Comprehensive Problem 07-63 (LO 07-1, LO 07-2, LO 07-3, LO 07-4) (Algo) [The following information applies to the questions displayed below.] During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets: Investment Assets 300 shares of IBM common 200 shares of IBM common 3,000 shares of Apple preferred 2,100 shares of Cisco common 420 shares of Vanguard mutual fund Date Acquired 11/22/2018 Purchase Price $ 10,580 4/3/2019 12/12/2019 8/14/2020 3/2/2021 *No commissions are charged when no-load mutual funds are bought and sold. 43,480 170,000 54,800 17,000 Broker's Commission Paid at Time of Purchase $ 100 300 1,300 550 No-load fund* Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund in 2021 and to reinvest in municipal bonds. The following investment assets were sold in 2021: Investment Assets 300 shares of IBM common 3,000 shares of Apple preferred 2,100 shares of Cisco common 451 shares of Vanguard mutual fund Date Sold 5/6 10/5 Sale Price $ 16,000 223,700 8/15 Broker's Commission Paid at Time of Sale $ 100 2,000 650 12/21 No-load fund* 63,480 18,000 *No commissions are charged when no-load mutual funds are bought and sold. The Howells' broker issued them a Form 1099-B showing the sales proceeds net of the commissions paid. For example, the IBM sales proceeds were reported as $15,900 on the Form 1099-B they received. In addition to the sales reflected in the table above, the Howells provided you with the following additional information concerning 2021: The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2021. In 2014, Mrs. Howell loaned $8,300 to a friend who was starting a new multilevel marketing company called LD3. The friend declared bankruptcy in 2021, and Mrs. Howell has been notified she will not be receiving any repayment of the loan. The Howells have a $4,600 short-term capital loss carryover and a $7,100 long-term capital loss carryover from prior years. The Howells did not instruct their broker to sell any particular lot of IBM stock. The Howells earned $4,150 in municipal bond interest, $4,150 in interest from corporate bonds, and $6,300 in qualified dividends. Assume the Howells have $187,500 of wage income during the year.
Comprehensive Problem 07-63 (LO 07-1, LO 07-2, LO 07-3, LO 07-4) (Algo) [The following information applies to the questions displayed below.] During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets: Investment Assets 300 shares of IBM common 200 shares of IBM common 3,000 shares of Apple preferred 2,100 shares of Cisco common 420 shares of Vanguard mutual fund Date Acquired 11/22/2018 Purchase Price $ 10,580 4/3/2019 12/12/2019 8/14/2020 3/2/2021 *No commissions are charged when no-load mutual funds are bought and sold. 43,480 170,000 54,800 17,000 Broker's Commission Paid at Time of Purchase $ 100 300 1,300 550 No-load fund* Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund in 2021 and to reinvest in municipal bonds. The following investment assets were sold in 2021: Investment Assets 300 shares of IBM common 3,000 shares of Apple preferred 2,100 shares of Cisco common 451 shares of Vanguard mutual fund Date Sold 5/6 10/5 Sale Price $ 16,000 223,700 8/15 Broker's Commission Paid at Time of Sale $ 100 2,000 650 12/21 No-load fund* 63,480 18,000 *No commissions are charged when no-load mutual funds are bought and sold. The Howells' broker issued them a Form 1099-B showing the sales proceeds net of the commissions paid. For example, the IBM sales proceeds were reported as $15,900 on the Form 1099-B they received. In addition to the sales reflected in the table above, the Howells provided you with the following additional information concerning 2021: The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2021. In 2014, Mrs. Howell loaned $8,300 to a friend who was starting a new multilevel marketing company called LD3. The friend declared bankruptcy in 2021, and Mrs. Howell has been notified she will not be receiving any repayment of the loan. The Howells have a $4,600 short-term capital loss carryover and a $7,100 long-term capital loss carryover from prior years. The Howells did not instruct their broker to sell any particular lot of IBM stock. The Howells earned $4,150 in municipal bond interest, $4,150 in interest from corporate bonds, and $6,300 in qualified dividends. Assume the Howells have $187,500 of wage income during the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Question
am. 113..
Transcribed Image Text:Comprehensive Problem 07-63 Part c (Algo)
c. Assume the Howells' short-term capital loss carryover from prior years is $84,600 rather than $4,600 as indicated above. If this is
the case, how much short-term and long-term capital loss carryover remains to be carried beyond 2021 to future tax years?
Short-term capital loss
Long-term capital loss
$
6,300
0
Howells' tax liability for the year
222,200
![Required information
Comprehensive Problem 07-63 (LO 07-1, LO 07-2, LO 07-3, LO 07-4) (Algo)
[The following information applies to the questions displayed below.]
During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets:
Investment Assets
300 shares of IBM common
200 shares of IBM common
Date Acquired
11/22/2018
Purchase Price
$ 10,580
3,000 shares of Apple preferred
2,100 shares of Cisco common
420 shares of Vanguard mutual fund
4/3/2019
12/12/2019
8/14/2020
3/2/2021
43,480
170,000
54,800
17,000
*No commissions are charged when no-load mutual funds are bought and sold.
Broker's Commission Paid
at Time of Purchase.
$ 100
300
1,300
550
No-load fund*
Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund
in 2021 and to reinvest in municipal bonds. The following investment assets were sold in 2021:
Investment Assets
300 shares of IBM common
3,000 shares of Apple preferred
2,100 shares of Cisco common
Date Sold
5/6
10/5
8/15
Sale Price
$ 16,000
223,700
63,480
Broker's Commission Paid
at Time of Sale
$ 100
2,000
650
12/21
No-load fund*
451 shares of Vanguard mutual fund
18,000
*No commissions are charged when no-load mutual funds are bought and sold.
The Howells' broker issued them a Form 1099-B showing the sales proceeds net of the commissions paid. For example,
the IBM sales proceeds were reported as $15,900 on the Form 1099-B they received.
In addition to the sales reflected in the table above, the Howells provided you with the following additional information
concerning 2021:
⚫The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain
distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2021.
.
In 2014, Mrs. Howell loaned $8,300 to a friend who was starting a new multilevel marketing company called LD3.
The friend declared bankruptcy in 2021, and Mrs. Howell has been notified she will not be receiving any repayment
of the loan.
⚫ The Howells have a $4,600 short-term capital loss carryover and a $7,100 long-term capital loss carryover from prior
years.
The Howells did not instruct their broker to sell any particular lot of IBM stock.
The Howells earned $4,150 in municipal bond interest, $4,150 in interest from corporate bonds, and $6,300 in
qualified dividends.
•Assume the Howells have $187,500 of wage income during the year.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad19d084-be74-4339-a201-3de43a00e3d3%2F958014e2-ce51-4d25-806d-74ea406b2a09%2Fwdjoqky_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
Comprehensive Problem 07-63 (LO 07-1, LO 07-2, LO 07-3, LO 07-4) (Algo)
[The following information applies to the questions displayed below.]
During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets:
Investment Assets
300 shares of IBM common
200 shares of IBM common
Date Acquired
11/22/2018
Purchase Price
$ 10,580
3,000 shares of Apple preferred
2,100 shares of Cisco common
420 shares of Vanguard mutual fund
4/3/2019
12/12/2019
8/14/2020
3/2/2021
43,480
170,000
54,800
17,000
*No commissions are charged when no-load mutual funds are bought and sold.
Broker's Commission Paid
at Time of Purchase.
$ 100
300
1,300
550
No-load fund*
Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund
in 2021 and to reinvest in municipal bonds. The following investment assets were sold in 2021:
Investment Assets
300 shares of IBM common
3,000 shares of Apple preferred
2,100 shares of Cisco common
Date Sold
5/6
10/5
8/15
Sale Price
$ 16,000
223,700
63,480
Broker's Commission Paid
at Time of Sale
$ 100
2,000
650
12/21
No-load fund*
451 shares of Vanguard mutual fund
18,000
*No commissions are charged when no-load mutual funds are bought and sold.
The Howells' broker issued them a Form 1099-B showing the sales proceeds net of the commissions paid. For example,
the IBM sales proceeds were reported as $15,900 on the Form 1099-B they received.
In addition to the sales reflected in the table above, the Howells provided you with the following additional information
concerning 2021:
⚫The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain
distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2021.
.
In 2014, Mrs. Howell loaned $8,300 to a friend who was starting a new multilevel marketing company called LD3.
The friend declared bankruptcy in 2021, and Mrs. Howell has been notified she will not be receiving any repayment
of the loan.
⚫ The Howells have a $4,600 short-term capital loss carryover and a $7,100 long-term capital loss carryover from prior
years.
The Howells did not instruct their broker to sell any particular lot of IBM stock.
The Howells earned $4,150 in municipal bond interest, $4,150 in interest from corporate bonds, and $6,300 in
qualified dividends.
•Assume the Howells have $187,500 of wage income during the year.
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Step 1: Short-term and long-term capital loss
VIEWStep 2: Calculation of short-term and long-term capital loss carryover remains to be carried beyond 2021:
VIEWStep 3: Calculation of taxable income:
VIEWStep 4: Calculation of tax liability:
VIEWStep 5: Calculation of Short term capital loss carryoverShort term capital loss carryover:
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