Cromwell Corporation's annual financial statements for December 31, 2018, include the Balance Sheet, Income Statement, and Statement of Retained Earnings, using the trial balance account balances as the basis for preparation.
To prepare the financial statements, the trial balance account balances need to be classified and grouped appropriately. The Balance Sheet summarizes the company's assets, liabilities, and shareholders' equity at a specific point in time. The Income Statement shows the company's revenues, expenses, and net income for a specific period. The Statement of Retained Earnings calculates the changes in the retained earnings account over a specific period. By analyzing and organizing the trial balance, the financial statements can be accurately presented, providing an overview of Cromwell Corporation's financial position, profitability, and retained earnings at the end of 2018.
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Background
Tema Industrial Products (TIP) manufactures and sells a wide variety of industrial tools to various
resellers and end users. Founded in 1990, the company prides itself on producing high-quality,
durable tools. The company's salesforce has always been an integral part of its success. Sales reps
at TIP work hard and are rewarded accordingly.
Current Situation
Tema Industrial Product's national sales manager, Benjamin Oduro, has enjoyed a great deal of
success with his salesforce. Since his promotion to his position three years ago, things have gone
relatively smoothly, until now.
"When it rains, it pours," Ben thinks to himself as he sits at his
desk and contemplated two issues confronting him. For starters, one of his star salespeople,
Charles Anim, seems to be slowing down at a time when his help was desperately needed.
Secondly, the company has added a new Web page, and reps are upset.
Charles Anim has worked for TIP for almost three years. In his first year, he generated GHC
850,000 in revenues, hitting 112 percent of quota. He followed this by racking up sales of
GHC1.29 million, for 119 percent of quota. He accomplished this by prospecting and meeting
with customers 14 hours a day during the week, and completing reports and writing proposals on
the weekends. At this pace, Anim looked as if he would exceed quota again this year-that is, until
he had his first child two months ago. Currently, he's down to 50 to 60 hours per week, and his
sales reflect this.
Oduro is worried. TIP currently is undertaking an ambitious growth program. Next month alone,
it plans to introduce four new products. Oduro had hoped to make Anim a member of the
management team. In casual conversation with Anim, however, Oduro discovered that Anim was
not interested in becoming a manager at TIP because the big money is in sales. Anim is still
carning a hefty paycheck despite working fewer hours. To be successful, Oduro realizes that he
needs to get back the energetic, hard-charging Anim he hired, but he is not sure how.
In the meantime, the salesforce, including Anim, is upset.
As part of its aggressive growth
strategy, the company began accepting orders through its Web site. While customers are happy
about his, the salesforce is not. Although salespeople earn commissions on current customers who
order through the Web site, they do not receive commissions on any new Web customers in their
territories. The company's president, Samuel Patterson, views the Web site as an additional "rep."
However, salespeople see it as competition. Consequently, productivity and morale are down.
Oduro is caught in the middle. He needs to find a solution to please both his salesforce and
Patterson.
Question 1
How do you suggest that Oduro handles Anim?
(8 marks)
Assess the situation regarding Tema Industrial Products' use of the Web.
(10 marks)
What would you suggest that Oduro does to please both Patterson and his salesforce?
(8 marks)
Describe the primary financial and nonfinancial compensation rewards available to
salespeople.
Primary financial compensation rewards for salespeople include base salary, sales commissions, and bonuses. Base salary provides a fixed income to salespeople.
Sales commissions are based on the value or volume of sales generated, providing an incentive for salespeople to achieve and exceed targets. Bonuses are additional financial rewards granted for exceptional performance or meeting specific objectives.
Non-financial compensation rewards for salespeople encompass recognition, career development opportunities, and work-life balance initiatives. Recognition can take the form of awards, public acknowledgment, or performance-based accolades, boosting motivation and job satisfaction. Career development opportunities, such as training programs or promotions, allow salespeople to enhance their skills and advance in their careers. Work-life balance initiatives, such as flexible schedules or remote work options, promote a healthy work-life integration and contribute to overall job satisfaction.
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Discuss which of the top 10 mistakes that managers make is the most serious or the most likely to cause problem in a business. Please write in Own own words I need it to be 250 words . Please, be in your own words. NO copy and paste.
Among the top 10 mistakes that managers make, micromanagement stands out as one of the most serious and likely to cause problems in a business.
Micromanagement refers to a management style characterized by excessive control, closely monitoring and dictating every aspect of employees' work. This mistake is detrimental to both individuals and the overall business. Micromanagement stifles creativity, undermines employee morale and autonomy, and hampers productivity.
When managers micromanage, they create a culture of distrust and hinder employee growth and development. Employees feel disempowered, demotivated, and discouraged from taking initiative. They become overly dependent on their managers for decision-making, which hampers their problem-solving abilities and stifles innovation. The lack of autonomy and freedom to make decisions based on their expertise reduces employee engagement and job satisfaction.
Moreover, micromanagement negatively affects teamwork and collaboration. It inhibits effective communication, as employees may hesitate to share ideas or raise concerns due to fear of being scrutinized or criticized. This leads to poor collaboration, reduced knowledge sharing, and decreased team synergy.
From a business perspective, micromanagement wastes valuable time and resources. Managers spend excessive time on minutiae, diverting their attention from strategic planning and important tasks. This hinders their ability to focus on long-term goals, make informed decisions, and effectively manage their teams. Additionally, employee turnover rates tend to be higher in organizations with a micromanagement culture, resulting in recruitment and training costs, as well as the loss of valuable talent and institutional knowledge.
To foster a healthy work environment, managers should focus on empowering their employees, providing guidance and support, and fostering a culture of trust and autonomy. By doing so, managers can harness the potential of their teams, promote innovation, and drive sustainable business growth.
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At the end of the current year, Accounts Receivable has a balance of $123,120 Allowance for Doubtful Accounts has a debit balance of $3,660 and sales for the year total $935,000. An analysis of the receivable estimates that $14,000 will not be collected. a. Determine the amount in the adjusting entry for bad debt expense. Amont in Adjusting Entry b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Balance in Accounts Receivable Balance in Allowance for Doubtful Accounts Balance in Bad Debt Expense c. Determine the net realizable value of accounts receivable. Net Realizable Value on Balance Sheet
a. Amount in adjusting entry for bad debt expenseIn the given problem, we are given that sales for the year total $935,000. An analysis of the receivable estimates that $14,000 will not be collected.Thus, the amount that is expected to be collected from the sales is given as:Total sales expected to be collected = Total sales - Unrecoverable amount
Total sales expected to be collected = $935,000 - $14,000Total sales expected to be collected = $921,000The balance of the allowance for doubtful accounts after adjusting entry will be equal to the estimated amount of accounts receivable that may be uncollectible. The amount of uncollectible accounts receivable is estimated as $14,000. So, the adjusted balance of Allowance for Doubtful Accounts will be:Adjusted balance of Allowance for Doubtful Accounts = $3,660 + $14,000 = $17,660Bad debt expense = Ending balance in the allowance for doubtful accounts - Beginning balance in the allowance for doubtful accountsBad debt expense = $17,660 - $0 = $17,660The amount in the adjusting entry for bad debt expense is $17,660.b. Adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt ExpenseEnding balance in Accounts Receivable = $123,120 - $14,000Ending balance in Accounts Receivable = $109,120Adjusted balance in Allowance for Doubtful Accounts = $17,660Adjusted balance in Bad Debt Expense = $17,660c. Net realizable value of accounts receivableNet realizable value is the amount of accounts receivable that a company expects to collect from its customers. It is calculated as follows:Net realizable value = Gross accounts receivable - Allowance for doubtful accountsNet realizable value = $109,120 - $17,660Net realizable value = $91,460Therefore, the amount in the adjusting entry for bad debt expense is $17,660; the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense are $109,120, $17,660, and $17,660 respectively. The net realizable value of accounts receivable is $91,460.
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Development of new technologies and ways of communication leads to change in people’s mindset and the ways in which they collaborate, share information, learn from one another, generate new knowledge, and disperse this knowledge throughout their organizations.
Explain in your own words what the term "boundaryless organization" means. What are main characteristics of a boundaryless organization that make it different from the traditional horizontal and vertical structures? In your opinion, what are the disadvantages of having a boundaryless organizational structure? Which problems may arise? Search on the Internet and provide an example of a company with a boundaryless organizational structure. Explain in your own words how this company can benefit from such a structure.
A boundaryless organization refers to a modern organizational structure that breaks down traditional boundaries and hierarchies to promote collaboration, knowledge sharing, and agility.
It encourages open communication, information flow, and cross-functional teams. However, it also presents challenges such as coordination difficulties and potential loss of control. An example of a boundaryless organization is W.L. Gore & Associates, known for its innovative and decentralized approach, enabling creativity and employee empowerment.
The term "boundaryless organization" refers to a contemporary organizational structure that eliminates traditional boundaries and barriers, both internal and external, to foster collaboration, information sharing, and innovation. It encourages open communication and a seamless flow of information across different departments, functions, and levels of hierarchy. In a boundaryless organization, the emphasis is on breaking down silos and promoting cross-functional teams and networks.
Unlike traditional hierarchical or vertical structures where information and decision-making flow through predefined channels, boundaryless organizations encourage a more flexible, decentralized approach. They promote employee empowerment, autonomy, and accountability, allowing individuals to contribute their expertise and ideas regardless of their formal position in the organizational hierarchy. This promotes agility, adaptability, and faster decision-making.
However, there are challenges associated with a boundaryless organizational structure. One of the main challenges is coordinating activities across various departments and teams, as the lack of clear hierarchical boundaries may lead to coordination difficulties and potential duplication of efforts. Additionally, the decentralized decision-making authority may result in a loss of control and a potential lack of alignment with the overall organizational goals.
An example of a company with a boundaryless organizational structure is W.L. Gore & Associates. This company, known for its innovative products such as Gore-Tex fabric, operates on a lattice organizational model. It promotes a flat structure where employees have the freedom to take on multiple roles, collaborate across functions, and make decisions based on their expertise. This structure enables knowledge sharing, creativity, and employee empowerment, fostering a culture of innovation and adaptability.
In a boundaryless organization like W.L. Gore & Associates, the benefits are numerous. It allows employees to freely share information, ideas, and best practices, leading to faster innovation and problem-solving. It facilitates collaboration and cross-functional teamwork, enabling the company to respond quickly to market changes and customer needs. Moreover, the decentralized structure promotes employee engagement, as individuals have the opportunity to take ownership of their work and contribute their unique perspectives. This results in a more agile and competitive organization.
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1.__________ require(s) the analysis of decisions based on creating the greatest good for the most number of people.
Multiple Choice
Ethical practices
Duty-based reasoning
Morality
Outcome-based reasoning
2. The federal government and many states have __________ that protect whistleblowers from retaliation.
Multiple Choice
morals
Credos
statutes
Values
3.Whistleblowers are often regarded as __________ by their peers and employers.
Multiple Choice
heroes
outcasts
good candidates for promotion
None of the options are correct.
1. Outcome-based reasoning requires the analysis of decisions based on creating the greatest good for the most number of people.
2. The federal government and many states have statutes that protect whistleblowers from retaliation.
Outcome-based reasoning, also known as consequentialism, is an ethical approach that focuses on the outcomes or consequences of actions.
evaluates decisions based on their ability to maximize overall well-being or utility for the greatest number of individuals. This perspective considers the end result as the determining factor of ethical value.
Outcome-based reasoning emphasizes the importance of considering the consequences and impacts of decisions on a broader scale rather than solely focusing on individual or personal interests. It aims to promote the greatest overall benefit for society and prioritize the common good.
Whistleblowers are individuals who disclose information about illegal or unethical activities within an organization. To encourage reporting and ensure transparency, the federal government and various states have enacted laws known as statutes to safeguard whistleblowers from retaliation.
These statutes provide legal protections to whistleblowers, prohibiting employers from taking adverse actions, such as termination, demotion, or harassment, in response to their reporting. Whistleblower protection laws are designed to encourage individuals to come forward with information about wrongdoing without fear of reprisal, thus promoting accountability and deterring unlawful behavior.
3. Whistleblowers are often regarded as outcasts by their peers and employers.
Despite the importance of their role in uncovering wrongdoing, whistleblowers often face social and professional challenges. They are frequently viewed as outcasts within their professional communities due to the potential disruption their revelations can cause.
Whistleblowers may encounter hostility, isolation, and even retaliation from their peers and employers. The act of whistleblowing can be seen as a breach of loyalty or trust, creating a negative perception of the whistleblower's character. This reaction is often rooted in the fear of potential consequences, such as damage to reputation or legal repercussions.
However, it is important to recognize the significant contribution whistleblowers make to exposing corruption, protecting public interests, and improving organizational ethics . Efforts should be made to create a supportive environment that acknowledges their courage and ensures their well-being throughout the process of reporting misconduct.
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BCG matrix is a strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUS. It includes Four Categories: Stars Cash Cows Question Marks Dogs Define each category, support your answers with examples
The BCG matrix, also known as the Boston Consulting Group matrix, is a strategic tool used for portfolio analysis and resource allocation decisions. It categorizes Strategic Business Units (SBUs) into four categories based on their market share and growth rate. Here are the definitions of each category along with examples:
Stars: Stars represent SBUs with a high market share in a high-growth market. These SBUs have a strong competitive position and high potential for future growth. They require significant investments to maintain their position and capture the growing market share. As the market matures, stars may transition to become cash cows. Example: Tesla in the electric vehicle market. Tesla has a dominant market share and operates in a rapidly growing industry.
Cash Cows: Cash cows are SBUs that have a high market share in a low-growth market. They generate significant cash flow and profit due to their established position, economies of scale, and lower investment requirements. Cash cows typically have a stable customer base and require minimal resources to maintain their market share. The excess cash generated by cash cows can be used to support other SBUs or invest in new ventures. Example: Coca-Cola in the carbonated beverage industry. Coca-Cola has a large market share and operates in a mature market with stable growth.
Question Marks (also known as Problem Children or Wild Cards): Question marks represent SBUs with a low market share in a high-growth market. These SBUs have the potential for future success but also face significant uncertainties and challenges. Question marks require careful consideration and strategic decisions to determine if they should be further invested in to increase market share or divested if they are unlikely to become stars. Example: a start-up in the autonomous vehicle industry. The market has high growth potential, but the company's market share is currently small.
Dogs: Dogs represent SBUs with a low market share in a low-growth market. These SBUs have limited prospects for growth and often operate in highly competitive or declining industries. Dogs may generate minimal profit or even incur losses. Management needs to evaluate whether it is worth maintaining these SBUs or if resources should be reallocated to more promising areas. Example: a traditional print media company in the age of digital media. The market for print media has been declining, and the company's market share is small.
It's important to note that the categorization of SBUs can change over time as market conditions and competitive dynamics evolve. The BCG matrix helps organizations identify their portfolio's strengths, weaknesses, and opportunities, enabling informed resource allocation decisions and strategic planning.
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Using appropriate examples explain why companies engage in fronting loans. You will be expected to explain what fronting loans are as well as to consider the ethical and legal aspects of this practice.
Companies engage in fronting loans as a financial arrangement where a third-party lender provides the funds to a borrower on behalf of another party. This practice is often used for various reasons, including accessing better terms or circumventing legal or regulatory requirements.
However, fronting loans raise ethical and legal concerns due to potential deception, regulatory non-compliance, and increased risks for all parties involved.
Fronting loans can be used by companies to access more favorable lending terms or to avoid certain legal or regulatory restrictions. For example, a company may engage in fronting loans to obtain better interest rates or loan conditions by leveraging the reputation or creditworthiness of the third-party lender. This arrangement can provide the borrower with increased financial flexibility and improved access to capital.
However, the use of fronting loans raises ethical and legal considerations. From an ethical standpoint, fronting loans may involve deception or misrepresentation, as the true lender's identity may be concealed or misrepresented. This can undermine transparency and create potential risks for all parties involved. Moreover, fronting loans may also be used to circumvent legal or regulatory requirements, such as licensing or lending restrictions, which can lead to non-compliance and potential legal consequences.
In summary, while fronting loans can offer benefits to companies, such as improved terms and circumvention of regulations, they also raise ethical and legal concerns. Transparency, adherence to regulatory requirements, and fair treatment of all parties involved are essential considerations to ensure the ethical and legal integrity of such financial arrangements.
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Why does the collective behavior of supply managers have such an
impact on economic trends?
The collective behavior of supply managers has a significant impact on economic trends. Supply managers are responsible for purchasing goods and services for their organizations. Their decisions and actions influence the production of goods and services, which in turn affects the overall supply and demand in the market.
In addition, supply managers are responsible for negotiating prices, setting delivery schedules, and managing supplier relationships.
One reason why the collective behavior of supply managers has such an impact on economic trends is that they can influence the availability of goods and services. If supply managers decide to increase their orders for goods and services, it can lead to an increase in production, which can increase the overall supply in the market. This can result in lower prices for consumers and stimulate demand, which can boost economic growth.
On the other hand, if supply managers decide to reduce their orders for goods and services, it can lead to a decrease in production, which can decrease the overall supply in the market. This can result in higher prices for consumers and reduce demand, which can slow down economic growth.
Another reason why the collective behavior of supply managers has such an impact on economic trends is that they can influence the cost of goods and services. Supply managers are responsible for negotiating prices with suppliers. If they can negotiate lower prices, it can lead to lower costs for businesses and consumers. This can lead to increased sales and profits, which can boost economic growth.
On the other hand, if supply managers are unable to negotiate lower prices, it can lead to higher costs for businesses and consumers. This can lead to reduced sales and profits, which can slow down economic growth.
In conclusion, the collective behavior of supply managers has a significant impact on economic trends. Their decisions and actions influence the availability and cost of goods and services, which in turn affects the overall supply and demand in the market.
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Description In class we considered Jim's problem of choosing a delivery van. Suppose Jim expects to drive 5,000 miles per year. Compute the breakeven cost of gasoline such that Jim would be indifferent between the two minivans. What do you think of this result? Upload your supporting work. Which minivan should Jim purchase? For $2,800 Jim can purchase a 1998 minivan for his delivery service. It is quite functional, but it only averages 20 miles per gallon (mpg). He has identified a somewhat newer vehicle (roughly the same functionality) а that averages 26 mpg. The newer vehicle would cost $4,000. Assume a cost of gasoline $4.00 per gallon. Assume an interest rate of 6%, zero salvage value for either vehicle after three years, and identical maintenance cost.
To compute the breakeven cost of gasoline, we need to determine at which price per gallon Jim would be indifferent between the two minivans in terms of their total cost of ownership.
For the older minivan:
Total cost = Purchase cost + Fuel cost + Maintenance cost
Total cost = $2,800 + (5,000 miles / 20 mpg) * $4.00 + 0
Total cost = $2,800 + $1,000 + $0
Total cost = $3,800
For the newer minivan:
Total cost = Purchase cost + Fuel cost + Maintenance cost
Total cost = $4,000 + (5,000 miles / 26 mpg) * $4.00 + 0
Total cost = $4,000 + $769.23 + $0
Total cost = $4,769.23
To find the breakeven cost of gasoline, we set the total costs of both minivans equal to each other:
$3,800 = $4,769.23
From this calculation, we can see that the breakeven cost of gasoline is approximately $3.80 per gallon. If the cost of gasoline is below this breakeven point, Jim would be better off purchasing the older minivan, while if the cost of gasoline is above this breakeven point, he should go for the newer minivan.
Based on this result, if the cost of gasoline remains at $4.00 per gallon, it would be more cost-effective for Jim to purchase the older minivan for $2,800.
Please note that this analysis does not consider other factors such as the condition of the vehicles, personal preferences, or potential resale value. It focuses solely on the cost of ownership and fuel efficiency.
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An email marketer sends an email out to a list of 10,000 subscribers. The click-through rate was 15%, but the email blast resulted in much fewer than 1,500 clicks. Why? O The open rate was less than 100% O The open rate was greater than 100% The close rate was greater than 100% Such a condition cannot happen since 15% of 10,000 is 1500. If Zach finds through analytics that users from mobile devices have 0.5% conversion rate whereas users on a full-size monitor have a 3% conversion rate, what should he do? Investigate whether the website is optimized for mobile users O. Focus advertising efforts on mobile users to increase their conversion rate Block mobile users from coming to the site Conclude that mobile users are just browsers and not purchasers
An email marketer sends an email out to a list of 10,000 subscribers. The click-through rate was 15%, but the email blast resulted in much fewer than 1,500 clicks.
This could be because the open rate was less than 100%. Not every subscriber opens the email they receive. So, if the open rate is less than 100%, the number of people who received the email but did not open it would affect the total number of clicks.
The click-through rate is calculated as the number of clicks divided by the number of delivered emails. Therefore, if not all of the 10,000 subscribers opened the email, the total number of clicks would be less than 1,500 clicks. Additionally, some email clients might disable the images that are linked to the click-through URL, which might cause an undercount of the total clicks.
In another scenario, if the open rate was greater than 100%, this would mean that some people opened the email more than once. This situation does not happen since one subscriber is assumed to be opening the email once.Therefore, if Zach finds through analytics that users from mobile devices have 0.5% conversion rate, whereas users on a full-size monitor have a 3% conversion rate, he should investigate whether the website is optimized for mobile users.
This is because users from mobile devices have a low conversion rate compared to users on a full-size monitor. Therefore, Zach should investigate whether the website is optimized for mobile users, to increase the conversion rate of mobile users.
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Summarize the two key conditions on the size of the payoffs to
guarantee that the corruption does not take place in the set-up
with an entrepreneur, a politician, and a citizen as players?
To prevent corruption, citizen's reporting payoff should exceed participation payoff, and entrepreneur's corruption payoff should be lower than legal activity payoff.
In order to deter corruption, the first condition requires that the citizen, who has the potential to report corruption, receives a higher payoff for reporting than for participating in corrupt activities. This means that the citizen must perceive greater benefits from being honest and reporting corruption rather than engaging in illegal practices. By offering a higher payoff for reporting, the incentive for the citizen to act ethically is strengthened.
The second condition focuses on the entrepreneur, who is susceptible to engaging in corruption. To prevent this, the entrepreneur's payoff from participating in corruption must be lower than the payoff from engaging in legal activities. This condition ensures that the entrepreneur is financially better off by pursuing legal business practices, making corruption less attractive and reducing the likelihood of their involvement in illicit activities.
By satisfying both conditions, the setup establishes a framework that discourages corruption. It aligns the incentives of the citizen, encouraging them to report corruption, while also discouraging the entrepreneur from participating in corrupt practices. This combination helps maintain integrity and accountability within the system, promoting transparency and fairness.
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the upstream supply chain includes the organizations that are involved in the supply chain from the production facility to the end-consumer. T/F
False. The upstream supply chain refers to the portion of the supply chain that encompasses the flow of materials, information, and resources from suppliers to the production facility or manufacturing stage.
It involves the sourcing of raw materials, components, and parts that are used in the manufacturing process. The upstream supply chain is responsible for ensuring the timely and efficient delivery of inputs to support production.
On the other hand, the downstream supply chain includes the organizations and activities involved in the movement of finished goods from the production facility to the end-consumer. It involves distribution, warehousing, transportation, and other activities related to delivering the final product to the customer.
Therefore, the statement is false. The upstream supply chain does not include the organizations involved in the supply chain from the production facility to the end-consumer. It focuses on the flow of materials and resources towards the production facility.
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Dale Nagel, Keith White, and Dan Neal have capital balances of $95,000, $75,000, and $60,000, respectively. They share income or loss on a 4:3:2 basis. Assume White withdraws from (SO 5) AP the partnership on September 30 of the current year under each of the following independent as- sumptions: 1. White is paid $85,000 cash from partnership assets. 2. White is paid $69,000 cash from partnership assets. Instructions Journalize the withdrawal of White under each of the above assumptions.
1. **Journal entry for White's withdrawal assuming he is paid $85,000 cash:**
Withdrawal of Keith White:
Cash (To pay White's withdrawal) $85,000
Keith White, Capital $75,000
Gain on Withdrawal $10,000
Explanation: In this scenario, White is withdrawing from the partnership and is paid $85,000 in cash from partnership assets. As a result, White's capital account is debited to reflect his withdrawal, and the partnership pays him the agreed-upon amount. There is a gain on the withdrawal of $10,000, which represents the excess of the cash payment over White's capital balance.
2. **Journal entry for White's withdrawal assuming he is paid $69,000 cash:**
Withdrawal of Keith White:
Cash (To pay White's withdrawal) $69,000
Keith White, Capital $75,000
Loss on Withdrawal $6,000
Explanation: In this scenario, White is withdrawing from the partnership and is paid $69,000 in cash from partnership assets. As a result, White's capital account is debited to reflect his withdrawal, and the partnership pays him the agreed-upon amount. There is a loss on the withdrawal of $6,000, which represents the difference between the cash payment and White's capital balance.
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Question 15 3.5 pts In our class data analytics class exercise, teams needed to cleanse the data before analysis could happen. Which of the following represents a challenge to transforming and combining two sets of data? Different levels of aggregation Different identifiers Differences in field concatenation All of the answer options
All of the answer options Different levels of aggregation: This is a challenge that arises when data are combined from various sources that use different aggregations. If two or more data sets use different levels of aggregation, the data must be transformed to enable an accurate combination.
Data analytics refer to the process of examining datasets and various quantitative and qualitative methods to get conclusions from data. It is a procedure that aims to summarize, analyze, and get insights from a huge volume of data. In our class data analytics class exercise, teams required to clean the data before analysis can happen. Several issues arise during transforming and combining data sets. The following represents a challenge to transforming and combining two sets of data: All of the answer options Different levels of aggregation: This is a challenge that arises when data are combined from various sources that use different aggregations. If two or more data sets use different levels of aggregation, the data must be transformed to enable an accurate combination. Different identifiers: This is a challenge that arises when data come from various sources, and each data set uses different identifiers. In this situation, the data must be mapped to a standard identifier to enable an accurate combination. Differences in field concatenation: This is a challenge that arises when two or more data sets combine, and some fields have different concatenation standards. In this situation, the data must be transformed to enable an accurate combination. All of the answer options Data analytics are beneficial for businesses, governments, or individuals to make important decisions based on accurate information. Thus, cleaning, transforming, and combining data is a crucial stage in the data analysis process. It makes sure that data quality is improved before analysis occurs.
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Suppose an intern in the quality department of a manufacturing company is tasked with proposing an approach to improve a process that has bad Cpk but a good Cp. Which is a better approach to solving this problem?
a. Expand the range between upper and lower specification limits.
b. First, the assignable (special) cause variation should be removed.
c. Simultaneously address both common and assignable cause variations.
d. First, the common (natural) cause variation should be removed.
The better approach to solving this problem is to "first, the assignable (special) cause variation should be removed."
An intern in the quality department of a manufacturing company is tasked with proposing an approach to improve a process that has bad Cpk but a good Cp. The better approach to solving this problem is to "first, the assignable (special) cause variation should be removed."Explanation:When a process is under statistical control, it has a Cp and a Cpk. However, when the process capability index Cpk is lower than the process capability index Cp, it implies that the process is not under statistical control. In this instance, the assignable cause variation should be removed first, and only then should the common cause variation be addressed. Assignable cause variation (ACV) refers to any factor that causes the process to deviate from the average or typical performance.
Because the assignable cause variation is responsible for only a small percentage of total variability, it may be managed directly. On the other hand, common cause variation (CCV) refers to the natural or inherent variability in the process that cannot be traced to a specific cause or factor. Since common cause variation is responsible for the majority of process variability, it cannot be managed directly.Expanding the range between upper and lower specification limits may only solve a few problems temporarily but not entirely address the issue. Simultaneously addressing both common and assignable cause variations will not be the best option because addressing both simultaneously could lead to negative impacts.
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You purchase a $250,000 piece of equipment for your hotel to be repaid in seven (7) years, semi-annually. The first payment is made on the day the equipment is purchased and the market interest rate is 10%. What is the periodic amount required?
The periodic amount required is $17,354.94. Therefore, option D is correct.
Given that,The principal amount = $250,000
Rate of interest = 10%
Time period = 7 years
Payments per year = 2 (semi-annually)
The first payment is made on the day the equipment is purchased.
To find: The periodic amount required formula is given by:
PV = R [1 – (1 + i)^(-n)] / i
Where,PV is the present value of the loan.
R is the periodic payment
i is the interest rate per payment period
n is the number of payment periods
Let's calculate the periodic payment,
R = PV * i / [1 – (1 + i)^(-n)]
Where,PV = $250,000i = 10% / 2 = 5% (semi-annually) = 0.05
n = 7 years * 2 = 14
R = 250000 * 0.05 / [1 - (1.05)^-14]
R = 250000 * 0.05 / 7.183
R = $17,354.94
The option D is correct.
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When Sally files for bankruptcy she declares the following debts:
$1600 Sears credit account;
$250 back taxes owed to State of Oregon;
$4000 judgment in favor of a past business partner from a lawsuit which established that Sally stole money from the business partner;
$3500 owed to her father.
Of the above debts, how many will be discharged by the bankruptcy?
a. One debt.
b. Two of the debts.
c. Three of the debts.
d. Four of the debts.
The debts include a Sears credit account, back taxes owed to the State of Oregon, a judgment from a lawsuit for stealing money from a business partner, and a debt owed to her father.
In Sally's bankruptcy case, the dischargeability of debts depends on various factors, including the type of debt and the specific circumstances. Examining the debts declared by Sally:
$1600 Sears credit account: This debt is a typical unsecured consumer debt, and it is likely to be discharged in bankruptcy.
$250 back taxes owed to the State of Oregon: Generally, tax debts are not dischargeable in bankruptcy. Therefore, it is unlikely that this debt will be discharged.
$4000 judgment from a lawsuit for stealing money from a business partner: Debts arising from fraud or theft are generally not dischargeable in bankruptcy. Thus, it is unlikely that this debt will be discharged.
$3500 owed to her father: Debts owed to family members are usually dischargeable unless there is evidence of fraudulent or malicious conduct.
Based on the information provided, it is likely that only one debt (the Sears credit account) will be discharged in the bankruptcy. The back taxes, judgment from the lawsuit, and debt owed to her father are less likely to be discharged.
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A firm's stock is selling for $76. The next annual dividend is expected to be $4.00. The growth rate is 11%. The flotation cost is $3. What is the cost of retained earnings? (Round your answer to 2 decimal places.) Multiple Choice 14.11% 17.71% 16.26% 14.91%
The cost of retained earnings is 16.26%.
to calculate the cost of retained earnings, we can use the gordon growth model (also known as the dividend discount model). the formula is as follows:
cost of retained earnings = (next annual dividend / stock price) + growth rate
given the following information:
stock price = $76
next annual dividend = $4.00
growth rate = 11%
let's calculate the cost of retained earnings:
cost of retained earnings = ($4.00 / $76) + 0.11
= 0.0526 + 0.11
= 0.1626
converting to a percentage:
cost of retained earnings = 16.26% :
c. 16.26%
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Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labour; hence, there is no traceable fixed costs. Common fixed costs equal $17 400. Parker’s accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Price Variable costs Number of units The tax rate is 28%. Required $40 $70 $30 $42 1 200 400
a. Calculate the weighted average contribution margin. b. Compute the number of vases and the number of figurines that must be sold for the company to break-even. How much revenue would be received for each product?
The weighted average contribution margin 28.75%. Revenue would be received for vases and figurines are $1,230.77 and $81,846.15 respectively
a. The contribution margin ratio (CMR) formula is given by the following:
CMR = (Price – Variable Costs) / Price
CMR of Vases = (40 – 30) / 40 = 0.25
CMR of Figurines = (70 – 42) / 70 = 0.4
The weighted average contribution margin (WACM) formula is given by the following:
WACM = (CMR of Vases x Units of Vases) + (CMR of Figurines x Units of Figurines) / Total Units
WACM = (0.25 x 1,200) + (0.4 x 400) / 1,600 = 0.2875 or 28.75%
b. Breakeven formula is given by the following:
Breakeven = (Fixed Costs) / (CMR)
Breakeven of the company = 17,400 / 0.2875 = 60,521.74
Units of Vases that must be sold for the company to break-even is given by the following:
60,521.74 = (10 x Units of Vases) + (28 x Units of Figurines)1,200 – Units of Vases = Units of Figurines
11 Units of Vases = 28 x Units of Vases
Units of Vases = 1,200 / 39 = 30.77
Units of Figurines = 1,200 – 30.77 = 1169.23
Revenue would be received for each product is given by the following:
Vases: 30.77 x $40 = $1,230.77
Figurines: 1,169.23 x $70 = $81,846.15
Therefore, the weighted average contribution margin is 28.75%, the number of vases that must be sold for the company to break-even is 30.77 and the number of figurines that must be sold for the company to break-even is 1,169.23. Revenue would be received for vases and figurines are $1,230.77 and $81,846.15 respectively.
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Somerset Inc has finished a new video game, Snowboard Challenge. Management is now considering it's marketing strategies. The following information is available: $80 Anticipated Sales price per unit...... Variable cost per until....... Anticipated volume... $35 1,000,0000 $20,000,000 Production Costs... Anticipated advertising ..$15,000,000 Two managers have different ideas on ways to increase the profitability. Jane suggests dropping the price to $60 per unit and maintain our advertising budget at $15,000,000. She thinks they will generate total sales of 2,000,000 units Sara suggests increasing out advertising budget to $25,000,000 she thinks sales will increase to 1,400,000 without changing the price Which Strategy is best: Do nothing? Following Jane? Follow Sara? Hint: Revenue - Variable Cost - Fixed Cost
There are three scenarios to be considered - do nothing, following Jane, or following Sara.
Let's evaluate all three scenarios.1. Do nothing$80 is the Anticipated Sales price per unit. $35 is the Variable cost per until. $20,000,000 is the Anticipated volume. Production costs are $15,000,000. Anticipated advertising cost is $15,000,000. From this, we can calculate revenue, variable costs, and fixed costs: Revenue = Sales Price x Volume= $80 x 1,000,000 = $80,000,000Variable cost = Variable cost per unit x Volume= $35 x 1,000,000 = $35,000,000Fixed cost = Production costs + Anticipated advertising= $15,000,000 + $15,000,000 = $30,000,000Profit = Revenue - Variable cost - Fixed Cost= $80,000,000 - $35,000,000 - $30,000,000= $15,000,000This will result in a profit of $15,000,000.
2. Following Jane$60 is the Anticipated Sales price per unit. $35 is the Variable cost per until. Jane expects the volume to be 2,000,000 units. Anticipated advertising cost is $15,000,000. Production costs are $20,000,000. From this, we can calculate revenue, variable costs, and fixed costs: Revenue = Sales Price x Volume= $60 x 2,000,000 = $120,000,000Variable cost = Variable cost per unit x Volume= $35 x 2,000,000 = $70,000,000Fixed cost = Production costs + Anticipated advertising= $20,000,000 + $15,000,000 = $35,000,000Profit = Revenue - Variable cost - Fixed Cost= $120,000,000 - $70,000,000 - $35,000,000= $15,000,000This will result in a profit of $15,000,000, which is the same as doing nothing.
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the term enterprise resource planning erp can mean different things
The term "Enterprise Resource Planning" (ERP) refers to a comprehensive software system that integrates various business processes and functions within an organization.
ERP can have different meanings depending on the context. In a general sense, ERP refers to the software and systems used to streamline and automate core business processes. It provides a centralized database and enables efficient management of resources, such as finances, human resources, and inventory. It encompasses a wide range of functionalities, including accounting, procurement, manufacturing, sales, and customer relationship management.
ERP systems help organizations achieve operational efficiency, improve decision-making, and enhance collaboration across different departments. The specific features and modules of an ERP system may vary depending on the industry and the organization's requirements. Overall, ERP plays a crucial role in integrating and managing various aspects of a business, leading to improved productivity and overall performance.
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CFAS Company issued 200,000 shares of P5 par value at P10 per share. On January 1, 2022, the retained earnings amounted to P3,000,000.
In March 2022, the entity reacquired 50,000 treasury shares at P20 per share. In June 2022, the entity sold 10,000 of these shares to corporate officers for P25 per share. The entity used the cost method to record treasury shares.
Net income for the current year was P600,000.
What is the total amount of retained earnings at year – end? [ Select ] ["P2,200,000", "P4,400,000", "P3,600,000", "P3,400,000"]
What amount should be reported as unappropriated retained earnings at year – end? [ Select ] ["P3,650,000", "P3,600,000", "P3,750,000", "P2,800,000"]
The total amount of retained earnings at year-end is P3,600,000. The amount reported as unappropriated retained earnings at year-end is P3,600,000.
CFAS Company issued 200,000 shares of P5 par value at P10 per share. On January 1, 2022, the retained earnings amounted to P3,000,000. In March 2022, the entity reacquired 50,000 treasury shares at P20 per share.
In June 2022, the entity sold 10,000 of these shares to corporate officers for P25 per share. The entity used the cost method to record treasury shares. Net income for the current year was P600,000.
CFAS Company issued 200,000 shares of P5 par value at P10 per share, and therefore, the total amount of share capital is given by:
Share capital = 200,000 × P10= P2,000,000
On March 2022, the company reacquired 50,000 treasury shares at P20 per share, for a total of: 50,000 × P20= P1,000,000. The company then sold 10,000 of these shares to corporate officers for P25 per share, for a total of: 10,000 × P25= P250,000.
The cost method is used to record treasury shares, and as such, the amount of money paid for the shares is removed from the treasury stock account.
On June 2022, the treasury stock account would then look like this:Treasury stock: 50,000 × P20= (P1,000,000)
Less: Amounts paid by corporate officers for shares sold: 10,000 × P20= P(250,000)
Balance in the treasury stock account: (P750,000). Retained earnings at January 1, 2022 is P3,000,000. The net income for the year is P600,000. The total retained earnings at year-end is given by:
Retained earnings at year-end = Retained earnings at January 1, 2022 + Net income for the year= P3,000,000 + P600,000= P3,600,000
Therefore, the total amount of retained earnings at year-end is P3,600,000.
Unappropriated retained earnings is calculated as the retained earnings minus any amounts appropriated for a specific purpose. Retained earnings at year-end = P3,600,000
Dividend appropriations: None, therefore, unappropriated retained earnings at year-end = P3,600,000
Thus, the amount reported as unappropriated retained earnings at year-end is P3,600,000. Answer: ["P3,600,000"].
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PLEASE ANSWER EACH QUESTION WITH 6-8 SENTENCES EXPLAING YOUR
REASONING. PLEASE LABEL (PART A & PART B) WHEN ANSWERING.
Identify situations where a severance pay plan would be advantageous, first from the perspective of the employer and then from the perspective of the employee. What other ways, if any, might exist to
Severance pay is a payment offered to an employee who is terminated by the employer. This can be message beneficial to both the employer and employee. Let's have a look at how this can be advantageous to both of them.
Part A - From the perspective of the employer:If the employer decides to terminate an employee, severance pay can be an excellent way of protecting themselves from future litigation. Offering the employee severance pay means that the employee would be more likely to agree to the termination and would be less likely to take legal action against the employer.
In addition, severance pay can be used as a way to maintain the reputation of the company. An employee who is laid off without any severance pay would be likely to share their negative experience with others, thus damaging the reputation of the company. From the perspective of the severance pay can help an employee deal with the financial impact of sudden job loss. This can be particularly beneficial for those who are living paycheck to paycheck or have other financial obligations that need to be met. Furthermore, severance pay can provide the employee with a buffer period to look for another job, thus reducing the impact of job loss on their personal and financial life.
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If a company issues 1,000 shares of $1 par value common stock for $20 per share, what would be the effect on the accounting equation? 19 Multiple Choice 200 Increase assets and increase stockholders' equity Increase assets and increase liabilities Increase assets and increase revenue Increase assets and decrease stockholders' equity How are Bonds Payable due in 15 years reported in the issuing corporation's balance sheet? 20 Multiple Choice Doin 01.2756 in the long-term liabilities section at their carrying value In the long-term liabilities section at the current bond market price In the current liabilities section at their face amount In the long-term liabilities section at their face amount Journal entries to record cash dividends are made on the: 21 Multiple Choice Since 3 01:27:55 Declaration date, record date, and payment date. Declaration date and record date. O Record date and payment date. О Declaration date and payment date.
If a company issues 1,000 shares of $1 par value common stock for $20 per share, the accounting equation would be affected by increasing assets and stockholders' equity.
This transaction can be shown in the accounting equation format as:Assets = Liabilities + Stockholders' EquityBefore issuance:Assets = xLiabilities = xStockholders' Equity = xAfter issuance:Assets = $20,000Liabilities = xStockholders' Equity = $20,000The issuance of common stock increases the assets by $20,000 (1,000 shares x $20 per share) and also increases the stockholders' equity by $20,000 (1,000 shares x $1 par value per share + $19 excess per share). Therefore, the correct option is Increase assets and increase stockholders' equity.Bonds Payable due in 15 years are reported in the long-term liabilities section at their carrying value on the issuing corporation's balance sheet. Carrying value is the amount at which bonds were sold and include any unamortized premiums or discounts. Hence, the correct option is Doing 01.2756 in the long-term liabilities section at their carrying value.Journal entries to record cash dividends are made on the Declaration date, Record date, and Payment date. Cash dividends are distributed to shareholders in three steps, which are:Declaration date: It is the date on which the board of directors announces the dividend and sets the record date.Record date: It is the date on which the company determines the list of shareholders who are eligible to receive the dividend.Payment date: It is the date on which the company actually pays the dividend to shareholders.Therefore, the correct option is Declaration date, Record date, and Payment date.
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what illustrates the relationship between a good and its complement
To understand economic questions like this it is important to understand that Good and its complement have an inverse relationship. An increase in the price of a good will decrease the demand for its complement.
Good and its complement are two goods that are often used together. When the price of a good increases, its demand decreases. It, in turn, affects the demand for its complement. The demand for its complement decreases as well. Therefore, the demand for one good and the demand for its complement have an inverse relationship. In economics, this is known as the principle of complementary goods.The principle of complementary goods is an important concept in microeconomics. It describes how changes in the price of one good can affect the demand for another good.
For example, if the price of peanut butter increases, the demand for jelly will decrease. This is because most people buy peanut butter and jelly together. If the price of peanut butter increases, fewer people will buy it, and therefore, fewer people will buy jelly as well. Therefore, the demand for peanut butter and the demand for jelly have an inverse relationship.
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Sam's Cat Hotel operates 52 weeks per year, 7 days per week, and uses a continuous review inventory system. It purchases kitty litter for $10.75 per bag. The following information is available about these bags. Refer to the standard normal table for z-values. > Demand = 96 bags/week > Order cost = $56/order > Annual holding cost = 28 percent of cost > Desired cycle-service level = 96 percent > Lead time = 4 week(s) (28 working days) > Standard deviation of weekly demand = 16 bags > Current on-hand inventory is 310 bags, with no open orders or backorders. a. What is the EOQ? Sam's optimal order quantity is bags. (Enter your response rounded to the nearest whole number.)
Sam's optimal order quantity is approximately 104 bags. The Economic Order Quantity (EOQ) is a formula used to determine the optimal order quantity that minimizes total inventory costs.
In this case, the EOQ can be calculated using the following formula:
EOQ = √[(2 * Demand * Order Cost) / Holding Cost]
Substituting the given values:
Demand = 96 bags/week
Order Cost = $56/order
Holding Cost = 28% of $10.75 per bag
First, let's calculate the holding cost per bag:
Holding Cost = 28% * $10.75 = $3.01 per bag
Now we can plug these values into the EOQ formula:
EOQ = √[(2 * 96 * $56) / $3.01]
EOQ ≈ √(10886.75) ≈ 104.33
Rounding the EOQ to the nearest whole number, we get:
Sam's optimal order quantity is approximately 104 bags.
The EOQ represents the ideal order quantity that minimizes the total costs associated with inventory management. It takes into account factors such as demand, ordering costs, holding costs, and desired service level.
In this scenario, the demand for kitty litter is given as 96 bags per week, and the order cost is $56 per order. The annual holding cost is calculated as 28% of the cost of each bag. The desired cycle-service level is 96%, indicating that Sam aims to meet 96% of the demand for kitty litter.
To calculate the EOQ, we use the formula mentioned earlier, which considers the demand, order cost, and holding cost. By substituting the given values into the formula, we find that the EOQ is approximately 104 bags.
This means that it is optimal for Sam's Cat Hotel to place orders for approximately 104 bags of kitty litter at a time. This quantity helps to balance the costs associated with ordering and holding inventory. By ordering this amount, Sam can reduce costs related to ordering too frequently or holding excessive inventory.
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Explain some steps to arrange time management by giving an
example. Suppose you will have a bed-room renovation project.
Arranging time management for a bedroom renovation project involves several steps. These steps include setting clear goals, creating a schedule, prioritizing tasks, allocating resources, and monitoring progress. By following these steps, you can effectively manage your time and complete the project efficiently.
When it comes to managing time for a bedroom renovation project, it is important to follow a systematic approach to ensure a smooth and successful outcome. Here are the steps to arrange time management:
1. Set clear goals: Begin by defining your goals and what you aim to achieve with the renovation project. Identify the specific changes you want to make to the bedroom, such as painting the walls, installing new flooring, or replacing furniture. Clearly outlining your objectives will help you stay focused and organized throughout the project.
2. Create a schedule: Develop a detailed timeline for the renovation project. Break down the tasks into smaller, manageable chunks and allocate specific time frames for each. Consider factors such as the availability of resources, the complexity of tasks, and any external constraints that may impact the project timeline.
3. Prioritize tasks: Determine the order in which tasks need to be completed based on their urgency and dependencies. For example, painting the walls may need to be done before installing new flooring. Prioritizing tasks will help you make efficient use of your time and ensure that critical activities are completed on schedule.
4. Allocate resources: Assess the resources required for the renovation project, including materials, tools, and manpower. Make a list of the necessary items and ensure they are available when needed. Allocate resources based on the project schedule and budget constraints to avoid delays and unnecessary expenses.
5. Monitor progress: Regularly track and monitor the progress of the renovation project. Update your schedule and adjust timelines if necessary. Keep an eye on any potential bottlenecks or delays and take proactive measures to address them promptly. Regularly reviewing your progress will help you stay on track and make any necessary adjustments to ensure timely completion.
By following these steps and implementing effective time management techniques, you can successfully manage your bedroom renovation project while staying organized and meeting your goals.
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QUESTION 5
(a) Consider a Collateralized Debt Obligation where the reference portfolio
consists of $100 million worth of loans, that on average, yield 8%.
A CDO is created where: (i) the Senior Tranche is worth $65 million and with a coupon
rate of 5%; (ii) the Mezzanine Tranche is worth $30 million and with a coupon rate of 7.2%
and an equity tranche worth $5 million.
If the default rate in the reference portfolio is 1%, calculate the rate of return to: (i) the
Senior Tranche; (ii) the Mezzanine Tranche and (iii) the Equity Tranche. Assume that if
any loans in the reference portfolio default, then the full amount of the loan is lost and no
interest payments on these loans are received.
(b) Repeat your calculation in (a) above, but this time assume the default rate
in the reference portfolio is 9%. Again assume that if any loans in the reference portfolio
default, then the full amount of the loan is lost and no interest payments on these loans
are received.
The rate of return on the Equity Tranche is (($0 − $5 million) / $5 million) = −100%.
(a) The rate of return on the Senior Tranche is calculated as follows: Default probability on loans in the reference portfolio = 1%, hence, the expected loss on the reference portfolio = 1% × $100 million = $1 million. Since the Senior Tranche is worth $65 million, it has credit protection against losses of $65 million − $1 million = $64 million. Interest income on the Senior Tranche is $65 million × 5% = $3.25 million. Therefore, the rate of return on the Senior Tranche is ($3.25 million / $65 million) = 5%.
The rate of return on the Mezzanine Tranche is calculated as follows: Mezzanine Tranche has credit protection against losses of $30 million − $64 million = − $34 million, which means it doesn’t have enough credit protection. Hence, Mezzanine Tranche will suffer losses on default. The expected loss on the Mezzanine Tranche is $34 million. Interest income on the Mezzanine Tranche is $30 million × 7.2% = $2.16 million. Therefore, the rate of return on the Mezzanine Tranche is (($2.16 million − $34 million) / $30 million) = −110.8%.
The rate of return on the Equity Tranche is calculated as follows: The Equity Tranche has no credit protection. The expected loss on the Equity Tranche is $5 million. Therefore, the rate of return on the Equity Tranche is (($0 − $5 million) / $5 million) = −100%.
(b) The rate of return on the Senior Tranche is calculated as follows: Default probability on loans in the reference portfolio = 9%, hence, the expected loss on the reference portfolio = 9% × $100 million = $9 million. Since the Senior Tranche is worth $65 million, it has credit protection against losses of $65 million − $9 million = $56 million. Interest income on the Senior Tranche is $65 million × 5% = $3.25 million. Therefore, the rate of return on the Senior Tranche is (($3.25 million − $9 million) / $65 million) = −8.8%.
The rate of return on the Mezzanine Tranche is calculated as follows: Mezzanine Tranche has credit protection against losses of $30 million − $56 million = − $26 million, which means it doesn’t have enough credit protection. Hence, Mezzanine Tranche will suffer losses on default. The expected loss on the Mezzanine Tranche is $26 million. Interest income on the Mezzanine Tranche is $30 million × 7.2% = $2.16 million. Therefore, the rate of return on the Mezzanine Tranche is (($2.16 million − $26 million) / $30 million) = −94.8%.
The rate of return on the Equity Tranche is calculated as follows: The Equity Tranche has no credit protection. The expected loss on the Equity Tranche is $5 million. Therefore, the rate of return on the Equity Tranche is (($0 − $5 million) / $5 million) = −100%.
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Intro You invest $2,700 in a savings account that pays 3.6% interest per year. Part 1 How much money will you have in one year? 0+ decimals Submit BAttempt 1/10 for 1 pts.
Intro Your favorite aunt ha
You will have approximately $2,792.52 in one year after investing by compound interest.
To calculate the amount of money you will have in one year, you can use the formula for compound interest:
A =[tex]P (1 + r)^n[/tex]
Where:
A = Final amount of money
P = Principal amount (initial investment)
r = Interest rate per period (in decimal form)
n = Number of periods
In this case, the principal amount is $2,700, the interest rate is 3.6% (or 0.036 in decimal form), and the number of periods is 1 year.
Plugging in the values:
A = [tex]$2,700 (1 + 0.036)^1[/tex]
Simplifying the equation:
A = [tex]$2,700 (1.036)[/tex]
Calculating the expression:
A ≈ $2,792.52
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Problem 3. Bob's risk preference is represented by the following expected utility formula: U(TT, C1; 1 – 1, C2) = a log(ci) + (1 – 7) log(c2). Bob can invest $10 into two stocks. Stock 1 returns $1 when the economy is good and returns 0 when the economy is bad while Stock 2 returns $0 when the economy is good and returns $1 when the economy is bad. The price of stock 1 is denoted by pı and the price of stock 2 is P2 = 0.25. Suppose the economy is good with probability 0.7 and is bad with probability 0.3. 1 i) Write down Bob's utility maximization problem. ii) Determine Bob's optimal investment bundle (C1,c*) as a function of P1. Draw the inverse demand curve for stock 1 (i.e., ci on X axis and pı on Y axis).
Bob's utility maximization problem involves a choice between two investment options. Bob can invest in stock 1 which returns $1 in good economies and $0 in bad economies.
The problem involves Bob who wants to invest $10 into two stocks. One stock (stock 1) returns $1 when the economy is good and returns $0 when the economy is bad, while the other stock (stock 2) returns $0 when the economy is good and returns $1 when the economy is bad. The price of stock 1 is denoted by p1 and the price of stock 2 is P2 = 0.25.
The economy is good with probability 0.7 and bad with probability 0.3. Bob's risk preference is represented by the expected utility formula: U(TT, C1; 1 – 1, C2) = a log(ci) + (1 – 7) log(c2). Here, ci denotes the quantity of stock i that Bob purchases and ai is a measure of his risk aversion. His utility function shows that he is risk-averse because of the log function. He is more sensitive to losses than gains.
To maximize his utility, Bob must determine how to allocate his investment across the two stocks. We can determine the optimal investment bundle by taking the derivative of his expected utility with respect to the quantity of stock 1 and setting it equal to zero. The result shows that Bob should invest all his money in stock 1, which returns $1 in good economies and $0 in bad economies.
In conclusion, Bob's optimal investment bundle is to invest all his money in stock 1. The inverse demand curve for stock 1 is P1 = 1 - Q1 where Q1 is the quantity demanded of stock 1. The problem demonstrates how expected utility theory can be used to determine optimal investment decisions.
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