Answer:
E = 74.27%
Preferred = 8.10%
Debt = 17.63%
Explanation:
We are asked for the structure weight.
Equity 55,000 shares x 31 = 1,705,000
Preferred stock 3,000 x 62 = 186,000
Debt 400,000 x 101.2/100 = 404,800
Value of the Firm 2,295,800
Now we divide each component by the value of the firm.
Equity weight 1,705,000/2,295,800 = 0,742660 = 74.27%
Preferred stock 186,000 / 2,295,800 = 0,081017 = 8.10%
Debt 404,800/ 2,295,800 = 0,17632197 = 17.63%
(a) Prepare the amortization schedule (effective interest method) through October 1, 2007.
(b) Prepare the adjusting entry for December 31, 2007. Use the effective-interest method.
(c) Compute the interest expense to be reported in the income statement for the year ended December 31, 2007.
Answer:
a)
period interest interest discount amortized bond's
payment expense on BP discount carrying value
0 49,320.60 750,679.40
1 32,000 37,533.97 43,786.63 5,533.97 756,213.37
2 32,000 37,810.67 37,975.96 5,810.67 762,024.04
3 32,000 38,101.20 31,874.76 6,101.20 768,125.24
4 32,000 38,406.26 43,786.63 6,406.26 774,531.50
b)
December 31, 2017, accrued interest on bonds payable
Dr Interest expense 19,050.60
Cr Interest payable 16,000
Cr Discount on bonds payable 3,050.60
c)
total interest expense year 2007:
($37,533.97/2) + $37,810.67 + ($38,101.20/2) = $18,776.99 + $37,810.67 + $19,050.60 = $75,638.26
Explanation:
the market price of the bonds:
$800,000 / 1.05¹⁰ = $491,130.60
$32,000 x 8.1109 (PV annuity factor, 4%, 10 periods) = $259,548.80
market price = $750,679.40
discount on bonds payable $49,320.60
discount amortization first payment = (750,679.40 x 0.05) - 32,000 = 5,533.97
discount amortization second payment = (756,213.37 x 0.05) - 32,000 = 5,810.67
discount amortization third payment = (762,024.04 x 0.05) - 32,000 = 6,101.20
discount amortization fourth payment = (768,125.24 x 0.05) - 32,000 = 6,406.26
The interest income and discount amortized are calculated based on the effective-interest method. The adjusting entry debits Bond Interest Expense and credits Discount on Bonds Payable. The income statement reports the interest expense as the sum of cash paid and discount amortized.
The interest on Logan Corporation's bonds is paid semi-annually, therefore the interest periods will be six months. The effective-interest method is used to amortize the premium or discount on these bonds, and it calculates interest expense based on the market rate and the outstanding balance of the bond.
For October 1, 2006, Logan Corporation issued $800,000 of 8% bonds. However, they were sold to yield 10% effective interest, which is annual, for six months this is 5% (10%/2). So, the interest income for the first period will be $800,000×5%=$40,000.
With actual cash received being $800,000×8%/2 = $32,000. The difference between the interest income and the cash received is the discount amortized.
For April 1, 2007, the carrying value of the bond will be the face value subtract the discount amortized. The remaining steps are essentially a repetition of the first period until October 1, 2007.
For adjusting entry on December 31, 2007, debit the Bond Interest Expense for the total discount amortized and credit Discount on Bonds Payable.
The interest expense on the income statement is the Bond Interest Expense, which includes both the cash paid and the discount amortized.
#SPJ3
Should be sold at the split-off point, rather than processed further.
Would increase the company's overall net income by $45,000 if processed further and then sold.
Would increase the company's overall net income by $108,000 if processed further and then sold.
Would increase the company's overall net income by $9,000 if processed further and then sold.
Answer: Would increase the company's overall net income by $9,000 if processed further and then sold.
Explanation:
The Revenue if sold at the split-off point is $63,000.
But if processed further, we can realize revenue of,
= $108,000 - 36,000
= $72,000
To find out the revenue difference then we will subtract the alternatives.
= $72,000 - 63,000
= $9,000
$9,000 extra will be gained if we process further as opposed to selling at the Split-off point. This shows that Option D or the last option is correct.
Answer:
The weighted-average unit contribution margin is $33.49 per unit
Explanation:
We know that,
Weighted average Contribution margin per unit = (Selling price per unit - Variable expense per unit) × sales mix
For A12 = ($55 - $40) × 55% = $8.25
For B22 = ($107- $79) × 29% = $8.12
For C124 = ($414 - $307) × 16% = $17.12
So, the total would be equal to
= $8.25 + $8.12 + $17.12
= $33.49 per unit
Case Questions (6 points each)
1)What is the force according to Porter’s competitive forces model, faced by the company? *
Customers
Suppliers
New market entrant
Traditional competitor
2)What is the information system strategy (or strategies) used by the company to face the forces? *
Focus on market niche
Focus on market niche & Low cost leadership
Focus on market niche & Customer intimacy
Product differentiation & Customer intimacy
3)What are the main IT components mentioned in this case? *
a) Software / Telecommunications / Physical facilities
b) Hardware / Software.
C) Software / Telecommunications / Hardware
d) Telecommunications / Software
4)If the company is not sure which IS strategy to use in order to face the competitive forces, which model may best help in this case? *
Porter competitive forces
Value chain
Porter strategies
Economic impacts
5)To which type of system the “Analytical Power” software belongs? *
DSS
ESS
MIS
TPS
Answer:
1.) Traditional competitor
2.) Product differentiation & Customer intimacy
3.) C
Software / Telecommunications / Hardware
4.) Value chain
5.) ESS
Explanation:
1.) The company was aware of its competitors' marketing strategies and pricing to any changes made. Rivalry among competitors tends to be cutthroat and industry profitability low while having the potential factors.
3.) An information system is essentially made up of five components hardware, software, database, network and people. These five components integrate to perform input, process, output, feedback and control. Hardware consists of input/output device, processor, operating system and media devices.
4.) Value chain is the process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales service.
5.) An Executive Support System (ESS) is software that allows users to transform enterprise data into quickly accessible and executive-level reports, An ESS enhances decision making for executives. ESS is also known asExecutive Information System (EIS).
Answer 1):
The correct option here is D) Traditional Competitors
Explanation:
The five forces of competition when analyzed they help a business understand the factors in its external environment. It is also helpful in crafting a strong business strategy that increases the chances of the company to win over its competition in the market.
If sales were declining due to very mouth-watering offers from other companies who are over 20 years in the industry, then the force Lebanese Steel Factory has to contend with is Traditional Competitors.
Answer 2)
The correct option here is C)
Explanation:
The information system deployed by Lebanese Steel Factory helped them to identify a niche area in the market which is the ability to customize product requests. By doing this, the demonstrated a kind of empathy for what the customer wants.
Their new system allowed customers to order for steel in a way no company in the market was doing it.
Answer 3)
The correct option her is B) Hardware/Software
Explanation:
There is no mention of telecommunications which is a technology that enables one to communicate via radio frequency over a long distance.
The "Analytical Power" however is a software. Softwares require hardware (that is a computer which may or may not be remote) to run.
Answer 4)
The correct option here is C) Porters Strategies
Explanation:
There are generic strategies identified by Michael Porter that a business can adopt to beat the competition. They are:
Cost Leadership, Differentiation and Focus strategies.
Answer 5)
The correct option here is C) MIS
Explanation:
MIS stands for Management Information System.
This is often used to refer to any computerized system that enables one to acquire data, process data into usable information, store both the data and information and generate reports based on such information for use in decision making by the management.
Cheers!
The payment to be received on July 15 should be equivalent to $800.
The amount received for the purpose served or promised to be served by a seller is known as a payment. Generally, discounts are offered for making early payments.
The discount offered for a period of 30 days cannot be redeemed for payment done within 15 days.
Thus, option D holds true that the payment of $800 shall be received on July 15.
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The terms 1/10, net 30, mean that the company is offered a 1% discount if they pay within 10 days. If they pay after this period, they have to pay the full amount. In this scenario, the payment on July 15 should be $800.
The invoice terms 1/10, net 30 mean that the company is offered a 1% discount if they pay the invoice within 10 days. After 10 days, the full invoice amount is due within 30 days. On July 1, the company receives an invoice for $800. If the company pays by July 10, they would only need to pay $792 ($800 - 1% of $800). If they wait until July 15, past the discount period, they will have to pay the full $800. Therefore the answer is $800.
$4 379 83
54 739 95
$5.076.55
Answer: $4,379.83
Explanation:
Given the following details:
Periodic payment = $550
Interest rate = 11%
Number of periods = 20 years
Present Value (PV) = P[(1 - (1 + r)^-n) / r]
Where
P = periodic payment = $550
r = Interest rate = 11% = 0.11
n = number of periods = 20
PV = 550[(1 - (1 + 0.11)^-20) / 0.11]
PV = 550[(1 - (1.11)^-20) / 0.11]
PV = 550[(1 - 0.1240339) / 0.11]
PV = 550[0.8759660 / 0.11]
PV = 550(7.9633281)
PV = 4379.8304
PV = 4379.83