The owner of a small deli is trying to decide whether to discontinue selling magazines. He suspects that only 10% of his customers buy a magazine and he thinks that he might be able to use the display space to sell something more profitable. Before making a final decision, he decides that for one day he will keep track of the number of customers that buy a magazine.

(a) Explain why this is a binomial experiment.



(b) Assuming his suspicion that 10% of his customers buy a magazine is correct, what is the probability that exactly 6 out of the first 10 customers buy a magazine? Give your answer as a decimal number rounded to two digits.



(c) What is the expected number of customers from this sample that will buy a magazine?

1. In its first month of operations, Pharoah Company made three purchases of merchandise in the following sequence: (1) 155 units at $10, (2) 560 units at $11, and (3) 135 units at $12.

a. Calculate the average unit cost.

2. In its first month of operations, Wildhorse Co. made three purchases of merchandise in the following sequence: (1) 190 units at $10, (2) 540 units at $11, and (3) 100 units at $12.

a. Calculate the average unit cost.

b. Compute the cost of the ending inventory under the average-cost method, assuming there are 270 units on hand.

3. At December 31, 2019, the following information was available for Pina Colada Corp.: ending inventory $38,250, beginning inventory $58,500, cost of goods sold $273,000, and sales revenue $366,000.

a. Calculate days in inventory for Pina Colada Corp..

Fred Inc. has the following financial results for the years 2019 through 2021 for its three regional divisions:

Required:

Calculate 1) return on sales (ROS)(i.e., Margin), 2) asset turnover (AT), and 3) return on investment (ROI) for each division and also for the firm as a whole for each of the three years 2019, 2020, and 2021 and show all your work.

A company has stores in different countries. The CEO is not sure about the profitability of three stores. The following table includes the revenues and costs of these three stores in the year ended (in euros) :

Should any of the stores be closed as soon as possible? Choose the appropriate decision for each store on the assumption that closing one store will not affect any other stores and total head office costs would not decrease if any of the stores were closed.

1) Paris

close or continue

2) Vienna

close or continue

3) Dublin

close or continue

ZPharma Co., a pharmaceutical company, sells three different products: Zdiet, a Weight Loss Medication, Zataflam, a Non-Steroidal Anti-Inflammatory and Zolymox, an Antibiotic. Due to a new government regulation with regard to pricing medications, suppose that the prices of these products have increased as follows: Zdiet (25%), Zataflam, (20%) and Zolymox, (10%). As a result, the monthly quantity sold from each product declined by the following percentages: Zdiet (35%), Zataflam (12%), and Zolymox (5%). Calculate the price elasticity of demand for the three products: Zdiet, Zataflam and Zolymox. Interpret your results to the best of your ability. Analyze the potential effect of the increase in prices on sales revenue of each product. Now, suppose the decline in demand indicated above was caused by a 20% decrease in income level. How would you best describe each product

Measuring Economic Exposure. Assume you live in the U.S. Using the following cost and revenue information shown for DeKalb, Inc.,

a) determine how the costs, revenue, and net cash flow would be affected by three possible exchange rate scenarios for the New Zealand dollar (NZ$):

            1) NZ$ = $0.55,

            2) NZ$ = $0.60, and

            3) NZ$ = $0.65.

            b) What is your conclusion?

            15 Marks    

Note: PCF_t is the percentage change in inflation-adjusted cash flows measured in the firm's home currency (U.S. dollars) over period t, and e_t is the percentage change in the exchange rate of the foreign currency over period t.   

Forecasted Net Cash Flows: DeKalb Inc.

(in millions of U.S. dollars and New Zealand dollars)

                                                                                                                               New Zealand

                                                                                            U.S. Business               Business

      Sales                                                                                   $800                         NZ$800

      Cost of Materials                                                               500                               100

      Operating Expenses                                                           300                                     0

      Interest Expense                                                                100                                     0

      Cash Flow                                                                       ($100)                         NZ$700

1. Joey Ltd is entering into a contract to sell Motor vehicle spare parts to Rachel Ltd for $25 000. The agreement allows Rachel Ltd to pay for these goods by three equal instalments of $6 500 and the balance remaining payable in the final instalment, the first instalment being required on delivery and the remainder to be paid every 4 months over the coming year. The Motor Vehicle spare parts are delivered to Rachel Ltd on 1 March 2020. Johnson Ltd determine that an appropriate discount rate for interest on this transaction is 7% per annum. The agreement stipulates that the interest revenue is due and payable when each repayment is due.

Narrations are required for this question.

Add rows to the answer tables if necessary.

Required

1. Complete the table below to determine the interest component of the payments.                                              
2. Give the journal entries to record the revenue. Note that giving the correct dates of your journal entries is essential.            

Barkers, Inc. had the following selected accounts in its unadjusted trial balance:

Accounts receivable                                  $176,000

Prepaid rent                                                  54,000

Prepaid insurance                                         24,000

Equipment                                                300,000

Accumulated depreciation-equipment            30,000

Unearned service revenue                              24,000

Salary expense                                          130,000

Additional data:

One-third of the revenue received in advance has been earned by December 31, 2017.

The prepaid insurance represents three years’ premium on a policy providing coverage starting October 1, 2017.

Since the last payday, employees have earned an additional $2,000 which has not yet been paid or recorded.

The equipment has an estimated life of 6 years and no expected value at the end of its life. (Prepare the entry for depreciation expense.)

Services performed but unbilled and uncollected at year end amount to $5,000.

The prepaid rent relates to one year of rent beginning on September 1, 2017.

REQUIRED: Prepare the necessary year-end adjusting entries as of December 31, 2017

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)