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yuradex [85]
3 years ago
12

Bonnie and Clyde each own one-third of a fast-food restaurant, and their 13-year-old daughter owns the other shares. Both parent

s work full-time in the restaurant, but the daughter works infrequently. Neither Bonnie nor Clyde receives a salary during the year, when the ordinary income of the S corporation is $180,000. An IRS agent estimates that reasonable salaries for Bonnie, Clyde, and the daughter are $30,000, $35,000, and $10,000, respectively. What adjustments would you expect the IRS to impose upon these taxpayers?
Business
1 answer:
yanalaym [24]3 years ago
7 0

Answer:

Net income = $180,000

- salaries = ($30,000 + $35,000 + $10,000 = $75,000)

adjusted net income = $105,000

the adjusted net income must now be divided equally between the 3 partners:

  • Bonnie: $35,000
  • Clyde: $35,000
  • daughter: $35,000

Their yearly gross income:

  • Bonnie: $35,000 + $30,000 = $65,000
  • Clyde: $35,000 + $35,000 = $70,000
  • daughter: $35,000 + $10,000 = $45,000

total taxable income = $65,000 + $70,000 + $45,000 = $180,000

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On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four useful
Ymorist [56]

Answer:

$10,000

Explanation:

Depreciation is charged to every asset based on the life and usage of such asset.

Straight line depreciation method charges equivalent depreciation each year of the useful life of the asset.

Here, as provided straight line depreciation = \frac{Cost\ of\ asset\ - Salvage\ value}{Life\ of\ asset}

Here, cost of asset = $48,000

Salvage value = $8,000

Thus, numerator in fraction = $48,000 - $8,000 = $40,000

Useful life of the asset = 4 years

Therefore, depreciation expense for each year = \frac{40,000}{4\ years} = 10,000

It will be same for each year, therefore, depreciation expense for year 2 = $10,000

3 0
3 years ago
Information technology (IT) has changed:_________. a. the various forms of utility that businesses require in order to succeed.
bogdanovich [222]

Answer: c. the degree that businesses rely on each other for information and decision making.

Explanation:

Information Technology has enabled firms of all sizes and types to be able to access information that they need for themselves instead of having to rely on third-party providers that would provide data to them at a high cost.

This has enabled these businesses to rely less on other companies for decision making as well as become more efficient at it because they are able to use varied sources of information not just what they would have acquired from other companies.

6 0
2 years ago
Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June. The jou
Gnesinka [82]

Answer: a). Debit Factory Payroll Payable $160,000; credit Cash $160,000.

Explanation: Direct labor refers to the manpower used in production. They are the factory workers involved in using the raw materials to produce finished goods.

Expense on direct labor is provided for during the production by a debit to factory payroll expense and a credit to factory payroll payable.

As such, the journal entry will be a debit to factory payroll payable $160,000 and a credit to cash $160,000. This means cash will reduce by $160,000 as the factory workers are paid while payables which is a provision account will reduce as well on the cash book by the same amount.

3 0
3 years ago
Presented below are certain account balances of Swifty Products Co. Rent revenue $6,980 Sales discounts $8,170 Interest expense
svetlana [45]

Answer and Explanation:

The computation is shown below:

a

Sales revenue $405,100

Add: Rent revenue $6,980

Add: Dividend revenue $71,430

Less: Sales returns and allowances $(12730)

Less: Sales discounts $(8170)

a  

Sales revenue 405100

Add: Rent revenue 6980

Add: Dividend revenue 71430

Less: Sales returns and allowances (12730)

Less: Sales discounts (8170)

Total net revenue $462,610

b  

Total net revenue $462,610

Less: Expenses  

Interest expense $13,320

Selling expenses $99,730

Income tax expense $27,776

Cost of goods sold $166,455

Administrative expenses $88,620

Total Expenses $395,901

Net income $66,709

c  

Net income $66,709

Less: Allocation to noncontrolling interest $17,320

Income attributable to controlling stockholders $49,389

5 0
2 years ago
The following expenditures relating to plant assets were made by Glenn Company during the first 2 months of 2014.
Nutka1998 [239]

Answer:

1. LAND

All expenses that went into the preparation of a fixed assets such as land to make it available for use should be capitalized and this includes taxes.

2. EQUIPMENT.

As explained above, the expense here was incurred trying to get the machinery to be available for use so it should be capitalized.

3. EQUIPMENT.

The same logic as the above stands here as well.

4. LAND IMPROVEMENTS.

This expense does not fall under the primary purpose for which the site was acquired but is still an improvement so even though it will not be capitalized to land, it goes to Land Improvements.

5. EQUIPMENT.

The name and slogan are part of the preparation of the vehicle for use so need to be capitalized.

6. EQUIPMENT.

Installation costs are to be capitalized because they are necessary to ge the asset working.

7. PREPAID INSURANCE.

Period costs (costs that provide benefits for a year or less) are to be expensed and not capitalized which is why this is posted to prepaid insurance.

8. LICENSE EXPENSE.

Licenses typically last a year so this is a period cost that should be expensed.

5 0
2 years ago
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