Joe is a plumber and has 50,000 in revenue for the year. What can you definitely conclude? Joe collected less than 50,000 cash he collected 50000 cash from his customers he did 50000 of plumbing work for his customers

Joe is a plumber and has 50,000 in revenue for the year. What can you definitely conclude? Joe collected less than 50,000 cash he collected 50000 cash from his customers he did 50000 of plumbing work for his customers

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter9: Deductions: Employee And Self-employed-related Expenses

Section: Chapter Questions

Problem 15CE

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Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of 320,000 and the 500 units purchased to replace them cost 256,000, so his cash account has increased by 64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her hed make at least 50,000 after taxes. That will give us 25,000 after paying off the investors. Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales. Using a pencil, fill in columns F and G in the Data Section of the worksheet printout at the end of this problem.
Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of 320,000 and the 500 units purchased to replace them cost 256,000, so his cash account has increased by 64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her hed make at least 50,000 after taxes. That will give us 25,000 after paying off the investors. Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales. Del has heard that the choice of an inventory cost flow assumption can have a significant effect on net income and taxes. He asks you to show him the differences between the specific identification method and the cost flow assumptions of FIFO, LIFO, and weighted average methods. Review the worksheet FIFOLIFO that follows these requirements. Note that all of the problem data have been entered in the Data Section of the worksheet.
Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of 320,000 and the 500 units purchased to replace them cost 256,000, so his cash account has increased by 64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her hed make at least 50,000 after taxes. That will give us 25,000 after paying off the investors. Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales. Examine your completed worksheet and answer the following questions: a. Which inventory cost flow assumption produces the most net income? b. Which inventory cost flow assumption produces the least net income? c. What caused the difference between your answers to a and b? d. Which inventory cost flow assumption produces the highest ending cash balance? e. Which inventory cost flow assumption produces the lowest ending cash balance? f. Does the assumption that produces the highest net income also produce the highest cash balance? Explain. g. As you recall, Del originally used the specific identification method in his initial calculations when he projected 51,600 net income. According to Dels reckoning, that should have left him cash of 25,800 (50% of 51,600) after paying his investors. Why would he only have 3,800 left? Explain. h. Which inventory cost flow assumption would you suggest Del use? Explain.
Del Rio began Rio Enterprises on January 1 with 200 units of inventory. During the year, 500 additional units were purchased, 500 units were sold, and Del ended the year with 200 units. Del is very satisfied with his first year of business although the cost of replacing his inventory rose continually throughout the year. The 500 units sold for a total of 320,000 and the 500 units purchased to replace them cost 256,000, so his cash account has increased by 64,000. Del is concerned however because he has three obligations yet to meet: taxes, dividends, and his wife. Federal and state income taxes will take 40% of his income. His investors are to receive dividends equal to half of any income after taxes are paid. And finally, Del promised his wife a big trip to Hawaii if she let him quit his job as a professor and start his own business. He promised her hed make at least 50,000 after taxes. That will give us 25,000 after paying off the investors. Del kept fairly good records during the year and knows the specific cost of each inventory unit sold. He has prepared the following table to summarize his purchases and sales. Reset the purchase prices to their original values (cells C11 through C14). Suppose Del had purchased 250 units on November 20 rather than 150. Enter 250 in cell C14 and alter column G in the Data Section. Explain what happens to net income under each inventory cost flow assumption and why. Also, what management implications might this have for Del?
Ryan's day care business collected $35,000 in revenues. In addition, customers owed him $3,000 at year-end. During the year, Ryan spent $5,500 for supplies, $1,500 for utilities, $15,000 for rent, and $500 for miscellaneous expenses. One customer gave him use of their vacation home for a week (worth $2,500) in exchange for Ryan allowing their child to attend the day care center free of charge. Ryan accounts for his business activities using the cash method of accounting.
2 Josh is an employee of a large Accounting firm in the city earning $120,000 per year. On weekends, to earn extra income, she established a small business selling Pokemon soft toys at the local market. In the first year of operating her business, she earned $8,000 revenue and incurred expenses of $10,000. Can he offset this loss against her salary income of $120,00? Would your answers will be different if Joss has been doing business this year for the past 5 years and the it was profitable on the first 3 years.
Ricardo is an engineer in a private company and earned salaries of $ 103,000 a year. During the current year, he started a vitamin sales business, in which he made a net loss of $ 4,000. How much is adjusted gross income?
A small business owner made $ 30,000 the first year he owned his store and made an additional 8% each year thereafter. He finds out how much he earned during his fourth year of business. (Round to the nearest penny, if necessary.)
Josh is an employee of a large Accounting firm in the city earning $120,000 peryear. On weekends, to earn extra income, she established a small businessselling Pokemon soft toys at the local market. In the first year of operating herbusiness, she earned $8,000 revenue and incurred expenses of $10,000. Can heoffset this loss against her salary income of $120,00? Would your answers will bedifferent if Joss has been doing business this year for the past 5 years and the itwas profitable on the first 3 years.
Juliet opened an Office Cleaning Service company on January 1, 2021. During the year she had the following transactions. 1) She started the business with investing $25,000 of her own money (business was organized as corporation) 2) She purchased $18,000 equipment in cash. 3) She purchased a truck for $30,000 for business use - paid $5,000 in cash and signed a 3-year note for the rest. 4) She borrowed $20,000 from bank by signing a 5-year note. 5) During the year, purchased $5,500 of supplies in cash. 6) During the year, provided $120000 services to customers of which $100,000 was collected, the rest was not yet collected as of Dec. 31st. 7) During the year, she incurred $80,000 of salaries, rent, utilities, and insurance expenses of which $3000 was still not paid as of Dec. 31st. 8) During the year, she paid $4,000 to bank of which $1200 was for interest and the rest was for payment of the principal of the loan. 9) During the year, she took $6,000 as dividend…
Juliet opened an Office Cleaning Service company on January 1, 2021. During the year she had the following transactions. 1) She started the business with investing $25,000 of her own money (business was organized as corporation) 2) She purchased $18,000 equipment in cash. 3) She purchased a truck for $30,000 for business use - paid $5,000 in cash and signed a 3-year note for the rest. 4) She borrowed $20,000 from bank by signing a 5-year note. 5) During the year, purchased $5,500 of supplies in cash. 6) During the year, provided $120000 services to customers of which $100,000 was collected, the rest was not yet collected as of Dec. 31st. 7) During the year, she incurred $80,000 of salaries, rent, utilities, and insurance expenses of which $3000 was still not paid as of Dec. 31st. 8) During the year, she paid $4,000 to bank of which $1200 was for interest and the rest was for payment of the principal of the loan. 9) During the year, she took $6,000 as dividend…
X had started business with $2,00,000 in the beginning of the year. During the year, he borrowed $1,00,000 from Y. He further introduced $2,00,000 in the business. He also gave $50,000 as loan to his son. Goods given away as charity by him were $20,000. Profits earned by him were $2,50,000. He also withdraw $30,000 from the business. His capital at the end of the year would be__________.