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Andrei [34K]
3 years ago
14

The marion's clothing has a gross profit of $700,000 and $240,000 in depreciation expense. the preston's pants also has $700,000

in gross profit, with $40,000 in depreciation expense. selling and administrative expense is $160,000 for each company. given that the tax rate is 40 percent, compute the cash flow for both companies. which answer below explains the comparison between the companies
a. both companies are the same with no differences
b. marion's had $200,000 more in depreciation which provided $80,000 (0.40 x $200,000) more in cash flow.
c. preston's had less depreciation which provided it with more spendable resources.
d. marion's paid more taxes therefore preston's had more income.
Business
1 answer:
bogdanovich [222]3 years ago
6 0
So, doing the calculations, Marion's had $700,000-240,000=$460,000-160,000 in expenses = $300,000 x 0.4 income tax=120,000 and so 300,000-120,000=$180,000 net value. Preston's had $700,000-40,000 depreciation=$660,000-160,000 expenses =$500,000 x 0.4 taxes= 200,000 taxes so 500,000-200,000=$300,000 net value. The result is Preston's had less depreciation which provided it with more spendable income.
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Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day at a $2,840 cost. On Janu
AVprozaik [17]

Answer:

Onslow Co.

Journal Entries:

1. Jan. 2: Debit Equipment $178,000

Credit Cash $178,000

To record the cash payment for equipment purchase.

2. Jan. 3: Debit Equipment $4,000

Credit Cash $4,000

To record the cash payment for readying the equipment for use.

3. Dec. 31: Debit Depreciation Expense $28,000

Credit Accumulated Depreciation $28,000

To record depreciation expense for the first year.

4. Dec. 31, Year 5: Debit Equipment Disposal$178,000

Credit Equipment $178,000

To transfer the equipment account to the Equipment Disposal account.

Debit Accumulated Depreciation $140,000

Credit Equipment Disposal $140,000

To transfer accumulated depreciation to the Equipment Disposal account.

a) Debit Cash $15,000

Credit Equipment Disposal $15,000

To record the cash proceeds from sale of equipment.

Debit Loss on Sale of Equipment $23,000

Credit Equipment Disposal $23,000

To record the loss on Equipment Disposal.

b) Debit Cash $50,000

Credit Equipment Disposal $50,000

To record the cash proceeds from sale of equipment.

Debit Sale of Equipment $12,000

Credit Gain on Sale of Equipment $12,000

To record the gain on Equipment Disposal.

c) Debit Cash $30,000

Credit Equipment Disposal $30,000

To record the cash proceeds from insurance company.

Debit Loss on Disposal $8,000

Credit Equipment Disposal $8,000

To record the loss on Equipment Disposal.

Explanation:

a) Data and Calculations:

January 2: Cost of used machine = $178,000

January 3: Readying costs = $4,000 ($2,840 + $1,160)

Estimated useful life = 6 years

Estimated salvage value = $14,000

Depreciable amount = $168,000 ($182,000 - $14,000)

Depreciation method = straight-line method

Annual depreciation expense = $28,000 ($168,000/6)

Accumulated depreciation at December 31, Year 5 = $140,000 ($28,000*5)

Disposal date = December 31, Year 5

Journal Entries Analysis:

1. Jan. 2: Equipment $178,000 Cash $178,000

2. Jan. 3: Equipment $4,000 Cash $4,000

3. Dec. 31: Depreciation Expense $28,000 Accumulated Depreciation $28,000

4. Dec. 31, Year 5: Equipment Disposal $178,000 Equipment $178,000

Accumulated Depreciation $140,000 Equipment Disposal $140,000

a) Cash $15,000 Equipment Disposal $15,000

Loss on Sale of Equipment $23,000 Equipment Disposal $23,000

b) Cash $50,000 Equipment Disposal $50,000

Equipment Disposal $12,000 Gain on Sale of Equipment $12,000

c) Cash $30,000 Equipment Disposal $30,000

Loss on Disposal $8,000 Equipment Disposal $8,000

5 0
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What can you suggest to warner Edwards in terms of marketing strategy
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Answer:

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I would suggest that only advertisement doesn't make people to buy it.

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Answer:

1. Based on my understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?

Th e correct option is (<em>b). The outlook for the economy and the markets is for improvement. </em>

2. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?  

Th e correct option is <em>(b). Portfolio risk   </em>

3. Generally, investors would prefer to invest in assets that have:  

a. A higher-than-average expected rate of return given the perceived risk

Explanation:

1. Based on my understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?

Th e correct option is (<em>b). The outlook for the economy and the markets is for improvement. If the outlook of the economy and the market prospects of the stocks are for improvements, it then means that the Price Per Earning of the stock will be increasing, which is a positive economic trend.</em>

<em>Moreover, since we are talking about the average P/E it can be inferred that in the very long run, average of the S&P 500 Price to Earnings (PE) ratio (since 1900) is approximately 15.8, and the ratio since 1946 (the post-World War II period) is 17.3, so, it is fair to call a "normal" PE ratio about 16.5, which is relatively stable over the years. </em>

 2. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?  

Th e correct option is <em>(b). Portfolio risk  is the chance that the combination of assets or units, within the investments that you own, fail to meet financial objectives. Each investment within a portfolio carries its own risk, with higher potential return typically meaning higher risk. It can be computed as  the risk of the  two-securities portfolio, first take the square of the weight of  40 Stocks ($100,000.00)  and multiply it by square of standard deviation of  the 40 stocks. Repeat the calculation for 20 Bonds and a Certificate of Deposit.</em>

<em></em>

3. Generally, investors would prefer to invest in assets that have:  

a. A higher-than-average expected rate of return given the perceived risk <em>Yes they will because a higher -than average expected rate of return will inform the investor the type of strategies to adopt to guarantee the expected earnings containing the risk. </em>

<em></em>

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Answer:

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Answer:

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