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Serhud [2]
2 years ago
11

A city government adds streetlights within its boundaries at a total cost of $300,000. These lights should burn for at least 10

years but can last significantly longer if maintained properly. The city develops a system to monitor these lights with the goal that 97 percent will be working at any one time. During the year, the city spends $48,000 to clean and repair the lights so that they are working according to the specified conditions. The city also spends another $78,000 to construct lights for several new streets. Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded on government-wide financial statements. Prepare the entries assuming infrastructure assets are capitalized with government using the modified approach on government-wide financial statements.
Business
1 answer:
tekilochka [14]2 years ago
3 0

Answer: See explanation

Explanation:

a. Prepare the entries assuming infrastructure assets are capitalized with depreciation recorded on government-wide financial statements.

1. Debit: Infrastructure assets—street lights $300,000

Credit: Cash $300,000

(To record cash purchase of street light

2. Debit: Depreciation expense $300,000/10 = $30,000

Credit: Accumulated depreciation—infrastructure assets $30,000

(To record depreciation expense)

3. Debit: Maintenance expense—infrastructure assets $48000

Credit: Cash $48000

(To record maintenance expense)

4. Debit: Infrastructure assets—street lights $78000

Credit: Cash $78000

(To record cash expense for new light)

b. Prepare the entries assuming infrastructure assets are capitalized with government using the modified approach on government-wide financial statements.

1. Debit: Infrastructure assets—street lights $300,000

Credit: Cash $300,000

(To record purchase of street light)

2. Debit: Maintenance expense—infrastructure assets $48000

Credit: Cash $48000

(To record maintenance expense)

3. Debit: Infrastructure assets—street lights $78000

Credit: Cash $78000

(To record cash expense for new light)

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Elise Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $400,000 and
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Answer:

800 units of product A must be sold for break-even

Explanation:

Given, weighted-average contribution is $100.

Total break-even units = Total fixed cost  / Weighted-average contribution

Total break-even units = $400,000  / $100

Total break-even units = 4,000 units

Product A break-even = 4,000 x 20%

Product A break-even = (800 units)

Hence, the correct answer is 800 units.

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Despite some optimism about the seeds of recovery, the Congressional Budget Office (CBO) sees joblessness rising. The CBO sees u
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Answer:

The resulting rise in unemployment is mostly a rise in __cyclical____ unemployment because it is related to the state of the economy.

Explanation:

Frictional unemployment occurs as a result of workers' search for or transition to new jobs.  It is brief and does not leave a mark on the economy.  Structural unemployment comes about when the skills of workers do not match the requirements of employers.  Therefore, workers require retraining and reskilling.  Cyclical unemployment relates to the macro-economic situation that is prevailing during periods of recession.

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3 years ago
Which of the following marketing orientations holds that achieving organizational goals depends on knowing the needs and wants o
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The Marketing Concept

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Which channel function is most visible to the customer
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Answer:

retailers

Explanation:

In order to get our goods to the market, we have to use a marketing channel. Rarely does a company create an isolated marketing channel in order to reach the customers. Instead, companies reach out to <em>wholesalers, distributors and retailers.</em>

Retailers are closely related to the customer, as the customer always goes to the retailer first, in order to find a particular good.

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5 0
3 years ago
The Saunders Investment Bank has the following financing outstanding. Debt: 120,000 bonds with a coupon rate of 8 percent and a
algol [13]

Answer:

R_Wacc =  11,35% (48%) + 8,57% (4%) + 4,18% (35%) + 3,59% (13%) =      7,70%

Explanation:

Re:   11,35%  Cost of Common Equity  

Re:   8,57%  Cost of Preferred STOCK  

Re:   4,18%  Cost of Debt BONDS  

Rd:   3,59%  Cost of Zero BONDS  

  • Equity :  

$179,200,000   Market Value of the firm's Common Equity  

  • Preferred Stock:  

$14,700,000   Market Value of the firm's Preferred STOCK  

  • Debt bonds :  

$132,000,000   Market Value of the firm's Debt BONDS  

  • Zero bonds :  

$49,300,000   Market Value of the firm's ZERO BONDS  

V:   $375,200,000   E+D = Total Market Value of the firm's financing  

E/V:   48%  Percentage of financing that is Common Equity  

PS/V:   4%  Percentage of financing that is Preferred Stock  

DB/V:   35%  Percentage of financing that is Debt Bonds  

ZB/V:   13%  Percentage of financing that is Zero Bonds  

Tc:    40% Corporate tax rate  

  • Total Market Value      

Market value of debt  Bonds:  

120,000 x $1,000 x 110% = $132,000,000

Market value of debt Zero Coupon:  

290,000 x $1,000 x 17% =  $49,300,000

Market value of preferred stock:  

210,000 x $70 = $14,700,000

Market value of common stock:  

3,200,000 x $56 =  $179,200,000

TOTAL = $375,200,000

  • Using the CAPM model we can calculate the costo of equity:      

R =   0,04 + 1,05(0,07) =  11,35%  

  • The cost of debt is the YTM of the bonds, so:      

P0= $1,110 = $40(PVIFAR%,40) + $1,000(PVIFR%,40) =      

R =   6,97%    

  • The aftertax cost of debt is:      

R_Bonds :  (1 - 0,4) x (0,0697) =  4,18%  

  • The aftertax cost of zero coupon bonds is:        

Yield To Maturity = (Face Value/Current Bond Price)^(1/Years To Maturity)−1 =   5,98%

(Face Value/Current Bond Price) = '$1,000/$175           (1/Years To Maturity) = 1/30          

  • The aftertax cost of debt is:          

R_ZeroB : (1 - 0,4) x (0,0598) = 3,59%      

  • We can use the preferred stock pricing equation, which is the level perpetuity equation, so the required return on the company’s preferred stock is:      

Rp= D1/P0 =  $6/$70 = 8,57%  

Rp = Required Return   D1 = Dividend   P0 = Price    

8 0
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