## Gen Corp. is expected to pay a dividend of \$3.20 per year indefinitely

Gen Corp. is expected to pay a dividend of \$3.20 per year indefinitely. The appropriate rate of return on this stock is 12 percent per year, and the stock consistently goes ex-dividend 40 days before dividend payment date.

What will be the expected minimum price in light of the dividend payment logistics? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Minimum stock price\$____

What will be the expected maximum price in light of the dividend payment logistics? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Maximum stock price\$ _____

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## Incredible Sounds is a wholesale business that sells musical instruments

Incredible Sounds is a wholesale business that sells musical instruments. Transactions involving sales and cash receipts for the firm during April 2019 follow. The firm sells its merchandise for cash and on open account. During April, Incredible Sounds engaged in the following transactions:

DATE

TRANSACTIONS

2019

April 1 Sold merchandise for \$3,600 to Alto Music Center; issued Invoice 3912 with terms of 2/10, n/30.

April 3 Received a check for \$1,519 from Music Supply Store in payment of Invoice 2718 of March 25 (\$1,550), less cash discount (\$31).

April 5 Sold merchandise totaling \$1,500 in cash to a new customer who has not yet established credit.

April 7 Merchandise of \$80 sold on April 5 is returned for a cash refund.

April 8 Sold merchandise for \$5,600 to Music Warehouse; issued Invoice 3913 with terms of 2/10, n/30.

April 10 Received payment from Alto Music Center in payment of Invoice 3912, less cash discount.

April 15 Accepted a return of damaged merchandise from Music Warehouse; issued Credit Memorandum 105 for \$1,850. The original sale was made on Invoice 3913 on April 8.

April 17 Received payment from Music Warehouse for the sale of April 8, less the return on April 15; Music Warehouse deducted the appropriate cash discount from its payment.

April 19 Received a check for \$1,850 as payment in full from Oldies Sounds for Invoice 3850 dated March 20.

April 20 Sold merchandise for \$10,300 to Hawk Music Center; issued Invoice 3914 with terms of 2/10, n/30.

April 25 Sold merchandise for \$9,900 to Modern Sounds; issued Invoice 3915 with terms of 2/10, n/30.

April 26 Sold merchandise for \$7,700 to Country Tunes; issued Invoice 3916 with terms of 2/10, n/30.

April 27 Accepted a return of damaged merchandise from Modern Sounds; issued Credit Memorandum 106 for \$410. The original sale was made on Invoice 3915 on April 25.

April 29 Received payment from Hawk Music Center for the sale of April 20, less cash discount.

April 30 Sold merchandise for \$2,300 to Oldies Sounds; issued Invoice 3917 with terms of 2/10, n/30.

Required:

Record the transactions in a general journal.

Analyze:

What was the amount of the cash discount taken by Hawk Music Center on April 29?

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## Woodsman Company sells a product for \$215 per unit

Target Profit

Woodsman Company sells a product for \$215 per unit. The variable cost is \$80 per unit, and fixed costs are \$756,000.

Determine (a) the break-even point in sales units and (b) the break-even point in sales units required for the company to achieve a target profit of \$294,840.

a. Break-even point in sales unitsunits

b. Break-even point in sales units required for the company to achieve a target profit of \$294,840units

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## On 1 January 2017, Nyvice Limited purchases a specialized machine tool

On 1 January 2017, Nyvice Limited purchases a specialized machine tool for €20000.

The useful life of the machine tool is estimated to be five years. The residual value at the end of its useful life is expected to be zero. On l January 20X8, Nyvice purchases another machine tool for €4000. The second machine tool has an expected useful life of four years and a residual value of €400. On 3L December 2OX9, the company unexpectedly sells the first machine tool for €6000. Nyvice uses the straight-line depreciation method for its equipment.

Required:

Show how the statement of financial position and the statement of profit or loss of Nyvice Limited are affected by the purchase of the machine tools for the years 2O17, 2O18 and 2O19.

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## The trial balance of YTP Supplies Pte Ltd (“YTP”) was given as at 31

The trial balance of YTP Supplies Pte Ltd (“YTP”) was given as at 31 December 20X6:

Debit    Credit
Account title                                        \$          \$

Cash                                                 39,410
Accounts receivable                        32,400
Inventory                                         22,000
Purchases                                       160,000
Prepaid Insurance                              6,000
Office supplies                                   4,440
Freehold Land                              3,000,000
Building    2400000
Accumulated depreciation – Building            48,000
Motor vehicles (MV)                    234,000
Accumulated depreciation – MV                    70,200
Accounts payable                                            33,690
Share capital                                                  5,000,000
Retained earnings                                            647,600
Dividends                                       150,000
Sales                                                                359,900
Sales Return                                       2,500
Salaries expense                               92,440
Utilities expense                              16,600
Rental expense                                 59,600
Bank loan                                        60,000
6,219,390    6,219,390

Before you prepare the financial statements, you manage to extract out the following additional information.

(i) The 4-year bank loan of \$60,000 was entered into on 1 October 20X6. It carries an annual interest of 5% payable on 1 October annually. The first interest payment will be made on 1 October 20X7.

(ii) The \$6,000 prepaid insurance was purchased on 1 July 20X6 for a 2-year fire insurance coverage for the building effective 1 July 20X6.

(iii) On 12 December 20X6, the company was informed that one of its customers had severe financial difficulties. The amount owing was \$780. The company had not made any allowance for this bad debt.

(iv) On 27 December 20X6, a customer prepaid the company \$1,600 in cash for an item to be delivered one week later. The accounts clerk did not record the transaction since the item was not delivered yet.

(v) As at 31 December, salaries amounting to \$7,800 remained outstanding. No entry was made for this amount.

(vi) The building was purchased on 1 January 20X5. It was expected to have zero residual value and a useful life of 50 years. The motor vehicles were purchased on 1 January 20X3. They are expected to have zero residual value and a useful life of 10 years.

(vii) YTP adopts a periodic inventory system. A stock count was done and the inventory at year end was \$58,300.

Required:

(a) Apply the accrual concept of accounting and prepare all necessary adjusting or additional journal entries as required by the additional information. Journal narratives are not necessary.

(b) Prepare the Statement of Financial Position for YTP as at 31 December 20X6, incorporating all the necessary adjustments.

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## A recent national survey found that high school students watched

A recent national survey found that high school students watched an average of 6.8 videos per month, with a standard deviation of 0.5. A random sample of 36 college students revealed that the mean number of videos watched last month was 6.2. At alpha =.05, can we conclude that college students watch fewer videos a month than high school students?

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## You are the administrator of Kaiserin Temporare clinic and you are paid

You are the administrator of Kaiserin Temporare clinic and you are paid a per-visit amount of \$30. Assuming your supply curve is the normally upsloping to the right one you remember from your health economics class. Select one of the following events and indicate what you believe would be the net effect on the quantity of visits supplied by your clinic:

Nurse salaries increase;
You offer “concierge care” where you provide more time for each patient visit (assuming that makes a higher “quality” of care).

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## Walker Machine Tools has 7.2 million shares of common stock outstanding

Walker Machine Tools has 7.2 million shares of common stock outstanding. The current market price of Walker common stock is \$86 per share rights-on. The company’s net income this year is \$26.00 million. A rights offering has been announced in which 720,000 new shares will be sold at \$80.50 per share. The subscription price plus nine rights is needed to buy one of the new shares.

a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round intermediate calculations and round your answers to 2 decimal places.)

b. What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round intermediate calculations and round your answers to 2 decimal places.)

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## Mr. and Mrs. Anderson own three shares of Magic Tricks Corporation’s

Mr. and Mrs. Anderson own three shares of Magic Tricks Corporation’s common stock. The market value of the stock is \$72. The Andersons also have \$60 in cash. They have just received word of a rights offering. One new share of stock can be purchased at \$60 for each three shares currently owned (based on three rights). (Do not round intermediate calculations and round your answers to the nearest whole dollar.)

a. What is the value of a right?

b. What is the value of the Andersons’ portfolio before the rights offering? (Portfolio in this question represents stock plus cash.)

c-1. Compute the diluted value (ex-rights) per share.

c-2. If the Andersons participate in the rights offering, what will be the value of their portfolio, based on the diluted value (ex-rights) of the stock?

d. If they sell their two rights but keep their stock at its diluted value and hold on to their cash, what will be the value of their portfolio?

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## The table above has some cost data for a perfectly competitive firm

The table above has some cost data for a perfectly competitive firm. Assume that only whole quantities of the good can be produced.

q FC VC TC MC AVC ATC
0 N/A N/A N/A
1 17
2 13
3 74
4 240
5 25 17
6 120
7 50
8 30.625

a) Fill in the missing items in the following table. I would suggest completing the table, cut it out, and paste it (either electronically or physically) onto the sheet you turn in. You can round decimal answers to 3 places or leave the numbers as fractions. (1 point)
b) Find the short run profit maximizing level of output and profit if the price of output is 30. (1 point)
c) Find the short run profit maximizing level of output and profit if the price of output is 12.5. (1 point)
d) If there are 80 firms in the short run, and the market demand is P = -2Qd + 1000, explain why P = 60 is not the SRCE price. (1 point)
e) Find the SRCE price. (1 point)

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