Question & Answer

1.       : As algorithmic control becomes more common in organizations, how might it affect the roles of managers and employees? Can you think of ways algorithmic tools might be used to decentralize control? Explain.

1.    : What strategic plans could the college or university at which you are taking this management course adopt to compete for students in the marketplace? Would these plans depend on the school’s goals?

Research and development activities may include (a) personnel costs, (b) materials and equipment costs, and (c) indirect costs. What is the recommended accounting treatment for these three types of R&D costs?

Capriati Corporation commenced operations in early 2014. The corporation incurred $60,000 of costs such as fees to underwriters, legal fees, state fees, and promotional expenditures during its formation. Prepare journal entries to record the $60,000 expenditure and 2014 amortization, if any.

In a tensile test on a metal specimen, true strain = 0.08 at a stress = 265 MPa. When true stress = 325 MPa, true strain = 0.27. Determine the strength coefficient and the strain-hardening exponent in the flow curve equation.

Recently, your uncle, Carlos Beltran, who knows that you always have your eye out for a profitable investment, has discussed the possibility of your purchasing some corporate bonds. He suggests that you may wish to get in on the “ground floor” of this deal. The bonds being issued by Neville Corp. are 10-year debentures which promise a 40% rate of return. Neville manufactures  novelty/party items. You have told Neville that, unless you can take a look at its financial statements, you would not feel comfortable about such an investment. Believing that this is the chance of a lifetime, Uncle Carlos has procured a copy of Neville’s most recent, unaudited financial statements which are a year old. These statements were prepared by Mrs. Andy Neville. You peruse these statements, and they are quite impressive. The balance sheet showed a debt-to-equity ratio of 0.10 and, for the year shown, the company reported net income of $2,424,240. The financial statements are not shown in comparison with amounts from other years. In addition, no significant note disclosures about inventory valuation, depreciation methods, loan agreements, etc. are available. Instructions Write a letter to Uncle Carlos explaining why it would be unwise to base an investment decision on the financial statements that he has provided to you. Be sure to explain why these financial statements are neither relevant nor representationally faithful.

Selane Eatery operates a catering service specializing in business luncheons for large corporations. Selane requires customers to place their orders 2 weeks in advance of the scheduled events. Selane bills its customers on the tenth day of the month following the date of service and requires that payment be made within 30 days of the billing date. Conceptually, when should Selane recognize revenue related to its catering service?

For tax purposes, why is the married filing jointly tax status generally preferable to the married filing separately filing status?Why might a married taxpayer prefer not to file a joint return with the taxpayer’s spouse?

Brooks Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2014, the corporation sells for cash 400 computers at a unit price of $2,500. On the basis of past experience, the 2-year warranty costs are estimated to be $155 for parts and $185 for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2014.) The warranty is not sold separately from the computer. Instructions (a) Record any necessary journal entries in 2014, applying the cash-basis method. (b) Record any necessary journal entries in 2014, applying the expense warranty accrual method. (c) What liability relative to these transactions would appear on the December 31, 2014, balance sheet and how would it be classified if the cash-basis method is applied? (d) What liability relative to these transactions would appear on the December 31, 2014, balance sheet and how would it be classified if the expense warranty accrual method is applied? In 2015, the actual warranty costs to Brooks Corporation were $21,400 for parts and $39,900 for labor. (e) Record any necessary journal entries in 2015, applying the cash-basis method. (f) Record any necessary journal entries in 2015, applying the expense warranty accrual method.

1.      : Would you rate Casper’s competitive strategy as pursuing differentiation, cost leadership, focus, or a combination of these? Explain. Do you think Casper will grow successfully and turn a profit? Why?

Use the information presented for Ottawa Corporation in BE10-14, but assume the machinery is sold for $5,200 instead of $10,500. Prepare journal entries to (a) update depreciation for 2015 and (b) record the sale.

Teton Corporation issued $600,000 of 7% bonds on November 1, 2014, for $644,636. The bonds were dated November 1, 2014, and mature in 10 years, with interest payable each May 1 and November 1. Teton uses the effective-interest method with an effective rate of 6%. Prepare Teton’s December 31, 2014, adjusting entry.

1.    : Harley-Davidson, which once boasted that it made “big toys for big boys,” is trying to lure more women to the brand to make up for declining sales in a slow economy. How do you think this move will complement or confound the company’s differentiation strategy, which has long been based on a macho image?

Do the following events represent business transactions? Explain your answer in each case. (a) A computer is purchased on account. (b) A customer returns merchandise and is given credit on account. (c) A prospective employee is interviewed. (d) The owner of the business withdraws cash from the business for personal use. (e) Merchandise is ordered for delivery next month.

Criticise the use of increasing government expenditure as a means of reducing unemployment.

Teller Corporation’s post-closing trial balance at December 31, 2014, was as follows. IFRS Insights 879 TELLER CORPORATION POST-CLOSING TRIAL BALANCE DECEMBER 31, 2014 Dr. Cr. Accounts payable $ 310,000 Accounts receivable $ 480,000 Accumulated depreciation—building and equipment 185,000 Allowance for doubtful accounts 30,000 Bonds payable 700,000 Building and equipment 1,450,000 Cash 190,000 Dividends payable on preference shares—cash 4,000 Inventories 560,000 Land 400,000 Prepaid expenses 40,000 Retained earnings 201,000 Share capital—ordinary ($1 par value) 200,000 Share capital—preference ($50 par value) 500,000 Share premium—ordinary 1,000,000 Share premium—treasury 160,000 Treasury shares—ordinary at cost 170,000 Totals $3,290,000 $3,290,000 At December 31, 2014, Teller had the following number of ordinary and preference shares. Ordinary Preference Authorized 600,000 60,000 Issued 200,000 10,000 Outstanding 190,000 10,000 The dividends on preference shares are $4 cumulative. In addition, the preference shares have a preference in liquidation of $50 per share. Instructions Prepare the equity section of Teller’s statement of financial position at December 31, 2014.

Wood-Mode Company is involved in the design, manufacture, and installation of various types of wood products for large construction projects. Wood-Mode recently completed a large contract for Stadium Inc., which consisted of building 35 different types of concession counters for a new soccer arena under construction. The terms of the contract are that upon completion of the counters, Stadium would pay $2,000,000. Unfortunately, due to the depressed economy, the completion of the new soccer arena is now delayed. Stadium has therefore asked Wood-Mode to hold the counters at its manufacturing plant until the arena is completed. Stadium acknowledges in writing that it ordered the counters and that they now have ownership. The time that Wood-Mode Company must hold the counters is totally dependent on when the arena is completed. Because Wood-Mode has not received additional progress payments for the arena due to the delay, Stadium has provided a deposit of $300,000. Instructions (a) Explain this type of revenue recognition transaction. (b) What factors should be considered in determining when to recognize revenue in this transaction? (c) Prepare the journal entry(ies) that Wood-Mode should make, assuming it signed a valid sales contract to sell the counters and received at the time of sale the $300,000 payment.

Assume the same information as in E14-4, except that Celine Dion Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%. Instructions Prepare the journal entries to record the following. (Round to the nearest dollar.) (a) The issuance of the bonds. (b) The payment of interest and related amortization on July 1, 2014. (c) The accrual of interest and the related amortization on December 31, 2014.

Give some other examples of choices that governments had to make during the pandemic. To what extent were they economic choices?

What is the objective of financial reporting?

What are the significant differences in the equipment and operating procedures between injection molding of thermoplastics and injection molding of thermosets?

What are the accounting problems related to the presentation of interim data?

What amounts are included in gross income for the following taxpayers? Explain your answers.

Use the information for Rode Inc. given in BE19-13. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2014.

What is the theoretical justification of the allowance method as contrasted with the direct write-off method of accounting for bad debts?