Problem 5-13 Qualified Retirement Plans Including Section 401(K) Plans (LO 5.4) During 2020, Jill, age 39, participated in a Section 401(k) plan which provides for maximum employee contributions of 12%. Jill's salary was $80,000 for the year. Jill elects to make the maximum contribution. What is Jill's maximum tax-deferred contribution to the plan for the year

Jill's maximum tax-deferred contribution to the plan for the year is $9,600.

Explanation:

Jill's maximum tax-deferred contribution to the plan for the year can be calculated as follows:

Maximum employee contributions provided for by Section 401(k) plan = 12%

Jill's salary = $80,000

Since Jill elects to make the maximum contribution, we have:

Jill's maximum tax-deferred contribution = Maximum employee contributions provided for by Section 401(k) plan * Jill's salary = 12% * $80,000 = $9,600

Therefore, Jill's maximum tax-deferred contribution to the plan for the year is $9,600.

Samz Off-Road Rage

On an income statement, the following will be found as indicated below:

The Rent, Utilities, Business License, Security System, Cleaning Service, Accounting Service,  and Payroll will be found on the expenses side.  They are deducted from gross profit to get the net profit or income.

The  Supplies and Display Materials will be found on Cost of Goods Sold side.  They used to determine the gross profit.

Explanation:

Expenses relate to costs incurred for running a business.  Examples are rent and workers' salaries and wages.  In order to keep a business open to customers, they must be incurred.

By their nature, they are fixed costs to a large extent.  With the matching principle, they must be subtracted from net revenue in order to determine the period's operating profit.

All store supplies and display materials relate directly to the cost of goods sold.  They are costs incurred in order to have goods available for sale.  They determine the gross profit of an entity.