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Shkiper50 [21]
2 years ago
6

On January 1, 20X4, Parke Company borrowed $360,000 from a major customer evidenced by a non-interest bearing note due in three

years and Parke did not elect the fair value option. Parke agreed to supply the customer's inventory needs for the loan period at lower than market price. At the 12% imputed interest rate for this type of loan, the present value of the note is $255,000 at January 1, 20X4. What amount of interest expense should be included in Parke's 20X4 income statement
Business
1 answer:
Sonbull [250]2 years ago
5 0

Answer:

Parke Company

The amount of interest expense should be included in Parke's 20X4 income statement is:

= $30,600.

Explanation:

a) Data and Calculations:

3-year Non-interest bearing note payable = $360,000

Imputed interest rate for this type of loan = 12%

Present value of the loan = $255,000

Interest expense as of December 31, 20X4 = $30,600 ($255,000 * 12%)

b) The interest expense is based on the present value of the loan and not on the future value of the note payable.  Therefore, the interest expense for each of the three years will not be the same amount but will continue to increase as the present value changes from one year to the next.

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Hi-Tek is a young start-up company that is currently retaining all of its earnings. The company plans to pay a $2 per share divi
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Answer:

$5.95

Explanation:

Given that,

Dividend paid in Year 7 = $2 per share

Growth rate of dividend = 2.2%

Required return = 16 percent

Share price is the present value of all future dividends.

Present Value of future dividends at year 6:

= \frac{Dividend\ in\ year\ 7}{Required\ return - Growth\ rate}

= \frac{2}{0.160 - 0.022}

= \frac{2}{0.138}

= $14.49

Present value of dividends (Now):

= Present Value of future dividends at year 6 × (1 + Required return)^{-6}

= $14.49 × (1 + 0.16)^{-6}

= $5.95

Therefore, the current share price is $5.95 if the required return is 16 percent.

5 0
2 years ago
AlphaBrona Industries manufactures 50,000 components per year. The manufacturing cost of the components was determined as follow
sashaice [31]

Answer:

Option (a) is correct.

Explanation:

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= Direct materials + Direct labor + Variable overhead + Fixed overhead

= $80,000 + $100,000 + $30,000 + $60,000

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Purchase from outside:

= Fixed overhead + Purchase price

= $60,000 + (50,000 × $10)

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= $560,000

Effect on income = Purchase from outside - Manufacturing cost

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8 0
2 years ago
Brianna is giving a speech on job specialization for her business class. She will most likely tell the class that one of the rea
Orlov [11]

Answer:

​the organization is too large for one person to do everything.

Explanation:

It is likely that Brianna will mention the fact that job specialization is necessary when an organization reaches a certain size. When an organization is very big, it becomes impossible for a single person to complete all tasks. Therefore, more employees have to be hired, and in order to be able to cooperate, they will have to divide their tasks. As these tasks are repeated, they will become more specialized.

hope this helps! have a wonderful day!

my name is brianna btw :) hehe

3 0
2 years ago
Capital budgeting projects typically assume that all cash flows transpire at the end of the year. The reason for this is that:
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Explanation:

This is an easy way for a manager to make an effective decision to carry out a capital budget project by analyzing a company's inflows and outflows from a period and determining what is the rate of resources and what are the aggregate risks for realization. investment that brings a positive return consistent with organizational objectives.

6 0
2 years ago
Zach is a quality control manager at Fresh Mints International. Any time a problem arises and a decision needs to be made, prese
Shtirlitz [24]

Answer:

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The facilitative style of action-making represents a collaborative effort between the members and the stakeholders, each giving feedback for mutual  the decision taking.

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