The Paria Oil Company is seeking police protection for the duration of industrial turmoil at its Head Office, due to layoff caused by the Covid 19. During discussions with the Police to deal with the turbulence, the Police suggested that a mobile patrol would be adequate because the disorder was largely contained. However, the CEO of Paria insisted on permanent police presence. The CEO then offered to compensate the Police, if they agreed on a permanent on site presence during the turmoil.

The Police thereafter indicated that they will provide 10 officers at a rate of $5000 per day, which they will maintain during the entire strike period. A few weeks after the strike was over, the Commissioner of Police, sent an invoice to Paria Oil Company for the cost of protection for two months. However, Paria Oil refused to compensate, and argued that the Police have a duty under law to protect the company from any pending violence and lawlessness.

The Commissioner of Police has sought your advice on the matter. Can you please advise him?

Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company. Suppose that a random sample of companies yielded the following data: B: Percent for company 2 5 29 8 21 14 13 12 A: Percent for CEO -1 5 21 13 12 18 9 8 Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Use a 1% level of significance. Will you use a left tailed, right tailed, or two tailed test? Select one: a. two tailed test b. right tailed test c. left tailed test

Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company. Suppose that a random sample of companies yielded the following data:

B: Percent for company 28 16 25 26 18 20 7 10

A: Percent for CEO 23 14 23 18 23 10 4 14

Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Use a 5% level of significance. Find (or estimate) the P-value.

Select one:

a. P-value = 0.50

b. P-value = 0.40

c. 0.02 < P-value < 0.05

d. 0.20 < P-value < 0.40

e. 0.01 < P-value < 0.02

Required: Prepare journal entries for each of the following transactions under the Perpetual Inventory method—include recording date and all required revenue, expense and balance sheet accounts. The Widget Company sells only one product (widgets) and uses FIFO. December 31, 2019 inventory is as follows:

1. January 2, 2020: Received 1,000 widgets with a unit cost of $6.00. The units were shipped from the supplier on December 29, 2019 FOB shipping point. The widgets were not included in the December 31, 2019 inventory. Payment terms are 2/10, net 30. The company uses the Net Method for recording payment discounts.
2. January 5, 2020: Sold 3,000 widgets for $11.00 each and shipped FOB shipping point. Payment terms are 1/10, net 30. The company uses the Gross Method for recording sales discounts.
3. January 6, 2020: Paid in full for the 1,000 widgets received on January 2, 2020.
4. January 10, 2020: Customer returned 200 of the widgets sold and shipped on January 5, 2020. All items were in excellent condition and returned to inventory.
5. January 15, 2020: Received 2,500 widgets with unit cost of $90. Payment terms are net 30—no payment discount offered. Atlas Freight Company billed Widgets $250.00 for delivering the widgets and Widgets paid Atlas immediately.
6. Calculate the following for January 2020:
   1. Inventory quantity on hand and account balance at the end of the month
   2. Net Sales, Cost of Goods Sold and Gross Profit for January 2020

PART I-- Peak, Inc. acquired a machine that involved the following expenditures and related factors:

PART II-- On January 1, 2019, Ivey Company purchased a bottle-capping machine for $160,000.  During its useful life, the company expects that the machine will cap 1,500,000 bottles.  The machine’s expected salvage value is $10,000.  During 2019, the machine capped 250,000 bottles and during 2020, the machine capped 300,000 bottles.  

Required:  Assuming units-of-production depreciation, 2020 depreciation expense is what amount?

PART III-- The cost of an asset is $1,020,000, and its residual value is $160,000. Estimated useful life of the asset is five years.

Required:   
                 1.  Compute first –year depreciation using the straight-line method.
               2.  Compute first-year and second –year depreciation using double-declining-balance method.

PART IV-- An asset was purchased for $37,000 on January 1, 2019. The asset's estimated useful life was five years, and its residual value was $9,000. The straight-line method of depreciation was used.

The asset was sold on December 31, 2019.

Required:  Compute the gain or loss on the sale of the asset and prepare the required journal entry
                   under both of the following assumptions:

                        1.  The selling price was $19,000.

                        2.  The selling price was $37,000.

PART V-- Saul Company purchased a tractor at a cost of $120,000 on January 1, 2019.  The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years.

Required:  If Saul uses the straight-line method, what is the book value at January 1, 2023?

PART VI-- Steve Company purchased a tractor at a cost of $180,000.  The tractor has an estimated salvage value of $20,000 and an estimated life of 8 years, or 10,000 hours of operation.  The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,100 hours in 2020.  On January 1, 2021, the company decided to sell the tractor for $70,000.  Steve uses the units-of-production method to account for the depreciation on the tractor.  

Required:  

            1.  Compute the book value of the tractor on January 1, 2021.

            2.  Compute the gain or loss on sale.

            3.  Prepare the journal entry to record the sale.

QUESTION 7 - Relevant costing on a special order

The following financial data apply to the USB production plant of the Drill Company for May 2015:
Budgeted Manufacturing Cost per USB:
Direct materials $3.20
Direct manufacturing labour 1.80
Variable manufacturing overhead 1.40
Fixed manufacturing overhead 2.00
Total manufacturing cost $8.40

Variable manufacturing overhead varies with the number of USB’s produced. Fixed manufacturing overhead of $2 per USB is based on budgeted fixed manufacturing overhead of $300,000 per month and budgeted production of 150,000 USB’s per month.

The Drill Company sells each USB for $10.
Marketing costs have two components:

Variable marketing costs (sales commissions) of 5% of revenues
Fixed monthly costs of $130,000

During May 2015, Lyn Randell, a Drill Company salesperson, asked the CEO for permission to sell 1,000 USB’s at $8.00 per pack to a customer not in Dill's normal marketing channels. The CEO refused this special order because the selling price was below the total budgeted manufacturing cost.

Required:
(i) What would have been the effect on monthly operating income of accepting the special order?
(ii) Comment on the CEO’s "below manufacturing costs" reasoning for rejecting the special order.
(iii)What other factors should the CEO consider before accepting or rejecting the special order?

Company X's total outstanding shares are 1000 shares, with 400 shareholders A, 300 B, 150 C, 100 D and 50 E, respectively.
C held a shareholders' meeting to appoint directors, and the agenda was presented as candidates for directors by F,G,H and B, professional managers recommended by A.

1. Is it possible for B to exercise its voting rights on the agenda of the shareholders'meeting for the appointment of this director?

At the shareholders' meeting, B,F,G and H were all appointed directors, while B and F were registered as co-chairmen of the company.

2. Explain how this sales contract works if B signed a contract with a customer and sold the product alone because F went on a family trip and could not be reached.

Since then, B has resigned as CEO and F has become the sole CEO. X Corp. recently decided to sell its holdings for 500 million won due to financial pressure, which CEO F wants to buy.

3. If A,B,C and D agree in writing to a land purchase transaction of F in connection with this transaction, will F acquire land from X in effect?

Prior to the transaction of this land, X held a board meeting, and the minutes indicated that B and G agreed, but no indication of H's intention was made.

4. If the market price of the land is found to be well over 1 billion won, explain later whether the company can get the difference back and from whom.

On May 1, Soriano Co. reported the following account balances along with their estimated fair values:

On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $135,000 to an investment banking firm.

The following information was also available:

• Zambrano further agreed to pay an extra $86,400 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $43,200.
• Soriano has a research and development project in process with an appraised value of $237,000. However, the project has not yet reached technological feasibility and the project’s assets have no alternative future use.

a&b. Prepare Zambrano’s journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $725,800 & (b) $840,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

• Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $725,800.
• Record the expenses related to the combination. Assume its initial cash payment to the former owners was $725,800.
• Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $840,000.
• Record the expenses related to the combination. Assume its initial cash payment to the former owners was $840,000.

On May 1, Soriano Co. reported the following account balances along with their estimated fair values:

On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $107,500 to an investment banking firm.

The following information was also available:

• Zambrano further agreed to pay an extra $79,000 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $39,500.
• Soriano has a research and development project in process with an appraised value of $248,500. However, the project has not yet reached technological feasibility and the project’s assets have no alternative future use.

a&b. Prepare Zambrano’s journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $802,000 & (b) $928,500. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $802,000.

2. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $802,000.\

3. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $928,500. \

4. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $928,500.

On May 1, Soriano Co. reported the following account balances along with their estimated fair values:

On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $145,500 to an investment banking firm.

The following information was also available:

- Zambrano further agreed to pay an extra $84,800 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $42,400.

- Soriano has a research and development project in process with an appraised value of $237,500. However, the project has not yet reached technological feasibility and the project’s assets have no alternative future use.

a&b. Prepare Zambrano’s journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $813,800 & (b) $923,600. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1) Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $813,800.

2) Record the expenses related to the combination. Assume its initial cash payment to the former owners was $813,800.

3) Record the acquisition of Soriano Co. Assume its initial cash payment to the former owner was $923,600.

4) Record the expenses related to the combination. Assume its initial cash payment to the former owner was $923,600.