Joe operates a business that locates and purchases speclalized assets for clients, among other activitles. Joe uses the accrual method of accounting, but he doesn't keep any significant inventorles of the specialized assets that he sells. Joe reported the following financlal information for his business activitles during this year. Determine the effect of each of the following transactions on the taxable business income. Requlred: a. Joe 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, Joe delivers $12,000 worth of gadgets to the city that will be tested in March of next year. Joe purchased the gadgets especlally for this contract and pald $8,500. b. Joe pald $180 in July of this year to entertain a VIsiting out-of-town client. The client didn't discuss business with Joe during this visit, but Joe wants to malntain good relations to encourage additional business next year. c. On November 1 of this year, Joe pald $600 for premlums providing for $40,000 of "Key employee" Insurance on the life of Joe's accountant over the next 12 months. d. At the end of this year, Joe's business reports $9,000 of accounts recelvable. Based upon experlence, Joe belleves that at least $2,000 of his new recelvables will be uncollectible. e. In December of this year, Joe rented equipment to complete a large job. Joe pald $3,000 in December because the rental agency required a minimum rental of three menths ( $1,000 per month). Joe completed the Job before year-end, but he returned the equipment at the end of the lease. 1. Joe hired a new sales representative as an employee and sent them to Dallas for a week to contact prospective out-of-state cllents. Joe ended up relmbursing his employee $300 for alfare, $350 for lodging, and $250 for meals (the employee provided adequate documentation to substantlate the business purpose for the meals). Joe requires the employee to account for all expenditures to be relmbursed. g. Joe uses his BMW (a personal auto) to travel to and from his residence to his factory. However, he switches to a business vehicle if he needs to travel after he reaches the factory. In September of this year, the business vehicle broke down and he was forced to documentation to substantlate the business purpose for the meals). Joe requires the employee to account for all expenditures to be relmbursed. g. Joe uses his BMW (a personal auto) to travel to and from his residence to his factory. However, he switches to a business vehicle if he needs to travel after he reaches the factory. In September of this year, the business vehicle broke down and he was forced to use the BMW both to travel to and from the factory and to visit work sites. He drove 120 miles visiting work sites and 46 miles drlving back and forth between the factory and his home. Joe uses the standard mileage rate to determine his auto-related business expenses. h. Joe pald a visit to his parents In Dallas over the Chrlstmas holidays this year. While he was In the city, Joe spent $50 to attend a halfday business symposium. Joe pald $200 for alrfare, $50 for meals provided during the symposium, and $20 on cab fare to the symposlum. Note: For all transactlons, select "No effect" If no change In taxable business Income. Round final answers to the nearest whole number