The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and

Response:

advertising expense 387 debit

prepaid expense 387 credit

--to document expired advertising at the year's end ---

Details:

1,548 represents the value over 36 months

From April to December 31, 9 months have elapsed thus:

1,548 x 9/36 = 387 expired advertising

We will reduce our prepaid account and record the advertising expense for the expired amount

The prepaid expense is classified as an asset since it grants us the right to receive advertising for our product and brand during the contract period. Therefore, we credit it to decrease it

while the expense will debit our equity

Answer:

Staples Corporation

A schedule calculating the increase in income tax liabilities for December 31 across the years 2020, 2021, 2022, and 2023:

Year          Pre-tax         GAAP Tax-  Tax Taxable   Income Tax      Deferred

          GAAP Income  able Income    Income      Payable Expense  Liability

                  (a)                     (b)                (c)             25%       25%   (Recovery)

                                                                                of (c)      of (b)  

2020     $230,000      $200,000     $110,000  $27,500 $50,000  $22,500

2021        250,000        220,000      250,000    62,500   55,000     (7,500)

2022       240,000         210,000      240,000    60,000   52,500     (7,500)

2023       240,000         210,000      240,000    60,000   52,500     (7,500)

Total     $960,000      $840,000    $840,000  $210,000 $210,000      0

Explanation:

a) Data and Calculations:

Cost of the depreciable asset = $120,000

Estimated useful life = 4 years

Residual value = $0

Tax depreciation expense = 100% for 2020

GAAP depreciation expense = 25% for 2020, 2021, 2022, and 2023

Tax rate for each year = 25%

Year          Pre-tax         GAAP Tax-  Tax Taxable   Income Tax      Deferred

          GAAP Income  able Income    Income      Payable Expense  Liability

                  (a)                     (b)                (c)             25%       25%   (Recovery)

                                                                                of (c)      of (b)  

2020     $230,000      $200,000     $110,000  $27,500 $50,000  $22,500

2021        250,000        220,000      250,000    62,500   55,000     (7,500)

2022       240,000         210,000      240,000    60,000   52,500     (7,500)

2023       240,000         210,000      240,000    60,000   52,500     (7,500)

Total     $960,000      $840,000    $840,000  $210,000 $210,000      0

Tax Taxable Income for 2020 = $110,000 ($230,000-$120,000)

GAAP Taxable Income = GAAP minus annual depreciation

b) Tax Taxable Income equals GAAP income of $230,000 less 100% depreciation ($120,000) for the first year and 0% for the following years. This results in temporary differences in 2020 between the calculated tax payable and the tax expense for later years. Although there was a tax obligation established in the first year, it is counterbalanced in the years that follow.

<span>If the FDIC possesses an insurance fund of $67.8 billion and needs to allocate 7.6% towards covering several failed banks, how much funds remain in the reserve? <span>Approximately $62.65 billion remains in the fund. </span></span>

To calculate:

Approximate remaining funds = ($67.8 billion)(0.076) = $5.15 billion

<span>Approximate remaining funds = $67.8 billion - $5.15 billion </span>

<span>Approximate remaining funds = $62.65 billion</span>

Answer: This chart indicates that the marginal cost initially declines as the level of production rises.

Marginal cost is the expense incurred for producing an additional unit of a product. When production levels increase, marginal costs tend to fall at first.

In the short run, inputs like capital remain constant while labor becomes the variable factor changing with the number of units produced. Initially, increasing labor enhances productivity, lowering marginal costs. However, as even more labor is added, its productivity diminishes, triggering the law of diminishing marginal returns, which results in a rising marginal cost curve.

Information Provided:

Yearly Demand (D) = 200,000 × 12 = 2,400,000 units

Ordering Cost (S) = $500 each order

Carrying Cost (H) = 20% of the Unit Price = $10 × 20% = $2

Cost per Unit = $10

Calculations:

1) Optimal Order Quantity =

Optimal Order Quantity =

2)

Annual Holding Expense = (34,641 / 2) × 2

Annual Holding Expense = $34,641

3) Orders Each Year = Yearly Demand / Optimal Order Quantity

Orders Each Year = 2,400,000 / 34,641

Orders Each Year = 69.2820646

Orders Each Year = 69 (Approximately)

4) Yearly Transportation Variable Cost = Cost per Unit × Yearly Demand

Yearly Transportation Variable Cost = $0.10 × 2,400,000

Yearly Transportation Variable Cost = $240,000

5) Yearly Clerical Expense = Orders Each Year × Cost Each Order

Yearly Clerical Expense = 69.282 × $500

Yearly Clerical Expense = $34,641