Jesse Ford Chapter 6 Tax Essays

Jesse Ford Chapter 6 Tax Essays - Jesse Ford Chapter 6...

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Jesse Ford Chapter 6 Sandra owns an insurance agency. The following selected data are taken from the agency balance sheet and income statement prepared using the accrual method. Revenue $250,000 Salaries and commissions 100,000 Rent 10,000 Insurance 5,000 Utilities 6,000 Accounts receivable, 1/1/2010 40,000 Accounts receivable, 12/31/2010 48,000 Accounts payable, 1/1/2010 12,000 Accounts payable, 12/31/2010 15,000 Calculate Sandra’s net profit using the cash method for 2010. Cash Basis Expenses of cash basis are only deductible when they are actually paid with cash or other property. Cash in 250,000 (revenue is cash + AR) - cash out 148,000 (expenses of 100,000 + 10,000 + 5,000 + 6,000 + AP of 12,000 + 15,000) = 102,000 net profit Arnold and Beth file a joint return. Use the following data to calculate their deduction for AGI. Mortgage interest on personal residence $ 4,000 Property taxes on personal residence 2,000 Alimony payments 12,000 Moving expenses 6,000 Charitable contributions 1,500 State income taxes 5,000 Investment interest ($8,000 of expenses limited to net investment income of $6,000) 6,000 Unreimbursed employee expenses 2,500 Sales taxes 2,600
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