Assignment Questions

5. The Samsons are trying to determine whether they can claim their 22-year-old adopted son, Jason, as a dependent. Jason is currently a full-time student at an out-of-state university. Jason lived in his parents’ home for three months of the year and he was away at school for the rest of the year. He received $9,500 in scholarships this year for his outstanding academic performance and earned $4,800 of income working a part-time job during the year. The Samsons paid a total of $5,000 to support Jason while he was away at college. Jason used the scholarship, the earnings from the part-time job, and the money from the Samsons as his only sources of support.

d. Assume the original facts except that Jason earned $5,500 while working part-time and used this amount for his support. Can the Samsons claim Jason as their dependent?

yes or no?

6. [The following information applies to the questions displayed below.]

Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income, causing the joint return year 2 tax liability to be understated by $9,800 and Crewella’s year 3 separate return tax liability to be understated by $9,500. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank – be certain to enter “0” wherever required.)

a. What amount of tax can the IRS require Jasper to pay for the Dahvill’s year 2 joint return?

Amount of tax: ?

7. Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income, causing the joint return year 2 tax liability to be understated by $9,800 and Crewella’s year 3 separate return tax liability to be understated by $9,500. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank – be certain to enter “0” wherever required.)

b. What amount of tax can the IRS require Jasper to pay for Crewella’s year 3 separate tax return?

Amount of tax: ?

8. Camille Sikorski was divorced last year. She currently provides a home for her 15-year-old daughter, Kaly, and 18-year-old son, Parker. Both children lived in Camille’s home, which she owns, for the entire year, and Camille paid for all the costs of maintaining the home. She received a salary of   $80,000 and contributed $5,200 of it to a qualified retirement account (a for AGI deduction). She also received $11,000 of alimony from her former husband. Finally, Camille paid $3,700 of expenditures that qualified as itemized deductions.

a. What is Camille’s taxable income?

9. Camille Sikorski was divorced last year. She currently provides a home for her 15-year-old daughter, Kaly, and 18-year-old son, Parker. Both children lived in Camille’s home, which she owns, for the entire year, and Camille paid for all the costs of maintaining the home. She received a salary of   $80,000 and contributed $5,200 of it to a qualified retirement account (a for AGI deduction). She also received $11,000 of alimony from her former husband. Finally, Camille paid $3,700 of expenditures that qualified as itemized deductions.

b. What would Camille’s taxable income be if she incurred $11,300 of itemized deductions instead of $3,700?

10. Camille Sikorski was divorced last year. She currently provides a home for her 15-year-old daughter, Kaly, and 18-year-old son, Parker. Both children lived in Camille’s home, which she owns, for the entire year, and Camille paid for all the costs of maintaining the home. She received a salary of   $80,000 and contributed $5,200 of it to a qualified retirement account (a for AGI deduction). She also received $11,000 of alimony from her former husband. Finally, Camille paid $3,700 of expenditures that qualified as itemized deductions.

c. Assume the original facts but now suppose Camille’s daughter, Kaly, is 25 years old and a full-time student. Kaly’s gross income for the year was $6,300. Kaly provided $3,780 of her own support, and Camille provided $6,300 of support. What is Camille’s taxable income?

In which of the following financial statements would a retained earnings account be found?

Select one:

a. Sole trader.

b. Company.

c. Partnership.

d. None of the options shown would contain a retained earnings account.

A partnership of three siblings would have how many capital accounts in the equity section of the balance sheet?

Select one:

a. One.

b. Two.

c. Three.

d. None.

Which of the following is an advantage of being a sole trader?

Select one:

a. The owner has total autonomy over business decisions.

b. The business is not a separate legal entity.

c. The owner has unlimited liability.

d. The business has limited life.

Partnerships should always have a Partnership Agreement in place to avoid potential disagreements.

Select one:

True

False

If a partner in a partnership decides to leave or retire from the business, the partnership can continue on with no disruption or administrative changes.

Select one:

True

False

The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates a wholesale warehouse.

1. Issued 47,000 shares of common stock in exchange for $470,000 in cash.

2. Purchased equipment at a cost of $57,000. $18,500 cash was paid and a note payable was signed for the balance owed.

3. Purchased inventory on account at a cost of $112,000. The company uses the perpetual inventory system.

4. Credit sales for the month totaled $205,000. The cost of the goods sold was $87,000.

5. Paid $6,700 in rent on the warehouse building for the month of March.

6. Paid $7,700 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2018.

7. Paid $87,000 on account for the merchandise purchased in 3.

8. Collected $72,000 from customers on account.

9. Recorded depreciation expense of $2,700 for the month on the equipment.

Post the above transactions to the below T-accounts. Assume that the opening balances in each of the accounts is zero. Prepare a trial balance from the ending account balances.

My trial balance totals dont equal each other. Please help

If Apple Computer decided to issue additional common stock, and Varga purchased 100 shares of this stock from Smyth Barry, the underwriter, would this transaction be a primary or a secondary market transaction? Would it make a differance if Varga purchased previously outstanding Apple stock in the dealter market? Explain.