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Nadya [2.5K]
3 years ago
6

Consider the following information for Maynor Company, which uses a periodic inventory system:

Business
1 answer:
katrin [286]3 years ago
8 0

Answer:

A. FIFO - 78 units and $7,770 and Cost of Goods Sold $12,738

B. LIFO - Inventory Valuation $7,312 and Cost of Goods Sold $13,196

C. Weighted Average - inventory Valuation $7,304 and Cost of Goods Sold $13,204

Explanation:

Detailed calculation as under:

<u>A. FIFO</u>

First 73 Units are sold from the inventory on May 1. Therefore, we first take the beginning inventory units and then we take the next in line purchases made during the period. In this case the first 34 units are completely taken and then out of the 44 units only 39 units are taken.

Next 68 units are sold from the inventory on October 28. Now we will take the remainder 5 units bought on March 28 (which are not yet sold). Then we take 63 units out of the 68 units purchased on August 22.

The company's ending inventory on FIFO Basis is remaining 5 units bought on 22 August and 73 units bought on 14 October. There total value is (5 x 94) + (73 x 100) = $7,770

Cost of Goods Sold = Total Goods Cost available for sale - Inventory ending valuation

$12,738 = $20,508 - $7,770

<u>B. LIFO</u>

First 73 Units are sold from the inventory on May 1. Therefore, we first take the units purchased on 28 March and then we take the beginning inventory. In this case the first 44 units are completely taken and then out of the 34 units only 29 units are taken.

Next 68 units are sold from the inventory on October 28. Now we will take the units bought on 14 October i.e. 68 units out of the 73 units bought.

The company's ending inventory on LIFO Basis is remaining 5 units in the beginning inventory, remaining 5 units bought on 14 October and 68 units bought on 22 August. There total value is (5 x 84) + (5 x 100) + (68 x 94) = &7,312

Cost of Goods Sold = Total Goods Cost available for sale - Inventory ending valuation

$13,196 = $20,508 - $7,312

<u>C. Weighted Average</u>

In order to calculate Weighted average cost method we divide the total cost of inventory (Beginning and Purchased) with the total units, this yields average cost per unit. Then we multiple the average cost per unit with the units remaining after sales. As shown below:

$20,508 / 219 = $93.64 per unit

$93.64 x 78 units = $7,304

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3 years ago
Serendipity Inc. is re-evaluating its debt level. Its current capital structure consists of 80% debt and 20% common equity, its
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Answer:

Using the current capital structure

Ke = Rf + β(Risk premium)

Ke = 5 + 1.60(6)

Ke = 5 + 9.60

Ke = 14.60

Weighted cost of equity

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= 2.92%

Using the new debt-equity ratio

Ke = 5 + 1.60(6)

Ke = 5 +  9.6

Ke  = 14.60%

Weighted cost of equity

Ke = 14.60(60/100)

Ke = 8.76%

Difference in cost of equity

= 2.92% - 8.76%

= -5.8%

Explanation:

There is need to calculate the cost of equity based on capital asset pricing model where Rf  represents risk-free rate, Rp denotes risk-premium and β refers to beta. Then, we will calculate the weighted cost of equity by multiplying cost of equity by the proportion of equity in the capital structure. We will also calculate the new weighted cost of equity by multiplying the cost of equity the new proportion of equity in the capital structure. Finally, we will deduct the new weighted cost of equity from the old weighted cost of equity.  

5 0
3 years ago
You are saving for retirement. To live​ comfortably, you decide you will need to save $ 4 million by the time you are 65. Today
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Answer: $50,846.3701

Explanation:

Need to save $4 million to live comfortably,

Interest rate, r = 3%

N = 40 years

Present\ value=\frac{FV_{N} }{(1+i)^{N}}

Present\ value=\frac{4,000,000 }{(1+0.03)^{40}}

Present\ value=\frac{4,000,000 }{3.262}

                             = 1,226,241.57

Present\ value\ of\ annuity= C\times\frac{1}{i}\times(1-\frac{1}{(1+i)^{N}}) + C

1,226,241.57= C\times\frac{1}{0.03}\times(1-\frac{1}{(1.03)^{40}})+C

1,226,241.57= C\times\frac{1}{0.03}\times(1-\frac{1}{(1.03)^{40}})+C

1,226,241.57=C[\frac{1}{0.03}\times(1-0.3065)+1]

1,226,241.57=24.1166\times C

C=\frac{1,226,241.57}{24.1166}

         = $50,846.3701

Hence, $50,846.3701 will be the annual payment to have $4 million in the account on 65th birthday.

7 0
3 years ago
Tom takes a loan of $60,000 at 4% annual interest to purchase a property worth $100,000. He earns an annual income of $10,000 af
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Based on the given data, Tom's leveraged return on the real estate investment is 13.3%.

A leveraged return means an investment return on equity partially financed with debt.

Investment in property = $100,000 - $60,000

Investment in property = $40,000

Interest = $60,000 * 4%

Interest = $2,400

Net income after tax = ($10,000 - $2,400) * (1 - 30%)

Net income after tax = $7,600 * 0.70

Net income after tax = $5,320

Leveraged return = Net income after tax / Investment in property * 100

Leveraged return = $5,320 / $40,000 * 100

Leveraged return = 0.133 * 100

Leveraged return = 13.3%

Hence, Tom's leveraged return on the real estate investment is 13.3%.

Learn more about leveraged return:

<em>brainly.com/question/14005616</em>

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