Partnership Income Allocation

Whitman and Greene are partners in a real estate venture. At January 1, 2020, their respective capital balances were $200,000 and $245,000. Their partnership agreement provides that Whitman is to receive a guaranteed salary of $100,000, and that remaining profits after the salary are to be shared in a 2:3 ratio. Partnership operations for the year 2020 resulted in income of $75,000, before distributions to partners. Whitman’s salary is paid in cash during the year, but there are no other withdrawals or capital changes. Assume full implementation.

Required

a. Compute the balance of each partner’s capital account at December 31, 2020.

b. Compute the balance of each partner’s capital account at December 31, 2020, assuming partnership income was $150,000.

Genetic vs. environment: Give example stories illustrating how environment and genetics affect development:

1. nature vs. nurture:

2. heritability:

3. gene-environment interaction:

4. epigenesis:

Individualist vs. collective societies: Tell stories that illustrate examples of: individualistic and collective societies comparing the 2 types of societies. Discuss pros and cons of each on childhood development.

1. individualistic societies:

2. collective societies:

3. Discuss pros and cons of each on childhood development:

• After looking into Hofstede reading in week 2 “cultural perspectives”, Consider Oman mixed culture and differentiate the advantage and disadvantages of these dimension and their effect on innovation and entrepreneurship

Test for normality (for a paired t test, you test if the differences are normal), and make a paired t test for both heart rate and contraction strength for epinephrine and nicotine.

Use the following financial data for Greta’s Gadgets, Inc.

Greta’s Gadgets, Inc.

Income Statement
For the Year Ended December 31, 2014

Greta’s Gadgets, Inc.

Balance Sheet

As of December 31, 2014

1. Calculate the current (2014) net profit margin, total asset turnover, assets-to-equity ratio, return on total assets, and return on common equity for Greta’s. Show your calculations!

2. Show mathematically the tax disadvantage to organizing a U.S. business today as a corporation versus a partnership, given the following assumptions. All earnings will be paid out as dividends, and operating income before taxes will be $1,500,000. The effective corporate tax rate is 35%, and the tax rate on corporate dividends is 15%. The average personal tax rate for partners in the business is 35%.

Tax Table

3. Refer to the Tax Table. First Watch, Inc. has a pretax income of $3,755,250. What is the company’s average tax rate, marginal tax rate and tax liability?

4. The Park Corp. had earnings before interest and taxes of $500,000 and had a depreciation expense of $200,000 this last year. If the firm was subject to an average tax rate of 30%, what was Park’s operating cash flow for the year? If you need to, assume that Park’s interest expense was zero for the year.

5. List and briefly describe the three general areas of responsibility for a financial manager.

6. Give some examples of ways in which manager's goals can differ from those of shareholders.

Galaxy Interiors

2011 Income Statement ($ in Millions)

Net Sales: $21415

Cost of goods sold: 16408

Depreciation: 1611

Earnings before Interest and taxes: 3396

Interest Paid: 1282

Taxable Income: 2114

Less Taxes: 740

Net Income: 1374  

Galaxy Interiors  

2010 and 2011 Balance Sheet ($ in millions)

cash: $668(2010) $297(2011)

Accounts Rec: 1611(2010) 1527(2011)

Inventory:3848(2010) 2947(2011)

Total: $6127(2010) $4771(2011)

Net fixed assets: 17489(2010) 17107(2011)

Total assets: $23616(2010) $21878(2011)

Accounts payable: $1694 (2010) $1532 (2011)  

Notes payable: 2500 (2010) 0 (2011)

Total: $4194 (2010) $1532 (2011)  

Long term debt: 9800 (2010) 10650 (2011)  

Common stock: 7500 (2010) 7000 (2011)

Retained Earnings: 2122 (2010) 2696 (2011)

Total liab. & Equity: $23616 (2010) $21878 (2011)  

7. What is the cash flow from assets for 2011? What is the cash flow to creditors for 2011? What is the cash flow to stockholders for 2011? Show your calculations!

8. Discuss the difference between book values and market values and explain which one is more important to the financial manager and why.

9. It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task. Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.

On January 1, 2015, a machine was purchased for $107,100. The machine has an estimated salvage value of $7,140 and an estimated useful life of 5 years. The machine can operate for 119,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2015, 23,800 hrs; 2016, 29,750 hrs; 2017, 17,850 hrs; 2018, 35,700 hrs; and 2019, 11,900 hrs.

Assume a fiscal year-end of September 30. Compute the annual depreciation charges over the asset’s life applying each of the following methods.

. 1. Based on article "After COVID-19, Can China Still Become 'Moderately Prosperous?', by Montijn Hulsman, explain why doubling of GDP and disposable income by 2020 would alleviate poverty in China. (5 marks, max 400 words)

2. Using AD-AS model, explain the macroeconomic condition of China before and after the outbreak of COVID-19. (8 marks, max 700 words)

Accounts receivable transactions are provided below for J Crane Co.

Dec. 31, 2020

The company estimated that 3% of its accounts receivable would become uncollectible. The balances in the Accounts Receivable account and Allowance for Doubtful Accounts were $684,000 and $3,000 (debit), respectively.

Mar. 5, 2021

The company determined that R. Mirza’s $3,100 account and D. Wight’s $6,900 account were uncollectible. The company’s accounts receivable were $719,000 before the accounts were written off.

June 6, 2021

Wight paid the amount that had been written off on March 5. The company’s accounts receivable were $674,000prior to recording the cash receipt for Wight.

(a)

Correct answer iconYour answer is correct.

Prepare the journal entries on December 31, 2020, March 5, 2021, and June 6, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Date

Account Titles and Explanation

Debit

Credit

[Dec. 31, 2020 \/]

[Bad Debts Expense \/]

[          ]

[          ]

[Bad Debts Expense \/]

[          ]

[          ]

(To record estimate of uncollectible accounts.)

[Dec. 31, 2020 \/]

[Bad Debts Expense \/]

[          ]

[          ]

[Allowance for Doubtful Accounts \/]

[          ]

[          ]

(To record write off of accounts receivable.)

[Dec. 31, 2020 \/]

[Cash \/]

[          ]

[          ]

[No Entry \/]

[          ]

[          ]

(To record write off of accounts receivable.)

[Dec. 31, 2020 \/]

[Allowance for Doubtful Accounts \/]

[          ]

[          ]

[No Entry \/]

[          ]

[          ]

(To reverse write off.)

[Dec. 31, 2020 \/]

[Accounts Receivable - Mirza \/]

[          ]

[          ]

[Accounts Receivable - Wight \/]

[          ]

[          ]

(Collection of account that was previously written off.)

eTextbook and Media

List of Accounts

Attempts: 3 of 5 used

(b)

Your Answer

Correct Answer

Correct answer iconYour answer is correct.

Post the journal entries to Allowance for Doubtful Accounts and calculate the new balance after each entry.

Allowance for Doubtful Accounts

Date

Explanation

Ref.

Debit

Credit

Balance

Dec. 31, 2020

Balance unadjusted Debit

[          ]

Dec. 31, 2020

AJE

[          ]

[          ]

[          ]

Mar. 5, 2021

Write off Mirza

[          ]

[          ]

[          ]

Mar. 5, 2021

Write off Wight

[          ]

[          ]

[          ]

June 6, 2021

Reverse write off

[          ]

[          ]

[          ]

eTextbook and Media

List of Accounts

Attempts: 5 of 5 used

(c)

Incorrect answer iconYour answer is incorrect.

Calculate the carrying amount of the accounts receivable both before and after recording the cash receipt from Wight on June 6, 2021.

Carrying amount before recovery

$ [          ]

Carrying amount after recovery

$ [          ]

On January 1, 2008, Dryft granted 1,000 employee share options that vest after a four-year service period, with an exercise price of $30 per share. Using the Black-Scholes pricing model, it was determined that the grant-date-fair-value-based measure of each option was $15. On the grant date, Dryft’s stock was trading at $30 per share.

On January 1, 2010, Dryft decided to change the terms of the incentives for the third and fourth years of service of the 2008 annual grant by modifying the exercise price to $20 per share. Using the Black-Scholes pricing model, management determined that the fair-value-based measure of the awards as of January 1, 2010 was $9 before the terms of the award were modified and $12 immediately after modification. The modification did not affect any of the other terms or conditions of the awards. (No forfeitures are assumed)

a- How much compensation cost should Dryft recognize in each year of the award’s service period?

b- How would the accounting for the awards change if the modification to the terms of the award was made on January 1, 2014, after the awards have become fully vested?

Please show detailed answers, use journal entries and explain.