Question & Answer

Erin is considering switching her business from the cash method to the accrual method at the beginning of next year. Determine the amount and timing of her §481 adjustment for next year assuming the IRS grants Erin’s request in the following alternative scenarios. a) At the end of this year, Erin’s business has $15,000 of accounts receivables and $18,000 of accounts payables that have not been recorded for tax purposes.  b) At the end of this year, Erin’s business reports $25,000 of accounts receivables and $9,000 of accounts payables that have not been recorded for tax purposes.

What is a chill in casting?

Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $60,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,200. On July 3, Roley returned damaged goods and received credit of $6,000. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley.

Emily purchased a building to store inventory for her business. The purchase price was $760,000. Emily also paid legal fees of $300 to acquire the building. In March, Emily incurred $2,000 to repair minor leaks in the roof (from storm damage earlier in the month) and $5,000 to make the interior suitable for her finished goods. What is Emily’s cost basis in the new building?

Using the facts from the previous problem, how would your answer change if Latoya understated her income by 40 percent? How would your answer change if Latoya intentionally failed to report as taxable income any cash payments she received from her clients?

Define a provision, and give three examples of a provision.

To qualify for head of household status a taxpayer must maintain a residence that is the principal place of abode for more than one-half of the taxable year of a qualifying child.The issue here is whether Marty’s nine-month military stay in Australia disqualifies Janice from head of household status.Reg. §1.2-2(c)(1) states that temporary absences of a qualifying child from the household due to special circumstances does not preclude taxpayers from qualifying for head of household status.Military service is one of the special circumstances described in the regulation.However, this regulationindicates that it must be reasonable to assume that the qualifying child will return to the household after the absence and that the taxpayer (head of household) maintains the household in anticipation of the return of the qualifying child.Because Marty will be returning to his home (or at least intends to), Janice can file as head of household status.

Think of two things that are provided free of charge. In each case, identify whether and in what form a shortage might occur. In what ways are/could these shortages be dealt with? Are they the best solution to the shortages?

Recording transactions in the accounting system requires knowledge of the important characteristics of the elements of financial statements, such as assets and liabilities. In addition, accountants must understand the inherent uncertainty in accounting measures and distinctions between related accounting concepts that are important in evaluating the effects of transactions on the financial statements. Instructions Go to http://aaahq.org/asclogin.cfm to log in and provide explanations for the following items. (Provide paragraph citations.) When you have accessed the documents, you can use the search tool in your Internet browser. (a) The three essential characteristics of assets. (b) The three essential characteristics of liabilities. (c) Uncertainty and its effect on financial statements. (d) The difference between realization and recognition.

Suppose in the previous problem that a roll spot-welding operation is performed instead of seam welding. The interface resistance increases to 100 micro-ohms, and the center-to-center separation between weld nuggets is 25 mm. Given the conditions from the previous problem, with the changes noted here, determine (a) the proportion of energy generated that goes into the formation of each weld nugget, and (b) the rotational speed of the electrode wheels. (c) At this higher rotational speed, how much does the wheel move during the current on-time, and might this have the effect of elongating the weld nugget (making it elliptical rather than round)?

If customers were all charged the same price for a product could this ever be classed as an example of price discrimination? Explain your answer.

Karen Sepan, a recent graduate of the local state university, ispresently employed by a large manufacturing company. She has been asked by Jose Martinez, controller, toprepare the company’s response to a current Preliminary Views published by the Financial Accounting Standards Board (FASB). Sepan knows that the FASB has a conceptual framework, and she believes that these concept statements could be used to support the company’s response to the Preliminary Views. She has prepared a rough draft of the response citing the objective of financial reporting. Instructions (a) Identify the objective of financial reporting. (b) Describe the level of sophistication expected of the users of financial information by the objective of financial reporting.

Controlling the money supply is sometimes advocated as an appropriate policy for controlling inflation. What implications do different assumptions about the relationship between M and V, and M and Y in the equation MV = PY have for the effectiveness of this policy?

Corbett’s AMTI is $650,000.  What is his AMT exemption under the following alternative circumstances?

Discuss the reasons why individuals generally prefer capital gains over ordinary gains. Explain why corporate taxpayers might prefer capital gains over ordinary gains.

A 12-inch diameter silicon wafer has a processable area that is circular with a diameter = 11.4 in. The IC chips that will be fabricated on the wafer surface are square with 0.75 in on a side, including an allowance for subsequent chip separation. However, the processable area on each chip is only 0.60 in by 0.60 in. The density of circuits within each chip’s processable area is 100,000 circuits per square inch. (a) How many IC chips can be placed onto the wafer? (b) Using Rent’s Rule with C = 3.8 and m = 0.43, how many input/output terminals (pins) will be needed for each chip package?

1.      Broken Rock LLC was recently formed with the following members: Name Tax Year-End Capital/Profits % George Allen December 31 33.33% Elanax Corp. June 30 33.33% Elizabeth Cheam December 31 33.34% What is the required taxable year-end for Broken Rock LLC?

Tawana owns and operates a sole proprietorship and has a 40 percent marginal tax rate.  She provides her son, Jonathon, $8,000 a year for college expenses.  Jonathon works as a pizza delivery person every fall and has a marginal tax rate of 15 percent.  a. What could Tawana do to reduce her family tax burden?  b.How much pretax income does it currently take Tawana to generate the $8,000 after-taxes given to Jonathon?  c. If Jonathon worked for his mother’s sole proprietorship, what salary would she have to pay him to generate $8,000 after taxes (ignoring any Social Security, Medicare, or self-employment tax issues)?  d.How much money would this strategy save?

Define precipitation hardening.

Spartan Corporation redeemed 25 percent of its shares for $2,000 on July 1 of this year, in a transaction that qualified as an exchange under §302(a).  Spartan’s accumulated E&P at the beginning of the year was $2,000. Its current E&P is $12,000.  Spartan made dividend distributions of $1,000 on June 1 and $4,000 on August 31.  Determine the balance in Spartan’s accumulated E&P at the beginning of next year.  See Rev. Rul. 74-338 and Rev. Rul. 74-339 for help in making this calculation.

Explain the purpose behind the §1231 look-back rule.

Indicate in general journal form how the items below would be entered in a worksheet for the preparation of the statement of cash flows. (a) Net income is $317,000. (b) Cash dividends declared and paid totaled $120,000. (c) Equipment was purchased for $114,000. (d) Equipment that originally cost $40,000 and had accumulated depreciation of $32,000 was sold for

] Song earns $100,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $20,000 of tax).  If Congress increases the income tax rate such that Song’s average tax rate increases from 20 percent to 25 percent, how much more income tax will she pay assuming that the income effect is descriptive?  What effect will this tax rate change have on the tax base and tax collected?

Distinguish between direct and indirect extrusion

Consider the cases for and against a poll tax.