MindTap for Garman/Forgue's Personal Finance Tax Update, 13th Edition [Instant Access], 1 term
13th Edition
ISBN: 9780357438886
Author: GARMAN, E. Thomas, Forgue, Raymond
Publisher: Cengage Learning US
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Chapter 3, Problem 5DTM
Summary Introduction
To determine: Preparation of
Introduction:
Financial statements: It shows value of assets and liabilities of an individual or family as well as their income and expenditure. The two most useful statements are balance sheet and the cash-flow statement.
A balance sheet defines an individual’s financial position on a stated date by showing assets, liabilities and net worth.
The cash-flow statement lists income and expenditures taken place over a specific period. It statesfrom where money came and from where it went.
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Review the following scenario. Use the information provided to answer questions about the taxpayers’ 2020 return.Chris (45) and Allison (46) Castillo are married, and they will file a joint return. During the year, they earned $82,500 in wages. They also had investment income consisting of:
$200 interest income from a savings account with their local bank, reported on Form 1099-INT.
$350 interest income from a certificate of deposit held with another local bank, reported on Form 1099-INT.
$250 interest income from a U.S. Treasury note, reported on Form 1099-INT.
$500 tax-exempt interest income from a municipal bond investment, reported on Form 1099-INT.
$1,700 in ordinary dividends from a mutual fund investment, reported on Form 1099-DIV.
They had no other income.
Question 1
What amount will Chris and Allison report for taxable interest on their Form 1040? The couple's partially completed Form 1040, page 1, is shown below. You may use the form to assist you in answering this…
A mother earned $18750.00 from royalties on her cookbook. She set aside 20% of this for a down payment on a new
home. The balance will be used for her son's future education. She invests a portion of the money in a bank certificate of
deposit (CD account) that earns 4% and the remainder in a savings bond that earns 7%. If the total interest earned after
one year is $900.00, how much money was invested at each rate?
How much money was invested in the CD account?
(Round to the nearest cent.)
GILB
Thomas Green, of Laramie, Wyoming, has been a retail salesclerk for six years. At age 35, he is divorced with one child, Amanda, age 7. Thomas' salary is $46,000 per year. He regularly receives $500 per month for child support from Amanda's mother. Thomas invests $100 each month ($50 in his mutual fund and $50 in U.S. savings bonds).
ASSETS
Amount
Vested retirement benefits(no employee contribution)
$ 6,000
Money market account (includes $150 of interest earned last year)
5,000
Mutual fund (includes $200 of reinvested dividend income from last year)
5,000
Checking account
1,000
Personal property
4,000
Automobile
11,500
U.S. savings bonds
3,500
LIABILITIES
Outstanding Balance
Dental bill (pays $25 per month and is included in uninsured medical/dental)
$ 450
Visa (pays $100 per month)
3,500
Student loan (pays $100 per month)
6,500
ANNUAL FIXED EXPENSES
Amount
Auto insurance
$ 780
Rent
12,000
Uninsured medical/dental
1,000
Federal income…
Chapter 3 Solutions
MindTap for Garman/Forgue's Personal Finance Tax Update, 13th Edition [Instant Access], 1 term
Ch. 3.1 - Prob. 1CCCh. 3.1 - What is the biggest financial worry of most...Ch. 3.1 - Prob. 3CCCh. 3.1 - Prob. 4CCCh. 3.2 - Prob. 1CCCh. 3.2 - Prob. 2CCCh. 3.2 - Prob. 3CCCh. 3.2 - Prob. 4CCCh. 3.2 - Which two financial ratios for evaluating...Ch. 3.3 - Prob. 1CC
Ch. 3.3 - Prob. 2CCCh. 3.4 - Prob. 1CCCh. 3.4 - Identify two money topics that you think might...Ch. 3.5 - Prob. 1CCCh. 3.5 - What are budget estimates? Offer some suggestions...Ch. 3.5 - How might one go about revising budget estimates...Ch. 3.5 - Prob. 4CCCh. 3.5 - Name different ways to handle budget variances.Ch. 3 - Prob. 1DTMCh. 3 - Calculating Net Worth and Net Surplus. Jennifer...Ch. 3 - Ratio Analyses. Now that Jennifer better...Ch. 3 - Prob. 4DTMCh. 3 - Prob. 5DTMCh. 3 - Prob. 6DTMCh. 3 - Prob. 1FPCCh. 3 - Prob. 2FPCCh. 3 - Prob. 3FPCCh. 3 - Prob. 4FPCCh. 3 - Prob. 5FPCCh. 3 - Prob. 1BYOPFMCh. 3 - Prob. 4BYOPFMCh. 3 - Prob. 5BYOPFMCh. 3 - Prob. 7BYOPFMCh. 3 - Prob. 10BYOPFMCh. 3 - Prob. 11BYOPFM
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