Question & Answer

Mehta Company traded a used welding machine (cost $9,000, accumulated depreciation $3,000)for office equipment with an estimated fair value of $5,000. Mehta also paid $3,000 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)

How can the market distortions argument be used to justify putting excise duties on specific goods such as petrol, alcohol and tobacco? Is this the only reason why excise duties are put on these particular products?

What is the purpose of the statement of cash flows? What information does it provide?

Arness Woodcrafters sells $250,000 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 5% and retains an amount equal to 4% of accounts receivable. Arness estimates the fair value of the recourse liability to be $8,000. Prepare the journal entry for Arness to record the sale.

What is meant by the term faying surface?

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

Do you think that this is an accurate description of how people behave when they acquire extra money?

Why might it make sense for a firm which cannot sell its output at a profit to continue in production for the time being? For how long should the firm continue to produce at a loss?

Inuk is the sole shareholder of Tex Corporation.  Inuk first formed Tex as a C corporation.  However, in an attempt to avoid having Tex’s income double-taxed, Inuk elected S corporation status for Tex several years ago.  On December 31, 2024, Tex reports $5,000 of earnings and profits from its years as a C corporation and $50,000 in its accumulated adjustments account from its activities as an S corporation (including its 2024 activities).  Inuk discovered that for the first time Tex was going to have to pay the excess net passive income tax.  Inuk wanted to avoid having to pay the tax, but he determined the only way to avoid the tax was to eliminate Tex’s E&P by the end of 2024.  He determined that, because of the distribution ordering rules (AAA first), he would need to have Tex immediately (in 2024) distribute $55,000 to him.  This would clear out Tex’s accumulated adjustments account first and then eliminate Tex’s C corporation earnings and profits in time to avoid the excess net passive income tax.  Inuk was not sure Tex could come up with $55,000 of cash or property in time to accomplish his objective.  Does Inuk have any other options to eliminate Tex’s earnings and profits without first distributing the balance in Tex’s accumulated adjustments account?

Describe the value-at-risk method for measuring risk. (LO4)

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.

Explain the characteristics of effective goals.

Assume that bond market participants suddenly expect the Fed to substantially increase the money supply. (LO2) a. Assuming no threat of inflation, how would this expectation affect bond prices? b. Assuming that inflation may result, how would bond prices be affected? c. Given your answers to (a) and (b), explain why expectations of the Fed’s increase in the money supply may sometimes cause bond market participants to disagree about how bond prices will be affected.

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

: Describe the value of the four components of emotional intelligence for managers.

Using the information provided in BE4-2, prepare a condensed multiple-step income statement for Brisky Corporation.

Within the area where you live, work, or attend school, name three businesses that would likely use job costing.

The welding power generated in a particular arc-welding operation = 3000 W. This is transferred to the work surface with a heat transfer factor = 0.9. The metal to be welded is copper whose melting point is given in Table 29.2. Assume that the melting factor = 0.25. A continuous fillet weld is to be made with a cross-sectional area = 15.0 mm2. Determine the travel speed at which the welding operation can be accomplished.

Describe the ways that insurance firms are utilizing innovative technologies to provide their services. (LO4)

Differentiate between a fixed-rate mortgage and a variablerate mortgage.

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.

Daniel Perkins is the sole shareholder of Perkins Inc., which is currently under protection of the U.S. bankruptcy court. As a “debtor in possession,” he has negotiated the following revised loan agreement with United Bank. Perkins Inc.’s $600,000, 12%, 10-year note was refinanced with a $600,000, 5%, 10-year note. Instructions (a) What is the accounting nature of this transaction? (b) Prepare the journal entry to record this refinancing: (1) On the books of Perkins Inc. (2) On the books of United Bank. (c) Discuss whether generally accepted accounting principles provide the proper information useful to managers and investors in this situation.

Can the margin of safety ever be negative? Explain your answer.

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

Design the nominal sizes of a GO/NO-GO plug gage to inspect a 1.500 ± 0.030 in diameter hole. There is a wear allowance applied only to the GO side of the gage. The wear allowance is 2% of the entire tolerance band for the inspected feature. Determine (a) the nominal size of the GO gage including the wear allowance and (b) the nominal size of the NO-GO gage