5. On December 1, 2018, Folks Wagon Company adopted a stock-option plan that granted options

to key executives to purchase 50,000 shares of the company’s $10 par value common stock. The

options were granted on January 1, 2019, and were exercisable 3 years after the date of grant if the

grantee was still an employee of the company. The options expired 5 years from the date of grant.

The option price was set at $35, and the fair value option-pricing model determines the total

compensation expense to be $450,000.

All of the options were exercised during the year 2022: 20,000 on February 23 when the market

price was $46, and 30,000 on August 8 when the market price was $85 a share.

a. Prepare the journal entries relating to the stock option plan for the years 2019, 2020, and 2021.

Assume that the employee performs services equally in 2019, 2020, and 2021.

b. Prepare the journal entries that record the two events of exercising the options in 2022.

On December 1, 2018, Folks Wagon Company adopted a stock-option plan that granted options to key executives to purchase 50,000 shares of the company’s $10 par value common stock. The options were granted on January 1, 2019, and were exercisable 3 years after the date of grant if the grantee was still an employee of the company. The options expired 5 years from the date of grant. The option price was set at $35, and the fair value option-pricing model determines the total compensation expense to be $450,000.

All of the options were exercised during the year 2022: 20,000 on February 23 when the market price was $46, and 30,000 on August 8 when the market price was $85 a share.

a. Prepare the journal entries relating to the stock option plan for the years 2019, 2020, and 2021. Assume that the employee performs services equally in 2019, 2020, and 2021.

b. Prepare the journal entries that record the two events of exercising the options in 2022.

What did you identify while conducting a value chain analysis of American Airlines?

What are your observations from a similar value chain analysis that you conducted for Walden University?

What is the purpose of copyrights, patents, and trademarks?

If a student uses University resources to develop and/or market software, is he/she required to notify the University?

What are the benefits of notifying the University?

What is the difference between a patent and a copyright?

Green Corporation, a manufacturing company, hired several executives during 2020. The executives had homes in other cities when they were hired by Green. If the executives were unable to sell those homes, they would be unable to buy replacement homes in Green’s area. Consequently, if the executives were unable to sell their homes within 30 days of listing them for sale, Green bought the homes from the executives for 10% less than the list price. Green immediately put the homes purchased up for resale. Each home Green purchased was ultimately sold at a loss. By the end of 2020, Green did not own any homes, but had suffered losses totaling $125,000 on the sale of houses. Green is uncertain how to report the sale of the homes. Green has a $32,000 short-term capital gain from stock investment transactions during 2020.

Would Green Corporation prefer the $125,000 loss from the sale of the houses to be treated as ordinary or capital? Why?

What is the proper treatment of the $125,000 loss (ordinary or capital)? Provide an explanation of your answer that is sufficiently supported by tax authorities that are properly cited.

Green Corporation has asked you how it might structure future transactions involving transferred executives and their residences to achieve better tax results. Provide an explanation of your answer that is sufficiently supported by tax authorities that are properly cited.

Problem Two University tuition fees in Quebec are the lowest in Canada and has been among the lowest for the past 20-30 years. Use the human capital model to answer the questions below and assume that initial annual earnings for a CEGEP graduate is $40.000 while the corresponding earnings for a university graduate is $52,000. Further, assume CEGEP students graduate at age 20 (so the time horizon is 45 years) and at that age they decide to start working or continue their studies in university. The interest rate is 5% and university studies last 3 years. a) Calculate the present value (PV) of each option (CEGEP and University), using the assumptions above and assuming that CEGEP wages grow on average by 1.5% per year and university wages grow by 3%)

The Abruzzi Olive Oil Company is a small producer of premium olive oil. Cheryl Sounders, the owner of Abruzzi, is currently developing a budget spreadsheet to explore the impact of various sales goals on production.

Month Sales

January 9,200

February. 9,000

March 9,400

April 8,600

May 8,000

June 8,500

July 8,200

August 7,500

September 8,900

October 9,300

November 9,200

December. 9,600

At a planning meeting in November 2020, Jay Peters, the marketing manager for Abruzzi, told Cheryl that he expected monthly sales to increase by 5 to 15 percent in the coming year. But in late december 2020, Jay rushed into cheryl's office with some good news. "cheryl, I just had a meeting with Consolidated Resturaunts, and they are considering an order for 1,250 gallons each month for all of 2021."

"Gosh," Cheryl replied. "that's an exciting bit of news, but I'm concerned about whether we have the capacity to accept such a large order. Ill prepare budgets assuming we don't get the Consolidated business but we increase monthly sales by 5, 10, or 15 percent. Then ill assume the consolidated order comes through, and on top of that we have monthly increases of 5, 10, and 15 percent/ This should give us a good idea of whether well bump up against capacity." Jay thought that this sounded fine, but he wondered whether Cheryl had the time to do this much work. Cheryl indicated that the analysis was relatively easy since she was preparing the budget on a spreadsheet and each analysis would require only a simple change.

A. Using a spreadsheet, prepare the six monthly budget schedule that Cheryl suggested (i.e. monthly budgets with and without the consolidated business assuming other sales increases of 5,10, and 15 percent). As a general rule, Cheryl likes to have ending inventory equal to 12 percent of next month's sales. Assume that the company ended 2020 with an inventory of 1,500 gallons of olive oil. In order to calculate ending inventory at the end of December 2021, assume that sales in January 2022 will be the same as December 2021 sales.

b. Suppose that capacity is 12,000 gallons. Is the company likely to encounter a capacity problem?

c. Abruzzi sells its oil for $25 per gallon. The variable cost per gallon is $10. What will be the annual impact on profit of obtaining the consolidated business (assuming that there is no capacity problem)?

The following data relates to Rogers Company for the year ending December 31, 2020:

Net Income for 2020= $920,000

Preferred Stock= 10,000 shares of $100 par 8% cumulative preferred stock were outstanding throughout the year. The preferred stock is non-convertible

Common Stock= 300,000 shares of common stock were issued and outstanding throughout the year. No shares were issued or repurchased, and there were no stock splits or dividends.

Convertible Bonds= 12% convertible bonds at $4,000,000 face amount. (These bonds were issued in 2015 and they are convertible to a total of 120,000 common shares.

Stock Options=500,000 (These options were issued on July 1, 2020. Each option allows the option holder to purchase one common share for $20. The average market price of the common stock in 2020 was $32 a share.

Other information:

Rogers income tax rate for 2020 is 40%

Rogers did not declare or pay any dividends in 2020

Question:

a. What is Rogers "Income available to common shareholders" for 2020?

b. What is Rogers "Weighted average common shares outstanding" for 2020?

c. Compute Rogers Basic Earnings Per Share for 2020?

d. What will be the "Numerator Effect of the convertible bonds?

e. What will be the "Denominator Effect" of the convertible bonds?

f. What will be the "Numerator Effect" of the stock options?

g. What will be the "Denominator Effect" of the stock options?

h. Compute Rogers Diluted Earnings Per Share for 2020?

At January 1, 2020, the credit balance of Whispering Winds Corp.’s Allowance for Doubtful Accounts was $401,000. During 2020, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2020 were $80 million, of which 90% were on account. Based on the information available at the time, the 2020 bad debt expense was estimated to be 0.75% of net credit sales. During 2020, uncollectible receivables amounting to $508,500 were written off against the allowance for doubtful accounts. The company has estimated that at December 31, 2020, based on a review of the aged accounts receivable, the allowance for doubtful accounts would be properly measured at $530,500.

Prepare a schedule calculating the balance in Whispering Winds Corp.’s Allowance for Doubtful Accounts at December 31, 2020.

Prepare any necessary journal entry at year end to adjust the allowance for doubtful accounts to the required balance. (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.)

The controller for Clint Swifty Co. is attempting to determine the amount of cash to be reported on its December 31, 2020, balance sheet. The following information is provided.

1. Commercial savings account of $690,500 and a commercial checking account balance of $812,900 are held at First National Bank of Yojimbo.

2. Money market fund account held at Volonte Co. (a mutual fund organization) permits Swifty to write checks on this balance, $5,228,200. 3. Travel advances of $194,800 for executive travel for the first quarter of next year (employee to reimburse through salary reduction).

4. A separate cash fund in the amount of $1,493,000 is restricted for the retirement of long-term debt.

5. Petty cash fund of $1,750.

6. An I.O.U. from Marianne Koch, a company customer, in the amount of $166,700.

7. A bank overdraft of $116,700 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time, the company has no deposits at this bank.

8. The company has two certificates of deposit, each totaling $537,300. These CDs have a maturity of 120 days.

9. Swifty has received a check that is dated January 12, 2021, in the amount of $131,320.

10. Swifty has agreed to maintain a cash balance of $514,800 at all times at First National Bank of Yojimbo to ensure future credit availability.

11. Swifty has purchased $2,005,100 of commercial paper of Sergio Leone Co. which is due in 60 days.

12. Currency and coin on hand amounted to $7,949. (a) Compute the amount of cash and cash equivalents to be reported on Swifty Co.’s balance sheet at December 31, 2020.

The amount of Cash and Cash Equivalents reported on December 31, 2020 $