During 20x1, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows:________.

FIFO Weighted-average

January 1, 20x1 $71,000 $77,000

December 31, 20x1 $79,000 $83,000

Orca's income tax rate is 30%.

In its 2005 financial statements, what amount should Orca report as the cumulative effect of this accounting change?

a) $2,800

b) $4,000

c) $4,200

d) $6,000

Answer:

Orca Corp.

The cumulative effect of this accounting change in estimate is:

That the cost of goods sold will be reduced by:

b) $4,000

Explanation:

a) Data and Calculations:

                                    FIFO       Weighted-average   Difference

January 1, 20x1         $71,000         $77,000                 $6,000

December 31, 20x1 $79,000        $83,000                 $4,000

Orca's income tax rate is 30%.

Note that the difference in the cost of the beginning inventory does not have any effect in the current period's financials.  It was an estimate that was done previously and Orca does not need to restate its financials for the previous year because of the change.  The accounting change only affects the current period.

Westbank Real Estate, Inc. owns 10 acres of forested land. Westbank wants the land cleared in order to build houses. Westbank emails a signed electronic memorandum to a representative of Hardell Lumber Co. offering to sell the mature trees and rich topsoil to Hardell for lumber and agricultural purposes. The electronic memorandum includes the parties' typed names, the consideration, the price, and a description of the property, lumber, and soil. Hardell replies via email to Westbank that it accepts Westbank's terms, electronically signs the memorandum, and will start removing the trees and soil next month. Before Hardell can begin clearing the land, Westbank changes its mind, wants to keep the land forested, and prevents Hardell from accessing the property claiming no contract has been formed.
2. Does the electronic agreement for the sale of trees and soil fall under the statute of frauds? (YES / NO)
3. Under which category? (CONTRACTS INVOLVING LAND/ CONTRACTS THAT BY THEIR TERMS CANNOT BE PREFORMED IN LESS THAN A YEAR AFTER THE DATE OF AGREEMENT/ A PROMISE TO ANSWER FOR A DEBT OF ANOTHER/ A PROMISE MADE IN CONSIDERATION OF MARRIAGE/ CONTRACTS FOR THE SALE OF GOODS OVER $500)
4. An electronic memorandum (DOES/ DOES NOT) satisfy the writing requirements for the Statute of Frauds.
5. Land is considered to be (REAL PROPERTY/ PERSONAL PROPERTY)
6. The definition of land includes (NO/ SOME/ ALL) physical objects that are permanently attached to the property.
7. Examples of physical objects that constitute land for purposes of the statute of frauds include (BUILDINGS/ FENCES/ TREES/ SOIL/ ALL OF THESE)
8. A written or electronic memorandum evidencing a contract will suffice provided that the writing is signed by (THE PERSON WHO IS ENFORCING THE CONTRACT/ THE PERSON AGAINST WHOM THE CONTRACT IS BEING ENFORCED)
9. Who signed the e-mails? (WESTBANK REAL ESTATE/ HARDELL LUMBER/ BOTH PARTIES)
10. What type of signature must be on an e-mail in order to enforce an electronic record? (A TYPED NAME/ AN OFFICIAL SIGNATURE/ A NOTARIZED SIGNATURE/ AN ENCRYPTED SIGNATURE)
11. Does the electronic memorandum have the parties' typed names? (YES/ NO)
12. Does the electronic memorandum describe the property involved?(YES/ NO)
13. Is it likely a court would find that the electronic memorandum satisfied the statue of frauds? (YES/ NO)
14. As a result, Hardell (WILL/ WILL NOT) likely be able to enforce the contract against Westbank.

$50 an hour is a
A salary
B commission
C wage
D pension

1. When will countries trade? Assuming 2 goods, food and clothing, and that both countries’ preferences are homothetic (but not necessarily identical), determine whether two countries will trade in each of the following situations: (a) Countries have identical preferences and identical endowments. (b) Countries have identical preferences, their endowments differ, and their endowments are not in the same ratio of food to clothing. (c) Countries have identical preferences, their endowments differ, but the ratio of food to clothing is the same in both countries. (d) Countries have identical endowments but different preferences. (e) Countries have both different preferences and different endowments.

Your boss wants to purchase a graphics design application to be distributed to approximately 40 users in the company. Although the vendor says the application has broad OS support, your boss wants to be sure it will work on the five different OSs running on the company’s user workstations. He wants you to verify compatibility by using evaluation copies of the software without disrupting users or their computers. You have the installation disks for all five OSs your company uses, but you don’t have a lot of computers available to install the OSs. a. What’s your plan?

The specific The specific identification inventory costing method: Select one: A. Measures the ending inventory at the actual prices of the specific units sold during the period B. Is more appropriate for a firm selling construction equipment than for a firm selling greeting cards C. Is not a generally accepted method of pricing inventories D. Uses expected future acquisition costs rather than historical costs to measure the ending inventoryinventory costing method:

Roose, Inc. reported revenue of $92 million and incurred total expenses of $84 million. The total expenses included cost of goods sold of $50 million, salaries and other administrative expenses of $9 million, $11 million of interest paid on a building's mortgage, and $14 million of depreciation. Assuming Roose is subject to the interest expense limitation, what amount of interest expense can the business deduct in the current year

Rust Pipe Co. was established in 1994. Four years later the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders' stock and is entitled to twelve votes per share. The normally traded common stock, designated as Class B, is entitled to one vote per share. In late 2010, Mr. Stone, an investor, was considering purchasing shares in Rust Pipe Co. While he knew the existence of founders’ shares were not often present in other companies, he decided to buy the shares anyway because of a new technology Rust Pipe had developed to improve the flow of liquids through pipes. Of the 1,900,000 total shares currently outstanding, the original founder's family owns 52,725 shares. What is the percentage of the founder's family votes to Class B votes? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)