Answer:
Allison should record the purchase at $5880
Explanation:
The net method for recording purchases implies that the purchases is recorded net of the envisaged cash discount on the transaction since the purchaser believes they would settle their account before the cash discount period expires.
Based on the above, the purchases would be recorded as shown below:
cost of purchase=original purchase value*(100%-discount rate)
original purchase price is $6,000
discount rate is 2%
cost of purchase=$6000*(100%-2%)
=$6000*98%
=$5880
Answer:
It is preferable to further process Product A.
Explanation:
Product should be processed further before sale if the net incremental benefits from further processing is positive.
The net incremental benefits from further processing is increase in revenue when further processed less further costs of processing.
Increase in revenue=$58,000-$40,000
=$18,000
Further processing costs=$15,000
Net incremental benefits=$18,000-$15,000
Net incremental benefits=$3,000
Since processing further brings a net benefit of $3,000, Product A should be further processed before being sold.
Answer:
0.73
Explanation:
Given that
WACC = 11%
Tax rate = 34%
Cost of equity = 14.9 %
Cost of debt = 8.6%
Recall that
WACC = (cost of equity × % of equity) + (cost of debt × % of debt) + ( 1 - tax rate)
We are to find
Cost of debt and cost of equity
Let
Cost of debt be x
Cost of equity be (1 - x)
Thus,
0.11 = (1 - x)(0.149) + (x)(0.086)(1 - 0.34)
x = 0.4228
Therefore,
Debt-equity ratio
= Cost of debt/cost of equity
= 0.4228/(1 - 0.4228)
= 0.73
Answer:
The five main characteristics of a c corporation are:
- limited liability: the owners' liability is determined by the amount of money they invested in purchasing the corporation's stock.
- corporations are owned by stockholders: every single stockholder owns a piece of the corporation, the size of that piece is determined by the amount of stocks.
- double taxation: owners of the corporation suffer from double taxation because first the corporation must pay corporate taxes and then the owners must pay income taxes when they receive dividends.
- corporations are separate entities: corporations exist by themselves, they are born when they are created and die when they are dissolved.
- corporations are professionally managed: the owners elect a board of directors and the board is responsible for hiring professional management.
Explanation:
