Pretzelmania, Inc., issues 5%, 20-year bonds with a face amount of $62,000 for $54,834 on January 1, 2018. The market interest rate for bonds of similar risk and maturity is 6%. Interest is paid semiannually on June 30 and December 31. 1. & 2. Record the bond issue and first interest payment on June 30, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

In 2014 Chara incurred a loan to pay for qualified higher education expenses for her 20-year-old grand daughter, who was a dependent. In 2018 her grand daughter graduated from college, moved away to start a new job, and ceased to be a dependent on Chara’s tax return. Chara started making payments on the loan in 2018. Without regard to any modified AGI limitations, is Chara permitted to deduct interest on the loan?

Assume the following time series regression has been estimated for sales of gadgets:

St = 20 + 13Q1 + 9Q2 +4Q3 + 2t + 3t2;

where t is the time trend and Q1, Q2 and Q3 are dummy variables for quarters 1, 2 and 3

respectively. Assume the data used in the regression starts in the first quarter of 2016 and ends

in the first quarter of 2018. Forecast the expected sales for quarters 2, 3 and 4 of 2018.

      The profits of a firm for the last five years were as follows.

1. Calculate the value of goodwill on the basis of four years’ purchase of weighted average profits based on weights 1,2,3,4 and 5 respectively to the profits for 2015, 2016, 2017, 2018 and 2019.                                                                         (3 marks)

2. Write any six need for valuation of goodwill                  (2 marks)

On December 31, 2018, Mrs. Laura Andrade gives shares with an adjusted cost base of $23,000 and a fair market value of $37,000 to her 12 year old daughter, Emma. On February 24, 2019, the shares pay eligible dividends of $2,500 ($3,450 taxable amount) and, on August 31, 2019, Emma sells the shares for $42,000. What are the tax consequences for Mrs. Andrade and Emma in each of the years 2018 and 2019?

Kathy is 48 years of age and self-employed. During 2018 she reported $110,000 of revenues and $44,000 of expenses relating to her self-employment activities. If Kathy has no other retirement accounts in her name, what is the maximum amount she can contribute to a simplified employee pension (SEP) IRA for 2018? (Round your final answer to the nearest whole number)

Multiple Choice

$12,267.

$17,157.

$61,500.

$55,000.

For 2016, Foreign company (FC) had $150 of effectively connected E&P (ECEP) and its US net equity decreased from $1600 at the beginning of the year to $1500 at the end. For 2017, FC had $225 of ECEP and its US net equity decreases by $300 from $1600 at the beginning of the year to $1300 at the end. What is FC's DEA amount for 2018 and its branch profits tax, if any, for 2018?

Headlines of failed mergers, stalled mergers, pending mergers or completed mergers abound. "Data from Thomas Reuters has revealed that the first six months of 2018 saw a record $2.5tn in mergers", (Dyble, 2018). As our economies become more intertwined, merger activity is on the rise. When a U.S. based organization is considering merging or acquiring a foreign organization, what factors beyond the cost of the transaction must be considered?

A firm has sales of $10, 000,000 in 2018, and operating income of $1,200,000 and net income of $650,000.    The firm has total equity at year end 2017 of $4,000,000, total asset of $7,000,000.   It also paid out $195,000 dividend in 2018.

1. Calculate its equity multiplier.

2. Use the 3-factor DuPont Identity to calculate its ROE.

3. What’s its retention ratio?

4. What’s its sustainable growth rate?