Question & Answer

Describe how a country’s laws can influence the degree of its financial market liquidity. (LO3)

Describe agency costs and give several examples of them.

Aminata is a tax expert, whereas Rob is a tax novice.  Explain how their process in identifying tax issues may differ.

Describe the melting characteristics of a noncrystalline material such as glass.

The Black Knights Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Black Knights has decided to locate a new factory in the Panama City area. Black Knights will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three buildings. Building A: Purchase for a cash price of $600,000, useful life 25 years. Building B: Lease for 25 years with annual lease payments of $69,000 being made at the beginning of the year. Building C: Purchase for $650,000 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $7,000. Rental payments will be received at the end of each year. The Black Knights Inc. has no aversion to being a landlord. Instructions In which building would you recommend that The Black Knights Inc. locate, assuming a 12% cost of funds?

Petoskey Stone Quarry Inc. (PSQ), a calendar-year, accrual-method C corporation, provides landscaping supplies to local builders in northern Michigan. PSQ has always been a family-owned business and has a single class of voting common stock outstanding.  The 500 outstanding shares are owned as follows:  Number of shares Nick Adams 150 Amy Adams (Sandler’s sister) 150 Abigail Adams (Nick’s daughter) 50 Charlie Adams (Nick’s son) 50 Sandler Adams (Nick’s father) 100    Total shares 500   Nick Adams serves as president of PSQ, and his father Sandler serves as chair of the board. Amy is the company’s CFO, and Abigail and Charlie work as employees of the company.  Sandler would like to retire and sell his shares back to the company. The fair market value of the shares is $500,000. Sandler’s tax basis in his PSQ shares is $10,000.  The redemption is tentatively scheduled to take place on December 31 of this year.  At the beginning of the year, PSQ had accumulated earnings and profits of $2,500,000.  The company projects current E&P of $200,000.  The company intends to pay a pro rata cash distribution of $300 per share to its shareholders on December 1 of this year.

Seven samples of 5 parts each have been collected from an extrusion process that is in statistical control, and the diameter of the extrudate has been measured for each part. The calculated values of x for each sample are (inch) 1.002, 0.999, 0.995, 1.004, 0.996, 0.998, and 1.006. The values of R are (inch) 0.010, 0.011, 0.014, 0.020, 0.008, 0.013, and 0.017, respectively. (a) Determine the values of the center, LCL, and UCL for x and R charts. (b) Construct the control charts and plot the sample data on the charts.

1. Explain the shape of the LRMC curve in diagram (d) in Figure 6.12. 2. What would the LRMC curve look like if the LRAC curve were ‘flat bottomed’ as in Figure 6.11?

How is the distinction between nominal and real relevant to misperceptions theory?

Describe the differences between a proportional, progressive, and regressive tax rate structure.

Assembly of a product requires that a component part be ordered and stocked. Demand for the product is constant throughout the year at 7800 units annually. The cost to place an order is $95. The cost of the part is $56 and the holding cost rate is 22%. When units are ordered, they take two weeks to arrive. Determine (a) the economic order quantity and (b) the reorder point. (c) The parts are prepackaged in multiples of 100. It saves the supplier unpacking and repackaging time if they can ship in multiples of 100. The supplier has offered to reduce the price by $1 per unit if even multiples of 100 are purchased. How much would be saved (if anything) by taking this offer?

If the slope of the Cd function is ¾ what is the slope of the W function?

Referring to Problem 38.1, the mechanical inaccuracies in the open-loop positioning system can be described by a normal distribution whose standard deviation = 0.005 mm. The range of the worktable axis is 500 mm, and there are 12 bits in the binary register used by the digital controller to store the programmed position. For the positioning system, determine (a) control resolution, (b) accuracy, and (c) repeatability. (d) What is the minimum number of bits that the binary register should have so that the mechanical drive system becomes the limiting component on control resolution?

The Colson Company issued $300,000 of 10% bonds on January 1, 2014. The bonds are due January 1, 2020, with interest payable each July 1 and January 1. The bonds are issued at face value. Prepare Colson’s journal entries for (a) the January issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry.

An extrusion operation produces continuous tubing with outside diameter = 2.0 in and inside diameter = 1.7 in. The extruder barrel has a diameter = 4.0 in and length = 10 ft. The screw rotates at 50 rev/min; it has a channel depth = 0.25 in and flight angle = 16°. The head pressure has a value of 350 lb/in2 and the viscosity of the polymer melt is 80 x 10-4 lb-sec/in2 . Under these conditions, what is the production rate in length of tube/min, assuming the extrudate is pulled at a rate that eliminates the effect of die swell (i.e., the tubing has the same OD and ID as the die profile)?

Hugh has the choice between investing in a City of Heflin bond at 6 percent or a Surething bond at 9 percent.  Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, in which bond should he invest?

Describe the current convergence efforts of the FASB and IASB in the area of accounting for taxes.

What does the term refractory mean?

For Problem 21.12, the lathe has a mechanical efficiency = 0.83. Determine (a) the horsepower consumed by the turning operation; (b) horsepower that must be generated by the lathe; (c) unit horsepower and specific energy for the work material in this operation

Define pressure gas welding.

A single crystal boule of silicon is grown by the Czochralski process to an average diameter of 320 mm with length = 1500 mm. The seed and tang ends are removed, which reduces the length to 1150 mm. The diameter is ground to 300 mm. A 90-mm-wide flat is ground on the surface which extends from one end to the other. The ingot is then sliced into wafers of thickness = 0.50 mm, using an abrasive saw blade whose thickness = 0.33 mm. Assuming that the seed and tang portions cut off the ends of the starting boule were conical in shape, determine (a) the original volume of the boule, mm3; (b) how many wafers are cut from it, assuming the entire 1150 mm length can be sliced; and (c) the volumetric proportion of silicon in the starting boule that is wasted during processing.

A tensile test is carried out to determine the strength constant C and strain-rate sensitivity exponent m for a certain metal at 1000°F. At a strain rate = 10/sec, the stress is measured at 23,000 lb/in2 ; and at a strain rate = 300/sec, the stress = 45,000 lb/in2 . (a) Determine C and m. (b) If the temperature were 900°F, what changes would you expect in the values of C and m?

Relative to the average tax rate, the effective tax rate provides a better depiction of a taxpayer’s tax burden because it depicts the taxpayer’s total tax paid as a ratio of the sum of both taxable and nontaxable income earned.

Why might a foreign government’s policies be closely monitored by investors in other countries, even if the investors plan no investments in that country? Explain how monetary policy in one country can affect interest rates in other countries. (LO6)

On June 3, Hunt Company sold to Ann Mount merchandise having a sales price of $8,000 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $120, terms n/30, was received by Mount on June 8 from the Olympic Transport Service for the freight cost. Upon receipt of the goods, June 5, Mount notified Hunt Company that merchandise costing $600 contained flaws that rendered it worthless. The same day, Hunt Company issued a credit memo covering the worthless merchandise and asked that it be returned at company expense. The freight on the returned merchandise was $24, paid by Hunt Company on June 7. On June 12, the company received a check for the balance due from Mount. Instructions (a) Prepare journal entries for Hunt Company to record all the events noted above under each of the following bases. (1) Sales and receivables are entered at gross selling price. (2) Sales and receivables are entered net of cash discounts. (b) Prepare the journal entry under basis (2), assuming that Ann Mount did not remit payment until August 5.