Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method?a. $2,400b. $4,800c. $8,000d. $10,800

Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year, Watkins still holds only $20,000 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method?a. $2,400b. $4,800c. $8,000d. $10,800

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter22: S Corporations

Section: Chapter Questions

Problem 23CE

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Choose the correct. Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for$90,000. At the end of the year, Watkins still holds only $20,000 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method?a. $2,400b. $4,800c. $8,000d. $10,800
Jubilee, Inc., owns 30 percent of JPW Company and applies the equity method. During the current year, Jubilee buys inventory costing $75,600 and then sells it to JPW for $126,000. At the end of the year, JPW still holds only $27,900 of merchandise. What amount of gross profit must Jubilee defer in reporting this investment using the equity method? Multiple Choice $3,348. $10,848. $6,048. $13,548.
A owns 30% of the stock of B. During the year, A sold inventory to B for $ 96,000. A charges a profit of 20% on cost. At the end of the year, B had $ 24,000 of the inventory still on hand. What is the unrealized profit on this sale? (A) $ 1,200 (B) $ 1,440 (C) $ 16,000 (D) $ 19,200
Palm Company owns 100% of Soso Company. During year X1, Soso sold merchandise costing $50,000 to Palm for $80,000. As of 12/31/X1, 40% of the merchandise remained in Palm's inventory. Assuming that Soso reported a $100,000 net income an paid $20,000 of dividends in year X1, how much investment income should should Palm recognize in year X1?
Company L sold an inventory item to Firm M for $40,000. Company L’s marginal taxrate is 21 percent. In each of the following cases.Required:a. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $10,000 cash and its note for $30,000. The note is payable two yearsfrom the date of sale. Company L’s basis in the inventory item was $15,700.b. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $5,000 cash and its note for $35,000. The note is payable two yearsfrom the date of sale. Company L’s basis in the inventory item was $47,000.c. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $40,000 cash. Company L’s basis in the inventory item was $18,000.d. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $40,000 cash. Company L’s basis in the inventory item was $44,000
Company L sold an inventory item to Firm M for $40,000. Company L’s marginal taxrate is 21 percent. In each of the following cases.Required: Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $10,000 cash and its note for $30,000. The note is payable two yearsfrom the date of sale. Company L’s basis in the inventory item was $15,700.b. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $5,000 cash and its note for $35,000. The note is payable two yearsfrom the date of sale. Company L’s basis in the inventory item was $47,000.c. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $40,000 cash. Company L’s basis in the inventory item was $18,000.d. Compute Company L’s after-tax cash flow from the sale when Firm M’s paymentconsisted of $40,000 cash. Company L’s basis in the inventory item was $44,000
Citrus Corporation is a calendar year S corporation with the following current year information: Operating loss Liabilities: Notes payable, Big Apple Bank 60,000 Notes payable, Grapefruit (individual) 40,000 On January 1 Grapefruit bought 60% of Citrus Corporation for $90,000. She then loaned Citrus Corporation $40,000 (the amount above under liabilities). How much of the operating loss may Grapefruit deduct currently? Assume the excess business loss limitation does not apply. O $114,000 $(240,000) O $160,000 O $130,000 $150,000
Ram Company bought all the shares of Lal Company on January 1, Year 1 for 2,000,000. During that year Ram sold Lal for 80,000. inventory that had cost him $40,000. At the end of the period, LAL still had not sold the inventory to outsiders, but still owed Ram the $50,000. For that year, Ram has a balance of 550,000 in cost of goods sold and Lal of 150,000. What should be the total cost of goods sold presented in the consolidated statement of income and expenses? 650,000 700,000 660,000 640,000
Par Inc owns 77.11% of Sub Corp. During the year, Par sold inventory to Sub for $79,271. Exactly 47.83% of this inventory remained in Y's warehouse at year end. Sub sold inventory to Par for $39,636 of which 39.47% remained in X's warehouse at year end. Both companies are subject to a tax rate of 28.35%. The gross profit percentage on sales is 20% for both companies. What is the after-tax dollar value of Par's unrealized profits during the year on its sales to Sub? a. $5,433 b. $5,977 c. $5,705 d. $5,569 e. $5,841
55)Grounds for Divorce Coffee Corporation had sales of $3 million this past year. Its cost ofgoods sold was $1.1 million and its operating expenses were $400,000. Interest expenseson outstanding debts were $160,000, and the company paid $40,000 in preferred stockdividends. The company received interest income of $14,000. Determine Grounds’taxable income.
Citrus Corporation is a calendar year 5 corporation with the following current year information: Operating loss Liabilities: Notes payable, Big Apple Bank 570,000 Notes payable, Grapefruit (individual) 380,000 On January 1 Grapefruit bought 60% of Citrus Corporation for $855,000. She then loaned Citrus Corporation $380,000 (the amount above under labilities). How much of the operating loss may Grapefruit deduct currently? Assume the excess business loss limitation does not apply. $1.425.000 $(2,280,000) $1,235,000 O 51.520,000 $1083.000
This year Barney purchased 440 shares of Bell common stock for $16.50 per share. At year-end the Bell shares were only worth $3.30 per share. What amount can Barney deduct as a loss this year?