Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price. Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement. To indicate: If the market price be the appropriate transfer price for Company G

Question

Martin Hughes earns net self-employment income of $157,100. He works a second job from which he receives FICA taxable earnings of $127,600.Self-Employment tax =

Answer 1

Question

Chapter 24, Problem 24.6APR

(1)

To determine

Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To indicate: If the market price be the appropriate transfer price for Company G

(2)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(3)

To determine

To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8

(4)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(5) (a)

To determine

The range of transfer price, if negotiated price approach is used

(b)

To determine

To suggest: The transfer price

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Martin Hughes earns net self-employment income of $157,100. He works a second job from which he receives FICA taxable earnings of $127,600.Self-Employment tax =

Question 2 U. Richards does not keep his books on the double entry system. His bank summary amount for 2010 is as follows: Balance 1.1.2010 1890 Receipts from $44656 debtors Creditors Loan from U. Miller $2.000 Rates Rent Drawings Cash withdrawn from bank $540 0 Payment to Trade $316 95 2750 1316 3095 1642 Sundry Expense Records of cash paid were sundry $122, trade creditors $642. Cash sales amounted to cash drawings were $5289. The following information is also available: 31.12.201 31.12.2 0 011 Cash in hand $48 $93 Trade creditors $4896 $5091 Accounts Receivables 60 $71 13 32 Rent Owing $250 Rates in Advance $282 $312 Motor van (at valuation) 2800 2400 Stock 11163 13021 Required: A. Statement of Affairs. (to find opening capital as at 31.12.2010) B. Cash Account & Bank Account. C. Accounts Receivables & Accounts Payables Control A/Cs. D. Income Statement for the year ended 31 December 2011.

2: Martin Hughes earns net self-employment income of $157,100. He works a second job from which he receives FICA taxable earnings of $127,600. Self-Employment tax = $ 6,440.70 3: Elisa Grant earns net self-employment income of $198,000. She works a second job from which she receives FICA taxable earnings of $100,400. Self-Employment tax = $ 30,294.00

Answer 2

Question

Chapter 24, Problem 24.6APR

(1)

To determine

Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To indicate: If the market price be the appropriate transfer price for Company G

(2)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(3)

To determine

To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8

(4)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(5) (a)

To determine

The range of transfer price, if negotiated price approach is used

(b)

To determine

To suggest: The transfer price

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Answer 3

Question

Chapter 24, Problem 24.6APR

(1)

To determine

Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To indicate: If the market price be the appropriate transfer price for Company G

(2)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(3)

To determine

To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8

(4)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(5) (a)

To determine

The range of transfer price, if negotiated price approach is used

(b)

To determine

To suggest: The transfer price

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Answer 4

Question

Chapter 24, Problem 24.6APR

(1)

To determine

Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To indicate: If the market price be the appropriate transfer price for Company G

(2)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(3)

To determine

To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8

(4)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(5) (a)

To determine

The range of transfer price, if negotiated price approach is used

(b)

To determine

To suggest: The transfer price

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Answer 5

Chapter 24, Problem 24.6APR

(1)

To determine

Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To indicate: If the market price be the appropriate transfer price for Company G

(2)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(3)

To determine

To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8

(4)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

(5) (a)

To determine

The range of transfer price, if negotiated price approach is used

(b)

To determine

To suggest: The transfer price

Answer 6

Chapter 24, Problem 24.6APR

(1)

To determine

Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To indicate: If the market price be the appropriate transfer price for Company G

Answer 7

Chapter 24, Problem 24.6APR

(1)

To determine

Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To indicate: If the market price be the appropriate transfer price for Company G

Answer 8

(2)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

Answer 9

(2)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

Answer 10

(3)

To determine

To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8

Answer 11

(3)

To determine

To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8

Answer 12

(4)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

Answer 13

(4)

To determine

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

Answer 14

(5) (a)

To determine

The range of transfer price, if negotiated price approach is used

Answer 15

(5) (a)

To determine

The range of transfer price, if negotiated price approach is used

Answer 16

(b)

To determine

To suggest: The transfer price

Answer 17

(b)

To determine

To suggest: The transfer price

Answer 18

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Answer 19

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Answer 29

Ch. 24 - Differentiate between centralized and...Ch. 24 - Differentiate between a profit center and an...Ch. 24 - Prob. 3DQ Ch. 24 - What is the major shortcoming of using income from...Ch. 24 - In a decentralized company in which the divisions...Ch. 24 - How does using the return on investment facilitate...Ch. 24 - Why would a firm use a balanced scorecard in...Ch. 24 - What is the objective of transfer pricing?Ch. 24 - When is the negotiated price approach preferred...Ch. 24 - When using the negotiated price approach to...

Solution Summary: The author explains that the transfer price is the price charged for goods and services transferred among the divisions. The income statement reports revenues and expenses from business operations.

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

To prepare: The income statements for CR and CL Divisions of Company G for the year ended December 31, 20Y8

The increase in CR Division, CL Division, and Company G income from operations as a result of transfer pricing

The range of transfer price, if negotiated price approach is used

To suggest: The transfer price

Chapter 24 Solutions