Question & Answer

Priya works for Shine Company, a retailer of upscale jewelry. How much taxable income does Priya recognize under the following scenarios?

Thriller Corporation has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows:  Joe Jackson400 Mike Jackson (Joe’s son)200 Jane Jackson (Joe’s daughter)200 Vinnie Price (unrelated)   200   Total1,000   Thriller Corporation has current E&P of $300,000 for this year and accumulated E&P at January 1 of this year of $500,000.  During this year, the corporation made the following distributions to its shareholders:  03/31: Paid a distribution of $10 per share to each shareholder ($10,000 in total).   06/30: Redeemed 200 shares of Joe’s stock for $200,000.  Joe’s basis in the 200 shares redeemed was $100,000.   09/30: Redeemed 60 shares of Vinnie’s stock for $60,000. His basis in the 60 shares was $36,000.   12/31: Paid a distribution of $10 per share to each shareholder ($7,400 in total).

1.       : Until Sheryl Sandberg was promoted to chief operating officer of Facebook in 2012, its board was composed of only men. Yet a majority of Facebook’s users are women. Given this demographic, explain how Facebook might benefit from increasing the presence of women on its corporate board.

incorporating their sole proprietorship.  Using the married-joint tax brackets an]{Planning}Orie and Jane, husband and wife, operate a sole proprietorship.  They expect their taxable income next year to be $300,000, of which $125,000 is attributed to the sole proprietorship.  Orie and Jane are contemplating d the corporate tax brackets, find out how much current tax this strategy could save Orie and Jane.  How much income should be left in the corporation?

Earnhart Corporation has outstanding 3,000,000 shares of common stock of a par value of $10 each. The balance in its Retained Earnings account at January 1, 2014, was $24,000,000, and it then had Paid-in Capital in Excess of Par—Common Stock of $5,000,000. During 2014, the company’s net income was $4,700,000. A cash dividend of $0.60 a share was declared on May 5, 2014, and was paid June 30, 2014, and a 6% stock dividend was declared on November 30, 2014, and distributed to stockholders of record at the close of business on December 31, 2014. You have been asked to advise on the proper accounting treatment of the stock dividend. The existing stock of the company is quoted on a national stock exchange. The market price of the stock has been as follows. October 31, 2014 $31 November 30, 2014 $34 December 31, 2014 $38 Instructions (a) Prepare the journal entry to record the declaration and payment of the cash dividend. (b) Prepare the journal entry to record the declaration and distribution of the stock dividend. (c) Prepare the stockholders’ equity section (including schedules of retained earnings and additionalpaid-in capital) of the balance sheet of Earnhart Corporation for the year 2014 on the basis of the foregoing information. Draft a note to the financial statements setting forth the basis of the accounting for the stock dividend, and add separately appropriate comments or explanations regarding the basis chosen.

If banks choose to operate a 20 per cent liquidity ratio and receive extra cash deposits of £10 million: (a)  how much credit will ultimately be created? (b)  by how much will total deposits have expanded? (c)  what is the size of the bank deposits multiplier?

What is the difference between a perpetual inventory and a physical inventory? If a company maintains a perpetual inventory, should its physical inventory at any date be equal to the amount indicated by the perpetual inventory records? Why?

Coy and Matt are equal partners in the Matcoy Partnership. Each partner has a basis in his partnership interest of $28,000 at the end of the current year, prior to any distribution. On December 31, each receives an operating distribution. Coy receives $10,000 cash. Matt receives $3,000 cash and a parcel of land with a $7,000 fair market value and a $4,000 basis to the partnership. Matcoy has no debt or hot assets. a. What is Coy’s recognized gain or loss? What is the character of any gain or loss? b. What is Coy’s ending basis in his partnership interest? c. What is Matt’s recognized gain or loss? What is the character of any gain or loss? d. What is Matt’s basis in the distributed property? e. What is Matt’s ending basis in his partnership interest?

Give an example of how sovereign risk is related to currency swaps. (LO8)

What is a photoresist in chemical machining?

Midori Company had ending inventory at end-of-year prices of $100,000 at December 31, 2013; $119,900 at December 31, 2014; and $134,560 at December 31, 2015. The year-end price indexes were 100 at 12/31/13, 110 at 12/31/14, and 116 at 12/31/15. Compute the ending inventory for Midori Company for 2013 through 2015 using the dollar-value LIFO method.

Presently, the profession requires that earnings per share be disclosed on the face of the income statement. What are some disadvantages of reporting ratios on the financial statements?

Balanced scorecard variances A large supermarket has used a balanced scorecard for several years. The store’s vision is to provide customers with low-cost goods and a high-quality shopping experience. The entity’s strategy has been to focus on reducing wait time for help on the floor and at the checkout counter. Information for the last two years follows.       Required (a)     Classify each performance measure according to one of the four balanced scorecard perspectives. (b)     Analyse the change in each performance measure from 2019 to 2024. Give one possible reason for the change. (c)     Which performance measures need further investigation? Explain. (d)     What do the balanced scorecard results suggest about the success of the entity’s strategy to reduce wait time? Explain. (e)     When an organisation focuses on one strategy, problems sometimes arise in other areas. Do the balanced scorecard results provide evidence of possible deterioration in any operational areas? Explain.

Using a graph similar to Figure 20.7, trace through the effect of a reduction in aggregate demand.

What is a cost object?

Presented below is information related to the Accounts Receivable accounts of Gulistan Inc. during the current year 2014. 1. An aging schedule of the accounts receivable as of December 31, 2014, is as follows. % to Be Applied after Age Net Debit Balance Correction Is Made Under 60 days $172,342 1% 60–90 days 136,490 3% 91–120 days 39,924* 6% Over 120 days 23,644 $3,700 defi nitely uncollectible; $372,400 estimated remainder uncollectible is 25% *The $3,240 write-off of receivables is related to the 91-to-120 day category. 2. The Accounts Receivable control account has a debit balance of $372,400 on December 31, 2014. 3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,240 on November 3, 2014, and a debit to Allowance for Doubtful Accounts because of a bankruptcy. 4. Allowance for Doubtful Accounts is as follows for 2014.   5. A credit balance exists in Accounts Receivable (60–90 days) of $4,840, which represents an advance on a sales contract. Instructions Assuming that the books have not been closed for 2014, make the necessary correcting entries

Compare the relative merits of targeting (a) the money supply; (b) the exchange rate; (c) the rate of inflation.

Lazaro Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $800, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $520, and the fair value of the repossessed merchandise is $275. Prepare Lazaro’s entry to record the repossession.

Isabella provides 30 percent of the support for her father Hastings, who lives in an apartment by himself and has no gross income. Is it possible for Isabella to claim her father as a dependent? Explain.

What led to the establishment of FDIC insurance? (LO2)

Presented below is selected information for Alatorre Company. 1. Alatorre purchased a patent from Vania Co. for $1,000,000 on January 1, 2012. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2022. During 2014, Alatorre determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2014? 2. Alatorre bought a franchise from Alexander Co. on January 1, 2013, for $400,000. The carrying amount of the franchise on Alexander’s books on January 1, 2013, was $500,000. The franchise agreement had an estimated useful life of 30 years. Because Alatorre must enter a competitive bidding at the end of 2015, it is unlikely that the franchise will be retained beyond 2022. What amountshould be amortized for the year ended December 31, 2014? 3. On January 1, 2014, Alatorre incurred organization costs of $275,000. What amount of organization expense should be reported in 2014? 4. Alatorre purchased the license for distribution of a popular consumer product on January 1, 2014, for $150,000. It is expected that this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying a nominal fee, Alatorre can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the year ended December 31, 2014? Instructions Answer the questions asked about each of the factual situations.

What are protective covenants? Why are they needed? (LO2)

Define legal–political risk and give an example of how it can affect an international corporation.

In writing a research memo, what types of facts should be included in the memo?

What is goodwill? What is a bargain purchase?