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3 years ago

How to do a balance sheet?

1 answer:

3 0

Balance sheet is a statement of all your assets, liabilities, and your capital.

List down all your assets, liabilities, and capital or equity.

Total Assets = Total Liabilities + Owner's Equity

Total Assets include: land, buildings, inventory, cash, account receivables, etc.

Total Liabilities include: accounts payable, notes payable, allowance for depreciation, etc.

Owner's equity: capital/stocks, withdrawal, additional capital, etc.

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Global Pistons (GP) has common stock with a market value of $ 200$200 million and debt with a value of $ 100$100 million. Inves

kvv77 [185]

Answer:

a. Suppose GP issues $ 100$100 million of new stock to buy back the debt. What is the expected return of the stock after this transaction?

b. Suppose instead GP issues $ 50.00$50.00 million of new debt to repurchase stock. i. If the risk of the debt does not change, what is the expected return of the stock after this transaction?

ii. If the risk of the debt increases, would the expected return of the stock be higher or lower than when debt is issued to repurchase stock in part (i)?

If the risk of the debt increases, then the cost of the debt will increase. Therefore, the company will need to spend more money paying the interests related to the new debt which would decrease the ROE compared to the 18% of (i). Since we do not know the new cost of the debt, we cannot know exactly by how much it will affect the ROE, but I assume it will still be higher than the previous ROE.

Explanation:

common stock $200 million

total debt $100 million

required rate of return 15%

cost of debt 6%

current profits = ($200 million x 15%) + ($100 x 6%) = $30 million + $6 million = $36 million

if equity increases to $300 million, ROI = 36/300 = 12

if instead new debt is issued at 6%:

equity 150 million, debt 150 million

cost of debt = 150 million x 6% = $9 million

remaining profits = $36 - $9 = $27 million

ROI = 27/150 = 18%

3 0

3 years ago

The City of Willows is preparing its government-wide financial statements from its fund financial statements. The City records D

brilliants [131]

Answer:

The City of Willows

Reconciliation Entries:

Debit Cash $500

Credit Deferred Revenue $500

To record the increase of deferred revenue.

Debit Compensated Absences Expense $150

Credit Compensated Absences Liability $150

To record the increase of compensated absences.

Explanation:

a) Data and Calculations:

Beginning balances:

Deferred Revenue = $3,500

Compensated Absences Liability = $1,000

Increases during the year:

Deferred Revenue = $500

Compensated Absences = $150

Reconciliation Entries:

Cash will increase by $500 and Deferred Revenue will increase by $500

Expenses will increase by $150 and Compensated Absences (Liability) will increase by $150.

4 0

2 years ago

You just purchased a parcel of land for $10,000. if you expect a 12% annual rate of return on your investment, how much will you

Sunny_sXe [5.5K]

I guess the closest answer is $31,060.

If you purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment. Therefore you can sell the land for in 10 years in $31,060.

4 0

3 years ago

Does geico provide roadside assistance even if you don't have coverage

iVinArrow [24]

No, Geico offers free towing for customers who have the company’s roadside assistance coverage

8 0

3 years ago

Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2021. During that time, he earned

laila [671]

The total amount of FICA Taxes (self-employment and employment related) that Kyle owes for 2021 is $17,181.

Data and Calculations:

Kyle = single taxpayer

Self-employment income for three months = $44,000

Employment income for nine months = $178,000

Total income for 2021 = $222,000

FICA taxes:

Social Security tax = $13,764 ($222,000 x 6.2%)

Medicare tax = $3,219 ($222,000 x 1.45%)

Additional Medicare tax = $198 ($22,000 x 0.9%) ($222,000 - $200,000)

Total FICA taxes = $17,181 ($13,764 + $3,219 + $198)

Thus, Kyle's total FICA taxes for 2021 is $17,181.

Learn more about calculating FICA taxes at brainly.com/question/21750517

4 0

3 years ago