Question & Answer

Side Kicks has year-end account balances of Sales Revenue $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Administrative Expenses $189,000; Income Tax Expense $35,100; and Dividends $18,900. Prepare the year-end closing entries.

Describe a passive monetary policy. (LO2; LO3)

By what would we need to divide GDP in order to get a measure of labour productivity per hour?

In which of the following industries are exit costs likely to be low: (a) steel production; b) market gardening; (c) nuclear power generation; (d) specialist financial advisory services; (e) production of a new drug; (f) street food; (g) car ferry operators? Do these exit costs depend on how narrowly the industry is defined?

The wage rate a firm has to pay and the output it can produce varies with the number of workers as follows (all figures are hourly): Number of workers 1 2 3 4 5 6 7 8 Wage rate (ACL) (£) 3 4 5 6 7 8 9 10 Total output (TPPL) 10 22 32 40 46 50 52 52 Assume that output sells at £2 per unit. (a)  Copy the table and add additional rows for TCL, MCL, TRPL and MRPL. Put the figures for MCL and MRPL in the spaces between the columns (b)  How many workers will the firm employ in order to maximise profits?     (c)  What will be its hourly wage bill at this level of employment?     (d)  How much hourly revenue will it earn at this level of employment?       (e)  Assuming that the firm faces other (fixed) costs of £30 per hour, how much hourly profit will it make?       (f)   Assume that the workers now formed a union and that the firm agreed to pay the negotiated wage rate to all employees. What is the maximum to which the hourly wage rate could rise without causing the firm to try to reduce employment below that in (b) above? (See Figure 10.10.) (g)  What would be the firm’s hourly profit now?

Mickelson Inc. owns land that it purchased on January 1, 2000, for $450,000. At December 31, 2014, its current value is $770,000 as determined by appraisal. At what amount should Mickelson report this asset on its December 31, 2014, balance sheet? Explain.

Wood-Mode Company is involved in the design, manufacture, and installation of various types of wood products for large construction projects. Wood-Mode recently completed a large contract for Stadium Inc., which consisted of building 35 different types of concession counters for a new soccer arena under construction. The terms of the contract are that upon completion of the counters, Stadium would pay $2,000,000. Unfortunately, due to the depressed economy, the completion of the new soccer arena is now delayed. Stadium has therefore asked Wood-Mode to hold the counters at its manufacturing plant until the arena is completed. Stadium acknowledges in writing that it ordered the counters and that they now have ownership. The time that Wood-Mode Company must hold the counters is totally dependent on when the arena is completed. Because Wood-Mode has not received additional progress payments for the arena due to the delay, Stadium has provided a deposit of $300,000. Instructions (a) Explain this type of revenue recognition transaction. (b) What factors should be considered in determining when to recognize revenue in this transaction? (c) Prepare the journal entry(ies) that Wood-Mode should make, assuming it signed a valid sales contract to sell the counters and received at the time of sale the $300,000 payment.

Jamarcus, a full-time student, earned $2,500 this year from a summer job.  He had no other income this year and will have zero federal income tax liability this year.  His employer withheld $300 of federal income tax from his summer pay.  Is Jamarcus required to file a tax return?  Should Jamarcus file a tax return?

Bobek Inc. has recently reported steadily increasing income. The company reported income of $20,000 in 2011, $25,000 in 2012, and $30,000 in 2013. A number of market analysts have recommended that investors buy the stock because they expect the steady growth in income to continue. Bobek is approaching the end of its fiscal year in 2014, and it again appears to be a good year. However, it has not yet recorded warranty expense. Based on prior experience, this year’s warranty expense should be around $5,000, but some managers have approached the controller to suggest a larger, more conservative warranty expense should be recorded this year. Income before warranty expense is $43,000. Specifically, by recording a $7,000 warranty accrual this year, Bobek could report an increase in income for this year and still be in a position to cover its warranty costs in future years. Instructions (a) What is earnings management? (b) Assume income before warranty expense is $43,000 for both 2014 and 2015 and that total warranty expense over the 2-year period is $10,000. What is the effect of the proposed accounting in 2014? In 2015? (c) What is the appropriate accounting in this situation?

Explain how in 2022, the rising inflation and higher prices in the United States affected the demand for loanable funds, the supply of loanable funds, and interest rates in the United States (LO1)

Explain why certain long-lived assets are capitalized and recovered over time rather than immediately expensed.

: Describe two ways organizations can enhance employee resilience to manage stress and improve health, satisfaction, and productivity.

If speculators had better information about future exchange rates, would their actions be more or less stabilising than at present?

Tonya Jefferson (single), a sole proprietor, runs a successful lobbying business in Washington, D.C. She doesn’t sell many business assets, but she is planning on retiring and selling her historic townhouse, from which she runs her business, to buy a place somewhere sunny and warm. Tonya’s townhouse is worth $1,000,000 and the land is worth another $1,000,000. The original basis in the townhouse was $600,000, and she has claimed $250,000 of depreciation deductions against the asset over the years. The original basis in the land was $500,000. Tonya has located a buyer that would like to finalize the transaction in December of the current year. Tonya’s marginal ordinary income tax rate is 35 percent, and her capital gains tax rate is 20 percent. a.       What amount of gain or loss does Tonya recognize on the sale?  What is the character of the gain or loss? What effect does the gain or loss have on her tax liability? b.      In addition to the original facts, assume that Tonya reports the following nonrecaptured net §1231 loss:   Year Net §1231 Gains/(Losses) Year 1 ($200,000) Year 2 0 Year 3 0 Year 4 0 Year 5 0 Year 6 (current year) ?   What amount of gain or loss does Tonya recognize on the sale?  What is the character of the gain or loss? What effect does the gain or loss have on her year 6 (the current year) tax liability?

Describe the purpose of a pension plan’s vesting schedule and explain how it works. (LO3)

Your classmate Kate believes that the equity method is applied with a strict application of the “20%” rule. Do you agree? Explain.

Dold Acrobats lent $16,529 to Donaldson, Inc., accepting Donaldson’s 2-year, $20,000, zero-interestbearing note. The implied interest rate is 10%. Prepare Dold’s journal entries for the initial transaction, recognition of interest each year, and the collection of $20,000 at maturity.

Data for Amsterdam Company are presented in BE8-5. Compute the April 30 inventory and the April cost of goods sold using the FIFO method.

Based on the definition of gross income in §61 and related regulations, what is the general presumption regarding the taxability of income realized?

Jerry Prior, Beeler Corporation’s controller, is concerned that net income may be lower this year. He is afraid upper-level management might recommend cost reductions by laying off accounting staff, including him. Prior knows that depreciation is a major expense for Beeler. The company currently uses the doubledeclining- balance method for both financial reporting and tax purposes, and he’s thinking of selling equipment that, given its age, is primarily used when there are periodic spikes in demand. The equipment has a carrying value of $2,000,000 and a fair value of $2,180,000. The gain on the sale would be reported in the income statement. He doesn’t want to highlight this method of increasing income. He thinks, “Why don’t I increase the estimated useful lives and the salvage values? That will decrease depreciation expense and require less extensive disclosure, since the changes are accounted for prospectively. I may be able to save my job and those of my staff.” Instructions Answer the following questions. (a) Who are the stakeholders in this situation? (b) What are the ethical issues involved? (c) What should Prior do?

Carol Keene, corporate comptroller for Dumaine Industries, is trying to decide how to present “Property, plant, and equipment” in the balance sheet. She realizes that the statement of cash flows will show that the company made a significant investment in purchasing new equipment this year, but overall she knows the company’s plant assets are rather old. She feels that she can disclose one figure titled “Property, plant, and equipment, net of depreciation,” and the result will be a low figure. However, it will not disclose the age of the assets. If she chooses to show the cost less accumulated depreciation, the age of the assets will be apparent. She proposes the following. Property, plant, and equipment, net of depreciation $10,000,000 rather than Property, plant, and equipment $50,000,000 Less: Accumulated depreciation 40,000,000 Net book value $10,000,000 Instructions Answer the following questions. (a) What are the ethical issues involved? (b) What should Keene do?

1.       : A survey of teachers found that two of the most important rewards were the belief that their work was important and a feeling of accomplishment. According to Maslow’s hierarchy of needs theory, what needs do these rewards meet?

In some instances, accounting principles require a departure from valuing inventories at cost alone. Determine the proper unit inventory price in the following cases. Cases 1 2 3 4 5 Cost $15.90 $16.10 $15.90 $15.90 $15.90 Net realizable value 14.50 19.20 15.20 10.40 16.40 Net realizable value less normal profi t 12.80 17.60 13.75 8.80 14.80 Market (replacement cost) 14.80 17.20 12.80 9.70 16.80

There are 18 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 1.1 Which of the following industries are classified as secondary industries (three correct answers): (a) beverages (b) financial services, (c) fishing, (d) mining, (e) power utilities, (f) publishing, and (g) transportation? 1.2 Mining is classified in which one of the following industry categories: (a) agricultural industry, (b) manufacturing industry, (c) primary industry, (d) secondary industry, (e) service industry, or (f) tertiary industry? Answer. (c). 1.3 Inventions of the Industrial Revolution include which one of the following: (a) automobile, (b) cannon, (c) printing press, (d) steam engine, or (e) sword? 1.4 Ferrous metals include which of the following (two correct answers): (a) aluminum, (b) cast iron, (c) copper, (d) gold, and (e) steel? 1.5 Which one of the following engineering materials is defined as a compound containing metallic and nonmetallic elements: (a) ceramic, (b) composite, (c) metal, or (d) polymer? 1.6 Which of the following processes start with a material that is in a fluid or semifluid state and solidifies the material in a cavity (two best answers): (a) casting, (b) forging, (c) machining, (d) molding, (e) pressing, and (f) turning? 1.7 Particulate processing of metals and ceramics involves which of the following steps (two best answers): (a) adhesive bonding, (b) deformation, (c) forging, (d) material removal, (e) melting, (f) pressing, and (g) sintering? 1.8 Deformation processes include which of the following (two correct answers): (a) casting, (b) drilling, (c) extrusion, (d) forging, (e) milling, (f) painting, and (g) sintering? 1.9 Which one of the following is a machine used to perform extrusion: (a) forge hammer, (b) milling machine, (c) rolling mill, (d) press, (e) torch? 1.10 High-volume production of assembled products is most closely associated with which one of the following layout types: (a) cellular layout, (b) fixed position layout, (c) process layout, or (d) product layout?   1.11 A production planning and control department accomplishes which of the following functions in its role of providing manufacturing support (two best answers): (a) designs and orders machine tools, (b) develops corporate strategic plans, (c) orders materials and purchased parts, (d) performs quality inspections, and (e) schedules the order of products on a machine?

List the advantages often attributed to soldering as an industrial joining process?