Name: Bart and Lisa run a lemonade stand called Springfield Lemonade Inc. Spring
ID: 2335428 • Letter: N
Question
Name: Bart and Lisa run a lemonade stand called Springfield Lemonade Inc. Springfield Lemonade Inc. is a calendar year accrual basis taxpayer. Springfield Lemonade Inc.'s FEIN number is 34-5678901. Springfield Lemonade Inc. is located in Springfield, USA. Springfield Lemonade Inc. sells lemonade from its stand on the side of Main Street, as well as, lemonade to local businesses in Springfield USA that these local businesses sell to their customers. Use the following accounting information for Springfield Lemonade Inc. to complete its Form Schedule C (ok to use either 2017 or 2018 draft version from IRS website) Springfield Lemonade Inc. made sales of lemonade to customers at the lemonade stand in the amount $20,000 in cash. Springfield Lemonade Inc. made sales of lemonade to local businesses in the amount of $30,000. Springfield Lemonade bilied half of its local business customers $15,000 in 2018, for which it received payment. Springield Lemonade Inc. plans to bill its remaining half of business customers $15,000 in January 2019 1. On January 1, 2018, Springfield Lemonade Inc. had no ($0.00) of lemonade or supplies on hand (no inventory at beginning of the year). During 2018, Springfield Lemonade Inc. purchased $40,000 in lemons, sugar, water, ice, plastic cups & containers, and straws. Bart and Lisa did not use any of these materials for personal use. As owners of the company, Bart and Lisa did all the work themselves. They did not incur any labor costs -they did not receive a salary. At the end of 2018, Bart and Lisa also incurred $5,000 in other materials and supplies related to making the lemonade it sold in 2018. On December 31, 2018, Springfield Lemonade Inc. had $5,000 in inventory remaining on hand. Springfield Lemonade Inc. uses the "cost method" to value inventory 2. 3. On June 1, 2018, Springfield Lemonade Inc. took out a business related insurance policy for 1,200, which covered 2018 and 2019, Springfield Lemonade Inc. prepaid the entire $1,200 insurance policy on June 1, 2018 4. During 2018, Springfield Lemonade Inc. made the following business related purchases (in cash): a) lemonade mixing machine for $1,000, 2) delivery truck for $10,000, 3) advertising costs $2,000, and 4) costs for meals (business related to new customers) for $1,000, and $1,000 for entertainment costs for friends and family at 4th of July party. With regards to the purchase of the delivery truck for $10,000, Springfield Lemonade Inc. would like to depreciate or expense the truck as fast as possible, under current law Prepare a draft Schedule C for Springfield Lemonade IncExplanation / Answer
Profit or Loss From Business
Schedule C
Name of Proprietor : Bart and Lisa FEIN: 34-5678901
Business Name : Springfield Lemonade Inc.
Business Address : Springfield,USA
Accounting Method : Accrual
Part I- Income
1) Gross receipt or sales USD 50000.00
2) Return and Allowance
3) Substract line 2 from 1 USD 50000.00
4) Cost of Goods sold(from line 40) USD 40000.00
5) Gross Profit (substract line 4 from line 3) USD 10000.00
6) Other Income including federal and state gasoilne or fuel tax
credit or refund
7) Gross Income (add line 5 and line 6) USD 10000.00
Part II Expenses
8) Addertising USD 2000.00
9) Car and truck expenses
10) Commission and fees
11) Contract labour
12) Depletion
13) Depreciation and section 179 expenses USD 10000.00
14) Employee benefit program
15) Insurance(other than health) USD 700.00
16) Interest
a) Mortgage(paid to Bank)
b) Other
17) Legal and Professional service
18) Office expenses
19) Pension and profit sharing plans
20) Rent or lease
21) Repairs and maintenance
22) Supplies (not included in Part III)
23) Taxes and licenses
24) Travel, meals and entertainment
a) Travel
b) Deductiblemeals and entertainment USD 1000.00
25) Utilities
26) Wages
27) Other expesnses
28) Total expenses before expenses for business use of home.
Add lines 8 through 27 USD 13700.00
29) Tentative profit or (loss). Substract line 28 from line 7 USD (3700.00)
30) Expenses for business use of your home
31) Net profit or (loss). Substract line 30 from line 29 USD (3700.00)
Part III Cost of Goods Sold
32) Method used to value closing inventory : Cost
33) Inventory at beginning of year
34) Purchases less cost of items withdrawn for personal use USD 40000.00
35) Cost of labor
36) Materials and supplies USD 5000.00
37) Other cost
38) Add lines 35 through 39 USD 45000.00
39) Inventory at end of year USD 5000.00
40) Cost of goods sold. Substract line 41 from line 40 USD 40000.00
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