I GIVE THUMBS UPS

Ceres Corporation is considering making a significant long-term investment in Pisces Ltd., a young and very promising company. Ceres decides to make a smaller investment first, and if Pisces turns out to be successful, Ceres intends to make an additional investment to reach significant influence. Pisces has 200,000 shares authorized, 110,000 shares issued and 90,000 shares outstanding.

On January 1, 2016, Pisces issues Ceres 10,000 shares for $400,000 in cash (so now there are 120,000 shares issued, and 100,000 shares outstanding).

Additional information:

1. On November 1, 2016, Pisces declares a total cash dividend of $180,000.

2. Pisces reports $225,000 net income for 2014. Its stock price on December 31, 2016 is $38.

3. On November 1, 2017, Pisces announces a total dividend of $270,000 to be paid on January 2, 2018.

4. Pisces reports $360,000 net income for 2017. Its stock price on December 31, 2017 is $44.

5. On March 15, 2018, Ceres is approached by an investment fund which offers to buy all their Pisces shares for $55 per share, a 25% premium over the current stock price of $44. Ceres accepts the offer and sells the shares on that day.

Instructions

Assuming Ceres uses the fair value through net income model (FV–NI) to account for this investment:

a) Prepare the journal entries in Ceres’s books for the 2016 calendar year.

b) Prepare the journal entries in Ceres’s books for the 2017 calendar year.

c) Prepare the journal entries in Ceres’s books for the 2018 calendar year.

3300 Econometics HW Set 1

The data given in the data file in the Consumption file represent the real private consumption of the USA from Quarter I 2005 to III Quarter 2018.

Similarly, the Real Disposable Income is provided over the same time span.

Set up a regression that relates the dependent variable(Y) to the independent variable(X).

Derive Manually the coefficients of the regression. (Intercept(b1) and slope(b2)).

State the Regression equation.

Interpret the meaning of the slopes b2, in this problem.

Derive the Correlation Coefficient R^2

Derive the Standard Error of the regression

Derive the standard error of the Intercept (b1) and the standard error of the Slope (b2).

Derive the t values of the coefficients

Construct a 95% confidence interval for b1 and b2

Use a two tail α=5% level of significance, to test the confidence intervals for the slope(b2).

(Hint: All the formulas required to answer the questions are cited in chapters 2 and 3 of the textbooks. Use also the notes from the lectures).

Measures of Disease Frequency (Chapter 2)

In 2009, President Obama launched a nationwide initiative to end homelessness in the U.S. by 2020. The homeless are a vulnerable population with limited access to health care and poor health outcomes. In order to allocate sufficient federal and local resources to eliminate homelessness, U.S. cities conduct an annual survey to estimate the number of homeless persons living within major cities. The City of Boston’s Emergency Shelter Commission (ESC) conducted a survey of homelessness on the night of January 25, 2017. Volunteers counted the number of homeless persons living on the streets, in emergency shelters for individuals or families, in domestic violence programs, in residential mental health or substance abuse programs, transitional housing, and in specialized programs.

1. Which of the following best describes the homeless population in the City of Boston?

a. Dynamic population

b. Fixed population

2. Which of the following describes the homeless population that took part in the ESC survey on January 25^th?

a. Dynamic population

b. Fixed population

3. The 2015 Homeless Census counted 3,456 homeless persons in Boston. The 2016 homeless census counted 3,384 homeless persons in Boston. The size of the population in Boston was 665,984 in 2015 and 673,184 in 2016. From 2015-2016, did the burden of homelessness:

a. Increase

b. Decrease

c. Stay the same (2015: .52%, 2016 0.50%)

d. Cannot determine from this information

4. What do you consider to be the biggest limitation in the homeless survey and why?

a. Time of year (winter)

b. Survey conducted one time annually, not more frequently

c. Survey unlikely captured all homeless persons

d. Survey captures prevalence, not incidence of homelessness

PLEASE SHOW HOW YOU GOT THE NUMBERS

Ceres Corporation is considering making a significant long-term investment in Pisces Ltd., a young and very promising company. Ceres decides to make a smaller investment first, and if Pisces turns out to be successful, Ceres intends to make an additional investment to reach significant influence. Pisces has 200,000 shares authorized, 110,000 shares issued and 90,000 shares outstanding.

On January 1, 2016, Pisces issues Ceres 10,000 shares for $400,000 in cash (so now there are 120,000 shares issued, and 100,000 shares outstanding).

Additional information:

1.    On November 1, 2016, Pisces declares a total cash dividend of $180,000.

2.    Pisces reports $225,000 net income for 2014. Its stock price on December 31, 2016 is $38.

3.    On November 1, 2017, Pisces announces a total dividend of $270,000 to be paid on January 2, 2018.

4.    Pisces reports $360,000 net income for 2017. Its stock price on December 31, 2017 is $44.

5.    On March 15, 2018, Ceres is approached by an investment fund which offers to buy all their Pisces shares for $55 per share, a 25% premium over the current stock price of $44. Ceres accepts the offer and sells the shares on that day.

Instructions

Assuming Ceres uses the fair value through net income model (FV–NI) to account for this investment:

a)    Prepare the journal entries in Ceres’s books for the 2016 calendar year.

b)    Prepare the journal entries in Ceres’s books for the 2017 calendar year.

c)    Prepare the journal entries in Ceres’s books for the 2018 calendar yea

The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed Cumulative Preferred 9% Stock, $50 par (1,806shares authorized, 500 shares issued); Common Stock, $20 par (25,271 shares authorized, 9,338 shares issued); and Retained Earnings of $1,116. The Notes to the Financial Statements in the Annual Corporate Report for 2015 indicate that the market values of the stock are $42 per share (Cumulative Preferred) and $17per share (Common). Forecasts in the Annual Report also indicate that investments in future growth in 2016 are expected to result in sustained increased profits. In consideration of these matters, the Board of Directors has secured approval from the Securities and Exchange Commission for a bond issuance. The Board of Directors has also decided to forego paying dividends in 2015, and to repurchase shares of the corporation’s common stock at par, with a view to reselling the stock when market rates rise with increased profitability.

On January 2, 2016, $247,159 in 10 year, 7% bonds with a market interest rate of 9%, and interest payable semiannually, were issued for $189,839. On January 3, the corporation purchased 2,108 shares of its common stock at par. Profits soared during 2016, and on May 1, the corporation resold 1,551 shares of treasury stock, at $9 above par. On June 30, bond interest was paid. On December 31, the corporation showed an after tax Net Income of $56,505. On December 31, bond interest was paid; and dividends were declared and paid. Common shareholders received $2.32 per share.

What is the effect of the stock and bond transactions on Cash on the Balance Sheet on December 31, 2016?

The January 1, 2016 trial balance for the Taylor company is found on the trial balance tab. The beginning balances are assumed. Perry Co. entered into the following transactions involving short-term liabilities in 2016 and 2017. (use 360 days a year).

2016

Apr. 20 Purchased $46,750 of merchandise on credit from Parker, terms are n/30. Perry uses the perpetual inventory system.

May 19 Replaced the April 20 account payable to Parker with a 90-day, $36,000 note bearing 10% annual interest along with paying $10,750 in cash.

July 8 Borrowed $84,000 cash from AKR Bank by signing a 120-day, 10% interest-bearing note with a face value of $84,000.

Aug 17 Paid the amount due on the note to Parker at the maturity date.

Nov 5 Paid the amount due on the note to AKR Bank at the maturity date.

Nov 28 Borrowed $81,000 cash from Chicago Bank by signing a 60-day, 8% interest-bearing note with a face value of $81,000.

Dec 31 Recorded an adjusting entry for accrued interest on the note to Chicago Bank.

2017

Jan 27 Paid the amount due on the note to Chicago Bank at he maturity date.

Requirement

General Journal tab-Prepare the 2016 journal entries related to the notes and accounts payable of Perry Co.

Calculation of interest tab-Use the interest formula (P x R x T) to verify the amount of interest recorded in your entries.

2017 payment tab- Prepare the January 27, 2017 entry to record the repayment of the note at maturity.

Stamboul Company lists the following condensed balance sheet as of the beginning of 2016:

Stamboul is considering the impact of various types of dividends on this balance sheet. Each dividend would be declared and paid in 2016. These include:

Required:

Suppose the comparative balance sheets of Skysong, Inc. are presented here. SKYSONG, INC. Condensed Balance Sheet May 31 ($ in millions) 2017 2016 Assets Current Assets $9,550 $8,900 Property, plant, and equipment (net) 2,050 1,850 Other assets 1,480 1,730 Total assets $13,080 $12,480 Liabilities and Stockholders' Equity Current Liabilities $3,230 $3,330 Long-term liabilities 1,270 1,300 Stockholders’ equity 8,580 7,850 Total liabilities and stockholders' equity $13,080 $12,480 (a) Prepare a horizontal analysis of the balance sheet data for Skysong, using 2016 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.) SKYSONG, INC. Condensed Balance Sheet May 31 ($ in millions) 2017 2016 Increase (Decrease) Percentage Change from 2016 Assets Current Assets $9,550 $8,900 $ % Property, plant, and equipment (net) 2,050 1,850 % Other assets 1,480 1,730 % Total assets $13,080 $12,480 $ % Liabilities and Stockholders' Equity Current Liabilities $3,230 $3,330 $ % Long-term liabilities 1,270 1,300 % Stockholders’ equity 8,580 7,850 % Total liabilities and stockholders' equity $13,080 $12,480 $ % (b) Prepare a vertical analysis of the balance sheet data for Skysong for 2017. SKYSONG, INC. Condensed Balance Sheet $ (in millions) Percent Assets Current Assets $9,550 % Property, plant, and equipment (net) 2,050 % Other assets 1,480 % Total assets $13,080 % Liabilities and Stockholders' Equity Current Liabilities $3,230 % Long-term Liabilities 1,270 % Stockholders’ equity 8,580 % Total liabilities and stockholders' equity $13,080 %

Assume that sales will grow at 5.00%. The following accounts (cash, accounts receivable, inventory, net fixed assets, accounts payable and accruals, as well as operating costs) are assumed to change with sales and will maintain their current percentage of sales rates into 2016. The dividend payout ratio will remain the same. Long-term debt and notes payable will remain constant into 2016 as will interest expense, as a result. The firm also does not plan to issue any additional common stock or conduct any share repurchases. The firm’s tax rate is 40%. Any additional funds needed will be sourced through a line-of-credit (LOC) and surpluses will be paid out through a special dividend.

BALANCE SHEET AS OF 12/31/2015:

Using the percent-of-sales forecast approach, forecast the 2016 income statement and balance sheet. Be sure the balance sheet balances.

What are the Projected Regular Dividends for 2016?

What is the Projected Special Dividend (if any)?

What is the Projected LOC (if any)?

Assume that sales will grow at 5.00%. The following accounts (cash, accounts receivable, inventory, net fixed assets, accounts payable and accruals, as well as operating costs) are assumed to change with sales and will maintain their current percentage of sales rates into 2016. The dividend payout ratio will remain the same. Long-term debt and notes payable will remain constant into 2016 as will interest expense, as a result. The firm also does not plan to issue any additional common stock or conduct any share repurchases. The firm’s tax rate is 40%. Any additional funds needed will be sourced through a line-of-credit (LOC) and surpluses will be paid out through a special dividend.

BALANCE SHEET AS OF 12/31/2015:

Using the percent-of-sales forecast approach, forecast the 2016 income statement and balance sheet. Be sure the balance sheet balances.

What are the Projected Regular Dividends for 2016?