Please develop a response (minimum 300 words) by researching the discussion question, using the internet, assigned readings and your personal experiences.

What Is Corporate Average Fuel Economy (CAFE)?

Is the President’s approach (President George W. Bush, April 27, 2006), i.e., doubling the CAFÉ standards, the right way to reduce gas consumption (and thereby reduce air pollution from cars)? If not, why not?

Does anyone need to drive a Sport Utility Vehicle (SUV)? Should they be exempt from CAFÉ standards?

Should the government subsidize automakers to develop zero-emission vehicles (ZEVs)?

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.)

On 1/1/2004, an insurance company invested $1,000,000 developing an annuity product that will produce returns of $150,000 per year for the next 10 years (assume at the end of each year) following which the product will have to be abandoned.

The net present value of the project is $100,000.

At the end of 5 years, the opportunity cost of capital for the project decreased by 3 percentage points (or 3%), with the rest of the project remaining unchanged.

The insurance company recalculates the net present value as the present value of the remaining cash flows at the new opportunity cost of capital.

Find the value of the project on 1/1/2009.

a.

485,000

b.

535,000

c.

585,000

d.

635,000

e.

685,000

A restaurant collects cash from customers for gift certificates. Assuming that 100% of the gift certificates are redeemed, the restaurant records the collection of the cash and the delivery of food to customers who redeem their gift certificates as follows (ignore inventory and COGS):

Select one:

a. Collection: increase cash and increase deferred revenue; and redemption: decrease deferred revenue and increase equity (revenue)

b. None of the listed answers

c. Collection: increase cash and increase deferred revenue; and redemption: decrease deferred revenue and decrease equity (revenue)

d. Collection: increase cash and decrease equity (revenue); and redemption: nothing is recorded

e. Collection: increase cash and increase equity (revenue); and redemption: nothing is recorded

Burger King is considering the purchase of Commercial Bakeries. Commercial Bakeries bakes buns and bagels used by several fast food restaurant chains, including Burger King. Burger King sees the purchase as a way to maintain a consistent supply of bakery products to its operators and franchisees. The current free cash flow for Commercial Bakeries is $28.9 million. The cash flows are expected to grow at 7% for the next five years before leveling off to 4% for the indefinite future. The cost of capital for Burger King and Commercial Bakeries is 10%  and 8%, respectively. Commercial Bakeries is publicly traded and has 18 million shares of stock outstanding and $142 million in debt outstanding. Commercial Bakeries also has $28 million in cash and cash equivalents. What is the maximum price per share Burger King should pay for Commercial Bakeries?

1. Describe the difference between a service and merchandising firm. Give an example of each from publicly traded companies.
2. Give a detailed example of the recording of purchases under a perpetual inventory system including returns, allowances and discounts.
3. Give a detailed example of the recording sales revenues under a perpetual inventory system including returns, allowances and discounts.
4. Give a detailed example of the recording of purchases under a periodic inventory system including returns, allowances and discounts.
5. Give a detailed example of the recording sales revenues under a periodic inventory system including returns, allowances and discounts.
6. What are the differences between a single-step and a multiple-step income statement?
7. Give an example of how to calculate cost of goods sold under a periodic inventory system. Show all relevant accounts.
8. Explain how the gross profit rate and the profit margin are computed.

Assume you currently work at a CPA firm. During the assessment of internal controls, your firm concluded that your publicly traded client did not have accounting staff who met the firm’s criteria for having adequate accounting expertise to ensure the company’s financials were prepared in compliance with appropriate accounting principles. This was identified as a material weakness and an adverse opinion was issued.

In a PowerPoint presentation, prepare information to further train the audit team on how to handle issues, which includes:

the communication that is required with the client.

the actions that the client must take to mitigate the weakness.

the course of action your firm should take as it relates to the financial audit.

After the report had been issued, assume that the client hired a CPA with extensive reporting experience to manage the accounting department. What part does this hiring decision play, if any, in your firm’s decision?

McCann Catching, Inc. has 3.00 million shares of stock outstanding. The stock currently sells for $12.75 per share. The firm’s debt is publicly traded and was recently quoted at 90.00% of face value. It has a total face value of $12.00 million, and it is currently priced to yield 8.00%. The risk free rate is 4.00% and the market risk premium is 8.00%. You’ve estimated that the firm has a beta of 1.37. The corporate tax rate is 34.00%.

The firm is considering a $41.72 million expansion of their production facility. The project has the same risk as the firm overall and will earn $12.00 million per year for 7.00 years.

What is the cost of equity?

What is the percentage of equity used by McCann Catching, Inc.?

What is the WACC for McCann Catching, Inc.?

What is the NPV of the expansion? (answer in terms of millions, so 1,000,000 would be 1.0000)

You own a small networking startup. You have just received an offer to buy your firm from a​ large, publicly traded​ firm, JCH Systems. Under the terms of the​ offer, you will receive 1 million shares of JCH. JCH stock currently trades for $24.63 per share. You can sell the shares of JCH that you will receive in the market at any time. But as part of the​ offer, JCH also agrees that at the end of one​ year, it will buy the shares back from you for $24.63 per share if you desire. Suppose the current​ one-year risk-free rate is 5.73%​, the volatility of JCH stock is 30.5%​, and JCH does not pay dividends.​ Round all intermediate values to five decimal places as needed.

a. Is this offer worth more than $24.63 ​million? Explain.

b. What is the value of the​ offer?