ACCT 422 Saudi Electronic University Accounting Questions
Description
Q.1- Mr. A and Mrs. B are married and have two dependent children. X & Y, They also fully support Mrs. Bs mother who lives with them and has no income. Their 2012 tax and other related information is as follows: (2.5 marks)
Particulars
Amount in $
Value of premiums for $ 100000 of group term life insurance provided by employer
2,000
Gift from AS parents
60,000
Dividend incomefrom ABC stock,
8,000
Loan from AS parents
20,000
Total salaries
640,000
Bank account interest income
14,000
Gain from the sale of qualified small business stock acquired in 2010
60,000
Total itemized deductions
64,000
Municipal bond interest income
6,000
Value of employer provided medical insurance
22,000
Required: Compute Mr. A and Mrs.B Taxable income. (Show all calculations in proper /good form.)
Solution:
Q.2- Mr. Abdullahs medical and personal expenses include the following: (2.5 mark)
Particulars
Amount in $
Prescription drugs
2,400
Eyeglasses
1,400
Doctors fees
8,000
Hospital fees
13,400
Food for personal use (expenses)
4,000
Travel allowances
10,000
General purpose vitamins
400
Medical premiums
43,400
Visitors fees
2,000
Recreation fees
5,000
Club fess
2,000
Abdullahs AGI for the year is $ 132,000. He is single and age 56. Insurance company reimburses none of the medical costs and other related items.
After considering the AGI floor, what will be Abdullahs medical expense deduction?
Answer:
Q.3 In the year 2013, PQR Corporation had the following items of income, expense, gains, and losses: (2 mark)
Particulars
Amount in $
Sales
2,000,000
Account payable
600,000
Interest on savings account
56,000
Plant & Machinery
600,000
Equipment
300,000
Operating expenses
400,000
Furniture and Fixture
400,000
Gain on sale of AT&T stock
24,000
Loss on sale of IBM stock
60,000
Building
400,000
Motor vehicle
200,000
Cost of sales
1,080,000
What is taxable income of PQR Corporations for the year?
Answer: –
Q-4-To make income taxable, income must be realized and recognized. Explain in your own words the difference between income realization and income recognition, and then provide a short numerical example to indicate the difference(Dont copy the same numerical example from other students. Numerical example must be differ). (2 mark)
Answer
Q5. If aNOL (net operating loss) is incurred, when would a taxpayer elect to forgo the carryback period and only carry the loss deduction forward?(1marks)
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