Condensed financial data of Oakley Company appear below.

Additional information:

Prepare a worksheet for the statement of cash flows using the indirect method. Enter the reconciling items directly in the worksheet columns. (Show details of retained earnings and accumulated depreciation, do not net)

Gelmite & Sons Hardware is considering introducing a cash discount policy to its customers so as to

improve current sales. There are three possible scenarios that include monthly estimates. Gelmite

& Sons uses a 60% mark up on cost on all their products as a general rule. Fixed costs are R8 000

per month.

Scenario A: Representing the Current Scenario

Company sold 600 units of the spark nail which they ordered at a wholesaler in Shoppers Town for

a cost price of R100 each.

Scenario B: Representing initial sales target

Company will sell 800 units of the spark nail which they ordered at a wholesaler in Shoppers Town

for a cost price of R100 each.

These sales units are achieved after the introduction of a 20% markdown on the original selling

price.

19; 20 2020

© The Independent Institute of Education (Pty) Ltd 2020

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Scenario C: Representing a scenario where sales targets are surpassed

Company will sell 1 000 units of the spark nail which they ordered at a wholesaler in Shoppers Town

for a cost price of R100 each. In order to achieve the increased sales, additional marketing costs of

R3 000 will be incurred.

These sales units are achieved after the introduction of a 20% markdown from original selling price.

Required:

Which of the three scenarios would you recommend to management? Provide a reason for your

answer with reference to net profit before tax.

Condensed financial data of Oakley Company appear below.

Oakley Company Comparative Balance Sheets December 31

Assets 2020 2019

Cash $82,700 $47,250

Accounts receivable 90,800 57,000

Inventory 126,900 102,650

Investments 84,500 87,000

Equipment 255,000 205,000

Accumulated depreciation—equipment (49,500 ) (40,000 )

$590,400 $458,900

Liabilities and Stockholders’ Equity Accounts payable $57,700 $48,280

Accrued expenses payable 12,100 18,830

Bonds payable 100,000 70,000

Common stock 250,000 200,000

Retained earnings 170,600 121,790

$590,400 $458,900

Oakley Company Income Statement For the Year Ended December 31, 2020

Sales revenue $297,500

Gain on disposal of plant assets 8,750

306,250

Less:

Cost of goods sold $99,460

Operating expenses (excluding depreciation expense) 14,670

Depreciation expense 49,700

Income tax expense 7,270

Interest expense 2,940

174,040

Net income $132,210

Additional information:

1. Equipment costing $97,000 was purchased for cash during the year.

2. Investments were sold at cost.

3. Equipment costing $47,000 was sold for $15,550, resulting in gain of $8,750.

4. A cash dividend of $83,400 was declared and paid during the year.

Prepare a worksheet for the statement of cash flows using the indirect method. Enter the reconciling items directly in the worksheet columns. (Show details of retained earnings and accumulated depreciation, do not net)

Lease DataYearly rental: $3,057.25

Lease term: 3 years

Estimated economic life: 5 years

Purchase option: $3,000 at end of 3 years, which approximates fair value

Renewal option: 1 year at $1,500; no penalty for nonrenewal; standard renewal clause

Fair value at commencement: $10,000

Cost of asset to lessor: $8,000

Residualvalue:

Guaranteed: $0

Unguaranteed: $3,000

Lessor's implicit rate (known by the lessee)12%Estimated fair value at end of lease: $3,000

1 . Briefly discuss the impact of the accounting for this lease as a finance or operating lease for two common ratios: return on assets and debt to total assets.

2.What fundamental quality of useful information is being addressed when a company like Salaur capitalizes all leases with terms of one year or longer?

Summary of case The opening case explores corporate social responsibility at Woolworths Group. The Australian conglomerate has set 2020 as the deadline to achieve goals across three areas that comprise its Corporate Social Responsibility Strategy 2020. Woolworths believes that it needs to be socially responsible across multiple areas within the framework of People, Planet, and Prosperity. Because the focus in each of these areas is unique, specialized strategic initiatives have been developed for each focus. The focus on People is about encouraging diversity, Planet focuses on the environment, and Prosperity focuses on trusted relationships.

Questions:

1. What challenges do you think a company like Woolworths Group is facing when developing and implementing a company-wide corporate social responsibility strategy that takes into account the more than 200,000 employees, diverse interests, and stakeholders?

2. Woolworths Group is trying to reduce its carbon emissions or footprint by 10 percent. Based on where we are as a world, is 10 percent enough of a reduction? Perhaps global warming is not real, albeit the vast majority of scientists clearly suggest it is; what do you think?

3. Woolworths Group is obviously not the only conglomerate that is working on Corporate Social Responsibility issues. Name at least one more company that is working on this topic. What efforts or goals are they setting in this regard? Write a brief paragraph on your findings.

The Riverside Company is evaluating two mutually exclusive projects: Black and White, at the end of 2016. The firm’s weighted average cost of capital is 8%. Data for each project are as follows:

Time value of money tables for an 8% discount rate are:

Requirements:

Compute the net present value for each project using the time value of money tables presented in the problem.

Determine which project the Riverside Company should invest in based on NPV.

Compute the profitability index for each project.

Determine which project the Riverside Company should invest in based on the profitability index.

Should the firm invest in the Black or White project? What is the basis for your choice?

What is hard water? Is it dangerous and how is it softened? The U.S. has some of the best, most universal access to clean water in the WORLD. Despite this, we’re the biggest consumer of bottled water. How is drinking water processed in the U.S.? Is the U.S. tap water safe and drinkable? Is the bottled water (even “spring” water) any safer than tap water?

Suppose that the Japanese yen depreciates relative to the U.S. dollar. How does this affect the competitiveness of both Ford and Honda in both the U.S. and Japanese markets? Create a numeric example to show how Honda could reduce the dollar price of cars sold in the U.S. and still earn more yen per car compared with the stronger yen and higher dollar price

(a) Use a graphical approach to explain the effect of the following changes.

i. A new Covid 19 face mask, made in America, is successful in sales to canada.

   ii. canada reduces its interest rate compared to the U.S., causing investors to sell canada’s bonds and buy U.S. bonds.

iii. Canadians, unhappy with monetary unification, transfer their bank balances to the U.S.