Joseph Thompson is president and sole shareholder of Jay Corporation (a cash method, calendar year C corporation). In Decembe Joe asks your advice regarding a charitable contribution he plans to have the corporation make to the University of Maine, a qualified public charity. Joe is considering the following altematives as charitable contributions in December 2020. Fair Market Value (1) Cash donation $200,000 (2) Unimproved land held for six years ($110,000 basis) 200,000 (3) Maize Corporation stock held for eight months ($140,000 basis) 200,000 (4) Brown Corporation stock held for nine years ($360,000 basis) 200,000 Joe has asked you to help him decide which of these potential contributions will be most advantageous taxwise. Jay's taxable income is $3,500,000 before considering the contribution. Rank the four alternatives, and complete the letter to Joe communicating your advice. Note: The land and stock are "unrelated use property," but they are not "tangible personal property". Raabe, Young, Nellen, Hoffman, & Maloney, CPAS 5191 Natorp Boulevard Mason, OH 45040 December 11, 2020 Mr. Joseph Thompson Jay Corporation 1442 Main Street Freeport, ME 04032 Dear Mr. Thompson: I have evaluated the proposed alternatives for your 2020 year-end contribution to the University of Maine (University). I recommend that you . The four alternatives are discussed below. Donation of cash, the unimproved land, or the Brown Corporation stock each will result in a $ charitable contribution deduction. Donation of the Maize Corporation stock will result in only a $ charitable contribution deduction.
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.
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