Solved

Sigma Tools Will Lease a Computerized Stamping Machine from StarBanc

question 48

Multiple Choice

Sigma Tools will lease a computerized stamping machine from StarBanc.The machine costs $500,000 and will be depreciated on a straight-line basis to a zero book value over the next 5 years, which is also the term of the lease.The expected salvage value in 5 years is $25,000.StarBanc's marginal tax rate is 30 percent and it requires an after- tax rate of return of 12 percent on investments of this type.What annual, beginning of the year, pretax lease payment must StarBanc receive to earn the required 12 percent return?

Understand the classification and recording of business transactions and their impact on owner's equity.

Comprehend the methods used to correct errors in accounting records.

Recognize the order of the flow of accounting data from journalizing to financial statement preparation.

Understand the distinction between monotheistic and polytheistic religions.

Definitions:

Revenue In Advance

Income received by a company for goods or services that are to be provided in the future, also known as deferred revenue.

Liability Account

An account on the balance sheet representing amounts owed to creditors or other parties, typically categorized as current or long-term.

Adjusting Entry

A journal entry made in accounting records to correct or allocate revenues and expenses to the appropriate period.

Wages Expense

This is the total amount of wages a company pays to its employees, which is considered an expense on the income statement.