Please answer question 13

Comprehensive Problem 8-1

Sherry Hopson owns a retail family clothing store. Her store is located at 4321 Heather Drive, Henderson, NV 89002. Her employer identification number is 95-1234321 and her Social Security number is 123-45-6789. Sherry keeps her books on an accrual basis. The income and expenses for the year are:

Gross sales $351,700 Returns and allowances 4,000 Expenses: Beginning inventory (at cost) $ 84,300 Add: purchases 100,700 Cost of goods available for sale 185,000 Less: ending inventory (at cost) 75,000 Cost of goods sold $110,000 Rent 23,800 Insurance 1,500 Legal and accounting fees 2,800 Payroll 37,200 Payroll taxes 3,440 Utilities 1,850 Office supplies 750 Advertising 2,100

Sherrys bookkeeper has provided the book-basis fixed asset roll forward to be used in computing the depreciation. The tax lives of the assets are the same as the book lives shown in the fixed asset schedule. The truck is not considered a passenger automobile for purposes of the luxury automobile limitations. No Section 179 election is made. For tax purposes, Sherry elected out of bonus depreciation in all years except 2018.

Required: Complete Sherry's Schedule C and Form 4562.

• Make realistic assumptions about any missing data.
• Enter all amounts as positive numbers.
• If an amount box does not require an entry or the answer is zero, enter "0".
• If required round any dollar amount to the nearest dollar.

Schedule of Fixed Asset Rollforward

Sherrys bookkeeper has provided the following book-basis fixed asset rollforward:

Hopson Retail Fixed Asset Rollforward 12/31/2018 (book basis)
		DEPR		COST		2016	2017	2018		ACCUM		NET BOOK
ASSET	IN SERVICE	METHOD	LIFE	BASIS		DEPR	DEPR	DEPR		DEPR		VALUE
CASH REGISTER	2/15/2016	SL	5	9,800.00		1,796.67	1,960.00	1,960.00		5,716.67		4,083.33
2016 TOTAL ADDITIONS				9,800.00		1,796.67	1,960.00	1,960.00		5,716.67		4,083.33
RETAIL FIXTURES	10/12/2017	SL	7	4,500.00			160.71	642.86		803.57		3,696.43
FURNITURE	10/12/2017	SL	7	3,600.00			128.57	514.29		642.86		2,957.14
2017 TOTAL ADDITIONS				8,100.00		-	289.28	1,157.15		1,446.43		6,653.57
TOTAL				17,900.00		1,796.67	2,249.28	3,117.15		7,163.10		10,736.90
DELIVERY TRUCK	6/1/2018	SL	5	32,000.00				3,733.33		3,733.33		28,266.67
DESK AND CABINETRY	6/1/2018	SL	7	17,000.00				1,416.67		1,416.67		15,583.33
COMPUTER	6/1/2018	SL	5	3,500.00				408.33		408.33		3,091.67
2018 TOTAL ADDITIONS				52,500.00		-	-	5,558.33		5,558.33		46,941.67
TOTAL				70,400.00		1,796.67	2,249.28	8,675.48		12,721.43		57,678.57

Schedule C

Complete Sherry's Schedule C.

SCHEDULE C (Form 1040) Department of the Treasury Internal Revenue Service (99) Profit or Loss From Business (Sole Proprietorship) Go to www.irs.gov/ScheduleC for instructions and the latest information. Attach to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065. OMB No. 1545-0074 2018 Attachment Sequence No. 09 Name of proprietor Sherry Hopson Social security number (SSN) 123-45-6789 A Principal business or profession, including product or service (see instructions) Retail Clothing Store B Enter code from instructions 448140 C Business name. If no separate business name, leave blank. Hopson Retail D Employer ID number (EIN), (see instr.) 951-23-4321 E Business address (including suite or room no.) 4321 Heather Drive City, town or post office, state, and ZIP code Henderson, NV 89002 F Accounting method: (1) Cash (2) Accrual (3) Other (specify) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ G Did you "materially participate" in the operation of this business during 2018? If "No," see instructions for limit on losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No H If you started or acquired this business during 2018, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I Did you make any payments in 2018 that would require you to file Form(s) 1099? (see instructions) . . . . Yes No J If "Yes," did you or will you file required Forms 1099? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No Part I Income 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was checked . . . . . . . . . . . . . 1 2 Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 Cost of goods sold (from line 42) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) . . . . 6 7 Gross income. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Part II Expenses. Enter expenses for business use of your home only on line 30. 8 Advertising . . . . . . . . . . . . . 8 18 Office expense (see instructions) . . . . 18 9 Car and truck expenses (see 19 Pension and profit-sharing plans . . . . 19 instructions) . . . . . . . . . . . . 9 20 Rent or lease (see instructions): . . . . . 10 Commissions and fees . . . . 10 a Vehicles, machinery, and equipment 20a 11 Contract labor (see instructions) 11 b Other business property . . . . . . . . . 20b 12 Depletion . . . . . . . . . . . . . 12 21 Repairs and maintenance . . . . . . . . . 21 13 Depreciation and section 179 22 Supplies (not included in Part III) . . . 22 expense deduction (not included 23 Taxes and licenses . . . . . . . . . . . . . . 23 in Part III) (see instructions) . . . 13 24 Travel and meals: . . . . . . . . . . . . . . 14 Employee benefit programs a Travel . . . . . . . . . . . . . . . . . . . .