DEF Company incorporated on January 1, 2018 after receiving authorization to issue 5,000 shares of $100 par value preferred stock and 500,000 shares of $10 par value common, with the former having a 10% cumulative dividend feature. During fiscal 2018, the company engaged in the following equity transactions: January 1 Issued 500 shares of preferred stock for $120 each. January 1 Issued 10,000 shares of common stock for $25 each. June 30 Bought 1,000 shares of common stock for the treasury at $30 each. December 31 Declared the preferred stock dividend and a $1.00 per-share dividend on the common. DEF’s fiscal 2018 comprehensive income consisted of the following: sales revenue of $2,500,000, cost of goods sold of $1,600,000, operating expenses of $300,000, income taxes of $215,000, and $40,000 of other comprehensive income from a transaction not subject to income tax.

Required—Prepare in good form each of the following: DEF’s fiscal 2018 statement of stockholders’ equity.

Dr. Smith and his wife are both medical doctors and they just completed their medical residence at a local hospital. While attending your graduation party, Dr. Smith and his wife learned that you just earned your MBA. The Smiths approached you for advice on the legal form of business they should elect for their medical practice they are planning to open. The Smiths are interested in understanding each form of business organization and advantages and disadvantages of each form.

In advising the Smiths, please address the following questions:

1.         Compare and contrast

a.         the forms of business organizations, advantages, and disadvantages.

b.         general partner vs. limited partner?

c.         limited liability partnership vs. a limited liability company?

2.         Explain the advantages and disadvantages of organizing a business as an “S-Corporation?”

3.         Explain if the form of business organization impact the control of the firm and ethical behavior.

Based on your discussion, explain which form of business organization you would advise the Smiths to elect. Defend your response.

Sales and purchasing management /1000/2000 words

describe the impact of the purchasing situation on Integrated Marketing Communication (IMC)

understand the purchasing (procurement) decisions and organization of a company.

Case

Princess Yachtswas established in 1965. Today Princess’ shipyards cover an area of over 1.1 million square feet, an area rich in British maritime heritage.  In fact, South Yard, where M Class superyachts are constructed, is a former naval yard dating back to the 17th century. From the outset, their goal has been to meticulously sculpt yachts around owners’ enjoyment of them.  Such dedication and attention to detail resonates deeply with their Plymouth craftsmen. Over 3,000 people, each possessing a mastery of their skill, fastidiously realise this vision in their shipyards. Through a culture of innovation, our yachts are not only some of the most technically-advanced in the world but also the most beautifully realised.

Questions

1. Using the company above, explain why effective purchasing is important for their business?
2. What is the concept of “adding value” to a business in terms of purchasing for the above company?
3. What are “make-decisions” and “buy decisions” and how would decisions about these points be made for this company?
4. What are the major benefits of sustainable purchasing/sourcing for the company?
5. Explain how modern technologies are helping purchasing processes and purchasing decisions in the above example?

V. Rahr and Sons is a Fort Worth brewery founded by Fritz Rahr, a Neeley undergraduate and MBA. Currently the company makes Rahr Blonde Lager, Rahr’s Red, and Ugly Pug brews. They are considering a new beer, Frog Princess, with which to celebrate their ties to TCU. The project includes an initial outlay of $750,000 for the purchase of capital equipment that will be depreciated straight line to zero over six years.

Sales are expected to be $400,000 in years 1-3 and $600,000 in years 4-6. Production costs during years 1-6 are as follows: fixed costs (not including depreciation) are expected to be $150,000 per year; variable costs per year will be 40% of sales. The project will require an initial investment in NWC of 200,000 in year 0.

Beyond year six, the company expects that sales and unlevered net income in year seven will be 4% higher than that in year 6, and will continue growing at 4% per year infinitely. Additionally, in year 7 and beyond, new capital expenditures net of depreciation, and increases in NWC, combined, will be 6% of sales. Assume the marginal tax rate is 21%. The appropriate discount rate is 8%.

What is the NPV of the project? What is the IRR? Should the project be undertaken?

V. Rahr and Sons is a Fort Worth brewery founded by Fritz Rahr, a Neeley undergraduate and MBA. Currently the company makes Rahr Blonde Lager, Rahr’s Red, and Ugly Pug brews. They are considering a new beer, Frog Princess, with which to celebrate their ties to TCU. The project includes an initial outlay of $750,000 for the purchase of capital equipment that will be depreciated straight line to zero over six years.

Sales are expected to be $400,000 in years 1-3 and $600,000 in years 4-6. Production costs during years 1-6 are as follows: fixed costs (not including depreciation) are expected to be $150,000 per year; variable costs per year will be 40% of sales. The project will require an initial investment in NWC of 200,000 in year 0.

Beyond year six, the company expects that sales and unlevered net income in year seven will be 4% higher than that in year 6, and will continue growing at 4% per year infinitely. Additionally, in year 7 and beyond, new capital expenditures net of depreciation, and increases in NWC, combined, will be 6% of sales. Assume the marginal tax rate is 21%. The appropriate discount rate is 8%.

What is the NPV of the project? What is the IRR? Should the project be undertaken?

On January 1, 2017, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $528,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $352,000 and Rockne's assets and liabilities had a collective net fair value of $880,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $330,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $390,000 in 2017 and $490,000 in 2018. Approximately 35 percent of the inventory purchased during any one year is not used until the following year.

1. What is the noncontrolling interest's share of Rockne's 2018 income?
2. Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers.

The following events pertain to Super Cleaning Company:
1. Acquired $10,000 cash from the issue of common stock.
2. Provided $15,000 of services on account.
3. Provided services for $5,000 cash.
4. Received $2,800 cash in advance for services to be performed in the future.
5. Collected $12,200 cash from the account receivable created in Event 2.
6. Paid $1,900 for cash expenses.
7. Performed $1,400 of the services agreed to in Event 4.
8. Incurred $3,600 of expenses on account.
9. Paid $4,800 cash in advance for one-year contract to rent office space.
10. Paid $2,800 cash on the account payable created in Event 8.
11. Paid a $1,500 cash dividend to the stockholders.
12. Recognized rent expense for nine months’ use of office space acquired in Event 9

On January 1, 2017, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $600,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $400,000 and Rockne's assets and liabilities had a collective net fair value of $1,000,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $390,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $450,000 in 2017 and $550,000 in 2018. Approximately 35 percent of the inventory purchased during any one year is not used until the following year.

1. What is the noncontrolling interest's share of Rockne's 2018 income?
2. Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers.

As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 590,000 shares for $670,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $350,000 and distributed cash dividends of 20 cents per share. At year-end, the fair value of the shares is $714,000.

1. Assume no significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Assume significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

According to the open-economy macro model, which of the following contains a list only of things that increase when the budget deficit of the U.S. increases?

A.U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment

B.U.S. supply of loanable funds, U.S. interest rates, U.S. domestic investment

C.U.S. supply of loanable funds, U.S. interest rates, U.S. net capital outflow

D.the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports

E.U.S. interest rates, the real exchange rate of the dollar, U.S. import

A decrease in the U.S. government budget deficit shifts the supply of U.S. loanable funds to the _________. If the demand for loanable funds does not shift, then the supply shift will cause U.S. interest rates to ___________ and U.S. domestic investment to __________.

A.right; rise; increase.

B.right; fall; increase.

C.left; fall; increase.

D.left; fall; decrease.

E.left; rise; decrease