Assignment
1. Economic Nexus relates to
a) A new way for states to connect to transactions in order to collect tax
b) A way to research law related matters
c) A connection for sales tax transactions only
d) None of the above
2. ABC in order of transaction: purchases 5 units of inventory at a $1,000/unit. Then ABC purchases 4 units at $1,100/unit Then Sells 2 units of inventory at a price of $1,500/unit. The Lower of Cost or Market suggests a replacement cost at the balance sheet date of $1,050/unit. ABC uses perpetual LIFO. Book all entries
3. ABC manufacturers custom guitars for sale. ABC purchases a machine that will be used to shape guitars on 1/1/2018 for $300,000. The machine has a 6-year life with no salvage value. Book the entry on 1/1 and 12/31. The machine is only to be used in the manufacturing process.
4. ABC purchases 3 investments on 9/1/2018. Stock of BCD for $10,000 that has a fair-value of $13,000 at year-end. Bonds of BCD for $10,000 that have a fair value of $10,500 at year-end. These bonds are considered available for sale. Bonds of CDE Company which were purchased on a bond market for $6,000 that have a year-end fair value of $9,000. These bonds are being held to maturity. Sales for ABC are 120,000. The only expense is salaries for 55,000. Dividends are $500 and total bond revenues are $1,000. Assume a tax rate of 20%. Prepare an income statement (in good form) for ABC. Show investment account balance that would be shown on balance sheet at 12/31/18.
5. ABC owns 30% of D Company. ABC and D have the following: Revenues of $90,000/30,000; COGS $40,000/12,000; SGA 10,000/3,000. ABC pays a dividend of $10,,000 and D pays a dividend of 5,000. Tax rate of 20%. Prepare an income statement for ABC
6.
a. Brief ASC 2016-1 (1 page (minimum) document)
7. An exemption certificate
a) allows a transaction to be treated as taxable
b) allows a seller with nexus not to have to collect sales tax
c) allows a buyer to remit use tax
d) allows a transaction to be treated as non-taxable for income tax purposes
8. Mack Corporation, a U.S. corporation, reported total taxable income of $5 million. Taxable income included $1.5 (as translated) million of foreign source taxable income from a company's branch. All of the branch income is foreign branch income. Mack paid Canadian income taxes of $375,000 (as translated) on its branch income. Compute Mackinac's allowable foreign tax credit.
9. ABC Corporation is domiciled in X jurisdiction. X jurisdiction uses a double weighted sales to determine apportionment. Sales to X jurisdiction is 250,000. Sales everywhere else is 1,180,637. Rental in X cost us $100,000. Federal TI is $500,000 and there are no state adjustments to this amount. $50,000 of the $500,000 is the total allocable income but only $32,000 is allocable to jurisdiction X. Jurisdiction X's tax rate is 8.25%. What is state tax payable to X?
10. Sales 480,000
COGS 40,000
Muni Interest revenue 20,000
Salaries 80,000
Rent expense 12,000
Supplies Expense 8,000
R&D expense 15,000
Depreciation 35,000 (for tax it is going to be $60,000)
Meals Expense 12,000
Dividend Revenue from a 10% owned company 20,000
Tax Rate is 21%
1. Prepare an income statement (per GAAP) in good format
2. Book Tax Journal Entries.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.