If your apartment catches on fire and you have renters insurance, the insurance company will likely pay all of these EXCEPT...
A) The cost of replacing damaged sections of the roof and any broken windows
B) The cost of replacing any items inside the apartment that completely burned in the fire
C) The cost of replacing items ruined by water as firefighters put out the fire
D) The cost of your hotel room for a week while your apartment is cleaned up
Answer:
d
Explanation:
because its not really their job to find u a temporary place to live while they get ur apartment fixed
If your apartment catches on fire and you have renters insurance, the insurance company will likely pay all of these EXCEPT The cost of your hotel room for a week while your apartment is cleaned up. Thus the correct option is D.
What is Insurance?A contract in which an individual or organization pays a premium to an insurance firm in exchange for protection against future financial losses is termed Insurance.
A type of insurance named Renters insurance is designed to protect renters from economic harm that may occur as a result of either harm to their personal belongings or liability for harm or injury they have caused to others.
Renters' insurance is often less expensive than other types of insurance, and it is frequently required by renters as an integral part of renting a property. It can give tenants peace of mind as well as financial security.
Therefore, option D is appropriate.
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The current price of the Volkswagen ADR (VWAGY) is 35.50. You purchase 50 shares on margin. You finance half of the purchase yourself and borrow the other half from your broker at an annual interest rate of 6.0%. Assume that the ADR pays an annual dividend of 0.56 per share. If the price in one year is 42, what is the return on your investment (keep in mind that you need to pay interest on the loan)
Answer:
33.77%
Explanation:
In one year, you are going to receive ($42 x 100) + ($0.56 x 100) = $4,256
you must return ($35.50 x 50) = $1,775
plus interests = $1,775 x 6% = $106.50
total return = $4,256 - $1,775 - $106.50 = $2,374.50
you invested $1,775
return on your investment = ($2,374.50 / $1,775) - 1 = 33.77%
Residents of poor countries tend to have fewer automobiles per capita because Group of answer choices lower per capita real gross domestic product (GDP) growth rates allow for less spending on automobiles. residents of poor countries generally prefer to walk. tax rates are higher in poor countries, which leaves less money to spend on cars. residents of poor countries tend to live on farms, where cars are unnecessary. residents of wealthy countries have automobiles provided to them by the government.
Answer:
lower per capita real gross domestic product (GDP) growth rates allow for less spending on automobiles.
Explanation:
Gross Domestic Products (GDP) is a measure of the total market value of all finished goods and services made within a country during a specific period.
Simply stated, GDP is a measure of the total income of all individuals in an economy and the total expenses incurred on the economy's output of goods and services in a particular country.
Generally, the Gross Domestic Products (GDP) of a country's economy gives an insight to the social well-being of the country, such as;
Adjusting the Real gross domestic product (Real GDP) for price level changes by using a price index. This simply means, Real GDP is adjusted for inflation to measure the value of goods and services produced by a country in a specific period of time.
Mathematically, [tex]{Real GDP}=\frac{\text{Nominal GDP}}{\text{GDP deflator}}[/tex]
Hence, residents of poor countries tend to have fewer automobiles per capita because lower per capita real gross domestic product (GDP) growth rates allow for less spending on automobiles.
Karl Jahaz Corp., an automobile company, has many business units across the globe. Although the company has reached saturation in the domestic market, it continues to generate substantial revenue by selling its old-model, light commercial vehicles in a few countries. In this case, which of the following is achieved by the globalization of the company?
a. Extension of product's life cycle
b. Deduction of production costs
c. Higher profits by lowering prices
d. Greater economies of scale
Answer:
a. Extension of product's life cycle
Explanation:
Extension of the product life cycle means the strategies that are followed to increase the product life or its service prior go into the decline stage.
These strategies involved price change, place, promotion, adding new attributes to the existing product, etc
So according to the given situation, the option a is correct
In a competitive economy, firms pay a real wage (W/P) equal to the marginal product of labor (MPL) and a real rental rate (R/P) equal to the marginal product of capital (MPK). Note that the total income of labor is equal to the product of the real wage and the total quantity of labor employed. Likewise, the total income of capital is equal to the product of the real rental rate and the total quantity of capital employed. Use this information to answer the following questions.
a. The marginal product of labor (MPL) can be expressed as______ and _______the marginal product of capital (MPK) can be expressed as _______.
Answer:
hello your question has some missing information attached below is the missing information
answer :
MPL = ( 1 - ∝ ) Y/L
MPK = ( ∝ ) Y/K
Explanation:
Given that : y = AK^∝ L^1-∝
The marginal product of labor can be expresses as :
MPL = dy/dL = AK^∝ ( 1 - ∝ ) L^ 1-∝-1
= ( 1 - ∝ ) [ A K^∝ L^-∝ ]
hence MPL = ( 1 - ∝ ) Y/L
The marginal product of capital can be expressed as :
MPK = A ∝ K^∝-1 L^ 1-∝
= ∝/K [ A k^∝ L^1-∝
= ∝/K * Y ∴ MPK = ( ∝ ) Y/K
The production department in a process manufacturing system completed 80,000 units of product and transferred them to finished goods during a recent period. Of these units, 32,000 were in process at the beginning of the period. The other 48,000 units were started and completed during the period. At period-end, 17,500 units were in process.
Prepare the department’s equivalent units of production with respect to direct materials under each of the three separate assumptions using the FIFO method for process costing.
Identify the opportunity below that could enable an employee to commit fraud. Group of answer choices An employee's spouse loses her job. The company does not have a clear policies and procedures for the employee to follow. The employee is experiencing financial hardship. An employee is upset that he was passed over for a promotion.
Answer:
The employee is experiencing financial hardship.
Explanation:
Fraud is best understood by the Fraud Triangle: pressure, opportunity and tone. Therefore for fraud to occur there must be pressure felt by employee for lack of funds, where opportunity to commit fraud exists and when the company's tone provides the means to justify employee's fraudulent behaviour.
In the given question, where an employee's spouse loses her job there is neither any opportunity nor tone of the company to commit fraud.
For the issue where company does not have a clear policies and procedures for the employee to follow, there is tone of the company to commit fraud but there is no pressure nor any opportunity to commit fraud.
The employee is experiencing financial hardship, this is a possible opportunity to commit fraud. As there is pressure and opportunity for the employee to go through it.
In the final option, the fact of being upset does creates a reason for fraud but due to lack of any financial pressure the fraud would not occur.
Cool Compartments Inc. has offered to sell 20,000 ice-makers to Refrigerator Company for $28 per unit. If Refrigerator accepts Cool Compartments' offer, the facilities used to manufacture ice-makers could be used to produce water filtration units. Revenues from the sale of water filtration units are estimated at $80,000, with variable costs amounting to 60% of sales. In addition, $6 per unit of the fixed overhead associated with the manufacture of ice-makers could be eliminated.
For Refrigerator Company to determine the most appropriate action to take in this situation, the total relevant costs of make vs. buy, respectively, are:________
Answer:
$680,000 vs $440,000
Explanation:
Total Costs to Make :
Manufacturing Costs ($34 x 20,000) $680,000
Total $680,000
Total Cost to Buy :
Purchase Price ($28 x 20,000) $560,000
Less Savings :
Fixed overhead ($6 x 20,000) ($120,000)
Total Cost $440,000
Your boss has asked you to obtain marketing feedback on one of the products for your company produces. But people are less likely to respond honestly if they know it’s the company requesting the information. So your boss tells you to use a fake marketing research name. Would you follow your boss’s direction? Why or why not?
Answer:
no I won't follow my boss
because I don't use Fake information
Insurance sales, tax preparation, personal financial advising, and investment fund management are careers in which workers can be self-employed. Which careers have the highest and lowest self-employment rates?
Insurance sales has the highest rates, and tax preparation has the lowest rates.
Personal financial advising has the highest rates, and investment fund management has the lowest rates.
Investment fund management has the highest rates, and insurance sales has the lowest rates.
Tax preparation has the highest rates, and personal financial advising has the lowest rates.
Answer:
A.Insurance sales has the highest rates, and tax preparation has the lowest rates.
Explanation:
its most likely A. Insurance sales has the highest rates, and tax preparation has the lowest rates.
Answer: A insurance sales has the highest rates, and tax preparation has the lowest rates.
Explanation:
Condensed financial data are presented below for the Phoenix Corporation: 20X2 20X1 Accounts receivable $ 267,500 $ 230,000 Inventory 312,500 257,500 Total current assets 670,000 565,000 Intangible assets 50,000 60,000 Total assets 825,000 695,000 Current liabilities 252,500 200,000 Long-term liabilities 77,500 75,000 Sales 1,640,000 Cost of goods sold 982,500 Interest expense 10,000 Income tax expense 77,500 Net income 127,500 Cash flow from operations 71,000 Cash flow from investing activities (6,000 ) Cash flow from financing activities (62,500 ) Tax rate 30 % If the intangible assets in 20X2 are $50,000, then the long-term debt to tangible assets for 20X2 is:
Answer:
Phoenix Corporation
The long-term debt to tangible assets for 20X2 is:
= 0.74.
Explanation:
a) Data and Calculations:
20X2 20X1
Accounts receivable $ 267,500 $ 230,000
Inventory 312,500 257,500
Cash 90,000 77,500
Total current assets 670,000 565,000
Intangible assets 50,000 60,000
Tangible assets 105,000 70,000
Total assets 825,000 695,000
Current liabilities 252,500 200,000
Long-term liabilities 77,500 75,000
Equity 495,000 420,000
Total liabilities/Equity 825,000 695,000
Income Statement for year 20X2
Sales 1,640,000
Cost of goods sold 982,500
Gross profit 657,500
Operating expenses 442,500
EBIT 215,000
Interest expense 10,000
Pretax income 205,000
Income tax expense 77,500
Net income 127,500
Statement of Cash Flows:
Cash flow from operations 71,000
Cash flow from investing activities (6,000 )
Cash flow from financing activities (62,500 )
Net cash flows = 2,500
Tax rate 30 %
Long-term debt to Tangible assets = 77,500/105,000 = 0.74
b) This ratio describes the percentage of the tangible assets financed by long-term debts. It is a financial leverage ratio. The computation compares the long-term debts to the tangible assets.
Alamo Power historically allocates IDC for its safety program to generation facilities in Cities A and B based on the number of employees. Last year, $300,000 was distributed and the employee count was 840 in city A and 450 in city B. Implementation of the ABC method took place this year to allocate IDC on the basis of number of accidents. City A reported 345 events and city B had 142 accidents reported.
Determine the allocation based on the number of employees. The allocation based on the number of employees is as follows:
City A:________
City B: _______
Answer:
Alamo Power
Allocation of IDC cost based on the number of employees:
City A = $195,349
City B = $104,651
Explanation:
a) Data and Calculations:
IDC cost = $300,000
City A City B Total
Employee count 840 450 1,290
Number of accidents 345 142 487
Allocation of IDC cost based on the number of employees:
City A = 840/1,290 * $300,000 = $195,349
City B = 450/1,290 * $300,000 = $104,651
Total cost allocated = $300,000
Allocation of IDC cost based on the number of accidents:
City A = 345/487 * $300,000 = $212,526
City B = 142/487 * $300,000 = $87,474
Determine which one of these three portfolios dominates another. Name the dominated portfolio and the portfolio that dominates it. Portfolio Blue has an expected return of 13 percent and risk of 17 percent. The expected return and risk of portfolio Yellow are 19 percent and 15 percent, and for the Purple portfolio are 18 percent and 22 percent. multiple choicePortfolio Purple dominates portfolios Blue and Yellow.Portfolio Blue dominates portfolios Yellow and Purple.Portfolio Yellow dominates portfolios Blue and Purple.
Answer: Yellow dominates portfolios Blue and Purple.
Explanation:
Portfolio Yellow has a higher expected return than either portfolio Blue or Portfolio Purple which means that if we were evaluating the portfolios on return alone, Portfolio Yellow would dominate the other two.
However, we need to adjust for risk. The portfolio with the lowest standard deviation is the less riskier one of the three. That portfolio is Yellow which means that Yellow has both a higher expected return and a lower risk. It would therefore dominate the rest.
Sweet Tooth Candy Company budgeted the following costs for anticipated production for August:
Advertising expenses $247,480 Manufacturing supplies 13,560
Power and light 40,450 Sales commissions 273,520
Factory insurance 23,560 Production supervisor wages 118,980
Production control wages 30,930 Executive officer salaries 252,240
Materials management wages 34,040 Factory depreciation 19,270
Required:
Prepare a factory overhead cost budget, separating variable and fixed costs.
Answer:
Fixed costs= $73,760
Variable cost= $159,430
Explanation:
First, let's separate the factory overhead costs:
Power and light 40,450
Factory insurance 23,560
Production supervisor wages 118,980
Production control wages 30,930
Factory depreciation 19,270
Now, the fixed and variable costs:
Fixed costs= Factory insurance 23,560 + Production control wages 30,930 + Factory depreciation 19,270
Fixed costs= $73,760
Variable cost= Power and light 40,450 + Production supervisor wages 118,980
Variable cost= $159,430
Classical economists support which amount of
government intervention into the economy?
A. limited
B. negligent
C. large
Carla McFarland was an associate professor of English literature at Highland College. She was the only single person in her department. Consequently, she was frequently assigned classes late in the evening, on weekends, and during the summer semester. She was also called upon to pick up visiting professors and serve as their escort and guide during their stays at the college. She received extra duty as adviser to the The Highland Review, the college’s literary magazine. When McFarland complained about the unequal treatment, she was told that the married professors had family responsibilities that she did not have, which took up much of their time and prevented them from having the flexibility that she had. Thus, she would continue to carry the extra load. McFarland filed a complaint with the EEOC.
Required:
Can discrimination based on an employee’s status as a single person be considered unlawful under the Civil Rights Act? Explain. Is this a case of disparate impact or disparate treatment? Explain.
Answer and Explanation:
The case shown above is an example of discrimination by civil status, however it is not an example of violation of the civil rights law, as it is not prohibited by the Civil Rights Act of 1964. However, some states have their own legislation that prevents this type of discrimination, which makes it a violation of state laws, which can lead the offender to be severely punished.
This is an example of case of disparate treatment, as we can see that there is discriminatory treatment with an employee, where she is treated differently compared to other employees because of a characteristic of her personal life.
This would be a case of disparate impact if there were a group of protected and privileged employees at the expense of the exploitation of other employees.
General Motors Corporation reported the following information in its 10-K report:
Inventories at December 31 ($ millions) 2008 2007
Productive material, work in process, and supplies $4,849 $6,267
Finished product, service parts, etc. 9,426 10,095
Total inventories at FIFO 14,275 16,362
Less LIFO allowance (1,233) (1,423)
Total automotive and other inventories, less allowances $13,042 $14,939
The company reports its inventory using the LIFO costing method during 2007 and 2008.
Required:
a. At what dollar amount are inventories reported on its 2008 balance sheet?
b. At what dollar amount would inventories have been reported in 2008 if FIFO inventory costing had been used?
Answer:
General Motors Corporation
a) Inventories are reported on its 2008 balance sheet at $13,042.
b) Inventories would have been reported on its 2008 balance sheet at $14,275 if FIFO inventory costing had been used.
Explanation:
a) Data and Analysis:
Inventories at December 31 ($ millions) 2008 2007
Productive material, work in process, and supplies $4,849 $6,267
Finished product, service parts, etc. 9,426 10,095
Total inventories at FIFO 14,275 16,362
Less LIFO allowance (1,233) (1,423)
Total automotive and other inventories, less allowances $13,042 $14,939
b) LIFO = Last-in, First-out. This inventory method assumes that items that were brought into the store last were the first to be sold. This presupposes that the cost of goods sold will be determined by the most recent items, while the ending inventory will be determined by the latter items.
c) FIFO = First-in, First-out: This is the opposite of LIFO. The inventory method assumes that items that were bought first would be the first to be sold. This method presupposes that the cost of goods sold will be determined by the first items in store, while the ending inventory will be determined by the cost of the most items.
The Filling Department received 52,900 ounces from the Blending Department. During the period, the Filling Department completed 67,000 ounces, including 16,700 ounces of work in process at the beginning of the period. The ending work in process inventory was 2,600 ounces.
Required:
How many ounces were started and completed during the period?b
Answer: 50,300 ounces
Explanation:
Ounces started would exclude the beginning ounces while ounces completed would include the beginning ounces.
Ounces started and completed during the period are:
= Ounces completed - Beginning Work in process ounces
= 67,000 - 16,700
= 50,300 ounces
What is the relationship between property and financial claims
Johnson Company had the following account balances at the end of the most recent fiscal year: Cash: $4,300, Accounts Receivable: $1,200, Supplies: $200, Accounts Payable: $700, S. Johnson, Capital: $2,900, S. Johnson, Drawing: $300, Fees Income: $4,900, Rent Expense: $1,300, Advertising Expense: $1,000, Supplies Expense: $200. Assuming that these were the only accounts used by Johnson Company during the year, for which of the following steps in the closing process would a compound entry be necessary?
Step 1: Transfer Revenue Account Balances
Step 2: Transfer Expense Account Balances
Step 3: Transfer Net Income or Net Loss to Owner’s Equity
Step 4: Transfer the Drawing Account Balance to Capital
Answer and Explanation:
The journal entries are shown below:
For step 1
Fees Income $ 4,900
To Income Summary $4,900
(Being revenue account is closed)
For step 2
Income Summary $2,500
To Rent Expense $1,300
To Advertising expense $1,000
To Supplies expense $200
(Being Expense account is closed )
For step 3
Income Summary ($4,900 - $2,500) $2,400
To Johnson`s Capital $2,400
(Being transfer net income to capital is recorded)
For Step 4
Johnson`s Capital $300
To Johnson`s Drawings $300
(Being closing of drawings to capital account is recorded)
Calculate the cash dividends required to be paid for each of the following preferred stock issues: Required: The semiannual dividend on 6% cumulative preferred, $62 par value, 8,200 shares authorized, issued, and outstanding. The annual dividend on $2.25 cumulative preferred, 130,000 shares authorized, 78,000 shares issued, 68,900 shares outstanding. Last year's dividend has not been paid. The quarterly dividend on 10.0% cumulative preferred, $90 stated value, $106 liquidating value, 78,000 shares authorized, 67,600 shares issued and outstanding. No dividends are in arrears.
Answer:
Preferred dividend calculation:
= Percentage return * Par Value * number of shares
a. The semiannual dividend on 6% cumulative preferred, $62 par value, 8,200 shares authorized, issued, and outstanding.
= 6% * 62 * 8,200 * 1/2 years
= $15,252
b. The annual dividend on $2.25 cumulative preferred, 130,000 shares authorized, 78,000 shares issued, 68,900 shares outstanding. Last year's dividend has not been paid.
In this case, last year's dividend was not paid and this is a cumulative preferred stock so the dividend will be accrued from last year and paid this year.
= Preferred dividend * 2 years
= (2.25 * 68,900 shares outstanding) * 2
= $310,050
c. The quarterly dividend on 10.0% cumulative preferred, $90 stated value, $106 liquidating value, 78,000 shares authorized, 67,600 shares issued and outstanding. No dividends are in arrears.
= 10% * 90 * 67,600 * 1/4 years
= $152,775
During the middle years of last decade, the exchange rate of the U.S. dollar has declined against the currencies of its major trading partners. You would expect this to result in a corresponding increase in U.S. dollar denominated import prices from those trading partners. U.S. dollar import prices, however, often rise less than the increase in the currency value of the exporter. Why
Answer:
Because there are other factors that influence the weakening or strengthening of the dollar, not just the dollar exchange rate in relation to the exchange rates of other countries' currencies.
Explanation:
Although the United States has registered increases in the trade deficit, that is, when the country imports more goods and services from abroad than it exports, there are other factors that determine whether the country's currency is valued or not. In the case of the dollar, its value has not decreased despite the fall in the exchange rate of the dollar in relation to the currencies of its main trading partners due to the fact that the dollar is the main reserve currency in the world, which means that the dollar is the fashion of commercial transaction in the world, therefore its value is not lost in relation to other currencies, since several important transactions in the world such as gold and oil commodities are traded in dollars.
There is also the fact that the US attracts a lot of international investment for US Treasury bills, which helps to strengthen the dollar.
Mrs. Eller's corporate employer has a cafeteria plan under which its employees can receive a $3,000 year-end Christmas bonus or enroll in a qualified medical reimbursement plan that pays up to $3,000 of annual medical bills. Mrs. Eller is in a 24 percent tax bracket, and her medical bills average $2,300 each year.
a. Should Mrs. Eller choose the cash bonus or the nontaxable fringe benefit? (Ignore any payroll tax implications.)
b. Does your answer change if Mrs. Eller is in the 12 percent tax bracket?
Answer and Explanation:
a. The computation is shown below;
Cash bonus after tax is ($3,000 × (1 - 0.24) $2,280
And, non taxable fringe benefit is $2,300
So here he should use the nontaxable fringe benefit
b. Yes answer would be changed
Cash bonus after tax is ($3,000 × (1 - 0.12) $2,640
And, non taxable fringe benefit is $2,300
hence, the same is to be considered
Present Value Index Montana Grill has computed the net present value for capital expenditures for the Billings and Great Falls locations using the net present value method. Relevant data related to the computation are as follows: Billings Great Falls Total present value of net cash flow $882,000 $1,050,000 Amount to be invested 900,000 750,000 a. Determine the present value index for each proposal. Round to two decimal places.
Answer:
Billings ⇒ 0.98Great Falls ⇒ 1.40Explanation:
Present value index (PVI)= Total present value of net cash flow / Amount to be Invested
Billings PVI
= 882,000 / 900,000
= 0.98
Great Falls PVI
= 1,050,000 / 750,000
= 1.40
Which of these career positions typically advise customers of the amount of money they need to support their families in case of death or to protect themselves in case of an emergency with their homes or cars?
bank teller
insurance agent
financial manager
mortgage broker
Answer:
C. financial manager
Explanation:
finacial manager usually give advises to customers on amount of money incase of a family passed way. This is why financial manager is the best option.
Answer:
B
Explanation:
Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 70,000 units of RX5 for $20.00 per unit. Required: 1. Determine the total incremental cost of making 70,000 units of RX5. 2. Determine the total incremental cost of buying 70,000 units of RX5. 3. Should the company make or buy RX5
Question Completion:
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 70,000 units of RX5 follows.
Direct materials $4.00
Direct labor 8.00
Overhead 9.00
Total costs per unit $21.00
Answer:
Haver Company1. The total incremental cost of making 70,000 units of RX5 is:
= $1,029,000.
2. The total incremental cost of buying 70,000 units of RX5 is:
= $1,400,000.
3. The company should make RX5. Buying 70,000 units of RX5 will cost the company $371,000.
Explanation:
a) Data and Calculations:
Variability of costs: 100%
Direct materials $4.00 100% = $4.00
Direct labor 8.00 100% = 8.00
Overhead 9.00 30% = 2.70
Total costs per unit $21.00 $14.70
Fixed cost:
Overhead = $6.30 ($9.00 * 70%)
Offer from an outside supplier to supply 70,000 units of RX5 at $20.00 per unit
Total incremental cost of making 70,000 units of RX5 = $1,029,000 (70,000 * $14.70)
The total incremental cost of buying 70,000 units of RX5 at $20,000 is:
= $1,400,000 (70,000 * $20.00)
Difference = $371,000 ($140,000 - $1,029,000)
Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business September, October, and November are $238,000, $302,000, and $407,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale.
The cash collections expected in September from accounts receivable are estimated to be:___________
a. $248,000
b. $138,880
c. $173,600
d. $297,600
Answer:
b. $138,880
Explanation:
Calculation to determine what The cash collections expected in September from accounts receivable are estimated to be:
First step is to calculate
(Cash) Sept sales=($248,000*30%)
(Cash) Sept sales=$74,400
Now let calculate September Expected Cash collections
(Credit) Sept sales=($248,000- $74,400)*80%
(Credit) Sept sales=$173,600*80%
(Credit) Sept sales=$138,880
Therefore The cash collections expected in September from accounts receivable are estimated to be:$138,880
Turnbull Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in capital by issuing $750,000 of debt at a before-tax cost of 11.1%, $78,000 of preferred stock at a cost of 12.2%, and $880,000 of equity at a cost of 14.7%. The firm faces a tax rate of 40%. What will be the WACC for this project
Answer:
11.06%
Explanation:
Calculation to determine What will be the WACC for this project
First step is to calculate the Weight of Debt
Weight of Debt = $750,000 / $1,708,000
Weight of Debt = 0.4391
Second step is to calculate the Weight of Preferred Stock
Weight of Preferred Stock = $78,000 / $1,708,000
Weight of Preferred Stock = 0.0457
Third step is to calculate the Weight of Equity
Weight of Equity = $880,000 / $1,708,000
Weight of Equity = 0.5152
Fourth step is to calculate After Tax Cost of Debt
After Tax Cost of Debt = 11.1% * (1 – 0.40)
After Tax Cost of Debt = 6.66%
Now let calculate WACC using this formula
WACC = (Weight of Debt * After Tax Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Equity * Cost of Equity)
Let plug in the formula
WACC = (0.4391 * 0.0666) + (0.0457 * 0.1220) + (0.5152 * 0.1470)
WACC = 0.02924406+0.0055754+0.0757344
WACC =0.1106*100
WACC =11.06%
Select the correct answer
When Ahmed's company files for bankruptcy, he requests the court to give him another chance to repay debt. He tells the court that he works
for a company from which he receives monthly salary. He thinks he can repay his debts with the salary he receives. Under what legal provision
can the government grant Ahmed the option of repaying his debt?
O A Chapter 15
OB. Chapter 10
OC Chapter 11
OD. Chapter 13
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On November 1, Year One, a company is paid $12,000 in advance to do a job for a customer. The job has ten separate steps. The first four steps were completed in Year One and the remaining six steps were completed in Year Two. The accountant mistakenly believed that this was just one big job and recorded it in that fashion. However, each of the ten steps was really an individual job and should have been accounted for in that way. Which of the following statements is true?
a. At the end of Year One, the company's liabilities are understated.
b. At the end of Year Two, the company's assets are overstated.
c. At the end of Year Two, the company's retained earnings are overstated.
d. At the end of Year One, the company's retained earnings are understated.
e. At the end of Year Two, the company's net income is understated.
Answer: a. At the end of Year One, the company's liabilities are understated.
Explanation:
Under the Accrual basis of Accounting, revenue should be recorded for only jobs that have been completed. In other words, only earned revenue should be recorded. Revenue that has not been earned but yet received, is to be termed Deferred revenue and should be treated as a current liability.
In this scenario, there are steps that have not been completed so some of the revenue received should be termed deferred revenue. These should therefore be in current liabilities and because they were not, the liabilities for the end of year 1 will be understated.