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1. Brady Company sells imported goods made in India. One product it sells is a wooden music box. The music box cost Bray $65, and Brady charges its customers a price of $250. Brady's cost of capital is 12%. On average, an entire year elapses between the time Brady pays for a music box and the time Brady collects the cash from the sale of the music box. What are Brady's annual financial holding costs per unit for the wooden music boxes?
2. In the past year, TVG had revenues of $3 million, cost of goods sole of $2.5 million, and depreciation expense of $200,000. The firm has a single issue of debt outstanding with face value of $1 million, market value of $.92 million, and a coupon rate of 8 percent. What is the firm's times interest earned ratio?
3. Lever Age pays an 8 percent coupon on outstanding debt with face value $10 million. The firm's EBIT was $1 million.
1. What is times interest earned?
2. If depreciation is $200,000, what is cash coverage?
3. If the firm must retire $300,000 of debt for the sinking fund each year, what is its "fixed payment cash-coverage ratio"(the ratio of cash flow to interest plus other fixed debt payments)?
4. Rulon Wilcox is the present of Wilcox Company, and his brother, Harry Wilcox, is the vice president. Their compensation package includes bonuses of 4% for Rulon Wilcox and 3% for Harry Wilcox of net income that exceeds $250,000. Net income for the year 2006 has just been computed to be 885,000.
1. Compute the amount of bonuses to be paid to Rulon and Harry Wilcox.
2. Prepare the journal entries to record the accrual and payment of the bonuses. Summarize all withholding taxes related to the bonuses in an account called Various Taxes Payable. Taxes payable on the bonuses total $9,800 for Rulon and $7,620 for Harry.
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The solution has various accounting questions relating to calculation of ratios, holding costs and bonuses
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1. Brady Company sells imported goods made in India. One product it sells is a wooden music box. The music box cost Bray $65, and Brady charges its customers a price of $250. Brady's cost of capital is 12%. On average, an entire year elapses between the time Brady pays for a music box and the time Brady collects the cash from the sale of the music box. What are Brady's annual financial holding costs per unit for the wooden music boxes?
Brady pays $65 for each unit and the collects $250 at the end of the year. The investment for Brady is $65 for the whole year. The annual financial holding cost per unit is 65X12% = $7.80
2. In the past year, TVG had revenues of $3 million, cost of goods sole of $2.5 million, and depreciation expense ...
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