Question & Answer

Included in Outkast Company’s December 31, 2014, trial balance are the following accounts: Prepaid Rent $5,200; Debt Investments (trading) $56,000; Unearned Fees $17,000; Land (held for investment) $39,000; Notes Receivable (long-term) $42,000. Prepare the long-term investments section of the balance sheet.

Venezuela Co. is building a new hockey arena at a cost of $2,500,000. It received a downpayment of $500,000 from local businesses to support the project, and now needs to borrow $2,000,000 to complete the project. It therefore decides to issue $2,000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2013, and pay interest annually on each January 1. The bonds yield 10%. Venezuela paid $50,000 in bond issue costs related to the bond sale. Instructions (a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2013. (b) Prepare a bond amortization schedule up to and including January 1, 2017, using the effectiveinterest method. (c) Assume that on July 1, 2016, Venezuela Co. redeems half of the bonds at a cost of $1,065,000 plus accrued interest. Prepare the journal entry to record this redemption.

Roth Inc. has a deferred tax liability of $68,000 at the beginning of 2015. At the end of 2015, it reports accounts receivable on the books at $90,000 and the tax basis at zero (its only temporary difference). If the enacted tax rate is 34% for all periods, and income taxes payable for theperiod is $230,000, determine the amount of total income tax expense to report for 2015.

Summarize the six steps used in managerial decision making.

Explain why organisational form may vary if specific knowledge versus general knowledge is needed for decision making.

(a) Name the four principal noble metals. (b) Why are they called noble metals?

What factors should be considered when choosing allocation bases?

Presented below are various account balances of K.D. Lang Inc. (a) Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year. (b) Bank loans payable of a winery, due March 10, 2018. (The product requires aging for 5 years before sale.) (c) Serial bonds payable, $1,000,000, of which $200,000 are due each July 31. (d) Amounts withheld from employees’ wages for income taxes. (e) Notes payable due January 15, 2017. (f) Credit balances in customers’ accounts arising from returns and allowances after collection in full of account. (g) Bonds payable of $2,000,000 maturing June 30, 2016. (h) Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.) (i) Deposits made by customers who have ordered goods. Instructions Indicate whether each of the items above should be classified on December 31, 2014, as a current liability, a long-term liability, or under some other classification. Consider each one independently from all others; that is, do not assume that all of them relate to one particular business. If the classification of some of the items is doubtful, explain why in each case.

Why is it the case that a – b = e – f, and c – d = g – h?

A 2.0-in-long billet with diameter = 1.25 in is direct extruded to a diameter of 0.50 in. The extrusion die angle = 90°. For the work metal, K = 45,000 lb/in2 , and n = 0.20. In the Johnson extrusion strain equation, a = 0.8 and b = 1.5. Determine (a) extrusion ratio, (b) true strain (homogeneous deformation), (c) extrusion strain, and (d) ram pressure at L = 2.0, 1.5, 1.0, 0.5 and zero in. Use of a spreadsheet calculator is recommended for part (d).

What is a cost object? Give 3 examples.

At January 1, 2014, Langley Company’s outstanding shares included the following. 280,000 shares of $50 par value, 7% cumulative preferred stock 900,000 shares of $1 par value common stock  Net income for 2014 was $2,530,000. No cash dividends were declared or paid during 2014. On February 15, 2015, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2014. On April 1, 2014, 450,000 shares of common stock were sold for $10 per share, and on October 1, 2014, 110,000 shares of common stock were purchased for $20 per share and held as treasury stock. Instructions Compute earnings per share for 2014. Assume that financial statements for 2014 were issued in March 2015.

Ballard Co. reported $145,000 of net income for 2014. The accountant, in preparing the statement of cash flows, noted the following items occurring during 2014 that might affect cash flows from operating activities. 1. Ballard purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then resold at $25 per share. 2. Ballard sold 100 shares of IBM common at $200 per share. The acquisition cost of these shares was $145 per share. This investment was shown on Ballard’s December 31, 2013, balance sheet as an available-for-sale security. 3. Ballard revised its estimate for bad debts. Before 2014, Ballard’s bad debt expense was 1% of its net sales. In 2014, this percentage was increased to 2%. Net sales for 2014 were $500,000, and net accounts receivable decreased by $12,000 during 2014. 4. Ballard issued 500 shares of its $10 par common stock for a patent. The market price of the shares on the date of the transaction was $23 per share. 5. Depreciation expense is $39,000. 6. Ballard Co. holds 40% of the Nirvana Company’s common stock as a long-term investment. Nirvana Company reported $27,000 of net income for 2014. 7. Nirvana Company paid a total of $2,000 of cash dividends to all investees in 2014. 8. Ballard declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of issuance was $20 per share. Instructions Prepare a schedule that shows the net cash flow from operating activities using the indirect method. Assume no items other than those listed above affected the computation of 2014 net cash flow from operating activities.

Toro Co. has equipment with a carrying amount of $700,000. The expected future net cash flows from the equipment are $705,000, and its fair value is $590,000. The equipment is expected to be used in operations in the future. What amount (if any) should Toro report as an impairment to its equipment?

Shetland Inc. had pretax financial income of $154,000 in 2014. Included in the computation of that amount is insurance expense of $4,000 which is not deductible for tax purposes. In addition, depreciation for tax purposes exceeds accounting depreciation by $10,000. Prepare Shetland’s journal entry to record 2014 taxes, assuming a tax rate of 45%.

A review of the ledger of Baylor Company at December 31, 2014, produces the following data pertaining to the preparation of annual adjusting entries. 1. Salaries and Wages Payable $0. There are eight employees. Salaries and wages are paid every Friday for the current week. Five employees receive $700 each per week, and three employees earn $600 each per week. December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days of December. 2. Unearned Rent Revenue $429,000. The company began subleasing office space in its new building on November 1. Each tenant is required to make a $5,000 security deposit that is not refundable until occupancy is terminated. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease. Date Term (in months) Monthly Rent Number of Leases Nov. 1 6 $6,000 5 Dec. 1 6 $8,500 4 3. Prepaid Advertising $13,200. This balance consists of payments on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are asshown below. Contract Date Amount Number of Magazine Issues A650 May 1 $6,000 12 B974 Oct. 1 7,200 24 The first advertisement runs in the month in which the contract is signed. 4. Notes Payable $60,000. This balance consists of a note for one year at an annual interest rate of 12%, dated June 1. Instructions Prepare the adjusting entries at December 31, 2014. (Show all computations).

Discuss the accounting treatment or disclosure that should be accorded a declared but unpaid cash dividend, an accumulated but undeclared dividend on cumulative preferred stock, and a stock dividend distributable.

What are the tax return preparer’s standards to avoid a penalty for recommending a tax return position?

Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $315,000. The estimated fair values of the assets are land $60,000, building $220,000, and equipment $80,000. At what amounts should each of the three assets be recorded?

The part in Problem 33.1 is to be fabricated using fused deposition modeling instead of stereolithography. Layer thickness is to be 0.20 mm and the width of the extrudate deposited on the surface of the part = 1.25 mm. The extruder workhead moves in the x-y plane at a speed of 150 mm/s. A delay of 10 s is experienced between each layer to reposition the workhead. Compute an estimate for the time required to build the part.

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

Use the information for Rode Inc. given in IFRS19-7. Assume that it is probable that the entire net operating loss carryforward will not be realized in future years. Prepare the journal entry(ies) necessary at the end of 2014.

Assume that a country had no state education at all. For what reasons might the private education system not provide the optimal allocation of resources to and within education?

Basler Corporation, which began business on January 1, 2014, appropriately uses the installment-sales method of accounting. The following data were obtained for the years 2014 and 2015. 2014 2015 Installment sales $750,000 $840,000 Cost of installment sales 510,000 588,000 General & administrative expenses 70,000 84,000 Cash collections on sales of 2014 310,000 300,000 Cash collections on sales of 2015 –0– 400,000 Instructions (a) Compute the balance in the deferred gross profit accounts on December 31, 2014, and on December 31, 2015. (b) A 2014 sale resulted in default in 2016. At the date of default, the balance on the installment receivable was $12,000, and the repossessed merchandise had a fair value of $8,000. Prepare the entry to record the repossession.

: Describe some of the diversity challenges that managers face in the United States and globally.