Question & Answer

Janyce, a single taxpayer, has AGI of $125,000 and paid the following taxes this year. Calculate how much Janyce can deduct for taxes as an itemized deduction this year.

A deep drawing operation is to be performed on a sheet-metal blank that is 1/8 in thick. The height (inside dimension) of the cup = 3.8 in and the diameter (inside dimension) = 5.0 in. Assuming the punch radius = 0, compute the starting diameter of the blank to complete the operation with no material left in the flange. Is the operation feasible (ignoring the fact that the punch radius is too small)?

Identify some of the sources for tax professional standards.  What are the potential ramifications of failing to comply with these standards?

How might differences in presentation of comparative data under GAAP and IFRS affect adoption of IFRS by U.S. companies?

What would be the marginal cost equation if the total cost equation were:                      C = 15 + 20Q – 5Q² + Q³ What would be the marginal cost at an output of 8?

Why are metals coated?

Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation since its inception. In 2015, it decides to switch to the average-cost method. You are provided with the following information. Net Income Retained Earnings (Ending Balance) Under FIFO Under Average-Cost Under FIFO 2009 $100,000 $ 90,000 $100,000 2010 70,000 65,000 160,000 2011 90,000 80,000 235,000 2012 120,000 130,000 340,000 2013 300,000 290,000 590,000 2014 305,000 310,000 780,000 Instructions (a) What is the beginning retained earnings balance at January 1, 2011, if Gordon prepares comparative financial statements starting in 2011? (b) What is the beginning retained earnings balance at January 1, 2014, if Gordon prepares comparative financial statements starting in 2014? (c) What is the beginning retained earnings balance at January 1, 2015, if Gordon prepares singleperiod financial statements for 2015? (d) What is the net income reported by Gordon in the 2014 income statement if it prepares comparative financial statements starting with 2012?

1. Draw a diagram with the same two countries and with the same production possibilities and exchange ratio as in Figure 24.5. But this time show how much would be imported and exported for each country if, after trade, the LDC consumes 500 million kilos of wheat. Fill the figures in on a table like Table 24.5. 2. If the opportunity cost ratio of wheat for cloth is 1/2 in the LDC, why is the slope of the production possibility curve 2/1? Is the slope of the production possibility curve always the reciprocal of the opportunity cost ratio? 3. Show (graphically) that, if the (pre-trade) opportunity cost ratios of the two countries were the same, there would be no gain from trade – assuming that the production possibility curves were straight lines and did not shift as a result of trade.

Sherwin-Williams, based in Cleveland, Ohio, manufactures a wide variety of paint and other coatings, which are marketed through its specialty stores and in other retail outlets. The company also manufactures paint for automobiles. The Automotive Division has had financial difficulty. During a recent year, five branch locations of the Automotive Division were closed, and new management was put in place for the branches remaining. The following titles were shown on Sherwin-Williams’s balance sheet for that year. Accounts payable Machinery and equipment Accounts receivable, less allowance Other accruals Accrued taxes Other capital Buildings Other current assets Cash and cash equivalents Other long-term liabilities Common stock Postretirement obligations other than pensions Employee compensation payable Retained earnings Finished goods inventories Short-term investments Intangibles and other assets Taxes payable Land Work in process and raw materials inventories Long-term debt Instructions (a) Organize the accounts in the general order in which they would have been presented in a classified balance sheet. (b) When several of the branch locations of the Automotive Division were closed, what balance sheet accounts were most likely affected? Did the balance in those accounts decrease or increase?

South Carolina Corporation has one temporary difference at the end of 2014 that will reverse and cause taxable amounts of $55,000 in 2015, $60,000 in 2016, and $65,000 in 2017. South Carolina’s pretax financial income for 2014 is $300,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2014. Instructions (a) Compute taxable income and income taxes payable for 2014. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014. (c) Prepare the income tax expense section of the income statement for 2014, beginning with the line “Income before income taxes.”

Describe the effect of a “bargain-purchase option” on accounting for a capital lease transaction by a lessee.

Discuss at least two situations in which estimates could affect the usefulness of information in the balance sheet.

Magilke Industries acquired equipment this year to be used in its operations. The equipment was delivered by the suppliers, installed by Magilke, and placed into operation. Some of it was purchased for cash with discounts available for prompt payment. Some of it was purchased under longterm payment plans for which the interest charges approximated prevailing rates. What costs should Magilke capitalize for the new equipment purchased this year? Explain.

When a shareholder receives a noncash distribution of property that is encumbered by a liability (the shareholder assumes the liability on the distribution), how does the shareholder determine the amount of the distribution?

1.       During times of significant organizational change, such as downsizing or a pandemic, the grapevine becomes more active as anxious employees share organizational news and rumors. As a manager, what communication strategies would you employ during a time of uncertainty in the workplace? What are the advantages and disadvantages of gossip during a time of uncertainty?

A series of cold rolling operations are to be used to reduce the thickness of a plate from 50 mm down to 25 mm in a reversing two-high mill. Roll diameter = 700 mm and coefficient of friction between rolls and work = 0.15. The specification is that the draft is to be equal on each pass. Determine (a) minimum number of passes required, and (b) draft for each pass?

The following are a series of unrelated situations. 1. Halen Company’s unadjusted trial balance at December 31, 2014, included the following accounts. Debit Credit Allowance for doubtful accounts $4,000 Net sales $1,200,000 Halen Company estimates its bad debt expense to be 1½% of net sales. Determine its bad debt expense for 2014. 2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2014, disclosed the following. Amounts estimated to be uncollectible $ 180,000 Accounts receivable 1,750,000 Allowance for doubtful accounts (per books) 125,000 What is the net realizable value of Stuart’s receivables at December 31, 2014? 3. Shore Co. provides for doubtful accounts based on 3% of credit sales. The following data are available for 2014. Credit sales during 2014 $2,400,000 Allowance for doubtful accounts 1/1/14 17,000 Collection of accounts written off in prior years (customer credit was reestablished) 8,000 Customer accounts written off as uncollectible during 2014 30,000 What is the balance in Allowance for Doubtful Accounts at December 31, 2014? 4. At the end of its first year of operations, December 31, 2014, Darden Inc. reported the following information. Accounts receivable, net of allowance for doubtful accounts $950,000 Customer accounts written off as uncollectible during 2014 24,000 Bad debt expense for 2014 84,000 What should be the balance in accounts receivable at December 31, 2014, before subtracting the allowance for doubtful accounts? 5. The following accounts were taken from Bullock Inc.’s trial balance at December 31, 2014. Instructions (a) What is the appropriate balance for Allowance for Doubtful Accounts at year-end? (b) Show how accounts receivable would be presented on the balance sheet. (c) What is the dollar effect of the year-end bad debt adjustment on the before-tax income? (CMA adapted)

For tax purposes, what happens to a corporation’s charitable contributions that are not deducted in the current year because of the taxable income limitation?

The creditors of Chester Company agree to accept promissory notes for the amount of its indebtedness with a proviso that two-thirds of the annual profits must be applied to their liquidation. How should these notes be reported on the balance sheet of the issuing company? Give a reason for your answer.

1.       : Evaluate your own personal experiences with people from other cultural backgrounds. How well do you think those experiences have prepared you to understand the unique needs and dilemmas of a diverse workforce?

Viscosity is an important property of a polymer melt in plastics shaping processes. Upon what parameters does viscosity depend?

The following note related to stockholders’ equity was reported in Wiebold, Inc.’s annual report.   Instructions (a) What is the significance of the date of record and the date of distribution? (b) Why might Wiebold have declared a 3-for-2 for stock split? (c) What impact does Wiebold’s stock split have on (1) total stockholders’ equity, (2) total par value, (3) outstanding shares, and (4) book value per share?

Vertovec Inc., a large local consulting firm in Utah, hired several new consultants from out of state last year to help service their expanding list of clients. To aid in relocating the consultants, Vertovec Inc. purchased the consultants’ homes in their prior location if the consultants were unable to sell their homes within 30 days of listing them for sale. Vertovec Inc. bought the homes from the consultants for 5 percent less than the list price and then continued to list the homes for sale. Each home Vertovec Inc. purchased was sold at a loss. By the end of last year, Vertovec had suffered a loss totaling $250,000 from the homes. How should Vertovec treat the loss for tax purposes?  Write a memo to Vertovec Inc. explaining your findings and any planning suggestions that you may have if Vertovec Inc. continues to offer this type of relocation benefit to newly hired consultants.

Explain why Congress allows self-employed taxpayers to deduct the cost of health insurance as a for AGI deduction when employees can only itemize this cost as a medical expense. Would a self-employed taxpayer ever prefer to claim health insurance premiums as an itemized deduction rather than a deduction for AGI? Explain.

According to the video on sheet-metal stamping dies and processes, what are the factors that affect the formability of a metal?