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%
Diamond Boot Factory normally sells its specialty boots for $26 a pair. An offer to buy 90 boots for $22 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $10, and special stitching will add another $2 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization. $fill in the blank 1 Should Diamond Boot Factory accept or reject the special offer
Answer: i would say they could accept because it seems to be pretty cheap and you would be able to decorate for 2 dollars and you can see the diff price for each boot and more.
Explanation:
pls mark brainliest
Based on the Marshall Laws of Derived Demand, labor demand is more inelastic when a. workers are making a product that uses a highly labor intensive technology b. workers are making a product with more inelastic demand c. workers are making a product that uses a capital input with elastic supply d. workers are making a product that uses a technology with a fixed labor-capital ratio
Answer:
b
Explanation:
According to Marshall Laws of Derived Demand, labor demand is more inelastic in the following circumstances :
the cost of employing labour constitutes a small proportion of the total cost of production.the demand for the product is relatively inelasticlabour cannot be easily substituted for in the production processwhen the supply of other factors of production is inelasticQu. 13-95 (Algo) Two products, QI and VH, emerge from a joint process... Two products, QI and VH, emerge from a joint process. Product QI has been allocated $27,300 of the total joint costs of $48,000. A total of 2,200 units of product QI are produced from the joint process. Product QI can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $10,200 and then sold for $13 per unit. If product QI is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point
Answer and Explanation:
The computation of the financial advantage or disadvantage is as follows:
Particulars Product Q1
Selling price after further processing 13.00
Selling price at split off point 11.00
Incremental revenue per pound or gallon 2.00
Total production 2,200.00
Total Incremental Revenue 4,400.00
Total Incremental Processing costs 10,200.00
Total Incremental profit or loss (5,800.00)
Since there is an incremental loss so the same would be Sold at split off
On December 31, 2017, Dow Steel Corporation had 730,000 shares of common stock and 43,000 shares of 9%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $530,000 and $82,000 to common and preferred shareholders, respectively, on December 15, 2018.
On February 28, 2018, Dow sold 60,000 common shares. Also, as a part of a 2017 agreement for the acquisition of Merrill Cable Company, another 24,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2019, if Merrill's 2019 net income is at least $630,000. In 2018, Merrill's net income was $760,000.
In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2018, was $2,750,000. The income tax rate is 40%.
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
Date Granted Options Granted Share Price
(adjusted for the stock dividend)
December 31, 2016 20,000 $ 32
December 31, 2017 15,000 $ 41
December 31, 2018 18,500 $ 40
The market price of the common stock averaged $40 per share during 2018.
On July 12, 2016, Dow issued $500,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 50 common shares (adjusted for the stock dividend).
Required:
Compute Dow's basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in thousands.)
Answer: See explanation
Explanation:
Dow's basic earnings per share for the year ended December 31, 2018 will be:
= Net Income - Preference Dividend / Basic Number of Shares
= ($2,750,000 - $82,000) / (730,000 × 1.05) + (60,000 × 10/12 × 1.05) - (2,000 × 6/12)
= $2,668,000 / 818,000
= $3.26
Therefore, Dow's basic earnings per share is $3.26.
Dow's diluted earnings per share for the year ended December 31, 2018 will be:
First we calculate the number of shares which will be:
= (20,000 × $32) / $40
= $6,40,000 $40
= 16,000 Shares
Solving further, the diluted earnings per share for the year will be:
= $2698000 / 888000
= $3.04
The diluted earnings per year is $3.04
g In the theory of comparative advantage, a good should be produced in that nation where Multiple Choice the production possibilities line lies further to the right than the trading possibilities line. its cost is least in terms of alternative goods that might otherwise be produced. its absolute cost in terms of real resources used is least. its absolute money cost of production is least.
Answer:
its cost is least in terms of alternative goods that might otherwise be produced
Explanation:
Comparative Advantage
This is simply explained as when an individual has an opportunity cost of performing a task is lower than the other individuals opportunity cost that is it is more efficient. It is the usual fundamental basis for international trade. Its principle includes production at a maximum peak to be achieved if each individual focus on the job or activities for which his or her opportunity cost is lowest.
Opportunity Cost
This is simply known as the highest valued of an alternative that must be given up so as to be involved or engage in an activity/job or task. There are several sources of a comparative advantage. They includes;
1. Climate and natural resources
2. Relative abundance of labor and capital
3. Technology
4. External economies etc.
Which of the following is a firm's cash cycle?
a. the average length of time between when a firm originally purchases its inventory and when it receives the cash back from selling its product
b. the average length of time between when a firm pays cash to purchase its initial inventory and when it receives cash from the sale of the product produced from that inventory
c. the average length of time between when a firm pays cash to purchase its initial inventory and when it sells that product
d. the average length of time between when a firm originally purchases its inventory and when it sells the product produced from that inventory
Answer:
he average length of time between when a firm pays cash to purchase its initial inventory and when it receives cash from the sale of the product produced from that inventory
Explanation:
A firm's cash cycle measure the time required for a company to go from cash paid (used in its operations) to cash received (as a result of operations)
It is an example of a liquidity ratio
Liquidity ratios measure the ability of a firm to meet its short term obligations
Cash cycle = days of inventory on hand + days of sales outstanding - number of days of payable
the shorter the cash cycle, the more liquid the firm is and the better for the firm
International Management Position (Scenario)
Global Choppers Inc. is an MNE based in Vancouver that manufactures high-quality motorcycles for sale around the world. The majority of design work is done at the Vancouver headquarters, but manufacturing and assembly are performed in company facilities located in Romania. In order to maintain control over manufacturing quality, Global Choppers sends representatives from the company headquarters to manage the Romanian facility for one year rotations. Conrad O'Neil has been selected to run the foreign facility for the upcoming year. The human resources department of Global Choppers will be preparing him for his foreign assignment through a variety of training methods.
Conrad's training for his assignment in Romania would most likely include ________.
Answer: area studies
Explanation:
Based on the information given in the question, Conrad's training for his assignment in Romania would most likely include the area studies.
Area studies simply refers to the study of the political or the geographical area
of a particular region and this consist of the history, language, geography and the general culture of the place.
Since Conrad O'Neil has been selected to run the foreign facility for the upcoming year, he needs to be trained on the area studies of the place.
Myers Corporation has the following data related to direct materials costs for November: actual cost for 4,650 pounds of material at $5.40 and standard cost for 4,490 pounds of material at $6.20 per pound. The direct materials price variance is a.$992 favorable b.$3,720 unfavorable c.$3,720 favorable d.$992 unfavorable
Answer:
Direct material price variance= $3,720 favorable
Explanation:
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Actual cost= $5.4
Standard cost= $6.2
Actual quantity= 4,650
Direct material price variance= (6.2 - 5.4)*4,650
Direct material price variance=$3,720 favorable
Why do you think it is important to consider both salary and benefits when applying for a job?
Superior Company has provided you with the following information before any year-end adjustments: Net credit sales are $131,750. Historical percentage of credit losses is 3%. Allowance for doubtful accounts has a credit balance of $400. Accounts receivables ending balance is $43,500. What is the estimated bad debt expense using the percentage of credit sales method
Answer:
$3,553
Explanation:
Credit losses = Net credit sales × Historical percentage of credit losses
= $131,750 × 3%
= $3,953
Allowance for doubtful account has a credit balance of $400
The estimated bad debt expense can therefore be calculated as:
Bad debt expense = Credit losses - Allowance for doubtful accounts credit balance
= $3,953 - $400
= $3,553
Hence, the estimated bad debt expense using the percentage of credit sales method is $3,553
The stockholders' equity section of Sheridan Company balance sheet at December 31, 2019, appears below:
Stockholders' equity
Paid-in capital
Common stock, $10 par value, 410,000 shares authorized;
330,000 issued and outstanding $3,300,000
Paid-in capital in excess of par 1,250,000
Total paid-in capital 4,550,000
Retained earnings 800,000
Total stockholders' equity $5,350,000
During 2020, the following stock transactions occurred:
Jan. 18 Issued 80,000 shares of common stock at $24 per share.
Aug. 20 Purchased 26,000 shares of Sheridan Company common stock at $26 per share to be held in the treasury.
Nov. 5 Issued 50,000 shares of common stock at $32 per share.
1. Prepare the journal entries to record the above stock transactions.
2. Prepare the stockholders' equity section of the balance sheet for Makoto Corporation at December 31, 2021. Assume that net income for the year was $100,000 and that no dividends were declared.
Answer:
Sheridan Company
1. Journal Entries:
Jan. 18 Debit Cash $1,920,000
Credit Common stock $800,000
Credit Paid-in capital in excess of par $1,120,000
To record the issuance of 80,000 shares of common stock at $24 per share.
Aug. 20 Debit Treasury stock $260,000
Debit Paid-in capital in excess of par $416,000
Credit Cash $676,000
To record the repurchase of 26,000 shares of Sheridan Company common stock at $26 per share to be held in the treasury.
Nov. 5 Debit Cash $1,600,000
Credit Common stock $500,000
Credit Paid-in capital in excess of par$1,100,000
To record the issuance of 50,000 shares of common stock at $32 per share.
2. Stockholders' Equity Section of Sheridan Company
Balance Sheet at December 31, 2019:
Paid-in capital
Common stock, $10 par value, 410,000 shares authorized;
330,000 issued and outstanding $4,600,000
Paid-in capital in excess of par 3,054,000
Treasury stock (260,000)
Total paid-in capital 7,394,000
Retained earnings 900,000
Total stockholders' equity $8,284,000
Explanation:
a) Data and Calculations:
Stockholders' Equity Section of Sheridan Company
Balance Sheet at December 31, 2019:
Paid-in capital
Common stock, $10 par value, 410,000 shares authorized;
330,000 issued and outstanding $3,300,000
Paid-in capital in excess of par 1,250,000
Total paid-in capital 4,550,000
Retained earnings 800,000
Total stockholders' equity $5,350,000
b) Transaction Analysis:
Jan. 18 Cash $1,920,000 Common stock $800,000 Paid-in capital in excess of par $1,120,000
Aug. 20 Treasury stock $260,000 Paid-in capital in excess of par $416,000 Cash $676,000
Nov. 5 Cash $1,600,000 Common stock $500,000 Paid-in capital in excess of par$1,100,000
Common stock:
Dec. 31, 2019: 330,000 issued and outstanding $3,300,000
Jan. 18, 2020: 80,000 issued of new shares 800,000
Nov. 5, 2020: 50,000 issued of additional shares 500,000
Dec. 31, 2020: 460,000 issued and outstanding $4,600,000
Paid-in capital in excess of par
December 31, 2019 $ 1,250,000
Jan. 18 issue 1,120,000
Aug. 20 treasury stock (416,000)
Nov. 5 issue of new shares 1,100,000
December 31, 2020 $3,054,000
Retained Earnings:
December 31, 2019 $800,000
Net income for 2020 100,000
December 31, 2020 $900,000
An oral contract is
O Not enforceable
O Legal
O Not for money
O Not legal
Sheffield Corporation incurred the following costs in 2020. Cost of laboratory research aimed at discovery of new knowledge $145,000 Cost of testing in search for product alternatives 92,000 Cost of engineering activity required to advance the design of a product to the manufacturing stage 240,000 $477,000 Prepare the necessary 2020 journal entry or entries for Sheffield.
Answer: Debit Research and Development expense $477,000
Credit Cash $477,000
Explanation:
The journal entry simply refers to the recording of transactions that a company makes and it should be noted that the total amount that's gotten in the debit column must be equal to the total amount that us gotten in the credit column.
Based on the information given in the question, the journal entry for Sheffield Corporation will be:
Debit Research and Development expense $477,000
Credit Cash $477,000
Parties to an administrative hearing may subpoena witnesses if they choose not to testify willingly.
True
False
Answer:
Parties to an administrative hearing may subpoena witnesses if they choose not to testify willingly.
True.
Burns Industries currently manufactures and sells 11,000 power saws per month, although it has the capacity to produce 26,000 units per month. At the 11,000-unit-per-month level of production, the per-unit cost is $46, consisting of $30 in variable costs and $16 in fixed costs. Burns sells its saws to retail stores for $71 each. Allen Distributors has offered to purchase 4,100 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs. Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least: Multiple Choice $16. $46. $71. $30. qizket
Answer:
Selling price= $30
Explanation:
Giving the following information:
Unitary cost:
Variable= $30
Fixed= $16
Number of units= 4,100
Normally, when there is unused capacity and a new customer asks for a reduced price, the fixed cost should not be taken into account when calculating the selling price. The company benefits from increasing its sales, acquiring a new customer, and perhaps getting some discounts from suppliers in the variable components.
The lower price that the company accepts is the one that equals the unitary variable cost. In this case:
Selling price= $30
Yolo Company, which has excess capacity (i.e. it doesn't have to give up producing and selling products in the normal market if it accepts a special order), received a special order for 4,500 units at a price of $16 per unit. Currently, production and sales are anticipated to be 11,000 units without considering the special order. Budget information for the current year follows. Sales $ 231,000 Less: Cost of Goods Sold 165,000 Gross Margin $ 66,000 Cost of goods sold includes $44,000 of fixed manufacturing cost. If the special order is accepted, the company's income will:
Answer:
$22,500 increase
Explanation:
The computation is shown below:
Variable cost per unit is
= ($165,000 - $44,000) ÷ 11,000 units
= $11
And, the Sales price per unit is $16
So, the Profit per unit is
= $16 - $11
= $5 per unit
Now the company income would be
= 4,500 units × $5 per unit
= $22,500 increase
Hence, the company income would be increased by $22,500
On February 24, 2020, Allison's building, with an adjusted basis of $2,986,000 (and used in her trade or business), is destroyed by fire. On March 31, 2020, she receives an insurance reimbursement of $3,881,800 for the loss. Allison invests $3,493,620 in a new building and buys stock with the balance of insurance proceeds. Allison is a calendar year taxpayer. a. By what date must Allison make the new investment to qualify for the nonrecognition election
Answer:
As a calendar-year taxpayer, Allison must make the new investment by December 31, 2020 to qualify for the nonrecognition election.
Explanation:
a) Data and Calculations:
Adjusted basis of building = $2,986,000
Insurance reimbursement = $3,881,800
Gain from loss = $895,800 ($3,881,800 - $2,986,000)
Investment in new building = $3,493,620
Purchase of stock = $388,180 ($3,881,800 - $3,493,620)
b) Allison is expected to make the election for the nonrecognition of the gain from loss in his Federal Tax return in the taxable year in which the gain with respect to the loss of the building is realized. The return must set forth the computation of the gain and other required details.
17. Which of the following is not a true statement
about monoplies?
a. Monopolies try to charge higher prices
than would result through competition.
b. By maximizing profits, monopolies
ultimately benefit social welfare.
c. Antitrust laws attempt to reduce
monopoly power.
d. Monopolies may try to influence the
political system in order to protect and
enhance their power.
Answer: B. is not a true statement. Most of the time monopolies do NOT benefit social welfare, they often put social welfare at a disadvantage.
The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool, England, where the firm has been manufacturing 100% organic cotton towels for five years. OTC sells towels in the United Kingdom primarily to boutique hotels and specialty retail stores, as well as to individual consumers through the company's . Recently, OTC managers attended a trade show in London where they made contact with numerous foreign market managers. OTC received a request from Earth Waves, an organic clothing store in Toronto, Canada, for a large order of towels. OTC had not been looking into expanding, but firm managers are seriously considering the opportunity to reach a global niche market with their towels.
Which of the following questions must be evaluated by OTC managers as a first step to exporting?
A) What are the risks involved in exporting OTC towels to Earth Waves?
B) Do Canadian towel companies have a high success rate when they export?
C) Will OTC save money on domestic marketing by exporting?
D) How can OTC adapt its distribution strategy in Canada?
Answer:
A)To evaluate The risks involved in exporting the OTC towels to Earth Waves
Explanation:
Based on the information given the questions that the manager have to effective evaluate as a first step to exporting the OTC towels to Earth Waves is to evaluate and weigh All THE POTENTIAL RISKS INVOLVED IN EXPORTING THE OTC TOWELS TO EARTH WAVES such as damage of goods or loss of good that may likely occur when the goods are in transit, fluctuations in the country currency in which the goods are been exported to ,The potential economic risks and instability that may arise as well as the delay in the payment of the exported goods among others.
Q.1.2.2 Explain the implications on Airbnb should South Africa implement a
command economy.
Answer:
Throughout the next part, the description of the question is detailed.
Explanation:
Airbnb had already expanded fast throughout South Africa but since its inception throughout 2015.
It received criticism from the established accommodation sector, like certain other innovative companies.Throughout order to assess Airbnb's impact, Creation story intelligence was requested for separate research to evaluate Airbnb's commercial importance.Average Rate of Return, Cash Payback Period, Net Present Value Method for a Service Company
Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $1,250,000. The equipment has an estimated life of eight years and no residual value. It is expected to provide yearly net cash flows of $312,500. The company’s minimum desired rate of return for net present value analysis is 12%.
Present Value of an Annuity of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 1.833 1.736 1.690 1.626 1.528
3 2.673 2.487 2.402 2.283 2.106
4 3.465 3.170 3.037 2.855 2.589
5 4.212 3.791 3.605 3.353 2.991
6 4.917 4.355 4.111 3.785 3.326
7 5.582 4.868 4.564 4.160 3.605
8 6.210 5.335 4.968 4.487 3.837
9 6.802 5.759 5.328 4.772 4.031
10 7.360 6.145 5.650 5.019 4.192
Compute the following:
a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place.
%
b. The cash payback period.
c. The net present value. Use the above table of the present value of an annuity of $1. Round to the nearest dollar.
Present value of annual net cash flows $
Amount to be invested $
Net present value $
Answer:
12.5%
4 years
NPV = $302,387
PV of cash flows = $1,552,387
Amount invested = $1,250,000
Explanation:
Average rate of return = net income / amount invested
Net income = cash flow - depreciation
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
1,250,000 / 8 = 156,250
Net income = $312,500 - 156,250 = $156250
(156250 / $1,250,000) x 100 = 12.50%
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
$1,250,000 / $312,500 = 4 years
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-1,250,000
Cash flow each year from year 1 to 8 = $312,500
I = 12%
NPV = $302,387
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
Case X: Compute cash received from customers:
Sales $ 515,000
Accounts receivable, December 31, 2013 27,200
Accounts receivable, December 31, 2014 33,600
Case Y: Compute cash paid for rent:
Rent expense $ 139,800
Rent payable, December 31, 2013 7,800
Rent payable, December 31, 2014 6,200
Case Z: Compute cash paid for merchandise:
Cost of goods sold $ 525,000
Merchandise inventory, December 31, 2013 158,600
Accounts payable, December 31, 2013 66,700
Merchandise inventory, December 31, 2014 130,400
Accounts payable, December 31, 2014 82,000
For each of the above three separate cases, use the information provided about the calendar-year 2014 operations of Sahim Company to compute the required cash flow information.
Case X:Cash received from customers
Case Y:Cash paid for rent
Case Z:Cash paid for merchandise
Answer:
Sahim Company
Case X: Cash received from customers = $508,600
Case Y: Cash paid for rent = $141,400
Case Z: Cash paid for merchandise = $481,500
Explanation:
a) Data and Calculations:
Case X: Compute cash received from customers:
Sales $ 515,000
Accounts receivable, December 31, 2013 27,200
Accounts receivable, December 31, 2014 33,600
Case Y: Compute cash paid for rent:
Rent expense $ 139,800
Rent payable, December 31, 2013 7,800
Rent payable, December 31, 2014 6,200
Case Z: Compute cash paid for merchandise:
Cost of goods sold $ 525,000
Merchandise inventory, December 31, 2013 158,600
Accounts payable, December 31, 2013 66,700
Merchandise inventory, December 31, 2014 130,400
Accounts payable, December 31, 2014 82,000
Case X: Cash received from customers:
Accounts receivable
Account Titles Debit Credit
Sales $ 515,000
December 31, 2013 27,200
December 31, 2014 $33,600
Cash received 508,600
Case Y: Cash paid for rent:
Rent Payable
Account Titles Debit Credit
Rent expense $ 139,800
December 31, 2013 7,800
December 31, 2014 $6,200
Cash paid 141,400
Case Z: Cash paid for merchandise:
Cost of goods sold $ 525,000
Merchandise inventory, December 31, 2014 130,400
Merchandise inventory, December 31, 2013 (158,600)
Purchases during 2014 $ 496,800
Accounts payable
Account Titles Debit Credit
December 31, 2013 $66,700
Purchases during 2014 496,800
December 31, 2014 $82,000
Cash paid for merchandise 481,500
g If nominal GDP is $4,000 billion and the amount of money demanded for transactions purposes is $800 billion, it can generally be concluded that Multiple Choice the asset demand for money is $3,200 billion. the total demand for money is $4,800 billion. on average, each dollar will be spent five times a year. the supply of money needs to be increased to meet the demand.
Answer:
on average, each dollar will be spent five times a year.
Explanation:
Based on the information given it can generally be concluded that ON AVERAGE, EACH DOLLAR WILL BE SPENT FIVE TIMES A YEAR reason been that nominal GDP of the amount of $4,000 billion Divided by $800 billion which is the amount of money that was demanded for transactions purposes will give us 5 indicating that on average, each dollar will be spent five times a year.
Calculated as:
nominal GDP /Money demanded
=$4,000 billion/$800 billion
=5
Therefore it can generally be concluded that on average, each dollar will be spent five times a year.
1. Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership.
a) true
b) false
2. Limited liability of stockholders, government regulations, and additional taxes are the major disadvantages of a corporation.
a) true
b) false
3. When a corporation is formed, organization costs are recorded as an asset.
a) true
b) false
4. Each share of common stock gives the stockholder the ownership rights to vote at stockholder meetings, share in corporate earnings, keep the same percentage ownership when new shares of stock are issued, and share in assets upon liquidation.
a) true
b) false
5. The number of issued shares is always greater than or equal to the number of authorized shares.
a) true
b) false
6. A journal entry is required for the authorization of capital stock.
a) true
b) false
7. Publicly held corporations usually issue stock directly to investors.
a) true
b) false
8. The trading of capital stock on a securities exchange involves the transfer of already issued shares from an existing stockholder to another investor.
a) true
b) false
9. The market price of common stock is usually the same as its par value.
a) true
b) false
10. Retained earnings is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.
a) true
b) false
Answer: 1. True
2. False
3. False
4. True
5. False
6. False
7. False
8. True
9. False
10. False
Explanation:
1. Corporation management is both an advantage and a disadvantage of a corporation compared to a proprietorship or a partnership is true.
2. This is false. LImited liability is not a disadvantage of a corporation. It is an advantage of a corporation.
3. Thus is false. When a corporation is formed, it should be noted that organization costs are expenses and not recorded as an asset.
4. This is true. Every share of common stock gives provides the stockholder the ownership rights to vote at stockholder meetings, and also share in corporate earnings, as well as keeping same percentage ownership when new shares of stock are issued, and will also share in the assets upon liquidation.
5. False. It should be noted that the number of authorized shares is typically more than greater or equal to the issued shares.
6. False. A journal entry is not required for the authorization of capital stock. It's required for the issuance of the capital stock.
7. Publicly held corporations do not issue stock directly to investors. Rather, this is done indirectly. It is the private corporations that issue their stock directly.
8. This is true. The trading of capital stock on a securities exchange has to do with the transfer of already issued shares from an existing stockholder to another investor.
9. False. The statement that "The market price of common stock is usually the same as its par value" is false. It should be noted that there's no relationship between the common stock market price and its par value.
10. This is false. The retained earnings simply meansis the total amount of the net income that is held by a corporation for use in the future.
Which of the following two ARMs is likely to be priced higher, that is, offered with a higher initial interest rate?
a. ARM A has a margin of 3 percent and is tied to a three-year index with payments adjustable every two years; payments cannot increase by more than 10 percent from the preceding period; the term is 30 years.
b. ARM B has a margin of 3 percent and is tied to a one-year index with payments to be adjusted each year; payments cannot increase by more than 10 percent from the preceding period; the term is 30 years.
Answer: ARM A
Explanation:
The issuers of Adjustable-Rate Mortgage adjust its rate based on a certain index in the market, the purpose of which is to reflect the current cost being incurred by the issuer for loaning out money.
Both these mortgages are similar in everything except the index period. ARM A has a longer index period which means that it is expose to more forward rates and as the yield curve is generally upward trending(interest rates are higher in future), ARM A will be offered at a higher interest rate.
From a firm's viewpoint, opportunity cost is the best alternative use customers can find for the firm's output. price a firm can charge for its output. cost the firm must pay for the factors of production it employs to attract them from their best alternative use. accounting cost of resources. cost of acquiring the opportunity to sell to its customers.
Answer:
cost the firm must pay for the factors of production it employs to attract them from their best alternative use.
Explanation:
Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.
Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.
Factors of production can be defined as the fundamental building blocks used by individuals or business firms for the manufacturing of finished goods and services in order to meet the unending needs and requirements of their customers.
The four factors of production are;
I. Land: this refers to the natural resources and raw materials extracted from the ground or grown in the soil e.g oil, gold, rubber, cocoa, etc.
II. Labor (working): this is the human capital or workers who are saddled with the responsibility of overseeing and managing all the aspects of production.
III. Capital resources: it includes the physical assets used for production of goods and services such as equipment, money, plant, etc.
IV. Entrepreneurship: it is intellectual capacity required to drive a business and the skills to develop an idea into a money making venture (business).
These four (4) factors of production when combined effectively and efficiently are used for the manufacturing or production of goods and services that meets the unending requirements or needs of the consumers.
From a firm's viewpoint, opportunity cost is cost the firm must pay for the factors of production it employs to attract them from their best alternative use.
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Required: Compute financial ratios as follows: 1. Earnings per share. (Round your answer to 2 decimal places.) 2. Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your percentage final answer to nearest whole number (i.e., 0.1234 should be entered as 12).) 3. Dividend yield ratio. (Round your intermediate calculations to 2 decimal places. Round your percentage final answer to nearest whole number (i.e., 0.1234 should be entered as 12).) 4. Price-earnings ratio. (Round your intermediate calculations to 2 decimal places. Round your answer to nearest whole number.) 5. Book value per share. (Round your answer to 2 decimal places.)
Answer:
1. Earnings per share = $13.13 per share
2. Dividend payout ratio = 26%
3. Dividend yield ratio = 5%
4. Price-earnings ratio = 5
5. Book value per share = $58.00
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question. See the attached pdf for the full question.
The explanation of the answers is now provided as follows:
1. Earnings per share. (Round your answer to 2 decimal places.)
Number of shares outstanding = Common stock / Common stock par value = $140,000 / $10 = 14,000
Earnings per share = Net income / Number of shares outstanding = $183,820 / 14,000 = $13.13 per share
2. Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your percentage final answer to nearest whole number (i.e., 0.1234 should be entered as 12).)
Dividend payout ratio = Dividend per share / Earnings per share = $3.35 / $13.13 = 0.2551, or 26%
3. Dividend yield ratio. (Round your intermediate calculations to 2 decimal places. Round your percentage final answer to nearest whole number (i.e., 0.1234 should be entered as 12).)
Dividend yield ratio = Dividend per share / Market price per share = $3.35 / $61 = 0.0549, or 5%
4. Price-earnings ratio. (Round your intermediate calculations to 2 decimal places. Round your answer to nearest whole number.)
Price-earnings ratio = Market price per share / Earnings per share = $61 / $13.13 = 4.65, or 5
5. Book value per share. (Round your answer to 2 decimal places.)
Book value per share = Total stockholders’ equity / Number of shares outstanding = $812,000 / 14,000 = $58.00
On January 1, 2021, Sunland Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $1090000 increase in the January 1, 2021 inventory. Assume that the income tax rate for all years is 30%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reported by Sunland in its 2021
income statement as a $650,000 cumulative effect of accounting change
income statement as a $520,000 cumulative effect of accounting change
retained earnings statement as of $650,000 addition to the beginning balance
retained earnings statement as of $520,000 addition to the beginning balance
QUESTION 2
In 2020, a company failed to record $100,000 of depreciation expense on a new asset. This was not discovered until 2021. However, the company did record the depreciation on its 2020 income tax return and properly recorded its 20% income taxes payable? How much was net income overstated or understated in 2020?
Overstated by $100,000
Overstated by $80,000
Understated by $80,000
Understated by $100,000
QUESTION 3
Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method.
The company decided to continue using completed contract for income tax purposes. The tax rate enacted is 20%. Income before taxes under both the methods for the past three years appears below.
2019 2020 2021
Completed contract $450,000 $300,000 $150,000
Percentage-of-completion 750,000 375,000 270,000
What amount will be debited to the Construction in Process account, to record the change at the beginning of 2021?
$75,000
$200,000
$300,000
$375,000
Answer: See explanation
Explanation:
1. Based on the information given in the question, there'll be a retained earning statement of:
= $1090000 × (1 - 30%).
= $1090000 × 70%
= $1090000 × 0.7
= $763000
There'll be a retained earnings statement as of $763,000 addition to the beginning balance.
2. Based on the information given in the question, the net income was overstated by $100,000 since the depreciation expense hasn't been deducted. Therefore, the correct option is A ''Overstated by $100,000".
3. The amount that will be debited to the Construction in Process account, to record the change at the beginning of 2021 will be:
= ($750000 - $450000) + ($375000 - $300000)
= $300000 + $75000
= $375000
Vaughn Manufacturing acquires a coal mine at a cost of $1920000. Intangible development costs total $354000. After extraction has occurred, Vaughn must restore the property (estimated fair value of the obligation is $183000), after which it can be sold for $208000. Vaughn estimates that 5000 tons of coal can be extracted. What is the amount of depletion per ton
Answer:
$452
Explanation:
The amount of depletion per ton is computed below.
= (Acquired cost of coal mine + Intangible development costs + Fair value of the obligation - Sale value) ÷ Number of estimated tons of coal extracted
= ($1,920,000 + $353,000 + $193,000 - $208,000) ÷ 5000
= $452
The amount of depletion per ton is therefore $452