Is Your Car “Made in the U.S.A.”? The phrase “made in the U.S.A.” has become a familiar battle cry as U.S. workers try to protect their jobs from overseas competition. For the past few decades, a ma- jor trade imbalance in the United States has been caused by a flood of imported goods that enter the country and are sold at lower cost than comparable American-made goods. One prime concern is the automotive industry, in which the number of imported cars steadily increased during the 1970s and 1980s. The U.S. automobile industry has been besieged with complaints about product quality, worker layoffs, and high prices, and has spent billions in advertising and research to produce an American-made car that will satisfy consumer demands. Have they been successful in stopping the flood of imported cars purchased by American consumers? The data in the table represent the numbers of imported cars y sold in the United States (in millions) for the years 1969–2009. To simplify the analysis, we have coded the year using the coded variable x = Year - 1969.

1. Using a scatterplot, plot the data for the years 1969–1988. Does there appear to be a linear relationship between the number of imported cars and the year?

2. Use a computer software package to find the least-squares line for predicting the number of imported cars as a function of year for the years 1969–1988.

3. Is there a significant linear relationship between the number of imported cars and the year?

4. Use the computer program to predict the number of cars that will be imported us- ing 95% prediction intervals for each of the years 2007, 2008, and 2009.

5. Now look at the actual data points for the years 2007–2009. Do the predictions obtained in step 4 provide accurate estimates of the actual values observed in these years? Explain.

6. Add the data for 1989–2009 to your database, and recalculate the regression line. What effect have the new data points had on the slope? What is the effect on SSE?

7. Given the form of the scatterplot for the years 1969–2009, does it appear that a straight line provides an accurate model for the data? What other type of model might be more appropriate? (Use residual plots to help answer this question.)

EX 12-3 Minor differences in the terms of a contribution may justify major differences in revenue recognition.

Upon meeting with the executive director of the Crime Victims Advocacy Group, the president of a private foundation agreed to contribute in the following year $100,000 in support of the group’s proposed program to provide legal assistance to victims of violent crimes.

Suppose that the foundation’s formal letter describing its pledge was worded in three different ways:

1. “We are pleased to pledge $100,000 in support of your group’s efforts to assist victims of violent crimes.”

2. “We are pleased to pledge $100,000 in support of your group’s efforts to develop a new program to provide legal assistance to victims of violent crimes.”

3. “We are pleased to pledge $100,000 upon your developing a new program to provide legal assistance to victims of violent crimes.” For each of the three options:

a. Prepare the journal entries that should be made on receipt of the letter from the foundation. Assume that it was unlikely that the pledge would be fulfilled in the same period as it was made.

b. Prepare the journal entries that should be made to record the expenditure of $100,000 on activities related to the legal assistance program.

c. Prepare the journal entries that should be made on receipt of the $100,000 check, assuming that it was received shortly after the legal assistance program was established and the group spent the $100,000 on program related activities.

d. Comment on why minor differences in wording might justify major differences in accounting. Be sure to indicate the type of fund in which your entries would be made.

EX 12-3 Minor differences in the terms of a contribution may justify major differences in revenue recognition.

Upon meeting with the executive director of the Crime Victims Advocacy Group, the president of a private foundation agreed to contribute in the following year $100,000 in support of the group’s proposed program to provide legal assistance to victims of violent crimes. Suppose that the foundation’s formal letter describing its pledge was worded in three different ways:

“We are pleased to pledge $100,000 in support of your group’s efforts to assist victims of violent crimes.”

“We are pleased to pledge $100,000 in support of your group’s efforts to develop a new program to provide legal assistance to victims of violent crimes.”

“We are pleased to pledge $100,000 upon your developing a new program to provide legal assistance to victims of violent crimes.”

For each of the three options:

a. Prepare the journal entries that should be made on receipt of the letter from the foundation. Assume that it was unlikely that the pledge would be fulfilled in the same period as it was made.

b. Prepare the journal entries that should be made to record the expenditure of $100,000 on activities related to the legal assistance program.

c. Prepare the journal entries that should be made on receipt of the $100,000 check, assuming that it was received shortly after the legal assistance program was established and the group spent the $100,000 on program related activities.

d. Comment on why minor differences in wording might justify major differences in accounting.

Be sure to indicate the type of fund in which your entries would be made.

Jakobsen, K. (2004). If work doesn’t work: How to enable occupational justice. Journal of Occupational Science, 11, 125-134.

What is the occupational justice type?

The Sosa Company produces baseball gloves with a degree of financial leverage of 1.66 based on the company’s income statement for 2004. What does that mean in its company's risk?

Company Zeta bought new office furniture in the year 2000. The purchase cost was 97972 dollars and in addition it had to spend 13926 dollars for installation. The furniture has been in use since April 21st, 2000. Zeta forecasted that in 2015 the office furniture would have a net salvage value of $1000. Using the US Accelerated Depreciation Schedule, estimate the value of depreciation recorded in the accounting books in the year 2004 if the company decided to sell the furniture on June 5th (of 2004). (note: round your answer to the nearest cent and do not include spaces, currency signs, or commas)

CORRECT ANSWER: 4996.25

a. (6 points) Re-create the income statement and balance sheet using formulae wherever possible. Each statement should be on a separate worksheet. Try to duplicate the format exactly.

b. (4 points) On another worksheet, create a statement of cash flows for 2004. Do not enter any numbers directly on this worksheet. All formulae should be linked directly to the source on previous worksheets.

c. (1 point) Using Excel’s outlining feature, create an outline on the statement of cash flows that, when collapsed, shows only the subtotals for each section.

d. (2 points) Suppose that sales were $320,000 in 2004 rather than $285,000 (all other information remains unchanged). What is the 2004 net income and retained earnings?

e. (2 points) Undo the changes from Part d, and change the tax rate to 40% (all other information remains unchanged). What is the 2004 net income and retained earnings?

26, 22, 27, 28, 31, 24, 22, 21, 30, 27

a. Estimate the population mean.

b. Estimate the population standard deviation. What sample size would you recommend for a 90% confidence interval and a margin of error of 1.5? e. In part c, your interval means (select 1):

1. there is a 90% chance that the sample mean falls between the upper and lower confidence interval value.

2. there is a 90% chance that the true mean falls between the upper and lower confidence interval values.

3. There is a 90% chance that the sample mean equals the true mean.

4. There is a 90% chance that the population mean equals the true mean.

c. Construct a 90% confidence interval for your estimate.