Iri is a newborn. Her parents are planning to contribute $4,000 a year (or possibly less) towards her college fund into an account that will grow at a constant rate of 4.5% a year. Both parents work for the same company that offered to match parental contributions dollar for dollar for the first 5 parental deposits and 30 cents for every parental dollar for subsequent parental deposits until Iri reaches 19. Once she reaches 19, both the company and parents stop their contributions. College costs are expected to be $40,000 a year and Jane spends 4 years in college once she reaches 19. Assume that the beginning balance on the account is $25,000(a)What is the smallest amount parents should contribute each year to make Iri's college affordable? The complete table below and solve the problem (15 points).

A company is considering a 5-year project. The company plans to invest $60,000 now and it forecasts cash flows for each year of $16,200. The company requires a hurdle rate of 12%. Calculate the internal rate of return to determine whether it should accept this project.

Stock A has a 22% possibility of performing well in the next year, which will produce a 24% stock return on investment. There is a 38% chance that stock A will perform good, and produce a return of 22%. Also there is a 45% possibility Stock A will have a modest performance , and will only produce a return of 12%, and there is a 12% chance that stock A will perform bad, and produce a negative return = -7%. There is a risk free rate of 6%. Calculate the risk premium ,expected return, standard deviation, and variance of stock A

DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

Required:

2. Evaluate the company’s performance over the last four months.

1.         You are engaged to examine the financial statements of Spitalfields Company for the year ended December 31. Assume that on October 1, Spitalfields borrowed $600,000 from Third National Bank to finance its plant expansion. The long-term note agreement provided for the annual payment of principal and interest over 5 years. The existing plant was pledged as security for the loan. Due to unexpected difficulties in acquiring the building site, the plant expansion did not begin on time. To use the borrowed funds, management decided to invest in stocks and bonds and on October 16, invested the $600,000 in publicly traded securities.

Required:

Develop specific assertions (audit objectives) related to securities (assets) based on management’s five (PCAOB) general assertions.

2.         GAAS require auditors to be independent. Included within this standard are the concepts of independence in fact and independence in appearance.

            Required:

            a.         Define independence in fact and independence in appearance.

b.         What two general types of relationships would normally compromise auditors’ independence?

3.         The preparation of audit documentation is an integral part of an auditor’s examination of financial statements. On a recurring engagement, auditors review the audit plans and audit documentation from the prior year to determine their usefulness for the current-year work.

            Required:

            a.         (1) What are the purposes or functions of audit documentation?

                        (2) What records may be included in audit documentation?

b.         What factors affect the auditors’ judgement of the type and content of the audit documentation for a particular engagement?

c.         What should be included in audit documentation to support auditors’ compliance with GAAS?

d.         How can auditors make the mot effective use of the prior-year audit plans in a recurring audit?

5. In Year 6, a donor gives $112.000 to a private not-for-profit entity to enable it to buy a new bus for transportation purposes. Near the end of Year 7. this money is used for the stipulated purpose. The donor made no provisions about the accounting for this acquisition. Which of the following is true about the statement of activities for Year 7?

a. Net assets without donor restrictions increased by $112,000.

b. Net assets with donor restrictions did not change.

c. Net assets without donor restrictions did not change.

d. Net assets with donor restrictions goes up by $112,000 and also down by $112.000

6. In Year 6, a donor gives $112,000 to a private not-for-profit entity to enable it to pay the salary of a new doctor to be hired by the organization. Near the end of Year 7, this money is used for the stipulated purpose. Which of the following is true about the statement of activities for Year 7？

a. Net assets with donor restrictions increased by $112,000.

b. Net assets with donor restrictions did not change.

c. Net assets without donor restrictions goes up by $112.000 and also down by $112.000

d. Net assets with donor restrictions goes up by $112.000 and also down by $112.000.

7. The governing board of a private not-for-profit entity votes to set $400,000 in cash aside in an investment fund so that this money and future interest will be available in five years, when a new building is scheduled for construction. Which of the following is not true?

a. The investments are reported on the statement of financial position as net assets without donor restrictions,

b. The acquisition of the investments is not reported on the statement of activities.  

c. Board-designated funds will appear in the net asset section of the week of not as net assets with donor restrictions

d. Income earned by these investments appears on the statement of activities under the out donor restrictions.

8. A private not-for-profit entity receives three large cash donations .

One gift of $70,000 is restricted by the down so that it cannot be spent for four years .

One gift of $90,000 is restricted to pay the salaries of the entity's workers .

One gift of $120.000 must be held forever with the income to be used to provide food for tid families. In the current yeas, income of $10,000 was carved but not spen.

What is the increase in the current year in wet assets with donor restrictions

a. $190,000 b. $210,000 C. $280,000 d. $290,000

9. A private not-for-profit university changes student tuition of $1 million for the current year. Finan cial aid grants total $220,000. The school also receives a $100,000 grant restricted for faculty sala ries. Of that amount, $30,000 is spent appropriately this year. In preparing a statement of activities, which of the following is not true?

a. Net assets without donor restrictions should show an increase of $30,000 for net assets reclassified

b. Net assets without donor restrictions should report revenue of $1 million

c. Net assets without donor restrictions should report expenses of $30.000

d. Net assets without donor restrictions should report a direct reduction of $220.000 in reporting the tuition revenue.

10. Which of the following statements about the reporting of functional expenses is not true!

a. A statement of functional expenses is now required of all private not-for-profit entities. b. Functional expenses are divided between program services and supporting services. c. Functional expenses can be reported as a footnote rather than as a separate statement of func tional expenses.

d. Functional expenses can be reported within the statement of activities rather than as a separate statement of functional expenses.

11. A private not-for-profit entity has the following expenses for the current year.

Research to cure disease $60,000

Fundraising costs 70,000

Work to help individuals with disabilities .... 40,000

Administrative salaries... 90,000

How should the not-for-profit entity report these costs?

a. Program service expenses of $100,000 and supporting service expenses of $160,000

b. Program service expenses of $160,000 and supporting service expenses of $100,000

c. Program service expenses of $170,000 and supporting service expenses of $90,000

d. Program service expenses of $190,000 and supporting service expenses of $70,000

12. A private not-for-profit entity spends $100,000 to send a mailing that solicits donations and pro- vides educational and other information about the charity. Which of the following is true?

a. No part of the $100,000 can be reported as a program service expense.

b. Some part of the $100,000 must be reported as a program service expense.

c. No authoritative guidance exists, so the entity can allocate the cost as it believes best.

d. Under certain circumstances, the entity should allocate a portion of the $100,000 to program service expenses.

13. A private not-for-profit entity sends a mailing to all of its current and former members regardless of whether they have ever donated money or not. The mailing has a total cost of $22,000. It asks for monetary contributions to help achieve the charity's stated mission. In addition, 80 percent of the mailed material is educational in nature, providing information about the entity's goals. Which of the following is true?

a.Some part of the $22000 should be reported as a program service cost because of the educational materials included.

b.No part of the $22000 should be reported as a program service cost because there is no specific call to action.

C. No part of the $22000 should be reported as a program service cost because the mailing was sent to both current and former members regardless of their donation history.

d.Some part of the $22000 should be reported as a program service cost because more than 50 percent of the material was educational in nature.

The ledger of Marigold Corp. on March 31 of the current year includes the following selected accounts before quarterly adjusting entries have been prepared:

An analysis of the accounts shows the following:

The following table shows the nominal returns on U.S. stocks and the rate of inflation.

a. What was the standard deviation of the nominal market returns? (Do not make the adjustment for degrees of freedom described in footnote 18.) (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Standard deviation             %

b. Calculate the arithmetic average real return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)  

Average real return             %