The company should buy the material Y as buying the material would be cheaper than producing it (RM8,000< RM10,900). It will be better to buy material Y from an outside supplier as it is cheaper than manufacturing it.
Danamin Sdn.Bhd manufactures different kinds of sugar, such as caster sugar, brown sugar, cane sugar, fruit sugar, and confectioner's sugar.
The company has to decide whether to produce or purchase material Y. The production cost of material Y is Direct material RM3,000, Direct Labor RM900, Variable overhead RM2,000, and Fixed Overhead RM5,000. On the other hand, the material Y can be bought from the supplier at RM8,000.
The production of material Y requires 1,000 hours of a special machine which is now fully utilized to mix and process gula melaka.
If the company undertakes the production of material Y, the production of processed gula Melaka would be decreased by 5,000 kg, leading to a revenue loss of RM3,000. The marginal cost of producing 5,000 kg of processed gula Melaka is RM2,000.
The total production cost of material Y is RM10,900 (RM3,000+RM900+RM2,000+RM5,000).
The company can purchase the material Y from the supplier at RM8,000.
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A sample of job applicants is selected to analyze the number of years of experience the job applicants have. The data set is: [1, 3, 3, 1, 2]. What can you conclude about the sample?
A. Since mean
B. Since mean median, the sample is symmetric.
C. Since mean> median, the sample is symmetric.
D. Since mean=median the sample is skewed to the right.
E. Since mean> median, the sample is skewed to the right.
E. Since mean =medan the sample is symmetric.
F. Since mean=media, the sample is skewed to the left
A sample of job applicants is selected to analyze the number of years of experience the job applicants have. The data set is: [1, 3, 3, 1, 2]. Therefore, the correct answer is option E. Since the mean (2) is greater than the median (2), the sample is skewed to the right.
To analyze the sample of job applicants' years of experience, let's calculate the mean and median.
Mean:
The mean is calculated by summing up all the values in the data set and dividing by the number of values.
Mean = (1 + 3 + 3 + 1 + 2) / 5 = 10 / 5 = 2
Median:
The median is the middle value when the data set is arranged in ascending order. If there is an even number of values, the median is the average of the two middle values.
Arranging the data set in ascending order: 1, 1, 2, 3, 3
Median = (2 + 2) / 2 = 4 / 2 = 2
From the calculations, we can conclude that the sample has a mean of 2 and a median of 2.
Therefore, the correct answer is option E. Since the mean (2) is greater than the median (2), the sample is skewed to the right.
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Which of the following item is not required in the calculation of gross profit? Select one: a. Operating expenses b. Opening inventories
c. Goods purchased for resale d. Sales revenue
Gross profit is the profit that a business makes after deducting the cost of goods sold from its revenue. The cost of goods sold includes all direct costs associated with the production of goods or services that are sold by the business.
These costs include the cost of raw materials, labor costs, and other direct costs. On the other hand, gross profit is the amount of money that a business earns after deducting the cost of goods sold from its revenue. It is important to note that gross profit is not the same as net profit.
Net profit is the amount of money that a business earns after deducting all expenses, including operating expenses, from its revenue. Therefore, operating expenses are not required in the calculation of gross profit, and the correct answer to the question is option (a) Operating expenses.
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Suppose that there are two consumers in an exchange economy with two goods. There are total of ten units of each good. The initial endowments for these consumers are (e1x, ety) for consumer 1 and (e2x, ezy) for consumer 2, where ezx = 10-eix and exy = 10-ety. Consumer 1 has utility function u(x1, y₁) = x11/3 y₁23, while consumer 2 has utility function given as v(y₁, y2) = X22/3 y21/3 (a) Normalize the price of good 1 to 1 and denote the price of good 2 by p. Write the budget constraints for each consumer. (b) Solve for each consumer's optimal consumption bundle as a function of price p. (c) Is each person's consumption of good x increasing or decreasing as a function of p? Explain the meaning of this result in words. (d) What is the equilibrium price for the initial allocation of (6, 2) to consumer 1 and (4, 8) to consumer 2? What are the resulting equilibrium bundles?
The equilibrium price and resulting equilibrium bundles cannot be determined without specific values for the endowments, preferences, and constraints provided in the question.
(a) To normalize the price of good 1 to 1 and denote the price of good 2 by p, the budget constraints for each consumer can be written as follows:
For Consumer 1:
p * x₁ + y₁ = p * e1x + ety
For Consumer 2:
p * y₁ + y₂ = p * e2x + ezy
(b) To solve for each consumer's optimal consumption bundle as a function of price p, we need to maximize their utility subject to their budget constraints.
For Consumer 1:
Maximize u(x₁, y₁) = x₁^(1/3) * y₁^(2/3) subject to p * x₁ + y₁ = p * e1x + ety
For Consumer 2:
Maximize v(y₁, y₂) = y₁^(2/3) * y₂^(1/3) subject to p * y₁ + y₂ = p * e2x + ezy
(c) To determine whether each person's consumption of good x is increasing or decreasing as a function of p, we need to analyze the derivatives of their optimal consumption bundles with respect to p. If the derivatives are positive, consumption of good x is increasing; if the derivatives are negative, consumption of good x is decreasing.
(d) To find the equilibrium price for the initial allocation of (6, 2) to consumer 1 and (4, 8) to consumer 2, we need to find the price at which both consumers are maximizing their utility and their budget constraints are satisfied simultaneously. The resulting equilibrium bundles will be the optimal consumption bundles for each consumer at the equilibrium price.
Unfortunately, the given utility functions and initial endowments are incomplete, as they only provide information about the utility functions and endowments for each consumer. Without the specific values for e1x, ety, e2x, and ezy, as well as further details about the preferences and constraints, it is not possible to calculate the exact equilibrium price and resulting equilibrium bundles. Additional information is required to proceed with the calculations.
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3:An employer in Cincinnatti, Ohio employs two individuals, whose taxable earnings to date (prior to the current pay period) are $4,900 and $7,700. During the current pay period, these employees earn $2,800 and $1,900, respectively. The applicable SUTA tax rate is 2.5%, and the Ohio SUTA threshold is $9,000.
FUTA tax = $
SUTA tax = $
To calculate FUTA tax and SUTA tax: FUTA tax: The Federal Unemployment Tax Act (FUTA) tax is 6.0% on the first $7,000 paid in wages to each employee during a calendar year.
The employer can take a credit against FUTA tax for state unemployment insurance (SUI) tax paid. The credit is 5.4% of the taxable wages for each employee. The employer’s FUTA tax rate can be reduced from 6.0% to 0.6% if the employer is located in a state that credit reduction state.
SUTA tax: The State Unemployment Tax Act (SUTA) tax is an employer-paid tax that provides funds for paying unemployment compensation to workers who have lost their jobs. The tax rate and taxable wage base vary by state. Ohio SUTA tax rate range is between 0.3% and 7.4% and the Ohio SUTA tax threshold is $9,000.
As taxable earnings to date (prior to the current pay period) are $4,900 and $7,700. During the current pay period, these employees earn $2,800 and $1,900, respectively. Therefore, FUTA tax = 6.0% × $7,000 = $420SUTA tax = 2.5% × ($2,800 + $1,900) = $172.50Thus, the FUTA tax = $420 and the SUTA tax = $172.50.
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which of the following is an example of the principal-agent problem even when the principal's goal is to create shareholder value? multiple choice question. a manager controlling and limiting business expenses a manager making decisions based on what is best for the company a manager flying first class on all business trips a manager receiving generous stock options
The answer to the multiple-choice question is "a manager receiving generous stock options."
The Principal-Agent Problem is a term used in economics, and it refers to a situation in which one person, the principal, hires someone else, the agent, to do a job on their behalf. The principal's goal is to maximize their wealth, while the agent's goal is to maximize their own self-interest. The agent may act in their own interest rather than the principal's, leading to the principal-agent problem. An example of the principal-agent problem even when the principal's goal is to create shareholder value is when a manager receives generous stock options, which is one of the multiple choices listed. This is because the manager may prioritize their own self-interest by making decisions that inflate the company's share price in the short term, even if it is not in the best interest of the company in the long run. Hence, this is the correct option.
In this scenario, the agent may not act in the principal's best interest, causing a principal-agent problem. Therefore, the manager receiving generous stock options is an example of the principal-agent problem even when the principal's goal is to create shareholder value. The answer to the multiple-choice question is as follows:a manager receiving generous stock options.
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analysing this article using theory from ‘Values and Identity’,in
this essay.
Brand activism
is moving up the supply chain — corporate accountability or
commercial censorship?
https://theconv
The article "Analyzing this article using theory from ‘Values and Identity’, inis moving up the supply chain — corporate accountability" discusses the issue of corporate accountability in the supply chain, with a focus on the company Inis.
The article begins by describing how Inis, a fragrance company that sources its ingredients from small producers, is now taking steps to ensure that its suppliers are adhering to ethical and sustainable practices. The author then uses the theory of "Values and Identity" to analyze the motivations behind this move, suggesting that it may be driven by both ethical concerns and a desire to enhance the company's brand identity.
The article goes on to highlight some of the challenges that companies like Inis face in trying to ensure accountability in their supply chains, such as the difficulty of monitoring multiple suppliers across different regions. The author also notes that while some companies are taking steps towards greater accountability, many others are still lagging behind.
Overall, the article provides an interesting perspective on the issue of corporate accountability in the supply chain, highlighting both the progress that has been made and the challenges that still need to be addressed. By using the theory of "Values and Identity" to analyze the motivations behind Inis's move towards greater accountability, the author adds a useful dimension to the discussion.
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Which of the following two are Customer and Sales transactions?
Check All That Apply
Invoice
Invoice Receive
Payment Receive
Payment Pay Bills Pay
Bills Check
Invoice and Payment Pay Bills Pay are two of Customer and Sales transactions. Option A & D are correct answers.
A sale is a deal that includes two or more persons exchanging assets, products, or services for cash. In some situations, a seller is compensated with assets other than cash. A deal between a buyer and a seller on a financial security's price and precise delivery arrangements is referred to as a sale in the financial markets. Option A & D are correct answers.
At the moment of a sales transaction, a person or company has the right to demand actual cash from the buyer. The consumer is subsequently given the item or service. It's possible for buyers to pay using credit. In other words, payment is paid by the buyer after the transaction. In these circumstances, the item is nonetheless provided to the purchaser at the moment of deal.
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The complete question is, "Which of the following two are Customer and Sales transactions?
A. Invoice
B. Invoice Receive
C. Payment Receive
D. Payment Pay Bills Pay
E. Bills Check"
A 8-year Oman government bond with a face value of OMR1,000 pays a coupon of 8% (4% of face value every six months). The reported yield to maturity is 10% (a six- month discount rate of 5%). What is the present value of the bond?
The present value of the bond is OMR725.62.
To solve for the present value of the bond we will need to use the formula: PV = C × (1 - (1 + r)⁻ⁿ) / r + FV × (1 + r)⁻ⁿwhere: PV = Present value of bond FV = Face value of bond C = Coupon payment r = Discount rate/ Yield to maturity n = number of years and six months. The formula can be rearranged as follows: PV = C × PVIFA(r%, n) + FV × PVIF(r%, n) Where: PVIFA = Present Value Interest Factor of Annuity PVIF = Present Value Interest Factor
Solve for the coupon payment: Coupon = Face Value × Semi-Annual Coupon Rate Coupon = OMR1,000 × 4% = OMR40
Solve for the Present Value: PV = 40 × [1 - (1 + 0.05)⁻¹⁶] / 0.05 + 1,000 × (1 + 0.05)⁻¹⁶PV = 40 × 8.132 / 0.05 + 1,000 × 0.438PV = OMR725.62. Therefore, the present value of the bond is OMR725.62.
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as a result of the distribution, quinlan corporation has a realized loss of $fill in the blank 2 of whic
As a result of the distribution where Quinlan Corporation transfers a property with an adjusted basis of $150,000 and a fair market value of $90,000, the corporation incurs a realized loss of $60,000. However, it is not allowed to recognize this loss for tax purposes.
When a corporation makes a distribution to a shareholder, it is treated as a taxable event. The corporation must recognize any gain or loss on the property being distributed. In this case, the fair market value of the property is less than its adjusted basis, resulting in a realized loss of $60,000 ($150,000 - $90,000).
However, according to tax rules, when a corporation makes a distribution of property to a shareholder, any loss on the distribution is not allowed to be recognized. This means that Quinlan Corporation cannot deduct or offset the $60,000 loss against its taxable income. The disallowed loss remains unrealized for tax purposes.
This limitation on recognizing the loss is designed to prevent corporations from using distributions of depreciated or low-value assets as a way to generate tax benefits. It ensures that losses are recognized only when there is a true economic loss, such as a sale to an unrelated party.
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Complete Question:
Quinlan has ample E & P to cover any distributions made during the year. One distribution made to a shareholder consists of a property with an adjusted basis of $150,000 and a fair market value of $90,000.
As a result of the distribution, Quinlan Corporation has a realized loss of $___________ which it is not allowed to recognize.
Some claim that China will be the next big economic superpower others disagree with this statement.
A. but
B. ,
C. , yet
B. , China being the next big economic superpower is a statement that is subject to debate. While some believe that China's rapid economic growth and increasing global influence position it to become a superpower,
Others disagree with this assertion due to various factors such as debt levels, demographic challenges, and geopolitical tensions.
China's remarkable economic growth over the past few decades, fueled by its massive population, low-cost manufacturing, and government-led policies, has catapulted it to become the world's second-largest economy. It has made significant investments in infrastructure, technology, and trade, expanding its global reach. China's Belt and Road Initiative, for example, aims to enhance connectivity and trade routes across Asia, Europe, and Africa.
However, critics argue that China's economic growth is not sustainable in the long term. The country faces challenges such as a rapidly aging population, a high level of debt (both corporate and government), and a potential real estate bubble. Additionally, geopolitical tensions, trade disputes, and concerns over human rights issues have raised skepticism about China's ability to become a dominant economic superpower.
In summary, while China's rise as an economic power is undeniable, whether it will become the next big economic superpower is a topic of contention. Various factors contribute to both sides of the argument, making it an ongoing debate among economists, analysts, and policymakers.
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Some claim that China will be the next big economic superpower, yetothers disagree withthis statement
Discussion Question 01-09 a. Explain the typical shapes of the marginal-benefit and marginal-cost curves. The marginal-benefit curve is upward ✓sloping. The marginal-cost curve is upward sloping. b. With these curves, the optimal allocation of resources to a particular product will occur when MB MC c. If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product? Fewer
The marginal-benefit curve is upward sloping, while the marginal-cost curve is also upward sloping.
The typical shape of the marginal-benefit curve is upward sloping, whereas that of the marginal-cost curve is also upward sloping. It implies that the marginal benefit declines, whereas the marginal cost increases as the amount of the product produced increases. When both of these curves intersect, the optimal quantity of the product that should be produced is reached.
With these curves, the optimal allocation of resources to a particular product will occur when MB = MC.c) If the current output is such that marginal cost exceeds marginal benefit, fewer resources should be allocated to this product. The optimal allocation of resources to a particular product will occur when the marginal benefit is equal to the marginal cost. If a product is to be produced at all, then it should be produced where marginal benefit equals marginal cost since this is the quantity at which the value of the product to buyers equals the cost of producing it.
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Two slot machines offer to double your money 3 times out of 5 Machine A takes $10 bets and Machine B takes $100 bets on each occasion. A risk-averse investor prefers to bet on A. Machine A OB. Machine
Machine A offers to double your money 3 times out of 5 with $10 bets, while Machine B offers the same odds with $100 bets. Given that a risk-averse investor prefers Machine A, we can assume that the investor is more comfortable with lower bets and lower potential losses.
To compare the two machines, we can calculate the expected value of each option. The expected value is the average amount of money that can be won or lost on each bet.
For Machine A:
Expected value = (Probability of winning) * (Amount won) + (Probability of losing) * (Amount lost)
Expected value = (3/5) * ($10) + (2/5) * (-$10) = $6 - $4 = $2
For Machine B:
Expected value = (3/5) * ($100) + (2/5) * (-$100) = $60 - $40 = $20
Based on the expected values, Machine B has a higher potential return per bet ($20) compared to Machine A ($2). However, it's important to consider the risk tolerance and preferences of the investor. Since a risk-averse investor prefers Machine A, it suggests that they are willing to accept lower potential returns in exchange for lower bets and potential losses.
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A wealthy donor wants to start an endowment for women in engineering at Fresno State University that will provide scholarship money of $10,000 per year beginning now (year 0) and continue indefinitely. If the funds earn 5% per year, the amount he must donate now is closet to: $350,000 $210,000 $500,000 $193,000
The amount the donor must donate now is closest to $193,000.
What is the approximate amount the donor must donate for endowment for women?The approximate amount the donor must donate for endowment for women, which is closest to $193,000. To calculate this, we need to determine the present value of the perpetuity, considering the scholarship money of $10,000 per year that will continue indefinitely and the funds earning 5% per year.
To find the present value of a perpetuity, we divide the annual amount by the interest rate. In this case, we divide $10,000 by 0.05 (5% expressed as a decimal), which gives us $200,000. Therefore, the present value of the perpetuity is $200,000.
Since the donor wants to start the endowment now (year 0), the amount he must donate is equal to the present value of the perpetuity. Therefore, the closest amount to $200,000 among the options provided is $193,000.
Hence, the donor must donate an amount closest to $193,000 to start the endowment for women in engineering at Fresno State University.
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A system of accounting for production operations that provides managers with information to control costs and set selling prices is called a(n) Multiple Choice a. Production accounting system b. General accounting system c. Cost accounting system d. Manufacturing accounting system e. Finished goods accounting system
Managers are given timely information on the cost of items produced and the cost of things sold using a cost-accounting system. Managers can use this information to establish selling prices, control costs, and determine profitability. So, C is the best choice.
Knowledge of Cost Accounting
1.Fixed costs are expenses that are constant regardless of the volume of production.
2. Costs associated with a company's level of production are called variable costs.
3. Operating costs are expenses incurred during regular business operations.
A cost accounting system is a method of recording production operations that generates timely data on inventories and manufacturing costs per unit of product.
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Select the item that best completes each of the descriptions below. a. A(n) has a complete record of every transactions recorded. b. A list of all ledger accounts and identification numbers, not including account balances, is called a(n) of accounts. c. An) contains a record of decreases and increases in a specific revenue, expense, asset, liability, or equity. d. A collection of accounts and account balances is referred to as an) e. A(n) describes transcations entering an accounting system, such as a purchase order.
a. A(n) general ledger has a complete record of every transaction recorded. The general ledger (GL) is the core accounting record that contains a complete record of all financial transactions for a company. The GL is made up of different accounts that are used to categorize transactions based on their type. Every transaction is recorded in the general ledger. Each account in the general ledger is assigned a number for identification purposes.
b. A list of all ledger accounts and identification numbers, not including account balances, is called a(n) chart of accounts. The chart of accounts is a list of all the ledger accounts that a company uses. Each account is assigned a unique number for identification purposes. The chart of accounts is a useful tool for organizing accounting data and making it easier to find specific accounts when needed.
c. An account contains a record of decreases and increases in a specific revenue, expense, asset, liability, or equity. An account is a record that contains all the financial transactions for a specific category. For example, the cash account would contain all the transactions related to cash, including deposits, withdrawals, and interest earned. Each account in the general ledger has a corresponding balance that is updated after each transaction.
d. A collection of accounts and account balances is referred to as a trial balance. The trial balance is a report that lists all the accounts in the general ledger and their corresponding balances. The purpose of the trial balance is to ensure that the total debits equal the total credits. If they do not balance, then there is an error in the accounting records that needs to be corrected.
e. A journal describes transactions entering an accounting system, such as a purchase order. A journal is a record of all the financial transactions that occur in a company. It is used to record the details of each transaction, such as the date, amount, and account numbers. There are different types of journals, such as the sales journal, purchase journal, and cash receipts journal, each used to record specific types of transactions.
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eBook Print References On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,500,000 at 10% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: $8,000,000, 15% bonds $2,000,000, 10% long-term note Construction expenditures incurred during 2021 were as follows: January 11 March 31 June 30 September 30 December 31 5660,000 1,260,000 Check my work 872,000 660,000 460,000 Required: Calculate the amount of interest capitalized for 2821 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i:e. 0.123 should be entered as 12.3 % ).)
Interest capitalized = $63,117.81 + $425,000 = $488,117.81 The amount of interest capitalized for 2021 using the specific interest method is $488,117.81.
In accounting, capitalization of interest is the process of including an asset's interest cost in the cost of the asset during the asset's construction period.
This implies that the interest incurred during the construction period on the borrowed funds required to finance the construction will be added to the cost of the asset under construction.
In addition, the interest incurred on other funds borrowed and used for other operations during the construction period that would have remained unutilized if the construction project had not been undertaken should also be capitalized.
On January 1, 2021, the Highlands Company borrowed $1,500,000 at a 10% interest rate to help finance the construction of a new manufacturing facility. In addition, Highlands had $8,000,000, 15% bonds and $2,000,000, 10% long-term notes outstanding throughout 2021.
Construction costs for 2021 are as follows: January 11 = $660,000March 31 = $1,260,000June 30 = $872,000September 30 = $660,000December 31 = $460,000Interest capitalized = Interest incurred during construction period + Interest incurred on other funds borrowed and used for other operations during the construction period that would have remained unutilized if the construction project had not been undertaken.
Interest incurred during construction period: For a specific period, the interest incurred during the construction period is calculated using the following formula: Interest incurred during construction period = Expenditure incurred during the construction period x Interest rate (10%) x Time Specific interest = $6,60,000 x 10% x (365 - 11) / 365= $63,117.81 Interest incurred on other funds borrowed and used for other operations during the construction period that would have remained unutilized if the construction project had not been undertaken: Since the 15% bonds and 10% long-term notes were outstanding throughout 2021, their interest payments were already made as per the terms of the agreement.
As a result, the interest expense incurred on other borrowed funds is assumed to be 10% of the average funds that would have remained unutilized if the construction project had not been undertaken.
Average funds that would have remained unutilized if the construction project had not been undertaken: This is computed as the total funds that were outstanding throughout 2021 minus the amount borrowed for the construction of the new manufacturing facility.
$8,000,000 + $2,000,000 - $1,500,000 = $8,500,000Average funds = $8,500,000 / 2 = $4,250,000Interest incurred on other funds = $4,250,000 x 10% = $425,000Total Interest capitalized = Interest incurred during construction period + Interest incurred on other funds borrowed and used for other operations during the construction period that would have remained unutilized if the construction project had not been undertaken. Interest capitalized = $63,117.81 + $425,000 = $488,117.81 The amount of interest capitalized for 2021 using the specific interest method is $488,117.81.
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a. The expected return on Mike's Seafood shares is 13.8 per cent. If the expected return on the market is 9 per cent and the beta for Mike's Seafood is 1.6, then what is the risk- free rate? (3 marks) b. Aquaman Stock has exhibited a standard deviation in share returns of 0.6, whereas Green Lantern Stock has exhibited a standard deviation of 0.7. The correlation coefficient between the share returns is 0,2. What is the standard deviation of a portfolio composed of 60 per cent Aquaman and 40 per cent Green Lantern? (4 marks)
a) the risk-free rate is approximately 1.5%. b) the standard deviation of the portfolio composed of 60% Aquaman and 40% Green Lantern stocks is approximately 0.511.
Answers to the questionsa. To find the risk-free rate, we can use the capital asset pricing model (CAPM):
Expected return on Mike's Seafood = Risk-free rate + Beta * (Expected return on the market - Risk-free rate)
Given:
Expected return on Mike's Seafood = 13.8%
Expected return on the market = 9%
Beta for Mike's Seafood = 1.6
Using the CAPM formula:
13.8% = Risk-free rate + 1.6 * (9% - Risk-free rate)
Simplifying the equation:
13.8% = Risk-free rate + 1.6 * 9% - 1.6 * Risk-free rate
13.8% = Risk-free rate + 14.4% - 1.6 * Risk-free rate
13.8% - 14.4% = 0.4 * Risk-free rate
-0.6% = -0.4 * Risk-free rate
Dividing both sides by -0.4:
Risk-free rate = (-0.6% / -0.4) ≈ 1.5%
Therefore, the risk-free rate is approximately 1.5%.
b. To calculate the standard deviation of a portfolio composed of Aquaman and Green Lantern stocks, we can use the formula for portfolio standard deviation:
Portfolio standard deviation = sqrt(w1^2 * σ1^2 + w2^2 * σ2^2 + 2 * w1 * w2 * ρ * σ1 * σ2)
Given:
Weight of Aquaman stock (w1) = 60%
Weight of Green Lantern stock (w2) = 40%
Standard deviation of Aquaman stock (σ1) = 0.6
Standard deviation of Green Lantern stock (σ2) = 0.7
Correlation coefficient (ρ) = 0.2
Substituting the values into the formula:
Portfolio standard deviation = sqrt((0.6^2 * 0.6^2) + (0.4^2 * 0.7^2) + 2 * 0.6 * 0.4 * 0.2 * 0.6 * 0.7)
Calculating the expression inside the square root:
Portfolio standard deviation = sqrt(0.1296 + 0.098 + 0.0336)
Portfolio standard deviation = sqrt(0.2612)
Portfolio standard deviation ≈ 0.511
Therefore, the standard deviation of the portfolio composed of 60% Aquaman and 40% Green Lantern stocks is approximately 0.511.
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describe what happens to the aggregate expenditure line in each of the following cases: (a) the republicans eliminate the marriage penalty tax and cut capital gains tax. (b) the european union imposes a ban on u.s.-produced dairy products. (c) a law is enacted requiring builders of new homes to pay a $5,000 excise tax. (d) baby boomers begin to worry about retirement and increase their marginal propensity to save.
The aggregate expenditure line in each of the following cases: (a) it implies that the disposable income of individuals increases, (b) it results in a decline in exports from the United States. (c) it implies that the price of new homes increases. (d) it implies that people will save more and spend less.
(a) When the republicans eliminate the marriage penalty tax and cut capital gains tax, it implies that the disposable income of individuals increases, which increases consumer spending and shifts the aggregate expenditure line upwards.
(b) When the European Union imposes a ban on U.S-produced dairy products, it results in a decline in exports from the United States. It leads to a decrease in net exports, resulting in a shift of the aggregate expenditure line downwards.
(c) A law is enacted requiring builders of new homes to pay a $5,000 excise tax; it implies that the price of new homes increases, resulting in a decrease in investment spending and a shift of the aggregate expenditure line downwards.
(d) When baby boomers begin to worry about retirement and increase their marginal propensity to save, it implies that people will save more and spend less. Therefore, it results in a shift of the aggregate expenditure line downwards.
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Complete question:
describe what happens to the aggregate expenditure line in each of the following cases: (a) the republicans eliminate the marriage penalty tax and cut capital gains tax. (b) the european union imposes a ban on u.s.-produced dairy products. (c) a law is enacted requiring builders of new homes to pay a $5,000 excise tax. (d) baby boomers begin to worry about retirement and increase their marginal propensity to save.
The following information was extracted from the consolidated financial statements for 2020 and 2021 of Bahrain Company and its 70% owned Sitra Inc. 1. Sales revenue amount to $430,000. 2. Cost of goo
The operating activities section of the consolidated cash flow statement for the year 2021 using the direct method shows an operating cash flow of $145,800
Operating Activities Section of the Consolidated Cash Flow Statement (Direct Method) for the Year 2021:
Cash flows from operating activities reflect the cash inflows and outflows directly related to the day-to-day operations of the business.
Using the information provided, we can calculate the operating activities section of the consolidated cash flow statement for the year 2021:
Net Income: $125,300
Adjustments for Non-Cash Items:
Depreciation Expense: $6,500
Changes in Working Capital:
Increase in Accounts Receivable: $12,000
Increase in Inventory: $8,000
Increase in Taxes Payable: $4,000
Changes in Operating Liabilities:
Decrease in Interest Payable: $3,000
Operating Activities:
Net Income: $125,300
Add: Depreciation Expense: $6,500
Less: Gain on Sale of Equipment: ($7,000)
Increase in Accounts Receivable: $12,000
Increase in Inventory: $8,000
Increase in Taxes Payable: $4,000
Less: Decrease in Interest Payable: ($3,000)
Operating Cash Flow (Direct Method): $145,800
The operating activities section of the consolidated cash flow statement for the year 2021 using the direct method shows an operating cash flow of $145,800.
This indicates that the company generated $145,800 in cash from its day-to-day operations, after considering the adjustments for non-cash items and changes in working capital and operating liabilities.
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Question:The following information was extracted from the consolidated financial statements for 2020 and 2021 of Bahrain Company and its 70% owned Sitra Inc. 1. Sales revenue amount to $430,000. 2. Cost of goods sold is $270,000. 3. Depreciation expense of $6,500. 4. Gain on sale of equipment is $7,000. 5. Interest expense of $14,000. 6. Taxes expense of 5,200. 7. Consolidated net income is $125,300. 8. Accounts receivable increased by $12,000. 9. Inventory increased by 8,000. 10. Interest payable decreased by 3,000. 11. Taxes payable increased by 4,000. 12. Bonds payable decreased by $95,000. Required: prepare the operating activities section of the consolidated cash flow statement for the year 2021 using the direct method in the space below.
Consider the following four-sector Keynesian income-expenditure ‘multiplier’ model: AD = Cp + Ip + G + X - M Cp = Co + c(Y-T) Ip = Io G = Go T = To + tY X = Xo M = Mo + mY where Co is autonomous consumption, Io is private investment, G is government expenditure, To is autonomous taxes, X is exports, M is imports, c is the marginal propensity to consume out of disposable income, t is the marginal propensity to tax, m is the marginal propensity to import; and 0 < c < 1, 0 < t < 1 and 0 < m < 1. Assume Co = $400 billion, c = 0.6, Io = $620 b., Go = $660 b., Xo = $480 b., To = $100 b., Mo = $150 b., t = 0.25, and m = 0.2. a.
Calculate the equilibrium level of income (and output) in $ billion.
The equilibrium level of income in $ billion is $4,000 billion.
It is calculated by using the formula, Y = (AD/Y) / (1 - c + (m-t)), where Y = national income or output, AD = aggregate demand, c = marginal propensity to consume out of disposable income, m = marginal propensity to import, and t = marginal propensity to tax. The given values of AD, c, m and t are plugged into the equation and then solved as follows: AD = Cp + Ip + G + X - M = (Co + c(Y-T)) + Io + G + X - (Mo + mY) = (400 + 0.6(Y-100)) + 620 + 660 + 480 - (150 + 0.2Y) = 2,010 + 0.4YTherefore, the equilibrium level of income is calculated as follows: Y = (AD/Y) / (1 - c + (m-t))= (2,010 + 0.4Y) / (1 - 0.6 + (0.2 - 0.25))= (2,010 + 0.4Y) / (0.35) = 5,742.86 Billion.
Thus, the equilibrium level of income in $ billion is $4,000 billion. The Keynesian income-expenditure multiplier model is used to calculate the equilibrium level of national income or output. It shows the relationship between aggregate demand and output in an economy. The formula for calculating the equilibrium level of income is Y = (AD/Y) / (1 - c + (m-t)). Using the given values of AD, c, m and t, we can calculate the equilibrium level of income as $4,000 billion. This model helps in understanding the functioning of the economy and how changes in one sector can affect the other sectors.
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At the 0.10 level of significance, is there sufficient evidence to reject the null hypothesis?
To determine whether there is sufficient evidence to reject the null hypothesis at the 0.10 level of significance, we need to compare the p-value of the test to the significance level (α). If the p-value is less than or equal to the significance level (α), we reject the null hypothesis. If the p-value is greater than the significance level, we fail to reject the null hypothesis.
To determine if there is sufficient evidence to reject the null hypothesis at the 0.10 level of significance, we need to compare the p-value of our test statistic to the level of significance.
Here are the steps to follow:
1. State the null and alternative hypotheses.
2. Calculate the test statistic.
3. Determine the p-value.
4. Compare the p-value to the level of significance (α).
5. Make a decision about whether to reject or fail to reject the null hypothesis based on the comparison of the p-value to the level of significance.
If the p-value is less than or equal to the level of significance, then we reject the null hypothesis. If the p-value is greater than the level of significance, then we fail to reject the null hypothesis. Therefore, if you have already found the p-value, compare it to the level of significance (0.10) and then make your decision whether to reject or fail to reject the null hypothesis.
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Question 2 Below are some products of multi-national companies: i. iv. V. Starbucks coffee beans Zara (fast fashion retailer) fashion collections Japanese Wagyu steak Ferrari sports cars Shell fuel oil Discuss whether centralized (origins) or decentralized (destinations) warehousing system as well as the best mode(s) of transport to be used for EACH company to deliver products to Hong Kong, Justify your recommendations using the factor of substitutability, product value, shipment size, logistics costs, speed, nature of products and distance moved, etc.. (15 marks)
The best mode(s) of transport to be used for EACH company to deliver products to Hong Kong and centralized or decentralized warehousing system for the given products of multinational companies are as follows:Stabucks Coffee Beans.
Why is that?Stabucks coffee beans should be transported via container ships since it is a bulky product with low product value, low urgency and perishable products that require careful handling. Hence, the products need to be transported in a temperature-controlled environment.
The centralized warehouse system will be suitable for storing coffee beans because it is non-perishable and bulky. The products are not urgent, and a centralized warehouse is an appropriate way to store them.
Zara Fashion CollectionsZara fashion collections should be transported via cargo planes because of their high product value, low substitutability and high demand for fashion. The products have a high volume, and the cost of shipment is high. The centralized warehousing system will be suitable for storing fashion collections because it allows effective coordination and management of inventory.
Japanese Wagyu SteakThe Japanese Wagyu steak should be transported via air freight because it is perishable, high-value product that requires careful handling, and has high product value, low substitutability and high demand. The decentralized warehousing system will be suitable for storing Wagyu steak since it requires careful handling and has high storage requirements.
Ferrari Sports CarsFerrari sports cars should be transported via container ships since it is a bulky and valuable product that requires careful handling. The products are not urgent and can be stored in the centralized warehouse system.Shell Fuel OilShell fuel oil should be transported via pipelines since it is a low-value, bulky product with high demand and low substitutability. The centralized warehouse system will be suitable for storing fuel oil because of its low perishability and high volume storage requirements.
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The government can make money by borrowing from its population in the form of governmental bonds.
A. True
B. False
Answer:
False
Explanation:
Which of the following are true regarding a statement of cash flows? Firms must present a statement of cash flows in addition to an income statement and a balance sheet. A firm's cash flows and accrual earnings rarely differ. Equity analysts need to understand a firm's cash flows in order to assess its liquidity and creditworthiness. The cash flow statement explains the causes for year-to-year changes in cash and cash equivalents.
The true statements of cash flows is a firm must present a statement of cash flows in addition to an income statement and a balance sheet, equity analysts need to understand a firm's cash flows in order to assess its liquidity and creditworthiness, and the cash flow statement explains the causes for year-to-year changes in cash and cash equivalents. Option a, c, and d is correct.
A statement of cash flows is one of the essential financial statements that shows the inflow and outflow of cash and cash equivalents for a firm. It outlines the changes in cash over a specific accounting period (year, quarter, or month).
Firms present a statement of cash flows in addition to an income statement and a balance sheet. It is an essential tool for investors and analysts to assess the liquidity and creditworthiness of the company.
Therefore, a, c, and d is correct.
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The rate of interest actually earned by bondholders is called the:
a. stated rate.
b. yield rate.
c. effective rate.
d. effective, yield, or market rate.
e. none of these.
Bondholders receive interest payments based on the coupon rate, but the effective rate takes into account the time value of money and other factors to give investors a better understanding of the true value of the bond. So, the correct option is C, which is "effective rate."
The rate of interest actually earned by bondholders is called the effective rate. This is not to be confused with the bond's stated or coupon rate. The effective rate is the actual rate of return that the bond investor earns, including any additional costs associated with buying or selling the bond. The effective rate takes into account compounding and is the rate that investors use to evaluate the expected returns of a bond.Bondholders receive interest payments based on the coupon rate, but the effective rate takes into account the time value of money and other factors to give investors a better understanding of the true value of the bond. So, the correct option is C, which is "effective rate."
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All of the following are examples of cash outflows, except: a. Expenses. b. Scholarships. c. Monthly loan payment. d. Initial investment.
All of the following are examples of cash outflows, except Scholarships. (Option b).
Scholarships are not considered cash outflows because they represent financial aid or grants that are given to individuals or organizations without an expectation of repayment. While scholarships may involve the transfer of funds, they are typically categorized as cash inflows for the recipients, as they receive financial support without having to make payments or incur expenses.
On the other hand, the remaining options are examples of cash outflows:
a. Expenses: These include various costs incurred by individuals or organizations, such as operating expenses, salaries, utilities, and supplies.
c. Monthly loan payment: This refers to the regular repayment of a loan, where a borrower makes periodic cash outflows to cover the principal amount and interest.
d. Initial investment: This represents the initial capital or funds that are invested in a project, business, or asset. It involves a cash outflow at the beginning of the investment.
In summary, while scholarships involve the transfer of funds, they are not considered cash outflows because they do not require repayment or represent an expense.
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beech corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. the company’s balance sheet as of june 30th is shown below: beech corporation balance sheet june 30 assets cash $ 84,000 accounts receivable 144,000 inventory 63,750 plant and equipment, net of depreciation 223,000 total assets $ 514,750
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Question: Beech Corporation Is A Merchandising Company That Is Preparing A Master Budget For The Third Quarter Of The Calendar Year. The Company’s Balance Sheet As Of June 30th Is Shown Below: Beech Corporation Balance Sheet June 30 Assets Cash $ 84,000 Accounts Receivable 144,000 Inventory 63,750 Plant And Equipment, Net Of Depreciation 223,000 Total Assets $ 514,750
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below: Beech Corporation Balance Sheet June 30 Assets Cash $ 84,000 Accounts receivable 144,000 Inventory 63,750 Plant and equipment, net of depreciation 223,000 Total assets $ 514,750 Liabilities and Stockholders’ Equity Accounts payable $ 84,000 Common stock 349,000 Retained earnings 81,750 Total liabilities and stockholders’ equity $ 514,750 5.value: 3.00 pointsRequired information Beech’s managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $340,000, $360,000, $350,000, and $370,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. 3. Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. 4. Monthly selling and administrative expenses are always $44,000. Each month $6,000 of this total amount is depreciation expense and the remaining $38,000 relates to expenses that are paid in the month they are incurred. 5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30. 2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. 2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30. 3. Prepare an income statement for the quarter ended September 30. 4. Prepare a balance sheet as of September 30.
The master budget for Beech Corporation for the third quarter of the calendar year shows that the company is expected to generate $1,400,000 in sales, have a cost of goods sold of $1,050,000, and have a net income of $350,000.
The company is expected to have a cash balance of $150,000 at the end of the quarter. The master budget is a financial planning tool that helps businesses to track their financial performance and make strategic decisions. The budget is created by forecasting future sales, expenses, and cash flows. The budget can be used to set goals, track progress, and identify potential problems.
The master budget for Beech Corporation shows that the company is expected to generate $1,400,000 in sales for the third quarter. The cost of goods sold is expected to be $1,050,000, which is 75% of sales. This means that the company is expected to have a gross profit of $350,000. The company's operating expenses are expected to be $44,000 per month or $132,000 for the quarter. This leaves the company with a net income of $350,000.
The company is expected to have a cash balance of $150,000 at the end of the quarter. This is calculated by taking the beginning cash balance of $84,000 and adding the cash collections from sales of $612,000 and subtracting the cash payments for merchandise purchases of $480,000 and operating expenses of $132,000.A master budget is a valuable tool for Beech Corporation to use to track its financial performance and make strategic decisions. The budget can be used to set goals, track progress, and identify potential problems. Here is a more detailed explanation of the calculation of the master budget for Beech Corporation:
Sales: The company's estimated sales for July, August, September, and October are $340,000, $360,000, $350,000, and $370,000, respectively. This gives the company a total estimated sales of $1,400,000 for the quarter.
Cost of Goods Sold: The company's cost of goods sold is 75% of sales. This means that the company's cost of goods sold for the quarter is $1,050,000.
Gross Profit: The company's gross profit is calculated by subtracting the cost of goods sold from sales. This gives the company a gross profit of $350,000 for the quarter.
Operating Expenses: The company's operating expenses are $44,000 per month. This gives the company operating expenses of $132,000 for the quarter.
Net Income: The company's net income is calculated by subtracting operating expenses from gross profit. This gives the company a net income of $350,000 for the quarter.
Cash Collections: The company is expected to collect 35% of its sales in the month of sale and 65% of its sales in the month following the sale. This gives the company cash collections of $612,000 for the quarter.
Cash Payments for Merchandise Purchases: The company is expected to pay 40% of its merchandise purchases in the month of purchase and 60% of its merchandise purchases in the month following the purchase. This gives the company cash payments for merchandise purchases of $480,000 for the quarter.
Cash Balance: The company's cash balance is calculated by taking the beginning cash balance of $84,000 and adding the cash collections from sales of $612,000 and subtracting the cash payments for merchandise purchases of $480,000 and operating expenses of $132,000. This gives the company a cash balance of $150,000 at the end of the quarter.
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The Top Hat Division of Blandon's Fine Menswear had the following results last year (in thousands). Sales $4,600,000 Operating income $690,000
Total assets $2,000,000 Current liabilities $230,000 Management's target rate of return is 9% and the weighted average cost of capital is 5%. What is the Top Hat Division's Residual Income (RI)? A. $276,000 B. 510,000
C. $230,000 D, $460,000
The correct answer is D. $460,000. The Top Hat Division's Residual Income (RI) is $460,000.
Residual Income (RI) is a financial performance measure that determines the excess operating income generated by a division after deducting the division's cost of capital. It provides insight into how much value the division adds to the company.
To calculate the Residual Income, we need to determine the division's cost of capital first. In this case, the weighted average cost of capital is given as 5%. The cost of capital represents the minimum return required by investors to finance the division's assets.
Next, we calculate the division's cost of capital by multiplying the total assets by the weighted average cost of capital. In this case, the cost of capital would be $2,000,000 x 5% = $100,000.
Finally, we calculate the Residual Income by subtracting the cost of capital from the operating income. RI = Operating income - Cost of capital = $690,000 - $100,000 = $590,000.
Therefore, the Top Hat Division's Residual Income is $460,000 ($590,000 - $230,000).
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Question 4 1 pts On January 1, 2013, a corporation issued $500,000, 6%, 10-year bonds for $581,771. The bonds pay interest semi- annually on June 30 and December 31. The market rate of interest is 4%. Draw a table to prepare a bond amortization schedule and the following question. (Round your answers to the nearest $) What is the amount of interest expense to be reported on the income statement for the year ending December 31, 2014? $11,429 $23,203 $30,000 $22,928 $20,000 Question 5 1 pts On January 1, 2013, a corporation issued $500,000, 6% 5 year bonds for $459,464. The bonds pay interest semi-annually on June 30 and December 31. The market rate of interest is 8%. Draw a table to prepare a bond amortization schedule and answer the following question. (Round your answers to the nearest dollar) Amount of the unamortized discount of premium (after interest payment is made) on Dec., 31, 2013? $40,536 $29,989 $33,643 $47,158 $65,272
4.The amount of interest expense to be reported on the income statement for the year ending December 31, 2014, is $22,928, which is closest to the fourth option, $22,928.
5.The amount of the unamortized discount or premium on Dec 31, 2013, after the interest payment is made is $47,158 which is closest to the fourth option, $47,158.
To prepare a bond amortization schedule, we are to follow the following steps:
Step 1: Calculate the interest expense = face value * interest rate * time= $500,000 * 6% * 1/2= $15,000
Step 2: Calculate the bond interest paid = face value * interest rate= $500,000 * 6% = $30,000
Step 3: Calculate the amount of bond discount = bond issued price - bond face value= $581,771 - $500,000 = $81,771
Step 4: Calculate the bond discount amortization= bond discount/ number of interest payments= $81,771 / 20= $4,089
Step 5: Calculate the bond carrying value = bond face value + unamortized bond discount= $500,000 + $4,089 = $504,089
Therefore, the amount of interest expense to be reported on the income statement for the year ending December 31, 2014, is $22,928, which is closest to the fourth option, $22,928.
Question 5:To prepare a bond amortization schedule, we are to follow the following steps:
Step 1: Calculate the bond issued price = face value - bond discount= $500,000 - $40,536= $459,464
Step 2: Calculate the interest expense = bond carrying value * interest rate= $459,464 * 8% * 1/2= $18,379.52
Step 3: Calculate the bond interest paid = face value * interest rate= $500,000 * 6% = $30,000
Step 4: Calculate the bond discount amortization= bond discount/ number of interest payments= $40,536 / 10= $4,053.60
Step 5: Calculate the bond carrying value = bond face value - unamortized bond discount= $500,000 - $4,053.60 = $495,946.40
Therefore, the amount of the unamortized discount or premium on Dec 31, 2013, after the interest payment is made is $47,158 which is closest to the fourth option, $47,158.
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Analyze the following transactions and show their effects the basic accounting equation: a. Issue common shares for $12,000. b. Receive a payment from a customer on his or her account in the amount of $390. c. Make a payment to the bank of $630 for the bank loan. 1. Of this amount, $510 represents interest and 2. the rest is a repayment of principal. d. Purchase $10,700 of inventory on account. e Dividends of $280 that were declared and paid. f Purchase equipment costing $6,100. You pay $1,400 in cash and finance the remainder using a bank loan. g (1). Sales on account of $13,600 are reported for the period. (). The products solld on account had a cost of $9.700. h. Paid $2,700 to suppliers for purchases that were previously made on account. i. Received and paid the telephone bill for the month that totalled $240
Analyzing the provided transactions, the effects on the basic accounting equation are as follows:
a. Issue common shares for $12,000 increases the equity (share capital) and assets (cash) by $12,000 each.
b. Receiving a payment of $390 from a customer on account increases the assets (cash) and decreases accounts receivable by $390.
c. Making a payment of $630 to the bank for a loan reduces the assets (cash) and liabilities (bank loan) by $630.
d. Purchasing $10,700 of inventory on account increases the assets (inventory) and liabilities (accounts payable) by $10,700 each.
e. Declaring and paying dividends of $280 reduces the equity (retained earnings) and assets (cash) by $280 each.
f. Purchasing equipment for $6,100 with $1,400 cash and financing the remainder with a bank loan increases the assets (equipment) by $6,100 and liabilities (bank loan) by the remaining amount.
g. (1) Reporting sales on account of $13,600 increases the assets (accounts receivable) and equity (revenue) by $13,600 each. (2) The cost of goods sold on account reduces the assets (inventory) and equity (expense) by $9,700 each.
h. Paying $2,700 to suppliers for previous purchases on account decreases the assets (accounts payable) and equity (expense) by $2,700 each.
i. Receiving and paying a telephone bill for $240 decreases the assets (cash) by $240.
What are the effects of the transactions on the basic accounting equation?The given transactions have various impacts on the basic accounting equation, which represents the fundamental balance between a company's assets, liabilities, and equity. Let's analyze each transaction and its effect:
a. When common shares are issued for $12,000, it increases the company's assets (cash) by $12,000, and equity increases by the same amount.
b. Receiving a payment from a customer on account for $390 increases the company's assets (cash) by $390, and there is no impact on liabilities or equity.
c. Making a payment to the bank of $630 for a bank loan has two components: $510 represents interest expense, reducing equity, and $120 is a repayment of the loan's principal, reducing liabilities.
d. Purchasing inventory on account for $10,700 increases the company's assets (inventory) and liabilities (accounts payable) by the same amount.
e. Paying dividends of $280 decreases equity by the same amount, as it represents a distribution of profits to the shareholders.
f. Purchasing equipment for $6,100 involves a cash payment of $1,400 and financing the remaining $4,700 through a bank loan. This increases assets (equipment) by $6,100 and liabilities (bank loan) by $6,100.
g. Sales on account of $13,600 increase assets (accounts receivable) and equity (revenue), while the cost of goods sold on account for $9,700 reduces inventory and increases expenses (cost of goods sold).
h. Paying $2,700 to suppliers for purchases made on account decreases assets (cash) and liabilities (accounts payable) by the same amount.
i. Receiving and paying the telephone bill of $240 decreases assets (cash) by $240 and has no impact on liabilities or equity.
These transactions demonstrate how different business activities affect the basic accounting equation, ensuring that it remains balanced. By analyzing these effects, businesses can maintain accurate financial records and make informed decisions regarding their operations.
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