You may use Microsoft Excel or any other technology to complete the question as long as the explanation is clear and a screen shot is included. Please complete the following problems: 1. Eastman Publishing Company is considering publishing an electronic textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and Web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell access to the book for $46 each. a. Build a spreadsheet model to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3500 copies? b. Use a data table to vary demand from 1000 to 6000 increments of 200 to assess the sensitivity of profit to demand. c. Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3500 copies.

The City of G is considering building a light rail transit (LRT) system similar to the one recently constructed in City KW. You have been asked to conduct a cost benefit analysis of the project. You have some data about the KW LRT project:

Present value of annual net benefits (to KW residents) =$620 million

Construction costs (paid by KW residents) (t=0) =$820 million

Grant from the provincial government (t=0) =$300 million

Grant from the federal government (t=0) =$250 million

A KW analyst estimated the net present value of the project for KW to be +$350 million. An independent analyst argued that the net present value was closer to -$200 million. Define the concept of “standing” and use this concept to help explain the difference in the net present value estimates.

During 2020, Barden Building Company constructed various assets at a total cost of $14,700,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2020 were $9,800,000. The company had the following debt outstanding at December 31, 2020:

1.   10%, 5-year note to finance construction of various assets,

      dated January 1, 2020, with interest payable annually on January 1                     $6,300,000

2.   12%, ten-year bonds issued at par on December 31, 2014, with interest

      payable annually on December 31                                                                            7,000,000

3.   9%, 3-year note payable, dated January 1, 2019, with interest payable

      annually on January 1                                                                                               3,500,000

Instructions - Compute the amounts of each of the following (show computations).

1. Avoidable interest.

2. Total interest to be capitalized during 2020.

Problem 1

The following transactions are unrelated:

1. a) Equipment listed at $12,000 was purchased at terms of 4%/10, net 30. To take advantage of the discount, the company borrowed $9,000 of the purchase price by issuing a one-year 11 percent note that was repaid with interest at maturity.

2. b) Equipment with a list price of $5,000 was purchased under the terms of 2%/10, net 30. Payment was made 20 days after purchase.

3. c) A company paid $260,000 for land upon which to build a new facility. The cost to raze and remove an old building on the site of the newly proposed facility was $50,000. Usable fixtures from the old building were sold for $10,000. The company paid $3,000 to the architect that designed the new building, $30,000 for excavation of the basement, and $420,000 to a contractor for construction of the building.

Required -

Prepare journal entries for the above transactions.

Harris County is planning to construct a Dam some tens of miles away from the Houston Metropolis Recreation center to facilitate Power Generation and fishing in the El Santos River Basin. The first cost for the Dam will amount to $7,500,000. Annual maintenance and repairs will amount to $25,000 for the first six years, to $30,000 for each year in the next eight years, and to $35,000 per year for the next six years. At the end of the 20th year, $24,000 is estimated to be deposited into Harris county account as tax credits earned for its environmental compliance in the construction and operation of the Dam. In addition a major overhaul costing $550,000 will be required at the end of the seventh year. Use an interest rate of 10% and :

Determine the engineering economy symbols and their corresponding values.

Construct the cash flow diagram

Calculate the Capital Recovery for the project

Determine the total Annual Worth for the Project

What is the Present worth of this project

In each of the following scenarios, prepare journal entries, as necessary, or give proper accounting recognition. For each, tell why you made an entry or accounting recognition or why you did not. Identify the appropriate fund to account for construction-type special assessments. Big City provides a defined benefit pension plan for employees of the city water department, an enterprise fund. Assume that the service cost component is $420,000, and interest on the pension liability is $380,000 for the year. Actual returns on plan assets for the year were $300,000, while the projected level of earnings on plan investments was $360,000. This difference is to be amortized over a five-year period, beginning this year. Finally, assume the City is amortizing a deferred inflow resulting from a change in plan assumptions from a prior year in the amount of $10,000 per year. Prepare journal entries to record annual pension expense for the enterprise fund.

Stoney Run Construction Company (U.S. GAAP) enters into a 3-year contract to build a new warehouse facility. Information for Years 1, 2, and 3 is shown below:

COST RECOVERY METHOD (IFRS)

Question 1: Calculate the Gross Profit booked in Year 1:

Question 2: Book the following Journal Entries for Year 1:

1-Record Sale

2-Record payments received

Question 3: Book the following journal entries for Year 3:

1-Record payments received

2-Record gross profit

Assets assigned to California Division for 2017 were as follows:

Assets Beg Balance End Balance

Cash $250,000 $260,000

Accounts receivable 120,000 135,000

Inventory 230,000 205,000

Plant and equipment (net) 420,000 380,000

Land (undeveloped)* 430,000 430,000

Total assets $1,450,000 $1,410,000

*The undeveloped land is purchased by the President of company in California for construction of future headquarter of the company, that is, Lisa is not accountable for it.

Income Statement

Sales $1,750,000

Cost of goods sold 1,170,000

Operating expenses 300,000

Operating income 280,000

Less interest and taxes:

Interest expense $96,000

Tax expense 70,000 166,000

Net income $114,000

1) Assess and report the performance of Lisa for the year 2018 by computing appropriate measures of

2) Explain the difference between ROI and Profit Margin Ratio by computing Profit Margin Ratio and ROInfor California division. What is each ratio measuring?

During 2020, Barden Building Company constructed various assets at a total cost of $14,700,000. The weighted average accumulated expenditures on assets qualifying for capitalization of interest during 2020 were $9,800,000. The company had the following debt outstanding at December 31, 2020:

1.   10%, 5-year note to finance construction of various assets,

      dated January 1, 2020, with interest payable annually on January 1       $6,300,000

2.   12%, ten-year bonds issued at par on December 31, 2014, with interest

      payable annually on December 31                                                                    7,000,000

3.   9%, 3-year note payable, dated January 1, 2019, with interest payable

      annually on January 1                                                                                         3,500,000

Instructions

Compute the amounts of each of the following (show computations).

1.   Avoidable interest.

2.   Total interest to be capitalized during 2020.

Question 96 options: