Income statement and balance sheet data for Great Adventures, Inc., are provided below.

Calculate the following risk ratios for 2020. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.)

2. Calculate the following profitability ratios for 2020. (Round your answers to 2 decimal places.)

An analyst is trying to value Jason’s Specialties (JS) stock. The analyst has collected data from the company and other sources to prepare the below financials, both actual and projected. Based upon these sources, the analyst expects the company’s free cash flows to grow at 4% on average. The analyst has estimated the company’s cost of capital (WACC) to be 16% and its cost of equity to be 21%. The risk-free rate is 2.3%..

1. Which items listed under Current Assets and Current Liabilities are typically excluded from NOWC? What is JS’s NOWC in years 2019 and 2020?

ncome statement for the fiscal year ending January 1 (Millions of dollars)

Balance sheets for the fiscal year ending January 1 (Millions of dollars)

Johns Company's Comparative balance sheet and income statement are presented below.

Income statement for 2020:

Additional information for transactions in 2020:

1. New equipment was purchased for $135,000 in cash.
2. Equipment that originally cost $60,000 and was depreciated by $10,000 was sold for cash.
3. A payment of $10,000 was paid to the bank for the notes payable.
4. Johns Co. declared dividends and made the payment to its shareholders.
5. In November, in order to finance the operation, Johns Co. issued additional common stock to shareholders.

Instructions

• Prepare a statement of cash flows for Johns Company using the indirect method.
• What is the amount of cash receipts from customers?
• What is the amount of cash paid to suppliers to purchase inventory?

Johns Company's Comparative balance sheet and income statement are presented below.

Income statement for 2020:

Additional information for transactions in 2020:

1. New equipment was purchased for $135,000 in cash.
2. Equipment that originally cost $60,000 and was depreciated by $10,000 was sold for cash.
3. A payment of $10,000 was paid to the bank for the notes payable.
4. Johns Co. declared dividends and made the payment to its shareholders.
5. In November, in order to finance the operation, Johns Co. issued additional common stock to shareholders.

Instructions

• Prepare a statement of cash flows for Johns Company using the indirect method.
• What is the amount of cash receipts from customers?
• What is the amount of cash paid to suppliers to purchase inventory?

Question2:

elow are account balances of Nile’Stones Shop, for the period ending 30th June 2020:

The following are transactions and additional information for Nile’Stones Shop for the month of June 2020 that have not been incorporated into those balances:

1. Collected cash $1,900 from credit customers.

2. Paid the creditors $2,600 of the amount owed on account.

3. The owner withdrew $1,000 from the business.

4. Paid all the accrued (utility) payable.

Required:

Based on the Nile’Stones Shop list of account balances at the end of June and incorporating the transactions and additional information above, calculate and itemise (list) the account balances and the amount of each account and the total amount that make up following:

a.     The total assets.

b.     The total liabilities

c.     The Owner’s Equity as at the 30^th June 2020.

On January 1, 2017, Eagle borrows $25,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $7,381, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020. (Round your intermediate calculations and final answers to the nearest dollar amount.)

Prepare the journal entries for Eagle to record the loan on January 1, 2017, and the four payments from December 31, 2017, through December 31, 2020.

• Eagle borrows $25,000 cash by signing a four-year, 7% installment note. Record the issuance of the note on January 1, 2017.

• 2

  Record the payment of the first installment payment of interest and principal on December 31, 2017.

• 3

  Record the payment of the second installment payment of interest and principal on December 31, 2018.

• 4

  Record the payment of the third installment payment of interest and principal on December 31, 2019.

• 5

  Record the payment of the fourth installment payment of interest and principal on December 31, 2020.

Assume that you are a consultant for an international management strategy consulting firm. Your firm has been approached by Mr. Hans Wursching, CEO of TransSprech, A.G., a newly formed cellular phone service and phone provider based in Stuttgart, Germany. TransSprech has a satellite GSM network with complete coverage in Europe and the United States, as well as throughout most countries in the world. The company has established some semblance of a marketing and management strategy, and you have been asked to review the current strategy and help the company go to the next level by growing its sales. You recently conducted the initial information-gathering meeting with Mr. Wursching, and received the following information: ? TransSprech maintains corporate offices in numerous cities around the world. However, its customer service outlets and retail sales are conducted through the company website, as well as through licensed electronic retailers. It does not maintain its own customer service or retail locations. ? Its target markets are both companies and individuals wanting cellular phone service with worldwide coverage and who are willing to pay a premium to get it. It already has about three thousand customers worldwide and is hoping to grow to ten thousand by year end. ? Corporate customers are more valuable customers because they are buying in larger volumes. Establishing a customer base is very important as this company attempts to establish itself. ? No sales force has been established. So far, the company has received many customers in response to its advertising. ? It offers individual customers four different cost plans with respect to the cellular service as well as five different phone options. However, corporate customers can negotiate variations within the established options. ? The phones themselves are similar to those used by TransSprech competitors but the satellite network providing the coverage is far more advanced. ? The company has retained a Berlin-based advertising and public relations agency to develop a worldwide advertising campaign. Print and TV advertisements have recently saturated the European market and will soon be shown in the US market. The company is currently running several promotions to get its product and name known; however, its long-term goal is to offer a premium, non-discounted product that is desired because of its value and quality, not low price. ? Because the company and its product are in the early stages of development, there have been technical problems, and the company has had to provide a great deal of service to its customers. ? Mr. Wursching understands that it costs more to acquire new customers than to retain existing ones, so he would like to establish a customer relationship management plan at some point to improve customer loyalty and retention. He has a well-trained customer service operator staff in place.

1. Describe and briefly explain whether the following changes cause the short-run aggregate supply to

increase, decrease or neither:

a. The price level increases

b. Input prices decrease

c. Firms and workers expect the price level to fall.

d. The price level decreases

e. New policies increase the cost for businesses of meeting government regulations.

f. The number of workers in the labor force increases.

2. Describe and briefly explain whether the following changes cause the aggregate demand to increase,

decrease or neither:

a. The price level increases

b. Investment decreases

c. Imports increase and exports decrease

d. Consumer optimism improves

e. Government increases infrastructure spending

f. Stock market crashes.

3. Starting in early March of 2020, many factories, restaurants, offices and entertainment venues closed

their doors fearing the spread of Coronavirus. Using aggregate demand-aggregate supply model, predict

which curve this event mostly affects and what’s the impact on the US economy in the short-run?

4. From 2014 to 2018, dollar has been slowly falling against other major currencies.

a. Determine how the falling value of the dollar affects the US price level, real GDP and the

unemployment rate in both short-run and the long-run. You can assume that the economy was in the

long-run equilibrium before this change, and consider only the stated event. Place your answers in the

boxes below (using an up arrow, a down arrow, or a dash if the level is constant).

Short Run Long-Run

P Y u P Y u

b. Draw a diagram that supports your answers in part (a). Clearly label all the curves and equilibria as

well as show the direction of changes using arrows.

Total Solution Ltd. is rendering its service on Network Solution to two types of customers: Company and Household. It categorised its operating department into: Company-Service and Household Service. Total Solution Ltd. also has two support departments: Administration (Admin) and Technician (Tech). Each of the operating departments conducts its operations independently. Total Solution Ltd. uses the number of technician’s hours used to allocate Tech costs and the number of admin staff used to allocate Admin costs. The following data are available for May 2020. Support Departments Operating Departments Admin Tech Company Household Budgeted costs $1,355,000 $3,200,000 $5,000,000 $4,000,000 Budgeted processing time (in min) 1,000 --- 1,600 2,400 Number of employees --- 15 9 36 Required (show your workings): Allocate the cost from support department to operating department and determine the total budgeted cost of each operating department after the cost has been allocated from the support department using the following method:

(a) Direct method

(b) Step-down method if the support department with highest dollar amount is allocated first. (c) Reciprocal method (using linear equation)