Problems: 7,9,11,13,15,21

Marina Sabatini - 201900217

7) a. The recording of the accounts receivable had no effect on firm F's taxable income,
because the firm is cash basis.
b. The write-off of the account receivable had no effect on firm F's taxable income,
because the firm is cash basis.

9) a. with a cash basis taxpayer, RTY recognizes no income for the service performed
and 4,000 prepaid rent income.
b. with accrual basis taxpayer, RTY can recognize 17,800 of the service performed and 4,000 of prepaid rent income

11) a. no deduction, 50,000 results in a benefit extending following taxable year.

b. no deduction, brillo has to use accrual method for purchases of inventory
c. no deduction, the purchase of 1,800 is capitalized to an asset account
d. deduction of 4,800
e. deduction of 22,300

13) a. LSG has ability to deduct 9,450 in 2018. Because the result in a benefit within 12 months or less.
b. LSG should capitalize 9,450 expenditure because the benefit in result is more than 12 months.
LSG can amortize the expenditure of 525 (9,450/18 months) and deduct 1050 (525 x 2 months) in 2018.

15) a. with a cash basis taxpayer, firm F can only deduct 4,720 (14,160*4/12) of interest payment
from september 1 to december 31
b. with accrual method is the same, 4,720.

21) a. net income before tax 378,200

permanent book/tax differences -33500
344,700
tax rate 21%
Yount's tax expense 72387

b. taxable income 457100

tax rate 21%
Yount's tax payable 95991

c. tax payable 95991

tax expense 72387
net increase in deferred tax assets 23604
d 4,000 of prepaid rent income.

onths or less.
12 months.
2 months) in 2018.