Answer:
17%
Explanation:
The actual return which stockholder receives on the average common equity is return on common stockholder's equity.
Return on Common Stockholder Equity = (Net Income - Preferred dividend) / Average common stockholders equity
Return on Common Stockholder Equity = ($298,000 - (10,000 x $100 x 6%) / ( ( $1,200,000 + $1,600,000 ) / 2 )
Return on Common Stockholder Equity = ($298,000 - $60,000) / $1,400,000
Return on Common Stockholder Equity = 0.17 = 17%
Answer:
(a) $190,000
(b) $2,185,000
(c) $3,125,900
(d) $841,090
(e) $561,260
(f) $1,200,000
Explanation:
Rainier and Yakima Company several balances are omitted. These are calculated with reverse calculation. The material inventory at beginning of may is added with the purchases made and then ending inventory is subtracted to identify cost of goods manufactured.
Answer:
Under the allowance method writing of uncollectible account will only affect Balance sheet accounts
Explanation:
Uncollectibles when write of under allowance method will create reduce account receivable one side and also results in reduction of allowance for receivable on other side created previously, thus having impact only on balance sheet:
Entry will be:
Dr: Allowance for Doubtful Debts (Balance Sheet Item)
Cr: Account Receivable (Balance Sheet Item)
Answer:
True
Explanation:
Prime's net realizable value of accounts receivable = accounts receivable balance - allowance for uncollectible accounts = $100,000 - $7,000 = $93,000
Bad debt expenses have already been debited, so they are no longer part of the allowance for uncollectible accounts.
Answer:
a) $337,615.38
b-1) $360,910.85
b-2) $415,266.92
c-1) $362,637.36
c-2) $438,461.54
Explanation:
a) To find the current value of the company, we have:
= 
= $337,615.38
b-1) If the company takes on debt equal to 30 percent of its unlevered value.
337,615.38 + (0.23 * 337,615.38 * 0.30)
= $360,910.85
b-2) When the company can borrow at 10 percent. The value of the firm if the company takes on debt equal to 100 percent of its unlevered value will be:
337,615.38 + (0.23 * 337,615.38 * 1)
= $415,266.92
c-1) The value of the firm if the company takes on debt equal to 30 percent of its levered value:
= $362,637.36
c-2) The value of the firm if the company takes on debt equal to 100 percent of its levered value:
= $438,461.54
