During the year, Janice invested $10,000 (tax basis and at-risk basis) into XYZ limited partnership (a passive investment). Her share of the limited partnership income for the year was $6,000, and Janice received a $5,000 distribution from XYZ limited partnership.

During the year, Janice also invested $6,000 (tax basis and at-risk basis) into ABC limited partnership (a passive investment). Her share of the limited partnership loss for the year was $7,000, and Janice received a $1,500 distribution from ABC limited partnership.

What will be the net income/loss reported on Schedule 1 line 5 of a 2019 tax return? Will there be a carry forward?

Hello,

Just want to compare.

Thanks,

Denver Cabinets Company (DCC) produces and sells specialty wooden cabinets. Production

is machine-intensive. DCC’s variable costs are direct materials, variable machining costs

and sales commissions. Robert Denver, the owner, is planning production for 2011.

Salespeople are paid a 6% commission on each Colonial or Modern models sold and an 8%

commission on each Distressed model sold. Fixed costs (administrative/selling and

production) total $8,750,000. Annual capacity is 50,000 machine hours which is limited by

the availability of machines. Variable machining costs are $200 per hour.

Type of Wooden Cabinet                                    Annual Demand in Units              Selling Price Per Unit             Direct Material cost per unit         Variable Machining Cost Per Unit

Colonial                                                                       4,000                                                 $3,000                                              $750                                                      $600

Modern                                                                        5,000                                                 $2,100                                              $500                                                      $500

Distressed                                                                  30,000                                                $800                                                $100                                                       $300

a. Calculate the machine hours per unit required to satisfy the estimated demand for

each type of cabinet.

b. Calculate the contribution margin per unit earned from each type of cabinet?

c. Advise Mr. Denver on the most profitable product mix based on these three models.

The company uses a single plantwide factory overhead rate. The budgeted Factory Overhead Costs for the year are $1,400,000 and allocates factory overhead based on direct labor hours. The company plans to make 100,000 shirts and 50,000 pairs of pants. It takes 2 direct labor hours to make a shirt and 3 direct labor hours to make a pair of pants. What are the total number of direct labor hours? What is the single plantwide factory overhead rate?

Answers should be entered as whole numbers with no signs or punctuation

Total direct labor hours:

Single plantwide factory overhead rate per direct labor hour:

How much FOH is allocated to a single shirt:

How much FOH is allocated to a single pair of paints:

What are the two basic methods of accounting for long-term construction contracts? Indicate the circumstances that determine when one or the other of these methods should be used.

What are the major lessor groups? What advantage does a captive have in a leasing agreement? Identify the two recognized lease accounting methods for lessees and distinguish between them

Lance contributed investment property worth $512,500, purchased Five years ago for $210,000 cash, to Cloud Peak LLC in exchange for an 65 percent profits and capital interest in the LLC. Cloud Peak owes $520,000 to its suppliers but has no other debts. a. What is Lance’s tax basis in his LLC interest? b. What is Lance’s holding period in his interest? c. What is Cloud Peak’s basis in the contributed property? d. What is Cloud Peak’s holding period in the contributed property?

Problem 4-1 On January 1, 2011, Perelli Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a long-term investment. The purchase price of $4,974,200 was paid in cash. At the purchase date, the balance sheet of Singer Company included the following:

Current assets $2,909,500

Long-term assets 3,887,900

Other assets 756,100

Current liabilities 1,547,800

Common stock, $20 par value 1,996,500

Other contributed capital 1,900,500

Retained earnings 1,605,500

Additional data on Singer Company for the four years following the purchase are:

2011 2012 2013 2014

Net income (loss) $1,984,600 $480,200 ($178,200 ) ($324,300 )

Cash dividends paid, 12/30 499,700   499,700 499,700 499,700

Prepare journal entries under each of the following methods to record the purchase and all investment-related subsequent events on the books of Perelli Company for the four years, assuming that any excess of purchase price over equity acquired was attributable solely to an excess of market over book values of depreciable assets (with a remaining life of 15 years). (Assume straight-line depreciation.)

Perelli uses the complete equity method to account for its investment in Singer. (Round answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date Account Titles and Explanation Debit Credit

2011 (To record the investment)

(To record dividend income)

(To record equity income (loss))

(To record amortization)

2012 (To record dividend income)

(To record equity income (loss))

(To record amortization)

2013 (To record dividend income)

(To record equity income (loss))

(To record amortization)

2014 (To record dividend income)

(To record equity income (loss))

(To record amortization)

Interview Notes

• Jeff and Linda got married in December of 2018.
• They are both U.S. citizens with valid Social Security numbers.
• They do not elect to file a joint return for 2018.
• Jeff worked all year and received wages of $32,000. He received full health insurance coverage from his employer all year.
• Linda worked part-time at a book store January through September. She earned $9,000 for the year. In November, she started working at the library. She had health insurance through her employers, except for the month of October when she was unemployed.

1. Jeff may need to make a shared responsibility payment. True/False

2. Linda does not need to make a shared responsibility payment because she qualifies for an exemption under the short coverage gap criteria.True/False

Interview Notes

• Ava is 43, divorced, and earned $38,000 in wages.
• Ava's 20-year-old son, David, is unmarried and a full-time student working towards a degree in Business Administration. David lives on campus during the school year and spent the summer at home with his mother.
• David does not have a felony drug conviction.
• Ava paid $4,000 of David's tuition that was not covered by his scholarship.
• Ava provided more than half of her son's support and all the cost of his room and board on campus.
• David's only income was $3,800 in wages.
• Ava and David are U.S. citizens and have valid Social Security numbers.

3. Ava cannot claim her son for the earned income credit because he did not live with her for more than half the year and does not meet the residency test.

A. True, David only lived with his mother during the summer, which was less than six months.

B. False, attendance at school is considered a temporary absence and this time is counted as time that her child lived with her.

Interview Notes

• Ava is 43, divorced, and earned $38,000 in wages.
• Ava's 20-year-old son, David, is unmarried and a full-time student working towards a degree in Business Administration. David lives on campus during the school year and spent the summer at home with his mother.
• David does not have a felony drug conviction.
• Ava paid $4,000 of David's tuition that was not covered by his scholarship.
• Ava provided more than half of her son's support and all the cost of his room and board on campus.
• David's only income was $3,800 in wages.
• Ava and David are U.S. citizens and have valid Social Security numbers.

4. David is Ava’s qualifying person for which of the following? (Select all that apply)

A. Head of Household filing status

B. Credit for other dependents

C. Education credit

D. Child tax credit

Interview Notes

• Ellen is 62. During the interview, she mentions that she always filed a joint return with her husband who died in 2014.
• Ellen has not remarried and she pays all the cost of keeping up her home. She earned $28,500 in wages for 2018.
• Ellen provides all the support for her two grandchildren who lived with her all year. Tricia is 12 years old and Evan is 16 years old.
• She does not have enough deductions to itemize.
• Her income tax before credits is $1,050.
• Ellen, Tricia, and Evan are all U.S. citizens with valid Social Security numbers.

5. What is the amount of Ellen's standard deduction?

A. $24,000

B. $19,600

C. $18,000

D. $12,000

6. The maximum amount of additional child tax credit that Ellen is able to claim per qualifying child is:

A. $500

B. $1,000

C. $1,400

D. $2,000

Interview Notes

• Christopher and his wife Amanda have lived in the United States since 2012 and have Individual Taxpayer Identification Numbers (ITINs).
• Christopher is 45 and Amanda is 40. They have been married since 2000. They both worked in 2018 and their combined wages for the year were $40,000.
• They have one child, Jennifer, who is 3 years old and lived with them all year. Jennifer is a U.S. citizen and has a valid Social Security number.
• In order for them to work, they paid $5,000 in daycare for Jennifer. The statement from the daycare provider includes the provider's name, address, valid Employer Identification Number, and the amount paid for Jennifer's care.
• Christopher and Amanda provided all the support for Jennifer and all the costs of keeping up their home.

7. Can Christopher and Amanda claim Jennifer as a qualifying child for the earned income credit (EIC)?

A. Yes, because their income is below the threshold for claiming EIC.

B. Yes, because Jennifer is 3 years old and lives with her parents.

C. No, because Christopher and Amanda both have ITINs.

D. Both A and B.

8. Which credits can Christopher and Amanda claim on their tax return?

A. Child and dependent care credit

B. Child tax credit

C. Credit for other dependents

D. Both A and B

Interview Notes

• Mathew and Ashley are both 28 years old.
• Mathew and Ashley are not married to each other and lived together all year. Mathew has never been married. Ashley is still legally married to another man, but she does not want to file a joint return with her spouse.
• Ashley earned $27,000 in wages during 2018. Mathew received $13,000 in wages.
• Mathew has two children from a previous relationship. Mark is 9 and Kevin is 6 years old. Mark and Kevin lived with Mathew and Ashley for all of 2018. Mark and Kevin did not provide over half of their own support.
• Ashley paid all the rent, utilities, and household expenses. Mathew did not pay any household expenses.
• Mathew, Ashley, Mark, and Kevin are all U.S. citizens with valid Social Security numbers.

9. Which of the following statements is true?

A. Both Ashley and Mathew's filing status is Single.

B. Ashley is eligible to claim Head of Household and Mathew must file Single.

C. Ashley's filing status is Married Filing Separately and Mathew's filing status is Single.

D. Ashley's filing status is Married Filing Separately and Mathew's filing status is Head of Household.

10. Who can claim Mark and Kevin as qualifying children for earned income credit?

A. Ashley

B. Mathew

C. Both Mathew and Ashley

Interview Notes

• George and Helen have an 18-year-old son, Joshua, who lived with them all year and is a college student.
• George and Helen provided all the support for Joshua and all the costs of keeping up their home.
• Joshua worked during the year and received wages of $2,000. He had $140 of federal withholding.
• The Reeds have a balance due on their return and are unsure what to do.
• George, Helen, and Joshua are U.S. citizens with valid Social Security numbers.

11. What actions should George and Helen take to prevent having a balance due next year?

A. They should use the withholding calculator.

B. They should adjust their Form W-4 to increase withholding.

C. There is no way to prevent a balance due.

D. Both A and B.

12. What options do George and Helen have if they are not able to full pay their balance due by the due date of the return?

A. Wait to file their return until they have the money to pay the full amount owed.

B. File Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

C. Pay as much as they can by the due date of the return and request a payment plan.

D. Both A and C.

13. George and Helen ask if their son Joshua should file a tax return for 2018. How should the volunteer respond?A. Joshua is exempt from filing because he is a student.

B. Joshua does not have to file because he is their dependent and they can claim his income on their tax return.

C. Joshua must file based on the 2018 filing threshold for children and other dependents.

D. Joshua should file a tax return to claim a refund of his withholding.

14. What is the amount of gambling winnings claimed on Jacob's and Martha's 2018 tax return?

A. $0

B. $1,300

C. $2,000

D. $2,500

15. Jacob and Martha can claim $2,000 of qualified education expenses to calculate Daniel's American opportunity credit.True/False

16. How much of Martha and Jacob's Social Security is taxable?

A. $0

B. $6,851

C. $7,169

D. $26,350

17. The amount of Martha and Jacob's standard deduction is $________.

18. Which of the following items are included in the total payments on Jacob and Martha's tax return?

A. Federal income tax withheld from Forms W-2 and 1099

B. $400 applied from 2017 return

C. Refundable credits

D. All of the above

19. What form must be used to split Jacob and Martha’s refund?

A. Form 8888, Allocation of Refund (Including Savings Bond Purchases)

B. Form 8880, Credit for Qualified Retirement Savings Contributions

C. Form 8862, Information To Claim Earned Income Credit After Disallowance

D. There is no form. A refund can't be split.

20. Does Emily have to pay a shared responsibility payment on her tax return?

A. Yes, she did not have full health coverage for 12 months of the year.

B. No, she can claim a short coverage gap exemption on her tax return.

21. The amount of Emily's education credit claimed on her tax return is $________.

22. Emily's total federal income tax withheld is $________.

23. What is the total credit amount shown on Form 2441, Child and Dependent Care Expenses?

A. $0

B. $600

C. $660

D. $792

24. Emily is eligible to claim the child tax credit on her 2018 tax return.True/False

25. Emily is subject to the 10% additional tax from her 401(k) distribution.True/False

Alfonso sells a passive activity in the current year for $800,000. His adjusted basis in the activity is $200,000, and he uses the installment method of reporting the gain. The activity has suspended losses of $44,000. Alfonso receives $400,000 in the year of sale.

Enter as a percentage. For example, .35 would be entered as "35". %

a. What is his gross profit ratio on the sale? _________________%      

b. His recognized gain for the current year is $. ____________________

c. Alfonso can currently deduct $______________________ of suspended losses.

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2020 balance sheet disclosed the following:

During 2021, credit sales were $1,820,000, cash collections from customers $1,900,000, and $53,000 in accounts receivable were written off. In addition, $4,400 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following:

Required:
1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off.
2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:

1. Bad debt expense is estimated to be 3% of credit sales for the year.
2. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.
3. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

3. For situations (a)−(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet?
  

Assume a product has the following activities and overhead costs:

Production ($40 per labor hour)

Assembly ($25 per labor hour)

Quality Inspection ($100 per inspection)

Also assume that each product requires 5 hours of direct labor hours for production, 4 hours of direct labor hours for assembly, and one inspection for every 10 units produced.

If the company produces 100 units, what is the total overhead cost?

Second case #1:

CRV Corp manufactures small plastic fittings for plumbing applications. They have accepted a new contract to provide a wide range of custom plastic fittings. To service the contract, CRV purchases a new, highly complex plastic injection molding machine. CRV’s fiscal year coincides with the calendar year. The machine is installed and operational as of July 1, 2015.

CRV provides the following data:

1. Purchase price of machine: $275,000

2. Shipping and installation: $ 45,000

3. Training costs: $ 15,000

4. Useful life: 5 years

5. Estimated salvage: $ 12,500

Required:

1. Prepare a depreciation schedule showing Net Book value (beginning and ending), depreciation expense, and accumulated depreciation for the asset. Hint: pay attention to dates of acquisition and fiscal year.

Prepare one schedule for each method:

a. Straight-line

b. Double-declining balance

Excel Format

2. Qualitative analysis:

CRV Company receives an offer of $159,000 for the machine in December, 2018.

a. What factors should CRV Company consider in determining whether to sell or keep the machine?

b. Evaluate the implication on taxable income under each deprecation method assuming CRV sells the machine at the end of December 2018.

Use $ values to support your support your written narrative.

#2: Inventory valuation:

The operations manager for CRV has asked you to provide a quantitative and qualitative inventory analysis using a sample of purchases as shown below.

The manager has asked for the following:

1. Calculate the $ ending inventory and $ cost of goods sold using each of the following inventory methods:

a. FIFO

b. LIFO

c. Average cost

2. Which inventory method would you recommend for reporting for income tax purposes to minimize taxable income? Why?

3. The company is operating in an inflationary environment. Which method should the company use to maximize inventory valuation? Why?

4. Looking at the purchasing volume versus demand, what guidance would you offer to the operations manager regarding inventory management and cash flow?

All calculations must be indicated via Excel formulas.

What process is used estimate revenues and costs of alternative actions availavbe to decision makers? And how does two-stage Activity-Based costing (ABC) assign costs?