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Posted: July 18th, 2022
Please give the completely work on Sunday, Feb 13th, before 12Pm with Chicago timezone.
Please give the completely work on Sunday, Feb 13th, before 12Pm with Chicago timezone.
Banjo Corporation is a subchapter C corporation located in Champaign, IL, and is a client of your accounting firm. Banjo Corp. manufactures and sells musical instruments through their webstore and physical location. The manager on the engagement assigned you to prepare the book to tax reconciliation below. The manager would like to remind you that the reconciliation format should be such that the column labeled “Book”, which is Banjo’s book profit and loss statement, plus the column labeled “Book-tax differences” should equal the column labeled “Tax”(sign +/- matters). Banjo typically has gross income much greater than $26m and is therefore required to use accrual basis for tax purposes. Show your work for calculations and any potential limitations.
Banjo Corp. Profit and Loss for the Year Ended December 31, 2021
Book
Book-tax Difference
Tax
Sales
$ 125,350,000
Interest income
$ 1,200,000
Income from Investments
$ 8,000,000
Capital gain (loss)
$ (3,750,000)
Salaries
$ (50,000,000)
Employee benefits
$ (12,000,000)
Utilities
$ (800,000)
Repairs and maintenance
$ (2,500,000)
Supplies
$ (17,000,000)
Rent
$ (10,000,000)
Bad debt expense
$ (800,000)
Insurance
$ (1,500,000)
Meals
$ (900,000)
Entertainment
$ (825,000)
Travel
$ (1,100,000)
Business interest expense
$ (7,500,000)
Charitable contributions
$ (5,000,000)
Depreciation
$ (10,000,000)
DRD
Net
$ 10,875,000
Additional information about Banjo Corp:
1. All of the charitable contributions were made in cash.
2. Meals all had a valid business purpose and were all purchased from a restaurant.
3. Entertainment was for various activities during which Banjo conducted meetings with important customers and suppliers.
4. Banjo had no floor plan financing.
5. Interest income included $260,000 from a Cook County bond issue to fund municipal property improvements.
6. A review of the accounts receivable subledger revealed the following accounts that are deemed to be uncollectible:
a. Jack Rabbit Studios $111,000
b. Miles of Chords $280,000
c. National Instrument Sales $146,000
d. Barry’s Banjo Bin $600,000
e. Power Notes $317,000
7. Banjo received $2,000,000 of dividends from Billy’s Band, Inc. in which Banjo owns a 3% share.
8. Banjo also received $2,000,000 of dividends from Musical Manny’s, Inc. in which Banjo owns at 40% share. Included in Income from Investments is $4,000,000 which is Banjo’s 40% share of Musical Manny’s income.
9. Banjo’s MACRS depreciation schedule shows a total of current year depreciation of $8,250,000.
10. Not included in the MACRS depreciation is the cost recovery for the following assets placed in service during 2020 (these were the only assets placed in service during the year: Asset Date Cost
computer equipment 4/2/2021 $150,000
delivery truck 9/12/2021 $250,000
storage building 11/1/2021 $5,000,000
Banjo chooses to claim the maximum amount of depreciation allowable under the law.
11. Banjo’s CEO has a compensation package which included the following expenditures for 2020:
a. Cash compensation $800,000
b. Performance bonus $100,000
c. Non-taxable fringe benefits $200,000
d. Taxable fringe benefits $300,000
12. Travel includes expenditures all have a valid business purpose.
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Please finish the work by Sunday, February 13th, before 12 p.m. in the Chicago timezone.
Banjo Corporation is a client of your accounting firm and a subchapter C corporation based in Champaign, Illinois. Banjo Corp. makes and sells musical instruments both online and in person. The manager on the engagement delegated to you the task of preparing the book to tax reconciliation listed below. The manager would want to remind you that the reconciliation format should be set up so that the column labeled “Book,” which is Banjo’s book profit and loss statement, plus the column labeled “Book-tax disparities,” equals the column labeled “Tax” (sign +/- important). Banjo generally has gross income in excess of $26 million and is thus compelled to adopt the accrual method for tax purposes. Display your work for
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