Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gabin, a self-employed taxpayer, owns and operates Mountain Adventures, a cash-basis, calendar-year company, as a sole proprietorship. During the year, Mountain Adventures had the following

image text in transcribed
Gabin, a self-employed taxpayer, owns and operates Mountain Adventures, a cash-basis, calendar-year company, as a sole proprietorship. During the year, Mountain Adventures had the following activity: 1. Mountain Adventures earned $138,000 of cash revenue and was owed $4,100 by customers at the end of the year. 2. Mountain Adventures paid $67,000 for salaries and $15,000 for health insurance for employees during the year. 3. Mountain Adventures received interest income from two bonds during the year: $5,250 in interest from a Blue Sky Corp. bond and $3,218 in interest from a State of Montana bond. 4. Mountain Adventures contributed $500 to a campaign aiming to stop the construction of a gas pipeline near one of its most popular sightseeing adventures. 5. Gabin uses his vehicle for both business and personal purposes. During the year, he paid $4,200 for gas, $800 for maintenance, $550 in personal property taxes (based on the vehicle's value), and $1,100 for insurance on the vehicle. He drove the vehicle 5,000 miles for business use and 3,000 for personal use. Gabin uses the actual cost method for his vehicle expenses. 6. Gabin has a $50,000 loan from a local bank that he took out last year. In August, the bank approached him with a discounted interest rate if he would prepay for a year. On September 1st Gabin prepaid $12,000 of interest for the 12-month period beginning September 1st What is Mountain Adventure's net profit (loss) for the year? Please round to the nearest dollar and enter a loss as a negative number

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services

Authors: Timothy J Louwers, Robert J. Ramsay, David Sinason, Jerry R Strawser

1st Edition

0072954442, 9780072954449

More Books

Students also viewed these Accounting questions