Question & Answer

A 125.0-mm-diameter shaft rotates inside a stationary bushing whose inside diameter = 125.6 mm and length = 50.0 mm. In the clearance between the shaft and the bushing is a lubricating oil whose viscosity = 0.14 Pa-s. The shaft rotates at a velocity of 400 rev/min; this speed and the action of the oil are sufficient to keep the shaft centered inside the bushing. Determine the magnitude of the torque due to viscosity that acts to resist the rotation of the shaft.

Berstler Construction Company began operations in 2014. Construction activity for the first year is shown below. All contracts are with different customers, and any work remaining at December 31, 2014, is expected to be completed in 2015. Cash Contract Estimated Total Billings Collections Costs Incurred Additional Contract through through through Costs to Project Price 12/31/14 12/31/14 12/31/14 Complete 1 $ 560,000 $ 360,000 $340,000 $450,000 $130,000 2 670,000 220,000 210,000 126,000 504,000 3 520,000 500,000 440,000 330,000 –0– $1,750,000 $1,080,000 $990,000 $906,000 $634,000 Instructions Prepare a partial income statement and balance sheet to indicate how the above information would be reported for financial statement purposes. Berstler Construction Company uses the completed-contract method.

Marathon Inc. (a C corporation) reported $1,000,000 of taxable income in the current year. During the year, it distributed $100,000 as dividends to its shareholders as follows: • $5,000 to Guy, a 5 percent individual shareholder. • $15,000 to Little Rock Corp., a 15 percent shareholder (C corporation).  • $80,000 to other shareholders. a. How much of the dividend payment did Marathon deduct in determining its taxable income? b. Assuming Guy’s marginal ordinary tax rate is 37 percent, how much tax will he pay on the $5,000 dividend he received from Marathon Inc. (including the net investment income tax)?  c. What amount of tax will Little Rock Corp. pay on the $15,000 dividend it received from Marathon Inc. (50 percent dividends-received deduction)? d. Complete Form 1120 Schedule C for Little Rock Corp. to reflect its dividends-received deduction (use the most recent Form 1120 Schedule C available). e. On what line on page 1 of Little Rock Corp.’s Form 1120 is the dividend from Marathon Inc. reported, and on what line of Little Rock Corp.’s Form 1120 is its dividends-received deduction reported?

Assume a financial institution has more rate-sensitive liabilities than rate-sensitive assets. Would it be more likely to be adversely affected by an increase or a decrease in interest rates? Should it purchase or sell interest rate futures contracts so as to hedge its exposure? (LO2)

Solve Problem 41.9 except that the following is known in addition to the information given: scheduled receipts of M5 are 250 units in period (week) 3 and 50 units in period (week) 4.

The New York Knicks, Inc. sold 10,000 season tickets at $2,000 each. By December 31, 2014, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2014?

Agazzi Repair Shop had the following transactions during the first month of business as a proprietorship. Journalize the transactions. (Omit explanations.) Aug. 2 Invested $12,000 cash and $2,500 of equipment in the business. 7 Purchased supplies on account for $500. (Debit asset account.) 12 Performed services for clients, for which $1,300 was collected in cash and $670 was billed to the clients. 15 Paid August rent $600. 19 Counted supplies and determined that only $270 of the supplies purchased on August 7 are still on hand.

Software Galore sells gaming software that is downloaded to the customer’s device on purchase. The owner, Fred, was talking with a friend who sang the praises of flexible budgeting in his manufacturing business. Fred was wondering whether a flexible budget would benefit his business decision making. Comment.

As noted in Example 1-2, tolls, parking meter fees, and annual licensing fees are not considered taxes.  Can you identify other fees that are similar?

Assume that inflation is expected to decline in the near future. How could this affect future bond prices? Would you recommend that financial institutions increase or decrease their concentration in long-term bonds based on this expectation? Explain. (LO2)

How is materiality (or immateriality) related to the proper presentation of financial statements? What factors and mea-sures should be considered in assessing the materiality of a misstatement in the presentation of a financial statement?

Kelly Clarkson Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2014. The terms of acquisition for each truck are described below. 1. Truck #1 has a list price of $15,000 and is acquired for a cash payment of $13,900. 2. Truck #2 has a list price of $16,000 and is acquired for a down payment of $2,000 cash and a zerointerest- bearing note with a face amount of $14,000. The note is due April 1, 2015. Clarkson would normally have to pay interest at a rate of 10% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. 3. Truck #3 has a list price of $16,000. It is acquired in exchange for a computer system that Clarkson carries in inventory. The computer system cost $12,000 and is normally sold by Clarkson for $15,200. Clarkson uses a perpetual inventory system. 4. Truck #4 has a list price of $14,000. It is acquired in exchange for 1,000 shares of common stock in Clarkson Corporation. The stock has a par value per share of $10 and a market price of $13 per share. Instructions Prepare the appropriate journal entries for the above transactions for Clarkson Corporation.

Using the facts in the previous problem, what are some ways that Bendetta could shift some of the rental income to Jenine? What are the disadvantages associated with these income-shifting strategies?

What are some of the general considerations that product designers must keep in mind when designing components out of plastics?

Because of calamitous earthquake losses, Bernstein Company, one of your client’s oldest and largest customers, suddenly and unexpectedly became bankrupt. Approximately 30% of your client’s total sales have been made to Bernstein Company during each of the past several years. The amount due from Bernstein Company—none of which is collectible—equals 22% of total accounts receivable, an amount that is considerably in excess of what was determined to be an adequate provision for doubtful accounts at the close of the preceding year. How would your client record the write-off of the Bernstein Company receivable if it is using the allowance method of accounting for bad debts? Justify your suggested treatment.

An indirect extrusion process starts with an aluminum billet with diameter = 2.0 in and length = 3.0 in. Final cross section after extrusion is a square with 1.0 in on a side. The die angle = 90°. The operation is performed cold and the strength coefficient of the metal K = 26,000 lb/in2 and strainhardening exponent n = 0.20. In the Johnson extrusion strain equation, a = 0.8 and b = 1.2. (a) Compute the extrusion ratio, true strain, and extrusion strain. (b) What is the shape factor of the product? (c) If the butt left in the container at the end of the stroke is 0.5 in thick, what is the length of the extruded section? (d) Determine the ram pressure in the process.

Name the accounts debited and credited for each of the following transactions. (a) Billing a customer for work done. (b) Receipt of cash from customer on account. (c) Purchase of office supplies on account. (d) Purchase of 15 gallons of gasoline for the delivery truck.

Explain what it means to say that a married couple filing a joint tax return has joint and several liability for the taxes associated with the return?

Zopf Company sells its bonds at a premium and applies the effective-interest method in amortizing the premium. Will the annual interest expense increase or decrease over the life of the bonds? Explain.

Briefly describe the provisions of the SarbanesOxley Act. Discuss how this act affects the monitoring performed by shareholders. (LO6)

Bar stock of initial diameter = 90 mm is drawn with a draft = 15 mm. The draw die has an entrance angle = 18°, and the coefficient of friction at the work-die interface = 0.08. The metal behaves as a perfectly plastic material with yield stress = 105 MPa. Determine (a) area reduction, (b) draw stress, (c) draw force required for the operation, and (d) power to perform the operation if exit velocity = 1.0 m/min

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for intangible assets.

What is meant by the term overcut in electric discharge machining?

How does a corporation determine the minimum amount of estimated tax payments it must make to avoid underpayment penalties?  How do these rules differ for large corporations.

The starting diameter of a shaft is 25.00 mm. This shaft is to be inserted into a hole in an expansion fit assembly operation. To be readily inserted, the shaft must be reduced in diameter by cooling. Determine the temperature to which the shaft must be reduced from room temperature (20°C) in order to reduce its diameter to 24.98 mm. Refer to Table 4.1.