Read the following scenario and answer the question in 5-10 sentences.
You are the CEO of a small company that sells transportation and logistics software. Your company has not been doing well because of competition from larger rivals. You learn of a lucrative opportunity to sell licenses of your software to the Lackria Department of Transportation, a government agency of the nation of Lackria. Closing the deal could save your company from bankruptcy. In an impulsive moment, you meet with a Lackrian government minister and offer her ownership of a luxury lakeside home in exchange for a guaranteed software contract with the Lackrian government. The minister refuses your offer and asks you to leave her office. The next day you regret your decision. Discuss any possible violations of white collar laws.
In: Finance
Presented below is the comparative balance sheet for Wildhorse
Inc., a private company reporting under ASPE, at December 31, 2021,
and 2020:
| WILDHORSE INC. Balance Sheet December 31 |
||||||
| Assets | 2021 | 2020 | ||||
| Cash | $54,900 | $98,000 | ||||
| Accounts receivable | 101,000 | 75,000 | ||||
| Inventory | 205,000 | 155,500 | ||||
| Long-term investment | 101,500 | 0 | ||||
| Property, plant, and equipment | 535,000 | 460,000 | ||||
| Less: Accumulated depreciation | (162,500 | ) | (140,000 | ) | ||
| $834,900 | $648,500 | |||||
| Liabilities and Shareholders' Equity | ||||||
| Accounts payable | $57,500 | $47,000 | ||||
| Dividends payable | 6,000 | 0 | ||||
| Income tax payable | 14,000 | 15,000 | ||||
| Long-term notes payable | 25,000 | 0 | ||||
| Common shares | 630,000 | 525,000 | ||||
| Retained earnings | 102,400 | 61,500 | ||||
| $834,900 | $648,500 | |||||
| WILDHORSE INC. Income Statement Year Ended December 31, 2021 |
||||||
| Sales | $650,900 | |||||
| Cost of goods sold | 432,000 | |||||
| Gross profit | 218,900 | |||||
| Operating expenses | $147,500 | |||||
| Loss on sale of equipment | 3,000 | 150,500 | ||||
| Profit from operations | 68,400 | |||||
| Interest expense | 3,000 | |||||
| Interest revenue | (4,500 | ) | (1,500 | ) | ||
| Profit before income tax | 69,900 | |||||
| Income tax expense | 14,000 | |||||
| Profit | $55,900 | |||||
| Additional information: | ||
| 1. | Cash dividends of $15,000 were declared. | |
| 2. | A long-term investment was acquired for cash at a cost of $101,500. | |
| 3. | Depreciation expense is included in the operating expenses. | |
| 4. | The company issued 10,500 common shares for cash on March 2, 2021. The fair value of the shares was $10 per share. The proceeds were used to purchase additional equipment. | |
| 5. | Equipment that originally cost $30,000 was sold during the year for cash. The equipment had a carrying value of $9,000 at the time of sale. | |
| 6. | The company issued a note payable for $28,000 and repaid $3,000 by year end. | |
| 7. | All purchases of inventory are on credit. | |
| 8. | Accounts Payable is used only to record purchases of inventory. | |
Prepare a cash flow statement for the year using the direct
method.
In: Accounting
Marin Company owes $225,000 plus $20,200 of accrued interest to Headland State Bank. The debt is a 10-year, 10% note. During 2020, Marin’s business deteriorated due to a faltering regional economy. On December 31, 2020, Headland State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $317,000, accumulated depreciation of $174,350, and a fair value of $202,000.
Prepare journal entries for Marin Company and Headland State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
No. |
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|---|
|
Marin Company (Debtor): |
||||
|
1. |
December 31, 2020 |
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
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|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
Headland State Bank (Creditor): |
||||
|
2. |
December 31, 2020 |
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
How should Marin report the following in its 2020 income statement?
| 1. |
Gain or loss on the disposition of machine |
select between gain and loss Ordinary GainOrdinary ExpenseOrdinary IncomeOrdinary Loss | ||
|---|---|---|---|---|
| 2. |
Gain or loss on restructuring of debt |
select between gain and loss Ordinary GainOrdinary ExpenseOrdinary LossOrdinary Income |
eTextbook and Media
List of Accounts
Assume that, instead of transferring the machine, Marin decides to grant 12,000 shares of its common stock ($10 par) which has a fair value of $202,000 in full settlement of the loan obligation. If Headland State Bank treats Marin’s stock as a trading investment, prepare the entries to record the transaction for both parties. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
|
No. |
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|---|
|
Marin Company (Debtor): |
||||
|
1. |
December 31, 2020 |
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Marin Company (Debtor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
Headland State Bank (Creditor): |
||||
|
2. |
December 31, 2020 |
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
||
|
enter an account title to record the transaction for Headland State Bank (Creditor) on December 31, 2020 |
enter a debit amount |
enter a credit amount |
In: Accounting
The following information has been extracted from the financial statements of a company. Use it to answer the 4 questions that follow it. When answering the questions (filling in the blanks), DO NOT use dollar signs, USE commas to separate thousands, DO NOT use parenthesis to denote negative numbers, USE the negative sign in front of first digit for negative numbers. Round to the nearest dollar.
|
Earnings before interests and taxes: EBIT in 2020 = |
600 |
|
Tax rate: T = |
25% |
|
Accumulated depreciation in balance sheet of 2019 = |
50 |
|
Accumulated depreciation in balance sheet of 2020 = |
60 |
|
Net Fixed Assets in 2019 = |
1,200 |
|
Net Fixed Assets in 2020 = |
1,500 |
|
Other Long-Term assets in 2019 = |
0 |
|
Other Long-Term assets in 2020 = |
0 |
|
Net operating working capital (NOWC) in 2019 = |
30 |
|
Current assets in balance sheet of 2020 = |
30 |
|
Current liabilities in balance sheet of 2020 |
20 |
1. What is the Net Cash Flow (NFC) for 2020?
2. What is the Investment in Gross Fixed Assets for 2020?
3. What is the investment in net operating working capital (Investment NOWC) for 2020?
4. What is the Free Cash Flow (FCF) for 2020?
In: Finance
The following information has been extracted from the financial statements of a company. Use it to answer the 4 questions that follow it. When answering the questions (filling in the blanks), DO NOT use dollar signs, USE commas to separate thousands, DO NOT use parenthesis to denote negative numbers, USE the negative sign in front of first digit for negative numbers. Round to the nearest dollar.
| Earnings before interests and taxes: EBIT in 2020 = | 400 |
| Tax rate: T = | 30% |
| Accumulated depreciation in balance sheet of 2019 = | 50 |
| Accumulated depreciation in balance sheet of 2020 = | 60 |
| Net Fixed Assets in 2019 = | 1,200 |
| Net Fixed Assets in 2020 = | 1,700 |
| Other Long-Term assets in 2019 = | 0 |
| Other Long-Term assets in 2020 = | 0 |
| Net operating working capital (NOWC) in 2019 = | 20 |
| Current assets in balance sheet of 2020 = | 20 |
| Current liabilities in balance sheet of 2020 = | 30 |
1. What is the Net Cash Flow (NFC) for 2020?
2. What is the Investment in Gross Fixed Assets for 2020?
3. What is the investment in net operating working capital (Investment NOWC) for 2020?
4. What is the Free Cash Flow (FCF) for 2020?
In: Finance
Increasing Student Enrollment Proposal Case The chancellor of a local private university is looking for ways to increase enrollment at his University and circulated a request for a proposal to that effect. In response, the vice president of admissions submitted the following summary proposal. She wishes to enter into a memorandum of understanding with four Universities in the United Kingdom as part of an exchange program. She promises that their earned credits from their Universities will count towards graduation at her University. The University will guarantee their graduation on time if they take and successfully pass courses being offered in her university's various programs. She proposes that the action will earn the university minimum of five hundred thousand ($500,000.00) dollars per year for the next (3) three years, a fifty (50%) percent return. However, the university must invest 1,000,000.00 pounds starlings initially, which it does not have at hand. The exchange rate is .89 per $1.00. The accounting department of the university believes that the $500,000.00 annual revenue is possible. The finance department analysis indicates that the university can raise the needed one million (+#1,000,000.00) pounds one-time investment at a cost of 12 percent annual rate based on the university's credit rating.
1. Base on your understanding of time value of money, should the Board of Directors of the University approve this proposal (support your decision with computations)?
2. What is the actual return on this proposal (show your computations)?
3. Add any other explanation to support your conclusion with facts using what you learned from this course and any other alternative methods.
In: Finance
You would like to study the weight of students at your
university. Suppose the average for all university students is 159
with a SD of 27 lbs, and that you take a sample of 31
students from your university.
a) What is the probability that the sample has a
mean of 160 or more lbs?
probability =
b) What is the probability that the sample has a
mean between 164 and 167 lbs?
probability =
In: Statistics and Probability
Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $5,382 per course taught. Denton pays its instructors $299 per student enrolled in the class. Both universities charge executives a $348 tuition fee per course attended.
Required
a.Prepare income statements for Kenton and Denton, assuming that 18 students attend a course.
b.Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $228 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 36 students in its course.
c.Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $228 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 36 students in its course.
e.Prepare income statements for Kenton and Denton Universities, assuming that 9 students attend a course, and assuming that both universities charge executives a $348 tuition fee per course attended.
In: Accounting
Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $6,622 per course taught. Denton pays its instructors $301 per student enrolled in the class. Both universities charge executives a $349 tuition fee per course attended.
Required
Prepare income statements for Kenton and Denton, assuming that 22 students attend a course.
Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $229 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 44 students in its course.
Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $229 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 44 students in its course.
Prepare income statements for Kenton and Denton Universities, assuming that 11 students attend a course, and assuming that both universities charge executives a $349 tuition fee per course attended.
In: Accounting
Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $6,384 per course taught. Denton pays its instructors $304 per student enrolled in the class. Both universities charge executives a $344 tuition fee per course attended.
quesion 5
Required
Prepare income statements for Kenton and Denton, assuming that 21 students attend a course.
Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $224 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 40 students in its course.
Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $224 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 40 students in its course.
Prepare income statements for Kenton and Denton Universities, assuming that 13 students attend a course, and assuming that both universities charge executives a $344 tuition fee per course attended.
In: Accounting