Question & Answer

Presented below is information from Perez Computers Incorporated. July 1 Sold $20,000 of computers to Robertson Company with terms 3/15, n/60. Perez uses the gross method to record cash discounts. 10 Perez received payment from Robertson for the full amount owed from the July transactions. 17 Sold $200,000 in computers and peripherals to The Clark Store with terms of 2/10, n/30. 30 The Clark Store paid Perez for its purchase of July 17. Instructions Prepare the necessary journal entries for Perez Computers.

Consider a state pension fund that needs to generate a series of fixed payments for its retirees. Assume that the compensation of the fund’s portfolio managers is tied to the return earned on the investments each year. Write a short essay that explains how the compensation plan might lead to investment strategies that do not serve the needs of the retirees.

A sine bar is used to determine the angle of a part feature. The length of the sine bar is 6.000 in. The rolls have a diameter of 1.000 in. All inspection is performed on a surface plate. In order for the sine bar to match the angle of the part, the following gage blocks must be stacked: 2.0000, 0.5000, 0.3550. Determine the angle of the part feature.

Define batch production and describe why it is often used for medium-quantity production products.

The U.S. Constitution is the highest tax authority but provides very little in the way of tax laws.  What are the next highest tax authorities beneath the U.S. Constitution?

Wayne Cooper has some questions regarding the theoretical framework in which GAAP is set. He knows that the FASB and other predecessor organizations have attempted to develop a conceptual framework for accounting theory formulation. Yet, Wayne’s supervisors have indicated that these theoretical frameworks have little value in the practical sense (i.e., in the real world). Wayne did notice that accounting rules seem to be established after the fact rather than before. He thought this indicated a lack of theory structure but never really questioned the process at school because he was too busy doing the homework. Wayne feels that some of his anxiety about accounting theory and accounting semantics could be alleviated by identifying the basic concepts and definitions accepted by the profession and considering them in light of his current work. By doing this, he hopes to develop an appropriate connection between theory and practice. Instructions (a) Help Wayne recognize the purpose of and benefit of a conceptual framework. (b) Identify any Statements of Financial Accounting Concepts issued by the FASB that may be helpful to Wayne in developing his theoretical background.

Assume the same facts as in the previous problem but that Betty and Barney are not getting along and have separated due to marital discord (although they are not legally separated). In fact, they cannot even stand to talk to each other anymore and communicate only through their accountant. Betty wants to argue that she should not be treated as owning any of Barney’s stock in Bedrock because of their hostility towards each other. Can family hostility be used as an argument to void the family attribution rules?  Consult Rev. Rul. 80-26; Robin Haft Trust v. Comm’r, 510 F.2d 43 (1st Cir. 1975);

Describe the activity in the secondary T-bill market. How can this degree of activity benefit investors in T-bills? Why might a financial institution sometimes consider T-bills as a potential source of funds? (LO1)

Mancuso Corporation amended its pension plan on January 1, 2014, and granted $160,000 of prior service costs to its employees. The employees are expected to provide 2,000 service years in the future, with 350 service years in 2014. Compute prior service cost amortization for 2014.

The information shown below and on page 1170 was disclosed during the audit of Elbert Inc. 1. Amount Due Year per Tax Return 2014 $130,000 2015 104,000 2. On January 1, 2014, equipment costing $600,000 is purchased. For financial reporting purposes, the company uses straight-line depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5-year life. (Hint: For tax purposes, the half-year convention as discussed in Appendix 11A must be used.) 3. In January 2015, $225,000 is collected in advance rental of a building for a 3-year period. The entire $225,000 is reported as taxable income in 2015, but $150,000 of the $225,000 is reported as unearned revenue in 2015 for financial reporting purposes. The remaining amount of unearned revenue is to be recognized equally in 2016 and 2017. 4. The tax rate is 40% in 2014 and all subsequent periods. (Hint: To find taxable income in 2014 and 2015, the related income taxes payable amounts will have to be “grossed up.”) 5. No temporary differences existed at the end of 2013. Elbert expects to report taxable income in each of the next 5 years. Instructions (a) Determine the amount to report for deferred income taxes at the end of 2014, and indicate how it should be classified on the balance sheet. (b) Prepare the journal entry to record income taxes for 2014. (c) Draft the income tax section of the income statement for 2014, beginning with “Income before income taxes.” (Hint: You must compute taxable income and then combine that with changes in cumulative temporary differences to arrive at pretax financial income.) (d) Determine the deferred income taxes at the end of 2015, and indicate how they should be classified on the balance sheet. (e) Prepare the journal entry to record income taxes for 2015. (f) Draft the income tax section of the income statement for 2015, beginning with “Income before income taxes.”

1.       : Discuss how the dilemma of teamwork versus individual work might be intensified in a virtual team. What dilemmas do you encounter when you have to do class assignments as part of a team? Discuss.

Under what conditions should a contingent liability be recorded?

Why does Congress provide tax deferral on the formation of a corporation?

According to the video on sheet-metal bending, what are the principal terms used to describe bending on a press brake?

When a taxpayer receives a nonqualified distribution from a Roth IRA, is the entire amount of the distribution treated as taxable income? Explain.

Under what circumstances does a corporate shareholder receive tax deferral in a complete liquidation?

: Define corporate culture as part of the organization’s internal environment, and identify when a culture becomes toxic for some or all employees.

Cleveland Inc. leased a new crane to Abriendo Construction under a 5-year noncancelable contract starting January 1, 2014. Terms of the lease require payments of $33,000 each January 1, starting January 1, 2014. Cleveland will pay insurance, taxes, and maintenance charges on the crane, which has an estimated life of 12 years, a fair value of $240,000, and a cost to Cleveland of $240,000. The estimated fair value of the crane is expected to be $45,000 at the end of the lease term. No bargain-purchase or renewal options are included in the contract. Both Cleveland and Abriendo adjust and close books annually at December 31. Collectibility of the lease payments is reasonably certain, and no uncertainties exist relative to unreimbursable lessor costs. Abriendo’s incremental borrowing rate is 10%,and Cleveland’s implicit interest rate of 9% is known to Abriendo. Instructions (a) Identify the type of lease involved and give reasons for your classification. Discuss the accounting treatment that should be applied by both the lessee and the lessor. (b) Prepare all the entries related to the lease contract and leased asset for the year 2014 for the lessee and lessor, assuming the following amounts. (1) Insurance $500. (2) Taxes $2,000. (3) Maintenance $650. (4) Straight-line depreciation and salvage value $15,000. (c) Discuss what should be presented in the balance sheet, the income statement, and the related notes of both the lessee and the lessor at December 31, 2014.

Dax Jones submitted his 2024 tax return on time and elected to file a joint tax return with his wife, Darlene. Dax and Darlene did not request an extension for their 2024 tax return. Dax and Darlene owed and paid the IRS $124,000 for their 2024 tax liability. Two years later, Dax amended his return and claimed married filing separate status. By changing his filing status, Dax sought a refund for an overpayment for the tax year 2024 (he paid more tax in the original joint return than he owed on a separate return). Is Dax allowed to change his filing status for the 2024 tax year and receive a tax refund with his amended return?

Simms Company has significant amounts of trade accounts receivable. Simms uses the allowance method to estimate bad debts instead of the direct write-off method. During the year, some specific accounts were written off as uncollectible, and some that were previously written off as uncollectible were collected. Instructions (a) What are the deficiencies of the direct write-off method? (b) What are the two basic allowance methods used to estimate bad debts, and what is the theoretical justification for each? (c) How should Simms account for the collection of the specific accounts previously written off as uncollectible?

Explain the difference between ordinary, capital, and §1231 assets.

Jones Co. is in a technology-intensive industry. Recently, one of its competitors introduced a new product with technology that might render obsolete some of Jones’s inventory. The accounting staff wants to follow the appropriate authoritative literature in determining the accounting for this significant market event. Instructions If your school has a subscription to the FASB Codification, go to http://aaahg.org/asclogin.cfm to log in and prepare responses to the following. Provide Codification references for your responses. (a) Identify the primary authoritative guidance for the accounting for inventories. What is the predecessor literature? (b) List three types of goods that are classified as inventory. What characteristic will automatically exclude an item from being classified as inventory? (c) Define “market” as used in the phrase “lower-of-cost-or-market.” (d) Explain when it is acceptable to state inventory above cost and which industries allow this practice.

Indicate whether the following items are capitalized or expensed in the current year. (a) Purchase cost of a patent from a competitor. (b) Research costs. (c) Development costs (after achieving economic viability). (d) Organizational costs. (e) Costs incurred internally to create goodwill.

1. How much would be supplied at a price of 70p per kilo? 2. Draw a supply curve for farmer X. Are the axes drawn to the same scale as in Figure 2.3?

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