Question & Answer

Keyser’s Fleece Inc. holds a drove of sheep. Keyser shears the sheep on a semiannual basis and then sells the harvested wool into the specialty knitting market. Keyser has the following information related to the shearing sheep at January 1, 2014, and during the first six months of 2014 Shearing Sheep Carrying value (equal to net realizable value), January 1, 2014 $74,000 Change in fair value due to growth and price changes 4,700 Change in fair value due to harvest (575) Wool harvested during the fi rst 6 months (at NRV) 9,000 Prepare the journal entry(ies) for Keyser’s biological asset (shearing sheep) for the first six months of 2014.

Presented below is the adjusted trial balance of Kelly Corporation at December 31, 2014. Additional information: 1. Net loss for the year was $2,500. 2. No dividends were declared during 2014. Instructions Prepare a classified balance sheet as of December 31, 2014. Debit Credit Cash $ ? Supplies 1,200 Prepaid Insurance 1,000 Equipment 48,000 Accumulated Depreciation—Equipment $ 4,000 Trademarks 950 Accounts Payable 10,000 Salaries and Wages Payable 500 Unearned Service Revenue 2,000 Bonds Payable (due 2021) 9,000 Common Stock 10,000 Retained Earnings 25,000 Service Revenue 10,000 Salaries and Wages Expense 9,000 Insurance Expense 1,400 Rent Expense 1,200 Interest Expense 900 Total $ ? $ ?

Selection of appropriate standard Franklin Industries’ CEO was talking with the CFO about the appropriate standard to use for the new product being launched in the coming year. The CEO argued that standards based on ideal performance would enable profits to be maximised through improved efficiency. The CFO argued, however, that the standard should be based on attainable performance or recent average historical performance.   Required Briefly comment on which standard is best for Franklin Industries to use in developing the standard cost for the new product.

(LO1)

1.       : As organizations become more technology-driven, which do you think will become more important—the management of the human element of the organization or the management of technology? Discuss.

Under what circumstances is it possible for partners to recognize gain when contributing property to partnerships?

Assume that the yield curve for Treasury bonds has a slight upward slope, starting at 6 percent for a 10- year maturity and slowly rising to 8 percent for a 30-year maturity. Create a yield curve that you believe would exist for A-rated bonds, and a corresponding yield curve for B-rated bonds. (LO1, LO3)

Is it reasonable to assume that people seek to equate the marginal utility/price ratios of the goods that they purchase, if (a) they have never heard of ‘utility’, let alone ‘marginal utility’; (b) marginal utility cannot be measured in any absolute way?

{Research}  Using the Internal Revenue Code, describe two deductions for AGI that are not discussed in this chapter.

Dewey is a lawyer who uses the cash method of accounting.  Last year Dewey provided a client with legal services worth $55,000, but the client could not pay the fee.  This year Dewey requested that in lieu of paying Dewey $55,000 for the services, the client could make a $45,000 gift to Dewey’s daughter.  Dewey’s daughter received the check for $45,000 and deposited it in her bank account.  How much of this income is taxed, if any, to Dewey?  Explain.

Identify at least two situations in which important changes in value are not reported in the income statement.

Discuss how a change in accounting policy is handled when it is impracticable to determine previous amounts.

How does the tax treatment of employee fringe benefits reflect the hybrid nature of the S corporation?

Would it be possible with this basic needs approach to say (a) that one country was more developed than another; (b) that one country was developing faster than another?

Describe how a country’s laws can influence the degree of its financial market liquidity. (LO3)

Aminata is a tax expert, whereas Rob is a tax novice.  Explain how their process in identifying tax issues may differ.

What are the advantages and disadvantages of sand casting over investment casting?

What is the difference between a notching operation and a seminotching operation?

The Black Knights Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Black Knights has decided to locate a new factory in the Panama City area. Black Knights will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three buildings. Building A: Purchase for a cash price of $600,000, useful life 25 years. Building B: Lease for 25 years with annual lease payments of $69,000 being made at the beginning of the year. Building C: Purchase for $650,000 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $7,000. Rental payments will be received at the end of each year. The Black Knights Inc. has no aversion to being a landlord. Instructions In which building would you recommend that The Black Knights Inc. locate, assuming a 12% cost of funds?

What would be the classical economists’ criticisms of this argument?

What are the differences between rotational parts and prismatic parts in machining?

How is the distinction between nominal and real relevant to misperceptions theory?

Describe the differences between a proportional, progressive, and regressive tax rate structure.

Referring to Problem 38.1, the mechanical inaccuracies in the open-loop positioning system can be described by a normal distribution whose standard deviation = 0.005 mm. The range of the worktable axis is 500 mm, and there are 12 bits in the binary register used by the digital controller to store the programmed position. For the positioning system, determine (a) control resolution, (b) accuracy, and (c) repeatability. (d) What is the minimum number of bits that the binary register should have so that the mechanical drive system becomes the limiting component on control resolution?

The Colson Company issued $300,000 of 10% bonds on January 1, 2014. The bonds are due January 1, 2020, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare Colson’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.