Question & Answer

In an orthogonal cutting operation, the tool has a rake angle = 15°. The chip thickness before the cut = 0.30 mm and the cut yields a deformed chip thickness = 0.65 mm. Calculate (a) the shear plane angle and (b) the shear strain for the operation.

On January 1, 2014, Irwin Animation sold a truck to Peete Finance for $33,000 and immediately leased it back. The truck was carried on Irwin’s books at $28,000. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $8,705 at the end of each year. The appropriate rate of interest is 10%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin’s 2014 journal entries.

Which is a more appropriate tax rate to use to compare taxpayers’ tax burdens – the average or the effective tax rate?  Why?

What is the role of an actuary relative to pension plans? What are actuarial assumptions?

On July 1, 2014, Wallace Company, a calendar-year company, sold special-order merchandise on credit and received in return an interest-bearing note receivable from the customer. Wallace Company will receive interest at the prevailing rate for a note of this type. Both the principal and interest are due in one lump sum on June 30, 2015. Instructions When should Wallace Company report interest revenue from the note receivable? Discuss the rationale for your answer. Part 2: On December 31, 2014, Wallace Company had significant amounts of accounts receivable as a result of credit sales to its customers. Wallace uses the allowance method based on credit sales to estimate bad debts. Past experience indicates that 2% of credit sales normally will not be collected. This pattern is expected to continue. Instructions (a) Discuss the rationale for using the allowance method based on credit sales to estimate bad debts. Contrast this method with the allowance method based on the balance in the trade receivables accounts. (b) How should Wallace Company report the allowance for doubtful accounts on its balance sheet at December 31, 2014? Also, describe the alternatives, if any, for presentation of bad debt expense in Wallace Company’s 2014 income statement.

Name the four principal steps in chemical machining

Assume the same information as in E17-19 for Lilly Company. In addition, assume that the investment in the Woods Inc. stock was sold during 2015 for $195,000. At December 31, 2015, the following information relates to its two remaining investments of common  stock. Cost Fair Value (at purchase date) (at December 31) Investment in Arroyo Company stock $100,000 $140,000 Investment in Lee Corporation stock 250,000 310,000 Total $350,000 $450,000 Net income before any security gains and losses for 2015 was $905,000. Instructions (a) Compute the amount of net income or net loss that Lilly should report for 2015, taking into consideration Lilly’s security transactions for 2015. (b) Prepare the journal entry to record unrealized gain or loss related to the investment in Arroyo Company stock at December 31, 2015.

Why should inventories be included in (a) a statement of financial position and (b) the computation of net income?

What are the main assets of life insurance companies? Identify the main categories. What is the main use of funds by life insurance companies? (LO3)

What factors must be present for income shifting to be a viable strategy?

Discuss the EU ruling that gender may not be used to differentiate insurance premiums. Which insurance markets would be affected by outlawing age ‘discrimination’ in a similar manner? What would be the impact?

What is the required method of amortizing discount and premium on bonds payable? Explain the procedures.

Explain why regulators might argue that the assistance they provided to Bear Stearns during the credit crisis was necessary. (LO5)

Bronson Paper Products purchased 10,000 acres of forested timberland in March 2014. The company paid $1,700 per acre for this land, which was above the $800 per acre most farmers were paying for cleared land. During April, May, June, and July 2014, Bronson cut enough timber to build roads using moveable equipment purchased on April 1, 2014. The cost of the roads was $250,000, and the cost of the equipment was $225,000; this equipment was expected to have a $9,000 salvage value and would be used for the next 15 years. Bronson selected the straight-line method of depreciation for the moveable equipment. Bronson began actively harvesting timber in August and by December had harvested and sold 540,000 board feet of timber of the estimated 6,750,000 board feet available for cutting. In March 2015, Bronson planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $120,000. In addition, Bronson spent $8,000 in road maintenance and $6,000 for pest spraying during calendar-year 2015. The road maintenance and spraying are annual costs. During 2015, Bronson harvested and sold 774,000 board feet of timber of the estimated 6,450,000 board feet available for cutting. In March 2016, Bronson again planted new seedlings at a cost of $150,000, and also spent $15,000 on road maintenance and pest spraying. During 2016, the company harvested and sold 650,000 board feet of timber of the estimated 6,500,000 board feet available for cutting. Instructions Compute the amount of depreciation and depletion expense for each of the 3 years (2014, 2015, and 2016). Assume that the roads are usable only for logging and therefore are included in the depletion base.

Under what circumstances will a partner recognize a loss from an operating distribution?

Woolford Inc. declared a cash dividend of $1.00 per share on its 2 million outstanding shares. The dividend was declared on August 1, payable on September 9 to all stockholders of record on August 15. Prepare all journal entries necessary on those three dates.

Jennie’s grandmother paid her tuition this fall to State University (an eligible educational institution).  Jennie is claimed as a dependent by her parents, but she also files her own tax return.  Can Jennie claim an education credit for the tuition paid by her grandmother?  What difference would it make, if any, if Jennie did not qualify as a dependent of her parents (or anyone else)?

Twenty-five thousand shares reacquired by Elixir Corporation for $53 per share were exchanged for undeveloped land that has an appraised value of $1,700,000. At the time of the exchange, the common stock was trading at $62 per share on an organized exchange. Instructions (a) Prepare the journal entry to record the acquisition of land assuming that the purchase of the stock was originally recorded using the cost method. (b) Briefly identify the possible alternatives (including those that are totally unacceptable) for quantifying the cost of the land and briefly support your choice.

Trace through the effects on the foreign exchange market of a fall in the money supply.

Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2023 (effective immediately), in preparation for taking it public.  Miley had previously elected S corporation status on January 1, 2022.  At the time of the election, the corporation had an accumulated adjustments account balance of $150,000 and $450,000 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $135,000.  During 2024, Miley’s corporation reported $0 taxable income or loss.  Also, during 2024 the corporation made distributions to Miley of $80,000 and $60,000.  How are these distributions taxed to Miley assuming the following?

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?

Explain how convertible securities are determined to be potentially dilutive common shares and how those convertible securities that are not considered to be potentially dilutive common shares enter into the determination of earnings per share data.

Nola, a tax novice, has a fairly simple tax question.  Besides tax services, what are some sources that she can use to answer her question?

Assume that Fielder Enterprises uses the following headings on its balance sheet. (a) Current assets. (f) Current liabilities. (b) Investments. (g) Long-term liabilities. (c) Property, plant, and equipment. (h) Capital stock. (d) Intangible assets. (i) Paid-in capital in excess of par. (e) Other assets. (j) Retained earnings. Instructions Indicate by letter how each of the following usually should be classified. If an item should appear in a note to the financial statements, use the letter “N” to indicate this fact. If an item need not be reported at all on the balance sheet, use the letter “X.” 1. Prepaid insurance. 2. Stock owned in affiliated companies. 3. Unearned service revenue. 4. Advances to suppliers. 5. Unearned rent revenue. 6. Preferred stock. 7. Additional paid-in capital on preferred stock. 8. Copyrights. 9. Petty cash fund. 10. Sales taxes payable. 11. Accrued interest on notes receivable. 12. Twenty-year issue of bonds payable that will mature within the next year. (No sinking fund exists, and refunding is not planned.) 13. Machinery retired from use and held for sale. 14. Fully depreciated machine still in use. 15. Accrued interest on bonds payable. 16. Salaries that company budget shows will be paid to employees within the next year. 17. Discount on bonds payable. (Assume related to bonds payable in item 12.) 18. Accumulated depreciation—buildings. 19. Noncontrolling interest.

Recently, Glenda Estes was interested in purchasing a Honda Acura. The salesperson indicated that the price of the car was either $27,600 cash or $6,900 at the end of each of 5 years. Compute the effective-interest rate to the nearest percent that Glenda would pay if she chooses to make the five annual payments.