Under what condition would it be rational for the trading areas of two branch locations to completely overlap?

The following data has been provided for a compan most recent year of operations:

Sidana [21]

Answer:

It is $9,450 (A)

Explanation:

Return on Investment = 40% * $ 45,000

=$18,000

Minimum Required Return = 19% *$ 45,000

= $8,550

Hence, Residual Income = $18,000-$8,550

=$9,450

Minimum required return represents the amount of returns that must be generated on investment to satisfy the expectations of providers of funds.

Residual income is what is left after dividends and interest have been paid to the various investors which can be retained for future investment.

4 0

3 years ago

Coney Island Entertainment issues $1,300,000 of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and Dec

Ganezh [65]

Answer:

1) The market interest rate is 5% and the bonds issue at face amount.

Dr Cash 1,300,000

Cr Bonds payable 1,300,000

Year Interest payment Book value of bonds

June/1 $32,500 $1,300,000

Dec/1 $32,500 $1,300,000

June/2 $32,500 $1,300,000

2) The market interest rate is 6% and the bonds issue at a discount.

price of bonds:

PV of face value = $1,300,000 / (1 + 3%)³⁰ = $535,582.79

PV of coupons = $32,500 x 19.600 (PV annuity factor, 3%, 30 periods) = $637,000

market price = $1,172,582.79

Dr Cash 1,172,582.79

Dr Discount on bonds payable 127,417.21

Cr Bonds payable 1,300,000

discount amortization per coupon payment = $127,417.21 / 30 = $4,247.24

Year Cash paid Interest Amortization Bond Book

expense bond discount discount value

June/1 $32,500 $36,747.24 $4,247.24 $123,169.97 $1,176,830.03

Dec/1 $32,500 $36,747.24 $4,247.24 $118,922.73 $1,181,077.27

June/2 $32,500 $36,747.24 $4,247.24 $114,675.49 $1,185,324.51

3. The market interest rate is 4% and the bonds issue at a premium.

price of bonds:

PV of face value = $1,300,000 / (1 + 2%)³⁰ = $717,692.16

PV of coupons = $32,500 x 22.396 (PV annuity factor, 2%, 30 periods) = $727,870

market price = $1,445,562.16

Dr Cash 1,445,562.16

Cr Bonds payable 1,300,000

Cr Premium on bonds payable 145,562.16

discount amortization per coupon payment = $145,562.16 / 30 = $4,852.07

Year Cash paid Interest Amortization Bond Book

expense bond discount premium value

June/1 $32,500 $27,647.93 $4,852.07 $140,710.09 $1,440,710.09

Dec/1 $32,500 $27,647.93 $4,852.07 $135,858.02 $1,435,858.02

June/2 $32,500 $27,647.93 $4,852.07 $131,005.95 $1,431,005.95

6 0

3 years ago

At December 31, 2020, Ivanhoe Corporation had a deferred tax liability of $26,800. At December 31, 2021, the deferred tax liabil

Tju [1.3M]

Answer:

$65,300

Explanation:

Ivanhoe's income tax expense = deferred tax liability 2021 - deferred tax liability 2020 + current tax expense 2020 = $42,800 - $26,800 + $49,300 = $65,300

A deferred tax liability occurs when a corporation's income statement shows a certain amount following US GAAP, but the tax rules used by the IRS determine a different amount.

5 0

3 years ago

Equinox Products Inc. Income Statement For the Year Ended December 31, 20Y8

Umnica [9.8K]

Answer and Explanation:

The preparation of the income statement is presented below:

Equinox Products Inc.

Income Statement

For the Year Ended December 31, 20Y8

Sales $5,313,000

Less: Cost of goods sold -3,700,000

Gross profit $1,613,000

Less:

Operating expenses:

Selling expenses:

Sales salaries expense $385,000

Sales commissions $185,000

Advertising expense $150,000

Depreciation expense-

store buildings and equipment $100,000

Delivery expense $30,000

Store supplies expense $21,000

Miscellaneous selling expense $14,000

Total -$885,000

Less:

Administrative expenses:

Office salaries expense $170,000

Office rent expense $50,000

Depreciation expense - office buildings and equipment $30,000

Office supplies expense $10,000

Miscellaneous administrative expense $7,500

Total $267,500

Total operating expenses $-1,152,500

Operating income $460,500

Other revenue and expense:

Interest revenue $30,000

Less: Interest expense -$21,000

Income before income tax $469,500

Less: Income tax -$140,500

Net income $329,000

We simply deduct the all expenses and add all revenues so that the net income could come

5 0

3 years ago

The following information is available for Ivanhoe Company for 2017. Cash used to purchase treasury stock $ 167,388 Cash dividen

Kazeer [188]

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.

6 0

3 years ago