Emory University

Identify the sub-industry or type of organization it belongs to (e.g., home care, hospital) and the financial background of the organization.

 Is Emory University a nonprofit or for-profit?

 What kind of impact do the economic principles of demand and market/consumer behavior have on Emory University's financial statements?

How would the trade war actually affect the macroeconomy of the US?

Summarize decade-long macroeconomic data in the US. Analyze US’s economic structure and argue on the severity of those impacts.

Based on your above data analysis, comment on whether President Trump's tariff and tax policies help resolve some underlying structural issues revealed from the trade war

1 Current government policy

In this year, the US government decide to cut tax to stimulate economic growth. Meantime, the US government raise the tariff against a list of imported goods from Asian countries. Use the open economy IS? ?LM? model to graphically explain how a combination of the fiscal and trade policy will affect the real exchange rate and the real output in equilibrium.

Research paper “Dynamic Risk Management” (JFE, Rampini, Sufi, Viswanathan) showed that those US airlines that experienced financial distress in 2004-2005 chose not to hedge their commodity price risk. As financial health of US airlines improved they became active hedgers. Please explain the paper’s findings from the point of view of the agency theory (conflict between shareholders and bondholders)

Explain how countries like Greece have largely misused the Keynesian model to “buy” votes and how this has created “sovereign debt” problems. In this regard, why can countries like Greece, or US states like California and cities like Detroit, become bankrupt, but countries like the US and Canada can never be bankrupt from too much debt?

Leisure Limited issued perpetual preferred stock with 7.5% annual dividend. The stock price is HK$115 and its par value is $100.

(a) Required:

(i) What is the current yield of Leisure Limited’s preferred stock? .

(ii) Suppose the market interest rate rises and Leisure’s preferred stock’s yield rises to 8%. What is the price of Leisure’s preferred stock then?

(b) The sales revenue of Carpe Diem Limited for 2019 is $100 million. The CEO told the sales director in December of 2019 that the board had set a target of $150 million in sales revenue for 2022 and expected that there should be stable annual growth of sales over the 3 years. The board expects the growth rate will be maintained continuously in future years. The market has the same expectation of the board. Carpe Diem Limited is expected to pay dividend of $20 per common stock at the end of the year 2020. The market price of the common stock at the beginning of 2020 is $1,000. What is the required rate of return on Carpe Diem Limited’s common stock?

(c) Leisure Limited provided a loan $3,000,000 to its subsidiary Carpe Diem Limited for 5 years which is interest bearing. The annual interest rate is 12% (compound interest method). Carpe Diem Limited has to make equal quarterly payment over the five years. How much should be repaid by Carpe Diem Limited at the end of each quarter?

(d) The investment return of an individual common stock can comprise dividend yield and eventual capital gain. Suppose there are two stocks: one stock with dividend payment and the other stock that does not pay any dividend. Is it possible that both stocks have the same investment returns? Please explain.

The trial balance of Scan House, Inc. included the following selected accounts as of December 31, 2020: Debits Credits Sales Revenue 16,755,000
Interest Revenue 75,000 Gain on sale of investments 150,000 Unrealized gains on investments 200,000 Other Income * 1,200,000 Foreign currency translation losses 125,000 Cost of Goods Sold 11,635,000
Selling expenses 975,000 Goodwill impairment loss 550,000 Interest Expense 60,000 Administrative Expense** 780,000 Loss on sale of land 225,000 Dividends declared 175,000   
Additional information:

* Other Income consists of income from discontinued operations. This includes $900,000 of income from operations and a $300,000 gain on the sale of investments.
** Administrative expense includes a $150,000 expense that was a correction of an error made in the 2018 Income Statement, but discovered during 2020.
Retained Earnings balance: January 1, 2020 = $725,000.
ScanHouse had 600,000 shares of common stock outstanding throughout the year and 1,000,000 shares of common stock authorized. Income tax expense had not yet been accrued. The effective tax rate is 21%.

Required: 1. Prepare a single, continuous 2020 statement of comprehensive income for Scan House, Inc., including income tax expense and Earnings Per Share (EPS). Use a multiple-step income

2. Prepare a 2020 statement of retained earnings for Scan House, Inc.

The following data were taken from the books of Powell Construction Ltd:

REQUIRED:

Prepare in the general ledger of Powell Construction Ltd for the month of August 2020:

a.       the Sales Ledger Control Account            (15 marks)

b.      Purchases Ledger Control Account            

Total 25 marks

a) Prior to 1 June 2020, the share capital of Jenkins’ Era Ltd consisted of 1,000,000 ordinary shares, issued at $2 each and fully paid. On 1 June, the directors of Jenkin’ Ear Ltd decided to issue a share dividend, Existing shareholders are to receive one new share for every five shares held. The share issue is to be funded entirely from retained earnings. Each new share is valued at 43, How much cash will the company pay to fund the share dividend?

a.nothing b.$1,000,000   c.$2,000,000    d.$3,000,000

b) Whiterun Ltd owned a boat that has an economic useful life of 6 years as at 1 July 2020. On 1 July 2020 the company leased the boat to Riverwood Ltd for three years. Whiterun Ltd recognised this lease as a finance lease and recorded a lease receivable valued at $58,784. The annual lease payment is $20,000. Lease payments are to be made annually and in arrears. The interest rate implicit in the lease for Riverwood Ltd is 5%. What is the amount of Riverwood Ltd’s first year’s interest expense?

A.$2,939   b.$1,939   c.There has not been enough information provided to accurately determine this   d.$1,000

c) Whiterun Ltd owned a boat that has an economic useful life of 6 years as at 1 July 2020. On 1 July 2020 the company leased the boat to Riverwood Ltd for three years. Whiterun Ltd recognised this lease as a finance lease and recorded a lease receivable valued at $58,784. In the lease agreement, Riverwood Ltd agreed to guarantee the full estimated $5,000 residual value. Lease payments are to be made annually and in arrears. The interest rate implicit in the lease for Riverwood Ltd is 5%. What is the amount of Riverwood Ltd’s annual depreciation expense?

a.$17,928   b.$19,595   c. There has not been enough information provided to accurately determine this   d.$12,928

d) On 23 October 2027, Preston Garvey Ltd had a balance of $111,000 in their options account. This reflected the full premiums paid by the holders of 100,000 options which were on issue. Each option entitled the holder to acquire one ordinary share in Preston Garvey Ltd for $4. Each option expires on 1 December 2027. By 1 December 2027, 40% of the options had been exercised. The remaining options duly lapsed. Which of the following is NOT a journal entry which would be part of recording the exercising of the options and issuing of the shares?

1. DR options $44,400 CR share capital $44,400
2. DR cash $100,000    CR share capital $100,000
3. DR options $66,600   CR lapsed options reserve $66,600
4. DR cash $66,600 CR options $66,600

e) Prior to 1 July 2020, the share capital account of MAGA Ltd had a balance of $10 million reflecting their issued capital of 1 million ordinary shares issued at $10 and paid in full. On 1 July 2020, MAGA Ltd announce a 1-for-4 rights issue, with each new share issued under the rights scheme being sold for $20, payable in full upon accepting the offer. Costs associated with the issue amount to $1 million. Assuming that all shareholders exercise their rights in full, what will the balance of the share capital account be once the rights issue is complete? (note: to be clear, we are looking for the dollar balance. NOT the number of outstanding shares)

A.$10,250,000    b.$14,000,0000   c.$16,000,000    d.$1,650,000