John and Tara Smith are married and have lived in the same home for over 20 years. John's uncle Tim, who is 64 years old, has lived with the Smiths since March of this year. Tim is searching for employment but has been unable to find any—his gross income for the year is $2,000. Tim used all $2,000 toward his own support. The Smiths provided the rest of Tim's support by providing him with lodging valued at $5,000 and food valued at $2,200. Assume the original facts except that Tim earned $10,000 and used all the funds for his own support. Assume the original facts except that Tim is a friend of the family and not John's uncle

An insurance company sells a two-year term life insurance policy to an 80-year-old woman. The woman pays a premium of $1,000 per year. If she dies within one of the insured years, the insurance company will pay $20,000 to her beneficiary. According to the US Centers for Disease Control and Prevention, the probability that an 80-year-old woman will be alive one year later is 0.9516 and the probability that an 80-year-old woman will be alive two years later is 0.9512 Find the expected value for the insurance company for that two year term policy.

Do you notice the difference between fast food restaurants in preparing menu items?  Typically, Some produce menu items in advance of customer orders based on anticipated demand.  Others, however, produce menu items only in response to customer orders.  Give us an example company for each type of restaurant. Which system (MRP-II or lean manufacturing) does each company use?  What are the relative advantages and disadvantages of each system?   

Rexon Company leases non-specialized equipment to Ten-Care Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows:

Required:

1. Assuming that the lease is a sales-type lease from Rexon’s point of view, calculate the amount of the equal rental receipts.

Additional Instruction

$

2. Prepare a table summarizing the lease receipts and interest income earned by Rexon.

Additional Instructions

3a. Prepare the journal entries for 2019.

General Journal Instructions

PAGE 2019

GENERAL JOURNAL

3b. Prepare the journal entries for 2020.

PAGE 2020

GENERAL JOURNAL

Strategic Risk Management—— Individual Q&A Discussion Narrative “Balanced Scorecard”

Assume you are presenting (as a consultant) the concept of the Balanced Scorecard to the executive team at a company that is considering implementing it for strategy execution. The CFO asks the following question: What financial performance measures are usually included in a Balanced Scorecard? In one short paragraph, please describe how you would reply to this question.

The Cordis Building Works Company modifies and builds portable offices and homes based on customized plans using everything from shipping containers, to modular homes. The company has been in business for 35 years and has prided itself on providing a very competitive salary and great benefits as well as retaining most of its original employees since they began. While they originally began the company doing creative designs and one of a kind housing and office buildings, much of the routine work in the factory is now done robotically. They still need a supervisor and technicians to keep the operations running as well as the construction crew who actually deliver and construct the products on site. Now the designs might be modified a bit but are already in their computer and ready to produce with some small modifications when needed. There are two main engineers, one who predominantly works on high-end mansions, and the other who predominantly works on corporate office projects back at the main offices.

The CEO and President (i.e., the husband and wife team who are the founders), are the ones that meet with prospective corporate clients and negotiate the prices and building parameters. While the company used to construct low income housing as well, the clients are now almost exclusively, wealthy private clients or corporate titans. The CEO and the company president are beginning to think about retirement. They want to keep the company running but they cannot understand why the two engineers seem unmotivated when they are receiving such competitive salaries, and great benefits with three weeks’ vacation a year. In addition, the production line has had more problems of late and the supervisor seems to be coming in late several times a week as have the technicians. They are worried about the future of the company they built.

Checklist: Minimum Submission Requirements

Summarize the problems at the company that are possibly affecting employee motivation and performance.
Analyze motivation theories as provided in your text and Learning Activities (providing proper attribution) to explain the engineers’ lack of motivation.
Analyze motivation theories as provided in your text and Learning Activities (providing proper attribution) to explain the supervisor’s, technicians’, and construction crew’s lack of motivation.
Explain how the CEO and president might better motivate employees to improve performance.

A manager is explaining to a staff auditor how various situations might affect the audit opinion. For each of the following scenarios, identify the appropriate reporting option by matching the scenario with the opinion type from the list provided. Assume that any financial statement effect is material, unless otherwise noted and that US auditing standards are followed.

Sue is a customer account representative for ABC Company. She recently acquired several new accounts when a previous representative, Dan, took an early retirement. Sue reviewed each of Dan’s accounts to help familiarize herself with his clients and under- stand how she can better serve each one’s individual needs. As she was reviewing the client list, she found a major customer she had never heard of before. Surprised that she had not yet done business with the company, she called it to introduce herself as the new representative. When Sue placed the call, she found that the reported number had been disconnected. Thinking that the customer may have done business with ABC in the past and have moved on, she reviewed the account transactions and found that the most recent transaction had taken place the week prior. During her review, she also noticed the latest transaction was for an unusually large amount for ABC. As Sue pursued her curiosity, she went to other employees to find out more about the company. In her questioning, she found that none of the employees had ever heard of the customer. Once she had run out of other avenues, Sue decided to contact the controller to find out if he could provide any additional information. When Sue opened the company directory, she was amazed  when she recognized his home address: it was the same address as the mystery customer!

1. What are some of the possible scenarios for why the addresses match?
2. What other symptoms would be present in each of the scenarios you identified in part (1)?
3. What are the implications of the address match if the company is private? If the company was pub- licly traded?
4. Assuming the company was preparing for an IPO, who should Sue contact, and what should she say? 5. If Sue believes these revenues are fictitious, what
should her next course of action be?

You have 3 billion dollars in the fund, which you can invest in any combination of Australian stocks, US stocks, and Australian Treasury. The idea is to use your knowledge of portfolio theory to make an argument for having an internationally diversified portfolio, rather than just holding domestic assets. The data are monthly returns and the relevant sample statistics are summarized in the following table:

1. Using the results of portfolio theory and the estimates above, compute the tangency mutual fund (portfolio) between Australian and US stocks (i.e., the optimal split between Australian and US stocks). Find the tangency portfolio using the Solver in Excel. Paste the table used with Solver to your Word document and discuss your findings.

2. Suppose you would like to achieve an average return of 0.5% per month in excess of the T-bill rate with the smallest possible risk. What is the optimal split between Australian stocks, US stocks, and T-bills? That is, how much of the $3 billion should you invest in each country and how much should you borrow or lend? What is the standard deviation of this portfolio?

3. After a bad year on the US stock market, some people try to influence you to divest (i.e., sell all of) the holdings of US stocks. How much should you invest in Australian stocks and T-bills alone to obtain the same level of risk as you obtained in part 2.? (Hint: you want the standard deviation of the divested portfolio to be the same as the nondivested portfolio.)

4. What would be the cost in terms of expected monthly return from divesting in the US stocks? What would be the cost in terms of annual return (note: the returns are continuously compounded)? What would be the cost in dollar terms on the $3 billion portfolio each year?