Edwards and Everett, Inc. had the following items in its capital structure at December 31, 2020:

Common stock options, issued in 2019, exercisable for 22,000 shares, beginning in 2022, at a “strike” price of $20 per share. The cash that would be received from the option-holders from a hypothetical exercise of the options at December 31, 2020 would be sufficient for Edwards & Everett to acquire 13,400 shares of its own common stock (as treasury stock).

Treasury stock, common, 20,000 shares, acquired on November 30, 2019 …...

$

280,000

Additional paid-in-capital ....................................................................................

760,000

Common stock, $10 stated value, issued January 2, 2019

(current market value, $17 per share) ..................................................................

1,200,000

Preferred stock, 10%, $8 par value, convertible into 146,000 common

shares no earlier than 2020, issued at par value on July 1, 2020

(current market value, $8 per share) ....................................................................

1,660,000

Stock warrants, issued in 2019 in exchange for legal services at the company’s formation, convertible into 1,300 shares of common stock at the

discretion of the warrant-holders, but not earlier than 2022. A

hypothetical conversion of the warrants at December 31, 2020 would

require a $14,000 cash payment from the warrant-holders, which would

be sufficient for Edwards & Everett to acquire 300 shares of its own

common stock (as treasury stock)........................................................................

20,000

Edwards & Everett’s net income for 2020 was $783,000; the company’s Board of Directors has not yet declared a dividend for 2020 for the preferred shareholders.

What earnings per share did Edwards and Everett, Inc. report for the year ended December 31, 2020? Prepare a schedule to support your answer.

FINANCIAL ACCOUNTING II

Edwards and Everett, Inc. had the following items in its capital structure at December 31, 2020:

Common stock options, issued in 2019, exercisable for 22,000 shares, beginning in 2022, at a “strike” price of $20 per share. The cash that would be received from the option-holders from a hypothetical exercise of the options at December 31, 2020 would be sufficient for Edwards & Everett to acquire 13,400 shares of its own common stock (as treasury stock).

Treasury stock, common, 20,000 shares, acquired on November 30, 2019 ...... $280,000

Additional paid-in-capital........................................................................................760,000

Common stock, $10 stated value, issued January 2, 2019 (current market value, $17 per share) ................................................................ 1,200,000

Preferred stock, 10%, $8 par value, convertible into 146,000 commonshares no earlier than 2020, issued at par value on July 1, 2020 (current market value, $8 per share) ...................................................................1,660,000

Stock warrants, issued in 2019 in exchange for legal services at the company’s formation, convertible into 1,300 shares of common stock at the discretion of the warrant-holders, but not earlier than 2022. A hypothetical conversion of the warrants at December 31, 2020 would require a $14,000 cash payment from the warrant-holders, which would be sufficient for Edwards & Everett to acquire 300 shares of its own common stock (as treasury stock)........................................................................ 20,000

Edwards & Everett’s net income for 2020 was $783,000; the company’s Board of Directors has not yet declared a dividend for 2020 for the preferred shareholders.

What earnings per share did Edwards and Everett, Inc. report for the year ended December 31, 2020? Prepare a schedule to support your answer.

The following information was obtained from the accounting records and financial statements of Palmer Inc.

Additional information:

• On May 5, 2020 a capital asset with a cost of $225,000 and net book value of $90,000 was sold for $70,000.
• On September 1, 2020, Palmer issued 5% bonds for face value of $ 200,000.
• On October 15, 2020, bonds with a face value of $ 100,000 were retired for $ 110,000.
• On December 20, 2020, Palmer declared and paid cash dividends.

Required:

1. Prepare the cash flow statement, using the direct method, for Palmer for the year ended December 31, 2020.
2. Prepare the cash flows from operating activities, using the indirect method, for Palmer for the year ended December 31, 2020.

Other than business and households, what are the other two sectors of a closed economy?

Provide a short description of the size of the foreign exchange market (Forex/FX):

Explain how the repeal of the 1933 Glass-Steagall Act in 1999 with the Financial Services Modernization Act changed the marketplace. 16. Which segment of the market is the main net supplier of loanable funds?

IBM issues 1 million new shares by selling them to its underwriter; is this a primary or secondary market transaction? ______________

Consider a closed economy (no international trade) under a simple Keynesian model. Assume investment is a constant. Tax is a lump-sum that does not depend on income. If a government increases its expenditure by $1 but at the same time increases the lump-sum tax by $1. Will real output be increased or decreased, and by how much?

What are the endogenous variables in a closed-economy ​model? ​(Select all that​ apply.)

A.

Aggregate output

B.

Quantity of labour demanded

C.

Total factor productivity

D.

Market real wage

E.

Consumption

F.

Government spending

G.

Capital stock

H.

Taxes

I.

Quantity of labour supplied

suppose private saving in a closed economy is $12 billion and investment is $10 billion. Which of the following are true?

A. national saving must equal $12 billion

B. public saving must equal $2 billion

C. Government budget surplus must equal $2 billion

D. Government budget deficit must equal $ 2 billion

Consider a closed economy described by the following equations (all figures in millions of dollars):

Y = C + I + G + NX

Y = 8,000 (current value of output)

G = 2,000

T = 1,000 + .1(Y)

C = 450 + 0.75 (DI)

I = 2,000

NX = 0

1. What is the current state of this economy in term of private saving, public saving and the balance between current level of investment and private domestic saving?
2. Suppose government approve an infrastructure investment which raises government expenditure to 2,250. How would this increase impact your calculation in (a) above?
3. Using the initial information given above, suppose due to better economic forecasts, business community decide to increase the level of investment by 10%, how would the change investment impact the economy (in term of consumption, saving, taxes, etc.)? (hint; you want compare the result you get in (c) with what you calculated in (a)).

At equilibrium real GDP in a private closed economy,

Multiple Choice

• the MPC must equal the APC.

• the slope of the aggregate expenditures schedule equals the MPS.

• aggregate expenditures and real GDP are equal.

• planned saving and consumption are equal.

Government actions that were taken in order to stimulate the economy during the Great Recession of 2007–09 included the following, except

Multiple Choice

• a significant reduction of interest rates to nearly zero.

• a large increase in transfer payments.

• an increase in the deficit spending of the government.

• a sharp increase in the natural rate of unemployment.

• Use the Leontief closed model to solve the linear system and determine the dollar amount each organization pays for a credit. Use a scale factor of s = 100.
• For each organization, calculate the ratio of the number of credits required and cost per credit. What does this information provide?

Provide your solution and recommendations.