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?

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?

From the earlier exercise in the previous chapter, 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 study the wax by racing on the course 8 times. His 8 race times were 56.3, 65.9, 50.5, 52.4, 46.5, 57.8, 52.2, and 43.2 seconds. Should he buy the wax? Explain by performing an appropriate hypothesis test.

The accountant for Bellows Corp. was preparing a bank reconciliation as of April 30. The following items were identified:

Particulars	Amount
Bellows’ book balance	$28,750
Outstanding checks	900
Interest earned on checking account	75
Customer’s NSF check returned by the bank	380

In addition, Bellows made an error in recording a customer’s check; the amount was recorded in cash receipts as$370; the bank recorded the amount correctly as $730.

Required:

What amount will Bellows report as its adjusted cash balance at April 30, 2019?

Use the given data to find the minimum sample size required to estimate a population proportion or percentage. An investor is considering funding of a new video game. She wants to know the worldwide percentage of people who play video games, so a survey is being planned. How many people must be surveyed in order to be 90% confident that the estimated percentage is within three percentage points of the true population percentage? Assume that about 16% of people play video games (based on a report by Spil Games).

The cost of tuition at public universities has been steadily increasing for many years. One Midwestern university pledged to keep the tuition constant for 4 years for all students who finished in the top 3% of their class. One such student who liked research planned to enroll at the university and continue there until earning a PhD degree (a total time of 9 years). If the tuition for the first 4 years will be $7200 per year and it increases by 5% per year for the next 5 years, what is the present worth of the tuition cost at an interest rate of 8% per year?

Here's a multiple regression model for the variables considered previously: Dependent variable is: Receipts(\$M)$R$squared$=99.9 \%      R$squared (adjusted)$=99.9 \%s=0.0931$with 74 degrees of freedom | Source | Sum of Squares df | Mean Square | F-ratio | | | :--- | :---: | ---: | :---: | :---: | | Regression | 484.789 | 3 | 161.596 | 18634 | | Resfdual | 0.641736 | 74 | 0.008672 | | | Variable | Coeff | SE(Coeff) | t-ratio | P-value | | Intercept | -18.320 | 0.3127 | -58.6 | < 0.0001 | | Paid | | | | | | Attendance | 0.076 | 0.0006 | 126.7 | < 0.0001 | | # Shows | 0.0070 | 0.0044 | 1.59 | 0.116 | | Average | | | | | | Ticket Price | 0.24 | 0.0039 | 61.5 | < 0.0001 | Consider the coefficient of \# Shows in the regression table. a) State the standard null and alternative hypotheses for the true coefficient of \# Shows. b) Test the null hypothesis (at$\alpha=0.05$ ) and state your conclusion. c) A Broadway investor challenges your analysis. He points out that the scatterplot of Receipts vs. \# Shows used previously shows a strong linear relationship and claims that your result in part can't be correct. Explain to him why this is not a contradiction

K.W. is an 18-year-old woman who comes to Planned Parenthood for a pregnancy test because a condom broke during intercourse the night before. Her last menstrual period (LMP) was 13 days ago and was normal. She always has a monthly menstrual cycle. She is extremely nervous about pregnancy because she is beginning college on a scholarship soon. She states there have been no other acts of unprotected intercourse since her LMP and declines a gynecologic examination.
K.W. says, "Are you talking about having an abortion?" Formulate a response.

In $1992$, the U.S. Supreme Court decided the case of Planned Parenthood of Southeastern Pennsylvania v. Casey. As a result of that case, a woman continues to have a right to an abortion before the fetus is viable (before the fetus could live independently outside the mother's womb). After fetal viability, however, states have increased power to restrict the availability of abortions. The state maintains the power to restrict some abortions because of its legitimate interests in protecting the health of the woman and the potential life of the fetus.

States can pass some laws that regulate abortion, but these laws cannot place a "substantial obstacle in the path of a woman seeking an abortion," the Court said in the Casey decision. However, the Court declined to define specifically what constitutes a substantial obstacle. This decision held that regulations were constitutional if they did not place an "undue burden" on obtaining an abortion. For example, the decision allowed a regulation that requires a woman to give "informed consent" at least $24$ hours before the planned abortion takes place.

Which of the following laws, if any, would place an undue burden on the right to obtain an abortion? Give reasons for each answer.

A state law requires a $24$-hour waiting period between the time of the woman's decision to have the abortion and the actual procedure.

Windhoek Mines, Ltd., of Namibia, is contemplating the purchase of equipment to exploit a mineral deposit on land to which the company has mineral rights. An engineering and cost analysis has been made, and it is expected that the following cash flows would be associated with opening and operating a mine in the area:

$$\begin{array}{ lr} \\ \text{Cost of new equipment and timbers} &&& \text{\$275,000} \\ \text{Working capital required} &&& \hspace{0pt}\text{\$100,000} \\ \text{Annual net cash receipts} &&& \hspace{5pt} \text{\$120,000*} \\ \text{Cost to construct new roads in three years} &&& \hspace{5pt} \text{\$40,000} \\ \text{Salvage value of equipment in four years} &&& \hspace{5pt} \text{\$65,000} \\ \text{*Receipts from sales of ore, less out-of-pocket costs for salaries, utilities,} \\ \quad \text{insurance, and so forth.} \end{array}$$

The mineral deposit would be exhausted after four years of mining. At that point, the working capital would be released for reinvestment elsewhere. The company's required rate of return is $20%.

Required:

What is the net present value of the proposed mining project? Should the project be accepted? Explain.

Lasting Summer Inc. has $2,510 in the October 1 balance of the accounts receivable accounts consisting of$1,060 from Champion Co. and $1,450 from Wayfarer Co. Transactions related to revenue and cash receipts completed by Lasting Summer Inc. during the month of October 2016 are as follow:

$$\begin{array}{ll} \text{Oct.}\hspace{5pt}3.\hspace{3pt}\text{Issued Invoce No. 622 for services provided to Palace Corp., \$2,829.}\\ \hspace{24pt}5.\hspace{3pt}\text{Received cash from Champion Co., on account, for \$1,060.}\\ \hspace{24pt}8.\hspace{3pt}\text{Issued Invoice No. 623 for services provided to Sunny Style Inc., \$1,450}\\ \hspace{24pt}12.\hspace{3pt}\text{Received cash from Wayfarer Co., on account, for \$1,450.}\\ \hspace{24pt}18. \hspace{3pt}\text{Issued Invoice No. 624 for services provided to Amex Services Inc., \$2,970.}\\ \hspace{24pt}23.\hspace{3pt}\text{Issued Invoce No. 622 for services provided to Palace Corp., \$2,829.}\\ \hspace{24pt}28.\hspace{3pt}\text{Issued Invoce No. 625 to Wayfarer Co., on account , for \$900}\\ \hspace{24pt}30.\hspace{3pt}\text{Received cash from Rogers Co. for services provided, \$120.}\\ \end{array}$$

a. Prepare a single-column revenue journal and a cash receipts journal to record these transactions. Use the following column headings for the cash receipts journals: Fees Earned Cr., and Cash Dr. Place a check (/) in the Post. Ref. column to indicate when the accounts receivable subsidiary ledger should be posted.

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?

Transactions related to revenue and cash receipts completed by Sycamore Inc. during the month of October 2014 are as follows:

Oct. 2.   Issued Invoice No. 512 to Albany Co., $670.        4.   Received cash from CMI Inc., on account, for$215.        8.   Issued Invoice No. 513 to Gabriel Co., $275.      12.   Issued Invoice No. 514 to Ells Inc.,$840.      19.   Received cash from Ells Inc., on account, $475.      22.   Issued Invoice No. 515 to Electronic Central Inc.,$150.      27.   Received cash from Marshall Inc. for services provided, $145.      29.   Received cash from Albany Co. for invoice of October 2.      31.   Received cash from McCleary Co. for services provided,$90.

Prepare a single-column revenue journal and a cash receipts journal to record these transactions. Use the following column headings for the cash receipts journal: Fees Earned Cr., Accounts Receivable Cr., and Cash Dr. Place a check mark in the Post. Ref. column to indicate when the accounts receivable subsidiary ledger should be posted.

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.