B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:

February 3: Purchased supplies for $22,500 in cash.

February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.

February 12: Received a bill from Dubai News for advertising amounted to $1,650.

February 14: Paid $24,000 salaries in cash.

February 16: Paid $6,000 utilities expense in cash.

February 17: Provided services to customers for $195,000 in cash.

February 19: Paid $150,000 for equipment purchased on February 9.

February 28: The owner withdrew $7,500 cash for personal use.

Required:

1. Prepare journal entries to record the above transactions.
2. 2- Post to the appropriate ledger accounts.

B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:

February 3: Purchased supplies for $22,500 in cash.

February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.

February 12: Received a bill from Dubai News for advertising amounted to $1,650.

February 14: Paid $24,000 salaries in cash.

February 16: Paid $6,000 utilities expense in cash.

February 17: Provided services to customers for $195,000 in cash.

February 19: Paid $150,000 for equipment purchased on February 9.

February 28: The owner withdrew $7,500 cash for personal use.

Required:

1. Prepare journal entries to record the above transactions.
2. 2- Post to the appropriate ledger accounts.

On January 1, 2018, Blossom Ltd. purchased equipment for $808,000. The equipment was assumed to have an 8-year useful life and no residual value, and was to be depreciated using the straight-line method. On January 1, 2020, Blossom's management became concerned that the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $580,750, the discounted future net cash flows was $515,100, and the current fair value of the equipment (after costs to sell) was $505,000.

1. Assuming that Blossom is a private Canadian company following ASPE, and uses the cost recovery impairment model. Record the journal entry to record the impairment loss, if any

2. Assuming that Blossom is a public Canadian company, and uses the rational entity impairment model. Record the journal entry to record the impairment loss, if any

Assume that the real risk-free rate of return, r*, is 1%, and it will remain at that level far into the future. Also assume that maturity risk premium on Treasury bonds increase from zero for bonds that mature in one year or less to a maximum of 2%, and MRP increases by 0.2% for each year to maturity that is greater than one year – that is, MRP equals 0.2% for two-year bond, 0.4% for a three-year bond, and so forth. Following are the expected inflation rates for the next five years:

Compute the interest rate for 1, 2, 3, and 4-year bond.

If inflation is expected to equal 3% every year after 2021, what should the interest rate be for 5- through 20-year bond?

Draw a graph of the yield curve.

Use the data below to answer the question parts (a) and (b). This data is for forecasting fure sale consdiering additive seasonality approach and answer related questions.

SHOW EACH CALCULATION STEP AND DESCRIBE IT

ROUND answers to 2 decimal points.

PART a) What is the seasonality index for second season (Q2) ?

Part b)   

Assume that we run the regression for the deseasonalized data after calculating seasonality index . We find that regression line slope is 0.4 , and intercept is 2.8. By considering the slope and intercept, what is your final forecast for second season of 2020 by considering both trend and seasonality?

This data is for forecasting future sale considering additive seasonality approach and answer related questions.

PART a) What is the seasonality index for second season (Q2) ?

Part b)   

Assume that we run the regression for the deseasonalized data after calculating seasonality index . We find that regression line slope is 0.4 , and intercept is 2.8. By considering the slope and intercept, what is your final forecast for second season of 2020 by considering both trend and seasonality?

Part c)

Slope = 0.4, intercept =2.8 for deseasonalized data, what is the absolute error of second season of 2018?

PT. ABC predicts its future dividend profile as follows:
Year Dividend (Rp)
2017 30
2018 10
2019 20
2020 30
2021 35
2022 40
After 2022, ABC assumes constant dividend growth based on 8 percent return on equity (ROE), and 1
0 percent dividend payout ratio. Currently, ABC’s market beta is 1.2 and its market risk premium is 1
0 percent. Meanwhile, the spot price of LQ45 is Rp88, the 6-month LQ45 futures theoretical price is
Rp90.6155, and LQ45 yields 2 percent dividend. Estimate:
(a) Risk free rate (5);
(b) ABC discount rate (5);
(c) ABC intrinsic value in 2018 (10)
Please pick only one correct answer to each sub questions.

2. (i) Your stockbroker told you about buying stocks on margin last year. You were NOT sure if it is a good investment decision to buy stocks on borrowed funds at the time. You decided to give using margin a try anyway. Your stockbroker bought 100 shares of ABC Corp. on margin for $65 a share. The margin requirement was 60 percent with an interest rate of 6.5 percent on borrowed funds, and commissions on the purchase and sale were 2%. One year after you invested in the stock ABC corp. paid annual dividend of $2 a share and the price of the stock rose to $110 in one year. (12 points)

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a. What is the percentage earned on the investment if the stock is bought for cash (i.e., the investor did not use margin)?

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b. What is the percentage earned on the investment if the stock is bought on margin?

2 (ii). An investor sells 100 shares short at $22. The sale requires a margin deposit equal to 60 percent of the proceeds of the sale. (8 points)

1. If the investor closes the position at $30, what was the percentage earned or lost on the investment?

2. If the position had been closed when the price of the stock was $17, what would have been the percent earned or lost on the position?

Weihu Corporation is considering building a new factory to manufacture bicycles. Weihu has already spent 300,000 in the R&D expense. The new factory will cost $1,500,000. The expected number of bikes produced and sold is 4000 for the first year, 5000 for the second year and 5500 for the third year. The sales price is $250 per bike in the first year in nominal terms. This price is expected to grow at 3% per year in real terms. The variable costs per bike are $120 in the first year in nominal terms. These costs are expected to increase at 2.5% per year in real terms. The factory requires temporary additional personnel, which will result in additional labor costs of $50,000 per year (in nominal terms), which remains constant in real terms. All costs and sales are incurred at the end of each year. Additional net working capital requirements at the beginning of each year are 15% of expected sales for that same year. The market value of the factory after three years is $1,300,000 in real terms. The asset class is closed upon selling the factory. The CCA rate is 4%, the tax rate is 35%, the expected inflation rate is 2.5% and the required rate of return is 10% in real terms. Calculate the project’s NPV.