Answer: See explanation
Explanation:
Number of units sold = 76000
Percentage repair= 2%
Estimated defective units = Percentage repair × Units sold = 2% × 76000 = 1520
Actual defective units = 490 + 350 + 210 = 1050
Unclaimed warranty = Estimated defective units - Actual defective units = 1520 - 1050 = 470
Repair cost = $50
Warranty expense = 470 × $50 = $23500
The journal entry will then be:
31 December:
Debit: Product warranty expense = $23500
Credit: Estimated liability for product warranty = $23500
Answer:
The answer is $56,000
Explanation:
Net working capital or working capital is the difference between a business current assets and current liabilities.
McRae Corporation has current assets of $412,000 and current liabilities of $356,000
Therefore, working capital is
$412,000 - $356,000
=$56,000
Answer:
$1,050,000
Explanation:
Given that,
Sox corporation purchased a 35% interest in hack corporation for $1,750,000.
On November 1, 2018, hack declared and paid dividends = $2.0 million
On December 31, hack reported a net loss during the year = $4.3 million
Carrying value:
= Purchased value - 35%(Dividend value)
= $1,750,000 - (0.35 × $2,000,000)
= $1,750,000 - $700,000
= $1,050,000
Net loss of Sox = 35% of net loss during the year
= 0.35 × $4,300,000
= $1,505,000
Since, the carrying value is less than the net loss of sox. Therefore, the net loss of $1,050,000 to be recognized by the sox corporation.
Answer:
Check the following calculations
Explanation:
Bond trade at Par, thus,
Cost of Debt = Coupon rate = 8%
Tax rate = 35%
Post-tax cost of Debt (kd) = 0.08*(1-0.35) = 0.052
Beta of stock = 1.25
Market return = 10%
T-bills rate = 4%
Cost of Equity (ke) = 0.04*1.25*(0.1-0.04) = 0.115
Debt to equity ratio = 3
Weight of Debt (wd) = 3/4 = 0.75
Weight of equity (we) = 0.25
WACC= wd * kd+ we *ke
WACC =0.75* 0.052+0.25* 0.115
WACC =0.06775
WACC= 6.76%
Please note: In above solution, CAPM model used to determine the cost of equity because CAPM model gives minimum required return by equity investors.
A) it is more accurate than accrual accounting.