Question & Answer

{Planning} Billups, a physician and cash-method taxpayer, is new to the concept of tax planning and recently learned of the timing strategy.  To implement the timing strategy, Billups plans to establish a new policy that allows all his clients to wait two years to pay their co-pays.  Assume that Billups does not expect his marginal tax rates to change.  What is wrong with his strategy?

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.

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?

To what extent do (a) income tax, (b) VAT and (c) a poll tax meet the various requirements for a good tax system?

Describe the flash crash on May 6, 2010, and explain why it caused so much concern among investors and regulators. (LO3)

Clark owns stock in BCS Corporation that he purchased in January of the current year. The stock has appreciated significantly during the year. It is now December of the current year, and Clark is deciding whether he should sell the stock. What tax and nontax factors should Clark consider before making the decision on whether to sell the stock now?

EG Corporation redeemed 200 shares of stock from one of its shareholders in exchange for $200,000. The redemption represented 20 percent of the corporation’s outstanding stock. The redemption was treated as an exchange by the shareholder. By what amount does EG reduce its E&P as a result of the redemption under the following E&P assumptions?

How easy do you think it would be for a firm to split customers into different groups based on their incomes?

Go through the above arguments and give a reply to the criticisms made of government intervention.

1.    Why do you think the three skills are all needed to be an effective manager? Give examples of times when each one is used.

Why might a foreign government’s policies be closely monitored by investors in other countries, even if the investors plan no investments in that country? Explain how monetary policy in one country can affect interest rates in other countries. (LO6)

What factors have to be present for income shifting to be a viable strategy?

List and briefly describe some of the plastic forming methods used to shape traditional ceramic products.

Hyundai is considering opening a plant in two neighboring states.  One state has a corporate tax rate of 10 percent.  If operated in this state, the plant is expected to generate $1,000,000 pretax profit.  The other state has a corporate tax rate of 2 percent.  If operated in this state, the plant is expected to generate $930,000 of pretax profit.  Which state should Hyundai choose?  Why do you think the plant in the state with a lower tax rate would produce a lower before-tax income?

What are the advantages and disadvantages of the singlestep income statement?

What are some of the taxes that currently are unique to state and local governments?  What are some of the taxes that the federal, state, and local governments each utilize?

What are adjusting entries and why are they necessary?

Presented below is information related to Waveland Inc. Cost Retail Inventory, 12/31/14 $250,000 $ 390,000 Purchases 914,500 1,460,000 Purchase returns 60,000 80,000 Purchase discounts 18,000 — Gross sales revenue (after employee discounts) — 1,410,000 Sales returns — 97,500 Markups — 120,000 Markup cancellations — 40,000 Markdowns — 45,000 Markdown cancellations — 20,000 Freight-in 42,000 — Employee discounts granted — 8,000 Loss from breakage (normal) — 4,500 Instructions Assuming that Waveland Inc. uses the conventional retail inventory method, compute the cost of its ending inventory at December 31, 2015.

What is a tax bracket?  What is the relationship between filing status and the width of the tax brackets in the tax rate schedule?

] Rivendell Corporation uses the accrual method of accounting and has the following assets as of the end of 2023. Rivendell converted to an S corporation on January 1, 2024.   Asset Adjusted basis FMV Cash $40,000 $40,000 Accounts receivable 30,000 30,000 Inventory 130,000 60,000 Land 100,000 125,000   Totals $300,000 $255,000   a. What is Rivendell’s net unrealized built-in gain at the time it converted to an S corporation?

1.    : Many successful entrepreneurs say that they did little planning, perhaps scratching notes on a legal pad. How was it possible for them to do well, even so?

1.   Mind your own business and just do your job. The company isn’t breaking any laws, and if Petro-Tech ‘s economic situation doesn’t improve, a lot of people will be thrown out of work.

What are the limitations on the number and type of shareholders an S corporation may have?  How are these limitations different from restrictions on the number and type of shareholders C corporations or partnerships may have?

What disclosures are required relative to long-term debt and sinking fund requirements?

Beilman Inc. reports the following pretax income (loss) for both book and tax purposes. (Assume the carryback provision is used where possible for a net operating loss.) Year Pretax Income (Loss) Tax Rate 2012 $120,000 40% 2013 90,000 40% 2014 (280,000) 45% 2015 120,000 45% The tax rates listed were all enacted by the beginning of 2012. Instructions (a) Prepare the journal entries for years 2012–2015 to record income tax expense (benefit) and income taxes payable (refundable), and the tax effects of the loss carryback and loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-half of the benefits of the loss carryforward will not be realized. (b) Prepare the income tax section of the 2014 income statement beginning with the line “Operating loss before income taxes.” (c) Prepare the income tax section of the 2015 income statement beginning with the line “Income before income taxes.”