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3 years ago

Which company took its name from the fact that it specialized in selling insurance to federal employees?

Business

2 answers:

Kobotan [32]3 years ago

6 0

Answer:

GEICO

Explanation:

In 1936, Leo and Lillian Goodwin started an insurance company to serve federal government employees.

Genrish500 [490]3 years ago

5 0

Geico is the company

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Which of the following scenarios demonstrates the leverage effect on net operating income due to the existence of fixed costs?

morpeh [17]

Answer:

C) A 25% increase in sales resulting in a 30% increase in net operating income.

7 0

3 years ago

"New York City is issuing $500,000,000 of general obligation bonds paying interest on January 1st and July 1st of each year unti

poizon [28]

Answer:

8 months for the first interest
6 months for the second

Explanation:

The interest is to be paid semi-annually which means that it accrues for 6 months. However, the bond was issued on May 1, 2020 which is 8 months before the first interest payment on January 1, 2021 so the January payment will have to cover for those months as interest starts to build immediately the bond is purchased.

The second payment on July 1, 2021 will cover the period of 6 months between January 1 and July 1, 2021.

8 0

3 years ago

Madrid Company plans to issue 9% bonds with a par value of $5,300,000. The company sells $4,770,000 of the bonds at par on Janua

ASHA 777 [7]

Answer and Explanation:

The journal entry are as follows

1. Interest expense $214,650

To Cash $214,650

(Being the first interest payment is recorded)

The computation is shown below

= $4,770,000 × 9% × 6 months ÷ 12 months

= $214,650

For recording this we debited the interest expense as it increased the expenses while on the other hand the cash is paid which reduced the cash balance so it is credited

2. Cash $530,000

To Bond payable $530,000

(Being the cash sale of bond is recorded)

For recording this we debited the cash as cash is received that increased the cash balance and at the same time we credited the bond payable

5 0

3 years ago

14-2B (Issuance and Retirement of Bonds) StarCenter Co. Is building a new music arena at a cost of $5,600,000. It received a dow

mezya [45]

Answer:

there are no requirements, but I assume that they ask about issuance costs and their amortization:

market price of the bonds:

PV of face value = $5,000,000 / (1 + 10%)²⁰ = $743,218

PV of coupon payments = $400,000 x 8.5136 (PV annuity factor, 10%, 20 periods) = $3,405,440

market price = $4,148,658

Journal entry to record issuance and bond issue costs

January 1, 2013

Dr Cash 4,088,658

Dr Discount on bonds payable 851,342

Dr Bond issue costs 60,000

Cr Bonds payable 5,000,000

amortization of bond discount and issue costs = ($4,088,658 x 10%) - $400,000 = $8,865.80 ≈ $8,866

allocation to bond issue costs = ($60,000 / $911,342) x $8,866 = $583.71 ≈ $584

allocation to bond discount = $8,866 - $584 = $8,282

Journal entry to record first coupon payment

January 1, 2014

Dr Interest expense 408,866

Cr Cash 400,000

Cr Discount on bonds payable 8,282

Cr Bond issue costs 584

4 0

3 years ago

When Tesla first launched their electric vehicles in the United States, they deviated from the norm in the automobile industry a

Damm [24]

Answer:

The choice of Tesla is known as Forward Integration.

According to the principles of Transaction Cost Economics, this is a good decision.

Explanation:

Companies sometimes take over the operations/businesses that deal with the distribution and supply of their products and or services. This move is known as forward integration.

Traditionally, companies focus on production then bring in middle-men such as Franchise owners, wholesales, dealers, and retailers to distribute their merhandise to the end user. Whilst there are associated benefits with this model, it's been found that the interests of the middle men also generate considerable costs.

In order to competitive advantage, companies are modifying their business models such that end users can deal directly with them thus reducing the final price of their goods and or services making them more accessible and easier to purchase for the consumers.

Transaction Cost Economics refers to the various ways in which an organisation can be set up in order to manage or control the costs associated with its transactions. The goal of transaction cost economics is to reduce overall costs in order to optimize profits, stay competitive and maintain growth by managing and modifying organisational structures and business models.

The most optimized organisational structure/business model is that which is able to attain the highest efficiency possible by operating at the lowest cost possible.

Good or Bad Decision

The market for motor vehicles is an oligopoly.

Therefore, price is an important factor to consider. As a more recent entrant into that space, this is very crucial for Tesla.

Tesla is not only entering into a market dominated by giants, but is also tryin to modify the way people know to drive cars (at least in most parts of the world). Therefore, it is a great move that it is going with a Price Penetration Strategy. Thus by cutting off the Franchise-Oriented dealerships and selling directly, Tesla is able to retain control over the price of it's vehicles.

The whole essence of reducing it's costs is so that it is able to make its products available to the consumers as an alternative to fossile fuel powered vehicles at the lowest cost possible. Despite it's best efforts, there are still petrol powered cars that are at least $10,000 cheaper that what Tesla is offering.

Besides price, one major factor that influences the choice to go with hybrid or 100% of electric cars is that they are clean and very environmental friendly.

Cheers!

5 0

3 years ago