Answer:
No
Explanation:
Lets assume that for current ratio to be 1.2, the current assets were $120000 and Current liabilities were $100000. [120000 / 100000 = 1.2]
Now, if say $20000 of accounts payable were paid, the new current ratio would be:
= ($120000 - $20000) / ($100000 - $20000)
= $100000 / $80000
= 1.25.
Hence, the current ratio would Increase and this should be encouraged.
If current ratio were 0.8, (Current Assets $ 80000 and Current Liabilities $ 100000, 80000 / 100000 = 0.8] and $ 20000 were paid, the new current ratio would be:
= ($80000 - $20000) / ($100000 - $20000)
= $60000 / $80000
= 0.75
Hence, the current ratio would Decrease. This should be discouraged.
Conclusion: No, the answer would not be the same if current ratio were 0.8 instead of 1.2.
Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2018 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $7.5 million. The fiscal year ends on December 31. Required: 1. Should this loss contingency be accrued
Answer and Explanation:
According to the given situation, the contingent liability should be probable and estimated so the cost of the warranty i.e. loss contingency would be accrued and the same would be recorded and reported depend upon the predicted amounts
hence, the same would be considered and relevant too
Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500.During the period, 14,000 units of direct materials were added at a cost of $28,700, and 15,000 units were completed.At the end of the period, 3,000 units were 75% completed.All materials are added at the beginning of the process.Direct labor was $32,450 and factory overhead was $18,710.The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was:________.
A. 14,850B. 14,650C. 15,650D. 14,150
Answer:
C. 15,650
Explanation:
Calculation for what The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was:
First step is to calculate the Unit transferred out
Unit transferred out = 4,000+14,000-3,000
Unit transferred out = 15,000
Now let calculate Equivalent unit of conversion
Equivalent unit of conversion = (4,000*60%)+11,000+(3,000*75%)
Equivalent unit of conversion =15,650
Therefore the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was:15,650
Arrange the types of investments in the correct order from the least risky to the most risky investment. property
bonds
starting a business
mutual funds
Answer:
Bonds
property
speculative bonds
starting a business
Explanation:
Bonds are low-risk investments. They are issued by governments or highly reputable corporations. The returns from bond investments are almost guaranteed.
Property refers to investing in land or building. They are low-risk investments. Land is always appreciating in value. The possibility of incurring losses is low.
Speculative bonds will experience price fluctuations during a trading session. They offer a chance to make high returns. They are risky due to the high chances of incurring losses.
Starting a business is the riskiest. Almost 82% of all start-ups will fail in their first year.
Answer:
bonds
mutual funds
starting a business
Explanation:
Hopes this helps :)
2. It is the intentional planting of trees or shrubs that are grown for food
production.
A. Orchards
B. Plants
C. Shrubs
D. Trees
Answer:
A.
Explanation:
An orchard can be described as a tree garden where plants are sown intentionally. The term 'orchard' is derived from an Old English word 'orceard', meaning 'fruit garden.'
Orchards is a fruit farm where trees or shrubs are intentionally sown with the purpose of food production. Some examples include apple orchards, orange orchards, etc.
Therefore, option A is the correct answer.
1. Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system. 2. Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. (Assume beginning inventory under LIFO was 28,000 units with a cost of $13.40). 3. Determine the amount Treynor would report for its LIFO reserve at the end of the year. 4. Record the year-end adjusting entry for the LIFO reserve, assuming the balance at the beginning of the year was $18,000.
Answer:
1. Determine the amount Treynor would calculate internally for ending inventory and cost of goods sold using first-in, first-out (FIFO) under a perpetual inventory system
FIFO 1.226.400
Determine the amount Treynor would report externally for ending inventory and cost of goods sold using last-in, first-out (LIFO) under a periodic inventory system. (Assume beginning inventory under LIFO was 28,000 units with a cost of $13.40
LIFO 1.204.000
Explanation:
Jan. 1 Inventory on hand—28,000 units; cost $13.90 each.
Feb. 12 Purchased 78,000 units for $14.20 each.
Apr. 30 Sold 50,000 units for $21.70 each.
Jul. 22 Purchased 58,000 units for $14.50 each.
Sep. 9 Sold 78,000 units for $21.70 each.
Nov. 17 Purchased 48,000 units for $14.90 each.
Dec. 31 Inventory on hand—84,000 units.
FIFO
Begginnin inventory 28000 13.4 375200
Purchased 78000 14.2 1107600
Sold 50000
Sold 28000 13.4 375200
Sold 22000 14.2 312400
Inventory 56000 14.2 795200
Purchased 58000 14.5 841000
Sold 78000
Sold 20000 14.2 284000
Sold 58000 14.5 841000
Inventory 36000 14.2 511200
Purchased 48000 14.9 715200
Ending Inventory 84000
LIFO
Begginnin inventory 28000 13.4 375200
Purchased 78000 14.2 1107600
Sold 50000
Sold 50000 14.2 710000
Inventory 28000 13.4
Inventory 28000 14.2 397600
Purchased 58000 14.5 841000
Sold 78000
Sold 20000 14.2 284000
Sold 58000 14.5 841000
Inventory 28000 13.4 375200
Inventory 8000 14.2 113600
Purchased 48000 14.9 715200
Ending Inventory 84000 1204000
ackson Inc. listed the following data for 2019: Budgeted factory overhead $1,530,000 Budgeted direct labor hours 90,000 Budgeted machine hours 42,500 Actual factory overhead 1,250,000 Actual direct labor hours 87,800 Actual machine hours 40,900 Assuming Jackson Inc. applied overhead based on machine hours, the firm's predetermined overhead rate for 2019 (round calculations to 2 significant digits) is:
Answer: $36 per machine hour
Explanation:
Assuming Jackson Inc. applied overhead based on machine hours, the firm's predetermined overhead rate for 2019 would be calculated by dividing the budgeted factory overhead by the budgeted machine hours. This will be:
= $1,530,000 / 42,500
= $36 per machine hour
The adjusted trial balance of Tahoe Company at the end of the accounting year, December 31, 2016, showed the following: Account Titles Adjusted Trial Balance Debits Credits Cash $20,000 Machinery 90,000 Accumulated depreciation $16,000 Accounts payable 7,000 Capital stock 20,000 Retained earnings 59,000 Service revenue 40,000 Interest expense 4,000 Operating expenses 17,000 Depreciation expense 11,000 Total $142,000 $142,000 Required: B. Calculate the 2016 ending balance in retained earnings.
Answer:
$67,000
Explanation:
Retained Earnings = Opening Balance + Profit for the Year - Dividends
where,
Profit for the Year = Sales - Expenses
= $40,000 - (4,000 + 17,000 + 11,000)
= $8,000
therefore,
Retained Earnings = $59,000 + $8,000 = $67,000
4-55 A firm expects to install smog control equipment on the exhaust of a gasoline engine. The local smog control district has agreed to pay to the firm a lump sum of money to provide for the first cost of the equipment and maintenance during its 10-year useful life. At the end of 10 years the equipment, which initially cost $10,000, is valueless. The firm and the smog control district have agreed that the following are reasonable estimates of the end-of-year maintenance costs: Year 1 2 3 4 5 $75 100 125 150 175 Year 6 7 8 9 10 $200 225 250 275 300 Assuming interest at 6% per year, how much should the smog control district pay to the firm now to provide for the first cost of the equipment and its maintenance for 10 years
Answer:
the amount that should be paid is $11,292
Explanation:
The computation of the amount that should be paid is shown below:
Present worth is
= $10,000 + $75(P/A, 6%, 10) + $25(P/G, 6%, 10)
= $10,000 + $75 × 7.3601 + $25 × 29.6023
= $11,292
Hence, the amount that should be paid is $11,292
We simply applied the above calculation
For the entries below, identify the account to be debited and the account to be credited. Indicate which of the accounts is the income statement account and which is the balance sheet account. Assume the company records prepayments of expenses in asset accounts, and cash receipts of unearned revenues in liability accounts. Entry to record consulting services performed but not yet billed or recorded. Entry to record service revenues performed but not yet billed or recorded. Entry to record rent expense incurred but not yet paid. Entry to record expiration of prepaid rent. Entry to record supplies used as supplies expense.
The accounts to be debited are:
A) Entry to record consulting services performed but not yet billed is debited to Accounts Receivable. This is a balance sheet item. In balance sheets, Accounts receivables are listed as assets. To increase assets in the balance sheet, you debit. To decrease it, you credit. Liabilities on the other hand are increased by crediting and decreased by debiting the same.
B) Entry to record service revenues performed but not yet billed or recorded is debited to Accounts Receivable. This also follows the same format in A above.
C) Entry to record rent expense incurred but not yet paid is credited to Accounts payable. This is also a balance sheet item. Recall the principle in A above.
D) Entry to record expiration of prepaid rent: This is an Income statement posting. Given that the rent was paid for but now expired that is, unusable, it, therefore, is an expense. The expense account will be credited.
E) Entry to record supplies used as supplies expense is credited to Supplies Expenses account. This is an income statement account. According to the principle of double-entry, you debit the receiver and credit the giver.
See the link below for more about Accounting Entries:
https://brainly.com/question/14279491
Answer:a.accounts receivable (balance sheet)
a. service rev (income statement)
b.acc receivable(balance)
b.service rev(income)
c.rent expense(income)
c. rent payable(balance)
d.rent expense(income)
d.prepaid rent (balance)
e.supp expense(income)
e.supplies(balance)
Explanation:
______ says that the quantity demanded of a good folls when the price of 1 point the good rises.
A) The Law of Supply
B) The Law of Demand
C) Market Structure
D) Market Equilibrium
Answer:
A) The Law of Supply
Explanation:
Compute gross profit for the month of January for Laker Company for the four inventory methods. 2. Which method yields the highest gross profit? 3. Does gross profit using weighted average fall between that using FIFO and LIFO? 4. If costs were rising instead of falling, which method would yield the highest gross profit?
Answer:
1. Net Income Specific Identification $255
LIFO $258
FIFO $246
Weighted Average $251
2. LIFO
3. Yes
4. FIFO
Explanation:
Particulars : Specific identification, Weighted Avg, FIFO, LIFO
Sales: $ 2700 , 2700, 2700, 2700
Cost of Goods Sold $ 1025, 1032, 1040, 1020
Gross Profit $ 1675, 1668, 1660, 1680
Expenses $1250 , 1250, 1250, 1250
Income before taxes $425, 418, 410, 430
Income Tax $170, 167, 164, 172
Net Income $255, 251, 246, 258
Use a piece of scrap paper to prepare a cost of Goods Manufactured from the following numbers: Beginning Direct Raw Materials -$69,000 Direct Raw Materials Purchases-$92,000. Direct Raw Materials Ending Inventory- $8000 Direct Labor-$25,000. Factory Overhead $37,000. Beginning work in process inventory $22,000. Ending Work in process Inventory $23,500 What are the total manufacturing costs for this statement
Answer:
the total manufacturing cost is $215,000
Explanation:
The computation of the total manufacturing cost is shown below:
= Direct material used + direct labor cost + manufacturing overhead cost
= $69,000 + $92,000 - $8,000 + $25,000 + $37,000
= $215,000
Hence, the total manufacturing cost is $215,000
We simply applied the above formula
Two manufacturing firms, located in cities 90 miles apart, both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the round trip takes all day) and each firm has truck operating costs of $1.30 a mile. How much could each firm save weekly if each sent its truck twice a week and hauled the other firm's cargo on the return trip
Answer: $1,018
Explanation:
Cities are 90 miles apart so a roundtrip is 180 miles which means that the operating cost per trip is:
= 1.30 * 180
= $234
Total cost per trip = Divers cost + operating cost
= 275 + 234
= $509
Four trips are made per week so total cost is:
= 509 * 4
= $2,036
If each sent its truck twice a week and hauled the other firm's cargo on the return trip then savings would be:
= Cost of 4 trips - cost of 2 trips
= 2,036 - (509 * 2)
= $1,018
Van is sick and tired of his job. His doctor certifies that his health may be compromised if he continues to work at his current job. He sells his life insurance policy to Life Settlements, Inc. for $50,000 so he can take a break from work. He has paid $10,000 so far for the policy. How much of the $50,000 must Van include in his taxable income
Answer:
$40,000
Explanation:
Based on the information given How much of the amount of $50,000 that Van must include in his taxable income will be $40,000 ($50,000-$10,000). The reason why he must pay tax on the amount of $40,000 gain ($50,000-$10,000) on the sale of the policy is that all the necessary requirements for the death benefit has not been meant by Van.
Therefore Van must include in his taxable income the amount of $40,000.
Stevens placed an ad in a literary magazine offering $7,400 for a complete set of Vacation in Paradise, a five volume set. Adams, who was not aware of the offer, gave to Stevens four volumes of the Vacation in Paradise set as a birthday present. Adams was informed of the offer at some point, obtained the missing volume, brought the volume to Stevens and requested the $7,400 payment. Stevens refused. If Adams sues, will he prevail
Answer:
Yes he will prevail because the advert placed is a unilateral contract
Explanation:
A unilateral contract is one that has only one promisor who receives a promise for his from the offeror. It is usually settlement for a particular service or product.
On the other hand bilateral agreement has both parties as the promisor and offeror. Meaning both of them have conditions that must be fulfilled in the contract by the other person.
In the given instance Stevens placed an ad in a literary magazine offering $7,400 for a complete set of Vacation in Paradise, a five volume set.
Any service short of this can be viewed as a failure in the contract.
Adams gave to Stevens four volumes of the Vacation in Paradise set as a birthday present. Adams was informed of the offer at some point, obtained the missing volume, brought the volume to Stevens.
Since Adams had not initially satisfied conditions set by Stevens, Stevens can refuse to make the $7,400 payment
You want to receive $5000 per month for 20 years in real dollars in an account when you retire in 35 years. The first monthly payment to be received 1 month after you retire. The nominal return on your investment is 9.94 percent and the inflation rate is 3.2 percent. What is the real amount you must deposit each year for 35 years to achieve your goal
Answer:
The real amount you must deposit each year for 35 years to achieve your goal is $5,359.02
Explanation:
To calculate the real amount we need to calculate the real interest rate as follow
1 + Nominal rate = ( 1 + Real rate ) x ( 1 + Inflation rate )
1 + 9.94% = ( 1 + Real rate ) x ( 1 + 3.2% )
1.0994 = ( 1 + Real rate ) x 1.032
1 + Real rate = 1.0994 / 1.032
1 + Real rate = 1.06531
Real rate = 1.06531 - 1
Real rate = 0.06531
Real rate = 6.531% = 6.53%
We need to calculate the PV of the payment that should be received.
Use the following formula to calculate the present value
PV of Annuity = Annuity payment x ( 1 - ( 1 + Interest rate )^-numbers of annuity payments ) / Interest rate
Where
Annuity Payment = $5,000 per month
Interest rate = 6.53% / 12 = 0.5442%
Numbers pf annuity payments = 20 years x 12 payments per year = 240 payment
PLacing values in the formula
PV of Annuity = $5,000 x ( 1 - ( 1 + 0.5442% )^-240 ) / 0.5442%
PV of Annuity = $5,000 x 133.80362
PV of Annuity = $669,018.09
Now calculate the amount of deposit required to receive the payment after retirement.
Use the following formula to calculate the real deposit
Future value of annuity = Annuity Payment x ( 1 + Interest rate )^numbers of annuity payments - 1 ) / Interest rate
Where
Future value of annuity = $669,018.09
Interst rate = 6.53%
Numbers of annuity payment = 35 years x 1 payment per year = 35 payments
Annuity payment = Real amount of deposit = ?
Placing values in the formula
$669,018.09 = Real amount of deposit x ( 1 + 6.53% )^35 - 1 ) / 6.53%
$669,018.09 = Real amount of deposit x 124.83967
Real amount of deposit = $669,018.09 / 124.83967
Real amount of deposit = $5,359.02
Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $86,722. The Focus Company initially offered to buy the land for $111,289. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $103,641. Under the cost principle, at what amount should the land be recorded in the accounting records of Focus Company
Answer: $212,000
Explanation:
Under the cost principle, the amount that the land should be recorded in the accounting records of Focus Company would be $212,000.
It should be noted that under the cost principle, any property that can be considered to be an asset would have to measured at its cost.
Since the companies settled on a purchase price of $212,000, that'll be the amount that will be recorded.
The adjusted trial balance for China Tea Company at December 31, 2021, is presented below: Accounts Debit Credit Cash $ 16,000 Accounts receivable 158,000 Prepaid rent 7,000 Supplies 27,000 Equipment 330,000 Accumulated depreciation $ 127,000 Accounts payable 19,000 Salaries payable 3,800 Interest payable 1,500 Notes payable (due in two years) 30,000 Common stock 180,000 Retained earnings 94,700 Dividends 30,000 Service revenue 470,000 Salaries expense 185,000 Advertising expense 78,000 Rent expense 18,000 Depreciation expense 33,000 Interest expense 2,000 Utilities expense 42,000 Totals $ 926,000 $ 926,000 Prepare a classified balance sheet for China Tea Company as of December 31, 2021.
Answer:
China Tea Company
Classified Balance Sheet as at December 31, 2021
ASSETS
Non Current Assets
Equipment $330,000
Accumulated depreciation ($127,000)
Total Non - Current Assets $203,000
Current Assets
Prepaid rent $7,000
Supplies $27,000
Accounts receivable $158,000
Cash $ 16,000
Total Current Assets $208,000
TOTAL ASSETS $411,000
EQUITY AND LIABILITIES
EQUITY
Common stock $180,000
Retained Earnings $361,700
TOTAL EQUITY $541,700
LIABILITIES
Non Current Liabilities
Notes payable (due in two years) $30,000
Total Non - Current Liabilities $30,000
Current Liabilities
Accounts payable $19,000
Salaries payable $3,800
Interest payable $1,500
Total Current Liabilities $24,300
TOTAL LIABILITIES $54,300
TOTAL EQUITY AND LIABILITIES $596,000
Explanation:
A Balance Sheet show the Assets, Liabilities and Equity Balances as at the Reporting date
Retained Earnings Balance = Opening Balance + Profit for the year - Dividends.
where,
Profit for the Year = Sales - Expenses
= $470,000 - ($78,000 + $18,000 + $33,000 + $2,000 + $42,000)
= $297,000
therefore,
Retained Earnings Balance = $94,700 + $297,000 - 30,000 = $361,700
A company's inventory records indicate the following data for the month of January: Jan. 1 Beginning 180 units at $9 each Jan. 5 Purchased 170 units at $10 each Jan. 9 Sold 300 units at $35 each Jan. 14 Purchased 200 units at $11 each Jan. 20 Sold 150 units at $35 each Jan. 30 Purchased 230 units at $12 each What is the amount of cost of goods sold for January, if the company uses the LIFO, FIFO and weighted average perpetual inventory system?
Answer:
The amount of cost of goods sold for January:
LIFO FIFO Weighted Average
Cost of goods sold $4,520 $4,420 $4,452
Explanation:
a) Data and Calculations:
Date Description Units Unit Cost/Price Total Cost Total Revenue
Jan. 1 Beginning 180 units at $9 each $1,620
Jan. 5 Purchased 170 units at $10 each 1,700
Jan. 9 Sold (300) units at $35 each $10,500
Jan. 14 Purchased 200 units at $11 each 2,200
Jan. 20 Sold (150) units at $35 each 5,250
Jan. 30 Purchased 230 units at $12 each 2,760
Total 780 / 450 $8,280 $15,750
b) Cost of goods sold:
LIFO:
Jan. 9 Sold (300) 170 units at $10 = $1,700
130 units at $9 = 1,170
Jan. 20 Sold (150) 150 units at $11 = 1,650
Cost of goods sold = $4,520
c) FIFO:
Jan. 9 Sold (300) 180 units at $9 = $1,620
120 units at $10 = 1,200
Jan. 20 Sold (150) 50 units at $10 = 500
100 units at $11 = 1,100
Cost of goods sold = $4,420
d) Weighted-Average:
Jan. 9 Sold (300) 300 units at $9.49 = $2,847
Jan. 20 Sold (150) 150 units at $10.70 = 1,605
Cost of goods sold = $4,452
Weighted Average Cost at each point of sale:
$9.49 = ($1,620 + $1,700)/350 units
$10.70 = (($9.49*50) + $2,200)/250 units
e) LIFO = Last In, First Out is based on the assumption that the items sold are from the last inventory purchased instead of the first.
FIFO = First In, First Out is based on the assumption that the items sold are from the first inventory instead of the last.
Weighted-Average: This method averages the cost of inventory to determine the unit cost.
Under the perpetual inventory system, the inventory costs are recorded immediately after an inventory transaction and not at the end of a period.
Pam retires after 28 years of service with her employer. She is 66 years old and has contributed $42,000 to her employer's qualified pension fund, all of which was taxable when earned. She elects to receive her retirement benefits as an annuity of $4,200 per month for the remainder of her life. Click here to access Exhibit 4.1 and Exhibit 4.2. a. Assume that Pam retired in June 2019 and collected six annuity payments that year. What is her gross income from the annuity payments in the first year
Answer:
A. $24,000
B. $50,400
Explanation:
A. Calculation for her gross income from the annuity payments in the first year
First step is to calculate the exclusion per payment
Exclusion per payment= $42,000/210
Exclusion per payment= $200
Now let calculate her Gross income
Collections in 2019 $25,200
(6 annuity payments*$4,200)
Less Exclusion for capital recovery ($1,200)
(6 annuity payments*$200)
Gross income $24,000
($25,200-$1,200)
Therefore her gross income from the annuity payments in the first year will be $24,000
B. Calculation for her gross income from the annuity payments in the twenty-fourth year
Gross income=$4,200 × 12 annuity payments
Gross income= $50,400
Therefore her gross income from the annuity payments in the twenty-fourth year will be $50,400
On December 31, 2021, L Inc. had a $2,000,000 note payable outstanding, due July 31, 2022. L borrowed the money to finance construction of a new plant. L planned to refinance the note by issuing long-term bonds. Because L temporarily had excess cash, it prepaid $550,000 of the note on January 23, 2022. In February 2022, L completed a $3,500,000 bond offering. L will use the bond offering proceeds to repay the note payable at its maturity and to pay construction costs during 2022. On March 13, 2022, L issued its 2021 financial statements. What amount of the note payable should L include in the current liabilities section of its December 31, 2021, balance sheet
Answer:
$550,000
Explanation:
Based on the information given we were told that the company temporarily had excess cash in which the company prepaid the amount of $550,000 of the note because the company had planned to refinance the note by issuing long-term bonds which means that the amount of the note payable that the company should include in the current liabilities section of its December 31, 2021, balance sheet will be the amount of $550,000 which represent the prepaid amount reason been that any amount that was been excluded as current Liabilities amount due to refinancing cannot in any way be greater than the amount that was actually refinanced in the nearest future.
Covent Gardens Inc. is considering two financial plans for the coming year. Management expects sales to be $300,000, operating costs to be $265,000, assets to be $200,000, and its tax rate to be 35%. Under Plan A it would use 25% debt and 75% common equity. The interest rate on the debt would be 8.8%, but under a contract with existing bondholders the Times Interest Earned (TIE) ratio would have to be maintained at or above 4.5. Under Plan B, the maximum debt that met the TIE constraint would be employed. Assuming that sales, operating costs, assets, the interest rate, and the tax rate would all remain constant, by how much would the ROE change in response to the change in the capital structure?
Answer:
Assets = $200,000
For Plan A
25% debt = 200,000 * 25% = 50,000
75% equity = 200,000 * 75% = 150,000
The debt will generate 8.8% interest expense. Interest expense = 50,000 * 8.8% = 4,400
Income for the expected project under Plan A
Sales revenue 300,00
Operating cost 265,000
EBIT 35,000
Interest expense 4,400
EBT 30,600
Income tax 10,710
Net income $19,890
Times interest earned = EBIT /interest expense = 35,000 / 4,400 = 7.95. So, it achieve the requirement of 4.5 or above.
ROE for plan A = Net income / Equity = 19,890/150,000 = 0,1326 = 13.26%
Under Plan B
We will take as much debt as we can until Times interest earned = 4.5
EBIT / interest expense = Times interest earned
35,000/Interest expense = 4.5
Interest expense = 35,000/4.5
Interest expense = 7.777,78
Net income = (EBIT - interest) x (1- tax-rate)
Net income = (35,000 - 7,777.78) x (1-35%)
Net income = 17.694,443
Interest expense = Debt * Rate
Debt = Interest expense / Rate
Debt = 7,777.78/0.088
Debt = 88.383,86
Asset = Debt + Equity
200,000 = 88,383.86 + Equity
Equity = 200,000 - 88,383.86 =
Equity = 111,616.14
ROE for Plan B = Net income/ Equity = 17,694.443 / 111,616.14 = 0,15852943 = 15.85%
So, we compare both ROE
Plan A = 13.26%
Plan B = 15.85%
Difference = 2.59%
So therefore, using the Plan B will increase the ROE for 2.59%
An investor has up to $250,000 to invest in three types of in-vestments. Type A pays 8% annually and has a risk factor of0. Type B pays 10% annually and has a risk factor of 0.06.Type C pays 14% annually and has a risk factor of 0.10. Tohave a well-balanced portfolio, the investor imposes the fol-lowing conditions. The average risk factor should be nogreater than 0.05. Moreover, at least one-fourth of the totalportfolio is to be allocated to Type A investments and at leastone-fourth of the portfolio is to be allocated to Type B invest-ments. How much should be allocated to each type of invest-ment to obtain a maximum return?
Answer:
Answer is explained below in the explanation section.
Explanation:
Solution:
An investor has up to $250,000 to invest in three types of investment.
Type A pays 8% annually and has risk factor of 0.
Type B pays 10% annually and has risk factor of 0.06.
Type C pays 14% annually and has risk factor of 0.10.
So,
Decision Variables are:
[tex]X_{1}[/tex] = Total Amount invested in Type A.
[tex]X_{2}[/tex] = Total Amount invested in Type B.
[tex]X_{3}[/tex] = Total Amount invested in Type C.
So, the Objective Function will be:
Objective function:
Max Z = 0.08[tex]X_{1}[/tex] + 0.10[tex]X_{2}[/tex] + 0.14[tex]X_{3}[/tex]
And the Constraints will be:
1. Total Amount Variable:
[tex]X_{1}[/tex] + [tex]X_{2}[/tex] + [tex]X_{3}[/tex] [tex]\leq[/tex] 250000
2. Total Risk is no greater than 0.05:
0[tex]X_{1}[/tex] + 0.06[tex]X_{2}[/tex] + 0.10[tex]X_{3}[/tex] [tex]\leq[/tex] 0.05
3. At least one fourth of the total amount invested to be allocated to Type A investment.
[tex]X_{1}[/tex] [tex]\geq[/tex] 0.25 ( [tex]X_{1}[/tex] + [tex]X_{2}[/tex] + [tex]X_{3}[/tex] )
0.75[tex]X_{1}[/tex] - 0.25[tex]X_{2}[/tex] - 0.25[tex]X_{3}[/tex] [tex]\geq[/tex] 0
4. At least one fourth of the total amount to be allocated to Type B investment.
[tex]X_{2}[/tex] [tex]\geq[/tex] 0.25 ( [tex]X_{1}[/tex] + [tex]X_{2}[/tex] + [tex]X_{3}[/tex] )
-0.25[tex]X_{1}[/tex] + 0.75[tex]X_{2}[/tex] - 0.25[tex]X_{3}[/tex] [tex]\geq[/tex] 0
5. And the non- negativity constraints are:
[tex]X_{1}[/tex],[tex]X_{2}[/tex], and [tex]X_{3}[/tex] [tex]\geq[/tex] 0
Nettle Co. uses process costing to account for the production of rubber balls. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 12,000 units for materials and 10,000 units for conversion costs. Beginning inventory consisted of $7,000 in materials and $4,000 in conversion costs. April costs were $36,000 for materials and $40,000 for conversion costs. Ending inventory still in process was 4,000 units (100% complete for materials, 50% for conversion). The equivalent cost per unit for materials using the FIFO method would be closest to:
Answer:
$3
Explanation:
The computation of the equivalent cost per unit for materials using the FIFO method is shown below:
= Materials cost ÷ equivalent units in materials
= $36,000 ÷ 12,000 units
= $3
hence, the equivalent cost per unit for materials using the FIFO method is $3
Bravo Industries intends to retire $950,000 in short-term debt using proceeds from the sale of 30,000 shares of common stock. The stock sells for $25 per share. How much of its short-term debt can Bravo exclude from current liabilities if the sale occurs after the balance sheet date but before the balance sheet issue
Answer:
the amount that should be excluded from the current liabilities is $750,000
Explanation:
The computation of the amount that should be excluded from the current liabilities is shown below;
= Number of shares in the common stock × selling price per share
= 30,000 shares × $25
= $750,000
Hence, the amount that should be excluded from the current liabilities is $750,000
Mark can produce 60 baseballs in a month and Katie can produce 42 baseballs in a month. Also, Mark can produce 40 bats in a month and Katie can produce 30 bats in a month. ______________has the absolute advantage in the production of bats, and _____________ has the comparative advantage in the production of bats.
Answer:
The answer is "Mark and Katie".
Explanation:
Through one month, Marked could manufacture 60 baseballs, but also Katie could manufacturing process 42 baseballs a couple of weeks, and inside the same month Katie may generate 40 bats in the same month 30 bats. In bats, Mark now has comparative advantages and Katie will have the peak value in bats production.
dentify which of the following statements is true. Group of answer choices The gift tax exclusion is available only for a gift of a present interest. A purpose of the annual exclusion is to eliminate the necessity of accounting for and reporting small gifts such as those made for weddings and Christmas. A present interest is an unrestricted right to the immediate use, possession, or enjoyment of property or the income from property. All of the above are true.
Answer:
Option D (All of the above are true) would be the right approach.
Explanation:
Future rewards of involvement aren't really able to qualify for allowance from taxation on presents as well as exclusions. Thus, only gifts of even more present involvement were also eligible to claim exemption on presents. This same sets up exemption has been tasked with the responsibility of eliminating the financial statements of thoughtful gifts besides formal events, and so much more.Present interest seems to be a responsibility which really characterizes this same authority for using, possess as well as appreciate the possessions or its earnings instantaneously. So all the points are valid.
Colter Steel has $4,800,000 in assets. Temporary current assets $ 1,600,000 Permanent current assets 1,530,000 Fixed assets 1,670,000 Total assets $ 4,800,000 Assume the term structure of interest rates becomes inverted, with short-term rates going to 12 percent and long-term rates 2 percentage points lower than short-term rates. Earnings before interest and taxes are $1,020,000. The tax rate is 40 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be
Answer:
Long-term financing need:
Permanent current assets $1,530,000
Fixed assets $1,670,000
Total $3,200,000
Short-term financing need:
Temporary current assets $1,600,000
Long-term interest expense $320,000
Short-term interest expense $192,000
Total interest expense $512,000
EBIT $1,020,000
Interest expense $512,000
Earnings before taxes $508,000
Taxes $203,200
Earnings after taxes $304,800
Workings:
Long-term interest expense =10%× $3,200,000 = $320,000
Short-term interest expense =12% × $1,600,000 = $192,000
Taxes = 40% × $508,000 = $203,200
While preparing the concept screening matrix, the development team chooses: Group of answer choices a benchmark or reference concept which is either an industry standard, or a straightforward concept which is very familiar to the team members a benchmark or reference concept which is neither an industry standard, nor familiar to the team members several concepts which team members are not familiar with. none of the above
Answer:
a) a benchmark or reference concept which is either an industry standard, or a straightforward concept which is very familiar to the team members
Explanation:
Screening matrix can be regarded as
a tool that gives the summary that contains the candidates and qualifications. It provide an objective way to make comparison of the candidates and the set standard or the comparison of the candidates with each other. It should be noted that While preparing the concept screening matrix, the development team chooses a benchmark or reference concept which is either an industry standard, or astraightforward concept which is very familiar to the team members
The amount of money withheld from an employee's paycheck is...
A.Payroll deductions
B.Levied taxes
C.FICA
D.Gross earnings
Answer:
A.Payroll deductions
Explanation:
Withholding is the action by employers to retain a portion of an employee's salary for a specific function. Money withheld does not get to the employee bank's account. The amount withheld is shown in the pay stub, but the employee will not access it.
Employers collect the amounts withheld and remit them to the concerned agency. Deductions are usually a percentage of the employee's gross pay.
