Hilda operates a business that locates and purchases specialized assets for clients, among other activities. Hilda uses the accrual method of accounting. She uses the specific identification method for inventories of the specialized assets that she sells. Hilda reported the following financial information for her business activities during this year.

Determine taxable income and the effect of each of the following transactions on the taxable business income.

Required:

1. Hilda collected $389,000 in services income.
2. Hilda has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully. In December of this year, Hilda delivers $12,000 worth of gadgets to the city that will be tested in March of next year. Hilda purchased the gadgets especially for this contract and paid $8,500.
3. Hilda received $50 interest from municipal bonds and $2,100 interest from other investments
4. Hilda paid $180 in July of this year to entertain a visiting out-of-town client. The client didnt discuss business with Hilda during this visit, but Hilda wants to maintain good relations to encourage additional business next year.
5. On November 1 of this year, Hilda paid $600 for premiums providing for $40,000 of key man insurance on the life of Hildas accountant over the next 12 months.
6. At the end of this year, Hildas business reports $9,000 of accounts receivable. Based upon past experience, Hilda believes that at least $2,000 of her new receivables will be uncollectible.
7. Hilda reported beginning inventory of $525,300. COGS was $113,200 and ending inventory was $406,400.
8. Hilda paid her son $15,000 for marketing services that would have cost no more than $9,000 if Hilda had hired any other local business to perform the services. While Hildas son was competent, he does not command such a premium from his other clients
9. Hilda hired a new sales representative as an employee and sent her to Dallas for a week to contact prospective out-of-state clients. Hilda ended up reimbursing her employee $300 for airfare, $350 for lodging, and $250 for meals (Hilda provided adequate documentation to substantiate the business purpose for the meals). Hilda requires the employee to account for all expenditures in order to be reimbursed.
10. Hilda uses her BMW (a personal auto) to travel to and from her residence to her factory. However, she switches to a business vehicle if she needs to travel after she reaches the factory. In September of this year, the business vehicle broke down and she was forced to use the BMW both to travel to and from the factory and to visit work sites. She drove 120 miles visiting work sites and 46 miles driving to and from the factory from her home. Hilda uses the standard mileage rate to determine her auto-related business expenses.
11. Hilda incurred a $900 fine from the state government for unauthorized materials dumping. Hilda was so upset with what she considered an unfair law, she contributed $3,000 to lobbyists for their help in persuading the state government to authorize unrestricted dumping at all local dump sites.
12. Hilda paid a visit to her parents in Dallas over the Christmas holidays this year. While she was in the city, Hilda spent $50 to attend a half-day business symposium. Hilda paid $200 for airfare, $50 for meals during the symposium, and $20 on cab fare to the symposium.
13. Hilda purchased some new equipment in March for $22,500. It claimed depreciation on these assets during the year in the amount of $6,740.

Determine taxable income and the effect of each of the following transactions on the taxable business income.