Answer:
$2.2 per unit
Explanation:
With regards to the above and to compute the company's unit contribution margin, we need to first calculate the total contribution margin
Total contribution margin
= Sales revenue - Variable manufacturing expenses - Variable selling and administrative expenses
= $1,104,600 - $432,000 - $94,000
= $578,600
Therefore, the company's unit contribution margin
= Total contribution margin ÷ Number of units produced and sold
= $578,000 ÷ 263,000
= $2.2 per unit
Large Stock Dividend and Forward Stock Split Low Corporation has 50,000 shares of $40 par value common stock outstanding and retained earnings of $1,500,000. The company declares a 100 percent stock dividend. The market price at the declaration date is $40 per share. a. Prepare the journal entries for (1) the declaration of the dividend and (2) the issuance of the dividend.
Answer:
Part 1
Debit : Dividends $50,000
Credit : Shareholders for dividends $50,000
Part 2
Debit : Shareholders for dividends $50,000
Credit : Cash $50,000
Explanation:
When dividends are declared and not paid, raise a Liability - Shareholders for Dividends to depict the Company`s Present obligation to its shareholders.
When dividends are issued, derecognize the liability - Shareholders for Dividends and recognize a Cash outflow to depict the outflow of cash resources as a result of the distribution.
Dividends Calculation :
Dividends = 50,000 shares x 100% = $50,000
On January 1, 2021, Bramble Corp., declared a 10% stock dividend on its common stock when the fair value of the common stock was $30 per share. Stockholders' equity before the stock dividend was declared consisted of:
Common stock, $10 par value, authorized 200,000 shares;
issued and outstanding 115000 shares $1150000
Additional paid-in capital on common stock 150000
Retained earnings 700,000
Total stockholders equity $2,050,000
What was the effect on Dodd's retained earnings as a result of the above transaction?
a. $180,000 decrease.
b. $360,000 decrease.
c. $600,000 decrease.
d. $300,000 decrease.
Answer: See explanation
Explanation:
The effect on Dodd's retained earnings as a result of the above transaction will be calculated as:
Common stock = 115000
Percent of stock dividend = 10%
Stock dividend = 10% × 115000 = 11500
Price per share = $30
Stock dividend = $30 × 11500 = $345000
Therefore, there'll be a $345000 decrease on Dodd's retained earnings. The options given are incorrect.
Assuming, the common stock was 120,000, then the answer will have been (120,000 × $3) = $360,000 decrease.
Levelor Company's flexible budget shows $10,630 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.10 per direct labor hour based on a budgeted operating level of 6,040 direct labor hours (90% of capacity). If overhead actually incurred was $11,095 during May, the controllable variance for the month was:
Answer:
$1,589 favorable
Explanation:
Calculation to determine what the controllable variance for the month was:
Using this formula
Overhead Controllable Variance =(Budgeted overhead per unit x standard number of units) - Actual overhead expense
Let plug in the formula
Controllable variance=(6,040*$2.10)-$11,095
Controllable variance=$12,684-$11,095
Controllable variance=$1,589 favorable
Therefore the controllable variance for the month was:$1,589 favorable
Angie owns numerous strip malls. A major tenant of one of the strip malls wanted to cancel its lease because it was moving to another city. After lengthy negotiations, the tenant paid Angie $60,000 to cancel its obligations under the lease. If the tenant had fulfilled the lease terms, Angie would have received rent of $700,000. a. What factors should Angie consider to determine the amount and character of her income from these circumstances
Answer:
1. To determine whether she is in the business of being a person who LEASE out property as well as what will be her TAX BASIS for the lease.
2. Ordinary income of $60,000
Explanation:
1. Based on the information given the factors that she should consider in order to determine the amount as well as the character of her income from these circumstances is to determine whether she is in the business of being a person who LEASE out property as well as what will be her TAX BASIS for the lease.
b. Based on the information given we were told that the tenant paid her the amount of $60,000 in order to cancel its obligations under the lease which means that the amount and character of her income from the cancelled lease will be ORDINARY INCOME of the amount of $60,000 which we were told the tenant paid her in order to cancel its obligations under the lease.
Explain how art sellers use the 4 P's of marketing to promote expensive art to the desired patrons. Then, consider: Do you think it makes sense to view art as a product and promote it using the marketing mix? How is it similar to other products? On the other hand, what makes art different or "special" in comparison to the products we usually buy in a store?
Explanation:
Yes, the art market can benefit from the use of the marketing mix, since the 4p's of marketing, which are the product, price, place and promotion, will directly influence the positioning of a product in the market and consequently increase sales.
In the case of works of art, the marketing mix helps to align marketing strategies to reach the potential audience that consumes art. It can then be considered that the arts make up a specific type of market niche, which has consumers willing to pay certain prices according to the artist, the rarity of the artwork, the time, etc. Therefore, the marketing mix works as a strategic set that will help art sellers to position their product with their consumers and thus achieve the final goal of making sales.
Rodriguez Company pays $352,755 for real estate with land, land improvements, and a building. Land is appraised at $250,000; land improvements are appraised at $50,000; and a building is appraised at $200,000. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase.
Answer and Explanation:
The computation and the journal entry is shown below;
a. The allocation of the total cost among the three assets is shown below:
(a) (b) (a × b)
Appraise value Total appraised Total cost of Apportioned
value cost
Percentage acquisition
Land $250,000 50% $352,755 $176,377.5
Land
improvemnts $50,000 10% $352,755 $35,275.5
Building $200,000 40% $352,755 $141,102
Total $500,000
b. The journal entry to record the purchase is shown below:
Land $176,377.5
Land improvements $35,275.5
Building $141,102
To Cash $352,755
(To record the purchase)
The asset is debited as it rise the assets and cash is credited as it decreased the assets
The efficient market hypothesis suggests that: Multiple Choice while individuals can be irrational, collectively they will not. because individuals are rational, collectively they are also rational. irrationality must a part of every economic model. asset price bubbles are efficient.
Answer: asset price bubbles are efficient.
Explanation:
The efficient market hypothesis simply states that all information are reflected by the share prices.
The efficient market hypothesis suggests that asset price bubbles are efficient. We should note they economic bubbles take place when the price of assets increases more then their true economic value but late falls.
Transformational leaders enhance performance of employees by ________. Group of answer choices Restricting creativity among employees Focusing on short-term goals for employees Instilling pride in employees and gaining their respect and trust Establishing goals, roles, and requirements
Answer:
gaining their respect and trust establishing goals roles and requirements
The Brisbane Manufacturing Company produces a single model of a CD player. Each player is sold for $182 with a resulting contribution margin of $71. Brisbane's management is considering a change in its quality control system. Currently, Brisbane spends $42,000 a year to inspect the CD players. An average of 1,900 units turn out to be defective: 1,520 of them are detected in the inspection process and are repaired for $75. If a defective CD player is not identified in the inspection process, the customer who receives it is given a full refund of the purchase price. The proposed quality control system involves the purchase of an x-ray machine for $210,000. The machine would last for five years and would have salvage value at that time of $18,000. Brisbane would also spend $470,000 immediately to train workers to better detect and repair defective units. Annual inspection costs would increase by $25,000. Brisbane expects this new control system to reduce the number of defective units to 400 per year. 350 of these defective units would be detected and repaired at a cost of only $41 per unit. Customers who still receive defective players will be given a refund equal to 120% of the purchase price.
Required:
a. What is the Year 3 cash flow if Brisbane keeps using its current system?
b. What is the Year 3 cash flow if Brisbane replaces its current system?
c. Assuming a discount rate of 8%, what is the net present value if Brisbane keeps using its current system?
d. Assuming a discount rate of 8%, what is the net present value if Brisbane replaces its current system?
Answer:
Year 3 cashflow:
current system: 243,360
alternative system: 102,240
Present cost:
current system PV -$971,665.9146
alternative system PV -$1,075,964.17
Explanation:
Current Scenario:
42,000 inspection cost
Repairs:
1,520 identified x $75 = 114,000
Refunds:
480 units x $182 = 87,360
Total yearly cost: 243,360
PV of an annuity of $243,360 during 5 years:
Present Value of Annuity
[tex]C \times \displaystyle \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 243,360
time 5
rate 0.08
[tex]243360 \times \displaystyle \frac{1-(1+0.08)^{-5} }{0.08} = PV\\[/tex]
PV $971,665.9146
New Scenario:
Inspection cost: $42,000 + $25,000 = $77,000
Repair cost: 350 units x $41 = $14,320
Refunds: 50 units x $182 x 120% = $10,920
Total yearly cost: $102,240
F0 cost:
470,000 workers trainings
210,000 purchase cost
Total F0 cost: 680,000
Present Value of Annuity
[tex]C \times \displaystyle \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 102,240
time 5
rate 0.08
[tex]102240 \times \displaystyle \frac{1-(1+0.08)^{-5} }{0.08} = PV\\[/tex]
PV $408,214.6742
PV of residual value:
PRESENT VALUE OF LUMP SUM
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 18,000.00
time 5.00
rate 0.08
[tex]\frac{18000}{(1 + 0.08)^{5} } = PV[/tex]
PV 12,250.50
Net present value:
- 680,000 -408,214.67 + 12,250.50 = 1,075,964.17
SUV Company is considering producing a line of luxury SUVs. Currently, SUV Company sells 4,200 standard SUVs annually for $45,400 each. They expect that they would sell 5,600 luxury SUVs for $80,500. If SUV Company produces the line of luxury SUVs, then they expect to only sell 3,300 standard SUVs. What is the incremental revenue generated from the potential project
Answer:
SUV Company
The incremental revenue generated from the potential project is:
= $409,940,000.
Explanation:
a) Data and Calculations:
Selling price of Standard SUVs = $45,400
Number of Standard SUVs sold annually = 4,200
Luxury SUVs' price per unit = $80,500
Number of Luxury SUVs expected to be sold = 5,600
Reduced number of Standard SUVs sold as a result = 3,300
Lost sales of Standard SUVs = 900 (4,200 - 3,300)
The incremental revenue generated from the potential project is:
Sale revenue from Luxury SUVs = $450,800,000 ($80,500 * 5,600)
Lost revenue from lost sale of
Standard SUVs = 40,860,000 ($45,400 * 900)
Incremental revenue generated = $409,940,000
b) The incremental revenue is the additional revenue generated from the introduction of the Luxury SUVs, excluding the lost revenue from the non-sale of Standard SUVs as a result of the introduction.
In which career is an employee least likely to work for a private company?
Insurance Sales
Personal Financial Advising
Investment Fund Management
Tax Preparation
Answer:
personal financial advising
Answer: B
Explanation:
How does a flourishing business affect trade?
Answer: Flourishing services trade could boost world growth ... it easier to export such services as business- process outsourcing, medical diagnostics or education.
Explanation: Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct exchange of goods and services for other goods and services.[1][need quotation to verify] Barter involves trading things without the use of money.[1] When either bartering party started to involve precious metals, these gained symbolic as well as practical importance.[citation needed] Modern traders generally negotiate through a medium of exchange, such as money
Earley Corporation issued perpetual preferred stock with an 8% annual dividend. The stock currently yields 6%, and its par value is $100. Round your answers to the nearest cent. What is the stock's value
Answer:
Value of stock = $133.33
Explanation:
The value of a preferred stock is the present value of the constant dividend payable for the foreseeable future discounted at the required rate of return
Price = Constant dividend/ required return
The constant dividend = Dividend rate × par value= 8%*100= 8
Requited return - 6%
So the price of the stock would be
Price = 8/0.06=133.33
Value of stock = $133.33
Which of the following arguments can be used to correctly defend the WTO’s position on retaliatory tariffs? Check all that apply. A countervailing duty protects import-competing producers. Convincing the government to impose antidumping duties is less costly than facing fair competition. Accusing foreign firms of dumping is less costly than producing goods competitively.
Answer:
The arguments that can be used to correctly defend the WTO's position on retaliatory tariffs are:
Convincing the government to impose antidumping duties is less costly than facing fair competition.
Accusing foreign firms of dumping is less costly than producing goods competitively.
Explanation:
A government can impose anti-dumping duties on certain imports when it believes that the prices of the imports are below their fair market values. Truly, some exports have been found to export goods at prices significantly below their domestic market prices. Dumping shows that the export prices may even be below their production costs.
Hernandez Company has 350,000 shares of $10 par value common stock outstanding. During the year, Hernandez declared a 10% stock dividend when the market price of the stock was $30 per share. Four months later Hernandez declared a $.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by:_______.
a. $1,242,500.
b. $525,000.
c. $192,500.
d. $175,000.
Answer:
b. $525,000.
Explanation:
Dividends distributions are always made out of the distributable profits found in the Retained Earnings.
The first step thus is to calculate the amount of dividends distributed.
1st Declaration :
Dividends = 350,000 shares x $10 x 10% = $350,000
2nd Declaration :
Dividends = 350,000 shares x $0.50 = $175,000
Therefore,
Total Dividends = $350,000 + $175,000 = $525,000
Conclusion :
As a results of the dividends distribution, retained earnings decreased by $525,000.
If Morgan Industries issued a Credit Memorandum on January 20 for a return of $1,100 of merchandise purchased on account by Doug Bowen, plus 6 percent sales tax, the credit memorandum total would be:
Answer:
1166
Explanation:
Morgan industries issued a credit
memorandum of $1100 on January 20th
They also have 6% tax sales
= 6/100 × 1100
= 0.06×1100
= 66
Therefore the total credit memorandum can be calculated as follows
= 1100+66
= 1,166
Hence the credit memorandum total is $1166
On December 31, 2020, Ed Abbey Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Abbey Co. agreed to accept a $200,000 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Abbey is much more creditworthy and has various lines of credit at 6%.
Required:
Prepare the journal entry to record the transaction of December 31, 2015
Answer:
Date Account titles and Explanation Debit ($) Credit ($)
Notes receivable 200,000
Discount on notes receivable 34,711
Sales revenue 165,289
(To record notes receivable)
Workings:
The PV of $200,000 due in 2 years at 10% = $200,000*0.82645 = $165,290
On June 1, 2020, Forde Auto Manufacturer sells a 4-door sedan to a dealer for $6,000, which includes three years of maintenance. The standalone selling price of the vehicle is $6,000 and the standalone selling price of the maintenance contract is $400. In addition, Forde offered a $100 cash incentive (per vehicle purchased) to the dealer if the vehicle was purchased in the first week of June 2020. a. How should the transaction price be allocated among the performance obligation(s) for sales made in the first week of June? b. Prepare Forde’s journal entry to record the sale of vehicles for cash, assuming that dealers purchased 20 vehicles during the first week of June 2020. Ignore the cost of sales entries
Answer:
Part a
Allocation based on Stand Alone Selling Prices :
4 - door Sedan and the 3 years maintenance contract = $6,400Cash incentive = $100Part b
Journal entry :
Debit : Cash $130,000
Credit : Revenue - 4 - door Sedan $128,000
Credit : Revenue - Cash incentive $2,000
Explanation:
It is important to identify the step in IFRS 15 - Revenue from Contracts with Customers, which is affected by the question.
Here, Step 2 - Identify the performance obligation in the contract, Step 3 - Determine the Transaction Price, Step 4 - Allocate the Transaction Price to the Performance obligation and Step 5 - Recognize the Revenue as or when the Performance Obligation is Satisfied. These are explained and applied as follows :
Step 2 - Identify the performance obligation in the contract.
Here, identify the individual promises (Performance Obligations) that the entity has committed to transfer to the customer.
Also the entity identifies each performance obligation that is distinct, or a series of distinct Goods or Services that are substantially the same and have the same pattern of transfer to the customer.
So, the performance obligations are as follows :
4 - door Sedan and the 3 years maintenance contract(these can not be consumed independently from one another)Cash incentive (can be consumed independently from the rest of the performance obligations)Step 3 - Determine the Transaction Price
Transaction price is the consideration the entity expects to be entitled to in exchange of goods or services transferred to the customer.
Transaction Price is $6,500 ($6,000 + $400 + $100)
Step 4 - Allocate the Transaction Price to the Performance obligation
Allocation of Transaction Price is done based on Stand Alone Selling Prices.
Stand alone selling prices have already been identified :
4 - door Sedan and the 3 years maintenance contract = $6,400Cash incentive = $100Step 5 - Recognize the Revenue as or when the Performance Obligation is Satisfied
Stand alone for 20 vehicles :
4 - door Sedan and the 3 years maintenance contract = $6,400 x 20 = $128,000Cash incentive = $100 x 20 = $2,000Journal entry :
Debit : Cash $130,000
Credit : Revenue - 4 - door Sedan $128,000
Credit : Revenue - Cash incentive $2,000
Abeis typically scheduled to operate 3machines at his workstation for 10 hours per day, 4 days per week. During every 10 hours of scheduled work, Abetakes 75minutesof break.Hemust perform 30minutes of maintenance on each machine (separately) during every 10 hours of scheduled work. Abeis unableprocess work while heis performing maintenance.1.What is theworkstation utilization
a. Edison is opening a clothing shop in the Old Town Boutique District in Alexandria, Virginia, near several other small fashion stores; this is an example of_____________.
b. The television program, Flip or Flop, features Tarek and Christina El Moussa, a couple who started their own business buying dilapidated houses, repairing them, and then selling them for a profit. This process is known as ___________ flipping.
c. The El Moussas are_____________because they were actively involved in developing the new business.
Answer: a. Entrepreneurship
b. House flipping
c. Entrepreneurs
Explanation:
a. Entrepreneurship
The scenario involved is an example of entrepreneurship. This is when a business is set up with the owner taking financial risks so as to meet the needs of the people and make profit as well.
b. House flipping
House flipping involves purchasing buying dilapidated houses, or old buildings , renovating and repairing them, and then sell them for a profit. This is what Tarek and Christina El Moussa does.
c. Entrepreneurs
The El Moussas are regarded as entrepreneurs because they were actively involved in developing the new business. They're the owners and control every other resources, take risks and make decisions.
A proposed new project has projected sales of $219,000, costs of $96,000, and depreciation of $26,000. The tax rate is 23 percent. Calculate operating cash flow using the four different approaches. (Do not round intermediate calculations.) Top-down
Answer and Explanation:
The computation of the operating cash flow using the four different approaches is shown below:
1. EBIT + depreciation - taxes approach
But before that the net income would be
Sales $219,000
Less cost -$96,000
Less depreciation -$26,000
EBT $97,000
Less tax at 23% -$22,310
Net income $74,690
Now the operating cash flow is
= EBIT + depreciation - taxes
= $97,000 $26,000 - $22,310
= $100,690
2. top down approach
= Sales - cost - taxes
= $219,000 - $96,000 - $22,310
= $100,690
3. Tax shield approach
= (Sales - cost) × (1 - tax rate) + tax rate × depreciation expense
= ($219,000 - $96,000) × 0.23 + 0.23 × $26,000
= $94,710 + $5,980
= $100,690
4. Bottom up approach
= Net income + depreciation
= $74,690 + $26,000
= $100,690
Suppose the own price elasticity of demand for good X is -3, its income elasticity is -2, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -2. Determine how much the consumption of this good will change if: Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers. a. The price of good X decreases by 7 percent. percent b. The price of good Y increases by 10 percent. percent c. Advertising decreases by 2 percent. percent d. Income increases by 4 percent. percent Prev
Answer:
a. 21 percent
b. -20 percent
c. -8 percent
d. -8 percent
Explanation:
Own price elasticity = -3
Income elasticity = -2
Advertising elasticity= 4
Cross price elasticity = -2
Formula for elasticity is given by,
[tex]Elasticity = \frac{Percentage change in Quantity}{Percentage change in factor}[/tex]
a. When price of good X decreases by 7 percent.
[tex]Elasticity = \frac{Percent change in quantity}{Percent change in own price}[/tex]
[tex]-3 = \frac{Percent change in quantity}{-7}[/tex]
[tex]Percent change in quantity = (-3) * (-7) = 21[/tex]
Thus, as price decreases by 7% quantity rises by 21%.
b. The price of good Y increases by 10 percent.
[tex]Corss- price elasticity = \frac{Percent change in quantity}{Percent change in Price of good Y} \\ -2 = \frac{Percent change in quantity }{10} \\Percent change in quantity = (-2) * (10) \\ = -20[/tex]
Thus, as price of good Y increases by 10 percent, demand for good X falls by 20 percent.
c. Advertising decreases by 2 percent.
[tex]Elasticity = \frac{Percent change in quantity}{Percent change in advertising} \\4 = \frac{Percent change in quantity }{-2} \\Percent change in quantity = (-2) * (4) \\ = -8[/tex]
Thus, a 2 percent decline in advertising will lead to a 8 percent fall in quantity of good X.
d. Income increases by 4 percent.
[tex]Income elasticity = \frac{Percent change in quantity }{Percent change in income}\\-2 = \frac{Percent change in quantity}{4} \\Percent change in quantity = (-2) * (4) \\ = -8\\[/tex]
Thus, when income increases by 4 percent, quantity decreases by 8 percent.
Richland Company has a calendar year reporting period. On July 1, 2020, Richland’s equipment, with an original cost of $29,000, was sold to Quaker Corporation for $15,000. The January 1, 2020, balance in the Accumulated Depreciation account was $10,000. Depreciation for the first six months of 2020 was $2,000. The journal entry to record the transaction would include a
Answer and Explanation:
The journal entry would be
Cash Dr $15,000
Accumulated depreciation ($10,000 + $2,000) $12,000
Loss on disposal - Plant assets $2,000
To equipment $29,000
(Being the sale of the equipment is recorded)
here the cash, accumulated depreciation and loss would be debited as it increased the assets and losses while on the other hand the equipment is credited as it decreased the assets
Pls hurry ! In your own words, why is using an outline to take notes a good strategy?
Answer:
It is better used to locate things.
Explanation:
Answer:
helps organize your ideas
Explanation:
edg 2021
According to the acquired needs theory, which of the following characteristics describe people who have a high need for affiliation? a. Passive and uncritical b. Successfully attain the top levels in the organizational hierarchy c. Tend to enjoy work that is entrepreneurial and innovative d. Successful "integrators" whose job is to coordinate the work of departments
Answer: D.
Explanation:
Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:
Direct labor per filing cabinet 20 minutes
Supervisor salaries $117,000 per month
Depreciation $21,000 per month
Direct labor rate $15 per hour
Required:
Prepare a flexible budget for 12,000, 15,000, and 18,000 filing cabinets for the month of March
Answer:
Results are below.
Explanation:
Giving the following information:
Supervisor salaries $117,000 per month
Depreciation $21,000 per month
Direct labor rate $15 per hour
Cabinets per hour= 60/20= 3
We need to determine the flexible budget for different production levels:
12,000 units:
Total direct labor hours= (12,000 / 3)= 4,000 hours
Total variable cost= 4,000*15= 60,000
Total fixed costs= 21,000 + 117,000= 138,00
Total cost= $198,000
15,000 units:
Total direct labor hours= (15,000 / 3)= 5,000 hours
Total variable cost= 5,000*15= 75,000
Total fixed costs= 21,000 + 117,000= 138,00
Total cost= $213,000
18,000 units:
Total direct labor hours= (18,000 / 3)= 6,000 hours
Total variable cost= 6,000*15= 90,000
Total fixed costs= 21,000 + 117,000= 138,00
Total cost= $228,000
Grace wants to sell her motorcycle, and Ryan is looking for a used motorcycle to buy. Ryan takes it for a test drive. Grace knows that the clutch is going out on her motorcycle, the fuel filter is leaking, and the tires will need to be replaced soon. If she does not disclose this information to Ryan and he cannot tell from his test drive, this is an example of
Answer:
lack of disclosure
Explanation:
As a rider, this is idiotic as both are clear when riding and even before mounting the vehicle. it is highly illegal to sell a vehicle or piece of property without disclosing problems that you know of.
The given situation is an example of asymmetric information.
What is the meaning of Asymmetric Information?
Asymmetric information refers to the transaction in which two parties are involved and one party has more information than the other. In those transactions buyers and take the advantage of the seller.
According to the given situation there is transaction of selling of the motorcycle is involved between Grace and Ryan. The Grace does not disclose the complete information about the clutch. This type of the transaction is called as Asymmetric information.
Learn more about Asymmetric information here:
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On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $76,000 and $4,000, respectively. During Year 2, Kincaid reported $215,000 of credit sales, wrote off $2,100 of receivables as uncollectible, and collected cash from receivables amounting to $271,100. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. What effect will the entry to recognize the uncollectible accounts expense for Year 2 have on the elements of the financial statements
Answer:
The effect the entry to recognize the uncollectible accounts expense for Year 2 will have on the elements of the financial statements are that it will reduce Accounts Receivable to $15,560 and the Allowance for Doubtful Accounts to $1,900 at the end of Year 2.
Explanation:
Credit sales estimated to be uncollectable = Credit sales * Estimated percentage uncollectable = $215,000 * 1% = $2,150
Ending account receivable = Beginning accounts receivable + Credit sales - Cash collected - Receivales written off as uncollectable - Credit sales estimated to be uncollectable = $76,000 + $215,000 - $271,100 - $2,100 - $2,150 = $15,560
Ending Allowance for Doubtful Accounts = Beginning Allowance for Doubtful Accounts - Allowance for Doubtful Accounts - Receivales written off as uncollectable = $4,000 - $2,100 = $1,900
Therefore, the effect the entry to recognize the uncollectible accounts expense for Year 2 will have on the elements of the financial statements are that it will reduce Accounts Receivable to $15,560 and the Allowance for Doubtful Accounts to $1,900 at the end of Year 2.
Descendants Corporation is a growth firm that recently had its IPO. It is not currently paying dividends and its first dividend is expected in year 5. After this, it is expected to offer dividends with growth rates of 15% for two years. After this time, it is expected to reach stable growth with a dividend growth rate of 4% forever. If the dividend discount model is used to value the stock, in what year does the horizon value from stable growth belong
Answer:
year 7
Explanation:
The dividend discount model (DDM) is used to determine the value of stock by discounting the dividend to derive the present value of the stock.
Types of DDM
1.two stage : one stage of rapid growth and a stage of constant growth
3. three stage : one stage of super normal growth, followed by a stage of normal growth and then constant growth
For this company
first 5 years = o dividends
next 2 years = 15%
7th year - constant growth
Shortcomings of the DDM
It doesn't take a control perspective
It is unsuitable for firms that don't pay dividends
$7,000 of merchandise inventory was ordered on September 2, 2009 2. $3,000 of this merchandise was received on September 5, 2009 3. On September 6, 2009, an invoice dated September 4, 2009, with terms of 3/10, net 30 for $3,250 which included a $250 prepaid freight cost, was received. 4. On September 10, 2009, $800 of the merchandise was returned to the seller. Based on the above information, what would be recorded as net purchases amount after all of the transactions have been recorded
Answer:
the amount of the net purchase is $2,384
Explanation:
The computation of the amount of the net purchase is shown below:
Net purchases is
= purchases - purchase Discount - purchase returns
= $3,250 - ($3,250 - $250 - $800) × 3% - $800
= $3,250 - $66 - $800
= $2,384
hence, the amount of the net purchase is $2,384
Basically the above formula would be used