(Conversion of Bonds) On January 1, 2010, when its $30 par value common stock was selling for $80 per share, Bartz Corp. issued $10,000,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $10,600,000. The present value of the bond payments at the time of issuance was $8,500,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2011, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2012, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 20% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums.

Instructions

(a) Prepare the entry to record the original issuance of the convertible debentures.

(b) Prepare the entry to record the exercise of the conversion option, using the book value method. Show supporting computations in good form.

The McGee Cake Company I n early 2010, Doc and Lyn McGee formed the McGee Cake Company. The company produced a full line of cakes, and its specialties included chess cake,* lemon pound cake, and double-iced, double-chocolate cake. The couple formed the company as an outside interest, and both continued to work at their current jobs. Doc did all the baking, and Lyn handled the marketing and distribution. With good product quality and a sound marketing plan, the company grew rapidly. In early 2014, the company was featured in a widely distributed entrepreneurial magazine. Later that year, the company was featured in Gourmet Desserts, a leading specialty food magazine. After the article appeared in Gourmet Desserts, sales exploded, and the company began receiving orders from all over the world. Because of the increased sales, Doc left his other job, followed shortly by Lyn. The company hired additional workers to meet demand. Unfortunately, the fast growth experienced by the company led to cash flow and capacity problems. The company is currently producing as many cakes as possible with the assets it owns, but demand for its cakes is still growing. Further, the company has been approached by a national supermarket chain with a proposal to put four of its cakes in all of the chain's stores, and a national restaurant chain has contacted the company about selling McGee cakes in its restaurants. The restaurant would sell the cakes without a brand name. Doc and Lyn have operated the company as a sole proprietorship. They have approached you to help manage and direct the company's growth. Specifically, they have asked you to answer the following questions: QUESTIONS What are the advantages and disadvantages of changing the company organization from a sole proprietorship to an LLC? What are the advantages and disadvantages of changing the company organization from a sole proprietorship to a corporation? Ultimately, what action would you recommend the company undertake? Why?

1) Babcock and Marks (2010) reviewed survey data from 2003–2005, and obtained an average of μ = 14 per week spent studying by full-time students at four-year colleges in the United States. To determine whether this average has changed in recent years, a researcher selected a sample of n = 64 of today’s college students and obtained an average of M = 12.5 hours . If the standard deviation for the distribution is σ = 4.8 per week, does this sample indicate a significant change in the number of hours spent studying? Use a two-tailed test with α = .05. Report Cohen’s d to indicate the size of the effect if necessary. Step 1,2,3,4,5,6

1) Babcock and Marks (2010) reviewed survey data from 2003–2005, and obtained an average of μ = 14 per week spent studying by full-time students at four-year colleges in the United States. To determine whether this average has changed in recent years, a researcher selected a sample of n = 64 of today’s college students and obtained an average of M = 12.5 hours . If the standard deviation for the distribution is σ = 4.8 per week, does this sample indicate a significant change in the number of hours spent studying? Use a two-tailed test with α = .05. Report Cohen’s d to indicate the size of the effect if necessary. Step 1,2,3,4,5,6

Student loans: In an article from September 13, 2010, titled “Student Loan Default Rates Increase,” the website ed.gov analyzes trends in default rates for student loans over time. For the year 2008, the default rate for graduates was 7%. Suppose that we select random samples from this population of graduates from 2008. For each sample we calculate the proportion who defaulted on their loans. The sample size is 200.

A. check if normal model applies in this situation

B. State the parameter given in the problem

C. Find the standard distribution of the sample distribution (standard error)

D. Find the probability that in a random sample of 200 graduates, the default rate is more than 7.5%. Is this unusual?

Zambian Breweries sells its products in Zambia and three neighboring countries. Data collected from 2010 to 2018 shows that the company produced 300,000 barrels of beer annually. During this period, the average price per barrel of beer P (in Kwacha) was related to the quantity of beer sold Q (in thousands of barrels) by the demand function

P=-0.3224Q+245.4031

The total cost of producing Q thousand barrels of beer was

TCQ=101.1995Q+4699.3441

1. At what output level revenue be maximized?
2. Find the quantity and price levels that maximize profit.

Heineken sells its products in Namibia and three neighboring countries. Data collected from 2010 to 2018 shows that the company produced 300,000 barrels of beer annually. During this period, the average price per barrel of beer P (in Namibian dollars) was related to the quantity of beer sold Q (in thousands of barrels) by the demand function

P=-0.3224Q+245.4031

The total cost of producing Q thousand barrels of beer was

TCQ=101.1995Q+4699.3441

1. At what output level revenue be maximized?

2. Find the quantity and price levels that maximize profit.

At December 31, 2010, Rijo Corporation reported the following plant assets.
Land $ 3,000,000
Buildings $26,500,000
Less: Accumulated depreciation—buildings 12,100,000 14,400,000
Equipment 40,000,000
Less: Accumulated depreciation—equipment 5,000,000 35,000,000
Total plant assets $52,400,000
During 2011, the following selected cash transactions occurred.
Apr. 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $600,000 when purchased on January 1, 2004.
The equipment was sold for $170,000.
June 1 Sold land for $1,800,000. The land cost $1,000,000.
July 1 Purchased equipment for $1,300,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December
31, 2001. No salvage value was received.
Instructions
(a) Journalize the transactions. (Hint: You may wish to set up T accounts, post beginning
balances, and then post 2011 transactions.) Rijo uses straight-line depreciation for
buildings and equipment. The buildings are estimated to have a 40-year useful life and
no salvage value; the equipment is estimated to have a 10-year useful life and no sal-
vage value. Update depreciation on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2011.
(c) Prepare the plant assets section of Rijo’s balance sheet at December 31, 2011.

You are given the following information about the economy.

2010 2011 2012 2013

u 0.03 0.09 0.06 0.03

Y 2244 2343 1134 5678

The natural rate of unemployment is 0.04 and the Phillips curve relationship is ? = ?e - 2 (u - 0.04). Please show your work in answering the following questions:

(a) Using the following formula ( Y(overbar)- Y)/ Y(overbar)= 2(u - u(overbar)) estimate full-employment level of output (Y(overbar)) in each year?

(b) Calculate the growth rate of full-employment output each year.

(c) If expected inflation was 0.04 for all four years, what was the inflation rate each year?