Question #4: Crystal Lake Memory Care in Winona, Texas has 250 residents. The administrator, Ken Stone, is concerned about balancing the ratio of its private pay to non-private pay patients. Non-private pay sources reimburse an average of $155 per day versus private pay residents who pay 90% of full daily charges. Stone estimates that the variable cost per resident per day is $80 for supplies, food, and contracted services, and annual fixed costs total $10 million.

What is the daily contribution margin of each non-private pay resident?

If 25% of the residents are non-private pay, what will Crystal Lake charge the private-pay patients to break even?

What if non-private pay payors cover 50% of the residents? What will Crystal Lake need to charge the private-pay patients to break even?

The investors insist that the facility earn $1 million in annual profits. How much must Stone raise the per day charge for the private pay residents in 25% of the residents are non-private pay?

Many companies incurred costs related to Covid-19 in the second quarter of 2020. In their 2nd quarter earnings announcements, many of them reported non-GAAP earnings that exclude costs related to Covid-19. Which of the following is more likely to be true?

a). Firms can disclose non-GAAP earnings that exclude costs related to Covid-19 from GAAP-based earnings as long as they provide reconciliation between non-GAAP earnings and GAAP earnings

b). The SEC does not allow firms to disclose non-GAAP earnings that exclude costs related to Covid-19 from GAAP-based earnings

c). Non-GAAP earnings that excludes costs related to Covid-19 from GAAP-based earnings always unfaithfully represent the true economic performance of a firm because costs related to Covid-19 are most likely recurring

d). Non-GAAP earnings that excludes costs related to Covid-19 from GAAP-based earnings always provide relevant information to financial statement users because costs related to Covid-19 are most likely one-time

Njenge is a special purpose vehicle set up by the Football Association of Zambia (FAZ) and the National Sports Council of Zambia (NSCZ) to undertake a project to manufacture an innovative muscle toning device (Muleza) that will be used in the treatment of sporting injuries. It is expected that the commercial life of the Muleza will be four years after which technological advances will bring more sophisticated devices to the market and the sales will fall to virtually zero. K8, 000,000 has been spent in developing and testing the device over the past year. Initial market research has been conducted at a cost of K2, 500,000 and is due to be paid shortly. The market research indicates the following demand and selling price per unit: Year (from now) 2 3 4 5 Units demand 2,000 70,000 125,000 20,000 Selling Price K2, 000 K2,200 K1,600 K1,400 A factory will be built for the production of the Muleza for K30, 000,000 and will take a year to complete. Payment will be made in two instalments; the first instalment of K18, 000,000 is payable immediately and the remainder in a year’s time. The factory building is expected to be sold for K25, 000,000 when the production and sales cease. Machinery costing K16, 000,000 will be installed at the end of the first year. The machinery will be depreciated on a straight-line basis over the next four years and is expected to have a nil value at the end of the four years. At present the materials cost of making one Muleza unit is K700. Njenge has enough materials in stock to make 1,500 units, which it had purchased a year ago for K450 per Muleza unit. If the project does not go ahead then these materials will be sold for an equivalent of K120 per Muleza unit. Labour that will be used to make the Muleza is to be made redundant immediately at a cost of K2,000,000 if the project does not go ahead. Labour costs per unit are K250. It is expected that once the project is completed, the labour will be made redundant at a cost of K3, 500,000. Fixed production overheads relating specifically to the production of the Muleza are expected to be K13,000,000 per annum and variable production overheads are expected to be K150 per Muleza unit produced and sold. Administrative costs are expected to be K17, 000,000 per annum of which K5,500,000 is allocated from the head office and the remainder relates directly to the production of the Muleza. Working capital of K10,000,000 will be required at the beginning of the second year once the production and sales have commenced. This will be released when the production and sales cease. The relevant cost of capital for the project is 9%. Assume that all cash flows occur at the year- end unless stated otherwise. All workings should be in K’000s to the nearest K’000. Ignore tax and inflation. Required: (a) Calculate the net present value and internal rate of return of the project and recommend whether the Muleza should be produced. Provide a brief justification of the cash flows included and excluded in the calculations.

Njenge is a special purpose vehicle set up by the Football Association of Zambia (FAZ) and the National Sports Council of Zambia (NSCZ) to undertake a project to manufacture an innovative muscle toning

device (Muleza) that will be used in the treatment of sporting injuries. It is expected that the commercial life of the Muleza will be four years after which technological advances will bring more sophisticated devices to the market and the sales will fall to virtually zero. K8, 000,000 has been spent in developing and testing the device over the past year. Initial market research has been conducted at a cost of K2, 500,000 and is due to be paid shortly. The market research indicates the following demand and selling price per unit:

Year (from now)                        2                     3                      4                      5

Units demand                            2,000                70,000              125,000             20,000

Selling Price                              K2, 000             K2,200              K1,600              K1,400

A factory will be built for the production of the Muleza for K30, 000,000 and will take a year to complete. Payment will be made in two installments; the first installment of K18, 000,000 is payable immediately and the remainder in a year’s time. The factory building is expected to be sold for K25, 000,000 when the production and sales cease.

Machinery costing K16, 000,000 will be installed at the end of the first year. The machinery will be depreciated on a straight-line basis over the next four years and is expected to have a nil value at the end of the four years.

At present the materials cost of making one Muleza unit is K700. Njenge has enough materials in stock to make 1,500 units, which it had purchased a year ago for K450 per Muleza unit. If the project does not go ahead then these materials will be sold for an equivalent of K120 per Muleza unit.

Labour that will be used to make the Muleza is to be made redundant immediately at a cost of K2,000,000 if the project does not go ahead. Labour costs per unit are K250. It is expected that once the project is completed, the labour will be made redundant at a cost of K3, 500,000.

Fixed production overheads relating specifically to the production of the Muleza are expected to be K13,000,000 per annum and variable production overheads are expected to be K150 per Muleza unit produced and sold. Administrative costs are expected to be K17, 000,000 per annum of which K5,500,000 is allocated from the head office and the remainder relates directly to the production of the Muleza.

Working capital of K10,000,000 will be required at the beginning of the second year once the production and sales have commenced. This will be released when the production and sales cease.

The relevant cost of capital for the project is 9%.

Assume that all cash flows occur at the year- end unless stated otherwise. All workings should be in K’000s to the nearest K’000. Ignore tax and inflation.

Required:

(a) Calculate the net present value and internal rate of return of the project and recommend whether the Muleza should be produced. Provide a brief justification of the cash flows included and excluded in the calculations.                                                                   

The following information is given for Aphria Farming Services Inc. for the year ended December 31, 2018. The account balances (all of which had their normal balance of debit or credit) at the beginning of 2018 (January 1, 2018) were as follows:

Cash $ 2,200

Accounts Payable $ 23,700

Accounts Receivable $ 4,400

Income Tax Payable $ 15,100

Prepaid Supplies (Feed and Straw) $ 27,800

Interest Payable $ 2,700

Land (cost) $ 167,000

Wages Payable $ 14,200

Buildings (cost) $ 115,000

Notes Payable (due in 2022) $ 60,000

Accumulated Depreciation (Buildings ) $ 36,000

Common Shares $ 150,000

Equipment $ 57,000

Retained Earnings, 12/31/2017 $ 55,200

Accumulated Depreciation (Equipment) $ 16,500

During the year ended December 31, 2018, the following transactions occurred:

a. Aphria provided farming services to customers, all on credit, for $210,300. Aphria rented stables to customers for $20,500 paid in cash. Aphria rented its grounds to individual riders, groups, and show organizations for $41,800 paid in cash.

b. There remains $15,600 of accounts receivable to be collected at December 31, 2018.

c. Feed in the amount of $62,900 was purchased from suppliers on credit and debited to the prepaid supplies account.

d. Straw was purchased for $7,400 cash and debited to the prepaid supplies account.

e. Wages payable at the beginning of 2018 were paid early in 2018. Wages were earned by employees and paid during 2018 in the amount of $112,000.

f. The income tax payable at the beginning of 2018 was paid early in 2018.

g. Payments of $73,000 were made to creditors for supplies previously purchased on credit.

h. One year’s interest at 9% was paid on the notes payable on July 1, 2018.

i. During 2018, Jon Aphria, a principal shareholder, purchased a used car for his wife, Jennifer. The car cost $7,000, and Jon used his personal credit to purchase it.

j. Property taxes were paid by cheque on the land and buildings in the amount of $17,000.

k. Dividends were declared and paid by cheque in the amount of $7,200.

Year End (December 31, 2018) Data

The following data is available for preparation of adjusting journal entries at December 31, 2018:

. Supplies (feed and straw) in the amount of $30,400 remained unused at year-end.

. Annual depreciation on the buildings is $6,000.

. Annual depreciation on the equipment is $5,500.

. Wages of $4,000 were unrecorded and unpaid at year-end.

. Interest for six months at 9% per year on the note is unpaid and unrecorded at year-end.

. Income taxes of $16,500 were unpaid and unrecorded at year-end.

Required:

1.Post the beginning balances at January 1, 2018 to T accounts. Prepare required journal entries for all transactions a to k and post the journal entries to the relevant T accounts. Add any new T accounts you need.

2.Prepare all required adjusting journal entries at December 31, 2018 and post the adjusting journal entries to the T accounts. Add any new T accounts you need..
3. Prepare, in proper financial statement format, a single step statement of earnings for the year ended December 31, 2018..

4. Prepare, in proper financial statement format, a statement of retained earnings for the year ended December 31, 2018.

5. Prepare, in proper financial statement format, a classified statement of financial position as at December 31, 2018.

Answer my this problem correctly.Balance sheet should be equal and all parts should be completed.

The following information is given for Aphria Farming Services Inc. for the year ended December 31, 2018. The account balances (all of which had their normal balance of debit or credit) at the beginning of 2018 (January 1, 2018) were as follows:

Cash                                                             $      2,200

Accounts Payable                                        $     23,700

Accounts Receivable                                   $       4,400

Income Tax Payable                                    $    15,100

Prepaid Supplies (Feed and Straw)            $     27,800

Interest Payable                                           $       2,700

Land (cost)                                                  $   167,000

Wages Payable                                            $    14,200

Buildings (cost)                                           $   115,000

Notes Payable (due in 2022)                       $    60,000

Accumulated Depreciation (Buildings )     $    36,000

Common Shares                                          $   150,000

Equipment                                                   $    57,000

Retained Earnings, 12/31/2017                   $     55,200

Accumulated Depreciation (Equipment)    $     16,500

During the year ended December 31, 2018, the following transactions occurred:

a. Aphria provided farming services to customers, all on credit, for $210,300. Aphria rented stables to

customers for $20,500 paid in cash. Aphria rented its grounds to individual riders, groups, and show

organizations for $41,800 paid in cash.

b. There remains $15,600 of accounts receivable to be collected at December 31, 2018.

c. Feed in the amount of $62,900 was purchased from suppliers on credit and debited to the prepaid supplies account.

d. Straw was purchased for $7,400 cash and debited to the prepaid supplies account.

e. Wages payable at the beginning of 2018 were paid early in 2018. Wages were earned by employees and

paid during 2018 in the amount of $112,000.

f. The income tax payable at the beginning of 2018 was paid early in 2018.

g. Payments of $73,000 were made to creditors for supplies previously purchased on credit.

h. One year’s interest at 9% was paid on the notes payable on July 1, 2018.

i. During 2018, Jon Aphria, a principal shareholder, purchased a used car for his wife, Jennifer. The car cost $7,000, and Jon used his personal credit to purchase it.

j. Property taxes were paid by cheque on the land and buildings in the amount of $17,000.

k. Dividends were declared and paid by cheque in the amount of $7,200.

Year End (December 31, 2018) Data

The following data is available for preparation of adjusting journal entries at December 31, 2018:

. Supplies (feed and straw) in the amount of $30,400 remained unused at year-end.

. Annual depreciation on the buildings is $6,000.

. Annual depreciation on the equipment is $5,500.

. Wages of $4,000 were unrecorded and unpaid at year-end.

. Interest for six months at 9% per year on the note is unpaid and unrecorded at year-end.

. Income taxes of $16,500 were unpaid and unrecorded at year-end.   

Required:

1.Post the beginning balances at January 1, 2018 to T accounts. Prepare required journal entries for all transactions a to k and post the journal entries to the relevant T accounts. Add any new T accounts you need.

2.Prepare all required adjusting journal entries at December 31, 2018 and post the adjusting journal entries to the T accounts. Add any new T accounts you need..

3. Prepare, in proper financial statement format, a single step statement of earnings for the year ended December 31, 2018..

4. Prepare, in proper financial statement format, a statement of retained earnings for the year ended December 31, 2018.

5. Prepare, in proper financial statement format, a classified statement of financial position as at December 31, 2018.

  At the beginning of 2018, Subway purchased an investment in a bond for $100,000. The fair value of the bond at the end of 2018 was $105,000. The bond was sold in 2019 for $120,000.

If the bond investment was classified as a trading security, how much of the $20,000 gain on the investment would be included in:

                                    2018 net income?                                           2019 net income?

If the bond investment was classified as an available-for-sale security, how much of the $20,000 gain on the investment would be included in:

                                    2018 net income?                                           2019 net income?

On January 1, 2018, Dreamworld Co. began construction of a new warehouse. The building was finished and ready for use on September 30, 2019. Expenditures on the project were as follows:

Dreamworld had $6,800,000 in 10% bonds outstanding through both years.

What was the final cost of Dreamworld's warehouse?

In an imaginary economy, consumers buy only shirts and pants. The fixed basket consists of 6 shirts and 4 pairs of pants.

Use 2018 as the base year.

1. Determine the cost of the basket for 2018 and 2019.
2. Calculate the consumer price index for 2018 and 2019.
3. Determine the inflation rate and interpret the result.
4. Explain two other use of the consumer price index.

On January 1, 2018, Vandenplas issues $800,000 of 8% bonds, due in ten years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 9%, the bonds will issue at $747,968.

Record the bond issue on January 1, 2018, and the first four semi-annual interest payments on June 30, 2018, December 31, 2018, June 30, 2019, and December 31, 2019.