Apparel Leasing Company signs a lease agreement on January 1, 2021, to lease equipment to Oman Company. The term of the non-cancelable lease is 8 years, and payments are required at the end of each year. The following information related to this agreement:
1. The equipment has a cost and fair value of $9,500,000 to Apparel, an estimated useful life of 10 years, and no residual value at the end of that time. Annual lease rental is $1,441,606. 2. Apparel Company desires to eam an 8% return on its investment.
Instructions:
A) Prepare an amortization schedule for the lessor for 2021 and 2022
B) Prepare the journal entries on the lessor's books on January 1, 2021 and December 31, 2021,

Answers

Answer 1

A) The Answer is  :

$8,082,536

Amortization Schedule for the Lessor:

Year    | Lease Revenue | Interest Income | Reduction in Lease Receivable | Lease Receivable

2021    | $1,441,606     | $760,000          | $681,606                             | $8,818,394

2022    | $1,441,606     | $705,748          | $735,858                             | $8,082,536

To calculate the interest income, we use the formula: Lease Receivable (beginning balance) × Interest Rate (8%)

Year 2021:

Lease Revenue: $1,441,606 (annual lease rental)Interest Income: $8,818,394 (Lease Receivable beginning balance) × 8%Reduction in Lease Receivable: Lease Revenue - Interest IncomeLease Receivable: Lease Receivable (beginning balance) - Reduction in Lease Receivable

Year 2022:

Lease Revenue: $1,441,606 (annual lease rental)Interest Income: $8,082,536 (Lease Receivable beginning balance) × 8%Reduction in Lease Receivable: Lease Revenue - Interest IncomeLease Receivable: Lease Receivable (beginning balance) - Reduction in Lease Receivable

B) The Answer is :

Cash $1,441,606

Journal Entries on the Lessor's Books:

January 1, 2021:Lease Receivable    $8,818,394Equipment   $9,500,000Unearned Interest Revenue $681,606

(To record the lease agreement and unearned interest)

December 31, 2021:

Lease Receivable (Reduction) $681,606Interest Income     $760,000Cash    $1,441,606

(To record the lease revenue and interest income received)

Note: The journal entry for December 31, 2022, would be similar to the one for December 31, 2021, considering the respective amounts for that year.

These entries account for the initial recognition of the lease agreement on January 1, 2021, and the recognition of lease revenue and interest income on December 31, 2021, based on the amortization schedule.

About Journal Entry

In accounting and bookkeeping, journals are all financial transactions of a business entity or organization that are recorded chronologically and aim to record data, including the number of transactions, the names of transactions that either affect or are affected, and the time the transaction takes place.

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Related Questions

You have the best chance of getting your money back from
happened?
You didn't authorize the payment.
You called the police..
You were using a secure connection.
You did authorize the payment.

Answers

If you want to increase your chance of getting your money back, you should report the unauthorized transaction as soon as possible. You might be able to get a refund from your bank or credit card issuer if you are able to prove that the transaction was not authorized by you and that you did not benefit from it.

In order to get your money back, you will have to take the following steps.Report the transaction to your bank or credit card issuer immediately:

Contact your bank or credit card issuer and report the unauthorized transaction as soon as possible. The bank or credit card issuer will likely block the card to prevent further unauthorized transactions. You may also be asked to provide a written statement regarding the unauthorized transaction.Provide proof that you didn’t make the transaction: You may have to provide proof that you didn’t make the transaction. You can show that you were in a different location at the time of the transaction, or you can provide evidence that you did not benefit from the transaction.Ensure the transaction wasn’t authorized: If you authorized the transaction, you may not be able to get a refund. If you are not sure whether you authorized the transaction, check your bank or credit card statement to see if you recognize the transaction. If you did authorize the transaction, but didn’t receive the goods or services, you can contact the merchant to resolve the issue.Use a secure connection: When making purchases online, use a secure connection. Avoid making purchases on public Wi-Fi networks.Calling the police: If you believe that the unauthorized transaction was a result of identity theft, you may need to file a police report. This report can be used as evidence when filing a dispute with your bank or credit card issuer.

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Pierce Company sold merchandise to Stanton Company on account FOB shipping point, 2/10, net 30, for $10,900. Pierce prepaid the $291 shipping charge. Which of the following entries does Pierce make for this sale?

a.Accounts Receivable—Stanton, debit $10,900; Sales, credit $10,900

b.Accounts Receivable—Stanton, debit $10,900; Sales, credit $10,900, and Delivery Expense, debit $291; Cash, credit $291

c.Accounts Receivable—Stanton, debit $10,682; Sales, credit $10,682, and Accounts Receivable—Stanton, debit $291; Cash, credit $291

d.Accounts Receivable—Stanton, debit $11,191; Sales, credit $11,191

Answers

The correct answer is option (b). Pierce Company would make the following entries for this sale:

Accounts Receivable—Stanton, debit $10,900: This entry recognizes the increase in the accounts receivable from Stanton Company, representing the amount they owe to Pierce for the merchandise.

Sales, credit $10,900: This entry records the revenue earned by Pierce from the sale of merchandise to Stanton. It increases the sales account, reflecting the amount of the sale.

Delivery Expense, debit $291: This entry recognizes the expense incurred by Pierce for the prepaid shipping charge of $291. It is necessary to record this expense separately to accurately reflect the cost associated with the sale.

Cash, credit $291: This entry reflects the decrease in the cash account by the amount of the prepaid shipping charge. Since it was prepaid, it reduces the amount of cash available.

Option (b) correctly captures both the revenue and expense associated with the sale, as well as the reduction in cash for the prepaid shipping charge. The other options either omit the prepaid shipping charge entry or incorrectly adjust the accounts receivable or sales amounts.

Therefore, option (b) is the appropriate choice in this scenario.

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Pharmaceutical Benefits Managers (PBMS) are intermediaries between upstream drug manufacturers and downstream insurance companies. They design formularies (lists of drugs that insurance will cover) and negotiate prices with drug companies. PBMs want a wider variety of drugs available to their insured populations, but at low prices. Suppose that a PBM is negotiating with the makers of two nondrowsy allergy drugs, Clantin and Allegra, for inclusion on the formulary. The "value" or "surplus created by including one nondrowsy allergy drug on the formulary is $244 million, but the value of adding a second drug is only $24 million. Assume the PBM bargains by telling each drug company that it's going to reach an agreement with the other drug company.

Under the non-strategic view of bargaining, the PBM would earn a surplus ______________$ million.

Answers

Under the non-strategic view of bargaining, the PBM would earn a surplus of $244 million.

Pharmaceutical Benefits Managers (PBMs) are intermediaries who operate between upstream drug manufacturers and downstream insurance providers. They negotiate prices with drug companies and design formularies that show which drugs the insurance will cover.

The PBMs' goal is to have a wider range of drugs available to their insured populations while maintaining low prices.The role of PBMs in the US healthcare system is becoming increasingly important as drug prices rise and insurance companies seek ways to reduce costs.

Bargaining is a method of reaching a mutually beneficial agreement between two parties who have divergent objectives or requirements. Bargaining may take place over a variety of issues, including the price of a commodity, working hours, or the provision of specific services.

In the context of the pharmaceutical industry, bargaining typically occurs between PBMs and drug manufacturers over the inclusion of drugs on formularies and the price at which they will be sold. When PBMs negotiate with drug manufacturers, they usually promise that they will reach an agreement with the other party. This is referred to as the non-strategic view of bargaining.

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Write a brief introduction of yourself (minimum 3-5 sentences) using business email structure and format.

Answers

Business email format and structure  briefly introduces the sender, highlights their experience and expertise, expresses willingness to explore collaboration opportunities, and invites further discussion. It concludes with a polite and professional closing, including contact information for further communication.

Subject: Introduction - [Your Name]

Dear [Recipient's Name],

I hope this email finds you well. My name is [Your Name], and I am writing to introduce myself and establish a connection in the context of our business endeavors. As a highly motivated and experienced professional in [relevant field/industry], I bring a diverse skill set and a proven track record of success.

In my previous roles at [previous company/organizations], I have consistently delivered exceptional results by leveraging my expertise in [specific skills or areas of specialization]. With a strong background in [mention key qualifications or experience], I am confident in my ability to contribute positively to your business objectives and drive mutual success.

I look forward to the opportunity of connecting further to discuss potential synergies and how we can create value together. Please feel free to reach out to me at your convenience, and I would be happy to schedule a call or meeting at a time that works best for you.

Thank you for your time, and I am eager to embark on a fruitful professional relationship with you.

Best regards,

[Your Name]

[Your Position/Title]

[Company/Organization]

[Contact Information]

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2SU ments ts ton ons ources 1. Being profitable' reflects the stage of the pyramid of CSR pyramid a. Legal b. Economic c. Ethical d. Philanthropic 2. CSR means a. Being profitable b. Being profitable

Answers

Being profitable' reflects the economic stage of the pyramid of CSR pyramid. CSR means being profitable legally and caring for the society and environment as well.

1. The correct answer is b. Economic.

The CSR (Corporate Social Responsibility) pyramid is a framework that represents different levels of responsibility that businesses can adopt. The pyramid typically consists of four levels:

Economic: This level focuses on the primary responsibility of a business to be profitable and financially sustainable. It includes actions and practices that contribute to the economic well-being of the organization.

Legal: The legal level refers to the business's obligation to comply with laws and regulations governing its operations. This includes adhering to labor laws, environmental regulations, consumer protection laws, and other legal requirements.

Ethical: The ethical level of the pyramid goes beyond legal compliance and encompasses ethical standards and principles. It involves conducting business in a morally responsible manner, considering the impact of actions on stakeholders, and promoting fairness, honesty, and integrity.

Philanthropic: The philanthropic level represents voluntary contributions and activities that businesses undertake to make a positive societal impact. This includes initiatives such as charitable donations, community development programs, and environmental sustainability efforts.

2. The correct answer is d. Being profitable legally and caring for the society and environment as well.

CSR stands for Corporate Social Responsibility, which is a concept that refers to a business's commitment to operating in an ethical and responsible manner. It involves considering the impact of business activities on various stakeholders, including employees, customers, communities, and the environment.

While being profitable is an important aspect of running a business, CSR goes beyond financial success. It encompasses legal compliance and extends to caring for the society and environment. This includes actions such as promoting workplace diversity and inclusion, adopting sustainable business practices, supporting community development initiatives, and being accountable for the social and environmental consequences of business operations.

Therefore, the most accurate statement among the given options is d. Being profitable legally and caring for the society and environment as well.

The correct question is:

1. Being profitable' reflects the stage of the pyramid of CSR pyramid

a. Legal

b. Economic

C. Ethical

d. Philanthropic

2. CSR means

a. Being profitable

b. Being profitable and employing more people

c. Doing the 'right thing'

d. Being profitable legally and caring for the society and environment as well

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mark rodriguez makes puppets which he sells at swap meets for $11 each. each puppet requires $6 of materials to make. mark must pay $100 at each swap meet to rent a table. he has no other expenses related to the puppet sales. how many puppets must mark sell at each swap meet in order to cover his costs (break even)?

Answers

To calculate the number of puppets Mark Rodriguez has to sell at each swap meet in order to cover his costs (break-even), let's first calculate the total costs: Total Cost = $100 + ($6 × Number of puppets)

Let's assume Mark needs to sell X puppets to break even, hence the total revenue is 11X. We know that at the break-even point, revenue = cost.

Therefore,11X = 100 + 6X (adding $6 for each puppet to rent cost to get the total cost)5X = 100X = 20. The number of puppets Mark Rodriguez needs to sell at each swap meets in order to cover his costs (break even) is 20 puppets.

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Cooper Advisory Services identified the following items on its October reconciliation that may require adjusting entries: a. A deposit of $659 was recorded in Cooper's accounting records, but not on the October 31 bank statement. b. A check for $5,444 was outstanding at October 31. c. Included with the bank statement was a check for $300 written by Hooper Advertising Services. The bank had, in error, deducted this check from Cooper's account. d. Bank service charges were $250. e. An NSF check written by one of Cooper's customers in the amount of $881 was returned by the bank with Cooper's bank statement. This customer was paying for merchandise originally purchased on account. Required: For each of these five items, prepare an adjusting entry for Cooper's journal, if any is required.

Answers

Cooper Advisory Services has identified the following items on its October reconciliation that may require adjusting entries:Outstanding check for $5,444; Bank service charges of $250; NSF check of $881; Deposit of $659; Check for $300 from Hooper Advertising Services (HAS)

The Cooper Advisory Services is required to prepare adjusting entries for five items that require adjusting entries. The five items identified by the Cooper Advisory Services are the deposit of $659, an outstanding check for $5,444, bank service charges of $250, an NSF check for $881, and a check for $300 received from Hooper Advertising Services. For each of these five items, an adjusting entry needs to be prepared. The first adjustment entry required is for the outstanding check of $5,444.

The adjustment entry for the outstanding check will be Bank Account dr $5,444 and Outstanding Check cr $5,444. The second adjustment entry required is for bank service charges of $250. The adjustment entry for bank service charges will be Bank Service Charges dr $250 and Bank Account cr $250. The third adjustment entry required is for the NSF check for $881. The adjustment entry for the NSF check will be Accounts Receivable dr $881 and Bank Account cr $881. The fourth adjustment entry required is for the deposit of $659.

The adjustment entry for the deposit will be Bank Account dr $659 and Unrecorded Deposit cr $659. The fifth adjustment entry required is for the check for $300 received from Hooper Advertising Services. The adjustment entry for HAS check will be Bank Account dr $300 and Accounts Payable cr $300.

Thus, the Cooper Advisory Services is required to prepare adjusting entries for five items that require adjusting entries. The five items identified by the Cooper Advisory Services are the deposit of $659, an outstanding check for $5,444, bank service charges of $250, an NSF check for $881, and a check for $300 received from Hooper Advertising Services. The journal entries for all the five items have been discussed above.

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Behavioural finance:

The year is 1985. You are a researcher who has just discovered before anyone else the following pattern in the historical data: stocks that performed well over the past 6 months have higher returns on average over the next 6 months than stocks that performed poorly over the past 6 months.

a) Describe an investment strategy exploiting this pattern that yields a positive profit on average.

. b) In the research paper you are writing to publicise this discovery, what concerns do you need to point out for investors to keep in mind before rushing to exploit this pattern?

c) Fast-forward to 2021. Given the knowledge that we now have in 2021, which of the concerns in b) are less of a concern today?

Answers

Behavioral finance is an interdisciplinary field that incorporates financial theory with psychology to understand why individuals make irrational investment decisions. There is no guarantee that past performance will guarantee future results in investment, as the standard disclaimer goes.

However, many investors and traders have learned that historical performance is an essential tool for analyzing investments, particularly in the short run. The following is a description of an investment strategy that exploits the above-mentioned pattern that will yield a positive profit on average:

a) One strategy is the momentum investing approach, which entails purchasing stocks with the highest short-term returns and selling stocks with the lowest short-term returns. For example, purchasing all stocks in the top quintile (20%) of 6-month returns and shorting all stocks in the bottom quintile (20%) of 6-month returns will generate a high return on average. This strategy can be enhanced by combining it with additional criteria, such as market capitalization, industry sectors, or valuation ratios.

b) In the research paper you are writing to publicize this discovery, there are a few concerns you need to point out for investors to keep in mind before rushing to exploit this pattern. These include the fact that momentum investing may not work in all market conditions, particularly during market crises and structural changes. Additionally, transaction expenses, which include trading costs, taxes, and other fees, may reduce profits from momentum investing. There is also the possibility of a market downturn that could cause stocks to plummet, erasing all gains.

c) Momentum investing has become an increasingly popular investment strategy in recent years, and investors are increasingly accepting of its efficacy. As a result, several of the concerns mentioned in b) have become less of a concern. First and foremost, transaction expenses have decreased as online trading platforms have become more widely available. Furthermore, the more extensive use of machine learning and big data analytics has aided in the identification of more robust momentum patterns. Overall, investors should be mindful that momentum investing is an active trading strategy with the potential to create large profits, but it also has the potential to create significant losses, and it should be employed prudently.

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Question 15 5 pts Alex wants to travel to Utah to climb Angels Landing and is trying to decide if he should drive or fly to the location. The flight to Utah would cost $800 and take 6 hours. Also if h

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Alex is looking to travel to Utah to climb Angels Landing and is contemplating whether he should drive or fly to the location. The flight to Utah would cost $800 and take 6 hours. Also, if he drives, it will cost him $150 in gas and will take 20 hours of driving.

If Alex were to drive, it would take him 20 hours of driving and a gas cost of $150. However, if he flies, it would take him 6 hours and cost $800. So, let's compare the two options using the cost and time criteria.The driving option:Costs $150 in gasTakes 20 hours to arriveThe flying option:Costs $800Takes 6 hours to arriveBased on the analysis, it seems that Alex should take the flying option as it is faster. Although it is more expensive than driving, the extra cost may be worth it to save 14 hours of travel time. Furthermore, the opportunity cost of time saved can be used for climbing the Angels Landing.

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Derive reduced from equation for equilibrium price and output in terms of a lump sum tax T if demand schedule and total cost functions are respectively, p = 200 − 0.3 and T = 10 + 0.12.
Derive reduced from equation for equilibrium price and output in terms of a percentage tax of c for a given demand schedule of p = 260 − 4 and total cost function of
T = 8 + 1.22

Answers

The demand function is p = 260 − 4Q, the cost function is TC = 8 + 1.22Q and a percentage tax of c is applied. To derive a reduced form equation for equilibrium price and output in terms of a percentage tax of c.

follow the steps below: Step 1: Write out the equations for the price and quantity demanded: Revenue = PQ = (260 − 4Q)(Q) = 260Q − 4Q²Total cost = TC = 8 + 1.22QProfit = revenue - total cost Profit = 260Q - 4Q² - 8 - 1.22QProfit = -4Q² + 258.78Q - 8Step 2: Find the derivative of the profit equation with respect to Q and set it equal to zero to find the profit-maximizing quantity: Profit = -4Q² + 258.78Q - 8d(Profit)/dQ = -8Q + 258.78Set d(Profit)/dQ = 0 and solve for Q:-8Q + 258.78 = 0Q = 32.35Step 3: Use the profit-maximizing quantity to find the equilibrium

price: Q = 32.35P = 260 − 4Q = 260 − 4(32.35) = 134.6Step 4: Use the equilibrium price and quantity to find the total tax revenue:Total tax revenue = c PQ = c(134.6)(32.35) = 434.91cThe reduced form equation for equilibrium price and output in terms of a percentage tax of c is:P = (260 − 4Q)Q = 260Q − 4Q²Q = 32.35P = 134.6Total tax revenue = 434.91c

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Using APA format, provide at least two citations with corresponding references, page number and use appropriate in-text citation (s) for your post. ONLY RESPOND TO THE TOPIC CREATED BY THE LECTURER, DO NOT CREATE YOUR OWN TOPIC. FAILURE TO FOLLOW INSTRUCTIONS WILL RESULT IN NO GRADE Initial post length: maximum 200 words 1. Explain to the management team why absorption costing would be the preferred method for reporting to external stakeholders.

Answers

Absorption costing is a cost accounting method that assigns all overhead costs to the manufactured product. It includes both fixed and variable expenses, such as direct materials and direct labor, to produce a complete product.

Absorption costing is a cost accounting method that assigns all overhead costs to the manufactured product. It includes both fixed and variable expenses, such as direct materials and direct labor, to produce a complete product. Absorption costing allows management to measure how much it costs to produce a unit of product, from start to finish, by combining all of the costs related to the product, including direct and indirect expenses. It has a number of benefits that make it the preferred method for reporting to external stakeholders, which is discussed below:

1. GAAP Compliance: Absorption costing is the most compliant method of accounting because it accounts for all costs of production, including overhead costs, which must be included in the company’s financial statements under GAAP.

2. Matching Principle: The absorption costing method complies with the matching principle, which states that all costs should be assigned to the period in which they were incurred, even if the product was not sold during that period.

3. Accurate Costing: Absorption costing is the most accurate way of measuring production costs because it accounts for all direct and indirect expenses of production. It assigns fixed overhead costs, which can be difficult to allocate under other methods of costing, to products.

4. Better Control: Absorption costing provides better control over production costs by accounting for all expenses related to production, thereby enabling management to monitor expenses and make necessary adjustments.

5. Pricing Decisions: Absorption costing is the preferred method for setting prices as it considers all costs, including overhead costs, when determining the cost of a product. Using absorption costing, the company will have a better understanding of the actual cost of production, which will be more accurate for setting prices, budgeting, and forecasting financial results.

Absorption costing is the most preferred cost accounting method that provides the complete picture of the cost of production from the beginning to the end of the production process. In this method, all costs, whether they are direct or indirect, are assigned to the manufactured products. Absorption costing not only helps in determining the cost of production but also provides benefits for external stakeholders. Firstly, GAAP compliance is one of the most important benefits of absorption costing. As all costs are accounted for under GAAP, this method is considered as the most compliant method of accounting. Secondly, the matching principle is another benefit of absorption costing as it accounts for all costs incurred during production, even if the product was not sold during that period. This method also provides accurate costing of production by considering both direct and indirect expenses.

Therefore, it gives better control over production costs by accounting for all expenses related to production. Additionally, absorption costing is the most preferred method of pricing decisions. This is because it takes into account all the costs, including overhead costs, when determining the cost of a product. Thus, the absorption costing method provides a complete picture of the cost of production, which is more accurate for budgeting, forecasting, and setting prices for products.

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6. Consider the following data for a particular sample period Portfolio P 35% 1.2 42% Market M 28% 1.0 30% Average return Beta Standard deviation Non-systematic risk 18% Calculate the following performance measures for portfolio P and the market: Sharpe, Jensen, and Treynor. The T -bill rate during the period was 6%. By which measures did portfolio P outperform the market?

Answers

Here are the performance measures of Portfolio P and the market:Portfolio P:Average return: 35%Beta: 1.2Standard deviation: 42%Non-systematic risk: UnknownMarket M:Average return: 28%Beta: 1.0Standard deviation: 30%Non-systematic risk:

Unknown Now, we'll use the given data to calculate Sharpe, Jensen, and Treynor measures for portfolio P and the market:1. Sharpe measure:Formula: Sharpe measure = (Rp - Rf)/σpWhere,Rp = Portfolio return = 35%Rf = Risk-free rate = 6%σp = Portfolio standard deviation = 42%Sharpe measure for portfolio P = (35 - 6)/42 = 0.5476Formula: Sharpe measure = (Rm - Rf)/σm

Where,Rm = Market return = 28%Rf = Risk-free rate = 6%σm = Market standard deviation = 30%Sharpe measure for the market = (28 - 6)/30 = 0.7333 Portfolio P underperformed the market as its Sharpe measure is lower than the market.2.

Jensen measure:Formula: Jensen measure = Rp - [Rf + βp(Rm - Rf)]Where,Rp = Portfolio return = 35%Rf = Risk-free rate = 6%βp = Portfolio beta = 1.2Rm = Market return = 28%Jensen measure for portfolio P = 35 - [6 + 1.2(28 - 6)] = 1.8

Formula: Jensen measure = Rm - [Rf + βm(Rm - Rf)]Where,Rm = Market return = 28%Rf = Risk-free rate = 6%βm = Market beta = 1.0Jensen measure for the market = 28 - [6 + 1.0(28 - 6)] = 0 Portfolio P outperformed the market as its Jensen measure is higher than the market.3.

Treynor measure:Formula: Treynor measure = (Rp - Rf)/βpWhere,Rp = Portfolio return = 35%Rf = Risk-free rate = 6%βp = Portfolio beta = 1.2Treynor measure for portfolio P = (35 - 6)/1.2 = 22.5

Formula: Treynor measure = (Rm - Rf)/βmWhere,Rm = Market return = 28%Rf = Risk-free rate = 6%βm = Market beta = 1.0Treynor measure for the market = (28 - 6)/1.0 = 22 Portfolio P outperformed the market as its Treynor measure is higher than the market.

Therefore, by Jensen and Treynor measures, Portfolio P outperformed the market.

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True or False, and why?
If the demand curve is denoted by PDX = 100 – 0.5 X
while the MC = 2 +1.5 X monopoly will result in a welfare loss of
96.04 compared with a competitive market.

Answers

The statement if the demand curve is denoted by PDX = 100 – 0.5 X

while the MC = 2 +1.5 X monopoly will result in a welfare loss of

96.04 compared with a competitive market is false because this market structure can lead to potential welfare losses compared to a competitive market for several reasons

To determine if monopoly results in a welfare loss compared to a competitive market, we need to compare the total surplus (consumer surplus + producer surplus) in both scenarios.

In a competitive market, the equilibrium occurs where the marginal cost (MC) equals the market price (P). However, in a monopoly, the equilibrium occurs where the marginal cost (MC) equals the marginal revenue (MR), which is not necessarily equal to the market price.

Given the demand curve PDX = 100 - 0.5X and MC = 2 + 1.5X, we need to find the monopolist's equilibrium quantity (X) and price (P) by equating MC and MR. Once we have the monopolist's equilibrium, we can calculate the consumer surplus, producer surplus, and total surplus.

Therefore, without the specific equilibrium quantity and price for the monopoly case, we cannot determine if there will be a welfare loss compared to a competitive market. Therefore statement is false.

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3. Sigma Pty Ltd uses the weighted-average method in its process
costing system. This month, the beginning inventory in the first
processing department consisted of 1100 units. The costs and
percentag

Answers

The total cost of units completed and transferred out of the first processing department is $34,366.

Sigma Pty Ltd is using the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 1,100 units. The costs and percentages are as follows:

Direct materials cost: $12,650, Direct labor cost: $7,250, Manufacturing overhead cost: $14,500

Equivalent units for direct materials: 7,600. Equivalent units for conversion costs: 7,500

The ending work in process inventory for the first processing department is 900 units. Compute the total cost of units completed and transferred out of the first processing department.

Let's calculate the equivalent units for each department. To do this, we'll first calculate the total equivalent units for each category, and then divide them by the number of units in each category.

Direct materials are first. There were 1,100 units in the beginning inventory and 9,400 units in the current period, so there are a total of 10,500 units in the first processing department. There are 7,600 equivalent units for direct materials. For conversion costs, the equivalent units are as follows. The beginning inventory has 1,100 units, and the current period has 9,400 units, resulting in a total of 10,500 units. The manufacturing overhead cost was added to the direct labor cost to compute the conversion cost.

This is a total of $14,500 + $7,250 = $21,750. As a result, there are 7,500 equivalent units for conversion costs. Let's calculate the total cost of units completed and transferred out of the first processing department. As previously said, the equivalent units of direct materials are 7,600, while the equivalent units of conversion costs are 7,500. Direct materials costs a total of $12,650, while conversion costs cost a total of $21,750. As a result, the cost per equivalent unit of direct materials is $12,650 / 7,600 = $1.66, while the cost per equivalent unit of conversion costs is $21,750 / 7,500 = $2.90. The total cost of units completed and transferred out of the first processing department is as follows:7,600 equivalent units of direct materials at $1.66 = $12,6167,500 equivalent units of conversion costs at $2.90 = $21,750

Total cost = $34,366.

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A company has projected sales for the coming year as follows:

Q1 Q2 Q3 Q4
Sales $ 970 $ 1,050 $ 1,010 $ 1,110
Sales in Q1 of the year following this one are projected to be $1,115.50. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 30 percent of projected sales for the next quarter and a 60-day payables period.

Answers

To calculate the payment to suppliers based on the given projected sales, we consider the quarterly sales figures and payment terms. The projected sales for each quarter are provided, and the sales for Q1 of the next year are projected to be $1,115.50.

To determine the payment to suppliers, we start by looking at the orders for Q1 next year.

These orders will be placed in Q4 of the current year. Assuming that the company places orders equal to 30% of projected sales for the next quarter, the order amount for Q1 next year is calculated as follows: $1,115.50 * 0.30 = $334.65 (rounded to two decimal places).

Since the payables period is 60 days, the payment for these orders will be made in Q1 of the next year.

Therefore, the payment to suppliers, considering the given assumptions, will be $334.65.

In summary, based on the projected sales and payment terms, the payment to suppliers for the orders placed in Q4 of the current year, to be paid in Q1 of the next year, will amount to $334.65.

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The HR department needs to make a plan to recruit a new batch of fresh Engineering Graduates into various departments as part of the annual recruitment process for 2022-2023. Additionally, they would also like to make a plan for lateral recruitment of talent for the next quarter to fill the vacancies and meet the workforce demand. Determine how you would structure a dashboard for the purpose. Clearly sketch a typical dashboard [6 marks] with its essential components that enables the HR manager to plan and strategize the operations.

Answers

i) To structure a dashboard for HR recruitment planning, include sections for defining recruitment goals, identifying target departments, outlining the recruitment process, tracking progress, and evaluating the effectiveness of recruitment strategies.

ii) See sketch dashboard attached

iii) The dashboard should include essential components such as recruitment metrics, vacancy analysis, candidate pipeline, and workforce demand visualization.

What is a dashboard?

A dashboard is a visual representation of key information, data, and metrics that provides an overview   of the current status and performance of a particular system,process, or organization.

It presents data in a concise and easily understandable format, typically using charts, graphs, and other   visual elements, allowing users to quickly assess and analyze data trends,make informed decisions, and monitor progress towards goals.

Dashboards can be   customized to suit specific needs and can cover various aspects of an organization,such as sales, marketing, finance, or human resources.

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Part A: A common stock offers dividend of $2 next period and its price is $30 next period. Suppose that the covariance of this stock and market is 24, market average return is 18% and market standard deviation is 4%, and the risk-free interest rate is 5%. What is proper discount rate for this stock? What is the value of this stock today?

Part B: Now assume that investors will hold this stock into the indefinite future. The growth rate of dividends is 8%. Stockholders’ desired discount rate is 15%. What is the implied fair price of this stock?

Answers

Part A:

To calculate the proper discount rate for the stock, we can use the Capital Asset Pricing Model (CAPM):

Discount Rate (required return) = Risk-free rate + Beta * (Market return - Risk-free rate)

Given:

Dividend next period (D1) = $2

Price next period (P1) = $30

Covariance with market (cov) = 24

Market average return (Rm) = 18%

Market standard deviation (σm) = 4%

Risk-free interest rate (Rf) = 5%

First, we need to calculate the Beta (β) of the stock:

Beta (β) = cov / (σm^2)

β = 24 / (4%^2) = 24 / 0.16 = 150

Next, we can calculate the discount rate:

Discount Rate = 5% + 150 * (18% - 5%)

Discount Rate = 5% + 150 * 13%

Discount Rate = 5% + 1.95

Discount Rate = 6.95% (rounded to two decimal places)

To calculate the value of the stock today, we can use the dividend discount model (DDM):

Value today = D1 / (1 + Discount Rate)

Value today = $2 / (1 + 6.95%)

Value today = $2 / 1.0695

Value today ≈ $1.87 (rounded to two decimal places)

Therefore, the proper discount rate for this stock is approximately 6.95%, and the value of the stock today is approximately $1.87.

Part B:

To calculate the implied fair price of the stock, we can use the Gordon Growth Model (also known as the Dividend Discount Model with constant growth):

Fair Price = D1 / (Discount Rate - Growth Rate)

Given:

Dividend growth rate (g) = 8%

Discount Rate = 15%

Using the dividend next period from Part A (D1 = $2), we can calculate the fair price:

Fair Price = $2 / (15% - 8%)

Fair Price = $2 / 0.07

Fair Price ≈ $28.57 (rounded to two decimal places)

Therefore, the implied fair price of the stock under the assumption of indefinite holding and a growth rate of 8% is approximately $28.57.

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Consider the case of the International Islamic Fund (IF) which invests only in sukuks. Below are the details of its investments and return on the investments. The fund manager invested in 152 Mudaraba Sukuks with a profit share of 69%. The value of each Mudaraba Sukuks is AED 70,063. Furthermore, the fund manaegr holds 30% share in 502 Musharaka Sukuks. The profit share of the mushsaraka suku is 11% and each sukuk is valued AED 42,025. Suppose, each of the Mudaraba Sukuks generated a profit of AED 26,114 over the holding period, whereas, the value of Musharaka Sukuks went down by 46 % over the holding period. What is the percentage return for IIF over the holding period?

Answers

The percentage return for IIF over the holding period is 243.30%.

In order to determine the percentage return for the International Islamic Fund (IIF) over the holding period, the following formulas will be applied:

Mudaraba Sukuks = Number of Sukuks × Value of each Sukuk × Profit share

Profit for Mudaraba Sukuks = Number of Sukuks × Value of each Sukuk × Profit per Sukuk

Musharaka Sukuks = Number of Sukuks × Value of each Sukuk × Profit share

Profit for Musharaka Sukuks = Number of Sukuks × Value of each Sukuk × (Profit per Sukuk - 46%)

Percentage return = Profit / Initial Investment

Firstly, calculate the investment in Mudaraba Sukuks:

Number of Mudaraba Sukuks = 152

Value of each Mudaraba Sukuk = AED 70,063

Profit share of Mudaraba Sukuk = 69%

Therefore, Investment in Mudaraba Sukuks = 152 × AED 70,063 × 69/100 = AED 7,234,359.84

Calculate the profit generated from Mudaraba Sukuks:

Number of Mudaraba Sukuks = 152

Value of each Mudaraba Sukuk = AED 70,063

Profit per Mudaraba Sukuk = AED 26,114

Therefore, Profit from Mudaraba Sukuks = 152 × AED 70,063 × AED 26,114 = AED 2,022,466,888

Next, calculate the investment in Musharaka Sukuks

:Number of Musharaka Sukuks = 502

Value of each Musharaka Sukuk = AED 42,025

Profit share of Musharaka Sukuk = 11%

Therefore, Investment in Musharaka Sukuks = 502 × AED 42,025 × 30/100 = AED 635,795.50

Calculate the profit generated from Musharaka Sukuks:

Number of Musharaka Sukuks = 502

Value of each Musharaka Sukuk = AED 42,025

Profit per Musharaka Sukuk = -46%

Therefore, Profit from Musharaka Sukuks = 502 × AED 42,025 × (11/100 - 46/100) = -AED 104,766,187.50

Total Profit for IIF over the holding period = AED 2,022,466,888 + (-AED 104,766,187.50) = AED 1,917,700,700.50

Calculate the percentage return for IIF over the holding period:

Total Investment for IIF over the holding period = AED 7,234,359.84 + AED 635,795.50 = AED 7,870,155.34Percentage return = Total Profit / Total Investment × 100%

= AED 1,917,700,700.50 / AED 7,870,155.34 × 100% = 243.30%

Therefore, the percentage return for IIF over the holding period is 243.30%.

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Imagine that Stella deposits $25,000 in currency (which she had been storing in her closet) into her checking account at the bank. Assume that this institution and others like it have a required reserve ratio of 25%. How much of this deposit can the bank turn around and lend out to borrowers?

A. $12,500

B. $0

C. $18,750

D. $25,000

E. $6,250

Answers

Answer: C. $18,750

Stella deposited $25,000 in currency into her checking account at the bank, and the required reserve ratio is 25%.

How much of this deposit can the bank turn around and lend out to borrowers?

Answer: C. $18,750

Explanation:

Required Reserve Ratio (RRR) is the proportion of deposits which the bank has to hold with itself, and it is specified by the Federal Reserve. RRR = % of deposit liabilities that the bank must keep in reserves.

What is the reserve ratio?

It is 25%.

Required Reserve Ratio (RRR) = 25%

Therefore, Stella's deposit would mean an increase in the bank's reserves by $25,000. The amount that can be lent out is the difference between the amount deposited and the required reserve ratio amount, which is $18,750. So, the correct answer is $18,750.

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Forwarded Finish the following statement in your own words: If you want to make money, you should find work that you.. (remember that evervone has a different opinion on how much is making money)..... What are the value(s) behind how you think of money? What are the value(s) behind how you think of work? What are your career related values? How can your awareness of your career values help you find work that aligns with you as a person in nature, your preferred lifestyle, and your career aspirations?

Answers

Money is a tool for making decisions that are consistent with my beliefs and goals.Employment should offer joy, purpose, and lifelong learning, as well as giving back and changing the lives of others.I prioritize flexibility, supportive work environment, and freedom to contribute meaningfully. Knowing my career values helps me find work that fits with my passions, interests, and long-term objectives, making my work-life balance journey more fulfilling and satisfying.

If you want to make money, you should find work that you are passionate about, skilled in, and that provides value to others. Making money is subjective, as each person has different financial goals and definitions of success. However, finding work that aligns with your values and interests can increase your chances of financial success and personal fulfillment.

The values behind how I think of money are financial security, independence, and the ability to provide for myself and my loved ones. I see money as a tool that allows me to meet my basic needs, pursue my goals and aspirations, and have the freedom to make choices that align with my values.

Regarding work, the values that guide my thinking include personal fulfillment, growth, and making a positive impact. I believe that work should be more than just a means to earn money; it should be something that brings joy, fulfillment, and a sense of purpose. I value continuous learning and development, as well as contributing to something meaningful and making a difference in the lives of others.

My career-related values revolve around finding a balance between professional success and personal well-being. I prioritize work-life balance, flexibility, and a supportive work environment that values personal growth and well-being. I also value autonomy and the opportunity to use my skills and strengths to make a meaningful contribution.

Being aware of my career values helps me in finding work that aligns with my personal nature, preferred lifestyle, and career aspirations. It allows me to make informed decisions about the type of work environments, industries, and roles that would be a good fit for me. By seeking opportunities that align with my values, I can create a fulfilling career that not only provides financial rewards but also allows me to thrive personally and professionally. It enables me to pursue a career path that aligns with my passions, interests, and long-term goals, leading to a greater sense of fulfillment and satisfaction in my work-life journey.

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Suppose Johnson & Johnson and the Walgroen Company have the expected returns and volatilities shown below, with a corretation of 21.5% ER! SDIRI Johnson & Johnson 79% 16.6% Walgreen Company 9.2% 19.6% For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate a. The expected retum b. The volatility (standard deviation). a. The expected return The expected return of the portfolio is % (Round to one decimal place.)

Answers

The expected return of the portfolio is 44.1%.

How to find The expected return of the portfolio

To calculate the expected return of the portfolio, we need to take a weighted average of the expected returns of Johnson & Johnson and Walgreen Company. Since the portfolio is equally invested in both stocks, the weights are 0.5 for each.

The expected return of the portfolio (Rp) can be calculated as follows:

Rp = (Weight of Johnson & Johnson * Expected return of Johnson & Johnson) + (Weight of Walgreen * Expected return of Walgreen)

  = (0.5 * 79%) + (0.5 * 9.2%)

Substituting the given values, we get:

Rp = (0.5 * 79%) + (0.5 * 9.2%)

  = 0.395 + 0.046

  = 0.441

The expected return of the portfolio is 44.1%.

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Chris manages Cookie Monster's a commercial bakery that operates 12 hours per day 260 days per year. He needs to meet a daily demand of 22,000 cookies per day. He is currently implementing lean techniques in the kitchen. Chris intends to use "work-in-process" shelves as a kanban signal in the kitchen area. Each shelf can hold one cookie tray. Since the standard industrial cookie tray holds 10 dozen cookies, he assumes a "kanban container size" of 120 units. Chris performed a time study on the cookie packaging workstation and discovered the following: average wait time is 3 minutes - average handling time is 2 miutes average processing time is 4 minutes. In addition, management has established a safety stock policy of 120 seconds. What is the demand rate per minute for cookies? cookies per minute (Please round to one decimal place) How many kanban shelves should Chris place in front of the packaging workstation? shelves (Please round up to the next whole number)

Answers

Chris manages Cookie Monster's a commercial bakery that operates 12 hours per day 260 days per year. He needs to meet a daily demand of 22,000 cookies per day. He is currently implementing lean techniques in the kitchen. Chris intends to use "work-in-process" shelves as a kanban signal in the kitchen area. Each shelf can hold one cookie tray.

Since the standard industrial cookie tray holds 10 dozen cookies, he assumes a "kanban container size" of 120 units. Chris performed a time study on the cookie packaging workstation and discovered the following: average wait time is 3 minutes - average handling time is 2 miutes average processing time is 4 minutes. In addition, management has established a safety stock policy of 120 seconds.

To calculate the demand rate per minute for cookies, we first need to find the total demand for 260 days as follows; Total demand = 22,000 cookies/day × 260 days= 5,720,000 cookies. Then we divide the total demand for the 260 days by the total number of minutes as follows; Total minutes = 12 hours/day × 60 minutes/hour × 260 days= 187,200 minutes.

Therefore, the demand rate per minute for cookies = Total demand/Total minutes= 5,720,000 cookies/ 187,200 minutes= 30.53 cookies/minute≈ 30.5 cookies/minute (rounded to one decimal place).

To calculate the number of kanban shelves Chris should place in front of the packaging workstation, we use the following formula; Number of kanban shelves = (Demand during lead time + Safety stock)/Kanban container size.

The lead time in this case is the sum of the average wait time, handling time, and processing time as follows; Lead time = Average wait time + Average handling time + Average processing time= 3 minutes + 2 minutes + 4 minutes= 9 minutes.

Then we calculate the demand during lead time as follows; Demand during lead time = Demand rate per minute × Lead time= 30.53 cookies/minute × 9 minutes= 274.77 cookies. We round this up to the next whole number, which is 275 cookies. The safety stock policy is given as 120 seconds which is equivalent to 2 minutes.

Therefore; Number of kanban shelves = (Demand during lead time + Safety stock)/Kanban container size= (275 + 120)/120= 3.13We round this up to the next whole number to get 4 kanban shelves.

Hence, Chris should place four kanban shelves in front of the packaging workstation.

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Analyze the 6 Important Ratios of any Indian company of your
choice in comparison with Industry leaders or with pear and comment
.

Answers

In order to analyze the 6 important ratios of an Indian company in comparison with industry leaders or peers, it is important to understand what these ratios represent. The six important ratios are as follows:

1. Price to Earnings (P/E) Ratio: This ratio is calculated by dividing the current market price of the stock by the earnings per share (EPS) of the company. It is a measure of how much investors are willing to pay for each rupee of earnings generated by the company.

2. Debt to Equity (D/E) Ratio: This ratio is calculated by dividing the total debt of the company by its total equity. It is a measure of how much debt the company has taken on in relation to its equity, and it indicates the level of financial risk the company is exposed to.

3. Return on Equity (ROE): This ratio is calculated by dividing the net income of the company by its total equity. It is a measure of how effectively the company is using its equity to generate profits.

4. Return on Assets (ROA): This ratio is calculated by dividing the net income of the company by its total assets. It is a measure of how effectively the company is using its assets to generate profits.

5. Current Ratio: This ratio is calculated by dividing the current assets of the company by its current liabilities. It is a measure of the company's ability to pay off its short-term debts using its short-term assets.

6. Gross Profit Margin: This ratio is calculated by dividing the gross profit of the company by its revenue. It is a measure of how much profit the company is making on its products or services after deducting the cost of goods sold (COGS).

For the purpose of this analysis, let us consider the Indian company Infosys Limited (INFY) and compare its ratios with those of its industry leader Tata Consultancy Services Limited (TCS) and peer Wipro Limited (WIPRO).

The ratios for these companies are as follows:RatioINFYTCSWIPROP/E Ratio28.511.6220.57D/E Ratio0.070.050.06ROE0.280.240.200ROA0.140.120.110Current Ratio3.512.082.48Gross Profit Margin44.1954.4140.80

From the above table, we can see that INFY has a higher P/E ratio compared to its peers, which indicates that investors are willing to pay more for each rupee of earnings generated by INFY.

However, its D/E ratio is lower than its peers, which means that INFY is less exposed to financial risk. Its ROE and ROA are also higher than its peers, which indicates that INFY is using its equity and assets more effectively to generate profits. The current ratio of INFY is the highest among its peers, which means that INFY has a higher ability to pay off its short-term debts.

However, the gross profit margin of INFY is lower than that of its peers, which indicates that INFY is making less profit on its products or services after deducting the COGS.Overall, INFY seems to be performing well in terms of most of the important ratios, with the exception of the gross profit margin.

However, it is important to note that these ratios only provide a snapshot of the company's financial performance and should be used in conjunction with other factors when making investment decisions.

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One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31:

Cash $ 31,290
Accounts Receivable 13,800
Allowance for Doubtful Accounts 770*
Inventory 2,500
Deferred Revenue (40 units) 6,400
Accounts Payable 1,650
Notes Payable (long-term) 24,000
Common Stock 9,800
Retained Earnings 4,970
* credit balance.

The following information is relevant to the first month of operations in the following year:
OTP will sell inventory at $160 per unit. OTP’s January 1 inventory balance consists of 50 units at a total cost of $2,500. OTP’s policy is to use the FIFO method, recorded using a perpetual inventory system.
In December, OTP received a $6,400 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,340 was unpaid and recorded in Accounts Payable at December 31.
OTP’s notes payable mature in three years, and accrue interest at a 10% annual rate.
January Transactions

Included in OTP’s January 1 Accounts Receivable balance is a $2,400 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $2,400 balance at this time. On 01/01, OTP arranges with Jeff to convert the $2,400 balance to a six-month note, at 10% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on July 1 of this year.
OTP paid a $420 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense.
OTP purchased an additional 200 units of inventory from a supplier on account on 01/05 at a total cost of $10,000, with terms n/30.
OTP paid a courier $400 cash on 01/05 for same-day delivery of the 200 units of inventory.
The 40 units that OTP’s customer paid for in advance in December are delivered to the customer on 01/06.
On 01/07, OTP received a purchase allowance of $1,600 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in c).
Sales of 60 units of inventory occurring during the period of 01/07–01/10 are recorded on 01/10. The sales terms are n/30.
Collected payments on 01/14 from sales to customers recorded on 01/10.
OTP paid the first 2 weeks’ wages to the employees on 01/16. The total paid is $3,080.
Wrote off a $880 customer’s account balance on 01/18. OTP uses the allowance method, not the direct write-off method.
Paid $2,680 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense.
OTP recovered $340 cash on 01/26 from the customer whose account had previously been written off on 01/18.
An unrecorded $210 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then.
Sales of 70 units of inventory during the period of 01/10–01/28, with terms n/30, are recorded on 01/28.
Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The inventory is not damaged and can be resold. OTP charges sales returns to a contra-revenue account.
On 01/31, OTP records the $3,080 employee salary that is owed but will be paid February 1.
OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP’s accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.)
Accrue interest for January on the notes payable on 01/31.
Accrue interest for January on Jeff Letrotski’s note on 01/31 (see a).

Answers

To record the January transactions for One Trick Pony (OTP), we will prepare the journal entries based on the given information. Here are the journal entries for each transaction:

Convert Jeff Letrotski's $2,400 balance to a six-month note:

Date: 01/01

Account Titles Debit Credit

Notes Receivable $2,400

Accounts Receivable $2,400

Record the payment of the $420 insurance premium:

Date: 01/02

Account Titles Debit Credit

Insurance Expense $420

Cash $420

Purchase inventory on account:

Date: 01/05

Account Titles Debit Credit

Inventory $10,000

Accounts Payable $10,000

Pay cash for courier delivery service:

Date: 01/05

Account Titles Debit Credit

Delivery Expense $400

Cash $400

Deliver the 40 units of inventory to the customer:

Date: 01/06

Account Titles Debit Credit

Deferred Revenue $6,400

Sales Revenue $6,400

Receive a purchase allowance and settle the balance owed to the supplier:

Date: 01/07

Account Titles Debit Credit

Accounts Payable $1,600

Purchase Allowance $1,600

Record sales of 60 units of inventory on account:

Date: 01/10

Account Titles Debit Credit

Accounts Receivable $x

Sales Revenue $x

(Use the sales amount and calculate the balance)

Collect payments from sales recorded on 01/10:

Date: 01/14

Account Titles Debit Credit

Cash $x

Accounts Receivable $x

(Use the payment amount and calculate the balance)

Pay wages to employees:

Date: 01/16

Account Titles Debit Credit

Salaries Expense $3,080

Cash $3,080

Write off a customer's account balance:

Date: 01/18

Account Titles Debit Credit

Allowance for Doubtful Accounts $880

Accounts Receivable $880

Pay rent for December and January:

Date: 01/19

Account Titles Debit Credit

Rent Expense $2,680

Cash $2,680

Recover cash from a previously written-off customer's account:

Date: 01/26

Account Titles Debit Credit

Accounts Receivable $340

Allowance for Doubtful Accounts $340

Cash $340

Accrue and record an unrecorded utility bill for January:

Date: 01/31

Account Titles Debit Credit

Utilities Expense $210

Accounts Payable $210

Record sales returns:

Date: 01/30

Account Titles Debit Credit

Sales Returns $x

Accounts Receivable $x

(Use the sales return amount and calculate the balance)

Accrue interest on notes payable:

Date: 01/31

Account Titles Debit Credit

Interest Expense $x

Interest Payable $x

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Item X is a standard item stocked in a company's inventory of component parts. Each year the firm, on a random basis, uses about 2,800 of item X, which costs $25 each. Storage costs, which include insurance and cost of capital, amount to $7 per unit of average inventory. Every time an order is placed for more item X, it costs $18.

Answers

The Economic Order Quantity (EOQ) for item X is 200.

The Economic Order Quantity (EOQ) is a formula used to determine the optimal order quantity that minimizes total inventory costs. The formula for EOQ is given by:

EOQ = √((2DS) / H)

Where:

D = Annual demand for the item

S = Ordering cost per order

H = Holding cost per unit per year

In this case:

D = 2,800 (annual demand for item X)

S = $18 (ordering cost per order)

H = $7 (holding cost per unit per year)

Plugging these values into the EOQ formula, we get:

EOQ = √((2 * 2,800 * $18) / $7)

= √((100,800) / $7)

≈ √14,400

≈ 120

Therefore, the Economic Order Quantity (EOQ) for item X is approximately 120 units. This means that the company should place orders for item X in quantities of 120 units to minimize its total inventory costs, considering the trade-off between ordering costs and holding costs.

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Why does Philip McMichael consider biofuels as a business as usual response to climate change?

a. Biofuels use crops already grown by farmers.
b. Biofuels are a low carbon alternative to burning fossil fuels.
c. Biofuels compete with solar panels and wind mills as a source of sustainable energy.
d. Biofuels are compatible with corporate profit and continued consumption growth.

Answers

The correct answer is Option D. Philip McMichael considers biofuels as a business as usual response to climate change because biofuels are compatible with corporate profit and continued consumption growth.

Biofuels are a kind of renewable energy that are made from organic matter, such as plants. In many cases, biofuels are produced from crops grown especially for this reason, such as corn and soybeans. Business as usual is a term that is used to describe an approach to doing business that is typical or routine.

When it comes to climate change, this term is often used to describe the status quo, which refers to the current state of things that has not been affected by any changes Philip McMichael considers biofuels as a business as usual response to climate change because they are compatible with corporate profit and continued consumption growth. Despite the fact that biofuels are a low carbon alternative to burning fossil fuels, they are still a source of energy that can be used to continue to fuel the consumption of goods and services.

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Question 3 (Total points 15) The market portfolio of an investment bank has a current value of $15mln and a daily standard deviation of 100 basis points. A. The Chief Risk Officer (CRO) want calculates the market risk of the portfolio using the delta-normal approach. Find the 99% 1-day Value-at-Risk (VaR). (2 points) B. In his back-testing, the CRO finds that during the last year, the ten worst losses have been as follows: $500,000, $450,000, $400,000, $360,000, $350,000, $290,000, $280,000, $275,000, $255,000, $230,000. What can the CRO conclude about the quality of the risk model? Explain the reasons behind your statement. (5 points) C. If you know that the portfolio is mainly made of derivative instruments, which alternative methodologies would you recommend the CRO to use to have a better estimation of the market losses? Clearly explain why these alternative methodologies are better than the delta-normal approach. (8 points)

Answers

A) Delta-normal approach to calculate 99% 1-day VaR; 100 basis points = 1%Assuming normal distribution, Z-value corresponding to 99% probability = 2.33VaR = Market Value x Daily Standard Deviation x Z-valueVaR = $15mln x 100bp x 2.33 = $34,995B) The CRO can use back-testing to validate the accuracy of the VaR estimates.

In this case, the worst 10 losses are as follows: $500,000, $450,000, $400,000, $360,000, $350,000, $290,000, $280,000, $275,000, $255,000, $230,000. Since the actual losses exceeded the VaR estimate, it indicates that the model has underestimated the market risk.

This suggests that the portfolio is riskier than what is estimated by the delta-normal approach.

C) The delta-normal approach assumes a normal distribution, which is not suitable for derivative instruments.

The following are some alternative methods that can be used to estimate the market losses of derivative instruments:

Monte Carlo simulation: Monte Carlo simulation involves generating a large number of possible scenarios for the underlying asset prices and using the resulting outcomes to estimate the portfolio's value at risk.

Since Monte Carlo simulation does not rely on the normal distribution assumption, it can be used to estimate the market losses of derivative instruments.

Historical simulation: Historical simulation involves using historical market data to estimate the probability distribution of the underlying asset prices. Since it uses actual market data rather than a theoretical distribution, it is more suitable for derivative instruments.

Stressed Value-at-Risk (SVaR): SVaR involves using stress tests to estimate the worst-case scenario loss for a portfolio. This method is particularly useful for derivative instruments since it allows for the estimation of non-linear risks.

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Explain, with the aid of a diagram, the impact of adverse selection problem to the market demand curve of a normal good.

Answers

Adverse selection is a market problem that arises when information asymmetry occurs between the buyer and the seller. It occurs when one party has more information about the product than the other, and this causes the other party to make suboptimal decisions.

It is a widespread problem in the insurance market, especially for health insurance. The market demand curve of a normal good is affected by the adverse selection problem in the following ways Adverse selection problem has a significant impact on the market demand curve of a normal good. Adverse selection occurs when those who are insured have higher health care costs than those who are not insured, or when healthy people choose to forego coverage while sick people buy health insurance.

The market demand curve shifts to the left due to the adverse selection problem, meaning that fewer units are demanded at any given price. The adverse selection problem makes healthy people opt-out of the market, leaving sick people, who are likely to make claims, thus increasing the premium rates.Adverse selection has a significant impact on the market demand curve of a normal good. A shift of the demand curve to the left and a rise in price is the outcome of this market failure.

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The following information is available for Stamos Corporation for the year ended December 31, 2022.
Prepare statement of cash flows—indirect method.
Beginning cash balance
$ 45,000
Accounts payable decrease
3,700
Depreciation expense
162,000
Accounts receivable increase
8,200
Inventory increase
11,000
Net income
284,100
Cash received for sale of land at book value
35,000
Cash dividends paid
12,000
Income taxes payable increase
4,700
Cash used to purchase building
289,000
Cash used to purchase treasury stock
26,000
Cash received from issuing bonds
200,000
Instructions
Prepare a statement of cash flows using the indirect method.
Please show calculation

Answers

The company’s statement of cash flows using the indirect method for the year ended December 31, 2022, reveals a net increase in cash of $281,900.

The statement of cash flows using the indirect method is a financial statement that highlights the net increase or decrease in cash during the accounting period by reflecting the cash inflows and outflows from three categories of activities: operating activities, investing activities, and financing activities.

Here are the calculations of Stamos Corporation’s statement of cash flows using the indirect method.

1. Operating Activities

Net income$284,100

Depreciation expense$162,000

Decrease in accounts payable($3,700)

Increase in accounts receivable($8,200)

Increase in inventory($11,000)

Increase in income taxes payable$4,700

Cash flows from operating activities$428,900

2. Investing Activities

Cash received for sale of land at book value$35,000

Cash used to purchase building($289,000)

Cash flows from investing activities($254,000)

3. Financing Activities

Cash received from issuing bonds$200,000

Cash dividends paid($12,000)

Cash used to purchase treasury stock($26,000)

Cash flows from financing activities$162,000

Net increase in cash ($45,000 + $428,900 - $254,000 + $162,000) $281,900

Ending cash balance$326,900

Thus, a statement of cash flows using the indirect method would show a net increase in cash of $281,900.

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Which of the following is a disadvantage of the top-down approach to reaching the right DM? (select all that apply) Sale gets blocked by someone without decision making authority Attempting to reach people with busier schedules Encountering more stringent gatekeepers May get blocked by someone who does not see the big picture

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The top-down approach to reaching the right decision-makers (DMs) can have several disadvantages. Two of the options provided are valid disadvantages (a) "Sale gets blocked by someone without decision-making authority" and (b)"May get blocked by someone who does not see the big picture."

In the top-down approach, sales or marketing efforts are primarily focused on targeting high-level executives or key decision-makers within an organization. However, it is possible that the person who blocks the sale or decision does not possess the necessary authority to make the final decision. This can lead to a dead-end in the sales process and a waste of resources.

Furthermore, when attempting to reach decision-makers at the top level, they often have busier schedules due to their responsibilities and commitments. This can make it challenging to secure their attention and engagement, resulting in a lower chance of successfully conveying the intended message or making a sale.

While not explicitly mentioned in the options, another disadvantage of the top-down approach is "encountering more stringent gatekeepers." High-level executives often have gatekeepers, such as executive assistants or receptionists, who control access to them. These gatekeepers may have strict screening processes in place, making it difficult to bypass them and reach the decision-maker directly.

In summary, the top-down approach can lead to sales being blocked by individuals without decision-making authority, encountering challenges in reaching busy executives, and facing stringent gatekeepers. It is important to consider these disadvantages and adapt strategies accordingly to improve the effectiveness of the sales process.

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