A company’s financial records report the following accounts and balances at the end of the year:

What would the company show as its total credits on its trial balance?

a) $39,800

b) $43,400

c) $36,600

d) $42,200

e) $44,400

COMMENT ON POST

Management of a company want to take a bath in the first year, because this poor performance could be passed in the previous management. The results of the first year of a new management are still linked to the decisions of the previous management and this is a great opportunity for new management to blamed their mistakes in the previous one. Also taking a bath in the first year will allow the new management to most likely show improvements in the second year that it will be for their benefit.

Cindy, who will graduate from college in a year is deciding whether to go on for her master’s degree which will last two years. She figures that if she takes a job immediately, she can earn $40,000 per year in real terms for the remainder of her working years. If she goes on for two more years of graduate study, however, she can increase her earnings to $50,000 per year. The cost of tuition is $40,000 per year in real terms. Is this a worthwhile investment if the real interest rate is 5% per year?—(Assume she will retire after working for 40 years. AND SHOW YOUR WORK)

A company has net operating assets at the start of the year of $422 million. If EBIT for the year is $87 million, free cash flow is $42 million and the corporate tax rate is 30%, what are net operating assets at the end of the year?

Marc and Michelle are married and earned salaries this year of $64,800 and $12,300, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $600 from corporate bonds. Marc contributed $2,600 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,600. Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $2,000 child tax credit for Matthew. Marc and Michelle paid $6,200 of expenditures that qualify as itemized deductions and they had a total of $5,600 in federal income taxes withheld from their paychecks during the course of the year.

a. What is Marc and Michelle’s gross income?

b. What is Marc and Michelle’s adjusted gross income?

c. What is the total amount of Marc and Michelle’s deductions from AGI?

d. What is Marc and Michelle’s taxable income?

e. What is Marc and Michelle’s taxes payable or refund due for the year?

At the beginning of the school year, Priscilla Wescott decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

c. What are the budget implications for Priscilla Wescott?

Priscilla can see that her present plan   sufficient cash. If Priscilla did not budget but went ahead with the original plan, she would be $   at the end of December, with no time left to adjust.

a) At the end of the current year, the taxpayer has a home-equity loan of $90,000. The value of the residence is $286,000, while the amount of acquisition indebtedness on the home is $125,000. Interest on how much of the home equity loan is indebtedness on the deductible?

b) A taxpayer donates a capital asset (basis of $16,000, value of $12,000) to a public charity on October 29th, 2014. She had acquired the property on December 2013. What is the value of the contribution?

Toronto Stock Exchange. In a meeting with investment analysts at the beginning of the year, Jones had predicted that the company’s earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and Jones concluded within two weeks of the end of the fiscal year that it would ultimately be impossible to report an increase in earnings as large as predicted unless some drastic action were taken. As a result, Jones ordered that wherever possible, expenditures should be postponed to the new year—including cancelling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-year advertising and travel. Also, Jones ordered the company’s controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product costs. The company is expected to have substantial inventories of work in process and finished goods at the end of the year.

Required:

1. Why would reclassifying period costs as product costs increase this period’s reported earnings?

2. Do you believe Adam Jone's actions to be ethical? Why, or why not? (Be descriptive and explain)