Sage Inc. experienced the following transactions for Year 1, its first year of operations: Issued common stock for $110,000 cash. Purchased $200,000 of merchandise on account. Sold merchandise that cost $160,000 for $318,000 on account. Collected $278,000 cash from accounts receivable. Paid $180,000 on accounts payable. Paid $60,000 of salaries expense for the year. Paid other operating expenses of $76,000. Sage adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $ 24,000 0.01 0–30 10,000 0.05 31–60 2,000 0.10 61–90 2,000 0.20 Over 90 days 2,000 0.50 Required

a. Organize the transaction data in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave cells blank if there is no corresponding Retained Earnings input needed.)

b. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Sage Inc. for Year 1.

c. What is the net realizable value of the accounts receivable at December 31, Year 1?

Westerville Company reported the following results from last year’s operations:

At the beginning of this year, the company has a $362,500 investment opportunity with the following cost and revenue characteristics:

The company’s minimum required rate of return is 10%.

7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

The following transactions are from Ohlm Company. (Use 360 days a year.)

Year 1

Year 2

Required:
1-a. First, complete the table below to calculate the interest amount at December 31, Year 1.

1-b. Use the calculated value to prepare your journal entries for Year 1 transactions.

• 1

  Accepted a $14,400, 60-day, 9% note in granting Danny Todd a time extension on his past-due account receivable.

• 2

  Made an adjusting entry to record the accrued interest on the Todd note.

1-c. First, complete the table below to calculate the interest amounts.

First, complete the table below to calculate the interest amounts. (Do not round intermediate calculations.)

1-d. Use those calculated values to prepare your journal entries for Year 2 transactions.

• 1

  Received Todd’s payment of principal and interest on the note dated December 16.

• 2

  Accepted a(n) $7,700, 9%, 90-day note in granting a time extension on the past-due account receivable from Midnight Co.

• 3

  Accepted a(n) $2,700, 30-day, 7% note in granting Ava Privet a time extension on her past-due account receivable.

• 4

  Privet dishonored her note.

• 5

  Midnight Co. dishonored its note.

• 6

  Accepted a(n) $8,900, 90-day, 12% note in granting a time extension on the past-due account receivable of Mulan Co.

• 7

  Accepted a(n) $2,330, 60-day, 8% note in granting Noah Carson a time extension on his past-due account receivable.

• 8

  Received payment of principal plus interest from Carson for the September 3 note.

• 9

  Received payment of principal plus interest from Mulan for the August 7 note.

• 10

  Wrote off the Privet account against the Allowance for Doubtful Accounts.

2. If Ohlm pledged its receivables as security for a loan from the bank, where on the financial statements does it disclose this pledge of receivables?

The yield to maturity on 1-year zero-coupon bonds is currently 5.5%; the YTM on 2-year zeros is 6.5%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon rate of 7.5%. The face value of the bond is $100.

a. At what price will the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price:

b. What will the yield to maturity on the bond be? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

Yield to Maturity:

c. If the expectations theory of the yield curve is correct, what is the market expectation of the price that the bond will sell for next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price:

d. Recalculate your answer to (c) if you believe in the liquidity preference theory and you believe that the liquidity premium is 1.5%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price:

Portfolio Alpha contains a 5-year zero-coupon bond with a face value of $5,000 and a 9-year zero-coupon bond with a face value of $6,050. Portfolio Beta is composed of only a 7-year zero-coupon bond with a face value of $10,000. The current yield on all three bonds is 5% per annum. Show that both portfolios have the same duration. What percentage changes in the two portfolio values would result from all three yields jumping to 7.5% per annum?

Macy Pharmacy has a project which has the following cash flows.

Year 0 = -$200,000

Year 1 = $50,000

Year 2 = $100,000

Year 3 = $150,000

Year 4 = $40,000

Year 5 = $25,000

The initial cost of capital is 10%. The financial manager wants to see what happens to the project's net present value if the cost of capital were increased to 12%.

Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of $195,000. The debt-to-total-assets ratio was 25%, the interest rate on the debt was 8.2%, and the firm's tax rate was 38%. The new CFO wants to see how the ROE would have been affected if the firm had used a 35% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change in response to the change in the capital structure?

a.2.57%

b.3.14%

c.1.29%

d.2.86%

e.2.48%

Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of $195,000. The debt-to-total-assets ratio was 27%, the interest rate on the debt was 8.2%, and the firm's tax rate was 25%. The new CFO wants to see how the ROE would have been affected if the firm had used a 45% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change in response to the change in the capital structure?

Roadhouse Inc. releases its financial statements in April each year. For the year ended December 31, 2022, Roadhouse had pretax accounting income of $405 million. Roadhouse also had taxable income of $427.5 million. This difference between pretax accounting income and taxable income was due to a $22.5 million dollar temporary difference which was received in December 2022 and related to unearned rent revenue that would be recognized in the following year (2023). The tax rate for 2022 is 30%.

What are the journal entries to record Roadhouse Inc. income taxes for 2022?

Now, suppose in March, after Roadhouse Inc. has recorded their financial statements, but before they have been released in April, a law is signed that will lower the tax rate to 25% for 2023. Please record (if necessary, if not say why), the entry for 2022 with this new change in tax rate.

The Jones Company has just completed the third year of a? 5-year diminishing value recovery period for a piece of equipment it originally purchased for $ 297 000. The depreciation rate is

40%.

a. What is the book value of the? equipment?

b. If Jones sells the equipment today for $ 79 000and its tax rate is 30 %, what is the? after-tax cash flow from selling? it?

c. Just before it is about to sell the? equipment, Jones receives a new order. It can take the new order if it keeps the old equipment. Is there a cost to taking the order and if? so, what is? it? Explain.? (Assume the new order will consume the remainder of the? machine's useful? life.)