Question & Answer

On December 21, 2013, Bucky Katt Company provided you with the following information regarding its trading securities. December 31, 2013 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $20,000 $19,000 $(1,000) Colorado Co. stock 10,000 9,000 (1,000) Buffaloes Co. stock 20,000 20,600 600 Total of portfolio $50,000 $48,600 (1,400) Previous fair value adjustment balance –0– Fair value adjustment—Cr. $(1,400) During 2014, Colorado Company stock was sold for $9,400. The fair value of the stock on December 31, 2014, was Clemson Corp. stock—$19,100; Buffaloes Co. stock—$20,500. Instructions (a) Prepare the adjusting journal entry needed on December 31, 2013. (b) Prepare the journal entry to record the sale of the Colorado Company stock during 2014. (c) Prepare the adjusting journal entry needed on December 31, 2014.

How does the expense warranty approach differ from the sales warranty approach?

Expenses, losses, and distributions to owners are all decreases in net assets. What are the distinctions among them?

What are postretirement benefits other than pensions?

In periods when home prices declined substantially, some homeowners blamed the Fed. In other periods when home prices increased, homeowners gave credit to the Fed. How can the Fed have such a large impact on home prices? How could news of a substantial increase in the general inflation level affect the Fed’s monetary policy and thereby affect home prices? (LO2; LO3)

There are several modern-day variations of forge welding, the original welding process. Name them.

What purpose do property and casualty insurance companies serve? Explain how the characteristics of PC insurance and life insurance differ. (LO4)

Using the facts in problem 34, if Chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income?  What is his marginal rate if, instead, he had $40,000 of additional deductions?

The unit melting energy for a certain sheet metal is 9.5 J/mm3. The thickness of each of the two sheets to be spot welded is 3.5 mm. To achieve required strength, it is desired to form a weld nugget that is 5.5 mm in diameter and 5.0 mm thick. The weld duration will be set at 0.3 sec. If it is assumed that the electrical resistance between the surfaces is 140 micro-ohms, and that only one-third of the electrical energy generated will be used to form the weld nugget (the rest being dissipated), determine the minimum current level required in this operation.

Are variable-rate bonds attractive to investors who expect interest rates to decrease? Explain. Would a firm that needs to borrow funds consider issuing variable-rate bonds if it expects interest rates to decrease in the future? Explain. (LO2)

Explain group plan life insurance. (LO3)

Describe the water jet cutting process.

Name the three principal types of printed circuit board.

1.      : Adopt Chris Robinson’s proposed changes, but with a higher limit than the proposed $20 amount (say, $50 or $100), but which is still less than the cost of prosecution. In addition, make sure that the policy isn’t publicized. That way you’ll reduce costs even more and still benefit from your reputation for prosecuting all shoplifters.

Jacob is a member of WCC (an LLC taxed as a partnership). Jacob was allocated $100,000 of business income from WCC for the year. Jacob’s marginal income tax rate is 37 percent. The business allocation is subject to 2.9 percent of self-employment tax (Jacob has salary in excess of the wage base limitation) and .9 percent additional Medicare tax.    a. What is the amount of tax Jacob will owe on the income allocation if the income is not qualified business income?  b. What is the amount of tax Jacob will owe on the income allocation if the income is qualified business income (QBI) and Jacob qualifies for the full QBI deduction?

Explain why the rescue of Fannie Mae and Freddie Mac during the credit crisis improved the ability of mortgage companies to originate mortgages. (LO5)

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.)

Gopher Corporation reported taxable income of $500,000 this year.  Gopher paid a dividend of $100,000 to its sole shareholder, Sven Anderson. The dividend meets the requirements to be a qualified dividend, and Sven is subject to a tax rate of 15 percent on the dividend. What income tax is imposed on the corporate income earned by Gopher and the income tax on the dividend distributed to Sven?

The books of Conchita Corporation carried the following account balances as of December 31, 2014. Cash $ 195,000 Preferred Stock (6% cumulative, nonparticipating, $50 par) 300,000 Common Stock (no-par value, 300,000 shares issued) 1,500,000 Paid-in Capital in Excess of Par—Preferred Stock 150,000 Treasury Stock (common 2,800 shares at cost) 33,600 Retained Earnings 105,000 The company decided not to pay any dividends in 2014. The board of directors, at their annual meeting on December 21, 2015, declared the following: “The current year dividends shall be 6% on the preferred and $.30 per share on the common. The dividends in arrears shall be paid by issuing 1,500 shares of treasury stock.” At the date of declaration, the preferred is selling at $80 per share, and the common at $12 per share. Net income for 2015 is estimated at $77,000. Instructions (a) Prepare the journal entries required for the dividend declaration and payment, assuming that they occur simultaneously. (b) Could Conchita Corporation give the preferred stockholders 2 years’ dividends and common stockholders a 30 cents per share dividend, all in cash?

On January 2, 2014, $100,000 of 11%, 10-year bonds were issued for $97,000. The $3,000 discount was charged to Interest Expense. The bookkeeper, Mark Landis, records interest only on the interest payment dates of January 1 and July 1. What is the effect on reported net income for 2014 of this error, assuming straight-line amortization of the discount? What entry is necessary to correct for this error, assuming that the books are not closed for 2014?

Question: The net income for the year for Genesis, Inc. is $750,000, but the statement of cash flows reports that the net cash provided by operating activities is $640,000. What might account for the difference?

1.       : Experts say that for teams to function well, members must get to know one another in some depth. What specifically would you do to facilitate this when team members are located together? What about in a global virtual team?

Bob Ryan filed his tax return and claimed a dependency exemption for his 16-year-old son Dylan.Both Bob and Dylan are citizens and residents of the United States.Dylan meets all the necessary requirements to be considered a qualifying child; however, when Bob filed the tax return he didn’t know Dylan’s Social Security number and, therefore, didn’t include an identifying number for his son on the tax return.Instead, Bob submitted an affidavit with his tax return stating he had requested Dylan’s Social Security number from Dylan’s birth state.Is Bob allowed to claim a dependency exemption for Dylan without including Dylan’s identifying number on the return?

In general terms, what are the differences in the rules for determining who is a qualifying child and who qualifies as a dependent as a qualifying relative? Is it possible for someone to be a qualifying child and a qualifying relative of the same taxpayer? Why or why not?

Outline the accounting procedures involved in applying the direct-financing method.