Calculating the depreciation for interiors unlimited

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Reference no: EM133412673

Case Scenario: Year ending December 31, 2022 Jack Frost (social security number 666-66-0666) operates "Interiors Unlimited", which sells home furnishings at retail, as a sole proprietor during the entire year. The business address is 45 Boswell Blvd., Anytown, VA 20181. His employer identification number is 36-3457896. The business code is 442200. In order to clearly show business income, Mr. Frost maintains an inventory at cost, and he uses the accrual method of accounting for his sales and purchases. Interiors Unlimited does not manufacture any of the goods it sells. Total gross receipts of the business were $278,644 and returns and allowances amounted to $1,535. The business books showed the following information:

Inventory at beginning of year (valued at cost) . . . . . . $45,000

Merchandise purchased . . . . . . . . . . . . . . . . . . . . . . . . 97,000

Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . 22,000

Truck expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550

Depreciation (to be calculated - see below)

Other interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300

Rent (property) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,800

Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000

Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,451

Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,450

Utilities and telephone . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200

Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,240

Legal and accounting (includes $200 of tax preparation fees) . . . . . . . . . . . . 400

Office expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400

Meals and entertainment . . . . . . . . . . . . . . . . . . . . . . . . 1,040

Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330

The business had the following depreciable property:

Computers purchased in March 2022 - orig. cost $ 2,432

Computers purchased in 2018 (mid-quarter, third quarter) - orig. cost 7,264

Equipment purchased in 2018 (mid-quarter, fourth quarter) - orig. cost 15,275

FFE purchased in 2016 (half-year) - orig. cost 10,500

Using, as applicable, Section 179, Bonus Depreciation and MACRS calculate the depreciation for 2022 for Interiors Unlimited to be reported on Schedule C of Jack Frost's 2022 Tax Return

Complete the Schedule C to report the net profit or loss for Interiors Unlimited, including
Calculating the depreciation for Interiors Unlimited for 2022.

Reference no: EM133412673

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