Question & Answer

The financial statements of P&G are presented in Appendix 5B. The company’s complete annual report, including the notes to the financial statements, can be accessed at the book’s companion website, www. wiley.com/college/kieso. Instructions Refer to P&G’s 2011 financial statements and the accompanying notes to answer the following questions. (a) What cash outflow obligations related to the repayment of long-term debt does P&G have over the next 5 years? (b) P&G indicates that it believes that it has the ability to meet business requirements in the foreseeable future. Prepare an assessment of its liquidity, solvency, and financial flexibility using ratio analysis.

What depreciation methods are available for tangible personal property? Explain the characteristics of a business likely to adopt each method.

Using the facts from the previous problem, when should Reese pay the bill if she expects her marginal tax rate to be 35 percent next year? 24 percent next year?

Variance analysis is only useful for organisations using a standard costing system. Discuss.

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/Marksand- Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) What cash outflow obligations related to the repayment of long-term debt does M&S have over the next 5 years? (b) M&S indicates that it believes that it has the ability to meet business requirements in the foreseeable future. Prepare an assessment of its liquidity, solvency, and financial flexibility using ratio analysis.

Instructions Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) Compute the debt to assets and the times interest earned ratios for these two companies. Comment on the quality of these two ratios for both Coca-Cola and PepsiCo. (b) What is the difference between the fair value and the historical cost (carrying amount) of each company’s debt at year-end 2011? Why might a difference exist in these two amounts? (c) Both companies have debt issued in foreign countries. Speculate as to why these companies may use foreign debt to finance their operations. What risks are involved in this strategy, and how might they adjust for this risk?

The accounting staff of Usher Inc. has prepared the following pension worksheet. Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to the pension plan for 2014.   Instructions (a) Determine the missing amounts in the 2014 pension worksheet, indicating whether the amounts are debits or credits. (b) Prepare the journal entry to record 2014 pension expense for Usher Inc. (c) The accounting staff has heard of a pension accounting procedure called “corridor amortization.” Is Usher required to record any amounts for corridor amortization in (1) 2014? In (2) 2015? Explain.

During pouring into a sand mold, the molten metal can be poured into the downsprue at a constant flow rate during the time it takes to fill the mold. At the end of pouring the sprue is filled and there is negligible metal in the pouring cup. The downsprue is 6.0 in long. Its cross-sectional area at the top = 0.8 in2 and at the base = 0.6 in2 . The cross-sectional area of the runner leading from the sprue also = 0.6 in2 , and it is 8.0 in long before leading into the mold cavity, whose volume = 65 in3 . The volume of the riser located along the runner near the mold cavity = 25 in3 . It takes a total of 3.0 sec to fill the entire mold (including cavity, riser, runner, and sprue. This is more than the theoretical time required, indicating a loss of velocity due to friction in the sprue and runner. Find (a) the theoretical velocity and flow rate at the base of the downsprue; (b) the total volume of the mold; (c) the actual velocity and flow rate at the base of the sprue; and (d) the loss of head in the gating system due to friction.

On a particular production line in a wafer fabrication facility, the crystal yield is 60%, the crystal-toslice yield is 60%, wafer yield is 90%, multiprobe is 70%, and final test yield is 80%. (a) What isthe overall yield for the production line? (b) If wafer yield and multiprobe yield are combined into the same reporting category, what overall yield for the two operations would be expected?

If both demand and supply change, and if we know which direction they have shifted but not how much, why is it that we will be able to predict the direction in which either price or quantity will change, but not both? (Clue: consider the four possible combinations and sketch them if necessary: (a) D left, S left; (b) D right, S right; (c) D left, S right (d) D right, S left.)

1. Trace through the effect of an adverse supply shock, such as a rise in oil prices. 2. What determines the amount that national income fluctuates when there is a temporary shift in the DAS curve?

1.    : The MBO technique has been criticized for putting too much emphasis on achieving goals (ends) and not enough on the methods that people use to achieve them (means). Do you think this is a flaw in the technique or in the way managers apply it? How might you achieve a balanced emphasis on ends and means?

Brisky Corporation had net sales of $2,400,000 and interest revenue of $31,000 during 2014. Expenses for 2014 were cost of goods sold $1,450,000; administrative expenses $212,000; selling expenses $280,000; and interest expense $45,000. Brisky’s tax rate is 30%. The corporation had 100,000 shares of common stock authorized and 70,000 shares issued and outstanding during 2014. Prepare a single-step income statement for the year ended December 31, 2014.

1.      Georgio owns a 20 percent profits and capital interest in Rain Tree LLC. For the current year, Rain Tree had the following revenues, expenses, gains, and losses: Sales revenue $70,000 Gain on sale of land (§1231) $11,000 Cost of goods sold ($26,000) Depreciation - MACRS ($3,000) §179 deduction* ($10,000) Employee wages ($11,000) Nondeductible fines and penalties ($3,000) Municipal bond interest $6,000 Short-term capital gains $4,000 Guaranteed payment to Sandra ($3,000)

In 2014, Gurney Construction Company agreed to construct an apartment building at a price of $1,200,000. The information relating to the costs and billings for this contract is shown below. 2014 2015 2016 Costs incurred to date $280,000 $600,000 $ 785,000 Estimated costs yet to be incurred 520,000 200,000 –0– Customer billings to date 150,000 500,000 1,200,000 Collection of billings to date 120,000 320,000 940,000 Instructions (a) Assuming that the percentage-of-completion method is used, (1) compute the amount of gross profit to be recognized in 2014 and 2015, and (2) prepare journal entries for 2015. (b) For 2015, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.

Explain how the Fed’s monetary policy could depend on the fiscal policy that is implemented. (LO4)

Explain how the investment account is affected by investee activities under the equity method.

Prior Company’s condensed financial statements provide the following information.   Instructions (a) Determine the following for 2014. (1) Current ratio at December 31. (2) Acid-test ratio at December 31. (3) Accounts receivable turnover. (4) Inventory turnover. (5) Return on assets. (6) Profit margin on sales. (b) Prepare a brief evaluation of the financial condition of Prior Company and of the adequacy of its profits.

What does the centerburst defect in extrusion have in common with the roll piercing process?

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)

Determine the shrink rule to be used by mold makers for die casting of zinc. Using the shrinkage value in Table 10.1, express your answer in terms of decimal mm of elongation per 300 mm of length compared to a standard 300-mm scale.

Bienvenu Enterprises reported cost of goods sold for 2014 of $1,400,000 and retained earnings of $5,200,000 at December 31, 2014. Bienvenu later discovered that its ending inventories at December 31, 2013 and 2014, were overstated by $110,000 and $35,000, respectively. Determine the corrected amounts for 2014 cost of goods sold and December 31, 2014, retained earnings

What is the difference between a track and a land on a printed circuit board?

List the factors that affect the hold down pressure in a drawing operation according to the video on sheet-metal stamping dies and processes.

A specimen with 6.0 in starting gage length is subjected to a tensile test in which the grips holding the end of the test specimen are moved with a relative velocity = 1.0 in/sec. Construct a plot of the strain rate as a function of length as the specimen is pulled to a length = 8.0 in