Nealon Energy Corporation engages in the​ acquisition, exploration,​ development, and production of natural gas and oil in the continental United States. The company has grown rapidly over the last 5 years as it has expanded into horizontal drilling techniques for the development of the massive deposits of both gas and oil in shale formations. The​ company's operations in the Haynesville shale​ (located in northwest​ Louisiana) have been so significant that it needs to construct a natural gas gathering and processing center near Bossier​ City, Louisiana, at an estimated cost of ​$60 million. To finance the new​ facility, Nealon has ​$10 million in profits that it will use to finance a portion of the expansion and plans to sell a bond issue to raise the remaining ​$50 million. The decision to use so much debt financing for the project was largely due to the argument by company CEO Douglas Nealon Sr. that debt financing is relatively cheap relative to common stock​ (which the firm has used in the​ past). Company CFO Doug Nealon Jr.​ (son of the company​ founder) did not object to the decision to use all debt but pondered the issue of what cost of capital to use for the expansion project. There was no doubt that the​ out-of-pocket cost of financing was equal to the new interest that must be paid on the debt.​ However, the CFO also knew that by using debt for this project the firm would eventually have to use equity in the future if it wanted to maintain the balance of debt and equity it had in its capital structure and not become overly dependent on borrowed funds. The following balance​ sheet, LOADING...​, reflects the mix of capital sources that Nealon has used in the past. Although the percentages would vary over​ time, the firm tended to manage its capital structure back toward these proportions. The firm currently has one issue of bonds outstanding. The bonds have a par value of ​$1,000 per​ bond, carry a coupon rate of 11 ​percent, have 15 years to​ maturity, and are selling for ​$1,045. ​Nealon's common stock has a current market price of $ 41​, and the firm paid a ​$2.80 dividend last year that is expected to increase at an annual rate of 4 percent for the foreseeable future.

a. What is the yield to maturity for​ Nealon's bonds under current market​ conditions?

b. What is the cost of new debt financing to Nealon based on current market prices after both taxes​ (you may use a marginal tax rate of 35 percent for your​ estimate) and flotation costs of ​$30 per bond have been​ considered? Note​: Use Nequals15 for the number of years until the new bond matures.

c. What is the​ investor's required rate of return for​ Nealon's common​ stock? If Nealon were to sell new shares of common​ stock, it would incur a cost of ​$2.00 per share. What is your estimate of the cost of new equity financing raised from the sale of common​ stock?

d. Compute the weighted average cost of capital for​ Nealon's investment using the weights reflected in the actual financing mix​ (that is, ​$10 million in retained earnings and ​$50 million in​ bonds).

e. Compute the weighted average cost of capital for Nealon where the firm maintains its target capital structure by reducing its debt offering to 30 percent of the ​$60 million in new​ capital, or ​$18 ​million, using ​$10 million in retained earnings and raising ​$32 million through a new equity offering.

f. If you were the CFO for the​ company, would you prefer to use the calculation of the cost of capital in part ​(d​) or ​(e​) to evaluate the new​ project? Why?

Nealon Energy Corporation engages in the​ acquisition, exploration,​ development, and production of natural gas and oil in the continental United States. The company has grown rapidly over the last 5 years as it has expanded into horizontal drilling techniques for the development of the massive deposits of both gas and oil in shale formations. The​ company's operations in the Haynesville shale​ (located in northwest​ Louisiana) have been so significant that it needs to construct a natural gas gathering and processing center near Bossier​ City, Louisiana, at an estimated cost of ​$80 million. To finance the new​ facility, Nealon has ​$20 million in profits that it will use to finance a portion of the expansion and plans to sell a bond issue to raise the remaining ​$60 million. The decision to use so much debt financing for the project was largely due to the argument by company CEO Douglas Nealon Sr. that debt financing is relatively cheap relative to common stock​ (which the firm has used in the​ past). Company CFO Doug Nealon Jr.​ (son of the company​ founder) did not object to the decision to use all debt but pondered the issue of what cost of capital to use for the expansion project. There was no doubt that the​ out-of-pocket cost of financing was equal to the new interest that must be paid on the debt.​ However, the CFO also knew that by using debt for this project the firm would eventually have to use equity in the future if it wanted to maintain the balance of debt and equity it had in its capital structure and not become overly dependent on borrowed funds. The following balance​ sheet, Bonds = 30% Common Stock = 70% reflects the mix of capital sources that Nealon has used in the past. Although the percentages would vary over​ time, the firm tended to manage its capital structure back toward these proportions. The firm currently has one issue of bonds outstanding. The bonds have a par value of ​$1,000 per​ bond, carry a coupon rate of 8 ​percent, have 14 years to​ maturity, and are selling for ​$1,070. ​Nealon's common stock has a current market price of $ 36​, and the firm paid a ​$2.60 dividend last year that is expected to increase at an annual rate of 6 percent for the foreseeable future. a. What is the yield to maturity for​ Nealon's bonds under current market​ conditions? b. What is the cost of new debt financing to Nealon based on current market prices after both taxes​ (you may use a marginal tax rate of 34 percent for your​ estimate) and flotation costs of ​$30 per bond have been​ considered? Note​: Use N= 14 for the number of years until the new bond matures. c. What is the​ investor's required rate of return for​ Nealon's common​ stock? If Nealon were to sell new shares of common​ stock, it would incur a cost of ​$3.50 per share. What is your estimate of the cost of new equity financing raised from the sale of common​ stock? d. Compute the weighted average cost of capital for​ Nealon's investment using the weights reflected in the actual financing mix​ (that is, ​$20 million in retained earnings and ​$60 million in​ bonds). e. Compute the weighted average cost of capital for Nealon where the firm maintains its target capital structure by reducing its debt offering to 30 percent of the ​$80 million in new​ capital, or ​$24 ​million, using ​$20 million in retained earnings and raising ​$36 million through a new equity offering. f. If you were the CFO for the​ company, would you prefer to use the calculation of the cost of capital in part ​(d​) or ​(e​) to evaluate the new​ project? Why?

High Class Painting purchased a 1-year insurance policy on 1 March 2020. The entire premium of $9000 was recorded by debiting Prepaid Insurance. Ignore GST.

Required
(a) Give the adjusting entry at 30 June for the financial year ending 30 June 2020.

(b) What amount should be reported in the 30 June 2020 Statement of Financial Position for Prepaid Insurance? What type of account should this be? Show calculations.

(c) If no adjusting entry was made on 30 June, by how much would profit be overstated or understated? Would assets be overstated or understated? Explain.

(d) What would your adjusting entry in requirement A be if the premium of $9000 was recorded by debiting Insurance Expense?

Aikman Corporation has the following cost records for June 2020:

Indirect factory labour $ 4,500 Direct materials used 25,000 Work in process (6/1/16) 3,000 Work in process (6/30/16) 2,800 Finished goods (6/1/16) 5,000 Finished goods (6/30/16) 9,500 Factory utilities $  400 Depreciation, factory equipment 1,400 Direct labour 30,000 Maintenance, factory equipment 1,800 Indirect materials 2,200 Factory manager's salary 3,000

Instructions

(a) Prepare a cost of goods manufactured schedule for June 2020

(b) Prepare an income statement through gross profit for June 2020, assuming net sales are $87,100.

In 2020, Ace Corporation reports gross income of $200,000 (including $150,000 of profit from its operations and $50,000 in dividends from less-than-20%-owned domestic corporations) and $230,000 of operating expenses.

A. What is Ace’s NOL for 2020

B. Assume that Ace expects 2021’s taxable income to be $20,000 and 2022’s taxable income to be $100,000, both before any NOL deduction in the carryover year. What NOL deductions can Ace expect to claim in 2021 and 2022

C. How would your answer to Part b change if, in addition to the 2020 NOL, Ace also had a $5,000 NOL carryover from a loss occurring before 2018?

On 1 August 2020, Candy Ltd issued a disclosure document inviting applications for 10,000 of $80 debentures at par, payable in full on application. The debentures carry an 8% annual interest charge and will be redeemed at nominal value in 5 years. The interest payment is made semi-annually on 31 December and 30 June each year. By 30 September 2020, Candy Ltd received application money for 11,000 debentures. On 1 October 2020, Courtney Ltd issued 10,000 debentures and refunded monies to 1,000 unsuccessful applicants. Required: Prepare a general journal template as per example below based on the information above, for Candy Ltd for the year ended 30 June 2021. Include a narration.

Course:Business Law

On 15 September 2020, Tammy purchased from CC two tickets to the Ed Shearer concert in Brisbane on 07 January 2021. The reality is that as at 15 September 2020, due to the current COVID – 19 pandemic, it was highly unlikely that the Ed Shearer concert would proceed.

Jane purchased 3 tickets to the same concert as Tammy however unlike Tammy, Jane purchased her tickets in January of 2020, at a time when there was every

expectation that the Ed Shearer concert would proceed as expected as at that time, the future impact of the pandemic had not been fully realised.

Has CC acted in breach of the ACL by selling Tammy and/or Jane tickets to the Ed Shearer concert?
Explain your answer

Bob Arnold is a well-known real estate developer in Santa Fe, New Mexico. He wants to remodel a building and convinces George Mitchell, a local businessperson, to contribute the capital to form a partnership. On January 1, 2020, Mitchell invests a building worth $162,000 and equipment valued at $32,000 as well as $25,000 in cash. Although Arnold makes no tangible contribution to the partnership, he will operate the business and be an equal partner in the beginning capital balances.

Required:

(A). Prepare the January 1, 2020 journal entry to record the formation of the partnership assuming the bonus method is used.

(B). Prepare the January 1, 2020 journal entry to record the formation of the partnership assuming the goodwill method is used.

On January 1, 2020, Marigold Company purchased 12% bonds having a maturity value of $270,000, for $290,470.00. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Marigold Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

1.Prepare the journal entry at the date of the bond purchase.

2.Prepare a bond amortization schedule.

3.Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.

4.Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.