ACNT 1331 Exam 1 Study Sheet over Ch 1-4, Exams of Accounting

Download ACNT 1331 Exam 1 Study Sheet over Ch 1-4 and more Exams Accounting in PDF only on Docsity! ACNT 1331 Exam 1 Study Sheet over Ch 1-4 1. Robert is a single taxpayer who has AGI of $145,000 in 2019; his taxable income is $122,000. What is his federal tax liability for 2019? a.$9,480.00 b.$18,719.00 c.$23,569.50 d.$29,280.00 e.$23,454.50 [ 10% * 9,875 = $987.50, 12%* 30,250 = $3,630.00, 22% * 45,399 = $9,987.78, 24% * 45,399 = $8,754, 987.50 + 3,630 + 9,987.78 + 8,754 = 23,359.28] 2. Eugene and Velma are married. For 2019, Eugene earned $25,000 and Velma earned $30,000. They have decided to file separate returns. They have no deductions for adjusted gross income. Velma's itemized deductions are $14,200 so she is going to itemize. Eugene's itemized deductions are $4,000. Assuming Eugene and Velma do not live in a community property state, what is Eugene's taxable income? a.$21,000 b.$26,000 c.$12,800 d.$18,000 e. None of these choices are correct. 3. In which of the following situations is the taxpayer not required to file a 2019 income tax return? a. When the taxpayer is a 69-year-old widow (spouse died 3 years ago) with wages of $16,500 and no dependents. b. When the taxpayer is a single 67-year-old with wages of $9,800. c. When an individual has a current year income tax refund and would like to obtain it. d. When the taxpayer is a 35-year-old head of household with wages of $18,900. e. When the taxpayers are a married couple with both spouses under 65 years old with wages of $26,000. ACNT 1331 Exam 1 Study Sheet over Ch 1-4 4. Martin, a 50-year-old single taxpayer, paid the full cost of maintaining his dependent mother in a home for the aged for the entire year. What is the amount of Martin's standard deduction for 2019? a.$18,350 [Head of Household Deductions] b.$24,400 c.$12,200 d.$19,600 e. None of these choices are correct. 5. Irma, widowed in 2018, pays all costs related to the home in which she and her unmarried son live. Her son does not qualify as her dependent. What is her filing status for 2019? a. Head of household b. Qualifying widow(er) c. Single d. Married, filing separate e. None of these choices are correct. 6. Clay purchased Elm Corporation stock 20 years ago for $10,000. In the current year, he sells the stock for $29,000. What is Clay's gain or loss? a.$3,000, with the excess carried forward b.$19,000 short-term c.$19,000 ordinary d.$19,000 long-term [29,000 – 10,000 = 19,000 Long-term gain] e.No gain or loss is recognized on this transaction ACNT 1331 Exam 1 Study Sheet over Ch 1-4 13. To pay for college, Henry received the following: $1,000 scholarship from the Thespian Club to pay for books $4,000 scholarship from the Elks Lodge for tuition $5,000 worth of room and board as a dorm supervisor through a work-study program How much income must Henry report on his tax return? a.$6,000 b.$4,000 c.$0 d.$5,000 e.$10,000 14. Indicate which of the following statements is true. a. Health care flexible spending accounts can be used to cover dentist fees. b. Dependent care accounts may include day care but not preschool. c. Public transportation may be covered by an employer-provided spending account, but parking cannot be covered. d. Dependent care plans can only be used to cover the costs of caring for a dependent child. 15. In the current year, Johnice started a profitable bookkeeping business as a sole proprietor. Johnice made $38,000 in her first year of operation. What two forms must Johnice file for her business? a. Schedules A and C b. Schedules B and C c. Schedules D and E d. Schedule SE and C e. None of these choices are correct. 16. Jennie receives $12,000 (of which $2,000 is earnings) from a Qualified Tuition Program. She uses the funds to pay for new furniture for her apartment. What amount is taxable to Jennie? a.$3,000 b.$12,000 c.$10,000 d.$0 e.$2,000 17. Which of the following items incurred while on travel is not considered a travel expense? ACNT 1331 Exam 1 Study Sheet over Ch 1-4 a. Transportation costs b. The cost of meals c. The cost of lodging d. Cost of entertaining clients e. None of these choices are correct. 18. Acacia Company had inventory of $300,000 on December 31, 20X1. Other information is as follows: Purchases $1,500,000 Sales 1,800,000 Inventory 1/1/20X1 500,000 What is the amount of Acacia's cost of goods sold for 20X1? a.$1,800,000 b.$2,000,000 c.$1,600,000 d.$1,700,000 [500,000 + 1,500,000 – 300,000 = 1,700,000] e.None of these choices are correct. 19. Mikey is a self-employed computer game software designer. He takes a week-long trip to Maui, primarily for business. He takes 2 personal days at the beach. How should he treat the expenses related to this trip? a. None of the expenses are deductible since there was an element of personal enjoyment in the trip. b. 50 percent of the trip should be deducted as a business expense. c. The cost of all of the airfare and the expenses related to the business days should be deducted, while the expenses related to the personal days are not deductible. d. 100 percent of the trip should be deducted as a business expense since the trip was primarily for business. ACNT 1331 Exam 1 Study Sheet over Ch 1-4 20. Linda is self-employed and spends $600 for business meals and $900 for business entertainment in the current year. What is Linda allowed to deduct in the current year for these expenses? a.$750 [50% * (600 + 900) = $750] b.$600 c.$1,500 d.$300 e.None of these choices are correct. 21. Carlos drives to Oregon to consult with a client. He works for 1 day and spends 3 days enjoying Oregon since the consultation was right before a 3-day weekend. His expenses were $175 to drive to Oregon and back, $600 for lodging, $50 for food on the day that he worked, and $125 for food on the other 3 days. How much of his travel expenses are deductible? a.$200 b.$175 c.$350 [175 + (600 / 4) + (50% * 50) = $350] d.$800 e.$0 22. Sue is a small business owner who often gives gifts to clients. She gives a $40 gift to her client, Mr. Smith, and his wife. Sue spent $6 to wrap the gift. She also gave out 400 calendars with her company name on them. Each calendar cost $1. Sue also gave her secretary a $370 watch for his 10 years of service. How much of the above expenses may she deduct? a.$795 b.$446 c.$816 d.$801 [25 gift card limit +6 + (400 * 1) + 370 = $801] e.None of these choices are correct. ACNT 1331 Exam 1 Study Sheet over Ch 1-4 29. In December 2019, Ben and Jeri (married filing jointly) have a long-term capital gain of $55,000 on the sale of stock held for 4 years. They have no other capital gains and losses for the year. After the standard deduction, their ordinary income for the year, before the capital gain, is $70,000, making their total income for the year $125,000. In 2019, married taxpayers who file jointly pay tax of $8,012 on the first $70,000 of ordinary taxable income and 15% on long-term capital gains above $78,750. What is their total tax liability? a.$8,012.00 b.$14,949.50 c.$19,217.00 d.$16,262.00 30. Jerry bought his home 15 years ago for $60,000. Three years ago, Jerry married Debbie and she moved into the same house and has lived there since. If they sell Jerry's house in the current year for $340,000, what is their taxable gain on a joint tax return? a.$155,000 b.$30,000 c.$0 [340,000 - 60,000 = 280,000 which is less than 500,000 Joint are allowed to deduct on gain] d.$280,000 31. Which of the following is a capital asset? a. A taxpayer's principle residence b. A literary work held by the author c. Real estate held by a developer d. A truck used in a taxpayer's business e. None of these choices are correct. 32. Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year. What is the amount of Martha's taxable income after deducting the allowed capital loss? a.$25,000 b.$42,000 c.$45,000 d.$38,000 e.None of these choices are correct. ACNT 1331 Exam 1 Study Sheet over Ch 1-4 33. Pat's taxable income exceeds $160,700 and thus he is required to phase out his QBI deduction. The phase-out calculation is: a.50% of taxable income without the QBI deduction b.The greater of 50% of business wages or 25% of wages plus 2.5% of the unadjusted basis of qualifying property c.50% of the amount over $160,700 d.The lesser of 50% of business wages or 25% of wages plus 2.5% of the unadjusted basis of qualifying property 34. Martin sells a stock investment for $26,000 on August 2, 2019. Martin's adjusted basis in the stock is $15,000. [26,000 – 15,000 = 11,000 Gain] a. If Martin acquired the stock on November 15, 2018, calculate the amount and the nature of the gain or loss. $ Short-term capital gain b. If Martin had acquired the stock on September 10, 2017, calculate the amount and nature of the gain or loss. $ Long-term capital gain 35. Jason and Mary are married taxpayers in 2019. They are both under age 65 and in good health. For 2019 they have a total of $90,100 in wages and $715 in interest income. Jason and Mary's deductions for adjusted gross income amount to $3,815 and their itemized deductions equal $14,590. They claim two exemptions for the year on their joint tax return. Table for the standard deduction Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 a. What is the amount of Jason and Mary's adjusted gross income? $ [(90,100 + 715) – 3,815 = 87,000] b. In order to minimize taxable income, Jason and Mary will take the standard deduction in the amount of $ . c. What is their taxable income? $ [81,000 for two exemptions, 62,600 – 81,000 = 54,500] 11,000 11,000 87,000 24,400 54,500