Mary, the plant manager of Southern Oregon Injection Molding, Inc. (SOIM), is pondering an interesting offer made by the president and majority shareholder, Kenny. Kenny recently turned sixty and is planning a gradual retirement. None of his children are interested in taking over the business and are currently pursuing careers unrelated to the plastics industry, so Kenny has decided to offer his controlling share to Mary.

SOIM began by manufacturing plastic lawn ornaments, including a colorful tropical bird that became a major fad in the 1980s. Pleased and amused by the success of his fanciful product, Kenny added rabbits, skunks, trolls, angels, and garden fairies to the product line. Under Mary’s leadership, SOIM has also become an important secondary supplier of plastic housings for speakers, cell phones, calculators, and similar products.

Marry started working at SOIM as a color technician shortly after graduating from Southern Oregon University with a degree in chemical engineering. Within five years, she became the plant manager, a position she has held for the last eight years. Along the way, she has earned an MBA through the evening program at Southern Oregon University.

Because SOIM stock is publicly traded, we can confidently assign a value of $10,000,000 to Kenny’s shares. Kenny has stated that he is open to any reasonable plan to finance the purchase.

Questions

1. Mary could probably borrow the money to purchase the shares outright because the shares would serve as collateral and dividends would cover a good part of the loan payments. The interest rate is 7%, and the lender will amortize the loan with a series of equal payments. What are the annual payments if the bank amortizes the loan over five, ten, or twenty years?

2. Repeat Question 1, but assume that Mary makes payments at the beginning of each year.

Treasure Corp. is a public company and has 100,000 common shares outstanding and 15,000 cumulative $2 preferred shares outstanding. In 2020, the company reported income from continuing operations before income tax of $2,830,000. Additional transactions not considered in the $2,830,000 are as follows: 1. In 2020, Treasure Corp. sold equipment for $65,000. The machine had originally cost $60,000 and had accumulated depreciation to date of $45,000. 2. The company sold one of its subsidiaries during the current year. Assume that this transaction meets the criteria for discontinued operations. The loss on 2020 operations of this subsidiary was $60,000 before tax. The loss from disposal of the subsidiary was $7,000 before tax. 3. Treasure purchased new computers for $20,000 cash at the end of 2020 to take advantage of a supplier promotion. By doing so, the company saved $4,000. 4. At year end, the company reviewed its accounts receivable and determined that a $6,700 of accounts receivable that had been outstanding since May appeared unlikely to be collected. No allowance for doubtful accounts was previously set up. 5. An internal audit discovered that amortization (depreciation) expense on a patent had been erroneously missed for both 2019 and 2020. The patent had a cost of $120,000 and has an 8-year useful life. 6. The company had an unrealized gain of $41,000 (not taxable) on their FV-OCI investment. Instructions: a. Make a list with one to six and for each of the 6 points, indicate if the transaction would effect Continuing Operations, Discontinued Operations, Other Comprehensive Income or N/A and by what before-tax amount, positive or negative. E.g. “8. Discontinued +53,000” b. Taking into account the above information, prepare a Statement of Financial Performance for the year 2020, starting with income from continuing operations before income tax. Calculate earnings per share as it should be shown on the face of the income statement (The preferred share dividends are $30,000). Assume a total effective tax rate of 30% on all points, unless otherwise indicated. c. Not all information is created equal. Using an example from the information provided in points 1 through 6, explain how the quality of earning information could have shortcomings. Be clear but concise and limit your answer to two to three sentences.

What is the main difference between situational and behavioral structured interviews? When would it be better to go with a situational interview? When would it be better to go with a behavioral interview?

for a fraud investigation

the current trends in interview techniques. How do you think this process has changed over the years or do you believe it has remained the same? Provide 3 questions you would ask a suspect during an initial interview and 3 questions you would ask a suspect during a follow up interview. Be sure to explain your reasons for the questions asked

1. Assume that the Student class is part of a generalization/specialization hierarchy, with University Person as a general class. What attributes would Student inherit from University Person? What are attributes are unique to the Student class, which all University Persons would not have?

Change in Estimates. On January 1, 2018, Hogan Manufacturing Co. purchased equipment for $400,000. The company expects the equipment to be in use for 6 years, and to have a salvage value of 10% of the original cost at the end of its useful life. At the beginning of 2020, Hogan revised its estimate of the equipment’s useful life from 6 years to a total of 10 years, and also at that time reduced the estimated salvage value to zero. The company uses the straight-line depreciation method. Compute depreciation expense for 2020

The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux’s accounting records is provided also.

Additional information from the accounting records:

1. A building that originally cost $184,000, and which was three-fourths depreciated, was sold for $7,000.
2. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment.
3. Property was acquired by issuing a 13%, seven-year, $48,000 note payable to the seller.
4. New equipment was purchased for $69,000 cash.
5. On January 1, 2021, bonds were sold at their $43,000 face value.
6. On January 19, Dux issued a 5% stock dividend (1,000 shares). The market price of the $10 par value common stock was $14 per share at that time.
7. Cash dividends of $31,000 were paid to shareholders.
8. On November 12, 12,500 shares of common stock were repurchased as treasury stock at a cost of $8,000.

Required:
Prepare the statement of cash flows for Dux Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 10,000 should be entered as 10).)

Problem 16-06 (Part Level Submission) Riverbed Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2020, and May 31, 2021. The income from operations for the fiscal year ended May 31, 2020, was $1,827,000 and income from continuing operations for the fiscal year ended May 31, 2021, was $2,536,000. In both years, the company incurred a 10% interest expense on $2,376,000 of debt, an obligation that requires interest-only payments for 5 years. The company experienced a loss from discontinued operations of $585,000 on February 2021. The company uses a 20% effective tax rate for income taxes. The capital structure of Riverbed Corporation on June 1, 2019, consisted of 1,018,000 shares of common stock outstanding and 19,200 shares of $50 par value, 7%, cumulative preferred stock. There were no preferred dividends in arrears, and the company had not issued any convertible securities, options, or warrants. On October 1, 2019, Riverbed sold an additional 507,000 shares of the common stock at $20 per share. Riverbed distributed a 20% stock dividend on the common shares outstanding on January 1, 2020. On December 1, 2020, Riverbed was able to sell an additional 817,000 shares of the common stock at $22 per share. These were the only common stock transactions that occurred during the two fiscal years.

Determine the weighted-average number of shares that Riverbed Corporation would use in calculating earnings per share for the fiscal year ended:

Partial information from the comparative balance sheet of Jackson Company as of December 31, 2020 and 2019 reflected the following selected account balances. From the information contained on the balance sheet and the additional information below, prepare the Net Cash Flows from Operating activities to answer the following two questions.  

Jackson Company

Comparative Balance Sheet Partial Information

                                                           2020                2019

Current Assets:

Cash                                                $114,000         $100,000

Accounts receivable                           18,400             20,700

Inventory                                            62,200             59,600

Current Liabilities:

Accounts payable                               29,300             26,600

Accrued liabilities                                9,700             10,100

Additional information:

Net income                                                       69,000

Depreciation expense                                         8,000

Question:

What is the amount of the total adjustments to net income (total of the adjustments column)?

See the previous question. How much is the net cash flows from operating activities?