Given the Abdulla Company’s Trial Balance of April 30, 2020, a) record the following transactions. b) What is the effect of the following transactions to the merchandise inventory account and the sales?

May 14 The Company sold merchandise to Majid Company AED 90,000 terms 2/10 net 60.

The merchandise had a cost of AED 40,000.

May 15   The Company purchased merchandise from Saif Company 80,000 with terms 2/10 net 30.

Made a down payment of 20,000.

May 20 Collected 90% of the account receivable from Majid Company.

May 21 Collected 10% of the account receivable from Majid Company.

May 24   The Company paid the balance owed to Saif Company entry May 15.

Answer:

a) record the transactions.

b) What is the effect of the following transactions to the merchandise inventory account and the sales?

Company A has a market value of equity of $2,000 million and 80 million shares outstanding. Company B has a market value of equity of $400 million and 25 million shares outstanding. Company A announces at the beginning of 2019 that is going to acquire Company B.

The projected pre-tax gains in operating income (in millions of $) from the merger are:

The projected pre-tax gains in operating income are expected to grow at 4% after year 2023. The company is using a discount rate of 8% to value the synergies. The marginal corporate tax rate is 35%.

Company A has decided to pay a $300 million premium for Company B. Assume that capital markets are efficient and that there is a 100% probability the deal will be closed.

By how much the price per share of Company A would change at the time of the announcement of the acquisition?

1--- Exxon Oil Corp. is negotiating the purchase of 1 million barrels of oil from a bankrupt competitor to be delivered and paid for in exactly 1 year. The oil exporter wants the contract expressed in Mexican Pesos, and the current "in USD" Peso exchange rate is $0.075. The contract is signed at a price of 1405 Pesos per barrel. How many US Dollars will Exxon be wrose off if at the time of oil delivery the "in USD" Peso exchange rate changes to $0.080?
$

Note: Round your answer rounded to the closest $USD.

2----Exxon Oil Corp. is negotiating the purchase of 1 million barrels of oil from a bankrupt competitor to be delivered and paid for in exactly 1 year. The oil exporter wants the contract expressed in Mexican Pesos, and the current "in USD" Peso exchange rate is $0.068. The contract is signed at a price of 1430 Pesos per barrel. Exxon can enter a futures contract that allows the company to purchase Pesos at the exact time of oil delivery at $0.069. If we consider the use of the futures contract to hedge Exxon's foreign exchange risk, how much is the cost of this insurance to Exxon?
$

Note: Round your answer to the closest $USD.

3---Charlie is a currency trader and has in inventory 115000 Euros that he purchased for $1.35 per Euro. The Euro is now trading at $1.35. What is Charlie's profit or loss on this currency trade?
$

Place your answer in numbers of dollars of profit or loss.

4--- Ford sells a particular car in Geneva for 50125 Swiss francs. The company sells the same car in the U.S. for $34800. The company has a position that it collects foreign currency and brings it over to its U.S. headquarters in dollars at the end of each quarter. What exchange rate, expressed as U.S. dollars per Swiss franc, at the end of this current quarter would make the revenues earned on the car the same whether it was sold in Detroit or Geneva?



Place your answer as a number with four decimal places

QUESTION 1

Ernest and his partner Mary run a second-hand bookshop. The business is incorporated under the name of Ketchum Ltd, and they are the only shareholders.

As the business is small they do not employ a full-time accountant, but pay a local firm to prepare their accounts after the end of the accounting period from information they supply. You are on a summer work placement with this firm and have been asked to prepare             a first draft of the accounts for Ketchum Ltd for the year ending 31^st December 2019.

A list of closing balances reported in Ketchum Ltd’s statement of financial position as at 31^st December 2018 is set out below:

Further information:

1. The shop premises were acquired under a 50-year lease on 1^st January 2016 and are being depreciated to a zero residual value.
2. The fixtures and fittings were also bought on 1^st January 2016 and are being depreciated over 10 years to a zero residual value.
3. Depreciation is provided on a straight line basis for both the shop premises and the fixtures and fittings.
4. The business pays its insurance premium annually on 1^st July to cover the following twelve month period. This is the only prepayment as at 31^st December 2018.
5. The accrued expenses relate to the accountant’s fees for preparing last year’s accountants, paid in March 2019. This is the only accrual as at 31^st December 2018.
6. All profits earned are subject to a 20% corporate income tax paid on 31^st December of the year in which they are earned.

During the year to 31^st December 2019, the following transactions and events took place:

1. The business made cash sales of £107,375. It also made credit sales to internet retailers of £76,787.50.
2. Inventory costing £94,725 was bought during the year. All items were bought on credit. Suppliers were paid £96,437.50 over the course of the year.
3. The inventory of books as at 31^st December 2019 cost £34,375.
4. During the year some fixtures that had cost £2,500 when purchased were sold for £1,375. New fixtures were acquired for cash at a cost of £3,750 and are also being depreciated over 10 years to a zero residual value. No depreciation is charged in the year of disposal but a full year’s depreciation is charged in the year of acquisition.
5. The part-time shop assistant was paid wages of £13,625 over the year.
6. Receipts from credit customers totalled £68,162.50.
7. Electricity bills totalling £2,287.50 were paid during the year. The company has recently changed its electricity supplier and is now being billed quarterly in arrears. At the end of December 2019 the bill for the quarter ended on 31^st January 2020 had not yet been received, but was estimated to be £862.50.
8. You have been told that the fees charged for preparing the accounts will be the same as last year. The bill will be sent out in March 2020.
9. The insurance premium of £1,125 for the year to 30^th June 2020 was paid during July 2019.
10. In December 2019 £10,000 was paid off the bank loan, and interest of £1,000 was paid on 31^st December 2019. Overdraft interest of £118.75 was charged and paid.
11. Administrative expenses of £1,581.25 were paid as they arose.
12. Ernest and Mary received directors’ wages of £1,250 per month each.

Required:

1. Using the information provided by Ernest and Mary, and Ketchum Ltd’s statement of financial position as at 31^st December 2018, prepare the following:
   1. A table summarising the effects of all transactions and events listed above on assets, liabilities, equity, revenue, and expenses of Ketchum Ltd.

Ernest and his partner Mary run a second-hand bookshop. The business is incorporated under the name of Ketchum Ltd, and they are the only shareholders.

As the business is small they do not employ a full-time accountant, but pay a local firm to prepare their accounts after the end of the accounting period from information they supply. You are on a summer work placement with this firm and have been asked to prepare             a first draft of the accounts for Ketchum Ltd for the year ending 31^st December 2019.

A list of closing balances reported in Ketchum Ltd’s statement of financial position as at 31^st December 2018 is set out below:

Further information:

1. The shop premises were acquired under a 50-year lease on 1^st January 2016 and are being depreciated to a zero residual value.
2. The fixtures and fittings were also bought on 1^st January 2016 and are being depreciated over 10 years to a zero residual value.
3. Depreciation is provided on a straight line basis for both the shop premises and the fixtures and fittings.
4. The business pays its insurance premium annually on 1^st July to cover the following twelve month period. This is the only prepayment as at 31^st December 2018.
5. The accrued expenses relate to the accountant’s fees for preparing last year’s accountants, paid in March 2019. This is the only accrual as at 31^st December 2018.
6. All profits earned are subject to a 20% corporate income tax paid on 31^st December of the year in which they are earned.

During the year to 31^st December 2019, the following transactions and events took place:

1. The business made cash sales of £107,375. It also made credit sales to internet retailers of £76,787.50.
2. Inventory costing £94,725 was bought during the year. All items were bought on credit. Suppliers were paid £96,437.50 over the course of the year.
3. The inventory of books as at 31^st December 2019 cost £34,375.
4. During the year some fixtures that had cost £2,500 when purchased were sold for £1,375. New fixtures were acquired for cash at a cost of £3,750 and are also being depreciated over 10 years to a zero residual value. No depreciation is charged in the year of disposal but a full year’s depreciation is charged in the year of acquisition.
5. The part-time shop assistant was paid wages of £13,625 over the year.
6. Receipts from credit customers totalled £68,162.50.
7. Electricity bills totalling £2,287.50 were paid during the year. The company has recently changed its electricity supplier and is now being billed quarterly in arrears. At the end of December 2019 the bill for the quarter ended on 31^st January 2020 had not yet been received, but was estimated to be £862.50.
8. You have been told that the fees charged for preparing the accounts will be the same as last year. The bill will be sent out in March 2020.
9. The insurance premium of £1,125 for the year to 30^th June 2020 was paid during July 2019.
10. In December 2019 £10,000 was paid off the bank loan, and interest of £1,000 was paid on 31^st December 2019. Overdraft interest of £118.75 was charged and paid.
11. Administrative expenses of £1,581.25 were paid as they arose.
12. Ernest and Mary received directors’ wages of £1,250 per month each.

Required:

1. Using the information provided by Ernest and Mary, and Ketchum Ltd’s statement of financial position as at 31^st December 2018, prepare the following:
   1. A table summarising the effects of all transactions and events listed above on assets, liabilities, equity, revenue, and expenses of Ketchum Ltd.

2. A statement of profit or loss for 2019.

3. A statement of cash flows for 2019.

4. A statement of financial position as at 31^st December 2019.

Show your workings.

Company A has a market value of equity of $2,000 million and 80 million shares outstanding. Company B has a market value of equity of $400 million and 25 million shares outstanding. Company A announces at the beginning of 2019 that is going to acquire Company B.

The projected pre-tax gains in operating income (in millions of $) from the merger are:

The projected pre-tax gains in operating income are expected to grow at 4% after year 2023. The company is using a discount rate of 8% to value the synergies. The marginal corporate tax rate is 35%.

Company A has decided to pay a $300 million premium for Company B. Assume that capital markets are efficient and that there is a 100% probability the deal will be closed.

If Company A were to offer 0.80 share of Company A for each share of company B, by how much the price per share of Company A would change at the time of the announcement of the acquisition?

We have reviewed the topic of Goodwill on the Balance Sheet which is created when a company acquires another and pays more than the market value of the acquired company's net assets.

What I want you to address in this discussion board are the following:

A. What type of "event" results in goodwill being recorded on a company's balance sheet?

B. How is goodwill evaluated to determine whether this specific asset is impaired? If it is deemed to be impaired, what actions does a company need to take?

C. How do you view goodwill on the balance sheet - specifically, if certain levels of it would cause concern, identify what level of goodwill would cause you concern and why?

D. If it would not concern you regardless of the amount of goodwill on the balance sheet, explain why.

An assembly operation at a software company currently requires ​$96,000 per year in labor costs. A robot can be purchased and installed to automate this​ operation, and the robot will cost $192,000 with no MV at the end of its​ 10-year life. The​ robot, if​ acquired, will be depreciated using SL depreciation to a terminal BV of zero after 10 years. Maintenance and operation expenses of the robot are estimated to be $70,000per year. The company has an effective income tax rate of 24​%. Invested capital must earn at least 6​% after income taxes are taken into account.

a. Use the IRR method to determine if the robot is a justifiable investment.

b. If MACRS​ (seven-year recovery​ period) had been used in Part​ (a), would the​ after-tax IRR be lower or higher than your answer to Part​ (a)?

The following information applies to the questions displayed below.]

Laker Company reported the following January purchases and sales data for its only product.

Date Activities Units Acquired at Cost Units sold at Retail
Jan. 1   Beginning inventory 180 units @ $ 7.60 = $ 1,368
Jan. 10   Sales 105 units @ $ 15.60
Jan. 20   Purchase 250 units @ $ 6.60 = 1,650
Jan. 25   Sales 175 units @ $ 15.60
Jan. 30   Purchase 120 units @ $ 5.60 = 672




  Totals 550 units $ 3,690 280 units

Required:

The company uses a perpetual inventory system. For specific identification, ending inventory consists of 270 units, where 120 are from the January 30 purchase, 80 are from the January 20 purchase, and 70 are from beginning inventory.