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Bryan followed in his father's footsteps and entered into the carpet businessHe owns and operates Do Carpet (DC)Bryan prefers Install carpet only, but in order
Bryan followed in his father's footsteps and entered into the carpet businessHe owns and operates Do Carpet (DC)Bryan prefers Install carpet only, but in order to additional revenue, he also cleans carpets and sells carpet-cleaning supplies Required: contracted with a homebuilder in December of last year to install carpet in 10 new homes being built. The contract price of $ 85,000 Includes $52,000 for materials (carpetThe remaining $33,000 for IDC's service of installing the carpetThe contract also stated that all money was to be paid up front. The homebuilder paid IDC in full on December 28 of last yearThe contract required to complete the work by January 31 of this year Bryan purchased the necessary carpet on January 2 and began working on the first home January 4. He completed the last home on January 27 of this year IDC entered into several other contracts this year and completed the work before year-end. The work cost $ 150,000 in materials and IDC elects to immediately deduct supplies. Bryan billed out $242,000 but only collected $220,000 by year-end Of the $ 22,000 still owed to him, Bryan wrote off $3,500 he didn't expect to collect as a bad debt from a customer experiencing extreme financial difficulties IDC entered into a three- year contract to clean the carpets of an office buildingThe contract specified that IDC would clean the carpets monthly from July 1 of this year through June 30 three years henceIDC received payment in full of $9,000 ($250 a month for 36 months) on June 30 of this year IDC sold 100 bottles of carpet stain remover this year for $ 5 per bottle collected $500 sold 40 bottles on June 1 and 60 on November 2. IDC had the following carpet-cleaning supplies on hand for this year, and IDC has elected to use the LIFO method of accounting for inventory under a perpetual inventory system Date year February this year this year this 40 200 152 25 135 40 240 On August 1 of this year IDC needed more room for storage and paid $1,500 to rent a garage for 12 months
Bryan followed in his father's footsteps and entered into the carpet business. He owns and operates I Do Carpet (IDC). Bryan prefers to install carpet only, but in order to earn additional revenue, he also cleans carpets and seils carpet-cleaning supplies. Required: a. IDC contracted with a homebuilder in December of last year to install carpet in 10 new homes being buitt. The contract price of $85,000 includes $52,000 for materials (carpet). The remaining $33,000 is for 10C 's service of installing the carpet. The contract also stated that all money was to be paid up front. The homebuilder paid IDC in full on December 28 of last year. The contract required IDC to compiete the work by January 31 of this year. Bryan purchased the necessary carpet on January 2 and began working on the first home January 4. He completed the last home on January 27 of this year. b. 10C entered into several other contracts this year and completed the work before year-end. The work cost $150,000 in materials, and IDC elects to immediately deduct supplies. Bryan billed out $242,000 but only collected $220,000 by year-end. Of the $22,000 still owed to him, Bryan wrote off $3,500 he didn't expect to collect as a bad debt from a customer experiencing extreme financial difficulties. c. IDC entered into a three-year contract to clean the carpets of an office building. The contract specified that IDC would clean the carpets monthly from July 1 of this year through June 30 three years hence. 10C received payment in full of $9,000 ( $250 a month for 36 months) on June 30 of this year. d. IDC sold 100 bottles of carpet stain remover this year for $5 per bottle (it collected $500 ). IDC sold 40 bottles on June 1 and 60 bottles on November 2. IDC had the following carpet-cleaning supplies on hand for this year, and IDC has elected to use the LIFO method of accounting for inventory under a perpetual inventory system: e. On August 1 of this year, IDC needed more room for storage and paid $1,500 to rent a garage for 12 months. 9. In December, Bryan's son, Aiden, helped him finish some carpeting jobs, IDC owed Aiden $800 (reasonable) compensation for his work. However, Alden did not receive the payment until January of next yeat. h. IDC also paid \$3,000 for interest on a short-term bank loan relating to the period from November 1 of this year through March 31 of next year. Compute his taxable income for the current year considering the above items. Note: Enter zero for no effect on taxable income. Do not round intermediate calculations Step by Step Solution
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