Abe's prices must have changed by:________%
At Webs-R-Us, a website design company, the new manager has decided to increase the price of Webs-R-Us services by 45%.
If Webs-R-Us has a price elasticity of demand at 0.70, we can expected the number of websites designed to ___________
Answers
Answer:
increased
fell
14.57%
decrease
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Honest Abe's Used Cars has an elastic demand because its coefficient of elasticity is greater than one. Because demand is elastic, a rise in price would lead to a decrease in the number of cars sold. If price is increased, demand would fall more than the change in price, so total revenue would fall.
4.6 = 0.67 / percentage change in price
Percentage change in price = 0.67 / 4.6 = 0.1457 = 14.57%
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Webs-R-Us services has an inelastic demand.
If prices are increased, demand would fall but it would fall less than the increase in price
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded
One major advantage of limited liability is that it:________.
a. is not subject to a free-rider problem.
b. has unlimited profit sharing among the firm's owners.
c. shields the personal assets of owners from liability claims.
d. is not subject to a principal-agent problem.
Answers
Answer: c. shields the personal assets of owners from liability claims.
Explanation:
An advantage of limited liability is that it shields the personal assets of owners from liability claims.
For a limited liability company, it should be noted that the liabilities of the members in the company for the debts that are incurred are limited only to the investment of the members. Personal assets are not affected if the company first into debt.