Identify the additional amount of tax that will be due from the taxpayer on the dividends received in each of the scenarios below. TAX YEAR 2018
a. Masha (an individual taxpayer) owns 100 percent of Metro Fashion Corporation. In 2018, she receives a $100,000 dividend from the Corporation. Masha’s other sources of income this year are wages of $80,000 (thus, she is not considered a high income taxpayer).
b. Tyson Corporation owns 100 percent of Lafayette Corporation, and both companies are in the same affiliated group. Lafayette pays Tyson $300,000 in dividends in 2018. Aside from the dividend income, Tyson Corporation earned $400,000 in income from its ordinary operations during the year.
c. Maya Enterprises (a corporate taxpayer) owns 15 percent of Tiger Corporation. Maya Enterprises earned $2 million from its ordinary operations during 2018. Tiger Corporation paid out a total of $1 million in dividends to all its owners, giving each owner a dividend in proportion to its ownership percentage.
In: Accounting
This will be probably the most important discussion we have, the 60-day rule. In government, as you can see we have few estimates. If we make all receipts only count if the cash is received (or paid) within 60 day of year end, by the time we complete financial reports (usually within 90 days of year end) we KNOW what will be collected. This fits with the current approach we use for funds. While only required for property tax, we generally use this rule for ALL taxes. So, if a tax is for the 2018 (June 12017-July 2018) budget, it is revenue in 2018 if collected before September 29th, 2018. If not, it will become revenue when it is collected. If it is collected before July 1, 2017, it is not considered revenue either since it is not available (budgeted) until July 1. We have a similar approach for matching costs.
Why would we avoid estimates? What about Sales or Income taxes?
In: Accounting
Crimson Industries purchased a supply of electronic components from Entel Corporation on November 1, 2018. In payment for the $27 million purchase, Crimson issued a 16-month installment note to be paid in equal monthly payments at the end of each month. The payments include interest at the rate of 24%
Present value of 1 for 16 periods at 1% 0.85282
Present value of 1 for 16 periods at 1.5% 0.78803
Present value of 1 for 16 periods at 2% 0.72845
Present value of annuity for 16 periods at 1% 14,71787
Present value of annuity for 16 periods at 1.5% 14.13126
Present value of annuity for 16 periods at 2% 13.57771
Required: (Round to the nearest dollar)
In: Accounting
Problem 12-2 Trading securities; bond investment; effective interest [LO12-1, 12-3] Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $150 million of 6% bonds, dated January 1, on January 1, 2018. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $133 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2018, was $140 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet? 4-b. Prepare any entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkey's 2018 statement of cash flows be affected by this investment?
In: Accounting
1- Towson Manufacturing had a Work in Process balance of $106,000 on January 1, 2018. The year end balance of Work in Process was $140,000 and the Cost of Goods Manufactured was $675,000. Use this information to determine the total manufacturing costs incurred during the fiscal year 2018. (Round enter as whole dollars only.)
2-
During FY 2018, Towson Manufacturing had a beginning finished goods inventory of $24,000 & ending finished goods inventory of $17,500. Beginning work-in-process was $20,000 and ending work-in-process was 15,500. Factory overhead was $22,500. The total manufacturing costs amounted to $288,000. Use this information to determine the FY 2018 Cost of Goods Sold. (Round enter as whole dollars only.)
3- During FY 2019, Dorchester Company plans to sell Widgets for $12 a unit. Current variable costs are $6 a unit and fixed costs are expected to total of $141,000. Use this information to determine the number of units of Widgets for Dorchester to breakeven. (Round to the nearest whole number)
In: Accounting
EXCEL (Entries for Conversion, Amortization, and Interest of Bonds) Volker Inc. issued $2,500,000 of convertible 10-year bonds on July 1, 2017. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $54,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Volker Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2018, $250,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash.
Instructions
Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (Round to the nearest dollar.)
(a) August 1, 2018. (Assume the book value method is used.)
(b) August 31, 2018.
(c) December 31, 2018, including closing entries for end-of-year.
In: Accounting
The following information is available for the Perez Company:
|
Comparative Balance Sheets |
||
|
2017 |
2018 |
|
|
Cash |
$800 |
$1,200 |
|
Accounts receivable |
440 |
400 |
|
Inventory |
740 |
1,220 |
|
Land |
500 |
820 |
|
Equipment |
4,140 |
4,400 |
|
Less:Accumulated depreciation |
(620) |
(800) |
|
Total Assets |
$6,000 |
$7,240 |
|
Accounts payable |
$1,600 |
$1,000 |
|
Notes payable (long-term) |
1,800 |
1,440 |
|
Common stock, no par |
1,200 |
2,000 |
|
Retained earnings |
1,400 |
2,800 |
|
Total Liabilities and Stockholders' Equity |
$6,000 |
$7,240 |
Partial additional information:The net income for 2018 totaled $3,200. During 2018, the company sold for $780, equipment that cost $780 and had a book value of $600. The company sold land for $400, resulting in a loss of $80. The remaining change in the Land account resulted from the purchase of land through the issuance of common stock.
Required
Making whatever additional assumptions that are necessary, prepare a statement of cash flows for the company for 2018 using the indirect method.
In: Accounting
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In: Accounting
At the beginning of 2018, Ace Company had the following portfolio of investments in available-for-sale debt securities (all of which were acquired at par value):
| Security | Cost | 1/1/2018 Fair Value |
|---|---|---|
| A | $20,000 | $25,000 |
| B | 30,000 | 29,000 |
| Totals | $50,000 | $54,000 |
During 2018, the following transactions occurred:
| May 3 | Purchased C debt securities at their par value for $50,000. |
| July 1 | Sold all of the A securities for $25,000 plus interest of $1,000. |
| Dec. 31 | Received interest of $7,600 on the B and C securities. Additionally the following information was available: |
| Security | 12/31/18 Fair Value |
|---|---|
| B | $29,000 |
| C | 52,500 |
Required:
| 1. | Prepare journal entries to record the preceding information. |
| 2. | What is the balance in the Unrealized Holding Gain/Loss account on December 31, 2018? |
| 3. | Next Level What justification does the FASB give for its treatment of unrealized holding gains and losses for available-for-sale securities? |
In: Accounting
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On January 1, 2018, Hire Now Corporation, a calendar year, accrual basis C corporation was organized and began business operations. Hire Now provides HR consulting services for businesses. During 2018, it had financial income (per books) before tax of $3,000,000. The following items were expensed in arriving at Hire Now’s 2018 financial income (per books): · $200,000 straight-line financial depreciation; total federal tax depreciation amounted to $900,000. · $30,000 increase to its allowance for doubtful accounts; actual bad debts written off amounted to $9,000. · $20,000 of qualifying meals and entertainment expenses. · $3,000 fine for filing its articles of incorporation late with the Secretary of State. |
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What is Hire Now Corporation’s 2018 federal taxable income and federal income tax liability? Please show your work and explain your calculations. Also, identify any book/tax differences as permanent differences or temporary differences. |
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In: Accounting