Answer:
1. The selling price of the bonds is $590.976.46
2 .The journal entry for the issuance of the bonds and bond issue costs would be as follows:
Debit Credit
Cash $538,976.26
Discount on bonds payable $39,023.74
Unamortized bonds issue costs $22,000
Bonds Payable $600,000
3. Assuming that Barnett uses IFRS, the journal entry for the issuance of the bonds would be as follows:
Debit Credit
Cash $600,000
Bonds Payable $600,000
Explanation:
In order to calculate the selling price of the bonds we would have to calculate first the present value of particular and present value of interest, hence:
present value of particular=($600,000×0.414643)=$248,785.80
present value of interest=$600,000×4%13.007936=$312,190.46
Therefore, selling price of the bonds=present value of particular+present value of interest
1. Selling price of the bonds=$248,785.80+$312,190.46=$590.976.46
2. The journal entry for the issuance of the bonds and bond issue costs would be as follows:
Debit Credit
Cash $538,976.26
Discount on bonds payable $39,023.74
Unamortized bonds issue costs $22,000
Bonds Payable $600,000
3. Assuming that Barnett uses IFRS, the journal entry for the issuance of the bonds would be as follows:
Debit Credit
Cash $600,000
Bonds Payable $600,000
Answer:
units required to be produced 217,000
Explanation:
expected sales for the period 208,000
desired ending inventory 27,000
total units required 235,000
beginning units ( 18,000 )
units required to be produced 217,000
The company needs units to fullfil teir sales bdget and desired ending invenoty.
the beginning inventory already complete a portion of the requirement so is the difference what determinates the required units to be produced.
Answer:
$104,000
Explanation:
Note: The full question is attached as picture below
Fair value of net assets = Cash and receivables + Inventory + Land + Buildings (net) + Equipment (net) - Liabilities
Fair value of net assets = $70,000 + 210,000 + 240,000 + 270,000 + 90,000 - 420,000
Fair value of net assets = $460,000
Purchase consideration paid = 12,000*$47
Purchase consideration paid = $564,000
Goodwill recognized = Purchase consideration - Fair value of net assets
Goodwill recognized = $564,000 - $460,000
Goodwill recognized = $104,000
unit and the company expects it can sell 350 000 unit per year at this price for a period of 4
years. Launching this project will require purchase of a $2 000 000 equipment that has
residual value in four years of $200 000 and adding $ 600 000 in working capital which is
expected to be fully retrieved at the end of the project. Other information is available below:
Depreciation method: straight line
Variable cost per unit: $11
Cash fixed costs per year $350 000
Discount rate: 10%
Tax Rate: 30%
Do an analysis with cash flows of the project to determine the sensitivity of the project NPV
with the following changes in the value drivers and provide your results in (a) relevant
tables:
Unit sales decrease by 10%
Price per unit decreases by 10%
Variable cost per unit increases 10%
Cash fixed cost per year increases by 10%
Answer:
Explanation:
The calculation can be done using sensitivity analysis
The sensitivity analysis is done as follows:
Scenario NPV Deviation in NPV from orignial scenario % depletion
Original 6140513
Unit sale decreases by 10% 5286234 -854279 13.91%
Price per unit decreases by 10% 2894254 -3246259 52.87%
Variable cost per unit increases 10% 5286234 -854279 13.91%
Cash fixed cost per year increases by 10% 6062851 -77662 1.26%
Calculation of original NPV
Sales (350000 * 22) 7700000
Less: Variable cost (350000 * 11) -3850000
Less: Fixed cost -350000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 3050000
Less: Tax at 30% -915000
Profit after tax 2135000
Add: Depreciation 450000
Cash flow after tax 2585000
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 2585000 2585000 2585000 2585000
Working capital released 600000
Residual value 200000
Net cash flows -2600000 2585000 2585000 2585000 3385000
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 2350000 2136364 1942149 2312001
NPV 6140513
Calculation of NPV when unit sales decrease by 10%
Sales (315000 * 22) 6930000
Less: Variable cost (315000 * 11) -3465000
Less: Fixed cost -350000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 2665000
Less: Tax at 30% -799500
Profit after tax 1865500
Add: Depreciation 450000
Cash flow after tax 2315500
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 2315500 2315500 2315500 2315500
Working capital released 600000
Residual value 200000
Net cash flows -2600000 2315500 2315500 2315500 3115500
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 2105000 1913636 1739669 2127928
NPV 5286234
Calculation of NPV when price per unit decrease by 10%
Sales (350000 * 19.8) 6237000
Less: Variable cost (350000 * 11) -3850000
Less: Fixed cost -350000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 1587000
Less: Tax at 30% -476100
Profit after tax 1110900
Add: Depreciation 450000
Cash flow after tax 1560900
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 1560900 1560900 1560900 1560900
Working capital released 600000
Residual value 200000
Net cash flows -2600000 1560900 1560900 1560900 2360900
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 1419000 1290000 1172727 1612526
NPV 2894254
Calculation of NPV when variable cost per unit increases 10%
Sales (350000 * 22) 7700000
Less: Variable cost (350000 * 12.1) -4235000
Less: Fixed cost -350000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 2665000
Less: Tax at 30% -799500
Profit after tax 1865500
Add: Depreciation 450000
Cash flow after tax 2315500
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 2315500 2315500 2315500 2315500
Working capital released 600000
Residual value 200000
Net cash flows -2600000 2315500 2315500 2315500 3115500
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 2105000 1913636 1739669 2127928
NPV 5286234
Calculation of NPV when cash fixed cost per year increases by 10%
Sales (350000 * 22) 7700000
Less: Variable cost (350000 * 11) -3850000
Less: Fixed cost -385000
Less: Depreciation [(2000000 - 200000) / 4] -450000
Profit before tax 3015000
Less: Tax 30% -904500
Profit after tax 2110500
Add: Depreciation 450000
Cash flow after tax 2560500
0 1 2 3 4
Initial investment -2000000
Working capital -600000
Cash flow after tax 2560500 2560500 2560500 2560500
Working capital released 600000
Residual value 200000
Net cash flows -2600000 2560500 2560500 2560500 3360500
PVF at 10% 1 0.9091 0.8264 0.7513 0.6830
Present value -2600000 2327727 2116116 1923742 2295267
NPV 6062851
Answer:
An authority is a power to give orders and ask your subordinates to perform certain duties. Authority can be given to a person by government’s executives, owner of an organization, or by the representatives of GOD.
An authority is a legitimate power to influence people to compel them to perform the task given to them. For example, a mob has the power to punish a criminal, but they don’t have legitimate authority to punish the criminal.
The authority lies in the hands of the law. Similarly, in an organization, the authority lies in the hands of a manager to get organizational tasks accomplished by his subordinates.
However, the authority of the manager is limited to a particular department of the organization. He has no authority on his employees outside the organization.
Authority is the consequence of the position of an individual in an organization. A person can only be at the superior position of the organization if he has authority; a person with no authority can never be on the top position of an organization.
Therefore, the degree of authority is highest at the top level, and its degree keeps on decreasing the levels of the organization. That means only a person at the top level can give orders to the people at a low level and can compel them to perform tasks given to them, and a person at lower level can’t give orders to the people at the top or his peers.
Authority can be of two types such as official authority (where authority is given to a person by the organization he works for), and other is a personal authority (where authority is given to a person because of his ability to influence people in the organization.
What is the Responsibility?
Being responsible
Responsibility is a moral duty or an obligation of an employee, whether he is a manager or subordinate to fulfill the task given to them. The responsibility starts as soon as the job is assigned to the employee and finish with the completion of the task.
The person is responsible for the consequence of his performance in the task. The responsibility comes with authority.
A manager is responsible for the accomplishment of the task. The responsibility moves upwards in the organization from a lower level of employees to the upper level of management.
The responsibility is originated from the superior-subordinate relationship in an organization. Because of this relationship, the manager can do a task from his subordinates with responsibility.
Difference between authority and responsibility
Difference between authority and responsibility
AUTHORITY RESPONSIBILITY
An authority is a power or right that a person gets because of his designation, role, or job. A responsibility is an obligation that an employee has to fulfill the work bestowed on him
An authority is the outcome of a formal position in an organization. A responsibility is the outcome of a superior-subordinate relationship.
An authority is a legal right given to a person. A responsibility is consequence of authority.
It is a delegation of authority. It is an assumption of responsibility.
The flow of authority is from the upper level to lower level. The flow of authority is from lower level to upper level.
Authority requires the ability to give orders. Responsibility requires the ability to follow orders.
The authority lasts for a long period of time. The responsibility ends as soon as the work bestowed on the employee is complete.
The objective of the authority is to make decisions and implement them effectively. The objective of responsibility is to perform duties effectively assigned by the superiors.
Answer:
Consider the following calculations
Explanation:
This 2-step mortgage problem requires a 2-step solution.
To solve for the PMT for the last 23 years of the loan, we first need to know what the principal is at the end of the 7th year.
Thus, step I uses the initial info to solve for the PMT for each month of the first 7 years. N=360, I/Y=5(%)/12 = 0.416667(%), PV=150,000, => PMT = 805.
The discount rate will change to 5% index rate plus 2% margin = 7% at the beginning of the 8th year.
In Step II we first determine the remaining balance at the end of year 7. This requires using the amortization worksheet.
On the TI BA II Plus, AMORT is the secondary function of PV.
Set P1, the periods at which the calculations begin, equal to 1. We cursor down to P2, which is the last period of the calculation, and set it equal to 84. Cursoring down once again, we see that BAL at month 84 = 131,917.52.
Going back to the TVM row, we set PV remaining at the end of 23 years = 131,917.52. I/Y is calcluated as 5(%) index rate plus 2(%) margin =7%; dividing 7(%) by 12 = 0.583333(%). N=360-84 = 276 months left.
Finally, we solve for PMT = 962.89.
Answer:
c. will be able to make new loans up to a maximum of $9.50
Explanation:
If the reserve requirement is 5% it means that the bank is required to reserve(not loan out) 5% of it's reserves so in this case the bank is required to 5% of 10 (0.05*10) $0.50 as reserves and can loan out $9.50 (10-0.50). As the bank has no desire to hold on to excess reserves we can be sure that it will only hold 0.50 as reserve as it is required and loan out $9.50. So statement c is correct.
Statement A is incorrect because the bank does not need to increase required reserve by $10 but by just $0.50.
Statement B is incorrect a deposit of $10 cannot increase the total reserve by $10.50 as it is impossible mathematically.
Statement d is incorrect because 2 of the 3 statements are incorrect therefore all of the above statements cant be correct.