Question & Answer

Imagine you had to determine whether a particular period of inflation was demand pull, or cost push, or a combination of the two. What information would you require in order to conduct your analysis?

What is Goodhart’s Law? How is it relevant to (a) monetary policy; (b) using assignment grades to assess a student’s ability; (c) paying workers according to the amount of output they produce; (d) awarding local authority contracts to cleaning or refuse disposal companies on the basis of tendered prices?

Why are inventories valued at the lower-of-cost-ormarket? What are the arguments against the use of the LCM method of valuing inventories?

Song earns $100,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $20,000 of tax).  If Congress increases the income tax rate such that Song’s average tax rate increases from 20 percent to 25 percent, how much more income tax will she pay assuming that the income effect is descriptive?  What effect will this tax rate change have on the tax base and tax collected?

An adhesive must cure in order to bond. What is meant by the term curing?

The following are Sullivan Corp.’s comparative balance sheet accounts at December 31, 2014 and 2013, with a column showing the increase (decrease) from 2013 to 2014. COMPARATIVE BALANCE SHEETS Increase 2014 2013 (Decrease) Cash $ 815,000 $ 700,000 $115,000 Accounts receivable 1,128,000 1,168,000 (40,000) Inventory 1,850,000 1,715,000 135,000 Property, plant, and equipment 3,307,000 2,967,000 340,000 Accumulated depreciation (1,165,000) (1,040,000) (125,000) Investment in Myers Co. 310,000 275,000 35,000 Loan receivable 250,000 — 250,000 Total assets $6,495,000 $5,785,000 $710,000 Accounts payable $1,015,000 $ 955,000 $ 60,000 Income taxes payable 30,000 50,000 (20,000) Dividends payable 80,000 100,000 (20,000) Lease liability 400,000 — 400,000 Common stock, $1 par 500,000 500,000 — Paid-in capital in excess of par—common stock 1,500,000 1,500,000 — Retained earnings 2,970,000 2,680,000 290,000 Total liabilities and stockholders’ equity $6,495,000 $5,785,000 $710,000 Additional information: 1. On December 31, 2013, Sullivan acquired 25% of Myers Co.’s common stock for $275,000. On that date, the carrying value of Myers’s assets and liabilities, which approximated their fair values, was $1,100,000. Myers reported income of $140,000 for the year ended December 31, 2014. No dividend was paid on Myers’s common stock during the year. 2. During 2014, Sullivan loaned $300,000 to TLC Co., an unrelated company. TLC made the first semiannual principal repayment of $50,000, plus interest at 10%, on December 31, 2014. 3. On January 2, 2014, Sullivan sold equipment costing $60,000, with a carrying amount of $38,000, for $40,000 cash. 4. On December 31, 2014, Sullivan entered into a capital lease for an office building. The present value of the annual rental payments is $400,000, which equals the fair value of the building. Sullivan made the first rental payment of $60,000 when due on January 2, 2015. 5. Net income for 2014 was $370,000. 6. Sullivan declared and paid the following cash dividends for 2014 and 2013. 2014 2013 Declared December 15, 2014 December 15, 2013 Paid February 28, 2015 February 28, 2014 Amount $80,000 $100,000 Instructions Prepare a statement of cash flows for Sullivan Corp. for the year ended December 31, 2014, using the indirect method.

What will happen to the equilibrium price and quantity of butter in each of the following cases? You should state whether demand or supply (or both) have shifted and in which direction. (In each case assume ceteris paribus.) (a) A rise in the price of non-dairy spread. (b) A rise in the demand for cream. (c) A rise in the price of bread. (d) A rise in the demand for bread. (e) An expected rise in the price of butter in the near future. (f) A tax on butter production. (g) The invention of a new, but expensive, process for removing all saturated fat from butter, alongside the passing of a law which states that all butter producers must use this process.

What are the desirable characteristics of a brazing flux?

Presented below is information related to Rembrandt Inc.’s inventory. (per unit) Skis Boots Parkas Historical cost $190.00 $106.00 $53.00 Selling price 212.00 145.00 73.75 Cost to distribute 19.00 8.00 2.50 Current replacement cost 203.00 105.00 51.00 Normal profi t margin 32.00 29.00 21.25 Determine the following: (a) the two limits to market value (i.e., the ceiling and the floor) that should be used in the lower-of-cost-or-market computation for skis, (b) the cost amount that should be used inthe lower-of-cost-or-market comparison of boots, and (c) the market amount that should be used to valueparkas on the basis of the lower-of-cost-or-market.

On September 1, 2014, Sands Company sold at 104 (plus accrued interest) 4,000 of its 9%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $15 per share. Shortly after issuance, the warrants were quoted on the market for $3 each. No fair value can be determined for the Sands Company bonds. Interest is payable on December 1 and June 1. Bond issue costs of $30,000 were incurred. Instructions Prepare in general journal format the entry to record the issuance of the bonds.

What determines the size of this world multiplier effect?

At the beginning of the year, Poplock began a calendar-year, dog-boarding business called Griff’s Palace. Poplock bought and placed in service the following assets during the year:

What is the difference between a cutoff operation and a parting operation?

What abrasive material would one select for grinding a cemented carbide cutting tool?

] There are two recovery period classifications for real property. What reasons might Congress have to allow residential real estate a shorter recovery period than nonresidential real property?

Willow Corp. (a calendar-year C corporation) reported taxable income before the net operating loss deduction (NOL) in the amount of $100,000 in 2024. Willow had an NOL carryover of $90,000 to 2024 How much tax will Willow Corp. pay for 2024, what is its NOL carryover to 2025, and when will the NOL expire under the following assumptions?

Explain why some meme stocks were misvalued by investors.

What are the relative advantages and disadvantages of mechanical presses versus hydraulic presses in sheet metalworking?

1.      : Recommend a meeting with the sales representatives entitled to a bonus and tell them that the company’s deteriorating financial situation triggers one of the contingency clauses in their contract so the company won’t be issuing their bonus checks. Tacoma will just have to deal with the negative impact on sales rep motivation.

Fosbre Corporation’s April 30 inventory was destroyed by fire. January 1 inventory was $150,000, and purchases for January through April totaled $500,000. Sales revenue for the same period were $700,000. Fosbre’s normal gross profit percentage is 35% on sales. Using the gross profit method, estimate Fosbre’s April 30 inventory that was destroyed by fire.

What are the carryover and carryback periods for a net operating loss? Does a corporation have the option to choose the years to which it carries back a NOL? Explain.

Who regulates credit unions? What are the regulators’ powers? Where do CUs obtain deposit insurance? (LO7)

Oregon Inc. $10 par common stock is selling for $110 per share. Four million shares are currently issued and outstanding. The board of directors wishes to stimulate interest in Oregon common stock before a forthcoming stock issue but does not wish to distribute capital at this time. The board also believes that too many adjustments to the stockholders’ equity section, especially retained earnings, might discourage potential investors. The board has considered three options for stimulating interest in the stock: 1. A 20% stock dividend. 2. A 100% stock dividend. 3. A 2-for-1 stock split. Instructions Acting as financial advisor to the board, you have been asked to report briefly on each option and, considering the board’s wishes, make a recommendation. Discuss the effects of each of the foregoing options.

What is the general rule for how many authorities a research memo should discuss?

What determines the shape and position of the IS curve?