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Complete the t-accounts below using the transactions listed (1.5 pts). 4. Calculate the ending balance of...

Complete the t-accounts below using the transactions listed (1.5 pts). 4. Calculate the ending balance of each account (.5 pts). • styx. issues a $1,000 bond in order to raise cash • styx. issues $5,000 in stocks to raise cash • styx. spends $2,400 of its cash to purchase a new tuning machine Debits - + Credits Debits + - Credits Debits Credits 5. Complete the Accounting Equation below (.5 pts). 6. Circle the mathematical functions that complete the accounting equation (.5 pts). Assets: ____________ + / - / = Liabilities: ________________ + / - / = Owners Equity: _____________

The $5,000 stock sale from the first page was split into 500 shares. Calculate the price of a share of (a company called Styx). given the following information.

Please show your work.

Year 1 Profits: $3,500 Year 2 Profits: $4,250 Discount Rate: 3.25%

A. Share Price: ________________

B) What is the new share price if you decide that Year 2 profits will be $5,500 and you change your discount rate for all years to 5%?

Share Price: ________________

c) If a company called Styx  is listed on the Dow Jones Industrial Average, and the Dos divisor is .1474, by how much will the Dow change if the price of a share of Styx. increases by $3.00? ________________

Solutions

Expert Solution

4. Calculation of the ending balance of each account :

Cash Account :

To bond a/c                $1000     By machinery a/c                $2400

To share capital a/c           $5000     By balance c/f                    $3600

Total                                $6000    Total                                 $6000

Bond Account :                                 

To balance c/f                   $1000      By cash a/c                      $1000

Total                                $1000    Total                                 $1000

Share Capital Account :

To balance c/f                   $5000      By cash a/c                      $5000

Total                                $5000    Total                                 $5000

Machinery Account :

To cash a/c                $2400     By balance c/f              $2400

Total                                $2400    Total                                 $2400

5 & 6. Completion the Accounting Equation :

Assets : Owners Equity + Liabilities

Liabilities : Assets - Owners Equity

Owners Equity : Assets - Liabilities

7. Calculation of share price of Styx :

A) Share price = 5000/500 + 3500/1.0325 + 4250/(1.0325)2 = $24.75

B) Share price = 5000/500 + 3500/1.05 + 5500/(1.05)2 = $26.64

C) Change in Dow Index if the price of a share of Styx. increases by $3.00 given divisor 0.1474 = 3 / 0.1474 = 20.35

hence, $3 increase in price of Styx. would lead to 20.35 point increase in the index.

jeff jeffy answered 1 day ago
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