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VLD [36.1K]
3 years ago
6

A taxpayer, age 64, purchases an annuity from an insurance company for $82,000. She is to receive $683 per month for life. Her l

ife expectancy is 20.8 years from the annuity starting date. Assuming that she receives $8,200 this year, what is the exclusion percentage and how much is included in her gross income
Business
1 answer:
Vinil7 [7]3 years ago
8 0

Answer:

Exclusion Percentage = 48.10%

Included in income = $4256

Explanation:

The exclusion percentage can be calculated using the following formula:

=> Exclusion Percentage = Investment in Total /(Payments made * Life Expectancy *Total months in a year)

=> Exclusion Percentage = $82,000 / ($683* 20.8 *12)

=> Exclusion Percentage = 0.4810 = 48.10%  (Rounded off to two decimal places)

(Included in income):

The Included in income amount can be calculated using the following formula:

=> Included in Income = (Received amount - Return on Capital ) (Edited to accomodate changes)

& Return on Capital = ( Received amount * Exclusion percentage ) (Edited to accomodate changes)

=> ROC = $8200 * 0.481 = 3944.2 (Edited to accomodate changes)

=> Included in income = ( $8200 )- 3944.2 = 4255.80 => 4256 ( Rounded off to nearest dollar amount)

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Prepare journal entries to record each of the following four separate issuances of stock. A corporation issued 5,000 shares of $
asambeis [7]

Answer and Explanation:

1. Cash Dr, $120,000

         To Common Stock $100,000    (5,000 × $20)

         To Additional Paid - in - Capital in Excess of Par $20,000

(Being issue of common stock is recorded)

2. Cash Dr, $28,000

         To Common Stock Dr, $2,500   (2,500 × $1)

         To Additional Paid - in - Capital in Excess of Stated $31,500

(To record issue of common stock to promoters)

3. Organization Expenses Dr, $28,000

          To Common Stock Dr, $28,000

(Being issue of common stock in exchange of organization expenses is recorded)

4. Cash Dr, $121,750

          To Preferred Stock $93,750  (1,250 × $75)

          To Additional Paid - in - Capital in Excess of Par (Preferred) $28,000

(Being issue of Preferred stock is recorded)

8 0
3 years ago
A financial adviser manages an equity portfolio for an endowment fund, which has an 8.2% return objective. The adviser makes a s
MArishka [77]

Answer:

The endowment fund is not satisfied with the advisor's performance

Explanation:

Judging from a nominal interest rate perspective where return expected of an investment comprises of real rate of return and an extra return which is a compensation for inflation rate in the economy,the endowment fund is not satisfied with performance of the advisor.

The satisfactory rate of return that would be expected of the advisor is computed below:

nominal interest rate=real rate+inflation rate

real rate is 8.2%

inflation rate is 2.9%

nominal interest rate=8.2%+2.9%

                                  =11.10%

3 0
3 years ago
Newdex has net income of $3,000,000 (INCLUDING the effect of expected out-of-pocket costs) and 1,000,000 shares outstanding. It
kkurt [141]

Answer:

$416,667

Explanation:

Current EPS = $3,000,000 / 1,000,000

Current EPS = $3

Net Proceeds per share = $40 * 90%

Net Proceeds per share = $36  

New Number of Shares = $5,000,000 / $36

New Number of Shares = 138888.88

Total Number of Shares Outstanding after the new issue = 1138888.88 shares

Diluted EPS = $3,000,000 / 1138888.88

Diluted EPS = $2.634

Amount of Dilution in EPS = $3 - $2.634

Amount of Dilution in EPS = $0.3658

Net Income must increase by 1138888.88 * $0.3658 = $416,667. So, Newdex's after-tax income must increase to $416,667 to prevent dilution of earnings per share.

6 0
3 years ago
Derived demand is demand: Group of answer choices
Aleks [24]

Answer:

C) linked to the production and sale of some other item.

Explanation:

• Derived demand is an economic term describing the demand for a good/service resulting from the demand for an intermediate or related good/service.

• Derived demand is solely related to the demand placed on a good or service for its ability to acquire or produce another good or service.

• The principles behind derived demand work in both directions; if the demand for a good decrease, the demand for the goods required to produce the item will also decrease.

5 0
3 years ago
A manufacturer makes two types of handmade fancy paper bags: type A and type B. Two designers—a cutter and a finisher—need to wo
avanturin [10]

Answer:

Type A to produce 44 bags and Type B to produce 16 bags to maximize profit of $440

Explanation:

Let X be the number of bags for Type A and Y be the number of bags for Type  B

                                      Cutter              Finisher

Type A                              2X                   1X    =   $6X

Type B                  <u>             1Y                   2Y     =  $11Y</u>

                                        104                  76

2x+1y= 104

1x+2y=76

y= 104-2x

x+2(104-2x) = 76

x+ 208-4x = 76

132= 3x

x= 44 bags

y= 104-2(44)

y= 16 bags

Type A should produce 44 bags and Type B 16 bags to maximize profit

Maximum Profit = 6X + 11Y

                         = 6(44) + 11(16)

                        = $440

7 0
3 years ago
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