Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 9, Problem 49P
To determine
Explain the issues that should have an impact on Ms. A’s choice.
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Deja owns a photo printing business and wants to purchase a new state-of-the-art photo printer that she found online for $9,275, plus sales tax of 5.5%. The supply company is offering cash terms of 2/15, n/30, with a 1.5% service charge on late payments, or 90 days same as cash financing if Deja is approved for a company line of credit. If she is unable to pay within 90 days under the second option, she would have to pay 22.9% annual simple interest for the first 90 days, plus 2% simple interest per month on the unpaid balance after 90 days. Deja has an excellent credit rating but is unsure of what to do. a) If Deja took the cash option and was able to pay off the printer within the 15-day discount period, how much would she save? How much would she owe? b) If Deja takes the 90 days same as cash option and purchases the printer on December 30 to get a current-year tax deduction, using exact time, what is her deadline for paying no interest in a non-leap year? In a leap year?
Deja owns a photo printing business and wants to purchase a new state-of-the-art photo printer that she found online for $9,275, plus sales tax of 5.5%. The supply company is offering cash terms of 2/15, n/30, with a 1.5% service charge on late payments, or 90 days same as cash financing if Deja is approved for a company line of credit. If she is unable to pay within 90 days under the second option, she would have to pay 22.9% annual simple interest for the first 90 days, plus 2% simple interest per month on the unpaid balance after 90 days. Deja has an excellent credit rating but is unsure of what to do.
c) If Deja takes the 90 days same as cash and pays within 90 days, what is her payoff amount? If she can't pay until April 30, how much additional money would she owe? (Assume ordinary interest and exact time and a non-leap year)
Deja owns a photo printing business and wants to purchase a new state-of-the-art photo printer that she found online for $9,275, plus sales tax of 5.5%. The supply company is offering cash terms of 2/15, n/30, with a 1.5% service charge on late payments, or 90 days same as cash financing if Deja is approved for a company line of credit. If she is unable to pay within 90 days under the second option, she would have to pay 22.9% annual simple interest for the first 90 days, plus 2% simple interest per month on the unpaid balance after 90 days. Deja has an excellent credit rating but is unsure of what to do.
d) Deja finds financing through a local bank. Find the bank discount and proceeds using ordinary interest for a 90-day promissory note for $9,500 at 8% annual simple interest. Is this enough money for Deja to cover the purchase price of the printer? Is this a better option for Deja to pursue, why or why not?
Chapter 9 Solutions
Individual Income Taxes
Ch. 9 - Prob. 1DQCh. 9 - Mason performs services for Isabella. In...Ch. 9 - Milton is a resident of Mobile (Alabama) and is...Ch. 9 - In 2017, Emma purchased an automobile, which she...Ch. 9 - Prob. 5DQCh. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Paul wholly owns and operates an office supplies...Ch. 9 - Prob. 16DQCh. 9 - Prob. 17DQCh. 9 - Lara uses the standard mileage method for...Ch. 9 - Fred, a self-employed taxpayer, travels from...Ch. 9 - Prob. 20CECh. 9 - Prob. 21CECh. 9 - In 2019, Robert entertains four key clients and...Ch. 9 - In 2019, the CEO of Crimson, Inc., entertains...Ch. 9 - Prob. 24CECh. 9 - Cindy maintains an office in her home that...Ch. 9 - Prob. 26CECh. 9 - Prob. 27CECh. 9 - Prob. 28PCh. 9 - Prob. 29PCh. 9 - Prob. 30PCh. 9 - In June of this year, Dr. and Mrs. Bret Spencer...Ch. 9 - Prob. 32PCh. 9 - On Thursday, Justin flies from Baltimore (where...Ch. 9 - Monica, a self-employed taxpayer, travels from her...Ch. 9 - Prob. 35PCh. 9 - Prob. 36PCh. 9 - Prob. 37PCh. 9 - Prob. 38PCh. 9 - Prob. 39PCh. 9 - Prob. 40PCh. 9 - Shelly has 200,000 of QBI from her local jewelry...Ch. 9 - Prob. 42PCh. 9 - Prob. 43PCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Prob. 46PCh. 9 - Ben and Molly are married and will file jointly....Ch. 9 - Prob. 48PCh. 9 - Prob. 49PCh. 9 - Prob. 50PCh. 9 - David R. and Ella M. Cole (ages 39 and 38,...Ch. 9 - Addison Parker (Social Security number...Ch. 9 - In the current year, Barlow moved from Chicago to...Ch. 9 - Prob. 2CPACh. 9 - Prob. 3CPACh. 9 - Prob. 4CPACh. 9 - Prob. 5CPACh. 9 - Prob. 6CPACh. 9 - Calculate the taxpayers 2019 qualifying business...Ch. 9 - Prob. 8CPA
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