Answer:
C. Increase
Explanation:
A bustling economy will make individuals want to take advantage of the opportunity. It’s however normal for prices of a good or service to increase when there is a huge demand for it.
In this case there was a boom in the economy which means the price of the shares he owns in the company will increase.
Answer:
b. $90,000 with a $10,000 loss carryover
Explanation:
Given that
Active business income = $90,000
From Activity A, the income earns = $20,000
From Activity B, the loss incurs = $30,000
So by considering the above information, the Adjusted gross income should be
The $90,000 should be recorded
Plus, the $10,000 loss should also be carryover
The $10,000 loss is come from
= $20,000 - $30,000
= -$10,000
Answer:
The NPV from opening the branch office is negative ( -$106668.08). Thus the branch office should not be opened.
Explanation:
The decision to open the branch office will be taken based on the NPV provided by opening of the branch office. If the NPV of a project is positive based on the required rate of return used as a discount rate fro cash flows, the investment is worth undertaking.
The net present value (NPV) for a project can be calculated as,
NPV = CF1 / (1+r) + CF2 / (1+r)² + ... + CFn / (1+r)^n - Initial Outlay
Where,
- r is the appropriate discount rate
- Initial Outlay is the Initial cost of the project
- CF represents cash flows from the project
As the required return is 16%, we will take this as the appropriate discount rate.
NPV = 45000 / (1+0.16) + 120000 / (1+0.16)² + 150000 / (1+0.16)³ +
150000 / (1+0.16)^4 + 150000 / (1+0.16)^5 - 485000
NPV = - $106668.08
As the NPV from project is negative at a required return of 16%, the project should not be under taken and the branch office should not be open.
Answer:
e. Debit Retained earning $49,280 Credit Common stock dividend distributable $35,200
Credit Paid in capital in excess of par value(Common stock) $14,080
Explanation:
The journal entry is as follows:
Retained earnings (3,520 shares × $14)
Dr $49,280
_______ Common stock dividend distributable (3,520 shares × $10)
Cr $35,200
_______ Paid in capital in excess of par value ($49,280 - $35,200)
Cr $14,080
