On December 31, 2018, Marsh Company held Xenon Company bonds in its portfolio of available-for-sale securities. The bonds have a par value of $15,000, carry a 10% annual interest rate, mature in 2025, and had originally been purchased at par. The market value of the bonds at December 31, 2018 was $13,000. The December 31, 2018, balance sheet showed the following:

On January 1, 2019, Marsh acquired bonds of Yellow Company with a par value of $16,000 for $16,200. The Yellow Company bonds carry an annual interest rate of 12% and mature on December 31, 2023. Additionally, Marsh acquired Zebra Company bonds with a face value of 18,000 for $17,600. The Zebra Company bonds carry an 8% annual interest rate and mature on December 31, 2028. At the end of 2019, the respective market values of the bonds were: Xenon, $14,000; Yellow, $17,000; and Zebra, $20,000. Marsh classifies all of the debt securities as available-for-sale as it does not intend to hold them to maturity nor does it intend to actively buy and sell them. Assume that Marsh uses the straight-line method to amortize any discounts or premiums.

Required:

Using fully labeled graphs and words that clearly and fully explain these graphs show the impact

a tariff will have on U.S. consumers, U.S. producers, and the U.S. Treasury. Assume that before

the tariff is imposed that U.S. consumers can buy goods at world prices (i.e. there are no restrictions

on imports into the U.S.)

Strategy Memo In this simulation, you are assigned the role of Senior Vice President for Marketing at Enhanced Analytics, Inc., a provider of marketing and consulting services, with headquarters in Austin, Texas. In this role, you report directly to the CEO of the company and are responsible for decision-making and marketing strategy. You oversee a department with 25 employees at the company. The CEO of the company has informed you at the weekly executive meeting that Premier Drinks of Sofia, Bulgaria - a key client of Enhanced Analytics, Inc. - has reported a drop-in sales, despite an expensive and carefully managed marketing campaign produced by your department. The management of Premier Drinks reports increased competition in the soft drink market in Bulgaria. Two companies - one from Poland and one from Germany - have recently established operations in the country. You were already aware of the trends in the local competitive environment from the periodic reports received from your campaign manager in Bulgaria. You have also studied the marketing efforts of some of your client's competitors and continue to believe that your campaign, particularly the promotional and pricing strategy adopted, is superior. The managers of Premier Drinks suspect that their local competitors have made payments to some of the local officials in exchange for an opportunity to sell their products in local government buildings and at sporting events, many of which have been off-limits to Premier Drinks. This lack of access has put a dent in the sales figures of Premier Drinks, and the company is now seeking guidance from Enhanced Analytics as to how to proceed. The executive team of Enhanced Analytics, led by the CEO, will be meeting to review options, next week. In your own words, prepare a report for the company's executives, containing the following sections (do not worry about being right or wrong; simply offer your perspective on the company’s situation and your recommendation):

1. Situation analysis - an overview of the client's business and the competitive landscape in the soft drink industry in Bulgaria (if you are unable to locate country-specific data, you may research the Eastern European market or the European Union, as a whole)

2. Problem Identification - in one or two paragraphs, clearly identify the problem faced by your client

3. Decision Options - an outline of 4 specific courses of action / decisions that your client can make to solve the problem. The purpose of this section is to get a clear overview of the options available to management. Because the company has limited resources, management will have to pick the best option

4. Decision - a clear recommendation, outlining which one of the 4 options is the best

5. Justification - a clear, concise justification of your decision from #4 Include outside research to support your ideas and recommendation. There is no page limit to this assignment. The assignment will be considered well-done if it contains all the required sections, if it is clearly written and your thoughts and ideas are supported by specific data and research.

Williams-Santana, Inc., is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2021, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries were prepared. The income tax rate is 25% for all years.

1. A five-year casualty insurance policy was purchased at the beginning of 2019 for $35,000. The full amount was debited to insurance expense at the time.
2. Effective January 1, 2021, the company changed the salvage value used in calculating depreciation for its office building. The building cost $600,000 on December 29, 2010, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $100,000. Declining real estate values in the area indicate that the salvage value will be no more than $25,000.
3. On December 31, 2020, merchandise inventory was overstated by $25,000 due to a mistake in the physical inventory count using the periodic inventory system.
4. The company changed inventory cost methods to FIFO from LIFO at the end of 2021 for both financial statement and income tax purposes. The change will cause a $960,000 increase in the beginning inventory at January 1, 2022.
5. At the end of 2020, the company failed to accrue $16,400 of sales commissions earned by employees during 2020. The expense was recorded when the commissions were paid in early 2021.
6. At the beginning of 2019, the company purchased a machine at a cost of $720,000. Its useful life was estimated to be ten years with no salvage value. The machine has been depreciated by the double-declining balance method. Its book value on December 31, 2020, was $460,800. On January 1, 2021, the company changed to the straight-line method.
7. Warranty expense is determined each year as 1% of sales. Actual payment experience of recent years indicates that 0.75% is a better indication of the actual cost. Management effects the change in 2021. Credit sales for 2021 are $4,000,000; in 2020 they were $3,700,000.

Required:
For each situation:
1. Identify whether it represents an accounting change or an error. If an accounting change, identify the type of change. For accounting errors, choose "Not applicable".
2. Prepare any journal entry necessary as a direct result of the change or error correction, as well as any adjusting entry for 2021 related to the situation described. Any tax effects should be adjusted for through Income tax payable or Refund—income tax.

Prepare any journal entry necessary as a direct result of the change or error correction, as well as any adjusting entry for 2021 related to the situation described. Any tax effects should be adjusted for through Income tax payable or Refund—income tax. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Koh Brothers Limited acquired a factory for $54 million on June 30, 2013, to produce hospital machines and equipment. The company estimated the factory has a useful life of 25 years with $2 million in residual value at the end of its useful life. The company adopted a straight-line depreciation method for all its property, plant, and equipment. The factory’s market value appreciated steadily to $60 million at the end of the company’s financial year, December 31, 2013. On June 30, 2014, the factory was sold for cash at $59 million. Assume that Koh Brothers Limited rented out the factory to another unrelated party. Show the journal entries if the company account for the factory using the fair value method.

1.

Which statement concerning lower-of-cost-or-net-realizable-value (LCNRV) is incorrect?

LCNRV is an example of a company choosing the accounting method that will be least likely to overstate assets and income.

The LCNRV basis is justified because of a decline in the selling price of the inventory item.

LCNRV is applied after one of the cost flow assumptions has been applied.

Under the LCNRV basis, market does not apply because assets are always recorded and maintained at cost.

2.

Ayayai Corp. sells six different products. The following information is available on December 31:

When applying the lower-of-cost-or-net-realizable-value rule to each item, what will Ayayai total ending inventory balance be?

$312000

$300975

$300700

$300300

3. Use the following information regarding Skysong, Inc. and Kingbird, Inc. to answer the question “Which amount is equal to Skysong, Inc.'s "days in inventory" for 2022 (to the closest decimal place)?” (Use 365 days for calculation.)

35.8 days

34.4 days

39.7 days

42.9 days

4.

Use the following information regarding Cullumber Company and Oriole Company to answer the question “Which of the following is Cullumber Company's "cost of goods sold" for 2021 (to the closest dollar)?”

$264034

$263120

$248132

$247940

5.

Use the following information regarding Crane Company and Cullumber to answer the question “Which of the following is Cullumber's "cost of goods sold" for 2022 (to the closest dollar)?”

$260913

$240100

$172620

$240100

6.

The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as the

inventory reserve.

LIFO reserve.

FIFO reserve.

periodic reserve.

7.

The LIFO reserve is

the amount used to adjust inventory to historical cost.

the difference between the value of the inventory under LIFO and the value under average cost.

the difference between the value of the inventory under LIFO and the value under FIFO.

an amount used to adjust inventory to the lower of cost or market.

8.

Ayayai Corp. reported ending inventory at December 31, 2022 of $984000 under LIFO. It also reported a LIFO reserve of $172000 at January 1, 2022, and $246000 at December 31, 2022. Cost of goods sold for 2022 was $4018000. If Ayayai Corp. had used FIFO during 2022, its cost of goods sold for 2022 would have been

$4092000.

$4264000.

$3772000.

$3944000.

Consider the new product offerings, brand identity, financial health, and global economy. Do you think will Apple or Samsung will enjoy the largest per cent revenue increase (not dollars) in total sales in 2020? What about 2021? Which company will have the lowest per cent revenue increase? What are the company and product strengths of Apple and Samsung? Please explain your reasons why for both opinions.

Lucky Corp. purchased the net assets of Cranky Company on 31 December 2020 for $920,000. Lucky Corp. reports under IFRS and considers Cranky Company to be a cash-generating unit. The following is the balance sheet for Cranky Company on that date:

Additional data:

a.     The inventory has a fair market value of $89,000.

b.     The plant & equipment have a fair market value of $380,000.

c.     Not included in the balance sheet is an internally developed patent with an estimated fair value of $60,000.

d.     All other assets and liabilities have fair values that are equal to their carrying amounts.

Required:

a)     Calculate the amount of goodwill that Lucky Corp. will record upon the purchase of the net assets of Cranky Company.

b)    Prepare the journal entry at 31 December 2020 to record the purchase of the net assets by Lucky Corp.

c)     Explain how goodwill differs from other intangible assets. (2 marks)

. Alpha Ltd has appointed you as a manager in the budgeting department. The company has provided the following information to prepare a cash flow budget for the six months from the 1 January 2021 to 30 June 2021.

1. Alpha Ltd produces only one type of product and the projected selling price of the product is £2 for January and February and after that will be fixed at £3 for the foreseeable future.      
2. For the first three months of the year, 2,000 units will be sold per month. For the following three months, 2,500 units will be sold per month. Sales income is to be received in the month of sale.
3. Insurance costs are £200 every two months. The company will pay for insurance on 1 December 2020.
4. The company is paying 20% of sales of each month as bonus to the employees in the following month. The total sales during December 2020 will be £5,000.
5. Alpha Ltd will pay overhead costs of £2,000 each month.
6. The opening cash balance at 1 January 2021 will be £1,000.
7. The monthly cost of direct material and direct labour is estimated to be £500 and the company will pay them during each month.

viii Fixed costs of production are £100 per month, payable in the month

Frito-Lay's Quality-Controlled Potato Chips

Video Case

Frito-Lay, the multi-billion-dollar snack food giant, produces billions of pounds of product every year at its dozens of U.S. and Canadian plants. From the farming of potatoes—in Florida, North Carolina, and Michigan—to factory and to retail stores, the ingredients and final product of Lay’s chips, for example, are inspected at least 11 times: in the field, before unloading at the plant, after washing and peeling, at the sizing station, at the fryer, after seasoning, when bagged (for weight), at carton filling, in the warehouse, and as they are placed on the store shelf by Frito-Lay personnel. Similar inspections take place for its other famous products, including Cheetos, Fritos, Ruffles, and Tostitos.

In addition to these employee inspections, the firm uses proprietary vision systems to look for defective potato chips. Chips are pulled off the high-speed line and checked twice if the vision system senses them to be too brown.

The company follows the very strict standards of the American Institute of Baking (AIB), standards that are much tougher than those of the U.S. Food and Drug Administration. Two unannounced AIB site visits per year keep Frito-Lay’s plants on their toes. Scores, consistently in the “excellent” range, are posted, and every employee knows exactly how the plant is doing.

There are two key metrics in Frito-Lay’s continuous improvement quality program: (1) total customer complaints (measured on a complaints per million bag basis) and (2) hourly or daily statistical process control scores (for oil, moisture, seasoning, and salt content, for chip thickness, for fryer temperature, and for weight).

In the Florida plant, Angela McCormack, who holds engineering and MBA degrees, oversees a 15-member quality assurance staff. They watch all aspects of quality, including training employees on the factory floor, monitoring automated processing equipment, and developing and updating statistical process control (SPC) charts. The upper and lower control limits for one checkpoint, salt content in Lay’s chips, are 2.22% and 1.98%, respectively. To see exactly how these limits are created using SPC, watch the video that accompanies this case.

Discussion Questions

1. Angela is now going to evaluate a new salt process delivery system and wants to know if the upper and lower control limits at 3 standard deviations for the new system will meet the upper and lower control specifications noted earlier.

The data (in percents) from the initial trial samples are:

• Sample 1: 1.98, 2.11, 2.15, 2.06
• Sample 2: 1.99, 2.0, 2.08, 1.99
• Sample 3: 2.20, 2.10. 2.20, 2.05
• Sample 4: 2.18, 2.01, 2.23, 1.98
• Sample 5: 2.01, 2.08, 2.14, 2.16

Provide the report to Angela.

2. What are the advantages and disadvantages of Frito-Lay drivers stocking their customers’ shelves?

3.Why is quality a critical function at Frito-Lay?