ACC 650 1 Take-Home Problems

Instructions:

There are two problems, one on each page.

Submit your computations and solutions in Canvas as one Excel file. Use one file that contains both solutions on different Excel sheets; do not try to submit two separate Excel files. Clearly indicate your final answers.

The solutions in your Excel file must show all of your computations leading up to the answers, and your work must be very organized with every number labeled.

Follow the examples in the textbook for the proper format.

Problem 1. 25 Points

Source and Application of Funds Method

Find the possible over/understatement of taxable income given the following:

Taxable income per tax return $60,000

Increase in mortgage payable $150,000

Increase (purchase) in real estate $700,000

Increase in cash on hand $30,000

Decrease in bank balance $10,000

Gift received $15,000

Personal living expenses $25,000

Income taxes paid $17,000

Increase in accounts receivable $220,000

Decrease in securities $35,000

Tax exempt interest received $1,000

Gifts made (paid) $8,000

Increase in inventory $5,000

Itemized deductions $28,000

Inheritance received $9,000

Show your complete computations in a schedule showing sources and uses of funds as shown in Figure 6.3 in your textbook (Source and Application of Funds Format).

Clearly show the possible over/understatement of taxable income.