Perry, Inc., has a total debt ratio of 0.36. What is its debt–equity ratio

Perry, Inc., has a total debt ratio of 0.36. What is its debt–equity ratio? (Round your answer to 2 decimal places. (e.g., 32.16))

Debt–equity ratio

What is its equity multiplier? (Round your answer to 2 decimal places. (e.g., 32.16))

Equity multiplier

Total debt ratio = 0.36 = TD / TA

Substituting total debt plus total equity for total assets, we get:

0.36 = TD / (TD + TE)

Solving this equation yields:

0.36(TE) = 0.64(TD)

Debt/equity ratio = TD / TE = 0.36 / 0.64 = 0.56

Equity multiplier = 1 + D/E = 1.56

Y3K, Inc., has sales of $6,339, total assets of $2,955, and a debt–equity ratio of 1.50

Y3K, Inc., has sales of $6,339, total assets of $2,955, and a debt–equity ratio of 1.50. If its return on equity is 12 percent, what is its net income?

This is a multistep problem involving several ratios. The ratios given are all part of the DuPont Identity. The only DuPont Identity ratio not given is the profit margin. If we know the profit margin, we can find the net income since sales are given. So, we begin with the DuPont Identity:

ROE = 0.12 = (PM)(TAT)(EM) = (PM)(S / TA)(1 + D/E)

Solving the DuPont Identity for profit margin, we get:

PM = [(ROE)(TA)] / [(1 + D/E)(S)]
PM = [(0.12)($2,955)] / [(1 + 1.50)( $6,339)] = 0.0224

Now that we have the profit margin, we can use this number and the given sales figure to solve for net income:

PM = 0.0224 = NI / S
NI = 0.0224($6,339) = $141.84

Toadies, Inc., has identified an investment project with the following cash flows.

Toadies, Inc., has identified an investment project with the following cash flows.

Year Cash Flow
1 $ 1,275
2 1,395
3 1,480
4 1,530

If the discount rate is 7 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value $

If the discount rate is 12 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value $

If the discount rate is 23 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Future value $

To find the FV of a lump sum, we use:

FV = PV(1 + r)^t

FV@7% = $1,275(1.07)^3 + $1,395(1.07)^2 + $1,480(1.07) + $1,530 = $6,272.67
FV@12% = $1,275(1.12)^3 + $1,395(1.12)^2 + $1,480(1.12) + $1,530 = $6,728.77
FV@23% = $1,275(1.23)^3 + $1,395(1.23)^2 + $1,480(1.23) + $1,530 = $7,833.50

Notice we are finding the value at Year 4, the cash flow at Year 4 is simply added to the FV of the other cash flows. In other words, we do not need to compound this cash flow.

On May 2, McLain Company lends $57,800 to Chang, Inc., issuing a 6-month,

On May 2, McLain Company lends $57,800 to Chang, Inc., issuing a 6-month, 10% note. At the maturity date, November 2, Chang indicates that it cannot pay.

Prepare the entry to record the issuance of the note.

Prepare the entry to record the dishonor of the note, assuming that McLain Company expects collection will occur.

Prepare the entry to record the dishonor of the note, assuming that McLain Company does not expect collection in the future.

Prepare the entry to record the issuance of the note.

Notes Receivable debit 57800
Cash Credit 57800

Prepare the entry to record the dishonor of the note, assuming that McLain Company expects collection will occur.

Accounts Receivable Debit 60690
Interest Revenue Credit ($57,800 × 10% × 1/2) = $2,890
Notes Receivable Credit 57800

Prepare the entry to record the dishonor of the note, assuming that McLain Company does not expect collection in the future.

Allowance for Doubtful Accounts Debit 57800
Notes Receivable Credit 57800

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.

	Job 102	Job 103	Job 104
Direct materials	$ 43,000	$ 74,000	$ 47,000
Direct labor	15,000	27,000	39,000
Overhead applied	4,500	8,100	11,700

Job 102 was started in production in May and the following costs were assigned to it in May: direct materials, $15,000; direct labor, $3,700; and overhead, $1,110. Jobs 103 and 104 are started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 are finished in June, and Job 104 is expected to be finished in July. No raw materials are used indirectly in June. Using this information, answer the following questions. (Assume this company’s predetermined overhead rate did not change across these months.)

1&2.	Complete the given below table to calculate the cost of the raw materials requisitioned and direct labor cost incurred during June for each of the three jobs?

3.	What predetermined overhead rate is used during June?

4.	How much total cost is transferred to finished goods during June?

Explanation:

1.	The cost of direct materials requisitioned in the month equals the total direct materials costs accumulated on the three jobs less the amount of direct materials cost assigned to Job 102 in May:

Job 102	$	43,000
Less prior costs		(15,000	)	$	28,000
Job 103					74,000
Job 104					47,000
Total materials used (requisitioned)				$	149,000

2.	Direct labor cost incurred in the month equals the total direct labor costs accumulated on the three jobs less the amount of direct labor cost assigned to Job 102 in May:

Job 102	$	15,000
Less prior costs		(3,700	)	$	11,300
Job 103					27,000
Job 104					39,000
Total direct labor				$	77,300

3.

The predetermined overhead rate equals the ratio of the amount of overhead assigned to jobs divided by the amount of direct labor cost assigned to them. Since the same rate is used for all jobs started and completed within a month, the ratio for any one job equals the rate that was applied. This table shows the ratio for jobs 102 and 104:

	Job 102			Job 104
Overhead	$	4,500		$	11,700
Direct labor		15,000			39,000
Ratio		30	%		30	%