Tamarisk Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use in its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing terms and options from each vendor. The Engineering Department has determined that each vendor’s punch press is substantially identical and each has a useful life of 20 years. In addition, Engineering has estimated that required year-end maintenance costs will be $1,100 per year for the first 5 years, $2,100 per year for the next 10 years, and $3,100 per year for the last 5 years. Following is each vendor’s sales package. Vendor A: $60,060 cash at time of delivery and 10 year-end payments of $18,850 each. Vendor A offers all its customers the right to purchase at the time of sale a separate 20-year maintenance service contract, under which Vendor A will perform all year-end maintenance at a one-time initial cost of $9,500. Vendor B: Forty semiannual payments of $10,280 each, with the first installment due upon delivery. Vendor B will perform all year-end maintenance for the next 20 years at no extra charge. Vendor C: Full cash price of $159,600 will be due upon delivery. Assuming that both Vendors A and B will be able to perform the required year-end maintenance, that Tamarisk’s cost of funds is 10%, and the machine will be purchased on January 1, compute the following:
In: Accounting
Vertical Analysis of Income Statement
Revenue and expense data for Innovation Quarter Inc. for two recent years are as follows:
| Current Year | Previous Year | |||
| Sales | $500,000 | $440,000 | ||
| Cost of goods sold | 340,000 | 277,200 | ||
| Selling expenses | 65,000 | 66,000 | ||
| Administrative expenses | 70,000 | 57,200 | ||
| Income tax expense | 10,000 | 17,600 | ||
a. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. If required, round percentages to one decimal place. Enter all amounts as positive numbers.
| Innovation Quarter Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Current year Percent | Previous year Amount | Previous year Percent | |
| Sales | $500,000 | % | $440,000 | % |
| Cost of goods sold | 340,000 | % | 277,200 | % |
| $ | % | $ | % | |
| Selling expenses | 65,000 | % | 66,000 | % |
| Administrative expenses | 70,000 | % | 57,200 | % |
| $ | % | $ | % | |
| % | % | |||
| Income tax expense | 10,000 | % | 17,600 | % |
| $ | % | $ | % | |
b. The vertical analysis indicates that the cost of goods sold as a percent of sales by 5 percentage points, while selling expenses by 2 percentage points, and administrative expenses by 1 percentage points. Thus, net income as a percent of sales by 2 percentage points.
In: Accounting
Derek and Meagan Jacoby recently graduated from State University and Derek accepted a job in business consulting while Meagan accepted a job in computer programming. Meagan inherited $36,000 from her grandfather who recently passed away. The couple is debating whether they should buy or rent a home. They located a rental home that meets their needs. The monthly rent is $2,450. They also found a three-bedroom home that would cost $136,000 to purchase. The Jacobys could use Meagan’s inheritance for a down payment on the home. Thus, they would need to borrow $100,000 to acquire the home. They have the option of paying two discount points to receive a fixed interest rate of 4.50 percent on the loan or paying no points and receiving a fixed interest rate of 5.70 percent for a 30-year fixed loan.
Though anything could happen, the couple expects to live in the home for no more than five years before relocating to a different region of the country. Derek and Meagan don’t have any school-related debt, so they will save the $36,000 if they don’t purchase a home. Also, consider the following information:
The couple’s marginal tax rate is 24 percent.
Regardless of whether they buy or rent, the couple will itemize their deductions.
If they buy, the Jacobys would purchase and move into the home on January 1, 2018.
If they buy the home, the property taxes for the year are $3,800.
Disregard loan-related fees not mentioned above.
If the couple does not buy a home, they will put their money into their savings account where they earn 5 percent annual interest.
Assume that all unstated costs are equal between the buy and rent option.
Required: Help the Jacobys with their decisions by answering the following questions: (Leave no answer blank. Enter zero if applicable.)
a If the Jacobys decide to rent the home, what is their after-tax cost of the rental for the first year (include income from the savings account in your analysis)? (Round your intermediate calculations to the nearest whole dollar amount.)
Derek and Meagan Jacoby recently graduated from State University and Derek accepted a job in business consulting while Meagan accepted a job in computer programming. Meagan inherited $36,000 from her grandfather who recently passed away. The couple is debating whether they should buy or rent a home. They located a rental home that meets their needs. The monthly rent is $2,450. They also found a three-bedroom home that would cost $136,000 to purchase. The Jacobys could use Meagan’s inheritance for a down payment on the home. Thus, they would need to borrow $100,000 to acquire the home. They have the option of paying two discount points to receive a fixed interest rate of 4.50 percent on the loan or paying no points and receiving a fixed interest rate of 5.70 percent for a 30-year fixed loan.
Though anything could happen, the couple expects to live in the home for no more than five years before relocating to a different region of the country. Derek and Meagan don’t have any school-related debt, so they will save the $36,000 if they don’t purchase a home. Also, consider the following information:
The couple’s marginal tax rate is 24 percent.
Regardless of whether they buy or rent, the couple will itemize their deductions.
If they buy, the Jacobys would purchase and move into the home on January 1, 2018.
If they buy the home, the property taxes for the year are $3,800.
Disregard loan-related fees not mentioned above.
If the couple does not buy a home, they will put their money into their savings account where they earn 5 percent annual interest.
Assume that all unstated costs are equal between the buy and rent option.
Required: Help the Jacobys with their decisions by answering the following questions: (Leave no answer blank. Enter zero if applicable.)
rev: 12_18_2018_QC_CS-151658
a. If the Jacobys decide to rent the home, what is their after-tax cost of the rental for the first year (include income from the savings account in your analysis)? (Round your intermediate calculations to the nearest whole dollar amount.)
Derek and Meagan Jacoby recently graduated from State University and Derek accepted a job in business consulting while Meagan accepted a job in computer programming. Meagan inherited $36,000 from her grandfather who recently passed away. The couple is debating whether they should buy or rent a home. They located a rental home that meets their needs. The monthly rent is $2,450. They also found a three-bedroom home that would cost $136,000 to purchase. The Jacobys could use Meagan’s inheritance for a down payment on the home. Thus, they would need to borrow $100,000 to acquire the home. They have the option of paying two discount points to receive a fixed interest rate of 4.50 percent on the loan or paying no points and receiving a fixed interest rate of 5.70 percent for a 30-year fixed loan.
Though anything could happen, the couple expects to live in the home for no more than five years before relocating to a different region of the country. Derek and Meagan don’t have any school-related debt, so they will save the $36,000 if they don’t purchase a home. Also, consider the following information:
The couple’s marginal tax rate is 24 percent.
Regardless of whether they buy or rent, the couple will itemize their deductions.
If they buy, the Jacobys would purchase and move into the home on January 1, 2018.
If they buy the home, the property taxes for the year are $3,800.
Disregard loan-related fees not mentioned above.
If the couple does not buy a home, they will put their money into their savings account where they earn 5 percent annual interest.
Assume that all unstated costs are equal between the buy and rent option.
Required: Help the Jacobys with their decisions by answering the following questions: (Leave no answer blank. Enter zero if applicable.)
rev: 12_18_2018_QC_CS-151658
a. If the Jacobys decide to rent the home, what is their after-tax cost of the rental for the first year (include income from the savings account in your analysis)? (Round your intermediate calculations to the nearest whole dollar amount.)
Derek and Meagan Jacoby recently graduated from State University and Derek accepted a job in business consulting while Meagan accepted a job in computer programming. Meagan inherited $36,000 from her grandfather who recently passed away. The couple is debating whether they should buy or rent a home. They located a rental home that meets their needs. The monthly rent is $2,450. They also found a three-bedroom home that would cost $136,000 to purchase. The Jacobys could use Meagan’s inheritance for a down payment on the home. Thus, they would need to borrow $100,000 to acquire the home. They have the option of paying two discount points to receive a fixed interest rate of 4.50 percent on the loan or paying no points and receiving a fixed interest rate of 5.70 percent for a 30-year fixed loan.
Though anything could happen, the couple expects to live in the home for no more than five years before relocating to a different region of the country. Derek and Meagan don’t have any school-related debt, so they will save the $36,000 if they don’t purchase a home. Also, consider the following information:
The couple’s marginal tax rate is 24 percent.
Regardless of whether they buy or rent, the couple will itemize their deductions.
If they buy, the Jacobys would purchase and move into the home on January 1, 2018.
If they buy the home, the property taxes for the year are $3,800.
Disregard loan-related fees not mentioned above.
If the couple does not buy a home, they will put their money into their savings account where they earn 5 percent annual interest.
Assume that all unstated costs are equal between the buy and rent option.
Required: Help the Jacobys with their decisions by answering the following questions: (Leave no answer blank. Enter zero if applicable.)
a. If the Jacobys decide to rent the home, what is their after-tax cost of the rental for the first year (include income from the savings account in your analysis)? (Round your intermediate calculations to the nearest whole dollar amount.)
b. What is the approximate break-even point in
years for paying the points to receive a reduced interest rate? (To
simplify this computation, assume the Jacobys will make
interest-only payments, and ignore the time value of money.)
(Do not round intermediate calculations. Round your final
answer to 1 decimal place.)
c. What is the after-tax cost (in interest and
property taxes) of living in the home for 2018? Assume that the
Jacobys' interest rate is 5.70 percent, they do not pay discount
points, they make interest-only payments for the first year, and
the value of the home does not change during the year.
(Round your intermediate calculations to the nearest whole
dollar amount.)
d. Assume that on March 1, 2018, the Jacobys sold their home for $159,000, so that Derek and Meagan could accept job opportunities in a different state. The Jacobys used the sale proceeds to (1) pay off the $100,000 principal of the mortgage, (2) pay a $10,000 commission to their real estate broker, and (3) make a down payment on a new home in the different state. However, the new home cost only $75,000. Assume they make interest-only payments on the loan.
Required:
d1. What gain or loss do the Jacobys realize and recognize on the sale of their home?
d2. What amount of taxes must they pay on the gain, if any?
e. Assume the same facts as in part (d), except that the Jacobys sell their home for $124,500 and they pay a $7,500 commission. What effect does the sale have on their 2018 income tax liability? Recall that the Jacobys are subject to an ordinary marginal tax rate of 24 percent and assume that they do not have any other transactions involving capital assets in 2018.
In: Accounting
Trina’s Trinkets Inc. (Trina’s) is a corporation incorporated and headquartered in Orem, Utah. Trina’s sells more than 3,600 different types of small trinkets and gifts, primarily to the end consumer, but also to wholesalers.
Trina’s has operated in Utah for the past 15 years. The company made a strategic decision to target expansion of its sales into specific geographic regions outside of Utah as well. This helps encourage word-of-mouth advertising, which reduces the costs of general advertising expenses. To that end, Trina’s is now selling in several nearby states, including Arizona, Idaho, Montana, Washington and Wyoming. Trina’s plans to expand further throughout the western United States in the coming years.
The founder, Trina, comes from rural Utah and has worked to increase opportunities in rural areas by building her manufacturing and warehousing facilities in the city of Ephraim in Sanpete County, Utah. Since Trina’s established its operations in Ephraim, both the city and county have grown significantly and the area is now considered urban.
Trina’s uses catalogs, phone calls and sales calls to make sales, but does not yet sell online. Trina’s ships all goods from Ephraim, Utah, using a third-party carrier (e.g., UPS, FedEx).[1]Trina’s only sells non-food items and does not offer services.
To handle customer inquiries, Trina’s opened a small call center in rural Riverton, Wyoming, three years ago. The call center employs eight people who help take orders, solve customer issues and take care of phone solicitations from small businesses. Trina chose Wyoming for the call center because she has extended family in the area and wanted to provide work opportunities for them.
In 2017, Trina’s began a pilot program in which salespeople are sent to several states to try and increase sales at larger businesses that buy Trina’s products and then resell them. To date, Trina’s has sent salespeople to Utah, Montana and Washington. This pilot program appears to be successful. In the coming years, Trina’s hopes to expand the program to all of the states in which she currently sells products and then she plans to reach several new markets.
Margins are slim for this business, ranging from 5% to 15% of sales before state sales taxes are determined. The industry is extremely competitive and Trina’s faces competition from many online companies that are not required to pay state sales tax. Because of the high competition (which is different than most companies), Trina’s does not feel that it can increase prices to collect sales tax, and instead sales taxes come out of the margins.
Given the tight margins and relatively high costs to manufacture in the United States, Trina is considering moving some of her manufacturing to Mexico and then purchasing warehouse space in Arizona. She has also considered trying to sell her products through Amazon.com. She continues to consider how her operations can positively impact rural areas.
Trina’s has struggled to compute sales taxes correctly for each jurisdiction. Trina’s hired you, a tax advisor, to answer a variety of sales-tax-related questions and create a system (or tool) to compute sales taxes for the business. Additionally, Trina is interested to know how the potential operational changes she is considering would affect her sales tax collection obligations.
For purposes of this case, you can ignore sales tax issues related to the shipping costs.
In: Accounting
In vitro fertilization (IVF) has become commonplace and fertility clinics in the US can nearly guarantee the child's gender. Gender selection is forbidden in many countries because politicians assume it will be used to produce boy babies. India and China have areas of the country where the gender imbalance is so skewed to men that they will have trouble finding spouses. In the Fertility Institutes of LA Dr. Steinberg asserts that there is roughly a 50/50 balance. What do you think of gender selection? Would you avail yourself of IVF if necessary?
An alternative assignment would be to discuss medical tourism where people go abroad to get a dental or medical procedure done, usually because of expense. Do you know someone who went abroad for medical tourism? What was the outcome? Would you go abroad if the cost savings were significant?
In: Accounting
Since the SUTA rates changes are made at the end of each year and there is much discussion about changes to the FUTA rate, the available 2018 rates were used for FUTA and SUTA.
Note: For this textbook edition the rate 0.6% was used for the FUTA tax rate for employers.
Example 5-5
Sutcliffe Company had taxable wages totaling $87,500 in 2019. During the year, the company paid some of its state contributions after the January 31, 2020, cutoff. The penalty for tardiness is shown in the following calculation of the firm's net FUTA tax for 2019:
| Amount of gross FUTA tax ($87,500 × 6.0%) | $5,250.00 | ||||||
| State taxable wages | $87,500 | ||||||
| Sutcliffe's SUTA tax rate | × 5.4% | ||||||
| Sutcliffe's SUTA tax | $ 4,725 | ||||||
| Breakdown of Sutcliffe's SUTA tax payments: | |||||||
| Before 1/31/20—$3,000 × 100% credit | (3,000.00) | ||||||
| After 1/31/20—$1,725 × 90% credit | (1,552.50) | ||||||
| Amount of net FUTA tax | $ 697.50 | ||||||
| If the company had made timely payments of its state contributions, the amount of its net FUTA tax would have been reduced to $525, for a savings of $172.50, as follows: | |||||||
| Amount of gross FUTA tax ($87,500 × 6.0%) | $5,250.00 | ||||||
| Total taxable wages | $87,500 | ||||||
| Credit against tax | × 5.4% | ||||||
| Total credit | 4,725.00 | ||||||
| Amount of net FUTA tax ($87,500 × 0.6%) | $ 525.00 | ||||||
| $697.50 − $525.00 = $172.50 savings | |||||||
Example 5-6
Yeldon Company has a $70,000 federal and state taxable payroll and has earned a reduced state tax rate of 4 percent. If none of its state tax payments are timely, the FUTA tax calculation is as follows:
| Gross FUTA tax ($70,000 × 0.060) | $4,200 | ||
| Less 90% credit for state taxes paid late ($70,000 × 0.04 × 90%) | $2,520 | ||
| Less additional credit for state tax if rate were 5.4% [$70,000 × (0.054 − 0.04)] | 980 | ||
| Total credit | 3,500 | ||
| Net FUTA tax | $ 700 |
If Yeldon Company had made its SUTA payments before the due date of Form 940, the credit for the payments (4%) and the additional credit (1.4%) would have provided a total credit of $3,780 and a FUTA tax savings of $280.
Roofling Company paid wages of $319,600 this year. Of this amount, $193,900 was taxable for net FUTA and SUTA purposes. The state's contribution tax rate is 4.3% for Roofling Company. Due to cash flow problems, the company did not make any SUTA payments until after the Form 940 filing date. Compute the following; round your answers to the nearest cent.
a. Amount of credit the company would receive
against the FUTA tax for its SUTA contributions
$
b. Amount that Roofling Company would pay to
the federal government for its FUTA tax
$
c. Amount that the company lost because of its
late payments
$
In: Accounting
Cruz Company has gathered the information needed to complete its Form 941 for the quarter ended September 30, 2019. They are a monthly depositor with the following monthly tax liabilities for this quarter:
| July | $7,193.10 |
| August | 7,000.95 |
| September | 7,577.78 |
State unemployment taxes are only paid to California. The company does not use a third-party designee, the tax returns are signed by the president, Carlos Cruz (Phone: 916-555-9739), and the date filed is October 31, 2019.
Complete Parts 2, 4, and 5 of Form 941 for Cruz Company for the third quarter of 2019.
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In: Accounting
Cruz Company has gathered the information needed to complete its Form 941 for the quarter ended September 30, 2019.
Using the information presented below, complete Part 1 of Form 941, rounding to the nearest cent.
Hint: Line 7 instructions. Fill in Form 941 through line 6, then fill in Part 2, line 16. Take that information and fill in line 13. Lines 12 and 13 must equal. If the amounts are not the same, correct by entering amount to make equal on line 7. Line 7 differences are caused by how calculations are made on Form 941 and the amounts withheld from employee's earning plus the employer's payroll tax amounts each pay.
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In: Accounting
Thermal Rising, Inc., makes paragliders for sale through
specialty sporting goods stores. The company has a standard
paraglider model, but also makes custom-designed paragliders.
Management has designed an activity-based costing system with the
following activity cost pools and activity rates:
Activity Cost Pool Activity Rate
Supporting direct labor $20 per direct labor-hour
Order processing $192 per order
Custom designing processing $255 per custom design
Customer service $428 per customer
--------------------------------------------------------------------------------
Management would like an analysis of the profitability of a
particular customer, Big Sky Outfitters, which has ordered the
following products over the last 12 months:
Standard
Model Custom
Design
Number of gliders 11 3
Number of orders 1 3
Number of custom designs 0 3
Direct labor-hours per glider 27.50 33.00
Selling price per glider $1,600 $2,320
Direct materials cost per glider $472 $580
--------------------------------------------------------------------------------
The company's direct labor rate is $22 per hour.
Required:
Using the company's activity-based costing system, compute the
customer margin of Big Sky Outfitters. (Round intermediate
calculations and final answer to the nearest whole number. Omit the
"$" sign in your response.)
In: Accounting
Do you think that the auditors' responsibility in auditing small public firms that are exempt from Section 404(b) of SOX is different from their role in auditing large accelerated filers that are subject to SOX 404(b) reporting requirements? please explain in detail
In: Accounting
College Coasters is a San Diego–based merchandiser specializing
in logo-adorned drink coasters. The company reported the following
balances in its unadjusted trial balance at December 1.
| Cash | $ | 10,005 |
| Accounts Receivable | 2,000 | |
| Inventory | 500 | |
| Prepaid Rent | 600 | |
| Equipment | 810 | |
| Accumulated Depreciation | 110 | |
| Accounts Payable | 1,500 | |
| Salaries and Wages Payable | 300 | |
| Income Taxes Payable | 0 | |
| Common Stock | 6,500 | |
| Retained Earnings | 3,030 | |
| Sales Revenue | 15,985 | |
| Cost of Goods Sold | 8,900 | |
| Rent Expense | 1,100 | |
| Salaries and Wages Expense | 2,000 | |
| Depreciation Expense | 110 | |
| Income Tax Expense | 0 | |
| Office Expenses | 1,400 | |
The company buys coasters from one supplier. All amounts in
Accounts Payable on December 1 are owed to that supplier. The
inventory on December 1 consisted of 1,000 coasters, all of which
were purchased in a batch on July 10 at a unit cost of $0.50.
College Coasters records its inventory using perpetual inventory
accounts and the FIFO cost flow method.
During December, the company entered into the following
transactions. Some of these transactions are explained in greater
detail below.
Other relevant information includes the following at 12/31:
What are the journal entries for a-n?
In: Accounting
true or false
A taxpayer should invest in tax exempt bonds instead of taxable
bonds if the interest on the exempt
bonds is greater than the interest on the taxable bonds multiplied
by 1 minus the taxpayer's marginal
tax rate
In: Accounting
In 20-- the annual salaries paid each of the officers of Abrew, Inc., follow. The officers are paid semimonthly on the 15th and the last day of the month. Compute the FICA taxes to be withheld from each officer's pay on (a) November 15 and (b) December 31.
Round your answers to the nearest cent. If an amount is zero, enter "0".
a.
| November 15 | |||||
Name and Title |
Annual Salary |
OASDI Taxable Earnings |
OASDI Tax |
HI Taxable Earnings |
HI Tax |
| Hanks, Timothy, President | $151,200 | $ | $ | $ | $ |
| Grath, John, VP Finance | 132,000 | ||||
| James, Sally, VP Sales | 69,600 | ||||
| Kimmel, Joan, VP Mfg. | 54,000 | ||||
| Wie, Pam, VP Personnel | 51,600 | ||||
| Grant, Mary, VP Secretary | 49,200 | ||||
b.
| December 31 | |||||
Name and Title |
Annual Salary |
OASDI Taxable Earnings |
OASDI Tax |
HI Taxable Earnings |
HI Tax |
| Hanks, Timothy, President | $151,200 | $ | $ | $ | $ |
| Grath, John, VP Finance | 132,000 | ||||
| James, Sally, VP Sales | 69,600 | ||||
| Kimmel, Joan, VP Mfg. | 54,000 | ||||
| Wie, Pam, VP Personnel | 51,600 | ||||
| Grant, Mary, VP Secretary | 49,200 | ||||
In: Accounting
Herbal Care is ready to begin its third quarter. The company has
requested a $40,000, 90-day loan for its bank to
help meet cash requirements during the quarter. The bank’s loan
officer has asked the Herbal to prepare a cash
budget for the quarter. In response, the following data have been
assembled:
1. On July 1, the beginning of the third quarter, the company will
have a cash balance of $65,000.
2. Actual sales for the last two months and budgeting sales for the
third quarter are shown below. Past
experience shows that 20% of a month’s sales are collected in the
month of the sale, 50% in the month
following the sale, and 25% in the second month following the sale.
The remainder is uncollectible.
Month Amount
May (actual) $350,000
June (actual) $380,000
July (budgeted) $450,000
August (budgeted) $550,000
September (budgeted) $260,000
3. Budgeted merchandise purchases and budgeted expenses for the
third quarter are shown below.
Merchandise purchases are paid in full during the month following
the purchase. Accounts payable for
merchandise purchases on June 30, which will be paid during July,
total $240,000. All other cash expenses are
paid in the month of the expense.
Item July August
September
Merchandise purchases $ 250,000 $ 250,000 $
245,000
Salaries and wages 50,000 50,000 50,000
Advertising 130,000 110,000 90,000
Rent payments 9,000 9,000 9,000
Depreciation 20,000 20,000 20,000
4. Equipment costing $30,000 will be purchased for cash during
July.
5. In preparing the cash budget, assume that the $40,000 loan will
be made in July and repaid in September.
Interest on the loan, $1200, will be paid in September.
Required:
Prepare a cash budget for the third quarter (July, August, and
September). Include four columns in your cash
budget: one for each month, and one for the entire third quarter.
In: Accounting
Joe operates a business that locates and purchases specialized
assets for clients, among other activities. Joe uses the accrual
method of accounting but he doesn’t keep any significant
inventories of the specialized assets that he sells. Joe reported
the following financial information for his business activities
during year 0.
Determine the effect of each of the following transactions on
the taxable business income. (Select "No Effect" from the
dropdown if no change in the taxable business
income.)
Required:
Joe has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully. In December, Joe delivers $13,350 worth of gadgets to the city that will be tested in March. Joe purchased the gadgets especially for this contract and paid $9,450.
Joe paid $275 for entertaining a visiting out-of-town client. The client didn’t discuss business with Joe during this visit, but Joe wants to maintain good relations to encourage additional business next year.
On November 1, Joe paid $590 for premiums providing for $59,000 of “key man” insurance on the life of Joe’s accountant over the next 12 months.
At the end of year 0, Joe’s business reports $11,850 of accounts receivable. Based upon past experience, Joe believes that at least $2,570 of his new receivables will be uncollectible.
In December of year 0, Joe rented equipment to complete a large job. Joe paid $5,850 in December because the rental agency required a minimum rental of three months ($1,950 per month). Joe completed the job before year-end, but he returned the equipment at the end of the lease.
Joe hired a new sales representative as an employee and sent her to Dallas for a week to contact prospective out-of-state clients. Joe ended up reimbursing his employee $490 for airfare, $540 for lodging, $440 for meals, and $340 for entertainment (Joe provided adequate documentation to substantiate the business purpose for the meals and entertainment). Joe requires the employee to account for all expenditures in order to be reimbursed.
Joe uses his BMW (a personal auto) to travel to and from his residence to his factory. However, he switches to a business vehicle if he needs to travel after he reaches the factory. Last month, the business vehicle broke down and he was forced to use the BMW both to travel to and from the factory and to visit work sites. He drove 215 miles visiting work sites and 84 miles driving to and from the factory from his home. Joe uses the standard mileage rate to determine his auto-related business expenses. (Round your answer to whole number. Use standard mileage rate.)
Joe paid a visit to his parents in Dallas over the Christmas holidays. While he was in the city, Joe spent $145 to attend a half-day business symposium. Joe paid $390 for airfare, $126 for meals during the symposium, and $77 on cab fare to the symposium.
In: Accounting