Question 1
1. The following defined-benefit pension data of Doreen Corp. apply to year 2008. Projected benefit obligation, January 1, 2008 (before amendment) - $560,000 Plan assets, January 1,2008 - 546,200 Pension liability - 13,800 On January 1, 2008, Doreen Corp. through plan amendment, grants prior service benefits having a present value of settlement rate 100,000 Settlement rate - 9% Annual pension service-cost - 58,000 Contribution (funding) ? 55,000 Actual return on plan assets - 52,280 Benefits paid to retirees - 40,000 Prior service cost of amortization for 2008 - 17,000 For 2008, prepare a pension worksheet for Doreen Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts. Doreen Corp. Pension Worksheet?2008 General Journal Entries Memo Record Items Annual Pension Expense Cash OCI?Prior Service Cost Pension Asset/ Liability Projected Benefit Obligation Plan Assets Balance, Dec. 31, 2007 Prior service cost Balance, Jan. 1, 2008 Service cost Interest cost Actual return Amortization of PSC Contributions Benefits Journal entry for 2008 Accumulated OCI, Dec. 31, 2007 Balance, Dec. 31, 2008 2. Freeman and Lueke, attorneys-at-law, provided legal representation to Murphy Equipment Inc. in a product liability suit. Twenty partner hours and 65 associate hours were worked in defending the company. The cost of each partner hour is $325, which includes partner wages plus overhead, based on direct labor cost. The cost of each associate hour is $145, which also includes wages and overhead. Other costs that can be directly identified with the job are travel ($2,800) and telephone/fax/copying charges ($1,740). The date Murphy contracted with Freeman and Lueke was May 8, 2013, and the defense was successfully completed on December 21, 2013. The engagement number is 525. Required: Prepare a job order cost sheet, in good form, for Murphy Equipment Inc. 3. Hornick and Sena, the systems consultants in P9-3, budgeted overhead and other expenses as follows for the year ended December 31, 2013: Overhead: Depreciation?equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?? $ 60,000 Depreciation?building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?.135,000 Fringe benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385,000 Photocopying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000 Secretarial support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,000 Telephone/fax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,000 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193,000 Other direct expenses: Travel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $123,000 Meals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,000 Required: 1. Prepare an overhead budget. 2. Prepare an other expenses budget. 4. The partners of Franklin and Silva, a security services firm, decide to implement an activity based costing system. They identify the following three cost pools and budgeted amounts for each for the coming year: fringe benefits, $400,000; technology support, $20,000; and litigation support, $300,000. It is determined that the best cost driver for fringe benefits is professional labor dollars ($2,000,000); technology support is partner labor hours (2,000); and research support is professional labor hours (25,000). Required: Compute the budgeted overhead rate for each of the three cost pools. 5. Swoosh Athletics manufactures sporting goods that are then sold to retailers. It is a very competitive industry, where quality and price are important to gain space on retailers' shelves. Swoosh's strategy is to produce defect free athletic equipment that can be sold at moderate prices. Required: Prepare a balanced scorecard, without numbers, for Swoosh Athletics that will help them to achieve their strategy and to maximize long-term shareholder value. 6. Using the information for Hornick and Sena, the systems consultants in P9-3 and P9-4, prepare a budgeted income statement for the year ended December 31, 2013. In p9-3 Hornick and Sena, partners in a systems consulting firm, budgeted the following professional labor hours for the year ended December 31, 2013: Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000 Staff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000 Partners have a billing rate of $225 per hour and actually earn $110 per hour. Associates bill out at $140 per hour and earn $85 per hour. Staff bill out at a rate of $75 per hour and earn $35 per hour. In P9-4
Question 2
#6 Ethics and Training Read the ?Thinking Ethically? and answer the three questions at the end of this section in a 2 ? 3 page paper. In addition to the three questions in the text, answer the following question: Describe and evaluate the usefulness of two traditional training methods that could be used to foster ethical behavior. THINKING ETHICALLY MENTORING TO DEVELOP ETHICAL EMPLOYEES According to business professor Linda Trevi?o, ethical behavior in organizations depends less on formal training programs than on such management practices as ethical leadership. Perhaps most important is creating an environment in which employees believe people are treated fairly. Managers can foster such an environment by responding positively when employees raise ethical and other concerns. They can also build ethical leadership by rewarding ethical behavior in managers and by placing ethical managers in positions where they can mentor others. In recent years, mentoring has become especially critical in companies? financial divisions. Several high profile scandals involving misleading financial reports have brought greater regulation and public scrutiny, especially aimed at the chief financial officer (CFO) and his or her staff. Whereas CFOs were once valued primarily for their quantitative skills, today they need a broader range of ethical skills. In particular, they must be role models for ethical behavior, mentoring the organization?s other financial experts. With these greater demands, the average length of service for a CFO is now just 30 months. SOURCES: Linda Trevi?o, ?The Key Role of HR in Organizational Ethics,? Ethics Resource Center, 2007, www.ethics.org , accessed March 21, 2008; and Cynthia Jamison, ?Struggling to Survive,? Strategic Finance , April 2007, downloaded from General Reference Center Gold, http://find.galegroup.com Questions 1. In general, how might a senior executive mentor junior employees in behaving ethically? 2. If you were an employee who contributed to preparing an organization?s financial statements, would having a CFO who places a high priority on ethical behavior help you meet high ethical standards? Why or why not? 3. How might an HR department help to develop financial executives who are ethical leaders and mentors?
Question 3
Prepare a report, not to exceed four pages, on the following refunding problem: Complete Problem 20-5, "Bond Refunding Analysis" on page 822 in your textbook. The spreadsheet template that you would use to complete the problem looks like the one on page 811(example furnished) . Write a short memo after completing your calculations on whether the bond should be refunded and why. In addition, the report should indicate how these bond refunding steps could be applied to your chosen company. Include responses to the following questions in your report: 1. Should the company refund the issuance? Provide a substantive rationale as to why the company should or should not proceed with the refunding process. 2. What critical factors should management take into account as it contemplates the refunding decision? 3. Assess how these bond refunding steps could be applied to your chosen company. (20.5) Mullet technologies is considering whether or not to refund a $75 million, 12% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $5 million of floatation costs on the 12% bonds over the issue?s 30-year life. Mullet?s investment banks have indicated that the company could sell a new 25-year issue at an interest rate of 10% in today?s market. Neither they nor Mullet?s management anticipate that interest rates will fall below 10% any time soon, but there is a chance that rates will increase. A call premium of 12% would be required to retire the old bonds, and floatation costs on the new issue would amount to $5 million. Mullet?s marginal federal-plus-state tax is 40%. The new bonds would be issued I month before the old bonds are called, with the proceeds being invested in short-term government securities returning 6% annually during the interim period. A. Perform a complete bond refunding analysis. What is the bond refunding?s NPV? B. What factures would influence Mullet?s decision to refund now rather than later?
Question 4
ACCT567 Case Study II (Week 5) The City of Shipley maintains an Employee Retirement Fund; a single-employer, defined benefit plan that provides annuity and disability benefits. The fund is financed by a process that makes actuarially determined contributions from the city?s General Fund and by contributions that are made by the employees. The General Fund is handling the administration of the retirement fund and it does not have any administrative expenses. The Statement of Net Assets for the Employees? Retirement Fund as of July 1, 2011 is shown below: City of Shipley Employees Retirement Fund Statement of Net Assets As of July 1, 2011 Assets Cash $ 60,000 Accrued Interest Receivable 160,000 Investments, at fair value Bonds 5,500,000 Common Stock 1,600,000 Total Assets $ 7,320,000 Liabilities Accounts Payable and Accrued Expenses 430,000 Net Assets Held in Trust for Pension Benefits $ 6,890,000 The following transactions took place during the fiscal year 2012: 1. The interest receivable on investments was collected in cash. 2. Member contributions in the amount of $ 460,000 were received in cash, the city?s General Fund also contributed $ 700,000 in cash. 3. Annuity benefits of $ 780,000 and disability benefits of $ 200,000 were recorded as liabilities. 4. Accounts payable and accrued expenses in the amount of $ 820,000 were paid in cash. 5. Interest income of $ 320,000 and dividends in the amount of $60,000 were received in cash. 6. Bond Interest Income of $ 160,000 was accrued at the end of year. 7. Refunds of $ 150,000 were made in cash to terminated, non-vested participating employees. 8. Common stocks, which are carried at a fair value of $ 500,000, were sold for $472,000. The amount of the sales price of the stock plus an additional $ 360,000 was invested in stocks. 9. As of the end of the fiscal year, June 30, 2012, a determination has been made that the fair value of the stocks held by the pension plan had decreased by $ 60,000; the fair value of bonds had increased by $35,000. 10. Temporary accounts for the year were closed. Instructions: a. Record the transactions on the books of the Employees Retirement Fund. b. Prepare a Statement of Changes in Net Assets for the Employees Retirement Fund for the Year Ended June 30, 2012. c. Prepare a Statement of Net Assets for the Employees? Retirement Fund as of June 30, 2012. d. A city council member asked you the following question: ? What are some of the differences between a defined benefit plan and a defined contribution plan? What are some of the accounting issues that the city faces when accounting for defined benefit plans as compared to a defined contribution plan?,thank you
Question 5
As part of its overall plant modernization and cost reduction program, the management of Teweles Textile Mills has decided to install a new automated weaving loom. In the capital budgeting analysis of this equipment, the IRR of the project was found to be 20 percent versus a project required return of 12 percent. The loom has an invoice price of $250,000, including delivery and installation charges. The funds needed could be borrowed from the bank through a four-year amortized loan at 10 percent interest rate, with payments to be made at the end of each year. In the event that the loom is purchased, the manufacturer will contract and service it for a fee of $20,000 per year at the end of each year. The loom will be depreciated over four years using the straight line method, with a salvage value of $42,500. And Teweles's tax rate is 40 percent. Apilado Automation Inc., maker of the loom, has offered to lease the loom to Teweles for $70,000 upon delivery and installation (at t=0), plus four additional lease payments of $70,000 to be made at the ends of Years 1 through 4. The lease agreement includes maintenance and servicing. Teweles plans to build an entirely new plant in four years, so it has no interest in either leasing or owning the proposed loom for more than that period. (a). Should the loom be leased or purchased? Explain and show your work.,Thank you,Hi Rachel, I've never done this before so I don't know what I am supposed to do. Am I just waiting for the question to be approved?
