
Financial Accounting
4th Edition
ISBN: 9781259307959
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 4, Problem 6RQ
To determine
To discuss: The major provision of the Sarbanes-Oxley Act.
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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
Chapter 4 Solutions
Financial Accounting
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - What is meant by the fraud triangle, and what can...Ch. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - What is meant by separation of duties?Ch. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18RQCh. 4 - Prob. 19RQCh. 4 - Prob. 20RQCh. 4 - Prob. 21RQCh. 4 - 22.What are two primary reasons that the companys...Ch. 4 - Prob. 23RQCh. 4 - Prob. 24RQCh. 4 - Prob. 25RQCh. 4 - Describe how management maintains control over...Ch. 4 - Prob. 27RQCh. 4 - Describe the operating, investing, and financing...Ch. 4 - Why is an analysis of the companys cash balance...Ch. 4 - We compared Regal Entertainment and Cinemark at...Ch. 4 - Prob. 4.1BECh. 4 - Match each of the following components of internal...Ch. 4 - Prob. 4.3BECh. 4 - Prob. 4.4BECh. 4 - During the year, the following sales transactions...Ch. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Prob. 4.8BECh. 4 - Prob. 4.9BECh. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Prob. 4.13BECh. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - On January 12, Ferrell Incorporated obtains a...Ch. 4 - Prob. 4.17BECh. 4 - For each company, calculate the ratio of cash to...Ch. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Below are several amounts reported at the end of...Ch. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Prob. 4.8ECh. 4 - Prob. 4.9ECh. 4 - Prob. 4.10ECh. 4 - Prob. 4.11ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Below are cash transactions for Goldman...Ch. 4 - Prob. 4.17ECh. 4 - Prob. 4.18ECh. 4 - Consider the following information: 1.Service...Ch. 4 - Prob. 4.20ECh. 4 - Prob. 4.1APCh. 4 - Prob. 4.2APCh. 4 - Prob. 4.3APCh. 4 - Prob. 4.4APCh. 4 - Prob. 4.5APCh. 4 - Prob. 4.1BPCh. 4 - Prob. 4.2BPCh. 4 - Prob. 4.3BPCh. 4 - Prob. 4.4BPCh. 4 - Prob. 4.5BPCh. 4 - An examination of the cash activities during the...Ch. 4 - Prob. 4.2APFACh. 4 - Prob. 4.3APFACh. 4 - Prob. 4.4APCACh. 4 - Prob. 4.5APECh. 4 - Prob. 4.7APWC
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Similar questions
- 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…arrow_forwardEntries to revenues accounts such as Service Revenues are usually __________..arrow_forwardCrane Company accumulates the following data concerning a mixed cost, using units produced as the activity level. Units Produced Total Cost March 9,970 $20,005 April 8,930 18,154 May 10,500 20,538 June 8,710 17,674 July 9,370 18,604 (a1) Compute the unit variable costs using the high-low method. (Round your answers to two decimal places (e.g., 2.25).) Variable cost +A $ per unitarrow_forward
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