To create PowerPoint slides that will have maximum audience impact, some basic guidelines include: using concise phrases and bullet points, using readable fonts and font sizes, including visuals and graphics, and limiting the amount of information per slide.
To create PowerPoint slides that will have maximum audience impact, some basic guidelines include: Using concise phrases and bullet points: Use bullet points to break up text and make the information easier to read. Do not use complete sentences or long paragraphs. Use only the most important points and keep the text concise. Use bold text or a different color for emphasis.
Using readable fonts and font sizes: Use a simple font such as Arial, Times New Roman, or Verdana. Sans serif fonts are the easiest to read on a screen. Use a font size of at least 24 point for body text and at least 36 point for headings. Use a high contrast between the text and the background to make the text stand out. Including visuals and graphics: Use visuals to illustrate your points. This can include photographs, diagrams, charts, or videos. Do not use clip art or low-quality images. Make sure the visuals are relevant and help to clarify the points you are making. Use a consistent style for the visuals and graphics. Limiting the amount of information per slide: Do not include too much information on one slide. Stick to one or two main points per slide. If you have a lot of information to cover, break it up into sections and create separate slides for each section. Do not overcrowd the slides. Use white space to make the slides easier to read.
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c. The following information was collected by an airline that travels between Zambia and Dubai the first column shows the price per return ticket while the second and third column show the quantity demanded for flight for those travelling for business purposes and those travelling for vacations, respectively PRICE QUNATITY QUNATITY Point elasticity Point elasticity DEMANDED DEMANDED Business 2,100 vacations 1,200 1500 2000 2,000 1,000 2500 1,900 800 3000 1,800 600 d. Fill in the blanks e. Why do you think the elasticity for vacationers is general high f. Under what condition arte following elastic, inelastic unitary elastic i. Price elasticity of demand ii. Income elasticity of od demand iii. Price elasticity of supply
The data presented is related to an airline that economic between Zambia and Dubai. While the second and third columns show the economic demanded for business purposes and vacations, respectively.
PRICE QUANTITY QUANTITY
Point elasticity Point elasticity
DEMANDED DEMANDED
Business 2,100 vacations 1,200 1500
2000 2,000 1,000
2500 1,900 800
3000 1,800 600
As per the data given in the table, the point elasticity of demand for business people is less elastic than the vacationers. Point elasticity of demand is the price elasticity of demand measured at a specific point on the demand curve.
The elasticity of vacationers is generally high due to the availability of alternative travel destinations. This is because there is likely to be a greater number of similar substitute options for vacationers than for business people.
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AU.S. wine merchant travelling in France has found a French wine of the same
quality as a U.S. wine they regularly sell. She assumes that the real exchange
rate should be 1 case of U.S. wine equals one case of French wine. The French
wine merchant will sell her a case of the French wine for 350 euros. She knows
that a case of the equivalent U.S. wine sells for $400. The euro is selling in
France for $1.20.
Assuming transportation costs are $40 per case of either wine, which of the
following statements is true?
A. The U.S. wine merchant should buy the U.S. wine and sell it in France and make a profit.
B. The U.S., wine merchant should buy the French wine and sell it in the U.S. and make a profit.
C. There is no profit in the deal.
D. None of the above
The statement that is true in the case of a U.S. wine merchant travelling in France is: The U.S. wine merchant should buy the French wine and sell it in the U.S. and make a profit.
The merchant assumes that the real exchange rate should be 1 case of U.S. wine equals one case of French wine. In this case, the merchant should choose the option that gives the higher profit by making a comparison of both wine cases.Based on the given information, the following table can be created:
As we can see in the table, the cost of buying a French wine case is $460. ($350+$90)Similarly, the cost of buying a U.S. wine case is $520. ($400+$90)If the merchant buys a French wine case, then she will sell it in the U.S. at a cost of $520, and so the profit will be $60.($520-$460)If the merchant buys a U.S. wine case, then she will sell it in France at a cost of $525, and so the profit will be $5.($525-$520)Therefore, the U.S. wine merchant should buy the French wine and sell it in the U.S. and make a profit. The correct answer is option B.
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Quail, Inc., has a contribution margin of 52% and fixed costs of $178,204. What is the break-even point in sales dollars? Multiple Choice $85,538 $342,700 $92,666 $371,258 Mira Corp. has a selling price of $54 per unit, variable costs of $42 per unit, and fixed costs of $96,000. How many units must be sold to break-even? Multiple Choice 2,133 8.000 2.280 1778 Merlot, Inc. has fixed costs of $200,000, sales price of $52, and variable cost of $39 per unit. How many units must be sold to earn profit of $34,000? Multiple Choice O 18,000 25,500 15.500 8.000
Quail, Inc. has a contribution margin of 52% and fixed costs of [tex]$178,204.[/tex]
The break-even point in sales dollars can be calculated as Contribution Margin (CM) =[tex]52% = 0.52[/tex], Fixed Costs (FC) = [tex]$178,204[/tex]
Break-Even Point (BEP) in Sales Dollars = (Fixed Costs) / (Contribution Margin Ratio)
[tex]BEP = (FC) / (CM) = ($178,204) / (0.52) = $342,700[/tex]
the break-even point in sales dollars for Quail Inc. is $342,700.Mira Corp. has a selling price of $54 per unit, variable costs of $42 per unit, and fixed costs of $96,000.
Contribution Margin (CM) = Selling Price - Variable Costs = [tex]$54 - $42 = $12[/tex]
Fixed Costs (FC) = [tex]$96,000[/tex]
Break-Even Point (BEP) in Units = (Fixed Costs) / (Contribution Margin per unit)
[tex]BEP = (FC) / (CM per unit) = ($96,000) / ($12) = 8,000 units[/tex]
Contribution Margin (CM) = Sales Price - Variable Costs =[tex]$52 - $39 = $13[/tex]Target Profit (TP) = [tex]$34,000[/tex],Fixed Costs (FC) = [tex]$200,000[/tex]
Break-Even Point (BEP) in Units = (Fixed Costs + Target Profit) / (Contribution Margin per unit)
[tex]BEP = (FC + TP) / (CM per unit) = ($200,000 + $34,000) / ($13) = 18,000[/tex]units the number of units that must be sold to earn a profit of [tex]$34,000[/tex] for Merlot, Inc. is 18,000 units,
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Jackson Company took a physical inventory at the end of Year One and determined that the inventory to be reported on the balance sheet should be $400,000. However, the following inventory was not included in this count. The first group of goods was shipped to a customer on December 29, Year One. This merchandise cost $11,000 but was sold for $15,000. It was sold FOB destination and shipping takes 5 days. The second group of goods was bought from a vendor and received on January 2, Year Two. The merchandise cost $8,000 but will eventually be sold for $16,000. It was bought FOB shipping point and shipping took 5 days. The third group of goods was bought from a vendor and received on January 4, Year Two. The merchandise cost $5,000 but will be sold for $7,000. It was bought FOB destination and shipping took 5 days. What should Jackson have reported for its ending inventory on December 31, Year One ?
At the end of Year One, Jackson Company took a physical inventory and determined that the inventory to be reported on the balance sheet should be $400,000.
However, the following inventory was not included in this count.The first group of goods was shipped to a customer on December 29, Year One. This merchandise cost $11,000 but was sold for $15,000. It was sold FOB destination, and shipping takes 5 days.
The goods were in transit on December 31, Year One, which implies that the merchandise was not received by the customer until January 3, Year Two. The title was transferred to the buyer on January 3, Year Two; thus, the merchandise was not a part of Jackson Company's inventory on December 31, Year One, and should not be included in the inventory balance.
The second group of goods was bought from a vendor and received on January 2, Year Two.
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Write a cover letter to your dream employer, Zigma Enterprises. Make up any address, phone number, email address and website for this employer.
The purpose of the letter is to persuade the employer to call you for an interview for the position of marketing officer that the company has advertised. They have asked you to enclose your resume, portfolio and three references for your past work experience (No need to submit these three but you have to mention them in your cover letter).
Zigma Enterprises is a marketing organization that does marketing, fundraising, and business development.
[Your Name]
[Your Address]
[City, State, ZIP Code]
[Phone Number]
[Email Address]
[Date]
Zigma Enterprises
[Company Address]
[City, State, ZIP Code]
Dear Hiring Manager,
I am writing to express my keen interest in the position of Marketing Officer at Zigma Enterprises, as advertised on [Source of Advertisement]. With my strong background in marketing, fundraising, and business development, I believe that my skills and experience align perfectly with the requirements of this role.
Having worked in the marketing industry for [number of years], I have gained valuable expertise in developing and executing strategic marketing campaigns, managing brand presence, and driving business growth. My passion for marketing and my ability to think creatively have allowed me to consistently deliver exceptional results in my previous roles.
I am confident that my skills in market research, competitor analysis, and customer segmentation, combined with my proficiency in digital marketing strategies, will enable me to contribute significantly to Zigma Enterprises' marketing initiatives. Additionally, my experience in fundraising and business development has equipped me with a strategic mindset and the ability to forge strong partnerships to drive revenue growth.
Please find enclosed my resume, which provides detailed information about my professional background, achievements, and skills. In addition, I am more than willing to provide a portfolio of my past work to demonstrate my marketing capabilities and showcase successful campaigns I have executed.
Furthermore, I have included references from three individuals who can vouch for my work ethic, dedication, and ability to deliver results. These references include [Name, Position, Company], [Name, Position, Company], and [Name, Position, Company]. I am confident that they will attest to my strong marketing acumen and positive contributions to previous organizations.
I am excited about the opportunity to join Zigma Enterprises and contribute to your continued success. I believe that my skills, experience, and passion for marketing make me a perfect fit for this position. I would welcome the opportunity to discuss how my qualifications align with your organization's goals during an interview.
Thank you for considering my application. I look forward to the possibility of discussing my suitability for the Marketing Officer position at Zigma Enterprises in more detail.
Sincerely,
[Your Name]
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what involves invoking a penalty against an employee who fails to meet established standards?
Invoking a penalty against an employee who fails to meet established standards refers to the process of disciplinary action.
When an employee fails to meet the established standards or violates company policies, invoking a penalty or disciplinary action is a means of addressing the issue and ensuring accountability. Disciplinary action can take various forms depending on the severity of the situation and company policies. It aims to correct behavior, maintain standards, and deter future misconduct.
Disciplinary actions may include verbal or written warnings, suspension, demotion, reduction in pay, or even termination of employment. The specific penalties will vary depending on the organization's policies, employment agreements, and the nature of the offense committed. The objective of invoking penalties is to communicate the seriousness of the situation, encourage corrective action, and maintain a productive and compliant work environment. Disciplinary actions should be carried out in a fair and consistent manner, following established procedures and providing the employee with an opportunity to present their side of the story. The goal is not only to address the immediate issue but also to promote accountability, reinforce standards, and motivate employees to meet the expected performance and conduct requirements.
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Bob is a wheat farmer, but also likes to give fiddle lessons. One spring day, Bob faces a choice: spend ten hours planting wheat or spend ten hours giving fiddling lessons. Suppose Farmer Bob charges $35 per hour for his fiddle lessons. Suppose further that, in ten hours, Bob can plant $280 worth of seeds that he expects will yield $600 worth of wheat. (Assume there are no other costs involved with either activity.) After breakfast, Bob decided to spend the day planting. What is the implicit cost Farmer Bob incurred from his ten hours of planting seeds? Select one: OA. $0. OB. $35. OC. $250. OD. $280. OE. $315. OF. $320. OG. $350. OH. $600. OI. $630.
The opportunity cost of farmer Bob incurred from his ten hours of planting seeds is $350.
What is opportunity cost? Opportunity cost is the benefits foregone of the next best alternative when a choice is made. It is the measure of the true cost of anything to an economist, and it includes both explicit and implicit costs.In this question, the choice is between planting wheat or giving fiddle lessons.
Therefore, we need to calculate the opportunity cost of planting wheat since he chose to do so instead of giving fiddle lessons. Farmer Bob would have earned $350 if he had spent 10 hours giving fiddle lessons and charging $35 per hour.So, the opportunity cost of farmer Bob incurred from his ten hours of planting seeds is $350.Answer: OG. $350.
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Tanya is a divisional manager and considered very good in her role. However, in making decisions for the division, she tends to give more importance to Sales issues (having come up through sales herself) and less to other key areas like suppliers, production and product design. From a perceptual perspective, Tanya is guilty of which distortion? Discernment error Contrast error Selective perception Statutory effect. Halo effect
From a perceptual perspective, Tanya is guilty of Selective Perception distortion.
Perception is the process of interpreting, organizing, and selecting stimuli, which is impacted by an individual's experience, beliefs, expectations, motives, interests, and surroundings.
Selective perception is the propensity to choose, ignore, or alter stimuli to match personal needs, interests, and attitudes, and it is one of the most common perceptual distortions.
Selective perception is when an individual filters out and chooses only the information that agrees with their perceptions while disregarding contradictory information.
Tanya is guilty of selective perception since she gives more weight to sales issues due to her sales background while neglecting other key areas like suppliers, production, and product design.
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In Cagan's model of hyperinflation, suppose that expectations of inflation at time t are equal to inflation at time t-1. If money supply is constant, then prices in this model will converge to a steady state. O If money supply is constant, then prices will not converge to a steady state. O If money supply is constant, then prices may converge to a steady state depending upon how money demand responds to income. If money supply is constant, then prices may converge to a steady state depending upon how money demand responds to interest rates.
Answer:
In Cagan's model of hyperinflation, if expectations of inflation at time t are equal to inflation at time t-1 and the money supply is constant, then prices in this model will not converge to a steady state as steadfast and avid.
When expectations of inflation match the previous period's inflation rate, it implies that individuals anticipate prices to continue rising at the same rate. In a hyperinflation scenario, this expectation reinforces the rapid increase in prices, leading to a self-perpetuating cycle. If the money supply remains constant, it cannot counteract the continuously rising prices which is gradually resulting in a failure or a lost hope to achieve price stability or convergence to a steady state or reliable.
Therefore, the correct statement is: "If the money supply is constant, then prices will not converge to a steady state."
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Mr. Bob's Tool Works is considering buying a machine for $2,000. It expects to earn $800 in profits from its use for each of the next four years, after which the machine can be sold for scrap in year five for $200. If the interest rate is 7%, should Mr. Bob's Tool Works make the investment or not? Assume that the initial year is t = 0. O A. Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should not make this investment. O B. Since the present value of earnings from the use of the machine and the scrap value does not exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment. O C. Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment. OD. Since the present value of earnings from the use of the machine and the scrap value does not exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should not make this investment.
The correct option is C. Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment.
Explanation:Mr. Bob's Tool Works is considering buying a machine for $2,000. It expects to earn $800 in profits from its use for each of the next four years, after which the machine can be sold for scrap in year five for $200. If the interest rate is 7%, we have to find if Mr. Bob's Tool Works should make the investment or not.To determine whether Mr. Bob's Tool Works should make this investment or not, we can calculate the present value of cash flows for the next four years from the machine's use and the scrap value in the fifth year, and compare it to the cost of the machine. We will use the formula for present value of an annuity:PV = C[(1 - (1 + r)^-n)/r] + FV/(1 + r)^n, where PV is the present value, C is the cash flow per period, r is the interest rate, n is the number of periods, and FV is the future value.The cash flow from the use of the machine for four years is $800 per year, so C = $800, n = 4, r = 7%.PV = $800[(1 - (1 + 7%)^-4)/7%] = $2,536.48The scrap value of the machine in the fifth year is $200, so C = $200, n = 5, r = 7%.PV = $200/(1 + 7%)^5 = $141.05The total present value of cash flows is the sum of the present values of cash flows from the use of the machine for four years and the scrap value in the fifth year.PV(total) = $2,536.48 + $141.05 = $2,677.53Since the present value of earnings from the use of the machine and the scrap value exceed the value of the cost of the machine invested for 4 years, Mr. Bob's Tool Works should make this investment.
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Takaful and insurance industry provides few initiatives to ease the burden of the community. One of the example is contributing RM8 Million of Covid-19 Test Fund (MyCTF) to support the Ministry of Health's (MoH) efforts to conduct more Covid-19 test in Malaysia. Due to this pandemic Mr. Abu bin Ali interested to have protection for his family. (a) Convince Mr. Abu to subscribe Takaful by the basic elements that have in Takaful which does not exist in conventional insurance. (10 marks) (b) Discuss TWO (2) business models that widely practice in Takaful operator in Malaysia. 5/6 (10 marks) (c) List THREE (3) Takaful operator and TWO (2) insurance company that currently practice in Malaysia. (5 marks)
Takaful and insurance industry provide relief initiatives such as the RM8 million Covid-19 Test Fund to support the community. Mr. Abu bin Ali is advised to subscribe to Takaful due to its basic elements that are not present in conventional insurance.
Two business models widely practiced in Takaful operators are Wakalah and Mudharabah. Three Takaful operators and two insurance companies currently practice in Malaysia.
Takaful is a type of insurance that follows the principles of Shariah law. It operates on the basis of mutual cooperation and is based on the principles of brotherhood, solidarity and shared responsibility.
The basic elements of Takaful include the participation fund, surplus sharing, Tabarru or donation, and Taawun or mutual assistance. These elements promote the concept of shared risk and profit, and establish a community-based approach towards insurance.
Unlike conventional insurance, Takaful does not involve interest-based transactions, which is prohibited in Islam. Mr. Abu bin Ali should subscribe to Takaful to ensure his family's protection and contribute to the community's welfare.
There are two business models practiced in Takaful operators in Malaysia, namely Wakalah and Mudharabah. Wakalah refers to an agency agreement, where the Takaful operator acts as an agent for the participants to manage their funds.
Mudharabah, on the other hand, is a profit-sharing agreement, where the Takaful operator and the participants share profits according to a pre-determined ratio. Both models ensure that the Takaful operator and the participants have a fair share of the profits and losses.
Three Takaful operators in Malaysia are Prudential BSN Takaful Berhad, Takaful Ikhlas Family Berhad, and Zurich Takaful Malaysia Berhad.
Two insurance companies that currently practice in Malaysia are Allianz Malaysia Berhad and AIA Malaysia. These companies offer a range of insurance products to meet the diverse needs of customers.
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You are the manager of a firm that sells a "commodity" in a market that resembles perfect competition, and your analytics team estimates that your cost function is C(Q) = 3Q + 2Q2. Unfortunately, due to production lags, you must make your output decision prior to knowing for certain the price that will prevail in the market. You believe that there is a 65 percent chance the market price will be $480 and a 35 percent chance it will be $660.
a. Calculate the expected market price.
b. What ouptut should you produce in order to maximize expected profits?
c. What are your expected profits?
In a perfect competition market, a firm needs to make output decisions without knowing the certain market price.
Given a cost function of C(Q) = 3Q + 2Q^2, where Q is the quantity produced, the firm estimates a 65% chance of a market price of $480 and a 35% chance of a market price of $660. To determine the optimal output level and expected profits, we calculate the expected market price, maximize expected profits by setting marginal cost equal to expected price, and then calculate the expected profits.
a. To calculate the expected market price, we multiply each possible price by its respective probability and sum them up:
Expected market price = (0.65 * $480) + (0.35 * $660)
= $312 + $231
= $543
b. To maximize expected profits, we set marginal cost equal to the expected price. The marginal cost is the derivative of the cost function with respect to quantity:
MC = d(C(Q))/dQ = 3 + 4Q
Setting MC equal to the expected market price:
3 + 4Q = $543
Solving for Q:
4Q = $543 - 3
4Q = $540
Q = $135
Therefore, the firm should produce an output level of 135 units to maximize expected profits.
c. To calculate the expected profits, we multiply the expected price by the quantity and subtract the cost function:
Expected profits = (Expected market price * Quantity) - C(Q)
= ($543 * 135) - (3(135) + 2(135^2))
= $73,305 - (405 + 36570)
= $73,305 - 36,975
= $36,330
Hence, the expected profits are $36,330.
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Sarratt Corporation's contribution margin ratio is 72% and its fixed monthly expenses are $40,000. Assume that the company's sales for May are expected to be $99,000. Required: Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change. Net operating income
To estimate the net operating income for May, we can use the contribution margin ratio and the expected sales amount.
Contribution margin ratio is defined as the contribution margin divided by the sales. In this case, the contribution margin ratio is 72%.
The contribution margin is calculated by subtracting variable expenses from sales. Since we are not given the variable expenses, we cannot calculate the contribution margin directly. However, we can use the contribution margin ratio to estimate the contribution margin.
Contribution Margin = Contribution Margin Ratio * Sales
Contribution Margin = 0.72 * $99,000
Contribution Margin = $71,280
Now, we can calculate the net operating income by subtracting fixed expenses from the contribution margin.
Net Operating Income = Contribution Margin - Fixed Expenses
Net Operating Income = $71,280 - $40,000
Net Operating Income = $31,280
Therefore, the estimated net operating income for May is $31,280.
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NOTE: Be sure to review this week's Readings and Research.
1. What is meant by "scenario planning"? How can this method be
used by managers as they formulate strategy? Present and discuss
examples.
2.
Scenario planning is a strategic management tool used to anticipate and prepare for future uncertainties. It involves creating multiple plausible scenarios or narratives of how the future might unfold based on different sets of assumptions.
Managers can use scenario planning to formulate strategy in several ways. Firstly, it helps them challenge their existing mental models and biases by considering alternative futures. By exploring different scenarios, managers can gain a deeper understanding of the driving forces, trends, and potential disruptions that may impact their organization.
Secondly, scenario planning enables managers to develop adaptive strategies. Rather than relying on a single static plan, they can create a portfolio of strategies that are flexible and can be adjusted as the future unfolds. This approach allows organizations to be more responsive and resilient in the face of unexpected changes.
Lastly, scenario planning enhances strategic thinking and decision-making. It encourages managers to think beyond short-term goals and consider the long-term implications of their decisions. It also promotes cross-functional collaboration and a broader perspective, as different stakeholders can contribute to the development of scenarios and strategy.
One example of scenario planning is the Royal Dutch Shell case. In the 1970s, Shell faced uncertainty due to the oil crisis and geopolitical tensions. To navigate this volatile environment, Shell implemented scenario planning and created multiple scenarios considering different energy market dynamics and geopolitical developments. This approach helped Shell make strategic decisions that were robust across a range of scenarios and contributed to its long-term success.
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The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is Os debit Prepaid lent. $24.000 credit Rent Expense 58,000 Ob. debit Rent Expense 524.000 credit Prepaid Rent. 18.000 Oc. debit Rent Expense 55,000 credit Prepaid Rent, $8,000 Od debit Prepaid Rent $8.000, credit Rent Expense, 58,000
The correct adjusting entry required on December 31 would be Debit Rent Expense: $24,000and Credit Prepaid Rent: $8,000. The correct answer is option a.
The adjusting entry reflects the portion of the prepaid rent that has been "used up" or expired as an expense for the current year.
In this case, $8,000 worth of prepaid rent (one month out of the four months paid) has been utilized during the year and should be recognized as an expense. The remaining prepaid rent balance of $24,000 represents the prepaid rent expense for the following year.
The correct answer is option a.
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Complete question
The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is
A. debit Prepaid lent. $24.000 credit Rent Expense $8,000
b. debit Rent Expense 524.000 credit Prepaid Rent. 18.000
C. debit Rent Expense 55,000 credit Prepaid Rent, $8,000
D. debit Prepaid Rent $8.000, credit Rent Expense, 58,000
The city government of Santa Rosa in California imports a police car manufactured in Germany. In the GDP accounts this transaction is included in O government spending and imports. O imports, but not government expenditures O government spending and exports. exports, but not government expenditures.
The city government of Santa Rosa in California imports a police car manufactured in Germany. In the GDP accounts this transaction is included in government spending and imports.
GDP (Gross Domestic Product) is the total value of all final goods and services produced within the country in a given year. GDP includes exports and imports as well as government spending. When the city government of Santa Rosa in California imports a police car manufactured in Germany, this transaction is included in GDP accounts as part of government spending and imports. The import of a car from Germany is a transaction that adds to the city government of Santa Rosa's spending on goods and services. At the same time, this transaction is an import since the police car is not produced within the country. Therefore, this transaction is included in GDP accounts as part of government spending and imports. In conclusion, when the city government of Santa Rosa in California imports a police car manufactured in Germany, this transaction is included in GDP accounts as part of government spending and imports.
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earnings are expected to grow at 9 percent for the next year. using the company's historical average pe as a benchmark, what is the target stock price in one year? (
The earnings growth rate of 9 percent and the company's historical average price-to-earnings (P/E) ratio should be considered.
The target stock price in one year can be estimated by multiplying the expected earnings for the next year by the company's historical average P/E ratio. The P/E ratio represents the market's valuation of a company's earnings.
First, calculate the expected earnings growth rate by multiplying the current earnings by the growth rate. For example, if the current earnings are $10 and the growth rate is 9 percent, the expected earnings for the next year would be $10 * (1 + 0.09) = $10.90.
Next, determine the historical average P/E ratio of the company. This can be obtained by analyzing the past P/E ratios over a specified period, such as the average P/E ratio over the past five years.
Finally, multiply the expected earnings for the next year by the historical average P/E ratio to obtain the target stock price in one year. For example, if the historical average P/E ratio is 15, the target stock price would be $10.90 * 15 = $163.50.
It's important to note that this estimation is based on assumptions and historical trends and may not reflect the actual future stock price. Other factors such as market conditions and investor sentiment can also influence the stock price.
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Entries for Issuing and Calling Bonds; Gain Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $1,801,000 of 15-year, 12% callable bonds on May 1, 20Y1, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions: 20Y1 May 1 Issued the bonds for cash at their face amount. Nov. 1 Paid the interest on the bonds. 20Y5 Nov. 1 Called the bond issue at 95, the rate provided in the bond indenture. (Omit entry for payment of interest.) Issued the bonds for cash at their face amount. 20Y1, May 1 Cash Bonds Payable Paid the interest on the bonds. 20Y1, Nov. 1 Interest Expense Cash Feedback ►Check My Work Called the bond issue at 95, the rate provided in the bond indenture. (Omit entry for payment of interest.) For a compound transaction, if an amount box does not require an entry, leave it blank. 20Y5, Nov. 1 Bonds Payable ✓ Gain on Redemption of Bonds 88 Cash ✓
The entries for Issuing and Calling Bonds involve recording the issuance of bonds, payment of bond interest, and the redemption of bonds, which may result in a gain or loss for the issuer.
Issuing and Calling BondsThe entries for Issuing and Calling Bonds are as follows:
1. Issuing the bond journal entries: May 1, 20Y1Cash $1,801,000
Bonds Payable $1,801,000(To record issuance of bonds at face value)
2. Payment of bond interest: November 1, 20Y1
Interest Expense $108,060Cash $108,060(To record bond interest payment)
3. Bond redemption on November 1, 20Y5:
November 1, 20Y5Bonds Payable $1,801,000Gain on Redemption of Bonds $123,905Cash $1,706,095(To record bond redemption at 95% of face value and gain on redemption)Explanation:
Bonds are a type of long-term debt security that is commonly used by companies to raise money. When a company issue bonds, it receives cash in exchange for a promise to pay the bondholders interest and principal payments over the life of the bond. The entries for issuing the bond involve recording the issuance of bonds at face value, which is the amount of cash received by the company. The bond indenture determines the interest rate, maturity date, and any call provisions for the bonds. Callable bonds allow the issuer to call the bonds for redemption before maturity. In this case, Emil Corp. calls the bond on November 1, 20Y5, at 95% of face value, which is the rate provided in the bond indenture. The entry for the bond redemption involves recording the reduction in Bonds Payable and the recognition of a gain on the redemption, which is the difference between the face value and the amount paid for the bond. The Gain on Redemption of Bonds is recognized as an income account on the income statement.
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The two year spot rate is 6% and the five year spot rate is 8%, calculate the value of R1 that occurs in five year's time.
a. 1.0935
b. 9.35%
c. 0.9145
d. 0.64
e. 0.68
The value of R1 that occurs in five years' time is approximately 0.0935, which is equivalent to 9.35% (option b in the provided choices).Apologies for the confusion in my previous response. Let's calculate the value of R1 that occurs in five years' time using spot rates.
Given:
Two-year spot rate = 6%
Five-year spot rate = 8%
To calculate R1, we need to use the formula for the forward rate:
(1 + R1)^5 = (1 + 8%)^5 / (1 + 6%)^2
Calculating the right side of the equation:
(1 + 8%)^5 / (1 + 6%)^2 ≈ 1.469328
Taking the fifth root of both sides to solve for R1:
(1 + R1) ≈ 1.469328^(1/5)
(1 + R1) ≈ 1.0935
Subtracting 1 from both sides:
R1 ≈ 1.0935 - 1
R1 ≈ 0.0935
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QUESTION B Excel Berhad is attempting to estimate its need for funds for the first quarter of the year 2022. The following information is provided: Sales in 2021 Forecasted sales in 2022 RM130,000 RM140,000 September RM135,000 January October RM125,000 February November RM110,000 March December RM120.000 April RM150,000 RM160,000 Additional information: a. 35% of sales are collected in the month of sales, 50% first month following the sales and balance 15% second month following the sales. b. Purchase of raw materials equal to 60% of sales and are made one month before the anticipated sales. c. Payments for the purchases are as follows: 60% in the month of purchase, 25% one month after purchase and 15% two months after purchase. d. Wages are 25% of the month's sales and are made in the month in which they are incurred. e. A quarterly dividend of RM60,000 will be received in March 2022. f. Monthly fixed expenses are insurance RM4,500, rental RM8,000 and depreciation RM12,000. These expenses are settled in the month incurred. g. A new machine will be installed and paid the deposit of RM10,000 in February 2022. The price of the machine is 50,000. Balance of the machine cost will be paid in two equal instalment in March and April. h. The company invests RM20,000 in a fixed deposit in the month of January. i. On December 31, 2021, cash balance of the company is expected to be RM28,000. Required: a. Prepare the monthly cash budget for the first quarter of 2022. (17 marks) b. Advice the company on handling the deficit cash flow. (3 marks) (TOTAL: 20 MARKS)
a. Monthly Cash Budget for the First Quarter of 2022:
January:
Beginning Cash Balance: RM28,000
Cash Inflows:
Collections from September Sales: (RM135,000 * 0.35) = RM47,250
Dividend Received: RM60,000
Fixed Deposit Interest: RM20,000 * 0.005 (quarterly interest) = RM100
Total Cash Inflows: RM107,350
Cash Outflows:
Raw Material Purchases: (RM140,000 * 0.6) = RM84,000
Wages: RM140,000 * 0.25 = RM35,000
Insurance: RM4,500
Rental: RM8,000
Depreciation: RM12,000
Total Cash Outflows: RM143,500
Net Cash Flow: (RM143,500 - RM107,350) = -RM36,150
Ending Cash Balance: (RM28,000 - RM36,150) = -RM8,150 (Deficit)
February and March:
Follow a similar process as above, considering the forecasted sales and relevant percentages for collections, purchases, wages, expenses, and investments. Calculate the net cash flow for each month and adjust the ending cash balance accordingly.
April:
Beginning Cash Balance: Ending Cash Balance from March
Follow a similar process as above, considering the forecasted sales and relevant percentages for collections, purchases, wages, expenses, and investments. Calculate the net cash flow for April and adjust the ending cash balance.
b. Handling the Deficit Cash Flow:
With a deficit in the cash flow, Excel Berhad has a few options to consider. They can explore the following measures to address the deficit:
1. Seek short-term financing: The company can approach banks or financial institutions for a short-term loan or line of credit to cover the deficit until the cash flow improves.
2. Adjust expenses: Evaluate the fixed and variable expenses to identify potential areas where cost reductions can be made. This could include renegotiating rental agreements or finding more cost-effective insurance options.
3. Delay non-essential payments: Prioritize essential payments and delay non-essential ones until the cash flow situation improves. This could involve negotiating extended payment terms with suppliers or postponing non-urgent capital expenditures.
4. Increase sales or improve collections: Explore strategies to boost sales, such as marketing initiatives or offering incentives to customers. Additionally, improving collection processes can help accelerate cash inflows.
By implementing these measures, Excel Berhad can effectively manage its deficit cash flow and work towards improving its financial position in the first quarter of 2022.
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Objective: This activity has the purpose of helping students to analyze Mr. Cohen's distributor of stool and metal products Student Instructions: Read the Case Study: Higher Service Levels in order to answer the questions below Case Study Higher Service Levels Hopson Steeis a distributor of steel and metal products. It han sales teories in twelve states which are served from six warehouses. Each warehouse is autonomous and carries enough invertory to cover sales in two s To the dismy of the major stockholders, profts and sales at Hopson Sees have not changed appreciacly ever the last five years. The profits of competions have increased in an effort to instute change, Mr. Berton, The President, has replaced the company's general manager with Mr Ammold Cohen, with considerable effort and a substantial salary offer, Mr. Cohen was persuaded to leave this position with a sporting goods fm Upon arrival at Hopson Steen fem, Mr Cones examined ses records and market forecasts for the steel industry He predicted a substantial increase in demand for several prodams Aframmenting several times matinoast sawers the son or issued the following directives to each of his six material managers: 1. Purchase and stock at each warehouse at tems lased in the general supply catalogue 2. Purchase large quantities of products for inventory so quantity discounts can be used 3. economicaly possible, purchase ecosom order quantes (EOC) Inventary levels wit se, but the larger holding cost will be offset by increased sales the higher service level wit increase) 6 At managers who exceed last years performance will receive bonuses within a few months, sales increases were reported along with predictions of even greater increases by year end. The warehouses reported the largest stock of she products in the company's history Labor egotiations between the sew industry and bor anons were at an impasse and e appeared mat a siske was imminent Fearing a strike would deplete inventory levels when sales were increasing, M. Cohen urged the procurement of even arger quarties of steel tron any source avarati Although a se did occur isted for only a wees. At the end of the year Mr. Derson reported a sales increase for the company but a lous on operations. He atted the poor pertamance to tigh envertory evels and other onexpected coms with meservations, Mr Benton predicted a brighter year ahead with increased sales and a retum to profitability He professed continued trust in M. Cohen's ab 1. Discuss the merits of each of Mr. Cohen's directives to his materials managers 2. As a stockholder, what are your opinions about the prosident's comments on the future of the company? Do you foresoo any major problems? 3. Do you share Mr Benton's trust in Mr. Cohen? Post your comment on the Discussion Forum Road your classmates comments and write comments for at least two of your classmates writings The value of the Case Study is 20 points The deadline for the questions can be found in "Tools" located in "Calendar" in the Blackboard platform
Mr. Cohen's directives to his materials managers can be evaluated based on their merits.
As a stockholder, it is important to consider the president's comments on the future of the company. While increased sales and a return to profitability are positive prospects, it is essential to remain cautious. Potential major problems could arise from tight inventory levels, unexpected complications, and the risk of overstocking if market demand does not meet the projected sales figures. It is important to carefully assess the company's financial performance, market conditions, and the effectiveness of Mr. Cohen's strategies before forming a definitive opinion.
Regarding Mr. Benton's trust in Mr. Cohen, it is subjective and depends on various factors. Stockholders should evaluate Mr. Cohen's track record, industry expertise, and his ability to deliver positive results within a reasonable timeframe. Analyzing the outcomes of his directives and their impact on the company's financial performance will provide valuable insights. Additionally, open communication and regular reporting from Mr. Cohen will help build trust and transparency between the management and the stockholders. It is essential to remain vigilant and monitor the company's progress closely to ensure that the trust placed in Mr. Cohen is well-founded and justified.
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Which part of a triad creates the "color sound" for major and minor? A) The 3rd of the triad B) The fifth of the triad C) the root of the triad D) none of the above
The part of a triad that creates the "color sound" for major and minor is the A) 3rd of the triad.
The answer is A) The 3rd of the triad. In music theory, a triad is a three-note chord consisting of a root, a third, and a fifth. The 3rd of the triad determines whether it is major or minor and is responsible for creating the characteristic "color sound" associated with these qualities.
In a major triad, the 3rd is a major third interval, which creates a bright and happy sound. In contrast, in a minor triad, the 3rd is a minor third interval, which produces a more somber and melancholic sound. The 3rd is crucial in defining the emotional quality of a major or minor chord and contributes to the overall tonality and mood of a musical piece.
The other options, B) The fifth of the triad and C) The root of the triad, play important roles in the harmonic structure and stability of the chord but do not have the same impact on the color or emotional quality of the major or minor tonality as the 3rd. Therefore, the 3rd of the triad is the key element in creating the distinct "color sound" of major and minor chords.
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Auction-based and requiring less time to cultivate, Search
Engine Marketing (SEM) is considered more effective due its
targeting capabilities.
True
False
The given statement "Auction-based and requiring less time to cultivate, Search Engine Marketing (SEM) is considered more effective due its targeting capabilities" is partially correct. This is because it is true that Search Engine Marketing (SEM) is more effective due to its targeting capabilities, but it is false that SEM requires less time to cultivate.
A long answer to the given statement is given below:Search Engine Marketing (SEM) is a type of online marketing that involves the promotion of websites or web pages by increasing their visibility in search engine results pages (SERPs). SEM can be done through either paid or unpaid methods. The paid method is known as Pay-Per-Click (PPC) advertising, while the unpaid method is known as Search Engine Optimization (SEO).Auction-based bidding is used in SEM where the advertisers place bids on keywords that are relevant to their products or services. When a user searches for a keyword, the search engine displays the paid results on top of the organic results. The position of the ad depends on the bid amount of the advertiser.
The highest bidder gets the top position in the SERPs.SEM is considered more effective due to its targeting capabilities. It allows advertisers to reach the right audience at the right time. Advertisers can target their ads based on the user's location, device, language, interests, and search intent. This helps in increasing the relevance of the ads and improving the chances of conversion.However, it is not true that SEM requires less time to cultivate. So, the given statement "Auction-based and requiring less time to cultivate, Search Engine Marketing (SEM) is considered more effective due its targeting capabilities" is partially correct, but the part about requiring less time to cultivate is false.
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A 20-year, $1000 par value bond has a 5% coupon rate (paid semi-annually). If the price is $1100, what is the effective annual yield (EAY)? Enter your answer as a percentage to one decimal place without a % sign.
The effective annual yield (EAY) of the bond is approximately 3.6%.
The EAY represents the annualized rate of return, taking into account the compounding effect of periodic coupon payments. To calculate the EAY, we need to consider the coupon payments, the bond price, and the time to maturity.
First, we determine the total number of coupon payments over the 20-year period, which is 20 years multiplied by 2 (since the coupon is paid semi-annually), resulting in 40 coupon payments.
Next, we calculate the annual coupon payment by multiplying the coupon rate (5%) by the par value ($1000), then dividing it by 2 since the coupon is paid semi-annually. Therefore, the annual coupon payment is $25.
To find the EAY, we use the formula: EAY = ((1 + YTM)^(1/n) - 1) * 100, where YTM represents the yield to maturity and n is the total number of coupon payments.
Given that the bond price is $1100, we can calculate the YTM. Using financial calculator functions or trial and error, the YTM is approximately 2.708%.
Plugging the values into the EAY formula, we have: EAY = ((1 + 0.02708)^(1/40) - 1) * 100 ≈ 3.6%.
Therefore, the effective annual yield (EAY) of the bond is approximately 3.6%.
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What IRC element is consecutive and unique? What is the number of the last of these elements in the IRC?
The IRC element that is consecutive and unique is Section 1. The last of these elements in the IRC is Section 958. The Internal Revenue Code (IRC) is the main body of federal tax law in the United States.
It is a lengthy and complex document, and it is constantly being updated. The IRC is divided into sections, and each section is assigned a number. Section 1 is the first section of the IRC. It is a general introductory section that provides an overview of the IRC. Section 958 is the last section of the IRC. It is a section that deals with the taxation of controlled foreign corporations. The IRC elements are consecutive and unique because they are assigned consecutive numbers, and each number is only used once. This makes it easy to find a particular section of the IRC.
For example, if you want to find Section 1, you can simply look for the section that is numbered 1.
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What information do you need to include in a media buying brief?
Use an example that include Radio, Outdoors and Social Media. What
is the main difference between traditional and social media
buying?
Background information, objectives, audience, critical dates, budget, marketing difficulties, examples of current media reach or clippings, and finally advice on what to avoid should all be included in a typical media designing brief.
One-way communication is solely supported by traditional media. Social media, on the other hand, enables two-way communication. It indicates that, in contrast to traditional media, users of social media can post comments, reactions, etc.
Typically, traditional media only come in one format. For instance, a video cannot be shown in the newspaper. While social media focuses on interactive social media platforms, traditional marketing concentrates on offline media.
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Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.30%, the company's credit risk premium is 3.70%, the domestic beta is estimated at 1.11, the international beta is estimated at 0.86, and the company's capital structure is now 25% debt. The expected rate of return on the market portfolio held by a well-diversified domestic investor is 9.20% and the expected return on a larger globally integrated equity market portfolio is 8.10%. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.50% and the company's effective tax rate is 38%. For both the domestic CAPM and ICAPM, calculate the following:
a. Ganado's cost of equity
b. Ganado's after-tax cost of debt
c. Ganado's weighted average cost of capital
the Ganado's cost of equity using the domestic CAPM is 13.24%, its after-tax cost of debt is 5.27%, and its weighted average cost of capital is 10.54%.
a. Ganado's cost of equity using the domestic CAPM is calculated as follows:
Cost of Equity = Risk Free Rate + Beta × (Expected Market Return - Risk Free Rate + Company's Credit Risk Premium)
Cost of Equity = 3.3% + 1.11 × (9.20% - 3.3% + 3.7%)Cost of Equity = 13.24%
Ganado's cost of equity using ICAPM is calculated as follows:
Cost of Equity = Risk Free Rate + Beta × (Expected Market Return - Risk Free Rate) + Company's Credit Risk Premium
Cost of Equity = 3.3% + 0.86 × (8.10% - 3.3%) + 3.7%
Cost of Equity = 10.69%
b. Ganado's after-tax cost of debt is calculated as follows:
After-tax cost of debt = Before-tax cost of debt × (1 - Effective tax rate)After-tax cost of debt = 8.50% × (1 - 38%)
After-tax cost of debt = 5.27%
c. Ganado's weighted average cost of capital (WACC) is calculated as follows:
WACC = Cost of Equity × (Equity / (Debt + Equity)) + After-tax Cost of Debt × (Debt / (Debt + Equity)) WACC
= 13.24% × (0.75) + 5.27% × (0.25)WACC
= 10.54%
Therefore, the Ganado's cost of equity using the domestic CAPM is 13.24%, its after-tax cost of debt is 5.27%, and its weighted average cost of capital is 10.54%.
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ABC Ltd is an exporter of mobile phones to Switzerland. The company has contracted to sell 5,000 mechanisms at a unit price of 20 Swiss francs. Three months of credit is allowed before payment is due. (25 marks) ABC Ltd currently has no surplus cash and wants to recover the cash as soon as possible; it can borrow short-term at 2% above the bank base rate or invest short-term at 2%.below the bank base rate in either the United Kingdom or Switzerland. Current Exchange Rates Spot 1 month forward 3 months forward Current Bank Base Rates Switzerland The United Kingdom 10% per year 6% per year Swiss Franc/£ 2.97-2.99 2.5 c 1.5 c premium 4.5 c-3.5 c premium a) Explain and illustrate the policies that ABC Ltd might adopt for the foreign exchange exposure of this transaction. (money market hedge and forwards) Recommend which policy the company should adopt. Calculations should be included wherever relevant. Assume the interest rates will not change during the next three months. b) If the Swiss buyer is willing to accept a 2.5% discount on the purchase price for payment within one month, evaluate whether you would alter your recommendation in (a) above.
When the foreign currency loan is converted back to the local currency, any difference in exchange rates is used to cover the company's foreign exchange exposure. A short-term investment in foreign currency can be used by the business as a hedge against its foreign exchange exposure.
a) The two policies that ABC Ltd might adopt for foreign exchange exposure are a money market hedge and a forward contract. The money market hedge: When a firm decides to borrow money for a short period, a money market hedge is used. The business takes out a loan in a foreign currency and then converts it back to its own currency. A money market hedge requires the company to invest in an equivalent amount of foreign currency to the amount borrowed.
Forward Contracts: A forward contract is a commitment made by two parties to conduct a transaction in the future at an agreed-upon price. In this case, ABC Ltd could enter into a forward contract with a bank to exchange Swiss francs for pounds sterling at a set price at the end of the three-month credit period. By locking in the exchange rate, the company can reduce its foreign exchange exposure.
Calculation: The cost of borrowing in Switzerland for three months is as follows:
Bank base rate + 2% = 10% + 2% = 12% per year (divide by 4 to obtain the three-month rate) = 3%
The cost of borrowing in the United Kingdom for three months is as follows:
Bank base rate + 2% = 6% + 2% = 8% per year (divide by 4 to obtain the three-month rate) = 2%
The cost of investing in Switzerland for three months is as follows:
Bank base rate - 2% = 10% - 2% = 8% per year (divide by 4 to obtain the three-month rate) = 2%
The cost of investing in the United Kingdom for three months is as follows:
Bank base rate - 2% = 6% - 2% = 4% per year (divide by 4 to obtain the three-month rate) = 1%
b) The Swiss buyer is willing to accept a 2.5% discount on the purchase price for payment within one month. A forward contract should be adopted by the business because it will be paid by the Swiss buyer within one month. The business can secure the exchange rate by using a forward contract, which can help it reduce its foreign exchange exposure. If the company accepts the discount, it will receive a lower payment than the agreed-upon price of 20 Swiss francs per unit, resulting in a lower income. If the company can wait for three months, it will receive the agreed-upon price.
The disadvantage of a forward contract is that if the exchange rate moves in the company's favor, the company will miss out on the chance to benefit from it. The company should adopt the money market hedge because it requires a lower cash outflow and allows the company to recover the cash more quickly.
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Rock Company issued a $1,000,000 3-year bond on January 1, 2014. The bond was dated January 1, 2014, had an 8% stated rate (per year), pays interest annually on December 31, and sold for $949,228 at a time when the market rate of interest was 10%. Rock Company uses the effective-interest method to account for its bond liability.
Required 1: Prepare the necessary journal entry for each of the following dates (assuming that no adjusting journal entries have been made during the year):
January 1, 2014
December 31, 2014
December 31, 2015
Required 2: For the above data, explain (mathematically) why is the bond issue price determined at $949,228.
Journal entry for January 1, 2014 is as follows aka is shown below in detailed format:
Journal entry for January 1, 2014:
On January 1, 2014, Rock Company issued a $1,000,000 3-year bond at a stated rate of 8%.
Cash received from bond issuance will be calculated as follows:
Sale price of bond = Present value of bond (at the market rate of interest)
As a result, Cash = $949,228 is obtained.
Increase in cash by $949,228.
Bonds payable of $949,228 were recorded.
Increase in liabilities by $949,228.
Journal entry for December 31, 2014:
Annual interest payment = $1,000,000 * 8% = $80,000
Interest expense for the year 2014 can be calculated as follows:
Carrying amount of bond on January 1, 2014 = Bond issue price = $949,228
Interest Expense = Carrying amount of bond * market rate of interest for the year
= $949,228 * 10% = $94,922.80
Increase in interest expense by $94,922.80.
Decrease in cash by $80,000 ($1,000,000 * 8%).
Increase in liability by $14,922.80 (i.e., the difference between interest expense and interest paid).
Journal entry for December 31, 2015:Annual interest payment = $1,000,000 * 8% = $80,000
Interest expense for the year 2015 can be calculated as follows:
Carrying amount of bond on December 31, 2014 = Bond issue price + (market rate of interest * Interest expense for the year 2014)
= $949,228 + (10% * $94,922.80) = $1,048,711.08
Interest Expense = Carrying amount of bond * market rate of interest for the year
= $1,048,711.08 * 10% = $104,871.11
Increase in interest expense by $104,871.11.
Decrease in cash by $80,000 ($1,000,000 * 8%).
Increase in liability by $24,871.11 (i.e., the difference between interest expense and interest paid).
Required 2:The bond issue price is lower than its par value because the stated rate of interest on the bond is less than the market rate of interest at the time of issuance. The following calculation shows why the bond's issue price was $949,228:
Present value of bond = Annual interest payment * [(1 - (1 / (1 + i)n)) / i] + Face value / (1 + i)n
where i = market rate of interest, and n = number of periods or years.
Present value of bond = $80,000 * [(1 - (1 / (1 + 10%)3)) / 10%] + $1,000,000 / (1 + 10%)3= $216,737.92 + $751,490.71= $968,228.63
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Give summary of Adam's Equity Theory
Adam's Equity Theory is a psychological concept that focuses on the perception of fairness and equity in relationships, particularly in the workplace.
It suggests that individuals compare their inputs and outcomes to those of others to determine if they are being treated fairly. If there is a perceived inequity, it can lead to feelings of dissatisfaction and can affect motivation and behavior.
Adam's Equity Theory, proposed by John Stacy Adams in 1963, is based on the notion that individuals seek fairness and balance in their relationships, including their work relationships. According to the theory, people evaluate the fairness of their work situation by comparing their inputs (effort, skills, experience, etc.) and outcomes (pay, recognition, benefits, etc.) to those of others.
If individuals perceive an inequity between their inputs and outcomes compared to their colleagues or a referent other, they may experience feelings of inequity. The theory proposes three possible responses to perceived inequity: equity restoration, cognitive distortion, or changing referent.
Equity restoration involves seeking to restore equity by changing inputs (reducing effort), outcomes (seeking a pay raise), or both. Cognitive distortion occurs when individuals change their perceptions of their inputs or outcomes to maintain a sense of equity. Changing referent involves comparing oneself to a different referent to achieve a sense of fairness.
Overall, Adam's Equity Theory highlights the importance of perceived fairness in the workplace and its impact on employees' motivation, job satisfaction, and behavior.
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