Question

Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...

Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $19,000 bill from her accountant for consulting services related to her small business. Reese can pay the $19,000 bill anytime before January 30 of next year without penalty. Assume Reese’s marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 4 percent on her investments.

a. What is the after-tax cost if she pays the $19,000 bill in December?

b. What is the after-tax cost if she pays the $19,000 bill in January? Use Exhibit 3.1. (Round your answer to the nearest whole dollar amount.)

c. Based on requirements a and b, should Reese pay the $19,000 bill in December or January?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer is attached below

Please rate my answer

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $28,000 bill from her accountant for consulting services related to her small business. Reese can pay the $28,000 bill anytime before January 30 of next year without penalty. Assume Reese’s marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 12 percent on her...
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $35,000 bill from her accountant for consulting services related to her small business. Reese can pay the $35,000 bill anytime before January 30 of next year without penalty. Assume Reese’s marginal tax rate is 32 percent this year and will be 37 percent next year, and that she can earn an after-tax rate of return of 10 percent on her...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $44,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $44,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 9 percent on her investments. a. What is...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $30,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $30,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 37 percent this year and next year, and that she can earn an after-tax rate of return of 4 percent on her investments. a. What is...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $19,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $19,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 32 percent this year and next year, and that she can earn an after-tax rate of return of 6 percent on her investments 1- What is...
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December, she received a $45,000 bill from her accountant for consulting services related to her small business. Reese can pay the $45,000 bill anytime before January 30 of next year without penalty. Assume Reese's marginal tax rate is 32 percent this year and 35 percent next year, and that she can earn an after-tax rate of return of 10 percent on her investments. a....
a. Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In...
a. Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $20,000 bill from her accountant for consulting services related to her small business. Isabel has plenty of cash in the bank to cover the bill and can pay the $20,000 bill any time before January 5 of next year without penalty. Assume her marginal tax rate is 30 percent this year and next year, and that she can earn...
Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late...
Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December he performed $18,000 of legal services for a client. Manny typically requires his clients to pay his bills immediately upon receipt. Assume Manny’s marginal tax rate is 40 percent this year and next year, and that he can earn an after-tax rate of return of 8 percent on his investments. a. What is the after-tax income if Manny sends his client the bill...
Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late...
Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late December, he performed $22,000 of legal services for a client. Hank typically requires his clients to pay his bills immediately upon receipt. Assume his marginal tax rate is 32 percent this year and will be 37 percent next year, and that he can earn an after-tax rate of return of 5 percent on his investments. a. What is the after-tax income if Hank sends...
Maud, a calendar year taxpayer, is the owner of a sole proprietorship that uses the cash...
Maud, a calendar year taxpayer, is the owner of a sole proprietorship that uses the cash method. On February 1, 2019, she leases an office building to use in her business for $197,250 for an 18-month period. To obtain this favorable lease rate, she pays the $197,250 at the inception of the lease. How much rent expense may Maud deduct on her 2019 tax return? Round any calculations to two decimal places and round the final answer to the nearest...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT