7. Consider the effects of the independent transactions, a through i, on a company’s balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity.

a.      The company purchased inventory on credit.

b.      The company sold all inventory purchased in transaction a) on credit (and for more than its cost).

c.      The company collected cash from customers from transaction b).

d.      The company purchased equipment with cash.

e.      The company paid cash for a note payable that came due.

f.       The company paid cash for interest on borrowings.

g.      Wages were earned by company employees but not yet paid.

h.      The company paid cash in dividends.

i.        The company received cash for the issuance of stock.

Complete the table below to explain the effects and financial statement linkages. Use “+” to indicate the account increases and “–” to indicate the account decreases (15 pts).

1. If a contingent liability is probable but cannot be reasonably estimated it should still be reported as a liability on the balance sheet.

True OR False

2. If a contingent liability is reasonably possible, it should be reported in the notes to the financial statements.

True OR False

3. A debt-to-assets ratio divides current liabilities by current assets

True OR False

4. If a company's debt-to-assets ratio is 75% and its competitors have debt-to-asset ratios near 60%, the company has adopted a riskier financing strategy than its competitors.

True OR False

5. The times interest earned ratio measures whether or not there are sufficient resources generated to cover interest costs.

True OR False

6. A times interest earned ratio of 4.22 is better than a times interest earned ratio of 5.81.

True OR False

South Hampton University is preparing its budget for the upcoming academic year. This is a specialised private university that charges fees for all degree courses. Currently, 30 000 students are enrolled on campus. However, the university is forecasting a 5 per cent growth in student numbers in the coming year, despite an increase in fees to $3 000 per subject. The following additional information has been gathered from an examination of university records and conversations with university managers:
1. South Hampton is planning to award scholarships to 200 students, which will cover their fees.
2. The average class has 80 students, and the typical student takes 4 subjects per semester. South Hampton operates 2 semesters per year.
3. The average academic staff salary is $120 000 per annum including on-costs.
4. South Hampton’s academic staff are evaluated on the basis of teaching, research, administration and professional/community service. Each of the academic staff teaches the equivalent of three subjects during the academic year.
Required:
a. Prepare a revenue budget for the upcoming academic year.
b. Determine the number of staff needed to cover classes.
c. Assume there is a shortage of full-time academic staff. List at least five actions that South Hampton might take to accommodate the growing student numbers

ASC 606 in practice. Please find a company who has either already adopted ASC 606 or who has provided significant disclosures about the impending impact of ASC 606 AND for which the adoption of ASC 606 has or will significantly alter revenue recognition. My company is General dynamics Company .Your job is to discuss the changes and what the underlying codification was under ASC 605 vs. ASC 606. This may require you to research ASC 605 guidance, SEC Topic 13 and any legacy accounting guidance from EY or the other Big 4.

Context

In this week's discussion, you are going to be the CEO of a company. In anticipation of the upcoming quarterly disclosure of profits, you prepare your board of directors for the challenge that U.S. tariffs on Chinese imports are having on profits.

Conceptually, you will be asked to address elasticity as a measurement of the magnitude of a change. Additionally, you will be asked to examine how price elasticity of demand plays a role in consumer demand and how profits are affected by a tariff.

Instructions

For this discussion, please make yourself CEO of only one of these hypothetical companies.

1. 'Tis the Season—'Tis the Season is one of the largest importers of holiday decorations, and the summer quarter is devoted to importing decorations such as lighting, artificial trees, table runners, and outdoor yard decorations—all of which have to be ready to ship by early fall. In fact, we at 'Tis the Season have a highly inelastic supply curve, ramping up to produce decorations for each season, and then once that season has been shipped, we move on to the next season. Fortunately, the price elasticity of demand for almost all of our products is 0.19.
2. We Build Big—We Build Big is one of the largest developers of new residential structure in the U.S. We Build Big builds everything from apartment complexes to new single-family homes. Critical materials such as lumber, gypsum board, and fabricate metal are largely imported. At We Build Big, we know that our production process, the supply curve, is relatively inelastic. The concern over profits is that the price elasticity of demand for housing is 1.0.
3. Very Big US Auto—Very Big US Auto is one of the oldest and largest auto manufacturers in the U.S. Very Big US Auto's supply chain is highly dependent on components manufactured in China and assembled in the U.S. Very Big US Auto knows that the price elasticity of supply is relatively inelastic and that demand is relatively elastic, with a price elasticity of demand of 1.2.

In your discussion post, address the following prompts within the context of your chosen hypothetical company of which you are the CEO:

• Is the demand curve for your product relatively elastic, inelastic, or unitary elastic? Demonstrate this for your company's product by how much the quantity demanded will change if you pass on the 25% increase in cost from the tariff as a price increase for your product. In other words, show your calculation of the percentage change in the quantity demanded given a 25% change in the price.
• Given your company's price elasticity of supply and price elasticity of demand, prepare a statement for your board of directors as to the potential impact of profits. Who will pay the larger share of the tariff: your firm or your customers?

Note: In your discussion posts for this course, do not rely on Wikipedia, Investopedia, or any similar website as a reference or supporting source.

Allison and Leslie, who are twins, just received $25,000 each for their 20th birthday. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year from today. Allison opened an account with the Safety First Bond Fund, a mutual fund that invests in high-quality bonds whose investors have earned 8% per year in the past. Leslie invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 14% per year in the fund's relatively short history.

1. If the two women’s funds earn the same returns in the future as in the past, how old will each be when she becomes a millionaire? Do not round intermediate calculations. Round your answers to two decimal places.
   Allison:  
   Leslie:  

2. How large would Allison's annual contributions have to be for her to become a millionaire at the same age as Leslie, assuming their expected returns are realized? Do not round intermediate calculations. Round your answer to the nearest cent.

3. Is it rational or irrational for Allison to invest in the bond fund rather than in stocks?

Allison and Leslie, who are twins, just received $40,000 each for their 24th birthday. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year from today. Allison opened an account with the Safety First Bond Fund, a mutual fund that invests in high-quality bonds whose investors have earned 8% per year in the past. Leslie invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 15% per year in the fund's relatively short history.

1. If the two women’s funds earn the same returns in the future as in the past, how old will each be when she becomes a millionaire? Do not round intermediate calculations. Round your answers to two decimal places.
   Allison:  
   Leslie:  

2. How large would Allison's annual contributions have to be for her to become a millionaire at the same age as Leslie, assuming their expected returns are realized? Do not round intermediate calculations. Round your answer to the nearest cent.

3. Is it rational or irrational for Allison to invest in the bond fund rather than in stocks?

Allison and Leslie, who are twins, just received $40,000 each for their 24th birthday. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year from today. Allison opened an account with the Safety First Bond Fund, a mutual fund that invests in high-quality bonds whose investors have earned 8% per year in the past. Leslie invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 15% per year in the fund's relatively short history.

1. If the two women’s funds earn the same returns in the future as in the past, how old will each be when she becomes a millionaire? Do not round intermediate calculations. Round your answers to two decimal places.
   Allison:  
   Leslie:  

2. How large would Allison's annual contributions have to be for her to become a millionaire at the same age as Leslie, assuming their expected returns are realized? Do not round intermediate calculations. Round your answer to the nearest cent.

3. Is it rational or irrational for Allison to invest in the bond fund rather than in stocks?

A company's overall cost of capital is a. equal to its cost debt. b. a weighted average of the costs of capital for the collection of individual projects that the company is working on. c. best measured by the cost of capital of the riskiest projects that the company is working on. d. none of the above

A bond has a face value of $1,000, a coupon of 5% paid annually, a maturity of 22 years, and a yield to maturity of 9%. (1) What is the bond price today and (2) what rate of return will be earned by an investor who purchases the bond today and holds it for 1 year if the bond’s yield to maturity at the end of the year is 6%?

A.$622.3 ; 41.79 %

B.$882.36 ; 41.79 %

C.$882.36 ; 49.82 %

D.$622.3 ; 49.82 %