Answer:
a. AIE will have to borrow $25,5102.04
b. The Effective Rate on this Loan is 6.63%
c. If AIE can convince the bank to remove the compensating balance requirement the effective rate is 6.50%
Explanation:
In order to calculate how much will AIE have to borrow we would have to use the following formula:
Amount to be borrowed = Cost of Truck / (1 - Compensating balance)
Amount to be borrowed = $250000 / (1 - 0.02)
a. Amount to be borrowed = $25,5102.04
In order to calculate the effective rate on this loan we calculate the following:
Effective Rate on this Loan = Interest / Amount received
Effective Rate on this Loan = 16581.63 / 250000
b. Effective Rate on this Loan = 6.63%
c. If AIE can convince the bank to remove the compensating balance requirement the Effective rate = annual rate, hence the effective rate is 6.50%
AIE will need to borrow approximately $255,102 at an effective interest rate of 6.63%. If the compensating balance requirement is removed, the effective rate will be 6.5%.
a. AIE will need to borrow the amount of the truck ($250,000) divided by 1 minus the compensating balance rate (2%). So, the company will have to borrow $250,000 / (1 - 0.02) = $255,102.
b. The effective interest rate is the discount interest divided by (1 - compensating balance), which is 6.5% / (1 - 0.02). The effective rate is thus approximately 6.63%.
c. If the compensating balance requirement is removed, the effective rate will be the same as the quoted rate, which is 6.5%%.
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b. The company paid $6,000 cash in advance for prepaid insurance coverage.
c. The company purchased $800 of supplies on account.
d. The company paid $600 cash for selling expenses.
e. The company received $6,000 cash for services provided.
f. The company paid $800 cash toward accounts payable.
g. The company paid $4,000 cash for equipment.
Here are the general journal entries for each of the transactions:
a. D. Belle invested in the business with cash, equipment, and web servers in exchange for common stock:
b. The company paid in advance for insurance coverage:
c. The company purchased supplies on account:
d. The company paid cash for selling expenses:
e. The company received cash for services provided:
f. The company paid cash to settle accounts payable:
g. The company paid cash to acquire equipment:
Journal entries are the chronological recordings of financial transactions in a company's accounting system. They serve as a detailed record, documenting each transaction's effects on various accounts, such as assets, liabilities, revenues, and expenses.
Journal entries provide a clear audit trail, helping track the flow of money and enabling the creation of financial statements.
They act as the foundation for accurate financial reporting, facilitating transparency, analysis, and decision-making within an organization.
Learn more about journal entries here:
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This question is about preparing general journal entries for various transactions in Belle Co.'s business. The company engages in activities such as investing cash and equipment, purchasing supplies on account, and receiving cash for services provided. The journal entries for each transaction are provided in the response.
Journal Entry a:
Debit: Cash ($5,900) + Equipment ($6,900) + Web servers ($12,900)
Credit: Common stock ($25,700)
Journal Entry b:
Debit: Prepaid Insurance ($6,000)
Credit: Cash ($6,000)
Journal Entry c:
Debit: Supplies ($800)
Credit: Accounts payable ($800)
Journal Entry d:
Debit: Selling expenses ($600)
Credit: Cash ($600)
Journal Entry e:
Debit: Cash ($6,000)
Credit: Service revenue ($6,000)
Journal Entry f:
Debit: Accounts payable ($800)
Credit: Cash ($800)
Journal Entry g:
Debit: Equipment ($4,000)
Credit: Cash ($4,000)
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Answer:
Adjusted balance = $23,387
Explanation:
Franklin Company
Bank Reconciliation statement
Bank balance as of August 31 $21,837
Add: Deposit in transit $ 7,350
$29,187
Less: Outstanding check $(5,800)
Adjusted cash balance $23,387
Cash balance as of August 31 $22,662
Add: Collection of Note receivable $ 870
$23,532
Less: Bank service charge $( 145)
Adjusted cash balance $23,387
Answer:
3.54 dollars
Explanation:
2.50 = 250 cents
2.70 = 270 cents
2e + 3t = 250
e = (250 - 3t) / 2
3((250 -3t) / 2) + 2t = 270
(750 - 9t) / 2 + 2t = 270
750 - 9t + 4t = 540
750 - 5t = 540
210 = 5t
t = 42
e = (250 - 3t) / 2
e= (250 - 126) / 2
e = 124 / 2
e = 62
3e + 4t = 3(62) + 4(42) = 354 cents or 3.54 dollars
Answer:
a. Taxable income/loss = (-$187500)
b. Current income tax benefit = $39780
Explanation:
Lets first understand the difference between reported income and taxable income. Reported income is the income earned by an entity during an accounting period which is calculated based on accounting rules and conventions whereas taxable income is calculated by tax authorities based on their own policies.
Now an important thing here to note is 'accounting concepts differ from tax policies (i.e permanent differences), so due to the differences in the policies two income figures are calculated separately by the entities following accounting conventions and tax authorities.
For example accounting follows the accruals concept which requires entities to record expenses and revenue in the period they are incurred whereas tax authorities might be following a cash basis of accounting so they wouldn't be allowing any expenses that are non-cash, such as accounting depreciation which is replaced by tax depreciation.
Now coming to the calculation, taxable income is calculated by adding back non-cash items, deducting items that are tax-exempt and adding back items that are dis-allowable under tax authorities.
The taxable income is calculated as follows;
Pretax book income = $752500
less: tax depreciation = (-$620000)
less: tax-exempt income = (-$320000)
Taxable income/loss = (-$187500)
Burhcham corporation has made a loss of (-$187500) which means Burcham has no tax liability this year.
Assuming a tax rate of 34% and that tax losses can be carried backward.
A tax relief could be claimed by Burhcam corporation as follows.
Burcham corporation's prior-year taxable income was $117000 so the tax relief is equal to $117000×34%=$39780
Current income tax benefit = $39780
The remaining $70500 ($187500 - 117000) net operating loss will be recorded as a deferred tax asset with the amount of tax (i.e $70500×34%) $23970.
Answer:
service is doing work to someone,:
----is supplying public a public needs example: tramsport
-----is emplyment as a servant
-------perios of employment with company or organization
A) Record the employee salary expense, withholdings, and salaries payable.
B) Record the employer-provided fringe benefits.
C) Record the employer payroll taxes.
Explanation:
The journal entries are shown below:
a. Salaries expense $2,900,000
To Income tax payable $616,250 ($435,000 + $181,250)
To FICA tax payable $221,850
To Account payable $29,000
To Salaries payable $2,032,900
(Being the employee salary expense, withholdings, and salaries payable is recorded)
b. Salaries expense $87,000
To Account payable $87,000
(Being the employer-provided fringe benefits is recorded)
c. Payroll tax expense $179,800
FICA tax expense $221,850
To Unemployment tax payable $401,650
(being the employer payroll taxes is recorded)