To answer the accounting question, let’s analyze the given data and use accounting terminologies:

1. Expected cash flow for a 1,000-share short sale on Monday: Since Dave is short selling 1,000 shares, he is essentially borrowing the shares from his broker and selling them in the market. The expected cash flow from this short sale would be the proceeds from selling the shares, which can be calculated as follows: Expected cash flow = Number of shares * Selling price Expected cash flow = 1,000 * $11.00 Expected cash flow = $11,000

2. Number of shares Dave could have purchased Monday morning using the broker’s entire extended margin loan: Dave’s equity is $100,000, and the broker allows initial margin loans of 50%. This means Dave can leverage his equity by a factor of 2. Therefore, the total purchasing power available to Dave would be: Total purchasing power = Equity * Leverage factor Total purchasing power = $100,000 * 2 Total purchasing power = $200,000

Since Dave already used $150,000 to purchase 15,000 shares of KNIGHT, he would have $50,000 remaining from the broker’s extended margin loan. Therefore, the number of shares Dave could have purchased would be: Number of shares = Remaining loan amount / Price per share Number of shares = $50,000 / $10.00 Number of shares = 5,000 shares

1. Dave’s total return as of the end of day on Monday: To calculate Dave’s total return, we need to consider the change in the value of his equity. The total return can be calculated as follows: Total return = (Ending equity - Initial equity) / Initial equity Total return = ($115,000 - $100,000) / $100,000 Total return = $15,000 / $100,000 Total return = 15%

2. Mechanics of margin accounting using the brokerage statement: The brokerage statement provides details of Dave’s brokerage account, including the cash flow, quantity, price, and value of his holdings. It also shows the equity, actual maintenance, reserve, available (slack), and buying power. These figures are important for margin accounting.

Margin accounting involves monitoring the equity position in relation to the market value of the position. In this case, Dave’s broker allowed an initial margin loan of 50%, which means Dave could leverage his equity by a factor of 2. The broker also set a maintenance margin requirement of 40%, below which a margin call would be triggered.

The brokerage statement shows the actual equity, actual maintenance, reserve, and available (slack) figures. These figures help determine whether the equity position is above or below the maintenance margin requirement. If the equity drops below 40% of the market value of the position, the broker would call for more equity in the account.

In this case, Dave’s equity increased from $100,000 to $115,000 by the end of the day, which is above the maintenance margin requirement. Therefore, no margin call was triggered.

Overall, margin accounting involves monitoring the equity position, maintaining the required margin levels, and taking appropriate actions, such as adding more equity or facing liquidation, based on the broker’s requirements.