Question & Answer

Identify the four forces that act upon the chip in the orthogonal metal cutting model but cannot be measured directly in an operation.

Refer to the accounting change by Wertz Construction Company in BE22-1. Wertz has a profitsharing plan, which pays all employees a bonus at year-end based on 1% of pretax income. Compute the indirect effect of Wertz’s change in accounting principle that will be reported in the 2014 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers.

Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2012, the company expends $325,000 on a research project, but by the end of 2012, it is impossible to determine whether any benefit will be derived from it. (a) What account should be charged for the $325,000, and how should it be shown in the financial statements? (b) The project is completed in 2013, and a successful patent is obtained. The R&D costs to complete the project are $130,000 ($36,000 of these costs were incurred after achieving economic viability). The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2013 total $24,000. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also,record patent amortization (full year) in 2013. (c) In 2014, the company successfully defends the patent in extended litigation at a cost of $47,200, thereby extending the patent life to December 31, 2021. What is the proper way to account for thiscost?Also, record patent amortization (full year) in 2014. (d) Additional engineering and consulting costs incurred in 2014 required to advance the design of a new version of the product to the manufacturing stage total $60,000. These costs enhance the design of the product considerably, but it is highly uncertain if there will be a market for the new version of the product. Discuss the proper accounting treatment for this cost.

Identify some of the advantages of adhesive bonding compared to alternative joining methods.

The two-bin approach is used to control inventory for a particular low-cost component. Each bin holds 1200 units. The annual usage of the component is 45,000 units. Cost to order the component is around $70. (a) What is the imputed holding cost per unit for this data? (b) If the actual annual holding cost per unit is only 7 cents, what lot size should be ordered? (c) How much more is the current two-bin approach costing the company annually, compared to the economic order quantity?

On January 5, 2014, Phelps Corporation received a charter granting the right to issue 5,000 shares of $100 par value, 8% cumulative and nonparticipating preferred stock, and 50,000 shares of $10 par value common stock. It then completed these transactions. Jan. 11 Issued 20,000 shares of common stock at $16 per share. Feb. 1 Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: equipment with a fair value of $50,000; a factory building with a fair value of $160,000; and land with an appraised value of $270,000. July 29 Purchased 1,800 shares of common stock at $17 per share. (Use cost method.) Aug. 10 Sold the 1,800 treasury shares at $14 per share. Dec. 31 Declared a $0.25 per share cash dividend on the common stock and declared the preferred dividend. Dec. 31 Closed the Income Summary account. There was a $175,700 net income. Instructions (a) Record the journal entries for the transactions listed above. (b) Prepare the stockholders’ equity section of Phelps Corporation’s balance sheet as of December 31, 2014.

An electron-beam welding operation is to be accomplished to butt weld two sheet-metal parts that are 3.0 mm thick. The unit melting energy = 5.0 J/mm3. The weld joint is to be 0.35 mm wide, so that the cross section of the fused metal is 0.35 mm by 3.0 mm. If accelerating voltage = 25 kV, beam current = 30 milliamp, heat transfer factor f1 = 0.85, and melting factor f2 = 0.75, determine the travel speed at which this weld can be made along the seam

The y-axis of an x-y positioning table is driven by a stepping motor that is connected to a leadscrew with a 3:1 gear reduction (3 turns of the motor for each turn of the leadscrew). The stepping motor has 72 step angles. The leadscrew has 5 threads per inch and provides an axis range = 30.0 in. There are 16 bits in each binary register used by the controller to store position data for the axis. (a) What is the control resolution of the y-axis? Determine (b) the required rotational speed of the y-axis stepping motor and (c) the corresponding pulse train frequency to drive the table in a straight line from point (x = 20 in, y = 25 in) to point (x = 4.5 in, y = 7.5 in) in exactly 30 sec. Ignore acceleration.

Koyuki transferred investment property she has owned for six years to XYZ Corporation in exchange for 40 percent of the corporation's stock (40 shares valued at $160,000) at the time XYZ was incorporated. The property's tax basis was $90,000 and its fair market value was $160,000. Assume the transfer qualifies under §351.  a. What gain or loss does Koyuki recognize on the transfer?   b. What is her basis in the stock she received in the exchange?   c. What is her holding period in the stock?

On December 31, 2014, the American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,000,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,000,000 to $2,400,000. 2. Extending the maturity date from December 31, 2014, to January 1, 2018. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each year. On January 1, 2018, Barkley Company pays $2,400,000 in cash to Firstar Bank. Instructions (a) Will the gain recorded by Barkley be equal to the loss recorded by American Bank under the debt restructuring? (b) Can Barkley Company record a gain under the term modification mentioned above? Explain. (c) Assuming that the interest rate Barkley should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Barkley Company after the debt restructuring. (d) Prepare the interest payment entry for Barkley Company on December 31, 2016. (e) What entry should Barkley make on January 1, 2018?

Is the assumption of rational expectations on its own sufficient for anticipated demand shocks to have no impact on economic activity even in the short run?

What is an operating segment, and when can information about two operating segments be aggregated?

The drive unit of a positioning table for a component insertion machine is based on a stepping motor and leadscrew mechanism. The specifications are for the table speed to be 25 mm/s over a 600 mm range and for the accuracy to be 0.025 mm. The pitch of the leadscrew = 4.5 mm, and the gear ratio = 5:1 (5 turns of the motor for each turn of the leadscrew). The mechanical errors in the motor, gear box, leadscrew, and table connection are characterized by a normal distribution with standard deviation = 0.005 mm. Determine (a) the minimum number of step angles in the stepping motor, and (b) the frequency of the pulse train required to drive the table at the desired maximum speed for the stepping motor in part (a).

Maple Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, Jian, who immediately elected S corporation status.  On December 31 of the current year, Maple distributed $30,000 cash to Jian.  What are the amount and character of gain Jian must recognize on the distribution in each of the following alternative scenarios?

What is extrusion?

An extruder has diameter = 80 mm and length = 2.0 m. Its screw has a channel depth = 5 mm, flight angle = 18 degrees, and it rotates at 1 rev/sec. The plastic melt has a shear viscosity = 150 Pa-s. Determine the extruder characteristic by computing Qmax and pmax and then finding the equation of the straight line between them.

A gas metal arc-welding test is performed to determine the value of melting factor f2 for a certain metal and operation. The welding voltage = 25 volts, current = 125 amps, and heat transfer factor is assumed to be = 0.90, a typical value for GMAW. The rate at which the filler metal is added to the weld is 0.50 in3 per minute, and measurements indicate that the final weld bead consists of 57% filler metal and 43% base metal. The unit melting energy for the metal is known to be 75 Btu/in3. (a) Find the melting factor. (b) What is the travel speed if the cross-sectional area of the weld bead = 0.05 in2?

Chris Spear invested $15,000 today in a fund that earns 8% compounded annually. To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 8% annual interest compounded semiannually?

Five jobs are waiting to be scheduled on a machine. For order A, the remaining process time = 5 days, and the due date is day 8. For order B, the remaining process time = 7 days, and the due date is day 16. For order C, the remaining process time = 11 days, and the due date is day 22. For order D, the remaining process time = 9 days, and the due date is day 31. For order E, the remaining process time = 10 days, and the due date is day 26. Determine a production schedulebased on (a) shortest processing time, (b) earliest due date, (c) critical ratio, and (d) least slack time. All times are listed in days.

Rodriguez Corporation includes the following items in its liabilities at December 31, 2014. 1. Notes payable, $25,000,000, due June 30, 2015. 2. Deposits from customers on equipment ordered by them from Rodriguez, $6,250,000. 3. Salaries and wages payable, $3,750,000, due January 14, 2015. Instructions Indicate in what circumstances, if any, each of the three liabilities above would be excluded from current liabilities.

Why is the heat transfer factor in arc-welding processes that utilize consumable electrodes greater than in those that use nonconsumable electrodes?

Differentiate between an originating temporary difference and a reversing difference.

A hot upset forging operation is performed in an open die. The initial size of the workpart is: Do = 25 mm, and ho = 50 mm. The part is upset to a diameter = 50 mm. The work metal at this elevated temperature yields at 85 MPa (n = 0). Coefficient of friction at the die-work interface = 0.40. Determine (a) final height of the part, and (b) maximum force in the operation.

Lanny and Shirley are recently divorced and do not live together.  Shirley has custody of their child, Art, and Lanny pays Shirley $22,000 per year.  All property was divided equally. a.       How much should Shirley include in income if Lanny’s payments are made in cash but will cease if Shirley dies or remarries? b.       How much should Shirley include in income if $12,000 of Lanny’s payments is designated as “nonalimony” in the divorce decree? c.       How much should Shirley include in income if Lanny’s payments drop to $15,000 once Art reaches the age of 18?

One common argument for imposing so-called sin taxes is the social goal of reducing demand for such products.  Using cigarettes as an example, is there a segment of the population that might be sensitive to price and for whom high taxes might discourage purchases?