Question & Answer

Dave and his friend Stewart each owns 50 percent of KBS. During the year, Dave received $75,000 compensation for services he performed for KBS during the year. He performed a significant amount of work for the entity, and he was heavily involved in management decisions for the entity (he was not a passive investor in KBS). After deducting Dave’s compensation, KBS reported taxable income of $30,000. How much FICA and/or self-employment tax is Dave required to pay on his compensation and his share of the KBS income if KBS is formed as a C corporation, an S corporation, or a limited liability company (taxed as a partnership) (ignore the .9 percent additional Medicare tax)? How much FICA tax would the entity be required to pay on the compensation paid to Dave?

A final assembly plant for a certain automobile model is to have a capacity of 240,000 units annually. The plant will operate 50 weeks/yr, 2 shifts/day, 5 days/week, and 8.0 hours/shift. It will be divided into three departments: (1) body shop, (2) paint shop, (3) trim-chassis-final department. The body shop welds the car bodies using robots, and the paint shop coats the bodies. Both of these departments are highly automated. Trim-chassis-final has no automation. There are 15.5 hours of direct labor content on each car in this department, where cars are moved by a continuous conveyor. Determine (a) hourly production rate of the plant, (b) number of workers and workstations required in trim-chassis-final if no automated stations are used, the average manning level is 2.5, balancing efficiency = 93%, proportion uptime = 95%, and a repositioning time of 0.15 min is allowed for each worker.

What is Circular 230?

1.      : Accept the fact you didn’t quite make your sales goal this year. Figure out ways to work smarter next year to increase the odds of achieving your target.

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?

Jerry is a 30 percent partner in the JJM Partnership when he sells his entire interest to Lucia for $56,000 cash. At the time of the sale, Jerry’s basis in JJM is $32,000. JJM does not have any debt or hot assets. What is Jerry’s gain or loss on the sale of his interest?

A bending operation is to be performed on 5.00 mm thick cold-rolled steel. The part drawing is given in Figure P20.9. Determine the blank size required.

Robert and Keisha invited Bijan to join them in forming Aero, a plane-chartering company, as a corporation. Bijan did not want to join at the time and declined their invitation. More than a year later, Bijan changed his mind and transferred appreciated property to Aero in exchange for 45 percent of Aero stock. Is Bijan required to recognize his realized gain on the transaction?

There are 15 correct answers in the following multiple choice questions (some questions have multiple answers that are correct). To attain a perfect score on the quiz, all correct answers must be given. Each correct answer is worth 1 point. Each omitted answer or wrong answer reduces the score by 1 point, and each additional answer beyond the correct number of answers reduces the score by 1 point. Percentage score on the quiz is based on the total number of correct answers. 10.1 Sand casting is which of the following types: (a) expendable mold or (b) permanent mold? 10.2 The upper half of a sand-casting mold is called which of the following: (a) cope or (b) drag? 10.3 In casting, a flask is which one of the following: (a) beverage bottle for foundrymen, (b) box which holds the cope and drag, (c) container for holding liquid metal, or (d) metal which extrudes between the mold halves? 10.4 In foundry work, a runner is which one of the following: (a) channel in the mold leading from the downsprue to the main mold cavity, (b) foundryman who moves the molten metal to the mold, or (c) vertical channel into which molten metal is poured into the mold? 10.5 Turbulence during pouring of the molten metal is undesirable for which of the following reasons (two best answers): (a) it causes discoloration of the mold surfaces, (b) it dissolves the binder used to hold together the sand mold, (c) it increases erosion of the mold surfaces, (d) it increases the formation of metallic oxides that can become entrapped during solidification, (e) it increases the mold filling time, and (f) it increases total solidification time? 10.6 Total solidification time is defined as which one of the following: (a) time between pouring and complete solidification, (b) time between pouring and cooling to room temperature, (c) time between solidification and cooling to room temperature, or (d) time to give up the heat of fusion? 10.7 During solidification of an alloy when a mixture of solid and liquid metals is present, the solid-liquid mixture is referred to as which one of the following: (a) eutectic composition, (b) ingot segregation, (c) liquidus, (d) mushy zone, or (e) solidus?   10.8 Chvorinov's rule states that total solidification time is proportional to which one of the following quantities: (a) (A/V) n , (b) Hf, (c) Tm, (d) V, (e) V/A, or (f) (V/A) 2 ; where A = surface area of casting, Hf = heat of fusion, Tm = melting temperature, and V = volume of casting? 10.9 A riser in casting is described by which of the following (three correct answers): (a) an insert in the casting that inhibits buoyancy of the core, (b) gating system in which the sprue feeds directly into the cavity, (c) metal that is not part of the casting, (d) source of molten metal to feed the casting and compensate for shrinkage during solidification, and (e) waste metal that is usually recycled? 10.10 In a sand-casting mold, the V/A ratio of the riser should be (a) equal to, (b) greater than, or (c) smaller than the V/A ratio of the casting itself? 10.11 Which of the following riser types are completely enclosed within the sand mold and connected to the main cavity by a channel to feed the molten metal (two correct answers): (a) blind riser, (b) open riser, (c) side riser, and (d) top riser?

On January 1, 2014, Lombard Co. sells property for which it had paid $690,000 to Sargent Company, receiving in return Sargent’s zero-interest-bearing note for $1,000,000 payable in 5 years. What entry would Lombard make to record the sale, assuming that Lombard frequently sells similar items of property for a cash sales price of $640,000?

Jane Yoakam, president of Estefan Co., recently read an article that claimed that at least 100 of the country’s largest 500 companies were either adopting or considering adopting the last-in, first-out (LIFO) method for valuing inventories. The article stated that the firms were switching to LIFO to (1) neutralize the effect of inflation in their financial statements, (2) eliminate inventory profits, and (3) reduce income taxes. Ms. Yoakam wonders if the switch would benefit her company. Estefan currently uses the first-in, first-out (FIFO) method of inventory valuation in its periodic inventory system. The company has a high inventory turnover rate, and inventories represent a significant proportion of the assets. Ms. Yoakam has been told that the LIFO system is more costly to operate and will provide little benefit to companies with high turnover. She intends to use the inventory method that is best for the company in the long run rather than selecting a method just because it is the current fad. Instructions (a) Explain to Ms. Yoakam what “inventory profits” are and how the LIFO method of inventory valuation could reduce them. (b) Explain to Ms. Yoakam the conditions that must exist for Estefan Co. to receive tax benefits from a switch to the LIFO method.

Are all capital gains (gains on the sale or disposition of capital assets) taxed at the same rate?Explain.

Dana Ashbrook Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $8,000 plus trade-in, f.o.b. factory. Dana Ashbrook Inc. paid $8,000 cash and traded in used equipment. The used equipment had originally cost $62,000; it had a book value of $42,000 and a secondhand fair value of $47,800, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,100. Instructions (a) Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance. (b) Assuming the same facts as in (a) except that fair value information for the assets exchanged is not determinable, prepare the general journal entry to record this transaction.

Lee is 30 years old and single.Lee paid all the costs of maintaining his household for the entire year.Determine Lee’s filing status in each of the following alternative situations: a.       Lee is Ashton’s uncle.Ashton is 15 years old and has gross income of $5,000. Ashton lived in Lee’s home from April 1 through the end of the year. b.      Lee is Ashton’s uncle.Ashton is 20 years old, not a full-time student, and has gross income of $7,000. Ashton lived in Lee’s home from April 1 through the end of the year. c.       Lee is Ashton’s uncle.Ashton is 22 years old and was a full-time student from January through April.Ashton’s gross income was $5,000.Ashton lived in Lee’s home from April 1 through the end of the year. d.      Lee is Ashton’s cousin.Ashton is 18 years old, has gross income of $3,000, and is not a full-time student. Ashton lived in Lee’s home from April 1 through the end of the year. e.       Lee and Ashton are cousins.Ashton is 18 years old, has gross income of $3,000, and is not a full-time student. Ashton lived in Lee’s home for the entire year.

resented below are a number of balance sheet items for Montoya, Inc., for the current year, 2014. Goodwill $ 125,000 Accumulated depreciation—equipment $ 292,000 Payroll taxes payable 177,591 Inventory 239,800 Bonds payable 300,000 Rent payable (short-term) 45,000 Discount on bonds payable 15,000 Income taxes payable 98,362 Cash 360,000 Rent payable (long-term) 480,000 Land 480,000 Common stock, $1 par value 200,000 Notes receivable 445,700 Preferred stock, $10 par value 150,000 Notes payable (to banks) 265,000 Prepaid expenses 87,920 Accounts payable 490,000 Equipment 1,470,000 Retained earnings ? Equity investments (trading) 121,000 Income taxes receivable 97,630 Accumulated depreciation—buildings 270,200 Notes payable (long-term) 1,600,000 Buildings 1,640,000 Instructions Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of equity investments (trading) are the same.

What is the difference between external customers and internal customers in TQM?

Kelly Company had cash receipts from customers in 2014 of $142,000. Cash payments for operating expenses were $97,000. Kelly has determined that at January 1, accounts receivable was $13,000, and prepaid expenses were $17,500. At December 31, accounts receivable was $18,600, and prepaid expenses were $23,200. Compute (a) service revenue and (b) operating expenses.

What were the causes of the credit crunch and the banking crisis of 2008?

A fillet weld is used to join 2 medium carbon steel plates each having a thickness of 5.0 mm. The plates are joined at a 90° angle using an inside fillet corner joint. The velocity of the welding head is 6 mm/sec. Assume the cross section of the weld bead approximates a right isosceles triangle with a leg length of 4.5 mm, the heat transfer factor is 0.80, and the melting factor is 0.58. Determine the rate of heat generation required at the welding source to accomplish the weld.

1.       : Describe the advantages of using a balanced scorecard to measure and control organizational performance. Suppose that you created a balanced scorecard for a Walmart Neighborhood Market. Which specific customer service measures would you include?

Explain the advantage of a swap option to a financial institution that wants to swap fixed payments for floating payments. (LO2)

Describe two disclosures required by the Corporations Act with respect to       executive remuneration.             (LO4 and 5)

Assume Tamar uses the IRS method of allocating expenses to rental use of the property.

1.       Think of a class that you’ve taken in the past. What standards of performance did your professor establish? How was your actual performance measured? How was your performance compared to the standards? Do you think the standards and methods of measurement were fair? Were they appropriate to your assigned work? Why or why not?

The following are two independent situations. Situation 1: Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2014. On June 30, Martinez declared and paid a $75,000 cash dividend. On December 31, Martinez reported net income of $122,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. The securities are classified as available-for-sale. Situation 2: Monica, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2014. On June 15, Seles declared and paid a cash dividend of $36,000. On December 31, Seles reported a net income of $85,000 for the year. Instructions Prepare all necessary journal entries in 2014 for both situations.6