When the Fed changes the interest rates how does it affect the bond market and the stock market? Do you expect lower or higher interest rates in the near future? Why?
Minimum of 500 words.
In: Finance
In: Physics
Explain Buchanan and Tullock's optimal decision rule model. Give examples of cases where rules near unanimity are optimal, where rules far from unanimity are optimal, and when it is optimal to not decide collectively.
In: Economics
Expressing contribution margin as a percentage of sales
| A. |
is particularly useful to multiproduct firms. |
|
| B. |
prohibits a company from calculating break-even. |
|
| C. |
is easier using calculus |
|
| D. |
is encouraged when a company has large fixed costs. |
|
| E. |
is not possible if variable cost per unit is constant. |
In: Accounting
Job Order Costing
The ABC Company builds residential housing. The company started operations on June 1st, 2018. Below are transactions that occurred in the first month of operations (June 2018)
Journal Entries:
June 1) ABC Company sold common stock for $1,500,000 in cash. The company issued 15,000 shares of $100 Par stock.
June 2) ABC Company purchased $300,000 of building materials. Paying $100,000 cash and the rest on account due in 45 days. No credit terms were given.
June 3) ABC Company purchased construction equipment for $240,000 cash. The company uses the straight line method of depreciation. The equipment has a useful life of 9 years and a residual value of $24,000.
June 4) ABC Company started construction on 3 homes (Job 100, 101, 102) by requisitioning the following materials: The materials were delivered to the job sites.
|
Job Number |
Direct Materials |
Indirect Materials |
|
100 |
$50,000 |
$2,000 |
|
101 |
$30,000 |
$1,000 |
|
102 |
$25,000 |
$1,500 |
June 14) The following direct labor was used and paid for during the period ($30/hour):
|
Job Number |
Amount |
Hours |
|
100 |
$33,000 |
1100 |
|
101 |
$27,000 |
900 |
|
102 |
$22,500 |
750 |
Predetermined overhead rate calculated May 8, 2018
(Estimated Total Overhead Costs) / (Estimated Direct Labor Hours)
($24,000) / (3000 hours) = $7 per direct labor used
June 21) Job 100 is completed and ready for sale.
The following actual costs were incurred and paid (Except for depreciation transactions listed below) during the month of June:
June 2) Insurance on houses under construction $2,000 (covers up to any number of homes.
June 3) Insurance on anticipated completed homes $500 no matter the number.
June 8) Construction supervisor salary $6,000 (Paid Monthly)
June 8) Company president salary $8,000 (Paid Monthly)
June 8) Administrative staff salaries $3,000 (Paid Monthly)
June 12) Building Permits $3,000
June 15) Fuel for construction equipment $1,500
June 15) Purchased land for $50,000 and a building for $112,000 to use as corporate HQ
June 20) Insurance on HQ is $1,000 per month
June 23) Declared a $5,000 cash dividend to be paid on July 23, 2018.
June 24) Job 100 is sold for $250,000; Cash $150,000 & $100,000 note receivable to be received on September 19, 2018. The amount received will be $109,000 principal and interest. The note is a 360 day (One year is 360 days) 9% simple interest note. An adjusting entry must be made for interest revenue earned for the month of June.
June 30) Depreciation for June on HQ Building $2,500
June 30) Depreciation on the construction equipment was _______________
June 30) Apply (Appropriate) overhead to incomplete jobs
June 30) Account for ending balance in Overhead account
Note: All June 30 entries are Adjusting Entries
----------------------------------------------------------------------------------------
ABC
| COMPANY | ||||||
| Trial Balance Worksheet as at June 30, 2018 | ||||||
| ? | ? | ? | ? | ? | ? | ? |
| Account | Adjusted | Income Statement | Balance Sheet | |||
| Debit | Credit | Debit | Credit | Debit | Credit | |
| Cash | $ 1,040,500.00 | ? | ? | ? | $ 1,040,500.00 | ? |
| Building Material | $ 190,500.00 | ? | ? | ? | $ 190,500.00 | ? |
| Work-in-process | $ 116,050.00 | ? | ? | ? | $ 116,050.00 | ? |
| Jobs Completed | $ - | ? | ? | ? | $ - | ? |
| Note Receivable | $ 100,000.00 | ? | ? | ? | $ 100,000.00 | ? |
| Interest Receivable | $ 750.00 | ? | ? | ? | $ 750.00 | ? |
| Construction Equipment | $ 240,000.00 | ? | ? | ? | $ 240,000.00 | ? |
| Accumulated Depreciation - Construction Equipment | ? | $ 2,000.00 | ? | ? | ? | $ 2,000.00 |
| Land | $ 50,000.00 | ? | ? | ? | $ 50,000.00 | ? |
| Building | $ 112,000.00 | ? | ? | ? | $ 112,000.00 | ? |
| Accumulated Depreciation -Building | ? | $ 2,500.00 | ? | ? | ? | $ 2,500.00 |
| Accounts Payable | ? | $ 200,000.00 | ? | ? | ? | $ 200,000.00 |
| Dividend Payable | ? | $ 5,000.00 | ? | ? | ? | $ 5,000.00 |
| Common Stock | ? | $ 1,500,000.00 | ? | ? | ? | $ 1,619,800.00 |
| Dividend | $ 5,000.00 | ? | ? | ? | $ 5,000.00 | ? |
| Sales | ? | $ 250,000.00 | ? | $ 250,000.00 | ? | ? |
| Interest Revenue | ? | $ 750.00 | ? | $ 750.00 | ? | ? |
| Cost of jobs sold | $ 87,450.00 | ? | $ 87,450.00 | ? | ? | ? |
| Works Overhead | $ 500.00 | ? | $ 500.00 | ? | ? | ? |
| Salaries Expense | $ 15,000.00 | ? | $ 15,000.00 | ? | ? | ? |
| Depreciation Expense | $ 2,500.00 | ? | $ 2,500.00 | ? | ? | ? |
| Income Summary | ? | ? | $ 124,800.00 | ? | ? | ? |
| ? | ? | ? | ? | ? | ? | ? |
| ? | $ 1,977,250.00 | $ 1,977,250.00 | $ 250,750.00 | $ 250,750.00 | $ 1,851,300.00 | $ 1,846,300.00 |
1. Prepare Traditional Income Statement
2. Prepare Statement of Retained Earnings
In: Accounting
Job Order Costing
The ABC Company builds residential housing. The company started operations on June 1st, 2018. Below are transactions that occurred in the first month of operations (June 2018)
Journal Entries:
June 1) ABC Company sold common stock for $1,500,000 in cash. The company issued 15,000 shares of $100 Par stock.
June 2) ABC Company purchased $300,000 of building materials. Paying $100,000 cash and the rest on account due in 45 days. No credit terms were given.
June 3) ABC Company purchased construction equipment for $240,000 cash. The company uses the straight line method of depreciation. The equipment has a useful life of 9 years and a residual value of $24,000.
June 4) ABC Company started construction on 3 homes (Job 100, 101, 102) by requisitioning the following materials: The materials were delivered to the job sites.
|
Job Number |
Direct Materials |
Indirect Materials |
|
100 |
$50,000 |
$2,000 |
|
101 |
$30,000 |
$1,000 |
|
102 |
$25,000 |
$1,500 |
June 14) The following direct labor was used and paid for during the period ($30/hour):
|
Job Number |
Amount |
Hours |
|
100 |
$33,000 |
1100 |
|
101 |
$27,000 |
900 |
|
102 |
$22,500 |
750 |
Predetermined overhead rate calculated May 8, 2018
(Estimated Total Overhead Costs) / (Estimated Direct Labor Hours)
($24,000) / (3000 hours) = $7 per direct labor used
June 21) Job 100 is completed and ready for sale.
The following actual costs were incurred and paid (Except for depreciation transactions listed below) during the month of June:
June 2) Insurance on houses under construction $2,000 (covers up to any number of homes.
June 3) Insurance on anticipated completed homes $500 no matter the number.
June 8) Construction supervisor salary $6,000 (Paid Monthly)
June 8) Company president salary $8,000 (Paid Monthly)
June 8) Administrative staff salaries $3,000 (Paid Monthly)
June 12) Building Permits $3,000
June 15) Fuel for construction equipment $1,500
June 15) Purchased land for $50,000 and a building for $112,000 to use as corporate HQ
June 20) Insurance on HQ is $1,000 per month
June 23) Declared a $5,000 cash dividend to be paid on July 23, 2018.
June 24) Job 100 is sold for $250,000; Cash $150,000 & $100,000 note receivable to be received on September 19, 2018. The amount received will be $109,000 principal and interest. The note is a 360 day (One year is 360 days) 9% simple interest note. An adjusting entry must be made for interest revenue earned for the month of June.
June 30) Depreciation for June on HQ Building $2,500
June 30) Depreciation on the construction equipment was _______________
June 30) Apply (Appropriate) overhead to incomplete jobs
June 30) Account for ending balance in Overhead account
Note: All June 30 entries are Adjusting Entries
----------------------------------------------------------------------------------------
ABC
| COMPANY | ||||||
| Trial Balance Worksheet as at June 30, 2018 | ||||||
| ? | ? | ? | ? | ? | ? | ? |
| Account | Adjusted | Income Statement | Balance Sheet | |||
| Debit | Credit | Debit | Credit | Debit | Credit | |
| Cash | $ 1,040,500.00 | ? | ? | ? | $ 1,040,500.00 | ? |
| Building Material | $ 190,500.00 | ? | ? | ? | $ 190,500.00 | ? |
| Work-in-process | $ 116,050.00 | ? | ? | ? | $ 116,050.00 | ? |
| Jobs Completed | $ - | ? | ? | ? | $ - | ? |
| Note Receivable | $ 100,000.00 | ? | ? | ? | $ 100,000.00 | ? |
| Interest Receivable | $ 750.00 | ? | ? | ? | $ 750.00 | ? |
| Construction Equipment | $ 240,000.00 | ? | ? | ? | $ 240,000.00 | ? |
| Accumulated Depreciation - Construction Equipment | ? | $ 2,000.00 | ? | ? | ? | $ 2,000.00 |
| Land | $ 50,000.00 | ? | ? | ? | $ 50,000.00 | ? |
| Building | $ 112,000.00 | ? | ? | ? | $ 112,000.00 | ? |
| Accumulated Depreciation -Building | ? | $ 2,500.00 | ? | ? | ? | $ 2,500.00 |
| Accounts Payable | ? | $ 200,000.00 | ? | ? | ? | $ 200,000.00 |
| Dividend Payable | ? | $ 5,000.00 | ? | ? | ? | $ 5,000.00 |
| Common Stock | ? | $ 1,500,000.00 | ? | ? | ? | $ 1,619,800.00 |
| Dividend | $ 5,000.00 | ? | ? | ? | $ 5,000.00 | ? |
| Sales | ? | $ 250,000.00 | ? | $ 250,000.00 | ? | ? |
| Interest Revenue | ? | $ 750.00 | ? | $ 750.00 | ? | ? |
| Cost of jobs sold | $ 87,450.00 | ? | $ 87,450.00 | ? | ? | ? |
| Works Overhead | $ 500.00 | ? | $ 500.00 | ? | ? | ? |
| Salaries Expense | $ 15,000.00 | ? | $ 15,000.00 | ? | ? | ? |
| Depreciation Expense | $ 2,500.00 | ? | $ 2,500.00 | ? | ? | ? |
| Income Summary | ? | ? | $ 124,800.00 | ? | ? | ? |
| ? | ? | ? | ? | ? | ? | ? |
| ? | $ 1,977,250.00 | $ 1,977,250.00 | $ 250,750.00 | $ 250,750.00 | $ 1,851,300.00 | $ 1,846,300.00 |
1. Prepare Classified Balance sheet
2. Prepare Post Closing Trial Balance
In: Accounting
Job Order Costing
The ABC Company builds residential housing. The company started operations on June 1st, 2018. Below are transactions that occurred in the first month of operations (June 2018)
Journal Entries:
June 1) ABC Company sold common stock for $1,500,000 in cash. The company issued 15,000 shares of $100 Par stock.
June 2) ABC Company purchased $300,000 of building materials. Paying $100,000 cash and the rest on account due in 45 days. No credit terms were given.
June 3) ABC Company purchased construction equipment for $240,000 cash. The company uses the straight line method of depreciation. The equipment has a useful life of 9 years and a residual value of $24,000.
June 4) ABC Company started construction on 3 homes (Job 100, 101, 102) by requisitioning the following materials: The materials were delivered to the job sites.
|
Job Number |
Direct Materials |
Indirect Materials |
|
100 |
$50,000 |
$2,000 |
|
101 |
$30,000 |
$1,000 |
|
102 |
$25,000 |
$1,500 |
June 14) The following direct labor was used and paid for during the period ($30/hour):
|
Job Number |
Amount |
Hours |
|
100 |
$33,000 |
1100 |
|
101 |
$27,000 |
900 |
|
102 |
$22,500 |
750 |
Predetermined overhead rate calculated May 8, 2018
(Estimated Total Overhead Costs) / (Estimated Direct Labor Hours)
($24,000) / (3000 hours) = $7 per direct labor used
June 21) Job 100 is completed and ready for sale.
The following actual costs were incurred and paid (Except for depreciation transactions listed below) during the month of June:
June 2) Insurance on houses under construction $2,000 (covers up to any number of homes.
June 3) Insurance on anticipated completed homes $500 no matter the number.
June 8) Construction supervisor salary $6,000 (Paid Monthly)
June 8) Company president salary $8,000 (Paid Monthly)
June 8) Administrative staff salaries $3,000 (Paid Monthly)
June 12) Building Permits $3,000
June 15) Fuel for construction equipment $1,500
June 15) Purchased land for $50,000 and a building for $112,000 to use as corporate HQ
June 20) Insurance on HQ is $1,000 per month
June 23) Declared a $5,000 cash dividend to be paid on July 23, 2018.
June 24) Job 100 is sold for $250,000; Cash $150,000 & $100,000 note receivable to be received on September 19, 2018. The amount received will be $109,000 principal and interest. The note is a 360 day (One year is 360 days) 9% simple interest note. An adjusting entry must be made for interest revenue earned for the month of June.
June 30) Depreciation for June on HQ Building $2,500
June 30) Depreciation on the construction equipment was _______________
June 30) Apply (Appropriate) overhead to incomplete jobs
June 30) Account for ending balance in Overhead account
Note: All June 30 entries are Adjusting Entries
----------------------------------------------------------------------------------------
ABC
| COMPANY | ||||||
| Trial Balance Worksheet as at June 30, 2018 | ||||||
| ? | ? | ? | ? | ? | ? | ? |
| Account | Adjusted | Income Statement | Balance Sheet | |||
| Debit | Credit | Debit | Credit | Debit | Credit | |
| Cash | $ 1,040,500.00 | ? | ? | ? | $ 1,040,500.00 | ? |
| Building Material | $ 190,500.00 | ? | ? | ? | $ 190,500.00 | ? |
| Work-in-process | $ 116,050.00 | ? | ? | ? | $ 116,050.00 | ? |
| Jobs Completed | $ - | ? | ? | ? | $ - | ? |
| Note Receivable | $ 100,000.00 | ? | ? | ? | $ 100,000.00 | ? |
| Interest Receivable | $ 750.00 | ? | ? | ? | $ 750.00 | ? |
| Construction Equipment | $ 240,000.00 | ? | ? | ? | $ 240,000.00 | ? |
| Accumulated Depreciation - Construction Equipment | ? | $ 2,000.00 | ? | ? | ? | $ 2,000.00 |
| Land | $ 50,000.00 | ? | ? | ? | $ 50,000.00 | ? |
| Building | $ 112,000.00 | ? | ? | ? | $ 112,000.00 | ? |
| Accumulated Depreciation -Building | ? | $ 2,500.00 | ? | ? | ? | $ 2,500.00 |
| Accounts Payable | ? | $ 200,000.00 | ? | ? | ? | $ 200,000.00 |
| Dividend Payable | ? | $ 5,000.00 | ? | ? | ? | $ 5,000.00 |
| Common Stock | ? | $ 1,500,000.00 | ? | ? | ? | $ 1,619,800.00 |
| Dividend | $ 5,000.00 | ? | ? | ? | $ 5,000.00 | ? |
| Sales | ? | $ 250,000.00 | ? | $ 250,000.00 | ? | ? |
| Interest Revenue | ? | $ 750.00 | ? | $ 750.00 | ? | ? |
| Cost of jobs sold | $ 87,450.00 | ? | $ 87,450.00 | ? | ? | ? |
| Works Overhead | $ 500.00 | ? | $ 500.00 | ? | ? | ? |
| Salaries Expense | $ 15,000.00 | ? | $ 15,000.00 | ? | ? | ? |
| Depreciation Expense | $ 2,500.00 | ? | $ 2,500.00 | ? | ? | ? |
| Income Summary | ? | ? | $ 124,800.00 | ? | ? | ? |
| ? | ? | ? | ? | ? | ? | ? |
| ? | $ 1,977,250.00 | $ 1,977,250.00 | $ 250,750.00 | $ 250,750.00 | $ 1,851,300.00 | $ 1,846,300.00 |
1. Prepare Financial Statements
In: Accounting
Kevin Shirley, CEO of Shirley Construction builds condos in a booming retirement community in Florida. Although sales have slowed because of a national recession, it now looks as if the recession is about to end. Mr. Shirley wants to be ready with material, labor, and foremen to meet the demand for condos. Last year, Kevin built and sold 30 condos. With the recent recession ending, Mr. Shirley thinks that his sales will increase to 40 units for the current year. The going market price for these condos (which Kevin and his numerous competitors have charged) has been $225,000. In addition, Shirley Contruction's marginal cost of building this model averages $155,000. a. Based on these facts, recommend a course of action for Kevin. b. Suppose that the economic boom raises the cost of labor and raw materials, so that the additional cost of a condo rises to $180,000. What is Kevin's most profitable course of action? Explain
In: Accounting
The county fire department is considering two options (A and B) for upgrading its aging physical facility. Assume an interest rate of 6% per year and 50-year time period.
Option A: Involves remodeling the existing fire station by spending $2,252,000 now. In addition, the cost for personnel and equipment will be $126,000 per year.
Option B: Calls for buying 5 acres of land for building a new fire station. The cost of the land in that area is estimated to be $366,000 per acre. The size of the new fire station would be 9,000 square feet with a construction cost of $151.18 per square foot. Contractor fees are expected to be $421,500(Assume all of the costs for plan B occur at time 0). In addition, the sale of the old site is to anticipated to net a positive $500,000 five years in the future from today.
Q1: Determine the Present Worth of Plan A and Pan B.
Q2: Which plan is better on the basis of present worth analysis?
In: Civil Engineering
Equity Viewed as an Option
A. Fethe Inc. is a custom manufacturer of guitars, mandolins, and other stringed instruments and is located near Knoxville, Tennessee. Fethe's current value of operations, which is also its value of debt plus equity, is estimated to be $5 million. Fethe has $3 million face value, zero coupon debt that is due in 2 years. The risk-free rate is 7%, and the standard deviation of returns for companies similar to Fethe is 30%. Fethe's owners view their equity investment as an option and they would like to know the value of their investment.
Using the Black-Scholes option pricing model, how much is
Fethe's equity worth? Enter your answers in millions. For example,
an answer of $10,550,000 should be entered as 10.55. Do not round
intermediate calculations. Round your answer to two decimal
places.
$ million
How much is the debt worth today? What is its yield? Enter your
answer for debt worth in millions. For example, an answer of
$10,550,000 should be entered as 10.55. Do not round intermediate
calculations. Round the monetary value to two decimal places and
percentage value to one decimal place.
Debt worth today: $ million
Yield on the debt: %
How would the equity value and the yield on the debt change if
Fethe's managers could use risk management techniques to reduce its
volatility to 10%? Enter your answers in millions. For example, an
answer of $10,550,000 should be entered as 10.55. Do not round
intermediate calculations. Round the monetary value to two decimal
places and percentage value to one decimal place.
New equity worth: $ million
New yield on the debt: %
Can you explain this?
The value of the stock goes down and the value of the debt goes up
because with lower risk, Fethe has (less/more) of
a chance of a "home run".
In: Finance