Question & Answer

1.    : A new business venture must develop a comprehensive business plan if it hopes to acquire start-up funding. Companies such as FedEx and Nike say they did not follow their original plans closely. Does this mean that developing the plan was a waste of time for these eventually successful companies?

Linus Paper Company decided to close two small pulp mills in Conway, New Hampshire, and Corvallis, Oregon. Would these closings be reported in a separate section entitled “Discontinued operations after income from continuing operations”? Discuss.

Tony Bautista needs $25,000 in 4 years. What amount must he invest today if his investment earns 12% compounded annually? What amount must he invest if his investment earns 12% annual interest compounded quarterly?

What are the criteria necessary to meet the “not essentially equivalent to a dividend” change-in-stock-ownership test in a stock redemption?

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?

Name the four types of finishing operations performed on plastics, according to the plastics finishing video.

What is meant by the concept of ‘learning by exporting’?

What is a flexible manufacturing system?

Another type of strategy firms can follow in a repeated game is the ’tit-for-tat’ strategy. What is the tit-for-tat strategy? What impact will it have on the most likely outcome in a repeated game?

Compute the unit melting energy for (a) aluminum and (b) steel as the sum of: (1) the heat required to raise the temperature of the metal from room temperature to its melting point, which is the volumetric specific heat multiplied by the temperature rise; and (2) the heat of fusion, so that this value can be compared to the unit melting energy calculated by Eq. (29.2). Use either the SI units orU.S. Customary units. Find the values of the properties needed in these calculations either in this text or in other references. Are the values close enough to validate Eq. (29.2)?

Johnstone Co. purchased a put option on Ewing common shares on July 7, 2014, for $240. The put option is for 200 shares, and the strike price is $70. (The market price of a share of Ewing stock on that date is $70.) The option expires on January 31, 2015. The following  data are available with respect to the put option. Date Market Price of Ewing Shares Time Value of Put Option September 30, 2014 $77 per share $125 December 31, 2014 75 per share 50 January 31, 2015 78 per share 0 Instructions Prepare the journal entries for Johnstone Co. for the following dates. (a) July 7, 2014—Investment in put option on Ewing shares. (b) September 30, 2014—Johnstone prepares financial statements. (c) December 31, 2014—Johnstone prepares financial statements. (d) January 31, 2015—Put option expires.

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.

Presented below are a number of balance sheet accounts of Deep Blue Something, Inc. (a) Investment in Preferred Stock. (h) Interest Payable. (b) Treasury Stock. (i) Deficit. (c) Common Stock. (j) Equity Investments (trading). (d) Dividends Payable. (k) Income Taxes Payable. (e) Accumulated Depreciation—Equipment. (l) Unearned Subscriptions Revenue. (f) Construction in Process. (m) Work in Process. (g) Petty Cash. (n) Salaries and Wages Payable. Instructions For each of the accounts above, indicate the proper balance sheet classification. In the case of borderline items, indicate the additional information that would be required to determine the proper classification.

Solve the previous problem, except that the metal to be welded is aluminum, and the corresponding melting factor is half the value for steel.

The part shown in Figure P16.13 is to be pressed of iron powders using a compaction pressure of 75,000 lb/in2 . Dimensions are inches. Determine (a) the most appropriate pressing direction, (b) the required press tonnage to perform this operation, and (c) the final weight of the part if the porosity is 10%. Assume shrinkage during sintering can be neglected.

Explain the least aggregate deferral test for determining a partnership’s year-end and discuss when it applies

What are some of the design guidelines for weldments that are fabricated by arc welding?

Explain why some meme stocks were misvalued by investors.

What determines the rate of depreciation of capital? What would happen if the rate of depreciation fell?

What is calorizing?

Anne Cleves Company reported the following amounts in the stockholders’ equity section of its December 31, 2013, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 2,000 shares issued) $200,000 Common stock, $5 par (100,000 shares authorized, 20,000 shares issued) 100,000 Additional paid-in capital 125,000 Retained earnings 450,000 Total $875,000 During 2014, Cleves took part in the following transactions concerning stockholders’ equity. 1. Paid the annual 2013 $10 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2013. 2. Purchased 1,700 shares of its own outstanding common stock for $40 per share. Cleves uses the cost method. 3. Reissued 700 treasury shares for land valued at $30,000. 4. Issued 500 shares of preferred stock at $105 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $45 per share. 6. Issued the stock dividend. 7. Declared the annual 2014 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2015. Instructions (a) Prepare journal entries to record the transactions described above. (b) Prepare the December 31, 2014, stockholders’ equity section. Assume 2014 net income was $330,000.

In what way does specialisation reduce the problem of scarcity?

Figure 19.5 shows a steep investment demand curve. If the real rate of interest falls from r1 to r2, there is only a small rise in investment from I1 to I2. Now draw a much more elastic I curve passing through point a. Assume that this is the true I curve. Show how the rate of interest could still fall to r2 and investment still only rise to I2 if this curve were to shift.

What major types of items are reported in the retained earnings statement?

Determine the shrink rule to be used by mold makers for die casting of zinc. Using the shrinkage value in Table 10.1, express your answer in terms of decimal mm of elongation per 300 mm of length compared to a standard 300-mm scale.