It is said of Gary Cohn, former chair of Goldman Sachs and advisor to the Trump presidency, that while “[p]inning blame for the world’s financial crisis of 2008 on one man or one bank would not be fair, . . . Gary Cohn and his entourage at Goldman Sachs is a good place to start.” At Goldman Sachs, Cohn aggressively promoted subprime mortgages and other dubious financial instruments. Knowing that these financial instruments were likely to fail, he and his cronies walked away with hundreds of millions of dollars in bonus money and stock options. His behavior cost his company billions and the world economy trillions of dollars in value, and earned him a place in Donald Trump's inner circle.

Of course, Cohn was only one of many crooks to walk away rich from the financial crisis of 2008.

1. Why was Cohn able to operate his fraud for so long? Why did people continue to trust him with their money right up until his frauds were exposed?

2. What happens to financial markets where insiders get a reputation for corruption? Will people continue to invest?

You are the chief of police of a suburban agency of 50,000 residents. The former chief had been in the position for nearly twenty years and believed that appropriate communication with the community was via the community’s elected representatives—the city council. You see a need to broaden the range of community contact. List and briefly describe at least five programs that you might consider that would accomplish this purpose.  Instructor’s note: feel free to customize this question to the area in which you live or work. There are differences between large, medium and small agencies; your responses make for interesting Discussion Board postings.

On an island inhabited by kings and peasants, where the former always tell the truth and the latter always lie, you meet three individuals: Erin, William, and Sam. Erin says that William is a king. William says that Erin is a king but Sam is a peasant. Sam says that both Erin and William are kings. Determine who is a king and who is a peasant by constructing a truth table.

Treasure Corp. is a public company and has 100,000 common shares outstanding and 15,000 cumulative $2 preferred shares outstanding. In 2020, the company reported income from continuing operations before income tax of $2,830,000. Additional transactions not considered in the $2,830,000 are as follows: 1. In 2020, Treasure Corp. sold equipment for $65,000. The machine had originally cost $60,000 and had accumulated depreciation to date of $45,000. 2. The company sold one of its subsidiaries during the current year. Assume that this transaction meets the criteria for discontinued operations. The loss on 2020 operations of this subsidiary was $60,000 before tax. The loss from disposal of the subsidiary was $7,000 before tax. 3. Treasure purchased new computers for $20,000 cash at the end of 2020 to take advantage of a supplier promotion. By doing so, the company saved $4,000. 4. At year end, the company reviewed its accounts receivable and determined that a $6,700 of accounts receivable that had been outstanding since May appeared unlikely to be collected. No allowance for doubtful accounts was previously set up. 5. An internal audit discovered that amortization (depreciation) expense on a patent had been erroneously missed for both 2019 and 2020. The patent had a cost of $120,000 and has an 8-year useful life. 6. The company had an unrealized gain of $41,000 (not taxable) on their FV-OCI investment. Instructions: a. Make a list with one to six and for each of the 6 points, indicate if the transaction would effect Continuing Operations, Discontinued Operations, Other Comprehensive Income or N/A and by what before-tax amount, positive or negative. E.g. “8. Discontinued +53,000” b. Taking into account the above information, prepare a Statement of Financial Performance for the year 2020, starting with income from continuing operations before income tax. Calculate earnings per share as it should be shown on the face of the income statement (The preferred share dividends are $30,000). Assume a total effective tax rate of 30% on all points, unless otherwise indicated. c. Not all information is created equal. Using an example from the information provided in points 1 through 6, explain how the quality of earning information could have shortcomings. Be clear but concise and limit your answer to two to three sentences.

Computing and Recording Interest Capitalization

The following information is from Bowin Inc. for a long-term construction project that is expected to be completed in January 2021. The construction project is for a building intended for the company’s own use. The capital expenditure on January 1, 2020, is for the purchase of land for the building site. No new construction loans were opened for the project in 2020. All debt was outstanding for the full year.

Capital Expenditures for 2020

Outstanding Debt in 2020

Answer the following questions:
a. Compute interest to be capitalized and the interest to be expensed in 2020.
b. Prepare the entry to record the construction expenditures and interest for 2020.
c. Prepare the entry for depreciation in 2021 assuming that the project is completed on January 1, 2021. Assume that the building has a useful life of 30 years, and that the company uses the straight-line depreciation method.

Note: Do not round until your final answers, then round to nearest whole number.

a.

b.

Land

Construction in process

cash and payables

c.

The following data relates to Rogers Company for the year ending December 31, 2020:

Net Income for 2020= $920,000

Preferred Stock= 10,000 shares of $100 par 8% cumulative preferred stock were outstanding throughout the year. The preferred stock is non-convertible

Common Stock= 300,000 shares of common stock were issued and outstanding throughout the year. No shares were issued or repurchased, and there were no stock splits or dividends.

Convertible Bonds= 12% convertible bonds at $4,000,000 face amount. (These bonds were issued in 2015 and they are convertible to a total of 120,000 common shares.

Stock Options=500,000 (These options were issued on July 1, 2020. Each option allows the option holder to purchase one common share for $20. The average market price of the common stock in 2020 was $32 a share.

Other information:

Rogers income tax rate for 2020 is 40%

Rogers did not declare or pay any dividends in 2020

Question:

a. What is Rogers "Income available to common shareholders" for 2020?

b. What is Rogers "Weighted average common shares outstanding" for 2020?

c. Compute Rogers Basic Earnings Per Share for 2020?

d. What will be the "Numerator Effect of the convertible bonds?

e. What will be the "Denominator Effect" of the convertible bonds?

f. What will be the "Numerator Effect" of the stock options?

g. What will be the "Denominator Effect" of the stock options?

h. Compute Rogers Diluted Earnings Per Share for 2020?

At January 1, 2020, the credit balance of Whispering Winds Corp.’s Allowance for Doubtful Accounts was $401,000. During 2020, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2020 were $80 million, of which 90% were on account. Based on the information available at the time, the 2020 bad debt expense was estimated to be 0.75% of net credit sales. During 2020, uncollectible receivables amounting to $508,500 were written off against the allowance for doubtful accounts. The company has estimated that at December 31, 2020, based on a review of the aged accounts receivable, the allowance for doubtful accounts would be properly measured at $530,500.

Prepare a schedule calculating the balance in Whispering Winds Corp.’s Allowance for Doubtful Accounts at December 31, 2020.

Prepare any necessary journal entry at year end to adjust the allowance for doubtful accounts to the required balance. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Comprehensive Problem: Consolidation Working Paper and Financial Statements Pierre

Corporation acquired 75 percent of Selene Corporation’s common stock for $20,100,000 on January 2,

2017. The estimated fair value of the noncontrolling interest was $5,900,000. Selene’s book value at date

of acquisition was $10,000,000, and its identifiable net assets were fairly stated except for previously

unreported completed technology, valued at $4,000,000, with a remaining life of 5 years, straight‑line. It

is now December 31, 2020, and you are preparing consolidated financial statements for Pierre and Selene.

Following is information on intercompany transactions

1. On January 2, 2018, Pierre sold equipment to Selene for $6 million and recorded a gain of $2 million.

The equipment had a remaining life of 10 years at that time.

2. Selene supplies Pierre with component parts for its products, at a markup of 20 percent on cost.

During 2020, Selene made sales totaling $20 million to Pierre. Pierre had parts purchased for $1.8

million and $2.4 million in its 2020 beginning and ending inventory balances, respectively.

3. Pierre sells materials to Selene for use in its manufacturing processes, at a markup of 20 percent on sell‑

ing price. During 2020, Pierre made sales totaling $15 million to Selene. Selene had materials purchased

for $3 million and $2.8 million in its 2020 beginning and ending inventory balances, respectively

Goodwill arising from this acquisition was impaired by $3 million during the years 2017–2019, and no

further goodwill impairment occurred in 2020. Pierre uses the complete equity method to report the in‑

vestment in Selene on its own books. The separate December 31, 2020, trial balances of Pierre and Selene

appear below, before Pierre’s end‑of‑year adjustment to record its equity in Selene’s net income and other

comprehensive income for 2020.

in thousands) Pierre Selene

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000 $ 2,500

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,600 10,000

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 30,000

Investment in AFS debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 6,000

Plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452,000 144,000

Investment in Selene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,225 —

Current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,000) (2,800)

Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (489,825) (163,700)

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,000) (2,000)

Retained earnings, January 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88,500) (19,600)

Accumulated other comprehensive income, January 1. . . . . . . . . . . . . . . . . . (1,500) (400)

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 3,000

Sales revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (150,000) (50,000)

Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 35,000

Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,500 7,900

Unrealized losses on AFS investments (other comprehensive income). . . . . . 500

100

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 0

Required

a. Calculate the total goodwill arising from this acquisition and its percentage allocation to the control‑

ling and noncontrolling interests.

b. Prepare a schedule calculating Pierre’s equity in the net income of Selene for 2020, and the noncon‑

trolling interest in Selene’s net income for 2020.

c. Update Pierre’s trial balance for its 2020 equity method entries and prepare a working paper consoli‑

dating the 2020 trial balances of Pierre and Selene.

d. Present the consolidated financial statements of Pierre and Selene, in proper format

Please answer the following question in two or three paragraphs (200+ words). The case study that relates to the question is listed below. This is for a public relations class. Thank you!

1.) Think of some crises that have hit U.S. corporations recently. Which of these social media strategies that Berger used with GM could be particularly useful in those scenarios? How would you use Facebook? Twitter? YouTube? Blogs?

Case Study – General Motors Goes Social with a Financial Crisis:

General Motors used social media to help handle its bankruptcy financial crisis in May 2009. Despite hesitation from the legal and financial consultants advising GM, Christopher Berger convinced the CEO to use Twitter and Facebook to let shareholders know of the chapter 11 filing. Berger, director of global social media at GM, said that getting CEO Fritz Henderson on board with the idea was crucial. GM following a 20/80 policy on its social media posts – 20 percent was GM material posted to Facebook or Twitter or other places and 80 percent was responding to questions. “Even if they were venting and saying, ‘We hate you,’ we tried to respond,” Berger said. “During a crisis, you want to use social media as a tool to respond and make sure that consumers realized you are listening and you care.”

GM employed such social media tactics as posting blogs and live webcasts, playing a video interview on Facebook with Fritz Henderson, and putting the CEO on Twitter for an open conversation. “You cannot overcommunication during a crisis,” Berger said. “Go on every platform, every possible place somebody might be listening to you. The audience expects you to be there.”

During the first week of the crisis, GM engaged in direct conversations via Twitter, Facebook, and through various blogs with about 800 individual people. Berger noted that those 800 conversations were translated into communication with thousands more because followers to those sites would see the conversations. “Again, it’s not ‘Here’s GM’s message; here’s what they want us to know.’ It is real people interacting,” Berger added. “That was a particular benefit for us.”

In one particular effective strategy, GM even sought to engage its critics. GM invited a popular blogger and frequent GM critic, David Meerman Scott, to headquarters and gave him access to the CEO and anyone else he wanted to talk to. Within a week of the visit, Scott had posted four blogs about GM to his blog, Web Ink Now. Scott’s post were still critical of GM’s advertising strategy (something he had been critical of the motor company for previously), but were positive about the corporation overall. “You don’t engage everybody,” Berger noted, adding that critics not interested in a genuine conversation are not worth the time. “If somebody is giving good thought to their criticism, then you want to engage that person.”

To have an effective and credible social media presence during a crisis, it is important to establish a social media strategy before the crisis hits, Berger maintains. “There is no over. This is not a campaign. It is a commitment. This is a long-term way of doing business.”

Nash Company began operations on January 1, 2018, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2021. The following information is available for the years 2018–2020. Net Income Computed Using Average-Cost Method FIFO Method LIFO Method

2018 $15,980 $19,140 $12,070

2019 18,090 21,090 14,040

2020 20,130 24,990 16,940

(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2021. Account Titles and Explanation Debit Credit Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount

(b) Determine net income to be reported for 2018, 2019, and 2020, after giving effect to the change in accounting principle. Net Income 2018 $Enter a dollar amount 2019 $Enter a dollar amount 2020 $Enter a dollar amount

(c) Assume Nash Company used the LIFO method instead of the average cost method during the years 2018–2020. In 2021, Nash changed to the FIFO method. Prepare the journal entry necessary to record the change in principle.