Freda's Florist reported the following before-tax income statement items for the year ended December 31, 2021: Operating income $ 269,000 Income on discontinued operations 55,000 All income statement items are subject to a 25% income tax rate. In its 2021 income statement, Freda's separately stated income tax expense and total income tax expense would be:
Answer:
the separately stated income tax expense and total income tax expense is $67,250 and $81,000 respectively
Explanation:
The computation of the separated stated income tax expense and total income tax expense is shown below
Income tax expense is
= $269,000 × 25%
= $67,250
And, the Total income tax expense is
= ($269,000 + $55,000) × 25%
= $81,000
hence, the separately stated income tax expense and total income tax expense is $67,250 and $81,000 respectively
Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4%. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7% coupon, pay interest annually, and mature in 4.89 years. The bonds are selling at 99% of face value. The company's tax rate is 34%. What is Jake's weighted average cost of capital
Answer:
WACC = 6.92%
Explanation:
total equity = 210,000 x $36 = $7,560,000,weight of equity = 56%
cost of equity:
36 = 1.65672 / (Re - 4%)
Re = 8.602%
total bonds = $5,940,000, weight of bonds = 44%
bond YTM = 7.24%
after tax cost = 7.24% x 66% = 4.78%
WACC = (.56 x 8.602$) + (.44 x 4.78%) = 4.817 + 2.103 = 6.92%
YTM = (70 + 10/4.89) / (1990/2) = 72.04 / 995 = 7.24%
715
Eastwood Enterprises offers horseback riding lessons. During the month of June, the company provides lessons on account totaling $5,100. By the end of the month, the company received on account $4,500 of this amount. In addition, Eastwood received $500 on account from customers who were provided lessons in May. Determine the amount of operating cash flows Eastwood will report as received from customers in June.
Answer:
$5,000
Explanation:
Calculation to Determine the amount of operating cash flows Eastwood will report as received from customers in June.
Using this formula
Operating cash flows=Receipts for lessons in June+Receipts for lessons in May
Let plug in the formula
Operating cash flows=$4,500+$500
Operating cash flows=$5,000
Therefore the amount of operating cash flows Eastwood will report as received from customers in June is $5,000
Corruptco is a large machine shop that fabricates metals. Corruptco maximizes profits and shareholder value by polluting the local river, where fish are often killed off due to the pollution, rather than installing a pollution abatement device. While this is not specifically in violation of the law, it does put burdens on the local community. Which theory of corporate social responsibility is Corruptco exhibiting
Answer: a. the narrow view, or invisible hand theory
Explanation:
When it comes to the narrow view theory of corporate social responsibility, companies put one thing above all else, the maximisation of shareholder wealth.
Any activity that would help them do so - legally - is considered fair game even if it leads to adverse effects. Corruptco is therefore adhering to this theory because they are polluting the the local river to maximize shareholder value.
Product Pricing: Single Product
Sue Bee Honey is one of the largest processors of its product for the retail market. Assume that one of its plants has annual fixed costs totaling $12,000,000, of which $4,500,000 is for administrative and selling efforts. Sales are anticipated to be 800,000 cases a year. Variable costs for processing are $30 per case, and variable selling expenses are 25 percent of selling price. There are no variable administrative expenses. If the company desires a profit of $7,500,000, what is the selling price per case? Round answer to two decimal places.
$ 0 price per case
Answer: $72.50
Explanation:
Let the selling price per case be represented by x.
Based on the information you can in the question, we will have an equation as:
(80000 × x) = 12,000,000 + 7,500,000 + (800,000 × 30) + (0.25 × 800000x
800000x = 12,000,000 + 7,500,000
+ (800,000 × 30) + (0.25 × 800000x)
800000x = 43500000 + 200000x
Collect like terms
800000x - 200000x = 43,500,000
600,000x = 43500000
x = 43,500,000 / 600,000
x = 72.50
Selling price per case is $72.50
Arizona Desert Homes (ADH) constructed a new subdivision during 2020 and 2021 under contract with Cactus Development Co. Relevant data are summarized below: Contract amount $ 3,000,000 Cost: 2020 1,200,000 2021 600,000 Gross profit: 2020 800,000 2021 400,000 Contract billings: 2020 1,500,000 2021 1,500,000 ADH recognizes revenue over time with respect to these contracts. What would be the journal entry made in 2020 to record revenue
Answer:
Dr Construction $800,000
Dr Cost of construction $1,200,000
Cr Revenue form long-term contracts $2,000,000
Explanation:
Preparation of the journal entry made in 2020 to record revenue.
Based on the information given What would be the journal entry made in 2020 to record revenue is
Dr Construction $800,000
Dr Cost of construction $1,200,000
Cr Revenue form long-term contracts $2,000,000
($800,000+$1,200,000)
(Being to record revenue)
MillerCoors Brewing Company is the world’s fifth largest brewer. In the United States, its tie to the magical appeal of the Rocky Mountains is one of its most powerful trademarks. Some of the items included in its recent annual consolidated statement of cash flows presented using the indirect method are listed here. Indicate whether each item is disclosed in the Operating Activities (O), Investing Activities (I), or Financing Activities (F) section of the statement or use (NA) if the item does not appear on the statement. (Note: This is the exact wording used on the actual statement.)
Answer:
1. Purchase of stock. FINANCING ACTIVITIES.
Financing activities relate to transactions that involve the capital of the company. They include long term debt and equity. In this case, the company is buying back its own shares so this falls under Financing activities as it has to do with the company's own capital.
2. Principal payment on long-term debt. FINANCING ACTIVITIES.
Principal repayment retires long term debt and as mentioned above, financing activities relate to activities that involve long term debt.
3. Proceeds from sale of properties. INVESTING ACTVITIES.
Properties are fixed assets and transactions involving these are considered investing activities so the proceeds from a sale of properties would rightfully be an investing activity.
4. Inventories (decrease). OPERATING ACTIVITIES.
Transactions that have to do with the day to day operations of the business fall under operating activities and this includes inventories decreasing.
5. Accounts payable (decrease). OPERATING ACTIVITIES.
Operations of the business includes accounts payables decreasing as well.
6. Depreciation and amortization. OPERATING ACTIVITIES.
Depreciation and amortization arise from using the fixed assets for day to day operations so this will fall under Operating activities.
The Smoot-Hawley Act, signed into law in 1930, increased U.S. tariffs to an unprecedented level of 53%, causing a sharp decline in U.S. exports. In 1934, however, changes in the U.S. trade policy enabled U.S. manufacturers to resume business with their foreign distributors. Which of the following is the most likely reason for the increase in U.S. exports after these changes?
A. The president received the authority to negotiate bilateral tariff-reduction agreements with foreign governments.
B. The scientific tariff was introduced, which allowed the president to increase tariff levels if foreign production costs were below those of the United States.
C. Congress was given the authority to approve bilateral trade agreements.
Answer:
A. The president received the authority to negotiate bilateral tariff-reduction agreements with foreign governments.
Explanation:
Since in the given situation it is mentioned that in the year 1934 the change in the trade policy enables the manufactured of U.S to restart their business with the foreign distributors so the reason that would increase the U.S exports would be that the president should received the authority in order to negotiate the agreement with the foreign government with respect to the decrease in the bilaterial tariff
Hence, the option A is corrrect
McGill and Smyth have capital balances on January 1 of $50,000 and $40,000 respectively . The partnership income sharing agreements provides for (1) annual salaries of $22,000 for Mcgill and $13,000 for Smyth (2) interest at 10% on beginning capital balances and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth .
(a) Prepare a schedule showing the distribution of net income assuming net income is
(1) $50,000 and
(2) $ 36,000
(b) Journalize the allocation of net income in each of the situation above .
Answer:
(a-1) Remaining income (loss) = $6,000
(a-2) Remaining income (loss) = –$8,000
(b) See (b-1) and (b-2) below for the journal entries.
Explanation:
(a-1) Prepare a schedule showing the distribution of net income assuming net income is $50,000.
Note: See part a-1 of the attached excel file for the schedule showing the distribution of net income.
In the attached excel file, the following is used:
Remaining income (loss) = Net income - Total annual salaries and interest on capital = $50,000 - $44,000 = $6,000
(a-2) Prepare a schedule showing the distribution of net income assuming net income is $36,000.
Note: See part a-2 of the attached excel file for the schedule showing the distribution of net income.
In the attached excel file, the following is used:
Remaining income (loss) = Net income - Total annual salaries and interest on capital = $36,000 - $44,000 = –$8,000
(b-1) Journalize the allocation of net income assuming net income is $50,000
The journal entries will look as follows:
Account Titles and Explanation Debit ($) Credit ($)
Income Summary 50,000
McGill Capital 30,600
Smyth Capital 19,400
(To record allocation of net income.)
(b-2) Journalize the allocation of net income assuming net income is $36,000
The journal entries will look as follows:
Account Titles and Explanation Debit ($) Credit ($)
Income Summary 36,000
McGill Capital 22,200
Smyth Capital 13,800
(To record allocation of net income.)
How do you construct a General Journal.
Jensen Automotive produces alternators for American-made cars. They generally use a static budget with the following costs based on 8,000 units per month: indirect materials, $22,000; indirect labor, $25,000; utilities, $12,000; supervision, $4,000; depreciation, $18,000. If Jensen wanted to create a flexible budget for 9,000 units, what value would they record for variable costs
Answer:
the value that should be recorded for variable cost is $66,375
Explanation:
The computation of the value that should be recorded for variable cost is shown below:
= Total variable cost ÷ budgeted units × flexible budget units
= ($22,000 + $25,000 + $12,000) ÷ 8,000 units × 9,000 units
= $59,000 ÷ 8,000 units × 9,000 units
= $66,375
hence, the value that should be recorded for variable cost is $66,375
The above formula is used
Tom Jordan is a manager for a McDonald's restaurant. Many of his key responsibilities include analyzing data and making key decisions for the success of his store. Tom's store has been experiencing decreased sales for breakfast services over the past 3 months. Tom is unsure why breakfast revenues are down while lunch and dinner revenues remain unchanged. Tom believes that he can drive revenue up by implementing a few different breakfast promotions such as free coffee or hash browns with the purchase of a meal. Tom performs an extensive analysis of how continuous changes in breakfast promotions could impact his daily revenue. What type of DSS analysis is Tom performing? optimization analysis sensitivity analysis transaction analysis goal-seeking analysis
Answer: sensitivity analysis
Explanation:
From the information given in the question, we can infer that the type of DSS analysis that Tom is performing is the sensitivity analysis.
Sensitivity analysis simply refers to the quantitative risk assessment that deajs with how the alteration of a particular variable will have an effect on the model's output.
Here, Tom believing that he can increase revenue up by implementing a few different breakfast promotions like the free coffee or hash browns shows that he's using sensitivity analysis.
Quantities on hand at the end of one month may not be sufficient to last until the next month's count. If the company has taken this into account in establishing reorder levels, then it is very possible that the company carrying too large an investment in inventory which can be costly.
a. True
b. False
Answer:
True
Explanation:
The correct option is - True
Reason -
When the company is considering the quantities in stock available at the end of the month in duly setting their reorder level that indicates it creates buffer stock in company's account and not following just-in-time model, whereby the quantity being ordered when there is demand for the same.
Hereby the investment cost occurred while maintaining the inventory will be higher as comparison to just-in-time inventory model as the money is blocked in the inventory and it will be recovered only when the inventory being sold.
ALL the questions in this assignment will be assessed using a rubric with marks awarded for
displaying logic and coherence: sound knowledge of content, including at least three academie
articles - sourced from credible sources, application of theory, and adherence to SBS referencing
guidelines
Question 1 [30]
Write an essay to demonstrate your understanding of the economies of scale in a supply chain with
reference to cycle inventory by arguing whether a toothpaste manufacturer wanting to offer quantity
discounts to maximise its profit should offer lot-size-based or volume-based quantity discounts if it
wants to maximise total supply chain profits at the same time. Discuss the concepts of lot-size-based
and volume-based quantity discounts and summarise under what circumstances lot-size-based and
volume-based quantity discounts are applicable before you argue the case of the toothpaste
nanufacturer
uestion 2 [35]
Explanation:
Material prices, ordering costs, and keeping costs are the three major expense groups for the supermarket's inventory strategy. The money spent to Proctor and Gamble on the materials themselves is known as the material expense. Ordering prices, also known as procurement costs, are charged when a customer requests supplies from a retailer and are fixed so that they do not change depending on the scale of the order. Fixed examples include the following:
The costs include the time it takes to put the order, deal with the paperwork that comes with it, and the cost of shipping the order. The holding cost is the cost of keeping a single unit in inventory for a set amount of time, normally a year. This expense is subjective and covers the cost of capital as well as all of the costs of physically handling material, such as shrinkage, spoilage, or obsolescence, insurance, the cost of capital, the cost of storage space, and so on.
We have implicitly assumed that Ace Airline starts paying the salary of $15,000 per month only at the end of the two-month school. Such a practice drew significant complaints from the trainees. Ace decided to change its practice and pay the trainees during the training session as well. How would the new policy change Ace's class size
Answer:
Ace Airline class size will increase as more trainees would be willing to work with Ace Airlines.
Explanation:
Ace airlines is paying trainees $15,000 per month after they complete their training. There was a complain by trainees that they are not paid for the training and the training expense is born by the trainees themselves. Ace decides to pay the trainees for the training sessions as well and this will attract more trainees to work for Ace.
Expenses recognition Sun Microsystems uses the accrual basis of accounting and recognizes revenue at the Lime it sells goods or renders services. It applies U.S. GAAP and reports in U.S. dollars. Indicate the amount of expenses (if any) the firm recognizes during the months of June. July, and August in each of the following hypothetical transactions. The firm does the following:
a. Pays $180,000 on July 1 for one year’s rent on a warehouse beginning on that date.
b. Receives a utility bill on July 2 totaling $4,560 for services received during June. It pays the utility bill during July.
c. Purchases office supplies on account costing $12,600 during July. It pays $5,500 for these purchases during July and the remainder during August. Office supplies on hand on July 1 cost $2,400, on July 31 cost $9,200, and On August 31 cost $2,900.
d. Pays $7,200 on July 15 for property taxes on office facilities for the current calendar year.
e. Pays $2,000 on July 15 as a deposit on a custom-made delivery van that the manufacturer will deliver on September 30.
f. Pays $4,500 on July 25 as an advance on the August salary of an employee.
g. Pays $6,600 on July 25 for advertisements that appeared in computer journals during June.
Answer:
Sun Microsystems
Amount of Expenses to recognize during the months of June, July, and August in each of the following transactions:
a. Rent Expense = $30,000
b. Utility Expense = $4,650
c. Supplies Expense = $9,700
d. Property Taxes = $1,800
e. No expense is recognized.
f. Salary Expense = $4,500
g. Advertising Expense = $6,600
Explanation:
Data and Calculations:
a. Rent Expense = $180,000/12 * 2 = $30,000 Rent Prepaid $150,000
b. Utility Expense $4,560
c. Supplies Expense $9,700 ($12,600 - $2,900)
d. Property Taxes = $7,200 *3/12 = $1,800
e. No expense is recognized for the advance payment for delivery van.
f. Salary Expense $4,500
g. Advertising Expense $6,600
How can camera footage help?
Answer:
camera footage are there not to invade a person's privacy but to protect the public by deterring criminal activity and by providing material evidence when a crime has been caught on film.
Explanation:
JOURNALIZING SALES TRANSACTIONS. Enter the following transactions in a sales journal. Use a 6% sales tax rate.
May 1 Sold merchandise on account to J. Adams, $2,000, plus sales tax. Sale No. 488.
4 Sold merchandise on account to B. Clark, $1,800, plus sales tax. Sale No. 489.
8 Sold merchandise on account to A. Duck, $1,500, plus sales tax. Sale No. 490.
11 Sold merchandise on account to E. Hill, $1,950, plus sales tax. Sale No. 491.
Answer:
May 1
Dr Accounts Receivable- J. Adams2120
Cr Sales $2,000
Sales Tax Payable 120
May 4
Dr Accounts Receivable- B. Clark 1908
Cr Sales 1800
Cr Sales Tax Payable 108
May 8
Dr Accounts Receivable- A. Duck 1590
Cr Sales 1500
Cr Sales Tax Payable 90
May 11
Dr Accounts Receivable- E. Hill 2067
Cr Sales 1950
Cr Sales Tax Payable 117
Explanation:
Preparation of sales journal entries
May 1
Dr Accounts Receivable- J. Adams2120
(2,000+120)
Cr Sales $2,000 Sales Tax Payable 120
($2,000*6%)
May 4
Dr Accounts Receivable- B. Clark 1908
(1800+108)
Cr Sales 1800
Cr Sales Tax Payable 108
(1800*6%)
May 8
Dr Accounts Receivable- A. Duck 1590
(1500+90)
Cr Sales 1500
Cr Sales Tax Payable 90
(1500*6%)
May 11
Dr Accounts Receivable- E. Hill 2067
(1950+117)
Cr Sales 1950
Cr Sales Tax Payable 117
(1950*6%)
Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The predetermined overhead rate was: Multiple Choice 5.0%. 12.0%. 20.0%. 500.0%. 16.7%
Answer:
Estimated manufacturing overhead rate= 20%
Explanation:
To calculate the predetermined overhead rate, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
6,000= Estimated manufacturing overhead rate*30,000
Estimated manufacturing overhead rate= 6,000 /30,000
Estimated manufacturing overhead rate= $0.2 per direct labor dollar
As a percentage= (0.2/1)*100= 20%
Mervon Company has two operating departments: Mixing and Bottling. Mixing has 330 employees and Bottling has 220 employees. Indirect factory costs include administrative costs of $192,000. Administrative costs are allocated to operating departments based on the number of workers. Determine the administrative costs allocated to each operating department.
Answer:
Mixing= $115,199.7
Bottling= $76,799.8
Explanation:
First, we need to calculate the allocation rate for Administrative costs:
Allocation rate= total estimated costs for the period/ total amount of allocation base
Allocation rate= 192,000 / (330 + 220)
Allocation rate= $349.09 per employee
Now, we can allocate costs:
Mixing= 330*349.09= $115,199.7
Bottling= 220*349.09= $76,799.8
What do we call the value of the next best alternative given up when a choice is made?
A opportunity cost
B sunk cost
C needs
D scarcity
Answer:
A) Opportunity Cost
Explanation:
Livingston Fabrication has created the following aggregate plan for the next five months: August September October November December Forecasted Demand (units of finished goods): 1,500,000 1,500,000 2,000,000 3,000,000 500,000 Production Plan: 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Assume that Livingston will have nothing in inventory at the end of July. Livingston employs 1,000 production assembly workers and it takes one production assembly worker 5 minutes to assemble one unit of finished good. (The unit is complete at that point.) Each production assembly worker can provide 150 hours of assembly time a month without requiring overtime pay. What will be ending inventory for the month of September?
Answer:
Livingston Fabrication
The ending inventory for the month of September is:
= 600,000 units.
Explanation:
a) Data and Calculations:
August September October November December
Forecasted Demand (units of
finished goods): 1,500,000 1,500,000 2,000,000 3,000,000 500,000
Production Plan: 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000
Production capacity = 150 * 60 * 1,000 = 9,000,000 minutes
Minutes required by each assembly worker to assemble 1 unit = 5
Units that can be produced based on capacity = 1,800,000 units (9,000,000/5)
Schedule of Production, Sales, and Ending Inventory:
August September October November December
Beginning inventory 0 300,000 600,000 400,000 (600,000)
Units produced 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000
Demand 1,500,000 1,500,000 2,000,000 3,000,000 500,000
Ending inventory 300,000 600,000 400,000 (600,000) 700,000
A firm has the following production relationship between labor and output, for a fixed capital stock.
Libor
0
1
Output
0
5
2
3
4
5
19
23
26
According to the above table saatis the average product of labor when three laborers are employed?
03
Answer:
12 i think but what are the answer choices.
Explanation:
Tyrell Company issued callable bonds with a par value of $18,000. The call option requires Tyrell to pay a call premium of $500 plus par (or a total of $18,500) to bondholders to retire the bonds. On July 1, Tyrell exercises the call option. The call option is exercised after the semiannual interest is paid the day before on June 30. Record the entry to retire the bonds under each separate situation.
1. The bonds have a carrying value of $15,000.
2. The bonds have a carrying value of $19,000.
Answer and Explanation:
The journal entries are shown below:
1. Bonds Payable $18,000
Loss on redemption $3,500
To Discount on Bonds Payable ($18,000 - $15,000) $3,000
To Cash ($18,000 + $500) $18,500
(Being retiring of the bond is recorded)
2. Bonds Payable $18,000
Premium on Bonds Payable ($19,000 - $18,000) $1,000
To Gain on redemption of bonds $500
To Cash ($18,000 + $500) $18,500
(Being retiring of the bond is recorded)
These two journal entries should be recorded
Assets Liabilities and Equity Current assets: Current liabilities: Cash $ 60 Accounts payable $ 240 Accounts receivable (net) 170 Other current liabilities 80 Notes receivable 50 Total current liabilities 320 Inventory 200 Long-term liabilities 110 Prepaid expenses 25 Total liabilities 430 Total current assets 505 Shareholders' equity: Equipment (net) 255 Common stock 150 Retained earnings 180 Total shareholders' equity 330 Total assets $ 760 Total liabilities and equity $ 760 The current ratio is (Round your answer to 2 decimal places.):
Answer:
the current ratio is 1.58 times
Explanation:
The computation of the current ratio is shown below:
As we know that
Current ratio = Current assets ÷ current liabilities
= $505 ÷ $320
= 1.58 times
By dividing the current assets from the current liabilities we can get the current ratio
hence, the current ratio is 1.58 times
It is used for analyzing the liquidating position of the company
Corinne is offered a job with a salary of $70,000, which she turns down to start her own business. She uses $20,000 of her own savings to help start the business, savings that had been providing her a return of $1,000 per year. Over her first year in business, Corinne collects total revenue of $180,000 and must cover explicit costs of $105,000. During her first year in business, Corinne's accounting profit is _____, and her economic profit is _____.
Answer:
Accounting profit $75,000
Economic profit $4,000
Explanation:
Calculation to determine the ACCOUNTING PROFIT
Using this formula
Accounting profit=Total revenue - Isxplicit costs
Let plug in the formula
Accounting profit=$180,000- $105,000
Accounting profit=$75,000
Calculation to determine the ECONOMIC PROFIT using this formula
Economic profit=Total revenue-Explicit costs of -Salary-Return per year
Let plug in the formula
Economic profit=$180,000-$105,00-$70,000-$1,000
Economic profit=$4,000
Therefore During her first year in business, Corinne's accounting profit is $75,000 and her economic profit is $4,000
Bull'sEye sells gift cards redeemable for Bull'sEye products either in-store or online. During 2018, Bull'sEye sold $2,000,000 of gift cards, and $1,800,000 of the gift cards were redeemed for products. As of December 31, 2018, $150,000 of the remaining gift cards had passed the date at which Bull'sEye concludes that the cards will never be redeemed. How much gift card revenue should Bull'sEye recognize in 2018
Answer:
$1,950,000
Explanation:
Calculation to determine How much gift card revenue should Bull'sEye recognize in 2018
Gift cards redeemed $1,800,000
Add December 31, 2018 Remaining gift $150,000
Revenue Recognized $1,950,000
($1,800,000+$150,000)
Therefore How much gift card revenue should Bull'sEye recognize in 2018 is $1,950,000
You run a construction firm. You have just won a contract to build a government office building Building it will require an investment of $10 million today and $5 million in one year. The government will pay you $20 million in one year upon the building's completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is 10%. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today?
Answer:
$3.64 million
The Npv can be turned into cash by borrowing $18.18 million today and paying back in one year time with the $20 million that would be paid
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-10 million
Cash flow in year 1 = $20 million - $5 million = 15 million
I = 10%
NPV = 3.63 million
The Npv can be turned into cash by borrowing $18.18 million today as the present value of 20 million is 18.18 million
20 million / 1.10 = 18.18 million
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Current Attempt in Progress
Cullumber Company entered into these transactions during May 2022, its first month of operations.
1. Stockholders invested $42,500 in the business in exchange for common stock of the company.
2. Purchased computers for office use for $31,900 from Ladd on account.
3. Paid $2,900 cash for May rent on storage space.
4. Performed computer services worth $17,900 on account.
5. Performed computer services for Wharton Construction Company for $5,400 cash.
6. Paid Western States Power Co. $8,300 cash for energy usage in May.
7. Paid Ladd for the computers purchased in (2).
8. Incurred advertising expense for May of $1,600 on account.
9. Received $14,000 cash from customers for contracts billed in (4).
Create a tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders' Equity in the far right column. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
Answer:
Assets = Liabilities + Stockholders' Equity = $68,600
Explanation:
Note: See the attached excel file for the tabular analysis of the effect of each transaction on the accounting equation.
From the attached excel file, we have:
Assetes = Total assets balance = = $18,800 + $17,900 + 31,900 = $68,600
Liabilities = Total liabilities balance = $1,600
Stockholders' Equity = Total Common Stock balance + Total Net Income balance = $42,500 + $25,500 = $67,000
Liabilities + Stockholders' Equity = $1,600 + $67,000 = $68,600
Therefore, we have:
Assets = Liabilities + Stockholders' Equity = $68,600
At December 31 of the current year, Sunland Corporation had a number of items that were not reflected in its accounting records. Maintenance and repair costs of $900 were incurred but not paid. Utilities costing $370 were used but not paid, and use of a warehouse space worth $2,070 was provided to a tenant who had not been billed as of the end of the month. Record the required adjusting entries related to these events.
Answer:
Dr Maintenance and repair expense $900
Cr Accrued expense $900
Being entries to record maintenance and repair costs incurred
Utilities costing $370 were used but not paid
Dr Utilities expense $900
Cr Accrued expense $900
Being entries to record utilities used but unpaid for
use of a warehouse space worth $2,070 was provided to a tenant who had not been billed as of the end of the month
Dr Unbilled receivables $2,070
Cr Rental Income $2,070
Being entries to recognize income from warehouse space unbilled
Explanation:
When an expense is incurred but unpaid for, an accrual is recognized to capture the cost. For income earned but unbilled, unbilled receivable is recognized. This is based on the accrual concept.
Considering the transactions given
Maintenance and repair costs of $900 were incurred but not paid
Dr Maintenance and repair expense $900
Cr Accrued expense $900
Being entries to record maintenance and repair costs incurred
Utilities costing $370 were used but not paid
Dr Utilities expense $900
Cr Accrued expense $900
Being entries to record utilities used but unpaid for
use of a warehouse space worth $2,070 was provided to a tenant who had not been billed as of the end of the month
Dr Unbilled receivables $2,070
Cr Rental Income $2,070
Being entries to recognize income from warehouse space unbilled