# tax accounting 3

## Project Description:

problem 1: scott butterfield is self-employed as a cpa. he uses the cash method of accounting, and his social security number is 644-47-7833. his principal business code is 541211. scott’s cpa practice is located at 678 peso dr., la mesa, ca 92041. during 2013, scott had the following income and expenses:
fees from cpa practice - \$128,250
expenses:
car mileage (3,173 business miles) – 1,793
office expense – 3,450
rent on office space – 8,400
travel expense – 4,100
meals and entertainment – 4,780
utilities – 1,625
wages of secretary – 25, 700
scott placed his car in service on january 1, 2008. this year he commuted 2,000 miles in it and drove it 4,000 miles for nonbusiness purposes. his wife has a car for personal use.
complete schedule c on pages 3-41 and 3-42 for scott showing scott’s net income from self-employment.
problem 3: margaret started her own business in the current year and will report a profit for her first year. her results of operations are as follows:
gross income - \$50,000
travel – 1,000
transportation 6,009 miles, using standard mileage method – 4,000
entertainment in total – 4,000
seven gifts at \$50 each – 350
rent and utilities for apartment in total – 10,000
(20% is used for a home office)
what is the net income margaret should show on her schedule c? show the calculation of her taxable business income.
gross income
expenses (describe each)
problem 5: kevin owns a retail store, and during the current year he purchased \$600,000 worth of inventory. kevin’s beginning inventory was \$65,000, and his ending inventory is \$75,000. during the year, kevin withdrew \$15,000 in inventory for his personal use. use part iii of schedule c below to calculate kevin’s cost of goods sold for the year.
problem 8: teresa is a civil engineer who uses her automobile for business. teresa drove her automobile a total of 21,732 miles during 2013, of which 95 percent was business mileage. the actual cost of gasoline, oil, depreciation, repairs, and insurance for the year was \$8,300.
a. how much is teresa’s transportation deduction based on the standard mileage method?
b. how much is teresa’s transportation deduction based on the actual cost method?
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