ABC Inc. borrowed funds from its bank. Details are as follows.
Four year term loan, U.S. $500,000
Funds borrowed 1 January 2016; due 31 December 2019
Exchange rates:

Required:

Prepare the journal entries as follows to record:
A) Receipt of loan proceeds for January 2016.
B) The adjustment to spot rate for December 2016.
C) The adjustment to spot rate December 2017
D) The adjustment to spot rate December 2018
E) The adjustment to spot rate December 2019
F) Repayment of loan December 2019

7. Based on the above information calculate the total accounting recognition of loss.

Which of the following events would most likely explain a general increase in interest rates and a decrease in private investment in the loanable funds model, ceteris paribus?

A. The U.S. federal government generates a surplus of $1 trillion and uses it to pay down the national debt.

B. The U.S. federal government budget goes from deficit to surplus.

C. The U.S. federal government reduces the tax rate on savings.

D. The U.S. federal government budget deficit increases.

_______________________________________________________________________________________________________________________________________________

2. Suppose the U.S. Congress passed, and the president signed, legislation that encouraged U.S. taxpayers to consume more and save less, by lowering the excise tax on various goods. As a likely consequence of this legislation, the loanable funds model would predict, ceteris paribus:

A. higher interest rates and less investment.

B. lower interest rates and greater investment.

C. lower interest rates and less investment.

D. higher interest rates and higher investment.

If a major new oil basin begins production via hydraulic fracturing (fraking) in the U.S. midwest, how would the following be impacted and explain?

a) Would the world demand curve for crude oil: Shift to the right, shift to the left, or stay the same

b) World supply curve for crude oil: Shift to the right, shift to the left, or stay the same

c) U.S. demand curve for crude oill: Shift to the right, shift to the left, or stay the same

d) U.S. supply curve for crude oil: Shift to the right, shift to the left, or stay the same

e) World crude oil prices: rise, fall, change little

f) U.S. crude oilprices: rise, fall, change little

g) World crude oil consumption: rise, fall, change little

h) U.S. crude oil consumption; rise, fall, change little

i) U.S. oil imports; rise, fall, change little

If the U.S. directed airstrikes against Iran, shutting down Iranian oil exports, how would this impact the following items and explain?

a) Would the world demand curve for crude oil: Shift to the right, shift to the left, or stay the same

b) World supply curve for crude oil: Shift to the right, shift to the left, or stay the same

c) U.S. demand curve for crude oil: Shift to the right, shift to the left, or stay the same

d) U.S. supply curve for crude oil: Shift to the right, shift to the left, or stay the same

e) World crude oil prices: rise, fall, change little

f) U.S. crude oil prices: rise, fall, change little

g) World oil consumption: rise, fall, change little

h) U.S. oil consumption; rise, fall, change little

i) U.S. oil imports; rise, fall, change little

2. ABC Inc. borrowed funds from its bank. Details are as follows.
Four year term loan, U.S. $500,000
Funds borrowed 1 January 20X6; due 31 December 20X9
Exchange rates:

Required:

Prepare the journal entries as follows to record:
A) Receipt of loan proceeds for January 20X6.
B) The adjustment to spot rate for December 20X6.
C) The adjustment to spot rate December 20X7
D) The adjustment to spot rate December 20X8
E) The adjustment to spot rate December 20X9
F) Repayment of loan December 20X9

G) Based on the above information calculate the total accounting recognition of loss.

Luxury Ltd is a large company that manufactures and sells wooden garden furniture. It has been very active in acquisition in recent years and acquired three small companies in the last few years. Mr. Yung, the CEO, determines to let the three companies running as autonomous investment center, as Division A, B and C respectively, each responsible for different specific product groups. The most recent sales and operating data for the three divisions are given below (In million dollars):

Managers are given as much freedom as possible to manage their divisions. Division managers have an annual bonus plan based on division Return on Investment (ROI). Senior executives of divisions reporting increases in ROI from the prior year are automatically eligible for a bonus.

Peter, manager of Division A, is considering a proposal to invest $2 million in asset to produce a new product that would generate a $0.29 million operating income. Mary, manager of Division C, is considering a proposal to invest $1 million in asset to produce a new product that would generates a $0.11 million operating income. The company has a 12% minimum required rate of return in all three divisions.

Required:

a. Calculate the margin, turnover, ROI for the three division for 2018 and 2019. Explain the trend over time and differences among the three divisions in their ROIs.

b. Who will accept the proposal? Show your supporting calculations for each division if they accept the investment opportunity based on the results in 2019.

c. Mr. Yung receives a suggestion to base senior executives’ compensation at each division on division Residual Income (RI). Calculate the RI of each division in 2019 (before proposal.) Which division’s manager might object to the change?

d. With a change in the bonus plan based on RI, who will accept the proposal? Show your supporting calculations for each division if they accept the investment opportunity.

e. Mr. Yung has heard of the concept of balanced scorecard. He is wondering why does the balanced scorecard include financial performance measures as well as measures of how well internal business processes are doing? Explain to him in detail.

Badbug makes Viral Memes which sell for $1,000 each.   The production process is fairly simple and involves tweaking components purchased from various suppliers.  Since each Viral Meme only takes one hour to assemble, there is essentially no work-in-process inventory.  

Badbug has the capacity to make 2,000 Viral Memes per year.

Costs for the Viral Meme components are:

Each meme should take one hour of direct labor to tweak.  Direct labor wages are $150 per hour.

Other manufacturing costs on a monthly basis are:

Inventory balances are as follows (Badbug uses the FIFO inventory cost flow assumption):

During 2020 (the entire year) Badbug expects to sell 1,000 viral memes.  

• What is the budgeted cost of Viral Memes manufactured for 2020?

• What is the budgeted cost of Primary GIFs purchased for 2020?

• What is the budgeted cost of Secondary GIFs purchased for 2020?

• What is the budgeted cost of JPEGs purchased for 2020?

• What is budgeted dollar value of ending Viral Meme inventory?

• What is the budgeted dollar value of ending Primary GIF inventory?

• What is the budgeted dollar value of ending Secondary GIF inventory?

• What is the budgeted dollar value of ending JPEG inventory?

• How much income does Badbug expect to make if they sell 1,000 Viral Memes in 2020 and have budgeted Selling & Administrative expenses of $600,000 (assume no income taxes)?

• How much income does Badbug expect to make if they sell 900 Viral Memes in 2020 (production is adjusted appropriately)?  Remember – individual cost-to-make will change with changes in volume.  That will change ending inventory value.

• How much income does Badbug expect to make if they sell 1,100 Viral Memes in 2020 (production is adjusted appropriately)?

• How much income does Badbug expect to make if they sell 2,000 Viral Memes in 2020 (production is adjusted appropriately)?

12. Which of the following statements is (are) correct?
(x) The local oak table producer has an increase in inventory of 25 tables in 2012. In 2013 it sells all 25 tables to consumers. The value of increased inventory will be counted as part of GDP in 2012 and the value of the tables sold in 2013 will not increase GDP in 2013.
(y) A wheat farmer in Montana buys a new tractor made during the current period that was produced by a German company in the U.S. state of Iowa. As a result, U.S. investment and U.S. GDP increase, but German GDP is unaffected.
(z) A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. If the firm does not add additional sweatshirts to inventory in the second quarter then investment, for the firm, decreases in the second quarter.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

13. Michigan Tea Company sold $18 million worth of tea it produced. In producing this tea it purchased $6 million worth of ingredients from foreign countries and paid $1 million to workers who reside in Canada but commute to the United States. How much did these transactions add to GDP of the United States?
A. $24 million
B. $18 million
C. $17 million
D. $12 million

14. Which of the following statements about nominal GDP is (are) correct?
(x) Betsy works at her home to produce goods and services for her family. Unpaid production of goods and services, by Betsy at her home, is not included in the calculation of gross domestic product (GDP).
(y) The value of illegally produced goods are included in GDP because the goods are traded in a market.
(z) Ross, a United States citizen, works only in Canada. The value added to production from his employment is included in Canadian GDP but not the GDP of the United States.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

E. $11 million

Question 7

The following information is available for Skysong Corporation for 2020.

1. Compute taxable income for 2020.

2. Compute pretax financial income for 2020.

3. Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2020 and 2021. Assume taxable income was $1,063,000 in 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
4.  Prepare the income tax expense section of the income statement for 2020, beginning with “Income before income taxes.” (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

1. The Accounts Receivable balance for River Corporation is $400,000 as of January 31, 2020. Before calculating and recording January 2020 Bad Debt Expense, the Allowance for Doubtful Accounts has a credit balance of $5,000. Credit sales for January 2020 are $4,000,000, and over the past several years, 1% of credit sales have proven uncollectible. An aging of River Corporation’s Accounts Receivable results in a $43,000 estimate for the Allowance for Doubtful Accounts as of January 31, 2020. Part A: PERCENT OF SALES METHOD Assume that River Corporation uses the percent of sales method to estimate future uncollectible accounts. a. What adjusting entry does River make to record January 2020 Bad Debt Expense? Accounts Receivable b. What is the “Accounts Receivable, net” on River’s January 31, 2020 Balance Sheet? c. What is “Bad Debt Expense” on River’s January 2020 Income Statement? Part B: ANALYSIS OF RECEIVABLES METHOD Assume that River Corporation instead uses the analysis of receivables method to estimate future uncollectible accounts. a. What adjusting entry does River make to record January 2020 Bad Debt Expense? b. What is the “Accounts Receivable, net” on River’s January 31, 2020 Balance Sheet? c. What is “Bad Debt Expense” on River’s January 2020 Income Statement?