Memo to Company Leadership Group
Topic: Has Lowes Recovered from the Recession?
Ladies and Gentlemen, As we look to future investing, I directed our financial team
to do some research on the Lowes Company to determine their competitiveness in
the home cen
Facts for the exercise
Interest paid semi-annual $
Cost of Bond Premium
4,000 per period
1/1/16 - $400,000 of bonds converted to common stock selling at
Balance Sheet Info from Dec 31, 2013
Common stock (par $10)
Paid-in Capital in excess of par $
(a) a 5% stock dividend is declared and distributed when
To calculate WACC you need to break down the equation into numbers that can be
So WACC is equal to (E/E+D)Re + D/(E+D)*Rd*(1-Tc)
E = Weight of Equity
D = Weight of Debt
Re = Cost of Equity
Rd = Cost of Debt
Tc = Tax Rate
To calculate the WACC
(a) adjusting entry for 12/31/13
12/31/2013 Unrealized holding gain or loss - income
Fair value adjustment
(b) record sale of security in 2014
Sometime 2014 Cash
Loss on sale of investments
Facts: Natsam has $250M excess cash; No debt; 500 million shares oustanding w/current price $15/share
Board has decided to have one-time cash payout dividend
a. What is the ex-dividend price of a share in a perfect capital market?
First determine the
1. Question: (T CO D) Wananty4U provides extended service contracts on electronic equipment sold through
major retailers. The standard contract is for three years. During the current year, Wananty4U
provided 21,000 such warranty contracts at
Week #2 Quiz
1. Electronics4U manufactures high-end whole home electronic systems. The
company provides a 1-year warranty for all products sold. The company
estimates that the warranty cost is $200 per unit sold, and it reported a
liability for estimated
Facts: 500 Rollomatics sold during 2014 @ $6,000 per During spent $20,000 on
servicing warranties in 2014 and cash basis being used.
Journal entries for 2014 assuming $120,000 cost for servicing the warranties for 2 yrs.
This problem has two sectors, the first is calculating a discount on bonds payable and
second is premium on bonds payable with corresponding journal entries.
(a) Calculate discount
Face Value of note
Quiz Week #1
Question #3 Alonzo Co. acquires three patents from Shaq Corp. for a
total of $360,000. The patents were carried on Shaqs books as follows:
Patent AA, $5,000; Patent BB, $2,000; and Patent CC, $3,000. When
Alonzo acquired the patents, their fa
Facts for Kathleen Battle Corporation for 2014
Authorized to issue 10,000 shares of 8%, $100 par value preferred stock
Authorized to issue 500,000 shares of no par common stock with a stated value of $1 per share.
Make the appropriate journal entrie
As per our text, the $325,000 is a R&D cost and should be charged to R&D Expense.
The entry can be made via a disclosure in the income statement or disclosed in the
notes of our financial statement.
Journal entry for R&D co