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3 years ago

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James Corporation owns 80 percent of Carl Corporation's common stock. During October, Carl sold merchandise to James for $205,00

0. At December 31, 60 percent of this merchandise remains in James's inventory. Gross profit percentages were 30 percent for James and 40 percent for Carl. The amount of intra-entity gross profit in inventory at December 31 that should be eliminated in the consolidation process is

1 answer:

lana66690 [7]3 years ago

7 0

Answer:

$35,143

Explanation:

Step 1 : Determine the value of Ending Inventory

Ending Inventory = $205,000 x 60 %

= $123,000

Step 2 : Determine the amount of unrealized profit in inventory

The Subsidiary (Carl Corporation) sold inventory to Parent (James Corporation).

James Corporation is the Parent of a Group since its owns more than 50% of voting rights of Carl Corporation

We use the gross profit percentage of the seller to determine the unrealized profit in inventory which is 40%.

Unrealized profit in inventory = 40/140 x $123,000

= $35,143

Conclusion :

The amount of intra-entity gross profit in inventory at December 31 that should be eliminated in the consolidation process is $35,143.

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Estes Park, Inc., has declared a dividend of $6.80 per share. Suppose capital gains are not taxed, but dividends are taxed at 15

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Answer:

$113.22

Explanation:

First, we need to find the after-tax dividend;

After-tax Dividend = Dividend x (1 - t) = $6.80 x (1 - 0.15) = $5.78

Ex-Dividend Price = Stock Price - After-tax Dividend

= $119 - $5.78 = $113.22

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Ultimate Sportswear has $190,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also ha

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Answer:

$11,400 and $27,600

Explanation:

The computation of the dividend distributed are as follows

Given that

6% noncumulative, nonparticipating, preferred stock = $190,000.

Common stock outstanding = $590,000.

In the first year, no dividend paid by the company.

The preferred stock is noncumulative that means no dividend will be a carryover.

Second year dividend paid by company = $39,000

Now based on the given information, the dividend distributed are as follows

For preffered stock

= $190,000 × 6%

= $11,400

And for common stock

= $39,000 - $11,400

= $27,600

This is the correct answer but the same is not provided in the given options

First we have to paid preferred stockholders and then equity stockholders

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3 years ago

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, it

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Answer: (B). raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level.

Explanation: When a minimum-wage law forces the wage to remain above the level that balances supply and demand, it raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level.

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3 years ago

On September 1, Shawn Dahl established Whitewater Rentals, a canoe and kayak rental business. The following transactions occurre

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Answer:

Assets = $ 55650

Liability =8300

Owner's equity=47350

Liability and Owner's equity.=8300 +47350=$55650

Explanation:

Using The basic equation we add the transaction to arrive at the actual amounts.

Assets = Liabilities + Owner's Equity

1. 50,000= 50,000

Cash +Assets = Liabilities + Owner's Equity

2. 35,800 +14,200= 50,000

Cash +Assets = Liabilities + Owner's Equity- Rent Expense

3) 33600+ 14200 = 50,000 - 2,200

Cash +Canoes = Liabilities + Owner's Equity- Rent Expense

4) 33600+ 14200+ 4900= 4900 + 50,000 - 2,200

Cash +Canoes = Liabilities + Owner's Equity- Rent Expense

5) 33600+ 19,100 + 3,400= 4900+ 3400 + 50,000 - 2,200

Cash +Canoes + Office Equip = Liabilities + Owner's Equity- Rent Expense

6) 33225+22500+ 375= 8,300 + 50,000 - 2,200

Cash +Canoes + Office Equip+ A/ R = Liabilities + Owner's Equity- Rent Expense

7) 33225+22500+ 375+ 1350 = 8,300 + 50,000 - 2,200+ 1350

Cash +Canoes + Office Equip+ A/ R = Liabilities + Owner's Equity- Rent Expense- drawings

8) 31425+22500+ 375+ 1350 = 8,300 + 50,000 - 2,200+ 1350-1800

We get

Cash = 31425

Kayak And Canoe 22500

Office Equipment= 375

Accounts Receivable= 1350

Accounts Payable = 8300

Capital less Drawings= 50,000- 1800= 48,200(850)= 47350

Revenue- Expenses = 1350 -2200= (850)

Assets = Cash +Kayak And Canoe +Office Equipment+ Accounts Receivable = 31425 +22500 + 375 +1350= $ 55650

Liability =8300

Owner's equity=47350

Liability and Owner's equity.=8300 +47350=$55650

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3 years ago

The total market value of the equity of ITM is $6 million, and the total value of its debt is $4

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Answer:

a. The required rate of return on Okefenokee stock is 16%.

b. WACC = 10.56%.

c. Estimate the discount rate for an expansion of the company's present business.

It should be the same as the WACC = 10.56%

d. The required rate of return on Okefenokee's new venture is Ke = 18 %.

Explanation:

Here the given is,

E = $6 million, D = $4 million, Beta = 1.2,

Rmp = the expected risk premium on the market =10%.

Rf = The Treasury bill rate = 4%

a. The required rate of return on Okefenokee stock,

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b. Tax rate, T = 40%

The proportion of debt = $Wd = D / (D + E) = 4 / (6 + 4) = 0.4$

Proportion of equity, We = 1 - Wd = 1 - 0.4 = 0.6

Cost of debt, Kd = Risk-free rate as debt is free of default = 4%

$WACC = Wd \times Kd \times (1 - T) + We\times Ke\\\\ = 0.4 \times4\times (1 - 40) + 0.6 \times 16\\\\ = 10.56%$

WACC = 10.56%.

c. Estimate the discount rate for an expansion of the company's present business.

It should be the same as the WACC = 10.56%

d. Suppose the company wants to diversify into the manufacture of rose-colored glasses. The beta of optical manufacturers with no debt outstanding is 1.4. What is the required rate of return on Okefenokee's new venture? (You should assume that the risky project will not enable the firm to issue an additional debt)

$Ke = Rf + Beta \times Rmp\\\\Ke = 4 + 1.4 \times 10 = 18%$

Ke = 18 %.

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3 years ago