Answer:
Eller Equipment Co.
Income statement
Particular Amount($) Amount ($)
Sales revenue 940,000
Less: Cost of good sold (595,000)
Gross margin 345,000
Operating expenses
Salaries expenses 122,000
Operating expenses 65,000
Warranty expenses 9,200
Un-collectible account expenses 45,000
Depreciation expenses 3,000
Total operating expenses (244,200)
Operating income 100,800
Non-operating expenses
Interest revenue 6,200
Interest expenses (36,000)
Gain on sale of equipment 19,000
Total non-operating items (10,800)
Net Income $90,000
Balance Sheet
Assets Amount$
Current Assets
Cash 41,000
Accounts receivable 108,000
Less: Allowance for doubtful (19,000) 89,000
accounts
Merchandise inventory 101,000
Interest receivable 3600
Prepaid rent 38,000
Supplies 6,500
Notes receivable 32,500
Total current assets 311,600
Property Plant and Equipment
Equipment 243,000
Less: Accumulated depreciation (66,000) 177,000
Land 95,000
Total property plant and equipment 272,000
Total Assets 583,600
Liabilities and Stockholder Equity
Current liabilities
Account payable 55,000
Unearned revenue 47,000
Warranties payable 6,500
Interest payable 6,000
Salaries payable 68,000
Total current liabilities 182,500
Long-term liabilities
Notes payable 160,000
Total long-term liabilities 160,000
Stockholders equity
Common stock 110,000
Retained earning 131,100
Total stockholders equity 241,100
Total liabilities and stockholders equity $583,600
Workings
Retained earning = Beginning retained earning + Net income - Dividend
= 61,100 + 90,000 - 20,000
= 131,100
The multistep income statement and the classified balance sheet was prepared for the Eller Equipment Co. using the provided year 1 figures. The net income was found to be $98,200 and total assets for the company were calculated to be $541,000. These statements are essential tools for financial decision making in business.
Multistep Income Statement for Eller Equipment Co.
Start by listing the different income categories. The sales revenue is $940,000.
Deduct the cost of goods sold which is $595,000 to calculate the gross profit: $345,000.
Next, deduct the operating expenses that include salaries expense ($122,000), uncollectible accounts expense ($45,000), operating expenses ($65,000), depreciation expense ($3,000), and interest expense ($36,000) to arrive at an operating income: $73,000.
Lastly, consider the gain on sale of equipment ($19,000) and the interest revenue ($6,200) to find a net income of $98,200.
Classified Balance Sheet for Eller Equipment Co.
Start with assets that include cash ($41,000), accounts receivable ($108,000 - $19,000 = $89,000), inventory ($101,000), Prepaid Rent ($38,000), Land ($95,000), and Equipment ($243,000 - $66,000 = $177,000) to get a total asset of $541,000.
Next, consider liabilities which include accounts payable ($55,000), salaries payable ($68,000), interest payable ($6,000), unearned revenue ($47,000), warranties payable ($6,500), and notes payable ($160,000) to get a total liability of $342,500.
Finally, calculate the equity. The retained earnings are beginning retained earnings ($61,100) + net income ($98,200) - dividends ($20,000) = $139,300.
Adding the common stock ($110,000) will give a total equity of $249,300.
Check your work: Assets ($541,000) = Liabilities ($342,500) + Equity ($249,300)
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Answer:
The expected return for securities with maturities of two, three, and four years is as follows:
Expected Return 2 year Security=4.50 %
Expected Return 3 year security=6 %
Expected Return 4 year security=7.25 %
Explanation:
According to the expectations hypothesis theory, the expected return for the 2 year security is the average of the expected yields of two one-year T-bills, for the 3 year security is the average of the expected yields of three one-year T-bills and the 4 year security is the average of the expected yields of the four one-year T-bills.
Therefore, in order to calcuate the expected return for each year we have to use the following formula:
Expected Return 2 year Security=(4 + 5) / 2 = 4.50 %
Expected Return 3 year security=(4 + 5 + 9) / 3 = 6 %
Expected Return 4 year security=(4 + 5 +9 + 11) / 4 = 7.25 %
Answer:
Line Stretching
Explanation:
A company normally makes an up-market stretch to obtain higher profit margins, achieve market growth, or position itself as a complete producer.
Answer:
$66,000
Explanation:
The computation of the total implicit cost per year is shown below:
= Given up salary + investment amount × interest rate on investment in the economy
= $60,000 + $100,000 × 6%
= $60,000 + $6,000
= $66,000
We simply added the given up salary and investment amount after considering the interest rate on investment so that the accurate amount could come
Average accounts receivable (net) 100,000
Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year.
a. Accounts receivable turnover.
b. Number of days' sales in receivables. _______ days
Answer:
a. 15 times
b. 24.3 days
Explanation:
The computations are shown below:
a. Account receivable turnover ratio = Net credit sales ÷ Average accounts receivable
= $1,500,000 ÷ $100,000
= 15 times
Now the Number of days' sales in receivables would be
= Total number of days in a year ÷ Accounts receivable turnover ratio
= 365 days ÷ 15 times
= 24.3 days
Answer:
In this situation, most of the NASA workforce would still be composed of austronauts with jet fighter experience because they would be lured by the higher wages offered to them.
However, the difference would lie in that there would also be some austronauts without jet figther experience, who would still try to get into NASA, despite being offered lower wages.
This is a different situation to the current one, where jet fighter experience is an requirement to become a NASA austronaut, which means that those without this type of experience are barred from entering NASA, no matter how low of a wage they would be willing to take.
Offering higher salaries to astronauts with jet fighter experience may attract more qualified candidates with these skills, as these prepare them for the extremes of space travel. Yet, this could create salary disparity and undervalue other essential astronautical skills and experience.
If NASA were to revise their hiring strategy and offer higher salaries to astronauts with jet fighter experience, it might increase the number of qualified applicants with this specific type of experience. Jet fighter experience and the associated G-force training in simulators is highly valuable in the space industry as it prepares individuals for the extreme forces experienced during space travel. Furthermore, adapting to zero G (free fall or weightlessness), another specific aspect of astronaut training, could be an easier transition for those with jet fighter background.
However, this kind of strategy might create a salary disparity among astronauts, potentially leading to dissatisfaction among those without jet fighter experience. It's important to remember that there are many valuable skills and experience required in space exploration, not just those gained through jet fighter training. Higher salaries based purely on jet experience might overlook other important attributes and qualifications.
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b. The WTO seeks to reduce remaining trade barriers through multilateral negotiations.
c. The WTO is headquartered in Belgium.
d. Existence of the WTO has allowed most member countries to replace their local currencies with a universal currency beginning in 2002.
Answer:
a) & b) are true. c) & d) are false.
Explanation:
WTO is an international (intergovernmental) organisation, supervising international trade between countries.
a) is true. It seeks to establish impartial procedures for resolving trade disputes among its members.
It seeks to reduce remaining trade barriers through multilateral negotiations, b) is true
c) is false. It is headquartered in Geneva, Switzerland (not Belgium)
d) is false. Existence of the WTO has allowed most member countries to replace their local currencies with a universal currency beginning in 2002. It is an international trade organisation, not monetary policy organisation.