Question & Answer

How does the ILO/OECD definition differ from the economist’s definition? What is the significance of the phrase ‘available for work at current wages’ in the economist’s definition?

What is work hardening?

Using an available tax service or the Internet, identify three basic tax planning ideas or tax tips suggested for year-end tax planning.  Which basic tax strategy from this chapter does each planning idea employ?

Of what significance is inventory turnover to a retail store?

Instructions Go to the book’s companion website and use information found there to answer the following questions related to The Coca-Cola Company and PepsiCo, Inc. (a) Which company had the greater percentage increase in total assets from 2010 to 2011? (b) Using the Selected Financial Data section of these two companies, determine their 5-year average growth rates related to net sales and income from continuing operations. (c) Which company had more depreciation and amortization expense for 2011? Provide a rationale as to why there is a difference in these amounts between the two companies.

1.      Why do you think Nicola and Steve are on the defensive? Might the emphasis on core leadership behaviors be handled in a different way? What do you suggest?

Sprague Company has been operating for several years, and on December 31, 2014, presented the following balance sheet.   The net income for 2014 was $25,000. Assume that total assets are the same in 2013 and 2014. Instructions Compute each of the following ratios. For each of the four, indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company. (a) Current ratio. (c) Debt to assets. (b) Acid-test ratio. (d) Return on assets.

What are the general rules for how gains or losses on retirement of plant assets should be reported in income?

Hoosier Corporation declared a stock distribution to all shareholders of record on March 25 of this year. Shareholders will receive one share of Hoosier Corporation stock for each share of stock they already own. Hoosier reported current E&P of $600,000 and accumulated E&P of $3,000,000. The total fair market value of the stock distributed was $1,500,000. Barbara owned 1,000 shares of Hoosier stock with a tax basis of $100 per share.

What modifications to the conventional retail method are necessary to approximate a LIFO retail flow?

Mortgage lenders with fixed-rate mortgages should benefit when interest rates decline, yet research has shown that this favorable impact is dampened. By what? (LO3)

Explain the advantage of a bullet loan. (LO3)

Boey Company reported net income of $25,000 in 2015. It had the following amounts related to its pension plan in 2015: Actuarial liability gain $10,000; Unexpected asset loss $14,000; Accumulated other comprehensive income (G/L) (beginning balance), zero. Determine for 2015 (a) Boey’s other comprehensive income, and (b) comprehensive income.

Explain why interest rates tend to decrease during recessionary periods. Review historical interest rates to determine how they react to recessionary periods. Explain this reaction. (LO1, LO2)

Rasheed Wallace Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The corporation’s books disclosed the following. Beginning inventory $170,000 Sales revenue $650,000 Purchases for the year 390,000 Sales returns 24,000 Purchase returns 30,000 Rate of gross profi t on net sales 40% Merchandise with a selling price of $21,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,000 had a net realizable value of $5,300. Instructions Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.

1.       : Big data analytics programs (which analyze massive data sets to make decisions) use gigantic computing power to quantify trends that would be beyond the grasp of human observers. As the use of this quantitative analysis increases, do you think it may decrease the “humanity of production” in organizations? Why?

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?

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)

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

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?

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?

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.