Question & Answer

Using the facts from problem 50, what will happen to the government’s tax revenues if Song chooses to spend more time pursuing her other passions besides work in response to the tax rate change and earns only $75,000 in taxable income?  What is the term that describes this type of reaction to a tax rate increase?  What types of taxpayers are likely to respond in this manner?

Given the following tax structure, what tax would need to be assessed on Venita to make the tax horizontally equitable?

Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years follow. Year Ended December 31 Inventory at Current-Year Cost Price Index 2013 $19,750 100 2014 22,140 108 2015 25,935 114 Instructions Compute the value of the 2014 and 2015 inventories using the dollar-value LIFO method.

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Lorenzo is considering starting a trucking company either in Texas or Oklahoma.  He will relocate his family, which includes his wife, children, and parents, to reside in the same state as his business.  What types of taxes may influence his decision of where to locate his business?

Congress would like to increase tax revenues by 10 percent.  Assume that the average taxpayer in the United States earns $65,000 and pays an average tax rate of 15 percent.  If the income effect is in effect for all taxpayers, what average tax rate will result in a 10 percent increase in tax revenues?  This is an example of what type of forecasting?

Locate the IRS Web site at http://www.irs.gov/.  For every $100 the IRS collected, how much was spent on the IRS collection efforts?  What tax system criterion does this information help you to evaluate with respect to the current U.S. tax system?

Using the Internet, find a comparison of income tax rates across states.  What state currently has the highest income tax rate?  In considering individual tax burdens across states, what other taxes should you consider?

At December 31, 2013, Stacy McGill Corporation reported current assets of $370,000 and current liabilities of $200,000. The following items may have been recorded incorrectly. 1. Goods purchased costing $22,000 were shipped f.o.b. shipping point by a supplier on December 28. McGill received and recorded the invoice on December 29, 2013, but the goods were not included in McGill’s physical count of inventory because they were not received until January 4, 2014. 2. Goods purchased costing $15,000 were shipped f.o.b. destination by a supplier on December 26. McGill received and recorded the invoice on December 31, but the goods were not included in McGill’s 2013 physical count of inventory because they were not received until January 2, 2014. 3. Goods held on consignment from Claudia Kishi Company were included in McGill’s December 31, 2013, physical count of inventory at $13,000. 4. Freight-in of $3,000 was debited to advertising expense on December 28, 2013. Instructions (a) Compute the current ratio based on McGill’s balance sheet. (b) Recompute the current ratio after corrections are made. (c) By what amount will income (before taxes) be adjusted up or down as a result of the corrections?

Define a provision, and give three examples of a provision.

What are some of the general considerations that product designers must keep in mind when designing components out of plastics?

Tevez Company experienced an actuarial loss of $750 in its defined benefit plan in 2014. For 2014, Tevez’s revenues are $125,000, and expenses (excluding pension expense of $14,000, which does not include the actuarial loss) are $85,000. Prepare Tevez’s statement of comprehensive income for 2014.

In the context of fiber reinforcement, what is a mat?

A direct extrusion operation produces the cross section shown in Figure P19.32(a) from a brass billet whose diameter = 125 mm and length = 350 mm. The flow curve parameters of the brass are K = 700 MPa and n = 0.35. In the Johnson strain equation, a = 0.7 and b = 1.4. Determine (a) the extrusion ratio, (b) the shape factor, (c) the force required to drive the ram forward during extrusion at the point in the process when the billet length remaining in the container = 300 mm, and (d) the length of the extruded section at the end of the operation if the volume of the butt left in the container is 600,000 mm3 .

Explain the relationship between margin of safety percentage and degree of operating leverage.

Moonwalker Corporation issued 2,000 shares of its $10 par value common stock for $60,000. Moonwalker also incurred $1,500 of costs associated with issuing the stock. Prepare Moonwalker’s journal entry to record the issuance of the company’s stock.

Cost behaviour; scatter plot Polar Bear Ski Wear is a shop that sells skiwear at a ski resort. Its cost accountant developed the following scatter plot for the cost of electricity for lights, heating, and cooling against retail sales revenue.                             Required (a)          In a business such as retail sales, what usually causes the cost of electricity to vary? (b)          In what time of year would most skiwear be sold at a ski resort? (c)           In the scatter plot, the cost of electricity appears to be related to volume of retail sales. If this shop specialised in selling swimwear, would the scatter plot look different? Explain what would change. (d)          Identify and explain another cost that is similar in nature to the cost of electricity. When you plot the cost against a cost driver, a relationship becomes apparent. However, the cost varies with something other than the cost driver. (Think of other situations where this type of relationship might occur.)

Archer Construction Company began work on a $420,000 construction contract in 2014. During 2014, Archer incurred costs of $278,000, billed its customer for $215,000, and collected $175,000. At December 31, 2014, the estimated future costs to complete the project total $162,000. Prepare Archer’s journal entry to record profit or loss using (a) the percentage-of-completion method and (b) the completed-contract method, if any.

What is work hardening?

Assume that the (weekly) market demand and supply of tomatoes are given by the following figures: Price (£ per kilo) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 Qd (000 kilos) 30 35 40 45 50 55 60 Qs (000 kilos) 80 68 62 55 50 45 38 (a)  What are the equilibrium price and quantity? (b)  What will be the effect of the government fixing a minimum price of (i) £3 per kilo; (ii) £1.50 per kilo? (c)  Suppose that the government paid tomato producers a subsidy of £1 per kilo. (i) Give the new supply schedule. (ii) What will be the new equilibrium price? (iii) How much will this cost the government? (d)  Alternatively, suppose that the government guaranteed tomato producers a price of £2.50 per kilo. (i) How many tomatoes would it have to buy in order to ensure that all the tomatoes produced were sold? (ii) How much would this cost the government? (e)  Alternatively, suppose it bought all the tomatoes produced at £2.50. (i) At what single price would it have to sell them in order to dispose of the lot? (ii) What would be the net cost of this action?

The trial balance of Wanda Landowska Company (shown on the next page) does not balance. Your review of the ledger reveals the following. (a) Each account had a normal balance. (b) The debit footings in Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated $100. (c) A transposition error was made in Accounts Receivable and Service Revenue; the correct balances for Accounts Receivable and Service Revenue are $2,750 and $6,690, respectively. (d) A debit posting to Advertising Expense of $300 was omitted. (e) A $1,500 cash drawing by the owner was debited to Owner’s Capital and credited to Cash.   Instructions Prepare a correct trial balance.

What is meant by the term “qualitative characteristics of accounting information”?

Lindsey Hunter Corporation is authorized to issue 50,000 shares of $5 par value common stock. During 2014, Lindsey Hunter took part in the following selected transactions. 1. Issued 5,000 shares of stock at $45 per share, less costs related to the issuance of the stock totaling $7,000. 2. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $46 per share on the date of issuance. 3. Purchased 500 shares of treasury stock at $43 per share. The treasury shares purchased were issued in 2010 at $40 per share. Instructions (a) Prepare the journal entry to record item 1. (b) Prepare the journal entry to record item 2. (c) Prepare the journal entry to record item 3 using the cost method.