Complete accounting cycle

Instructions

Chart of Accounts

Labels and Amount Descriptions

Work Sheet

Journal

Ledger

Unadjusted Trial Balance

Adjusted Trial Balance

Income Statement

Statement of Stockholders’ Equity

Balance Sheet

Post-closing Trial Balance

X

Instructions

For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:

Record the following transactions on Page 2 of the journal:

Mean Green Acid Inc. has $40 million in earnings, pays $5 million in interest to bondholders, and $3 million in dividends to preferred stockholders.
  
What are the common stockholders’ residual claims to earnings? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places (e.g., $1.23 million should be entered as "1.23").)
  

The Donut Corporation has been experiencing declining earnings but has just announced a 50 percent salary increase for its top executives. A dissident group of stockholders wants to oust the existing board of directors. There are currently 15 directors and 31,000 shares of stock outstanding. Mr. Wright, the president of the company, has the full support of the existing board. The dissident stockholders control proxies for 12,001 shares. Mr. Wright is worried about losing his job.

a-1. Under cumulative voting procedures, how many directors can the dissident stockholders elect with the proxies they now hold? (Do not round intermediate calculations. Round your answer down to the nearest whole number.)
  

a-2. How many directors could they elect under majority rule with these proxies?
  

b. How many shares (or proxies) are needed to elect eight directors under cumulative voting? (Do not round intermediate calculations. Round your answer up to the nearest whole number.)
  

Rust Pipe Co. was established in 1994. Four years later the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders' stock and is entitled to seven votes per share. The normally traded common stock, designated as Class B, is entitled to one vote per share. In late 2010, Mr. Stone, an investor, was considering purchasing shares in Rust Pipe Co. While he knew the existence of founders’ shares were not often present in other companies, he decided to buy the shares anyway because of a new technology Rust Pipe had developed to improve the flow of liquids through pipes.

Of the 1,650,000 total shares currently outstanding, the original founder's family owns 52,225 shares.

What is the percentage of the founder's family votes to Class B votes? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
  

Mr. and Mrs. Anderson own five shares of Magic Tricks Corporation's common stock. The market value of the stock is $60. The Andersons also have $42 in cash. They have just received word of a rights offering. One new share of stock can be purchased at $42 for each five shares currently owned (based on five rights). (Do not round intermediate calculations and round your answers to the nearest whole dollar.)

a. What is the value of a right?
  

b. What is the value of the Andersons’ portfolio before the rights offering? (Portfolio in this question represents stock plus cash.)
  

c-1. Compute the diluted value (ex-rights) per share.
  

c-2. If the Andersons participate in the rights offering, what will be the value of their portfolio, based on the diluted value (ex-rights) of the stock?
  

d. If they sell their two rights but keep their stock at its diluted value and hold on to their cash, what will be the value of their portfolio?
  

Robbins Petroleum Company is four years in arrears on cumulative preferred stock dividends. There are 720,000 preferred shares outstanding, and the annual dividend is $9.50 per share. The Vice-President of Finance sees no real hope of paying the dividends in arrears. She is devising a plan to compensate the preferred stockholders for 90 percent of the dividends in arrears.

a. How much should the compensation be? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g. $1,234,000).)
  

b. Robbins will compensate the preferred stockholders in the form of bonds paying 12 percent interest in a market environment in which the going rate of interest is 12 percent for similar bonds. The bonds will have a 15-year maturity. Using the bond valuation Table 16-2, indicate the market value of a $1,000 par value bond. (Round your answer to the nearest whole number.)
  

c. Based on market value, how many bonds must be issued to provide the compensation determined in part a? (Do not round intermediate calculations and round your answer to the nearest whole number.)
  

Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight (normal) preferred stock. Both issues have a par value of $100. The floating-rate preferred stock pays an annual dividend yield of 7 percent, and the straight preferred stock pays 12 percent. Since the issuance of the two securities, interest rates have gone up by 2.00 percent for each issue. Both securities will pay their year-end dividend today.

a. What is the price of the floating-rate preferred stock most likely to be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

b. What is the price of the straight preferred stock likely to be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

Where it says week 3 stock prices above the chart that I have posted is the week three prices. These are all the old prices. I need the current ones based off of the information that I have provided from the previous answer. Everything from the top of this page on down to that chart is the previous anwer to the question. Based off of that information, I will need the new question answered at the bottom of the page.

This is the previous question that I posted to get the answer to the chart below if this helps. The actual question that I need answered now is near the bottom of the page and it plays off of the the previous answer to the question given.

Indicate the companies you are investing in: Select three (3) US companies that are publicly traded. Please use your knowledge and experience and pick, as many stocks as you’d like. Lastly, make sure you are practicing good diversification. Jim Cramer, Money Manger, on CNBC, plays a game at the end of his show called “Am I Diversified.” Check out a short clip to get a sense of industry diversification at https://www.youtube.com/watch?v=f3lDxexupcE.

Sources of Information: There are many ways to find such companies and the stock prices, including the New York Stock Exchange at http://www.nyse.com, Google Finance athttp://google.com, NASDAQ at http://www.nasdaq.com, and http://finance.yahoo.com.   

Indicate the amount you are investing in each company: Decide how you will divide $25,000 across the three (3) companies; e.g. $10,000 in Company 1, $10,000 in Company 2, and $5,000 in Company 3. You decide the amount you are investing in each company. You do not have to provide any analysis to justify your decisions. You must only provide some reason for picking that company. For example, you might invest in Ford because that company gets a lot of your money and you hear that Ford is doing well, and will continue to do well.

Indicate the number of shares you are buying, and the price of the shares you are buying for each company: Once you decide the companies and the amount for each company, determine how many shares you can buy. If Company 1 is selling for $42.16, then you may buy $10,000/ $42.16, or 237.19 shares. But you cannot buy a part of a share, so you decide to buy either 237 or 238. In this example you buy 237 shares, at $42.16 per share, investing $9,991.92. You won’t be able to buy exactly $10,000, or $5,000, or $25,000, but it will be relatively close.

Answer

I will be investing in three companies as below:

• Wal-Mart Stores, Inc (Ticker Code: WMT)

• Alphabet Inc (Ticker Code: GOOGL)

• Tesla Inc (Ticker Code: TSLA)

The decision to invest in these companies is because these are high growth companies and are present in different sectors of the economy. So, the investment portfolio would be well diversified. Investment reasons: • Walmart: Walmart is a leader in retail and provide good scope of growth in the future. Hence it is wise to invest in it. • Alphabet Inc: It is the parent of Google, which is at the forefront of innovation and has delivered excellent value to all stakeholders. High growth expected to continue and hence goo investment option • Tesla: Leader in terms of use of renewable energy for fueling transportation solutions. Huge future potential and hence justified for investment.

Week 3 Stock Prices

Use the information listed about the three companies you previously chose to help you answer the question that follows. The question is broken up in three parts. Please note that this assignment is based on a pretend scenario and fictitious money. However, the assignment is based on actual stock pricing in real time situations.

Here Is The New Question

You may be following your stock every day, but if you’re not, you must:

Record the current price of the stock for each company you selected. You may use any price during this week (e.g., day one price, the opening, the low, the high, the close, or any price you find when you check it during the day). Using MS Excel spreadsheet or MS Word document, put your Week 3 and New stock prices side-by-side, to show your comparison.

Then, determine the current value of your total investment. Do not make any changes to your investment at this time. Calculate your total based on the number of shares and the new price per share, for each company.

Last, provide your opinion / assessment of your investments. Evaluate the results of your current investment. Are you happy with the result and the trend? Are you upset because your investment is worth less than $25,000? Feel free to speculate / guess at why you believe the stock increased, decreased, or remained static.

For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:

Record the following transactions on Page 2 of the journal:

“I can’t breathe”. Those are the last words of George Floyd. An officer's knee on Floyd’s neck for nearly nine minutes because he was black. This unfortunate event ignited the Black Lives Matter movement. The strength to revolt and to resist is at the heart of the Black Lives Matter movement, which is now a global force. Sadly, with good comes bad. In retaliation of the Black Lives Matter movement comes the All Lives Matter movement. This movement is made to silence black voices. America is built on the systematic oppression of African Americans; the All Lives Matter movement is just another reminder of how deep-rooted racism is in America's system and society.

Martin Luther King Jr is a well-known activist and leader during the Civil rights movement. King wrote, “The letter from Birmingham” while incarcerated in Birmingham, Alabama. In this letter, King is trying to persuade the people that segregation negatively affected African Americans and how it causes racial inequality in the United States. This letter still speaks to African Americans because they are still being racially targeted. The reality is King was assassinated, and he died the most hated man in American. That was in 1968 which is not that long ago. The internalized racism in America has not been faced. Instead, it is brushed to the side, and the textbooks provided in schools teach the youth a whitewashed perspective of the civil rights movement. The perspective that the civil rights act was passed due to the peaceful protests but, for six days Americans rioted -caused $13.5 million damage- which then passed the civil rights act of 1968.(source) Why must the people riot to be heard? George Floyd's case is the fastest a police officer has ever been charged because of the riots. All the rage, destruction, and sadness are in a relation of the system that failed to protect innocent lives.

The police system and prisons in America are a prime example demonstrating how black Americans are targeted. The police system first started as slave patrols and night watches. (https://plsonline.eku.edu/insidelook/brief-history-slavery-and-origins-american-policing) The system is based on repressing minorities which is why it should come to no shock that it is structurally prejudiced. Many cases across the U.S. have been reported of officers using illegal techniques without any purpose towards African Americans and has become a serious human rights violation. 99% of killings done by police are not charged with a crime. A frequent fact that is brought up by the All Lives Matter movement when speaking of police brutality towards black Americans is that whites are shot more than black. An attempt to belittle a silence the black struggles. Ignoring the data, that there are more white people than African Americans; they are 13% of the population but make up 24% of those being shot. (source) The same system that white Americans feel protected by is the same system that threatens black Americans. On top of that, there is a corrupt prison system set in place. Before the abolition of slavery, there was no real prison system in the United States. Regulations called the Black Codes developed to criminalize lawful action towards African Americans. The implementation of these rules caused behaviors such as standing in one area of town to become the criminal acts of “loitering”, for which African Americans were incarcerated. As a result, the percentage of African Americans in prison grew, surpassing whites. Now, has become modern-day slavery. Private companies can use factories in prisons (https://www.reimaginerpe.org/node/856)

Furthermore, money in America is administered unfairly by race, particularly among whites and blacks. When one has less wealth, they are already at a disadvantage for a better opportunity or just at a better life. The black-white wealth gap is a consequence of the standardized restrictions blacks suffer in trying to improve their wealth. African Americans also face inequality when it comes to debt. The fact is that blacks are slightly less likely to owe money than whites. However, blacks' interest payments are comparatively high relative to the debt. (Hanks, 1) There is even "redlining" when it comes to certain areas. "Discrimination based on location is often referred to as redlining because, historically, some lending institutions were found to have maps with red lines delineating neighborhoods within which they would not do business."(Turner, 12) This practice is partaking in the growth of the wealth gap as the banks are providing easy loans to the Whites as they are considered to be law-abiding citizens while the similar loaning facilities are denied to the Black community. By having better access to financial resources, whites can collect funds for their ventures hence creating the income and upgrading their lives while all these opportunities are not present to the black community.

Lastly, there is a problem of whitewashing black culture and representing Black Americans in a bad light.  

My fourth paragraph is not done but that is what it will be about. Please write a 250-word conclusion about this essay

For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:

Jul. 1 The following assets were received from Steffy Lopez in exchange for common stock: cash, $12,500; accounts receivable, $20,800; supplies, $3,200; and office equipment, $7,000. There were no liabilities received.

1 Paid two months’ rent on a lease rental contract, $4,800.

2 Paid the premiums on property and casualty insurance policies, $4,860.

4 Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, $5,500.

5 Purchased additional office equipment on account from Office Station Co., $6,500.

6 Received cash from clients on account, $15,100.

10 Paid cash for a newspaper advertisement, $400.

12 Paid Office Station Co. for part of the debt incurred on July 5, $5,200.

12 Recorded services provided on account for the period July 1–12, $13,300.

14 Paid receptionist for two weeks’ salary, $1,800.

Record the following transactions on Page 2 of the journal:

Jul. 17 Recorded cash from cash clients for fees earned during the period July 1–17, $9,450.

18 Paid cash for supplies, $600.

20 Recorded services provided on account for the period July 13–20, $6,650.

24 Recorded cash from cash clients for fees earned for the period July 17–24, $4,000.

26 Received cash from clients on account, $12,000.

27 Paid receptionist for two weeks’ salary, $1,800.

29 Paid telephone bill for July, $350.

31 Paid electricity bill for July, $675.

31 Recorded cash from cash clients for fees earned for the period July 25–31, $5,300.

31 Recorded services provided on account for the remainder of July, $3,000.

31 Paid dividends, $12,500.

Required: 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.)

2. Post the journal to a ledger of four-column accounts. Add the appropriate posting reference to the journal.

3. Prepare an unadjusted trial balance.

4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete requirements (5) and (6)

. A. Insurance expired during July is $405.

B. Supplies on hand on July 31 are $1,550.

C. Depreciation of office equipment for July is $750.

D. Accrued receptionist salary on July 31 is $180.

E. Rent expired during July is $2,400.

F. Unearned fees earned on July 31, $2,000.

5. On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the work sheet.

6. A. Journalize the adjusting entries on page 3 of the journal. Adjusting entries are recorded on July 31. Refer to the Chart of Accounts for exact wording of account titles.

B. Post the adjusting entries, inserting balances in the accounts affected.

7. Prepare an adjusted trial balance.

8. A. Prepare an income statement for the month ended July 31, 20Y2. Be sure to complete the statement heading. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (:) on the income statement.

B. Prepare a statement of stockholders’ equity for the month ended July 31, 20Y2. Be sure to complete the statement heading. Negative amount should be indicated by the minus sign. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. If an amount is zero, enter "0".

C. Prepare a balance sheet as of July 31, 20Y2. Be sure to complete the statement heading. Fixed assets must be entered in order according to account number. Refer to the Accounts, Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Negative amount should be indicated by the minus sign.

9.A. Journalize the closing entries on page 4 of the journal. Refer to the Chart of Accounts for exact wording of account titles.

B. Post the closing entries, inserting balances in the accounts affected. Leave the ITEM column BLANK for each row. If the account balance is zero (0) after closing entries are posted, enter a zero (0) in the account's normal balance column.

10. Prepare a post-closing trial balance.

Case Study (Questions at the Bottom)

In a suburban county outside a large city, the Parks and Recreation Department has been run for decades by a friendly, popular director who has run the volunteer program for the department by himself. He had a network of friends throughout the county that served as volunteer coaches, as teachers in recreational programs (art, music, dance, exercise), and in other roles. In turn, these volunteers drew in other volunteers to serve as timers, scorers, and assistants, as well as other necessary roles. The director loved working with this network of friends that he had developed over the years, and the volunteer program virtually ran itself, with the director’s administrative assistant simply filling a roster with the names of people who called in, chatted with the director, and then chose a role. The director has now retired, after a large banquet with numerous warm testimonials and expressions of appreciation. The new director is younger and new to the county. The county commissioners and county administrator hired her out of respect for her administrative training (a master’s degree and various training programs) and the administrative skills that she displayed in her previous position as assistant director in the Parks and Recreation department of a medium-sized city. They have asked her to work on shaping up the department’s budgeting and financial procedures, its communications and accountability to the commission and the county administrator’s office, and its internal organization. Several of them have quietly mentioned to her that as much as they loved the former director, “Old Ed” was wonderful but wanted to do things his way, and “it was hard to know what was going on over there sometimes.” The county was under increasing financial pressure, and it would be harder and harder to grant the budget increases that Old Ed asked for, especially without the popular support he could always bring to help the commissioners justify the increase. In addition, auditors were becoming increasingly critical of the budgets and accounts of the department. No one suspected any wrongdoing, but organization and management clearly needed improvement. The new director is concerned about the loose organization of the volunteer program. Drawing on some of the policies at her previous organization, she initiates the requirement that volunteers will sign a waiver of liability and statements that they will follow a drug-free policy and avoid sexual harassment. She also begins considering setting up a training program for volunteers through the National Youth Sports Coaches Association, and may ask the coaches to pay for their training. Word of these changes and possible changes spreads rapidly among the volunteers. In getting to work on her various priorities, the new director finds the constant phone calls from volunteers to be too disruptive to her other work. Knowing that it is not a satisfactory long-term solution, she asks her administrative assistant to handle the conversations and assignments of the volunteers himself, as best he can. Within two weeks, problems arise. Soccer season is starting, and for the first time ever, there is a shortage of coaches. The new director asks the administrative assistant to find more volunteers to serve as coaches. The assistant finds a few. He also reports back that some former coaches are refusing, saying they get the sense that their contributions are not really valued, and without Old Ed as center of the activity, it is just not the same anymore. Some comment that the new requirements imply distrust and are demeaning, and involve too much red tape. The new director has to stop all other activity, get on the phone, and talk some of these reluctant volunteers into continuing. She shores up the soccer program for the time being. Some of these old-timers tell her that the problem will get worse when t-ball and baseball season starts. She also hears that the exercise and dance instructors have told the administrative assistant that they may not continue. The new director has called in your group to assist her in improving the volunteer program. She asks that you advise her on what to do about the volunteers. She can only offer you a small consulting fee and lunch, but you have agreed to try to help because you are so good-hearted and professional.

3. What are the potential behavior objectives and target goals that you would recommend for the director and discuss with her? What are the questions or discussion points you would mention in trying to help her establish these objectives and goals?

4. How would you describe to her the desired benefits, potential motivators (desired behavior) and competing behaviors in this situation ? Explain this. Then, try to create a chart for this situation similar to table 7.5 below with Perceived Barriers and Benefits of the Competition.

5. What are the biggest challenges that you see for the new director in her effort to recruit more volunteers?

You are asked to answer all the questions in the proposed case. This task assesses the following learning outcomes:

• Assess the present value of future cash flows and the future value of regular savings, annually and periodically.

• Understand the Perpetuity and annuity valuation and their factors – annual and periodical – and with various starting dates with and without

  growth.

• Demonstrate an ability to apply the technical skills in a practical context.

  LAUNCH: WEEK 10 / DELIVERY: MAY 10Tth, 2020, 23:59HRS ON MOODLE
  Submission file format: Word document with all the answers, clearly identifying all steps, results, and including comments besides each answer. Task (100 points)

  The Andreotti family—comprising Mr. Andreotti, aged 40, Mrs. Andreotti, aged 38, and their three young children— relocated to Barcelona in 2020 when Mr. Andreotti received a job offer from a leading investment banking giant. For the next six years, they rented a three-bedroom condominium for 2.000€ in Barcelona per month, which included parking and condominium fees.

  While renting made life easy, the Andreotti family began weighing the pros and cons of purchasing a flat, in the same building, that became available in June 2020. In the past three years, the real estate market had softened somewhat, and the cost of the flats were stable. The idea of home ownership as a form of pension investment appealed to the couple. The monthly rents could be used for mortgage payments instead.

  While searching for the right property they found a nice apartment with 200 square meters, very close to Diagonal-Numancia, one of the best locations of the city.

  The apartment was owned and been promoted by a state-owned construction company and was offering to type of alternatives:

Option A: renting the apartment with a perpetual contract, meaning for ever and ever. The Andreotti family thought that could be a good solution for them.

The family was very happy living in that area, and they had the chance to live there forever at an offered price of 1.600€ per month. The contract contained a clause stating that the rent price will be growing at a 0.1% monthly.

At the same time, they were not forced to ask for a loan, which represented a heavy weight in Mr. Andreotti ́s shoulders.

Option B: consisted in acquiring the property with a mortgage scheme for 40 years. The ownership was demanding an initial down payment of 1.000.000€. The total price of the apartment was still not clear, it seems there was some space for negotiation.

Mr. Andreotti new that the interest applicable rates were very attractive, around 2.4% compounded monthly, this is supposed to be the market rate for this type of activities.

Mr. Andreotti is fixing the maximum amount he can pay monthly in 2.000€.

1. 1) What is the maximum amount that Mr. Andreotti should pay? Show the calculations and explain why. (15 points)

2. 2) What is the total amount that Mr. Andreotti will pay in total after 40 years? (15 points)

3. 3) What is the present value of the rental contract offered by the owner as option A? (15 points)

4. 4) Mr. Andreotti believes that he might be interested in selling the apartment in 40 years’ time, this is when he is planning to retire.

   If the interest rates remain at the existing level, what will be the price of the apartment in that moment? (15 points)

5. 5) Mr. Andreotti is very happy for knowing how to calculate future values and present values, because this helps him in taking this type of decisions. Having said that he wonders what the future value of the rental contract could be. Can you help him? Explain your answer and show your calculations. (10 points)

6) We are still thinking that the price of the apartment is very expensive, we believe we could convince the bank of making payments only once a year, at the end of the year. The interest rate would still be the same 2.4%, how much money have we saved with this action?

a) In the payments for each year? b) in the total amount paid for the whole period? c) what is the present value of the savings?

(15 points)

7)There is a risk according to Mr. Andreotti that the interests may rise after the first 5 years. If this is the case, and the new interest rate is 5%, just after the first 5 years, how much will then be the monthly payments for the remaining 35 years of mortgage? (Hint the total initial value of the loan is depends of the offered purchase price in point 2). Explain your answer and show your calculations. (15 points)

Rubrics

Points are at the end of each question.

For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:

Record the following transactions on Page 2 of the journal:

For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July:

Record the following transactions on Page 2 of the journal: