Personal Budget

At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
Static

c. What are the budget implications for Priscilla Wescott?

Priscilla can see that her present plan will not provide sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $ short at the end of December, with no time left to adjust.

1. If an employee is awarded stock with a 2-year vesting period, what are the advantages and disadvantages to the employee to making a Section 83 election? How is this election made? Does the election (or lack of election) impact the employer?

2. The following statement is true: Lapse restrictions affect the timing, but not the amount, of compensation recognized under Section 83. Nonlapse restrictions affect the amount, but not the timing, of compensation recognized under Section 83. Explain why this is true.

The stockholders’ equity section of Martino Inc. at the beginning of the current year appears below.

Common stock, $10 par value, authorized 1,000,000 shares,

300,000 shares issued and outstanding ………………………………………….. $3,000,000

Paid-in capital in excess of par …………………………………………………………      600,000

Retained earnings ……………………………………………………………………………      570,000

During the current year the following transactions occurred.

1. The company issued to the stockholders 100,000 rights. Ten rights are needed to buy one share of stock at $32. The rights were void after 30 days. The market price of the stock at this time was $34 per share.

2. The company sold to the public a $200,000, 10% bond issue at 104. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $30 of common stock at $30 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8.

3. All but 5,000 of the rights issued in (1) were exercised in 30 days.

4. At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were out-standing and in good standing.

5. During the current year, the company granted stock options for 10,000 shares of common stock to company executives. The company using a fair value option-pricing model determines that each option is worth $10. The option price is $30. The options were to expire at year-end and were considered compensation for the current year.

6. All but 1,000 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill and obligation related to the employment contract.

Instructions:

(a) Prepare general journal entries for the current year to record the transactions listed above.

(b) Prepare the stockholders’ equity section for the balance sheet at the end of the current year. Assume that the retained earnings balance at the end of the current year is $750,000.

A survey of several 11 to 13 year olds recorded the following amounts spent on a trip to the mall:

$28.43,$25.23,$23.98,$24.79,$29.05

Construct the 95% confidence interval for the average amount spent by 11 to 13 year olds on a trip to the mall. Assume the population is approximately normal.

Step 3 of 4 : Find the critical value that should be used in constructing the confidence interval. Round your answer to three decimal places.

IRS data indicates that the tax refunds it issued this year follow the normal distribution with μ = 1,200 and σ = 200. Based on this information calculate the following probabilities.

1. Probability of selecting a tax return, the refund for which will fall between $1,170 and $1,200:
   
   
   
2. Probability of selecting a tax return, the refund for which will be less than $1,406:
   
   
   
3. Probability of selecting a tax return, the refund for which will be more than $1,598:
   
   
   
4. Probability of selecting a tax return, the refund for which will fall between $1,132 and $1,354:

Pearl Corp. is expected to have an EBIT of $2,400,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $105,000, and $145,000, respectively. All are expected to grow at 20 percent per year for four years. The company currently has $12,500,000 in debt and 1,050,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.5 percent indefinitely. The company’s WACC is 8.9 percent and the tax rate is 21 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Assume that Lee Inc. has the following accounts at the end of the current year:

1. Common Shares

2. Raw Materials Inventory

3. FV-OCI Investments

4. Unearned Rent Revenue

5. Work-in-Process Inventory

6. Intangible Assets—Copyrights

7. Buildings

8. Notes Receivable (due in three months)

9. Cash (includes Restricted Cash—see item 12)

10. Salaries and Wages Payable

11. Accumulated Depreciation—Buildings

12. Restricted Cash (for plant expansion)

13. Land Held for Future Plant Site

14. Allowance for Doubtful Accounts

15. Retained Earnings

16. Unearned Subscriptions Revenue (earned in the next year)

17. Accounts Receivable—Officers (due in one year)

18. Finished Goods Inventory

19. Accounts Receivable

20. Bonds Payable (due in four years)

21. Accounts Payable

22. Goodwill

Prepare a classified statement of financial position in good form (no monetary amounts are necessary). (List Current Assets in order of liquidity. List Property, Plant and Equipment in order of Land, Buildings and Equipment.)

Lee Inc.
Statement of Financial Position
December 31, 20–

Assets

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Liabilities and Shareholders’ Equity

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The number of initial public offerings of stock issued in a​ 10-year period and the total proceeds of these offerings​ (in millions) are shown in the table. Construct and interpret a​ 95% prediction interval for the proceeds when the number of issues is

585.

The equation of the regression line is

ModifyingAbove y with caret equals 33.634 x plus 17 comma 224.539y=33.634x+17,224.539.

Construct and interpret a​ 95% prediction interval for the proceeds when the number of issues is

585.

Select the correct choice below and fill in the answer boxes to complete your choice.

​(Round to the nearest million dollars as needed. Type your answer in standard form where​ "3.12 million" means​ 3,120,000.)

A.We can be​ 95% confident that when there are 585 issues, the proceeds will be between $____ and ​$____.

B.There is a​ 95% chance that the predicted proceeds given 585 issues is between ​$____ and ​$____.

Presented below are a number of balance sheet items for Coronado, Inc., for the current year, 2017.

Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of debt investments (trading) are the same. (List Current Assets in the order of liquidity. List Property, Plant and Equipment in order of Land, Building and Equipment.)