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irga5000 [103]
3 years ago
13

The Massoud Consulting Group reported net income of $1,376,000 for its fiscal year ended December 31, 2021. In addition, during

the year the company experienced a positive foreign currency translation adjustment of $350,000 and an unrealized loss on debt securities of $90,000. The company’s effective tax rate on all items affecting comprehensive income is 25%. Each component of other comprehensive income is displayed net of tax. Required: Prepare a separate statement of comprehensive income for 2021. (Amount to be deducted should be indicated with a minus sign.)
Business
1 answer:
White raven [17]3 years ago
8 0

Answer:

Statement of Comprehensive Income for 2021;

Net Income = $1,376,000

Other Comprehensive income (loss):-

Foreign Currency Translation Gain (Net of Tax):

= $350,000 - 25% of $350,000

= $350,000 - $87,500

= $262,500

Unrealized losses on investment securities (Net of tax):

= $90,000 - 25% of $90,000

= $90,000 - $22,500

= ($67,500)

Total other Comprehensive income:

= Foreign Currency Translation Gain (Net of Tax) + Unrealized losses on investment securities (Net of tax)

= $262,500 + ($67,500)

= $262,500 - $67,500

= $195,000

Comprehensive Income = Net Income + Total other Comprehensive income

                                        =  $1,376,000 + $195,000

                                        = $1,571,000

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Answer:

The target stock price in one year is $149.93

Explanation:

Fly Away, Inc., has

Balance sheet equity of (E) = $ 5,400,000

Also, the income statement shows net income of (NI) = $783,000.

The company paid dividends of (D) = $438,480

Shares of stock outstanding (N) = 100,000

Benchmark PE ratio = 18

Question = what is the target stock price in one year?

We need the expected EPS at the end of next year and not this year.

EPS this year, E₀ = NI / N

                            = 783,000 / 100,000

                            = $ 7.83

Retention Ratio, "R" = 1 - Dividend payout ratio = 1 - D/NI

                                 = 1 - 438,480 / 783,000

                                 = 1 - 56.00%

                                 = 44.00%

Return on equity, ROE = NI / E

                                     = 783,000 / 5,400,000

                                     = 14.50%

Growth rate in earnings, g = R x ROE

                                         = 44.00% x 14.50%

                                         = 6.38%

Hence, expected EPS next year, E₁ = E₀ x (1 + g)

= $ 7.83 x (1 + 6.38%)

= $ 8.33

Hence, target price next year, P = Benchmark PE ratio x E₁

                                                     = 18 x $8.33

                                                     = $149.93

The target stock price in one year = $149.93

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3 years ago
Define the law of demand in a perfectly competitive market
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Is a microeconomics law that states, all other factors being equal, as the price of a good or service increases, consumers demand for the good or service will decrease, and vice versa
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Assume a company's current ratio and acid-test ratio are less than 1.0 before it purchases inventory on credit. When it makes th
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Answer: b. Its quick ratio decreases.

Explanation:

The Quick ratio is calculated net of inventory to determine if a company can cover its current liabilities with its more liquid current assets. The formula is to subtract Inventory from the Current Assets and then divided that by the Currency liabilities.

The Quick ratio will be less than before because the number of current assets will not change but the amount of current liabilities will change as the goods were purchased on credit. With a larger denominator, the resultant ratio will be less than before.

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a While troubleshooting a problem, you realize the problem is caused by a complex series of issues that will affect a large numb
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The next step to undertake in the troubleshooting process is:

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8 0
2 years ago
Transactions Units Amount
mario62 [17]

Answer:

a) Cost of Goods Sold under each method of inventory:

1) Average Cost:

Beginning Inventory  600 units   $1,800

Purchases: January 12, 580 units 2,900

Purchases: January 26, 180 units  1,260

Cost of goods available for sale, 1,360 units $5,960

Less ending Inventory, 440 units   $1,927.20

Cost of goods sold, 920 units     $4,032.80

a2) FIFO:

Beginning Inventory  600 units   $1,800

Purchases: January 12, 580 units 2,900

Purchases: January 26, 180 units  1,260

Cost of goods available for sale, 1,360 units $5,960

Less ending Inventory, 440 units   $2,560

Cost of goods sold, 920 units     $3,400

a3) LIFO

Beginning Inventory  600 units   $1,800

Purchases: January 12, 580 units 2,900

Purchases: January 26, 180 units  1,260

Cost of goods available for sale, 1,360 units $5,960

Less ending Inventory, 440 units   $1,320

Cost of goods sold, 920 units     $4,640

a4) Specific Identification:

Beginning Inventory  600 units   $1,800

Purchases: January 12, 580 units 2,900

Purchases: January 26, 180 units  1,260

Cost of goods available for sale, 1,360 units $5,960

Less ending Inventory, 440 units   $2,280

Cost of goods sold, 920 units     $3,680

B. Partial Income Statement under:

                                  Average cost   FIFO    LIFO     Specific Identification

Beginning Inventory      $1,800        $1,800    $1,800          $1,800

Purchases                        4,160          4,160       4,160            4,160

Cost of goods for sale $5,960       $5,960   $5,960        $5,960

Less ending Inventory    1,927.20    2,560       1,320          2,280

Cost of goods sold     $4,032.80  $3,400   $4,640       $3,680

Explanation:

a) The average cost per unit under Average Method =

Average cost per unit =$4.38 (5,960/1,360)

Ending Inventory, 440 x $4.38 = $1,927.20

b) Ending Inventory under FIFO: 440 units

Cost of 180 units = $1,260

Cost of 260 units =  1,300 (260 x $5)

Total cost = $2,560

c) Ending Inventory under LIFO: 440 units

Cost of 440 units from beginning inventory = 440 x $3 = $1,320

d) Ending Inventory under Specific Identification: 440 units

Remaining opening inventory 140 units at $3 = $420

Remaining Jan 12, 120 units at $5 = $600

Remaining Jan 26, 180 units at $7 = $1,260

Total cost of ending inventory = $2,280

e) These are various inventory costing methods which present different results in their cost of goods sold and the ending inventory.

6 0
3 years ago
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