Answered: Advise the boss about the least cost of…

Business

Finance

Advise the boss about the least cost of financing

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 4DQ

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You are working as a summer intern at a rapidly growing organic food distributor. Part of your responsibility is to assist in the accounts payable department. You notice that most bills from suppliers are not paid within the discount period. The manager of accounts payable says the bills are organized by vendor, like the accounts payable ledger, and she is too busy to keep track of the discount periods. Besides, the owner has told her that the 1% and 2% discounts available are not worth worrying about.
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Timmy knows that Tammy, his boss at ABC Corp., desperately wants to bring the department in under-budget for the year so that she can earn herself a nice year-end bonus. And since Timmy is desperate to butter Tammy up and become her favorite employee, his brain churns out the following logic: Even though I used my own credit card to take that big group of customers out to eat and to the ball game last night, and even though the total cost was $1,200, I’ll not submit an expense report and so not get reimbursed, which will make Tammy very happy and she’ll like me very much! Oh, and since I file a Schedule C for my side business (tax return prep), I’ll just deduct the $1,200 there! Wonderful strategy! Do you agree with Timmy that his strategy is wonderful? Why or why not?
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You are working as a summer intern at a rapidly growing orgainc food distribution. Part of your responsibility is to assist in the accounts payable department. You notice that most of the bills are not paid with in discount period. The manager of the accounts payable sees the bills are organized by vendor, like the accounts payable ledger, and she is too busy to keep track of the discounts period. Besides, the owner has told her that The 1% and 2% discount available or not worth worrying about. 1. Explain to the owner why it is expensive not to take it advantage to cash discounts on credit purchases. suggest a way to file (organize) suppliers invoices so that they are paid with in the discount period.
Cal’s Carpentry is considering outsourcing its accountsreceivable function. Currently, Cal employs two full-time clerksand one part-time clerk to manage accounts receivable. Each fulltime clerk has an annual salary of $36,000 plus fringe benefitscosting 30 percent of their salary. The part-time clerk makes$18,000 per year but has no fringe benefits. Total salary plus fringecost is $111,600. Cal estimates that each account receivable incursa $10 variable cost. The Small Business Accounts ReceivablesGroup (SBARG) specializes in handling accounts receivable forsmall- to medium-size companies. Doris Roberts from SBARGhas offered to do the accounts receivable for Cal’s Carpentry ata fixed cost of $75,000 per year plus $30 per account receivable.Next year, Cal expects to have 2000 accounts receivable.(a) Calculate the cost for Cal’s Carpentry to continue doingaccounts receivable in-house.(b) Calculate the cost for Cal’s Carpentry to use SBARG tohandle the accounts receivable.(c) If the fixed…
Catherine Romanov was a loan officer who needed one last loan to make her quota for the month. Yvonne Gunner, who was only a freshman in college, walked in one day for a loan for a new software business she was starting. She had never dealt with banks before and did not understand the nuances of loans but asked very good questions. Ms. Romanov, however, was ruthless and intentionally did not answer the questions accurately. Had Ms. Gunner received accurate answers to her questions, she would not have taken the loan. After six months, Ms. Gunner defaulted on the loan, and the bank pursued her for payment. Does Ms. Gunner have any remedies?
Chris is a financial manager for a small business. Right now, he's working on next year's budget. Money is tight, and each department has requested more money than Chris is able to budget for it. His best friend works in marketing and is pressuring Chris for an extra $5,000.00 for her advertising budget. Chris doesn't want to disappoint her but granting her the favor would mean taking money away from other departments. The decision is up to him, and his boss will trust his judgment. What should Chris do? Is it all right to let a personal relationship influence his budgeting decisions?
James Burrow is the loan officer for the National Bank of Dallas.National has a loan of $325,000 outstanding to Regional Delivery Service, a companyspecializing in delivering products of all types on behalf of smaller companies. National’scollateral on the loan consists of 25 small delivery trucks with an average original cost of$24,000.Burrow is concerned about the collectibility of the outstanding loan and whether thetrucks still exist. He therefore engages Samantha Altman, CPA, to count the trucks, usingregistration information held by Burrow. She was engaged because she spends most ofher time auditing used automobile and truck dealerships and has extensive specializedknowledge about used trucks. Burrow requests that Altman issue a report stating thefollowing:1. Which of the 25 trucks is parked in Regional’s parking lot on the night of June 30,2013.2. Whether all of the trucks are owned by Regional Delivery Service.3. The condition of each truck, using the guidelines of poor, good,…
The University has a graduate school of business. The Vice-President of Finance of the University says he will not allow a class to run unless it has six students. Only three students sign up for the class. The VP states the professor can run the class at half pay. The school is not near its capacity. Evaluate this using the principles of management and cost accounting.
Suppose Frances earns $825 per week working as a programmer for PC Pros. She uses $9 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Dmitri $450 per week to work the cash register. Dmitri uses $175 to purchase software from PC Pros. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Frances spends $9 to buy a box of aspirin. Frances earns $825 per week working for PC Pros. Dmitri spends $175 to purchase software from PC Pros. Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply. a. Frances's labor b. The $450 per week Dmitri earns working for Pillmart Pharmacy c. The aspirin Frances receives d. The $175 Dmitri spends to purchase software from PC Pros
The Dotson Company, owner of Bleacher Mall, charges Rich Clothing Store a rental fee of $600 per month plus 5% of yearly profits over $500,000. Matt Rich, the owner of the store, directs his accountant, Ron Hamilton, to increase the estimate of bad debt expense and warranty costs in order to keep profits at $475,000. Instructions Answer the following questions. a. Should Hamilton follow his boss’s directive?. b. Who is harmed if the estimates are increased? c. Is Matt Rich’s directive ethical?