Business Law II

1) Please distinguish between the legal effect of a personal defense and a universal defense. see Exhibit 27-2 on page 507 for a summary of these defenses.

2) Disinguish between fraud in the inducement and fraud in the execution of the instrument.

3) Distinguish between a material alteration and an unauthorized completion of an instrument.

The following information is taken from the records of XYZ Company: Cash $10,000 Accounts receivables 30,000 Inventory 80,000 Prepaid insurance 6,000 Fixed assets 200,000 Accounts payable 30,000 Notes payable (due in 10 months) 25,000 Wages payable 5,000 Long term liabilities 70,000 Owners’ equity 196,000 The company had sales of $150,000, cost of good sold of 60,000 and a net income of 25,000

MCQ

8-The company’s assets turnover is: A) 1 times B) 0.75 times C) 0.5 times

9. The company’s inventory turnover is: A) 1 times B) 0.75 times C) 0.5 times

10. The company’s Days inventory on hand is: A) 450 days B) 477 days C) 487 days

11. The company’s receivable turnover is: A) 5 times B) 10 times C) 15 times

12. The company’s average collection period is: A) 75 days B) 74 days C) 73 days

Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,600,000. The building was completed on December 31, 2023. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-2021 At 12-31-2022 At 12-31-2023 Percentage of completion 10 % 60 % 100 % Costs incurred to date $ 369,000 $ 2,940,000 $ 4,960,000 Estimated costs to complete 3,321,000 1,960,000 0 Billings to Axelrod, to date 730,000 2,370,000 4,600,000 Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs.

omplete this question by entering your answers in the tabs below.

• Req 1 and 2
• Req 3

Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs.

The table below shows data for Flo's Beach Ball Company, a monopolistically competitive firm.

a. Use the columns above to calculate Total Revenue, Marginal Revenue, and Marginal Cost at each output level. Use negative signs where appropriate.

b. In order to maximize profit, how many beach balls should Flo’s Company produce?  

What price should the firm charge? $  

c. At the profit-maximizing output level, what is the firm’s total profit? $  

d. Given your answer from (b), what will happen to the beach ball industry in the long-run? [Describe the steps that will occur.] What will happen to the profits for Flo’s Company?

Mazoon Electric Company is responsible for supplying and upkeep of the distribution of electric power in South Al Batinah region. The company is planning to upgrade the distribution system which will reduce line losses, failure occurrences and increased revenue. This up gradation will cost the company OMR 250,000. Information on the expected revenues and costs for coming years is tabulated below:

Assume that annual interest rate is 8% per annum and compounded annually.

a) Draw a cash flow diagram for the information given above.

b) Compute the Net Present Worth of the future cash flows.

c) Compute the Future Worth at the end of 2026 of cash flows.

Kalamazoo Paper Company has three divisions: Recycling, Cardboard, and Paper. In order to determine the profit provided by each division, the company allocates all costs to the three divisions. As a result, for the year ended December 31, 2015, Kalamazoo reported a profit of $50,000 for Recycling, a profit of $60,000 for Paper, and a loss of $30,000 for Cardboard. If Cardboard has avoidable costs of $40,000 and unavoidable costs of $50,000 which of the following actions should be taken by the company? Select one:

a. Eliminate the Cardboard Division because the division's unavoidable costs exceed the amount of the loss.

b. Continue the Cardboard Division because the revenue generated by the division exceeds the avoidable costs.

c. Continue the Cardboard Division because the revenue generated by the division exceeds the unavoidable costs.

d. Eliminate the Cardboard Division because the company's total net income would increase by $30,000.

Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company. Suppose that a random sample of companies yielded the following data:

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Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Assume that the distribution of differences is approximately normal, mound-shaped and symmetric. Use a 10% level of significance. Find (or estimate) the P-value.

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Are America's top chief executive officers (CEOs) really worth all that money? One way to answer this question is to look at row B, the annual company percentage increase in revenue, versus row A, the CEO's annual percentage salary increase in that same company. Suppose that a random sample of companies yielded the following data: B: Percent for company 21 11 16 20 5 8 4 22 A: Percent for CEO 18 5 14 22 10 12 1 17 Do these data indicate that the population mean percentage increase in corporate revenue (row B) is different from the population mean percentage increase in CEO salary? Use a 1% level of significance. What is the value of the test statistic? Select one: a. -0.730 b. -0.683 c. 0.683 d. 0.730 e. -0.639

Prepare the financing section of the statement of cash flows for the year ended December 31, 2018.

13) Dakota Telescopes Company uses the indirect method to prepare the statement of cash flows. Refer to the following income statement:

                                   Dakota Telescopes Company

                                             Income Statement

                                 Year Ended December 31, 2019

Sales Revenue                                                   $275,000

Interest Revenue                                                     2,600

Total Revenues                                                                                   $277,600

Cost of Goods Sold                                             135,000

Salary Expense                                                      66,500

Depreciation Expense                                          32,000

Other Operating Expenses                                 35,900

Interest Expense                                                      2,400

Income Tax Expense                                              6,500

Loss on Sale of Plant Assets                                 2,000

Total Expenses and Losses                                                                280,300

Net Loss                                                                                                ($2,700)

Additional information provided by the company includes the following:

Current assets other than cash decreased by $25,000.

Current liabilities increased by $3,000.

Prepare the operating activities section of the statement of cash flows.

Lenci Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 5,230 units, but its actual level of activity was 5,180 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

Actual results for May:

The spending variance for manufacturing overhead in May would be closest to: