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?

Consider using these questions to start your feedback conversation: $\bullet$ What elements of humor do you think you were most successful at using? Least successful? $\bullet$ Can you explain why you made the choice to ... $\bullet$ When did you feel the audience was most with you? $\bullet$ When did you feel the audience was least connected to your performance? $\bullet$ Did you ever have to adapt or adjust differently than you had planned? Explain. How did it work out?

Acker Supply completed the following transactions during December of the current year. Acker records unearned items initially as revenue. The company uses the accounts Gift Cards Outstanding and Breakage Revenue to account for gift card transactions. The sales tax rate is 6.0%. A cash receipts journal, general journals, and amortization schedules for installment notes are provided in the Recycling Problems Working Papers.

Instructions:

Journalize any adjusting or reclassification entries that should be reversed. Use page 17 of a general journal.

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

Accounts Payable	$14,000
Accounts Receivable	22,000
Cash	17,000
Inventory	13,500

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 Sales Revenue balance for Hulse.

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. asks whether she is at risk for pregnancy. How will you respond?

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.

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 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?

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.

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.

Linda's Foods produces frozen meals that it sells for $7 each. The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number of meals to be produced that month. Assume all costs and production levels are exactly as planned. The following data are from Linda's Foods' first month in business:

$$\begin{array}{lc} \hline \textbf{}&\textbf{January 2018}\\ \hline\\ \text{Units produced and sold:}\\ \hspace{10pt}\text{Sales}&\text{1,000 meals}\\ \hspace{10pt}\text{Production}&\text{1,200 meals}\\ \\\hline\\ \text{Variable manufacturing cost per meal}&\text{\$\hspace{15pt}3}\\ \text{Sales commission cost per meal}&\text{\hspace{20pt}1}\\ \text{Total fixed manufacturing overhead}&\text{\hspace{10pt}660}\\ \text{Total fixed selling and administrative costs}&\text{\hspace{10pt}500}\\ \\\hline \end{array}$$

Requirements

1. Compute the product cost per meal produced under absorption costing and under variable costing.
2. Prepare income statements for January 2018 using:

• a. absorption costing.
• b. variable costing.

3. Is operating income higher under absorption costing or variable costing in January?

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.

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

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.