Pro forma income statement. Given the income statement in the popup​ window, for California Cement Company for 2013 and an expected sales growth rate of 6.61 % for​ 2014, prepare a pro forma income statement for 2014.

First, find the percentage of each income statement line from 2013 as a percent of sales. ​(Round to three decimal​ places.)

Sales Revenue $22,811,000 ____ %

Cost of goods sold $-11,638,000 ___%

Selling, general, and administrative expenses $-3,973,000 ____%

Depreciation expenses $ -1,369,000 ____%

EBIT $5,831,000 ____%

Interest expense $-173,000 ____%

Taxable income $5,658,000 ____%

Taxes $-2,479,594 ____%

Net Income $3,178,406 ___ %

What is the sales forecast for 2014?

$___ (Round to the nearest dollar.)

Sales Revenue $ ____ 100.00%

Cost of goods sold $ ____ 51.019%

Selling, general, and administrative expenses $____ 17.417%

Depreciation expenses $ ____ 6.001%

EBIT $ ____ 25.562%

Interest expense $ ____ 0.758%

Taxable income $ ____ 24.804%

Taxes $ ____ 10.870%

Net Income $ ____ 13.934%

Assume that the transactions listed in the first column of the following table are anticipated by U.S. firms that have no other foreign transactions. Place an “X” in the table wherever you see possible ways to hedge each of the transactions.

            1.   Georgetown Co. plans to purchase Japanese goods denominated in yen.

            2   Harvard, Inc., sold goods to Japan, denominated in yen

3.   Yale Corp. has a subsidiary in Australia that will be remitting funds to the U.S. parent.

4 Brown, Inc., needs to pay off existing loans that are denominated in Canadian dollars.

Princeton Co. may purchase a company in Japan in the near future (but the deal may not go through).

                 Forward Contract                    Futures Contract                    Options Contract

               Forward         Forward                  Buy               Sell                  Purchase       Purchase

               Purchase           Sale                  Futures          Futures                  Calls              Puts  

      a.                                                                                                           

      b.                                                                                                                                

      c.                                                                                                                                 

      d.                                                                                                           

      e.

ATTENTION I NEED ONLY PART C !!

Part A

In late 2017 the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 4,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2018, 2,000,000 shares of the common stock are issued in exchange for cash at an average price of $12 per share. Also on January 2, all 1,000,000 shares of preferred stock are issued at $25 per share.

Required:

1. Prepare journal entries to record these transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

2. Prepare the shareholders' equity section of the Nicklaus balance sheet as of March 31, 2018. (Assume net income for the first quarter 2013 was $1,050,000.)

Part B

During 2018, the Nicklaus Corporation participated in three treasury stock transactions:

a.            On June 30, 2018, the corporation reacquires 280,000 shares for the treasury at a price of $14 per share.

b.            On July 31, 2018, 40,000 treasury shares are reissued at $17 per share.

c.             On September 30, 2018, 40,000 treasury shares are reissued at $12 per share.

Required:

1. Prepare journal entries to record these transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

2. Prepare the Nicklaus Corporation shareholders' equity section as it would appear in a balance sheet prepared at September 30, 2018. (Assume net income for the second and third quarter was $2,500,000.)

Part C

On October 1, 2019, Nicklaus Corporation receives permission to replace its $1 par value common stock (4,000,000 shares authorized 2,000,000 shares issued, and 1,800,000 shares outstanding) with a new common stock issue having a $.50 par value. Since the new par value is one-half the amount of the old, this represents a 2-for-1 stock split. That is, the shareholders will receive two shares of the $.50 par stock in exchange for each share of the $1 par stock they own. The $1 par stock will be collected and destroyed by the issuing corporation.

    On November 1, 2013, the Nicklaus Corporation declares a $0.04 per share cash dividend on common stock and a $0.20 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2018, to shareholders of record on November 15, 2018.

    On December 2, 2018, the Nicklaus Corporation declares a 2% stock dividend payable on December 28, 2018, to shareholders of record on December 14. At the date of declaration, the common stock was selling in the open market at $12 per share. The dividend will result in 72,000 (0.03 *3,600,000) additional shares being issued to shareholders.

Required:

1.Prepare journal entries to record the declaration and payment of these stock and cash dividends.

2. Prepare the December 31, 2018, shareholders' equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,000,000.) (Enter your answers in whole dollars.)

3.Prepare a statement of shareholders' equity for Nicklaus Corporation for 2018. (Enter your answers in thousands.)

October 01, 2018 No Journal entry required

Production Budget and Direct Materials Purchases Budgets

Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

Company policy requires that ending inventories for each month be 20% of next month's sales. At the beginning of January, the inventory of peanut butter is 35,000 jars.

Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met on January 1.

Required:

1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.

2. Prepare a direct materials purchases budget for jars for the months of January and February.

Prepare a direct materials purchases budget for peanuts for the months of January and February.

Operating Budget, Comprehensive Analysis

Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below.

The following data pertain to production policies and manufacturing specifications followed by Ponderosa:

1. Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month’s sales.
2. The data on materials used are as follows:

   Direct Material	Per-Unit Usage	Unit Cost
   Part #K298	2	$4
   Part #C30	3	7

   Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month’s production needs. This is exactly the amount of material on hand on January 1.

3. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.
4. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.)

   	Fixed Cost Component	Variable Cost Component
   Supplies	$ —	$1.00
   Power	—	0.20
   Maintenance	12,600	1.10
   Supervision	14,000	—
   Depreciation	45,000	—
   Taxes	4,300	—
   Other	86,000	1.60

5. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.)

   	Fixed Costs	Variable Costs
   Salaries	$ 88,600	—
   Commissions	—	$1.40
   Depreciation	25,000	—
   Shipping	—	3.60
   Other	137,000	1.60

6. The unit selling price of the wiring harness assembly is $110.
7. In February, the company plans to purchase land for future expansion. The land costs $68,000.
8. All sales and purchases are for cash. The cash balance on January 1 equals $62,700. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum.

Required:

Prepare a monthly operating budget for the first quarter with the following schedules:

2. Production budget

3. Direct materials purchases budget

4. Direct labor budget. Round your answers to two decimal places, if required.

6. Selling and administrative expense budget. Round your answers to the nearest cent, if required.

7. Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required.

8. Cost of goods sold budget

9. Budgeted income statement (ignore income taxes)

10. Cash budget
Enter a negative balance as a negative amount, and if an amount is zero enter "0".

ThreePoint Sports Inc. manufactures basketballs for the Women’s National Basketball Association (WNBA). For the first 6 months of 2020, the company reported the following operating results while operating at 80% of plant capacity and producing 120,300 units.

Fixed costs for the period were cost of goods sold $960,000, and selling and administrative expenses $257,000.

In July, normally a slack manufacturing month, ThreePoint Sports receives a special order for 10,000 basketballs at $28 each from the Greek Basketball Association (GBA). Acceptance of the order would increase variable selling and administrative expenses $0.75 per unit because of shipping costs but would not increase fixed costs and expenses.

(a) Prepare an incremental analysis for the special order. (Round all per unit computations to 2 decimal places, e.g. 15.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

(b) Should ThreePoint Sports Inc. accept the special order?

select between Yes and No                                                                      NoYes

During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 40,000 mini refrigerators, of which 36,000 were sold. Operating data for the month are summarized as follows:

Wages, consumption and GDP growth remain sluggish despite an increase in employment.

In the ten years prior to the global financial crisis Australia’s real GDP grew 3.4% on average per year, decelerating to 1.6% in 2009 after the turmoil. Australia showed resilience being one of the few developed nations that still recorded growth in 2009. Since then Australia’s real GDP growth has averaged below 3% but grew just 2.3% for the year ended December 2018 (seasonally adjusted). Inflation continues to be low, yet all key measures of inflation are now currently below the Reserve Bank’s preferred 2 to 3% band. The economic indicators that signal the start of a downturn are emerging in many advanced economies including Australia. Australian households are carrying a high total private sector debt ratio of 121 percent of GDP in June 2018, making us less resilient to future shocks.

Australia is also seeing the lowest growth in wages as a percentage of economic activity since 1959 when official records commenced. This is despite mostly growth year on year in labour productivity over the same period. The clear downward trend in wages share of GDP is visible from 1980 to current, despite short term small fluctuations, with labour compensation as a percentage of GDP falling from 56% in 1980 to 46.5% in 2018. Nominal wage growth has now been around 2% a year since 2015.

Record numbers of Australians are also working a second job. The number exceeded one million persons at the end of 2018 having increased by more than 20% in the past two years. Since 2010 the wage price index shows the real value of wages growth has fallen from 7% to 2.3% whilst secondary jobs have risen from 3.8% to 6.3% of total jobs over the same period. Secondary job roles feature work like caring, office temping, call centre answering, uber driving and other delivery services, and healthcare and social assistance work.

Despite a small rise in the employment statistics in the years since the GFC, underemployment levels have risen from just 2.5% in 1980 to 9% of the labour force in 2018. Underemployment needs to be considered in context with headline employment figures. Younger Australians are more affected by underemployment and disproportionately so. 31% of workers aged 15-19 and 20% of workers aged 20 – 24 are underemployed. Underemployment in other age demographics does not exceed 9%. According to the OECD, Australia has the highest proportion of “temporary” (including casual) jobs in the OECD. With higher underemployment levels the headline employment rate is therefore likely to include a significant number of people who want more work and cannot get it as well as those who may be working two jobs to make ends meet, indicating that the labour force is underutilised.

In an open letter signed by 124 Labour Market, Employment Relations and Labour Law Researchers, Dr Stanford Jim Stanford, economist, claimed Australia was in the grip of a “wages crisis” that “isn’t going to fix itself” citing an “unprecedented slowdown” despite the employment growth. The economists called for various measures as a matter of urgency to tackle the crisis, including raising the minimum wage, strengthening collective wage bargaining, relaxing caps on the public sector and limiting the ability of private firms to outsource. Professor John Quiggin, one signatory to the letter commented;

“for decades, government policy has been designed to weaken unions and push wages down. It’s time to put that process into reverse.”

Australia’s current Treasurer declined to respond to the written concerns of labour market experts. The Prime Minister countered that increasing wages costs on businesses would contribute to loss of jobs. The argument is that tax cuts for business owners will drive investment and create more jobs. The Business Council of Australia supports the idea of business tax cuts and similarly argues against ‘tinkering with wages’ lest it cause ‘higher prices and lost jobs’.

Some businesses claim they are now suffering because of sluggish consumption. The $310 billion retail sector remains largely in recession due to both low wage growth and high debt carried by households. Retail sales growth slowed to 2.2% in the 2018 year. One market adviser warns that big box retail is “slowly dying” with even heavyweights like Bunnings and Dan Murphy’s now facing “significant store closures.” The physical retail sector has already taken a hit from the growth of online shopping. Many jobs in stores like Kmart, Woolworths, Coles and others have been lost to automation such as electronic scan and pay systems. Other local jobs have been lost to the complete automation of factories and outsourcing of call centre operations.

Slow wages growth forces households to reduce their discretionary spending or look for lower priced goods and services. Wages are for the most part spent locally and there will be flow on effects to businesses from stagnant wages growth. Ultimately businesses will see this in lower sales, despite having interests in also keeping cost structures low by pushing for flexible wages and flexible work patterns from their workers. There is a government policy trade off that must be managed well to avoid low wages growth feeding into low consumption growth, thus dragging down economic growth. The signs are there, in the current dilemma that the RBA is attempting to grapple with. Why with a rise in employment are Consumption and GDP growth not meeting predicted growth rates?

Questions:

6.1 What does an economy’s potential output level represent and how is this related to the main types of unemployment?

6.2   What do current unemployment, GDP and inflation statistics suggest about what stage of the business cycle the Australian economy is currently in?

6.3  Using the AD/AS model, and assuming the economy starts at full employment, explain in words the effect of reduced consumption by households.

6.4 Using the AD/AS model, and assuming the economy starts below full employment, explain in words the effect of a decrease in the rate of consumption and the long run self-correction of the economy.

1. An economy has a total of 320 units of labor and 80 units of capital to use on
the production of 2 goods. The production functions for the goods are a function
of the labor and capital used in each process. Specifically,

x=F(l_x, K_x)= (l_x* K_x)^1/2
y = G(l_y, K_y)^1/2l

a) Find the production of each good if x is given 40 labor and 40 capital y has the
rest of the resources. Find the specific value of the RTS for each production
process with the current distribution of resources. Use this information to help you
re-allocate the resources in a way that leads to more of both goods being
produced. Explains why this proves the first (x,y) in this problem is not a point on
the PPF for this economy. there are many correct ways to redistribute the
resources.)

c) Explain why at any point on the PPF, each firm always has 4 times more labor
than capital.

d. If (c) is correct, then both the quantity of x and y can be written solely as a
function of K_x. Find these functions, then use them to prove that the PPF function
for this economy is y = 800 – 5x.