Master Business with Fun Quizzes & Brain Teasers!
At the beginning of the summer, Humphrey Nelson was looking for a way to earn money to pay for his college tuition in the fall. He decided to start a lawn service business in his neighborhood. To get the business started, Humphrey used $6,000 from his savings account to open a checking account for his new business, Elegant Lawn Care. He purchased two used power mowers and various lawn care tools for $2,000, and paid $3,600 for a second-hand truck to transport the mowers. Several of his neighbors hired him to cut their grass on a weekly basis. He sent these customers monthly bills. By the end of the summer, they had paid him $4,800 in cash and owed him another $2,400. Humphrey also cut grass on an as-needed basis for other neighbors, who paid him $4,000. During the summer, Humphrey spent $800 for gasoline for the truck and mowers. He paid $4,000 to a friend who helped him on several occasions. An advertisement in the local paper cost $800. Now, at the end of the summer, Humphrey is concerned because he has only $3,600 left in his checking account. He says, "I worked hard all summer and have only $3,600 to show for it. It would have been better to leave the money in the bank. " Required: Prepare an income statement, a statement of owners equity (for the three month period ended August 31, 20X1), and a balance sheet (dated August 31, 20X1) for Elegant Lawn Care
On December 31, 2020, Dow Steel Corporation had 780,000 shares of common stock and 318,000 shares of 10%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $580,000 and $87,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 68,000 common shares. In keeping with its long-term share repurchase plan, 5,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2021, was $3,000,000. The income tax rate is 25%. Also, as a part of a 2020 agreement for the acquisition of Merrill Cable Company, another 24,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2022, if Merrill's 2022 net income is at least $680,000. In 2021, Merrill's net income was $810,000. As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:Options GrantedDate Granted(adjusted for the stock dividend)Share PriceDecember 31, 201925,000$42December 31, 202020,000$51December 31, 202123,500$50The market price of the common stock averaged $50 per share during 2021. On July 12, 2019, Dow issued $1,000,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 25 common shares (adjusted for the stock dividend). Required:Compute Dow's basic and diluted earnings per share for the year ended December 31, 2021
You can purchase software you need to work your project for $40,500 which requires the purchase of hardware (servers) with a cost of $52,000. the purchased software has a yearly maintenance fee of $3,000 starting after the first year. the servers have a monthly operating cost $250 starting the month of purchase. on the other hand, you can contract with a cloud services provider for an initial setup fee of $7,000 and a $3,000 a month utilization charge starting the first month and charged until the end of the contract. right now, at the planning stage of your project, your project schedule estimates that the project will be completed in three years from today. you started analyzing risks on your work breakdown structure (wbs) deliverables and have determined that half of the activities carry at least one high negative risk associated with it. your mitigation plan may include extending the project to manage those high risks. also, you know that your company will not use the software once the project is over.89500 + 500x = 7000 + 3000xin which month does the purchase cost is the same as the lease cost?a. what is your decision as a project manager, should you lease or should you buy? explain the reason for your decision.b. weighing the risk factors and the mitigating plan for those factors, you have the potential of finishing early by six months. what is your decision at 2.5 years? explain.c. you know that if you purchased the software, you will continue to accrue expenses after the project is completed. what are those expense costs? what factors would affect this decision?