Sarah's Flower Shop, a proprietorship, began the year with total assets of $75,000 and total liabilities of $45,000. During the year, the business recorded $125,000 in sales revenue, $68,000 in expenses, and Sarah withdrew $12,000 for personal use. Sarah's capital balance at the end of the year was: a) $75,000 b) $70,000 c) $65,000 d) $80,000
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- The following transactions occurred during the year. Record these transactions. HHL took out a long-term loan for $3 million. b. HHL purchased $1 million in inventory with cash. HHL purchased equipment that cost $150,000 on account. The equipment is expected to last 15 years and has no salvage value. $540,865,000 (net of allowances and charity care) was billed for patient services. The hospital estimates that 5% of these bills will be bad debt. $875,000 of inventory was used. f. Donations of $400,000 were received in cash. HHL pays in cash for a 2-year malpractice insurance premium at a cost of $5 million. One-half of the premium is for next year, and the other is for the following year. HHL pays $12,560,000 in accounts payable. HHL workers earned $259 million in wages for the year. The hospital paid out $282 million in cash. It also paid out $60 million in benefits, all in cash. The equipment purchased in transaction c was paid for in cash. $370,500,000 from bills sent to patients…For the current year, santos has wages of $80,000 and the following property transactions: Stock investment sales— Long-term capital gain $ 9,000 Short-term capital loss (12,000) Loss on sale of camper (purchased four years ago and used for family vacations) (2,000) What is David's AGI for the current year? a.$76,000. b.$78,000. c.$89,000. d.$77,000.During the year, Rita rented her vacation home for twelve days for $2,400 and she used it personally for three months. The following expenses were incurred on the home: Property taxes $ 2, 200 Mortgage interest 10, 800 Utilities and maintenance 1,900 Depreciation 5, 000 Insurance 900 Calculate the gross income recognized from the rental property a. $0 b. $780 c. $1,300 d. $2,400
- Dillon rented his personal residence at Lake Tahoe for 14 days while he was vacationing in Ireland. Heresided in the home for the remainder of the year. Rental income from the property was $6,500.Expenses associated with use of the home for the entire year were as follows: Real property taxes $ 3,100Mortgage interest 12,000Repairs 1,500Insurance 1,500Utilities 3,900Depreciation 13,000 a. What effect does the rental have on Dillon's AGI? b. What effect does the rental have on Dillon's itemized deductions (assuming he itemizesdeductions before considering deductions associated with the home)?Mrs. V paid the following expenditures in the current year. Interest on line of credit ($20,000 outstanding for the entire year) $1,000 Investment management fees for her registered retirement savings plan 6,000 Investment management fees for her non-registered investments 800 Legal fees related to the acquisition of a rental property 1,200 The line of credit is mostly for the purchase of non-registered investments, made several years ago. All of the investments are still owned. However, $5,000 of the total outstanding principal was used to renovate her home last year. The rental property was purchased late in the year. No rental income was received in the year. What is the total amount that she can deduct on her personal income tax return for the current year, in respect of these expenditures? A. 1,550 B. 1,800 C. 2,750 D. 3,000Lakeview, a calendar year C corporation, reports the following income and expenses in the current year: Income from operations $400,000 Expenses from operations $280,000 Dividends received (10% ownership) $30,000 On July 15t of the year, Lakeview made a cash contribution to a qualified charitable organization of $25,000 in cash (not included in any of the above items). What is Lakeview's charitable contribution deduction for the year? Answer: $ . The charitable contribution deduction for corporations is limited to 10% of their taxable income for the year computed without regard to the charitable contribution deduction, net operating loss or capital loss carrybacks, and dividends received deduction. In this course, we are not applying the changes under the CARES Act.
- Renee operates a proprietorship selling collectibles over the Web, and last year she purchased a building for $24 million for her business. This year, Rene’s proprietorship reported revenue of $95.5 million and incurred total expenses of $88.6 million. Her expenses included cost of goods sold of $48.5 million. Sales commissions paid of $16.9 million. $10.5 million of interest paid on the building mortgage, and $12.7 million of depreciation. What’s Renee’s adjusted taxable income for purposes of calculating the limitation on business interest expense? What is the maximum amount of business interest expense that Renee can deduct this year, and how is the disallowed interest expense (if any) treated? Suppose that Renee’s revenue includes $5 million of business interest income. What is the maximum amount of business interest expense that could be deducted this year under the business interest limitation?Jimmy Corporation had the following income and expenses during the current year: Gross receipts Selling and Administrative expenses $480,000 200,000 Other operating expenses Contributions to qualified charitable organizations Capital gains Capital loss carryback Depreciation expense Dividend income 40,000 32,000 4,000 3,000 40,000 30,000 Dividends-received deduction 21,000 What is Jimmy Corp's charitable contribution deduction for the current year? Be sure to explain your answer and show your work.devrat
- Aquamarine Corporation, a calendar year C corporation, makes the following donations to qualified charitable organizations during the current year: Painting: The amount of the contribution is Stock: The amount of the contribution is Groceries: The amount of the contribution is Adjusted Basis $6,000 $10,000 Painting held four years as an investment, to a church, which sold it immediately Apple stock held two years as an investment, to United Way, which sold it immediately Canned groceries held one month as inventory, to Catholic Meals for the Poor 15,750 35,000 7,800 13,000 Determine the amount of Aquamarine Corporation's charitable deduction for the current year. (Ignore the taxable income limitation.) Therefore, the total charitable contribution is $ Fair Market ValueIn year 1, Abby purchased a new home for $200,000 by making a down payment of $150,000 and financing the remaining $50,000 with a loan, secured by the residence, at 6 percent. As of January 1, year 4 the outstanding balance on the loan was $40,000. On January 1, year 4, when her home was worth $300,000, Abby refinanced the home by taking out a $120,000 mortgage at 5 percent. With the loan proceeds, she paid off the $40,000 balance of the existing mortgage and used the remaining $80,000 for purposes unrelated to the home. During year 4, she made interest-only payments on the new loan of $6,000. What amount of the $6,000 interest expense on the new loan can Abby deduct in year 4 on the new mortgage as home-related interest expense?In year 1, Abby purchased a new home for $200,000 by making a down payment of $150,000 and financing the remaining $50,000 with a loan, secured by the residence, at 6 percent. As of January 1, year 4 the outstanding balance on the loan was $40,000. On January 1, year 4, when her home was worth $300,000, Abby refinanced the home by taking out a $120,000 mortgage at 5 percent. With the loan proceeds, she paid off the $40,000 balance of the existing mortgage and used the remaining $80,000 for purposes unrelated to the home. During year 4, she made interest- only payments on the new loan of $6,000. What amount of the $6,000 interest expense on the new loan can Abby deduct in year 4 on the new mortgage as home-related interest expense? Multiple Choice $2,000 $6,000 $0 $5,000