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DJ Jammer, a rapper/musician, travels around the country performing concerts on college campuses. He has two employees who make up his road crew. The crew sets up his equipment and sells DJ Jammer memorabilia (CDs, T-shirts, posters, etc.) during intermissions and after the concerts. For the last several years, Jammer has operated his business as Jammer Entertainment, Inc. (JEI). JEI, a C corporation with Jammer as the sole shareholder, has generated about 75% of its income from ticket sales and about 25% from memorabilia sales. In January 2006, Jammer sets up a second corporation, Jammer Memorabilia, Inc. (JMI). The new corporation (JMI) handles all memorabilia sales, while JEI now handles only the concert arrangements and concert ticket sales. The two road crew employees continue to perform the same duties as before and continue to be paid by JEI. (JMI is billed for the salaries paid on its behalf.) Jammer spends about 80% of his time on JEI activities and the remainder on JMI. He set up JMI in order to sell the memorabilia business and concentrate on his career as an artist/performer. Upon audit, the IRS advises DJ Jammer that the new arrangement causes JEI to be classified as a qualified personal service corporation. Write a 2- to 3-page memo to the file, evaluating the merits of the position taken by the IRS. Use the IRAC Tax memo format: Issue, Ruling, Analysis, and Conclusion.
LaGrange Corp. has forecasted that over the next four years the average annual after-tax income will be $45,731. The average book value of the manufacturing equipment that is used is $167,095. What is the accounting rate of return?
Williams Inc reports total net income of $130,000 during 2012. This includes $10,000 of income from 5.5% Orange County municipal bonds. Thus the Corporation's taxable income is equal to $120,000.
The stockholder's equity accounts of Lawrence Company have the folowing balance on December 31, 2010. Common stock, $10 par, 274,000 shares issued and outstanding $2,740,000, Paid-in capital in excess of par $1,200,000, Retained Earnings $5,600,00..
Elston Company is authorized to issue 1,000,000 shares of $1 par value common stock. During 2002, its 1st year of operation the corporation has the following stock transactions:
Nashville Corporation allocates administrative costs on the basis of staff hours. Short-run monthly usage and long-run monthly usage of staff hours for Operating Departments 1 and 2 follow:
Damons uses the allowance method to account for uncollectible receivables. At the beginning of the year, allowance for doubtful accounts had a debit balance of $100. During the year you recorded bad debt expense of $1,800 and wrote off bad receiva..
For each of the following transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an ad..
What are the steps of the accounting cycle? Why is it necessary to make adjusting entries at the end of each accounting period? What would happen if all of the steps of the accounting cycle were not completed in a specific accounting period?
Explain in detail a post-closing trial balance, how it relates to the practice of accounting and its uses in business?
How are journals and ledger used in processing transactions? If a manufacturing company were to maintain special journals for purchases, sales, cash receipts, and cash disbursements, describe five journal entries that an AIS might make directly to..
Salen Company finances some of its current operations by assigning accounts receivable to a finance company. On July 1, 2012, it assigned, under guarantee, specific accounts amounting to $150,000.
MBA 640 Exam 1, Spring 1, 2014, Determine the net income for the month of December and for the month of June.
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