(iv) On 1 April 2019, GHL entered into a sale and leaseback agreement for its manufacturing plant. The plant was originally acquired by GHL on 31 March 2009 for $8,910,000, at which point the plant had a useful life of 30 years with no residual value. The sale proceeds of plant from the sale and leaseback agreement were $11.25 million, which is higher than the fair value of the plant of $9.0 million. The plant was leased back on a 20-year lease from 1 April 2019 at an annual rental of $1,105,350 to be paid annually in arrears at 31 March 2020. The sale satisfies HKFRS 15 “Revenue from Contracts with Customers”, however, she insisted to account for it as a financing arrangement. The first lease rental is paid and charged to the statement of profit or loss. The sales proceed was treated as a financial liability. The incremental borrowing rate is 15% per annum.

4) what is the requirement of a sale and leaseback transaction from the seller-lessee perspective in accordance with HKFRS 16?

Smooth Blend, Inc., a calendar year company, produces several blends of whiskey. Maturing whiskey is stored for 3 years in a large, dark aromatic warehouse owned by Smooth Blend. Smooth Blend sells the whiskey to Distributor Company at the beginning of the aging process (January 1, 2011). Distributor Company will pick up the whiskey at the end of the aging process (December 31, 2013) and take it to its facilities for bottling. Distributor Company pays the full purchase price to Smooth Blend on January 1, 2011 to protect itself against price increases. When should Smooth Blend recognize revenue? Why? Would your answer change If the quality control manager of Distributor Company had the right to taste the whiskey on December 31, 2013 and receive a full refund if not satisfied with the quality of the liquor? If there was no right of return but Smooth Blend promised to help Distributor Company attract customers? If Smooth Blend acquired a fixed price option from Distributor Company to repurchase the whiskey in 6 months?

Trial Balance Transactions Required: 5 Assets, 2 Liabilities, 2 Equity, 1 Revenue, and 5 Expense accounts Jan 1 Owner invested $10,000 and recorded ownership in the company 2 Company paid current month's rent $500 7 Purchased merchandise to sell to customers on account from vendor TicWick Products $3,000 8 Sold to customer Mary Jones merchandise on account $1,600; cost of merchandise was $1,000 10 Signed a contract with a new supplier 15 Paid advertising from checking $100 17 Purchased a new computer from checking $250 20 Mary Jones paid her account balance in full. Amount deposited to checking account. 22 Paid legal fees $200 23 Purchased store equipment on account from Ace Supply $1,000. 25 Paid utilities $140 28 Paid 3 months of insurance $300 for coverage beginning Feb 1. 31 Paid Ace Supply for amount owed

Transaction 2

TeleCo, a customer of CoAx, entered into a binding written agreement to purchase 1,500 feet of fiber-optical cable for $3 per foot. TeleCo’s shipping terms are freight on board (FOB) shipping point. CoAx collected payment before the order was shipped. Title transfers upon delivery to the carrier, and TeleCo will insure the product while it is in transit. Instead of using a third-party shipper such as FedEx and UPS, CoAx has decided to use its own logistics subsidiary, DeliveryAx, to deliver the cable to TeleCo.

* CoAx acquired 100 percent ownership interest in DeliveryAx in the previous year. DeliveryAx provides an array of shipping services to third-party customers outside the cable industry. Only 2 percent of DeliveryAx’s shipping revenue is expected to be derived from transactions with CoAx in the current year. Case 16-2c: The Cable Guys Page 2 Copyright 2015 Deloitte Development LLC All Rights Reserved.

1. Summarize transaction 2 in bullet points

Problem: In order to do so Starbucks has closed 900 stores and eliminated 34,000 jobs. Strategy: Growth strategy of Starbucks is to have more revenue with lower costs. For strategy identification, let’s take a look at the way Starbucks sells their items, increase in their sales rate, attract more customers and advertise more but spend less. Opportunity: Starbucks is refocusing on some of the areas that decrease risk and up-front investment. This includes expanding foreign stores, with aid of partnerships that share risk and costs, selling VIA instant coffee and other products in retail and convenience stores, and reinvigorating the Seattle’s Best Brand coffee. Evaluation: The strategy was proposed after following a defined process of analysis and drawing inference as all the study and their result is also included in the proposal. Recommendation: As Starbucks is cutting down jobs, they can implement self-ordering interactive screens where users can place their order. please elaborate more on the problem and incorporate more to make it 1-2 pages long.

1. New England Co. had net cash provided by operating activities of $351,000; net cash used by investing activities of $420,000; and cash provided by financing activities of $250,000.

New England's cash balance was $27,000 on January 1.
What was New England's cash balance at the end of the year?

A. $40,000
B. $208,000
C. $248,000
D. $27,000

2. In a statement of cash flows, cash receipts from sales of inventory to customers should generally be classified as cash inflows from

A. investing activities
B.operating activities
C.financing activities
D.selling activities

3. Which of the following is a contra account?

A. Premium on bonds payable
B.Allowance for doubtful accounts
C.Patents
D.Unearned revenue

Questions 6, and 7 refer to the following information:

At the end of the year, a company offered to buy 4,740 units of a product from X Company for a special price of $11.00 each instead of the company's regular price of $18.00 each. The following information relates to the 65,000 units of the product that X Company made and sold to its regular customers during the year:

Fixed cost of goods sold for the year were $124,150, and fixed period costs were $68,250. Variable period costs include selling commissions equal to 3% of revenue.

6. Profit on the special order is

7. Assume the following two changes for the special order: 1) variable cost of goods sold will decrease by $0.73 per unit, and 2) there will be no selling commissions. What would be the effect of these two changes on the special order profit?

PLEASE ANSWER BOTH

#6 = NOT 20,856

#7 = NOT 5024

US Auto Company would like to offer rebates to its customers in order to increase sales. If it lowers prices sales will increase.    This will depend on the price elasticity of demand. Assume that the price elasticity of demand is 1.5. This firm is considering a $400 rebate on its cars. Also assume the following information on prices and costs before the rebates:

          Average price per car                                   $9,000 per car

          Expected sales volume at $9,000) per car     1,000,000 cars

          Average total costs per car                           $8,200 per car

          Total variable cost                                         $6,400,000,000

• Calculate the present total fixed costs, average variable costs and average fixed costs.
• What is the present breakeven point?
• What is the change in revenue resulting from the $400 price reduction?
• What is the effect on the cost per car after the change? In other words what is the average cost per car after the change?
• Should the change be made?

Please show the calculation. Thank you.

Goal:
Please answer the questions below. The main goal of this homework is to see if you can calculate the profit maximization point for this small wedding cake business. I hope that you will be able to merge your knowledge of basic accounting and microeconomic theory in order to calculate the profit maximization point, make comments about efficiency, and make logical recommendations to the firm's management to ensure their future success.

Current Situation:
The local wedding cake business was very competitive during 2012. Delicious Deserts was the only wedding cake bakery in the entire county of two million people for several years. They often charged as much as $300 to $500 for each wedding cake. But a new competitor recently came into the market and started selling "discount wedding cakes" for less than $150. The quality and the taste of the discount wedding cakes were acceptable for most of their customers. Both businesses operated in a low-to moderate-income county in California where the average household income was not much higher than $40,000 per year.

The Challenge For Delicious Deserts:
At first the news of a low-cost competitor was terrible news for Delicious Deserts. They had no choice. They had to charge from $300 to $500 per wedding cake to cover their high costs. However, because of this new competition, the husband and wife owners of Delicious Deserts decided to make the business more efficient and lower costs. They invested in better ovens and created better tasting cakes using special ingredients. Their customers went crazy over their new and unique 80 proof Italian Rum Wedding cake that actually got people slightly drunk if they ate more than three slices.

To boost sales during 2012 they hired part-time telemarketers and social media experts. They also increased their advertising in traditional media such as local wedding magazines. They also displayed eye-catching ads in local churches, entertainment centers and jewelry stores.

They also experimented with a new pricing model in which they lowered prices each quarter. Indeed, they found that as they lowered their prices, they sold more cakes. They hired an "A" student who took a microeconomics class with Professor Ed Torres to do an elasticity analysis. The student estimated that the price elasticity for wedding cakes was 1.25 (elastic) and that the income elasticity was 2.10 (a luxury good). The owners of Delicious Deserts were not aware of this information. The student told them that they made a huge pricing strategy error for many years by charging high prices on an elastic good within a low-to moderate-income county.

The profit and loss statement below shows that Delicious Deserts made a Total Revenue of $275,000 and sold 1,375 wedding cakes. During 2012, they made three times (3X) more than they did versus 2011. Of course, because they invested in new ovens, made more cakes, and hired new part-time staff, the cost of doing business also rose. The net profit for 2012 was a slim $32,175. The salary for a professional desert baker averaged $70,000 per year in California.

Please examine the profit and loss statement on the next page, then answer the questions on pages 4 through 6.  

Delicious Deserts, Incorporated
Income Statement For The Year Ending December 31, 2012

Revenues

Gross Sales....................................................................$275,000
Less: Sales Discounts ..................................................$ 2,500
Less: Returns (Cancelled Weddings)...........................$ 2,000
Net Sales...............................................................................................$270,500

Cost of Goods Sold

Beginning Inventory (January 1).................................$ 18,000
Cost Of Ingredients To Bake Cakes............................$109,500
Total Cost of Goods For Sale......................................$127,500
Less: Ending Inventory December 31.........................$ 15,000
Cost of Goods Sold..............................................................................$112,500

Gross Profit.....................................................................................................$158,000

Operating Expenses
Selling Expenses
Sales Commissions........................................$ 31,000
Advertising...................................................$ 16,000
Other Selling Expenses (Internet).................$ 18,000
Total Selling Expenses...............................................$ 65,000

General and Administrative Expenses
Professional & Office Salaries.................................$ 20,500
Utilities....................................................................$ 5,000
Office Supplies........................................................$ 1,500
Bank Interest Paid on Loans....................................$ 3,600
Insurance.................................................................$ 2,500
Rent (Fixed Cost)....................................................$ 17,000
Total General & Administrative Expense.............................$ 50,100
Total Operating Expenses..................................................$115,100

Net Profit Before Taxes..............................................................................$ 42,900
Less: Federal/State/Local Taxes................................................................$ 10,725
NET PROFIT.............................................................................................$ 32,175

   

Question #1:
What was the Total Fixed Cost of running this business?

Free Answer:
The rent was the only fixed cost that Delicious Deserts had. They paid $17,000 per year or $1,416.66 per month for rent. All other expenses were variable costs.

Question #2:
What was the Total Variable Cost of running this business?

Answer: $________________________________________

Clue:
Add up Cost of Goods Sold, Total Operating Expenses (less Rent), Income Tax Expense and include the write-off losses from Sales Discounts & Wedding Cancellations.


Question #3:
Assuming that Delicious Deserts sold 150 cakes during Q1, 300 cakes during Q2, 450 cakes during Q3, and 475 cakes during Q4, what was the Total Revenue during each quarter assuming the prices were: Q1 - $275 per cake, Q2 - $240 per cake, Q3 - $180 per cake and Q4 - $170 per cake?    

Q1 - Total Revenue = $____________________________

Q2 - Total Revenue = $____________________________

Q3 - Total Revenue = $____________________________

Q4 - Total Revenue = $____________________________

The "A" student did a quarterly cost breakdown analysis for Delicious Deserts. A month-to-month analysis would have been better, but the owners just wanted a quick quarterly analysis. Q1 = 150 cakes sold, Q2 = 300 cakes sold, Q3 = 450 cakes sold and Q4 = 475 sold.   

Challenge Question #4:
Hint: Use the instructions on page 7 of the Excel 2016 handout.

Can you plot a nice-looking graph to show how the demand curve, the average total cost, marginal cost, and marginal revenue curves look like? Paste it on this page or attach a separate page to this homework.   

Question #5
What is the MC=MR Profit Maximization point? What quantity should Delicious Deserts be producing at 'and' what price should they be charging to maximize their profits?

Question #6
Why isn't it a good idea for them to produce and sell as many cakes as they can? Is it more profitable to sell less cakes at this current stage of their business?

Question #7
Do you have any other recommendations for Delicious Deserts to increase their revenues, profits, market share, and client retention?