Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with Omer for all of 2020. Omer paid all costs of maintaining the household for himself and Maria. Omer’s sister, Zelda, also lived with Omer for all of 2020. Zelda had no income, and Omer provided all of her support.
In 2020, Omer had the following income items:
Salary: $75,000
Interest on savings account (investment income): $2,500
Ordinary dividends (investment income; not qualified dividends): $1,500
Unemployment Compensation: $10,000
Gift from Omer’s father: $10,000
Alimony from ex-wife (divorce finalized in 2014): $10,000
Omer paid the following expenses in 2020:Federal income taxes withheld on wages: $4,000
State & local income taxes withheld on wages: $1,000
Sales tax: $9,000
Property tax: $3,000
Medical expenses: $1,000
Food and clothes for Maria: $4,000
Investment interest: $5,000
Food and clothes for himself: $5,000
Childcare expenses so Omer can work: $2,000
HSA Contribution (Omer has a HDHP): $2,000
Charitable contribution (cash): $2,500
Unreimbursed employee business expenses: $500
Car payment: $6,000
Mortgage interest on $300,000 mortgage used to purchase primary residence: $3,000
QUESTION: What is Omer’s total itemized deductions?
QUESTION: What is Omer’s taxable income? Omer has no QBI deduction.
In: Accounting
Value Products Ltd manufactures a single product. You
are the management accountant
responsible for preparing the quarterly budgets of the next quarter
from July to September 2020.
Your colleague, the financial accountant, has provided you the
following extracted data from
the balance sheet as at 30 June 2020:
Assets Liabilities
Accounts Receivable $250,000 Bank Overdraft $90,000
Plant and Machinery $800,000 (Cost) Dividend Payable $10,000
Long-term Loan 15% $400,000
The following transactions are expected during the next three
months:
Sales Purchases Expenses
January $1,500,000 $1,000,000 $200,000
February 2,000,000 1,500,000 250,000
March 3,000,000 2,800,000 300,000
All sales are on credit and the collections have the following
pattern:
During the month of sale: 80% (early payment discount of 4% is
given)
In the subsequent month: 20% (no discount)
Payments for purchase are made in the month of purchase enjoying a
10% early payment
discount.
Expenses shown above include depreciation of machinery which is
calculated at a rate of 12%
per annum on cost. Expenses are paid for in the month in which they
are incurred.
The dividend payable will be paid in July.
Loan interest for the three months will be paid in September.
Required:
(a) Prepare a Cash Budget for each of the three months from July to
September 2020.
(b) Prepare a Budgeted Income Statement for the period
from July to September 2020.
In: Accounting
Boehm Corporation has had stable earnings growth of 4% a year for the past 10 years, and in 2019 Boehm paid dividends of $5 million on net income of $10 million. However, net income is expected to grow by 24% in 2020, and Boehm plans to invest $7.0 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2020 Boehm will return to its previous 4% earnings growth rate. Its target debt ratio is 32%. Boehm has 1 million shares of stock.
Calculate Boehm's dividend per share for 2020 under each of the following policies:
In: Accounting
On December 31, 2019, Akron, Inc., purchased 5 percent of Zip Company's common shares on the open market in exchange for $17,100. On December 31, 2020, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $95,000.
During the next two years, the following information is available for Zip Company:
| Income | Dividends Declared | Common Stock Fair Value (12/31) |
|
| 2019 | $313,000 | ||
| 2020 | $68,000 | $6,600 | 380,000 |
| 2021 | 85,000 | 14,400 | 470,000 |
At December 31, 2020, Zip reports a net book value of $280,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2020.
Assume Akron applies the equity method to its Investment in Zip account:
Assume Akron uses fair-value accounting for its Investment in Zip account:
In: Accounting
Question 11
The following facts pertain to a non-cancelable lease agreement
between Carla Vista Leasing Company and Tamarisk Company, a
lessee.
| Commencement date | May 1, 2020 | ||
| Annual lease payment due at the beginning of | |||
| each year, beginning with May 1, 2020 | $15,138.16 | ||
| Bargain purchase option price at end of lease term | $4,000 | ||
| Lease term | 5 | years | |
| Economic life of leased equipment | 10 | years | |
| Lessor’s cost | $50,000 | ||
| Fair value of asset at May 1, 2020 | $68,000 | ||
| Lessor’s implicit rate | 8 | % | |
| Lessee’s incremental borrowing rate | 8 | % |
The collectibility of the lease payments by Carla Vista is
probable.
Discuss the nature of this lease to
Tamarisk.
Discuss the nature of this lease to Carla
Vista.
Prepare a lease amortization schedule for Tamarisk for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.)
Prepare the journal entries on the lessee’s books to
reflect the signing of the lease agreement and to record the
payments and expenses related to this lease for the years 2020 and
2021. Tamarisk’s annual accounting period ends on December 31.
Reversing entries are used by Tamarisk.
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. Round answers to 2
decimal places, e.g. 5,275.15. Record journal entries in the order
presented in the problem.)
In: Accounting
The current assets and current liabilities sections of the
statement of financial position of Monty Corp. are as
follows:
| MONTY CORP. Statement of Financial Position (partial) December 31, 2020 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
|
Cash |
$43,000 |
Accounts payable |
$62,000 | ||||||
|
Accounts receivable |
$95,000 |
Notes payable |
68,000 | ||||||
|
Allowance for doubtful accounts |
7,800 | 87,200 | |||||||
|
Inventory |
186,600 | ||||||||
|
Prepaid expenses |
9,500 | ||||||||
| $326,300 | $130,000 | ||||||||
The following errors have been discovered in the corporation’s
accounting:
| 1. | January 2021 cash disbursements that were entered as at December 2020 included payments of accounts payable in the amount of $44,000. | |
| 2. | The inventory balance is based on an inventory count that included $31,000 of merchandise that was received at December 31 but with no purchase invoices received or entered. Of this amount, $15,000 was received on consignment; the remainder was purchased f.o.b. destination. | |
| 3. | Sales for the first four days of January 2021 in the amount of $31,000 were entered in the sales book as at December 31, 2020. Of these, $23,500 were sales on account and the remainder were cash sales. | |
| 4. | Cash, not including cash sales, collected in January 2021 and entered as at December 31, 2020, totalled $40,324. Of this amount, $25,382 was received on account; the remainder was proceeds on a bank loan. (the amount owed to the bank for January 2021 was included as part of the Notes Payable account.) |
I can't seem to figure out the adjustments. If you could prove explanations to your steps: it would be appreciated!
In: Accounting
The December 31, 2019 statement of financial position of Howson Limited (Howson) showed Trade Accounts Receivable of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000. During 2020, the following transactions occurred: Total service revenue of 2,000,000 was recognized of which 75% was billed on account; collections from customers totaled $1,300,000; accounts written off totaled $37,000; and previously written off accounts of $4,000 were collected.
Required
a) Journalize the 2020 transactions. (6 marks)
b) If the company uses the
percentage of receivables basis to estimate bad debts
expense and determines that uncollectible accounts are expected to
be 5% of trade accounts receivable, prepare the adjusting entry at
December 31, 2020?
c) Management of Howson wants to show the highest
possible net income for the year ended December 31, 2020. The
president states, “one of my competitors told me that using % of
credit sales method in determining our bad debt expense would
increase the Company’s net income. Our industry average % of 2.4%
is very reflective of our bad debt experience.”
Required:
The president of Howson has two questions she would like addressed.
In: Accounting
Boehm Corporation has had stable earnings growth of 7% a year for the past 10 years, and in 2019 Boehm paid dividends of $3 million on net income of $15 million. However, net income is expected to grow by 30% in 2020, and Boehm plans to invest $11.0 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2020 Boehm will return to its previous 7% earnings growth rate. Its target debt ratio is 37%. Boehm has 1 million shares of stock.
1.Its 2020 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest cent.
2. It continues the 2019 dividend payout ratio. Round your answer to the nearest cent.
3. It uses a pure residual policy with all distributions in the form of dividends (37% of the $11.0 million investment is financed with debt). Round your answer to the nearest cent.
4. It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy. What will the extra dividend be? Round your answer to the nearest cent.
Show calculations please
In: Finance
The Trial Balance of Nuqa Ltd is provided below
2020 2019
Bank Overdraft 60,000
Cash 29,000 0
Sales 1,200,000 1,150,000
Cost of Goods Sold 800,000 714,000
Insurance Expense 30,000 27,000
Wages Expense 120,000 121,000
Doubtful Debts Expense 5,000 4,000
Other Expenses 65,000 78,000
Accounts Payable 70,000 75,000
Accounts Receivable 90,000 88,000
Allowance for Doubtful Debts 10,000 11,000
Inventory 80,000 82,000
Accrued Wages 12,000 10,000
Prepaid Insurance 8,000 6,000
Plant & Equipment 550,000 600,000
Accumulated Dep. on Plant & Equip. 125,000 110,000
Loan Payable 150,000 130,000
Share Capital 200,000 200,000
Retained Earnings 10,000 0
Accumulated Losses 0 26,000
Additional Information
Depreciation was $28,000 in 2019 and $25,000 in 2020. Loss on disposal in 2020 was $15,000.
i)Calculate receipts from customers
ii)Calculate payments to suppliers
iii)Calculate payments to employees
iv)Calculate net investing cash flows
v)Calculate financing cash inflows
vi)Calculate net profit for 2020
vii)Reconcile net profit with operating cash flows, using the direct method.
viii)Use your answer for (vii) to suggest two ways in which the company could improve its operating cash flows by managing current assets and liabilities.
In: Accounting
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In: Accounting