Question & Answer

Guillen, Inc. began work on a $7,000,000 contract in 2014 to construct an office building. Guillen uses the completed-contract method. At December 31, 2014, the balances in certain accounts were Construction in Process $1,715,000; Accounts Receivable $240,000; and Billings on Construction in Process $1,000,000. Indicate how these accounts would be reported in Guillen’s December 31, 2014, balance sheet.

The flow curve parameters for the aluminum alloy of Problem 19.29 are: K = 240 MPa and n = 0.16. If the die angle in this operation = 90°, and the corresponding Johnson strain equation has constants a = 0.8 and b = 1.5, compute the maximum force required to drive the ram forward at the start of extrusion.

Pierre Company has a 12% note payable with a carrying value of $20,000. Pierre applies the fair value option to this note. Given an increase in market interest rates, the fair value of the note is $22,600. Prepare the entry to record the fair value option for this note.

Based on the definition of gross income in §61, related regulations, and judicial rulings, what are the three criteria for recognizing taxable income?

What is isothermal forging?

In each of the following independent cases, indicate the amount (1) deductible for AGI, (2) deductible from AGI, and (3) neither deductible for nor deductible from AGI before considering income limitations or the standard deduction.

When should a debt security be classified as held-tomaturity?

Cemented carbides are what class of composites?

Under what circumstances might a new entrant succeed in the market for a product, despite existing firms benefiting from economies of scale?

Seattle Bank just took speculative positions by borrowing Canadian dollars and converting the funds to invest in Australian dollars. Explain a possible future scenario that could adversely affect the bank’s performance. (LO2, LO3)

Using examples, discuss the conflicts between using the environment as productive resource and as a dump?

Part of a contract between a union and a company guarantees that all manufacturing employees earn five hours of overtime each week. In the company’s job costing system, should overtime be treated as a direct or indirect cost?

It is desired to determine the effect of package style on the number of circuits (logic gates) that can be fabricated onto an IC chip to which the package is assembled. Using Rent's rule with C = 4.5 and m = 0.5, compute the estimated number of devices (logic gates) that could be placed on the chip in the following cases: (a) a DIP with 16 I/O pins on a side - a total of 32 pins; (b) a square chip carrierwith 16 pins on a side - a total of 64 I/O pins; and (c) a pin grid array with 16 by 16 pins - a total of 256 pins

Examine the case for public ownership of an industry where a natural monopoly exists.

Are C corporations or flow-through entities (S corporations and entities taxed as partnerships) more flexible in terms of selecting a tax year-end? Why are the tax rules in this area different for C corporations and flow-through business entities?

What is the difference between a refundable and nonrefundable tax credit?

In an examination of Arenes Corporation as of December 31, 2014, you have learned that the following situations exist. No entries have been made in the accounting records for these items. 1. The corporation erected its present factory building in 1999. Depreciation was calculated by the straight-line method, using an estimated life of 35 years. Early in 2014, the board of directors conducted a careful survey and estimated that the factory building had a remaining useful life of 25 years as of January 1, 2014. 2. An additional assessment of 2013 income taxes was levied and paid in 2014. 3. When calculating the accrual for officers’ salaries at December 31, 2014, it was discovered that the accrual for officers’ salaries for December 31, 2013, had been overstated. 4. On December 15, 2014, Arenes Corporation declared a cash dividend on its common stock outstanding, payable February 1, 2015, to the common stockholders of record December 31, 2014. Instructions Describe fully how each of the items above should be reported in the financial statements of Arenes Corporation for the year 2014.

Use the same information as in E14-22 above except that American Bank reduced the principal to $1,900,000 rather than $2,400,000. On January 1, 2018, Barkley pays $1,900,000 in cash to American Bank for the principal. Instructions (a) Can Barkley Company record a gain under this term modification? If yes, compute the gain for Barkley Company. (b) Prepare the journal entries to record the gain on Barkley’s books. (c) What interest rate should Barkley use to compute its interest expense in future periods? Will your answer be the same as in E14-22 above? Why or why not? (d) Prepare the interest payment schedule of the note for Barkley Company after the debt restructuring. (e) Prepare the interest payment entries for Barkley Company on December 31, of 2015, 2016, and 2017. (f) What entry should Barkley make on January 1, 2018?

Figure 19.5 shows a steep investment demand curve. If the real rate of interest falls from r1 to r2, there is only a small rise in investment from I1 to I2. Now draw a much more elastic I curve passing through point a. Assume that this is the true I curve. Show how the rate of interest could still fall to r2 and investment still only rise to I2 if this curve were to shift.

1.       : Experts say that organizations are becoming increasingly decentralized, with authority, decision-making responsibility, and accountability being pushed further down into the organization. How will this trend affect what will be asked of you as a manager?

1.       : Suppose that you manage an employee who is spending too much time using personal social media at work. As a consequence, he has missed three important deadlines in one week. You are planning a face-to-face conversation to address this performance problem and your goal is to communicate with candor. Using “I” statements as described in this chapter, how would you begin this conversation?

The problem in a certain thermoforming operation is that there is too much thinning in the walls of the large cup-shaped part. The operation is conventional pressure thermoforming using a positive mold, and the plastic is an ABS sheet with an initial thickness of 3.2 mm. (a) Why is thinning occurring in the walls of the cup? (b) What changes could be made in the operation to correct the problem?

Richardson Company cans a variety of vegetable-type soups. Recently, the company decided to value its inventories using dollar-value LIFO pools. The clerk who accounts for inventories does not understand how to value the inventory pools using this new method, so, as a private consultant, you have been asked to teach him how this new method works. He has provided you with the following information about purchases made over a 6-year period. Ending Inventory Date (End-of-Year Prices) Price Index Dec. 31, 2010 $ 80,000 100 Dec. 31, 2011 111,300 105 Dec. 31, 2012 108,000 120 Dec. 31, 2013 128,700 130 Dec. 31, 2014 147,000 140 Dec. 31, 2015 174,000 145 You have already explained to him how this inventory method is maintained, but he would feel better about it if you were to leave him detailed instructions explaining how these calculations are done and why he needs to put all inventories at a base-year value. Instructions (a) Compute the ending inventory for Richardson Company for 2010 through 2015 using dollar-value LIFO. (b) Using your computation schedules as your illustration, write a step-by-step set of instructions explaining how the calculations are done. Begin your explanation by briefly explaining the theory behind this inventory method, including the purpose of putting all amounts into base-year price levels.

Although Hank is retired, he is an excellent handyman and often works part time on small projects for neighbors and friends. Last week his neighbor, Mike, offered to pay Hank $500 for minor repairs to his house. Hank completed the repairs in December of this year. Hank uses the cash method of accounting and is a calendar-year taxpayer. Compute Hank’s gross income for this year from each of the following alternative transactions:

Illustrate equilibrium in the market for loanable funds using a demand and supply diagram.