1. Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2020 and 2021. Assume taxable income was $1,063,000 in 2021. (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.)

2. Prepare the income tax expense section of the income statement for 2020, beginning with “Income before income taxes.” (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Suppose the first population is all Zoom meetings held in March 2020, the second population is all face-to-face meetings held in March 2020, and the parameter of interest is μ1 – μ2 = the difference in the mean number of people attending all Zoom meetings and the mean number of people attending all face-to-face meetings. For both Zoom meetings and face-to-face meetings the distributions are skewed heavily to the right due to some meetings that have many people in attendance.

It is known that the standard deviation of the number of people attending all Zoom meetings in March 2020 is 7.5, and that the standard deviation of the number of people attending all face-to-face meetings in March 2020 is 6.8. A simple random sample of 84 Zoom meetings from March 2020 was selected, and the mean number of people attending this sample of 84 meetings was 21.6. An independent simple random sample of 51 face-to-face meetings in March 2020 was selected, and the mean number of people attending this sample of 51 meetings was 17.4. If appropriate, use this information to calculate and interpret a 99% confidence interval for the difference in the mean number of people attending all Zoom meetings in March 2020 and the mean number of people attending all face-to-face meetings in March 2020.

On 1 November 2019, Pink Ltd issued a prospectus inviting applications for 200 000 ordinary shares to the public at an issue price of $4, payable as follows:
$2 on application (due by closing date of 1 February 2020)
$1 on allotment (due 31 March 2020)
$1 on future call/calls to be determined by the directors
By 1 February 2020, applications had been received for 250 000 ordinary shares of which applicants for 100 000 shares forwarded the full $4 per share and the remainder forwarded only the application money.
At a directors’ meeting on 15 February 2020, it was decided to allot shares in full to applicants who had paid $4 on application, to reject applications for 10 000 shares and to proportionally allocate shares to all remaining applicants. According to the company’s constitution, all surplus money from application can be transferred to Allotment and/or Call accounts. Share issue costs of $3 000 were also paid on 15 February 2020. All outstanding allotment money was received by 31 March 2020.
The call for $1 was made on 1 July 2020 with money due by 1 September 2020. All money was received by the due date.

Required:
Prepare the journal entries to record these transactions of Pink Ltd.

Lina purchased a new car for use in her business during 2019. The auto was the only business asset she purchased during the year and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2019 and 2020 (Lina doesn’t want to take bonus depreciation for 2019 or 2020) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.)

The vehicle cost $30,800 and business use is 100 percent (ignore §179 expense).

b. The vehicle cost $74,000, and business use is 100 percent.

c The vehicle cost $74,000, and she used it 80 percent for business.

d. The vehicle cost $74,000, and she used it 80 percent for business. She sold it on March 1 of year 2.

e. The vehicle cost $74,000, and she used it 20 percent for business.

f. The vehicle cost $74,000, and is an SUV that weighs 6,500 pounds. Business use was 100 percent.

Downtown Street, a British Company, is considering establishing an operation in the United States to assemble and distributes top hats. The initial investment is estimated to be £20,000,000 (British pounds - GBP) which is equivalent to US$23,000,000 at the current exchange rate. Given the current corporate income tax rate in the United States, Downtown Street estimates that total after-tax annual cash flow in each of the three years of the investments life would be US$10,000,000, US$12,000,000, and US$15,000,000, respectively. However, the U.S. national legislature is considering a reduction in the corporate income tax rate that would go into effect in the second year of the investment’s life, and would result in the following total annual cash flows: US$10,000,000 in year 1, US$14,000,000 in year two, and US$18,000,000 in year three. Downtown Street estimates the probability of the tax rate reduction occurring at 50%. Downtown Street uses a discount rate of 12% evaluating potential capital investments. Present value factors are as follows:

Period PV Factor

1 0.893

2 0.797

3 0.712

The U.S. operation will distribute 100% of its after-tax annual cash flow to Downtown Street as a dividend at the end of each year. The terminal value of the investment at the end of three years is estimated to be US$25,000,000. Neither the dividends nor the terminal value received from the U.S. investment will be subject to a British income tax.

Exchange rate between GBP and USD are forecasted as follows:

Year 1 GBP 0.74 = USD 1.00

Year 2 GBP 0.70 = USD 1.00

Year 3 GBP 0.60 = USD 1.00

Determine the expected net present value of the potential US investment from a parent company perspective.

Consider the information provided for Peak Financial Services

You must use formula to construct the ledger accounts, profit and loss statement, and balance sheet.

                                        PEAK FINANCIAL SERVICES

                             UNADJUSTED TRIAL BALANCE AS AT 31^st MAY 2020

ACCOUNT                                                      DR                            CR

CASH AT BANK                                                                          88,300 –

ACCOUNTS RECEIVABLE 48,300 –

GST RECEIVABLE                                                                     4,380    -

PREPAID RENT                                                                          9,000    -

PREPAID INSURANCE                                                               8,000    -

OFFICE SUPPLIES                                                                     4,700 -

OFFICE EQUIPMENT                                                                 92,400 -

ACCUMULATED DEPRECIATION – OFFICE EQUIPMENT     -                       25,000

ACCOUNTS PAYABLE –                       26,800

UNEARNED FEES –                      12,200

LOAN PAYABLE – DUE 31 DECEMBER 2019                                 –                      25,000

GST PAYABLE    –                       5,980

CAPITAL (A, PEAK) –                      32,000

DRAWINGS (A, PEAK) 12,500 –

FEES REVENUE                                                                          –                         213,700

GAS EXPENSE                                                                             750 -

FUEL EXPENSE                                                                           6,400 -

RENT EXPENSE                                                             30,000 -

SLALARIES EXPENSE    32,800 -

PHONE AND INTERNET EXPENSE 3,150    -

TOTALS                                                                            3,40,680 3,40,680

June transactions

Date                               transaction                                               amount

1/06/2020   cash receipts from customers for money owed $19,800

2/06/2020     purchased a work van paying a 20% cash deposits and taking out a 4-year 6% loan to cover the balance $67,100

5/06/2020 purchased office supplies on credit, due 15 July $2,200

9/06/2020 received a cash deposit upfront from a customer for financial advisory work to be completed during July 2020 $4730

12/06/2020 cash receipts from customers for moneys owed $22,185

15/06/2020 paid all outstanding accounts payable from previous month

22/06/2020 received gas bill $330

24/06/2020 paid June salaries to this date $2,400

26/06/2020 received and paid mobile phone and internet bill for month of June $374

28/06/2020 settled previous month GST with ATO

29/06/2020 cash receipts from customers for moneys owed $3,250

30/06/2020 record all June sales on credit $21,340

30/06/2020    received bank interest $230

30/06/2020 one customer was declared bankrupt during June. Their debt is judged to be non-recoverable (a bad debt). $2,310

Additional Information:

• All sales are credit sales (30 days).
• Unless stated all amounts are GST inclusive or GST exempt.
• Interest expense of $227 has accrued in June on the loans payable
• A physical count of office supplies on 30 June shows $2400 of unused supplies on hand
• Depreciation of the office equipment this year is estimated to be $9,400.
• Depreciation of the motor vehicle will be determined using the straight-line method. The business estimates the useful life of the van to be 5 years, and the residual value to be $16,000. Based on these values, the business estimates annual depreciation on the van to be $9,000 per year.
• Prepaid insurance was paid on the 1st of April 2020 and covered a period of 6 months.
• Prepaid rent balance as at 1 July 2020 should be $2,800.
• Of the unearned fees balance as at 31st May, 60% were refunded to a customer as the business was unable to complete the work prior to 30 June as previously agreed, the remainder of the unearned fees were earned during June.
• Salaries expense accrued for the last week in June amounts to $2,800. Ignore PAYG related to salaries.
• The fuel expense for June of approximately $800 has not been recorded or paid.
• At the end of the month A, Peak withdrew $4,500 for his own use

Consider the information provided for Peak Financial Services

You must use formula to construct the ledger accounts, profit and loss statement, and balance sheet.

                                        PEAK FINANCIAL SERVICES

                             UNADJUSTED TRIAL BALANCE AS AT 31^st MAY 2020

ACCOUNT                                                      DR                            CR

CASH AT BANK                                                                          88,300 –

ACCOUNTS RECEIVABLE 48,300 –

GST RECEIVABLE                                                                     4,380    -

PREPAID RENT                                                                          9,000    -

PREPAID INSURANCE                                                               8,000    -

OFFICE SUPPLIES                                                                     4,700 -

OFFICE EQUIPMENT                                                                 92,400 -

ACCUMULATED DEPRECIATION – OFFICE EQUIPMENT     -                       25,000

ACCOUNTS PAYABLE –                       26,800

UNEARNED FEES –                      12,200

LOAN PAYABLE – DUE 31 DECEMBER 2019                                 –                      25,000

GST PAYABLE    –                       5,980

CAPITAL (A, PEAK) –                      32,000

DRAWINGS (A, PEAK) 12,500 –

FEES REVENUE                                                                          –                         213,700

GAS EXPENSE                                                                             750 -

FUEL EXPENSE                                                                           6,400 -

RENT EXPENSE                                                             30,000 -

SLALARIES EXPENSE    32,800 -

PHONE AND INTERNET EXPENSE 3,150    -

TOTALS                                                                            3,40,680 3,40,680

June transactions

Date                               transaction                                               amount

1/06/2020   cash receipts from customers for money owed $19,800

2/06/2020     purchased a work van paying a 20% cash deposits and taking out a 4-year 6% loan to cover the balance $67,100

5/06/2020 purchased office supplies on credit, due 15 July $2,200

9/06/2020 received a cash deposit upfront from a customer for financial advisory work to be completed during July 2020 $4730

12/06/2020 cash receipts from customers for moneys owed $22,185

15/06/2020 paid all outstanding accounts payable from previous month

22/06/2020 received gas bill $330

24/06/2020 paid June salaries to this date $2,400

26/06/2020 received and paid mobile phone and internet bill for month of June $374

28/06/2020 settled previous month GST with ATO

29/06/2020 cash receipts from customers for moneys owed $3,250

30/06/2020 record all June sales on credit $21,340

30/06/2020    received bank interest $230

30/06/2020 one customer was declared bankrupt during June. Their debt is judged to be non-recoverable (a bad debt). $2,310

Additional Information:

• All sales are credit sales (30 days).
• Unless stated all amounts are GST inclusive or GST exempt.
• Interest expense of $227 has accrued in June on the loans payable
• A physical count of office supplies on 30 June shows $2400 of unused supplies on hand
• Depreciation of the office equipment this year is estimated to be $9,400.
• Depreciation of the motor vehicle will be determined using the straight-line method. The business estimates the useful life of the van to be 5 years, and the residual value to be $16,000. Based on these values, the business estimates annual depreciation on the van to be $9,000 per year.
• Prepaid insurance was paid on the 1st of April 2020 and covered a period of 6 months.
• Prepaid rent balance as at 1 July 2020 should be $2,800.
• Of the unearned fees balance as at 31st May, 60% were refunded to a customer as the business was unable to complete the work prior to 30 June as previously agreed, the remainder of the unearned fees were earned during June.
• Salaries expense accrued for the last week in June amounts to $2,800. Ignore PAYG related to salaries.
• The fuel expense for June of approximately $800 has not been recorded or paid.
• At the end of the month A, Peak withdrew $4,500 for his own use

What is FinTech? Give some examples. Is the U.S. ahead or behind in the FinTech revolution. How do you think FinTech will change financial transactions in the next decade in the U.S.?

Discuss the economic impact of the Tax Cuts and Jobs Act of 2017 (TCJA) on:

1. U.S. corporations.

2. U.S. economy

3. Other countries including tax havens

What features could be beneficial to our own healthcare system in the U.S. and why? What are the tradeoffs structurally and financially? Who benefits the most? The least if they were to be implemented in the U.S.?