Consider a simple model to estimate the effect of personal computer (PC) ownership on college grade point average for graduating seniors at a large public university
GPA= β0+ β1PC+u
where PC is a binary variable for graduating seniors at a large public university
Why might PC ownership be correlated with u?
Explain why PC is likely to be related to parents’ annual income. Does this mean parental income is a good IV for PC? Why or why not?
Suppose that, four years ago, the university gave grants to buy computers to roughly one-half of the incoming students, and the students that received grants were randomly chosen. Carefully explain how you would use this information to construct an IV for PC.
Using the IV you describe in (c), state the two equations/models you would use in a 2 staged least squares estimation:

The university wants to examine whether students spend enough time on their remote classes after switching to the online teaching. The university staff sends a survey to 50 random students and asks for the study time per week after the spring break. The mean study time per week of the sample is 25.5 hours. It is believed that the population standard deviation is 3.5 hours. The university wants to know whether the students have spent at least 23 hours per week on average in their remote study.

 What is the correct form of the statistical hypothesis?

 What is the value of the test statistics?

 If you decide to use the critical value approach to perform the test, what is the corresponding critical value for the test at 95% confidence level?

 If you decide to use the P-value approach to perform the test, what is your P-value?

 What is your conclusion at the 95% confidence level?

The acceptance rate for a university is 42 percent. Assuming the binomial to the normal distribution. Of the next 10 applications what is the probability that they will accept: (WHEN ROUNDING DO NOT ROUND ANY CALCULATION UNTIL THE VERY END)

a) Find the mean: μ = n ⋅ p =  round to a single decimal.

b) Calculate the standard deviation. σ = n ⋅ p ⋅ q =  . Round to 4 decimals.

c) Determine the probability that exactly four applicants will be accepted.  round to 4 decimals

d) Determine the probability that between four and six applications will be accepted.  round to 4 decimals.

e) Determine the probability that at least two of the applicants will be accepted. (You may use the complement rule here).  round to 4 decimals.

f) What is the probability for the university to accept none or more than 7 applications?  Round to 4 decimals. Would it be unusual for the university to accept no or more than 7 applicants?  Yes/No.

Zoysia University must purchase mowers for its landscape department. The university can buy six EVF mowers that cost $7,900 each and have annual, year-end maintenance costs of $1,775 per mower. The EVF mowers will be replaced at the end of Year 4 and have no value at that time. Alternatively, Zoysia can buy seven AEH mowers to accomplish the same work. The AEH mowers will be replaced after seven years. They each cost $6,900 and have annual, year-end maintenance costs of $2,225 per mower. Each AEH mower will have a resale value of $700 at the end of seven years. The university’s opportunity cost of funds for this type of investment is 7 percent. Because the university is a nonprofit institution, it does not pay taxes. It is anticipated that whichever manufacturer is chosen now will be the supplier of future mowers. What is the EAC of each type of mower?

Zoysia University must purchase mowers for its landscape department. The university can buy four EVF mowers that cost $7,800 each and have annual, year-end maintenance costs of $1,635 per mower. The EVF mowers will be replaced at the end of Year 4 and have no value at that time. Alternatively, Zoysia can buy six AEH mowers to accomplish the same work. The AEH mowers will be replaced after seven years. They each cost $6,800 and have annual, year-end maintenance costs of $1,625 per mower. Each AEH mower will have a resale value of $900 at the end of seven years. The university’s opportunity cost of funds for this type of investment is 7 percent. Because the university is a nonprofit institution, it does not pay taxes. It is anticipated that whichever manufacturer is chosen now will be the supplier of future mowers. What is the EAC of each type of mower?

If 5 years ago a company bought a $10,500 piece of equipment with $500 salvage value and 10 year usefull life and is using straight-line depreciation what is its book value now? If it revises estimated life to 15 years (10 more years left) what is revised annual depreciation?

What is the cost-allocation account for a natural resourse?

On January 1, Company sells merchandise and collects $5000 in cash which includes 6% sales tax. Journalize the sale.

Company’s employees earned $20,000 for the pay period ending January 31. The Company withholds $1530 FICA, $4373 Federal Income Tax and $585 State Income Tax. Journalize the entry.

On January 1 Company issues a 5 year $1,000,000 face value bond with a 5% annual coupon paid semiannually. The company issues it for $916,884 for an effective interest rate of 7% and uses the effective-interest amortization method. Journalize the issuance:

Towing Company manufactures and sells a single product for $40 per unit.
Variable costs are $30 per unit and fixed costs total $168,000. During
2019, the company sold 26,500 units of this product to customers. In
order to improve profitability, the president of Towing Company believes
the following changes should be made in 2020:

1. decrease the selling price of the product by 10%

2. automate a portion of the production process which will reduce
   variable costs by 5% per unit but will add an additional fixed
   cost of $16,310 per year

3. increase advertising by $49,420

Assume these changes are made. 
A) Calculate the number of units that Towing Company must sell in 2020 in order to earn a net income that is 20% greater than the net income earned in 2019.

B) Calculate the number of units that Towing Company must sell in 2020 in order to earn a target profit equal to 12% of sales.

Consider the following independent situations relating to the audit of five different audit clients for year ended 30 June 20X8. Assume that all the situations are material.

1. A new client has changed its valuation method of property, plant and equipment. It has adopted the Fair Value Revaluation Model to replace the Historic cost measurement method. Whilst the auditor does not object to the change in the valuation model, the new method has a material effect on the financial statements and has not been disclosed. A special meeting was held between the CFO and the Finance Team and the Lead Partner from the Audit team, but nothing was resolved.

2. A new start-up company specialising in air-drone mail/package delivery has grown strongly in the past year. Over the past three years the company has made consistent losses, borrowed heavily, experienced staff turnover and dealt with some significant regulatory and operational issues. Nonetheless, the current CEO believes the company is turning around and will soon improve profitability. She is a high wealth individual who has invested more funds (equity) into the company, which is fully disclosed. No material misstatements were noted in the Auditor’s report.

3. The Auditors of ROME, a high-profile bank, were unable to obtain sufficient and appropriate audit evidence concerning the carrying amount of ROME’s investment in ITA Pty Ltd as at 30 June 20X8. ITA Pty Ltd is a small firm of five financial planners in total. The auditors were denied access to the financial information of ITA, and they were not allowed to interview ITA’s Management. Consequently, the auditors were unable to determine the correct valuation of ITA Pty Ltd.

4. The introduction of a new accounts receivable system in August 20X7 resulted in numerous errors in accounts receivable. As at the date of the Audit report, management was still in the process of correcting the system errors. As a result of these issues, the Auditors were unable to determine whether any adjustments are required in relation to the recorded or unrecorded inventories and accounts receivables, as well as the elements making up the Income statement and the Cash Flow statement.

For all the above clients, identify the type of audit opinion that should be issued and justify your response.

Write your answers in the table below:  

1. Consolidated Bargains, Inc. has a corporate policy of not allowing employees to use company email for private use.  Joe Bennett is a Consolidated employee who used email to communicate with his attorney asking whether Joe’s wife filed for divorce.  Joe knows that the company policy is that employee emails are randomly monitored to enforce this policy.  Joe’s employer read his email and also read the attorney’s response telling Joe that his wife indeed had filed for divorce.  Discuss whether you think the employer’s action is lawful or unlawful and why.  If unlawful, do you think Consolidated should receive a penalty?
2. Brownlee, Inc. manufactures and sells sports clothing and shoes in the United States.  Brownlee employs over 100 fourteen- and fifteen-year-old teenagers paying them an hourly wage of $7 per hour and allows them to work over 40 hours per week.  Discuss any legal issues you see in this situation.
3. Jack worked as a window cleaner for Tower Cleaning, Inc., which specialized in cleaning windows in high-rise apartments and skyscrapers. Tower cleaning has procedures in place located in the company employment manual that all employees must follow.  Among those procedures are safety checklists including wearing protective gear, harnessing while being lifted up high, communicating with the lift, making logs of malfunctioning equipment, etc.  Jack was scheduled to clean the windows of a skyscraper all the way up to the 20^th floor when he was injured because he dangled from side to side while being lifted. An investigation revealed that Jack was careless and did not follow the company’s procedure manual for properly harnessing before being lifted up high to clean windows. Jack has filed a claim under the state’s Workers’ Compensation. Tower Cleaning denies any liability because Jack was careless and disobeyed company policy.  Discuss any legal implications.   

4. Which of the following medical conditions do not qualify under the Americans with Disabilities Act of 1990?  Please briefly explain your answer for each item.

   a.   An individual born blind seeks employment as a telephone operator.

   b.   A factory worker lost two fingers in a workplace accident and the employer terminated his employment.  

Read the scenario and then answer the question that follows.

Recology CleanScapes, formed when CleanScapes of Seattle merged with San Francisco–based Recology, provides recycling services to about 800,000 residential and commercial customers in four western states. The employee-owned company’s motto is “WASTE ZERO,” and it is an industry leader in the waste reduction and recovery industry. Recology CleanScapes has credited much of its financial success, low employee turnover, and high customer satisfaction to open-book management.

If you were hired as a manager at Recology CleanScapes, which of the following would be parts of your job? Check all that apply.

1) Help employees think like owners, taking responsibility for the financial success of the company

2) Encourage employees to focus on their individual job performance and reward them for individual results

3) Share financial measures such as revenues, expenses, and profits with your employees