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Cameron Bly is a sales manager for an automobile dealership. He earns a bonus every year based on revenue from number of autos sold in year less related warranty expenses. Actual warranty expenses have varied over the prior 10 years from a low of 3 percent of an automobile's selling price to a high of 10 percent. In the past, Bly has tended to approximation warranty expenses on high end to be conservative. He must work with dealership's accountant at year-end to turn up at warranty expense accrual for cars sold each year.
Required
1. Does warranty accrual decision create any ethical dilemma for Bly?
2. Since warranty expenses vary, what % do you think Bly could select for the current year? Justify your response.
Joel has four transactions involving the sale of capital assets during the year resulting in a STCG of $5,000, a STCL of $12,000, a LTCG of $1,800 and a LTCL of $1,000. As a result of these transactions, Joel will:
Crown Industries has the following information about its standards and production activity for December-Assume the allocation base for fixed overhead costs is the number of units to be produced.
On January 1, 2010, Parabolic Company issued 8% bonds with a face amount of $72.9 million, dated January 1. The bonds mature in 2025 (15 years). The market yield for bonds of similar risk and maturity is 10%. Interest is paid semiannually.
Kordel Inc. acquired 75% of the outstanding common stock of Raxston Corp. Raxston currently owes Kordel $500,000 for inventory acquired over the past few months.
Many firms recognize revenus at the point of shipment. This provides an incentive to accelerate revenues by shipping goods at the end of the quarter.
Recording Transactions Affecting the Enterprise Fund and Business-Type Activities, Prepare general journal entries to record the December 31, 2013, accounts and balances for the Water Utility Fund, selecting the corresponding accounts from drop-down..
In 2012, Warren sold his personal use automobile for a loss of $9,000. He also sold a personal coin collection for a gain of $10,000. As result of these sales, $1,000 is subject to income tax.
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Precision Numbers, Inc., manufactures pocket calculators. Costs incurred in making 25,000 calculators in April included $85,000 of fixed manufacturing overhead. The total absorption cost per calculator was $12.50.
Case Study Question: As a reviewer of BC Securities Commission, you're in the procedure of reviewing the financial statements of public companies.
In November 2011, Kendall purchases a computer for $4,000. She does not use Sec. 179. She only uses the most accelerated depreciation method possible.
Under the terms of his salary agreement, president Juan Rivera has an option of receiving either an immediate bonus of $40,000, or a deferred bonus of $75,000 payable in 10 years.
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