These journal entries below account for the various events related to Gumtree Ltd's initial public offering and subsequent actions.
What are the journal entries to account for the events related to Gumtree Ltd's initial public offering?Journal Entries:
On 15th February 2022, when applications were received for 7 million shares:
Dr. Bank Account $7,000,000Cr. Share Application Account $7,000,000On 25th February 2022, when shares were allotted on a pro rata basis:
Dr. Share Application Account $2,000,000Cr. Share Capital Account $2,000,000(This entry represents the amount received for the allotted shares at the rate of $2.00 per share.)
On 25th February 2022, when excess application money was adjusted against the final payment:
Dr. Share Application Account $1,000,000Cr. Share Allotment Account $1,000,000(This entry reduces the excess application money against the final payment due.)
On 27th March 2022, when subscribers failed to make the final payments for 1 million shares:
Dr. Share Allotment Account $1,000,000Cr. Share Forfeiture Account $1,000,000(This entry records the forfeiture of shares due to non-payment.)On 10th April 2022, when forfeited shares were reissued at $1.60 with full payment:
Dr. Share Forfeiture Account $1,000,000Dr. Share Capital Account $600,000Dr. Share Premium Account $400,000Cr. Share Allotment Account $2,000,000(This entry cancels the forfeiture of shares and reissues them at a reduced price of $1.60 per share.).
Full question:
Share capital and reserves Gumtree Ltd open for initial public offering for 5 million shares at a rate of $2.00 per share. Application close on 15th February 2022 with $1.00 and balance 1.00 will be payable within 30 days of allotment. Gumtree Ltd received application for 7 million shares on 15th February 2022. On 25 February 2022, management decided to allot shares on pro rata basis with excess amount received will be reduce against final payment due. Subscribers of 1 million shares fail to make the final payments due on 27th March 2022. On 10th April 2022,1 million shares forfeited and reissued at 1.60 with full payment. REQUIRED Provide the journal entries to account for the above events.
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Bailey Buyer purchases a screwdriver for $2 from Sid's Hardware Store. He lends the screwdriver to his neighbor, Dan Dimwit, who uses the screwdriver as a chisel to break up a piece of crumbling cement in his backyard in order to rebuild it. While Dan is hammering at the screwdriver with a sledgehammer, it breaks and a piece of the handle flies into his eye, causing him a minor eye injury. Explain which warranties attach to this sale to Bailey and whether they also extend to Dan. Discuss the elements of any warranty claim and Dan's chances of winning a suit against Sid's Hardware Store for breach of warranty. Be sure to discuss whether the hardware store has any defense. Explain fully for full credit.
Sid's Hardware Store may be liable for breach of implied warranty of merchantability, but Dan's chances of winning are uncertain due to misuse.
For this situation, the suggested guarantee of merchantability would connect to the offer of the screwdriver to Bailey since Sid's Home improvement shop is a trader.
This guarantee ensures that the screwdriver is good for its normal reason and of satisfactory quality. In the event that the screwdriver was deficient or not reasonable for its planned use, Bailey would have a case under this guarantee.
Nonetheless, the guarantee may not stretch out to Dan since he acquired the screwdriver from Bailey and was not the first buyer. Dan's possibilities winning a suit against Sid's Home improvement shop for break of guarantee are unsure as he is an outsider to the first deal.
Sid's Home improvement shop might actually contend the protection of abuse of the item. Dan involved the screwdriver as an etch and exposed it to exorbitant power with a demo hammer, which was not its planned use.
The store might battle that the injury came about because of Dan's carelessness or abuse, as opposed to a deformity in the screwdriver. The result of the claim would rely upon the particular conditions and proof introduced.
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Discuss these questions/topic:
Distinguish between internet and digital banking and discuss the benefits of digital banking
Payment services, their methods, innovations and competition. Select a few to comment on.
Distinguish between digital, virtual and crypto currencies and their use in the payment system.
Traditionial banks stand threatened. Where is the threat coming from? Discuss
Discuss e-technology developments in mortgage and insurance industry.
Security and Privacy Issues in e-banking
Technology trends: what is open banking?
Internet banking refers to the provision of banking services through the Internet, allowing customers to access their accounts, make transactions, and manage their finances online.
Digital banking, on the other hand, encompasses a broader range of banking services that are delivered through digital channels, including mobile applications, ATMs, and other electronic platforms.
The benefits of digital banking include convenience, 24/7 accessibility, faster transactions, cost savings for banks, and personalized services.
Payment services encompass various methods of transferring funds and making transactions.
Virtual currencies, on the other hand, are digital representations of fiat currencies, like digital dollars or euros.
Both digital and virtual currencies can be used for payments, but cryptocurrencies offer additional features such as anonymity and potential for investment.
Traditional banks face threats from various sources. Fintech startups and digital banks offer innovative and customer-centric services that attract tech-savvy customers.
Big tech companies also pose a threat as they have vast user bases and the ability to integrate financial services into their platforms. Regulatory changes and evolving customer preferences toward digital solutions further contribute to the challenges faced by traditional banks.
In the mortgage and insurance industries, e-technology developments have revolutionized processes. Online mortgage applications streamline the application and approval process, reducing paperwork and enhancing customer experience.
Security and privacy are critical concerns in e-banking. The risk of unauthorized access, data breaches, and identity theft is a constant challenge.
Banks employ advanced security measures like encryption, multi-factor authentication, and fraud detection systems to protect customer information. Privacy regulations such as the General Data Protection Regulation (GDPR) also play a vital role in safeguarding customer data and ensuring transparency.
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Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $55,000, and it estimates that 2% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $415 credit balance before the adjustment. (b) a $291 debit balance before the adjustment.
View transaction list Journal entry worksheet Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has a $415 credit balance before the adjustment. Note: Enter debits before credits. Transaction (a)=
General Journal=
Debit =
Credit =
The adjustment entry involves increasing the allowance to reflect the estimated bad debts expense. In this case, the estimated bad debts expense is 2% of the outstanding accounts receivable.
a) Transaction (a):
General Journal
Debit: Bad Debts Expense $1,030
Credit: Allowance for Doubtful Accounts $1,030
Explanation:
Since the Allowance for Doubtful Accounts has a $415 credit balance before the adjustment and the company estimates that 2% of the outstanding accounts receivable will be uncollectible, we need to adjust the allowance by the estimated amount.
The adjustment entry involves increasing the allowance to reflect the estimated bad debts expense. In this case, the estimated bad debts expense is 2% of the outstanding accounts receivable.
2% of $55,000 = $1,100
However, since the Allowance for Doubtful Accounts has a credit balance of $415, we only need to increase it by the net amount.
$1,100 - $415 = $685
To record this adjustment:
Debit the Bad Debts Expense account for $1,030 to increase the expense.
Credit the Allowance for Doubtful Accounts account for $1,030 to increase the allowance.
Please note that the amounts in the adjusting entry are derived based on the information provided in the question and the assumption that the allowance account balance before the adjustment is $415 credit.
b) Transaction (b):
General Journal
Debit: Allowance for Doubtful Accounts $1,100
Credit: Bad Debts Expense $1,100
Explanation:
Since the Allowance for Doubtful Accounts has a $291 debit balance before the adjustment, we need to adjust the allowance to reflect the estimated bad debts expense. The estimated bad debts expense is 2% of the outstanding accounts receivable, which is calculated as follows:
2% of $55,000 = $1,100
To record this adjustment:
Debit the Allowance for Doubtful Accounts account for $1,100 to increase the allowance.
Credit the Bad Debts Expense account for $1,100 to record the expense.
Please note that the amounts in the adjusting entry are derived based on the information provided in the question and the assumption that the allowance account balance before the adjustment is $291 debit.
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If the production function features increasing returns to scale producing a higher quantity
(a) reduces the variable cost of production
(b) reduces the fixed cost of production
(c) reduces the average cost of production
(d) All answers are correct
If the production function features increasing returns to scale producing a higher quantity, it reduces the average cost of production.
The correct option is c) . reduces the average cost of production.
The increasing returns to scale imply that an increase in the input leads to a more than proportional increase in output. Thus, as the production level rises, the total cost of production does not increase proportionally, resulting in a decline in average cost of production.
When production increases, it leads to economies of scale. Economies of scale happen when there is an increase in production, and it results in a decrease in the cost of production per unit. This is because the cost of producing each unit of output falls as the number of units produced rises. Thus, the average cost of production falls as production increases with increasing returns to scale.
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GoSnow sells snowboards. Each snowboard requires direct materials of $150, direct labor of $55, variable overhead of $65, and variable selling, general, and administrative costs of $30. The company has fixed overhead costs of $285,000 and fixed selling, general, and administrative costs of $355,000. The company has a target profit of $560,000. It expects to produce and sell 10,000 snowboards. Compute the selling price per unit using the variable cost method. (Round your intermediate calculations and final answer to nearest whole dollar amounts.) Selling price per unit
If the company has a target profit of $560,000, the selling price per unit using the variable cost method is $420.
To compute the selling price per unit using the variable cost method, we need to consider the variable costs and the target profit.
The variable costs per unit include direct materials, direct labor, variable overhead, and variable selling, general, and administrative costs. Adding these costs together, we get:
Variable costs per unit = Direct materials + Direct labor + Variable overhead + Variable selling, general, and administrative costs
= $150 + $55 + $65 + $30
= $300
Next, we need to determine the total fixed costs. The fixed costs include fixed overhead costs and fixed selling, general, and administrative costs. Adding these costs together, we get:
Total fixed costs = Fixed overhead costs + Fixed selling, general, and administrative costs
= $285,000 + $355,000
= $640,000
Now, we can calculate the total cost per unit by adding the variable costs per unit and the fixed costs per unit:
Total cost per unit = Variable costs per unit + (Total fixed costs / Number of units)
= $300 + ($640,000 / 10,000)
= $300 + $64
= $364
Finally, we can compute the selling price per unit using the formula:
Selling price per unit = Total cost per unit + Target profit per unit
= $364 + ($560,000 / 10,000)
= $364 + $56
= $420
This price covers the variable costs per unit, the fixed costs per unit, and achieves the target profit of $560,000.
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Recall the last problem on Exam 2, which was about how a shelter cat should behave and whether Dave and Charlotte should adopt it. You should have found that the game had a semi- separating equilibrium. The payoff matrix in that game is shown below, with the cat's payoffs first. This numbering assumes that you numbered Nature's node as 1. (You can take a look at the exam solutions for how I got to this matrix, or to see the setup if you don't remember it.) DC A4L5 LALS CAT P2P3 64,-34 -58, 5 P2B3 -20, 18.5 -44, -26.5 a. Find and formally state the Bayesian-Nash equilibrium. Show your work, and if you are using decimals rather than fractions for any part of question 2, please go to four places after the decimal. Round carefully! b. If Dave and Charlotte observe that the Cat purrs, what is their posterior belief that the cat is Nice? What is their posterior belief that it is Mean? Show your work, using the method from class (HINT: you need to answer part "a" before you can do this part!) the aquilibrium from part "a" and Dave and Charlotte's posterior beliefs
If Dave and Charlotte observe the cat purring, payoff matrix their posterior belief is 0.389 for Nice and 0.611 for Mean.
a. To find the Bayesian-Nash balance, we want to decide the procedures that augment the normal utility for every player, given their convictions about the feline's kind. We should think about the two potential sorts of the feline: Pleasant (N) and Mean (M).
For Dave and Charlotte:
On the off chance that they take on the feline (A), their normal settlements are:
E[Dave(A)] = P(N) * 64 + P(M) * (-58)
E[Charlotte(A)] = P(N) * 5 + P(M) * (-44)
On the off chance that they don't take on the feline (N), their normal adjustments are:
E[Dave(N)] = P(N) * (-34) + P(M) * 18.5
E[Charlotte(N)] = P(N) * (-20) + P(M) * (-26.5)
To find the Bayesian-Nash balance, we want to compute the likelihood dissemination P(N) that makes Dave and Charlotte unconcerned between taking on or not embracing the feline.
Setting E[Dave(A)] = E[Dave(N)] and E[Charlotte(A)] = E[Charlotte(N)], we get:
P(N) * (64-34) + P(M) * (-58) = P(N) * (-20) + P(M) * 18.5
P(N) * (5-20) + P(M) * (-44) = P(N) * (-20) + P(M) * (-26.5)
Improving on the above conditions, we have:
30P(N) - 56P(M) = 0
19P(N) + 17.5P(M) = 0
Addressing these conditions all the while, we find:
P(N) = 0.3889 (around)
P(M) = 0.6111 (around)
Consequently, the Bayesian-Nash balance is:
Dave and Charlotte ought to embrace the feline with likelihood 0.3889 in the event that they notice the feline murmuring and with likelihood 0.6111 assuming they notice the feline murmuring.
b. To compute Dave and Charlotte's back convictions, we utilize Bayes' hypothesis. How about we accept that Dave and Charlotte at first doled out equivalent earlier probabilities to the feline being Great or Mean, i.e., P(N) = P(M) = 0.5.
Assuming Dave and Charlotte see that the feline murmurs, their back conviction that the feline is Pleasant can be determined as follows:
P(N|Purr) = (P(Purr|N) * P(N))/(P(Purr|N) * P(N) + P(Purr|M) * P(M))
P(N|Purr) = (0.3889 * 0.5)/(0.3889 * 0.5 + 0.6111 * 0.5)
P(N|Purr) = 0.3889/1
Consequently, their back conviction that the feline is Great, considering that it murmurs, is 0.3889 or roughly 0.389.
Also, their back conviction that the feline is Mean, considering that it murmurs, is:
P(M|Purr) = 1-P(N|Purr)
P(M|Purr) = 1-0.3889
P(M|Purr) = 0.6111 or roughly 0.611.
In outline, assuming Dave and Charlotte see that the feline murmurs, their back conviction that the feline is Pleasant is roughly 0.389, and their back conviction that it is Mean is around 0.611.
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4. The PE ratio multiple shows its limitations when: a. There are significant extraordinary incomes or expenses b. Many comparables have negative earnings c. Firms in the industry have very different
When there are significant extraordinary incomes or expenses, the PE ratio multiple shows its limitations.
The price-to-earnings (P/E) ratio is a ratio that measures the stock price in relation to earnings. It is a valuation ratio that is used to compare the market value of a company's shares to its earnings per share (EPS).However, the PE ratio multiple has its limitations, and one of them is that it shows its limitations when there are significant extraordinary incomes or expenses. This is because earnings that are not usual or consistent will impact the PE ratio and can make it seem as if the company is overvalued or undervalued. In conclusion, when there are significant extraordinary incomes or expenses, the PE ratio multiple shows its limitations.
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Ann wants to buy a property which costs $3,500,000. She gets a mortgage with 75% LTV. What is Ann’s Debt to Equity ratio for this purchase? A. 3:4 B. 3:1 C. 5:1 D. 4:1
Given: Cost of the property = $3,500,000.LTV = 75%.Formula used:Debt to Equity Ratio = Total Debt / Total Equity.
Ann’s Debt to Equity ratio for this purchase can be calculated as follows:Total debt = (LTV / 100) × Cost of propertyTotal debt = (75 / 100) × $3,500,000Total debt = $2,625,000Total equity = Cost of property - Total debtTotal equity = $3,500,000 - $2,625,000Total equity = $875,000Debt to Equity Ratio = Total Debt / Total Equity Debt to Equity Ratio = $2,625,000 / $875,000Debt to Equity Ratio = 150 / 50 Debt to Equity Ratio = 3:1Therefore, the correct option is B. 3:1.
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In private carriage, which of the following is an incorrect statement?
A) If excess capacity exists, or in some other instances, private fleets can haul products for other unrelated organizations.
B) The organization does not have to own the equipment used to transport the products.
C) Private carriage is also a financial decision that organizations make.
D) Private fleets primarily transport products owned by their organization or are owned by other members of their supply chain.
E) The vast majority of private carriage involves truck transport.
The incorrect statement is, Private fleets primarily transport products owned by their organization or are owned by other members of their supply chain. Option D is the answer.
Private carriage refers to the transportation of goods by a company's own fleet or by hiring third-party carriers exclusively for their own use. Private fleets can transport products owned by their organization, but they generally do not transport products owned by other members of their supply chain.
Private carriage is distinct from common carriage, where transportation services are offered to the general public. Private carriage allows companies to have control over their transportation operations and tailor them to their specific needs. It is important to accurately understand the scope of private carriage, which typically involves the organization's products and not products owned by others in the supply chain. Option D is the answer.
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You are considering investing in two call options both of which expire on the same day and have the same strike price. The underlying stock's market price for the first option is $75 and the underlying stock's market price for the second option is $80. Which of the following statements is accurate?
The correct option is that the call option with a market price of $75 has a lower premium than the call option with a market price of $80.
A call option is an agreement where the owner of the option has the right to buy an underlying asset, which is typically a stock, at a predetermined price, which is known as the strike price, before the option contract expires.The premium for a call option is the price that the owner of the option must pay to buy the call option, which gives the owner the right to buy the underlying asset at the strike price.
The premium for a call option is based on various factors, including the underlying asset's market price, the strike price, the time until expiration, and the volatility of the underlying asset. The higher the market price of the underlying asset, the higher the premium for a call option.
On the other hand, if the market price of the underlying asset is low, then the premium for a call option will also be low. This is because the option is less likely to be exercised if the market price of the underlying asset is lower than the strike price. Therefore, in this case, the call option with a market price of $75 has a lower premium than the call option with a market price of $80, as the market price of the underlying asset for the first option is lower than the second option.
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If the elasticity of demand is 4, and the price of a cup of coffee is $2, how much would the seller need to reduce her price in order to increase the quantity sold by 20 percent? Instructions: Enter your answer rounded to 2 decimal places (i.e in dollars and cents). The seller would need to reduce her price by: $[ 4.8 View previous attempt
The seller would need to reduce her price using elasticity of demand by $0.10 (10 cents) to increase the quantity sold by 20 percent.
To determine how much the seller would need to reduce her price to increase the quantity sold by 20 percent,
use the concept of elasticity of demand.
The formula to calculate the percentage change in quantity demanded given the percentage change in price is,
% Change in Quantity Demanded = Elasticity of Demand × % Change in Price
The elasticity of demand is 4, and we want to increase the quantity sold by 20 percent.
Plug in the values and solve for the percentage change in price,
20% = 4 × % Change in Price
Dividing both sides by 4 gives us,
% Change in Price
= 20% / 4
= 5%
To calculate the actual price reduction needed, multiply the current price by the percentage change in price,
Price Reduction
= $2 × 5%
= $0.10
Therefore, as per elasticity of demand the seller would need to reduce her price by $0.10 (10 cents) to increase the quantity sold by 20 percent.
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Erin wants to double her money in 17 years in an investment
fund. What nominal monthly compounding interest rate do you suggest
that she look for? (Hint: If money doubles, the ratio of FV to PV
is 2.)
If Erin wants to double her money in 17 years, she must invest in nominal monthly compounding interest rate of 6.76% per annum.
To find out the nominal monthly compounding interest rate that Erin should look for to double her money in 17 years in an investment fund, we will use the following formula:
Future Value = Present Value x (1 + r/n)^(n x t),
where
FV = 2 PV (since Erin wants to double her money),PV = Present Value (the initial amount that Erin wants to invest),r = nominal annual interest rate (the interest rate advertised by the bank or the institution),n = number of times the interest is compounded per year, andt = time (in years)Erin wants to double her money in 17 years.We have to find the nominal monthly compounding interest rate.
Therefore, we will convert 17 years to months:
17 years = 17 x 12 months = 204 months
PV = 1r/n = r/12 (since Erin wants to know the nominal monthly compounding interest rate)
Now, substituting the values in the formula, we get:
2 PV = PV x (1 + r/12)^(12 x 204)2 = (1 + r/12)^(2,448)r/12 = 0.0056354
r = 0.0676 or 6.76%
Therefore, Erin should look for a nominal monthly compounding interest rate of 6.76% per annum to double her money in 17 years in an investment fund.
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1. finance going over budget due to exigency in the campus event:
If the finance department is going over budget due to an exigency in the campus event, there are a few potential implications.
First, the unexpected expenses incurred for the event may exceed the allocated budget, leading to a shortfall in available funds. This could result in the need to reallocate funds from other areas or seek additional funding to cover the deficit. Second, the over-budget situation may impact the overall financial performance of the organization, potentially affecting its financial statements and reporting. It is important for the finance department to address the issue promptly, assess the impact on the overall financial picture, and take necessary steps to mitigate any negative consequences. If the finance department is going over budget due to an exigency in the campus event, there are a few potential implications.
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explain house’s concept of charisma and identify five types of behaviors exhibited by charismatic leaders.
According to sociologist Max Weber, charisma is a concept used to describe a unique and extraordinary quality possessed by certain individuals that enables them to exert a strong influence over others.
Charismatic leaders are characterized by their exceptional personal qualities, their ability to inspire and motivate others, and their ability to create a sense of devotion and loyalty among their followers.
Five types of behaviors commonly exhibited by charismatic leaders are:
Inspirational Communication: Charismatic leaders have the ability to articulate a compelling vision and communicate it in a way that captivates and inspires their followers.
Self-Confidence: Charismatic leaders exude a high level of self-assurance and belief in their own abilities.
Empathy: Charismatic leaders demonstrate a genuine concern and understanding for the needs and emotions of their followers.
Visionary Thinking: Charismatic leaders possess a clear and compelling vision for the future..
Personal Magnetism: Charismatic leaders possess a magnetic and captivating personality that attracts others to them.
These behaviors collectively contribute to the charismatic leader's ability to rally others around their cause, create a strong sense of identity and purpose.
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Which of the following personality dimensions is typically associated with a person being nondepressed, secure, and content?
a. Extroversion b. Adjustment c. Agreeableness
d. Conscientiousness e. Openness to experience
Adjustment is a personality dimensions that is typically associated with a person being non-depressed, secure, and content. The correct option is B.
The personality dimension typically associated with a person being non-depressed, secure, and content is "adjustment." Adjustment refers to an individual's emotional stability, resilience, and ability to cope with stress. People with high levels of adjustment tend to have a positive outlook, exhibit emotional well-being, and are less prone to experiencing depression or anxiety.
They are secure in themselves and their environment, displaying a sense of contentment. In contrast, individuals with lower levels of adjustment may be more susceptible to negative emotions, insecurity, and dissatisfaction. Therefore, when it comes to being nondepressed, secure, and content, the personality dimension of adjustment plays a significant role.
The correct option is B.
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Increasing your OR ING leverage (increase in Fixed costs) usually involves an investment in fixed assets. One reason is to increase capacity to meet demand. Another KEY reason to increase leverage is to:___________
a. Reduce variable costs
b. Reduce fixed costs
c. increase borrowings
d. Improve profits
Increasing your OR ING leverage (increase in Fixed costs) usually involves an investment in fixed assets. One reason is to increase capacity to meet demand.
Another KEY reason to increase leverage is to improve profits.What is leverage?Leverage is the usage of borrowed money or financial instruments to amplify the potential gain or loss of an investment. An investor may utilize leverage to increase a portfolio's earning potential when the market is optimistic, and interest rates are low.
Increasing leverage aims to boost profits. To improve profits, increasing leverage is another KEY reason for the investment in fixed assets and increasing fixed costs. Therefore, the correct option is d. Improve profits.
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The statement that "inflation is always and everywhere a
fiscal phenomenon" is one of the most famous statements in
economics it was made by
Paul Krugman
Jerome Powell
Thomas Sargent
Robert Solow David Gabel
The statement that "inflation is always and everywhere a fiscal phenomenon" is one of the most famous statements in economics.
The person who made this statement is Milton Friedman. Friedman was a Nobel Memorial Prize-winning economist and a leading advocate of monetarism, the view that a stable and low inflation rate is necessary for economic growth, employment, and prosperity. His statement is often interpreted to mean that inflation is primarily caused by monetary factors such as changes in the money supply, rather than real factors such as changes in the supply and demand for goods and services.
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Morelli Electric Motor Corporation manufactures electric motors for commercial use. The company produces three models, designated as standard, deluxe, and heavy-duty. The company uses a job-order cost-accounting system with manufacturing overhead applied on the basis of direct-labor hours. The system has been in place with little change for 25 years. Product costs and annual sales data are as follows:
Morelli Electric Motor Corporation manufactures three types of electric motors: standard, deluxe, and heavy-duty.
What accounting system is used?The company uses a job-order cost-accounting system with manufacturing overhead applied on the basis of direct-labor hours. The system has been in place with little change for 25 years.
The company's annual sales data are as follows:
Standard model: 19,000 units
Deluxe model: 1,500 units
Heavy-duty model: 9,400 units
The product costs for each model are as follows:
Raw material: $18
Direct labor: $10
Manufacturing overhead: $65
The total product cost for each model is as follows:
Standard model: $93
Deluxe model: $183
Heavy-duty model: $196
The predetermined overhead rate is calculated as follows:
Budgeted manufacturing overhead: $3,570,000
Budgeted direct-labor hours: 21,000 hours
Predetermined overhead rate: $170 per hour
The company's target price for each model is as follows:
Standard model: $110
Deluxe model: $220
Heavy-duty model: $232
The company is considering implementing an activity-based costing system. The activity cost pools and their drivers are as follows:
* Activity cost pool Driver
Depreciation, machinery | Machine hours
Maintenance, machinery | Machine hours
Depreciation, taxes, and insurance for factory | Square feet
Engineering | Number of engineering hours
Purchasing, receiving, and shipping | Number of purchase orders
Inspection and repair of defects | Number of defects
Material handling | Number of pounds of material
Miscellaneous manufacturing overhead costs | Number of direct-labor hours
The company is also considering changing its pricing formula to 110% of full product cost.
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Morelli Electric Motor Corporation Manufactures Electric Motors For Commercial Use. The Company Produces Three Models, Designated As Standard, Deluxe, And Heavy-Duty. The Company Uses A Job-Order Cost-Accounting System With Manufacturing Overhead Applied On The Basis Of Direct-Labor Hours. The System Has Been In Place With Little Change For 25 Years. Product
Morelli Electric Motor Corporation manufactures electric motors for commercial use. The company produces three models, designated as standard, deluxe, and heavy-duty. The company uses a job-order cost-accounting system with manufacturing overhead applied on the basis of direct-labor hours. The system has been in place with little change for 25 years. Product costs and annual sales data are as follows:
Standard Model Deluxe Model Heavy-Duty Model
Annual sales (units) 19,000 1,500 9,400
Product costs:
Raw material $ 18 $ 33 $ 46
Direct labor 10 (0.5 hr. at $20) 20 (1 hr. at $20) 20 (1 hr. at $20)
Manufacturing overhead* 65 130 130
Total product cost $ 93 $ 183 $ 196
*The calculation of the predetermined overhead rate is as follows:
The Police Department (PD) would like to know whether forgiving a first-time offender for a drug related crime might actually reduce the likelihood they commit crime in the future. Consider the crime of possession of a small quantity of marijuana committed by a minor (an individuals aged less than 18 years of age). Assume that the law states that if a minor is caught with 5 grams of marijuana for the first time, they only get a warning. If the quantity is higher than 5 grams, the minor gets charged and convicted of a serious crime. Adults (age 18 or more) get arrested and convicted regardless of the quantity of marijuana they are caught carrying.
You are hired as a consultant to help the PD to answer the question whether forgiving a first- time offender for a drug related crime might actually reduce the likelihood they commit crime in the future. The PD holds administrative records of the universe of warnings, offenses, as well as the individuals’ gender, age, and address.
In answering questions below, note that general statements about econometric methods will yield no marks. Adapt and assume the necessary assumptions to this particular setting and use equations and or graphs to support your argument. If using graphs, make sure that the axes are labelled correctly.
(i) Discuss the endogeneity problem in studying the above problem
(ii) What econometric method would be suitable for you to use in this setting to answer the question of interest to the PD?
(iii) Describe in detail the method in (ii) applied to this setting. What are the identifying assumptions of the method in (ii)?
(iv) How can the identifying assumptions be tested? Which graphs would be useful in supporting your arguments?
(i) The endogeneity problem in studying this problem arises because of the potential correlation between the decision to forgive the first-time offender and the likelihood of committing a future crime.
(ii) A suitable econometric method in this setting would be a difference-in-differences (DD) approach.
(iii) In the DD approach, we compare the change in the future crime rate of those who received a warning for a drug-related crime (the treatment group) before and after the warning, with the change in the future crime rate of those who were charged and convicted of the crime (the control group) over the same time period.
(iv) The parallel trends assumption can be tested visually with a graph of the pre-treatment period crime rates for both the treatment and control groups.
For example, if a certain group of minors are more likely to receive a warning instead of being charged, it could be because they live in a wealthier neighbourhood, have parents who are well-connected or for some other reason make it less likely they will commit crimes in the future. Thus, a failure to account for such factors can lead to biased estimates of the effect of forgiveness on future crime rates.
In the DD approach, we compare the change in the future crime rate of those who received a warning for a drug-related crime (the treatment group) before and after the warning, with the change in the future crime rate of those who were charged and convicted of the crime (the control group) over the same time period. The identifying assumption of this method is the parallel trends assumption, which means that in the absence of the warning, the treatment and control groups would have had the same trend in future crime rates.
If the treatment and control groups have similar pre-treatment trends, it provides some evidence in support of the assumption. Additionally, we can estimate the DD model and test for the significance of the interaction term between the treatment indicator and time dummies. If the interaction term is statistically significant, it suggests that the parallel trends assumption may not hold. We can also conduct a placebo test by setting the treatment period to be before the policy change and ensure that there is no significant difference in crime rates between the treatment and control groups during the placebo period.
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Laurel Enterprises expects earnings next year of $3.81 per share and has a 30% retention rate, which it plans to keep constant. Its equity cost of capital is 11%, which is also its expected retum on new investment. Its earnings are expected to grow forever at a rate of 3.3% per year. If its next dividend is due in one year, what do you estimate the firm's current stock price to be? The current stock price will be $
Given: Earnings per share next year = 3.81Retention ratio = 30%Equity cost of capital = expected return on new investment = 11%Earnings growth rate = 3.3% per year Dividend due in one year .
The Gordon growth model is given as: P = D1 / (Ke - g)where, P = current stock priced 1 = next year's dividend Ke = equity cost of capital g = earnings growth rate We can find out the value of D1 as:D1 = Earnings per share * Retention ratio[tex]D1 = 3.81 * 0.30D1 = $1.143Now we can find out the value of P as:P = D1 / (Ke - g)P = 1.143 / (0.11 - 0.033)P = $12.77[/tex]
Therefore, the current stock price of the firm is[tex]$12.77[/tex].
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.In a perfectly competitive industry, there are two types of firms: low-cost producers and high-cost producers. The minimum average total cost of the high-cost producers is $150. The low-cost producers have a long-run total cost curve given by LTC = 150Q - 15Q2 + 0.4Q3, where LMC = 150 - 30Q + 1.2Q2. How much economic rent does the low-cost producer earn?
The economic rent earned by the low-cost producer is $1,275.
To calculate the economic rent earned by the low-cost producer, we need to compare its average total cost (ATC) with the market price.
Given that the low-cost producer's long-run total cost (LTC) is given by LTC = 150Q – 15Q² + 0.4Q², we can find its ATC by dividing LTC by the quantity produced (Q).
ATC = (150Q – 15Q² + 0.4Q³) / Q
= 150 – 15Q + 0.4Q²
The market price is given as $100.
To find the economic rent, we subtract the ATC from the market price and multiply it by the quantity produced (Q).
Economic Rent = (Market Price - ATC) * Q
= (100 - (150 - 15Q + 0.4Q²)) * Q
= (100 - 150 + 15Q - 0.4Q²) * Q
= (-50 + 15Q - 0.4Q²) * Q
= -0.4Q³ + 15Q² - 50Q
Substituting the given quantity (Q = 15) into the equation, we can find the economic rent
Economic Rent = -0.4(15)³ + 15(15)² - 50(15)
= -0.4(3375) + 15(225) - 750
= -1350 + 3375 - 750
= 1275
Therefore, the economic rent is $1,275.
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--The given question is incomplete, the complete question is given below " In a perfectly competitive industry, there are two types of firms: low-cost producers and high-cost producers. The minimum average total cost of the high-cost producers is $150. The low-cost producers have a long-run total cost curve given by LTC = 150Q –15Q2 + 0.4Q2, where LMC = 150 – 30Q + 1.2Q2. How much economic rent does the low-cost producer earn? p = $100, q = 15"--
Using the following information:
The bank statement balance is $4,333.
The cash account balance is $4,601.
Outstanding checks amounted to $834.
Deposits in transit are $1,021.
The bank service charge is $72.
A check for $37 for supplies was recorded as $28 in the ledger.
Prepare a bank reconciliation for Candace Co. for May 31.
Candace Co.
Bank Reconciliation
May 31
Cash balance according to bank statement $fill in the blank 1
Adjustments:
Bank service chargeDeposits in transit not recorded by bankError in recording check
$- Select -
Bank service chargeError in recording checkOutstanding checks
- Select -
Total adjustments fill in the blank 6
Adjusted balance $fill in the blank 7
Cash balance according to company's records $fill in the blank 8
Adjustments:
Bank service chargeDeposits in transit not recorded by bankOutstanding checks
$- Select -
Deposits in transit not recorded by bankError in recording checkOutstanding checks
- Select -
Total adjustments fill in the blank 13
Adjusted balance $fill in the blank 14
Candace Co.
Bank Reconciliation
May 31
Cash balance according to bank statement $4,333
Adjustments:
Bank service charge: -$72
Deposits in transit not recorded by bank: +$1,021
Error in recording check: +$9 ([$37 - $28])
Total adjustments: $958
Adjusted balance: $5,291 ($4,333 + $958)
Cash balance according to company's records $4,601
Adjustments:
Deposits in transit not recorded by bank: +$1,021
Error in recording check: +$9 ([$37 - $28])
Outstanding checks: -$834
Total adjustments: $196
Adjusted balance: $4,797 ($4,601 + $196)
To prepare the bank reconciliation for Candace Co. on May 31, we need to compare the cash balance according to the bank statement with the cash balance according to the company's records and make adjustments for any discrepancies.
Cash balance according to the bank statement is given as $4,333.
Adjustments:
Bank service charge: The bank service charge is listed as -$72. This amount needs to be deducted from the bank statement balance.
Deposits in transit not recorded by bank: The deposits in transit, which are $1,021, have not been recorded by the bank yet. Therefore, we need to add this amount to the bank statement balance.
Error in recording check: There is an error in recording a check for supplies. The check was recorded as $28 in the ledger, but it should be $37. The difference is $9, and we need to add this amount to the bank statement balance.
Total adjustments: The total adjustments are the sum of the adjustments mentioned above, which is $958.
Adjusted balance: The adjusted balance is calculated by adding the total adjustments to the cash balance according to the bank statement. Thus, the adjusted balance is $5,291 ($4,333 + $958).
Cash balance according to the company's records is given as $4,601.
Adjustments:
Deposits in transit not recorded by bank: The deposits in transit, which are $1,021, have not been recorded by the bank yet. Therefore, we need to add this amount to the company's cash balance.
Error in recording check: There is an error in recording a check for supplies. The check was recorded as $28 in the ledger, but it should be $37. The difference is $9, and we need to add this amount to the company's cash balance.
Outstanding checks: Outstanding checks amount to $834. These checks have been issued by the company but have not been cleared by the bank yet. Thus, we need to subtract this amount from the company's cash balance.
Total adjustments: The total adjustments are the sum of the adjustments mentioned above, which is $196.
Adjusted balance: The adjusted balance is calculated by adding the total adjustments to the cash balance according to the company's records. Therefore, the adjusted balance is $4,797 ($4,601 + $196).
By comparing the adjusted balances, we can see that there is a discrepancy between the bank and company's cash balances. Further investigation may be required to reconcile the difference.
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Ten years ago, you deposited P5400 per month. You made the
deposit for 6 years and then stopped. 4 years later, you
established a belts and nuts factory, and start withdrawing P2,300
every month for a
The total deposit made for the period of six years can be computed as P5400*12*6 = P3,10,800. The number of months between the time the deposit stopped and when it resumed is four years * 12 months = 48 months.
The total amount withdrawn from the establishment of the belt and nuts factory is P2,300*48 = P1,10,400. In order to find the total deposit made over the period of six years, the monthly deposit made must be multiplied by the number of months in six years.P5400 is deposited monthly, therefore the total deposit made is P5400*12*6 = P3,10,800.When the deposit stopped after the sixth year, a period of four years went by before it was resumed.
Four years is equivalent to 48 months, thus, the total number of months the deposit was not made was 48 months.At the point of resuming the deposit, the establishment of a belt and nuts factory was created, which required the monthly withdrawal of P2,300. Therefore, the total amount withdrawn is P2,300*48 = P1,10,400.
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Spar Company has calculated the following ratios for one of its investment centers: Margin............. 25% Turnover... .......... 0.5 times What is Spar's return on investment for this investment cen
Spar Company has calculated the Margin and Turnover ratios for one of its investment centers. The Margin ratio is 25%, and the Turnover ratio is 0.5 times. The Return on Investment (ROI) of this investment center can be determined by multiplying the Margin and Turnover ratios.
Let us calculate the ROI for Spar's investment center using the given formula: ROI = Margin × Turnover.ROI = 0.25 × 0.5ROI = 0.125 or 12.5%
Therefore, Spar Company's return on investment for this investment center is 12.5%.
This indicates that for every dollar invested in this investment center, the company is earning a return of 12.5 cents. The higher the ROI, the more efficient the investment center is in generating profits. The ROI of 12.5% is a good ROI, but it depends on the company's standards and expectations. If Spar Company has set higher standards for ROI, then this investment center's ROI is considered below par, and the company needs to take corrective actions.
Therefore, Spar Company has calculated the Margin and Turnover ratios for one of its investment centers. The Margin ratio is 25%, and the Turnover ratio is 0.5 times.
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Multiple Choice . Please place the letter of your choice in the blank space. 1. The A) income statement B) statement of cash flows C) balance sheet is the summary of revenues and expenses for a period. 2. A) Revenue B) Loss C) Owner's withdrawal does not decrease owner's equity. 3. A) Multi-step B) Single-step C) Reorganized income statements itemize operating expenses under selling and administrative expenses. 4. Inventory is recorded on the balance sheet and becomes A) Common Stock B) Cost of Goods Sold C) Long-term Debt when sold. Please fill in the blanks 5. is a liability account for goods received by a business but not paid for yet. 6. have been incurred (service used) in the period but cash has not been paid yet. 7. From the company buying inventory's perspective, accounts _reflects the amount owed to a vendor. 8. We use to recognize the cost of an intangible asset over the periods it is used 9. Net income kept in the business and not paid in dividends goes into the account on the balance sheet 10. In preparing a statement of cash flows, an increase in the Common Stock during a period would be acn) activity
1. The income statement summarizes revenues and expenses. 2. Revenue does not decrease owner's equity.3. Multi-step income statements itemize operating expenses. 4. Inventory becomes Cost of Goods Sold when sold. 5. Accounts Payable is a liability for unpaid goods.
6. Accrued expenses have been incurred (service used) in the period but cash has not been paid yet. 7. From the company buying inventory's perspective, accounts Accounts Payable reflects the amount owed to a vendor. Accounts Payable reflects the amount owed to a vendor. 8. Amortization is used to recognize the cost of intangible assets. 9. Net income not paid in dividends goes into Retained Earnings. 10.An increase in Common Stock is a financing activity in the statement of cash flows.
1.The A) income statement is the summary of revenues and expenses for a period.
2.A) Revenue does not decrease owner's equity.
3.A) Multi-step income statements itemize operating expenses under selling and administrative expenses.
4.Inventory is recorded on the balance sheet and becomes B) Cost of Goods Sold when sold.
5.Accounts Payable is a liability account for goods received by a business but not paid for yet.
6.Accrued expenses have been incurred (service used) in the period but cash has not been paid yet.
7.From the company buying inventory's perspective, accounts Payable reflects the amount owed to a vendor.
8.We use Amortization to recognize the cost of an intangible asset over the periods it is used.
9.Net income kept in the business and not paid in dividends goes into the Retained Earnings account on the balance sheet.
10.In preparing a statement of cash flows, an increase in the Common Stock during a period would be categorized as a financing activity.
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Edelman Engines has $20 billion in total assets – of which cash and equivalents total $90 million. Its balance sheet shows $3 billion in current liabilities – of which the notes payable balance totals $1.05 billion. The firm also has $9 billion in long-term debt and $8 billion in common equity. It has 400 million shares of common stock outstanding, and its stock price is $24 per share. The firm's EBITDA totals $1.152 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios?
When, firm's debt will be priced at par, so the market value of its debt equal to its book value. Then, the Edelman Engines' EV/EBITDA ratio is approximately 16.06.
To calculate Edelman Engines' market/book ratio, we need to determine the market value and book value of its equity.
Market value of equity = Number of shares outstanding × Stock price
Market value of equity = 400 million × $24
Market value of equity = $9.6 billion
Book value of equity = Total assets - Total liabilities
Book value of equity = $20 billion - ($3 billion + $9 billion)
Book value of equity = $8 billion
Market/book ratio = Market value of equity / Book value of equity
Market/book ratio = $9.6 billion / $8 billion
Market/book ratio = 1.2
Therefore, Edelman Engines' market/book ratio is 1.2.
To calculate Edelman Engines' EV/EBITDA ratio, we need to determine its enterprise value (EV) and EBITDA.
Enterprise value (EV) = Market value of equity + Total debt - Cash and equivalents
EV = $9.6 billion + $9 billion - $90 million
EV = $18.51 billion
EV/EBITDA ratio = Enterprise value (EV) / EBITDA
EV/EBITDA ratio = $18.51 billion / $1.152 billion
EV/EBITDA ratio = 16.06
Therefore, Edelman Engines' EV/EBITDA ratio will be 16.06.
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Define law of demand and Law of supply List one price factor and 3 non-price factors that affect the demand for the goods and services with examples.
The law of demand states that, ceteris paribus (all other factors remaining constant), there is an inverse relationship between the price of a good or service and the quantity demanded. In other words, as the price of a product increases, the quantity demanded decreases, and vice versa.
The law of supply, on the other hand, states that, ceteris paribus, there is a direct relationship between the price of a good or service and the quantity supplied. As the price of a product increases, the quantity supplied also increases, and vice versa.
Price factor affecting demand:
Price of the product: Changes in the price of a product directly impact its demand. When the price of a product decreases, the demand for that product generally increases, and when the price increases, the demand decreases.
Non-price factors affecting demand (examples):
Consumer income: The income of consumers is a crucial factor that affects the demand for goods and services. Higher income levels often lead to increased purchasing power and a greater demand for various products. For example, if individuals experience an increase in their disposable income, they may be more willing to purchase luxury goods or engage in leisure activities.
Consumer preferences and tastes: Consumer preferences and tastes play a significant role in shaping the demand for goods and services. Changes in trends, fashion, and consumer preferences can lead to shifts in demand. For example, a growing preference for healthier food options may increase the demand for organic or plant-based food products.
Availability of substitutes: The availability of substitutes impacts the demand for a particular product. When more substitutes are available, consumers have more options to choose from, which can influence their purchasing decisions. For instance, if the price of a particular brand of cell phone increases significantly, consumers may opt for a different brand or choose to purchase a different electronic device altogether.
Consumer expectations: Consumer expectations about future prices, income levels, or economic conditions can affect their current demand. If consumers anticipate future price increases, they may be motivated to purchase the product at the present price, leading to an increase in current demand. Similarly, if consumers expect their income to decrease, they may reduce their current demand for certain goods and services.
It is important to note that these factors do not act independently but often interact with each other, influencing the overall demand for goods and services in the market.
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A late penalty of 10% will apply to new answers Intro Samsung has preferred stock outstanding with a constant annual dividend of $2.2 that is promised forever. Samsung has a required return of 10% Attempt 1/10 for 9 pts. Part 1 What is the value of Samsung's preferred stock?
The value of Samsung's preferred stock is $22.To calculate the value of Samsung's preferred stock, we can use the formula for the present value of perpetuity. The formula is as follows:
Value of preferred stock = Dividend / Required return
In this case, the dividend is the constant annual dividend of $2.2, and the required return is 10% (0.10 in decimal form).
Value of Samsung's preferred stock = $2.2 / 0.10 = $22
Therefore, the value of Samsung's preferred stock is $22.
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Gary's workbook include three worksheets of data and text. Minutes to change all instance of account to accounts (plural). He estimates that account a virus at least 75 times in the workbook. What do you recommend?
A. Use find to locate each instance and make the manual change one by one
B. Use replace all to change all instances on every tab simultaneously
C. Klik the replace button for each instances as find locates it.
D. Make one manual replacement and then copy and paste to all other instances
Gary's workbook includes three worksheets with data and text. To replace all the instances of accounts with accounts (plural), it is recommended to use the Replace All function.
This is the quickest and most efficient way of replacing the word throughout the workbook. By using the Replace All function, you don't have to go to each cell or sheet to make the change manually. Gary's workbook is quite large, and the time taken to make each replacement manually will be significantly higher than using the Replace All function. Manually replacing each occurrence of the word "account" with "accounts" is not a practical solution as it will be time-consuming and prone to errors.
On the other hand, by using the Replace All function, you can change all instances on every tab simultaneously. This ensures that no instance is missed, and the entire workbook is consistent. Using the Replace All function is also quite simple. All you have to do is go to the Find and Replace dialog box, enter "account" in the "Find what" field and "accounts" in the "Replace with" field. Clicking on "Replace All" will replace all instances of "account" with "accounts" in one go. It is recommended to use the Replace All function to replace all instances of "account" with "accounts" in Gary's workbook. This is the quickest and most efficient way of replacing the word throughout the workbook. Manually replacing each occurrence of the word is time-consuming and prone to errors.
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The management of Local Cinema has estimated the monthly demand for tickets to be in Q=22,328 -0.41 In P+0.5 in M -0.33 In A +100 In PDVD, where Q = quantity of tickets demanded, P = price per ticket, M = income, A = advertising outlay, and PDVD= price of a DVD rental. It is known that P = $5.50, M = $9,000, A = $900, and Pvcr = $3.00. Based on the information given, which of the following statements is false?
d) When P increases, the demand for tickets decreases.When the price of the ticket increases, the demand for tickets decreases. The inverse relationship is given in the demand function.option (d) is the false statement.
The given demand function is as follows :Q = 22328 − 0.41P + 0.5M − 0.33A + 100PDVD.
P = $5.50M = $9,000A = $900PDVD = $3.00.
Now we need to plug these values into the demand function to obtain the value of Q:
Q = 22328 − 0.41(5.5) + 0.5(9000) − 0.33(900) + 100(3)Q = 22328 − 2.255 + 4500 − 297 + 300Q = 27079.745 ≈ 27080.
The estimated monthly demand for tickets is 27080. Now, we will check which of the given statements is false.
a) When M increases, the demand for tickets increases.
b) When A decreases, the demand for tickets increases False. This statement is false. When advertising outlay decreases, the demand for tickets decreases. More advertising makes people aware of new movies and attracts them to the cinema.
c) When PDVD decreases, the demand for tickets increase False. This statement is true. When the price of DVD rental decreases, people tend to prefer DVDs over cinema.
Hence, the demand for tickets decreases.. This statement is false. When the price of the ticket increases, the demand for tickets decreases. The inverse relationship is given in the demand function.
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