Journalize the following adjustments.

tarcups Coffee Company is launching a new sustainability initiative that would reward customers for purchasing a reusable cup. During the cup promotion, customers would pay an extra $1.00 for the reusable cup and would receive a 30% discount each time they return with the cup to buy a cup of coffee.

Each week Starcups serves 57,000 customers who purchase an average of 2.50 cups of coffee per week (142,500 cups total). Starcups’s contribution margin income statement for a typical week is shown below:

Assume the new cup promotion is expected to impact sales volume, revenue, fixed, and variable costs as follows:

• Starcups estimates that 25% of its current customers (14,250) will participate in the promotion. The remainder of its existing customer base (42,750) will continue to buy an average of 2.50 cups of coffee per week.
• Starcups expected to attract 6,700 new customers to participate in the promotion.
• Customers who participate in the promotion will pay an additional $1.00 for the reusable cup. They will then receive a 30% discount on repeat visits when they bring back their reusable cup.
• The additional variable cost of purchasing the reusable cup is $3.20. The variable cost savings of the paper cup is $.40.
• Starcups expects that customers who participate in the reusable cup promotion will visit an average of 4 times per week, including the first purchase of the reusable cup.
• Starcups will spend a total of $27,000 per week advertising the reusable cup promotion.

Required:

1. Prepare a contribution margin income statement to predict how the reusable cup promotion will impact weekly net operating income.

2. Compute the difference in total revenue, total variable costs, total contribution margin, total fixed costs, and total operating income before and after the promotion.

3. How will this sustainability initiative impact the company’s triple bottom line?

Question 4 Culver Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Culver as of May 31, 2017, are as follows. The company is preparing its statement of cash flows. CULVER COMPANY COMPARATIVE BALANCE SHEET AS OF MAY 31 2017 2016 Current assets Cash $28,500 $19,900 Accounts receivable 74,900 58,300 Inventory 221,700 251,100 Prepaid expenses 8,900 7,100 Total current assets 334,000 336,400 Plant assets Plant assets 600,200 497,300 Less: Accumulated depreciation—plant assets 149,500 126,200 Net plant assets 450,700 371,100 Total assets $784,700 $707,500 Current liabilities Accounts payable $123,900 $115,300 Salaries and wages payable 47,500 71,500 Interest payable 26,700 24,800 Total current liabilities 198,100 211,600 Long-term debt Bonds payable 70,000 100,000 Total liabilities 268,100 311,600 Stockholders’ equity Common stock, $10 par 370,000 280,000 Retained earnings 146,600 115,900 Total stockholders’ equity 516,600 395,900 Total liabilities and stockholders’ equity $784,700 $707,500 CULVER COMPANY INCOME STATEMENT FOR THE YEAR ENDED MAY 31, 2017 Sales revenue $1,267,200 Cost of goods sold 715,700 Gross profit 551,500 Expenses Salaries and wages expense 253,700 Interest expense 75,500 Depreciation expense 23,300 Other expenses 8,100 Total expenses 360,600 Operating income 190,900 Income tax expense 42,600 Net income $148,300 The following is additional information concerning Culver’s transactions during the year ended May 31, 2017. 1. All sales during the year were made on account. 2. All merchandise was purchased on account, comprising the total accounts payable account. 3. Plant assets costing $102,900 were purchased by paying $33,900 in cash and issuing 6,900 shares of stock. 4. The “other expenses” are related to prepaid items. 5. All income taxes incurred during the year were paid during the year. 6. In order to supplement its cash, Culver issued 2,100 shares of common stock at par value. 7. Cash dividends of $117,600 were declared and paid at the end of the fiscal year. Prepare a statement of cash flows for Culver Company for the year ended May 31, 2017, using the direct method. (A reconciliation of net income to net cash provided is not required.)

Kingbird Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Kingbird as of May 31, 2017, are as follows. The company is preparing its statement of cash flows.

The following is additional information concerning Kingbird’s transactions during the year ended May 31, 2017.

Prepare a statement of cash flows for Kingbird Company for the year ended May 31, 2017, using the direct method. (A reconciliation of net income to net cash provided is not required.)

Bridgeport Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Bridgeport as of May 31, 2017, are as follows. The company is preparing its statement of cash flows.

The following is additional information concerning Bridgeport’s transactions during the year ended May 31, 2017.

Using the indirect method, calculate only the net cash flow from operating activities for Bridgeport Company for the year ended May 31, 2017. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

1. What publicly listed company most epitomizes CSR and why?

2. What privately-owned company most epitomizes CSR and why?

please dont take other people's answer

Sandhill Machinery Corporation, a private company following ASPE sold manufacturing equipment for $2,100 each. Each machine carried with it a 2-year warranty against manufacturing defects. From experience, Sandhill Machinery Corporation determined that each machine sold would average $253 in replacement parts. In 2020, the company sold 1,000 machines. Also in 2020, the company incurred $125,000 in total repair costs (the cost of replacement parts from inventory). Sandhill Machinery Corporation also sold an extended warranty for its machines. For $430, customers could purchase an extended warranty that extended the warranty on the machine for an additional 2 years. 800 of the customers that bought machines also purchased the extended warranty. Assume the revenue is earned evenly over the two-year contract. Using the Revenue Approach, prepare the journal entry to record the sale of the machines and extended warranties. (Ignore any cost of goods sold entry).Using the Revenue Approach, prepare the journal entry to record the warranty costs incurred during 2020.

Using the Revenue Approach, prepare the journal entry to record the year-end adjusting entries at December 31, 2020,for the assurance-type warranties assuming Sandhill’s year-end is December 31. Using the Revenue Approach, prepare the journal entry to record the year-end adjusting entries at December 31, 2022 for the service-type warranties. (Note: assume that the cost of repairs has already been recorded during 2022 and prepare any other adjusting entry needed). (

Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its unit costs for each product at this level of activity are given below:

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.

12. What contribution margin per pound of raw material is earned by Alpha and Beta? (Round your answers to 2 decimal places.)

13. Assume that Cane’s customers would buy a maximum of 92,000 units of Alpha and 72,000 units of Beta. Also assume that the company’s raw material available for production is limited to 300,000 pounds. How many units of each product should Cane produce to maximize its profits?

15. Assume that Cane’s customers would buy a maximum of 92,000 units of Alpha and 72,000 units of Beta. Also assume that the company’s raw material available for production is limited to 300,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.)

In re Yukos Oil Company Securities Litigation 2006 WL 3026024 (S.D.N.Y.)

FACTS: Yukos is a Moscow-based joint-stock company whose shares trade on the Russian stock exchange. Yukos shares also trade indirectly on multiple European exchanges and over-thecounter in the United States. Allegedly, Khodorkovsky was part of a select group of Russian business leaders known as “oligarchs” who supported former Russian President Boris N. Yeltsin, but were politically opposed to current Russian President Vladimir V. Putin. The Tax Code of the Russian Federation prescribed a maximum income tax rate that incorporated two components: a tax payable to the federal budget and a tax payable to the budget of the taxpayer's local region. For example, in 2004, the statutory maximum rate was 24%, of which up to 6.5% could be collected by the federal government and up to 17.5% by regional governments. The Tax Code also prescribed a minimum rate for taxes payable to regional governments. In 2004, that rate was 13.5%. However, the regional governments could offer tax benefits to reduce or even eliminate the regional budget liability of certain categories of taxpayers. Because of this regional variance in the effective income tax rate, taxpayers in the metropolitan regions of the Russian Federation, such as Moscow, paid higher taxes than taxpayers in remote regions, or “ZATOs.” The complaint alleges that from 2000 through 2003, Yukos grossly underpaid its taxes to the Russian Federation by illegally taking advantage of the ZATOs' preferential tax treatment. According to the complaint, Yukos booked oil sales at “well below” market prices to seventeen trading companies, all of which were registered within ZATOs. Without taking physical possession, the trading companies sold the oil to customers at market prices and claimed the tax benefits of their ZATOs. However, the profits were “funneled ... back to Yukos and Yukos paid taxes only on the initial below-market sales while reaping substantial profits from the low-tax market-price sales. The complaint alleges that the regional trading companies received the benefits of ZATO registration illegitimately because “[n]o business was actually conducted by the sham companies in the ZATOs.” This Yukos tax strategy presented enormous risk because it violated Russian law and because the Russian Federation had prosecuted other companies that had acted similarly. Nonetheless, the risk was not disclosed in any of the Yuko’s filings with the SEC. Also, what was filed with the SEC was allegedly not prepared in conformity with U.S. GAAP or other standards of financial reporting. At a secret meeting with Khodorkovsky and other oligarchs in 2000, Putin promised not to investigate potential wrongdoing at their companies if the oligarchs refrained from opposing Putin. Nearly three years later, at another such meeting, Khodorkovsky allegedly voiced his opinion that high-level officials in Putin's government should be ousted. According to the plaintiffs, Putin reacted negatively and intimated to Khodorkovsky that the Russian Federation might investigate Yukos' methods of acquiring oil reserves. Despite Putin's warnings, Khodorkovsky publicly criticized Putin and financed opposition parties. On October 25, 2003, Russian Federation authorities arrested Khodorkovsky and charged him with fraud, embezzlement and evasion of personal income taxes. Days later, the Russian Government seized control of Khodorkovsky's 44% interest in Yukos as security against the approximately $1 billion he owed in taxes. Concurrently, the Tax Ministry revealed that it had been investigating Yukos' tax strategies. The Department of Information and Public Relations of the General Prosecutors Office then announced charges that accused Khodorkovsky and others of fraudulently operating an illegal scheme at Yukos to avoid tax liability through shell company transactions. On December 29, 2003, the Tax Ministry concluded its audit of Yukos for tax year 2000, issued a report that Yukos had illegally obtained the benefit of the ZATOs’ preferential tax treatment, and owed $3.4 billion to the Russian Federation in back taxes, interest, and penalties for tax year 2000. As a result, Yukos defaulted on a $1 billion loan from private lenders and the Russian Government confiscated Yukos' assets, including its main production facility and billions of dollars from its bank accounts. The price of Yukos securities “plummeted” in response to these events. Shareholders in Yukos (Plaintiffs) filed consolidated class actions against Khodorkovsky and others (defendants) on July 2, 2004. The U.S. plaintiffs had purchased Yukos securities between January 22, 2003, and October 25, 2003. They allege that Yukos, its outside auditor, and certain of its executives and controlling shareholders knowingly concealed the risk that the Russian Federation would take action against Yukos by failing to disclose: (1) that Yukos had employed an illegal tax evasion scheme since 2000; and (2) that Khodorkovsky's political activity exposed the Company to retribution from the current Russian government. The plaintiffs based their claims on the fraud provision, Section 10(b), of the Securities Exchange Act. ISSUE: Does the act of state doctrine prohibit the court from taking the case? DECISION: No. The court dismissed the case on other grounds, but found that the act of state doctrine did not prohibit the court from hearing the case. The case was not one that involved invalidating Russian actions; it was a case to decide whether the company should have been more transparent and forthcoming about the risk of its strategy as well as the political risk in Russia. Questions: 1. Describe how Yukos is alleged to have saved significant amounts in taxes. 2. Explain what act of the Russian Federation is in question. 3. What are the plaintiffs asking the court to decide? Does that decision require revisiting what the Russian Federation did, and why or why not?

1. In class, we address the importance of maximizing shareholders’ wealth. However, it seems like maximizing stock prices does not make sense, because investors focus on short-term results and do not care about long-term consequences. What do you think? Please discuss.

2. In February, Cap Inc. announced that it would split into two independent publicly traded companies: one comprised of its Old Navy brand, and the second a yet-to-be-named company that includes its other brands like Banana Republic and Athleta. The planned breakup is an acknowledgment of the two chains' diverging fortunes and how much Gap has lost its once-powerful grip on American consumers. For several years, Old Navy has outperformed its sister brands Gap and Banana Republic with its lower price-points and catchy marketing. Old Navy now exceeds the original brand in sales, making up nearly half of Gap Inc.'s $16.6 billion of sales in 2018.

In your opinion, what are the benefits and downsides to splitting Gap into two firms? How did Gap's stock react to the news in after-market trading? How would you explain this reaction? Will the separation save the company in the long run? Please elaborate on your answers.