For the year ending December 31, 2020, Bad Year, Inc. reported Basis Earnings Per Share in the amount of $ 1.75, which was calculated as Net Income of $ 1,050,000 dividend by 600,000 weighted average commonshares outstanding. Bad Year, Inc. does not have a preferred stock outstanding, and did not pay any common dividends during 2020.
Throughout 2020, employees of Bad Year, Inc. owned 150,000 stock options, which entitled them to purchase 150,000 shares of Bad Year, Inc. common stock at a price of $ 40 per share. The options are currentlyexercisable, and expire on December 31, 2025. During 2020, the average price of Bad Year Common Stock was $ 25 per share.
In addition, Bad Year has Convertible Debt with a face value of $ 8,000,000 outstanding. This debt was issued "at par" on January 1, 2016, it has a coupon rate of 5% per year, and an expiration date of December 31,2030. The conversion option on the debt allows an owner to exchange $ 1,000 of face value debt for 50 shares of Bad Year common stock. Bad Year, Inc. currently pays income tax at a rate of 20%
Based on the information provided above, what is the "Diluted EPS"that Bad Year, Inc. should report for the fiscal year ending December 31, 2020?

A.$1.25

B.$1.37

C.$ 1.75

D.None of the above

Comparative financial statement data for Carmono Company follow: This Year Last Year Assets Cash and cash equivalents $ 5.50 $ 10.00 Accounts receivable 42.00 35.00 Inventory 82.50 68.80 Total current assets 130.00 113.80 Property, plant, and equipment 219.00 186.00 Less accumulated depreciation 42.40 31.80 Net property, plant, and equipment 176.60 154.20 Total assets $ 306.60 $ 268.00 Liabilities and Stockholders’ Equity Accounts payable $ 49.50 $ 42.00 Common stock 102.00 79.00 Retained earnings 155.10 147.00 Total liabilities and stockholders’ equity $ 306.60 $ 268.00 For this year, the company reported net income as follows: Sales $ 650.00 Cost of goods sold 390.00 Gross margin 260.00 Selling and administrative expenses 240.00 Net income $ 20.00 This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year. Required: 1. Using the indirect method, prepare a statement of cash flows for this year. 2. Compute Carmono’s free cash flow for this year.

ABC common stock is expected to have have dividends in year 1 of $3/share,  year 2 of $3/share,year 3 of $3.2/share, year 4 of $3.4/share, and in year 5 of $3.6/share. Then dividends will grow at a constant rate of 6%.

If the discount rate is 15% , what should be the current share price? Hint: The growing perpetuity (Gordon growth model) should be put into year 5 along with the year 5 dividend before taking the present values.

Bagwell's net income for the year ended December 31, Year 2 was $199,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2.

Multiple Choice

• $51,400.

• $199,000.

• $107,400.

• $96,400.

• $147,800.

Glaston Company manufactures a single product using a JIT inventory system. The production budget indicates that the number of units expected to be produced are 197,000 in October, 205,500 in November, and 202,000 in December. Glaston assigns variable overhead at a rate of $0.80 per unit of production. Fixed overhead equals $154,000 per month. Compute the total budgeted overhead that would appear on the factory overhead budget for month of October.

Multiple Choice

• $351,000.

• $154,000.

• $157,600.

• $318,400.

• $311,600.

Suppose a 10-year zero-coupon bond (zero) is trading spot at 6% and a 20-year zero is trading spot at 8%. We know that the 10 year forward rate for a 10 year zero must be 0.1004 (annual compounding). All are risk free. If the rates are not 0.1004 for the forward you can make a free profit by using arbitrage.

Suppose you have $0 dollars today but are allowed to sell and buy $100,000 worth of zero coupon bonds (and commit to the forward 10 year zero coupon bond using any cash you have - or need to reborrow - after 10 years from your initial trades).

(a) What trades do you execute if the forward rate is 9% - report your profit.

(b) What trades do you execute if the forward rate is 11% - report your profit.

(c) Comment on why the forward rate must be 10.04% in light of your results.

13. Accelerated Solutions has the following data for the year ended December 31, Year 1:

Refer to Accelerated Solutions. If the aging approach is used to estimate bad debts, what is the balance in the allowance for doubtful accounts after the bad debt expense adjustment?

Juanita earns $56,000 a year before-tax, spends $31,500 per year on consumption, and saves the rest at the end of the year. She also has $14,400 in her savings account. She wants to retire in 25 years with a million dollars. Her average tax rate is 25%, and her marginal tax rate is 35%. What before-tax rate of return does she need to make on her investments in order to achieve her goal?

a. 8.99%

b. 13.71%

c. 5.13%

d. 6.49%

e. None of the above.

Atlanta Tours Company entered into a five-year lease on January 1, Year 1, with Duck Boats, Inc. for a customized duck boat. Duck Boats, Inc. will provide a vehicle to Atlanta Tours Company with the words "Gone with the Wind" carved into the sides. Following are the terms of the lease arrangement.

•Fair value of the wagon at the inception of the lease is $10,000

•There is an eight-year estimated economic life

•Estimated (unguaranteed) residual value is $3,500. Atlanta Tours Company does not absorb any gains or losses in fluctuations of the fair value of the residual value.

•Annual lease payments of $2,000 are due on January 1 of each year. The implicit interest rate in the lease is 6 percent.

•There is an option to purchase at end of lease term for $4,000.

•The lease is noncancelable and may not be extended.

Required:

1.Discuss whether Atlanta Tours Company should classify this lease as an operating lease or as a finance lease under (a) IFRS and (b) U.S. GAAP.

2.Discuss your reasoning. Do not forget to include proper APA formatting and citation where necessary.

Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses.