Question & Answer

Dan has AGI of $50,000 and paid the following taxes during this tax year. Calculate how much Dan can deduct for taxes as an itemized deduction this year.

Explain the primary use of funds by commercial banks versus savings institutions. (LO3)

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.

The following account balances were included in the trial balance of Twain Corporation at June 30, 2014. Sales revenue $1,578,500 Depreciation expense (offi ce Sales discounts 31,150 furniture and equipment) $ 7,250 Cost of goods sold 896,770 Property tax expense 7,320 Salaries and wages expense (sales) 56,260 Bad debt expense (selling) 4,850 Sales commissions 97,600 Maintenance and repairs Travel expense (salespersons) 28,930 expense (administration) 9,130 Delivery expense 21,400 Offi ce expense 6,000 Entertainment expense 14,820 Sales returns and allowances 62,300 Telephone and Internet expense (sales) 9,030 Dividends received 38,000 Depreciation expense (sales equipment) 4,980 Interest expense 18,000 Maintenance and repairs expense (sales) 6,200 Income tax expense 102,000 Miscellaneous selling expenses 4,715 Depreciation understatement Offi ce supplies used 3,450 due to error—2011 (net of tax) 17,700 Telephone and Internet expense Dividends declared on (administration) 2,820 preferred stock 9,000 Dividends declared on common stock 37,000 The Retained Earnings account had a balance of $337,000 at July 1, 2013. There are 80,000 shares of common stock outstanding. Instructions (a) Using the multiple-step form, prepare an income statement and a retained earnings statement for the year ended June 30, 2014. (b) Using the single-step form, prepare an income statement and a retained earnings statement for the year ended June 30, 2014.

Where, if at all, should the following items be classified on a balance sheet? (a) Goods out on approval to customers. (b) Goods in transit that were recently purchased f.o.b. destination. (c) Land held by a realty firm for sale. (d) Raw materials. (e) Goods received on consignment. (f) Manufacturing supplies.

In 2014, Wild Corporation reported a net loss of $70,000. Wild’s only net income adjustments were depreciation expense $81,000, and increase in accounts receivable $8,100. Compute Wild’s net cash provided (used) by operating activities.

What is a hybrid composite?

Describe the U.S. government’s efforts to infuse capital into all of the very large banks during the credit crisis. (LO6)

n a turning operation on stainless steel with hardness = 200 HB, the cutting speed = 200 m/min, feed = 0.25 mm/rev, and depth of cut = 7.5 mm. How much power will the lathe draw in performing this operation if its mechanical efficiency = 90%. Use Table 21.2 to obtain the appropriate specific energy value

In general, how do the disproportionate distribution rules ensure that partners recognize their share of partnership ordinary income?

In a turning operation on aluminum, cutting speed = 900 ft/min, feed = 0.020 in/rev, and depth of cut = 0.250 in. What horsepower is required of the drive motor, if the lathe has a mechanical efficiency = 87%? Use Table 21.2 to obtain the appropriate unit horsepower value.

Using the facts in problem 52, what is the minimum tax that Pedro should pay to make the tax structure vertically equitable based on the tax rate paid?  This would result in what type of tax rate structure?

The Taurin Partnership (calendar-year-end entity) has the following assets as of December 31 of the current year: Tax Basis FMV Cash $ 45,000 $ 45,000 Accounts receivable 15,000 30,000 Inventory 81,000 120,000    Totals $ 141,000 $ 195,000 On December 31, Taurin distributes $15,000 of cash, $10,000 (FMV) of accounts receivable, and $40,000 (FMV) of inventory to Emma (a one-third partner) in termination of her partnership interest. Emma’s basis in her partnership interest immediately prior to the distribution is $40,000. a. What are the amount and character of Emma’s recognized gain or loss on the distribution? b. What is Emma’s basis in the distributed assets? c. If Emma’s basis before the distribution was $55,000 rather than $40,000, what is Emma’s recognized gain or loss and what is her basis in the distributed assets?

How might expectations of higher prices in the United States affect the demand for loanable funds, the supply of loanable funds, and interest rates in the United States? Offer a logical explanation of why such an impact on interest rates in the United States might spread to other countries. (LO1, LO2)

In a turning operation on low carbon steel (175 BHN), cutting speed = 400 ft/min, feed = 0.010 in/rev, and depth of cut = 0.075 in. The lathe has a mechanical efficiency = 0.85. Based on the unit horsepower values in Table 21.2, determine (a) the horsepower consumed by the turning operation and (b) the horsepower that must be generated by the lathe.

Suppose you asked your favorite AI learning tool “What basis does a shareholder take in property received in a liquidating distribution?” and the AI tool provided the following response:

Describe the tax benefits from “bunching” itemized deductions in one year. Describe the characteristics of the taxpayers who are most likely to benefit from using bunching and explain why this is so.

Assume the same information as in E17-19 for Lilly Company. In addition, assume that the investment in the Woods Inc. stock was sold during 2015 for $195,000. At December 31, 2015, the following information relates to its two remaining investments of common  stock. Cost Fair Value (at purchase date) (at December 31) Investment in Arroyo Company stock $100,000 $140,000 Investment in Lee Corporation stock 250,000 310,000 Total $350,000 $450,000 Net income before any security gains and losses for 2015 was $905,000. Instructions (a) Compute the amount of net income or net loss that Lilly should report for 2015, taking into consideration Lilly’s security transactions for 2015. (b) Prepare the journal entry to record unrealized gain or loss related to the investment in Arroyo Company stock at December 31, 2015.

Data for Pat Metheny Company are presented in E23-11. Instructions Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)

Buchanan Company recently was sued by a competitor for patent infringement. Attorneys have determined that it is probable that Buchanan will lose the case and that a reasonable estimate of damages to be paid by Buchanan is $300,000. In light of this case, Buchanan is considering establishing a $100,000 selfinsurance allowance. What entry(ies), if any, should Buchanan record to recognize this loss contingency?

Consider a turning operation performed on steel whose hardness = 225 HB at a speed = 3.0 m/s, feed = 0.25 mm, and depth = 4.0 mm. Using values of thermal properties found in the tables and definitions of Section 4.1 and the appropriate specific energy value from Table 21.2, compute an estimate of cutting temperature using the Cook equation. Assume ambient temperature = 20°C.

Joey is a 25 percent owner of Loopy LLC. He no longer wants to be involved in the business. What options does Joey have to exit the business?

What are some of the basic types of microsystem devices?

It is desired to estimate the cutting temperature for a certain alloy steel whose hardness = 240 Brinell. Use the appropriate value of specific energy from Table 21.2 and compute the cutting temperature by means of the Cook equation for a turning operation in which the cutting speed is 500 ft/min, feed is 0.005 in/rev, and depth of cut is 0.070 in. The work material has a volumetric specific heat of 210 in lb/in3 -F and a thermal diffusivity of 0.16 in2 /sec. Assume ambient temperature = 88°F.

Diderot Stores Inc., which uses the conventional retail inventory method, wishes to change to the LIFO retail method beginning with the accounting year ending December 31, 2014. Amounts as shown below appear on the store’s books before adjustment. Cost Retail Inventory, January 1, 2014 $ 15,800 $ 24,000 Purchases in 2014 116,200 184,000 Markups in 2014 12,000 Markdowns in 2014 5,500 Sales revenue in 2014 175,000 You are to assume that all markups and markdowns apply to 2014 purchases, and that it is appropriate to treat the entire inventory as a single department. Instructions Compute the inventory at December 31, 2014, under the following methods. (a) The conventional retail method. (b) The last-in, first-out retail method, effecting the change in method as of January 1, 2014. Assume that the cost-to-retail percentage for 2013 was recomputed correctly in accordance with procedures necessary to change to LIFO. This ratio was 59%.