Question & Answer

Magilke Industries acquired equipment this year to be used in its operations. The equipment was delivered by the suppliers, installed by Magilke, and placed into operation. Some of it was purchased for cash with discounts available for prompt payment. Some of it was purchased under longterm payment plans for which the interest charges approximated prevailing rates. What costs should Magilke capitalize for the new equipment purchased this year? Explain.

1.       During times of significant organizational change, such as downsizing or a pandemic, the grapevine becomes more active as anxious employees share organizational news and rumors. As a manager, what communication strategies would you employ during a time of uncertainty in the workplace? What are the advantages and disadvantages of gossip during a time of uncertainty?

The following are a series of unrelated situations. 1. Halen Company’s unadjusted trial balance at December 31, 2014, included the following accounts. Debit Credit Allowance for doubtful accounts $4,000 Net sales $1,200,000 Halen Company estimates its bad debt expense to be 1½% of net sales. Determine its bad debt expense for 2014. 2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2014, disclosed the following. Amounts estimated to be uncollectible $ 180,000 Accounts receivable 1,750,000 Allowance for doubtful accounts (per books) 125,000 What is the net realizable value of Stuart’s receivables at December 31, 2014? 3. Shore Co. provides for doubtful accounts based on 3% of credit sales. The following data are available for 2014. Credit sales during 2014 $2,400,000 Allowance for doubtful accounts 1/1/14 17,000 Collection of accounts written off in prior years (customer credit was reestablished) 8,000 Customer accounts written off as uncollectible during 2014 30,000 What is the balance in Allowance for Doubtful Accounts at December 31, 2014? 4. At the end of its first year of operations, December 31, 2014, Darden Inc. reported the following information. Accounts receivable, net of allowance for doubtful accounts $950,000 Customer accounts written off as uncollectible during 2014 24,000 Bad debt expense for 2014 84,000 What should be the balance in accounts receivable at December 31, 2014, before subtracting the allowance for doubtful accounts? 5. The following accounts were taken from Bullock Inc.’s trial balance at December 31, 2014. Instructions (a) What is the appropriate balance for Allowance for Doubtful Accounts at year-end? (b) Show how accounts receivable would be presented on the balance sheet. (c) What is the dollar effect of the year-end bad debt adjustment on the before-tax income? (CMA adapted)

A series of cold rolling operations are to be used to reduce the thickness of a plate from 50 mm down to 25 mm in a reversing two-high mill. Roll diameter = 700 mm and coefficient of friction between rolls and work = 0.15. The specification is that the draft is to be equal on each pass. Determine (a) minimum number of passes required, and (b) draft for each pass?

1.       : Evaluate your own personal experiences with people from other cultural backgrounds. How well do you think those experiences have prepared you to understand the unique needs and dilemmas of a diverse workforce?

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

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.

For tax purposes, what happens to a corporation’s charitable contributions that are not deducted in the current year because of the taxable income limitation?

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.

In a certain grinding operation, the grade of the grinding wheel should be “M” (medium), but the only available wheel is grade “T” (hard). It is desired to make the wheel appear softer by making changes in cutting conditions. What changes would you recommend?

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

In a certain pressing operation, the metallic powder fed into the open die has a packing factor of 0.5. The pressing operation reduces the powders to 2/3 of their starting volume. In the subsequent sintering operation, shrinkage amounts to 10% on a volume basis. Given that these are the only factors that affect the structure of the finished part, determine its final porosity.

Juanita, a Texas resident (5th Circuit), is researching a tax question and finds a 5th Circuit case ruling that is favorable and a 9th Circuit case that is unfavorable.  Which circuit case has more “authoritative weight” and why?  How would your answer change if Juanita were a Kentucky resident (6th Circuit)?

Compare and contrast the FICA tax burden of S corporation shareholder-employees and LLC members (assume the LLC is taxed as a partnership) receiving compensation for working for the entity (guaranteed payments) and business income allocations to S corporation shareholders and LLC members assuming the owners are actively involved in the entity’s business activities. How does your analysis change if the owners are not actively involved in the entity’s business activities?

Compare and contrast the general rule for determining the amount of the charitable contribution if the corporation contributes capital gain property versus ordinary income property.

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

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.

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?

Cedarville Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also listed. Earnings to Weekly Vacation Pay to Be Employee July 31 Pay Received in August Mark Hamill $4,200 $200 — Karen Robbins 3,500 150 $300 Brent Kirk 2,700 110 220 Alec Guinness 7,400 250 — Ken Sprouse 8,000 330 660 Assume that the federal income tax withheld is 10% of wages. Union dues withheld are 2% of wages. Vacations are taken the second and third weeks of August by Robbins, Kirk, and Sprouse. The state unemployment tax rate is 2.5% and the federal is 0.8%, both on a $7,000 maximum. The FICA rate is 7.65% on employee and employer on a maximum of $113,700 per employee. In addition, a 1.45% rate is charged both employer and employee for an employee’s wages in excess of $113,700. Instructions Make the journal entries necessary for each of the four August payrolls. The entries for the payroll and for the company’s liability are made separately. Also make the entry to record the monthly payment of accrued payroll liabilities.

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