Question & Answer

Describe the origination process for corporations that are about to issue new stock. (LO1)

Coffin Corporation appropriately uses the installment-sales method of accounting to recognize income in its financial statements. The following information is available for 2014 and 2015. 2014 2015 Installment sales $900,000 $1,000,000 Cost of installment sales 594,000 680,000 Cash collections on 2014 sales 370,000 350,000 Cash collections on 2015 sales –0– 450,000 Instructions (a) Compute the amount of realized gross profit recognized in each year. (b) Prepare all journal entries required in 2015.

Billups, a physician and cash-method taxpayer, is new to the concept of tax planning and recently learned of the timing strategy. To implement the timing strategy, Billups plans to establish a new policy that allows all his clients to wait two years to pay their co-pays. Assume that Billups does not expect his marginal tax rates to change. What is wrong with his strategy?

An alloy steel Metric 10x1.5 screw (10 mm diameter, pitch p = 1.5 mm) is to be turned into a threaded hole and tightened to one/half of its proof strength. According to Table 32.2, the proof strength = 830 MPa. Determine the maximum torque that should be used if the torque coefficient = 0.18.

Jurassic Company owns equipment that cost $900,000 and has accumulated depreciation of $380,000. The expected future net cash flows from the use of the asset are expected to be $500,000. The fair value of the equipment is $400,000. Prepare the journal entry, if any, to record the impairment loss.

Using an available tax service or the Internet, identify three basic tax planning ideas or tax tips suggested for year-end tax planning.  Which basic tax strategy from this chapter does each planning idea employ?

Solve Problem 33.1 except that the layer thickness = 0.40 mm.

Presented below is information related to Aaron Rodgers Corporation for the current year. Beginning inventory $ 600,000 Purchases 1,500,000 Total goods available for sale $2,100,000 Sales revenue 2,500,000 Instructions Compute the ending inventory, assuming that (a) gross profit is 45% of sales; (b) gross profit is 60% of cost; (c) gross profit is 35% of sales; and (d) gross profit is 25% of cost.

In rolling of steel, what are the differences between a bloom, a slab, and a billet?

What is meant by the term aspect ratio for a metallic particle?

Assume that if the U.S. dollar strengthens, it can place downward pressure on U.S. inflation. Based on this information, how might expectations of a strong dollar affect the demand for loanable funds in the United States and U.S. interest rates? Is there any reason to think that expectations of a strong dollar could also affect the supply of loanable funds? Explain. (LO1, LO2)

An internal cylindrical grinding operation is used to finish an internal bore from an initial diameter of 250.00 mm to a final diameter of 252.5 mm. The bore is 125 mm long. A grinding wheel with an initial diameter of 150.00 mm and a width of 20.00 mm is used. After the operation, the diameter of the grinding wheel has been reduced to 149.75 mm. Determine the grinding ratio in this operation.

Troopers Medical Labs, Inc., began operations 5 years ago producing stetrics, a new type of instrument it hoped to sell to doctors, dentists, and hospitals. The demand for stetrics far exceeded initial expectations, and the company was unable to produce enough stetrics to meet demand. The company was manufacturing its product on equipment that it built at the start of its operations. To meet demand, more efficient equipment was needed. The company decided to design and build the equipment, because the equipment currently available on the market was unsuitable for producing stetrics. In 2014, a section of the plant was devoted to development of the new equipment and a special staff was hired. Within 6 months, a machine developed at a cost of $714,000 increased production dramatically and reduced labor costs substantially. Elated by the success of the new machine, the company built three more machines of the same type at a cost of $441,000 each. Instructions (a) In general, what costs should be capitalized for self-constructed equipment? (b) Discuss the propriety of including in the capitalized cost of self-constructed assets: (1) The increase in overhead caused by the self-construction of fixed assets. (2) A proportionate share of overhead on the same basis as that applied to goods manufactured for sale. (c) Discuss the proper accounting treatment of the $273,000 ($714,000 2 $441,000) by which the cost of the first machine exceeded the cost of the subsequent machines. This additional cost should not be considered research and development costs.

Relative to the average tax rate, the effective tax rate provides a better depiction of a taxpayer’s tax burden because it depicts the taxpayer’s total tax paid as a ratio of the sum of both taxable and nontaxable income earned.

Assume you asked your favorite AI learning tool “What accounting method choices are linked to the gross receipts test?” and the AI tool responded as follows: Is the AI answer to the question correct?  Explain.

Explain the use of a balloon-payment mortgage. Why might a financial institution prefer to offer this type of mortgage? (LO2)

Why are some deductions called “above the line” deductions and others called “below the line” deductions? What is the “line”?

According to research, have mutual funds outperformed the market? Explain. Would mutual funds be attractive to some investors even if they are not expected to outperform the market? Explain. (LO6)

Discuss the basic accounting problem that arises in handling each of the following situations. (a) Assets purchased by issuance of common stock. (b) Acquisition of plant assets by gift or donation. (c) Purchase of a plant asset subject to a cash discount. (d) Assets purchased on a long-term credit basis. (e) A group of assets acquired for a lump sum. (f) An asset traded in or exchanged for another asset.

Does this imply that if, say, half of the petrol stations were closed down, the consumer would benefit? (Clue: what would happen to the demand curves of the remaining stations?)

Remuneration disclosure The ASX Corporate Governance Principles and Recommendations set out rules to deal with enhanced management performance and effectiveness and requires disclosure of the process for performance evaluation of the board, its committees and individual directors and key executives. However, the outcomes of individual evaluations are not required to be disclosed.   Required Why do you think such a recommendation is included in the guidelines? (LO5)

Why may the newer members of the Union have possibly the most to gain from the single market, but also the most to lose?

How are realized income, gross income, and taxable income similar, and how are they different?

Brad purchased land for $45,000 this year. At year-end Brad sold the land for $51,700 and paid a sales commission of $450. What effect does this transaction have on Brad’s gross income? Explain.

Explain the strategy of high-frequency trading firms. Describe the typical time horizon of an investment that is relevant to highfrequency traders and explain how it varies from the time horizons of other institutional investors. (LO3)