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Phantasy [73]
3 years ago
12

George operates a business that generated revenues from services of $50 million in 2019 and reported deductible expenses other t

han interest of $49 million in 2019, which included depreciation expense of $500,000. The business paid interest expenses of $800,000 in 2019, none of which was for loans used to purchase tax-exempt investments. What is the maximum business interest deduction that George will be eligible to claim this year
Business
1 answer:
k0ka [10]3 years ago
6 0

Answer:

$750,000

Explanation:

The Adjustable Taxable Income will be calculated first to compute the maximum business interest deduction that is allowable to George.

Step 1. Calculate Net Adjustable Taxable Income

Net Adjustable Taxable Income = Total revenue - Deductible expenses + Disallowed Expenses - Tax Exempt Revenue

Here

Total revenue is $50 million

Deductible expenses are $49 million

Disallowed Expenses includes a depreciation of $0.5 million

Tax Exempt Revenue is zero

So by putting values, we have:

Net Adjustable Taxable Income = $50 million - $49 million + $0.5 million

= $1.5 million

Net ATI = $1.5 million

Step 2. Calculate the maximum business interest deduction which is 50% of Net ATI

Maximum Business Interest Deduction = Net ATI * 50%

= $1.5 * 50% = $0.75 million

So Maximum Business Interest Deduction is $750,000.

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ra1l [238]

Answer:

Supplier dependence

Explanation:

When an entity finds itself in a situation where it has to rely on a particular supplier or provider of service for its business operations, either as a result of not being able to get an alternative supplier or the importance of the suppliers product to the entity, such is called supplier dependence.

It is very risky for an entity to depend on a particular source for input. This reverse order of an entity depending on the supplier for business strategy instead of the supplier depending on the entity is not a good business practice.

It’s easy for our own strategy to be determined by what our suppliers are doing. If we become too dependent, we risk having our strategy set by our suppliers rather than having them support our strategy. I’ve been thinking a lot here recently about how much suppliers can direct you  

3 0
3 years ago
Cups of coffee and donuts are complementary. Both have inelastic demand. A hurricane destroys half of the coffee bean crop. Use
Nadya [2.5K]

Explanation:

<u>a.what happens to the price of coffee beans?</u>

In this case, when there is a phenomenon like a hurricane that destroys half the harvest, the supply of coffee beans consequently decreases, the quantity decreases and the price increases.

<u>b. What happens to the price of a cup of coffee? What happens to the total expenditure on cups of coffee?</u>

When the price of the main input for the production of coffee cups increases and the supply decreases, it appears as an increase in the price of a cup of coffee and a decrease in the amount of coffee cups available on the market.

As they have an inelastic demand, coffee cups with a higher price correspond to an increase in total coffee expenses.

<u>c.What happens to the price of a cup of donuts? What happens to the total expendiure on donuts?</u>

In this case, donuts and coffee are complementary, so when there is an increase in the price of coffee and a decrease in the quantity demanded, there is also a decrease in the demand for donuts. So if the demand for donuts decreases, their price also decreases and the total expenditure on donuts decreases.

8 0
3 years ago
Katherine Potter knew a good thing when she saw it. At least, it seemed so at first. She was traveling in Italy when she spotted
lilavasa [31]
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  • Katherine's products were mostly purchased on credit. They'd buy a few lamps and a pot, and Katherine would let them pay overtime. Some were extremely slow to pay her, taking six months or more.
  • Katherine noticed a small drop in her business after three years. The local economy was struggling, and many people were losing their jobs. Nonetheless, Katherine's business remained steady. Katherine received a phone call from the bank one day, informing her that she was behind on her payments. She explained that she had been so preoccupied that she had missed the bills. The issue was that Katherine did not have enough money to pay the bank. She frantically called several customers for payment, but none of them could pay her. Katherine had a classic cash flow problem.
<h3>How is it possible to have high sales and high profits and run out of cash while running a business?</h3>

It is entirely possible if you have a high level of accounts receivables and inventory and a low level of accounts payables. A sale is recorded when an invoice is raised, and a shipment is delivered; this does not always imply that you received cash and that it is recorded in your accounts receivable. Similarly, if you keep a lot of inventory, a lot of your money is locked up until the inventory is sold. On the contrary, if your payment terms with your suppliers are less favorable, you will end up paying before your receivables convert to cash. As a result, high sales and profits do not always imply a strong cash position.

Learn more about profit:

brainly.com/question/13050157

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4 0
1 year ago
The Grind coffee shop offers drink cards to purchasers of its gourmet coffees with ten spaces. The cashier punches one space wit
Vera_Pavlovna [14]

A unilateral contract
With each cup of coffee purchased, the cashier punches a space. The card can be used to redeem a free coffee once all ten spaces have been punched. This serves as an illustration of a unilateral contract.
-Unilateral contract - A unilateral contract
explicitly states that payment will only be provided in exchange for performance by one side. A prize or a competition is another illustration of a unilateral contract. In a unilateral contract, the offeror has the right to withdraw it prior to the offeree's commencement of performance. Usually, the revocation must be made in writing. An insurance policy contract, which is typically only partially unilateral, is an illustration of a unilateral contract. The offeror is the sole party having a contractual responsibility in a unilateral contract. Most unilateral agreements are one-sided.
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6 0
1 year ago
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout th
Sav [38]

Answer:

Equivalent units of production= 68,000 units

Explanation:

Giving the following information:

Units started and completed= 80,000 - 20,000= 60,000

Units in ending inventory= 20,000 nits that were 40% complete in the ending work in process inventory at the end of January.

<u>To calculate the equivalent units for conversion costs, we need to use the following formula:</u>

Units completed in the period + Equivalent units in ending inventory WIP (units*%completion) = Equivalent units of production

Equivalent units of production= 60,000 + (20,000*0.4)

Equivalent units of production= 68,000 units

5 0
3 years ago
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