Question & Answer

Anwer owns a rental home and is involved in maintaining it and approving renters. During the year he has a net loss of $8,000 from renting the home. His other sources of income during the year are a salary of $111,000 and $34,000 of long-term capital gains. How much of Anwer’s $8,000 rental loss can he deduct currently if he has no sources of passive income?

Describe the differences between a proportional, progressive, and regressive tax rate structures.

Using the information in BE5-14, determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of $400,000.

Charles Austin of the controller’s office of Thompson Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ending December 31, 2015. Austin has compiled the information listed below. 1. The company is authorized to issue 8,000,000 shares of $10 par value common stock. As of December 31, 2014, 2,000,000 shares had been issued and were outstanding. 2. The per share market prices of the common stock on selected dates were as follows. Price per Share July 1, 2014 $20.00 January 1, 2015 21.00 April 1, 2015 25.00 July 1, 2015 11.00 August 1, 2015 10.50 November 1, 2015 9.00 December 31, 2015 10.00 3. A total of 700,000 shares of an authorized 1,200,000 shares of convertible preferred stock had beenissued on July 1, 2014. The stock was issued at its par value of $25, and it has a cumulative dividendof $3 per share. The stock is convertible into common stock at the rate of one share of convertible preferred for one share of common. The rate of conversion is to be automatically adjusted for stock splits and stock dividends. Dividends are paid quarterly on September 30, December 31, March 31, and June 30. 4. Thompson Corporation is subject to a 40% income tax rate. 5. The after-tax net income for the year ended December 31, 2015, was $11,550,000. The following specific activities took place during 2015. 1. January 1—A 5% common stock dividend was issued. The dividend had been declared on December 1, 2014, to all stockholders of record on December 29, 2014. 2. April 1—A total of 400,000 shares of the $3 convertible preferred stock was converted into common stock. The company issued new common stock and retired the preferred stock. This was the only conversion of the preferred stock during 2015. 3. July 1—A 2-for-1 split of the common stock became effective on this date. The board of directors had authorized the split on June 1. 4. August 1—A total of 300,000 shares of common stock were issued to acquire a factory building. 5. November 1—A total of 24,000 shares of common stock were purchased on the open market at $9 per share. These shares were to be held as treasury stock and were still in the treasury as of December 31, 2015. 6. Common stock cash dividends—Cash dividends to common stockholders were declared and paid as follows. April 15—$0.30 per share October 15—$0.20 per share 7. Preferred stock cash dividends—Cash dividends to preferred stockholders were declared and paid as scheduled. Instructions (a) Determine the number of shares used to compute basic earnings per share for the year ended December 31, 2015. (b) Determine the number of shares used to compute diluted earnings per share for the year ended December 31, 2015. (c) Compute the adjusted net income to be used as the numerator in the basic earnings per share calculation for the year ended December 31, 2015.

Briefly explain the accounting requirements for stock compensation plans under GAAP.

: How do you think that the team evolved to this low level of cooperation and cohesiveness?

Jurassic Park Co. prepares monthly financial statements from a worksheet. Selected portions of the January worksheet showed the following data.   During February, no events occurred that affected these accounts. But at the end of February, the following information was available. (a) Supplies on hand $715 (b) Monthly depreciation $257 (c) Accrued interest $ 50

What is the difference between tax avoidance and tax evasion?

Generally, a selling partner’s capital account carries over to the purchaser of the partnership interest. Under what circumstances will this not be the case?

Why may the newer members of the Union have possibly the most to gain from the single market, but also the most to lose?

Under what circumstances can a partner recognize both gain and loss on the sale of a partnership interest?

In a complete JW model, what else would cause the JW curve (a) to shift to the right: (b) to shift to the left?

What is meant by the ‘prisoners’ dilemma game’ when applied to the behaviour of oligopolists? What will determine the outcome of the game?

Adam elects the accrual method of accounting for his business. What amount of deductions does Adam recognize this year for the following transactions?  a) Adam guarantees that he will refund the cost of any goods sold to a client if the goods fail within a year of delivery. In December of this year, Adam agreed to refund $2,400 to clients, and he expects to make payment in January of next year. b) On December 1 of this year, Adam paid $480 for a one-year contract with CleanUP Services to clean his store. The agreement calls for services to be provided on a weekly basis. c) Adam was billed $240 for annual personal property taxes on his delivery van. Because this was the first time Adam was billed for these taxes, he did not make payment until January of next year. However, he considers the amounts immaterial.

The adjusted trial balance of Lopez Company shows the following data pertaining to sales at the end of its fiscal year, October 31, 2014: Sales Revenue $800,000, Delivery Expense $12,000, Sales Returns and Allowances $24,000, and Sales Discounts $15,000. Instructions (a) Prepare the revenues section of the income statement. (b) Prepare separate closing entries for (1) sales and (2) the contra accounts to sales.

Distinguish the tax treatment of an NOL incurred in 2017 and an NOL incurred in 2024.

1.            How valuable do you think being a certified PMP is?

Should available-for-sale securities always be reported as a current asset? Explain.

Camille Sikorski was divorced in 2018. She currently owns and provides a home for her 15-year-old daughter Kaly. Kaly lived in Camille’s home for the entire year, and Camille paid for all the costs of maintaining the home. Camille received a salary of $105,000 and contributed $6,000 of it to a qualified retirement account (for AGI deduction). She also received $10,000 of alimony from her former husband (per divorce decree issued in 2018). Finally, Camille paid $15,000 of expenditures that qualified as itemized deductions.

Santo Design Agency was founded by Thomas Grant in January 2008. Presented below is the adjusted trial balance as of December 31, 2014.   Instructions (a) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2014, and an unclassified balance sheet at December 31. (b) Answer the following questions. (1) If the note has been outstanding 6 months, what is the annual interest rate on that note? (2) If the company paid $17,500 in salaries in 2014, what was the balance in Salaries and Wages Payable on December 31, 2013?

Why are Christmas trees and fresh foods often sold cheaply on Christmas Eve? (See Box 6.5 on page 161.)

Revenues, gains, and investments by owners are all increases in net assets. What are the distinctions among them?

Based on the video about vernier calipers, are the markings on the vernier plate (moveable scale) the same spacing, slightly closer, or slightly further apart compared to the stationary bar?

What is meant by consumption smoothing and of what significance might it be for the relationship between spending and income?

Why is austenitic stainless steel called by that name?