Chapter 20, Problem 4DQ

Hank, 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. Hank typically requires his clients to pay his bills immediately upon receipt. Assume his marginal tax rate is 32 percent this year and will be 35 percent next year, and that he can earn an after-tax rate of return of 12 percent on his investments. Use Exhibit 3.1.   a. What is the after-tax income if Hank sends his client the bill in December?            b. What is the after-tax income if Hank sends his client the bill in January?            c. Should Hank send his client the bill in December or January?       multiple choice 1 December January   d. What is the after-tax income if Hank expects his marginal tax rate to be 24 percent next year and sends his client the bill in January? (Round your answer to the nearest whole dollar amount.)            e. Should Hank send his client the bill in December or January…

Which of the following is true?   Accounts receivable are found in the current asset section of a balance sheet. Accounts receivable increase by credits. Accounts receivable are generated when a customer makes payments. Accounts receivable become more valuable over time.

Assets are usually reported on the balance sheet at which amount? Cost Current Market Value Expected Selling Price.

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 8 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.)            c. Based on requirements a and b, should Manny send his client the bill in December or January?       multiple choice December January

Isabel, 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 8 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 January

When a company pays a bill, the account Cash will be __________.

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.)            c. Based on requirements a and b, should Manny send his client the bill in December or January?       multiple choice December January

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 35 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? Use Exhibit 3.1.           c. Should Reese pay the $20,000 bill in December or January?       multiple choice 1 December January   d. What is the after-tax cost if she expects her marginal tax rate to be 24 percent next year and pays the $20,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.)            e. Should Reese…

Entries to revenues accounts such as Service Revenues are usually __________..