Joe operates a business that locates and purchases specialized assets for clients, among other activities Joe...

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Joe operates a business that locates and purchases specialized assets for clients, among other activities Joe uses the accrual method of accounting, but he doesn't keep any significant inventories of the specialized assets that he sells Joe reported the following financial information for his business activities during this year Determine the effect of each of the following transactions on the taxable business income Required: a. Joe has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully In December of this year, Joe delivers $12.000 worth of gadgets to the city that will be tested in March of next year. Joe purchased the gadgets especially for this contract and paid $8.500 b. Joe paid $180 in July of this year to entertain a visiting out-of-town chent. The client didn't discuss business with Joe during this visit but Joe wants to maintain good relations to encourage additional business next year, c. On November 1 of this year. Joe paid $600 for premiums providing for $40,000 of key employee insurance on the life of Joe's accountant over the next 12 months d. At the end of this year Joe's business reports 59.000 or accounts receivable Besed upon aroenence Joe beveves that at inst $2.000 of his new receivables will be incollectible e. in December of this year Joe rented equipment to complete a large job Joe bed 53000 m December oecause the rental agency required a minimum rental of three months $1000 per month) Jos completed the job before yearend but ne returned the equipment at the end of the ente f. Joe nired a new sales representative as an employee and cent them to Deitas for a week to contact prospective out of state clients Joe ended up reimbursing his employee $300 for airfare, $350 for lodging, and $250 for meals te employee provided adequate documentation to substantiate the business purpose for the mess) Joe requires me employes to account for allersenctures to be reimbursed g. Joe uses his BMW (a personal auto) to travel to and from his residence to his factory. However, he switches to a business vehicle if he needs to travel after he reaches the factory In September of this year, the business vehicle broke down and he was forced to use the BMW both to travel to and from the factory and to visit work sites. He drove 120 miles visiting work sites and 46 miles driving back and forth between the factory and his home. Joe uses the standard mileage rate to determine his auto-related business expenses h. Joe paid a visit to his parents in Dallas over the Christmas holidays this year. While he was in the city. Joe spent $50 to attend a half- day business symposium, Joe paid $200 for airfare. $50 for meals provided during the symposium, and $20 on cab fare to the symposium Note: For all transactions, select "No effect" if no change in taxable business income, Round final answers to the nearest whole number. Answer is complete but not entirely correct. Effect Amount 2 No effect 5 100 B No effect 00 S No effess Os 00 8 noses aule income 40 0000- ONCINIS TRIapie inceme 1000 C . Decreases (vable income 105 660 O Decreases xal income 00 35 Depresses abe income 03 Joe operates a business that locates and purchases specialized assets for clients, among other activities Joe uses the accrual method of accounting, but he doesn't keep any significant inventories of the specialized assets that he sells Joe reported the following financial information for his business activities during this year Determine the effect of each of the following transactions on the taxable business income Required: a. Joe has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully In December of this year, Joe delivers $12.000 worth of gadgets to the city that will be tested in March of next year. Joe purchased the gadgets especially for this contract and paid $8.500 b. Joe paid $180 in July of this year to entertain a visiting out-of-town chent. The client didn't discuss business with Joe during this visit but Joe wants to maintain good relations to encourage additional business next year, c. On November 1 of this year. Joe paid $600 for premiums providing for $40,000 of key employee insurance on the life of Joe's accountant over the next 12 months d. At the end of this year Joe's business reports 59.000 or accounts receivable Besed upon aroenence Joe beveves that at inst $2.000 of his new receivables will be incollectible e. in December of this year Joe rented equipment to complete a large job Joe bed 53000 m December oecause the rental agency required a minimum rental of three months $1000 per month) Jos completed the job before yearend but ne returned the equipment at the end of the ente f. Joe nired a new sales representative as an employee and cent them to Deitas for a week to contact prospective out of state clients Joe ended up reimbursing his employee $300 for airfare, $350 for lodging, and $250 for meals te employee provided adequate documentation to substantiate the business purpose for the mess) Joe requires me employes to account for allersenctures to be reimbursed g. Joe uses his BMW (a personal auto) to travel to and from his residence to his factory. However, he switches to a business vehicle if he needs to travel after he reaches the factory In September of this year, the business vehicle broke down and he was forced to use the BMW both to travel to and from the factory and to visit work sites. He drove 120 miles visiting work sites and 46 miles driving back and forth between the factory and his home. Joe uses the standard mileage rate to determine his auto-related business expenses h. Joe paid a visit to his parents in Dallas over the Christmas holidays this year. While he was in the city. Joe spent $50 to attend a half- day business symposium, Joe paid $200 for airfare. $50 for meals provided during the symposium, and $20 on cab fare to the symposium Note: For all transactions, select "No effect" if no change in taxable business income, Round final answers to the nearest whole number. Answer is complete but not entirely correct. Effect Amount 2 No effect 5 100 B No effect 00 S No effess Os 00 8 noses aule income 40 0000- ONCINIS TRIapie inceme 1000 C . Decreases (vable income 105 660 O Decreases xal income 00 35 Depresses abe income 03