ACCT324 part II project

Part IIFor the Part II (Week 5) assignment, you are asked to do the following:Use the Part I assignment you completed previously.Correct your Part I assignment mistakes, if any, based on the solution you were provided by your instructor at the end of Week 4.Complete the following additional paragraph items: 1 – 5Please also examine the bullets on requirements to add that may pertain to these paragraphs.State any assumptions you are making in a separate memorandum attached to the return.1.Will’s annual salary from Moveable Feast is $82,000. He also earns an annual bonus. The amount is determined in late December, and Will receives it in January of the next year. Will’s 2012 bonus was $6,000 (received in 2013), and his 2013 bonus was $7,000 (received in 2014). Will is also paid a flat travel allowance of $16,000 per year. The allowance is to cover his expenses in visiting restaurants in his region to conduct inspections, consult with the local managers, and recruit potential hires. Although Will maintains substantiation of his travel, he is not required to account for these expenses to Moveable Feast. Will participates in his employer’s group health insurance plan to which he contributed $3,600 in 2013 for medical coverage. These contributions were made with after-tax dollars. The health plan covers Will, Mari, and their two dependent children. Moveable Feast does not provide any retirement benefits, but it has established a §401(k) plan to enable its employees to make voluntary contributions. Will contributed $10,000 to the plan in 2013. The company provides an office for Will’s use that is located at 110 North Reid Street, Suite 217, Sioux Falls.2.Besides the business use of his car (see item 3 below), Will’s out-of-pocket employment-related expenses for 2013 are as follows:Airfare$2,600Lodging3,200Meals3,400Entertainment800Car rentals, limos, taxis600Parking and tolls300Subscriptions to trade journals120Dues to trade association80Business gifts550E-1E-2While on business trips in his car, Will was cited for speeding several times and paid related fines totaling $620. Will presented the business gifts in late December to managers of thetop 11 restaurants in his region, with each manager receiving a $50 gift card to a national retailer.3.On March 5, 2012, Will purchased a new Ford Focus for use in his job. The car cost $24,000 (including sales tax), with no trade-in involved. The car was driven 14,000 miles in 2012 and 18,000 in 2013 with usage as follows: 20% for commuting to the office and 80% for business trips. The mileage for 2013 was evenly distributed throughout the year. Will uses the actual operating cost method, and for depreciation purposes, uses 200% declining-balance with a half-year convention. In addition, Will did not claim any §179 expensing or additional first-year depreciation last year when he bought the car. (See Table 3 of the Instructions to Form 4562.) Will’s expenses related to operating the Ford Focus for 2013 are as follows:Gasoline$2,900Oil change and lubrication150Auto insurance1,800Repairs400Auto club dues160License and registration120Interest on car loan9004.Mari Frost is a licensed architect who works part time on a consulting basis. Her professional activity code is 541310. Her major clients are real estate developers (both residential and commercial) for whom she prepares structural designs and construction plans. She also advises on building code requirements regarding the renovation and remodeling of existing structures. Mari collected $52,000 in consulting fees during 2013. This total includes a $3,000 payment for work she performed in 2012 and does not include $5,000 she billed in December for work performed in late 2013. In addition, Mari has an unpaid invoice for $6,000 from a client for work done in 2011. This client was convicted of arson in August 2013 and is now serving a five-year sentence in state prison. Mari feels certain that she will never collect the $6,000 she is owed.Mari does her work at the client’s premises or in her office at home (see item 5 below). Her business expenses for 2013 are as follows:Drafting supplies$4,800Reproduction materials (e.g., molds, models, photos, blueprints, copies)3,200On-site work clothing (e.g., hip boots, safety glasses, safety helmet)800Professional license fee400Subscriptions to professional journals250Dues to professional organizations240In addition, Mari drove the family Acura (purchased on June 7, 2012) 940 miles on her job assignments. She uses the standard mileage method to deduct business costs related to the Acura. During 2013, Mari drove the car a total of 10,000 miles.5.When the Frosts purchased their home on February 2, 2012, they set aside 300 square feet (out of a total of 2,400 square feet) of living space for Mari’s office. As of January 1, 2013, the home had an adjusted basis of $240,000 for purposes of line 36 of Form 8829 (of which $40,000 is attributable to the land)—the fair market value of the property is in excess of this amount. Relevant information concerning the residence for all of 2013 follows:Homeowner’s insurance$3,200Repairs and maintenance1,800Utilities6,200Painting (office area only)2,500E-2E-3The cost of Mari’s office furniture and equipment was previously deducted under §179 in the years these assets were acquired. On June 29, 2013, she purchased a fireproof file cabinet for $800 to safeguard the blueprints of her structural designs and construction plans. If possible, Mari prefers to avoid depreciating capital expenditures.