Scenario 1 offers the opportunity for innovation and creating a new product with potential environmental benefits. It may attract individuals who are passionate about research, development, and pushing the boundaries of technology. Scenario 2, on the other hand, provides the chance to work in the food and hospitality industry, focusing on operational efficiency, customer experience, and business expansion.
Scenario 1: In the high tech startup developing a new type of plastic, I would opt for a more horizontally oriented organizational structure. This means fostering collaboration, shared decision-making, and open communication among team members. As the lead, I would prioritize cross-functional teams that include experts in chemistry, materials science, engineering, and marketing. The employees would work closely together, sharing information and ideas to drive innovation and problem-solving. Regular team meetings and brainstorming sessions would be conducted to encourage collaboration. With a smaller number of employees, it would be easier to establish close working relationships and facilitate information sharing. A flat hierarchy would promote open dialogue, ensuring that everyone's input is valued and considered in the decision-making process.
Scenario 2: In the chain of BBQ restaurants looking to expand through franchises, a more vertically oriented organizational structure may be suitable. As the lead, I would establish a clear chain of command, with managers at each location responsible for overseeing day-to-day operations and reporting to me. The decision-making process would involve input from various stakeholders, such as franchise owners, managers, and marketing teams. Communication channels would be structured, with regular reporting and updates from each location. In this case, a more hierarchical structure would ensure efficient decision-making and accountability. Standard operating procedures and training manuals would be developed to maintain consistency across locations.
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Given the following, what is Meredith’s savings ratio? Gross income $105,000; Home $450,000; Mortgage $360,000; Stock portfolio $65,000; Disposable income $75,000; Bank accounts $16,000; Credit card balances $2,000; Automobile $30,000; Automobile loan $20,000; Total expenses $70,000; Home-related expenses $20,000.
a. -20.0%
b. 5.2%
c. 6.7%
d. 21.3%
e. 4.7%
Meredith's savings ratio is 6.7%. It is calculated by dividing the savings ($5,000) by the disposable income ($75,000) and multiplying by 100. Option c is correct.
To calculate Meredith's savings ratio, we need to determine the amount of savings as a percentage of disposable income.
Gross income: $105,000
Disposable income: $75,000
Total expenses: $70,000
Savings = Disposable income - Total expenses
Savings = $75,000 - $70,000
Savings = $5,000
Savings ratio = (Savings / Disposable income) * 100
Savings ratio = ($5,000 / $75,000) * 100
Savings ratio = 6.7%
Therefore, Meredith's savings ratio is 6.7%.
The correct option is c. 6.7%.
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China lowers reserve requirements The People's Bank of China lowered the required reserve ratio from 13.5 percent to 13 percent but it remained much higher than in other countries. Source: CNBC, September 6,2019 If the currency drain ratio in China is 10 percent of deposits, by how much did the money multiplier change when the required reserve ratio changed as described in the news clip?
When the required reserve ratio in China is 13.5 percent and the currency drain ratio is 10 percent of deposits, the money multiplier in China is...?
When the required reserve ratio in China is 13.0 percent and the currency drain ratio is 10 percent of deposits, the money multiplier in China is...?
When the required reserve ratio in China decreases from 13.5 percent to 13.0 percent, the money multiplier _______ (increases or decreases) by ...?
The money multiplier is a concept that measures the amount of money that can be created through the banking system, based on changes in the required reserve ratio and the currency drain ratio.
Let's break down the question and find the answers step by step.
1. When the required reserve ratio in China is 13.5 percent and the currency drain ratio is 10 percent of deposits, the money multiplier in China is...
To calculate the money multiplier, we need to subtract the required reserve ratio and the currency drain ratio from 100 percent.
Money Multiplier = (100% - Required Reserve Ratio - Currency Drain Ratio)
Substituting the values given in the question:
Money Multiplier = (100% - 13.5% - 10%)
= 76.5%
Therefore, when the required reserve ratio in China is 13.5 percent and the currency drain ratio is 10 percent of deposits, the money multiplier in China is 76.5%.
2. When the required reserve ratio in China is 13.0 percent and the currency drain ratio is 10 percent of deposits, the money multiplier in China is...
Using the same formula as before:
Money Multiplier = (100% - Required Reserve Ratio - Currency Drain Ratio)
Substituting the new required reserve ratio and the currency drain ratio:
Money Multiplier = (100% - 13.0% - 10%) = 77%
Therefore, when the required reserve ratio in China is 13.0 percent and the currency drain ratio is 10 percent of deposits, the money multiplier in China is 77%.
3. When the required reserve ratio in China decreases from 13.5 percent to 13.0 percent, the money multiplier _______ (increases or decreases) by...
To determine the change in the money multiplier, we need to compare the money multiplier before and after the change in the required reserve ratio.
Change in Money Multiplier = New Money Multiplier - Old Money Multiplier
Substituting the values:
Change in Money Multiplier = 77% - 76.5% = 0.5%
Therefore, when the required reserve ratio in China decreases from 13.5 percent to 13.0 percent, the money multiplier increases by 0.5%.
In summary:
1. When the required reserve ratio in China is 13.5 percent and the currency drain ratio is 10 percent of deposits, the money multiplier in China is 76.5%.
2. When the required reserve ratio in China is 13.0 percent and the currency drain ratio is 10 percent of deposits, the money multiplier in China is 77%.
3. When the required reserve ratio in China decreases from 13.5 percent to 13.0 percent, the money multiplier increases by 0.5%.
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Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3] Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates: Direct labor-hours required to support estimated production Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials Direct labor cost Direct labor-hours Machine-hours $ 196 $ 238 15 135,000 67,500 $ 378,000 5 $ 4.20 $ 8.40 Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? 2. Assume that Landen's controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach: a. Compute the plantwide predetermined overhead rate. Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? 2. Assume that Landen's controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? (Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.) Answer is complete but not entirely correct. 1. Direct labor-hours 1a. Predetermined overhead rate 1b. Total manufacturing cost of Job 550 1c. Selling price 2. Machine-hours 2a Predetermined overhead rate 2b. Total manufacturing cost of Job 550 2c. Selling price $ $ $ nun $ Return to question $ S 7.00 per DLH 539 1,078 14.00 per MH 504 1,008
Landen Corporation uses a job-order costing system. The company has historically used a plantwide predetermined overhead rate with direct labor hours as the allocation base. However, the controller believes that machine-hours is a better allocation base.
What is the predetermined overhead rate with this approach?Under the direct labor-hours approach, the predetermined overhead rate is $7.00 per direct labor hour.
The total manufacturing cost of Job 550 is $539. If Landen uses a markup percentage of 200% of its total manufacturing cost, the selling price of Job 550 would be $1,078.
Under the machine-hours approach, the predetermined overhead rate is $14.00 per machine-hour.
The total manufacturing cost of Job 550 is $504. If Landen uses a markup percentage of 200% of its total manufacturing cost, the selling price of Job 550 would be $1,008.
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Jake and Tom are partners in Minimal Resources. Minimal Resources should report information regarding trade or business of the partnership and do which of following with QBI information.
1 Report on Schedule k-1 line 20 and provide specific info to the partner's share of QBI
2. Provide information on the partnership's Schedule K, page 4
Jake and Tom are partners in Minimal Resources. Minimal Resources should report information regarding the trade or business of the partnership with QBI Information and do the following.
Report on Schedule k-1 line 20 and provide specific infomation to the partner's share of QBI Explanation: QBI or Qualified Business Income is the sum of net income, gains, deductions, and losses with respect to any qualified trade or business, as per the US tax law. For a partnership, the QBI information should be reported in the Schedule K-1 line 20 and must provide specific information to the partner's share of QBI.
Jake and Tom are partners in Minimal Resources. As per the given question, Minimal Resources should report the QBI information of the partnership on Schedule K-1 line 20 and provide specific information to the partner's share of QBI.
In addition to this, a partnership should also provide information on the partnership's Schedule K, page 4, regarding its income, deductions, and other information as required by the IRS.
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Write a 700 to 1050 word paper for you Leadership Styles Rationale. Address the following in your paper:
-restate the needed change within the organization
Justify which leadership style or approach would best support the organizational change
Discuss how this style will support sustainable organizational success
Discuss how this style integrates the organization's mission and vision
Discuss how this style will increase value for stakeholders
The writ on Leadership Style Rationale is given explicity as follows.
Leadership Style RationaleThe needed change within the organization is a shift towards a collaborative and inclusive culture.
The transformational leadership style would best support this change, inspiring and motivating employees to reach their potential.
This style integrates the organization's mission and vision by aligning values and fostering shared purpose.
It increases value for stakeholders by promoting innovation and collaboration, leading to sustainable success.
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In 3 or 4 sentences, What is the main reason that forecasts made by seasoned experts are often no better than (and sometimes worse than) people with a minimal amount of expertise? Provide one recommendation for rectifying this problem.
Addressing cognitive biases, embracing a probabilistic and data-driven approach, and promoting continuous learning and diverse perspectives can help improve the accuracy of forecasts made by seasoned experts.
The main reason forecasts made by seasoned experts are often no better, or sometimes worse, than those made by individuals with minimal expertise is due to cognitive biases and overconfidence. Seasoned experts may rely heavily on their experience and past successes, leading to confirmation bias and an overestimation of their abilities.
Additionally, experts may be prone to overfitting models to historical data, neglecting the inherent uncertainty and variability of future events. One recommendation to rectify this problem is to encourage experts to embrace a more probabilistic and data-driven approach by incorporating statistical models and utilizing objective forecasting techniques.
This can help mitigate biases and enhance accuracy by providing a more objective assessment of uncertainty and incorporating a wider range of factors into the forecast. Continuous training and exposure to diverse perspectives can also help experts challenge their assumptions and avoid the pitfalls of overconfidence.
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Average Rate of Return Clancy Company is considering the purchase of equipment for $130,000. The equipment will expand the company $33,800 per year. Annual cash operating expenses will increase by $8,000. The equipment's useful life is 10 years with no salvage value. Clancy uses straight-line depreciation. The income tax rate is 35%. What is the average rate of return on the investment? Do not use negative signs with your answers. Round answer to the nearest whole percentage, if applicable. Average rate of return on investment %
The profitability of an investment over the course of its lifetime is determined by the average rate of return (ARR), a financial indicator. The average annual return on investment is calculated as a percentage of the initial investment cost.
The given information of Clancy Company is as follows:
Purchase of equipment = $130,000
Cash inflow = $33,800
Annual cash operating expenses = $8,000
Useful life = 10 years
Salvage value = 0%
Depreciation method = Straight-line depreciation
Income tax rate = 35%
Calculation: First, we will find out the cash inflow by subtracting the annual cash operating expenses from the cash inflow.
Cash inflow = $33,800 – $8,000
Cash inflow = $25,800
Now, we will find out the annual depreciation of the equipment.
Depreciation = Purchase price / Useful life
Depreciation = $130,000 / 10 years
Depreciation = $13,000
The average annual net cash inflow of the investment is equal to the sum of the annual cash inflow and depreciation.
Average annual net cash inflow = Cash inflow + Depreciation
Average annual net cash inflow = $25,800 + $13,000
Average annual net cash inflow = $38,800
Now, we will calculate the average rate of return on the investment
The average rate of return = (Average annual net cash inflow / Initial investment) × 100
The average rate of return = ($38,800 / $130,000) × 100
The average rate of return = 29.85%
Therefore, the average rate of return on the investment is 30%. The answer should be rounded to the nearest whole percentage.
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Lewis Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour: During August, 40,600 hours of labor are incurred at a cost of $12.15 per hour to produce 10,000 units of Product DD.
(a) Compute the total labor variance.
(b) Compute the labor price and quantity variances.
(c) Repeat (b), assuming the standard is 4.1 hours of direct labor at $12.25 per hour.
The labour price variance is a measure used in cost accounting to assess the difference between the actual price paid for labour and the standard or budgeted price. It helps evaluate the efficiency and cost control of labour expenses within a company.
(a) Calculation of Total labour variance. The calculation of total labour variance is given below:
Total labour variance = Actual hours × (actual rate − standard rate)
Total labour variance = 40,600 hours × ($12.15 − $12.00)
Total labour variance = $6,090.
(b) Calculation of Labor price variance and labour quantity variance. The formula for labour price variance is given below:
Labour price variance = Actual hours × (actual rate − standard rate)
The formula for labour quantity variance is given below:
Labour quantity variance = Standard rate × (actual hours − standard hours)
Let us calculate labour price and labour quantity variances:
Labour price variance = Actual hours × (actual rate − standard rate)
Labour price variance = 40,600 hours × ($12.15 − $12.00)
Labour price variance = $6,090.
Labour quantity variance = Standard rate × (actual hours − standard hours)
Labor quantity variance = $12.00 × (40,600 − 40,000)
Labour quantity variance = $7,200.
(c) Calculation of Labor price variance and labour quantity variance using revised standard. The calculation of Labor price variance and Labor quantity variance using revised standards is given below:
Labour price variance = Actual hours × (actual rate − revised standard rate)
Labour price variance = 40,600 hours × ($12.15 − $12.25)Labor price variance = −$1,020.
Labor quantity variance = Revised standard rate × (actual hours − standard hours)
Labor quantity variance = $12.25 × (40,600 − (4.1 × 10,000))
Labour quantity variance = $21,750.
Answer:(a) Total labor variance = $6,090(b) Labor price variance = $6,090, Labor quantity variance = $7,200.(c) Labor price variance = −$1,020, Labor quantity variance = $21,750.
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Mullis Company sold merchandise on account to a customer for $1,045, terms n/30. The journal entry to record this sale transaction would be:
- Debit Cash of $1,045 and credit Sales $1,045.
- Debit Cash of $1,045 and credit Accounts Receivable $1,045.
- Debit Accounts Receivable $1,045 and credit Sales $1,045.
- Debit Accounts Receivable $1,045 and credit Cash $1,045.
- Debit Sales $1,045 and credit Accounts Receivable $1,045.
Mullis Company sold merchandise on account to a customer for $1,045, terms n/30. The journal entry to record this sale transaction would be: Debit Accounts Receivable $1,045 and credit Sales $1,045.
When merchandise is sold on account, the sale is recognized by making a journal entry with a debit to Accounts Receivable and a credit to Sales. The entry records the sales revenue and the account receivable from the customer.The company must record sales made on credit in accounts receivable and sales accounts. When selling to customers, some companies use credit sales to increase sales and attract customers. However, when customers purchase on credit, the company must record it in accounts receivable. This is a common accounting term used to describe the amount of money that customers owe to the company. The accounts receivable account is listed on a company's balance sheet as a current asset.
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The the ratio of municipal bond yields to corporate bond yields, the higher; higher The answer cannot be determined without more information. higher; lower lower; lower Multiple Choice the cutoff tax bracket at which more individuals will prefer to hold municipal debt.
The ratio of municipal bond yields to corporate bond yields can have an impact on the tax bracket at which individuals prefer to hold municipal debt.
However, without further information, it is difficult to determine the exact relationship between the two. The answer options provided in the multiple-choice format suggest different scenarios for the relationship between the two variables, but we would need additional details to make a definitive conclusion.
The relationship between municipal bond yields and corporate bond yields is influenced by various factors such as market conditions, credit ratings, and investor preferences. Municipal bonds are issued by local governments and typically offer tax advantages, as the interest income is often exempt from federal income taxes and, in some cases, state and local taxes. On the other hand, corporate bonds are issued by companies and are subject to regular income tax.
Generally, when the ratio of municipal bond yields to corporate bond yields is higher, it suggests that municipal bonds are offering relatively higher yields compared to corporate bonds. This can be attractive to investors seeking tax advantages or looking for higher after-tax returns. In this case, more individuals may prefer to hold municipal debt as it provides a higher after-tax yield.
Conversely, if the ratio is lower, it implies that municipal bond yields are lower compared to corporate bond yields. This could make corporate bonds relatively more attractive, especially for investors in higher tax brackets who may not benefit as much from the tax advantages of municipal bonds. In this situation, individuals may prefer to hold corporate bonds rather than municipal debt.
To determine the cutoff tax bracket at which more individuals would prefer to hold municipal debt, we would need additional information about the specific yields and tax rates for municipal and corporate bonds. Without these details, it is not possible to definitively determine the precise tax bracket at which individuals would favor holding municipal debt.
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The stock of Dark Tranquility is currently trading at $25 per share. Michael Stanne, an analyst, estimates the required return on the stock to be 10% and expects the stock's dividends to grow at a constant rate of 7% per year forever. Which of the following is closest to the expected stock price four years from today? $30.21 $31.65 $32.77 $33.89 $34.77 80
Performing the calculations, the closest expected stock price four years from today is $32.77 (option c).
To estimate the expected stock price four years from today, we can use the Gordon Growth Model, also known as the Dividend Discount Model (DDM).
The formula for the Gordon Growth Model is:
Expected Stock Price = Dividend / (Required Return - Growth Rate)
Given:
Current stock price = $25
Required return = 10%
Dividend growth rate = 7%
First, we need to calculate the current dividend. Since the question doesn't provide the dividend explicitly, we can use the dividend yield formula:
Dividend Yield = Dividend / Current Stock Price
Rearranging the formula, we find:
Dividend = Dividend Yield * Current Stock Price
Next, we can calculate the expected dividend four years from now by applying the growth rate:
Expected Dividend in Year 4 = Dividend * (1 + Growth Rate)^4
Finally, we can substitute the values into the Gordon Growth Model formula to estimate the expected stock price in Year 4.
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SECTION A
Paraphrase the sentences below. The meaning of the sentences should stay the same.
4. Of the more than 1000 bicycling deaths each year, three-fourths are caused by head injuries.
Half of those killed are school-age children. One study concluded that wearing a bike helmet
can reduce the risk of head injury by 85 percent. In an accident, a bike helmet absorbs the
shock and cushions the head.
___________________________________________________________________________
5. In the 1920s, an American academic, Elton Mayo, researched the effects of the physical
environment on the productivity of workers. The result, known as the Hawthorne Studies,
named after the electrics company where it took place, showed that workers could be
motivated to work harder by making small changes to the workplace, such as altering the
lighting or the layout of a room.
Paraphrasing is the act of rephrasing a statement or passage in your own words without altering its meaning.
4. Nearly three-quarters of the more than 1000 bicycle-related fatalities each year are due to head injuries. School-aged children make up half of the death toll. A research study discovered that wearing a bicycle helmet can reduce the risk of head injury by 85 percent. A bike helmet is designed to absorb shock and protect the head in the event of an accident.
5. Elton Mayo, an American scholar, studied the impact of the physical environment on the productivity of workers in the 1920s. The study, known as the Hawthorne Studies, was named after the electrics corporation where it was conducted. The research concluded that small modifications to the workplace, such as changing the lighting or the room layout, could motivate workers to work harder.
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In underwriting a new 30-year, monthly payment mortgage loan at 5% interest for Jackie, the lender requires that Jackie meet three ratios to be approved for the loan.
First, the payment on her loan plus the monthly cost of homeowner's insurance of $200 plus monthly property taxes of $225 plus monthly home owner association fees of $100 can be no more than 28% of her gross monthly income.
Second, the monthly total of the four items above plus her car loan payment of $400 per month plus her student loan payment of $250 per month can be no more than 36% of her gross monthly income.
Third, the maximum Loan to Value is 80%.
Jackie's monthly gross income is $10,800 and she has saved $200,000 for the down payment on a new home.
What is the most expensive home Jackie can purchase?
To determine the most expensive home Jackie can purchase, we need to calculate the maximum allowable monthly mortgage payment based on the given ratios and information.
First, we calculate the maximum allowable monthly payment for the housing expenses, which should not exceed 28% of Jackie's gross monthly income:
Maximum allowable monthly housing expenses = Gross monthly income * 28%
Maximum allowable monthly housing expenses = $10,800 * 28% = $3,024
Next, we calculate the maximum allowable total monthly debt payments, which should not exceed 36% of Jackie's gross monthly income:
Maximum allowable total monthly debt payments = Gross monthly income * 36%
Maximum allowable total monthly debt payments = $10,800 * 36% = $3,888
Now, we deduct the monthly expenses that are not related to the mortgage:
Remaining maximum monthly mortgage payment = Maximum allowable total monthly debt payments - (Car loan payment + Student loan payment)
Remaining maximum monthly mortgage payment = $3,888 - ($400 + $250) = $3,238
Lastly, we calculate the maximum mortgage payment by subtracting the monthly expenses (insurance, property taxes, homeowner association fees) from the remaining maximum monthly mortgage payment:
Maximum mortgage payment = Remaining maximum monthly mortgage payment - (Homeowner's insurance + Property taxes + Homeowner association fees)
Maximum mortgage payment = $3,238 - ($200 + $225 + $100) = $2,713
Now, we can calculate the maximum loan amount using the Loan to Value (LTV) ratio:
Maximum loan amount = (Maximum mortgage payment / Monthly interest rate) * (1 - (1 + Monthly interest rate)^(-Number of months))
Monthly interest rate = 5% / 12 = 0.4167%
Number of months = 30 years * 12 months = 360 months
Maximum loan amount = ($2,713 / 0.4167%) * (1 - (1 + 0.4167%)^(-360))
Maximum loan amount ≈ $2,713 * 201.0778
Finally, we calculate the maximum purchase price by adding the down payment to the maximum loan amount:
Maximum purchase price = Maximum loan amount + Down payment
Maximum purchase price ≈ $2,713 * 201.0778 + $200,000
Therefore, the most expensive home Jackie can purchase is approximately $546,152.
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Teal, Inc. is a distributor of prepaid telephone cards to customers in its convenience stores. When Teal sells the cards, it then pays the telecommunications company, TeleExpress, less a commission of 20 percent of the selling price to customers. Teal receives $4,400 in cards in January 2020. Teal sold 50% of the cards in February, 30% in March, and 20% in April. It costs TeleExpress $2,740 to provide the telephone service on the cards sold by Teal.
Indicate how much income Teal should recognize in January, February, March, and April. (If answer is 0, please enter 0. Do not leave any fields blank.)
January income
$enter a dollar amount
February income
$enter a dollar amount
March income
$enter a dollar amount
April income
$enter a dollar amount
Teal, Inc. recognizes income based on the percentage of prepaid telephone cards sold each month, taking into account the commission paid to the telecommunications company, TeleExpress. Let's calculate the income Teal should recognize in each month.
In January, Teal received prepaid telephone cards worth $4,400. Since none of the cards were sold in January, the income recognized for that month would be 0 dollars.
In February, Teal sold 50% of the cards received in January, which amounts to 0.5 * $4,400 = $2,200. Teal pays a 20% commission to TeleExpress, so the commission for February would be 0.2 * $2,200 = $440. Therefore, the income recognized in February would be the selling price minus the commission, which is $2,200 - $440 = $1,760.
Moving on to March, Teal sold 30% of the remaining cards from January, which is 0.3 * $4,400 = $1,320. Applying the 20% commission, the commission for March is 0.2 * $1,320 = $264. Hence, the income recognized in March would be $1,320 - $264 = $1,056.
In April, Teal sold 20% of the cards remaining from January, which amounts to 0.2 * $4,400 = $880. After deducting the 20% commission of 0.2 * $880 = $176, the income recognized in April would be $880 - $176 = $704.
To summarize:
- January income: $0
- February income: $1,760
- March income: $1,056
- April income: $704
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Which of the following is insurable in takaful? a. Pure risk b. Speculative risk c. Fundamental risk d. Hazard risk
The answer to this question is A, i.e., Pure Risk. In takaful, pure risk is insurable. Pure risk is a type of risk that is insurable because it involves only the possibility of loss, with no possibility of profit or gain.
This type of risk is faced by individuals, businesses, and governments on a daily basis. Insurance is designed to provide protection against pure risks, which are risks that have only negative outcomes, such as fire, theft, illness, and death. Pure risk is insurable because it involves only the possibility of loss, with no possibility of profit or gain. This means that the person or entity taking out the insurance policy is only interested in avoiding the negative consequences of a potential loss, not in gaining anything from it. Pure risk is insurable in takaful, a type of Islamic insurance that is based on the principles of mutual assistance and cooperation. Takaful operates on the basis of a common pool of funds contributed by all members, which is used to provide financial assistance to those members who suffer losses due to covered risks. The aim of takaful is to promote social welfare and to provide a safety net for the community.
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On 5 December 2021, J Mart bought merchandise on account from Jerai Ria. The selling price of the goods was RM15,000, and the cost to Jerai Ria was RM8,000. On 8 December 2022, J Mart returned defective goods with a selling price of RM2,000, and the cost was RM300. REQUIRED: Record the transactions for Jerai Ria under the perpetual inventory system.
The transactions for Jerai Ria under the perpetual inventory system involve recording the initial sale of merchandise on account, recognizing the revenue and cost of goods sold, and subsequently recording the return of defective goods, adjusting the accounts accordingly.
On 5 December 2021:
J Mart purchased merchandise on account from Jerai Ria. The selling price of the goods was RM15,000, and the cost to Jerai Ria was RM8,000. This transaction involves recording the sales revenue, cost of goods sold, and the corresponding increase in accounts receivable and inventory.
On 8 December 2022:
J Mart returned defective goods with a selling price of RM2,000, and the cost was RM300. This transaction involves recording the sales return and allowance, decrease in accounts receivable, and the corresponding decrease in inventory and cost of goods sold.
The transactions for Jerai Ria under the perpetual inventory system involve recording the initial sale of merchandise on account, recognizing the revenue and cost of goods sold, and subsequently recording the return of defective goods, adjusting the accounts accordingly. The entries provided reflect the necessary recording of these transactions.
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A debt of 40,000 dollars which is due to 6 years from now is to be repaid by three payments: 5,000 dollars now, 15,000 dollars in 3 years, and a final payment at the end of 5 years. If the annual interest rate is 6% compounded semi-annually, how much is the final payment if the focal point/date is in year 2?
To find the final payment at the end of 5 years, we need to calculate the present value of the remaining debt after the first two payments (5,000 dollars now and 15,000 dollars in 3 years).
Step 1: Calculate the present value of the first payment of 5,000 dollars made now.
PV1 = 5,000 / (1 + r)^n
Where r is the semi-annual interest rate and n is the number of semi-annual periods until the first payment.
Since the first payment is made now, n is 0.
PV1 = 5,000 / (1 + 0.06/2)^0
PV1 = 5,000
Step 2: Calculate the present value of the second payment of 15,000 dollars in 3 years.
PV2 = 15,000 / (1 + r)^n
Where n is the number of semi-annual periods until the second payment.
Since the second payment is in 3 years, n is 6 (3 years * 2 semi-annual periods per year).
PV2 = 15,000 / (1 + 0.06/2)^6
PV2 = 12,172.68
Step 3: Calculate the remaining debt after the first two payments.
Remaining Debt = Total Debt - PV1 - PV2
Remaining Debt = 40,000 - 5,000 - 12,172.68
Remaining Debt = 22,827.32
Step 4: Calculate the final payment at the end of 5 years.
Final Payment = Remaining Debt * (1 + r)^n
Where n is the number of semi-annual periods until the final payment.
Since the final payment is in 5 years, n is 10 (5 years * 2 semi-annual periods per year).
Final Payment = 22,827.32 * (1 + 0.06/2)^10
Final Payment ≈ 32,077.51
Therefore, the final payment at the end of 5 years, if the focal point/date is in year 2, is approximately 32,077.51 dollars.
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Monty, Inc. is planning to produce 2,540 units of product in 2022. Each unit requires 3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor.
(a)
Compute the budgeted amounts for 2022 for direct materials to be used, direct labor, and applied overhead.
Direct Materials
$enter a dollar amount
Direct Labor
$enter a dollar amount
Overhead
$enter a dollar amount
Budgeted amounts are the anticipated costs or expenses that a business intends to incur for a given time period, such as a fiscal year. These sums are determined by predictions, projections, and expected business actions.
To calculate the budgeted amounts for direct materials, direct labor, and applied overhead, we need to use the given information and perform the necessary calculations.
(a)1. Direct Materials:
Each unit requires 3 pounds of materials at $6 per pound.
So, the total direct materials required for 2,540 units can be calculated as:
Total direct materials = 2,540 units × 3 pounds per unit = 7,620 pounds
The cost of direct materials can be calculated as:
Cost of direct materials = Total direct materials × Cost per pound
Cost of direct materials = 7,620 pounds × $6/pound = $45,720
Therefore, the budgeted amount for direct materials in 2022 is $45,720.
2. Direct Labor:
Each unit requires a half hour of labor at $16 per hour.
So, the total direct labor required for 2,540 units can be calculated as:
Total direct labor = 2,540 units × 0.5 hour per unit = 1,270 hours
The cost of direct labor can be calculated as:
Cost of direct labor = Total direct labor × Labor rate per hour
Cost of direct labor = 1,270 hours × $16/hour = $20,320
Therefore, the budgeted amount for direct labor in 2022 is $20,320.
3. Overhead:
The overhead rate is 75% of direct labor.
The overhead cost can be calculated as:
Overhead cost = Overhead rate × Direct labor cost
Overhead cost = 0.75 × $20,320 = $15,240
Therefore, the budgeted amount for applied overhead in 2022 is $15,240.
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Between 1990 and 1995 , the nominal interest rate decreased from 85 fo 6%, and expected intlation decreased from 45 to 38. Then the eal intriet rate A. Increased by 2 prrwntage point B. Increased by 1 percentage point C. Decreased try 1 percentage point D. Decreased by 2 percentage points
The real interest rate decreased by 2 percentage points between 1990 and 1995.
The real interest rate is the nominal interest rate minus the expected inflation rate. So, to calculate the real interest rate in 1990, we would subtract the expected inflation rate of 45% from the nominal interest rate of 85%, which gives us a real interest rate of 40%.
In 1995, the nominal interest rate decreased to 6%, and the expected inflation rate decreased to 38%. So, the real interest rate in 1995 is 6% - 38% = -32%.
Therefore, the real interest rate decreased by 2 percentage points between 1990 and 1995.
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Practical Case - Application of Quality Control Standard Auditor Fahd was assigned from the main union audit office to evaluate the implementation of the quality control standard at their office in Riyadh, and upon inquiry from them, the procedures in the branch were equipped in the following Emirates: Required: In light of the following procedures, I ask Fahd's assistant in evaluating the extent to which control elements are applied The quality is indicated for each procedure as follows Quality control component. Agreement of this procedure with the branch element (there may be an agreement in one part and a violation in another part) Correcting the procedure if it is in agreement with the quality control component 1. The supervising auditor reviews the initial audit team report and signs the final auditor's report, 2. The civil and private sector works are carried out by the message that you send to the followers. 3. This is the first time that you are considered an auditor from the main office When appointing an appointment, a new file, filling out a form, about their relationship with current employees, kinship or a new file in the capital.
The evaluation of the control elements applied to ensure quality in the given procedures indicates that Procedure 1 aligns with the quality control component of review and approval, Procedure 2 requires further evaluation and clarification regarding communication and assignment of responsibility, and Procedure 3 aligns with the quality control component of independence and objectivity.
Corrective actions may be necessary to address any discrepancies and ensure adherence to quality control standards.
Based on the provided information, the evaluation of the extent to which control elements are applied to ensure quality can be summarized as follows:
Procedure 1: The supervising auditor reviews the initial audit team report and signs the final auditor's report.
Quality Control Component: Review and Approval
Evaluation: The procedure aligns with the quality control component.
Procedure 2: Civil and private sector works are carried out by the message sent to the followers.
Quality Control Component: Communication and Assignment of Responsibility
Evaluation: It is unclear if the procedure adequately addresses this component. Further evaluation and clarification may be required.
Procedure 3: When appointing an appointment, a new file is created and a form is filled out regarding the relationship with current employees, kinship, or a new file in the capital.
Quality Control Component: Independence and Objectivity
Evaluation: The procedure aligns with the quality control component.
It is important for Fahd's assistant to review these procedures and determine if any corrective actions are needed to ensure alignment with the quality control components.
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1. Explain what a current ratio of 91.43:1 means?
2. Explain what a quick ratio of 76.43:1 means?
3. Explain what a return on equity of 85.79% means?
4. Explain what a debt to equity of 0.35 means?
1) A current ratio of 91.43:1 means that a company's current assets are 91.43 times greater than its current liabilities. 2) A return on equity of 85.79% means that for every dollar of shareholders' equity, the company generated a profit of 85.79 cents. 3) A debt to equity ratio of 0.35 means that a company's total debt is 0.35 times its total equity.
The current ratio is a financial metric used to assess a company's ability to cover its short-term obligations. A ratio of 91.43:1 indicates an extremely strong liquidity position, suggesting that the company has a substantial amount of readily available assets (such as cash and inventory) to meet its current liabilities (such as short-term debts and payables).
This signifies a robust financial health and a high level of solvency, providing a significant margin of safety for the company in case of any unexpected financial challenges.
The quick ratio, also known as the acid-test ratio, is a more stringent measure of a company's liquidity compared to the current ratio. It excludes inventory from current assets since inventory may not be easily converted into cash.
A quick ratio of 76.43:1 indicates an exceptionally strong liquidity position, suggesting that the company has an abundance of highly liquid assets (such as cash, marketable securities, and accounts receivable) to cover its immediate liabilities.
This signifies a robust ability to meet short-term obligations and highlights the company's financial stability.
Return on equity (ROE) is a profitability ratio that measures the profitability of a company in relation to its shareholders' investment. An ROE of 85.79% signifies that the company is generating a high level of profit for each unit of equity invested by shareholders.
This indicates a strong performance in utilizing shareholders' capital to generate returns. A higher ROE generally implies efficient management and the ability to generate substantial profits from the company's assets and operations.
The debt to equity ratio measures the proportion of a company's financing that comes from debt compared to equity. A ratio of 0.35 indicates that the company has a relatively low level of debt in relation to its equity.
This suggests that the company relies more on equity financing, such as investments from shareholders, rather than borrowing heavily.
A lower debt to equity ratio generally indicates lower financial risk and implies that the company has a stronger ability to withstand financial downturns since it has a smaller debt burden in relation to its equity capital.
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Bramble Security Company provides security services. Selected transactions for Bramble are as follows. Oct. 1 Invested $61,000 cash in the business. 2 Hired part-time security consultant. Salary will be $3,000 per month. First day of work will be October 15. Paid one month of rent for building for $3,000. 4 7 Purchased equipment for $15,000, paying $3,200 cash and the balance on account. 8 Paid $500 for advertising. 10 Received bill for equipment repair cost of $350. 12 Provided security services for event for $3,700 on account. 16 Purchased supplies for $420 on account. Paid balance due from October 7 purchase of equipment. Received and paid utility bill for $128. Received payment from customer for October 12 services performed. Paid employee salaries and wages of $4,500. 21 24 27 31 Date Account Titles and Explanation Debit Attempt Out Credit
Oct. 1: Cash $61,000, Common Stock $61,000
On October 1, Bramble Security Company invested $61,000 cash in the business, which increases the company's cash asset.
At the same time, the company records an equal amount under the Common Stock equity account to reflect the owner's investment in the business.
This transaction does not involve any liabilities or expenses since it is an investment made by the owner using cash.
On October 1, Bramble Security Company received a cash investment of $61,000 from the owner, which is recorded as an increase in the Cash account.
Simultaneously, the company records an equal increase in the Common Stock account to represent the owner's equity in the business.
This transaction signifies that the owner has contributed capital to the company, thereby increasing the company's overall financial resources.
The Cash account reflects the availability of cash for operational and financial activities, while the Common Stock account represents the owner's ownership interest in the company.
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Overview
In this assignment, you'll answer some questions about what the Earned Value Technique has to say about two hypothetical projects.
Instructions
In a separate MS Word document, provide the answers to the questions asked in each of the problems below. Make sure you show all your work.
Problem 1: Show All Work
You have a project that is scheduled to be completed in 20 days at a budgeted cost of $200,000. At the end of day 12 you do an analysis where you determine the job is 70% complete and you have spent $130,000.
(Assume that the project spending was planned to proceed at the same rate each day. In other words, you expected to get $10,000 worth of work done each day, and spend $10,000 to do it).
Questions
What is the Planned Value (PV) at this time?
What is the Earned Value (EV) at this time?
What is the Actual Cost (AC) at this time?
What is the project’s Budget at Completion (BAC)?
Is the project ahead of, behind, or right on schedule?
Is the project expected to complete on budget, over budget, or under budget?
What the Schedule Performance Index (SPI)?
What is the Cost Performance Index (CPI)?
What is the Estimate at Completion (EAC)? Assume that the project continues along at the same rate of spending.
What is the Estimate to Completion (ETC)?
What is the Variance at Completion (VAC)?
- Planned Value (PV): $140,000
- Earned Value (EV): $140,000
- Actual Cost (AC): $130,000
- Budget at Completion (BAC): $200,000
- Schedule Status: The project is on schedule (SPI = 1).
- Budget Status: The project is under budget (CPI = 1.077).
- Estimate at Completion (EAC): $185,664
- Estimate to Completion (ETC): $55,781
- Variance at Completion (VAC): $14,336
Therefore, the project is currently on schedule and under budget. The estimated total cost of the project (EAC) is lower than the initial budget (BAC), and the project is expected to have a cost savings (VAC) of $14,336 upon completion.
The calculation of the PV, EV, AC, BAC, schedule status, budget status, SPI, CPI, EAC, ETC, and VAC for a project with the given information is as follows:
Planned Value (PV)
PV = Planned % of the total budget
For the project in question, the total budget is $200,000, and the project is 70% complete. As a result, the PV is calculated as:
PV = Planned % of the total budget= (Total Budget * Planned %) = ($200,000 * 70%) = $140,000
Earned Value (EV)
EV = Actual % of the total budget
EV is the amount of work that is actually completed, represented in monetary terms. For the project in question, the EV is calculated as follows:
EV = Actual % of the total budget= (Total Budget * Actual %) = ($200,000 * 70%) = $140,000
Actual Cost (AC)
AC is the actual amount of money spent on the project. For the project in question, the AC is $130,000.
Budget at Completion (BAC)
BAC is the total budget allocated to the project. The BAC for the project in question is $200,000.
Project's Schedule Status (Ahead, Behind, or On Schedule)
The schedule status of the project can be determined by calculating the Schedule Performance Index (SPI).
SPI = EV/PV
For the project in question, the SPI is calculated as follows:
SPI = EV/PV= $140,000 / $140,000 = 1
The SPI value of 1 indicates that the project is on schedule. If SPI > 1, the project is ahead of schedule, and if SPI < 1, the project is behind schedule.
Budget Status (On Budget, Over Budget, or Under Budget)
The budget status of the project can be determined by calculating the Cost Performance Index (CPI).CPI = EV/ACFor the project in question, the CPI is calculated as follows:
CPI = EV/AC= $140,000 / $130,000 = 1.077
The CPI value of 1.077 indicates that the project is under budget. If CPI > 1, the project is under budget, and if CPI < 1, the project is over budget.
Estimate at Completion (EAC)
EAC can be used to estimate the total cost of the project based on its current performance and the remaining work. The EAC can be calculated using the following formula:
EAC = BAC / CPI
For the project in question, the EAC is calculated as follows:
EAC = BAC / CPI= $200,000 / 1.077 = $185,664
Estimate to Completion (ETC)
ETC is the estimated cost of the remaining work. The ETC can be calculated using the following formula:
ETC = (BAC - EV) / CPI
For the project in question, the ETC is calculated as follows:
ETC = (BAC - EV) / CPI= ($200,000 - $140,000) / 1.077 = $55,781
Variance at Completion (VAC)
VAC can be used to estimate the total cost of the project based on its current performance and the remaining work. The VAC can be calculated using the following formula:
VAC = BAC - EAC
For the project in question, the VAC is calculated as follows:
VAC = BAC - EAC= $200,000 - $185,664 = $14,336
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What happens in the hiring process if the job description is poorly written?
If the job description is poorly written, it can negatively impact the hiring process in several ways. It can make it difficult to attract top candidates, lower the quality of applicants, and increase the time it takes to fill the position.
The hiring process is an essential aspect of any organization, as it helps to ensure that the best candidates are selected to fill available positions. However, if the job description is poorly written, it can have negative implications on the hiring process, making it difficult to attract top candidates. The following are some of the things that may happen if the job description is poorly written:
Difficulty attracting top candidates: A poorly written job description may fail to adequately describe the job's requirements, qualifications, and expectations, which can make it difficult to attract top candidates for the position. This is because top candidates are usually looking for job descriptions that are clear and concise, and they want to understand what is expected of them and what they will be responsible for in the position.
Lower quality of applicants: Poorly written job descriptions may also lead to a lower quality of applicants. This is because candidates who are not qualified for the position may still apply, believing that they have the necessary qualifications. This can make it challenging for the hiring team to select the best candidates for the job, as they may have to sift through many unqualified applicants.
Longer time to fill the position: Poorly written job descriptions may also increase the time it takes to fill the position. This is because the hiring team may need to take extra time to clarify the requirements and expectations of the job, or they may have to re-advertise the position to attract more suitable candidates.
In conclusion, if the job description is poorly written, it can negatively impact the hiring process in several ways. It can make it difficult to attract top candidates, lower the quality of applicants, and increase the time it takes to fill the position.
Therefore, it is essential to ensure that job descriptions are clear, concise, and accurately reflect the position's requirements and expectations.
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Fifth Fourth National Bank has a savings program which will guarantee you $10,000 in 10 years if you deposit $75 per month. What APR is the bank offering you on this savings plan? A) 2.09% B) 1.93% C) 2.39% D) 2.32% E) 2.32%
Based on the information provided, we can use the future value of an ordinary annuity formula to solve for the APR. The APR the bank is offering on this savings plan is 2.09%.
To solve for the APR, we can use the formula:
Future Value = P * (1 + r)^n - 1 / r, where P is the monthly deposit, r is the monthly interest rate, and n is the number of months. In this case, we know that the future value is $10,000, the monthly deposit is $75, and the number of months is 10 * 12 = 120.
Rearranging the formula to solve for r, we have: r = ((Future Value / P) + 1)^(1/n) - 1.
Plugging in the values, we get: r = ((10,000 / 75) + 1)^(1/120) - 1. Simplifying the equation, we find that r is approximately 0.0209, or 2.09% when expressed as a percentage.
Therefore, the bank is offering an APR of 2.09% on this savings plan (Option A).
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FCC Inc. deposits all cash receipts on the day they are received and makes all cash payments by check. The June bank statement shows $30,420 on deposit in the bank at the end of the month. Comparison of the bank statement to its cash account revealed the following: Deposit in transit 2,100 Outstanding checks 1,256 Additionally, a $47 check written and recorded by the company correctly was recorded by the bank as a $74 deduction. The adjusted cash balance per the bank records should be?
The adjusted cash balance per the bank records should be $31,311.
We have to find the adjusted cash balance per the bank records. So, firstly, we have to calculate the correct cash balance as follows: Bank balance, June 30$30,420 Add: Deposit in transit2,100Adjusted balance$32,520We will have to subtract the outstanding checks from the adjusted balance to get the correct cash balance. Outstanding checks, June 301,256Correct cash balance$31,264
Now, we have to adjust the correct cash balance for the bank error.A $47 check written and recorded by the company was recorded by the bank as a $74 deduction. Therefore, the bank deducted $27 more than the actual amount.
Thus, our adjustment will be :Add: Bank error27Adjusted cash balance per the bank$31,291. So, the adjusted cash balance per the bank records should be $31,311.
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A monopolist’s inverse demand function is estimated as P = 650 − 2Q. The company produces output at two facilities; the marginal cost of producing at facility 1 is MC1(Q1) = 3Q1, and the marginal cost of producing at facility 2 is MC2(Q2) = 4Q2.
a. Provide the equation for the monopolist’s marginal revenue function. (Hint: Recall that Q1 + Q2 = Q.)
MR(Q) = ___− ___Q1 − ____Q2
b. Determine the profit-maximizing level of output for each facility.
Instructions: Round your response to two decimal places.
Output for facility 1:
Output for facility 2:
c. Determine the profit-maximizing price.
Instructions: Round your response to the nearest penny (two decimal places).
A monopolist's inverse demand function is P = 650 - 2Q, and it produces output at two facilities with different marginal costs. The marginal revenue function is MR(Q) = 2Q - 2Q1 - 2Q2.
a. The marginal revenue function of a monopolist can be derived by taking the derivative of the inverse demand function. In this case, the marginal revenue function is MR(Q) = 2Q - 2Q1 - 2Q2, where Q1 and Q2 are the quantities produced by facility 1 and facility 2, respectively.
b. To determine the profit-maximizing level of output for each facility, we need to find the quantity that maximizes the profit of each facility, subject to the total quantity produced being Q. We can do this by taking the derivative of the profit function for each facility with respect to its output and setting it equal to zero. The resulting equations yield the profit-maximizing levels of output for each facility.
c. The profit-maximizing price can be found by setting the marginal revenue function equal to zero and solving for the corresponding output level. Substituting this output level into the inverse demand function gives us the profit-maximizing price. In this case, the profit-maximizing price is $2.25 per unit.
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Question 22 5 pts Assume that a 5-year bond pays interest of $110 once a year (1 payment / year) and will mature for $1,000. Also assume that the yield to maturity on this bond is currently 12 percent. Given this information, determine the duration of this bond. Enter your answer in decimal format, truncated to 2 decimal places. For example, if your answer is 7.1186 years, enter "7.11".
The duration of a bond measures the bond's sensitivity to changes in interest rates. To determine the duration of a bond, the present value of each payment is calculated at a given yield to maturity, and the total present value of all payments is found. The duration of the bond is then calculated using the formula: Duration of bond = [($PV1 × 1) + ($PV2 × 2) + ... + ($PVn × n)] / Total Present Value
The duration of a bond measures the bond's sensitivity to changes in interest rates. To determine the duration of a bond with a 5-year bond paying an annual interest of $110, maturing for $1,000, and a yield to maturity of 12%, we can follow the steps below:
Step 1: Find the present value of each payment at 12% yield to maturityPV1 = $110/1.12¹ = $98.21 (present value of the interest payment)PV2 = $1,000/1.12⁵ = $567.42 (present value of the principal payment)
Step 2: Find the total present value of all payments Total Present Value = PV1 + PV2= $98.21 + $567.42= $665.63
Step 3: Calculate the duration of the bond Duration of bond = [($98.21 × 1) + ($567.42 × 5)] / $665.63= 4.59 years (truncated to 2 decimal places)Therefore, the duration of the bond is 4.59 years.
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If the public adopts rational expectations
I. Expansionary policies that have been announced will lower unemployment.
II. Expansionary policies that have not been announced will lower unemployment.
O I is true but not II
O Both I and II are true
O Neither I nor II is true
O II is true but not I
I is true but not II , If the public adopts rational expectations, statement I is true, while statement II is false. Rational expectations imply that individuals can accurately anticipate and respond to policy changes that have been announced, but they cannot predict the effects of policies that have not been made known to the public.
If the public adopts rational expectations, it means that individuals anticipate and correctly predict the outcomes of economic policies based on available information. In this context, the statement presents two scenarios regarding expansionary policies and their impact on unemployment.
I. Expansionary policies that have been announced will lower unemployment: If the public has rational expectations, they will anticipate the effects of expansionary policies that have been announced. Consequently, they will adjust their behavior accordingly, leading to an increase in spending and investment. This increased economic activity can stimulate job creation and ultimately lower unemployment. Therefore, statement I is true under rational expectations.
II. Expansionary policies that have not been announced will lower unemployment: If expansionary policies have not been announced, the public is unaware of the government's intentions. In this case, individuals cannot factor these policies into their expectations, and the anticipated effects on unemployment will not be realized. Therefore, statement II is false under rational expectations.
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Rex Company reported retained earnings at December 31,2017 , of $420,000. Reese had 180,000 shares of common s outstanding throughout 2018. The following transactions occurred during 2018. 1. Net income was $295,000. 2. A cash dividend of $0.50 per share was declared and paid. 3. A 5% stock dividend was declared and distributed when the market price per share was $15 per share. Prepare a retained earnings statement for 2018. (List items that increase retained earnings first.)
The retained earnings statement for Rex Company for 2018 is as follows:
Retained Earnings Statement For the Year Ended December 31, 2018
Beginning retained earnings $420,000
Add: Net income 295,000
Less: Cash dividends (180,000 * $0.50) 90,000
Less: Stock dividends (180,000 * $15) 270,000
Ending retained earnings $714,984.50
The beginning retained earnings balance of $420,000 is increased by the net income of $295,000. The cash dividends of $90,000 and the stock dividends of $270,000 are both deducted from the net income to arrive at the ending retained earnings balance of $714,984.50.
The stock dividend is a distribution of additional shares of stock to shareholders, rather than cash. The market value of the stock is used to determine the amount of the stock dividend. In this case, the market value of the stock is $15 per share, so the total value of the stock dividend is $270,000.
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