Twice a year Rowdy

Skip to question   While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE), specializes in custom-sculpted cakes for weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2023, and each contributed $140,000 in exchange for a 50 percent ownership interest. GTE also borrowed $560,000 from a local bank Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the business. The following information pertains to GTE's 2023 activities: GTE uses the cash method of accounting (for both book and tax purposes) and reports income on a calendar-year basis. GTE received $900,000 of sales revenue and reported $420,000 of cost of goods sold (it did not have any ending inventory). GTE paid $75,000 compensation to James, $75,000 compensation to Paul, and $85,000 of compensation to…

Jeffrey Dean, a Masters Degree candidate at North State Central University, was awarded a 15,000 scholarship from North State Central in the current year. During the current year, he paid the following expenses: In addition, he received 6,000 for teaching two undergraduate accounting courses. What amount must be included in Deans gross income? a. 0 b. 6,000 c. 7,500 d. 21,000

In 2022, Values R Us, a real estate appraising firm, incurs the following meal expenses: $1,200 restaurant meals with business clients $1,600 for an end of year celebratory company dinner for all employees $400 for bagels once a month for all employees $300 for pre-packaged snacks offered to potential clients at a business fair • $40 for non-restaurant travel snacks consumed by employees while on business travel • $800 of restaurant meals consumed by employees while on business travel What is Values R Us' deductible meals expense in 2022? O a. $4,340. O b. $4,120. X c. $3,320. O d. $2,770.

Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2025, for $15,000. They expect to use the Suburban for five years and then sell the vehicle for $6,000. The following expenditures related to the vehicle were also made on July 1, 2025: ⚫ The company pays $2,550 to GEICO for a one-year insurance policy. • • The company spends an extra $6,000 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides. An additional $2,750 is spent on a deluxe roof rack and a trailer hitch. The painting, roof rack, and hitch are all expected to increase the future benefits of the vehicle for Great Adventures. In addition, on October 22, 2025, the company pays $1,900 for basic vehicle maintenance related to changing the oil, replacing the windshield wipers, rotating the tires, and inserting a new air filter. 2. Record the expenditure related to vehicle maintenance on…

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Bubbles LLC is a web design company that operates out of Boulder, Colorado. Mark and Jeff started Bubbles twenty years ago and it has grown to be one of the more sizeable web development firms in Colorado. Bubbles offers a 401(k)/profit sharing plan. The plan has the following characteristics: Eligibility: age 21 and one-year of service Match: dollar for dollar match Vesting: 20% per year (years 1 through 5) Highly compensated definition: uses top 20% election Profit-sharing contribution: Bubbles generally makes a sizeable contribution, but the percentage varies. The plan has been amended to permit in-plan Roth rollovers. The plan permits rollovers from other qualified plans and IRAs EE# Employee Ownership Age Tenure Salary Deferral 1 Mark 60% 48 20 Years $200,000 $10,000 2 Jeff 30% 49 20 Years $150,000 $15,000 3 Chad 6% 33 15 Years $75,000 $5,250 4 Josh 4% 42 10 Years $85,000 $5,100 5…

Bubbles LLC is a web design company that operates out of Boulder, Colorado. Mark and Jeff started Bubbles twenty years ago and it has grown to be one of the more sizeable web development firms in Colorado. Bubbles offers a 401(k)/profit sharing plan. The plan has the following characteristics: Eligibility: age 21 and one-year of service Match: dollar for dollar match Vesting: 20% per year (years 1 through 9) Highly compensated definition: uses top 20% election Profit-sharing contribution: Bubbles generally makes a sizeable contribution, but the percentage varies. The plan permits rollovers from other qualified plans and IRA EE# Employee Ownership Age Tenure Salary Deferral 1 Mark 60% 48 20 Years $200,000 $10,000 2 Jeff 30% 49 20 Years $150,000 $15,000 3 Chad 6% 33 15 Years $75,000 $5,250 4 Josh 4% 42 10 Years $85,000 $5,100 5 Alex 0% 58 8 Years $60,000 $0 6 Shay 0% 29…