Answer:
Dr Retained earnings $6,200
Cr Dividends payable $6,200
Explanation:
The shares entitled to dividends payment are those outstanding as at when dividends were declared,that is those shares in issue as at the date of dividend declaration,in essence only the outstanding shares of 12,400 are entitled to dividend payment of $0.50 per share.
The amount of dividend payment=$0.50*12,400=$6,200
The total dividends declared of $6,200 would be debited to retained earnings and credited to dividends payable until the payment date when the cash would be settled.
The constant growth model will work best on companies that are categorized as mature and that they have a relatively predictable earnings because having this type of company will allow the constant growth model to work best by which the growth model will be in a constant shape and does not tend to change.
Answer:
a. Accounting profit for the business = $3,500
b. Economic loss = $1,000
c. The two friends can open the business and incur economic loss of $1,000 in the first year of operation. In subsequent years, the revenue may increase to generate better economic profit. This is the labor, risk, and reward of entrepreneurship.
d. If the two friends do not go ahead with the business because of the economic loss they suffer in the first year of operation, then they cannot be regarded as entrepreneurs. They are merely laborers who cannot assume any risk for greater rewards tomorrow.
Explanation:
Cost of business per month:
Operating expenses = $4,000
Lease of building = 2,000
Total expenses = $6,000
Revenue = $10,000
Accounting profit $4,000
Economic profit:
Revenue = $10,000
Total expenses = $6,000
Opportunity costs:
Lost salaries 4,500
Lost Interest 500
Total costs $11,000
Economic loss = $1,000
Answer:
$45,297
Explanation:
Data provided as per the question
Installment = $9,000
Present value factor = 5.0330
The calculation of present value is shown below:-
Present value = Installment × Present value factor
= $9,000 × 5.0330
= $45,297
Therefore for computing the present value of the loan we simply multiply the installment with present value factor.
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