The following information was drawn from the balance sheets of the Kansas and Montana companies: Kansas Montana Current assets $ 59,000 $ 78,000 Current liabilities 40,000 43,000 Required a. Compute the current ratio for each company. b. Which company has the greater likelihood of being able to pay its bills? c. Assume that both companies have the same amount of total assets. Speculate as to which company would produce the higher return-on-assets ratio.

Answers

Answer 1

Answer:

a) Current ratio for Kansas company is  1.475

Current ratio for Montana company is 1.814

b) Since the current ratio for the Montana company is more than that of the Kansas company which shows better liquidity, the Montana company has the greater likelihood of being able to pay its bills.

c) Kansas company would produce the higher return-on-assets ratio.

Explanation:

                                    Current Assets           Current liabilities

Kansas Company           $ 59,000                     $ 40,000

Montana Company        $ 78,000                      $ 43,000

a) To calculate the current ratio of A company

Current ratio = [tex]\frac{Current Assets}{Current Liabilities}[/tex]

Therefore current ratio for Kansas company = $ 59,000 ÷ $ 40,000 = 1.475

Current ratio for Montana company =  $ 78,000 ÷ $ 43,000 = 1.814


Related Questions

Oklahoma enacts a law requiring all businesses in the state to donate 10 percent of their profits to Protestant churches that provide services to indigent persons. Price-Lo Mart files a law suit to block the enforcement of the law. The court will probably decide that this law violates: a. the Free Exercise clause. b. the Supremacy clause. c. the Equal Protection clause. d. the Establishment clause.

Answers

Answer: d. the Establishment clause.

Explanation:

The Establishment Clause was put in place as a limitation by the United States Congress to prevent excesses or stop it from passing legislation forcing an establishment, religion, which broadly made it illegal for the government to promote theocracy or promote a specific religion with taxes. As this is the case with the state asking business to donate 10% of their profit to Protestant.

Answer:

The establishment clause.

Explanation:

Establishment clause, also called establishment-of-religion clause, clause in the First Amendment to the U.S. Constitution forbidding Congress from establishing a state religion. It prevents the passage of any law that gives preference to or forces belief in any one religion. It is paired with a clause that prohibits limiting the free expression of religion.

As the citizenry became more diverse, however, challenges arose to existing laws and practices, and eventually, the Supreme Court was called upon to determine the meaning of the establishment clause.

Though not explicitly stated in the First Amendment, the clause is often interpreted to mean that the Constitution requires the separation of church and state.

The capital accounts of Heidi and Moss have balances of $90,000 and $65,000, respectively, on January 1, the beginning of the current fiscal year. On April 10, Heidi invested an additional $8,000. During the year, Heidi and Moss withdrew $40,000 and $32,000, respectively. Revenues were $540,000 and expenses were $420,000 for the year. The articles of partnership make no reference to the division of net income. Required: 1. Prepare a statement of partners' equity for the partnership of Heidi and Moss. If an amount box does not require an entry, leave it blank. Enter all amounts as positive numbers. Heidi and Moss Statement of Partners' Equity For the Year Ended December 31 Heidi Moss Total Capital, January 1 $ 90,000 $ 65,000 $ 155,000 Net income for the year 60,000 60,000 120,000 $ $ $ $ $ $ Withdrawals during the year Capital, December 31 $ 118,000 $ 93,000 $ 211,000 2. Journalize the entries to: Close the revenue and expenses account. Close the drawing accounts. If an amount box does not require an entry, leave it blank. a. Revenues 540,000 Heidi, Capital 540,000 Moss, Capital 420,000 Heidi, Capital 40,000 Moss, Capital Moss, Drawing b. Heidi, Capital 40,000 Moss, Capital 32,000 Heidi, Drawing 40,000 Moss, Drawing 32,000

Answers

Answer:

The statement and journal are attached

Explanation:

g Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $20,000,000 of five-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $20,811,010. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. If an amount box does not require an entry, leave it blank. c. Why was the company able to issue the bonds for $20,811,010 rather than for the face amount of $20,000,000? The market rate of interest is the contract rate of interest.

Answers

Answer:

Explanation:

a

Cash 20811010

Bonds payable 20000000

Premium on Bonds payable 811010

b

Interest expense 818899

Premium on Bonds payable 81101 =811010/5*6/12

Cash 900000 =20000000*9%*6/12

c

The market rate of interest will be lower than the contract rate of interest.

Management in Life Annabelle and Bettina share a dorm room. They like each other, but they disagree about how often to clean. Eventually, Annabelle says to Bettina, "I'm afraid that if we clean the room only once a month, we're going to get bugs. Bettina replies, "Maybe, but this physics course is killing me, so I don't have time to clean more often than that." Annabelle and Bettina are engaged in conflict, based on Which of the following outcomes are likely in this situation?
A) Annabelle and Bettina will learn from each other.
B) The roommates will come up with a creative solution.
C) The roommates will stop speaking to each other.
D) Annabelle and Bettina will be angry at each other.

Answers

Answer:

A). Annabelle and Bettina will learn from each other .

B). The roommates will come up with a creative solution."

Explanation:

Anabelle and Bettina are involved in a 'cognitive' conflict as it occurs when they both experience a mental as well as emotional discomfort when they are confronted with the information that challenges their existing ideas or beliefs. The most likely outcomes of this situation would be that they 'both would learn from each other' by accepting each other's point of view and adapting with the new information that would help them 'reach a creative solution' to resolve their conflict over the cleaning of their room. Therefore, options A and B are the correct answers.

he income statement of Sarasota Company is shown below. SARASOTA COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6,890,000 Cost of goods sold Beginning inventory $1,910,000 Purchases 4,410,000 Goods available for sale 6,320,000 Ending inventory 1,620,000 Cost of goods sold 4,700,000 Gross profit 2,190,000 Operating expenses Selling expenses 460,000 Administrative expenses 700,000 1,160,000 Net income $1,030,000 Additional information: 1. Accounts receivable decreased $350,000 during the year. 2. Prepaid expenses increased $160,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $300,000 during the year. 4. Accrued expenses payable decreased $90,000 during the year. 5. Administrative expenses include depreciation expense of $50,000. Prepare the operating activities section of the statement of cash flows using the direct method.

Answers

Answer:

Cash flow from operating activities

Cash Receipts from Customers                    $7,240,000

Cash Paid to Suppliers and Employees      ($6,460,000)

Net Cash from Operating Activities                 $780,000

Explanation:

Prepare a statement of cash flows` operating activities section as follows :

Cash flow from operating activities

Cash Receipts from Customers                    $7,240,000

Cash Paid to Suppliers and Employees      ($6,460,000)

Net Cash from Operating Activities                 $780,000

Cash Receipts from Customers Calculations

Sales revenue                                             $6,890,000

Add Decrease in Accounts Receivables      $350,000

Cash Receipts from Customers                 $7,240,000

Cash Paid to Suppliers and Employees Calculations

Cost of goods sold                                       $4,700,000

Add

Selling expenses                                            $460,000

Administrative expenses                                $700,000

Less depreciation expense of                         $50,000

Decrease in Accounts Payable                     $300,000

Decrease in Accrued Expenses                      $90,000

Increase in  Prepaid expenses                       $160,000

Cash Paid to Suppliers and Employees    $6,460,000

Now suppose country A imposes a tax on A's production of to curb emissions. Country B, however, is not taxed. A's cost function is now , while B's cost function is . World demand is . The amount of greenhouse gas emissions per unit is still , such that total world emissions are given by . What are total world emissions after country A enacts a carbon tax?

Answers

Answer:

286.5

Explanation:

P=99-qa-qb

MRa=99-2qb-qb

MCa=48

99-2qa-qb=48

Qa=25.5-0.5qb{ best response function of firm A)

MRb=99-qa-2qb

MCb=4

99-qa-2qb=4

Qb=47.5-0.5qa{ best response function of form b}

Qb=47.5-0.5(25.5-0.5qb)

Qb=34.75/0.75=46.33

Qa=25.5-0.5*46.33=2.33

Total world output=46.33+2.33=48.66

Total world emission=0.5*48.66=24.33

p=1146-qa-qb-qc

MRa=1146-2qa-qb-qc

MCa=0

1146-2qa-qb-qc=0

Qa=573-0.5(qb+qc) best response function of firm a)

By symmetry,

Qb=573-0.5(qa+qc)

Qc=573-0.5(qa+qb)

Qb+qc=1146-qa-0.5(qb+qc)

Qb+qc=764-qa/1.5

Qa=573-0.5(764-qa/1.5)=191+qa/3

Qa=191*3/2=286.5

Qa=Qb=Qc=286.5

Total output=3*286.5=859.5( cournot equilibrium market output)

Cartel output=573

Lower QUANTITY in cartel equilibrium compare to cournot equilibrium

=859.5-573

=286.5

The following information will be used for 2 questions on this exam: Charlotte Corporation's management keeps track of the time it takes to process orders. During the most recent month, the following average times were recorded per order: Time spent between receipt of order and start of production 3.7 days Time spent ensuring quality levels 0.2 days Time spent working on the product 1.3 days Time spent transporting the product between work stations 0.8 days Time spent waiting to be worked on in the factory 6.9 days What is the throughput time?

Answers

Answer:

6.00 days

Explanation:

data provided

Inspection time = 3.7 days

Process time = 0.2 days

Move time = 1.3 days

Queue time = 0.8 days

The calculation of throughput time is given below:-

Throughput time = Inspection time + Process time + Move time + Queue time

= 3.7 days + 0.2 days + 1.3 days + 0.8 days

= 6.00 days

Here, we added the inspection time, process time , move time and queue time to reach at throughput time and we ignore the time spent waiting to be worked on in the factory as it is not relevant.

The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year. Manufacturing Overhead (a) 486,144 (b) 405,120 Bal. 81,024 Work in Process Bal. 10,880 (c) 754,000 298,500 90,500 (b) 405,120 Bal. 51,000 Finished Goods Bal. 39,000 (d) 662,000 (c) 754,000 Bal. 131,000 Cost of Goods Sold (d) 662,000 The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows: Work in Process, ending $ 24,480 Finished Goods, ending 62,880 Cost of Goods Sold 317,760 Overhead applied $ 405,120 For example, of the $51,000 ending balance in work in process, $24,480 was overhead that had been applied during the year. Required: 1. Identify reasons for entries (a) through (d). 2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry. 3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.

Answers

Answer and Explanation:

As per the data given in the question,

1.

a) Cost of goods manufactured.

b) Cost of goods sold.

c) Overhead cost applied to work in process

d) Actual manufacturing overhead cost.

2. Journal Entry

Manufacturing overhead A/c Dr. 81,024

To cost of goods sold A/c. 81,024

3.

Work in process ending $24,480 =6.04%

Finished goods ending $62,880 =15.52%

Cost of goods sold $317,760 =78.44%

Total cost $405.120 =100%

To calculate overhead allocation :

Work in process ending = ($81,024× 6.04%) =$4,894

Finished goods ending = ($81,024 × 15.52%) =$12,575

Cost of goods sold = ($81,024 × 78.44%) = $63,355

Total cost = $81,024

Journal Entry

Manufacturing overhead A/c Dr. 81,024

To work in process A/c. $4,893

To finished goods A/c. $12,575

To cost of goods sold A/c. $63,555

Which of the following statements generates the greatest amount of disagreement among economists? a. Increases in the money supply shift aggregate demand to the right. b. In the long run, increases in the money supply increase prices, but not output. c. Recessions are associated with decreases in consumption, investment, and employment. d. Government should use fiscal policy to try to stabilize the economy.

Answers

Answer:

d. Government should use fiscal policy to try to stabilize the economy.

Explanation:

Suggesting that the government should use fiscal policy to try to stabilize the economy generates the greatest amount of disagreement among economists because the process of implementing fiscal policy usually experiences lag as it is being slowed down by the political system (bureaucracy) of checks and balances.

Fiscal policy is the use of government expenditures, revenues and tax policies to influence macroeconomic conditions such as employment, inflation and Aggregate Demand (ADl in a specific country.

The benefits of fiscal policy is that investments, savings and growth is usually influenced in the long-run while it basically influences aggregate demand for goods and services in the short-run.

On March 15, American Eagle declares a quarterly cash dividend of $0.045 per share payable on April 13 to all stockholders of record on March 30.

Required:

Record American Eagle's declaration and payment of cash dividends for its 226 million shares. (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. $5.5 should be entered as 5,500,000).)

Answers

Answer and Explanation:

The journal entries are shown below:

On March 15

Dividend Dr $10,170,000  (226 million shares × $0.045 per share)

     To Dividend payable $10,170,000

(Being the dividend is declared)

For recording this we debited the dividend as it increased the balance of dividend and credited the dividend payable as it increased the liabilities

On March 30

No journal entry is required for recording of dividend

On April 13

Dividend payable $10,170,000

     To cash $10,170,000

For recording this we debited the dividend payable as it decreased the liabilities and credited the cash as it reduced the assets

(Being the dividend payable is recorded)

elb Company currently manufactures 50,000 units per year of a key component for its manufacturing process. Variable costs are $2.95 per unit, fixed costs related to making this component are $67,000 per year, and allocated fixed costs are $61,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.90 per unit. Calculate the total incremental cost of making 50,000 units and buying 50,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier

Answers

Answer: Please refer to Explanation

Explanation:

Incremental Cost of Making Product

Variable costs are $2.95 per unit and 50,000 units are to be made. Total Variable Cost is therefore,

= 2.95 * 50,000

= $147,500

Fixed costs associated with the production are$ 67,000 so added tl the variable costs is,

= 147,500 + 67,000

= $214,500

$214,500 is the cost making the product.

Cost of Buying Product

Component can be bought for $3.90 per unit. 50,000 units to be bought gives,

= 50,000 * 3.9

= $195,000

Cost of buying is $195,000

Decision

Company should buy the component as it spends less in buying it than I making it.

Note - Allocated fixed costs were not included in calculation because they will be there regardless of the decision. Hence the term, incremental costs.

Answer:

elb Company

a) Incremental Cost of making 50,000 units:

Variable costs = $2.95 x 50,000 = $147,500

Avoidable fixed costs = $67,000

Total = $214,500

b) Incremental Cost of buying 50,000

Buy-in costs =- $3.90 x 50,000 = $195,000

c) The company should buy this component from the outside supplier.

Explanation:

In make or buy decisions, only variable and avoidable costs are taken into consideration.  Unavoidable fixed costs are sunk costs which must be incurred irrespective of the choice made.

Therefore, the unavoidable allocated fixed costs of $61,500 should not be taken into consideration.  Afterall, no matter the decision, it would still be incurred and allocated.

Your bagel shop uses both capital and labor in the production of bagels. In this production process capital and labor are substitutes. If you install a new oven and the marginal product of capital increases, you will:

a. reduce the number of workers you employ
b. increase the number of workers you employ
c. reduce the amount of capital you are using not make any changes since you are already maximizing profit

Answers

Answer:

The answer is option A) reduce the number of workers you employ

Explanation:

Installing a new oven is capital intensive. So, for a business person to incur an additional capital cost to aid the efficiency of production, something has to give.

In this case, where capital and labor are substitutes, installing a new oven will drastically reduce the workload thereby necessitating a reduction in the number of workers.

By implication, the cost of paying wages which is a recurrent expenditure will reduce. In the long run and if the oven is maintained, it will e a very cost effective option.

Installing a new oven also suggests a marginal increment in capital.

Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,800 direct labor-hours will be required in August. The variable overhead rate is $1.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,560 per month, which includes depreciation of $8,790. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answers

Answer:

Total cash= $101,130

Explanation:

Giving the following information:

Estimated direct labor hours=  7,800

The variable overhead rate is $1.20 per direct labor-hour.

The company's budgeted fixed manufacturing overhead is $100,560 per month, which includes depreciation of $8,790.

We need to deduct the depreciation expense because it is not a cash disbursement.

Cash disbursement:

Variable overhead= 7,800*1.2= $9,360

Fixed overhead= (100,560 - 8,790)= $91,770

Total cash= $101,130

On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 80,000. SunTime’s December 31, 20X1, trial balance in SFr is as follows:Part 1. Prepare a schedule translating (current rate method) the December 31, 20X1, trial balance from Swiss francs to dollars.

Answers

On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 80,000. SunTime’s December 31, 20X1, trial balance in SFr is as follows:

Then intended files that supposed to be here are added in the attachments below:

Part 1. Prepare a schedule translating (current rate method) the December 31, 20X1, trial balance from Swiss francs to dollars.

Answer:

Explanation:

We are tasked to Prepare a schedule translating (current rate method) the December 31, 20X1, trial balance from Swiss francs to dollars.

 

                     Schedule remeasuring Swiss francs to dollars

                     Trial Balance Translation Schedule

                      December 31, 20X1

                                             Sfr            Exchange Rate      U.S dollar        

Cash                             $7,200                   0.73               $5,256

Accounts                      $25,000                0.73               $18,250

receivable (net)

Receivable from           $6,300                  0.73                $4,599

Creek

Inventory                       $26,000               0.73                $18,980

Plant & equipment        $110,000              0.73                $80,300

Cost of good sold         $71,500                0.75                $53,625

Depreciation expense  $10,100                0.75                $7,575

Operating expense       $35,000              0.75                $26,250

Dividends paid              $16,400               0.74                 $12,136

                                                                                                                     

Total:                             $307,500                                     $226,971

                                                                                                                     

[tex]Accumulated - \ translation \\other \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ adjustment\\Comprehensive \\ loss[/tex]  (233,031 - 226,971)           $6060

                                                                                                                                   

TOTAL DEBITS                                                                    $233,031

Accumulated              $10,100                 0.73                  $7,373

Depreciation

Account                      $13,600                 0.73                  $9,928  

Payable

Bond                           $51,000                 0.73                  $37,230

Payable

Common stock          $78,000                 0.80                $62,400

Sales                          $154,800                 0.75               $116,100

                                                                                                                       

Total:                         $307,500                                        $233,031

No entry necessary                                                         $   -

TOTAL CREDITS                                                               $233,031              

A Company manufactures coffee tables. The Company has a policy of adding a 20% markup to full costs and currently has excess capacity. The following information pertains to the company's normal operations per month: Output units 30,000 tables Machine-hours 6000 hours Direct manufacturing labor-hours 10,000 hours Direct materials per unit $50 Direct manufacturing labor per hour $12.00 Variable manufacturing overhead costs $322,500 Fixed manufacturing overhead costs $1,200,000 Product and process design costs $600,000 Marketing and distribution costs $1,290,000 For long-run pricing of the coffee tables, what price will most likely be used by the Company

Answers

Answer:

$201.30

Explanation:

Direct materials = $50

Total Direct manufacturing labor =  $12.00 * 10,000 = $120,000

Variable manufacturing overhead costs = $322,500

Fixed manufacturing overhead costs = $1,200,000

Product and process design costs = $600,000

Marketing and distribution costs = $1,290,000

Total cost apart from direct material = $120,000 + $322,500 + $1,200,000 + $600,000 + $1,290,000 = $3,532,500

Cost per unit apart from direct material = $3,532,500 / 30,000 = $117.75

Total cost per unit = $117.75 + $50 = $167.75

Mark up per unit = $167.75 * 20% = $33.55

Price per unit = $167.75 + $33.55 = $201.30

Answer: $201.30

Explanation:

To solve this all the expenses incurred per unit need to be included in the unit.

Direct Materials $50

Direct Manufacturing Labour Hours per unit

= (10,000/30,000 units) * 12 (direct Manufacturing Labour per hour)

= $4

Variable Manufacturing Overhead Cost

= 322,500/30,000

= $10.75

Fixed manufacturing overhead costs

= 1,200,000/30,000

= $40

Product and process design costs

= 600,000/30,000

= $20

Marketing and distribution costs

= 1,290,000/30,000

= $43

Adding everything up,

= 50 + 4 + 10.75 + 40 + 20 + 43

= $167.75

Company adds 20% to costs so,

= 167.75 * ( 1 + 20%)

= $201.30

Company will most likely sell at $201.30

The following information relates to the pension plan for the employees of Turner Co.: 1/1/20 12/31/20 12/31/21 Projected benefit obligation 9,765,000 10,458,000 14,007,000 Fair value of plan assets 8,925,000 10,920,000 12,054,000 AOCI – net (gain) or loss -0- (1,512,000) (1,680,000) Settlement rate (for year) 11% 11% Expected rate of return (for year) 8% 7% Turner estimates that the average remaining service life is 16 years. Turner's contribution was $1,323,000 in 2021 and benefits paid to retired employees was $987,000. The amount of AOCI (net gain) amortized in 2021 is

Answers

Answer:

The amount of AOCI (net gain) amortized in 2021 is $26,250

Explanation:

In order to calculate the calculate the amount of AOCI (net gain) amortized in 2021 we would have to use the following formula:

amount of AOCI (net gain) amortized in 2021=(AOCI net gain 12/31/20-Corridor amount for 2021)/Average remaining service life

AOCI net gain 12/31/20=$1,512,000  

Corridor amount for 2021=$1,092,000=10,920,000*10%

Average remaining service life=16  

Therefore, AOCI (net gain) amortized in 2021=($1,512,000-$1,092,000)/16

AOCI (net gain) amortized in 2021=$26,250

Andrews Corporation has income from operations of $253,000. In addition, it received interest income of $25,300 and received dividend income of $28,900 from another corporation. Finally, it paid $13,000 of interest income to its bondholders and paid $47,400 of dividends to its common stockholders. Using the 2013 corporate tax schedule, what is the firm’s federal income tax? Round your intermediated and final answers to the nearest cent. $

Answers

Answer:

$107,122

Explanation:

corporate tax rate during 2013 = 39.1%

Andrews Corporation net taxable income:

from operations $253,000from interests $25,300from dividends $28,900 - dividends received deductions $20,230 = $8,670

Deductions on net taxable income*:

interest paid to bondholders = $13,000

Net taxable income = $286,970 - $13,000 = $273,970

federal income tax = $273,970 x 39.1% = $107,122

*Dividends are paid with retained earnings which include after tax net income. They are not tax deductible.

A division is considering the acquisition of a new asset that will cost $2,950,000 and have a cash flow of $740,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes. Required: a. & b. What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 8 percent?

Answers

Answer and Explanation:

The computation of ROI for each year of the asset's life and residual income each year is shown below:-

Year            Investment base              ROI                   Residual income

1                   $2,950,000                       8%                  -$233,500

2                  $2,212,500                          11%                 -$233,500

3                   $1,475,000                          17%                  -$115,500

4                   $737,500                             34%                 -$56,500

ROI = Net income ÷ Total investment × 100

Net Income = Cash flow - Depreciation

Residual income = Net income - (Investment × Cost of capital)

Depreciation = Investment base ÷ 4 years

The return on investment and the residual income can be find out by using the excel spreadsheet. Kindly find it in the attachment

Matt and Joel are equal partners in the MJ Partnership. For the current year ended December​ 31, the partnership has book income of​ $80,000, which includes the following​ deductions: (1) guaranteed payments​ (salaries) to​ partners: Matt,​ $35,000; and​ Joel, $25,000; and​ (2) charitable​ contributions, $6,000. The book income amount does not include any sales of capital assets or Sec. 1231 assets or any taxminusexempt income. Based on the above​ information, what amount should be reported as ordinary income on the partnership​ return?

Answers

Answer:

$86,000

Explanation:

A partnership is a pass through entity that is not taxed directly, but instead its partners are taxed. Even the partners' salaries are recorded as drawings, not salary expense.

The partnership's total ordinary income = book income + any donations or contributions to charities = $80,000 + $6,000 = $86,000

Suppose that you are the international treasurer of Apple with an extra U.S. $10 million to invest for 9 months. You are considering the purchase of U.S. T-bills that yield 1.50% annual rate. The spot exchange rate is $1.00 = ¥100, and the 9 month forward rate is $1.00 = ¥110. What must the interest rate in Japan be before you are willing to consider investing there for 9 months? A. 14.5515 B. <8.8975 C. >13.4983 D. 12.5050

Answers

Answer:

Japan Interest Rate = 0.15%  

Explanation:

As per Interest Rate Parity Theory

Spot Rate : 1$ = 100

Forward Rate : 1 $ = 110

r = 9/12

As per interest rate parity, forward rate = Spot rate(1+Interest rate Japan)/(1+Interest rate US)

Forward rate = Spot rate *(1+ iD)/(1+iF)

110 / 100 = (1 + Japan Interest Rate * 9 /12)  / 1.01125

1.1 * 1.01125 = 1 + Japan Interest Rate * 0.75

1.112375 = 1 + Japan Interest Rate * 0.75

Japan Interest Rate * 0.75 = 1.112375 - 1

Japan Interest Rate * 0.75 = 0.112375

Japan Interest Rate = 0.112375 / 0.75

Japan Interest Rate = 0.15%  

Hancock Medical Supply Co., earned $90,500 of revenue on account during Year 1, its first year of operation. During Year 1, Hancock collected $71,400 of cash from its receivables accounts. The company did not write-off any uncollectible accounts. It estimates that it will be unable to collect 1% of revenue on account. What is the net realizable value of receivables that will be reported on the balance sheet at December 31, Year 1

Answers

Answer:

$18,195

Explanation:

The computation of the net realizable value is shown below:

As we know that

Net Realizable Value of Receivables =  Ending Accounts Receivable - Estimated Uncollectibles  amount

where,

Ending balance of Accounts Receivable is

= Revenue on Account - Accounts collected

= $90,500 - $71,400

= $191,00

And,

Estimated Uncollectibles i.e  Bad debt Expense is

= Revenue on Account × given percentage

= $90,500 × 1%

= $905

So, the net realizable value is

= $19,100 - $905

= $18,195

We simply applied the above formula

(Ignore income taxes in this problem.) Assume you can invest money at a 14 percent rate of return. How much money must be invested now to be able to withdraw $5,000 from this investment at the end of each year for eight years, the first withdrawal occurring one year from now

Answers

Answer:

the original amount invested = $285,714.29

Explanation:

Let original amount invested be x

Amount to be withdrawn per year = $5,000

Total number of years = 8

Total amount to be withdrawn = 5,000 × 8 = $40,000

Next, we are told that 14% return on x is realized,

∴ 14% return on x = $40,000

0.14 × x = 40,000

x = 40,000 ÷ 0.14 = $285,714.29

Therefore, the original amount invested = $285,714.29

Check all true statements regarding CMBS:

a.CMBS have less exposure to prepayment risk than RMBS

b.Loans in a CMBS deal are recourse loans The multifamily/apartment CRE sector never uses CMBS for financing as it relies on RMBS

c.CMBS are the main source of financing for commercial real estate loans

d.The number of commercial mortgages in a CMBS deal are usually lower than the number of residential mortgage in a RMBS deal

Answers

Answer: A and D only

Explanation:

CMBS Loan are also referred to as a Conduit Loan, this is a type of real estate loan usually commercial, which is secured by a first-position mortgage on a commercial property. These loans are usually packaged, and sold by a Conduit Lender, commercial banks, investment banks, and syndicates of banks.

Loans in a CMBS are always bigger so they are less in a CMBS deal. Sometimes it’s onlyone loan in a Single Asset (SA) CMBS deal

Prepayments are discouraged in CMBS through defeasance,prepayment penalties or yield maintenance fees.

Answer:

a.CMBS have less exposure to prepayment risk than RMBS

d. The number of commercial mortgages in a CMBS deal are usually lower than the number of residential mortgage in a RMBS deal

Explanation:

Commercial Mortgage-Backed Securities (CMBS) as the name implies are mortgage backed securities that are secured with commercial mortgages while Residential Mortgage-Backed Securities (RMBS) are mortgage backed securities secured by residential property.

a) CMBS are based on mortgages which usually have a fixed term contract in place meaning that prepayment is less of a thing with CMBS than with RMBS so the former does indeed have a less exposure to prepayment risk than the latter.

d) This is indeed true because both packages have to look appealing to investors but can only use different amounts to reach the minimum threshold. This is because Commercial Mortgages pay more than Residential Mortgages so more RMBS have to be pulled together to form an attractive investment as opposed to CMBS. This is why the number in CMBS are usually less than that of RMBS.

A bidding firm, A, is worth $27,000 as a stand-alone entity. A target firm, B, is worth $12,000 as a stand-alone entity, but $18,000 if it is acquired and integrated with Firm A. Several other firms are interested in acquiring Firm B, and Firm B is also worth $18,000 if it is acquired by these other firms. If A acquired B, would this acquisition create value? If yes, how much? How much of this value would the equity holders of A receive? How much would the equity holders of B receive?

Answers

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

Firm A’s worth as a stand-alone entity = $27,000

Firm B’s worth as a stand-alone entity = $12,000

But if Firm A acquired Firm B it’s increase worth of Firm B at $18000.

Firm A is acquired Firm B, this acquisition create value of

= $18,000 - $12000

= $6000.

With this acquisition equity holders of Firms received $18,000 which is $6,000 more than Firm B stand alone.

Bass Accounting Services expects its accountants to work a total of 26 comma 000 direct labor hours per year. The​ company's estimated total indirect costs are $ 390 comma 000. The company uses direct labor hours as the allocation base for indirect costs. What is the indirect cost allocation​ rate? A. $ 18.00 per hour B. $ 30.00 per hour C. $ 15.00 per hour D. $ 150.00 per hour

Answers

Answer:

C) $ 15.00 per hour

Explanation:

total labor hours 26,000 per year

total indirect costs $390,000

if the company allocates indirect costs according to labor hours employed, the cost allocation rate should be:

$390,000 / 26,000 = $15 per direct labor hour

This means that for every labor hour employed, $15 will be allocated as indirect costs, e.g. a client requires 50 labor hours per year and $750 (= 50 x $15) in indirect costs.

Answer:

The correct answer is option (c) $15 per hour

Explanation:

Solution

Recall that:

Expected wok for accountants = 26,000

The company estimated total indirect costs - 390,000

The next step is to find the allocation base cost for indirect cost.

Now,

The indirect labor cost is calculated as follows:

indirect cost allocation​ rate:

= Total indirect costs/Labor hours

= $390,000/26,000

= $15 per hours

If a firm has retained earnings of $2.7 million, a common shares account of $4.7 million, and additional paid-in capital of $9.4 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity.

Answers

Answer:

Change in retained earnings = $1.02 million (Decrease)

Change in common shares account = $5.17 million (Increase)

Change in additional paid-in capital = $10.61 million (Increase)

Explanation:

Given:

Retained earnings = $2.7 million

Common shares account = $4.7 million

Additional paid-in capital = $9.4 million

Stock dividend = 10%

Find:

Changes in account.

Computation:

1. Change in retained earnings

Change in retained earnings = Retained earnings - (Retained earnings - Common shares account - Additional paid-in capital)Stock dividend

Change in retained earnings = $2.7 million - ($2.7 million - $4.7 million - $9.4 million)10%

Change in retained earnings = $2.7 million - 1.68 million

Change in retained earnings = $1.02 million (Decrease)

2. Change in common shares account

Change in common shares account = Common shares account (1+Stock dividend)

Change in common shares account = $4.7 million (1+10%)

Change in common shares account = $5.17 million (Increase)

3. Change in additional paid-in capital

Change in additional paid-in capital = Additional paid-in capital + (Additional paid-in capital + Retained earnings)Stock dividend

Change in additional paid-in capital = $9.4 million + ($9.4 million + $2.7 million)10%

Change in additional paid-in capital = $9.4 million + 1.21 million

Change in additional paid-in capital = $10.61 million (Increase)

The Converting Department of Hopkinsville Company had 1,200 units in work in process at the beginning of the period, which were 75% complete. During the period, 25,200 units were completed and transferred to the Packing Department. There were 1,360 units in process at the end of the period, which were 25% complete. Direct materials are placed into the process at the beginning of production. Determine the number of equivalent units of production with respect to direct materials and conversion costs. If an amount is zero, enter in "0".

Answers

Answer:

Equivalent Units

Material cost = 26,560

Conversion Cost= 25,540

Explanation:

We would assume the company uses  weighted average method of valuation.

Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.

Equivalent units = Degree of completion (%) × Number of units

Material cost

Item                                 Unit                                  Equivalent unit

Completed                    25,200      100% ×25200  = 25,200

Closing WIP                   1,360           100%× 1,360       1360

Total equivalent units                                                 26,560

Conversion Cost

Item                                 Unit                                  Equivalent unit

Completed                    25,200      100% ×25200  = 25,200

Closing WIP                   1,360           25%× 1,360        340

Total equivalent units                                                  25,540

Suppose that the standard deviation of monthly changes in the price of commodity A is $2. The standard deviation of monthly changes in a futures price for a contract on commodity B (which is similar to commodity A) is $3. The correlation between the futures price and the commodity price is 0.9. What hedge ratio should be used when hedging a one month exposure to the price of commodity A

Answers

Answer:

0.6

Explanation:

Correlation r = 0.9,

Standard deviation of monthly change in price of commodity A, σA = 2,

Standard deviation of monthly change in price of commodity B, σB = 3

The hedge ratio will be calculated using the formula

Hedge ratio=r×σA÷σB

Hedge ratio=0.9×2÷3

Hedge ratio = 0.6

Therefore, the hedge ratio used when hedging a one month exposure to the price of commodity A is 0.6.

All of the following are correct statements about transfers between divisions located in countries with different tax rates except that

A. differences in tax rates across countries complicate the determination of the appro-priate transfer price
B. a decreasing number of transfers are between divisions located in different countries
C. companies must pay income tax in the country where income is generated
D. many companies prefer to report more income in countries with low tax rates.

Answers

I think it’s A .................

All of the following are correct statements about transfers between divisions located in countries with different tax rates except that the companies must pay income tax in the country where income is generated. Thus option (C) is correct.

What is tax?

Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional, or national.

Tax revenues finance government activities, including public works and services such as roads and schools, or programs such as Social Security and Medicare.

In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, such as a business, or the end consumers of the business’s goods.

From an accounting perspective, there are various taxes to consider, including payroll taxes, federal and state income taxes, and sales taxes.

Learn more about tax here:

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Stone Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent? A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be restated. A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported. A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be presented as previously reported. A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be restated.

Answers

Answer:

A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported.

Explanation:

Since the accounting method is being changed from FIFO to LIFO, any adjusting of prior year balances would be impractical. If the change is from LIFO to FIFO, then it makes more sense to adjust prior year balances. By impractical, it means that any changes would be too difficult and expensive to determine, and the value of the change  is insignificant (materiality principle).

Generally US GAAP rules require that changes from FIFO to LIFO be disclosed in the footnotes only.

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