Kempton owns a plumbing repair service company that has been in business for thirty years in Shreveport Louisiana (population 198,675). The company employs 50 repairmen and repairwomen that work in two person teams doing plumbing repair jobs. Kempton’s son Myron is going to be taking over the business and has lots of ideas about improving incentives. Equipped with what he has learned in the MBA program at LSU, he has established that (1) customer satisfaction, (2) capacity utilization (the plumbing repair service people need to be working when they are on the clock) and (3) the profit margin of the service (some repairs involve more parts than others and the mark up the customers on the parts is high) are the company’s profit drivers.

Myron has decided to implement a program where the plumber’s bonuses are based on a formula that has 40% weight on customer satisfaction (measured by post-service customer satisfaction surveys), 30% weight on capacity utilization (measured by number of jobs completed) and 30% weight on profit margin (measured by number of high mark-up jobs completed).

Explain to Myron why, while he would like to see improvements in the plumbers’ performance on all three dimensions, he is more likely to see significant improvement on one dimension and little or no improvement on the other two dimensions.

On October 15, 2016, Koala, Inc. issued a 10 year bond (with a typical $1000 face value) that had an annual coupon value of $60.  [We are assuming that the 2020 coupon has just been redeemed.]

• Initially, the bond was sold for the premium price of $1,025.
• On October 15, 2020, this bond was selling for only $975.
• The market rate of interest for a riskless corporate bond, of this maturity, was 4.5% on October 15, 2016, which reflects market expectations about future rates of inflation.
• The market rate of interest for a riskless corporate bond, of this maturity, was 4.0% on October 15, 2020, which reflects market expectations about future rates of inflation.

1.  What was the nominal yield on this bond on October 15, 2016?  [To 1 decimal place.]

2.  What was the current yield on this bond on October 15, 2016?  [To 2 decimal places.]

3.  What was the yield to maturity for this bond on October 15, 2016?  [To 3 decimal places.]

4.  What was the risk premium for this bond on October 15, 2016?  [To 3 decimal places.]

5.  What was the nominal yield on this bond on October 15, 2020?  [To 1 decimal place.]

6.  What was the current yield on this bond on October 15, 2020?  [To 2 decimal place.]

7.  What was the yield to maturity for this bond on October 15, 2020?  [To 3 decimal places.]

8.  What was the risk premium for this bond on October 15, 2020?  [To 3 decimal places.]

9.  It is now October 15, 2020 and suddenly the Federal Reserve announces a massive program to reduce inflation.  Instantly, the market rate of interest for a riskless corporate bond that would apply to this bond, falls from 4.0% to 2.5%.  If there is no change in the risk premium expected for this Koala, Inc. bond, what will be this bond’s yield to maturity?  [To 3 decimal places.]

Q5- Week 10
You are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for the
audits of the following four independent entities for the year ended 30 June 2018:
(a) Human Help Ltd is a non-profit entity. You have discovered that it has not kept substantiating
vouchers or receipts for more than 55 per cent of its expenses, excluding salaries and allowances
(2.5 marks)
(b) JJ King Ltd is a building contractor with a varying workload. In order to compensate for the
irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land
that it later subdivides for the construction of houses and units. JJ King then sells these on its own
account. Your analysis strongly suggests that the apportionment of costs to houses and units sold
has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the
unsold properties. The directors of the company do not agree and hold to their view that the stock
of properties is correctly valued (2.5 marks)
(c) You have completed the audit of Grand Resort Ltd (Grand Resort) for the year ended 30 June 2015.
The audit partner suggested that the value of properties on the Gold Coast were overstated by
$16 million, a figure which was twice the level of materiality set for the audit. As a result of
discussions with the audit committee, the CEO of Grand Resort agreed to revise the valuations
downward by $10 million. All other issues were resolved to the satisfaction of the audit partner,
resulting in an overall misstatement of the financial report of $6 million. The audit partner is now
considering the effect of the misstatement on the auditor’s report. (2.5 marks)
(d) Grand Event Ltd arranges for popular overseas entertainment artists to perform in Australia. The
band Eclipse was booked by Grand Event to play in major cities across the country. Grand Event’s
written contract required the company to pay the band in US dollars but, in order to reduce costs,
it did not hedge the amounts. Subsequent to year end, the Australian dollar fell against the US
dollar and a substantial loss relating to the band’s tour was predicted. The management of Grand
Event tried unsuccessfully to renegotiate the band’s contract and has been unable to obtain
finance to cover the expected shortfall. Grand Event has now cancelled the tour and expects a
substantial claim from Eclipse. It is clear to you, as the auditor, that Grand Event does not have
the income, cash or other assets to sustain such a loss. (2.5 marks)
Required:
Assuming no amendments have been made, identify and explain the type of auditor’s opinion required
for each issue outlined above. (10 marks, maximum 300 words)

Q5- Week 10 You are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for the audits of the following four independent entities for the year ended 30 June 2018: (a) Human Help Ltd is a non-profit entity. You have discovered that it has not kept substantiating vouchers or receipts for more than 55 per cent of its expenses, excluding salaries and allowances (2.5 marks) (b) JJ King Ltd is a building contractor with a varying workload. In order to compensate for the irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land that it later subdivides for the construction of houses and units. JJ King then sells these on its own account. Your analysis strongly suggests that the apportionment of costs to houses and units sold has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the unsold properties. The directors of the company do not agree and hold to their view that the stock of properties is correctly valued (2.5 marks) (c) You have completed the audit of Grand Resort Ltd (Grand Resort) for the year ended 30 June 2015. The audit partner suggested that the value of properties on the Gold Coast were overstated by $16 million, a figure which was twice the level of materiality set for the audit. As a result of discussions with the audit committee, the CEO of Grand Resort agreed to revise the valuations downward by $10 million. All other issues were resolved to the satisfaction of the audit partner, resulting in an overall misstatement of the financial report of $6 million. The audit partner is now considering the effect of the misstatement on the auditor’s report. (2.5 marks) (d) Grand Event Ltd arranges for popular overseas entertainment artists to perform in Australia. The band Eclipse was booked by Grand Event to play in major cities across the country. Grand Event’s written contract required the company to pay the band in US dollars but, in order to reduce costs, it did not hedge the amounts. Subsequent to year end, the Australian dollar fell against the US dollar and a substantial loss relating to the band’s tour was predicted. The management of Grand Event tried unsuccessfully to renegotiate the band’s contract and has been unable to obtain finance to cover the expected shortfall. Grand Event has now cancelled the tour and expects a substantial claim from Eclipse. It is clear to you, as the auditor, that Grand Event does not have the income, cash or other assets to sustain such a loss. (2.5 marks) Required: Assuming no amendments have been made, identify and explain the type of auditor’s opinion required for each issue outlined above. (10 marks, maximum 300 words) Issues Audit Opinion (1 mark) Explanation (1.5 marks) (a)(/(b)/ Write 1 line about issue Unqualified or Qualified or Adverse or Disclaimer Audit Opinion or Unqualified Audit opinion with emphasis of matter or Unqualified Audit Opinion with other matter paragraph Here you will mention about why you have chosen this audit opinion and reason details

You are the audit partner at Parkville & Associates, a mid-tier audit firm. You are responsible for the audits of the following four independent entities for the year ended 30 June 2018: (a) Human Help Ltd is a non-profit entity. You have discovered that it has not kept substantiating vouchers or receipts for more than 55 per cent of its expenses, excluding salaries and allowances (2.5 marks) (b) JJ King Ltd is a building contractor with a varying workload. In order to compensate for the irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land that it later subdivides for the construction of houses and units. JJ King then sells these on its own account. Your analysis strongly suggests that the apportionment of costs to houses and units sold has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the unsold properties. The directors of the company do not agree and hold to their view that the stock of properties is correctly valued (2.5 marks) (c) You have completed the audit of Grand Resort Ltd (Grand Resort) for the year ended 30 June 2015. The audit partner suggested that the value of properties on the Gold Coast were overstated by $16 million, a figure which was twice the level of materiality set for the audit. As a result of discussions with the audit committee, the CEO of Grand Resort agreed to revise the valuations downward by $10 million. All other issues were resolved to the satisfaction of the audit partner, resulting in an overall misstatement of the financial report of $6 million. The audit partner is now considering the effect of the misstatement on the auditor’s report. (2.5 marks) (d) Grand Event Ltd arranges for popular overseas entertainment artists to perform in Australia. The band Eclipse was booked by Grand Event to play in major cities across the country. Grand Event’s written contract required the company to pay the band in US dollars but, in order to reduce costs, it did not hedge the amounts. Subsequent to year end, the Australian dollar fell against the US dollar and a substantial loss relating to the band’s tour was predicted. The management of Grand Event tried unsuccessfully to renegotiate the band’s contract and has been unable to obtain finance to cover the expected shortfall. Grand Event has now cancelled the tour and expects a substantial claim from Eclipse. It is clear to you, as the auditor, that Grand Event does not have the income, cash or other assets to sustain such a loss. (2.5 marks) Required: Assuming no amendments have been made, identify and explain the type of auditor’s opinion required for each issue outlined above. (10 marks, maximum 300 words) Issues Audit Opinion (1 mark) Explanation (1.5 marks) (a)(/(b)/ Write 1 line about issue Unqualified or Qualified or Adverse or Disclaimer Audit Opinion or Unqualified Audit opinion with emphasis of matter or Unqualified Audit Opinion with other matter paragraph Here you will mention about why you have chosen this audit opinion and reason details

For the operating systems game, let us now assume the intrinsic superiority of Mac is not as great and that network effects are stronger for Windows. These modifications are reflected in different payoffs. Now, the payoff from adopting windows is (50 x W) and from adopting Mac is (15+ 5 x M); n consumers are simultaneously deciding between Windows and Mac.

A. Find all nash equilibria.

B. With these new payoffs, let us now suppose that a third option exists, which is to not buy either operating system; it has a payoff of 1000. Consumers simultaneously decide among windows, mac, and no operating system. Find all nash equilibria.

On December 31, 2020, Jen & Mink Clothing (J&M) performed the inventory count and determined the year-end ending inventory value to be $75,500. It is now January 8, 2021, and you have been asked to double-check the year-end inventory listing. J&M uses a perpetual inventory system. Note: Only relevant items are shown on the inventory listing.

The following situations have been brought to your attention:

1. On January 3, 2021, J&M received a shipment of 100 blue jackets, for $2,000 (Item #7649). The inventory was purchased December 23, 2020, FOB destination from Global Threads. This inventory was included in J&M’s inventory count and inventory listing.
2. On December 29, 2020, J&M sold scarves (Item #5566) to a customer with a sale price of $700 and cost of $500, FOB shipping. The order was shipped on December 30, 2020. J&M has not included this inventory.
3. Red Blazers (Item #6193) were purchased and shipped from International Co. on December 30, 2020, for $3,300, FOB shipping. The shipment arrived January 5, 2021, and the appropriate party paid for the shipping charges of $320. Additional costs were $220 for import duties and $60 for insurance during shipment. J&M has not included this inventory.
4. At year-end, J&M is holding $5,000 of black pants (Item #10824) on consignment for designer Duke Co. This inventory was included in J&M’s inventory count and inventory listing.
5. On December 31, 2020, J&M shipped white shirts (Item #4291), FOB destination costing $1,000 to a customer. The customer was charged $1,400 and the customer received the goods on January 3, 2021. J&M has not included this inventory.

Required:
1. In situations (a) to (e) determine whether inventory should be included or excluded in inventory at December 31, 2020. If the inventory should be included, determine the correct inventory cost. (Do not leave any empty spaces; input a 0 wherever it is required.)

2. Determine the correct ending inventory value at December 31, 2020. Starting with the unadjusted inventory value of $75,500, add or subtract any errors based on your analysis in Part 1. Assume all items that are not shown in the inventory listing are recorded correctly.

Next

Lake Ltd. was incorporated on July 1, 2013. The company is authorized to issue an unlimited number of preferred and common shares. The company entered into the following transactions during its fiscal year ending June 30, 2014:

Jul 10 Issued 100,000 common shares for $12.50 per share.

Jul 15 Issued 400,000 common shares for $13 per share.

Sep 30 Issued 30,000 common shares in return for a warehouse. The common shares were trading for $15.50 on the date the warehouse was acquired.

Mar 16 Issued 1,000 preferred shares for $95 per share.

Instructions

1. Record the above transactions on the general journal template.

True/False

1. _____ The number of accounts on the chart of accounts is strictly limited.
2. _____ Every account on the chart of accounts must be identified by one of the accounting elements
3. _____ An account on the chart of accounts could be both a liability and a revenue.
4. _____ The term prepaid is usually associated with an asset account.
5. _____ Unearned revenue would usually be listed in the asset section of a chart of accounts.
6. _____ The FASB dictates to companies what their chart of accounts must look like.
7. _____ The accounting equation stays in balance except when dealing with dividends.
8. _____ Gains and losses are listed under retained earnings because they change the amount of retained earnings.
9. _____ Paying cash for prepaid insurance will not change retained earnings.
10. _____ Using electricity in June and receiving a bill from the electric company in June will result in an increase in assets during June.
11. _____ Selling inventory for a price more than what was paid will increase retained earnings.
12. _____ Amounts to be reported on the financial statement come from the accounting equation worksheet.
13. _____ Accounts receivable at the end of 2020 would become the beginning balance for accounts receivable in 2021.
14. _____ Cost of Goods Sold for the year 2020 would become the beginning balance for Cost of Goods Sold in 2021.
15. _____ Every total from the accounting equation worksheet will have a place to go on the financial statements.
16. _____ When unearned revenue is earned, liabilities are decreased.
17. _____ For revenue recognition the transaction price is adjusted for discounts and rebates that are most likely to take place.
18. _____ Allocating the transaction price to the performance obligations is not necessary if there is only one performance obligation.