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Marizza181 [45]
3 years ago
10

A corporation is considering expanding operations to meet growing demand. With the capital expansion, the current accounts are e

xpected to change. Management expects cash to increase by $20,000, accounts receivable by $40,000, and inventories by $60,000. At the same time accounts payable will increase by $50,000, accruals by $10,000, and long-term debt by $100,000. The change in net working capital is __________.
A) an increase of $120,000.
B) a decrease of $40,000.
C) a decrease of $120,000.
D) an increase of $60,000.
Business
1 answer:
andre [41]3 years ago
6 0

Answer:

B) a decrease of $40,000

Explanation:

As we Know Working capital is the the net or current assets and current liabilities.

Increase in Current Assets

Cash                              $20,000

Accounts receivable    $40,000

Inventories                   <u>$60,000</u>

Total Increase in CA   $120,000

Increase in Current Liabilities

Accounts payable       $50,000

Accruals                       $10,000

Long-term debt           <u>$100,000</u>

Total Increase in CA   $160,000

Increase in Working Capital =  Increase in Current Assets - Increase in Current Liabilities

Change in Working Capital = $120,000 - $160,000 = -$40,000

As current Liabilities increased more than the current assets, so the working capital will decrease by $40,000

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You’ve collected the following information from your favorite financial website.
Nataliya [291]

Answer:

-9.92%

Explanation:

P₀ = Div₁ / (Re - g)

  • Div₁ = next year's expected dividend = $1.12 x (1 - 11.5%) = $0.9912
  • Re = cost of equity = ?
  • P₀ = current stock price = $62.91
  • g = dividend's growth rate = -11.5%

Re =  (Div₁ / P₀) + g

Re = ($0.9912 / $62.91) - 11.5%

Re = 1.58% - 11.5% = -9.92%

Since the cost of equity or required rate of return cannot be negative, I suppose that investors are not worried about Abbott distributing dividends, instead, they prefer that the company reinvests earnings in new projects.

3 0
3 years ago
What is the bullwhip effect and how does it relate to lack of coordination in a supply chain?
rewona [7]

Answer:

The bullwhip effect happens when retailers or other members of the supply chain overestimate a sudden increase in demand, and this causes a chain reaction in all the other participants of the supply chain that start requesting higher quantities of goods or materials for production. E.g. the fidget spinner was a very popular fad and its producers probably didn't anticipate how large the demand would be. Once the product became extremely popular, everyone wanted to sell fidget spinners. This caused an increase in the order quantities of all the supply chain. Once the fad faded out, all this momentum stopped and many stores, distributors, wholesalers, and even factories were left with huge unsold stocks of fidget spinners.

When the supply chain is well coordinated, there is little chance for some retailers or distributors to over react and want more product just in case. If your supply is guaranteed, then it would take some extraordinary increase in demand to make you want to increase your purchase orders. But if your supply chain is not well coordinated, you might fear that you will lose a lot of sales and other competitors will make them. Then you get anxious and start ordering large quantities.

6 0
3 years ago
Junkman Autos uses a separate checking account to pay their employees. The gross pay for the period was $1,000. However, after d
STALIN [3.7K]

Answer:

journal entry are given below

Explanation:

given data

gross pay for the period = $1,000

net pay for the period =  $820

to find out

journal entry to record the issuance of payroll checks

solution

journal entry are as

Account Name                       Debit                      Credit

Labor Expenses                        $1000

payroll taxes Payable                                                  $820

Net Payroll Payable                                                     $180

( $1000 - $820 )

6 0
3 years ago
[The following information applies to the questions displayed below.]
Sunny_sXe [5.5K]

Answer:

Since the requirements are missing, I believe that you need the adjusting entries:

1. Depreciation on the equipment for the month of January is calculated using the straight-line method.

Dr Depreciation expense 375 ($18,000/4 x 1/12)

    Cr Accumulated depreciation, equipment 375

2. At the end of January, $3,500 of accounts receivable are past due, and the company estimates that 50% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 2% will not be collected. The note receivable of $18,000 is considered fully collectible and therefore is not included in the estimate of uncollectible accounts.

Dr Bad debt expense 6,250

    Cr Allowance for doubtful accounts 6,250

3. Accrued interest revenue on notes receivable for January.

Dr Interest receivable 75 ($18,000 x 5% x 1/12)

    Cr Interest revenue 75

4. Unpaid salaries at the end of January are $33,100.

Dr Salaries expense 33,100

    Cr Salaries payable 33,100

5. Accrued income taxes at the end of January are $9,500

Dr Income tax expense 9,500

    Cr Income tax payable 9,500

5 0
3 years ago
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