Four friends were comparing installment loans. They each planned to borrow $850. Adam Carter wanted to make one monthly payment of$900. Betsy Dunn preferred to make 900 monthly payments of $1 each. More realistically, Chris Evans decided to make 18 monthly payments of$50 each. Darcy Fogel chose to make 30 monthly payments of $30 each. To the nearest hundredth of a percent, find the APR for each. You can use the table or the formula for Chris and Darcy.

The accounting records of Michigan Fur Traders include these accounts:

$$\begin{matrix} \text{Cash} & \quad & \text{Accounts Receivable} & \quad & \text{Inventory}\\ \text{Dec 1 100,000} & \quad & \text{Dec 1 5,000} & \quad & \text{Dec 1 6,000}\\ \text{Receipts 526,000} & \text{Payments 438,000} & \text{Receipts 528,000} & \quad & \text{Purchase 451,000} & \text{Cost of Sales 448,000}\\ \text{Dec 31 188,000} & \quad & \text{Dec 31 7,000} & \quad & \text{Dec 31 9,000}\\ \text{Equipment} & \quad & \text{Accumulated Deprec.—Equipment} & \quad & \text{Accounts Payable }\\ \text{Dec 1 181,000} & \quad & \quad & \text{Dec 1 60,000} & \quad & \text{Dec 1 14,500}\\ \text{Acquisition 10,000} & \quad & \quad & \text{Depreciation 9,000} & \text{Payments 331,000} & \text{Purchases 451,000}\\ \text{Dec 31 191,000} & \quad & \quad & \text{Dec 31 69,000} & \quad & \text{Dec 31 134,500}\\ \text{Accrued Liabilities } & \quad & \text{Retained Earnings}\\ \quad & \text{Dec 1 19,000} & \text{Quarterly} & \text{Dec 1 67,000}\\ \text{Payments 29,000} & \text{Receipts 25,000} & \text{Dividend 19,000} & \text{Net Income 10,000}\\ \quad & \text{Dec 31 15,000} & \quad & \text{Dec 31 58,000}\\ \end{matrix}$$

Compute Michigan’s net cash provided by (used for) operating activities during December. Use the indirect method. Do you see any potential problems in Michigan’s cash flows from operations? How can you tell?

A sample of voters in a certain city was asked whether they planned to vote for the incumbent mayor in the next election. The following display presents a $99\%$ confidence interval for the population proportion that plan to vote for the incumbent mayor.

$$\begin{array}{|ccc|} \hline & \text{1-PropZInt} & \\ &(.41911, .73714)\\ &\begin{align*} \hat{p} &=.578125\\ n &= 64\\ \end{align*}\\ & \\ & \\ \hline \end{array}$$

$\textbf{a.}\hspace{10pt}$ Fill in the blanks. We are $\_\_\_\_\_\_\_\_\_\_\_\_\_$ confident that the population proportion is between $\_\_\_\_\_\_\_\_\_\_\_\_\_$ and $\_\_\_\_\_\_\_\_\_\_\_\_\_$.

$\textbf{b.}\hspace{10pt}$ Use the information in the display to construct a $95\%$ confidence interval for $p$.

A series of titrations of lactic acid, $\mathrm{CH}_3 \mathrm{CH}(\mathrm{OH}) \mathrm{COOH}$ $\left(\mathrm{p} K_{\mathrm{a}}=3.86\right)$ is planned. About $1.00 \mathrm{mmol}$ of the acid will be titrated with $\mathrm{NaOH}(\mathrm{aq})$ to a final volume of about $100 \mathrm{~mL}$ at the equivalence point.
(a)To assist in locating the equivalence point in the titration, a buffer solution is to be prepared to have the same $\mathrm{pH}$ as that at the equivalence point. A few drops of the indicator in this buffer will produce the color to be matched in the titrations.

Bjork Larsen was trying to decide whether to use a new racing wax for cross-country skis. He decided that the wax would be worth the price if he could average less than 55 seconds on a course he knew well, so he planned to test the wax by racing on the course 8 times. Suppose that he eventually decides not to buy the wax, but it really would lower his average time to below 55 seconds. What kind of error would he have made?

On June 30, 2020, your client, Ferry Company, was granted two patents covering plastic cartons that it had been producing and marketing profit- ably for the past 3 years. One patent covers the manufacturing process, and the other covers the related products.

Ferry executives tell you that these patents represent the most significant breakthrough in the industry in the past 30 years. The products have been marketed under the registered trademarks Everlight, Duratainer. and Sealrite. Licenses under the patents have already been granted by your client to other manufacturers in the United States and abroad, and are producing substantial royalties.

On July 1, Ferry commenced patent infringement actions against several companies whose names you recognize as those of substantial and prominent competitors. Ferry's management is optimistic that these suits will result in a permanent injunction against the manufacture and sale of the infringing products as well as collection of damages for loss of profits caused by the alleged infringement.

The financial vice president has suggested that the patents be recorded at the discounted value of expected net royalty receipts.

Instructions

a. What is the meaning of "discounted value of expected net receipts"? Explain.

b. How would such a value be calculated for not myalty receipts?

c. What basis of valuation for Ferry's patents would be generally accepted in accounting? Give supporting reasons for this basis.

d. Assuming no practical problems of implementation and ignoring generally accepted accounting principles, what is the preferable basis of valuation for patents? Explain.

e. What would be the preferable theoretical basis of amortization? Explain.

f. What recognition, if any, should be made of the infringement litigation in the financial statements for the year ending September 30, 2020? Discuss.

This problem continues the Daniels Consulting situation from Problem P20-43 of Chapter 20. Assume Daniels Consulting began January with $12,000 cash. Management forecasts that cash receipts from credit customers will be$52,000 in January and $55,000 in February. Projected cash payments include equipment purchases ($16,000 in January and $40,400 in February) and selling and administrative expenses ($6,000 each month). Daniels's bank requires a $23,000 minimum balance in the firm's checking account. At the end of any month when the account balance falls below$23,000, the bank automatically extends credit to the furn in multiples of $5,000. Daniels borrows as little as possible and pays back loans each month in$1 ,000 increments, plus 12% interest on the entire unpaid principal. The first payment occurs one month after the loan. Requirements

1. Prepare Daniels Consulting's cash budget for January and February 2018.
2. How much cash will Daniels borrow in February if cash receipts from customers that month total $30,000 instead of$55,000?

Hannah Thatcher, a longtime employee of a local shoe store, is responsible for maintaining the company’s cash records and for opening the daily mail, through which the company receives about 25% of its daily cash receipts. Virtually all cash received by mail is in the form of checks made payable to the company. Thatcher is also responsible for preparing deposits of currency and checks for the bank at the end of each day.

Required:

What internal control procedures would you recommend to prevent this theft?

The partners share equally in all changes in equity. For each situation, prepare the appropriate journal entries to admit a new partner on May 1 of the current year. A cash receipts journal and a general journal are provided in the Working Papers.

Churna Knox and Mack Daniels each have equity of $36,000.00. Each partner agrees to sell$12,000.00 in equity to Paola Diaz and to give her a one-third share of ownership. Paola is to pay the money directly to the two original partners. M52.

Based on the information given in the previous exercise, those who responded that they planned to buy something were asked what they intended to buy. Here is a list of their responses:

1. Home improvement project
2. Purchase appliances
3. Purchase automobiles
4. Purchase clothing
5. Purchase electronics
6. Purchase furniture
7. Purchase gas
8. Spa or salon time
9. Purchase groceries
10. Purchase vacation
11. Impulse purchase
12. Down payment on house

Graphically summarize these data.

This problem continues the Piedmont Computer Company situation from Chapter 21. Assume Piedmont Computer began January with $15,000 cash. Management forecasts that cash receipts from credit customers will be$48,000 in January and $51,000 in February. Projected cash payments include equipment purchases ($20,000 in January and $41,000 in February) and selling and administrative expenses ($2,000 each month).

Piedmont Computer Company's bank requires a $26,000 minimum balance in the firm's checking account. At the end of any month when the account balance falls below$26,000, the bank automatically extends credit to the firm in multiples of $5,000. Piedmont Computer Company borrows as little as possible and pays back loans each month in$1,000 increments, plus 12% interest on the entire unpaid principal. The first payment occurs one month after the loan.

Requirements

1. Prepare Piedmont Computer Company's cash budget for January and February 2020.
2. How much cash will Piedmont Computer Company borrow in February if cash receipts from customers that month total $41,000 instead of$51,000?

The following information provides the amount of cost incurred in August for the cost items indicated. During August, 8,000 units of the firm’s single product were manufactured.

Required: a. How much cost would you expect to be incurred for each of these items during September when 9,600 units of the product are planned for production?

Two types of tickets are to be sold for a concert. One type costs $30 per ticket and the other type costs$40 per ticket. The promoter of the concert must sell at least 15,000 tickets, including at least 8000 of the $30 tickets and at least 4000 of the$40 tickets. Moreover, the gross receipts must total at least $500,000 in order for the concert to be held. (a) Find a system of inequalities describing the different numbers of tickets that must be sold, and (b) sketch the graph of the system.

Even Better Products has come out with a new and improved product. As a result, the firm projects an ROE of 20%, and it will maintain a plowback ratio of .30. Its earnings this year will be $2 per share. Investors expect a 12% rate of return on the stock.

a. At what price and P/E ratio would you expect the firm to sell?

b. What is the present value of growth opportunities?

c. What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvest only 20% of its earnings?