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ICE Princess25 [194]
3 years ago
8

What is your reaction to Harriet's suggestion of using the cost of debt only?

Business
1 answer:
Ahat [919]3 years ago
8 0

Answer:

No, it is a bad idea to use only the cost of debt

Explanation:

Only using the cost of debt, is not a good idea because too much amount of borrowing could lose the confidence of the investors and it could lead to the uncertainty in the future cash flows.

Suppliers might be worried regarding the financial situation and lead to the supply disruption. Though, the debt might save the tax expenses, which could lead to the negative cash flow.

When the company does not have adequate amount of cash at hand, it could cause many disruptions of financial. WACC (Weighted Average Cost of Capital) rates need to be used as the capital costs as it weigh the used capital cost and the used debt.

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On January 1, 2018, Red Flash Photography had the following balances: Cash, $21,000; Supplies, $8,900; Land, $69,000; Deferred R
Nutka1998 [239]

Answer:

See explanation

Explanation:

Red Flash Photography

Journal Entries

1. Debit     Cash                 $29,000

Credit       Common Stock               $29,000

(issuing common stock for cash that will increase the cash)

2. Debit    Cash                               $44,000

   Debit    Accounts Receivable    $39,000

 Credit           Service Revenue                   $83,000

(Provided services on account and cash)

3. Debit    Salaries expense            $32,000

Credit               Cash                                     $32,000

(Paid salaries to workers)

4. Debit    Prepaid Rent                   $21,000

Credit               Cash                                     $21,000

(Paid rent in advance for cash)

5. Debit    Supplies                          $31,000

Credit                  Accounts payable            $31,000

(Purchase supplies on account means liability will increase)

6. Debit    Dividends                        $2,900

Credit                   Cash                                 $2,900

(Paid cash dividends to the shareholders)

7 0
3 years ago
Inventory records for Dunbar Incorporated revealed the following: Date Transaction Number of Units Unit Cost Apr. 1 Beginning in
Drupady [299]

Answer:

$816

Explanation:

Calculation for Dunbar Incorporated Ending inventory

Formula for Ending inventory units using FIFO method:

Ending inventory units = Beginning balance + Purchase -sales

Leg plug in the formula

490+410 - 600

= 300units

Calculation for Ending inventory

Ending inventory = 300*2.72

= $816

Therefore the Ending inventory assuming FIFO method is use would be $816

3 0
3 years ago
When the economy slips into a recession, normally the demand for bonds ________, the supply of bonds ________, and the interest
Leno4ka [110]

Answer:

b. decreases; decreases; falls.

Explanation:

A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.

In Economics, there are primarily two (2) factors which affect the availability and the price at which goods and services are sold or provided, these are demand and supply.

The law of demand states that, the higher the demand for goods and services, the higher the price it would be sold all things being equal. On the other hand, law of supply states that the higher the price of goods and services, the lower the supply.

Recession can be defined as a period of economic meltdown, in which there's a general decline in all economic activities such as trade.

Hence, when the economy slips into a recession, normally the demand for bonds decreases, the supply of bonds decreases, and the interest rate falls, ceteris paribus (everything else held constant).

5 0
3 years ago
The primary participants in a market are A. firms who supply the product and consumers who buy​ it, but government policies such
MrRa [10]

Answer:

The correct answer is letter "A": firms who supply the product and consumers who buy​ it, but government policies such as taxes also play an important role in the operation of markets.

Explanation:

Primary markets are formed by buyers and sellers of a given product and the regulations the government imposes to promote fair competition. The term is mostly used in the stock market to define the place where firms sell securities directly to investors. These securities have been recently issued and are offered through Initial Public Offerings (IPOs).

5 0
3 years ago
Describe the difference between a 401(k) plan and an Individual Retirement Account.
nadya68 [22]
401(k) is an employer-provided plan, IRA isn't.
4 0
3 years ago
Read 2 more answers
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