Answer:
a. In consideration for her one-half interest in their personal residence, Kirby will transfer to Nell stock with a value of $200,000 and $50,000 of cash. Kirby's cost of the stock was $150,000, and the value of the personal residence is $500,000. They purchased the residence three years ago for $300,000.
Nell's basis for the stock is $150,000
Kirby's basis in the house is $300,000
The transfer of property due to divorce is nontaxable. The $50,000 that Nell receives is generally considered alimony (for tax purposes).
b. Nell will receive $1,000 per month for 120 months. If she dies before receiving all 120 payments, the remaining payments will be made to her estate.
The payments NOT QUALIFY as alimony and are EXCLUDED FROM Nell's gross income as they are received.
The TC&JA changed alimony rules and made them not deductible for the spouse that gives it, and not taxable for the spouse that receives it. It now works in a similar manner than child support. It doesn't make any difference now if payments are alimony or not.
c. Nell is to have custody of their 12-year-old son, Bobby. She is to receive $1,200 per month until Bobby (1) dies or (2) attains age 21 (whichever occurs first). After either of these events occurs, Nell will receive only $300 per month for the remainder of her life.
$300 per month is alimony that is EXCLUDED FROM Nell's gross income, and the remaining $900 per month is considered CHILD SUPPORT and is NONTAXABLE to Nell.
Again, the TC&JA changed the rules, so alimony received is not taxable.
A credit granted to a customer for returned goods requires a debit to a. Accounts Receivable and a credit to a contra-revenue account. b. Cash and a credit to Sales Returns and Allowances. c. Sales Revenue and a credit to Cash. d. Sales Returns and Allowances and a credit to Accounts Receivable.\
Answer:
d. Sales Returns and Allowances and a credit to Accounts Receivable.
Explanation:
The entry to record credit granted to customer entails :
Decrease the Assets of Accounts Receivable (credit entry) and Decrease the Sales Revenue (debit entry).
The Recognition of Sales Return and Allowance decreases Sales Revenue.
Van Frank Telecommunications has a patent on a cellular transmission process.
1. The company has amortized the $19.80 million cost of the patent on a straight-line basis, since it was acquired at the beginning of 2012.
2. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost.
3. The decision was made at the end of 2016 (before adjusting and closing entries).
What is the appropriate adjusting entry for patent amortization in 2016 to reflect the revised estimate.
(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) Record the adjusting entry for patent amortization in 2016.
Answer:
Van Frank Telecommunications
December 31, 2016:
Debit Amortization Expense - Patent $4,400,000
Credit Accumulated Amortization-Patent $4,400,000
To record the revised amortization expense for the year.
Explanation:
Data and Calculations:
Patent's value on January 1, 2012 = $19,800,000
Patent's assessed lifespan = 9 years
Amortization expense for each year on straight-line = $2,200,000 ($19,800,000/9)
Accumulated Amortization for Patent = $6,600,000 (for 3 years)
Net book value of patent = $13,200,000 ($19,800,000 - $6,600,000)
Revised lifespan = 6 years
Revised amortization expense per year = $4,400,000 ($13,200,000/3)
Angela is selling her car through a newspaper advertisement. When she finds a buyer, she wants a form of payment which is guaranteed to be good. Which form of payment should she AVOID? *
Personal check
Certified check
Cashier's check
Cash
QUESTION 2 / 10
Which of the following is the BEST reason to use cash for making purchases?
A. Keeping track of how much you have spent is simple.
B. Splitting bills with friends is easier.
C. Getting more cash from an ATM machine is easy to do.
D. Knowing what you have spent your money on is
simple.
The best reason to use cash for making purchases is keeping track of how much you have spent is simple. Thus, option A is correct.
What is purchases?Purchasing is the process through which a company or organization acquires products or services in order to achieve its objectives. Although numerous organizations seek to establish standards in the purchasing process, practices can vary widely amongst firms.
Cash makes budgeting and sticking to it simpler. When you pay with cash that you've planned for purchases, it's easy to keep track of where your money is going. It's also eye-opening and keeps you grounded in terms of how much money is going out vs coming in from week to week or month to month.
The main incentive to utilize cash for purchases is that it is simple to keep account of the amount you have spent. As a result, option A is correct.
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On January 1, 2018, the chief operating officer of New Belgium, Jeff Stambaugh, signed a noncancellable lease for street equipment. The lease was for 10 years. The present value of payments expected to be made during the lease is $75,152. The township’s incremental borrowing rate is 7 percent. The $10,000 annual lease payment is due on the first day of each year beginning in 2018.
Required:
Prepare all journal entries necessary to record the lease transaction for 2018 and the payment made in 2019.
Answer:
Account Titles and Explanation Debit$ Credit$
2018
Expenditure-Capital outlays $75,152
Other financing source-Capital leases $75,152
(To record expenditure-capital outlay)
Expenditure-capital lease principal $10,000
Voucher payable $10,000
(To record expenditure capital lease principal)
Voucher Payable $10,000
Cash $10,000
(To record payment of expenditure)
2019
Expenditure-capital lease principal $5,440
Expenditure-interest on capital lease $4,560
Voucher payable $10,000
(To record expenditure capital lease principal)
Voucher payable $10,000
Cash $10,000
(To record payment of expenditure)
On January 1, 2021, The Barrett Company purchased merchandise from a supplier. Payment was a noninterest-bearing note requiring five annual payments of $25,000 on each December 31 beginning on December 31, 2021, and a lump-sum payment of $150,000 on December 31, 2025. A 10% interest rate properly reflects the time value of money in this situation.
Required:
Calculate the amount at which Barrett should record the note payable and corresponding merchandise purchased on January 1, 2021.
Answer:
$187,908
Explanation:
Hint : Use time of Value techniques to calculate the price (today) : January 1, 2021.
Pmt = ($25,000)
n = 5
Fv = ($150,000)
i = 10 %
P/yr = 1
Pv = ?
Using a Financial Calculator, the price (today) that is the PV will be $187,907.87 or $187,908.
Thus the amount at which Barrett should record the note payable and corresponding merchandise purchased on January 1, 2021 will be $187,908.
On January 1, 2013, Parent Company purchased 80% of the common stock of Subsidiary Company for $280,000. On this date, Subsidiary had total owners' equity of $250,000 (common stock $20,000; other paid-in capital, $80,000; and retained earnings, $150,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Inventory, which was sold in the third quarter, is undervalued $5,000. Land is undervalued $20,000. Buildings and equipment have a fair value which exceeds book value by $30,000, and a 5-year expected life. Bonds payable are overvalued $10,000. The remaining excess, if any, is due to goodwill. Subsidiary had net income of $60,000 and paid $3,000 in dividends during 2013. Parent had net income of $50,000 and paid $1,000 in dividends during 2013. Assume that Parent uses equity method to record its investment.
Required:
a. Prepare a value analysis schedule for this business combination.
b. Prepare the determination and distribution schedule for this business combination
c. Prepare the necessary elimination entries in general journal form.
Answer and Explanation:
Please find answer and explanation attached
At Bargain Electronics, it costs $32 per unit ($19 variable and $13 fixed) to make an MP3 player at full capacity that normally sells for $46. A foreign wholesaler offers to buy 3,180 units at $26 each. Bargain Electronics will incur special shipping costs of $4 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order.
Reject Accept Net Income
Order Order Increase (Decrease)
Revenues
Costs-Manufacturing
Shipping
Net income
Answer:
Net income
Reject order $0
Accept order $9,540
Net Income Increase $9,540
Explanation:
Calculation to indicate the net income (loss) Bargain Electronics would realize by accepting the special order.
Reject Order Accept Order Net Income Increase (Decrease)
Revenues $0 $82,680 $82,680
($26*3,180 units)
Costs-Manufacturing $0 $60,420 $60,420
($19*3,180 units)
Shipping $0 $12,720 $12,720
($4*3,180)
Total cost $0 $73,140 $73,140
($60,420+$12,720)
Net income $0 $9,540 $9,540
($82,680-$73,140)
The Net income have increase by the amount of $9,540 which means that the SPECIAL ORDER should be accepted.
Financial Assertions and Audit Objectives. You are engaged to examine the financial statements of Spillane Company for the year ended December 31. Assume that on November 1, Spillane borrowed $500,000 from Second National Bank to finance plant expansion. The long-term note agreement provided for the annual payment of principal and interest over five years. The existing plant was pledged as security for the loan. Due to the unexpected difficulties in acquiring the building site, the plant expansion did not begin on time. To use the borrowed funds, management decided to invest in stocks and bonds and on November 16, invested the $500,000 in publicly traded securities
Required:
Develop specific assertions (audit objectives) related to securities (assets) based on management’s five (PCAOB) general assertions.
Answer:
Assertion 1) Existence or occurrence: the company must provide the loan documents along with proof that they actually purchased the stocks and bonds using the loan money. It would also help to have a document explaining why the building site couldn't be acquired as planned.
Assertion 2) Rights and obligations: all the legal paperwork regarding the loan, the mortgage on the existing plant and the stocks and bond paperwork must be presented.
Assertion 3) Completeness: all the relevant information must be readily available including building titles, inventories, equipment, cash receipts, etc. The auditor should be allowed to physically visit the plant and confirm the documents.
Assertion 4) Valuation and allocation: information regarding the current market values of the building, inventories and equipment should be given. The auditor should be able to confirm if the depreciation values and market values are consistent. Also, the auditor must have access to accounts receivables and should be able to analyze them to check for any inconsistencies.
Assertion 5) Presentation and disclosure: the auditor should be able to check expense accounts and capitalization accounts, and analyze them. E.g. equipment or machinery repairs must be treated as expenses and not capitalized.
The following were selected from among the transactions completed by Babcock Company during November of the current year:
Nov. 3 Purchased merchandise on account from Moonlight Co., list price $85,000, trade discount 25%, terms FOB destination, 2/10, n/30.
Nov.4 Sold merchandise for cash, $37,680. The cost of the merchandise sold was $22,600.
Nov. 5 Purchased merchandise on account from Papoose Creek Co., $47,500, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice.
Nov. 6 Returned $13,500 ($18,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co.
Nov. 8 Sold merchandise on account to Quinn Co., $15,600 with terms n/15. The cost of the merchandise sold was $9,400.
Nov. 13 Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
Nov. 14 Sold merchandise on VISA, $236,000. The cost of the merchandise sold was $140,000.
Nov. 15 Paid Papoose Creek Co. on account for purchase of November 5.
Nov. 23 Received cash on account from sale of November 8 to Quinn Co.
Nov. 24 Sold merchandise on account to Rabel Co., $56,900, terms 1/10, n/30. The cost of the merchandise sold was $34,000.
Nov. 28 Paid VISA service fee of $3,540.
Nov. 30 Paid Quinn Co. a cash refund of $6,000 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,300.
Journalize the transactions.
Answer:
Babcock Company
Journal Entries:
Nov. 3:
Debit Inventory $63,750
Credit Accounts Payable (Moonlight Co.) $63,750
To record the purchase of goods on account, terms FOB destination, 2/10, n/30.
Nov. 4:
Debit Cash Account $37,680
Credit Sales Revenue $37,680
To record the sale of goods for cash.
Debit Cost of goods sold $22,600
Credit Inventory $22,600
To record the cost of goods sold.
Nov. 5:
Debit Inventory $47,500
Credit Cash (For prepaid freight) $810
Credit Accounts Payable (Papoose Creek Co.) $46,690
To record the purchase of goods on account, terms FOB Shipping point, 2/10, n.30.
Nov. 6:
Debit Accounts Payable (Moonlight Co.) $13,500
Credit Inventory $13,500
To record the return of goods to Moonlight Co.
Nov. 8:
Debit Accounts Receivable (Quinn Co.) $15,600
Credit Sales Revenue $15,600
To record the sale of goods on account, terms n/15.
Debit Cost of goods sold $9,400
Credit Inventory $9,400
To record the cost of goods sold.
Nov. 13:
Debit Accounts Payable (Moonlight Co.) $50,250
Credit Cash Discount $1,005
Credit Cash Account $49,245
To record the payment for goods on account
Nov. 14:
Debit VISA Account $236,000
Credit Sales Revenue $236,000
To record the sale of goods on VISA.
Debit Cost of goods sold $140,000
Credit Inventory $140,000
To record the cost of goods sold.
Nov. 15:
Debit Accounts Payable (Papoose Creek Co.) $46,690
Credit Cash Discount $9,338
Credit Cash Account $37,353
To record the payment on account.
Nov. 23:
Debit Cash Account $15,600
Credit Accounts Receivable (Quinn Co.) $15,600
To record the receipt of cash on account.
Nov. 24:
Debit Accounts Receivable (Rable Co.) $56,900
Credit Sales Revenue $56,900
To record the sale of goods on account, terms 1/10, n/30.
Debit Cost of goods sold $34,000
Credit Inventory $34,000
To record the cost of goods sold.
Nov. 28:
Debit VISA Service Fee Expense $3,540
Credit Cash Account $3,540
To record the payment for VISA service.
Nov. 30:
Debit Inventory $3,300
Credit Cost of goods sold $3,300
To record the return of goods.
Debit Sales Returns $6,000
Credit Accounts Receivable $6,000
To record the return of goods by Quinn Co.
Debit Accounts Receivable $6,000
Credit Cash Account $6,000
To record the refund for returned goods.
Explanation:
Babcock Company uses Journals to record business transactions as they occur on a daily basis. They provide the needed guidance to ensure that the accounts involved in every business transaction are properly identified and entries are correctly recorded on the correct side of the accounts. Transactions are recorded following the ubiquitous accounting equation, the accrual concept, and matching principle of generally accepted accounting principles.
Please complete the spreadsheet template:
Trans no. Transaction
1. Pamela Wong, the owner, opened a checking account for the business by depositing $48,000 of her personal funds.
2. Paid the monthly rent of $1,500.
3. Bought office furniture on account for $1,000.
4. Pamela Wong invested $3,000 of office equipment in the business.
5. Paid cash for a new computer for the business, $5,000.
6. Paid for an advertisement in the local newspaper, $200.
7. Completed graphic desktop publishing services for a client and sent a bill for $800.
8. Paid $700 on account for the office furniture bought earlier.
9. Received $500 on account from a client.
10. Pamela Wong withdrew $1,000 for personal use.
11. Received $400 cash for desktop publishing services completed for a client.
Answer:
I used an excel spreadsheet sine there is not enough room here.
Explanation:
Excel templates make it simpler to create a spreadsheet with a polished appearance by including all of the following, with the exception of Data.
What is Excel Sheet ?To eliminate the necessity for the user to generate those designs from scratch, templates are made to specify the fundamental structure of each document that is repeated.
A template typically includes formatting and pre-defined formulas. However, it won't include any data as the template's goal is to have a consistent structure but allow for variable values so that it can respond appropriately to the data.
Formatting and pre-made formulas are frequently included in templates. Although the template aims to have a consistent structure and allow for variable values so that it can react appropriately to the data, it won't contain any data.
Any template will therefore include design but not data. We are able to make a new one, modify an existing template, or utilize the default template.
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The Weber Company purchased a mining site for $1,750,000 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated residual value of the property is $150,000. During the first year, the company extracted 6,500 tons of ore. The depletion expense is
Answer:
The correct solution is "$26,000".
Explanation:
The given values are:
Cost
= $1,750,000
Salvage value
= $150,000
First Year Extraction
= 6,500
Total Extraction
= 400,000
Now,
⇒ [tex]Depletion \ Expense = (Cost - Salvage \ value)\times (\frac{First \ Year \ Extraction}{Total \ extraction} )[/tex]
On putting the values, we get
⇒ = [tex](1,750,000 - 150,000)\times (\frac{6,500}{400,000} )[/tex]
⇒ = [tex]1,600,000\times 0.01625[/tex]
⇒ = [tex]26,000[/tex] ($)
The environmental protection agency of a county would like to preserve a piece of land as a wilderness area. The current owner has offered to lease the land to the county for 20 years in return for a lump-sum payment of $1.1 million, which would be paid at the beginning of the 20-year period. The agency has estimated that the land would generate $110,000 per year in benefits to hunters, bird watchers, and hikers. Assume that the lease price represents the social opportunity cost of the land and that the appropriate real discount rate is 4 percent.
a. Assuming that the yearly benefits, which are measured in real dollars, accrue at the end of each of the 20 years, calculate the net benefits of leasing the land. Should the environmental protection agency pay for this piece of land?
b. Some analysts in the agency argue that the annual real benefits are likely to grow at a rate of 2 percent per year due to increasing population and county income. Recalculate the net benefits assuming that they are correct. Should the environmental protection agency pay for this piece of land?
Answer: Check explanation
Explanation:
a. For this scenario, it should be noted that the net benefits for the land lease will be equal to the present value of the benefits that are generated. This will be the annual benefit multiplied by the present value of annuity factor. This will be:
= $110,000 x 13.59
= $1,494,900
From the calculation, we can see that the lease price is less than the present value calculated, this implies that the transaction will incur a profit and should be undertaken.
b. For the growing annuity here, the calculation will be:
= [$110,000/(4% - 2%)] x [1 - [(1 + 2%)/(1 + 4%)]²⁰]
= [$110,000/2%] × [1 - (1 + 0.02)/(1 + 0.04)²⁰]
= $5,500,000 x 0.321833005
= $1,770,081.53
The environmental agency should pay for the piece of land as the present value calculated is higher.
Note that the present value of the annuity factor for 20 years at 4% = 13.59
At a local business school, there is a toasted submarine sandwich process that uses a conveyor-fed oven. ( See picture below) Alice is the sole operator of the sub making process. In the first step of the process, she spends 2 minutes putting various ingredients in the sub. Then, she puts the sub on a conveyor belt and, over a period of 12 minutes, the conveyor moves the sub from the beginning of the oven to the end of the oven, fully toasting it. After the sub comes out of the oven, Alice spends 1 minute slicing the sandwich and putting it in a box. At most, 5 subs can fit in the oven at once. The toasting time in the oven does not depend on the number of subs in the oven.
Required:
a. Draw a process-flow chart for the sandwich-making process.
b. Calculate the hourly capacity of this sandwich-making process.
c. Suppose another employee is hired to do the slicing and boxing, and Zeynep now only loads the sandwiches with the right ingredients. What is the hourly capacity of this process with the additional employee?
Answer:
b. 20 sandwiches
c. 25 sandwiches
Explanation:
1. I added this diagram of the flow chart as an attachment
2.
Hourly capacity of sandwich making process:
Time it makes to 1 sandwich: 2 + 12 + 1 = 15
The time alice spends when making one sandwich = 2 + 1 = 3
oven uses 12 minutes to process one sandwich, so in 12 minutes, alice can can make 12/3 sandwiches = 4
The Oven can take 5 subs at a time,
So in one hour, the making process
= 60/3 = 20 sandwiches
3.
To calculate Hourly capacity with additional employee:
Alice takes 2 minutes
Additional employees takes 1 minute
Oven uses 12 minutes to make one sandwich
It's only after every 2 minutes Alice can put one sandwich. The oven can take only 5 sandwiches.
So in an hour:
Since oven can take 5
Sandwiches at a time, therefore one sandwich takes,
12 / 5 = 2.4 minutes.
In 1 hour number we have number of processed sandwich as
60 / 2.4 = 25
At hourly capacity with additional employees we have 25 sandwiches
Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate
Answer:
b. corporate bond, U.S. government bond, municipal bond
Explanation:
If we assume that the bonds have the similar time period and the principal amount so the bond that pays the highest interest to the bond that pays the lowest interest rate is described below:
The ranking can be done
Corporate bond - highest interest rates
Municipal bonds - lowest interest rates
The same is to be considered
Therefore the option b is correct
4. If you enter your credit card information as a requirement for a "free trial" there is
a possibility you could be charged automatically after the trial period is up.
True
O
False
HELP ME
Answer:
True
Explanation:
If you enter a credit card for a free trial, the card will likely be automatically charged because you have agreed to have your card charged immediately after the free trial period.
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Rodeo, Inc. has a contribution margin ratio of 30%. This month, profit was $12,300 and fixed costs were $15,600. How much was Laredo's sales revenue
Answer:
Sales= $93,000
Explanation:
Giving the following information:
Contribution margin ratio= 0.30
Profit= $12,300
Fixed costs= $15,600
First, we need to determine the total contribution margin:
Total contribution margin= 12,300 + 15,600
Total contribtuion margin= $27,900
Now, to calculate the sales revenue, we need to use the following formula:
Sales= total contribution margin / Contribution margin ratio
Sales= 27,900/0.3
Sales= $93,000
The________ of the message is based on the number of times an average person in the target market is exposed to a message.
Frequency
Quantitative value
Reach
Exposure rate
Air conditioning for a college dormitory will cost $2.1 million to install and $170,000 per year to operate at current prices. The system should last 19 years. The real cost of capital is 9%, and the college pays no taxes. What is the equivalent annual cost
Answer:
$404,634
Explanation:
the formula that we can use to calculate equivalent annual costs is:
EAC = asset price x {discount rate / [1 - (1 + discount rate)⁻ⁿ]} + annual maintenance costs
EAC = $2,100,000 x {0.09 / [1 - (1.09)⁻¹⁹]} + $170,000
EAC = $2,100,000 x {0.09 / [1 - (1.09)⁻¹⁹]} + $170,000 = $234,634 + $170,000 = $404,634
EAC is basically the cost of using an asset during its lifetime. We are determining the cost per year, assuming that they are all equal.
Assume General Electric Company agreed in May 2016 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. General Electric Company estimated that its construction costs would be $960 million. The contract price of $1,200 million is to be paid as follows: $400 million at the time of signing; $400 million on December 31, 2016; and $400 million at completion in May 2017. General Electric incurred the following costs in constructing the generator: $384 million in 2016 and $576 million in 2017.
Required:
Compute the amount of General Electric's revenue, expense, and income for both 2016 and 2017, and for both years combined, under the cost-to-cost revenue recognition method. Enter dollar amounts in millions.
Answer:
date revenue costs
May 2016 $400
Dec. 2016 $400 $384 / $960 = 40%
May 2017 $400 $576 / $960 = 60%
Revenue recognized during 2016 = $1,200 x 40% = $480 million
Expenses recognized during 2016 = $384 million
Income recognized during 2016 = $480 - $384 = $96 million
Revenue recognized during 2017 = $1,200 x 60% = $720 million
Expenses recognized during 2017 = $576 million
Income recognized during 2017 = $720 - $576 = $144 million
Combined years:
Revenue recognized = $1,200 million
Expenses recognized = $960 million
Income recognized = $240 million
Last week, an investigative reporter for a major metropolitan newspaper discovered that the doctors conducting clinical trials of a new cancer treatment drug are also the principal shareholders in Cancer Solutions Inc. (CSI). CSI is the company developing and attempting to market the drug. Upon being interviewed by federal authorities, the doctors acknowledged their conflict of interest but reported that they were sold the shares at a 75% discount by CSI's chief financial officer. The CFO was concerned that CSI might not be able to meet its annual performance objectives and in turn pay his anticipated multimillion-dollar bonus.
Does an agency conflict exist between CSI's CFO and the company's shareholders?
a. Yes; CSI's CFO engaged in unethical conduct to manipulate the firm's short-term earnings and improve the likelihood of receiving his annual bonus.
b. Yes; the shares should not have been sold at a 75% discount, which is price discrimination.
c. No; professionals, such as doctors and professional money managers, would not participate in unethical activities.
d. No; in general, shareholders are satisfied with company officers engaging in any type of legal or illegal activity to ensure the chances of them receiving greater dividend payments.
Which of the following actions will help ease agency conflicts and better align managers' objectives with the firm's shareholder wealth?
a. Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.
b. Pay the manager a large base salary with a huge stock option package that matures on a single date.
Amalgamated Metals Corporation's stockholders are mostly individual investors, and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Amalgamated Metals Corporation's stock, direct shareholder intervention would be___________ likely to motivate the firm's management.
Answer:
FIRST QUESTION
A)Yes; CSI's CFO engaged in unethical conduct to manipulate the firm's short-term earnings and improve the likelihood of receiving his annual bonus.
SECOND QUESTION
A)Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.
LAST QUESTION
MORE likely
Explanation:
We are informed from the question about an investigative reporter for a major metropolitan newspaper discovery about the doctors conducting clinical trials of a new cancer treatment drug are also the principal shareholders in Cancer Solutions Inc. And how The CFO was concerned that CSI might not be able to meet its annual performance objectives and in turn pay his anticipated multimillion-dollar bonus.
In this case there is an agency conflict that exist between CSI's CFO and the company's shareholders, this is because the, CSI's CFO engaged in unethical conduct to manipulate the firm's short-term earnings and improve the likelihood of receiving his annual bonus.
Agency conflict in finance, is also regarded as conflict of interest, usually occur between the management and the shareholders of that company, it is conflict that usually emerge when those that are required for certain responsibility like interest of principal decide to divert the the authority for their own benefits. However,agency conflict can be minimized by allowing transparency and some ways.
It should be noted here that the CSI's CFO engaged in unethical conduct to manipulate the firm's short-term earnings and improve the likelihood of receiving his annual bonus which is the reason behind the conflict because he act on his own interest.
SECOND QUESTION,
Which of the following actions will help ease agency conflicts and better align managers' objectives with the firm's shareholder wealth?
From the explanation of Agency conflict from First question it should be noted that there are some actions that will help to ease agency conflicts and better align managers' objectives with the firm's shareholder wealth such as
Payment of the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.
The payment of the stock options to the manager will allow selling of stock at agreed price as well as date.
LAST QUESTION
Amalgamated Metals Corporation's stockholders are mostly individual investors, and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Amalgamated Metals Corporation's stock, direct shareholder intervention would be__MORE__ likely to motivate the firm's management.
The following information pertains to Yuji Corporation:
January 1, 20X1 December 31, 20X1
Raw materials inventory $34,000 $38,000
Work-in-process inventory 126,000 145,000
Finished goods inventory 76,000 68,000
Costs incurred during the year 20X1 were as follows:
Raw material purchased $116,000
Wages to factory workers 55,000
Salary to factory supervisors 25,000
Salary to selling and administrative staff 40,000
Depreciation on factory building and equipment 10,000
Depreciation on office building 12,000
Utilities for factory building 5,000
Utilities for office building 7,500
Required:
Sales revenue during 20X1 was $300,000. The income tax rate is 21%. Compute the following:
a. Cost of raw materials used.
b. Cost of goods manufactured/completed.
c. Cost of goods sold.
d. Gross margin.
e. Net income.
Answer:
a. Cost of raw materials used.$ 112,000
b. Cost of goods manufactured/completed.$ 188,000
c. Cost of goods sold. $ 196,000
d. Gross margin. $ 104,000
e. Net income. $ 35155
Explanation:
Yuji Corporation
Cost Of Goods Sold Statement.
Beginning Raw materials inventory $34,000
Add Raw material purchased $116,000
Less Ending Raw materials inventory $38,000
Direct Materials Used $ 112,000
Add
Direct Labor Wages to factory workers 55,000
FOH $ 40,000
Utilities for factory building 5,000
Salary to factory supervisors 25,000
Depreciation on factory building and equipment 10,00
Total Manufacturing Costs $ 207,000
Add Beginning Work-in-process inventory 126,000
Cost of goods available for manufacture $ 333,000
Less Ending Work-in-process inventory 145,000
Cost of goods manufactured/completed $ 188,000
Add Beginning Finished goods inventory 76,000
Cost of goods available for sale $ 264,000
Less Ending Finished goods inventory 68,000
Cost of goods sold $ 196,000
We add and subtract as per format to get the required amounts.
Yuji Corporation
Income Statement
Sales revenue $300,000
Less Cost of goods sold $ 196,000
Gross margin $ 104,000
Less Selling and Administrative Expenses
Salary to selling and administrative staff 40,000
Depreciation on office building 12,000
Utilities for office building 7,500
Profit Before Income Tax 44,500
Income Tax ( 21% of 44,500) $ 9345
Net Income $ 35155
Consider a multifactor model with two factors. A well-diversified portfolio (Portfolio P) has a beta of 0.75 on factor 1 and a beta of 1.25 on factor 2. The risk premiums on the factor 1 and factor 2 are 1% and 7%, respectively. The risk-free rate of return is 7%. What is the expected return on portfolio P, according to a two-factor model
Answer: 16.5%
Explanation:
Expected Return on portfolio P will be calculated as:
= Rf + (Beta1 × F1) + (Beta2 × F2)
where,
Rf = Risk Free rate
F1 = risk premium on Factor1
F2 = risk premium on Factor2
Expected Return will now be:
= 7% + (0.75 × 1%) + (1.25 × 7%)
= 7% + 0.75% + 8.75%
= 16.5%
The expected return on portfolio P, according to a two-factor model will be 16.5%.
Answer:
16.5%
Explanation:
A multi-factor model can be used to explain either an individual security or a portfolio of securities. It does so by comparing two or more factors to analyze relationships between variables and the resulting performance.
DATA
Risk Free rate = Rf = 7%
risk premium on Factor1 = F1 = 1%
Beta (Factor 1) = 1.25
risk premium on Factor2 = F2 = 7%
Beta (Factor 1) = 2
Expected Return = Rf + (Beta1 x F1) + (Beta2 * F2)
Expected Return = 7% + (0.75 x 1%) + (1.25 x 7%)
Expected Return = 0.07 + 0.0075 + 0.0875
Expected Return = 0.165 or 16.5%
Transactions for Buyer and SellerShore Co. sold merchandise to Blue Star Co. on account, $112,000, terms FOB shipping point, 2/10, n/30. The cost of the merchandise sold is $67,200. Shore Co. paid freight of $1,800.Journalize Shore Co.'s entry for the sale, purchase, and payment of amount due.Accounts Receivable-Blue Star Co. Sales Cost of Merchandise Sold Merchandise Inventory Common Stock Cash Cash Accounts Receivable-Blue Star Co. Journalize Blue Star Co.'s entry for the sale, purchase, and payment of amount due.Merchandise Inventory Accounts Payable-Shore Co. Accounts Payable-Shore Co. Cash
Answer:
The definition is defined in the clarification portion beneath, as per the particular circumstance.
Explanation:
Correct you're. FOB shipping comments mean that perhaps the shipping can be paid for by consumers. But perhaps the freight is paid by the seller in the question. It would reimburse the freight treated as income from the buyer. The credit including its buyer would be debited with either the deferred revenue sum of freight.Account Titles and Explanation Debit Credit
Receivable accounts -Blue Star Co. $1,800 -
Cash - $1,800
(To record freight paid)
You are invested in two hedge funds. The probability that hedge fund Alpha generates positive returns in any given year is 60%. The probability that hedge fund Omega generates positive returns in any given year is 70%. Assume the returns are independent. What is the probability that both funds generate positive returns in a given year? What is the probability that both funds lose money?
Answer:
42% and 12%
Explanation:
The computation is shown below:
For Alpha Fund
Positive return = 60%
Lose money is
= 1 - 0.60
= 40%
For Omega Fund
Positive return = 70%
Lose money is
= 1 - 0.70
= 0.30
Also the returns are non-dependent
Now the positive return is
= 60% × 70
= 42%
And, the probability of lose money is
= 40% × 30%
= 12%
Farr Corp. purchased a new delivery van on January 1, 2020 and chose to use the double declining balance depreciation method. The van cost $48,000 with an estimated life of five years and a $12,000 salvage value. After the year end adjustment, how much accumulated depreciation would be recorded on the van at December 31, 2021
Answer:
$30,720
Explanation:
First, we will calculate the depreciation for 2020.
Depreciation for 2020 = ($48,000 cost - 0) × 40%
= $19,200
Depreciation for 2021 = ($48,000 cost - $19,200 depreciation 2020) × 40%
= $11,520
Accumulated depreciation at the end of 2021
= $11,520 + $19,200
= $30,720
The value of $30,720 will be recorded as accumulated depreciation on the value of the van at December 31, 2021.
• Note, the asset's annual depreciation will be 20% of the depreciation cost since its useful life is 5. It will however be 40% since we are using the double declining balance method.
A _____ has nonprofit status and is owned by its members
A. Securities firm
B. Investment company
C. Savings bank
D. Credit union
Answer:
D Credit Union
Explanation:
A company has total equity of $1,965, net working capital of $175, long-term debt of $940, and current liabilities of $1,770. What is the company's net fixed assets?
Answer:
The net fixed assets is $2,730
Explanation:
The computation of the net fixed asset is shown below:
= Total equity + long term debt + current liabilities - (net working capital + current liabilities)
= $1,965 + $940 + $1,770 - ($175 + $1,770)
= $2,730
hence, the net fixed assets is $2,730
We simply applied the above formula and the same is to be considered
Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.
Process Activity Overhead Cost Driver Quantity
Components Changeover 458,000 Number of batches 810
Machining 307,000 Machine hours 7,650
Setups 232,000 Number of setups 160
997,000
Finishing Welding 188,000 Welding hours 4,100
Inspecting 231,000 Number of inspections 835
Rework 62,000 Rework orders 150
481,000
Support Purchasing 143,000 Purchase orders 525
Providing space 32,000 Number of units 5,020
Providing utilities 61,000 Number of units 5,020
236,000
Additional production information concerning its two product lines follows.
Model 145 Model 212
Units produced 2,000 3,020
Welding hours 1,200 2,900
Batches 405 405
Number of inspections 465 370
Machine hours 2,350 5,300
Setups 80 80
Rework orders 100 50
Purchase orders 350 175
Required:
Determine departmental overhead rates and compute the overhead cost per unit for each product line.
Answer:
I used an excel spreadsheet since there is not enough room here.
Explanation:
After visiting several automobile dealerships, Richard selects the used car he wants. He likes its $10,000 price, but financing through the dealer is no bargain. He has $2,000 cash for a down payment, so he needs an $8,000 loan. In shopping at several banks for an installment loan, he learns that interest on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on the full amount borrowed even though a portion of the principal has been paid back. Richard borrows $8,000 for a period of four years at an add-on interest rate of 11 percent. What is the total interest on Richard’s loan? What is the total cost of the car? What is the monthly payment? What is the annual percentage rate (APR)?
Answer:
A. $3,520
B. $13,520
C. $240 monthly
D. 21.55%
Explanation:
A. Calculation for the total interest
Using this formula
Interest = (Principal) (Rate) (Time)
Let plug in the formula
Interest = (8000)(.11)(4)
Interest = $3,520
B. Calculation for the total cost of the car
Using this formula
Total Cost = Down Payment + Principal amount Borrowed + Interest amount
Let plug in the formula
Total Cost = $2,000 + $8,000 + $3,520
Total Cost = $13,520
C. Calculation for the monthly payment
Using this formula
Monthly Payment = (Principal amount Borrowed + Total interest amount ) / Total number of payments
Monthly Payment = ($8,000 + $3,520) / 48
Monthly Payment=$11,520/48
Monthly Payment=$240 monthly
Note 4-year * 12 months will give us 48months
D. Calculation for the annual percentage rate (APR) using this formula
APR= (2 × n × I) / [P × (N + 1)]
Let plug in the formula
APR = (2 × 12 × $3,520) / [$8,000 × (48+1)]
APR =$84,480/$8,000×49
APR=$84,480/$392,000
APR=0.2155×100
APR= 21.55%