(TCO A) On March 1, 2010, Ruiz Corporation issued $800,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2030. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Ruiz common stock, par value $25. The bonds without the warrants would normally sell at 95. On March 1, 2010, the fair market value of Ruiz's common stock was $40 per share and the fair market value of the warrants was $2.00. What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants?
Note also that the interest rate we must use is a simple discount rate. The data can be displayed on a time line. | | | | | $800,000 | | | | 0 | 39 | 123 | | $P | | | | | P | = | Price | = | unknown | | S | = | Face value | = | $800,000 | | d | = | Simple discount rate (decimal) | = | 4.7 | 100 | | = | 0.047 | | t | = | Time period (years) | = | 84 | 365 | | = | 0.23013699... years | | The step-by-step calculation is: P | = | S(1 - dt) | | | = | 800,000(1 - 0.047 x 0.23013699...) | | | = | 800,000 x 0.98918356... | | | = | $791,346.85 | Rounded as last step | c)This is not
In year 2 it reports a $40,000 loss. For year 3, it reports taxable income from operations of $100,000 before any loss carryovers. Using the corporate tax rate table, determine how much tax Willow Corp. will pay for year 3. Answer: $4,500. Description (1) Year 3 taxable income $100,000 (2) Year 1 NOL carryforward ($30,000) (3) Year 2 NOL carryforward ($40,000) (4) Taxable income reported 30,000 (1) - (2) -
On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2011. The following additional facts pertain to the transaction: The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. The book value of Footwear's assets totaled $48 million on the date of the sale. Footwear's operating income was a pre-tax loss of $10 million in 2011.
Week 4 Case Study Fresh &Fruity Foods Inc. 1. Average Collection Period =Accounts Receivable/ Average daily credit sales Accounts receivable =$209,686 Average daily Credit sales =$1,179,000/360 =$3,275 Average collection Period =$209,686/$3,275 =64.02 days 2. Cost of forgoing the cash discount: Kdis=2%/100%-2% x 360/f(67)-d(10)= .1307= 13.07% The formula tells us that Fresh and Fruity is effectively paying 13.07% interest to delay paying the discounted amount for 57days (the 67 days on which they pay less the 10 day discount period). 3. Average Collection Period x Average Daily credit Sales= New Accounts receivable 32x 3,275=$104,800 Freed-up Cash = old accounts receivable $209,686 - new accounts receivable $104,800
Normal Cost of Trade Credit = [Discount percentage/(100-Discount percentage)]*[365days/(credit outstanding-Discount Period)] Normal Cost of trade credit = (3/97)*(365/30) = 37.63% Question 6. Your supplier offers terms of 1/10, Net 45. What is the effective annual cost of trade credit if you choose to forgo the discount and pay on day 45? Normal Cost of Trade Credit = [Discount percentage/(100-Discount percentage)]*[365days/(credit outstanding-Discount Period)] Normal Cost of trade credit = (1/99)*(365/45) = 8.19% Question 10. The Manana Corporation had sales of $60 million this year.
The net cash inflow and cash outflow are calculated using sales and production figures for the next 8 years. The unit cost from the first year is £0.89 which is the cost per mashing without depreciation and divided by 13,000 bottles. From this information provided, the cost will increase by 3.5% and also the selling price will increase by 4% every year (reference 4). These figures are based on the current rate inflation of 4% which is shown in appendix 9 The capital allowances are worked out on cased of 20% (Reference 5) and the annual investment allowance is £100,000 is available (Reference 6) in the first year which is restricted to £87,359. This figure is substrated from the acquisition giving a result of £332,641 which is the written down value.
FV = PV x (1+r)5; $100,000 = $65,000 x (1=r)5; 1.53846 = (1+r)5; (1.53846) 1/5 = 1+r; 1.08998 = 1+r; annual rate = 8.998$ 13. PV of Annjuity = Payment x [1-(1+r)-5]/r; $33,520 = $10,000 x [1-(1+r)-5]/r Period 9nper0 = 5; Payment = $10,000; Present Value (PV) = $33,250; Future Value (FV) = $0; Rate of Return =
| | | | | * Question 6 0 out of 2 points | | | Examine the graph below. The government has placed a $200 tariff on Product z. The new equilibrium price is $600. How much tax revenue will be collected? | | | | | Selected Answer: | $10,000 | | | | | * Question 7 2 out of 2 points | | | Examine the graph below.
5) Information about Clearwater Company's direct materials cost follows: Standard price per materials ounce $ 100 Actual quantity used 8,700 grams Standard quantity allowed for production 9,100 grams Price variance $ 76,125 F ________________________________________ Required: What was the actual purchase price per gram? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Actual purchase price $ 91.25 Total grade: 0.0×1/1 = 0% Feedback: Actual Costs = AP × 8,700 Actual Inputs at Standard Price = $100 × 8,700 =$870,000 Price Variance = $76,125 F 8,700 × AP = $870,000 – $76,125 AP = $91.25 ________________________________________ Question 3: Score