Answer:
The price index in 1995 would be $59.4
Explanation:
In order to calculate the price index in 1995 we would have to calculate the following formula:
price index in 1995=(Market basket at current year prices/ Market basket at base year prices)*100
Market basket at current year prices=12 hotdogs*price each hotdog+20 bottles of soda*price each bottes of soda
Market basket at current year prices=12 hotdogs*0.9+20 bottles of soda*0.5
Market basket at current year prices=$20.8
Market basket at base year prices =12*1.25+20*1
Market basket at base year prices=$35
Therefore, price index in 1995=($20.8/$35)*100
price index in 1995=$59.4
The price index in 1995 would be $59.4
Suppose an American worker can make 100 chairs or catch 1,000 fish per day. A Chilean worker, on the other hand, can produce 40 chairs or catch 400 fish per day. Which of the following statements is true?
a. Chile has the comparative advantage in chair production.
b. Both the United States and Chile have a comparative advantage in chair production.
c. Neither the United States nor Chile has a comparative advantage in chair production.
d. The United States has the comparative advantage in chair production.
Answer:
Neither the United States nor Chile has a comparative advantage in chair production.
Explanation:
A country has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries.
A countrry has absolute advantage if it produces more quantities of a good when compared to another country.
America:
Opportunity cost in producing chairs = 1,000 / 100 = 10
Opportunity cost in fishing = 100 / 1000 = 0.1
For Chile:
Opportunity cost in producing chairs = 400 / 40 = 10
Opportunity cost in fishing = 40/ 400 = 0.1
Neither the United States nor Chile has a comparative advantage in chair production because they produce at the same opportunity cost.
I hope my answer helps you
The amount of earnings distributed to stockholders can be found in the income statement.
Sally's Choice sells season memberships for $200 each. During January 2017, 60 season memberships were sold. As of March 31, 2017, $3,000 of season membership fees had been collected from customers. The season runs for four months starting March 1, 2017. Which one of the following is an amount reported on the financial statements for the period ending March 31, 2017?
Unearned membership revenue of $3,000
Unearned membership revenue of $9,000
Accounts receivable of $3,000
Membership revenue of $9,000
False
Answer:
Unearned membership revenue of $9,000
Explanation:
The sales on credit during January 2017 was valued at $12,000 ($200 x 60).
In March 2017, customers paid $3,000, leaving the balance of $9,000 outstanding.
Since the season for which sales and collections were made starts March 1, 2017, when reporting the financial statements for the period ending March 31, 2017, the Membership Revenue would be $3,000 only and the balance $9,000 would be reported as Unearned Membership Revenue in the Balance Sheet with a further $9,000 reported in the Accounts Receivable to balance the records.
This shows that Unearned Membership Revenue of $9,000 is the only valid statement.
Sarah and First Financial Corp. enter into an oral employment contract under which First Financial Corp. agrees to hire Sarah for five years. Before Sarah begins, First Financial Corp. backs out of the contract. If Sarah sues to enforce the contract,
she will be able to successfully sue to enforce the contract or receive damages for the full five year term.
she will be able to successfully sue to enforce the contract or receive damages for one year of the contract, but the remaining four years will be unenforceable because of the Statute of Frauds.
she will not be able to enforce it, because it is voidable by First Financial since it violates the Statute of Frauds.
she will not be able to enforce it because fixed term employment contracts are illegal.
Answer:
she will not be able to enforce it, because it is voidable by First Financial since it violates the Statute of Frauds.
Explanation:
All contracts that last for more than one year fall under the Statute of Frauds and therefore, must be in writing and signed by both parties. Even if the contract was for one year and one day, it must be in writing. The non-breaching party, Sarah, cannot even sue for damages corresponding to only the first year because the contract is considered to be one and cannot be divided into parts.
On April 1, 2021, the Electronic Superstore borrows $21 million of which $7 million is due in 2022. Show how the company would report the $21 million debt on its December 31, 2021 balance sheet.
Electronic Superstore
Partial Balance Sheet
December 31, 2021
Current liabilities:
Long-term liabilities:
Total liabilities
Answer:
Electronic Superstore
Partial balance sheet as at December 31, 2021
Current Liabilities
Current portion of long term debt 7,000,000
Long term liabilities
Notes payable 14,000,000
Total Liabilities 21,000,000
As part of the initial investment, Jackson contributes accounts receivable that had a balance of $35,017 in the accounts of a sole proprietorship. Of this amount, $1,229 is deemed completely worthless. For the remaining accounts, the partnership will establish a provision for possible future uncollectible accounts of $740. The amount debited to Accounts Receivable for the new partnership is
Answer: $33788
Explanation:
From the question, we are told that as part of the initial investment, Jackson contributes accounts receivable that had a balance of $35,017 in the accounts of a sole proprietorship and of this amount, $1,229 is deemed completely worthless.
The amount that will be debited to the accounts receivable for the new partnership will be the difference between the balance of $35017 and the $1229 that is seen as been worthless.
= $35017 - $1229
= $33788
Susan wanted to give a diamond pendant to Lucy, her daughter. Susan entered into a contract with Andrew, a dealer who specializes in diamond jewelry. Susan had promised to pay him if he delivered the pendant to Lucy. Andrew withdrew from the contract and Lucy wanted to sue him. Which of the following statements is true in this scenario?
A. Lucy cannot sue Andrew as Susan's promise was gratuitous and therefore unenforceable.
B. Lucy can sue Andrew as she is a creditor beneficiary of the contract.
C. Lucy can sue Andrew as she is a donee beneficiary of the contract.
D. Lucy cannot sue Andrew as she is an incidental beneficiary of the contract.
Answer: Lucy can sue Andrew as she is a donee beneficiary of the contract
Explanation:
From the question, we are told that Susan wanted to give a diamond pendant to Lucy, who is her daughter. Susan then entered into a contract with Andrew, who is a dealer that specializes in diamond jewelry.
Susan had promised to pay him if he delivered the pendant to Lucy but later Andrew withdrew from the contract and Lucy wanted to sue him.
In this case, Lucy cannot sue Andrew because she is a donee beneficiary. It should be noted that as a donee beneficiary of the contract, the will only get the benefit of the contract as a gift but the contract is really between Susan and Andrew. She is not a party to the contract technically.
Doug Pederson Corporation bases its predetermined overhead rate on machine-hours. Data for 2017 appear below: Estimated machine-hours 73,000 Estimated total manufacturing overhead $1,057,730 Actual machine-hours 74,900 Actual total manufacturing overhead $1,147,000 The predetermined overhead rate for 2017 was closest to:
Answer:
Predetermined overhead Absorption rate = $14.5 per machine hour
Explanation
Predetermined Overhead absorption rate(POAR) = Estimate overhead /Estimated machine hours
Estimated overhead = $1,057,730
Estimated machine hours =73,000 hours
Overhead absorption rate = $1,057,730/73,000 hours =$14.48 per machine hour
Predetermined overhead Absorption rate = $14.5 per machine hour
What is the fundamental goal of a business? Do all organizations share this goal?
Answer:
the fundamental goal of business is profit ,yes they share
Explanation:
every organisation wants or look forward to gain or earn profit and look for high capable employees of high capacity of thinking so that they make some extraordinary work
Giorgio Italian Market bought $8,000 worth of merchandise from Food Suppliers and signed a 90-day, 10% promissory note for the $8,000. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)
Answer and Explanation:
The journal entry is shown below:
Cash $8,200
To Notes receivable $8,000
To Interest revenue ($8,000 × 10% × 90 days ÷ 360 days) $200
(being the collection of notes is recorded)
For recording this we debited the cash as it increased the asset and credited the notes receivable and interest revenue as it decreased the assets and increased the revenue
A one-year and two-year bonds currently pays 1.2% and 1.6%, respectively. What is the expected interest rate on a one-year bond next year according to the liquidity premium theory if the two-year term premium is 0.1%
Answer: 1.8%
Explanation:
Liquidity Premium theory posits that investors prefer more liquid securities to less liquid ones.
It can also be used to calculate expected interest by relating to other bond returns.
The formula is;
Interest Rate expected in nth year = (Sum of individual interest rates in n years)/n + Liquidity Premium in nth year
The premium provided is for the two - year bond and the return on the 2 year bond is also given.
Plugging the figures in gives;
1.6% = (1.2% + One year bond expected interest) / 2 + 0.1%
1.6% - 0.1% = (1.2% + interest) / 2
1.5% * 2 = 1.2% + interest
3% = 1.2% + interest
Interest = 3% - 1.2%
Interest = 1.8%
Sheridan Corporation incurred the following transactions.
1.Purchased raw materials on account $46,600.
2.Raw Materials of $40,800 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $7,000 was classified as indirect materials.
3.Factory labor costs incurred on account were $83,700.
4. Time tickets indicated that $55,700 was direct labor and $4,600 was indirect labor.
5. Manufacturing overhead costs incurred on account were $83,700.
6. Depreciation on the company’s office building was $8,900.
7. Manufacturing overhead was applied at the rate of 160% of direct labor cost.
8. Goods costing $93,500 were completed and transferred to finished goods.
9. Finished goods costing $85,100 to manufacture were sold on account for $104,500.
Journalize the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (1) (2) (3) (4) (5) (6) (7) (8) (9) (To record the sale) (To record the cost of the sale)
Answer:
Sheridan Corporation
Journal Entries:
1. Debit Raw Materials Inventory $46,600
Credit Accounts Payable $46,600
To record purchase of raw materials on account.
2. Debit Direct Raw Materials $33,800
Debit Indirect Raw materials $7,000
Credit Inventory $40,800
To record the requisitioning of raw materials to the factor.
4. Debit Direct labor $55,700
Debit Indirect labor $4,600
Credit Cash Account $60,300
To record labor costs incurred.
5. Debit Manufacturing Overhead $83,700
Credit Cash account $83,700
To record manufacturing overhead cost.
6. Debit Depreciation $8,900
Credit Accumulated Depreciation $8,99
To record the depreciation expense for the period.
7. Debit Manufacturing Overhead $5,420
Underapplied Manufacturing Overhead $5,420
To record underapplied manufacturing overhead.
8. Debit Finished Goods Inventory $93,500
Credit Cost of Production $93,500
To transfer completed goods.
9. Debit Cost of Goods Sold $85,100
Credit Finished Goods Inventory $85,100
To record the cost of finished goods.
Explanation:
Journal entries are made to record business transactions. They help classified transactions according to their whether they are to be debited or credit.
Logan, a 50-percent shareholder in Military Gear Inc. (MG), is comparing the tax consequences of losses from C corporations with losses from S corporations. Assume MG has a $111,000 tax loss for the year, Logan's tax basis in his MG stock was $155,500 at the beginning of the year, and he received $80,500 ordinary income from other sources during the year. Assuming Logan's marginal tax rate is 24 percent, how much more tax will Logan pay currently if MG is a C corporation compared to the tax he would pay if it were an S corporation
Answer:
$10,680
Explanation:
Computation of the amount of how much more tax that Logan will pay currently if MG is a C corporation compared to the tax he would pay if it were an S corporation
Logan would pay the amount of $19,320 in taxes if Military Gear Inc. is a C corporation ($80,500 ×24%).
In a situation were it is an S corporation, that means he would pay the amount of $8,640 in taxes (($80,500 - $44,500) × 24%).
Therefore he has to pay the amount of $10,680 more in his taxes which is ($19,320 - $8,640) currently if Military Gear, Inc.
Logan's tax basis $155,500 -$111,000 tax loss for the year =$44,500
Therefore the amount of money that Logan will tend to pay MG is a C corporation compared to the tax he would pay if it were an S corporation would be $10,680.
Record the journal entry for Sales and for Cash Over and Short for each of the following separate situations.
a. The cash register's record shows $420 of cash sales, but the count of cash in the register is $430.
b. The cash register's record shows $980 of cash sales, but the count of cash in the register is $972.
Answer:
1.Dr Cash $430
Dr Cash Over and Short $10
Cr Sales $420
2.Dr Cash $980
Dr Cash Over and Short $8
Cr Sales $972
Explanation:
Preparation of the journal entry for Sales and for Cash Over and Short for each of the following separate situations.
1. Since the cash register's record already shows $420 of the cash sales in which the count of cash in the register was $430 this means we have to record the transaction as:
Dr Cash $430
Dr Cash Over and Short $10
($430-$420)
Cr Sales $420
2.. Since the cash register's record already shows $972 of the cash sales in which the count of cash in the register was $980 this means we have to record the transaction as:
Dr Cash $980
Dr Cash Over and Short $8
($980-$972)
Cr Sales $972
Suppose the opportunity cost of capital is 10 percent and you have just won a $1 million lottery that entitles you to $100,000 at the end of each of the next ten years. Alternatively, you can accept an immediate cash payment of $600,000. Ignoring the tax implications, which option is better and by how much?
Answer:
It is more convenient to accept the first offer. It has a higher present value than accepting $600,000 now. Exactly $14,456.712
Explanation:
Giving the following information:
Discount rate= 10%
Offer:
Cash flow= $100,000
Years= 10
Or:
You can accept an immediate cash payment of $600,000.
First, we need to calculate the present value of the first offer. We will determine the final value, and then, the present value.
FV= {A*[(1+i)^n-1]}/i
A= annual cash flow
FV= {100,000*[(1.10^10)-1]} / 0.10
FV= 1,593,742.46
Now, the present value:
PV= FV/(1+i)^n
PV= 1,593,742.56/ (1.10^10)
PV= $614,456.712
It is more convenient to accept the first offer. It has a higher present value than accepting $600,000 now. Exactly $14,456.712
In which of the following situations will the acting party be liable for the tort of negligence? Explain fully.
a.
Shannon goes to the golf course on Sunday morning, eager to try out a new set of golf clubs she has just purchased. As she tees off on the first hole, the head of her club flies off and injures a nearby golfer.
b.
Shannon goes to the golf course on Sunday morning. While she is teeing off at the eleventh hole, her golf ball veers off toward a roadway next to the golf course and shatters the windshield of a car.
c.
Shannon's physician gives her some pain medication and tells her not to drive after she takes it, as the medication induces drowsiness. In spite of the doctor's warning, Shannon decides to drive to the store while on the medication. Owing to her lack of alertness, she fails to stop at a traffic light and crashes into another vehicle, causing a passenger in that vehicle to be injured.
Answer:
C). Shannon's physician gives her some pain medication and tells her not to drive after she takes it, as the medication induces drowsiness. In spite of the doctor's warning, Shannon decides to drive to the store while on the medication. Owing to her lack of alertness, she fails to stop at a traffic light and crashes into another vehicle, causing a passenger in that vehicle to be injured.
Explanation:
Negligence is defined as the 'tort whereby a duty of reasonable or standard care as defined by law is breached, causing damage or any conduct short of .'
In the above situation, Shanon was aware of the after-effects of the medication she took as her physician instructs her to not drive because she may feel drowsy. Despite this warning, her decision to drive to the store reflects her negligence i.e. 'intentional action that falls below the legal standard for preventing unreasonable damage or harm.' Thus, option C is the correct answer.
Pre-determined overhead rates are calculated by dividing estimates of total factory overhead cost in the upcoming accounting period (usually a year) by an estimated usage or capacity of some unit of related activity (such as direct labor hours).
A. True
B. False
Answer:
The correct option is A, true
Explanation:
The predetermined overhead absorption rate is a forecast overhead rate usually computed by estimated total factory overhead by the planned usage or capacity of the unit of the activity.
This is more like planning ahead for the overhead to be incurred, hence the correct option is A , which truly supported that the statement made in the question
Calico Corporation produced 1 comma 900 units in Job 903. The following data is provided for Job 903 for the year: Direct materials used $ 3 comma 100 Direct labor costs $ 819 Actual manufacturing overhead rate per direct labor hour $17.15 Predetermined manufacturing overhead rate per direct labor hour $ 18.00 Direct labor hours used in Job 903 39 Direct labor rate per hour $ 21 What is the unit cost for Job 903? (Round to two decimal places.)
Answer:
Unitary cost= $2.23
Explanation:
Giving the following information:
Units= 1,900
Direct materials used $3,100
Direct labor costs $819
Predetermined manufacturing overhead rate per direct labor hour $8.00
Direct labor hours used in Job 903= 39
We will consider the predetermined overhead rate.
First, we need to calculate the total cost:
Total cost= 3,100 + 819 + 8*39= $4,231
Now, the unitary cost:
Unitary cost= 4,231/1,900= $2.23
Compare the roles of the United Nations, the World Bank, the European Union, the World Trade Organization, and non-governmental organizations. If you could gain the support of just one of these institutions for a policy you favored, which would you choose
Answer:
The United Nations
Explanation:
The united nations ensures peace and security to the world,which is the most important thing
The WTO is a broad international organization whose members account for more than 90% of global trade, whereas the EU, as a WTO member, is a geographically limited and tightly integrated organization.
What is the main role of the World Bank?The World Bank Group works with emerging countries to reduce poverty and increase economic stability, whereas the International Monetary Fund serves to steady the global monetary system and acts as a currency monitor.
The World Bank, officially the World Bank Group, is an international organization affiliated with the United Nations (UN) that finances projects that help member countries' economic development. The World Bank, headquartered in Washington, D.C., is the largest source of financial aid to developing countries.
Learn more about the World Bank, the European Union, and the World Trade Organization here:
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Bobbi and Stuart are partners. The partnership capital of Bobbi is $35,300 and that of Stuart is $77,700. Bobbi sells his interest in the partnership to John for $55,900. The journal entry to record the admission of John as a new partner would include a credit to a.Stuart's capital account for $56,500 b.John's capital account for $35,300 c.John's capital account for $55,900 d.John's capital account for $35,300 and a credit to Stuart's capital account for $77,700
Answer:
The correct answer is:
John's capital account for $35,300 (c.)
Explanation:
In the admission of a new partner, the purchase of ownership from an existing partner to a new partner is entirely a personal transaction between the existing partner and the new partner, and the extent of partner bonus (the interest sold on the original partnership amount) is acquired by the exiting partner, but this bonus is not reflected in the partnership agreement, hence the amount credited into the new partner's account is the same as that owned previously by the exiting partner, irrespective of how much the partnership ownership was sold for.
Hence, since Bobbi's partnership capital was $35,300, John's account would be credited with the same amount even if the ownership was sold for $55,900, as the bonus goes to Bobbi.
Orion Flour Mills purchased a new machine and made the following expenditures:
Purchase price $55,000
Sales tax 5,000
Shipment of machine 800
Insurance on the machine for the first year 500
Installation of machine 1,600
The machine, including sales tax, was purchased on account, with payment due in 30 days. The other expenditures listed above were paid in cash.
Required:Record the above expenditures for the new machine.
Transaction General Journal Debit Credit
Answer:
Orion Flour Mills Journal entry
Dr Equipment 62,400
Dr Prepaid Insurance 500
Cr Cash 2,900
Cr Accounts Payable 60,000
Explanation:
Calculation for cost of equipment
Purchase price 55,000
Add: Sales tax 5,000
Add: Shipment of machine 800
Add: Installation 1,600
Total Cost of Equipment 62,400
Calculation for Cash
Shipment of machine 800
Add Insurance on the machine for the first year 500
Add Installation 1,600
Total Cash 2,900
Calculation for Accounts Payable
Purchase price 55,000
Add: Sales tax 5,000
Total Account payable 60,000
Orion Flour Mills purchased a new machine and made the following expenditures:
Purchase price
$65,000
Sales tax
5,500
Shipment of machine
900
Insurance on the machine for the first year
600
Installation of machine
1,800
The machine, including sales tax, was purchased on account, with payment due in 30 days. The other expenditures listed above were paid in cash.
Required:
Record the above expenditures for the new machine.
Answer:
When buying PPE, the way to record it is to capitalize every expense that enabled the PPE to be brought to the location required and then set up for use. This includes the actual cost of the machine, the sales taxes (part of purchases price so must be included), the shipment of the machine as well as installation costs.
The Insurance paid (prepaid) is an expense for the period and so will not be capitalized.
Total cost of the machine therefore is;
= 65,000 + 5,500 + 900 + 1,800
= $73,200
Only the machine and the sales tax were purchased on account.
= 65,000 + 5,500
= $70,500
The rest in cash.
Journal Entry is
DR Machinery $73,200
DR Prepaid Insurance $600
CR Cash $3,300
CR Accounts $70,500
(To record purchase of equipment)
A firm considers to buy a machine in 2020. The cost of that machine is $ 5 000 000. The firm uses 5 year straight line depreciation which allows it to write off $ 1 000 000 depreciation expense each year. The firm is subject to 20% corporate tax rate. The firm's revenue in 2021 is expected to be $ 6 000 000 if the investment is not done. The revenue will be $ 9 000 000 if the investment is done. The firm's total costs (including both COGS and General&Administrative Costs) will be $ 4 000 000 if the investment is not done. The total costs will be $ 5 500 000 if the investment is done. Also the following information is given for the year 2021
Without Investment With Investment
Inventories $ 300 000 $ 500 000
Acc. Receivables $ 200 000 $ 300 000
Acc. Payables $ 100 000 $ 150 000
Given the above information, calculate the free cash flow of that investment for the years 2020 and 2021.
Answer and Explanation:
The computation of the free cash flow of the investment for the year 2020 and 2021 is shown below:
Particulars Case 1 Case 2
Without Investment With Investment
Add: Earnings Before
Interest and
Tax × (1 - Tax Rate) $2,000,000 $2,500,000
Add: Non Cash Expenses $0 $1,000,000
less: Change in
(Current Assets
- Current Liabilities) ($400,000) ($650,000)
Less: Capital Expenditure $0 ($5,000,000)
Free Cash Flows $1,600,000 ($2,150,000)
Working notes:
1.
Particulars Without Investment With Investment
Revenue for the Year 2021 $6,000,000 $9,000,000
Less: Cost of Goods Sold $4,000,000 $5,500,000
(-) Depreciation $0 $1,000,000
Earnings Before
Interest and Tax $2,000,000 $2,500,000
Tax Savings on Depreciation
(Depreciation × 20%) $0 $200,000
2.
Current Assets Without Investment With Investment
Inventories $300,000 $500,000
Accounts Receivable $200,000 $300,000
Total $500,000 $800,000
(Less: Current Liabilities)
Accounts Payable $100,000 $150,000
Less: Change in
(Current Assets
- Current Liabilities) $400,000 $650,000
National Java offers to buy 5,000 pounds of coffee beans from Fair Enough Coffee, Inc. without stating a price. Fair Enough accepts the offer. With respect to this arrangement
A. there is a contract, and National Java may set the price at whatever it wishes.
B. there is no contract, because National Java failed to state a price in its offer.
C. there is a contract, and the price will be a reasonable price at the time of delivery.
D. there is a contract, and Fair Enough may set the price at whatever it wishes.
Answer: B. there is no contract, because National Java failed to state a price in its offer.
Explanation:
For a Contract to be legally binding, the most rudimentary of contract rules is required which is that of Offer and Acceptance.
In Offer and Acceptance, one party makes an offer and if the other party has no qualms with the offer they will agree with the offer with the condition being that services will be provided to them by the former and they being the latter will accept those services and then settle their side of the bargain. Their side of the bargain will be whatever it is that the former wants for providing the services that they will.
Should the former party not state what it is they want for their services then the latter cannot know what it is they should do to fulfil their side of the contract so the contract cannot stand.
National Java did not state what it wanted for providing 5,000 lbs of coffee beans so Fair Enough Coffee cannot know what to pay them for it. There is no contract.
A couple received a $131,000 inheritance the year they turned 48 and invested it in a fund that earns 6.1% compounded semiannually. If this amount is deferred for 14 years (until they retire), how much will it provide at the end of each half year (in dollars) for the next 20 years after they retire
Answer:
It will provide an amount of $13,259
Explanation:
According to the given data we have the following:
present value of deferred annuity=$131,000
i=0.061/2=0.0305
n=20*2=40
k=14*2=28
Therefore, to calculate how much will it provide at the end of each half year (in dollars) for the next 20 years after they retire we would have to calculate the following formula:
$131,000=R(1-(1+0.0305)∧-40/0.0305)*(1+0.0305)∧-28
$131,000=R(1-(1.0305)∧-40/0.0305)* (1.0305)∧-28
$131,000=R(1-0.3006/0.0305)* 0.4311
$131,000=R(22.93)*(0.4311)
R=$131,000/9.88
R=$13,259
It will provide an amount of $13,259
Ajax Inc. was formed on April 25 and elected a calendar year for tax purposes. Ajax paid $11,200 to the attorney who drew up the articles of incorporation and $5,100 to the CPA who advised the corporation concerning the accounting and tax implications of its organization. Ajax began business operations on July 15. To what extent can Ajax deduct its $16,300 organizational costs on its first tax return
Answer: $5,377
Explanation:
$5,000 can be deducted from Ajax inc. $16,300 organizational costs and must capitalize the $11,300 which remains.
The capitalized cost can be amortized for a period of 180 months at a rate of $62.78 per month.
If Ajax inc. decides to follow this direction, Ajax can also deduct $377 amortization this sums up to
(6 months × $62.78).
Ajax inc. can save $377 more by deducting $5,377 organizational cost from its first tax return.
A company issued 1,000 shares of $10 par value common stock due to a previously declared stock dividend; the market value at both the date of declaration and distribution was $12 per share. Which of the following correctly describes the reporting of this stock issue within the financing activities section of the cash flow statement?
a) A cash outflow of $10,000
b) A cash outflow of $2,000
c) A cash outflow of $12,000
d) There is no cash flow
Answer:
d) There is no cash flow
Explanation:
There is no cash flow because a stock dividend refers to a dividend that is paid by issuing additional shares to shareholders of a company instead of paying them a cash dividend.
Therefore, there is no cash flow since no cash is received nor paid.
Note: To record stock dividends, the amounts is moved from retained earnings to paid-in capital; and the evidence that no cash is received nor paid is that the journal entries for the issue of stock dividend will be as follows:
Debit Retained for $12,000 (i.e. 1,000 * $12 = $12,000)
Credit Common Stock for $10,000 (i.e. 1,000 - $10 = $10,000)
Credit Additional Paid-In Capital in Excess of Par - Common Stock for $2,000 ($12,000 - $10,000)
Francis Inc.'s stock has a required rate of return of 10.25%, and it sells for $87.50 per share. The dividend is expected to grow at a constant rate of 6.00% per year. What is the expected year-end dividend, D1
Answer:
D1 is $3.72
Explanation:
The constant growth model of Dividend discount model approach (DDM) is used to calculate the fair price per share of a stock today when the dividends of a stock are growing at a constant rate forever. It values the stock based on the present value of the expected future dividends. The formula for price per share today is,
P0 = D1 / r - g
WHERE,
D1 is dividend expected for the next periodr is the required rate of return on the stockg is the growth rate in dividendsPlugging the values of the available variables, we calculate the value of D1 to be,
87.5 = D1 / (0.1025 - 0.06)
87.5 * 0.0425 = D1
D1 = $3.71875 rounded off to $3.72
Bret and Jay finalized their divorced in 2018. The divorce decree provides that Bret must pay Jay $20,000 per year until their child turns 18 years old in Year 5, upon which the payments will be reduced to $15,000 until Jay’s death. During Year 2, Bret and Jay agreed that Bret would pay $16,000 directly to Jay and $4,000 to a private school for their child’s tuition. What amount, if any, of these payments should be reported as taxable income in Jay’s Year 2 income tax return?
Answer:
First, it's important to note that the United States of America uses a progressive tax system.
Thus, the amount to be reported as taxable income depends on the method Jay opts for. When tax deductions, you can use the Standard Deduction Method or the Itemized Deduction Method.
Explanation:
The standard deduction basically is a flat-dollar reduction in ones Adjusted Gross Income (AGI). In this method, the reduction one is qualified for depends on their filing status. Various kinds of filing statues include:
Single Married, filing jointly Married, filing separately Head of householdGiven that Jay is now single, the amount she can declare as taxable income is $16,000 - $12,400 which is $3,600.
Under the itemized deduction method, Jay can claim a lot of credits. The more credit she claims, the less tax she'll have to pay. However, based on the question, given that she is the one taking care of the child, she can claim up to 20% to 35% of up to $3,000 of daycare and similar costs for a child under if their child is less than thirteen years of age.
Cheers!
g in computing the present value of lease payments, the lessee shoulduse the lessee's incremental borrowing rate unless the lessor's implicit interest rate is known to the lessee. expected rate of return. settlement rate. none of these answer are correct
Answer:
b on edg
Explanation:
A project with an initial investment of $451,700 will generate equal annual cash flows over its 8-year life. The project has a required return of 8.9 percent. What is the minimum annual cash flow required to accept the project
Answer:
$81,307.55
Explanation:
The minimum annual cash flow required to accept the project is the equal annual cash flow that makes net present value of the project to be at least equal to zero. In other words, it is the equal annual cash flow that equates the initial investment and the summation of the present values (PV) of all the 8-year equal annual cash flow.
This can be estimated as using the formula for calculating the ordinary annuity as follows:
PV = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] …………………………………. (1)
Where;
PV = Present values of equal annual cash flow that is equal to Initial investment = $451,700
P = annual cash flow = ?
r = required return = 8.9% = 0.089
n = number of years = 8
Substitute the values into equation (1) to have:
$451,700 = P × [{1 - [1 ÷ (1 + 0.089)]^8} ÷ 0.089]
$451,700 = P × 5.55544994023063
P = $451,700 / 5.55544994023063
P = $81,307.5457181148
P = $81,307.55 when approximated to two decimal places.
Therefore, the minimum annual cash flow required to accept the project is $81,307.55.