Minion, Inc., has no debt outstanding and a total market value of $211,875. Earnings before interest and taxes, EBIT, are projected to be $14,300 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 20 percent higher. If there is a recession, then EBIT will be 35 percent lower. The company is considering a $33,900 debt issue with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 7,500 shares outstanding. Assume the company has a tax rate of 21 percent
a-1. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
a- Calculate the percentage changes in EPS when the economy expands or enters a 2. recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to the nearest whole number, e.g., 32.)
b-1.Calculate earnings per share, EPS, under each of the three economic scenarios after the recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b- Calculate the percentage changes in EPS when the economy expands or enters a 2. recession assuming recapitalization has occurred.

Answer:

Consumption c is a function of disposable income

Investment I is a function of interest rate

Marginal propensity to consume equals 0.8

If this 3, I = investment

= 500-(3*50)

= 500-150

= 350

We have Y= C+I+G

Y = 120+0.8(Y-125)+350+150

Y = 120+0.8Y-100+350+150

Y-0.8Y = 120-100+350+150

0.2Y = 520

Y = 520/0.2

Y = 2600

GDP and interest rate falls below full employment

If there is no change in monetary policy an increase in government purchases by 50dollars takes gdp back to full employment

If no change in fiscal policy when interest rate decreases by 1.4% God goes back to full employment.

Answer:

The answer is "8.37%".

Explanation:

[tex]\text{MV of equity} = \text{equity price} \times \text{number of outstanding shares}[/tex]

                     [tex]=84 \times 4100000\\\\=344400000[/tex]

[tex]\text{MV of Bond1}=\text{Par value} \times \text{bonds outstanding} \times \text{age of percentage}[/tex]

                      [tex]=1000 \times 70000 \times 0.98 \\\\=68600000[/tex]

[tex]\text{MV of Bond2}=\text{Par value} \times \text{bonds outstanding} \times \text{age of percentage}[/tex]

                      [tex]=1000 \times 50000 \times 1.08 \\\\=54000000[/tex]

[tex]\text{MV of firm} = \text{MV of Equity} + \text{MV of Bond1}+ \text{MV of Bond 2}[/tex]

                  [tex]=344400000+68600000+54000000\\\\=467000000[/tex]

[tex]\text{Weight of equity W(E)} = \frac{\text{MV of Equity}}{\text{MV of firm}}[/tex]

                                     [tex]= \frac{344400000}{467000000}\\\\=0.7375[/tex]

[tex]\text{Weight of debt W(D)}= \frac{\text{MV of Bond}}{\text{MV of firm}}[/tex]

                                  [tex]= \frac{122600000}{467000000}\\\\=0.2625[/tex]

Equity charges

By DDM.  

[tex]\text{Price = new dividend} \times \frac{(1 + \text{rate of growth})}{( \text{Equity expense-rate of growth)}}[/tex]

[tex]84 = 3.95 \times \frac{(1+0.05)}{(\text{Cost of equity}- 0.05)}\\\\84 = 3.95 \times \frac{(1.05)}{(\text{Cost of equity} - 0.05)}\\\\84 = \frac{4.1475}{ (\text{Cost of equity} - 0.05)}\\\\\text{Cost of equity} -0.05 = \frac{4.1475}{84}\\\\\text{Cost of equity} -0.05 = 0.049375\\\\\text{Cost of equity} = 0.049375 + 0.05\\\\\text{Cost of equity} = 0.099375 \\\\\text{Cost of equity} \% = 9.9375 \% \ \ \ or \ \ \ 9.94 \% \\\\[/tex]

Debt expenses  

Bond1

[tex]K = N \times 2 \\\\[/tex]

[tex]Bond \ Price = \sum [ \frac{\text{(Semi Annual Coupon)}}{(1 + \frac{YTM}{2})^k}] + \frac{Par\ value}{(1 + \frac{YTM}{2})^{N \times 2}}[/tex]

[tex]k=1\\\\K =20 \times 2\\\\980 = \sum [ \frac {(5.1 \times \frac{1000}{200})}{(1 + \frac{YTM}{200})^k}] + \frac{1000}{(1 + \frac{YTM}{200})}^{20 \times 2}\\\\k=1\\\\\ YTM1 = 5.2628923903\\\\Bond2\\[/tex]

[tex]K = N \times 2[/tex]

[tex]Bond \ Price = \sum [ \frac{\text{(Semi Annual Coupon)}}{(1 + \frac{YTM}{2})^k}] + \frac{Par\ value}{(1 + \frac{YTM}{2})^{N \times 2}}[/tex]

[tex]k=1\\\\K =12 \times 2\\\\[/tex]

[tex]1080 =\sum [\frac{(5.6 \times \frac{1000}{200})}{(1 + \frac{YTM}{200})^k}] +\frac{1000}{(1 +\frac{YTM}{200})^{12 \times 2}} \\\\k=1\\\\YTM2 = 4.72\\\\[/tex]

[tex]\text{Company debt costs} = YTM1 times \frac{(MV \ bond1)}{(MV \ bond1+MV \ bond2)}+YTM2 \times \frac{(MV \ bond2)}{(MV \ bond2)}\\\\[/tex]

The cost of the debt for the company:

[tex]= 5.2628923903 \times \frac{(68600000)}{(68600000+54000000)}+4.72 \times \frac{(68600000)}{(68600000+54000000)}\\\\[/tex]

Business debt cost=[tex]5.02 \% \\\\[/tex]

after taxation cost of debt:  

[tex]= \text{cost of debt} \times (1- tax \ rate)\\\\= 5.02 \times (1-0.21)\\\\= 3.9658\\\\[/tex]

[tex]WACC= \text{after debt charges} \times W(D)+equity cost \times W(E) \\\\[/tex]

            [tex]=3.97 \times 0.2625+9.94 \times 0.7375 \\\\ =8.37 \% \\\\[/tex]

Answer: Check explanation

Explanation:

a. Sales tax payable

Amount = $120,000 × 5%

= $120,000 × 0.05

= $6000

b. Notes payable, short term

Amount = $85000

Interest payable = $85000 × 4% × 4/12

= $1133.3

c. Unearned revenue

Amount: $2400 × 2/6

= $800

d. Accrued Warranty Payable

Amount = $11600 + $34000 - $34800

= $10800

e. Current portion of long term note payable

Amount = $35,000

Interest payable

Amount = $70000 × 12%

= $8400

Answer:

$1,513.30

Explanation:

The Trading  price of the Bond is it Present Value (PV) and is calculated as :

Fv = $1000

n = 5 × 2 = 10

pmt = ($1000 × 10.0%) ÷ 2 = $100

p/yr = 2

i = 7.5%

Pv = ?

Using a Financial Calculator, the Price of the Bond (PV) is $1,513.30.

Answer:

I couldn't find the questions that should follow these transactions, the only requirement that I found on similar questions was to journalize them:

Oct. 1 Martin purchases 2 new saws on credit at $375 each; the saws are added to Martin's rental fleet; payment is due in 30 days.

Dr Equipment 750

    Cr Accounts payable 750

8 Martin accepts advance deposits for tool rentals of $75.

Dr Cash 75

    Cr Unearned revenue 75

15 Martin receives a $150 bill for electricity provided by Local Electric Company; payment is due in 30 days.

Dr Electricity expense 150

    Cr Accounts payable 150

20 Customers are charged $750 by Martin for tool rentals; payment is due from customers in 30 days.

Dr Accounts receivable 750

    Cr Service revenue 750

31 Payments of $500 are received by Martin from customers billed for rentals on October 20.

Dr Cash 500

    Cr Accounts receivable 500

Answer:

1. True.

2. False.

3. True.

4. False.

Explanation:

GAAP is an acronym for Generally Accepted Accounting Principles. It comprises of the accounting standard, procedures and principles used by public institutions in the United States of America. The GAAP is issued by the Financial Accounting Standards Board (FASB) and adopted by the U.S. Securities and Exchange Commission (SEC).

GAAP includes each of the following pronouncements:

For external reporting purposes, US Generally Accepted Accounting Principles (GAAP) allows companies to use only the traditional format of the income statement.

When accountants prepare and compile financial statements for public firms, it must be in line with United States of America, Generally Accepted Accounting Principles (GAAP).

Also, the financial accounting standards board (FASB) is a private, non-profit organization saddled with the responsibility of establishing and maintaining standard financial accounting and reporting for general guidance of individuals such as investors, issuers and auditors.

Additionally, Securities and Exchange Commission (SEC) reviews registration statements of bond issuers, investment advisers etc, to ensure they comply with current laws and regulations.

1. True: GAAP is the term used to indicate the whole body of FASB authoritative literature.

2. False: Any company claiming compliance with GAAP must comply with most standards and interpretations but does not have to follow the disclosure requirements. All companies are required to follow the disclosure requirements at all times.

3. True: The primary governmental body that has influence over the FASB is the SEC.

4. False: The FASB has a government mandate and therefore does not have to follow due process in issuing a standard. FASB has to follow due process all the time in issuing standards.

Please find attached

Answer and Explanation:

1. If there are no other bidders present as from question them we can conclude that Kenji would buy the art piece for $5000. See question

2. If there is a bidder present in the name of Manuel who would bid for $8000 then Kenji would bid at $8000 and win the bid for the art piece. See question. Kenji would bid at price of 2nd highest bidder to win the bid for art piece

Answer:

When the purchase price is lower than the fair market value, accountants generally refer to this as negative goodwill. All negative goodwill must be reported as a gain.  

Another way to refer to this type of situation is a bargain purchase (lower price than FMV).

Answer:

a. What is the estimated contribution margin per ticket sold for the benefit concert?

contribution margin per ticket = ($15.50 + $2 + $17) - ($6 + $2.55 + $7) = $34.50 - $15.55 = $18.95

b. What are the estimated total fixed costs for the benefit concert?

total fixed costs = $21,000 + $85,000 = $106,000

c. What is the estimated profit from the benefit concert if 10,500 tickets are sold?

estimated profit = (10,500 x $18.95) - $106,000 = $92,975

d. How many tickets must be sold in order for concert profit to be $100,000?

number of tickets sold = ($106,000 + $100,000) / $18.95 = 10,870.71 ≈ 10,871 tickets sold

e. Assuming a tax rate of 31% on profits from the concert, what must dollar ticket sales be in order for after-tax concert profits to be $100,000?

$100,000 / (1 - 31%) = $144,927.54

number of tickets sold = ($106,000 + $144,927.54) / $18.95 = 13,241.56 ≈ 13,241.56 tickets sold

f. Assume that the organizers can negotiate the fixed payment for the pavilion's operating expenses. If the organizers expect to sell 10,500 tickets, how much can they afford to pay and still earn a profit of $100,000 (ignore taxes)?

contribution margin increases to $18.95 + $7 = $25.95

10,500 = ($21,000 + $100,000 + ?) / $25.95

$272,475 = $121,000 + ?

? = $151,475

you can pay up to $151,475 in fixed expenses to the pavilion

Answer:

Please see attached trial balance as requested.

Explanation:

Please find attached solved trial balance for Spade Company as at May 31.

Incomplete question. The options read;

A. An aggrieved taxpayer files a petition with the United States Tax Court stating a claim against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary

B. The IRS representative signs a complaint naming the tax practitioner and files the complaint with the Administrative Law Judge (ALJ)

C. The Secretary of the Treasury files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary in the United States District Court for the District of Columbia

D. The Commissioner of the IRS files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary with the United States Tax Court

Answer:

D. The Commissioner of the IRS files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary with the United States Tax Court

Explanation:

According to the information on the thetaxadviser website, when there is a  violation of the regulations in Circular 230 instituted by a tax practitioner a complaint would be filed, and if found guilty, he or she "may be censured, suspended, or disbarred from practice before the IRS."

Usually, the Office of Professional Responsibility would take up the case against the tax practitioner.

Answer:

1. No match.

2. Rebate.

3. No match.

4. No match.

5. Lease.

Explanation:

1. No match: This is the worth of the leased asset after the lease period expires.

2. Rebate: This is a partial refund offered to attract the buyer to purchase the vehicle.

3. No match: This is the price of an asset being leased as specified in the lease agreement, which includes the negotiated cost of the vehicle and any applicable fees and taxes.

4. No match: This is the advertised retail price listed on a particular vehicle for sale.

5. Lease: This is a contract which allows the lessee (consumer) to use the asset, such as car, land, services etc., in return for a specific amount paid periodically.

Answer:

A. Dr Cash 174,600

Dr Discount on bonds payable 18,941

Cr Bond Payable 173,000

Cr Paid-in Capital—Stock Warrants

20,541

B. Dr Cash 174,600

Cr Discount on bonds payable 1,600

Cr Bond Payable 173,000

Explanation:

A. Preparation of the Journal entries that should be made at the time of the issuance of the bonds and warrants

Dr Cash 174,600

Dr Discount on bonds payable 18,941

($173,000 - $154,059)

Cr Bond Payable 173,000

Cr Paid-in Capital—Stock Warrants

20,541

[(174,600+18,941)-173,000]

B. Preparation of the journal entry if the warrants were non-detachable Journal entries

Dr Cash 174,600

Cr Discount on bonds payable 1,600

(174,600-173,000)

Cr Bond Payable 173,000

Calculation for value assign to bonds

Value assign to bonds=(155,700/155,700+20,760)*174,600

Value assign to bonds=155,700/176,460*174,600

Value assign to bonds=154,059

Calculation for value assign to warrant

Value assign to warrant=(20,760/155,700+20,760)*174,600

Value assign to warrant=20,760/176,460*174,600

Value assign to warrant=20,541

Answer:

For buying = $32,640

For leasing = $31,800

Explanation:

The computation is shown below:

For buying

Total cash outflow = Down payment + Loan repayment - Value of vehicle at the end of loan

= $5,600 + (780 × 48) - $10,400

= $32,640

For Leasing

Total cash outflow = Down payment + Loan repayment - Value of vehicle at the end of loan

= $2,000 + (600 × 48) - $1,000

= $31,800

Answer:

Sunk cost

Explanation:

The sunk cost is a type of cost which is already spent or incurred by company these cost are not relevant for the decision making as for the decision making only relevant cost is to be considered

It is a past cost that cannot be recovered back.

hence, as per the given situation, it is a sunk cost and the same is to be considered

Answer:

a) May 1 G. Gram invested $40,000 cash in the company in exchange for its common stock.

Dr Cash 40,000

    Cr Common stock 40,000

May 1 The company rented a furnished office and paid $2,200 cash for May’s rent.

Dr Rent expense 2,200

    Cr Cash 2,200

May 3 The company purchased $1,890 of equipment on credit.

Dr Equipment 1,890

    Cr Accounts payable 1,890

May 5 The company paid $750 cash for this month’s cleaning services.

Dr Cleaning expenses 750

    Cr Cash 750

May 8 The company provided consulting services for a client and immediately collected $5,400 cash.

Dr Cash 5,400

    Cr Service revenue 5,400

May 12 The company provided $2,500 of consulting services for a client on credit.

Dr Accounts receivable 2,500

    Cr Service revenue 2,500

May 15 The company paid $750 cash for an assistant’s salary for the first half of this month.

Dr Wages expense 750

    Cr Cash 750

May 20 The company received $2,500 cash payment for the services provided on May 12.

Dr Cash 2,500

    Cr Accounts receivable 2,500

May 22 The company provided $3,200 of consulting services on credit.

Dr Accounts receivable 3,200

    Cr Service revenue 3,200

May 25 The company received $3,200 cash payment for the services provided on May 22.

Dr Cash 3,200

    Cr Accounts receivable 3,200

May 26 The company paid $1,890 cash for the equipment purchased on May 3.

Dr Accounts payable 1,890

    Cr Cash 1,890

May 27 The company purchased $80 of equipment on credit.

Dr Equipment 80

    Cr Accounts payable 80

May 28 The company paid $750 cash for an assistant’s salary for the second half of this month.

Dr Wages expense 750

    Cr Cash 750

May 30 The company paid $300 cash for this month’s telephone bill.

Dr Telephone expense 300

    Cr Cash 300

May 30 The company paid $280 cash for this month’s utilities.

Dr Utilities expense 280

    Cr Cash 280

May 31 The company paid $1,400 cash in dividends to the owner (sole shareholder).

Dr Dividends 1,400

    Cr Cash 1,400

                                                 debit               credit

Cash                                        $42,780

Equipment                              $1,970

Accounts payable                                           $80

Common stock                                               $40,000

Service revenue                                             $11,100

Rent expense                         $2,200

Cleaning expenses                $750

Wages expense                     $1,500

Telephone expense               $300

Utilities expense                     $280

Dividends                                $1,400                          

totals                                        $51,180            $51,180

Service revenue                                             $11,100

Expenses:

Net income                                                    $6,070

Beginning balance                                               $0

Common stocks issued                             $40,000

Net income                                                   $6,070

Sub-total                                                     $46,070

Dividends                                                   ($1,400)

Ending balance                                          $44,670

Assets:

Cash $42,780

Equipment $1,970

Total assets                             $44,750

Liabilities and equity:

Accounts payable $80

Common stock $40,000

Retained earnings $4,670

Total liabilities and equity      $44,750

Cash flows from operating activities:

Net income                                      $6,070

Increase in accounts payable             $80

net cash from operating activities  $6,150

Cash flows from financing activities:

Purchase of equipment                  ($1,970)

Cash flow from financing activities:

Common stocks issued               $40,000

Dividends paid                              ($1,400)

net cash fro financing activities  $38,600

net cash increase                        $42,780

beginning cash balance                 $0    

ending cash balance                  $42,780

a.1. The final total for each account is determined in the general ledger as follows:

Date   Account Titles                  Debit       Credit

May 1 Common Stock             $40,000

May 1 Rent Expense                                   $2,200

May 5 Cleaning Services Expense              $750

May 8 Consulting Fees            $5,400

May 15 Salaries Expense                             $750

May 20 Accounts Receivable $2,500

May 25 Accounts Receivable $3,200

May 26 Accounts Payable                       $1,890

May 28 Salaries Expense                          $750

May 30 Telephone Expense                     $300

May 30 Utilities                                          $280

May 31  Dividends                                   $1,400

May 31  Balance                                   $42,780

Totals                                     $51,100   $51,100

Date   Account Titles                  Debit       Credit

May 12 Consulting Fees          $2,500

May 20 Cash                                             $2,500

May 22 Consulting Fees        $3,200

May 25 Cash                                            $3,200

Totals                                      $5,700      $5,700

Date   Account Titles                  Debit       Credit

May 3 Accounts Payable          $1,890

May 27 Accounts Payable              80

May 31 Balance                                          $1,970

Totals                                        $1,970      $1,970

Date   Account Titles                  Debit       Credit

May 1 Cash                                              $40,000

Date   Account Titles                  Debit       Credit

May 3  Equipment                                     $1,890

May 26 Cash                              $1,890

May 27 Equipment                                        $80

May 31  Balance                             $80

Totals                                         $1,970    $1,970

Date   Account Titles                  Debit       Credit

May 8 Cash                                                $5,400

May 12 Accounts Receivable                   $2,500

May 22 Accounts Receivable                    3,200

May 31  Balance                        $11,100

Totals                                        $11,100    $11,100

Date   Account Titles                  Debit       Credit

May 1  Cash                              $2,200

Date   Account Titles                  Debit       Credit

May 5 Cash                                 $750

Date   Account Titles                  Debit       Credit

May 15 Cash                                $750

May 28 Cash                               $750

May 31  Balance                                        $1,500

Totals                                       $1,500     $1,500

Date   Account Titles                  Debit       Credit

May 30 Cash                                $300

Date   Account Titles                  Debit       Credit

May 30 Cash                                $280

Date   Account Titles                  Debit       Credit

May 31 Cash                              $1,400

a.2. The determination that the equation is in balance is established through the Trial Balance as follows:

Date   Account Titles                  Debit       Credit

Cash                                         $42,780

Common stock                                         $40,000

Equipment                                 $1,970

Accounts payable                                           $80

Consulting fees                                          $11,100

Rent expense                         $2,200

Cleaning expenses                   $750

Wages expense                     $1,500

Telephone expense                $300

Utilities expense                      $280

Dividends                              $1,400

Totals                                   $51,180     $51,180

b. The preparation of the income statement is as follows:

The Gram Co.

For the month ended May 31

Service revenue                     $11,100

Expenses:

Rent expense          $2,200

Cleaning expenses    $750

Wages expense      $1,500

Telephone expense $300

Utilities expense       $280 ($5,030)

Net income                          $6,070

c. The preparation of the statement of owner's equity is as follows:

The Gram Co.

As of May 31

Common stocks issued $40,000

Net income                       $6,070

Dividends                        ($1,400)

Ending balance           $44,670

d. The preparation of the Balance Sheet is as follows:

The Gram Co.

As of May 31

Assets:

Cash                        $42,780

Equipment                 $1,970

Total assets            $44,750

Liabilities and equity:

Accounts payable        $80

Equity:

Common stock    $40,000

Retained earnings $4,670

Total equity         $44,670

Total liabilities and

owner's equity   $44,750

e. The preparation of the Statement of Cash Flows is as follows:

The Gram Co.

Operating activities:

Net income                          $6,070

Increase in accounts payable $80

Net operating cash             $6,150

Investing activities:

Purchase of equipment    ($1,970)

Financing activities:

Common stocks issued $40,000

Dividends paid                 ($1,400)

Net financing cash        $38,600

Net cash flows              $42,780

Beginning cash balance        $0

Net cash flows              $42,780

Ending cash balance   $42,780

May 1 Cash $40,000 Common Stock $40,000

May 1 Rent Expense $2,200 Cash $2,200

May 3 Equipment $1,890 Accounts Payable $1,890

May 5 Cleaning Services Expense $750 Cash $750

May 8 Cash $5,400 Consulting Fees $5,400

May 12 Accounts Receivable $2,500 Consulting Fees $2,500

May 15 Salaries Expense $750 Cash $750

May 20 Cash $2,500 Accounts Receivable $2,500

May 22 Accounts Receivable $3,200 Consulting Fees $3,200

May 25 Cash $3,200 Accounts Receivable $3,200

May 26 Accounts Payable $1,890 Cash $1,890

May 27 Equipment $80 Accounts Payable $80

May 28 Salaries Expense $750 Cash $750

May 30 Utilities (Telephone) $300 Cash $300

May 30 Utilities $280 Cash $280

May 31 Dividends $1,400 Cash $1,400

Learn more about preparing financial statements at https://brainly.in/question/33221066

Answer:

KW Steel Corp. and Waretown Steel

LIFO and FIFO Inventory Valuation Methods:

a. Computation of each company's 20X1 gross margin percentage and inventory turnover:

                                         KW Steel Corp.           Waretown Steel

                                         ($ in millions)                ($ in millions)

                                        20X1         20X0           20X1         20X0

B/sheet inventories      $797.6      $692.7         $708.2      $688.6

LIFO reserve                   378.0        334.9

Sales                            4,284.8     4,029.7         3,584.2     3,355.8

Cost of goods sold     3,427.8     3,226.5         2,724.0      2,617.5

Gross margin               $857.0     $803.2          $860.0      $738.3

Gross margin %             20%                                24%

Average Inventory =  $745.15                         $698.4        

Inventory Turnover    4.6 ($3,427.8/$745.15)  3.9  ($2,724.0/$698.4)

b. Restatement of KW's cost of goods sold and inventory balances to FIFO:

                                     KW Steel Corp.           Waretown Steel

                                       ($ in millions)                ($ in millions)

                                     20X1         20X0           20X1         20X0

Sales                         4,284.8     4,029.7         3,584.2     3,355.8

Cost of goods sold $3,805.8  $3,561.40

Gross margin             $479.0     $468.3          $860.0      $738.3

Gross margin %           11.2%                                24%

Inventory Turnover    9.8 ($3,805.8/$388.75)  3.9  ($2,724.0/$698.4)

c. The performance of KW Steel worsened with the reinstatement of the LIFO reserves.  Before the reinstatement, KW Steel was running closely behind its competitor, Waretown Steel.  But after the reinstatement, Waretown gave KW Steel more gap in performance.  This reinstatement shows that when the performances of two companies are compared based on different criteria, the financial analyst will likely arrive at a wrong conclusion.

Explanation:

a) Data and Calculations:

                                         KW Steel Corp.           Waretown Steel

                                         ($ in millions)                ($ in millions)

                                        20X1         20X0           20X1         20X0

B/sheet inventories      $797.6      $692.7         $708.2      $688.6

LIFO reserve                   378.0        334.9

Sales                            4,284.8     4,029.7         3,584.2     3,355.8

Cost of goods sold     3,427.8     3,226.5         2,724.0      2,617.5

Gross margin               $857.0     $803.2          $860.0      $738.3

Gross margin %             20%                                24%

Average Inventory =  $745.15                         $698.4        

Inventory Turnover    4.6 ($3,427.8/$745.15)  3.9  ($2,724.0/$698.4)

c.

                                     KW Steel Corp.           Waretown Steel

                                       ($ in millions)                ($ in millions)

                                     20X1         20X0           20X1         20X0

B/sheet inventories   $797.6      $692.7         $708.2      $688.6

LIFO reserve                378.0        334.9

FIFO balance             $419.6      $357.8

Cost of goods sold  3,427.8     3,226.5         2,724.0      2,617.5

LIFO reserve               378.0        334.9

Average Inventory =  $745.15                         $698.4

New Average Invt.      388.75      

Answer and Explanation:

The consumer price index refers to an index in which the prescribed market cost of goods & services by the prices years from the base year prices of the prescribed market basket and then it is multiplied by 100.

But the Gross Domestic Inflator would be represented when the all types of prices of goods and services generated domestically

An increase in the price refelected the GDP deflator

And, the decrease in the price of treewood represents CPI

Answer:

cash account reconciliation:

cash account balance      $16,893

+ earned interest                     $10

- bank fees                               ($6)

reconciled cash account $16,897

bank account reconciliation:

bank account balance      $17,616

+ deposits in transit           $2,785

- outstanding check         ($3,504)

reconciled bank account $16,897

After the accounts have been reconciled, both must have the same balance. If not, then you must check your answer and recalculate until both match.

Answer:

$87,800

Explanation:

The following expenditures were incurred by Tamerisk incorporation when purchasing a land

Cash price = $74,000

Accured taxes = $4,400

Attorneys fee= $4,300

Real estate brokers commission = $1,500

Clearing and grading = $3,600

Therefore the cost of the land can be calculated as follows

= $74,000 + $4,400 + $4,300 + $1,500 + $3,600

= $87,800

Hence the cost of the land is $87,800

Answer:

I used an excel spreadsheet since there is not enough room here.              

Explanation:

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.

Answer:

Sept 6.   DR Inventory (80 * 20)                                  1,600  

                    CR Accounts Payable                                             $1,600

Sept 9.    DR Inventory                                                    80

                    CR Cash                                                                   80

Sept 10.  DR Accounts Payable                                     63

                    CR Inventory                                                            63

Sept 12.  DR Accounts Receivable (26 * 31)                806

                     CR Sales Revenue                                                806

               DR Cost of Goods Sold  (21 * 26)                 546

                     CR Inventory                                                         546

Sept 14.    DR Sales Returns and Allowances                 31

                     CR Accounts Receivable                                        31

                 DR Inventory                                                  21

                      CR Cost of Goods Sold                                         21

Sept. 20    DR Accounts Receivable (30 * 32)             960

                        CR Sales Revenue                                              960

                  DR Cost of Goods Sold (30 * 21)               630

                        CR Inventory                                                        630

Answer:

The balance sheet

Explanation:

In a balance sheet, one can see the information on the assets of the company, their liabilities and the equity brought by the shareholders at any particular point in time.

In some cases, it can be referred to as statement of net worth because one can be able to see what the company owns and owes and how the assets are financed either as equity or debt.

Answer:

$16,500

Explanation:

She invested = $12,000

Total money spent to acquire the policy = ($16,500 + $5000) = $21,500

Total money invested on policy = $21500 + $12000

Total money invested on policy = $33500

Money that sara got after angela died = $50,000

Therefore, the taxable proceed will be = $50,000 - $33,500 = $16,500

Answer:

the implied rate of return on the stock is 14.80%

Explanation:

The computation of the implied rate of return is shown below:

The Rate of return is

= (Dividend at year 1  ÷  share price) + growth rate

= ( $6 ÷ 104) + 0.09

= 0.058 + 0.09

= 14.80%

We simply applied the above formula

And, the same is to be considered

hence, the implied rate of return on the stock is 14.80%

Answer:

a) sales revenue     75,760

  cost of good sold 51,000

gross profit:             24,760

b)

LESSOR ENTRIES:

lease receivable  69,260 debit

cash                        6,500 debit

  sales revenue     75,760 credit

--to record sale on lease--

cost of good sold 51,000 debit

    Inventory            51,000 credit

--to record cost--

LESEE ENTRIES:

equipment 75,760 debit

 lease liability    69,260 credit

 cash                    6,500 credit

Lease Schedule:

[tex]\left[\begin{array}{cccccc}Time&Beg&Cuota&Interest&Amort&Ending\\0&75760&6500&&6500&69260\\1&69260&6500&2078&4422&64838\\2&64838&6500&1945&4555&60283\\3&60283&6500&1808&4692&55591\\4&55591&6500&1668&4832&50759\\5&50759&6500&1523&4977&45782\\6&45782&6500&1373&5127&40655\\7&40655&6500&1220&5280&35375\\8&35375&6500&1061&5439&29936\\9&29936&6500&898&5602&24334\\10&24334&6500&730&5770&18564\\11&18564&6500&557&5943&12621\\12&12621&13000&379&12621&0\\\end{array}\right][/tex]

December 31st, 2021  (1st payment)

LESEE ENTRIES:

lease liability        4,422 debit

interest expense 2,078 debit

     cash                     6,500 credit

--to record payment--

depreciation expense 3,547.5 debit

       acc depreciation      3,547.5 credit

--to record depreciation--

LESSOR ENTRIES:

cash 6,500 debit

     lease receivables  4,422 credit

    interest revenue    2,078 credit

e) option exercised:

LESEE ENTRIES:

lease liability       12,621 debit

interest expense     379 debit

     cash                     13,000 credit

--to record purchase option--

LESSOR ENTRIES:

cash 13,000 debit

     lease receivables  12,621  credit

    interest revenue         379 credit

--to record purchase option--

Explanation:

We solve for the present value of the lease:

Present Value of Annuity-due

[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]

C $6,500

time 12

rate     0.03

[tex]6500 \times \frac{1-(1+0.03)^{-12} }{0.03} = PV\\[/tex]

PV $66,642.0567

+ 13,000 purchase option on June 2024:

PRESENT VALUE OF LUMP SUM

[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]  

Maturity  13,000.00

time   12.00

rate  0.03

[tex]\frac{13000}{(1 + 0.03)^{12} } = PV[/tex]  

PV   9,117.94

Total lease receivables: 66,642.06 + 9,117.94 = 75,760

a) sales revenue     75,760

  cost of good sold 51,000

gross profit:             24,760

d) depreciation on equipment:

(75,760 - 19,000) / 4 year = 14,190 per year

we divide by four as only a quarter of the year past:

14,190 / 4 quarter = 3,547.5

It is the lesee which does the depreicaiton as the Truck possesion belong to it.