Answer:
a) Net Present Value = $ 304,495.12
b) Beyer should accept the investment.
Explanation:
The net present value NPV) of a project is the present value of cash inflow less the present value of cash outflow of the project.
NPV = PV of cash inflow - PV of cash outflow
Year PV
1 77,000 × 1.12^(-1) = 68,750.00
2 54,000 × 1.12^(-2) = 43,048.47
3 82,000 × 1.12^(-3) = 58,365.98
4 172,000 × 1.12^(-4) = 109,309.11
5 423,000 × 1.12^(-5)= 240,021.56
Total Present Value 519,495.12
Initial cost (215,000)
Net Present Value 304,495.12
Net Present Value = $ 304,495.12
b) Decision :
Beyer should accept the investment. This will increase the wealth of the shareholders by $ 304,495.12
The transactions of Spade Company appear below. a. Kacy Spade, owner, invested $13,250 cash in the company. b. The company purchased office supplies for $384 cash. c. The company purchased $7,327 of office equipment on credit. d. The company received $1,564 cash as fees for services provided to a customer. e. The company paid $7,327 cash to settle the payable for the office equipment purchased in transaction c. f. The company billed a customer $2,809 as fees for services provided. g. The company paid $515 cash for the monthly rent. h. The company collected $1,180 cash as partial payment for the account receivable created in transaction f. i. Kacy Spade withdrew $1,000 cash from the company for personal use.Required: 1. Prepare general journal entries to record the transactions above for Spade Company by using the following accounts: i. Cash ii. Accounts Receivable iii. Office Supplies iv. Office Equipment v. Accounts Payable vi. Common Stock vii. Dividends viii. Fees Earned 2. Post the above journal entries to T-accounts, which serve as the general ledger for this assignment.
Answer:
See the answers and explanation below.
Explanation:
1. Prepare general journal entries to record the transactions above for Spade Company
These can presented as follows:
Trans. General Journal Debit ($) Credit ($)
a. Cash 13,250
Common stock 13,250
(To record cash investment by the owner in the company.)
b. Office supplies 384
Cash 384
(To record cash purchase of office supplies.)
c. Office equipment 7,327
Account payable 7,327
(To record purchase of office equipment on credit.)
d. Cash 1,564
Fees earned 1,564
(To record cash received as fees for service rendered.)
e. Account payable 7,327
Cash 7,327
(To record cash paid for office equipment bought on credit.)
f. Account receivable 2,809
Fees earned 2,809
(To record fees earned from services provided on credit.)
g. Rent 515
Cash 515
(To record monthly rent paid in cash.)
h. Cash 1,180
Account receivable 1,180
(To record partial cash receipt from account receivable.)
i. Dividend 1,000
Cash 1,000
(To record drawings by Kacy for personal use.)
2. Post the above journal entries to T-accounts, which serve as the general ledger for this assignment.
Note: Find the attached the excel file for the T-accounts.
An ex-gratia claim made when a project is closed down is made when:________
A. The project company fails to perform to the terms of the contract.
B. The client company fails to perform to the terms of the contract.
C. There is no contractual basis for a claim.
D. A third party causes either the client or project company to fail to perform to the terms of the contract
Answer:
The correct answer is (C)There is no contractual basis for a claim
Explanation:
Solution
An ex-gratia claim is a a free of charge payment carried out by a person in a reaction to a loss for which it is not technically liable under the terms of its policy.
When something has carried out in a free will manner or out of abundance .
With regards to law, an ex gratia payment is a payment done without the giver admitting any liability or legal commitment.
Bethesda Mining Company reports the following balance sheet information for 2015 and 2016.
Prepare the 2015 and 2016 common-size balance sheets for Bethesda Mining. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
BETHESDA MINING COMPANY
Balance Sheets as of December 31, 2015 and 2016
2015 2016 2015 2016
Assets Liabilities and Owners’ Equity
Current assets Current liabilities
Cash $ 29,266 % $ 38,098 % Accounts payable $ 193,922 % $ 201,611 %
Accounts receivable 58,281 % 78,639 % Notes payable 89,020 % 140,588 %
Inventory 133,148 % 199,946 % Total $ 282,942 % $ 342,199 %
Total $ 220,695 % $ 316,683 % Long-term debt $ 245,000 % $ 181,750 %
Owners’ equity
Common stock and paid-in surplus $ 210,000 % $ 210,000 %
Fixed assets Accumulated retained earnings 140,100 % 172,012 %
Net plant and equipment $ 657,347 % $ 589,278 % Total $ 350,100 % $ 382,012 %
Total assets $ 878,042 % $ 905,961 % Total liabilities and owners’ equity $ 878,042 % $ 905,961 %
Answer and Explanation:
The Preparation of 2015 and 2016 common-size balance sheets for Bethesda Mining is shown in the attachment
The balance sheet refers to the financial position, performance, profit of the company.
It can be made by using the accounting equation which is as follows
Total assets = total liabilities + total stockholder equity
Both the sides of the balance sheet should be matched and equal
Stine Corp.'s trial balance reflected the following account balances at December 31, 2014: Accounts receivable (net)? $21,000 Trading securities? 8,000 Accumulated depreciation on equipment and furniture? 15,000 Cash? 18,000 Inventory? 32,000 Equipment? 25,000 Patent? 4,000 Prepaid expenses? 4,000 Land held for future business site? 18,000 In Stine's December 31, 2014 balance sheet, the current assets total is
Answer:
the current assets total is $ 83,000
Explanation:
Current assets are assets that can be easily be converted into cash within a period of 12 months in the business.
In Stine Corp.'s balance sheet the following are listed as assets ;
Accounts receivable $ 21,000
Trading securities $ 8,000
Cash $ 18,000
Inventory $ 32,000
Prepaid expenses $ 4,000
Total $ 83,000
Therefore, the current assets total is $ 83,000
A manager creates a policy document that lists the policy name, identifying information, and the operational policy. When she gets to the section marked "roles and responsibilities," she is uncertain if she should include the names of the individuals assigned to the roles and responsibilities, but decides ultimately that she will because these individuals were newly appointed and have played an active role in reviewing and providing feedback on the policy. Which of the following statements is an accurate assessment of this manager’s choice to include the names of the individuals?a. the manager made the right choice to include the names of the individuals in the policy because it is highly unlikely that newly appointed employees will leave the company anytime soon. b. the manager should have postponed her decision to include the names until after she consulted the hr department. c. the manager should not have included the names because even though they were newly appointed, individuals join and leave and the company. d. the manager should have waited to include the individuals' names until she received verification that their contracts would be renewed.
Answer:
C
Explanation:
the manager should not have included the names because even though they were newly appointed, individuals join and leave and the company.
The manager made a mistake including the names of the individuals assigned to the roles and responsibilities, because these individuals were newly appointed and although they have played an active role in reviewing and providing feedback on the policy people join companies at anytime and also have the choice of leaving whenever they want.
Cost accounting systems used by manufacturing companies are based on the: Multiple Choice Periodic inventory system. Perpetual inventory system. Finished goods inventories. Weighted average inventories. LIFO inventory system.
Answer:
Perpetual inventory system.
Explanation:
The cost accounting refers to managing the cost of the company so that the company could able to produced their goods at the lowest cost
Now in the case of a manufacturing company, various things can be calculated like - the cost of goods sold, ending work in process, etc
The perpetual inventory system refers to the system in which the inventory is updated on a regular basis while on the other hand periodic inventory system refers to the system in which the company updated their inventory counts in periodic or particular period only
So here the manufacturing company based on perpetual inventory system so that it can trace the cost in an effective manner
A company received a bank statement showing a balance of $78,000. Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,400. What is the company's adjusted bank balance
Answer:
Adjusted Bank Balance = $85,000
Explanation:
Adjustment of bank balance is a bank reconciliation procedure, that is used to match the amount in the bank statement with the amount in the company's balance sheet.
To adjust the bank balance, particulars that need to be subtracted or added to the bank statement balance has to be identified and treated accordingly.
For this example, the adjusted balance is calculated thus:
Adjusted bank balance = (Bank statement balance) - (outstanding checks) +(deposit in transit)
Adjusted Bank Balance = 78,000 - 2,400 + 9,400 = $85,000
Note:
outstanding checks are subtracted because they are payments to be made made by the company, representing a liability to the company (payer)
deposit in transit is an income to the company that has not been credited yet, but that will be credited.
In December 2008, Hawaiian Telecom took action to strengthen its balance sheet by reducing debt. Although the company continued to operate, its creditors could not collect their debts or loan payments that were due prior to the legal action that the company took. However, on November 30, 2009, the company had $75 million in cash on hand.
This is an example of:
1. Reorganization
2. Liquidation
Answer:
1. Reorganization
Explanation:
The reorganization is the position where the firm wants to restructure its business so that the company could able to improve its profitability by making good decisions, proper working in the organization, resource utilization, etc
While at the same time the liquidation is the winding up of the company or shut down of the company due to high losses suffered in the business
Therefore in the given case, since the Hawaiian telecom took an action for better off the balancing sheet by decreasing debt that represents the reorganization example
The campground will make the most economic profit whenit has property rights to a clean lake . True or False: The fish cannery will use the recycling method, regardless of who has the property rights. True False
Answer:
hi your question is incomplete here is the complete question
Consider a lake found in the town of Center Barnstead,
The town has a campground whose visitors use the lake for recreation. The town also has a fish cannery that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the fish cannery's waste decreases the campground's economic profit.
Suppose that the fish cannery could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the campground would no longer be affected. If the fish cannery uses the recycling method, then the fish cannery's economic profit is $1,500 per week, and the campground's economic profit is $1,800 per week. If the fish cannery does not use the recycling method, then the fish cannery's economic profit is $2,000 per week, and the campground's economic profit is $1,000 per week. These figures are summarized in the following table.
Action
Profit
Fish Cannery
Campground
Total
(Dollars)
(Dollars)
(Dollars)
No Recycling 2,000 1,000
Recycling 1,500 1,800
Total economic profit is highest when the recycling production method is .
When the fish cannery uses the recycling method, the campground earns $1,800−$1,000=$800$1,800−$1,000=$800 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $800 per week for the fish cannery to recycle water. However, the recycling method decreases the fish cannery's economic profit by $2,000−$1,500=$500$2,000−$1,500=$500 per week. Therefore, the fish cannery should be willing to use the recycling method if it is compensated with at least $500 per week.
Suppose the campground has the property rights to the lake. That is, the campground has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the fish cannery will the recycling method and will pay the campground per week.
Now, suppose the fish cannery has the property rights to the lake, including the right to pollute it. In this case, assuming the two firms can bargain at no cost, the fish cannery will the recycling method, and the campground will pay the fish cannery per week.
ANSWER
TrueTrueExplanation:
The campground will make the most economic profit when it has property rights to a clean lake : True. this is true because the Fish cannery will be using the recycling method and from the table it is seen that when the recycling method is used The Campground make the most economic profit
The fish cannery will use the recycling method regardless of who has the property right : TRUE . this is because the Fish cannery will use the recycling method anyways because the recycling method would not pollute the water hence not interfering with the campground activities in case they own the property rights.
Cole Corporation was organized on January 1, Year 1. The company was authorized to issue 100,000 shares of $1 par value common stock. During the year, the company had the following transactions relating to stockholders’ equity: Issued 40,000 shares of common stock at $8 per share. Reported a net income of $60,000. Paid dividends of $30,000. Purchased 5,000 shares of treasury stock at $10 per share. What is total stockholders’ equity at the end of Year 1? Multiple Choice a) $300,000 b) $350,000 c) $400,000 d) $460,000
Answer: a)$300,000
Explanation:
Stockholders Equity shows just how much of the company is being financed by the shareholders. It is calculated by,
Total Stockholders Equity for the Year = Issued and Outstanding Shares + Retained Earnings - Treasury Stock
Retained Earnings = Opening Retained Earnings + Net Income - Dividends
First year of operation so no Opening Retained Earnings.
= $0 + 60,000 - $30,000
= $30,000
Total Stockholders Equity for the Year = (40,000* $8) + $30,000 - (5,000 * 10)
= 320,000 + 30,000 - 50,000
= $300,000
The trial balance for a business at a given point in time typically has much more detailed information than what is depicted on the financial statements. What is the accounting concept that allows for the information from the trial balance to be condensed to what is displayed on the financial statements
Answer:
Going Concern Concept
Explanation:
The Information from a trial balance is usually shown at historic values and not market values. The financial statements also show the amounts in historic not Liquidation / market values.
Thus we say the entity is foreseen to be in operation in future thus it is a going concern. The concept applied therefore is the Going Concern Concept.
Carlos had been thinking of setting up a graphic design service business for quite some time. He knew that he wanted to work at home and he now had several leads for prospective customers. He also knew how much money he needed to make to cover his expenses. He had several ways to approach his new business including working by himself or taking on a partner. Both ways needed more thought to determine what each would involve. In terms of the rational decision-making model, Carlos is in which of the following steps?A. Defining the situation.
B. Describing and collect needed information.
C. Develop alternatives.
D. Develop agreement among those involved.
Answer: Develop alternatives
Explanation:
From the question, we are informed that Carlos had been thinking of setting up a graphic design service and has several leads for prospective customers and also has different ways to approach his new business which. include either by working alone or having a partner and he is critically thinking to determine the best option.
This means that he is developing alternatives. He is looking at a range of options in order to choose the.best one that will help him achieve his objective. Alternatives should reflect the different ways to tackle a problem.
Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:
Answer:
Estimated Over head applied = ($112500 / $125000) *100 = 90% of Direct labor cost.
Thus, Actual Over Head applied = 90% of $120000 = $108000
Moreover, Actual Over Head incurred = $107400
Therefore, Overhead Over-applied is to be applied as the Actual Overhead applied is higher than the Actual Overhead Incurred
Overhead Over-applied = $108000 - $107400
Overhead Over-applied = $600
The entry to close the over-applied overhead at year-end would include:
i. Over-head A/c will be debited for $600
ii. Cost of goods sold will to be credited for $600
Tammy wishes to purchase a new laptop in 4 years. She makes quarterly deposits of $130 into an account that pays 4% per year compounded quarterly for 4 years. How much will she have towards the purchase of a new laptop in 4 years?
Answer:
FV= $2,243.52
Explanation:
Giving the following information:
Number of periods= 4*4= 16
Quarterly deposit= $130
Interest rate= 4%
First, we need to calculate the quarterly interest rate:
Interest rate= 0.04/4= 0.01
Now, using the following formula, we can calculate the final value:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {130*[(1.01^16) - 1]} / 0.01
FV= $2,243.52
Assume that you are an intern with the Brayton Company, and you have collected the following data: The yield on the company's outstanding bonds is 7.75%; its tax rate is 25%; the next expected dividend is $0.65 a share; the dividend is expected to grow at a constant rate of 6.00% a year; the price of the stock is $15.00 per share; the flotation cost for selling new shares is F= 5%; and the target capital structure is 25% debt and 75% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?
a. 6.89%
b. 7.24%
c. 7.64%
d. 8.55%
e. 8.44%
Answer:
WACC is 9.37%
Explanation:
After tax cost of debt=yield to maturity*(1-t)
where t is the tax rate of 25% or 0.25
after tax cost of debt=7.75%*(1-0.25)=5.81%
Using stock price formula,the cost of equity can be determined as below:
stock price=Di/k-g
Di is the next dividend of $0.65
k is the cost of equity which is unknown
g is the constant growth rate of 6.00%
stock price=$15*(1-f)
f is the flotation cost percentage
stock price=$15*(1-5%)=$14.25
14.25=0.65/k-6%
14.25(k-6%)=0.65
k-6%=0.65/14.25
k=(0.65/14.25)+6%=10.56%
WACC=Ke*We+Kd*Wd
ke is 10.56%
We is the weight of equity which is 75%
Kd is 5.81%
We is the weight of debt which is 25%
WACC==(10.56%*75%)+(5.81%*25%)=9.37%
Trailblazer Company sells a product for $210 per unit. The variable cost is $105 per unit, and fixed costs are $588,000. Determine (a) the break-even point in sales units and (b) the sales units required for the company to achieve a target profit of $223,440.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Trailblazer Company sells a product for $210 per unit. The variable cost is $105 per unit, and fixed costs are $588,000.
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 588,000/ (210 - 105)
Break-even point in units= 5,600 units
Desired profit= 223,440
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (588,000 + 223,440) / 105
Break-even point in units= 7,728 units
The food and beverage manager should always expect that the fresh produce delivered to his or her establishment will be the same quality and degree of ripeness that they were when first harvested in the field. True or False
Answer:
False.
Explanation:
The food and beverage manager shouldn't always expect that the fresh produce delivered to his or her establishment will be the same quality and degree of ripeness that they were when first harvested in the field.
The produce delivered wouldn't be as fresh, same quality and degree of ripeness that they were when first harvested because of changes in environmental conditions such as temperature and relative humidity. Also, a change in its biochemical composition would go a long way to affect the quality of fresh produce.
Hence, this would result in a change in taste, texture, degree of ripeness, nutritional value, smell etc.
However, the farmer or supplier of this food products could mitigate the change in quality by transporting them as soon as possible after harvesting, transporting at a required cold temperature, humidity and ensuring they're well packaged in a safe container during shipment.
An increase in ROE would imply an increase in shareholder wealth. Based on your understanding of the uses and limitations of ROE, a rational investor is likely to prefer an investment option that has: A high ROE and high risk A high ROE and low risk
Answer:
The correct answer is the second option: A high ROE and low risk.
Explanation:
To begin with, the concept of "Return of Equity" or ROE refers to a measure used in the field of business that mainly focus in the relationship between the profits and the equity of the company and therefore that it shows how profitable the company is regarding the amount of its equity. Moreover, this measure focus on the amount of dollars that the company gains regading the amount of equity that the company uses. Therefore that a rational investor is likely to prefer an investment option that has a high ROE and low risk at the time of taking the decision.
Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $23,025. Clayborn's May bank statement shows $20,600 on deposit in the bank. Determine the adjusted cash balance using the following information: Deposit in transit $ 7,000 Outstanding checks $ 5,800 Bank service fees, not yet recorded by company $ 85 A NSF check from a customer, not yet recorded by the company $ 1,140 The adjusted cash balance should be:
Answer:Adjusted cash balance = $21,800
Explanation:
A bank reconciliation statement is a document that shows the cash balance on a company’s balance sheet to match with the amount on its bank statement. This statement helps the company in maintaining correct cash records thereby eliminating any form of cash manipulation.
To determine , the adjusted cash balance, we prepare a Reconciliation statement document.
Clayborn Company Bank Reconciliation statement ending May 31st.
Cash balance by bank statement $20,600
Deposit in transit(add) +$7000
Less Outstanding checks -$5,800
Adjusted cash balance $21,800
Cash balance from Clayborn record $23,025
less Ban service fees -$ 85
less NSF Check -$1140
Adjusted cash balance $21,800
Determine the difference in the present worth of the following two commodity contracts at an interest rate of 8% per year. Contract 1 has a cost of $10,000 in year 1; this cost will escalate at a rate of 4% per year for ten years. Contract 2 has a present cost of $80,520.
Answer:
Difference = 4418.64
Explanation:
We first need to determine the present value of the contract 1. We already have the present value of contract 2.
The present value of contract 1 will be,
Present value = 10000/(1.08) + 10000*(1.04)/(1.08)^2 +
10000*(1.04)^2/(1.08)^3 + 10000*(1.04)^3/(1.08)^4 + 10000*(1.04)^4/(1.08)^5 + 10000*(1.04)^5/(1.08)^6 + 10000*(1.04)^6/(1.08)^7 + 10000*(1.04)^7/(1.08)^8 + 10000*(1.04)^8/(1.08)^9 + 10000*(1.04)^9/(1.08)^10 +
10000*(1.04)^10/(1.08)^11
Present Value-Contract 1 = 84938.63563 rounded off to 84938.64
Difference = 84938.64 - 80520 = $4418.64
Take Test: Lab 3: Saving for Retirement Quiz Suppose Betty saves $200 each month in her 401(k) account. How much less will her monthly take-home pay be? (Assume a combined 20% state and federal income tax rate, as in the example.)
Answer:
$160
Explanation:
her net monthly take home pay will be reduced by $200 x (1 - combined tax rate = $200 x (1 - 20%) = $200 x 0.8 = $160
If instead of contributing to her 401k account, Betty took the money home, she would have to pay $40 in taxes (both state and federal), so the net amount that she receives is reduced by the taxes that she pays.
find the nominal annual rate of interest compounded monthly if $1200 accumulates to $1618.62 in years
Answer:
Nominal annual rate of interest(r) = 2.5% (Approx)
Explanation:
Given:
Present value (P) = $1,200
Future value (F) = $1,618.62.
Number of year = 1year = 12 months
Find:
Nominal annual rate of interest(r)
Computation:
Nominal annual rate of interest(r) = [tex]\sqrt[12]{\frac{1,618.62}{1,200} }-1[/tex]
Nominal annual rate of interest(r) = [tex]\sqrt[12]{1.34885}-1[/tex]
Nominal annual rate of interest(r) = 0.02525
Nominal annual rate of interest(r) = 2.5% (Approx)
A proposed new project has projected sales of $125,000, costs of $59,000, and depreciation of $12,800. The tax rate is 35 percent. Calculate operating cash flow using the four different approaches.
Answer:$47,380
Explanation:
To calculate the Operating Cash Flow using the four different approaches.
1. Operating Cash Flow= EBIT + Depreciation − Taxes
We calculate EBIT first
Sales of project= 125000
Cost of project=59000
Depreciation 12800
Earnings Before Income Tax, EBIT= Sales – (Variable Costs + Fixed Costs) – Depreciation = 53200
Operating Cash Flow= EBIT + Depreciation − Taxes
Operating Cash Flow= $53,200 + 12,800 − 18,620
=$47,380
2 The top-down approach
Operating Cash Flow = Sales − Costs − Taxes
= $125,000 − 59,000 − 18,620
=$47,380
(3)The tax-shield approach is:
Operating Cash Flow = (Sales − Costs)(1 − T) + T(Depreciation)($125,000 − 59,000)(1 − 0.35) + 0.35($12,800)
=$47,380
4. The bottom-up approach
Operating Cash Flow= Net income + Depreciation
First we calculate net income
Sales of project= 125000
Cost of project=59000
Depreciation 12800
Earnings Before Income Tax= Sales – (Variable Costs + Fixed Costs) – Depreciation = 53200
taxes at 35%=0.35 x 53,200= 18, 620
Net income= 53,200- 18,620=34580
Operating Cash Flow= Net income + Depreciation
$34,580 + 12,800
=$47,380
Sometimes, customers can tell if they received good service. For example, vacations, haircuts, and restaurants all have ________ attributes that allow customers to decide whether they will repeat the purchase another time.
Answer:
experiential
Explanation:
All of these have experiential attributes that allow customers to decide whether they will repeat the purchase another time. Experiential attributes are those that are based on experience and observation. The customer is able to judge different aspects of their purchase and experience in order to decide how good the service was. Such as in a vacation, the individual can rate the service of the food, hotel, attractions etc.
Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $232,000, $319,000, and $411,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale. The cash collections in November are
Answer:
Total cash collection= $322,425
Explanation:
Giving the following information:
Sales:
Septmeber= $232,000
October= $319,000
November= $411,000
The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale.
We need to determine the cash collection for November:
Cash Collection:
Sales in Cash November= 411,000*0.25= 102,750
Sales on Account October= (319,000*0.75)*0.7= 167,475
Sales on Account September= (232,000*0.75)*0.3= 52,200
Total cash collection= $322,425
Rihanna Company is considering purchasing new equipment for $578,500. It is expected that the equipment will produce net annual cash flows of $65,000 over its 10-year useful life. Annual depreciation will be $57,850. Compute the cash payback period.
Answer:
The answer is 8.9 years
Explanation:
Solution
Given that:
purchase of new equipment = $578,500
Net annual cash flows =$65,000
The useful life = 10 years
Annual depreciation = $57.850
Now, we have to compute the cash payback period which given below:
The payback period (cash) = cost of capital investment/net annual cash flows
=$578.500/$65,000
=8.9 years
The cash payback period is 8.9 years
Investment X offers to pay you $4,700 per year for 9 years, whereas Investment Y offers to pay you $6,400 per year for 5 years.
Requirement 1:
A. If the discount rate is 8 percent, what is the present value of these cash flows?
B. Which of these cash flow streams has the higher present value at 8 percent?
Requirement 2:
A) If the discount rate is 20 percent, what is the present value of these cash flows?
B) Which of these cash flow streams has the higher present value at 20 percent?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Investment X offers to pay you $4,700 per year for 9 years
Investment Y offers to pay you $6,400 per year for 5 years.
Requirement 1:
First, we need to calculate the final value, using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual cash flow
Investment X:
FV= {4,700*[(1.08^9)-1]} / 0.08
FV= $58,691.52
Investment Y:
FV= {6,400*[(1.08^5)-1]} / 0.08
FV= $37,546.25
Now, the present value:
PV= FV/(1+i)^n
Investment X:
PV= 58,691.52/(1.08^9)
PV= $29,360.37
Investment Y:
PV= 37,546.25/(1.08^5)
PV= $25,553.35
Investment X provides the higher present value, therefore, it should be the one to choose.
Requirement 2:
First, we need to calculate the final value, using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual cash flow
Investment X:
FV= {4,700*[(1.20^9)-1]} / 0.20
FV= $97,754.84
Investment Y:
FV= {6,400*[(1.20^5)-1]} / 0.20
FV= $47,626.24
Now, the present value:
PV= FV/(1+i)^n
Investment X:
PV= 97,754.84/(1.20^9)
PV= $18,945.54
Investment Y:
PV= 47,626.24/(1.20^5)
PV= $19,139.92
Investment Y provides the higher present value, therefore, it should be the one to choose.
Exercise 5-10 Lower of cost or market LO P2 Martinez Company's ending inventory includes the following items. Product Units Cost per Unit Market per Unit Helmets 36 $ 58 $ 54 Bats 29 76 82 Shoes 50 95 99 Uniforms 54 40 40 Compute the lower of cost or market for ending inventory applied separately to each product.
Answer:
Helmets $ 1,944
Bats $ 2,204
Shoes $ 4,750
Uniforms $ 2,000
Explanation:
We will compare between the cost and the proceeds from sale of the units. As accounting wants to represent reality it cannot value the company goods higher than it can acceess to it in the market regardless of the purchase cost.
This may generate losses to represent the decrease in the overall value of the good.
Helmets 36 $ 58 $ 54
Helmets cost is higher than market so we recognize a loss an valued at $54
36 units x $54 = $1,944
Bats 29 $76 $82
Bats productions cost is lower so we keep it.
29 units x $76 = $2,204
Shoes 50 $95 $99
Shoes also has a lower production cost
50 units x $95 = $4,750
Uniforms 54 $40 $40
As they are the same we just leave with $40
50 units x $40 = $2000
The standard costs and actual costs for direct materials for the manufacture of 1,910 actual units of product are as follows: Standard Costs Direct materials 1,910 kilograms at $8.60 Actual Costs Direct materials 2,000 kilograms at $8.15 The direct materials quantity variance is
Answer:
$774 unfavorable
Explanation:
The computation of the direct material quantity variance is shown below:
= Standard Price × (Standard Quantity - Actual Quantity)
= $8.60 × (1,910 kilograms - 2,000 kilograms)
= $8.60 × 90 kilograms
= $774 unfavorable
Since it is unfavorable as it derives that actual quantity is more than the standard quantity and in the case of favorable, the actual quantity is less than the standard quantity
On December 2, Coley Corp. acquired 1,800 shares of its $4 par value common stock for $23 each. On December 20, Coley Corp. resold 1,400 shares for $13 each. Which of the following is correct regarding the journal entry for the resold shares?
a. Credit Additional Paid-in Capital $7,000
b. Credit Treasury Stock $20,000
c. Debit Cash $15,400
d. Credit Treasury Stock $11,000
e. None of these
Answer:
b. Credit Treasury Stock $20,000
Explanation:
General Journal
For the reacquisition of shares of common stock
Date Account Titles and Explanation Debit Credit
Dec 2 Treasury stock $28,000
Cash (1,400 shares * $20 each) $28,000 (To record the repurchase of shares of common shares
General Journal
For the reissue of shares treasury stock
Date Account Titles and Explanation Debit Credit
Dec 20 Cash (1,000 shares * $11 each) $11,000
Paid-in-capital in excess of par $9,000
- Treasure stock
Treasury stock $20,000
(1,000 shares * $20 per share)
(To record the reissue of treasury stock)
Conclusion: The journal entry to record the reissue of treasury stock is Credit Treasury Stock $20,000.
