ACCOUNTING 7 Lecture Notes - Lecture 5: Basic Income, Guaranteed Minimum Income, Gini Coefficient

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5 Jan 2023

School

UT-Dallas

Department

Accounting

Course

ACCOUNTING 7

Professor

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Document Summary

Inequality refers to the unequal distribution of income or wealth among a group of people. Income inequality can be caused by a variety of factors, including differences in education and job opportunities, the prevalence of low-paying jobs, and the concentration of wealth in the hands of a small number of people. Wealth inequality, or the unequal distribution of wealth, can be caused by similar factors, as well as inheritance, differences in saving and investment behavior, and differences in the returns on investment. Inequality can have negative consequences for society, as it can lead to social and economic instability, and can make it harder for people to improve their circumstances. There are a number of policy solutions that have been proposed to address inequality, including progressive taxation, universal basic income, and investments in education and job training. There are several ways that income and wealth inequality can be measured.

Related Questions

Diane Stacy, who has a 33 percent marginal income tax rate and a3.8 percent Medicare contribution tax rate on investment income,owns 13,800 shares in Tobler Mutual Fund. This year, she receivedan $88,400 dividend from Tobler. Assume the taxable year is 2016.Compute Dianeâs total federal tax on this income if her Form 1099from Tobler reported that:

a. The entire dividend was a qualified dividenddistribution.

Income tax:

Medicare contribution tax:

Total Federal Tax:

b. $61,000 was an ordinary dividend and $27,400was a qualified dividend distribution.

Income tax:

Medicare contribution tax:

Total Federal Tax:

c. $45,500 was a qualified dividenddistribution and $42,900 was a capital gain distribution.

Income tax:

Medicare contribution tax:

Total Federal Tax:

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The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamentalâs fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017.

Mar.	31	Acquired 8% Distribution Transformers Corporation bonds costing $420,000 at face value.
Sep.	1	Acquired $960,000 of American Instruments' 10% bonds at face value.
Sep.	30	Received semiannual interest payment on the Distribution Transformers bonds.
Oct.	2	Sold the Distribution Transformers bonds for $455,000.
Nov.	1	Purchased $1,500,000 of M&D Corporation 6% bonds at face value.
Dec.	31	Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are:


American Instruments bonds	$	912,000
M&D Corporation bonds	$	1,562,000

(Hint: Interest must be accrued.)

Required:
1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end.
2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.

Note:

Journal entry requiremant 1:

1)Record the acquisition of 8% Distribution Transformers Corporation bonds costing $420,000 at face value.

2)Record the acquisition of 8% Distribution Transformers Corporation bonds costing $420,000 at face value.

3)Record the entry for the semiannual interest received on the Distribution Transformers bonds.

4)Record the entry to adjust to fair value on the date of sale of the Distribution Transformers bonds.

5)Record the entry for sale of Distribution Transformers bonds for $455,000.

6)Record the acquisition of $1,500,000 of M&D Corporation 6% bonds at face value.

7)Record the interest accrual for American Instruments bonds.

8)Record the interest accrual for M&D bonds.

9)Record the entry for Fair-value adjustment.

Requirement 2:

Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments. (Amounts to be deducted should be indicated with a minus sign.)


Income tatement:



		$0
Statement of comprehensive income:



Balance sheet:
Assets
Current Assets



Investments

		$0
Shareholdersâ Equity

ochredinosaur665

Specifically, three separate options are being considered to generate an average of $4,000 per workerâa flat mandatory premium, a doubling of the current 7.65% payroll tax that comes out of people's pay to cover social security and Medicare, and a 7% increase in income tax.

Think about funding plans from the perspective of three workers:

One who makes $25,000 per year

One who makes the same in salary but also has $1,000 in investment income

One who makes $85,000 per year, including $10,000 in investment income

Based on the above scenario, answer the following questions:

Which of the three funding measures, considering the relative financial contributions it imposes on individuals such as these, would you support and why?

How has the emergence of different types of health insurance plansâFFS, health maintenance organizations (HMOs), preferred provider organizations (PPOs), and capitationâaffected the trends in healthcare services today?

What economic and societal factors affect the demand and pricing of healthcare services in today's health insurance market?

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ACCOUNTING 7 Lecture Notes - Lecture 5: Basic Income, Guaranteed Minimum Income, Gini Coefficient

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