Question & Answer

The financial statements of P&G are presented in Appendix 5B. The company’s complete annual report, including the notes to the financial statements, can be accessed at the book’s companion website, www. wiley.com/college/kieso. Instructions Refer to P&G’s financial statements and the accompanying notes to answer the following questions. (a) What is the par or stated value of P&G’s preferred stock? (b) What is the par or stated value of P&G’s common stock? (c) What percentage of P&G’s authorized common stock was issued at June 30, 2011? (d) How many shares of common stock were outstanding at June 30, 2011, and June 30, 2010? (e) What was the dollar amount effect of the cash dividends on P&G’s stockholders’ equity? (f) What is P&G’s return on common stock equity for 2011 and 2010? (g) What is P&G’s payout ratio for 2011 and 2010? (h) What was the market price range (high/low) of P&G’s common stock during the quarter ended June 30, 2011?

Camille Sikorski was divorced in 2018. She currently owns and provides a home for her 15-year-old daughter Kaly. Kaly lived in Camille’s home for the entire year, and Camille paid for all the costs of maintaining the home. Camille received a salary of $105,000 and contributed $6,000 of it to a qualified retirement account (for AGI deduction). She also received $10,000 of alimony from her former husband (per divorce decree issued in 2018). Finally, Camille paid $15,000 of expenditures that qualified as itemized deductions.

Define resistivity as a material property.

Suppose you asked your favorite AI query tool “Can a single member LLC with one owner who is an individual elect to be taxed as an S corporation?” and the AI tool responded as follows:

A continuous hot rolling mill has two stands. Thickness of the starting plate = 25 mm and width = 300 mm. Final thickness is to be 13 mm. Roll radius at each stand = 250 mm. Rotational speed at the first stand = 20 rev/min. Equal drafts of 6 mm are to be taken at each stand. The plate is wide enough relative to its thickness that no increase in width occurs. Under the assumption that the forward slip is equal at each stand, determine (a) speed vr at each stand, and (b) forward slip s. (c) Also, determine the exiting speeds at each rolling stand, if the entering speed at the first stand = 26 m/min

On January 1, 2013, when its $30 par value common stock was selling for $80 per share, Plato Corp. issued $10,000,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $10,800,000. The present value of the bond payments at the time of issuance was $8,500,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2014, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2015, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straightline method for amortizing any bond discounts or premiums. Instructions (a) Prepare in general journal form the entry to record the original issuance of the convertible debentures. (b) Prepare in general journal form the entry to record the exercise of the conversion option, using the book value method  Show supporting computations in good form.

Hendricks Corporation purchased trading investment bonds for $50,000 at par. At December 31, Hendricks received annual interest of $2,000, and the fair value of the bonds was $47,400. Prepare Hendricks’ journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.)

Draw a diagram like Figure 13.2, only this time assume that the activity has the effect of reducing pollution, with the result that there are marginal external benefits. Identify the socially optimal level of the activity. What would be the level of subsidy required to achieve this level of activity?

Included in Adams Company’s December 31, 2014, trial balance are the following accounts: Accounts Payable $220,000; Pension Liability $375,000; Discount on Bonds Payable $29,000; Unearned Rent Revenue $41,000; Bonds Payable $400,000; Salaries and Wages Payable $27,000; Interest Payable $12,000; Income Taxes Payable $29,000. Prepare the current liabilities section of the balance sheet.

Thomas More Company incurred the following costs during the current year in connection with its research and development activities. Cost of equipment acquired that will have alternative uses in future R&D projects over the next 5 years (uses straight-line depreciation) $280,000 Materials consumed in R&D projects 59,000 Consulting fees paid to outsiders for R&D projects 100,000 Personnel costs of persons involved in R&D projects 128,000 Indirect costs reasonably allocable to R&D projects 50,000 Materials purchased for future R&D projects 34,000 Instructions Compute the amount to be reported as research and development expense by More on its current year income statement. Assume equipment is purchased at the beginning of the year.

Identify the three basic forms of sawing operation?

Peter M. Dell Co. purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2015, it is determined that the total estimated life should be 15 years with a salvage value of $5,000 at the end of that time. Instructions (a) Prepare the entry (if any) to correct the prior years’ depreciation. (b) Prepare the entry to record depreciation for 2015.

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://annualreport.marksandspencer.com/_assets/downloads/Marksand- Spencer-Annual-report-and-financial-statements-2012.pdf. Instructions Refer to M&S’s financial statements and the accompanying notes to answer the following questions. (a) What is the par or stated value of M&S’s preference shares? (b) What is the par or stated value of M&S’s ordinary shares? (c) What percentage of M&S’s authorized ordinary shares was issued at 31 March 2012? (d) How many ordinary shares were outstanding at 31 March 2012, and 2 April 2011? (e) What was the pound amount effect of the cash dividends on M&S’s equity? (f) What is M&S’s return on ordinary share equity for 2012 and 2011? (g) What is M&S’s payout ratio for 2012 and 2011?

McIntyre Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warrants without the bonds cannot be determined. Use the incremental method to record the issuance of the bonds and warrants.

‘As volume increases, total cost increases and per-unit cost decreases.’ What type of linear cost function does this describe? Draw a simple graph of this type of cost function.

Discuss the relationship between the yield and the liquidity of securities. (LO1)

Craig Brokaw, newly appointed controller of STL, is considering ways to reduce his company’s expenditures on annual pension costs. One way to do this is to switch STL’s pension fund assets from First Security to NET Life. STL is a very well-respected computer manufacturer that recently has experienced a sharp decline in its financial performance for the first time in its 25-year history. Despite financial problems, STL still is committed to providing its employees with good pension and postretirement health benefits. Under its present plan with First Security, STL is obligated to pay $43 million to meet the expected value of future pension benefits that are payable to employees as an annuity upon their retirement from thecompany. On the other hand, NET Life requires STL to pay only $35 million for identical future pension benefits. First Security is one of the oldest and most reputable insurance companies in North America. NET Life has a much weaker reputation in the insurance industry. In pondering the significant difference in annual pension costs, Brokaw asks himself, “Is this too good to be true?” Instructions Answer the following questions. (a) Why might NET Life’s pension cost requirement be $8 million less than First Security’s requirement for the same future value? (b) What ethical issues should Craig Brokaw consider before switching STL’s pension fund assets? (c) Who are the stakeholders that could be affected by Brokaw’s decision?

A centerless grinding operation uses a regulating wheel that is 150 mm in diameter and rotates at 500 rev/min. At what inclination angle should the regulating wheel be set, if it is desired to feed a workpiece with length = 3.5 m and diameter = 18 mm through the operation in exactly 30 sec?

If a partner with a taxable year-end of December 31 is in a partnership with a March 31 taxable year-end, how many months of deferral will the partner receive? Why?

Tamika Meer purchased a new car for use in her business during 2024 for $75,000. The auto was the only business asset she purchased during the year, and her business was very profitable. Calculate Tamika’s maximum depreciation deductions for the automobile in 2024 and 2025 under the following scenarios: a. Tamika does not want to take §179 expense and she elects out of bonus depreciation. b. Tamika wants to maximize her 2024 depreciation using bonus depreciation.

Suppose that a travel agency decided it would no longer compensate employees with sales commissions, but instead pay a salary with a bonus for high customer satisfaction ratings. What problems would you foresee from the agency’s financial perspective?

Carmine was allocated the following items from the Piccolo LLC for last year: Ordinary business loss Nondeductible penalties Tax-exempt interest income Short-term capital gain Cash distributions Rank these items in terms of the order they should be applied to adjust Carmine’s tax basis in Piccolo for the year (some items may be of equal rank).

At December 31, 2014, Hyasaki Corporation has the following account balances: Bonds payable, due January 1, 2023 $2,000,000 Discount on bonds payable 88,000 Interest payable 80,000 Show how the above accounts should be presented on the December 31, 2014, balance sheet, including the proper classifications.

1. Trace through the effects of a squeeze on the monetary base from an initial reduction in cash, to banks’ liquidity being restored by the rediscounting of bills. Will this restoration of liquidity by the Bank of England totally nullify the initial effect of reducing the supply of cash? (Clue: what is likely to happen to the rate of interest?) 2. Given the difficulties of monetary base control, would you expect cash in circulation and broader measures of the money supply, such as M4, to rise and fall by the same percentage as each other?

Describe the two criteria for determining the valuation of financial assets.