:Julie and David Day are married taxpayers who file jointly. Their addresses and social security numbers have been pre-populated into all of the forms. They also have 3 dependent children: two under 13 who live at home and one 20-year old who is a full time student at a state university. Their names and social security numbers have also been pre-populated.

David Day works as a claims adjuster for the insurance company with a gekko as its mascot. Julie is self-employed as a life coach.

1.David received the following 2019 earnings statement from his employer.

Description

Amount

Gross Pay

$100,000

401(k) contribution

(5,000)

Pretax health insurance premiums

(6,000)

Federal income tax withheld

(7,000)

FICA - Social Security and Medicare

(7,650)

State income tax withheld

(2,500)

Net Pay

$71,850

2.Self-employment income:Julie operates her life coaching business as a sole proprietorship and uses thecash methodfor tax purposes. Some information on Schedule C has been pre-populated. Use the information below to fill out the rest of Schedule C. Note that some of the items may be reported elsewhere on the tax return (i.e., not all of them go directly on the Schedule C).

a.Cash receipts of $80,000 during 2019. She also performed a one-week seminar at the end of 2019 for which she received a $5,000 payment on January 10, 2020.

b.For financial reporting purposes, she recorded $36,000 of labor costs related to her assistant during 2019. She didn't give the final $1,500 paycheck to her assistant until the first week of 2020.

c.Paid $2,750 for the employer portion of FICA taxes for her assistant's wages.

d.Paid $4,000 of property taxes on her office building.

e.Julie paid $1,300 for utilities and another $700 for office supplies that were completely used by the end of the year.

f.Julie prepaid $18,000 of rent for a 12-month period beginning July of 2019.

g.Julie prepaid interest of $1,200 on a business loan for the six-month period Oct. 2019-March 2020.

h.Julie spent $2,000 on business meals during 2019.