Answer:
a. $522 repayment of a loan from an employee. Firm B loaned $500 to the employee six months ago, and the employee repaid the loan with interest.
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Firm B should recognize $22 as interest income.
b. $600 deposit from a customer who rented mechanical equipment. Firm B must return the entire deposit when the customer returns the undamaged equipment.
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The deposit cannot be recognized as income since it is a liability.
c. $10,000 short-term loan from a local bank. Firm B gave the bank a written note to repay the loan in one year at 9 percent interest.
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Interests ($900) will be recognized when they are actually paid for in 1 year. No accrued interests must be reported on the balance sheet (December 31).
d. $888 prepaid rent from the customer described in part b. The rent is $12 per day for the 74-day period from December 17 through February 28.
- The $888 will be recognized as revenue during the current year.
Explanation:
When a taxpayer is a cash basis taxpayer, it will only report income and expenses that are actually collected or paid for respectively. All accounts receivable or accounts payable are not considered revenues nor expenses.
Answer:
ROE = 16.98%
Explanation:
The question is to determine Amer Company's Return on Equity
The following steps are taken:
1) The Total Debt ÷ Total Assets = 35%
It means Total Debt ÷ 1000= 0.35
Meaning 0.35 x $1,000 = $350 and this is the total debt
2) Calculate Interest on debt
Interest on debt = Interest rate on total debt x total debt
= 4.57% x $350 = $16
3) Now calculate the Net Income from Earnings before Interest and Tax
Earnings before Interest and tax = $200
less interest $16
Earnings Before Tax $184
Subtract tax (40% of EBT) $73.6
Net income $110.4
4) Calculate the Return on Equity
= Net income/ Shareholders' Equity
= $110.4/ ($1,000-$300)
= 16.98%
Answer:
c) independent contractor
Explanation:
The independent contractor is hired by an employer to accomplish a particular goal. As the work on freelancing basis so the company does not have a control over them. Even they are not bound by the labor and the laws related to employment. Companies are interested to hire them as the company has not to provide the bonuses, insurance etc
Therefore as per the given options, the option c is to be selected as it fits to the given situation
Answer:
I think option 1 is the best because it would be the most profitable rather than licensing another company to manufacture it and get the loyalty.
