Q–7. An American investor purchased 100 shares of a French beyond meat company on January 1, 2018 at €93.00 per share. e French company paid an annual dividend of €0.72 on December 31st, 2018 to all its shareholders. e stock was sold that day as well for €100.25. e exchange rate was € 0.68 per US dollar on January 1,2018 and €0.71 per US dollar on December 31, 2018. What is the investor’s total return in US dollars?

The Baron Basketball Company (BBC) earned $9 a share last year and paid a dividend of $6 a share. Next year, you expect BBC to earn $10 and continue its payout ratio. Assume that you expect to sell the stock for $140 a year from now. Do not round intermediate calculations. Round your answers to the nearest cent.

If you require 10 percent on this stock, how much would you be willing to pay for it? $

If you expect a selling price of $110 and require a 7 percent return on this investment, how much would you pay for the BBC stock? $

For the year ended 31 December 2016 a company earned a profit after interest and tax of
£480,000. The company’s share price is £12 per share. The following are extracts from the
company’s Statement of financial position at 31 December 2016:
Ordinary share capital (50p shares) £200,000
Retained earnings £380,000
Revaluation reserve £80,000
Long-term 10% Bank loan £48,000
The company’s price earnings (PE) number and return on equity for the period were:

The following information pertains to the payrolls of Warrs Company for November 2018:

Employees       Wage earned               Wage earned               Federal Income           State/local

                        By 10/31/2018 in November 2018     Tax                              Income Taxes

Jane                 $105,000                     $12,000                       $1,500                         $650

Tom                     60,000                      7,000 500 250

Bill                        6,000 1,200                          0                                   0

Actual state unemployment tax rate is 4%, while the federal unemployment tax rate is 1%. The taxable income limit for social security tax is $110,000/person, year, while the taxable income limit of SUTA and FUTA is $7,000/ person, year.

- Prepare the necessary journal entries for November payrolls of Warrs Company if salaries and wages are paid in cash after withholding all payroll taxes and dues.

Howard's company earned $320,000 in a year when it had an average of 40,000 ordinary shares outstanding. The ordinary shares sold at an average market price of $7.5 per share in the year. Also outstanding were 30,000 warrants that could be exercised to buy one ordinary share for $5 for each warrant exercised.

(a) Determine whether the warrant exercised lead to dilutive earnings per share.

(b) Compute the number of treasury shares that can be bought back through proceeds of warrants if exercised. How many related incremental shares that can be issued?

Owen Company forgot to accrue $3,000 of salaries its employees had earned at the end of 2019. It paid and expensed the salaries in 2020. It also, in 2019, recorded $4,000 of sales as an account receivable; however, the sale really did not take place until 2020, and it should have recognized the revenue in 2020. It collected the money from the sale early in 2020.

Provide the impact of the errors on the following:

Assets as of 12/31/19: $_____________ Overstated Understated

Assets as of 12/31/20: $_____________ Overstated Understated

Liabilities as of 12/31/19: $_____________ Overstated Understated

Net income for 2020: $_____________ Overstated Understated

During the year, Hepworth Company earned a net income of $59,225. Beginning and ending balances for the year for selected accounts are as follows:

There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows.

Required:

X

Amount Descriptions

Refer to the list below for the exact wording of an amount description within your Statement of Cash Flows.

X

Operating Cash Flows - Indirect Method

1. Prepare a schedule of operating cash flows using the indirect method. (Note: Use a minus sign to indicate any decreases in cash or cash outflows. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

Final questions

2. Suppose that all the data used in Requirement 1 except the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was $20,075. What is the ending balance of accounts payable?

3. Conceptual Connection: Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs $25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this year’s operating cash flows?

Company V earned a net profit margin of 25% on sales of $25 million in its most recently ended fiscal year. Capital investment was $2.5 million and depreciation was $3 million. Investment in working capital is 10% of sales every year. Assume the following:

• Sales, net income, cap ex, depreciation and interest expense are expected to grow 10% every year for the next five years
• After five years sales, net income, cap ex, depreciation and interest expense will decline to a stable growth rate of 4% per year

The tax rate is 36%. Company Z has 1.5 million shares of common stock outstanding. Company Z also has long-term debt paying 10% interest and it is trading at its par value of $30 million.

Calculate the value of the firm and its equity assuming the cost of capital is 15% during years 1-5 and 12% during the stable stage.

INSTRUCTIONS: A company has a centralized accounting system. Each individual department currently compiles its accounting paper transactions from its local accounting system. To eliminate the paper and increase efficiency, the Audit Manager of the company just asked you, IT auditor, to help him come up with a plan to implement an interface from each individual department’s accounting system to the centralized accounting system.

TASK: Prepare a memo to the Audit Manager naming and describing the most critical controls that you would recommend in this particular case. You are required to search beyond the chapter (i.e., IT literature and/or any other valid external source) to support your response. Include examples, as appropriate, to evidence your case point. Submit a word file with a cover page, responses to the task above, and a reference section at the end. The submitted file should be 5 pages long (double line spacing), including cover page and references. Be ready to present your work to the class.

a. Wages of $10,000 are earned by workers but not paid as of December 31, 2017.

b. Depreciation on the company’s equipment for 2017 is $10,960.

c. The Office Supplies account had a $330 debit balance on December 31, 2016. During 2017, $4,656 of office supplies are purchased. A physical count of supplies at December 31, 2017, shows $516 of supplies available.

d. The Prepaid Insurance account had a $5,000 balance on December 31, 2016. An analysis of insurance policies shows that $2,800 of unexpired insurance benefits remain at December 31, 2017.

e. The company has earned (but not recorded) $750 of interest from investments in CDs for the year ended December 31, 2017. The interest revenue will be received on January 10, 2018.

f. The company has a bank loan and has incurred (but not recorded) interest expense of $4,500 for the year ended December 31, 2017. The company must pay the interest on January 2, 2018.

For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31, 2017.