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mafiozo [28]
3 years ago
14

On September 1, 2021, Southwest Airlines borrows $40.6 million, of which $9.2 million is due next year. Show how Southwest Airli

nes would record the $40.6 million debt on its December 31, 2021, balance sheet
Business
1 answer:
BigorU [14]3 years ago
8 0

Answer:

see below

Explanation:

Liabilities are recorded on the left-hand side of the balance sheet. They are classified as current and long term liabilities. Current liabilities are due within one year, and long term liabilities are payable in future financial periods

Liabilities

Current liabilities

Accounts payable

Short term loans    <u>$31.4</u>

Total current liabilities  $31.4

Long liabilities

Long term debts   <u>$9.2</u>

Total long liabilities   $9.2

Total liabilities     $40.6

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Suppose Deborah gets a sales bonus at her place of work that gives her an extra $600 of disposable income. She chooses to spend
Mashutka [201]

Answer:

Option (d) is correct.

Explanation:

Suppose Deborah gets a sales bonus at her place of work,

Disposable Income, YD = $ 600

Consumption, C = $480

Savings , S = $ 120

Marginal propensity to consumer, MPC:

= Consumption ÷ Disposable Income

= 480 ÷ 600

= 0.8

Therefore, Deborah marginal propensity to consume (MPC) is 0.80

Option (d)

7 0
3 years ago
Akua’s Paint Supply charges $15 per gallon of paint. Akua started with three employees, who together produced 40 gallons of pain
timofeeve [1]

Answer:

$70

Explanation:

Total revenue from three employees:

= No. of gallons of paint produced × Selling price per gallon

= 40 × $15

= $600

Total revenue from four employees:

= No. of gallons of paint produced × Selling price per gallon

= 48 × $15

= $720

Total revenue created by 4th worker:

= Total revenue from four employees - Total revenue from three employees

= $720 - $600

= $120

Cost of hiring 4th worker = $50 per day

Therefore,

Marginal profit for the fourth employee:

= Total revenue created by 4th worker - Cost of hiring 4th worker

= $120 - $50

= $70

4 0
3 years ago
If the appropriate discount rate for this bond is 6%, what would you be willing to pay for ABC’s bond?
Juliette [100K]

Question:

Suppose there is a bond in ABC Company that that pays coupons of 8.5%, and suppose that these coupons are paid annually.

Suppose the face value of the ABC bond is $1000 and the maturity is 11 years.

If the appropriate discount rate for this bond is 6%, what would you be willing to pay for ABC’s bond?

Answer:

Price of bond = $ 1197.17

Explanation:

<em>The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV)</em>.  

Value of Bond = PV of interest + PV of RV  

The price of the bond can be worked out as follows:  

S<em>tep 1  </em>

<em>PV of interest payments </em>

Annual Interest payment =  8.5%× 1000 = 85

Annual yield = 6%

Total period to maturity (in years) = 11  

PV of interest =  

85 × (1- (1+0.06)^(-11)/)/0.06 = 670.38

<em />

<em>Step 2  </em>

<em>PV of Redemption Value </em>

= 1,000 × (1.06)^(-11) = 526.78

<em>Step 3:</em>

<em>Price of bond  </em>

670.38 + 526.78= 1,197.17

Price of bond = $ 1197.17

6 0
2 years ago
Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided
il63 [147K]

Answer:

What journal entry did Pincus record to write off uncollectible accounts during 2021

In 2021, the company wrote off uncollectible accounts of $10,800.  

Dr Allowance for Uncollectible Accounts $ 10,800

Cr Accounts receivable $ 10,800

and to recognize bad debt expense for 2021?

Pincus estimates that 5% of the accounts receivable balance at 12/31/2021 will prove uncollectible  

Dr Bad Debt Expense $ 1,520

Cr Allowance for Uncollectible Accounts $ 1,520

Explanation:

Pincus provided a total of $268,000 of services on account  

Dr Accounts receivable $ 268,000  

Cr Sales $ 268,000  

In 2021, the company wrote off uncollectible accounts of $10,800.    

Dr Allowance for Uncollectible Accounts $ 10,800  

Cr Accounts receivable $ 10,800  

If the company use the allowance method to account for bad debts, at the moment of the write off the company debits the Allowance for Uncollectible Accounts that was previously estimated with a credit to account receivable, to reflect the new accounts receivable balance.

By the end of 2021, cash collections on accounts receivable totaled $226,800  

Dr CASH $ 226,800  

Cr Accounts receivable $ 226,800  

BALANCE  

Dr Accounts receivable $ 30,400  

Pincus estimates that 5% of the accounts receivable balance at 12/31/2021 will prove uncollectible  

Dr Bad Debt Expense $ 1,520  

Cr Allowance for Uncollectible Accounts $ 1,520  

5 0
3 years ago
Based on the corporate valuation model, Morgan Inc.’s total corporate value is $325 million. The balance sheet shows $90 million
Vsevolod [243]

Answer:

$25.5

Explanation:

Morgan Inc.’s total corporate value = $325 million

notes payable = $90 million

long-term debt = $30 million

preferred stock = $40 million

common equity = $100 million

shares of stock outstanding = $100 million

Market Value of company

= Market Value of debt + Market Value of preferred + Market Value of equity

$325 million = $30 million + $40 million + Market Value of equity

or

Market Value of equity = $325 million - $30 million - $40 million

= $255 million

Share price = \frac{\textup{Market Value of equity}}{\textup{shares of stock outstanding}}

= \frac{\$255 million}{10 billion}

= $25.5

4 0
2 years ago
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