Question 1
"E7-25B(Bank Reconciliation and Adjusting Entries) Elfen Company has just received the October 31, 2012, bank statement, which is summarized below. Tri National Bank: Balance, October 1, Deposits during October, Note collected for depositor, including $40 interest, Checks cleared during October, Bank service charges, Balance, October 31. Disbursements: Checks cleared during October $54,501, Balance, October 31, 10. Receipts: Deposits during October $47,200, Note collected for depositor, including $40 interest $2,040. Balance: Balance, October 1 $21,361, Deposit during October $68,561, Note collected for depositor, including $40 interest $70,601, Checks cleared during October $16,100, Bank service charges $16,090, Balance, October 31 $16,090. The general ledger Cash account contained the following entries for the month of October. Cash: Balance, October 1 17,801, Disbursements in October 45,271, Receipts during October 45,000. Deposits in transit at October 31 are $4,800, and checks outstanding at October 31 total $1,550. Cash on hand at October 31 is $250. The bookkeeper improperly entered one check in the books at $210.00 which was written for $240.00 for supplies (expense); it cleared the bank during the month of October. Instructions: (a) Prepare a bank reconciliation dated October31, 2012, proceeding to a correct balance. (b) Prepare any entries necessary to make the books correct and complete. (c) What amount of cash should be reported in the October31 balance sheet?
Question 2
Problem 6 You have been commissioned by Oxford city government to study how the addition of 1,000 condominium units around the edge of town over the last several years might impact the city's transportation infrastructure, levels of trac, and air quality. You decide to begin by estimating the number of additional motor vehicles brought to the area per new condominium. In a survey of the occupants, a simple random sample of size 100 yields the information that the average number of motor vehicles per unit is 1.6, with a sample standard deviation of 0.8. A) Calculate the estimated standard error of X n=100, which we will label Sx. B) Calculate a 50% con dence interval, 90% con dence interval, and a 99% con dence interval for the population mean. Explain how the formulas you are using di er. What happens to the interval as you increase the level of con dence? C) You are now being interviewed by The Oxford Eagle, the local newspaper, about your initial survey results. i) Give the newspaper a brief explanation about your results in Part B. Be rigorous, but use easy-to- understand language (i.e., plain English) about what the con dence interval means. ii) Popular media usually include with surveys like yours the margin of error." The margin of error is usually operationalized as the radius (or half-width) of a 90% con dence interval around the point estimate, although its exact usage varies from survey to survey. Provide the margin of error for your estimate based on your 90% con dence interval from Part B. 2 D) Oxford has hired another graduate student to do a similar analysis. He is using X Sx to calculate his con dence interval. What level of con dence is he using? E) The graduate student in Part D also computes a 95% con dence interval, which is (1.44, 1.76). However, he did not take POL 551, and it shows. He o ers the following explanations of this interval to local media. Explain what is wrong with each interpretation. i) If random samples of 100 condominiums were repeatedly selected, then 95% of the time the sample mean number of motor vehicles will fall between 1.44 and 1.76." ii) Ninety- ve percent of the number of motor vehicles for condominiums in the new developments are between 1.44 and 1.76. (In addition to the technical reason this interpretation is wrong, there is also an common sense reason)." iii) We can be 95% con dent that the sample mean is between 1.44 and 1.76." iv) If we repeatedly sampled the entire population of 1,000 condominiums, then 95% of the time the population mean would be between 1.44 and 1.76." F) Part B showed how the con dence level changes the width of your con dence interval, but other factors might shape the interval too. Consider the following: i) What if instead of a sample standard deviation of 0.8 you found a sample standard deviation of 0.4. What would the 90% con dence interval be in this case? How does it compare to the 90% interval from Part B? ii) What if instead of a sample mean of 1.6 you found a sample mean of 1 (still with a standard deviation of 0.8). What would the 90% con dence interval be in this case? How does it compare to the 90% interval from Part B? iii) What if instead of a sampling 100 condominiums, you sampled 900 and still had a sample mean of 1.6 and standard deviation of 0.8. What would the 90% con dence interval be in this case? How does it compare to the 90% interval from Part B? iv) Summarize in laymen's terms what you have just demonstrated about whether and how con dence level, sample standard deviation, sample mean, and sample size all a ect the interval, and be sure to explain why this makes sense. G) After estimating the number of cars in the new development, you wonder about how these cars might a ect air quality or gasoline supply in the Oxford area. As a rst step toward examining these questions, you decide to check the fuel eciency of motor vehicles in the new developments. Unfortunately, you are short on time because you have a POL 551 problem set due. You only have time to select a simple random 3 sample of 9 motor vehicles from the condominiums. They have a sample mean of 25.5 miles per gallon (mpg) and a sample standard deviation of 4.5 mpg. What is the 95% con dence interval? 4
Question 3
REVISION QUESTIONS 1. Distinguish each of the following: a) physical asset markets and financial asset markets, b) spot and futures markets, c) money and capital markets, d) primary and secondary markets, and e) private and public markets. 2. If a firm attempts to maximize its fundamental stock price, it is good or bad for society? In general, it is good. Aside from such illegal actions as fraudulent accounting, exploiting monopoly poser, violating such codes, and failing to meet environment standards, the same actions that maximize fundamental stock prices also benefits society. Discuss the benefits of maximization of stock price to the society, focusing on three groups of stakeholders: owners, consumers and employees. 3. The cost of capital is affected by a number of factors. Some are beyond the firm?s control, but others are influenced by its financing and investment policies. A firm can affect its cost of capital through its capital structure policy, dividend policy and investment policy. Discuss the three most important factors that are beyond a firm?s direct control. 4. Financial management is about to explain what managers can do to make their companies more valuable. Managers must understand how investors determine the values of stocks and bonds if they are to identify, evaluate and implement projects that meet or exceed investors expectations. However, value creation is impossible unless the company has a well articulated plan. Elaborate the three types of plan: a) Strategic plan b) Operating plan c) Financial plan. 5 Since the early 1990s, bonds have been assigned quality ratings that reflect their probability of going into default. The three major rating agencies are Moody?s Investors Service (Moody?s), Standard & Poor?s Corporation (S&P), and Fitch Investor Service. In Malaysia, it is done by Rating Agency Malaysia (RAM) and Malaysia Agency Rating Corporation (MARC). Bond ratings are based on both qualitative and quantitative factors. Discuss these factors in detail. 6 In a free economy, capital from providers with available funds is allocated through the price system to users that have a demand for funds. The interaction of the providers? supply and the users? demand determines the cost (or price) of money, which is the rate users pay to providers. For debt, we call this price the interest rate. For equity, we call this price the cost of equity. Discuss the four most fundamental factors affecting the cost of money. 7 Although all bonds have some common characteristics, they do not always have the same contractual features. For example, most corporate bonds have provisions for early repayment (call features), but these provisions can be quite different for different bonds. Explain the basic characteristics of bonds: a) Par value b) Coupon interest rate c) Maturity date d) Provisions to call or redeem bonds e) Sinking funds,please can the answers be detailed
Question 4
Problem 17-6 Costs of Financial Distress Steinberg Corporation and Dietrich Corporation are identical firms except that Dietrich is more levered. Both companies will remain in business for one more year. The companies' economists agree that the probability of the continuation of the current expansion is 85 percent for the next year, and the probability of a recession is 15 percent. If the expansion continues, each firm will generate earnings before interest and taxes (EBIT) of $2.51 million. If a recession occurs, each firm will generate earnings before interest and taxes (EBIT) of $910,000. Steinberg's debt obligation requires the firm to pay $811,000 at the end of the year. Dietrich's debt obligation requires the firm to pay $1.27 million at the end of the year. Neither firm pays taxes. Assume a discount rate of 12 percent. Requirement 1: What is the value today of Steinberg's debt and equity? What about that for Dietrich's? (Do not include the dollar signs ($). Enter your answers in dollars, not millions of dollars. (e.g., 1,234,567)) Debt Equity Steinberg $ $ Dietrich $ $ ________________________________________ Requirement 2: Steinberg's CEO recently stated that Steinberg's value should be higher than Dietrich's because the firm has less debt and therefore less bankruptcy risk. Do you agree or disagree with this statement? Agree disagree
Question 5
I am going to cut and paste the assignment and then attach the template...hope this helps... Newbirth Coatings Company purchased waterproofing equipment on January 2, 2009, for $380,000. The equipment was expected to have a useful life of four years, or 8,000 operating hours, and a residual value of $36,000. The equipment was used for 3,000 hours during 2009, 2,500 hours in 2010, 1,400 hours in 2011, and 1,100 hours in 2012. Instructions Determine the amount of depreciation expense for the years ended December 31, 2009, 2010, 2011, and 2012, by (a) the straight-line method, (b) the units-of-production method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. The following columnar headings are suggested for recording the depreciation expense amounts: Depreciation Expense Straight- Units-of- Double-Declining- Line Production Balance Year Method Method Method PR 10-2A Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: a. On December 31, the company determined that $20,000,000 of goodwill was impaired. b. Governmental and legal costs of $675,000 were incurred on June 30 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for onehalf year. c. Timber rights on a tract of land were purchased for $1,665,000 on February 16. The stand of timber is estimated at 9,000,000 board feet. During the current year, 2,400,000 board feet of timber were cut and sold. Instructions 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. 2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item. PR 10-6A
