APR = 15.99%
Carry-Over balance for month 1 = $793.16
Minimum payment is $50 or 8%, whichever is greater
In: Accounting
Simmons Inc. has an expected net income of 4 million Euros at the end of the year. The company is currently all equity financed but it is planning to buy back equity and undertake some debt so that the debt- to-equity ratio will become 0.5. The debt-to-equity ratio will be kept constant. The assets will be fully depreciated in the next three years, with annual depreciation installments of 1,000,000 Euro each. The company does not plan to acquire any asset. The expected return on unlevered equity for Simmons is 9.25% and the cost of debt is 5.25%. The tax rate on corporate earnings is 32%. What is the value of Simmons’ debt, if the expected EBITDA of the company is perpetual and constant every year? (Assume that the depreciation tax shield is as risky as the rest of the unlevered cash flow)
(a) 15,829,380 Euro
(b) 16,032,251 Euro
(c) 17,987,342 Euro
(d) 18,223,172 Euro
The answer is D: 18,223,171 Euro
Thumb up for correct step-by-step solution. Many thanks.
In: Accounting
Veronica Mars, a recent graduate of Bell’s accounting program, evaluated the operating performance of Dunn Company’s six divisions. Veronica made the following presentation to Dunn’s board of directors and suggested the Percy Division be eliminated. “If the Percy Division is eliminated,” she said, “our total profits would increase by $26,500.”
| The Other Five Divisions |
Percy Division |
Total | ||||||
|---|---|---|---|---|---|---|---|---|
| Sales | $1,663,000 | $100,000 | $1,763,000 | |||||
| Cost of goods sold | 978,100 | 76,800 | 1,054,900 | |||||
| Gross profit | 684,900 | 23,200 | 708,100 | |||||
| Operating expenses | 529,000 | 49,700 | 578,700 | |||||
| Net income | $155,900 | $ (26,500 | ) | $129,400 |
In the Percy Division, cost of goods sold is $60,500 variable and
$16,300 fixed, and operating expenses are $29,100 variable and
$20,600 fixed. None of the Percy Division’s fixed costs will be
eliminated if the division is discontinued.
Is Veronica right about eliminating the Percy Division? Prepare a
schedule to support your answer. (Enter negative
amounts using either a negative sign preceding the number e.g. -45
or parentheses e.g. (45).)
| Continue | Eliminate | Net Income Increase (Decrease) |
|||||
|---|---|---|---|---|---|---|---|
| Sales | $enter sales in dollars | $enter sales in dollars | $enter sales in dollars | ||||
| Variable costs | |||||||
| Cost of goods sold | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | ||||
| Operating expenses | enter operating expenses in dollars | enter operating expenses in dollars | enter operating expenses in dollars | ||||
| Total variable | enter a subtotal of the two previous amounts | enter a subtotal of the two previous amounts | enter a subtotal of the two previous amounts | ||||
| Contribution margin | enter contribution margin in dollars | enter contribution margin in dollars | enter contribution margin in dollars | ||||
| Fixed costs | |||||||
| Cost of goods sold | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | enter the cost of goods sold in dollars | ||||
| Operating expenses | enter operating expenses in dollars | enter operating expenses in dollars | enter operating expenses in dollars | ||||
| Total fixed | enter a subtotal of the two previous amounts | enter a subtotal of the two previous amounts | enter a subtotal of the two previous amounts | ||||
| Net income (loss) | $enter net income or loss in dollars | $enter net income or loss in dollars | $enter net income or loss in dollars |
| Veronica is select an optioncorrectincorrect correctincorrect |
In: Accounting
J&W Corporation manufactures a new electronic game console. The current standard cost sheet for a game console follows.
| Direct materials, ? kilograms at $8 per kilogram | $ | ? | per game |
| Direct labor, 0.75 hours at ? per hour | ? | per game | |
| Overhead, 0.75 hours at ? per hour | ? | per game | |
| Total costs | $ | 39 | per game |
Assume that the following data appeared in J&W’s records at the end of the past month.
| Actual production | 46,500 | units | |
| Actual sales | 43,500 | units | |
| Materials (115,500 kilograms) | ? | ||
| Materials price variance | 42,000 | U | |
| Materials efficiency variance | 31,200 | U | |
| Direct labor price variance | 28,800 | U | |
| Direct labor (32,000 hours) | 534,400 | ||
| Underapplied overhead (total) | 18,300 | U | |
There are no materials inventories.
Required:
a-1. Complete the standard cost sheet for a game console given below.
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a-2. Prepare a variance analysis for direct materials and direct labor.
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b. Assume that all production overhead is fixed and that the $18,300 underapplied is the only overhead variance that can be computed. What are the actual and applied overhead amounts?
|
In: Accounting
Multiple Production Department Factory Overhead Rates
The total factory overhead for Bardot Marine Company is budgeted for the year at $945,000, divided into two departments: Fabrication, $585,000, and Assembly, $360,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The speedboats require one direct labor hour in Fabrication and two direct labor hours in Assembly. The bass boats require four direct labor hours in Fabrication and four direct labor hours in Assembly. Each product is budgeted for 6,000 units of production for the year.
When required, round all per unit answers to the nearest cent.
a. Determine the total number of budgeted direct labor hours for the year in each department.
| Fabrication | direct labor hours |
| Assembly | direct labor hours |
b. Determine the departmental factory overhead rates for both departments.
| Fabrication | $ per dlh |
| Assembly | $ per dlh |
c. Determine the factory overhead allocated per unit for each product using the department factory overhead allocation rates.
| Speedboat: | $ per unit |
| Bass boat: | $ per unit |
In: Accounting
A partial list of Waterways’ accounts and their balances for the month of November follows.
Accounts Receivable
$274,500
Advertising Expenses 54,200
Cash 261,000
Depreciation—Factory Equipment
16,800
Depreciation—Office Equipment
2,500
Direct Labor 41,900
Factory Supplies Used 16,700
Factory Utilities 10,300
Finished Goods Inventory, November 30
68,800
Finished Goods Inventory, October 31
73,100
Indirect Labor 48,100
Office Supplies Expense 1,600
Other Administrative Expenses
71,500
Prepaid Expenses 41,400
Raw Materials Inventory, November 30
52,300
Raw Materials Inventory, October 31
37,600
Raw Materials Purchases
184,100
Rent—Factory Equipment 46,800
Repairs—Factory Equipment
4,600
Salaries 323,000
Sales Revenue
1,354,600
Sales Commissions 40,500
Work In Process Inventory October 31
52,600
Work In Process Inventory, November 30
42,200
Collapse question part
(b1)
A list of accounts and their values are given above. From this
information, prepare a cost of goods manufactured schedule.
WATERWAYS CORPORATION
Cost of Goods Manufactured Schedule
In: Accounting
Williams-Santana, Inc., is a manufacturer of high-tech
industrial parts that was started in 2006 by two talented engineers
with little business training. In 2018, the company was acquired by
one of its major customers. As part of an internal audit, the
following facts were discovered. The audit occurred during 2018
before any adjusting entries or closing entries were
prepared.
Required:
For each situation:
1. Identify whether it represents an accounting
change or an error. If an accounting change, identify the type of
change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct
result of the change or error correction as well as any adjusting
entry for 2018 related to the situation described. (Ignore tax
effects.)
In: Accounting
Discuss how the COSO's Enterprise Risk Management — Integrated Framework relates to internal Control for Technology
In: Accounting
Problem 5-1A Perpetual: Alternative cost flows LO P1 [The following information applies to the questions displayed below.] Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginning inventory 70 units @ $50.40 per unit Mar. 5 Purchase 210 units @ $55.40 per unit Mar. 9 Sales 230 units @ $85.40 per unit Mar. 18 Purchase 70 units @ $60.40 per unit Mar. 25 Purchase 120 units @ $62.40 per unit Mar. 29 Sales 100 units @ $95.40 per unit Totals 470 units 330 units Problem 5-1A Part 1 Required: 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 50 units from beginning inventory and 180 units from the March 5 purchase; the March 29 sale consisted of 30 units from the March 18 purchase and 70 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)
In: Accounting
Gladstone Company
tracks the number of units purchased and sold throughout each
accounting period but applies its inventory costing method at the
end of each period, as if it uses a periodic inventory system.
Assume its accounting records provided the following information at
the end of the annual accounting period, December 31.
| Transactions | Units | Unit Cost | |||||||
| Beginning inventory, January 1 | 2,700 | $ | 45 | ||||||
| Transactions during the year: | |||||||||
| a. | Purchase, January 30 | 3,050 | 60 | ||||||
| b. | Sale, March 14 ($100 each) | (2,350 | ) | ||||||
| c. | Purchase, May 1 | 1,750 | 75 | ||||||
| d. | Sale, August 31 ($100 each) | (2,000 | ) | ||||||
Assuming that for Specific identification method (item 1d) the
March 14 sale was selected two-fifths from the beginning inventory
and three-fifths from the purchase of January 30. Assume that the
sale of August 31 was selected from the remainder of the beginning
inventory, with the balance from the purchase of May 1.
Required:
Last-in, first-out
Weighted average cost
First-in, first-out
Specific identification
Last-in, first-out
Weighted average cost
First-in, first-out
Specific identification
In: Accounting
Consider a corporate bond with refunding protection and a different corporate bond with call protection. Briefly describe a situation in which a company might call a bond but not refund the bond. In other words, describe a situation in which a bond is **Called but not refunded***
In: Accounting
Q1. Discuss in your words the purpose of a bank reconciliation. (1 point)
Q2. Prepare general journal entries for the following
transactions of this company for the current year: (2
points).
|
Apr. 25 |
Sold SAR 4,500 of merchandise to CBC Corp., receiving a 10%, 60-day, SAR 4,500 note receivable. |
|
June 24 |
The note of CBC Corp., received on April 25 was dishonored. |
Q3. A company purchased mining property containing 7,350,000 tons of ore for SAR 1,837,500. In 2009 it mined and sold 857,000 tons of ore and in 2010 it mined and sold 943,000 tons of ore. (2 points).
a. Calculate the depletion expense for 2009 and 2010.
b. What was the book value of the property at the end of 2010?
Q4. Define liabilities and explain in your words the differences between current and long-term liabilities. (2 points).
In: Accounting
On January 1, 2016, Lamb Services issued $200,000, 9%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $193,537 when the market rate was 10%.
Required:
1. Prepare an amortization schedule that determines interest at the effective interest rate.
2. Prepare an amortization schedule by the straight-line method.
3. Prepare the journal entries to record interest expense on June 30, 2018, by each of the two approaches.
In: Accounting
Both Bond A and Bond B have 8.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while Bond B has 18 years to maturity.
a. If interest rates suddenly rise by 1.2 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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b. If interest rates suddenly fall by 1.2 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
|
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In: Accounting
Lenitnes Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $265,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 3 years, and it requires a 10% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table provided.)
| Period | Cash Flow | |||
| 1 | $ | 123,200 | ||
| 2 | 92,700 | |||
| 3 | 70,400 | |||
| 4 | 52,200 | |||
| 5 | 48,000 | |||
Required:
1. Determine the payback period for this
investment.
2. Determine the break-even time for this
investment.
3. Determine the net present value for this
investment.
In: Accounting