Question & Answer

Winsor Inc. recently purchased Holiday Corp., a large midwestern home painting corporation. One of the terms of the merger was that if Holiday’s income for 2014 was $110,000 or more, 10,000 additional shares would be issued to Holiday’s stockholders in 2015. Holiday’s income for 2013 was $120,000. Instructions (a) Would the contingent shares have to be considered in Winsor’s 2013 earnings per share computations? (b) Assume the same facts, except that the 10,000 shares are contingent on Holiday’s achieving a net income of $130,000 in 2014. Would the contingent shares have to be considered in Winsor’s earnings per share computations for 2013?

Dejan owns stock in two S corporations, Blue and Green. He actively participates in the management of Blue but maintains ownership in Green only as a passive investor.  Dejan has no other business investments.  Both Blue and Green anticipate a loss this year, and Dejan’s basis in his stock of both corporations is $0. All else equal, if Dejan plans on making a capital contribution to at least one of the corporations this year, to which firm should he contribute in order to increase his chances of deducting the loss allocated to him from the entity?  Why?

A steel test specimen (modulus of elasticity = 30 x 106 lb/in2 ) in a compression test has a starting height = 2.0 in and diameter = 1.5 in. The metal yields (0.2% offset) at a load = 140,000 lb. At a load of 260,000 lb, the height has been reduced to 1.6 in. Determine (a) yield strength and (b) flow curve parameters (strength coefficient and strain-hardening exponent). Assume that the cross-sectional area increases uniformly during the test.

Under what circumstances can a college student qualify for the earned income credit?

Assume the same data as in P21-13 and that Chambers Medical Center has an incremental borrowing rate of 10%. Instructions (a) Discuss the nature of this lease in relation to the lessee, and compute the amount of the initial lease liability. (b) Prepare a 10-year lease amortization schedule. (c) Prepare all of the lessee’s journal entries for the first year.

What is preform molding?

Try this brain teaser. A monopoly would be expected to face an inelastic demand. After all, there are no direct substitutes. An yet,  if it produces where MR = MC, MR must be positive and demand must therefore be elastic. Therefore the monopolist must face an elastic demand! Can you solve this conundrum?

LaBouche Corporation owns a warehouse. On November 1, it rented storage space to a lessee (tenant) for 3 months for a total cash payment of $2,400 received in advance. Prepare LaBouche’s November 1 journal entry and the December 31 annual adjusting entry.

For taxpayers qualifying for home office deductions, what are considered to be indirect expenses of maintaining the home? How are these expenses allocated to personal and home office use? Can taxpayers choose to calculate home office expenses without regard to actual expenses allocated to the home office? Explain.

A turning operation is to be performed on C1010 steel, which is a ductile grade. It is desired to achieve a surface finish of 64 µ-in, while at the same time maximizing the metal removal rate. It has been decided that the speed should be in the range 200 ft/min to 400 ft/min, and that the depth of cut will be 0.080 in. The tool nose radius = 3/64 in. Determine the speed and feed combination that meets these criteria.

What are the three basic categories of inspection and testing techniques used for weldments? Name some typical inspections and/or tests in each category.

The upper and lower control limits for a p chart are: LCL = 0.19 and UCL = 0.24. Determine the sample size n that is used with this control chart.

What is the function of a mutual fund? Why are mutual funds popular among investors? How does a money market mutual fund differ from a stock or bond mutual fund? (LO3)

Jake is a retired jockey who takes monthly trips to Las Vegas to gamble on horse races. So far this year, Jake has won almost $47,500 during his trips to Las Vegas while spending $27,250 on travel expenses and incurring $62,400 of gambling losses. Explain how Jake’s gambling winnings and related costs will be treated for tax purposes.

Which of the following are macroeconomic issues, which are microeconomic ones and which could be either depending on the context?                (a)  Inflation.                (b)  Low wages in certain sectors.                (c)  The rate of exchange between the pound and the euro.                (d)  Why the prices of fresh fruit and vegetables fluctuate more than those of cars.                (e)  The rate of economic growth this year compared with last year.                (f)   The decline of traditional manufacturing industries.                (g)  Immigration of workers

How does whole life insurance serve as a form of savings to policyholders? (LO3)

Would the adoption of improved working conditions necessarily lead to higher labour costs per unit of output?

List (a) the similarities and (b) the differences in the accounting treatments of depreciation and cost depletion.

Janelle wants to create an S corporation called J’s Dance Shoes (JDS). Describe how the items below affect her eligibility for an S election. a. Because Janelle wants all her shareholders to have an equal say in the future of JDS, she gives them equal voting rights and decides shareholders who take a more active role in the firm will have priority in terms of distribution and liquidation rights.

For what possible reasons may a country experience a persistently faster rate of economic growth than another?

The worktable of a numerical control machine tool is driven by a closed-loop positioning system which consists of a servomotor, leadscrew, and optical encoder. The leadscrew has 4 threads/in and is coupled directly to the motor shaft (gear ratio = 1:1). The optical encoder generates 200 pulses per motor revolution. The table has been programmed to move a distance of 7.5 in at a feed rate = 20.0 in/min. (a) How many pulses are received by the control system to verify that the table has moved the programmed distance? What are (b) the pulse rate and (c) motor speed that correspond to the specified feed rate?

Explain the differences between the installment-sales method and the cost-recovery method.

The cash account of Aguilar Co. showed a ledger balance of $3,969.85 on June 30, 2014. The bank statement as of that date showed a balance of $4,150. Upon comparing the statement with the cash records, the following facts were determined. 1. There were bank service charges for June of $25. 2. A bank memo stated that Bao Dai’s note for $1,200 and interest of $36 had been collected on June 29, and the bank had made a charge of $5.50 on the collection. (No entry had been made on Aguilar’s books when Bao Dai’s note was sent to the bank for collection.) 3. Receipts for June 30 for $3,390 were not deposited until July 2. 4. Checks outstanding on June 30 totaled $2,136.05. 5. The bank had charged the Aguilar Co.’s account for a customer’s uncollectible check amounting to $253.20 on June 29. 6. A customer’s check for $90 had been entered as $60 in the cash receipts journal by Aguilar on June 15. 7. Check no. 742 in the amount of $491 had been entered in the cash journal as $419, and check no. 747 in the amount of $58.20 had been entered as $582. Both checks had been issued to pay for purchases of equipment. Instructions (a) Prepare a bank reconciliation dated June 30, 2014, proceeding to a correct cash balance. (b) Prepare any entries necessary to make the books correct and complete.

1.              : How would you suggest that Baker modify his leadership style if he wants to succeed Davidson in two years? Be specific.

Assume that in a household one parent currently works full time and the other stays at home to look after the family. How would you set about identifying and calculating the opportunity costs of the second parent now taking a full-time job? How would such calculations be relevant in deciding whether it is worth taking that job?