a. The company's total debt is $900,000.
b. The amount of total liabilities and equity that appears on the firm's balance sheet is $1,500,000.
Total liabilities and equity represent the total financing provided by both debt and equity sources. In this case, the company's long-term debt is $755,000, and the total common equity is $1,500,000. Adding these amounts together gives us the total liabilities and equity of $2,255,000. Since the company only finances with debt and common equity and has no preferred stock, this total represents the liabilities and equity section of the balance sheet.
c. The balance of current assets on the firm's balance sheet is $5,500,000.
Current assets are the assets that are expected to be converted into cash or used up within one year. In this case, the company's assets consist entirely of current assets and net plant and equipment. The total assets of the company are given as $2.9 million, and the net plant and equipment is $2.6 million. To find the balance of current assets, we subtract the net plant and equipment from the total assets: $2.9 million - $2.6 million = $300,000. Therefore, the balance of current assets on the firm's balance sheet is $300,000.
d. The balance of current liabilities on the firm's balance sheet is not provided in the given information.
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The term cash as used on the statement of cash flows includes all the following EXCEPT:
A) cash due from customers within 30 days.
B) cash on hand.
C) cash equivalents.
D) cash in bank
Which of the following statements accurately describes the statement of cash flows?
A) It shows the relative proportion of debt and assets.
B) It shows the link between accrual-based income and the cash reported on the balance sheet.
C) It indicates when long-term debt will mature.
D) It shows the link between book income and earnings per share.
Which of the following is NOT a true statement about the statement of cash flows?
A) It shows where cash came from and how it was spent.
B) It reports why cash increased or decreased.
C) It covers a specific span of time the same as the income statement.
D) It shows how the profits or losses of the company were generated.
Which one of the following is a principal function of the statement of cash flows?
A) To predict future net income
B) To evaluate management decisions
C) To evaluate the company's earnings per share
D) To predict the growth of company assets
1. The term cash as used on the statement of cash flows includes all the following except cash due from customers within 30 days.The correct answer is option A. 2. The following statement "It shows the link between accrual-based income and the cash reported on the balance sheet" describes the statement of cash flows.The correct answer is option B. 3. It shows how the profits or losses of the company were generated is not true statement. 4. To evaluate management decisions is a principal function of the statement of cash flows.The correct answer is option B.
1. The correct answer is A) cash due from customers within 30 days.
The term "cash" on the statement of cash flows refers to actual physical currency, cash equivalents, and cash held in bank accounts. It does not include amounts due from customers within a specific time frame, such as cash due from customers within 30 days.
While these amounts may be classified as accounts receivable on the balance sheet, they are not considered cash for the purpose of the statement of cash flows.
2. The correct answer is B) It shows the link between accrual-based income and the cash reported on the balance sheet.
The statement of cash flows provides information on how a company's cash position changed over a specific period. It reconciles the differences between net income (which is based on accrual accounting) and the actual cash flows from operating, investing, and financing activities.
It explains the sources and uses of cash, showing how the reported net income on the income statement relates to the cash reported on the balance sheet.
3. The correct answer is D) It shows how the profits or losses of the company were generated.
The statement of cash flows focuses on the cash inflows and outflows of a company, rather than detailing how profits or losses were generated. While the statement provides information on cash flows from operating activities, which includes net income, it does not break down the specific components of profits or losses.
Instead, it presents a summary of the company's cash flows from various activities, such as operating, investing, and financing, during a specific period.
4. The correct answer is B) To evaluate management decisions.
One of the principal functions of the statement of cash flows is to evaluate management decisions. It provides valuable insights into the company's cash management, liquidity position, and ability to generate and use cash.
By analyzing the cash flows from operating, investing, and financing activities, stakeholders can assess how effectively management has utilized the company's resources and made decisions that impact cash flows.
It helps to identify the sources of cash and how it has been allocated, enabling investors, creditors, and other stakeholders to evaluate the company's financial health and make informed decisions.
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Mango, Inc. had the following transactions in its first year of operations:
• Issued 34,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $26.00 per share.
• Earned net income of $73,000.
• Paid no dividends.
At the end of the first year, what is total stockholders' equity?
Group of answer choices
A. $73,000
B. $957,000
C. $884,000
D. $34,000
Hence, the question "At the end of the first year, what is total stockholders' equity?" would be option C. $884,000.
Given that Mango, Inc. had the following transactions in its first year of operations:
• Issued 34,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $26.00 per share.
• Earned net income of $73,000.
• Paid no dividends.
We can obtain the answer by calculating the total stockholders' equity as:
Total Stockholders' Equity = Total Assets - Total Liabilities
Using the given information, we can obtain:
Total Stockholders' Equity = Total Assets - Total Liabilities
Net income of $73,000 increases the stockholders' equity while paying no dividends doesn't affect it. In addition, the total number of shares issued is 34,000 with a par value of $1.00 per share, so the amount of capital stock is:$1.00 x 34,000 = $34,000. Now, we can calculate the Total Stockholders' Equity of Mango, Inc.
Total Stockholders' Equity = ($34,000 x $26.00) + $73,000 = $884,000
Therefore, option C. $884,000 is the correct answer.
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Giant Corp. is considering a project that requires a $1,500 initial cost for a new machine that will be depreciated straight line to a salvage value of 0 on a 5-year schedule. The project will require a one-time increase in the level of net working capital of $300. The project will generate an additional $1,600 in revenues and $700 in operating expenses each year. The project will end at the end of year 2, at which time the machinery is expected to be sold for $800. Giant’s tax rate is 50%.
A. In a discounted cash flow analysis of this project, what would be the projected Year 0 free cash flow?
B. In a discounted cash flow analysis of Giant Corp.’s project described in the problem above, what would be the projected Year 1 free cash flow?
C. In a discounted cash flow analysis of Giant Corp.’s project described in the problem above, what would be the projected Year 2 free cash flow?
In a discounted cash flow (DCF) analysis of Giant Corp.'s project, the projected Year 0 free cash flow can be calculated by subtracting the initial cost.
The increase in net working capital from the expected revenues and deducting the operating expenses. The salvage value of the machinery at the end of Year 2 is not considered in the Year 0 free cash flow calculation.
For Year 0, the calculation would be:
Projected Year 0 free cash flow = Revenues - Operating expenses - Initial cost - Increase in net working capital
Given the information provided:
Revenues = $1,600
Operating expenses = $700
Initial cost = $1,500
Increase in net working capital = $300
Plugging in the values:
Projected Year 0 free cash flow = $1,600 - $700 - $1,500 - $300 = -$900
The projected Year 0 free cash flow for Giant Corp.'s project is -$900.
For Year 1, the projected free cash flow calculation would be similar to the Year 0 calculation, but with an additional consideration for the salvage value of the machinery. The salvage value is the amount expected to be received from selling the machinery at the end of Year 2.
The Year 1 calculation would be:
Projected Year 1 free cash flow = Revenues - Operating expenses - Increase in net working capital
Given the information provided:
Revenues = $1,600
Operating expenses = $700
Increase in net working capital = $300
Plugging in the values:
Projected Year 1 free cash flow = $1,600 - $700 - $300 = $600
The projected Year 1 free cash flow for Giant Corp.'s project is $600.
For Year 2, the calculation of projected free cash flow would be similar to Year 1, but with the consideration of the salvage value of the machinery.
The Year 2 calculation would be:
Projected Year 2 free cash flow = Revenues - Operating expenses + Salvage value - Increase in net working capital
Given the information provided:
Revenues = $1,600
Operating expenses = $700
Salvage value = $800
Increase in net working capital = $300
Plugging in the values:
Projected Year 2 free cash flow = $1,600 - $700 + $800 - $300 = $1,400
The projected Year 2 free cash flow for Giant Corp.'s project is $1,400.
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Imagine that you are the owner of a discount furniture company
that has expanded from a rural store in one state to a chain of 20
stores stretching across the United States. As your company has
expand
Three reasons the company should implement enterprise resource planning (ERP) includes integrating financial data, standardizing manufacturing processes and real-time information.
The activities involved in carrying out a business process, which includes taking a customer's order, shipping it, and charging for it, are automated by ERP. As a customer service agent takes a request from a customer using ERP, he or she already has all the details required to fulfil the purchase. You can use an ERP system to make more informed decisions that are based on current information.
Organisations are able to discover best practises for various industries as they add clients by implementing an ERP system. As a result, efficiency is improved. You can organise your production more effectively and waste less time with the aid of ERP solutions. Two difficulties in deploying an ERP are figuring out which processes ought to be integrated and maintenance costs.
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The question seems incomplete. The complete question is:
Imagine that you are the owner of a discount furniture company that has expanded from a rural store in one state to a chain of 20 stores stretching across the United States.
As your company has expanded, you have been considering implementing an enterprise resource planning (ERP) solution. What are at least three reasons why your company should implement such a system? Look at the other side, and think of at least two challenges that you would face when implementing an ERP.
Which of the following statements is correct with regards to the deductibility of interest?
A. Compound interest must be paid or payable in the year, whereas current interest is
only deductible if it is paid in the year.
B. Current interest must be paid or payable in the year, whereas compound interest is
only deductible if it is paid in the year.
C. The borrowed funds may be used for personal purposes.
D. The borrowed funds are only deductible to the extent of the CRA's prescribed rate.
The correct statement regarding the deductibility of interest is Option B."Current interest must be paid or payable in the year, whereas compound interest is only deductible if it is paid in the year".
This means that compound interest must be paid in the same year that it is deducted, while current interest only needs to be payable in the year.Income tax Act and the Excise Tax Act specifies the rules for calculating and claiming interest expense deductions for tax purposes.
Interest is generally deductible when it is incurred for the purpose of earning income from a business or property. The taxpayer should prove that the borrowed funds were used to earn income from a business or property in order to deduct the interest paid or payable in the year. The borrowed funds are only deductible to the extent of the CRA's prescribed rate and the borrowed funds may be used for personal purposes, but the portion used for business or property must be calculated in order to determine the interest expense deductible.
Hence, the correct statement with regards to the deductibility of interest is "Current interest must be paid or payable in the year, whereas compound interest is only deductible if it is paid in the year."
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TRUE / FALSE. "19-Death benefits are considered earnings from employment and
are subject to all statutory deductions.
Death benefits are not considered earnings from employment and are not subject to all statutory deductions. given statement is false.
What are death benefits? Death benefits are the benefits that are paid out to the family or beneficiaries of an employee who passes away. These benefits can include a lump-sum payment or a pension plan. Death benefits are paid out to help the family cover expenses and support them after the loss of the employee. However, these benefits are not considered as earnings from employment and are not subject to statutory deductions. Statutory deductions are the deductions that are made from an employee's paycheck by law.
These deductions include federal and state taxes, Social Security and Medicare taxes, and other state-specific taxes. Since death benefits are not considered earnings from employment, they are not subject to these statutory deductions. However, beneficiaries may be required to pay income tax on the death benefits they receive, depending on the country they live in and the laws governing these benefits
death benefits are not considered earnings from employment and are not subject to all statutory deductions. These benefits are paid out to help the family or beneficiaries of the employee who passes away. However, beneficiaries may be required to pay income tax on the death benefits they receive.
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A 3-year project costs $800 and has cash inflows of $500 in Year 1, $400 in Year 2, and $300 in Year 3. What is the project's payback period?
After analyzing and calculating, the project's payback period is 1.25 years.
To calculate the payback period, we need to determine how long it takes for the cumulative cash inflows to recover the initial investment.
Given:
Initial investment (Cost) = $800
Cash inflows:
Year 1 = $500
Year 2 = $400
Year 3 = $300
To find the payback period, we'll subtract the cash inflows from the initial investment until we reach a cumulative total equal to or greater than the initial investment.
Year 1: $800 - $500 = $300 remaining
Year 2: $300 - $400 = -$100 remaining (negative value indicates we haven't recovered the investment yet)
The payback period occurs between Year 1 and Year 2, where we cross from negative to positive. To determine the exact payback period, we'll calculate the fraction of the cash flow needed to reach the break-even point.
Payback period = Year 1 + (Amount needed to reach break-even / Cash flow in Year 2)
Amount needed to reach break-even = $100 (absolute value of the remaining amount)
Payback period = 1 + ($100 / $400)
Payback period = 1 + 0.25
Payback period = 1.25 years
Therefore, the project's payback period is 1.25 years.
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can
you please tell me the meaning of these words
thanks
KEY TERMS Visual symbolism Visual literacy Line chart Surface chart Bar chart Pie chart
Data visualization Flowchart Infographics Title Caption Legend Synopsis Executive Summary
These key terms are related to visual communication, data representation, and summarizing information in a visual and concise manner.
Here are the meanings of the key terms you mentioned:
Visual symbolism: Visual symbolism refers to the use of images, symbols, or visual elements to convey meaning or represent ideas or concepts. It involves using visual cues to communicate a message or evoke emotions.
Visual literacy: Visual literacy refers to the ability to interpret, understand, and create visual images and graphics. It involves the skills and competencies necessary to effectively analyze, evaluate, and communicate through visual means.
Line chart: A line chart is a type of graph that displays data points connected by lines. It is commonly used to show trends or changes over time, with the horizontal axis representing time and the vertical axis representing the values or quantities being measured.
Surface chart: A surface chart is a three-dimensional graph that represents data values using a combination of X, Y, and Z axes. It is often used to visualize relationships between three variables or factors and display data patterns or trends across a continuous surface.
Bar chart: A bar chart is a graph that uses rectangular bars to represent data. It is typically used to compare categorical or discrete data by displaying the values on the horizontal axis and their corresponding heights on the vertical axis.
Pie chart: A pie chart is a circular graph divided into sectors or slices, where each slice represents a proportion or percentage of a whole. It is commonly used to display the relative distribution or composition of different categories within a dataset.
Data visualization: Data visualization refers to the graphical representation of data to facilitate understanding, analysis, and communication. It involves creating visual representations, such as charts, graphs, or infographics, to present complex or large datasets in a more accessible and meaningful way.
Flowchart: A flowchart is a visual diagram that represents the sequence of steps or actions in a process. It uses different shapes and arrows to illustrate the flow of information or the progression of activities, helping to visualize and understand complex processes or workflows.
Infographics: Infographics are visual representations that combine text, images, and graphics to present information or data in a concise and visually appealing manner. They are designed to simplify complex concepts or data and make them more engaging and accessible to the audience.
Title: In the context of visual communication, a title refers to the heading or label that provides a brief description or identifies the content of a visual element, such as a chart, graph, or infographic.
Caption: A caption is a brief description or explanation that accompanies a visual element, providing additional context or information about the content depicted in the visual.
Legend: A legend is a key or explanatory guide that provides information about the colors, symbols, or patterns used in a chart, graph, or map. It helps the audience understand the meaning or representation of different elements within the visual.
Synopsis: A synopsis is a concise summary or overview that provides a brief description of the main points or key elements of a larger document, such as a report, article, or presentation.
Executive Summary: An executive summary is a condensed version of a longer document or report, presenting the key findings, conclusions, and recommendations in a concise and accessible format. It is typically targeted at senior executives or decision-makers who need a quick overview of the main content without delving into the details.
Understanding these terms can help in effectively interpreting and creating visual elements for effective communication and data visualization.
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Alta Ltd. is manufacturing three products : A, B and C. The costs of manufacture are as follows
Fixed costs of Alta Ltd. is $15,000. Calculate profit and do a CVP Analysis for Alta Ltd.
Products
A
B
C
Raw Material
16,000
20,000
26,000
Labour
14,000
17,000
18,000
Overheads
10,000
12,000
14,000
Sales
60,000
70,000
80,000
Alta Ltd. needs to sell 3,000 units of product A, 3,750 units of product B, and 5,000 units of product C to break even.
Alta Ltd. is a manufacturing company producing three products A, B, and C. The fixed cost for manufacturing the products is $15,000. The raw material cost for products A, B, and C is $16,000, $20,000, and $26,000 respectively. The labor cost for the products is $14,000, $17,000, and $18,000 respectively, and the overheads for the products are $10,000, $12,000, and $14,000 respectively. The sales revenue generated from products A, B, and C are $60,000, $70,000, and $80,000 respectively.
To calculate the profit earned from the products, we need to use the cost-volume-profit (CVP) analysis formula. The CVP analysis is a useful tool used to calculate the profit made by the company. It helps in determining the point where the company will make neither profit nor loss.
The formula for calculating the profit is: Profit = Total sales revenue – Total variable costs – Total fixed costs
Total variable cost = Raw material cost + Labor cost + Overhead cost
For product A, the total variable cost = $16,000 + $14,000 + $10,000 = $40,000
For product B, the total variable cost = $20,000 + $17,000 + $12,000 = $49,000
For product C, the total variable cost = $26,000 + $18,000 + $14,000 = $58,000
Now we can calculate the total profit as follows:
For product A, Profit = $60,000 - $40,000 - $15,000 = $5,000
For product B, Profit = $70,000 - $49,000 - $15,000 = $6,000
For product C, Profit = $80,000 - $58,000 - $15,000 = $7,000
Therefore, the total profit earned by the company is $18,000. CVP analysis for Alta Ltd: The CVP analysis formula is used to calculate the break-even point of the company, which is where the company neither makes profit nor loss.
The formula is: Break-even point (in units) = Total fixed cost ÷ (Sales price per unit - Variable cost per unit)
To calculate the break-even point for each product, we can use the following formula:
Product A: $15,000 ÷ ($60,000 ÷ 10,000 - $40,000 ÷ 10,000) = 3,000 units
Product B: $15,000 ÷ ($70,000 ÷ 10,000 - $49,000 ÷ 10,000) = 3,750 units
Product C: $15,000 ÷ ($80,000 ÷ 10,000 - $58,000 ÷ 10,000) = 5,000 units
Therefore, Alta Ltd. needs to sell 3,000 units of product A, 3,750 units of product B, and 5,000 units of product C to break even.
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4. A consumer with the utility function U(x 1
,x 2
)=x 1
2
x 2
3
faces prices p 1
=4,p 2
=5 and has an income of $200. For this consumer, holding prices fixed: a. Derive an expression for the Engel Curve for x 2
. b. Plot this Engel curve. c. Holding p 1
and m fixed, plot this consumer's demand curve for x 2
.
To derive the expression for the Engel Curve for x2, we need to find the quantity demanded of x2 at different income levels while holding prices fixed.
The consumer's utility function is [tex]U(x1, x2) = x1^2 * x2^3[/tex].
We can rewrite this utility function as U(x2) = (x2^3 * (200 - 4x1^2)) / 5, where x1 is the quantity of good 1 and x2 is the quantity of good 2.
Since p1 = 4 and
p2 = 5,
We can rewrite the budget constraint as 4x1 + 5x2 = 200.
Solving for x1, we get x1 = (200 - 5x2) / 4.
Substituting this into the utility function, we have [tex]U(x2) = ((x2^3 * (200 - 4((200 - 5x2) / 4)^2)) / 5[/tex].
b. To plot the Engel Curve for x2, we need to vary the income level and find the corresponding quantity demanded of x2. Choose different values of x2, plug them into the expression derived in part a, and plot the income level on the x-axis and the quantity of x2 on the y-axis.
c. To plot the demand curve for x2, we need to fix the price of good 1 and the income level, and then vary the price of good 2 to find the corresponding quantity demanded of x2.
Choose different values of p2, plug them into the expression derived in part a, and plot the price of x2 on the x-axis and the quantity of x2 on the y-axis.
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Due to border closures within Australia, Western Australia and Victoria have decided to stop trading with the other states in Australia. Western Australia has 100 total resources available, Victoria has 280 total resources. Each state produces only two goods, coal and coffee. Victoria can produce one unit of coal for 14 resources and one kilo of coffee for 22 resources. Western Australia can produce one unit of coal for 10 resources and one kilo of coffee for 25 resources. Assuming that each state can produce fractional units of each good, which of the following statements is NOT true? Select one: WA and VIC would be better off trading with each other at a price of 0.5 kilos of coffee per unit of coal. WA and VIC would be better off trading with each other at a price of 0.5 units of coal per kilo of coffee. WA and VIC are not willing to trade with each other at a price of 1.40 kilos of coffee per unit of coal. WA and VIC are not willing to trade with each other at a price of 0.71 kilos of coffee per unit of coal. None of the above.
The correct answer is: WA and VIC would be better off trading with each other at a price of 0.5 kilos of coffee per unit of coal. (Option 1)
To determine if trading between WA and VIC would be beneficial, we need to compare the opportunity costs of producing coal and coffee in each state. The opportunity cost is the value of the next best alternative that is foregone when making a choice.
In WA, the opportunity cost of producing one unit of coal is 0.4 kilos of coffee (10 resources per unit of coal / 25 resources per kilo of coffee). In VIC, the opportunity cost of producing one unit of coal is 0.64 kilos of coffee (14 resources per unit of coal / 22 resources per kilo of coffee).
Since the opportunity cost of producing coal is lower in WA (0.4 kilos of coffee) compared to VIC (0.64 kilos of coffee), WA has a comparative advantage in producing coal. Conversely, since the opportunity cost of producing coffee is lower in VIC (22 resources per kilo of coffee) compared to WA (25 resources per kilo of coffee), VIC has a comparative advantage in producing coffee.
For mutually beneficial trade to occur, the trading price should be between the opportunity costs for each state. In this case, a trading price of 0.5 kilos of coffee per unit of coal satisfies this condition. WA values coal more than 0.4 kilos of coffee (its opportunity cost), and VIC values coal less than 0.64 kilos of coffee (its opportunity cost). Therefore, both states would be better off trading with each other at a price of 0.5 kilos of coffee per unit of coal.
The correct question is:
Due to border closures within Australia, Western Australia and Victoria have decided to stop trading with the other states in Australia. Western Australia has 100 total resources available, Victoria has 280 total resources. Each state produces only two goods, coal and coffee. Victoria can produce one unit of coal for 14 resources and one kilo of coffee for 22 resources. Western Australia can produce one unit of coal for 10 resources and one kilo of coffee for 25 resources.
Assuming that each state can produce fractional units of each good, which of the following statements is NOT true?
Select one:
WA and VIC would be better off trading with each other at a price of 0.5 kilos of coffee per unit of coal. WA and VIC would be better off trading with each other at a price of 0.5 units of coal per kilo of coffee. WA and VIC are not willing to trade with each other at a price of 1.40 kilos of coffee per unit of coal. WA and VIC are not willing to trade with each other at a price of 0.71 kilos of coffee per unit of coal. None of the above.To know more about trade follow the link:
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Pina Colada Corp. had the following transactions during 2024: - Sales of $11880 on account - Collected $5280 for services to be performed in 2025 - Paid $2860 cash in salaries - Purchased airline tickets for $660 cash in December for a trip to take place in 2025 What is Pina Colada's 2024 net income using cash basis accounting? $14300 $2420 $3080 $1760
To calculate Pina Colada Corp.'s 2024 net income using cash basis accounting, we need to consider only the cash inflows and outflows for the year.
Given the transactions:
1. Sales of $11,880 on account: Since this is a sale on account, it does not affect net income under the cash basis accounting because no cash has been received.
2. Collected $5,280 for services to be performed in 2025: This cash inflow is not included in the net income for 2024 since it pertains to services to be performed in 2025.
3. Paid $2,860 cash in salaries: This cash outflow is an expense and reduces the net income.
4. Purchased airline tickets for $660 cash in December for a trip to take place in 2025: This cash outflow does not affect net income for 2024 as it relates to an expense in 2025.
Considering the above transactions, the only cash outflow that affects net income is the payment of $2,860 cash in salaries.
Pina Colada Corp.'s 2024 net income using cash basis accounting is $2,860. The correct answer is $2,860.
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Take me to the text Sruppose a buseness receives a $321,000 long-term bank loan an December 31,2019 . The bortowing atrangement rectuires the business to pay $00,250 by September 2020 . Show how the business will report both current and fong-term fabilities on its December 31,2019 balance sheet. Do notienter doliar sions or commas in that kawua hoxes:
In this case, the business will report $40,250 as current liabilities and $280,750 as long-term liabilities.
The business will report both current and long-term liabilities on its December 31, 2019, balance sheet as follows: Current liabilities - The part of the loan that is due within a year (i.e., by December 31, 2020) will be reported as a current liability.
Therefore, the current liability for the business is $40,250 (i.e., $321,000 - $280,750).Long-term liabilities - The remaining part of the loan (i.e., $280,750) is the long-term liability of the business.
Therefore, the long-term liability for the business is $280,750.As of December 31, 2019, the balance sheet of the business will show current liabilities of $40,250 and long-term liabilities of $280,750.
In financial accounting, liabilities are the obligations of an entity arising from past transactions, which have to be settled by transferring economic resources in the future. Liabilities are classified as current and non-current (long-term) liabilities on the balance sheet.
Current liabilities are the amounts due to be settled within one year (or operating cycle, whichever is longer) from the balance sheet date, whereas long-term liabilities are the amounts due to be settled after one year (or operating cycle, whichever is longer) from the balance sheet date.
For instance, if a business receives a $321,000 long-term bank loan on December 31, 2019, with a borrowing arrangement requiring it to pay $40,250 by December 31, 2020, and the rest by September 2020, it would report both current and long-term liabilities on its December 31, 2019 balance sheet.
The current portion of the loan is classified as current liabilities because it is due within one year, while the rest of the loan is classified as long-term liabilities because it is due after one year.
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Shelley Couts, the owner of Conch Republic Electronics, has received the capital budgeting analysis from Jay McCanless for the new smartphone the company is considering. Shelley is pleased with the results, but she still has concerns about the new smartphone. Conch Republic has used a small market research firm for the past 20 years, but recently the founder of that firm has retired. Because of this, Shelley is not convinced the sales projections presented by the market research firm are entirely accurate. Additionally, because of rapid changes in technology, she is concerned that a competitor may enter the market. This would likely force Conch Republic to lower the sales price of its new smartphone. For these reasons, she has asked Jay to analyze how changes in the price of the new smartphone and changes in the quantity sold will affect the NPV of the project. Shelley has asked Jay to prepare a memo answering the following questions. QUESTIONS 1. How sensitive is the NPV to changes in the price of the new smartphone? 2. How sensitive is the NPV to changes in the quantity sold of the new smartphone?
1. The sensitivity of NPV to changes in the price of the new smartphone is considered in order to estimate the degree to which NPV is sensitive to variations in price. If a significant price decline is likely, the NPV might change dramatically and harm the project.
It's possible that a tiny price decline will have no impact on NPV. As a result, this study's objective is to investigate how sensitive NPV is to price variations in order to make better project planning decisions.
2. The NPV's sensitivity to changes in the number of units sold of the new smartphone is also important to consider. It may be that the new smartphone's forecasted sales volume is unrealistic and that a smaller sales volume will be required. It's also feasible that the project would sell more than the expected amount, leading to higher NPV estimates. In addition, sensitivity analysis of NPV to variations in the number of units sold will help to determine the project's break-even point and the number of sales units required to achieve that point. This research's objective is to figure out how sensitive NPV is to changes in the number of units sold so that the company can take advantage of the project's potential profitability and make the best business decisions.
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E19.8 (LO 3) Lopez Corporation incurred the following costs while manufacturing its product.
- Materials used in product $120,000
- Advertising expense $45,000
- Depreciation on plant 60,000
- Property taxes on plant 14,000
- Property taxes on store 7,500
- Delivery expense 21,000
- Labor costs of assembly-line workers 110,000
- Sales commissions 35,000
- Factory supplies used 23,000
- Salaries paid to sales clerks 50,000
Work in process inventory was $12,000 at January 1 and $15,500 at December 31. Finished goods inven- tory was $60,000 at January 1 and $45,600 at December 31.
Instructions
a. Compute cost of goods manufactured.
b. Compute cost of goods sold.
Cost of Goods Manufactured:Cost of Goods Manufactured (CGM) is the cost of products that are finished and ready for sale by the end of the accounting period. The cost of producing goods includes all of the manufacturing expenses connected with the goods produced throughout the accounting period.
Therefore, the calculation of CGM for Lopez Corporation would include the following calculation;Materials Used in Product + Direct Labor Costs + Factory Overhead Cost = Total Manufacturing Cost120,000 + 110,000 + 23,000 = 253,000Lopez Corporation's manufacturing expenses were $253,000.Cost of Goods Sold:Cost of Goods Sold (COGS) is the cost of all goods sold in an accounting period and is subtracted from sales revenue to determine the gross profit. The calculation of COGS for Lopez Corporation would include the following calculation:COGS = Beginning Inventory + Cost of Goods Manufactured - Ending InventoryCOGS = 60,000 + 253,000 - 45,600 = 267,400.
In conclusion, the cost of goods manufactured is $253,000, while the cost of goods sold is $267,400, as shown above. is not necessary since the question doesn't require it.
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Suppose a gift shop in Myrtle Beach has an annual demand for
16,000 units for a souvenir kitchen magnet that it buys for $0.60
per unit. Assume it costs $12 to place an order and the inventory
carryin
The optimal order quantity is 1,549 units. When the ordering cost is $10 per unit, the annual demand is 15,000 units, and the carrying cost is 0.125.
The computation of optimal order quantity is also known as Economic Order Quantity (EOQ) and it can be calculated by using Annual demand, ordering cost, and carrying cost.
The optimal order quantity (or) Economic Order Quantity (EOQ) = √ 2 × Annual demand × ordering cost / carrying cost
where,
Annual demand = 15,000 units
The ordering cost = $10 per unit
The carrying cost = $0.50 × 25% = 0.125
Substuting the given values in the equation we get,
= √ 2 × 15,000 × $10 / 0.125
= √300000 / 0.125
= 400√15
= 1,549 units
Therefore, The optimal order quantity is 1,549 units.
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The complete question is...
Suppose a gift shop in Myrtle Beach has an annual demand for 15,000 units of a souvenir kitchen magnet that it buys for $0.50 per unit. Assume it costs $10 to place an order and the inventory carrying cost is 25% of the item's unit cost. Use Solver to determine the optimal order quantity if the company wants to minimize the total cost of procuring this item.
a. What is the optimal order quantity? If necessary, round your answer to a whole number.
Wang Company manufactures and sells a single product that sells for $550 per unit variable costs are $257 Amulte costs are $966.000 Cu sales volume is $4,300,000. Compute the break-even point in units
The break-even point in units for Wang Company is approximately 3,302 units.
To compute the break-even point in units, we need to determine the number of units that need to be sold in order to cover all fixed costs.
Break-even point (in units) = Fixed costs / Contribution margin per unit
First, let's calculate the contribution margin per unit:
Contribution margin per unit = Selling price per unit - Variable costs per unit
Selling price per unit = $550
Variable costs per unit = $257
Contribution margin per unit = $550 - $257 = $293
Now, let's calculate the break-even point in units using the contribution margin per unit and the total fixed costs:
Break-even point (in units) = Fixed costs / Contribution margin per unit
Fixed costs = Total fixed costs = $966,000
Break-even point (in units) = $966,000 / $293 ≈ 3,302 units
Therefore, the break-even point in units for Wang Company is approximately 3,302 units.
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with the aid of a practical example of a situation,
discuss the fundamental ethical principles that guide an
auditor.
NB: Apply a practical example of a situation in the
answe.
The fundamental ethical principles guiding an auditor include integrity, objectivity, professional competence, confidentiality, and professional behavior.
The ethical principles that guide auditors are essential for maintaining trust and professionalism in their work. Integrity ensures honesty and transparency, while objectivity requires impartiality and independence. Professional competence ensures auditors possess the necessary skills and knowledge for accurate evaluations. Confidentiality ensures sensitive information remains protected. Lastly, professional behavior involves compliance with laws, regulations, and auditing standards. By adhering to these principles, auditors uphold the highest ethical standards and contribute to the integrity and reliability of financial reporting and auditing practices.
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Should the NIKE company participate in such efforts as
the Sustainable Development Goals, or should their focus be on the
bottom line and returning dividends to shareholders?
(2 paragraph and key ref
Nike should prioritise sustainability objectives. Nike aspires to produce no waste or carbon in the future.
Numerous billions of plastic jugs have been diverted from landfills and converted into repurposed polyester for Nike execution goods starting around 2010. The business concentrates on enhancing its sourcing and production procedures and designs its items to safeguard sustainable development for coming generations.
Nike's "move to zero" initiative fights climate change by setting ambitious, fact-based goals. Considering the magnitude of Nike, even modest adjustments like using recycled materials can have a big impact. Nike's sustainability strategy is still developing. Nike is changing its manufacturing cycle and resources through its multifaceted strategy.
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If the yield to maturity of a zero-coupon bond with a $10,000 face value and time to maturity of 6 years is 2. percent, what should be its current price? 7547.75 8435.72 8879.71 9767.68 7991.73
To calculate the current price of a zero-coupon bond, we can use the formula:The current price of the zero-coupon bond with a $10,000 face value and 6 years to maturity, with a yield to maturity of 2 percent, should be approximately $8,879.71.
Current Price = Face Value / (1 + Yield to Maturity)^Time to Maturity
In this case, the face value of the bond is $10,000, the yield to maturity is 2 percent (0.02), and the time to maturity is 6 years. Substituting these values into the formula, we get:
Current Price = 10,000 / (1 + 0.02)^6
Calculating the exponent first:
(1 + 0.02)^6 = 1.127585
Now, let's calculate the current price:
Current Price = 10,000 / 1.127585
Current Price ≈ $8,879.71
Therefore, the current price of the zero-coupon bond with a $10,000 face value and 6 years to maturity, with a yield to maturity of 2 percent, should be approximately $8,879.71.
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Happy Baby, a maker of baby foods, has found a high correlation between the aggregate company sales (in $100,000) and the number of births nationally the preceding year (one year prior). Suppose that the sales and the birth figures during the past eight years are
Sales U.S. births
Year ($100,000) in millions
1 6.1 2.9
2 6.4 3.4
3 8.3 3.5
4 8.8 3.1
5 5.1 3.8
6 9.2 2.8
7 7.3 4.2
8 12.5 3.7
The linear regression equation for sales and births is calculated as follows: y = 4.16x - 5.85. Forecast the sales in year 9. (Note that the units for all the numerical choices below are in $100,000s)
a. 46.15
b. Sales in year 9 can not be forecasted since we do not have the birth rate in year 9.
c. 5.8
d. 17.5
e. 31.59
f. 9.5
______________________________________________________________
6) Happy Baby, a maker of baby foods, has found a high correlation between the aggregate company sales (in $100,000) and the number of births nationally the preceding year (one year prior). Suppose that the sales and the birth figures during the past eight years are
Sales U.S. births
Year ($100,000) in millions
1 6.1 2.9
2 6.4 3.4
3 8.3 3.5
4 8.8 3.1
5 5.1 3.8
6 9.2 2.8
7 7.3 4.2
8 12.5 3.7
Name the independent and dependent variables given the correlation information.
a. "Births" is the independent variable and "Year" is the dependent variable.
b. "Sales" is the independent variable and "Year" is the dependent variable.
c. "Births" is the independent variable and "Sales" is the dependent variable.
d. "Sales" is the independent variable and "Births" is the dependent variable.
e. "Year" is the independent variable and "Sales" is the dependent variable.
_______________________________________________________________________
7) The seasonal indeces (relatives) for the months of January, February, and March are given as 1.10, 0.99, and 0.90, respectively. The sales of coffee cups in January, February, and March of 2012 were respectively 88, 99, and 108. Compute the deseasonalized sales data accordingly.
a. 96.8, 98.01, 97.2
b. 88, 99, 108
c. 80, 100, 120
d. Enough information is not given.
__________________________________________________________________
8) For the following data, construct the linear regression line to forecast future sales:
Week Sales
1 10
2 26
3 45
4 70
Select one:
a. y = -12 + 19.9 t
b. y = 12 - 19.9 t
c. y = 19.9 + 12 t
d. y= 19.9 - 12 t
e. y = 12 + 19.9 t
1) Sales in year 9 cannot be forecasted since we do not have the birth rate in year 9. Option B is correct.
2) The independent variable is "Births," and the dependent variable is "Sales." Option D is correct.
3) The deseasonalized sales data is 80, 100, and 120. Option B is correct.
4) The linear regression line to forecast future sales is y = -12 + 19.9t. Option D is correct.
Given the data from the maker of baby foods, Happy Baby, the independent and dependent variables are "Births" and "Sales," respectively. Therefore, the correct answer is option (c) "Births" is the independent variable and "Sales" is the dependent variable.
To compute the deseasonalized sales data, we divide each month's sales data by the corresponding seasonal index. Using the given data and seasonal indices, the deseasonalized sales data are as follows:
Deseasonalized sales for January = 88 / 1.10 = 80Deseasonalized sales for February = 99 / 0.99 = 100Deseasonalized sales for March = 108 / 0.90 = 120Therefore, the correct answer is option (c) 80, 100, 120.
To construct the linear regression line for forecasting future sales, we need to calculate the slope and intercept of the line. Using the given data, we can determine the slope and intercept as follows:
Slope, b = (nΣxy - ΣxΣy) / (nΣx^2 - (Σx)^2)
Intercept, a = (Σy - bΣx) / n
Using the provided data, we get:
Slope, b ≈ 19.9
Intercept, a ≈ -12
Therefore, the correct answer is option (b) y = 12 - 19.9t.
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You are the administrator for your company network. You and a colleague are discussing
client reservations. With client reservations, you can reserve an IP address for permanent
use by a DHCP client. Typically, you will need to do this if the client uses an IP address that
was assigned using another method for TCP/IP configuration. If you are reserving an IP
address for a new client, or an address that is different from its current one, you should
verify that the address has not already been leased by the DHCP server. Reserving an IP
address in a scope does not automatically force a client currently using that address to stop
using it. So, what ipconfig command would you use if the address is already in use?
(
When a DHCP client is using an IP address that needs to be reserved for permanent use, the administrator can use client reservations to ensure that the client always receives the same IP address.
However, if the address is already in use by another device or client, the administrator should verify that the address is not currently leased by the DHCP server before reserving it. This can be done by checking the DHCP server's lease database or using a network scanning tool to identify the device currently using the IP address.
If the address is already in use and needs to be reserved for the DHCP client, the administrator can use the ipconfig /release command on the device currently using the IP address. This command will notify the DHCP server that the address is no longer in use and can be assigned to another client. After releasing the address, the DHCP client can obtain the reserved IP address using the ipconfig /renew command.
It's important to note that releasing an IP address can cause network connectivity issues for the device that was previously using the address. Therefore, it's crucial to ensure that the address is not currently in use by a critical device before releasing it. Additionally, client reservations should only be used when necessary to avoid exhausting the available IP addresses in the DHCP scope.
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Use the following to answer the next two questions. You invested $50,000 in a mutual fund last year. At the time you opened your account, the mutual fund shares had a NAV of $50. The fund charges a 2% front-end load and a 1% back-end load. During the course of your investment, you received $4.21 per share in dividends, which you reinvested in the fund at a price of $55.01/share. The fund's NAV was $53 at the time you closed your account. Find the total number of shares you owned after you reinvested your dividends. Round intermediate steps to four decimals and your final answer to the nearest whole share. a 1077 b 1055 c 1066 d 1126
The total number of shares owned after reinvesting dividends, we need to consider the initial investment, front-end load, back-end load, dividends, and the price at which dividends were reinvested.
The initial investment of $50,000 with a front-end load of 2% means that $1,000 (2% of $50,000) was deducted as a sales charge. Therefore, the net investment was $49,000 ($50,000 - $1,000).
Next, we calculate the number of shares purchased with the net investment. The net investment divided by the NAV of $50 gives us 980 shares ($49,000 / $50).
When you received $4.21 per share in dividends, you reinvested it at a price of $55.01 per share. So, the number of additional shares purchased is $4.21 / $55.01 = 0.0764 shares per dollar. Multiplying this by the total amount of dividends ($4.21) gives us approximately 0.325 additional shares (0.0764 * $4.21).
Therefore, the total number of shares owned after reinvesting dividends is approximately 980 + 0.325 = 980.325 shares.
Rounding this to the nearest whole share, the answer is 980 shares.
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A supermarket has the following minimum personnel requirements during the week. Each employee is required to have two consecutive days off. How many regular employees are required, and what is a good schedule?
A minimum of 9 regular employees is required to cover the shifts while ensuring each employee has two consecutive days off.
To determine the minimum number of regular To determine the minimum number of regular employees required and create a good schedule, we need to establish the number of shifts and the duration of each shift at the supermarket. Let's assume the supermarket operates for 7 days a week and has the following shift durations:
Shift duration: 8 hours
With this information, we can calculate the minimum number of regular employees required as follows:
Determine the number of shifts in a week: Since each day has 24 hours and each shift is 8 hours long, there will be 24/8 = 3 shifts per day.
1. Calculate the number of employees required per shift: Considering each employee should have two consecutive days off, we need to ensure that there are enough employees to cover all shifts while maintaining this requirement. One way to achieve this is to divide the shifts into three groups (A, B, C) and rotate them over the week, with each group working two consecutive days and then having two days off. This means each group will work 2 out of 7 days.
Group A: Works on days 1 and 2, and then has days 3 and 4 off.
Group B: Works on days 3 and 4, and then has days 5 and 6 off.
Group C: Works on days 5 and 6, and then has days 7 and 1 off.
Since there are 3 shifts per day, we need a minimum of 3 employees per group.
2. Calculate the total number of regular employees required: Since we have three groups of 3 employees, the minimum number of regular employees required will be 3 x 3 = 9.
Therefore, a minimum of 9 regular employees is required to cover the shifts while ensuring each employee has two consecutive days off. Here's a sample schedule for a week:
Day 1: Group A (Employees 1, 2, 3)
Day 2: Group A (Employees 1, 2, 3)
Day 3: Group B (Employees 4, 5, 6)
Day 4: Group B (Employees 4, 5, 6)
Day 5: Group C (Employees 7, 8, 9)
Day 6: Group C (Employees 7, 8, 9)
Day 7: All employees have two consecutive days off
This schedule ensures proper coverage and adherence to the requirement of each employee having two consecutive days off. Keep in mind that this is a basic example, and factors such as employee availability, preferences, and workload fluctuations may require adjustments to the schedule.
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Again consider the sales data from problem 1 above. Again, let 2019 and 2020 be the training period, and let 2021 be the validation period. (a) Calculate moving average (MA) forecasts for the validation period using a window width of 4(w=4). (b) Based on your forecasts in part (a), calculate the errors for the validation period. (c) Assuming you are content with the forecasting or predictive accuracy of this model, find the moving average ( MA(4))
forecast for 2024 Quarter 1.
Moving average (MA) forecasts for the validation period using a window width of 4(w=4): The moving average forecast for 2021 Q1 is the average of sales of the previous four quarters i.e. the average of 2020 Q2 to 2021 Q1= (108+105+123+134)/4 = 470/4 = 117.5.
The moving average forecast for 2021 Q2 is the average of sales of the previous four quarters i.e. the average of 2020 Q3 to 2021 Q2= (105+123+134+136)/4 = 498/4 = 124.5.The moving average forecast for 2021 Q3 is the average of sales of the previous four quarters i.e. the average of 2020 Q4 to 2021 Q3= (123+134+136+138)/4 = 531/4 = 132.75.
The moving average forecast for 2021 Q4 is the average of sales of the previous four quarters i.e. the average of 2021 Q1 to 2021 Q4= (134+136+138+141)/4 = 549/4 = 137.25.
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Jason and Clare are Indigenous Australians who reside in Armidale NSW. Jason is a local
doctor and Clare teaches in the local primary school. Jason and Clare have lived in Armidale
all their lives except for a short period of time when they studied in Sydney.
Jason, Clare and other members of their community are considering making a claim for
native title over land at Ebor Falls. The Ebor Falls themselves are within the National Park
which is Crown land. The area surrounding the Ebor Falls is grazing land with the fee simple
title held by a number of graziers.
Advise
• Jason and Clare whether they can make a native title claim in relation to the Ebor
Falls and /or the surrounding grazing land.
• In answering this question focus on the decision of the High Court in Mabo (No 2) v
State of Queensland (1992) 175 CLR 1 specifically the decision of Justice Brennan.
Based on the decision of the High Court in Mabo (No 2) v State of Queensland (1992) 175 CLR 1, Jason and Clare may potentially make a native title claim in relation to the Ebor Falls and/or the surrounding grazing land.
Justice Brennan's decision in the Mabo case recognized the existence of native title rights for Indigenous Australians over land that has not been extinguished by valid legislation or other acts. The Ebor Falls being within a National Park, which is Crown land, and the surrounding grazing land held under fee simple title by graziers, does not automatically extinguish the possibility of a native title claim. However, a detailed assessment of the specific circumstances, including the history of land tenure and any legislative or legal actions, would be necessary to determine the viability of a native title claim in this case.
In Mabo (No 2) v State of Queensland, Justice Brennan's decision acknowledged the existence of native title rights for Indigenous Australians. The key principle established was that native title rights could continue to exist if they had not been extinguished by valid legislation or other acts. Extinguishment can occur through acts such as the grant of fee simple title or the creation of a National Park.
However, the mere fact that land is Crown land or held under fee simple title does not automatically extinguish native title. Therefore, Jason and Clare, along with members of their community, may have the potential to make a native title claim over the Ebor Falls and/or the surrounding grazing land. To assess the viability of such a claim, it would be necessary to examine the specific circumstances, including the history of land tenure and any legislative or legal actions that may have affected native title rights in the area.
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(1）"A", a member of the Board of Directors, after reading a report prepared by Corporate Counsel, stating that bribing foreign officials is permissible, decides to authorize the bribing of the Commerce Deputy of Peru. (Bribing of foreign officials is, in fact illegal) The US Justice Department, upon learning of the bribe, prosecutes the corporation resulting in a $100,000 fine. The shareholders of the corporation sue "A" to recover the fine paid. Should the shareholders be successful?
Result:
Reason:
(2）"A", "B" and "C" are shareholders of X Corp. stock. The Board of Directors of X Corp. declared a dividend. "A" received her dividend but, although the payment date has passed, "B" and "C" did not receive their dividend. "B" made a demand on the Board to bring suit and the Board refused. "B" brings a shareholder's derivative suit to force payment of the dividend. Should "B" be successful?
Result:
Reason:
1. The shareholders should be successful in suing "A" to recover the fine paid. "A" authorized an illegal act, which resulted in the corporation being prosecuted and fined. As a member of the Board of Directors, "A" has a duty to act in the best interest of the corporation and its shareholders. By authorizing bribery, "A" breached this duty, and the shareholders can hold "A" accountable for the financial consequences.
2. "B" may be successful in bringing a shareholder's derivative suit to force payment of the dividend. In a derivative suit, a shareholder sues on behalf of the corporation when the Board of Directors fails to take action that is in the best interest of the shareholders. If "B" can demonstrate that the Board's refusal to pay the dividend was not in the best interest of the corporation and its shareholders, the court may allow the suit to proceed, potentially leading to a resolution in favor of "B" and the other shareholders.
1. In the first scenario, "A," as a member of the Board of Directors, authorized the bribing of a foreign official based on a report that falsely claimed it was permissible. However, bribing foreign officials is illegal. The US Justice Department prosecuted the corporation and imposed a fine. The shareholders can sue "A" to recover the fine paid because "A" breached their fiduciary duty by authorizing an illegal act that resulted in financial harm to the corporation.
2. In the second scenario, "B" and "C" did not receive their dividends despite the payment date passing. "B" demanded that the Board bring suit to force payment, but the Board refused. In such cases, a shareholder can bring a derivative suit on behalf of the corporation to address a breach of fiduciary duty by the Board. If "B" can show that the Board's refusal to pay the dividend was not in the best interest of the corporation and its shareholders, the court may allow the suit to proceed and potentially order the payment of the dividend.
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1.It is important for a company to monitor its aggregate accounts receivable balances because A.That will impact its accounts payable aging B.Lenders will exclude any past-due accounts receivable for use as collateral for a loan to the company C.Older accounts receivable balances can enhance a firm's profitability D.Higher accounts receivable balances result in a higher state corporate income tax liability E.None of the above
The correct option is B. Lenders will exclude any past-due accounts receivable for use as collateral for a loan to the company.
Accounts receivable are the amounts that a company is owed by its customers for goods or services that have been sold. Lenders will consider a company's accounts receivable when making a lending decision.
If a company has a large amount of past-due accounts receivable, lenders may be less likely to lend to the company or may charge a higher interest rate. This is because past-due accounts receivable are a sign that the company may have difficulty collecting its receivables.
Here are some other reasons why it is important for a company to monitor its aggregate accounts receivable balances:
To identify potential collection problems early.
To ensure that the company has enough cash on hand to meet its obligations.
To track the company's creditworthiness.
To comply with financial reporting requirements.
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Sleepy Time is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Sleepy Time fears a significant drop in the firm's upcoming income stream. The CFO asked you to use the company financial information provided below.
Sales price per unit $ 3,350.00
Per-unit variable costs: Invoice cost 2,568.80
Sales commissions 351.20
Total per-unit variable costs $ 2,920.00
Total annual fixed costs: Advertising $ 236,700
Rent 178,700
Salaries 386,700
Total annual fixed costs $ 802,100
If 4,350 bed frames were sold, Sleepy Time's operating income (πB) would be: (Do not round intermediate calculations.)
Multiple Choice
$1,108,400.
$1,148,400.
$1,068,400.
$1,208,400.
$988,400.
Answer:
Explanation:
To calculate Sleepy Time's operating income (πB), we need to subtract the total variable costs and total fixed costs from the total sales revenue.
Total variable costs per unit: $2,920.00
Number of units sold: 4,350
Total variable costs = Total variable costs per unit x Number of units sold
Total variable costs = $2,920.00 x 4,350 = $12,702,000
Total fixed costs: $802,100
Total sales revenue = Sales price per unit x Number of units sold
Total sales revenue = $3,350.00 x 4,350 = $14,572,500
Operating income (πB) = Total sales revenue - Total variable costs - Total fixed costs
Operating income (πB) = $14,572,500 - $12,702,000 - $802,100 = $1,068,400
Therefore, Sleepy Time's operating income (πB) would be $1,068,400.
The correct answer is:
$1,068,400.
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2. Which of the following is an example of money illusion?
A. An individual is willing to work more hours when the nominal wage rises by 10 percent and the overall price level rises by 5 percent.
B. An individual is willing to work more hours when the nominal wage rises by 10 percent and the overall price level rises by 20 percent.
C. An individual will neither increase nor decrease the number of hours she is willing to work
when the nominal wage rises by 10 percent and the overall price level rises by 10 percent.
Money illusion refers to an economic concept where people are likely to believe that price changes can influence their real incomes.
The option that is an example of money illusion is:
An individual is willing to work more hours when the nominal wage rises by 10 percent and the overall price level rises by 20 percent.
What is Money Illusion?Money illusion is a situation where people believe that changes in price can alter their actual income. It occurs when a person does not recognize that the increase in price will lead to a proportional rise in their nominal income. It is based on the idea that people concentrate on the nominal value of their wages or income rather than on the real value of the same.A person who suffers from the money illusion will focus solely on the numerical value of the money received as their income. As a result, they might be satisfied with receiving the same nominal amount of money even if the purchasing power of the money has decreased because of a change in the prices of goods and services available.The money illusion is generally referred to as a 'misinterpretation of inflation' by economists and occurs when the increase in the price level causes an increase in nominal incomes, which the people believe is an increase in real incomes.Example of Money Illusion
An individual is willing to work more hours when the nominal wage rises by 10 percent and the overall price level rises by 20 percent.
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