5 Jack, a geologist, had been debating for years whether or not to venture out on his own and operate his own business. He had developed a lot of solld relationships with clients and he belleved thet many of them would follow him it he were to leave his current employer, As part of a New Year's resolution, Jack decided he would finally do it. Jack put his of this year, Jack opened his doors for business as a Cc the following financial Iinformation for the year (assume GJ reports on a calendar year and uses the accrual method of accountingl a. In January, GJ rented a small business office about 12 miles from Jack's home. GJ poid $10,000, which represented a damage deposit of $4,000 and rent for two years ($3,000 annually) b. GJ earned and collected $290,000 performing geological-teleted services and selling its specialized digging tool (see part (m c. GJ received $50 interest from municipal bonds and $2.100 interest from other investments d. GJ purchased some new equipment in February for $42,500. it clalmed depreciation on these assets during the year in the amount e. GJ paid $7000 to buy luxury season tickets for Jack's parents for State U football games , GJ paid Jack's fother $10,000 for services that would heve cost no more than $6,000 if Jack had hired any other local business to Print perform the services. While Jack's dad was competent, he does not command such a premium from his other g in an attempt to get his name and new business recognized, GJ pald 7000 for a one page ad in the Geologle Survey also paid References $15,000 in radio ads to be run through the end of December h. GJ leased additional office space in a building downtown GJ paid rent of $27000 for the year i. In August, GJ began manufacturing a special geological digging tool that it selis to wholesalers. QPAI from the activiy for the year is $100,000 [included in revenues reported in part (bj)l GJ paid $10,000 of wages to the e the year and its cost of goods sold on the sales is $18,000 (Assume that taxable income does not limit the amount of the DPAD, and that no wages should be included in cost of goods sold) Remember that cost of goods sold and wages reduce taxae working on the project durning ovember, Jack's office was broken into and equipment valued at $6,000 was stchen. The tax basis of the equipment ws 6,500. Jack received $2,000 of insurance proceeds from the theft k. GJ incurred $4,000 fine from the state government for digging in an unauthorized digging zone $3,000 to in persuading the state government to authorize certain unsuthonzed digging m. On July 1, GJ paid $1,800 for an 18-month insurance policy for its business equipment. The policy covers the period July 1 of n 6J borrowed $20,000 to help with the company's initial funding needs. QJ used $2,000 of funds to invest in municipal bonds Ar year through December 31 of next year the end of the year, GJ paid the $1,200 of interest ex Jack lives 12 miles from the office. He carefully tracked his mileage and drove his truck 6,280 miles between the office and home. He also drove an additionel 7.200 mites between the office and traveling to client sites. Jack did not use the truck for any other purposes. He did not keep treck of the specific expenses essocisted with the truck d a $150 speeding ticket. GJ reimbursed Jack for business mileage and for the speeding ticket son tickets (20 games) to attend State U baseball games for a total of $1,100 Jack took existing and cili ents to the games to maintain contact and find further work. This was very successful for 5 Jack, a geologist, had been debating for years whether or not to venture out on his own and operate his own business. He had developed a lot of solld relationships with clients and he belleved thet many of them would follow him it he were to leave his current employer, As part of a New Year's resolution, Jack decided he would finally do it. Jack put his of this year, Jack opened his doors for business as a Cc the following financial Iinformation for the year (assume GJ reports on a calendar year and uses the accrual method of accountingl a. In January, GJ rented a small business office about 12 miles from Jack's home. GJ poid $10,000, which represented a damage deposit of $4,000 and rent for two years ($3,000 annually) b. GJ earned and collected $290,000 performing geological-teleted services and selling its specialized digging tool (see part (m c. GJ received $50 interest from municipal bonds and $2.100 interest from other investments d. GJ purchased some new equipment in February for $42,500. it clalmed depreciation on these assets during the year in the amount e. GJ paid $7000 to buy luxury season tickets for Jack's parents for State U football games , GJ paid Jack's fother $10,000 for services that would heve cost no more than $6,000 if Jack had hired any other local business to Print perform the services. While Jack's dad was competent, he does not command such a premium from his other g in an attempt to get his name and new business recognized, GJ pald 7000 for a one page ad in the Geologle Survey also paid References $15,000 in radio ads to be run through the end of December h. GJ leased additional office space in a building downtown GJ paid rent of $27000 for the year i. In August, GJ began manufacturing a special geological digging tool that it selis to wholesalers. QPAI from the activiy for the year is $100,000 [included in revenues reported in part (bj)l GJ paid $10,000 of wages to the e the year and its cost of goods sold on the sales is $18,000 (Assume that taxable income does not limit the amount of the DPAD, and that no wages should be included in cost of goods sold) Remember that cost of goods sold and wages reduce taxae working on the project durning ovember, Jack's office was broken into and equipment valued at $6,000 was stchen. The tax basis of the equipment ws 6,500. Jack received $2,000 of insurance proceeds from the theft k. GJ incurred $4,000 fine from the state government for digging in an unauthorized digging zone $3,000 to in persuading the state government to authorize certain unsuthonzed digging m. On July 1, GJ paid $1,800 for an 18-month insurance policy for its business equipment. The policy covers the period July 1 of n 6J borrowed $20,000 to help with the company's initial funding needs. QJ used $2,000 of funds to invest in municipal bonds Ar year through December 31 of next year the end of the year, GJ paid the $1,200 of interest ex Jack lives 12 miles from the office. He carefully tracked his mileage and drove his truck 6,280 miles between the office and home. He also drove an additionel 7.200 mites between the office and traveling to client sites. Jack did not use the truck for any other purposes. He did not keep treck of the specific expenses essocisted with the truck d a $150 speeding ticket. GJ reimbursed Jack for business mileage and for the speeding ticket son tickets (20 games) to attend State U baseball games for a total of $1,100 Jack took existing and cili ents to the games to maintain contact and find further work. This was very successful for