Answer:
The solution to the given problem is done below.
Explanation:
a. Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2016 as the base year.
Nominal GDP is simply equal to the sum of the current year price * current year quantity of all the goods.
2016: ($1 per qt. of milk X 100 qts. milk) + ($2 per qt. of honey X 50 qts. honey) = $200
2017: ($1 per qt. of milk X 200 qts. milk) + ($2 per qt. of honey X 100 qts. honey) = $400
2018: ($2 per qt. of milk X 200 qts. milk) + ($4 per qt. of honey X 100 qts. honey) = $800
Calculating real GDP (base year 2016):
Real GDP is equal to the sum of the base year price * current year quantity of all the goods.
Calculating real GDP (base year 2016):
2016: ($1 per qt. of milk X 100 qts. milk) + ($2 per qt. of honey X 50 qts. honey) = $200
2017: ($1 per qt. of milk X 200 qts. milk) + ($2 per qt. of honey X 100 qts. honey) = $400
2018: ($1 per qt. of milk X 200 qts. milk) + ($2 per qt. of honey X 100 qts. honey) = $400
b. Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2017 and 2018.
Percentage change in nominal GDP in 2017 = [($400 –$200)/$200] X 100% = 100%.
Percentage change in nominal GDP in 2018 = [($800 –$400)/$400] X 100% = 100%.
Percentage change in real GDP in 2017 = [($400 –$200)/$200] X 100% = 100%.
Percentage change in real GDP in 2018 = [($400 –$400)/$400] X 100% = 0%.
The GDP deflator is equal to (Nominal GDP / Real GDP)*100
Percentage change in the GDP deflator in 2017 = [(100 –100)/100] X 100% = 0%.
Percentage change in the GDP deflator in 2018 = [(200 –100)/100] X 100% = 100%.
Prices did not change from 2016 to 2017. Thus, the percentage change in the GDP deflator is zero. Likewise, output levels did not change from 2017 to 2018. This means that the percentage change in real GDP is zero.
To compute nominal GDP, real GDP, and the GDP deflator, we use the prices and quantities of goods and services. We compare the values to a base year to calculate the percentage change in each measure.
Explanation:To compute nominal GDP, we multiply the price of each good or service by the quantity produced and sum across all goods and services. To compute real GDP, we use constant prices from a base year to remove the effects of inflation. The GDP deflator is a measure of the overall price level in an economy. We can calculate it by dividing nominal GDP by real GDP and multiplying by 100.
In 2017, the nominal GDP increased by 20% compared to 2016, the real GDP increased by 9.09%, and the GDP deflator increased by 10%. In 2018, the nominal GDP increased by 41.67%, the real GDP increased by 9.09%, and the GDP deflator increased by 32.14%.
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A company had calculated net income to be $77,850 based on the unadjusted trial balance. The following adjusting entries were then made for: Salaries and wages owed but not yet paid of $820 Interest earned but not received from investments of $780 Prepaid insurance premiums amounting to $580 have expired Unearned revenue in the amount of $780 has now been earned.
Answer:
Adjusted net income will be $78,010
Explanation:
According to the Accrual concept all the accrued expenses should be recognized and deducted from the unadjusted net income and all the earned revenues should be recognized and added to unadjusted net Income.
Salaries and wages owed but not yet paid of $820 is an expense which is accrued but not been paid it should be recorded and deducted from the unadjusted net income as earlier expenses were understated.
Interest earned but not received from investments of $780 is the revenue recognized but not been received until now. Accrual Concept requires that when revenue is realized it should be recognized into the accounting records. So it should be added to the net income.
Prepaid insurance premiums amounting to $580 have expired is actually an accrued expense which previously recorded as prepaid expense. It should be deducted from the net income as it is a expense which need to be recognized.
Unearned revenue in the amount of $780 has now been earned. Now it should be added to the net income because it is a revenue item that should be recognized as it is recorded as unearned revenue earlier.
Net income to be $77,850 based on the unadjusted trial balance.
Adjusted Net Income = $77,850 - $820 + $780 - 580 + 780 = $78,010
Final answer:
Adjusted net income is calculated by considering the effects of adjusting entries for unpaid salaries and wages, interest earned, expired insurance premiums, and now-earned unearned revenue on the net income previously based on the unadjusted trial balance. The adjusted net income is $78,010 after accounting for these changes.
Explanation:
The question involves making adjusting entries to a company's financial records to reflect events that have occurred but are not yet recorded in the accounts. This process is a key part of the accounting cycle, ensuring that the financial statements reflect the true financial position of the company at the end of the accounting period. Adjusting entries for salaries and wages, interest, prepaid insurance, and unearned revenue will affect both the company's balance sheet and income statement.
To calculate the adjusted net income, we need to consider the effect of these adjustments on the originally calculated net income:
Interest earned (revenue increases, increasing net income): $780
Expired insurance premiums (expense increases, reducing net income): $580
$77,030 + $780 (increase in accounts receivable - interest)
$77,230 + $780 (decrease in deferred revenue)
Adjusted net income: $78,010
Assume that the spot rate of the singaproe dollar is $.664. The ADR of a Singapore firm is convertibe into 3 shares of stock. The price of an ADRis $20. What is the share price of the firm in Singapore dollars
Answer: 10
Explanation:
1 ADR = $20
1 ADR = 3 Shares
Hence,
3 Shares =$20
1 share =$20/3
1 Singapore dollar =$0. 664
1$= 1/0.664 =1.506
20$ =20 x 1.506 /3
=10.10
The share price of the firm in Singapore dollars is $10.
The calculation is as follows:
1 ADR = $20
1 ADR = 3 Shares
So,
3 Shares =$20
1 share =$20 ÷÷3
1 Singapore dollar =$0. 664
Now
1$= 1 ÷ 0.664 =1.506
And,
20$ =[tex]20 \times 1.506 \div 3[/tex]
=10.10
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An accounting clerk for Chesner Co. prepared the following bank reconciliation:
Chesner Co. Bank Reconciliation July 31, 2016
1. Cash balance according to company's records $11,100.00
2. Add: Outstanding checks $3,585.00
3. Error by Chesner Co. in recording Check No. 1056 as $950 instead of $590 360.00
4. Note for $12,000 collected by bank, including interest 12,480.00 16,425.00
5. $27,525.00
6. Deduct: Deposit in transit on July 31 $7,200.00
7. Deduct: Bank service charges 25.00 7,225.00
8. Cash balance according to bank statement $20,300.00
A. From the data prepared by the accounting clerk, prepare a new bank reconciliation for Chesner Co., using the format shown in the illustrative problem in the text. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
B. If a balance sheet were prepared for Chesner Co. on July 31, 2016, what amount should be reported for cash?
Amount Descriptions - Adjusted balance - Bank error in charging Check No. 1056 as $590 instead of $950 - Bank error in charging Check No. 1056 as $950 instead of $590 - Bank service charges - Deposit in transit on July 31 - Error in recording Check No. 1056 as $590 instead of $950 - Error in recording Check No. 1056 as $950 instead of $590 - Note for $12,000 collected by bank, including interest - Outstanding checks
Answer:
Explanation:
Bank reconciliation
Chesner Co.
July 31,2016
Cash balance according to bank statement $20,300
Adjustments:
Add:Deposit in transit on July 31 7200
Less:Outstanding checks -3585
Adjusted balance as per bank $23,915
Cash balance according to company’s records 11,100
Adjustments:
Add:Note for $12,000 collected by bank, including interest 12,480
Less:Bank service Charges -25
Add:Error in recording Check No. 1056 as $950 instead of $590 360
Adjusted balance as per Books 23,915
B. $23,915 should be reported to cash
A piece of equipment is purchased for $110,000 and has an estimated salvage value of $10,000 at the end of the recovery period. (a) Prepare a depreciation schedule for the piece of equipment using the straight-line method with a recovery period of seven years. (b) Prepare a depreciation schedule for the piece of equipment using the sum-of the-years method. (c) Prepare a depreciation schedule using the 200% declining balance method. (d) Prepare a depreciation schedule using the 150% declining balance method.
Answer:
Year //dep expense //ac dep //book value
- $110,000.00
1 $14,285.71 $14,285.71 $95,714.29
2 $14,285.71 $28,571.43 $81,428.57
3 $14,285.71 $42,857.14 $67,142.86
4 $14,285.71 $57,142.86 $52,857.14
5 $14,285.71 $71,428.57 $38,571.43
6 $14,285.71 $85,714.29 $24,285.71
7 $14,285.71 $100,000.00 $10,000.00
SUM OF YEARS
Year //factor// dep expense //ac dep //book value
- $110,000.00
1 0.25 $25,000.00 $25,000.00 $85,000.00
2 0.21 $21,428.57 $46,428.57 $63,571.43
3 0.18 $17,857.14 $64,285.71 $45,714.29
4 0.14 $14,285.71 $78,571.43 $31,428.57
5 0.11 $10,714.29 $89,285.71 $20,714.29
6 0.07 $7,142.86 $96,428.57 $13,571.43
7 0.04 $3,571.43 $100,000.00 $10,000.00
200% double declining:
[tex]\left[\begin{array}{ccccc}Year&Beginning&Dep-Expense&Acc. \: Dep&Ending\\0&-&-&-&110000\\1&110000&31428.57&31428.57&78571.43\\2&78571.43&22448.98&53877.55&56122.45\\3&56122.45&16034.99&69912.54&40087.46\\4&40087.46&11453.56&81366.1&28633.9\\5&28633.9&8181.11&89547.21&20452.79\\6&20452.79&5843.65&95390.86&14609.14\\7&14609.14&4609.14&100000&10000\\\end{array}\right][/tex]
150% accelerated depreaciation:
[tex]\left[\begin{array}{cccccc}Year&Beginning&Dep-Expense&Acc. \: Dep&Ending\\0&-&-&-&110000\\1&110000&23571.43&23571.43&86428.57\\2&86428.57&18520.41&42091.84&67908.16\\3&67908.16&14551.75&56643.59&53356.41\\4&53356.41&11433.52&68077.11&41922.89\\5&41922.89&8983.48&77060.59&32939.41\\6&32939.41&7058.45&84119.04&25880.96\\7&25880.96&15880.96&100000&10000\\\end{array}\right][/tex]
Explanation:
Straight Line:
Acquisition Value 110,000
Salvage Value 10,000
ammount subject to depreciation 100000
Useful Life 7
depreciation per year:
depreciable amount divided by useful life 14285.71
This amount is repeatead throughout the life of the equipment.
SUM OF YEARS FACTORS:
sum of year: 7*8/2 = 28
remaining years over sum of year
1st 7/28
2nd 6/28
3rd 5/28
4th 4/28
5th 3/28
6th 2/28
7th 1/28
Double declining 200%
we have to multiply 1/useful life by the double declining facot
in this case as it is 200% it will be 2.
threfore the carrying vlue is multiplied by 2/7 each year to determinatethe depreciation expense
declining 150%
here we multiply by 1.5 resulting in a factor of 3/14 to obtain the depreciation expense
Answer:
Depreciation schedule using Straight Line Method
Straight Sum of 200 % declining 150 % declining
Line the years balance balance
Method Method Method Method
Year 1 $ 14,285 $ 25,000 $ 31,427 $ 23,570
Year 2 $ 14,285 $ 21,429 $ 22,448 $ 18,520
Year 3 $ 14,285 $ 17,857 $ 16,035 $ 14,551
Year 4 $ 14,285 $ 14,286 $ 11,454 $ 11,433
Year 5 $ 14,285 $ 10,714 $ 8,181 $ 8,984
Year 6 $ 14,285 $ 7,143 $ 5,844 $ 7,059
Year 7 $ 14,285 $ 3,571` $ 4,174 $ 5,546
Explanation:
Computation of Depreciation under the straight Line Method
Cost of equipment $ 110,000
Salvage Value $( 10,000)
Depreciable Basis $ 100,000
Estimated Useful Life 7 years
Depreciation % per year 14.285%
Depreciation per year for each year $ 14,285
Computation of Depreciation under the Sum of the years method
In a sum of the years balance method the no of years recovery life is added together as a denominator and the first year the highest depreciation is charged. The salvage value is considered and the depreciable basis is the same as the Straight Line Method
Sum of the years ( 7 + 6 + 5 + 4 + 3 + 2 + 1) = 28
Depreciable basis $ 100,000
Depreciation Year 1 7/28 * $ 100,000 $ 25,000
Depreciation Year 2 6/28 * $ 100,000 $ 21,429
Depreciation Year 3 5/28 * $ 100,000 $ 17,857
Depreciation Year 4 4/28 * $ 100,000 $ 14,286
Depreciation Year 5 3/28 * $ 100,000 $ 10,714
Depreciation Year 6 2/28 * $ 100,000 $ 7,143
Depreciation Year 6 1/28 * $ 100,000 $ 3,571
Computation of Depreciation under 200 % declining balance method
In a declining balance method the salvage value is not considered and the depreciation is applied on a declining balance on double the straight line method depreciation %
Depreciable Basis - same as cost $ 110,000
Depreciation Rate - 14.285 % * 2 = 28,57 %
Depreciation for Year 1 - $ 110,000 * 28.57 % = $ 31,427
Depreciation Basis for Year 2 $ 78,573
Depreciation for Year 2 - $ 78,573 * 28.57 % = $ 22,448
Depreciation Basis for Year 3 $ 56, 125
Depreciation for Year 3 - $ 56,125 * 28.57 % $ 16,035
Depreciation Basis for Year 4 $ 40,090
Depreciation for Year 4 - $ 40,090 * 28.57 % $ 11,454
Depreciation Basis for Year 5 $ 28,636
Depreciation for Year 5 - $ 28,636 * 28.57 % $ 8,181
Depreciation Basis for Year 6 $ 20,455
Depreciation for Year 6 - $ 20,455 * 28.57 % $ 5,844
Depreciation Basis for Year 7 $ 14,611
Depreciation for Year 7 - $ 14,611 * 28.57 % $ 4,174
Computation of Depreciation under 150 % declining balance method
In a declining balance method the salvage value is not considered and the depreciation is applied on a declining balance on one and half times the straight line method depreciation %
Depreciable Basis - same as cost $ 110,000
Depreciation Rate - 14.285 % * 1.50 = 21,4275 %
Depreciation for Year 1 - $ 110,000 * 21.4275 % = $ 23,570
Depreciation Basis for Year 2 $ 86,430
Depreciation for Year 2 - $ 86,430 * 21.4275 % = $ 18,520
Depreciation Basis for Year 3 $ 67,910
Depreciation for Year 3 - $ 67,910 * 21..4275 % $ 14,551
Depreciation Basis for Year 4 $ 53,359
Depreciation for Year 4 - $ 53,359 * 21.4275 % $ 11,433
Depreciation Basis for Year 5 $ 41,925
Depreciation for Year 5 - $ 41,925 * 21.4275 % $ 8,984
Depreciation Basis for Year 6 $ 32,942
Depreciation for Year 6 - $ 32,944 * 21.4275 % $ 7,059
Depreciation Basis for Year 7 $ 25,883
Depreciation for Year 7 - $ 25,883 * 21.4275 % $ 5,546
A significant improvement in auto technology will: A. Shift the supply of cars out and to right, decreasing the equilibrium price of cars, but increasing the equilibrium quantity. B. Shift the demand for cars in and to the left, lowering the equilibrium price and quantity of cars. C. Shift the supply of cars in and to the left, increasing the equilibrium price of cars, but lowering the equilibrium quantity. D. Shift the supply of cars in and to the left, raising the equilibrium price and quantity of cars. E. Shift the demand for cars in and to the left, raising the equilibrium price of cars, but lowering the equilibrium price.
Answer:
A. Shift the supply of cars out and to right, decreasing the equilibrium price of cars, but increasing the equilibrium quantity.
Explanation:
The effect of technology on supply is that it will shift supply to the right. As cost of production reduces, producers can have more output at the same cost.
There will be excess supply (surplus), so customers will pay less for the product.
The equilibrium quantity will also increase as more cars are available in the market.
This is illustrated in the attached diagram. Equillibrum price reduces from P1 to P2. The equillibrum quantity increases from Q1 to Q2.
Government can influence cost of production through taxes, regulations and subsidies. Therefore they also influence shift of supply curve.
A significant advancement in auto technology will shift the supply curve for cars outward and to the right, which will decrease the equilibrium price but increase the equilibrium quantity of cars, aligning with option A.
Explanation:An improvement in auto technology, such as more fuel-efficient cars, will lead to a change in the market for cars. This improvement is typically viewed as a positive change in production technology, which makes it cheaper to produce cars or allows more cars to be produced with the same resources. Consequently, the supply curve for cars shifts outward and to the right, indicating that manufacturers are willing and able to supply more cars at each price level. This shift will lead to a decrease in the equilibrium price of cars, as the increased supply puts downward pressure on prices. However, the equilibrium quantity of cars will increase because more cars are available at lower prices, which can boost sales. This scenario matches option A: A significant improvement in auto technology will: Shift the supply of cars out and to right, decreasing the equilibrium price of cars, but increasing the equilibrium quantity.
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For direct price discrimination to work a. The firm need not be able to identify the members of the low-value group b. The firm be able to charge the low-value customers a lower price than the higher-value customers c. The firm need not worry about any arbitrage since all its customers are charged the same price d. It needs to be too complicated for the customers to understand
Answer:
The correct answer is letter "B": The firm be able to charge the low-value customers a lower price than the higher-value customers.
Explanation:
Price discrimination is the practice by which producers charge different prices to different consumers based on factors such as age, income or location to mention a few. This differentiation in prices is always justified by producers with one of those factors otherwise the approach would be considered illegal.
Direct price discrimination is carried out when the firm charges lower prices to an unfavored sector of the market keeping the regular price in sectors where income is higher.
Exercise 189 Hu, Marcos, and Letterman share income on a 6:3:1 basis. They have capital balances of $80,000, $60,000, and $45,000, respectively, when Buffett is admitted to the partnership. Prepare the journal entry to record the admission of Buffett into the partnership if Buffett purchases one-half of Hu’s equity for $45,000; one-half of Marcos’s equity for $22,000; and one-third of Letterman’s equity for $18,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answer:
Debit Hu, 40,000, Marcos, 30,000 and Letterman 15,000 and credit Buffet, 85,000
Explanation:
The question is to journalize the entry of admitting Buffet into the partnership
First, we know that Buffet bought 1/2 of Hu, 1/2 of Marcos and 1/3 of Letterman.
Has such Buffet bought the following number of shares
Hu = 1/2 x $80,000 = $40,000
Marcos = 1/2 of $60,000 = $30,000
Letterman = 1/3 of $45,000 = $15,000
Buffet= 85,000
Jounal Entry
Description Debit($) Credit($)
Hu, Capital 40,000
Marco, Capital 30,000
Letterman, Capital 15,000
Buffet, Capital $85,000
Being the admission of Buffet in to partnership.
What makes buying a foreclosed property risky? Select two. The title fee is set later and can’t be negotiated They’re usually sold "as is" Usually, you can’t inspect the home in advance You must use an adjustable-rate loan for purchase
They’re usually sold "as is" and Usually, you can’t inspect the home in advance makes buying a foreclosed property risky.
Purchasing a foreclosed property is dangerous for the following two reasons:
They're usually sold "as is"
Frequently, foreclosed homes are offered for sale as-is, with no alterations done by the bank or the prior owner.
This implies that you may be buying a house with hidden problems or damage that would cost a lot of money to rectify. You can incur unforeseen fees after buying the home if you are unable to negotiate repairs or renovations before the purchase.
Usually, you can't inspect the home in advance:
Many often, prospective purchasers of foreclosed homes are not given the chance to perform a comprehensive examination before finalizing the purchase.
Due to the lack of an assessment, there may be repulsive after-purchase shocks, such as finding basic troubles, plumbing or electrical issues, or other covered-up imperfections that were not seen amid the initial seeing. You'll not have comprehensive information on the genuine state of the property you're buying without an intensive examination.
Hence, buying a foreclosed property risky cause Usually, you can't inspect the home in advance and They're usually sold "as is".
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The correct options are B and C. Buying a foreclosed property is risky because they are usually sold 'as is' and prospective buyers often cannot inspect them in advance.
The correct answers are:
They’re usually sold “as is”Usually, you can’t inspect the home in advanceForeclosed properties are often sold “as is”, meaning the buyer takes responsibility for any existing issues without expecting repairs or improvements from the seller. Furthermore, prospective buyers often cannot inspect the home in advance, which increases the risk of unforeseen problems that may require costly repairs after the purchase.
Complete question
What makes buying a foreclosed property risky? Select two.
A. The title fee is set later and can’t be negotiated
B. They’re usually sold “as is”
C. Usually, you can’t inspect the home in advance
D. You must use an adjustable-rate loan for purchase
Dumphy and Funke are rival tattoo artists in the small town of Feline. There are no other tattoo artists in town. It costs $30 to produce a Tweety Bird tattoo. Assume for simplicity that fixed costs are zero and that Dumphy and Funke perform identical work. For a while, there was too much demand for Funke and Dumphy to handle and they both charged $200 for a tatoo. But recently, demand has dropped significantly and there isn't enough work for both to fill their days at any price. However, there is some demand at all prices.a. What will be the equilabrium price that Dumphy and Funke will charge?b. What are the profits for Dumphy and Funke at the equilibrium price?c. What type of competition would Funke and Dumphy likely engage in after the decrease in demand?
Answer:
Part a: What will be the equilabrium price that Dumphy and Funke will charge?
Answer: Price charged = $30
Part b: What are the profits for Dumphy and Funke at the equilibrium price?
Answer: Profit on equilibrium price = $0
Part c: What type of competition would Funke and Dumphy likely engage in after the decrease in demand?
Answer: Price competition
Explanation:
Part a: What will be the equilabrium price that Dumphy and Funke will charge?
Answer:
Price charged by each of the artists will be equal to their marginal cost.
Thus, equilibrium P = MC = $30.
Part b: What are the profits for Dumphy and Funke at the equilibrium price?
Answer:
Equilibrium profits will be 0 at the equilibrium because price charged is equal to MC, leading to no profits.
Part c: What type of competition would Funke and Dumphy likely engage in after the decrease in demand?
Answer:
Price competition - as changes in price will lead to changes in demand and thus sales
In this limited market with two providers, the equilibrium price and profits cannot be decisively calculated without specific demand and supply information. However, the decline in demand will likely bring about price competition or differentiation in services or products.
Explanation:In this scenario, tattoo artists Dumphy and Funke operate in a duopoly market as there are no other competitors. As they perform identical work and have similar costs, they will likely end up charging the same price to remain competitive.
a) Equilibrium Price: The equilibrium price is determined by market forces - supply and demand. Given that demand has dropped, the equilibrium price would likely be lower than $200. However, the exact equilibrium price can't be determined without specific demand and supply information.
b) Profits: To calculate the profit, subtract the total cost of producing the service from the total revenue (price x quantity). As the cost of production for each tattoo is $30, anything above this would be profit. However, in a scenario of reduced demand, both artists might not have enough work to optimize their profits. Exact profits can't be determined without knowing how many tattoos they sell at the equilibrium price.
c) Type of Competition: After the decrease in demand, Dumphy and Funke could engage in price competition, where each attempts to undercut the other's price. Alternatively, they might differentiate their services by offering additional services or unique tattoo designs.
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In 2018, DFS Medical Supply collected rent revenue for 2019 tenant occupancy. For income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as income in the period tenants occupy the rental property. The deferred portion of the rent collected in 2018 amounted to $460,000 at December 31, 2018. DFS had no temporary differences at the beginning of the year.
Required:
Assuming an income tax rate of 40% and 2018 income tax payable of $940,000, prepare the journal entry to record income taxes for 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
income tax expense 756,000 debit
deferred tax assets 184,000 debit
income tax payable 940,000 credit
Explanation:
As we are taxes as we collect but, for accounting reasons we reocngize gains under accrual method we have a portion of unearned reveneu which generates a deffered tax assets as next year this amount will not generate a tax payable:
unearned revenue 460,000
deferred tax assets: 460,000 x 40% = 184,000
income tax payable 940,000
- deferred tax assets 184,000
income tax expense 756,000
In the economy of Cycladia, the total unemployment rate is equal to 11.0 percent, the structural unemployment rate is 2.42.4 percent, and the frictional unemployment rate is 4.4 percent. The cyclical unemployment rate equals ____ percent. (Enter your response rounded to one decimal place.)
The cyclical unemployment rate in the economy of Cycladia is 4.2%.
Explanation:The cyclical unemployment rate in the economy of Cycladia can be calculated by subtracting the sum of structural and frictional unemployment rates from the total unemployment rate.
In this case, the total unemployment rate is 11.0%, the structural rate is 2.4%, and the frictional rate is 4.4%.
So, to find the cyclical unemployment rate, we subtract 2.4% and 4.4% from 11.0%, resulting in a cyclical unemployment rate of 4.2%.
Final answer:
The cyclical unemployment rate in Cycladia is 4.2 percent, calculated by subtracting the sum of the frictional (4.4%) and structural (2.4%) unemployment rates from the total unemployment rate (11.0%).
Explanation:
To calculate the cyclical unemployment rate in Cycladia, we start by understanding that the total unemployment is the sum of frictional, structural, and cyclical unemployment. The total unemployment rate in Cycladia is 11.0 percent, the frictional unemployment rate is 4.4 percent, and the structural unemployment rate is 2.4 percent. To find the cyclical unemployment rate, we subtract the sum of frictional and structural unemployment rates from the total unemployment rate:
Total Unemployment = Frictional Unemployment + Structural Unemployment + Cyclical Unemployment11.0% = 4.4% + 2.4% + Cyclical UnemploymentCyclical Unemployment = 11.0% - (4.4% + 2.4%)Cyclical Unemployment = 11.0% - 6.8%Cyclical Unemployment = 4.2%The cyclical unemployment rate in Cycladia equals 4.2 percent.
Ayayai Corporation engaged in the following cash transactions during 2020. Sale of land and building $194,800 Purchase of treasury stock 46,900 Purchase of land 44,700 Payment of cash dividend 91,800 Purchase of equipment 58,200 Issuance of common stock 157,000 Retirement of bonds 102,900
Compute the net cash provided (used) by investing activities
Answer:
$91,900 (provided)
Explanation:
The cashflow statement shows how much cash has been used up or generated by the company's activities which are classified into 3 groups;
Operating, investing and,Financing.The sale of land and building, purchase of land and equipment are investing activities. Others are financing activities as they relate to owner's equity and long term debts.
The net cash provided (used) by investing activities
= $194,800 - $44,700 - $58,200
= $91,900
Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 114,000 kilometers during a year, the average operating cost is 12.7 cents per kilometer. If a truck is driven only 76,000 kilometers during a year, the average operating cost increases to 14.8 cents per kilometer.
Required:
1.Using the high-low method, estimate the variable and fixed cost elements of the annual cost of the truck operation. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places and Fixed cost answer to nearest whole dollar amount.)
2. Express the variable and fixed costs in the form Y = a + bX. (Do not round your intermediate calculations. Round the Variable cost per kilometer to 3 decimal places.)
3. If a truck were driven 95,000 kilometers during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations.)
Explanation:
The computation of the fixed cost and the variable cost per hour by using high low method is shown below:
Variable cost per hour = (High Operating cost - low operating cost) ÷ (High driven in kilometers - Low driven in kilometers)
where,
High operating cost = 114,000 km × 12.7%
= $14,478
Low operating cost = 76,000 km × 14.8%
= $11,248
So,
= ($14,478 - $11,248) ÷ (114,000 km - 76,000 km)
= $3,230 ÷ 38,000 km
= $0.085 per km
Now the fixed cost equal to
= High operating cost - (High driven in kilometers × Variable cost per km)
= $14,478 - (114,000 km × $0.085)
= $14,478 - $9,690
= $4,7882
2. The equation is as follows
Y = a + bx
So,
Total cost = $4,788 + 0.085X
3.
Y = a + bx
= $4,788 + 0.085 × 95,000
= $4,788 + $8,075
= $12,863
1. Variable Cost per Kilometer is $0.085 and Fixed Cost is $4,788 2. Cost Formula is [tex]\( Y = 4,788 + 0.085X \)[/tex]. 3.Total Cost for 95,000 Kilometers is $12,863.
To solve this problem, we'll use the high-low method to estimate the variable and fixed cost elements of the annual cost of truck operation.
Step 1: Determine Variable and Fixed Costs
Given Data:
High activity level: 114,000 kilometers, cost: 12.7 cents/km
Low activity level: 76,000 kilometers, cost: 14.8 cents/km
Total Costs at High and Low Activity Levels:
High activity total cost: [tex]\(114,000 \times 0.127 = 14,478\)[/tex] dollars
Low activity total cost: [tex]\(76,000 \times 0.148 = 11,248\)[/tex] dollars
Variable Cost per Kilometer:
[tex]\[ \text{Variable Cost per Kilometer} = \frac{\text{Cost at High Activity} - \text{Cost at Low Activity}}{\text{High Activity Kilometers} - \text{Low Activity Kilometers}} \][/tex]
[tex]\[ \text{Variable Cost per Kilometer} = \frac{14,478 - 11,248}{114,000 - 76,000} \][/tex]
[tex]\[ \text{Variable Cost per Kilometer} = \frac{3,230}{38,000} \][/tex]
[tex]\[ \text{Variable Cost per Kilometer} = 0.085 \text{ dollars} \][/tex]
Fixed Costs:
Using the variable cost per kilometer, we can calculate the fixed cost using the total cost equation for either the high or low point.
Let's use the high point:
[tex]\[ \text{Total Cost} = \text{Fixed Cost} + (\text{Variable Cost per Kilometer} \times \text{Kilometers Driven}) \][/tex]
[tex]\[ 14,478 = \text{Fixed Cost} + (0.085 \times 114,000) \][/tex]
[tex]\[ 14,478 = \text{Fixed Cost} + 9,690 \][/tex]
[tex]\[ \text{Fixed Cost} = 14,478 - 9,690 \][/tex]
[tex]\[ \text{Fixed Cost} = 4,788 \text{ dollars} \][/tex]
Step 2: Express the Costs in the Form [tex]\(Y = a + bX\)[/tex]
Where:
\(Y\) = Total Cost
\(a\) = Fixed Cost = $4,788
\(b\) = Variable Cost per Kilometer = $0.085
\(X\) = Number of Kilometers Driven
[tex]\[ Y = 4,788 + 0.085X \][/tex]
Step 3: Predict the Total Cost for 95,000 Kilometers
Using the cost formula:
[tex]\[ Y = 4,788 + 0.085 \times 95,000 \][/tex]
[tex]\[ Y = 4,788 + 8,075 \][/tex]
[tex]\[ Y = 12,863 \text{ dollars} \][/tex]
On July 1, 2019, Major Co. pays $15,120 to Mesa Insurance Co. for a 4- year insurance contract. Both companies have fiscal years ending December 31 Journalize and post the entry on July 1 and the adjusting entry on December 31 for Mesa Insurance Co. Mesa uses the accounts Unearned Service Revenue and Service Revenue. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to O decimal places,e.g. 5,275.) Date Account Titles and Explanation Debit Credit Unearned Service Revenue Service Revenue
Answer:
Debit Cash account $15,120
Credit Unearned Service Revenue $15,120
Being entries to record cash collected for service to be rendered.
Debit Unearned Service revenue $1,890
Credit Service Revenue $1,890
Being entries to recognize revenue earned as at 31 December
Explanation:
When an amount is collected in advance for a service yet to be rendered, the company recognizes and asset in form of cash and a liability in form of Unearned Service Revenue.
When the service for which cash was collected is performed, revenue is said to have been earned. Entries required then are debit Unearned Service Revenue Credit Service revenue.
For Mesa, on 1 July , entries required are
Debit Cash account $15,120
Credit Unearned Service Revenue $15,120
Being entries to record cash collected for service to be rendered.
As at 31 December, revenue earned
= 1/2 × $15120/4
= $1890
Entries required
Debit Unearned Service revenue $1,890
Credit Service Revenue $1,890
Being entries to recognize revenue earned as at 31 December
The journal entries and adjusting entries should be shown below.
Journal entries:Cash account $15,120
Unearned Service Revenue $15,120
(Being entries to record cash collected for service to be rendered)
Unearned Service revenue $1,890 ( 1/2 × $15120/4)
Service Revenue $1,890
( to recognize revenue earned as at 31 December)
These journal entries should be recorded.
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Sunland Company had 1570000 shares of common stock issued and outstanding at December 31, 2020. On July 1, 2021 an additional 1259000 shares were issued for cash. Sunland also had stock options outstanding at the beginning and end of 2021 which allow the holders to purchase 373000 shares of common stock at $15 per share. The average market price of Sunland's common stock was $20 during 2021. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2021?
Answer:
3,202,000 shares.
Explanation:
Diluted earning per share (EPS) is an EPS that is calculated using both the common stock and all convertible securities like convertible preferred stock, convertible debt, equity options, warrants, or convertible bonds which are converted into common stock or equity.
Diluted EPS is different from an EPS that is calculated using only the common stock.
From the common stock, the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2021 are the addition of all the shares obtained as follows:
Number of shares for diluted EPS = 1,570,000 + 1,259,000 + 373,000
= 3,202,000 shares.
Therefore, the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2021 is 3,202,000 shares.
A manufacturer of brand A jeans has daily production costs of Upper C equals 0.3 x squared minus 120 x plus 12 comma 585, where C is the total cost (in dollars) and x is the number of jeans produced. How many jeans should be produced each day in order to minimize costs? What is the minimum daily cost?
Answer:
a. 200 jeans should be produced each day in order to minimize costs.
b. The minimum daily cost is $108,585
Explanation:
a. How many jeans should be produced each day in order to minimize costs?
Given C = 0.3x^2 - 120x + 120,585 ........................... (1)
Cost is minimized when MC = C' = 0
To obtain MC, equation (1) is differentiate with respect to x as follows:
dC/dx = MC = C' = 0.6x - 120 = 0 ............................... (2)
From equation (2), we can now solve for x follows:
0.6x - 120 = 0
0.6x = 120
x = 120 ÷ 0.6
x = 200
Therefore, 200 jeans should be produced each day in order to minimize costs.
b. What is the minimum daily cost?
Substitute 200 for x in equation (1) to have:
C = 0.3(200^2) - 120(200) + 120,585
= 12,000 - 24,000 + 120,585
C = $108,585
Therefore, the minimum daily cost is $108,585.
a. 200 jeans should be produced each day in order to minimize costs.
b. The minimum daily cost is $108,585
The company you work for is a programming services contractor that consults with businesses in the United States requiring assistance in creating software in compliance with the Health Insurance Portability and Accountability Act (HIPAA). Your company advertises a proven track record in providing secure code that meets regulatory and compliance recommendations that include the protection of all Personally Identifiable Information (PII).
Answer:
Explanation:
Find attached The compliance act policy for coding that talk about the various source code for diifrent organization
Answer:
Question:
The company you work for is a programming services contractor that consults with businesses in the United States requiring assistance in creating software in compliance with the Health Insurance Portability and Accountability Act (HIPAA). Your company advertises a proven track record in providing secure code that meets regulatory and compliance recommendations that include the protection of all Personally Identifiable Information (PII).
Your client is a small hospital and surgery center that requires a program that will calculate the bill for a patient's hospital stay, including charges for the surgery, daily hospital fees, and pharmacy. The hospital only performs five types of surgeries, limits the patient stay to three days, and has a limited pharmacy offering of ten prescription drugs. The hospital employees who will use the program should be able to enter the patient information, including name, hospital ID number, diagnosis, surgery type, length of stay, and prescriptions. The program will then produce a final billing statement. The client would like the program completed in six months.
Using the file provided and referencing the scenario above, complete the 2- to 3-page System Development Life Cycle Table. The table is designed to help you see how to apply the SDLC to an actual program.
Explanation:
SDLC: Software Development life cycle model is a complete systematic process which is followed to develop a high quality product which meets the customer expectations. It generally including below phases which is followed to develop software:
Requirements Gathering and Analysis
Architecture Design
Implementation
Testing
Deploy/Maintenance
Please find below the Software Development Life Cycle Table:
Download the attached file for further solution and table
The Yum and Yee food truck near the business school serves customers during lunch hour by taking orders and making fresh batches of stir-fry. Customers have only one choice during the lunch hour so that Y&Y can maximize the number of customers served. Assume that each customer places just one lunch order, and all lunch orders are the same size: one unit of stir-fry. The stir-fry cooking works in this manner. First, one person cooks a batch of orders in a wok. The cooking depends upon the number of orders in the batch. The time to cook just one order is 3 minutes. For each additional order in the batch, it takes 0.5 minute more to cook. Thus, cooking two orders in a batch takes 3.5 minutes, cooking three orders takes 4 minutes, and so on. The other process is bagging and accepting payments (done by a separate person), which takes 0.80 minute per order.
a.What is the setup time of this process?
b.If Y&Y operates with batch sizes of 6 units, what is their process capacity (in orders per minute)?
c.If Yum and Yee operates with batch sizes of 10 units, what is the utilization of the wok?
d.Calculate the batch size (in orders) that maximizes the overall flow rate (assume there is ample demand)?
Answer:
Setup time = 2.5 min. per order
Process capacity = 1.09 units/minute
Utilization = 7.5 minutes
Explanation:
The time to cook just one order = 3 minutes
Cooking two orders in a batch = 3.5 minutes
cooking three orders = 4 minutes
bagging and accepting payments = 0.80 minutes
a) Setup time:
Setup time = 3 - 0.5
= 2.5 min. per order
b) Process capacity:
Production = Setup time + ( Processing time * Batch size )
= 2.5 + (0.5 * 6)
= 5.5 minutes
Process capacity = Batch size / Production
= 6 / 5.5
= 1.09 units/minute
c) Utilization:
Batch size = 10
Production = Setup time + (Processing time * Batch size)
= 2.5 + (0.5 * 10)
= 7.5 minutes
The base time for setting up the cooking process is 3 minutes. If Y&Y operates with 6 units, the capacity is approximately 1.09 orders per minute, and if they run 10 units, the utilization of the wok is 12.5%. To maximize the flow rate, smaller batch sizes or even single orders should be the strategy due to the incremental nature of cooking time.
Explanation:a. The setup time for preparing a batch of stir-fry is 3 minutes. This is the base time without counting any additional orders in the batch. b. If Y&Y operates with batch sizes of 6 units, the total time required to prepare a batch is 3 (for the first unit) + 0.5*(6-1) = 5.5 minutes. The capacity is 6 units / 5.5 minutes = 1.09 orders per minute.
c. If Yum and Yee operates with batch sizes of 10 units, the total time required to cook is 3 (for the first unit) + 0.5*(10-1) = 7.5 minutes. To calculate the utilization, we also need the available time. If the wok may be operated continuously, then the utilization is 7.5/60 = 12.5%.
d. The batch size that maximizes the flow rate can be found by dividing the time available for cooking (in minutes) by the cooking time per order (in minutes/order). Since the cooking time per order could vary depending on the batch size, this calculation could be complex. However, by given information, we know cooking time 'increases' with batch size, implying smaller batch sizes or even single orders should optimize the flows.
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In a net lease, the tenant is responsible for paying a clearly defined portion of the property's operating expenses. Based on your understanding of the standard definitions of "netness" in commercial leases, the tenant is responsible for which of the following in a net-net lease?
A) both property taxes and insurance
B) no operating expenses
C) all operating expenses
D) only property taxes
Answer:
A
Explanation:
net-net refers to 2 of the operating expenses in Commerical property. Triple Net refers to all of the taxes, maintenance and insurance or TMI
A day care program frequently has a few parents picking up their children late. In an attempt to curb this, the daycare decides to charge a fine to parents who are more than 10 minutes late. However, after the fine was implemented, the number of late parents increased. Which of these conclusions can be true?
a. The fine eliminated the non-financial incentives to be on time
b. The fine was not high enough to discourage being late
c. The fine was perceived as a price
d. All of the above
Answer:
correct option is d. All of the above
Explanation:
given data
charge a fine for late = 10 minute
solution
The number of late parents has increased because their late opportunity cost is not high and they can afford it. There is no non-financial incentive to arrive any other time without paying a fine
so that here All the option is true
correct option is d. All of the above
Mustard Corporation (a C corporation) owns 15% of the stock of Burgundy Corporation (a C corporation), which pays an annual dividend to its shareholders. Mustard is considering the purchase of additional shares of Burgundy stock. Would this stock purchase affect the amount of dividends received deduction that Mustard can claim
Answer:
Yes, it will affect it.
Explanation:
The dividends received deduction (DRD) refers to a US federal tax law that allows some corporation that are paid dividend by related entities to deduct certain percentage of the dividend received from their income tax depending on their percentage of ownership of the related entity that paid the dividend.
The three criteria or tiers that determines how much to deduct as DRD are as follows:
1. Generally, the DRD a corporation is qualified for is 70% of the dividend received.
2. A DRD equals to 80% of the dividend received can be deducted if the corporation holds more than 20% but less than 80% shareholding of the company that paid the dividend.
3. If the corporation holds more than 80% shareholding of the company that paid the dividend, a DRD of 100% of the dividend applies.
Therefore, additional stock purchase will affect the amount of dividends received deduction that Mustard can claim.
Final answer:
Purchasing additional shares of Burgundy Corporation could affect Mustard Corporation's dividends received deduction (DRD). The impact depends on whether the additional shares purchased increase Mustard's ownership stake to reach certain thresholds, which would allow a higher percentage of the dividends to be deducted from taxable income.
Explanation:
The purchase of additional shares of Burgundy Corporation stock by Mustard Corporation would affect the dividends received deduction (DRD) that Mustard can claim for tax purposes. The DRD allows a corporation that receives a dividend from another corporation in which it has an ownership stake to deduct a portion of that dividend from its taxable income. Notably, the amount of deduction depends on the percentage of ownership. Owning more shares typically entitles the shareholder to a larger deduction. Under U.S. tax law, corporations that own less than 20% of another corporation can deduct 50% of dividends received, those owning between 20% to 80% can deduct 65%, and those owning more than 80% can deduct 100%. If Mustard Corporation purchases additional shares and its ownership stake in Burgundy Corporation increases to meet one of these thresholds, the DRD percentage that Mustard Corporation can claim may increase, leading to a potentially more favorable tax treatment of the received dividends.
Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 14 percent, and the company just paid a dividend of $3.40, what is the current share price?
Answer;
$ 70.07
Explanation:
The price of the stock when the dividends level off at a constant growth rate, we then find the PV of the future stock price, including the PV of all dividends during the super normal growth period. The stock start it constant growth in Year 4, so that we can be able to find the price of the stock in Year 3, which is the year before the constant dividend growth begins as:
P3= D3(1 + g) / (R− g) = D0(1 + g1)3(1 + g2) / (R− g)
P3= $3.40(1.24)3(1.06) / (.14 − .06)
P3= $85.89
Therefore the price of the stock today is the PV of the first three dividends, we then add it with the PV of the Year 3 stock price.
Hence the price of the stock today will be:
P0= $3.40(1.24) / 1.14 + $3.40(1.24)2/ 1.142+ $3.40(1.24)3/ 1.143+ $85.89 / 1.143
P0= $70.07
The current shape price is $70.07
Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all that apply. Providing tax breaks and patents for firms that pursue research and development in health and sciences Imposing restrictions on foreign ownership of domestic capital Protecting property rights and enforcing contracts Increasing taxes on income from savings
Answer:
1)Protecting property rights and enforce contracts.
2)Providing tax breaks and patents for firms that pursue research and development in health and sciences.
Explanation:
These two alternatives are the most applicable in relation to policies that are most consistent with the goal of increasing productivity and growth in developing countries. The first alternative is related to the protection of property rights and compliance with contracts, which guarantees stability and political confidence to the country, which is important to attract new investors and consequently to leverage the growth and development of a country.
The other alternative concerns tax incentives and patents for companies seeking research and development in health and science. What is a way to encourage the growth of this sector, which in addition to generating savings and productivity for the country, also brings innovations and relevant discoveries in health and science, which helps the growth and development of the country.
Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month). Your firm can borrow at 6% APR with quarterly compounding.
The present value of the lease payments for the delivery truck is closest to $____.
Answer:
The present value of the lease payments for the delivery truck is closest to $207,050.
Explanation:
First we need to calculate the monthly discount rate for the lease arrangement.
EAR = (1 + APR / k) [tex]^{k}[/tex]- 1
= (1 + 0.06 / 4)[tex]^{4}[/tex] - 1 = 0.06136 or 6.14%
Monthly rate = (1 + EAR)([tex]\frac{1}{12}[/tex]) - 1
= (1.06136)[tex]^{\frac{1}{12}}[/tex] - 1 = 0.004975 = 0.4975%
Now we can apply the PVA formula in excel or calculate the PV of the lease or by a calculator:
I = 0.4975
N = 60 (5 years × 12 months/yr)
FV = 0
PMT = $4000
PV = 207,051.61.
In 2016, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients andearned $25,000. The clients signed notes receivable to Chaya that have a fair market value of$22,000 at year-end. In addition, Chaya sold a 36-month service contract on June 1, 2016, and received payment in full of $12,000.
How much income does Chaya report from these transactions in 2016?
Answer:
$27,333.33
Explanation:
The computation of the amount of income reported is shown below:
= Provided services to the customer + Payment received × number of months ÷ given number of months
= $25,000 + $12,000 × 7 months ÷ 36 months
= $25,000 + $2,333.33
= $27,333.33
The seven months is calculated from the June 1 to December 31. We assume the books are closed on December 31
Chaya Corporation reports a total income of $27,333.33 for 2016, which includes $25,000 from services provided and $2,333.33 from the service contract sold on June 1, 2016.
For Chaya Corporation, which is an accrual basis, calendar year taxpayer, the income reported for 2016 from the transactions mentioned can be determined as follows:
1. Services Provided: Chaya earned $25,000 from providing services. Under the accrual basis of accounting, income is recognized when services are performed, regardless of when cash is received. Thus, Chaya reports the full amount of $25,000 as income.
2. Fair Market Value of Notes Receivable: Chaya received notes receivable with a fair market value of $22,000 for the services. However, for accrual accounting, the income is recorded based on the amount earned, not the lower fair market value of the note receivable. Therefore, the $22,000 is not considered.
3. Service Contract: Chaya sold a 36-month service contract on June 1, 2016, and received $12,000. For accrual purposes, income must be allocated over the period the service is provided. For 2016, Chaya should report ($12,000 / 36 months) * 7 months = $2,333.33 as income earned from the service contract in 2016.
$25,000 from services provided$2,333.33 from the service contractTotal income reported for 2016: $25,000 + $2,333.33 = $27,333.33
While living in her home country of Tanzania, Sophia Kiwanuka signed an employment contract with Anne Margareth Bakilana, a Tanzanian living in Washington, D.C. Kiwanuka traveled to the United States to work as a babysitter and maid in Bakilana’s house. When Kiwanuka arrived, Bakilana confiscated her passport, held her in isolation, and forced her to work long hours under threat of having her deported. Kiwanuka worked seven days a week without breaks and was subjected to regular verbal and psychological abuse by Bakilana. Kiwanuka filed a complaint against Bakilana for intentional infliction of emotional distress, among other claims. Bakilana argued that Kiwanuka’s complaint should be dismissed because the allegations were insufficient to show outrageous intentional conduct that resulted in severe emotional distress. If you were the judge, in whose favor would you rule? Why? [Kiwanuka v. Bakilana, 844 F.Supp.2d 107 Miller, Roger LeRoy. Business Law: Text & Cases - The First Course - Summarized Case Edition (p. 123). Cengage Learning. Kindle Edition.
In this example, Kiwanuka is suing for intentional infliction of emotional distress. This can be defined as extreme and outrageous conduct which results in severe emotional distress to another person. This act must be severely extreme, to an extent that is not normally tolerated by society. In such cases, threatening conduct coupled with repeated annoyances can be enough to offer support to a claim of intentional infliction of emotional distress.
If I were the judge, I would rule in favor of Kiwanuka, as I the fact that Bakilana held Kiwanuka in isolation and confiscated her passport is evidence of extreme emotional distress.
A company had 158 million shares outstanding at the beginning of the year 2012. On February 2, 2012, the company issued an additional 30 million shares to the market at a price of $50, while the market price per share was $50. The resulting price per share after new issuance will be____________.
The resulting price per share after new issuance will be $50
Solution:
Values:
Company shares = 158 million shares
Additional shares = 30 million shares
Market price = $50 per share
Evaluating:
Total value of equity prior to issue = Company shares * Market price
= 158 million * 50
= $7.9 billion
Value of share issue = Additional shares * Market price
= 30 million * 50
= $1.5 billion
Total value of equity after share issue = Total value of equity prior to issue + Value of share issue
= 7.9 billion + 1.5 billion
= $9.4 billion
Shares outstanding after share issue = Company shares + Additional shares
= 158 million + 30 million
= 188 million
Price per share after issue = [tex]\frac{Total value of equity after share issue}{Shares outstanding after share issue}[/tex]
= [tex]\frac{9.4 billion}{188 million}[/tex]
= $50
Boston Cycles started October with 12 bicycles that cost $42 each. On October 16, Boston bought 40 bicycles at $68 each. On October 31, when the average cost per unit was $62.00, Boston sold 34 bicycles for $100 each. Boston's cost of goods sold under the FIFO, LIFO and weighted-average methods is summarized as follows: FIFO LIFO Weighted-average bicy Cost of Goods Sold $2,000 $ 2,312 $ 2,108 Which inventory costing method produced the lowest cost of goods sold?
Answer:
FIFO method of inventory valuation produced the lowest of goods sold at $2000
Explanation:
The implication of FIFO producing the lowest costs of good sold is that profit under FIFO method will be much higher since a lower costs of good sold is deducted from sales revenue to arrive at gross profit for the period
In addition, higher gross profit is also a pointer to higher net income and higher tax expense overall.
In order to manage tax exposure effectively,the LIFO method of valuation would be the best option as it has the highest costs of good sold,hence lower profit figure and lower tax liability
"Farley Frozen Yogurt is a perfectly competitive firm. The market price of a frozen yogurt cake is $7. Farley sells 200 frozen yogurt cakes. Its AVC is $6, and its AFC is $4."
Suppose the marginal cost for frozen yoghurt cake is $7. In this case, Farley frozen youghurt should:
(A) produce less.
(B) produce the same quantity
(C) produce more.
(D) non produce
Answer:
B. Produce the same quantity
Explanation:
Perfect Competition is market form with many buyers & sellers, where identical goods are sold at uniform prices .
In this market : Marginal Revenue (MR) = Average Revenue (AR) = Price (P) , as a horizontal curve parallel to X axis.
Producer is at profit maximising equilibrium where : MR = MC (Marginal Cost). Producer tends to stay at this production point.
So, by above 2 equations : MC = [ MR = P ] is the equilibrium for Farley Frozen Yogurt .
As given : Price = $7 & MC = $7 satisfies above equilibrium equality condition. Hence , this is Farley Frozen Yogurt's Producer Equilibrium & it would tend to produce the same quantity.
Final answer:
Farley Frozen Yogurt should continue to produce the same quantity of frozen yogurt cakes as the market price equals the marginal cost, and therefore the firm operates at the point where Price = MR = MC, contributing towards fixed costs despite incurring losses.
Explanation:
In a perfectly competitive market, the firm's decision regarding the quantity to produce is based on the equality of price, marginal revenue (MR), and marginal cost (MC). Given that Farley Frozen Yogurt sells its product at a market price of $7, which equals its marginal cost, the firm is currently operating at the point where Price = MR = MC and therefore should produce the same quantity of frozen yogurt cakes. Producing more would increase the average total cost (ATC), which is $10 (AVC + AFC), while producing less would not maximize profits. As long as the price covers the average variable cost (AVC) and contributes to fixed costs, the firm should continue to produce the same amount.
By following the pricing rule where Price = MR = MC, we must also consider the firm's profitability. If price equals MC but is less than ATC, the firm is incurring losses. In this scenario with Farley Frozen Yogurt, because the sale price ($7) is lower than the ATC ($10), each unit sold contributes to a loss. However, since the price is higher than AVC ($6), the firm is covering its variable costs and contributing $1 towards its fixed costs with each unit sold. Therefore, the best option for Farley Frozen Yogurt is to maintain production, hoping that market conditions will improve, or until fixed costs change the calculation.
This analysis is consistent with the example given where the price of frozen raspberries falls to the break even point, at which the firm's price received is exactly equal to its average cost of production. In such a scenario, the firm would also continue to produce the quantity where Price = MR = MC, to meet the condition for maximizing profits or in the worst case, minimizing losses.
On September 30, Silver Corporation, a calendar year taxpayer, sold a parcel of land (basis of $400,000) for a $1 million note. The note is payable in five installments, with the first payment due next year. Because Silver did not elect out of the installment method, none of the $600,000 gain is taxed this year. Silver Corporation had a $300,000 deficit in accumulated E&P at the beginning of the year. Before considering the effect of the land sale, Silver had a deficit in current E&P of $50,000. Sam, the sole shareholder of Silver, has a basis of $200,000 in his stock. If silver distributes $900,000 to Sam on December 31,
how much income must he report for tax purposes?
Answer: Sam must report $700,000($900,000 - $200,000) for tax purposes.
Explanation:
Because Sam is the sole shareholder of Silver, and has a basis of $200,000 in his stock. Once Silber distributes $900,00to Sam on December 31