Recording Entries under the Fair Value Option—Equity Method

Assume that Fireside Inc. purchased 30% of the common stock of Theater Supplies Corporation on January 1, 2020, for $270,000. Fireside Inc. elected to account for its investment using the fair value option. During the year, Fireside Inc. reported net income of $216,000 and declared and paid dividends of $40,500. The fair value of Fireside’s investment in Theater Supplies common stock is $283,500. Assume that Fireside Inc. has significant influence over Theater Supplies Corporation.

a. What amount would Fireside Inc. report on its balance sheet on December 31, 2020, for its investment in Theater Supplies Corporation?

b. What amount would Fireside Inc. report in its income statement for the year ended December 31, 2020, for its investment in Theater Supplies Corporation?

Note: Use a negative sign to indicate a loss.

Taryn would like to open a new business as an interior designer, to funds her ambition she sold some of the following assets: 1. Antique Painting that was given to Taryn by her father 5 years ago. Taryn’s father bought it on 20 August 1984 for $2,500. Taryn sold it on 1’st June 2020 for $25,000 2. Taryn sold her car (Toyota Corolla) for the amount of $12,000 on 20’th May 2020, she bought on 1’st January 2015 for the amount of $20,000 3. Taryn sold her Harry Potter’s collection for the amount of $1,500 on 4’th January 2020, she bought it second hand on 10’th October 2018 for $350. 4. Taryn sold her gold necklace for $2,000 on 20’th March 2020, she bought it for $1,200 on 8’th August 2018 5. Taryn sold a sculpture for $6,000 on 1 January 2020, she bought it on December 1994 for $1,500 Advise the Capital Gain Tax Consequences for the above transactions,

Oak Creek Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Sales: Sales for the year are expected to total 1,000,000 units. Quarterly sales are 20%, 25%, 25%, and 30%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $46 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2020.

Production: Management desires to maintain the ending finished goods inventories at 20% of the next quarter's budgeted sales volume.

Direct materials: Each unit requires 2 kg of raw materials at a cost of $10 per kilogram. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2021 are 630,000 kg.

1. Prepare the sales budget by quarters for 2020.

2. Prepare the production budget by quarters for 2020.

3. Prepare the direct materials budget by quarters for 2020.

FC.71 Five-star sells school related products. Their top seller, the five subject spiral notebook, has done very well. The notebook's sales during the back-to-school season (July through October) over the last three years are shown below:

For the five-subject notebook, Five-star's projected sales for the 2020 back-to-school season of are 375,000. Based on the past sales and this year's projected sales, answer the following questions.

Given the above information and using the most appropriate forecasting method, what should be the forecast for July 2020 sales? (Display your answer to the nearest whole number.)

   

What is the forecast for August 2020 sales? (Display your answer to the nearest whole number.)

   

What is the forecast for September 2020 sales? (Display your answer to the nearest whole number.)

   

What is the forecast for October 2020 sales? (Display your answer to the nearest whole number.)

A sample of 15 patients suffering from asthma participated in an experiment to study the effect of a new treatment on pulmonary function. Among the various measurements recorded were those are forced expiratory volume (liters) in 1 second (FEV1) before and after application of the treatment. Suppose the researcher would like to test if the treatment is effective in increasing the FEV1. Please clearly state the hypotheses, carry out the test and state your conclusion for the tests listed below.

Subject Before After

(1) 1.69, 1.69

(2) 2.77, 2.22

(3) 1, 3.07

(4) 1.66, 3.35

(5) 3, 3

(6) .85, 2.74

(7) 1.42, 3.61

(8) 2.82, 5.14

(9) 2.58, 2.44

(10) 1.84, 4.17

(11) 1.89, 2.42

(12) 1.91, 2.94

(13) 1.75, 3.04

(14) 2.46, 4.62

(15) 2.35, 4.42

(a) Use the matched pairs t-test to test the hypothesis.

(b) Use the sign test to test the hypothesis.

(c) Use the Wilcoxon signed rank test to test the hypothesis.

(d) Please explain which test is the most powerful non-parametric test

The table below shows the number of hours per day 11 patients suffered from headaches before and after 7 weeks of soft tissue therapy. At alphaαequals= 0.01,is there enough evidence to conclude that soft tissue therapy helps to reduce the length of time patients suffer from headaches? Assume the samples are random and dependent, and the population is normally distributed. Complete parts (a) through (f).

A. State Ho and Ha

B.Find the critical value(s) and identify the rejection region(s).

Identify the rejection region(s)

C. (c) Calculated overbard.

Calculate s Subscript dsd.

D. (d) Use the t-test to find the standardized test statistic t.

(e) Decide whether to reject or fail to reject the null hypothesis.

(f) Interpret the decision in the context of the original claim. .

The following information is for all three questions. Suppose the country of Coventry is joining a customs union (CU). It can buy Product S from the country of Plata or the country of Soyuz. Plata is not in the CU, while Soyuz is in the CU. Before joining the CU, Coventry has a tariff on all imports of Product S. After joining the CU, Coventry does not have a tariff on the Product S imported from other countries in the CU, but maintains its tariff on the Product S imported from countries outside the CU. The tariff, when applicable, is $7. (Use the Basic Tariff Model in this analysis and assume no foreign retaliation on this product.)

2. The price of Product S from Plata is $62 and the price of Product S from Soyuz is $73. Suppose Coventry changes from not being in the CU to being in the CU.

(a) Who is Coventry’s supplier of Product S before joining the CU? After joining the CU?

(b) Is there a trade creation effect in this case?

(c) Is there a trade diversion effect in this case? Why?

(d) What happens to the Coventry Total Surplus for Product S because it joined the CU? Why?

For each exercise, answer the following along with any additional questions. Assume group variances are equal (unless the problem is ran via statistical software). |  Provide the null and alternative hypotheses in formal and plain language for appropriate two-tailed test (viz., dependent or independent) at the 0.05 significance level  Do the math and reject/accept null at a=.05. State your critical t value.  Explain the results in plain language.  Calculate the 95% confidence interval for the difference in means and state both formally and in plain language if appropriate.|

1. The State of Florida severely cut funding for the TRUTH campaign (advertising which is aimed at teenagers to reduce smoking). Advocates claim that TRUTH reduces teen smoking. To demonstrate this, they provide two separate samples of the state’s high school students reporting their number of cigarettes smoked per day two years before (nine students) and two years after the start of TRUTH (eight students). (C11PROB1.SAV) Before TRUTH: 5, 5, 8, 0, 0, 10, 0, 4, 10 After TRUTH: 6, 0, 6, 7, 0, 0, 2, 5

Beats wants to build a new factory to produce its headphones. It will cost $230 million initially to build the factory over the course of 12 months, which will be worthless after 10 years. The factory will be depreciated linearly to $0 over 10 years. Beats already owns the land on which the factory will be built. The land is currently worth $10 million and was purchased for $2 million eight years ago. After completion of the factory at the end of year 1, Beats expects earnings before interest and taxes (EBIT) of $34 million each year for 10 years. The company also has to add inventory (components) worth $13 million just before operation starts at the end of the first year. Beat's marginal tax rate is 21% and its cost of capital is 6%.

What is the free cash flow in year 0 (in $ million)?

What is the free cash flow in year 1 (in $ million)?

What is the annual depreciation in year 2 (in $ million)?

What is the free cash flow in year 2 (in $ million)?

What is the free cash flow in year 11 (in $ million)?

What is the NPV of this project (in $ million)?

E4-23  

Prepare closing entries.

The adjusted trial balance for Ryan Company is given below.

Instructions

Prepare the closing entries for the temporary accounts at August 31.

The trial balances shown below are before and after adjustment for Ryan Company at the end of its fiscal year.