Problem 3-1 Schedule C (LO 3.1, 3.3, 3.5, 3.7) Scott Butterfield is self-employed as a CPA. He… 1 answer below »

Problem 3-1Schedule C (LO 3.1, 3.3, 3.5, 3.7) Scott Butterfield is self-employed as a CPA. He uses the cash method of accounting, and his Social Security number is 644-47-7833. His principal business code is 541211. Scott’s CPA practice is located at 678 Third Street, Riverside, CA 92860. Scott’s income statement for the year shows the following: Income Statement Scott Butterfield, CPAIncome Statement12/31/2019 Current Period Prior Period 1/1/2019 to 12/31/2019 1/1/2018 to 12/31/2018 REVENUES Tax Services $76,123.00 $75,067.00 Accounting Services 49,001.00 48,860.00 Other Consulting Services 10,095.00 10,115.00 TOTAL REVENUES 135,219.00 134,042.00 COST OF SERVICES Salaries 32,000.00 30,100.00 Payroll Taxes 2,868.00 2,387.00 Supplies 1,391.00 1,548.00 TOTAL COST OF SERVICES 36,259.00 34,035.00 GROSS PROFIT (LOSS) 98,960.00 100,007.00 OPERATING EXPENSES Advertising and Promotion 300.00 350.00 Business Licenses and Permits 250.00 250.00 Charitable Contributions 425.00 275.00 Continuing Education 300.00 300.00 Dues and Subscriptions 3,500.00 3,500.00 Insurance 875.00 875.00 Meals and Entertainment 4,400.00 5,500.00 Office Expense 150.00 150.00 Postage and Delivery 50.00 50.00 Printing and Reproduction 100.00 100.00 Office Rent 14,000.00 14,000.00 Travel 865.00 865.00 Utilities 2,978.00 2,978.00 TOTAL OPERATING EXPENSES 28,193.00 29,193.00 NET INCOME (LOSS) $70,767.00 $70,814.00 Scott also mentioned the following: The expenses for dues and subscriptions were his country club membership dues for the year. $300 of the charitable contributions were made to a political action committee. Scott does not generate income from the sale of goods and therefore does not record supplies and wages as part of cost of goods sold. Scott placed a business auto in service on January 1, 2016 and drove it 3,792 miles for business, 3,250 miles for commuting, and 4,500 miles for nonbusiness purposes. His wife has a car for personal use. He maintains written records for the business use of the car. Complete Schedule C for Scott showing Scott’s net taxable profit from self-employment. Assume Scott has evidence to support his deductions. If required, only use the minus sign to indicate a net loss. When required, round amounts to the nearest dollar.

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