Kara Ries, Tammy Bax, and Joe Thomas invested $26,000, $42,000, and $50,000, respectively, in a partnership. During its first calendar year, the firm earned $359,700. Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $359,700 net income to the partners under each of the following separate assumptions:

SYN 960 Business Government & Society

Albright College

Application Test #1

Read the following case below and then answer the questions following the case.

Case: A Brawl in Mickey’s Backyard

Outside City Hall in Anaheim, California—home to the theme park Disneyland—dozens

of protestors gathered in August 2007 to stage a skit. Wearing costumes to emphasize their

point, activists playing “Mickey Mouse” and the “evil queen” ordered a group of “Disney

workers” to “get out of town.” The amateur actors were there to tell the city council in a

dramatic fashion that they supported a developer’s plan to build affordable housing near

the world-famous theme park—a plan that Disney opposed.

“They want to make money, but they don’t care about the employees,” said Gabriel de

la Cruz, a banquet server at Disneyland. De la Cruz lived in a crowded one-bedroom apartment

near the park with his wife and two teenage children. “Rent is too high,” he said. “We

don’t have a choice to go some other place.”

The Walt Disney Company was one of the best-known media and entertainment companies

in the world. In Anaheim, the company operated the original Disneyland theme park,

the newer California Adventure, three hotels, and the Downtown Disney shopping district.

The California resort complex attracted 24 million visitors a year. The company as a whole

earned more than $35 billion in 2007, about $11 billion of which came from its parks and

resorts around the world, including those in California.

Walt Disney, the company’s founder, had famously spelled out the resort’s vision when

he said, “I don’t want the public to see the world they live in while they’re in Disneyland.

I want them to feel they’re in another world.”

Anaheim, located in Orange County, was a sprawling metropolis of 350,000 that had

grown rapidly with its tourism industry. In the early 1990s, the city had designated two square

miles adjacent to Disneyland as a special resort district, with all new development restricted

to serving tourist needs, and pumped millions of dollars into upgrading the area. In 2007, the

resort district—5 percent of Anaheim’s area—produced more than half its tax revenue.

Housing in Anaheim was expensive, and many of Disney’s 20,000 workers could not

afford to live there. The median home price in the community was more than $600,000,

and a one-bedroom apartment could rent for as much as $1,400 a month. Custodians at the

park earned around $23,000 a year; restaurant attendants around $14,000. Only 18 percent

of resort employees lived in Anaheim. Many of the rest commuted long distances by car

and bus to get to work.

The dispute playing out in front of City Hall had begun in 2005, when a local developer

called SunCal had arranged to buy a 26-acre site in the resort district. (The parcel was directly

across the street from land Disney considered a possible site for future expansion.)

SunCal’s plan was to build around 1,500 condominiums, with 15 percent of the units set

aside for below-market-rate rental apartments. Because the site was in the resort district,

the developer required special permission from the city council to proceed.

Affordable housing advocates quickly backed SunCal’s proposal. Some of the unions

representing Disney employees also supported the idea, as did other individuals and groups

drawn by the prospect of reducing long commutes, a contributor to the region’s air pollution.

Backers formed the Coalition to Defend and Protect Anaheim, declaring that “these

new homes would enable many . . . families to live near their places of work and thereby

reduce commuter congestion on our freeways.”

Disney, however, strenuously opposed SunCal’s plan, arguing that the land should be

used only for tourism-related development such as hotels and restaurants. “If one developer

is allowed to build residential in the resort area, others will follow,” a company

spokesperson said. “Anaheim and Orange County have to address the affordable housing

issue, but Anaheim also has to protect the resort area. It’s not an either/or.” In support of

Disney’s position, the chamber of commerce, various businesses in the resort district, and

some local government officials formed Save Our Anaheim Resort District to “protect our

Anaheim Resort District from non-tourism projects.” The group considered launching an

initiative to put the matter before the voters.

The five-person city council was split on the issue. One council member said that if

workers could not afford to live in Anaheim, “maybe they can move somewhere else . . .

where rents are cheaper.” But another disagreed, charging that Disney had shown “complete

disregard for the workers who make the resorts so successful.”

Sources: “Disneyland Balks at New Neighbors,” USA Today, April 3, 2007; “Housing Plan Turns Disney Grumpy,” The New

York Times, May 20, 2007; “In Anaheim, the Mouse Finally Roars,” Washington Post, August 6, 2007; and “Not in Mickey’s

Backyard,” Portfolio, December 2007.

1. Using Disney as the focal organization, identify all the relevant stakeholders to this case.

2. For each of the stakeholders above, clear explain their respective “interest” or claim to the situation using evidence from the case. Also, indicate if each stakeholder is in

favor of, or opposed to, SunCal’s proposed development.

3. What sources of power do each of the relevant stakeholders identified above have in this case?

4. Based on the information you have included in your stakeholder analysis/map, what do you believe is the socially responsible decision for Disney? Justify your solution by applying either the ownership theory of the firm or the stakeholder theory of the firm.

When researching information to complete the cash flow budget, what needs to be considered?

Describe how budget assumptions operate over time, what makes the best budget assumptions and what happens when they become invalid. (100 words)

Question 5: Forty-Niner Co purchased a computer for $325,000 on January 2, 2017. The company expects the computer to last for 8 years or 15,000 hours of operation, with an estimated residual value of $25,000. During 2017 the computer was operated for 2,000 hours, while in 2018 it was operated for 2,600 hours . Required: Calculate the depreciation expense for the computer for 2017 and 2018 using the following depreciation methods: a) Straight-line. b) Declining-balance at twice the straight-line rate. c) Units-of-production.

Inventory by Three Methods; Cost of Goods Sold

The units of an item available for sale during the year were as follows:

There are 18 units of the item in the physical inventory at December 31.

Determine the cost of ending inventory and the cost of goods sold by three methods, presenting your answers in the following form:

Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $349,800 of manufacturing overhead for an estimated allocation base of 1,060 direct labor-hours. The following transactions took place during the year:

Raw materials purchased on account, $230,000.

Raw materials used in production (all direct materials), $215,000.

Utility bills incurred on account, $65,000 (85% related to factory operations, and the remainder related to selling and administrative activities).

Accrued salary and wage costs:

Maintenance costs incurred on account in the factory, $60,000

Advertising costs incurred on account, $142,000.

Depreciation was recorded for the year, $90,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment).

Rental cost incurred on account, $115,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities).

Manufacturing overhead cost was applied to jobs, $ ? .

Cost of goods manufactured for the year, $830,000.

Sales for the year (all on account) totaled $1,500,000. These goods cost $860,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were:

Plyler Plastics Company produces a variety of custom plastics products for a worldwide clientele. The company's cost accounting manager, Martha Johns, is beginning to implement an activity-based costing system and has gathered data on the quality inspections activity. She is unsure what the most appropriate driver is for this activity cost pool, but she is considering number of units produced, number of batches produced, machine hours, and direct labor hours. She has gathered weekly information for the past two years and has asked you to help her determine which activity driver to select.

Required

(a)Using the activity cost pool and activity driver data, prepare a scatterplot for each potential activity driver. What do you notice about the appropriateness of each as the selected driver for assigning inspections costs to products under the new activity-based costing system?

(b)Using Excel's CORREL formula, determine the correlation between each activity driver level and the inspections cost.

(c)Using Excel's RSQ formula, determine how much of the variation in activity costs each activity driver explains.

(d)Based on your analysis, which activity driver do you recommend? Why?

(e)Assuming the past two years represent the expected level of costs and activity for the coming year, what activity cost rate for quality inspections should be used to assign costs to products in the coming year?

Week Quality Insepctions Cost Units Produced    Batches    Machine Hours    Direct Labor Hours
1 $                           1,626                 83,481        57                16,353                      10,518
2 $                           2,044               105,939        98                25,598                      13,136
3 $                           1,736               138,215         84                25,416                      17,125
4 $                           2,401                 82,028        123                27,485                      10,528
5 $                           2,280                 89,964        148                27,776                      11,299
6 $                           1,267               130,227      75                19,183                      16,180
7 $                           2,391                 84,843         166                21,745                      10,746
8 $                           2,418                 93,504         161                22,909                      11,748
9 $                             774                 95,214       56                26,631                      11,685
10 $                           2,332               117,356      120                21,225                      14,621
11 $                           2,572               112,073       131                21,317                      13,986
12 $                           1,918                 82,702      139                27,087                      10,490
13 $                           1,819               148,925     86                26,939                      18,323
14 $                           1,326               125,663       58                17,269                      15,574
15 $                           1,648               118,270       117                27,161                      14,573
16 $                           1,882               115,109       143                18,017                      14,447
17 $                           2,129                 90,066       112                27,124                      11,307
18 $                           1,962               130,190       150                12,683                      16,184
19 $                           1,751               131,078       99                17,705                      16,107
20 $                           1,061               100,707       64                19,261                      12,374
21 $                            762               148,448     54                18,166                      18,092
22 $                           2,166               118,074       104                25,257                      14,553
23 $                            1,571               138,106      112                19,470                      17,068
24 $                            1,691               108,828      107                17,036                      13,649
25$                           2,647               131,576      134                19,045                      16,498
26 $                           1,631               123,399      60                20,018                      15,375
27 $                           1,215                 89,104      61                16,209                      11,106
28 $                           1,027               106,660      63                18,393                      13,085
29 $                            644                 87,025      51                18,437                      10,821
30 $                           1,958               133,661      93                10,925                      16,552
31 $                           1,554               128,015      120                17,937                      15,828
32 $                           1,401               143,200      86                18,559                      17,726
33 $                            740               128,785      51                10,099                      15,893
34 $                           2,860               142,728      165                20,995                      17,733
35 $                           2,224                 96,737      132                22,561                      12,100
36 $                           1,371                 94,023      67                23,730                      11,717
37 $                             920                 82,081      72                17,493                      10,257
38 $                           1,395               149,748     101                16,047                      18,412
39 $                           2,474               100,344     169                10,768                      12,713
40 $                           2,268               101,425    131                26,647                      12,854
41 $                           2,013                 89,539    119                14,015                      11,135
42 $                           2,356               117,345     156                18,850                      14,494
43 $                           2,257                 86,370    168                14,751                      10,961
44 $                           2,422                 98,056 143                19,805                      12,276
45 $                           1,932                 83,271    109                11,061                      10,502
46 $                           2,590               107,880    159                26,449                      13,586
47 $                           1,701               114,017    117                16,632                      14,023
48 $                           2,040               141,278    122                26,212                      17,597
49 $                           1,908               131,427    102                23,126                      16,291
50 $                           2,152                 87,576    159                11,435                      11,155
51 $                           1,705               105,897    72                14,396                      13,084
52 $                           1,091               137,863 52                20,149                      17,051
53 $                           1,285               105,966    101                27,544                      13,152
54 $                           1,749               113,491    68                18,207                      14,036
55 $                           1,899               135,404    93                18,511                      16,630
56 $                           2,574               118,977    155                13,952                      14,758
57 $                           1,460               108,169    67                12,894                      13,451
58 $                           1,236               139,303    76                14,862                      17,082
59 $                           1,451               141,178    55                14,084                      17,372
60 $                           2,052               135,222   108                22,784                      16,865
61 $                           1,246               117,651    55                15,647                      14,409
62 $                           1,546                 90,802   118                11,623                      11,485
63 $                           2,338               145,299   156                12,498                      18,081
64 $                           1,178               143,988   62                26,536                      17,798
65 $                           1,664               139,198    109                25,516                      17,157
66 $                           1,042               138,232    66                20,416                      17,061
67 $                           1,667               149,345    79                15,158                      18,490
68 $                           1,085                 97,291    58                15,769                      12,127
69 $                           1,690               100,025   116                10,179                      12,600
70 $                           2,148                 92,106   114                27,464                      11,484
71 $                           1,724               144,295   92                23,986                      17,806
72 $                           2,002               126,032   116                14,026                      15,580
73 $                           2,903                 83,548   155                27,859                      10,735
74 $                          2,258                 95,736   148                26,346                      12,087
75 $                          1,496               100,358   72                13,726                      12,564
76 $                          1,940               104,231   107                14,854                      12,927
77 $                          1,626                 80,340   77                18,798                      10,234
78 $                          2,129               137,565   110                12,692                      16,882
79 $                          1,749                 82,523   107                24,803                      10,498
80 $                          1,810                 97,869   73                23,296                      12,276
81 $                          2,003                 90,266   110                15,686                      11,481
82 $                         2,213               119,616   99                27,074                      14,844
83 $                         1,453               115,210   57                13,688                      14,113
84 $                         1,311               104,454   102                23,384                      13,033
85 $                        1,037                 88,748   65                19,517                      10,893
86 $                        1,134               139,251   60                12,888                      17,237
87 $                        2,371                 97,479   124                17,916                      12,142
88 $                        2,428               128,002   115                18,031                      15,953
89 $                        2,467               111,798   169                22,302                      13,962
90 $                        2,638               106,219   164                21,894                      13,343
91 $                        2,400               116,886   125                11,629                      14,705
92 $                        2,107               142,368   91                19,878                      17,618
93 $                        1,139               112,606   52                10,829                      13,777
94 $                        1,306                 92,930   96                22,443                      11,710
95 $                        2,885                 85,927   152                14,086                      10,972
96 $                       1,100               128,001   87                21,742                      15,807
97 $                       2,131               138,025   148                25,300                      16,943
98 $                       1,811               105,397 80                25,729                      13,039
99 $                       1,928                 88,465    127                22,027                      11,082
100 $                     1,276               118,707   67                25,246                      14,510
101 $                             1,527               129,211   99                23,519                      15,988
102 $                             2,176               144,143   113                20,821                      17,874
103 $                             1,564                 80,889   118                22,465                      10,197
104 $                             2,142                 94,066   165                12,640                      11,702

Calculating the Fair Value of Debt

The Longo Corporation issued $60 million maturity value in notes, carrying a coupon rate of six percent, with interest paid semiannually. At the time of the note issue, equivalent risk-rated debt instruments carried yield rates of eight percent.

The notes matured in five years.

Calculate the proceeds that Longo Corporation will receive from the sale of the notes.
Round your answer to the nearest dollar.

$Answer

How will the notes be disclosed on Longo’s balance sheet immediately following the sale?
Round your answers to the nearest dollar.

Calculate the interest expense for Longo Corporation for the first year that the notes are outstanding.
Do not round until final answer. Round answers to the nearest dollar.

Calculate the balance sheet value of the notes at the end of the first year.
Do not round until final answer. Round answer to the nearest dollar.

$Answer

Computing Return on Equity and Return on Assets

The following table contains financial statment information for Walmart Stores Inc.

Questions

A. Compute the return on euqity (ROE) for 2014 and 2015. What trend, if any, is evident? How does Wal-Mart's ROE compare with approximately 18.9% ROE for companies in the Dow Jones INdustrial average of 2015?

B. Compute the return on assets for 2014 and 2015. What trends, if any, are evident? How does Wal-Mart's ROA compare with the approximate 7.1% median ROA for companies in the DOW Jones Industrial average for 2015?

C. What factors might allow a company like Walmart to reap above-average returns?

What are the arguments for and against open markets and free-trade policies? Which do you find convincing?

Problem 13-25 Net Present Value Analysis of a Lease or Buy Decision [LO13-2]

The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company’s present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives:

At the end of three years, the fleet could be sold for one-half of the original purchase price.

Riteway Ad Agency’s required rate of return is 18%.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:    

1. What is the net present value of the cash flows associated with the purchase alternative?

2. What is the net present value of the cash flows associated with the lease alternative?

3. Which alternative should the company accept?

Distinguish among a statutory merger, a statutory consolidation, and a stock acquisition.

How does the Canadian Government treat special assessment tax in governmental accounting?