Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these investments are accounted for under the equity method.

All of the securities were purchased in 2020.
In 2021, Ayayai completed the following securities transactions.

Ayayai’s portfolio of equity securities appeared as follows on December 31, 2021.

Prepare the general journal entries for Ayayai Company for:

Nabor Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public? offering, managers at Nabor have decided to make their own estimate of the? firm's common stock value. The? firm's CFO has gathered data for performing the valuation using the free cash flow valuation model.

The? firm's weighted average cost of capital is 15 % and it has $1,830,000 of debt at market value and $370,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5? years, 2016 through? 2020, are given in the? table. Beyond 2020 to? infinity, the firm expects its free cash flow to grow by 5 % annually.

a.??Estimate the value of Nabor? Industries' entire company by using the free cash flow valuation model.

b.??Use your finding in part a?, along with the data provided? above, to find Nabor? Industries' common stock value.

c.??If the firm plans to issue 200,000 shares of common? stock, what is its estimated value per? share?

Problem 4 (Allocation of Cash Dividends to Preference and Ordinary Shareholders)

The Company has the same capital structure (except for retained earnings) for the past five year, see details below:

6% Preference Share Capital, 80,000 shares issued and outstanding, P 50 par                       P4,000,000

Ordinary Share Capital, 200,000 shares issued and outstanding, P 30 par                                     6,000,000

Retained Earnings                                                                                                                                                              5,000,000

No dividends were paid prior to 2020 for two years. On December 10, 2020, the Company declared P 1,500,000 as cash dividends to shareholders of record of December 21, 2020, payable on January 5, 2021.

Requirements:

1. Prepare all the necessary journal entries to record the dividend transactions.
2. Allocate the dividends between ordinary shareholders and preference shareholders if:

                  Case A. Preference share capital is NON-CUMULATIVE and NON-PARTICIPATING

                  Case B. Preference share capital is CUMULATIVE and NON-PARTICIPATING

                  Case C. Preference share capital is NON-CUMULATIVE and FULLY PARTICIPATING

                  Case D. Preference share capital is NON-CUMULATIVE and PARTICIPATING UP TO ADDITIONAL 5%

3. Assuming the dividend declared is P 1,000,000 what will be the allocation of dividends if in case the preference share is CUMULATIVE and FULLY PARTICIPATING

Nabor Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public offering, managers at Nabor have decided to make their own estimate of the​ firm's common stock value. The​ firm's CFO has gathered data for performing the valuation using the free cash flow valuation model. The​ firm's weighted average cost of capital is 13%, and it has $2,190,000 of debt at market value and $440,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5​ years, 2016 through​ 2020, are given in the​ table, Beyond 2020 to​ infinity, the firm expects its free cash flow to grow by 3% annually.

a. Estimate the value of Nabor​ Industries' entire company by using the free cash flow valuation model.
b. Use your finding in part along with the data provided​ above, to find Nabor​ Industries' common stock value.
c. If the firm plans to issue 200,000 shares of common stock, what is its estimated value per​ share?

The following information is available for Cinrich Pools, a manufacturer of above-ground swimming pool kits:

In its first year of operation, the company produced 11,800 units but was able to sell only 9,800 units. In its second year, the company needed to get rid of excess inventory (the extra 2,000 units produced but not sold in 2020), so it cut back production to 7,800 units.

Calculate profit for both years using full costing. (Round cost per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g.125.)

The board of directors of API, a relatively new electronics manufacturer, has decided to continue paying a common stock dividend to increase the attractiveness of the stock in the free market. The board plans to pay $2.20 per share in the coming year (i.e., next year) and anticipates that its future dividends will increase at an annual rate consistent with that experienced over the period from 2017 - 2020 (see below). The company currently has a beta of 1.2, the rate of return for the market is expected to be 8% and the risk-free rate is currently 5%. Given this scenario, what is the current value of API's common stock? If the current market price is $40.00 per share, should you purchase this stock. Briefly, explain your answer. (HINT: This problem requires a three-part calculation to solve it). USE MS EXCEL TO EMBED YOUR CALCULATIONS IN THE CELLS (do NOT round your interim calculations, rather use links between the cells), then post your spreadsheet using this link (Textbook Assignment 2). Year Dividend 2020 $2.12 2019 $2.04 2018 $1.96 2017 $1.88.

Daly bhd. is a leasing company that enters into 5-year lease (that does not allow cancellation) for equipment with Krause Bhd. on 1 january 2019. The equipment has an estimated life of 6 years and a fair value of RM 1,800,00 at the commencement of the lease. in addition, the leased equipment is of a specialized nature such that only Krause Bhd. can use the equipment without major modifications being made. The lease contains the following provisions:

rental payments of RM 200,000, payable at the beginning of each 6-month period, throughout the lease period.

it is expected that Daly Bhd. will realize rm 100,000 from selling the assets at the expiration of the lease. however, the actual residual value is expected to be rm60,000. the residual value is not guaranteed by Klause Bhd. Krause's incremental borrowing rate is 8%. Krause uses the straight line method to depreciate its assets.

(a) related journal entries for the year 2019 in the books of Krause Bhd ( include amortization schedule through 1 January 2020)

(b) prepare the statements of profit or loss and statements of financial position as at 31 December 2020  

Independent Energy depreciates all assets using the straight-line method. The company's fiscal year end is December 31. The following selected transactions and events occurred during the first three years:

Independent Energy also incurred freight and installation costs of $1,500 and $4,000 respectively.

machine. The insurance policy expires on September 30, 2021.

residual value of $20,000.

conducted an impairment assessment as indicators suggested that an impairment may be possible. It was determined that the recoverable amount of the equipment is currently $160,000. The estimated residual value remained unchanged.

proceeds of $140,000.

Instructions
Prepare the necessary entries. (Show calculations.)

The Matson Company had the following financial information for the year ended April 30

Salaries Expense                                                                              $123,800

Common Stock                                                                                    72,000

Allowance for Doubtful Accounts                                                7,000

Bad Debts Expense                                                                            15,800

Supplies                                                                                                 14,500

Interest Revenue                                                                                 4,600

Accumulated Depreciation                                                           38,000

Sales                                                                                                  500,000

Dividends                                                                                          12,000

Interest Receivable (short term)                                                3,300

Beginning Retained Earnings                                                       28,800

Advertising Expense                                                                       79,000

Accounts Payable                                                                             142,000

Cash Flow from Investing Activities                                          105,000

Notes Receivable (short-term)                                                   17,000

Land                                                                                                       50,000

Cash                                                                                                    23,000

Inventory                                                                                          154,000

Salaries Payable                                                                                102,000

Cost of Goods Sold                                                                          212,000

Accounts Receivable                                                                       113,000

Equipment                                                                                          77,000

   a)         Prepare the multistep income statement (in good form) for April 30, 2020.                                                                                          

   b)        Prepare the classified balance sheet (in good form) as of April 30, 2020.                                                                                  

       There may be items that will NOT appear on either statement. The total current assets are $317,800 and the total current liabilities are $244,000. You do not need any detail for cost of goods sold so don't include it!

On August 1, 2020, Sage Ltd. purchased a call option from Starco Corporation. The option gave Sage the right to buy 8,000 shares in a third company, Dillon Ltd., at a price of $10 per share. On the day Sage purchased the option, Dillon shares were trading at $10 each. Sage paid $1,300 for the options. On August 31, 2020, the Dillon shares were trading at $12 each, and the options for Dillon shares were trading at $25,000. On September 15, Sage settled the options in cash when the Dillon shares were trading at $16 and the options were trading at $48,000.

QUESTION:

1) Prepare the journal entries to record the above transactions.

A) (To record the acquisition of the option.)

B) (To record the change in value of the option.)

C) (To record the change in value of the option.)

D) (To record the settlement of the option.)

2) Prepare the September 15 journal entry settling the option for cash, and assuming Sage accepted instead the shares in Dillon.

A) (To record the change in value of the option.)

B) (To take delivery of the shares
using the option.)