Question

Please complete all the sections

Accounts	Net Income per Books		Adjustments		Taxable Income
Sales Revenue	$1,500,000.00
Cost of Goods Sold	($600,000.00)
Gross Margin	$900,000.00
Dividends from 10% owned Corporation	$2,000.00
Interest from city issued bonds	$500.00
Capital Gains from sale of real estate	$10,000.00
Salary (payment to a single officer)	($500,000.00)
Parking fines	($200.00)
Organizational Expense (Total $60,000) Amortize over 10 years company started this year (1/1/2019)	($6,000.00)
Bad Debt Expense (for AR allowance adjustment; 50% of accrual amount actually written off)	($15,000.00)
Owner Expensed his personal trip to Las Vegas	($3,500.00)
Guarateed Payments	($7,000.00)
Goodwill Impairment	$0.00
Capital Loss from sale of equipment	($4,000.00)
Warrant Expense (Actual payments = $2,000)	($1,500.00)
Depreciation Expense ($10,000 piece of equipment acquired on 6/1/2019. MACRS 5 year property)	($1,000.00)
Charitable Contributions	($35,000.00)
Meals and Entertainment	($5,000.00)
Net Income	$334,300.00		$0.00		$0.00

Accounts		Ordinary Items		Separately Stated Items
Sales Revenue
Cost of Goods Sold
Gross Margin
Dividends from 10% owned Corporation
Interest from city issued bonds
Capital Gains from sale of real estate
Salary (payment to a single officer)
Parking fines
Organizational Expense (Total $60,000) Amortize over 10 years company started this year (1/1/2019)
Bad Debt Expense (for AR allowance adjustment; 50% of accrual amount actually written off)
Owner Expensed his personal trip to Las Vegas
Guarateed Payments
Goodwill Impairment
Capital Loss from sale of equipment
Warrant Expense (Actual payments = $2,000)
Depreciation Expense ($10,000 piece of equipment acquired on 6/1/2019. MACRS 5 year property)
Charitable Contributions
Meals and Entertainment
Net Income		$0.00		$0.00

Answer 1

Answer:
Accounts	Net Income per Books	Adjustments	Taxable Income
Sales Revenue	$1,500,000.00	$               -	$1,500,000.00
Cost of Goods Sold	$ (600,000.00)	$               -	$ (600,000.00)
Gross Margin	$    900,000.00	$               -	$900,000.00
Dividends from 10% owned Corporation	$2,000.00	$               -	$2,000.00
Interest from city issued bonds	$500.00	$               -	$500.00
Capital Gains from sale of real estate	$10,000.00	$               -	$10,000.00
Salary (payment to a single officer)	$ (500,000.00)	$               -	$ (500,000.00)
Parking fines	$ (200.00)	$      200.00	$0.00	(Parking Fines are not deductible items)
Organizational Expense (Total $60,000) Amortize over 10 years company started this year (1/1/2019)	$ (6,000.00)	$               -	$ (6,000.00)
Bad Debt Expense (for AR allowance adjustment; 50% of accrual amount actually written off)	$ (15,000.00)	$   7,500.00	$ (7,500.00)	(Allowed only 50% as only that much is actally written off)
Owner Expensed his personal trip to Las Vegas	$ (3,500.00)	$   3,500.00	$0.00
Guarateed Payments	$ (7,000.00)	$               -	$ (7,000.00)
Goodwill Impairment	$0.00	$               -	$0.00
Capital Loss from sale of equipment	$ (4,000.00)	$               -	$ (4,000.00)
Warrant Expense (Actual payments = $2,000)	$ (1,500.00)	$ (500.00)	$ (2,000.00)	(Actual expenses are allowed)
Depreciation Expense ($10,000 piece of equipment acquired on 6/1/2019. MACRS 5 year property)	$ (1,000.00)	$ (1,000.00)	$ (2,000.00)	(Assuming Half Year Convention, Depreciation rate for 5 year property is 20%), so total depreciation allowed in 20% of $10,000 = $ 2,000)
Charitable Contributions	$ (35,000.00)	$               -	$ (35,000.00)
Meals and Entertainment	$ (5,000.00)	$ 2,500.00	$ (2,500.00)	(only 50% is deductible business expenses)
Net Income	$334,300.00	$12,200.00	$346,500.00

Accounts	Ordinary Items	Separately Stated Items
Sales Revenue	$1,500,000.00
Cost of Goods Sold	$ 600,000.00)
Gross Margin	$    900,000.00
Dividends from 10% owned Corporation		$       2,000.00
Interest from city issued bonds		$          500.00
Capital Gains from sale of real estate		$     10,000.00
Salary (payment to a single officer)		$ (500,000.00)
Parking fines	$ -
Organizational Expense (Total $60,000) Amortize over 10 years company started this year (1/1/2019)	$ (6,000.00)
Bad Debt Expense (for AR allowance adjustment; 50% of accrual amount actually written off)	$ (7,500.00)
Owner Expensed his personal trip to Las Vegas	$                     -
Guarateed Payments		$ (7,000.00)
Goodwill Impairment	$                     -	$                    -
Capital Loss from sale of equipment		$ (4,000.00)
Warrant Expense (Actual payments = $2,000)	$ (2,000.00)
Depreciation Expense ($10,000 piece of equipment acquired on 6/1/2019. MACRS 5 year property)	$ (2,000.00)
Charitable Contributions		$ (35,000.00)
Meals and Entertainment	$                     -	$ (2,500.00)
Net Income	$    882,500.00	$ (536,000.00)