Question
In: Finance
You invest $8,000 in an on-line bookstore in the form of a corporation on Jan. 2....
You invest $8,000 in an on-line bookstore in the form of a corporation on Jan. 2. For the sake of simplicity, you are the only shareholder who owns this corporation. You also decide to take on $10,000 liabilities with 20% annual interest rate. You spend $6,000 cash to buy books as the inventory. Throughout the year, you sell half of books to students in exchange for $9,000 cash, that is, your revenue is $9,000 and COGS is $3,000. Also, $2,000 cash dividend is paid at the end of the year. Tax rate is 40%.
All entries of balance sheet are zero at the beginning of the year (Jan. 1).
What is the book value of inventory (books) at the end of the year?
Solutions
Expert Solution
Since the values at the beginning of the year was zero and after that you purchased books as inventory worth $6000. You sold books worth $3000 during the year.
Therefore cost of Inventory left is $6000-$3000 = $3000.
And as per Inventory valuation method, Inventory is valued at cost or Net Realizable value (NRV) whichever is lower. We do not have any information regarding the NRV, hence we should recored Inventory at cost only, i.e. $3000.
Therefore, book value of Inventory at the year end is $3000.
jeff jeffy answered 2 years agoRelated Solutions
You invest $8,000 in an on-line bookstore in the form of a corporation on Jan. 2....
You invest $8,000 in an on-line bookstore in the form of a
corporation on Jan. 2. For the sake of simplicity, you are the only
shareholder who owns this corporation. You also decide to take on
$10,000 liabilities with 20% annual interest rate. You spend $6,000
cash to buy books as the inventory. Throughout the year, you sell
half of books to students in exchange for $9,000 cash, that is,
your revenue is $9,000 and COGS is $3,000. Also, $2,000...
You invest $8,000 in an on-line bookstore in the form of a corporation on Jan. 2....
You invest $8,000 in an on-line bookstore in the form of a
corporation on Jan. 2. For the sake of simplicity, you are the only
shareholder who owns this corporation. You also decide to take on
$10,000 liabilities with 20% annual interest rate. You spend $6,000
cash to buy books as the inventory. Throughout the year, you sell
half of books to students in exchange for $9,000 cash, that is,
your revenue is $9,000 and COGS is $3,000. Also, $2,000...
You invest $8,000 in an on-line bookstore in the form of a corporation on Jan. 2....
You invest $8,000 in an on-line bookstore in the form of a
corporation on Jan. 2. For the sake of simplicity, you are the only
shareholder who owns this corporation. You also decide to take on
$10,000 liabilities with 20% annual interest rate. You spend $6,000
cash to buy books as the inventory. Throughout the year, you sell
half of books to students in exchange for $9,000 cash, that is,
your revenue is $9,000 and COGS is $3,000. Also, $2,000...
You invest $8,000 in an on-line bookstore in the form of a corporation on Jan. 2....
You invest $8,000 in an on-line bookstore in the form of a
corporation on Jan. 2. For the sake of simplicity, you are the only
shareholder who owns this corporation. You also decide to take on
$10,000 liabilities with 20% annual interest rate. You spend $6,000
cash to buy books as the inventory. Throughout the year, you sell
half of books to students in exchange for $9,000 cash, that is,
your revenue is $9,000 and COGS is $3,000. Also, $2,000...
You invest $8,000 in an on-line bookstore in the form of a corporation on Jan. 2....
You invest $8,000 in an on-line bookstore in the form of a
corporation on Jan. 2. For the sake of simplicity, you are the only
shareholder who owns this corporation. You also decide to take on
$10,000 liabilities with 20% annual interest rate. You spend $6,000
cash to buy books as the inventory. Throughout the year, you sell
half of books to students in exchange for $9,000 cash, that is,
your revenue is $9,000 and COGS is $3,000. Also, $2,000...
4. You own an 8,000 ft^2 (K = 8,000) factory that produces N95 masks and you...
4. You own an 8,000 ft^2 (K = 8,000) factory that produces N95
masks and you produce them by combining labor and capital (your
factory) as follows: Q = 4K^(1/3)L^(2/3), where Q is the number of
masks produced per week. Assume there are many competing factories
and all factories are identical. Until two months ago, the price of
masks in this perfectly 1 competitive market was $1.50 each. Today
the price is $3.00 ea. The rental value of your factory...
We are now at Jan 1, 2009. Suppose that you plan to invest $500 at the...
We are now at Jan 1, 2009. Suppose that you plan to invest $500
at the end of each year starting 2009 and for the coming four years
and you expect to earn 10% per year. How much will you have after 4
years?
Future value (with changing interest rates). Jose has $8,000 to invest for a 2-year period. He...
Future value (with changing interest rates). Jose has $8,000
to invest for a 2-year period. He is looking at four different
investment choices.
What will be the value of his investment at the end of 2 years
for each of the following potential investments?
a. Bank CD at 4.5%.
b. Bond fund at 7.5%.
c. Mutual stock fund at 12%.
d. New venture stock at 25%.
a. What will be the value of Jose's bank CD investment that
offers an...
Problem 1 Consider the following two potential investments Nexit and Rexit. You plan to invest 8,000...
Problem 1
Consider the following two potential investments Nexit and
Rexit. You plan to invest 8,000 KD in investment Nexit and 12,000
KD in investment Rexit.
Date
Return Nexit
Return Rexit
2016
0.03
-0.04
2017
-0.05
0.08
2018
0.08
0.07
2019
0.12
0.13
a. Build a portfolio consisting of Nexit and Rexit based on the
information above.
b. Calculate the average return of the portfolio.
c. Calculate the risk of the portfolio.
Encapsulation You are tasked with building a BookStore. Your Architect has told you that the BookStore...
Encapsulation
You are tasked with building a BookStore. Your Architect has
told you that the BookStore class has the following members : long
id; String name; Address address; Book book; The Address class has
the following attributes : String streetName; String houseNumber;
String apartmentNumber; String zipCode; The book class has the
following members String name; String isbn; Author author; The
Author class within the book class has the following member :
String firstName; String lastName; Date dateOfBirth; Address
address; //Address...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1.) The blood volume in left ventricle is the highest during end diastolic phase. True or...
- Two social media marketing campaign in Saudi Arabia that failed (Last two years) and why did...
- In assignment 1 you had used the data structure called Stack to evaluate arithmetic expressions by...
- Problem 8 ( please write neatly and in full ) a) Draw the block diagram with...
- List three reasons why an experimentally measured reduction potential would not equal the theoretical reduction potential.
- Do you think that conscious (voluntary) movements must be organized differently from unconscious (involuntary) movements? What...
- A newly issued bond has a maturity of 10 years and pays a 7% coupon rate...
ADVERTISEMENT