On January 1, 2020, Winthrop Inc. entered into a lease agreement to lease equipment:
Required:
In: Accounting
On January 1, 2020, Winthrop Inc. entered into a lease agreement to lease equipment:
Required:
In: Accounting
If Susie earns $750,000 in taxable income, how much tax will she pay as a single taxpayer for year 2020? (Use tax rate schedule)
Marc, a single taxpayer, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2020, what is his average tax rate (rounded) & effective tax rate (rounded)
3. Jamie is single. In 2020 , she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount? (Use the tax rate schedules,long term capital gains tax brackets)
In: Accounting
Ivanhoe Inc. operates a retail computer store. To improve its delivery services to customers, the company purchased four new trucks on April 1, 2020. The terms of acquisition for each truck were as follows:
| 1. | Truck #1 had a list price of $27,200 and was acquired for a cash payment of $25,500. | |
| 2. | Truck #2 had a list price of $28,800 and was acquired for a down payment of $2,100 cash and a non–interest-bearing note with a face amount of $26,700. The note is due April 1, 2021. Ivanhoe would normally have to pay interest at a rate of 10% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. | |
| 3. | Truck #3 had a list price of $22,900. It was acquired in exchange for a computer system that Ivanhoe carries in inventory. The computer system cost $17,000 and is normally sold by Ivanhoe for $19,100. Ivanhoe uses a perpetual inventory system. | |
| 4. | Truck #4 had a list price of $23,400. It was acquired in exchange for 1,000 common shares of Ivanhoe Inc. The common shares trade in an active market valued at $22 per share in the most recent trade. |
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF
1.
(a)
Prepare the appropriate journal entries for Ivanhoe Inc. for the
above transactions, assuming that Ivanhoe prepares financial
statements in accordance with IFRS. For Truck #2, calculate the
purchase price using any of the three methods (tables, financial
calculator, or Excel). (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts. Round factor values to
5 decimal places, e.g. 1.25124 and final answers to 0 decimal
places, e.g. 5,275.)
|
No. |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
1. |
enter an account title to record purchase of Truck #1 | enter a debit amount | enter a credit amount |
| enter an account title to record purchase of Truck #1 | enter a debit amount | enter a credit amount | |
|
(To record purchase of Truck #1.) |
|||
|
2. |
enter an account title to record purchase of Truck #2 | enter a debit amount | enter a credit amount |
| enter an account title to record purchase of Truck #2 | enter a debit amount | enter a credit amount | |
| enter an account title to record purchase of Truck #2 | enter a debit amount | enter a credit amount | |
|
(To record purchase of Truck #2.) |
|||
|
3. |
enter an account title to record purchase of Truck #3 | enter a debit amount | enter a credit amount |
| enter an account title to record purchase of Truck #3 | enter a debit amount | enter a credit amount | |
|
(To record purchase of Truck #3.) |
|||
| enter an account title to record the cost of sold goods | enter a debit amount | enter a credit amount | |
| enter an account title to record the cost of sold goods | enter a debit amount | enter a credit amount | |
|
(To record the cost of sold goods.) |
|||
|
4. |
enter an account title to record purchase of Truck #4 | enter a debit amount | enter a credit amount |
| enter an account title to record purchase of Truck #4 | enter a debit amount | enter a credit amount | |
|
(To record purchase of Truck #4.) |
In: Accounting
During the classic period the court lifted the veil on a number of occasions - from the list below select the correct answers (you may choose more than one answer)
Group of answer choices
When groups of companies should be viewed as one single entity. (DHN Food Distributors)
Defendant set up a company to solicit customers he was prohibited from soliciting due to previous employment contract (Gilford Motor Co v Horne)
Setting up a company to avoid an estate contract (Jones v Lipman);
Setting up a company to force compulsory purchase of minority shareholdings (Re Bugle Press).
Dealing with the enemy (Daimler v Continential Tyre);
Lord Denning argued in DHN Food Distributors v Tower Hamlets that groups of companies should be viewed as one single entity.
Group of answer choices
True
False
The key question in the case of Adams v Cape Industries was ?
Group of answer choices
It is possible for a company to be held as a mere facade even though it was not originally set up as a sham.
The company was used for some impropriety unconnected to the corporate form.
If there was an existence of an agent-principal relationship.
Whether Cape, the parent company, had a presence in the US through it subsidiaries.
The three situations where the case of Adams v Cape limited veil lifting to are :-
1. Where the interpretation of a statute or document shows that
the group of companies is to be treated as one;
2. Where a company is being used as a sham or mere facade;
3. Where there is no agent-principal relationship
In: Accounting
WX Company produced an oil based chemical product which it sells to paint manufacturers.
Because of the unique nature of the chemical product, price is not driven by the market.
In year 2020 with good market condition, it incurred total cost of $412,000 to produce the
chemical. The invested asset is $1,487,500. The cost per unit to manufacture a gallon of the
chemical is presented as belowDirect Labor $2
Direct Material $5
Apart from this, the variable manufacturing overhead is incurred at a rate of 40% of the cost of
direct labor. Assume that 40% of the variable manufacturing cost is indirect labor, 35% of the
variable manufacturing cost is indirect material and the remaining 25% is utilities. Fixed
manufacturing overhead is also incurred.
WX Company decided to price its product to earn a 16% return on its investment, and it has taken
into account the total cost plus the mark up when pricing its chemical product. The market price
of the chemical is $13.3.
In year 2019, it reported that 40,000 gallons of chemical have been produced by WX Company. It
is the company policy to set the production volume of the current year based on the production
volume of the preceding year and the market condition in the current year. If the market condition
of the current year is good, there will be 25% increase in production volume compared with the
preceding year. If the market condition of the current year is bad, there will be 20% decrease in
production volume compared with the preceding year.
In year 2020, WX Company is considering whether it can manufacture the paint itself. If the
company process the chemical further and manufacture the paint by itself (one gallon of chemical
can be further processed into one gallon of paint), the cost of indirect material will increase by
50%, the cost of indirect labor will rise by $0.09, the cost of utilities will remain the same,
additional cost for direct material per gallon is $1.8 and additional cost for direct labor per gallon
is $0.7. It is the company policy that the selling price of paint is driven by the market. If the
company processes the chemical further and manufactures the paint by itself, the invested assets
will increase by 41% and the fixed cost of production will increase by 50% compared with the
original situation that it produced an oil-based chemical product which it sells to paint
manufactures. The market price of the paint product is $16.5.
Required:
(a) Determine the fixed cost per unit (gallon) for the original situation that it produced an oil
based chemical product which it sells to paint manufactures. Show workings.
(b) Determine the net income per gallon for selling chemical. Reconcile the net income per gallon
with the difference between selling price and total cost per gallon. Show workings.
(c) Determine the incremental per gallon increase in net income and the total increase in net
income if the company manufactures the paint (under the same 2020 production volume).
(d) What is the accounting implication if there is high differentiation between the paint products
produced by WX Company and that produced by other competitors? Explain and provide
supporting calculations.
(e) What is the accounting implication if the invested asset amount has been overstated? Explain.
(f) What is the accounting implication if the company has considered the variable cost only
instead of full cost when pricing its chemical product? Explain.
In: Accounting
WX Company produced an oil based chemical product which it sells to paint manufacturers. Because of the unique nature of the chemical product, price is not driven by the market. In year 2020 with good market condition, it incurred total cost of $412,000 to produce the chemical. The invested asset is $1,487,500. The cost per unit to manufacture a gallon of the chemical is presented as below
Direct Labor $2
Direct Material $5
Apart from this, the variable manufacturing overhead is incurred at a rate of 40% of the cost of direct labor. Assume that 40% of the variable manufacturing cost is indirect labor, 35% of the variable manufacturing cost is indirect material and the remaining 25% is utilities. Fixed manufacturing overhead is also incurred.
WX Company decided to price its product to earn a 16% return on its investment, and it has taken into account the total cost plus the mark up when pricing its chemical product. The market price of the chemical is $13.3.
In year 2019, it reported that 40,000 gallons of chemical have been produced by WX Company. It is the company policy to set the production volume of the current year based on the production volume of the preceding year and the market condition in the current year. If the market condition of the current year is good, there will be 25% increase in production volume compared with the preceding year. If the market condition of the current year is bad, there will be 20% decrease in production volume compared with the preceding year.
In year 2020, WX Company is considering whether it can manufacture the paint itself. If the company process the chemical further and manufacture the paint by itself (one gallon of chemical can be further processed into one gallon of paint), the cost of indirect material will increase by 50%, the cost of indirect labor will rise by $0.09, the cost of utilities will remain the same, additional cost for direct material per gallon is $1.8 and additional cost for direct labor per gallon is $0.7. It is the company policy that the selling price of paint is driven by the market. If the company processes the chemical further and manufactures the paint by itself, the invested assets will increase by 41% and the fixed cost of production will increase by 50% compared with the original situation that it produced an oil-based chemical product which it sells to paint manufactures. The market price of the paint product is $16.5.
(a) Determine the fixed cost per unit (gallon) for the original situation that it produced an oil based chemical product which it sells to paint manufactures. Show workings.
(b) Determine the net income per gallon for selling chemical. Reconcile the net income per gallon with the difference between selling price and total cost per gallon. Show workings.
(c) Determine the incremental per gallon increase in net income and the total increase in net income if the company manufactures the paint (under the same 2020 production volume).
(d) What is the accounting implication if there is high differentiation between the paint products produced by WX Company and that produced by other competitors? Explain and provide supporting calculations.
(e) What is the accounting implication if the invested asset amount has been overstated? Explain.
(f) What is the accounting implication if the company has considered the variable cost only instead of full cost when pricing its chemical product? Explain.
In: Accounting
WX Company produced an oil based chemical product which it sells to paint manufacturers. Because of the unique nature of the chemical product, price is not driven by the market.
In year 2020 with good market condition, it incurred total cost of $412,000 to produce the chemical. The invested asset is $1,487,500. The cost per unit to manufacture a gallon of the chemical is presented as below
Direct Labor $2
Direct Material $5
Apart from this, the variable manufacturing overhead is incurred at a rate of 40% of the cost of direct labor. Assume that 40% of the variable manufacturing cost is indirect labor, 35% of the variable manufacturing cost is indirect material and the remaining 25% is utilities. Fixed manufacturing overhead is also incurred.
WX Company decided to price its product to earn a 16% return on its investment, and it has taken into account the total cost plus the mark up when pricing its chemical product. The market price of the chemical is $13.3.
In year 2019, it reported that 40,000 gallons of chemical have been produced by WX Company. It is the company policy to set the production volume of the current year based on the production volume of the preceding year and the market condition in the current year. If the market condition of the current year is good, there will be 25% increase in production volume compared with the preceding year. If the market condition of the current year is bad, there will be 20% decrease in production volume compared with the preceding year.
In year 2020, WX Company is considering whether it can manufacture the paint itself. If the company process the chemical further and manufacture the paint by itself (one gallon of chemical can be further processed into one gallon of paint), the cost of indirect material will increase by 50%, the cost of indirect labor will rise by $0.09, the cost of utilities will remain the same, additional cost for direct material per gallon is $1.8 and additional cost for direct labor per gallon is $0.7. It is the company policy that the selling price of paint is driven by the market. If the company processes the chemical further and manufactures the paint by itself, the invested assets will increase by 41% and the fixed cost of production will increase by 50% compared with the original situation that it produced an oil-based chemical product which it sells to paint manufactures. The market price of the paint product is $16.5.
Required:
(a) Determine the fixed cost per unit (gallon) for the original situation that it produced an oil based chemical product which it sells to paint manufactures. Show workings.
(b) Determine the net income per gallon for selling chemical. Reconcile the net income per gallon with the difference between selling price and total cost per gallon. Show workings.
(c) Determine the incremental per gallon increase in net income and the total increase in net income if the company manufactures the paint (under the same 2020 production volume).
(d) What is the accounting implication if there is high differentiation between the paint products produced by WX Company and that produced by other competitors? Explain and provide supporting calculations.
(e) What is the accounting implication if the invested asset amount has been overstated? Explain.
(f) What is the accounting implication if the company has considered the variable cost only instead of full cost when pricing its chemical product? Explain.
In: Accounting
WX Company produced an oil based chemical product which it sells to paint manufacturers. Because of the unique nature of the chemical product, price is not driven by the market. In year 2020 with good market condition, it incurred total cost of $412,000 to produce the chemical. The invested asset is $1,487,500. The cost per unit to manufacture a gallon of the chemical is presented as belowDirect Labor $2 Direct Material $5 Apart from this, the variable manufacturing overhead is incurred at a rate of 40% of the cost of direct labor. Assume that 40% of the variable manufacturing cost is indirect labor, 35% of the variable manufacturing cost is indirect material and the remaining 25% is utilities. Fixed manufacturing overhead is also incurred. WX Company decided to price its product to earn a 16% return on its investment, and it has taken into account the total cost plus the mark up when pricing its chemical product. The market price of the chemical is $13.3. In year 2019, it reported that 40,000 gallons of chemical have been produced by WX Company. It is the company policy to set the production volume of the current year based on the production volume of the preceding year and the market condition in the current year. If the market condition of the current year is good, there will be 25% increase in production volume compared with the preceding year. If the market condition of the current year is bad, there will be 20% decrease in production volume compared with the preceding year. In year 2020, WX Company is considering whether it can manufacture the paint itself. If the company process the chemical further and manufacture the paint by itself (one gallon of chemical can be further processed into one gallon of paint), the cost of indirect material will increase by 50%, the cost of indirect labor will rise by $0.09, the cost of utilities will remain the same, additional cost for direct material per gallon is $1.8 and additional cost for direct labor per gallon is $0.7. It is the company policy that the selling price of paint is driven by the market. If the company processes the chemical further and manufactures the paint by itself, the invested assets will increase by 41% and the fixed cost of production will increase by 50% compared with the original situation that it produced an oil-based chemical product which it sells to paint manufactures. The market price of the paint product is $16.5.
(a) Determine the fixed cost per unit (gallon) for the original situation that it produced an oil based chemical product which it sells to paint manufactures. Show workings. (b) Determine the net income per gallon for selling chemical. Reconcile the net income per gallon with the difference between selling price and total cost per gallon. Show workings. (c) Determine the incremental per gallon increase in net income and the total increase in net income if the company manufactures the paint (under the same 2020 production volume). (d) What is the accounting implication if there is high differentiation between the paint products produced by WX Company and that produced by other competitors? Explain and provide supporting calculations. (e) What is the accounting implication if the invested asset amount has been overstated? Explain. (f) What is the accounting implication if the company has considered the variable cost only instead of full cost when pricing its chemical product? Explain.
In: Accounting
The US unemployment rate (actual unemployment, u) is 8.4 percent, while the natural rate of unemployment (nru) is 4.4 percent.
(i) Using Okun's Law, compute the US current percentage GDP gap. Show your computation. (ii) State your answer in words, comparing actual to potential output. (iii) Is the US GDP gap positive or negative—and why?
Note: "Okun’s Law Arthur Okun was the first macroeconomist to
quantify the inverse relationship between the actual unemployment
rate and the GDP gap. He noticed that, on average:
GDP gap = −2.0 × (actual unemployment rate − natural unemployment
rate)"
The note is from one of my textbooks, is the formula provided above, Okun's Law formula?
In: Economics