Problem 1 (20 points total Whirlwind Cycles is owned 100% by Daniel, a single taxpayer. Both whirlwind Cycles and Daniel use the cash method of accounting for tax purposes. The business incurred the following items of income and expense in Year 2 Cash Sales Interest received from City of Flint Bonds S225,000 (this is a municipal bond) paid in Year 2) payments for Year 2 rent 3,000 Cost of Goods Sold (assume cash Cash payments for Year 2 utilities Cash Tax depreciation Cash contribution to the Democratic party 45,000 3,500 18,000 40,000 (not deductible for tax purposes) 1,000 On 1 /1, Year 1, whirlwind Cycles purchased a 60-month zero coupon bond with a 5% yield and a S20,000 maturity value for $15,670 (compounded annually). Daniel's taxable income is $100,000 before any profits from the business are considered. Daniel files as a single tax payer. Whirl Cycles is organized as a C Corporation and the corporation pays all of its after-tax cash flows to Daniel as a dividend. (a) How much interest income does Whirlwind cycles need to recognize from the zero coupon bond in Year 2? (5 pts) (b) What is the taxable income of Whirlwind Cycles in Year 2? (5 pts) (c) What is the after-tax cash flow of Whirlwind Cycles in Year 2? (5 pts) Hint: the total tax due in Year 2 of Whirlwind Cycles is 25,058 (d) Calculate Daniel's Year 2 after-tax cash flows from the Whirlwind Cycles. (S pts) Hint: This is a dividend payment.So consider what is tax rate Daniel needs to pay on the cash payment