Question 1
A residual interest in the assets after deducting the liabilities is:
a. Income
b. Equity
c. Expenses
d. None
Question 2
The main purpose of tax planning is:
a. Minimizing tax liability
b. Repealing all federal taxes
c. Converting capital gain into ordinary income
d. Deferring deductions and accelerating income
Question 3
The cost, which is related specific cost object and economically traceable will be
classified as:
a. Indirect cost
b. Fixed cost
c. Variable cost
d. Direct cost
Question 4
At the beginning of the year, PVA Company’s manager estimated total direct labor cost
to be $1,300,000. The manager also estimated the following overhead costs for the
year.
For the year, the company incurred $888,000 of actual overhead costs. It completed and
sold five jobs with the following direct labor costs: Job 625, $352,000; Job 626,
$320,000; Job 627, $185,000; Job 628, $480,000; and Job 629, $162,000. In addition, Job
630 is in process at the end of the year and had been charged $11,000 for direct labor.
No jobs were in process at the beginning of the year. The company’s predetermined
overhead rate is based on a percent of direct labor cost.
Required
1. Determine the following.
a. Predetermined overhead rate for the year.
b. Overhead applied to each of the six jobs during the year.
c. Over- or underapplied overhead at year-end.
2. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold
at year-end.
Question 5
Melissa has $90,000 in salary from her full-time position and $40,000 in net income in
2018 from consulting as an independent contractor. What is her self-employment tax?
What portion of this can she deduct?
