Sunny Corporation expects to have the following balances on July 1, 2020: Cash, $3,000; Accounts receivable, $135,000; and Accounts payable, $100,000. Its budgeted sales, merchandise purchases, and various expenses for the next three months follow.

20% of the sales are for cash. Of the remaining credit sales, 30% are collected in the same month as the sale, and 70% are collected the month following the sale.

All merchandise is purchased on credit. 20% of the balance is paid in the month of the purchase, and the remaining 80% is paid in the month following the purchase. All other cash expenses are paid in the month incurred. Included in the payroll, rent, and other expenses is $10,000 of depreciation expense.

The company requires a minimum cash balance of $10,000. If cash falls below $10,000, the company borrows on a line of credit with an annual rate of interest of 12% to bring the balance to $10,000. If cash is above $10,000, the company repays as much as possible on any outstanding line of credit but does not allow cash to fall below $10,000. On July 1, the line of credit has a $0 balance.

Complete the following blanks to prepare the cash budget. If a blank has an amount of $0, you are required to enter 0. Note: You have schedules provided below the cash budget that will need to be completed to enable you to prepare certain calculations needed for the cash budget.

Sunny Corporation

Cash Budget

July, 2020 - September, 2020

Schedule to Calculate Cash Sales and Credit Sales

Cash Receipts

Cash payments for Merchandise Purchases

Allan set up a trading business, buying and selling goods. The following transactions took place in the first month of its trading, July 2020.

1. Allan introduced $500,000 cash into the business bank account.
2. The business bought a motor vehicle with price of $60,000. The payment was by cheque.
3. The business bought some inventory for $30,000. The payment was by cheque.
4. The entire inventory purchased in transaction #3 was sold $65,000 in cash.
5. Additional inventory was purchased amounting to $100,000 on credit.
6. 50% of the inventory purchased in transaction #5 was sold for $80,000. All these sales were on credit.
7. A payment of $30,000 was made to a supplier for some of the purchases.
8. A payment of $40,000 was received from a customer for some of the sales on credit.
9. Allan draw $10,000 from the bank account for his personal use.
10. The business paid $2,000 for the motor vehicle maintenance using a cheque.
11. The business paid $15,000 by cheque for the premium of one-year insurance policy.
12. The business received a bank loan of $100,000, repayable in two years.
13. Depreciation for motor vehicles should be allocated 10% per annum on costs.

You are required:

1. Post all the transactions to ledger accounts (including the necessary adjustment entries).
2. Prepare a trial balance as at 31 July 2020.

3. Prepare a statement of comprehensive income for the month ended 31 July 2020 and a statement of financial position as at 31 July 2020. (Assume that Allan has closing inventory of $47,000).

Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with Omer for all of 2020. Omer paid all costs of maintaining the household for himself and Maria. Omer’s sister, Zelda, also lived with Omer for all of 2020. Zelda had no income, and Omer provided all of her support.

In 2020, Omer had the following income items:

• Salary: $75,000

• Interest on savings account (investment income): $2,500

• Ordinary dividends (investment income; not qualified dividends): $1,500

• Unemployment Compensation: $10,000

• Gift from Omer’s father: $10,000

• Alimony from ex-wife (divorce finalized in 2014): $10,000

  Omer paid the following expenses in 2020:

• Federal income taxes withheld on wages: $4,000

• State & local income taxes withheld on wages: $1,000

• Sales tax: $9,000

• Property tax: $3,000

• Medical expenses: $1,000

• Food and clothes for Maria: $4,000

• Investment interest: $5,000

• Food and clothes for himself: $5,000

• Childcare expenses so Omer can work: $2,000

• HSA Contribution (Omer has a HDHP): $2,000

• Charitable contribution (cash): $2,500

• Unreimbursed employee business expenses: $500

• Car payment: $6,000

• Mortgage interest on $300,000 mortgage used to purchase primary residence: $3,000

QUESTION: What is Omer’s total itemized deductions?

Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with Omer for all of 2020. Omer paid all costs of maintaining the household for himself and Maria. Omer’s sister, Zelda, also lived with Omer for all of 2020. Zelda had no income, and Omer provided all of her support.

In 2020, Omer had the following income items:

• Salary: $75,000

• Interest on savings account (investment income): $2,500

• Ordinary dividends (investment income; not qualified dividends): $1,500

• Unemployment Compensation: $10,000

• Gift from Omer’s father: $10,000

• Alimony from ex-wife (divorce finalized in 2014): $10,000

  Omer paid the following expenses in 2020:

• Federal income taxes withheld on wages: $4,000

• State & local income taxes withheld on wages: $1,000

• Sales tax: $9,000

• Property tax: $3,000

• Medical expenses: $1,000

• Food and clothes for Maria: $4,000

• Investment interest: $5,000

• Food and clothes for himself: $5,000

• Childcare expenses so Omer can work: $2,000

• HSA Contribution (Omer has a HDHP): $2,000

• Charitable contribution (cash): $2,500

• Unreimbursed employee business expenses: $500

• Car payment: $6,000

• Mortgage interest on $300,000 mortgage used to purchase primary residence: $3,000

QUESTION:

1. What is Omer’s taxable income? Omer has no QBI deduction.

Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with Omer for all of 2020. Omer paid all costs of maintaining the household for himself and Maria. Omer’s sister, Zelda, also lived with Omer for all of 2020. Zelda had no income, and Omer provided all of her support.

In 2020, Omer had the following income items:

• Salary: $75,000

• Interest on savings account (investment income): $2,500

• Ordinary dividends (investment income; not qualified dividends): $1,500

• Unemployment Compensation: $10,000

• Gift from Omer’s father: $10,000

• Alimony from ex-wife (divorce finalized in 2014): $10,000

  Omer paid the following expenses in 2020:

• Federal income taxes withheld on wages: $4,000

• State & local income taxes withheld on wages: $1,000

• Sales tax: $9,000

• Property tax: $3,000

• Medical expenses: $1,000

• Food and clothes for Maria: $4,000

• Investment interest: $5,000

• Food and clothes for himself: $5,000

• Childcare expenses so Omer can work: $2,000

• HSA Contribution (Omer has a HDHP): $2,000

• Charitable contribution (cash): $2,500

• Unreimbursed employee business expenses: $500

• Car payment: $6,000

• Mortgage interest on $300,000 mortgage used to purchase primary residence: $3,000  

  • QUESTION: What is Omer’s total itemized deductions?

  • QUESTION: What is Omer’s taxable income? Omer has no QBI deduction.

  • ​​​​​​​

The financial statements for Waverley Ltd are provided below:

Waverley Ltd

Comparative Balance Sheet

As at 30 June 2019 and 2020

Waverley Ltd

Income Statement

For the Year Ended at 30 June 2020

Required:

Prepare an extract of the Cash Flow Statement for the year ended 30 June 2020 showing Cash Flows from Operating Activities AND Cash Flows from Financing Activities. Show all workings.

Matt and Debra Baxter live in an upscale neighborhood in Orem, Utah. Matt is a partner in the family owned business. Debra stays home with their child, Brady, who is age 5.

After visiting with their financial planner, the couple became concerned that they were spending too much and not putting enough funds aside for Brady’s future educational needs. Matt earns $85,000 per year, but with the rising costs of education, they are concerned.

Matt is an alumni of Duke University, a prestigious school with tuition and book expenses of approximately $18,000 per year. Debra graduated from Utah Valley University. The expense for tuition and books there is estimated at about $8,000 per year. When Brady turns 18, the couple wishes to send him to one of these two exceptional universities. They have a slight preference for Utah Valley University. The problem, however, is that with the rate at which tuition is increasing the Baxter’s are not sure they can save enough money and they have decided they do not want to borrow to pay for Brady’s education. Assume the tuition at both universities will increase at an annual rate of 5% from now until Brady starts college.

Living expenses are currently estimated to be $9,000 per year at both schools. This expense is expected to increase at only 3% per year. Further, assume that Baxter’s can deposit their money into a growth oriented mutual fund which has historically earned 12% per annum.

The couple wishes to save by having a pre-determined amount automatically withdrawn from their bank account at the end of each month. They plan to contribute from now until Brady starts college. When Brady starts college, at the beginning of his freshman year, they will stop making contributions. They want to have enough in their account when Brady starts college so the principle and interest will cover all four years of his college expenses. They will make annual withdrawals from the account to cover both tuition and living expenses for Brady at the beginning of his freshman, sophomore, junior, and senior years. When the withdrawal for the senior year is made the account balance will be zero.

Complete a thorough analysis and write a professional letter to the Baxter’s (who don’t understand finance) explaining the analysis you performed, why you performed it, and the results and conclusions. In the letter and attached schedules provide information that answers the following questions.

-When Brady is 18, what will be the tuition expense, living expense, and total expense for each of the four years that Brady will attend college? Provide the information for each University.

-What amount will be needed in the account when Brady starts his freshman year if he attends Duke? What amount if he attends UVU?--

-How much money will Matt and Debra have to deposit at the end of each month to allow Brady to attend Duke? How much money will have to be deposited per month to allow Brady to attend Utah Valley University? Assume that Matt and Debra stop making deposits when Brady starts college.

-The Baxter’s are concerned that given the current market performance the mutual fund will only earn 9% per year. Redo the analysis assuming they can earn only 9% per year on their investments. How much will be needed in the account when Brady starts college and how much will have to be deposited per month for Brady to have sufficient funds to attend each school?

Please show excel workthrough!

Use the following information on Disney to answer the case questions.

• Disney’s current stock price is $140.00 per share. The average growth rate of the company’s dividend has been 17.7% from 2004 through 2018.
• Disney’s return on equity is 28.0% and the company retains approximately 80.0% of its profits while paying out the remaining 20.0% in dividends.
• The company’s stock currently trades at 21.21 times its current year earnings estimate of $6.60 per share.
• Analysts expect the company to earn $6.19 per share in 2020 and $6.93 in 2021.
• Disney’s peers in media networks trade at 25.5 times their current-year earnings estimates while peers in parks, experiences and consumer products at 21.9; studio entertainment at 19.1 and DTCI at 14.1.
• Assume the expected return for Disney’s stock is 6.9%.

What is the Constant Growth Model, the Multi-Stage Growth Model, Discounted Dividend Model, and Market Multiples Approach?

Use the following information on Disney to answer the case questions.

◼ Disney’s current stock price is $140.00 per share. The average growth rate of the company’s dividend has been 17.7% from 2004 through 2018

◼ Disney’s return on equity is 28.0% and the company retains approximately 80.0% of its profits while paying out the remaining 20.0% in dividends.

◼ The company’s stock currently trades at 21.21 times its current year earnings estimate of $6.60 per share.

◼ Analysts expect the company to earn $6.19 per share in 2020 and $6.93 in 2021. ◼ Disney’s peers in media networks trade at 25.5 times their current year earnings estimates while peers in parks, experiences and consumer products at 21.9; studio entertainment at 19.1 and DTCI at 14.1.

◼ Assume the expected return for Disney’s stock is 6.9%.

What is Disney stock’s intrinsic value using Multi-Stage Growth Model

The client was a young IT professional who wanted to start-up a new company. The idea was to combine virtual reality developments with online education which was getting quite popular after coronavirus pandemic in 2020. Furthermore, the client was getting ready to launch virtual offices as well. Test runs have shown a strong interest from many companies as this would allow to save a lot of money on office spaces, utilities and supplies.

you have also asked the client which criteria is the most important for the new company: (a) organizational requirements and costs, (b) liability of the owners, (c) the continuity of the business, (d) the transferability of ownership, (e) management control and regulations, (f) the ability to raise capital or (g) income taxes.

Question . Specify the most suited legal form of business for each above mentioned criterion and explain the reason. Answer: a, b, c, d, e, f, and g