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Financial advice

ABC Ltd. produces an MP3 player. The market for this product is increasing, and for this reason, ABC is planning to expand its production capacity. This plan requires new machinery and an increase in working capital that would be financed with borrowing. Complete the following: 1. What are the main sources of finance that

Angelo Diaz: Colorful Scarves

Angelo Diaz has decided to go into business selling colorful scarves which are popular among university students. He will operate the business out of a flea market, mostly on weekends. He is trying to get himself organized for the start of the first quarter. In order to do so, he will have to prepare a few budgets. Use the follo

S Corporation Distributions Reclassified as Salary

The IRS audited S. Johnson's tax returns for the 2010 through 2012 and classified the $260,000 of distributions as salary income for each year. What IRC is used to support the claim of the distribution as income based on the following facts and for the tax research memo? S. Johnson and K. Morrison, attorneys at law, formed

Myers Co: Types of dividends on assets, liab & equity accounts

Myers Company provides you with the following condensed balance sheet information. Assets Current assets 43,600 Equity investments (ABC stock; 10,290 shares at cost) 41,160 Equipment (net) 252,900 Intangibles 60,310 Total assets397,970 Liabilities and Stockholders' Equity Current and long-term liabilities10

Transfer Pricing Issues and Measures

Transfer Pricing 1) What is your opinion on the questions below? Transfer pricing is an important topic from multiple perspectives. It is a global issue affecting taxation, financial results, performance evaluations, and managerial motivation. Ratios are based on the underlying financial information. Transfer pricing is a

Principles Governing International Accounting in the USA

1. International accounting is impacted by a wide range of factors, including accounting diversity, global accounting standards, multinational companies, and the global economy.Think about the meaning of international accounting. As you do so, consider the variety of factors that impact it. Consider how accounting diversity can

Transaction Analysis of Darby Coporation

The following are selected 2012 transactions of Darby Corporation. Sept. 1 Purchased inventory from Orion Company on account for $54,700. Darby records purchases gross and uses a periodic inventory system. Oct. 1 Issued a $54,700, 12-month, 8% note to Orion in payment of account. Oct. 1 Borrowed $84,080 from the Shore Ba

Calculating the Mexican Peso Cost of a Dollar Loan

Suppose on that on January 1st a Mexican firm borrows $20 million from Citibank (USA) for one year at 8.00% interest per annum. The loan was taken when the spot rate was USD/MXP3.40. At the end of the one year when the loan was repaid, the exchange rate was USD/MXP 5.80. Based on the above information, calculate the Mexican Pe

Taking Inventory for Personal Use

Hart Nance and Jason Symington operate gift boutiques in shopping malls. The partners split profits and losses equally, and each takes an annual drawing of $80,000. To even out the workload, Nance travels around the country inspecting their properties. Symington manages the business and serves as the accountant. From time to tim

Bond Issuance - Effective Interest Rate Method

The following amortization and interest schedule reflects the issuance of 11-year bonds by Capulet Corporation on January 1, 2006, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly. Amortization Schedule Year Cash Interest Amount Unamo

Looking at Inventory Costing Methods

Using FIFO, LIFO, and the weighted average method, determine the gross profit, cost of goods sold, and cost of ending inventory. Use the form provided for your answers. Data below represents the purchases in August of Item ABC for Golson Company. Assume the company sold 1 unit during the month at a selling price of $50. D

Western Bank & Trust: Depreciation

Western Bank & Trust purchased land and a building for the lump sum of $3 million dollars. To get the maximum tax deduction, Western allocated 90% of the purchase price to the building and only 10% to the land. A more realistic allocation would have been 70% to the building and 30% to the land. Explain the tax advantage of al

Dos Passos Company: Current Liability

Dos Passos Company sells televisions at an average price of $909 and also offers to each customer a separate 3 year warranty contract for $204 that requires the company to perform periodic services and to replace defective parts. During 2012, the company sold 303 televisions and 285 warranty contracts for cash. It estimates the

Quest Tech: Multiple arrangement revenue recognition

Quest Tech, Inc. manufactures and sells specialized data storage equipment and services to entertainment and media companies. The equipment is used to efficiently store large data files. Quest Tech is currently marketing its latest equipment, which includes the Company's new patented technology that significantly increases it

Current Liability Journal Entry

Employees are paid every Saturday for the preceding work week. If a balance sheet is prepared on Wednesday, December 31st, what does the amount of wages earned during the first three days of the week (12/29, 12/30, 12/31) represent? Explain. What journal entry would be made for the days worked and what entry would be made when t

School District: Encumbrance Accounting System

School District #25 formally integrates the budget into the accounting system and uses the encumbrance system. All appropriations lapse at year-end. At year-end, before closing entries, the district had the following balances in its accounts. All accounts had normal balances. (a) Prepare the necessary closing entries. (b)

Bankruptcy and Default- Creditors' Concessions

In a troubled debt situation, why might the creditor grant concessions to the debtor? b. What type of concessions might a creditor grant the debtor in a troubled debt situation? c. What is meant by "impairment" of a loan? Under what circumstances should a creditor or debtor recognize an impaired loan?

Interest revenue of Bismarck

On July 31, 2012, Bismarck Company engaged Duval Tooling Company to construct a special-purpose piece of factory machinery. Construction began immediately and was completed on November 1, 2012. To help finance construction, on July 31 Bismarck issued a $628,800, 3-year, 12% note payable at Wellington National Bank, on which inte

Activity-Based Costing and Pricing

1. What is activity-based Costing? How can banks use it in their business? Explain. 2. How can banks link activity-based costing to performance management? Explain. 3. How can activity-based costing provide useful information on costs? Explain. 4. How is activity-based costing useful in measuring customer profitability?

Activity-based costing information

Jog Road Company's cost system assigns MSDA expenses to customers using a rate of 33% of sales revenue. The new CFO has discovered that Jog Roads's customers differ greatly in their ordering patterns and interaction with the company's sales force. Because the CFO believes Jog Road's cost system does not accurately assign MSDA ex

Beeline Manufacturing Activity Based Costing

Beeline Manufacturing produces two types of industrial ventilation machines: heavy-duty and standard. The assignment basis for overhead costs has always been direct labor hours. For 2013, Beeline compiled the following data for the two products: Heavy-duty Standard Sales in units 4,000 45,000 Sales price per unit

Tests for ceiling and floor value of inventory using the LCM rule

Year-end inventory cannot merely be based on a company's cost and whichever cost flow method the company is currently using. It needs to be further tested under the Lower of Cost or Market Rule for the potential need to mark it down. What are the "tests" used to determine the ceiling and the floor values to which the market va

Standards, Reporting, and Enforcement

In need some help in answering these questions: 1) What is your opinion on the questions below? FASB promulgates US GAAP (Generally Accepted Accounting Standards) and IASB creates IFRS (International Financial Reporting Standards). US GAAP is a rule-based system while IFRS are principle-based. The accounting standards only

Three Powerful Pricing Strategies

I need some help in answering these questions: 1. What is life-cycle costing? Under what circumstances can it be most useful? What are some potential problems with this approach? 2. What is target pricing? Under what circumstances can it be most useful? What are some potential problems with this approach? 3. What is cost-p

Statement of cash flow & balance

Review the information in the Los Lobos Ledger Data. Prepare a statement of cash flows using the direct and indirect methods. Prepare a classified balance sheet. 12-31 2007 2006 Cash $35,000 $32,000 Accounts receivable 33,000 30,000 Allowance for doubt

The tax effect of permanent and temporary timing differences

When it comes to taxes, one should always be mindful of the fact that without the Internal Revenue Service, there would not be tax issues to worry about. As a follow-up question to this statement, consider the tax issues brought about by permanent differences and temporary differences. Define each type of timing difference and g