Merry is a chef. She runs her own restaurant business. During the year, Merry incurred the following expenses.

Advise Merry as to whether the expenses below would be deductible for income tax purposes.

Five years ago, Mr. K, who runs a restaurant, purchased a nearby site to expand the parking lot for the convenience of customers. For this purpose, 250 million won was loaned from a commercial bank under the condition of repayment of the same amount each year from a floating-rate mortgage product whose repayment interest rate fluctuates every year, and all of it has been repaid over the past five years. At this time, interest rates for five years changed to 5% in the first year, 7.5% in the second year, 10% in the third year, 12.5% in the fourth year and 15% in the fifth year, respectively.

(1) What is the annual real interest rate on this loan?

(2) What is the total interest paid by Mr. D for five years?

Jane owns​100% of Carnate Corporation’s stock and also runs the company as its CEO. Carnate is a C corporation that expects to earn $420,000 before deducting any salary paid to Jane. Jane wants the corporation to pay her $230,000 for current year in pretax dollars. She is considering three different options: (1) a $230,000 dividend. (2) a $115,000 dividend plus a $115,000 salary, or (3) a $230,000 salary.

Any dividends qualify for the preferential capital gains tax rates. Jane​'s husband has no earnings of his own in the current​ year, so her income is the sole source for the family.Jane and her husband file a joint tax return and claim the $24,000 standard deduction.

​* The corresponding amounts if married filing separately are half of the amounts for filing jointly. The preferential rate is zero for taxable income up to

$ 38 comma 600$38,600

if married filing separately.

Calculate the total tax liability​ (corporate and​ individual) for each of the three​options, and determine which option results in the lowest overall tax.

Wally runs a fruit & vege stall Wally’s VegeRama -at the local Sunday market. He can buy watermelons from his supplier for $5 each. He can sell watermelons for $10

Each. On any particular Sunday, demand for watermelons follows a Poisson distribution with mean 5. Any watermelons that are not sold on Sunday go bad before the next

weekend. Wally’s current policy is to stock 6 watermelons.

2. What is Wally’s expected and variance of the profit?

Dean runs a small coffee stand offering standard coffee (with or without milk) during the mornings on campus. The following are the costs per cup of coffee compiled for September and October 2016.

Dean is puzzled. He thought based on September’s cost per cup of coffee he would be making $465 profit for October but instead he only made $40, almost a 96% drop in profit!

(a) Using your understanding of cost behaviour, explain why the profit per cup has decreased in October 2106 compared with September 2016. Show the relevant computations to support your answer.

(b) Dean is thinking of expanding his coffee business to 10 other university and polytechnic campuses. In order to encourage his workers (who are students from each campus) to increase sales, Dean is considering giving them a sales commission of 5 cents for every cup of coffee sold. As Dean is not able to be physically at all coffee stands in the mornings, he will have to rely on his workers to prepare and sell coffee, collect and record daily takings, and inform him when they need replenishment of coffee, cups and other ingredients. Dean expects to maintain the price per cup of coffee at $3 for at least the coming year.

(i) Give three (3) examples of management accounting information that will help Dean evaluate and choose the campuses to open his next three outlets. (Be specific and explain how such information would support his decision.)

(ii) Using your knowledge of organizational architecture (OA), evaluate if Dean’s proposed commission plan would work. Explain.

Australian Taxation

Abby runs a printing business and leases a building for which she pays rent of $75,000 per annum. During the year ended 30 June 2020, Abby incurred the following expenses: Painting of the exterior of the building at a cost of $12,000. The original paintwork was peeling and mouldy and did not represent the kind of look Abby wanted for her business. Re-surfacing of the dirt car park with a new non-slip cement to fill in pot-holes and create a safer environment for her customers $8,000 Replace torn awning over the front door for $1,500. The replacement awning was made of the same material as the original awning. Payment of $22,000 for a commercial embroidery machine so that Abby could introduce clothing design and printing into her business. The machine was purchased on 10 February 2020 and installed on 26 February 2020. Advise Abby if the expenses would be deductible with reference to relevant statute or other supporting documents.

The SPARTA organization runs a year round charter elementary school in St. Louis, MO. This organization believes that children need to be tough physically and mentally. To get tough physically the children exercise outdoors (in minimum clothing) everyday as long as it is physically possible (the children need to go inside before they become adversely effected by the environment, but not a moment too soon). The weather in St. Louis ranges from 95^o F with 95% humidity in the summer to 20^o F 55% humidity in the winter. SPARTA needs to hire a new overseer of their physical program. They need to choose between two excellently conditioned individuals, Jeremy 35 yr male 6'1", 190 lbs, 10% fat; or Maude 62 yr female, 5'3", 115 lbs, 17% fat. Both individuals claim to have extensive experience with work outdoors in all types of weather, and say their experience enables them to be able to “feel” when it is time to go in. Who should SPARTA hire, and why

Part A: Provisional Tax and Interest

Yixuan Wu runs a business and her residual income tax (RIT) for the 2019-20 income year (31 March balance date) was $30,000. She filed for her 2019-20 income year return on 1 July 2020. Business has not been great since April this year due to the lock downs and Yixuan is expecting to make much lower profit for this income year and hence expects to pay much less tax for the 2020-21 income year. She seeks your advice on her provisional tax payments for the 2020-21 income tax year ending 31 March 2021. She has previously used the standard uplift method to calculate her provisional tax payments.

(c) Yixuan is concerned that she may end up paying her tax late or underpaying her tax and is not sure of the consequences if this happens. Explain to Yixuan what happens if a taxpayer is late paying their tax or underpays their tax?

Ichabod runs a clothing store in London. He recently purchased 1000 dress shirts that had a manufacturer’s list price of $35. On each shirt there was a trade discount of 10%, 8% and 6% from the manufacturer. Ichabod’s store has operating expenses that are 35% of the selling price and rate of markup is 60% on selling price.  

a) He sold 400 shirts at the regular selling price. What was the total revenue from the first 400 shirts sold?

b) During a sale, Ichabod offered a markdown of 20% and sold another 250 shirts. What was the total revenue from the 250 shirts sold?

c) Ichabod sold another 200 shirts at the break-even price. What was the total revenue from the 200 shirts sold at the break-even price?

d) What was the rate of markdown from the regular price of the shirts to the break-even price of the shirts?

Please show all work with correct formulas