Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 14E
To determine
Explain to person P that person M has a liability of $150,000 and when person M will earn that $150,000.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
QUESTION 26
David owns a liquor store in a high-crime area. In order to obtain a reduced insurance premium, David promised to have a burglar alarm operating
at the store when the store was closed. This agreement, which was incorporated into the insurance contract, is an example of
O representation.
O binder.
O rider,
O warranty.
QUESTION 2
Danny Zuma operates a security business in Inanda, Kwazulu-Natal. He seeks advice on whether the following expenses and losses are
deductible in terms of the general deduction formula:
1.
2.
3.
One of Danny's vans, with a tax value of R180 000 on the date, was hijacked when the driver was returning after havingtransported a
team of guards to a client's business premises in Springfield. The van was not insured.
One of Danny's guards was badly bitten by one of the guard dogs while on duty. The court granted the guard compensation amounting
to R30 000 on 25 April 2023 which Danny duly paid on 30 April 2023.
Three of Danny's team leaders attended a two-day training workshop in Midrand, Johannesburg on the latest security techniques, at
a cost of R16 000 per person.
Required:
Determine with reference to tax cases (case law) whether the expenses/losses above [1-3] are deductible in terms of the general deduction
formula.
Question 7
Jack has a small shop that he runs as a mited company. He also owns a small two bed flat in his name, which he uses as his personal accommodation
One of his customers slipped on the wet floor in his shop, resulting into a lawsuit. The court verdict was in favour of the customer and the limited company
was instructed to pay damages and costs totalling to £50,000 by the court. The value of the limited company is expected to be £30.000.
Assuming Jack cannot pay this charge from any other source, which of the following statements are true? You may refer the concept of limited and
unlimited liability associated with different business forms.
b
Only the business as the limited company can be auctioned, the court cannot take away the personal property (the flat)
The business and the flat can be taken away and auctioned by the court to pay these charges.
The court cannot make Jack pay the charges as this may render him bankrupt
Only the flat can be auctioned, the court cannot take…
Chapter 2 Solutions
Survey Of Accounting
Ch. 2 - 1. What does accrual accounting attempt to...Ch. 2 - 2. Define recognition. How is it independent of...Ch. 2 - 3. What does the term deferral mean?Ch. 2 - 4. If cash is collected in advance of performing...Ch. 2 - Prob. 5QCh. 2 - 6. What effect does the issue of common stock have...Ch. 2 - 7. How does the recognition of revenue on account...Ch. 2 - 8. Give an example of an asset source transaction....Ch. 2 - 9. When is revenue recognized under accrual...Ch. 2 - 10. Give an example of an asset exchange...
Ch. 2 - 11. What is the effect on the right side of the...Ch. 2 - Prob. 12QCh. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - 17. Why may net cash flow from operating...Ch. 2 - Prob. 18QCh. 2 - Prob. 19QCh. 2 - 20. What is the difference between a cost and an...Ch. 2 - Prob. 21QCh. 2 - Prob. 22QCh. 2 - 23. What does the term expense mean?Ch. 2 - Prob. 24QCh. 2 - 25. What is the purpose of the statement of...Ch. 2 - Prob. 26QCh. 2 - 27. Why is the balance sheet dated as of a...Ch. 2 - 28. In what order are assets listed on the balance...Ch. 2 - Prob. 29QCh. 2 - Prob. 30QCh. 2 - 31. What types of accounts are closed at the end...Ch. 2 - 32. Give several examples of period costs.Ch. 2 - 33. Give an example of a cost that can be directly...Ch. 2 - Prob. 34QCh. 2 - Prob. 1ECh. 2 - Exercise 2-2 Effect of accrued expenses on the...Ch. 2 - Prob. 3ECh. 2 - Prob. 4ECh. 2 - Prob. 5ECh. 2 - Prob. 6ECh. 2 - Prob. 7ECh. 2 - Prob. 8ECh. 2 - Exercise 2-9 Supplies on financial statements Yard...Ch. 2 - Prob. 10ECh. 2 - Exercise 2-11 Prepaid items on financial...Ch. 2 - Exercise 2-12 Effect of an error on financial...Ch. 2 - Exercise 2-13 Unearned items on financial...Ch. 2 - Prob. 14ECh. 2 - Prob. 15ECh. 2 - Prob. 16ECh. 2 - Prob. 17ECh. 2 - Prob. 18ECh. 2 - Prob. 19ECh. 2 - Prob. 20ECh. 2 - Exercise 2-21 Adjusting the accounts Norell Inc....Ch. 2 - Prob. 22ECh. 2 - Prob. 23ECh. 2 - Prob. 24ECh. 2 - Prob. 25ECh. 2 - Prob. 26ECh. 2 - Exercise 2-27 Identifying transaction type and...Ch. 2 - Exercise 2-27A Effect of accounting events on the...Ch. 2 - Prob. 29ECh. 2 - Exercise 2-29A Identifying source, use, and...Ch. 2 - Prob. 31ECh. 2 - Problem 2-32 Recording events in a horizontal...Ch. 2 - Problem 2-37A Effect of adjusting entries on the...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Problem 2-36 Identifying and arranging elements on...Ch. 2 - Problem 2-37 Missing information in financial...Ch. 2 - Problem 2-38 Events for two complete accounting...Ch. 2 - Prob. 1ATCCh. 2 - ATC 2-3 Research Assignment Identifying accruals...Ch. 2 - ATC 2-4 Writing Assignment Revenue Recognition and...
Knowledge Booster
Similar questions
- D Question 8 On 1 December in the previous year a taxpayer borrows $350,000 to use in his business. He pays $2,000 in Stamp Duty and $500 in mortgage broker fees. The loan was to be repaid in 10 years. Interest in the current year was $10,000. What is the remaining expenditure and the remaining loan period to calculate the claim for borrowing expense deduction under $25-25 in the current year? O $350,000 and 3,650 days O $2,500 and 1,825 days 13 days $12.500 and 1.825 days $2.210 and 1.arrow_forwardQUESTION 9 Faisal has insured his vehicle with AXA insurance company. Throughout the year he experiences a loss in January costing 1,127, another in May costing 2,209 and the last in December costing 1,043. If Faisal has a straight deductible of 324. How much will the insurer pay?arrow_forwardm 34 Jamison's gross tax liability is $9,500. Jamison had $2,400 of available credits and he had $6,150 of taxes withheld by his employer. What are Jamison's taxes due (or taxes refunded) with his tax return? Multiple Choice $950 tax refund $3,350 taxes due $950 taxes due $7,100 taxes duearrow_forward
- Question 2 The maximum a 35-year-old self-employed taxpayer can contribute to his SEP is the lesser of _____________ or 20% of self-employment net profit minus _____________. Question 3 On November 1, 20X1, an accrual basis taxpayer receives $3,600 in advance for 24-months of subscription services. The taxpayer includes in gross income _____________ in 20X1, _____________ in 20X2 and _____________ in 20X3arrow_forwardD Question 34 Vivian is a college student with auto liability limits of 100/300/100. She also has a $1,000,000 umbrella policy. Assuming Vivian's auto limits meet the underlying insurance requirements for the umbrella policy, answer the following: Vivian was rushing home from work last week so that she wouldn't miss Game of Thrones. Right before she pulled into the parking garage, she side-swiped another car (the other car did not have insurance). Vivian was deemed to be at-fault and the other driver sustained $150,000 worth of medical expenses. The other car had damage of $150,000. How much, if any, will Vivian's umbrella policy pay out for this accident? Jannet Format Tools Tablearrow_forwardDiscussion Question 1-42 (Algorithmic) (LO. 5) Rita files her income tax return 120 days after the due date of the return without obtaining an extension from the IRS. Along with the return, she remits a check for $98,000, which is the balance of the tax she owes. Note: Assume 30 days in a month. Disregarding the interest element, enter Rita's failure to file penalty and failure to pay penalty. Failure to pay penalty $ Failure to file penalty X Xarrow_forward
- Problem 4-16 Net Operating Losses (LO 4.9) Tyler, a single taxpayer, generates business income of $3,000 in 2019. In 2020, he generates an NOL of $5,000. In 2021, he generates business income of $1,000. In 2022, his business generates income of $1,100. What is Tyler's NOL carryforward into 2023, if any? Under the temporary COVID provisions, Tyler can carryforward 2,000 of 2020 loss to 2019 leaving an NOL balance of $ to carryforward of his 2022 income or $ into 2021. His use of the NOL in 2021 is limited to This leaves an NOL of his 2021 income or $ into 2023. the NOL in 2021 leaving an NOL balance of $ into 2022. His NOL use is limited to balance of $ He uses $ ofarrow_forwardQuestion 9 Discuss the CGT consequences of these events for Nathan and Chemical Pty Ltd (4 marks). Include in your discussion the availability of the 50% discount. Nathan had a car that he acquired for $45,000 5 years ago. It was stolen in the current tax year, and insurance as a result gave Nathan $65,000 in compensation. Nathan, whose job was an industrial chemist, also entered into a restraint of trade with his ex-employer, Chemical Pty Ltd, to not work with any of their competitors for 3 years. Nathan was paid $300,000 for this (assume this did not constitute ordinary income and was also not assessable under s. 15-2). When the agreement lapsed it was not renewed.arrow_forwardProblem 5-19 Taxes (LO 5.7) Laura is a single taxpayer living in New Jersey with adjusted gross income for the 2021 tax year of $86,000. Laura's employer withheld $8,400 in state income tax from her salary. In April of 2021, she pays $600 in additional state taxes for her prior year's tax return. The real estate taxes on her home are $2,100 for 2021, and her personal property taxes, based on the value of the property, amount to $130. Also, she paid $80 for state gasoline taxes for the year. Complete the taxes section of Schedule A below to report Laura's 2021 deduction for taxes assuming she chooses to deduct state and local income taxes. If an amount is zero, enter "0". Enter all amounts as positive numbers. 5 State and local taxes a State and local income taxes or general sales taxes. You may include Taxes You Paid either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box ... b State and…arrow_forward
- #4-4A – LO 3 Eaton enterprises uses the wage-bracket method to determine federal income tax withholding on its employees. Find the amount to withhold from the wages paid each employee: i have asked this question 4 times and keep getting answer to another problem. Can you assist? Hal Bower married 1 withholding allowance paid weekly wage $1,350 amount to be withheld?arrow_forwardA taxpayer forgot to register his book of accounts on time. Which of the following penalties will be charged to him for the violation? * a. 25% surcharge penalty b. 12% annual interest penalty c. P1,000 compromise penalty d. All of these penalties e. Answer not givenarrow_forwardeBook Chapter 3Financial Planning Exercise 2Estimating taxable income, tax liability, and potential refund Arabella Cunningham is 24 years old and single, lives in an apartment, and has no dependents. Last year she earned $39,200 as a sales representative for Planning Associates; $2,744 of her wages was withheld for federal income taxes. In addition, she had interest income of $185. The standard deduction in 2018 was $12,000 for single. The appropriate tax rate schedule is shown below: EXHIBIT 3.3 Sample Tax Rate Schedules Tax rates levied on personal income vary with the amount of reported taxable income and the taxpayer's filing status. 2018 Tax Rate Schedules Single Taxable Income Tax Rate $0—$9,525 10% of taxable income $9,526—$38,700 $952.50 plus 12% of the amount over $9,525 $38,701—$82,500 $4,453.50 plus 22% of the amount over $38,700 $82,501—$157,500 $14,089.50 plus 24% of the amount over $82,500 $157,501—$200,000 $32,089.50 plus 32% of the…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
