Question & Answer

Assume that if the U.S. dollar strengthens, it can place downward pressure on U.S. inflation. Based on this information, how might expectations of a strong dollar affect the demand for loanable funds in the United States and U.S. interest rates? Is there any reason to think that expectations of a strong dollar could also affect the supply of loanable funds? Explain. (LO1, LO2)

: Describe two of the Big Five personality traits, and explain how each trait might influence a manager’s behaviors toward direct reports.

Describe why Congress enacted the UNICAP rules, and describe an exception to these rules.

Oregon Inc. $10 par common stock is selling for $110 per share. Four million shares are currently issued and outstanding. The board of directors wishes to stimulate interest in Oregon common stock before a forthcoming stock issue but does not wish to distribute capital at this time. The board also believes that too many adjustments to the stockholders’ equity section, especially retained earnings, might discourage potential investors. The board has considered three options for stimulating interest in the stock: 1. A 20% stock dividend. 2. A 100% stock dividend. 3. A 2-for-1 stock split. Instructions Acting as financial advisor to the board, you have been asked to report briefly on each option and, considering the board’s wishes, make a recommendation. Discuss the effects of each of the foregoing options.

What requirements do an abandoned spouse and qualifying surviving spouse have in common?

Jupiter Company sells goods on January 1 that have a cost of $500,000 to Danone Inc. for $700,000, with payment due in 1 year. The cash price for these goods is $610,000, with payment due in 30 days. If Danone paid immediately upon delivery, it would receive a cash discount of $10,000. Instructions (a) Prepare the journal entry to record this transaction at the date of sale. (b) How much revenue should Jupiter report for the entire year?

Mantle Inc. sells merchandise for cash and also on the installment plan. Entries to record cost of goods sold are made at the end of each year. Repossessions of merchandise (sold in 2014) were made in 2015 and were recorded correctly as follows. Deferred Gross Profi t, 2014 7,200 Repossessed Merchandise 8,000 Loss on Repossession 2,800 Installment Accounts Receivable, 2014 18,000 Part of this repossessed merchandise was sold for cash during 2015, and the sale was recorded by a debit to Cash and a credit to Sales Revenue. The inventory of repossessed merchandise on hand December 31, 2015, is $4,000; of new merchandise, $127,400. There was no repossessed merchandise on hand January 1, 2015. Collections on accounts receivable during 2015 were: Installment Accounts Receivable, 2014 $80,000 Installment Accounts Receivable, 2015 50,000 The cost of the merchandise sold under the installment plan during 2015 was $111,600. The rate of gross profit on 2014 and on 2015 installment sales can be computed from the information given. MANTLE INC. TRIAL BALANCE DECEMBER 31, 2015 Dr. Cr. Cash $118,400 Installment Accounts Receivable, 2014 80,000 Installment Accounts Receivable, 2015 130,000 Inventory, Jan. 1, 2015 120,000 Repossessed Merchandise 8,000 Accounts Payable $ 47,200 Deferred Gross Profi t, 2014 64,000 Common Stock 200,000 Retained Earnings 40,000 Sales Revenue 400,000 Installment Sales 180,000 Purchases 360,000 Loss on Repossession 2,800 Operating Expenses 112,000 $931,200 $931,200 Instructions (a) From the trial balance and other information given above, prepare adjusting and closing entries as of December 31, 2015. (b) Prepare an income statement for the year ended December 31, 2015. Include only the realized gross profit in the income statement.

Describe how mortgage-backed securities (MBS) are used. (LO4)

Pretax financial income for Lake Inc. is $300,000, and its taxable income is $100,000 for 2015. Its only temporary difference at the end of the period relates to a $70,000 difference due to excess depreciation for tax purposes. If the tax rate is 40% for all periods, compute the amount of income tax expense to report in 2015. No deferred income taxes existed at the beginning of the year.

Qualls Corporation reported 2014 earnings per share of $7.21. In 2015, Qualls reported earnings per share as follows. On income before extraordinary item $6.40 On extraordinary item 1.88 On net income $8.28Is the increase in earnings per share from $7.21 to $8.28 a favorable trend?

Under what circumstances is it appropriate to record goodwill in the accounts? How should goodwill, properly recorded on the books, be written off in order to conform with generally accepted accounting principles?

What is the danger of issuing too much stock? What is the role of the securities firm that serves as the underwriter, and how can it ensure that the firm does not issue too much stock? (LO2, LO4)

Last year, Zeno Company recorded an impairment on an intangible asset held for use. Recent appraisals indicate that the asset has increased in value. Should Zeno record this recovery in value?

On a particular production line in a wafer fabrication facility, the crystal yield is 60%, the crystal-toslice yield is 60%, wafer yield is 90%, multiprobe is 70%, and final test yield is 80%. (a) What isthe overall yield for the production line? (b) If wafer yield and multiprobe yield are combined into the same reporting category, what overall yield for the two operations would be expected?

Why is raw material preparation more important in the processing of new ceramics than for traditional ceramics?

The comparative balance sheets of ConstantineCavamanlis Inc. at the beginning and the end of the year 2014 are as follows.   Net income of $44,000 was reported, and dividends of $23,000 were paid in 2014. New equipment was purchased and none was sold. Instructions Prepare a statement of cash flows for the year 2014.

During the credit crisis in the 2008–2009 period, banks were criticized for restricting their credit. Write a short essay to explain why you think banks should or should not be allowed to restrict their credit during a credit crisis.

Explain the difference between efficiency and effectiveness, as well as their importance for organizational performance.

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

A cup-drawing operation is performed in which the inside diameter = 80 mm and the height = 50 mm. The stock thickness = 3.0 mm, and the starting blank diameter = 150 mm. Punch and die radii = 4 mm. Tensile strength = 400 MPa and yield strength = 180 MPa for this sheet metal. Determine (a) drawing ratio, (b) reduction, (c) drawing force, and (d) blankholder force.

Latrell recently used his Delta Skymiles to purchase a free roundtrip ticket to Milan, Italy (value $1,200).  The frequent flyer miles used to purchase the ticket were generated from Latrell’s business travel as a CPA.  Latrell’s employer paid for his business trips, and he was not taxed on the travel reimbursement.   a.  Use an available tax research service to determine how much income, if any, does Latrell have to recognize as a result of purchasing an airline ticket with Skymiles earned from business travel.  b.  Write a memo communicating the results of your research.

How might fluctuations in aggregate demand lead to changes in output even under the assumption of continuous market clearing?

What is the difference between a closed-loop control system and an open-loop control system?

Oxford Corporation began operations in 2014 and reported pretax financial income of $225,000 for the year. Oxford’s tax depreciation exceeded its book depreciation by $40,000. Oxford’s tax rate for 2014 and years thereafter is 30%. In its December 31, 2014, balance sheet, what amount of deferred tax liability should be reported?

What are the advantages and disadvantages of using prepreg material for lay-up of composites according to the composite video?