Problem $3-1$

Schedule C$,$ Transportation, Meals and Entertainment, Dues, Subscriptions, and Publications $($LO $3\mathrm{.}1,3\mathrm{.}3,3\mathrm{.}5,3\mathrm{.}7)$

Scott Butterfield is self$-$employed as a CPA. He uses the cash method of accounting, and his Social Security number is $644-47-7833.$ His principal business code is $541211.$ Scott's CPA practice is located at $678$ Third Street, Riverside, CA $92860.$ Scott's income statement for the year shows the following:

Income Statement

Scott Butterfield, CPA

Income Statement

$12/31/2023$

Current Period Prior Period

$1/1/2023$ to $12/31/20231/1/2022$ to $12/31/2022$

REVENUES

Tax Services $$76,824$ $$75,067$

Accounting Services $49,08148,860$

Other Consulting Services $10,09510,115$

TOTAL REVENUES $136,000134,042$

COST OF SERVICES

Salaries $34,00030,100$

Payroll Taxes $3,0212,387$

Supplies $1,3021,548$

TOTAL COST OF SERVICES $38,32334,035$

GROSS PROFIT $($LOSS$)97,677100,007$

OPERATING EXPENSES

Advertising and Promotion $250350$

Business Licenses and Permits $300250$

Charitable Contributions $400275$

Continuing Education $500300$

Dues and Subscriptions $2,8003,500$

Insurance $900875$

Meals and Entertainment $4,4005,500$

Office Expense $200150$

Postage and Delivery $10050$

Printing and Reproduction $50100$

Office Rent $12,00014,000$

Travel $900865$

Utilities $3,0002,978$

TOTAL OPERATING EXPENSES $25,80029,193$

NET INCOME $($LOSS$)$ $$71,877$ $$70,814$

Scott provides the following additional information:

The expenses for dues and subscriptions were his country club membership dues for the year.

$$400$ of the charitable contributions were made to a political action committee.

Scott does not generate income from the sale of goods and therefore does not record supplies and wages as part of cost of goods sold.

Scott placed a business auto in service on January $1,2020$ and drove it $4,000$ miles for business, $3,250$ miles for commuting, and $4,500$ miles for nonbusiness purposes. No business expenses for the car are included above. Scott wishes to use the standard mileage method. His wife has a car for personal use.

Meals and Entertainment expense includes $$2,500$ related to golf greens fees for entertaining clients, $$1,000$ for business meals provided by restaurants, and $$900$ for the bagels and doughnuts once a month for all employees.

Complete Schedule C from Appendix F for Scott showing the net taxable profit from self$-$employment. Assume Scott has evidence to support his deductions. If required, only use the minus sign to indicate a net loss. When required, round amounts to the nearest dollar.

SCHEDULE C

$($Form $1040)$

Department of the Treasury Internal Revenue Service Profit or Loss From Business

$($Sole Proprietorship$)$

Attach to Form $1040,1040-$SR$,1040-$SS$,1040-$NR$,$ or $1041$; partnerships must generally file Form $1065.$

Go to www$.$irs.gov$/$ScheduleC for instructions and the latest information. OMB No$.1545-0074$

$2023$

Attachment

Sequence No$.09$

Name of proprietor

Scott Butterfield

Social security number $($SSN$)$

$644-47-7833$

A Principal business or profession, including product or service $($see instructions$)$

Accounting Services B Enter code from instructions

$541211$

C Business name. If no separate business name, leave blank.

D Employer ID number $($EIN$)$

$($see instr.$)$

E Business address $($including suite or room no$.)678$ Third Street

City, town or post office, state, and ZIP code Riverside, CA $92860$

F Accounting method: $(1)$ Cash $(2)$ Accrual $(3)$ Other $($specify$)$

G Did you "materially participate" in the operation of this business during $2023?$ If $"$No$,"$ see instructions for limit on losses $$ Yes $$ No

H If you started or acquired this business during $2023,$ check here $........................................$

I Did you make any payments in $2023$ that would require you to file Form$($s$)1099?$ see instructions $................$ Yes $$ No

J If "Yes," did you or will you file required Form$($s$)1099?...............................................$ Yes $$ No

Part I Income

$1$ Gross receipts or sales. See instructions for line $1$ and check the box if this income was reported to you on Form W$-2$ and the "Statutory employee" box on that form was checked $.........................1$ fill in the blank $1$

$2$ Returns and allowances $.............................................................2$

$3$ Subtract line $2$ from line $1...........................................................3$ fill in the blank $2$

$4$ Cost of goods sold $($from line $42)......................................................4$

$5$ Gross profit. Subtract line $4$ from line $3.................................................5$ fill in the blank $3$

$6$ Other income, including federal