Question & Answer

3. Why will marginal social benefit not equal marginal social costs in the labour market if there exists (a) union monopoly power and/or (b) firms with monopsony power?

Why is understanding the time value of money important for tax planning?

Presented below are selected account balances for Homer Winslow Co. as of December 31, 2014. Inventory 12/31/14 $ 60,000 Cost of Goods Sold $225,700 Common Stock 75,000 Selling Expenses 16,000 Retained Earnings 45,000 Administrative Expenses 38,000 Dividends 18,000 Income Tax Expense 30,000 Sales Returns and Allowances 12,000 Sales Discounts 15,000 Sales Revenue 410,000 Instructions Prepare closing entries for Homer Winslow Co. on December 31, 2014. (Omit explanations.)

Explain the term sales mix in your own words. How does sales mix affect the contribution margin?

LAA Inc. made a charitable donation of $100,000 to the Trevor Project (a qualifying charity) For the year, LAA reported taxable income of $550,000, which included a $100,000 charitable contribution deduction (before limitation) and a $50,000 dividends-received deduction. What is LAA Inc.’s charitable contribution deduction for the year?

Morgan Sondgeroth Inc. began operations in January 2012 and reported the following results for each of its 3 years of operations. 2012 $260,000 net loss 2013 $40,000 net loss 2014 $800,000 net income At December 31, 2014, Morgan Sondgeroth Inc. capital accounts were as follows. 8% cumulative preferred stock, par value $100; authorized, issued, and outstanding 5,000 shares $500,000 Common stock, par value $1.00; authorized 1,000,000 shares; issued and outstanding 750,000 shares $750,000 Morgan Sondgeroth Inc. has never paid a cash or stock dividend. There has been no change in the capital accounts since Sondgeroth began operations. The state law permits dividends only from retained earnings. Instructions (a) Compute the book value of the common stock at December 31, 2014. (b) Compute the book value of the common stock at December 31, 2014, assuming that the preferred stock has a liquidating value of $106 per share.

Explain how the accounting for bad debts can be used for earnings management.

Using the facts from the previous problem, how would your answer change if Manny’s after-tax rate of return were 8 percent?

Accountants try to prepare income statements that are as accurate as possible. A basic requirement in preparing accurate income statements is to record costs and revenues properly. Proper recognition of costs and revenues requires that costs resulting from typical business operations be recognized in the period in which they expired. Instructions (a) List three criteria that can be used to determine whether such costs should appear as charges in the income statement for the current period. (b) As generally presented in financial statements, the following items or procedures have been criticized as improperly recognizing costs. Briefly discuss each item from the viewpoint of matching costs with revenues and suggest corrective or alternative means of presenting the financial information. (1) Receiving and handling costs. (2) Cash discounts on purchases.

How does the ILO/OECD definition differ from the economist’s definition? What is the significance of the phrase ‘available for work at current wages’ in the economist’s definition?

How is raw rubber recovered from the latex that is tapped from a rubber tree?

Identify some materials that have a crystalline structure.

Compare how the return of capital principle applies when (1) a taxpayer sells an asset and collects the sale proceeds all immediately and (2) a taxpayer sells an asset and collects the sale proceeds over several periods (an installment sale). If Congress wanted to maximize revenue from installment sales, how would it have applied the return of capital principle for installment sales?

In nine samples of size n = 10, the grand mean of the samples is x = 100 for the characteristic of interest, and the mean of the ranges of the samples is R = 8.5. Determine (a) lower and upper control limits for the x chart and (b) lower and upper control limits for the R chart. (c) Based on the data given, estimate the standard deviation of the process?

For each of the following, determine the expected cash flows. Cash Flow Probability Estimate Assessment (a) $ 4,800 20% 6,300 50% 7,500 30% (b) $ 5,400 30% 7,200 50% 8,400 20% (c) $(1,000) 10% 3,000 80% 5,000 10%

The volume of manufacturing in a period has an effect on income calculated using absorption costing but has no effect on income calculated using variable costing. Explain.

How do two taxpayers determine who has priority to claim a person as a dependent if the person is a qualifying child of both taxpayers when neither

Cooke Company has a fiscal year ending on September 30. Selected data from the September 30 worksheet are presented below.   Instructions (a) Prepare a complete worksheet. (b) Prepare a classified balance sheet. (Note: $10,000 of the mortgage payable is due for payment in the next fiscal year.) (c) Journalize the adjusting entries using the worksheet as a basis. (d) Journalize the closing entries using the worksheet as a basis. (e) Prepare a post-closing trial balance.

Prepare the following adjusting entries at August 31 for Walgreens. (a) Interest on notes payable of $300 is accrued. (b) Services performed but unbilled total $1,400. (c) Salaries and wages earned by employees of $700 have not been recorded. (d) Bad debt expense for year is $900. Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable,Salaries and Wages Expense, Salaries and Wages Payable, Allowance for Doubtful Accounts, and Bad Debt Expense.

Presented below is the balance sheet of Sameed Brothers Corporation (000s omitted).   Instructions Evaluate the balance sheet presented. State briefly the proper treatment of any item criticized.

What determines the shape and position of the IS curve?

Using an available tax service or the Internet, identify three basic tax planning ideas or tax tips suggested for year-end tax planning.  Which basic tax strategy from this chapter does each planning idea employ?

Polymer fibers and filaments are used in several applications; what is the most important application commercially?

List the accessory tools that can be used during open die forging according to the video on forging

Red Hot Chili Peppers Co. had the following activity in its most recent year of operations. (a) Purchase of equipment. (g) Amortization of intangible assets. (b) Redemption of bonds payable. (h) Purchase of treasury stock. (c) Sale of building. (i) Issuance of bonds for land. (d) Depreciation. (j) Payment of dividends. (e) Exchange of equipment for furniture. (k) Increase in interest receivable on notes receivable. (f) Issuance of capital stock. (l) Pension expense exceeds amount funded. Instructions Classify the items as (1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant non-cash investing and financing activities. Use the indirect method.