Question & Answer

In 2014, Leppard Inc. issued 1,000 shares of $10 par value common stock for land worth $40,000. (a) Prepare Leppard’s journal entry to record the transaction. (b) Indicate the effect the transaction has on cash. (c) Indicate how the transaction is reported on the statement of cash flows.

Is voluntary unemployment the same as frictional unemployment?

Kase, an individual, purchased some property in Potomac, Maryland, for $150,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase’s Maryland property. Kase agrees to the exchange. What is Kase’s realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios?   a. The transaction qualifies as a like-kind exchange, and the fair market value of each property is $675,000. b. The transaction qualifies as a like-kind exchange, and the fair market value of

What is the freeze drying process used to make certain new ceramic powders?

Explain the difference between an ideal standard and a currently          attainable standard.

Anne purchased an annuity from an insurance company that promised to pay her $20,000 per year for the next 10 years. Anne paid $145,000 for the annuity, and in exchange she will receive $200,000 over the term of the annuity.

In its 2011 annual report, Campbell Soup Company reports beginning-of-the-year total assets of $6,276 million, end-of-the-year total assets of $6,862 million, total sales of $7,719 million, and net income of $805 million. (a) Compute Campbell’s asset turnover. (b) Compute Campbell’s profit margin on sales. (c) Compute Campbell’s return on assets using (1) asset turnover and profit margin and (2) net income.

Baker Corporation owned a building located in Kansas. Baker used the building for its business operations. Last year, a tornado hit the property and completely destroyed it. This year, Baker received an insurance settlement. Baker had originally purchased the building for $350,000 and had claimed a total of $100,000 of depreciation deductions against the property. What are Baker’s realized and recognized gain or (loss) on this transaction and what is its basis in the new building in the following alternative scenarios? a. Baker received $450,000 in insurance proceeds and spent $450,000 rebuilding the building during the current year. b. Baker received $450,000 in insurance proceeds and spent $500,000 rebuilding the building during the current year. c. Baker received $450,000 in insurance proceeds and spent $400,000 rebuilding the building during the current year. d. Baker received $450,000 in insurance proceeds and spent $450,000 rebuilding the building during the next three years.

In the past several years, Shakira had loaned money to Shakira Inc. (an S corporation) to help the corporation keep afloat in a downturn.  Her stock basis in the S corporation is now $0, and she has deducted $40,000 in losses, reducing her debt basis from $100,000 to $60,000.  Things appear to be turning around this year, and Shakira Inc. repaid Shakira $20,000 of the $100,000 outstanding loan.  What is Shakira’s income, if any, on the partial loan repayment?

Human occupations have been lost as a result of technological advancements throughout history. Do you believe that the advancements in fintech will have a comparable effect on employment, leading to the replacement of human jobs with intelligent robots and software? (LO1, LO4)

Lanco Corporation, an accrual-method corporation, reported taxable income of $1,460,000 this year. Included in the computation of taxable income were the following items: • MACRS depreciation of $200,000. Depreciation for earnings and profits purposes is $120,000. • A net capital loss carryover of $10,000 from last year. • A net operating loss carryover of $25,000 from last year. • $65,000 capital gain from the distribution of land to the company’s sole shareholder (see below).   Not included in the computation of taxable income were the following items: • Tax-exempt income of $5,000. • Life insurance proceeds of $250,000. • Excess current-year charitable contribution of $2,500 (to be carried over to next year). • Tax-deferred gain of $20,000 on a like-kind exchange. • Nondeductible life insurance premium of $3,500. • Nondeductible interest expense of $1,000 on a loan used to buy tax-exempt bonds.   Lanco accrued and paid federal income taxes this year of $306,600. Lanco’s accumulated E&P at the beginning of the year was $2,400,000.  During the year, Lanco made the following distributions to its sole shareholder, Luigi Nutt:  • June 30:  $50,000 • September 30:  Parcel of land with a fair market value of $75,000. Lanco’s tax basis in the land was $10,000.  Luigi assumed an existing mortgage on the property of $15,000.

What limitations exist for self-employed taxpayers in deducting home office expenses, and how does the taxpayer determine which expenses are deductible and which are not in situations when the overall amount of the home office deduction is limited?

Job Costing, determination of manufacturing overhead rates One Glass Brewery estimates the following activity for the coming year:       At the end of the financial period the following information was collected:       Required (a)   What was the predetermined manufacturing overhead rate calculated at the beginning of the year? (b)   What was the actual manufacturing overhead rate for the year? (c)    Explain the difference between the rates calculated in (a) and (b) above.

Briefly describe the process of computing a corporation’s taxable income assuming the corporation must use GAAP to determine its book income.

Mission statement, strategy, balanced scorecard implementation Squeezers Juice and Tea Company manufactures organic juices and chai teas that are sold at whole foods stores. Several of its products have been featured in movies because the company’s products are popular with celebrities. The owners and employees value organic products and innovative combinations of juices and teas with outstanding taste. Several employees have found sources of unusual ingredients from organic farmers around the world. The ingredients are more expensive than those used by other juice manufacturers. Although Squeezers cannot set unrealistically high prices, it focuses on high quality. Demand for the company’s products is stable, even though it sets the highest prices for juices in its market. Recently, the costs of several unusual ingredients increased because of weather conditions. The owner is concerned that increasing prices any more could reduce demand. She has taken a business workshop and learned about the balanced scorecard. She wants to incorporate a balanced scorecard at Squeezers.   Required (a)     Draft a potential mission statement for Squeezers. Explain how you decided what should be included in the statement and how it should be worded. (b)     Explain the company’s business strategy and core competencies. (c)     Identify several performance objectives for each of the four perspectives. (d)     Select two performance objectives for each of the four perspectives, and identify a potential performance measure for each. Explain your choices. (e)     Describe possible methods to collect the data needed for each of the performance measures in part (d). For example, what existing information might be available? What new record-keeping might be required? Would the company need to develop surveys?

In 2024, Jasmine and Thomas, a married couple, had taxable income of $150,000.  If they were to file separate tax returns, Jasmine would have reported taxable income of $140,000 and Thomas would have reported taxable income of $10,000.  What is the couple’s marriage penalty or benefit?

Identify the four generic perspectives for a balanced scorecard and         explain how they are related.

In reviewing the tax rate schedule for a single taxpayer, Chuck notes that the tax on $75,000 is $5,226.25 plus 25 percent of the taxable income over $37,950.  What does the $5,226.25 represent?

Irene is disabled and receives payments from a number of sources. The interest payments are from bonds that Irene purchased over past years and a disability insurance policy that Irene purchased herself. Calculate Irene’s gross income.

Assume that a firm faces a downward-sloping demand curve. Draw a diagram showing the firm’s AR, MR, AC and MC curves. (Draw them in such a way that the firm can make supernormal profits.) Mark the following on the diagram:          (a)  The firm’s profit-maximising output and price.          (b)  Its sales-revenue-maximising output and price.          (c)  Its sales-maximising output and price (subject to earning at least normal profit).

Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $1,500 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,000. During the year, he drove his car a total of 12,000 miles (combination of business and personal travel).

Describe an inventoriable product cost.

There are 10 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. 14.1 The most important rubber product is which one of the following: (a) footwear, (b) conveyor belts, (c) pneumatic tires, or (d) tennis balls? 14.2 The chemical name of the ingredient recovered from the latex of the rubber tree is which one of the following: (a) polybutadiene, (b) polyisobutylene, (c) polyisoprene, or (d) polystyrene? 14.3 Of the following rubber additives, which one would rank as the single most important: (a) antioxidants, (b) carbon black, (c) clays and other hydrous aluminum silicates, (d) plasticizers and softening oils, or (e) reclaimed rubber? 14.4 Which one of the following molding processes is the most important in the production of products made of conventional rubber: (a) compression molding, (b) injection molding, (c) thermoforming, or (d) transfer molding? 14.5 Which of the following ingredients do not contribute to the vulcanizing process (two correct answers): (a) calcium carbonate, (b) carbon black, (c) stearic acid, (d) sulfur, and (e) zinc oxide? 14.6 How many minutes are required to cure (vulcanize) a modern passenger car tire: (a) 5, (b) 15, (c) 25, or (d) 45? 14.7 When is the tread pattern imprinted onto the circumference of the tire: (a) during preforming, (b) while building the carcass, (c) during molding, or (d) during curing? 14.8 Which of the following are not normally used in the processing of thermoplastic elastomers (two correct answers): (a) blow molding, (b) compression molding, (c) extrusion, (d) injection molding, or (e) vulcanization?

Cost function using regression; scatter plots; three potential cost drivers Laura Mills is the controller of Peer Jets International, a manufacturer of small corporate jets. She has undertaken a project to study the behaviour of overhead cost. She has assembled factory overhead data for the last 30 months from the company’s manufacturing facility. Laura has asked you to develop a model to predict the level of manufacturing overhead.   Required (a)          Create a scatter plot of manufacturing overhead for each of the potential cost drivers. (b)          Would you eliminate any of the potential cost drivers based on the scatter plots? Why? (c)           Explain why you create a scatter plot of the data before you perform regression analysis. (d)          To practice your regression analysis skills, perform a simple regression analysis of manufacturing overhead for each of the three potential cost drivers. Write the cost function from each regression. (e)           Based on the simple regression results, which cost driver does the best job of explaining manufacturing overhead costs? Explain. (f)           Do your regression results support your answer to part (b)? Explain.

In your audit of Jose Oliva Company, you find that a physical inventory on December 31, 2014, showed merchandise with a cost of $441,000 was on hand at that date. You also discover the following items were all excluded from the $441,000. 1. Merchandise of $61,000 which is held by Oliva on consignment. The consignor is the Max Suzuki Company. 2. Merchandise costing $38,000 which was shipped by Oliva f.o.b. destination to a customer on December 31, 2014. The customer was expected to receive the merchandise on January 6, 2015. 3. Merchandise costing $46,000 which was shipped by Oliva f.o.b. shipping point to a customer on December 29, 2014. The customer was scheduled to receive the merchandise on January 2, 2015. 4. Merchandise costing $83,000 shipped by a vendor f.o.b. destination on December 30, 2014, and received by Oliva on January 4, 2015. 5. Merchandise costing $51,000 shipped by a vendor f.o.b. shipping point on December 31, 2014, and received by Oliva on January 5, 2015. Instructions Based on the above information, calculate the amount that should appear on Oliva’s balance sheet at December 31, 2014, for inventory.