BUSINESS COLLEGE

Hagar Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $800,000, an amortized cost of $800,000, and a fair value of $720,000. The company believes that impairment accounting is now appropriate for these bonds.Required:
Prepare the journal entry to recognize the impairment.

Answers

Answer 1
Answer:

Explanation:

The journal entries are as follows

On December 31,2017

Loss on impairment Dr $80,000

        To Debt investment - available for sale $80,000

(Being the loss on impairment is recorded)

It is computed below:

= $800,000 - $720,000

= $80,000

On December 31, 2017

Fair value adjustment- available for sale Dr $80,000

                To Unrealized holding gain or loss - equity $80,000

(Being the fair value adjustment is recorded)
Answer 2
Answer:

Answer:

Dr Allowance for Doubtful Accounts         $80,000

     Cr Debt Investments                                               80,000

Explanation:

Impairment = Cost - Fair Value = 800,000 - 720,000 = 80,000

Companies should use the CECL model to record the impairment of debt investments similar to receivables.

In evaluating the securities, Hagar now determines that it is probable that it will not collect all amounts due. In this case, it records a debit to allowance for doubtful accounts. Hagar includes this amount in income and records the impairment as shown above.

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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $ 1,000,000 Variable expenses 390,000 Contribution margin 610,000 Fixed expenses 625,000 Net operating income (loss) $ (15,000 ) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Division East Central West Sales $ 250,000 $ 400,000 $ 350,000 Variable expenses as a percentage of sales 52 % 30 % 40 % Traceable fixed expenses $ 160,000 $ 200,000 $ 175,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $15,000 based on the belief that it would increase that division's sales by 20%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? 2-b. Would you recommend the increased advertising?
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Assume there was no beginning work in process inventory and the ending work in process inventory is 70% complete with respect to conversion costs. Under the weighted-average method, the number of equivalent units of production with respect to conversion costs would be: A) the same as the units completed. B) less than the units completed. C) the same as the units started during the period. D) less than the units started during the period.

A bailment is different from a gift because:___. a. a gift requires consideration, but a bailment does not.
b. a gift is always a contract, but a bailment is generally not a contract.
c. a gift requires delivery, but a bailment does not.
d. in a bailment, only possession of the property is transferred to the bailee, whereas with a gift, both possession and ownership must pass to the donee.

Answers

Answer: d. in a bailment, only possession of the property is transferred to the bailee, whereas with a gift, both possession and ownership must pass to the donee.

Explanation:

When you give a person a gift, you are giving the person both ownership of that gift and the possession as well. For instance, if you give a person a car as a gift, that person now owns the car and will use it as they please.

With a bailment, there is no transfer of ownership. The bailor is simply giving the bailee possession of the property in question which means that after the bailee is done with the property, they have to return it back to the bailor.

Westfall Watches has two product​ lines: Luxury watches and Sporty watches. Income statement data for the most recent year​ follow: Total Luxury Sporty Sales revenue $ 490 comma 000 $ 360 comma 000 ​$130,000 Variable expenses 355 comma 000 235 comma 000 ​120,000 Contribution margin 135 comma 000 125 comma 000 ​10,000 Fixed expenses 78 comma 000 39 comma 000 39 comma 000 Operating income​ (loss) $ 57 comma 000 $ 86 comma 000 ​$(29 comma 000​) If $ 23 comma 000 of fixed costs will be eliminated by discontinuing the Sporty​ line, how will operating income be​ affected?

Answers

Answer:

The operating income will increase by $13,000.

Explanation:

Giving the following information:

Sales revenue

Total= $490,000

Luxury= $360,000

Sporty= ​$130,000

Variable expenses:

Total= $355,000

Luxury= $235,000

Sporty= $​120,000

Contribution margin

Total= $135,000

Luxury= $125,000

Sporty= $​10,000

Fixed expenses:

Total= $78,000

Luxury= $39,000

Sporty= $39,000

Operating income​ (loss):

Total= $57,000

Luxury= $86,000

Sporty= ​$(29,000​)

New Income Statement:

Sales= 360,000

Variable costs= 235,000 (-)

Contribution margin= 125,000

Fixed costs= 39,000 + 16,000= 55,000

Operating income= 70,000

The operating income will increase by $13,000.

You have been asked to estimate the beta for a large South Korean company, with large holdings in steel and financial services. A regression of stock returns against the local market index yields a beta of 1.10, but the firm is 15% of the index. You have collected the average betas for global companies in each of the sectors, as well as the average debt equity ratios in each sector: Setor Average Regression Beta Average D/E ratio
Steel 1.18 30%
Financial
Services 1.14 70%
The average tax rate for these industries is 40%.
In the most recent period, the company you are analyzing earned 70% of its operating income from steel and 30% from financial services. The firm also had a debt/equity ratio of 150%, and a tax rate of 30%. Estimate the levered beta for the company.

Answers

Answer:

The levered beta for the company is 1.93.

Explanation:

Levered beta for the company = (Weight of steel business*levered beta of steel business) + (Weight of financial services business*levered beta of financial services business)

Levered beta of steel business = Unlevered beta of steel sector*[1+(1 - firm's tax rate)*(firm's debt/equity ratio)

levered beta of financial services business = Unlevered beta of financial services sector*[1+(1 - firm's tax rate)*(firm's debt/equity ratio)

Unlevered beta of steel sector = Current beta of steel sector/[1+(1 - avg. tax rate of firms in the sector)*(Avg. debt/equity ratio of the sector)  

Unlevered beta of steel sector = 1.18/[1+((1-0.4)*0.3)]

Unlevered beta of steel sector = 1.18/[1+(0.6*0.3)]

Unlevered beta of steel sector = 1.18/(1+0.18)

Unlevered beta of steel sector = 1.18/1.18

Unlevered beta of steel sector = 1

Levered beta of steel business = 1*[1+((1-0.3)*1.5)]

Levered beta of steel business = 1*[1+(0.7*1.5)]

Levered beta of steel business = 1*(1+1.05)

Levered beta of steel business = 1*2.05

Levered beta of steel business = 2.05

Unlevered beta of financial services sector = Current beta of financial services sector/[1+(1 - avg. tax rate of firms in the sector)*(Avg. debt/equity ratio of the sector)

Unlevered beta of financial services sector = 1.14/[1+((1-0.4)*0.7)]

Unlevered beta of financial services sector =1.14/[1+(0.6*0.7)]

Unlevered beta of financial services sector = 1.14/(1+0.42)

Unlevered beta of financial services sector = 1.14/1.42

Unlevered beta of financial services sector = 0.80

Levered beta of financial services business = 0.8*[1+((1-0.3)*1.5)] = 0.8*[1+(0.7*1.5)] = 0.8*(1+1.05) = 0.8*2.05 = 1.64

Levered beta for the company = (0.7*2.05) + (0.3*1.64)

Levered beta for the company = 1.44 + 0.49

Levered beta for the company = 1.93

Hence, the levered beta for the company is 1.93.

Final answer:

To estimate the levered beta for a company with operations in multiple sectors - steel and financial services in this case - you take a weighted average of the sector betas based on earnings distribution to get the unlevered beta. You then adjust for the company's debt/equity ratio and tax rate to get the levered beta. The estimated levered beta for this company is 2.378.

Explanation:

To estimate the levered beta for the company, we first need to consider the betas for each of the sectors the company operates in - steel and financial services. Given the firm's earnings distribution, the unlevered beta is computed as 0.7*Steel Beta + 0.3*Financial Services Beta = 0.7*1.18 + 0.3*1.14 = 1.16.

Next, to calculate the levered beta, we need to factor in the firm's debt/equity ratio. We use the formula for the levered beta: Levered Beta = Unlevered Beta * (1 + (1 - Tax Rate) * D/E ratio). Substituting the values we have: Levered Beta = 1.16 * (1 + (1 - 0.3) * 1.5) = 1.16 * 2.05 = 2.378. Therefore, the estimated levered beta is 2.378.

Learn more about Levered Beta Calculation here:

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Identical products, as well as a large number of buyers and sellers, are characteristics of a market. In such markets, sellers of goods influence the prevailing market price, giving them the role of price in the market. True or False: The market for digital cable does not exhibit the two primary characteristics that define perfectly competitive markets.

Answers

Answer:

  • Identical products, as well as a large number of buyers and sellers, are characteristics of a market. In such markets, sellers of goods influence the prevailing market price, giving them the role of price in the market. FALSE: This characteristics correspond to competitive markets, which are those markets where prices are determined by sellers and buyers simultaniouslly, and, none of them individually can exert influence over prices (nor sellers or buyers in particular) . Aditionally, goods or services must be homogeneous or equal.
  • The market for digital cable does not exhibit the two primary characteristics that define perfectly competitive markets: TRUE: digital cable is not an identical product (different sellers offer different options of channels, the service they offer is heterogeneous) and there are not many sellers, in a way that they cannot exert influence over prices. Then, it is not a competitive market.

What are three strategies that you can use to make better financial decisions?

Answers

Investing at a young age so you can either have a heathy amount of money or retire at a young age, try to have people work for you and not work for someone, be smart with your money and use common sense when buying something. Example: “do I really need this though?”
I would say save, invest and start a business

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a. Journalize the adjusting entries on December 31 to record the expected customer returns.
b. Journalize the entries to record the returned merchandise and cash refund to Buck Co. on February 3.

Answers

Answer:

pasensya na di ko alam ang sagot
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