Question 1
E2-7 (Accounting Principles?Comprehensive) Presented below are a number of business transactions that occurred during the current year for Gonzales, Inc. Instructions In each of the situations, discuss the appropriateness of the journal entries in terms of generally accepted accounting principles. The president of Gonzales, Inc. used his expense account to purchase a new Suburban solely for personal use. The following journal entry was made. Miscellaneous Expense 29,000 Cash 29,000 Merchandise inventory that cost $620,000 is reported on the balance sheet at $690,000, the expected selling price less estimated selling costs. The following entry was made to record this increase in value. Merchandise Inventory 70,000 Revenue 70,000 The company is being sued for $500,000 by a customer who claims damages for personal injury apparently caused by a defective product. Company attorneys feel extremely confident that the company will have no liability for damages resulting from the situation. Nevertheless, the company decides to make the following entry. Loss from Lawsuit 500,000 Liability for Lawsuit 500,000 Because the general level of prices increased during the current year, Gonzales, Inc. determined that there was a $16,000 understatement of depreciation expense on its equipment and decided to record it in its accounts. The following entry was made. Depreciation Expense 16,000 Accumulated Depreciation 16,000 Gonzales, Inc. has been concerned about whether intangible assets could generate cash in case of liquidation. As a consequence, goodwill arising from a purchase transaction during the current year and recorded at $800,000 was written off as follows. Retained Earnings 800,000 Goodwill 800,000 Because of a ?fire sale,?equipment obviously worth $200,000 was acquired at a cost of $155,000. The following entry was made. Equipment 200,000 Cash 155,000 Revenue 45,000
Question 2
The Prescott Furniture Company Instructions: Using Palisades Precision Tree software create a tree that graphically shows the various options open to customers of the Prescott Furniture Company . You must import your Precision Tree into a Word document that contains the NSU/SBE front page. Be sure to explain what you did to solve this problem, and explain what a decision tree is and what the solution is for each of the various branches. There is a maximum of 10 points available for this opportunity. The Problem Walt (Hutch) Woods is the owner and main furniture maker at the Prescott Furniture Company (located just behind the K-Mart on route 52) in Prescott Florida. The company has been in business for over 15 years producing some of the finest examples of curio cabinets available in the Southeast US. Hutch makes two sizes of cabinets; the regular size is about 10 inches smaller in width than the large size cabinet seen on the right. The company uses only three types of woods, Miami Dade Pine, pecan, and red cherry to make their cabinets. The Miami Dade Pine is only finished in natural wood, but the pecan and red cherry woods can be finished in either a matte finish or a glossy finish which both cost the same. Walt (Little Hutch) Woods Walt?s son, Little Hutch, is a senior at Prescott High School where he has been taking as many business courses and wood working classes as he can. Because he is planning on graduating at the end of this semester, his dad hopes that he will continue his studies at PC and work part-time at his furniture shop. In order to help Little Hutch out he has asked you to create a decision-tree that explains the various options open to customers. Over the past years Walt has been keeping track of the preferences that his customers make when ordering a cabinet, and he has provided you with a table that shows the percentages and costs of each item for you to use in your decision tree. ? Your task You are to take this information and beginning with a purchase/don?t purchase decision node create a Precision Tree that shows Little Hutch the possible options open to the customer, and find the final ending price for each option. NOTE: You must also include the state of Florida sales tax and Prescott County sales tax cost. Together they total 7.25% of the total sale. You may have to calculate this by hand in your decision tree. The Furniture Options The following are the options open to customers of the company. Prepare a Precision Tree graphically showing these options, percentages and costs. Import this tree into a Word document and explain your answers in the Word document. Prescott Furniture Company ? Cabinet Options Chart Type of Wood Finish - Natural Finish - Matte Finish Glossy % of people selecting this option Cost of Cabinet with this option Miami Dade Pine Small Cabinet X 8% $4,500 Large Cabinet X 14% $5,250 Pecan Small Cabinet X X 17% $3,500 Large Cabinet X X 20% $3,750 Cherry Wood Small Cabinet X X 20% $2,000 Large Cabinet X X 21% $2,500 Be sure to also include the following table in your finished work project. ? Assume that Walt will have 135 customers in the coming year, and that each one will order one of the above cabinets in the same percentage indicated, how much is his expected income (gross) and how much will he pay in state and local sales taxes? Table 1. Estimated Income Type of Wood Estimated Income Estimated Sales Tax Total Income Miami Dade Pine Pecan Cherry Wood
Question 3
""Hi there, I was told by Ashley Rockefeller that I can pose all 3 question at any time within the day. I dont understand why my question is being denied... "(15 marks) You manage a portfolio that is currently all invested in equities in companies in five major Canadian industries. The market value involved and beta for each industry are shown in the table below. Industry MV Beta Oil and Gas $1,000,000 1.2 Technology 600,000 1.5 Utilities 1,500,000 0.8 Financial 800,000 1.3 Pharmaceutical 1,300,000 1.1 You believe that the Canadian equity market is on the verge of a big but short-lived downturn. You would move your portfolio temporarily into T-bills, but you do not want to incur the transaction costs of liquidating and reestablishing your equity position. Instead, you decide to hedge your portfolio with three-month S&P/TSX 60 index futures contracts for one month. Currently, the level of the S&P/TSX 60 index is 678.68, the three-month futures price of the S&P/TSX 60 is 665.60, and one contract is for $200 times the index. The annual simple risk-free rate of return is 1%. a. How many futures contracts should you use? Long or short? (5 marks) b. Suppose the return on the S&P/TSX 60 index is -5% in one month, and the S&P/TSX index futures price falls to 620 in one month. Calculate your net gain or loss on your hedged portfolio in part (a). (10 marks)" "
Question 4
The plant asset and accumulated depreciation accounts of Pell Corporation had the following balances at December 31, 2010: Plant Asset Accumulated Depreciation Land $ 350,000 $ ? Land improvements 180,000 45,000 Building 1,500,000 350,000 Machinery and equipment 1,158,000 405,000 Automobiles 150,000 112,000 -------------------------------------------------------------------------------- Transactions during 2011 were as follows: a. On January 2, 2011, machinery and equipment were purchased at a total invoice cost of $260,000, which included a $5,500 charge for freight. Installation costs of $27,000 were incurred. b. On March 31, 2011, a machine purchased for $58,000 in 2007 was sold for $36,500. Depreciation recorded through the date of sale totaled $24,650. c. On May 1, 2011, expenditures of $50,000 were made to repave parking lots at Pell?s plant location. The work was necessitated by damage caused by severe winter weather. d. On November 1, 2011, Pell acquired a tract of land with an existing building in exchange for 10,000 shares of Pell's common stock that had a market price of $38 per share. Pell paid legal fees and title insurance totaling $23,000. Shortly after acquisition, the building was razed at a cost of $35,000 in anticipation of new building construction in 2012. e. On December 31, 2011, Pell purchased a new automobile for $15,250 cash and trade-in of an old automobile purchased for $18,000 in 2007. Depreciation on the old automobile recorded through December 31, 2011, totaled $13,500. The fair value of the old automobile was $3,750. Required: (1) Prepare a schedule analyzing the changes in each of the plant assets during 2011, with detailed supporting computations. (2) Prepare a schedule showing the gain or loss from each asset disposal that would be recognized in Pell?s income statement for the year ended December 31, 2011.,Pls try to do earlier than 9th because the deadline is tomorrow which is July 8th. Thanks Sana,Thank you
Question 5
Automobiles are often leased, and there are several terms unique to auto leases. Suppose you are considering leasing a car. The price you and the dealer agree on for the car is $28,000.This is the base capitalized cost. Other costs added to the capitalized cost price include the acquisition (bank) fee, insurance, or extended warranty. Assume these costs are $450. Capitalization cost reductions include any down payment, credit for trade-in, or dealer rebate. Assume you make a down payment of $2,000, and there is no trade-in or rebate. If you drive 12,000 miles per year, the lease-end residual value for this car will be $16,500 after three years. The lease or ?money? factor, which is the interest rate on the loan, is the APR of the loan divided by 2,400. (We?re not really sure where the 2,400 comes from either.) The lease factor the dealer quotes you is .00342. The monthly lease payment consists of three parts: a depreciation fee, a finance fee, and sales tax. The depreciation fee is the net capitalization cost minus the residual value divided by the term of the lease. The net capitalization cost is the cost of the minus any cost reductions plus any additional costs. The finance fee is the net capitalization cost plus the residual times the money factor, and the monthly sales tax is simply the monthly lease payment times the tax rate. What is your monthly lease payment for a 36-month lease if the sales tax is 7 percent?
