QUESTION 14
The Lead Underwriter, in an IPO, prepares the issueing firm's application that is made to the SEC
True
False
3 points
QUESTION 15
Insurance is the business of risk shifting.
True
False
3 points
QUESTION 16
A Treasury security in which the periodic interest payments been
separated from the principal repayment and sold as a different
security is called
|
a T-note |
||
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a T-bond |
||
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a Zero Coupon bond |
||
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a G.O. bond |
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a Revenue bond |
In: Finance
A monopolist faces a demand curve of the form: P = 610 – 0.01Q. The total cost for this monopolist is TC = 2,000,000 + 10Q. Assume there are no externalities of production or consumption of this monopolist’s product.
a) Suppose this monopolist cannot price discriminate. Explain why this monopolist will not produce an output greater than 30,000 units.
b) Draw a diagram to illustrate this monopolist’s situation. Show the demand, marginal revenue and marginal cost curves, and the profit maximizing price and quantity from part (a).
In: Economics
Among the most important uses of managerial accounting data are establishing price for a particular product or service. This is how we earn revenue. In many situations, there are external factors that impact the price that is set. This in turns impacts the organization’s bottom line. It is important that a healthcare manager has a solid understanding of pricing strategies. Identify and discuss the pricing strategies available to a healthcare manager. Be sure to discuss what it is; how it is used; and the advantages/disadvantages of each one.
In: Finance
Home Depot sells a washer and dryer for $1,600 on April 1st. After successful completion of a credit check, the customer makes a down payment of $280 cash and agrees to pay an additional $110 per month for the next 12 months. The washer and dryer are delivered and installed on April 6th. Are the revenue recognition criteria met or not met? Why or why not?
Each response should be about one paragraph long, describing the justification for your decision.
In: Accounting
ABC Corp. is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 21%. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. Depreciation is calculated using the 5-year MACRS schedule, and the fixed asset will have a salvage value equal to 25% of the original cost at the end of year 4. All net working capital is recovered at the end of the project
|
Year 0 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
|
|
Investment in fixed asset |
$30,000 |
A |
|||
|
Sales revenue |
$14,000 |
$15,000 |
$16,000 |
$13,000 |
|
|
Operating costs |
3,000 |
3,500 |
4,000 |
2,800 |
|
|
Depreciation |
B |
C |
D |
E |
|
|
NWC spending |
300 |
200 |
150 |
100 |
F |
In: Finance
True / False Questions
1. Inventory is a relatively liquid asset and usually appears above Accounts Receivable on the balance sheet.
2. The operating cycle of a merchandising company consists of (1) purchases of merchandise; (2) sales of the merchandise; and (3) collection of accounts receivable.
3. Inventory shrinkage refers to unrecorded decreases in inventory resulting from breakage, theft, and sales of inventory.
4. In a perpetual inventory system, when merchandise is purchased, it is debited to an account called Purchases.
5. In a periodic inventory system, the Cost of Goods Sold account may be created during the closing process by debiting Cost of Goods Sold and crediting the Beginning Inventory and the Purchases account.
6. Purchase Discounts Lost is shown as a reduction of cost of goods sold in the income statement.
7. Net Sales is computed as total sales revenue less sales returns and allowances less sales discounts.
8. The contra-revenue accounts, Sales Returns and Allowances and Sales Discounts, should be closed by crediting these accounts and debiting Income Summary for each account.
9. Gross profit margin is the dollar amount of gross profit expressed as a percentage of gross sales.
10. The accounting cycle of a merchandising business is the length of time covered by the company's income statement.
In: Accounting
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $16,000 of common stock for cash. Recognized $64,000 of service revenue earned on account. Collected $57,200 from accounts receivable. Paid operating expenses of $36,200. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply to Jova for Year 2: Recognized $71,500 of service revenue on account. Collected $65,200 from accounts receivable. Determined that $880 of the accounts receivable were uncollectible and wrote them off. Collected $100 of an account that had previously been written off. Paid $48,300 cash for operating expenses. Adjusted the accounts to recognize uncollectible accounts expense for Year 2. Jova estimates uncollectible accounts expense will be 1.0 percent of sales on account. Required Complete the following requirements for Year 1 and Year 2. Complete all requirements for Year 1 prior to beginning the requirements for Year 2. d-1. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Year 1.
In: Accounting
If the company paid $12,500 in salaries and wages in 2020, what was the balance in salaries and wages payable on December 31.2019?
Presented below are adjusted and unadjusted trial balance
| December 31, 2020 | Unadjusted ( U ) | Adjusted (A) | |||||
| Balance Sheet ( B)/ Income Statement Item (I) | Dr | Cr | Dr | Cr | |||
| B | Cash | 11,000 | 11,000 | ||||
| B | Accounts Receivable | 20,000 | 23,500 | ||||
| B | Supplies | 8,400 | 3,000 | ||||
| B | Prepaid Insurance | 3,350 | 2,500 | ||||
| B | Equipment | 60,000 | 60,000 | ||||
| B | Accumulated Depreciation - Equipment | 28,000 | 33,000 | ||||
| B | Accounts Payable | 5,000 | 5,000 | ||||
| B | Interest Payable | 150 | |||||
| B | Notes Payable | 5,000 | 5,000 | ||||
| B | Unearned Service Revenue | 7,000 | 5,600 | ||||
| B | Salaries and Wages Payable | 0 | 1,300 | ||||
| B | Common Stock | 10,000 | 10,000 | ||||
| B | Retained Earnings | 3,500 | 3,500 | ||||
| I | Service Revenue | 58,600 | 63,500 | ||||
| I | Salaries and Wages Expense | 10,000 | 11,300 | ||||
| I | Insurance Expense | 850 | |||||
| I | Interest Expense | 350 | 500 | ||||
| I | Depreciation Expense | 5,000 | |||||
| I | Supplies Expense | 5,400 | |||||
| I | Rent Expense | 4,000 | 4,000 | ||||
| Totals | 117,100 | 117,100 | 127,050 | 127,050 | |||
In: Accounting
Budweiser is thinking about making wine…
• Expected sales per unit o 260,000 bottles sold in the first year o Sales revenue declines 10% per year (ie, sales growth = -10%)
• Proposed selling price per bottle = $5.20
• Variable cost per bottle = $2
• Fixed costs = $250K/year in maintenance and labor
• Budweiser also expects to lose $300K pretax per year (revenue net of expenses) from beer sales as people switch from beer to wine
• Working capital necessary = $50K
• Wine-making equipment o would cost $750K, plus $50K in modifications required on the assembly line (included in depreciable basis)
o depreciated 5-year MACRS
• After five years, project ends as everyone realizes Budweiser wine is disgusting o all remaining working capital recouped o wine-making equipment sold for $400,000
• Tax rate = 30%
• Assume any negative taxes can be treated as an immediate tax credit. (=treat negative taxes as a positive CF.)
• Required return = 10%.
On Excel, calculate the NPV and the IRR of the project. Should the company pursue this project?
In: Finance
Roger Productions is evaluating a film project. The president of
Roger estimates that the film will cost $20,000,000 to produce. In
its first year, the film is expected to generate $16,307,000 in net
revenue, after which the film will be released to video. Video is
expected to generate $9,538,000 in net revenue in its first year,
$2,496,100 in its second year, and $1,011,500 in its third year.
For tax purposes, amortization of the cost of the film will be
$12,000,000 in year 1 and $8,000,000 in year 2. The company’s tax
rate is 35 percent, and the company requires a 13 percent rate of
return on its films.
Click here to view factor tables
What is the net present value of the film project? To simplify,
assume that all outlays to produce the film occur at time 0.
(Round present value factor calculations to 4 decimal
places, e.g. 1.2151 and final answer to 0 decimal places, e.g. 125.
Enter negative amounts using either a negative sign preceding the
number e.g. -45 or parentheses e.g. (45).)
| The net present value | $enter the net present value in dollars rounded to 0 decimal places |
Should the company produce the film?
| The company select an option should notshould produce the film. |
In: Finance