All categories

3 years ago

Amber Corporation reported the following summarized balance sheet data on December 31, 20X6:

Business

1 answer:

taurus [48]3 years ago

8 0

Answer:

A. Give the journal entries recorded by Purple on its books during 20X7 if it accounts for its investment in Amber using the equity method.

January 1, 20x7, investment on Amber Corporation

Dr Investment on Amber Corporation 500,000

Cr Cash 500,000

Date, 20x7, dividends distributed by Amber Corporation

Dr Cash 20,000

Cr Investment on Amber Corporation 20,000

December 31, 20x7, Amber Corporation reports net income

Dr Investment on Amber Corporation 50,000

Cr Investment revenue 50,000

B. Give the elimination entries needed on December 31, 20X7, to prepare consolidated financial statements.

Since there are no intercompany sales reported, the only consolidation entry necessary is to eliminate investment account:

December 31, 20x7, consolidation entry

Dr Common stock 300,000

Dr Retained earnings 230,000

Cr Investment on Amber Corporation 530,000

You might be interested in

For the "determine data needs" activity of a project, the optimistic estimated duration is 10 days, the pessimistic estimated du

fredd [130]

Answer: 15 days.

Explanation: When one makes an optimistic estimation duration of a project, they don't take into account the unforeseen circumstances that could take place within the duration of the work. This may delay the work that would ultimately increase the number of days.

Similarly, when you make a pessimist estimate, you take into account all the delays and breaks and more into account.

Therefore, when you actually start the work you face these delays and more that ultimately gets you in between the predicted optimistic and pessimistic estimate.

6 0

4 years ago

Monmouth Inc.'s stock has a 30% chance of producing a 20% return, a 30% chance of producing a 10% return, and a 40% chance of pr

otez555 [7]

Answer:

Expected rate of return is 13%

Explanation:

Using the expected values method:

Expected Rate of return = Chance 1 * Outcome 1 + Chance 2 * Outcome 2 + Chance 3 * Outcome 3 + ................... Chance n * Outcome n

So by putting values, we have:

Expected Rate of return = 30% * 20% + 30% * 10% + 40% * 10%

Expected Rate of return = 6% + 3% + 4% = 13%

So the expected rate of return using the expected value method is 13%

3 0

3 years ago

Read 2 more answers

Limited decision making is used when purchasing frequently bought, low-cost items needing very little decision effort.

Kay [80]

Answer:

True

Explanation:

Routinized response behavior is the decision making process used by consumers when they buy frequently purchased, low cost items that require very little search and decision effort.

Convenience goods are low cost goods that are purchased frequently with very little search and decision effort, e.g. candy, cold drinks, etc.

5 0

4 years ago

Ramble On Co. wishes to maintain a growth rate of 13.6 percent per year, a debt-equity ratio of 1.8, and a dividend payout ratio

Korvikt [17]

Answer: 5.99%

Explanation:

Based on the question,

Dividend payout ratio = 30%

Therefore, the retention ratio will be:

= 1 - 30%

= 70%

Growth rate = 13.6%

We'll the use the sustainable growth rate formula which will be:

0.136 = (ROE x 0.7)/ (1-(ROE x 0.7))

0.136(1 - (0.7ROE)) = 0.7ROE

ROE = 0.136/0.7952

ROE = 0.171026

Then, the Profit margin will be:

ROE = Profit Margin x Asset Turnover x Equity multiplier

0.171026 = PM x (1/0.98) x (1 + 1.8)

0.171026 = PM x (1/0.98) x 2.8

PM = 0.171026 x 0.98/2.8

PM = 0.0598591

Profit margin = 5.99%

3 0

3 years ago

Consider the single-index model. The alpha of a stock is 0%. The return on the market index is 16%. The risk-free rate of return

Natalka [10]

Answer:

β of the stock = 1

Explanation:

Given:

α of a stock = 0%

Return on the market index = 16%

Risk-free rate of return = 5%

Required rate = 11% + 5% = 16%

β of the stock = ?

Computation of β of the stock:

Required rate = Risk-free rate of return + [β (Return on the market index - Risk-free rate of return)]

16% = 5% + [β (16% - 5%)]

16% - 5% = β (16% - 5%)

11% = [β (16% - 5%)

11% = [β (11%)

β of the stock = 1

3 0

3 years ago