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Jack, a geologist, opened a business organized as a C corporation called Geo-Jack (GJ) in...

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Accounting

Jack, a geologist, opened a business organized as a C corporation called Geo-Jack (GJ) in January of this year. Jack is the sole shareholder. Assume GJ reports on a calendar year and uses the accrual method of accounting. For each item below, indicate its effect on Jacks taxable income and you must clearly indicate whether it is positive or negative.

  1. In an attempt to get his name and new business recognized, GJ paid $9,000 for a one-page ad in the Geologic Survey. It also paid $11,000 in radio ads to be run through the end of December.

______________

  1. In November, GJs office was broken into and equipment valued at $6,000 was stolen. The tax basis of the equipment was $6,500. GJ received $4,000 of insurance proceeds from the theft.

______________

  1. GJ incurred a $5,000 fine from the state government for digging in an unauthorized digging zone.

______________

  1. GJ reimbursed employee-salespersons $4,200 for meals involving substantial business discussion.

______________

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