a2 Milk Ltd Pty.

a2 Milk is an Australian company specialising in producing fresh milk and milk formula. The company has its operations in Australia. Therefore, there expenses are generally invoiced in Australian dollars (AUD). However, it has recently imported supplies from New Zealand, and the bill is invoiced in the New Zealand dollars (NZD) for NZD 1,500,000, payable in 6 months’ time.

Suppose a2 Milk’s management is concerned about foreign exchange rate exposure, and would like to hedge this risk. Suppose also that you observe the following quotes in the foreign exchange market:

The banker offers to set up a forward hedge based on the NZD/AUD forward cross-exchange rate implicit in the forward rates against the dollar. Suppose you are a risk manager at a2 Milk. You are required to advise the CEO the following:

1. The AUD equivalent of this transaction at the current spot exchange rates. (Could you explain in details and step by step)
2. The foreign exchange rate risk exposure of this transaction. (Could you explain in details and step by step)
3. Whether the company should hedge. If so, show the CEO how you would hedge this risk exposure with the available forward contracts. (Could you explain in details and step by step)

Windy Kitchen is a manufacturer of baked beans. Kim Gordon is the CEO of Windy Kitchen and a strong believer in continuous quality improvement. Recently, Kim asked her management accountant, Tom Hardee, to gather further information about quality costs for her company. Below is a list of quality-related costs manually prepared by Tom for the years 20X1 and 20X2.

20X1 20X2

Customer Returns $3,000 $8,000

Handling Customer Complaints $6,000 $5,000

Inspection of WIP $20,000 $10,000 Machines Repair $16,000 $17,500

Product Recalls $2,000 $10,000

Quality Training $10,000 $8,000

Raw Materials Inspection $20,000 $15,000

Rework $15,000 $14,000 Scrap Processing $30,000 $40,000

Technical Training $50,000 $30,000 Total $172,000 $157,500

Sales revenue for Windy Kitchen was $500,000 in 20X1 and $550,000 in 20X2.

(a) Prepare a combined cost of quality report for Windy Kitchen for both 20X1 and 20X2. Include proportions of the major quality cost categories as a percentage of sales.

(b) When Kim, the CEO, receives the cost of quality report from you, she is amazed and says, “Why haven’t I been able to access this information from our accounting systems before?” Explain to Kim why she may not have been able to easily extract this information from the company’s accounting system?

(c) Kim is very happy that the total cost of quality has decreased from $172,000 to $157,500. She believes that the company is moving in the right direction. Analyse and assess Windy Kitchen’s quality improvement progress with respect to the cost of quality information you have calculated in part (a). Do you agree with Kim that the company is “moving in the right direction” on quality costs?

compare and contrast the types of capital, external assessment of capital structure, the capital structure of non–U.S. firms, and capital structure theory. Based on your current organization, what type of capital structure do they use and how has the company been doing in terms of economic success?

Tower Company owned a service truck that was purchased at the beginning of 2018 for $31,000. It had an estimated life of three years and an estimated salvage value of $4,000. Tower company uses straight-line depreciation. Its financial condition as of January 1, 2020, is shown in the following financial statements model.

In 2020, Tower Company spent the following amounts on the truck:

Record the 2020 transactions in a statements model like the preceding one. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change and NA for not affected. Round your answers to the nearest dollar amount. Enter any decreases to account balances with a minus sign.)

Assume that on January 1, 2020, Kroger Corp. signs a 6-year, non-cancelable lease agreement to lease a storage building from Trancoso Company. The following information pertains to this lease agreement:

1. The agreement requires equal rental payments of $35,000 beginning on December 31, 2020.

2. The fair value of the building on January 1, 2020, is $195,000.

3. The building has an estimated economic life of 12 years, an unguaranteed residual value of $5,000, and an expected residual value of $1,000. Kroger depreciates similar buildings on the straight-line method.

4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor.

5. The lessor's implicit rate is 6%, which is known by Kroger.

questions: (1) Determine whether this is a finance or operating lease. Clearly document your rationale and show all necessary calculations. (2) Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020, 2021, and 2022. Kroger's fiscal year-end is December 31.

During 2020, Riverbed Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. T

he following information is available. 2020 2021 2022

Costs incurred to date $383,800 $905,280 $1,063,000

Estimated costs to complete 626,200 198,720 –0–

Billings to date 302,000 896,000 1,610,000

Collections to date 271,000 817,000 1,419,000

Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

Prepare all necessary journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For costs incurred use account Materials, Cash, Payables.)

Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.
Gross profit 2020? 2021? 2022?

Tabor Company had the following account balances on January 1, 2020: Raw Materials Inventory $ 42,000 Work in Process Inventory $ 87,000 Finished Goods Inventory $ 93,000 During 2020, the following transactions took place: 1. Raw materials costing $75,000 were purchased on account. 2. Raw materials costing $96,000 were issued to the factory, of which $70,000 is considered to be direct material cost. 3. Total factor labor costs for the period were $150,000 of which $120,000 is considered to be direct labor cost. 4. The following other factory overhead costs were incurred: Factory utilities (paid in cash) $32,000; factory depreciation $64,000; and miscellaneous factory costs (incurred on account) $53,000. 5. Units costing a total of $250,000 were completed. 6. Units costing $240,000 were sold on account for $500,000.

INSTRUCTIONS: A. Complete a cost flow diagram (T-accounts attached) for 2020.

B. Prepare the journal entries to record ALL of the 2020 transactions listed above.

C. Prepare a manufacturing statement and a partial income statement.

Problem 20-09 (Part Level Submission)

Sunland Co. has the following defined benefit pension plan balances on January 1, 2020.

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2021, the company amends its pension agreement so that prior service costs of $595,000 are created. Other data related to the pension plan are:

a. prepare pension worksheet for the pension plan in 2020

c. Prepare a pension worksheet for 2021 and any JE related to the pension plan as of December 31, 2021

d. indicate the pension-related amounts reported in the 2021 financial statements