Question & Answer

Kyle, a single taxpayer, worked as a freelance software engineer for the first three months of 2024.  During that time, he earned $44,000 of self-employment income.  On April 1, 2024, Kyle took a job as a full-time software engineer with one of his former clients, Hoogle Inc.  From April through the end of the year, Kyle earned $178,000 in salary.  What amount of FICA taxes (self-employment and employment related) does Kyle owe for the year?

An organisation’s plant in Queensland manufactures a product that is shipped to a branch in Tasmania for sale. Does it make any difference which branch (each is a profit centre) is charged for the cost of transportation? Explain.

Mustafa, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mustafa is contributing $200,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $200,000 and a tax basis of $150,000 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownership interest. What amount of gain or income is each owner required to recognize under each of the following alterative situations? [Hint: Look at §§351 and 721.] a. MMT is formed as a C corporation. b. MMT is formed as an S corporation. c. MMT is formed as an LLC (taxed as a partnership).

In each of the following independent cases the company closes its books on December 31. 1. Sanford Co. sells $500,000 of 10% bonds on March 1, 2014. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2017. The bonds yield 12%. Give entries through December 31, 2015. 2. Titania Co. sells $400,000 of 12% bonds on June 1, 2014. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2018. The bonds yield 10%. On October 1, 2015, Titania buys back $120,000 worth of bonds for $126,000 (includes accrued interest). Give entries through December 1, 2016. 3 4 Instructions For the two cases prepare all of the relevant journal entries from the time of sale until the date indicated. Use the effective-interest method for discount and premium amortization (construct amortization tables where applicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversing entries were made.)

Using the information in E20-19, prepare a worksheet inserting January 1, 2014, balances, and showing December 31, 2014, balances. Prepare the journal entry recording postretirement benefit expense.

Assume that as traffic density increases along a given stretch of road, there comes a point when traffic begins to slow down. The following table gives the times taken for a car to travel the stretch of road (in minutes) according to the number of cars entering the road per minute. Cars entering the road 5 6 7 8 9 10 11 Journey time 10 10 11 13 16 22 30 (a)  Copy out the table and add the following rows: (i) total journey time for all cars; (ii) extra journey time as traffic increases by one more car (marginal social time cost); (iii) additional time cost imposed on other road users for each additional car entering the road (marginal external time cost). (See Table 13.3 in the text.) (b)  Assume that time is valued at 10p per minute. On a graph, plot the marginal private time cost (journey time) and the marginal social time cost. (c)  Assume that electronic road pricing is introduced. What charge should be levied when traffic density reaches (i) 6 cars per minute; (ii) 8 cars per minute; (iii) 11 cars per minute? (d)  What additional information would you need in order to work out the socially efficient traffic density on this particular stretch of road?

Describe the exchange-rate path if there were a single shock that caused interest rates to fall. What determines the magnitude and speed of changes in the exchange rate in such a scenario?

(i) What do you understand by the term financialisaton? (ii) How might we assess the financial well-being of households?

: Summarize how SWOT analysis can be used to evaluate a company’s strengths, weaknesses, opportunities, and threats.

Explain how the Treasury uses the primary market to obtain adequate funding from the U.S. government. (LO1)

Identify some of the details and decisions that are included within the scope of process planning.

What is the difference between a machining center and a turning center?

Geri has a certificate of deposit at the local bank. The interest on this certificate was credited to their account on December 31 of last year but they didn’t withdraw the interest until January of this year. When is the interest income taxed?

What are the differences between an explicit and an implicit tax?

Dividends are sometimes said to have been paid “out of retained earnings.” What is the error, if any, in that statement?

Marlon and Latoya recently started building a house.  They had to pay $300 to the county government for a building permit.  Is the $300 payment a tax?  Why or why not?

Variance analysis is only useful for organisations using a standard costing system. Discuss.

Why do marginal cost curves intersect both the average variable cost curve and the average cost curve at their lowest point?

In terms of the UK economy, are the following net injections, net withdrawals or neither? If there is uncertainty, explain your assumptions. (a)  Firms are forced to take a cut in profits in order to give a pay rise. (b)  Firms spend money on research. (c)  The government increases personal tax allowances. (d)  The general public invests more money in banks and building societies. (e)  UK investors earn higher dividends on overseas investments. (f)   The government purchases US military aircraft. (g)  People draw on their savings to finance holidays abroad. (h)  People draw on their savings to finance holidays in the UK. (i)   The government runs a budget deficit (spends more than it receives in tax revenues) and finances it by borrowing from the general public. (j)   The government runs a budget deficit and finances it through new money created by the central bank.

Mike Crane is an audit senior of a large public accounting firm who has just been assigned to the Frost Corporation’s annual audit engagement. Frost has been a client of Crane’s firm for many years. Frost is a fast-growing business in the commercial construction industry. In reviewing the fixed asset ledger, Crane discovered a series of unusual accounting changes, in which the useful lives of assets, depreciated using the straight-line method, were substantially lowered near the midpoint of the original estimate. For example, the useful life of one dump truck was changed from 10 to 6 years during its fifth year of service. Upon further investigation, Mike was told by Kevin James, Frost’s accounting manager, “I don’t really  your problem. After all, it’s perfectly legal to change an accounting estimate. Besides, our CEO likes to see big earnings!” Instructions Answer the following questions. (a) What are the ethical issues concerning Frost’s practice of changing the useful lives of fixed assets? (b) Who could be harmed by Frost’s unusual accounting changes? (c) What should Crane do in this situation?

A turning operation uses a cutting speed = 200 m/min, feed = 0.25 mm/rev, and depth of cut = 4.00 mm. The thermal diffusivity of the work material = 20 mm2 /s and the volumetric specific heat = 3.5 (10-3 ) J/mm3 -C. If the temperature increase above ambient temperature (20°F) is measured by a tool-chip thermocouple to be 700°C, determine the specific energy for the work material in this operation.

What are the functions of a well-designed electronics package?

Illini Corporation reported taxable income of $500,000 from operations for this year. In addition, the company distributed an automobile to its sole shareholder, Yuki. The auto’s fair market value was $30,000 and its tax basis to Illini was $0. The auto’s E&P tax basis was $15,000. Illini had accumulated E&P of $1,500,000 at the beginning of the year.

1.       : Imagine yourself as a potential member of a team responsible for designing a new package for a breakfast cereal. Do you think interpersonal skills would be equally important if the team is organized to interact on a face-to-face basis versus as a virtual team? Why or why not? Might different types of interpersonal skills be required for the two types of teams? Be specific.

1.    : What personal skills do you need to keep your financial backers feeling confident in your new business? Which skills are most useful when you’re dealing with more informal financial sources, such as family and friends, versus receiving funds from stockholders, a bank, or a venture capital firm? Would these considerations affect your financing strategy?