ACCT 324 Week 2 Quiz
1. (TCO 2) On June 30, 20×2, Jill, a cash basis taxpayer, gave Tina a bond with a $25,000 face amount that pays $2,500 interest each December 31. When Tina collected the interest on December 31, 20×2:
2. (TCO 3) Iris, a widow, elected to receive the proceeds of a $100,000 face value life insurance policy on the life of her deceased husband in annual installments of $12,500 over the remainder of her life, estimated to be 10 years.
3. (TCO 3) Section 119 excludes the value of meals from the employee’s gross income:
4. (TCO 3) Mallard Auto Parts, Inc. has on hand 1,000 fenders for 1953 Studebakers. Mallard purchased the fenders in 1965 for $30 each, and the selling price is $400 each. Only rarely does Mallard sell a Studebaker fender, and it is highly unlikely that more than 100 of the remaining fenders will ever be sold. However, Mallard has ample storage space and feels an obligation to Studebaker owners. Therefore, the company will NOT salvage the fenders and will continue to sell them for $400 each. Scrap value of the fenders is $5 each. Under the lower-of-cost-or-market inventory method:
5. (TCO 7) Martha participated in a qualified tuition program for the benefit of her son. She invested $5,000 in the fund. Four years later, her son withdrew $7,500, the entire balance in the program, to pay his college tuition.
6. (TCO 7) A C corporation is required to annualize its income:
7. (TCO 7) In 20×2, Helen sold property and reported her gain by the installment method. Her basis in the property was $150,000, and it was subject to $30,000 of depreciation recapture. Helen sold the property for $225,000, with $75,000 due on the date of the sale and $150,000 (plus interest at the federal rate) due in two years. The recognized gain Helen should report in 20×2 is:
8. (TCO 7) Taylor sold a capital asset on the installment basis and did NOT charge interest on the deferred payment due in three years
9. (TCO 7) The installment method CANNOT be applied to the following:
10 (TCO 2) Which of the following is an exclusion from wage and salary taxable income?