Question & Answer

Vedula Advertising Agency was founded by Murali Vedula in January 2009. Presented on the next page are both the adjusted and unadjusted trial balances as of December 31, 2014.   Instructions (a) Journalize the annual adjusting entries that were made. (b) Prepare an income statement and a retained earnings statement for the year ended December 31, and a classified balance sheet at December 31. (c) Identify which accounts should be closed on December 31. (d) If the note has been outstanding 10 months, what is the annual interest rate on that note? (e) If the company paid $10,500 in salaries and wages in 2014, what was the balance in Salaries and Wages Payable on December 31, 2013?

A final assembly plant for a certain automobile model is to have a capacity of 240,000 units annually. The plant will operate 50 weeks/yr, 2 shifts/day, 5 days/week, and 8.0 hours/shift. It will be divided into three departments: (1) body shop, (2) paint shop, (3) trim-chassis-final department. The body shop welds the car bodies using robots, and the paint shop coats the bodies. Both of these departments are highly automated. Trim-chassis-final has no automation. There are 15.5 hours of direct labor content on each car in this department, where cars are moved by a continuous conveyor. Determine (a) hourly production rate of the plant, (b) number of workers and workstations required in trim-chassis-final if no automated stations are used, the average manning level is 2.5, balancing efficiency = 93%, proportion uptime = 95%, and a repositioning time of 0.15 min is allowed for each worker.

Armelio operates a business that acts as a sales representative for a client that produces and sells precious metals to electronic manufacturers. Armelio contacts manufacturers and convinces them to sign contracts for delivery of metals, and his company earns a commission on the sales. This year, Armelio contacted a jeweler to engrave small lapel buttons for his client’s employees. Armelio paid $20 each for the lapel buttons, and the jeweler charged Armelio an additional $7 for engraving. Can Armelio deduct the cost of the lapel buttons as business gifts? (Hint: see §274(b) and Reg. §1.274-3.)

How does an “asset gain or loss” develop in pension accounting? How does a “liability gain or loss” develop in pension accounting?

Presented below is the current liabilities section of Micro Corporation. ($000) 2015 2014 Current liabilities Notes payable $ 68,713 $ 7,700 Accounts payable 179,496 101,379 Compensation to employees 60,312 31,649 Accrued liabilities 158,198 77,621 Income taxes payable 10,486 26,491 Current maturities of long-term debt 16,592 6,649 Total current liabilities $493,797 $251,489 Instructions Answer the following questions. (a) What are the essential characteristics that make an item a liability? (b) How does one distinguish between a current liability and a long-term liability? (c) What are accrued liabilities? Give three examples of accrued liabilities that Micro might have. (d) What is the theoretically correct way to value liabilities? How are current liabilities usually valued? (e) Why are notes payable reported first in the current liabilities section? (f) What might be the items that comprise Micro’s liability for “Compensation to employees”?

Calculate price elasticity of demand between points n and l using the arc method. Does this give the same answer as by the point method? Would it if the demand curve were actually curved?

At December 31, 2014, Higley Corporation has one temporary difference which will reverse and cause taxable amounts in 2015. In 2014, a new tax act set taxes equal to 45% for 2014, 40% for 2015, and 34% for 2016 and years thereafter. Instructions Explain what circumstances would call for Higley to compute its deferred tax liability at the end of 2014 by multiplying the cumulative temporary difference by: (a) 45%. (b) 40%. (c) 34%.

Is a taxpayer who has funds in a traditional IRA able to convert the funds to a Roth IRA? If yes, explain the tax consequences of the conversion.

Quantity requirements are to be planned for component C2 in product P1. Required deliveries for P1 are given in Table 41.1. Ordering, manufacturing, and assembly lead times are as follows: for P1 and C2, the lead time is one week; and for S1 and M2, the lead time is two weeks. Given the product structure in Figure 41.4, determine the time-phased requirements for M2, C2, and S1 to meet the master schedule for P1. Assume no common use items and all on-hand inventories and scheduled receipts are zero. Use a format similar to Table 41.2 and develop a spreadsheet calculator to solve. Ignore demand for P1 beyond period 10.

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

Zopf Company sells its bonds at a premium and applies the effective-interest method in amortizing the premium. Will the annual interest expense increase or decrease over the life of the bonds? Explain.

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.

Franklin Corp. has an investment that it has held for several years. When it purchased the investment, Franklin classified and accounted for it as available-for-sale. Can Franklin use the fair value option for this investment? Explain.

What is the difference between a perpetual inventory and a physical inventory? If a company maintains a perpetual inventory, should its physical inventory at any date be equal to the amount indicated by the perpetual inventory records? Why?

Andre constructs and installs cabinets in homes. Blair sells and installs carpet in apartments. Andre and Blair worked out an arrangement whereby Andre installed cabinets in Blair’s home and Blair installed carpet in Andre’s home. Neither Andre nor Blair believes he is required to recognize any gross income on this exchange because neither received cash. Do you agree with them? Explain.

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.

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?

Using the same information as in E14-22 and , answer the following questions related to American Bank (creditor). Instructions (a) Compute the loss American Bank will suffer under this new term modification. Prepare the journal entry to record the loss on American’s books. (b) Prepare the interest receipt schedule for American Bank after the debt restructuring. (c) Prepare the interest receipt entry for American Bank on December 31, 2015, 2016, and 2017. (d) What entry should American Bank make on January 1, 2018?

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 issue precipitated the return of capital principle? Explain.

Diane has a job working three-quarter time.  She hired a relative to take care of her two small children so Diane could work.  Do Diane’s child care payments to her relative qualify for the child and dependent care credit in 2024?  Explain.

1.    : Over the past 20 years, entrepreneurship has been the fastest-growing course of study on campuses throughout the United States. Do you think it is possible to teach someone to be an entrepreneur? Why or why not?

What are some of the common examples of the conversion strategy?

The designer of a polar configuration robot is considering a portion of the manipulator consisting of a rotational joint connected to its output link. The output link is 25 in long and the rotational joint has a range of 75°. The accuracy of the joint-link combination, expressed as a linear measure at the end of the link which results from rotating the joint, is specified as 0.030 in. The mechanical inaccuracies of the joint result in a repeatability error = ±0.030° of rotation. It is assumed that the link is perfectly rigid, so there are no additional errors due to deflection. (a) Show that the specified accuracy can be achieved, given the repeatability error. (b) Determine the minimum number of bits required in the binary register of the robot's control memory to achieve the specified accuracy.

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.