Ethics and Decision Making
Assume that you just completed a December weekend vacation to a casino within the United States. During your trip you won $10,000 gambling. When the casino exchanged your chips for cash they did not record any personal information, such as your driver’s license number or social security number. Four months later while preparing your tax returns for the prior year, you stop to contemplate the fact that the Internal Revenue Service requires taxpayers to report all gambling winnings on Form 1040.
Required:
Would you report your gambling winnings to the Internal Revenue Service so that you could pay federal income taxes on those winnings? Do you believe that your actions are ethical? Why?
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MANAGERIAL ACCOUNTING FOR MANAGERS
- Carol Stokke receives her April 6 bank statement showing a balance of $859.75; her checkbook balance is $954.25. The bank statement shows an ATM charge of $25.00, NSF fee of $27.00, earned interest of $2.75, and Carol's $630.15 refund check, which was processed by the IRS and deposited to her account. Carol has two checks that have not cleared-No. 115 for $521.15 and No. 116 for $205.50. There is also a deposit in transit for $1,402.05. Prepare Carol's bank reconciliation. (Input all amounts as positive values. Round your answers to 2 decimal places.) BANK RECONCILIATION Carol's checkbook balance Bank balance Add: Add: Subtotal Subtotal Deduct: Dedut: Subtotal Reconciled balance Reconciled balancearrow_forwardYour client is preparing financial statements to show the bank. You know that he has incurred a refrigeration repair expense during the month, but you see no such expense on the books. When you question the client, he tells you that he has not yet paid the 1,255 bill. Your client is on the accrual basis of accounting. He does not want the refrigeration repair expense on the books as of the end of the month because he wants his profits to look good for the bank. Is your client behaving ethically by suggesting that the refrigeration repair expense not be booked until the 1,255 is paid? Are you behaving ethically if you agree to the clients request? What principle is involved here?arrow_forwardCarol Stokke receives her April 6 bank statement showing a balance of $1,154.75; her checkbook balance is $972.75. The bank statement shows an ATM charge of $29.00, NSF fee of $36.40, earned interest of $2.95, and Carol's $823.05 refund check, which was processed by the IRS and deposited to her account. Carol has two checks that have not cleared-Number 115 for $610.25 and Number 116 for $315.20. There is also a deposit in transit for $1,504.05. Prepare Carol's bank reconciliation. Note: Input all amounts as positive values. Round your answers to 2 decimal places. Carol's checkbook balance Add: Subtotal Deduct: Subtotal Reconciled balance BANK RECONCILIATION Bank balance Add: Deposit in transit Interest Subtotal Deduct ATM card fee NSF fee Reconciled balancearrow_forward
- Braun issued a $35 check to Rice. Rice took the check to Braun’s bank and had it certified. Rice then raised the amount to $350 and negotiated it to Turner. Turner presented the check for payment and received $350. When Braun received her canceled checks, she noticed the alteration and notified the bank. Who will suffer the loss?arrow_forward1. Electronic filing (e-filing): a.Generally results in a slower refund. b.Reduces the chances that the IRS will make mistakes when inputting tax return information. c.Requires the services of a professional. d.Can be done only by telephone. 2. Barry is a self-employed attorney who travels to New York on a business trip during 2021. Barry's expenses were as follows: Airfare $550 Taxis 40 Restaurant meals 150 Lodging 350 How much may Barry deduct as travel expenses for the trip? a.$0 b.$1,015 c.$940 d.$1,090 e.None of these choices are correct. 3. Which of the following is deductible as dues, subscriptions, or publications? a.Subscription to the "Journal of Taxation" for a tax attorney b.Dues to a health club for a doctor c.Dues to the drama club for a student d.Subscription to "Vogue" magazine for a corporate president e.None of these choices are correct.arrow_forwardSuppose that someone stole your ATM card and withdrew $1,000 from your checking account. How much money could you lose (according to federal legislation) if you reported the stolen card to the bank:arrow_forward
- James Cooper sells memberships to the Atlanta Symphony Association. TheAssociation’s procedure requires that Cooper prepare and give each customer a receipt for eachmembership sold. The receipt forms are prenumbered. Cooper is having personal financialproblems, and he kept the $500 cash received from a customer for a new membership. To hidehis theft, Cooper destroyed the Association’s copy of the receipt that he gave to the customer.What will alert manager Terry Reynolds that something is wrong?arrow_forwardOn Thursday, Justin flies from Baltimore (where his sole proprietorship office is located) to Cadiz (Spain). He conducts business on Friday and Tuesday; vacations on Saturday, Sunday, and Monday (a legal holiday in Spain); and returns to Baltimore on Thursday. Justin was scheduled to return home on Wednesday, but all flights were canceled due to bad weather. As a result, he spent Wednesday watching floor shows at a local casino. a. For tax purposes, what portion of Justins trip is regarded as being for business? b. Suppose Monday was not a legal holiday. Would this change your answer to part (a)? Explain. c. Under either part (a) or (b), how much of Justins airfare qualifies as a deductible business expense?arrow_forwardwhich of the followingtaxpayers has a deductible loss from identity thief? ashen he hasnt received rent from his tenant for several months because his tenant was a victim of identity theft and had $5000 stolen geraldine she fell victim to a phone scam shegave identitythieves her personal bank account information and$8000 was taken harris he is sole proprietor and was the target of a phishing attempt he does not have a business checking account but the login information for his personal checking account was stolen and thieves took $10000 from the account jessica she owns residential rental property identity thieves impersonated her and took out a $50000 second mortage on her rental property that jessica must now repayarrow_forward
- Select the correct answer(s) for the following multiple-choice questions. Note that there may be more than one correct answer. A group of immigrants moved from town to town in the Pacific Northwest perpetrating the same fraud. An advanced member of the group obtained a paycheck from the largest employer in the town by paying a premium to the check’s value. He then scanned the check and used a variety of software packages to prepare fictitious paychecks from the employer. The group arrived on the next payday, cashed the checks at the local establishment, and moved to another town before the check was presented for payment at the local bank. This is an example of what type of fraud? a. Input fraud b. Processor fraud c. Computer instruction Fraud d. Data fraud e. Output fraudarrow_forwardOn June 30, 2021, the bank's records say that your company has $12,956.73 in its chequing account. You are aware of three outstanding cheques for a total of $2,112.19. During June 2021, the bank rejected two deposited cheques from customers totalling $654.19 because of insufficient funds and charged you $12.00 in service fees. You had not yet received notice about the bad cheques, but you were aware of and have recorded the $12.00 of service fees, Prior to adjustment on June 30, 2021, your Cash account should have a balance of: Multiple Choice $14,402.73. $15,711.11. $1,498.73. $10,202.35. < Prev 33 of 50 Next marrow_forwardOn February 15, 2022, Kate Collins, owner of Kate’s Cards, asks you to investigate the cash han- dling activities in her business. She believes that a new employee might be stealing funds. “I have no proof,” she says, “but I’m fairly certain that the January 31, 2022, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer’s department) shows only $7,238.40. Also, the January bank reconciliation doesn’t show several checks that have been outstanding for a long time. The cashier told me that these checks needn’t appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?” At your request, Kate shows you the following (unaudited) January 31, 2022, bank reconciliation prepared by the cashier: KATE’S CARDS Bank Reconciliation January 31, 2022 Ending balance from bank statement . . . $…arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT