2. A night-club owner has both the student (S) and non-student (NS) customers. The demand for drinks by a typical student is QS = 18 - 3P. The demand for drinks by a typical non-student customer is QNS = 10 – 2P. There are equal number of students and non-students. The marginal cost of each drink is $2. If the club owner could easily identify the groups and can serve each group by offering an entry-fee to the club and number of drink tokens

(a) What would be the entry-fee and the number of drink tokens for each student.

(b) What would be the entry-fee and the number of drink tokens for non-each student.

(c) If there were 100 students and 100 non-students, what would the club owner’s profit be under this pricing regime?

(d) What would you call this pricing regime?

1. FOR MCDONALDS CORP: WHAT IS THE 2018 AND 2017 TIMES INTEREST EARNED

2. FOR MCDONALDS CORP: WHAT IS THE 2018 AND 2017 WHAT IS THE TOTAL DEBT TO TOTAL ASSETS

3. FOR MCDONALDS CORP: WHAT IS THE 2018 AND 2017 AVERAGE COLLECTION PERIOD

1. FOR BURGER KING: WHAT IS THE 2018 AND 2017 TIMES INTEREST EARNED

2. FOR BURGER KING: WHAT IS THE 2018 AND 2017 WHAT IS THE TOTAL DEBT TO TOTAL ASSETS

3. FOR BURGER KING WHAT IS THE 2018 AND 2017 AVERAGE COLLECTION PERIOD

Light, Inc. Consolidated Statements of Cash Flows ($ thousands) For the year ended December 31, 2019 2018 2017 Cash flows from X activities Net income $ 1,629 2,813 4,240 Adjustments to reconcile net income to net cash from X activities: Depreciation 705 747 706 Amortization 15 27 10 Gain/Loss on disposal of property, plant and equipment 3 1 (5) Gain/Loss on sale of short-term securities 50 (70) (60) Changes in certain working capital components: Change in accounts receivable 270 187 426 Change in inventories (800) (1,255) 231 Change in prepaid expenses (203) 35 (120) Change in accounts payable and accrued liabilities (1,525) 1,515 (158) Net cash from X activities 144 4,000 5,270
Cash flows from Y activities Short-term securities (2,937) (1,783) (1,928) Short-term securities 2,072 2,950 2,423 Property, plant and equipment (2,419) (1,950) (1,105) Property, plant and equipment 5 3 13 Other Y activities (34) (25) (805) Net cash from Y activities (3,279) (631) Cash flows from Z activities Long-term debt - 1,482 Long-term debt (280) (300) (320) Notes payable 50 (70) (27) 60 (23) Capital lease (17) Treasury shares (2,286) (2,223) (1,000) (1,900) Dividends - common and preferred (1,133) (1,332) (3,995) Net cash from Z activities (3,163) (2,161) Change in cash and cash equivalents (7,130) 32 2,478 Cash and cash equivalents at the beginning of the year 8,648 8,616 6,138 Cash and cash equivalents at the end of the year 1,518 8,648 8,616
Kindly answer the following questions: 1- Analyze the operating cash flow trend over the three years (in amounts and percentages). How does it compare to net income in each year (include differences in amounts)? From where the difference (between operating cash flow and net income) comes in each year (use $100 thousand as a threshold for your analysis – include in your analysis whether the item has increased or decreased during the year)? 2- What are the main non-operating sources and uses of cash over the past three years? Specifically analyze where management has generated or used cash under non-operating activities in each year (use $100 thousand as a threshold for your analysis – include in your analysis of each year the amount of cash used or generated and identify the cause and the non-operating activity of each amount). 3- Analyze the changes in cash and cash equivalents over the three years (in amounts and percentages). What actions (at least two) would you suggest for management to take in 2020 to avoid a substantial decrease in cash and cash equivalents? 4- What are the free cash flows of years 2017, 2018 and 2019? Show all calculations. Analyze each and every year's free cash flows.

She Shed. Corp was organized in 2017. These business events occurred during the year, affecting intangible assets. 1. Purchased a license for $20,000 on July 1, 2017. The license gives She Shed exclusive rights to sell its sheds in the tri-state region and will expire on July 1, 2025. 2. Purchased a patent on January 2, 2018, for $40,000. It is estimated to have a 5-year life. 3. Costs incurred to develop an exclusive Internet connection process as of June 1, 2018, were $45,000. The process has an indefinite life. 4. On April 1, 2018, She Shed. purchased a small circuit board manufacturer for $350,000. Goodwill recorded in the transaction was $90,000. 5. On July 1, 2018, legal fees for successful defense of the patent purchased on January 2, 2018, were $11,400. 6. Research and development costs incurred as of September 1, 2018, were $75,000. (a) Prepare the journal entries to record all the entries related to the patent during 2018. (b) At December 31, 2018, an impairment test is performed on the license purchased in 2017. It is estimated that the net cash flows to be received from the license will be $13,000, and its fair value is $7,000. Compute the amount of impairment, if any, to be recorded on December 31, 2018. (c) What is the amount to be reported for intangible assets on the balance sheet at December 31, 2017?

On January 1, 2018, the Allegheny Corporation purchased machinery for $170,000. The estimated service life of the machinery is 10 years and the estimated residual value is $5,000. The machine is expected to produce 300,000 units during its life. Required: Calculate depreciation for 2018 and 2019 using each of the following methods.

1. Straight line.

2. Sum-of-the-years'-digits.

3. Double-declining balance.

4. One hundred fifty percent declining balance.

5. Units of production (units produced in 2018, 45,000; units produced in 2019, 40,000).

Required 1

Calculate depreciation for 2018 and 2019 using straight line method

Required 2

Calculate depreciation for 2018 and 2019 using sum-of-the-years' digits.

Required 3

Calculate depreciation for 2018 and 2019 using double-declining balance.

Company XYZ has appointed you as an Accountant and you are asked to review the following transactions as at 30 June 2018, which is the current year before any adjusting entries have been made.

1 (a) 08/09/2017 Purchase equipment for cash $5000

(b) 18/10/2017 Provide services to a client A for $500 on account

(c) 20/10/2018 pay the bank loan for $10000

(d) 11/12/2018 Invest additional $30000 cash into the business by the owner

(e) 01/18/2018 Collect an account receivable in cash from client A

(f) 31/01/2018 Pay wages to employees for $5000

(g) 04/02/2018 Paid the electricity bill for $100

(h) 06/04/2018 Sell a piece of equipment for $3000 in cash

(i) 05/05/2018 Withdraw cash by the owner for private usage for $500

(j) 06/06/2018 Borrow money on a long-term basis from a bank for $100000

Requirement:

1. List the effect of each of the following transactions upon any or all of the four financial statements of a business. Apart from indicating the financial statement(s) involved, use appropriate phrases such as ‘increase total assets’, ‘decrease equity’, ‘increase income’, ‘decrease cash flow’ to describe the transaction concerned.

2. Record all the necessary journals following the template below.

3. Options contracts for corn are listed below. A single option contract is for 5,000 bushels, but prices are quoted per bushel. For example, if someone wanted to purchase a December 2018 put option with a strike price of $3.60, then the premium would be $400 (= $0.08 x 5,000 bushels). The maturity dates are the same as the futures contracts.

Firm A needs to purchase 10,000 bushels of corn in December 14, 2018. The current price per bushel of corn is $3.60. Assume the firm cannot pass on any increased costs due to changes in price to their customers.

Suppose Firm A decides to purchase option contracts to protect itself from corn prices above $3.90 per bushel.

(a) What will be the total premium Firm A has to pay for these contract(s)?

(b) What would be the total payoff if the price of corn at maturity is $3.70?

(c) What would be the total payoff if the price of corn at maturity is $4.00?

(d) What would be the total payoff if the price of corn at maturity is $4.20?

You are in charge of the audit of “cash and bank” at Beachbreak (Pty) Ltd for the financial year – end February 2018. During the interim audit conducted during late December 2017, you had audited the bank reconciliation at 30 November and found it to be correct. During March, as part of your normal year – end procedures, you are preparing to audit the bank reconciliation prepared by Otis Redding and presented below.

Bank reconciliation at 29 February 2018 – Beachbreak (Pty) Ltd
Balance as per cashbook $127 261.30
Add: outstanding cheques
49378 3 October 2017 4 447.35
52133 10 December 2017 15 210.65
52876 18 February 2018 9 316.00
53192 22 February 2018 943.89
53193 22 February 2018 47 209.11 77 126.00
204 387.30
Add: direct deposit: Note 1 18 649.30
223 036 60
Less: bank charges and fees for February 2018 (163.00)
Balance as per Bank statement 28 February 2018 222 873.60
Note 1: This represents a deposit credited in error by the bank, to Beachbreak (Pty ) Ltd’s account on the 17 February 2018.
YOU ARE REQUIRED TO describe the audit procedures you would conduct on the bank reconciliation of Beachbreak (Pty) Ltd at 28 February 2018. (25)

A major overhaul of the Federal Tax structure was enacted at the end of 2017, effective beginning with the 2018 tax year. This assignment consists of calculations to gauge effects on situations as described.

In all cases, for this assignment, assume that the tax being calculated is for a “Married couple filing jointly” who do not itemize deductions, and have no other additions, subtractions, or any tax situations not specifically stated. Complete the table below, finding the difference between the tax due in 2016 and 2018 (all numbers should be rounded to whole dollars). When your table is complete, save this document and either submit it as an attachment via email or turn in a hard copy in class – this assignment is due no later than Monday, April 23^rd.

Up to (8) “extra credit” points will be added to your score for Current Event Assignment #2.