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Statistics For Business And Economics 10th Edition David R. Anderson, Dennis J. Sweeney, Thomas A. Williams - Solutions
14. LO.4 Caleb Samford calls you and says that his two-person S corporation was involuntarily terminated in February 2011. He asks you if they can make a new S election now, in November 2012. Draft a memo for the file outlining what you told Caleb.
13. LO.2, 3 On March 2, 2012, the two 50% shareholders of a calendar year corporation decide to elect S status. One of the shareholders, Terry, purchased her stock from a previous shareholder (a nonresident alien) on January 18, 2012. Identify any potential problems for Terry or the corporation.
12. LO.2, 11 Bob Roman, the major owner of an S corporation, approaches you for some tax planning help. He would like to exchange some real estate in a like-kind transaction under § 1031 for other real estate that may have some environmental liabilities. Prepare a letter to Bob outlining your
11. LO.2 Which of the following can be a shareholder of an S corporation?a. Resident alien.b. Partnership.c. Charitable remainder trust.d. IRA.e. Estate.f. One-person LLC (disregarded entity).
10. LO.2 Which, if any, of these items would be considered a second class of stock for an S corporation?a. Short-term unwritten advances from a shareholder that do not exceed $10,000 in the aggregate at any time during the corporation’s taxable year.b. Debt that is held by shareholders in the
9. LO.2 Outline the characteristics of an S corporation’s straight debt.
8. LO.2 Which, if any, of these items would be considered a second class of stock for an S corporation?a. Voting preferred stock (with a preference on dividends).b. Treasury stock of another class.c. Phantom stock.d. Unexercised stock options.e. Warrants.f. Stock appreciation rights.g. Convertible
7. LO.2 What requirements must an entity meet to elect S corporation status?
6. LO.2 What is a qualified S corporation subsidiary (QSSS)? Elaborate.
5. LO.2 Which of the following are requirements to be an S corporation?a. Only one class of stock.b. Cannot have an estate as a shareholder.c. Cannot use a phantom stock plan.d. Cannot be a foreign corporation.e. Cannot have a resident alien.
4. LO.1 How can a C corporation mitigate its double taxation potential?
3. LO.1 Explain how the net operating loss rules apply to a new S corporation. To a new C corporation.
2. LO.1 The alternative minimum tax applies to an S corporation. Discuss the validity of this statement.
1. LO.1 Which of these characteristics are found with an S corporation?a. Limited liability to shareholder.b. Personal holding company.c. Liabilities affect the owner’s basis.d. Distributions of appreciated property are taxable at the corporate level.e. Treated as a corporation under state laws.
3. Use the search feature on your favorite news site on the Web (e.g., CNN, ABC News, or Fox News) and search for news on partnerships, LLCs, or limited partnerships. What entities did you find that are taking advantage of the partnership entity form? (Make sure these entities are truly legal
2. Barney, an individual, and Aldrin, Inc., a domestic C corporation, have decided to form BA, LLC. The new LLC will produce a product that Barney recently developed and patented. Barney and Aldrin, Inc., will each own a 50% capital and profits interest in the LLC. Barney is a calendar year
1. Your clients, Grayson Investments, Inc. (Ana Marks, President), and Blake Caldwell, each contributed $200,000 of cash to form the Realty Management Partnership, a limited partnership. Grayson is the general partner, and Blake is the limited partner. The partnership used the $400,000 of cash to
77. Each month the U.S. Bureau of Labor Statistics publishes a variety of unemployment statistics, including the number of individuals who are unemployed and the mean length of time the individuals have been unemployed. For November 1998, the Bureau of Labor Statistics reported that the national
76. H0: μ 120 and Ha: μ 120 are used to test whether a bath soap production process is meeting the standard output of 120 bars per batch. Use a .05 level of significance for the test and a planning value of 5 for the standard deviation.a. If the mean output drops to 117 bars per batch, the firm
75. A federal funding program is available to low-income neighborhoods. To qualify for the funding, a neighborhood must have a mean household income of less than $15,000 per year. Neighborhoods with mean annual household income of $15,000 or more do not qualify. Funding decisions are based on a
74. Shorney Construction Company bids on projects assuming that the mean idle time per worker is 72 or fewer minutes per day. A sample of 30 construction workers will be used to test this assumption. Assume that the population standard deviation is 20 minutes.a. State the hypotheses to be tested.b.
73. According to the federal government, 24% of workers covered by their company’s health care plan were not required to contribute to the premium (Statistical Abstract of the United States: 2006). A recent study found that 81 out of 400 workers sampled were not required to contribute to their
72. Aradio station in Myrtle Beach announced that at least 90% of the hotels and motels would be full for the Memorial Day weekend. The station advised listeners to make reservations in advance if they planned to be in the resort over the weekend. On Saturday night a sample of 58 hotels and motels
71. During the 2004 election year, new polling results were reported daily. In an IBD/TIPP poll of 910 adults, 503 respondents reported that they were optimistic about the national outlook, and President Bush’s leadership index jumped 4.7 points to 55.3 (Investor’s Business Daily, January 14,
70. Virtual call centers are staffed by individuals working out of their homes. Most home agents earn $10 to $15 per hour without benefits versus $7 to $9 per hour with benefits at a traditional call center (BusinessWeek, January 23, 2006). Regional Airways is considering employing home agents, but
69. An airline promotion to business travelers is based on the assumption that two-thirds of business travelers use a laptop computer on overnight business trips.a. State the hypotheses that can be used to test the assumption.b. What is the sample proportion from an American Express sponsored
68. Astudy by the Center for Disease Control (CDC) found that 23.3% of adults are smokers and that roughly 70% of those who do smoke indicate that they want to quit (Associated Press, July 26, 2002). CDC reported that, of people who smoked at some point in their lives, 50%have been able to kick the
67. The U.S. Energy Administration reported that the mean price for a gallon of regular gasoline in the United States was $2.357 (U.S. Energy Administration, January 30, 2006). Data for a sample of regular gasoline prices at 50 service stations in the Lower Atlantic states are contained in the data
66. The chamber of commerce of a Florida Gulf Coast community advertises that area residential property is available at a mean cost of $125,000 or less per lot. Suppose a sample of 32 properties provided a sample mean of $130,000 per lot and a sample standard deviation of $12,500. Use a .05 level
65. An extensive study of the cost of health care in the United States presented data showing that the mean spending per Medicare enrollee in 2003 was $6883 (Money, Fall 2003). To investigate differences across the country, a researcher took a sample of 40 Medicare enrollees in Indianapolis. For
64. The College Board reported that the average number of freshman class applications to public colleges and universities is 6000 (USAToday,December26, 2002). During a recent application/enrollment period, a sample of 32 colleges and universities showed that the sample mean number of freshman class
63. On Friday, Wall Street traders were anxiously awaiting the federal government’s release of numbers on the January increase in nonfarm payrolls. The early consensus estimate among economists was for a growth of 250,000 new jobs (CNBC, February 3, 2006). However, a sample of 20 economists taken
62. Playbill is a magazine distributed around the country to people attending musicals and other theatrical productions. The mean annual household income for the population of Playbill readers is $119,155 (Playbill, January 2006). Assume the standard deviation is s $20,700. A San Francisco civic
61. At Western University the historical mean of scholarship examination scores for freshman applications is 900. Ahistorical population standard deviation σ 180 is assumed known.Each year, the assistant dean uses a sample of applications to determine whether the mean examination score for the
60. A production line operates with a mean filling weight of 16 ounces per container. Overfilling or underfilling presents a serious problem and when detected requires the operator to shut down the production line to readjust the filling mechanism. From past data, a population standard deviation σ
59. An automobile mileage study tested the following hypotheses. Hypothesis Ho: 25 mpg Ha:
58. Young Adult magazine states the following hypotheses about the mean age of its subscribers.If the manager conducting the test will permit a .15 probability of making a Type II error when the true mean age is 29, what sample size should be selected? Assume σ 6 and a .05 level of significance.
57. Aspecial industrial battery must have a life of at least 400 hours. Ahypothesis test is to be conducted with a .02 level of significance. If the batteries from a particular production run have an actual mean use life of 385 hours, the production manager wants a sampling procedure that only 10%
56. Suppose the project director for the Hilltop Coffee study (see Section 9.3) asked for a .10 probability of claiming that Hilltop was not in violation when it really was underfilling by 1 ounce ( μa 2.9375 pounds). What sample size would have been recommended?
55. Consider the following hypothesis test.The population standard deviation is 10. Use α .05. How large a sample should be taken if the researcher is willing to accept a .05 probability of making a Type II error when the actual population mean is 22? Ho: = 20 u Ha a- 20
54. Consider the following hypothesis test.The sample size is 120 and the population standard deviation is 5. Use α .05. If the actual population mean is 9, the probability of a Type II error is .2912. Suppose the researcher wants to reduce the probability of a Type II error to .10 when the
53. Sparr Investments, Inc., specializes in tax-deferred investment opportunities for its clients.Recently Sparr offered a payroll deduction investment program for the employees of a particular company. Sparr estimates that the employees are currently averaging $100 or less per month in
52. Refer to Exercise 48. Assume the firm selects a sample of 50 surveys and repeat parts (b)and (c). What observation can you make about how increasing the sample size affects the probability of making a Type II error?
51. A production line operation is tested for filling weight accuracy using the following hypotheses.Hypothesis Conclusion and Action H0: μ 16 Filling okay; keep running Ha: μ 16 Filling off standard; stop and adjust machine The sample size is 30 and the population standard deviation is σ
50. Young Adult magazine states the following hypotheses about the mean age of its subscribers.a. What would it mean to make a Type II error in this situation?b. The population standard deviation is assumed known at σ 6 years and the sample size is 100. With α .05, what is the probability of
49. Aconsumer research group is interested in testing an automobile manufacturer’s claim that a new economy model will travel at least 25 miles per gallon of gasoline (H0: μ 25).a. With a .02 level of significance and a sample of 30 cars, what is the rejection rule based on the value of for the
48. Fowle Marketing Research, Inc., bases charges to a client on the assumption that telephone surveys can be completed within 15 minutes or less. If more time is required, a premium rate is charged. With a sample of 35 surveys, a population standard deviation of 4 minutes, and a level of
47. Consider the following hypothesis test. Ho: = 20 Ha: 20 A sample of 200 items will be taken and the population standard deviation is = 10. Use a = .05. Compute the probability of making a Type II error if the population mean is: a. u=18.0 b. = 22.5 c. u = 21.0
46. Consider the following hypothesis test.The sample size is 120 and the population standard deviation is assumed known with σ 5. Use α .05.a. If the population mean is 9, what is the probability that the sample mean leads to the conclusion do not reject H0?b. What type of error would be made
45. Many investors and financial analysts believe the Dow Jones Industrial Average (DJIA)provides a good barometer of the overall stock market. On January 31, 2006, 9 of the 30 stocks making up the DJIA increased in price (The Wall Street Journal, February 1, 2006). On the basis of this fact, a
44. In a cover story, BusinessWeek published information about sleep habits of Americans(BusinessWeek, January 26, 2004). The article noted that sleep deprivation causes a number of problems, including highway deaths. Fifty-one percent of adult drivers admit to driving while drowsy. A researcher
43. Eagle Outfitters is a chain of stores specializing in outdoor apparel and camping gear. They are considering a promotion that involves mailing discount coupons to all their credit card customers. This promotion will be considered a success if more than 10% of those receiving the coupons use
42. According to the Census Bureau’s American Housing Survey, the primary reason people who move choose their new neighborhood is because the location is convenient to work(USA Today, December 24, 2002). Based on 1990 Census Bureau data, we know that 24%of the population of people who moved
41. Speaking to a group of analysts in January 2006, a brokerage firm executive claimed that 70% of investors are currently confident of meeting their investment objectives. A UBS Investor Optimism Survey, conducted over the period January 2 to January 15, found that 67% of investors were confident
40. Before the 2003 Super Bowl, ABC predicted that 22% of the Super Bowl audience would express an interest in seeing one of its forthcoming new television shows, including 8 Simple Rules, Are You Hot?, and Dragnet. ABC ran commercials for these television shows during the Super Bowl. The day after
39. The National Center for Health Statistics released a report that stated 70% of adults do not exercise regularly (Associated Press, April 7, 2002). A researcher decided to conduct a study to see whether the claim made by the National Center for Health Statistics differed on a state-by-state
38. A study by Consumer Reports showed that 64% of supermarket shoppers believe supermarket brands to be as good as national name brands. To investigate whether this result applies to its own product, the manufacturer of a national name-brand ketchup asked a sample of shoppers whether they believed
37. A study found that, in 2005, 12.5% of U.S. workers belonged to unions (The Wall Street Journal, January 21, 2006). Suppose a sample of 400 U.S. workers is collected in 2006 to determine whether union efforts to organize have increased union membership.a. Formulate the hypotheses that can be
36. Consider the following hypothesis test: Ho: p.75 Ha: p
35. Consider the following hypothesis test: Ho: p = .20 Ha: P.20 A sample of 400 provided a sample proportion p = .175. a. Compute the value of the test statistic. b. What is the p-value? c. At a = .05, what is your conclusion? d. What is the rejection rule using the critical value? What is your
34. Joan’s Nursery specializes in custom-designed landscaping for residential areas. The estimated labor cost associated with a particular landscaping proposal is based on the number of plantings of trees, shrubs, and so on to be used for the project. For cost-estimating purposes, managers use
33. Annual per capita consumption of milk is 21.6 gallons (Statistical Abstract of the United States: 2006). Being from the Midwest, you believe milk consumption is higher there and wish to support your opinion. A sample of 16 individuals from the midwestern town of Webster City showed a sample
32. According to the National Automobile Dealers Association, the mean price for used cars is $10,192. A manager of a Kansas City used car dealership reviewed a sample of 50 recent used car sales at the dealership in an attempt to determine whether the population mean price for used cars at this
31. Raftelis Financial Consulting reported that the mean quarterly water bill in the United States is $47.50 (U.S. News &World Report, August 12, 2002). Some water systems are operated by public utilities, whereas other water systems are operated by private companies.An economist pointed out that
30. AOL Time Warner Inc.’s CNN has been the longtime ratings leader of cable television news. Nielsen Media Research indicated that the mean CNN viewing audience was 600,000 viewers per day during 2002 (The Wall Street Journal, March 10, 2003). Assume that for a sample of 40 days during the first
29. The cost of a one-carat VS2 clarity, H color diamond from Diamond Source USA is $5600(www.diasource.com, March 2003). A midwestern jeweler makes calls to contacts in the diamond district of New York City to see whether the mean price of diamonds there differs from $5600.a. Formulate hypotheses
28. The National Association of Professional Baseball Leagues, Inc., reported that attendance for 176 minor league baseball teams reached an all-time high during the 2001 season (New York Times, July 28, 2002). On a per-game basis, the mean attendance for minor league baseball was 3530 people per
27. The Employment and Training Administration reported the U.S. mean unemployment insurance benefit of $238 per week (The World Almanac, 2003). A researcher in the state of Virginia anticipated that sample data would show evidence that the mean weekly unemployment insurance benefit in Virginia was
26. Consider the following hypothesis test: Ho: = 100 Ha: 100 A sample of 65 is used. Identify the p-value and state your conclusion for each of the fol- lowing sample results. Use a = .05. a. 103 and s = 11.5 b. 96.5 and s = 11.0 C. x=102 and s = 10.5
25. Consider the following hypothesis test: Ho: 45 Ha: < 45 A sample of 36 is used. Identify the p-value and state your conclusion for each of the fol- lowing sample results. Use a = .01. 44 and s = 5.2 a. b. 43 and s = 4.6 C. x=46 and s = 5.0
24. Consider the following hypothesis test: Ho: = 18 Hau 18 A sample of 48 provided a sample mean = 17 and a sample standard deviation s = 4.5. a. Compute the value of the test statistic. b. Use the t distribution table (Table 2 in Appendix B) to compute a range for the p-value. C. At a = .05,
23. Consider the following hypothesis test:Asample of 25 provided a sample mean 14 and a sample standard deviation s 4.32.a. Compute the value of the test statistic.b. Use the t distribution table (Table 2 in Appendix B) to compute a range for the p-value.c. At α .05, what is your conclusion?d.
22. CCN and ActMedia provided a television channel targeted to individuals waiting in supermarket checkout lines. The channel showed news, short features, and advertisements. The length of the program was based on the assumption that the population mean time a shopper stands in a supermarket
21. Fowle Marketing Research, Inc., bases charges to a client on the assumption that telephone surveys can be completed in a mean time of 15 minutes or less. If a longer mean survey time is necessary, a premium rate is charged. A sample of 35 surveys provided the survey times shown in the CD file
20. For the United States, the mean monthly Internet bill is $32.79 per household (CNBC, January 18, 2006). A sample of 50 households in a southern state showed a sample mean of $30.63. Use a population standard deviation of $5.60.a. Formulate hypotheses for a test to determine whether the
19. In 2001, the U.S. Department of Labor reported the average hourly earnings for U.S. production workers to be $14.32 per hour (The World Almanac 2003). A sample of 75 production workers during 2003 showed a sample mean of $14.68 per hour. Assuming the population standard deviation σ $1.45,
18. The average annual total return for U.S. Diversified Equity mutual funds from 1999 to 2003 was 4.1% (Business Week, January 26, 2004). A researcher would like to conduct a hypothesis test to see whether the returns for mid-cap growth funds over the same period are significantly different from
17. Wall Street securities firms paid out record year-end bonuses of $125,500 per employee for 2005 (Fortune, February 6, 2006). Suppose we would like to take a sample of employees at the Jones & Ryan securities firm to see whether the mean year-end bonus is different from the reported mean of
16. Reis, Inc., a New York real estate research firm, tracks the cost of apartment rentals in the United States. In mid-2002, the nationwide mean apartment rental rate was $895 per month(The Wall Street Journal, July 8, 2002). Assume that, based on the historical quarterly surveys, a population
15. Individuals filing federal income tax returns prior to March 31 received an average refund of $1056. Consider the population of “last-minute” filers who mail their tax return during the last five days of the income tax period (typically April 10 to April 15).a. A researcher suggests that a
14. Consider the following hypothesis test:A sample of 75 is used and the population standard deviation is 10. Compute the p-value and state your conclusion for each of the following sample results. Use α .01. Ho: = 22 u Ha 22
13. Consider the following hypothesis test:A sample of 60 is used and the population standard deviation is 8. Use the critical value approach to state your conclusion for each of the following sample results. Use α = .05. Ho: 50 Ha: > 50 u
12. Consider the following hypothesis test:A sample of 100 is used and the population standard deviation is 12. Compute the p-value and state your conclusion for each of the following sample results. Use α .01. Ho: 80 < 80
11. Consider the following hypothesis test:A sample of 50 provided a sample mean of 14.15. The population standard deviation is 3.a. Compute the value of the test statistic.b. What is the p-value?c. At α .05, what is your conclusion?d. What is the rejection rule using the critical value? What is
10. Consider the following hypothesis test:A sample of 40 provided a sample mean of 26.4. The population standard deviation is 6.a. Compute the value of the test statistic.b. What is the p-value?c. At α .01, what is your conclusion?d. What is the rejection rule using the critical value? What is
9. Consider the following hypothesis test:A sample of 50 provided a sample mean of 19.4. The population standard deviation is 2.a. Compute the value of the test statistic.b. What is the p-value?c. Using α .05, what is your conclusion?d. What is the rejection rule using the critical value? What is
8. Suppose a new production method will be implemented if a hypothesis test supports the conclusion that the new method reduces the mean operating cost per hour.a. State the appropriate null and alternative hypotheses if the mean cost for the current production method is $220 per hour.b. What is
7. Carpetland salespersons average $8000 per week in sales. Steve Contois, the firm’s vice president, proposes a compensation plan with new selling incentives. Steve hopes that the results of a trial selling period will enable him to conclude that the compensation plan increases the average sales
6. The label on a 3-quart container of orange juice claims that the orange juice contains an average of 1 gram of fat or less. Answer the following questions for a hypothesis test that could be used to test the claim on the label.a. Develop the appropriate null and alternative hypotheses.b. What is
5. Nielsen reported that young men in the United States watch 56.2 minutes of prime-time TV daily (The Wall Street Journal Europe, November 18, 2003). Aresearcher believes that young men in Germany spend more time watching prime-time TV. Asample of German young men will be selected by the
4. Because of high production-changeover time and costs, a director of manufacturing must convince management that a proposed manufacturing method reduces costs before the new method can be implemented. The current production method operates with a mean cost of$220 per hour. A research study will
3. A production line operation is designed to fill cartons with laundry detergent to a mean weight of 32 ounces. Asample of cartons is periodically selected and weighed to determine whether underfilling or overfilling is occurring. If the sample data lead to a conclusion of underfilling or
2. The manager of an automobile dealership is considering a new bonus plan designed to increase sales volume. Currently, the mean sales volume is 14 automobiles per month. The manager wants to conduct a research study to see whether the new bonus plan increases sales volume. To collect data on the
1. The manager of the Danvers-Hilton Resort Hotel stated that the mean guest bill for a weekend is $600 or less. Amember of the hotel’s accounting staff noticed that the total charges for guest bills have been increasing in recent months. The accountant will use a sample of weekend guest bills to
60. Although airline schedules and cost are important factors for business travelers when choosing an airline carrier, a USA Today survey found that business travelers list an airline’s frequent flyer program as the most important factor. From a sample of n 1993 business travelers who responded
59. In a survey, 200 people were asked to identify their major source of news information; 110 stated that their major source was television news.a. Construct a 95% confidence interval for the proportion of people in the population who consider television their major source of news information.b.
58. A well-known bank credit card firm wishes to estimate the proportion of credit card holders who carry a nonzero balance at the end of the month and incur an interest charge.Assume that the desired margin of error is .03 at 98% confidence.a. How large a sample should be selected if it is
57. The 2003 Statistical Abstract of the United States reported the percentage of people 18 years of age and older who smoke. Suppose that a study designed to collect new data on smokers and nonsmokers uses a preliminary estimate of the proportion who smoke of .30.a. How large a sample should be
56. Cincinnati/Northern Kentucky International Airport had the second highest on-time arrival rate for 2005 among the nation’s busiest airports (The Cincinnati Enquirer, February 3, 2006). Assume the findings were based on 455 on-time arrivals out of a sample of 550 flights.a. Develop a point
55. Which would be hardest for you to give up: Your computer or your television? In a recent survey of 1677 U.S. Internet users, 74% of the young tech elite (average age of 22) say their computer would be very hard to give up (PC Magazine, February 3, 2004). Only 48%say their television would be
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