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qwelly [4]
3 years ago
5

The Pastel Paint Company recently loaned $300,000 to KIX 96, a local radio station. The radio station signed a noninterest-beari

ng note requiring the $300,000 to be repaid in three years. As part of the agreement, the radio station will provide Pastel with a specified amount of free radio advertising over the three-year term of the note. The focus of this case is the valuation of the note receivable by Pastel Paint Company and the treatment of the "free" advertising provided by the radio station. Your instructor will divide the class into two to six groups depending on the size of the class. The mission of your group is to reach consensus on the appropriate note valuation and accounting treatment of the free advertising.
Required:
1. Each group member should deliberate the situation independently and draft a tentative argument prior to the class session for which the case is assigned.
2. In class, each group will meet for 10 to 15 minutes in different areas of the classroom. During that meeting, group members will take turns sharing their suggestions for the purpose of arriving at a single group treatment.
3. After the allotted time, a spokesperson for each group (selected during the group meetings) will share the group’s solution with the class. The goal of the class is to incorporate the views of each group into a consensus approach to the situation.
Business
1 answer:
VladimirAG [237]3 years ago
7 0

Answer:

Following are the queries to these question:

Explanation:

Reporting entering for recording the note received

Permissible notes (face amount)........................................................  \$300,000

Cash................................................................................................... \$300,000

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In perfect competition, each additional unit of output that a firm sells will yield a marginal revenue that is:
il63 [147K]

Answer:

The correct answer is equal to price.

Explanation:

A perfectly competitive firm is a price taker. This is because of the large number of firms, no single firm is able to influence the price. So each firm faces a horizontal demand curve. This horizontal line shows demand, marginal revenue, and average revenue.  

The price level is determined at the point where the marginal cost is equal to price. The marginal revenue is always equal to price because the price is fixed at a point, each output level is supplied at the same price.

4 0
3 years ago
The Macro Islands can produce either 250 bamboo towels or 500 botanical soaps using all its resources. The Micro Islands can pro
jarptica [38.1K]

Answer:

The Micro Islands have a comparative advantage in producing botanical soaps.

Explanation:

Comparative advantage can be defined as the ability of an economy to produce a good at lower opportunity cost than other economies. This enables the economy sell the product at lower prices, therefore having higher margin of profit than other economies.

The opportunity cost of Micro Island in producing 300 botanical soaps is the cost of producing 30 bamboo towels. The opportunity cost is quite low.

While for Macro Island the opportunity cost of producing 500 botanical soaps is 250 bamboo towels. The opportunity cost is higher than for Micro Island.

6 0
3 years ago
A company had $7,040,000 in net income for the year. Its net sales were $15,600,000 for the same period. Calculate its profit ma
ivann1987 [24]

The measure of a product, service, or company's profitability is its profit margin. The bigger the percentage representing the profit margin, the more profitable the company is.

Profitability is gauged by profit margin. Finding the profit as a proportion of revenue is used to calculate it.

Profit margin=44.9%

Explanation to the answer:

Profit margin =Net income / sales

                    =7,050,000 / $ 15,700,000

                    =0.44904

                    =44.9%

Profit margin =44.9%

Learn more about profit margin here brainly.com/question/24161087

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5 0
2 years ago
Harrison Corporation is studying a project that would have an eight-year life and would require a $300,000 investment in equipme
zheka24 [161]

Answer:

The payback period for this project is closest to 2 years

Explanation:

Initial investment = $300,000

Sales = $500,000

Cash variable expenses = ($200,000)

Contribution margin = 300,000

Fixed cash expenses = $150,000

Depreciation expenses = $37,500

Total Fixed expenses: $150,000 + $37,500 = ($ 187,500 )

Net operating income = $112,500

Annual cash inflows = Net operating income + Depreciation

= $112,500 + $37,500

= $150,000

Payback period = Initial investment ÷ Annual cash inflows

= $300,000 ÷ $150,000 = 2 years

5 0
3 years ago
Here I Sit Sofas has 7,100 shares of common stock outstanding at a price of $94 per share. There are 600 bonds that mature in 30
Zinaida [17]

Answer:

Weight of debt = 57.83 %

Explanation:

given data

number of shares =  7,100

price = $94 per share

number of bonds = 600

mature time = 30 year s

coupon rate = 6.8 percent

bonds par value = $2,000

sell = 108.5 percent

stock outstanding = 6,000 shares

stock outstanding price = $47 per share

to find out

capital structure weight of the debt

solution

first we get here Equity market value that is express as

Equity market value = number of shares × price per share

Equity market value = 7100 × $94

Equity market value = $667,400

and  

current debt value will be here as

current debt value = number of bonds × price per bond

current debt value = 600 × (1.085 × 2000)

current debt value = $1,302,000

and now Preferred stock value will be

Preferred stock value = stock outstanding × stock outstanding price

Preferred stock value = 6,000  × $47

Preferred stock value = $282000

and total capital will be as  

Total capital = Equity market value + current debt value + preferred stock value ..................1

put here value

Total capital =  $667,400 +  $1,302,000 + $282000

total capital = $2251400

so here Weight of debt will be

Weight of debt = debt value ÷ total capital ..............2

Weight of debt = \frac{1,302,000}{2251400}

Weight of debt = 0.578306

Weight of debt = 57.83 %

6 0
3 years ago
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