Answer:
1. Franklin Inc. is not under any legal obligation to pay divided to common stock holders. A company can only pay dividend when it makes profit. A company may not pay dividend even when it makes profit because payment of dividend at the discretion of board of directors. Dividends on common stocks are not fixed.
Payment of dividend to preferred stock holders is fixed because preferred stocks are fixed income securities. Dividend in this case does not depend on the financial fortune of a company. In case of cummulative preferred stocks, arrears of dividend in a given year can be carried forward to another year.
Franklin Inc is under a legal obligation to pay interest to debenture holders because the company is under bond to pay principal and interest as and when due. Bonds are also fixed income securities in which interest is fixed regardless of whether the company makes profit or not.
2. Rob Lowe is advised to invest in bonds because he is guaranteed of his principal and interest as and when due since the interest on bond and principal do not depend on the financial fortune of the company.
Explanation:
In the first case, explanations were made on the obligation of the company to pay dividend or interest.
In the second case, explanations were provided on the appropriate investment to undertake.
Answer:
b. In an ordinary annuity payments occur at the end of the period
Explanation:
<u>Why the other options are false:</u>
A.- On annuity due, the payment occurs at the beginning of the period.
B.- The perpetuity will not mature. It will yield interest for an indefinite period of time
C.- The present present value of a perpetuity is calculate as follow:
cash inflow/ interest rate = perpetuity
On an ordinary annuity, the payment occur at the end of the period, which is correct.
Answer:
The amount used in the buyer's accounting records to record this acquisition is $60,000.
Explanation:
Amount in the buyer's accounting records to record this acquisition = Cash paid + Note payable
= $20,000 + $40,000
= $60,000
Therefore, The amount used in the buyer's accounting records to record this acquisition is $60,000.
Answer:
1 $126
2 $140
3 90%
Explanation:
1. Overhead applied = Closing balance of job - (opening balance of job + prime cost added to the job during the month
= $1,921 - ($1,235 + $560)
= $1,921 - $1,795
= $126
2. Direct labor for job 46 for July.
Direct labor = prime cost / ( 3 parts of direct materials + 1 part of direct labor)
Direct labor = $560 / 4
Direct labor = $140
Therefore, direct labor for job 46 for July is $140
Direct materials for job 46 for July
= Direct labor cost × 3(This is due to the fact that prime cost includes 3 parts of direct materials
= $140 × 3
= $420
3. Overhead rate for the company
= [($126 / $140) × 100
= 90%
The amount of cash received from credit sales during the month of may $676,000. In general credit sales is equals to total sale multiply by credit sales ratio.
What is credit sales?
Credit sales = Closing debtors + Receipts - Opening debtors.
Credit sales are transactions in which the debt will be paid in full at a later time. In other words, credit sales are transactions in which customers make purchases but do not pay in full, in cash, at the time of the transaction.
A manual for bookkeeping. Recognition of Revenue. Sales are recorded as a credit since the journal entry's opposite, which is typically a debit to either the cash or accounts receivable account, is a credit. In essence, the credit raises shareholders' equity while the debit increases one of the asset accounts.
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