Complete Question:
Crossfire Company segments its business into two regions - East and West. The company prepared a contribution format segmented income statement as shown below:
Total Company East West
Sales $900,000 $600,000 $300,000
Variable Expenses 675,000 480,000 195,000
Contribution margin 225,000 120,000 105,000
Traceable Fixed Expenses 141,000 50,000 91,000
Segment Margin $84,000 $70,000 $14,000
Common Fixed Expenses 59,000
Net Operating Income $25,000
Instructions: (As given).
Answer:
Crossfire Company1. Computation of the companywide break-even point in dollar sales:
Break-even point in dollar sales
= Sales = Total costs
Sales = $816,000
Total costs = Variable costs + Traceable fixed costs
= $675,000 + $141,000
= $816,000
2. Computation of the break-even point in dollar sales for the East region:
Break-even point in dollar sales
= Sales = Total costs
= $530,000
Total costs = $530,000 ($480,000 + 50,000)
3. Computation of the break-even point in dollar sales for the West region:
Break-even point in dollar sales
= Sales = Total costs
= $286,000
Total costs = $286,000 ($195,000 + 91,000)
4. A new segmented income statement based on the break-even dollar sales that are computed in requirements 2 and 3:
Total Company East West
Sales $816,000 $530,000 $286,000
Variable Expenses 675,000 480,000 195,000
Contribution margin 141,000 50,000 105,000
Traceable Fixed Expenses 141,000 50,000 91,000
Segment Margin $0 $0 $0
Common Fixed Expenses 59,000
Net Operating Income/(loss) ($59,000)
Crossfire's net operating income (loss) in the new segmented income statement is: $59,000
5. I think that Crossfire should allocate the common fixed expenses to the East and West regions when computing the break-even points for each region.
This ensures that Crossfire does not run into net operating loss, company-wide. The segmented sales revenues for the regions can be used to allocate the common fixed expenses. Other suitable bases are traceable fixed expense, number of sales and administrative staff, or activity cost pools, using activity-based costing technique.
Explanation:
a) Break-even point in sales dollars is the sales point at which Crossfire's sales revenue will be equal to the total costs. At this point, Crossfire will not make any profit or incur any loss.
If United Airlines acted as a "price leader" and all other airlines simply charged the same prices
that United Airlines charged, then could this action be illegal because it is a form of "silent collusion?"
A. There is no such term in microeconomics known as "tacit" or "silent collusion."
B. Matching the prices of the price leader firm is a good example of a competitive market.
C. The U.S. Anti-Trust Department has always considered this business behavior as suspicious
and it does consider this pricing strategy to be illegal.
D. The famous 1982 anti-monopoly IBM court case said that this pricing strategy within an
industry is legal as long as the firms fill out quarterly reports to keep the U.S. Anti-Trust
Answer:
D
Explanation:
The airline industry is an example of an oligopoly
An Oligopoly is when there are few large firms operating in an industry. While, a monopoly is when there is only one firm operating in an industry.
Oligopolies are characterised by :
price setting firms
product differentiation
profit maximisation
high barriers to entry or exit of firms
downward sloping demand curve
the action taken by the other airlines is known as tacit collusion.
Tacit collusion is when other companies adopt the price of the price leader
Tacit collusion is not illegal while the explicit collision is illegal.
Potential GDP of an economy is $12 billion. Real (Actual) GDP is $20 Billion. Marginal propensity to consume is 0.75. What level of Government spending is required to achieve Full employment
Answer:
Government spending required = $2 billion
Explanation:
The required amount of GDP to achieve the full employment GDP =
Potential GDP - Actual
that is 20 - 12 = $8 billion.
But note that a government spending of less than $8 billion would be required to achieve an increase of 8 billion in real GDP. This is so because of expenditure multiplier effect.
The expenditure multiplier is the amount by which the aggregate output would increase with an increase in any of the expenditure components.
It is calculated as follows;
Multiplier = 1/(1-MPC)
For this question ,
Expenditure multiplier = 1/(1-0.75) = 4
This implies that $1 change in any of the aggregate expenditure would lead a $4 worth of change in GDP.
Government spending required is determined as
Desired change in real GDP/expenditure multiplier
= $8 billion/4 = $2 billion
Government spending required = $2 billion
an investment under consideration has a payback of six years and a cost of 876000. Assume the cash flows are conventional. If the required return is 12 percent, what is the worst-case NPV?
Answer:
-43291.14
Explanation:
Npv = net present value
Payback = 6 years
Required return = 12 percent
Cost = 876000
When we talk about last case npv we mean that cash flow has gotten to its last future. The entire cost of 876000 will have to be paid after 6 years and after that future cash flows would exist.
Npv = -876000 +(876000/1.12)⁶
= -876000+443808.86
= = -43291.14
Simon Corporation manufactures hydraulic valves. The product life of a valve is 4 years. Target average profit margin for Simon 20.00% The company does not expect the manufacturing cost to vary over the next 4 years. Estimated sales volume and the unit selling price of the valve for the next 4 years is given below: Year Sales volume (units) Unit selling price Year 1 40,000 $80.00 Year 2 50,000 $75.00 Year 3 35,000 $50.00 Year 4 25,000 $45.00 What is the allowable unit cost of a hydraulic valve using the target costing model
Answer:
Allowable unit cost of a hydraulic valve using the target costing model = 52.4
Explanation:
Given that:
Simon Corporation manufactures hydraulic valves. The product life of a valve is 4 years.
Target average profit margin for Simon 20.00%
The company does not expect the manufacturing cost to vary over the next 4 years
Estimated sales volume and the unit selling price of the valve for the next 4 years is given below:
Year Sales volume (units) Unit selling price
Year 1 40,000 $80.00
Year 2 50,000 $75.00
Year 3 35,000 $50.00
Year 4 25,000 $45.00
The objective is to determine the allowable unit cost of a hydraulic valve using the target costing model.
The Cost for each unit selling price can be calculated as:
= unit selling price - (Target average profit margin × unit selling price)
For Year 1
= $80.00- (0.2 × $80.00)
= $80.00 - $16.00
= $64.00
For Year 2
= $75.00 - ( 0.2 × $75.00)
= $75.00 - ( $15.00)
= $60.00
Year 3
= $50.00 - (0.2× $50.00)
= $50.00 - $10.00
= $40.00
Year 4
= $45.00 - (0.2 × $45.00)
=$45.00 - $9.00
= $36.00
Year Sales volume Unit Cost Cost per Unit
(units) selling price
Year 1 40,000 $80.00 $64.00 $2560000
Year 2 50,000 $75.00 $60.00 $3000000
Year 3 35,000 $50.00 $40.00 $1400000
Year 4 25,000 $45.00 $36.00 $900000
Total: 150000 $7860000
Allowable unit cost = Total cost/Total number of unit cost
Allowable unit cost = $7860000/150000
Allowable unit cost = 52.4
good is excludable if: a. it is Wi-Fi or a similar service. b. people who do not pay cannot be easily prevented from using the good. c. one person's use of the good does not reduce the ability of another person to use the same good. d. people who do not pay can be easily prevented from using the good.
Answer:
The correct answer is:
people who do not pay can be easily prevented from using the good. (d)
Explanation:
Excludable goods or services are those to which the consumer cannot have access unless payment of some form is made. By contrast, a non-excludable good or service is one to which the consumer cannot be prevented from using even without payment. Excludable goods can be further divided into rivalrous and non-rivalrous.
A rivalrous excludable good or service is one in which usage by a consumer or usage by one party prevents or reduces significantly, its use by another consumer or party examples are goods such as clothes, food, cars etc, while non-rivalrous excludable goods/services include tv subscriptions, cinemas, etc.
22. On January 1, 2021, Princess Corporation leased equipment to King Company. The lease term is eight years. The first payment of $675,000 was made on January 1, 2021. The equipment cost Princess Corporation $3,600,000. The present value of the lease payments is $3,961,183. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 10%, how much interest revenue will Princess record in 2022 on this lease
Answer:
$293,980.13
Explanation:
Calculation of how much of the interest revenue Princess will record in 2022 on the lease
First Step is to find the interest for year 2021
Present Value January 1, 2021 $3,961,183
Less Payment January 1, 2021 (675,000)
=$3,286,183
Hence,
2021 Interest =$3,286,183× 10%
2021 Interest = $328,618.3
Second Step
Second Payment $675,000
Less Interest (328,618.3)
Reduced balance $346,381.7
Third Step is to find the how much interest revenue will Princess record in 2022 on the lease
2021 $3,286,183
Less Reduced balance (346,381.7)
January 1 2022 Liability = $2,939,801.3× 10%
2022 Interest Revenue =$293,980.13
Therefore the amount of interest revenue that Princess will record in 2022 on the lease will be $293,980.13
Yan Yan Corp. has a $5,000 par value bond outstanding with a coupon rate of 4.6 percent paid semiannually and 21 years to maturity. The yield to maturity on this bond is 4.1 percent.
What is the price of the bond?
Answer:
Price of the bond = $4,122.36
Explanation:
The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
Value of Bond = PV of interest + PV of RV
The value of bond for Yan Yan Corp. be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 4.6% × 5,000 × 1/2 = 115
Semi-annual yield = 4.1%/2 = 2.05 % per six months
Total period to maturity (in months) = (2 × 21) = 41 periods
PV of interest =
115 × (1- (1+0.0205)^(-21)/0.0205)=1,946.47
Step 2
PV of Redemption Value
= 5000 × (1.0205^(-41) = 2,175.89
Step 3:Price of the bond
Total present Value = 1,946.47 + 2,175.89 = 4,122.36
Price of the bond = $4,122.36
Rent expense of $3,000 is allocated to Department A and Department B based on square footage. Department A has 5,000 square feet and Department B has 2,500 square feet.
The dollar amount of rent expense allocated to Department B is:_______
Answer:
$1,000
Explanation:
Calculation for the Dollar amount of rent expense allocated to department B
Using this formula
Expense allocated to Department B= Rent expense allocated to Department A and B* Department B square feet/Department A and Department B Square foot
Let plug in the formula
Expense allocated to department B =$3,000*2,500/5,000+2,500
Expense allocated to department B= $3,000 * 2,500 / 7,500
Expense allocated to department B =$7,500,000/7,500
Expense allocated to department B= $1,000
Therefore the Dollar amount of rent expense allocated to department B will be $1,000
Universal Travel Inc. borrowed $497,000 on November 1, 2018, and signed a 12-month note bearing interest at 4%. Interest is payable in full at maturity on October 31, 2019. In connection with this note, Universal Travel Inc. should report interest payable at December 31, 2018, in the amount of:
Answer:
Dec 31, 2018
Interest expense 3313.33 Dr
Interest Payable 3313.33 Cr
Explanation:
The note interest is payable at an annual rate of 4%. The interest will be paid at maturity however, an adjusting entry will be made on December 31, 2018 following the accrual basis of accounting to record the interest expense that relates to the period from November to December of 2018. The interest expense will be debited and as the interest will be paid at maturity, interest payable will be credited.
Interest expense = 497000 * 0.04 * 2/12 = $3313.33
The risk-free rate is 6% and the expected rate of return on the market portfolio is 13%. a. Calculate the required rate of return on a security with a beta of 1.25.
Answer:
The required rate of return is r = 0.1475 or 14.75%
Explanation:
The required rate of return is the minimum return that investors demand/expect on a stock based on the systematic risk of the stock as given by the beta. The expected or required rate of return on a stock can be calculated using the CAPM equation.
The equation is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free raterM is the return on marketr = 0.06 + 1.25 * (0.13 - 0.06)
r = 0.1475 or 14.75%
Item9 2 points Time Remaining 2 hours 55 minutes 49 seconds02:55:49 eBookItem 9Item 9 2 points Time Remaining 2 hours 55 minutes 49 seconds02:55:49 TB MC Qu. 6-143 Keyser Corporation, which has... Keyser Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 118 Units in beginning inventory 400 Units produced 2,100 Units sold 2,300 Units in ending inventory 200 Variable costs per unit: Direct materials $ 37 Direct labor $ 23 Variable manufacturing overhead $ 3 Variable selling and administrative expense $ 5 Fixed costs: Fixed manufacturing overhead $ 73,500 Fixed selling and administrative expense $ 29,900 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under variable costing?
Answer:
Results are below.
Explanation:
Giving the following information:
Selling price $118
Units sold 2,300
Variable costs per unit:
Direct materials $37
Direct labor $23
Variable manufacturing overhead $3
Variable selling and administrative expense $5
First, we need to determine the total unitary variable cost:
Unitary variable cost= 37 + 23 + 3 + 5=$68
Variable cost income statement:
Sales= 2,300*118= 271,400
Total variable cost= 68*2,300= (156,400)
Total contribution margin= 115,000
Fixed manufacturing overhead= (73,500)
Fixed selling and administrative expense= (29,900)
Net operating income= 11,600
Cameroon Corp. manufactures and sells electric staplers for $15.30 each. If 10,000 units were sold in December, and management forecasts 3.3% growth in sales each month, the number of electric stapler sales budgeted for March should be:
Answer:
Electric stapler sales budgeted for March should be: 11,023 units.
Explanation:
Apply the growth of 3.30% to each month starting December as follows :
December Sales = 10,000 units
January Sales = 10,000 × (1.033)^1 = 10,330 units
February Sales = 10,000 × (1.033)^2 = 10,671 units
March Sales = 10,000 × (1.033)^3 = 11,023 units
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
Sales in Units
April 54,000
May 75,000
June 94,000
July 82,000
The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 20% of the following month’s sales. The inventory at the end of March was 10,800 units. Required: Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.
down under products Ltd.
prodcution budget
april may june other
budgeted unit sales
total needs
required production in units
Answer:
Results are below.
Explanation:
Giving the following information:
Sales in Units
April 54,000
May 75,000
June 94,000
July 82,000
Desired ending inventory= 20% of the following month’s sales.
The inventory at the end of March was 10,800 units.
To calculate the production for each month, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
April:
Sales= 54,000
Ending inventory= 75,000*0.2= 15,000
Beginning inventory= (10,800)
Total= 58,200 units
May:
Sales= 75,000
Ending inventory= 94,000*0.2= 18,800
Beginning inventory= (15,000)
Total= 78,800 units
June:
Sales= 94,000
Ending inventory= 82,000*0.2= 16,400
Beginning inventory= (18,800)
Total= 91,600 units
Total for the quarter= 228,600 units
In the above case, Sales in Units in the month of April is 54,000, in the month of May is 75,000, in the month of June is 94,000 and in the month of July is 82,000.
What is sales?A sale is defined as a transaction between the parties in which the purchaser acquires goods, services, or assets in return for money. In some cases, other assets are pay off to a seller.
Computation of production:
According to the available information,
Desirable closing inventory= 20% of the following month’s sales.
The inventory at the end of March was 10,800 units.
To calculate the production in each month, the formula is:
[tex]\text{Production= Sales + Desired Ending Inventory - Beginning Inventory}[/tex]
Production in the month of April:
According to the given information,
Sales= 54,000
Ending inventory:
[tex]=75,000\times \dfrac{20}{100}\\= 15,000[/tex]
Beginning inventory= 10,800
Now, apply the given values in the above formula:
[tex]\text{Production= Sales + Desired Ending Inventory - Beginning Inventory}\\\\\text{Production} =54,000+15,000-10,800\\\\\text{Production}=58,200\text{Units}[/tex]
Production in the month of May:
Sales= 75,000
Ending inventory:
[tex]=94,000\times \frac{20}{100}\\\\= 18,800[/tex]
Beginning inventory= 15,000
Now, apply the given values in the above formula:
[tex]\text{Production= Sales + Desired Ending Inventory - Beginning Inventory}\\\\\text{Production} =75,000+18,800-15,000\\\\\text{Production}=78,800\text{Units}[/tex]
Production in the month of June:
Sales= 94,000
Ending inventory:
[tex]872,000\times\dfrac{20}{100}= 16,400[/tex]
Beginning inventory= 18,800
Now, apply the given values in the above formula:
[tex]\text{Production= Sales + Desired Ending Inventory - Beginning Inventory}\\\\\text{Production} =94,000+16,400-18,800\\\\\text{Production}=91,600\text{Units}[/tex]
Therefore, the Total for the quarter :
[tex]=\text{May's Production + June's Production+Juily's Production}\\\\=58,200+78,800+91,600 \text{Units}\\= 228,600 \text{Units}[/tex]
Learn more about sales, refer to:
https://brainly.com/question/16911495
1. While FF was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for FF for 2012 to 2016 are:
Answer:
hello some details/parts of your question are missing attached below is the missing part
answer : A ) = 24.13%
B ) = 0.1084, The preceding data series represents a SAMPLE
C ) = 0.4494
Explanation:
A) The average realized return on FF stock can be calculated as
= 24% + 16.15% + 29% +39.9% + 12.35% / 5
= 24.13%
B) The preceding data series represents a SAMPLE standard deviation BECAUSE RETURNS WERE MADE ONLY FOR FIVE YEARS
and the sample standard deviation is calculated as
[tex]s^2 = \frac{summation ( x - mean vale)^2}{N-1}[/tex]
[tex]S^2 = \frac{0.0470383}{ 5 -1 }[/tex] = 0.01175056
s = [tex]\sqrt{0.01175056}[/tex] = 0.1084
C) coefficient of variation
coefficient of variation = standard deviation / mean
= 0.1084 / 0.2413 = 0.4494
Dextra Computing sells merchandise for $9,000 cash on September 30 (cost of merchandise is $7,200). Dextra collects 7% sales tax. Record the entry for the $9,000 sale and its sales tax. Also record the entry that shows Dextra sending the sales tax on this sale to the government on October 15.
View transaction list
Journal entry worksheet
Record the cash sales and 9% sales tax.
Note: Enter debits before credits.
Date General Journal Debit Credit
Sep 30
Record entry Clear entry View general journal
Answer:
Sept 30
DR Cash ........................... $9,630
CR Sales ..........................................$9,000
CR Sales Tax Payable...................$630
(To record Sales and Sales taxes)
Working
Cash = 9,000 + (9,000 * 7%)
= $9,630
Sales tax = 9,630 - 9,000
= $630
Sept 30
DR Cost of Goods Sold .....................$7,200
CR Merchandise Inventory ...................................$7,200
(To record cost of goods sold)
Oct 15
DR Sales Tax Payable...........................$630
CR Cash...............................................................$630
(To record remittance of Sales Tax)
Ms. Ray is age 46 and single. Her employer made a $2,730 contribution to her qualified profit-sharing plan account, and she made the maximum contribution to her traditional IRA. Compute her IRA deduction if:
a. Ms. Ray's $50,000 salary is her only income item.
b. Ms. Ray's S64,250 salary is her only income item.
c. Ms. Ray's $64,250 salary and S 7,970 dividend income are her only income items.
Answer:
B
Explanation:
You manufacture wine goblets. In mid- June you receive an order for 10,000 goblets from Japan. Payment of ¥400,000 is due in mid- December. You expect the yen to rise from its present rate of $1=¥107 to $1 to ¥120 by December 2020. You can borrow yen at 6% a year. What should you do?
Answer:
I will borrow yen at 6% a year.
Explanation:
a) Data and Calculations:
Payment for 10,000 = ¥400,000
Spot rate = $1 = ¥107
Forward rate = $1 to ¥120
Borrow ¥400,000, the interest cost = ¥24,000 = $224.30/2 (¥24,000/107) = $112.15 for six months
Value of ¥400,000 borrowed in dollars = $3,738.32 (¥400,000/107)
Loan Repayment of ¥400,000 in dollars = $3,333,33 (¥400,000/120)
Gain from forward contract = $404.99
Interest cost for borrowing = 112.15
Overall debt hedging gain = $292.84
By borrowing yen at 6% per annum, you will make an overall gain of $292.84. This is not comparable to the foreign exchange loss of $404.99 that you will incur without borrowing yen. Taking advantage of the the debt hedging, the supplier is able to save foreign exchange loss.
All of the following are considered process innovation EXCEPT A. organizational innovation. B. nonneutral technical progress. C. neutral technical progress. D. labor saving technical progress.
Answer:
B. nonneutral technical progress.
Explanation:
A company has a net cash inflow from operating activities of $793,000, a net cash outflow of $58,000 from investing activities and a net cash inflow of $100,800 from financing activities. The company paid $128,000 in interest, $188,500 in income taxes, and $204,000 in cash dividends. Which of the following statements about the statement of cash flows is not correct?a. The statement of cash flows will show a net increase in cash and cash equivalents of $838, 500. b. If the direct method is used, the $125,000 of interest paid and the $187,000 of income taxes paid will be reported in the cash flows from operating activities. c. The cash dividends of $201,000 paid will be reported as a cash outflow in the cash flow from investing activities section. d. Supplemental disclosures required for a company using the indirect method include the amount of interest and the amount of income taxes paid.
Answer:
Incorrect Statement about the Statement of Cash Flows:
c. The cash dividends of $201,000 paid will be reported as a cash outflow in the cash flow from investing activities section.
Explanation:
Cash dividends of $201,000 will be reported as a cash outflow in the financing activities section and not the investing activities section.
Statement of Cash Flows is broadly divided into three, the operating, investing, and financing activities sections. The operating activities section show the cash flows from the normal business of the enterprise. The investing activities section shows the acquisition and disposal of investments made by the company in cash. While, the financing section shows the inflow and outflow of cash resulting from the funding of the business by stockholders and noncurrent creditors.
"A $10,000 municipal bond with 10 years to maturity is purchased in the primary market at 105. The bond is sold after 4 years at 105. The taxable gain or loss is a:"
Answer:
2 point capital gain
Explanation:
Every municipal bond that is purchased at premium is subject to straight line depreciation, whether the premium be trading premium or original issue premium.
Here the premium is 5 points = 105 - 100
Which shall be amortised over its useful life of 10 years.
Thus, for each year 1/2 point is amortised without allowing any tax deduction.
Thus, after 4 years total amortisation = [tex]\frac{1}{2} \times 4years = 2[/tex]
Thus, value at end of year 4 = 105 - 2 = 103 basis point.
Further the selling amount = 105 basis point.
Thus, 105 - 103 = 2 basis point shall be taxable.
Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish (model TS111). Ray has estimated the annual demand for this model at 1,500 units. His cost to carry one unit is $80 per year per unit, and he has estimated that each order costs $22 to place.
Using the EOQ model, how many should Ray order each time?
Answer:
28.72 units
Explanation:
Calculation of how many should Ray order each time using EOQ model
Using this formula
EOQ= √2DS/H
Where,
D=Annual demand 1,500 units
S=Order costs $22
H=Holding Costs $80 per unit
Let plug in the formula
EOQ=√2*1,500*$22/$80
EOQ=√66,000/$80
EOQ=√825
EOQ=28.72 units
Therefore Using the EOQ model, Ray should order 28.72 units each time.
Sheridan Company issues 3600 shares of its $10 par value common stock having a fair value of $20 per share and 5600 shares of its $10 par value preferred stock having a fair value of $20 per share for a lump sum of $205400. What amount of the proceeds should be allocated to the preferred stock
Answer:
$125,026
Explanation:
Common Shares 3,600
Fair value $20
Total market value of common stock $72,000
Preferred shares 5,600
Fair value $20
Total market value of preferred stock $112,000
Lump Sum amount $205,400
Amount of proceeds should be allocated to the preferred stock = 205,400 * (112,000 / (72,000 + 112,000) ) = $125,026
ICOT Industries issued 28 million of its $1 par common shares for $492 million on April 11. Legal, promotional, and accounting services necessary to effect the sale cost $3 million. Required: 1. Prepare the journal entry to record the issuance of the shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Answer:
Dr Cash $492
Cr Common stock $28
Cr PIC in excess of par 464
Dr PIC in excess of par $3
Cr Cash $3
Explanation:
Preparation of the Journal entry to record the issuance of the shares
Based on the information given we were told that the Industries issued 28 million of its $1 par common shares for the amount of $492 million on April 11 which means that the Journal entry will be:
Dr Cash $492
Cr Common stock $28
(28 million x $1)
Cr PIC in excess of par 464
($492-$28)
(To record the sale of the stock)
Based on the information given we were told that the Industries had Legal, promotional, and accounting services necessary to effect the sale cost of the amount of $3 million which means that the Journal entry will be:
Dr PIC in excess of par $3
Cr Cash $3
(To record the stock issue costs)
RLW-II Enterprises estimated that indirect manufacturing costs for the year would be $60 million and that 12,000 machine hours would be used
Answer: $3,150,000
Explanation:
Total cost of production will be the total sum of the material costs, labor costs and indirect costs.
Indirect Costs
It was estimated that 12,000 machine hours would be used at a cost of $60 million.
Indirect cost per machine hour is;
= 60,000,000/12,000
= $5,000 per hour
With 200 machine hours, indirect cost is;
= 200 * 5,000
= $1,000,000
Total cost of production = 1,250,000 + 900,000 + 1,000,000
= $3,150,000
A bond par value is $1,000 and the coupon rate is 5.1 percent. The bond price was $946.02 at the beginning of the year and $979.58 at the end of the year. The inflation rate for the year was 2.6 percent. What was the bond's real return for the year
Answer:
the bond's real return for the year is 6.18 %.
Explanation:
First find the nominal return of the bond then the real return as follows :
PV = - $946.02
Pmt = $1,000 × 5.10% = $51
P/yr = 1
FV = $979.58
n = 1
r = ?
Using a Financial Calculator, the nominal return of the bond, r is 8.9385 %.
Real Return = ( 1 + nominal return) / (1 + inflation rate) -1
= (1 + 0.089395) / (1 + 0.026) - 1
= 0.0618 or 6.18 %
Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $750,000. The net cash flows estimated for the two proposals are as follows:
Net Cash Flow Year Processing Mill Electric Shovel
1 $310,000 $330,000
2 260,000 325,000
3 260,000 325,000
4 260,000 320,000
5 180,000
6 130,000
7 120,000
8 120,000
The estimated residual value of the processing mill at the end of Year 4 is $280,000.
Present Value of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 0.890 0.826 0.797 0.756 0.694
3 0.840 0.751 0.712 0.658 0.579
4 0.792 0.683 0.636 0.572 0.482
5 0.747 0.621 0.567 0.497 0.402
6 0.705 0.564 0.507 0.432 0.335
7 0.665 0.513 0.452 0.376 0.279
8 0.627 0.467 0.404 0.327 0.233
9 0.592 0.424 0.361 0.284 0.194
10 0.558 0.386 0.322 0.247 0.162
Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 15%. Use the present value table appearing above. If required, round to the nearest dollar.
Processing mill electric shovel
Present value of net cash flow total $_____ $_____
Less amount to be invested $_____ $_____
Net present value $_____ $_____
Answer:
Year NCF Processing Mill NCF Processing Mill NCF Electric Shovel
0 -$750,000 -$750,000 -$750,000
1 $310,000 $310,000 $330,000
2 $260,000 $260,000 $325,000
3 $260,000 $260,000 $325,000
4 $260,000 $540,000 $320,000
5 $180,000
6 $130,000
7 $120,000
8 $120,000
discount rate = 15%
NPV Processing Mill (8 years) = -$750,000 + ($310,000 x .87) + ($260,000 x .756) + ($260,000 x .658) + ($260,000 x .572) + ($180,000 x .497) + ($130,000 x .432) + ($120,000 x .376) + ($120,000 x .327) = -$750,000 + $267,700 + $196,560 + $171,080 + $148,720 + $89,460 + $56,160 + $45,120 + $39,240 = -$750,000 + $1,014,040 = $264,040 HIGHEST NPV, SO THIS PROJECT SHOULD BE SELECTED
NPV Processing Mill (4 years) = -$750,000 + ($310,000 x .87) + ($260,000 x .756) + ($260,000 x .658) + ($540,000 x .572) = -$750,000 + $267,700 + $196,560 + $171,080 + $308,880 = -$750,000 + $944,220 = $194,220
NPV Electric Shovel (4 years) = -$750,000 + ($330,000 x .87) + ($325,000 x .756) + ($325,000 x .658) + ($320,000 x .572) = -$750,000 + $287,100 + $245,700 + $213,850 + $183,040 = -$750,000 + $929,690 = $179,690
Companies Heidee and Leaudy are virtually identical in that they are both profitable, and they have the same total assets (TA), Sales (S), return on assets (ROA), and profit margin (PM). However, Company Heidee has the higher debt ratio. Which of the following statements is CORRECT?a. Company Heidee has a lower operating income (EBIT) than Company LDb. Company Heidee has a lower total assets turnover than Company Leaudy.c. Company Heidee has a lower equity multiplier than Company Leaudy.d. Company Heidee has a higher fixed assets turnover than Company Leaudy.e. Company Heidee has a higher ROE than Company Leaudy.
Answer:
Correct Answer:
e. Company Heidee has a higher ROE than Company Leaudy.
Explanation:
Return on Equity, (ROE) is a ratio that provides investors with insight into how efficiently a company and more specifically, its management team is handling the money that shareholders have contributed to it. That is, it measures the profitability of a corporation in relation to stockholders' equity.
Company Heidee has the higher debt ratio shows that the ROE is very high. This shows that the investors money in Company Heidee is well managed in the business.
Earnings per Share, Price-Earnings Ratio, Dividend Yield The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year:
Common stock, $25 par value (no change during the year) $5,500,000
Preferred $5 stock, $100 par (no change during the year) 3,000,000
The net income was $502,000 and the declared dividends on the common stock were $55,000 for the current year. The market price of the common stock is $13.60 per share. For the common stock
Determine:
a. the earnings per share
b. the price-earnings ratio
c. the dividends per share
d. the dividend yield.
Answer:
a. the earnings per share is $2.28
b. the price-earnings ratio is 5.96 times
c. the dividends per share is $0.25
d. the dividend yield is 1.84%
Explanation:
a. the earnings per share
Earning per share is the net earning of the company against each outstanding share.
Earning per share = Net Income / Numbers of Outstanding shares
Earning per share = $502,000 / ($5,500,000/$25)
Earning per share = $502,000 / 220,000 = $2.28
b. the price-earnings ratio
Price earning ratio determines the impact of net income on market value of the share.
Price earning Ratio = Market Pice of stock / Earning per share
Price earning Ratio = $13.60 / $2.28
Price earning Ratio = 5.96
c. the dividends per share
Dividend per share is the value of dividend paid to each outstanding common share.
Dividend per share = Dividend declared / Numbers of outstanding shares
Dividend per share = $55,000 / 220,000 shares
Dividend per share = $0.25 per share
d. the dividend yield.
Dividend yield is the ratio of dividend per share and Market price per share.
Dividend Yield = Dividend Per share / Market price per share
Dividend Yield = $0.25 / $13.60 = 0.0184 = 1.84%
Kelley Company reports $1,250,000 of net income for 2017 and declares $175,000 of cash dividends on its preferred stock for 2017. At the end of 2017, the company had 380,000 weighted-average shares of common stock. 1. What amount of net income is available to common stockholders for 2017
Answer:
Net income available to common stockholders is $1,075,000
Explanation:
Net Income $1,250,000
To Preferred Shareholders $175,000
Net income available to $1,075,000
common stockholders
Basic earnings per share = Net income available to common stockholders / weighted average shares of common stock
Basic earnings per share = $1,075,000 / 380,000
Basic earnings per share = $2.8290 per share.
Prepare journal entries to record the following four separate issuances of stock. A corporation issued 7,000 shares of $20 par value common stock for $168,000 cash. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $34,000. The stock has a $1 per share stated value. A corporation issued 3,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $34,000. The stock has no stated value. A corporation issued 1,750 shares of $25 par value preferred stock for $77,750 cash.
Answer: Please see explanation column for answer
Explanation:
1. For shares issued in excess of par value common stock
Amount Debit Credit
Cash $168,000
Common stock at $20 ( 7000 x 20) $140,000
Paid in excess of par value common stock
(168,000 - 140,000) $28,000
2. For shares issued to Promoters at stated value
Amount Debit Credit
Organisational expenses $34,000
Common stock at $1 ( 3,500x 1) $3,500
Paid in capital in excess of stated value
common stock(34,000 - 3,500) $30, 500
3. For shares issued to Promoters at no stated value
Amount Debit Credit
Organisational expenses $34,000
Common stock at $1 no par value $34,000
4.For shares issued in excess of par value preferred stock
Amount Debit Credit
Cash $77,750
preferred stock at $25(1,750 x 25) $43,750
Paid in capital in excess of par value
Preferred stock(77,750 -43,750) $34,000
