Question & Answer

Peter M. Dell Co. purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2015, it is determined that the total estimated life should be 15 years with a salvage value of $5,000 at the end of that time. Instructions (a) Prepare the entry (if any) to correct the prior years’ depreciation. (b) Prepare the entry to record depreciation for 2015.

Kano and his wife Hoshi have been married for 10 years and have two children under the age of 12.The couple has been living apart for the last two years and both children live with Kano.Kano has provided all the means necessary to support himself and his children.Kano and Hoshi do not file a joint return. What is Kano’s filing status?

Why must a production line be paced at a rate higher than that required to satisfy the demand for the product?

1.    : TikTok, a Chinese video-sharing social networking service, was founded in 2012 and became available in the United States in 2018. TikTok is wildly popular, with a global reach mostly among 16- to 24-year-olds. Why and how might a company such as TikTok want to use contingency planning? Scenario planning? Discuss.

Assume that stocks in the United Kingdom become very attractive to U.S. investors. How could this affect the value of the British pound? Explain. (LO2)

Presented below are transactions related to Tom Brokaw, Inc. May 10 Purchased goods billed at $15,000 subject to cash discount terms of 2/10, n/60. 11 Purchasedgoods billed at $13,200 subject to terms of 1/15, n/30. 19 Paid invoice of May 10. 24 Purchasedgoods billed at $11,500 subject to cash discount terms of 2/10, n/30. Instructions (a) Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense. (b) Assuming no purchase or payment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.

Geddes Corporation is a medium-sized manufacturing companywith two divisions and three subsidiaries, all located in the United States. The Metallic Division manufactures metal castings for the automotive industry, and the Plastic Division produces small plastic items for electrical products and other uses. The three subsidiaries manufacture various products for other industrial users. Geddes Corporation plans to change from the lower of first-in, first-out (FIFO)-cost-or market method of inventory valuation to the last-in, first-out (LIFO) method of inventory valuation to obtain tax benefits. To make the method acceptable for tax purposes, the change also will be made for its annual financial statements. Instructions (a) Describe the establishment of and subsequent pricing procedures for each of the following LIFO inventory methods. (1) LIFO applied to units of product when the periodic inventory system is used. (2) Application of the dollar-value method to LIFO units of product. (b) Discuss the specific advantages and disadvantages of using the dollar-value LIFO application as compared to specific goods LIFO (unit LIFO). (Ignore income tax considerations.) (c) Discuss the general advantages and disadvantages claimed for LIFO methods.

What are guaranteed payments, and how do partnerships and partners treat them for income and self-employment tax purposes?

Why would banks not be prepared to offer a forward exchange rate to a firm for, say, five years’ time?

The transactions below took place during the year 2014. 1. Convertible bonds payable with a par value of $300,000 were exchanged for unissued common stock with a par value of $300,000. The market price of both types of securities was par. 2. The net income for the year was $410,000. 3. Depreciation expense for the building was $90,000. 4. Some old office equipment was traded in on the purchase of some dissimilar office equipment, and the following entry was made. Equipment 50,000 Accum. Depreciation—Equipment 30,000 Equipment 40,000 Cash 34,000 Gain on Disposal of Plant Assets 6,000 The Gain on Disposal of Plant Assets was credited to current operations as ordinary income. 5. Dividends in the amount of $123,000 were declared. They are payable in January of next year. Instructions Show by journal entries the adjustments that would be made on a worksheet for a statement of cash flows.

Bo Newman will invest $10,000 today in a fund that earns 5% annual interest. How many years will it take for the fund to grow to $17,100?

Discuss the importance of job satisfaction and trust for effective employee performance.

On January 1, 2015, Wilke Corp. had 480,000 shares of common stock outstanding. During 2015, it had the following transactions that affected the common stock account. February 1 Issued 120,000 shares March 1 Issued a 10% stock dividend May 1 Acquired 100,000 shares of treasury stock June 1 Issued a 3-for-1 stock split October 1 Reissued 60,000 shares of treasury stock Instructions (a) Determine the weighted-average number of shares outstanding as of December 31, 2015. (b) Assume that Wilke Corp. earned net income of $3,456,000 during 2015. In addition, it had 100,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2015. Compute earnings per share for 2015, using the weighted-average number of shares determined in part (a). (c) Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2015. (d) Assume the same facts as in part (b), except that net income included an extraordinary gain of $864,000 and a loss from discontinued operations of $432,000. Both items are net of applicable income taxes. Compute earnings per share for 2015.

1.       You have been hired to manage a 20-person staff for Nightlight Travels, a travel agency in Las Vegas. For a full year, sales have been hammered by the COVID-19 pandemic, and staff morale has plummeted as key employees left for positions in more secure industries. The few remaining key customer relationships have been damaged by the sloppy and unprofessional work habits of the remaining staff members. Your first responsibility as a new manager is to create next year’s budget for all planned expenditures. But first you must decide if you will adopt a hierarchical approach or a decentralized approach to control. Which would you choose, and why?

What is the feature that distinguishes glass from the traditional and new ceramics?

1.       : Describe how diversity of thought boosts creativity and innovation in the workplace. Why do managers consider diversity of thought to be a competitive advantage?

1.       : Until Sheryl Sandberg was promoted to chief operating officer of Facebook in 2012, its board was composed of only men. Yet a majority of Facebook’s users are women. Given this demographic, explain how Facebook might benefit from increasing the presence of women on its corporate board.

Arnold and Lilly recently had a discussion about whether a sales tax is a proportional tax or a regressive tax.  Arnold argued that a sales tax is regressive.  Lilly countered that the sales tax is a flat tax.  Who was correct?

What are some of the reasons why surfaces are important?

1.    : Fortune magazine and the Hay Group found that a clear, stable strategy is one of the defining characteristics of companies on the list of “The World’s Most Admired Companies.” Why might this be the case?

Bryan followed in his father’s footsteps and entered the carpet business. He owns and operates I Do Carpet (IDC). Bryan prefers to install carpet only, but in order to earn additional revenue, he also cleans carpets and sells carpet cleaning supplies. Compute his taxable income for the current year considering the following items:  a) IDC contracted with a homebuilder in December of last year to install carpet in 10 new homes being built. The contract price of $80,000 includes $50,000 for materials (carpet). The remaining $30,000 is for IDC’s service of installing the carpet. The contract also stated that all money was to be paid up front. The homebuilder paid IDC in full on December 28 of last year. The contract required IDC to complete the work by January 31 of this year. Bryan purchased the necessary carpet on January 2 and began working on the first home January 4. He completed the last home on January 27 of this year.  b) IDC finalized several other contracts this year and completed the work before year-end. The work cost $130,000 in materials, and IDC elects to immediately deduct supplies. Bryan billed out $240,000 but only collected $220,000 by year-end. Of the $20,000 still owed to him, Bryan wrote off $3,000 he didn’t expect to collect as a bad debt from a customer experiencing extreme financial difficulties. c) IDC agreed to a three-year contract to clean the carpets of an office building. The contract specified that IDC would clean the carpets monthly from July 1 of this year through June 30 three years hence. IDC received payment in full of $8,640 ($240 a month for 36 months) on June 30 of this year.  d) IDC sold 100 bottles of carpet stain remover this year for $5 per bottle (it collected $500). IDC sold 40 bottles on June 1 and 60 bottles on November 2. IDC had the following carpet-cleaning supplies on hand for this year, and IDC has elected to use the LIFO method of accounting for inventory under a perpetual inventory system: Purchase Date Bottles Total Cost November last year 40 $120 February this year 35 $112 July this year 25 $85 August this year 40 $140 Totals 140 $457   e) On August 1 of this year, IDC needed more room for storage and paid $900 to rent a garage for 12 months.  f) On November 30 of this year, Bryan decided it was time to get his logo on the sides of his work van. IDC hired We Paint Anything Inc. (WPA) to do the job. It paid $500 down and agreed to pay the remaining $1,500 upon completion of the job. WPA indicated it would not be able to begin the job until January 15 of next year, but the job would only take one week to complete. Due to circumstances beyond its control, WPA was unable to complete the job until April 1 of next year, at which time IDC paid the remaining $1,500. g) In December, Bryan’s son, Aiden, helped him finish some carpeting jobs. IDC owed Aiden $600 (reasonable) compensation for his work. However, Aiden did not receive the payment until January of next year.  h) IDC also paid $1,000 for interest on a short-term bank loan relating to the period from November 1 of this year through March 31 of next year.

1.       : If you were asked to design a training program to help managers become better communicators of vision, mission, and values, what would you include in the program?

Kellogg Company is the world’s leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg.   Instructions (a) What are some of the reasons that management purchases its own stock? (b) Explain how earnings per share might be affected by treasury stock transactions. (c) Calculate the ratio of debt to assets for 2010 and 2011, and discuss the implications of the change.

Identify three situations in which accounting measures are based on present values. Do these present value applications involve single sums or annuities, or both single sums and annuities? Explain.

Threshold Concept 9) 1. What risks are involved in buying the latest version of the iPhone? Compare these with the risks of buying a house. (Threshold Concept 9) 2. Give some examples of ways in which it is possible to buy better information. Your answer should suggest that there is profitable business to be made in supplying information. (Threshold Concept 9) 3. Is there a role for government intervention in the provision of information?