Question & Answer

The following balances were taken from the books of Maria Conchita Alonzo Corp. on December 31, 2014. Interest revenue $ 86,000 Accumulated depreciation—equipment $ 40,000 Cash 51,000 Accumulated depreciation—buildings 28,000 Sales revenue 1,380,000 Notes receivable 155,000 Accounts receivable 150,000 Selling expenses 194,000 Prepaid insurance 20,000 Accounts payable 170,000 Sales returns and allowances 150,000 Bonds payable 100,000 Allowance for doubtful accounts 7,000 Administrative and general expenses 97,000 Sales discounts 45,000 Accrued liabilities 32,000 Land 100,000 Interest expense 60,000 Equipment 200,000 Notes payable 100,000 Buildings 140,000 Loss from earthquake damage Cost of goods sold 621,000 (extraordinary item) 150,000 Common stock 500,000 Retained earnings 21,000 Assume the total effective tax rate on all items is 34%. Instructions Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year.

Explain the difference between ordinary, capital, and §1231 assets.

: Describe transformational leadership and when it should be used.

There are 27 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 19.1 The starting workpiece in steel hot rolling of plate and sheet stock is which of the following (one best answer): (a) bar stock, (b) billet, (c) bloom, (d) slab, or (e) wire stock? 19.2 The maximum possible draft in a rolling operation depends on which of the following parameters (two correct answers): (a) coefficient of friction between roll and work, (b) roll diameter, (c) roll velocity, (d) stock thickness, (e) strain, and (f) strength coefficient of the work metal? 19.3 Which of the following stress or strength parameters is used in the computation of rolling force (one best answer): (a) average flow stress, (b) compression strength, (c) final flow stress, (d) tensile strength, or (e) yield strength? 19.4 Which of the following rolling mill types are associated with relatively small diameter rolls in contact with the work (two correct answers): (a) cluster mill, (b) continuous rolling mill, (c) four-high mill, (d) reversing mill, and (e) three-high configuration? 19.5 Production of pipes and tubes is associated with which of the following bulk deformation processes (three correct answers): (a) extrusion, (b) hobbing, (c) ring rolling, (d) roll forging, (e) roll piercing, (f) tube sinking, and (g) upsetting? 19.6 Which of the following stress or strength parameters is used in the computation of the maximum force in a forging operation (one best answer): (a) average flow stress, (b) compression strength, (c) final flow stress, (d) tensile strength, or (e) yield strength? 19.7 Which of the following operations are closely related to open-die forging (three best answers): (a) cogging, (b) flashless forging, (c) fullering, (d) impression-die forging, (e) Mannesmann process, (f) precision forging, (g) soaking, and (h) upsetting? 19.8 Flash in impression die forging serves no useful purpose and is undesirable because it must be trimmed from the part after forming: (a) true or (b) false? 19.9 Which of the following are classified as forging operations (four correct answers): (a) coining, (b) fullering, (c) impact extrusion, (d) roll piercing, (e) swaging, (f) thread rolling, (g) trimming, and (h) upsetting? 19.10 Which of the following are alternative names for indirect extrusion (two correct answers): (a) backward extrusion, (b) direct extrusion, (c) forward extrusion, (d) impact extrusion, and (e) reverse extrusion? 19.11 The production of tubing is possible in indirect extrusion but not in direct extrusion: (a) true or (b) false? 19.12 Which of the following stress or strength parameters is used in the computation of the force in an extrusion operation (one best answer): (a) average flow stress, (b) compression strength, (c) final flow stress, (d) tensile strength, or (e) yield strength? 19.13 In which of the following extrusion operations is friction a factor in determining the extrusion force (one best answer): (a) direct extrusion or (b) indirect extrusion? 19.14 Theoretically, the maximum reduction possible in a wire drawing operation, under the assumptions of a perfectly plastic metal, no friction, and no redundant work, is which of the following (one answer): (a) zero, (b) 0.63, (c) 1.0, or (d) 2.72? 19.15 Which of the following bulk deformation processes are involved in the production of nails for lumber construction (three best answers): (a) bar and wire drawing, (b) extrusion, (c) flashless forging, (d) impression die forging, (e) rolling, and (f) upsetting? 19.16 Johnson's formula is associated with which one of the four bulk deformation processes: (a) bar and wire drawing, (b) extrusion, (c) forging, and (d) rolling?

Use the information for Kemper Company from BE9-5. In 2015, Kemper paid $1,000,000 to obtain the raw materials which were worth $950,000. Prepare the entry to record the purchase.

Identify some advantages of CUs. Identify disadvantages of CUs that relate to their common bond requirement. (LO7)

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?

Describe the exchange-rate path if there were a single shock that caused interest rates to fall. What determines the magnitude and speed of changes in the exchange rate in such a scenario?

Presented below are two independent situations. Situation A: Annie Lennox Co. reports revenues of $200,000 and operating expenses of $110,000 in its first year of operations, 2014. Accounts receivable and accounts payable at year-end were $71,000 and $29,000, respectively. Assume that the accounts payable related to operating expenses. (Ignore income taxes.) Instructions Using the direct method, compute net cash provided by operating activities. Situation B: The income statement for Blues Traveler Company shows cost of goods sold $310,000 and operating expenses (exclusive of depreciation) $230,000. The comparative balance sheet for the year shows that inventory increased $26,000, prepaid expenses decreased $8,000, accounts payable (related to merchandise) decreased $17,000, and accrued expenses payable increased $11,000. Instructions Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.

] In July of this year, Stephen started a proprietorship called ECR (which stands for electric car repair). ECR uses the cash method of accounting and Stephen has produced the following financial information for this year:

Why might it make sense for a firm which cannot sell its output at a profit to continue in production for the time being? For how long should the firm continue to produce at a loss?

The behavior of nanoscale structures is different from macroscale and even microscale structures due to two factors mentioned in the text. What are those two factors?

Muggsy Bogues Company purchased equipment for $212,000 on October 1, 2014. It is estimated that the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 40,000 units and estimated working hours are 20,000. During 2014, Bogues uses the equipment for 525 hours and the equipment produces 1,000 units. Instructions Compute depreciation expense under each of the following methods. Bogues is on a calendar-year basis ending December 31. (a) Straight-line method for 2014. (b) Activity method (units of output) for 2014. (c) Activity method (working hours) for 2014. (d) Sum-of-the-years’-digits method for 2016. (e) Double-declining-balance method for 2015.

Burbank Corporation (calendar-year-end) acquired the following property this year: Asset Placed in Service Basis Used copier November 12 $7,800 New computer equipment June 6 14,000 Furniture July 15 32,000 New delivery truck October 28 19,000 Luxury auto January 31 70,000   Total $142,800 Burbank acquired the copier in a tax-deferred transaction when the shareholder contributed the copier to the business in exchange for stock. a) Assuming no bonus or §179 expense, what is Burbank’s maximum cost recovery deduction for this year? b) Assuming Burbank would like to maximize its cost recovery deductions by electing bonus and §179 expense, which assets should Burbank immediately expense?  c) What is Burbank’s maximum cost recovery deduction this year assuming it elects §179 expense and claims bonus depreciation?

Revenue is usually recognized at the point of sale. Under special circumstances, however, bases other than the point of sale are used for the timing of revenue recognition. Instructions (a) Why is the point of sale usually used as the basis for the timing of revenue recognition? (b) Disregarding the special circumstances when bases other than the point of sale are used, discuss the merits of each of the following objections to the sale basis of revenue recognition: (1) It is too conservative because revenue is earned throughout the entire process of production. (2) It is not conservative enough because accounts receivable do not represent disposable funds, sales returns and allowances may be made, and collection and bad debt expenses may be incurred in a later period. (c) Revenue may also be recognized (1) during production and (2) when cash is received. For each of these two bases of timing revenue recognition, give an example of the circumstances in which it is properly used and discuss the accounting merits of its use in lieu of the sale basis.

Leontyne Price Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2013, the company expends $325,000 on a research project, but by the end of 2013 it is impossible to determine whether any benefit will be derived from it. Instructions (a) What account should be charged for the $325,000, and how should it be shown in the financial statements? (b) The project is completed in 2014, and a successful patent is obtained. The R&D costs to complete the project are $110,000. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2014 total $16,000. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2014. (c) In 2015, the company successfully defends the patent in extended litigation at a cost of $47,200, thereby extending the patent life to December 31, 2022. What is the proper way to account for this cost?Also, record patent amortization (full year) in 2015. (d) Additional engineering and consulting costs incurred in 2015 required to advance the design of a product to the manufacturing stage total $60,000. These costs enhance the design of the product considerably. Discuss the proper accounting treatment for this cost.

Discuss the importance of selecting an appropriate cost driver for cost allocation.

How are product variety and production quantity related when comparing typical factories?

Describe the calendering process.

Corrs Company began operations in 2013 and determined its ending inventory at cost and at lower-of-cost-or-market at December 31, 2013, and December 31, 2014. This information is presented below. Cost Lower-of-Cost-or-Market 12/31/13 $346,000 $327,000 12/31/14 410,000 395,000 Instructions (a) Prepare the journal entries required at December 31, 2013, and December 31, 2014, assuming that the inventory is recorded at market, and a perpetual inventory system (direct method) is used. (b) Prepare journal entries required at December 31, 2013, and December 31, 2014, assuming that the inventory is recorded at cost and an allowance account is adjusted at each year-end under a perpetual system. (c) Which of the two methods above provides the higher net income in each year?

Are different factor markets similarly interdependent? What would happen if the price of capital equipment rose?

The welding power generated in a particular arc-welding operation = 3000 W. This is transferred to the work surface with a heat transfer factor = 0.9. The metal to be welded is copper whose melting point is given in Table 29.2. Assume that the melting factor = 0.25. A continuous fillet weld is to be made with a cross-sectional area = 15.0 mm2. Determine the travel speed at which the welding operation can be accomplished.

Saurez Company, your client, manufactures paint. The company’s president, Maria Saurez, has decided to open a retail store to sell Saurez paint as well as wallpaper and other supplies that would be purchased from other suppliers. She has asked you for information about the conventional retail method of pricing inventories at the retail store. Instructions Prepare a report to the president explaining the retail method of pricing inventories. Your report should include the following points. (a) Description and accounting features of the method. (b) The conditions that may distort the results under the method. (c) A comparison of the advantages of using the retail method with those of using cost methods of inventory pricing. (d) The accounting theory underlying the treatment of net markdowns and net markups under the method.

Presented below is information related to Viel Company at December 31, 2014, the end of its first year of operations. Sales revenue $310,000 Cost of goods sold 140,000 Selling and administrative expenses 50,000 Gain on sale of plant assets 30,000 Unrealized gain on available-for-sale investments 10,000 Interest expense 6,000 Loss on discontinued operations 12,000 Allocation to noncontrolling interest 40,000 Dividends declared and paid 5,000 Instructions Compute the following: (a) income from operations, (b) net income, (c) net income attributable to Viel Company’s controlling shareholders, (d) comprehensive income, and (e) retained earnings balance at December 31, 2014.

Presented below is financial information for two different companies. Alatorre Company Eduardo Company Sales revenue $90,000 (d) Sales returns and allowances (a) $ 5,000 Net sales 81,000 95,000 Cost of goods sold 56,000 (e) Gross profi t (b) 38,000 Operating expenses 15,000 23,000 Net income (c) Instructions Compute the missing amounts.