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Gnom [1K]
3 years ago
11

Saleh, an accountant, is the sole shareholder of Turquoise Corporation, a C corporation. Turquoise is a personal service corpora

tion with a fiscal year ending September 30 (pursuant to a § 444 election). The corporation paid Saleh a salary of $330,000 during its fiscal year ending September 30, 2019. How much salary must Turquoise pay Saleh during the period October 1 through December 31, 2019, if the corporation is to continue to use its fiscal year without negative tax effects?
Business
1 answer:
VashaNatasha [74]3 years ago
3 0

Answer: $82,500

Explanation:

Saleh's salary for fiscal year ending September 30 = $330,000

Salary that should be paid between October 1 - December 31, if the corporation is to continue to use it's fiscal year without negative tax effect.

To avoid negative tax effect, the Saleh's salary should be atleast equal to the amount being given for the fiscal year which ended in September 30.

October 1 - December 31 = 3 months

Saleh's monthly salary = total slary during fiscal year ÷ 12

$330,000 ÷ 12 = $27,500

October 1 - December 31 = $27500 * 3 = $82,500

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Beedle issued a 10-year bond to Aeron Company on 1/1/20x6. The bonds have a 6% annual interest rate and pay interest semi-annual
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1. The issue price of the bonds is<u> $215,589.16</u>.

2. An amortization schedule through 20x9 is as follows:

<h3>Amortization Schedule:</h3>

Period       PV             PMT   Interest Expense  Amortization        FV

1       $215,589.16     $6,000       $5,389.73            $610.27      $214,978.89

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3     $214,353.36     $6,000      $5,358.83             $641.17        $213,712.20

4      $213,712.20     $6,000      $5,342.80           $657.20      $213,055.00

Year 3

5    $213,055.00     $6,000      $5,326.38            $673.62        $212,381.38

6     $212,381.38     $6,000      $5,309.53            $690.47        $211,690.91

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3. The journal entry recorded by Beedle on January 1, 20x6 is as follows:

Debit Cash $215,589.16

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Credit Bond Premium $15,589.16

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4. The amount in the accounts at the end of 20x6 are:

A. Bond payable $200,000

B. Premium $14,353.36 ($15,589.16 - $610.27 = $625.53)

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5. The journal entry to record the bond retirement transaction on 12/31/20X8 is as follows:

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Debit Bonds Premium $12,000

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<h3>Data and Calculations:</h3>

Maturity period = 10 years

Interest rate = 6% semi-annually

Interest payment dates = June 30 and December 31

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Face value = $200,000

Semi-annual coupon payment = $6,000 ($200,000 x 3%)

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12/31/20X7 $ 213,300

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N (# of periods) = 20 (10 years x 2)

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FV (Future Value) = $200,000

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