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Compute Candlewood's deductions for the first year of its operations for: a. Organizational expenditures: $ 5,097.78 X b. Startup expenses: $ 5,276.11 X

Compute Candlewood's deductions for the first year of its operations for: a. Organizational expenditures: $ 5,097.78 X b. Startup expenses: $ 5,276.11 X

FINANCIAL ACCOUNTING
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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Exercise 14-5 (Algorithmic) (LO. 3) Candlewood LLC began its business on March 1, 2022; and it uses a calendar tax and an accounting year. Candlewood incurred $13,600 in legal fees for drafting the LLC's operating agreement and $6,800 in accounting fees for tax advice of an organizational nature, for a total of $20,400 of organizational costs. Candlewood also incurred $26,000 of preopening advertising expenses and $27,800 of salaries and training costs for new employees before opening for business, for a total of $53,800 of startup costs. The LLC desires to take the largest deduction available for these costs. If required, round any division to six decimal places and use in subsequent computations. Round your final answers to the nearest dollar. Compute Candlewood's deductions for the first year of its operations for: a. Organizational expenditures: 5,097.78 X b. Startup expenses: $ 5,276.11 X Feedback ✓ Check My Work In its initial stages, a LLC incurs expenses related to some or all of the following act business operations (startup costs), admitting members to the LLC, marketing and costs), and acquiring assets. The LLC may elect to deduct up to $5,000 of such expenditures in the year in which limitations.
Transcribed Image Text:Exercise 14-5 (Algorithmic) (LO. 3) Candlewood LLC began its business on March 1, 2022; and it uses a calendar tax and an accounting year. Candlewood incurred $13,600 in legal fees for drafting the LLC's operating agreement and $6,800 in accounting fees for tax advice of an organizational nature, for a total of $20,400 of organizational costs. Candlewood also incurred $26,000 of preopening advertising expenses and $27,800 of salaries and training costs for new employees before opening for business, for a total of $53,800 of startup costs. The LLC desires to take the largest deduction available for these costs. If required, round any division to six decimal places and use in subsequent computations. Round your final answers to the nearest dollar. Compute Candlewood's deductions for the first year of its operations for: a. Organizational expenditures: 5,097.78 X b. Startup expenses: $ 5,276.11 X Feedback ✓ Check My Work In its initial stages, a LLC incurs expenses related to some or all of the following act business operations (startup costs), admitting members to the LLC, marketing and costs), and acquiring assets. The LLC may elect to deduct up to $5,000 of such expenditures in the year in which limitations.
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