Blossom Corporation Ltd. has the following capital structure at the following fiscal years ended December 31:

The following additional information is available.

Determine the weighted average number of common shares that would be used in calculating earnings per share for the year ended December 31, 2020.

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Starting with the heading “Income from Continuing Operations,” prepare the bottom portion of the income statement for the year ended December 31, 2020. Assume that Blossom Corporation discloses all applicable earnings per share data on the face of the income statement. (Round Earnings Per Share amounts to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Crane Corporation Ltd. has the following capital structure at the following fiscal years ended December 31:

The following additional information is available.

Determine the weighted average number of common shares that would be used in calculating earnings per share for the year ended December 31, 2020.

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Starting with the heading “Income from Continuing Operations,” prepare the bottom portion of the income statement for the year ended December 31, 2020. Assume that Crane Corporation discloses all applicable earnings per share data on the face of the income statement. (Round Earnings Per Share amounts to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

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Suppose we are interested in modeling the factors that affect salaries of CEO’s of companies. Let salaryi denote CEO compensation in 1990 measured in $1000 increments. Let salesi denote the 1990 sales of a firm in millions of dollars. Let mktvali denote the market value of the firm at the end of 1990 in millions of dollars. Let profitsi denote 1990 profits in millions of dollars. Finally, let the dummy variable collegei = 1 if a CEO attended college and 0 otherwise and let the dummy variable gradi = 1 ,if a CEO attended graduate school and 0 otherwise.
First consider a simpler model where log denotes the natural logarithm (log base e):
log(salaryi) = β1 + β2 log(salesi) + β3 log(mktvali) + εi.
Assume that Classical Assumptions for MLR hold. This regression was estimated using a random sample of 177 firms. Standard errors are in parentheses:
log(sal?aryi) = 4.62 (0.25)
R2 = 0.299
(a) Test the joint significance of β2 and β3 at the 1% significance level.
Suppose an undergraduate RA student majoring in economics was working on this empirical question. Given the lack of training, this student could only think to estimate the simple regression model
log(salaryi) = β1 + β2 log(salesi) + εi. and he only reported that RSS from this regression was 46.51.
(b) Would the R2 from this simple regression be larger or smaller than 0.299? Give an explanation for your answer.
One might think that the profits of a firm would affect CEO pay (the more a firm makes, the more it can pay its CEO). Consider the following fitted model
log(sal?aryi) = 4.69 +0.161 log(salesi) +0.098 log(mktvali) +0.000036profitsi
(0.38) (0.04)
(0.064) (0.00015)
+0.162 log(salesi) +0.170 log(mktvali) (0.04) (0.05)
RSS = 45.31 TSS = 64.65 RSS = 43.295
(c) Test for the joint significance of the two slope parameters for log(mktval) and profits at the 1% signif-
icance level.
A more complete model of CEO salaries would take into effect the education of the CEOs:
log(salaryi) = β1 + β2 log(salesi) + β3 log(mktvali) + β4collegei + β5gradi + εi. (1)
This model was estimated by OLS yielding
log(sal?aryi) = 4.68 +0.160 log(salesi) +0.112 log(mktvali) −0.056collegei −0.057gradi
(0.35) (0.04)
(0.05) (0.237) (0.080)
RSS = 43.137

Below are Lebnas Corp.’s 2019 income statement and comparative balance sheet at 12/31/2019 and 12/31/2018.  

Additional information:                                                  

1. On December 31, 2018, Lebnas acquired 25% of Island Co.’s common stock for $609,000. On that date, thecarrying value of Island’s assets and liabilities, which approximated their fair values, was $2,435,000. Islandreported income of $319,000 for the year ended December 31, 2019. No dividend income was received by Lebnas on Island’s common stock during the year 2019.

2. During 2018, Lebnas loaned $797,500 to POI Co., an unrelated company. POI made the first semi-annualprincipal repayment of $72,500, plus interest at 10%, on December 31, 2018. POI is current on the loan as of December 31, 2019.

3. On January 2, 2019, Lebnas sold equipment costing $145,000, with a carrying amount of $44,950 for cash.

4. On December 31, 2019, Lebnas entered into a finance lease for a new factory. The present value of the annual rental payments is $1,232,500, which equals the fair value of the building. Lebnas will make the firstrental payment of $174,000 on 1/2/2020.

Note:  The right of use asset is included in Property, Plant and Equipment on the balance sheet.

5. Depreciation expense of $230,550 is included in Cost of Goods Sold.

6. Lebnas declared and paid cash dividends as follows.

Required: Prepare a statement of cash flows for Lebnas Corp. for the year ended 12/31/2019, using the indirect method and good form, including footnote disclosures.

On December 1, 2013, a US firm plans to sell a piece of equipment [with asking price of 200,000 units of a foreign currency (FC)] during January of 2014. The transaction is probable. The company enters into a forward contract on December 1, 2013 to sell 200,000 FC on February 1, 2014 for $1.02. Spot rates and the forwards rates for January 31, 2014, settlement were as follows (dollars per euro):

Spot Rate Forward rate for 2/1/14

December 1, 2013 $1.04 $1.02

Balance sheet date (12/31/2013) $1.01 $1.00

January 31 and February 1, 2014 $0.99

On January 31, 2014, the equipment was sold for 200,000 FC. The cost of the equipment is $170,000. The US company has an incremental borrowing rate of 12% per year.

Required:

1. Record the journal entries needed on December 1 and December 31, 2013, January 31, and February 1, 2014. Round all entries to the nearest whole dollar (10 points)

2. Answer the following questions:

a. Indicate the amount of the discount or premium at which the foreign currency was originally sold in the foreign currency market (1 point)

b. What is the net impact on December 31, 2013 Stockholder equity related to this transaction? (1 point)

c. What is the accumulated net impact at February 1, 2014 on Stockholder equity related to this transaction? (1 point)

d. What would have been the net impact on December, 31 2013 Stockholder equity related to this transaction if the US company had never entered the Forward Contract? (1 point)

e. What would have been the accumulated net impact on the US company’s Stockholder equity related to this transaction at February 1, 2014 if the US company had never entered the Forward Contract? Was the US company better- or worst off with the derivative contract? (1 point)

1. Following is the list of business transactions took place in Cameroon. Both

companies use a perpetual inventory system. (Currency in Central African CFA franc, FCFA) (30%)

1. On June 10, 2020, Hamadou Company in Yaoundé purchased FCFA 800,000 of merchandise from Moussa Company in Douala, FOB shipping point, with 3/10, n/30 discount terms.
2. Hamadou pays the freight costs of FCFA 40,000 on June 11.
3. On June 19, Hamadou pays Moussa Company in full, less the purchase discount.

Instructions:

1. Prepare separate entries for each transaction on the books of Hamadou Company.
2. Prepare separate entries for each transaction for Moussa Company. Themerchandise purchased by Hamadou on June 10 had cost Moussa FCFA 480,000.

Part (a) Consider a firm called Health-R-Us that is a monopoly. How does Health-RUs decide the price to charge and quantity to sell of the good it has a monopoly on? Illustrate your answer using a fully labelled and explained market diagram. Assume Health-R-Us is making monopoly profits and illustrate these on the same diagram. In addition, indicate the area on your diagram that illustrates the efficiency cost (the dead weight loss) of the monopoly, and explain why this dead weight loss arises.

Part (b) Assume Health-R-Us is a legal monopoly: it is a monopoly due to legal protection from the government in the form of a patent issued to the company. Imagine that the government withdraws the legal protection for Health-R-Us such that the market becomes competitive. Will a typical individual firm in this competitive market make economic profit in the long run? Why or why not? Use an appropriate firm-level diagram to illustrate and explain your answer.

Part (c) Your answers to parts 2a and 2b illustrated different levels of profit made by an individual firm in both a monopoly market structure and a competitive market structure respectively. In part 2a you also indicated the dead weight loss of a monopoly.

Assume now that Health-R-Us has discovered a vaccine for coronavirus. Why might the government be willing to grant (and allow to remain in place) a patent to HealthR-Us, despite the dead weight loss and the ensuring monopoly profits caused by such a patent? Explain your answer. For simplicity assume the vaccine is only relevant for the domestic market (i.e., there is no global market for vaccines).

Part (a) Consider a firm called Health-R-Us that is a monopoly. How does Health-RUs decide the price to charge and quantity to sell of the good it has a monopoly on? Illustrate your answer using a fully labelled and explained market diagram. Assume Health-R-Us is making monopoly profits and illustrate these on the same diagram. In addition, indicate the area on your diagram that illustrates the efficiency cost (the dead weight loss) of the monopoly, and explain why this dead weight loss arises.

Part (b) Assume Health-R-Us is a legal monopoly: it is a monopoly due to legal protection from the government in the form of a patent issued to the company. Imagine that the government withdraws the legal protection for Health-R-Us such that the market becomes competitive. Will a typical individual firm in this competitive market make economic profit in the long run? Why or why not? Use an appropriate firm-level diagram to illustrate and explain your answer.

Part (c) Your answers to parts 2a and 2b illustrated different levels of profit made by an individual firm in both a monopoly market structure and a competitive market structure respectively. In part 2a you also indicated the dead weight loss of a monopoly.

Assume now that Health-R-Us has discovered a vaccine for coronavirus. Why might the government be willing to grant (and allow to remain in place) a patent to HealthR-Us, despite the dead weight loss and the ensuring monopoly profits caused by such a patent? Explain your answer. For simplicity assume the vaccine is only relevant for the domestic market (i.e., there is no global market for vaccines)

Part (a)

Consider a firm called Health-R-Us that is a monopoly. How does Health-R-Us decide the price to charge and quantity to sell of the good it has a monopoly on? Illustrate your answer using a fully labelled and explained market diagram. Assume Health-R-Us is making monopoly profits and illustrate these on the same diagram. In addition, indicate the area on your diagram that illustrates the efficiency cost (the dead weight loss) of the monopoly, and explain why this dead weight loss arises.

Part (b)

Assume Health-R-Us is a legal monopoly: it is a monopoly due to legal protection from the government in the form of a patent issued to the company. Imagine that the government withdraws the legal protection for Health-R-Us such that the market becomes competitive. Will a typical individual firm in this competitive market make economic profit in the long run? Why or why not? Use an appropriate firm-level diagram to illustrate and explain your answer.

Part (c)Your answers to parts 2a and 2b illustrated different levels of profit made by an individual firm in both a monopoly market structure and a competitive market structure respectively. In part 2a you also indicated the dead weight loss of a monopoly.

Assume now that Health-R-Ushas discovered a vaccine for coronavirus. Why might the government be willing to grant (and allow to remain in place) a patent to Health-R-Us, despite the dead weight loss and the ensuring monopoly profits caused by such a patent? Explain your answer. For simplicity assume the vaccine is only relevant for the domestic market (i.e., there is no global market for vaccines).