Answer:
The missing word is: Financial Risk
Explanation:
To begin with, the name of "Financial Risk" is used in the field of business and finances in order to explain that the companies, and also the government, have to find a way to determine how the firm will finance itself so that they could pay for all the assets they own. Moreover, this financial term implicates the loss of the money that can happen when the company needs to invest in assets and the operations may not go right. So that is why that it is a concept used to understand the danger that the organization has when it comes to acquire the assets and pay for them.
Which best describes the role that government and business play in investments?
O They both use taxes to support a country's growth.
They both invest money to earn a profit.
They both receive capital to use for growth.
They both act as angel investors for start-ups.
Answer:
They both receive capital to use for growth.
Explanation:
The government received the capital in the form of tax that being paid by the citizens. After collecting the tax income, the government allocated it to make a couple of investments such as building the country's infrastructure, providing aid for people to pursue education, and investing in scientific research/development.
Business on the other hand could receive their capital from either reallocating their profit or receiving capital injection from the investors. They use the capital for growth by reinvesting it to increase the scope of their business operation or putting it under investment accounts.
Statement that best describes the role that government and business play in investments is They both receive capital to use for growth
What is an investment?Investment can be regarded as the input that is been put into some business in order to generate revenue.
however, this also applies to the government because they use the public funds as investment for the betterment of the economy and the public.
Learn more about investments at;
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If a Treasury note has a bid price of $975, the quoted bid price in the Wall Street Journal would be
Answer:
the quoted bid price would be 97:16
Explanation:
the quoted ask price will be 97:50
The quoted bid price is the price at which buyers are willing to purchase a security, while the quoted ask is the price at which sellers are willing to sell their securities. There is always a difference between both of them, and it is called the spread.
Robert needs his daily fix of coffee in the mid-afternoon and visits different coffee shops that will give him as much utility as possible, given his $20/month food budget. On Monday, the Blue Coffee Shop was selling espresso shots for $3 each and Robert added 3 shots to his cappuccino. By Friday, the Purple Coffee Shop offered espresso shots for $2 each, while all other prices remained the same, so Robert was bold and added 4 espresso shots to his hot beverage.
Required:
Given this information, plot Robert's demand curve for espresso shots.
Answer:
I drew Robert's demand curve for espresso shots assuming that it was a linear curve since the information contained in the question is limited to that.
A demand curve generally is downward sloping, since an increase in price will usually result in a higher quantity demanded (at least for normal goods).
Balance Sheet Data Income Statement Data
Cash $600,000 Accounts payable $720,000 Sales $12,000,000
Accounts receivable 1,200,000 Accruals 240,000 Cost of goods sold 7,200,000
Inventory 1,800,000 Notes payable 960,000 Gross profit 4,800,000
Current assets 3,600,000 Current liabilities 1,920,000 Operating expenses 3,000,000
Long-term debt 2,400,000 EBIT 1,800,000
Total liabilities 4,320,000 Interest expense 403,200
Common stock 720,000 EBT 1,396,800
Net fixed assets 3,600,000 Retained earnings 2,160,000 Taxes 488,880
Total equity 2,880,000 Net income $907,920
Total assets $7,200,000 Total debt and equity $7,200,000
If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the turnover ratio, and the the total asset And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights into the company's effectiveness in using the company's assets, and Hydra Cosmetics Inc. DuPont Analysis Ratios Value Correct/Incorrect Value Correct/Incorrect Ratios Asset management ratio Total assets turnover 1.67 Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) 40.00 11.64 14.55 40.58 Financial ratios Equity multiplier 1.67 Do not round intermediate calculations and round your final answers up to two decimals. Hydra Cosmetics Inc. DuPont Analysis Calculation Value Numerator Denominator Ratios Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier Check all that apply. Reduce the company's operating expenses, its cost of goods sold, and/or the interest rate on its borrowed funds because this will increase the company's net profit margin. Increase the cost and amount of assets necessary to generate each dollar of sales because it will increase the company's total assets turnover. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the company's total assets turnover. Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the company's net profit margin.
Question attached
Answer and Explanation:
Find answer and explanation attached
A Corporation has two divisions: the South Division and the West Division. The corporation's net operating income is $26,900. The South Division's divisional segment margin is $42,800 and the West Division's divisional segment margin is $29,900. What is the amount of the common fixed expense not traceable to the individual divisions
Answer:
$45,800
Explanation:
Common fixed expense not traceable to the individual divisions = South division's divisional segment margin + west division's divisional segment - corporation's net operating income
Common fixed expense not traceable to the individual divisions = $42,800 + $29,900 - $26,900
Common fixed expense not traceable to the individual divisions = $45,800
Who was the first missionary to arrive in Africa?
Answer:
David Livingstone in 1840.
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A company has total equity of $2,160, net working capital of $240, long-term debt of $1,070, and current liabilities of $4,500. What is the company's net fixed assets?
Answer:
$2,990
Explanation:
A company's fixed asset consist of its plants and machineries, motor vehicles , buildings etc.
To get the company's net fixed asset, we would subtract the networking capital from total equity and add up long term debt.
Therefore,
Net fixed asset = $2,160 total equity - $240 working capital + $1,070 long term debt
= $2,990
Hence net fixed asset is $2,990
Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice). The couple received salary income of $100,000 and qualified business income of $10,000 from an investment in a partnership, and they sold their home this year. They initially purchased the home three years ago for $200,000 and they sold it for $250,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $16,500 of itemized deductions, and they had $3,550 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice is 18 years of age, the Jacksons may only claim the child tax credit for other qualifying dependents for Candice. (Use the tax rate schedules.)
Comprehensive Problem 4-55 Parts-c through f
a. What would their taxable income be if their itemized deductions totaled $28,000 instead of $16,500?
b. What would their taxable income be if they had $0 itemized deductions and $6,000 of for AGI deductions?
c. Assume the original facts but now suppose the Jacksons also incurred a loss of $5,000 on the sale of some of their investment assets. What effect does the $5,000 loss have on their taxable income?
Answer:
a. Taxable income = $80,000
b. Taxable income = $77,600
c. Taxable income = $80,600
Explanation:
Taxable income refers to the amount of income that is used to determine the amount of tax that will be paid to the government by an individual or firm in given year. The taxable income is arrived at after all the relevant addition and allowable deductions have been made.
The requirements are therefore answered as follows:
a. What would their taxable income be if their itemized deductions totaled $28,000 instead of $16,500?
Note: See part a of the attached excel file see the effect on taxable income.
The itemized deductions total of $28,000 instead of $16,500 makes the taxable income to be $80,000.
In the attached excel file, the following calculations is used:
Qualified business income deduction = Qualified business income * Parentage of deduction allowed = $10,000 * 20% = $2,000
b. What would their taxable income be if they had $0 itemized deductions and $6,000 of for AGI deductions?
Note: See part b of the attached excel file for the calculations of the taxable income.
This makes the taxable income to be equal to $77,600.
c. Assume the original facts but now suppose the Jacksons also incurred a loss of $5,000 on the sale of some of their investment assets. What effect does the $5,000 loss have on their taxable income?
Note: See part c of the attached excel file for the calculations of the taxable income.
The loss of loss of $5,000 on the sale of some of their investment assets incurred by the Jacksons is capital loss.
For tax purposes, capital loss of can be deducted as a loss on tax return by tax payers with a maximum of $3,000 to be deducted per year.
Therefore, the Jacksons will deduct $3,000 as a capital loss from their tax return, and the effect of this is to reduce the taxable income by $3,000.
This makes the taxable income to be equal to $80,600.
On September 1, 2019, Fast Track, Inc., was started with $25,000 invested by the owners as contributed capital. On September 30, 2019, the accounting records contained the following amounts:
Unearned revenue $ 500
Accounts payable 2,200
Prepaid expenses $ 1,000
Dividends declared 2,300
Accounts receivable 2,200
Office equipment 20,000
Accumulated depreciation 500
Office supplies 1,750
Cash 9,500
Office supplies expense 600
Consulting fees revenue 19,200
Rent expense 2,400
Contributed capital 25,000
Salary expense 6,900
Depreciation expense 500
Telephone expense 250
Required:
Prepare a classified income statement, a statement of retained earnings and a classified balance sheet for the first month of Fast Track’s operation.
Answer:
Fast Track, Inc.
Income Statement
For the year ended December 31, 2019
Revenues:
Consulting fees revenue $19,200
Expenses:
Office supplies expense $600 Rent expense $2,400 Salary expense $6,900 Depreciation expense $500 Telephone expense $250 ($10,650)Net income $8,550
Fast Track, Inc.
Statement of Retained Earnings
For the year ended December 31, 2019
Beginning balance September 1, 2019 $0
Net income $8,550
Subtotal $8,550
Dividends ($2,300)
Ending balance December 31, 2019 $6,250
Fast Track, Inc.
Balance Sheet
For the year ended December 31, 2019
ASSETSCurrent assets
Cash $9,500
Accounts receivable $2,200
Office supplies $1,750
Prepaid expenses $1,000
Total current assets $14,450
Property, plant and equipment
Office equipment $20,000
Accumulated depreciation ($500)
Total P, P & E $19,500
Total assets $33,950
LIABILITIES AND EQUITYCurrent liabilities
Unearned revenue $500
Accounts payable $2,200
Total liabilities $2,700
Equity
Common stock $25,000
Retained earnings $6,250
Total equity $31,250
Total liabilities + equity $33,950
Because there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator.
The GDP deflator for this year is calculated by dividing the____________________ using by_____________________________ the using___________ and multiplying by 100. However, the CPI reflects only the prices of all goods and services .
Indicate whether each scenario will affect the GDP deflator or the CPI for the United States.
a. A decrease in the price of a Chinese-made car that is popular among U.S. consumers.
b. An increase in the price of a Waterman Industries deep-water reel, which is a commercial fishing product used for deep-sea fishing, made in the U.S., but not bought by U.S. consumers.
Answer:
1. The GDP deflator for this year is calculated by dividing the Value of all goods and services produced in the economy this year using this year's prices by the Value of all goods and services produced in the economy in the base year using the base year's prices and multiplying by 100.
However, the CPI reflects only the prices of all goods and services bought by consumers.
2. a. A decrease in the price of a Chinese-made car that is popular among U.S. consumers. Affects CPI.
This affects CPI because the CPI reflects only the prices of goods and services purchased by customers.
b. An increase in the price of a Waterman Industries deep-water reel, which is a commercial fishing product used for deep-sea fishing, made in the U.S., but not bought by U.S. consumers. Affects GDP Deflator.
This is a good produced in the United States so it will affect the GDP Deflator as that deals with GDP.
financial statement information and additional data for Stanislaus Co. is presented below. Prepare a statement of cash flows for the year ending December 31, 2014December 31 2013 2014Cash $42,000 $75,000Accounts receivable (net) 84,000 144,200Inventory 168,000 206,600Land 58,800 21,000Equipment 504,000 789,600TOTAL $856,800 $1,236,400Accumulated depreciation $84,000 $115,600Accounts payable 50,400 86,000Notes payable - short-term 67,200 29,400Notes payable - long-term 168,000 302,400Common stock 420,000 487,200Retained earnings 67,200 215,800TOTAL $856,800 $1,236,400Additional data for 2014:1. Net income was $240,000, see income statement below.2. Depreciation was $31,600.3. Land was sold at its original cost.4. Dividends were paid.5. Equipment was purchased for $184,000 cash.6. A long-term note for $101,000 was used to pay for an equipment purchase.7. Common stock was issued8. Company issued $33,400 long-term note payable. Income Statement For the year ended December 31, 2014Sales revenue…………….. $1,200,000Cost of goods sold……… .......480,000Gross profit .............................720,000Selling and administrative expenses….. 360,000Pre-tax operating income .......................340,000Income taxes ..........................................120,000Net income……………………………… $240,0001. Prepare the statement of cash flow using the indirect method2. Prepare the statement of cash flow using the direct method
Answer:
Statement of cash flow for the year ended December 31, 2014
Cash flow from Operating Activities
Cash Receipts from Customers $1,139,800
Cash Paid to Suppliers and Employees ($811,600)
Cash Generated from operations $328,200
Income tax paid ($120,000)
Net Cash from Operating Activities $208,200
Cash flow from Investing Activities
Purchase of Equipment ($101,000)
Proceeds from Sale of Land $37,800
Net Cash from Investing Activities $63,200
Cash flow from Financing Activities
Issue of Note Payables $33,400
Repayment of Note Payables ($37,800)
Issue of Common Stock $67,200
Dividends Paid ($91,400)
Net Cash from Financing Activities ($28,600)
Movement during the year $33,000
Beginning Cash and Cash Equivalents $42,000
Ending Cash and Cash Equivalents $75,000
Explanation:
The Direct Method has been used to to prepare Cash flow Statement. See also calculation of the respective line items done below.
Cash Receipts from Customers calculation :
Total Trade Receivables T - Account
Debit :
Beginning Balance $84,000
Sales Revenue $1,200,000
Totals $1,284,000
Credit :
Cash Receipts from Customers $1,139,800
Ending Balance $144,200
Totals $1,284,000
Cash Paid to Suppliers and Employees calculation :
Cost of goods sold $480,000
Add Selling and administrative expenses $360,000
Adjustment for Non -Cash Items :
Depreciation ($31,600)
Adjustment for Working Capital Items :
Increase in Inventory $38,800
Increase in Accounts Payables ($35,600)
Cash Paid to Suppliers and Employees $811,600
Note payable T - Account
Debit :
Ending (29,400 + 302,400) $331,800
Cash (Balancing figure) $37,800
Totals $369,600
Credit :
Beginning (67,200 + 168,000) $235,200
Equipment $101,000
Cash $33,400
Totals $369,600
Equipment T - Account
Debit :
Beginning Balance $504,000
Note Payable $101,000
Cash $184,000
Totals $789,000
Credit :
Ending Balance $789,600
Disposal $0
Totals $789,000
Calculation of Dividends
Beginning Retained Earnings Balance $67,200
Add Income for the year $240,000
Less Ending Retained Earnings Balance $215,800
Dividends Paid $91,400
It is important that marketers be able to identify which strategy a competitor is using so that they better understand how to position their own products and services. You will see a list of recent or potential strategic decisions made by large firms, and your job is to identify which type of strategy was used in each example.
While there are a variety of strategies across industries, most fall under four basic categories.
1. Market penetration strategies emphasize selling more existing products and services to existing customers.
2. Product development strategies involve creating new goods or services for existing markets.
3. Market development strategies focus on selling existing products or services to new customers. The targeted new customers could be a different gender, age group, or international market.
4. Finally, diversification strategies involve offering new products that are unrelated to the existing products produced by the organization.
Select the most appropriate category of emotional intelligence for below mention behaviors.
i. Arm and Hammer selling baking soda for new purposes.
a. Market penetration
b. Product development
c. Market development
d. Diversification
ii. Apple opening mini-stores within Target
a. Market penetration
b. Product development
c. Market development
d. Diversification
iii. Disney purchasing ESPN
a. Market penetration
b. Product development
c. Market development
d. Diversification
Answer:
1. Market development
2. Market penetration
3. Diversification
Explanation:
we have already been given a definition of these concepts from question
1.
for Ann and hammer: it is market development because they are trying to create a product for new purposes
2.
for apple: since they are opening mini stores within target they are trying to have an expansion approach where more products and services would be sold to their customers.
3.
for disney: they are diversifying into a new product entirely. ESPN is a well known channel for sporting related activities.
What was the non-live show revenue (merchandising + record sales + etc) for the Amzai Brothers during September-December 2019?
Full question attached
Answer and Explanation:
Answer and explanation attached
Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and distribution industry. ($ in millions, except per share amounts.)
Balance Sheets
Metropolitan Republic
Assets $ 179.3 $ 37.1
Cash
Accounts receivable (net) 422.7 325.0
Short-term investments — 4.7
Inventories 466.4 635.2
Prepaid expenses and other current assets134.6 476.7
Current assets $ 1,203.0 1,478.7
Property, plant, and equipment (net) 2,608.2 2,064.6
Intangibles and other assets 210.3 464.7
Total assets $ 4,021.5 $4,008.0
Liabilities and Shareholders’ Equity
Accounts payable $ 467.9 691.2
Short-term notes 227.1 557.4
Accruals and other current liabilities 585.2 538.5
Current liabilities $ 1,280.2 1,787.1
Long-term debt 535.6 542.3
Deferred tax liability 384.6 610.7
Other long-term liabilities 104.0 95.1
Total liabilities $ 2,304.4 3,035.2
Common stock (par and additional paid-in capital)
144.9 335.0
Retained earnings 2,476.9 1,601.9
Less: treasury stock (904.7) (964.1)
Total liabilities and shareholders’ equity $
4,021.5 4,008.0
Income Statements
Net sales 5,698.0 7,768.2
Cost of goods sold (2,909.0) (4,481.7)
Gross profit $ 2,789.0 3,286.5
Operating expenses (1,743.7 ) (2,539.2)
Interest expense (56.8) (46.6)
Income before taxes $ 988.5 700.7
Tax expense (394.7) (276.1)
Net income 593.8 424.6
Net income per share $ 2.40 6.50
Note: Because comparative statements are not provided you should use year-end balances in place of average balances as appropriate.
Required:
Calculate the rate of return on assets for the following companies
Calculate the return on assets for both companies.
Calculate the Rate of return on shareholders’ equity for the following companies
Calculate the equity multiplier for the following companies.
Calculate the acid-test ratio and current ratio for the following companies.
Calculate the receivables and inventory turnover ratios the following companies.
Calculate the times interest earned ratio for the following companies.
Answer and Explanation:
We refer to balance sheet figures for each company stated above to retrieve figures for our calculations and use the following formulas for calculations:
For return on assets= net imcome/total assets
For rate of return on shareholders equity =net income/equity
For equity multiplier= total assets/ total equity
For acid-test ratio=liquid assets/current liabilities
For current ratio =current assets/current liabilities
For receivables = credit sales /acct receivables and inventory turnover ratios=cost of goods/inventory
For times interest earned ratio=ebit/interest expenses
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 20-year life when issued and the annual interest payment was then 13 percent. This return was in line with the required returns by bondholders at that point as described below:
Real rate of return 4 %
Inflation premium 5
Risk premium 4
Total return 13 %
Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required return (or yield to maturity) of the bonds. The bonds have 15 years remaining until maturity. Use Appendix B and Appendix D.
Answer:
$1,161.23
since the coupon rate is higher than the market rate, the bonds will be priced at a premium
Explanation:
In order to calculate the current market price of the bonds we can use the yield to maturity formula:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
YTM = 11%n = 15 yearscoupon = $130face value = $1,0000.11 = {130 + [(1,000 - market value)/15]} / [1,000 + market value)/2]
0.11 x [1,000 + market value)/2] = 130 + [(1,000 - market value)/15]
0.11 x (500 + 0.5M) = 130 + 66.67 - 0.067M
55 + 0.055M = 196.67 - 0.067M
0.122M = 141.67
M = 141.67 / 0.122 = $1,161.23
BMW’s vehicle-assembly facility in South Carolina represents a direct investment inside the United States by the German manufacturer. This facility is an example of:
Answer:
Foreign direct investment.
Explanation:
BMW’s vehicle-assembly facility in South Carolina represents a direct investment inside the United States by the German manufacturer. This facility is an example of foreign direct investment.
A foreign direct investment (FDI) can be defined as an investment made by an individual or business entity (investor) into an investment market (industry) located in another country. The investor here, shares a different country of origin from the country where his investment is located.
In a foreign direct investment (FDI), an investor must establish his business, factory and operations in a foreign country or acquire assets in a business that is being operated in a foreign country.
Additionally, foreign direct investment (FDI) are categorized into three (3) main types and these are;
1. Vertical FDI: it involves establishing a different business that is however similar to the main business owned by the investor.
2. Horizontal FDI: it involves establishing the same type of business in a foreign country as owned in the investor's country.
3. Conglomerate FDI: it involves establishing a business that is completely different in another (foreign) country.
When all of a firm's inputs are doubled, input prices do not change, and this results in the firm's level of production more than doubling, a firm is operating:
Answer: (B) on the downward-sloping portion of its long-run average total cost curve.
Explanation:
The downward-sloping portion of a company's Long Run Average Total Cost(LRATC) curve is the part where increasing returns to scale is witnessed.
This is because the costs that are incurred by the company leads to higher proportional output thereby reducing the average cost and pulling the LRATC down.
In this scenario, the inputs doubled and the firm's level of production more than doubled which means that with outputs increasing more than costs, the Average cost is reducing and the slope is downward sloping.
what has the U.S customs created to force importing companies like wal-mart to provide more detailed information about
Answer: The Customs-Trade Partnership Against Terrorism (CTPAT)
Explanation:
The Customs-Trade Partnership Against Terrorism (CTPAT) is a partnership program between the public and private sector created by the US Customs to improve border and cargo security.
When a firm like Wal-Mart becomes a member of the CTPAT, the likelihood of their goods being examined at a port of entry falls but this is because of the oversight requirements imposed on the firms such as ensuring the members provide detailed information about their suppliers and transportation companies.
The revenues budget identifies: a. expected cash flows for each product b. actual sales from last year for each product c. the expected level of sales for the company d. the variance of sales from actual for each product
Answer:
c. the expected level of sales for the company
Explanation:
Revenue/Sales Budget is the first budget to be prepared by most companies because most businesses are sales led.
This Budget shows, the expected level of sales for the company.
Thirteen students entered the business program at Sante Fe College 2 years ago. The following table indicates what each student scored on the high school SAT math exam and their grade-point averages (GPAs) after students were in the Sante Fe program for 2 years.
Student A B C D E F G
SAT Score 421 375 585 693 608 392 418
GPA 2.93 2.87 3.03 3.42 3.66 2.91 2.12
Student H I J K L M
SAT Score 484 725 506 613 706 366
GPA 2.50 3.24 1.97 2.73 3.88 1.58
The least-squares regression equation that shows the best relationship between GPA and the SAT score is:________ (round your responses to four decimal places)
Answer:
ŷ = 0.0035X + 1.0030
Explanation:
Given the data :
Student A B C D E F G H I J K L M
SAT Score: 421 375 585 693 608 392 418 484 725 506 613 706 366
GPA: 2.93 2.87 3.03 3.42 3.66 2.91 2.12 2.50 3.24 1.97 2.73 3.88 1.58
We can obtain the Least square regression calculator, we can obtain the least square regression equation in the Format :
y = mx + c
Where ; m = gradient / slope
x = predictor variable ; c = intercept
y = Independent variable.
The model equation produced by the calculator is :
ŷ = 0.0035X + 1.0030
y predicted variable ; x = explanatory variable
0.0035 = slope or gradient ; 1.0030 = intercept
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Firms may not include all income taxes for a period on the line for income tax expense in the income statement. Other places that income tax expenses may occur include all of the following except: Select one: a. Extraordinary Items b. Other Comprehensive Income c. Common Stock d. Discontinued Operations
Answer:
Option C
Explanation:
Firms may not include all income taxes for a period on the line for income tax expense in the income statement. Other places that income tax expenses may occur include all of the following except Common Stock. Common stock is a form of corporate equity ownership, a type of security. Common stock is reported in the stockholder's equity section of a company's balance sheet.
Alice and Bob entered into a forward contract some time ago. Alice has the long position, while Bob has the short position. The forward contract will mature in three months and has a delivery price of $40. The current forward price for the contract is $42. The three-month risk-free interest rate (with continuous compounding) is 8%. What is the value Bob's position?
Answer:
$ - 1.96
Explanation:
After three months, Alice (long the contract) can buy the underlying by paying the delivery price of $40 which is $2 less than $42 the long position would have to pay if the contract was entered today.
DATA
Delivery price = $40
The three-month risk-free interest rate (with continuous compounding) =8%.
The current forward price = $42
Solution
So based on the present situation, Alice would be in $2 profit at the end of 3 months and Bob would be in $2 loss
Present value of Bob's loss (with continuous compounding) = 2\times e^{-0.08\times 0.25}
Present value of Bob's loss (with continuous compounding) = $1.96
The value of Bob's position is $ - 1.96
Hector was prosecuted following police seizure of 80 pounds of drugs from his airplane. The seizure was held to be unlawful, the evidence was sup- pressed, and the suit against Hector was dismissed. He sued the government officials involved in his arrest and prosecution to recover $3,500 in bail bond expenses, $23,000 in attorney's fees, and $2,000 in travel costs. The district court held he could not recover the costs incurred during the criminal prosecution. Hector appealed. Can he recover the costs? (Hector v. Watt, 235 F.3d 154, 3rd Cir. (2000)]
Answer:
Hector will lose.
Explanation:
If someone suffers an illegal search or seizure, he/she can recover any costs associated with that incident, e.g. property damage, injuries (both physical or to their reputation, lawyers, etc.). But if the illegal search actually results in some criminal evidence being discovered, then you cannot recover any costs. Anything seized illegally will be dismissed, but the reward is not going to jail even if they committed a crime, they get no money back.
Why only ask for a refund of his lawyer's fees, he should also ask for a refund for the value of the drugs? This lawsuit is absolutely ridiculous.
Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 1,500 units of Product A and 1,500 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $87,630. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows:
Expected Activity
Activity Cost Pool Estimated Overhead Costs Product A Product B Total
Activity 1 $ 41,400 1,000 500 1,500
Activity 2 15,720 800 400 1,200
General Factory 30,510 600 300 900
Total $ 87,630
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.)
The overhead cost per unit of Product B under the activity-based costing system is closest to:_________
a. $42.90
b. $9.10
c. $21.30
d. $63.92
Answer:
Results are below.
Explanation:
First, we need to calculate the predetermined overhead rate for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Activity 1= 41,400/1,500= $27.6 per unit of activity
Activity 2= 15,720/1,200= $13.1 per unit of activity
General Factory= 30,510/900= $33.9 per direct labor hour
Now, we can allocate overhead to product B:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Activity 1= 27.6*500= $13,800
Activity 2= 13.1*400= $5,240
General Factory= 33.9*300= $10,170
Total allocated overhead= $29,210
Unitary allocated overhead= 29,210/1,500= $19.47
The following information is available for Mergenthaler Corporation for the year ended December 31, 2022:
Collection of principal on long-term loan to a supplier $16,000
Acquisition of equipment for cash 10,000
Proceeds from the sale of long-term investment at book value 22,000
Issuance of common stock for cash 20,000
Depreciation expense 25,000
Redemption of bonds payable at carrying (book) value 34,000
Payment of cash dividends 6,000
Net income 30,000
Purchase of land by issuing bonds payable 40,000
In addition, the following information is available from the comparative balance sheet for Mergenthaler at the end of 2022 and 2021:
2021 2022
Cash $148,000 $91,000
Accounts receivable (net) 25,000 15,000
Prepaid insurance 19,000 13,000
Total current assets $192,000 $119,000
Accounts payable $30,000 $19,000
Salaries and wages payable 6,000 7,000
Total current liabilities $36,000 $26,000
Required:
Prepare Mergenthaler's statement of cash flows for the year ended December 31, 2014, using the indirect method.
Answer:
Cash Flow from Operating Activities Amount$
Net Income 30000
Add Depreciation Expense 25000
Increase in Accounts Payable 11000
Increase in Accounts Receivables -10000
Increase in Prepaid Insurance -6000
Decrease in Salaries and Wages Payable -1000
Net Cash Flow from Operating Activities A 49000
Cash Flow from Investing Activities
Acquisition of Equipment for Cash -10000
Proceeds from Sale of Long-Term Investment 22000
Net Cash Flow from Investing Activities B 12000
Cash Flow from Financing Activities
Redemption of Bonds Payable -34000
Proceeds from Issuance of Common Stock 20000
Payment of Cash Dividends -6000
Collection of Principal on Long-Term Loan 16000
Net Cash Used in Financing Activities C -4000
Opening Cash Balance 91000
Add Increase in Cash (A+B+C) 57000
Closing Cash Balance 148000
Assessment
A customer hands you $3,850 in cash and would like to purchase 14 prepaid cards of
$275 each. The customer hands you the cash with an expired ID, and is expecting you to
process the transaction.
You must decline the transaction for the following reasons: (Select all that apply)
A customer may not purchase more than $2,000 in prepaid cards within a 24-hour period.
We do not sell prepaid cards.
The POS will prompt for customer ID for all prepaid card purchases.
Customer ID must be a valid (not expired) government issued photo ID (US or Canadian
issued driver's license, state ID, passport; US military ID, US Territory ID)
The customer appears to be purchasing prepaid cards just below the threshold where an ID
would be needed.
The customer is attempting to purchase more than the allowable number of gift cards in a
single transaction.
Answer:
You must decline the transaction for the following reasons:
A customer may not purchase more than $2,000 in prepaid cards within a 24-hour period.
Customer ID must be a valid (not expired) government issued photo ID (US or Canadian issued driver's license, state ID, passport; US military ID, US Territory ID)
Customers may not purchase more than $250 at the assisted check out (ACO).
Explanation:
A customer may not purchase more than $2,000 worth of prepaid products in one business day.
POS will prompt cashiers for an ID at $300:
POS will prompt cashiers to scan or manually enter a valid ID for purchases at $300.
Customers may not purchase more than 10 prepaid cards in one day.
Customers may not purchase more than $250 at the assisted check out (ACO).
Managing our prepaid card limits on a daily basis is run, similar to our money order process. The 2,000 daily limits for prepaid/gift cards is accomplished through a partnership with APPRISS.
Note :
The POS Register does not allow a single transaction over $2,000 to ensure CVS/pharmacy is in compliance with federal regulations.
Breaking up transactions to allow the purchase of more than $2,000
in prepaid products to one customer, couple or group is strictly against CVS/pharmacy policy and may result in disciplinary action up to, and including, termination of employment.
In 1998, the Russian government defaulted on its bonds. According to the open-economy macroeconomic model, this should have
Answer:
An increase in the net export and Russian interest rate.
Explanation: An open economy is an economy where all players which includes traders, investors and other stakeholders in the economy both within and outside the economy freely conduct their businesses and are controlled by market forces with minimal interference by Government agencies.
According to the open-economy macroeconomic model with the defaulting by the Russian government in 1998 will definitely lead to an increase in net export and an increase in Russian Interest rate.
At January 1, 2021, Cafe Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $29,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Crescent at a cost of $207,000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $94,113.) Crescent seeks a 12% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease.
Required:
a. What will be the effect of the lease on Cafe Med's earnings for the first year (ignore taxes)?
b. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Café Med (ignore taxes)?
Answer:
Café Med
a. Café Med's earnings for the first year will be reduced by $58,000 (Operating lease expense for January 1 and December 31, 2021).
b. In Café Med's Balance Sheet, at the end of the first year, there will be a liability balance or Lease Expense Payable of $29,000 for the balance due to be paid on December 31, 2021.
Explanation:
Lease annual payments = $29,000
First payment date = January 1, 2021
Subsequent payment dates = December 31, 2021 to 2028.
Period of lease agreement = 9 years < 75% (9/13)
Cost of equipment to Crescent = $207,000
Lifespan of equipment = 13 years
Residual value at end of the lease term = $94,113
b) Café Med will recognize this lease arrangement as an operating lease. This is based on periodic rental payment on a straight-line basis, which is recorded as an operating lease expense. The liability arising will be for unpaid rentals at the end of the accounting period.
Nutritional Foods reports merchandise inventory at the lower-of-cost-or-market. Prior to releasing its financial statements for the year ended August 31, 2019, Nutritional's preliminary income statement, before the year-end adjustments, appears as follows:
NUTRITIONAL FOODS
Income Statement (Partial)
Year Ended March 31, 2017
Sales Revenue ........ $117,000
Cost of Goods Sold ..... 45,000
Gross Profit ........ $72,000
Nutritional has determined that the current replacement cost of ending merchandise inventory is $17,000. Cost is $19,000.
Required:
a. Journalize the adjusting entry for merchandise inventory, if any is required.
b. Prepare a revised partial income statement to show how Nutritional Foods should report sales, cost of goods sold, and gross profit.
Answer:
a) since the cost of ending inventory is higher than the replacement value, then ending inventory must decrease, which will result in higher COGS. The adjusting journal entry is:
March 31, 2017, inventory adjustment
Dr Cost of goods sold 2,000
Cr Merchandise inventory 2,000
b) revised income statement
NUTRITIONAL FOODS
Income Statement (Partial)
Year Ended March 31, 2017
Sales Revenue ........ $117,000
Cost of Goods Sold ..... $47,000
Gross Profit ........ $70,000
With respect to dividends and priority in liquidation, what has priority over common stock? Group of answer choices Treasury Stock Debt Capital Preferred Stock nonconvertible common equity
Answer:
Preferred stock
Explanation:
Preferred stock is a stock that has properties of both stocks and bonds. this is why they are referred to as an hybrid instrument. Preferred stock holders have priority over common shareholders with respect to dividends and liquidation,