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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Jay and Bevonce come to you for tax advice. Jay is a self-employed consultant. Last
year, Jay's business generated revenue of $200,000 and incurred expenses of $10,000
for rent and utilities for an office. Jay also spent $2,000 purchasing depreciable
equipment used in the business and paid a part-time assistant $10,000 for work
performed during the year. He hired Greg to help him with his consulting practice and
paid him $20,000 for his work during the year. Jay
Jay paid $3,000 for his own health insurance and $500 for term life insurance. He did
not contribute to any retirement plans.
Bevonce works for Disney Travels and travels for her job and was reimbursed by
Disney $3,000 for her travel expenses. Beyonce spent $4,000 on other employee
business expense that was not reimbursed by her employer. Disney pays Beyonce a
salary of $100,000, $20,000 for her health insurance and provided $60,000 of group
term life insurance to each of its employees. Beyonce contributes out of her own
money $5,000 to a traditional IRA.
You are a highly priced accountant. Jay and Beyonce have come to you for tax advice
and would like to know the tax ramifications of each of the events and transactions
listed above.
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