Question: White Corporation estimates that its 2018 taxable

> Assume that the business in Exercise 7-9 maintains a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, assuming the last-in, first-out method. Present the data in the form illustra

> Assume that the business in Exercise 7-9 maintains a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustr

> The following units of a particular item were available for sale during the calendar year: The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance

> Go to the Internet and review the procedures for applying for a patent, a copyright, and a trademark. You may find information available on Wikipedia (Wikipedia.org) useful for this purpose. Prepare a brief written summary of these procedures.

> Before inventory purchases are recorded, the receiving report should be reconciled to what documents?

> In teams, select a public company that interests you. Obtain the company's most recent annual report on Form 10-K. The Form 10-K is a company's annually required filing with the Securities and Exchange Commission (SEC). It includes the company's financia

> On April 18, 2019, Bontanica Company, a garden retailer, purchased $9,800 of seed, terms 2/10, n/30, from Whitetail Seed Co. Even though the discount period had expired, Shelby Davey subtracted the discount of $196 when he processed the documents for pay

> Margie Johnson is a staff accountant at ToolEx Company, a manufacturer of tools and equipment. The company is under pressure from investors to increase earnings, and the president of the company expects the accounting department to “make this happen.” Ma

> The following is an excerpt from a conversation between Mark Loomis and Krista Huff. Mark is debating whether to buy a stereo system from Tru-Sound Systems, a locally owned electronics store, or Wholesale Stereo, an online electronics company. Mark: Kris

> One item is omitted in each of the following four lists of income statement data. Determine the amounts of the missing items, identifying them by letter. Sales $463,400 (b) $1,295,000 (d) Cost of merchandise sold $410,000 $900,000 (a) 83,500 (c) 275

> Rustic Furniture Co. is owned and operated by Cam Pfeifer. The following is an excerpt from a conversation between Cam Pfeifer and Mitzi Wheeler, the chief accountant for Rustic Furniture Co. Cam: Mitzi, I’ve got a question about this recent balance shee

> Suzi Nomro operates Watercraft Supply Company, an online boat parts distributorship that is in its third year of operation. The following income statement was prepared for the year ended October 31, 2019. Suzi is considering a proposal to increase net

> Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2019 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the foll

> The following were selected from among the transactions completed by Essex Company during July of the current year: July 3. Purchased merchandise on account from Hamling Co., list price $72,000, trade discount 15%, terms FOB shipping point, 2/10, n/30, w

> The following selected transactions were completed by Green Lawn Supplies Co., which sells irrigation supplies primarily to wholesalers and occasionally to retail customers: July 1. Sold merchandise on account to Landscapes Co., $33,450, terms FOB shippi

> In teams, select a public company that interests you. Obtain the company’s most recent annual report on Form 10-K. The Form 10-K is a company’s annually required filing with the Securities and Exchange Commission (SEC). It includes the company’s financia

> The following selected transactions were completed by Niles Co. during March of the current year: Mar. 1. Purchased merchandise from Haas Co., $43,250, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $650 was added to the invoice. 5. Purchased

> On June 30, 2019, the balances of the accounts appearing in the ledger of Simkins Company are as follows: Instructions 1. Does Simkins Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Simkin

> Selected transactions for Essex Company during July of the current year are listed in Problem 6-3B. In Problem 6-3B The following were selected from among the transactions completed by Essex Company during July of the current year: July 3. Purchased mer

> Selected transactions for Niles Co. during March of the current year are listed in Problem 6-1B. In Problem 6-1B The following selected transactions were completed by Niles Co. during March of the current year: Mar. 1. Purchased merchandise from Haas Co

> The following expenses were incurred by a merchandising business during the year. In which expense section of the income statement should each be reported: (a) Selling, (b) Administrative, or (c) Other? 1. Advertising expense 2. Depreciation expense on s

> Selected accounts and related amounts for Kanpur Co. for the fiscal year ended June 30, 2019, are presented in Problem 6-5B. In Problem 6-5B The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal yea

> The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of owner’s equity.

> The following selected transactions were completed during April between Swan Company and Bird Company: Apr. 2. Swan Company sold merchandise on account to Bird Company, $32,000, terms FOB shipping point, 2/10, n/30. Swan Company paid freight of $330, whi

> The following selected transactions were completed by Amsterdam Supply Co., which sells office supplies primarily to wholesalers and occasionally to retail customers: Mar. 2. Sold merchandise on account to Equinox Co., $18,900, terms FOB destination, 1/1

> The following selected transactions were completed by Capers Company during October of the current year: Oct. 1. Purchased merchandise from UK Imports Co., $14,448, terms FOB destination, n/30. 3. Purchased merchandise from Hoagie Co., $9,950, terms FOB

> On December 31, 2019, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Instructions 1. Does Wyman Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Wyman

> Waylander Coatings Company purchased waterproofing equipment on January 6 for $320,000. The equipment was expected to have a useful life of four years, or 20,000 operating hours, and a residual value of $35,000. The equipment was used for 7,200 hours dur

> Selected transactions for Babcock Company during November of the current year are listed in Problem 6-3A. In Problem 6-3A The following were selected from among the transactions completed by Babcock Company during November of the current year: Nov. 3.

> United Rug Company is a small rug retailer owned and operated by Pat Kirwan. After the accounts have been adjusted on December 31, the following selected account balances were taken from the ledger: Advertising Expense . . . . . . . . . . . . . . . . . .

> Identify the errors in the following schedule of the cost of merchandise sold for the year ended May 31, 2018: Cost of merchandise sold: Merchandise Inventory, May 31, 2018 Cost of merchandise purchased: $ 105,000 Purchases ... $1,110,000 Purchases

> For the fiscal year, sales were $191,350,000 and the cost of merchandise sold was $114,800,000. a. What was the amount of gross profit? b. If total operating expenses were $18,250,000, could you determine net income? c. Is Customer Refunds Payable an ass

> Based on the following data, determine the cost of merchandise sold for July: Increase in estimated returns inventory ……………… $ 34,900 Merchandise inventory, July 1 ………….………………….. 190,850 Merchandise inventory, July 31 ………….………………… 160,450 Purchases ……………

> Based on the following data, determine the cost of merchandise sold for November: Increase in estimated returns inventory ……………………… $ 14,500 Merchandise inventory, November 1 …………………………….. 28,000 Merchandise inventory, November 30 …………………………… 31,500 Purc

> The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 2019: Increase in estimated returns inventory …………………… $ 11,600 Merchandise inventory, May 1, 2018 ……………………….. 380,000 Merchandise inventory, Ap

> Selected transactions for Capers Company during October of the current year are listed in Problem 6-1A. In Problem 6-1A The following selected transactions were completed by Capers Company during October of the current year: Oct. 1. Purchased merchandi

> The following selected transactions were completed by Air Systems Company during January of the current year. Air Systems Company uses the periodic inventory system. Jan. 2. Purchased $18,200 of merchandise on account, FOB shipping point, terms 2/15, n/3

> Selected accounts and related amounts for Clairemont Co. for the fiscal year ended May 31, 2019, are presented in Problem 6-5A. In Problem 6-5A The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fis

> Kroger Co., a national supermarket chain, reported the following data (in millions) in its financial statements for a recent year: Total revenue …………………………………………….. $108,465 Total assets at end of year ………………………………. 30,556 Total assets at beginning of ye

> The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search . . . . . . . . . . . . . . .

> The Home Depot reported the following data (in millions) in its recent financial statements: a. Determine the asset turnover for The Home Depot for Year 2 and Year 1. Round to two decimal places. b. What conclusions can be drawn concerning the trend in

> During the current year, merchandise is sold for $31,850,000. The cost of the merchandise sold is $24,206,000. a. What is the amount of the gross profit? b. Compute the gross profit percentage (gross profit divided by sales). c. Will the income statement

> On July 31, 2019, the balances of the accounts appearing in the ledger of Serbian Interiors Company, a furniture wholesaler, are as follows: Prepare the July 31, 2019, closing entries for Serbian Interiors Company. $ 530,000 Accumulated Depr.-Build

> Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: a. On December 31, the company determined that $3,400,000 of goodwill was impaired. b. Governmental and legal costs of $4,800

> Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,

> Give some examples of why gathering pertinent facts can be a challenging task for tax researchers.

> Identify the major elements of a client letter and briefly discuss the difference between a letter to a sophisticated client and to an unsophisticated client.

> Mimi had $40,000 in federal income taxes withheld in 2016. Because of a sizable amount of itemized deductions, she figured that she had no further tax to pay for the year. For this reason and because of personal problems, and without securing an extensio

> Should prevailing interest rates bear on tax decision making in either or both of the following situations? a. The taxpayer is contemplating litigation in either the Tax Court or the Court of Federal Claims. b. An understatement of estimated tax payments

> Jack and Jill filed a joint return in 2014 showing Jill’s wages of $50,000 and Jack’s self-employment income of $30,000. Jack and Jill divorced in 2015. In 2016, the IRS audited their return and found that Jack did not report $20,000 of self-employment i

> What are the rules for equitable relief?

> What are the rules for innocent spouse relief under the provisions of IRC Section 6015(b)?

> Briefly discuss the three ways that a spouse can request relief from joint and several liability.

> What is joint and several liability?

> Discuss which penalties, if any, the tax adviser might be charged with in each of the following independent circumstances. In this regard, assume that the tax adviser: a. Suggested that the client invest in a real estate tax shelter. b. Provided a statem

> Discuss which penalties, if any, the tax adviser might be charged with in each of the following independent circumstances. In this regard, assume that the tax adviser: a. Provided information about the taxpayer’s federal income tax returns to the pertine

> Give one or more examples to show how a taxpayer might take advantage of preferential tax rates on long-term capital gains by structuring transactions to produce capital gains rather than ordinary income.

> The client’s return is found by the U.S. Tax Court to have included improper business deductions. The court agreed that the taxpayer’s position had some statutory and judicial merit, but it held for the government nonetheless. Which of the following coul

> Indicate whether the following statements are true or false: a. The government never pays a taxpayer interest on an overpayment of tax. b. Penalties may be included as an itemized deduction on an individual’s tax return. c. An extension of time for filin

> Define and illustrate the following terms or concepts: a. Fraud b. Negligence c. Reasonable cause d. Lack of reasonable cause e. Civil penalty conviction f. Criminal penalty conviction

> Kold Corporation estimates that its 2018 taxable income will be $900,000. Thus, it is subject to a flat 34 percent income tax rate and incurs a $306,000 tax liability. For each of the following independent cases, compute the minimum quarterly estimated-t

> How has Congress used tax penalties to discourage the development of certain tax shelters?

> What is an injunction, and when may the IRS seek an injunction?

> Make a chart that distinguishes among the various types of examinations that the IRS conducts relative to individual income tax returns, namely, office, correspondence, field, and NRP audits. For this purpose, examine the following criteria: a. Scope of

> A revenue agent may do which of the following in an attempt to negotiate a settlement after the completion of an audit? More than one answer may be correct. a. Attempt to settle an unresolved issue based on the hazards of litigation b. Settle a question

> Which type of audit is used most often to substantiate the reported items of income or deduction for individuals who have only wages? a. Field b. Office c. Correspondence

> Jenna and Sam sold a piece of property for $300,000, claiming that their basis was $150,000 and report a taxable gain of $150,000. Their 2016 return filed in February 2017 reported gross income of $250,000. Jenna and Sam later determine that the property

> Discuss some of the key points that the tax researcher must consider with respect to evaluating court cases as part of a research project.

> David accidentally omitted from his 2016 tax return $40,000 of the gross receipts that he collected as the owner of a restaurant. His 2016 return indicated collective gross receipts of $25,000. The IRS no longer can pursue David with the threat of collec

> Carl purposely omitted from his 2017 tax return $40,000 of the gross receipts that he collected as the owner of a restaurant. His 2017 return indicated collective gross receipts of $25,000. The IRS no longer can pursue Carl with the threat of collection

> Blanche filed her 2016 income tax return on April 4, 2017. On December 14, 2017, she learned that 100 shares of stock that she owned had become worthless in 2016. Because she did not deduct this loss on the 2016 return, Blanche intends to file a claim fo

> Ace filed her 2016 income tax return on January 25, 2017. There was no material understatement of income on her return, and the return was properly signed and filed. The statute of limitations for Ace’s 2016 return expires on: a. January 25, 2020 b. Apri

> Compute the undervaluation penalty for each of the following independent cases involving the executor’s reporting of the value of a closely held business in the decedent’s gross estate. In each case, assume a marginal estate tax rate of 50 percent.

> What is the applicable filing period under the statute of limitations in each of the following independent situations? a. No return was filed by the taxpayer. b. The taxpayer incurred a bad-debt loss that she failed to claim. c. A taxpayer inadvertently

> Indicate whether the following statements are true or false: a. The statute of limitations for assessment of taxes never extends beyond three years from the filing of a return. b. There is no statute of limitations relative to a taxpayer’s claim for a re

> Construct a scenario in which the tax adviser should recommend that the client terminate an IRS challenge with the following: a. Lawsuit b. Offer in compromise c. Closing agreement d. Appeals conference e. Office audit f. Correspondence audit

> Distinguish between the receipt of a 30-day letter and a 90-day letter.

> In early 2017, the IRS selected Amber’s 2014 return for audit with respect to Schedule C expenses and employee business expenses claimed on the return. Amber met with an IRS agent, who disallowed many of the expenses and who claims that Amber owes $2,500

> List and discuss the primary parts of a tax research memo.

> Respond to the following client comment: “We have a better than even chance of winning in the Tax Court, according to an article I read. Let’s sue the government!”

> Why must the tax professional be cognizant of how tax law administration works?

> Examine some tax journal articles and treatises to put together a checklist, “How to Prepare for an Appeals Conference.”

> What are the statutes of limitations for the IRS and taxpayers? Why did Congress create them? When can they be shortened, extended, or suspended?

> Should the IRS audit more or fewer returns every year? What issues would you consider in this regard if you were a politician? A wealthy individual?

> Compute the overvaluation penalty for each of the following independent cases involving the taxpayer’s reporting of the fair market value of charitable-contribution property. In each case, assume a marginal income tax rate of 35 percent. Taxpayer Co

> Carol takes some very aggressive positions on her tax return. She maintains, “With the downsizing of the government, my chances of getting caught are virtually zero.” Is Carol’s approach correct?

> Identify several items that you believe are included in the prevailing DIF model.

> Distinguish among the various means by which the IRS selects a tax return for examination. For this purpose, examine the criteria of: a. Scope of review b. Probability of selection c. Preservation of taxpayer constitutional rights

> Relate some of the “audit etiquette” tactics that you have heard taxpayers or tax professionals discuss.

> What are the major functions of the national office of the IRS?

> Why might it be desirable to settle with an agent rather than continue by appealing to a higher level within the IRS?

> What techniques other than the random selection of returns for audit does the IRS use in its enforcement function?

> Distinguish between the mathematical/clerical error program and the unallowable items program.

> List three of the items included in one of the Taxpayer Bills of Rights.

> Rex incurred $8,000 of employment-related meal and entertainment expenses during the year. Rex’s employer is trying to determine whether to reimburse Rex directly for the expenses (and claim the $4,000 deduction on its corporate tax return) or to pay him

> It is late 2017, and you are a successful executive working in New York for a large company. Tomorrow morning you will have the opportunity to negotiate receiving a $100,000 bonus at the end of the year or an amount of deferred salary in 3 years. Both yo

> Joan filed her unextended 2017 tax return on November 15, 2018, paying the $5,000 amount due at that time. Joan has no reasonable cause for failing to file the return by October 15 or for failing to pay the tax that was due on April 15, 2018. Compute the

> Maris Corporation put into service $100,000 of equipment that qualifies for its state’s 10 percent research credit. To the extent that the credit is claimed, no cost-recovery deductions are allowed. Maris is subject to a 14 percent cost of capital. If th

> Paris Corporation holds a $100,000 unrealized net capital gain and a capital loss carryforward that will expire in the current year. Paris is subject to a 14 percent cost of capital. Its marginal tax rate is 40 percent. Should Paris accelerate the recogn

> In each of the following scenarios should Harris Corporation accelerate $100,000 of gross income into 2017, its first year subject to the AMT? Harris is subject to a 14 percent cost of capital. The corporate AMT rate is a flat 20 percent, and Harris Corp