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1 year ago

8

You sell $4,000 per week in bags of dog food at 30% margin. You sell $3,000 per week in dog toys at 45% margin. Which generates

more margin for you?

1 answer:

nika2105 [10]1 year ago

5 0

The dog toys big man boss

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The following information was drawn from the accounting records of Chapin Company. On January 1, Year 1, Chapin paid $56,000 cas

mote1985 [20]

Answer: Please refer to Explanation

Explanation:

a)

The truck was bought for $56,000 and has a 5 year useful value after which it will have a salvage value of $6,000.

Depreciation can therefore be calculated as,

= ( Cost - Salvage) / Useful life

= (56,000 - 6,000) / 5

= $10,000

It will be depreciated at $10,000 per year.

Recording it will be,

DR Depreciation $10,000

CR Accumulated Depreciation (Truck) $10,000

(To record Depreciation expense to the year)

b) The Book Value is calculated as the Original Cost less the Accumulated Depreciation.

The Accumulated Depreciation so far being the first year is only $10,000.

The Book Value therefore is,

= 56,000 - 10,000

= $46,000

c) It is estimated that 5% of Credit Sales will be Uncollectible. This will go into the Uncollectible Account Balance. This is done to cater for the possibility that some people will not pay the money they owe so if they don't, it is simply taken from this account.

Sales are $320,000 and 5% are estimated Uncollectible.

This means that,

= 320,000 * 5%

= $16,000 will be recorded in the Uncollectible Account Balance

Recording it looks like,

DR Uncollectible Account Expense $16,000

CR Allowance for Doubtful Accounts $16,000

(To record Uncollectible Account Expense)

d) The Net Realizable Value of the Receivables will be Receivables less the Uncollectible Account Expense which will be removed to reflect the belief that some debtors will default.

Receivables are $68,000 and the Uncollectible Amount is $ 16,000.

Net Realizable Value = 68,000 - 16,000

Net Realizable Value = $52,000

6 0

2 years ago

Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2019, at a cost

Tcecarenko [31]

Answer:

The depreciation cost of the bus per unit is $ 1.4 which is purchased on January 1, 2019.

Explanation:

The depreciation cost per unit is computed as:

Depreciable asset = Cost - Salvage Value

= $205,860 - $7,900

= $197,960

Depreciation per unit = Depreciable asset /Useful life expected value

= $197,960 / 141,400

= $1.4

Therefore, the per unit cost is $1.4

8 0

1 year ago

Upton Umbrellas has a cost of equity of 11.6 percent, the YTM on the company's bonds is 6.2 percent, and the tax rate is 40 perc

matrenka [14]

Answer:

WACC = 9.86%

so correct option is d. 9.86%

Explanation:

given data

cost of equity = 11.6 percent

bonds = 6.2 percent

bonds sell = 103.2 percent

debt book value = $408,000

total assets book value= $952,000

market to book ratio = 2.74 times

to find out

what is the company's WACC

solution

we get here first Total book value of equity that is express as

Total book value of equity = Total assets book value - Total debt book value .................1

Total book value of equity = 952000 - 408000

Total book value of equity = $544000

and here market to book ratio is

market to book ratio = $\frac{market\ value}{book\ value}$

so market value of equity = (2.74 × 544000) = $1490560

and

After tax cost of debt = 6.2 (1 - tax rate)

After tax cost of debt = 6.2 (1 - 0.4)

After tax cost of debt = 3.72%

and

Market value of Debt = 408000 × 103.2%

Market value of Debt = $421056

so

Total market value = $1490560 + $421056

Total market value is =$1911616

and

WACC will be

WACC = Respective costs × Respective weights

WACC = $\frac{1490560}{1911616}11.6 + 3.72\frac{421056}{1911616}$

WACC = 9.86%

so correct option is d. 9.86%

4 0

2 years ago

Mojo Mining has a bond outstanding that sells for $2,201 and matures in 21 years. The bond pays semiannual coupons and has a cou

Ann [662]

Answer:

the after tax cost of debt is 3.90 %.

Explanation:

The Cost of debt is the rate required on the bond and this is calculated as follows :

PV = - $2,201

n = 21 × 2 = 42

PMT = ($2,000 × 7.38 %) ÷ 2 = $73.80

P/YR = 2

FV = $2,000

r = ?

Using a Financial Calculator, the Pre-tax Cost of debt, r is 6.4963% or 6.50 % (2 decimal places)

After tax cost of debt = Interest rate × (1 - tax rate)

= 6.50 % × (1 - 0.40)

= 3.90 %

5 0

2 years ago

Raven Company has a target of $70,000 pre-tax income. The contribution margin ratio is 30%. What amount of dollar sales must be

MrRa [10]

Answer:

Sales will be $353333.33

Explanation:

We have given fixed Cost = $ 38,600

Earning Required = $70,000

Contribution margin ratio = 30 %

Hence Contribution Required= Fixed Cost+Earning Required = $70000+$36000 = $106000

We know that contribution margin ratio is given by

Contribution margin ratio $=\frac{contribution\ margin\ }{sales}$

$0.3=\frac{$106000 }{sales}$

Sales = $353333.333

8 0

1 year ago