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

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Accounting

Jack, a geologist, opened a business organized as a Ccorporation called Geo-Jack (GJ) in January of this year. Jackis the sole shareholder. Assume GJ reports on a calendaryear and uses the accrual method of accounting. Foreach item below, indicate its effect on Jack’s taxable income andyou must clearly indicate whether it is positive or negative.
In an attempt to get his name and new business recognized, GJpaid $9,000 for a one-page ad in the Geologic Survey. Italso paid $11,000 in radio ads to be run through the end ofDecember.

In November, GJ’s office was broken into and equipment valuedat $6,000 was stolen. The tax basis of the equipment was $6,500. GJreceived $4,000 of insurance proceeds from the theft.

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

GJ reimbursed employee-salespersons $4,200 for meals involvingsubstantial business discussion.

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Answer aThe 9000 paid for one page ad and 11000 paid in radio for ad are advertising expense incurred and the benifits of these expenses are expected to be received through the end of December On See Answer

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