Question 27 of 30.
Referring to Case Study 2 for Gifts Galore, Inc.: If inventory purchases change to $160,467, how will that change Form 1125-A, line 8? Form 1125-A, line 8 will now be _____
$133,721
$140,829
$148,721
$168,359
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Question 28 of 30.
Referring to Case Study 2 for Gifts Galore, Inc.: If each of the two shareholders paid in additional capital of $5,000, how will that affect Schedule L?
Line 24, retained earnings, will be decreased by $10,000.
Only line 1, cash, will be increased by $10,000.
Only line 23, additional paid-in capital, will increase by $10,000.
Line 1, cash, will increase by $10,000 and $10,000 will be entered on line 23.
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Question 29 of 30.
Referring to Case Study 2 for Gifts Galore, Inc.: If a charitable contribution of $1,500 had been included on the income statement, how would that impact the tax return for 2022?
The charitable contribution will be reported as a miscellaneous expense on page 1, line 19.
The charitable contribution would be reported on Schedule K, line 12a.
The charitable contribution will be reported as a miscellaneous expense on page 1, line 19, and must also be included on Schedule K, line 12a.
S corporations are not allowed to deduct charitable contributions, so no entry is required on the tax return.
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