Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 8, Problem 1RP
Your client, Dave’s Sport Shop, sells sports equipment and clothing in three retail outlets in New York City. During 2019, the CFO decided that keeping track of inventory using a combination of QuickBooks and spreadsheets was not an efficient way to manage the stores’ inventories. So Dave’s purchased an inventory management system for $9,000 that allowed the entity to keep track of inventory, as well as automate ordering and purchasing, without replacing QuickBooks for its accounting function.
The CFO would like to know whether the cost of the inventory management program can be expensed in the year of purchase. Write a letter to the CFO, Cassandra Martin, that addresses the tax treatment of purchased software. Cassandra’s mailing address is 867 Broadway, New York, NY 10003.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
STaaPM x
ugth.wileyplus.com/edugen/Iti/main.uni
Indeed Monster Jobs
Degree Progra
High Energy Make
1 Hear Student Da..
Paused
d pue
S Consumer Center
* The Ultimate Guide
nancial Calculator.
IS Kimmel, Financial Accounting, 8e
Help I System Announcements
CALCULATOR
PRINTER VERSION
4BACK
Exercise 6-1
Umatilla Bank and Trust is considering giving Sage Hill Inc. a loan. Before doing so, it decides that further discussions with Sage Hill Inc's accountant may be desirable. One area of particular concern is the Inventory account, which has
year-end balance of $253,760. Discussions with the accountant reveal the following.
1. Sage Hill Inc. sold goods costing $55,290 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not induded in the physical inventory because the
were not in the warehouse.
2. The physical count of the inventory did not indude goods costing $96,030 that were shipped to Sage Hill Inc. FOB…
Suppose you work for a company that sells computers and that you have been asked to oversee doing a physical count and valuation of the inventory at year end. You determine the value of inventory on hand to be $23,500 yet according to the Inventory account in the ledger the balance should be $35,000. give two reasons that could explain why the balances are not the same and what journal entry would need to be recorded in the books?
I.
Street Bank is considering giving Fallen Company a loan. Before doing so, it decides that further discussions with
Fallen's accountant may be desirable. One area of particular concern is the inventory account, which has a year-end
balance of $375,000. Discussions with the accountant reveal the following.
1.
Fallen sold goods costing $55,000 to White Company FOB shipping point on December 28. The goods are not
expected to reach White until January 12. The goods were not included in the physical inventory because they
were not in the warehouse.
2.
The physical count of the inventory did not include goods costing $95,000 that were shipped to Fallen FOB
destination on December 27 and were still in transit at year-end.
3.
Fallen received goods costing $15,000 on January 2. The goods were shipped FOB shipping point on December
26 by Lynch Co. The goods were not included in the physical count.
4.
Fallen sold goods costing $41,000 to Benet of Canada FOB destination on December 30. The goods…
Chapter 8 Solutions
Individual Income Taxes
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - LO.2 Robert purchased and placed in service...Ch. 8 - LO.2 Jim owns a very large ranch. A large part of...Ch. 8 - Prob. 10DQ
Ch. 8 - Explain how the 179 immediate expensing deduction...Ch. 8 - Prob. 12DQCh. 8 - Discuss the definition of business income as it is...Ch. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 17DQCh. 8 - Prob. 18DQCh. 8 - Prob. 19DQCh. 8 - Prob. 20DQCh. 8 - LO.2 Euclid acquires a 7-year class asset on May...Ch. 8 - LO.2 Hamlet acquires a 7-year class asset on...Ch. 8 - LO.2 Lopez acquired a building on June 1, 2014,...Ch. 8 - LO.2 Andre acquired a computer on March 3, 2019,...Ch. 8 - LO.2, 3 Diana acquires, for 65,000, and places in...Ch. 8 - LO.3 McKenzie purchased qualifying equipment for...Ch. 8 - LO.4 On April 5, 2019, Kinsey places in service a...Ch. 8 - LO.7 On October 1, 2019, Priscilla purchased a...Ch. 8 - Prob. 29CECh. 8 - Prob. 30CECh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - LO.2 Orange Corporation acquired new office...Ch. 8 - LO.2 Weston acquires a new office machine (7-year...Ch. 8 - LO.2 Juan acquires a new 5-year class asset on...Ch. 8 - LO.2 Debra acquired the following new assets...Ch. 8 - LO.2 On August 2, 2019, Wendy purchased a new...Ch. 8 - Prob. 38PCh. 8 - LO.2 On May 5, 2019, Christy purchased and placed...Ch. 8 - Prob. 40PCh. 8 - Lori, who is single, purchased 5-year class...Ch. 8 - LO.2, 3 Olga is the proprietor of a small...Ch. 8 - LO.2, 3, 9 On June 5, 2018, Javier Sanchez...Ch. 8 - LO.3, 4 Jabari Johnson is considering acquiring an...Ch. 8 - LO.2, 4 On October 15, 2019, Jon purchased and...Ch. 8 - LO.4 On June 5, 2018, Leo purchased and placed in...Ch. 8 - LO.2, 3, 4 On March 15, 2019, Helen purchased and...Ch. 8 - LO.2, 4 On May 28, 2019, Mary purchased and placed...Ch. 8 - Prob. 49PCh. 8 - LO.2, 4, 9 Dennis Harding is considering acquiring...Ch. 8 - LO.2, 5 In 2019, Muhammad purchased a new computer...Ch. 8 - LO.2, 5, 9 Jamie purchased 100,000 of new office...Ch. 8 - Prob. 53PCh. 8 - Prob. 54PCh. 8 - Prob. 55PCh. 8 - Prob. 56PCh. 8 - Prob. 57CPCh. 8 - John Smith, age 31, is single and has no...Ch. 8 - Your client, Daves Sport Shop, sells sports...Ch. 8 - Prob. 2RPCh. 8 - Prob. 3RPCh. 8 - Michael Sima, a sole proprietor craftsman,...Ch. 8 - Cox Construction, a company in its 10th year of...Ch. 8 - Stem Corp. bought a machine in February of year 7...Ch. 8 - Prob. 4CPACh. 8 - Data, Inc., purchased and placed in service a...Ch. 8 - Data, Inc., purchased and placed in service 5,000...Ch. 8 - Which statement below is correct? a. Real property...Ch. 8 - Charlie purchased an apartment building on...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Splish Brothers Bank and Trust is considering giving Pohl Company a loan. Before doing so, it decides that further discussions with Pohl's accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $319,000. Discussions with the accountant reveal the following. 1. Pohl shipped goods costing $63,800 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physiçal inventory because they were not in the warehouse. The physical count of the inventory did not include goods costing $95,000 that were shipped to Pohl FOB destination on December 27 and were still in transit at year-end. Pohl received goods costing $29,000 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. 3. Pohl shipped goods costing $59,160 to Ehler of Canada FÓB destination on December 30.…arrow_forwardAlpha company is a trading company that purchases and sales fruits and vegetables. During the year 2020, the company shows the following transactions and events: 10) The driver of the company has access to the inventory, he delivers the merchandise, receives the cash and has access to the company books. Required: For each case, identify the anomaly and propose the correct accounting treatment/answer:arrow_forwardConcord Bank and Trust is considering giving Alou Company a loan. Before doing so, management decide that further discussions with Alou's accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of £277,500. Discussions with the accountant reveal the following. 1 2 3. 4. 5. Alou sold goods costing £38,500 to Comerico Company, FOB shipping point, on December 28. The goods are not expected to arrive at Comerico until January 12. The goods were not included in the physical inventory because they were not in the warehouse. The physical count of the inventory did not include goods costing £94,700 that were shipped to Alou FOB destination on December 27 and were still in transit at year-end. Alou received goods costing £22,100 on January 2. The goods were shipped FOB shipping point on December 26 by Grant Co. The goods were not included in the physical count. Alou sold goods costing £33,400 to Emerick Co., FOB destination, on December…arrow_forward
- First Bank is considering giving Ivanhoe Company a loan. First, however, it decides that it would be a good idea to have further discussions with Ivanhoe's accountant. One area of particular concern is the inventory account, which has a December 31 balance of $241,660. Discussions with the accountant reveal the following: 1. 2. 4. 3. On December 31, Flint Company had $26,230 of goods held on consignment for Ivanhoe. The goods were not included in Ivanhoe's ending inventory balance. The physical count of the inventory did not include goods that cost $81,700 that were shipped to Ivanhoe, FOB shipping point, on December 27 and were still in transit at year end. Determine the correct inventory amount at December 31. Ivanhoe sold goods that cost $30,100 to Pharoah Company, FOB destination, on December 28. The goods are not expected to arrive at their destination in India until January 12. The goods were not included in the physical inventory because they were not in the warehouse. The…arrow_forwardTri-State Bank and Trust is considering giving Swifty Company a loan. Before doing so, management decides that further discussions with Swifty's accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of $348,000. Discussions with the accountant reveal the following 1. Swifty shipped goods costing $34,000 to Lilja Company, FOB shipping point, on December 28. The goods are not expected to arrive at Lilja until January 12. The goods were notincluded in the physical inventory because they were not in the warehouse 2. The physical count of the inventory did not include goods costing $94.000 that were shipped to Swifty FOB destination on December 27 and were still in transit at year-end 3. Swifty received goods costing $24,000 on January 2 The goods were shipped FOB shipping point on December 26 by Brent Co. The goods were not included in the physical count. 4. Swifty shipped goods costing $33,000 to Jesse Co., FOB destination on…arrow_forwardCompany A sells floral centerpieces, but they aren't very good at accounting. They have a year-end of December 31st. In 2019, they recorded their regular transactions, but then realized the following: They were counting inventory at 12/31/18 and the inventory clerk forgot to include in inventory $40,000 of flowers that were in transit to a customer (shipped FOB destination a few days before). Analyze the error assuming that it is not discovered at 12/31/18. Use the standard grid, but also include a line for retained earnings. They are impressed, but are also bummed out. It appears that in March 2019, their clerk forgot to record the freight in of 10,000 for items that were purchased in March. The error was not discovered until they paid the freight bill in 2020. Analyze using the standard grid, but analyze retained earnings as well. If Company A just lets both errors play out without correcting them, what is the amount of the error they would have in their 2019 cost of goods sold…arrow_forward
- Umatilla Bank and Trust is considering giving Sarasota Corp. a loan. Before doing so, it decides that further discussions with Sarasota’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $284,470. Discussions with the accountant reveal the following. 1. Sarasota shipped goods costing $50,150 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse. 2. The physical count of the inventory did not include goods costing $88,600 that were shipped to Sarasota FOB destination on December 27 and were still in transit at year-end. 3. Sarasota received goods costing $24,100 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. 4. Sarasota shipped goods costing $49,800 to Ehler of…arrow_forwardTri-State Bank and Trust is considering giving Cheyenne Corp. a loan. Before doing so, management decides that further discussions with Cheyenne’s accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of $303,500. Discussions with the accountant reveal the following. 1. Cheyenne shipped goods costing $32,400 to Sorci Company, FOB shipping point, on December 28. The goods are not expected to arrive at Sorci until January 12. The goods were not included in the physical inventory because they were not in the warehouse. 2. The physical count of the inventory did not include goods costing $91,000 that were shipped to Cheyenne FOB destination on December 27 and were still in transit at year-end. 3. Cheyenne received goods costing $29,800 on January 2. The goods were shipped FOB shipping point on December 26 by Solita Co. The goods were not included in the physical count. 4. Cheyenne shipped goods costing $44,000…arrow_forwardUmatilla Bank and Trust is considering giving Whispering Winds Corp. a loan. Before doing so, it decides that further discussions with Whispering Winds's accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $300,800. Discussions with the accountant reveal the following. 1. 2. 3. 4. 5. Whispering Winds shipped goods costing $44,300 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse. The physical count of the inventory did not include goods costing $93.500 that were shipped to Whispering Winds FOB destination on December 27 and were still in transit at year-end. Whispering Winds received goods costing $22.500 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. Whispering Winds shipped…arrow_forward
- Assume that you are a staff accountant at BikeBuild, a manufacturer of high end off-road bicycles. BikeBuild uses a perpetual inventory system and prepares annual financial statements on December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because of BikeBuild's poor cash management. On November 15, excess inventory of bike parts (raw materials) was purchased in anticipation of an expected increase in bicycle production which will begin in January. To decrease the company's tax liability, the chief financial officer tells you to record the purchase of this inventory as part of supplies and expense it in the current year; this would decrease the company's tax liability by increasing expenses. 1. In which account should the purchase of bicycle parts be recorded? 2. How should you respond to this request by the chief financial officer?arrow_forwardTri-State Bank and Trust is considering giving Concord Company a loan. Before doing so, management decides that further discussions with Concord’s accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of $345,000. Discussions with the accountant reveal the following. 1. Concord sold goods costing $32,000 to Lilja Company, FOB shipping point, on December 28. The goods are not expected to arrive at Lilja until January 12. The goods were not included in the physical inventory because they were not in the warehouse. 2. The physical count of the inventory did not include goods costing $95,000 that were shipped to Concord FOB destination on December 27 and were still in transit at year-end. 3. Concord received goods costing $23,000 on January 2. The goods were shipped FOB shipping point on December 26 by Brent Co. The goods were not included in the physical count. 4. Concord sold goods costing $34,000 to Jesse…arrow_forwardUmatilla Bank and Trust is considering giving Blossom Company a loan. Before doing so, it decides that further discussions with Blossom's accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $250,820. Discussions with the accountant reveal the following. 1. 2. 3. 4. 5. Blossom shipped goods costing $54,230 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse. The physical count of the inventory did not include goods costing $91,590 that were shipped to Blossom FOB destination on December 27 and were still in transit at year-end. Blossom received goods costing $24,420 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. Blossom shipped goods costing $56,030 to Ehler of Canada FOB…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License