Question 1
Please go to this to answer questions: http://www.sec.gov/Archives/edgar/data/1048911/000110465905032464/a05-11806_110k.htm The questions in this exercise are based on FedEx Corporation. To answer the questions you will need to download FedEx?s Form 10-K for the fiscal year ended May 31, 2005 (file date July 14, 2005). You do not need to print this document to answer the questions. Required: 1) What is FedEx?s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operations excellence, or product leadership customer value proposition? What evidence supports your conclusion? 2) What are FedEx?s four main business segments? Provide two examples of traceable fixed costs for each of FedEx?s four business segments. Provide two examples of common costs that are not traceable to the four business segments. 3) Identify one example of a cost center, a profit center, and an investment center for FedEx. 4) Provide three examples of fixed costs that can be traceable or common depending on how FedEx defines its business segments. 5) Compute the margin, turnover, and return on investment (ROI) in 2005 for each of FedEx?s four business segments (Hint: page 99 reports total segment assets for each business segment.) 6) Assume that FedEx established a minimum required rate of return of 15% for each of its business segments. Compute the residual income earned in 2005 in each of FedEx?s four segments. 7) Assume that the senior managers of FedEx Express and FedEx Ground each have an investment opportunity that would require $20 million of additional operating assets and that would increase operating income by $4 million. If FedEx evaluates all of its senior managers using ROI, would the managers of both segments pursue the investment opportunity? If FedEx evaluates all of its senior managers using residual income, would the managers of both segments pursue the investment opportunity?
Question 2
1. Recognition of concepts. Jim Armstrong operates a small company that books enter?tainers for theaters, parties, conventions, and so forth. The company?s fiscal year ends on June 30. Consider the following items and classify each as either (1) pre?paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing. a Interest owed on the company's bank loan, to be paid in early July b Professional fees earned but not billed as of June 30 c Office supplies on hand at year-end d An advance payment from a client for a performance next month at a convention e The payment in part (d) from the client's point of view f Amounts paid on June 30 for a 1-year insurance policy g The bank loan payable in part (a) h Repairs to the firm's copy machine, incurred and paid in June 2. Understanding the closing process. Examine the following list of accounts: Note Payable Accumulated Depreciation: Building Alex Kenzy, Drawing Accounts Payable Product Revenue Cash Accounts Receivable Supplies Expense Utility Expense Which of the preceding accounts a. appear on a post-closing trial balance? b. are commonly known as temporary, or nominal, accounts? c. generate a debit to Income Summary in the closing process? d. are closed to the capital account in the closing process? 3. Adjusting entries and financial statements. The following information pertains to Sally Corporation: ? The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half of this amount had been earned. ? Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31. ? Salaries owed to employees at year-end amounted to $1,000. ? The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period. ? The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months? rent of Sally Corporation?s headquarters, beginning on November 1. Sally Corporation?s accounting year ends on December 31. Instructions Analyze the five preceding cases individually and determine the following: a. The type of adjusting entry needed at year-end (Use the following codes: A, adjust?ment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an accrued expense; or D, adjustment to record an accrued revenue.) b. The year-end journal entry to adjust the accounts c. The income statement impact of each adjustment (e.g., increases total revenues by $500) 4. Adjusting entries. You have been retained to examine the records of Mary?s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following: ? On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31. ? Unrecorded interest owed to the center totaled $275 as of December 31. ? All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31. ? Depreciation on the school?s van was $3,000 for the year. ? On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Pre?paid Rent, a new account. ? Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday. ? Mary?s Day Care paid insurance premiums as follows, each time debiting Pre?paid Insurance: Date Paid Policy No. Length of Policy Amount Feb. 1, 20X2 1033MCM19 1 year $540 Jan. 1, 20X3 7952789HP 1 year 912 Aug. 1, 20X3 XQ943675ST 2 years 840 Instructions The center?s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting. 5. Bank reconciliation and entries. The following information was taken from the accounting records of Palmetto Company for the month of January: Balance per bank $6,150 Balance per company records 3,580 Bank service charge for January 20 Deposits in transit 940 Interest on note collected by bank 100 Note collected by bank 1,000 NSF check returned by the bank with the bank statement 650 Outstanding checks 3,080 Instructions: a. Prepare Palmetto?s January bank reconciliation. b. Prepare any necessary journal entries for Palmetto. 6. Direct write-off method. Harrisburg Company, which began business in early 20X7, reported $40,000 of accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed for personal bankruptcy. Harrisburg uses the direct write-off method to account for uncollectibles. a. Prepare the journal entry needed to write off Mattingly?s account. b. Comment on the ability of the direct write-off method to value receivables on the year-end balance sheet. 7. Allowance method: analysis of receivables. At a January 20X2 meeting, the presi?dent of Sonic Sound directed the sales staff ?to move some product this year.? The president noted that the credit evaluation department was being disbanded be?cause it had restricted the company?s growth. Credit decisions would now be made by the sales staff. By the end of the year, Sonic had generated significant gains in sales, and the president was very pleased. The following data were provided by the accounting department: 20X2 20X1 Sales $23,987,000 $8,423,000 Accounts Receivable, 12/31 12,444,000 1,056,000 Allowance for Uncollectible Accounts, 12/31 ? 23,000 cr. The $12,444,000 receivables balance was aged as follows: Age of Receivable Amount Percentage of Accounts Expected to Be Collected Under 31 days $4,321,000 99% 31260 days 4,890,000 90 61290 days 1,067,000 80 Over 90 days 2,166,000 60 Assume that no accounts were written off during 20X2. Instructions a. Estimate the amount of Uncollectible Accounts as of December 31, 20X2. b. What is the company?s Uncollectible Accounts expense for 20X2? c. Compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2. d. Compute the net realizable value at the end of 20X1 and 20X2 as a percentage of respective year-end receivables balances. Analyze your findings and comment on the president?s decision to close the credit evaluation department.
Question 3
Part 3 - Ethics Question 1: 3.1 From the 12 internal audit findings identify if any of them could be considered a breach of ethics. Explain your answer. How could similar breaches of ethics be prevented in the future? Answer: Not Nil- There should be a breach of ethics based see below case study question#3. Please answer the following questions: Based Q #3.The sales manager had also discussed other revenue raising options like selling the list of the few thousand people that had entered the ?Give-away? competition to a marketing company. She said it would be making money for nothing. Answer: ? Question 2: Part 4 ? Performance Indicators 4.1 Identify 2 Performance Indicators, from published sources or recognised practices, which might assist RJ Enterprises to evaluate compliance with internal control procedures in the future. Based Q #11.In searching through the files you note that for the past two months the number of report deadlines missed rose from 10% in May to 50% in June. Please do Check if my answer Question #11 from previous clarification- answer: Yes/No Answer #11 Current Policy- Financial Reporting Policy Deviation: Weekly Record Update Ensure 0% delay in reporting requirements. Questions #3 Then, please answer the below questions: Focus on areas case study. Performance Indicators ? need a Title? What should we do to fix the problem? Give them additional feedback and be specific -based above questions ie question#3 & Q#11. Please help me to answer this one. Thank you! Key performance indicators are established to help management evaluate and report on progress made in relation to the objectives. Two performance indicators are which will help RJ Enterprises to improve their internal control procedures are as follows: The company needs to increase its authority over the management as the management and staff of the company is very reckless and casual in dealing with things which are important. Likewise we can say that the staff needs to be backed up and followed by with some good and strict supervision. Next the company needs to keep the records intact. As the sales manager herself is not interested in keeping the records which are important for the audit and financial reporting. (needs a proper key word) Question 4: Additional: Internal Management Report Needs a policy for confidentiality ? how can be resolve?,Hi Professor, Please answer the following, the questions are based on the previous clarification from assignment which I need to fix ASAP- So, I paid extra...please help me to answer soon if possible tomorrow morning 7am due already these are already my second attempt answer...just slight to fix from previous assignment. I do hope you can continue help. Thank you! Regards, student Part 3 - Ethics Question 1: 3.1 From the 12 internal audit findings identify if any of them could be considered a breach of ethics. Explain your answer. How could similar breaches of ethics be prevented in the future? Answer: Not Nil- There should be a breach of ethics based see below case study question#3. Please answer the following questions: Based Q #3.The sales manager had also discussed other revenue raising options like selling the list of the few thousand people that had entered the ?Give-away? competition to a marketing company. She said it would be making money for nothing. Answer: ? Question 2: Part 4 ? Performance Indicators 4.1 Identify 2 Performance Indicators, from published sources or recognised practices, which might assist RJ Enterprises to evaluate compliance with internal control procedures in the future. Based Q #11.In searching through the files you note that for the past two months the number of report deadlines missed rose from 10% in May to 50% in June. Please do Check if my answer Question #11 from previous clarification- answer: Yes/No Answer #11 Current Policy- Financial Reporting Policy Deviation: Weekly Record Update Ensure 0% delay in reporting requirements. Questions #3 Then, please answer the below questions: Focus on areas case study. Performance Indicators ? need a Title? What should we do to fix the problem? Give them additional feedback and be specific -based above questions ie question#3 & Q#11. Please help me to answer this one. Thank you! Key performance indicators are established to help management evaluate and report on progress made in relation to the objectives. Two performance indicators are which will help RJ Enterprises to improve their internal control procedures are as follows: The company needs to increase its authority over the management as the management and staff of the company is very reckless and casual in dealing with things which are important. Likewise we can say that the staff needs to be backed up and followed by with some good and strict supervision. Next the company needs to keep the records intact. As the sales manager herself is not interested in keeping the records which are important for the audit and financial reporting. (needs a proper key word) Question 4: Additional: Internal Management Report Needs a policy for confidentiality ? how can be resolve?,Hi Sir Michael, The above questions are clarification from case study RJ Enterprises last week or week before, I received a feed back again yesterday. I have only one chance left. Now, the ethics part 3 questions- has breach contract of ethics on it- based question#3. I need you to help me to resolve on that particular question and other questions above. I really appreciate if you can help me to resolve the above question soon. If possible today sir I get the solution the better. Thank You again for your time and help! You are great tutor! Regards, Student,I hope you will be able to help me to resolve the questions above. Many thanks in advance and please accept my questions. You are really good! Regards, Student
Question 4
1-A firm has 100 shares of stock and 40 warrants outstanding. The warrants are about to expire, and all of them will be exercised. The market value of the firm's assets is $2,000, and the firm has no debt. Each warrant gives the owner the right to buy 2 shares at $15 per share. What is the price per share of the stock? a.$11.11 b.$15.00 c.$17.78 d.$20.00 e.None of the above. 2-Firm V was worth $450 and Firm A had a market value of $375. Firm V acquired Firm A for $425 because they thought the combination of the new Firm VA was worth $925. What is the NPV from the merger of Firm V and Firm A? a.$0 b.$50 c.$425 d.$450 e.None of the above. 3-The Plastic Iron Company has decided to acquire a new electronic milling machine. Plastic Iron can purchase the machine for $87,000 which has an expected life of 8 years and will be depreciated using 7 class MACRS rates of .1428, .2449, .1749, .125, .0892, .0892, .0892 and any remainder in year 8. Miller Leasing has offered to lease the machine to Plastic Iron for $14,000 a year for 8 years. Plastic Iron has an 18.64% cost of equity, 12% cost of debt, a 1:1 D/E ratio and faces a 34% marginal tax rate. Should they lease or buy? Show all work. MS word file or an Excel file that shows step-by-step solution to the problems. MS word file or an Excel file that shows step-by-step solution to the problems. 1-A firm has 100 shares of stock and 40 warrants outstanding. The warrants are about to expire, and all of them will be exercised. The market value of the firm's assets is $2,000, and the firm has no debt. Each warrant gives the owner the right to buy 2 shares at $15 per share. What is the price per share of the stock? a. $11.11 b. $15.00 c. $17.78 d. $20.00 e. None of the above. 2-Firm V was worth $450 and Firm A had a market value of $375. Firm V acquired Firm A for $425 because they thought the combination of the new Firm VA was worth $925. What is the NPV from the merger of Firm V and Firm A? a. $0 b. $50 c. $425 d. $450 e. None of the above. 3-The Plastic Iron Company has decided to acquire a new electronic milling machine. Plastic Iron can purchase the machine for $87,000 which has an expected life of 8 years and will be depreciated using 7 class MACRS rates of .1428, .2449, .1749, .125, .0892, .0892, .0892 and any remainder in year 8. Miller Leasing has offered to lease the machine to Plastic Iron for $14,000 a year for 8 years. Plastic Iron has an 18.64% cost of equity, 12% cost of debt, a 1:1 D/E ratio and faces a 34% marginal tax rate. Should they lease or buy? Show all work.,Hello. Have you finished the problem?,I do not need the answer to the question about the 100 shares. If you have time, I rather you work on some other question, please.
Question 5
Turner Co. owned a warehouse and then decided to build a new automated racking system in the warehouse. They began construction of the system on January 1, 2012. The project was completed on December 31, 2012 and placed into service on 1/1/2013. Payments to the contractors were made as follows: January 1, 2012 $ 50,000 April 1, 2012 $590,000 October 1, 2012 $ 270,000 Total $910,000 On April 1, 2012, the company obtained a $480,000, 6% annual interest rate construction loan. The loan was outstanding for the entire construction period. The other interest bearing debt of the company included two long-term notes of $180,000 and $120,000 with interest rates of 4% and 5% respectively. The loans were outstanding for the entire year. To save you time- I am going to give you avoidable interest for these facts. (but you might want to try to compute it to see if you get it right, too!) Avoidable interest for 2012 is $32,320. The racking system has an estimated useful life of 10 years and an estimated residual value of $100,000. Turner computes depreciation for short years using the nearest full month as the convention. Turner uses the double declining balance method. 1. Assume all interest payments for 2012 are made in cash on December 31, 2012. What is the total interest paid in cash by Turner on 12/31/2012? (This is ?actual interest?). You type 1. #put your final answer here# (then show your work after under that) 2. What is the amount of interest capitalized for 2012? You type 2. #put your final answer here# (then show your work after under that) 3. How much interest expense will Turner report on its income statement for 2012? You type 3. #put your final answer here# (then show your work after under that) 4. What is acquisition cost for the racking system based on the information we have? _________________ You type 4. #put your final answer here# (then show your work after under that)
