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Reasonable salary and bonus income of a sole shareholder of Camel Corp

Camel is the sole shareholder of Desert, Inc. Desert's taxable income before the payment of Camel's salary is $175,000. Based on this, Camel has the corporation pay him a salary of $100,000 and a bonus of $75,000. A reasonable salary and bonus would be $125,000. Which of the following is correct? a. The taxable income of

Tax Accounting: Tax Treatment of Shareholders and IRS Rules for Partnerships

1. What are the major advantages of bona fide loans from shareholders and other debt instruments over stock? 2. What conditions need to be met to avoid IRS classification of loans from shareholders as equity (contributions to capital)? 3. What is the tax treatment of losses from worthless stock or securities? 4. What is th

Matching Exercise for audit terminology

Please see attached file. PART II ? MATCHING Instructions: Designate the terminology that best represents the definition or statement given below by placing the identifying letter(s) in the space provided. No letter should be used more than once. Not all letters will be used. A. Full disclosure principle B. Internal

Accounting for Depreciation Problem

You are asked to make a depreciation schedule for a business asset.. A depreciation schedule shows the remaining value of the asset at the end of each time period. A. a $1,200 postage printing system depreciated using the straight -line method over 4 years. In your depreciation schedule, give the following information for ea

Biometrics and Digital Cash

Much debate surrounds the use of biometrics. Many people like it because biometrics can provide identification and increase security. Other people see it as a tremendous invasion of your privacy. Just as you read in this chapter, a bank¿by using biometric identification¿may be able to tell if a woman is pregnant. So, the great

Federal Taxation and Gross Income Exclusions - Multiple Choice

Teresa sued her former employer for age, rage and gender discrimination. She claimed $250,000 in damages for loss of income and $500,000 in punitive damages. She settled the claim for $600,000. As a result of the settlement Teresa must include in gross income: a. 0$ b. $400,000 [$500,000/($250,000 + $500,000) x $600,000

Wilma and Barney's tax transactions for the boat and the divorce

Wilma divorced Barney last year. This year she received the title to their boat that cost $45,000 and is now worth $55,000. Barney paid Wilma $1,500 per month, $500 for alimony and $1,000 for support of their two children. Wilma owed $60,000 to the bank for a loan on a failed business. To satisfy the debt, she transferred title

Incremental Analysis for a make or buy decision

Please see the attached excel spreadsheet that includes one worksheet with the problem to resolve, one worksheet with an example of what the problem should be formated or resemble and one worksheet to use for the answer. Please show the calculations. The management of Martinez Manufacturing Company has asked for your assis

Multiple-step Income, Retained Earnings

(Multiple-step Income, Retained Earnings) Presented blow is information related to American Horse Company for 2007 Retained earnings balance, January 1, 2007 $980,000 Sales for the year $25,000,000 Cost of goods sold $17,000,000 Interest revenue

Costs associated with land and construction of new building

Could use some help on the following accounting questions: Poin Company recently incurred the following costs: 1. Purchase price of land and dilapidated building 280,000 2. Real estate broker's commission 14,000 3. Net demolition costs of dilapidated building 42,000 4. Excavation costs for ne

Tax questions for Linda, Quail, Jake, Drew, Joanne, Sue, Mable, Hazel, Marjory

Q1- Linda operates a drug-running operation. Which of the following expenses she incurs can reduce taxable income? a. Bribes paid to border guards. b. Salaries to employees. c. Price paid for drugs purchased for resale. d. Kickbacks to police. e. Rent on an office. f. Depreciation on office furniture and equipment. g. Ten

Net income of Simon and Hobbs: bank financing

The net income of Simon and Hobbs, a department store, decreased sharply during 2000. Carol Simon, owner of the store, anticipates the need for a bank loan in 2001. Late in 2000, Simon instructs the store's accountant to record a $10,000 sale of furniture to the Simon family, even though the goods will not be shipped from the ma

Smooth Brew: Incremental analysis for special order

Smooth Brew manufactures cappuccino makers. For the first eight months of 2006, the company reported the following operating results while operating at 80% of plant capacity: Sales (120,000) $6,000,000 Cost of Goods Sold 3,600,000 Gross profit 2,400,000 Operating Expenses 1,800,000 Net income $ 600,000 An ana

EOQ calculation: what is the revised EOQ?

Question 12: A product whose EOQ is 40 experiences a decrease in ordering cost from $90 per order to $10. The revised EOQ is: a) three times as large b) one-third as large c) nine times as large d) one-ninth as large e) cannot be determined Please select the right answer and explain how you have calculated it

Norton's Mufflers: calculate which model is most profitable

Norton's Mufflers manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following unit data apply: Model X Model Y Model Z Selling Price $80 $90 $100 Direct Materials

Proration of overhead

Please see the attached file. 1) Compute the budgeted manufacturing overhead rate for 2004. 2) Compute the under-or over-allocated manufacturing overhead of Zaf Radiator in 2004. Dispose of this amount using a) Write-off Cost of Goods Sold b) Proration based on ending balances (before proration) in Work i

Determine actual bad debts amount; match accounting concept with description

Please see the attachment. 3. After examining the records of AIS Consultants Incorp., you determined the following end-of-year amounts: 2006 2005 Credit Sales 200,000 160,000 Accounts Receivable 45,000 40,000 Allowance for Bad Debt 2,000 1,000 AIS Consultants uses the percentage-of-sales method to estimate bad deb


Please see the attachment. 1. (8pts) Match as many of the descriptions as possible with one of the terms. If no match is possible, answer "7." Place the number to the right of the letter below. a. Reports the major classes of operating cash receipts and payments of an entity during a period b. Investing and financin

Accounting for Machine improvements and exchanges

1. An improvement made to a machine increased its fair market value and its production capacity by 25% without extending the machine's useful life. The cost of the improvement should be ...... (expensed, debited to accumulated depreciation, capitalized in the machine account, allocated between accumulated depreciation and the

Calculating the equilibrium price

If the supply/demand for a product are given by: Supply: p = 1/6q^2; demand p = -1/6q^2 +36 Where p is the price and q is quantity. What is the equilibrium price?

Sales and Manfuacture Overhead budgets

How to calculate manufacturing overhead budget and sales budget? Zeller Electronics Inc. produces and sells two models of pocket calculators, XQ-103 and XQ-104. The calculators sell for $12 and $25, respectively. Because of the intense competition Zeller faces, management budgets sales semiannually. Its projections for the

Research Methods: Scientific Method of Data Collection

Based on the analysis of the last six months' sales, your boss notices that sales of beef products are declining in your chain's restaurants. As beef entrée sales decline, so do profits. Fearing beef sales have declined due to several newspaper stories reporting E.coli contamination discovered at area grocery stores, he sugge

EPS and Dividends - Stock Price

Company's current return on equity is 14%. It pays out one half of earnings as cash dividends (payout ratio = .5). Current book value per share is $50. Book value per share will grow as the company reinvests earnings. Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE