Answer:
On its 2021 income statement Swifty should report as a result of the troubled debt restructuring...
Gain on disposal = $197,000
Restructuring gain = $212,200
Explanation:
We need to find the gain on disposal. Let's use:
Gain on disposal = fair value of land - cost of land.
Where,
Fair value = $920,000
Cost of land = $723,000
Therefore,
Gain on disposal = $920,000 - $723,000 = $197,000
Let's find the gain on restructuring.
Restructuring gain = Loan amount + Accured interest - fair value of land
Where,
Loan amount = $1,020,000
Accured interest = $112,200
Fair value of land = $920,000
Therefore,
Restructuring gain = $1,020,000 + $112,200 - $920,000 = $212,200
On its 2021 income statement Swifty should report as a result of the troubled debt restructuring...
Gain on disposal = $197,000
Restructuring gain = $212,200
The SP Corporation makes 42,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $ 10.10 Direct labor $ 9.10 Variable manufacturing overhead $ 3.75 Fixed manufacturing overhead $ 4.70 An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to SP Corporation for this motor is $25.75. If SP Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be:
Answer:
annual financial advantage, $837,600
Explanation:
Analysis of the Make or Buy Decision - Making
Making Costs
Direct materials $ 10.10×42,000 424,200
Direct labor $ 9.10×42,000 382,200
Variable manufacturing overhead $ 3.75×42,000 157,500
Fixed manufacturing overhead $ 4.70×42,000 197,400
Total 1,161,300
Buying Costs
Purchase Price $25.75×42,000 1,801,500
Fixed manufacturing overhead $ 4.70×42,000 197,400
Total 1,998,900
It costs $837,600 more to Buy than to make.
Hence the annual financial advantage for the company as a result of making the motors rather than buying them from the outside supplier would be $837,600.
Consider the oil-producing countries of A, B, and C. Each has a marginal cost of zero. World demand is given by Q = 1430 - P. Suppose the three countries form a cartel, and that none of them has an incentive to deviate from the cartel. By how many units lower is the total output of oil under the cartel relative to the Cournot solution?
Answer: 357.50
Explanation:
Under Cournot model that has three firms, each firm produces at
q = (1430 – 0)/((3+1)×1)
= 1430/4
= 357.5 units
Total output = 357.5 × 3
= 1072.5 units
Under cartel, the marginal revenue equals to the marginal cost.
MR = MC = 0
1430 – 2Q = 0
Q = 1430/2
Q = 715 units
Difference= 1072.5 units - 715 units
= 357.5 units
Hence the units are 357.50 units lower in cartel compared to Cournot.
This is a partial adjusted trial balance of Pharoah Company. PHAROAH COMPANY Adjusted Trial Balance January 31, 2022 Debit Credit Supplies $760 Prepaid Insurance 1,620 Salaries and Wages Payable $1,080 Unearned Service Revenue 780 Supplies Expense 870 Insurance Expense 540 Salaries and Wages Expense 1,770 Service Revenue 4,350 Prepare the closing entries at January 31, 2022. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answer and Explanation:
The closing entries are shown below:
1. Service revenue $4,350
To Income summary 4,350
(Being the closing of service revenue is recorded)
For recording this we debited the sales revenue as it has normal credit balance so to close it we debited it and credited the income summary
2. Income summary $3,180
To Supplies Expense $870
To Insurance Expense $540
To Salaries and Wages Expense $1,770
(Being the closing of all expenses is recorded)
For recording this we debited the income summary and credited all expenses as it has normal debit balance so to close it we credited it
3. Income summary $1,170 ($4,350 - $3,180)
To Retained earnings $1,170
(Being the net income or loss is closed)
Since the revenue is more than the expenses so it would leads to net income and for recording this we debited the income summary and credited the retained earning so that the closing of the net income is recorded
A company bought $950,000 of equipment with an expected life of 24 years and no residual value. After 20 years the company sold the equipment for $120,500. If the company uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities, which of the following reflects how the sale of the equipment would be reported in the statement of cash flows?
a. $128,500 is recorded as a cash inflow from investing activities and $35,786 is added to convert net income to net cash flow provided by operating activities.
b. $128,500 is recorded as a cash inflow from investing activities and $35,786 is subtracted to convert net income to net cash flow provided by operating activities.
c. $128,500 is recorded as a cash inflow from operating activities.
d. $128,500 is recorded as a cash inflow from investing activities and no other sections of the statement are affected.
Answer:
The correct answer is Option A although the numbers in all the options are not correct. The appropriate answer is $120,500 is recorded as a cash inflow from investing activities and $37,833 is added to convert net income to net cash flow provided by operating activities.
Explanation:
Under straight-line method, depreciation expense is (cost - residual value) / No of years = ($950,000 - 0) / 24 years = $39,583.33 yearly depreciation expense.
Accumulated depreciation for 20 years = $39,583.33 x 20 = $791,666.67
Net book value (NBV) becomes $950,000 - $791,666.67 = $158,333.33
Gain or loss on disposal = Sales proceeds - NBV = $120,500 - $158,333 = $ 37,833 (loss)
Using these data from the comparative balance sheet of Sunta Fe Spice Company, perform horizontal analysis. (Round percentages to 0 decimal place, e.g. 17%.)
Increase or (Decrease)
December 31, 2017 December 31, 2016 Increase or (Decrease) Amount Percentage
Accounts receivable $ 375,000 $ 300,000 $ __________ ___________ %
Inventory 780,000 600,000 ____________ ___________ %
Total assets 3,220,000 2,800,000 __________ __________ %
Answer:
75000,25%;
18000, 30%.
420000, 15%.
Explanation:
From the question above we are given the following parameters Accounts receivable for year 2017 = $ 375,000,
Inventory for the year 2017 = 780,000 and the Total assets for the year 2017 = 3,220,000.
Accounts receivable for year 2016 = $ 300,000, inventory for the year 2016 = 600,000 and the Total assets for the year 2016 = 2,800,000.
Therefore, we have the following simple arithmetic(which is subtraction between the variables in the two years) to determine the solution to the question:
(375,000 - 300,000) = 75,000 = 25%(increase).
(780,000 - 600,000) = 180,000 = 30%(Increase).
(3,220,000 - 2,800,00) = 420,000 = 15%(increase).
Answer:
25%30%15%Explanation:
Accounts receivables
December 31 2017 = $375000
December 31 2016 = $300000
difference = $75000 ( 25%) { increase}
Inventory
December 31 2017 = 780000
December 31 2016 = 600000
difference = 180000 ( 30% ) { increase}
Total assets
December 31 2017 = 3220000
December 31 2016 = 2800000
difference = 420000 ( 15% ) { increase }
The southern division of Pryto Corporation uses a part much like Part D in one of its products. The southern division can buy this part from an outside supplier for $78.25 per unit. However, the southern division could use Part D instead of this part that it purchases from outside suppliers. What's the most that the southern division would be willing to pay the western division for Product D
Answer: $78.25
Explanation:
The Southern Division is willing to pay $78.25 to an outside company for this part that it needs.
In the same vein, the maximum therefore that they would be willing to pay for the Western Division should be $78.25 as well because anything higher than that would constitute an Opportunity Cost loss.
They should go for the cheaper option and if buying from the Western Division exceeds the $78.25 then it is loss on their part. Western Division should charge the same or less.
Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp rise in the stock market, an increase in government purchases, an increase in the money supply and a decline in the value of the dollar. In the short run a. the price level and real GDP will both rise. b. the price level and real GDP will both fall. c. neither the price leave nor real GDP will change. d. All of the above are possible.
Answer:
All of the above are possible.
Explanation:
Discussions here center on equilibrium of an economy in a long run, and here after the government activities, their is a decline in dollar value; therefore in the short run, the price level and real GDP will both rise in as much as the price level and real GDP will also both fall. It is also gathered that neither the price leave nor real GDP will change.
The transition from the short run to the long run may be done by considering some short run equilibrium that is also a long run equilibrium as to supply and demand, then comparing that state against a new short run and long run equilibrium state from a change that disturbs equilibrium, say in the sales tax rate, tracing out the short run adjustment first, then the long run adjustment.
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $74,000. The machine would replace an old piece of equipment that costs $19,000 per year to operate. The new machine would cost $9,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $31,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine
Answer:
$7,400 per year
Explanation:
Data provided for computing the annual depreciation expense is here below:-
Automated bottling machine = $74,000
Useful life = 10 years
The calculation of annual depreciation expense is given below:-
Annual depreciation expense = Automated bottling machine ÷ Useful life
= $74,000 ÷ 10
= $7,400 per year
Therefore for computing the annual depreciation expense we simply divide the automated bottling machine by useful life.
A law firm received $1600 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause:
Answer and Explanation:
In the first situation, the journal entry is
Cash Dr $1,600
To Unearned revenue $1,600
(Being the unearned revenue is recorded)
For this we debited the cash as it increased the assets and credited the unearned revenue as it also increased the liabilities
The adjusting entry is
Unearned Service Revenue XXXXX
To Service Revenue XXXXX
(Being the adjusting entry is recorded)
If this entry is not recorded than it would leads to understated of revenue and overstated of liabilities
Barton and Fallows form a partnership by combining the assets of their separate businesses. Barton contributes accounts receivable with a face amount of $48,000 and equipment with a cost of $186,000 and accumulated depreciation of $105,000. The partners agree that the equipment is to be valued at $90,000, that $3,700 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $1,900 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Fallows contributes cash of $28,300 and merchandise inventory of $56,000. The partners agree that the merchandise inventory is to be valued at $60,500. Journalize the entries to record in the partnership accounts (a) Barton's investment and (b) Fallows's investment. If an amount box does not require an entry, leave it blank. (a) (b)
Answer and Explanation:
The Journal entry is shown below:-
1. Equipment Dr, $90,000
Accounts receivable Dr, $44,300
($48,000 - $3,700)
To Accumulated depreciation -equipment $1,900
To Barton's capital $132,400
(Being Barton capital contribution in the form of accounts Receivable and equipment as per agreed terms is recorded)
2. Cash account Dr, $28,300
Merchandise Inventory Account Dr, $60,500
To Fallows’s Capital Account $88,800
(Being Fallows capital contribution in the form of merchandise inventory and cash as per agreed terms)
Selected information from Arbon Corporation's accounting records and financial statements for 2021 is as follows ($ in millions): Cash paid to acquire machinery $ 36 Reacquired Arbon common stock 50 Proceeds from sale of land 90 Gain from the sale of land 52 Investment revenue received 66 Cash paid to acquire office equipment 80 In its statement of cash flows, Arbon should report net cash outflows from investing activities of:
Answer:
Arbon should report net cash outflows from investing activities of: ($26)
Explanation:
Arbon Corporation
Statement of cash flows (extract)
Purchase of machinery ($36)
Proceeds from sale of land 90
Cash paid to acquire office equipment (80)
Net cash outflows from investing activities ($26)
Therefore, Arbon should report net cash outflows from investing activities of ($26).
Note that reacquired stock affects the financing section of the cash flows, while gain on sale of land and investment revenue received affect the operating section of the cash flows.
John, a limited partner of Candy Apple, LP, is allocated $30,000 of ordinary business loss from the partnership. Before the loss allocation, his tax basis is $20,000 and his at-risk amount is $10,000. John also has ordinary business income of $20,000 from Sweet Pea, LP, as a general partner and ordinary business income of $5,000 from Red Tomato as a limited partner. How much of the $30,000 loss from Candy Apple can John deduct currently
Answer: $5,000
Explanation:
First of all John's tax basis in Candy Apple is $20,000 and the losses are $30,000. $10,000 of the loss will therefore be suspended as it is more than his tax basis.
Of the remaining $20,000, a further $10,000 will be deducted due to his at-risk amount being $10,000 which means he can only be charged that $10,000.
As John is a limited partner in both Candy Apple and Red Tomato, this means that these are Passive incomes or losses for him and he can use then to offset one another. He will therefore use the $5,000 gained from Red Tomato to offset some of the losses from Candy Apple.
This leaves him with $5,000.
Minot Corporation is preparing its cash budget for August. The following information is available concerning its accounts receivable: Estimated credit sales for August $ 220,000 Actual credit sales for July $ 167,000 Estimated collections in August for credit sales in August 25 % Estimated collections in August for credit sales in July 70 % Estimated collections in August for credit sales prior to July $ 18,000 Estimated write-offs in August for uncollectible credit sales $ 8,000 Estimated provision for bad debts in August for credit sales in August $ 7,800 Required: What is the estimated amount of cash receipts from accounts receivable collections in August?
Answer:
$189,900
Explanation:
For computation of estimated amount of cash receipts from accounts receivable collections first we need to find out the credit sales in August and credit sales in July which is shown below:-
Credit sales in August = Estimated credit sales × Estimated collections in August for credit sales in August
= $220,000 × 25%
= $55,000
Credit sales in July = Actual credit sales × Estimated collections in August for credit sales in July
= $167,000 × 70%
= $116,900
Total estimated cash receipts from accounts receivable = Credit sales in August +Credit sales in July = Actual credit sales + Credit sales prior to July
= $55,000 + $116,900 + $18,000
= $189,900
We learned in class that Starbucks uses its baristas as front line “brand ambassadors”. This is an example of ________________?
A.
top management not doing their jobs
B.
Inverted Organization Structure
C.
Management by Objectives MBO
D.
Giving uneducated employees too much responsibility
Answer:
Inverted Organization Structure
Explanation:
An Inverted Organization Structure is a structure where the employees are given more autonomy. Employees are given more prominent and important roles in the business.
I hope my answer helps you
Option B is correct because it is an example of inverted organization structure.
An Inverted Organization Structure is a organizational structure where employees are given more autonomy in their operation, that is, they are given more prominent and important roles in the company.
This type of structure is beneficial because the top hierarchy have lesser work and employee get more experience because of decision-makings.
In conclusion, the Option B is correct because it is an example of inverted organization structure
Read more about inverted organization structure
brainly.com/question/23840012
The competitive force of substitute products tends to be stronger when Group of answer choices buyers view the prices of substitutes as too high. the costs that buyers face in switching over to substitutes are low. the quality and performance of substitutes are relatively low. substitutes do not embody many characteristics that are similar to those of products already serving the market. none of the above.
Answer:
B. . the costs that buyers face in switching over to substitutes are low.
Explanation:
Porter's threat of substitutes assumes that there are alternative products which customers can easily switch to, to replace a particular product which might be dominant in the market. Some businesses tend to have a lot of competitors, unlike some that have monopoly of the market. Fast moving consumer goods like toiletries or beverages, fall into the class of businesses with many competitors.
There are several high risk factors that could prompt customers to chose a substitute. One of them is, if the prices of the substitutes are perceived by the customers as low. This would make them view the product as a better substitute. And if the product has similar or even higher quality, it makes the substitute more appealing.
In preparation for developing its statement of cash flows for the year just ended, D-Rose Distributors collected the following information: ($ in millions) Purchase of treasury bills (considered a cash equivalent) 6.7 Sale of preferred stock 150.7 Gain on sale of land 4.7 Proceeds from sale of land 25.7 Issuance of bonds payable for cash 140.7 Purchase of equipment for cash 30.7 Purchase of GE stock 35.7 Declaration of cash dividends 134.7 Payment of cash dividends declared in previous year 130.7 Purchase of treasury stock 120.7 Payment for the early extinguishment of long-term notes (carrying (book) value: $100 million) 110.7 Required: 1. Prepare the investing activities section of D-Rose's statement of cash flows. 2. Prepare the financing activities section of D-Rose's statement of cash flows.
Answer and Explanation:
1. The preparation of the investing activities is presented below:
Cash flow from investing activities
Proceeds from sale of land $25.7
Purchase of equipment for cash -$30.7
Purchase of GE stock -$35.7
Net cash used by investing activities -$40.7
2. The preparation of the financing activities is presented below:
Cash flow from financing activities
Sale of preferred stock 150.7
Issuance of bonds payable for cash 140.7
Payment of cash dividends declared in previous year -130
Purchase of treasury stock -120
Payment for the early extinguishment of long-term notes (carrying (book) value: $100 million) -110.7
Net cash used by financing activities -$69.3
The minus sign shows the cash outflow and the positives sign shows the cash inflow
QS 21-17B Computing unit cost under absorption costing LO P5 Vijay Company reports the following information regarding its production costs. Direct materials $ 10.60 per unit Direct labor $ 20.60 per unit Overhead costs for the year Variable overhead $ 10.60 per unit Fixed overhead $ 223,600 Units produced 26,000 units Compute its product cost per unit under absorption costing. (Round your final answer to 2 decimal places.)
Answer:
Total unitary cost= $50.4
Explanation:
Giving the following information:
Direct materials $ 10.60 per unit
Direct labor $ 20.60 per unit
Variable overhead $ 10.60 per unit
Fixed overhead $ 223,600
Units produced 26,000 units
Under absorption costing, the unit product cost is calculated using the direct material, direct labor, and total unitary fixed overhead.
Fixed unitary overhead= 223,600/26,000= $8.6
Total unitary cost= 10.6 + 20.6 + 10.6 + 8.6
Total unitary cost= $50.4
The Collins Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on machine hours in Dept. A and labor cost in Dept. B. At the beginning of the year, the company made the following estimates: Dept A Dept B Direct labor cost $65,000 $42,000 Manufacturing overhead $91,000 $48,000 Direct labor-hours 8,000 10,000 Machine-hours 3,000 12,000 What predetermined overhead rates would be used in Dept A and Dept B, respectively
Answer:
Predetermined overhead rate for department A = 1.4
Predetermined overhead rate for department B = $4
Explanation:
The computation of predetermined overhead rates would be used in Dept A and Dept B, is shown below:-
The predetermined overhead rate for department A = Manufacturing overhead ÷ Machine hours
= $91,000 ÷ $65,000
= 1.4
The predetermined overhead rate for department B = Manufacturing overhead ÷ Machine hours
= $48,000 ÷ 12,000 hours
= $4
So, we have applied the above formula.
Drake Corporation is reviewing an investment proposal. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. The salvage value of the investment at the end of each year is equal to its book value. There would be no salvage value at the end of the investment's life.
Investment Proposal
Year Initial Cost and Book Value Annual Cash Flows Annual Net Income
0 $104,500
1 69,600 $44,000 $9,100
2 41,900 39,500 11,800
3 21,600 35,900 15,600
4 8,300 31,000 17,700
5 0 25,400 17,100
Drake Corporation uses an 11% target rate of return for new investment proposals.
(a) What is the cash payback period for this proposal? (Round answer to 2 decimal places, e.g. 10.50.)
Cash payback period
(b) What is the annual rate of return for the investment? (Round answer to 2 decimal places, e.g. 10.50.)
Annual rate of return for the investment %
(c) What is the net present value of the investment? (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer to 0 decimal places, e.g. 125.)
Answer:
Check the explanation
Explanation:
Kindly check the attached images below to see the step by step explanation to the question above.
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. The system has an installation cost of $150,000 and an additional cost of $50,000 at year 10. The annual software maintenance cost is $5,000 for the first 4 years and $8,000 thereafter. If the new system will be used for the indefinite future, find the equivalent present value at a discount rate of 5%.
Answer:
Equivalent annual cost = $16,502.89
Explanation:
Equivalent annual cost = Present Value of cost / Annuity factor
Present value of cost:
PV of additional cost =50,000 ×1.05^(-10)=30,695.66
PV of maintenance cost
First four years= 5,000× (1-1.05^(-4))/0.05=17,729.75
From year 5 to infinity = (8,000/0.05)× 1.05^(-4)=131,632.39
PV of maintenance cost = 17,729.75 + 131,632.396= 149,362.14
PV of costs = 150,000 + 30,695.66 + 149,362.14= 330,057.8112
Annuity factor = 1/r = 1/0.05= 20
Equivalent annual cost = 330,057.8112 /20=$16,502.89
Equivalent annual cost = $16,502.89
Net income was $469,000. Issued common stock for $76,000 cash. Paid cash dividend of $14,000. Paid $115,000 cash to settle a note payable at its $115,000 maturity value. Paid $124,000 cash to acquire its treasury stock. Purchased equipment for $90,000 cash. Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
The company's cash flows from financing activities is ($177,000).
Explanation:
The company
Statement of cash flows (extract)
Proceed from issue of common stock $76,000
Dividends paid ($14,000)
Repayment of note payable ($115,000)
Purchase of treasury stock ($124,000)
Net cash flows from financing activities ($177,000)
g Birch Company normally produces and sells 48,000 units of RG-6 each month. The selling price is $26 per unit, variable costs are $17 per unit, fixed manufacturing overhead costs total $180,000 per month, and fixed selling costs total $40,000 per month. Employment-contract strikes in the companies that purchase the bulk of the RG-6 units have caused Birch Company’s sales to temporarily drop to only 9,000 units per month. Birch Company estimates that the strikes will last for two months, after which time sales of RG-6 should return to normal. Due to the current low level of sales, Birch Company is thinking about closing down its own plant during the strike, which would reduce its fixed manufacturing overhead costs by $43,000 per month and its fixed selling costs by 11%. Start-up costs at the end of the shutdown period would total $13,000. Because Birch Company uses Lean Production methods, no inventories are on hand. Required: 1. What is the financial advantage (disadvantage) if Birch closes its own plant for two months? 2. Should Birch close the plant for two months? 3. At what level of unit sales for the two-month period would Birch Company be indifferent between closing the plant or keeping it open?
Answer:
Check the explanation
Explanation:
(1) Product RG-6 yields a contribution margin of $10 per unit ($20 - $10 = $10). If the plant closes, this contribution margin will be lost on the 18,000 units (9,000 units per month * 2 months) that could have been sold during the two-month period. However, the company will be able to avoid certain fixed costs as a result of closing down. The analysis is:
Amount ($) Amount ($)
Contribution margin lost by closing the
plant for two months ($10 * 18,000 units) (180,000)
Costs avoided by closing the plant for two months:
Fixed manufacturing overhead cost ($41,000 * 2 months)82,000
Fixed selling costs ($48,000 * 10% * 2months) 9,600 91,600
Net disadvantage of closing, before start-up cost (88,400)
Add start-up costs 13,000
Disadvantage of closing the plant 101,400
(2) No, the company should not close the plant; it should continue to operate at the reduced level of 9,000 units produced and sold each month. Closing will result in a $101,400 greater loss over the two-month period than if the company continues to operate.
(3)
Amount ($)
Cost avoided by closing the plant for two months 91,600
Less: start-up costs (13,000)
Net avoidable costs 78,600
Units = Net avoidable cost / Contribution margin per unit
= $78,600 / $10 = 7,860 units
What is the difference between change in quantity supplied and change in supply?
Answer:
A change in quantity supplied is a movement along the supply curve in response to a change in price. A change in supply is a shift of the entire supply curve in response to something besides price.
Explanation:
Equipment with a book value of $78,000 and an original cost of $168,000 was sold at a loss of $31,000. Paid $106,000 cash for a new truck. Sold land costing $315,000 for $420,000 cash, yielding a gain of $105,000. Long-term investments in stock were sold for $90,000 cash, yielding a gain of $15,500. Use the above information to determine this company's cash flows from investing activities. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
$451,000
Explanation:
The computation of cash flows from investing activities is shown below:-
Sale of equipment $47,000
($78,000 - $31,000)
Purchase of new truck ($106,000)
Sale of land $420,000
Sale of Long-term investments $90,000
Net cash provided by investing activities $451,000
Therefore to reach the cash flows from investing activities we simply added the sale of equipment, sale of land, sale of long term investments and deduct the purchase of new truck.
2. Boilermaker Corp has a beta of 0.8. The market return is expected to be 15%, and the current risk-free rate is 4%. We have used analysts’ estimates to determine that the market believes our dividends will grow at 5% per year and our last dividend was $1. The stock is currently selling for $12.00. What is the company’s cost of equity using the Security Market Line and using the Dividend Growth Model?
Answer:
Security Market Line 16%
Dividend Growth Model 13.75%
Explanation:
Boilermaker Corp
Security Market Line: Re = 4% + 0.8(15%)
=0.04+0.12
= 16%
Dividend Growth Model : Re = [1(1.05)/12.00] + 0.05
=1(0.0875)+0.05
=0.0875+0.05
= 13.75%
Therefore the company’s cost of equity using the Security Market Line is 16% and using the Dividend Growth Model is 13.75%
Scranton, Inc. reports net income of $232,000 for the year ended December 31. It also reports $88,600 depreciation expense and a $5,100 gain on the sale of equipment. Its comparative balance sheet reveals a $35,900 decrease in accounts receivable, a $15,950 increase in accounts payable, and a $12,650 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.
Answer:
Cash flow form operating activities $359,800
Explanation:
$
Net income 232,000
Add depreciation expense 88,600
Add Decrease in receivable 35,900
Increase in account payable 15,950
Decrease in wages ( 12,650)
Cash flow form operating activities 359,800
Increase in payable and decrease in receivable represent cash inflow while decrease in payable and increase in receivables represent cash outflow
During January, a company incurs employee salaries of $2.6 million. Withholdings in January are $198,900 for the employee portion of FICA, $390,000 for federal income tax, $162,500 for state income tax, and $26,000 for the employee portion of health insurance (payable to Company B). The company incurs an additional $161,200 for federal and state unemployment tax and $78,000 for the employer portion of health insurance. Required: 1.-3. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)
Answer:
The journal entries to record would be the following:
Jan-31 Debit Credit
Salaries Expenses $2,600,000
Income Tax payable ($390,000+$162,500) $522,500
FICA Tax payable $198,900
Accounts payable $26,000
Salaries payable Balance $1,822,600
Jan-31 Debit Credit
Salaries Expenses $78,000
Accounts payable $78,000
Jan-31 Debit Credit
Payroll Tax expense $360,100
FICA Tax Payable $198,900
Unemployment Tax Payable $161,200
Explanation:
The journal entries to record would be the following:
To record employee salary expense and withholdings
Jan-31 Debit Credit
Salaries Expenses $2,600,000
Income Tax payable ($390,000+$162,500) $522,500
FICA Tax payable $198,900
Accounts payable $26,000
Salaries payable Balance $1,822,600
To record fringe benefit provided by employer
Jan-31 Debit Credit
Salaries Expenses $78,000
Accounts payable $78,000
To record employer payroll taxes
Jan-31 Debit Credit
Payroll Tax expense $360,100
FICA Tax Payable $198,900
Unemployment Tax Payable $161,200
Langley Company reported net income for 2022 in the amount of $460,000. The company's financial statements also included the following: Increase in accounts receivable$77,000 Decrease in inventory 62,000 Increase in accounts payable 250,000 Depreciation expense 107,000 Gain on sale of land 147,000 What is net cash provided by operating activities under the indirect method
Answer:
$655,000
Explanation:
Cash flow from operating activities involved all the cash flows related to the operations of the company like sales , purchases, receivable, payable etc.
Net Cash flow is the net of receipts and Payment.
Following are the operating cash flows.
Cash flows from operating activities
Net Income $460,000
Add: Non cash Expense Adjustments:
Depreciation $107,000
Change in Working Capital:
Increase in Account receivable ($77,000)
Decrease in Inventory $62,000
Increase in Account payable $250,000
Less: Net Change in WC $235,000
Other Adjustments
Gain on sale of Land ($147,000)
Net Operating Cash flow $655,000
Depreciation is a non cash expense deducted from the revenue to calculate net income. Now it needs to be added back.
Answer:
The net cash provided by operating activities under the indirect method is $655,000.
Explanation:
Langley Company
Statement of cash flows (extract)
Net income $460,000
Add: Depreciation expense 107,000
Less: Gain on sale of land (147,000)
Increase in accounts receivable (77,000)
Decrease in inventory 62,000
Increase in accounts payable 250,000
Net cash provided by operating activities $655,000
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $69, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate of 6 percent, and sells for 94 percent of par. The second issue has a face value of $55 million, a coupon rate of 5 percent, and sells for 106 percent of par. The first issue matures in 24 years, the second in 9 years.Suppose the most recent dividend was $4.25 and the dividend growth rate is 4.4 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 25 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer:
10.83%
Explanation:
The simplest way to determine the if we use the Gordon growth model for determining the company's stock price:
stock price = [dividend x (1 + growth rate)] / (WACC - growth rate)
dividend = $4.25g = 4.4%stock price = $69WACC - g = [dividend x (1 + g] / price
WACC = {[dividend x (1 + g] / price} + g
WACC = {[$4.25 x (1 + 4.4%] / $69} + 4.4% = 0.1083 or 10.83%
Misty and John formed the MJ Partnership. Misty contributed $50,000 of cash in exchange for her 50% interest in the partnership capital and profits. During the first year of partnership operations, the following events occurred: the partnership had a net taxable income of $20,000; Misty received a distribution of $12,000 cash from the partnership; and Misty had a 50% share in the partnership's $60,000 of recourse liabilities on the last day of the partnership year. Misty's adjusted basis for her partnership interest at year end is:
Answer:
$78,000
Explanation:
The computation of interest at year end is shown below:-
Interest at year end = Cash contribution + Income of partnership + Share of partnership liabilities - Cash from the partnership
= $50,000 + $20,000 × 50% + $60,000 × 50% - $12,000
= $90,000 + $10,000 + $30,000 - $12,000
= $78,000
Therefore for computing the partnership interest at year end we simply applied the above formula by considering all the items given in the question
