Answer: 12.2%
Explanation:
Given the variables available, the required rate of return can be computed using the Capital Asset Pricing Model with the formula;
Required Return = Risk-free rate + beta ( Market risk premium)
Required return = 4.25% + 1.4 * 5.5%
Required return = 4.25% + 7.7%
Required return = 12.2%
Note; The actual question says the Risk-free rate is 4.25%.
Answer:
Sr. No Particulars Debit Credit
1 Finished Goods $135,600
Work In Process- Assembly department $135,600
Transferred completed goods from the Assembly department to finished goods inventory. The goods cost $135,600.
2 Account Receivable $315,000
Sales $315,000
Cost Of Goods Sold $ 175,000
Merchandise Inventory $ 175,000
Sold $315,000 of goods on credit. Their cost is $175,000.
This answer explains how to record the journal entries for the transfer of completed goods, sale of goods on credit, and cost of goods sold.
To record the transfer of completed goods from the Assembly department to finished goods inventory, you would debit Finished Goods Inventory and credit Work in Process Inventory. The journal entry would be:
Finished Goods Inventory: $135,600
Work in Process Inventory: $135,600
To record the sale of goods on credit, you would debit Accounts Receivable and credit Sales Revenue. The journal entry would be:
Accounts Receivable: $315,000
Sales Revenue: $315,000
To record the cost of goods sold, you would debit Cost of Goods Sold and credit Finished Goods Inventory. The journal entry would be:
Cost of Goods Sold: $175,000
Finished Goods Inventory: $175,000
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Answer:
The required rate of return is 7.20%
Explanation:
The price of a share that pays a particular dividend amount in perpetuity is given by the below formula:
price of share=dividend/required rate of return
price of share is $91.00 per share
dividend payable in perpetuity is $6.55
required rate of return is unknown
$91=$6.55/required rate of return
required rate of return =$6.55/$91
=7.20%
to confirm the required of return,I divided the by the required rate of return as shown below:
6.55/0.0.72=$90.97 .approximately $91
That is a way to validate the computed required rate of return
B) His instrumentality estimates will be lower and his expectancy estimates will remain the same
C) His expectancy estimates for the next quarter will be lower
D) Neither her expectancy nor instrumentality estimates will change
E) His expectancy estimates for the next quarter will be higher
Answer:
Option E
His expectancy estimates for the next quarter will be higher
Explanation:
Will Presley's expectancy rate will be higher in the next sales quarter. This is because he feels that the birth of his new baby is instrumental to his his poor sales performance. Now that he feels that factor has been taken out of the way, he expects that there will be a great increase in the next sales quarter.
Year 2 Year 3
Amounts billed to customers for services rendered $ 320,000 $ 420,000
Cash collected from credit customers 230,000 370,000
Cash disbursements:
Payment of rent 77,000 0
Salaries paid to employees for services rendered during the year 137,000 157,000
Travel and entertainment 27,000 37,000
Advertising 13,500 32,000
In addition, you learn that the company incurred advertising costs of $24,000 in year 2, owed the advertising agency $4,900 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.
Required:
1. Calculate accrual net income for both years.
2. Determine the amount due the advertising agency that would be shown as a liability on RPG’s balance sheet at the end of year 2.
Answer:
RPG Company
1. Accrual Net Income for Year 2 and Year 3:
Year 2 Year 3
Amounts billed to customers for services $ 320,000 $ 420,000
Expenses:
Rent 38,500 0
Salaries paid to employees for services 137,000 157,000
Travel and entertainment 27,000 37,000
Advertising 24,000 16,600
Net Income $93,500 $170,900
2. Determination of the liability for Advertising:
Advertising Expense:
Year 1 balance = $4,900
Year 2 = $24,000
Cash paid (13,500)
Balance $15,400
Explanation:
a) Data and Calculations:
RPG Company.
Year 2 Year 3
Amounts billed to customers for services $ 320,000 $ 420,000
Cash collected from credit customers 230,000 370,000
Cash disbursements:
Payment of rent 77,000 0
Salaries paid to employees for services 137,000 157,000
Travel and entertainment 27,000 37,000
Advertising 13,500 32,000
Year 2 Year 3
Service Revenue: $ 320,000 $ 420,000
Accounts Receivable
Service revenue $320,000
Cash collected 230,000
Balance Year 2 $90,000
Service revenue 420,000
Cash collected 370,000
Balance Year 3 $50,000
Advertising Expense:
Year 1 balance = $4,900
Year 2 = $24,000
Cash paid (13,500)
Balance $15,400
Year 3 = 16,600
Cash paid 32,000
Balance 0
The accrual net income for RPG Company in Year 2 is $55,000, and in Year 3 is $194,000. The amount due to the advertising agency shown as a liability on RPG's balance sheet at the end of Year 2 is $0, as it was completely paid off in that year.
In order to calculate the accrual net income and determine the liability of the advertising agency, we first need to correctly account for all the incomes and expenses. Here's how it works:
Accrual net income is calculated as revenues (Amounts billed to customers) minus expenses. For year 2, the expenses include Payments of rent, Salaries paid, Travel and entertainment, and Advertising costs. For year 3, as there was no rent payment and no liabilities at the end of the year, we deduct only the Salaries paid, Travel and entertainment, and Advertising costs from the revenues.
Revenues
Year 2: $320,000
Year 3: $420,000
Expenses
Year 2: Rent($77,000) + Salary($137,000) + Travel & Entertainment($27,000) + Advertising($24,000) = $265,000
Year 3: Salary($157,000) + Travel & Entertainment($37,000) + Advertising($32,000) = $226,000
Accrual Net Income
Year 2: $320,000 - $265,000 = $55,000
Year 3: $420,000 - $226,000 = $194,000
The amount owed to the advertising agency that should be considered as a liability at the end of year 2 can be figured out by taking into account the advertising expenses incurred in year 2 and the previous year's outstanding. But since we learn that there were no liabilities at the end of year 3, the outstanding $4,900 at the end of year 1 must be paid in year 2 along with the incurred cost of $24,000. Therefore, the liability at the end of year 2 would be $0.
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Answer:
a. 24%
b. 12%
Explanation:
Marginal tax rate is an incremental tax rate that is paid out of the taxable income of a tax payer. It represents the rate at which the last unit of dollar of the taxable income is taxed. The marginal rate for each income bracket is supplied by the Internal Revenue Service (IRS).
Chuck Marginal Tax Rate
a) The marginal tax rate for Chuck if he earns additional $40,000 taxable income will be:
= $75,000 + $40,000
= $115,000
Marginal tax rate for $115,000 is 24% according IRS tax rate schedule.
b) If instead, it is an additional deduction of $40,0000, the marginal tax rate will be:
= $75,000 - $40,000
= $35,000
The marginal tax rate for taxable income of $35,000 is 12% according US tax rate schedule.
Note: the interest is categorized as interest from municipal bond, so it is tax free.
It is also assumed that Chuck is single. Hence, tax rate under single filer applies to him.
Based on IRS tiers, if Chuck earns an extra $40,000 his marginal tax rate would be 24%. If he instead had a $40,000 tax deduction, his rate would drop to 12%. These rates depend on the specific tax year.
The marginal tax rate for Chuck's income bracket of $75,000 is 22% based on IRS tax rates. However, if Chuck earns an additional $40,000, it would bump his total taxable income to $115,000, placing him in the 24% tax bracket. Therefore, his marginal tax rate for the additional $40,000 is 24%.
If instead Chuck had $40,000 of additional deductions, this would reduce his taxable income to $35,000. According to the IRS tax rates, this puts him at the 12% tax bracket. Therefore, his marginal tax rate with the additional deductions is 12%.
Please note that these rates are specific to the current tax year and subject to change.
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Overload of information
High perceptual bias
Good communication
Effective electronic trail
Answer: GOOD COMMUNICATION
Explanation:
A. The capacity of data to carry potential information is called information richness. As the sales representative were the mediums and the topic was need of customers there is no scope that information will be low in richness.
B. If there would be an information overload there could not have been an increase in responsiveness.
C. The information was presented by sales representatives who gets in direct contact with customers so there is a very little chance that the information would be on perceptual basis.
D. Free and effective communication between managers and sales representatives helps to transmit complete message with all perspectives cleared . Thus, helping in succeed.
E. In this problem there is an effective internal organizational communication and not an electronic trail.