Tax Paper

b) (10 points) Based on your results in a), graph publishers on a bubble chart using the

25 Amount owed. If line 23d is smaller than the total of lines 22c and 24, enter amount owed

For problems requiring computations, please ensure that your Excel file includes the associated cell computations and/or statistics output; this information is needed in order to receive full credit on these problems.

P B - 2 0 0 6 - 2 | M a y 17, 2 0 0 6

| In Year 1, depreciation is $5,000 plus 15% of the asset’s outlayFrom Year 2, depreciation is either * 30% of the asset’s book value; or * if the asset’s book value is less than $6,500, depreciation is the asset’s book value (i.e. asset is depreciated to zero once book value < $6,500)

Complete the calculations below using this data. Show all of your work and clearly label each of your calculations.

| if maritalStatus = ‘M’ taxRate = MARRIED_RATEif maritalStatus = ‘S’ taxRate = SINGLE_RATEif maritalStatus = ‘D’ taxRate = DIVORCED_RATEif maritalStatus = ‘W’ taxRate = WIDOWED_RATEIf hoursWorked <= 40 grossPay = hoursWorked * hourlyRateElse regularPay = (40 * hourlyRate) overtimePay = ((hoursWorked-40) * (hourlyRate * 1.5)) grossPay = regularPay + overtimePaytaxAmount = grossPay * taxRatenetPay = grossPay - taxAmount

To find out exactly how much you will be getting back, subtract line 10 from line 9.

The standard costs and variances for direct materials, direct labor, and factory overhead for the month of May are as follows:

(b) Recorded an adjusting entry to record use of $20 of the above supplies. Cash 0/ Net Income -20

Natalie’s grandmother has decided to charge interest of 6% on the note payable extended on November 16. The loan plus interest is to be repaid in 24 months. (Assume that half a month of interest accrued during November.)

ii. Using double- declining method, the first year ending balance of $6,404 is subtracted form the proceeds of the sale netting in a gain of $1,096 on the disposal. Once this is subtracted form the previous years depreciation $4,269, you get a total income statement impact of $3,173.

Milligan’s Backyard Storage Kits, a mail order company, sells a variety of backyard storage unit kits and landscaping decorations to its customers. Although the company makes a profit, David Milligan, the company’s owner, realizes that he can improve his company’s operations if he better manages his inventory. Mr. Milligan requests your help in preparing an Inventory Analysis worksheet. The Inventory Analysis worksheet provides Mr. Milligan with information about his annual sales, cost of goods sold, gross profit, and markup on this products. Preparing the worksheet for Mr. Milligan requires you to insert columns, use several functions, and apply proper formatting to the

Accrual Basis ­ Method of ACCOUNTING that recognizes REVENUE when earned, rather than when  collected. Expenses are recognized when incurred rather than when paid.  Accumulated Depreciation ­ Total DEPRECIATION pertaining to an ASSET or group of assets from  the time the assets were placed in services until the date of the FINANCIAL STATEMENT or tax return.  This total is the CONTRA ACCOUNT to the related asset account.  Additional Paid in Capital ­ Amounts paid for stock in excess of its PAR VALUE or STATED VALUE.  Also, other amounts paid by stockholders and charged to EQUITY ACCOUNTS other than CAPITAL  STOCK.  Adjusted Basis ­ After a taxpayer 's basis in property is determined, it must be adjusted upward to  include any additions of capital to the property and reduced by any returns of capital to the taxpayer.  Additions might include improvements to the property and subtractions may include depreciation or  depletion. A taxpayer 's adjusted basis in property is deducted from the amount realized to find the gain  or loss on sale or disposition.  Adjusted Gross Income ­ Gross income reduced by business and other specified expenses of  individual taxpayers. The amount of adjusted gross income affects the extent to which medical  expenses, non business casualty and theft losses and charitable contributions may be deductible. It is  also an important figure in the basis of many other individual planning issues as

c) In relation to the plant, explain the adjustment required to the deferred tax account.