Reconciliation of Book Income and Taxable Income
	Book	BTD	Tax	FAV/UNFAV	TEMP/PERM
Revenue	475,000	-
Wages paid to employees	(173,000)
Accrued wage expense	(7,250)
Accrued payroll tax expense	(23,000)
Advertising	(12,000)
Commissions	(3,000)
Accrued vacation	(8,000)
Fees paid to CPA for tax preparation services	(2,750)
Rent expense	(90,000)
Utilities paid	(12,600)
Cost to take clients to Food Network Gala	(2,500)
Supplies	(22,000)
Business meals	(4,200)
Fine for excess noise at the annual company holiday party	(1,000)
Depreciation expense for books	(2,300)
Accrued bad debt expense	(1,500)
Net Income per books	109,900	-

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Client name: Juliet Hazelton Social Security Number: 538-23-1827 Birthdate: May 23, 1987 Occupation: Bakery Owner Filing status: Single Address: 1532 Wildflower Lane, Tempe, AZ 85283

Hazelnuts Bakery Employer Identification Number (EIN): 85-1258749 Address: 15 N Main St., Tempe, AZ 85283 Accounting method: Accrual basis Types of business: Retail Bakery Code for business type: 445290 Did not make any payments that require 1099s

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Dear CPAs: Some of the information for my 2022 tax return is enclosed. I have been swamped the last few months, and am still working on gathering the rest of the documents for my tax return. I hope to have those items for you in late October. As you requested last year, I kept very careful records of all business activities, and the information on my business expenses is summarized from these records. I included a bunch of extra details with the income statement that Im not sure if you need or not (enclosed). Thanks for your help, and sorry for the delay. Juliet Hazelton

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Hazelnuts Bakery 2022 Income Statement Revenue 475,000 Wages paid to employees (173,000) Accrued wage expense (7,250) Accrued payroll tax expense (23,000) Advertising (12,000) Commissions (3,000) Accrued vacation (8,000) Fees paid to CPA for tax preparation services (2,750) Rent expense (90,000) Utilities paid (12,600) Cost to take clients to the Food Network Gala (2,500) Supplies (22,000) Business meals (4,200) Fine for excess noise at the annual company holiday party (1,000) Depreciation expense for books (2,300) Accrued bad debt expense (1,500) Net Income per books $109,900

Additional information: 1. The revenue amount listed above does not include $10,000 of prepaid income received September 1, 2022, for a wedding to be held in February 2024. 2. The accrued wage expense is for hours worked by my employees from December 15 to December 31, 2022; this was paid out on January 7, 2023. 3. For the vacation accrual, $1,000 was paid out in February 2023. The rest of the accrual has not been paid out yet because most of my employees did not take vacation days. (They just love their jobs, I guess!) 4. The rent expense relates to a rental payment I made on February 1, 2022, for the two-year period from February 1, 2022, through January 31, 2024. I paid it in advance to lock in the current rental rate. 5. The Food Network Gala was an incredible event. The potential client enjoyed it so much that they hired me a few days later. 6. The book depreciation expense relates to two assets: an industrial microwave purchased in 2021 and a point-of-sale system purchased in 2022. a. Microwave placed in service 01/01/2021, cost 3,000. This asset was purchased in 2021, so 2022 is the second year of the assets useful life. The book life is 10 years; tax class life is 5 years. No bonus depreciation or Section 179 was taken on this asset for tax purposes. Ill let you calculate this years tax depreciation.

b. Point-of-sale system placed in service 2/15/2022, cost $10,000. Book life is 5 years; class life is 7 years. Please take the maximum cost recovery available on this asset. 7. The accrued bad debt expense is for the period ending December 31, 2022. That balance was written off on October 31, 2023, when my client declared bankruptcy. Thankfully, there were no other write-offs in 2022 or 2023. 8. The accrued payroll tax expense was paid April 15, 2023. We previously elected the recurring item exception for payroll tax.

Given this information, please complete the table at the top.