Answer:
Apr 30
Dr Legal fees expense $2,000
Cr Legal fees payable $2,000
May 12
Dr Legal fees payable $2,000
Cr Cash $2,000
Apr 30
D Interest expense $2,559
Cr Interest payable $2,559
May 20
Dr Interest expense $5,118
Dr Interest payable $2,559
Cr Cash $7,677
Apr 30
Dr Salaries expense $3,200
Cr Salaries payable $3,200
May 03
Dr Salaries expense $4,800
Dr Salaries payable $3,200
Cr Cash $8,000
Explanation:
Preparation of the adjusting journal entries to prepare financial statements as of April 30 and the subsequent entry during May to record payment of the accrued expenses.
Apr 30
Dr Legal fees expense $2,000
Cr Legal fees payable $2,000
May 12
Dr Legal fees payable $2,000
Cr Cash $2,000
Apr 30
D Interest expense $2,559
Cr Interest payable $2,559
May 20
Dr Interest expense $5,118
($7,677- $2,559)
Dr Interest payable $2,559
Cr Cash $7,677
Apr 30
Dr Salaries expense $3,200
($8,000*2/5)
Cr Salaries payable $3,200
May 03
Dr Salaries expense $4,800
($8,000*3/5)
Dr Salaries payable $3,200
($8,000*2/5)
Cr Cash $8,000
On January 1, Year 1, Chertco acquired a patent for $500,000 and, using the straight-line method, began amortizing it properly over its estimated useful life of 10 years. The asset has no residual value. At December 31, Year 4, a significant change in the business climate caused Chertco to assess the recoverability of the carrying amount of the patent. Chertco estimated that the undiscounted future net cash inflows from the patent would be $325,000 and that its fair value was $275,000. Accordingly, for the year ended December 31, Year 4, Chertco should recognize an impairment loss of :________.
a. $175,000
b. $50,000
c. $25,000
d. $0
Answer:
c. $25,000
Explanation:
We recognize impairment loss when the Carrying Amount of an Asset is greater than its Recoverable Amount.
Recoverable Amount of an Asset is the Higher of Asset Fair Value and Value in use. The future cash shows represent value in use and these need to be discounted. Since they are not, Recoverable Amount = $275,000
Carrying Amount of an Asset is the Cost of the Asset less all depreciation charges to date of the impairment test, Carrying Amount = $300,000
Therefore, Impairment loss = $25,000 ($300,000 - $275,000)
​"A permanent increase in government purchases has a larger effect than a temporary increase of the same​ amount." Use the​ saving-investment diagram to evaluate this​ statement, focusing on effects on​ consumption, investment, and the real interest rate for a fixed level of output. ​(​Hint: The permanent increase in government purchases implies larger increases in current and future taxes​.)
Answer:
here
Explanation:
Stephenson Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the CFO's back-up computer data.
Cost of Goods Sold $400,000
Work-in-Process Inventory, Beginning 35,000
Work-in-Process Inventory, Ending 46,000
Selling and Administrative Expense 59,000
Finished Goods Inventory, Ending 18,000
Direct Materials Purchased $194,900
Factory Overhead Applied $125,600
Operating Income $25,000
Direct Materials Inventory, Ending $6,800
Cost of Goods Manufactured $380,900
Direct Labor $62,700
The CFO of Stephenson Company has asked you to recalculate the following accounts and report to him by week's end. What should be the amount of direct materials available for use?
Answer:
$210,400
Explanation:
Particulars Amount
Cost of Goods Manufactured $380,900
Add: Closing WIP $46,000
Less: Opening WIP -$35,000
Less: Factory Overhead Applied -$125,600
Less: Direct Labor -$62,700
Add: Closing stock of Direct material $6,800
Direct Material Available for use $210,400
Solve each of the following three problems, all of which involve borrowing money from a bank with an APR of 6.5% compounded annually. Look carefully at how the problems differ from one another, in spite of appearing similar. In your solutions, say a few words explaining how you can tell which is the appropriate formula to apply in each case.
a. Suppose that you borrow $1000 once per year, beginning today, and ending 10 years from now (so you borrow your last $1000 on the ten year anniversary of today’s date). How much will your total debt be at the end of the 10th year?b. Suppose that you borrow $10,000 today. You repay the loan over the course of ten years, making a payment every year on the anniversary of today’s date. The first payment will be one year from today, and the last payment will be ten years from today. How much should each payment be?c. Suppose that you borrow $10,000 today, and repay the loan all at once, on the ten year anniversary of today’s date. How much will you have to repay on that date?
Answer:
a. The formula is annuity immediate. This requires annual addition at the end of each period. The total debt at the end of the 10th year is $16,248.70.
b. Amortized loan repayment is applicable here since the loan and interest are repaid every year. Therefore, the payment every year is: $1,391.05.
c. The compound interest formula is used here since the interest accumulates annually but repayment of loan is due at the end of 10 years. The total debt due for repayment at the end of the 10th year is $18,771.37.
Explanation:
1. Data and Calculations:
Starting Principal = $1000
Annual Addition = $1000
Annual interest rate = 6.5%
Period of loan = 10 years
The formula is annuity immediate. This requires annual addition at the end of each period.
Using the annuity calculator for annual addition at the end of each period, the loan's:
End Balance $16,248.70
Total Principal $11,000.00
Total Interest $5,248.70
2. Starting Principal = $10,000
Annual interest rate = 6.5%
Period of loan = 10 years
Amortized loan repayment is applicable here since the loan and interest are repaid every year. Therefore, the payment every year is: $1,391.05
Total of 10 Payments $13,910.47
Total Interest $3,910.47
3. Starting Principal = $10,000
Annual interest rate = 6.5%
Period of loan = 10 years
Compound interest formula is used here since the interest accumulates annually but repayment of loan is due at the end of 10 years.
Using an online financial calculator, the future debt will total $18,771.37 with a total compounded interest of $8,771.37 ($18,771.37 - $10,000).
FV = $18,771.37
Total Interest $8,771.37
ReNew Corporation raises funds to build renewable energy systems by issuing 3-year bonds with a coupon rate of 6% and a face value of $1,600. Assume that the market interest rate for a 3-year bond issued by a firm like ReNew is currently the same as the coupon rate. The price of each of these bonds is____ , which means that the bonds sell at ___. Suppose that the market interest rate for bonds that are similar to the ReNew bond has increased to 7%. The price of the ReNew bond changes to____ , which means that it sells at ____. Suppose that instead of rising, the market rate decreases from 6% to 4%. The new price of the bond changes to ___, which means that the bond sells at ___.
Answer:
The price of each of these bonds is $1,600, which means that the bonds sell at par.
Suppose that the market interest rate for bonds that are similar to the ReNew bond has increased to 7%. The price of the ReNew bond changes to $1,558.00 , which means that it sells at discount.
Suppose that instead of rising, the market rate decreases from 6% to 4%. The new price of the bond changes to $1,688.80, which means that the bond sells at a premium.
When the coupon rate and the market interest rate are the same, the price will be at par.
Interest rate increases:
Bond Price = Present value of coupon + Present value of bond price
Coupon = 6% * 1,600
= $96
Bond price = 96 * (1 - 1.07⁻³ / 0.07) + 1,600 / 1.07³
Bond price = $1,558.00
Interest rate decreases:
= 96 * (1 - 1.04⁻³ / 0.04) + 1,600 / 1.04³
= $1,688.80
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows:
FMV Adjusted Basis Appreciation
  Cash $32,250 $32,250
  Receivables 18,600 18,600
  Building 136,000 68,000 68,000
  Land 269,250 89,750 179,500
Total $456,100 $208,600 $247,500
Payables $27,200 $27,200
  Mortgage* 135,750 135,750
Total $162,950 $162,950
Ernesto was asking for $408,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales price was an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($68,000) will be recorded as goodwill. Required:
a. What amount of gain or loss does BLI recognize if the transaction is structured as a direct asset sale to Amy and Brian? What amount of corporate level tax does BLI pay as a result of the transaction, assuming a tax rate of 34 percent?
b. What amount of gain or loss does Ernesto recognize if the transaction is structured as a direct asset sale to Amy and Brian, and BLI distributes the after-tax proceeds (computed in question a) to Ernesto in liquidation of his stock?
c. What is the nature of tax benefits to Amy and Brian as a result of structuring the acquisition as a direct asset purchase?
d. What is the tax basis in the assets received by Amy and Brian?
Answer:
Bottom Line, Inc. (BLI)
a. The amount of gain that BLI should recognize if the transaction is structured as a direct asset sale to Amy and Brian is:
= $199,400
BLI will a corporate tax of $ 67,796 ($199,400 * 34%) as a result of the transaction.
b. The amount of gain that Ernesto recognizes when BLI distributes the after-tax proceeds to Ernesto in liquidation of his stock is:
= $190,204
c. Amy and Brian can step up the tax basis of the assets to their fair market values.
d. The tax basis in the assets received by Amy and Brian is:
= $408,000
Explanation:
a) Data and Calculations:
FMV Adjusted Basis Appreciation
Cash $32,250 $32,250
Receivables 18,600 18,600
Building 136,000 68,000 68,000
Land 269,250 89,750 179,500
Total $456,100 $208,600 $247,500
Payables $27,200 $27,200
Mortgage* 135,750 135,750
Total $162,950 $162,950
Net Value $293,150 $45,650
Sales price for the company = $408,000
Ernesto tax basis in BLI stock = 150,000
Difference = $258,000
Unrecognized customer list = 150,000
Unallocated Goodwill = $108,000
Gain to be recognized if transaction is a direct asset sale:
Sales price = $408,000
Adjusted basis 208,600
Capital gain = $199,400
After-tax proceeds:
Sales price = $408,000
Corporate tax on capital gain = $ 67,796
After-tax proceeds = $340,204
Ernesto's tax basis = 150,000
Capital gain for Ernesto = $190,204
Use the following information to answer the questions:
Assets Liabilities and Equity
Cash 14,000 Accounts payable 17,000
Marketable securities 4,000 Notes payable 8,000
Accounts receivable 10,000 Current liabilities 25,000
Inventory 39,000 Long-term debt 80,000
Current assets 67,000 Total liabilities 105,000
Machines 42,000 Paid-in capital 30,000
Real estate 60,000 Retained earnings 34,000
Net fixed assets 102,000 Equity 64,000
Total assets 169,000 Total liab. & equity 169,000
Sales 330,000
Operating expenses 297,000
Depreciation 25,000
EBIT 8,000
Interest 5,000
Taxable income 3,000
Taxes 990
Net income 2010
There are 8,200 shares outstanding, each currently trading for $5.65.
Required:
a. What are earnings per share?
b. What is the book value per share?
Answer:
a. Earnings per share = $0.25
b. The book value per share = $7.80
Explanation:
Balance Sheet
Assets Liabilities and Equity
Cash 14,000 Accounts payable 17,000
Marketable securities 4,000 Notes payable 8,000
Accounts receivable 10,000 Current liabilities 25,000
Inventory 39,000 Long-term debt 80,000
Current assets 67,000 Total liabilities 105,000
Machines 42,000 Paid-in capital 30,000
Real estate 60,000 Retained earnings 34,000
Net fixed assets 102,000 Equity 64,000
Total assets 169,000 Total liab. & equity 169,000
Income Statement
Sales 330,000
Operating expenses 297,000
Depreciation 25,000
EBIT 8,000
Interest 5,000
Taxable income 3,000
Taxes 990
Net income 2,010
Outstanding shares = 8,200
Market price of shares = $5.65
Earnings per share = 2,010/8,200 = $0.25
Book value per share = (Assets - Liabilities)Equity/8,200
= ($169,000 - 105,000)/8,200 = $7.80
b) The earnings per share is a financial measure of the how much is generated in net income for each share. The book value per share measures the equity value per share.
Acker Inc. bought 40% of Howell Co. on January 1, 2020 for $576,000. The equity method of accounting was used. The book value and fair value of the net assets of Howell on that date were $1,440,000. Acker began supplying inventory to Howell as follows:
Year Cost to Acker Transfer Price Amount Held by Howell at Year-End
2020 $55,000 $75,000 $15,000
2021 $70,000 $110,000 $55,000
Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying $40,000 in dividends each year. What is the amount of unrealized intra-entity inventory profit to be deferred on December 31, 2010?
Answer:
the amount of unrealized intra-entity inventory profit is $1,600
Explanation:
The computation of the amount of unrealized intra-entity inventory profit is given below:
= Profit percentage × amount at year end × purchase percentage
= (($75,000 - $55,000) ÷ $75,000) × 15,000 × 40%
= $1,600
hence, the amount of unrealized intra-entity inventory profit is $1,600
sally borrowed $1000 from her friend monique two years ago. their arrangement required sally to repay $250 each year for the subsequent four years. Today with two paymewnts remaining on the loan, Sally offers to repay the loan with a single payment of $475. Assuming no change in interest rates throughout the entire time, should monique accept the signle $475 payment today, why or why not
Answer:
a
Explanation:
Here are the options to this question :
A. yes, 475 is more than the PV of the two remaining payments
B. More information is needed to decide
C. Monique is indifferent between the options, the PVs are equivalent
D. No, the PV of the remaining two payments is more than 475
We have to determine the present value of the remaining two payments and compare the options
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = 0
Cash flow in year 2 = 0
Cash flow in year 3 = 250
Cash flow in year 4 = 250
I = 2%
PV = $466.54
$475 is greater than $466.54. Therefore, she should accept the single $475 payment
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
On January 1, 2020, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.9 million and $700,000, respectively. A customer list compiled by Q-Video had an appraised value of $300,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $250,000 in 2020 and a net loss of $100,000 in 2021. In each of these two years, Q-Video declared and paid a cash dividend of $15,000 to its stockholders. During 2020, Q-Video sold inventory that had an original cost of $100,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2020, and the remainder was sold during 2021. In 2021, Q-Video sold inventory to Stream for $175,000. This inventory had cost only $140,000. Stream resold $100,000 of the inventory during 2021 and the rest during 2022. For 2020 and then for 2021, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method. (Enter your answers in whole dollars and not in millions. Do not round intermediate calculations.)
Answer:
Stream Company
The amount that Stream Company should report as income from its investment in Q-Video in its external financial statements under the equity method:
2020 = $75,000
2021 = ($30,000)
Explanation:
a) Data and Calculations:
Equity share in Q-Video, Inc. = 30%
Cost of equity investment = $770,000
Q-Video Profits and dividends Stream's share
2020 net income = $250,000 $75,000 ($250,000 * 30%)
2021 net loss of $100,000 ($30,000) ($100,000 * 30%)
2020 dividends = $15,000 $4,500 ($15,000 * 30%)
2021 dividends = $15,000 $4,500 ($15,000 * 30%)
b)The equity method is used by Stream Company because its investment in Q-Video, Inc. is less than 51% and more than 20%. Under the equity method, Stream accounts for its share of net income and net loss. The investment is initially recorded at cost. Adjustments are then made to the cost balance at the end of every period by increasing it with the share of net income and decreasing it with its share of net loss and dividends received.
A corporation wishes to determine the fixed portion of its maintenance expense (a semivariable expense), as measured against direct labor hours, for the first 3 months of the year. The inspection costs are fixed; the adjustments necessitated by errors found during inspection account for the variable portion of the maintenance costs. Information for the first quarter is as follows:
Direct Labor Hours Maintenance Expense
January 34,000 $610
February 31,000 $585
March 34,000 $610
Required:
What is the fixed portion of Jacob's maintenance expense, rounded to the nearest dollar?
a. $283
b. $327
c. $258
d. $541
Answer:
b. $327
Explanation:
The computation of the fixed portion is shown below:
But before that variable maintenance expense per direct labor is
= ($610 - $585) ÷ (34000 hours - 31000 hours)
= $0.00833 per direct labor hour
Now
Total variable expense for 34,000 hours is
= $0.00833 × 34000
= $283
And, finally Fixed portion is
= $610 - $283
= $327
Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows.
Sales Mix
Unit Contribution
Margin
Lawnmowers 20 % $30
Weed-trimmers 50 % $20
Chainsaws 30 % $40
Yard Tools has fixed costs of $4,200,000.
Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix. (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)
Lawnmowers
units
Weed-trimmers
units
Chainsaws
units
Answer:
Lawnmowers= 30,000
Weed-trimmers= 75,000
Chainsaws= 45,000
Explanation:
First, we need to calculate the weighted average contribution margin:
Weighted average contribution margin= sales proportion*unitary contribution margin
Weighted average contribution margin= (0.2*30) + (0.5*20) + (0.3*40)
Weighted average contribution margin= $28
Now, the break-even point in units for the whole company:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Break-even point (units)= 4,200,000 / 28
Break-even point (units)= 150,000
Finally, the number of units to be sold for each product:
Lawnmowers= 0.20*150,000= 30,000
Weed-trimmers= 0.5*150,000= 75,000
Chainsaws= 0.3*150,000= 45,000
Sandhill Co. began operations on January 2, 2020. It employs 13 people who work 8-hour days. Each employee earns 11 paid vacation days annually. Vacation days may be taken after January 10 of the year following the year in which they are earned. The average hourly wage rate was $19 in 2020 and $20.25 in 2021. The average vacation days used by each employee in 2021 was 10. Sandhill Co. accrues the cost of compensated absences at rates of pay in effect when earned.
Prepare journal entries to record the transactions related to paid vacation days during 2020 and 2021.
Answer:
2020
Dr Wages expense $21,836
Cr To vacation wages payable $18,720
On 2021
Dr Wages expense $1,300
Dr Vacation wages payable $19,760
Cr Cash $21,060
2021
Dr Wages expense $23,166
Cr To vacation wages payable $23,166
Explanation:
Preparation of the journal entries to record the transactions related to paid vacation days during 2020 and 2021.
2020
Dr Wages expense $21,836
(13 × 8 hrs × 11 days × $19)
Cr To vacation wages payable $18,720
(Being to record wages expense )
2021
Dr Wages expense $1,300
($21,060-$19,760)
Dr Vacation wages payable $19,760
(13 × 8 hrs × 10 days × $19)
Cr Cash $21,060
(13 × 8 hrs × 10 days × $20.25)
(Being to record cash paid )
2021
Dr Wages expense $23,166
(13 × 8 hrs × 11 days × $20.25)
Cr To vacation wages payable $23,166
(Being to record wages expense )
Quality improvement, relevant costs, relevant revenues. SpeedPrint manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows:
Variable Cost Fixed Cost Total Cost
Rework Cost per hr. $79 $115 $194
Repair Cost
Customer Support cost/hr. 35 55 90
Transportation Cost/load 350 115 465
Warranty repair cost/hour 89 150 239
Speed Print’s current presses have a quality problem that causes variations in the shade of some colors. Its engineers suggest changing a key component in each press. The new component will cost $70 more than the old one. In the next year, however, Speed Print expects that with the new component it will
(1) save 14,000 hours of rework,
(2) save 850 hours of customer support,
(3) move 225 fewer loads,
(4) save 8,000 hours of warranty repairs, and
(5) sell an additional 140 printing presses, for a total contribution margin of $1,680,000. SpeedPrint believes that even as it improves quality, it will not be able to save any of the fixed costs of rework or repair. SpeedPrint uses a 1-year time horizon for this decision because it plans to introduce a new press at the end of the year.
1. Should SpeedPrint change to the new component? Show your calculations.
2. Suppose the estimate of 140 additional printing presses sold is uncertain. What is the minimum number of additional printing presses that SpeedPrint needs to sell to justify adopting the new component?
3. What other factors should managers at SpeedPrint consider when making their decision about changing to a new component?
Answer:
1. Speed print SHOULD CHANGE to the new component
2. Since the new components incremental cost of the amount of $1,260,000 is lesser than the incremental savings of the amount of $1,926,500 which means that it will be of benefit if SpeedPrint invest in the new component.
3. Nonfinancial factors
Explanation:
1. Calculation to show whether Speed print
should change to the new component
First step is to calculate the Relevant costs
Relevant costs = $70 *18,000 copiers
Relevant costs= $1,260,000
Second step is to calculate Relevant Benefits
RELEVANT BENEFITS
Savings in rework costs $1,106,000
($79 *14,000 hours)
Add Savings in customer-support costs $29,750
($35 *850 hours)
Add Savings in transportation costs for parts $78,750
($350 *225 fewer loads)
Add Savings in warranty repair costs $712,000
($89 *8,000 repair-hours)
Add Contribution margin from increased sales $1,680,000
Cost savings and additional contribution margin $3,606,500
($1,106,000+$29,750+$78,750+$712,000+$1,680,000)
Based on the above calculation relevant benefits of the amount of $3,606,500 is higher than the relevant costs of the amount of $1,260,000 which means that Speed print
SHOULD CHANGE to the new component.
2. Based on the above calculation it shows that the new components incremental cost of the amount of $1,260,000 is lesser than the incremental savings of the amount of $1,926,500 which means that it will be of benefit if SpeedPrint invest in the new component.
Calculation for INCREMENTAL SAVINGS
Savings in rework costs $1,106,000
($79 *14,000 rework hours)
Add Savings in customer-support costs $29,750
($35 *850 customer-support hours)
Add Savings in transportation costs for parts $78,750
($350 *225 fewer loads)
Add Savings in warranty repair costs $712,000
($89 *8,000 repair-hours)
Incremental savings $1,926,500
($1,106,000 + $29,750 + $78,750 + $712,000)
3. The factors that the managers at SpeedPrint should consider when making their decision about changing to a new component will be NON-FINANCIAL FACTORS.
Inattentive Driving. While cutting class and driving off campus to check on her new dress for the upcoming formal, Molly, a busy college student, is busy talking on her cell phone with her friend Sharon. Molly is trying to talk Sharon into going to the dance with her brother, who has a big crush on Sharon. Unfortunately for Molly, there is a statute in her state outlawing talking on a cell phone while operating a motor vehicle. Molly crashes into the side of Sam's new convertible when she looks down to pick up a can of soda she just dropped onto her new jeans. A police officer just down the street comes over to investigate. Molly explains to him that it was difficult to hold the cell phone in one hand, the soda in the other, and also drive. The officer was not impressed. Around that time Sam comes along. He is furious regarding the significant dent in his new car. Molly says she has insurance and that she will cover the whole incident. Sam says that is insufficient. The officer is annoyed because it is his lunch break. He tells Molly that she must obey the law and proceeds to write several citations to her. Which of the following is true regarding Molly's predicament?
A. Public law only.
B. Private law only.
C. Public law, private law, civil law, and criminal law.
D. Criminal law and public law only.
E. Civil law and private law only.
Answer:
C.
Explanation:
Under civil law, Molly has caused damages to sam's car and she has to be held liable for this.
She has also violated criminal law as her action is against the public as a unit. She violated this by driving and endangering the lives of people by talking on phone while driving.
She has also violated public alw as criminal law is one of the types of public law.
She is in violation of private law by causing damages to sam's car. Private law has to do with the relationship existing between people, one of such example is the law of property.
Quantitative Problem: Jenna is a single taxpayer. During 2018, she earned wages of $113,000. She doesn't itemize deductions, so she will take the standard deduction to calculate 2018 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $5,200. How much does Jenna owe to the IRS for taxes
Solution :
Item Amount
Income $113,000
Personal exemption for one $ 4,050
Standard deduction $ 6,350
Taxable income $102,600
Therefore the taxable income is $102,600.
Now the tax payable on the taxable income is given by :
Marginal tax rate Amount brackets
10% $0 - $ 9,325
15% $ 9,326 - $ 37,950
25% $ 37,951 -$ 91,900
28% $ 91,901 - $ 191,650
Now according to the above taxable slab, the amount of tax on the wages earned by Jenna is :
Tax payable = [tex]$= (0.1 \times 9325)+(0.15 \times (37950 - 9325))+(0.25 \times (91900 - 37950))+(0.28 \times (102600-91900))$[/tex][tex]$= (0.1 \times 9325)+(0.15 \times 28625)+(0.25 \times 53950)+(0.28 \times 10700)$[/tex]
= 932.5 + 4293.75 + 13487.50 + 2996
= $ 21,709.75
There is also a long term capital gain of $ 5,200 that is earned by selling the common stock.
Now as per IRS, the capital gain of a long term tax percentage for an individual single filer is in 28% tax slab category is 15%.
Therefore the tax on the capital gain of $ 5,200 is = 0.15 x 5200
= $780
Thus the total tax payable by Jenna is = $ 21,709.75 + $ 780
= $ 22,489.75
Tanek Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Tanek is currently operating at full capacity with limited machine time. Sales and production information relevant to each model follows.
Economy Standard Deluxe
Selling price $32 $53 $106
Variable costs and expenses $17 $21 $50
Machine hours required 0.5 0.8 1.6
Required:
a. Calculate contribution margin per unit.
b. What is the contribution margin per unit of limited resource for each product?
Answer and Explanation:
The computation is shown below:
a. The contribution margin per unit is
As we know that
Contribution margin per unit = Selling price - variable cost
So
For economy, it is
= $32 - $17
= $15
For standard, it is
= $53 - $21
= $32
For deluxe, it is
= $106 - $50
= $56
b. Now the contribution margin per unit of limited resources is
For economy, it is
= $15 ÷ 0.5
= $30
For standard, it is
= $32 ÷ 0.8
= $40
For deluxe, it is
= $56 ÷ 1.6
= $35
Golden Eagle Company prepares monthly financial statements for its bank. The November 30 and December 31 adjusted trial balances include the following account information:
30-Nov 31-Dec
debit   credit debit credit
supplies $2,000 $3,500
prepaid Insurance $8,000 $6,000
salaries payable $11,000 $16,000
unearned revenue $3,000 $1,500
The following information also is known:
a. Purchases of supplies during December total $3,500.
b. Supplies on hand at the end of December equal $3,000.
c. No insurance payments are made in December.
d. Insurance cost is $1,500 per month.
e. November salaries payable of $10,000 were paid to employees in December. Additional salaries for December owed at the end of the year are $15,000. On November 1, a tenant paid Golden Eagle $3,000 in advance rent for the period November through January, and Deferred Revenue was credited for the entire amount.
Required:
Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and unearned revenue on December 31.
Answer:
Golden Eagle Company
Adjusting Journal Entries:
a. Debit Supplies $3,500
Credit Cash $3,500
To record the purchase of supplies during December.
b. Debit Supplies Expense $2,500
Credit Supplies $2,500
To record the used supplies for the month.
d. Debit Insurance Expense $1,500
Credit Prepaid Insurance $1,500
To record expired insurance expense for the month.
e. Debit Salaries Payable $10,000
Credit Cash $10,000
To record the payment of salary arrears.
f. Debit Salaries Expense $15,000
Credit Salaries Payable $15,000
To record unpaid salaries for the month.
g. Debit Unearned Revenue $1,000
Credit Earned Revenue $1,000
To record earned revenue for the month.
Explanation:
a) Data and Calculations:
Golden Eagle Company
Adjusted Trial Balances as of November 30 and December 31 (Partial):
30-Nov 31-Dec
Debit Credit Debit Credit
supplies $2,000 $3,500
prepaid Insurance $8,000 $6,000
salaries payable $11,000 $16,000
unearned revenue $3,000 $1,500
Adjusting Entries for Supplies, Prepaid Insurance, Salaries Payable and Unearned Revenue on December 31:
a. Supplies $3,500 Cash $3,500
b. Supplies Expense $2,500 Supplies $2,500
d. Insurance Expense $1,500 Prepaid Insurance $1,500
e. Salaries Payable $10,000 Cash $10,000
f. Salaries Expense $15,000 Salaries Payable $15,000
g. Unearned Revenue $1,000 Earned Revenue $1,000
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $61,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine
Answer:
1. $6,100
2. $3,000
3.$41,000
4.7.3%
Explanation:
1. Calculation for What is the annual depreciation expense associated with the new bottling machine
Depreciation expense= 61,000/10
Depreciation expense=$6,100
2. Calculation for What is the annual incremental net operating income provided by the new bottling machine
Reduction in Operating costs 9,000 ($15,000-$6,000)
Less: Depreciation expense $6000
Incremental net operating income $3,000
3. Calculation for What is the amount of the initial investment
Purchase cost $61,000
Less: Salvage value of old machine $20,000
Initial Investment $41,000
4. Calculation for What is the simple rate of return on the new bottling machine
Incremental net operating income 3000
÷ Initial Investment 41000
Simple rate of return 7.3%
(3,000÷41,000)
For each of the following scenarios, please decide whether there will be an increase, decrease, or no change in aggregate demand.
a. The United States government decides to increase the federal tax rate by 4% for all earners.
b. The Federal Reserve, the agency charged with regulating banking and monetary policy in the United States, decides to increase the amount of money available in the economy.
c. The newest release of the Consumer Confidence Index shows a steady increase in consumer confidence about the economy.
d. A manufacturing boom during the late 1990s has created an oversupply of tractors, a necessary implement in agricultural production.
Answer:
a. Decrease
If the Federal government increases taxes on people, they will have less money to spend and save after paying their taxes. This will reduce their consumption and investment (savings) thereby leading to a lower aggregate demand.
b. Increase
An increase in the money supply means that people will have more money to spend on goods and services. They will therefore consume more. More money in the economy reduces interest rates so people will borrow to invest more as well. These two things will combine for an increase in aggregate demand.
c. Increase
If consumers are more confident about their economy, it means they find it safe to invest in it. As they invest, the investment component of aggregate demand would rise which would increase aggregate demand.
d. Decrease
The oversupply from recent years will mean that investment required in recent years will be less. This will lead to a lower aggregate demand.
Which of the following about writing and revising business documents is most accurate? a. Experienced business writers rarely need to revise. b. Revision is not necessary for informal documents such as internal memos or e-mail messages. c. The real work of revision should happen in the writing stage as you select words and form sentences.
When the message is to be evaluated so it includes an analysis of whether the message attains its motive so this represents the accurateness of writing & revising the business documents.
The following information should be relevant:
Since revision is important so option a and option b is not considered.It can't be done in the writing stage and should be in the flow. So, option c should not be selected. Therefore, option d should be considered.Therefore we can conclude that when the message is to be evaluated so it includes an analysis of whether the message attains its motive so this represents the accurateness of writing & revising the business documents.
Learn more about the message here: brainly.com/question/7723255
It is estimated that the annual sales of an energy saving device will be 20,000 the first year and increase by 10,000 per year unitl 50,000 units are sold during the fourth year. Proposal A is to purchase manufacturing equipment costing $120,000 with an estimated salvage value of $15,000 at the end of 4 years.Proposal B is to purchase equipment costing $280,000 with an estimated salvage value of $32,000 at the end of 4 years. The variable manufacturing cost per unit under proposal A is estimated to be $8,00, but is estimated to be only $2.60 under proposal B. If the interest rate is 9%, which proposal should be accepted for a 4-year production horizon?
Answer:
Proposal B should be accepted
Explanation:
1 2 3 4
Sales(Units) 20,000 30,000 40,000 50,000
Variable Cost (A) 160,000 240,000 320,000 400,000- 15,000
Variable Cost (B) 52,000 78,000 104,000 130,000 - 32,000
PV Factor(9%) 0.917 0.841 0.772 0.708
PV OF Variable Cost(A) 146,720 201,840 247,040 272,580
PV of Variable Cost(B) 47,684 65,598 80,288 69,384
Total PV of Variable Cost of A: $868,180
Total PV of Variable Cost of B: $262,954
Difference in PV of Expenses= $605,226
Difference in PV of Outflow = 280,000 - 120,000 = $160,000
So, Proposal B should be accepted because it has a cost saving of Net $445,226 (605,226 - 160,000).
A partial listing of costs incurred at Archut Corporation during September appears below: Direct materials $ 113,000 Utilities, factory $ 5,000 Administrative salaries $ 81,000 Indirect labor $ 25,000 Sales commissions $ 48,000 Depreciation of production equipment $ 20,000 Depreciation of administrative equipment $ 30,000 Direct labor $ 129,000 Advertising $ 135,000 The total of the manufacturing overhead costs listed above for September is: Multiple Choice $292,000 $50,000 $586,000 $30,000 PrevQuestion 7 of 10 Total7 of 10Visit question mapNext
Answer: $50,000
Explanation:
Manufacturing overhead are the costs that are indirectly related to production.
In this scenario those costs are:
Utilities, Factory, Indirect labor and Depreciation of production equipment.
= 5,000 + 25,000 + 20,000
= $50,000
You have decided to undertake a project and have defined the main research question as "what are the opinions of consumers to a 20% reduction in weight, with the price remaining the same, of a pack of lucky me pancit canton?" Write a hypothesis that you could test in your project.
On October 21, 2004, Abitibi-Consolidated Inc., a large Canadian-based newsprint and groundwood producer, reported net income for its third quarter, 2004, of $182 million. This compares with a net loss for the same quarter of 2003 of $70 million. Sales for the quarter were up, to $1528 million, and earnings excluding low persistence items, was a loss of $27 million. the low - persistence items included a gain of $239 million before tax from foreign exchange conversion. Much of the company's long term debt is denominated in US dollars. The foreign exchange gain arose because of the rising value of the Canadian dollar, relative to the US dollar, during the quarter. Comparable figures for the third quarter of 2003 were as follows: sales of $ 1,340 mil-lion, a loss before low- persistence items of $ 32 million, and foreign exchange conversion gain of $ 13 million. There is no mention of R& D costs in the company’s third quarter report. Its 2003 annual report mentions R& D only in passing, with reference to forest conservation. Presumably, R& D expenditures are relatively low. Abitibi- Consolidated’s share price rose $ 0.59 to $ 7.29 on the Toronto Stock Exchange on October 21, 2004. The S& P/ TSX Composite index gained 59 points to close at 8,847 on the same day. According to media reports, the increases were driven by a "red- hot" materials and energy sect
Solution :
The unexpected earnings is the term used to address the difference between the actual earning of the company for a period as well as the expected earnings for the period. The financial analyst make a mathematical as well as a financial models of the company earnings from the other accounting periods. The unexpected aspect of the earnings also means the price of the stock that can price up of fall dramatically over the course of the day.
Here,
For Q3 2004 2003
Net reported income 82M (70M)
Expected earnings (27M)
Unexpected earnings 55M
Thus we consider the earnings excluding the low persistence items. The low persistence items do not included the sinte there is no continuity or durability of the earnings currently, as they can vary on the large scale.
Also we are given company beta was 0.779 which indicates less volatility. Even though the stock price went up from 0.59 to 0.79, the difference can be considered as the unexpected earnings.
i.e. [tex]$7.29 - 0.59 =6.7 $[/tex] increase per share.
Which of the statements is the best description of inflation? The prices of only consumer goods are increasing. The price of all goods and services have increased proportionately. The price of all goods and services in the economy are increasing. Real GDP is rising. An increase in the overall price level has occurred.
Answer:
An increase in the overall price level has occurred.
Explanation:
Inflation can be defined as the persistent general rise in the price of goods and services in an economy at a specific period of time.
Mathematically, inflation is given by the formula;
Inflation = Nominal interest - Real interest rate
Hence, the best description of inflation is an increase in the overall price level has occurred.
Additionally, economics can be classified into two (2) main categories, namely;
1. Macroeconomics can be defined as the study of behaviors, performance and factors that affect the entire economy. Hence, it focuses on aggregate phenomena such as price level, economic growth, Gross Domestic Product (GDP), inflation, unemployment and national income levels with respect to the central bank, demand or supply shocks, government policies, aggregate spending and savings.
2. Microeconomics can be defined as the study of the effect of price and quantity levels through interactions between individual buyers and sellers in various markets. Simply stated, it focuses on analyzing or evaluating the decisions of consumers (buyers) and those of firms (sellers) such as methods of production, pricing; and the manner in which government policies affect those decisions.
Hence, macroeconomic is a kind of externalities that affects the levels of unemployment, inflation, or growth in the economy as a whole.
Last year Viera Corp had $155,000 of assets, $305,000 of sales, $20,000 of net income, and a debt-to-total-capital ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, total invested capital, sales, and the debt to capital ratio would not be effected. By how much would the cost reduction improve the ROE?
Answer:
13.41%
Explanation:
Calculation for By how much would the cost reduction improve the ROE
First step
Debt value = $155,000 × 37.5%
Debt value = $58,125
Second step
Equity value = $155,000 - $58,125
Equity value $96,875
Third step
= (Net income ÷ Total equity) × 100
Ratio = ($20,000 ÷ $96,875) × 100 = 20.65%
New ROE would be = ($33,000 ÷ $96,875) × 100 = 34.06%
Fourth step
Change in ROE= New ROE - Old ROE
ROE= 34.06% - 20.65%
ROE= 13.41%
Therefore By how much would the cost reduction improve the ROE is 13.41%
Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 20192018 Sales$3,220.0$2,800.0 Operating costs excluding depreciation and amortization2,576.02,380.0 EBITDA$644.0$420.0 Depreciation and amortization90.078.0 Earnings before interest and taxes (EBIT)$554.0$342.0 Interest70.861.6 Earnings before taxes (EBT)$483.2$280.4 Taxes (25%)193.3112.2 Net income$289.9$168.2 Common dividends$260.9$134.6 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 20192018 Assets Cash and equivalents$36.0$31.0 Accounts receivable370.0308.0 Inventories678.0616.0 Total current assets$1,084.0$955.0 Net plant and equipment902.0784.0 Total assets$1,986.0$1,739.0 Liabilities and Equity Accounts payable$315.0$252.0 Accruals269.0224.0 Notes payable64.456.0 Total current liabilities$648.4$532.0 Long-term bonds644.0560.0 Total liabilities$1,292.4$1,092.0 Common stock614.2596.6 Retained earnings79.450.4 Common equity$693.6$647.0 Total liabilities and equity$1,986.0$1,739.0 Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, if necessary. Negative values, if any, should be indicated by a minus sign. What was net operating working capital for 2018 and 2019
Answer:
Calculation of net operating working capital
Particulars 2018 2019
Current asset A $955 million $1,084 million
Current liability B $532.0 million $648.4 million
Net working capital A-B $423 million $435.6 million
Consider an economy in which money does not exist, so that agents rely on barter to carry out transactions. When the economy was small, barter seemed sufficient. However, the economy has now begun to grow. If people in this economy trade five goods, the price tag of each good must list____prices, and the economy requires____prices for people to carry out transactions. Suppose that the number of goods people trade increases to 17. Then the price tag of each good must list____prices, and the number of prices that the economy requires increases to____.
Now suppose that our economy has a money. The government now issues a national currency and there is no longer any barter. In this economy, money and currency are not the same because:____.
1. The fact that the government issues currency means that the currency will be accepted as money by all agents.
2. The fact that the currency is backed by the government means that it will never lose value and will remain a perfect unit of account.
3. Just because the government issues currency does not mean that the currency will be accepted as money, since it must be used as a medium of exchange, store of value and standard of value.
4. Just because the government issues currency does not mean that the currency will be accepted as money, and buyers and sellers still need barter to ensure that money does not lose its value.
Suppose now that our economy is suffering from rapid, ongoing increases in the cost of living. Which characteristic of money is directly negatively impacted in that economy?
1.Medium of exchange.
2.Double coincidence of wants.
3.Store of value.
4.Unit of account.
Answer:
4. Just because the government issues currency does not mean that the currency will be accepted as money, and buyers and sellers still need barter to ensure that money does not lose its value.
Suppose now that our economy is suffering from rapid, ongoing increases in the cost of living. Which characteristic of money is directly negatively impacted in that economy?
3.Store of value.
Explanation:
Assume Bank XYZ has 3 assets and 4 liabilities, with the following information: Assets Liabilities yield dollar value cost dollar value 5% 1,000 0% 3,000 10% 4,000 2% 1,000 20% 2,000 4% 1,000 6% 1,000 We also know the noninterest income is 1,000, the noninterest expense 1,200, the provision for loan losses 50, the realized securities gains and losses 40, and the tax 20. What is the net income of Bank XYZ
Answer:
The answer is "$500".
Explanation:
Calculating the total Interest Income:
[tex]= \$( 5\% \times 1000+10\% \times 4000+20\% \times 2000)\\\\= \$( \frac{5}{100} \times 1000+ \frac{10}{100} \times 4000+ \frac{20}{100} \times 2000)\\\\=\$ (50+400+400) \\\\ =\$ 850[/tex]
Profits of non-interest=$1000
Earnings and losses for shares = $40
For point 1:
The formula for Total Revenue: [tex]= \text{Total Interest Income}+ \text{Non Interest Income} + \text{Realized Securities gains and losses} \\[/tex]
[tex]= \$(850+1000+40) \\\\ = \$ 1890[/tex]
For point 2:
The formula for total Expenditure: [tex]\text{(Interest Expense+Non interest expense+Provision for losses+Taxes)}[/tex]
[tex]\text{Interest expense}= \$( 2 \% \times 1000+4\% \times 1000+6\% \times 1000)[/tex]
[tex]= \$( \frac{2}{100} \times 1000+ \frac{4}{100} \times 1000+ \frac{6}{100} \times 1000) \\\\= \$ (20+40+60)\\\\ =\$ 120[/tex]
Expenditure for non-interest=$1200
Loan and damage provisions = $50
Tax = $20
Complete Expenditures[tex]= \$(120+1200+50+20) = \$ 1390[/tex]
Therefore,[tex]\text{net sales = (Total Revenue-Total Expenditure)}[/tex]
[tex]=\$(1890-1390) \\\\ = \$ 500[/tex]