Question & Answer

Vedula Advertising Agency was founded by Murali Vedula in January 2009. Presented on the next page are both the adjusted and unadjusted trial balances as of December 31, 2014.   Instructions (a) Journalize the annual adjusting entries that were made. (b) Prepare an income statement and a retained earnings statement for the year ended December 31, and a classified balance sheet at December 31. (c) Identify which accounts should be closed on December 31. (d) If the note has been outstanding 10 months, what is the annual interest rate on that note? (e) If the company paid $10,500 in salaries and wages in 2014, what was the balance in Salaries and Wages Payable on December 31, 2013?

How are FRPs cut?

Illustrate the effect of a fall in demand for an imperfectly competitive firm (a) in the presence of menu costs and (b) in the absence of menu costs?

How would a central bank’s aversion to inflation affect how much the MP curve moves vertically downwards in response to a reduction in cost-push inflation?

Horton Corporation is preparing a bank reconciliation and has identified the following potential reconciling items. For each item, indicate if it is (1) added to balance per bank statement, (2) deducted from balance per bank statement, (3) added to balance per books, or (4) deducted from balance per books. (a) Deposit in transit $5,500. (d) Outstanding checks $7,422. (b) Bank service charges $25. (e) NSF check returned $377. (c) Interest credited to Horton’s account $31.

The following information is available for the pension plan of Radcliffe Company for the year 2014. Actual and expected return on plan assets $ 15,000 Benefi ts paid to retirees 40,000 Contributions (funding) 90,000 Interest/discount rate 10% Prior service cost amortization 8,000 Projected benefi t obligation, January 1, 2014 500,000 Service cost 60,000 Instructions (a) Compute pension expense for the year 2014. (b) Prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2014.

Given that annual demand for a product is 20,000 units, cost per unit = $6.00, holding cost rate = 2.5%/month, changeover (setup) time between products averages 2.0 hr, and downtime cost during changeover = $200/hr, determine (a) economic order quantity and (b) total inventory costs for this situation.

A product is made to stock. Annual demand is 86,000 units. Each unit costs $9.50 and the annual holding cost rate is 22%. Setup cost to produce this product is $800. Determine (a) economic order quantity and (b) total inventory costs for this situation.

Levi is recommending a tax return position to his client.  What standard must he meet to satisfy his professional standards?  What is the source of this professional standard?

Which members of a family are included in the family attribution rules? Is there any rationale for the family members included in the test?

In a controlled experiment, it takes 3700 J to melt the amount of metal that is in a weld bead with a cross-sectional area of 6.0 mm2 that is 150.0 mm long. (a) Using Table 29.2, what is the most likely metal? (b) If the heat transfer factor is 0.85 and the melting factor is 0.55 for a welding process, how much heat must be generated at the welding source to accomplish the weld?

The following information is available for Wenger Corporation for 2013 (its first year of operations). 1. Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2014–2017. 2. Deferral, for book purposes, of $20,000 of rent received in advance. The rent will be recognized in 2014. 3. Pretax financial income, $300,000. 4. Tax rate for all years, 40%. Instructions (a) Compute taxable income for 2013. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2013. (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming taxable income of $325,000.

1.    : Do you think leadership is more important or less important in today’s flatter, team-based organizations? Are some leadership styles better suited to such organizations as opposed to traditional hierarchical organizations? Explain.

How do partners determine whether they are passive participants in partnerships when applying the passive activity loss limitation rules?

Arnold and Lilly have recently had a heated discussion about whether a sales tax is a proportional tax or a regressive tax.  Arnoldargues that a sales tax is regressive.  Lillycounters that the sales tax is a flat tax.  Who is correct?

Explain how to estimate the beta of a stock. Explain why beta serves as a measure of the stock’s risk. (LO4)

Omar (single) is a 50 percent owner in Cougar LLC (taxed as a partnership). Omar works half time for Cougar and receives a guaranteed payment of $50,000. Cougar LLC reported $450,000 of business income for the year. Before considering his 50 percent business income allocation from Cougar and the self-employment tax deduction (if any), Omar’s adjusted gross income is $210,000 (includes $50,000 guaranteed payment from Cougar and $180,000 salary from a different employer). Omar reports itemized deductions of $40,000. Answer the following questions for Omar. a. What is Omar’s self-employment tax liability? b. What would be Omar’s self-employment tax liability if he didn’t receive any salary. c. Assume the original facts and that the business income allocated to Omar is not from a specified service, what is Omar’s deduction for qualified business income? Assume that 81.82 percent of the self-employment tax is from self-employment income included in QBI [i.e., $225,000 business income allocation/$275,000 (business income allocation plus guaranteed payment)]. That is, the $50,000 guaranteed payment is not qualified business income. Ignore the wage-based limitation. d. What is Omar’s net investment income tax liability (assume no investment expenses)? e. What is Omar’s additional Medicare tax liability?

What is meant by the term graduated measuring device?

On December 31, 2014, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-rate note. The note was issued to yield 10% interest. Unfortunately, during 2016, Firth began to experience financial difficulty. As a result, at December 31, 2016, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%. Instructions (a) Prepare the entry (if any) to record the impairment of the loan on December 31, 2016, by Paris Bank. (b) Prepare the entry on March 31, 2017, if Paris learns that Firth will be able to repay the loan under the original terms.

Is the incentive structure in the single-move prisoners’ dilemma game in the interests of society?

Much of the work at the Cut-Anything Company involves cutting and forming of flat sheets of fiber-glass for the pleasure boat industry. Manual methods based on portable saws are currently used to perform the cutting operation, but production is slow and scrap rates are high. The foreman says the company should invest in a plasma arc cutting machine, but the plant manager thinks it would be too expensive. What do you think? Justify your answer by indicating the characteristics of the process that make PAC attractive or unattractive in this application.

Explain the general difference in the composition of pension portfolios managed by trusts versus those managed by insurance companies. Why does this difference occur? (LO6)

Explain the difference between a direct cost and indirect cost.

Indiana Jones Corporation enters into a 6-year lease of equipment on January 1, 2014, which requires 6 annual payments of $40,000 each, beginning January 1, 2014. In addition, Indiana Jones guarantees the lessor a residual value of $20,000 at lease-end. The equipment has a useful life of 6 years. Prepare Indiana Jones’ January 1, 2014, journal entries assuming an interest rate of 10%.

1.       Give five examples of business processes at Tesla.  How do they create business value for Tesla and its shareholders?