Question & Answer

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.

If a disastrous harvest of rice were confined to a particular country, would (a) the world price and (b) its own domestic price of rice fluctuate significantly? What would happen to the country’s export earnings and the earnings of individual farmers?

The following independent situations relate to inventory accounting. 1. Kim Co. purchased goods with a list price of $175,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Kim Co. record as the cost of these goods? 2. Keillor Company’s inventory of $1,100,000 at December 31, 2014, was based on a physical count of goods priced at cost and before any year-end adjustments relating to the following items. (a) Goods shipped from a vendor f.o.b. shipping point on December 24, 2014, at an invoice cost of $69,000 to Keillor Company were received on January 4, 2015. (b) The physical count included $29,000 of goods billed to Sakic Corp. f.o.b. shipping point on December 31, 2014. The carrier picked up these goods on January 3, 2015. What amount should Keillor report as inventory on its balance sheet? 3. Zimmerman Corp. had 1,500 units of part M.O. on hand May 1, 2014, costing $21 each. Purchases of part M.O. during May were as follows. Units Unit Cost May 9 2,000 $22.00 17 3,500 23.00 26 1,000 24.00 4 5 8A physical count on May 31, 2014, shows 2,000 units of part M.O. on hand. Using the FIFO method, what is the cost of part M.O. inventory at May 31, 2014? Using the LIFO method, what is the inventory cost? Using the average-cost method, what is the inventory cost? 4. Ashbrook Company adopted the dollar-value LIFO method on January 1, 2014 (using internal price indexes and multiple pools). The following data are available for inventory pool A for the 2 years following adoption of LIFO. At Base- At Current- Inventory Year Cost Year Cost 1/1/14 $200,000 $200,000 12/31/14 240,000 264,000 12/31/15 256,000 286,720 Computing an internal price index and using the dollar-value LIFO method, at what amount should the inventory be reported at December 31, 2015? 5. Donovan Inc., a retail store chain, had the following information in its general ledger for the year 2015. Merchandise purchased for resale $909,400 Interest on notes payable to vendors 8,700 Purchase returns 16,500 Freight-in 22,000 Freight-out (delivery expense) 17,100 Cash discounts on purchases 6,800 What is Donovan’s inventoriable cost for 2015? Instructions Answer each of the preceding questions about inventories, and explain your answers.ROBLEMS

Explain five management competencies and the trend toward bosslessness in today’s world.

1. Why do economists treat normal profit as a cost of production? 2. What determines (a) the level and (b) the rate of normal profit for a particular firm?

The state of Georgia recently increased its tax on a pack of cigarettes by $2.00.  What type of tax is this?  Why might Georgia choose this type of tax?

Webb Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2014, the following balances relate to this plan. Plan assets $480,000 Projected benefi t obligation 600,000  Pension asset/liability 120,000 Accumulated OCI (PSC) 100,000 Dr. As a result of the operation of the plan during 2014, the following additional data are provided by theactuary. Service cost $90,000 Settlement rate, 9% Actual return on plan assets 55,000 Amortization of prior service cost 19,000 Expected return on plan assets 52,000 Unexpected loss from change in projected benefi t obligation, due to change in actuarial predictions 76,000 Contributions 99,000 Benefi ts paid retirees 85,000 Instructions (a) Using the data above, compute pension expense for Webb Corp. for the year 2014 by preparing a pension worksheet. (b) Prepare the journal entry for pension expense for 2014.

Grady received $8,200 of Social Security benefits this year. Grady also reported salary and interest income this year. What amount of the benefits must Grady include in his gross income under the following two independent situations?

There are 14 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 on the quiz is based on the total number of correct answers 29.1 Welding can only be performed on metals that have the same melting point; otherwise, the metal with the lower melting temperature always melts while the other metal remains solid: (a) true, (b) false? 29.2 A fillet weld can be used to join which of the following joint types (three correct answers): (a) butt, (b) corner, (c) edge, (d) lap, and (e) tee? 29.3 A fillet weld has a cross-sectional shape that is approximately which one of the following: (a) rectangular, (b) round, (c) square, or (d) triangular? 29.4 Groove welds are most closely associated with which one of the following joint types: (a) butt, (b) corner, (c) edge, (d) lap, or (e) tee? 29.5 A flange weld is most closely associated with which one of the following joint types: (a) butt, (b) corner, (c) edge, (d) lap, or (e) tee? 29.6 For metallurgical reasons, it is desirable to melt the weld metal with minimum energy input. Which one of the following heat sources is most consistent with this objective: (a) high power, (b) high power density, (c) low power, or (d) low power density? 29.7 The amount of heat required to melt a given volume of metal depends strongly on which of the following properties (three best answers): (a) coefficient of thermal expansion, (b) heat of fusion, (c) melting temperature, (d) modulus of elasticity, (e) specific heat, (f) thermal conductivity, and (g) thermal diffusivity? 29.8 The heat transfer factor in welding is correctly defined by which one of the following descriptions: (a) the proportion of the heat received at the work surface that is used for melting, (b) the proportion of the total heat generated at the source that is received at the work surface, (c) the proportion of the total heat generated at the source that is used for melting, or (d) the proportion of the total heat generated at the source that is used for welding? 29.9 The melting factor in welding is correctly defined by which one of the following descriptions: (a) the proportion of the heat received at the work surface that is used for melting, (b) the proportion of the total heat generated at the source that is received at the work surface, (c) the proportion of the total heat generated at the source that is used for melting, or (d) the proportion of the total heat generated at the source that is used for welding? 29.10 Weld failures always occur in the fusion zone of the weld joint, since this is the part of the joint that has been melted: (a) true, (b) false?

What is an ad valorem tax?  Name an example of this type of tax.

What are the two basic types of forging equipment?

Floyd Corporation has the following four items in its ending inventory. Replacement Cost Net Realizable Value (NRV) NRV Less Item Cost Normal Profi t Margin Jokers $2,000 $2,050 $2,100 $1,600 Penguins 5,000 5,100 4,950 4,100 Riddlers 4,400 4,550 4,625 3,700 Scarecrows 3,200 2,990 3,830 3,070 Determine the final lower-of-cost-or-market inventory value for each item.

1.    : If managerial work is characterized by variety, fragmentation, and brevity, how do managers perform basic management functions such as planning and strategic management, which would seem to require reflection and analysis?

Make the calculations and plot on linearly scaled axes the relationship for unit melting energy as a function of temperature. Use temperatures as follows to construct the plot: 500°F, 1000°F, 1500°F, 2000°F, 2500°F, 3000°F, and 3500°F. On the plot, mark the positions of some of the welding metals in Table 29.2. Use of a spreadsheet program is recommended for the calculations.

Differentiate between “accounting for the employer” and “accounting for the pension fund.”

Craig Company asks you to review its December 31, 2014, inventory values and prepare the necessary adjustments to the books. The following information is given to you. 1. Craig uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2014. 2. Not included in the physical count of inventory is $13,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31. 3. Included in inventory is merchandise sold to Champy on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Champy received it on January 3. 4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded. 5. Not included in inventory is $8,540 of merchandise purchased from Glowser Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30. 6. Included in inventory was $10,438 of inventory held by Craig on consignment from Jackel Industries. 7. Included in inventory is merchandise sold to Kemp f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $10,520, and Kemp received the merchandise on January 5. 8. Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 which had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged. Instructions (a) Determine the proper inventory balance for Craig Company at December 31, 2014. (b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2014. Assume the books have not been closed.

Cost of sales schedule Rebecca Ltd is a manufacturer of machines made to customer specifications. All production costs are accumulated by means of a job order costing system. The following information is available at the beginning of the month of October.       A review of the job order cost sheets revealed the composition of the work in process inventory on October 1 as follows:         Activity during the month of October was as follows:       On 31 October, inventories consisted of the following:       Required Prepare a detailed schedule showing the cost of goods manufactured for October.

Melting furnaces for glassworking can be divided into four types. Name three of the four types.

1.       : Why do you think empowerment increases motivation? Do you see any ways in which a manager’s empowerment efforts might contribute to demotivation among employees? Discuss.

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.

You have just started work for Warren Co. as part of the controller’s group involved in current financial reporting problems. Jane Henshaw, controller for Warren, is interested in your accounting background because the company has experienced a series of financial reporting surprises over the last few years. Recently, the controller has learned from the company’s auditors that there is authoritative literature that may apply to its investment in securities. She assumes that you are familiar with this pronouncement and asks how the following situations should be reported in the financial statements. Situation 1: Trading securities in the current assets section have a fair value that is $4,200 lower than cost. Situation 2: A trading security whose fair value is currently less than cost is transferred to the availablefor- sale category. Situation 3: An available-for-sale security whose fair value is currently less than cost is classified as noncurrent but is to be reclassified as current. Situation 4: A company’s portfolio of available-for-sale securities consists of the common stock of one company. At the end of the prior year, the fair value of the security was 50% of original cost, and this reduction in fair value was reported as an other than temporary impairment. However, at the end of the current year, the fair value of the security had appreciated to twice the original cost. Situation 5: The company has purchased some convertible debentures that it plans to hold for less than a year. The fair value of the convertible debentures is $7,700 below its cost. Instructions What is the effect upon carrying value and earnings for each of the situations above? Assume that these situations are unrelated.

Scot and Vidia, married taxpayers, earn $240,000 in taxable income and $5,000 in interest from an investment in City of Tampa bonds.  Using the U.S. tax rate schedule for married filing jointly (see Example 1-3), how much federal tax will they owe?  What is their average tax rate?  What is their effective tax rate?  What is their current marginal tax rate?

Explain how manufacturing overhead cost pools and cost allocation are related.

] Montana Max sells a 2,500-acre ranch for $1,000,000 in cash, a note receivable of $1,000,000, and debt relief of $2,400,000. He also pays selling commissions of $60,000. In addition, Max agrees to build a new barn on the property (cost $250,000) and spend $100,000 upgrading the fence on the property before the sale. What is Max’s amount realized on the sale?

The trial balance before adjustment of Reba McIntyre Inc. shows the following balances Dr. Cr. Accounts Receivable $90,000 Allowance for Doubtful Accounts 1,750 Sales Revenue (all on credit) $680,000 Instructions Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 1% of net sales.