Question & Answer

Presented below is information related to Bobby Engram Company. Cost Retail Beginning inventory $ 58,000 $100,000 Purchases (net) 122,000 200,000 Net markups 10,345 Net markdowns 26,135 Sales revenue 186,000 Instructions (a) Compute the ending inventory at retail. (b) Compute a cost-to-retail percentage (round to two decimals) under the following conditions. (1) Excluding both markups and markdowns. (2) Excluding markups but including markdowns. (3) Excluding markdowns but including markups. (4) Including both markdowns and markups. (c) Which of the methods in (b) above (1, 2, 3, or 4) does the following? (1) Provides the most conservative estimate of ending inventory. (2) Provides an approximation of lower-of-cost-or-market. (3) Is used in the conventional retail method. (d) Compute ending inventory at lower-of-cost-or-market (round to nearest dollar). (e) Compute cost of goods sold based on (d). (f) Compute gross margin based on (d).

What particular sectors might a distributional analysis of the impact of trade consider?

Assume Rafael can earn an 8 percent after-tax rate of return.  Would he prefer $1,000 today or $1,500 in five years?    Answer:

On June 30, 2006, County Company issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2014. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2015, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. County Company uses straight-line amortization. Interest payment dates are December 31 and June 30. Instructions (a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2015. (b) Prepare the entry required on December 31, 2015, to record the payment of the first 6 months’ interest and the amortization of premium on the bonds.

An injection molded polyethylene part has a dimension of 2.500 in. A new material, polycarbonate, is used in the same mold. What is the expected corresponding dimension of the polycarbonate molding?

Derrick Company issues 4,000 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2014. The stock has a fair value of $120,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Yaping stays with the company for 4 years. The par value of the stock is $5. At December 31, 2015, the fair value of the stock is $145,000. Instructions (a) Prepare the journal entries to record the restricted stock on January 1, 2014 (the date of grant), and December 31, 2015. (b) On March 4, 2016, Yaping leaves the company. Prepare the journal entry (if any) to account for this  forfeiture.

Describe two methods for enhancing self-awareness.

1.    : If you are the CEO of a global company, how might you determine whether a globalization, multidomestic, or glocalization strategy would work best for your enterprise? What factors would influence your decision?

Mehta Company traded a used welding machine (cost $9,000, accumulated depreciation $3,000)for office equipment with an estimated fair value of $5,000. Mehta also paid $3,000 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)

Assume the bonds in BE14-2 were issued at 98. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Colson Company records straight-line amortization semiannually.

Surface roughness is a measurable aspect of surface texture; what does surface roughness mean?

Arness Woodcrafters sells $250,000 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 5% and retains an amount equal to 4% of accounts receivable. Arness estimates the fair value of the recourse liability to be $8,000. Prepare the journal entry for Arness to record the sale.

Robert and Keisha invited Bijan to join them in forming Aero, a plane-chartering company, as a corporation. Bijan did not want to join at the time and declined their invitation. More than a year later, Bijan changed his mind and transferred appreciated property to Aero in exchange for 45 percent of Aero stock. Is Bijan required to recognize his realized gain on the transaction?

: Describe two of the Big Five personality traits, and explain how each trait might influence a manager’s behaviors toward direct reports.

} Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December, he performed $20,000 of legal services for a client. Hank typically requires his clients to pay his bills immediately upon receipt. Assume his marginal tax rate is 32 percent this year and will be 37 percent next year, and that he can earn an after-tax rate of return of 12 percent on his investments. Should Hank send his client the bill in December or January?

Do you think that this is an accurate description of how people behave when they acquire extra money?

Explain how the value of the dollar affects stock valuations. (LO3)

What is the technical difference between crushing and grinding in the preparation of traditional ceramic raw materials?

Describe how mortgage-backed securities (MBS) are used. (LO4)

Mantle Inc. sells merchandise for cash and also on the installment plan. Entries to record cost of goods sold are made at the end of each year. Repossessions of merchandise (sold in 2014) were made in 2015 and were recorded correctly as follows. Deferred Gross Profi t, 2014 7,200 Repossessed Merchandise 8,000 Loss on Repossession 2,800 Installment Accounts Receivable, 2014 18,000 Part of this repossessed merchandise was sold for cash during 2015, and the sale was recorded by a debit to Cash and a credit to Sales Revenue. The inventory of repossessed merchandise on hand December 31, 2015, is $4,000; of new merchandise, $127,400. There was no repossessed merchandise on hand January 1, 2015. Collections on accounts receivable during 2015 were: Installment Accounts Receivable, 2014 $80,000 Installment Accounts Receivable, 2015 50,000 The cost of the merchandise sold under the installment plan during 2015 was $111,600. The rate of gross profit on 2014 and on 2015 installment sales can be computed from the information given. MANTLE INC. TRIAL BALANCE DECEMBER 31, 2015 Dr. Cr. Cash $118,400 Installment Accounts Receivable, 2014 80,000 Installment Accounts Receivable, 2015 130,000 Inventory, Jan. 1, 2015 120,000 Repossessed Merchandise 8,000 Accounts Payable $ 47,200 Deferred Gross Profi t, 2014 64,000 Common Stock 200,000 Retained Earnings 40,000 Sales Revenue 400,000 Installment Sales 180,000 Purchases 360,000 Loss on Repossession 2,800 Operating Expenses 112,000 $931,200 $931,200 Instructions (a) From the trial balance and other information given above, prepare adjusting and closing entries as of December 31, 2015. (b) Prepare an income statement for the year ended December 31, 2015. Include only the realized gross profit in the income statement.

George purchased a life annuity to provide him monthly payments for as long as he lives. Based on IRS tables, George’s life expectancy is 100 months. Is George able to recover his cost of the annuity if he dies before he receives 100 monthly payments? Explain. What happens for tax purposes if George receives more than 100 payments?

Explain the characteristics of effective goals.

: Describe the value of the four components of emotional intelligence for managers.

Using the information provided in BE4-2, prepare a condensed multiple-step income statement for Brisky Corporation.

Describe ESG investing and how it is allowing firms to become more focused on environmental, social, and governance issues. (LO6)