Suppose that you are part of the Management team at Porsche. Suppose that it is the end of December 2019 and a novel coronavirus that causes a respiratory illness was identified in Wuhan City, Hubei Province, China. The illness was reported to the World Health Organization and there is heightened uncertainty around the Globe. You (as part of the management team) are reviewing Porsche’s hedging strategy for the cash flows it expects to obtain from vehicle sales in North America during the calendar year 2020. Assume that Porsche’s management entertains three scenarios:

Scenario 1 (Expected): The expected volume of North American sales in 2020 is 35,000 vehicles.

Scenario 2 (Pandemic): The low-sales scenario is 50% lower than the expected sales volume.

Scenario 3 (High Growth): The high-sales scenario is 20% higher than the expected sales volume.

Assume, in each scenario, that the average sales price per vehicle is $85,000 and that all sales are realised at the end of December 2020. All variable costs incurred by producing an additional vehicle to be sold in North America in 2020 are billed in euros (€) and amount to €55,000 per vehicle. Shipping an additional vehicle to be sold in North America in 2020 are billed in € and amount to €3,000 per vehicle.

The current spot exchange rate is (bid-ask) $1.11/€ - $1.12/€ and forward bid-ask is $1.18/€ - $1.185/€. The option premium is €0.025, and option strike price is €0.922. Your finance team made the following forecasts about the exchange rates at the end of December 2020:

• bid-ask will be $1.45/€ - $1.465/€ if the investors (and speculators) consider the euro (€) a safe haven currency during the pandemic.

• bid-ask will be $0.88/€-$0.90/€ if the investors (and speculators) consider the U.S. dollar ($) a safe haven currency during the pandemic

5. Assume that the Scenario 2 (Pandemic) took place in 2020 and the U.S. dollar became a safe haven currency during the pandemic. What are your cash flows (profits) if you did not hedge, hedged using forward contracts, and hedged using option contracts?

6. Based on the calculations in Part B, do you believe that it is a good policy to hedge Porsche’s currency exposure? Why?

Morgan Company’s balance sheet at December 31, 2019, is presented below.

During January 2020, the following transactions occurred. (Morgan Company uses the perpetual inventory system.)

Adjustment data:

Can you please help me find these answers. Thank you!!

A)Prepare journal entries for the transactions listed above and the adjusting entries.

B)Prepare an adjusted trial balance at January 31, 2020.

C)Prepare an income statement.

D)Prepare an owner’s equity statement for the month ending January 31, 2020.

E)Prepare a classified balance sheet as of January 31, 2020

Suppose that you are part of the Management team at Porsche. Suppose that it is the end of December 2019 and a novel coronavirus that causes a respiratory illness was identified in Wuhan City, Hubei Province, China. The illness was reported to the World Health Organization and there is heightened uncertainty around the Globe.

You (as part of the management team) are reviewing Porsche’s hedging strategy for the cash flows it expects to obtain from vehicle sales in North America during the calendar year 2020. Assume that Porsche’s management entertains three scenarios:

Scenario 1 (Expected): The expected volume of North American sales in 2020 is 35,000 vehicles.

Scenario 2 (Pandemic): The low-sales scenario is 50% lower than the expected sales volume.

Scenario 3 (High Growth): The high-sales scenario is 20% higher than the expected sales volume.

Assume, in each scenario, that the average sales price per vehicle is $85,000 and that all sales are realised at the end of December 2020. All variable costs incurred by producing an additional vehicle to be sold in North America in 2020 are billed in euros (€) and amount to €55,000 per vehicle. Shipping an additional vehicle to be sold in North America in 2020 are billed in € and amount to €3,000 per vehicle.

The current spot exchange rate is (bid-ask) $1.11/€ - $1.12/€ and forward bid-ask is $1.18/€ - $1.185/€. The option premium is 2.5% of US$ strike price, and option strike price is $1.085/€. Your finance team made the following forecasts about the exchange rates at the end of December 2020:

• bid-ask will be $1.45/€ - $1.465/€ if the investors (and speculators) consider the euro (€) a safe haven currency during the pandemic.
• bid-ask will be $0.88/€-$0.90/€ if the investors (and speculators) consider the U.S. dollar ($) a safe haven currency during the pandemic

1. Assume that the Scenario 2 (Pandemic) took place in 2020 and the U.S. dollar became a safe haven currency during the pandemic. What are your cash flows if you did not hedge, hedged using forward contracts, and hedged using option contracts?   

2. Based on the calculations in Part B, do you believe that it is a good policy to hedge Porsche’s currency exposure? Why?

Question 3 (30 pts)

Kobani Corporation produces high quality Greek yogurts that pass through three departments – Fermentation Department (Department I), Mixing Department (Department II), and Packaging Department (Department III).

The production process in the Mixing Department requires the input of two main types of ingredients. One is the basic ingredients and the other one is the special ingredients. 100% of the basic ingredients are added at the beginning of the process. For the special ingredients, they are added gradually. 30% of these special ingredients are added at the beginning of the process, 50% are added midway through the process and the remainder of the special ingredients are added at the three-quarter way through the process.

The following information was available concerning the operation of the Mixing Department for the month of October 2020.

Beginning work-in process (WIP) (1 October 2020): 2,500 units were 40% completed with respect to conversion costs (CC). Costs pertaining to the beginning WIP as at 1 October 2020 were: Department I $10,000, Basic Ingredients $30,000, Special Ingredients $15,000 and CC $10,000.

Units started in the month were 15,000 units. Costs added to production during the month of October 2020 were: Department I $60,000, Basic Ingredients $188,750, Special Ingredients $203,400, and CC $154,500.

Ending WIP as at 31 October 2020 were 3,500 units and 70% completed with respect to CC.

Required:

A) Use of the weighted average (WA) process costing method, calculate

i. the units completed in October 2020.
ii. the equivalent units for the Special Ingredients.
iii. the total costs per equivalent unit.

iv. the total costs of completed products transferred to the Packaging Department.

B) Use the first-in-first-out (FIFO) process costing method, calculate

v. the units completed in October 2020.
vi. the equivalent units for the Special Ingredients.
vii. the total costs per equivalent unit.

viii) the total costs of completed products transferred to the Packaging Department.

C) Discuss the main differences of the FIFO method as compared to the weighted average method. In what situation will the results from the two methods produce similar result?

Required information

Problem 12-5A Partner withdrawal and admission LO P3, P4

[The following information applies to the questions displayed below.]

Meir, Benson, and Lau are partners and share income and loss in a 1:4:5 ratio. The partnership's capital balances are as follows: Meir, $43,000; Benson, $179,000; and Lau, $228,000. Benson decides to withdraw from the partnership, and the partners agree not to have the assets revalued upon Benson's retirement.

Problem 12-5A Part 1

Prepare the journal entry to record Benson's withdrawal from the partnership under each of the following independent assumptions. (Do not round intermediate calculations.)

Benson (a) sells her interest to North for $160,000 after Meir and Lau approve the entry of North as a partner; (b) gives her interest to a son-in-law, Schmidt, and thereafter Meir and Lau accept Schmidt as a partner; (c) is paid $179,000 in partnership cash for her equity; (d) is paid $217,000 in partnership cash for her equity; and (e) is paid $16,000 in partnership cash plus equipment recorded on the partnership books at $36,000 less its accumulated depreciation of $11,600.
  

Journal entry worksheet

Record the withdrawal of Benson sells her interest to North for $160,000 after Meir and Lau approve the entry of North as a partner.

Note: Enter debits before credits.

Journal entry worksheet

Record the withdrawal of Benson on the assumption that she gives her interest to a son-in-law, Schmidt and thereafter Meir and Lau accept Schmidt as a partner.

Note: Enter debits before credits.

Sitcom Technology Case

Case Study: Cost Concept and Cost Sheet

Sitcom Technology was founded by two IIT graduates Rehan and Nixit in the year 2016 with the objective of providing IT solutions to various companies. They launched their FinTech start-up after getting funded Rs 25,00,000 by Business Ventures, one of the FinTech Angel investors. This was in the form of a loan at a 12% rate of interest.

Rehan utilized his unused two bedrooms flat in Bannerghatta, Karnataka worth Rs 60,00,000 for the office. Although he could get Rs 20,000 per month as rent for the same in the market, he rented it out to his start-up at Rs 15,000 per month and also decided to waive off the security deposit of Rs 100,0000 (going rate).

The other assets bought for their enterprise were four computers and a server (Rs. 200,000), two printers come scanner (Rs 18,000), two cordless phones & four mobiles (Rs 62,000), modem for wifi and other internet accessories (Rs 6000)and office furniture (Rs 1,70,000). After purchasing the furniture, they realized that Rs 20,000 invested in panel doors couldn’t be used. There was no return or refund for that. With no other option in hand, they sold these doors as scrap for Rs 8,000. Besides these purchases, they also invested Rs 40,000 in annual licenses for a lot of software.

Nixit picked up two of his juniors as Programmer and Visualizer come graphic designer after negotiating heavily on their hourly remuneration of 1,000 per hour on a freelancing basis. Depending on the number of hours invested in the development of a particular software/ERP/IT Solution, they were paid. In the month of April 2019, Sitcom Technology paid them Rs 84,000 for 42 hours of work put in by each one of them.

In addition to these two, a telephone operator and a data entry staff were also hired at Rs 13,000 and Rs 17,000 per month respectively. The monthly expenses of Sitcom Technology in April 2019 were:

In April 2019, Sitcom Technology received two big project orders from a leading private bank and one small programming work outsourced by a major IT company in Electronic City. The work was completed in the same month with all four of them putting in a lot of hours. The revenue generated from these three projects was Rs 4,10,000.

Question: Prepare the cost sheet for April 2019 and calculate the profit generated assuming the depreciation on fixed assets to be 10%.

NOTE- could you please provide me the solution ASAP.

Describe life after Death?

An SAT prep course claims to improve the test score of students. The table below shows the scores for seven students the first two times they took the verbal SAT. Before taking the SAT for the second time, each student took a course to try to improve his or her verbal SAT scores. Do these results support the claim that the SAT prep course improves the students' verbal SAT scores?

Let d=(verbal SAT scores prior to taking the prep course)−(verbal SAT scores after taking the prep course)d=(verbal SAT scores prior to taking the prep course)−(verbal SAT scores after taking the prep course). Use a significance level of α=0.05α=0.05for the test. Assume that the verbal SAT scores are normally distributed for the population of students both before and after taking the SAT prep course.

Step 2 of 5:

Find the value of the standard deviation of the paired differences. Round your answer to one decimal place.

Step 3 of 5:

Compute the value of the test statistic. Round your answer to three decimal places.

Step 4 of 5:

Determine the decision rule for rejecting the null hypothesis H0H0. Round the numerical portion of your answer to three decimal places.

Step 5 of 5:

Make the decision for the hypothesis test.

Office Problem (Use the attached spreadsheets as a guide)

Property:             Office One, Anytown, U.S.A.

Acquisition date:         December 31, 1999

Purchase Price:           2000 NOI @ 10% CAP RATE

Deal Terms:                65% financed with debt, 9% interest-only, 10-year term

35% equity ownership

Base Year 1999:         Rental Income                   $1,600,000

Escalation Income             $              0

Less:         Janitorial & Cleaning       $   330,000

Labor                    $   215,250

Utilities                         $     60,000

Management Fee         $     80,000

Real Estate Taxes         $     80,000

Assumptions:              Vacancy Rate :        9%

                                   Growth Rates:          Rental      Income            5% Annually

                                                             Janitorial & Cleaning       3% Annually

Utilities                     3% Annually

                                                             Management Fee              3% Annually

In 2001, Labor and Real Estate Taxes escalate by 13.07 and 10%, respectively, and remain at those levels for the remainder of the holding period. Tenant pays the increase over the stated Base Year.

Sell on December 31, 2004

Selling Expenses- 5% of sale price (2005 NOI @ 10% Cap Rate)

Depreciable Basis = 80% of cost (calculate depreciation using straight-line method)

Owner’s Ordinary Tax Rate: 39.6%

Use Post-1997 capital gains & recapture tax rates (20% & 25% respectively)

REQUIRED:

9A) Pro-forma Analysis for both Pre-Tax and After- Tax scenarios

9B) Calculations for:

Adjusted Basis

Capital Gains and Recapture Taxes

Net Sales Proceeds

Break Even Occupancy (2000 & 2004)

Cash-on-Cash Returns (annually)

Gross Rent Multiplier ((2000 & 2004)

Debt Service Coverage (2000 & 2004)

Before and After Tax IRR

Before and After Tax NPV @12%