Ac553 Week 1 Hw

Homework Week 1

Chapter 3

Problems

3-31

Tom and Linda are married taxpayers who file a joint return. They have itemized Deductions of $11,950 and four exemptions. Assuming an adjusted gross income of $40,000, what is their taxable income for 2011?

Taxable Income = Adjusted Gross Income - Standard or itemized deductions - Personal exemptions

Solution

Filing status married who file a joint return

AGI 40,000.00

Itemized Deductions 11,950.00

Exemptions 4.00

Amount for exemptions 3,700.00

Total Personal exemptions 14,800.00

Taxable Income = 40,000.00 -11,950.00 -14,800.00

Taxable Income = 13,250.00

3-32

Compute Marie's taxable income for 2011, assuming she is single and claims two dependent

Children. Her adjusted gross income is $70,000, and she has itemized deductions of $9,000.

Taxable Income = Adjusted Gross Income - Standard or itemized deductions - Personal exemptions

Solution

Filing status Head of Household

AGI 70,000.00

Itemized Deductions 9,000.00

Exemptions 3.00

Amount for exemptions 3,700.00

Total Personal exemptions 11,100.00

Taxable Income = 70,000.00 -9,000.00 -11,100.00

Taxable Income = 49,900.00

3-36

Compute Stanley's taxable income for 2011, assuming he has $1,000 in wages from working in a grocery store and $2,000 in interest income from some bonds he owns. Stanley, age 16, is claimed as a dependent on his parents' return.

Taxable Income = Adjusted Gross Income - Standard or itemized deductions - Personal exemptions

Solution

AGI 3,000.00

Itemized Deductions 1,000.00 Plus 300 1,300.00

Taxable Income = 3,000.00 -1,300.00

Taxable Income = 1,700.00

Problem

13-55

Mr. Z, a no dealer, sold assets on an installment plan. Determine Mr. Z's gross income for

2011. Relevant data include:

Year Installment Sales Gross Profit %Gross profit

2009 200,000.00 50,000.00 0.25

2010 300,000.00 81,000.00 0.27

2011 400,000.00 96,000.00 0.24

year 2011 Collection Gross Profit 2011 Collections

2009 25,000.00 0.25 6,250.00

2010...