Tom can choose when he is to receive $100,000 of fully taxable bonus. If he receives the bonus at the end of 2016, his bonus will be $100,000. If he postpones receipt of the bonus until the end of 2017, the amount will be $110,000. If Tom receives the bonus at the end of 2016, he can invest the proceeds with a pre-tax return of 10% over the next year.
If the marginal tax rate of Tom is 31% in 2016 and 2017, when should he elect to receive the bonus?
At what pre-tax rate of return will Tom be indifferent to receiving the bonus in the alternative years?
If the marginal tax rate of Tom increases to 35% in 2017, when should he elect to receive the bonus?
What would the tax rate need to be in 2017 to make Tom indifferent to the two options?
In: Accounting
The following selected account balances are provided for Delray
Mfg.
| Sales | $ | 1,317,000 |
| Raw materials inventory, Dec. 31, 2016 | 42,000 | |
| Work in process inventory, Dec. 31, 2016 | 57,600 | |
| Finished goods inventory, Dec. 31, 2016 | 61,800 | |
| Raw materials purchases | 187,900 | |
| Direct labor | 229,000 | |
| Factory computer supplies used | 24,500 | |
| Indirect labor | 46,000 | |
| Repairs—Factory equipment | 5,250 | |
| Rent cost of factory building | 51,000 | |
| Advertising expense | 99,000 | |
| General and administrative expenses | 131,000 | |
| Raw materials inventory, Dec. 31, 2017 | 46,400 | |
| Work in process inventory, Dec. 31, 2017 | 45,300 | |
| Finished goods inventory, Dec. 31, 2017 | 69,400 | |
Prepare an income statement for Delray Mfg. (a manufacturer).
In: Accounting
On January 1, 2016, Parkway adopted a defined benefit pension plan, with retroactive benefits. Prior service cost of $2,180,000, amortized straight-lined over 16 years.
Service Cost 340,000 348,000
Projected benefit obligation (1/1) 2,180,000 2,738,000
Plan assets (1/1) 0 670,000
Discount rate 10% 10%
Expected/actual long-term rate of return 0% 9%
Contributions 670,000 700,000
Projected benefit obligation (end of 2017)
3,359,800
Fair value of plan assets 1,430,300
1. Compute the amount of Parkway’s pension expense for 2016 and
2017.
2. Prepare all the journal entries related to Parkway’s pension
plan for 2016 and 2017.
3. What is the total accrued/prepaid pension cost at the end of
2017? Is it an asset or a liability?
In: Accounting
During August, Hill Sales Company had these summary transactions:
| 1. | Cash sales of $230,000, subject to sales taxes of 6%. |
| 2. | Sales on account of $260,000, subject to sales taxes of 6%. |
| 3. | Paid the sales taxes to the state |
| Prepare journal entries to record the preceding transactions. |
q2
On August 1, 2016, Pereira Corporation has sold, on account, 1,800 Wiglows to Mendez Company at $480 each. Mendez also purchased a 1-year service-type warranty on all the Wiglows for $10 per unit. In 2016, Pereira incurred warranty costs of $9,000. Costs for 2017 were $6,000.
Required:
| 1. | Prepare the journal entries for the preceding transactions. |
| 2. | Show how Pereira would report the items on the December 31, 2016, balance sheet. |
In: Accounting
Consider the case of Falcon Freight Inc. (FF):
Five years of realized returns for FF are given in the following table. Remember:
| 1. | While FF was started 40 years ago, its common stock has been publicly traded for the past 25 years. |
| 2. | The returns on its equity are calculated as arithmetic returns. |
| 3. | The historical returns for FF for 2012 to 2016 are: |
|
2012 |
2013 |
2014 |
2015 |
2016 |
|
|---|---|---|---|---|---|
| Stock return | 21.25% | 14.45% | 25.50% | 35.70% | 11.05% |
Given the preceding data, the average realized return on FF’s stock is ._________-
The preceding data series represents ________ of FF’s historical returns. Based on this conclusion, the standard deviation of FF’s historical returns is ._____________
If investors expect the average realized return from 2012 to 2016 on FF’s stock to continue into the future, its coefficient of variation (CV) will be __________________
In: Finance
4. A 2017 study showing that the proportion of people with health insurance is higher among people with higher income
a. is an example of positive economics.
b. is an example of normative economics.
c. is an example of qualitative economics.
d. is an example of Australian economics.
5. A study arguing that the United States should adopt a single-payer health system
a. is an example of positive economics.
b. is an example of normative economics.
c. is an example of qualitative economics.
d. is an example of Australian economics.
6. Compared to Canada, France, Germany, Switzerland, and the United Kingdom, the United States
a. had the highest spending per person and the shortest life expectancy in 2016.
b. had the lowest spending per person and the shortest life expectancy in 2016.
c. had the lowest spending per person and the longest life expectancy in 2016.
d. had the highest spending per person and the longest life expectancy in 2016.
7. Rational decision making involves
a. choosing the cheapest option.
b. choosing the highest-quality option.
c. choosing the option that best helps you realize your goals, given your resources.
d.avoiding choices that involve scarce resources.
In: Economics
Blossom Ltd. purchased a new machine on April 4, 2014, at a cost of $ 197,600. The company estimated that the machine would have a residual value of $ 14,000. The machine is expected to be used for 10,200 working hours during its four-year life. Actual machine usage was 1,500 hours in 2014; 2,300 hours in 2015; 2,200 hours in 2016; 2,100 hours in 2017; and 2,100 hours in 2018. Blossom has a December 31 year end.
Calculate depreciation for the machine under each of the
following methods: (Round expense per unit to 2 decimal
places, e.g. 2.75 and final answers to 0 decimal places, e.g.
5,275.)
(1) Straight-line for 2014 through to 2018.
2014 Expense
2015 Expense
2016 Expense
2017 Expense
2018 Expense
(2) Diminishing-balance using double the
straight-line rate for 2014 through to 2018.
2014 Expense
2015 Expense
2016 Expense
2017 Expense
2018 Expense
(3) Units-of-production for 2014 through to 2018.
2014 Expense
2015 Expense
2016 Expense
2017 Expense
2018 Expense
In: Accounting
Culver Company began operations late in 2016 and adopted the
conventional retail inventory method. Because there was no
beginning inventory for 2016 and no markdowns during 2016, the
ending inventory for 2016 was $14,097 under both the conventional
retail method and the LIFO retail method. At the end of 2017,
management wants to compare the results of applying the
conventional and LIFO retail methods. There was no change in the
price level during 2017. The following data are available for
computations.
|
Cost |
Retail |
|||
| Inventory, January 1, 2017 | $14,097 | $21,700 | ||
| Sales revenue | 83,000 | |||
| Net markups | 8,800 | |||
| Net markdowns | 1,800 | |||
| Purchases | 60,400 | 87,100 | ||
| Freight-in | 10,175 | |||
| Estimated theft | 1,800 |
Compute the cost of the 2017 ending inventory under both:
(a) The conventional retail method.
(Round ratios for computational purposes to 0 decimal
places, e.g. 78% and final answer to 0 decimal places, e.g.
28,987.)
Ending inventory using the conventional retail method $______
(b) The LIFO retail method. (Round
ratios for computational purposes to 0 decimal places, e.g. 78% and
final answers to 0 decimal places, e.g.
28,987.)
Ending inventory at cost $____
Ending inventory at retail $____
In: Accounting
ON JANUARY 1, 2016 FLORIDA PURCHASED ALL THE OUTSTANDING COMMON SHARES OF SUNSHINE CO FOR $3,500,000 CASH.AT THE DATE OF ACQUISITION, SUNSHINE EQUITY ACCOUNTS HAD THE FOLLOWING BALANCES:
COMMON STOCK$500,000
PAID IN CAPITAL$1,800,000
RETAINED EARNINGS$700,000
ALL OF SUNSHINE'S ASSETS WERE FAIRLY STATED EXCEPT FOR THE FOLLOWING:
EQUIPMENT: BOOK VALUE $180,000, FAIR VALUE $270,000, EST LIFE 5 YEARS
BUILDING: BOOK VALUE $600,000, FAIR VALUE $800,000, EST LIFE 10 YEARS
SUNSHINE ALSO HAD A COPYRIGHT WITH A FAIR VALUE OF $160,000 WITH A REMAINING OF 5 YEARS
DURING 2016, SUNSHINE REPORTED NET INCOME OF $1,325,000 AND PAID DIVIDENDS OF $850,000
DURING 2017, SUNSHINE REPORTED NET INCOME OF $900,000 AND PAID DIVIDENDS OF $1,100,000
REQUIRED:
A.) ANALYZE THE PURCHASE PRICE AND PREPARE A SCHEDULE ALLOCATING THE PURCHASE PRICE
B.) ASSUME THAT OHIO USES THE EQUITY METHOD TO ACCOUNT FOR ITS INVESTMENT IN BUCKEYE. PREPARE ALL JOURNAL ENTRIES TO BE MADE ON ITS BOOKS FOR 2016 AND 2017. EXPLAIN WHY THE ENTRIES ARE MADE.
C.) PREPARE THE CONSOLIDATION WORKSHEET ENTRIES FOR THE YEAR ENDED 2016 AND 2017. EXPLAIN WHY THE ENTRIES ARE MADE.
In: Accounting
1.On January 1, 2016, TXU Europe Corporation purchased 40% of the outstanding stock of Alberta Power Pool Corporation for $800,000. Net income reported by Alberta Power Pool Corporation for 2016 and 2017 was, respectively, $100,000 and $125,000. Dividends paid by Alberta Power Pool Corporation during 2016 and 2017 were, respectively, $60,000 and $75,000. The long−term investment will appear on TXU Europe Corporation's December 31, 2016, balance sheet at:
A.$800,000
B.$776,000
C.$816,000
D.$840,000
2. The adjusting entry for investments at fair value through other comprehensive income contains a credit to Investments for $651. The income statement will reflect:
A.other comprehensive income/loss of ($651)
B.an extraordinary gain of $651
C.revenue of $651
D.nothing, because gain/loss is not reported on the income statement
3.The Gain/Loss on Investment account may appear on which financial statement?
A.the income statement under the "other income/expense" section
B.the balance sheet under the "assets" section as a contra asset
C.the balance sheet under the "liabilities" section
D.the balance sheet as part of the shareholders' equity
In: Accounting