Hinton Company is considering purchasing new equipment for $570,000 (A+ Guaranteed)

Hinton Company is considering purchasing new equipment for $570,000. It is expected that the equipment will produce annual net income of $66,500 over its 20-year useful life. Annual depreciation will be $28,500.

Compute the cash payback period

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Beamer Manufacturing incurs unit costs of $6 (A+ Guaranteed)

Beamer Manufacturing incurs unit costs of $6 ($5 variable and $1 fixed) in making a subassembly part for its finished product. A supplier offers to make 19,000 of the part at $6.10 per unit. If the offer is accepted, Beamer will save all variable costs but no fixed costs.

Prepare an analysis showing the total cost saving, if any, Beamer will realize by buying the part. What should they do? (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

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Knudsen Corporation was organized on January 1, 2013 (A+ Guaranteed)

Knudsen Corporation was organized on January 1, 2013. During its first year, the corporation issued 2,000 shares of $50 par value preferred stock and 109,600 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2013, $6,000; 2014, $14,500; and 2015, $28,000.

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Wilson Co. purchased land as a factory site for $900,000 (A+ Guaranteed)

Wilson Co. purchased land as a factory site for $900,000. Wilson paid $80,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Architect’s fees were $31,200. Title insurance cost $2,400, and liability insurance during construction cost $2,600. Excavation cost $10,440. The contractor was paid $2,800,000. An assessment made by the city for pavement was $6,400. Interest costs during construction were $170,000.

The cost of the land that should be recorded by Wilson Co. is
a. $989,880
b. $980,480
c $996,280
d. $986,880

The cost of the building should be recorded by Wilson Co. is

a. 2,804,840

b. 2,813,200

c. 2,803,800

d. 3,014,240

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Anderson Company uses the indirect method of preparing the Statement of Cash Flows (A+ Guaranteed)

Anderson Company uses the indirect method of preparing the Statement of Cash Flows and reports the following comparative balance sheet information. As customary, the most recent data is in the first column.

Balance Sheets 12-31-2012 12-31-2011

Cash $50,000 $20,000

Inventory 150,000 134,000

Equipment 120,000 105,000

Accum. Depreciation (35,000)       (27,000)

$285,000     $232,000

Accounts payable $75,000 $96,000

Bonds payable (due in 7 years) 180,000 110,000

Common Stocks 20,000 19,000

Retained earnings 10,000   7,000

$285,000   $285,000
Additional Information:
Net income for 2012 was $6,000.
No equipment was disposed of during 2012.

Required:
Prepare a Cash Flow Statement using the indirect method

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On August 1, 2011, Airport Company sold Paxton Company $1,000,000 (A+ Guaranteed)

On August 1, 2011, Airport Company sold Paxton Company $1,000,000 of 10-year, 6% bonds, dated July 1 at 100 plus accrued interest. On March 1, 2012, Paxton sold half of the bonds for $520,000 plus accrued interest. Present entries to record the following transactions:

Paxton Company:

  1. Purchase of bonds on August 1, 2011.
  2. Receipt of first semiannual interest amount on December 31, 2011.
  3. The sale of the bonds on March 1, 2012.

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Why did the SEC impose a temporary ban on short sales of specific stocks (A+ Guaranteed)

Ban on Short Selling – Why did the SEC impose a temporary ban on short sales of specific stocks in 2008? Do you think a ban on short selling is effective?

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Your friend just told you about a penny stock he purchased (A+ Guaranteed)

Bid–Ask Spread of Penny Stocks – Your friend just told you about a penny stock he purchased, which increased in price from $0.10 to $0.50 per share. You start investigating penny stocks and, after conducting a large amount of research, you find a stock with a quoted price of $0.05. Upon further investigation, you notice that the ask price for the stock is $0.08 and that the bid price is $0.01.

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Briefly describe the structure and role of the Securities and Exchange Commission (A+ Guaranteed)

SEC Structure and Role – Briefly describe the structure and role of the Securities and Exchange Commission (SEC).

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Under what conditions might investors consider short selling a specific stock (A+ Guaranteed)

Short Selling – Under what conditions might investors consider short selling a specific stock?

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