Compute and Interpret Altman's Z-scores Following is selected financial information for Netflix, for 2018 and 2017. $ thousands, except per share data 2018 2017 Current assets $9,694,135 $7,669,974 Current liabilities 6,487,320 5,466,312 Total assets 25,974,400 19,012,742 Total liabilities 20,735,635 15,430,786 Shares outstanding 436,598,597 433,392,686 Retained earnings 2,942,359 1,731,117 Stock price per share 267.66 191.96 Sales 15,794,341 11,692,713 Earnings before interest and taxes 1,605,226 838,679 Compute and interpret Altman Z-scores for the company for both years. (Do not round until your final answer; then round your answers to two decimal places.) 2018 z-score = Answer 2017 z-score = Answer Which of the following best describes the company's likelihood to go bankrupt given the z-score in 2017 compared to 2018. The z-score in 2018 increased. Z-scores for both years are in the gray area indicating some risk of bankruptcy. The z-score in 2018 increased, which suggests the company's risk of bankruptcy has increased. The z-score in 2018 increased. Z-scores for both years indicate low bankruptcy potential in the short term. The z-score in 2018 decreased, which suggests the company's risk of bankruptcy has decreased.

On January 4, 2018, Runyan Bakery paid $324 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2.00 per share on December 15, 2018, and Lavery reported net income of $160 million for the year ended December 31, 2018. The market value of Lavery's common stock at December 31, 2018, was $31 per share. On the purchase date, the book value of Lavery's net assets was $800 million and: The fair value of Lavery's depreciable assets, with an average remaining useful life of six years, exceeded their book value by $80 million. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: 1-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, and accounts for the Lavery investment in a manner similar to what it would use for securities for which there is not significant influence. 1-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet. 2-a. Prepare all appropriate journal entries related to the investment during 2018, assuming Runyan accounts for this investment under the fair value option, but uses equity method accounting to account for Lavery’s income and dividends, and then records a fair value adjustment at the end of the year that allows it to comply with GAAP. 2-b. Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet.

Calculate the effect of these journal entries on 2018 net income, and the amount at which the investment is carried in the December 31, 2018, balance sheet. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

• Net income    million Investment million

[The following information applies to the questions displayed below.]

Arndt, Inc., reported the following for 2018 and 2019 ($ in millions):

Expenses each year include $40 million from a two-year casualty insurance policy purchased in 2018 for $80 million. The cost is tax deductible in 2018.

Expenses include $3 million insurance premiums each year for life insurance on key executives.

Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $45 million and $36 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $22 million ($11 million collected in 2017 but not recognized as revenue until 2018) and $30 million, respectively. Hint: View this as two temporary differences—one reversing in 2018; one originating in 2018.

2018 expenses included a $11 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019.

During 2017, accounting income included an estimated loss of $4 million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible.

At January 1, 2018, Arndt had a deferred tax asset of $4 million and no deferred tax liability.

A. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2019.

B. Compute the deferred tax amounts that should be reported on the 2019 balance sheet.

C. Suppose that during 2019, tax legislation was passed that will lower Arndt’s effective tax rate to 30% beginning in 2020. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2019.

When Patey Pontoons issued 10% bonds on January 1, 2018, with a face amount of $880,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2021 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record their issuance by Patey on January 1, 2018.
3. Prepare an amortization schedule that determines interest at the effective rate each period.
4. Prepare the journal entry to record interest on June 30, 2018.
5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2018?
6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2018? (Ignore income taxes.)
7. Prepare the appropriate journal entries at maturity on December 31, 2021.

Req 1

Req 2

Req 3

Req 4

Req 5 and 6

Req 7

Determine the price of the bonds at January 1, 2018. (Round final answers to the nearest whole dollar.)

Prepare the journal entry to record their issuance by Patey on January 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round final answers to the nearest whole dollar.)

Journal entry worksheet

Record the issuance of the bonds on January 1, 2018.

Note: Enter debits before credits.

Prepare an amortization schedule that determines interest at the effective rate each period. (Round final answers to the nearest whole dollar.)

Prepare the journal entry to record interest on June 30, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round final answers to the nearest whole dollar.)

Journal entry worksheet

Record the interest expense on June 30, 2018.

Note: Enter debits before credits.

What is the amount(s) related to the bonds that Patey will report in its balance sheet at December 31, 2018 and income statement for the year ended December 31, 2018? (Ignore income taxes.) (Round your intermediate calculation to nearest whole dollar.)

Prepare the appropriate journal entries at maturity on December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round final answers to the nearest whole dollar.)

Journal entry worksheet

Record the interest expense on December 31, 2021.

Note: Enter debits before credits.

Record the retirement of the bond at maturity on December 31, 2021.

Note: Enter debits before credits.

Is it possible for a seasonally adjusted series to increase if the non-seasonally adjusted series is decreasing? Explain.

b. Is it possible for a seasonally adjusted series to decrease if the non-seasonally adjusted series is increasing? Explain

Payroll. Canada. Payroll practitioners should be familiar with the different types of non-statutory deductions. List the four types of non-statutory deductions discussed in the material and give two examples for each.

Provide two examples of regular payments and two examples of non-regular payments. In your own words, explain the differences in the statutory withholding requirements between regular and non-regular payments..

Explain the difference between a parallel and non-parallel shift in interest rates. Then explain whether the duration matching hedging approach works for both a non-parallel and parallel shift interest rates.

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.

1/ Arizona Desert Homes (ADH) constructed a new subdivision during 2017 and 2018 under contract with Cactus Development Co. Relevant data are summarized below:

ADH recognizes revenue upon completion of the contract.

What is the journal entry in 2018 to record revenue?

Multiple Choice

• Construction in progress	460,000
  Cost of construction	660,000
  Revenue from long-term contracts		1,120,000

• Accounts receivable	1,635,000
  Revenue from long-term contracts		1,635,000

• Construction in progress	1,350,000
  Cost of construction	1,920,000
  Revenue from long-term contracts		3,270,000

• Cost of construction	2,150,000
  Gross profit	1,120,000
  Revenue from long-term contracts		3,270,000

2/ On December 15, 2018, Rigsby Sales Co. sold a tract of land that cost $3,300,000 for $5,000,000. Rigsby appropriately uses the installment sales method of accounting for this transaction. Terms called for a down payment of $440,000 with the balance in two equal annual installments payable on December 15, 2019, and December 15, 2020. Ignore interest charges. Rigsby has a December 31 year-end.

In its December 31, 2018, balance sheet, Rigsby would report:

Multiple Choice

• Installment receivables (net) of $4,560,000.

• Installment receivables (net) of $3,009,600.

• Realized gross profit of $149,600.

• Deferred gross profit of $149,600

3/ Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the cost recovery method to recognize revenue on these installment sales. In 2017, Lake began operations and sold jet skis with a total price of $750,000 that cost Lake $375,000. Lake collected $250,000 in 2017, $250,000 in 2018, and $250,000 in 2019 associated with those sales. In 2018, Lake sold jet skis with a total price of $1,200,000 that cost Lake $720,000. Lake collected $400,000 in 2018, $270,000 in 2019, and $270,000 in 2020 associated with those sales. In 2020, Lake also repossessed $260,000 of jet skis that were sold in 2018. Those jet skis had a fair value of $97,500 at the time they were repossessed.

In 2017, Lake would recognize realized gross profit of:

Multiple Choice

• $0.

• $250,000.

• $375,000.

• $125,000.

4/ Indiana Co. began a construction project in 2018 with a contract price of $161 million to be received when the project is completed in 2020. During 2018, Indiana incurred $36 million of costs and estimates an additional $89 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed.

Indiana:

Multiple Choice

• Recognized $72.00 million loss on the project in 2018.

• Recognized $36.00 million loss on the project in 2018.

• Recognized $10.37 million gross profit on the project in 2018.

• Recognized no gross profit or loss on the project in 2018.