Dianne started her daycare business on January 1, 2020; it is open five days a week from
Question:
Dianne started her daycare business on January 1, 2020; it is open five days a week from 8:30 AM to 5:30 PM all year. (Use 260 days for the year.) Dianne was required to purchase an additional homeowner's insurance rider, to cover the operation of a business in the home. She uses the cash method of accounting.
Their home is valued at $270,200, which includes the land value of $20,000. The total area of the house is 2,000 square feet, and she uses the whole house for the daycare.
Gross receipts for daycare business: $13,600
Expenses:
Electricity $2,270
Toys $475
Advertising $82
Water $448
Homeowner's insurance (rider) $509
Real estate tax $1,675
Business license $100
Homeowner's insurance $1,535
CPR class $600
Mortgage interest $7276
Repairs to home (damage by child) $275
Meals for the children $5,050
Paint entire house (inside & out) $4,245
Personal draw (Dianne) $5,000
Answer the following question based on the tax return you prepared for Donald and Dianne Duncan:
Select the amount of daycare business net profit/loss:
a) $2,660
b) $1,848
c) $ 135
d) $ 735
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon