ACCT 315 FALL 21 Intuit Tax Software Problem Davenport University Federal Taxation

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2. Write a tax memo/letter advising the Northways how to improve their tax position. *********************************************************** Use the same information as the Manual problem subject

ACCT 315 FALL 21 Intuit Tax Software Problem Davenport University Federal Taxation I ACCT 315 Instructor: Darlena Billops -Hill TAX PREPARATION SOFTWARE T A X R E T U R N P R O B L E M *********************************************************** REQUIREMENT 1. Prepare a 2020 tax return using Intuit software or other tax preparation software 2. Write a tax memo/letter advising the Northways how to improve their tax position. ********** ************************************************* Use the same information as the Manual problem subject to the following revisions: The Northways updated their exterior windows in their primary residence last year. The new windows exceed the energy effic iency criteria established by the International Energy Conservation Code (IECC) for the climate zone. They have brought the manufacturer’s certification along. The cost of the new windows total $4,700. John’s Bargain Books sold $317,430 of merchandis e. They had a beginning inventory of $39,250 and an ending inventory of $44,300. All other expenses/transactions remained the same except John does not elect to take §179 expensing or additional first year depreciation on his office furniture purchase; b ut does elect to take the §179 deduction for the computer system. He made quarterly estimated Federal income tax payments of $1,500 on January, April, June and September, 2020 ($6,000 in total payments). Michigan estimated income tax payments were $400 p er quarter or $1,600 for the year. The Northways sold 1,000 shares of Capp Corp stock they had received as a wedding present on June 25, 2002. The stock was worth $8.50 per share in January but had had dropped to $6 per share on September 3 when the Nor thways sold the stock on that date. They had been given the stock by John’s father, who paid $11.50 per share for it in 1974. Its value at the date of gift was $18.50 per share. No gift tax was paid on the gift. (The Northway’s basis is $11.50 per share .) John has 3 employees and is contemplating the Affordable Health Care Act provisions and the effect they will have on his business operations. He wonders how to keep his business profitable, how to best take advantage of available tax deductions and cr edits and how they can plan more efficiently to minimize their tax burden while increasing their wealth. He is expecting his gross receipts to grow by 5% next year. John’s brother, Mike, would like to claim mom Beverly next year on his tax return. The children are getting older and Phyllis is wondering how changes in the family composition and tax law ACCT 315 FALL 21 Intuit Tax Software Problem changes might affect their 2021 taxes and what steps they can take now to reduce their tax liability next year. What advice can you offer the Northways on how they can improve their current tax situation and improve their tax planning process for next year? Compose a 2 page tax memo or a client letter to the Northways enumerating all of your tax recommendations starting with the most significant challenges/recommendations and the reasons why the proposed changes make sense.

Write a tax memo/letter advising the Northways how to improve their tax position.

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ONLY QUESTION 2 IS NEEDED TO BE COMPLETED 2. Write a tax memo/letter advising the Northways how to improve their tax position. Use the same information as the Manual problem subject to the follow

ONLY QUESTION 2 IS NEEDED TO BE COMPLETED

2. Write a tax memo/letter advising the Northways how to improve their tax position.

Use the same information as the Manual problem subject to the following revisions: The Northways updated their exterior windows in their primary residence last year. The new windows exceed the energy efficiency criteria established by the International Energy Conservation Code (IECC) for the climate zone. They have brought the manufacturer’s certification along. The cost of the new windows total $4,700. John’s Bargain Books sold $317,430 of merchandise. They had a beginning inventory of $39,250 and an ending inventory of $44,300. All other expenses/transactions remained the same except John does not elect to take §179 expensing or additional first year depreciation on his office furniture purchase; but does elect to take the §179 deduction for the computer system. He made quarterly estimated Federal income tax payments of $1,500 on January, April, June and September, 2020 ($6,000 in total payments). Michigan estimated income tax payments were $400 per quarter or $1,600 for the year. The Northways sold 1,000 shares of Capp Corp stock they had received as a wedding present on June 25, 2002. The stock was worth $8.50 per share in January but had had dropped to $6 per share on September 3 when the Northways sold the stock on that date. They had been given the stock by John’s father, who paid $11.50 per share for it in 1974. Its value at the date of gift was $18.50 per share. No gift tax was paid on the gift. (The Northway’s basis is $11.50 per share.) John has 3 employees and is contemplating the Affordable Health Care Act provisions and the effect they will have on his business operations. He wonders how to keep his business profitable, how to best take advantage of available tax deductions and credits and how they can plan more efficiently to minimize their tax burden while increasing their wealth. He is expecting his gross receipts to grow by 5% next year. John’s brother, Mike, would like to claim mom Beverly next year on his tax return. The children are getting older and Phyllis is wondering how changes in the family composition and tax law ACCT 315 FALL 21 Intuit Tax Software Problem changes might affect their 2021 taxes and what steps they can take now to reduce their tax liability next year. What advice can you offer the Northways on how they can improve their current tax situation and improve their tax planning process for next year? Compose a 2 page tax memo or a client letter to the Northways enumerating all of your tax recommendations starting with the most significant challenges/recommendations and the reasons why the proposed changes make sense.

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ONLY QUESTION 2 IS NEEDED TO BE COMPLETED 2. Write a tax memo/letter advising the Northways how to improve their tax position. Use the same information as the Manual problem subject to the follow

ACCT 315 FALL 21 Intuit Tax Software Problem Davenport University Federal Taxation I ACCT 315 Instructor: Darlena Billops -Hill TAX PREPARATION SOFTWARE T A X R E T U R N P R O B L E M *********************************************************** REQUIREMENT 1. Prepare a 2020 tax return using Intuit software or other tax preparation software 2. Write a tax memo/letter advising the Northways how to improve their tax position. ********** ************************************************* Use the same information as the Manual problem subject to the following revisions: The Northways updated their exterior windows in their primary residence last year. The new windows exceed the energy effic iency criteria established by the International Energy Conservation Code (IECC) for the climate zone. They have brought the manufacturer’s certification along. The cost of the new windows total $4,700. John’s Bargain Books sold $317,430 of merchandis e. They had a beginning inventory of $39,250 and an ending inventory of $44,300. All other expenses/transactions remained the same except John does not elect to take §179 expensing or additional first year depreciation on his office furniture purchase; b ut does elect to take the §179 deduction for the computer system. He made quarterly estimated Federal income tax payments of $1,500 on January, April, June and September, 2020 ($6,000 in total payments). Michigan estimated income tax payments were $400 p er quarter or $1,600 for the year. The Northways sold 1,000 shares of Capp Corp stock they had received as a wedding present on June 25, 2002. The stock was worth $8.50 per share in January but had had dropped to $6 per share on September 3 when the Nor thways sold the stock on that date. They had been given the stock by John’s father, who paid $11.50 per share for it in 1974. Its value at the date of gift was $18.50 per share. No gift tax was paid on the gift. (The Northway’s basis is $11.50 per share .) John has 3 employees and is contemplating the Affordable Health Care Act provisions and the effect they will have on his business operations. He wonders how to keep his business profitable, how to best take advantage of available tax deductions and cr edits and how they can plan more efficiently to minimize their tax burden while increasing their wealth. He is expecting his gross receipts to grow by 5% next year. John’s brother, Mike, would like to claim mom Beverly next year on his tax return. The children are getting older and Phyllis is wondering how changes in the family composition and tax law ACCT 315 FALL 21 Intuit Tax Software Problem changes might affect their 2021 taxes and what steps they can take now to reduce their tax liability next year. What advice can you offer the Northways on how they can improve their current tax situation and improve their tax planning process for next year? Compose a 2 page tax memo or a client letter to the Northways enumerating all of your tax recommendations starting with the most significant challenges/recommendations and the reasons why the proposed changes make sense.

List and then describe the types of audit evidence you will request from the company.

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look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it

look at the files attached and Add to your memo from Milestone  2-3  page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it specifically relates to this company and industry.

Describe the audit data or evidence your team will review. Why is this proof important?

What if a significant portion of the data is overseas and beyond the auditors’ jurisdiction or audit universe? Analyze how the audit team will

compensate for that risk. What governing rules and regulations must be taken into consideration?

Describe analytical procedures you will use to determine the sampling program. How will your internal control evaluation affect this step? Be

specific.

List and then describe the types of audit evidence you will request from the company.

Describe any considerations your team will make in auditing subjective areas, including any governing rules and regulations that were factored

into the auditing decisions.

Describe the factors you took into consideration when planning the nature and extent of the audit documentation.

Describe how responsibility for IT (computers, software, internet usage, databases) risk coverage for companies in the IT industry is defined. Is it

adequate? Describe how that definition addresses or fails to address current and future risks related to social media.

Describe the internal controls that are put in place to specifically protect computer data and proprietary information. How well do these

controls operate within the IT industry?

Where do current and future vulnerabilities exist for IT, and what must be done to manage these gaps? [

make sure you add references and

look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it

Assume you are an auditor at an accounting firm. Your team is getting ready to start a financial audit of Robbins Network Solutions (RNS). You will start with the initial review and audit preparation.

You know the following information about RNS.

Objectives of the Engagement

Audit of the financial statements for the year ended December 31, 2017.

Business and Industry Conditions

RNS sells and installs computers and networking hardware and software, and provides information technology consulting to businesses. It is currently developing its own computer networking software to sell to customers.

RNS’s success depends on attracting and retaining personnel with a high level of technical expertise who are able to provide a broad range of services. The market for staff is highly competitive.

The market for computers and networking products is extremely competitive. RNS’s main competitors are companies like Dell, Hewlett Packard, and Apple. RNS also competes with local and regional resellers that provide similar products and consulting services directly to customers. To be competitive, RNS has relied on its ability to provide its customers with state-of-the-art products in a timely manner. Because the company does not have the buying power of some of its competitors, it generally must charge a higher price for its products, but it is also able to provide a higher level of service and expertise to its customers to compensate for the higher price.

The market for computer products and technology services is sensitive to economic conditions. Economic indicators predict the U.S. economy will be relatively stagnant for the next few years, with the annual growth in spending for information technology products and services expected to be 1 percent per year for the next three years. In the past year, RNS has decided to increase sales by relaxing credit rules to provide credit to customers with slightly higher credit risk.

Ownership and Management

RNS is a closely held company owned by six stockholders. Two stockholders are active members of the company’s board of directors. None of the other owners take an active part in the management of the business.

Objectives, Strategies, and Business Risks

RNS’s primary business objectives are to increase sales, services, and consulting revenues by five percent and increase net income by seven percent each year for the next three years. Strategies to achieve those objectives include:

  •   New software development
  •   Aggressive marketing of products and services through increased advertising
  •   Sales to customers with a higher credit risk profile

The primary business risks associated with the company’s strategies include the following:

look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it 1

  •   The U.S. economy may suffer a significant downturn.
  •   Competitors may engage in predatory pricing to gain market share.
  •   Increased advertising expenditures may not produce desired results.
  •   Credit losses may exceed the benefits of increased sales.
  •   Software development activities may not generate viable products.

The company has developed the following responses to these risks:

  •   Frequent monitoring of economy and industry conditions
  •   Monitoring of competitor actions
  •   Hiring of a marketing consulting firm to evaluate the performance of advertising methods
  •   Daily review of aging of accounts receivable
  •   Adherence to a controlled software development budget

Measurement and Review of Financial Performance

Management uses the following measures to monitor the company’s performance:

  •   Inventory and receivables turnover
  •   Aging of accounts receivable
  •   Sales and gross margins by type of revenue
  •   Net income
  •   Total inventory balance

Understanding of the relationship between audit risk, audit evidence, and financial statement assertions

/in /by

look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it

look at the files attached and Add to your memo from Milestone  2-3  page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it specifically relates to this company and industry.

Describe the audit data or evidence your team will review. Why is this proof important?

What if a significant portion of the data is overseas and beyond the auditors’ jurisdiction or audit universe? Analyze how the audit team will

compensate for that risk. What governing rules and regulations must be taken into consideration?

Describe analytical procedures you will use to determine the sampling program. How will your internal control evaluation affect this step? Be

specific.

List and then describe the types of audit evidence you will request from the company.

Describe any considerations your team will make in auditing subjective areas, including any governing rules and regulations that were factored

into the auditing decisions.

Describe the factors you took into consideration when planning the nature and extent of the audit documentation.

Describe how responsibility for IT (computers, software, internet usage, databases) risk coverage for companies in the IT industry is defined. Is it

adequate? Describe how that definition addresses or fails to address current and future risks related to social media.

Describe the internal controls that are put in place to specifically protect computer data and proprietary information. How well do these

controls operate within the IT industry?

Where do current and future vulnerabilities exist for IT, and what must be done to manage these gaps? [

make sure you add references and

look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it

Assume you are an auditor at an accounting firm. Your team is getting ready to start a financial audit of Robbins Network Solutions (RNS). You will start with the initial review and audit preparation.

You know the following information about RNS.

Objectives of the Engagement

Audit of the financial statements for the year ended December 31, 2017.

Business and Industry Conditions

RNS sells and installs computers and networking hardware and software, and provides information technology consulting to businesses. It is currently developing its own computer networking software to sell to customers.

RNS’s success depends on attracting and retaining personnel with a high level of technical expertise who are able to provide a broad range of services. The market for staff is highly competitive.

The market for computers and networking products is extremely competitive. RNS’s main competitors are companies like Dell, Hewlett Packard, and Apple. RNS also competes with local and regional resellers that provide similar products and consulting services directly to customers. To be competitive, RNS has relied on its ability to provide its customers with state-of-the-art products in a timely manner. Because the company does not have the buying power of some of its competitors, it generally must charge a higher price for its products, but it is also able to provide a higher level of service and expertise to its customers to compensate for the higher price.

The market for computer products and technology services is sensitive to economic conditions. Economic indicators predict the U.S. economy will be relatively stagnant for the next few years, with the annual growth in spending for information technology products and services expected to be 1 percent per year for the next three years. In the past year, RNS has decided to increase sales by relaxing credit rules to provide credit to customers with slightly higher credit risk.

Ownership and Management

RNS is a closely held company owned by six stockholders. Two stockholders are active members of the company’s board of directors. None of the other owners take an active part in the management of the business.

Objectives, Strategies, and Business Risks

RNS’s primary business objectives are to increase sales, services, and consulting revenues by five percent and increase net income by seven percent each year for the next three years. Strategies to achieve those objectives include:

  •   New software development
  •   Aggressive marketing of products and services through increased advertising
  •   Sales to customers with a higher credit risk profile

The primary business risks associated with the company’s strategies include the following:

look at the files attached and Add to your memo from Milestone 2-3 page , document your understanding of the relationship between audit risk, audit evidence, and financial statement assertions as it 1

  •   The U.S. economy may suffer a significant downturn.
  •   Competitors may engage in predatory pricing to gain market share.
  •   Increased advertising expenditures may not produce desired results.
  •   Credit losses may exceed the benefits of increased sales.
  •   Software development activities may not generate viable products.

The company has developed the following responses to these risks:

  •   Frequent monitoring of economy and industry conditions
  •   Monitoring of competitor actions
  •   Hiring of a marketing consulting firm to evaluate the performance of advertising methods
  •   Daily review of aging of accounts receivable
  •   Adherence to a controlled software development budget

Measurement and Review of Financial Performance

Management uses the following measures to monitor the company’s performance:

  •   Inventory and receivables turnover
  •   Aging of accounts receivable
  •   Sales and gross margins by type of revenue
  •   Net income
  •   Total inventory balance