Wildhorse Co. entered into these transactions during May 2017, its first month of operations. 1. Stockholders invested $31,500 i
n the business in exchange for common stock of the company 2. Purchased computers for office use for $33,800 from Ladd on account 3. Paid $4,100 cash for May rent on storage space 4. Performed computer services worth $18,600 on account. S. Performed computer services for Wharton Construction Company for $6,400 cash. 6. Paid Western States Power Co. $8,000 cash for energy usage in May 7. Paid Ladd for the computers purchased in (2) 8. Incurred advertising expense for May of $3,100 on account 9. Received $11,000 cash from customers for contracts billed in (4) Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders' Equity in the far right column. (Ifa transaction causes a decrease in Assets, Liabilities or Stockholders' Fquity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Fquity item that was reduced. See Illustration 3-3 for example.
1 answer:
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Answer:
Ans. The expected rate of return on the Inferior Goods Co. stock is 5.90%
Explanation:
Hi, you just have to multiply the expected earnings by the probability of occurance of a certain event and then add up all the products. Here is the information all organized to be processed.
Item Prob Earn
Booming 20% -6%
Normal 55% 7%
Recession 25% 13%
Ok, now let´s calculate the expected rate of return.
So the expected rate of return of the stock is 5.90%
Best of luck.