Problem 06-06 (Algo) [LO 6-5]Besito Company, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, itreceived the following cash payments. To what extent does each payment represent current taxable income to Besito?Required:a. $1,092 repayment of a loan from an employee. Besito loaned $1,050 to the employee six months ago, and theemployee repaid the loan with interest.b. $1,150 deposit from a customer who rented mechanical equipment. Besito must return the entire deposit when thecustomer returns the undamaged equipment.c. $11,100 short-term loan from a local bank. Besito gave the bank a written note to repay the loan in one yearpercent interest.d. $814 prepaid rent from the customer described in part (b). The rent is $11 per day for the 74-day period fromDecember 17 through February 28.For all requirements, leave no cells blank - be certain to enter "0" wherever required.a. Taxableincomeb. Taxableincomec. Taxableincomed. TaxableincomeAmount6

A taxable income on the basis of the cash basis is the taxable income which has been received by the…

Answered: Besito Company, a calendar year, cash…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In Year 1, George Michael Co. had financial accounting income of $850,000 before taxes, including $250,000 paid on premiums for life insurance of the C-suite officers (non-deductible expense). Other differences include $500,000 of rent revenue received in advance on January 1 Year 1 for a 5-year rent agreement to a customer ($100,000 earned each year) and an additional $150,000 difference because of tax depreciation (i.e., tax depreciation exceeds book depreciation). If George Michael Co. has a tax rate of 21%, what is the income tax expense on the December 31 Year 1 financial statements?
Bonita Corporation operates on a calendar year basis. The company is in its first year of operations and received its annual property tax bill on March 31 for $21900. The bill is due May 1. Even though the company records adjusting entries on a monthly basis, no entries related to property taxes have been recorded. The March 31 entry to record property tax should be O debits to prepaid property tax and property tax expense for $16425 and $5475, respectively and credits to property tax payable and cash for $16425 and $5475, respectively. O debit property tax experise $5475 and credit property tax payable $5475. O debit property tax expense $21900 and credit property tax payable $21900. debits to prepaid property tax and property tax expense for $16425 and $5475, respectively and credit to property tax payable for $21900.
Joshua Pty Ltd runs a furniture retailing business. During the tax year 19-20, Joshua provided customers with various loan arrangements to finance the purchase of furniture. Total expenses relating to the loan arrangements (specific loan calculation software and computers) totaled $33,000 (inc. GST) Joshua’s total expenses during the year (All expenses to run the business included the $33,000) were $2.2 million (inc. GST). Joshua Pty Ltd is registered for GST purposes. Required: Discuss Joshua’s Ability to claim the $3,000 Input Tax Credit?
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The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Paid $62,000 cash for other operating expenses during the year. Paid the sales tax due on $110,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $201,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $102,500 of other…

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