Many U.S. Firms Use Leases Leasing is big business for U.S. companies. For example, business investment in equipment in a recent year totaled $709 billion. Leasing accounted for about 31% of all business investment ($218 billion). Who does the most leasing? Interestingly major banks, such as Continental Bank, J.P. Morgan Leasing, and US Bancorp Equipment Finance, are the major lessors. Also, many companies have established separate leasing companies, such as Boeing Capital Corporation, Dell Financial Services, and John Deere Capital Corporation. And, as an excellent example of the magnitude of leasing, leased planes account for nearly 40% of the U.S. fleet of commercial airlines. In addition, leasing is becoming increasingly common in the hotel industry. Marriott, Hilton, and InterContinental are increasingly choosing to lease hotels that are owned by someone else. Why might airline managers choose to lease rather than purchase their planes?

Consider the following variation of Table 11-1 for the U.S. semiconductor market

1. Fill in the values for W, X, Y, and Z.
2. Suppose that before NAFTA, the United States had a 16% tariff on imported semiconductors. Which country supplied the U.S. market? Is it the lowest-cost producer?
3. After NAFTA, who supplies the U.S. market? Has either trade creation or diversion occurred because of NAFTA? Explain.
4. Now suppose that before NAFTA, the United States had an 8% tariff on imported semiconductors. Then repeat parts (b) and (c).
5. In addition to the assumptions made in (d), consider the effect of an increase in high-technology investment in Canada due to NAFTA, allowing Canadian firms to develop better technology. As a result, three years after the initiation of NAFTA, Canadian firms can begin to sell their products to the United States for $40. What happens to the U.S. trade pattern three years after NAFTA? Has either trade creation or diversion occurred because of NAFTA? Explain.

U.S. Treasury quotes as follows: U.S. Treasury quotes from the WSJ on Oct. 15, 2003:

a. What is the duration of the above Treasury note? Use the asked price to calculate the duration. Recall that Treasuries pay interest semiannually.

b. If yields increase by 10 basis points, what is the approximate price change on the $100,000 Treasury note? Use the duration approximation relationship. Briefly discuss.

Corruption is widespread in many less developed countries. The U.S. anti-corruption laws sanction the U.S. multinational from bribing foreign entities. (The Foreign Corrupt Practice Act of 1977, amended 1988, and the International Anti-Bribery Act of 1998.) Do the anti-corruption laws handicap American firms in their ability to compete against multinationals from elsewhere?

Aubrae and Tylor Williamson began operations of their furniture repair shop (Furniture Refinishers, Inc.) on January 1, 2019. The annual reporting period ends December 31. The trial balance on January 1, 2020, was as follows:

Transactions during 2020 follow:

1. Borrowed $40,000 cash on July 1, 2020, signing a one-year, 10 percent note payable.
2. Purchased equipment for $19,000 cash on July 1, 2020.
3. Sold 10,000 additional shares of capital stock for cash at $.50 market value per share at the beginning of the year.
4. Earned $148,000 in revenues for 2020, including $62,000 on credit and the rest in cash.
5. Incurred $40,000 in wages expense and $12,000 in miscellaneous expenses for 2020, with $10,000 on credit and the rest paid with cash. Note: Wages are paid in cash.
6. Purchased additional small tools, $5,000 cash.
7. Collected accounts receivable, $12,000.
8. Paid accounts payable, $15,000.
9. Purchased $24,000 of supplies on account.
10. Received a $3,000 deposit on work to start January 15, 2021.
11. Declared a cash dividend on December 1, $15,000; paid on December 31.

Data for adjusting entries:

12. Supplies of $8,000 and small tools of $7,000 were counted on December 31, 2020 (debit Miscellaneous Expenses).
13. Depreciation for 2020, $3,000.
14. Interest accrued on notes payable (to be computed).
15. Wages earned since the December 24 payroll but not yet paid, $6,000.
16. Income tax expense was $6,000, payable in 2021. Post the journal entries for transactions 1 through 11 and adjusting entries for transactions 12 through 16 to the respective T-Accounts.

Create a Schedule of Cash Collections in Excel using formulas only

Create a Direct Labor Budget in Excel using Formulas only

You are Assistant to Susan Ali, controller for POW PRODUCTS Ltd. (PP), a food distributor. It is late afternoon May 31. Susan has called you to her office to tell you that she is leaving this evening on a well-deserved vacation and that you are to complete and circulate the cash budget for June. To help , she has assembled the following budget data.

Sales. Each month 40% of sales are in cash and 60% are on credit. The collection of credit sales is 20% in the month of sale, 50% in the following month, and 30% in the next month. Inventory purchases. Inventory purchases are paid 30% in the month of purchase, and 70% the following month. Additional information: • At the end of the day on May 31st the company has a cash balance of $460,000. •

Early in May a dealer offered to sell PP a fleet of 12 new high capacity delivery vans at $900,000 for all 12 vans. PP intends to make the purchase in cash on June 15. In addition, the dealer has agreed to accept the old fleet as a trade-in for $140,000. PP will recognize a gain on disposal sale of $55,000 in this transaction.

• Other monthly cash expenses are expected to total $250,000.

• Monthly depreciation of plant and equipment is $180,000.

• Quarterly income tax instalments of $150,000 is to be paid in June.

• A dividend payment of $230,000 was declared in May for payment in June.

• All PP employees share a monthly cash bonus of 2% of the preceding month's sales.

• The company has a policy of maintaining a minimum cash balance of $10o,000 and has a line of credit with the bank to enable it to borrow when necessary. All borrowing is done at the beginning of the month, and borrowings are made to the nearest $1,000. Monthly interest is calculated at 2% per annum and must be paid at the end of each month. There is no outstanding borrowing currently. Susan is rushing to catch her flight as she hands you the budget data, and says, "We may be a bit cash short for June. If so, prepare the budget on the assumption that the cash shortfall will be made up with borrowing. You then go to Stella Ruel, the CEO, to get permission to borrow. However, she will first want to know what are the best alternatives so you should also prepare two reasonable alternatives for your meeting with her. She will also want to know which of these three courses of action you recommend and why. You know our operations, priorities and constraints well enough to do this—just be prepared.”

Required A. Prepare a cash budget for June 200x using a clear and logical format.

B. Assume that Susan is correct about June being cash short. Prepare notes to present to the CEO, outlining the three best alternative courses of action to choose from, i.e., borrowing and two others. Then make a case for the one you judge to be best.

C. Some managers who do not have any accounting training don’t understand the difference between a statement of cash flows (SCF) and a cash budget. The CEO of POW PRODUCTS , Stella Ruel, is one of these non-accountant managers and she asks you to explain, briefly, in what way are these two statements are similar and in what way to they differ. In particular, what are the key differences between them.

Marcia Miller died July 23, 2017. Marcia (born April 2, 1930) resided at 117 Brandywine Way, Eastern City, PA 19000 and was a lifelong Pennsylvania resident. Her first husband, Arthur Adams, died in 1999. In June 1999, she married Matt Miller, a U.S. citizen, who survived her. Marcia has three children (Andy, Annie, and Archie Adams) from her first marriage.

Date of death values of the properties discovered at Marcia’s death are listed below.

Principal residence with a value of $420,000. Purchased by Marcia in 2001 and titles in the names of Matt and Marcia Miller, joint tenants with right of survivorship.

Household furnishings acquired by Marcia during her first marriage and values at $62,000 when she died.

$1 million cash in money market account in Marcia’s name. On her date of death, there also was $2,200 of accrued interest in the account.

$17,000 checking account at Keystone State Bank in the names of Marcia and Matt as tenants in common.

Stock portfolio in Marcia’s name with fair market value at her death of $5.6 million.

$1 million like insurance policy. Marcia purchased the policy in 1990 and held incidents of ownership. Beneficiary is Marcia’s estate, and Marcia held incidents of ownership.

Trust at Quaker State Bank with value of $500,000. The trust was created under the will of Marcia’s uncle, Josh Judson, who died in 1992. Marcia was entitled to receive all the income annually for life and was granted the power to will the property to such of her descendants as she so desired with the specification that, if she did not exercise the power, the property would pass to Josh’s Former housekeeper, Yvonne Jones.

Marcia’s will includes the following provisions:

I bequeath to Matt all of my tangible, personal property.

To First Lutheran Church I leave $50,000.

To a trust with PHL Bank I leave $200,000. Matt is to receive all the trust income quarterly for life, and the remainder is to be divided equally at his death among my three children or their estates.

I leave my sister Annette $100,000, but if she disclaims this amount, it will go to my beloved Matthew.

I appointed the property on the trust at Quaker State Bank to Annie Adams.

The rest of my property I leave to Andy (my first born).

Other pertinent information follows:

As of her date of death, Marcia owed her country club $800.

The cost of Marcia’s funeral and tombstone totaled $15,000.

Her accountant’s, attorney’s, and executor’s fees are estimated to be $120,000.

Annette made a qualified disclaimer of the $100,000 bequest.

Marcia’s executor, Susan, will make whatever elections will result in the lower tax payable. During her life, Marcia never made any taxable gifts and never consented to gift splitting.

Assume that, under state law, taxes and nay other costs associated with death are payable from the estate’s residue and that the state death tax owed is equal to the state death tax credit available on the federal estate tax return.

Prepare an estate tax return (Form 706) for Marcia. You will also need to prepare the following sub-schedules for Marcia:

B, C, D, E, F, J, K, M, O (These forms all need to be downloaded from the IRS website and the numbers must be manually loaded into the forms and then printed).

1. Suppose that oil prices hit an all-time high of $200 a barrel, driving U.S. inflation up to 7 percent per year. At the same time, weak U.S. growth and increasing foreign competition have generated unacceptably high levels of unemployment in the United States. You are the chair of the Federal Reserve. What do you suggest?