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Ugo [173]
3 years ago
7

June Smith, a process engineer, has sold her 15-year patent for a new etching process to Silica Labs, Inc. In return, she has re

ceived $500,000 in cash and, based on its value on the sale date, $200,000 in common stock in Silica Labs. The stock is forecasted to double in market value over the next two months. Assuming that Silica Labs holds some long-term debt, which of the following describes the effect of the transaction on Silica Labs?
A. Current ratio will decrease and total debt to equity ratio will increase.
B. Current ratio will increase and total debt to equity ratio will decrease.
C. Current ratio will increase and total debt to equity ratio will increase.
D. Current ratio will decrease and total debt to equity ratio will decrease.
Business
1 answer:
Oduvanchick [21]3 years ago
8 0

Answer: D. Current ratio will decrease and total debt to equity ratio will decrease.

Explanation:

The Current ratio is calculated by dividing the firm's current assets by it current liabilities. This transaction will have the effect of reducing the cash account of Silica Labs by $500,000 which means the numerator will be less in the equation which would lead to a lesser Current ratio.

The total debt to equity ratio is calculated by dividing the firms's total debt by its equity. Silica offered equity to June thereby increasing their equity account. This will mean that the denominator has increased in the equation which will lead to a lesser total debt to equity ratio.

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Sunland Construction Company uses the percentage-of-completion method of accounting. In 2021, Sunland began work on a contract i
Westkost [7]

Answer:

$3900000

Explanation:

The gross profit is the difference between the revenue earned during the year and the cost of sales. The percentage of completion method is one in which the revenue is recognized based on the cost incurred to date on the project.

Revenue to be recognized in 2021

= $15600000/($15600000 + $9600000) * $31500000

= $19500000

Though the billings for the year is lower, the difference may be recognized as unbilled receivable.

As such, the gross profit for the year

= $19500000 - $15600000

= $3900000

5 0
3 years ago
Jasper industrial has no debt outstanding and a total market value of $216,000. earnings before interest and taxes, ebit, are pr
hodyreva [135]

What is the percentage change in EPS when a normal economy slips into recession -15.0 percent

Under Normal Economic Conditions :

EPS = EBIT/shares outstanding = $216000/8600 = $25.11

Under Expansionary Times:

EPS = [EBIT x 1.60]/shares outstanding = $216,000(1.3)/8600

$280800/8600 = $32.65

Under a Recession:

EPS = [EBIT x (1-.12)]/shares outstanding =$216,000(.15)/8600

$324000/8600 = $37.67

% Δ EPS going from Normal  Expansion:

($32.65 - $37.67)/$37.67 = .15 or 15%

% Δ EPS going from Normal  Recession:

($32.65 - $37.67)/$37.67 = -.15 or -15%

About EBIT :

Earnings before interest and taxes (EBIT) is an indicator of a company's profitability. EBIT can be calculated as revenue minus expenses excluding tax and interest. EBIT is also referred to as operating earnings, operating profit, and profit before interest and taxes.

Learn more about EBIT :

brainly.com/question/14565042

#SPJ4

8 0
1 year ago
All sales are made on credit. Based on past experience, the company estimates that 0.5% of net credit sales are uncollectible. W
professor190 [17]

Answer:

$4,400

Explanation:

The computation of the amount which is debited to a bad debt expense account is shown below:

=  Net Credit sales × estimated percentage given

= $880,000 × 0.5%

= $4,400

The journal entry is shown below;

Bad debt expense A/c Dr  $4,400

  To Allowance for doubtful debts  $4,400

(Being bad debt expense is recorded)

4 0
3 years ago
The Hatfields and the McCoys both earn $50,000 per year in real terms in the labor market, and both families are able to earn a
rjkz [21]

Answer:

Consider the following calculations

Explanation:

1. Income in 2000 = $50,000

In 2000

Hatfields save 8% = $50,000*8% =$4,000

McCoys save 10% = $50,000*10% = $5,000

Hatfields consume {[($50,000- $4,000) – ($50,000 - $5,000)] = 1000} i.e. $1000 more than the McCoys

In 2001

25% interest on 4000 = 4000(1+.25) = $5,000

25% interest on 5000 = 5000(1+.25) =$6,250

Total earning for Hatfields = $55,000

Total earning for McCoys =$ 56,250

Hatfields save 8% = $55,000*8% =$4,400

McCoys save 10% = $56,250*10% = $5,625

Hatfields consume { [($55,000- $4,400) – ($56,250- $5,625)] = -25 } i.e. $25 less than the McCoys

1. Income in 2000 = $50,000

In 2010

Hatfields save 8% = $50,000*8% =$4,000

McCoys save 10% = $50,000*10% = $5,000

Hatfields consume {[($50,000- $4,000) – ($50,000 - $5,000)] = 1000} i.e. $1000 more than the McCoys

In 2011

5% interest on 4000 = 4000(1+.05) = $4,200

5% interest on 5000 = 5000(1+.05) =$5,250

Total earning for Hatfields = $54,200

Total earning for McCoys =$ 55,250

Hatfields save 8% = $54,200*8% =$4,336

McCoys save 10% = $55,250*10% = $5,525

Hatfields consume { [($54,200- $4,336) – ($55,250- $5,525)] = 139 } i.e. $139 more than the McCoys

8 0
2 years ago
Accelerated Finance is deciding whether to purchase new accounting software. The cost of the software package is $ 72 comma 000​
SSSSS [86.1K]

Answer:

18,000 per year

Explanation:

investment 72,000

payback in four year thus: the project pays itself in four year.

Also as the expected annual cash savings are equal between years

we con conclude:

\frac{investment}{regular \: cash \: flow} = payback

72,000/ cash flow = 4

cash flow = 72,000 / 4 = 18,000

we are considering the cash savings adn depreciatin is not a monetary concept. We must ignore depreciation.

8 0
3 years ago
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