Flag Advanced Scenario 2: Pat and Terri Jefferson

Interview Notes

• Pat and Terri are married and want to file a joint return.

• Pat is a U. S. citizen and has a valid Social Security number. Terri is a resident alien and has an ITIN.

• Pat has a child from a previous marriage, Jacob, age 17.

• Pat and Terri have a child together, Jill, age 12.

• Jacob and Jill are U. S. citizens and have valid Social Security numbers.

• Pat received a total of $3,300 in unemployment compensation when he lost his job due to the coronavirus pandemic. He also earned $22,000 in wages.

• Terri did not have any income.

• Pat and Terri provided all the support for their two children.

Advanced Scenario 2: Test Questions

3. Pat and Terry are eligible for which of the following credits?

a. Credit for other dependents

b. Child tax credit

c. Earned income credit

d. Both a and b

4. Pat’s unemployment compensation is not taxable this year because it was received as a result of the coronavirus pandemic.

a. True

b. False

Chance company had two operating divisions, one manufacturing farm equipment and the other office supplies. both divisions are considered separate components as defined by generally accepted accounting principles. the farm equipment component had been unprofitable, and on september 1, 2018, the company adopted a plan to sell the assets of the division. the actual sale was completed on december 15, 2018, at a price of $600,000. the book value of the division’s assets was $1,000,000, resulting in a before-tax loss of $400,000 on the sale. the division incurred a before-tax operating loss from operations of $130,000 from the beginning of the year through december 15. the income tax rate is 40%. chance’s after-tax income from its continuing operations is $350,000. required: prepare an income statement for 2018 beginning with income from continuing operations. include appropriate eps disclosures assuming that 100,000 shares of common stock were outstanding throughout the year. (amounts to be deducted should be indicated with a minus sign. round eps answers to 2 decimal places.)

Materials purchases (on credit). direct materials used in production. direct labor paid and assigned to work in process inventory. indirect labor paid and assigned to factory overhead. overhead costs applied to work in process inventory. actual overhead costs incurred, including indirect materials. (factory rent and utilities are paid in cash.) transfer of jobs 306 and 307 to finished goods inventory. cost of goods sold for job 306. revenue from the sale of job 306. assignment of any underapplied or overapplied overhead to the cost of goods sold account. (the amount is not material.) 2. prepare journal entries for the month of april to record the above transactions.

Who is not spending wisely? erika goes shopping and saves her receipts. she totals how much she spent and writes it down. mia needs to buy a new pair of shoes because she joined the soccer team. she looks at newspaper ads to find the best price. lauren has been thinking about getting a puppy for a long time. she walks by the pet store at the mall and decides to get a puppy. erin makes a purchase online using a credit card. she knows that she can pay the entire bill when it arrives.