Question & Answer

A partial trial balance of Julie Hartsack Corporation is as follows on December 31, 2015. Dr. Cr. Supplies $ 2,700 Salaries and wages payable $ 1,500 Interest receivable 5,100 Prepaid insurance 90,000 Unearned rent –0– Interest payable 15,000 Additional adjusting data: 1. A physical count of supplies on hand on December 31, 2015, totaled $1,100. 2. Through oversight, the Salaries and Wages Payable account was not changed during 2015. Accrued salaries and wages on December 31, 2015, amounted to $4,400. 3. The Interest Receivable account was also left unchanged during 2015. Accrued interest on investments amounts to $4,350 on December 31, 2015. 4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2015. 5. $28,000 was received on January 1, 2015, for the rent of a building for both 2015 and 2016. The entire amount was credited to rent revenue. 6. Depreciation on equipment for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000. 7. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment. Instructions (a) Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2015? (Ignore income tax considerations.) (b) Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2015? (Ignore income tax considerations.) (c) Repeat the requirements for items 6 and 7, taking into account income tax effects (40% tax rate) and assuming that the books have been closed.

What is dressing, in reference to grinding wheels?

What are the functions of securities firms? Many securities firms employ brokers and dealers. Distinguish between the functions of a broker and those of a dealer, and explain how each type of professional is compensated. (LO3)

What is a tax-basis capital account, and what type of tax-related information does it provide?

You have been engaged to review the financial statements of Gottschalk Corporation. In the course of your examination, you conclude that the bookkeeper hired during the current year is not doing a good job. You notice a number of irregularities as follows. 1. Year-end wages payable of $3,400 were not recorded because the bookkeeper thought that “they were immaterial.” 2. Accrued vacation pay for the year of $31,100 was not recorded because the bookkeeper “never heard that you had to do it.” 3. Insurance for a 12-month period purchased on November 1 of this year was charged to insurance expense in the amount of $2,640 because “the amount of the check is about the same every year.” 4. Reported sales revenue for the year is $2,120,000. This includes all sales taxes collected for the year. The sales tax rate is 6%. Because the sales tax is forwarded to the state’s Department of Revenue, the Sales Tax Expense account is debited. The bookkeeper thought that “the sales tax is a selling expense.” At the end of the current year, the balance in the Sales Tax Expense account is $103,400. Instructions Prepare the necessary correcting entries, assuming that Gottschalk uses a calendar-year basis.

Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2014, Sprinkle reacquired 100 shares at $87 per share. On September 1, Sprinkle reissued 60 shares at $90 per share. On November 1, Sprinkle reissued 40 shares at $83 per share. Prepare Sprinkle’s journal entries to record these transactions using the cost method.

Chemical milling is used in an aircraft plant to create pockets in wing sections made of an aluminum alloy. The starting thickness of one workpart of interest is 20 mm. A series of rectangular-shaped pockets 12 mm deep are to be etched with dimensions 200 mm by 400 mm. The corners of each rectangle are radiused to 15 mm. The part is an aluminum alloy and the etchant is NaOH. The penetration rate for this combination is 0.024 mm/min and the etch factor is 1.75. Determine (a) metal removal rate in mm3/min, (b) time required to etch to the specified depth, and (c) required dimensions of the opening in the cut and peel maskant to achieve the desired pocket size on the part.

1.    : Based on your knowledge of the following companies, how effective would you say any one of the following acquisitions was in terms of creating synergy? Why?    a) T-Mobile’s merger with Sprint    b) Google’s purchase of YouTube    c) PepsiCo’s purchase of Frito-Lay

The differences between the book basis and tax basis of the assets and liabilities of Castle Corporation at the end of 2013 are presented below. Book Basis Tax Basis Accounts receivable $50,000 $–0– Litigation liability 30,000 –0– It is estimated that the litigation liability will be settled in 2014. The difference in accounts receivable will result in taxable amounts of $30,000 in 2014 and $20,000 in 2015. The company has taxable income of $350,000 in 2013 and is expected to have taxable income in each of the following 2 years. Its enacted tax rate is 34% for all years. This is the company’s first year of operations. The operating cycle of the business is 2 years. Instructions (a) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2013. (b) Indicate how deferred income taxes will be reported on the balance sheet at the end of 2013.

Jennifer Capriati Corp. has a deferred tax asset account with a balance of $150,000 at the end of 2013 due to a single cumulative temporary difference of $375,000. At the end of 2014, this same temporary difference has increased to a cumulative amount of $450,000. Taxable income for 2014 is $820,000. The tax rate is 40% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2013. Instructions (a) Record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming that it is more likely than not that the deferred tax asset will be realized. (b) Assuming that it is more likely than not that $30,000 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2014 to record the valuation account.

Explain the similarities and differences between support department costs and manufacturing overhead costs.

Venture capital firms commonly attempt to cash out as soon as possible following IPOs. Describe the likely effect that would have on the stock price at the time of lockup expiration. Would the effect be different for a firm that relied more heavily on VC firms than on other investors for its funds? (LO3)

Explain how ERISA affects employees who change employers. (LO3)

(Threshold Concept 11) 1. Why might consumers not always make efficient consumption decisions? (Threshold Concept 11) 2. Explain the meaning of social efficiency using the concept of Pareto optimality.

Using the information from BE4-9, prepare a retained earnings statement for the year ended December 31, 2014. Assume an error was discovered: land costing $80,000 (net of tax) was charged to maintenance and repairs expense in 2011.

What are “initial direct costs” and how are they accounted for?

An automated transfer line is to be designed. Based on previous experience, the average downtime per occurrence = 5.0 min, and the probability of a station failure that leads to a downtime occurrence p = 0.01. The total work content time = 9.8 min and is to be divided evenly amongst the workstations, so that the ideal cycle time for each station = 9.8/n. Determine (a) the optimum number of stations on the line n that will maximize production rate, and (b) the production rate and proportion uptime for your answer to part (a).

In a complete model where there were three injections (I, G and X), and three withdrawals (S, T and M), what else would determine the shape of the ‘JW’ curve?

Wertz Construction Company decided at the beginning of 2014 to change from the completedcontract method to the percentage-of-completion method for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2014, pretax income under the two methods was as follows: percentage-of-completion $120,000, and completed-contract $80,000. The tax rate is 35%. Prepare Wertz’s 2014 journal entry to record the change in accounting principle.

Zoop Corporation purchased for $300,000 a 30% interest in Murphy, Inc. This investment enables Zoop to exert significant influence over Murphy. During the year, Murphy earned net income of $180,000 and paid dividends of $60,000. Prepare Zoop’s journal entries related to this investment.

Wildcat Corporation is owned equally by Evan and his sister Sara, each of whom hold 1,000 shares in Wildcat. Sara wants to reduce her ownership in the company, and it was decided that Wildcat will redeem 500 of her shares for $25,000 per share on December 31 of this year. Sara’s tax basis in each share is $5,000. Wildcat has current E&P of $10,000,000 and at the beginning of the year accumulated E&P is $50,000,000.

Use the information provided in BE12-7. Assume that the fair value of the division is estimated to be $750,000 and the implied goodwill is $350,000. Prepare Waters’ journal entry, if necessary, to record impairment of the goodwill.

Does the use of public-sector deficit targets rule out the use of fiscal policy to reduce economic fluctuations associated with the business cycle.

Johnny Football Shop began operations on January 2, 2014. The following stock record card for footballs was taken from the records at the end of the year. Units Unit Invoice Gross Invoice Date Voucher Terms Received Cost Amount 1/15 10624 Net 30 50 $20 $1,000 3/15 11437 1/5, net 30 65 16 1,040 6/20 21332 1/10, net 30 90 15 1,350 9/12 27644 1/10, net 30 84 12 1,008 11/24 31269 1/10, net 30 76 11 836 Totals 365 $5,234 A physical inventory on December 31, 2014, reveals that 100 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Johnny Football Shop uses the invoice price less discount for recording purchases. Instructions (a) Compute the December 31, 2014, inventory using the FIFO method. (b) Compute the 2014 cost of goods sold using the LIFO method. (c) What method would you recommend to the owner to minimize income taxes in 2014, using the inventory information for footballs as a guide?

In addition to fillers and plasticizers, what are some other additives used with polymers?