Question: Duck, an accrual basis corporation, sponsored a

> Use information in Exercise 2-7 to prepare journal entries for the following events for the month of May. 1. Factory payroll costs in cash. 2. Direct labor usage. 3. Indirect labor usage.

> Use information in Exercise 2-7 to prepare journal entries for the following events for the month of May. 1. Raw materials purchases for cash. 2. Direct materials usage. 3. Indirect materials usage.

> Lorenzo Company uses a job order cost accounting system that charges overhead to jobs on the basis of direct material cost. At year-end, the Goods in Process Inventory account shows the following. 1. Determine the overhead rate used (based on direct ma

> In December 2012, Shire Computer’s management establishes the year 2013 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $747,500 of overhea

> The left column lists the titles of documents and accounts used in job order cost accounting. The right column presents short descriptions of the purposes of the documents. Match each document in the left column to its numbered description in the right c

> The following information is from the materials requisitions and time tickets for Job 9-1005 completed by Great Bay Boats. The requisitions are identified by code numbers starting with the letter Q and the time tickets start with W. At the start of the y

> Match the terms below with their definitions. 1. Cost accounting system 2. Target cost 3. General accounting system 4. Job 5. Job order production 6. Job lot a. Production of products in response to customer orders. b. A system that records manufacturing

> A recent balance sheet for Porsche AG shows beginning raw materials inventory of €83 million and ending raw materials inventory of €85 million. Assume the company purchased raw materials (on account) for €3,108 million during the year. (1) Prepare journa

> Hansel Corporation has requested bids from several architects to design its new corporate headquarters. Frey Architects is one of the firms bidding on the job. Frey estimates that the job will require the following direct labor. Frey applies overhead t

> Distinguish between managerial and financial accounting on a. Users and decision makers. b. Purpose of information. c. Flexibility of practice. d. Time dimension. e. Focus of information. f. Nature of information.

> Describe the managerial accountant’s role in business planning, control, and decision making.

> Referring to the citation only, determine which court issued these decisions. a. 716 F.2d 693 (CA–9, 1983). b. 92 T.C. 400 (1998). c. 70 U.S. 224 (1935). d. 3 B.T.A. 1042 (1926). e. T.C.Memo. 1957–169. f. 50 AFTR2d 92–6000 (Ct. Cl., 1992). g. Ltr.Rul. 90

> What is the difference between the Federal income tax on individuals and that imposed on corporations?

> Is there an automatic right to appeal to the U.S. Supreme Court? If so, what is the process?

> Elijah and Anastasia are husband and wife who have five married children and nine minor grandchildren. For 2017, what is the maximum amount they can give to their family (including the sons- and daughters-in-law) without using any of their unified transf

> In the citation Schuster’s Express, Inc., 66 T.C. 588 (1976), aff’d 562 F.2d 39 (CA–2, 1977), nonacq., to what do the 66, 39, and nonacq. refer?

> Address the following issues: a. What is the purpose of the unified transfer tax credit? b. Is the same amount available for both the Federal gift tax and the estate tax? Explain. c. Does the use of the credit for a gift affect the amount of credit avail

> Marvin is the executor and sole heir of his aunt’s estate. The estate includes her furnished home, which Marvin is considering converting to rental property to generate additional cash flow. What are some of the tax problems Marvin may confront?

> In assessing the validity of a prior court decision, discuss the significance of the following on the taxpayer’s issue: a. The decision was rendered by the U.S. District Court of Wyoming. Taxpayer lives in Wyoming. b. The decision was rendered by the U.S

> Jake (age 72) and Jessica (age 28) were recently married. To avoid any transfer taxes, Jake has promised to leave Jessica all of his wealth when he dies. Is Jake under some misconception about the operation of the Federal gift and estate taxes? Explain.

> Marcie is divorced, and her married son, Jamie (age 25), and his wife, Audrey (age 18), live with her. During the year, Jamie earned $4,800 from a part-time job and filed a joint return with Audrey to recover his withholdings. Audrey reports zero gross i

> Lynn Swartz’s husband died three years ago. Her parents have an income of over $200,000 a year and want to ensure that funds will be available for the education of Lynn’s 8-year-old son, Eric. Lynn is currently earning $45,000 a year. Lynn’s parents have

> Distinguish between an estate tax and an inheritance tax. a. Do some states impose both? Neither? b. Which, if either, does the Federal government impose?

> During the year, Hernando recorded the following transactions. How should Hernando treat these transactions for income tax purposes? • Gain on the sale of stock held as an investment for 10 months. • Gain on the sale of land held as an investment for 4 y

> During a social event, Muriel and Earl are discussing the home computer each recently purchased. Although the computers are identical makes and models, Muriel is surprised to learn that she paid a sales tax, while Earl did not. Comment as to why this cou

> In connection with the application of the kiddie tax, comment on the following. a. The child generates only earned income. b. The child reports a modest amount of unearned income. c. The child is age 20, not a student, and not disabled. d. The child is

> Mona viewed herself as a creative individual who had chosen to go to law school for economic reasons. Mona’s undergraduate majors were creative writing and American Indian studies. Mona was very successful as an attorney and eventually was admitted to p

> Rex and Agnes Harrell purchased a beach house at Duck, North Carolina, in early 2016. Although they intended to use the beach house occasionally for recreational purposes, to help pay the mortgage payments, property taxes, and maintenance costs, they als

> Sarah was contemplating making a contribution to her traditional IRA in 2016. She determined that she would contribute $5,000 in December 2016, but forgot about making the contribution until she was preparing her 2016 tax return in February 2017. Use the

> For each of the following independent transactions, calculate the recognized gain or loss to the seller and the adjusted basis to the buyer. a. Bonnie sells Parchment, Inc. stock (adjusted basis $17,000) to Phillip, her brother, for its fair market value

> The Robin Corporation is owned as follows: Isabelle……………………………………………………………….26% Peter, Isabelle’s husband……………………………………..19% Sonya, Isabelle’s mother………………………………………15% Reggie, Isabelle’s father………………………………………..25% Quinn, an unrelated party……………………………………

> Brittany Callihan sold stock (basis of $184,000) to her son, Ridge, for $160,000, the fair market value. a. What are the tax consequences to Brittany? b. What are the tax consequences to Ridge if he later sells the stock for $190,000? For $152,000? For $

> Tonya, who lives in California, inherited a $100,000 State of California bond in 2017. Her marginal Federal tax rate is 35%, and her marginal state tax rate is 5%. The California bond pays 3.3% interest, which is not subject to California income tax. She

> Elisa and Clyde operate a retail sports memorabilia shop. For the current year, sales revenue is $55,000 and expenses are as follows: Cost of goods sold……………………………. $21,000 Advertising………………………………………..1,000 Utilities……………………………………………..2,000 Rent……………………

> Chee, single, age 40, had the following income and expenses during 2017: Income Salary……………………………………………………………………………………………$43,000 Rental of vacation home (rented 60 days, used personally 60 days, vacant 245 days)…………………………………………………4,000 Municipal bond in

> The Grays live in Clay County, which is adjacent to Jackson County. Although the retail stores in both counties are comparable, the Grays usually drive a few extra miles to shop in Jackson County. As to why the Grays might do this, consider the following

> How would your answer to Problem 48 differ if Anna had rented the house for 87 days and had used it personally for 13 days?

> During the year (not a leap year), Anna rented her vacation home for 30 days, used it personally for 20 days, and left it vacant for 315 days. She had the following income and expenses: Rent income…………………………………………………. $ 7,000

> Adelene, who lives in a winter resort area, rented her personal residence for 14 days while she was visiting Brussels. Rent income was $5,000. Related expenses for the year were as follows: Real property taxes…………………………………..$ 3, 800 Mortgage interest………

> Sarah owns a vacation cabin in the Tennessee mountains. Without considering the cabin, she has gross income of $65,000. During the year, she rents the cabin for two weeks for $2,500 and uses it herself for four weeks. The total expenses for the year are

> Samantha, an executive, has AGI of $100,000 before considering income or loss from her miniature horse business. Her outside income comes from prizes for winning horse shows, stud fees, and sales of yearlings. Samantha’s home is on 20 a

> Alex, who is single, conducts an activity in 2017 that is appropriately classified as a hobby. The activity produces the following revenues and expenses: Revenue……………………………………………..$18,000 Property taxes………………………………………..3,000 Materials and supplies………………

> Terry traveled to a neighboring state to investigate the purchase of two hardware stores. His expenses included travel, legal, accounting, and miscellaneous expenses. The total was $52,000. He incurred the expenses in June and July 2017. Under the follow

> In January 2017, Ezra purchased 2,000 shares of Gold Utility Mutual Fund for $20,000. In June, Ezra received an additional 100 shares as a dividend, in lieu of receiving $1,000 in cash dividends. In December, the company declared a two-for-one stock spli

> Nancy, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $35,000 of expenses associated with this investigation. Based on the regulatory environment f

> Amber, a publicly held corporation, currently pays its president an annual salary of $900,000. In addition, it contributes $20,000 annually to a defined contribution pension plan for him. As a means of increasing company profitability, the board of direc

> Trevor, a friend of yours from high school, works as a server at the ST Cafe. He asks you to help him prepare his Federal income tax return. When you inquire about why his bank deposits substantially exceed his tip income, he confides to you that he is a

> What is meant by the term petitioner?

> Doug incurred and paid the following expenses during the year: • $50 for a ticket for running a red light while he was commuting to work. • $100 for a ticket for parking in a handicapped parking space. • $200 to an attorney to represent him in traffic co

> A list of the items that Peggy sold and the losses she incurred during the current tax year is as follows: Yellow, Inc. stock………………………………………………………..$ 1,600 Peggy’s personal use SUV………………………………………………8,000 Peggy’s personal residence……………………………………………10,000

> Janice, age 22, is a student who earns $10,000 working part-time at the college ice cream shop in 2017. She has no other income. Her medical expenses for the year total $3,000. During the year, she suffers a casualty loss of $3,500 when her apartment cat

> Daniel, age 38, is single and has the following income and expenses in 2017. Salary income………………………………………………………………………………………..$60,000 Net rent income……………………………………………………………………………………….6, 000 Dividend income……………………………………………………………………………………...3,500 Payment

> Amos is a self-employed tax attorney. He and Monica, his employee, attend a conference in Dallas sponsored by the American Institute of CPAs. The following expenses are incurred during the trip: a. Amos pays for all of these expenses. Calculate the eff

> Determine Hazel’s gross income from the following receipts for the year: Gain on sale of Augusta County bonds…………………………………………..$800 Interest on U.S. government savings bonds……………………………………400 Interest on state income tax refund………………………………………………..200 Int

> During the current year, Robert pays the following amounts associated with his own residence: Property taxes………………………………………$3, 000 Mortgage interest…………………………………..8, 000 Repairs…………………………………………………..1, 200 Utilities…………………………………………………..2, 700 Replacement

> Gordon anticipates that being positively perceived by the individual who is elected mayor will be beneficial for his business. Therefore, he contributes to the campaigns of both the Democratic and the Republican candidates. The Republican candidate is el

> Stuart, an insurance salesperson, is arrested for allegedly robbing a convenience store. He hires an attorney who is successful in getting the charges dropped. Is the attorney’s fee deductible? Explain.

> Clear, Inc., is a bottled water distributor. Clear’s delivery trucks frequently are required to park in no-parking zones to make their deliveries. If the trucks are occasionally ticketed, can Clear deduct the fines that it pays? Explain.

> What is the difference between an excise tax and a general sales tax? a. Do all states impose a general sales tax? b. Does the Federal government impose a general sales tax?

> Use www.congress.gov or another reliable website to find a proposal for a carbon tax or a financial transactions tax. Draft a summary of the tax, and analyze it against five of the principles of good tax policy.

> Mary Kate owns a building that she leases to an individual who operates a grocery store. Rent income is $10,000, and rental expenses are $6,000. On what Form 1040 schedule or schedules are the income and expenses reported?

> Boston Clothing Limited was a private company that experienced cash flow difficulties and hired new management to turn the company around. The company then went public and the shares sold at $15 per share. Within months, however, the share price plummete

> Larry and Susan each invest $10,000 in separate investment activities. They each incur deductible expenses of $800 associated with their respective investments. Explain why Larry’s expenses might be properly classified as deductions from AGI (itemized de

> Classify each of the following expenditures as a deduction for AGI, a deduction from AGI, or not deductible: a. Amos contributes to his H.R. 10 plan (i.e., a retirement plan for a self-employed individual). b. Keith pays child support to his former wife,

> George is a U.S. citizen who is employed by Hawk Enterprises, a global company. Beginning on June 1, 2017, George began working in London. He worked there until January 31, 2018, when he transferred to Paris. He worked in Paris the remainder of 2018. His

> Classify each of the following expenditures as a deduction for AGI, a deduction from AGI, or not deductible: a. Sam gives cash to his father as a birthday gift. b. Sandra gives cash to her church. c. Albert pays Dr. Dafashy for medical services rendered.

> “All income must be reported, and all deductions are allowed unless specifically disallowed in the Code.” Discuss.

> Ella owns 60% of the stock of Peach, Inc. The stock has declined in value since she purchased it five years ago. She is going to sell 5% of the stock to a relative. Ella is also going to make a gift of 10% of the stock to another relative. Identify the r

> Edna incurs various legal fees in obtaining a divorce. Which types of expenses associated with the divorce are deductible by Edna, and which are not?

> Ray loses his job as a result of a corporate downsizing. Consequently, he falls behind on the mortgage payments on his personal residence. His friend Ted would like to make the delinquent mortgage payments for him. a. Could the payments be structured so

> Hank was transferred from Arizona to North Dakota on March 1 of the current year. He immediately put his home in Phoenix up for rent. The home was rented May 1 to November 30 and was vacant during the month of December. It was rented again on January 1 f

> Why do taxpayers often have more than one alternative for structuring a business transaction?

> Karen and Andy own a beach house. They have an agreement with a rental agent to rent it up to 200 days per year. For the past three years, the agent has been successful in renting it for 200 days. Karen and Andy use the beach house for one week during th

> Paul operates a restaurant in Cleveland. He travels to Columbus to investigate acquiring a business. He incurs expenses as follows: $1,500 for travel, $2,000 for legal advice, and $3,500 for a market analysis. Based on the different tax consequences list

> What limits exist on the deductibility of executive compensation? Do the limits apply to all types of business entities? Are there any exceptions to the limitations? Explain.

> Sparrow Corporation would like you to review its employee fringe benefits program with regard to the tax consequences of the plan for the company’s president (Polly), who is also the majority shareholder. a. The company has a qualified retirement plan. T

> Melissa, the owner of a sole proprietorship, does not provide health insurance for her 20 employees. She plans to spend $1,500 lobbying in opposition to legislation that would require her to provide such insurance. Discuss the tax advantages and disadvan

> Linda operates an illegal gambling operation. Which of the following expenses that she incurs can reduce taxable income? a. Bribes paid to city employees. b. Salaries to employees. c. Security cameras. d. Kickbacks to police. e. Rent on an office. f. Dep

> Ted, an agent for an airline manufacturer, is negotiating a sale with a representative of the U.S. government and with a representative of a developing country. Ted’s company has sufficient capacity to handle only one of the orders. Both orders will have

> Aubry, a cash basis and calendar year taxpayer, decides to reduce his taxable income for 2017 by buying $65,000 worth of supplies for his business on December 27, 2017. The supplies will be used up in 2018. a. Can Aubry deduct the expenditure for 2017? E

> What is the “actually paid” requirement for the deduction of an expense by a cash basis taxpayer? Does actual payment ensure a deduction? Explain.

> Boston Clothing Limited was a private company that experienced cash flow difficulties and hired new management to turn the company around. The company then went public and the shares sold at $15 per share. Within months, however, the share price plummete

> Nanette is a first-grade teacher. Potential deductions are charitable contributions of $800, personal property taxes on her car of $240, and various supplies purchased for use in her classroom of $225 (none reimbursed by her school). How will these items

> After his first business trip to a major city, Herman is alarmed when he reviews his credit card receipts. Both the hotel bill and the car rental charge are in excess of the price he was quoted. Was Herman overcharged, or is there an explanation for the

> Michael earned $20,000 at the K-M Resort Golf Club during the summer prior to his senior year in college. He wants to make a contribution to a traditional IRA, but the amount is dependent on whether it reduces his taxable income. If Michael is going to c

> Jarret owns City of Charleston bonds with an adjusted basis of $190,000. During the year, he receives interest payments of $3,800. Jarret partially financed the purchase of the bonds by borrowing $100,000 at 5% interest. Jarret’s interest payments on the

> Rosa’s employer has instituted a flexible benefits program. Rosa will use the plan to pay for her daughter’s dental expenses and other medical expenses that are not covered by health insurance. Rosa is in the 28% marginal tax bracket and estimates that t

> John and Mary Jane Diaz are married, filing jointly. Their address is 204 Shoe Lane, Blacksburg, VA 24061. John is age 35, and Mary Jane is age 30. They are expecting their first child in early 2018. John’s salary in 2017 was $105,000, from which $20,800

> Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6789. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daught

> Murphy has a brokerage account and buys on the margin, which resulted in an interest expense of $20,000 during the year. Income generated through the brokerage account was as follows: Municipal interest………………………………………$ 50,000 Taxable dividends and inter

> Printer Company pays a $25,000 annual membership fee to a trade association for paper wholesalers. The trade association estimates that 60% of its dues are allocated to lobbying activities. a. What are Printer’s total deductible expenses for tax purposes

> Vella owns and operates an illegal gambling establishment. In connection with this activity, he has the following expenses during the year: Rent………………………………………………. $ 24,000 Bribes………………………….………..…….…….40, 000 Travel expenses……………………………………4,000 Utiliti

> Maud, a calendar year taxpayer, is the owner of a sole proprietorship that uses the cash method. On February 1, 2017, she leases an office building to use in her business for $120,000 for an 18-month period. To obtain this favorable lease rate, she pays

> Falcon, Inc., paid salaries of $500,000 to its employees during its first year of operations. At the end of the year, Falcon had unpaid salaries of $45,000. a. Calculate the salary deduction if Falcon is a cash basis taxpayer. b. Calculate the salary ded

> Glenda, a calendar year and cash basis taxpayer, rents property from Janice. As part of the rental agreement, Glenda pays $8,400 rent on April 1, 2017, for the 12 months ending March 31, 2018. a. How much is Glenda’s deduction for rent expense in 2017? b

> List an advantage and a disadvantage of using the U.S. Tax Court as the trial court for Federal tax litigation.

> Stanford owns and operates two dry cleaning businesses. He travels to Boston to discuss acquiring a restaurant. Later in the month, he travels to New York to discuss acquiring a bakery. Stanford does not acquire the restaurant but does purchase the baker

> Bluebird, Inc., does not provide its employees with any tax-exempt fringe benefits. The company is considering adopting a hospital and medical benefits insurance plan that will cost approximately $9,000 per employee. To adopt this plan, the company may h

> Your client, John Butler, is an avid Houston Astros fan. Last March at the Astros’ home opener, as a result of a random drawing of those in attendance at the game, John won 300 Shipley Do-Nut coupons. Each coupon entitled him to a cup of coffee and a fre

> Murray reported to the Environmental Protection Agency that his employer was illegally dumping chemicals into a river. His charges were true, and Murray’s employer was fined. In retaliation, Murray’s employer fired him and made deliberate efforts to prev