Sandra would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 11 percent annual before-tax return on a $730,000 investment. Sandra’s marginal income tax rate is 37 percent and her tax rate on dividends and capital gains is 23.8 percent (including the 3.8 percent net investment income tax). If Sandra organizes BAL as an LLC, she will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. BAL’s income is not qualified business income (QBI) so Sandra is not allowed to claim the QBI deduction. Assume that BAL will distribute all of its after-tax earnings every year as a dividend if it is formed as a C corporation. (Round your intermediate computations to the nearest whole dollar amount.)
a. How much cash after taxes would Sandra receive from her investment in the first year if BAL is organized as either an LLC or a C corporation?
In: Accounting
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 11 percent annual before-tax return on a $200,000 investment. Andrea’s marginal income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, Andrea will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. Further, she is eligible to claim the full deduction for qualified business income. Assume that SHO will pay out all of its after-tax earnings every year as a dividend if it is formed as a C corporation.
a. How much cash after taxes would Andrea receive from her investment in the first year if SHO is organized as an LLC ?
The previous answer of "15172" is not correct .
In: Accounting
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Andrea’s marginal income tax rate is 37 percent and her tax rate on dividends and capital gains is 23.8 percent. Andrea will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, Andrea will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. Further, she is eligible to claim the full deduction for qualified business income. Assume that SHO will pay out all of its after-tax earnings every year as a dividend if it is formed as a C corporation.
a. How much cash after taxes would Andrea receive from her investment in the first year if SHO is organized as either an LLC or a C corporation?
In: Accounting
Amanda would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Amanda’s marginal income tax rate is 37 percent and her tax rate on dividends and capital gains is 23.8 percent (including the 3.8 percent net investment income tax). If Amanda organizes BAL as an LLC, she will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. Also, she is eligible to claim a full deduction for qualified business income on BAL’s income. Assume that BAL will distribute half of its after-tax earnings every year as a dividend if it is formed as a C corporation. (Round your intermediate computations to the nearest whole dollar amount.)
How much cash after taxes would Amanda receive from her investment in the first year if BAL is organized as either an LLC or a C corporation ?
In: Accounting
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 11 percent annual before-tax return on a $200,000 investment. Andrea’s marginal income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO as an LLC, Andrea will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. Further, she is eligible to claim the full deduction for qualified business income. Assume that SHO will pay out all of its after-tax earnings every year as a dividend if it is formed as a C corporation.
a. How much cash after taxes would Andrea receive from her investment in the first year if SHO is organized as either an LLC or a C corporation?
In: Accounting
Sandra would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 7 percent annual before-tax return on a $690,000 investment. Sandra’s marginal income tax rate is 37 percent and her tax rate on dividends and capital gains is 23.8 percent (including the 3.8 percent net investment income tax). If Sandra organizes BAL as an LLC, she will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. BAL’s income is not qualified business income (QBI) so Sandra is not allowed to claim the QBI deduction. Assume that BAL will distribute all of its after-tax earnings every year as a dividend if it is formed as a C corporation. (Round your intermediate computations to the nearest whole dollar amount.)
a. How much cash after taxes would Sandra receive from her investment in the first year if BAL is organized as either an LLC or a C corporation?
In: Accounting
Nathan purchased a 6-year Treasury bond with a coupon rate of j2 = 3.50% p.a. and a face value of $100 that matures at par. Coupons can be reinvested at j2 = 3.2% p.a. for the first five and a half years.
a. Calculate Nathan’s purchase price for this bond at a yield rate of j2 = 3.1% p.a. (rounded to three decimal places).
b. Assume that Nathan held this bond to maturity to earn a total realised compound yield of j2 = 3.13% p.a. Based on your result from part a, calculate the reinvestment rate for the last half year. Give your answer in j2 form, rounded to two decimal places.
c. Assume that Nathan held this bond for 3 years and sold it for a yield of j2 = 3.8% p.a. Based on your result from part a, calculate the holding period yield in j2 form, rounded to two decimal places. Include in your answer a cash flow diagram, drawn from Nathan’s perspective, that models the purchase and sale of the bond.
In: Finance
Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated’s investment activities during the last quarter of 2018 and the first month of 2019. The only securities held by Amalgamated at October 1 were $50 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1 at face value and held in Amalgamated’s trading portfolio. The company’s fiscal year ends on December 31.
Required:
Prepare the appropriate journal entry for each transaction or
event.
| 2018 | ||||
| Oct. | 18 | Purchased 2 million preferred shares of Millwork Ventures Company for $74 million. | ||
| 31 | Received semiannual interest of $2.0 million from the Kansas Abstractors bonds. | |||
| Nov. | 1 | Purchased 10% bonds of Holistic Entertainment Enterprises at their $72 million face value, to be held until they mature in 2025. Semiannual interest is payable April 30 and October 31. | ||
| 1 | Sold the Kansas Abstractors bonds for $45 million because rising interest rates are expected to cause their fair value to continue to fall. No unrealized gains and losses had been recorded on these bonds previously. | |||
| Dec. | 1 | Purchased 12% bonds of Household Plastics Corporation at their $80 million face value, to be held until they mature in 2028. Semiannual interest is payable May 31 and November 30. | ||
| 20 | Purchased U. S. Treasury bonds for $6.7 million as trading securities, hoping to earn profits on short-term differences in prices. | |||
| 21 | Purchased 4 million common shares of NXS Corporation for $66 million, planning to earn profits from dividends or gains if prevailing market conditions encourage sale. | |||
| 23 | Sold the Treasury bonds for $7.1 million. | |||
| 29 | Received cash dividends of $3 million from the Millwork Ventures Company preferred shares. | |||
| 31 | Recorded any necessary adjusting entry(s) and closing entries relating to the investments. The market price of the Millwork Ventures Company preferred stock was $36.00 per share and $19.00 per share for the NXS Corporation common. The fair values of the bond investments were $54.6 million for Household Plastics Corporation and $17.8 million for Holistic Entertainment Enterprises. |
| 2019 | ||||
| Jan. | 7 | Sold the NXS Corporation common shares for $61 million. |
In: Accounting
Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated’s investment activities during the last quarter of 2018 and the first month of 2019. The only securities held by Amalgamated at October 1 were $60 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1 at face value and held in Amalgamated’s trading portfolio. The company’s fiscal year ends on December 31.
| 2018 | ||||
| Oct. | 18 | Purchased 2 million preferred shares of Millwork Ventures Company for $65 million. | ||
| 31 | Received semiannual interest of $2.4 million from the Kansas Abstractors bonds. | |||
| Nov. | 1 | Purchased 10% bonds of Holistic Entertainment Enterprises at their $126 million face value, to be held until they mature in 2025. Semiannual interest is payable April 30 and October 31. | ||
| 1 | Sold the Kansas Abstractors bonds for $53 million because rising interest rates are expected to cause their fair value to continue to fall. No unrealized gains and losses had been recorded on these bonds previously. | |||
| Dec. | 1 | Purchased 12% bonds of Household Plastics Corporation at their $50 million face value, to be held until they mature in 2028. Semiannual interest is payable May 31 and November 30. | ||
| 20 | Purchased U. S. Treasury bonds for $7.6 million as trading securities, hoping to earn profits on short-term differences in prices. | |||
| 21 | Purchased 4 million common shares of NXS Corporation for $56 million, planning to earn profits from dividends or gains if prevailing market conditions encourage sale. | |||
| 23 | Sold the Treasury bonds for $7.8 million. | |||
| 29 | Received cash dividends of $3 million from the Millwork Ventures Company preferred shares. | |||
| 31 | Recorded any necessary adjusting entry(s) and closing entries relating to the investments. The market price of the Millwork Ventures Company preferred stock was $30.00 per share and $16.50 per share for the NXS Corporation common. The fair values of the bond investments were $59.1 million for Household Plastics Corporation and $18.7 million for Holistic Entertainment Enterprises. |
| 2019 | ||||
| Jan. | 7 | Sold the NXS Corporation common shares for $54 million. |
In: Accounting
Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated’s investment activities during the last quarter of 2018 and the first month of 2019. The only securities held by Amalgamated at October 1 were $55 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1 at face value and held in Amalgamated’s trading portfolio. The company’s fiscal year ends on December 31.
| 2018 | ||||
| Oct. | 18 | Purchased 2 million preferred shares of Millwork Ventures Company for $62 million. | ||
| 31 | Received semiannual interest of $2.2 million from the Kansas Abstractors bonds. | |||
| Nov. | 1 | Purchased 10% bonds of Holistic Entertainment Enterprises at their $36 million face value, to be held until they mature in 2025. Semiannual interest is payable April 30 and October 31. | ||
| 1 | Sold the Kansas Abstractors bonds for $48 million because rising interest rates are expected to cause their fair value to continue to fall. No unrealized gains and losses had been recorded on these bonds previously. | |||
| Dec. | 1 | Purchased 12% bonds of Household Plastics Corporation at their $80 million face value, to be held until they mature in 2028. Semiannual interest is payable May 31 and November 30. | ||
| 20 | Purchased U. S. Treasury bonds for $6.1 million as trading securities, hoping to earn profits on short-term differences in prices. | |||
| 21 | Purchased 4 million common shares of NXS Corporation for $54 million, planning to earn profits from dividends or gains if prevailing market conditions encourage sale. | |||
| 23 | Sold the Treasury bonds for $6.6 million. | |||
| 29 | Received cash dividends of $3 million from the Millwork Ventures Company preferred shares. | |||
| 31 | Recorded any necessary adjusting entry(s) and closing entries relating to the investments. The market price of the Millwork Ventures Company preferred stock was $29.00 per share and $15.50 per share for the NXS Corporation common. The fair values of the bond investments were $61.2 million for Household Plastics Corporation and $17.2 million for Holistic Entertainment Enterprises. |
| 2019 | ||||
| Jan. | 7 | Sold the NXS Corporation common shares for $49 million. |
Required:
Prepare the appropriate journal entry for each transaction or
event.
In: Accounting