Presented here are the comparative balance sheets of Hames Inc. at December 31, 2020 and 2019. Sales for the year ended December 31, 2020, totaled $590,000.
|
Assets |
2020 |
2019 |
|
Cash |
$21,000 |
$19,000 |
|
Accounts receivable |
78,000 |
72,000 |
|
Merchandise inventory |
103,000 |
99,000 |
|
Total current assets |
$202,000 |
$190,000 |
|
Land |
50,000 |
40,000 |
|
Plant and equipment |
125,000 |
110,000 |
|
Less: Accumulated depreciation |
(65,000) |
(60,000) |
|
Total assets |
$312,000 |
$280,000 |
|
Liabilities |
||
|
Short-term debt |
$18,000 |
$17,000 |
|
Accounts payable |
$64,800 |
$75,000 |
|
Other accrued liabilities |
$20,000 |
$18,000 |
|
Total current liabilities |
$102,800 |
$110,000 |
|
Long-term debt |
$22,000 |
$30,000 |
|
Total liabilities |
$124,800 |
$140,000 |
|
Stockholders’ Equity |
||
|
Common stock, no par, 100,000 shares authorized |
$74,000 |
$59,000 |
|
Retained earnings: |
||
|
Beginning balance |
$81,000 |
$85,000 |
|
Net income for the year |
$52,200 |
$1,000 |
|
Dividends for the year |
(20,000) |
(5,000) |
|
Ending balance |
$113,200 |
$81,000 |
|
Total stockholders’ equity |
$187,200 |
$140,000 |
|
Total liabilities and stockholders’ equity |
$312,000 |
$280,000 |
e
In: Accounting
Can you summarize this article?
An Economic Analysis of the Intellectual Monopoly in The Lego Movie Beckett Chung
This paper aims to identify the intellectual monopoly in society. It draws inspiration from themes in The Lego Movie (2014) and examines various papers that define the causes of intellectual monopolies. Using a case study of the firm BlackBerry, this paper seeks to understand the severe consequences of an intellectual monopoly. It concludes by suggesting the market power return to the everyday worker, so society can be wholly creative.
The Lego Movie (2014) delivers an ominous warning of the darkness that lurks underneath society’s bed. The plot is structured around overcoming the antagonist, Lord Business, and his monopolistic company, Octan. Octan dominates the Lego Universe, and maintains full control over every single market. By taking advantage of key markets, such as legislation and media, Octan controls the way people think. For example, Lord Business thrusts mandatory instructions onto the laps of his citizens, ensuring everything as simple as waking up in the morning is standardized. By airing only one TV show, and playing only one song, Lord Business manipulates the people of the Lego Universe into realizing his vision of perfection. When thinking processes are monopolized, human creativity is hindered, and technological innovation will suffer.
In “The crisis of intellectual monopoly capitalism,” Pagano (2014) explored how knowledge is controlled in modern society. This paper aids in understanding what an intellectual monopoly is, and offers a socialist solution to stabilize the market for knowledge. In “Why U.S. firms are dying: Failure to innovate,” Denning (2015) presented a multitude of statistics to quantify the lack of support for creativity that workers feel. His numbers help this paper view the effect of a thought monopoly on everyday people.
Classical economics insists that a market dominated by a monopolist cannot function at maximum efficiency. Unfortunately, classical economics fails to reveal the inevitability of an intellectual monopoly as a product of competitive markets. Competition drives capitalists to maximize the efficiency in their labour power, which is rented from the workers. To maximize the efficiency of the rented labour, capitalists streamline production by dividing labour. Instead of hiring one expensive high-skilled worker to produce something, capitalists employ many cheap low-skilled workers who complete small, individual tasks to produce the same thing, at a higher volume for a lower price. Pagano (2014) argued that labour division removes the creative process from the production process (p. 1141). The division of labour represents the division of creativity from production. It is a crucial step towards creating a knowledge monopoly. Overtime, workers become entrenched in their roles, becoming mindless producers. Denning (2015) reported that a very small percentage of workers feel inclined to innovate (para. 11), which he blamed on the overwhelming focus on a firm’s stock price. This is because high production drives the stock price upwards.
The people who are creative have their ideas patented, which further boosts the stock price of the firm. However, only the few people at the head of a company are thinking, and they make it illegal for others to use their ideas. If good ideas contribute positively to stock prices, then why are firms failing to support creativity among their workers? Marxist theory dictates that the capitalist class and the working class are bound to conflict. The capitalist rents labour from the working class at a cost lower than the value of what the worker can produce. The price of labour must stay low enough for the worker to afford the cost of living, but may never grow so that the worker can begin saving. If workers begin saving, they may accrue capital, allowing them to break from the working class and become capitalists. Likewise, if workers feel pushed to innovate, they may innovate beyond the role of a mere worker. If workers begin outputting influential ideas, there is little to stop the workers from patenting their ideas, accruing capital and becoming capitalists. This threatens to dramatically shrink the workforce; which capitalists heavily rely on. So, in the name of profit, firms will continue to alienate their workers, even at the risk of falling to the intellectual monopoly they have created.
Consider the firm BlackBerry. Ten years ago, nearly everyone used their products. Now, the products are rarely seen. From 2009 to 2013, the stock price of BlackBerry plummeted by ninety percent (Gustin 2013). Using the technology industry as a model, it is possible to quantify what could happen to society should it continue under an intellectual monopoly. When Apple launched the first iPhone in 2007, they severely disrupted BlackBerry’s tight hold on the smartphone market. The iPhone emerged backed with a slew of patents, to lock in its monopoly and secure profits. Lacking the creative power to overcome the iPhone’s strengths, such as interface and internet access, BlackBerry chose to attack the iPhone’s weaknesses, such as emailing and security (Ladurantaye, McNish, & Silcoff, 2013). With only a few people in the company innovating, and intellectual property laws forbidding copying, BlackBerry was doomed. Many argue that the patent system encourages innovation because when firms race to idea A, the winner gets all of the profits. This is true, but it is risky for the losers. It hurts competing firms, and it limits true, cooperative innovation. If idea A is fruitful, then two heads are better than one. When multiple firms with diverse problemsolving skills work on an idea, they can maximize the potential of the idea at a faster rate than when one firm works alone.
At the end of The Lego Movie (2014), Lord Business discovered that the true beauty of life was not found by following the instructions, but that it lay in the individual creativity of everyday people. When the people were encouraged to live life freely, happiness blossomed. Creative freedom must return to the people if innovation is to thrive and the economy is to prosper. The intellectual monopoly must dissolve into one of perfect competition, where no one can individually influence the market, but together, everyone can work at maximum efficiency. A uniquely human gift, creativity must be shared and supported. A more diligent study would examine a case of innovation lacking on a macroeconomic scale, and would include the consideration of sociological factors such as childhood education.
In: Economics
Estimating Share Value Using the ROPI Model
Assume the following are the income statement and balance sheet for
Intel Corporation.
| INTEL CORPORATION Consolidated Statements of Income |
|||
|---|---|---|---|
| Year Ended (In millions) | Dec. 25, 2010 | Dec. 26, 2009 | Dec. 27, 2008 |
| Net revenue | $ 44,223 | $ 35,127 | $ 37,586 |
| Cost of sales | 15,132 | 15,566 | 16,742 |
| Gross margin | 29,091 | 19,561 | 20,844 |
| Research and development | 6,576 | 5,653 | 5,722 |
| Marketing, general and adminstrative | 6,309 | 7,931 | 5,452 |
| Restructuring and asset impairment charges | -- | 231 | 710 |
| Amortization of acquisition-related intangibles | 18 | 35 | 6 |
| Operating expenses | 12,903 | 13,850 | 11,890 |
| Operating income | 16,188 | 5,711 | 8,954 |
| Gains (losses) on equity method investments, net* | 117 | (147) | (1,380) |
| Gains (losses) on other equity investments, net | 231 | (23) | (376) |
| Interest and other, net | 109 | 163 | 488 |
| Income before taxes | 16,645 | 5,704 | 7,686 |
| Provisions for taxes | 4,581 | 1,335 | 2,394 |
| Net income | $ 12,064 | $ 4,369 | $ 5,292 |
*This should be considered as part of operating income.
| INTEL CORPORATION Consolidated Balance Sheets |
||
|---|---|---|
| As of Year-Ended (In millions, except par value) | Dec. 25, 2010 | Dec. 26, 2009 |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $ 5,498 | $ 3,987 |
| Short-term investments | 11,294 | 5,285 |
| Trading assets | 5,093 | 4,648 |
| Accounts receivables, net | 2,667 | 2,273 |
| Inventories | 3,757 | 2,935 |
| Deferred tax assets | 1,888 | 1,216 |
| Other current assets | 1,614 | 813 |
| Total current assets | 31,811 | 21,157 |
| Property, plant and equipment, net | 17,899 | 17,225 |
| Marketable equity securities | 1,008 | 773 |
| Other long-term investments** | 3,026 | 4,179 |
| Goodwill | 4,531 | 4,421 |
| Other long-term assets | 5,111 | 5,340 |
| Total assets | $63,386 | $53,095 |
| Liabilities | ||
| Currnet liabilities | ||
| Short-term debt | $38 | $172 |
| Accounts payable | 2,190 | 1,883 |
| Accrued compensation and benefits | 2,888 | 2,448 |
| Accrued advertising | 1,007 | 773 |
| Deferred income on shipments to distributors | 622 | 593 |
| Other accrued liabilities | 2,482 | 1,722 |
| Total current liabilities | 9,227 | 7,591 |
| Long-term income taxes payable | 190 | 193 |
| Long-term debt | 1,677 | 2,049 |
| Long-term deferred tax liabilities | 926 | 555 |
| Other long-term liabilities | 1,236 | 1,003 |
| Total liabilities | 13,256 | 11,391 |
| Stockholders' equity: | ||
| Preferred stock, $0.001 par value | -- | -- |
| Common stock, $0.001 par value, 10,000 shares authorized; 5,581 issued and 5,511 outstanding and capital in excess of par value | 16,178 | 14,993 |
| Accumulated other comprehensive income (loss) | 333 | 393 |
| Retained earnings | 33,619 | 26,318 |
| Total stockholders' equity | 50,130 | 41,704 |
| Total liabilities and stockholders' equity | $ 63,386 | $ 53,095 |
** These investments are operating assets as they relate to
associated companies.
(a) Compute Intel's net operating assets (NOA) for year-end
2010.
HINT: Gains/losses on equity method investments are considered
operating income. Round your answer to the nearest whole
number.
2010 NOA = $Answer
(b) Compute net operating profit after tax (NOPAT) for 2010,
assuming a federal and state statutory tax rate of 37%.(Round your
answer to the nearest whole number.)
2010 NOPAT = $Answer
(c) Forecast Intel's sales, NOPAT, and NOA for years 2011 through
2014 using the following assumptions:
| Sales growth | 10% |
| Net operating profit margin (NOPM) | 26% |
| Net operating asset turnover (NOAT) at fiscal year-end | 1.50 |
Forecast the terminal period value using the assumptions above and assuming a terminal period growth of: 1%.
| INTC | Reported | Forecast Horizon | Terminal | |||
|---|---|---|---|---|---|---|
| ($ millions) | 2010 | 2011 Est. | 2012 Est. | 2013 Est. | 2014 Est. | Period |
| Sales (rounded two decimal places) | ||||||
| Sales (rounded nearest whole number) | ||||||
| NOPAT (rounded nearest whole number)* | ||||||
| NOA (rounded nearest whole number)* | ||||||
* Use sales rounded to nearest whole number for this calculation.
(d) Estimate the value of a share of Intel common stock using the residual operating income (ROPI) model as of December 25, 2010; assume a discount rate (WACC) of 11%, common shares outstanding of 5,511 million, and net nonoperating obligations (NNO) of $(21,178) million (NNO is negative which means that Intel has net nonoperating investments). Use your rounded answers for subsequent calculations.
| INTC | Reported | Forecast Horizon | Terminal | |||
|---|---|---|---|---|---|---|
| ($ millions) | 2010 | 2011 Est. | 2012 Est. | 2013 Est. | 2014 Est. | Period |
| ROPI Model | ||||||
| ROPI [NOPAT - (NOA beg x WACC)] (rounded to nearest whole number) | ||||||
| Discount factor (rounded to 5 decimal places) | ||||||
| Present value of horizon ROPI (rounded to nearest whole number) | ||||||
| present value of horizon ROPI | (rounded to nearest whole number) | |||||
| Present value of terminal ROPI | (rounded to nearest whole number) | |||||
| NOA | (rounded to nearest whole number) | |||||
| Total firm value | (rounded to nearest whole number) | |||||
| Plus negative NNO | (enter as a negative number) | |||||
| Firm equity value | (rounded to nearest whole number) | |||||
| Shares outstanding (millions) | (rounded to nearest whole number) | |||||
| Stock price per share | (rounded to two decimal places) | |||||
In: Accounting
You set up your own business in merchandising sector in Scranton, PA - opening a luxury watch shop on 1/1/2020.
The following is related information about the business:
- Specific sub-sector: Merchandising sector.
- Location: Scranton, PA
- Business model: merchandiser - buying and selling luxury watches.
- Investment by owner: $1,000,000
- You hired a shop manager. In order to handle different aspects of business, you had one employee responsible for the purchasing, receiving, and storing of watches purchased. A second employee is responsible for the maintenance of account receivable records and collection from customers. A third employee has responsibility for personal records, timekeeping, preparation of payrolls, and distribution of payroll checks. As a part of his job, the shop manager would do some internal control functions. In addition, you hired one security officer, and 4 full-time sales assistants.
Requirements:
1/1/2020: Opened the business, invested $1,000,000 cash in the business.
1/1/2020: bought a building for the business purpose for $100,000 cash. The building has a useful economic life of 10 years.
1/1/2020: purchased 100 luxury watches for $200,000 with $100,000 cash payment, the remaining amount payable on 2/1/2021. (each watch costs $2,000)
3/1/2020: purchased 50 luxury watches for $250,000 with cash. Each watch costs $5,000.
4/1/2020: purchased 40 luxury watches for $240,000 with cash. Each costs $6,000.
6/1/2020: Sold 130 watched for $1,300,000. Of which $300,000 cash was received at the time of sale. The remaining amount to be received on 5/2/2021.
7/1/2020: paid $1,200 in advance for 12 months’ property insurance (7/1/20 to 7/1/21).
8/1/2020: borrowed $500,000 from a local Chase bank. Interest rate is 12%/year. Interest is paid every 6 months- the first payment date is 2/1/2021. Principal would be paid on 8/1/2021.
9/1/2020: to expand business, you rent a showroom in the next building. Paid $24,000 cash in advance for 12 month’s rent.
12/31/2020: Paid 2020 utilities expense, advertising expense, and miscellaneous expense for $5000, $15,000, and $4,000, respectively.
Salary is paid on the last day of each month. Each month’s salary expense is $20,000.
Notes:
Requirement: Prepare an excel file that includes
In: Accounting
You set up your own business in merchandising sector in Scranton, PA - opening a luxury watch shop on 1/1/2020.
The following is related information about the business:
- Specific sub-sector: Merchandising sector.
- Location: Scranton, PA
- Business model: merchandiser - buying and selling luxury watches.
- Investment by owner: $1,000,000
- You hired a shop manager. In order to handle different aspects of business, you had one employee responsible for the purchasing, receiving, and storing of watches purchased. A second employee is responsible for the maintenance of account receivable records and collection from customers. A third employee has responsibility for personal records, timekeeping, preparation of payrolls, and distribution of payroll checks. As a part of his job, the shop manager would do some internal control functions. In addition, you hired one security officer, and 4 full-time sales assistants.
Requirements:
1/1/2020: Opened the business, invested $1,000,000 cash in the business.
1/1/2020: bought a building for the business purpose for $100,000 cash. The building has a useful economic life of 10 years.
1/1/2020: purchased 100 luxury watches for $200,000 with $100,000 cash payment, the remaining amount payable on 2/1/2021. (each watch costs $2,000)
3/1/2020: purchased 50 luxury watches for $250,000 with cash. Each watch costs $5,000.
4/1/2020: purchased 40 luxury watches for $240,000 with cash. Each costs $6,000.
6/1/2020: Sold 130 watched for $1,300,000. Of which $300,000 cash was received at the time of sale. The remaining amount to be received on 5/2/2021.
7/1/2020: paid $1,200 in advance for 12 months’ property insurance (7/1/20 to 7/1/21).
8/1/2020: borrowed $500,000 from a local Chase bank. Interest rate is 12%/year. Interest is paid every 6 months- the first payment date is 2/1/2021. Principal would be paid on 8/1/2021.
9/1/2020: to expand business, you rent a showroom in the next building. Paid $24,000 cash in advance for 12 month’s rent.
12/31/2020: Paid 2020 utilities expense, advertising expense, and miscellaneous expense for $5000, $15,000, and $4,000, respectively.
Salary is paid on the last day of each month. Each month’s salary expense is $20,000.
Notes:
Requirement: Prepare an excel file that includes
Tab 2 titled “income statement”: prepare a multiple-step income statement for year ended 12/31/2020.
In: Accounting
Project Monitoring and Control Process Plan:
You have a Project Budget for building a five-bedroom house in
Ashburn, VA. Assume that your building project is two months behind
and has a $100,000.00 cost overrun. This should not be a surprise
to you because of the monitoring processes. Identify and discuss
some of the monitoring processes that could have alerted you of the
schedule and cost problems. What are some of the controlling steps
you would take to bring both the schedule and the cost back on
track? Be sure to justify your answers. . Your Project Monitoring
and Control Process Plan should be at least two pages including a
summarization and conclusion page. If necessary, include data from
the Project Budget and Project Schedule in the table shown below to
support your schedule and cost problems.
| Unit 5 Project: | ||||
| Activity Description | Start Date | End Date | Days to complete | Est $ |
| Architectural Design | 5/1/2018 | 5/15/2018 | 14 | 50,000 |
| Procurement of machinery | 5/15/2018 | 5/30/2018 | 15 | 60,000 |
| Hiring Labor | 5/31/2018 | 6/10/2018 | 10 | 120,000 |
| Work and Environmental Permits | 7/27/2018 | 8/6/2018 | 10 | 25,000 |
| Site Security | 8/18/2018 | 4/30/2020 | 731 | 20,000 |
| Concrete | 8/18/2018 | 8/31/2018 | 15 | 80,000 |
| Lumber Procurement | 9/1/2018 | 9/11/2018 | 10 | 80,000 |
| Material Storage | 9/1/2018 | 4/30/2020 | 637 | 10,000 |
| Scaffolding Erection | 9/12/2018 | 9/17/2018 | 5 | 25,000 |
| Framing | 9/15/2018 | 1/13/2019 | 120 | 130,000 |
| Roofing | 1/14/2019 | 2/13/2019 | 30 | 40,000 |
| Plumbing | 2/14/2019 | 3/17/2019 | 30 | 30,000 |
| Electrical | 3/18/2019 | 4/17/2019 | 30 | 30,000 |
| HVAC | 4/18/2019 | 6/2/2019 | 45 | 40,000 |
| Windows and Doors | 6/3/2019 | 8/2/2019 | 60 | 20,000 |
| Drywall | 8/3/2019 | 9/12/2019 | 40 | 45,000 |
| Interior Design | 9/13/2019 | 10/23/2019 | 40 | 15,000 |
| Paint and Wood Finishing | 10/24/2019 | 12/23/2019 | 60 | 40,000 |
| Cabinetry | 12/24/2019 | 1/8/2020 | 15 | 40,000 |
| Plumbing Fixtures | 12/24/2019 | 1/8/2020 | 15 | 20,000 |
| Lighting Fixtures | 12/24/2019 | 1/8/2020 | 15 | 20,000 |
| Flooring | 1/9/2020 | 1/30/2020 | 21 | 30,000 |
| Interior Decorator and Decorations | 1/31/2020 | 2/20/2020 | 20 | 20,000 |
| Exterior Rock | 2/21/2020 | 3/22/2020 | 30 | 50,000 |
| Landscaping | 3/23/2020 | 4/15/2020 | 23 | 30,000 |
| Cost of Construction | 1,040,000 | |||
| Contingency (2%) | 4/16/2020 | 4/30/2020 | 14 | 19,800 |
| Total | 1,059,800 | |||
In: Operations Management
On August 1, 2020, Kazazis Company sold inventory to Magic Company and received Magic’s 9-month, noninterest-bearing $100,000 note due April 30, 2021. The cash selling price of the inventory was $94,000. The cost of the inventory was $60,000. Kazazis records adjusting entries annually at December 31.
a. Record the August 1, 2020, journal entries (including COGS) for Kazazis.
b. If Kazazis recorded the note as an interest-bearing note on August 1, 2020, (i.e., did not record a discount on the note), how would the financial statements be misstated (overstated/understated and $ amount)?. (Hint: Record the entry without the discount and compare to your answer in part a.)ASSETSLIABILITIESSE2020 NET INCOME$$$$OverstatedOverstatedOverstatedOverstatedUnderstatedUnderstatedUnderstatedUnderstated
c. Record the December 31, 2020, adjusting entry for Kazazis.
d. If Kazazis’ 2020 net income without including the Aug. 1 sale or December 31 adjusting entry was $200,000, what is the correct 2020 net income? Ignore taxes.
e. What amounts related to the note will Kazazis report on its 2020 balance sheet?
f. Record the April 30, 2021, journal entry/entries for Kazazis. (You may choose to record 1 entry as we did in the example in class or 2 entries as required by Connect.)
In: Accounting
Blanchard Inc. acquired a packaging machine from CCC Corporation. CCC Corporation completed construction of the machine on January 1, 2020. In payment for the $4 million machine, Blanchard Inc. issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 6%.
1. Prepare the journal entry for Blanchard’s purchase of the machine on January 1, 2020
January 1, 2020:
PVA(i=3%, n=3) = 2.82861, PVA(i=3%, n=6) = 5.41719, PVA(i=6%, n=3)
= 2.67301, PVA(i=6%, n=6) = 4.917322. Prepare the partial
amortization schedule for the first two years of the 3-year
installment note
| Amount of Loan | |
| / present value of an ordinary annuity (PVA) of $1 | |
| Installment payment (Rounded up to the nearest integer) |
| Date | Cash Payment | Effective Interest | Decrease in Balance | Outstanding Balance |
| 1/1/2020 | ||||
| 12/31/2020 | ||||
| 12/31/2021 | ||||
| 12/31/2022 | Not required | Not Required | Not Required | Not Required |
3. Prepare the journal entry for the installment payments on December 31, 2020 and December 31, 2021.
December 31, 2020:
December 31, 2021
In: Accounting
On January 1st 2000 Froto Company acquired 100% of the voting stock of Bilbo Company at book value.
Froto uses the initial value method (cost) and Bilbo doesn't pay any dividends.
On October 1st 2020 Froto sold some merchandise (inventory) to Bilbo company for $1,000,000 credit
the inventory had cost Bilbo $600,000. Both Bilbo and Froto use the perpetual inventory method.
During 2020 Bilbo had sold 70% of the merchandise acquired from Froto for $750,000 but had not paid off Froto
During 2021 Bilbo sold the remaining merchandise for $325,000 and paid off Froto
In 2020 Froto (unconsolidated) reported income of $1,000,000 and Bilbo reported income of $40,000
In 2021 Froto (unconsolidated) reported income of $1,200,000 and Bilbo reported income of $77,000.
| REQUIRED: | |||||
| A)Make Froto's journal entry when it sells the merchandise to Bilbo in 2020 | |||||
| B) make Bilbo's journal entry when it buys the merchandise from Froto in 2020 | |||||
| c) make any necessary worksheet entries in 2020 | |||||
| d) determine consolidated income for 2020 | |||||
| e) make any necessary worksheet entries in 2021 | |||||
| f) make any necessary worksheet entries in 2021 | |||||
| g) determine consolidated income for 2021 | |||||
In: Accounting
Major Communications Ltd., a publicly traded company that specializes in data capture, has been in operation for several years. On October 1, 2019, it had 10 million common shares authorized and 1.5
million shares issued at an average value of $30 per share. As well, there were 1 million preferred shares authorized, with 200,000 of them issued at $15 per share. On October 1, 2019, the balance in Retained Earnings was $20,375,000. During the fiscal year 2020, the following transactions affected shareholders' equity:
In: Accounting