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3 years ago

If you wanted to make sure a company has enough money available to pay ts

Business

1 answer:

vovikov84 [41]3 years ago

3 0

Answer:

Explanation:

The cash flow statement, as the name implies, report the use of company's real cash use in three area: investing, operating and financing activities as well as cash available at the beginning of the period and the end of the period as the result of three activities mentioned above.

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Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage buildi

Anika [276]

Answer:

a) the journal entry to record the signing of the lease agreement:

December 31, 2019, lease agreement signed

Dr Right of use 483,360

Cr Lease liability 483,360

the lease liability must record the present value of the 10 annual lease payments: $68,099 and 8% discount rate:

present value of an annuity due = payment + {payment x [1 - (1 + r)⁻⁽ⁿ⁻¹⁾]/r}

payment = 66,699
r = 8%
n - 1 = 10 - 1 = 9

PV annuity due = 66,699 + {66,699 x [1 - (1 + 0.08)⁻⁹]/0.08} = 66,699 + 416,661 = $483,360

the journal entries to record the annual lease payments:

December 31, 2019, first annual lease payment

Dr Lease liability 66,699

Cr Cash 66,699

December 31, 2020, second annual lease payment

Dr Lease liability 33,366

Dr Interest expense 33,333

Cr Cash 66,699

interest expense = $416,661 x 8% = $33,333

December 31, 2020, depreciation expense

Dr Depreciation expense - leased building 48,336

Cr Accumulated depreciation - leased building 48,336

December 31, 2021, third annual lease payment

Dr Lease liability 36,035

Dr Interest expense 30,664

Cr Cash 66,699

interest expense = $383,295 x 8% = $30,664

December 31, 2021, depreciation expense

Dr Depreciation expense - leased building 48,336

Cr Accumulated depreciation - leased building 48,336

b) this would increase the right to use asset and lease liability by:

= -$5,000 + $1,000 = $4,000

c) this would increase the right to use asset and lease liability by:

= 5,000 + {5,000 x [1 - (1 + 0.08)⁻⁹]/0.08} = $36,234

8 0

3 years ago

Machinery purchased for $150,000 by Tom Brady Co. in 2010 was originally estimated to have a life of 12 years with a salvage val

Phoenix [80]

Answer:

$7,312.50

Explanation:

The computation of the depreciation expense for 2017 is shown below:

Book Value is

= Cost - Accumulated Depreciation

= $150,000 - {[($150,000 - $24,000) ÷ 12 ] × 7y}

= $150,000 - [($126,000 ÷ 12 ) × 7]

= $150,000 - ($10,500 × 7)

= $150,000 - $73,500

= $76,500

Now the depreciation expense for 2017 :

= ($76,500 - $18,000) ÷ (15 - 7) years

= $58,500 ÷ 8 years

= $7,312.50

5 0

3 years ago

Buffalo Corporation issues $630,000 of 9% bonds, due in 11 years, with interest payable semiannually. At the time of issue, the

katen-ka-za [31]

Answer:

the issue price of the bonds is $593,177

Explanation:

The computation of the issue price of the bonds is shown below:

Particulars Amount PV factorat 5% Present value

Semi-annual interest $28,350 11.68959 $331,400

Principal $630,000 0.41552 $261,778

Total $593,177

hence, the issue price of the bonds is $593,177

6 0

3 years ago

Ethics Lawrence Gaffney was the president and general manager of Ideal Tape Company (Ideal). Ideal, which was a subsidiary of Ch

tangare [24]

Answer:

Fiduciary Duty

1. The two main duties of company directors and top managers are the duty of care and the fiduciary duty of loyalty. The fiduciary duty of loyalty requires that managers act in the best economic interest of the company without engaging in activities that give rise to personal economic conflict.

2. Gaffney did not act ethically in this case. He did not avoid conflict of interest as an officer of Chelsea Corporation.

3. Gaffney and his partners clearly breached their fiduciary duty of loyalty. Within the two years of their employment at Ideal Tape Company, they acted in their personal interest. They were using company resources to conduct researches, setting up a rival company to compete with Ideal.

Explanation:

When a fiduciary duty of loyalty is breached, the corporation can damages. The court will usually base the damages on the salaries of the officer who breached his fiduciary duty within the application period.

6 0

3 years ago

How important is the environment to the performance of airlines in the airline industry? What does this suggest regarding the in

Leni [432]

Answer:

External and internal environment is very important to the performance of airlines in the airline industry.

The industrial organization (I/O) model suggests that environments is the key point for firms to earn above-average returns.

Explanation:

The airlines´ external and internal environments analysis is important because it is the first step in developing the frim´s strategic management process.

This analysis will establish the firm´s resources availability and capability, along with the core competencies looking forward setting commitments, making decisions, and taking actions aiming to reach competitiveness and to earn above-average returns.

The industrial organization, or I/O model, suggests that the external environment is the key of a firm’s strategic actions as firms use the sources information of these continuously evolving "strategic inputs" to develop its vision and mission and to formulate its strategy to respond to the challenging landscape brought by globalization and the resulting economy featuring rapid technological changes, and achieve strategic competitiveness and above-average returns.

6 0

4 years ago