Question & Answer

Jeremy and Alyssa Johnson have been married for five years and do not have any children.  Jeremy was married previously and has one child from the prior marriage.  He is self-employed and operates his own computer repair store.  For the first two months of the year, Alyssa worked for Office Depot as an employee.  In March, Alyssa accepted a new job with Super Toys Inc. (ST), where she worked for the remainder of the year.  This year, the Johnsons received $255,000 of gross income.  Determine the Johnsons’ AGI for 2024 given the following information:

What are the three basic steps in the conventional powder metallurgy shaping process?

How do the tax laws treat family members for purposes of limiting the number of owners an S corporation may have?

Money that individual and institutional investors previously invested in stocks is now being invested in private equity funds. Explain why this should result in improved business conditions. (LO5)

Assume a calendar-year corporation has a deficit in current E&P of ($120) and positive accumulated E&P of $120. Under this circumstance, a cash distribution of $120 to the corporation’s sole shareholder on June 30 will not be treated as a dividend because E&P on December 31 is $0. True or false? Explain.

Use a stock valuation framework to explain why the Sarbanes-Oxley Act (SOX) could improve the valuation of a stock. Why might SOX cause a reduction in the valuation of a stock? (See the chapter appendix). (LO1)

Economists sometimes refer to the ‘twin characteristics of economic growth’. What are these characteristics?

Assume the economy is represented by EAPC1 in Figure 21.1. Illustrate the effects of positive and negative inflation shocks on the curve.

What are the functions of a grinding fluid?

Explain why Congress allows taxpayers to deduct interest forfeited as a penalty on the premature withdrawal from a certificate of deposit.

1.       : Stick to your principles and refuse to fudge the numbers. Tell Tessa you will work overtime to help develop an alternate proposal that stays within the budget by providing more training to employees who work directly with customers and fewer training hours for those who don’t have direct customer contact.

1.      Rufus is a one-quarter partner in the Adventure Partnership. On January 1 of the current year, Adventure distributes $13,000 cash to Rufus in complete liquidation of his interest. Adventure has only capital assets and no liabilities at the date of the distribution. Rufus’s basis in his partnership interest is $18,500. a.    What are the amount and character of Rufus’s recognized gain or loss? b.   What are the amount and character of Adventure’s recognized gain or loss? c.    If Rufus’s basis is $10,000 at the distribution date rather than $18,500, what are the amount and character of Rufus’s recognized gain or loss?

Look through the categories of possible market failings in section 12.2. Are there any others, in addition to the four we have just identified, that will result in a socially inefficient use of the environment?

Matt and Lori recently were divorced.  Although grief stricken, Matt was at least partially comforted by his monthly receipt of $10,000 alimony.  He was particularly excited to learn from his friend, Denzel, that the alimony was not taxable.  Use an available tax service to determine if Denzel is correct.  Would your answer change if Matt and Lori continued to live together?

What is meant by “prior service cost”? When is prior service cost recognized as pension expense?

Would the adoption of improved working conditions necessarily lead to higher labour costs per unit of output?

Explain Congress’s rationale for depreciation recapture.

Jobim Inc. had the following condensed balance sheet at the end of operations for 2013. JOBIM INC. BALANCE SHEET DECEMBER 31, 2013 Cash $ 8,500 Current liabilities $ 15,000 Current assets other than cash 29,000 Long-term notes payable 25,500 Investments 20,000 Bonds payable 25,000 Plant assets (net) 67,500 Capital stock 75,000 Land 40,000 Retained earnings 24,500 $165,000 $165,000 During 2014, the following occurred. 1. A tract of land was purchased for $9,000. 2. Bonds payable in the amount of $15,000 were redeemed at par. 3. An additional $10,000 in capital stock was issued at par. 4. Dividends totaling $9,375 were paid to stockholders. 5. Net income was $35,250 after allowing depreciation of $13,500. 6. Land was purchased through the issuance of $22,500 in bonds. 7. Jobim Inc. sold part of its investment portfolio for $12,875. This transaction resulted in a gain of $2,000 for the company. The company classifies the investments as available-for-sale. 8. Both current assets (other than cash) and current liabilities remained at the same amount. Instructions (a) Prepare a statement of cash flows for 2014 using the indirect method. (b) Prepare the condensed balance sheet for Jobim Inc. as it would appear at December 31, 2014.

Indicate three reasons why a company might sell its receivables to another company.

On July 1, 2014, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Crowe Co., journalize the entry on July 1 and the adjusting entry on December 31.

1.      : Accept the fact you didn’t quite make your sales goal this year. Figure out ways to work smarter next year to increase the odds of achieving your target.

: Explain the organizational dimensions that managers use to execute strategy.

Describe how the new purpose of a corporation as defined by the Business Roundtable differs from the previously defined corporate purpose.

Explain why the medical expense provisions are sometimes referred to as “wherewithal” deductions and how this rationale is reflected in the limits on these deductions.

If the part illustrated in Figure P20.32 were made by shear spinning, determine (a) the wall thickness along the cone-shaped portion, and (b) the spinning reduction r.