1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mr Goodwill [35]
2 years ago
12

nnual salary allowance to Jack of $169,680. Interest of 7% on each partner's capital balance on January 1. Any remaining net inc

ome divided to Jack and Bernard, 1:2. Jack and Bernard had $96,000 and $87,000, respectively, in their January 1 capital balances. Net income for the year was $303,000. How much is distributed to Jack and Bernard?
Business
1 answer:
Katarina [22]2 years ago
7 0

Answer:

$216,570; $89,430

Explanation:

Jack:

Interest amount = 7% × $96,000

                           = $6,720

Bernard:

Interest amount = 7% × $87,000

                           = $6,090

Overall profit = Net income - salary - interest amount

                      = $303,000 - $169,680 - ( $6,720 + $6,090)

                      = $303,000 - $169,680 - $12,810

                      = $120,510

Profit is divided in a 1:2 ratio among Jack and Bernard:

Jack's profit = $120,510 × (1/3)

                    = $40,170

Bernard's profit = $120,510 × (2/3)

                          = $80,340

Net income should be distributed to Jack:

= salary + Interest + profit

= $169,680 + $6,720 + $40,170

= $216,570

Net income should be distributed to Bernard:

= Interest + profit

= $6,090 +$80,340

= $89,430

You might be interested in
Which of the following will be accomplished by efficient allocations of the factors of production?
Pavlova-9 [17]

Answer:

fulfilling many needs and wants of society

Explanation:

In producing a product during production, it is always important to ask if society needs the product that we are developing. The key to every successful product is to answer whether the consumer meets the needs.

I dont know if this correect....you don't have any options(^^):^>.<

3 0
2 years ago
Assume you are to receive a 30-year annuity with annual payments of $2,000. The first payment will be received at the end of Yea
max2010maxim [7]

Answer:

Total FV= $678.615.02

Explanation:

<u>First, we need to calculate the value of the annuity at the end of the last payment:</u>

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {2,000*[(1.06^30) - 1]} / 0.06

FV= $158,116.37

<u>Now, the total future value after 25 years:</u>

FV= PV*(1 + i)^n

FV= 158,116.37*(1.06^25)

FV= $678.615.02

6 0
2 years ago
The relationship between financial leverage and profitability Pelican Paper, Inc., and Timberland Forest, Inc., are rivals in th
OLEGan [10]

Answer:

Pelican Paper, Inc., and Timberland Forest, Inc.

Financial leverage and profitability Ratio Analysis

A. Computation of debt and coverage ratios:

1. debt ratio  = Total debt to Total assets x 100

Pelican = $1,000,000/$10,000,000 x 100

= 10%

Timberland =v$5,000,000/$10,000,000 x 100

= 50%

2. times interest earned ratio = EBIT/Interests

Pelican = $6,250,000/$100,000

= 62.5 times

Timberland = $6,250,000/$500,000

= 12.5 times

A discussion of their financial risk and ability to cover the costs:

Pelican Paper's financial leverage is 10% compared to Timberland's 50%, showing that debt creditors finance and lay claim to half of the company's assets.  This is very high and not attractive to potential investors and creditors.  Timberland has already hampered its ability to borrow more as it is highly leveraged.  Whereas Pelican Paper can meet its debt obligations and pay its interest expenses 62.5 times from current earnings, these pale in comparison with Timberland's 12.5 times, further jeopardizing its opportunities for more debt financing.

B. Calculation of the profitability ratios:

1. Operating profit margin  = EBIT/Sales x 100

Pelican Paper = $6,250,000/$25,000,000 x 100 = 25%

Timberland = $6,250,000/$25,000,000 x 100 = 25%

2. Net profit margin  = (EBIT less Interest)/Sales x 100

Pelican Paper = ($6,250,000 - $100,000)/$25,000,000 x 100

= $6,150,000/$25,000,000 x 100 = 24.6%

Timberland = ($6,250,000 - $500,000)/$25,000,000 x 100

= $5,750,000/$25,000,000 x 100 = 23%

3. Return on total assets  = EBIT/Total Assets x 100

Pelican Paper = $6,250,000/$10,000,000 x 100

= 62.5%

Timberland = $6,250,000/$10,000,000 x 100

= 62.5%

4. Return on common equity = Earnings available to Common Stockholders/Equity x 100

Pelican = $3,690,000/$9,000,000 x 100

= 41%

Timberland = $3,450,000/$5,000,000 x 100

= 69%

A discussion of their profitability relative to one another:

The two companies make the same level of operating profit margin at 25%, but Pelican's net profit margin of 24.6% is better than Timberland's 23%.  They show that Pelican's management has better ability to control expenses than Timberland's.

The returns on assets are similar for both companies, but Timberland performed better than Pelican Paper in terms of the return on equity.  This shows that Timberland with ROE of 69% is making larger returns for its common stockholders than Pelican because it is leveraging debts, whose interests are tax-deductible, and also using less equity in generating the returns.

C. The larger debt of Timberland has made it more profitable than Pelican Paper because the debt interests are deductible from EBIT before tax expense is computed and it reduces the tax burden for the company, thus making it to pay less tax and saving more profits for distribution to its stockholders.

However, this higher return to the investors in Timberland also comes with higher risks, as the investors are exposed to debt risks, higher pressure to satisfy debt creditors, heightened interference and oversight from creditors since they own half of the assets of the company, and an increased threat of business takeover in case of debt default.

Explanation:

a) Data:

Items                        Pelican Paper, INC    Timberland Forest, INC

Total assets              $10,000,000               $10,000,000

Total equity                  9,000,000                   5,000,000

Total Debt                     1,000,000                   5,000,000

Annual Interest                100,000                      500,000

Total Sales                 25,000,000                25,000,000

EBIT                              6,250,000                  6,250,000

Earnings available for  common

stockholders               3,690,000                   3,450,000

b) Ratio computation and analysis help companies to compare their performances and positions with competitors.  They can spot risks facing a company and even point out ways to address such business risks.

8 0
3 years ago
In preparing its August 31, 2010 bank reconciliation, Adel Corp. has available the following information:
saul85 [17]

Answer: C $22,100

Explanation: Bank Reconciliation

8/31/10 Bank Balance $21,650

Add:

8/31/10 Deposit in transit. $3,900

Less:

8/31/10 Outstanding Chq. $2,750

8/30/10 Rtd Chq. $600

8/31/10 Bank Charges. $100

Cash book balance $22,100

5 0
3 years ago
TB Problem Qu. 15-131 (Algo) Clayborn Corporation's net cash provided by operating activities... Clayborn Corporation's net cash
melomori [17]

Answer:

See below

Explanation:

Clayborn Corporation

Determination of free cash flow

Free cash flow = Net cash provided by operating activities - Capital expenditure - Cash dividends paid

Free cash flow = $118,800 - $96,300 - $30,200

Free cash flow = -$7,700

Therefore, Clayborn corporation's free cash flow is -$7,700

8 0
3 years ago
Other questions:
  • Under what circumstance might you receive a tax fund from the IRS
    13·1 answer
  • Quality that measures usefulness vs. price paid is which definition of quality? A. Conformance to specifications B. Fitness for
    14·1 answer
  • For lunch, Maria eats only salads or vegetarian burgers. Her weekly food budget is $36. Each salad costs $6 and each vegetarian
    12·1 answer
  • Which situation is a drawback of e-commerce?
    9·2 answers
  • Scott is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products. For his wife's birthday, he
    7·1 answer
  • Earleton Manufacturing Company has $2 billion in sales and $500,000,000 in fixed assets. Currently, the company's fixed assets a
    12·1 answer
  • United Trans Service jet costs $ 55.000.000 and is expected to fly 500.000.000 miles during its 8​-year life. Residual value is
    6·1 answer
  • A building with an appraisal value of $126,112 is made available at an offer price of $155,827. The purchaser acquires the prope
    9·1 answer
  • Rekha, a server in the coffee shop of a large hotel, noticed a customer shivering and rubbing her arms. Rekha noticed the woman
    6·1 answer
  • Why is it important to find something you’re passionate about when finding<br> a career?
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!