Answer:
The food and drug industry
Explanation:
The Pure Food and Drug Act of 1906
Trevor Williams Company borrowed $10,000 from Mike Trout National Bank on May 1, 2019. Interest on the note, which accumulates at 6% annually, is paid when the loan principal is repaid. The loan remains outstanding on June 30 when both the Williams Company’s and the Trout National Bank close their books to prepare financial statements. Other than cash, The Williams Company’s balance sheet shows which of these amounts related to the loan?
a. Reduce June's pre-tax income by $50
b. Reduce June's pre-tax income by $100
c. Increase June's pre-tax income by $100
d. Increase June's pre-tax income by $50
Answer:
Trevor Williams Company
a. Reduce June's pre-tax income by $50
Explanation:
a) Data and Calculations:
Bank loan = $10,000
Date of loan = May 1, 2019
Interest rate on loan = 6%
This amounts to an interest expense of $600 ($10,000 * 6%) per annum
Accounting year end = June 30
To account for the two months at year-end, the interest expense will be $100 ($600 * 2/12), but to account for only June, the interest expense is only $50.
b) Interest expense, whether paid for in cash or not, reduces the pre-tax income. It is accounted for in the income statement after the earnings before interests and taxes.
Selected financial data regarding current assets and current liabilities for Queen’s Line, a competitor in the cruise line industry, is provided:($ in millions)Current assets: Cash and cash equivalents $ 331 Current investments 63 Net receivables 230 Inventory 116 Other current assets 135Total current assets $ 875 Current liabilities: Accounts payable $1,025 Short-term debt 694 Other current liabilities 919 Total current liabilities $2,638Required:Calculate the current ratio and the acid-test ratio for Queen’s Line.
Answer:
Current ratio = 0.33 times
Acid test ratio = 0.29 times
Explanation:
• Current ratio
Current ratio = Total current assets ÷ Total current liabilities
= $875 ÷ $2,638
= 0.33 times
• Acid test ratio
Acid test ratio = Quick assets ÷ total current liabilities
Where,
Quick assets = Total current assets - Inventory
= $875 - $116
= $759
Recall total current liabilities = $2,638
Therefore,
Acid test ratio = $759 ÷ $2,638
Acid test ratio = 0.29 times
Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December, he performed $38,000 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 37 percent 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 Hank sends his client the bill in December?After- tax income ?b. What is the after-tax income if Hank sends his client the bill in January? (Do not round intermediate calculations. Round "PV Factor" to 3 decimal places. Round your answer to 2 decimal places.)after-tax income ?c. Should Hank send his client the bill in December or January?DecemberJanuaryd. What is the after-tax income if Hank expects his marginal tax rate to be 25 percent next year and sends his client the bill in January? (Round "PV Factor" to 3 decimal places. Round your answer to 2 decimal places.)After-tax income ?
Answer:
Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship.
a. The after-tax income if Hank sends his client the bill in December
= $26,098.40
b. The after-tax income if Hank sends his client the bill in January:
= $23,700.60
c. Hank should send his client the bill in December.
d. After-tax income if Hank expects his marginal tax rate to be 25% next year and sends his client the bill in January:
= $28,215
Explanation:
a) Data and Calculations:
Value of services performed = $38,000
Marginal tax rate this year = 32%
Marginal tax rate next year = 37%
After-tax return on investments = 12%
1. Bill sent in December:
After-tax income
For services rendered = $25,840 ($38,000 * (1 - 0.32))
After-tax return on $25,840 investment for 1 month = $258.40 ($25,840 * 12%)/12
Total after-tax income = $26,098.40
2. Bill sent in January:
After-tax income
For services rendered = $23,700.60 ($38,000 * (1 - 0.37) * 0.990
3. Bill sent in January with marginal tax rate = 25% next year:
After-tax income
For services rendered = $28,215 ($38,000 * (1 - 0.25) * 0.990
Newhard Company assigns overhead cost to jobs on the basis of 115% of direct labor cost. The job cost sheet for Job 313 includes $17,435 in direct materials cost and $10,100 in direct labor cost. A total of 1,350 units were produced in Job 313. Required: a. What is the total manufacturing cost assigned to Job 313
Answer:
the total manufacturing cost is $39,150
Explanation:
The computation of the total manufacturing cost assigned as follows:
Overhead costs is
= 115% of $10,100
= $11,615
Now the total manufacturing cost is
= Direct materials cost + Direct labor costs + Overhead costs
= $17,435 + $10,100 + $11,615
= $39,150
Hence, the total manufacturing cost is $39,150