Answer:
Journal entries for the transactions are given below
Explanation:
1. Development of new product
DEBIT CREDIT
Research and development $24,000
Cash $24,000
2. Paid the plaintiff for losing patent
DEBIT CREDIT
Legal fee (expense) $8,000
Cash $8,000
3. Bought Equipment and signed non-interest bearing note
DEBIT CREDIT
Equipment Cash price $37,000
Discount on note payable $5,000
Cash paid $18,000
Note payable $24,000
4. Installed sprinkler system
DEBIT CREDIT
Sprinkler system $40,000
Cash $40,000
5. Plaintiff paid for successful infringement suit on its patent
DEBIT CREDIT
Patent $24,000
Cash $24,000
6. Bought New equipment and traded old one
DEBIT CREDIT
New Equipment $13,600
Accumulated depreciation $6,800
Loss on sale $3,400
Old Equipment $13,400
Cash $10,400
Working:
Accumulated depreciation = Original Cost - book value
Accumulated depreciation = $13,400 - $6,600
Accumulated depreciation = $6,800
Answer:
a 1) FIFO
Closing Inventory = $1,760
Cost of Goods sold = $11,264
2) LIFO
Closing Inventory = $1,056
Cost of Goods sold = $11,968
b) FIFO gives the higher ending inventory than LIFO because the oldest items and lowest costs are allocated to the cost of goods sold.
c) LIFO results in higher cost of Goods sold because latest cost are allocated to the cost of goods sold and latest cost may include price increases.
Explanation:
FIFO
Closing inventory = 176 units * $10= $1760
Cost goods sold = 352 units + 704+528 -176 =1,408 units sold
from opening $2,112
12 June = $5632
23 June = ( 528-176) =352 units * 10 =3,520
total sold = $11,264
LIFO
Closing inventory = 176 units * 6 = $1,056
Cost goods sold = 352 units + 704+528 -176 =1,408 units sold
23 June = $5,280
12 June = $5,632
1 June = (352-176) = 176 *6 = $1,056
Total = $11,968
Answer:
Option B (150) is the correct answer.
Explanation:
Given:
Nominal GDP,
= $900
Money velocity,
= 6
As we know,
⇒ 
By putting the vales, we get
⇒ 
⇒ 
⇒ 
Answer:
<u>sell the stock which will drive it's expected return even lower.</u>
Explanation:
An investor wants to be compensated for the risk undertaken in the form of return. When investors believe that a stock is not providing sufficient return, such stocks would be sold by the investor.
When a stock is not performing well i.e it's current market price goes down, all the investors holding that stock will sell it , leading to it's market price going further down.
Since the market price goes further down, the expected return on such a stock would further decline.
Answer:
Do = $2.00
D1= Do(1+g)1 = $2(1+0.1)1 = $2.20
D2= Do(1+g)2 = $2(1+0.1)2 = $2.42
PHASE 1
V1 = D1/1+ke + D2/(1+ke)2
V1 = 2.20/(1+0.11) + 2.42/(1+0.11)2
V1 = $1.9820 + $1.9641
V1 = $3.9461
PHASE 2
V2 = DN(1+g)/ (Ke-g )(1+k e)n V2 = $2.42(1+0.03)/(0.11-0.03)(1+0.11)2
V2 = $2.4926/$0.0649
V2 = $38.4068
The current stock price is calculated as follows:
Po = V1 + V2
Po = $3.9461 + $38.4068
Po = $42.35
Explanation: This question relates to valuation of shares with 2-phase growth model. The value of shares in the first phase will be determined by discounting the dividend for the 2 years by cost of equity. The dividends for year 1 and year 2 were obtained by subjecting the current dividend paid (Do) to growth rate.
Moreso, the value of shares for the second phase was calculated by considering the last dividend paid(D2) and then subject it to the new growth rate. The adjusted dividend was then capitalized at the appropriate discount rate of the company.
