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- Develop short definitions for the following terms: balance sheet, income statement, and fundamental accounting equationCharles lives in Houston and operates a small company selling drones. On average, he receives $849,000 per year from selling drones. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $390,000. He also pays several utility companies, as well as his employees wages totaling $359,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $72,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Charles does not operate the drone business, he can work as a programmer and earn a yearly salary of $25,000 with no additional monetary costs, and rent out his storefront at the $72,000 per year rate. There are no other costs faced by Charles in running this drone company. Identify each of Charles’s costs in the following table as either an implicit cost or an explicit cost of selling drones. Implicit Cost Explicit Cost The salary Charles could…On a balance sheet, a corporation’s economic obligations to nonowners are called a. Owners’ equity b. Liabilities c. Assets d. Retained earnings.
- Manuel lives in Dallas and operates a small company selling drones. On average, he receives $778,000 per year from selling drones. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $462,000. He also pays several utility companies, as well as his employees wages totaling $257,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $12,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the drone business, he can work as a blogger and earn a yearly salary of $50,000 with no additional monetary costs, and rent out his storefront at the $12,000 per year rate. There are no other costs faced by Manuel in running this drone company. Identify each of Manuel’s costs in the following table as either an implicit cost or an explicit cost of selling drones. Implicit Cost Explicit Cost The wholesale cost for the…Bob lives in Miami and operates a small company selling bikes. On average, he receives $778,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $462,000. He also pays several utility companies, as well as his employees wages totaling $257,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $12,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Bob does not operate the bike business, he can work as a blogger and earn a yearly salary of $50,000 with no additional monetary costs, and rent out his storefront at the $12,000 per year rate. There are no other costs faced by Bob in running this bike company. Accounting Profit Economic Profit17.7 Rotana Construction, Inc., has operated for the last 21 years in a northern U.S. state where the state income tax on corporate revenue is 6% per year. Rotana pays an average federal tax of 23% and reports taxable income of $7 million. Because of pressing labor cost increases, liability insurance premium increases, and other cost increases, the president wants to move to another state to reduce the total tax burden. The new state may have to be willing to offer tax allowances or an interest-free grant for the first couple of years in order to attract the company. You are an engineer with the company and are asked to do the following. (a) Determine the effective tax rate for Rotana. (b) Estimate the state tax rate that would be necessary to reduce the overall effective tax rate by 10% per year. (c) Determine what the new state would have to do financially for Rotana to move there and to reduce its effective tax rate to 22% per year.
- Which of the following costs would not be included as part of manufacturing overhead? (A) supplies for the office workers (B) Insurance on production equipment (C) Depreciation of product equipment (D) Direct labor costsIncome taxes are calculated based on gross income less certain allowabledeductions. They are also assessed on gains resulting from the disposal of property. What is a 10-word or less definition appropriate for a corporation, based on Wikipedia, for each of the following factors? a. Gross income. b. Expenses. c. Depreciation. d. Interest. e. Property (e.g., equipment) disposition.Some commonly known costs associated with manufacturing operations arelisted below:(a) Paint shop superintendent's salary(b) Labor costs in assembling a product(c) Rent on a factory building(d) Radio-frequency identification (RFID) units embedded in the final productduring shipping ( e) Depreciation on machinery(f) Lubricants used for machines(g) CPU chips used in notebook production(h) The paint used in automobile production(i) Janitorial and custodial salaries(j) Coffee beans used in packaging roasted coffee(k) Sugar used in ice cream production(I) Electricity for the operation of machines(m) Electricity for heating and cooling the factory building(n) The glue used in electronic board productionClassify each cost as being either variable or fixed with respect to volume or level of activity.
- Some commonly known costs associated with manufacturing operations arelisted below:(a) Paint shop superintendent's salary(b) Labor costs in assembling a product(c) Rent on a factory building(d) Radio-frequency identification (RFID) units embedded in the final productduring shipping ( e) Depreciation on machinery(f) Lubricants used for machines(g) CPU chips used in notebook production(h) Paint used in automobile production(i) Janitorial and custodial salaries(j) Coffee beans used in packaging roasted coffee(k) Sugar used in icecream production(I) Electricity for operation of machines(m) Electricity for heating and cooling the factory building(n) Glue used in electronic board productionClassify each cost as being either variable or fixed with respect to volume or level of activity.At the beginning of the year, an audio engineer quit his job and gave up a salary of $175,000 per year in order to start his own business, Sound Devices, Inc. The new company builds, installs, and maintains custom audio equipment for businesses that require high-quality audio systems. A partial income statement for the first year of operation for Sound Devices, Inc., is shown below: Revenues Revenue from sales of product and services $970,000 Operating costs and expenses Cost of products and services sold 355,000 Selling expenses 155,000 Administrative expenses 45,000 Total operating costs and expenses $555,000 Income from operations $415,000 Interest expense (bank loan) 60,000 Legal expenses 88,000 Corporate income tax payments 90,000 Net income $177,000 To get started, the owner of Sound Devices spent $100,000 of his personal savings to pay for some of the capital equipment used in the business. During the first year of operation, page 34the owner of Sound Devices could have earned…EFG Corporation ("EFG") is a Canadian-controlled private corporation and has correctly calculated its net income for tax purposes to be $857,000 for the year ending December 31, 2019, as shown below: Business income $710,000 Taxable capital gains $80,000 Taxable dividends from Canadian public corporations $32,000 Taxable dividends from XYZ Inc. $5,000 Interest on five-year bonds $30,000 Net income for tax purposes $857,000 EFG owns 100% of the shares of XYZ. For the current year, XYZ claimed the small-business deduction on $80,000 of its active business income. Additional information: • EFG made charitable donations of $45,000 during the year • Net capital losses were $35,000 as of January 1, 2019 • Non-capital losses were $50,000 as of January 1, 2019 • At the end of the previous year, EFG had a balance in its non-eligible refundable dividend tax on hand (RDTOH) account of $18,000 and GRIP of $2,000. XYZ received a dividend refund of $1,917 from its non-eligible RDTOH when it paid…