96. Rufus and Rhonda are a married couple with 3 dependent children, all under 16 years of age. Rufus, 46, is an executive with Plowshare Corporation. Rhonda, 39, is a self-employed attorney. Rufus receives an annual salary of $78,000. He participates in Plowshare?s qualified pension plan by contributing 4% of his annual salary, which is matched by Plowshare. Rufus also receives group term life insurance at twice his annual salary. The coverage costs Plowshare $2,100. All employees are covered by a medical insurance policy. (Rufus?s policy costs $2,300.) He also participates in the company?s flexible benefits plan by paying $200 per month into the plan. During the year, Rufus submits claims totaling $1,800 to the plan. An additional benefit that only top-level executives such as Rufus enjoy is the payment of $2,300 in country club dues by Plowshare. Although Rufus occasionally entertains clients at the club, his primary use of the facility is personal. Rhonda bills clients a total of $125,000 for services rendered during the current year. She receives $17,000 in payments from billings in prior years and $87,000 from current-year billings. Rhonda pays the following expenses related to her legal practice: Office rent $14,400 Secretary?s salary 24,000 Withholdings from secretary?s salary Federal income taxes $2,250 State income taxes 520 Social Security taxes 1,836 4,606 Matching Social Security tax payment 1,836 Entertainment costs 4,000 Seminar costs 1,155 Insurance on building?2 years prepaid on August 1 1,600 Supplies 2,250 Bar association dues 600 State licensing fee 725 Automobile costs 4,700 Business gifts 850 Salary paid to Rhonda 64,000 Salary paid to Rhonda?s son 2,500 In addition to these out-of-pocket costs, Rhonda determines that $2,400 in accounts receivable from previous years? billings are uncollectible. The entertainment costs consist of the following: Dues to social club $1,000 Meals while discussing cases with clients 1,200 Open house 1,800 Rhonda has records that show that she uses the club 70% of the time for entertainment directly related to business, 10% for entertainment associated with her business, and 20% for personal purposes. The open house costs consist of $1,400 for food and $400 for a jazz combo at a reception she hosted for clients when she moved into her new offices this year. Rhonda uses her automobile extensively in her business. She keeps a log to record business miles and related costs. Her records show that she drove 10,000 business miles and 3,000 personal miles during the current year. In past years, she had always kept track of her business miles but failed to keep an accurate record of her actual costs. Accordingly, her records indicate that she has never depreciated any of the $26,000 cost of the automobile she purchased 2 years ago?she has used the standard mileage rate method.,Thank you! I'll be looking forward to your response!
Paper#5130 | Written in 18-Jul-2015Price : $25