Question & Answer

Matt Perry, Inc. had outstanding $6,000,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $9,000,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 11% bonds at 102 on August 1. Unamortized bond discount and issue cost applicable to the 11% bonds were $120,000 and $30,000, respectively. Instructions Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds.

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).

What is the price elasticity of demand at the point (a) where the demand curve crosses the vertical axis; (b) where it crosses the horizontal axis?

In nine samples of size n = 10, the grand mean of the samples is x = 100 for the characteristic of interest, and the mean of the ranges of the samples is R = 8.5. Determine (a) lower and upper control limits for the x chart and (b) lower and upper control limits for the R chart. (c) Based on the data given, estimate the standard deviation of the process?

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.

Describe the computation of the limit placed on the business interest deduction. Is the disallowed business interest ever deductible?

For flow-through business entities with individual owners, how many times is flow-through entity income taxed, who pays the tax, and what is the tax rate?

The volume rate of flow of molten metal into the downsprue from the pouring cup is 50 in3 /sec. At the top where the pouring cup leads into the downsprue, the cross-sectional area = 1.0 in2 . Determine what the area should be at the bottom of the sprue if its length = 8.0 in. It is desired to maintain a constant flow rate, top and bottom, in order to avoid aspiration of the liquid metal

Saurez Company, your client, manufactures paint. The company’s president, Maria Saurez, has decided to open a retail store to sell Saurez paint as well as wallpaper and other supplies that would be purchased from other suppliers. She has asked you for information about the conventional retail method of pricing inventories at the retail store. Instructions Prepare a report to the president explaining the retail method of pricing inventories. Your report should include the following points. (a) Description and accounting features of the method. (b) The conditions that may distort the results under the method. (c) A comparison of the advantages of using the retail method with those of using cost methods of inventory pricing. (d) The accounting theory underlying the treatment of net markdowns and net markups under the method.

Explain why mortgage originators have been criticized for their behavior during the credit crisis. Should other participants in the mortgage securitization process have recognized that lack of complete disclosure in mortgages? (LO5)

A vertical true centrifugal casting process is used to make tube sections with length = 10.0 in and outside diameter = 6.0 in. The inside diameter of the tube = 5.5 in at the top and 5.0 in at the bottom. At what speed must the tube be rotated during the operation in order to achieve these specifications?

A consulting firm was hired to determine whether a particular trading strategy could generate abnormal returns. The strategy involved taking positions based on recent historical movements in stock prices. The strategy did not achieve abnormal returns. Consequently, the consulting firm concluded that the stock market is weak-form efficient. Do you agree? Explain. (LO6)

Explain how the present value of an ordinary annuity interest table is converted to the present value of an annuity due interest table.

Lazaro Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $800, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $520, and the fair value of the repossessed merchandise is $275. Prepare Lazaro’s entry to record the repossession.

A 16 gage nickel wire (0.0508-in diameter) connects a solenoid to a control circuit that is 32.8 ft away. (a) What is the resistance of the wire? Use Table 4.3 as a reference. (b) If a current was passed through the wire, it would heat up. How does this affect the resistance?

What distinguishes machining from other manufacturing processes?

Are an employee’s entire wages subject to the FICA tax? Explain.

After the presentation of your report on the examination of the financial statements to the board of directors of Piper Publishing Company, one of the new directors expresses surprise that the income statement assumes that an equal proportion of the revenue is recognized with the publication of every issue of the company’s magazine. She feels that the “crucial event” in the process of earning revenue in the magazine business is the cash sale of the subscription. She says that she does not understand why most of the revenue cannot be “recognized” in the period of the cash sale. Instructions Discuss the propriety of timing the recognition of revenue in Piper Publishing Company’s accounts with: (a) The cash sale of the magazine subscription. (b) The publication of the magazine every month. (c) Both events, by recognizing a portion of the revenue with the cash sale of the magazine subscription and a portion of the revenue with the publication of the magazine every month.

Identify some of the details and decisions that are included within the scope of process planning.

Molten metal can be poured into the pouring cup of a sand mold at a steady rate of 1000 cm3 /s. The molten metal overflows the pouring cup and flows into the downsprue. The cross section of the sprue is round, with a diameter at the top = 3.4 cm. If the sprue is 25 cm long, determine the proper diameter at its base so as to maintain the same volume flow rate.

{Research}  Cash donations to charity are subject to a number of very specific substantiation requirements.  Describe these requirements and how charitable gifts can be substantiated.  Describe the substantiation requirements for property donations.

74. Fizbo Corporation is in the business of breeding and racing horses. Fizbo has taxable income of $5,000,000 other than from these transactions. It has nonrecaptured §1231 losses of $10,000 from 2020 and $13,000 from 2018.    Consider the following transactions that occur during 2024: a. A building with an adjusted basis of $300,000 is totally destroyed by fire. Fizbo receives insurance proceeds of $400,000 but does not plan to replace the building. The building was built 12 years ago at a cost of $420,000 and was used to provide lodging for employees.  b. Fizbo sells four acres of undeveloped farmland (used for grazing) for $50,000. Fizbo purchased the land 15 years ago for $15,000. c. Fizbo sells a racehorse for $250,000. The racehorse was purchased four years ago for $200,000. Total depreciation taken on the racehorse was $160,000.  d. Fizbo exchanges equipment that was purchased three years ago for $300,000 for $100,000 of IBM common stock. The adjusted basis of the equipment is $220,000. If straight-line depreciation had been used, the adjusted basis would be $252,000. e. On November 1, Fizbo sold XCON stock for $50,000. Fizbo had purchased the stock on December 12, 2023, for $112,000.   Part (1): After all netting is complete, what is Fizbo’s total amount of income from these transactions to be treated as ordinary income or loss? What is its capital gain or loss?   Part (2):  What is Fizbo’s taxable income for the year after including the effects of these transactions?

Why is the oxyacetylene welding process favored over the other oxyfuel welding processes?

The following information is related to Dickinson Company for 2014. Retained earnings balance, January 1, 2014 $ 980,000 Sales revenue 25,000,000 Cost of goods sold 16,000,000 Interest revenue 70,000 Selling and administrative expenses 4,700,000 Write-off of goodwill 820,000 Income taxes for 2014 1,244,000 Gain on the sale of investments (normal recurring) 110,000 Loss due to fl ood damage—extraordinary item (net of tax) 390,000 Loss on the disposition of the wholesale division (net of tax) 440,000 Loss on operations of the wholesale division (net of tax) 90,000Dividends declared on common stock $250,000 Dividends declared on preferred stock 80,000 Dickinson Company decided to discontinue its entire wholesale operations and to retain its manufacturing operations. On September 15, Dickinson sold the wholesale operations to Rogers Company. During 2014, there were 500,000 shares of common stock outstanding all year. Instructions Prepare a multiple-step income statement and a retained earnings statement.

A shareholder receives appreciated noncash property in a corporate distribution and assumes a liability attached to the property. How does this assumption affect the amount of gain the corporation recognizes? From the corporation’s perspective, does it matter if the liability assumed by the shareholder exceeds the property’s gross fair market value?