Please answer sections a-d. Section D is typed here while A-C are attached. D)What does the economic profit value tell us, and what advice would you give Jarod about his business? a. Jarod's explicit costs total $His implicit costs total $b. What is Jarod's annual accounting profit? $c. What is Jarod's annual economic profit?%24 Last year, Jarod left a job that pays $80,000 to run his own bike repair shop. Jarod's shop charges $65 for a repair, and last year theshop performed 5,000 repairs. Jarod's production costs for the year included rent, wages, and equipment. Jarod spent $60,000 onrent and $100,000 on wages for his employees. Jarod keeps whatever profit the shop earns but does not pay himself an official wage.Jarod has invested $30,000 of his savings in the business. His savings were earning an annual interest rate of 4 percent.

a. Explicit Cost : Rent - $60,000 Wages - $100,000 Total Explicit Cost = $160,000…

Answered: Please answer sections a-d. Section D…

Please answer sections a-d. Section D is typed here while A-C are attached. D)What does the economic profit value tell us, and what advice would you give Jarod about his busin

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 4DQ

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Wade paid 7,000 for an automobile that needed substantial repairs. He worked nights and weekends to restore the car and spent 2,400 on parts for it. He knows that he can sell the car for 13,000, but he is very wealthy and does not need the money. On the other hand, his daughter, who has very little income, needs money to make the down payment on a house. a. Would it matter, after taxes, whether Wade sells the car and gives the money to his daughter or whether he gives the car to his daughter and she sells it for 13,000? Explain. b. Assume that Wade gave the car to his daughter after he had arranged for another person to buy it from his daughter. The daughter then transferred the car to the buyer and received 13,000. Who is taxed on the gain?
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Ann is a self-employed restaurant critic who does her work exclusively from a home office. Ann's income is $25,000 before the home office deduction this year. Her office takes up 200 square feet of her 1,000-square-foot apartment. The total expenses for her apartment are $6,000 for rent, $1,000 for utilities, $200 for renter's insurance, and $800 for pest control and other maintenance. What is Ann's home office deduction?
Last year Acme paid Ralph $15,000 to install a new air-conditioning unit at its headquarters building. The air conditioner did not function properly, and this year Acme requested that Ralph return the payment. Because Ralph could not repair one critical part in the unit, he refunded the cost of the repair, $5,000, to Acme. A> Is Ralph required to include the $15,000 payment he received last year in his gross income from last year? B> What are the tax implications of the repayment if Ralph was in the 35 per cent tax bracket when he received the $15,000 payment from Acme, but was in the 28 per cent tax bracket when he refunded $5,000 to Acme? C> How would you answer the question in part (b) if Ralph refunded $2,500 to Acme and not $5,000?