Tallcrest discounted a $50,000, 45-day, 5% note receivable on August 10 at the local bank, which applies an 8% discount rate. Tallcrest had held the note for 25 days before discounting it. Record the entry on August 10.

These financial statement items are for Fairview Corporation at year-end, July 31, 2017. Salaries and wages payable ................................... $ 2,080 Salaries and wages expense ................................... 57,500 Supplies expense ............................................... 15,600 Equipment ...................................................... 18,500 Accounts payable ............................................. 4,100 Service revenue ................................................ 66,100 Rent revenue ................................................... 8,500 Notes payable (due in 2020) ................................. 1,800 Common stock ................................................ 16,000 Cash ............................................................ 29,200 Accounts receivable .......................................... 9,780 Accumulated depreciation-equipment ................... 6,000 Dividends ..................................................... 4,000 Depreciation expense ....................................... 4,000 Retained earnings (beginning of the year) ................. 34,000 Instructions (a) Prepare an income statement and a retained earnings statement for the year. Fairview Corporation did not issue any new stock during the year. (b) Prepare a classified balance sheet at July 31. (c) Compute the current ratio and debt to assets ratio. (d) Suppose that you are the presid

An insurance company reported the following balance sheet at year end for 2009 (all amounts are in millions of dollars)

Assets

Investments $1500

Insurance assets 300

Total 1800

Liabilities and equity

Insurance claims 700

Unearned premiums 140

Long-term debt 150

Equity 810

Total 1800

Investments are available-for-sale securities marked to market.

The company reported the following income statement for 2010

Premium revenue 365

Investment income 60

Realized gains on investments 80

Total revenue 505

Insurance losses and expenses 405

Net income 100

In addition, the company reported $65 million in unrealized losses on investments as part of other comprehensive income in its equity statement

Ignore taxes in answering the following question:

1. What was the rate of return earned on investments for 2010?
2. Calculate net operating assets in the insurance underwriting part of the business at the end of 2009.
3. Calculate both the earnings and residual earnings from the insurance underwriting part of the business for 2010. Use a required return rate of 9% for this calculation

Round to two decimal places.

Case Study 8.1

In February 2017 the price of a daily pass to drive on a Volusia County beach was $10, and at that price 26,467 daily passes were sold. In February 2018 the price of a daily pass rose to $20, and at that price the number of daily passes sold dropped to 17,994.

1. What is the elasticity of demand for the daily pass? Is the demand elastic or inelastic? Explain the meaning of your answer in the context of this problem. Is revenue increasing or decreasing?
2. The County Council may consider raising the price of a daily pass to $30 next year. Based on elasticity of demand, should the Council consider another increase? Please justify your answer.

Case Study 8.2

Demand for tickets to a theme park, based on average daily attendance, is given by           Dp=-7.7p2+495.8p+20,000, where p is the daily admission price. The current admission price is $75, but the park is considering raising the price to $80.

3. At $75, what is the elasticity of demand for the tickets? Is the demand elastic or inelastic? Based on elasticity of demand, should the price be increased?
4. What should the ticket price be for maximum revenue?

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

Each T-shirt is expected to sell for $11.

The purchasing manager buys the T-shirts for $4 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 21 percent of the next quarter’s sales demand.

Selling and administrative expenses are budgeted at $72,000 per quarter plus 10 percent of total sales revenue.

Required:
1. Determine budgeted sales revenue for each quarter.



2. Determine budgeted cost of merchandise purchased for each quarter.



3. Determine budgeted cost of good sold for each quarter.

4. Determine selling and administrative expenses for each quarter.



5. Complete the budgeted income statement for each quarter.

Required information

[The following information applies to the questions displayed below.]

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

rev: 09_15_2017_QC_CS-99734

4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)

End of the year, The Vulcan Community Hospital's some parts of the balance sheet, the income statement, and cash flow statement is provided below. Based on the provided information, What is the hospital's the Debt Service Coverage?

CH8 HW2

Case Study:

Management discovers that a supervisor at one of their restaurant locations removes excess cash and resets sales totals throughout the day on the point of sale (POS) system. At closing the supervisor deposits cash equal to the recorded sales on the POS system and keeps the rest.

The supervisor forwards the close-of-day POS reports from the POS system along with a copy of the bank deposit slip to the company’s revenue accounting department. The revenue accounting department records the sales and the cash for the location in the general ledger and verifies the deposit slip to the bank statement. Any differences between sales and deposits are recorded in an over/short account and, if necessary, followed up with the location supervisor. The customer food order checks are serially numbered, and it is the supervisor’s responsibility to see that they are accounted for at the end of each day. Customer checks and the transaction journal tapes from the POS system are kept by the supervisor for one week at the location and then destroyed.

Questions:

1. What control procedures in the above case allowed the fraud to occur?
2. What audit procedures would have detected the fraud?

After spending 500,000 to study the potential market for a new specialty chemical, hart industries is considering a new plant requiring an initial investment in new construction and equipment. The company will purchase 6,000,000 in new plant equipment. The IRS will allow hart to depreciate the plant equipment to a salvage value of zero on a straight-line basis over a six-year useful life. At the end of five years they expect to sell the plant and equipment for 2,000,000. The firm estimates revenue year1= 26M, Year2= 25M, Year3= 25M, Year4= 25M, Year5= 25M. Variable cost will be 70% of revenue. Fixed costs for the project are estimated to be 3,000,000 annually. Initial net working capital requirements for the project are expected to be 700,000. In addition, the company will increase required working capital 50,000 each year. at the end of five year project the net working capital will no longer be required. The company tax rate is 30%. What is harts cash flows from assets for the 5 years of the project? If your required return rate is 10%, what is the projects NPV and IRR? Should the company accept the project?