Answer:
$10.8734
Explanation:
The computation of the current value of the stock is shown below:
D1 = $1.20
D2 = $1.35
D3 = 1.35 × 1.025 = 1.38375
g = 2.5% = 0.025
Now as we know that
P2 = D3 ÷ (r - g)
where,
Price in year 2 = P2 = $1.38375 ÷ (0.145 - 0.025)
= $11.53125
So Current Price is
= $1.20 ÷ 1.145 + $1.35 ÷ 1.145^2 + $11.53125 ÷ 1.145^2
= $10.8734
<u>Calculation of retained earnings beginning balance:</u>
Retained earning beginning balance can be calculated using the following formula:
Retained earnings ending balance = Retained earning beginning balance + Revenue – Expenses - Dividends
Hence using the given information we can solve the equation as follows:
3,050 = Retained earning beginning balance + 1935 – 1065 - 550
3,050 = Retained earnings beginning balance +320
Retained earnings beginning balance = 3050-320 = $2,730
Hence, Retained earnings beginning balance is <u>$2,730</u>
Answer:
Average rate = $1.55
Explanation:
Normally all companies use the current rates for the transaction, revenue department and profit loss, but it is not fair to use the same current rate on different dates.
Therefore, businesses usually use average exchange rates to overcome these kinds of shortcomings.
Therefore in this example, it would be appropriate to use the average exchange rates by the parent company to find the income of the subsidiary.
Question Completion:
Prepare an Income Statement for the month of June.
Answer:
Windsor, Inc.
Income Statement for the month ended June 30, 2017:
Service Revenue $7,730
Supplies expense 1,100
Maintenance and
repairs expense 700
Advertising expense 400
Utilities expense 200
Salaries and
wages expense 1,630 $4,030
Net Income $3,700
Explanation:
Windsor, Inc. Income Statement is where the revenues and expenses are summarized in order to arrive at the net income or profit of the business. Temporary accounts are closed to the income statement. These are accounts that are periodic in nature. They are not permanent accounts, which are transferred to the next period. The only element of the income statement that is taken to the balance sheet is the net income or loss.