4. Overhead Door (OD) Corporation’s founder, C. G. Johnson, invented the upward-lifting garage door in 1921 and the electric garage door opener in 1926. Since then OD has been a leading supplier of commercial, industrial, and residential garage doors sold through a nationwide network of more than 450 authorized distributors. They have built a solid reputation as a premier door supplier, commanding 15 % share of the market.

Suppose that customers assess door quality first in terms of the ease of operation, followed by its durability. The quality improvement team (QIT) might then assign an engineering team to determine the factors that contribute to these two main problems.

Smooth operation of a garage door is a critical quality characteristic that affects both problems: If a door is too heavy, it’s difficult and unsafe to balance and operate; if it’s too light, it tends to buckle and break down frequently or may not close properly.

Suppose the design engineers determine that a standard garage door should weigh a minimum of 74 kg. and a maximum of 86 kg., which thus specifies its design quality specification. QIT is inspecting if there is evidence that the percentage of defective doors does not exceed 7%. Suppose the QIT decides to collect data on the actual weights of 60 standard garage doors sampled randomly from their monthly production of almost 2,000 doors. See the tables on the next page.

4.1 (2 point) What is the sample defective rate ?

4.2 (2 points) Formulate and test an appropriate set of hypotheses to determine if the machine can be qualified. Use α = 0.05. Find the P-value.

4.3 (2 points) What is the 95% confidence interval?

4.4 (2 points) What is the 99% confidence interval?

Table 2:

Gundagai Ltd was incorporated on June 30, 2019. On July 1, 2019, the company issued a prospectus offering 300,000 ordinary shares at an issue price of $10, payable on the following terms.

• $3 on application
• $3 on allotment
• $2 on the first call
• $2 on the second call

A summary of the applications and allotments register follows.

The application process was completed on August 31, 2019, and the shares were allotted to all applicants on September 1, 2019. All money received more than the amounts due on application where applied to amounts due on allotment and calls. Where appropriate, refunds of application money were made. All allotment money was received by September 30, 2019.

On November 1, 2020, Gundagai Ltd’s directors made a call of 42c per share, payable by November 30, 2020. By December 31, call money had not been received from holders of 25,000 shares.

Required:

Prepare journal entries to record the above events. No Post Ref required. Refer to the provided Chart of Accounts for the appropriate account names.

Gundagai Ltd was incorporated on June 30, 2019. On July 1, 2019, the company issued a prospectus offering 300,000 ordinary shares at an issue price of $10, payable on the following terms.

• $3 on application
• $3 on allotment
• $2 on the first call
• $2 on the second call

A summary of the applications and allotments register follows.

The application process was completed on August 31, 2019, and the shares were allotted to all applicants on September 1, 2019. All money received more than the amounts due on application where applied to amounts due on allotment and calls. Where appropriate, refunds of application money were made. All allotment money was received by September 30, 2019.

On November 1, 2020, Gundagai Ltd’s directors made a call of 42c per share, payable by November 30, 2020. By December 31, call money had not been received from holders of 25,000 shares.

Required:

Prepare journal entries to record the above events. No Post Ref required. Refer to the provided Chart of Accounts for the appropriate account names.

Question 6 Audit Report

Before the audit report was signed, the audit team encountered the following situation. Treat each situation independently and assume the remaining financial statements are fine.

1) A property owned by Cook’s Furniture Ltd was sold to Lidia Preston, the wife of Howard Cook in June 2020 (refer to case description in part A). The property has a market value of four million and was sold at 3.2 million. Management did not disclose this in the financial statement because they believed this was a private matter. The disposal of this asset has been appropriately accounted for on the financial statements (e.g. the asset was removed from PPE and the loss of disposal was correctly recognized as an expense).

2) The subsequent selling price of the ready-made furniture range suggests the inventory valuation as of 30 June 2020 should be written down by $48,000 but management only wrote $38,000 off as per the financial statements because they were confident that they can increase the selling price again in 2021 after people settling back to normality.

3) Carl Cook decided to retire in 2021 due to health reasons, Carl is willing to sell his shareholding to the remaining shareholders. However, the BoD decided to explore the potential of selling the business. By the time to sign the 2020 financial statements, the company has not commenced negotiations with any potential buyer. The BoD said to the auditor that they may not sell the business if they cannot get a good deal. Carl’s retirement decision is disclosed on the financial statements, but not the intention to sell the business.

REQUIRED: For each of the above situation:

a) Discuss the audit procedure that the auditor needs to perform in relation to each situation.

b) Explain which audit opinion is appropriate for each situation.

Assume that IBM leased equipment that was carried at a cost of $120,000 to Sharon Swander Company. The term of the lease is 6 years beginning January 1, 2020, with equal rental payments of $28,430 at the beginning of each year. All executory costs are paid by Swander directly to third parties. The fair value of the equipment at the inception of the lease is $145,000. The equipment has a useful life of 6 years with no residual value. The lease has an implicit interest rate of 7%, no bargain-purchase option, and no transfer of title. Collectibility is reasonably assured with no additional cost to be incurred by IBM.

The present value of an annuity due, 6 years, 7% is 5.10020

Ka-Pow Corporation's charter authorizes the issuance of 1 million common shares and 500,000 cumulative, participating preferred shares that have a dividend rate of $6 per share per year.

Ka-Pow’s limited ledger shows the following balances on December 31, 2019:

Preferred shares outstanding, 10,000 shares $1,200,000 Common shares outstanding, 20,000 shares 300,000 Retained earnings 2,000,000

The following transactions involving share issues were completed in 2020. Assume that Ka-Pow follows IFRS.

Jan 1: The board of directors declared a $163,000 dividend on both the 20,000 shares of outstanding common and the 10,000 shares of outstanding preferred.

Feb 1: The dividend was paid. Mar 1: Issued 4,000 common shares for machinery. The machinery had been appraised at a fair value of $72,000, and the seller's carrying amount was $58,600. The common shares' most recent market price is $18.50 a share.

Jun 1: Purchased 6,000 of its own outstanding common shares for $20 each and cancelled them.

Dec 15:Declared a 2-for-1 stock split on the outstanding common shares. The market price of the common shares was $24 at the time of the split.

Dec 31: The company reported/declared/calculated net income of $500,000 and comprehensive income of $530,000.

Instructions:

1. Prepare the journal entries to record the transactions from January 1 through to and including December 15. If no entry is needed for a particular date, write “n/a”.

2. On December 31, 2020,

a) What is the total number of common shares outstanding?

b) What is the total number of common shares authorized?

c) What is the balance in retained earnings at December 31, 2020?

1. Place the following in the correct order from initiation to end of inflammation (some events may happen simultaneously)

Attraction of phagocytes

Clot formation around area

Damage/injury

Histamine released

Mast cell activated

Neutrophils enter tissue

Phagocytes attack

Remove debris

Swelling

Tissue repair

Vasodilation

2. Explain humoral immunity; and the active, passive, natural and acquired componenents.

1. Hyperkalemia

(a) Provide an understanding of how abnormally elevated blood serum K⁺ levels can lead to abnormalities in the resting membrane potential

(b) Describe how hyperkalemia impacts a neurons ability to produce typical action potentials

(c) From your acquired understanding of how hyperkalemia leads to abnormalities in the resting membrane potential, describe how hyperkalemia may result in cardiac arrhythmias.

PIETROLUNGA TIMBER MERCHANTS LTD

Pietrolunga is a small stock market-listed Italian timber merchant involved in forestry management, timber production, and the export of specialist woods used in the production of fine musical instruments – so-called “singing wood.” The company, based in the mountains of Trentino in the North Italy, has a reputation as the world’s finest producer of woods to produce concert-grade grand pianos.

Pietrolunga has a thirty-year contract to supply all of the piano wood requirements for a leading manufacturer based in Japan, in addition to numerous small-scale contracts with master luthiers around the world who specialize in producing high-quality hand-made classical stringed instruments from violins to double bass. The trees used in piano production take around sixty years to reach the required level of maturity, but the maple used for the backs of the stringed instruments takes much longer, and these trees are more susceptible to disease. This long lead time requires careful planning by the staff at Pietrolunga, who face huge uncertainties about the long-term demand for such items. In addition, significant amounts of working capital are tied up in the forestry stocks because even once felled, the slow air-drying processes mean that wood cannot be sold for several years.

There is also a high level of uncertainty within the company’s current business environment. The primary geographic market for products is South East Asia, in the countries of Japan, Singapore, and China, but both the European and North American markets are in decline, except for cheap student-grade instruments that are now being produced in huge numbers under factory conditions in China. Chinese producers have also gained a foothold in the professional grade of instrument making, by sending staff over to train in the leading instrument-making schools of Europe, and then using these masters to train local staff back in China. The Chinese instruments are made using local, tropical woods rather than the spruce and maple commonly used in Europe, but the resulting instruments are highly rated by many professional players and are priced at less than half of their traditional equivalent. In contrast to the market for classical instruments, that for hand-made guitars is growing. In recognition of this, Pietrolunga entered into a joint venture arrangement in 2006 with a US-based company that supplies wood to North American luthiers. Under the terms of the joint venture agreement, in which costs, income, and profit are shared 50:50 between the two parties, Pietrolunga takes responsibility for forestry management and felling, while the US party then stores, dries, prepares, and manages the sale and distribution of the wood. Due to different climatic conditions, the trees grown in the US are not the same as those in Italy, although maturity cycles are similar. The resulting tonewood is, however, very well suited to the US guitar market

All revenue from trade sales and transactions within mainland Europe are priced in euros, but sales to all other geographic areas are priced in local currencies. Contract prices are fixed on felling the selected trees an average of 24 months before delivery.

Required;

1. Identify five risks that the company is exposed to and explain their potential impact to financial performance for the entity. For each risk also propose the various strategies that can be used to control/mitigate the risks you have identified.