Question & Answer

Answer the following questions relatedto Dubois Inc. (a) Dubois Inc. has $600,000 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $80,000 at the end of each year for 12 years, and the other is to receive a single lump-sum payment of $1,900,000 at the end of the 12 years. Which alternative should Dubois select? Assume the interest rate is constant over the entire investment. (b) Dubois Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $824,150. The purchase agreement specifies an immediate down payment of $200,000 and semiannual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction? (c) Dubois Inc. loans money to John Kruk Corporation in the amount of $800,000. Dubois accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note? (d) Dubois Inc. wishes to accumulate $1,300,000 by December 31, 2024, to retire bonds outstanding. The company deposits $200,000 on December 31, 2014, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,300,000 is available at the end of 2024. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round to even dollars.)

Joy Cunningham Co. purchased a machine on January 1, 2012, for $550,000. At that time, it was estimated that the machine would have a 10-year life and no salvage value. On December 31, 2015, the firm’s accountant found that the entry for depreciation expense had been omitted in 2013. In addition, management has informed the accountant that the company plans to switch to straight-line depreciation, starting with the year 2015. At present, the company uses the sum-of-the-years’-digits method for depreciating equipment. Instructions Prepare the general journal entries that should be made at December 31, 2015, to record these events. (Ignore tax effects.)

Presented below are selected accounts of Yasunari Kawabata Company at December 31, 2014 Inventory (fi nished goods) $ 52,000 Cost of Goods Sold $2,100,000 Unearned Service Revenue 90,000 Notes Receivable 40,000 Equipment 253,000 Accounts Receivable 161,000 Inventory (work in process) 34,000 Inventory (raw materials) 207,000 Cash 37,000 Supplies Expense 60,000 Equity Investments (short-term) 31,000 Allowance for Doubtful Accounts 12,000 Customer Advances 36,000 Licenses 18,000 Restricted Cash for Plant Expansion 50,000 Additional Paid-in Capital 88,000 Treasury Stock 22,000 The following additional information is available. 1. Inventories are valued at lower-of-cost-or-market using LIFO. 2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is $50,600. 3. The short-term investments have a fair value of $29,000. (Assume they are trading securities.) 4. The notes receivable are due April 30, 2016, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrued interest due on December 31, 2014.) 5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of $50,000 are pledged as collateral on a bank loan. 6. Licenses are recorded net of accumulated amortization of $14,000. 7. Treasury stock is recorded at cost. Instructions Prepare the current assets section of Yasunari Kawabata Company’s December 31, 2014, balance sheet, with appropriate disclosures.

In MRP, what are common use items?

(Threshold Concept 14) 1. Give some examples of supply-side policy. (see Chapter 23 for some ideas if you are stuck). (Threshold Concept 14) 2. If there is an increase in aggregate supply, will this result in an increase in potential growth?

Explain how gains or losses on impaired assets should be reported in income.

A sand core used to form the internal surfaces of a steel casting experiences a buoyancy force of 23 kg. The volume of the mold cavity forming the outside surface of the casting = 5000 cm3 . What is the weight of the final casting? Ignore considerations of shrinkage

Jansen Corporation shipped $20,000 of merchandise on consignment to Gooch Company. Jansen paid freight costs of $2,000. Gooch Company paid $500 for local advertising, which is reimbursable from Jansen. By year-end, 60% of the merchandise had been sold for $21,500. Gooch notified Jansen, retained a 10% commission, and remitted the cash due to Jansen. Prepare Jansen’s entry when the cash is received.

Why did the U.S. government rescue AIG during the credit crisis in 2008? (LO5)

Compare and contrast the tests for accruing income and those for accruing deductions for tax purposes.

Compare and contrast the aggregate and entity concepts for taxing partnerships and their partners.

The meaning of the term “fund” depends on the context in which it is used. Explain its meaning when used as a noun. Explain its meaning when it is used as a verb.

What is the difference between absolute positioning and incremental positioning?

Explain the role of the Emerging Issues Task Force inestablishing generally accepted accounting principles.

It is desired to etch out a region of a silicon dioxide film on the surface of a silicon wafer. The SiO2 film is 100 nm thick. The width of the etched-out area is specified to be 650 nm. (a) If the degree of anisotropy for the etchant in the process is known to be 1.25, what should be the size of the opening in the mask through which the etchant will operate? (b) If plasma etching is used instead of wet etching, and the degree of anisotropy for plasma etching is infinity, what should be the size of the mask opening?

A Six Sigma program uses three measures of defects per million (DPM) to assess the performance of a given process. Name the three measures of DPM.

(Looking at the Maths) Assuming that the pre-tax equations were:       QD = 120 – 10P and QS = 10 + 5P What is (a) the consumer share of the tax and (b) the producer share?

A turning operation is performed on an engine lathe using a tool with zero rake angle in the direction of chip flow. The work material is an alloy steel with hardness = 325 Brinell hardness. The feed is 0.015 in/rev, depth of cut is 0.125 in and cutting speed is 300 ft/min. After the cut, the chip thickness ratio is measured to be 0.45. (a) Using the appropriate value of specific energy from Table 21.2, compute the horsepower at the drive motor, if the lathe has an efficiency = 85%. (b) Based on horsepower, compute your best estimate of the cutting force for this turning operation. Use the orthogonal cutting model as an approximation of the turning process.

A sheet-metal part 3.0 mm thick and 20.0 mm long is bent to an included angle = 60° and a bend radius = 7.5 mm in a V-die. The metal has a yield strength = 220 MPa and a tensile strength = 340 MPa. Compute the required force to bend the part, given that the die opening dimension = 15 mm.

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for dilutive securities, stock-based compensation, and earnings per share.

What are the primary factors to consider when deciding whether a worker should be considered an employee or a self-employed taxpayer for tax purposes?

Distinguish between the following values relative to bonds payable: (a) Maturity value. (c) Market (fair) value. (b) Face value. (d) Par value.

A production line with four automatic workstations (the other stations are manual) produces a certain product whose total assembly work content time = 55.0 min of direct manual labor. The production rate on the line is 45 units/hr. Because of the automated stations, uptime efficiency = 89%. The manual stations each have one worker. It is known that 10% of the cycle time is lost due to repositioning. If the balancing efficiency = 0.92 on the manual stations, find (a) cycle time, (b) number of workers and (c) workstations on the line. (d) What is the average manning level on the line, where the average includes the automatic stations?

Which of the following unions find themselves in a weak bargaining position for the above reasons? (a)  The shopworkers’ union (USDAW). (b)  The tube and train drivers’ union (ASLEF). (c)  The farm workers’ union (part of Unite).

Taveras Co. decides at the beginning of 2014 to adopt the FIFO method of inventory valuation. Taveras had used the LIFO method for financial reporting since its inception on January 1, 2012, and had maintained records adequate to apply the FIFO method retrospectively. Taveras concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Inventory Determined by Cost of Goods Sold Determined by Date LIFO Method FIFO Method LIFO Method FIFO Method January 1, 2012 $ 0 $ 0 $ 0 $ 0 December 31, 2012 100 80 800 820 December 31, 2013 200 240 1,000 940 December 31, 2014 320 390 1,130 1,100 Other information: 1. For each year presented, sales are $3,000 and operating expenses are $1,000. 2. Taveras provides two years of financial statements. Earnings per share information is not required. Instructions (a) Prepare income statements under LIFO and FIFO for 2012, 2013, and 2014. (b) Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2014 and 2013. (c) Prepare the note to the financial statements describing the change in method of inventory valuation. In the note, indicate the income statement line items for 2014 and 2013 that were affected by the change in accounting principle. (d) Prepare comparative retained earnings statements for 2013 and 2014 under FIFO. Retained earnings reported under LIFO are as follows: