Vandals Company has not yet prepared a formal statement of cash flows for the 2020 fiscal year. Comparative balance sheets as of December 31, 2019, and 2020, and a statement of income and retained earnings for the year ended December 31, 2020, are presented below.

Instructions:                                                                                    

Prepare a statement of cash flows using the direct method. Changes in accounts receivable and in accounts payable relate to sales and cost of sales. Do not prepare a reconciliation schedule.      

“Most large department stores pay their workers the minimum wage, which is Massachusetts in 2020 is $12.75/hour. However, Target announced that pays its workers to $15/hour by 2020. Target CEO Brian Cornell claims that this higher wage will help it attract and retain better workers, leading to a more pleasant shopping experience and ultimately make Target more profitable.” “This illustrates that if Massachusetts raises its minimum wage to $15/hour in 2021 then for most businesses which pay their workers minimum wage the extra productivity and quality of work of the minimum-wage employees will offset the extra expense of their wages, so we can expect little to no impact on their profits.” Make a counter-argument.

Students taking the Graduate Management Admissions Test (GMAT) were asked about their undergraduate major and intent to pursue their MBA as a full-time or part-time student. A summary of their responses follows. Undergraduate Major Business Engineering Other Totals Intended Enrollment Full Time 423 394 75 892 Status Part Time 401 594 45 1,040 Totals 824 988 120 1,932 Develop a joint probability table for these data (to 3 decimals). Undergraduate Major Business Engineering Other Totals Intended Enrollment Full-Time Status Part-Time Totals Use the marginal probabilities of undergraduate major (Business, Engineering, or Other) to comment on which undergraduate major produces the most potential MBA students. If a student intends to attend classes full-time in pursuit of an MBA degree, what is the probability that the student was an undergraduate Engineering major (to 3 decimals)? If a student was an undergraduate Business major, what is the probability that the student intends to attend classes full-time in pursuit of an MBA degree (to 3 decimals)? Let A denote the event that student intends to attend classes full-time in pursuit of an MBA degree, and let B denote the event that the student was an undergraduate Business major. Are events A and B independent? Icon Key Previous Question 14 of 15 Next SaveSubmit Test for Grading

Adina, age 32, is a married architect with one child. Her salary has reached a plateau at $85,000 a year. She believes that if she pursues an MBA degree full-time, she would move into a managerial position and her salary would rise by $60,000 a year. Adina wants to maintain her current lifestyle, which already generates substantial yearly cash savings and accumulate the capital to leave to her son. Her MBA course would take two years to complete and cost $52,000 a year. Because she plans to pay for the MBA out of existing savings and would be spending the money to qualify for a new position, she would not be eligible for any tax benefits. Assume that Adina pays one-third of her salary in taxes and her tax bracket will remain unchanged after the raise, that she can earn 6 percent after taxes on investments with a similar risk to her job, and that she plans to retire at age 65. Furthermore, assume that all salary and schooling payments are made in a lump sum at the beginning of each year. What is her rate of return on this investment? Should she pursue an MBA? If so, what will be the value of her human capital, assuming a calculation that incorporates salary forgone and her extra salary from obtaining her MBA upon graduation?

According to Peters (2017), the pharmaceutical industry faced a challenging situation in September 2017 with the significant weather disruption incurred by their manufacturing plants when the island of Puerto Rico was hit by damaging Hurricane Maria. How big of a deal was it for the industry? For many years, favorable tax laws made it cost beneficial for pharmaceutical companies to locate manufacturing plants in Puerto Rico. In fact, almost 75% of Puerto Rico’s exports in 2016 were pharmaceutical products according to the Bureau of Labor Statistics. Shortly after Maria hit, the U.S. Food & Drug Administration identified a list of more than 40 high-priority pharmaceutical drugs where short-term distribution disruption could be an issue! That’s a huge hit to the industry which it likely had not planned for and would have to incur significant additional costs to remedy. Bye-bye to some of those cost savings…

If the CEO of a newer pharmaceutical company was in the process of looking to outsource the manufacturing of a medication currently produced at a plant in the U.S. to Puerto Rico when Maria hit, should (s)he immediately stop his/her consideration of the plans because of the hurricane, even if it was financially favorable to outsource there?

Vetting each qualitative and quantitative matter takes time and resources, but it is necessary to make sure the company makes sound business decisions from both perspectives.

Parsons Company acquired 90% of the outstanding common stock of Shea Company on June 30, 2019, for $426,000. On that date, Shea Company had retained earnings in the amount of $60,000, and the fair value of its recorded assets and liabilities was equal to their book value. The excess of implied over the fair value of the recorded net assets was attributed to an unrecorded manufacturing formula held by Shea Company, which had an expected remaining useful life of five years from June 30, 2019.

Financial data for 2021 are presented here:

On December 31, 2019, Parsons Company sold equipment (with an original cost of $100,000 and accumulated depreciation of $50,000) to Shea Company for $97,500. This equipment has since been depreciated at an annual rate of 20% of the purchase price. During 2020 Shea Company sold land to Parsons Company at a profit of $15,000.

The inventory of Parsons Company on December 31, 2020, included goods purchased from Shea Company on which Shea Company recognized a profit of $7,500. During 2021, Shea Company sold goods to Parsons Company for $375,000, of which $60,000 was unpaid on December 31, 2021. The December 31, 2021, inventory of Parsons Company included goods acquired from Shea Company on which Shea Company recognized a profit of $10,500.

Required:

1. Prepare a consolidated financial statements workpaper for the year ended December 31, 2021.
2. Prepare a schedule to calculate consolidated retained earnings on December 31, 2021, using an analytical or t‐account approach. (Hint: Due to rounding, you may be out of balance by $1. To avoid this, you should carry decimals until the final calculation.)

You are the new accounting manager at the Barry Transport Company. Your CFO has asked you to provide input on the company's income tax position based on the following: Pretax accounting income was $75 million and taxable income was $13 million for the year ended December 31, 2018. The difference was due to three items: Tax depreciation exceeds book depreciation by $60 million in 2018 for the business complex acquired that year. This amount is scheduled to be $70 million in 2019 and to reverse as ($70 million) and ($60 million) in 2020, and 2021, respectively. Insurance of $10 million was paid in 2018 for 2019 coverage. A $8 million loss contingency was accrued in 2018, to be paid in 2020. No temporary differences existed at the beginning of 2018. The tax rate is 40%. Required: 1. Determine the amounts necessary to record income taxes for 2018 and prepare the appropriate journal entry. 2. Assume the enacted federal income tax law specifies that the tax rate will change from 40% to 35% in 2020. When scheduling the reversal of the depreciation difference, you were uncertain as to how to deal with the fact that the difference will continue to originate in 2019 before reversing the next two years. Upon consulting PricewaterhouseCoopers' Comperio database, you found:

It’s 2014. You’ve been working for 4 years. You’re thinking about getting an MBA (full time two years).
• Current Salary: $80,000 per year
• Expected Salary: $110,000 per year
• Cost of an MBA: $100,000
How many years to take to pay back the cost after the graduation? Assume 8% of annual rate.

Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a foreign supplier at a cost of 1,200,000 francs on March 15, 2021. To hedge this forecasted transaction, on December 15, 2020, the company acquires a call option to purchase 1,200,000 francs in three months. Maas selects a strike price of $0.68 per franc when the spot rate is $0.68 and pays a premium of $0.005 per franc. The spot rate increases to $0.686 at December 31, 2020, causing the fair value of the option to increase to $10,000. By March 15, 2021, when the raw materials are purchased, the spot rate has climbed to $0.70, resulting in a fair value for the option of $24,000. The raw materials are used in assembling finished products, which are sold by December 31, 2021, when Maas prepares its annual financial statements.

1. Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials.

2. What is the overall impact on net income over the two accounting periods?

3. What is the net cash outflow to acquire the raw materials?