1)When Peter Pan Co. acquired 75% of the common stock of Smee Corp., Smee owned land with a book value of $70,000 and a fair value of $100,000.

What is the amount of excess land allocation attributed to the controlling interest at the acquisition date?
A. $0.
B. $30,000.
C. $22,500.
D. $25,000.
E. $17,500.

2) Perch Co. acquired 80% of the common stock of Salem Corp. for $1,600,000. The fair value of Salem's net assets was $1,850,000, and the book value was $1,500,000. The noncontrolling interest shares of Salem Corp. are not actively traded.

What amount of goodwill should be attributed to Perch at the date of acquisition?
A. $150,000.
B. $250,000.
C. $0.
D. $120,000.
E. $170,000.

3) When Peter Pan Co. acquired 80% of the common stock of Smee Corp., Smee owned land with a book value of $70,000 and a fair value of $100,000.

What amount should have been reported for the land in a consolidated balance sheet at the acquisition date?
A. $56,000.
B. $70,000.
C. $80,000.
D. $96,000.
E. $100,000

Red Bull is the most popular energy drink in sales in the United States. Red Bull GmbH (the parent company) has observed that daily sales are normally distributed with an average of 6,284,050 drinks sold with a standard deviation of 8,130.78. What is the probability that on a given day between 6,290,096 and 6,301,996 drinks are sold? Question 9 options: 1) We do not have enough information to calculate the value. 2) 0.0136 3) 0.2149 4) 0.0005 5) 0.7715

Question 10 (1 point) When students use the bus from their dorms, they have an average commute time of 11.13 minutes with standard deviation 3.0876 minutes. Approximately 26.34% of students reported a commute time less than how many minutes? Assume the distribution is approximately normal. Question 10 options: 1) 9.18 2) 13.08 3) 5.1 4) 17.16 5) We do not have enough information to calculate the value.

Question 11 (1 point) Suppose that the distribution of income in a certain tax bracket is approximately normal with a mean of $53,183.88 and a standard deviation of $1,799.608. Approximately 18.56% of households had an income greater than what dollar amount? Question 11 options: 1) We do not have enough information to calculate the value. 2) 54,793.14 3) 51,574.62 4) 2,842,851 5) 2,949,219

Question 12 (1 point) According to a survey conducted by Deloitte in 2017, 0.4609 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 89 randomly selected U.S. smartphone owners, what is the probability that greater than 46 will have attempted to limit their cell phone use in the past? Question 12 options: 1) 0.0241 2) 0.1703 3) 0.8779 4) 0.0483 5) 0.1221

Question 13 (1 point) According to a survey conducted by Deloitte in 2017, 0.4702 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 54 randomly selected U.S. smartphone owners, what is the probability that between 22 and 29 (inclusively) will have attempted to limit their cell phone use in the past? Question 13 options: 1) 0.1383 2) 0.7244 3) 0.2756 4) 1.0844 5) 0.0132

Question 14 (1 point) According to a survey conducted by Deloitte in 2017, 0.44 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 87 randomly selected U.S. smartphone owners, approximately __________ owners, give or take __________, will have attempted to limit their cell phone use in the past. Assume each pick is independent. Question 14 options: 1) 4.63 , 38.28 2) 38.28 , 21.40 3) 87 , 4.63 4) 38.28 , 0.44 5) 38.28 , 4.63

The company has three bond issues and uses the effective interest method to amortize discounts/premiums.  Information for each is below:

There was a bond issue with a par value of $250,000 on July 1, 2015 when the market rate of interest was 6%.  The bonds have a coupon rate of 5% and interest is paid semiannually on January 1 and July 1. The bonds have a ten-year life when issued. This bond issue is convertible into common stock at the rate of 10 shares for every $1,000 of face value (note - common stock has a par value of $10 per share).  On January 2, 2019, $50,000 of face value was converted into common stock. The company uses the book value method to record conversions. The market price of the stock was $90 per share when the bonds were converted.

On May 1, 2015, the company had a bond issue with principal of $200,000.  The bond issue has a seven-year life. Interest is payable semi-annually on May 1 and November 1.  The coupon rate is 7%. The market rate of interest at issue was 6%. On November 2, 2020, the company called the entire bond issue at 115.  

On November 1, 2014, the company issued serial bonds at par.  The face value of the issue was $150,000, and the coupon interest rate is 6%.  Interest is paid annually on November 1st. The principal will be paid with six equal payments of $30,000 on November 1, 2015 through November 1, 2019.

Required:

Compute the price of the first two bonds (the serial bonds are issued at par).

Prepare amortization tables (effective interest method) for the first two bonds from the issuance date.  

Prepare all journal entries needed for each bond from the date of issue through December 31, 2017.  The company has a year-end of December 31st.

Prepare the journal entry to record the bond conversion (first bond) on January 2, 2019.

Prepare the journal entry to record the bond call (second bond) on November 2, 2020

Rexon Company leases non-specialized equipment to Ten-Care Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows:

Required:

1. Assuming that the lease is a sales-type lease from Rexon’s point of view, calculate the amount of the equal rental receipts.

Additional Instruction

$

2. Prepare a table summarizing the lease receipts and interest income earned by Rexon.

Additional Instructions

3a. Prepare the journal entries for 2019.

General Journal Instructions

PAGE 2019

GENERAL JOURNAL

3b. Prepare the journal entries for 2020.

PAGE 2020

GENERAL JOURNAL

Case study

Chicago-based Groupon was launched in 2008 by Andrew Mason with the idea to email subscribers daily deals of heavily discounted coupons for local restaurants, theatres, spas, etc. Via the emails or by visiting the Groupon website customers purchase these substantially discounted deals in the form of electronic coupons which can be redeemed at the local merchant. Groupon brings exposure and more customers to the merchants and charges them commissions for the same. The venture rapidly grew into a daily deal giant and became the fastest-growing internet business ever to reach a $1bn valuation milestone and, thus, became a 'unicorn' (name for start-ups with valuations over $1bn). In 2010 Groupon rejected a $6bn (€4.5bn) takeover bid by Google and instead went public at $10bn in 2011.

While Groupon's daily deals were valued by customers - the company quickly spread to over 40 countries - they also attracted thousands of copycats worldwide. Investors questioned Groupon's business and to what extent it had rare and inimitable resources and capabilities. CEO Andrew Mason denied in the Wall Street Journal (WSJ) that the model was too easy to replicate:

'There's proof. There are over 2000 direct clones of the Groupon business model. However, there's an equal amount of proof that the barriers to success are enormous. In spite of all those competitors, only a handful is remotely relevant.

This, however, did not calm investors and Groupon shares fell by 80 per cent at its all-time low in 2012. One rare asset Groupon had was its customer base of more than 50 million customers, which could possibly be difficult to imitate. The more customers, the better deals and this would make customers come to Groupon rather than the competitors and the cost for competitors to acquire customers would go up. Further defending Groupon's competitiveness, the CEO emphasised in WS) that it is not as simple as providing daily deals, but that a whole series of things have to work together, and competitors would have to replicate everything in its operational complexity":

'People overlook the operational complexity. We have 10,000 employees across 46 countries. We have thousands of salespeople talking to tens of thousands of merchants every single day. It's not an easy thing to build.

Mason also emphasised Groupon's advanced technology platform that allowed the company to 'provide better targeting to customers and give them deals that are more relevant to them'. Part of this platform, however, was built via acquisitions - a route competitors possibly also could take.

If imitation is the highest form of flattery Groupon has been highly complimented, but investors have not been flattered. Consequently, Andrew Mason was forced out in 2013, succeeded by the chairman Eric Lefkofsky. Even though Amazon and other copycats left the daily-deals business he struggled to explain how Groupon would fight off imitators. The company was forced to exit over 30 international markets. Lefkofsky later returned to his chairman role and was followed by Rich Williams in 2015. He managed to turn Groupon profitable for the first time ever in 2017, but still did not regain investors' confidence with the share price still below $4, far from the $20 IPO price. Williams, however, was optimistic:

'[Groupon) is one of the first unicorns. It got a lot of praise and attention it didn't deserve at the beginning. We've not recovered from that. Over time, the numbers will speak for themselves.'

NOTE " ANSWER IN SRTATEGIC MANAGEMENT WAY "

1. If you were the new Groupon CEO what resources and capabilities would you build on to give the company a sustainable competitive advantage?

Designing a Managerial Incentives Contract

Specific Electric Co. asks you to implement a pay-for-performance incentive contract for its new CEO and four EVPs on the Executive Committee. The five managers can either work really hard with 70 hour weeks at a personal opportunity cost of $200,000 in reduced personal entrepreneurship and increased stress-related health care costs or they can reduce effort, thereby avoiding the personal costs. The CEO and EVPs face three possible random outcomes: the probability of the company experiencing good luck is 30 percent, medium luck is 40 percent, and bad luck is 30 percent. Although the senior management team can distinguish the three “states” of luck as the quarter unfolds, the Compensation Committee of the Board of Directors (and the shareholders) cannot do so. Once the board designs an incentive contract, soon thereafter the good, medium, or bad luck occurs, and thereafter the senior managers decide to expend high or reduced work effort. One of the observable shareholder values listed below then results.

Assume the company has 10 million shares outstanding offered at a $65 initial share price, implying a $650,000,000 initial shareholder value. Since the EVPs and CEOs effort and the company’s luck are unobservable to the owners and company directors, it is not possible when the company’s share price falls to $50 and the company’s value to $500,000,000 to distinguish whether the company experienced reduced effort and medium luck or high effort and bad luck. Similarly, it is not possible to distinguish reduced effort and good luck from high effort and medium luck.

Answer the following questions from the perspective of a member of the Compensation Committee of the board of directors who is aligned with shareholders’ interests and is deciding on a performance-based pay plan (an “incentive contract”) for the CEO and EVPs.

Referenced Questions:

• 2. If you decide to pay 1 percent of the increase in shareholder value as a cash bonus, what performance level (what share price or shareholder value) in the table should trigger the bonus? Suppose you decide to elicit high effort by paying a bonus should the company’s value rise to $800,000,000. What two criticisms can you see of this incentive contract plan?
• 3. Suppose you decide to elicit high effort by paying a bonus only for an increase in the company’s value to $1,000,000,000. When, and if, good luck occurs, what two criticisms can you see of this incentive contract plan?
• 4. Suppose you decide to elicit high effort by paying the bonus when the company’s value falls to $500,000,000. When, and if, bad luck occurs, what two criticisms can you see of this incentive contract plan?

_______________________________________________________

#8) Design an incentive plan that seeks to elicit high effort by granting restricted stock. Show that one-half million shares granted at $70 improves shareholder value relative to all prior alternatives.

#9) Sketch the game tree for designing this optimal managerial incentive contract among the alternatives in Question 2, 3 and 4. Who makes the first choice? Who the second? What role does randomness play? Which bonus pay contract represents a best reply response in each endgame? Which bonus pay contract should the Compensation Committee of the Board select to maximize expected value? How does that compare with your selection based on the contingent claims analysis in Questions 7 and 8?

1. More than $70 billion is spent each year in the drive-thru lanes of America’s fast-food restaurants. Having quick, accurate, and friendly service at a drive-thru window translates directly into revenue for the restaurant. According to Jack Greenberg, former CEO of McDonald’s, sales increase 1% for every six seconds saved at the drive-thru. So industry executives, stockholders, and analysts closely follow the ratings of fast-food drive-thru lanes that appear annually in QSR, a publication that reports on the quick-service restaurant industry.

The 2012 QSR magazine drive-thru study involved visits to a random sample of restaurants in the 20 largest fast-food chains in all 50 states. During each visit, the researcher ordered a modified main item (for example, a hamburger with no pickles), a side item, and a drink. If any item was not received as ordered, or if the restaurant failed to give the correct change or supply a straw and a napkin, then the order was considered “inaccurate.” Service time, which is the time from when the car stopped at the speaker to when the entire order was received, was measured each visit. Researchers also recorded whether or not
each restaurant had an order-confirmation board in its drive-thru.

Here are some results from the 2012 QSR study:

• For restaurants with order-confirmation boards, 1169 of 1327 visits (88.1%) resulted in accurate orders. For restaurants with no order-confirmation board, 655 of 726 visits (90.2%) resulted in accurate orders.
• McDonald’s average service time for 362 drive-thru visits was 188.83 seconds with a standard
  deviation of 17.38 seconds. Burger King’s service time for 318 drive-thru visits had a mean of 201.33
  seconds and a standard deviation of 18.85 seconds.
• a. Is there a significant difference in order accuracy between restaurants with and without order-confirmation boards? Carry out an appropriate test at the a = 0.05 level to help answer this question.
• b. A 95% confidence interval for the difference in the population proportions of accurate orders at restaurants with and without order-confirmation boards is (–0.049, 0.00649). Interpret the confidence interval and explain how the confidence interval is consistent with your conclusion from Question 1.
• c. Construct and interpret a 99% confidence interval for the difference in the mean service times at McDonald’s and Burger King drive-thru's.

1. More than $70 billion is spent each year in the drive-thru lanes of America’s fast-food restaurants. Having quick, accurate, and friendly service at a drive-thru window translates directly into revenue for the restaurant. According to Jack Greenberg, former CEO of McDonald’s, sales increase 1% for every six seconds saved at the drive-thru. So industry executives, stockholders, and analysts closely follow the ratings of fast-food drive-thru lanes that appear annually in QSR, a publication that reports on the quick-service restaurant industry.

The 2012 QSR magazine drive-thru study involved visits to a random sample of restaurants in the 20 largest fast-food chains in all 50 states. During each visit, the researcher ordered a modified main item (for example, a hamburger with no pickles), a side item, and a drink. If any item was not received as ordered, or if the restaurant failed to give the correct change or supply a straw and a napkin, then the order was considered “inaccurate.” Service time, which is the time from when the car stopped at the speaker to when the entire order was received, was measured each visit. Researchers also recorded whether or not
each restaurant had an order-confirmation board in its drive-thru.

Here are some results from the 2012 QSR study:

• For restaurants with order-confirmation boards, 1169 of 1327 visits (88.1%) resulted in accurate orders. For restaurants with no order-confirmation board, 655 of 726 visits (90.2%) resulted in accurate orders.
• McDonald’s average service time for 362 drive-thru visits was 188.83 seconds with a standard
  deviation of 17.38 seconds. Burger King’s service time for 318 drive-thru visits had a mean of 201.33
  seconds and a standard deviation of 18.85 seconds.
• a. Is there a significant difference in order accuracy between restaurants with and without order-confirmation boards? Carry out an appropriate test at the a = 0.05 level to help answer this question.
• b. A 95% confidence interval for the difference in the population proportions of accurate orders at restaurants with and without order-confirmation boards is (–0.049, 0.00649). Interpret the confidence interval and explain how the confidence interval is consistent with your conclusion from Question 1.
• c. Construct and interpret a 99% confidence interval for the difference in the mean service times at McDonald’s and Burger King drive-thru's.

Sheffield Company began operations on January 2, 2019. It employs 9 individuals who work 8-hour days and are paid hourly. Each employee earns 9 paid vacation days and 7 paid sick days annually. Vacation days may be taken after January 15 of the year following the year in which they are earned. Sick days may be taken as soon as they are earned; unused sick days accumulate. Additional information is as follows.

Sheffield Company has chosen to accrue the cost of compensated absences at rates of pay in effect during the period when earned and to accrue sick pay when earned.

1. Prepare journal entries to record transactions related to compensated absences during 2019 and 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

2. Compute the amounts of any liability for compensated absences that should be reported on the balance sheet at December 31, 2019 and 2020.

PLEASE PROVIDE STEPS AND EXPLANATION WITH ANSWERS. THANK YOU!