Facts: Jason and Lucy want to manufacture and sell a new and innovative product called Glucc,...
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Facts: Jason and Lucy want to manufacture and sell a new and innovative product called Glucc, which is an industrial cleaning compound. Both Jason and Lucy will perform services for the business in addition to their roles as owners of the business. They formed the entity (JL) on 1-1-X1. JL will have the following estimated inflows and outflows between 1-1-X1 and 1-1-X2, the date that JL opened its store for business. JL Corporation will have a calendar year-end. Transactions in the order they occurrred: 1. Received cash from Jason. In addition, Jason performed legal & accounting services: 2/3 of his services were to set up the entity and the rest for ongoing accounting work. Total value of services = ?? Paid legal fees to an external law firm set up the entity. Received title to a building from Lucy: At the time of transfer it had an unpaid mortgage of and was worth 2. 3. 4. 5. 6. 7. 8. Amount Lucy paid for the building Lucy's accumulated MACRS depreciation on the building (Note: Lucy and Jason had to personally guarantee the mortgage.) Paid the state for a one-time registration franchise fee Paid for printing of ownership certificates for 9. 10. issuance to Jason and Lucy. Paid for machinery, equipment and furniture and fixtures for the store. Issued 1,000 shares of common stock each to Jason and Lucy. Common stock par value is $10 per share. To ready the store for opening, the company paid for: Inventory purchases ( $3,200 Wages (for employee training) Interest Expense (on a bank loan) Supplies (all used in X1) used in X1) Taxes (various state/local taxes) a. b. $166,000 $?? $3,500 $188,000 $378,000 $235,000 $130,500 $300 $505 $122,000 $20,800 $5,200 $94 $2,100 $920 C. d. e. Jason and Lucy want to defer current deductions when possible. For depreciable assets, JL uses straight line depreciation for book purposes, and they take a full year of depreciation in the first year and none in the year of sale. 11. JL uses GAAP to record transactions and events except that they do not record deferred tax expense, assets, or liabilities. This means that they use their estimated their tax liability as their tax expense and pay that amount as required to the Federal or state government. 12. Note: JL did not place into service any of the depreciable property acquired in year X1 until 1-1-X2 and had no sales in year X1. Facts: Jason and Lucy want to manufacture and sell a new and innovative product called Glucc, which is an industrial cleaning compound. Both Jason and Lucy will perform services for the business in addition to their roles as owners of the business. They formed the entity (JL) on 1-1-X1. JL will have the following estimated inflows and outflows between 1-1-X1 and 1-1-X2, the date that JL opened its store for business. JL Corporation will have a calendar year-end. Transactions in the order they occurrred: 1. Received cash from Jason. In addition, Jason performed legal & accounting services: 2/3 of his services were to set up the entity and the rest for ongoing accounting work. Total value of services = ?? Paid legal fees to an external law firm set up the entity. Received title to a building from Lucy: At the time of transfer it had an unpaid mortgage of and was worth 2. 3. 4. 5. 6. 7. 8. Amount Lucy paid for the building Lucy's accumulated MACRS depreciation on the building (Note: Lucy and Jason had to personally guarantee the mortgage.) Paid the state for a one-time registration franchise fee Paid for printing of ownership certificates for 9. 10. issuance to Jason and Lucy. Paid for machinery, equipment and furniture and fixtures for the store. Issued 1,000 shares of common stock each to Jason and Lucy. Common stock par value is $10 per share. To ready the store for opening, the company paid for: Inventory purchases ( $3,200 Wages (for employee training) Interest Expense (on a bank loan) Supplies (all used in X1) used in X1) Taxes (various state/local taxes) a. b. $166,000 $?? $3,500 $188,000 $378,000 $235,000 $130,500 $300 $505 $122,000 $20,800 $5,200 $94 $2,100 $920 C. d. e. Jason and Lucy want to defer current deductions when possible. For depreciable assets, JL uses straight line depreciation for book purposes, and they take a full year of depreciation in the first year and none in the year of sale. 11. JL uses GAAP to record transactions and events except that they do not record deferred tax expense, assets, or liabilities. This means that they use their estimated their tax liability as their tax expense and pay that amount as required to the Federal or state government. 12. Note: JL did not place into service any of the depreciable property acquired in year X1 until 1-1-X2 and had no sales in year X1.
Expert Answer:
Related Book For
Finite Mathematics and Its Applications
ISBN: 978-0134768632
12th edition
Authors: Larry J. Goldstein, David I. Schneider, Martha J. Siegel, Steven Hair
Posted Date:
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