The Brock\'s Business had the following income and expenses: 2. Assume that West
ID: 2670452 • Letter: T
Question
The Brock's Business had the following income and expenses:
2. Assume that Westchester Wood is a HOBBY
a. Identify ezpenditures (ignore any that would be capitalized) that are allowed and to what extent and
b. Identify which expenditures are Tier 1, Tier 2, or Tier 3 expenses.
1. Receipts from sales of unfinished furniture $65,000
2. Receipts from services to stain/paint furniture $12,000,
3. Receipts from sales of paint and stain products $1,000
4. Cost of furniture $38,000
5. Costs of stains and paints $2500
6. Depreciation expense on building $7000
7. Advertising $1,200
8. Advertising $200
9. Auto Expenses(delivering furniture) $900
10. Loading Dock (new) $22,000
Explanation / Answer
T1 is Capital Exp T2 is Revenue exp T3 is Owners drawings A - Allowed D- Not allowed 1. Receipts from sales of unfinished furniture $65,000 - T2, A 2. Receipts from services to stain/paint furniture $12,000, - T2, A 3. Receipts from sales of paint and stain products $1,000 - T2, A 4. Cost of furniture $38,000 - T2,, A 5. Costs of stains and paints $2500 - T2, A 6. Depreciation expense on building $7000 - T2, A 7. Advertising $1,200 - T2, A 8. Advertising $200 - T2, A 9. Auto Expenses(delivering furniture) $900 - T2, A 10. Loading Dock (new) $22,000 - T1, A
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