On August 1, 2019, United Corporation issued $9.50 million of 6% bonds at 104. The bonds mature in 20 years. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $45, one share of United $5 par common stock. World Company purchased 20% of the bond issue. On August 1, 2019, the market value per share for United stock was $51 and the market value of each warrant was $7. In March 2025, when United common stock had a market price of $65 per share and the unamortized premium balance was $250,000, World exercised the warrants it held.

Required:

1. Prepare the journal entries on August 1, 2019, to record (A) the issuance of the bonds by United and (B) the investment by World.

2. Prepare the journal entries for both companies in March 2025 to record the exercise of the warrants.

On August 1, 2019, United Corporation issued $9.20 million of 8% bonds at 105. The bonds mature in 20 years. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $42, one share of United $5 par common stock. World Company purchased 10% of the bond issue. On August 1, 2019, the market value per share for United stock was $48 and the market value of each warrant was $6. In March 2025, when United common stock had a market price of $62 per share and the unamortized premium balance was $220,000, World exercised the warrants it held.

Required:
1. Prepare the journal entries on August 1, 2019, to record (A) the issuance of the bonds by United and (B) the investment by World.
2. Prepare the journal entries for both companies in March 2025 to record the exercise of the warrants.

On August 1, 2019, United Corporation issued $9.50 million of 6% bonds at 104. The bonds mature in 20 years. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $45, one share of United $5 par common stock. World Company purchased 20% of the bond issue. On August 1, 2019, the market value per share for United stock was $51 and the market value of each warrant was $7. In March 2025, when United common stock had a market price of $65 per share and the unamortized premium balance was $250,000, World exercised the warrants it held.

Required:

1. Prepare the journal entries on August 1, 2019, to record (A) the issuance of the bonds by United and (B) the investment by World.

2. Prepare the journal entries for both companies in March 2025 to record the exercise of the warrants.

Case Two: Sony’s Response to North Korea’s Cyberattack

On November 24, 2014, employees of Sony Pictures Entertainment booted up their computers to find an image of a skull along with a message from a group calling itself the Guardians of Peace. The message read: “We’ve already warned you and this is just the beginning. We’ve obtained all your internal data including your secrets and top secrets [which will be released] if you don’t obey us.”

As Sony would eventually discover, the hackers had stolen reams of sensitive data, including the Social Security numbers of 47,000 current and former employees, system passwords, salary lists, contracts, and even copies of some Sony employees’ passports. The hackers accessed hundreds of Outlook mailboxes as well as Sony IT audit documents. They also stole media files and placed pirated copies of five of Sony’s movies on illegal file-sharing servers. Sony was forced to completely shut down its information systems in an attempt to stem the data breach. Ultimately, Sony would determine that the damage done by the hackers was far more extensive than it first believed. Not only had data been stolen, but 75 percent of the company’s servers had been destroyed and several internal data centers had been wiped clean.

Contacted within hours of the event, the FBI soon identified the culprit. In June, several months before the hack, North Korea’s Ministry of Foreign Affairs had declared that it would take “a decisive and merciless countermeasure” if the U.S. government did not prevent the planned release of Sony’s motion picture The Interview, which features two reporters who venture to North Korea to interview and assassinate the country’s dictator, Kim Jong-un. In the film, the main character, initially won over by the dictator’s apparent kindness, discovers that the tyrant is lying about the country’s prosperity and freedoms. The plot, along with the movie’s unflattering portrayal of the dictator as ruthless and childish, had caught the attention of the North Korean government.

The U.S. government disclosed that it had proof that the North Koreans had made good on their threat. The U.S. National Security Agency (NSA) had reportedly penetrated the North Korean cyberwarfare unit four years prior to the attack and had been monitoring its capabilities since then. After Sony alerted the FBI of the attack, the NSA was able to trace the attack back to North Korea, using a digital fingerprint the hackers had left in the malware. Several weeks after the attack, FBI Director James Comey, revealed in a speech that the Sony hackers had been sloppy. “We could see that the IP [Internet protocol] addresses that were being used to post and to send the emails were coming fromIPs that were exclusively used by the North Koreans.”

The hackers warned Sony not to release The Interview, and then on December 16, the group issued a message threatening large terrorist attacks on theaters that showed the film. The National Organization of Theatre Owners contacted the Department of Homeland Security for information and advice. The FBI and NSA released a bulletin explaining that they had no credible information about a plan to attack theaters, but they could neither confirm nor deny whether the hackers had the ability to launch such an attack. Shortly after the bulletin was released, the four largest U.S. theater chains withdrew their requests to show the movie—Carmike Cinemas first, followed by Regal Entertainment, AMC Entertainment, and Cinemark. Within hours, Sony announced that it had canceled the film’s release. White House officials, Hollywood personalities, and the media were aghast. Comedian Jimmy Kimmel tweeted that the decision by the major theater chains to refuse to screen The Interview was “an un-American act of cowardice that validates terrorist actions and sets a terrifying precedent.”

On December 19, President Obama addressed the issue publicly: “Sony is a corporation. It suffered significant damage. There were threats against its employees. I’m sympathetic to the concerns that they faced. Having said all that, yes, I think they made a mistake.” Obama explained, “We cannot have a society in which some dictator in some place can start imposing censorship in the United States.” The president’s remarks highlighted the seriousness of the incident to the American public, many of whom came to view the incident as an attack on the freedom of expression.

In response to Obama’s comments, Sony officials released a statement later the same day: “Let us be clear—the only decision that we have made with respect to release of the film was not to release it on Christmas Day in theaters, after the theater owners declined to show it.... After that decision, we immediately began actively surveying alternatives to enable us to release the movie on a different platform. It is still our hope that anyone who wants to see this movie will get the opportunity to do so.”

In fact, on Christmas Day, the planned release day in the theater, The Interview became available through video on- demand outlets such as Amazon.com, and within less than a month, the movie had brought in over $40 million in revenue. Approximately 6 million viewers had rented or purchased the movie in this way. Several hundred movie theaters that opted to screen the movie generated another $6 million. Over the next two months, Sony also released the movie on Netflix, on DVD and Blu-Ray, and in theaters in other countries.

Meanwhile, Sony has worked to recover from the damage done to the company itself by the hack. Sony Pictures’ parent company, which is based in Japan, asked regulators there for an extension to file its third-quarter financial results. It also fired executive Amy Pascal whose leaked emails contained derogatory remarks about Hollywood producers and the U.S. president’s movie preferences. The company also provided one year of free credit protection services to current and former employees.

In February 2015, President Obama held the first-ever White House summit on cyber security issues in Silicon Valley. The summit was billed as an attempt to deal with the increasing vulnerability of U.S. companies to cyber attacks— including those backed by foreign governments. However, the chief executives of Microsoft, Google, Facebook, and Yahoo all refused to attend the summit. Those companies have long advocated for the government to stop its practice of collecting and using private data to track terrorist and criminal activities and have worked to find better ways to encrypt the data of their customers. However, U.S. security agencies have continually pressured the IT giants to keep the data as unencrypted as possible to facilitate the government’s law enforcement work. Ultimately, both the government and private businesses will need to find a way to work together to meet two contradictory needs—the country’s need to make itself less vulnerable to cyber attacks while at the same time protecting itself from potential real-world violence.

Critical Thinking Questions:

1. Do you think that Sony’s response to the attack was appropriate? Why or why not?
2. What might Sony and the U.S. government done differently to discourage future such attacks on other U.S. organizations?
3. Are there measures that organizations and the U.S. government can take together to prevent both real-world terrorist violence and cyber attacks?

Which of the following is NOT an assumption of the traditional economic order quantity (EOQ) model?

a. Holding and ordering costs are stable and known.

b. Demand is constant and known.

c. Supply lead time is constant and known.

d. Quantity discounts are possible.

Kim’s Nail Salon uses a weighted moving average method to forecast demand. She assigns a weight of 5 to the previous month’s demand, 3 to demand two months ago, and 2 to demand three months ago. If demand was 800 customers in April, 900 customers in May, 1,200 customers in June, and 2,000 customers in July, what should her forecast for August be?

a. 1,540

b. 910

c. 1,400

d. 1,210

Statewide Insurers receives 600 applications per month. Currently, there are 60 applications in the Reception area and 140 applications with the Underwriting team. How long does Receiving take to process an application? Assume that there are 20 working days per month.

a. 2 days

b. 3 days

c. 7 days

d. 10 days

Based on experience, the manager at the Giraffe Hotel decides to accept a reservation for a party of 12 guests knowing that his hotel is sold out. He is accepting the reservation because:

a. he can cancel the reservations of the 12 lowest-paying guests and get more revenue from the new guests

b. he can make arrangements with the neighboring hotel to accept the 12 guests

c. he is using overbooking techniques and has determined that he can safely accept the 12 guests

d. he knows he will have 6 cancellations and 6 no-shows among the current reservations

A manufacturing firm finds a location using the center of gravity method but rejects that location because they are unable to efficiently transport the finished goods to market. The firm’s action illustrates the link between __________ and location.

a. proximity

b. clustering

c. infrastructure

d. globalization

Chapter 2 Mastery Problem

The T – Accounts are set up for you in the excel spreadsheet.

Hassan Rahim won a concession to rent bicycles in the local park during the summer. During the month of June, Hassan completed the following transactions for his bicycle rental business:

Chart of Accounts

In C++

All guests in ABC Hotel are either Elite members (meaning they get a free breakfast) or Standard members (meaning they do not get a free breakfast). They collect points for every stay-Elite members earn 100 points for every day stayed in the hotel (so 2 days would be 200 points) and Standard member earns 50 points for every stay (so 3 days would be 140 points). Once 1000 points are reached, guests get a free stay. Guest details are kept in a file:

Sample input file1: Augustus, E-300,200, eggs//customer name, Membership level (E means elite), item ordered, ID number, points, breakfast choice

Sample input file2: Cyrus, S-100,30,x//customer name, Membership level(S means standard), item ordered, ID number, points, breakfast choice

1.The program should read in the number of points to get a free stay (1000) from the command line. It should continuously read in files of guests until the exit is entered (meaning the user can keep typing in file names-note that you can type in the same file name to open a previous guest).

2.Every time a file is opened, the program should ask how many days the guest is staying and award the appropriate number of points based on the membership level. The new point total should be saved in the file. If they are an elite member, they have the chance to change their breakfast choice.

3.When exiting, a file should be output with the number of guests that got a free stay (meaning their total points were 1000 or greater)

Sample output file:

Augustus had a free stay.

Jane had a free stay.

4.You should make a Hotel class and an abstract Person class. You should also make additional classes as necessary.

Your BANA II professor is going on vacation. He has narrowed down a list of potential hotels, but he is still overwhelmed by the data. He loves great food and wants to do all the activities at the resort. Refer to the attached Excel workbook to complete the following 2 questions: 1. Develop two unique ways to display the data (two unique types of charts) to show him where he should stay. Save the graphs in the Blackboard Midterm Tab. Make sure to label and describe the data in the chart. Be creative and impress your professor. 2. Recommend the best way to present the data. Write a narrative summary of what hotel you recommend based on the data visualization and the tradeoffs that you observe.