Final Exam: Corporations Essay

Question 1: Buttercup Corporation issued 250 shares of $11 par value common stock for $4,125. Prepare Buttercup’ journal entry. Question 2: Wilco Corporation has the following account balances at December 31, 2012. Common stock, $5 par value $511,670 Treasury stock 95,260 Retained earnings 2,400,840 Paid-in capital in excess of par 1,320,150 Prepare Wilco’s December 31, 2012, stockholders’ equity section Question 3: Woolford Inc. declared a cash dividend of $1.38 per share on its 2.22 million outstanding shares. The dividend was declared on August 1, payable on September 9 to all stockholders of record on August 15. Prepare the journal entries necessary on those three dates. Question 4: The outstanding capital stock of Pennington Corporation consists of 3,100 shares of $109 par value, 6% preferred, and 5,700 shares of $52 par value common. Assuming that the company has retained earnings of $83,000, all of which is to be paid out in dividends, and that preferred dividends were not paid during the 2 years preceding the current year, state how much each class of stock should receive under each of the following conditions. Question 5: Martinez Company’s ledger shows the following balances on December 31, 2012. 5% Preferred stock-$10 par value, outstanding 22,480 shares $224,800 Common stock-$100 par value, outstanding 33,720 shares 3,372,000 Retained earnings 708,120 Assuming that the directors decide to declare total dividends in the amount of $298,984, determine how much each class of stock should receive under each of the conditions stated below. One year’s dividends are in arrears on the preferred stock. Question 6: On January 1, 2012, Barwood Corporation granted 5,040 options to executives. Each option entitles the holder to purchase one share of Barwood’s $5 par value common stock at $50 per share at any time during the next 5 years. The market price of the stock is $72 per share on the date of grant. The fair value of the options at the grant date is $154,000. The period of benefit is 2 years. Prepare Barwood’s  journal entries for January 1, 2012, and December 31, 2012 and 2013. Question 7: Rockland Corporation earned net income of $340,800 in 2012 and had 100,000 shares of common stock outstanding throughout the year. Also outstanding all year was $908,800 of 10% bonds, which are convertible into 18,176 shares of common. Rockland’s tax rate is 40 percent. Compute Rockland’s 2012 diluted earnings per share. Question 8: DiCenta Corporation reported net income of $250,000 in 2012 and had 50,000 shares of common stock outstanding throughout the year. Also outstanding all year were 5,410 shares of cumulative preferred stock, each convertible into 2 shares of common. The preferred stock pays an annual dividend of $5 per share. DiCenta’ tax rate is 40%. Compute DiCenta’ 2012 diluted earnings per share. Question 9: Ferraro, Inc. established a stock appreciation rights (SAR) program on January 1, 2012, which entitles executives to receive cash at the date of exercise for the difference between the market price of the stock and the pre-established price of $24 on 5,050 SARs. The required service period is 2 years. The fair value of the SAR’s are determined to be $6 on December 31, 2012, and $13 on December 31, 2013. Question 10: Hillsborough Co. has an available-for-sale investment in the bonds of Schuyler with a carrying (and fair) value of $88,020. Hillsborough determined that due to poor economic prospects for Schuyler, the bonds have decreased in value to $57,020. It is determined that this loss in value is other-than temporary. Prepare the journal entry, if any, to record the reduction in value. Question 11: Capriati Corporation made the following cash purchases of securities during 2012, which is the first year in which Arantxa invested in securities. 1. On January 15, purchased 11,700 shares of Gonzalez Company’s common stock at $43.55 per share plus commission $2,574. 2. On April 1, purchased 6,500 shares of Belmont Co.’s common stock at $67.60 per share plus commission $4,381. 3. On September 10, purchased 9,100 shares of Thep Co.’s preferred stock at $34.45 per share plus commission $6,383. On May 20, 2012, Capriati sold 3,900 shares of Gonzalez Company’s common stock at a market price of $45.50 per share less brokerage commissions, taxes, and fees of $3,705. The year-end fair values per share were: Gonzalez $39.00, Belmont $71.50, and Thep $36.40. In addition, the chief accountant of Capriati told you that Capriati Corporation plans to hold these securities for the long term but may sell them in order to earn profits from appreciation in pri ces. Question 12: (Journal Entries for Fair Value and Equity Methods) Presented below are two independent situations. Prepare all necessary journal entries in 2012 for each situation. Situation 1 Hatcher Cosmetics acquired 10% of the 207,400 shares of common stock of Ramirez Fashion at a total cost of $15 per share on March 18, 2012. On June 30, Ramirez declared and paid a $80,200 cash dividend. On December 31, Ramirez reported net income of $123,500 for the year. At December 31, the market price of Ramirez Fashion was $18 per share. The securities are classified as available-for-sale. Situation 2 Holmes, Inc. obtained significant influence over Nadal Corporation by buying 25% of Nadal’s 30,800 outstanding shares of common stock at a total cost of $9 per share on January 1, 2012. On June 15, Nadal declared and paid a cash dividend of $43,800. On December 31, Nadal reported a net income of $90,500 for the year. Question 13: (Equity Method) Gator Co. invested $1,380,000 in Demo Co. for 25% of its outstanding stock. Demo Co. pays out 40% of net income in dividends each year. Use the information in the following T-account for the investment in Demo to answer the following questions. Question 14: (Fair Value and Equity Method Compared). Gregory Inc. acquired 20% of the outstanding common stock of Handerson Inc. on December 31, 2012. The purchase price was $1,320,000 for 50,000 shares. Handerson Inc. declared and paid an $0.87 per share cash dividend on June 30 and on December 31, 2013. Handerson reported net income of $741,000 for 2013. The fair value of Handerson’s stock was $32 per share at December 31, 2013. Question 15: (Call Option). On January 2, 2012, Jones Company purchases a call option for $450 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2012 (the intrinsic value is therefore $0). On March 31, 2012, the market price for Merchant stock is $60 per share, and the time value of the option is $200. Question 16: In 2012, Amirante Corporation had pretax financial income of $207,000 and taxable income of $166,400. The difference is due to the use of different  depreciation methods for tax and accounting purposes. The effective tax rate is 40%. Compute the amount to be reported as income taxes payable at December 31, 2012. Question 17: At December 31, 2012, Fell Corporation had a deferred tax liability of $732,802, resulting from future taxable amounts of $2,155,300 and an enacted tax rate of 34%. In May 2013, a new income tax act is signed into law that raises the tax rate to 42% for 2013 and future years. Prepare the journal entry for Fell to adjust the deferred tax liability. Question 18: AMR Corporation (parent company of American Airlines) reported the following for 2009 (in millions). Service cost $405 Interest cost on P.B.O 736 Return on plan assets 825 Amortization of service cost 29 Amortization of loss 66 Compute AMR Corporation’s 2009 pension expense (in millions). Question 19: For Warren Corporation, year-end plan assets were $2,094,700. At the beginning of the year, plan assets were $1,762,400. During the year, contributions to the pension fund were $120,000, and benefits paid were $200,000. Compute Warren’s actual return on plan assets. Question 20: For 2010, Campbell Soup Company had pension expense of $48 million and contributed $296 million to the pension fund. Prepare Campbell Soup Company’s journal entry to record pension expense and funding. Question 21: Lahey Corp. has three defined-benefit pension plans as follows. Pension Assets (at Fair Value) Projected Benefit Obligation Plan X $637,500 $504,000 Plan Y 902,200 739,900 Plan Z 584,600 713,200 How will Lahey report these multiple plans in its financial statements? Question 22: For 2012, Sampsell Inc. computed its annual postretirement expense as $278,680. Sampsell’s contribution to the plan during 2012 was $185,750. Prepare Sampsell’s 2012 entry to record postretirement expense. Question 23: Wertz Corporation decided at the beginning of 2012 to change  from the completed-contract method to the percentage-of-completion method for financial reporting purposes. The company will continue to use completed-contract method for tax purposes. For years prior to 2012, pre-tax income under the two methods was as follows: percentage-of-completion $143,000, and completed-contract $65,800. The tax rate is 32%. Prepare Wertz’s 2012 journal entry to record the change in accounting principle. Question 24: In 2012, Bailey Corporation discovered that equipment purchased on January 1, 2010, for $50,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 29%. Prepare Hiatt’s 2012 journal entry to correct the error. Question 25: At January 1, 2012, Beilder Company reported retained earnings of $2,027,300. In 2012, Beilder discovered that 2011 depreciation expense was understated by $442,300. In 2012, net income was $931,270 and dividends declared were $204,310. The tax rate is 38%. Complete the 2012 retained earnings statement for Beilder Company. Question 26: Simmons Corporation owns stock of Armstrong, Inc. Prior to 2012, the investment was accounted for using the equity method. In early 2012, Simmons sold part of its investment in Armstrong, and began using the fair value method. In 2012, Armstrong earned net income of $81,100 and paid dividends of $90,400. Prepare Simmons’s entries related to Armstrong’s net income and dividends, assuming Simmons now owns 11% of Armstrong’s stock. Question 27: Manno Corporation has the following information available concerning its postretirement benefit plan for 2012. Service cost $53,750 Interest cost 58,360 Actual return on plan assets 40,190 Compute Manno’s 2012 postretirement expense Question 28: Ravonette Corporation issued 310 shares of $13 par value common stock and 130 shares of $47 par value preferred stock for a lump sum of $17,500. The common stock has a market price of $22 per share, and the preferred stock has a market price of $98 per share. Prepare the journal entry to record the issuance Question 29: Garfield Company purchased, as a held-to-maturity investment, $82,400 of the 9%, 8-year bonds of Chester Corporation for $73,919, which provides an 11% return. Prepare Garfield’s journal entries for (a) the purchase of the investment and (b) the receipt  of annual interest and discount amortization. Assume effective interest amortization is used. Question 30: Clydesdale Corporation has a cumulative temporary difference related to depreciation of $606,600 at December 31, 2012. This difference will reverse as follows: 2013, $43,100; 2014, $264,300; and 2015, $299,200. Enacted tax rates are 34% for 2013 and 2014, and 40% for 2015. Compute the amount Clydesdale should report as a deferred tax liability at December 31, 2012

The role of originality and creativity in setting out a good marketing communication strategy

Introduction The paper panda tour of introducing 1600 paper pandas in Hong Kong has demonstrated the use of quite original and creative elements, which are important aspects in setting out a good marketing communication strategy (Ng, 2014). It has been indicated that marketing managers have tried their best to use original methods of attracting customers to particular products and services. The dimension of creativity implies one’s talent in presenting projects that not only keep the attention of the audience but also make them realise that creativity is an indicator of long-term success (Thun, 2010). The objective of this paper is to explore the impact of originality and creativity on the process of developing a positive marketing communication strategy. Originality and creativity are major elements in setting out a relevant marketing communication strategy. These aspects allow marketers to send reliable brand messaging across numerous marketing channels, including social media which is associated with adequate creativity (Porcu, del Barrio-Garcia, & Kitchen, 2012). The paper panda tour serves as a proper example of how business should provide customers with more than the standard form of advertising (Thun, 2010). For instance, the idea of Integrated Marketing Communications (IMC) makes a clear sense in this context by emphasising the originality and creativity dimensions of the strategy behind the paper panda tour. Researchers suggest that marketing teams should focus initially on the customer, which is the case with the paper pandas (Porcu, del Barrio-Garcia, & Kitchen, 2012). Customers are exposed to the original and creative project of paper pandas through a mix of integrated communication methods, which are considered by people eye-catching and trustworthy. According to marketing researchers, IMC is an innovative and creative step because the complete culture of marketing agencies, in-house marketing departments, and marketing consultants had expanded the idea of separating advertisement, direct marketing, sales promotion, and public relations, rather than the pleasant, customer-centred development process that IMC requires (Duncan & Mulhern, 2004). Integrated Marketing Communication has become an important part in marketing because the technological system has the integration of business stakeholders (Kalamas, Mitchell, & Lester, 2009). According to experts, planning and implementation of all marketing communications are required to be done in an original and creative manner in order to meet the marketing objectives and attract more customers (Vance, Howe, & Dellavalle, 2009). The process of building and applying different communication programs reflects in the possibility to have a solid impact in the future over time (Kitchen & Schultz, 1999). The general IMC method focuses on customers and functions to establish and classify the methods to extend the influential communications programs. For the creators of the paper panda tour, it has become important to plan, develop, implement and assess the coordinated and measurable influential marketing communication programs applicable to external and internal viewers over time (Laurie & Mortimer, 2011). It is a policy in which different marketing communication tools like promotion, public relations, sales promotion, direct marketing and personal selling operate together to strengthen the communication process to target consumers. Such holistic and creative approach has led to the popularity of paper pandas. Media has experienced a wide phase of development in the last decade, implying that the creators of this original project have considered the importance of applying essential marketing strategies to reach out an optimal number of customers (Duncan & Mulhern, 2004). Marketing managers were formerly focused on advertising their product/service through traditional marketing forms like TV, radio and newspapers (Gronroos, 2004). However, now the current marketing trend appears to be digital as Information Technology has become an important element of daily lives (Reid, 2005). The digital aspects of originality along with the physical dimensions of creativity evident in the massive project of paper pandas have indicated the use of proper communication strategies. A concept shift has been presented, or in other words, the creators of the project have focused on demonstrating a move from traditional marketing towards digital content that flows across various integrated media channels. As a r esult, more people can be informed about the project of the paper pandas and thus would prefer to see it (Laurie & Mortimer, 2011). The theory definitely suggests about building the marketing communication mix which is considered being interdependent and bringing more incorporation and moving towards having several methods of accessing media, i.e. bringing in more flexibility in the marketing mix by using a combination of traditional and new digital media. Furthermore, it refers to the actions of media audience as being migrant, i.e. changing the marketing form that can provide them with the required experience. In such marketing environment, customers are dynamically involved and looking for new, original and creative content to make proper connections. Transition has played a relevant role in shifting the marketing trends, which is obvious in the formation of the paper panda project. The concept of transition indicates that the traditional media is not being displaced; rather its operations and significance are being shifted with new media options (Reid, 2005). This reflects in providing detailed online information about the project, such as in social media platforms and blogs. For instance, in a blog by Ng (2014), the focus is on describing the paper panda project in detail, with an emphasis on the substantial number (1600) of paper pandas exhibited to the audience in Hong Kong. In this way, media transition is more than merely a technological shift changing the relationship between existing technologies, sectors, markets and supporters (Kelm, 2011). Transition has brought remarkable changes in the media rights and has improved marketing media concentration. The elements of originality and creativity have played an important role in forming a good strategy that involves a combination of different IMC elements (Michaelidou, Siamagka, & Christodoulides, 2011). According to marketing experts, there are five established IMC elements known as Advertising, Promotion, Direct marketing, Personal selling and PR (Public Relations). It has been indicated that the paper panda project in Hong Kong has been successful in covering all these elements and achieving substantial customer interest (Porcu, del Barrio-Garcia, & Kitchen, 2012). A good marketing strategy normally focuses on building original and creative content that creates attention as well as motivational encouragement for users to share it with their friends and families (Kelm, 2011). For instance, the paper panda project can be adequately popularised through different social media platforms because it is a relevant step to rely on the contribution of different users to talk about the exciting project. The keys to social media success are user contribution, user brand loyalty, user enthusiasm, and the communication between people (Laurie & Mortimer, 2011). The introduction of an original and creative design related to the paper pandas, and the creation of opportunities for social interaction, are some of the features making this project quite appealing to the general audience. Many marketing experts long before have recognised synergism and originality as important concepts behind the introduction of a good marketing strategy; the incorporated effect of each effort would force the marketing communication to become more effective (Laurie & Mortimer, 2011). In this way, originality and creativity can enhance the brand image and popularity of companies that consider the importance of endorsing those concepts (Kelm, 2011). Communication, especially if it is done in an original manner, also represents a significant driver of marketing communication activities. Communication, as seen in the paper panda project, is a fundamental element which allows the creators of the project to connect with the audience (Duncan & Mulhern, 2004). This simply occurs through communicating of ideas and seeking to establish particular perceptions of these original paper pandas introduced in a quite creative way. With the rapid development of technology, modern organizations can utilise different communication channels to attract a significant number of customers. As mentioned, the role of social media platforms is important in the process of facilitating organisational communication (Kelm, 2011). The creators of the paper panda project have obviously ensured the creative application of a relevant marketing planning platform in a direction of expanding the positive impact of communication on all stakeholders (Ng, 2014). Commu nication has a strategic role in contemporary organisations. It is important to emphasise its priority of expanding particular marketing activities through the development of diverse communication channels. The emphasis is to deliver a consistent and properly structured message about the original project. Creativity is basically the application of better ways of solving organisational problems. The ability of an organisation to change in the environment provides the degree of elasticity and adaptability in all kinds of situations through creativity (Laurie & Mortimer, 2011). Originality means that a company has promising financial prospects that will ensure increase in profits. It means that whatever changes occur in the market, the company will continue to grow by providing the required services, hence increasing its market share and in the end have high revenues. Thus, originality and creativity can be used as adequate measures of performance as related to the paper panda project (Ng, 2014). It is important to mention that this project is quite flexible and has produced the necessary positive effects that original and creative projects usually produce in the audience. This paper discussed the role of originality and creativity, which have been indicated as essential principles of a good marketing strategy (Duncan & Mulhern, 2004). Details about the paper panda project have been provided, as this information was closely related to the dimensions of originality and creativity (Kelm, 2011). The paper focused on explaining how the paper panda project ensured the use of originality and creativity in the sense that no one has ever done a similar project. In conclusion, the success of this project points out that marketing managers have demonstrated the implementation of a proper marketing strategy combining the dimensions of originality and creativity. References Duncan, T. & Mulhern, F. (2004). A white paper on the status, scope and future of IMC. New York: McGraw-Hill. Gronroos, C. (2004). The relationship marketing process: Communication, interaction, dialogue, value. Journal of Business and Industrial Marketing, 19(2), 99-113. 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