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Pani-rosa [81]
3 years ago
12

Pearl Corporation issued 1,700 $1,000 bonds at 103. Each bond was issued with one detachable stock warrant. After issuance, the

bonds were selling separately at 98. The market price of the warrants without the bonds cannot be determined. Use the incremental method to record the issuance of the bonds and warrants.
ex. account title DR
Account title CR
Business
1 answer:
arlik [135]3 years ago
7 0

Answer:

Solution as seen below

Explanation:

Bond = 1,700 × $1,000 × 98%

= $1,666,000

Allocation :

Issue price $1,751,000

(1,700 × $1,000 × 103%)

Bonds ( $1,666,000 )

Warrants $85,000

($1,751,000 - $1,666,000)

Bond face value $1,700,000

(1,700 × $1,000)

Allocated FMV ($1,666,000)

Discounts $34,000

($1,700,000 - $1,666,000)

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What are the costs associated with operating a franchise.
Debora [2.8K]
7 Common Costs Associated with Operating a franchise

Exactly how much a franchise costs is different for every franchise company out there, but most of them have similar startup costs. While the franchisor will help you with some of these costs — maybe through deals it has with preferred vendors or by lending you the money — the onus will be on you to come up with the funds on your own. And it’s not just funds to build and open your franchise, you will also need funds to run it until it becomes profitable.

Let’s take a look at some of the most common costs associated with opening a franchise.

Franchise Fee

When opening a franchise, it’s important to remember that you are essentially “renting” the brand from the franchise. That brand comes with a lot of support and recognition, but you still have to pay for the privilege of being associated with it.

Franchise fees can be as little as $20,000 or as much as $50,000 or even more. The amount of the fee usually depends on how much you have to do to get the franchise up and running. Franchises that require you to build a location will be more than a mobile or home-based franchise, for example.

Your fee will usually cover the cost of your training and site selection support, hence why the fee is higher for businesses that require a location. Exactly what the fee covers is different for each franchise. Sometimes it will just act as a licensing fee for the rights to use the brand. When you are doing your initial research, be sure to find out exactly what your franchise fee covers.

Legal and Accounting Fees

These fees are on you, of course, but they are well worth it. Any person who is considering purchasing a franchise should absolutely consult with an attorney who is familiar with franchise law. The attorney you hire can review the franchise disclosure document with you and go through the franchise agreement to make sure it’s fair.

Each attorney will charge differently for this and it will largely depend on how much time your attorney has to spend on the documents, but you’ll probably have to budget between $1,500 and $5,000 for this.

It’s also a good idea to start working with a qualified accounting firm as soon as you decide to purchase a franchise. An accountant can help you set up your books and records for the company and can also help you determine how much working capital you’ll require to get your business set up and have it run until it becomes profitable.

Working Capital

Speaking of working capital, this is the amount of cash that is available to a given business on a day-to-day basis. It’s crucial to have enough working capital to cover a given length of time. This could be just a few months, or it could be a few years. It depends on how much time the business will need to start bringing in enough revenue for it to run.

Franchisors do generally provide an estimate of how much working capital you’ll require, but you should back this up with your own research and do your own calculations with the help of your accountant. Talk to other franchisees in the system about how much they needed.

Build-Out Costs

Build-out costs include constructing the building and purchasing all the furniture, fixtures, equipment, signage and anything else related to the building such as architectural drawings, zoning compliance fees, contractor fees, decor, security, deposits, insurance and landscaping. Your franchisor will give you an estimate of build-out costs, which vary widely between franchises.

If you choose a home-based franchise, obviously there will not be any buildout costs associated with it, but there may be other expenses like vehicles.

Supplies

These are all the things you require to run your franchise. Restaurants will need food, of course, but they also need plates, cutlery and napkins. Other franchises will need different things to offer their services. Your franchisor can give you a list or estimate of what you will need to run your franchise.

Inventory

If you are purchasing a retail franchise or some other kind of franchise that sells products, you will need inventory. This is another cost that will vary widely between franchises, but your franchisor should be able to help you with estimates. You might have to purchase between $20,000 and $150,000 worth of inventory depending on the business.

Travel and Living Expenses During Training

Franchisors will provide training for franchisees and often the franchisee’s management team. While the training itself is usually covered by the franchise fee, the travelling and living expenses to go to a franchise’s headquarters for that training may not be covered. Often, training runs from a few days to a week or so and is followed up with more training back at the franchisee’s location.

You’ll want to determine whether travel and accommodation are covered by your franchisor and, if not, work out how much the training related expenses will cost you.
5 0
2 years ago
What is an example of what a business would write a check for​
Helga [31]

Answer:

To pay in taxes, to purchase goods to make things if the business is a factory etc. hope this helps

Explanation:

7 0
3 years ago
You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% a
astra-53 [7]

Answer:

amount to be investment in risky portfolio =  $405

amount invest in security x = $243

amount invested in security Y = $162

Explanation:

given data

investing = $1,000

Treasury bills = 5%

optimal weights of X = 60 %

optimal weights of Y = 40 %

expected rate of return x =  14%

expected rate of return y = 10%

solution

we know that

                      weight                     return                     return from risky port

X                     60 %                         14 %                       8.4 %

Y                     40 %                          10 %                       4%

total                                                                                 12.4 %

so here

return from risky portfolio is = 12.4 %

and

return from risk free investment = 5 %

so 'we consider here investment in risky portfolio = x

so investment in risk free  = 1 - x

so we can say that

12.4 % × x + 5 % × (1-x) = 8 %

solve we get

x = 0.405

so investment in risky portfolio = 0.405

so investment in risk free  =0.595

and

amount to be investment in risky portfolio = $1000 × 0.405

amount to be investment in risky portfolio =  $405

and

amount invest in security x = $405 × 60%

amount invest in security x = $243

and

amount invested in security Y = $405 × 60%

amount invested in security Y = $162

4 0
4 years ago
Income statement information for Einsworth Corporation follows: Sales $1,500,000 Cost of goods sold 900,000 Gross profit 600,000
Semenov [28]

Answer:

A vertical analysis income statement uses Sales as a base and makes everything else a percentage of sales.

                                            Vertical Analysis Statement

                                                     Amount                     Percentage

Sales                                       $1,500,000                         100%

Cost of Goods sold                ($900,000)                          60%

Gross Profit                               $600,000                          40%

Cost of Goods sold percentage = 900,000 / 1,500,000

= 60%

Gross Profit percentage = 600,000 / 1,500,000

= 40%

6 0
3 years ago
Safety Supply Corporation in New York sells a truckload of protective suits, masks, and other safety gear to Toxic Recovery, Inc
Vedmedyk [2.9K]

Answer:

A is the correct option

Explanation:

Free On Board Destination is also known as FOB. It means that the buyer will take the delivery of the goods which is being shipped by the supplier once the good arrives at the supplier's dock. The four variations of FOB destination terms are Freight prepared and allowed, freight prepared and added, freight collect, freight collect and allowed. The terms of FOB  get superseded if the customer elects to override the terms with customer arranged pickup. In FOB destination terms the seller pays the shipping charges.

7 0
3 years ago
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