chapter 17, question 2
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Award: 6 out of 6.00 points
Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 1.6 million shares that are outstanding. Shareholders
require a 8% rate of return from Consolidated stock.
a. What is the price of Consolidated stock?
Note: Do not round intermediate calculations.
b. What is the total market value of its equity?
Note: Enter your answer in millions.
Consolidated now decides to increase next year’s dividend to $20 a share, without changing its investment or borrowing plans. Thereafter the company will
revert to its policy of distributing $10 million a year.
c. How much new equity capital will the company need to raise to finance the extra dividend payment?
Note: Enter your answer in millions.
d. What will be the total present value of dividends paid each year on the new shares that the company will need to issue?
Note: Enter your answer in millions.
e. What will be the transfer of value from the old shareholders to the new shareholders?
Note: Enter your answer in millions.
f. Is this figure more than, less than, or the same as the extra dividend that the old shareholders will receive?
a.
Stock price
$
125
b.
Market value of equity
$
200
million
c.
New equity
$
16
million
d.
Present value
$
16
million
e.
Transfer of value
$
16
million
f.
Is this figure more than, less than, or the same as the extra dividend that the old shareholders will receive?
The same
Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 1.6 million shares that are outstanding. Shareholders
require a 8% rate of return from Consolidated stock.
a. What is the price of Consolidated stock?
Note: Do not round intermediate calculations.
b. What is the total market value of its equity?
Note: Enter your answer in millions.
Consolidated now decides to increase next year’s dividend to $20 a share, without changing its investment or borrowing plans. Thereafter the company will
revert to its policy of distributing $10 million a year.
c. How much new equity capital will the company need to raise to finance the extra dividend payment?
Note: Enter your answer in millions.
d. What will be the total present value of dividends paid each year on the new shares that the company will need to issue?
Note: Enter your answer in millions.
e. What will be the transfer of value from the old shareholders to the new shareholders?
Note: Enter your answer in millions.
f. Is this figure more than, less than, or the same as the extra dividend that the old shareholders will receive?
$
$
$
$
$
a.
Stock price
125
b.
Market value of equity
200 million
c.
New equity
16 million
d.
Present value
16 million
e.
Transfer of value
16 million
f.
Is this figure more than, less than, or the same as the extra dividend that the old shareholders will receive?
The same
Explanation:
Some values below may show as rounded for display purposes, though unrounded numbers should be used for actual calculations.
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Calculate the amount recognised as expenses and amount disclosed as equity.
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Manufacturing cost data for Orlando Company, which uses a job order cost system, are presented below.
Indicate the missing amount for each letter. Assume that in alltases manufacturing overhead is applied on the basis of direct labor
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Osborn Manufacturing uses a predetermined overhead rate of $19.40 per direct labor-hour. This predetermined rate was based on a
cost formula that estimates $256,080 of total manufacturing overhead for an estimated activity level of 13,200 direct labor-hours.
2.14
The company actually incurred $251,000 of manufacturing overhead and 12,700 direct labor-hours during the period.
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BP22603 FINANCIAL ACCOUNTING AND REPORTING III
SEM 2, 2021/2022
QUESTION 3
On 1.1.2016 the management of ANDY Bhd granted its 100 employees in the production units
options to buy 100 shares each. If production increased by a minimum of 10%, the options
granted would increase by 10% and if the production increased by 20% or more the options
granted would increase by 20%. The options would vest at the end of the third year.
In 2016, the company estimated that production would not increase and that ten employees
would leave before the end of year 2018. In year 2017, five employees left and the company
estimated that productivity would increase by 15% only and only 75 employees would remain
in service till end of year…
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SEM 2, 2021/ZUZZ
TUTORIAL QUESTION 5
QUESTION 1
On 1 January 2016, the management of ZAIDY granted an option for 3,000 shares to an
employee on condition that he stays in the employment of ZAIDY for three years. Also, the
option cannot be exercised till the share price has increased to RM20 per share by the end of
the third year.
The fair value of the option on 1 January 2016 was RM5 each and was estimated to rise to
RM6.50 each by 31 December 2018. The fair value is determined taking into consideration
that the share price will rise to more that RM20 each.
Required:
Calculate the amount recognized in the statement of profit or loss and the amount disclosed
as equity in the statement of financial position.
QUESTION 2
On 1 January 2017, SURDIN granted 100 share…
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References
Exercises 18-41 (Algo) Allocation of Central Costs; Profit Centers [LO 18-3]
Woodland Hotels Incorporated operates four resorts in the heavily wooded areas of northern California. The resorts are named after
the predominant trees at the resort: Pine Valley, Oak Glen, Mimosa, and Birch Glen. Woodland allocates its central office costs to each
of the four resorts according to the annual revenue the resort generates. For the current year, the central office costs (000s omitted)
were as follows:
Front office personnel (desk, clerks, etc.)
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Carpet-cleaning contract
Contract to repaint rooms
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600
3,700
80
1,210
50
570
Mc…
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E10.1 (LO 1) (Acquisition Costs of Realty) The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are
enclosed in parentheses.
a. Money borrowed to pay building contractor (signed a note)
$(275,000)
b. Payment for construction from note proceeds
275,000
c. Cost of land fill and clearing
8,000
d. Delinquent real estate taxes on property assumed by purchaser
7,000
e. Premium on 6-month insurance policy during construction
6,000
f. Refund of 1-month insurance premium because construction completed early
(1,000)
g. Architect's fee on building
22,000
h. Cost of real estate purchased as a plant site (land $200,000 and building $50,000)
250,000
i. Commission…
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O $190000.
O $175000.
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AC114: Accounting I
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Martha Pharoah Ito began the Pharoah Company by investing $75000 of cash in the business. The company recorded revenues of
$555000, expenses of $410000, and had owner drawings of $30000. What was Pharoah's net income for the year?
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Module 8 Problem Set
1. BE.13.01
2. BE.13.06
3. BE.13.04.ALGO
4. BE.13.02
5. BE.13.05
6. BE.13.03.ALGO
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Changes in Current Operating Assets and Liabilities-Indirect Method
Mohammed Corporation's comparative balance sheet for current assets and liabilities was as follows:
Dec. 31, 20Y2
Dec. 31, 20Y1
Accounts receivable
$18,400
$17,600
Inventory
52,600
53,300
Accounts payable
28,700
27,400
Dividends payable
21,000
23,000
Adjust net income of $105,400 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
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Once you have calculated the changes in the current operating assets and liabilities determine what impact those changes would have on
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apter Nine
Determine Due Date and Interest on Notes
.09-03.BLANKSHEET
Determine the due date and the amount of interest due at maturity on the following notes:
L09-04.BLANKSHEET
Date of Note
Face Amount
Interest Rate
Term of Note
09-03.ALGO
January 10*
$40,000
90 days
a.
b.
March 19
180 days
000
8.
09-04.ALGO
June 5
30 days
000'06
d.
September 8
90 days
90-60
3.
000'9E
e.
November 20
60 days
9-11
4.
000'
*Assume that February has 28 days.
9-12
Assume 360-days in a year when computing the interest.
-19
Note
Due Date
Interest
>
-20
(2)
(b)
9-22
-24
(p)
(a)
890-
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Exercise 1-24B Preparing financial statements and interpreting the information in
those statements
On January 1, Year 2, the following information was drawn from the accounting records of Zeke
Company: cash of $200; land of $1,800; notes payable of $600; and common stock of $1,000.
Required
a. Determine the amount of retained earnings as of January 1, Year 2.
b.
After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a
$300 cash dividend to the stockholders. Can the company pay this dividend? Why or why not?
As of January 1, Year 2, what percentage of the assets were acquired from creditors?
As of January 1, Year 2, what percentage of the assets were acquired from investors?
As of January 1, Year 2, what percentage of the assets were acquired from retained earnings?
Create an accounting equation using percentages instead of dollar amounts on the right side of…
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Pablo Management has five employees, each of whom earns $250 per day. They are paid on Fridays for work completed Monday
through Friday of the same week. Near year-end, the five employees worked Monday, December 31, and Wednesday, Thursday, and
Friday, January 2, 3, and 4. New Year's Day (January 1) was an unpaid holiday.
Prepare the December 31 year-end adjusting entry for wages expense and record payment of the employees' wages on Friday,
January 4.
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Table of Contents > Week 9: Operational and legal Considerations > Lecture Notes > 09 Operational and Legal Considerations
09 Operational and Legal Considerations -
>
Calculating Capacity
• How many machines do you need?
• You expect your sales to be
3,000,000 granola bars (20g each)
• How large is your plant?
per month
• How many workers do you need?
The machine:
• How much is the investment?
Capacity: 100 kgs per hour
• What are the operating costs?
Requires 2 people to operate it
Takes 8 ft x 40 ft space
• Cost per machine $15,000
Energy and maintenance: $5 per hour
• Cost of material and packaging:
$0.12 per bar
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On January 1, 2018, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a five-year period ending December 31,
2021, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $429,029 and has an expected
economic life of six years. Aqua expects the residual value at December 31, 2021, to be $65,000. Negotiations led to Maywood
guaranteeing a $92,500 residual value.
Equal payments under the lease are $130,000 and are due on December 31 of each year with the first payment being made on…
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Assignment 1: Question 1 (a) Version 5
On July 1, 2021, Bird Inc., a private enterprise, acquired 1,250 shares of Duck Ltd. for $75,000. This investment
represents a 14% interest in Duck Ltd. and Bird Inc. uses the cost method to record the investment. On October 31,
2021, Duck Ltd. paid a $50,000 dividend to its shareholders. At December 31, 2021, Duck Ltd.'s shares were valued at
$40 per share and Duck Ltd. reported a net loss of $50,000 for the year. On March 15, 2021, Bird Inc. sold the shares
for $125,000. Both Bird Inc. and Duck Ltd. have December 31, 2021 year
gepacem fan to read 540
© Atro Derck ( loss of S
Required:
Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal.
Ignore income…
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On January 1, 20x1, Pete Electrical Shop received from Marion Trading 300 pieces
of bread toasters. Pete was to sell these on consignment at 50% above original
cost, for a 15% commission on the selling price. After selling 200 pieces, Pete had
the remaining unsold units repaired for some electrical defects for which he
spent P2,000. Marion subsequently increased the selling price of the remaining
units to P330 per unit. On January 31, 20x1, Pete remitted P64,980 to Marion
after deducting the 15% commission, P850 for delivery expenses of sold units,
and P2,000 for the repair of 100 units. The consigned goods cost Marion Trading
P200 per unit, and P900 had been paid to ship them to Pete Electrical Shop. All
expenses in connection with the…
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