Question & Answer

What is a DIP?

Where there is evidence that the utility of inventory goods, as part of their disposal in the ordinary course of business, will be less than cost, what is the proper accounting treatment?

Washington Company has the following stockholders’ equity accounts at December 31, 2014. Common Stock ($100 par value, authorized 8,000 shares) $480,000 Retained Earnings 294,000 Instructions (a) Prepare entries in journal form to record the following transactions, which took place during 2015. (1) 280 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.) (2) A $20 per share cash dividend was declared. (3) The dividend declared in (2) above was paid. (4) The treasury shares purchased in (1) above were resold at $102 per share. (5) 500 shares of outstanding stock were purchased at $105 per share. (6) 350 of the shares purchased in (5) above were resold at $96 per share. (b) Prepare the stockholders’ equity section of Washington Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2015 was $94,000. State law requires restriction of retained earnings for the amount of treasury stock.

What is meant by the terms elements and items as they relate to the income statement? Why might items have to be disclosed in the income statement?

Explain why Congress allows self-employed taxpayers to deduct the cost of health insurance above the line (for AGI) when employees can only itemize this cost as a medical expense.  Would a self-employed taxpayer ever prefer to claim health insurance premiums as an itemized deductions rather than a deduction for AGI?  Explain.

In terms of the UK economy, are the following net injections, net withdrawals or neither? If there is uncertainty, explain your assumptions. (a)  Firms are forced to take a cut in profits in order to give a pay rise. (b)  Firms spend money on research. (c)  The government increases personal tax allowances. (d)  The general public invests more money in banks and building societies. (e)  UK investors earn higher dividends on overseas investments. (f)   The government purchases US military aircraft. (g)  People draw on their savings to finance holidays abroad. (h)  People draw on their savings to finance holidays in the UK. (i)   The government runs a budget deficit (spends more than it receives in tax revenues) and finances it by borrowing from the general public. (j)   The government runs a budget deficit and finances it through new money created by the central bank.

Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2015. Inventory, October 1, 2015 At cost $ 52,000 At retail 78,000 Purchases (exclusive of freight and returns) At cost 272,000 At retail 423,000 Freight-in 16,600 Purchase returns At cost 5,600 At retail 8,000 Markups 9,000 Markup cancellations 2,000 Markdowns (net) 3,600 Normal spoilage and breakage 10,000 Sales revenue 390,000 Instructions (a) Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-ormarket inventory for October 31, 2015. (b) A department store using the conventional retail inventory method estimates the cost of its ending inventory as $60,000. An accurate physical count reveals only $47,000 of inventory at lower-of-costor- market. List the factors that may have caused the difference between the computed inventory and the physical count.

What is a eutectic alloy?

Would it be desirable for all countries to stick to the same targets?

When the Fed lowers the federal funds rate target, will the cost of capital of U.S. companies be reduced? Explain how the segmented markets theory regarding the term structure of interest rates (as explained in Chapter 3) could influence the degree to which the Fed’s monetary policy affects long-term interest rates. (LO2)

How is the shear modulus of elasticity G related to the tensile modulus of elasticity E, on average?

Using the facts in Problem 51, what is the minimum tax that Pedro should pay to make the tax structure vertically equitable based on the tax rate paid?  This would result in what type of tax rate structure?

The net income for Letterman Company for 2014 was $320,000. During 2014, depreciation on plant assets was $124,000, amortization of patent was $40,000, and the company incurred a loss on sale of plant assets of $21,000. Compute net cash flow from operating activities.

1.       : What do you think is your dominant decision style? Is your style compatible with group techniques such as brainstorming and engaging in rigorous debate? Discuss.

68. Two years ago, Bethesda Corporation bought a delivery truck for $30,000 (not subject to the luxury auto depreciation limits). Bethesda used MACRS 200 percent declining balance and the half-year convention to recover the cost of the truck, but it did not elect §179 expensing and opted out of bonus depreciation. Answer the questions for the following alternative scenarios. a. Assuming Bethesda used the truck until it sold it in March of year 3, what depreciation expense can it claim on the truck for years 1 through 3?  b. Assume that Bethesda claimed $18,480 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $17,000 and incurred $2,000 of selling expenses on the sale? c. Assume that Bethesda claimed $18,480 of depreciation expense on the truck before it sold it in year 3. What are the amount and character of the gain or loss if Bethesda sold the truck in year 3 for $35,000 and incurred $3,000 of selling expenses on the sale?

For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor. 1. In a future value of 1 table Annual Number of Rate Years Invested Compounded a. 9% 9 Annually b. 12% 5 Quarterly c. 10% 15 Semiannually 2. In a present value of an annuity of 1 table Annual Number of Number of Frequency of Rate Years Involved Rents Involved Rents a. 9% 25 25 Annually b. 10% 15 30 Semiannually c. 12% 7 28 Quarterly

This year, Justin B.’s share of S corporation income includes $4,000 of interest income, $5,000 of dividend income, and $40,000 of net income from the corporation’s professional service business activity.  a) Assume that Justin B. materially participates in the S corporation. How much of his S corporation income is potentially subject to the net investment income tax?

Explain how robo-advisers differ from their human counterparts. (LO4)

Brian Erlacher, an inventory control specialist, is interested in better understanding the accounting for inventories. Although Brian understands the more sophisticated computer inventory control systems, he has little knowledge of how inventory cost is determined. In studying the records of Strider Enterprises, which sells normal brand-name goods from its own store and on consignment through Chavez Inc., he asks you to answer the following questions. Instructions (a) Should Strider Enterprises include in its inventory normal brand-name goods purchased from its suppliers but not yet received if the terms of purchase are f.o.b. shipping point (manufacturer’s plant)? Why? (b) Should Strider Enterprises include freight-in expenditures as an inventory cost? Why? (c) If Strider Enterprises purchases its goods on terms 2/10, net 30, should the purchases be recorded gross or net? Why? (d) What are products on consignment? How should they be reported in the financial statements?

What are some of the weaknesses of ceramics that might be corrected in fiber-reinforced ceramic matrix composites?

Name the two categories of component mounting to a printed circuit board.

WCC Corp. has a $100,000 net operating loss carryover into 2024. Assume that it reported $75,000 of taxable income in 2024 (before the net operating loss deduction) and $30,000 of taxable income in 2025 (before the net operating loss deduction).

How do the tax consequences of S corporation liquidating distributions differ from the tax consequences of S corporation operating distributions at both the corporate and shareholder levels?

Identify some of the limitations and disadvantages of surface-mount technology?

Keyser Beverage Company reported the following items in the most recent year. Net income $40,000 Dividends paid 5,000 Increase in accounts receivable 10,000 Increase in accounts payable 7,000 Purchase of equipment (capital expenditure) 8,000 Depreciation expense 4,000 Issue of notes payable 20000,3RIEF EXERCISES Compute net cash provided by operating activities, the net change in cash during the year, and free cash flow.