The Flatiron Pub provides catering services to local businesses. The following information was available for The Flatiron Pub for the years ended December 31, 2019 and 2020.

	December 31, 2019	December 31. 2020
Cash	$2,000	$1,685
Accounts receivable	46,000	?
Allowance for doubtful accounts	550	?
Other current assets	8,500	7,925
Current liabilities	37,000	44,600
Total credit sales	205,000	255,000
Collections on accounts receivable	190,000	228,000

Flatiron management is preparing for a meeting with its bank concerning renewal of a loan and has collected the following information related to the above balances.

1. The cash reported at December 31, 2020, reflects the following items: petty cash $1,575 and postage stamps$110. The other current assets balance at December 31, 2020, includes the checking account balance of $4,000.

2. On November 30, 2020, Flatiron agreed to accept a 6-month,$5,000 note bearing 12% interest, payable at maturity, from a major client in settlement of a $5,000 bill. The above balances do not reflect this transaction.

3. Flatiron factored some accounts receivable at the end of 2020, It transferred accounts totaling$10,000 to Final Factor, Inc. with recourse. Final Factor will receive the collections from Flatiron's customers and will retain 2% of the balances. Final Factor assesses Flatiron a finance charge of 3% on this transfer. The fair value of the recourse liability is $400. However, management has determined that the amount due from the factor and the fair value of the resource obligation have not been recorded, and neither are included in the balances above.

4. Flatiron charged off uncollectible accounts with balances of$1,600. On the basis of the latest available information, the 2020 provision for bad debts is estimated to be 2.5% of accounts receivable.

Accounting

a. Based on the above transactions, determine the balance for (1) Accounts Receivable and (2) Allow- ance for Doubtful Accounts at December 31, 2020.

b. Prepare the current assets section of The Flatiron Pub's balance sheet at December 31, 2020.

Analysis

a. Compute Flatiron's current ratio and accounts receivable turnover for December 31, 2020. Use these measures to analyze Flatiron's liquidity. The accounts receivable turnover in 2019 was 4.37.

b. Discuss how the analysis you did above of Flatiron's liquidity would be affected if Flatiron had trans- ferred the receivables in a secured borrowing transaction.

Principles

What is the conceptual basis for recording bad debt expense based on the percentage-of-receivables ap- proach at December 31, 2020?

The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies' complete annual reports, including the notes to the financial statements, are available online.

Instructions

Use the companies' financial information to answer the following questions.

a. What were the cash and cash equivalents reported by Coca-Cola and PepsiCo at the end of 2017? What does each company classify as cash equivalents?

b. What were the accounts receivable (net) for Coca-Cola and PepsiCo at the end of 2017? Which company reports the greater allowance for doubtful accounts (amount and percentage of gross receivable) at the end of 2017?

c. Assuming that all "net operating revenues" (Coca-Cola) and all "net revenues" (PepsiCo) were net credit sales, compute the accounts receivable turnover for 2017 for Coca-Cola and PepsiCo, also compute the days outstanding for receivables. What is your evaluation of the difference?

List the institutions of European society that were brought to the Americas by European missionaries.

Use the closing costs to calculate the (a) total closing costs and (b) total amount of the mortgage if the closing costs are financed. Jeremy Roberts purchases a condo with a mortgage loan of $50,000.$

$$\begin{array}{c}\\ \text{Closing Cost}\\ \begin{array}{|l|c|} \hline \text { Application Fee } & \$ 252 \\ \hline \text { Borrower's Credit Check } & 65 \\ \hline \text { Points } & 2.00 \% \text { of Mortgage } \\ \hline \text { Appraisal Fee } & \$ 325 \\ \hline \text { Title Search } & 212 \\ \hline \text { Title Insurance } & 410 \\ \hline \text { Inspection } & 350 \\ \hline \text { Attorney Fee } & 450 \\ \hline \text { Documentation Stamp } & 0.30 \% \text { of Mortgage } \\ \hline \text { Processing Fee } & 1.10 \% \text { of Mortgage } \\ \hline \end{array} \end{array}$$

$

How might the conquistadors' exploration and conquest of the Americas affect the future of the region?

Better at Getting Deals. To better understand how husbands and wives feel about their finances, Money magazine conducted a national poll of 1,010 married adults age 25 and older with household incomes of $\$ 50,000$ or more (Money website). Consider the following example set of responses to the question, "Who is better at getting deals?"

$$\begin{aligned} &\text { Who Is Better? }\\ &\begin{array}{lccc} \text { Respondent } & \text { I Am } & \text { My Spouse } & \text { We Are Equal } \\ \text { Husband } & 278 & 127 & 102 \\ \text { Wife } & 290 & 111 & 102 \end{array} \end{aligned}$$

a. Develop a joint probability table and use it to answer the following questions.

You have been at your job with S&S Air for a week now and have decided you need to sign up for the company’s 401(k) plan. Even after your discussion with Audrey Sanborn, the Bledsoe Financial Services representative, you are still unsure as to which investment option you should choose. Recall that the options available to you are stock in S&S Air, the Bledsoe S&P 500 Index Fund, the Bledsoe Small-Cap Fund, the Bled-soe Large-Company Stock Fund, the Bledsoe Bond Fund, and the Bledsoe Money Market Fund. You have decided that you should invest in a diversified portfolio, with 70% of your investment in equities, 25% in bonds, and 5% in the money market fund.

 You have also decided to focus your equity investment on large-cap stocks, but you are debating whether to select the S&P 500 Index Fund or the Large-Company Stock Fund. In thinking it over, you understand the basic difference in the two funds. One is a purely passive fund that replicates a widely followed large-cap index, the S&P 500, and has low fees. The other is actively managed with the intention that the skill of the portfolio manager will result in improved performance relative to an index. Fees are higher in the latter fund. You’re just not certain which way to go, so you ask Chris Guthrie, who works in the company’s finance area, for advice.

 After discussing your concerns, Chris gives you some information comparing the performance of equity mutual funds and the Vanguard 500 Index Fund. The Vanguard 500 is the world’s largest equity index mutual fund. It replicates the S&P 500, and its return is only negligibly different from the S&P 500. Fees are very low. As a result, the Vanguard 500 is essentially identical to the Bledsoe S&P 500 Index Fund offered in the 401(k) plan, but it has been in existence for much longer, so you can study its track record for over two decades. Chris recommends that you study the figure in this chapter and answer the following questions.

QUESTION

What investment decision would you make for the equity portion of your 401(k) account? Why?

How did the Aztecs create one of the strongest empires in the Americas?

Dyreng Plc. (Dyreng), a Belgian-based construction firm, reported the following information for Year 11. Dyreng applies IFRS and reports in thousands of dollar ($).$

$$\begin{array}{lr} \hline & \text { Year 11 } \\ \hline \text{Revenues}& 18,957.2 \\ \text{Cost of Sales}&(14,161.9) \\ \hline\text{Gross Profit}& 4,795.3 \\ \text{Other Operating Income}&107.9 \\ \text{Selling, General, and Administrative Expense}&(3,929.5) \\ \text{Other Operating Expenses}&(36.5) \\ \hline \text{Operating Profit}&937.2 \\ \text{Finance Costs}&(347.2) \\ \text{Income from Investments}&14.5 \\ \hline \text{Profit Before Taxes and Discontinued Operations}& 604.5 \\ \text{Income Tax Expense}&(203.7) \\ \hline \text{Net Profit from Continuing Operations}&400.8 \\ \text{Results of Discontinued Operations (net of tax)}&23.7 \\ \hline \text{Net Profit}&424.5 \\ \hline \hline \end{array}$$

$Further information available to you reveals the following six items, with all euro amounts reported in thousands.

Evaluate the way Dyreng classified each of the six items on its income statement. If you disagree with this classification, state your reasoning and determine the effect on the firm’s gross profit and pretax profit from continuing operations from the alternative classification that you would recommend.

c. In Year 11 Dyreng consolidated its administrative functions and sold an office building for$560. The carrying value of the building was $600. The firm reported this transaction in revenues and cost of sales, respectively.

How did European exploration affect the Americas?

What made the Maya one of the most sophisticated civilizations of the early Americas?

Grieg Landscaping began construction of a new plant on December 1, 2020. On this date, the company purchased a parcel of land for $139,000 in cash. In addition, it paid$2,000 in surveying costs and $4,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of$3,000, with $1,000 being received from the sale of materials.

Architectural plans were also formalized on December 1, 2020, when the architect was paid$30,000. The necessary building permits costing $3,000 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2021 as follows.

$$\begin{array} {lcccc} \underline{\hspace{5pt}\text{Date of Payment}\hspace{5pt}}&\underline{\hspace{2pt}\text{Amount of Payment}\hspace{2pt}}\\ \text{March 1}& \hspace{10pt}\text{\$240,000}&\\ \text{May 1}& \hspace{10pt}\text{\hspace{5pt}330,000}&\\ \text{July 1}& \text{\hspace{20pt}60,000}&\\ \end{array}$$

The building was completed on July 1, 2021.

To finance construction of this plant, Grieg borrowed $600,000 from the bank on December 1, 2020, Grieg had no other borrowings. The$600,000 was a 10-year loan bearing interest at 8%.

Instructions

Compute the balance in each of the following accounts at December 31, 2020, and December 31, 2021. (Round amounts to the nearest dollar.)

a. Land.

b. Buildings.

c. Interest Expense.

Contesta.

¿Cómo llegó la gente esclavizada a las Américas?

Consider a 7/1 ARM loan, starting at 5 percent with potential up-or-down yearly increments of 1 percent in the rate. Why is such an ARM loan potentially economically dangerous?

a. Actually, many people have financed their house with an ARM, and such loans are not considered potentially economically dangerous.

b. The loan interest rate can increase without limit over the life of the loan.

c. The loan interest rate for the example mentioned can start at 5 percent and increase to as much as 12 percent after 7 years, effectively doubling (+/-) the monthly payment.

d. The economic risk of an ARM loan is neutralized, because it is just as likely that the interest rate for the example mentioned could go down each year by the maximum amount.