Maya Lee and John Spencer are facing an important decision. After having discussed different financial scenarios into the wee hours of the morning, the two computer engineers felt it was time to finalize their cash flow projections and move to the next stage – decide which of two possible projects they should undertake. Both had a bachelor degree in engineering and had put in several years as maintenance engineers in a large chip manufacturing company. About six months ago, they were able to exercise their first stock options. That was when they decided to quit their safe, steady job and pursue their dreams of starting a venture of their own. In their spare time, almost as a hobby, they had been collaborating on some research into a new chip that could speed up certain specialized tasks by as much as 25%. At this point, the design of the chip was complete. While further experimentation might improve the performance of their design, any delay in entering the market now may prove to be costly, as one of the established players might introduce a similar product of their own. The duo knew that now was the time to act if at all. They estimated that they would need to spend about $2,500,000 on plant, equipment and supplies. As for future cash flows, they felt that the right strategy at least for the first year would be to sell their product at dirt-cheap prices in order to induce customer acceptance. Then, once the product had established a name for itself, the price could be raised. By the end of the fifth year, their product in its current form was likely to be obsolete. However, the innovative approach that they had devised and patented could be sold to a larger chip manufacturer for a decent sum. Accordingly, the two budding entrepreneurs estimated the cash flows for this project (call it Project A) as follows: Year Project A Expected Cash flows ($) 0 ($2,500,000) 1 $290,000 2 $400,000 3 $880,000 4 $1,600,000 5 $1,600,000 An alternative to pursuing this project would be to immediately sell the patent for their innovative chip design to one of the established chip makers. They estimated that they would receive around $200,000 for this. It would probably not be reasonable to expect much more as neither their product nor their innovative approach had a track record. They could then invest in some plant and equipment that would test silicon wafers for zircon content before the wafers were used to make chips. Too much zircon would affect the long-term performance of the chips. The task of checking the level of zircon was currently being performed by chip makers themselves. However, many of them, especially the smaller ones, did not have the capacity to permit 100% checking. Most tested only a sample of the wafers they received. Maya and John were confident that they could persuade at least some of the chip makers to outsource this function to them. By exclusively specializing in this task, their little company would be able to slash costs by more than half, and thus allow the chip manufacturers to go in for 100% quality check for roughly the same cost as what they were incurring for a partial quality check today. The life of this project too (call it project B) is expected to be only about five years. The initial investment for this project is estimated at $ 2,600,000. After taking into account the sale of their patent, the net investment would be $2,400,000. As for the future, Maya and John were reasonably sure that there would be sizable profits in the first couple of years. But thereafter, the zircon content problem would slowly start to disappear with advancing technology in the wafer industry. Keeping all this in mind, they estimate the cash flows for this project as follows: Year Project B Expected Cash flows ($) 0 ($2,400,000) 1 $1,450,000 2 $1,215,000 3 $470,000 4 $285,000 5 $165,000 Maya and John now need to make their decision. For purposes of analysis, they plan to use a required rate of return of 15% for both projects. Ideally, they would prefer that the project they choose have a payback period of less than 4 years and a discounted payback period of less than 5 years. Below are the results of the analysis they have carried out so far: Metrics Project A Project B Payback period (in years) 3.58 1.78 Discounted payback period (in years) 4.57 2.71 Net Present Value (NPV) $343,534 $333,601 Internal Rate of Return (IRR) 19.22% 23.50% Profitability Index 1.1374 1.1390 Modified Internal Rate of Return (MIRR) 18.00% 18.03% One of the concerns that Maya and John have is regarding the reliability of their cash flow estimates. All the analysis in the table above is based on “expected” cash flows. However, they are both aware that actual future cash flows may be higher or lower. Assignment: Suppose that Maya and John have hired you as a consultant to help them make the decision. Please draft an official memo to them with your analysis and recommendations. Your submission should cover the following questions: Briefly, summarize the key facts of the case and identify the problem being faced by our two budding entrepreneurs. In other words, what is the decision that they need to make? (10 points) An excellent paper will demonstrate the ability to construct a clear and insightful problem statement while identifying all underlying issues. What are some approaches that can be used to solve this problem? What are some various criteria or metrics that can be used to help make this decision? (10 points) An excellent paper will propose solutions that are sensitive to all the identified issues. a) Rank the projects based on each of the following metrics: Payback period, Discounted payback period, NPV, IRR, Profitability Index, and MIRR. (10 points) b) John believes that the best approach to make the decision is the NPV approach. However, Maya is not so sure that ignoring the other metrics is a good idea. Which of the approaches or metrics would you propose? In other words, would you prefer one or more of these approaches over the others? Explain why. (20 points) An excellent paper will include an evaluation of solutions containing thorough and insightful explanations, feasibility of solutions, and impacts of solutions. a) Which of these projects would you recommend? Explain why. (10 points) b) Briefly state the limitations of the approach you used in making this decision, and outline what further analysis you would recommend. (20 points)

On January 1, 20X1, Kiner Company formed a foreign subsidiary that issued all of its currently outstanding common stock on that date. Selected accounts from the balance sheets, all of which are shown in local currency units, are as follows: December 31 20X2 20X1 Accounts Receivable (net of allowance for uncollectible accounts of 1,900 LCU on December 31, 20X2, and 1,700 LCU on December 31, 20X1) LCU 45,000 LCU 40,000 Inventories, at cost 68,000 63,000 Property, Plant and Equipment (net of allowance for accumulated depreciation of 37,000 LCU on December 31, 20X2, and 18,000 LCU on December 31, 20X1) 205,300 190,000 Long-Term Debt 100,000 120,000 Common Stock, authorized 19,000 shares, par value 10 LCU per share; issued and outstanding, 9,500 shares on December 31, 20X2, and December 31, 20X1 95,000 95,000 Additional Information: Exchange rates are as follows: LCU $ January 1, 20X1–July 31, 20X1 2.0 = 1 August 1, 20X1–October 31, 20X1 1.8 = 1 November 1, 20X1–June 30, 20X2 1.7 = 1 July 1, 20X2–December 31, 20X2 1.5 = 1 Average monthly rate for 20X1 1.9 = 1 Average monthly rate for 20X2 1.6 = 1 An analysis of the accounts receivable balance is as follows: 20X2 20X1 Accounts Receivable: Balance at beginning of year LCU 41,700 Sales (42,000 LCU per month in 20X2 and 37,000 LCU per month in 20X1) 504,000 LCU 444,000 Collections (495,600 ) (401,000 ) Write-offs (May 20X2 and December 20X1) (3,200 ) (1,300 ) Balance at end of year LCU 46,900 LCU 41,700 20X2 20X1 Allowance for Uncollectible Accounts: Balance at beginning of year LCU 1,700 Provision for uncollectible accounts 3,400 LCU 3,000 Write-offs (May 20X2 and December 20X1) (3,200 ) (1,300 ) Balance at end of year LCU 1,900 LCU 1,700 An analysis of inventories, for which the first-in, first-out inventory method is used, follows: 20X2 20X1 Inventory at beginning of year LCU 63,000 Purchases (June 20X2 and June 20X1) 315,000 LCU 355,000 Goods available for sale LCU 378,000 LCU 355,000 Inventory at end of year (68,000 ) (63,000 ) Cost of goods sold LCU 310,000 LCU 292,000 On January 1, 20X1, Kiner’s foreign subsidiary purchased land for 28,000 LCU and plant and equipment for 180,000 LCU. On July 4, 20X2, additional equipment was purchased for 37,000 LCU. Plant and equipment is being depreciated on a straight-line basis over a 10-year period with no residual value. A full year’s depreciation is taken in the year of purchase. On January 15, 20X1, 7 percent bonds with a face value of 120,000 LCU were issued. These bonds mature on January 15, 20X7, and the interest is paid semiannually on July 15 and January 15. The first interest payment was made on July 15, 20X1. Required: Prepare a schedule translating the selected accounts into U.S. dollars as of December 31, 20X1, and December 31, 20X2, respectively, assuming that the local currency unit is the foreign subsidiary’s functional currency. (Round your dollar amounts to nearest whole dollar.)

Bills Bird House Bonanza

The following information relates to the manufacturing plant of Bills Bird House Bonanza:

Inventory Values                                           September1                September 30

Direct Materials for bird houses                    122,200                    115,500

Work In Progress of bird houses                    200,000                      225,500

Finished and Complete bird houses               140,400                      125,500

Production Data for the Month of September:

Direct Labor for bird house production                     275,500

Anticipated Actual Factory Overhead December 31             200,200

Direct Materials Purchased                                        234,400

Bills Bird House Bonanza uses one factory over-head account and applies factory overhead to production at 70% of direct labor cost. Over-and-Under applied overhead is not recognized until year-end.

Required:

What is the total manufacturing cost for month of September for Bills Bird House Bonanza?

1. TYU Inc. has a profit margin of 8.3 percent and a payout ratio of 42 percent. The firm has annual sales of $386,400, current liabilities of $37,200, long-term debt of $123,800, and net working capital of $16,700, and net fixed assets of $391,500. No external equity financing is possible. What is the internal growth rate?

2.  Jump Company., has annual sales of $40,934, depreciation of $3,100, interest paid of $750, cost of goods sold of $22,400, taxes of $3,084, and dividends paid of $4,060. The firm has total assets of $55,300 and total debt of $32,600. The firm wants to maintain a constant payout ratio but does not want to incur any additional external financing. What is the firm's maximum rate of growth?     

Kuzma​ Foods, Inc. has budgeted sales for June and July at $690,000 and $745,000​, respectively. Sales are 80​% ​credit, of which 70​% is collected in the month of sale and 30​% is collected in the following month. What is the budgeted Accounts Receivable balance on July​ 31?

A. 596,000

B. 223,500

C. 165,600

D. 178,800

Journalize Bennett Enterprises’ entries to record: the issuance of the note. the payment of the note at maturity. 1. Inventory 540,000 Notes Payable 540,000 2. Notes Payable 540,000 Interest Expense 6,075 Cash 546,075 Feedback b. Journalize Spectrum Industries’ entries to record: the receipt of the note. the receipt of the payment of the note at maturity. 1. Notes Receivable Sales 2. Cash Notes Receivable Interest Revenue

Imagine that you are preparing taxes for a local tax service provider. A married couple named Judy and Walter Townson has come to you to seeking assistance with their federal income taxes. During your meeting with the Townsons, you gather the following information:

-they are both 55 years of age
-They have two daughters and one son. One daughter (25) is married with children. One daughter (20) is living at home and attending college. Their son (16) is a junior in high school.
-They are currently paying for their college-student daughter to attend school full time.
- Judy is employed as a teacher and makes $60,000 a year. She used $500 of her personal funds to purchase books and other supplies for her classroom.
-Walter is employed as a CPA and makes $100,000 a year
- They provided you a 1099-INT which reported $4,500 in the interest of which $500 was saving bonds interest
- They offered you a 1099-DV which said $300 in dividends
-They received a state tax refund last year of $385
- They provided you a list of expenses including: doctors bill $800, Prescriptions $400, New glasses $2000, dental bills $560, braces $5000, Property taxes for their two cars of $800, which included $50 in decal fees, real estate taxes $4500, mortgage interest $12000, Gifts to charities $1,000, GoFunMe contribution to local families in need $100, and Taxes preparation fees for last years taxes $400.

Consider the most beneficial way for Judy and Walter to file their federal income tax return. Prepare a brief written summary that addresses the following:

-Estimated taxable income for Judy and Walter (please show compilations)
-Summary of tax return, including andy suggestions or tax planning consideration
- Explain how you determined the filing status, dependents, and use of standard/ itemized deduction

The specific course learning outcomes associated with this assignment are:

1. Review tax authories and sources of tax law
2. Assess the concepts of gross income and strategies to minimize gross income
3. Examine deductions from income, limitations on those deductions, and strategies for maximizing deductions.

Comprehensive Accounting Cycle Review 5-2 (Part Level Submission)

On November 1, 2017, Teal Mountain Inc. had the following account balances. The company uses the perpetual inventory method.

During November, the following summary transactions were completed.

(c)

Post to the ledger accounts. (Post entries in the order of journal entries presented in the previous part.)

Markowis Corp. has collected the following data concerning its maintenance costs for the past 6 months. Units Produced Total Cost July 18,054 $36,108 August 32,096 48,144 September 36,108 55,165 October 22,066 38,114 November 40,120 74,724 December 38,114 62,186 Collapse question part (a1) Incorrect answer. Your answer is incorrect. Try again. Compute the variable cost per unit using the high-low method. (Round variable cost per mile to 2 decimal places e.g. 1.25.) Variable cost per unit $Entry field with incorrect answer Click if you would like to Show Work for this question: Open Show Work By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 2 of 2 used Point Potential is enabled You have surpassed the number of attempts to earn Maximum Points for this question. For this attempt, and any subsequent attempt(s), you will earn points according to the Point Potential policy set by your instructor. Collapse question part (a2) Compute the fixed cost elements using the high-low method. Fixed costs $

Janenda Inc. issued $5,000,000 of convertible

5-year bonds on July 1, 2017. The bonds provide for 6% interest payable semiamuially on January 1 and July 1. The discount in

connection with the issue was $120,000, which is being amortized monthly on a straight-line basis.

The bonds are convertible after one year into 15 shares of Janenda Inc.’s $1 par value common stock for each $1,000 of bonds.

On October 1, 2018, $600,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly

and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash.

Instructions

Instructions

Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following

dates. (Round to the nearest dollar.)

(a) October 1, 2018. (Assume the book value method is used.)

(b) October 31, 2018.

(c) December 31, 2018, including closing entries for end-of-year.

Greener Grass Fertilizer Company plans to sell 250,000 units of finished product in July and anticipates a growth rate in sales of 5 percent per month. The desired monthly ending inventory in units of finished product is 80 percent of the next month’s estimated sales. There are 200,000 finished units in inventory on June 30. Each unit of finished product requires 5 pounds of raw material at a cost of $1.75 per pound. There are 780,000 pounds of raw material in inventory on June 30.

Required:

1. Compute the company’s total required production in units of finished product for the entire three-month period ending September 30. (Round all intermediate calculations and your final answer to the nearest unit.)

2. Independent of your answer to requirement (1), assume the company plans to produce 680,000 units of finished product in the three-month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period ending September 30.

Example 6-2 John Jenkins earns $1,290 per week. The deductions from his pay were: FIT $116.00 FICA—OASDI 79.98 FICA—HI 18.71 State income tax 31.00 State disability insurance 9.03 Credit union deduction 40.00 Health insurance premium 47.50 Charitable contribution 5.00 John’s disposable earnings would be: $1,290.00 - $116.00 (FIT) - $79.98 - $18.71 (FICA deductions) - $31.00 (SIT) - $9.03 (disability insurance) = $1,035.28 Example 6-3 Huffman Company has a child support order outstanding on one of its employees (Charles Suffert—$170 per week). Charles Suffert's disposable income is $950 per week. A new garnishment is received for a $5,000 debt to a credit card company. The company would take an additional $237.50 out of Suffert's pay. Lesser of: 25% × $950 = $237.50 or $950 − (30 × $7.25) = $732.50 Kalen O'Brien earned $735 this week. The deductions from her pay were as follows: FIT $74.00 FICA-OASDI 45.57 FICA-HI 10.66 State income tax 36.75 State disability insurance 8.41 Health insurance premium 19.60 Credit union contribution 37.00 United Fund contribution 5.00 O'Brien's employer just received a garnishment order (credit card debt of $3,330) against her pay. Compute the following; round your answers to the nearest cent. a. O'Brien's disposable earnings: $ b. The amount of her pay subject to the garnishment: $

Car and Truck Expense. (Obj. 3)Keith is self-employed. During 2018, he drove his car a total of 9,169 miles for work. He drove a total of 21,468 miles during the year. His car expenses for the year were as follows.

Business parking and tolls 360

Depreciation 1475

Gas 2557

Insurance 940

License tags 50

Repairs and maintenance 52

5434

a. Compute Keith’s car expense deduction using the standard mileage rate.

b. Compute Keith’s car expense deduction using the actual cost method.

1. Identify tools for analyzing financial statements and ratios for computing a company's profitability. (Please don't plagiarize)