. Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $150,000 on December 31, 20X2. During the year 20X2, the corporation purchased additional inventory of $375,000. If cost of goods sold for 20X2 is $470,000, what was the beginning inventory at January 1, 20X2? a.$255,000 b.$245,000 c.$55,000
. Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $150,000 on December 31, 20X2. During the year 20X2, the corporation purchased additional inventory of $375,000. If cost of goods sold for 20X2 is $470,000, what was the beginning inventory at January 1, 20X2? a.$255,000 b.$245,000 c.$55,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $150,000 on December 31, 20X2. During the year 20X2, the corporation purchased additional inventory of $375,000. If cost of goods sold for 20X2 is $470,000, what was the beginning inventory at January 1, 20X2?
a.$255,000
b.$245,000
c.$55,000
d.$310,000
e.None of these choices are correct.
2. Martin has a home office for his business as an agent for rock-and-roll bands. The business shows a loss of $2,000 before home office expenses. How should the home office expenses be treated?
a. Because of the business loss, home office expenses (other than mortgage interest and property taxes allocated to the office) cannot be deducted in the current year but can be carried forward to the next year.
b. Because of the business loss, home office expenses cannot be deducted and are lost forever.
c. The home office expenses increase the business loss in the year they are incurred and are 50 percent deductible in that year.
d. The home office expenses increase the business loss in the year they are incurred and are fully deductible in that year.
3. In 2021, Jack is a lawyer who is a member at Ocean Spray Country Club where he spends $7,200 in dues, $4,000 in business meals at the dining room and golf course bar, and $2,000 in green fees to entertain clients. He has separate invoices for the meals. He is also a member of the local Rotary club where he meets potential clients. The dues for the Rotary club are $1,200 a year. How much of the above expenses can Jack deduct as business expenses?
a.$6,200
b.$4,200
c.$3,200
d.$14,400
e.None of these choices are correct.
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