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3 years ago

Tiger Company completed the following transactions.

Business

1 answer:

lbvjy [14]3 years ago

7 0

Answer:

Tiger Company

1. Accounts, Amounts, and Effects on the Accounting Equation:

Date Assets = Liabilities + Stockholders' Equity

Jan. 3 Inventory $31,000 increased = Accounts Payable $31,000 increased + Stockholders' Equity

Jan. 27 Cash $31,000 decreased = Accounts Payable $31,000 decreased + Stockholders' Equity.

Apr. 1 Cash $87,000 increased = Notes Payable $87,000 increased + Stockholders' Equity

June 13 Inventory $9,400 increased = Accounts Payable $9,400 increased + Stockholders' Equity

July 25 Cash $9,400 decreased = Accounts Payable $9,400 decreased + Stockholders' Equity.

Aug. 1 Cash $9,400 increased = Liability + Rent Revenue (Retained Earnings) $9,400 increased.

Dec. 31 Assets = Wages Payable $19,000 increased + Wages Expense (Retained Earnings) $19,000 decreased

Dec. 31 Assets = Interest Payable $1,305 increased + Interest Expense (Retained Earnings) $3,915 decreased

Dec. 31 Assets = Unearned Rent Revenue $3,525 increased + Rent Revenue (Retained Earnings) $3,525 decreased.

2. Indication of whether the debt-to-assets ratio is increased or decreased:

Date Effect Numerator Denominator

Jan. 3 Increased, Debt is increased, Assets are increased

Jan. 27 Decreased, Debt is decreased, and Assets are decreased

Apr. 1 Increased, Debt is increased, Assets are increased

June 13 Increased, Debt is increased, Assets are increased

July 25 Decreased, Debt is decreased, and Assets are decreased

Aug. 1 Increased, Debt is increased, Assets are increased

Dec. 31 Increased, Debt is increased, Assets are not affected.

Explanation:

The accounting equation indicates the balance that exists between the basic elements of accounting. It states that Assets = Liabilities + Stockholders' Equity. For every transaction, this equation holds true, because by the double entry system of bookkeeping, two or more accounts are always involved in every business transaction.

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Answer:

Annual depreciation= $10,160 a year

Explanation:

Giving the following information:

Ivanhoe Company purchased a new machine on October 1, 2017, for $77,980. The company estimated that the machine has a salvage value of $6,860. The machine is expected to be used for 72,900 working hours during its 7-year life.

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (77,980 - 6,860)/7= $10,160 a year

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2 years ago

On the last day of October, Wicker Company borrows $120,000 on a bank note due in 90 days (3 months) at %11 percent. Interest is

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Answer:

interest expense 3,000 debit

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Explanation:

We will recognize the accrued interest for the period Nov 1st to Dec 31th

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3 years ago

R.S. Green has 250,000 shares of common stock outstanding at a market price of $28 a share. Next year’s annual dividend is expec

zhannawk [14.2K]

Answer:

WACC 6.18%

Explanation:

to get the cost of capital we solve using the gordon model:

$\frac{divends}{return-growth} = Intrinsic \: Value$

$\frac{divends}{Price} = return-growth$

$\frac{divends}{Price} + growth = return$

$$Cost of Equity =\frac{D_1}{P)} +g$

D1 1.55

P 28

f 0.00

g 0.02

$$Cost of Equity =\frac{1.55}{28} +0.02$

Ke 0.075357143

Then for the cost of debt, we need to calculate the YTM of the bonds:

which is the rate at which the present value of the coupon payment and maturity equals the market price:

For the complexity this is done with excel or a financial calculator there is also an approximation formula

YTM with excel: 0.073516565

now that we good this we need to determinate the weigth of equity and debt:

250,00 shares x 28 dollars each = 7,000,000

1,500 bonds of $1,000 each at 98% = 7,350,000

value of the company: 7,000,000 + 7,350,000 = 14,350,000

Ew: 7,000,000 / 14,350,000 = 0.487804878

Dw: 7,350,000 / 14,350,000 =0.512195122

Now we got all values and we can determinate the WACC:

$WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})$

Ke 0.075357143

Equity weight 0.487804878

Kd 0.074

Debt Weight 0.512195122

t 0.34

$WACC = 0.075357143(0.48780487804878) + 0.074(1-0.34)(0.51219512195122)$

WACC 0.0617752 = 6.18%

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3 years ago

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3 years ago

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Answer:

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