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2 years ago

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A company's inventory records report the following in November of the current year: Beginning November 1 5 units @ $20 Purchase

November 2 10 units @ $22 Purchase November 12 6 units @ $25 On November 8, it sold 12 units for $54 each. Using the LIFO perpetual inventory method, what amount of gross profit was earned from the 12 units sold?

1 answer:

Musya8 [376]2 years ago

4 0

Answer:

Gross profit= $388

Explanation:

Giving the following information:

Beginning November 1: 5 units at $20

Purchase November 2: 10 units at $22

Purchase November 12: 6 units at $25

On November 8, it sold 12 units for $54 each.

LIFO (last-in, first-out)

COGS= 10*22 + 2*20= $260

Gross profit= 12*54 - 260= $388

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Your uncle holds just one stock, East Coast Bank (ECB). You agree that this stock is relatively safe, but you want to demonstrat

g100num [7]

Complete question:

Assume that your uncle holds just one stock, East Coast Bank (ECB), which he thinks has very little risk. You agree that the stock is relatively safe, but you want to demonstrate that his risk would be even lower if he were more diversified. You obtain the following returns data for West Coast Bank (WCB). Both banks have had less variability than most other stocks over the past 5 years.

Year ECB WCB

2004 40.00% 40.00%

2005 -10.00% 15.00%

2006 35.00% -5.00%

2007 -5.00% -10.00%

2008 15.00% 35.00%

a. What is the expected return and risk of each stock?

b. Measured by the standard deviation of returns, by how much would your uncle's risk have been reduced if he had held a portfolio consisting of 60% in ECB and the remainder in WCB? In other words, what is the difference between portfolio's standard deviation and weighted average of components' standard deviations? (Hint: check the example on page 11-12 on my note).

Solution:

The estimated return of the stock is the average profit.

So the average of ECB is (40-10+35-5+15)/5

= $\frac{75 percent}{5}$

= 15% expected return

WCB expected return = 40+15-5-10+35

= $\frac{75 percent}{5}$

= 15%

They've had the same planned return.

This is generally defined in the Greek letter Mu, (U) A weighted average may also be used to calculate portfolio volatility.

Standard deviation of ECB is $\sqrt{{ sum [(x-U)^2]/5}}$

so for ECB:

$(40-15)^2$ = $25^2$ =6.25%

$(-10-15)^2$ = $-35^2$ = 0.1225

$(35-15)^2$ = $20^2$ = 0.04

$(-5-15)^2$ = $-20^2$ = 0.04

$(15-15)^2$ =0

now 0.0625+0.1225+0.04+0.04+0=0.265

stdev= $\sqrt{(0.265/5)}$ = 0.23

So WCB is the same except in a different order to make things quick I'm only going to add the median again WCB=0.23

Then the 60/40 portfolio will be the "weighted average" of the returns.

portfolio returns

2004: (60%*40%)+(40%*40%) = 40%

2005: (60%*-10%)+(40%*15%) = 0%

2006: (60%*35%)+(40%*-5%) = 19%

2007: (60%*-5%)+(40%*-10%) = -7%

2008:(60%*15%)+(40%*35%) = 23%

we have an average return of (40+19-7+23)/5 = 75/5 =15%

The estimated return of all combined stocks is a better way to do so.

we knew they both had expected returns of 15% so we can say

(60%*15%)+(40%*15%)=15% so the portfolio has an expected return of 15%

Now we do the standard deviation for the whole portfolio and get

$(40-15)^2$ = $25^2$ =6.25%

$(0-15)^2$ = - $25^2$ =6.25%

$(19-15)^2$ = $4^2$ = 0.16%

$(-7-15)^2$ = $-22^2$ = -4.84%

$(23-15)^2$ = $8^2$ = 0.64%

now add them up and get 9.78%

$\sqrt{(9.78%/5)}$ = 13.98%

Therefore, the normal portfolio variance is 13.98 per cent and the predicted portfolio return is 15 per cent.

Every stock has a standard deviation of 23 per cent and an average return of 15 per cent, meaning that the fund has the same estimated return but with less standard deviation. This ensures that the same gain is less costly. It's stronger than any of these products.

5 0

2 years ago

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500.

Paraphin [41]

Answer:

$3,850

Explanation:

The computation of the machine's second-year depreciation under the straight-line method is shown below:

= (Cost of the machine - salvage value) ÷ (estimated useful life)

= ($43,500 - $5,000) ÷ (10 years)

= ($38,500) ÷ (10 years)

= $3,850

In this method, the depreciation is the same for all the remaining useful life. Therefore, for the second year also, the depreciation expense is the same i.e $3,850

8 0

2 years ago

Treasury Stock Pomona Corporation issued 60,000 shares of $3 par value common stock at $21 per share and 9,000 shares of $30 par

In-s [12.5K]

Answer:

Issuance

Common Stock

Dr. Cash $1,260,000

Cr. Common Stock $180,000

Cr. Paid-in-Capital excess of par common stock $1,080,000

Preferred Stock

Dr. Cash $765,000

Cr. Preferred Stock $270,000

Cr. Paid-in-Capital excess of par Preferred stock $495,000

Treasury Stock Purchase

Dr. Treasury Stock $46,000

Cr. Cash $46,000

Explanation:

Common Shares are issued at a specified price, we need to record the par value of the share in common stock account and The value excess of par in the Paid-in-Capital Excess of par common stock separately.

Issuance of 60,000 shares

Par value = $60,000 x 3 = $180,000

Excess of par value = ($21 - $3 ) x 60,000 = $1,080,000

Preferred stock has also recorded same as the common but in different accounts

Par Value = 9,000 x $30 = $270,000

Excess of par value = ($85 - $30) x 9,000 = $495,000

Treasury stocks are the company's own shares which is repurchased by the company. It is recorded in treasury shares account which is an contra equity account. I can be reissued or cancelled by the company.

Purchase of Treasury Stock

Treasury Stock = 2,000 x $23 = $46,000

5 0

2 years ago

On March 1, 2018, Shipley Resources entered into an agreement with the state of Alaska to obtain the rights to operate a mineral

N76 [4]

Answer:

B) $20,697.

Explanation:

For computing the accretion expense, first we have to determine the present value which is shown below:

Present value would be

= Annual cash flows × PVIF factor for five years at 10%

where,

Annual cash flows would be

= Probability × cash outflows + Probability × cash outflows + Probability × cash outflows

= 25% × $300,000 + 50% × $400,000 + 25% × $500,000

= $75,000 + $200,000 + $125,000

= $400,000

And, the PVIF would be 0.62092. Refer to the PVIF table

So, the present value would be

= $400,000 × 0.62092

= $248,368

Now the accretion expense would be

= $248,368 × 10% × 10 months ÷ 12 months

= $20,697

The 10 months are computed from March 1 to December 31 and we assume the books are closed on December 31

4 0

2 years ago

Maurice sent in a complaint about a rude salesperson he dealt with at FirstElectronics Inc. He didn't get a response for about t

AfilCa [17]

Answer:

centralized

Explanation:

According to my research on different organizational structures, I can say that based on the information provided within the question FirstElectronics most likely has an extremely centralized organizational structure. This type of structure is based on a hierarchical decision-making model in which all decisions and processes are handled strictly at the top or the executive level.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

8 0

2 years ago