Monthly Archives: May 2012

In late 2010, you purchased the common stock of a company that has reported earnings increase in nearly every quarter since your purchase

In late 2010, you purchased the common stock of a company that has reported earnings increase in nearly every quarter since your purchase. The price of the stock increased from $12 a share at the time of purchase to a … Continue reading

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During 2011, Jimmy Enterprises completed the following transactions

During 2011, Jimmy Enterprises completed the following transactions: a. Sales revenue on account, $550,000. b. Collections on account, $325,000 c. Write-offs of uncollectible, $13,000 d. Uncollectible account expense, 5% of sales revenue Required: 1. Prepare the journal entries for the … Continue reading

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Classify the following items as (a) an addition to the bank balance

Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance, (c) an addition to the book balance, or (d) a subtraction from the book balance: _____ $20 in service charges _____ … Continue reading

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The Mitchem Marble Company has a target current ratio of 2.0 but has experienced some difficulties financing its expanding sales in the past few months

(Ratio analysis) The Mitchem Marble Company has a target current ratio of 2.0 but has experienced some difficulties financing its expanding sales in the past few months. At present the firm has a current ratio of 2.5 and current assets … Continue reading

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The CFO of your firm has asked you for an approximate answer to this question

(Real interest rates: financial analyst’s method) The CFO of your firm has asked you for an approximate answer to this question: What was the increase in real purchasing power associated with both 3-month Treasury bills and 30-year Treasury bonds? Assume … Continue reading

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E8–4 Your portfolio has three asset classes

E8–4 Your portfolio has three asset classes. U.S. government T-bills account for 45% of the portfolio, large-company stocks constitute another 40%, and small-company stocks make up the remaining 15%. If the expected returns are 3.8% for the T-bills, 12.3% for … Continue reading

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The expected annual returns are 15% for investment 1 and 12% for investment 2

E8–3 The expected annual returns are 15% for investment 1 and 12% for investment 2. The standard deviation of the first investment’s return is 10%; the second investment’s return has a standard deviation of 5%. Which investment is less risky … Continue reading

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Four analysts cover the stock of Fluorine Chemical

E8–2 Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming year. A second expects the return to be negative 5%. A third predicts a 10% return. A fourth expects a 3% return in … Continue reading

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An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year

E8–1 An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year. At the beginning of the year, the firm had a stock market value of $10 … Continue reading

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Castle Company is considering the purchase of a new machine

BYP 6-1 Castle Company is considering the purchase of a new machine. The invoice price of the machine is $125,000, freight charges are estimated to be $4,000, and installation costs are expected to be $6,000. Salvage value of the new … Continue reading

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