Auto Parts, Inc. is medium-sized company that manufactures auto parts in Buffalo, New York. The company currently loses $30,000 per month. The owner of the company is evaluating whether she should shut down the factory. She thinks that the factory should continue to operate until the economic environment improves and buyer for the factory can be identified. The logic of the owner is that her company has already invested millions of dollars in the factory over the years. The monthly fixed costs for the factory are $40,000. The CEO of Auto Parts, Inc. thinks the factory should be shut down because most the monthly fixed costs ($40,000/month) are sunk costs. Do you agree with the owner or the CEO? Explain the logic of your argument, including a numerical demonstration.

Can someone please explain who is correct and also provide a numerical demonstration showing this?

Acquired $30,000 cash from the issue of common stock. Borrowed $42,000 cash from National Bank. Earned cash revenues of $58,000 for performing services. Paid cash expenses of $50,000. Paid a $2,000 cash dividend to the stockholders. Acquired an additional $30,000 cash from the issue of common stock. Paid $11,000 cash to reduce the principal balance of the bank note. Paid $51,000 cash to purchase land. Determined that the market value of the land is $71,000. Determine the amount of total assets that Maben would report on the December 31, 2018, balance sheet.

Maben Company was started on January 1, 2018, and experienced the following events during its first year of operation:

1. Acquired $30,000 cash from the issue of common stock.

2. Borrowed $42,000 cash from National Bank.

3. Earned cash revenues of $58,000 for performing services.

4. Paid cash expenses of $50,000.

5. Paid a $2,000 cash dividend to the stockholders.

6. Acquired an additional $30,000 cash from the issue of common stock.

7. Paid $11,000 cash to reduce the principal balance of the bank note.

8. Paid $51,000 cash to purchase land.

9. Determined that the market value of the land is $71,000.

Required

1. Record the preceding transactions in the horizontal statements model. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), financing activities (FA), or net change in cash (NC). If the element is not affected by the event, leave the cell blank. The first event is shown as an example. (Enter any decreases to account balances and cash outflows with a minus sign. Not all cells will require entry.)

Sweet Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2020. Jim Alcide, controller for Sweet, has gathered the following data concerning inventory.

At May 31, 2020, the balance in Sweet’s Raw Materials Inventory account was $485,520, and Allowance to Reduce Inventory to NRV had a credit balance of $27,670. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the schedule below.

Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Sweet’s May 31, 2020, financial statements for inventory under the LCNRV rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle.

(a)

Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2020.

Whispering Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2020. Jim Alcide, controller for Whispering, has gathered the following data concerning inventory.

At May 31, 2020, the balance in Whispering’s Raw Materials Inventory account was $424,320, and Allowance to Reduce Inventory to NRV had a credit balance of $27,440. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the schedule below.

Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Whispering’s May 31, 2020, financial statements for inventory under the LCNRV rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle.

(a)

Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2020.

Sunland Home Improvement Company installs replacement siding, windows, and louvered glass doors for single-family homes and condominium complexes. The company is in the process of preparing its annual financial statements for the fiscal year ended May 31, 2020. Jim Alcide, controller for Sunland, has gathered the following data concerning inventory.

At May 31, 2020, the balance in Sunland’s Raw Materials Inventory account was $505,920, and Allowance to Reduce Inventory to NRV had a credit balance of $27,630. Alcide summarized the relevant inventory cost and market data at May 31, 2020, in the schedule below.

Alcide assigned Patricia Devereaux, an intern from a local college, the task of calculating the amount that should appear on Sunland’s May 31, 2020, financial statements for inventory under the LCNRV rule as applied to each item in inventory. Devereaux expressed concern over departing from the historical cost principle.

Determine the proper balance in Allowance to Reduce Inventory to NRV at May 31, 2020.

Sheffield Inc. was authorized to issue 100000 £10 par value ordinary shares. As of December 31, 2020, the company had issued 54000 shares at an average price of £22 per share. During 2020, the company felt that the shares were undervalued so it purchased 9800 treasury shares at £16 per share. When the share price rebounded later in the year, the company sold 4200 of the treasury shares for £24 per share. Retained earnings was £1666000 at December 31, 2020.

Total equity at December 31, 2020 is

£2697200.

£2994000.

£2764400.

£2798000.

The Government has recently launched a new and innovative transport system in the country, which is managed by the Metro Express Co Ltd. The CEO of the company is aware that a big challenge lies ahead in managing a new company and to run it efficiently. The Chairperson of the Board of Directors has stated, at the first meeting, that “Managing an organisation requires various skills and the ability to organise various resources. All these tasks must be executed with an understanding of how actions influence the organisation, both internally and externally.” Furthermore, the Board of Directors of the Metro Express Co Ltd has stressed that one of the significant influences on how an organisation is managed is the system of corporate governance.

You are requested to advise the CEO on:

(i) all the factors he must consider, including accounting information, to manage the decision making process of the company.

INTRODUCTION

BODY

CONCLUSION

We acquire 30% of the company for a thousand dollars.The fair value of the investee is 3000, and the book value is 2500. The difference is from property plant equipment with a fair 500 higher than its book value. During the year, the investee reports income of 120 and pays dividends of 40. PP&E is being depreciated over 10 years and 10% of initial goodwill is impaired. We acquired 30% of the company for 1000 dollars, fair value is 3000, book value is 2500. You tested annually for impairment. We acquire 30% of the company for a thousand dollars. The fair value of the investee is 3000, and the book value is 2500. The difference is from property plant equipment with a fair 500 higher than its book value. During the year, the investee reports income of 120 and pays dividends of 40. PP&E is being depreciated over 10 years and 10% of initial goodwill is impaired. We acquired 30% of the company for 1000 dollars, fair value is 3000, book value is 2500. You tested annually for impairment.

In the journal entry there is:

Debit: Cash 12

                        Credit: Investment                              12

Could you please tell me what does this do?

On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved. Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generous severance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Assume the company has an expected return equal to the market return. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 1 decimal place.)

On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved. Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generous severance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Date Market Return (%) Company Return (%) Nov 7 1.7 1.3 Nov 8 1.5 1.3 Nov 9 -1.4 -0.2 Nov 10 −0.6 −0.5 Nov 11 2.5 1.0 Nov 14 −1.3 3.0 Nov 15 0.1 0.1 Nov 16 0.9 1.9 Nov 17 1.4 0.8 Nov 18 −1.4 0.0 Nov 21 1.5 0.2 Assume the company has an expected return equal to the market return. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. ) What is the percentage cumulative abnormal return (CAR) on Day "-2", which is relative to the announcement date of the event?