Question & Answer

Washington Company has the following stockholders’ equity accounts at December 31, 2014. Common Stock ($100 par value, authorized 8,000 shares) $480,000 Retained Earnings 294,000 Instructions (a) Prepare entries in journal form to record the following transactions, which took place during 2015. (1) 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.) (2) A $20 per share cash dividend was declared. (3) The dividend declared in (2) above was paid. (4) The treasury shares purchased in (1) above were resold at $102 per share. (5) 500 shares of outstanding stock were purchased at $105 per share. (6) 350 of the shares purchased in (5) above were resold at $96 per share. (b) Prepare the stockholders’ equity section of Washington Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2015 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.

What are the differences, if any, between the legal and tax classifications of business entities?

Geddes Corporation is a medium-sized manufacturing companywith two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. Geddes Corporation plans to change from the lower of first-in, first-out (FIFO)-cost-or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change also will be made for its annual financial statements. Instructions (a) Describe the establishment of and subsequent pricing procedures for each of the following LIFO inventory methods. (1) LIFO applied to units of product when the periodic inventory system is used. (2) Application of the dollar-value method to LIFO units of product. (b) Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.) (c) Discuss the general advantages and disadvantages claimed for LIFO methods.

Explain the following terms. (a) LIFO layer. (b) LIFO reserve. (c) LIFO effect.

How has the opening up of trade and investment between eastern and western Europe likely to have affected the location of industries within Europe that have (a) substantial economies of scale; (b) little or no economies of scale?

How do partners who purchase a partnership interest determine the tax basis and holding period of their partnership interests?

An entity uses variable costing for internal reports. It must convert the variable costing results to absorption costing results for external reports. How can this conversion be accomplished?

Candice Willis will invest $30,000 today. She needs $150,000 in 21 years. What annual interest rate must she earn?

What is a photoresist in chemical machining?

1.              : Discipline Darius Hayes for coercing his subordinates to spend their own time on his volunteer work at the community after-school program. This action will send a signal that coercing employees is a clear violation of leadership authority.

1.       : Which of the four components of emotional intelligence do you consider most important to an effective manager in today’s world? Why?

Gramps purchased a joint survivor annuity that pays $500 monthly over his remaining life and that of his wife, Gram. Gramps is 70 years old and Gram is 65 years old. Gramps paid $97,020 for the contract. How much income will Gramps recognize on the first payment?

How many times is income from a C corporation taxed if a retirement fund is the owner of the corporation’s stock? Explain.

Grant Wood Corporation’s balance sheet at the end of 2013 included the following items. Current assets $235,000 Current liabilities $150,000 Land 30,000 Bonds payable 100,000 Buildings 120,000 Common stock 180,000 Equipment 90,000 Retained earnings 44,000 Accum. depr.—buildings (30,000) Total $474,000 Accum. depr.—equipment (11,000) Patents 40,000 Total $474,000 The following information is available for 2014. 1. Net income was $55,000. 2. Equipment (cost $20,000 and accumulated depreciation $8,000) was sold for $10,000. 3. Depreciation expense was $4,000 on the building and $9,000 on equipment. 4. Patent amortization was $2,500. 5. Current assets other than cash increased by $29,000. Current liabilities increased by $13,000. 6. An addition to the building was completed at a cost of $27,000. 7. A long-term investment in stock was purchased for $16,000. 8. Bonds payable of $50,000 were issued. 9. Cash dividends of $30,000 were declared and paid. 10. Treasury stock was purchased at a cost of $11,000. Instructions (Show only totals for current assets and current liabilities.) (a) Prepare a statement of cash flows for 2014. (b) Prepare a balance sheet at December 31, 2014.

Cooke Company has a fiscal year ending on September 30. Selected data from the September 30 worksheet are presented below.   Instructions (a) Prepare a complete worksheet. (b) Prepare a classified balance sheet. (Note: $10,000 of the mortgage payable is due for payment in the next fiscal year.) (c) Journalize the adjusting entries using the worksheet as a basis. (d) Journalize the closing entries using the worksheet as a basis. (e) Prepare a post-closing trial balance.

A cylindrical riser is to be used for a sand-casting mold. For a given cylinder volume, determine the diameter-to-length ratio that will maximize the time to solidify.

To illustrate these figures, draw the demand curve corresponding to the following table.  P (£) TE (£) 2.50 5.00 10.00 20.00 40.00 400 200 100 50 25 1000 1000 1000 1000 1000                            If the curve had an elasticity of –1 throughout its length, what would be the quantity demanded (a) at a price of £1; (b) at a price of 10p; (c) if the good were free?

Compare and contrast for and from AGI deductions. Why are for AGI deductions likely more valuable to taxpayers than from AGI deductions?

A drawing operation is performed on 3.0 mm stock. The part is a cylindrical cup with height = 50 mm and inside diameter = 70 mm. Assume the corner radius on the punch is zero. (a) Find the required starting blank size Db. (b) Is the drawing operation feasible?

If MCX/MCY were greater than PX/PY how would firms behave? What would bring production back into equilibrium where MCX/MCY = PX/PY?

The following financial statement was prepared by employees of Walters Corporation.   Note 1: New styles and rapidly changing consumer preferences resulted in a $71,500 loss on the disposal of discontinued styles and related accessories. Note 2: The corporation sold an investment in marketable securities at a loss of $39,050. The corporation normally sells securities of this nature. Note 3: The corporation sold one of its warehouses at an $86,350 loss. Instructions Identify and discuss the weaknesses in classification and disclosure in the single-step income statement above. You should explain why these treatments are weaknesses and what the proper presentation of the items would be in accordance with GAAP.

Side Kicks has year-end account balances of Sales Revenue $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Administrative Expenses $189,000; Income Tax Expense $35,100; and Dividends $18,900. Prepare the year-end closing entries.

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 financial statements and the accompanying notes to answer the following questions. (a) Were there changes in accounting principles reported by P&G during the three years covered by its income statements (2009–2011)? If so, describe the nature of the change and the year of change. (b) What types of estimates did P&G discuss in 2011?

When the accounts of Daniel Barenboim Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period. 1. The prepaid insurance account shows a debit of $5,280, representing the cost of a 2-year fire insurance policy dated August 1 of the current year. 2. On November 1, Rent Revenue was credited for $1,800, representing revenue from a subrental for a 3-month period beginning on that date. 3. Purchase of advertising materials for $800 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of $290 are on hand. 4. Interest of $770 has accrued on notes payable. Instructions Prepare the following in general journal form. (a) The adjusting entry for each item. (b) The reversing entry for each item where appropriate.

1.       : Aaron Alexis, the former Navy reservist who went on a shooting rampage and killed 12 people at the Washington Navy Yard in Washington D.C., had a history of mental instability, but he was carrying a valid security clearance. How would you suggest managers make decisions for issuing or revoking security clearances to prevent this kind of catastrophe?