Question & Answer

Given the following items and amounts, compute the actual return on plan assets: fair value of plan assets at the beginning of the period $9,500,000; benefits paid during the period $1,400,000; contributions made during the period $1,000,000; and fair value of the plan assets at the end of the period $10,150,000.

Previn Brothers Inc. purchased land at a price of $27,000. Closing costs were $1,400. An old building was removed at a cost of $10,200. What amount should be recorded as the cost of the land?

Colin Davis Machine Company maintains a general ledger account for each class of inventory, debiting such accounts for increases during the period and crediting them for decreases. The transactions below relate to the Raw Materials inventory account, which is debited for materials purchased and credited for materials requisitioned for use. 1. An invoice for $8,100, terms f.o.b. destination, was received and entered January 2, 2014. The receiving report shows that the materials were received December 28, 2013. 2. Materials costing $28,000, shipped f.o.b. destination, were not entered by December 31, 2013, “because they were in a railroad car on the company’s siding on that date and had not been unloaded.” 3. Materials costing $7,300 were returned to the supplier on December 29, 2013, and were shipped f.o.b. shipping point. The return was entered on that date, even though the materials are not expected to reach the supplier’s place of business until January 6, 2014. 4. An invoice for $7,500, terms f.o.b. shipping point, was received and entered December 30, 2013. The receiving report shows that the materials were received January 4, 2014, and the bill of lading shows that they were shipped January 2, 2014. 5. Materials costing $19,800 were received December 30, 2013, but no entry was made for them because “they were ordered with a specified delivery of no earlier than January 10, 2014.” Instructions Prepare correcting general journal entries required at December 31, 2013, assuming that the books have not been closed.

Horace Greeley Corporation was organized in 2013 and began operations at the beginning of 2014. The company is involved in interior design consulting services. The following costs were incurred prior to the start of operations. Attorney’s fees in connection with organization of the company $15,000 Purchase of drafting and design equipment 10,000 Costs of meetings of incorporators to discuss organizational activities 7,000 State fi ling fees to incorporate 1,000 $33,000 Instructions (a) Compute the total amount of organization costs incurred by Greeley. (b) Prepare the journal entry to record organization costs for 2014.

What effects do debit cards and cash machines (ATMs) have on (a) banks’ prudent liquidity ratios; (b) the size of the bank deposits multiplier?

Using the theory of present bias, provide an economic rationale for government regulation of the payday loan market.

Employees at your company disagree about the accounting for sales returns. The sales manager believes that granting more generous return provisions and allowing customers to order items on a bill and hold basis can give the company a competitive edge and increase sales revenue. The controller cautions that, depending on the terms granted, loose return or bill and hold provisions might lead to non-IFRS revenue recognition. The company CFO would like you to research the issue to provide an authoritative answer. Instructions Access the IFRS authoritative literature at the IASB website (http://eifrs.iasb.org/). (Click on the IFRS tab and then register for free eIFRS access if necessary.) When you have accessed the documents, you can use the search tool in your Internet browser to respond to the following questions. (Provide paragraph citations.) (a) What is the authoritative literature addressing revenue recognition when right of return exists? (b) What is meant by “right of return”? “Bill and hold”? (c) When there is a right of return, what conditions must the company meet to recognize the revenue at the time of sale? (d) What factors may impair the ability to make a reasonable estimate of future returns? (e) When goods are sold on a bill and hold basis, what conditions must be met to recognize revenue upon receipt

Summarize the six steps used in managerial decision making.

A part made of sheet steel is to be nickel plated. The part is a rectangular flat plate that is 0.075 cm thick and whose face dimensions are 14 cm by 19 cm. The plating operation is carried out in an acid sulfate electrolyte, using a current = 20 amps for a duration = 30 min. Determine the average thickness of the plated metal resulting from this operation.

How many tax brackets are there in the corporate tax rate schedule?

: Explain how empowerment and engagement approaches can be used to heighten employee motivation.

Dan Aykroyd Corp. was a 30% owner of Steve Martin Company, holding 210,000 shares of Martin’s common stock on December 31, 2013. The investment account had the following entries. Investment in Martin 1/1/12 Cost $3,180,000 12/6/12 Dividend received $150,000 12/31/12 Share of income 390,000 12/5/13 Dividend received 240,000 12/31/13 Share of income 510,000 On January 2, 2014, Aykroyd sold 126,000 shares of Martin for $3,440,000, thereby losing its significant influence. During the year 2014, Martin experienced the following results of operations and paid the following dividends to Aykroyd. Martin Dividends Paid Income (Loss) to Aykroyd 2014 $300,000 $50,400 At December 31, 2014, the fair value of Martin shares held by Aykroyd is $1,570,000. This is the first reporting date since the January 2 sale. Instructions (a) What effect does the January 2, 2014, transaction have upon Aykroyd’s accounting treatment for its investment in Martin? (b) Compute the carrying amount of the investment in Martin as of December 31, 2014 (prior to any fair value adjustment). (c) Prepare the adjusting entry on December 31, 2014, applying the fair value method to Aykroyd’s long-term investment in Martin Company securities.

Explain how liabilities of an LLC (taxed as a partnership) or an S corporation affect the amount of tax losses from the entity that limited liability company members and S corporation shareholders may deduct. Do the tax rules favor LLCs or S corporations?

Explain the rights of common stockholders that are not available to other individuals. (LO2)

: Describe the innovation strategies that managers implement for changing products and workflow technologies, such as a bottom-up approach and open innovation.

If two or more firms are charging similar prices, does this imply that collusion is taking place? What evidence would you need to determine the existence of collusion?

Assume the same information as E19-14, except that at the end of 2013, Jennifer Capriati Corp. had a valuation account related to its deferred tax asset of $45,000. Instructions (a) Record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming that it is more likely than not that the deferred tax asset will be realized in full. (b) Record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming that it is more likely than not that none of the deferred tax asset will be realized.

Discuss the concept of asymmetric information. Explain why it may motivate firms to repurchase some of their stock. (LO4)

An electric discharge machining operation is being performed on two work materials: tungsten and tin. Determine the amount of metal removed in the operation after one hour at a discharge current of 20 amps for each of these metals. Use metric units and express the answers in mm3/hr. From Table 4.1, the melting temperatures of tungsten and tin are 3410°C and 232°C, respectively.

How do speculators use call options? Describe the conditions under which their strategy would backfire. What is the maximum loss that could occur for a purchaser of a call option? (LO3)

Use the information for Rick Kleckner Corporation from BE21-3. Assume that at December 31, 2014, Kleckner made an adjusting entry to accrue interest expense of $29,530 on the lease. Prepare Kleckner’s January 1, 2015, journal entry to record the second lease payment of $53,920.

What implication does the financial instability hypothesis have for the balance sheets of different sectors of the economy?

10.12 In the casting of steel under certain mold conditions, the mold constant in Chvorinov's rule is known to be 4.0 min/cm2 , based on previous experience. The casting is a flat plate whose length = 30 cm, width = 10 cm, and thickness = 20 mm. Determine how long it will take for the casting to solidify.

If this is true, why do people not increase their rate of saving?

Verify that the derivative of Eq. (24.12) results in Eq. (24.13)