Monetary Policy Today. Assess the economic situation today. Is the administration more concerned with reducing unemployment or inflation? Does the Fed have a similar opinion? If not, is the administration publicly criticizing the Fed? Is the Fed publicly criticizing the administration? Discuss.

Accounting

1. Because of a change in a state law, Romulus County has been informed that it will receive $100,000 less in state revenue than was budgeted.

2. Purchase orders and other commitment documents in the amount of $1,032,000 were issued during the six months ended April 30, 2005.

3. Property taxes of $6,500 and interest and penalties receivable of $1,340, which had been written off in prior years, were collected. Additional interest of $270 that had accrued since the write-off was collected at the same time.

4. Personnel costs, excluding the employer's share of the FICA tax, totaled $338,420 for the second six months. Withholdings amounted to $25,890 for FICA, $42,510 for employees' federal income tax liability, and $14,400 for state withholding tax. The balance was paid to employees in cash.

5. The employer's FICA tax of $25,890 was recorded as a liability.

6. The County Board of Review discovered unassessed properties of a total taxable value of $500,000 located within the county. The owners of these properties were charged taxes at the County's General Fund rate of $5 per hundred dollars of assessed value. (You need not adjust the Estimated Uncollectible Current Taxes account.)

7. The following were collected in cash: Current taxes of $927,000, delinquent taxes of $43,270, interest and penalties of $7,330, and revenues of $593,700 from a number of sources. (No part of any of these amounts is included in any other transaction given.)

8. Accrued interest and penalties, estimated to be 30 percent uncollectible, was recorded in the amount of $23,200.

9. All unpaid current year's taxes became delinquent. The balances of current tax receivables and related estimated uncollectibles were transferred to the delinquent classification.

10. All amounts due to the federal government and state government were vouchered.

11. Invoices and bills for goods and services that had been encumbered at $1,097,240 were received.

12. Personal property taxes of $39,940 and interest and penalties of $4,180 were written off because of the inability to locate the property owners.

13. A physical inventory of materials and supplies at April 30, 2005, showed a total of $19,100. Inventory is recorded using the consumption method.

14. Payments made on vouchers during the second half-year totaled $1,202,600.

Required

a. Record in general journal form the effect on the General Fund and governmental activities for the second half of fiscal year 2005.

b. Record in general journal form entries to close the budgetary accounts and operating statement accounts.

c.Prepare a General Fund Balance Sheet as of April, 2005

d. Prepare a statement of revenues, expenditures and changes in fund balance for the fiscal year ended April 30,2005. Do not prepare the government-wide financial statement

How much revenue, if any, should the Company recognize through December 31, 20X1?

Customized Software, a software company (the “Company”), is contracted by a bank (the “Bank”) to provide a customized online platform for the Bank’s mortgage loan applications (the “Loan Platform”). Bank customers use the Loan Platform to complete online mortgage applications, which involves inputting relevant information (e.g., name, address, employment, income, assets) and uploading supporting documents (e.g., tax returns, bank statements). The Loan Platform enables both the Bank and the applicants to retrieve necessary information and documents as well as track the status of the lending process in real time. To develop the Loan Platform, the Company significantly modifies and customizes its proprietary loan application software to work with the existing systems used by the Bank’s credit, customer service, and accounting departments.

To create a Loan Platform that meets the Bank’s specifications, the Company is contractually required to perform the following specific software development activities (the “Software Services”):

• Conduct interviews with Bank personnel to understand system requirements and determine how to establish interfaces needed for the Bank to integrate the Loan Platform with its existing systems.

• Test the Loan Platform in a test environment using dummy transactions.

• Perform application program interface additions and modifications to the Loan Platform that are needed to support the Bank’s integration and data export requirements.

• Add custom functionalities to the Loan Platform (e.g., Bank-specific underwriting and reporting features, integration with the Bank’s customer service).

• Customize the design of the Loan Platform (e.g., Bank’s logo, branding, color scheme, preferred button placement).

Because the Loan Platform is highly customized, loan applicants perceive that they are accessing the Bank’s Web site and may be unaware of the Company’s involvement. The Bank does not have the ability to direct the use of the Loan Platform during the Software Services period and is not allowed to run the Loan Platform on Bank hardware at any time. Instead, after the Software Services are completed, the Company hosts the Loan Platform on its own servers, which allows the Bank and its loan applicants to access the software online (the “Processing Services”). The Company has no obligation to perform further work on the Loan Platform (e.g., customization, upgrades) after the Software Services are completed. Because the Loan Platform runs on the Company’s proprietary technology, no other vendor has the ability to perform the Software Services or Processing Services. The Loan Platform is delivered to the Bank as a service in the form of the Processing Services. That is, no software license is transferred to the Bank.

The Software Services commence on July 1, 20X1, and continue through December 31, 20X1. The Processing Services commence on January 1, 20X2, and continue for a term of five years. The contract requires the Bank to pay the Company nonrefundable fees of $3 million at the commencement of the Software Services (i.e., on July 1, 20X1) and $3 million over the period in which the Company will provide the Processing Services (i.e., equal monthly installments between January 1, 20X2, and December 31, 20X7). Neither party has a unilateral option to extend the contract, but the parties are free to negotiate an extension if desired.

The Company concludes the following:

• The provisions of FASB Accounting Standards Update (ASU) No. 2014-09, Revenue From Contracts With Customers (Topic 606), and related amendments are effective for the Company.

• The Company’s customer, as defined in FASB Accounting Standards Codification (ASC) Subtopic 606-10, Revenue From Contracts With Customers — Overall, is the Bank (as opposed to the mortgage loan applicants).

• The arrangement is within the scope of ASC 606-10 and meets the criteria in ASC 606- 10-25-1 to be considered a contract with a customer.

• Any explicit or implicit promises other than the Software Services and the Processing Services are immaterial in the context of the contract and need not be considered.

• The total transaction price, as described in ASC 606-10-32-3, is the sum of the contractually stated fees (i.e., $6 million).

• The Software Services are required to be performed to create the customized Loan Platform that the Company will use to provide the Processing Services to the Bank. In other words, the Software Services are integral to the Bank’s ability to derive its intended benefit from the Processing Services.

• The Bank does not derive value from the Software Services; rather, it derives value from the Processing Services. However, the Processing Services cannot begin until the Software Services are complete (i.e., until a Loan Platform that meets the Bank’s specifications has been developed).

Required:

How much revenue, if any, should the Company recognize through December 31, 20X1?

A catalog sales company promises to deliver orders placed on the Internet within 3 days.​ Follow-up calls to a few randomly selected customers show that a 90​% confidence interval for the proportion of all orders that arrive on time is 88​% ±4​%. What does this​ mean? Are the conclusions below​ correct? Explain.

1. Stock Options Worksheet - Pfizer

2. Identify the stock and its ticker symbol that you are using in this assignment. Provide its last traded price.

3. Company Name	Ticker Symbol	Last Traded Price

4. Obtain one of each for Call Option quotes and Put Option quotes. The TWO quotes must meet the following two criteria:
   1. The strike price is approximately equal to the stock’s last traded price you wrote down earlier on your note paper.
   2. The expiry date is in three to six weeks.

5. Call Option

   Expiry (Month/Year)
   Strike	Symbol	Last	Open Interest

   Put Option

   Expiry (Month/Year)
   Strike	Symbol	Last	Open Interest

6. Answer the following questions:
   1. What are the intrinsic values of each option?
7. 2. What are the option time values of each option?
8. 3. Assume each option’s contract size is 100 hundred shares. Given the holdings of this stock in your individual portfolio, describe an option strategy utilizing calls. Discuss the costs incurred and possible benefits of such a strategy.  

Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled $340,000, of which $184,000 can be avoided if the blenders are not produced and $142,500 can be avoided if the coffee makers are not produced. Revenue and variable cost information follows:

Required:

1. Prepare segmented income statements. Separate direct and common fixed costs. Enter all amounts as positive numbers.

2. What would the effect be on Alard’s profit if the coffee maker line is dropped? The blender line?

If the coffee maker line is dropped, profits will   by $, the segment margin. If the blender line is dropped, profits will   by $.

3. What would the effect be on firm profits if an additional 10,000 blenders could be produced (using existing capacity) and sold for $21.50 on a special-order basis? Existing sales would be unaffected by the special order. Enter all amounts as positive numbers.

You may need to use the appropriate technology to answer this question.

Home values tend to increase over time under normal conditions, but the recession of 2008 and 2009 has reportedly caused the sales price of existing homes to fall nationwide.† You would like to see if the data support this conclusion. The file HomePrices contains data on 30 existing home sales in 2006 and 40 existing home sales in 2009.

(a)

Provide a point estimate of the difference (in dollars) between the population mean prices for the two years. (Use year 2006 − year 2009. Round your answer to the nearest dollar.)

$

(b)

Develop a 99% confidence interval estimate of the difference (in dollars) between the resale prices of houses in 2006 and 2009. (Use year 2006 − year 2009. Round your answers to the nearest dollar.)

$  to $

(c)

Would you feel justified in concluding that resale prices of existing homes have declined from 2006 to 2009? Why or why not?

To answer this question, we need to conduct a hypothesis test.

State the null and alternative hypotheses. (Let μ₁ = mean home price in 2006 and let μ₂ = mean home price in 2009.)

H₀:μ₁ − μ₂ > 0

H_a:μ₁ − μ₂ ≤ 0

H₀:μ₁ − μ₂ ≤ 0

H_a:μ₁ − μ₂ > 0

H₀:μ₁ − μ₂ ≠ 0

H_a:μ₁ − μ₂ = 0

H₀:μ₁ − μ₂ = 0

H_a:μ₁ − μ₂ ≠ 0

H₀:μ₁ − μ₂ ≤ 0

H_a:μ₁ − μ₂ = 0

Find the value of the test statistic. (Round your answer to three decimal places.)

Find the p-value. (Round your answer to four decimal places.)

p-value =

State your conclusion. (Use α = 0.01)

Do not reject H₀. We can conclude that existing home prices have declined between 2006 and 2009.

Do not reject H₀. We can not conclude that existing home prices have declined between 2006 and 2009.  

Reject H₀. We can conclude that existing home prices have declined between 2006 and 2009

.Reject H₀. We can not conclude that existing home prices have declined between 2006 and 2009.

1. Why might a company implement a discount program to customers?

2. What are three common uses of financial models?

3. Why might a company abandon an annual plan or budget in favor of a rolling 12-month

forecast?

The following selected transactions were completed by Amsterdam Supply Co., which sells office supplies primarily to wholesalers and occasionally to retail customers. Note that the company uses a clearing house to take care of all bank as well as non-bank credit cards used by its customers.

Record on page 10 of the journal

Record on page 11 of the journal

Journalize the entries to record the transactions of Amsterdam Supply Co. Refer to the Chart of Accounts for exact wording of account titles.

none

X

Chart of Accounts

none

X

Journal

Journalize the entries to record the transactions of Amsterdam Supply Co. Refer to the Chart of Accounts for exact wording of account titles. Scroll down for page 11 of the journal.

PAGE 10

JOURNAL

Solution

Points:

PAGE 11

JOURNAL

Solution

Converting Sales Revenue to Cash
Smith & Sons is converting its sales revenues to corresponding cash amounts using the direct method. Sales revenue on the income statement are $2,050,000.

Beginning and ending accounts receivable on the balance sheet are $116,000 and $68,000, respectively.

Calculate the amount of cash received from customers.

$Answer