1. Trevonne had a $750,000 line of credit with Treyenne State bank. They had an outstanding balance of $150,000 at the beginning of 2020, paid $72,000 on the balance on January 28, 2020, borrowed an additional $165,000 on March 16, 2020. If the interest rate is seven percent compounded monthly, what is the balance on the line of credit as of March 31, 2020.

Joe Reeka is a senior sales representative for Power Flour, LLC, a supplier of flour to private-label brands in supermarkets as well as to bakeries across Europe. Power Flour has developed a new white flour with a non-traditional bleaching agent, which will allow for the baking of bread products with lower carbohydrates but without a change in taste. Joe feels this new flour product would be ideal to sell to Rising Action Bakery and has sent information on the new flour to its purchasing department.

Rising Action Bakery is a small but growing chain of bakeries in Germany, specializing in “home-baked” premium bread products. Its products are baked at a central bakery and shipped to its retail stores. The management team is quite ethnically diverse including talent recruited from multiple global regions. CEO is Ana Paula Gutierrez, and she has a small senior management team consisting of a production and operations manager, Dawn Chiles; a sales and marketing manager, Nimesh Patel; a purchasing manager, Joan Wells; a finance and accounting manager, Matt Simon; and a store coordination manager, Dan Levy. Each manager leads an assistant manager/coordinator and an executive assistant. Rising Action also has a store manager and staff for each of its 24 retail stores.

Ana Paula and her five managers are meeting to discuss the results of the sales and marketing department’s recent market research study on the future of low-carbohydrate diet. The results indicated that the trend may not continue, but that low-carb bread products would be in high demand for at least the next two to three years. Sales numbers have been down since the rise in popularity of low-carbohydrate diets, and Nimesh is concerned with maintaining, or hopefully increasing, Rising Action’s market share by adding low-carbo products to the marketing mix. Dawn’s main concern is to produce the low-carb bread efficiently and without having to purchase new equipment. Dawn’s assistant manager handles determination of quantities for ordering and would be involved with developing the new bread product and determining the type and amount of flour to be used. Matt is concerned that this will be a large investment in a possibly short-lived product and that the forecasted budgets did not anticipate such as outlay for inventory expense.

Joan is worried about purchasing the right amount of flour for the production needs but also keeping within the budgets determined by finance. Further, Joan is bound by Rising Action’s policy of getting three bids on supply purchases. Dan is excited at the prospect of new low-carb products for the retail stores but must make the store manager aware of the changes. The stores would be instrumental in collecting feedback form their customers to determine the success of the new products. Ana Paula trusts the decision making of her management team, but ultimately she is responsible for the new products and especially has a hand in developing recipes that are up to Rising Action’s taste standards.

Joan’s purchasing assistant, Janice, received the written sales information from Joe Reeka of Power Flour about the new low-carb flour and has called him back for further information.

1 What stage of the sales process is the sales opportunity? Explain your reason.

2 What should Joe’s sales objective be for this initial meeting with Janice, the purchasing assistant?

3 Which individuals at Rising Action Bakery will it be important for Joe to establish a relationship with to advance this opportunity through the sales process? Why?

4 What is the business problem that Rising Action Bakery is facing?

5 Which of the individuals at Rising Action Bakery would benefit the most (i.e. who is feeling the most pain within the company regarding their current challenges) from working with Joe? Why

6 Which individuals at Rising Action Bakery might try to stop Joe/Power Flour (i.e. anti-sponsors) from succeeding in making a sale if Joe doesn’t overcome their concerns / objectives? Explain.

7 Who do you think the decision maker at Rising Action Bakery will be? Explain

7 What could you envision the steps in the decision making process for Rising Action Bakery to add a new flour ingredient / product….. i.e. what could the next steps be for the two sides after an initial meeting. Think about the steps involved in a new product launch…inhouse testing in a pilot, test marketing in stores, etc.

8 Who will Joe want to makes sure he engages in the interview process?

9. For a product like a low carb flour what format would you envison the demonstration / presentation stage to take?

10. What are 5 good introductory questions (i.e. approach questions) Joe should ask Janice in the first meeting?

11. What are 5 good interview questions Joe should ask in the follow up meeting he will succeed in securing?

12 Summarize why Power Flour could provide a good solution for Rising Action Bakery, given the concerns an constraints of the various managers who could influence the decision?

please answer all questions

Critique the development of International Accounting Standards and the implications for US corporations.

Scenario

CM Corporation (CMC) was founded six years ago by Phil Connor and Eric Martin. The company designs, installs, and service security systems for high-tech companies. The founders, who describe themselves as "entrepreneurial geeks," met in a computer lab when they were teenagers and found they had common interests in working on security systems for critical industries. CMC hired you as a junior accountant this year.

Lately, Connor and Martin have been working with "radio frequency identification" (RFID) technology. They have developed a detailed system designed to track inventory items using RFID tags embedded invisibly in products. This technology has numerous inventory applications in multiple industries.

One of the most basic applications is tracking manufacturing components; if tagged components "go walking" (if employees attempt to take them), companies can easily track and find them. Connor and Martin have sold their system to several high-tech companies in the area. These companies have a number of government contracts that require extensive security systems to protect sensitive data from infiltration by terrorists and others. To date, CMC's cash flow from sales and services has adequately funded its operations.

CMC expects much growth potential for its products. As a result, they are considering going public and expanding internationally in the near future.

Instructions

Connor and Martin are contemplating international business in their industry and feel that global expansion is a great transition for the company. They do not feel as if they understand IFRS and are in need of clarification of both implications and convergence factors that may affect the expansion. They have asked you to prepare a memorandum to help them understand the differences in US GAAP and IFRS Standards, as well as what the costs will be in making the change.

Research the following topics and prepare a memorandum on your findings:

What are the major factors in converging from US GAAP to IFRS Standards?

Will switching accounting standards be costly for the firm? Explain your reasoning.

How does IFRS differ from GAAP regarding international transactions? Are there issues in accounting for international transactions?

What is your final recommendation on whether CMC should converge to IFRS or GAAP? Explain your reasoning.

Memorandum Mechanics should be as follows:

The body of the memorandum should be a professional presentation centered on clear and concise writing. The responses to the questions should be detailed, well researched, and specifically related to CMC's industry.

Use the FASB Codification and IFRS to address all technical accounting issues presented in the questions, being certain to reference the applicable sections of the Codification and IFRS in your report.

All sources used to support your responses should be properly documented. You should have other credible sources in addition to the Codification and IFRS.

Target ROE problem You are given the following information regarding KTC for 2019: RETURN ON ASSETS = 7.5% NET PROFIT MARGIN = 6.0% DEBT EQUITY RATIO = 1.5x SALES = $550,000.00 GROSS PROFIT RATE = 50.0% TAX RATE = 34.0% 1) What must KTC project as its 2020's sales in order to generate an additional 5% Return on Equity above last year’s levels (2019’s ROE + 5%, not 2019’s ROE x 105%) 2) Prepare a projected 2020 Profit and Loss Statement and Balance Sheet (general categories are fine). 3) Calculate: 2020’s projected RETURN ON EQUITY (use the DuPont model) 2020’s projected RETURN ON ASSETS 2020’s projected NET PROFIT MARGIN 2020’s projected EQUITY MULTIPLIER 2020’s projected TOTAL ASSET TURNOVER 4) In addition to the above, determine the increase in sales necessary to also provide for dividends to be paid at the rate of 30% of 2020’s after-tax profits.

Target ROE problem

You are given the following information regarding KTC for 2019:

RETURN ON ASSETS = 7.5% NET PROFIT MARGIN = 6.0% DEBT EQUITY RATIO = 1.5x SALES = $550,000.00 GROSS PROFIT RATE = 50.0% TAX RATE = 34.0%

1) What must KTC project as its 2020's sales in order to generate an additional 5% Return on Equity above last year’s levels (2019’s ROE + 5%, not 2019’s ROE x 105%)

2) Prepare a projected 2020 Profit and Loss Statement and Balance Sheet (general categories are fine).

3) Calculate: 2020’s

projected RETURN ON EQUITY (use the DuPont model)

2020’s projected RETURN ON ASSETS

2020’s projected NET PROFIT MARGIN

2020’s projected EQUITY MULTIPLIER

2020’s projected TOTAL ASSET TURNOVER

4) In addition to the above, determine the increase in sales necessary to also provide for dividends to be paid at the rate of 30% of 2020’s after-tax profits.

For the three questions below…..think z scores and the area under the curve.

3. A nursing professor was curious as to whether the students in a very large class she was teaching who turned in their tests first scored differently from the overall mean on the test. The overall mean score on the test was 75 with a standard deviation of 10; the scores were approximately normally distributed. The mean score for the first 20 tests was 78. Did the students turning in their tests first score significantly different from the mean? Explain. 8 points

4. Do college students from private schools have higher than average test-taking skills? A researcher administered a standard measure of test-taking skills to a randomly chosen student from a private university and found him to have a score of 68. The average on this measure for the population in general is 60 with a standard deviation of 10. What should you conclude about whether this student from a private university has higher test-taking ability? Explain. 8 points

5. Does computer-assisted instruction help community college health science students with reading difficulties to learn reading skills at a faster than normal rate? A researcher arranged for one of these students to have access to a set of computer-learning programs instead of the normal reading curriculum for one term. At the end of the term, the researcher tested her on a standardized reading ability test on which the mean for students with reading difficulties is 36 with a standard deviation of 6. The test participant scored 55. What would you conclude? Explain. 8 points

2.3. Each of the following scenarios presents a claim by a researcher. Assume that the sample sizes in each case was in the range of 20 to 25 observations per sample in each case. Answer the following for each scenario:

(i) state the appropriate null (HO) and alternate hypothesis (HA) in symbolic form (e.g. Hx : Meanleft = Meanright);

(ii) indicate whether it is a 1or 2-tailed test, and if a 1-tailed tests which tail is the area of rejection at.

A. Outside of the nesting season, male and female Robins do not differ in weight. An ornithologist thought however that females gained extra weight prior to nesting. She captured and weighed 20 adult females (F) and 22 males (M) from the same location just as they were started to build nests.wanted to know if this was also true during the nesting season.

B. A resident of Peterborough thinks the city is unusual in that the north end of the city (near Trent University) gets less rainfall than the south end (of the city (near Peterborough Airport). Data were collected for all rain events greater than 4 mm from weather stations at the University (TU) and the airport (PA) from April 1 to November 30 2019.

C. Whether the intensity of rain events (cm/hr) in August (AUG) differ from those in May (MAY) in Peterborough county.

D. A Professor wonders whether it is true that students actually spend more time (hours per week) on course work (ie “attending lectures” and doing assignments) in his online course(ON) compared to the same course taught face-to-face (F2F) in the same semester. He surveyed 25 students from each of the two courses.

Music-Is-Us, Inc., is a supplier of musical instruments for professional and amateur musicians. The company’s accountants make adjusting entries monthly, and they make all closing entries annually . The company is growing rapidly and prides itself on having no long-term liabilities. The company has provided the following trial balance dated December 31, 2018.
MUSIC-IS-US, INC. TRIAL BALANCE DECEMBER 31, 2018
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,000

Marketable securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000

Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000

Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000

Merchandise inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000

Office supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200

Prepaid insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600

Building and fixtures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,791,000

Accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000

Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,800

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000

Unearned customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000

Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000

Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000

Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,200

Unrealized holding gain on investments. . . . . . . . . . . . . . . . . . . . . . . . 6,000

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600,000

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958,000

Bank service charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

Uncollectible accounts expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000

Salary and wages expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395,000

Office supplies expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400

Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,400

Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600

Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000

$3,804,200 $3,804,200
Other information pertaining to the company’s trial balance is provided as follows. 1. The most recent bank statement reports a balance of $46,975. Included with the bank statement was a $2,500 check from Iggy Smarts, a professional musician, charged back to Music-Is-Us as NSF. The bank’s monthly service charge was $25. Three checks written by Music-Is-Us to suppliers of merchandise inventory had not yet cleared the bank for payment as of the statement date. These checks included: no. 508, $5,500; no. 511,
388
$7,500; and no. 521, $8,000. Deposits of $16,500 reached the bank too late for inclusion in the current bank statement. The company prepares a bank reconciliation at the end of each month.

2. Music-Is-Us has a portfolio of marketable securities that originally cost $19,000. As of December 31, the market value of these securities was $27,500. All short-term investments are classified as “available for sale.”

3. During December, $6,400 of accounts receivable were written off as uncollectible. A recent aging of the company’s accounts receivable led management to conclude that an allowance for doubtful accounts of $8,500 is needed at December 31, 2018.

4. The company uses a perpetual inventory system. A year-end physical count revealed that several guitars reported in the inventory records were missing. The cost of the missing units amounted to $1,350. This amount is not considered significant relative to the total cost of inventory on hand.

5. At December 31, approximately $900 in office supplies remained on hand.

6. The company pays for its insurance policies 12 months in advance. Its most recent payment was made on November 1, 2018. The cost of this policy was slightly higher than the cost of coverage for the previous 12 months.

7. Depreciation expense related to the company’s building and fixtures is $5,000 for the month ending December 31, 2018.

8. Although Music-Is-Us carries an extensive inventory, it is not uncommon for experienced musicians to order custom guitars made to their exact specifications. Manufacturers do not allow any sales returns of custom-made guitars. The entire sales amount is collected at the time a custom order is placed, and is credited to an account entitled “Unearned Customer Deposits.” As of December 31, $4,800 of these deposits remained unfilled because the special-order guitars have not been received from the manufacturer. The cost of goods sold and the reduction in inventory associated with all custom orders is recorded when the custom merchandise is delivered to customers. At that time, the adjusting entry requires only a decrease to unearned customer deposits and an increase in sales.

9. Accrued income taxes payable for the entire year ending December 31, 2018, total $81,000. No income tax payments are due until early in 2019.

Instructions

a. Prepare a bank reconciliation and make the journal entries to update the accounting records of Music-Is-Us as of December 31, 2018.

b. Prepare the adjusting entry to update the company’s marketable securities portfolio to its mark-to-market value.

c. Prepare the adjusting entry at December 31, 2018, to report the company’s accounts receivable at their net realizable value (i.e., total amount receivable, less estimated allowance for uncollectible accounts).

d. Prepare the entry to account for the guitars missing from the company’s inventory at the end of the year.

e. Prepare the adjusting entry to account for the office supplies used during December.

f. Prepare the adjusting entry to account for the expiration of the company’s insurance policies during December.

g. Prepare the adjusting entry to account for the depreciation of the company’s building and fixtures during December.

h. Prepare the adjusting entry to report the portion of unearned customer deposits that were earned during December.

i. Prepare the adjusting entry to account for income tax expense that accrued during December.

j. On the basis of the adjustments made to the accounting records in parts a through i, prepare the company’s adjusted trial balance at December 31, 2018.

k. Using the adjusted trial balance prepared in part j, prepare an annual income statement, statement of retained earnings, and a balance sheet dated December 31, 2018.
389
l. Using the financial statements prepared in part k, determine approximately how many days on average an account receivable remains outstanding before it is collected. You may assume that the company’s ending accounts receivable balance on December 31 is a close approximation of its average accounts receivable balance throughout the year.

m. Using the financial statements prepared in part k, determine approximately how many days on average an item of merchandise remains in stock before it is sold. You may assume that the company’s ending merchandise inventory balance on December 31 is a close approximation of its average merchandise inventory balance throughout the year.

n. Using the financial statements prepared in part k, determine approximately how many days it takes to convert the company’s inventory into cash. In other words, what is the length of the company’s operating cycle?

o. Comment briefly upon the company’s financial condition from the perspective of a short-term creditor.