The contribution margin ratio for Oslo Company is 26.79%, indicating that 26.79% of each sales dollar contributes towards covering fixed expenses and generating operating income.
The contribution margin ratio is calculated by dividing the contribution margin by the sales revenue and expressing the result as a percentage. In this case, the contribution margin is $5,600 and the sales revenue is $20,900.
Contribution Margin Ratio = (Contribution Margin / Sales Revenue) * 100
Substituting the values:
Contribution Margin Ratio = ($5,600 / $20,900) * 100
Contribution Margin Ratio ≈ 26.79%
Therefore, the contribution margin ratio for Oslo Company is approximately 26.79%.
Hence, the contribution margin ratio indicates that 26.79% of each sales dollar contributes towards covering fixed expenses and generating operating income for Oslo Company.
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Blue Spruce Inc. acquired 20% of the outstanding common shares of Gregson Inc. on December 31, 2019. The purchase price was $1.031.700 for 54,300 shares, and is equal to 20% of Gregson's carrying amount. Gregson declared and paid a $0.75 per share cash dividend on June 15 and again on December 15, 2020. Gregson reported net income of $546,000 for 2020. The fair value of Gregson's
shares was $23 per share at December 31, 2020. Blue Spruce is a public company and applies IFS.
. Prepare the journal entries for Blue Spruce for 2019 and 2020, assuming that Blue Spruce cannot exercise significant influence over Gregson. The investment is accounted for using the FV-OCI model.
2019:
- Investment in Gregson Inc. $1,031,700; Cash $1,031,700.
2020:
- Investment in Gregson Inc. $109,200; Equity in Net Income $109,200.
Prepare the journal entries for Blue Spruce Inc. for 2019 and 2020, assuming Blue Spruce cannot exercise significant influence over Gregson Inc. and the investment is accounted for using the FV-OCI model.
Under the FV-OCI (Fair Value through Other Comprehensive Income) model, changes in the fair value of the investment are recognized in other comprehensive income. Here are the journal entries for Blue Spruce Inc. for 2019 and 2020:
2019:
To record the acquisition of 20% of Gregson Inc. shares:Investment in Gregson Inc. $1,031,700
Cash $1,031,700
2020:
To record the share of Gregson's net income:Investment in Gregson Inc. $109,200 [20% * $546,000]
Equity in Net Income of Gregson Inc. $109,200
To record the cash dividend received on June 15, 2020:Cash $40,725 [54,300 shares * $0.75 per share * 20%]
To record the cash dividend received on December 15, 2020:Cash $40,725 [54,300 shares * $0.75 per share * 20%]
To record the change in fair value of the investment:Investment in Gregson Inc. $467,100 [$23 per share * 54,300 shares * 20% - $1,031,700]
Unrealized Gain on Investment $467,100
It's important to consult with a professional accountant or financial advisor to ensure compliance with the specific accounting standards and regulations applicable to your situation.
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equals a division's operating income divided by its investment
a. return on investment (ROI)
b. residual income (RI)
C. economic value added (EVA)
d. earnings before interest and tax (EBII) e. net income (NI)
Return on investment (ROI) equals a division's operating income divided by its investment. Option A is the correct answer.
Return on investment (ROI) is a financial metric used to evaluate the profitability and efficiency of an investment. It is calculated by dividing the operating income (or net income) of a division or project by its investment.
ROI is a widely used performance measure as it provides an indication of how effectively an investment is generating profits relative to its cost. By comparing the return on investment of different divisions or projects, managers can make informed decisions about resource allocation and evaluate the success of their investments.
Residual income (RI), economic value added (EVA), earnings before interest and tax (EBIT), and net income (NI) are also important financial metrics, but they are not specifically defined as the division's operating income divided by its investment. Each of these metrics has its own unique calculation and purpose in evaluating financial performance.
Option A is the correct answer.
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Catherine has been receiving a monthly annuity payment from a life annuity with a 20 year guarantee which she purchased at age 70 . Catherine's sister, Norma, was named the beneficiary after Catherine's husband died several years ago. Norma died last year and Catherine died this year at age 91. To whom will the remaining annuity payment be made? Select one: a. Norma's estate b. No annuity payment is payable c. Catherine's children d. Catherine's estate
In the scenario provided, the remaining annuity payment would be made to catherine's estate upon her death.
Based on the given information, catherine had been receiving a monthly annuity payment from a life annuity with a 20-year guarantee. the guarantee period ensures that if catherine were to pass away within the guarantee period, the remaining annuity payments would be made to the designated beneficiary or the estate of the beneficiary.
in this case, catherine's sister norma was named the beneficiary of the annuity. however, norma passed away before catherine. as norma predeceased catherine, she would not be eligible to receive any remaining annuity payments. the correct is:d. catherine's estate
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Which of the following would charge a purchaser of realty with inquiry notice?
The correct answer is "b, Recorded documents." When purchasing, it is necessary for buyers to watch the recorded documents.
Recorded documents, such as liens, encumbrances, or easements, that are publicly available and recorded in the property records would typically charge a purchaser of realty with inquiry notice.
When purchasing real estate, it is crucial for buyers to review these recorded documents to understand any potential issues or claims that may affect the property.
By examining the recorded documents, a purchaser can gain important information about the property's legal status, any existing encumbrances, and potential restrictions on its use. Therefore, recorded documents are a key factor that would charge a purchaser of realty with inquiry notice.
On the other hand, a routine inspection of the property (option "a") is a common practice during due diligence and may reveal physical conditions or defects but does not typically trigger inquiry notice. The correct option is b.
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--The given question is incomplete, the complete question is given below " Which of the following would charge a purchaser of realty with inquiry notice?
a, routine inspection of the property
b, Recorded documents"--
The use of estimates on a tax return generally is:
Prohibited
Allowed, but must be disclosed if the amounts involved are material
Allowed, but must be disclosed if most, or all, of the line items on the tax return were estimated
Allowed only if documents were destroyed by a natural disaster or computer failure
The use of estimates on a tax return generally is not allowed unless documents were destroyed by a natural disaster or computer failure. Taxpayers are required by law to file a return that accurately reports their income, deductions, and other tax-related information.
Therefore, taxpayers are expected to keep accurate and complete records to support the items reported on their tax return.However, in some cases, it may be impossible for taxpayers to obtain the necessary records to support their tax return due to natural disasters or computer failures.
In these situations, the IRS may allow taxpayers to use reasonable estimates to complete their tax return. This is known as the "reasonable cause" exception to the record-keeping requirement. The IRS will generally accept estimates if the taxpayer can demonstrate that they made a good faith effort to obtain the necessary records and that the estimates are based on the best information available.
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the classical decision making model is based on the assumption that the decision maker can ______.
The classical decision-making model is based on the assumption that the decision maker can make rational choices by systematically evaluating all available alternatives, considering the consequences of each option, and selecting the one that maximizes their utility or objective.
In other words, the classical model assumes that the decision maker can:
1. Gather and process all relevant information: The decision maker is assumed to have access to complete and accurate information about the decision problem, including available alternatives, potential outcomes, and associated risks.
2. Evaluate all available alternatives: The decision maker is assumed to have the ability to identify and consider all possible courses of action or alternatives that could potentially address the decision problem.
3. Assess the consequences: The decision maker can assess and understand the potential outcomes and consequences of each alternative, including the likelihood of success, potential benefits, and risks involved.
4. Assign values and priorities: The decision maker is able to assign values or weights to different outcomes and objectives, reflecting their preferences and priorities. This allows for the comparison and ranking of alternatives based on their perceived desirability.
5. Make a rational choice: The decision maker is assumed to possess the cognitive ability to analyze and weigh all the information and alternatives, apply logical reasoning, and select the option that maximizes their objective or utility..
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Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
A. premiums are not tax deductible as a business expense
B. premiums are tax deductible by the key employee
C. premiums are tax deductible as a business expense
D. premiums are taxable to the employee
A) Premiums in a key-person life insurance policy are not tax deductible as a business expense.
The taxation of premiums in a key-person life insurance policy follows specific rules. In general, premiums paid for key-person life insurance are not tax deductible as a business expense. This means that the company cannot deduct the premiums paid from its taxable income. However, there are exceptions to this rule. If the key employee is also the policy's beneficiary, the premiums may be tax deductible by the key employee as a personal expense. In such cases, the key employee would be responsible for reporting the premiums as income and potentially claiming a deduction on their personal tax return. However, in the context of the given options, option A is the correct statement as it reflects the general rule that premiums for key-person life insurance are not tax deductible as a business expense.
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The break even point of a company is $240000. They sell their product at a markup of 30% and have variable expenses of 9% of sales. They currently make a profit of $10500. They plan on reducing their variable costs by 12% of sales by increasing fixed costs. If sales remain exactly as at the moment and they want to make a profit of $30000, what is the maximum that they can increase the fixed cost?
To determine the maximum increase in fixed costs that would allow the company to achieve a target profit of $30,000 while keeping sales unchanged, we need to analyze the contribution margin and the break-even point.
Let's start by calculating the current contribution margin:
Current contribution margin = Selling price - Variable expenses
Current contribution margin = 30% - 9%
Current contribution margin = 21%
The contribution margin represents the portion of each sale that contributes to covering fixed costs and generating profit. Now, let's determine the current fixed costs using the break-even point:
Break-even point = Fixed costs / Contribution margin
$240,000 = Fixed costs / 21%
Solving for fixed costs:
Fixed costs = $240,000 * 21%
Fixed costs = $50,400
New contribution margin = Fixed costs / Break-even point
New contribution margin = $50,400 / $240,000
New contribution margin = 21%
Since we want to reduce variable costs by 12% of sales, the new variable expenses will be 9% - 12% = -3% of sales. However, this negative percentage implies that the variable expenses would contribute to profit rather than being costs. To achieve a positive contribution margin, we need to keep the variable expenses at 9% of sales.
Now, let's calculate the new break-even point required to achieve the target profit of $30,000:
New break-even point = Fixed costs / New contribution margin
$50,400 = Fixed costs / 21%
Solving for fixed costs:
Fixed costs = $50,400 * 21%
Fixed costs = $10,584
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At which stage of the product life cycle do industry profits start to decline?
Question 12 options:
a) stagnation
b) market introduction
c) sales decline
d) market growth
e) market maturity
Industry profits start to decline during the stage of market maturity in the product life cycle. The option e is correct.
The product life cycle consists of various stages, namely market introduction, market growth, market maturity, and sales decline. During the market maturity stage, the product has reached its peak level of market penetration, and the competition becomes intense. At this stage, most potential customers have already purchased the product, and market saturation begins to occur. As a result, companies often find it challenging to sustain high profit margins due to increased competition and price pressures.
During market maturity, competitors may introduce similar or substitute products, leading to price wars and a decline in overall profitability. The market becomes saturated, with limited room for further expansion. As a result, companies may experience declining sales volumes and reduced profit margins. Additionally, technological advancements and changing consumer preferences may also contribute to the decline in industry profits during this stage.
To maintain profitability during market maturity, companies often resort to strategies such as product diversification, entering new markets, or finding ways to differentiate their offerings from competitors. However, in many cases, industry profits start to decline during this stage as the market becomes saturated and competition intensifies. Therefore , the option e is correct.
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A company plans to produce a new type of product that requires an initial cost of Rp. 100,000,000, and operational and maintenance costs of Rp. 10,000 per hour. In addition, the company must pay other costs of Rp. 40,000,000 per year. Based on the standard time obtained from engineering studies, it can be estimated that producing 2,000 units of product takes 100 hours. Furthermore, it is also estimated that the price per unit of product is Rp.50,000. The investment is assumed to be 10 years old with zero remaining. Question : With a MARR of 20%, calculate how many units must be produced for this company to break even?
The company, which is engaged in telecommunications, plans a program to provide Business Funds to each of its permanent employees at the end of their working period at the age of 58 years, amounting to Rp. 300 million. For the Business Fund program plan, the salary of each permanent employee will be deducted every month. The proceeds from the salary deduction will be used to purchase bonds with an interest rate of 20% per year. Question : If the age of the permanent employee at the time of employment is 25 years, then how much is the salary deduction for the employee each month? Draw the flow chart.
The first question asks how many units need to be produced for a company to break even, given the initial and operational costs, annual costs, production time, and unit price. The second question pertains to a company planning a Business Fund program for its permanent employees, deducting a portion of their salary each month to purchase bonds with a specific interest rate. The task is to determine the monthly salary deduction for an employee who starts working at the age of 25 and will receive the funds at the age of 58. Additionally, a flowchart is required to illustrate the process.
In the first scenario, the break-even point is the production level at which the company's total costs equal its total revenue. To calculate the break-even point, we need to consider the initial cost, operational and maintenance costs per hour, additional costs per year, production time, and unit price. By using these inputs, we can determine the total costs incurred and divide that by the unit price to find the break-even point in terms of units produced.
For the second question, the company plans to deduct a portion of the permanent employee's salary each month to contribute to a Business Fund program. The employee will receive a lump sum amount at the age of 58, calculated based on the accumulated funds and the interest rate earned from purchasing bonds. To determine the monthly salary deduction, we need to calculate the monthly contribution required to accumulate the desired fund amount by the time the employee reaches 58 years of age. This can be achieved by considering the interest rate, duration of employment, and desired fund amount.
A flowchart is a visual representation that shows the sequence of steps or actions in a process. It can be used to illustrate the steps involved in deducting the salary, purchasing bonds, and accumulating the funds for the Business Fund program. The flowchart will provide a clear and organized visualization of the process, allowing for easy understanding and identification of each step involved in the program.
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the short-run effects of an increase in the expected price level include
The short-run effects of an increase in the expected price level include a decrease in consumption, an increase in saving, and a decrease in investment.
When the expected price level increases, it has several effects on the economy in the short run.
One of the main effects is a decrease in consumption. Consumers anticipate higher prices in the future, which reduces their purchasing power and leads to a decrease in current consumption.
Furthermore, an increase in the expected price level often prompts individuals to increase their saving.
They may perceive the need to save more to maintain their purchasing power in the face of anticipated higher prices. This increase in saving contributes to a decrease in aggregate demand and can further dampen economic activity.
Another consequence of an increase in the expected price level is a decrease in investment. Higher expected prices can lead to uncertainty and discourage businesses from making new investments.
The anticipation of higher production costs and lower profitability can deter firms from expanding their operations or undertaking new projects, resulting in a decline in investment spending.
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Q2) Investment is a very crucial aspect of any business especially involving technology and innovation. Decision making to invest in a particular project is a big risk action but with proper strategy
By carefully analyzing market potential, assessing risks and returns, and considering long-term vision and flexibility, businesses can make informed investment decisions in technology and innovation projects. It is crucial to involve relevant stakeholders, conduct thorough research, and utilize appropriate financial and strategic analysis tools to mitigate risks and maximize the chances of success.
It can lead to significant rewards. Here are three key considerations for investment decision-making in technology and innovation projects:
1. Market Potential and Competitive Advantage: Before investing in a technology project, it is essential to assess the market potential and demand for the product or service. Understanding the target market, customer needs, and competition will help determine if the project has a competitive advantage and if it has the potential to generate sustainable revenues and profits.
2. Risk and Return Assessment: Investments in technology and innovation projects often involve a certain level of risk. It is crucial to evaluate the risks associated with the project, such as technological challenges, market uncertainties, and regulatory changes. Additionally, assessing the potential return on investment (ROI) is important to ensure that the project aligns with the organization's financial goals and objectives.
3. Long-Term Vision and Flexibility: Technology and innovation projects require a long-term perspective. It is important to consider the project's alignment with the organization's overall strategic goals and vision. Additionally, investing in projects that offer flexibility and adaptability can help navigate changing market dynamics and emerging technologies.
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Cunning, a 66-year-old senior and Bunning half her age, are in partnership operating under the name BunnCunn Choices. You have been tasked with the job of preparing and filing their tax returns with the relevant tax authority for 2021. You have been presented with the following Trial Balance along with the attached notes.
1. Building was purchased in 2020 and annual depreciation is charged at 5% per annum.
2. Bunning is a salaried partner who does not share in profits. Included in salaries is $3m paid to him for the year.
3. The amount for Bad debts is estimated based on debtors balance
4. Breakdown for Donations reflect $80,000 to UTECH and $10,000 to an unregistered football club unknown to TAJ, the balance was to TAJ’s approved clubs.
5. Travelling expenses relate to costs incurred in travelling by Partner Bunning to negotiate a critical business deal. However, he used the opportunity to take his wife on the trip as a treat for her birthday. Costs relating to having his wife on the trip is $40,000.
6. Estimated tax payment for 2021 of $100,000 was paid by Cunning from personal funds
7. 50% of amounts paid for legal fees relate to cost of protecting the business reputation, the other 5% was for cost in acquiring fixed assets.
Note: Assume NIS rate of 3% and ceiling of J$3m throughout the year 2021.
BunnCunn Choices
Trial Balance
Year ended December 31, 2021
DescriptionDebitCredit
Land2,500,000
Industrial Building8,000,000
Accumulated Depreciation - Building800,000
Motor Vehicle (purchased in 2021)2,000,000
Accumulated Depreciation - Motor Vehicle400,000
Capital: Cunning3,000,000
Capital: Bunning2,000,000
Drawings for Bunning34,000
Debtors330,000
Creditors1,355,000
Loan2,100,000
Sales20,000,000
Purchases8,000,000
Salaries6,400,000
Legal Fees450,000
Depreciation800,000
Donations120,000
Bad Debts33,000
Travelling300,000
Loan Interest 133,000
Utilities375,000
Rent180,000
TOTAL29,655,000 29,655,000
Required
Prepare the Accounting Profit Statement along with the Profit Adjustment Statement for the
Partnership for 2021 and write brief notes to the partners explaining the reason(s) for differences
in each of the items included in both statements for taxation purposes.
To prepare the Accounting Profit Statement and Profit Adjustment Statement for BunnCunn Choices for the year 2021, we need to analyze the trial balance and make necessary adjustments for tax purposes.
The adjustments include depreciation, salaries, bad debts, donations, traveling expenses, estimated tax payment, and legal fees. These adjustments will result in the final profit figures for taxation purpose.
Depreciation: Calculate the depreciation expense for the building and motor vehicle based on the respective rates and deduct them from the trial balance amounts.
Salaries: Exclude the $3 million paid to Bunning from the salaries expense since he does not share in profits.
Bad debts: Estimate the bad debts based on the debtors' balance and deduct it from the trial balance.
Donations: Adjust the donations to exclude the $10,000 given to the unregistered football club, as it is not tax-deductible.
Traveling expenses: Adjust the traveling expenses to exclude the $40,000 cost related to Bunning's wife, as it is not a legitimate business expense. Estimated tax payment: Deduct the estimated tax payment of $100,000 made by Cunning from personal funds.
Legal fees: Allocate 50% of the legal fees to the cost of protecting the business reputation and include the remaining 5% as a cost of acquiring fixed assets.
After making these adjustments, calculate the net profit and prepare the Accounting Profit Statement. The Profit Adjustment Statement will explain the differences between the Accounting Profit Statement and taxable profit, providing the reasoning for each adjustment made.
Note: Ensure to consider any applicable tax regulations and guidelines specific to the jurisdiction in which BunnCunn Choices operates to accurately determine the taxable profit.
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abc corporation had $370,000 in inventory at the start of the year and a daily cost of goods sold of $8,220. abc's average days in inventory is
ABC Corporation's average days in inventory is 45
The average days in inventory of the ABC Corporation is 45.
To calculate the average days in inventory, we need to use the following formula:
Average days in inventory = (Ending inventory / Cost of goods sold) x Number of days in the period
Here,
Ending inventory = Beginning inventory + Purchases - Cost of goods sold.
Let's calculate ending inventory:
Ending inventory = Beginning inventory + Purchases - Cost of goods sold 370,000 + 0 - 8,220 = 361,780
Next, we can calculate the number of days in the period.
Assuming that a year consists of 365 days, Number of days in the period = 365
The cost of goods sold per day is given as 8,220, which means that in 365 days, the cost of goods sold will be:
Cost of goods sold = Daily cost of goods sold x Number of days in the period 8,220 x 365 = 2,999,300
We can now substitute these values into the formula to get the average days in inventory:
Average days in inventory = (Ending inventory / Cost of goods sold) x Number of days in the period= (361,780 / 2,999,300) x 365= 0.1207 x 365= 44.07 ≈ 45
Therefore, ABC Corporation's average days in inventory is 45.
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Why might a CEO have an incentive to drive his company’s
stock price down? Is there evidence that CEOs might do this on any
systematic basis? If so, describe it.
Dont copy other's answer
CEOs may have incentives to drive their company's stock price down due to certain circumstances and strategic considerations.
There is evidence to suggest that CEOs might engage in such behavior on a systematic basis.
A CEO may have several reasons to intentionally drive down their company's stock price. One possible motive is to benefit from stock options or other equity-based compensation.
If the CEO anticipates a decline in the stock price, they could exercise their options at a lower price, allowing them to purchase shares at a discount and potentially profit when the price recovers. This behavior can align their personal financial interests with the short-term decline in stock price.
Furthermore, a CEO might drive down the stock price to deter a potential hostile takeover. By artificially lowering the company's value, it becomes less attractive to acquirers, making it more challenging for them to execute a successful takeover.
Evidence suggests that CEOs engage in stock price manipulation. Studies have found that CEOs exploit opportunities to time stock option exercises, selling shares before negative news or unfavorable events that could drive down the stock price. This behavior has been observed across various industries and is often attributed to managerial opportunism.
In addition, instances of accounting manipulations, earnings management, or fraudulent activities by CEOs have been documented, all of which can impact the stock price negatively.
Overall, while not all CEOs engage in such behavior, there is evidence to suggest that some CEOs may systematically drive down their company's stock price for personal gain or strategic purposes.
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Mankow, Inc., a calendar-year company, uses an allowance system to account for its uncollectible accounts. Record the following in general journal form.
March 1 Sold merchandise for $43,000 to Stork Inc., on account.
May 30 Joe Stork, owner of Stork, Inc. skips town. Mankow writes off the account as uncollectible
Nov. 4 Joe is back. He struck it rich and pays Mankow $25,000.
The following transactions should be recorded in general journal form for Mankow, Inc.: 1. On March 1, Mankow sold merchandise worth $43,000 to Stork Inc. on account. 2. On May 30, Joe Stork, the owner of Stork, Inc., disappears, and Mankow determines the account to be uncollectible and writes it off. 3. On November 4, Joe Stork returns and pays Mankow $25,000.
To record these transactions in general journal form, we would follow the standard format, including the date, description of the transaction, accounts affected, and the corresponding amounts.
1. On March 1, we would record the sale of merchandise to Stork Inc. on account as follows:
Date | Description | Debit | Credit
-----------------------------------------------------------------------------------
March 1 | Accounts Receivable | $43,000 |
| Sales Revenue | | $43,000
2. On May 30, when Mankow determines the account to be uncollectible and writes it off, we would record the following entry:
Date | Description | Debit | Credit
-----------------------------------------------------------------------------------
May 30 | Allowance for Doubtful Accounts | $43,000 |
| Accounts Receivable | | $43,000
3. On November 4, when Joe Stork returns and pays $25,000, we would record the following entry to reinstate the account:
Date | Description | Debit | Credit
-----------------------------------------------------------------------------------
November 4 | Accounts Receivable | $25,000 |
| Allowance for Doubtful Accounts | | $25,000
These entries accurately record the sales, write-off, and subsequent payment of the uncollectible account in Mankow's general journal.
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Revenue that the government collects from households and businesses
a. Taxes
b. Economic profit
c. Subsidies
d. Virtual monopoly
The main way that the government gets money from people's homes and companies is through a. Taxes. Taxes are mandatory payments made by people, households, and enterprises to the government in order to pay for public expenses and run the government.
Taxes can be imposed on a variety of income sources, including corporation taxes on business earnings, property taxes on real estate, sales taxes on goods and services, and income taxes on both persons and businesses. The government depends on these tax revenues to pay for public services, infrastructure improvements, social welfare programmes, defence, and other vital governmental tasks. Economic gain, subsidies, and virtual monopoly do not directly correspond to taxes paid by citizens and companies to the government.
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For the functional area of logistics and materials management provide an example of how information systems could support managing the supply or sale of parts inventory.
Provide an example of how each of the following types of reports could be used to support each
management level of the functional area of parts inventory management.
(i) Comparative report for strategic decision making
(ii) Key-indicator report for tactical decision making
(iii) Drill-down report for operational decision making
Be sure to both describe the report and the management decision it supports
Example of how information systems could support managing the supply or sale of parts inventory in logistics and materials management:
Information systems can play a crucial role in managing the supply or sale of parts inventory by providing real-time visibility, streamlining processes, and improving decision-making. For example, an enterprise resource planning (ERP) system can integrate various functions within the organization, including inventory management, procurement, sales, and finance, to ensure efficient and effective operations.
Example of reports supporting each management level in parts inventory management:
(i) Comparative report for strategic decision making:
A comparative report provides a comparison of key performance indicators (KPIs) and metrics over a specified period, usually covering multiple years or quarters. This report supports strategic decision making by enabling management to identify trends, patterns, and performance gaps in parts inventory management. For example, a comparative report may compare sales revenue, inventory turnover, and profit margins across different product categories or geographical regions. Based on this information, strategic decisions can be made regarding product mix, market expansion, or resource allocation.
(ii) Key-indicator report for tactical decision making:
A key-indicator report focuses on specific performance indicators that are critical for tactical decision making in parts inventory management. This report provides regular updates on important metrics and KPIs, allowing managers to monitor operational efficiency and take timely actions. For example, a key-indicator report may include metrics such as inventory levels, stockouts, lead times, order fill rates, and supplier performance. Based on these indicators, tactical decisions can be made regarding reorder points, safety stock levels, supplier selection, or production scheduling.
(iii) Drill-down report for operational decision making:
A drill-down report provides detailed, granular information about specific transactions, activities, or events in parts inventory management. It allows managers to dive deep into operational data and identify root causes or exceptions. For example, a drill-down report may provide information on individual stock movements, order status, backorders, or quality issues. This report supports operational decision making by enabling managers to troubleshoot problems, address bottlenecks, or optimize processes at the operational level.
In summary, these reports cater to different management levels and serve specific decision-making needs in parts inventory management. The comparative report aids strategic decision making by providing a long-term perspective, the key-indicator report supports tactical decision making with critical performance indicators, and the drill-down report assists operational decision making by providing detailed transactional information.
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There are 3 financial institutes that have the below information:
- Flns1: 9.77 compounded daily(consider 365 days per year)
- Flns2: 9.77 compounded weekly (consider 52 weeks per annum)
- Flns3: 9.77 compounded monthly
What is the EAR for Flns1?
What is the EAR for Flns2?
What is the EAR for Flns3?
By considering the effective annual interest rate, which one is preferable to get a loan? EAR for Flns1? EAR for Flns2? EAR for Flns3? which one is preferable to get a loan?
The effective annual interest rate (EAR) for Flns1 is 10.00%, for Flns2 is 10.27%, and for Flns3 is 10.20%. Flns2, with an EAR of 10.27%, is preferable for getting a loan.
The effective annual interest rate (EAR) takes into account the compounding frequency and provides a standardized measure of the annual interest rate. To calculate the EAR, we use the formula:
[tex]EAR= (1+\frac{r}{n} )^{n} -1[/tex], where r is the nominal interest rate and n is the number of compounding periods per year.
For Flns1 with a nominal interest rate of 9.77% compounded daily (365 times a year), the EAR is 10.00%. For Flns2 with a nominal interest rate of 9.77% compounded weekly (52 times a year), the EAR is 10.27%. For Flns3 with a nominal interest rate of 9.77% compounded monthly (12 times a year), the EAR is 10.20%.
Comparing the three options, Flns2 offers the highest EAR of 10.27%. This means that Flns2 has the highest effective interest rate, taking into account the compounding frequency. Therefore, Flns2 is preferable for getting a loan as it would result in higher interest earnings for the lender.
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If a company's revenue grows by 15%, would its EBITDA grow by more than, less than, or the same percent?
a. EBITDA would grow at the same pace if the company has only variable costs
b. EBITDA would grow less than revenue if the company has as much variable costs as it has fixed costs
c. EBITDA would grow more than if the company has only variable costs
EBITDA would grow more than if the company has only variable costs (option c) .
When a company's revenue grows by 15%, the impact on EBITDA depends on the cost structure of the company. Let's explore the different scenarios:
a. If the company has only variable costs, EBITDA would grow at the same pace as revenue. This is because variable costs are directly linked to revenue and increase proportionally.
b. If the company has as much variable costs as it has fixed costs, EBITDA would grow less than revenue. In this case, fixed costs remain constant, and any increase in revenue would incur additional variable costs. As a result, the growth rate of EBITDA would be lower than the growth rate of revenue.
c. If the company has only variable costs, EBITDA would grow more than revenue. In this scenario, all costs are variable and directly tied to revenue. Therefore, any increase in revenue would lead to a corresponding increase in EBITDA, resulting in EBITDA growing at a higher rate than revenue.
In summary, the growth rate of EBITDA would vary depending on the cost structure of the company. If a company has only variable costs, EBITDA would grow at the same pace as revenue (option a). If a company has as much variable costs as fixed costs, EBITDA would grow less than revenue (option b). Finally, if a company has only variable costs, EBITDA would grow more than revenue (option c).
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Compute the objective function value for the following problem: Min 9X + 33Y subject to : 2X>=0 ;3X + 11Y = 33; X+Y>=0
a.
infeasible
b.
99
c.
unbounded
d.
126
e.
0
The objective function value for the given problem is option (b) 99.
To compute the objective function value for the given problem, we need to find the values of X and Y that satisfy the constraints and minimize the objective function.
Let's solve the system of constraints to find the values of X and Y:
2X ≥ 0
This constraint indicates that X must be greater than or equal to 0.
3X + 11Y = 33
This is an equation representing a line in the X-Y plane.
X + Y ≥ 0
This constraint indicates that the sum of X and Y must be greater than or equal to 0.
To determine the objective function value, we need to minimize 9X + 33Y.
Let's analyze the answer choices based on the constraints:
a. Infeasible: If the system of constraints has no feasible solutions, it means there are no values of X and Y that satisfy all the constraints. We can check this by solving the equations. However, based on the given constraints, it is possible to find feasible solutions, so this option is incorrect.
b. 99: This is a potential objective function value, but we need to calculate it based on the values of X and Y that satisfy the constraints.
c. Unbounded: If the solution to the problem is unbounded, it means that the objective function can be minimized or maximized without any bound. We can check if this is the case by solving the equations. However, based on the given constraints, the solution is not unbounded, so this option is incorrect.
d. 126: This is a potential objective function value, but we need to calculate it based on the values of X and Y that satisfy the constraints.
e. 0: This is a potential objective function value, but we need to calculate it based on the values of X and Y that satisfy the constraints.
To find the values of X and Y, let's solve the equations:
From the second equation, we have:
3X + 11Y = 33
3X = 33 - 11Y
X = (33 - 11Y) / 3
Now, let's substitute this value of X into the third equation:
(33 - 11Y) / 3 + Y ≥ 0
33 - 11Y + 3Y ≥ 0
33 - 8Y ≥ 0
8Y ≤ 33
Y ≤ 33/8
Since X ≥ 0, we need to find the maximum value of Y that satisfies the above inequality. The maximum value of Y is Y = 33/8.
Now, let's substitute this value of Y back into the second equation to find the corresponding value of X:
3X + 11(33/8) = 33
3X + 363/8 = 33
3X = 33 - 363/8
3X = (264 - 363)/8
3X = -99/8
X = -33/8
Therefore, the values of X and Y that satisfy the constraints are X = -33/8 and Y = 33/8.
Now, let's calculate the objective function value:
9X + 33Y = 9(-33/8) + 33(33/8)
= -297/8 + 1089/8
= (1089 - 297)/8
= 792/8
= 99
So, the objective function value for the given problem is 99.
Therefore, the correct answer is (b) 99.
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Abbotsford Ltd. receives its annual property tax bill for the calendar year on May 1, 2021. The bill is for $28,000 and payable on June 30, 2021. Abbotsford Ltd. paid the bill on June 30, 2021. The company prepares quarterly financial statements and had initially estimated that its 2021 property taxes would be $30,000.
Based on the given information, here is how the property tax payment of Abbotsford Ltd. would be reflected in the company's quarterly financial statements:
1. First Quarter (January 1, 2021 - March 31, 2021):
Since the property tax bill was received on May 1, 2021, it falls outside the first quarter. Therefore, there would be no impact on the first-quarter financial statements.
2. Second Quarter (April 1, 2021 - June 30, 2021):
The property tax bill of $28,000 is payable on June 30, 2021. Since the company pays the bill on the same day, there would be a cash outflow of $28,000 recorded under the operating activities section of the cash flow statement for the second quarter. Additionally, an expense of $28,000 would be recognized in the income statement for the second quarter, reflecting the actual amount of the property tax bill.
3. Third Quarter (July 1, 2021 - September 30, 2021):
In the third quarter, there would be no impact on the financial statements related to property taxes since the bill has already been paid in the second quarter.
4. Fourth Quarter (October 1, 2021 - December 31, 2021):
Similarly, there would be no impact on the financial statements related to property taxes in the fourth quarter since the bill has already been paid in the second quarter.
It's worth noting that since the estimated property taxes of $30,000 were higher than the actual property tax bill of $28,000, there would be a favorable variance of $2,000. This variance would not impact the second-quarter financial statements but could be reflected in the year-end financial statements or in any subsequent reporting period where the variance is recognized or adjusted.
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You have been appointed as a management consultant for OnFinance and are required to solve the challenges that they are facing. You are expected to develop a strategy and more importantly an execution plan for implementation. OnFinance is in its early stage entering a highly competitive financial indicator market. For a platform providing real-time investment insights driven by highly accurate and powerful AI \& NLP models that you can leverage on the go, OnFinance is facing problems growing its user base.
Problem 1: - Provide an industry analysis Hint: SWOT and PESTEL frameworks
Problem 2: - Perform an in-depth competitor analysis Hint: Heat map
Problem 3: - Formulate a robust go-to-market strategy for reaching its target customers.
Industry analysis helps identify strengths, weaknesses, opportunities, and threats (SWOT) as well as external factors (PESTEL) affecting On Finance..
Competitor analysis evaluates competitors' strengths, weaknesses, and market positioning using a heat map. This helps On Finance understand competitors' offerings, pricing, customer base, and unique selling points, enabling effective differentiation and competitive advantage. To formulate a go-to-market strategy, On Finance needs to define target customers, understand their needs, and develop a value proposition. It should identify marketing channels, pricing, distribution, and customer acquisition strategies to effectively reach and engage its target customers, driving user growth and market penetration.
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A. U.S. government bond with a 6 3/8% coupon that expires in December 2020. The bond was issued on January 1, 2016, and the required annual yield is 5%. The Par Value of the bond is $1,000. Coupon payments are made semi-annually (June 30 and December 31 for this bond). Find the price of the bond.
The price of the bond is $1,120.57.
To calculate the price of the bond, we need to determine the present value of its cash flows, which include both the periodic coupon payments and the final principal payment at maturity.
First, let's calculate the coupon payments. The bond has a 6 3/8% coupon rate, which means it pays an annual coupon of 6.375% of the par value. Since coupon payments are made semi-annually, each coupon payment will be half of the annual coupon rate. Therefore, the coupon payment is (6.375% / 2) * $1,000 = $31.875.
Next, let's calculate the number of semi-annual coupon payments remaining until maturity. The bond was issued on January 1, 2016, and it expires in December 2020. Therefore, there are 4 years (or 8 semi-annual periods) remaining until maturity.
To find the present value of the coupon payments, we discount each payment back to the present using the required annual yield of 5%. Since coupon payments are semi-annual, we use a semi-annual discount rate of 5% / 2 = 2.5%.
Using the present value of an ordinary annuity formula, the present value of the coupon payments can be calculated as follows:
PV = Coupon Payment * (1 - (1 + r)^(-n)) / r,
where PV is the present value, r is the discount rate, and n is the number of periods.
PV = $31.875 * (1 - (1 + 0.025)^(-8)) / 0.025 = $31.875 * (1 - 0.790787) / 0.025 = $31.875 * 0.209213 / 0.025 = $261.113
Finally, we need to calculate the present value of the principal payment at maturity. Since the bond has a par value of $1,000, and it will be received at the end of the bond's term, its present value is simply $1,000 / (1 + 0.025)^8 = $859.457.
Now, we can calculate the price of the bond by summing up the present values of the coupon payments and the principal payment:
Price = PV of Coupon Payments + PV of Principal Payment = $261.113 + $859.457 = $1,120.57
Therefore, the price of the bond is $1,120.57.
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Question 9 (1 point)
If a grace period does not exist for a legal deduction, the
employer should act on the
legal order immediately.
True
False
The statement is true. If a grace period does not exist for a legal deduction, the employer should act on the legal order immediately.
When a legal deduction is imposed on an employer, such as a court-ordered garnishment or child support payment, the employer is legally obligated to comply with the order. In some cases, a grace period may be provided, allowing the employer some time to process the necessary paperwork or make arrangements for the deduction.
However, if there is no grace period specified, it means that the employer should take immediate action to implement the deduction as required by the legal order. Failing to act promptly in such cases could result in legal consequences or penalties for the employer. Therefore, the statement is true, and the employer should act on the legal order without delay when a grace period is not provided.
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A firm is able to adjust both L and K and has a production function q=KL, where K is the amount of capital and L is the amount of labor it uses as inputs. The cost per unit of capital is r and the cost per unit of labor is w. The (conditional) demand for capital (also known as the optimal level of capital) is given by:
a. the square root of qr/w
b. the square root of qw/r
c. qw/r
d. qwr
e. q/wr
The answer to the question is option B. The square root of qw/r is the optimal level of capital.
The optimal level of capital is the amount of capital required by the firm to produce a given level of output with the least cost possible. It is also referred to as the (conditional) demand for capital. The optimal level of capital can be calculated as follows: Optimal level of capital = √qw/r. Therefore, option B is the correct answer.
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Which of the following statements is TRUE? Select one: a. None of the other options is true. b. The repricing gap is a market-value based approach c. Convexity is a major problem associated with the duration model d. Other factors remaining the same, duration of a coupon bond is the same as its maturity.
The statement that is true is "Other factors remaining the same, the duration of a coupon bond is the same as its maturity.
"What is duration?Duration is a calculation that provides the sensitivity of bond prices to the changes in interest rates. It is calculated by evaluating the bond's cash flows, time to maturity, and coupon yield. Duration estimates how much a bond's price can increase or decrease when interest rates fluctuate. It's a risk metric that determines how long a bond must be held until it recovers its initial price.
The time remaining until a bond matures is referred to as its maturity. Bond prices are affected by changes in interest rates, and bonds with longer maturities are more sensitive to those changes. The bond's duration is a measure of the bond's sensitivity to changes in interest rates, and it rises as the bond's maturity increases.
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26)ABC Company sold furniture used in its business, which had been depreciated $10,000, at a loss of $15,000. Which of the following is true?
The Section 1231 loss is $15,000.
The Section 1245 depreciation recapture is $10,000.
The capital loss is $15,000.
The ordinary loss is $5,000.
29) Mary is a single mother with 2 children: Ted, age 14, and Cindy, age 10. Her adjusted gross income (AGI) is $60,000. In the current year, Mary spent $2,000 for after-school care for Ted and $4,000 for after-school care for Cindy. What is Mary’s dependent care credit for the current year?
$600
$1,200
$1,000
$800
$0
In the given scenario, ABC Company sold furniture that had been depreciated by $10,000, resulting in a loss of $15,000. To determine the correct statement, we need to understand the implications of this transaction on different tax provisions.
The options provided are the Section 1231 loss, Section 1245 depreciation recapture, capital loss, and ordinary loss.
Based on the information provided, the correct statement is: The Section 1231 loss is $15,000. Section 1231 of the Internal Revenue Code pertains to the treatment of gains and losses on the sale or exchange of property used in a trade or business. When a sale of property results in a loss, it is considered a Section 1231 loss. In this case, ABC Company sold the depreciated furniture at a loss of $15,000, which qualifies as a Section 1231 loss.
The other options are not applicable in this scenario. Section 1245 depreciation recapture applies when there is a gain on the sale of depreciable property, not a loss. Capital loss typically applies to the sale of investment assets, not business assets. Ordinary loss refers to losses incurred in the normal course of business operations, and in this case, it is a Section 1231 loss rather than an ordinary loss.
Regarding the second question, to calculate Mary's dependent care credit, we need to determine the eligible expenses and apply the appropriate credit rate based on her adjusted gross income (AGI). Since Mary's AGI is $60,000 and she spent a total of $6,000 ($2,000 for Ted and $4,000 for Cindy) on qualified after-school care, the dependent care credit is calculated based on a percentage of these expenses. The specific credit rate depends on the taxpayer's AGI, but without additional information on the AGI range, we cannot determine the exact credit amount.
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Hector's wealth is zero, he expects to work for another 45 years at a constant salary of $80,000 and live for another 60 years. If yearly taxes are $20,000 and Hector completely smooths consumption over his lifetime, his annual consumption is ____
If yearly taxes are $20,000 and Hector completely smooths consumption over his lifetime, his annual consumption is $60,000.
To calculate Hector's annual consumption, we need to subtract his annual taxes from his annual salary and divide the remaining amount by the number of years he expects to live.
Hector's annual salary is $80,000, and his annual taxes are $20,000. So, his annual income after taxes is $80,000 - $20,000 = $60,000. Since he completely smooths his consumption over his lifetime, he will consume the same amount each year.
Considering he expects to live for another 60 years, his annual consumption will be $60,000 per year. This means he will spend the entire amount of his after-tax income on consumption each year.
In conclusion, based on Hector's expectation of working for another 45 years, living for another 60 years, and completely smoothing his consumption, his annual consumption is projected to be $60,000. This calculation takes into account his constant salary of $80,000, annual taxes of $20,000, and the assumption that he spends his entire after-tax income on consumption each year. By maintaining a consistent consumption level over his lifetime, Hector aims to balance his financial resources and expenses, ensuring a stable standard of living throughout his working and retirement years.
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Required information [The following information applies to the questions displayed below.] Seiko's current salary is $85,500. Her marginal tax rate is 32 percent, and she fancies European sports cars. She purchases a new auto each year. Seiko is currently a manager for Idaho Office Supply. Her friend, knowing of her interest in sports cars, tells her about a manager position at the local BMW and Porsche dealer. The new position pays only $72,000 per year, but it allows employees to purchase one new car per year at a discount of $16,600. This discount qualifies as a nontaxable fringe benefit. In an effort to keep Seiko as an employee, Idaho Office Supply offers her a $7,500 raise. Answer the following questions about this analysis.
a. what is the annual after-tax cost to idaho office supplies if it provides seiko with with $7.500 increase in salary
The annual after-tax cost to Idaho Office Supply if they provide Seiko with a $7,500 increase in salary would be $5,100.
To calculate the annual after-tax cost to Idaho Office Supply if they provide Seiko with a $7,500 increase in salary, we need to consider Seiko's marginal tax rate.
Seiko's current salary is $85,500, and her marginal tax rate is 32 percent. Therefore, any additional Income , including the $7,500 raise, will be subject to the same marginal tax rate.
The after-tax cost can be calculated by subtracting the tax amount from the raise amount. The tax amount is determined by multiplying the raise by the marginal tax rate:
Tax Amount = $7,500 * 0.32
After-Tax Cost = $7,500 - Tax Amount
Substituting the values, we have:
Tax Amount = $7,500 * 0.32 = $2,400
After-Tax Cost = $7,500 - $2,400 = $5,100
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