Calculation of Gross Income Report 2022

Answer question 1-8
1:
Statement showing Calculation of Gross Income reported on Schedule C Line 1 for
the year 2018:
Description Amount
Cash received in January 2018 for services performed in December
2017
$2,000
Cash received in 2018 for services performed in 2018 $24,750
Cash received in January 2019 for services performed in December
2018
To be included in Income for
year 2019
Gross Income $26,750
*Since Stella maintains accounts on Cash Basis, the income received in cash in year
2018 will form part of business income
2:
Schedule C Line 9 = 4000 x 0.545 = $ 2,180

3:
Description Amount
Accountant's fees paid in January 2018 for Quickbooks services
performed in December 2017
$50
Accountant's fees paid in 2018 for Quickbooks services performed
in 2018
$660
Accountant's fees paid in January 2019 for Quickbooks services
performed in December 2018
To be included in Income for
year 2019
Total Legal and Professional Service Expense $ 710
4: Nil
5:
Description Amount Deductible
Business-related meals with current clients $900 $ 450
Business-related meals with prospective clients $540 $ 270
Meals with current clients who are also close friends with
Stella (no business was discussed during the meals)
$375
Deduction Not Available
Tickets to a local dog competition to entertain current
clients (business was discussed during the show)
$1,600
Deduction Not Available
(Source :
https://www.irs.gov/pub/irs-
drop/n-18-76.pdf)
Total Deduction $ 720
6:

Statement showing Net Profit to be reported:
Description Amount
Gross Income $ 26750
Expenses:
Pet-grooming supplies, leashes and squeaky toys (Stella does not
personally own any pets)
600
Car and Truck Expense 2180
Legal and Professional Service Expense 710
Meals and Entertainment 720
Total Deductions $ 4210
Net Profit $ 22540
7: Adjusted Gross Income = $ 22540
Description Amount
Adjusted Gross Income $ 22,540
Less: Standard Deduction $ 12,000
Taxable Income $ 10540
Tax Rate 10%
Total tax owed $ 1054
8: