13 A hemisphere of diameter 84 mm is having its circular face parallel to HP on the upper side. A regular pentagonal prism of base side 24 mm and height 55 mm, is resting centrally on it, with a base side, away from the observer, parallel to VP and their common axis perpendicular to HP. Draw its isometric projection. Give all dimensions.

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13.25 WACC for a firm: The Imaginary Products Co. currently has $300 million of market value debt outstanding. The 9 percent coupon bonds (semiannual pay) have a maturity of 15 years and are currently priced at $1,440.03 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $12.00. The preferred shares offer an annual dividend of $1.20. Imaginary also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Imaginary is subject to a 40 percent marginal tax rate, then what is the firm’s weighted average cost of capital? Capital componentNumber outstandingCurrent price Bonds300,000 $1,440.03 Preffered stock2,000,000 $12.00 Common stock14,000,000 $20.00 Coupon rate on debt9% Coupon frequency (per year)2 Bond maturity (years)15 Preferred dividend (annual)$1.20 Expected dividend on common (D1)$2.20 Constant annual dividend growth rate (forever)5% Marginal tax rate40% Capital componentMarket ValueWeightAfter-tax costWeighted Cost (%) Bonds Preferred stock Common stock Total capital (market value) WACC

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13-35

Common transactions affecting stockholders equity accounts

13-35 LO 1 Identify common transactions affecting stockholders’ equity accounts.

13-39Identify fraud risks associated with debt obligations.

13-45 LO 6 What type of audit approach is typically planned for debt obligations? Why is this most often the most appropriate approach?

13-51 Review theAuditing in Practicefeature “SEC Focus on Debt Presentation and Disclosure” and identify potential audit problems related to presentation and disclosure of debt.

14-62Each of the following is an independent situation related to a contingency. Describe what the auditor should do in each case.

a. The lawyer refused to furnish the requested information.

b. The lawyer was unable to form an opinion on the probability or amount of a pending lawsuit, but the auditor believes that the amount could be material.

c. The client stated that it had not consulted lawyers during the

past year.

14-69

What are the inherent limitations in an auditor’s ability to detect material misstatements relating to the client’s compliance with laws and regulations?

14-77

The audit of GolfDay Company, a manufacturer of bicycle racks and golf carts, is almost finished. Krista Heiss is the most experienced auditor on this audit and is in charge of performing final analytical procedures. The company ships most of its products to a combination of distributors and retailers. The business in totally within the United States at the present time and is seasonal.

a. Why is it important that final analytical procedures be per-

formed by experienced auditors?

b. What are some analytical procedures that Heiss might perform?

c. How can these procedures be useful at this stage of the audit to help ensure audit quality?

 

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12Brown Protein Powder produces a dietary supplement. The standard cost of producing one unit is: Material (1.30 pounds × $2.30)$2.99 Labor (1.20 hours × $10.00)12.00 Overhead? Standard variable overhead is $8.00 per unit, and fixed annual overhead is $100,800. At the start of 2014, expected production was 25,200 units. During 2014, 30,000 units were produced. The following information, related to actual costs incurred in 2014, is available: 1.Purchased 40,000 pounds of material for $84,400. 2.Used 39,010 pounds of material. 3.Worked 32,455 labor hours costing $371,700. 4.Actual overhead incurred was $325,600. Compute the standard overhead rate per unit. (Round answer to 2 decimal places, e.g. 15.25.)

 

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14. Mateo currently has nothing saved for his retirement, which will start in 6 years from today. Mateo wants to receive 68,500 dollars each year for 5 years during retirement. The first of these payments will be received in 6 years from today. Mateo can earn a return of 7.6 percent per year in his account. How much does Mateo need to save each year for 6 years to have exactly enough to meet his retirement goal if he makes his first contribution to savings in one year from today and all contributions are equal?

 

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