Question & Answer

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.

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 are compensated absences?

George (age 42 at year-end) has been contributing to a traditional IRA for years (all deductible contributions), and his IRA is now worth $25,000. He is planning on converting the entire balance to a Roth IRA account. George’s marginal tax rate is 24 percent. a. What are the tax consequences to George if he takes $25,000 out of the traditional IRA and contributes the entire amount into a Roth IRA one week after receiving the distribution? b. What are the tax consequences to George if he takes $25,000 out of the traditional IRA, pays the taxes due from the traditional IRA distribution, and contributes the what’s left from the distribution to the Roth IRA one week after receiving the distribution? c. What are the tax consequences to George if he takes $25,000 out of the traditional IRA, keeps $10,000 to pay taxes and to make a down payment on a new car, and contributes what’s left from the distribution to the Roth IRA one week after receiving the distribution?

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

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)

Francis Corporation purchased an asset at a cost of $50,000 on March 1, 2014. The asset has a useful life of 8 years and a salvage value of $4,000. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2014–2019.

(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.

1. If a person earning £10 000 per year pays £1000 in a given tax and a person earning £20 000 per year pays £1600, is the tax progressive or regressive? 2. A proportional tax will leave the distribution of income unaffected. Why should this be so, given that a rich person will pay a larger absolute amount than a poor person?

Name some of the steps that can be taken to reduce or eliminate vibrations in machining

1.    b.       Pick two industries of your choice and identify environmental issues that have the potential to create environmental uncertainty. (Examples: automobile, newspaper, medical services, etc.)

Are an employee’s entire wages subject to the FICA tax? Explain.

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).

1.    What is transformational leadership? Give examples of organizational situations that would call for transformational, transactional, or charismatic leadership.

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?

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.

1.      : What goal or mission for the Park Hill Museum do you personally prefer? As director, would you try to implement your preferred direction? Explain.

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

Discuss the basic differences between annotated and topical tax services.  How are these services used in tax research?   Answer:

Matt Perry, Inc. had outstanding $6,000,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $9,000,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 11% bonds at 102 on August 1. Unamortized bond discount and issue cost applicable to the 11% bonds were $120,000 and $30,000, respectively. Instructions Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds.

Laser-beam welding and electron-beam welding are often compared because they both produce very high power densities. LBW has certain advantages over EBW. What are they?