Question & Answer

Demonstrate with a supply and demand curve diagram the incidence of a subsidy when demand is price elastic and supply is price inelastic.

Make out a case for adopting a policy of individual tradable carbon permits, allocated to all citizens within a country. Could such a policy be extended globally?

Devon Harris Company sells 10% bonds having a maturity value of $2,000,000 for $1,855,816. The bonds are dated January 1, 2014, and mature January 1, 2019. Interest is payable annually on January 1. Instructions Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to the nearest cent.)

What is isothermal forming?

What is the composition of green sand in the green-sand molding process?

Flintstone Corporation is owned equally by Fred and his sister Wilma, each of whom holds 1,000 shares in Flintstone. Wilma wants to reduce her ownership in the company, and it is decided that Flintstone will redeem 250 of her shares for $25,000 per share on December 31 of this year. Wilma’s tax basis in each share is $5,000.  Flintstone has current E&P of $10,000,000 and accumulated E&P at the beginning of the year is $50,000,000.

Celine Dion Company issued $600,000 of 10%, 20-year bonds on January 1, 2014, at 102. Interest is payable semiannually on July 1 and January 1. Dion Company uses the straight-line method of amortization for bond premium or discount. Instructions Prepare the journal entries to record the following. (a) The issuance of the bonds. (b) The payment of interest and the related amortization on July 1, 2014. (c) The accrual of interest and the related amortization on December 31, 2014.

What type of general guidelines may be specified for a trust that is managing a pension fund? (LO6)

Explain why an increase in the money supply can affect other short-term interest rates in different ways. Include the potential impact of the money supply on the supply of and the demand for loanable funds when answering this question. (LO2)

True centrifugal casting is performed horizontally to make large diameter copper tube sections. The tubes have a length = 1.0 m, diameter = 0.25 m, and wall thickness = 15 mm. (a) If the rotational speed of the pipe = 700 rev/min, determine the G-factor on the molten metal. (b) Is the rotational speed sufficient to avoid \"rain?\" (c) What volume of molten metal must be poured into the mold to make the casting if solidification shrinkage and contraction after solidification are considered? Solidification shrinkage for copper = 4.5%, and solid thermal contraction = 7.5%

An article in the financial press entitled “Important Information in Annual Reports This Year” noted that annual reports include a management’s discussion and analysis section. What would this section contain?

The following defined pension data of Doreen Corp. apply to the year 2014. Defi ned benefi t obligation, 1/1/14 (before amendment) $560,000 Plan assets, 1/1/14 546,200 Pension asset/liability 13,800 Cr. On January 1, 2014, Doreen Corp., through plan amendment, grants past service benefi ts having a present value of 120,000 Discount rate 9% Service cost 58,000 Contributions (funding) 65,000 Actual return on plan assets 49,158 Benefi ts paid to retirees 40,000 Instructions For 2014, prepare a pension worksheet for Doreen Corp. that shows the journal entry for pension expense and the year-end balances in the related pension accounts.

Discuss briefly the three approaches that have been suggested for reporting changes in accounting principles.

Describe how a piece of glass is heat treated to produce tempered glass.

Hui is currently considering investing in municipal bonds that earn 6 percent interest, or in taxable bonds issued by the Coca-Cola Company that pay 8 percent. If Hui’s tax rate is 22 percent, which bond should Hui choose? Which bond should Hui choose if the rate is 32 percent? At what tax rate would Hui be indifferent between the bonds? What strategy is this decision based upon?

Jenkins has a one-third capital and profits interest in the Maverick General Partnership. On January 1, year 1, Maverick has $120,000 of general liabilities obligations and Jenkins has a $50,000 tax basis (including his share of Maverick’s liabilities) in his partnership interest. During the year, Maverick incurred a $30,000 nonrecourse liability that is not secured by real estate. Because Maverick is a rental real estate partnership, Jenkins is deemed to be a passive participant in Maverick. His share of the Maverick losses for year 1 is $75,000. Jenkins is not involved in any other passive activities, and this is the first year he has been allocated losses from Maverick. a. Determine how much of the Maverick loss Jenkins will currently be able to deduct on his tax return for year 1, and list the losses suspended due to tax basis, at-risk, and passive activity loss limitations. b. If Jenkins sells his interest on January 1, year 2, what happens to his suspended losses from year 1? [Hint: See §706(c)(2)(A); Reg. §1.704-1(d)(1); Prop. Reg. §1.465-66(a); and Sennett v. Comm’r, 80 TC 825 (1983).]

Explain the difference between service cost and prior service cost.

1.              What decision style did John Tate use (Exhibit 9.5) and what mistakes do you think he made with the way he solved the problem of limited office space? Explain.

Nottebart Corporation has outstanding 10,000 shares of $100 par value, 6% preferred stock and 60,000 shares of $10 par value common stock. The preferred stock was issued in January 2014, and no dividends were declared in 2014 or 2015. In 2016, Nottebart declares a cash dividend of $300,000. How will the dividend be shared by common and preferred stockholders if the preferred is (a) noncumulative and (b) cumulative?

When High Horizon LLC was formed, Maude contributed the following assets in exchange for a 25 percent capital and profits interest in the LLC: Maude: Basis Fair Market Value Cash $ 20,000 $ 20,000 Land* 100,000 360,000 Totals $ 120,000 $ 380,000

Salen Company finances some of its current operations by assigning accounts receivable to a finance company. On July 1, 2014, it assigned, under guarantee, specific accounts amounting to $150,000. The finance company advanced to Salen 80% of the accounts assigned (20% of the total to be withheld until the finance company has made its full recovery), less a finance charge of ½% of the total accounts assigned. On July 31, Salen Company received a statement that the finance company had collected $80,000 of these accounts and had made an additional charge of ½% of the total accounts outstanding as of July 31. This charge is to be deducted at the time of the first remittance due Salen Company from the finance company. (Hint: Make entries at this time.) On August 31, 2014, Salen Company received a second statement from the finance company, together with a check for the amount due. The statement indicated that the finance company had collected an additional $50,000 and had made a further charge of ½% of the balance outstanding as of August 31. Instructions Make all entries on the books of Salen Company that are involved in the transactions above.

In recent years, private equity funds have grown substantially. Will the creation of private equity funds increase the semistrong form of market efficiency in the stock market? Explain. (LO5)

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

1.      : Continue NIX’s zero-tolerance policy toward shoplifting. It’s the right thing to do—and it will pay off in the end in higher profitability because the chain’s reputation for being tough on crime will reduce overall losses from theft.

Dillon rented his personal residence at Lake Tahoe for 14 days while he was vacationing in Ireland. He resided in the home for the remainder of the year. Rental income from the property was $6,500. Expenses associated with use of the home for the entire year were as follows: