Answer:
B. 25.
Explanation:
Normally the life of a human breaks into various stages like infancy, childhood, adolescence, old age ,and adulthood which depends upon the level of age.
Like we can say that in the age of 18 the person is an adult but at the age of 25 he has reached to the level of maturity in term of mental, physical, strength, emotional, etc
And at this level, the development normally stops i.e brain not with the person body
Hence, option b is correct
Answer:
development never stops
Explanation:
our bodies are always changing and always growing to be something different. This includes every 7 years our cells are completely changed so we are practically all new people. option c is also the right answer on apex.
The common belief among economists is that it is better to embrace _____________, and then deal with the costs and trade offs with other policy tools, than it is to engage in _______________.
Answer: the gains from trade; protectionism
Explanation:
The common belief among economists is that it is better to embrace the gains from trade, and then deal with the costs and trade offs with other policy tools, than it is to engage in protectionism.
Economists believe that when countries engage in trade together, it brings about increase in the world's output, better innovation and better product quality hence, they do not really support protectionism.
A $ 1 comma 000 bond with a coupon rate of 6.2% paid semiannually has two years to maturity and a yield to maturity of 6%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond?
Answer:
As a result of a fall in interest and YTM, the bond price will increase by $15.04
Explanation:
To calculate the change in price due to fall in interest rate, we must first calculate the price of the bond before and after the fall of interest rates.
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 1000 * 0.062 * 0.5 = $31
Total periods (n)= 2 * 2 = 4
r or YTM = 6% * 1/2 = 3% or 0.03
The formula to calculate the price of the bonds today is attached.
Before Interest rates Fell
Bond Price = 31 * [( 1 - (1+0.03)^-4) / 0.03] + 1000 / (1+0.03)^4
Bond Price = $1003.717098 rounded off to $1003.72
After Interest Rates Fell
New YTM = 6% - 0.8% = 5.2% or 0.052
Semi Annual YTM = 0.052 * 0.5 = 0.026
Bond Price = 31 * [( 1 - (1+0.026)^-4) / 0.026] + 1000 / (1+0.026)^4
Bond Price = $1018.764647 rounded off to $1018.76
Change in Bond Price = 1018.76 - 1003.72 = $15.04
As a result of a fall in interest and YTM, the bond price increased by $15.04
4. Calculate the required rate of return for Manning Enterprises assuming that investors expect 3.5% rate of inflation in the future. The real risk-free rate is 2.5%, and the market risk premium is 6.5% Manning has a beta of 1.7, and its realized rate of return has averaged 13.5% over the past 5 years.
Answer: 17.05%
Explanation:
Given the variables available, the method to be used to calculate the required return is the Capital Asset Pricing Model with the formula;
Required Return = Nominal Risk-free rate + beta ( Market premium)
Nominal Risk-free rate = real risk-free rate + inflation
= 2.5% + 3.5%
= 6%
Required Return = 6% + 1.7 ( 6.5%)
Required Return = 6% + 11.05%
Required Return = 17.05%
For a variety of reasons, a bank sometimes will hold more reserves than is legally required. These reserves are known as excess reserves. How does holding excess reserves affect the degree to which the money supply will change
Answer: D. The money supply will decrease as banks loan out less money.
Explanation:
The money supply in the Economy is inversely related to the amount of reserves that a bank holds. This is because the higher the reserves held, the less the banks will have to borrow out and the less new money can be created from the money loaned out. Holding excess reserves therefore results in less money supply.
Lassen Corporation sold a machine to a machine dealer for $37,250. Lassen bought the machine for $68,000 and has claimed $22,500 of depreciation expense on the machine. What gain or loss does Lassen realize on the transaction
Answer:
Loss of $8,250
Explanation:
Lassen corporation sold a machine to a machine dealer at a price of $37,250
Lassen bought the machine for $68,000
He claimed $22,500 of depreciated expenses on the machine
Therefore, the gain or loss realized on the transaction can be calculated as follows
Gain/loss= Cash received-book value
Book value= Original basis-accumulated depreciation
= $68,000-$22,500
= $45,500
Gain/loss= $37,250-$45,500
= $8,250
Hence Lassen realized a loss of $8,250 on the transaction
Exercise F The luggage department of Sampson Company has revenues of $1,000,000; variable expenses of $250,000; direct fixed costs of $500,000; and allocated, indirect fixed costs of $300,000 in an average year. If the company eliminates this department, what would be the effect on net income
Answer:
Decrease by $250,000
Explanation:
Calculation for what would be the effect on net income.
We would be using Differential Analysis method to find the effect on the net income
Differential Analysis
Continue with Luggage Department; Eliminate Luggage Department; Effect on Income
Sales
1,000,000 0 -1,000,000
Variable cost
-250,000 0 250,000
Direct fixed costs
-500,000 0 500,000
Indirect fixed costs
-300,000 -300,000 0
Net Income
-$50,000 -$300,000 -$250,000
Therefore in a situation where the luggage department is eliminated, the income would decrease by $250,000
A proposed project has fixed costs of $47,000 per year. The operating cash flow at 11,000 units is $69,000. a. Ignoring the effect of taxes, what is the degree of operating leverage
Answer: 1.68
Explanation:
From the question, we are informed that a proposed project has fixed costs of $47,000 per year and that the operating cash flow at 11,000 units is $69,000.
Ignoring the effect of taxes, the degree of operating leverage will be:
= 1 + ($47,000/$69,000)
= 1 + 0.68
= 1.68
Consider a team that you are familiar with - either by being a member of the team, a team leader, or a bystander. What were the team's goals?
Answer:
• To ensure that there is no income leakage whatsoever
• Ensure that there is no customer complaint made to the company's executives
• Early closure not later than 5pm daily, Monday to Friday
• Ensure customer survey ratings of at least 8.0
• Drive paperless environment.
• Daily reconciliation of the bank's transit accounts.
Explanation:
I used to belong to a team called settlement and reconciliation , which is under operations support, business banking in one of the top financial institution.
The goals are as listed above. For instance as a settlement and reconciliation team, you must ensure accurate settlement of all merchants such that none would receive excess settlement s which could deplete the bank's income. Also, there must be no customer complaint escalated to the bank's executives hence team must promptly resolve all queries and complaint.
Another goal is to drive early closure. No member of staff must remain in the office after 5pm unless permission is obtained to deal urgent transaction. Each year, the bank conducts internal survey among departments to know how well we treat our internal and external stakeholders. The least score approved for my team is 8.0 out of 10 , which must be met.
Again, one of the goals of the bank is paperless drive which was included in each team or unit's goals. We support the drive for paperless transactions by suggesting means to consummate transactions without printing. We must also ensure daily and timely reconciliation of all our transit accounts in order to ensure that no idle fund is sitting in there.
The Mahoney Company failed to accrue Rent Revenue on 12/31/23. The error was discovered on 2/1/24, before any cash was collected and after the 2023 books were closed. On 2/1/24, Mahoney would record:
Answer:
Mahoney would record record on the 2023 books A debit to rent receivables
Explanation:
As error of failure to accrue rent revenue on 12/31/2023 was discovered before closing of books, therefore on 02/01/2024 Mahoney would record on the 2023 books "A debit to rent receivables"
Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 9,000 flashing lights per year and has the capacity of producing 60 per day. Setting up the light production costs $49. The holding cost is $0.10 per light per year.
a. What is the optimal size of the production run?
b. What is the average holding cost per year?
c. What is the average setup cost per year?
d. What is the total cost per year, including the cost of the lights?
Answer:
a. 2,970
b. $148.50
c. $148.50
d. $297.00
Explanation:
Optimal size of the production run is the size of the Production run that minimizes set -up costs and holding costs.
Optimal size of the production run = √ (2 × Annual Production Demand × Set-up Cost) / Holding Cost per unit
= √(2 × 9,000 × $49) / $0.10
= 2,969.85 or 2,970 flashing lights
Average holding cost = Optimal size of the production run /2 × Holding Cost per unit
= 2,970/2 × $0.10
= $148.50
Average setup cost = Annual Production Demand / Optimal size of the production run × Cost per set -up
= 9,000 / 2,970 × $49
= $148.50
Total Cost = Average holding cost + Average setup cost
= $148.50 + $148.50
= $297.00
Eppich Corporation has provided the following data for the most recent month: Raw materials, beginning balance $ 20,500 Work in process, beginning balance $ 32,800 Finished Goods, beginning balance $ 50,800 Transactions: (1) Raw materials purchases $ 79,100 (2) Raw materials used in production (all direct materials) $ 77,900 (3) Direct labor $ 52,800 (4) Manufacturing overhead costs incurred $ 92,500 (5) Manufacturing overhead applied $ 72,800 (6) Cost of units completed and transferred from Work in Process to Finished Goods $ 190,000 (7) Any overapplied or underapplied manufacturing overhead is closed to Cost of Goods Sold ? (8) Finished goods are sold $ 221,700 Required: Complete the following T-accounts by recording the beginning balances and each of the transactions listed above.
Answer:
Raw Materials T - Account
Debit :
Beginning Balance $ 20,500
Raw materials purchases $ 79,100
Total $99,600
Credit :
Raw materials used in production $ 77,900
Closing Balance $ 21,700
Total $99,600
Overheads T - Account
Debit :
Manufacturing overhead costs incurred $ 92,500
Totals $ 92,500
Credit :
Manufacturing overhead applied $ 72,800
Understatement of Overheads $ 19,700
Totals $ 92,500
Work In Process T - Account
Debit :
Beginning Work In Process $ 32,800
Raw materials $ 77,900
Direct Labor $ 52,800
Manufacturing overhead applied $ 72,800
Totals $236,300
Credit :
Transferred to Finished Goods $ 190,000
Ending Work In Process $46,300
Totals $236,300
Finished Goods T - Account
Debit :
Beginning Balance $ 50,800
Transferred from Work In Process $ 190,000
Totals $240,800
Credit :
Trading Account $ 221,700
Ending Balance $ 19,100
Totals $240,800
Cost of Goods Sold = $241,400
Explanation:
Cost of Goods Sold = $ 221,700 + $ 19,700 (under-applied overheads)
= $241,400
If Treasury bills are currently paying 6.5 percent and the inflation rate is 1.3 percent, what is the approximate and the exact real rate of interest
Answer:
the approximate real interest rate = nominal rate - inflation rate = 6.5% - 1.3% = 5.2%
the exact real interest rate is calculated using the following formula:
(1 + nominal interest rate) = (1 + real interest rate) (1 + expected rate of inflation)
(1 + 0.065) = (1 + real interest rate) x (1 + 0.013)
1 + real interest rate = (1 + 0.065) / (1 + 0.013) = 1.065 / 1.013 = 1.05133
real interest rate = 1.05133 - 1 = 0.05133 = 5.13%
Capital budgeting is the process of planning and controlling investments in assets that are expected to produce cash flows for one year or less. This statement is: False True
Answer:
false
Explanation:
Capital budgeting is the process taken to evaluate and determine the profitability of an investment. capital budgeting can be done for projects that have cash flows of more than one year
capital budgeting methods include :
Net present value
internal rate of return
accounting rate of return
payback period
On August 1, Batson Company issued a 60-day note with a face amount of $58,800 to Jergens Company for merchandise inventory. (Assume a 360-day year is used for interest calculations.)
a) Determine the proceeds of the note assuming the note carries an interest rate of 10%.
b) Determine the proceeds of the note assuming the note is discounted at 10%.
Answer:
a. $58,800
b. $57,820
Explanation:
Generally, notes are issued on the discounted or face value. It is face value when the price of the note is the same as the face value while it is discounted when the price of the note is lower than the face or par value.
a. Since the note is issued on the face value of $58,800 , it means that the proceed is the same amount. The proceeds from a note that is issued, is that price at which the note is issued.
b. Discount value
= $58,800 × 10% × 60/360
= $980
Proceeds
= Face/par value of the note - Discount value of the note
= $58,800 - $980
= $57,820
A security held in a well-diversified portfolio that has a beta of zero in a one-factor model will have an expected return of:
Answer:
The answer is risk free rate.
Explanation:
Beta is a risk arising from systematic risk or market risk.
A portfolio with a beta of zero would have the same expected return as the risk-free rate. Such a portfolio would have zero correlation with market movements.
Market risk cannot be diversified. Examples of zero beta assets are cash and US treasury bill.
Suresh Co expects its five departments to yield the following income for next year
Dept. M. Dept. N Dept. O Dept. P Dept. T Total
Sales $35,500 $17,100 $33,500 $33,000 $15,400 $134,500
Expenses
Avoidable 4,400 14,200 10,700 8,000 19,900 $57,200
Unavoidable 19,000 7,200 2,700 16,000 4,100 $49,000
Total expenses 23,400 21,400 13,400 24,000 24,000 106,200
Net income (loss) $12,100 $(4,300) $20,100 $,000 $(8,600) $28,300
Recompute and prepare the department income statements including e combined total column for the company under each of the following separate scenarios.
1. Management elimates departments with expected net losses.
DEPARTMENTS WITH EXPECTED NET LOSSES ELIMATED
Dept. M. Dept. N Dept. O Dept. P Dept. T Total
Sales ______ ______ ______ ______ ______
Expenses
Avoidable ______ ______ ______ ______ ______
Unavoidable ______ ______ ______ ______ ______
Total expenses
Net income (loss)
2. Management eliminates departments with sales dollars that are less than avoidable expenses.
DEPARTMENTS WITH SALES THAN AVOIDABLE EXPENSES ELIMATED
Dept. M. Dept. N Dept. O Dept. P Dept. T Total
Sales ______ ______ ______ ______ ______
Expenses
Avoidable ______ ______ ______ ______ ______
Unavoidable ______ ______ ______ ______ ______
Total expenses
Net income (loss)
Answer and Explanation:
The preparation is presented below
1.
Particulars Dept. M Dept N Dept O Dept P Dept T Total
Sales $35,500 0 $33,500 0 0 $102,000
Expenses
Avoidable $4,400 0 $ 10,700 0 0 $23,100
Unavoidable $19,000 $7,200 $2,700 $16,000 $4,100 $49,000
Total
expenses $23,400 $7,200 $13,400 ($16,000) ($4,100) $72,100
Net income
(loss) $12,100 ($7,200) $22,100 ($16,000) ($4,100) $29,900
As we can see that department N, P and T are suffering from losses so these are closed
2. Department N and T had fewer sales dollars than avoidable costs, and certain units will be dropped. Yet there will always be unavoidable costs to incur.
Particulars Dept. M Dept N Dept O Dept P Dept T Total
Sales $35,500 0 $33,500 $33,000 0 $102,000
Expenses
Avoidable $4,400 0 $ 10,700 $8,000 0 $23,100
Unavoidable $19,000 $7,200 $2,700 $16,000 $4,100 $49,000
Total
expenses $23,400 $7,200 $13,400 $24,000 $4,100 $72,100
Net income
(loss) $12,100 ($7,200) $22,100 $9,000 ($4,100) $29,900
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pool Activity Rate Setting up batches $ 59.56 per batch Processing customer orders $ 72.96 per customer order Assembling products $ 4.25 per assembly hour Data concerning two products appear below: Product K91B Product F65O Number of batches 89 60 Number of customer orders 39 53 Number of assembly hours 493 900 How much overhead cost would be assigned to Product K91B using the activity-based costing system?
Answer:
$10,241.53
Explanation:
Using the activity-based costing system, Overhead cost for Product K91B would be?
Setting up batches 89 batches x $59.56= $5300.84
Processing customer orders 39 orders x $72.96= $2,845.44
Assembling products 493 hours x $4.25= $2,095.25
Total Overhead cost $10,241.53
Chester has negotiated a new labor contract for the next round that will affect the cost for their product Camp. Labor costs will go from $3.79 to $4.39 per unit. Assume all period and other variable costs remain the same. If Chester were to absorb the new labor costs without passing them on in the form of higher prices, how many units of product Camp would need to be sold next round to break even on the product?
Complete Question:
Chester has been selling widgets for $10, total variable costs are $4.40 and fixed costs are $100,000.
Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cid. Labor costs will go from $2.79 to $3.39 per unit. Assume all period and other variable costs remain the same.
If Chester were to absorb the new labor costs without passing them on in the form of higher prices, how many units of product Cid would need to be sold next round to break even on the product?
Answer:
Chester
Break-even point = Fixed costs/Contribution margin per unit
= $100,000 / $5
= 20,000 units
Explanation:
a) Data and Calculations:
Selling price = $10
Old variable cost = $4.40
Additional variable cost = $0.60
New variable costs = $5 ($4.40 + $0.60)
Contribution per unit = Selling price minus variable cost per unit
= $5 ($10 - $5)
Fixed costs = $100,000
b) Chester's Break-even point (in units) is the number of units of a product Camp that Chester requires to sell in order to recover her fixed costs. The information provided by break-even analysis guides Chester in making decisions for the production of Camps and its marketing. Without identifying the units of Camp to be produced and sold in order to remain in business, all things being equal, Chester might short-produce or short-sell Camps and run the business unprofitably.
Montel Company’s July sales budget calls for sales of $630,000. The store expects to begin July with $63,000 of inventory and to end the month with $37,000 of inventory. Gross margin is typically 20% of sales. Determine the budgeted cost of merchandise purchases for July.
Answer:
Budgeted cost of merchandise purchases =$499,000
Explanation:
The expected units of a product that a business estimates to purchase given its sales budget and inventory is known as the purchases budget.
The purchases budget can bed determined by adjusting the sales budget for closing and opening inventories.
Purchases budget = Sales budget +closing inventory - opening inventory
Note that the sales was given in selling price terms while the inventories in cost terms, hence there is a need to work out the cost of the sales using the 20% margin
Cost of the sales = 100/120× 630,000 =$ 525000
Opening inventory =63,000
Closing inventory = 37,000
Budgeted cost of merchandise purchases:
= 525000 + 37,000 - 63,000= $499,000
Budgeted cost of merchandise purchases =$499,000
Wells Fargo & Company, headquartered in San Francisco, is one of the nation’s largest financial institutions. Suppose it reported the following selected accounts (in millions) as of December 31, 2017.
Retained earnings $41,563
Preferred stock 8,485
Common stock—$12/3 par value, authorized 6,000,000,000 shares; issued 5,245,971,422 shares 8,743
Treasury stock—67,346,829 common shares (2,450)
Paid-in capital in excess of par value—common stock 52,878
Required:
Prepare the stockholders’ equity section of the balance sheet for Wells Fargo as of December 31, 2017
Answer:
EQUITY AND LIABILITIES
EQUITY
Retained earnings $ 41,563
Preferred stock $ 8,485
Common stock - Issued $ 8,743
Treasury stock $ 2,450
Share Premium $ 52,878
Total Equity $114,119
Explanation:
The the stockholders’ equity section of the balance sheet shows the amount of capital invested by the shareholders in the business as well as the reserves that have been allocated to them.
The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized.
Current Year Prior Year
Balance Sheet
Assets
Cash $ 78,900 $ 99,300
Accounts Receivable 108,000 94,500
Merchandise Inventory 81,000 87,750
Property and Equipment 152,000 81,000
Less:
Accumulated Depreciation (43,280) (22,000)
Total Assets $ 376,620 $ 340,550
Liabilities:
Accounts Payable $ 13,500 $ 16,200
Salaries and Wages Payable 2,700 1,350
Notes Payable, Long-Term 67,500 81,000
Stockholders’ Equity:
Common Stock 128,000 108,000
Retained Earnings 164,920 134,000
Total Liabilities and Stockholders’ Equity $ 376,620 $ 340,550
Current Year
Income Statement
Sales $ 340,000
Cost of Goods Sold 180,000
Depreciation Expense 21,280
Other Expenses 85,000
Net income $ 53,720
Other information from the company’s records includes the following:
1. Bought equipment for cash, $71,000.
2. Paid $13,500 on long-term note payable.
3. Issued new shares of common stock for $20,000 cash.
4. Cash dividends of $22,800 were declared and paid to stockholders.
5. Accounts Payable arose from inventory purchases on credit.
6. Income Tax Expense ($4,000) and Interest Expense ($3,000) were paid in full at the end of both years and are included in Other Expenses.
Required:
Prepare a schedule summarizing operating, investing, and financing cash flows using the T-account approach.
Answer:
A Schedule Summarizing Operating, Investing, and Financing Cash Flows, using the T-account approach:
Operating Investing Financing
Debit Credit Debit Credit Debit Credit
1. Equipment $71,000
2. Note Payable $13,500
3. Common Stock $20,000
4. Cash Dividends $22,800
5. Accounts Payable $2,700
6. Income Tax Expense $4,000
7. Interest Expense $3,000
8. Net Income $53,720
9. Depreciation $21,280
10. Tax & Interest $7,000
11. Accts receivable $13,500
12. Inventory $6,750
13. Salaries Payable $1,350
Total inflows/
outflows $83,350 ($26,950) ($71,000) $20,000 ($39,300)
Net cash from $56,400 ($71,000) ($19,300)
Operating activities $56,400
Investment activities ($71,000)
Financing activities ($19,300)
Net cash flows ($33,900)
Explanation:
a) Data and Calculations:
1. Current Year Prior Year
Balance Sheet
Assets
Cash $ 78,900 $ 99,300
Accounts Receivable 108,000 94,500
Merchandise Inventory 81,000 87,750
Property and Equipment 152,000 81,000
Less:
Accumulated Depreciation (43,280) (22,000)
Total Assets $ 376,620 $ 340,550
Liabilities:
Accounts Payable $ 13,500 $ 16,200
Salaries and Wages Payable 2,700 1,350
Notes Payable, Long-Term 67,500 81,000
Stockholders’ Equity:
Common Stock 128,000 108,000
Retained Earnings 164,920 134,000
Total Liabilities &
Stockholders’ Equity $ 376,620 $ 340,550
2. Current Year Income Statement
:
Sales $ 340,000
Cost of Goods Sold 180,000
Depreciation Expense 21,280
Other Expenses 85,000
Net income $ 53,720
3. The Wickersham Brothers Inc.'s Statement of Cash Flows is one of the three main financial statements that the management of Wickersham Brothers Inc. must prepare and present to the stockholders of the company and the general public. It details the Wickersham's cash flows under the operating activities, investing activities, and financing activities sections.
National Chemical Company manufactures a chemical compound that is sold for $55 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $78 per gallon. National expects the market for the new compound variant to be 8,300 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $157,700. Required: a. What would be the effect on total profit if National produces the new compound variant?
Answer:
National Chemical Company
New Variant of a Chemical Compound:
The effect on total profit if National produces the new compound variant is that total profit increases by $33,200
Explanation:
a) Data:
Selling price of old chemical = $55
Selling price of fined chemical = $78
Initial demand for the new compound = 8,300 gallons
Refining costs for the new compound = $157,700
b) Calculations:
Profit from new fined chemical = $23 ($78 - 55)
Differential Sales revenue = $190,900 ($23 x 8,300)
Differential processing costs $157,700
Effect on total profit = $33,200
c) Refining a chemical always add some value to the chemical. The additional value added is the differential sales revenue that National generates minus the additional processing costs involved to get the chemical refined.
Danube Corp. purchased a used machine for $21,000. The machine required installation costs of $6000 and insurance while in transit of $1800. At which of the following amounts would the machine be recorded?
A. $28,800
B. $21,000
C. $27,000
D. $22,800
Answer:
$28,800
Explanation:
Danube corporation bought a new machine for $21,000
The machine required $6,000 as installation costs
$1,800 was paid as insurance while in transit
Therefore, the amount at which the machine would be recorded can be calculated as follows
= $21,000+$6,000+$1,800
= $28,800
Hence the machine would be recorded at $28,800
Blossom Company issued 3,000 shares of common stock. Prepare the entry for the issuance under the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,675. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) The stock had a par value of $9.25 per share and was issued for a total of $51,500. (b) The stock had a stated value of $9.25 per share and was issued for a total of $51,500. (c) The stock had no par or stated value and was issued for a total of $51,500. (d) The stock had a par value of $9.25 per share and was issued to attorneys for services during incorporation valued at $51,500. (e) The stock had a par value of $9.25 per share and was issued for land worth $51,500.
Answer:
Blossom Company
Issue of 3,000 Common Stock Shares on the following assumptions:
(a) The stock had a par value of $9.25 per share and was issued for a total of $51,500:
Debit Cash Account $51,500
Credit Common Stock $27,750
Credit Paid-in In Excess of Par $23,750
To record the issue of 3,000 shares of $9.25 par value.
(b) The stock had a stated value of $9.25 per share and was issued for a total of $51,500:
Debit Cash Account $51,500
Credit Common Stock $27,750
Credit Additional Paid-in Capital $23,750
To record the issue of 3,000 shares of $9.25 stated value.
(c) The stock had no par or stated value and was issued for a total of $51,500:
Debit Cash Account $51,500
Credit Common Stock $51,500
To record the issue of 3,000 shares.
(d) The stock had a par value of $9.25 per share and was issued to attorneys for services during incorporation valued at $51,500:
Debit Incorporation Cost (Attorneys Fees) $51,500
Credit Common Stock $51,500
To record the issue of 3,000 shares for attorneys' services
(e) The stock had a par value of $9.25 per share and was issued for land worth $51,500.
Debit Land $51,500
Credit Common Stock $51,500
To record the issue of 3,000 shares for land.
Explanation:
Shares of Blossom Company can be issued to settle debts or expenses or in exchange for other assets than cash. They can also be issued at par value, above par value, or below par value, depending on prevailing circumstances. Some shares have a par value, which is the nominal value of the shares as authorized. Some are issued at a stated value without par. Others have no par or stated values. Their different accounting treatments are indicated above for Blossom Company.
Suppose Hillard Manufacturing sold an issue of bonds with a 10-year maturity, a $1,000 par value, a 10% coupon rate, and semiannual interest payments.
a. Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell?
b. Suppose that 2 years after the initial offering, the going interest rate had risen to 12%. At what price would the bonds sell?
c. Suppose that 2 years after the issue date (as in part a) interest rates fell to 6%. Suppose further that the interest rate remained at 6% for the next 8 years. What would happen to the price of the bonds over time?
Answer:
A) Market Value: $1,251.2220
B) Market Value: $898.94
C) the price of the bonds will decrease over time. As the nominal amount will suffer from less discounting over time at maturity will match the nominal amount of $ 1,000. To do so It need to decrease over time.
Explanation:
The value of the bonds will be the present value of the future coupon payment and maturity at the new rate of 6%
PV of the coupon payment
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 50.000 (1,000 x 10% / 2 ayment per year)
time 16 (8 year to maturity x 2 payment per year)
rate 0.03 (6% over two payment per year)
[tex]50 \times \frac{1-(1+0.03)^{-16} }{0.03} = PV\\[/tex]
PV $628.0551
PV of the maturity
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 16.00
rate 0.03
[tex]\frac{1000}{(1 + 0.03)^{16} } = PV[/tex]
PV 623.17
PV c $628.0551
PV m $623.1669
Total $1,251.2220
If the rate is 12%
PV of the coupon payment:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 50.000
time 16
rate 0.06
[tex]50 \times \frac{1-(1+0.06)^{-16} }{0.06} = PV\\[/tex]
PV $505.2948
PV of the maturity:
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 1,000.00
time 16.00
rate 0.06
[tex]\frac{1000}{(1 + 0.06)^{16} } = PV[/tex]
PV 393.65
PV c $505.2948
PV m $393.6463
Total $898.9410
Thomas, the manager of an apartment complex, rented an apartment to Donna. A few weeks later, Donna complained that the hot water did not work. Thomas hired Hometown Plumbers to fix the hot water, but the job was not successful. A few days later Donna moved out since she had no hot water. She sued the landlord and Thomas for breach of contract.
Answer:
The landlord is liable but not thomas
Explanation:
Even though Thomas rented the apartment to Donna, he is just the manager and not the owner of the apartment. There is a difference between the landlord and Thomas the property manager. The landlord actually owns the apartment or the building. Thomas on the other hand, only offers a third party service because he was hired by the owner of the apartment to handle the day to day operations of taking care of the building. The Landlord is therefore liable for this breach of contract as he is known to be the apartment owner.
The new machine will increase cash flow by $326,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $1,760,000. The cost of the machine will decline by $111,000 per year until it reaches $1,205,000, where it will remain.
1. If your required return is 13 percent, calculate the NPV today.
2. If your required return is 13 percent, calculate the NPV for the following years.
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
3. Should you purchase the machine?
4. If so, when should you purchase it?
A. Today
B. One year from now
C. Two years from now
Answer:
1. If your required return is 13 percent, calculate the NPV today.
initial outlay -$1,760,000
10 annual cash flows $326,000
NPV = $8,955.37
2. If your required return is 13 percent, calculate the NPV for the following years.
Year 1
initial outlay -$1,649,000
9 annual cash flows $326,000
NPV = $23,919.57
Year 2
initial outlay -$1,538,000
8 annual cash flows $326,000
NPV = $26,399.12
Year 3
initial outlay -$1,427,000
7 annual cash flows $326,000
NPV = $14,771
Year 4
initial outlay -$1,316,000
6 annual cash flows $326,000
NPV = -$12,798.77
Year 5
initial outlay -$1,205,000
5 annual cash flows $326,000
NPV = -$169,382.61
Year 6
initial outlay -$1,205,000
4 annual cash flows $326,000
NPV = -$346,322.35
3. Should you purchase the machine?
You can purchase the machine this year, but it would be more profitable if you purchase it later.
4. If so, when should you purchase it?
C. Two years from now
ABC Company sells three products, X, Y and Z. The weighted average contribution margin for all three products is $3.05 per unit. ABC's total fixed costs are $35,000. Sales mix percentages are :
Answer:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Explanation:
Giving the following information:
The weighted average contribution margin for all three products is $3.05 per unit. ABC's total fixed costs are $35,000
With the information provided, we can only calculate the break-even point in units for the whole company using the following formula:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Break-even point (units)= 35,000/3.05
Break-even point (units)= 11,475
Now, imagine the following sales mix:
X= 0.25
Y=0.40
Z=0.35
We can determine the number of units for each product:
X= 11,475*0.25= 2,869
Y= 11,475*0.4= 4,590
Z= 11,475*0.35= 4,016
There is a direct relationship between the par value and market value of common stock: stocks with a low par value have a low market value, while stocks with a high par value have a high market value.
a. True
b. False
Answer:
The statement is false.
Explanation:
As the market value of the stock depends upon the industry risk, political, economical, technological, etc factors and also largely depends upon the business performance which is the profits generated by the organization and its cashflow health. So higher par value has nothing to do with higher market value. Hence the statement is totally incorrect.
____________the market school aruges that forward exchange rates do the best possible job for forecasting future spot exchange rates, so investing in exchagne rate forecasting services would be a waste of time.
Answer:
Efficient market school.
Explanation:
Efficient market school is the market school which argues that forward exchange rates do the best possible job for forecasting future spot exchange rates, so investing in exchange rate forecasting services would be a waste of time because it is impossible to have a consistent alpha generation on a risk adjusted excess returns basis as market prices are only affected by new informations.
The efficient market school also known as the efficient market hypothesis (EMH) is a hypothesis that states that asset (share) prices reflect all information and it is very much impossible to consistently beat the market.
Also, forward exchange rates are exchange rates controlling foreign exchange transactions at a specific future date or time.
Hence, according to the efficient market school it would be a waste of time investing in exchange rate forecasting services because all the information about an asset or security is already factored into their prices and as a result of the randomness of the market.
