Chapter 15, Problem 2BIC

Many students attending college in the United States find themselves having to take out loans to attend school while obtaining their education.  Do you believe that the special for AGI deduction for students should be made permanent? Also, do you believe that the amount offered as a maximum deduction is too high, too low, or just right? What would be the impact of changing it?

One Corporation has two potential suppliers. Both are supplying the items at similar list prices and trade,discounts. However, Supplier A.offered a credit term of 2/10, n/30 and the other offered a term of 3/10, n/40. Which of the following statements is true?  a. Alpha should choose Supplier A and pay on the 10th day.b. Alpha should choose Supplier B and pay on the 10th day.c. Alpha can choose either supplier and always pay on the 10th day.d. If Alpha chose Supplier B, the former should pay on the 30th day so that it can maximize the trade discount

Lokalalo is a New Zealand company helping Kiwi families redesign their homes. The balance date is 31 August.   You have studied the theory and want to put what you have learnt into practice.    Paulo Jr. wonders why the profit after tax is not the same as the cash flows from operating activities. Explain to Paulo Jr. two reasons why these two numbers are usually different and provide an example for each difference?

Explain why proponents of LIFO argue that it provides a better match of revenue and expenses. In what situations would it not provide a better match? Be specific. The management of the Esquire Oil Company believes that the wholesale price of heating oil that they sell to homeowners will increase again as the result of increased political problems in the Middle East. The company is currently paying $0.80 per gallon. If they are willing to enter an agreement in November 2021 to purchase a million gallons of heating oil during the winter of 2022, their supplier will guarantee the price at $0.80 per gallon. However, if the winter is a mild one, Esquire would not be able to sell a million gallons unless they reduced their retail price and thereby increase the risk of a loss for the year. On the other hand, if the wholesale price did increase substantially, they would be in a favorable position with respect to their competitors. The company’s fiscal year-end is December 31. Discuss the…

Noora is considering selling her store’s old equipment to Rashid. Rashid would like to pay 1000 Rial for the equipment. How can Noora record the value of the equipment in her business’ accounting records? Should Noora write the market value, Noora’s cost, or the amount she will receive from the sale? a. Faithful Representation b. Historical cost principle c. Stable-monetary-unit assumption d. Entity assumption

1. If the company accepts this offer and rejects some business from regular customers so as not to exceed capacity, what would be the total net operating income next year?  2. If the company rejects the offer of the foreign distributor, how much is the opportunity cost?

Mr. Assad a Wholesaler buys a product from the Al Mazoon  manufacturing company at RO 700 and pays VAT at the prescribed rate of 10%. a retailer buys a product from the wholesaler at RO 800 and the wholesaler charges VAT at the prescribed rate of 10%. The retailer fixes the price at RO 1000 and charges VAT at the same rate. Mr. Yousuf buys the product from the ABC LLC.                                          What is the price including VAT that Mr. Yousuf has to pay to buy the Product? What is input tax and output tax? Discuss Amount of output tax for the retailer and wholesaler. How much VAT does the retailer pay to the government? VAT is different from sales tax system. Explain and give reason to your answer

Your company has a travel policy that reimburses employees for the “ordinary and necessary” costs of business travel. Employees often mix a business trip with pleasure by either extending the time at the destination or traveling from the business destination to a nearby resort or other personal destination. When this happens, an allocation must be made between the business and personal portions of the trip. However, the travel policy is unclear on the allocation method to follow.  Consider this example. An employee obtained a business-class ticket for $9,694 and traveled the following itinerary.  From To Miles One-Way Regular Fare   Purpose Chicago Paris 4,110 $ 3,580   Business Paris Rio de Janeiro 5,700   4,500   Personal Rio de Janeiro Chicago 5,250   3,310   Return     On the date of the flights between Chicago and Paris (and return), a restricted round-trip fare of $4,980 was available.   Required: a. Compute the business portion of the airfare according to each of…

A U.S. company purchases medical lab equipment from a Japanese company. The Japanese company requires payment in Japanese yen. In this transaction, the dollar would be referred to as the ___________ currency. a. measurement b. denominated c. purchasing d. selling