5–5A Buono Adventures, which uses the perpetual inventory system, has the following account balances (in alphabetical order) on July 31, 2020:

Note: For simplicity, all operating expenses have been summarized in the account Operating Expenses.

Additional data at July 31, 2020:

1. A physical count of items showed $3,000 of supplies on hand. (Hint: Use the account Operating Expenses in the adjusting journal entry.)

2. An inventory count showed inventory on hand at July 31, 2020, of $140,000.

3. The equipment has an estimated useful life of eight years and is expected to have no scrap or residual value at the end of its life. (Hint: Use the account Operating Expenses in the adjusting journal entry.)

4. Unearned sales revenue of $5,600 was earned by July 31, 2020.

Required

1. Record all adjustments and closing entries that would be required on July 31, 2020.

2. Prepare the multi-step income statement and statement of owner’s equity for the year ended July 31, 2020, and the classified balance sheet in report format as at July 31, 2020.

3 4

Adjusting and closing the accounts of a merchandising company, and preparing a merchandiser’s financial statements under the perpetual inventory system

2. Net loss, $67,500

Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2021, management decided to change from the average inventory costing method to the FIFO inventory costing method at each of its outlets.

The following table presents information concerning the change. The income tax rate for all years is 25%.

   
Required:
1. Prepare the journal entry to record the change in accounting principle.
2. Determine the net income to be reported in the 2021–2020 comparative income statements.
4. Indicate the affect of the change in the 2021–2020 comparative statements of shareholders’ equity assuming cash dividends were $2 million each year and that no dividends were paid prior to 2020.

Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2021, management decided to change from the average inventory costing method to the FIFO inventory costing method at each of its outlets.

The following table presents information concerning the change. The income tax rate for all years is 25%.

Required:
1. Prepare the journal entry to record the change in accounting principle.
2. Determine the net income to be reported in the 2021–2020 comparative income statements.
4. Indicate the affect of the change in the 2021–2020 comparative statements of shareholders’ equity assuming cash dividends were $5.00 million each year and that no dividends were paid prior to 2020.

Magpie Ltd enters into a non-cancellable two-year lease agreement with Tiger Ltd for an item of machinery on 1 January 2020. Magpie Ltd pays $15,000 on signing the agreement with Tiger Ltd on 1 January 2020. There are eight quarter payments of $10,000, the first being made on 31 March 2020. Included within the $10,000 lease payments is an amount of $1,000 representing payment to the lessor for insurance and maintenance of the machinery. The machinery is to be depreciated on a straight-line basis. The machinery is expected to have an economic life of five years, after which time it will have a zero-salvage value. There is a purchase option Magpie Ltd will be able to exercise at the end of the second year for $30,000. If this purchase option is exercised, the machinery will be transferred to Magpie Ltd. The rate of interest implicit in the lease is 12%. Refer to the appendix for the tables of Present Value Factor for a single future amount and Present Value of an ordinary annuity of $1.

Prepare the lease payments schedule for Magpie Ltd from 1 January 2020 to 30 June 2020.

Managerial Decision Making Research and Analysis Focus of the Final Paper Research a specific company of your choice and identify some of the managerial decisions that were made over time and in response to changes in its market or competitive environment. Use the Ashford University Library and web-based sources for your research. At least three external scholarly sources must be used in addition to the textbook.

Address all of the following areas: Describe the company and provide a brief history of its operations. Find or use graphs to illustrate its financial performance over the years. Describe any sources of risk or uncertainty in its operations. Do the financial reports indicate risky or uncertain activities or changes to the economic environment that ultimately appear to have affected the company

The case:

Hai Vu is the new president of Pacific Coast Optics (PCO) a small manufacturing firm in Sacramento, CA which produces fiber lenses for Street Mapping System, Infrared Lens for Anti-Terrorism Detection, and Camera Lenses for the Mars Rove. Hai Vu recently bought this company from his former employer. PCO used brokers to sell to wholesalers who marketed to retailers. Hai Vu occasionally thought about eventually developing his own sales force, but that was still some time away. Hai Vu is currently taking a second look at his plan to improve his firm’s profit performance. In 2019 PCO had a modest profit of $160,000; his 2020 goal is to increase this by 25%.

The 2019 retail selling prices of the three products PCO sold were $100,000 (Camera Lenses for the Mars Rove, $70,000 (Street Mapping Systems), and $25,000 (Infrared Lens for Anti-Terrorism Detection) per product, accounting for 25%, 40%, and 35%, respectively, of retail sales.  In 2019, PCO paid its brokers a 6% commission on all products sold to wholesalers. Wholesalers margin was 28% on retailer purchase price while retailers’ markup was 39% on wholesaler selling price. PCO’s 2019 material and labor costs per product ran about $20,000, while packaging and crating costs were $500 per product.

Hai Vu estimates machinery maintenance expenditures to be about $90,000 per year. PCO uses both “push” and “pull” promotional approaches to marketing through their channels of distribution. PCO products aside a $5 product information brochure for every product . In 2019, PCO attended two national trade shows at $9,000 each and 4 regional trade shows at about $4,000 each. PCO spent nearly $240,000 advertising in national consumer magazines and an additional $30,000 in trade publications to wholesalers and retailers. All of these will repeat for 2020.

Broker commission for 2020 will increase to 12% while packaging crating costs will go up to $505 per product. Hai Vu also plans to increase 2020 manufacturer selling price by about $2000 per product.

Assuming no changes in costs and prices other than those mentioned earlier, how will Hai Vu’srequired level of sales (RLS) to reach the 2020 profit goal, in units and dollars, differ from those for the 2019 profit goal, in units and dollars? That is, will they go up, down or stay the same?

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Q07.​What is the proposed PCO manufacturer selling price per product and $ profit goal for 2020?

TI Inc. is considering a 4-year investment project. The project’s cash flows are summarized in the table below. Management is expecting at least a 8% annual return from this investment. What are the IRR and MIRR of the following cash flows? Which metric you would recommend to Truman’s CEO and why? (Explain briefly)

Trident, which is US based company, has many subsidiaries in different countries, such as England, Germany, China etc. Trident Germany, which is one of the foreign subsidiaries of Trident Parent Company, manufactures in Germany, sells domestically and exports and all sales are invoiced in euro. Trident Germany will be affected by the unexpected change in the value of US dollar and euro, the currency of the economic consequence for the German subsidiary. Trident Germany’s baseline assumptions are given as:

Suppose that on January, 1, 2015, before any commercial activity begins, the euro unexpectedly depreciates from $1.20/€ to $1.12/€. To illustrate the effect of different scenarios on the Trident Germany’s operating exposure, consider two cases;

Case 1: Depreciation, no change in any variable - The euro unexpectedly depreciates from $1.20/€ to $1.12/€. There is no change in Net Working Capital.

Case 2: Increase in sales volume, other variables remain constant – Assume that the depreciation of the euro will result in the sales increase by 40%, to 1,400,000. There is an increase of €203,397 in Net Working Capital.

1. Calculate the present value of the operating cash flows for Case 1.
2. Calculate the present value of the operating cash flows for Case 2.
3. Summarize the impact of the depreciation of the euro in the Trident Germany’s present value.