Answer:
Equals the increase in total benefits from consuming the unit.
Explanation:
This is defined as a maximum amount a consumer is willing to pay for an additional good or service.
It is also the additional satisfaction or utility that consumer receives when the additional good or service is purchased. The marginal benefit for a consumer tends to decreases as consumption of the good or service increases.
In the business world, the marginal benefit for producers is often referred to as marginal revenue.
(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.
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Answer:
The question is not complete:
Here is the complete question:
The projected benefit obligation was $460 million at the beginning of the year. Service cost for the year was $25 million. At the end of the year, pension benefits paid by the trustee were $21 million and there were no pension-related other comprehensive income accounts requiring amortization. The actuaries discount rate was 5%. The actual return on plan assets was $24 million although it was expected to be only $23 million.
What was the pension expense for the year?
Here is the answer: The pension expense is $25 million.
Explanation:
Pension is the form of defined benefit contribution plan which require employers to make certain periodic contribution on behalf of employees. This contribution is reported as an expense in the income statement if even though the benefit has not been enjoyed by the employees. To determine the value of this expenses to be included in the income statement, the components of the pension expenses are relevant.
Components of pension expense are service cost, interest cost, return on plan asset, amortization of prior service costs and gain or loss from change in asset value.
Here is the determination of the pension expense as required by the question.
$`M
Service cost 25
Interest ($460,000,000*5%) 23
Expected return on plan asset (23)
Amortization of prior service costs -
Gain or loss in change in value -
Pension expense 25
Explanation:
The computation is shown below:
a. The gross margin is
Gross margin = (Sales revenues - Cost of sales) ÷ (Sales revenues) × 100
= ($10.7 million - $5.9 million) ÷ ($10.7 million) × 100
= 45%
b. The local operating margin is
= (Operating income ÷ Sales) × 100
where,
Operating income is
= (Sales - cost of sales - selling, general & administrative expenses - research & development - Depreciation & Amortization) ÷ (Sales revenue) × 100
= ($10.7 million - $5.9 million - $0.55 million - $1.2 million - $1.4 million) ÷ ($10.7 million) × 100
= ($1.65 million) ÷ ($10.7 million) × 100
= 15.42%
c. Net profit margin
= (Net profit ÷ Sales) × 100
where,
= (Sales - cost of sales - selling, general & administrative expenses - research & development - Depreciation & Amortization) × (1 - tax rate) ÷ (Sales revenue) × 100
= ($10.7 million - $5.9 million - $0.55 million - $1.2 million - $1.4 million) × (1 - 0.35) ÷ ($10.7 million) × 100
= ($1.0725 million) ÷ ($10.7 million) × 100
= 10.02%
Answer:
maximum profit = 10500
Explanation:
The newsvendor model is a statistical model used to manage inventory and determine the appropriate amount of inventory. So first of all we determine the optimal inventory level then we use it to find maximum profit. In order to determine optimal inventory level we first have to find possible variability in demand, for that we use the critical fractile formula which is as follows:
f= cu/cu+co
cu= underage cost = price - cost = $25 -$10 = $15
co= overage cost = cost - salvage value = $10 -$5 = $5
f= 15/15+5
f= 0.75
If we look at the standard normal cumulative distribution table 0.75 is equal to z= 0.67.
Q = Mean+ (z* standard deviation)
Optimal inventory = 500 + (0.67* 300)
Optimal inventory = 701 units
WE ROUND OFF THE UNITS TO 700.
Now we calculate maximum profit as follows:
maximum profit = contribution * Q
maximum profit = ($25 - $10) * 700
maximum profit = 10500
b. compensating differential
c. taste-based discrimination
d. not clear why XYZ did not match the other firm's offer
Answer:
The correct answer from the options given is D)
It is not clear why XYZ did not match the other firm's offer.
Explanation:
Alejandro is already an employee at XYZ Tech Corp. If his boss is willing to let him go, it may be because they are unable to match the higher salary being offered by the competition.
Another theory is that Alejandro is no longer very productive in the current company. There is a myriad of possible reasons. However, none of these are hinted in the question.
What we know is that he is Hispanic, He is a computer programmer and he got a better offer which his current company is unable to match.
We cannot posit that this is an issue of statistical discrimination. Why? We don't know that his current boss is not Hispanic as well.
A) Statistical Discrimination arises when agents make use of an individual's measurable trait to draw conclusions regarding another characteristic important to the interaction but more difficult to detect. This clearly is not the case.
B) When the factors surrounding a job suddenly become more adverse, the employee can reject such a change. Sometimes a company may offer such employee(s) additional money to their salary for them to accept such changes. This additional money or benefit is called Compensating Differential.
This also is clearly not the case.
C) Taste-based discrimination simply examines an employer's disposition to hiring a minority applicant. This theory posits that the prejudice of an employer towards people from a minority group will ultimately affect hiring decisions.
Again, this is not the picture painted in the above scenario.
So we are left with option D as the correct answer.
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b. involves some simplification of reality.
c. focuses on the unique aspects of each situation.
d. bears no relation to reality.
e. is based on normative statements.
Answer:
The correct answer is B
Explanation:
Economic theory is the theory which states or trying to explain the phenomena of economics, how the economy behaves, interpret the reason and what is the best solution to the economic problem- how to influence the economic theory.
All the theories of the economic, used to explain the particular problems or the situation in the economy through its model.
So, the good economic theory would be the one which comprise of the simplification of reality.