Winter Term Distinction: Accounting Module Mastery
40. Sally Beauchamp, the Director of Finance of your Northern Expeditions company, has advised that...
Sally Beauchamp, the Director of Finance of your Northern Expeditions company, has advised that the company will be opening an office in Nunavut this year. The office will offer guided northern trips to hunters and adventurers. It expects to mainly employ local guides (40 days over the summer period) but the company will also be periodically bringing in guides from its offices in Alberta, Saskatchewan and Québec. Some of the guides from outside Nunavut may work 10 days, others could work 15 days over the summer depending on the number of bookings; they normally work in their home province for 60 days every year. The average daily rate paid to these guides is $400.
Sally is asking for information on the Nunavut Payroll Tax. Who pays the tax and how is it calculated? Are there any special considerations or challenges for the calculation of the payroll tax for the guides brought in from Alberta, Saskatchewan and Québec? What are the reporting and remitting requirements during the year? What are the reporting requirements at year-end? Provide examples based on the information provided in the assignment to clarify.
41. Journalize the withdrawal of Posada under each of the following assumptions.
On December 31, the capital balances and income ratios in TEP Company are as follows.
Partner | Capital Balance | Income Ratio |
Brayer | $60,000 | 50% |
Emig | 40,000 | 30% |
Posada | 30,000 | 20% |
Instructions
(a)Journalize the withdrawal of Posada under each of the following assumptions.
(1)Each of the continuing partners agrees to pay $18,000 in cash from personal funds to purchase Posada"s ownership equity. Each receives 50% of Posada"s equity.
(2)Emig agrees to purchase Posada"s ownership interest for $25,000 cash.
(3)Posada is paid $34,000 from partnership assets, which includes a bonus to the retiring partner.
(4)Posada is paid $22,000 from partnership assets, and bonuses to the remaining partners are recognized.
(b)If Emig"s capital balance after Posada"s withdrawal is $43,600, what were (1) the total bonus to the remaining partners and (2) the cash paid by the partnership to Posada?
42. Amanda would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corpor...
Amanda would like to organize BAL as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 8 percent annual before-tax return on a $500,000 investment. Amanda’s marginal income tax rate is 37 percent and her tax rate on dividends and capital gains is 23.8 percent (including the 3.8 percent net investment income tax). If Amanda organizes BAL as an LLC, she will be required to pay an additional 2.9 percent for self-employment tax and an additional 0.9 percent for the additional Medicare tax. Also, she is eligible to claim a full deduction for qualified business income on BAL’s income. Assume that BAL will distribute half of its after-tax earnings every year as a dividend if it is formed as a C corporation.
43. Question 5 Snow cap Springs produces and sells water filtration systems for homeowners. Information
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44. You purchased shares of Broussard Company using 50 percent margin
You purchased shares of Broussard Company using 50 percent margin; you invested a total of $20,000 (buying 1,000 shares at a price of $20 per share) by using $10,000 of your own funds and borrowing $10,000. Determine your percentage profit or loss under the following situations (ignore borrowing costs, dividends, and taxes). In addition, what would the percentage profit and loss be in these scenarios if margin were not used?
- the stock price rises to $23 a share
- the stock price rises to $30 a share
- the stock price falls to $16 a share
- the stock price falls to $10 a share
45. Colt Company owns a machine that can produce two specialized products. Production time for Produc...
Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is two units per hour and for Product MTV is four units per hour. The machine's capacity is 2,300 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 3.910 units of Product TLX and 1.820 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round cost per unit answers to 2 decimal places.)
46. In 1987, Herman Moore Company completed the construction of a building at a cost of $3,700,000 and f
In 1987, Herman Moore Company completed the construction of a building at a cost of $3,700,000 and first occupied it in January 1988. It was estimated that the building will have a useful life of 40 years and a salvage value of $111,000 at the end of that time. | ||||
Early in 1998, an addition to the building was constructed at a cost of $925,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $37,000. | ||||
In 2016, it is determined that the probable life of the building and addition will extend to the end of 2047, or 20 years beyond the original estimate. | ||||
Using the straight-line method, compute the annual depreciation that would have been charged from 1988 through 1997. (Round answer to 0 decimal places, e.g. 45,892.) | ||||
| . | ||||
Annual depreciation from 1988 through 1997 | $ | / yr | ||
Compute the annual depreciation that would have been charged from 1998 through 2015. (Round answer to 0 decimal places, e.g. 45,892.) | ||||
Annual depreciation from 1998 through 2015 | $ | / yr | ||
Prepare the entry, if necessary, to adjust the account balances because of the revision of the estimated life in 2016. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) | ||||
Account Titles and Explanation | Debit | Credit | ||
Compute the annual depreciation to be charged, beginning with 2016. (Round answer to 0 decimal places, e.g. 45,892.) | ||||
Annual depreciation expenseAc€??building | ||||
47. ) Explain the income measurement process in a merchandising company
(a) Explain the income measurement process in a merchandising company.
(b) How does income measurement differ between a merchandising company and a service company?
48. EXAMPLES OF ECONOMIC DECISION
GIVE 5 EXAMPLES OF ECONOMIC DECISION THAT ARE BASED ON ACCOUNTING INFORMATION?
49. Each of the four independent situations below describes a direct financing lease in which annual ...
Each of the four independent situations below describes a direct financing lease in which annual lease payments of $175,000 are payable at the beginning of each year. Each is a capital lease for the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
