Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2020. Gross receipts were $300,000. The following expenses were incurred and paid as indicated:
Expense Payment Date
Rental of coliseum $25,000 December 21, 2020
Cost of goods sold:
Food 30,000 December 30, 2020
Souvenirs 60,000 December 30, 2020
Performers 100,000 January 5, 2021
Cleaning the coliseum $10,000 February 1, 2021
Performers Cleaning the coliseum Because the coliseum was not scheduled to be used again until January 15, the company with which Duck had contracted did not perform the cleanup until January 8-10, 2020. a. Calculate Duck's net income from the concert for tax purposes for 2019. If an amount is zero, enter "0".
Gross receipts 300,000 ✓
Coliseum rental 25,000
Food 30,000
Souvenirs 60,000
Performers 100,000
a. Calculate Duck's net income from the concert for tax purposes for 2019. If an amount is zero, enter "0". Gross receipts 300,000 Less: Coliseum rental 25,000 Food 30,000 Souvenirs 60,000 Performers 100,000 Cleaning costs Total expenses 215,000 Net income for 2019 85,000
b. What is the true cost to Duck if it had to defer the $100,000 deduction for the performers until 2020? Assume a 5% discount rate and a 21% marginal tax rate in 2019 and 2020. The present value factor for a single sum at 5% for one year is 0.9524. If required, round your answers to the nearest dollar. The present value of the 2020 tax savings is and the cost of the deferral to Duckiss.

Answer:

Duck Corporation

Rock Concert

a) Income Statement for the year ended December 31, 2020:

Gross receipts          $300,000

Less: Coliseum rental  25,000

Food                             30,000

Souvenirs                     60,000

Performers                 100,000

Total expenses          215,000

Net income for 2019  85,000

b) The true cost is $116,240.

Explanation:

a) Data and Calculations:

Rental of coliseum $25,000 December 21, 2020

Cost of goods sold:

Food 30,000 December 30, 2020

Souvenirs 60,000 December 30, 2020

Performers 100,000 January 5, 2021

Cleaning the coliseum $10,000

b) The Cleaning expense is excluded because the services had not been rendered as at December 31.  The inclusion of the Performers' compensation is necessary because the services had been enjoyed and incurred as at December 31.

c)  The true cost = the Present value of the $100,000 performers' compensation plus additional tax expense of $21,000 ($100,000 * 21%) that would have been deducted.

= $116,240 ($95,240 + $21,000)

Carlos transfers property with a tax basis of $750 and a fair market value of $1,200 to a corporation in exchange for stock with a fair market value of $975 and $75 cash in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is the corporation's tax basis in the property received in the exchange

Journalizing Payroll Transactions On December 31, the payroll register of Hamstreet Associates indicated the following information: Wages and Salaries Expense $9,500.00 Employee Federal Income Tax Payable 960.00 United Way Contributions Payable 150.00 Earnings subject to Social Security tax 8,800.00 Use Social Security 6.2% and Medicare 1.45% as specified in the text. 1. Determine the amount of Social Security and Medicare taxes to be withheld. If required, round your answers to the nearest cent.

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What is an example of an asset class?

A.
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B.
inflation

C.
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D.
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Required:
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b. What is the Year 3 cash flow if Brisbane replaces its current system?
c. Assuming a discount rate of 8%, what is the net present value if Brisbane keeps using its current system?
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Thermopolis, Inc. reported retained earnings of $490,953 on December 31, 2017. During the year, Thermopolis recorded net income of $135,075 and paid dividends of $57,762. The company had no other transactions that affected retained earnings. What must retained earnings have been on December 31, 2016

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Unimart Precision Manufacturing

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Finished goods $450,000
Cost of purchases 500,000
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Ending inventory
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Finished goods 375,000

Required:
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Activity Budgeted Activity Cost
Production $471,200
Setup 310,800
Inspection 81,000
Shipping 156,000
Customer service 65,500
Total $1,084,500
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Activity Activity Base
Production Machine hours
Setup Number of setups
Inspection Number of inspections
Shipping Number of customer orders
Customer service Number of customer service requests
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
Machine Hours Number of
Setups Number of
Inspections Number of
Customer Orders Customer
Service
Requests Units
White sugar 3,340 180 200 780 50 8,350
Brown sugar 2,130 270 300 2,150 320 5,325
Powdered sugar 2,130 250 500 970 130 5,325
Total 7,600 700 1,000 3,900 500 19,000
Each product requires 0.9 machine hour per unit.
Required:
If required, round all per unit amounts to the nearest cent.
1. Determine the activity rate for each activity.
Production $ per machine hour
Setup $ per setup
Inspection $ per move
Shipping $ per cust. ord.
Customer service $ per customer service request
2. Determine the total and per-unit activity cost for all three products.
Total Activity Cost Activity Cost Per Unit
White sugar $ $
Brown sugar
Powdered sugar
3. Why aren’t the activity unit costs equal across all three products since they require the same machine time per unit?
The unit costs are different because the products consume many activities in ratios different from the .

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