“The resignation of the CEO and Senior Executives at Rio Tinto is merely symbolic - nothing will change in the organisation”.

Do you agree with this assessment?

Use systems thinking to explain your answer. (250 words)

Assume you are the CEO at Nike. What challenges do you see ahead for Nike as they try to regain corporate responsibility? What should be done to ensure that Nike is able to overcome these challenges?

Imagine you are the head accountant for GE Corp located in Wisconsin. In November 2017, that state had the second highest unemployment rate in the Midwest: 4.9% (down from 6.1% in January 2015). For the past few years, you have noticed that the company’s bad debt rate has been about 7% of year-end accounts receivable. That rate of bad debts has severely affected the company’s profitability…especially since management has steadily been lowering the standards for granting credit to customers.

Your salary structure (as well as that of other corporate managers) allows for a bonus when net income is equal to or greater than a specific percentage of net sales. Unfortunately, that profit metric has not been reached in four years. However, the CEO and CFO (who is retiring after the first quarter of 2018) realized that a change in the bad debts percentage would allow them and you to obtain bonuses in 2017. If bad debts were computed at 2% of year-end A/R rather than 7%, everyone would receive a reasonable (but not extreme) bonus for 2017. The CEO justifies the use of that rate by concluding that, since unemployment in Illinois has been decreasing over the past few years, so will bad debts.

a.   Is a change in a bad debts estimate permissible under generally accepted accounting principles? If yes, explain how such a change is effected. If no, explain why such a change would not be allowed

b.   Would making such a change in the bad debts estimate violate any basic accounting concepts? Explain your yes or no answer

c.   Provide at least two alternatives to help improve the company’s profit performance.

d.   You have a new baby at home as of September 2017. The bonus would help with the added expenses. Additionally, you are up for promotion to CFO next year upon the retirement of the current CFO; allowing the current CEO and CFO to receive their bonuses would certainly bring positive recommendations for that new position.

      1.   Is reducing the bad debts estimate illegal? Explain.

      2.   Is reducing the bad debts estimate unethical, given the CEO’s justification? Explain.

e.   Assume that the CEO and CFO are very adamant that the bad debts percentage be reduced in 2017 to 2% of year-end receivables. The 5% difference is not material to the financial statements. You believe that you will be terminated if you don’t make this adjustment. What should you consider in making your decision?

At January 1, 2020, Splish Company’s outstanding shares included the following.

259,000 shares of $50 par value, 7% cumulative preferred stock

974,000 shares of $1 par value common stock

Net income for 2020 was $2,570,000. No cash dividends were declared or paid during 2020. On February 15, 2021, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2020.

On April 1, 2020, 454,000 shares of common stock were sold for $10 per share, and on October 1, 2020, 112,000 shares of common stock were purchased for $21 per share and held as treasury stock.

Compute earnings per share for 2020. Assume that financial statements for 2020 were issued in March 2021. (Round answer to 2 decimal places, e.g. $2.55.)

Earnings per share $

Miller Corp. has reported pre-tax income of $250,000 for calendar 2020, before considering the five items below. Prepare the adjusting entries needed at December 31, 2020 in order to correctly state the 2020 pre-tax income. If no entry is needed, write NONE.

1.    Interest on a $42,000, 7%, six-year note payable was last paid on September 1, 2020.

2.    On May 31, 2020, Melody entered into a contract to provide services to a customer for eighteen months beginning June 1. The customer paid the $18,000 fee in full on June 1 and Maison credited it to Service Revenue.

3.    On August 1, 2020, Maison paid a year’s rent in advance on a warehouse, and debited the $48,000 payment to Prepaid Rent.

4.    Depreciation on office equipment for 2020 is $17,000.

5.    On December 18, 2020, Maison paid the local newspaper $1,000 for an advertisement to be run in January of 2021, debiting it to Prepaid Advertising.

At January 1, 2020, Headland Company’s outstanding shares included the following.

Net income for 2020 was $2,499,000. No cash dividends were declared or paid during 2020. On February 15, 2021, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2020.

On April 1, 2020, 436,000 shares of common stock were sold for $10 per share, and on October 1, 2020, 106,000 shares of common stock were purchased for $21 per share and held as treasury stock.

Compute earnings per share for 2020. Assume that financial statements for 2020 were issued in March 2021. (Round answer to 2 decimal places, e.g. $2.55.)

JTC purchased call options on Flynn common shares on July 7, 2020, for $200 as a speculative investment. The call options give JTC the right to buy 100 shares at a strike price of $20 each. The options expire on January 31, 2021.

The following data is observed through 2020:

a. At September 30, 2020, the options are on JTC's balance sheet at a value of ? Muliple Choice: ["$350", "$150", "$200", "$1,950"].

b. In the fourth quarter (October - December) of 2020, JTC records a loss in time value of? Muliple Choice: ["$150", "$90", "$110", "$60"].

c. At December 31, 2020, the options are on JTC's balance sheet at a value of? Muliple Choice: ["$260", "$350", "$460", "$490", "$200", "$290"].

In the US, fluoride is added to drinking water. In 2015, the US Department of Health [12] lowered the recommended amount of fluoride in drinking water. Fluoride is added to drinking water to help prevent tooth decay, but too much fluoride can lead to fluorosis (white stains in the enamel of the teeth). A particular city wants to check whether their drinking water meets the specifications made by the department of health. The department of health recommends that there should be 0.7 milligrams of fluoride per liter of water. Suppose we collect a random sample of 40 different liters of water and find the the average amount of fluoride per liter of water is 0.775 milligrams with standard deviation 0.2 milligrams. Conduct a hypothesis test using α = .01. Make sure to state the null and alternative hypotheses, state the appropriate test statistic, set up the rejection region, find the P-value for this test, make your conclusion using both the rejection region method and the P-value, and state your conclusion in the context of the problem. Also, find a 99% confidence interval for the true average amount of fluoride per liter of water and use this interval to make a conclusion about the test of hypothesis.

A US electronics firm has a plant in the US and another in China. The production function is the same in both plants q = L1 2 K 1 2 (notice that marginal product of labor is MPL = 1 2L− 1 2 K 1 2 = 1 2 q L and marginal product of capital is MPK = 1 2L1 2 K− 1 2 = 1 2 q K ). The US prices are w = r = 9. In China the firm faces the same cost of capital r∗ = 9 but the wage rate is lower, w∗ = 4.

A.Show the total, average and marginal product of labor with this production function if capital is fixed at K = 100

B.

C.Represent in a diagram the cost minimizing choice of factors to produce q = 100 in each country

D.Write the equilibrium proportions of the factors that the firm is going to use in each country.

E. Write the expressions for cost, obtain the relationships factorsoutput and deduce the cost functions for both countries. Calculate the cost of producing q = 100 units in each country.

There is no question b

Suppose that the US Federal Reserve Board was able to confirm that the US economy is in the brink of a recession, operating at a GDP level (Y1) that is well below its full-employment capacity (YF). Your tasks are:

5.1. Name one monetary policy, and specify the policy tool to use, that the Fed could make to help boost the economy.

5.2.Using the AD-AS theory, show and EXPLAIN the expected short run and long run effect of this policy on the US economy. Other things are assumed constant. Explain which curves shift and why. Label curves clearly. Identify the new equilibrium in the short-run and the long-run.