USE THE ATTACHED DOCUMENTS TO UNDERSTAND THE ASSIGNMENT REQUIREMENTS. THIS IS A GROUP ASSIGNMENT THEREFORE I ONLY NEED TO ANSWER THE FOLLOWING QUESTIONS.

Week 3 Determine Taxable Income:

3.

You find that in 2014, the Dr. qualifies, and choose to file on the cash basis. His books are kept on the accrual basis. Determine the adjustments needed.

4.

No federal taxes were paid in 2013, and no estimated taxes were paid in 2014.

5.

Within the state tax expense, you find $4,389 is late payment penalties.

6.

While analyzing the financial information, you find that hidden in "Accounts Payable" is $28,953 of accrued salaries. You also find that the salaries were paid in the first week of February.

Does this have an impact on taxable income?

Unadjusted Balance Debit Book Adjustments Credit Debit Adjusted Book Balance Credit Debit Credit Debit Adjusted Tax Balance Credit Debit Credit 10001 Checking 609,842.00 609,842.00 609,842.00 10010 Savings 557,392.23 557,392.23 557,392.23 10020 Cash Maximizer 558,380.05 558,380.05 558,380.05 11000 Accounts Receivable 260,990.00 260,990.00 260,990.00 0.00 0.00 18100 Loan to Shareholder Adj 1 15000 Furniture and Equipment 40,316.00 40,316.00 40,316.00 15500 Leasehold Improvements 506,889.00 506,889.00 506,889.00 1,699,776.00 1,699,776.00 16100 Medical Equipment 1,699,776.00 17000 Accumulated Depreciation 18001 Investment in Big Labs 18050 Investment in R&D Company 1,240,071.00 3,206,518.00 866,507.20 866,507.20 866,507.20 122,601.00 r 122,601.00 122,601.00 39,065.51 39,065.51 0.00 0.00 1,207,401.72 1,207,401.72 1,207,401.72 1,000.00 1,000.00 1,000.00 39,065.51 0.00 30100 Capital Stock r 400,000.00 400,000.00 400,000.00 32000 Retained Earnings 3,103,563.25 3,103,563.25 43700 Fee for Service Income 5,050,583.00 5,050,583.00 47300 Refunds 1,240,071.00 3,206,518.00 28001 Business Loan 31400 Shareholder Distributions Adj 1 & 2 3,206,518.00 20100 Credit Cards 20200 Accrued Salaries Adj 1 1,240,071.00 20001 Accounts Payable 3,103,563.25 a 5,050,583.00 17,633.00 17,633.00 17,633.00 1,252.00 1,252.00 1,252.00 11,961.00 11,961.00 11,961.00 60400 Bank Service Charges 8,808.00 8,808.00 8,808.00 61000 Business Licenses and Permits 5,611.00 5,611.00 5,611.00 61100 Charitable Contributions (Cash) 60,000.00 60,000.00 61700 Computer and Internet Expenses 13,575.00 13,575.00 13,575.00 0.00 0.00 8,327.00 8,327.00 8,327.00 201,106.00 201,106.00 201,106.00 62600 Equipment Rental:62610 Laser Facility Rent 14,979.00 14,979.00 14,979.00 63300 Insurance Expense 55,356.00 55,356.00 55,356.00 63400 Interest Expense 63,678.00 63,678.00 63,678.00 63600 Laboratory Testing Fees 121,653.00 121,653.00 121,653.00 64300 Meals and Entertainment 16,725.00 16,725.00 64400 Medical Records and Supplies 103,456.00 103,456.00 103,456.00 66700 Professional Fees 123,945.00 123,945.00 123,945.00 18,855.00 18,855.00 18,855.00 67800 Salaries and Wages 321,580.00 321,580.00 321,580.00 67800 Salaries and Wages:67810 Officer Compensation 940,000.00 940,000.00 940,000.00 68000 Taxes:68010 Payroll Taxes 206,103.00 206,103.00 206,103.00 68000 Taxes:68020 State Tax 35,041.00 35,041.00 68500 Uniforms 16,121.00 16,121.00 16,121.00 68600 Utilities 30,364.00 30,364.00 30,364.00 60000 Advertising and Promotion 60200 Automobile Expense 62400 Depreciation Expense 62500 Dues and Subscriptions 62600 Equipment Rental 67200 Repairs and Maintenance Adj 2 70200 Interest Income 70222 Tax Exempt Interest 70300 Sublease Rents 71000 Dividends Adj 1 Sale of fixed assets Adj 2 2014 Depreciation Reclass of accounts payable Tax Adjustments a Accrual to Cash Adjustment - Accounts Receivable b Charitable contributions carryover c 50% Meals and Entertainment d Non-deductible penalties e Tax Exempt interest f Accrual to Cash Adjustment - Accounts Payable 16,725.00 d 35,041.00 17,621.00 240,000.00 240,000.00 240,000.00 80,000.00 80,000.00 80,000.00 0.00 0.00 11,102,739.48 0.00 0.00 0.00 0.00 11,102,739.48 11,102,739.48 Book Income Book Adjustments c 17,621.00 Adj 1 11,102,739.48 60,000.00 833.00 M-1 Accrual to Cash - Accounts Payable TOTAL b 833.00 75000 Gain on Sale of Assets r Tax Adjustments Book Income Check Figure 2,992,908 553,702 833.00 e 17,621.00 0.00 f 0.00 0.00 11,102,739.48 Tax Income 11,102,739.48 2,992,908 107245 Date 12/31/2014 12/31/2014 TOTAL Num 2014 Adj 1 2014 Adj 2 Memo Account to sell obsolete equipment 17000 Accumulated Depreciation to sell obsolete equipment 16100 Medical Equipment to sell obsolete equipment 18100 Loan to Shareholder to sell obsolete equipment 75000 Gain on Sale of Assets to record 2014 depreciation on assets placed in service prior to 2014 62400 Depreciation Expense to record 2014 depreciation on assets placed in service prior to 2014 17000 Accumulated Depreciation to record Sec. 179 expense 62400 Depreciation Expense to record Sec. 179 expense 17000 Accumulated Depreciation to record depreciation on assets placed in service in 2014 62400 Depreciation Expense to record depreciation on assets placed in service in 2014 17000 Accumulated Depreciation Debit Credit 0.00 0.00 0.00 0.00 0.00 0.00 Dec 31, 14 Dec 31, 13 $ Change ASSETS Current Assets Checking/Savings 10001 Checking 609,842.00 277,131.00 332,711.00 10010 Savings 557,392.23 325,541.23 231,851.00 10020 Cash Maximizer 558,380.05 69,672.05 488,708.00 1,725,614.28 672,344.28 1,053,270.00 260,990.00 826,113.00 -565,123.00 260,990.00 826,113.00 -565,123.00 75,000.00 0.00 75,000.00 75,000.00 0.00 75,000.00 2,061,604.28 1,498,457.28 563,147.00 Total Checking/Savings Accounts Receivable 11000 Accounts Receivable Total Accounts Receivable Other Current Assets 18100 Loan to Shareholder Total Other Current Assets Total Current Assets Fixed Assets 15000 Furniture and Equipment 40,316.00 40,316.00 0.00 15500 Leasehold Improvements 506,889.00 506,889.00 0.00 16100 Medical Equipment 17000 Accumulated Depreciation Total Fixed Assets 1,399,776.00 1,129,888.00 269,888.00 -1,568,773.00 -1,240,071.00 -328,702.00 378,208.00 437,022.00 -58,814.00 3,206,518.00 2,306,518.00 900,000.00 Other Assets 18001 Investment in Big Labs 18050 Investment in R&D Company Total Other Assets TOTAL ASSETS 866,507.20 364,352.20 502,155.00 4,073,025.20 2,670,870.20 1,402,155.00 6,512,837.48 4,606,349.48 1,906,488.00 93,648.00 107,245.00 -13,597.00 93,648.00 107,245.00 -13,597.00 39,065.51 34,742.51 4,323.00 39,065.51 34,742.51 4,323.00 28,953.00 26,375.00 2,578.00 LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 20001 Accounts Payable Total Accounts Payable Credit Cards 20100 Credit Cards Total Credit Cards Other Current Liabilities 20200 Accrued Salaries Total Other Current Liabilities Total Current Liabilities 28,953.00 26,375.00 2,578.00 161,666.51 168,362.51 -6,696.00 1,207,401.72 1,333,423.72 -126,022.00 1,207,401.72 1,333,423.72 -126,022.00 1,369,068.23 1,501,786.23 -132,718.00 Long Term Liabilities 28001 Business Loan Total Long Term Liabilities Total Liabilities Equity 30100 Capital Stock 31400 Shareholder Distributions 32000 Retained Earnings Net Income Total Equity TOTAL LIABILITIES & EQUITY 1,000.00 1,000.00 0.00 -400,000.00 0.00 -400,000.00 3,103,563.25 3,103,563.25 0.00 2,439,206.00 0.00 2,439,206.00 5,143,769.25 3,104,563.25 2,039,206.00 6,512,837.48 4,606,349.48 1,906,488.00