Case / Topic # 2 Preparing Financial Statements: Axel Gibson is preparing his balance sheet and income and expense statement for the year ending June 30, 2020. He is having difficulty classifying six items and asks for your help. Which, if any, of the following transactions are assets, liabilities, income, or expense items? a.Axel rents a house for $1,350 a month. b.On June 21, 2020, Axel bought diamond earrings for his wife and charged them using his MasterCard. The earrings cost $900, but he hasnt yet received the bill. c.Axel borrowed $3,500 from his parents last fall, but so far, he has made no payments to them. d.Axel makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance is repayment of principal. He has 20 payments left, totaling $4,500. e.Axel paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasnt yet received. f.Axel invested $2,300 in some common stock. g.Whereas Axels balance sheet summarizes your financial condition at a given point in time, his income and expense statement report on your financial performance over time. (true of false ? Explain the essence of each financial statement)

Case/Topic # 3 Preparing an Individuals Tax Form. Caleb Lee graduated from college in 2018 and began work as a systems analyst in July of that year. He is preparing to file his income tax return for 2018, and has collected the following financial information for calendar year 2018. A blank Form 1040 and Schedule 1 may be obtained at www.IRS.gov. Tuition scholarships and grants $ 5,750 Scholarship, room, and board 1,850 Salary 55,000 Interest income 185 Potentially deductible itemized expenses 3,000 Income taxes withheld 2,600 a. Prepare Calebs tax return, using a $12,000 standard deduction and the tax rates given in Exhibit 3.3. Assume Caleb is single and his tuition scholarships and grants are nontaxable (do not exceed tuition), but his room and board scholarship is taxable. b. Prepare Calebs tax return using the data in part a, along with the following information: IRA contribution $5,000 Qualified cash dividends received from U.S. corporation 150