Answer:
Without cafeteria plan Karen taxable income is 2250 dollars and with cafeteria plan the taxable income is $2135.
Without cafeteria plan Katie taxable income is 2075 dollars and with cafeteria plan the taxable income is $1960.
Explanation:
A married women Karen earns = $2250
Katie single women earn = $2075
Employee contribution to health care = $115
If the Karen decline to participate in the cafeteria then her taxable income is $2250 (wages).
If the Karen accept to participate in the cafeteria then her taxable income is $2250 - $115 (contribution) = $2135
If Katie declined to participate in the cafeteria then her taxable income is $2075 (wages).
If Katie accept to participate in the cafeteria then her taxable income is $2075 - $115 (contribution) = $1960
Answer:
Cash $50,800
Accounts receivable $91,700
Inventory $125,700
Land $62,500
Buildings (net) $75,100
Equipment (net) $70,000
Trademarks $15,600
Goodwill $111,180 (Balancing figure)
To Accounts payable $206,000
To Note payable $133,000
To Cash $251,100
(Being the purchase is recorded)
Explanation:
The journal entry is shown below:
Cash $50,800
Accounts receivable $91,700
Inventory $125,700
Land $62,500
Buildings (net) $75,100
Equipment (net) $70,000
Trademarks $15,600
Goodwill $111,180 (Balancing figure)
To Accounts payable $206,000
To Note payable $133,000
To Cash $251,100
(Being the purchase is recorded)
For recording this we debited the assets as it increased the assets and credited the current liabilities as it also show rise in the current liabilities
In addition to this, the balancing figure is debited to goodwill account
Moreover, the fair value of land, inventory ,and trademarks are considered while recording this journal entry
Answer:
Option 1 PV lumpsum = $200000
Option2 PV of Annuity = $195413.08035 rounded off to $195413.08
Based on the present value of both the options, Option 1 should be chosen as it has a higher present value than option 2.
Explanation:
To decide on the best option to choose among the given two, we need to find the present value of both the options.
As the first option is to receive a lumpsum payment of $200000 today, the present value of this option is also equal to $200000 as it will be received today.
Option two, on the other hand, is an annuity as fixed payments will be received after equal intervals of time and for a limited time period and at the end of the period which satisfies the criteria of annuity ordinary. We will use the formula for the present value of annuity which is,
PV of Annuity = C * [( 1 - (1+r)^-n) / r]
Where,
- C is the periodic payment
- r is the rate of return of discount rate
- n is the number of periods
The periodic payment is provided as $1400. We are also provided with and APR of 6% which is the Annual rate. We will have to convert it into monthly rate by dividing it by 12. We are also provided with the number of years which we will need to convert into number of months by multiplying it by 12.
Monthly r = 6%/12 = 0.5%
Number of periods = 20 * 12 = 240
PV of Annuity = 1400 * [( 1 - (1+0.5%)^-240) / 0.5%]
PV of Annuity = $195413.08035 rounded off to $195413.08
Answer:
He must invest $36,751
Explanation:
Future value is the sum of value of principal invested and compounded return received over the investment period.
Using following formula of future value to calculate the required interest rate.
FV = PV x ( 1 + r )^n
FV = Future value = $50,000
n = number of years = 4 years
r = Interest rate = 8%
PV = Present value = ?
$50,000 = PV x ( 1 + 8% )^4
$50,000 = PV x ( 1 + 0.08 )^4
$50,000 = PV x ( 1.08 )^4
$50,000 = PV x 1.3605
PV = $50,000 / 1.3605
PV = $36,751.19
