Question & Answer

Make a list of those who are most likely to gain and those who are most likely to lose from inflation.

The creditors of Chester Company agree to accept promissory notes for the amount of its indebtedness with a proviso that two-thirds of the annual profits must be applied to their liquidation. How should these notes be reported on the balance sheet of the issuing company? Give a reason for your answer.

Viscosity is an important property of a polymer melt in plastics shaping processes. Upon what parameters does viscosity depend?

The following note related to stockholders’ equity was reported in Wiebold, Inc.’s annual report.   Instructions (a) What is the significance of the date of record and the date of distribution? (b) Why might Wiebold have declared a 3-for-2 for stock split? (c) What impact does Wiebold’s stock split have on (1) total stockholders’ equity, (2) total par value, (3) outstanding shares, and (4) book value per share?

Explain why Congress allows self-employed taxpayers to deduct the cost of health insurance as a for AGI deduction 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 deduction rather than a deduction for AGI? Explain.

According to the video on sheet-metal stamping dies and processes, what are the factors that affect the formability of a metal?

Vertovec Inc., a large local consulting firm in Utah, hired several new consultants from out of state last year to help service their expanding list of clients. To aid in relocating the consultants, Vertovec Inc. purchased the consultants’ homes in their prior location if the consultants were unable to sell their homes within 30 days of listing them for sale. Vertovec Inc. bought the homes from the consultants for 5 percent less than the list price and then continued to list the homes for sale. Each home Vertovec Inc. purchased was sold at a loss. By the end of last year, Vertovec had suffered a loss totaling $250,000 from the homes. How should Vertovec treat the loss for tax purposes?  Write a memo to Vertovec Inc. explaining your findings and any planning suggestions that you may have if Vertovec Inc. continues to offer this type of relocation benefit to newly hired consultants.

Jones Mills Inc. (JMI) decided to liquidate its wholly owned subsidiary, Most Help Inc. (MH). MH had the following tax accounting balance sheet:     FMV         Tax BasisAppreciation Cash$  200,000$     200,000 Building      50,000         10,000        40,000 Land    150,000       200,000      (50,000) Total$  400,000$     410,000$    (10,000)

Threaded metric fasteners are available in several systems, two of which are coarse and fine (Table 32.1). Finer threads are not cut as deep and as a result have a larger tensile stress area for the same nominal diameter. (a) Determine the maximum preload that can be safely achieved for coarse pitch and fine pitch threads for a 12 mm bolt. (b) Determine the percent increase in preload of fine threads compared to course threads. Coarse pitch = 1.75 mm and fine pitch = 1.25 mm. Assume the proof strength for both bolts is 600 MPa.

Lebron Co. owns most but not all of the shares of its subsidiary Bryant Inc. Lebron reported net income of $124,700. The amount to be attributed to the noncontrolling interest in Bryant is $30,000. Indicate how Lebron will report the noncontrolling interest in its income statement.

1. How much would be supplied at a price of 70p per kilo? 2. Draw a supply curve for farmer X. Are the axes drawn to the same scale as in Figure 2.3?

What are the two methods of amortizing discount and premium on bonds payable? Explain each.

Assume that a monopolistically competitive industry is in long-run equilibrium. On a diagram like Figure 8.1(b), show the effect of a fall in demand on a firm’s price and profit in (a) the short run and (b) the long run.

Other than corporations, are there other legal business entities that offer liability protection? Are any of them taxed as flow-through entities? Explain.

Describe a call option on interest rate futures. How does it differ from purchasing a futures contract? (LO6)

Answer the following questions. (a) On May 1, 2014, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required five equal annual payments, with the first payment due on May 1, 2014. What present value concept is appropriate for this situation? (b) On June 1, 2014, Seymour Inc. purchased a new machine that it does not have to pay for until May 1, 2016. The total payment on May 1, 2016, will include both principal and interest. Assuming interest at a 12% rate, the cost of the machine would be the total payment multiplied by what time value of money concept? (c) Costner Inc. wishes to know how much money it will have available in 5 years if five equal amounts of $35,000 are invested, with the first amount invested immediately. What interest table is appropriate for this situation? (d) Megan Hoffman invests in a “jumbo” $200,000, 3-year certificate of deposit at First Wisconsin Bank. What table would be used to determine the amount accumulated at the end of 3 years?

Presented below is information related to Gonzales Corporation for the month of January 2014. Cost of goods sold $208,000 Salaries and wages expense $ 61,000 Delivery expense 7,000 Sales discounts 8,000 Insurance expense 12,000 Sales returns and allowances 13,000 Rent expense 20,000 Sales revenue 350,000 Instructions Prepare the necessary closing entries.

Why do you think partnerships, rather than the individual partners, are responsible for making most of the tax elections related to the operation of the partnership?

Determine the shear strain that is experienced by the material that is shear spun in Problem 20.33

Explain how the credit crisis of 2008–2009 encouraged some securities firms to convert to a bank holding company (BHC) structure. Why might the expected return on equity be lower for securities firms that convert to this structure? (LO5)

Why are aluminum and copper alloys unsuitable for use in hot chamber die casting?

What is the difference between crystalline and noncrystalline structures in materials?

: Think about the highly publicized safety grounding of Boeing’s 737 MAX jetliner. One observer said that the goal of profit had taken precedence over the goal of safety within the company. Do you think managers can succeed at both profit and safety simultaneously? DOrganizational effectiveness is the degree to which the organization achieves a stated goal or succeeds in accomplishing what it tries to do. Organizational efficiency refers to the amount of resources used to achieve an organizational goal. It is based on how much raw materials, money, and people are necessary for producing a given volume of output. The ultimate responsibility of managers is to achieve high performance, which is the organization’s ability to attain its goals by using resources in an efficient and effective manner. Although efficiency and effectiveness are both important for performance, most people would probably say that effectiveness is the more important concept. The reason is that internal efficiency has no value if it does not enable the organization to achieve its goals and respond to the external environment. On the other hand, an organization that is effective does achieve its goals, by definition. One of these goals should involve continuously increasing efficiency. Managers can and should improve both efficiency and effectiveness simultaneously. As noted above, one of any organization’s primary goals should be to continuously improve efficiency. To the extent that the organization increases its success in achieving this goal, along with others, its effectiveness also improves.

How does information from the balance sheet help users of the financial statements?

Using the facts from the previous problem, when should Reese pay the bill if she expects her marginal tax rate to be 33 percent next year? 25 percent next year?