1. (Capital Structure) Sanderson Manufacturing Company would like to achieve a capital structure consistent with a Baa2/BBB senior debt rating. Sanderson has identified six comparable firms and calculated the credit statistics shown here. a. Sanderson's return on assets is 5.3%. It has a total capitalization of $600 million.
Wyndham Stores operates a regional chain of upscale department stores. The company is going to open another store soon in a prosperous and growing suburban area. In discussing how the company can acquire the desired building and other facilities needed to open the new store, Harry Wilson, the company's marketing vice president,
See the attached file. Lease or Buy decision Larine Industries wants an airplane available for use by its corporate staff. The airplane that the company wishes to acquire, a Superjet 25, can either be purchased or leased from the manufacturer. Larine Industries' cost of capital is 20% and the tax rate is 30%. The company has m
See the attached file. 1. Lease A does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75% of the estimated economic li
1. General Farms, Inc. had sales of $750,000, cost of goods sold of $200,000, selling and administrative expense of $70,000, and operating profit of $150,000. What was the value of depreciation expense? 2. Cassy Beauty Company had sales of $320,000 and cost of goods sold of $112,000. What is the gross profit margin (ratio of g
Suncoast Healthcare is planning to acquire a new x-ray machine that costs $200,000. The business can either lease the machine using an operating lease or buy it using a loan from a local bank. Suncoast's balance sheet prior to acquiring the machine is as follows: Current assets : $100,000 Debt : $400,000
1. On January 1, Year 8, Von Company entered into two non-cancellable leases of new machines for use in its manufacturing operations. The first lease does not contain a bargain purchase option, and the lease term is equal to 80% of the estimated economic life of the machine. The second lease contains a bargain purchase option, a
JK Company has the following balances on the 2008 B/S: current assets=70,000, long-term assets=250,000, current liability=40,000, long-term debt=130,000, and stockholders equity=150,000. The company has an operating lease contract. It promises to pay a lessor $10,000 annually for the next three years. The company s average borro
Federated fabrications leased a tooling machine on January 1, 2011, for a three-year period ending December 31, 2013. The lease agreement specified annual payment of $36,000 beginning with the first payment at the inception of the lease, and each December 31 through 2012. The company had the option to purchase the machine on Dec
To raise operating funds, Signal Aviation sold an airplane on January 1, 2011, to a finance company for $770,000. Signal immediately leased the plane back for a 13-year period, at which time ownership of the airplane will transfer to Signal. The airplane has a fair value of $800,000. Its cost and its book value were $620,000. I
How can we classify the lease into finance lease or operating lease?
Neighborhood Savings Bank is considering leasing $100,000 worth of computer equipment. A 4 year lease would require payments in advance of $22,000 per year. The bank does not currently pay income taxes and does not expect to have to pay income taxes in the foreseeable future. If the bank purchased the computer equipment,
The manager of a small firm is considering whether to produce a new product that would require leasing some special equipment at a cost of $20,000 per month
1) The manager of a small firm is considering whether to produce a new product that would require leasing some special equipment at a cost of $20,000 per month. In addition to this leasing cost, a production cost of $10 would be incurred for each unit of the product produced. Each unit sold would generate $20 in revenue. Develo
TRIPLE ENTERPRISES INC TRIAL BALANCE Debits Credits Cash $669.51 Accounts Receivable $1,420,530.43 Prepaid Insurance $5,147.72 Allowance for Doubtful Acounts $73,214.87 Inventory - Raw Material $256,364.04 Inventory - Finished Goods $8,350.87 Inventory - WIP $85,542.56
I need some help reviewing the following topics listed. Definitions would be great. Long term Liabilities part#1: - Leases - Off-balance sheet obligation - Long term debt (notes and bond) Long-term Liabilities part#2: - Pensions - Other retirement benefits Long-term liabilities part# 3: - Deferred taxes
Identify the required licenses and permits for your selected business and its scenario. Acquiring Capital Assets: Compare the legal consequences of the buy versus lease decision for the capital assets the business will need, and explain what method is best for your business.
Problem 9-10 Contingent Liabilities Several items are listed for which the outcome of events is unknown at year-end. a. A company offers a two-year warranty on sales of new computers. It believes that 4% of the computers will require repairs. b. The company is involved in a trademark infringement suit. The company's legal exp
Compare and contrast lease versus purchase options, including advantage and disadvantages. How are debt financing and equity financing related to lease and purchase and please give a couple of examples for each. What is alternative capital structure and its advantages and disadvantages? Which one is better? Please provide your
1. Which of the following statements concerning direct and indirect costs are NOT true? Whether a particular cost is classified as direct or indirect does not depend on the cost object. A direct cost is one that can be easily traced to the particular cost object. The factor manager's salary would be classified as an indir
The Uniform Leasing Company currently utilizes a number of outdated database systems. Describe a scenario where it might be beneficial for the uniform leasing company invest in an updated database system. Additonally, -Describe the capabilities, advantages, and disadvantages of newer database systems currently on the mar
Background Information: The Uniform and Linen Leasing Company (U&L) expansion plans include building a manufacturing facility in a small town in Pell City, Alabama to manufacture cleaning products as well as perform research and development for new products. By locating their facility in this town, U&L will receive substantia
2. At the date of a bond issue, the effective rate of interest is significantly above the stated rate of interest. If the bond has a $1,000 face value, the proceeds from the issue would be more than $1,000 less than $1,000 $1,000 $0 6. Stock with a higher claim on dividends and assets
A) Prepare simple fictitious financial statements B) Write notes for the fictitious annual report. Note 1: Significant Accounting Polices (consisting of at least 10 items) Notes 2-10+: Consisting of at least the items below. Inventory Property, Plant, & Equipment Contingencies and Liabilities Changes in Accountin
The Uniform and Linen Leasing Company (U&L) is experiencing problems in its Detroit, MI location with employees leaving the company at a high rate. Complaints from customers have been coming in for this location regarding late or missed pick-ups and deliveries, unfriendly attitudes of U&L employees, extra charges, and unpressed
Costs/Revenue structure Comparison of any US airline, Singapore Airlines, and British Airways. Show references please.
On January 1, 2011, Seven Wonders Inc. signed a five-year non-cancelable lease with Moss Company. The lease calls for five payments of $277,409.44 to be made at the end of each year. The leased asset has a fair value of $1,200,000 on January 1, 2011. Seven wonders cannot renew the lease, there is no bargain purchase option, and
Lessor Company has a machine with a cost and fair value of $100,000 that it leases for a 10-year period to Lessee Company. The machine has a 12-year expected economic life. Payments are received at the beginning of each year. The machine is expected to have a $10,000 residual value at the end of the lease term. (Lessee is not gu
Making computations and journal entries for lessee: Bunker Company negotiated a lease with Gilbreth Company, financial statement effects of the lease treatment
Bunker Company negotiated a lease with Gilbreth Company that begins on January 1, 2011. The lease term is three years, and the asset's c=economic life is four years. The annual lease payments are $7,500, payable at the end of the year. The cost and fair value of the asset are $23,000. The lessee's cost of borrowing is 9%. 1.
Please answer the questions A-E for this case. Case: INTEGRATIVE CASE 7.1 STARBUCKS Part 1-Accounting Policy Presented below are excerpts from Note 1 to Starbucks' September 28, 2008, Consolidated Financial Statements in which Starbucks describes accounting policy for long-lived assets. Excerpts from Note 1:
For each of the following situations discuss: Type of audit opinion(s) to be issued. Give your reason(s) and in each situation describe any necessary changes to the standard audit report. State your assumptions and consider in your response all possible alternatives. You can assume that the transactions are material.