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Sunday, 24 June 2012

You have set up your tax preparation firm as an incorporated business. You took $70,500 from the firm as your salary. The firm’s taxable income for the year (net of your salary) was $29,000. Assume you pay personal taxes as an unmarried taxpayer. Use the tax rates presented in Table 3-5 and Table 3-7.


You have set up your tax preparation firm as an incorporated business. You took $70,500 from the firm as your salary. The firm’s taxable income for the year (net of your salary) was $29,000. Assume you pay personal taxes as an unmarried taxpayer. Use the tax rates presented in Table 3-5 and Table 3-7.

a.
How much taxes must be paid to the federal government, including both your personal taxes and the firm’s taxes?

  Total taxes

b.
By how much will you reduce the total tax bill by reducing your salary to $50,500, thereby leaving the firm with taxable income of $49,000?

  Total taxes reduced



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The year-end 2010 balance sheet of Brandex Inc. listed common stock and other paid-in capital at $1,400,000 and retained earnings at $3,700,000. The next year, retained earnings were listed at $4,000,000. The firm’s net income in 2011 was $930,000. There were no stock repurchases during the year. What were the dividends paid by the firm in 2011?

The year-end 2010 balance sheet of Brandex Inc. listed common stock and other paid-in capital at $1,400,000 and retained earnings at $3,700,000. The next year, retained earnings were listed at $4,000,000. The firm’s net income in 2011 was $930,000. There were no stock repurchases during the year. What were the dividends paid by the firm in 2011?

  Dividends paid

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Using Table 3.7, calculate the marginal and average tax rates for a single taxpayer with the following incomes: (Do not round intermediate calculations. Round "Average tax rate" to 2 decimal places.)


Using Table 3.7, calculate the marginal and average tax rates for a single taxpayer with the following incomes: (Do not round intermediate calculations. Round "Average tax rate" to 2 decimal places.)


Income    
      Marginal Tax Rate
      Average Tax Rate
a.
$28,500
%  
%  
b.
$58,500
%  
%  
c.
$334,000
%  
%  
d.
$4,700,000
%  

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Construct a balance sheet for Sophie’s Sofas given the following data. (Be sure to list the assets and liabilities in order of their liquidity.)


Construct a balance sheet for Sophie’s Sofas given the following data. (Be sure to list the assets and liabilities in order of their liquidity.)





  Cash balances
=
$
9,500  
  Inventory of sofas
=
$
195,000  
  Store and property
=
$
95,000  
  Accounts receivable
=
$
21,500  
  Accounts payable
=
$
16,500  
  Long-term debt
=
$
165,000  



BALANCE SHEET OF SOPHIE’S SOFAS
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