On October 1, 2017, Sharp Company (based in Denver, Colorado) entered into a forward contract to sell 310,000 rubles in four months (on January 31, 2018) and receive $186,000 in U.S. dollars. Exchange rates for the ruble follow:

Sharp's incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Sharp must close its books and prepare financial statements on December 31.

Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a 310,000 ruble receivable arising from a sale made on October 1, 2017. Include entries for both the sale and the forward contract.

Entry 1. Record the sale.

Entry 2. Record entry for forward contract entered into by Hanks Company.

Entry 3. Record the entry for changes in the exchange rate.

Entry 4. Record gain or loss on forward contract.

Entry 5. .Record the entry for changes in the exchange rate.

Entry 6. Record gain or loss on forward contract.

Entry 7. Record the receipt of LCUs.

Entry 8. Record settlement of forward contract.

The Village of Hawksbill issued $4,500,000 in 5 percent general obligation, tax-supported bonds on July 1, 2016, at 101. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates are December 31 and June 30. The first of 20 annual principal payments is to be made June 30, 2017. Hawksbill has a calendar fiscal year.

1. A capital projects fund transferred the premium (in the amount of $52,500) to the debt service fund.
2. On December 31, 2016, funds in the amount of $112,500 were received from the General Fund and the first interest payment was made.
3. The books were closed for 2016.
4. On June 30, 2017, funds in the amount of $285,000 were received from the General Fund, and the second interest payment (112,500) was made along with the first principal payment ($225,000)
5. On December 31, 2017, funds in the amount of $106,875 were received from the General Fund and the third interest payment was made (also in the amount of $106,875).
6. The books were closed for 2017.

Required

a. Prepare journal entries to record the events above in the debt service fund.

b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2016.

c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2017.

Solano Company has sales of $840,000, cost of goods sold of $540,000, other operating expenses of $70,000, average invested assets of $2,450,000, and a hurdle rate of 11 percent.


Required:
1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)
Return on Investment Turnover= __%

Investment Turnover

Profit Margin= __ %

Residual Income (Loss)=
     

2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) (Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.))

   a. Company sales and cost of goods sold increase by 40 percent.      

Return on Investment= __ %

Residual Income (Loss)=  

         
       
    b. Operating expenses decrease by $12,000.        
      
       

Return on Investment= __ %

Residual Income (Loss)=  

         

   c. Operating expenses increase by 10 percent.

         

Return on Investment= __ %

Residual Income (Loss)=  

       

    d. Average invested assets increase by $470,000.

Return on Investment= __ %

Residual Income (Loss)=  

                

    e. Solano changes its hurdle rate to 17 percent.

Return on Investment= __ %

Residual Income (Loss)=

Explore how multinational giant Philips NV has evolved over time. The Dutch company, which was internationally oriented almost from the start, moved to a national organization approach during World War II. This approach, which allowed the company to tailor its product line and marketing to each national market, remained in place for several decades, however, by the 1970s, the duplication of effort the approach required began to cause problems and Philips shifted toward a product division structure that established international production centers. In the mid-1990s, a new CEO implemented significant changes replacing Philips’ 21 product divisions with just 7 global business divisions. This new structure was further refined in 2008 to establish three global divisions responsible for product strategy, global marketing, and production decisions. QUESTION 1: Why did Philips’ decentralized structure make sense in the 1950s and 1970s? Why did this structure start to create problems for the company in the 1980s? QUESTION 2: What was Philips trying to achieve by tilting the balance of power in its structures away from national organizations and toward the product divisions? Why was this hard to achieve? QUESTION 3: What was the point of the organizational changes made by Cor Boonstra? What was he trying to achieve? QUESTION 4: In 2008 Philips reorganized yet again. Why do you think it did this? What is it trying to achieve?

We are evaluating a project that costs $744,000, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 45,000 units per year. Price per unit is $60, variable cost per unit is $20, and fixed costs are $744,000 per year. The tax rate is 35 percent, and we require a return of 18 percent on this project.

Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.)

What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) ΔNPV/ΔQ $

Calculate the change in NPV if sales were to drop by 500 units. (Enter your answer as a positive number. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV would (INCREASE/DECREASE) by $

What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) ΔOCF/ΔVC $

Solano Company has sales of $820,000, cost of goods sold of $530,000, other operating expenses of $60,000, average invested assets of $2,400,000, and a hurdle rate of 11 percent.


Required:
1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)

Return on investment-

Investment turnover-

Profit Margin-

Residiual Income(loss)-

2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) (Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.))

   a. Company sales and cost of goods sold increase by 30 percent.    

ROI-

Residual Income(loss)-

    b. Operating expenses decrease by $11,000.   

ROI-

Residual Income(loss)-

c. Operating expenses increase by 20 percent.

ROI-

Residual Income(loss)-

d. Average invested assets increase by $460,000.

ROI-

Residual Income(loss)-

e. Solano changes its hurdle rate to 16 percent.

ROI-

Residual Income(loss)-

Answer the following questions in the space provided in your own words. 1. A Bureau of Labor Statistics (BLS) economist conducts a statistical study to test his hunch that in households with a minimum-wage worker, mean household debt changes following a hike in the minimum wage. Suppose the mean household debt stays the same following a minimum-wage hike. However, when the economist collects a random sample, the sample mean difference is actually greater than zero.

a. Does this mean the economist made a mistake in his research? Explain why/why not.

b. Suppose the economist collects a random sample and decides to conduct a hypothesis test. Formulate the null and alternative hypothesis: c

. For each statement in the following table, place in X in the correct box to indicate whether the statement is the null hypothesis, the alternative hypothesis, or neither (Hint: this is a non-directional hypothesis test)