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ICE Princess25 [194]
3 years ago
7

Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the followin

g relevant information: She received $117,000 in salary. She received $13,500 of dividend income. She received $5,700 of interest income on Home Depot bonds. She received $21,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $6,000. She received $11,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $7,400. Mary receives one exemption ($4,000), and she has allowable itemized deductions of $7,500. These amounts will be deducted from her gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is Mary's federal tax liability? Round your answer to the nearest cent. Do not round intermediate calculations. b. What is her marginal tax rate? Round your answer to 1 decimal place. c. What is her average tax rate?
Business
1 answer:
worty [1.4K]3 years ago
8 0

Answer:

Mary's income:

  • salary = $117,000
  • dividend income = $13,500
  • interest on bonds = $5,700
  • long term capital gains = $21,000 - $6,000 = $15,000
  • short term capital gains = $11,000 - $7,400 = $3,600

Mary's adjusted gross income:

  • taxable income = $117,000 + $13,500 + $5,700 + $3,600 = $139,800
  • capital gains = $15,000

Mary's exemption + itemized deduction = $4,000 + $7,500 = $11,500

  • since the exemption plus the itemized deductions are lower than the standard deduction, Mary should use the standard deduction ($12,200 > $11,500).

*since we are not given the table containing the tax bracket, I will use the current 2019 tax brackets:

A) taxable income = $139,800 - $12,200 = $127,600 + $15,000 (capital gains 15%)

federal tax liability = [$14,382.50 + 24% x ($127,600 - $84,200)] + ($15,000 x 15%) = ($14,382.50 + $10,416) + $2,250 = $24,798.50 + $2,250 = $27,048.50

B) Mary's marginal tax rate is 24%

C) Mary's average tax rate = $24,798.50 / $127,600 = 19.43%

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Answer:

1. $50 and 40%

2. 177 units and $22,125

3. 473 units and 72.77%

Explanation:

Price = $125

Variable cost = $75

Fixed cost =$8,850

Contribution margin is the net of sales price and variable cost of the product. It is the cost available to recover the fixed cost and make profit afterward.

1. Contribution margin = Sales price - Variable cost = $125 - $75 = $50

Contribution margin ratio = Contribution margin / Sale price = $50 / $125 = 40%

Break-even is the level of sales at which business has no profit no loss situation.

2. Break-even point = Fixed cost / Contribution margin per unit = $8,850 / $50 = 177 units

Break-even in $ = 177 units x $125 = $22,125

Margin of safety is the level of sales at which the business is safe from making loss. Margin of safety measures the profit after the break-even point.

3. Margin of Safety = Total sales - Break-even point = 650 units - 177 units = 473 units

Margin of safety to sales = ( Margin of safety / Total sales ) = ( 473 units / 650 units ) x 100 = 72.77%

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Answer:

C. When the recipient was not included on the original email.

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Answer:

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Dr    Bad debt expense                     $9,100

Cr    Accounts receivable                  $9,100    

(at the time of collection) March 29

 Dr Accounts receivable                      $9,100    

 Cr Bad debts expense                        $9,100

 

  Dr Cash                                              $9,100

  Cr  Accounts receivable                   $9,100

Explanation:

On March 11, Dexter made an entry to write-off bad debts in the amount of $9,100. Dexter Co., charged it directly to Accounts receivable because the company uses direct write-off method. During the collection we have 2 steps to consider; First, On March 29 during the unexpected collection, Dexter shoud set up the reversal of the write-off entry which they had made last March 11. So we debit Accounts receivable and credit bad debts in the amount of $9,100. Second, is to record the collection, debit cash and credit Accounts receivable in the amount of $9,100.

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Answer:

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