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?

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 0.30. Its earnings this year will be 2 dollars 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?

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 using a confidence interval

Selected account balances for Hulse Company at January 1, 2017, are shown below.

Hulse’s sales journal for January shows a total of$110,000 in the selling price column, and its one-column purchases journal for January shows a total of $77,000. The column totals in Hulse’s cash receipts journal are Cash Dr.$61,000, Sales Discounts Dr. $1,100, Accounts Receivable Cr.$45,000, Sales Revenue Cr. $6,000, and Other Accounts Cr.$11,100.

The column totals in Hulse’s cash payments journal for January are Cash Cr. $55,000, Inventory Cr.$1,000, Accounts Payable Dr. $46,000, and Other Accounts Dr.$10,000.

Hulse’s total cost of goods sold for January is $63,600. Accounts Payable, Accounts Receivable, Cash, Inventory, and Sales Revenue are not involved in the Other Accounts column in either the cash receipts or cash payments journal, and are not involved in any general journal entries.

Instructions
Compute the January 31 Accounts Receivable balance for Hulse.

Movie companies need to predict the gross receipts of individual movies once the movie has debuted. The following results, stored in PotterMovies, are the first weekend gross, the U.S. gross, and the worldwide gross (in $millions) of the Harry Potter movies.

a. Perform a cluster analysis using the complete linkage method on the Harry Potter movies based on the first weekend gross, the U.S. gross, and the worldwide gross (in$millions).

b. What conclusions can you reach about which Harry Potter movies are most similar?

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.

During a recent month, Cleveland Company planned to provide cleaning services to 30 customers for $25 per hour. Each job was expected to take 3 hours. The company actually served 10 more customers than expected, but the average time spent on each job was only 2.5 hours each. Cleveland's revenues for the month were

• a.$250 more than expected.
• b. $250 less than expected.
• c.$750 more than expected.
• d. Cannot be determined from the data given

The accounting records of Ashby Fur Traders include these accounts:

$$\begin{matrix} \text{Cash} & \quad & \text{Accounts Receivable} & \quad & \text{Inventory}\\ \text{Aug 1 80,000} & \quad & \text{Aug 1 8,000} & \quad & \text{Aug 1 6,000}\\ \text{Receipts 418,000} & \text{Payments 450,000} & \text{Receipts 522,000 } & \text{Collections 418,000} & \text{Purchases 433,000} & \text{Cost of Sales 333,000}\\ \text{Aug 31 48,000} & \quad & \text{Aug 31 112,000} & \quad & \text{Aug 31 106,000}\\ \text{Equipment} & \quad & \text{Accumulated Deprec.—Equipment} & \text{Accounts Payable}\\ \text{Aug 1 181,000} & \quad & \quad & \text{Aug 1 45,000} & \quad & \text{Aug 15,000}\\ \text{Acquisition 4,000} & \quad & \quad & \text{Depreciation 5,000} & \text{Payments 334,000} & \text{Purchases 433,000}\\ \text{Aug 31 185,000} & \quad & \quad & \text{Aug 31 50,000} & \quad & \text{Aug 31 114,000}\\ \text{Accrued Liabilities } & \quad & \text{Retained Earnings}\\ \quad & \text{Aug 1 14,000} & \text{Quarterly} & \text{Aug 1 63,000}\\ \text{Payments 35,000} & \text{Receipts 30,000} & \text{Dividend 20,000} & \text{Net Income 25,000}\\ \quad & \text{Aug 31 9,000} & \quad & \text{Aug 31 68,000}\\ \end{matrix}$$

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

The amount of catalyst $(x)$ and the yield $(y)$ of a chemical experiment are analyzed using a simple linear regression model. There are 30 observations $(x_i , y_i )$, and it is found that the fitted model is

$$y = 51.98 + 3.44x$$

Suppose that the sum of squared residuals is $\sum_{i=1}^{30} e_i^2 = 329.77$, and that $\sum_{i=1}^{30} x_i = 603.36, \sum_{i=1}^{30} x_i^2 = 12578.22$. If an additional experiment is planned with a catalyst level 22, give a range of values with $95\%$ confidence for the yield that you think will be obtained for that experiment.

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 noth ing is known about the worldwide percentage of people who play video games.

On June 30, 2017, your client, Ferry Company, was granted two patents covering plastic cartons that it had been producing and marketing profitably 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 Evertight, 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 net royalty 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, 2017? Discuss.

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 that the father of the baby provide written consent before a woman is able to obtain an abortion.

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 $p$.

Chef Whiz manufactures premium food processors. The following are some manufacturing overhead data for Chef Whiz for the year ended December 31, 2014:

$$\begin{array}{lccc} \textbf { Manufacturing Overhead } & \textbf { Actual Results } & \textbf { Flexible Budget } & \textbf { Allocated Amount } \\ \hline \text { Variable } & \$ 51,480 & \$ 79,950 & \$ 79,950 \\ \text { Fixed } & 350,210 & 343,980 & 380,250 \end{array}$$

Budgeted number of output units: 588

Planned allocation rate: 3 machine-hours per unit

Actual number of machine-hours used: 1,170

Static-budget variable manufacturing overhead costs: $72,324

Compute the following quantities (you should be able to do so in the prescribed order):

1. Budgeted number of machine-hours planned

2. Budgeted fixed manufacturing overhead costs per machine-hour

3. Budgeted variable manufacturing overhead costs per machine-hour

4. Budgeted number of machine-hours allowed for actual output produced

5. Actual number of output units

6. Actual number of machine-hours used per output unit