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MariettaO [177]
3 years ago
8

Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received

a $43,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $43,000 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 $43,000 bill in December?
Business
2 answers:
VMariaS [17]3 years ago
6 0

Answer:

Tax rate (T) = 37% = 0.37

After-tax cost = Cost (1 - T)

After-tax cost = $43,000 (1 - 0.37)

After-tax cost = $27,090

Explanation:

After-tax cost equals before tax cost multiplied by 1 - tax rate. Before-tax cost is $43,000 and when this cost is subject to tax, we will obtain the after-tax cost.

Bumek [7]3 years ago
3 0

Answer:

the after-tax cost of debt is: 27,090

Explanation:

assuming the entire among of the consulting services is tax deductible

we can determinate the after-tax cost as:

expense x (1 - tax rate) =

 43,000 x    (1 - 0.37)    = <em>27,090</em>

<em />

<em>the rate of return of a potential investment is not relevant for this purpose as is paying right away and not giving time to invest in a project to pay the amount next year.</em>

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Answer:

rights offer.

Explanation:

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3 0
3 years ago
Shmenson Company uses the periodic inventory system. Sales for 2020 were $470,000 while operating expenses were $175,000. Beginn
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Answer:

The net income  for 2020 was $90,000

Explanation:

Shmenson Company

Income Statement for the year ended 2020

Sales                                                                             $470,000

Less Cost of Sales

Beginning Inventories                           $70,000

Add Net purchases                              $180,000

Add Freight In                                         $15,000

Less Ending Inventories                      ($60,000)     ($205,000)

Gross Profit                                                                  $265,000

Less Expenses

Operating expenses                                                   ($175,000)

Net Income                                                                    $90,000

Conclusion

Thus, the net income  for 2020 was $90,000.

8 0
2 years ago
1.You should document your sources in all of the following situations except A. when using someone else's unique idea. B. when u
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2. A. Feasibility report

7 0
3 years ago
Franklin Company borrowed $144,000 from a bank on March 1, 2021 and agreed to pay it back in eleven months at an interest rate o
ioda

Answer:

$25,080

Explanation:

Given:

Loan amount = $1,44,000

Starting Date 1 march 2021

Duration = 11 month

Interest Rate = 19%

Amount of interest =?

Amount of interest for a year = PRT/100\\\\Amount of interest for a year = 144,000\times19\times1/100\\Amount of interest for a year= 27,360

Amount of interest for eleven month = Amount of interest *11/12

Amount of interest = $27,360*11/12

Amount of interest = $25,080

6 0
3 years ago
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Answer:

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b.      I Agree with Faith's method of handling this situation because Faith has followed the internal control principle of assignment of responsibility by making one employee responsible for the cash drawer and followed the internal control principle of segregation of duties (preparing the orders) from the accounting (taking orders and payments).

c.       I disagree with Faith's method of handling this situation because Faith has not followed the internal control principle of segregation of duties. It is true that faith has made one employee responsible however after cash counting another employee or Faith himself remove the cash register tape and compare the balance with cash drawer for effective internal control. Also, Faith’s standard of no mistakes may encourage the cashiers to overcharge a few customers in order to cover any possible shortages in the cash drawer.

6 0
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