Investments are reported at fair value when a company has a significant influence over another company in which it invests. True False

Consolidated financial statements combine the separate financial statements of the purchasing company and the acquired company into a single set of financial statements. True False

When the investor has insignificant influence, the receipt of cash dividends is recorded as dividend revenue. True False

When significant influence exists, the investment should be accounted for by the equity method. True False

Bond investments are long-term assets that earn interest revenue, while bonds payable are long-term liabilities that incur interest expense. True False

As a sale market manager for a company, contemplate whether prices should reflect the value the customers are willing to pay or whether they should be based upon the cost of the product or service to your company. How would you support this with an example of your product or service to substantiate your position?

When using binomial approach and Black-Scholes formula for pricing options, do you expect the results to be the same? (3)Why or why not? (2)  Price a put and a call with data offered below using both methods and show the prices. Do your results support initial expectations? (5)

Present stock price $30, exercise price $40, interest rate 5%, option expires one year from now, volatility 27%, stock will either move up by 40% or down by 27%.

A machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand of the customers. It can be upgraded now for $81,000 or sold to a smaller company internationally for $41,000. The upgraded machine will have an annual operating cost of $82,000 per year and a $33,000 salvage value in 3 years. If upgraded, the presently owned machine will be retained for only 3 more years, then replaced with a machine to be used in the manufacture of several other product lines. The replacement machine, which will serve the company now and for a maximum of 8 years, costs $224,000. Its salvage value will be $49,000 for years 1 through 5; $20,000 after 6 years; and $10,000 thereafter. It will have an estimated operating cost of $45,000 per year. Perform an economic analysis at 8% per year using a specified 3-year planning horizon.

a) Determine if the current machine should be replaced now or 3 years from now

b) Once decided, determine the equivalent AW for the next three years.

a) The current machine should be replaced ___.

b) The equivalent AW for the next three years is $ ___ .

Suppose that in a random selection of 100 colored​ candies, 25​% of them are blue. The candy company claims that the percentage of blue candies is equal to 27​%. Use a 0.05 significance level to test that claim. Identify the test statistic for this hypothesis test. Identify the​ P-value for this hypothesis test. Identify the conclusion for this hypothesis test.

In the following problems , give a complete hypothesis test for each problem. Use the method described. Make sure you include the original claim in symbols, The null and alternative hypothesis, the significance level, the actual formula and calculation of the test statistic, give the p-value and a  drawing of critical region ,the decision concerning the null hypothesis and a conclusion stated in non technical terms

1. In a recent year, of the 109,857 arrests for Federal Offenses, 31968 were for drug offenses. Use a 0.01 significance level to test the claim that the drug offense rate is less than 30%.

2. In a previous test baseballs were dropped 24 ft. onto a concrete surface, and they bounced an average of 984 in. In a test of a sample of 40 new balls, the bounce heights had a mean of 92.67 in. with a standard deviation of 1.79 in. Use a 0.05 significance level to determine whether there is significant evidence to support the claim that the new balls have bounce heights with a mean different from 92.84.

3. A communications industry spokesperson claims that over 80% of Americans either own a smart phone or have a family member that does.  In a random survey of 1036 Americans, 956 said that they or a family member owns a smart phone. Test the spokesperson’s claim at the  level.

4. A large university says the mean number of classroom hours per week for full-time faculty is more than 9. A random sample of the number of classrooms hours for full-time faculty for one week is listed. At  test the university’s claim. Assume normality

10.7     9.8       11.6     9.7       7.6       11.3     14.1     8.1       11.5     8.5       6.9

5. USA Today ran a report about a University of North Carolina poll of 1248 adults from the southern United States. The poll asked them if they believed that Elvis was alive. 99 of the 1248 adults believed that Elvis still lives. The article began with the claim that almost 1 out of 10 Southerners still think Elvis is alive. At the 0.01 significance level, test the claim that the true percentage is less than 10%.

6. The FDA regulates that fish that is consumed is allowed to contain 1.0 mg/kg of mercury. In Florida, bass fish were collected in 53 different lakes to measure the amount of mercury in the fish. The data for the average amount of mercury in each lake is in table below Do the data provide enough evidence to show that the fish in Florida lakes has more mercury than the allowable amount? Test at the 10% level.

7. The Kyoto Protocol was signed in 1997, and required countries to start reducing their carbon emissions. The protocol became enforceable in February 2005. In 2004, the mean CO₂ emission was 4.87 metric tons per capita. The data below are a random sample of CO₂ emissions in 2010. Is there enough evidence to show that the mean CO₂ emission is lower in 2010 than in 2004? Test at the 1% level.

The following information was disclosed during the audit of Elbert Inc.

Question: Prepare the journal entry to record income taxes for 2018.

PA8-6 Preparing Operating Budgets for a Merchandising Firm [LO 8-5, 8-3a, f, g, h] Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Unit Sales 36,000 56,000 28,000 56,000 Each T-shirt is expected to sell for $11. The purchasing manager buys the T-shirts for $4 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 21 percent of the next quarter’s sales demand. Selling and administrative expenses are budgeted at $72,000 per quarter plus 10 percent of total sales revenue. Required: 1. Determine budgeted sales revenue for each quarter. 2. Determine budgeted cost of merchandise purchased for each quarter. 3. Determine budgeted cost of good sold for each quarter. 4. Determine selling and administrative expenses for each quarter. 5. Complete the budgeted income statement for each quarter. rev: 10_28_2016_QC_CS-67902

PA8-6 Preparing Operating Budgets for a Merchandising Firm [LO 8-5, 8-3a, f, g, h] Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Unit Sales 46,000 72,000 36,000 72,000 Each T-shirt is expected to sell for $21. The purchasing manager buys the T-shirts for $8 each. The company needs to have enough T-shirts on hand at the end of each quarter to fill 31 percent of the next quarter’s sales demand. Selling and administrative expenses are budgeted at $92,000 per quarter plus 20 percent of total sales revenue. Required: 1. Determine budgeted sales revenue for each quarter. 2. Determine budgeted cost of merchandise purchased for each quarter. 3. Determine budgeted cost of good sold for each quarter. 4. Determine selling and administrative expenses for each quarter. 5. Complete the budgeted income statement for each quarter. rev: 10_28_2016_QC_CS-67902 ReferenceseBook