Volker Inc. issued $2,500,000 of convertible 10-year bonds

Volker Inc. issued $2,500,000 of convertible 10-year bonds on July 1, 2012. The bonds provide for 12% interest payable semiannually on Jan 1 and July 1. The discount in connection with the issue was $54,000, which is being amortized monthly on a straight-line basis.

The bonds are convertible after one year into 8 shares of Volker Inc.’s $100 par value common stock for each $1000 of bonds.

On August 1, 2013, $250,000 of bonds were turned in for conversion into common stock. Interest has been accrued and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash.

Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (round to the nearest dollar)
A. August 1, 2013 (assume book value method is used
B. August 31, 2013
C. December 31, 2013, including closing entries for end-of-year

The attachment the prof gave us also has tables ot fill in.
1. Unamortized discount on bonds payable and it starts with Amount to be amortized over 120 months
2. Amortization of bond discount charged to bond interest expense in 2013 would be as follows
3. Interest on Bonds:
4.Interest for 2013 would be as follows:
5.Total interest

Veronica is a life insurance agent and she meets with

Veronica is a life insurance agent and she meets with a prospective client, Jason. After the necessary due diligence. Veronica recommends that Jason purchase a participating whole life policy, citing the potential benefits of policy dividends. When Jason asks Veronica about the dividend payment options, which of the following is CORRECT response that Veronica should provide Jason?

A. Instead of receiving the dividends., Jason can apply the dividends towards his premiums, thereby reducing his premiums accordingly.

B. The dividends can be invested in a separate accumulation account and both the dividends and the growth will be non-taxable and can be withdrawn at any time.

C. Jason can increase the amount of insurance by using the dividends to buy paid up additions provided that he has medical evidence of insurability

D. Jason can elect to receive the dividends, which are taxed more favourably than ordinary income, and spend or invest the money however he chooses.

Financial and security markets are providing a valuable

Financial and security markets are providing a valuable platform to both demanders and suppliers of funds. Meanwhile, these markets are known for providing the trading facilities for stocks, bonds, and shares. However, in country like Pakistan, financial and security markets are very much uneven and hard to predict. Various risk factors and market forces are determining the trends in financial markets of Pakistan. Suppose that your teacher of Introduction to Business is taking your class to visit Karachi Stock Exchange (KSE). However, before this visit you are assigned with the following tasks to answer in black and white. 

Types and Functions of  financial and security markets in Pakistan

Types of financial securities as traded in these markets.  

Regulatory and governing bodies for financial and security markets in Pakistan

Key risk factors affecting the overall structure of financial and security markets in Pakistan

Use revenue management technique to help MEAirline to

Use revenue management technique to help ME Airline to deciding which price set option is better for its flight number 331 from Beruit to Washingtion DC

 

One Price Set for flight seat pricing

ME  Flight number 331 ( from Beruit to DC) has

400

Seats in Economy Class

Has one price per seat

(customer accept to pay $1000 per seat)

 $1,000

per seat

the variable cost of seat being occupied is   (inculde meal,…etc)

 $50

per seat (person)

Expecting number of seats to be sold

( with $1000 price)

300

seat per flight

 

 

Three Price Sets for flight seat pricing

1st price per seat

( customer will book the flight 3 month before departure day)

 $600

 per seat

Expecting number of seats to be sold

( with $600 price)

150

seats

2nd price per seat

( customer book the flight between 1 to 3 months before departure day

 $800

per seat

Expecting number of seats to be sold

( with $800 price)

150

seats

3rd price per seat

( customer book the flight less than 1  month before departure day)

$1200

per seat

 Expecting number of seats to be sold

( with $1200 price)

100

seats

 

Answer

Net Sales for one price set

 

 

Net Sales for three price sets

 

 

Explaining the methods is highly appreciated

Use financial calculator Texas Inst BA II Plus You are

Use financial calculator Texas Inst BA II Plus

You are doing some long-range retirement planning. On the day you retire (23 years from now) you want to be able to withdraw $200,000. Then, you want to withdraw the following amounts at the end of each year after that (during your retirement period).

Years 1-4 $160,000

Years 5-9 $175,000

Years 10-15 $165,000

Years 16-26 $145,000

At the end of the 26th year in retirement, you’d like to have $500,000 remaining in your retirement account available for withdraw. During your retirement years, you anticipate earning a 4.5% rate of return.

You currently have $275,000 that you are going to use to start your retirement savings today. In addition, you plan to save $700 at the end of each month for the next 8 years. At that point (8 years from today) you will add another $150,000 to your retirement fund. Then, over the remaining 15 years, how much must you save at the end of each month to reach your goal if you earn 8.9% as a rate of return during the first 8 years and 7.6% over the final 15 years in which you are saving for retirement?

You need to design a questionnaire about Using Social Media

You need to design a questionnaire about Using Social Media in Public Relations Management, how it impacts the business successful and service development, considering the business of Emirates Flights (your answer should be submitted as MS. Word file)

Please design the formal aspects of the questionnaire according to the following rules:

The questionnaire contains the title of the research

The questionnaire contains the research objectives

The questionnaire contains four categories and that the total of the questions should not be less than ten questions.

A paragraph clarifying the importance of the respondents’ answers and thanking them

A paragraph clarifying the confidentiality of the respondents’ answers and using them for scientific purposes only

The name of the researcher and the authority to which he/she belongs

Numbering questions and questionnaire pages

Consider the order of questions from general to private

Stay away from branching questions

Task#

Analysis the questionnaire outcomes you’ve did in task#1 by using Excel sheet, this can be done by generating an analysis of correlations and regressions that shows the business performance as well as Scatter chart for the data of the questionnaire.

The simplified balance sheet for the Dutch manufacturer

The simplified balance sheet for the Dutch manufacturer Rensselaer Felt (figures in thousands) is as follows: 

Cash and marketable Short-term debt 2,300 76,400 securities Accounts payable Accounts receivable 120,800 62,800 € 139,200 Inventory Current liabilities 125,800 Current assets € 248,900 Property, plant, and equipment Deferred taxes Long-term debt 212,800 209,400 45,800 88,200 Shareholders’ equity Other assets 247,100 € 595,700 € 595,700 Total Total 

The debt has an interest rate of 4.00% (short term) and 6.00% (long term). The expected rate of return on the company’s shares is 13.00%. There are 7.54 million shares outstanding, and the shares are trading at €54. The tax rate is 25%. Assume the company issues €50 million in new equity and uses the proceeds to retire long-term debt. Also assume the company’s borrowing rates are unchanged and the short-term debt is permanent. Use the three-step procedure. 

a. Calculate the cost of equity after the capital restructuring. 

b. Calculate the WACC after the capital restructuring.

 

We are given the following information about a Company X

We are given the following information about a Company X

Debt-Value Ratio – ……………15%

Revenue – ………………$90,000

Cost – ……………………$50,0000

Cost of Debt – ……………5%

Cost of Equity – ……….25%

Shares Outstanding – ..5,000

Corporate Tax – ……..30%

(a) What is the firm’s value?

(b) What is its stock price?

(c) Company Y is a leveraged buyout firm. It believes that Company X’s leverage is too low. It thinks that Company X’s firm value can increase with higher debt-to-value ratio and believes Company X’s optimal debt-to-value ratio is 15%. Company X’s cost of debt at this 15% debt-to-value ratio is 9%. Company Y is considering buying all of Company X’s shares and increase Company X’s leverage to the optimal 15% level. Proceeds from debt issuance will be given out to equity holders as special dividend. What is the maximum premium Company Y is willing to pay for Company X’s shares?

Water Your World (WYW) is a medium-sized, private

Water Your World (WYW) is a medium-sized, private manufacturing company located near Harrow, Ontario. WYW has a June 30 year end. The chief financial officer (CFO) felt that WYW has outgrown its previous audit firm Jacob and Jacob and asked your firm, Bartle & James (B&J), to perform the annual audit.

It is now August 2, 2020. B&J has performed the necessary client acceptance procedures and is currently working on the year-end audit of WYW. However, Jason Bourne, the senior on the engagement has met his life partner and suddenly left the country to be with her in Bali. He is not available and will be unable to complete the file. You, Justin Case, CPA, have been asked to take over the senior role on the audit. The following information has been provided to help you familiarize yourself with the client:

(Exhibit I) information on WYW, (Exhibit II) a draft income statement prepared by management in accordance with accounting standards for private enterprises (ASPE), (Exhibit III) notes from your firm’s meetings with management and the board chair, and (Exhibit IV) excerpts from the current-year audit file.

Required:

The following week, the audit partner on the file calls you into her office and says, “Now that you’ve had the audit file for a week, can you let me know what financial reporting issues you have found? I want to know if there are any updates needed to our approach in particular our audit plan, any materiality considerations, and what audit procedures are outstanding. In addition, the board chair is wondering what our management letter is likely to contain, what internal control improvements can be made, and if there are any suggestions to the board for improving their oversight.”

Prepare the memo to the audit partner in proper memo format.

Exhibit I

Information on Water Your World

WYW manufactures water irrigation units for the agricultural industry. The units include sprayers and fans to distribute the water equally. The units are very popular with the traditional greenhouse operators as well as the emerging cannabis growers. The technology was invented by Gene Yus, the current chief executive officer (CEO). WYW holds a number of patents and is protective of its proprietary technology. Seed capital was generated from the sale of shares to Gene’s friends and family members, to employees, and through bank financing.

As the company grew, Gene recognized the need for a CFO, particularly because he is more involved with research and development and manufacturing operations. It was difficult to recruit someone to come to Harrow, which is so small it lacks a Tim Horton’s, so Gene decided to recruit someone with the right skill set, regardless of location. Two years ago, WYW hired Dan Dadealer, who works out of Tilbury, and spends about one week per month in Harrow, Leamington and Kingsville. The bookkeeper, Rita Richard, works in Harrow and reports to Dan. Even though Dan was hired as the CFO, he really enjoys sales and marketing. Dan has been instrumental in WYW’s rapid sales growth because he is willing to travel extensively throughout North America to meet potential customers. With Dan involved in sales, Gene says he considers himself more of a chief operating officer (COO) than a CEO. He completely trusts Dan, and defers most decisions, other than those related to manufacturing, to Dan.

A venture capital firm, VC Ventures (VC), obtained a 20% interest in WYW three years ago. Gene owns 40% of the outstanding common shares of the company, while Dan holds 15%. The remaining shares are held by Gene’s friends and family members, and by WYW employees. Two directors of VC sit on WYW’s board, along with Gene, Dan, and one other member of WYW’s management. The board also functions as the audit committee.

VC and WYW’s management have been actively pursuing a buyer for the company. In the past year, WYW entered into negotiations with one company; however, the deal was not completed and is no longer being pursued. A second potential buyer has now been identified and has started some preliminary due diligence, and there has been significant interest from other potential parties. The current year’s earnings are expected to be a key part of the determination of the purchase price.

Exhibit II

Draft income statement prepared by management

Water Your World

Income statement

For the year ended June 30, 2020

(unaudited)

Sales $ 16,973,450

Cost of sales 7,012,495

Gross profit 9,960,955

Administrative expenses 6,123,560

Selling and marketing expenses 487,988

Interest on long-term debt 624,333

Amortization of fixed assets 369,421

Amortization of intangibles 48,709

Earnings before income taxes 2,306,944

Income taxes 647,065

Net earnings $ 1,659,879

Exhibit III

Notes from meetings with management and board chair

Bookkeeper: Rita Richard — Rita has been co-operative, but Dan has asked that she checks with him before giving us information. Dan is often on the road, so this correspondence can be slow. Rita mentioned that she had taken a course at Odette called

“implementing effective internal controls” and had been keen to make suggestions from the course. When Rita had suggested the changes to Dan, he said “why fix something that isn’t broken,” so no changes were made. Rita mentioned that one of the vendor invoices had the same address as Dan’s, but Dan said that it must have just been a mistake and he would take care of it.

Board chair: David Webb of VC — The board has not met regularly as a group for most of the past year because Dan has been unavailable. David has also not received the monthly reports promised to him by management. David finds Dan difficult to contact and instead has asked the audit partner to update him weekly on the audit status. He thinks it will be easier than trying to get an explanation from Dan.

CEO: Gene Yus — Gene is proud of the products WYW produces. He prefers dealing with product development and is grateful that, except for manufacturing, Dan has taken over almost everything, including sales. It also helps that Dan is very reliable and never takes vacation. With Dan on the road a lot, they decided that it made more sense to pay vendors electronically, instead of dealing with cheques, so that Dan could make the payments himself remotely. WYW is not only selling more products, but its gross margin, which was around 50%, has increased. With these results, Gene is happy to continue to focus on the products and to let Dan deal with everything else.

CFO: Dan Dadealer — Dan has indicated that he has achieved increased sales due in part to the new Early Order Program, which provides a 15% discount to buyers who commit to purchases in advance. Any purchase orders placed by June 15 and accompanied by a 10% deposit were eligible for the program, with delivery of the units to occur within four months. The units are kept in inventory until they are delivered. The program was highly successful, resulting in total sales of $500,000 being recognized. In addition, this year, WYW started selling demonstration units (demos) to customers. The customer pays for the demo up front but has the option to return it within six months if the customer is not satisfied with its performance. $400,000 of demos were sold and delivered to customers fairly evenly throughout the year. Based on his estimate of returns of regular units over the past two years, Dan has recognized 80% of the items as sales. Dan was not happy to hear that the board chair was contacting us directly. He has asked that we deal directly with him and save the reporting to the board for the final audit meeting.

Exhibit IV

Excerpts from the current-year audit file

Board minutes — No board minutes were available for review because the board met only once during the year, and no secretary was appointed to take the minutes.

Materiality — Preliminary materiality was calculated using 5% of net earnings before tax and came to $115,000 (rounded).

Approach — No approach had been documented in the audit file, but our firm likes to use tests of controls wherever possible to cut down on the substantive testing required.

Accounts receivable confirmations — The sample size was calculated based on a preliminary materiality. A number of confirmations received were initially returned with

discrepancies. One customer indicated that four of the units confirmed, worth approximately $25,000 each, were demos and would be returned. For other outstanding confirmations, Dan followed up with those customers, and the confirmations were received by him shortly thereafter. He also dealt with confirmation discrepancies related to the Early Order Program, as customers seemed unsure whether or not to include these purchases in the amounts confirmed. Accounts receivable includes approximately $450,000 related to the Early Order Program.

Inventory count — A junior audit team member attended the inventory count in Harrow on June 30, 2020. During the count, the staff noted four returned demo units on hand.

Journal entry review — We asked Dan for a listing of the general ledger journal entries. He has provided us with a sample of journal entries that he has selected from the first half of the fiscal year. No work has been performed to date on them.

Merger and acquisition costs — WYW has capitalized $350,000 of costs related to legal and other expenses for the first offer to purchase. While the first offer is no longer active, much of the work done on the first offer can be leveraged for future offers. Most of the costs incurred related to preparing the company for purchase, thus greatly improving its marketability.

Expense testing — The disbursements selected for testing included a number of Dan’s expense reports. The expense reports had not been approved by anyone other than Dan. It was also noted that there were a few errors, as it appeared that Dan often forgot to deduct his wife’s airfare from the attached receipt. The errors appeared insignificant, so no further investigation was noted.

Votex Inc. closes its books on December 31 of each

Votex Inc. closes its books on December 31 of each year. On January 1, 2019, the following information on the CCA classes of the business was contained in its records:

Class 1 The buildings in Class 1 were acquired in January, 2008 at a cost of $734,000, with $84,000 of this total being allocated to land. The UCC balance on January 1, 2019 was $562,154.

Class 8 The equipment in Class 8 was acquired in January, 2013 at a cost of $78,500. The UCC balance on January 1, 2019 was $23,520.

Class 10 The vehicles in Class 10 were acquired in June, 2016 at a total cost of $82,000. The UCC balance on January 1, 2019 was $34,153.

During the 2019 fiscal year, the following transactions occurred:

Sale Of Buildings – A similar decision is made with respect to the buildings. They are sold for $825,000 and replaced with leased premises. Of the $825,000 received, $100,000 is for the land on which the buildings are situated. The lease term is for 4 years with no options for renewal. A total of $81,000 is spent on leasehold improvements to make the buildings more suitable for the business.

Sale Of Equipment – As the result of an extensive analysis, it is decided that it would be better to sell the existing equipment and to replace it with improved equipment that will be leased. The old equipment is sold for $32,500.

Sale Of Vehicles – The Class 10 vehicles were sold during the current year and replaced with leased vehicles. The sale proceeds totaled $27,500 with no vehicle being sold for more than its cost.

Sale Of Goodwill – In order to further streamline its operations, Votex Inc. sells off a portion of its operations to another company. No depreciable or tangible capital assets were disposed of in this transaction. However, an amount of $225,000 was received for the goodwill of this portion of the business.

Required: For the taxation year ending December 31, 2019 calculate the maximum CCA that can be deducted by Votex Inc. for each CCA class.   In addition, calculate the January 1, 2020 UCC balances and indicate any other tax consequences that would result from the described transactions.