back, and CRA for compliance with reporting. Issues: 1. Cash Flow Obviously non-income statement cash spending has drained the company’s cash. We cannot be certain exactly what these are since no data is given besides revenue and operating expenses and possible gross profit and pre-tax income numbers determined by which inventory costing and bad debt policy the company uses. However, by looking at the large gap between gross profit and pre-tax income, Joe probably has a large amount owed to
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employment, she cannot deduct her work clothing as a business expense because she is not prohibited form using the clothes in her ordinary lifestyle. Analysis: IRS Sec. 162(a) states that all expenses classified as ordinary and necessary incurred for the purpose of the trade or business are deductible. IRS Sec. 262(a) imposes a limit on Sec. 162(a) to the extent that such expenses cannot be categorized as “personal, living, or family expenses.” The dilemma in this situation is whether the expensive
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average sales growth rate for the period 1988 – 1990 is 26.0%, while the geometric average interest expense growth rate is 59.3%. Basically the interest expense is growing at the speed that doubles the growth rate for sales. Given that sales growth rate is 30%, we estimate the interest expense growth rate to be 76.7% and the amount would be 58K. While under the new credit line, the maximum interest expense under fully utilization of the notes payable would be 465k*10.5%+50K*11%=54.33K. Obviously under
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Books & Report Cont. Ed. Central Staff Total Revenues: $450,000 $220,000 $70,000 $230,000 $970,000 Traceable Expenses: Salaries $170,000 $60,000 $40,000 $50,000 $120,000 $440,000 Dist. to local chapters $210,000
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Learning Plan 4.2 Assignment Principle Management Katrina Taylor In my house a big decision that needs to be made is about me going back to work after I have the baby. Since it is baby number three childcare is a huge expense. I always thought that it would be such a great idea to have a big family so that my kids would have others to play with and rely on each other for help if they need it in school. Right now my kids are 3 and 2. I am pregnant and about to have another
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2014 Intercompany gain on sale of truck $780 Truck $780 Accumulated Depreciation $260 Depreciation expense $260 Truck $7500 Accumulated depreciation $7500 2015 Retained earnings $520 Accumulated depreciation
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DISCUSSION 1. A company profit-sharing arrangement is a matter of auditor concern because it provides an incentive for employees to generate artificially high income figures. These individuals can receive direct financial benefits from the manipulation of reported earnings. This potential problem is even more of a concern in the Lakeside engagement because controls are weak and each store is geographically isolated from the oversight provided by the administrative offices. 2. This case describes
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As we previous mentioned, the profit margin ratio of Southwest is much lower than its peers because it has high sales revenue but low net operating profit. The huge expenditure on depreciating and amortization is the key factor of high operating expense, which also leads to a low net operating profit. Compared to its peer companies, Southwest falls in the high risk but also high potential area of the
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$30,000 on January 1, 2011. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2011 and 12,000 in 2012. Compute depreciation expense for 2011 and 2012 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining balance method. (Round cost per mile to 2 decimal places, e.g. 10.50. Use rounded amount for future calculations. Round final answers
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Capital Expenditure Budget ITEMS DESCRIPTION COSTS COMPANY EXPANSIONS Facility Renovations More seating, menu add ons, décor change, and more advertising and marketing $15,000.00 1 MACHINES $77,760.99 Office Laptop Dell Latitude Business Laptop 18 in Screen $499.99 soda fountain bar(2) 6 fountain self serve soda machines $7,028.00 cash registers (2) POS Sytem plus yearly service $8,296.00 $3,500.00 $3,500.00
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