---------The International Monetary Fund (IMF) has recently released a report calling for tax increases in the world’s wealthiest nations what the IMF calls "revenue-maximizing top income tax rates". As the IMF calculates it, the average revenue-maximizing rate for the main Organization of Economic Cooperation and Development countries is around 60%, way above existing levels (The current top marginal federal rate in the U.S. is 39.6%).

For the U.S., the revenue-maximizing rate is estimated to be 56% to 71%—far more than the current 45% paid in federal, state and local taxes by those in the top tax bracket now. The IMF singles out the U.S. as the country where raising top rates toward 70% (where they were before the Reagan tax cuts) would yield the most revenue—around 1.25% of GDP. And with a chilling candor, the IMF admits that its revenue-maximizing approach takes no account of the well-being of top earners (or their businesses). The full story is here.

Analyze the economic impact of this proposal should it be enacted. Be thorough and comprehensive.-----

Jerry’s Ice Cream Parlor is considering a marketing plan to increase sales of ice cream cones. The plan will give customers a free ice cream cone if they buy 10 ice cream cones at regular prices. Customers will be issued a card that will be punched each time an ice cream cone is purchased. After 10 punches, the card can be turned in for a free ice cream cone. Jerry Donovna, the company’s owner, is not sure how the new plan will affect accounting procedures. He realizes the company will be incurring costs each time a free ice cream cone is awarded but there will be no corresponding revenue or cash inflow.

Prepare a memo detailing how revenue recognition will change if the new plan is implemented. Your memo should include specific revenue recognition accounting terminology from the text as well as journal entry(ies).Prepare a memo detailing how revenue recognition will change if the new plan is implemented. Your memo should include specific revenue recognition accounting terminology from the text as well as journal entry(ies).

2.Amortizing a discount on along−termbond investment will​cause:

A.the interest revenue reported on the income statement to equal the cash received by the investor

B.the cash received by the investor to exceed the interest revenue reported on the income statement

C.the interest revenue reported on the income statement to exceed the cash received by the investor

D.the interest revenue reported is not related to the cash received by the investor

3.When a premium on a bond investment is amortized by the company holding the​ investment:

A.the amount of cash received as an interest payment will be increased

B.the amount of cash received as an interest payment will be reduced

C.Interest Revenue will be debited

D.companies normally credit a separate account called Premium on Investments

4.When a parent acquires​ 100% of the voting stock of a​subsidiary, that​ subsidiary:

A.automatically becomes part of one large legal entity that consists of the parent and the subsidiary together

B.ceases to exist as a separate legal​ entity, but it is still accounted for as a separate accounting entity

C.lives on as a separate legal entity

D.continues to exist as an accounting​ entity, but it ceases to exist in any legal form

The owner of Showtime Movie Theaters, Inc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow.

1. Develop an estimated regression equation with the amount of television advertising as the independent variable (to 1 decimal).
   Revenue =  +  TVAdv
2. Develop an estimated regression equation with both television advertising and newspaper advertising as the independent variables (to 2 decimals).
   Revenue =  +  TVAdv +  NewsAdv
3. Is the estimated regression equation coefficient for television advertising expenditures the same in part (a) and in part (b)?
   SelectYes, the coefficients are the sameNo, the coefficients are not the sameItem 6
4. Predict weekly gross revenue for a week when $3.4 thousand is spent on television advertising and $1.6 thousand is spent on newspaper advertising? (to 2 decimals, if necessary)
   
   $ in thousands

Break-Even Units and Sales Revenue: Margin of Safety

Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 3,010,000 pages at a price of $0.1 each in the coming year. Product costs include:

There is no variable selling expense; fixed selling and administrative expenses total $35,000.

Required:

In your computations that involve the contribution margin ratio, do not round the ratio.

1. Calculate the break-even point in units.
  units

2. Calculate the break-even point in sales revenue.
$

3. Calculate the margin of safety in units for the coming year.
  units

4. Calculate the margin of safety in sales revenue for the coming year.
$

5. What if the total selling and administrative expenses are reduced to $11,600? Recalculate the following:

You are now ready to play the part of the manager of the public transit system. Your finance officer has just advised you that the system faces a deficit. Your board does not want you to cut service, which means that you cannot cut costs. Your only hope is to increase revenue. Would a fare increase boost revenue? You consult the economist on your staff who has researched studies on public transportation elasticities. She reports that the estimated price elasticity of demand for the first few months after a price change is about −0.3, but that after several years, it will be about −1.5. Explain why the estimated values for price elasticity of demand differ. Compute what will happen to ridership and revenue over the next few months if you decide to raise fares by 5%. Compute what will happen to ridership and revenue over the next few years if you decide to raise fares by 5%. What happens to total revenue now and after several years if you choose to raise fares?

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Question 1

1. You have the following projections about the costs in a family restaurant for next year. Answer questions a and b, explaining your calculations and answer.

Net income required: 22% on the owner’s present investment of $80,000

Income tax rate is 28%

Depreciation:              Book value of furniture and equipment is $76,000,                                                                          depreciation rate is 20%.

Interest:                      Interest on a loan outstanding of $35,000 is 18%.

Known Costs:                                                              Variable Costs:

Insurance                    $ 3,000                                    Food cost, 38% of sales revenue

License                        $ 2,500                                      Wage cost, 34% of sales revenue

Utilities                        $ 8,400                                    Other costs, 18% of sales revenue

Maintenance               $ 3,600

Administration            $ 9,800

Salaries                        $41,600

a. What sales revenue would the restaurant have to achieve next year in order to acquire the desired net income?

b. What is the required average check needed to achieve the annual sales revenue objective if the restaurant is open 365 days, had 60 seats, and had an average seat turnover of 2.5 times per day?

Alternative Treatments of Items of the Statement of Cash Flows

The statement of cash flows is intended to provide information about the investing,

financing, and operating activities of an enterprise during an accounting period. In

a statement of cash flows, cash inflows and outflows for interest expense, interest

revenue, and dividend revenue and payments to the government are considered

operating activities.

Required:

a. Do you believe that cash inflows and outflows associated with nonoperating

items, such as interest expense, interest revenue, and dividend revenue, should

be separated from operating cash flows? Explain.

b. Do you believe that the cash flows from investing activities should include

not only the return of investment but also the return on investment—that

is, the interest and dividend revenue? Explain.

c. Do you believe that the cash flows from the sale of an investment should

also include the tax effect of the sale? Explain. Do you believe that cash

flows from sales of investments should be net of their tax effects, or do you

believe that the tax effect should remain an operating activity because it is a

part of “payments to the government”? Explain.

Break-Even Units and Sales Revenue: Margin of Safety Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 2,930,000 pages at a price of $0.1 each in the coming year. Product costs include:

Direct materials $0.015

Direct labor $0.005

Variable overhead $0.002

Total fixed overhead $166,020

There is no variable selling expense; fixed selling and administrative expenses total $36,000.

Required: In your computations that involve the contribution margin ratio, do not round the ratio.

1. Calculate the break-even point in units.

2. Calculate the break-even point in sales revenue. $

3. Calculate the margin of safety in units for the coming year.

4. Calculate the margin of safety in sales revenue for the coming year.

5. What if the total selling and administrative expenses are reduced to $12,600?

Recalculate the following:

a. Break-even point in units

b. Break-even point in sales revenue $

c. Margin of safety in units for the coming year

d. Margin of safety in sales revenue for the coming year

As output increases, total revenue increases, but total costs also increase. Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost? Can this same principle be applied to minimize a loss