BUSINESS COLLEGE

To encourage employee ownership of the company's common shares, KL Corp. permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 12% discount. During May, employees purchased 10,000 shares at a time when the market price of the shares on the New York Stock Exchange was $12 per share. KL will record compensation expense associated with the May purchases of:

Answers

Answer 1

Answer:

Dr Cash 105,600

Dr Compensation Expense 14,400

Cr Common Stock 10,000

Cr Paid-In Capital – Excess of Par 110,000

Explanation:

KL Corp Journal entry

Dr Cash 105,600

Dr Compensation Expense 14,400 (10,000*12*12%)

Cr Common Stock 10,000 (10,000*1)

Cr Paid-In Capital – Excess of Par 110,000

(10,000*(12-1))

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Right Medical introduced a new implant that carries a five-year warranty against manufacturer’s defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 1% of sales. Sales were $15 million and actual warranty expenditures were $20,000 for the first year of selling the product. What amount (if any) should Right report as a liability at the end of the year? (Enter your answers in whole dollars.)

Answers

Answer:

warranty liability $ 130,000

Explanation:

the warrant liability will de clared based on sales volume and the expected warranty expenditures associate with sales.

This is done to match the expenses of the warranty with the period on which are generated. If don't further period will have expenditures which related to sales of prior periods.

Having said that we proceeds:

warranty liability:

15,000,000 x 1% = 150,000

warranty expenditures (20,000)

net 130,000

the company still spect this sales will generate additioal warranty expenditres for 130,000 dollars. this is a liability.

Final answer:

Based on an expected 1% of sales as warranty costs, Right Medical should report a warranty liability of $130,000 at year-end, subtracting the actual costs ($20,000) from the expected costs ($150,000).

Explanation:

The question revolves around estimating the warranty liability that Right Medical should report at the end of the year after introducing a new implant with a five-year warranty. Based on industry standards, warranty costs are expected to be 1% of sales. The company did indeed incur actual warranty expenditures of $20,000, however, the expectation based on sales would be $150,000 (1% of $15 million). Since the actual expenditures are lower than expected, the company should report the difference between the expected cost (calculated as 1% of sales) and the actual cost as the warranty liability. Therefore, Right Medical should report a liability of $150,000 - $20,000 = $130,000 at the end of the year.

Learn more about warranty liability here:

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A 7X Corp.just paid a dividend of $2.30 per share. The dividend are expected to grow at 23 percent for the next eight years and then level off to a growth rate of 7 percent indefinitely. If the required return is 15 percent, what is the price of the stock today?

Answers

Answer:

Price of stock=$ 77.88

Explanation:

The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.

The price of the stock will the sum of the present value of the growing annuity and the growing perpetuity

Present value of dividend from year 1 to 8

The PV of the growing annuity = A/r-g) ( 1- (1+g)/(1+r)^n )

A- dividend payable now , r- required of return, g-growth rate, number of years

PV = (2.30×1.23)/(0.15-0.23)× (1- (1.23/1.15)^8) = 25.199

PV of Dividend from year 9 and beyond:

P = D× g/(r-g)

This will be done in two steps:

Step 1: PV(in year 8)of dividend = 2.30× 1.23^8×1.07/(0.15-0.07) = 161.16

Step 2 : PV in year 0 = 161.16× 1.15^(-8)= 52.684

PV of Dividend from year 9 and beyond = 52.684

Price of stock = 25.19 + 52.68= 77.88

Price of stock=$ 77.88

you are going to deposit $19000 today. You will earn an annual rateof 3.3 percent for 11 years, and then earn an annual rate of 2.7 percent for 14 years. how much will you have in your account in 25 years?

Answers

Answer:

After 25 years you will have in your account $42,782.05.

Explanation:

First find the Future value of $19000 invested today at the end of 11 years.

PV = - $19,000

Pmt = $0

P/yr = 1

r = 3.30%

n = 11

FV = ?

Using a Financial calculator, the Future Value (FV) after 11 years will be $27,155.46.

Use the $27,155.46 to find future value at the end of the next 14 years at the rate of 2.70%

PV = - $27,155.46

Pmt = $0

P/yr = 1

r = 3.30%

n = 14

FV = ?

Using a Financial calculator, the Future Value (FV) after 14 years will be $42,782.05.

Thus, after 25 years you will have in your account $42,782.05.

"Charles Dow was the original editor of the Wall Street Journal. He was the originator of ""Dow Theory,"" which holds that the prices of transportation stocks, such as Heartland Express, can predict changes in the price of industrial stocks, such as ExxonMobil. a. An article in the Wall Street Journal refers to Dow Theory as the ""granddaddy of technical analysis."""b. Would an investor be able to earn an aboveaverage return on her stock investments by selling industrial stocks whenever she saw declines in transportation stocks and buying industrial stocks whenever she saw increases in transportation stocks? Briefly explain.

Answers

Answer:

Answer is explained in the attachment.

Explanation:

If a company's revenue is $530,000, profit before taxes is $98,000, and product costs are $390,000 then:a)The company's gross margin totals $98,000 b)The company's period costs total $140,000. c)The company's period costs cannot be determined d)The company's contribution margin totals $140,000 e)The company's gross margin totals $140,000

Answers

Answer: Option (e) is correct.

Explanation:

Given that,

Company's revenue = $530,000

Profit before taxes = $98,000

Product costs = $390,000

Company's gross margin = Company's revenue - Product costs

= $530,000 - $390,000

= $140,000

Therefore, The company's gross margin totals $140,000.

Present value (with changing interest rates). Marty has been offered an injury settlement of $12 comma 000 payable in 3 years. He wants to know what the present value of the injury settlement is if his opportunity cost is 5%. (The opportunity cost is the interest rate in this problem.) What if the opportunity cost is 6.5%? What if it is 11.5%?