Getler Inc.'s projected capital budget is $2,000,000, its target capital structure is 40% debt and 60% equity, and its forecaste
1 answer:
Answer:
The correct answer to the following question will be Option e (0 $ 200,000).
Explanation:
Residual dividend policy should be used for businesses that fund their capital needs by wealth earned at home. Such that, companies can make investments only if all investment requirements are satisfied by something like internal resources instead of moving to something like the marketplace.
Capital Budget = $2,000,000
Capital structure will be:
Debt = 40%
Equity = 60%
Income = $1,000,000
So let us measure the balance of our Expected Debt and Equity first:
Debt =
=
Equity =
=
As we know our income will be $1,000,000.
Then maybe we can have been using our inner income of $1,000,000 to funding everyone's capital requirement of $1,2000,000.
So,
Residual amount =
=
This suggests that our organization has to sell upwards of $200,000 shares of assets and therefore will not be capable to afford to pay some distributions yet. So that option e would be the right answer.
You might be interested in
Answer:
Explanation:
Balance sheet: In the balance sheet, the assets, liabilities, and stockholder equity is recorded. In this the accounting equation is used which is shown below:
Total assets = Total liabilities + stockholder equity
The debit and credit side of the balance sheet should always be equal and balanced.
Moreover, it always is prepared on the specified date.
The land is a fixed asset and patents is an intangible asset. Thus these items would not come in the current asset section
The preparation of the current assets section of the balance sheet is presented in the spreadsheet. Kindly find the attachment below:
Answer:
Please check the attached image for the depreciation schedule
2. Units of production method
Explanation:
Book value in year 1 = Cost of asset - Depreciation expense of year 1
Book value in year in subsequent years = previous book value - that year's depreciation expense
Accumulated depreciation is sum of deprecation expense
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($18,000 - $3,000) / 4 = $3,750
Depreciation expense each year of the useful life is $3,750
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Deprecation factor = 2 x (1/useful life) = 0.5
Depreciation expense in year 1 = 0.5 x $18,000 = $9,000
Book value = $18,000 - $9,000 = $9,000
Depreciation expense in year 2 = 0.5 × $9,000 = $4,500
Book value = $9,000 - $4,500 = $4,500
Depreciation expense in year 3 = 0.5 x $4,500 = $2250
Book value = $4,500 - $2250 = $2250
Depreciation expense in year 4 = 0.5 × $2250 = $1125
Depreciation expense using the unit of production method =( Total production in the year/ total productive capacity) × (cost of asset - Salvage value)
Depreciation expense in year 1 = ($18,000 - $3,000) x (300 / 3000) = $1,500
Depreciation expense in year 2 =18,000 - $3,000) x (900 / 3000) = $4,500
Depreciation expense in year 3 = (18,000 - $3,000) x (1200 / 3000) = $6,000
Depreciation expense in year 3 = (18,000 - $3,000) x (600 / 3000) = $3,000
The Units of production method tracks wear and tear accurately because deprecation depends on the production each year.
I hope my answer helps you
