Question & Answer

Julie paid a day care center to watch her two-year-old son this year while she worked as a computer programmer for a local start-up company.  What amount of child and dependent care credit can Julie claim in 2024 in each of the following alternative scenarios? a.  Julie paid $2,000 to the day care center and her AGI is $50,000 (all salary).

Garison Music Emporium carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music. Garison uses two sales promotion techniques—warranties and premiums—to attract customers. Musical instruments and sound equipment are sold with a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience, is 2% of sales. The premium is offered on the recorded and sheet music. Customers receive a coupon for each dollar spent on recorded music or sheet music. Customers may exchange 200 coupons and $20 for a digital MP3 player. Garison pays $32 for each player and estimates that 60% of the coupons given to customers will be redeemed. Garison’s total sales for 2014 were $7,200,000—$5,700,000 from musical instruments and sound reproduction equipment and $1,500,000 from recorded music and sheet music. Replacement parts and labor for warranty work totaled $164,000 during 2014. A total of 6,500 players used in the premium program were purchased during the year and there were 1,200,000 coupons redeemed in 2014. The accrual method is used by Garison to account for the warranty and premium costs for financial reporting purposes. The balances in the accounts related to warranties and premiums on January 1, 2014, were as shown below. Inventory of Premiums $ 37,600 Premium Liability 44,800 Warranty Liability 136,000 Instructions Garison Music Emporium is preparing its financial statements for the year ended December 31, 2014. Determine the amounts that will be shown on the 2014 financial statements for the following. (a) Warranty Expense. (d) Inventory of Premiums. (b) Warranty Liability. (e) Premium Liability. (c) Premium Expense.

What is filament winding?

What are the reasons why the bulk deformation processes are important commercially and technologically?

Presented below are a number of balance sheet accounts of Deep Blue Something, Inc. (a) Investment in Preferred Stock. (h) Interest Payable. (b) Treasury Stock. (i) Deficit. (c) Common Stock. (j) Equity Investments (trading). (d) Dividends Payable. (k) Income Taxes Payable. (e) Accumulated Depreciation—Equipment. (l) Unearned Subscriptions Revenue. (f) Construction in Process. (m) Work in Process. (g) Petty Cash. (n) Salaries and Wages Payable. Instructions For each of the accounts above, indicate the proper balance sheet classification. In the case of borderline items, indicate the additional information that would be required to determine the proper classification.

In a laser beam welding process, what is the quantity of heat per unit time (J/sec) that is transferred to the material if the heat is concentrated in circle with a diameter of 0.2 mm? Assume the power density provided in Table 29.1.

What date or event does the profession believe should be used in determining the value of a stock option? What arguments support this position?

In an article that appeared in the Wall Street Journal, the phrases “phantom (paper) profits” and “high LIFO profits” through involuntary liquidation were used. Explain these phrases.

Pine Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, Alejandro, who has always operated it as a C corporation.  However, at the beginning of this year, Alejandro made a qualifying S election for Pine Corp., effective January 1.  Pine Corp. reported $70,000 of C corporation earnings and profits on the effective date of the S election.  This year (its first S corporation year), Pine Corp. reported business income of $50,000.  Alejandro’s basis in his Pine Corp. stock at the beginning of the year was $15,000.  What are the amount and character of income or gain Alejandro must recognize on the following alternative distributions, and what is his basis in his Pine Corp. stock at the end of the year?

Indicate how each of the following accounts should be classified in the equity section. (a) Share Capital—Ordinary. (e) Share Premium—Treasury. (b) Retained Earnings. (f) Share Capital—Preference. (c) Share Premium—Ordinary. (g) Accumulated Other Comprehensive Income. (d) Treasury Shares.

Describe the like-kind property requirements for real property for purposes of qualifying for a like-kind exchange. Explain whether land held for investment by a corporation will qualify as like-kind property with land held by an individual for personal use.

Jake is a professional dog trainer who purchases and trains dogs for use by law enforcement agencies. Last year Jake purchased 500 bags of dog food from a large pet food company at an average cost of $30 per bag. This year, however, Jake purchased 500 bags of dog food from a local pet food company at an average cost of $45 per bag. Under what circumstances would the IRS likely challenge the cost of Jake’s dog food as unreasonable?

What are the common methods for assessing surface roughness?

LAA Inc. made a charitable donation of $100,000 to the Trevor Project (a qualifying charity) For the year, LAA reported taxable income of $550,000, which included a $100,000 charitable contribution deduction (before limitation) and a $50,000 dividends-received deduction. What is LAA Inc.’s charitable contribution deduction for the year?

Englehart Co. provides the following information about its postretirement benefit plan for the year 2014. Service cost $ 90,000 Prior service cost amortization 3,000 Contribution to the plan 56,000 Actual and expected return on plan assets 62,000 Benefi ts paid 40,000 Plan assets at January 1, 2014 710,000 Accumulated postretirement benefi t obligation at January 1, 2014 760,000 Accumulated OCI (PSC) at January 1, 2014 100,000 Dr. Discount rate 9% Instructions Compute the postretirement benefit expense for 2014.

Lady Gaga Co. recently made an investment in the bonds issued by Chili Peppers Inc. Lady Gaga’s business model for this investment is to profit from trading in response to changes in market interest rates. How should this investment be classified by Lady Gaga? Explain.

Why are single station assembly cells generally not suited to high-production jobs?

In 2014, Bailey Corporation discovered that equipment purchased on January 1, 2012, for $50,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%. Prepare Bailey’s 2014 journal entry to correct the error.

Lauren’s basis in Driftwood Partnership is $510,000. Driftwood distributes all the land to Lauren in complete liquidation of her partnership interest. The partnership reports the following balance sheet just before the distribution: Assets: Tax Basis FMV Cash $ 370,000 $ 370,000 Stock (investment) 910,000 370,000 Land 250,000 370,000    Totals $1, 530,000 $ 1,110,000 Liabilities and capital: Capital- Esteban $ 510,000 - Kylie 510,000 - Lauren 510,000   Totals $ 1,530,000 a. What are the amount and character of Lauren’s recognized gain or loss? b. If Driftwood does not have a §754 election in place, what is the amount of the special basis adjustment, if any?

List three properties of ferrite at room temperature.

Distinguish between a debt security and an equity security.

When is revenue recognized in the following situations:(a) Revenue from selling products? (b) Revenue from services performed? (c) Revenue from permitting others to use enterprise assets? (d) Revenue from disposing of assets other than products?

Slaton Corporation traded a used truck for a new truck. The used truck cost $20,000 and has accumulated depreciation of $17,000. The new truck is worth $35,000. Slaton also made a cash payment of $33,000. Prepare Slaton’s entry to record the exchange. (The exchange has commercial substance.)

Equipment was purchased on January 2, 2014, for $24,000, but no portion of the cost has been charged to depreciation. The corporation wishes to use the straight-line method for these assets, which have been estimated to have a life of 10 years and no salvage value. What effect does this error have on net income in 2014? What entry is necessary to correct for this error, assuming that the books are not closed for 2014?

Nancy Tercek, the financial vice president, and Margaret Lilly, the controller, of Romine Manufacturing Company are reviewing the financial ratios of the company for the years 2014 and 2015. The financial vice president notes that the profit margin on sales ratio has increased from 6% to 12%, a hefty gain for the 2-year period. Tercek is in the process of issuing a media release that emphasizes the efficiency of Romine Manufacturing in controlling cost. Margaret Lilly knows that the difference in ratios is due primarily to an earlier company decision to reduce the estimates of warranty and bad debt expense for 2015. The controller, not sure of her supervisor’s motives, hesitates to suggest to Tercek that the company’s improvement is unrelated to efficiency in controlling cost. To complicate matters, the media release is scheduled in a few days. Instructions (a) What, if any, is the ethical dilemma in this situation? (b) Should Lilly, the controller, remain silent? Give reasons. (c) What stakeholders might be affected by Tercek’s media release? (d) Give your opinion on the following statement and cite reasons: “Because Tercek, the vice president, is most directly responsible for the media release, Lilly has no real responsibility in this matter.”