What is ceos compensation package at silver cloud computing

Assignment Help Accounting Basics

Reference no: EM131976839

Problem

Silver Cloud Computing is a new company that provides cloud computing services. The company will begin operations on April 1, 2017. It acquired financing from the issuance of common stock for $75,000,000 and long-term debt for $50,000,000. The following projected income statement and balance sheet were prepared by the external accountant prior to the start of operations. All amounts are in thousands.

Silver Cloud Computing Projected Income Statement First Year of Operations (in thousands)
Sales		$400,000
Expenses:
Wages and salaries (includes CEO salary of $1,000)	$125,000
Bad debt expense	1,500
Depreciation Marketing Expense Occupancy Expense	40,000 50,000 99,000
Research and Development (includes R&D salaries & wages and other R&D expenditures)	80,000
Total Expenses		395,500
Operating income before bonus		4,500
Bonus		225
Operating income		4,275
Interest expense		2,500
Income before taxes		1,775
Income taxes (40%)		710
Net income		$ 1,065

Silver Cloud Computing Projected Balance Sheet March 31, 2018 (in thousands)
Assets:
Cash	$ 2,430
Accounts receivable, net of allowance of 4,000	48,500
Net computer equipment	80,000
Total assets	$130,930
Liabilities & Shareholders' Equity:
Accounts payable	$ 5,000
Long-term debt	50,000
Common stock	75,000
Retained earnings	930
Total liabilities and shareholders' equity	$130,930

1. Decrease research and development expenditures from 20% of sales to 10% of sales.

2. Increase the estimated lives of the computer equipment from 3 years to 6 years.

3. Reduce the allowance for doubtful accounts from 10% of accounts receivable to 5% of accounts receivable.

4. Decrease marketing expense from 12.5% of sales to 8% of sales.

Additional notes:

The CEO's compensation package at Silver Cloud Computing is a $1,000,000 salary with a cash bonus of 5% of operating income before the bonus.

Original depreciation of the computers was calculated using straight-line depreciation over a 3 year period with no salvage value.

Reference no: EM131976839

Questions Cloud

Evaluate changes that silverados management is considering : Evaluate the changes that Silverado's management is considering, and discuss the specific steps that Larry Stewart should take to resolve the situation.

What is total paid-in capital at the end : Silver Corporation was organized on January 3, 2012. The firm was authorized to issue 300,000 shares. What is total paid-in capital at the end of 2012?

Depiction of a reaction between a carboxylic acid : Below is a generalised depiction of a reaction between a carboxylic acid (in this case butanoic acid) and an alcohol (ethanol). What type of reaction is this

Calculate the expected return for different stock : Consider the following probability distribution for stocks A and B for questions 1 and 2. Calculate the Expected return for Stock A and for Stock B.

What is ceos compensation package at silver cloud computing : What is the CEO's compensation package at Silver Cloud Computing is a $1,000,000 salary with a cash bonus of 5% of operating income before the bonus.

Net ionic equation for the reaction : What pH range would you expect the equivalence point to lie for the titration of a weak base (such as ammonia) with a strong acid (such as HCl)?

Calculate total sales using the sum function : Calculate total sales for each quarter. (March, June, and September each represent a quarter.). A quarter is three months.

Explain why two 2pz or two 2px orbitals : Could you please explain why two 2pz or two 2px orbitals form a sigma bond whereas two 2py orbitals form a pi bond?

Properties of a hydrogen bonding substance : Do the values bear out the assertion that hydrogen bonds are about one tenth as strong as covalent bonds? How does such a 'weak' force

User Account

All Pages