Question

In: Accounting

Wally is employed as an executive with Pay More Incorporated. To entice Wally to work for...

Wally is employed as an executive with Pay More Incorporated. To entice Wally to work for Pay More, the corporation loaned him $36,000 at the beginning of the year at a simple interest rate of 1 percent. Wally would have paid interest of $4,320 this year if the interest rate on the loan had been set at the prevailing federal interest rate.

a. Wally used the funds as a down payment on a speedboat and repaid the $36,000 loan (including $360 of interest) at year-end. Does this loan result in any income to either party, and if so, how much?

b. Assume instead that Pay More forgave the loan and interest on December 31. What amount of gross income does Wally recognize this year?

PLEASE INCLUDE YOUR CALCULATIONS IN THE ANSWERS!

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Wally?s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012....
Wally?s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. WWC prepares adjusting entries and financial statements at the end of each month. Balances in the accounts at the end of January are as follows:   Cash $ 18,920 Unearned Revenue (30 units) $ 4,450      Accounts Receivable $ 9,950 Accounts Payable (Jan Rent) $ 1,500      Allowance for Doubtful Accounts $ (1,000) Notes Payable $ 14,500      Inventory (35 units) $ 2,800 Contributed Capital...
do males or female feel more tense or stress out at work?A survey of employed adults...
do males or female feel more tense or stress out at work?A survey of employed adults conducted online revealed the following. in the space below, draw a decision tree diagram and answer the question a-d. your answer should be demonstrably derived via decision tree. a.   Given that the employed adults felt tense or stress out at work, what is the probability that the employed adults was a male b.   Given that the employed adults is a male, what is the...
In the US economy, nearly half of all workers employed by private firms work at the 0.3% of firms that have 500 or more employees.
In the US economy, nearly half of all workers employed by private firms work at the 0.3% of firms that have 500 or more employees.What does this relationship mean for the power relationship between large firms and the labor force?What do you think these large firms having such a market share of labor means for labor prices (wages)?Can you propose a policy that would counteract this power imbalance?
Executive Pay 1. Explain the Ratio between CEO and average worker pay 2. Explain how the...
Executive Pay 1. Explain the Ratio between CEO and average worker pay 2. Explain how the economy is suffering from executive pay 3. What are the principles of executive compensation
Facial recognition software is becoming more effective and more widely employed by government agencies and by...
Facial recognition software is becoming more effective and more widely employed by government agencies and by businesses all the time. Kindly, (i) explain how businesses might use such technology (ii) detail any ethically important aspects of its use (iii) construct an argument either in defense of or in opposition to its use.
A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash...
A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash compensation of the CEOs of 115 companies, adjusted for inflation, in a recent year. The mean increase in real compensation was x = 6.8%, and the standard deviation of the increases was s = 45%. Is this good evidence that the mean real compensation μ of all CEOs increased that year? Ho: μ = 0 (no increase) Ha: μ > 0 (an increase) Because...
A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash...
A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash compensation of the CEOs of 107companies, adjusted for inflation, in a recent year. The mean increase in real compensation was x = 7.1%, and the standard deviation of the increases was s = 49%. Is this good evidence that the mean real compensation μ of all CEOs increased that year? Ho: μ = 0 (no increase) Ha: μ > 0 (an increase) Because the...
A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash...
A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash compensation of the CEOs of 103 companies, adjusted for inflation, in a recent year. The mean increase in real compensation was x = 7.7%, and the standard deviation of the increases was s = 41%. Is this good evidence that the mean real compensation μ of all CEOs increased that year? Ho: μ = 0 (no increase) Ha: μ > 0 (an increase) Because...
Pay Packages Explained Executive pay packages differ substantially from typical salaried or hourly employee compensation because...
Pay Packages Explained Executive pay packages differ substantially from typical salaried or hourly employee compensation because unlike typical employee pay, the vast majority of an executive's pay is contingent compensation and structured only to reward the executive for actual, positive company performance and growth in shareholder value. To this end, executive compensation packages typically utilize six distinct compensation components: Base Salary Short-Term Incentive Long-Term Incentive Employee Benefits Perquisites Severance/Change-in-Control Payments A company's Compensation Committee will structure their executive's pay packages...
If you are not currently employed, look at a company you would like to work for...
If you are not currently employed, look at a company you would like to work for and look at their retirement program. Next, what concept do you find most challenging about retirement?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT