C10-Chp-00-Tst-4-Exm-Sol-2010-May

C10-Chp-00-Tst-4-Exm-Sol-2010-May - Corporate Return No Ans

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Corporate Return 2f245b6c89c3aebc8c96f9af010742cd53dacef4.xls Page 1 of 5 No Ans Basic information for the first two questions about the corporate income tax return. In its first two years of operations a corporation had the following results GAAP Net Income Year 1 Year 2 Revenue $100,000 $100,000 Compensation 40,000 40,000 Rent, utilities, etc. 20,000 20,000 Charitable contributions 7,000 1,000 Expenses 67,000 61,000 Net income before tax 33,000 39,000 There is no state income tax. 1 A The company does not elect any accounting method on its tax return that differs from GAAP accounting On the tax return for year 1, how much adjustment is made for charitable contributions on schedule M-1? a a. 3,000 b. $4,000 c. $6,000 d. $7,000 2 D On the year 2 income tax return, what adjustment will be made for charitable contributions on Schedule M-1? a $2,000 on Line 5(b) b $2,000 on Line 8(b) c $3,000 on Line 5(b) d $3,000 on Line 8(b) 3 B Refer to your income tax return problem assignment. Assume that your audit reveals that an additional invoice for entertainment expenses (not lavish, etc.) for $10,000 was received on December 31, year 1. The account balances provided with the problem are used in preparing the income tax return, except that you will make an adjusting entry to record the additional entertainment expense of $10,000. What is the amount of the adjustment you will report on line 5( c) of Schedule M-1? a a. 9,000 b. $14,000 c. $19,000 d. $28,000 4 C Refer to your income tax return problem assignment. Assume in the second year of operations (2010), the company has capital gains of $9,000. What amount of adjustment will be made on Schedule M-1 related to the capital gains on the tax return for 2010? a a. 3,000 b. $6,000 c. $9,000 d. $15,000 5 B Refer to your income tax return problem assignment. Suppose you recommend that the company take the maximum amount of write-off for its equipment in 2009. Assume that overall limit on Depreciation expense is $80,000, and the client deducts depreciation of $80,000 on the income tax return for year 1. What is the amount of the adjustment on Schedule M-1 for year 1 related to depreciation? a a. 17,000 b. $64,000 c. $72,000 d. $80,000 Extra Refer to your income tax return problem assignment. Assume the company invested in IBM stock asshown, but the company name is actually
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This note was uploaded on 03/09/2012 for the course ACCT 6120 taught by Professor Godfrey,h during the Spring '08 term at UNC Charlotte.

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C10-Chp-00-Tst-4-Exm-Sol-2010-May - Corporate Return No Ans

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