Answer:
234.3399
Explanation:
The wholesale cost of a video game is $459.45. The original markup was 51% based on selling price. The final sale price after the following series of price changes would be a markup of 24%. Thus option (a) is correct.
What is a cost?The cost is the expenditure or spending required or incurred to create and sell products and services, or to acquire assets.
When a product is sold or consumed, a cost is charged to expense. In the case of a buying of an asset, the charge to expense could be significantly deferred.
The cost concept underlies the transition of assets from the balance sheet to expenses in the income statement.
The cost can be a fixed cost like the lease of a building which will not vary every month or can be a variable cost like the telephone cost which can vary every month.
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The tangible assets of an organization include
A. Company reputation
B. Patents
C. Real estate
D. Technical knowledge
Answer:
a. company reputation
Explanation:
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You have just been hired as the accountant for Fan-Tastic Sports Gear Inc., a wholesaler of sporting goods and apparel. The previous accountant left abruptly in late December, 20Y7, and an accounting intern has been drafting the journal entries since January. You are examining the accounting records before finalizing the journal entries for the first quarter of 20Y8. The following journal shows some of the accounts receivable transactions that you are reviewing.
JOURNAL
ACCOUNTING EQUATION
DATE DESCRIPTION POST. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1 Jan.
17 Sales 9,600.00
2 Bad Debt Expense 9,600.00
3 17 Bad Debt Expense 9,600.00
4 Accounts Receivable-
CJ’s Sports Corp. 9,600.00
5 21 Cash 10,700.00
6 Bad Debt Expense 2,200.00
7 Accounts Receivable-Four
Seasons Sportswear Co. 12,900.00
8 Feb.
15 Accounts Receivable-Healthy
Running Inc. 3,000.00
9 Bad Debt Expense 500.00
10 Sales 3,500.00
11 Mar.
4 Accounts Receivable-Four
Seasons Sportswear Co. 2,200.00
12 Bad Debt Expense 2,200.00
13 4 Cash 2,200.00
14 Bad Debt Expense 2,200.00
15 13 Cash 5,540.00
16 Accounts Receivable-
Barb’s Best Gear 5,540.00
17 31 Bad Debt Expense 20,970.00
18 Accounts Receivable-
Healthy Running Inc. 5,150.00
19 Accounts Receivable-
The Locker Room 4,100.00
20 Accounts Receivable-
CJ’s Sports Corp. 2,780.00
21 Accounts Receivable-
Get Your Gear Inc. 7,050.00
22 Accounts Receivable-
Ready-2-Go 1,890.00
CHART OF ACCOUNTS
Fan-Tastic Sports Gear Inc.
General Ledger
ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable-Healthy Running Inc.
122 Accounts Receivable-The Locker Room
123 Accounts Receivable-CJ’s Sports Corp.
124 Accounts Receivable-Get Your Gear Inc.
125 Accounts Receivable-Four Seasons Sportswear Co.
126 Accounts Receivable-Ready-2-Go
127 Accounts Receivable-Barb’s Best Gear
132 Notes Receivable-Fast Feet Co.
136 Interest Receivable
141 Inventory
145 Office Supplies
151 Prepaid Insurance
181 Land
191 Store Equipment
192 Accumulated Depreciation-Store Equipment
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
211 Salaries Payable
212 Unearned Rent
213 Customer Refunds Payable
215 Notes Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
610 Rent Revenue
612 Interest Revenue
EXPENSES
510 Cost of Goods Sold
520 Sales Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Store Equipment
523 Delivery Expense
529 Miscellaneous Selling Expense
530 Office Salaries Expense
531 Rent Expense
532 Depreciation Expense-Office Equipment
533 Insurance Expense
534 Office Supplies Expense
536 Credit Card Expense
537 Cash Short and Over
538 Bad Debt Expense
539 Misc. Administrative Expense
710 Interest Expense
1. Finalize the journal entries shown on the Fan-Tastic Sports Gear Inc. panel and make any necessary changes.
2. Journalize the entry needed to record information about the note receivable from Fast Feet for the year 20Y7.
3. Journalize the entry needed to record collection of the note at maturity on March 19, 20Y8.
Answer:
Accounts Receivable (Dr.) $9,600
Sales (Cr.) $9,600
Bad debt expense (Dr.) $500
Accounts Receivable (Cr.) $500
Bad Debt Expense (Dr.) $2,200
Accounts Receivable (Cr.) $2,200
Notes Receivable - Fast Feet (Dr.) $3,600
Sales (Cr.) $3,600
Explanation:
Fan-Tastic Sports Gear Inc., has incurred business transactions. It has recorded sales to Sportswear Co on accounts. The money is not received and the accounts receivable are offset by recording bad debt expense.
Forming a joint venture with an existing foreign company offers all of the following advantages excepta.providing control over product attributes.b.joining an established firm.c.requiring less commitment from all parties involved in the joint venture.d.providing immediate marketing knowledge.e.providing reduced risk.
Answer:
The correct answer is the option C: Requiring less commitment from all parties involved in the joint venture.
Explanation:
To begin with, the name of "joint venture" in the field of business refers to the method and strategy whose process consists of incorporating two or more parties into one only form of company with the final purpose of increasing the sales of every party included in the agreement and doing that by different ways. Moreover, generally this strategy has its focus on the fact of entering a new market or acquiring new management that will come with more resources and more. So that is why that it brings a lot of advantages as stated in the case presented but absolutely not less commintment from every party involved in it.
Koch traded Machine 1 for Machine 2 when the fair market value of both machines was $49,750. Koch originally purchased Machine 1 for $75,500, and Machine 1's adjusted basis was $40,250 at the time of the exchange. Machine 2's seller purchased it for $64,750 and Machine 2's adjusted basis was $55,250 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange
Answer:
machine 2 45,000
acc depreciation mchine 1 35,000
machine 1 75,000
The seller valuation are not relevant the important is the fair value. Which is 50,000.
If there was commercial substance we will recognize a gain for 5,000
(50,000 fair value - 45,000 book value)
However, we are not given with information of commercial substance, so we should not recognize any gain or loss in trade.
The machine 2 will enter the accounting for the same value as the previous machine net book.
Explanation:
Fox Corporation has provided its contribution format income statement for June. The company produces and sells a single product: sales (2,700 units), $261,900; variable costs, $102,600; contribution margin, $159,300; fixed costs, $136,300; and operating profit, $23,000.If the company sells 3,000 units, its total contribution margin should be closest to _____.A. $25,556
Answer:
Total contribution margin= $177,000
Explanation:
First, we need to calculate the unitary contribution margin:
Unitary contribution margin= total contribution margin / number of units
Unitary contribution margin= 159,300 / 2,700
Unitary contribution margin= $59
Now, the total contribution margin for 3,000 units:
Total contribution margin= 3,000*59
Total contribution margin= $177,000
Nittany Company borrowed $60,000 from Lion Corporation on September 1, 2018 signing a 9-month payable with an interest rate of 3%. Nittany Co operates on a calendar year basis and is preparing its year-end financial statements In preparing its Income Statement for 2018, what amount of Interest Expense should Nittany Co. report from this note payable
Answer:
the interest expense that should be recorded in the income statement is $600
Explanation:
The computation of the interest expense is shown below:
= Borrowed amount × rate of interest × given months
= $60,000 × 0.03 ÷ 12 × 4 months
= $600
Hence, the interest expense that should be recorded in the income statement is $600
The following information was taken from the records of Waterway Inc. for the year 2020: Income tax applicable to income from continuing operations $216,920; income tax applicable to loss on discontinued operations $29,580, and unrealized holding gain on available-for-sale securities (net of tax) $17,400.
Gain on sale of equipment $110,200
Cash dividends declared $174,000
Loss on discontinued operations 87,000
Retained earnings January 1, 2020 2,640,000
Administrative expenses 278,400
Cost of goods sold 986,000
Rent revenue 46,400
Selling expenses 348,000
Loss on write-down of inventory 69,600
Sales Revenue 2,204,000
Shares outstanding during 2020 were 100,000.
Required:
Prepare a single-step income statement.
Answer:
Waterway Inc.
Single-step income statement
Particular Amount
Sales Revenue $2,204,000
Add: Rent Revenue $46,400
Total Revenue $2,250,400
Less: Expense
Cost of goods sold $986,000
Selling Expense $348,000
Administrative Expenses $278,400
Total Expenses $1,612,400
Income from operations $638,000
Other revenues and gains
Add: Gain on sale of equipment $110,200
Other expenses and losses
Less: Loss on write-down of inventory $69,600
Income from continuing operations $678,600
before income taxes
Less: Income taxes $216,920
Income from continuing operations $461,680
Discontinued operations:
Loss on discontinued operations $87,000
Income tax at loss on discontinued $29,580 $116,580
operation
Net Income $345,100
Per share of common stock:
Income from continuing operations (income from continuing operations /share outstanding = ($461,680/ 100000) = $4.62
Loss on discontinued operations, net of tax ($116,580 /100000) = $1.17
Net Income ($345,100/100,000) = $3.45
Read the descriptions and identify which region each one describes.
1. Historically, this region has suffered from extreme poverty, which continues to this day. Growth has been effectively zero since the 1960s. Problems such as political instability, poor public health and a lack of effective institutions have all contributed to its stagnation.
2. Until the middle of the last century, these countries were relatively poor. Beginning in the mid 1970s, real GDP per capita growth has averaged 6% per year. The growth was achieved in part because of high levels of investment spending in the development of human and physical capital and rapid technological progress.
3. In the early 1990s, this region was in the middle of substantial social and economic reform. Countries in this region have experienced variable growth rates, depending on their ability to adapt to the modern market economy.
4. In the early 20th century, this region was reasonably prosperous. Since that time, however, growth has stagnated, owing to government instability, banking failures, and runaway inflation. Recently, some countries in the region have begun to grow more consistently, with one country becoming a powerhouse of world economic development.
A. European Transition Economies
B. North Africa
C. South Africa
D. Asian Tigers
E. North America
F. Western Europe
G. South America
H. Sub-Saharan Africa
Answer:
Identifying regions with appropriate descriptions:
Description Region
1. H. Sub-Saharan Africa
2. D. Asian Tigers
3. A. European Transition Economies
4. G. South America
Explanation:
One factor which promotes negative economic growth is political instability. There is also the lack of human and physical development and social and economic reforms, including inconsistencies in governmental policies. For the economy of a region to grow out of poverty, governments must collaborate to pursue reforms on a large scale.
What is a benefit of joining a professional organization for your chosen career path?
Answer: experience
Explanation: This will give the opportunity to show off your skills in the organization you have chosen plus it would be hands on and they can show you things to enhance your skills you learned.
At the beginning of Year 1, a company reported a balance in common stock of $164,000 and a balance in retained earnings of $64,000. During the year, the company issued additional shares of stock for $54,000, earned net income of $44,000, and paid dividends of $11,400. In addition, the company reported balances for the following assets and liabilities on December 31.
Assets Liabilities
Cash $53,600 Account payable $9,100
Supplies 13,400 Un-earned revenue 2,400
Prepaid rent 24,000 Salaries payable 3,500
Land 200,000 Notes payable 15,000
Required:
a. Prepare a statement of stockholders' equity.
b. Prepare a balance sheet.
Answer:
Explanation:
The preparation of the statement of stockholder equity and balance sheet is presented below:
a. Statement of stockholder equity
Particulars Common stock Retained earnings Total stock equity
Beg balance $150000 $50,000 $200,000
Add: Addi shares $40,000 $40,000
Add: Net income $30,000 $30,000
Less: dividend -$10000 -$10000
Total $190,000 $70,000 $260,000
b. Balance sheet
Assets Amount
Cash $52,600
Supplies $13,400
Prepaid rent $24,000
Land $200,000
Total assets $290,000
Liabilities Amount
Account payable $9,100
Un-earned revenue $2,400
Salaries payable $3,500
Notes payable $15,000
Stockholder equity $260,000
Total liabilities & stockholder equity $290,000
The following Information applies to the questions displayed below.) Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the variable and fixed portions of It car washing costs. The company operates its own car wash facility in which each rental car that is returned is thoroughly cleaned before being released for rental to another customer. Management belleves that the variable portion of its car washing costs relates to the number of rental returns. Accordingly, the following data have been compiled:
Month Rental Returns Car Wash Costs
January 2,380 $ 10,825
February 2,421 $ 11,865
March 2,586 $ 11,332
April 2725 $ 12422
May 2968 $ 13850
June 3281 $ 14419
July 3,353 $ 14,935
August 3,489 $ 15,738
September 3,057 $ 13,563
October 2,876 $ 11,889
November 2,735 $ 12,683
December 2,983 $ 13,796
Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost Incurred to wash cars. (Round Fixed cost to the nearest whole dollar amount and the Varlable cost per unit to 2 decimal places.)
Answer:
a. The variable cost per rental return is $4.04.
b. The monthly fixed cost Incurred to wash cars is $1,376.
Explanation:
Note: See the attached excel file for the calculations of Rental Returns (x), Car Wash Costs (y), xy, and x^2.
Since Σ = Total of or summation of, we can therefore obtain the following from the attached excel file:
Σx = 34,854
Σy = 157,317
Σxy = 462,541,971
Σx^2 = 102,623,516
N = Number of months = 12
a. calculation of variable cost per rental return
To calculate the variable cost per rental return, the following formula is used:
Variable cost per rental return = (NΣxy − ΣxΣy) /((NΣx²) − (Σx)²) ……………… (1)
Substituting the relevant values into equation (1), we have:
Variable cost per rental return = ((12 * 462,541,971) - (34,854 * 157,317)) / (((12 * 102,623,516) - 34,854^2)
Variable cost per rental return = 4.03917240317595
Rounding to 2 decimal places as required, we have:
Variable cost per rental return = $4.04
Therefore, the variable cost per rental return is $4.04.
b. Calculation of monthly fixed cost Incurred to wash cars
To calculate the monthly fixed cost Incurred to wash cars, the following formula is used:
Fixed Cost per month = {Σy - (Variable cost per rental return * Σx) / N ....... (2)
Substituting the relevant values into equation (2), we have:
Fixed Cost per month = (157,317 - (4.04 * 34,854)) / 12
Fixed Cost per month = $1,375.57
Rounding to the nearest whole dollar amount as required, we have:
Fixed Cost per month = $1,376
Therefore, the monthly fixed cost Incurred to wash cars is $1,376.
The variable cost per rental return is $4.04 and the fixed cost per month is $1378.
The following can be depicted from the question
Σx = 34,854
Σy = 157,317
Σxy = 462,541,971
Σx² = 102,623,516
N = number of months = 12
Variable cost per rental return will be:
= ( N Σxy − Σx Σy)/{(N Σx²) − (Σx)²}
= {( 12 × 462,541,971) - (34,854 × 157,317) } / {(12 ×102,623,516) - (34,854)²}
= (5,550,503,652 - 5,483,126,718) / (1231482192 - 1214801316)
= 67,376,934 / 16680876
= $4.04
Fixed Cost per month will be:
= {Σy - ( Variable cost per rental return × Σx )/N
= {157,317 - (4.04 × 34,854)} /12
= ( 157,317 - 140,810.16) /12
= $1378
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Bi-Lo Traders is considering a project that will produce sales of $44,800 and have costs of $25,700. Taxes will be $4,500 and the depreciation expense will be $2,650. An initial cash outlay of $2,100 is required for net working capital. What is the project's operating cash flow?
Answer:
$10,700
Explanation:
Operating cash flow is computed as;
= Net income + non cash expenses - outlay in working capital
First, we'll determine the net income
Net income = Sales $44,800 - cost $27,500 depreciation expense $2,650 - Taxes $4,500
Net income = $10,150
Operating cash flow = $10,150 + $2,650 - $2,100 = $10,700
You work at a construction company with a stated cost of capital of 12%. Your company is currently deciding between two different projects. Project A will pay you $800,000 up front and $1.5 million after 4 years. You will have to spend $300,000 now, and $400,000 once a year for the next 4 years. Project B will pay you $1.2 million up front and cost you $1.1 million in 4 years.
A. What is the net present value of Project A?
B. What is the net present value of Project B?
Answer:
$1,453,277.12
$1,899.069.89
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Project A
Cash flow in year 0 = $800,000 - $500,000 = $300,000
Cash flow in year 1 = 0
Cash flow in year 2 =0
Cash flow in year 3 =0
Cash flow in year 4 = 1.5 million
NPV =
Poject B
Cash flow in year 0 = $1.2 MILLION
Cash flow in year 2 =0
Cash flow in year 3 =0
Cash flow in year 4 = -1.1 MILLION
NPV =
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
To find the NPV 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
What is the proper factor notation for calculating the present worth of a gradient series, given a gradient amount of $500, an interest rate of 2%, and the number of periods equal to 10?
a) P-$500(PIF 290, 10)
b) P-$500(GIP 296, 10)
c) P-$500(PIA 296, 10)
d) P-$500(PIG 296, 10)
Answer:
Explanation:
d) P-$500(PIG 296, 10)
Can someone help me with this ?
Answer:
come over
Explanation:
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Treasury Stock Facts Target Inc. arranged to purchase a large block of its common stock from a major shareholder. The total number of shares purchased is 10,000 and these shares are to be held as treasury shares. Target Inc. uses the cost method to account for treasury shares. This shareholder had a controlling interest before the transaction. After the transaction this shareholder no longer has a controlling interest. Given these facts, to induce the shareholder to sell the block of stock Target Inc. was forced to pay an amount in excess of the current market price of the stock. Target Inc. paid the shareholder $40 per share when the market price was $30 per share.Question How should Target Inc. account for the purchase of this treasury stock?a. Provide a brief written description of the proper accounting treatment, including how the extra $10 paid per share is recorded.b. Prepare a formal journal entry to record the treasury stock transaction.c. Identify the specific paragraph of the FASB Codification which addresses this issue.
Answer:
Target Inc.
a. Under the cost method, as adopted by Target Inc., the cost of acquiring the treasury stock is debited to the Treasury Stock account and credited to the Cash account. This means that there is no differentiation of the extra $10 just as there is no differentiation between the par-value and the cost of acquiring each share.
b. Journal Entry:
Debit Treasury Stock $40,000
Credit Cash $40,000
To record the repurchase of 10,000 shares at $40 each.
c. The FASB Codification which addresses Treasury Stock accounting is called Codification Topic 505-30. The cost of treasury stock is reported separately from the gain or loss.
Explanation:
a) Data and Calculations:
Total number of shares purchased = 10,000
Price paid for the purchase = $40
Market price of the share = $30
Extra cost paid = $10
b) Two methods are adopted for recording treasury stock. There is the par-value method. This method records the treasury stock at the par value multiplied by the number of treasury stock. The difference in the purchase cost and the par-value is then recorded in the Additional Paid-in Capital account. The other method is the cost method. Here, the cost of acquiring the treasury stock (not the par-value) is recorded in the Treasury Stock account, with a credit entry to the Cash account. Treasury Stock account is a contrary account to the stockholders' equity, and as a result, is a deduction from the amounts in the Stockholders' Equity in the balance sheet, in both cases.
At the beginning of the recent period, there were 1,230 units of product in a department, 35% completed. These units were finished and an additional 6,100 units were started and completed during the period. 1,240 units were still in process at the end of the period, 25% completed. Using the weighted average method, the equivalent units produced by the department were:
Answer:
7,640 units
Explanation:
Calculation for what the equivalent units produced by the department were Using the weighted average method
First step is to calculate the units Completed & transferred out
Completed & transferred out =6,100+1,230
Completed & transferred out=7,330
Second step is to calculate the EGIP
EGIP= (1,240*25%)
EGIP=310
Now let calculate the equivalent units produced by the department
Equivalent units produced=7,330+310
Equivalent units produced=7,640 units
Therefore Using the weighted average method, the equivalent units produced by the department were:7,640 units
The following information was taken from the records of Sheffield Inc. for the year 2020: Income tax applicable to income from continuing operations $209.440: income tax applicable to loss on discontinued operations $28,560. and unrealized holding gain on available-for-sale securities (net of tax) $16,800.
Gain on sale of equipment $106,400
Cash dividends declared $168,000
Loss on discontinued operations 84,000
Retained earnings January 1, 2020 2,400,000
Administrative expenses 268,800
Cost of goods sold 952,000
Rent revenuc 44,800
Selling expenscs 336,000 2,128,000
Loss on write-down
F inventory 67 200
Sales Revenue Shares outstanding during 2020 were 100,000.
Prepare a single-step income statement. (Kound eurmings pershre to 2 decimal paces, e 148 SHEFFIELD INC. Income Statement $ Prepare a comprehensive income statement for 2020, using the two statement format. SHEFFIELD INC. Comprehensive Income Statement Prepare a retained earnings statement for 2020. (tfst ltens tatheuse 1euhe enMhgs firsEj SHEFFIELD INC. Retained Earmings Statement
Answer:
a. Single-step Income Statement for the year ended December 31, 2020:
Sales Revenue $2,128,000
Rent revenue 44,800
Gain on sale of equipment 106,400
Total Revenue $2,279,200
Cost of goods sold 952,000
Administrative expenses 268,800
Selling expenses 336,000
Loss on write-down
of inventory 67 200
Total expenses $1,624,000
$655,200
Income Tax $209,440
Net Income $445,760
Comprehensive Income Statement for the year ended December 31, 2020:
Net Income $445,760
Loss on discontinued operations (84,000)
Income Tax
on discontinued operations (28,560)
Unrealized holding gain (net of taxes) 16,800
Comprehensive Income $350,000
Statement of Retained Earnings for the year ended December 31, 2020:
Retained earnings January 1, 2020 $2,400,000
Comprehensive Income 350,000
Cash dividends declared (168,000)
Retained earnings, December 31 $2,582,000
Explanation:
a) Data and Calculations:
Income tax applicable to income from continuing operations $209.440: income tax applicable to loss on discontinued operations $28,560, and unrealized holding gain on available-for-sale securities (net of tax) $16,800.
Gain on sale of equipment $106,400
Cash dividends declared $168,000
Loss on discontinued operations 84,000
b) Unrealized holding gain on available-for-sale securities and loss on discontinued operations are reported separately from the net income on continuing operations. Therefore, they can be reported in the Comprehensive Income Statement.
Retained earnings January 1, 2020 2,400,000
Administrative expenses 268,800
Cost of goods sold 952,000
Rent revenue 44,800
Selling expenses 336,000
Loss on write-down
F inventory 67 200
Sales Revenue 2,128,000
Shares outstanding during 2020 were 100,000
Question 6 of 10
Match each business model with the type of business that commonly uses it.
Bricks and clicks
?
Grocery stores
Subscription
?
Magazines
Shopkeeper
Retail stores
?
Answer:
Bricks and Clicks - Retail Stores
Retail stores such as Walmart use a bricks and clicks model to ensure they sell as much as possible. Bricks and clicks refers to having both an online and an offline (physical location) presence where customers can come and buy in person if they want.
Grocery Stores - Shopkeeper
Grocery Stores are usually bricks and mortar which means that they are a physical location. This physical location is usually small and in need of being managed by a shopkeeper.
Subscription - Magazines
Magazines have found over the years that it is effective to offer their services as a subscription based one. That way they can be sure of a steady inflow of cash and people can be sure that they will receive magazines periodically.
You're prepared to make monthly payments of $310, beginning at the end of this month, into an account that pays 4 percent interest compounded monthly. How many payments will you have made when your account balance reaches $20,175
Answer:
59 Payments
Explanation:
Future value = $20,175
Monthly payment= $310
Interest rate= 4%/12 = 0.3333% per month
How many payments will you have made when your account balance reaches $20,175?
Now we use Ms Excel to calculate the number of payment
Number of payment = N(FV, -PMT, I/Y)
Number of payment = N(20,175 , -310 , 0.3333%)
Number of payment = 58.9989
Number of payment = 59.
Joseph Thompson is president and sole shareholder of Jay Corporation (a cash method, calendar year C corporation). In December 2020, Joe asks your advice regarding a charitable contribution he plans to have the corporation make to the University of Maine, a qualified public charity. Joe is considering the following alternatives as charitable contributions in December 2020:_____.
Fair Market Value
(1) Cash donation $200,000
(2) Unimproved land held for six years ($110,000 basis) 200,000
(3) Maize Corporation stock held for eight months ($140,000 basis) 200,000
(4) Brown Corporation stock held for nine years ($360,000 basis) 200,000
Joe has asked you to help him decide which of these potential contributions will be most advantageous taxwise. Jay's taxable income is $3,500,000 before considering the contribution.
Rank the four alternatives, and complete the letter to Joe communicating your advice.
Note: The land and stock are "unrelated use property" but they are not "tangible personal property".
Hoffman, Maloney, Raabe, & Young, CPAs
5191 Natorp Boulevard
Mason, OH 45040
December 10, 2020
Mr. Joseph Thompson
Jay Corporation
1442 Main Street
Freeport, ME 04032
Dear Mr. Thompson:
I have evaluated the proposed alternatives for your 2020 year-end contribution to the University of Maine. I recommend that you sell the Brown Corporation stock and donate the proceeds to the University. The four alternatives are discussed below.
Donation of cash, the unimproved land, or the Brown Corporation stock each will result in a $ __________ charitable contribution deduction. Donation of the Maize Corporation stock will result in only a $ ______________charitable contribution deduction.
You will benefit in two ways if you sell the Brown Corporation stock and give the $ __________in proceeds to the University. Donation of the proceeds will result in a $ ___________charitable contribution deduction. In addition, sale of the stock will result in a $ _________ long-term capital ______________. If Jay Corporation had capital __________________of at least $ ___________ and paid corporate income tax in the past three years, the entire _______________could be ________________and Jay would receive tax refunds for the carryback years. If Jay Corporation _______________capital gains in the carryback years, the capital loss could be carried forward and offset against capital gains of the corporation for up to _______________years.
Jay Corporation ________________ make the donation in time for the ownership to change hands before the end of the year. Therefore, I recommend that you notify your broker immediately so that there will be no problem in completing the donation on a timely basis.
I will be pleased to discuss my recommendation in further detail if you wish. Please call me if you have questions. Thank you for consulting my firm on this matter. We look forward to serving you in the future.
Sincerely,
Richard Stinson, CPA
Answer:
Joseph Thompson of Jay Corporation
Hoffman, Maloney, Raabe, & Young, CPAs
5191 Natorp Boulevard
Mason, OH 45040
December 10, 2020
Mr. Joseph Thompson
Jay Corporation
1442 Main Street
Freeport, ME 04032
Dear Mr. Thompson,
I have evaluated the proposed alternatives for your 2020 year-end contribution to the University of Maine. I recommend that you sell the Brown Corporation stock and donate the proceeds to the University. The four alternatives are discussed below.
Donation of cash, the unimproved land, or the Brown Corporation stock each will result in a $ ___200,000_______ charitable contribution deduction. Donation of the Maize Corporation stock will result in only a $ ____140,000__________charitable contribution deduction.
You will benefit in two ways if you sell the Brown Corporation stock and give the $ __200,000________in proceeds to the University. Donation of the proceeds will result in a $ __200,000_________charitable contribution deduction. In addition, sale of the stock will result in a $ __160,000_______ long-term capital ___loss___________. If Jay Corporation had capital ____gain______________of at least $ ___160,000________ and paid corporate income tax in the past three years, the entire ____capital gain loss___________could be ____deducted____________and Jay would receive tax refunds for the carryback years. If Jay Corporation _____no__________capital gains in the carryback years, the capital loss could be carried forward and offset against capital gains of the corporation for up to ______twenty_________years.
Jay Corporation ______should__________ make the donation in time for the ownership to change hands before the end of the year. Therefore, I recommend that you notify your broker immediately so that there will be no problem in completing the donation on a timely basis.
I will be pleased to discuss my recommendation in further detail if you wish. Please call me if you have questions. Thank you for consulting my firm on this matter. We look forward to serving you in the future.
Sincerely,
Richard Stinson, CPA
Explanation:
1. Cash donation: $200,000 deduction
2. Unimproved land donation: $200,000 deduction, $90,000 long term capital gain forgiven (21% X $90,000 = 18,900 tax saving, or $90,000 could be used to offset otherwise non-deductible capital losses)
3. Maize Corporation stock held 8 months: $140,000 deduction
4. Brown Corporation stock held 9 years: $200,000 deduction, $160,000 loss not available
Consider a firm with an EBIT of $11,400,000. The firm finances its assets with $51,800,000 debt (costing 7.4 percent) and 10,900,000 shares of stock selling at $8.00 per share. The firm is considering increasing its debt by $25,000,000, using the proceeds to buy back shares of stock. The firm is in the 30 percent tax bracket. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $11,400,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS. (Round your answers to 3 decimal places.)
Answer:
EPS Before the change in capital structure = $0.486 Per shares
EPS After the change in capital structure = $0.515 Per shares
Difference = $ 0.029
Explanation:
Calculation of EPS before the change in capital structure :
Particulars Amount
EBIT $ 11,400,000
Interest Cost $ 3,833,200 (51,800,000×7.4%)
Earning After Interest $ 7,566,800
Tax ( 30% ) $ 2,270,040
Net Profit after tax $ 5,296,760
Number of Shares outstanding $ 10,900,000
Earning Per Shares $0.486
Calculation of EPS after the change in capital structure :
Particulars Amount
EBIT $ 11,400,000
Interest Cost $ 5,683,200
( $ 76,800,000×7.4%)
Earning After Interest $ 5,716,800
Tax ( 30%) $ 1,715,040
Net Profit after tax $40,01,760
Number of Shares outstanding 77,75,000
Earning Per Shares $0.515
∴ we get
EPS Before the change in capital structure = $0.486 Per shares
EPS After the change in capital structure = $0.515 Per shares
Difference = $ 0.486 - 0.515 = $ 0.029
Record adjusting journal entries for each of the following for year ended December 31. Assume no other adjusting entries are made during the year.
Accounts Receivable. At year-end, the L. Cole Company has completed services of $20,500 for a client, but the client has not yet been billed for those services.
Interest Receivable. At year-end, the company has earned, but not yet recorded, $450 of interest earned from its investments in government bonds.
Accounts Receivable. A painting company bills customers when jobs are complete. The work for one job is now complete. The customer has not yet been billed for the $1,420 of work.
Answer:
1. Dr Account receivable $20,500
Cr Service revenue $20,500
2. Dr Interest receivable $450
Cr Interest revenue $450
3. Dr Account receivable $1,420
Cr Service revenue $1,420
Explanation:
Preparation of the adjusting journal entries for each of the following for year ended December 31.
Based on the information given the adjusting journal entries for each of the following for year ended December 31 will be :
1. Dr Account receivable $20,500
Cr Service revenue $20,500
(Being to record Accounts Receivable)
2. Dr Interest receivable $450
Cr Interest revenue $450
(Being to record Interest receivable)
3. Dr Account receivable $1,420
Cr Service revenue $1,420
(Being to record Accounts Receivable)
Rossdale, Inc., had additions to retained earnings for the year just ended of $641,000. The firm paid out $50,000 in cash dividends, and it has ending total equity of $7.36 million.
1. If the company currently has 730,000 shares of common stock outstanding, what are:
a. Earnings per share?
b. Dividends per share?
c. Book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
2. lf he stock currently sells or $30.60 per share, what is:
a. the market-to-book ratio?
b. the price earnings ratio?
3. If total sales were $10.66 million, what is the price-sales ratio?
Answer:
1. a. Earnings per share:
= Total earnings / No. of shares
= (Addition to retained earnings + Dividends) / No. of shares
= (641,000 + 50,000) / 730,000
= $0.95
b. Dividends per share:
= Dividends / No. of shares
= 50,000 / 730,000
= $0.07
c. Book Value per share:
= Ending total equity / No. of shares
= 7,360,000 / 730,000
= $10.08
2. a. Market to book ratio
= Market price / Book value
= 30.60 / 10.08
= 3.06 times
b. Price - earnings ratio:
= Market price / Earnings per share
= 30.60 / 0.95
= 32.21 times
3. Price - sales ratio
= Market value of equity / Sales
= (30.60 * 730,000 shares) / 10,660,000
= 2.1 times
For each separate case below, follow the 3-step process for adjusting the accrued expense account: Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record an adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year.
a. Salaries Payable. At year-end, salaries expense of $18,500 has been incurred by the company, but is not yet paid to employees. Interest Payable. At its December 31 year-end, the company owes $400 of interest on a line-of-credit loan. That interest will not be paid until sometime in January of the next year.
b. Interest Payable. At its December 31 year-end, the company holds a mortgage payable that has incurred $1,025 in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.
c. Interest Payable. At its December 31 year-end, the company holds a mortgage payable that has incurred $875 in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.
Answer:
a. Salaries Expense (Dr.) $18,500
Salaries Payable (Cr.) $18,500
b. Interest Expense (Dr.) $85
Interest Payable (Cr.) $85
c. Interest Expense (Dr.) $75
Interest Payable (Cr.) $75
Explanation:
The adjusting entries are made at the month or year end to adjust the transactions that were recorded. The adjustment is usually made for the transaction whose impact is changed at the month end. For the given case the interest amount recorded was for the annual but for monthly recording the interest expense will be divided by 12.
You owe $5,000 on your credit card and you can pay the following monthly payments:
Month 1 2 3 4 5 6 7 8
Payment 500 550 600 650 700 750 800 850
IF the credit card company charges an interest rate of 1.5% per month, is this enough to pay off your credit card, and if so, by how much?
A. No, this cash flow falls short of paying off the credit card.
B. Yes, this cash flow exceeds the balance by $320.
C. Yes, this cash flow will pay off the credit card with $23.75 remaining.
D. No, this will only pay off $4,793.63 of the credit card.
Answer:
C. Yes, this cash flow will pay off the credit card with $23.75 remaining.
Explanation:
Calculation for how much will be enough to pay off your credit card
First step will be to use financial calculator to find the Net Present Value (NPV) of the payment amount from 1 month which is 500 to 8 month which is 850.
Hence,
NPV=$5,023.75
Now let calculate how much will be enough to pay off your credit card
Credit card pay off Amount =$5,023.75-$5,000
Credit card pay off Amount=$23.75
Therefore YES it will be enough to pay off the credit card and the amount that will be enough to pay off your credit card will be $23.75.
a. A ______ of accounts is a list of all accounts a company uses, not including account balances. b. The ______ is a record containing all accounts used by a company, including account balances. c. A(n) ______ describes transcations entering an accounting system, such as a purchase order. d. Increases and decreases in a specific asset, liability,
Answer:
a. A general ledger of accounts is a list of all accounts a company uses, not including account balances.
b. The Chart of accounts is a record containing all accounts used by a company, including account balances.
c. A source document describes transactions entering an accounting system, such as a purchase order.
d. An account contains a record of decreases and increases in a specific revenue, expense, asset, liability, or equity
You are the manager of two plants (factories) in Mexico that manufacture shoes. The combined monthly output of both plants is to be 10,000 pairs of shoes. Explain, based on your understanding , how you would best divide this output of 10,000 pairs of shoes between the two plants.
Answer:
Given that both factories together produce 10,000 pairs of shoes, and both carry out the entire production process of the same in an identical way, if I were the manager of the same, I would distribute the benefits of what is produced by both factories in the following way: 50% of them equally, 25% for each one; and the other 50% in proportion to what each one has actually produced. Thus, it would guarantee that both receive income and, at the same time, it would encourage production by the one that generated the most income.
Assume that the British government eliminates all controls on imports by British companies. Other things being equal, the U.S. demand for pounds would ____, the supply of pounds for sale would ____, and the equilibrium value of the pound would ____. a. remain unchanged; increase; decrease b. remain unchanged; increase; increase c. decrease; increase; decrease d. increase; increase; increase
Answer:
increase
increase
decrease
Wildhorse Co., a ski tuning and repair shop, opened on November 1, 2016. The company carefully kept track of all its cash receipts and cash payments. The following information is available at the end of the ski season, April 30, 2017.
Cash Receipts Cash Payments
Issuance of common shares $19,900
Payment to purchase repair shop equipment $9,430
Payments to landlord 1,225
Newspaper advertising payment 365
Utility bill payments 885
Part-time helper's wage payments 2,950
Income tax payment 10,000
Cash receipts from ski and snowboard repair services 30,400
Subtotals 50,300 24,855
Cash balance 25,445
Totals $50,300 $50,300
The repair shop equipment was purchased on November 1 and has an estimated useful life of 5 years. Lease payments to the landlord are made at the beginning of each month. The payments to the landlord included a security deposit of $175. The part-time helper is owed $495 at April 30, 2017, for unpaid wages. At April 30, 2017, customers owe Wildhorse Co. $455 for services they have received but have not yet paid for.
Answer and Explanation:
The preparation is as follows:
1. Accrual basis Income statement
Revenues ($30,400 + $455) $30,855
Less: Expenses
News paper advertising -$365
Rent expense -$1,225
Utility bill payments -$885
Part time helpers wages ($2,950 + $495) -$3,445
income tax payment -$10,000
Depreciation expense
($9,430 ÷ 5 × 6 ÷ 12) -$943
total expense -$16,863
Net income $13,992
b) Balance sheet
Assets
Current assets
Cash $25,445
Account receivable $455
total current assets $25,900
PP&E
Equipment $9,430
less Accumulated depreciation -$943
total $8,487
total Assets $34,387
Liabilities
Current liabilities
Salaries and Wages payable $495
total liabilities $495
Stockholders Equity
common stock $19,900
Add: Retained Earnings $13,992
Stockholders Equity $33,892
total liabilities & Equity $34,387