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3 years ago

Purchasing marketable securities with cash will have no effect on a company's acid-test ratio.

Business

1 answer:

slava [35]3 years ago

3 0

Answer:

given statement is true

Explanation:

given statement of purchase marketable security with the cash have not effect on the organization acid test ratio is true because

the cash and marketable security both will be considered for the calculation of acid test ratio and there is not effect

because change by the cash to the marketable securities

so as that given statement is true

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San Lorenzo General Store uses a periodic inventory system and the retail inventory method to estimate ending inventory and cost

muminat

Answer:

The average cost of ending inventory is $37,259 and cost of goods sold for october is 24,166

Explanation:

In order to calculate the average cost of ending inventory, we would have to calculate first the cost to retail ratio with the following formula:

cost to retail ratio=Total cost/Total retail

According to the given data, the total cost=$61,425, and the total retail= $87,100, Hence:

cost to retail ratio=$61,425/$87,100= 70.5%

Also, we have to calculate the ending inventory at retail=$87,100+$1,700-$1,050-$37,00=$52,850

Therefore, the average cost of ending inventory= $52,850×70.5%

=$37,259

To calculate the cost of goods sold for october we would have to use the following formula:

cost of goods sold=Beginning inventory+purchases-ending inventory

=$40,000+$21,425-$37,259

=$24,166

6 0

3 years ago

Lang Co. issued bonds with detachable common stock warrants. Only the warrants had a known market value. The sum of the fair val

12345 [234]

Answer: discount on bonds payable

Explanation:

Based on the information given, since the sum of the fair value of the warrants and the face amount of the bonds exceeds the cash proceeds, then the excess will be reported as the discount on bonds payable.

The discount on the bonds payable occurs in a scenario whereby the bonds are issued for a lesser amount than their face or their maturity amount.

The reason for this is when the bonds have a stated interest rate that is smaller than market interest rate for similar bonds.

6 0

3 years ago

M&M Proposition I with tax implies that:

Savatey [412]

Answer:

D. A firm's weighted average cost of capital decreases as the firm's debt-equity ratio increases.

6 0

3 years ago

Mest Company has 9 employees. FICA Social Security taxes are 6.2% of the first $118,500 paid to each employee, and FICA Medicare

bulgar [2K]

Answer:

Following are the solution to this question:

Explanation:

Please find the complete question and its solution in the attached file.

7 0

3 years ago

Sonny's BBQ Company recently issued $85 par value preferred stock that pays an annual dividend of $9. Analysts estimate that the

Bond [772]

Answer:

Intrinsic value=$73.77

Explanation:

The Dividend Valuation Model(DVM) is a technique used to value the worth of an asset.

According to this model, the value of an asset is the sum of the present values of the future cash flows would that arise from the asset discounted at the required rate of return.

Price = D/Kp

D- Dividend payable

Kp- cost of preferred stock

So will need to work out the cost of equity using CAPM

The capital asset pricing model (CAPM): relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c

This model is considered superior to DVM. Hence, we will use the CAPM

Using the CAPM , the expected return on a asset is given as follows:

E(r)= Rf +β(Rm-Rf)

E(r) =? , Rf- 2.4%, Rm- 12.1% β- 1.01

E(r) = 2.4% + 1.23×(12.1- 2.4)% = 12.20 %

Cost of preferred stock= 12.20 %

Using the dividend valuation model

Intrinsic value = 9/0.1220=73.77

Intrinsic value=$73.77

5 0

3 years ago