Question & Answer

Externalities and sustainability Read the management accounting case at the beginning of this chapter. Using Bank Australia as an example, list some of the positive externalities that might be achieved as a result of its operations. What are some of the negative externalities that could result from the banking operational activities? (LO1 and 3)

Kathleen Battle Corporation was organized on January 1, 2014. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year. Jan. 10 Issued 80,000 shares of common stock for cash at $5 per share. Mar. 1 Issued 5,000 shares of preferred stock for cash at $108 per share. Apr. 1 Issued 24,000 shares of common stock for land. The asking price of the land was $90,000; the fair value of the land was $80,000. May 1 Issued 80,000 shares of common stock for cash at $7 per share. Aug. 1 Issued 10,000 shares of common stock to attorneys in payment of their bill of $50,000 for services rendered in helping the company organize. Sept. 1 Issued 10,000 shares of common stock for cash at $9 per share. Nov. 1 Issued 1,000 shares of preferred stock for cash at $112 per share. Instructions Prepare the journal entries to record the above transactions.

List possible sources of additional paid-in capital.

The treasurer of Miller Co. has read on the Internet that the stock price of Wade Inc. is about to take off. In order to profit from this potential development, Miller Co. purchased a call option on Wade common shares on July 7, 2014, for $240. The call option is for 200 shares (notional value), and the strike price is $70. (The market price of a share of Wade stock on that date is $70.) The option expires on January 31, 2015. The following data are available with respect to the call option. Date Market Price of Wade Shares Time Value of Call Option September 30, 2014 $77 per share $180 December 31, 2014 75 per share 65 January 4, 2015 76 per share 30 Instructions Prepare the journal entries for Miller Co. for the following dates. (a) July 7, 2014—Investment in call option on Wade shares. (b) September 30, 2014—Miller prepares financial statements. (c) December 31, 2014—Miller prepares financial statements. (d) January 4, 2015—Miller settles the call option on the Wade shares.

Your classmate Kate believes that the equity method is applied with a strict application of the “20%” rule. Do you agree? Explain.

Graber Corporation runs a long-haul trucking business. Graber incurs the following expenses: replacement tires, oil changes, and a transmission overhaul. Which of these expenditures may be deducted currently and which must be capitalized? Explain.

1.      : Place Farhad with a more sympathetic account manager who is open to finding ways to help him improve his English and has the time to help him develop his assertiveness and telephone skills. Send Hazel Putnam to diversity awareness training.

Consider the prevailing conditions that could affect the demand for stocks, including inflation, the economy, the budget deficit, and the Fed’s monetary policy, political conditions, and the general mood of investors. Based on these conditions, do you think stock prices will increase or decrease during this semester? Offer some logic to support your answer. Which factor do you think will have the biggest impact on stock prices? (LO3)

Tan Chin Company purchases a building for $11,300,000 on January 2, 2014. An engineer’s report shows that of the total purchase price, $11,000,000 should be allocated to the building (with a 40-year life), $150,000 to 15-year property, and $150,000 to 5-year property. No residual (salvage) value should be considered. Compute depreciation expense for 2014 using component depreciation.

Melting furnaces for glassworking can be divided into four types. Name three of the four types.

Strategy; balanced scorecard measures and process Refer to the information in problem 19.25. Dyggur Equipment wants to offer weekend servicing of heavy equipment. None of its competitors offer this service, and management believes this service will bring in new business and help retain current customers.   Required (a)     List several advantages and disadvantages of this strategy. (b)     List one financial and two non-financial performance measures that could be used to monitor the success of this plan. (c)     Suppose the managers decide to launch this new service. At the end of the first year of operating weekend service, performance is evaluated by gathering and analysing measures such as those identified in part (b). How can this information be used to improve performance for the next period? (d)     Given that Dyggur management are now exploring new strategies, outline how senior management could use the balanced scorecard interactively.

An electric discharge machining operation is being performed on two work materials: tungsten and zinc. Determine the amount of metal removed in the operation after one hour at a discharge amperage = 20 amps for each of these metals. Use U.S. Customary units and express the answer in in3/hr. From Table 4.1, the melting temperatures of tungsten and zinc are 6170°F and 420°F, respectively.

Schuss Corporation sold equipment to Potsdam Company for $20,000. The equipment is on Schuss’s books at a net amount of $13,000. Schuss collected $10,000 in 2014, $5,000 in 2015, and $5,000 in 2016. If Schuss uses the cost-recovery method, what amount of gross profit will be recognized in each year?

1.    : This chapter described studies that show that people work harder and better for managers who put the interests of others above their own. Do you believe being more of a “giver” than a “taker” will translate into greater career success for these managers? Discuss

In 2024, Lisa and Fred, a married couple, have taxable income of $400,000.  If they were to file separate tax returns, Lisa would have reported taxable income of $225,000 and Fred would have reported taxable income of $175,000.  What is the couple’s marriage penalty or benefit?

How are CVP analysis and breakeven analysis related?

On November 24, 2014, 26 passengers on Windsor Airlines Flight No. 901 were injured upon landing when the plane skidded off the runway. Personal injury suits for damages totaling $9,000,000 were filed on January 11, 2015, against the airline by 18 injured passengers. The airline carries no insurance. Legal counsel has studied each suit and advised Windsor that it can reasonably expect to pay 60% of the damages claimed. The financial statements for the year ended December 31, 2014, were issued February 27, 2015. Instructions (a) Prepare any disclosures and journal entries required by the airline in preparation of the December 31, 2014, financial statements. (b) Ignoring the November 24, 2014, accident, what liability due to the risk of loss from lack of insurance coverage should Windsor Airlines record or disclose? During the past decade, the company has experienced at least one accident per year and incurred average damages of $3,200,000. Discuss fully.

A 75 mm diameter tube is bent into a rather complex shape with a series of simple tube bending operations. The wall thickness on the tube = 4.75 mm. The tubes will be used to deliver fluids in a chemical plant. In one of the bends where the bend radius is 125 mm, the walls of the tube are flattening badly. What can be done to correct the condition?

Why were bank regulators concerned about credit default swaps during the credit crisis? (LO2)

Describe the major constraint inherent in the presentation of accounting information.

Solve Problem 20.24 except use a punch radius = 0.375 in

Why does Congress provide the dividends-received deduction for corporations receiving dividends?

Mel and Cindy Gibson’s 12-year-old daughter Rachel was abducted on her way home from school on March 15, 2017.Police reports indicated that a stranger had physically dragged Rachel into a waiting car and sped away.Everyone hoped that the kidnapper and Rachel would be located quickly.However, as of the end of the year, Rachel was still missing.The police were still pursuing several promising leads and had every reason to believe that Rachel was still alive.In 2018, Rachel was returned safely to her parents.a.Are the Gibsons allowed to claim an exemption deduction for Rachel in 2017 even though she only lived in the Gibson’s home for two-and-one-half months?Explain and cite your authority.

The cone-shaped part in Problem 33.5 is to be built using laminated-object manufacturing. Layer thickness = 0.20 mm. The laser beam can cut the sheet stock at a velocity of 500 mm/s. Compute an estimate for the time required to build the part, if 10 s are lost each layer to lower the height of the platform that holds the part and advance the sheet stock in preparation for the next layer. Ignore cutting of the cross-hatched areas outside of the part since the cone should readily drop out of the stack owing to its geometry.

What limitations apply to the amount of the allowable dividends-received deduction?