MYLAB EXCELLENCE IN BUSSI COMM ETEXT
12th Edition
ISBN: 9780135854907
Author: BOVEE
Publisher: PEARSON
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Question
Chapter 10, Problem 1LOC
Summary Introduction
To determine:
The option that is an accurate general statement about good ideas in the business world.
Introduction:
Business world today is flushing with new innovative ideas in mass scale. These are arising mainly according to improvements in technology and accessibility worldwide.
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Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $20,000 bill from her accountant for consulting services related to her small business. Reese can pay the $20,000 bill anytime before January 30 of next year without penalty. Assume Reese’s marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 12 percent on her investments.
a. What is the after-tax cost if she pays the $20,000 bill in December?
b. What is the after-tax cost if she pays the $20,000 bill in January 30? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.)
Exhibit 3.1 below
4%
5%
6%
7%
8%
9%
10%
11%
12%
Year 1
.962
.952
.943
.935
.926
.917
.909
.901
.893
Year 2
.925
.907
.890
.873
.857
.842
.826
.812
.797
Year 3
.889
.864
.840
.816
.794
.772
.751
.731
.712
Year 4
.855
.823
.792
.763
.735
.708
.683
.659
.636
Year 5…
Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $20,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny’s marginal tax rate is 37 percent this year and next year, and that he can earn an after-tax rate of return of 12 percent on his investments.
a. What is the after-tax income if Manny sends his client the bill in December?
b. What is the after-tax income if Manny sends his client the bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.)
Exhibit 3.1 below
4%
5%
6%
7%
8%
9%
10%
11%
12%
Year 1
.962
.952
.943
.935
.926
.917
.909
.901
.893
Year 2
.925
.907
.890
.873
.857
.842
.826
.812
.797
Year 3
.889
.864
.840
.816
.794
.772
.751
.731
.712
Year 4
.855
.823
.792
.763
.735
.708
.683
.659
.636
Year 5
.822
.784
.747
.713
.681
.650
.621
.593
.567
Year 6
.790
.746…
Rocky Mountain Tours Co. is a travel agency. The nine transactions recorded by Rocky Mountain Tours during June 20Y2, its first month of operations, are
indicated in the following T accounts:
Cash
(1) 40,000 (2) 4,000
(7) 13,100 (3) 5,000
(4) 6,175
(6) 6,000
(9) 1,500
Equipment
(3) 15,000
Dividends
(9) 1,500
Accounts Receivable
Accounts Payable
Service Revenue
(5) 20,500 (7) 13,100
(6) 6,000 (3) 10,000
(5) 20,500
Supplies
(2) 4,000 (8) 2,200
Common Stock
(1) 40,000
Operating Expenses
(4) 6,175
(8) 2,200
a. Prepare an unadjusted trial balance. List all the accounts in the order of Assets, Liabilities, Stockholders' equity, Revenues, and Expenses. Place the
amounts in the proper columns. If an entry is not required in an amount box, leave it blank.
Chapter 10 Solutions
MYLAB EXCELLENCE IN BUSSI COMM ETEXT
Ch. 10 - Prob. 1CACh. 10 - Prob. 2CACh. 10 - Prob. 1LOCCh. 10 - Prob. 2LOCCh. 10 - Prob. 3LOCCh. 10 - Prob. 4LOCCh. 10 - Prob. 5LOCCh. 10 - Prob. 6LOCCh. 10 - Prob. 7LOCCh. 10 - Prob. 8LOC
Ch. 10 - Prob. 9LOCCh. 10 - Prob. 10LOCCh. 10 - Prob. 11LOCCh. 10 - Prob. 12LOCCh. 10 - Prob. 13LOCCh. 10 - Prob. 14LOCCh. 10 - Prob. 15LOCCh. 10 - Prob. 16LOCCh. 10 - Prob. 17LOCCh. 10 - Prob. 18LOCCh. 10 - Prob. 19LOCCh. 10 - Prob. 10.1AYKCh. 10 - Prob. 10.2AYKCh. 10 - Prob. 10.3AYKCh. 10 - Prob. 10.4AYKCh. 10 - Prob. 10.5PYSMFACh. 10 - Prob. 10.6PYSMFACh. 10 - Prob. 10.7PYSMFACh. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Prob. 10.10ECh. 10 - Prob. 10.11ECh. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - Prob. 10.16ECh. 10 - Prob. 10.17ECh. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - Prob. 10.21ECh. 10 - Prob. 10.22ECh. 10 - Prob. 10.23ECh. 10 - Prob. 10.24ECh. 10 - Prob. 10.25ECh. 10 - Prob. 1EYSCTPCh. 10 - Prob. 1SYCKO
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, subject and related others by exploring similar questions and additional content below.Similar questions
- Transactions and T Accounts The following selected transactions were completed during July of the current year: 1. Billed customers for fees earned, $112,700. 2. Purchased supplies on account, $4,500. 3. Received cash from customers on account, $88,220. 4. Paid creditors on account, $3,100. a. Journalize these transactions in a two-column journal, using the appropriate number to identify the transactions. Journal entry explanations may be omitted. If an amount box does not require an entry, leave it blank. (1) Accounts Receivable Fees Earned (2) Supplies Accounts Payable (3) Cash Accounts Receivable (4) Accounts Payable Casharrow_forward9-15arrow_forwardIsabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $20,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $20,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 12 percent on her investments. a. What is the after-tax cost if Isabel pays the $20,000 bill in December? b. What is the after-tax cost if Isabel pays the $20,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.) c. Based on requirements a and b, should Isabel pay the $20,000 bill in December or January? multiple choice December Januaryarrow_forward
- Answer correctly plz otherwise unhearrow_forwardFinancial accountingarrow_forwardWhen privately-held Toys "R" Us filed for bankruptcy in fall 2017, it disclosed that it had $5 billion in debt and was spending about $400 million per year for interest on that debt. Toys "R" Us net debt was $109.0 million in 2005, just before being taken over by private equity buyers in 2005. In that takeover, the company incurred $5.3 billion in debt. Sales revenue in the twelve months before the buyout in 2005 were $11.2 billion. Sales in the twelve months ending October 2017 were $11.1 billion. During the bankruptcy and store closing announcement in March 2018, the Toys "R" Us CEO stated that the company had fallen behind on the general upkeep and condition of its stores, which contributed to the decline in sales. It has also faced intense competition from other retailers, such as Amazon.com and Walmart. Toys "R" Us had had plans during 2017 to invest in technology, upgrade its stores to have toy testing areas, and create other features that would draw customers into the stores,…arrow_forward
- 9-16arrow_forwardAnswer? financial accountingarrow_forwardThe privately-held Toys "R" Us filed for bankruptcy in fall 2017, it disclosed that it had $5 billion in debt and was spending about $400 million per year for interest on that debt. Toys "R" Us net debt was $109.0 million in 2005, just before being taken over by private equity buyers in 2005. In that takeover, the company incurred $5.3 billion in debt. Sales revenue in the twelve months before the buyout in 2005 were $11.2 billion. Sales in the twelve months ending October 2017 were $11.1 billion. During the bankruptcy and store closing announcement in March 2018, the Toys "R" Us CEO stated that the company had fallen behind on the general upkeep and condition of its stores, which contributed to the decline in sales. It has also faced intense competition from other retailers, such as Amazon.com and Walmart. Toys "R" Us had had plans during 2017 to invest in technology, upgrade its stores to have toy testing areas, and create other features that would draw customers into the stores, but…arrow_forward
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