To preserve Watch This, Inc.'s (WTI) S election once the trust owns 10% of the WTI stock, Diana can establish the trust as a Qualified Subchapter S Trust (QSST).
A QSST is a specific type of trust that allows the income and tax benefits of an S corporation to flow through to the beneficiary. By qualifying the trust as a QSST, the S election can be maintained.
To qualify the trust as a QSST, Diana needs to ensure that certain requirements are met. First, the trust must be irrevocable and provide that all income must be distributed annually to the beneficiary. In this case, Diana's four children would be the beneficiaries of the trust. The trust agreement should clearly state that the income generated by the WTI stock must be distributed to the children on an annual basis.
Additionally, the trust must distribute the entire trust corpus to the beneficiary upon their reaching a specified age or a triggering event, such as the death of the current income beneficiary. Diana's specific instructions should outline the conditions under which the trust corpus will be distributed to her children, such as upon reaching a certain age or at her death.
It is important for Diana to work closely with her lawyers and tax advisors to ensure that the trust is structured correctly and that all necessary elections and documentation are completed to maintain the S election for WTI. They can guide her through the process, assist with drafting the trust agreement, and ensure that the trust meets the specific requirements for a QSST. This will help Diana achieve her goal of removing some of WTI's value from her estate while preserving the S election and its associated tax benefits.
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Alice Duever purchased a put option on British pounds for $.04 per unit. The strike price was $1.80, and the spot rate at the time the pound option was exercised was $1.59. Assume there are 31,250 units in a British pound option. What was Alice’s net profit on the option?
Bama Corp. has sold British pound call options for speculative purposes. The option premium was $0.06 per unit, and the exercise price was $1.58. Bama will purchase the pounds on the day the options are exercised (if the options are exercised) in order to fulfill its obligation. In the following table, fill in the net profit (or loss) to Bama Corp. if the listed spot rate exists at the time the purchaser of the call options considers exercising them
Possible Spot Rate at on expiry date
Net Profit (Loss) per Unit to Bama Corporation
1.57
1.60
1.62
1.64
1.58
1. We must ascertain whether Alice's put option was exercised or not in order to assess her net profit on the option. Alice would have the option to sell British pounds at the strike price of $1.80 while the spot rate was $1.59 if it were exercised. Alice's profit per unit is the difference between the strike price and the spot rate.
Strike price minus spot rate equals profit per unit ($1.80 minus $1.59, or $0.21). A British pound option has 31,250 units, so Alice would make the following money if she exercised the option: Net profit is calculated as follows: $0.21 per unit x number of units x 31,250 = $6,562.50 Therefore, Alice's put option would have earned her a net profit of $6,562.50. 2. Bama Corp. sold call options in the pound sterling. to determine the net We need to take into account whether the options were exercised or not when calculating the profit (or loss) to Bama Corp. at various spot pricing. The call option will not be exercised if the spot rate is 1.57 because the spot rate is less than the exercise price. As a result, Bama Corp.'s net profit per unit would be equal to the option price, which is $0.06. The call option will be exercised if the spot rate is 1.60 because it is greater than the exercise price. Bama Corp. would have to sell pounds for $1.58, which is the workout price. The difference between the spot rate and the exercise price, less the option premium, would be the net profit per unit: Spot rate minus exercise price equals net profit per unit. Option premium: $0.16 ($1.60 + $1.58 + $0.06) If the spot rate is 1.62, the call option will likewise be executed, and Bama Corp. will get $0.04 per unit of profit. If the spot rate is 1.64, the call option will be executed, and Bama Corp. will get $0.06 per unit of profit. The call option will not be exercised if the spot rate is 1.58, as the spot rate and the exercise price are equal. In this scenario, the option premium of $0.06 would serve as the net profit per unit for Bama Corp. Consequently, at various spot rates, Bama Corp. would experience the following net profit (or loss) per unit: 1.57: $0.06 1.60: $0.16 1.62: $0.04 1.64: $0.06 1.58: $0.06
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Which of the following is NOT true concerning sales promotion and sales management?
O a. In foreign countries, perceptions of a particular promotional tool or program can vary.
O b. Unlike the United States, coupons are not popular in Malaysia as Malaysians see coupon usage as embarrassing.
O c. Information-oriented cultures allow for use of expatriates
O d. One of disadvantages of using Expatriates is the difficulty to recruit high-quality sales people
O e. None of the above
Option d. One of disadvantages of using Expatriates is the difficulty to recruit high-quality sales people is NOT true concerning sales promotion and sales management.
What is sales promotion?Sales promotion is a form of marketing communication used by organizations to raise consumer demand for their goods. Sales promotions use numerous tactics to incentivize customers to take action and buy the promoted product. Sales promotion and sales management have certain facts that are true and not true. Option a states that perceptions of a particular promotional tool or program can vary in foreign countries. It is true concerning sales promotion and sales management.Option b, unlike the United States, coupons are not popular in Malaysia as Malaysians see coupon usage as embarrassing is also true concerning sales promotion and sales management.
Information-oriented cultures allow for the use of expatriates, this is also a true statement concerning sales promotion and sales management.However, Option d is false, one of the disadvantages of using expatriates is the difficulty to recruit high-quality salespeople. Option e, none of the above, cannot be the answer since options a, b, and c are true concerning sales promotion and sales management. Therefore, the correct option is d. One of the disadvantages of using expatriates is the difficulty to recruit high-quality salespeople.
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As a financial analyst at Credit Suisse Corporate Finance desk, you are evaluating an option to purchase an equipment to expand the product line for the company. There are two machines meeting the company's investment criteria, Machine H and Machine L. Machine H costs more than Machine L but has the flexibility to be modified if the demand for the product is low while machine L cannot be modified. The following is the financial information about these two machines. The project with Machine L is worth $15 million today and will be $18 million one year from today with high demand and $12 million with low demand. Machine H can be modified and sold off for $14 million if the demand is low. (Assume 8% of interest rate) Please answer the following questions.
a. What is the risk neutral probability of up move? (sample answer: 45.50%) ...answer is NOT 50%
b. How much will machine H cost more than machine L? (sample answer: $2.50 million) answer is NOT 5 million
Machine H costs $1 million less than Machine L, rather than more.
The risk-neutral probability of an up move can be calculated using the information provided. Let's denote the risk-neutral probability of an up move as p.
Explanation :
According to the given data, Machine L has a value of $18 million with high demand and $12 million with low demand. Considering an 8% interest rate, we can calculate the risk-neutral probability as follows:
Expected value with high demand = $18 million
Expected value with low demand = $12 million
Risk-free rate = 8%
Using the risk-neutral pricing formula, we can calculate p as follows:
$15 million = [($18 million) * p + ($12 million) * (1 - p)] / (1 + 8%)
Simplifying the equation, we find that the risk-neutral probability of an up move is approximately 33.33%.
b. To determine how much Machine H will cost more than Machine L, we need to compare their prices. Let's denote the cost of Machine L as CL and the cost of Machine H as CH. According to the given information, Machine L has a cost of $15 million today, while Machine H costs more but offers the flexibility to be modified. The modification allows Machine H to be sold off for $14 million if the demand is low.
Therefore, the additional cost of Machine H compared to Machine L is the difference between the modification value and the initial cost of Machine L:
Additional cost of Machine H = Modification value - Cost of Machine L
Additional cost of Machine H = $14 million - $15 million
Additional cost of Machine H = -$1 million
In this case, Machine H costs $1 million less than Machine L, rather than more.
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Describe how firms grow their business. Identify and explain the
riskiest and easiest strategy to implement.
Firms grow their businesses by increasing sales volume, expanding their customer base, increasing market share, or increasing profit margins. Some strategies to achieve these goals include product differentiation, diversification, acquisitions and mergers, vertical integration, and globalization. The riskiest and easiest methods to implement are discussed below.
Easiest Strategy to Implement: The easiest strategy to implement is product differentiation. In this strategy, firms seek to differentiate their products from their competitors by offering something unique or different. This could be achieved by improving the product's quality, packaging, or design, or by adding new features or functionalities. Product differentiation allows firms to charge higher prices for their products, leading to increased sales volume and profit margins. It is easy to implement because it does not require significant investments in infrastructure or resources and can be done quickly and cost-effectively. Riskiest Strategy to Implement: The riskiest strategy to implement is acquisitions and mergers. In this strategy, firms seek to grow their business by acquiring or merging with other companies. Acquisitions and mergers are risky because they require significant investments in infrastructure, resources, and personnel, and they can be expensive and time-consuming. Moreover, they may only sometimes result in the desired outcomes, leading to cultural clashes or other challenges. Despite these risks, acquisitions and mergers can be beneficial if done correctly, as they can lead to increased market share, expanded customer base, and improved efficiencies and economies of scale.
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State 3 benefits that speculators bring to derivative market. In
what way might some of their activity might hurt markets?
Speculators in the derivative market bring several benefits, including increased liquidity, price discovery, and risk management. However, some of their activities may have negative impacts on the market, such as increased volatility and potential for market manipulation.
1. Increased Liquidity: Speculators play a crucial role in enhancing market liquidity by actively participating in buying and selling derivative contracts. Their presence ensures that there is a continuous flow of trading activity, allowing market participants to enter or exit positions more easily. Higher liquidity reduces the bid-ask spread and improves price efficiency, benefiting all market participants.
2. Price Discovery: Speculators contribute to price discovery in the derivative market. By engaging in trading based on their expectations of future market movements, they provide valuable information and signals regarding market sentiment. Their actions help in determining fair market prices and narrowing the gap between buyers' and sellers' expectations, leading to more accurate pricing of derivatives.
3. Risk Management: Speculators play a vital role in the risk management process. They provide a means for hedgers, such as businesses and investors, to transfer their risks to willing counterparties. Speculators take on the risk that hedgers seek to offload, allowing hedgers to mitigate their exposure to adverse price movements. This risk transfer mechanism enhances the overall stability and efficiency of the derivative market.
However, while speculators bring benefits to the derivative market, there are potential downsides to their activities:
1. Increased Volatility: Speculative trading can amplify market volatility, particularly in situations where large speculators enter or exit positions rapidly. Their actions based on short-term price movements can lead to exaggerated price swings and increased market volatility. This heightened volatility can create challenges for market participants and may affect the stability and efficiency of the market.
2. Market Manipulation: In some cases, speculators may engage in manipulative practices that harm market integrity. Activities such as spreading false information, front-running, or creating artificial market movements can distort prices and mislead other participants. Market manipulation undermines market confidence and fairness, making it crucial for regulators to monitor and enforce rules to prevent such behavior.
3. Excessive Risk-Taking: Speculators, driven by profit motives, may sometimes take on excessive risks that can have adverse effects on the market. Aggressive speculation, particularly when coupled with high leverage, can lead to financial instability and systemic risks. Uncontrolled speculation can contribute to market bubbles, excessive price swings, and potential market crashes, posing risks to both speculators and other market participants.
It is important to strike a balance between the benefits provided by speculators and the potential risks associated with their activities. Proper regulation, oversight, and transparency in the derivative market help mitigate the negative impact of speculators and maintain the market's integrity and stability.
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What should Sophie do it company policy appears to conflict with
the firm's corporate culture? in Business Ethics
Sophie should address the conflict between company policy and corporate culture by first understanding the underlying reasons for the conflict.
She can then communicate her concerns to relevant stakeholders, such as supervisors or HR, to seek clarification or propose changes to the policy. If necessary, she can initiate discussions with colleagues to gauge their perspectives and gather support for potential modifications. By actively engaging with the issue, Sophie can foster a dialogue that aligns the policy with the firm's corporate culture, ensuring ethical conduct and maintaining a positive work environment. Sophie's actions demonstrate her commitment to ethical decision-making and the well-being of the organization. Through open communication and collaboration, she can contribute to a resolution that balances compliance with the policy and upholds the values and norms of the corporate culture. This approach promotes integrity and helps maintain a cohesive and ethical business environment.
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Consolidated Balance Sheet, Date of Acquisition: U.S. GAAP and IFRS Assume that Microsoft Corporation acquired 90 percent of the outstanding common stock of Powerline Technologies for $6,000,000 cash plus 400,000 shares of Microsoft's $20 par value common stock having a market value of $160 per share. Immediately prior to the acquisition, the trial balances of the two companies were as follows:
Dr (Cr) Microsoft Powerline
Current assets $ 20,000,000 $ 4,000,000
Plant and equipment, net 70,000,000 14,000,000
Current liabilities (10,000,000) (3,000,000)
Long-term liabilities (40,000,000) (6,000,000)
Common stock (6,000,000) (200,000)
Additional paid-in capital (11,200,000) (2,900,000)
Retained earnings (22,000,000) (6,000,000)
Accumulated other comprehensive (income) loss (800,000) 100,000
$ 0 $ 0
A review of the fair values of Powerline's assets indicates that current assets are overvalued by $1,000,000, plant and equipment is overvalued by $12,000,000, and previously unrecorded brand names have a fair value of $6,000,000. The fair value of the noncontrolling interest is $3,600,000.
a. Calculate total goodwill and its allocation to the controlling and noncontrolling interests, following U.S. GAAP.
b. Prepare working paper to consolidate the balance sheets of Microsoft and Powerline at the date of acquisition, following U.S. GAAP.
c. Assume Microsoft uses IFRS and the alternative valuation method for noncontrolling interests. Calculate total goodwill and repeat part b following IFRS. (Enter answers in thousands)
Total goodwill and consolidation process for Microsoft's acquisition of Powerline Technologies under U.S. GAAP and IFRS.
a. Under U.S. GAAP, the calculation of total goodwill and its allocation to the controlling and noncontrolling interests can be done as follows:
Total Consideration Paid:
Cash paid by Microsoft = $6,000,000
Market value of Microsoft shares issued = 400,000 shares * $160 per share = $64,000,000
Total consideration paid = $6,000,000 + $64,000,000 = $70,000,000
Fair Value of Identifiable Net Assets:
Current assets adjustment = -$1,000,000
Plant and equipment adjustment = -$12,000,000
Brand names = $6,000,000
Net identifiable assets = ($4,000,000 - $1,000,000) + ($14,000,000 - $12,000,000) + $6,000,000 = $13,000,000
Noncontrolling Interest:
Fair value of noncontrolling interest = $3,600,000
Total Goodwill:
Total consideration paid - Net identifiable assets - Fair value of noncontrolling interest = $70,000,000 - $13,000,000 - $3,600,000 = $53,400,000
Allocation of Goodwill:
Controlling interest's share = 90% of goodwill = 0.9 * $53,400,000 = $48,060,000
Noncontrolling interest's share = 10% of goodwill = 0.1 * $53,400,000 = $5,340,000
b. Consolidated Balance Sheet (U.S. GAAP):
Assets:
Current assets: $20,000,000 - $1,000,000 = $19,000,000
Plant and equipment, net: $70,000,000 - $12,000,000 = $58,000,000
Brand names: $6,000,000
Total assets: $19,000,000 + $58,000,000 + $6,000,000 = $83,000,000
Liabilities and Equity:
Current liabilities: ($10,000,000 - $3,000,000) = $7,000,000
Long-term liabilities: ($40,000,000 - $6,000,000) = $34,000,000
Common stock: ($6,000,000 + $6,000,000) = $12,000,000
Additional paid-in capital: ($11,200,000 + $2,900,000) = $14,100,000
Retained earnings: ($22,000,000 + $6,000,000) = $28,000,000
Accumulated other comprehensive (income) loss: ($800,000 + $100,000) = -$700,000
Goodwill - Controlling Interest: $48,060,000
Noncontrolling interest: $5,340,000
Total liabilities and equity: $83,000,000
c. Under IFRS and the alternative valuation method for noncontrolling interests, the calculation of total goodwill and the consolidation of the balance sheets would follow a different approach. Unfortunately, the information provided does not specify the alternative valuation method or provide the necessary details to calculate total goodwill and prepare the consolidated balance sheet under IFRS. Therefore, it is not possible to provide a specific answer to part c of the question.
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ABC Company is considering expanding operations into a new market. This expansion will require an investment of $8 million and it is expected that it will earn the company a return of 17%. The company requires financing to fund this expansion and is planning to obtain it from the following sources: The treasurer of ABC Company has already calculated and finalized the following cost information, but needs you to complete all necessary work to determine if this expansion investment should be made. Cost data already properly determined: • The cost of retained earnings financing is 19% • The cost of preferred share financing is 12% Additional information provided: • The stated rate of interest regarding the long-term borrowings is 10%. • The common shares will be issued at a market price of $60 per share and it is anticipated that they will yield an annual dividend of $9 per share. The company will also incur issuance costs (ie. flotation costs) of $6 per share. • ABC Company has an annual growth rate is 4%. • The income tax rate for the company is 35% Required: 1.) Calculate the cost of (a) long-term borrowings financing as a %, and (b) common share financing as a %. (Round your final answers as a % to 2 decimals places and show all work) (5 marks) 2.) Calculate the weighted average cost of capital (WACC) for the expansion investment as a %. (6 marks) (Use the worksheet table provided in the answer working papers.) (Round all calculated %’s to 2 decimal places.) 3.) Based on your answer in requirement 2, should the expansion investment be made? Briefly explain why. (2 marks) PROVIDE YOUR ANSWERS ON YOUR SEPARATE ANSWER PAGES Question #2 (7 Marks) Ms. Gaga would like to provide the following future cash payments to her daughter: $6,000 each year for the next 4 years beginning one year from today to help her pay for her college education. Also, Ms. Gaga would like to give her daughter an additional $10,000, 3 years from today so her daughter can take a vacation, and another $20,000, 5 years from today so her daughter can make a down-payment on a house. Required: What is the total minimum amount that Ms. Gaga needs to invest today so that she will have the future funds available to make the planned payments to her daughter? Assume Ms. Gaga can earn 9% on his investment. (Round all calculated amounts to the nearest dollar). **Note: Where applicable, marks are awarded for calculating your answer efficiently. PROVIDE YOUR ANSWERS ON YOUR SEPARATE ANSWER PAGES Question #3 (13 Marks) MLB Ltd. is considering two potential asset investments, Asset X and Asset Y. Each asset has an initial purchase cost of $14,500 and a useful life of four years. MLB Ltd. has a minimum required rate of return of 6% for all asset investments. The projected annual net cash inflows from each investment is as follows:
Required:
1.) Calculate the Payback Period (PBP) for each of: (a) Asset X (b) Asset Y ** Marks are awarded for calculating your answers efficiently, where applicable. (Round your answers to 2 decimal places)
2.) Calculate the Net Present Value (NPV) for each of: (a) Asset X (b) Asset Y ** Marks are awarded for calculating your answers efficiently, where applicable. (Round all dollar amounts to the nearest dollar) (7 marks) 3.) Based on your answers in requirement 2, if only one asset is to be purchased, which asset should be purchased?
Cost of common share financing = 0.1695 or 16.95% (rounded to 2 decimal places. The project will be able to generate a positive net present value (NPV) and add value to the company.
1. (a) The cost of long-term borrowing financing as a % is 10%. (b) The cost of common share financing as a % is 22.52%. Cost of retained earnings financing = 19% Cost of preferred share financing = 12% Stated rate of interest regarding long-term borrowings = 10% Dividend per share = $9 Issuance cost per share = $6 Market price of common share = $60 Current growth rate = 4% Income tax rate = 35%
(a) Cost of long-term borrowing financing as a % is equal to the stated rate of interest regarding long-term borrowings, which is 10%.
(b) Cost of common share financing as a % can be calculated as follows:Cost of common share financing = (Dividend per share / Market price of common share) + (Issuance cost per share / Market price of common share) × (1 – Income tax rate)Cost of common share financing = ($9 / $60) + ($6 / $60) × (1 – 0.35)Cost of common share financing = 0.15 + 0.03 × 0.65Cost of common share financing = 0.1695 or 16.95% (rounded to 2 decimal places)
2. The weighted average cost of capital (WACC) for the expansion investment as a % is 13.59%. The cost of long-term borrowings financing = 10% The cost of common share financing = 16.95% The weight of long-term borrowings financing = 0.3 The weight of common share financing = 0.7 WACC = (Weight of long-term borrowings financing × Cost of long-term borrowings financing) + (Weight of common share financing × Cost of common share financing)WACC
= (0.3 × 10%) + (0.7 × 16.95%)
WACC = 4.65% + 11.865%
WACC = 16.515% or 13.59% (rounded to 2 decimal places)Based on the calculated WACC, the expansion investment should be made as it is expected to yield a return of 17% which is higher than the calculated WACC of 13.59%. Therefore, the project will be able to generate a positive net present value (NPV) and add value to the company.
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All of the following are true about the NYSE automated trading system EXCEPT:
a. market orders are accepted
b. limit orders are accepted
c. any size order is accepted
d. day orders are accepted
All of the statements about the NYSE automated trading system are true, except for the acceptance of day orders.
The NYSE (New York Stock Exchange) automated trading system is designed to facilitate the trading of securities on the exchange. It operates electronically and offers various functionalities to market participants. Three of the statements provided about the NYSE automated trading system are true:
a. Market orders are accepted: Market orders are buy or sell orders to be executed immediately at the best available market price. The NYSE automated trading system accepts market orders to facilitate quick execution.
b. Limit orders are accepted: Limit orders are buy or sell orders that specify a maximum buy price or a minimum sell price at which the trade should be executed. The NYSE automated trading system accepts limit orders and matches them with corresponding buy or sell orders within the specified price limits.
c. Any size order is accepted: The NYSE automated trading system allows market participants to submit orders of any size. This includes both large and small orders, accommodating a wide range of trading volumes.
However, the statement "d. Day orders are accepted" is not true for the NYSE automated trading system. A day order is an instruction from a trader to execute a trade only during the current trading session. In contrast, the NYSE operates with a different order type called a Good 'Til Cancelled (GTC) order, which remains active until it is explicitly canceled by the trader or fulfilled. Day orders, which are specific to one trading session, are not accepted in the NYSE automated trading system.
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A brand's primary benefit or how it can solve the consumer's problem is known as a(n) _____.
a. appropriateness summary
b. creative brief
c. value proposition
d. message summary
e. uniqueness proposition
The correct answer is c. value proposition.
A value proposition refers to the primary benefit or unique advantage that a brand offers to its target consumers. It articulates how a brand can solve a consumer's problem, fulfill their needs, or provide value that differentiates it from competitors. A strong value proposition highlights the key benefits and reasons why consumers should choose a particular brand or product over others in the market.
Options a, b, d, and e are not the correct terms to describe the primary benefit or how a brand can solve the consumer's problem. They may be related to other aspects of marketing or advertising strategies, but they do not specifically represent the concept of a value proposition.
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which statement about a falling dollar value in the global market is correct?
A falling dollar value in the global market benefits exports by increasing their competitiveness and attracting foreign buyers, potentially improving trade balance.
A falling dollar value in the global market can have various implications. One correct statement about a falling dollar value is:
Export Boost: A falling dollar value can make goods and services produced in the country with the weakening currency more competitive in international markets. As the value of the currency declines, it makes exports relatively cheaper for foreign buyers. This can potentially boost export volumes and help improve the trade balance of the country.However, it's important to note that the impact of a falling dollar value is not limited to this single effect. It can also lead to other consequences such as higher import costs, increased inflationary pressures, changes in investment patterns, and fluctuations in financial markets. The overall effects are influenced by a complex interplay of various economic factors and policy responses.
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Ecker Company reports $1,400,000 of net income and declares $196,000 of cash dividends on its preferred stock for the year. At year-end, the company had 340,000 weighted-average shares of common stock.
1. What amount of net income is available to common stockholders?
2. What is the company’s basic earnings per share (EPS)?
1. The company's basic earnings per share (EPS) is approximately $3.54.
2. The net income available to common stockholders is $1,204,000.
To calculate the net income available to common stockholders and the basic earnings per share (EPS), we need to consider the preferred dividends and the weighted-average shares of common stock. Here's how to calculate each:
1..Net Income Available to Common Stockholders:
Net income available to common stockholders is the net income after deducting the preferred dividends. Given that Ecker Company declared $196,000 of cash dividends on its preferred stock, we subtract this amount from the net income.
Net income available to common stockholders = Net income - Preferred dividends
Net income available to common stockholders = $1,400,000 - $196,000
Net income available to common stockholders = $1,204,000
Therefore, the net income available to common stockholders is $1,204,000.
2. Basic Earnings Per Share (EPS):
To calculate the basic EPS, we divide the net income available to common stockholders by the weighted-average shares of common stock.
Basic EPS = Net income available to common stockholders / Weighted-average shares of common stock
Given that the company had 340,000 weighted-average shares of common stock, we can now calculate the basic EPS.
Basic EPS = $1,204,000 / 340,000
Basic EPS = $3.54
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Cynthia Knotrs oyster bar buys fresh Louisiana oysters for $3 per pound and selis them for $8 per pound. Ary oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $2 per pound. Cynthia believes that demand follows the nomal distribution, with a mean of 100 pounds and a standard deviation of 19 pounds. How many pounds should she order each day? Refer to the standard normal table for z-values:
Cynthia should ordor ___ pounds of oysters each day (round your response to one decimal place):
Cynthia should order 79.8 pounds of oysters each day.
To determine the optimal order quantity, Cynthia needs to consider the expected demand and the associated costs.
Since demand follows a normal distribution with a mean of 100 pounds and a standard deviation of 19 pounds, she can calculate the z-value corresponding to the desired service level or probability of meeting demand.
Assuming a desired service level of 50%, Cynthia wants to avoid stockouts half the time, so she needs to calculate the z-value corresponding to the cumulative probability of 0.5. Consulting the standard normal table, the z-value for a cumulative probability of 0.5 is approximately 0.00.
Next, she needs to calculate the safety stock, which is the number of additional pounds required to avoid stockouts. The safety stock is given by the formula: safety stock = z-value * standard deviation.
In this case, safety stock = 0.00 * 19 pounds = 0 pounds.
Finally, she needs to calculate the reorder point, which is the sum of the mean demand and the safety stock. Reorder point = mean demand + safety stock.
Reorder point = 100 pounds + 0 pounds = 100 pounds.
Since the reorder point represents the expected demand, Cynthia should order the expected demand minus any remaining inventory. In this case, she should order 100 pounds - 20 pounds = 80 pounds.
However, Cynthia can sell any unsold oysters to her cousin for $2 per pound, reducing the financial impact of any excess inventory.
Therefore, she can adjust the order quantity upwards to minimize the risk of stockouts. As a result, she should order approximately 79.8 pounds of oysters each day to optimize her profits.
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Which of the following statements is FALSE? Select one: a. Holding liquid assets can increase a bank's return on assets b. A bank selling large amounts of liquid assets will not significantl c. Liquid assets are traded in an active market d. Stored liquidity management involves investing in liquid assets e. Home loans are less liquid than treasury bills
The statement that stored liquidity management involves investing in liquid assets is false. The correct option is D.
Stored liquidity management refers to the practice of holding excess reserves or maintaining a buffer of cash and highly liquid assets to ensure that a bank has sufficient funds to meet its short-term obligations and unexpected liquidity needs. However, the strategy of stored liquidity management typically does not involve investing in liquid assets.
Instead, it involves holding cash reserves or maintaining highly liquid instruments such as cash equivalents or short-term government securities. The purpose is to have readily available funds that can be accessed quickly when needed, rather than investing in assets that may need to be sold or converted to cash before use. The correct option is D.
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Complete Question:
Which of the following statements is FALSE? Select one:
a. Holding liquid assets can increase a bank's return on assets.
b. A bank selling large amounts of liquid assets will not significantly impact its liquidity.
c. Liquid assets are traded in an active market.
d. Stored liquidity management involves investing in liquid assets.
e. Home loans are less liquid than treasury bills.
The risk-free rate is currently 4.80%. In addition, you have the following information: A) Assume that Microsoft (MSFT) is correctly priced and that its expected return reflects the best information available to investors. What does this tell you about the market risk premium that investors seem to be expecting for the coming 12 months? The market risk premium is % B) What beta for Orange LLC would make investor expectations consistent with your findings in part A)? C) Given the market risk premium in A), what is the correct expected return for Alpine Tanning?
A) Market risk premium cannot be determined without the expected return of Microsoft.
B) Not enough information provided to calculate the required beta for Orange LLC.
C) The correct expected return for Alpine Tanning cannot be determined without specific information.
A) The expected return of Microsoft (MSFT) reflects the best information available to investors, assuming it is correctly priced. Since the risk-free rate is 4.80%, we can deduce that the expected return of Microsoft includes compensation for the risk associated with investing in the overall market. Hence, the expected return of Microsoft represents the risk-free rate plus the market risk premium.
B) To find the beta for Orange LLC that would align with the expectations in part A), we need to equate the expected return of Orange LLC with the risk-free rate plus the market risk premium.
However, the question does not provide the expected return for Orange LLC or the risk-free rate for comparison. Without this information, we cannot determine the specific beta that would make investor expectations consistent with part A).
C) Without the specific expected return for Alpine Tanning, it is not possible to calculate the correct expected return using the market risk premium from part A).
The expected return for a specific company requires its own risk assessment, incorporating factors such as the company's beta and the risk-free rate.
A) Market risk premium cannot be determined without the expected return of Microsoft.
B) Not enough information provided to calculate the required beta for Orange LLC.
C) The correct expected return for Alpine Tanning cannot be determined without specific information.
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In the Kyle (1985) model, the dealers' key decision outcome variable is:
a.
The uninformed trading demand
b.
The market clearing price
c.
The informed trading demand
d.
Other
e.
The informed trader's information advantage
Under the Kyle (1985) model equilibrium and all else being equal, the dealers's price sensitivity to order flow increases with:
a.
The informed trader's information advantage
b.
The change in the fundamental value of the stock
c.
The number of dealers in the market
d.
The noise created by liquidity traders in the market
In the Kyle (1985) model, the dealers' key decision outcome variable is b. The market clearing price. This variable represents the price at which the quantity of shares demanded by informed and uninformed traders matches the quantity supplied by the dealers.
Regarding the dealers' price sensitivity to order flow, in the Kyle (1985) model, it increases with a. The informed trader's information advantage. This means that as the informed trader possesses a greater informational advantage over other market participants, dealers become more sensitive to their trading activity and adjust prices accordingly. This sensitivity is a result of dealers attempting to incorporate the information conveyed by the informed trader's trades into the market price.
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The Tolar Corporation has 400 obsolete desk calculators that are carried in inventory at a total cost of $576,000. If these calculators are upgraded at a total cost of $120.000, they can be sold for a total of $180,000. As an alternative, the calculators can be sold in their present condition for $40,000. Assume that Tolar decides to upgrade the calculators. At what selling price per unit would the company be as well off as if itjust sold the calculators in their present condition?
To determine the selling price per unit at which the company would be as well off as if it sold the calculators in their present condition, we need to compare the total cost and revenue in both scenarios.
Scenario 1: Selling the calculators in their present condition
Total cost = $576,000
Total revenue = $40,000
Scenario 2: Upgrading the calculators and selling them
Total cost = $576,000 + $120,000 = $696,000
Total revenue = $180,000
For the company to be as well off as if it sold the calculators in their present condition, the total revenue from upgrading and selling the calculators should match the total revenue from selling them in their present condition. Let's assume the selling price per unit in the upgraded scenario is 'x'. Since there are 400 calculators in total, the total revenue in the upgraded scenario can be calculated as 400 * x.
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Which of the following is true of an easement? O An easement is an irrevocable right to use all of another's land for a general purpose without taking anything from it. An easement is a revocable right to use some part of one's own land for a general purpose, including taking something from the land, An eusement is a revocable right to use some part of another's land for a specific purpose, including taking something from the land, An easement is an irrevocable right to use some part of another's land for a specific purpose without taking anything from it
Among the options provided, the statement "An easement is a revocable right to use some part of another's land for a specific purpose, including taking something from the land" is the most accurate.
An easement is a legal right that allows someone to use or access a portion of another person's property for a specific purpose. The easement holder, known as the dominant estate, is granted certain rights over the servient estate (the property over which the easement exists). These rights may include accessing the land, using it for a particular purpose (such as crossing it or installing utility lines), or taking something from the land (such as water or minerals) as specified in the easement agreement.
It is important to note that easements can be either revocable or irrevocable, depending on the terms of the agreement or the applicable laws in a specific jurisdiction. However, the statement mentioning an "irrevocable right to use some part of another's land for a specific purpose without taking anything from it" is not an accurate representation of easements, as they typically involve some form of usage or access to the land.
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To discourage the consumption of a product, the government should impose a tax on the consumers instead of the producers. Do you agree? Explain with a suitable market diagram.
The choice between taxing consumers or producers depends on the specific goals, effectiveness, and fairness considerations of the policy, as well as the characteristics of the market and the product in question.
The statement that the government should impose a tax on consumers instead of producers to discourage the consumption of a product is a matter of perspective and depends on the specific circumstances and goals of the policy. Both approaches have their own advantages and disadvantages.
When the government imposes a tax on consumers, it directly affects the price paid by consumers and reduces their purchasing power. This can lead to a decrease in demand and consumption of the product.
In terms of market diagram, imposing a tax on consumers shifts the demand curve downward by the amount of the tax, resulting in a new equilibrium with lower quantity demanded and a lower price received by producers.
One potential advantage of taxing consumers is that it may be easier to administer and enforce since consumers are more numerous and easily identifiable compared to producers. Additionally, it may be more politically acceptable as the burden of the tax falls directly on the end-users of the product.
However, there are also disadvantages to taxing consumers. It can be regressive, meaning it disproportionately affects low-income individuals who may spend a higher proportion of their income on the product. This can lead to issues of fairness and inequality.
Additionally, taxing consumers may have unintended consequences such as creating incentives for black market activities or reducing consumer welfare.
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Numbers in the body, or middle, of frequency tables, are A. calculated frequencies B. marginal frequencies C. joint frequencies D. middle frequencies
The numbers in the body or middle of frequency tables are referred to as calculated frequencies. Therefore, the correct option is A. calculated frequencies.
These frequencies indicate the number of occurrences of each value or category within a dataset. They provide a quantitative representation of how frequently each value or category appears, allowing for a better understanding of the data's distribution.
Frequency tables are used in statistical analysis to organize and summarize data. They typically consist of two columns: one listing the values or categories being observed, and the other displaying their respective frequencies. The calculated frequencies are derived by counting the occurrences of each value or category in the dataset. By examining these frequencies, researchers can identify patterns, trends, or outliers within the data.
The numbers in the body of frequency tables represent the calculated frequencies, which reflect the number of occurrences of each value or category in the dataset. These frequencies help in summarizing and understanding the distribution of data, enabling researchers to draw insights and make informed interpretations.
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You work in a non-unionized environment. A manager comes to you and tells you, as the HR Manager, that one of his employees needs a raise. You ask him why he says that. He says that he was on the evening shift last night and this employee pulled him aside to say that he is a very good worker and that he deserves a raise. You know that this employee is confident and even can be charming. Will you process a raise? - When thinking about this conversation what are some of the considerations that come to your mind? - What do you do next?
When thinking about the conversation of a manager asking for a raise for an employee in a non-unionized environment, there are several considerations that come to mind. Some of the considerations are as follows:
Policy: What does the company policy say about raises?
Salary Range: Is the employee being paid in the same salary range as others with similar qualifications and experience?
Performance: Has the employee’s performance been consistently good? If so, how has it contributed to the company’s growth?
Budget: What is the current budget for salary raises? How will a raise for this employee affect other employees and the company's bottom line?
Based on these considerations, the HR Manager should evaluate whether the employee is truly deserving of a raise. If the manager simply requests a raise based on one conversation with the employee and nothing more, it is important to investigate further to get a complete picture of the employee's performance and contribution to the organization.
What do you do next?
The HR Manager should investigate further to get a complete picture of the employee's performance and contribution to the organization before processing the raise. A meeting with the employee is appropriate to discuss their performance, future goals, and how they can contribute more to the company's growth. This discussion will help the HR Manager make an informed decision regarding the raise for the employee.
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baroque musicians tried to have an effect on their audiences
Baroque musicians aimed to have a profound impact on their audiences through elaborate techniques, emotional expression, theatrical performances, spiritual connections, and direct engagement.
Baroque musicians aimed to have a profound effect on their audiences through their compositions and performances. Here's a step-by-step breakdown of how they tried to achieve this impact:
Elaborate musical techniques: Baroque composers employed intricate and complex musical techniques, including ornamentation, virtuosic passages, and intricate counterpoint. These techniques aimed to captivate and impress the listeners with the technical skill and complexity of the music.
Emotional expression: Baroque music was known for its emotional depth and expressiveness. Composers sought to evoke strong emotions and stir the passions of their listeners. They used techniques like dramatic contrasts, intense melodies, and harmonies to create a wide range of emotions, from joy and triumph to sadness and despair.
Theatricality in performances: Baroque musicians often performed in elaborate settings, such as opulent palaces and cathedrals. They utilized dramatic gestures, expressive body language, and dynamic stage presence to enhance the theatrical impact of their performances. This visual aspect complemented the emotional depth of the music.
Connection with religious and spiritual experiences: Many Baroque compositions were deeply rooted in religious themes and were performed in sacred spaces. Musicians aimed to create a sense of spiritual transcendence and a connection with the divine through their music. They used sacred texts, choruses, and grand vocal and instrumental ensembles to heighten the spiritual experience of the audience.
Interaction with the audience: Baroque musicians often engaged in direct interaction with their audience. They sought to create a sense of intimacy and connection by performing in smaller venues, such as salons or private gatherings. This allowed for a more personal and immersive experience, where the musicians could directly engage with the listeners and evoke a stronger emotional response.
In summary, Baroque musicians aimed to have an effect on their audiences through elaborate musical techniques, emotional expression, theatricality in performances, connection with religious experiences, and direct interaction with the listeners. Their goal was to create a powerful and transformative musical experience that left a lasting impact on the audience.
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Consider a four-year project with the following information: Initial fixed asset investment =$575,000; straight-line depreciation to zero over the four-year life; zero salvage value; price =$41; variable costs =$28; fixed costs =$250,000; quantity sold =91,000 units; tax rate =23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The sensitivity of OCF (Operating Cash Flow) to changes in quantity sold can be calculated by determining the change in OCF. The sensitivity of OCF to changes in quantity sold is $13.
To calculate the sensitivity, we need to determine the contribution margin per unit, which is the difference between the selling price and the variable cost per unit. In this case, the contribution margin per unit is $41 - $28 = $13.
Next, we calculate the change in OCF by multiplying the contribution margin per unit by the change in quantity sold. Since the quantity sold is given as 91,000 units, we can calculate the change in OCF for a one-unit change as follows:
Change in OCF = Contribution Margin per Unit * Change in Quantity Sold
Change in OCF = $13 * 1 = $13
Therefore, the sensitivity of OCF to changes in quantity sold is $13.
In summary, the sensitivity of OCF to changes in quantity sold is $13. This means that for every one-unit change in quantity sold, the OCF will change by $13.
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Which of the following is TRUE about Additional Personal Injury Protection (PIP)?
A. It cancels and replaces Basic PIP coverage.
B. It increases the monthly lost wages limitation.
C. It amends coverage to include minor Property Damage Expenses.
D. It extends coverage when the car is driven in Europe.
The TRUE statement about Additional Personal Injury Protection (PIP) is: b. It increases the monthly lost wages limitation.
Additional PIP coverage does not cancel or replace Basic PIP coverage (Option A). It does not specifically include minor Property Damage Expenses (Option C). Lastly, PIP coverage is typically limited to the country where the car is registered and driven, so it does not extend coverage to Europe (Option D). However, Additional PIP coverage may offer higher limits for lost wages, increasing the monthly lost wages limitation (Option B).
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Which of the following types of earnings are assessable for worker's compensation premiums?
bonuses
vacation pay
overtime pay
all of the above
Worker's compensation premiums are calculated based on a percentage of the employer's payroll.
All types of earnings paid to employees are assessable for worker's compensation premiums, including bonuses, vacation pay, and overtime pay. This is because worker's compensation premiums are based on the total amount of earnings paid to employees, regardless of how the earnings are classified.
Therefore answer is "all of the above".
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in california, borrowers pay a fee for a service company that track the borrowers’ payments of _____
In California, borrowers pay a fee for a service company that tracks their payments of mortgages. The company, known as a mortgage loan servicer, is responsible for collecting payments from borrowers, sending out billing statements, and reporting payments to credit bureaus.
The fee that borrowers pay to the servicer is typically 0.5% to 1% of the loan amount. The mortgage loan servicer plays an important role in ensuring that borrowers make their payments on time. If a borrower misses a payment, the servicer will typically try to contact the borrower to work out a payment plan. If the borrower is unable to make the payments, the servicer may foreclose on the property.
The fee that borrowers pay to the servicer is typically included in their monthly mortgage payment. However, borrowers may be able to avoid this fee by choosing to self-service their mortgage. This means that the borrower would be responsible for making payments directly to the lender, and they would not have to pay a fee to the servicer.
Here are some additional details about mortgage loan servicers:
They are typically hired by the lender to collect payments and manage the borrower's account.
They may also be responsible for providing customer service to borrowers, handling escrow accounts, and closing the loan at the end of the term.
The fees that they charge vary depending on the lender and the terms of the loan.
Borrowers should carefully review the terms of their mortgage loan before choosing a servicer.
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Sandhill Manufacturing Company has the following data at June 30, 2022:
Raw materials inventory, June 1 $ 16,640
Work in process inventory, June 1 21,680
Finished goods inventory, June 1 52,200
Total manufacturing costs 516,000
Sales 696,000
Work in process inventory, June 30 36,520
Finished goods inventory, June 30 66,160
Raw materials inventory, June 30 21,600
a) Prepare an income statement through gross profit for the month of June.
IncomeStatement for the Month of June:
Sales: $696,000
Cost of Goods Sold:Beginning Finished Goods Inventory: $52,200
Add: Cost of Goods Manufactured Total Manufacturing Costs: $516,000
Add: Beginning Work in Process Inventory: $21,680 Less: Ending Work in Process Inventory: $36,520
Cost of Goods Manufactured: $501,160 Total Cost of Goods Available for Sale: $553,360
Less: Ending Finished Goods Inventory: $66,160Cost of Goods Sold: $487,200
Gross Profit:
Sales: $696,000Cost of Goods Sold: $487,200
Gross Profit: $208,800
To prepare the income statement, we start with the sales figure of $696,000.
Next, we calculate the cost of goods sold.
We take the beginning finished goods inventory of $52,200 and add the cost of goods manufactured. The cost of goods manufactured is calculated by adding the total manufacturing costs of $516,000 with the beginning work in process inventory of $21,680 and subtracting the ending work in process inventory of $36,520. This gives us a cost of goods manufactured of $501,160. We then add the beginning finished goods inventory and subtract the ending finished goods inventory to arrive at the cost of goods sold, which is $487,200.
Finally, we calculate the gross profit by subtracting the cost of goods sold from the sales figure. The gross profit for the month of June is $208,800.
The income statement provides a summary of the company's sales and costs of goods sold, resulting in the gross profit figure. This information helps assess the profitability of the company's operations during the month of June.
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a) Materiality is a key auditing concept that is first assessed during the risk assessment phase of every audit.
Explain the concept of materiality and differentiate between Performance materiality and planning materiality ( 6 marks)
b) YCM a firm that you and your friends Chanda and Monde owns is auditing the books of VNY. You have decided to use 5% of income before tax as a benchmark for planning materiality. If income before tax was K 15 million. i)What would be the amount of planning materiality? (1 marks) ii)After checking the inventory and receivable ledger the total misstatement is K600, 000. What effect will this have on your audit report? Explain (4 marks)
c) Y ou friend Chandais reviewing the audit paper and he is wondering how you decided to settled for the the 5% benchmark. Explain to your friend the factors that you considered when coming up with the5 % benchmark (6 marks) d) In the context of fraud, explain the differences between (1) incentives and pressures, (2) opportunity, and (3) attitudes and rationalization. Howcan the auditor use these components in fraud risk assessment? (8 marks) Total marks: 25
Materiality is the significance of an item in influencing decisions. Planning materiality is set at the financial statement level, while performance materiality is set at a lower level.
Planning materiality would be K750,000 (5% of K15 million income before tax).
A K600,000 misstatement is material and may result in a qualified or adverse audit report, indicating that the financial statements are not fairly presented.
Factors considered for the 5% benchmark include entity size, industry norms, financial stability, and the importance of income before tax as a financial measure.
Incentives and pressures drive fraud, opportunity enables it, and attitudes and rationalization justify it. Auditors assess these components to identify and address fraud risks through control evaluation and testing.
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1. A manufacturer considers his production process to be out of control when defects exceed 4%. In a random sample of 140 items, the defect rate is 8.5% but the manager claims that this is only a sample fluctuation and production is not really out of control. At the 1% level of significance, use the p-value method to test the manager's claim.
2. A manufacturer considers his production process to be out of control when defects exceed 4%. In a random sample of 145 items, the defect rate is 8% but the manager claims that this is only a sample fluctuation and production is not really out of control. At the 5% level of significance, use the critical value method to test the manager's claim.
3. A medical school claims that exactly 24% of its students plan to go into general practice. It is found that among a random sample of 50 of the school's students, 28% of them plan to go into general practice. Find the P-value for a test to support the school's claim.
The linear programming model can then be solved using various optimization techniques to find the optimal production quantities of tables (X1) and chairs (X2) that maximize the total profit while satisfying the given constraints.
To develop a production schedule using linear programming, we define the variables as follows:
X1 = number of tables produced each week
X2 = number of chairs produced each week
The objective is to maximize the total profit, which can be represented as:
Maximize: Profit = 120X1 + 80X2
Subject to the following constraints:
Assembly constraint: 3X1 + 2X2 ≤ 200 (available assembly time)
Finishing constraint: 2X1 + 2X2 ≤ 180 (available finishing time)
Inspection constraint: X1 + X2 ≤ 40 (available inspection time)
Non-negativity constraint: X1 ≥ 0, X2 ≥ 0 (number of tables and chairs cannot be negative)
These constraints ensure that the total time spent on each stage of the manufacturing process does not exceed the available time.
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On September 1, Walker Company had the following account balances: Accounts Receivable, $77,400; Allowance for Uncollectible Accounts, $4,010. On September 5, Walker receives $350 from Bryant Company. Bryant Company's account of $1,280 had been previously written off. Walker does not believe the remaining amount due from Bryant Company will be collected. Required: (a) What is the net realizable value (NRV) of the accounts receivable on September 1 ? (b) What is the NRV on September 5? 1. Net realizable value on September 1 2. Net realizable value on September 5
a) The net realizable value (NRV) of the accounts receivable on September 1 for Walker Company is $73,390 ($77,400 - $4,010).
b) The NRV on September 5 is $73,740 ($77,400 - $4,010 + $350).
a) Net realizable value (NRV) is the estimated amount a company expects to collect from its accounts receivable.
To calculate the NRV on September 1, we subtract the Allowance for Uncollectible Accounts from the Accounts Receivable balance: NRV on September 1 = Accounts Receivable - Allowance for Uncollectible Accounts = $77,400 - $4,010 = $73,390.
b) On September 5, Walker receives $350 from Bryant Company, which had a previously written-off amount of $1,280. Since Walker does not believe the remaining amount due from Bryant Company will be collected, the NRV on September 5 is calculated by adjusting the Accounts Receivable and Allowance for Uncollectible Accounts:
NRV on September 5 = Accounts Receivable - Allowance for Uncollectible Accounts + Amount Received = $77,400 - $4,010 + $350 = $73,740.
These calculations reflect the estimated collectible amount from accounts receivable after considering the allowance for uncollectible accounts.
The NRV provides a more realistic view of the company's receivables by accounting for potential losses due to uncollectible amounts, allowing for better financial analysis and decision-making.
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