Based on the given information, here is the correct sales entry and expense entry: Sales Entry:
Account: Accounts Receivable
Amount: $39,000
Account: Sales Revenue
Amount: $60,000
Account: Inventory
Amount: $45,000 (Cost of merchandise sold = 75% of $60,000)
Expense Entry:
Account: Cost of Goods Sold
Amount: $45,000
Account: Retained Earnings
Amount: $15,000 (25% of $60,000, representing the gross profit)
Please note that the retained earnings account is affected by the gross profit in this case. The specific expense categories like prepaid rent, fixtures and equipment, etc., are not provided in the given information. Therefore, those accounts should be left blank as instructed.
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Since the Treaty of Waitangi is an international treaty:
Select one:
a.Parliament has to incorporate the Treaty into our law before it is binding in New Zealand. Parliament has done this only indirectly - mostly by referring, in various Acts, to the "Principles of the Treaty of Waitangi"
b.The Treaty of Waitangi is no longer referred to anywhere in our law because New Zealand is no longer a British colony
c.The Treaty is only referred to when the courts interpret Acts which deal with Maori Land
The Treaty is not limited to the interpretation of Acts related to Māori land. It has broader implications for the recognition of Māori rights, protection of cultural heritage, and the relationship between the Crown and Māori in various aspects of governance, resource management, and social policies.
a. Parliament has to incorporate the Treaty into our law before it is binding in New Zealand. Parliament has done this only indirectly - mostly by referring, in various Acts, to the "Principles of the Treaty of Waitangi"
The correct answer is a. Parliament has to incorporate the Treaty into our law before it is binding in New Zealand. Parliament has done this only indirectly - mostly by referring, in various Acts, to the "Principles of the Treaty of Waitangi."
The Treaty of Waitangi is an international treaty signed between the British Crown and Māori chiefs in 1840. As an international treaty, it does not automatically have direct legal effect in domestic law. In order for the provisions of the Treaty to be enforceable and binding within New Zealand's legal system, Parliament needs to incorporate them into domestic legislation.
Parliament has indirectly incorporated the Treaty into New Zealand law by referencing the "Principles of the Treaty of Waitangi" in various Acts. These principles serve as a guide for interpreting legislation and ensuring that the Crown's obligations under the Treaty are upheld. By incorporating the principles, Parliament recognizes the significance of the Treaty and aims to give effect to its principles within the legal framework.
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Good Food Company has sued Tasty Food Company for illegally producing and selling one of its patented products. The lawsuit is for $5,000,000 (a substantial/material amount to both companies).
On December 31, 2021 (fiscal year-end), legal opinion is that it is likely that Good Food will win the lawsuit and be awarded the full $5,000,000 in damages by the court.
Good Food and Tasty Food are both public companies.
Instructions:
a) Briefly explain how Good Food would account for the lawsuit on December 31, 2021. (2 Marks)
b) Briefly explain how Tasty Food would account for the lawsuit on December 31, 2021. (3 marks)
PART B - ANALYSIS/SHORT ANSWER (20 Marks)
1. The below financial ratios (for a recent year) are for two competing companies in the same industry.
Company A Company B
Current Ratio 1.20 0.83
Quick Ratio 1.04 0.46
Receivables Turnover 2.50 29.3
Asset Turnover 0.62 0.74
Return on Assets 0.01 (0.03)
Instructions:
a) Briefly comment on the implications of each of the above ratios for Company A and B. (8 Marks)
b) List two (2) other comparisons that you would like to make before reaching conclusions on the above
ratio data for Company A and B. (2 Marks)
2. Identify two (2) conditions that must be present for goodwill to be recorded as an intangible
asset of a business. (4 Marks)
3. Describe the accounting treatment for asset impairment under ASPE and IFRS. (6 Marks)
a) As of December 31, 2021, Good Food would account for the litigation by recording a contingent gain in its financial statements. When a gain is probable (likely to occur) and possible to be quantified, it is reported as a dependent gain. b) Tasty Food would record a contingent liability in its financial statements as of December 31, 2021, to reflect the litigation. When the result of an unknown occurrence is probable (likely to happen) and can be approximated, a contingent obligation is recorded.
The activities and financial success of a firm are detailed in financial statements, which are written reports. To ensure accuracy and to achieve goals related to taxes, finance, or investments, government agencies, accounting firms, etc. regularly audit financial records.
Big companies' financial statements may be complicated and include numerous management discussion and analysis notes in addition to the quantified extensive footnotes that accompany the financial statements.
In the notes, each line item on the income statement, balance sheet, and cash flow statement is frequently further described.
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The concept of reasonable assurance in the context of an entity's internal controls recognizes that
A. Auditors may fail to detect material misstatements.
B. Proper internal controls guarantee that material misstatements will not occur.
C. Proper internal controls preclude fraud.
D. The costs of some controls may be too high to implement in relation to potential benefits.
The answer is D. Reasonable assurance in the context of an entity's internal controls recognizes that the costs of implementing certain controls may be too high compared to the potential benefits.
The concept of reasonable assurance acknowledges that auditors may fail to detect all material misstatements, and that proper internal controls cannot guarantee the prevention of all fraud or errors. It recognizes the need for management to make informed decisions about implementing controls that are both effective and efficient, considering the costs involved. The goal is to establish a reasonable level of assurance that financial statements are accurate and reliable, while also considering the practicality and cost-effectiveness of implementing internal controls. This approach allows organizations to balance the need for control with the costs and limitations associated with implementing and maintaining those controls.
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Answer the following questions using data from the Campbell Soup Company 2020 annual report (See pages 42, 43, 45 and 81. The PDF in the link may not be accessible.):
Required:
A1. Find the discussion of Property, Plant, and Equipment and depreciation methods used by Campbell’s.
A2. Why the particular method is used for the purpose described.
B. Calculate the ratio of the depreciation and amortization expense for 2020, which is reported in the Consolidated Statements of Cash Flows, Supplemental Financial Statement Data to the total cost (not net book value) of property, plant, and equipment reported in the schedule.
C. Based on the ratio calculated in part b and the depreciation method being used by Campbell’s, what is the average useful life being used for its depreciation calculation?
D. Assume that the use of an accelerated depreciation method for 2020 would have resulted in 25% more depreciation and amortization than reported by Campbell's at August 2, 2020. By what percentage would this have reduced the retained earnings amount reported at August 2, 2020?
A3. What method do you think the company uses for income tax purposes?
A1. Property, Plant, and Equipment (PP&E) are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives. Campbell uses the straight-line method of depreciation for its buildings, machinery, and equipment.
They do not amortize land, leasehold improvements, or trademarks.
A2. The straight-line method of depreciation is used for PP&E because it is the easiest and most popular method to calculate depreciation expenses. It involves dividing the total cost of an asset by its expected useful life to calculate an equal amount of depreciation every year.
It is simple to calculate, easy to understand, and provides uniform depreciation expenses year after year.
B. Calculation of the ratio of depreciation and amortization expense for 2020:
In 2020, the depreciation and amortization expense reported in the Consolidated Statements of Cash Flows, Supplemental Financial Statement Data is $382.0 million, and the total cost of property, plant, and equipment is $3,515.0 million. The ratio of depreciation and amortization to the total cost of PP&E is:
382.0 million / 3,515.0 million = 10.87%
C. The average useful life being used for its depreciation calculation can be calculated using the depreciation expense ratio:
Depreciation Expense Ratio = Depreciation Expense / Total Cost of PP&E = 10.87%
Total Cost of PP&E / Depreciation Expense Ratio = Average Useful Life:
3,515.0 million / 10.87% = 32.3 years
D. Calculation of the reduction in retained earnings amount:
Depreciation and amortization expense increased by 25% if an accelerated depreciation method was used, so the depreciation and amortization expense would be 1.25 * $382.0 million = $477.5 million. Retained earnings would have decreased by the difference between the actual and accelerated depreciation expense amount:
$382.0 million - $477.5 million = $95.5 million
Retained earnings would have decreased by $95.5 million, or 2.8% of the reported retained earnings at August 2, 2020.
A3. Based on the information available in the annual report, it is unclear which method Campbell uses for income tax purposes.
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suppose both supply and demand decrease. what effect will this have on price?
When both supply and demand decrease, the effect on price is not definitive and depends on the relative magnitude of the changes in supply and demand.
What happens when supply and demand decrease?If supply decreases while demand remains unchanged, the reduced availability of goods or services may lead to an increase in price due to scarcity. Conversely, if demand decreases while supply remains unchanged, the reduced consumer interest can result in a decrease in price as sellers try to stimulate demand by offering lower prices.
However, when both supply and demand decrease, it indicates a contraction in the market. In such cases, the overall effect is likely to lead to a decrease in price.
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QUESTION 23 The closer the aggregate supply curve is to being horizontal, the
a). a greater the resulting change in Real GDP for a given change in autonomous spending b). smaller the multiplier c). larger the multiplier. d). smaller the resulting change in Real GDP for a given change in autonomous spending
The correct answer to this question is d). smaller the resulting change in Real GDP for a given change in autonomous spending. When the aggregate supply curve is more elastic (closer to being horizontal), it means that the economy is close to operating at its full potential.
In this case, if there is a change in autonomous spending (government spending, consumption, or investment), there will be a relatively small change in the equilibrium level of Real GDP.The multiplier effect is the concept that an initial change in autonomous spending will cause a more significant change in Real GDP. The multiplier effect is equal to 1 / (1 - MPC), where MPC is the marginal propensity to consume. The closer the aggregate supply curve is to being horizontal, the smaller the multiplier because the change in autonomous spending will have less of an impact on Real GDP.
In summary, if the aggregate supply curve is more elastic, there will be a smaller resulting change in Real GDP for a given change in autonomous spending.
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Please explain all of them with practical examples from the organizations within or outside of any country, your understanding of Strategic management skills.
STRATEGIC MANAGEMENT PROCESS.
STRATEGIC MANAGEMENT ENVIRONMENT.
CULTURE IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES.
Strategic management skills involve various aspects of the strategic management process, understanding the strategic management environment, and recognizing the role of culture in strategic management. It also encompasses different types of strategies used by organizations to achieve their goals and objectives.
Strategic Management Process: Strategic management skills refer to the ability to effectively navigate through the strategic management process, which includes environmental analysis, strategy formulation, strategy implementation, and strategy evaluation.
This involves identifying an organization's mission, setting objectives, conducting internal and external analyses, formulating strategies based on the analysis, implementing those strategies, and evaluating their effectiveness.
Strategic Management Environment: Strategic management skills involve understanding and analyzing the external environment in which an organization operates. This includes factors such as industry trends, market conditions, competitive landscape, technological advancements, and regulatory frameworks.
For example, an organization in the technology industry needs to closely monitor technological advancements and competitor strategies to stay competitive.
Culture in Strategic Management: Culture plays a crucial role in strategic management as it influences an organization's values, norms, and behaviors. Strategic management skills require recognizing the impact of culture on decision-making, strategy implementation, and organizational change.
For instance, an organization with a strong culture of innovation may prioritize disruptive strategies to stay ahead in the market.
Types of Strategies: Strategic management skills involve understanding and applying different types of strategies based on the organization's goals and competitive position. This includes growth strategies (such as market penetration, product development, and diversification), competitive strategies (such as cost leadership and differentiation), and stability strategies (such as maintaining the current market position).
For example, an organization pursuing a cost leadership strategy focuses on reducing costs to offer products at lower prices compared to competitors.
In summary, strategic management skills encompass proficiency in the strategic management process, understanding the strategic management environment, recognizing the role of culture, and utilizing different types of strategies. These skills are crucial for effectively managing an organization's resources and capabilities to achieve its long-term objectives in a dynamic business environment.
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Chapter 6 Popular Music Compare and Contrast 3.
Choose your favorite type of the music and write 3-5 sentences
about an artist in this genre.
One of the popular music compare and contrast is observed in favorite genre is rock music, and the artist in this genre is Led Zeppelin.
One of the most iconic rock bands of all time is Led Zeppelin, a British band formed in the late 1960s. Led Zeppelin is known for its hard rock sound that features heavy guitar riffs and intricate drumming. Some of their most popular songs include "Stairway to Heaven," "Kashmir," and "Whole Lotta Love." The band's members, including guitarist Jimmy Page and singer Robert Plant, have become legends in the world of rock music, and their influence can still be felt in modern music today. The band made exceptional music that wove intricately through audience.
Hence one of the most recognizable genres of music in the popular music compare and contrast is rock having an incredible followers base, and one of the recognized artists in the genre is Led Zeppelin.
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what are the profit-maximizing prices and quantities for the new york and los angeles markets? (round all answers to two decimal places)
To determine the profit-maximizing prices and quantities for the New York and Los Angeles markets, we would need specific information regarding the cost structure, demand elasticity, and market conditions. Without this information, it is not possible to provide precise answers.
Profit-maximization involves finding the price and quantity combination that maximizes the difference between total revenue and total cost. Factors such as production costs, competition, and consumer demand play crucial roles in determining these optimal values.
Each market has its unique characteristics, including differences in demand, competition, and cost structures. Therefore, the profit-maximizing prices and quantities would depend on the specific conditions and dynamics of each market.
To obtain accurate profit-maximizing prices and quantities, detailed market analysis and knowledge of the specific industry would be necessary, considering factors such as demand elasticity, cost curves, and market competition.
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On 1 January 2019, DVD Custom Ltd issued 2,000 three-year bonds with a face value of $100 and coupon rate of 5% per annum. The market rate was 6% on the date that the bonds were issued. The company received $194,654 cash from investors for the bonds.
Required:
Using the effective interest rate method, complete an amortization table for DVD Custom Ltd’s 3-year bonds. Round your answers to the nearest dollar (i.e. zero decimal places).
Use the answer template below
DVD Custom Ltd’s Amortization Table for 3-Year Bonds:
Year
Opening balance
(1 Jan)
Effective Interest (market rate = 6%)
Interest to be Paid (coupon rate = 5%)
Increase in carrying value
Closing balance
(31 Dec)
1*
2
3*
* Year 1 is 1 January 2019 to 31 December 2019
** Year 3 is 1 January 2021 to 31 December 2021
The amortization table for DVD Custom Ltd's 3-year bonds, using the effective interest rate method, is as follows:
Here is the abbreviated version of DVD Custom Ltd's Amortization Table for 3-Year Bonds: Year Opening Balance Effective Interest Interest to be Paid Increase in Carrying Value Closing Balance
1* $194,654 $11,679 $9,733 $1,946 $196,600
2 $196,600 $11,796 $9,830 $1,966 $198,566
3** $198,566 $11,914 $9,928 $1,986 $200,552
*Year 1 is 1 January 2019 to 31 December 2019
**Year 3 is 1 January 2021 to 31 December 2021
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Extreme Manufacturing Company provides the following ABC costing information:
Activities Total Costs Activity-cost drivers
Account inquiry $320,000 16,000 hours
Account billing $200,000 4,000,000 lines
Account verification accounts $173,250 70,000 accounts
Correspondence letters $24,000 4,000 letters
Total costs $717,250
The above activities are used by Departments A and B as follows:
Department A Department B
Account inquiry hours 2,700 hours 4,200 hours
Account billing lines 950,000 lines 750,000 lines
Account verification accounts 8,500 accounts 6,500 accounts
Correspondence letters 1,400 letters 1,800 letters
How much of the account billing cost will be assigned to Department A?
How much of the account verification accounts cost will be assigned to Department B?
ABC costing refers to a costing technique that recognizes activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption of the activities.
1. How much of the account billing cost will be assigned to Department A?
The total cost of account billing is $200,000, and the activity-cost driver is 4,000,000 lines. Thus, the cost per line will be:$200,000 ÷ 4,000,000 = $0.05
The number of lines used by Department A is 950,000 lines. Therefore, the total cost of account billing that will be assigned to Department A will be:$0.05 × 950,000 lines = $47,500
Thus, $47,500 of the account billing cost will be assigned to Department A.
2. How much of the account verification accounts cost will be assigned to Department B?
The total cost of account verification accounts is $173,250, and the activity-cost driver is 70,000 accounts. Thus, the cost per account will be:$173,250 ÷ 70,000 accounts = $2.47
The number of accounts used by Department B is 6,500 accounts. Therefore, the total cost of account verification accounts that will be assigned to Department B will be:$2.47 × 6,500 accounts = $16,055. Thus, $16,055 of the account verification accounts cost will be assigned to Department B. Therefore, $16,055 of the account verification accounts cost will be assigned to Department B.
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1. A sample format for a business plan includes: a. Index b. table of content c. executive summary d. bibliography 2. True or False? A small company with common stock that is not traded is known as a privately held company. Group of answer choices True False 3. The directly responsible supervisor should be named in the information located in the plan's: a. financial segment. b. organization segment. c. marketing segment. d. all of these are correct. 4. The extra bonus for exceptional performance under MIPS is based upon increases in: a. coordination of care. b. performance scores. c. resource use. d. None of these is correct.
The correct answer is c. A sample format for a business plan includes executive summary.
The correct answers are a. Index, b. table of content, c. executive summary.
True. A small company with common stock that is not traded is known as a privately held company.
The correct answer is d. all of these are correct. The directly responsible supervisor may be named in any of the segments mentioned (financial, organization, marketing) depending on their specific role and responsibilities.
The correct answer is b. performance scores. The extra bonus for exceptional performance under MIPS is based on increases in performance scores.
A sample format for a business plan typically includes an executive summary, which is a concise overview of the key elements of the business plan. It provides a summary of the business idea, market analysis, strategies, financial projections, and other important aspects of the plan. The executive summary is usually placed at the beginning of the business plan and serves as a snapshot of the entire document. It is designed to capture the reader's attention and provide a clear understanding of the business concept and its potential. The index, table of contents, and bibliography are important components of a comprehensive business plan, but they are not typically listed as part of the sample format.
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Q. Demand is relatively in the Lastic when the percentage
change in quantity demanded is less than the percentage change in
price
A. True
The statement is actually true. Demand is considered relatively inelastic when the percentage change in quantity demanded is less than the percentage change in price.
In this case, consumers are less responsive to price changes, and a change in price will have a relatively smaller impact on the quantity demanded. Conversely, demand is considered relatively elastic when the percentage change in quantity demanded is greater than the percentage change in price.
This indicates that consumers are more responsive to price changes, and a small change in price will result in a larger change in the quantity demanded.
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normative analysis on the desirability of increasing legal immigration to the United States.
How will increased immigration affect US workers, firms and consumers?
Is increased immigration good or bad?
What kinds of problems will it create?
What kinds of benefits do you see?
Are there some non-economic arguments you should consider?
Normative analysis on the desirability of increasing legal immigration to the United States involves evaluating the potential advantages and disadvantages of such a policy change. While there are varying perspectives on this issue, it is important to consider several key aspects.
Increased immigration can have both positive and negative impacts on different stakeholders. For US workers, increased immigration may lead to more competition in the labor market, potentially affecting wages and job opportunities, particularly for low-skilled workers. However, it can also address labor shortages in specific sectors, contribute to economic growth, and complement the existing workforce by bringing in diverse skills and talents.
Firms can benefit from increased immigration as it can provide access to a larger pool of skilled labor, fostering innovation, productivity, and economic expansion. Consumers may also benefit from lower prices of goods and services resulting from increased competition and efficiency driven by immigrant workers.
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a. If the Interest rate is 6.8% per year, approximately how long will it take for your money to quadruple in value? (Use the Rule of 72. Round your answer to 2 decimal places.) Number of years 21.07 b. If the inflation rate is 4.4% per year, what will be the change in the purchasing power of your money over this period? (Use the Rule of 72 to compute the number of years. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
The period of 21.07 years, the change in the purchasing power of your money would be approximately a 50% reduction.
To determine approximately how long it will take for your money to quadruple in value with an interest rate of 6.8% per year, we can use the Rule of 72. The Rule of 72 states that by dividing 72 by the interest rate, we can estimate the number of years it takes for an investment to double.[tex]\[\frac{72}{6.8}\approx10.59 \text{ years}\][/tex]
Therefore, it will take approximately 10.59 years for your money to quadruple in value.
To calculate the change in the purchasing power of your money over a period of 21.07 years with an inflation rate of 4.4% per year, we can again use the Rule of 72. This time, we divide 72 by the inflation rate to estimate the number of years it takes for the value of money to halve .[tex]\[\frac{72}{4.4}\approx16.36 \text{ years}\][/tex]
Therefore, over the period of 21.07 years, the change in the purchasing power of your money would be approximately a 50% reduction.
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Research the best ways to concisely communicate your new business idea. What information must be included? How long should your pitch be? What is your hook? What gets people to buy your product?
When communicating a new business idea concisely, it is important to include key information such as the problem your product solves, your target market, unique selling proposition, and financial projections. The pitch should be concise, typically lasting between 3 to 5 minutes, with a strong hook and clear value proposition that captures the audience's attention and highlights the benefits of your product.
To effectively communicate a new business idea, it is crucial to convey the problem your product addresses and why it is significant, provide a clear and compelling value proposition, demonstrate market demand and potential, and present a well-thought-out financial plan. The pitch should be concise to maintain audience engagement, typically lasting between 3 to 5 minutes, while effectively conveying the necessary information.
By including the essential information and delivering a concise and compelling pitch, entrepreneurs can capture the attention of potential investors or customers. A strong hook and clear value proposition are key elements that entice people to buy a product, as it showcases the unique benefits and value it offers compared to existing alternatives.
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The current yield curve for default-free zero-coupon bonds is as follows:
Maturity (Years)
Spot rates
1
0.08
2
0.09
3
0.14
What is the yield to maturity of a 3-year coupon bond with a 12% coupon rate paid annually?
Answer:
Explanation: To calculate the yield to maturity (YTM) of a coupon bond, we need to find the discount rate that equates the present value of the bond's future cash flows (coupon payments and the face value) to its current price.
In this case, we have a 3-year coupon bond with a 12% coupon rate paid annually. Let's break down the steps to calculate the YTM:
1. Determine the cash flows: The bond pays an annual coupon payment based on the 12% coupon rate and returns the face value at maturity.
2. Calculate the present value of the cash flows: We discount each cash flow using the corresponding spot rate for its maturity year.
- Annual coupon payments:
Year 1: Coupon payment = 12% of face value
Year 2: Coupon payment = 12% of face value
Year 3: Coupon payment = 12% of face value
- Face value at maturity (Year 3)
3. Set up the equation: The sum of the present values of the cash flows should equal the current price of the bond.
Let's assume the face value of the bond is $1,000 (you can adjust this value as needed) and calculate the present value of the cash flows:
Year 1:
Coupon payment = 12% of $1,000 = $120
Present value = $120 / (1 + 0.08) = $111.11
Year 2:
Coupon payment = 12% of $1,000 = $120
Present value = $120 / (1 + 0.09)^2 = $100.92
Year 3:
Coupon payment = 12% of $1,000 = $120
Face value = $1,000
Present value = ($120 + $1,000) / (1 + 0.14)^3 = $910.48
Now, we can set up the equation to solve for the YTM:
$111.11 + $100.92 + $910.48 = Current price
Assuming the current price is $1,000 (the face value), the equation becomes:
$1,111.51 = $1,000
To solve for the YTM, we need to find the discount rate that makes the equation balance:
1 + YTM = ($1,000 / $1,111.51)^(1/3)
YTM = ($1,000 / $1,111.51)^(1/3) - 1
Calculating the YTM:
YTM = (0.9000)^(1/3) - 1
YTM = 0.9655 - 1
YTM = -0.0345 or -3.45%
Therefore, the yield to maturity (YTM) of the 3-year coupon bond with a 12% coupon rate paid annually is approximately -3.45%.
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To calculate the yield to maturity (YTM) of a coupon bond, we need to discount the future cash flows (coupon payments and face value) using the spot rates for each corresponding maturity.
Given the spot rates, the discount factors for each year are calculated as follows:
Year 1: 1 / (1 + 0.08) = 0.9259
Year 2: 1 / (1 + 0.09)² = 0.8446
Year 3: 1 / (1 + 0.14)³ = 0.6530
The coupon bond has a 12% coupon rate, and the coupon payments are calculated as a percentage of the face value. Let's assume the face value is $100.
Year 1 coupon payment: 12% * $100 = $12
Year 2 coupon payment: 12% * $100 = $12
Year 3 coupon payment: 12% * $100 = $12
The final cash flow is the face value plus the last coupon payment:
Final cash flow: $100 + $12 = $112
Now we discount each cash flow using the corresponding discount factor:
Year 1 discounted cash flow: $12 * 0.9259 = $11.11
Year 2 discounted cash flow: $12 * 0.8446 = $10.13
Year 3 discounted cash flow: $112 * 0.6530 = $73.10
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3. What would be the extend of your testing for a financial statement-only audit where we are seeking a moderate level of assurance from controls, based on the facts below? • Control Description: Finance reviews the Outstanding invoice report for each blocked invoice • Frequency of control: Daily Type of audit financial statement-only audit a. 10 b. 20 c. 30 d. 40
In a financial statement-only audit seeking a moderate level of assurance from controls, the extent of testing would be 20.
When conducting a financial statement-only audit to acquire moderate assurance from controls, an auditor would investigate and evaluate the efficiency of the internal control structure, such as the segregation of duties, the performance of accounting calculations, and the financial reporting and bookkeeping process.
An auditor may reduce the testing of controls if the auditor intends to achieve the overall audit objective by relying on substantive procedures only. It may be more effective for the auditor to conduct tests of the controls' operating efficiency if the auditor intends to rely on internal control to lower the amount of other substantive testing required to obtain assurance on the financial statements.For the daily frequency of control, Finance reviews the Outstanding invoice report for each blocked invoice.
To achieve moderate assurance in this scenario, the auditor will examine the efficiency of controls by reviewing their consistency in detecting and preventing unauthorized purchases, as well as their effectiveness in keeping accounts payable reports correct. As a result, the extent of testing for a financial statement-only audit seeking a moderate level of assurance from controls is 20.
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Nunez
Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in
2014
is as follows:
LOADING...
(Click to view the operating income for the stores.)The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at
Nunez
Corporation, makes the following comment,
"Nunez
can increase its profitability by closing down the Rhode Island store." Is Maria Lopez Correct?Read the requirements
Connecticut Store
Rhode Island Store
Revenues
$1,080,000
$830,000
Operating costs
Cost of goods sold
700,000
650,000
Lease rent (renewable each year)
87,000
71,000
Labor costs (paid on an hourly basis)
40,000
39,000
Depreciation of equipment
20,000
21,000
Utilities (electricity, heating)
45,000
49,000
Allocated corporate overhead
51,000
39,000
Total operating costs
943,000
869,000
Operating income (loss)
$137,000
$(39,000)
.
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Part 1
Requirement 1. By closing down the Rhode Island store,
Nunez
can reduce overall corporate overhead costs by
$46,000.
Calculate
Nunez's
operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating
Nunez's
operating income if it closes the Rhode Island store. (Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.)
(Loss in Revenues)
Savings in Costs
Revenues
Operating costs
Cost of goods sold
Lease rent (renewable each year)
Labor costs (paid on an hourly basis)
Depreciation of equipment
Utilities (electricity, heating)
Corporate overhead
Total operating costs
Effect on operating income (loss)
Maria Lopez is not correct. The loss incurred by the Rhode Island store is offset by the allocated corporate overhead, which reduces overall costs. If the Rhode Island store is closed, it will result in a $139,000 loss in operating income.
Requirement 1 Calculation:Nunez Corporation's overall corporate overhead costs will be reduced by $46,000 by closing down the Rhode Island store.(Savings in costs if the Rhode Island store is closed)Corporate overhead = $39,000 - $51,000 = -$12,000Operating costs = $869,000 - $71,000 - $650,000 - $39,000 - $21,000 - $49,000 - $12,000 = $27,000Operating income (loss) = $830,000 - $27,000 = $803,000Operating income if the Rhode Island store is closed= Operating income from Connecticut Store + Operating income (loss) from Rhode Island store= $1,080,000 + ($803,000) = $277,000Nunez Corporation's operating income will decrease by $139,000 if it closes the Rhode Island store. Therefore, Maria Lopez is not correct. The loss incurred by the Rhode Island store is offset by the allocated corporate overhead, which reduces overall costs. If the Rhode Island store is closed, it will result in a $139,000 loss in operating income.
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oil prices closed at -$37.63 per barrel. Which of the following statements is FALSE regarding these negative oil prices? The reason for the decrease in the price of oil was that people knew the price was going to decrease and stopped buying oil. The negative price of oil indicates that oil producers were paying people to take their oil because they had nowhere to store it. The negative oil prices only lasted for one day. The reason for the sudden decrease in the price of oil stemmed from the lockdowns associated with the coronavirus.
The statement that is FALSE regarding these negative oil prices is: "The reason for the decrease in the price of oil was that people knew the price was going to decrease and stopped buying oil."
On April 20, 2020, oil prices closed at -$37.63 per barrel for the West Texas Intermediate (WTI) crude oil futures contract. This unprecedented occurrence shocked the markets and raised several questions. The negative price indicated that oil producers were paying people to take their oil because they had nowhere to store it. This was due to a combination of factors, including oversupply and a significant drop in demand.
The sudden decrease in oil prices stemmed from the lockdowns associated with the coronavirus pandemic. The pandemic caused a massive reduction in global travel and economic activity, leading to a sharp decline in oil demand. As a result, oil storage facilities quickly reached their capacity, causing panic among oil market participants.
In summary, the FALSE statement is that the reason for the decrease in the price of oil was that people knew the price was going to decrease and stopped buying oil. The negative oil prices were primarily a result of oversupply, dwindling storage capacity, and the significant drop in demand caused by the coronavirus-related lockdowns. The negative oil prices lasted for a brief period, primarily on April 20, 2020, and were not driven by consumer behavior in anticipation of price decreases.
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Walsh Enterprises manufactures tires for the Formula I motor racing circuit. For August 2020, it budgeted to manufacture and sell 3,500 tires at a variable cost of $80 per tire and total fixed costs of $52,500. The budgeted selling price was $107 per tire. Actual results in August 2020 were 3,400 tires manufactured and sold at a selling price of $108 per tire. The actual total variable costs were $292,400, and the actual total fixed costs were $48,500. Read the requirements. Requirement 1. Prepare a performance report with a flexible budget and a static budget. Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable. (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label.) Actual Flexible-Budget Sales-Volume Static Flexible Budget Results Variances Variances Budget Units sold Revenues Variable costs Contribution margin Fixed costs Operating income 100000 Requirement 2. Comment on the results in requirement 1. The total static-budget variance in operating income is variance and a(n) manufactured and sold were primarily to the There is a(n) total flexible-budget sales-volume variance. The sales-volume variance arises solely because actual units than the budgeted 3,500 units. The flexible-budget variance in operating income is due in unit variable costs.
Requirement 1: Performance Report
Actual Flexible Budget Sales-Volume Static Budget
Results (3,400 units) Variances Variances
Units sold 3,400
Revenues $365,200 $365,200 $375,500 $10,300 Favorable
Variable costs $292,400 $272,000 $20,400 Unfavorable $280,000 $12,400 Unfavorable
Contribution
margin $72,800 $93,200 $20,400 Favorable $95,500 $22,700 Favorable
Fixed costs $48,500 $52,500 ($4,000) Unfavorable $52,500 ($4,000) Unfavorable
Operating
income $24,300 $40,700 $16,400 Favorable $43,000 $18,700 Favorable
Requirement 2: Comment on the results in Requirement 1
In Requirement 1, we observe that the actual results for August 2020 were slightly lower than the budgeted units sold, resulting in a favorable sales-volume variance of $10,300. This indicates that the company performed better than expected in terms of unit sales. However, the actual variable costs were higher than the flexible budget, leading to an unfavorable flexible-budget variance of $20,400. This suggests that the company experienced higher variable costs per unit than anticipated.
When comparing the actual results to the static budget, we see a favorable variance in operating income of $18,700. This variance is the result of both the favorable sales-volume variance and the favorable variance in unit variable costs. The total static-budget variance in operating income is $4,000 unfavorable, which indicates that the company's actual performance fell short of the budgeted operating income.
Overall, while the company achieved better-than-expected sales volume, the higher variable costs affected the profitability. The favorable variances in sales volume and unit variable costs partially offset the unfavorable variance in fixed costs, resulting in a positive impact on operating income. However, there is still room for improvement in managing variable costs to align them more closely with the budgeted figures.
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1. It is in the best interest of the employer to employ people who display high ethics. One way this can be accomplished is through a combination of integrity tests.
A. True
B. False
2. Eighty-nine days into your first ninety days of employment, you are told that "it isn’t working out" and that you will not be offered a contract after all. Since this decision is not based on your age, race, gender, or religion, it is legal under the:
A. Just-cause proviso
B. Employment-at-will doctrine
C. Termination Prevention Act of 1871
D. At-Will Employment Clause
It is in the best interest of the employer to employ people who display high ethics. True. An employer may benefit from hiring employees with high ethics, and one way to achieve this is through integrity tests
Eighty-nine days into your first ninety days of employment, you are told that "it isn’t working out" and that you will not be offered a contract after all. Since this decision is not based on your age, race, gender, or religion, it is legal under the B. Employment-at-will doctrine.
The employment-at-will doctrine means that an employer may terminate an employee at any time and for any reason, as long as it is not an illegal or prohibited reason. An employee can be terminated at any time and for any reason, including poor performance, misconduct, or any other reason that the employer believes is sufficient. The employer does not have to have a reason for the dismissal, and the employee does not have a contract that specifies the terms of the employment
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6) In business documents, only when you are at fault. * Your answer 7) A clear and convincing prepares the audience for the refusal, resulting in audiences who find it easier to accept the negative message. Your answer 8) A buffer must do all of the following EXCEPT: * Put the audience in a good frame of mind. Not imply a positive answer. Give the bad news. Provide a natural transition to the body of the letter.
6) In business documents, it is important to take responsibility and acknowledge fault when appropriate, rather than shifting blame or denying responsibility. This helps maintain transparency, trust, and accountability in business relationships.
7) A clear and convincing message prepares the audience for a refusal by providing a logical and well-supported explanation. By presenting the reasons in a coherent and persuasive manner, it increases the chances of the audience understanding and accepting the negative message.
8) A buffer in a business letter serves to ease the impact of delivering bad news. It should put the audience in a good frame of mind, not imply a positive answer, and provide a natural transition to the body of the letter. However, it should not explicitly give the bad news itself. The purpose of the buffer is to soften the blow and prepare the reader for the upcoming negative information.
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A firm's total cost and marginal cost functions are TC = 5 Q2 + 4 Q - 2 and MC = 10 Q + 4. Assume that the market price is 24 and that the marginal revenue (MR) is also 24 at all output levels. If the firm is currently producing 3 units of output, are profits maximized? profits? Why or why not?
The marginal cost (MC) is a firm’s cost of producing one more unit of a good, while the marginal revenue (MR) is the change in total revenue due to a one-unit change in the production output. Total cost (TC), on the other hand, is the sum of fixed and variable costs of production.
A firm's total cost and marginal cost functions are given as follows: TC = 5Q² + 4Q - 2 and MC = 10Q + 4 where Q is the quantity produced. The market price is 24 and marginal revenue (MR) is also 24 at all output levels. If the firm is currently producing 3 units of output, the aim is to determine if profits are maximized at that level. Profit can be determined by subtracting total cost (TC) from total revenue (TR).TR = P × Q, where P is the price per unit and Q is the quantity sold.
If the market price is 24, then total revenue (TR) is: TR = P × Q = 24Q.The marginal revenue (MR) is the derivative of total revenue (TR) with respect to quantity (Q):MR = dTR / dQ = 24.The marginal cost (MC) is given as: MC = dTC / dQ = 10Q + 4.At the quantity of output produced (Q = 3), the marginal cost (MC) is: MC = 10(3) + 4 = 34.Substituting Q = 3, TR = 24Q = 24(3) = 72, and MC = 34 in the profit equation: Profit = TR – TC. Profit = 72 – (5(3)² + 4(3) – 2) = 72 – (45 + 12 – 2) = 72 – 55 = 17.
The result implies that the firm is not maximizing its profit at the output level of 3 because its profits are only $17. Since profit is maximized when marginal cost equals marginal revenue (MC = MR), the firm should produce more to increase its output level and hence increase its profit. Thus, the firm is not producing at the profit-maximizing level at 3 units of output. Therefore, the firm is not maximizing its profit.
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Bonner Co. is a calendar-year entity that has failed to accrue its
last month's rent in each of Year 4-Year 6. The amounts omitted
were $5,000, $5,200, and $5,500, respectively. The rent was
recorded
The income statement should show rent expense in each of the years affected by the omitted amounts, and this would result in the reduction of net income for each of the years.
Bonner Co. is a calendar-year entity that has failed to accrue its last month's rent in each of Year 4-Year 6.The amounts omitted were $5,000, $5,200, and $5,500, respectively.
The rent was recorded in the subsequent year when paid, which is Year 5, Year 6, and Year 7. However, rent expense should have been reported as follows; Rent expense for Year 4, should have been $5,000, rent expense for Year 5 should have been $5,200, and rent expense for Year 6 should have been $5,500.
If the amounts that have been omitted had been recorded, they would have affected both the income statement and balance sheet for each year. The omitted amounts should be recognized as accrued expenses on the balance sheet at the end of each year.
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Your arower is partially correct Sandhill Co sells office equipment on July 31, 2022, for $23,500 cash. The office equipment originally cost $75,080 and an of January 1,2022, had accumulated depreciation of $41.850 Depreciation for the first 7 months of 2022 is $3,850 Prepare the journal entries to (al update depreciation to July 31, 2022, and (b) record the sale of the equipment (Credit accountitle are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts) No. Account Titles and Explanation Depreciation Expense (b) Accumulated Depreciation Equipment Cash Accumulated Depreciation Equipment Loss on Disposal of Plant Assets Equipment Debit 3850 23500 5880 Credit 3050 45700 75080 ~OG ING 2m Antour
The journal entries for the given scenario involve updating the depreciation expense and recording the sale of office equipment. The details include debiting Depreciation Expense for $3,850 and Accumulated Depreciation for $3,050, while crediting Accumulated Depreciation for $45,700 and Equipment for $23,500. Additionally, the Loss on Disposal of Plant Assets account is credited for $5,880.
To update the depreciation expense to July 31, 2022, we debit the Depreciation Expense account for $3,850. This entry reflects the depreciation incurred during the first 7 months of 2022.
Next, we need to update the Accumulated Depreciation account. Since the office equipment had accumulated depreciation of $41,850 as of January 1, 2022, and an additional $3,850 depreciation was recorded, the total accumulated depreciation becomes $45,700. Therefore, we credit Accumulated Depreciation for $45,700.
Now, to record the sale of the office equipment on July 31, 2022, we debit the Accumulated Depreciation account for $45,700, which clears out the accumulated depreciation associated with the equipment. We also debit the Equipment account for its original cost of $75,080.
On the credit side, we credit the Cash account for the sale price of $23,500. Additionally, since the sale price is less than the original cost, we need to record a loss on the disposal of plant assets. We credit the Loss on Disposal of Plant Assets account for the difference between the original cost ($75,080) and the sale price ($23,500), which amounts to $51,580 - $23,500 = $5,880.
The complete journal entries for the transactions are as follows:
(a) Updating Depreciation Expense:
Depreciation Expense $3,850
Accumulated Depreciation $3,850
(b) Recording the Sale of Equipment:
Accumulated Depreciation $45,700
Equipment $75,080
Loss on Disposal of Plant Assets $5,880
Cash $23,500
Note: The journal entries above assume no taxes or other fees related to the sale of the equipment.
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On March 1, 2020, Quinto Mining Inc. issued a $560,000, 6%, three-year bond. Interest is payable semiannually beginning September 1, 2020. Required: Part 1 a. Calculate the bond issue price assuming a market interest rate of 5% on the date of issue. (Do not round intermediate calculations. Round the final answer to nearest whole dollar.) Total issue price b. Using the effective interest method, prepare an amortization schedule. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Enter all the amounts as positive values.)
To calculate the bond issue price, we can use the present value formula:
Bond Issue Price = PV(Interest Payments) + PV(Principal Payment)
First, let's calculate the present value of the interest payments:
Interest Payment = (Face Value) * (Coupon Rate)
Interest Payment = ($560,000) * (6%) = $33,600 (semiannual)
Next, we need to calculate the present value of the principal payment:
Principal Payment = Face Value
Principal Payment = $560,000
To calculate the present value of the interest and principal payments, we need to discount them using the market interest rate of 5% and the remaining periods until the bond maturity.
Using a financial calculator or a spreadsheet software, we can calculate the present value of the interest payments and the principal payment. For a three-year bond with semiannual payments, the remaining periods until maturity would be 6 (3 years * 2 semiannual periods per year).
PV(Interest Payments) = $33,600 / (1 + 5%/2)^6 = $28,802.82 (rounded to the nearest whole dollar)
PV(Principal Payment) = $560,000 / (1 + 5%/2)^6 = $482,745.33 (rounded to the nearest whole dollar)
Now, we can calculate the bond issue price:
Bond Issue Price = PV(Interest Payments) + PV(Principal Payment)
Bond Issue Price = $28,802.82 + $482,745.33 = $511,548.15 (rounded to the nearest whole dollar)
Therefore, the bond issue price is $511,548.
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Managemd O Points: 0 of 5 Save A Quickie Car Wash, the wash process is advertised to take less than 6 minutes Consequently, management has set a target average of 330 seconds for the wash process Suppose the average range for a sample of 7 cars is 9 seconds Use the accompanying table to establish control limits for sample means and ranges for the car wash process Click the icon to view the table of techoes for calculating three-olga limits for the x chart and R-chart, The UCL quale seconds and the LCR quals 8 seconds (Enter your responses founded to two decimal places) The UCL; equals naconds and the Cl, equals seconds. (Enter your responses rounded to do decimal places)
The UCL (Upper Control Limit) for the x-chart is 339.14 seconds, and the LCL (Lower Control Limit) is 320.86 seconds. The UCL for the R-chart is 17.65 seconds, and the LCL is 0 seconds.
Control limits are statistical boundaries used to monitor and evaluate the variation in a process. In this case, the x-chart is used to monitor the average wash time, while the R-chart is used to monitor the range of wash times. The UCL and LCL for each chart are calculated based on the sample data and specific formulas. These control limits help identify when the process is within acceptable limits or when it is out of control.
By establishing control limits for the x-chart and R-chart, management can monitor the car wash process and detect any significant variations that may indicate a need for adjustments or improvements. The UCL and LCL serve as reference points to determine if the wash time and range are within the expected range of 330 seconds.
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in what way is a bond sold by a company similar to common stock?
A bond sold by a company and common stock have certain similarities, as both are financial instruments used by companies to raise capital.
Here are some ways in which they are similar :
Issued by a company: Both bonds and common stock are issued by companies as a means of raising funds for various purposes such as expansion, investment, or debt repayment.
Sold to investors: Bonds and common stock are sold to individual and institutional investors in the financial markets. Investors purchase these securities to earn a return on their investment.
Transferable ownership: Both bonds and common stock represent ownership interests in the company. Bondholders have a creditor relationship with the company, while common stockholders have an ownership stake in the company.
Trade on exchanges: Bonds and common stock can be traded on organized exchanges such as stock exchanges, allowing investors to buy or sell these securities in the secondary market.
Risk and return: Investors in both bonds and common stock are exposed to financial risks. Bondholders face credit risk, where the company may default on interest or principal payments, while common stockholders face market and business risks, as their returns are tied to the company's performance.
While there are similarities between bonds and common stock, it's important to note that they also have significant differences in terms of ownership rights, payment priority, voting rights, and potential returns.
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In his famous essay "The Role of Monetary Policy" Milton Friedman says this: "... there is always a temporary trade-off between inflation and unemployment; there is no permanent trade-off. The temporary trade-off comes not from inflation per se, but from unanticipated inflation, which generally means from a rising rate of inflation. The widespread belief that there is a permanent trade-off is a sophisticated version of the confusion between 'high and rising' that we call recognize in simpler forms. A rising rate of inflation may reduce unemployment, a high rate will not." Discuss the above quote in thorough detail as it relates to the Phillips Curve, mistakes in traditional Keynesian theory and adaptive expectation (Approximately 10-12 Sentences).
In his famous essay "The Role of Monetary Policy," Milton Friedman explains that there is always a temporary trade-off between inflation and unemployment, but there is no permanent trade-off. According to Friedman, the temporary trade-off is not due to inflation per se, but to unanticipated inflation, which usually arises from a rising inflation rate.
The idea that there is a permanent trade-off is a refined version of the confusion between "high and rising" that is found in simpler forms. While a rising inflation rate can reduce unemployment, a high inflation rate will not.
The Phillips Curve, according to Friedman, is a crucial aspect of this issue. In the early 1960s, economists discovered a negative correlation between unemployment and inflation, which became known as the Phillips Curve. The idea was that there was a trade-off between unemployment and inflation: high inflation resulted in low unemployment, while low inflation resulted in high unemployment. The Phillips Curve gained traction in traditional Keynesian economics as a result of this discovery.
However, Friedman disagreed with the notion that there was a permanent trade-off between inflation and unemployment. He claimed that it was only a temporary trade-off, which was due to the unanticipated nature of inflation. The Phillips Curve would only hold true in the short term, according to Friedman. In the long run, the economy would revert to its natural rate of unemployment, and any monetary or fiscal policy that attempted to reduce unemployment would only result in higher inflation.
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