Homework Help for Accounting

Name a problem in your community and how you would solve it if you had the power.

B. Put your thoughts in the form of a 'letter to the editor' of your local newspaper.

C. Visit this wikipedia link to learn more about a 'letter to t

Seventy two inc. a developer of radiology equipment Has stock outstanding as follows 80,000 shares of cumulative preferred 3% Stock $20 per Ann 405,000 shares of $25 per comment during its first four years of operation. The following amounts were distributed as dividends first year 30,000 2nd year 75,000 3rd year 80,000 4th year 100,000.

ASK ME ANYTHING

Budgeted Anancial statements: retaller

Everywhere Sports Is a retall store supplying sporing equipment to community sports

clubs. Information

about the store's operations is as follows:

November sales amounted to $400 000

Sales are budgeted at $440 000 for December and $400 000 for January.

Receipts are expected to be 60 per cent in the month of sale and 38 per cent in the month following the

sale. Two per cent of sales receipts are expected to be uncollectable

The store's gross margin is 25 per cent of its sales revenue

A total of 8O per cent of the merchandise for resale IS purchased in the month prior to the month of sale.

and 20 per centis purchased in the month of sale. Paymentf fori merchandise IS made in the month following

the purchase,

Other monthly expenses pald in cash amount to $45 200

Annual depreciation is $432 000

The balance sheet of Everywhere Sports as at 30 November is

Everywhere Sports

Balance sheet 30 November

Asset:

Cash

44000

152 000

280 000

1724 000

$2 200 000

Accounts reccivable (net of $7 000 allowance for uncollectable accounts)

Inventory

Property. plant and equipment (net of $1 180 000 accumulated depreciation)

Total asscts

Liabiliues and sharcholders' cquity:

Accounts payable

Ordinary shares

Retained earnings

Total liabilities and sharcholders' equity

324 000

1590 000

286000

$2_200 000

Required:

Calculate the following amounts:

1. budgeted cash receipts for December

2. budgeted profit (loss) before income taxes for December

3. projected balance in accounts payable on 31 December.                                          

below i will give some details and help me to draw an isoprofit curve. Thanks

Label the x-axis as "Quantity of Bedaquiline."
Label the y-axis as "Price of Bedaquiline."
Draw a downward-sloping isoprofit curve that starts at a profit-maximizing price of $46.
Now, let's explain what this diagram represents:

Profit (Producer Surplus):

Mark the point on the isoprofit curve where the price is $46. This is the initial profit-maximizing price for J&J.

Calculate the area above the supply curve and below the price of $46 up to the quantity produced. This area represents J&J's producer surplus at the original price of $46.

Markup:
3. Calculate the difference between the price ($46) and the cost of production ($5). This difference, $41, represents the markup that J&J was earning per unit of bedaquiline sold at the original price.

Consumer Surplus:
4. Now, mark the point on the isoprofit curve where the price is reduced to $8.

Calculate the area above the supply curve and below the price of $8 up to the quantity produced at this new price. This area represents the consumer surplus gained by consumers due to the price reduction.

Subtract the original consumer surplus (before the price reduction) from the new consumer surplus (after the price reduction). The difference between the two represents the change in consumer surplus.

Output:
7. The quantity of bedaquiline produced at the new price of $8 is determined by the intersection of the demand curve (you can assume a straight-line demand curve) and the new price level.

Now, let's explain the economic implications of this diagram:

Profit (Producer Surplus): J&J's producer surplus decreases as a result of the price reduction. This is because they are now selling the product at a lower price, and their profit per unit sold has decreased.

Markup: The markup, which was initially $41 per unit, has decreased significantly due to the price reduction.

Consumer Surplus: Consumer surplus has increased as a result of the price reduction. Consumers are now able to purchase bedaquiline at a lower price, leading to a larger consumer surplus.

Output: The quantity of bedaquiline produced has likely increased due to the lower price, making it more affordable for consumers, which also contributes to the increase in consumer surplus.

In summary, J&J's decision to reduce the price of bedaquiline from $46 to $8 per month has led to a decrease in producer surplus (profit), a significant decrease in markup, an increase in consumer surplus, and a likely increase in the quantity of bedaquiline produced. This decision reflects a trade-off between lower profits for the company and increased access and affordability for consumers, especially in the context of healthcare and drug pricing.

The Case of J&J and Changes to Drug Pricing of Treatment for TB
The world's largest pharmaceutical market is the US. But there is social contention about the monopoly pricing strategies of big drug firms, e.g. see

Consider the firm Johnson & Johnson (J&J) and the production of the drug bedaquiline to treat tuberculosis (TB), and its recent decision to cut the price of bedaquiline from $46 to $8 per month, as discussed in the following freely available articles:
For this task, you will be required to illustrate and explain to a typical first-year undergrad student who has no economics background what has happened to profit (producer surplus), markup, consumer surplus and the output as a result of the price reduction.

▪ You will hand draw one (1) diagram with an isoprofit curve, which is an adaptation of Figure 7.9d from the CORE ESPP text. An adaptation means that you modify the main diagram from the text to suit the case study at hand, for the drug to fight TB. Assume unit costs of production of this drug are a constant $5 per month.

▪ Youareonlyrequiredtodrawoneisoprofitcurvewiththeprofit-maximisingpriceof$46.Beaccuratewhen you draw your isoprofit curve, but there is no need to calculate with precision all the points on the isoprofit curve. Calculate and show workings of what the iso-profit would be for any price greater than $10 but less
than $40 (pick any one price but stick to an integer).

▪ Fortheincrementalquantitiesofdrugproductiononthex-axis,usehypotheticalvalues(roughguessesfrom
your imagination). Also use your intuition for making up other prices/costs of the drug on the y-axis and
make up a demand (straight-line) 'curve'.

▪Calculateandshowworkingsforthechangeinproducersurplusandmarkup,butyouonlyneedtoshadein
the change in consumer surplus.

The extract of statement of financial position for the year ended 30 June 2023 for Persian Ltd and Sumo Ltd are as follows: On 01 July 2022, Persian Ltd acquired 551,250 ordinary shares of Sumo Ltd, that is, Persian Ltd holds 70% shares in Sumo Ltd. The purchase consideration was as follows: • Cash paid $ 950,000 • A deferred cash settlement to be paid in three years’ time of $ 475,000 • By an exchange of one share in Persian Ltd for every four shares in Sumo Ltd. The market price of Persian Ltd share at the date of acquisition was $ 2.95 and the market price of each Sumo Ltd share at the date of acquisition was $ 3.15 Legal fees associated with the acquisition were $ 10,500. The discount rate of Persian Ltd is 10 %. (a) Calculate the fair value consideration (Costs of investment) transferred to acquire control of Sumo Ltd at the date of acquisition. Your answer should include a brief explanation if any of the above issue(s) is/are not required to be accounted in your working(s). [ 10 Marks] 

Gap o has project a sales of 650000 hospital gowns in October

PROBLEM 21

Nonconstant growth assume that it is now January 1, 2016. Wayne Martin electic inc. (WME) has developed a solar panel capable of generating 200% more electricity than any other solar panel currently on the market. As a result, WME is expected to experience a 15% annual growth rate for the next 5 years. Other firms will have developed comparable technology by the end of 5 year, and WME’s growth rate will slow to 5% per year indefinitely. Stockholders require a return of 12% on WME’s stock. The most recent annual dividend (D0), which was paid yesterday, was $ 1.75 per share.

1. Calculate WME’s expected dividends for 2016,2017,2018,2019 and 2020
2. Cal\culate the value of the stock today, p0. Proceed by finding the present value of the dividends expected at the end of 2016,2017,2018,2019 and 2020 plus the present value of the stock price that should exist at the end of 2020. The year end 2020 stock price can be found by using the constant growth equation. Notice than to find the December 31, 2020, price, you must use the dividend expected in 2021, which is 5% greater than the 2020 dividend.
3. Calculate the expected dividend yield (D1/P0), capital gains yield, and total return ( dividend yield plus capital gains yield ) expected for 2016. ( Assume that Ṕ0=P0 and recognize that the capital gains yield is equal to the total return minus the dividend yield.) then calculate these same three yields for 2021
4. How might an investor’s tax situation affect his or he decision to purchase stocks of companies in the early stages of their lives, when they are growing rapidly, versus stock of older, more mature firms? When doe’s WMW’s stock become “mature” for purposes of this question?
5. Suppose your boss tells you she believes that WME’s annual growth rate will be only 12% during the next 5 years and that the firm’s long-run growth rate will be only 4%. Without doing any calculations, what general effect would these growth rate changes have on the price of WME’s stock?
6. Suppose your boss also tells you that she regards WME as being quite risky and that she believes the required rate of return should be 14%, not 12%. Without doing any calculations, determine how the higher required rate of return would affect the price of the stock, the capital gains yield, and the dividend yield. Again, assume that the long-run growth rate is 4%

On December 31, 2021. Rhone-Metro Industries leased equipment to Western Soya Co. for a four-year period ending December 31. 2025, at which time possession of the leased asset will revert back to Rhone-Metro.The equipment cost Rhone-Metro $365,760 and has an expected useful life of six years. Its normal sales price is $365,760. The lessee-guaranteed residual value at December 31. 2025, is $25,000. Equal payments under the lease are $100,000 and are due on December 31 of each year. The first payment was made on December 31. 2021. Western Soya's incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the lease payments is 10%. Both companies use straight-line depreciation or amortization.

Required:

1. Show how Rhone-Metro calculated the $100000 annual lease payments.
2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)? Why?
3. Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on December 31, 2021.
4. Prepare an amortization schedules) describing the pattern of interest over the lease term for the lessee and the lessor.
5. Prepare all appropriate entries for both Western Soya and Rhone-Metro on December 31. 2022 (the second lease payment and amortization).
6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2025, assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $1500
7. .

Pitso and Steve are partners operating a business Topclass Pro Services. The information
that follows is relevant to the business activities of the partnership for the year ended
30 June 2022. Pitso and Steve share in profits and losses in the ratio of 3:2 respectively.
Topclass Pro Services
Extract of relevant account balances as at 30 June 2022
Debit
R
Credit
R
Capital: Pitso
Capital: Steve
Current account: Pitso: balance at 1 July 2021
Current account: Steve: balance at 1 July 2021
Drawings for the year: Pitso
Drawings for the year: Steve
Long term loan from Pitso
Salaries paid to partners during the year:
 Pitso
 Steve
Profit for the year – before taking the any of the additional 
information into account
 76 600
 68 310
 43 470
 144 000
 126 000
 
 270 000
 270 000
 52 900
 110 000
 765 500
Additional information:
The following has been extracted from the partnership agreement:
1. Interest must be calculated and recorded at the following rates at the end of each 
financial period. All interest must be processed through the current accounts of the 
partners. Interest rates are as follows:
1.1 Interest on capital must be calculated at 10% per year,
1.2 Interest at 10% per year on current account balances at beginning of the year, 
1.3 Interest on drawings accounts balances has been calculated as follows:
• Pitso R4 500
• Steve R2 900
2. The following salaries are payable to the partners for the current year:
➢ Pitso: R12 000 per month, and Steve R15 000 per month.
Year-end adjustments:
1. On 1 January 2022 Pitso contributed another R90 000 as capital to the partnership. It 
was agreed that the amount will be included in his fixed capital account. The transaction 
was correctly recorded as at 30 June 2022.
2. Pitso granted an unsecured loan to the partnership on 1 January 2022. According to the 
loan agreement, interest will be charged at 10% per year. The loan will be repaid in 
annual installments beginning 31 December 2026. Interest on the loan is still to be 
calculated and recorded in the books of the partnership.
Required:
Take the above information into account and adjust the “Profit for the year” to show the 
correct amount to be shared between the partners, Pitso and Steve. Thereafter, 
prepare the statement of changes in equity for Topclass Pro Services for the year ended 30 
June 2022 to clearly show the distribution of profits in terms of the partnership agreement. 
Show all calculations. Use the format suggested below.
 
Recommended format:
Topclass Pro Services
Statement of changes in equity for the year ended 30 June 2022
Capital accounts Pitso
R
Steve
R
Total
R
Balance at 1 July 2021
Additional contributions
Balance at 30 June 2022
Current accounts: Pitso
R
Steve
R
Appropriation
R
Balance 1 July 2021
Profit for the year 
Appropriations:
Interest on capital
Interest on current a/c
Interest on drawings
Salaries due
Share of profits
Drawings
Balance 30 June 2022 

It is safe to earn

Problem 4-26A (Static) Comprehensive cycle problem: Perpetual system LO 4-1, 4-2, 4-3, 4-4, 4-5, 4-6,4-7

Take the above information into account and adjust the “Profit for the year” to show the 
correct amount to be shared between the partners, Pitso and Steve. Thereafter, 
prepare the statement of changes in equity for Topclass Pro Services for the year ended 30 
June 2022 to clearly show the distribution of profits in terms of the partnership agreement. 
Show all calculations. Use the format suggested below.

The following information was extracted from the accounting records of Mode Ltd for the 
financial year ended 30 June 2022.                                                                                                                      
Extract from: Statement of Profit or loss and other comprehensive income 
of Mode Ltd for the year ended 30 June 2022                                                                                                                                                                                                   
Gross profit : 1 440 000                                                          
Dividends received: 43 000
Profit on sale of machine: 75 000
Depreciation : (15 000)
Interest expense: (180 000)
Distribution, administration and other expenses: (403 000)
Taxation: (420 000)
Profit for the year after taxation: 540 000

Extract from: Statement of financial position of Mode Ltd as at 30 June 2022:
ASSETS                                                                                                  30 June 2022                      30 June 2021
Land and buildings                                                                            925 000                                 890 000
Machinery at carrying amount                                                     875 000                                 250 000
Investments                                                                                          235 000                                 385 000
Inventory                                                                                                170 000                                  480 000
Trade debtors                                                                                       140 000                                 400 000
Receiver of revenue – income tax                                               10 000                                     Nil
Bank balance                                                                                        30 000                                    15 000
 Total assets                                                                                           2 385 000                             2 420 000
                                                                                                                                                                                              
EQUITY AND LIABILITIES
EQUITY                                                                                                    1 565 000                               940 000
Ordinary share capital                                                                        745 000                                480 000
Retained earnings                                                                                820 000                               460 000
                                                                                                                                                                                     
LIABILITIES                                                                                              820 000                             1 480 000
Long term Borrowings                                                                        750 000                              1 050 000
Trade creditors                                                                                         60 000                                 352 000
Receiver of revenue – income tax                                                     Nil                                            43 000
Shareholders for dividends                                                                 10 000                                    35 000
Total equity and liabilities                                                                 2 385 000                           2 420 000                                                                                      
                                                                                                                                                                                        
 Additional information:
1. Shares were issued for cash during the year.
2. Dividends of R180 000 were declared during the current financial year.
3. On 31 October, machinery with a carrying amount of R110 000 was sold for cash. A 
replacement machine as well as additional machinery was purchased for cash. 
4. No long term borrowings were made during the year.
5. Investments were sold during the year. No new investments were purchased.
Required:
Take all the above information into account and prepare the statement of cash flows for 
Mode Ltd for the year ended 30 June 2022. Use the indirect method. Your answer must 
comply with the International Financial Reporting Standards (IFRS) appropriate to this type 
of business. 
Show all workings. Round off all workings to the nearest Rand.