I answered the questions but do not feel 100% about my answer want to compare it to another

Maria Santos was recently promoted to senior vice president and assistant to the CFO at Paradise Environmental Designs (PED).

In her new position, Maria is responsible for raising external funds for PED. When the firm needs to raise capital, her team recommends the type of financial instrument that should be issued, completes the appropriate paperwork, negotiates with PED’s investment bankers, and so forth. In a departmental meeting a couple of days ago, the CEO stated that he thought the rate at which PED has been raising capital has been much too high, and he wants any future funds that are raised to have substantially lower costs. Although he blamed her predecessor, the comments were clearly directed at Maria and the members of her department.

As a result, Maria felt that she had to come up with some means by which PED can lower the costs of funds in the future. Because she is fairly new to her position, Maria thought it would be a good idea to meet with others who are more experienced in raising funds for corporations. One of the persons who offered Maria some ideas is Roger, a close friend of hers, who works at Superior Investment Networks (SIN), which is one of the investment banking organizations used by PED. Roger suggested that PED consider issuing convertible bonds rather than straight, or traditional, bonds. He explained that a convertible bond can be issued at a lower interest rate than an identical bond that is not convertible because the conversion feature is a benefit to investors rather than to issuers.

Roger also explained that convertibles are somewhat complex hybrid securities. Other than the information that Roger gave her, Maria knows nothing about convertibles. But because Roger is a friend and his description of convertibles was intriguing, she decided to investigate whether it would be appropriate for PED to use convertibles. When she arrived at work this morning, Maria was told that PED plans to raise $400 million as soon as possible to invest in new projects that the CEO wants to purchase within one year.

Unfortunately, Maria hasn’t had a chance to collect more information about convertibles. Even so, she thinks that a convertible might be an appropriate instrument to issue at this time. As a result, Maria called Roger and asked him how she could learn more about convertibles in a short time period. Roger told her that SIN presents a conference each year at which invited participants discuss various aspects of convertibles. The topics that are covered at the conference range from the basics of convertible securities to more complex topics. The conference seems to be exactly what Maria needs to become more informed about the advantages and disadvantages of issuing convertibles, so she asked Roger to provide her with specific information about the conference, including the dates, costs, specific session topics, and so forth.

One hour ago, Roger called with details about the SIN conference. The seven-day conference will be held aboard a cruise ship as it sails to exotic ports in the Mediterranean Sea. The sessions are scheduled during the time the ship is traveling from one port to another, which generally takes four or five hours. When the ship is in port, the conference coordinator has arranged for the participants to take tours, play golf and tennis, lounge at the beach, and enjoy the local entertainment. The conference sounds great to Maria because she can work and relax at the same time.

One thing bothers her, however—all of the costs, including recreation, relaxation, and entertainment activities will be paid by SIN. Maria is convinced that she will get the information she needs at the SIN conference. But she is concerned that attending the conference might be considered a conflict of interest because she knows that SIN representatives will try to convince her to use the company’s services to issue convertibles. She also knows that Roger will earn substantial commissions if PED uses SIN to issue convertibles. Further, Maria is concerned that material and information she receives at the conference will be one-sided (biased). If she is going to attend the conference, Maria needs to register within the next couple of days. As a result, she needs to make a decision soon.

QUESTIONS -

1. What do you think Maria should do?
2. If she decides to work with SIN to purchase the convertible bonds, do you think she can remain impartial?
3. What do you think is the best decision for PED?

Imagine you are Person A. You just graduated from school and are now on your own. Your family is unable to help you in any way. You managed to find a job, but the pay is only enough to cover your rent in a tiny rundown apartment, transportation to and from work, limited cell phone service, and fast food or other cheap sources of calories. Your purchases of clothing and personal items are limited to what you absolutely require. You cannot buy anything simply because you like it. You need some new slacks to wear to work, so you are skipping breakfast this month to save for them. You cannot afford to see a doctor if you get sick. Your only choices for entertainment include hanging out with old friends from school, walking in a city park, watching a 9-year-old TV in your apartment, or reading books from the library. You do not have a computer or access to the Internet or cable TV at home. You do not know if or when you will be able to get a higher-paying job.

Now, imagine you are Person B. Like Person A, you just graduated from school. But unlike Person A, you have been put under house arrest for one year because of a conviction for drug possession. Although you live alone, you are the beneficiary of a family fortune and have more money than you could possibly spend in a lifetime. You are not allowed to leave your beautiful penthouse apartment, which is furnished with every kind of electronic entertainment device known to man. You do not need a job; you can surf the Internet; you can buy anything you want online and have it delivered; you can listen to the music you like and watch TV or streaming video whenever you wish; you can order food in from the best restaurants in town; and your friends can visit you.   

In legal terms, Person A is “free” and Person B is “not free.” Person A has the right to go anywhere in the world, while Person B is “imprisoned” in a beautifully decorated 3,000 squarefoot condominium.   

question

1. On page 4 of Handout S3, I describe an imagined Person A and Person B. Person A is legally free to go anywhere and do anything, but has very limited resources. Person B is confined to house arrest, but has no financial constraints. Go back and read the description, then answer the following questions:

If you had to spend a year living under the conditions of Person A or Person B, which would you choose? Which of the two has greater freedom? What if the timeframe were longer? Would that change your answers? (25 POINTS)

Answer EITHER 2a OR 2b below (25 POINTS):

2a. Happiness in the present moment has been described as being “in the flow,” a state of “being so absorbed and engaged in something that time falls away.” Here is a quote from page 14 of Handout S3:

“Being “in the flow” is not the same thing as relaxation, although both might make you lose track of time and both are important to happiness. Both can also bring about a sense of peace. Yet while relaxation generally implies a passive engagement or an avoidance of purpose, “flow” happens when you are actively focused on an intentional task or pursuit. All of your thoughts and emotions are simultaneously and purposefully directed toward this task, so much so that you may not even be aware of your feelings. You may not even be able to distinguish your awareness and intent from the actions themselves.

You might play ball, for example, either to relax or to intentionally hone your athletic skills. Either way, you might enjoy yourself and lose a sense of time, but working on skills requires more directed focus. Or, you might watch a movie either to relax or to gain information. The intention of the activity is what distinguishes “flow” from relaxation.”

What intentional activities do you engage in that take you away from time, place, and maybe even an awareness of yourself? Are there any similarities in these activities? Can you think of how to build more of them into your life?  

2b. Describe a situation in which you discovered synthetic happiness. What did you want that you did not get? What happened instead? How did you find happiness? What surprised you about the situation?

Consider a market with many firms that have different cost structures.

Unless shutdown or exit is​ optimal, every firm expands production until​ ___________.

A.

marginal product is maximized.

B.

marginal​ revenue, marginal​ cost, and price are all equal

​(MR

​ = MC​ =

P​).

C.

marginal revenue is equal to the minimum of​ short-run average total cost.

D.

marginal cost is minimized.

To construct the supply curve in a market with many firms with different cost​ structures, the​ ___________.

A.

individual supply curves for each firm are added together.

B.

individual average variable cost curves are added together.

C.

minimums of the​ firms' marginal cost curves are linked together.

D.

minimums of the​ firms' long-run average total cost curves are linked together.

The equilibrium price is the​ ___________.

A.

​long-run average total cost of the last entrant into the market.

B.

average marginal cost of the firms.

C.

​long-run average total cost of the first entrant into the market.

D.

minimum of the average variable cost of the smallest firm in the market.

In terms of economic​ profits, early market entrants earn

(negative

zero

positive)

economic profits and the last entrant earns

(negative

zero

positive)

economic profits.

A perfectly competitive firm will choose to shut down when the (price (marginal revenue)/ average total cost) intersects the marginal cost curve below the ( total cost curve average variable cost curve ).

​Therefore, the​ short-run supply curve for a perfectly competitive firm is represented by​ __________.

A. the portion of the average variable cost curve below marginal cost. B. the portion of the average variable cost curve above marginal cost. C. the portion of the marginal cost curve above average total cost. D. the portion of the marginal cost curve above average variable cost.

In the long​ run, the supply curve for a perfectly competitive firm is represented by​ __________.

A. the portion of the marginal cost curve above average total cost. B. the portion of the marginal cost curve above average variable cost. C. the portion of the average variable cost curve below marginal cost. D. the portion of the average variable cost curve above marginal cost.

Following are several transactions involving a university. In the current fiscal year, the university was notified by the federal government that next fiscal year it would receive a $500,000 grant for wetlands research. The university received a $500,000 endowment. For the fiscal year, the university recorded $2,500,000 in tuition and fees revenue. Cash refunds of $325,000 were given. The university provided $12,600 in tuition waivers for students with outstanding academic performance. During the year, the university constructed a new street, to allow for the expansion of its student housing efforts. The cost of the street was $1,980,000. The biology department spent $25,000 on wetlands research. At year-end, $1,670 of estimated uncollectible tuition and fees was recorded. Required Prepare journal entries to record the foregoing transactions, assuming the university is a private institution. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)Following are several transactions involving a university. In the current fiscal year, the university was notified by the federal government that next fiscal year it would receive a $500,000 grant for wetlands research. The university received a $500,000 endowment. For the fiscal year, the university recorded $2,500,000 in tuition and fees revenue. Cash refunds of $325,000 were given. The university provided $12,600 in tuition waivers for students with outstanding academic performance. During the year, the university constructed a new street, to allow for the expansion of its student housing efforts. The cost of the street was $1,980,000. The biology department spent $25,000 on wetlands research. At year-end, $1,670 of estimated uncollectible tuition and fees was recorded. Required Prepare journal entries to record the foregoing transactions, assuming the university is a private institution. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. In the current fiscal year, the university was notified by the federal government that next fiscal year it would receive a $500,000 grant for wetlands research.

Note: Enter debits before credits.

b.The university received a $500,000 endowment.

Note: Enter debits before credits.

c. Record the receipt of tuition and fees revenue.

Note: Enter debits before credits.

Case Background

A sole proprietor (the owner) has established a service business specializing in recruitment for businesses needing specialized Tool Industry staff. The trail balance at the end of the first three months of operations is provided below. Part of the service is to train people before they are placed with companies. The owner has asked, you, the accountant for HR, to prepare the answers to the questions below considering the notes provided.

Trial Balance

Notes

1. The owner issued a cheque for $2,000 for insurance for the next three month after discovering there was no insurance in place. The cheque has not been recorded as a reduction of cash to-date. There is no insurance expense for the first three months.

2. The equipment must be depreciated for three months. The equipment has a service life of 5 years and monthly depreciation is estimated to be $833 a month.

3. Recorded revenue of $5,000 is unearned and was an advance from a client. This revenue will be earned in the next three months.

4. Salaries of $15,000 were paid in the first three months. However, $1,000 of salaries should be accrued as employees earned these salaries but will not be paid until the 4th month.

5. The owner provided services of $2,500, which were not invoiced or billed to clients in the 3rd month but were earned in accordance with the Revenue Principle.

6. Interest expense (Debit) needs to be recorded at the end of three months. The amount is $750 and should be recorded as a liability in Interest Payable (Credit) on the balance sheet. None of the $50,000 note has been paid to lenders yet. This note will be paid back at the end of 5 years.

7. Supplies of $1,500 must be expensed to Cost of Goods Sold (i.e., moved out of inventory) and a new accrual of Accounts Payable should be established for $2,000 for supplies ordered at the end of the 3rd month, and not booked to-date.

Questions

1. Prepare an adjusted trial balance showing adjustments. Show the adjustments and add any new accounts required because of the adjustments. Calculate the current ratio, quick ratio and debt to equity (capital) ratio for the owner.

Q1. Non-GST version

On 1 July 2019 Andreou Black opened a beauty parlour. The following transactions occurred during the first month of operations (ignore GST).

Use the following account titles and numbers: Cash at Bank, 100; Accounts Receivable, 101; Supplies, 102; Equipment, 103; Loan Payable, 200; Andreou Black, Capital, 300; Andreou Black, Drawings, 301; Revenue, 400; Rent Expense, 500; Advertising Expense, 501; Insurance Expense, 502; Telephone Expense, 503.

Required:

(a) Prepare the general journal entries to record the transactions.

(b) Post the entries from the general journal to the general ledger accounts (running balance format) and enter the posting references in the general journal.

(c) Prepare a trial balance as at 31 July 2019.

(d) Prepare a Balance sheet as at 31 July 2019.

(e) Prepare a Balance sheet as at 31 July 2019.

Q2. Flow GST and journal entries

A Timber merchant sells timber to a Furniture manufacturer for $220 (this amount include 10% GST). The furniture manufacturer then makes a table and sells it to Fantastic Furniture Ltd, a furniture retailer, for $440 (including GST). The retailer sells the table to a consumer for $550 (Including GST).

Required

1. Prepare flow of GST among businesses and the Australia Taxation Office.
2. Prepare journal entries for the flow of GST among businesses and the Australia Taxation Office

2–1. Using the Comprehensive Annual Financial Report obtained for Exercise 1–1, answer the following questions: a. Compare the items discussed in the MD&A in your CAFR with the list of items in this chapter. Which topics listed in this chapter are not in your CAFR? Which topics are in your CAFR that are not listed in this chapter? Do you think your CAFR has a reasonably complete discussion?

b. From the MD&A in your report, write a short summary of (1) the financial condition of your government, (2) a comparison of revenues compared with the prior year, (3) a comparison of expenses compared with the prior year, and (4) a comparison of budgeted and actual activity.

c. From the Statement of Net Position, identify the following: (1) unrestricted net position—governmental activities; (2) unrestricted net position— business-type activities; (3) restricted net position by restriction— governmental activities; (4) restricted net position by restriction—business-type activities; and (5) unrestricted and restricted net position—component units (if any).

d. From the Statement of Activities, identify the following: (1) net program expense (or revenue)—governmental activities; (2) net program expense (or revenue)—business-type activities; (3) net program expense (or revenue)—component units; (4) change in net position— governmental activities; (5) change in net position—business-type activities; and (6) change in net position—component units. Does the ending net position in this statement agree with the net position figures in the Statement of Net Position?

e. From the Statement of Revenues, Expenditures, and Changes in Fund Balances for Governmental Funds, identify the names of the major governmental funds. List the net change in fund balance for each major fund.

f. From the governmental fund statements, take one major fund (other than the General Fund) and prove, using the 10 percent and 5 percent criteria described in this chapter, that the fund is required to be reported as a major fund.

g. From the Statement of Revenues, Expenses, and Changes in Fund Net Position, list the major enterprise funds. For each, identify: (1) the operating income, (2) the income (loss) before contributions and transfers, and (3) the change in net position.

Poco Miller is the RM at the Hampton Inn. Mark is the property’s FOM and Latisha is the DOSM. All three serve on the hotel’s RM committee. The hotel has 200 rooms. Next month the hotel will serve as the host hotel for the Retired Firefighters Association. The Association originally blocked 100 rooms per night for Thursday, Friday, and Saturday nights at a rate of $99.00 per night. All the rooms in their block have been picked up. The current rooms availability forecast for the three days of the meeting is as follows:

The group has requested that Latisha add 30 rooms each night to its block at the originally contracted rate of $99.00. It states that its members will use all of the additional rooms if they are made available, but if not, they will move their remaining 30 attendees down the street to the Comfort Inn. Latisha is in favor of increasing the block and keeping the group together. Mark is opposed. He is convinced he can sell 20 more rooms on Thursday, 40 rooms on Friday, and 30 rooms on Saturday at the normal rack rate of $129.99. Under his plan, he states, “The hotel can maximize its ADR.”

Based on Mark’s estimate of future sales to be made at rack rate, Poco knows the hotel will sell out and maximize its occupancy percentage under Latisha’s plan. Help Poco analyze the data she needs to answers the questions that follow by filling in the chart.

A. What would the hotel’s ADR be under Mark’s plan?
B. What would the hotel’s RevPAR be under Mark’s plan?
C. What would the hotel’s ADR be under Latisha’s plan?
D. What would the hotel’s RevPAR be under Latisha’s plan?
E. Who’s plan would you advise Poco to support? Explain your rationale.