3. Joe’s Grocery Store, a calendar year taxpayer, had ending inventory of $160,0

Question

3. Joe’s Grocery Store, a calendar year taxpayer, had ending inventory of $160,000 on December 31st of the tax year. During the year, the store purchased additional inventory of $415,000. If cost of goods sold for the year was $470,000, what was the beginning inventory?
A. $55,000
B. $215,000
C. $255,000
D. $310,000

4. During the holiday season, Randy, a barber, gave business gifts to 34 customers. What is the amount of Randy’s business gift deduction'? The values of the gifts, which were not of a promotional nature, were as follows: 8 at $10 each, 8 at $25 each, 8 at $50 each, 10 at $100 each
A. $0
B. $280
C. $730
D. $1,680

5. Jody has $2,100 withheld from her wages for state income taxes during the current tax year. In March of the current year, she paid $300 in additional taxes for her prior year tax return. Her state income tax liability for the current year is $2,500 and she pays the additional $400 when she files her return in March of the following year. What amount should Jody deduct as an itemized deduction for state income taxes on her current year tax return'?
A. $2,100
B. $2,400
C. $2,500
D. $2,800

Explanation / Answer

3) option "B" is the correct answer. Cost of good sold = Beginig inventory + Purchases -Ending invesntory 470000 = Beginig inventory + 415000-160000 Begingi inventory = 470000+160000-415000 = $215000 4)Option "a" is correct answer. Because it was not a promotional nature.We can not conclude  it is an expense. 5) Option "B" is the corect answer. = [tax with held from wages + prior year tax paid] =[2100+300=$2400] These items are tax deductble.. 1.any estimated you paid to state or local taxes during the year 2.Any amount paid to state or local taxes for pror year. 3.Additional tax paid is not a itemised deduction.

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