Question & Answer

For each of the following independent situations, indicate the amount the taxpayer must include in gross income and explain your answer: a.       Phil won $500 in the scratch-off state lottery.  There is no state income tax. b.       Ted won a compact car worth $17,000 in a TV game show.  Ted plans to sell the car next year. c.       Al Bore won the Nobel Peace Prize of $500,000 this year.  Rather than take the prize, Al designated that the entire award should go to Weatherhead Charity, a tax-exempt organization. d.       Jerry was awarded $2,500 from his employer, Acme Toons, when he was selected most handsome employee for Valentine’s Day this year. e.       Ellen won a $1,000 cash prize in a school essay contest.  The school is a tax-exempt entity, and Ellen plans to use the funds to pay her college education. f.       Gene won $400 in the office March Madness pool.

Fong Sai-Yuk Company sells one product. Presented below is information for January for Fong Sai-Yuk Company. Jan. 1 Inventory 100 units at $5 each 4 Sale 80 units at $8 each 11 Purchase 150 units at $6 each 13 Sale 120 units at $8.75 each 20 Purchase 160 units at $7 each 27 Sale 100 units at $9 each Fong Sai-Yuk uses the FIFO cost flow assumption. All purchases and sales are on account. Instructions (a) Assume Fong Sai-Yuk uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units. (b) Compute gross profit using the periodic system. (c) Assume Fong Sai-Yuk uses a perpetual system. Prepare all necessary journal entries. (d) Compute gross profit using the perpetual system.

What requirements do an abandoned spouse and qualifying widow or widower have in common?

What is an end effector?

A screen with 10 mesh count has wires with a diameter of 0.0213 in. Determine (a) the maximum particle size that will pass through the wire mesh and (b) the proportion of open space in the screen.

What are diversified companies? What accounting problems are related to diversified companies?

Explain the amortization convention applicable to intangible assets.

What are the two major groups of metals? Define them.

Give two examples of machining operations in which generating and forming are combined to create workpart geometry.

How did the Financial Reform Act of 2010 change the reserve requirements of the FDIC’s Deposit Insurance Fund? (LO7)

Do investors in high tax brackets or those in low tax brackets benefit more from tax-exempt securities? Why? At a given point in time, which offers a higher before-tax yield: municipal bonds or corporate bonds? Why? Which has the higher after-tax yield? If taxes did not exist, would Treasury bonds offer a higher or lower yield than municipal bonds with the same maturity? Why? (LO1)

Betty joined Jin in forming DBJ Corp. Betty contributed appreciated land for 90 percent of the stock in DBJ. Jin received 10 percent of the DBJ stock valued at $15,000.  Determine Jin's tax consequences in each of the following alternative scenarios.  a. Jin received the stock in exchange for providing computer-related services for the corporation. What amount of income or gain does Jin recognize on the exchange?  What is Jin's basis in the stock he received in the exchange?  b. Jin contributed the rights to a patent he owned to DBJ in exchange for the DBJ stock. The patent was worth $15,000 and Jin's basis in the patent was $8,000. How much gain does Jin recognize on the exchange?  What is Jin's basis in the DBJ stock?

Below is a payroll sheet for Otis Import Company for the month of September 2014. The company is allowed a 1% unemployment compensation rate by the state; the federal unemployment tax rate is 0.8% and the maximum for both is $7,000. Assume a 10% federal income tax rate for all employees and a 7.65% FICA tax on employee and employer on a maximum of $113,700. In addition, 1.45% is charged both employer and employee for an employee’s wages in excess of $113,700 per employee. Income Unemployment Tax Earnings September Tax Name to Aug. 31 Earnings Withholding FICA State Federal B.D. Williams $ 6,800 $ 800 D. Raye 6,500 700 K. Baker 7,600 1,100 F. Lopez 13,600 1,900 A. Daniels 107,000 13,000 B. Kingston 112,000 16,000 Instructions (a) Complete the payroll sheet and make the necessary entry to record the payment of the payroll. (b) Make the entry to record the payroll tax expenses of Otis Import Company. (c) Make the entry to record the payment of the payroll liabilities created. Assume that the company pays all payroll liabilities at the end of each month.

McCanna, Inc., has hired an investment company to manage its pension fund, which is invested in a stock portfolio and a bond portfolio. Explain how McCanna can evaluate the performance of the investment company in managing its pension fund money. (LO7)

'Transfer pricing is a waste of an entity’s resources; it all gets eliminated          on consolidation'. Discuss

What are some of the factors that influence a polymer's tendency to crystallize?

Clemson Company had the following stockholders’ equity as of January 1, 2014. Common stock, $5 par value, 20,000 shares issued $100,000 Paid-in capital in excess of par—common stock 300,000 Retained earnings 320,000 Total stockholders’ equity $720,000 During 2014, the following transactions occurred. Feb. 1 Clemson repurchased 2,000 shares of treasury stock at a price of $19 per share. Mar. 1 800 shares of treasury stock repurchased above were reissued at $17 per share. Mar. 18 500 shares of treasury stock repurchased above were reissued at $14 per share. Apr. 22 600 shares of treasury stock repurchased above were reissued at $20 per share. Instructions (a) Prepare the journal entries to record the treasury stock transactions in 2014, assuming Clemson uses the cost method. (b) Prepare the stockholders’ equity section as of April 30, 2014. Net income for the first 4 months of 2014 was $130,000.

What are the characteristics of high-quality information in a company’s first IFRS financial statements?

A prototype of a part is to be fabricated using stereolithography. The part is shaped like a right triangle whose base = 36 mm, height = 48 mm, and thickness = 25 mm. In application, the part will stand on its base, which is 36 mm by 25 mm. In the stereolithography process, the layer thickness = 0.20 mm. The diameter of the laser beam (“spot size”) = 0.15 mm, and the beam is moved across the surface of the photopolymer at a velocity of 400 mm/s. Compute the minimum possible time required to build the part, if 8 sec are lost each layer to lower the height of the platform that holds the part. Neglect the time for postcuring.

What does it mean to characterize a gain or loss?  Why is characterizing a gain or loss important?

Current setup time on a certain machine is 3.0 hr. Cost of downtime on this machine is estimated at $200/hr. Annual holding cost per part made on the equipment, Ch = $1.00. Annual demand for the part is 15,000 units. Determine (a) EOQ and (b) total inventory costs for this data. Also, determine (c) EOQ and (d) total inventory costs, if the changeover time could be reduced to six minutes.

Presented below are certain account balances of Paczki Products Co. Rent revenue $ 6,500 Sales discounts $ 7,800 Interest expense 12,700 Selling expenses 99,400 Beginning retained earnings 114,400 Sales revenue 390,000 Ending retained earnings 134,000 Income tax expense 31,000 Dividend revenue 71,000 Cost of goods sold 184,400 Sales returns and allowances 12,400 Administrative expenses 82,500 Allocation to noncontrolling interest 17,000 Instructions From the foregoing, compute the following: (a) total net revenue, (b) net income, (c) dividends declared, and (d) income attributable to controlling stockholders.

Midwest Health Club (MHC) offers one-year memberships. Membership fees are due in full at the beginning of the individual membership period. As an incentive to new customers, MHC advertised that any customers not satisfied for any reason could receive a refund of the remaining portion of unused membership fees. As a result of this policy, Richard Nies, corporate controller, recognized revenue ratably over the life of the membership. MHC is in the process of preparing its year-end financial statements. Rachel Avery, MHC’s treasurer, is concerned about the company’s lackluster performance this year. She reviews the financial statements Nies prepared and tells Nies to recognize membership revenue when the fees are received. Instructions Answer the following questions. (a) What are the ethical issues involved? (b) What should Nies do?

Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2015. Inventory, October 1, 2015 At cost $ 52,000 At retail 78,000 Purchases (exclusive of freight and returns) At cost 272,000 At retail 423,000 Freight-in 16,600 Purchase returns At cost 5,600 At retail 8,000 Markups 9,000 Markup cancellations 2,000 Markdowns (net) 3,600 Normal spoilage and breakage 10,000 Sales revenue 390,000 Instructions (a) Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-ormarket inventory for October 31, 2015. (b) A department store using the conventional retail inventory method estimates the cost of its ending inventory as $60,000. An accurate physical count reveals only $47,000 of inventory at lower-of-costor- market. List the factors that may have caused the difference between the computed inventory and the physical count.

Name the four subsystems in a wire EDM process.