1.Use the following information from Marvel Company for the month of July to ans
ID: 2385668 • Letter: 1
Question
1.Use the following information from Marvel Company for the month of July to answer questions 1 through 3July 1 Beginning inventory 50 units @$15 each
July 3 Purchase 80 units @$20 each
July 8 Sale 70 units
July 15 Purchase 100 units @$30 each
July 23 Sale 50 units
(1). Assume that Marvel uses a perpetual FIFO inventory system. What is the dollar value of its ending inventory?
(2). Assume that Marvel uses a perpetual LIFO inventory system. What is the dollar value of its ending inventory?
(3). Assume that Marvel uses a perpetual specific identification inventory system. Its ending inventory consists of 20 units from beginning inventory, 40 units from the July 3 purchase, and 50 units from the July 15 purchase. What is the dollar value of its ending inventory?
Please explain.
2. Which statement is correct?
A) Tax credits reduce tax liability on a dollar-for-dollar basis.
B) Tax deductions reduce tax liability on a dollar-for-dollar basis.
C) The benefit of a tax credit depends on the taxpayer's marginal tax rate.
D) Tax deductions are more valuable for high-income taxpayers than for low-income taxpayers.
3.Max and Alexandra are married and incur $5,500 of qualifying expenses to care for their two
children, ages 2 and 5. Max's earned income is $35,000 and Alexandra's earnings from a part-time
job are $5,000. What is the amount of the qualifying expenses for purposes of computing the child
and dependent care credit? (show your work please)
4. A company has $100,000 of U.S. source taxable income and $300,000 of foreign source taxable
income from countries X and Y for a total worldwide taxable income of $400,000. Countries X and
Y levy a total of $60,000 in foreign taxes upon the foreign source taxable income. U.S. taxes before
credits are $140,000. The foreign tax credit limitation is ? explain please
Explanation / Answer
July 1 B.Inv. 50 units @$15 each $750 July 3 Purchase 80 units @$20 each $1,600 Total 130 units $2,350 July 8 Sale 70 units($750+20x$20) $1,150 Ending Balance 60 units(60x$20) $1,200 July 15 Purch. 100 units @$30 each $3,000 Total 160 units $4,200 July 23 Sale 50 units(50x$20) $1,000 Ending Balance 110 units(10x$20+$3000) $3,200 (2). Assume that Marvel uses a perpetual LIFO inventory system. What is the dollar value of its ending inventory? 110 units @ $30 $3,300 10 units @ $20 $200 Total $3,500 3). Assume that Marvel uses a perpetual specific identification inventory system. Its ending inventory consists of 20 units from beginning inventory, 40 units from the July 3 purchase, and 50 units from the July 15 purchase. 20 units @ $15 $300 40 units @ $20 $800 50 units @ $30 $1,500 Total $2,600
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