Rosenberg Land Development (RLD) is a developer of condominium properties in the Southwest United States. RLD has recently acquired a 40.625 acre site outside Phoenix, Arizona. Zoning restrictions allow at most 8 units per acre. Three types of condominiums are planned: one-, two-, and three-bedroom units. The average construction costs for each type of unit are $450,000, $600,000 and $750,000, respectively. These units will generate a net profit of 10%. The company has equity and loans totaling $180 million dollars for this project. From prior development projects, senior managers have determined that there must be a minimum of 15% one-bedroom units, 25% two-bedroom units, and 25% three-bedroom units.

a. Develop a linear optimization model to determine how many of each type of unit the developer should build.

b. Find an optimal solution by Solver in Excel.

Lily Company began business on January 1, 2017. The company’s year-end is December 31. The following events occurred during the first year of operations: Apr. 1 Paid cash in the amount of $24,000 for a one-year rental contract on a building. July 1 Received $60,000 in cash from customers for services to be provided evenly during the next twelve months. Oct. 1 Acquired a building by borrowing $300,000 at 6% interest, principal and interest payable at maturity in ten years. Annual depreciation expense is $12,000.

1. Prepare the necessary adjusting journal entries at December 31 (10 points total). (Hint: Four adjusting entries are necessary.)

2. Bonus: For each of the adjusting entries, indicate which of the following type of entry was recorded: accrued expense, accrued revenue, deferred expense, or deferred revenue (2 points total).

Carla Cole Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $16,000 $559,000 Building, estimated service life, 30 years; no salvage value $675,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method.

(a) Prepare the general journal entry to record depreciation expense for the equipment in 2018.

(b) Prepare the journal entry to record depreciation expense for the building in 2018.

SEAT Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $16,200 $503,700 Building, estimated service life, 30 years; no salvage value $648,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method.

(a) Prepare the journal entry to record depreciation expense for the equipment in 2018.

(b) Prepare the journal entry to record depreciation expense for the building in 2018

PLEASE EXPLAIN THE ANSWER STEP BY STEP

Automatic versus Manual Processing
Photo Station Company operates a printing service for customers with digital cameras. The current service, which requires employees to download photos from customer cameras, has monthly operating costs of $5,000 plus $0.20 per photo printed. Management is evaluating the desirability of acquiring a machine that will allow customers to download and make prints without employee assistance. If the machine is acquired, the monthly fixed costs will increase to $10,000 and the variable costs of printing a photo will decline to $0.04 per photo.

(a) Determine the total costs of printing 20,000 and 50,000 photos per month.

(b) Determine the monthly volume at which the proposed process becomes preferable to the current process.
Answer

units

On December 16th, 2015, FED decided to raise first time the record low target rate of federal reserve fund from 1/4% to 1/2%.

On December 14th, 2016, Fed decided to raise the second time the federal fund rate from 1/2% to 3/4%.

On March 15th, 2017, Fed decided to raise the federal fund rate from 3/4% to 1%.

On June 14th, 2017, Fed decided to raise the federal fund rate from 1% to 1.25%.

On December 13th, 2017, Fed decided to raise the federal fund rate from 1.25% to 1.5%.

On March 21st, 2018, Fed decided to raise the federal fund rate from 1.5% to 1.75%.

On June 13th, 2018, Fed decided to raise the federal fund rate from 1.75% to 2%.

On September 26th, 2018, Fed decided to raise the federal fund rate from 2% to 2.25%.

On December 19th, 2018, Fed decided to raise the federal fund rate from 2.25% to 2.5%.

On July 31st, 2019, Fed decided to cut the federal fund rate from 2.5% to 2.25%.

On September 18th, 2019, Fed decided to cut the federal fund rate from 2.25% to 2%.

On October 30th, 2019, Fed decided to cut the federal fund rate from 2% to 1.75%.

Fed agrees that economic recovery is sound, Also Fed feels that the job market is strengthening, but the long term inflation signs still stabilized. Now Fed feel it is not necessary to maintain such accommodating easy monetary policy including very low interest rate until unemployment improves further and inflation rate goes up to 2.0%.

Fed decided that the size of the mortgage bond purchase as QE policy was winding down on October 2014 as the economy continues to improve.

The future rate hike will be gradual, depending upon the upcoming economic indicators.

1) What's your opinion about the Fed policy decision by next FOMC meeting?

2) Do you feel that this near-zero interest was a necessary one, or may not work to save declining economy, due to liquidity trap? or can we be back in double-dip recession due to too early exit strategy by the FED's tight monetary policy?

3) Are you concerned about the inflation come back due to such easy monetary policy with zero interest rate for long time? if so, how fast is the Fed supposed to tighten its monetary policy as an normalizing strategy?

4) Will the new president's proposal of spending increase on infrastructure and defense as well as tax cut on corporate income tax and individual income tax may overheat US economy to be inflationary? if so, will it cause Fed to speed up the rate hike? If Tariff over trade and possible retaliation could be inflationary, does it give another incentive for Fed to speed the rate hike?

5) Is there any risk that tight Fed policy may put the US economy back into another recession, if tight Fed policy is ahead of curve , although it is gradual tightening? Do you think the US will be in recession the next year(Year 2020)? Yes or No. Can You predict how many times Fed will raise FFR(federal fund rate) this year? or how many times FED will cut FFR due to trade issues and global slowdown?

The Evergreen Chemical Corporation, established in 1990, has managed to earn a consistently high rate of return on its investments. The secret of its success has been the strategic and timely development, manufacturing, and marketing of innovative chemical products that have been used in various industries. Currently, the management of the company is considering the manufacture of a thermosetting resin as packaging material for mobile devices. The Company's Research and Development Department has come up with two alternatives: an epoxy resin, which would have a lower startup cost, and a synthetic resin, which would cost more to produce initially but would have greater economies of scale. At the initial presentation, the project leaders of both teams presented their cash flow projections and provided sufficient documentation in support of their proposals. However, since the products are mutually exclusive, the firm can only fund one proposal.

In order to resolve this dilemma, Tim Lui, the Assistant Treasurer, and a recent MBA from a prestigious university has been assigned the task of analyzing the costs and benefits of the two proposals and presenting his findings to the board of directors. Tim knows that this will be a difficult task, since the board members are not all familiar with financial concepts. The Board has historically had a strong preference for using rates of return as its decision criteria. On occasions it has also used the payback period approach to decide between competing projects when they are close competitors. However, Tim is convinced that the net present value (NPV) method is the best and when used correctly will always create the most value to the company.

After obtaining the cash flow projections for each project (see Tables 1 & 2), and crunching out the numbers, Tim realizes that the presentation is more difficult than he thought. The various capital budgeting techniques, when applied to the two series of cash flows, provide inconsistent results. The project with the higher NPV has a longer payback period, as well as a lower Internal Rate of Return (lRR). Tim scratches his head, wondering how he can convince the Board that the IRR and Payback Period can often lead to incorrect decisions.

In looking over the documentation prepared by the two project teams, it appears to you that the synthetic resin technology would require extensive development before it could be implemented whereas the epoxy resin technology is available “off-the-shelf." What impact might this have on your analysis?  

Q1:

Bill Limited holds a 60% interest in Bob Limited. Bill Limited sells inventory to Bob Limited during the year for $10,000. The inventory originally cost $7,000. At the end of the year 50% of the inventory is still on hand. The tax rate is 30%. The NCI adjustment required in relation to this transaction is a debit of:

Q2:

The statement of cash flows is not used to:

Q3:

The carrying amount of property, plant and equipment is $1,000 at the start of the year and $1,400 at the end of the year. During the year, the following occurred:

• Sale of equipment—carrying amount $40
• Acquisition of equipment—financed by share issue $200
• Depreciation expense for year—$120

Investing cash flow is:

Q4:

Which of the following statements is incorrect?

Q5:

Warriors Limited acquired a 20% share in Tomkins Limited for $36 000. Warriors Limited has no other investments. At the date on which it became an associate, Tomkins Limited had the following equity:
- share capital $100 000
- retained earnings $80 000.

At the end of the financial year following the investment, Tomkins Limited generated a profit after tax of $12 000. After applying the equity method of accounting, Warriors Limited will have which of the following carrying amounts for the investment?

Q6:

A decrease in the direct rate of US$1 to A$# results in:

Q7:

Foreign exchange risk may relate to:

Q8:

The currency of the country in which the foreign operation is based is referred to as the:

Q9:

Translating from the functional currency to the presentation currency involves which of the following procedures?

Nash Company manufactures equipment. Nash’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Nash has the following arrangement with Winkerbean Inc.

Nash delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. The equipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately.

Assuming Nash does not have market data with which to determine the standalone selling price of the installation services. As a result, an expected cost plus margin approach is used. The cost of installation is $39,200; Nash prices these services with a 25% margin relative to cost.

(a)

How should the transaction price of $1,040,000 be allocated among the service obligations? (Do not round intermediate calculations. Round final answers to 0 decimal places.)

(b)

Prepare the journal entries for Nash for this revenue arrangement on June 1, 2020, assuming Nash receives payment when installation is completed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

For a school, the principal expected that a student takes 45 minutes to travel to school on average. Suppose the time taken to travel to school by a student follows a normal distribution. 100 students are randomly selected from the school for interview and they took on average 44 minutes to travel to school with a standard deviation of 15 minutes. 6 of the selected students had lateness record in the last month.

1. How large a sample is required to ensure the estimate of p is accurate within 2% with a confidence level of 97%?
2. By using critical value approach to perform a hypothesis testing for the principal’s claim that under (10 of all students had lateness record in the last month at level of significant α = 0.01. Correct the test statistics to 2 decimal places.