home / study / business / finance / finance questions and answers / suppose you invest $20,000 by purchasing 200 shares of abbott labs (abt) at $50 per share, ... Question: Suppose you invest $20,000 by purchasing 200 shares of Abbott Labs (ABT) at $50 per share, 200 sh... Suppose you invest $20,000 by purchasing 200 shares of Abbott Labs (ABT) at $50 per share, 200 shares of Lowes (LOW) at $30 per share, and 100 shares of Ball Corporation (BLL) at $40 per share. Suppose over the next year Ball has a return of 12.5%, Lowes has a return of 20%, and Abbott Labs has a return of -10%. The weight of Abbott Labs in your portfolio after one year is closest to:
A. 20 %
B. 34.8%
C. 30 %
D. 36%
In: Accounting
On January 1, 2017, Panther, Inc., issued securities with a total fair value of $588,000 for 100 percent of Stark Corporation's outstanding ownership shares. Stark has long supplied inventory to Panther. The companies expect to achieve synergies with production scheduling and product development with this combination.
Although Stark's book value at the acquisition date was $322,000, the fair value of its trademarks was assessed to be $60,000 more than their carrying amounts. Additionally, Stark's patented technology was undervalued in its accounting records by $206,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years.
In 2017, Stark sold Panther inventory costing $87,500 for $175,000. As of December 31, 2017, Panther had resold 80 percent of this inventory. In 2018, Panther bought from Stark $162,000 of inventory that had an original cost of $81,000. At the end of 2018, Panther held $43,800 (transfer price) of inventory acquired from Stark, all from its 2018 purchases.
During 2018, Panther sold Stark a parcel of land for $101,800 and recorded a gain of $18,200 on the sale. Stark still owes Panther $70,800 (current liability) related to the land sale.
At the end of 2018, Panther and Stark prepared the following statements in preparation for consolidation.
Panther, Inc. Stark Corporation
Revenues $ (810,800 ) $ (375,000 )
Cost of goods sold 348,600 196,700
Other operating expenses 190,800 84,200
Gain on sale of land (18,200 ) 0
Equity in Stark's earnings (45,750 ) 0
Net income $ (335,350 ) $ (94,100 )
Retained earnings 1/1/18 $ (373,500 ) $ (305,500 )
Net income (335,350 ) (94,100 )
Dividends declared 91,600 32,000
Retained earnings 12/31/18 $ (617,250 ) $ (367,600 )
Cash and receivables $ 124,000 $ 176,000
Inventory 377,800 125,400
Investment in Stark 736,100 0
Trademarks 0 66,000
Land, buildings, and equip. (net) 775,600 318,600
Patented technology 0 142,200
Total assets $ 2,013,500 $ 828,200
Liabilities $ (679,450 ) $ (266,500 )
Common stock (400,000 ) (150,000 )
Additional paid-in capital (316,800 ) (44,100 )
Retained earnings 12/31/18 (617,250 ) (367,600 )
Total liabilities and equity $ (2,013,500 ) $ (828,200 )
Show how Panther computed its $45,750 equity in Stark's earnings balance. Prepare a 2018 consolidated worksheet for Panther and Stark.
In: Accounting
Question:
Part 1. Gary and Joy developed a neat Bento box for children. The shape of the containers encourages healthy eating and it is very popular. They have been paying another company to manufacture the boxes for them but are interested in manufacturing the boxes themselves. They've developed the following cost estimates:
Sales (100,000 units)$ 1,000,000Costs:FixedVariable Raw Materials$ 0$ 300,000 Direct Labor0200,000 Factory Costs100,000150,000 Selling and Administrative Costs110,00050,000Total Costs$ 210,000$ 700,000Operating Income$ 90,000
ANSWER
1.70000 Units
2.120000 Units
Part 2. Gary and Joy are concerned that the estimated fixed costs are too low. They believe that they'll need additional equipment, increasing their fixed costs by $ 31,500. Also, there has been a change in the corporate tax rate. Adjust your analysis to assume an increase of $31.500 in fixed costs and the new corporate income tax rate.
the 2018 corporate tax rate needs to be found online and cited in APA
PT1 was already solved, I just need help with PT2
In: Accounting
Walsh Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 24 |
| Direct labor | $ | 12 |
| Variable manufacturing overhead | $ | 3 |
| Variable selling and administrative | $ | 2 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 240,000 |
| Fixed selling and administrative expenses | $ | 60,000 |
During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company’s product is $82 per unit.
Required:
1. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1 and Year 2.
b. Prepare an income statement for Year 1 and Year 2.
2. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1 and Year 2.
b. Prepare an income statement for Year 1 and Year 2.
3. Reconcile the difference between variable costing and absorption costing net operating income in Year 1.
In: Accounting
Home Hardware reported beginning inventory of 20 shovels, for a total cost of $100. The company had the following transactions during the month: Jan. 2 Sold 4 shovels on account at a selling price of $10 per unit. Jan 16 Sold 10 shovels on account at a selling price of $10 per unit. Jan 18 Bought 5 shovels on account at a cost of $5 per unit. Jan 19 Sold 10 shovels on account at a selling price of $10 per unit. Jan 24 Bought 10 shovels on account at a cost of $5 per unit. Jan 31 Counted inventory and determined that 10 units were on hand.
Record a journal entry that shows all goods initially on hand at the beginning of the period (in the Inventory account) and all goods bought during the period (in the purchases account) as having been sold by the end of the period.
In: Accounting
Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 3% service charge for sales on its credit card. Access deducts a 2% service charge for sales on its card. Mayfair completes the following transactions in June.
| June | 4 | Sold $650 of merchandise on credit (that had cost $400) to Natara Morris terms n/30. | ||
| 5 | Sold $6,900 of merchandise (that had cost $4,200) to customers who used their Zisa cards. | |||
| 6 | Sold $5,850 of merchandise (that had cost $3,800) to customers who used their Access cards. | |||
| 8 | Sold $4,350 of merchandise (that had cost $2,900) to customers who used their Access cards. | |||
| 13 | Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $429 balance in McKee’s account stemmed from a credit sale in October of last year. | |||
| 18 | Received Morris’s check in full payment for the purchase of June 4. |
Required:
Prepare journal entries to record the preceding transactions and
events. (The company uses the perpetual inventory system.)
(If no entry is required for a transaction/event, select
"No journal entry required" in the first account
field.)
In: Accounting
Why did the banks that lent Starbucks more than $2 billion require such a low return on their investment relative to Starbucks’ common shareholders who expect a 7.2% return?
In: Accounting
Discounted Cash Flow Valuation
Presented below are data for Rom Com Truck:
| Forecast Year | ||||||
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5 | Terminal | |
| No. of outstanding shares | 500 | 500 | 500 | 500 | 500 | 500 |
| Terminal year growth rate | 4% | |||||
| Cost of common equity | 10% | 10% | 10% | 10% | 10% | 10% |
| Net income | $79 | $94 | $111 | $130 | $150 | $157 |
| Beginning of year common equity | $649 | $683 | $720 | $758 | $797 | $839 |
| Free cash flow to common equity | $44 | $58 | $73 | $90 | $108 | $115 |
Compute the value of a share of Rom Com common stock using the discounted cash flow method.
Do not round your computations until your final answer. Round final answer to two decimal places.
$????
In: Accounting
What are some of the issues a company might face if they do not have enough inventory on hand and what ratio analysis might help management analyze inventory issues?
In: Accounting
Choose a company. Break that company into two separate segments. What are three common fixed costs of the company? What are three traceable fixed costs to each segment
In: Accounting
In: Accounting
In 2016, Pronghorn Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of common stock. Pronghorn had revenues of $18,200 and expenses other than interest and taxes of $8,400 for 2017. (Assume that the tax rate is 40%.) Throughout 2017, 2,000 shares of common stock were outstanding; none of the bonds was converted or redeemed. (a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.) Earnings per share $ (b) Assume the same facts as those assumed for part (a), except that the 60 bonds were issued on September 1, 2017 (rather than in 2016), and none have been converted or redeemed. Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.) Earnings per share $ (c) Assume the same facts as assumed for part (a), except that 20 of the 60 bonds were actually converted on July 1, 2017. Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.) Earnings per share $
In: Accounting
Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,037 and No. 5893 for $508. The following information is available for its September 30, 2017, reconciliation. From the September 30 Bank Statement PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE 20,000 9,783 11,411 21,628 CHECKS AND DEBITS DEPOSITS AND CREDITS Date No. Amount Date Amount 09/03 5888 1,037 09/05 1,187 09/04 5902 708 09/12 2,242 09/07 5901 1,852 09/21 4,103 09/17 657 NSF 09/25 2,342 09/20 5905 926 09/30 22 IN 09/22 5903 412 09/30 1,515 CM 09/22 5904 2,121 09/28 5907 215 09/29 5909 1,855 From Chavez Company’s Accounting Records Cash Receipts Deposited Date Cash Debit Sept. 5 1,187 12 2,242 21 4,103 25 2,342 30 1,718 11,592 Cash Disbursements Check No. Cash Credit 5901 1,852 5902 708 5903 412 5904 2,078 5905 926 5906 998 5907 215 5908 356 5909 1,855 9,400 Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Aug. 31 Balance 18,455 Sept. 30 Total receipts R12 11,592 30,047 30 Total disbursements D23 9,400 20,647 Additional Information Check No. 5904 is correctly drawn for $2,121 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,078. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum is from the collection of a $1,540 note for Chavez Company by the bank. The bank deducted a $25 collection fee. The collection and fee are not yet recorded. Required: 1. Prepare the September 30, 2017, bank reconciliation for this company.
2. Prepare the journal entries to adjust the
book balance of cash to the reconciled balance. (If no
entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
1 Record the entry related to the September 30 deposit, if required.
2 Record the entry related to interest earned, if required.
3 Record the entry related to the note receivable and the collection fee, if required.
4 Record the entry related to the outstanding checks, if required.
5 Record the entry related to the NSF check, if required.
6 Record the entry related to the error on check 5904, if required.
In: Accounting
Required information
Problem 8-5 (Algo) Various inventory costing methods [LO8-1, 8-4]
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[The following information applies to the questions
displayed below.]
Ferris Company began January with 7,000 units of its principal
product. The cost of each unit is $6. Merchandise transactions for
the month of January are as follows:
| Purchases | |||||||||
| Date of Purchase | Units | Unit Cost* | Total Cost | ||||||
| Jan. 10 | 6,000 | $ | 7 | $ | 42,000 | ||||
| Jan. 18 | 7,000 | 8 | 56,000 | ||||||
| Totals | 13,000 | 98,000 | |||||||
* Includes purchase price and cost of freight.
| Sales | ||
| Date of Sale | Units | |
| Jan. 5 | 3,000 | |
| Jan. 12 | 1,000 | |
| Jan. 20 | 4,000 | |
| Total | 8,000 | |
12,000 units were on hand at the end of the month.
Problem 8-5 (Algo) Part 1
Required:
1. Calculate January's ending inventory and cost
of goods sold for the month using FIFO, periodic system.
2. Calculate January's ending inventory and
cost of goods sold for the month using LIFO, periodic system.
4. Calculate January's ending inventory and cost of goods sold for the month using Average cost, periodic system.
5. Calculate January's ending inventory and
cost of goods sold for the month using Average cost, perpetual
system. (Round average cost per unit to 4 decimal places.
Enter sales with a negative sign.)
In: Accounting
Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5%. For example, if a hospital buys supplies from Worley that cost Worley $100 to buy from manufacturers, Worley would charge the hospital $105 to purchase these supplies.
For years, Worley believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits, Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown:
| Activity Cost Pool (Activity Measure) | Total Cost | Total Activity | |||
| Customer deliveries (Number of deliveries) | $ | 264,000 | 3,000 | deliveries | |
| Manual order processing (Number of manual orders) | 600,000 | 8,000 | orders | ||
| Electronic order processing (Number of electronic orders) | 322,000 | 14,000 | orders | ||
| Line item picking (Number of line items picked) | 696,000 | 480,000 | line items | ||
| Other organization-sustaining costs (None) | 630,000 | ||||
| Total selling and administrative expenses | $ | 2,512,000 | |||
Worley gathered the data below for two of the many hospitals that it serves—University and Memorial (each hospital purchased medical supplies that had cost Worley $31,000 to buy from manufacturers):
|
Activity |
||
| Activity Measure | University | Memorial |
| Number of deliveries | 11 | 23 |
| Number of manual orders | 0 | 40 |
| Number of electronic orders | 13 | 0 |
| Number of line items picked | 200 | 250 |
Required:
1. Compute the total revenue that Worley would receive from University and Memorial.
2. Compute the activity rate for each activity cost pool.
3. Compute the total activity costs that would be assigned to University and Memorial.
4. Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $31,000 cost of goods sold that Worley incurred serving each hospital.)
Compute the total revenue that Worley would receive from University and Memorial.
Required1
|
Required2
Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)
|
Compute the total activity costs that would be assigned to University and Memorial.
Required3
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Required4
Compute Worley’s customer margin for University and Memorial. (Hint: Do not overlook the $31,000 cost of goods sold that Worley incurred serving each hospital.) (Loss amounts should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places. Round your final answers to the nearest whole number.)
|
In: Accounting