Identify the transactions that should not be recorded in the accounting records of Masood’s business. B. Discuss the reasons for not recording the identified transactions in the accounting records.
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- Consider the following events related Mr. Masood, the owner of a retail shop in Ibri.
- Masood gifted a watch to his staff Ms. Zainab on the occasion of her marriage.
- Paid rent for the staff accommodation
- One of his staff got injured in a road accident.
- Masood fired a staff for theft of money from shop.
- A customer, who had to give OMR 2,000 to Masood, died.
- A new staff is hired as a manger of the shop.
- Masood donated OMR 500 to help people affected by Covid 19.
Required:
A. Identify the transactions that should not be recorded in the accounting records of Masood’s business.
B. Discuss the reasons for not recording the identified transactions in the accounting records.
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- For each of the following scenarios, determine if the event is included or excluded from gross income. In addition, you must also explain the reason for your decision. A father gives his son $10,000 so that he can purchase a car. A family member receives $3,000 from a friend after your house was destroyed by fire. A client gives her attorney an extra $500 because he did an excellent job preparing her will. An employer gave an employee an iPad because he has not been absent from work for three weeks. A spouse died three weeks ago, and her employer gave the spouse’s children $2,000. An uncle died and left his neighbor $40,000 in cash and a car worth $22,000.Hopper works as an independent contractor (self-employed sole proprietor) for local businesses on weekends, and he often provides services in exchange for property. All of the following happened during 2019: Hopper provided security services in exchange for $1,375 of car repair services, $2,500 of groceries, and cash of $5,250. The cash was mailed to Hopper in the form of a check on December 15, 2019. Hopper, however, was out of town for the entire month of December. When he checked his mail on January 1, 2020, the check was there. Hopper also received a gift card in exchange for services he provided that could only be used for $1,000 work of clothing at a local mall shop. During 2019, Hopper only redeemed $250 worth of clothing at a local mall shop. Hopper has a total of $6,300 worth of legitimate business expenses during 2019, none of which were considered Cost of Goods Sold. Determine Hopper’s gross income for 2019 assuming that he uses the cash basis of accounting.Jenny operated a small shop selling hygienic supplies and bought facial masks worth $15,000 from the supplier, Amy. Jenny visited Amy’s office and gave Amy an uncrossed bearer cheque for full payment. When Amy finished her job and rushed to meet her customer by taking the MTR, she lost the cheque somewhere on the way accidentally. William found the cheque left on the floor of the MTR platform and picked it up. William was unemployed for six months and needed $15,000 to pay this month rent. After noticing the characteristic of this cheque, this was a bearer cheque. William took this bearer cheque to Isaac, his landlord, to pay this month’s rent of $15,000.Isaac deposited this cheque to her ABC Bank. The cheque was duly cleared through the Isaac’s bank and paid by Jenny’s CDE Bank. a) Explain how to apply “Holder in Due Course” (HIDC) in this case. b) Who is the true owner of this cheque from three parties of Amy, William and Isaac?c) If the cheque was crossed and the words “not…
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- Your Client, Ashley Mason, is an artist who specializes in henna tattoos. Four years ago, she entered into a five-year contract to rent a kiosk inside the local mall to sell henna tattoos to customers. She called the business “Ashley’s Arm Brands” and hired two other local artists to assist in the work. She opened a separate bank account to keep track of the business cash, and she tracked all expenses and income using a detailed spreadsheet. She is not incorporated. In the first year, the business did fairly well, but then revenues and customer interest declined. Another local artist opened a competing henna studio at a nearby location that seemed to get more foot traffic and was able to bring in celebrity artists to complete work. Ashley increased her marketing and advertising, including creating both a webpage and a Facebook page, offered discounts and contests, and created deals with other kiosks to increase business. Ashley works at the mall kiosk almost 40 hours a week. She is…During the current year, Paul, the vice president of a bank, made gifts in the following amounts: To Sarah (Paul's personal assistant) at Christmas $36 To Darryl (a key client)—$3 was for gift wrapping 53 To Darryl's wife (a homemaker) on her birthday 20 To Veronica (Paul's boss) at Christmas 30 In addition, on professional assistants' day, Paul takes Sarah to lunch at a cost of $82. Presuming that Paul has adequate substantiation and is not reimbursed, how much can he deduct? Do not round intermediate computations. If required, round your final answer to the nearest cent.Kathy Wintz formed a lawn service business as a summer job. To start the corporation on May 1, 2018, she deposited $1,000 in a new bank account in the name of the business. The $1,000 consisted of a $600 loan from Bank One to her company, Wintz Lawn Service, and $400 of her own money. The company issued $400 of common stock to Wintz. Wintz rented lawn equipment, purchased supplies, and hired other students to mow and trim customers’ lawns. At the end of each month, Wintz mailed bills to the customers. On August 31, she was ready to dissolve the corporation and return to college. Because she was so busy, she kept few records other than the checkbook and a list of receivables from customers. At August 31, the business’s checkbook shows a balance of $2,000, and customers still owe $750. During the summer, the business collected $5,500 from customers. The business checkbook lists payments for supplies totaling $400 and it still has gasoline, weed trimmer cord, and other supplies that cost…
