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.

As a reviewer for the Ontario Securities Commission, you are in the process of reviewing the financial statements of public companies. The following items have come to your attention: 1. A merchandising company overstated its ending inventory two years ago by a material amount. Inventory for all other periods is correctly calculated. 2. An automobile dealer sells for $137,000 an extremely rare 1930 S-type Invicta, which it purchased for $21,000 10 years ago. The Invicta is the only such display item that the dealer owns. 3. During the current year, a drilling company extended the estimated useful life of certain drilling equipment from 9 to 15 years. As a result, amortization for the current year was materially lowered. 4. A retail outlet changed its calculation for bad debt expense from 1% to 0.5% of sales because of changes in its clientele. 5. A mining company sells a large foreign subsidiary that does uranium mining, although the company continues to mine uranium in other countries. 6. A steel company changes from straight-line depreciation to accelerated amortization in accounting for its plant assets, stating that the expected pattern of consumption of the future economic benefits has changed. 7. A construction company, at great expense to itself, prepares a major proposal for a government loan. The loan is not approved. 8. A water pump manufacturer has had large losses resulting from a strike by its employees early in the year. 9. Amortization for a prior period was incorrectly understated by $950,000. The error was discovered in the current year. 10. A large sheep rancher suffered a major loss because the provincial government required that all sheep in the province be killed to halt the spread of a rare dis- ease. Such a situation has not occurred in the province for 20 years. 11. A food distributor that sells wholesale to supermarket chains and to fast-food restaurants (two major classes of customers) decides to discontinue the division that sells to one of the two classes of customers. Instructions Discuss the financial reporting issues.

What is the standard deviation of students math test scores? 12 18 27 31 40 42 14 20 27 32 40 51 14 20 27 32 40 56 14 21 29 32 40 60 16 23 31 36 40 65

Please answer question 1. Thank you.

You and your team are financial consultants who have been hired by a large, publicly traded electronics firm, Brilliant Electronics (BE), a leader in its industry. The company is looking into manufacturing its new product, a machine using sophisticated state of the art technology developed by BE’s R&D team, overseas. This overseas project will last five years. They’ve asked you to evaluate this project and to make a recommendation about whether or not the company should pursue it. BE’s management team needs your recommendation and the analysis used to arrive at it by no later than April 10, 2020.

The following market data on BE’s securities are current:

Debt: 210,000 6.4 percent coupon bonds outstanding, 25 years to maturity, selling or 108 percent of par; the bonds have $1000 par value each and make semi-annual payments

Common Stock: 8,300,000 shares outstanding, selling for $68 per share; beta=1.1

Preferred Stock: 450,000 shares of 4.5% preferred stock outstanding, selling or $81 per share

Market: 7 percent expected market risk premium; 3.5 percent risk-free rate

The company bought some land three years ago for $3.9 million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. The land was appraised last week for $4.4 million on an after-tax basis. In five years, the after-tax value of the land will be $4.8 million, but the company expects to keep the land for a future project. The company wants to build its new manufacturing plant on this land; the plant will cost $37 million to build.

At the end of the project (the end of year 5), the plant can be scrapped for $5.1 million. The manufacturing plant will be depreciated using the straight line method.

The company will incur $6,700,000 in annual fixed costs excluding depreciation. The plan is to manufacture 15,300 machines per year and sell them at $11,450 per machine; the variable production costs are $9,500 per machine. Selling price and costs are expected to remain unchanged over the life of the project.

BE uses PK Global (PKG) as its lead underwriter. PKG charges BE spreads of 8% on new common stock issues, 6% on new preferred stock issues, and 4% on new debt issues. PKG has included all direct and indirect issuance costs (along with its profit) in setting these spreads. BE’s tax rate is 35 percent. The project requires $1,300,000 in initial net working capital investment to get operational. Assume BE raises all equity for new projects externally (that is, BE does not use retained earnings).

The weighted average flotation cost is the sum of the weight of each source of funds in the capital structure of the company times the flotation costs, so:

fT = ($564.4/$827.65)(0.08) + ($36.45/$827.65)(0.06) + ($226.8/$827.65)(0.04) = 0.0682, or 6.82%

Thus the initial investment is increased by the amount of flotation costs:

(Amount raised)(1 – 0.0682) = $37,000,000

Amount raised = $37,000,000/(1 – 0.0682) = $39,708,092

a. A one-page executive summary for the CEO and CFO that provides the client with your recommendation regarding the project and the analysis that supports it.

b. The main body of the report which contains Excel spreadsheets and/or other supporting documentation that the CFO can review in order to gain a thorough understanding of your analysis and to assess its quality and accuracy. This documentation should explain how the consulting team calculated its answers to 1-4 below. It should be labeled in a manner that makes it easy to follow. Your analysis should include, and your recommendation should be based on, the following:

1) What is the NPV and IRR of the project? You will use these calculations to support your recommendation.

On January 1, 2018, the general ledger of a company includes the following account balances: Accounts Debit Credit Cash $ 87,000 Accounts Receivable 56,000 Allowance for Uncollectible Accounts $ 5,000 Inventory 47,000 Building 87,000 Accumulated Depreciation 27,000 Land 217,000 Accounts Payable 37,000 Notes Payable (6%, due in 3 years) 54,000 Common Stock 117,000 Retained Earnings 254,000 Totals $ 494,000 $ 494,000 The company accounts for all inventory transactions using the perpetual FIFO method. Purchases and sales of inventory are recorded using the gross method for cash discounts. The $47,000 beginning balance of inventory consists of 470 units, each costing $100. During January 2018, the company had the following transactions: During January 2018, the following transactions occur: January 2 Lent $37,000 to an employee by accepting 6% note due in six months. January 5 Purchased 5,200 units of inventory on account for $520,000 ($100 each) with terms 1/10, n/30. January 8 Returned 110 defective units of inventory purchased on January 5. January 15 Sold 5,000 units of inventory on account for $600,000 ($120 each) with terms 2/10, n/30. January 17 Customers returned 100 units sold on January 15. These units are placed in inventory to be sold in the future. January 20 Received cash from customers on accounts receivable. This amount includes $53,000 from 2017 plus amount receivable on sale of 4,500 units sold on January 15. January 21 Wrote off remaining accounts receivable from 2017. January 24 Paid on accounts payable. The amount includes the amount owed at the beginning of the period plus the amount owed from purchase of 4,800 units on January 5. January 28 Paid cash for salaries during January, $45,000. January 29 Paid cash for utilities during January, $27,000. January 30 Paid dividends, $6,000. The following information is available on January 31, 2018. Of the remaining accounts receivable, the company estimates that 10% will not be collected. Accrued interest income on notes receivable for January. Accrued interest expense on notes payable for January. Accrued income taxes at the end of January for $6,700. Depreciation on the building, $3,700.

Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 - 13) assuming a FIFO perpetual inventory system. The transaction on January 30 requires two entries: one to record sales revenue and one to record cost of goods sold. Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the account balances. Record adjusting entries on January 31. in the 'General Journal' tab (these are shown as items 14-18). Record the closing entries in the 'General Journal' tab (these are shown as items 19 and 20). (The company prepares closing entries by closing the appropriate accounts directly to Retained Earnings. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

The Concord Company recently moved to activity-based costing and implemented customer profitability analysis. In doing so, they found that one of their oldest customers, The Mequon Company, is not profitable. The Mequion Company is small and the management of Concord knows they are very reliant on products from Concord and that they can't absorb a significant increase from Concord, which is needed to make them profitable.

1. What would you recommend if you were part of The Concord Company management team?

2. Because of their long relationship, does The Concord Company have a moral obligation to help them staying in business?

company

Nike

Take some time to review the website of the company you’ve selected. What is the company’s mission? (2 pt)

Customer Focus: Who are your company's customers? What are some of the unique things the company does to provide superb customer service? (2 pt)

List your company’s main competitors (2 pt)

Review Porter’s Strategies for Competitive Advantage. Which of the strategies does your selected company use? Explain why you’ve the selected this strategy. (2 pts)

List at least one way your selected company uses technology? (2 pt)

Total revenue for producing 10 units of output is $5. Total revenue for producing 11 units of output is $9. Given this information, the

1. Average revenue for producing 11 units is $2.

2. Average revenue for producing 11 units is $4

3. Marginal revenue for producing the 11th unit is $2.

4. Marginal revenue for producing the 11th unit is $4.

Refer to the above data. If product price is $30, the firm will: 
A. shut down.
B. produce 4 units and realize a $40 economic profit.
C. produce 6 units and realize a $70 loss.
D. produce 5 units and incur a $60 loss.

What does the revenue equivalence theorem say? Given an example to illustrate the revenue equivalence theorem.

Explain the relationship between elasticity, total revenue, and marginal revenue. If you have a new product in the market, will you set the product price in the elastic or inelastic area? Why?