Answer:
A. $56,000
B. Jan 1, 2020 $70,000
Dec 31, 2020
$27,162 $5,600 -$21,562 $48,438
Dec 31, 2021
$27,162 $3,875 -$23,287 $25,150
Dec 31, 2022
$27,162 $2,012 -$25,150 $0
Total $81,486 $11,487, $70,000
B. Jan 1, 2020
Dr Cash $56,000
Dr Discount on Note Payable $14,000
Cr Note Payable $70,000
Dec 31, 2020
Dr Interest Expense $5,600
Dr Note Payable $21,562
Dr Cash $27,162
Dec 31, 2021
Dr Interest Expense Dr $3,875
Dr Note Payable Dr $23,287
Cr To Cash $27,162
Dec 31, 2022
Dr Interest Expense $2,012
Dr Note Payable $25,150
Cr To Cash $27,162
Explanation:
A. Computation for the cash received by the borrower
Cash received by the borrower=70000*8%/10%
Cash received by the borrower=$56,000
Therefore The Cash received by the borrower is $56,000
B.Preparation of a debt amortization schedule.
DEBT AMORTIZATION SCHEDULE
Date Cash Interest Expense Reduction in N.P Carrying Value
Jan 1, 2020 $70,000
Dec 31, 2020
$27,162 $5,600 -$21,562 $48,438
($70,000*8%=$5,600)
($27,162-$5,600=21,562)
($70,000-$21,562=$48,438)
Dec 31, 2021
$27,162 $3,875 -$23,287 $25,150
(8%*$48,438=$3,875)
($27,162-$3,875=$23,287)
($48,438-$23,287=$25,150)
Dec 31, 2022
$27,162 $2,012 -$25,150 $0
(8%*$25,151=$2,012)
($27,162-$2,012=$25,150)
($25,151-$25,150)
Total
Jan 1, 2020 $70,000
Dec 31, 2020
$27,162 $5,600 -$21,562 $48,438
Dec 31, 2021
$27,162 $3,875 -$23,287 $25,150
Dec 31, 2022
$27,162 $2,012 -$25,150 $0
Total $81,486 $11,487, $70,000
b. Preparation of the required entries for the borrower for the issuance of the note on January 1, 2020, and the interest payments in 2020, 2021, and 2022
Jan 1, 2020
Dr Cash $56,000
Dr Discount on Note Payable $14,000
($70,000-$56,000)
Cr Note Payable $70,000
Dec 31, 2020
Dr Interest Expense $5,600
Dr Note Payable $21,562
Dr Cash $27,162
($21,562+$5,600)
Dec 31, 2021
Dr Interest Expense Dr $3,875
Dr Note Payable Dr $23,287
Cr To Cash $27,162
($3,875+$23,287)
Dec 31, 2022
Dr Interest Expense $2,012
Dr Note Payable $25,150
Cr To Cash $27,162
($2,012+$25,150)
Oriole Company has issued three different bonds during 2022. Interest is payable annually on each of these bonds. 1. On January 1, 2022, 1,000, 8%, 5-year, $1,000 bonds dated January 1, 2022, were issued at face value. 2. On July 1, $854,000, 9%, 5-year bonds dated July 1, 2022, were issued at 101. 3. On September 1, $281,000, 7%, 5-year bonds dated September 1, 2022, were issued at 99. Prepare the journal entry to record each bond transaction at the date of issuance.
Answer:
Transaction 1
Debit : Cash ($1,000 x 1,000) $1,000,000
Credit : Bond Payable $1,000,000
Transaction 2
Debit : Cash ($854,000 x 101.30%) $865,102
Credit : Bond Payable $865,102
Transaction 3
Debit : Cash ($281,000 x 99%) $278,190
Credit : Bond Payable $278,190
Explanation:
On each issuance date recognize a cash inflow and a liability - Bond Payable to the extent of the amount paid on issue.
On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows:
Book Value FairValue
Current assets $ 6,000,000 $7,500,000
Property, plant, and equipment 11,000,000 14,000,000
Other assets 1,000,000 1,500,000
Current liabilities 4,000,000 4,000,000
Long-term liabilities 6,000,000 5,500,000
Required:
Calculate the amount paid for goodwill.
Answer:
the amount paid for goodwill is $3,500,000
Explanation:
The computation of the amount paid for goodwill is given below
But before that the net fair value of assets would be determined
Net fair value of assets purchased is
= ($7,500,000 + $14,000,000 + $1,500,000) - ($4,000,000 + $5,500,000)
= $13,500,000
Now Amount paid for goodwill is
= $17,000,000 - $13,500,000
= $3,500,000
Hence the amount paid for goodwill is $3,500,000
An investor deposits 50 in an investment account on January 1. The following summarizes the activity in the account during the year: DateValue Immediately Before DepositDeposit March 154020 June 18080 October 117575 On June 30, the value of the account is 157.50. On December 31, the value of the account is X. Using the time-weighted method, the equivalent annual effective yield during the first 6 months is equal to the (time-weighted) annual effective yield during the entire 1-year period. Calculate X.
Answer:
236.25
Explanation:
Calculation to determine X
First step is to calculate the 6 months Yield
6 month Yield=(40/40+20) (80/40+20) (157.60/80+80)+1)
6 month Yield=(40/60) (80/60) (157.60/160)-1
6 month Yield=5%
Second step is to calculate the Annual equivalent
Annual equivalent=(1.05)^2-1
Annual equivalent=10.25%
Third step is to calculate the 1 year yield
1 year yield=(40/50) (80/40+20) (175/80+80) (x/175+75)
1 year yield=(40/50) (80/60) (175/160) (x/250)-1
1 year yield=0.1025
Now Let calculate X
x(0.004667)=1+.1025
x(0.004667)=1.1025
x=1.1025/0.004667
x=236.25
Therefore X is 236.25
Bramble Corp. had 2500000 shares of common stock outstanding on January 1 and December 31, 2021. In connection with the acquisition of a subsidiary company in June 2020, Bramble is required to issue 96000 additional shares of its common stock on July 1, 2022, to the former owners of the subsidiary. Bramble paid $195000 in preferred stock dividends in 2021, and reported net income of $3470000 for the year. Bramble's diluted earnings per share for 2021 should be (rounded to the nearest penny)
Answer:
$1.47
Explanation:
Diluted earnings per share = Earnings before preferred stock dividends ÷ Weighted Average Number of Common Stock Outstanding
where,
Earnings before preferred stock dividends is calculated as :
Net Income $3,470,000
Add Preferred Stock Dividends $195,000
Earnings attributable to Common Stock holders $3,665,000
Weighted Average Number of Common Stock Outstanding is calculated as :
Outstanding end of the year 2,500,000 shares
therefore,
Diluted earnings per share = $3,665,000 / 2,500,000 shares = $1.47
You got asked to analyze a 5-year project for your firm. The project produces an annual revenue of $28,500, but requires an annual labor and materials cost of $5,000. To initiate the project your firm must invest $20,000. The salvage value of the project is $0 at the end of the 5-year useful life.
Required:
Use straight line depreciation and a 40% income tax rate to compute the:
a. after-tax cash flows
b. the IRR for the ATCF of this project.
Answer:
= 15700
73.5%
Explanation:
Cash flow = (revenue - cost - depreciation) (1 - tax rate) + depreciation = 15700
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
20,000 / 5 = 4,000
($28,500 - $5000 - $4000) x (1-0.4) + 4000 = $15700
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR can be calculated with a financial calculator
Cash flow in year 0 = -20,000
Cash flow each year from year 1 to 5 = 15,700
IRR = 73.5%
To find the IRR 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 IRR button and then press the compute button.
Write a short paragraph describing how segmentation could make your marketing efforts more effective. In your response to your manager, provide at least one specific example of how using segmentation could more effectively reach customers. In addition, describe at least two specific action steps you would suggest taking in order to effectively segment your customers.
Explanation:
Market segmentation consists of directing the business strategy to satisfy the desires and needs of a specific audience.
The use of segmentation can make marketing efforts more effective because the company finds out the profile of its customer, its needs, its income, its location, and in this way develops or improves its products and services in order to satisfy its customers. potential. An example of market segmentation is demographic segmentation that, through data, identifies consumer information such as age, income, gender to improve the product's strategy.
For demographic segmentation to be effective, it is necessary for companies to conduct market research in order to delimit their audience and then determine communication from the data and information found, in order to attract and retain consumers to increase their positioning and profitability. in the market.
A firm is a pure monopoly when: Group of answer choices there are only a few other very large firms selling similar products. it can sell all it can produce at any price it chooses. it is the only seller of a product that has very few close substitutes and entry into the market in the long run is unrestricted. it is the only seller of a unique product and barriers to entry prevent other sellers from entering the market in the long run.
Answer: it is the only seller of a unique product and barriers to entry prevent other sellers from entering the market in the long run.
Explanation:
A pure monopoly is referred to as a single supplier of a particular product in an industry. In such market, there no no substitute exists and such firms usually have a large market share.
They are price makers, profit maximizer, discriminate on prices and have a high barriers to entry. Due to their economies of scale, they prevent other sellers from entering the market in the long run.
The purpose of this assignment is to build an analysis model to explore what-if scenarios when buying a new car. We will consider two types of vehicles on the market: Gasoline powered vehicles that operate solely using gasoline. Fully electric vehicles that operate solely on battery-stored power and use no gasoline. The batteries are charged by plugging in to an external power source.
Answer:
The decision to choose specific type of vehicle will be based on the mileage, cost, environmental effects and driving experience.
Explanation:
There are two types of vehicles, one operate on gasoline and others operate on electricity. Both of the vehicles are used by the people but since gasoline vehicles are most commonly used people prefer buying this type of vehicle. Electric vehicles are also gaining significance in todays world as it saves natural resource like oil and the vehicle is energy efficient so gives better mileage.
Axelia Corporation has two divisions, Refining and Extraction. The company's primary product is Luboil Oil. Each division's costs are provided below: Extraction: Variable costs per barrel of oil $14 Fixed costs per barrel of oil $5 Refining: Variable costs per barrel of oil $27 Fixed costs per barrel of oil $31 The Refining Division has been operating at a capacity of 40,200 barrels a day and usually purchases 25,100 barrels of oil from the Extraction Division and 15,600 barrels from other suppliers at $58 per barrel. What is the transfer price per barrel from the Extraction Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 180% of variable costs
Answer: $25.20
Explanation:
The transfer price per barrel from the Extraction Division to the Refining Division, assuming the method used to place a value on each barrel of oil is 180% of variable costs will be calculated thus:
Variable cost of extraction division = $14
Transfer price will now be:
= 180% × $14
= 180/100 × $14
= 1.8 × $14
= $25.20
Four weeks after the year-end date, a major-customer of Prince Construction Co. declared bankruptcy. Because the customer had confirmed the balance due to Prince at the balance sheet date, management refuses to charge off the account or otherwise disclose the information. The receivable represents 10% of accounts receivable and 20% of net earnings before taxes. First, Identify which of the conditions requiring a modification of or a deviation from an unqualified standard report is applicable: [ Select ] Second, suppose this is
Answer:
Adverse or qualified report
Explanation:
The adverse or qualified report in audit is the statement which confirms that there is some material misstatement in the financial statements and it impacts company's financial position. This opinion of auditors proves that financial statements of the company are not reliable. In the given scenario Prince Construction is declared bankrupt and this is serious concern for any organization. The audit report for such a company will be adverse or qualified.
Julie Convenience Store sold merchandise for cash to a customer, and recorded a debit to Cash for $371, which included a 6% Sales tax. In the same transaction, they must also: A) credit Sales Revenue for 300 B) credit Sales Tax Payable for $22.26 C) credit Sales Tax Payable for $21 D) credit Sales Revenue for $371 E) credit Sales Revenue for $393.26
Answer:
C) credit Sales Tax Payable for $21
Explanation:
Based on the information given In the same transaction, they must also CREDIT SALES TAX PAYABLE FOR $21 Calculated as:
First step is to calculate the sales tax element
Sales tax element = $371*6/106
Sales tax element= $21
Now let calculate what the Price exclusive of sales tax would be
Price exclusive of sales tax=$371-$21
Price exclusive of sales tax= $350
The correct journal entry should be:
Dr Cash $371
Cr Sales revenue $350
($371-$21)
Cr Sales tax payable $21
Bryce Corporation has pretax accounting income of $100,000. Bryce has interest on municipal bonds of $7,000. Depreciation for tax purposes is $5,000 greater than depreciation for financial reporting purposes. Bad debt expense was $3,000, and bad debts for tax purposes was $1,000. Calculate taxable income. Multiple choice question. $87,000 $99,000 $101,000 $90,000
Answer:
$90,000
Explanation:
It is given that :
The pretax accounting income of Bryce Corporation 100,000
The interest on the municipal bonds - 7,000
The depreciation - 5,000
The difference in bad debt expense (3000-1000) +2,000
So the total income of Bryce Corporation $ 90,000
3.1 Define 'democracy'
Democracy is when the people of a country are ruled by majority of the people in that country. Democracy can be defined as government for the people, by the people and for the people.
What are the advantages of democracy?Citizens of a country are allowed to make decisions on matters that concern them. It enhances the accountability of the leaders to the people.To learn more about democracy, please check:
https://brainly.com/question/22468379
Manufacturers use several different production processes to create goods and services.
a. True
b. False
Answer:
A) true
Explanation:
Manufacturing involves converting raw materials into useful finished product. Manufacturers engage different production processes in creation of goods/ services, and the choice of process to use is dependent on the kind of products/ goods that were to be produced. In choosing process or production methods desires of the market as well as available resources and volumes need to be put into consideration. For instance, in steel manufacturing, the process is one that requires a continuous process, therefore, CONTINUOUS PROCESS is used. A production plant involving working together of both workers and robot works together in assembling if automobiles requires a "ASSEMBLY PROCESS"
In the B2B market, General Motors Company, Anheuser-Busch, and Kraft all purchase raw materials from their upstream suppliers, make and then sell their own finished products to consumers. In terms of business customers, these three companies are all examples of _____ in the B2B market.
Answer:
Producers.
Explanation:
B2B (business-to-business) is a marketing strategy that deals with meeting the needs of other businesses, by selling products or services to the organizations for resale to other consumers, used in production of goods or for the operation of an organisation.
In terms of business customers, these three companies are all examples of producers in the B2B market because they all purchase raw materials from their upstream suppliers, subsequently, they make and then sell their own finished products to the end users or consumers.
Olsen Outfitters Inc. believes that its optimal capital structure consists of 65% common equity and 35% debt, and its tax rate is 40%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $2 million of retained earnings with a cost of rs = 12%. New common stock in an amount up to $7 million would have a cost of re = 16%. Furthermore, Olsen can raise up to $2 million of debt at an interest rate of rd = 10%, and an additional $5 million of debt at rd = 12%. The CFO estimates that a proposed expansion would require an investment of $5.7 million.
Required:
What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.
Answer: 12.5%
Explanation:
Amount that will be raised with Equity = 65% * 5,700,000 = $3,705,000
This is more than the retained earnings so new equity will have to be issued at cost of 16%
Amount raised by debt = 35% * 5,700,000 = $1,995,000
Less than $2 million so cost of debt is 10%
WACC = cost of equity * weight of equity + weight of debt * cost of debt * ( 1 - tax rate)
= (16% * 65% ) + (35% * 10% * (1 - 40% tax))
= 12.5%
The stockholders’ equity section of Concord Corporation’s balance sheet at December 31 is presented here.
Concord Corporation Balance Sheet(partial)
Stockholders’ equity:
Paid-in capital
Preferred stock, cumulative, 8,000 shares authorized, 4,800 shares issued and outstanding $384,000
Common stock, no par, 870,000 shares authorized, 580,000 shares issued 2,900,000
Total paid-in capital 3,284,000
Retained earnings 1,858,000
Total paid-in capital and retained earnings 5,142,000
Less: Treasury stock (8,000 common shares) 52,800
Total stockholders’ equity $5,089,200
From a review of the stockholders’ equity section, answer the following questions.
a. How many shares of common stock are outstanding?
b. Assuming there is a stated value, what is the stated value of the common stock?
c. What is the par value of the preferred stock?
d. If the annual dividend on preferred stock is $36,000, what is the dividend rate on preferred stock?
e. If dividends of $72,000 were in arrears on preferred stock, what would be the balance reported for retained earnings?
Answer and Explanation:
The computation is shown below;
a.
No of Common Stock Outstanding = No. of stocks issued - Treasury stock
= 580,000 shares - 8,000 shares
= 572,000 shares
b. Stated Value of Common Stock = $2,900,000 ÷ 580,000 shares
= $5 per share
c. Par Value of the Preferred Stock = $384,000 ÷ 4,800 shares
= $80 per share
d. Dividend Rate = $36,000 ÷ $384,000
= 9.375%
e. The retained earning after arrears on preferred stock would remain the same i.e. $1,858,000 as they are declared
Michael McBride is an employee of Reach-it Pharmaceuticals. His company car is a 2019 Lexus GS 200t with a fair-market value of $50,000 and a lease value of $13,250, according to Publication 15-b. During the year, Michael drove 45,000 miles, of which 9,000 were for personal use. The car was available for use on 270 of the days during the year. All gasoline was provided by the employer and is charged back to Michael at $0.055 per mile. What is the amount of the company-car fringe benefit that will appear on Michael's W-2, using the lease-value rule
Answer:
Michael
The amount of the company-car fringe benefit that will appear on Michael's W-2, using the lease-value rule is:
= $1,960.27
Explanation:
a) Data and Calculations:
Fair market value of 2019 Lexus GS 200t = $50,000
Lease value of the company car = $13,250
Distance that Michael drove the car during the year = 45,000
Personal use of the car during the year = 9,000
Percentage of personal use = 9,000/45,000 * 100 = 20%
Availability of the car during the year = 270
Gasoline charged back to Michael by the employer = $0.055 * 45,000 * 20%
= $495
Company-car fringe benefit that will appear on Michael's W-2, using the lease-value rule is = $13,250 * 20% * 270/365 = $1,960.27
Primara Corporation has a standard cost system in which it applies overhead to products based on the standard direct labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
Total budgeted fixed overhead cost for the year $530,400
Actual fixed overhead cost for the year $521,000
Budgeted standard direct labor-hours (denominator level of activity) 68,000
Actual direct labor-hours 69,000
Standard direct labor-hours allowed for the actual output 66,000
Required:
1. Compute the fixed portion of the predetermined overhead rate for the year.
2. Compute the fixed overhead budget variance and volume variance.
Answer:
See below
Explanation:
1. Predetermined overhead rate
= Total fixed overhead cost for the year / Budgeted standard direct labor hour
Predetermined overhead rate = $530,400 / 68,000
Predetermined overhead rate
= $7.8 per direct labor hour
2. i. Fixed overhead budget variance
= Actual fixed overhead - Budgeted fixed overhead
= $521,000 - $530,400
= $9,400 favourable
ii Fixed overhead volume variance
= Budgeter fixed overhead - Fixed overhead applied to work in process
= $530,400 - (66,000 × $7.8)
= $530,000 - $514,800
= $15,200 unfavorable
How can World Literature help a businessman or a top executive in a multinational corporation? Will an interest in books be an advantage or a drawback for him/her?
Answer:
Explanation:
World literature has many pros for those interested in it. For a businessman in a multinational corporation, it allows them to understand and learn about diverse cultures, their beliefs, traits, habits, and the way they communicate. It also allows them to look beyond the horizon and think without bias. All of this combines and creates valuable information and ideas for the corporation to help it thrive in various locations. Just like this, having an interest in books will always be an advantage to anyone as they provide knowledge and knowledge will always bring with it power.
An institution is a significant practice, relationship, or organization in a society. Institutions shape the environment in which decisions are made, and they affect production and income in a nation. The most significant institutions are private property rights, political stability and the rule of law, open and competitive markets, efficient taxes, and stable money and stable prices.
Required:
The single greatest incentive for voluntary production is the existence of:______
Answer:
Private property rights
Explanation:
The Private property rights are the key that should be considered for the individuals and the country. Also it would given the feeling of pride and inclusion
Moreover, it would include all the cost and the benefits that could be involved in the decision making at the time when it would be decided which resource should be used
Hence, the above represent the answer
Which Finance jobs can someone pursue with only a high school diploma? Check all that apply.
Tax Preparer
Treasurer
Actuary
Teller
Loan Officer
Quantitative Analyst
Answer:
Actuary, Tax Preparer and Loan Officer
Answer:
A, C, and E
Explanation:
Actuary, Tax Preparer and Loan Officer
Cala Manufacturing purchases land for $357,000 as part of its plans to build a new plant. The company pays $44,900 to tear down an old building on the lot and $66,374 to fill and level the lot. It also pays construction costs $1,616,200 for the new building and $102,019 for lighting and paving a parking area. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.
Answer and Explanation:
The journal entry to record the given cost is shown below:
Land Dr ($357,000 + $44,900 + $66,374) $468,274
Building Dr $1,616,200
Land improvement Dr $102,019
To Cash $2,186,493
(being the cash paid is recorded)
Here land, building & land improvement is debited as it increased the assets and credited the cash as it decreased the assets
Elite Inc. is as a brand of luxury clothing and accessories, and it targets affluent working women. However, it alters its offerings to include a large proportion of standard clothes at cheaper prices when the country faces severe recessionary pressures. In this scenario, which of the following environments does Elite primarily respond to by changing its offerings?
a. legal
b. competitive
c. cooperative
d. economic
Benson Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Benson sells car stereos to Berna, as well as to other vehicle manufacturers and retail stores. The following information is available for Benson's standard unit: variable cost per unit $37, fixed cost per unit $23, and selling price to outside customer $86. Berna currently purchases a standard unit from an outside supplier for $80. Because of quality concerns and to ensure a reliable supply, the top management of Berna has ordered Benson to provide 200,000 units per year at a transfer price of $35 per unit. Benson is already operating at full capacity. Benson can avoid $3 per unit of variable selling costs by selling the unit internally.
1. What is the minimum transfer price that Benson should accept? ,
2. What is the potential loss to the corporation as a whole resulting from this forced transfer?
Answer:
Potential loss to the whole corporation = $(60,000)
Explanation:
The Benson Division is operating at full capacity, hence it has no excess capacity .
This implies that it can not produce enough to meet both demand of internal and external buyers.
Hence, Benson Division cannot accommodate the demands of the Berna Division at a price lower than the external price, because it will result to a loss in contribution.
To maximize and optimize the group's profit in this scenario, the minimum transfer should be:
Minimum transfer price = External selling price - savings in selling cost resulting from in internal transfer
= $86-3= 83
Minimum transfer price = $83.
Effect on Group's profit
Any unit transferred at a priced lower than $83 would result in a unit loss to the Benson Division equal to $83 minus the transfer price.
Any unit transferred to Berna at a price lower that its current purchase cost would save the division an amount equal to the current purchase cost minus the forced transfer price.
The potential loss to the organization as a whole would be computed as the net effect of the following:
Lost contribution by Benson : The difference between the Minimum transfer price and the transfer imposed by the group company multiplied by the quantity transferred.
Savings made by the Berna Division : The difference between the forced transfer price and current purchase of Berna.
We can summarize the effect of the forced transfer price on the whole corporation as follows:
Lost contribution per unit = 83 - 35= 48 .
Savings made per unit = 80 - 35 = 45
$
Total lost contribution by Benson
(48 × 200,000) (960,000)
Savings made by Berna as result of the transfer
(45 × 200,000) 900,000
Potential loss to the group (60,000)
Potential loss to the whole corporation = $(60,000)
On December 31, 2016, Beckford Company issues 150,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARs is estimated to be $4 per SAR on December 31, 2017; $1 on December 31, 2018; $10 on December 31, 2019; and $9 on December 31, 2020. The service period is 4 years, and the exercise period is 7 years.
Instructions:
(a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan.
(b) Prepare the entry at December 31, 2014, to record compensation expense, if any, in 2014.
(c) Prepare the entry on December 31, 2014, assuming that all 150,000 SARs are exercised.
Answer: See attachment and explanation
Explanation:
(a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan.
The above has been attached.
(b) Prepare the entry at December 31, 2014, to record compensation expense, if any, in 2014.
31/12/2014:
Debit Compensation expense = $225000
Credit Stock Appreciation Plan = $225000
(To record the compensation expense)
(c) Prepare the entry on December 31, 2014, assuming that all 150,000 SARs are exercised.
31/12/2014:
Debit: Stock Appreciation Plan = $1350000
Credit Cash = $1350000
(To record the realization of cash exercised)
Yuri owns just one ship, he calls it Previt. The ship is worth $25 million dollars. If the ship sinks, Yuri loses $25 million. The probability that it will sink is .02. Yuri's total wealth, including the value of the ship is $50 million. He is an expected utility maximizer with utility U(W) equal to W2. What is the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship
Answer:
$745,000
Explanation:
Calculation to determine the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship
First step is to calculate the Expected Utility (√W)
Expected Utility = (98% x √$25,000,000) + (2% x √$0)
Expected Utility = $4,900
Second step is to calculate the Fair premium of insurance policy using this formula
Fair premium of insurance policy = Probability of loss x Size of loss
Let plug in the formula
Fair premium of insurance policy = 2% x $25,000,000
Fair premium of insurance policy = $500,000
Third step is to calculate the Maximum premium using this formula
Maximum premium = Maximum utility - Expected Utility²
Let Plug in the formula
Maximum premium = $25,000,000 - $4,900²
Maximum premium = $25,000,000 - $24,010,000
Maximum premium= $990,000
Now let calculate the Maximum amount willing to pay using this formula
Maximum amount willing to pay = (Fair premium + Maximum premium) / 2
Let plug in the formula
Maximum amount willing to pay= ($ 500,000 + $990,000) / 2
Maximum amount willing to pay=$1,490,000/2
Maximum amount willing to pay= $745,000
Therefore the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship is $745,000
Andrea has prepared the following list of statements about corporations. Identify whether each statement is true or false. 1. A corporation is an entity separate and distinct from its owners. select an option 2. As a legal entity, a corporation has most of the rights and privileges of a person. select an option 3. Most of the largest U.S. corporations are privately held corporations. select an option 4. Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be sued. select an option 5. The net income of a corporation is not taxed as a separate entity. select an option 6. Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts. select an option 7. The transfer of stock from one owner to another requires the approval of either the corporation or other stockholders. select an option 8. The board of directors of a corporation legally owns the corporation. select an option 9. The chief accounting officer of a corporation is the controller. select an option 10. Corporations are subject to fewer state and federal regulations than partnerships or proprietorships.
Answer:
1. TRUE.
A corporation truly is separate from its owners.
2. TRUE.
As a result of this separation, it has most of the rights and privileges of a person.
3. FALSE.
Most of the largest American companies are public held corporations which is how they got the resources needed for expansion.
4. TRUE.
As corporations are separate entities, they can do all these things.
5. FALSE.
The net income of a corporation is taxed as separate from the income of the owners.
6. FALSE.
Creditors only have a legal claim to the assets of the corporation and not its owners because they are separate entities.
7. FALSE.
The transfer of stock requires the permission of the stockholder selling the stock and the party buying. This is a two party transaction that does not require company approval.
8. FALSE.
The shareholders own the corporation. The Board of Directors simply represent the shareholders.
9. TRUE.
The Chief Accounting Officer truly is the controller.
10 . FALSE.
Corporations are subject to more regulations than partnerships and proprietorships.
Marvin, the vice president of Lavender, Inc., exercises a stock option to purchase 100 shares of stock in March 2020. The stock options are incentive stock options (ISOs). Their exercise price is $20 and the fair market value on the date of exercise is $28. The options were granted in March 2016 and all restrictions on the free transferability had lapsed by the exercise date.
a. If Marvin sells the stock in December 2020 for $3,000, his AMT adjustment in 2020 is a positive adjustment of $800.
b. If Marvin sells the stock in December 2020 for $3,000, his AMT adjustment in 2020 is $0.
c. If Marvin sells the stock in December 2020 for $3,000, his AMT adjustment in 2020 is a negative adjustment of $800.
d. If Marvin sells the stock in December 2021 for $3,000, his AMT adjustment in 2021 is a negative adjustment of $1,000.
Answer:
None of the answer is correct.
Explanation:
When Marvin purchase stock in March 2020 at a price of $28. The exercise price for the stock is $20. When Marvin will sell the stock at the exercise price he will gain on the sale of the stock. AMT is the difference or spread between the stock exercise price and its underlying fair market value.
Stephanie Robbins is attempting to perform an inventory analysis on one of her most popular products. Annual demand for this product is 5,000 units; carrying cost is $50 per unit per year; order costs for her company typically run nearly $30 per order; and lead time averages 10 days. (Assume 250 working days per year.) a) The economic order quantity is b) The average inventory is c) The optimal number of orders per year is d) The optimal number of working days between orders is e) The total annual inventory cost (carrying costordering cost) is f) The reorder point is
Solution :
Given :
The annual demand, [tex]$D=5000$[/tex] units
Ordering cost, [tex]$S=\$30$[/tex]
Carrying cost, [tex]$H=\$50$[/tex]
Lead time, L = 10 days
Number of days per year = 250 days
So, average demand is d = [tex]$\frac{D}{250}$[/tex] days
= [tex]$\frac{5000}{250}$[/tex] = 20 units
a). The economic order quantity, Q = [tex]$\sqrt{\frac{2DS}{H}}$[/tex]
[tex]$=\sqrt{\frac{2\times 5000 \times 30}{50}}$[/tex]
= 77 units
b). Average inventory = [tex]$\frac{Q}{2}$[/tex]
[tex]$=\frac{77}{2}$[/tex]
≈ 39 units
c). Number of orders per year = [tex]$\frac{D}{Q}$[/tex]
[tex]$=\frac{5000}{77}$[/tex]
= 65 units
d). Time between orders = [tex]$\frac{Q}{D}$[/tex] x number of days per year
[tex]$=\frac{77}{5000} \times250$[/tex]
= 3.85
e). Annual ordering cost = [tex]$\frac{D}{Q} \times S$[/tex]
[tex]$=\frac{5000}{77} \times 30$[/tex]
= $ 1948.05
Annual carrying cost = [tex]$\frac{Q}{2} \times H$[/tex]
[tex]$=\frac{77}{2} \times 50$[/tex]
= $ 1925
Total annual cost of inventory = $ 1948.05 + $ 1925
= $ 3873.05
f). Reorder point = [tex]$d \times L$[/tex]
[tex]$=20 \times 10$[/tex]
[tex]$=200$[/tex] units