A14. (Cost of trade credit) Calculate the cost of skipping the discount and paying at the end of the net period for each of the following credit terms. Calculate the APR and the APY.
a. 5/10, net 50
b. 3/15, net 30
c. 2/10, net 20
Click here for the solution: Calculate the cost of skipping the discount and paying at the end of the net period for each of the following credit terms
Showing posts with label end. Show all posts
Showing posts with label end. Show all posts
Wednesday, April 13, 2016
Wednesday, November 11, 2015
South Carolina Corporation has one temporary difference at the end of 2008 that will reverse and cause taxable amounts
E19-1 (One Temporary difference, Future Taxable Amounts, One Rate, No Beginning Deferred Taxes) South Carolina Corporation has one temporary difference at the end of 2008 that will reverse and cause taxable amounts of $55,000 in 2009, $60,000 in 2010, and $65,000 in 2011. South Carolina's pretax financial income for 2008 is $300,000 and the tax rate us 30% for all years. There are no deferred taxes at the beginning of 2008.
Instructions
a.) Compute taxable income and income taxes payable for 20008.
b.) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2008.
c.) Prepare the income tax expense section of the income statement for 2008, beginning with the line "Income before income taxes"
Click here for the solution: South Carolina Corporation has one temporary difference at the end of 2008 that will reverse and cause taxable amounts
Instructions
a.) Compute taxable income and income taxes payable for 20008.
b.) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2008.
c.) Prepare the income tax expense section of the income statement for 2008, beginning with the line "Income before income taxes"
Click here for the solution: South Carolina Corporation has one temporary difference at the end of 2008 that will reverse and cause taxable amounts
Tuesday, November 10, 2015
Peter M. Dell Co. purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time
E22-11 (Change in Estimate—Depreciation) Peter M. Dell Co. purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2008, it is determined that the total estimated life should be 15 years with a salvage value of $5,000 at the end of that time.
Instructions
(a) Prepare the entry (if any) to correct the prior years’ depreciation.
(b) Prepare the entry to record depreciation for 2008.
Click here for the solution: Peter M. Dell Co. purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time
Instructions
(a) Prepare the entry (if any) to correct the prior years’ depreciation.
(b) Prepare the entry to record depreciation for 2008.
Click here for the solution: Peter M. Dell Co. purchased equipment for $510,000 which was estimated to have a useful life of 10 years with a salvage value of $10,000 at the end of that time
Wednesday, October 14, 2015
Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007 (the end of its fiscal year)
P2-3A Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007 (the end of its fiscal year).
BYTE REPAIR SERVICE, INC.
Trial Balance
December 31, 2007
Cash $8,000
Accounts Receivable 15,000
Parts Inventory 13,000
Prepaid Rent 3,000
Shop Equipment 21,000
Accounts Payable $19,000
Common Stock 30,000
Retained Earnings 11,000
$60,000 $60,000
Summarized transactions for January 2008 were as follows:
1. Advertising costs, paid in cash, $1,000.
2. Additional repair parts inventory acquired on account $4,000.
3. Miscellaneous expenses, paid in cash, $2,000.
4. Cash collected from customers in payment of accounts receivable $14,000.
5. Cash paid to creditors for accounts payable due $15,000.
6. Repair parts used during January $4,000. (Hint: Debit this to Repair Parts Expense.)
7. Repair services performed during January: for cash $6,000; on account $9,000.
8. Wages for January, paid in cash, $3,000.
9. Dividends paid in January were $3,000.
Instructions
(a) Prepare journal entries to record each of the January transactions.
(b) Open T accounts for each of the accounts listed in the trial balance, and enter the opening balances for 2008. Post the journal entries to the accounts in the ledger.
(c) Prepare a trial balance as of January 31, 2008.
Click here for the solution: Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007
BYTE REPAIR SERVICE, INC.
Trial Balance
December 31, 2007
Cash $8,000
Accounts Receivable 15,000
Parts Inventory 13,000
Prepaid Rent 3,000
Shop Equipment 21,000
Accounts Payable $19,000
Common Stock 30,000
Retained Earnings 11,000
$60,000 $60,000
Summarized transactions for January 2008 were as follows:
1. Advertising costs, paid in cash, $1,000.
2. Additional repair parts inventory acquired on account $4,000.
3. Miscellaneous expenses, paid in cash, $2,000.
4. Cash collected from customers in payment of accounts receivable $14,000.
5. Cash paid to creditors for accounts payable due $15,000.
6. Repair parts used during January $4,000. (Hint: Debit this to Repair Parts Expense.)
7. Repair services performed during January: for cash $6,000; on account $9,000.
8. Wages for January, paid in cash, $3,000.
9. Dividends paid in January were $3,000.
Instructions
(a) Prepare journal entries to record each of the January transactions.
(b) Open T accounts for each of the accounts listed in the trial balance, and enter the opening balances for 2008. Post the journal entries to the accounts in the ledger.
(c) Prepare a trial balance as of January 31, 2008.
Click here for the solution: Jack Shellenkamp owns and manages a computer repair service, which had the following trial balance on December 31, 2007
The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations
E2-10 The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations.
Cash No. 101
4/1 15,000 4/15 600
4/12 900 4/25 1,500
4/29 400
4/30 1,000
Accounts Receivable No. 112
4/7 3,200 4/29 400
Supplies No. 126
4/4 1,800
Accounts Payable No. 201
4/25 1,500 4/4 1,800
Unearned Revenue No. 205
4/30 1,000
Common Stock No. 311
4/1 15,000
Service Revenue No. 400
4/7 3,200
4/12 900
Salaries Expense No. 726
4/15 600
Instructions
(a) Prepare the complete general journal from which the postings to Cash were made.
(b) Prepare a trial balance at April 30, 2008.
Click here for the solution: The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations
Cash No. 101
4/1 15,000 4/15 600
4/12 900 4/25 1,500
4/29 400
4/30 1,000
Accounts Receivable No. 112
4/7 3,200 4/29 400
Supplies No. 126
4/4 1,800
Accounts Payable No. 201
4/25 1,500 4/4 1,800
Unearned Revenue No. 205
4/30 1,000
Common Stock No. 311
4/1 15,000
Service Revenue No. 400
4/7 3,200
4/12 900
Salaries Expense No. 726
4/15 600
Instructions
(a) Prepare the complete general journal from which the postings to Cash were made.
(b) Prepare a trial balance at April 30, 2008.
Click here for the solution: The T accounts below summarize the ledger of Simon Landscaping Company at the end of the first month of operations
The trial balances before and after adjustment for Garcia Company at the end of its fiscal year is presented below
E3-13 The trial balances before and after adjustment for Garcia Company at the end of its fiscal year is presented below.
GARCIA COMPANY
Trial Balance
August 31, 2008
Before Adjustment After Adjustment
Dr. Cr. Dr. Cr.
Cash $10,400 $10,400
Accounts Receivable 8,800 9,800
Office Supplies 2,300 700
Prepaid Insurance 4,000 2,500
Office Equipment 14,000 14,000
Accumulated Depreciation–Office Equipment $3,600 $4,500
Accounts Payable 5,800 5,800
Salaries Payable -0- 1,100
Unearned Rent 1,500 600
Common Stock 10,000 10,000
Retained Earnings 5,600 5,600
Service Revenue 34,000 35,000
Rent Revenue 11,000 11,900
Salaries Expense 17,000 18,100
Office Supplies Expense -0- 1,600
Rent Expense 15,000 15,000
Insurance Expense -0- 1,500
Depreciation Expense -0- 900
$71,500 $71,500 $74,500 $74,500
Instructions
Prepare the adjusting entries that were made.
Click here for the solution: The trial balances before and after adjustment for Garcia Company at the end of its fiscal year is presented below
GARCIA COMPANY
Trial Balance
August 31, 2008
Before Adjustment After Adjustment
Dr. Cr. Dr. Cr.
Cash $10,400 $10,400
Accounts Receivable 8,800 9,800
Office Supplies 2,300 700
Prepaid Insurance 4,000 2,500
Office Equipment 14,000 14,000
Accumulated Depreciation–Office Equipment $3,600 $4,500
Accounts Payable 5,800 5,800
Salaries Payable -0- 1,100
Unearned Rent 1,500 600
Common Stock 10,000 10,000
Retained Earnings 5,600 5,600
Service Revenue 34,000 35,000
Rent Revenue 11,000 11,900
Salaries Expense 17,000 18,100
Office Supplies Expense -0- 1,600
Rent Expense 15,000 15,000
Insurance Expense -0- 1,500
Depreciation Expense -0- 900
$71,500 $71,500 $74,500 $74,500
Instructions
Prepare the adjusting entries that were made.
Click here for the solution: The trial balances before and after adjustment for Garcia Company at the end of its fiscal year is presented below
Waren Sports Supply, Year-End Worksheet, December 31, 2009
WAREN SPORTS SUPPLY, YEAR-END WORKSHEET, DECEMBER 31, 2009
TRANSACTIONS LIST A
(Accounts with no activity in this worksheet are excluded in this solution.)
Preparation of Unadjusted Trial Balance on worksheet
Check Figures:
Post Closing Trial Balance, December 31, 2008
-Cash 11,025.19
-Accounts Receivable 11,065
Adjusted Trial Balance, December 31, 2009
-Cash 103,141.67
-Accounts Receivable 47,421
Click here for the solution: Waren Sports Supply, Year-End Worksheet, December 31, 2009
TRANSACTIONS LIST A
(Accounts with no activity in this worksheet are excluded in this solution.)
Preparation of Unadjusted Trial Balance on worksheet
Check Figures:
Post Closing Trial Balance, December 31, 2008
-Cash 11,025.19
-Accounts Receivable 11,065
Adjusted Trial Balance, December 31, 2009
-Cash 103,141.67
-Accounts Receivable 47,421
Click here for the solution: Waren Sports Supply, Year-End Worksheet, December 31, 2009
Sunday, September 27, 2015
At the end of its first year of operations on December 31, 2010, CNU Company's accounts show the following
P12-2A At the end of its first year of operations on December 31, 2010, CNU Company's accounts show the following.
Partner Drawings Capital
Reese Caplin 23,000 48,000
Phyllis Newell 14,000 30,000
Betty Uhrich 10,000 25,000
The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2010 has not been closed to the partners' capital accounts.
a. Journalize the entry to record the division of net income for the year 2010 under each of the following independent assumptions.
1. Net income is $30,000. Income is shared 6 : 3 : 1.
2. Net income is $37,000. Caplin and Newell are given salary allowances of $15,000 and $10,000, respectively. The remainder is shared equally.
3. Net income is $19,000. Each partner is allowed interest of 10% on beginning capital balances. Caplin is given a $12,000 salary allowance. The remainder is shared equally.
b. Complete the schedule showing the division of net income under assumption (3) above.
c. Complete the partners' capital statement for the year under assumption (3) above.
Click here for the solution: At the end of its first year of operations on December 31, 2010, CNU Company's accounts show the following
Partner Drawings Capital
Reese Caplin 23,000 48,000
Phyllis Newell 14,000 30,000
Betty Uhrich 10,000 25,000
The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2010 has not been closed to the partners' capital accounts.
a. Journalize the entry to record the division of net income for the year 2010 under each of the following independent assumptions.
1. Net income is $30,000. Income is shared 6 : 3 : 1.
2. Net income is $37,000. Caplin and Newell are given salary allowances of $15,000 and $10,000, respectively. The remainder is shared equally.
3. Net income is $19,000. Each partner is allowed interest of 10% on beginning capital balances. Caplin is given a $12,000 salary allowance. The remainder is shared equally.
b. Complete the schedule showing the division of net income under assumption (3) above.
c. Complete the partners' capital statement for the year under assumption (3) above.
Click here for the solution: At the end of its first year of operations on December 31, 2010, CNU Company's accounts show the following
Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken
P9-4 (Gross Profit Method) Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following.
Inventory (beginning) $ 80,000 Sales $415,000
Purchases 290,000 Sales returns 21,000
Purchase returns 28,000 Gross profit % based on net selling price 35%
Merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a salvage value of $8,150. The company does not carry fire insurance on its inventory.
Instructions
Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)
Click here for the solution: Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken
Inventory (beginning) $ 80,000 Sales $415,000
Purchases 290,000 Sales returns 21,000
Purchase returns 28,000 Gross profit % based on net selling price 35%
Merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a salvage value of $8,150. The company does not carry fire insurance on its inventory.
Instructions
Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)
Click here for the solution: Eastman Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken
Thursday, September 10, 2015
The amounts of the assets and liabilities of Padre Travel Service as of June 30, 2010, the end of the current year
The amounts of the assets and liabilities of Padre Travel Service as of June 30, 2010, the end of the current year, and its revenue and expenses for the year are listed below. The retained earnings were $210,000, and the capital stock was $90,000 as of July 1, 2009, the beginning of the current year. Dividends of $180,000 were paid during the current year.
Accounts payable $71,500
Accounts receivable 188,100
Cash 318,300
Fees earned 1,579,200
Miscellaneous expense 16,000
Rent expense 226,800
Supplies 20,100
Supplies expense 42,600
Taxes expense 33,600
Utilities expense 135,000
Wages expense 790,200
Instructions
1. Prepare an income statement for the current year ended June 30, 2010.
2. Prepare a retained earnings statement for the current year ended June 30, 2010.
3. Prepare a balance sheet as of June 30, 2010.
Click here for the solution: The amounts of the assets and liabilities of Padre Travel Service as of June 30, 2010, the end of the current year
Accounts payable $71,500
Accounts receivable 188,100
Cash 318,300
Fees earned 1,579,200
Miscellaneous expense 16,000
Rent expense 226,800
Supplies 20,100
Supplies expense 42,600
Taxes expense 33,600
Utilities expense 135,000
Wages expense 790,200
Instructions
1. Prepare an income statement for the current year ended June 30, 2010.
2. Prepare a retained earnings statement for the current year ended June 30, 2010.
3. Prepare a balance sheet as of June 30, 2010.
Click here for the solution: The amounts of the assets and liabilities of Padre Travel Service as of June 30, 2010, the end of the current year
Wednesday, September 9, 2015
You are provided with the following information for Kiley Enterprises, effective as of its April 30, 2010, year-end
P2-3A You are provided with the following information for Kiley Enterprises, effective as of its April 30, 2010, year-end.
Accounts payable $834
Accounts receivable 810
Building, net of accumulated depreciation 1,537
Cash 1,270
Common stock 900
Cost of goods sold 990
Current portion of long-term debt 450
Depreciation expense 335
Dividends paid during the year 325
Equipment, net of accumulated depreciation 1,220
Income tax expense 165
Income taxes payable 135
Interest expense 400
Inventories 967
Land 2,100
Long-term debt 3,500
Prepaid expenses 12
Retained earnings, beginning 1,600
Revenues 4,600
Selling expenses 210
Short-term investments 1,200
Wages expense 700
Wages payable 222
(a) Complete income statement and a retained earnings statement for Kiley Enterprises for the year ended April 30, 2010.
(b) Complete the classified balance sheet for Kiley Enterprises as of April 30, 2010.
Click here for the solution: You are provided with the following information for Kiley Enterprises, effective as of its April 30, 2010, year-end
Accounts payable $834
Accounts receivable 810
Building, net of accumulated depreciation 1,537
Cash 1,270
Common stock 900
Cost of goods sold 990
Current portion of long-term debt 450
Depreciation expense 335
Dividends paid during the year 325
Equipment, net of accumulated depreciation 1,220
Income tax expense 165
Income taxes payable 135
Interest expense 400
Inventories 967
Land 2,100
Long-term debt 3,500
Prepaid expenses 12
Retained earnings, beginning 1,600
Revenues 4,600
Selling expenses 210
Short-term investments 1,200
Wages expense 700
Wages payable 222
(a) Complete income statement and a retained earnings statement for Kiley Enterprises for the year ended April 30, 2010.
(b) Complete the classified balance sheet for Kiley Enterprises as of April 30, 2010.
Click here for the solution: You are provided with the following information for Kiley Enterprises, effective as of its April 30, 2010, year-end
Sunday, September 6, 2015
Xcaliber manufactures high-end flatware
Xcaliber manufactures high-end flatware. One of the crucial processes in flatware production is polishing. The company normally operates three polishing machines to maintain pace with the upstream and downstream production operations. However, one to the polishing machines broke yesterday, and management has been informed that the machine will not be back in operation until repairs are completed in three weeks. Two machines cannot keep the pace with the volume of products flowing to the polishing operation. You have been hired as a consultant to improve the throughput of the polishing operation. Discuss the tactics you would recommend Xcaliber to employ for handling the capacity limitation.
Click here for the solution: Xcaliber manufactures high-end flatware
Click here for the solution: Xcaliber manufactures high-end flatware
Wednesday, September 2, 2015
Livetree Ltd. Is developing a detailed financial plan for next year and expects to have the following fixed asset accounts by the end of this year ($000)
Livetree Ltd. Is developing a detailed financial plan for next year and expects to have the following fixed asset accounts by the end of this year ($000).
Gross $45,789
Accumulated Depreciation (26,328)
Net Fixed Assets $19,461
The capital plan already completed calls for expenditures of $7,042,000 on new equipment next year, which will be depreciated straight line over a 10-year period without a half-year convention. Assets currently on the books will depreciate by $4,258,000 next year. Develop Livetree’s ending fixed asset balances for the planned year.
Click here for the solution: Livetree Ltd. Is developing a detailed financial plan for next year and expects to have the following fixed asset accounts by the end of this year ($000)
Gross $45,789
Accumulated Depreciation (26,328)
Net Fixed Assets $19,461
The capital plan already completed calls for expenditures of $7,042,000 on new equipment next year, which will be depreciated straight line over a 10-year period without a half-year convention. Assets currently on the books will depreciate by $4,258,000 next year. Develop Livetree’s ending fixed asset balances for the planned year.
Click here for the solution: Livetree Ltd. Is developing a detailed financial plan for next year and expects to have the following fixed asset accounts by the end of this year ($000)
Friday, August 14, 2015
Following are components of the M1 money supply at the end of last year
4. Following are components of the M1 money supply at the end of last year. What will be the size of the M1 money supply at the end of next year if currency grows by 10 percent, demand deposits grow by 5 percent, other checkable deposits grow by 8 percent, and the
amount of traveler’s checks stays the same?
Currency $700 billion
Demand deposits $300 billion
Other checkable deposits $300 billion
Traveler’s checks $10 billion
Click here for the solution: Following are components of the M1 money supply at the end of last year
amount of traveler’s checks stays the same?
Currency $700 billion
Demand deposits $300 billion
Other checkable deposits $300 billion
Traveler’s checks $10 billion
Click here for the solution: Following are components of the M1 money supply at the end of last year
Thursday, August 13, 2015
The December 31, 2011, year-end inventory balance of the Raymond Corporation is $210,000
E 8-7 Goods in transit; consignment
The December 31, 2011, year-end inventory balance of the Raymond Corporation is $210,000. You have been asked to review the following transactions to determine if they have been correctly recorded.
1. Goods shipped to Raymond f.o.b. destination on December 26, 2011, were received on January 2, 2012. The invoice cost of $30,000 is included in the preliminary inventory balance.
2. At year-end, Raymond held $14,000 of merchandise on consignment from the Harrison Company. This merchandise is included in the preliminary inventory balance.
3. On December 29, merchandise costing $6,000 was shipped to a customer f.o.b. shipping point and arrived at the customer's location on January 3, 2012. The merchandise is not included in the preliminary inventory balance.
4. At year-end, Raymond had merchandise costing $15,000 on consignment with the Joclyn Corporation. The merchandise is not included in the preliminary inventory balance.
Required:
Determine the correct inventory amount to be reported in Raymond's 2011 balance sheet.
Click here for the solution: The December 31, 2011, year-end inventory balance of the Raymond Corporation is $210,000
The December 31, 2011, year-end inventory balance of the Raymond Corporation is $210,000. You have been asked to review the following transactions to determine if they have been correctly recorded.
1. Goods shipped to Raymond f.o.b. destination on December 26, 2011, were received on January 2, 2012. The invoice cost of $30,000 is included in the preliminary inventory balance.
2. At year-end, Raymond held $14,000 of merchandise on consignment from the Harrison Company. This merchandise is included in the preliminary inventory balance.
3. On December 29, merchandise costing $6,000 was shipped to a customer f.o.b. shipping point and arrived at the customer's location on January 3, 2012. The merchandise is not included in the preliminary inventory balance.
4. At year-end, Raymond had merchandise costing $15,000 on consignment with the Joclyn Corporation. The merchandise is not included in the preliminary inventory balance.
Required:
Determine the correct inventory amount to be reported in Raymond's 2011 balance sheet.
Click here for the solution: The December 31, 2011, year-end inventory balance of the Raymond Corporation is $210,000
Francis Equipment Co. closes its books regularly on December 31, but at the end of 2010 it held its cash book open
P7-1 (Determine Proper Cash Balance) Francis Equipment Co. closes its books regularly on December 31, but at the end of 2010 it held its cash book open so that a more favorable balance sheet could be prepared for credit purposes. Cash receipts and disbursements for the first 10 days of January were recorded as December transactions. The information is given on the next page.
1. January cash receipts recorded in the December cash book totaled $45,640, of which $28,000 represents cash sales, and $17,640 represents collections on account for which cash discounts of $360 were given.
2. January cash disbursements recorded in the December check register liquidated accounts payable of $22,450 on which discounts of $250 were taken.
3. The ledger has not been closed for 2010.
4. The amount shown as inventory was determined by physical count on December 31, 2010.
The company uses the periodic method of inventory.
Instructions
(a) Prepare any entries you consider necessary to correct Francis's accounts at December 31.
(b) To what extent was Francis Equipment Co. able to show a more favorable balance sheet at December 31 by holding its cash book open? (Compute working capital and the current ratio.) Assume that the balance sheet that was prepared by the company showed the following amounts:
Dr. Cr.
Cash $39,000
Receivables 42,000
Inventories 67,000
Accounts payable $45,000
Other current liabilities 14,200
Click here for the solution: Francis Equipment Co. closes its books regularly on December 31, but at the end of 2010 it held its cash book open
1. January cash receipts recorded in the December cash book totaled $45,640, of which $28,000 represents cash sales, and $17,640 represents collections on account for which cash discounts of $360 were given.
2. January cash disbursements recorded in the December check register liquidated accounts payable of $22,450 on which discounts of $250 were taken.
3. The ledger has not been closed for 2010.
4. The amount shown as inventory was determined by physical count on December 31, 2010.
The company uses the periodic method of inventory.
Instructions
(a) Prepare any entries you consider necessary to correct Francis's accounts at December 31.
(b) To what extent was Francis Equipment Co. able to show a more favorable balance sheet at December 31 by holding its cash book open? (Compute working capital and the current ratio.) Assume that the balance sheet that was prepared by the company showed the following amounts:
Dr. Cr.
Cash $39,000
Receivables 42,000
Inventories 67,000
Accounts payable $45,000
Other current liabilities 14,200
Click here for the solution: Francis Equipment Co. closes its books regularly on December 31, but at the end of 2010 it held its cash book open
At the end of 2010, Payne Industries had a deferred tax asset account with a balance of $30 million attributable
E 16-10 Deferred tax asset; taxable income given; valuation allowance
At the end of 2010, Payne Industries had a deferred tax asset account with a balance of $30 million attributable to a temporary book–tax difference of $75 million in a liability for estimated expenses. At the end of 2011, the temporary difference is $70 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2011 is $180 million and the tax rate is 40%.
Required:
1. Prepare the journal entry(s) to record Payne's income taxes for 2011, assuming it is more likely than not that the deferred tax asset will be realized.
2. Prepare the journal entry(s) to record Payne's income taxes for 2011, assuming it is more likely than not that one-half of the deferred tax asset will ultimately be realized.
Click here for the solution: At the end of 2010, Payne Industries had a deferred tax asset account with a balance of $30 million attributable
At the end of 2010, Payne Industries had a deferred tax asset account with a balance of $30 million attributable to a temporary book–tax difference of $75 million in a liability for estimated expenses. At the end of 2011, the temporary difference is $70 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2011 is $180 million and the tax rate is 40%.
Required:
1. Prepare the journal entry(s) to record Payne's income taxes for 2011, assuming it is more likely than not that the deferred tax asset will be realized.
2. Prepare the journal entry(s) to record Payne's income taxes for 2011, assuming it is more likely than not that one-half of the deferred tax asset will ultimately be realized.
Click here for the solution: At the end of 2010, Payne Industries had a deferred tax asset account with a balance of $30 million attributable
Tuesday, August 4, 2015
The following account balances relate to the stockholders’ equity accounts of Patil Corp. at year-end
P12-2A The following account balances relate to the stockholders’ equity accounts of Patil Corp. at year-end.
2012 2011
Common stock, 10,500 and 10,000 shares, respectively, for 2012 and 2011 $160,800 $140,000
Preferred stock, 5,000 shares 125,000 125,000
Retained earnings 300,000 270,000
A small stock dividend was declared and issued in 2012. The market value of the shares was $8,800. Cash dividends were $20,000 in both 2012 and 2011. The common stock has no par or stated value.
Determine cash flow effects of changes in equity accounts.
Instructions
a. What was the amount of net income reported by Patil Corp. in 2012?
b. Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2012.
c. Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.
Check: (a) Net income $58,800
Click here for the solution: The following account balances relate to the stockholders’ equity accounts of Patil Corp. at year-end
2012 2011
Common stock, 10,500 and 10,000 shares, respectively, for 2012 and 2011 $160,800 $140,000
Preferred stock, 5,000 shares 125,000 125,000
Retained earnings 300,000 270,000
A small stock dividend was declared and issued in 2012. The market value of the shares was $8,800. Cash dividends were $20,000 in both 2012 and 2011. The common stock has no par or stated value.
Determine cash flow effects of changes in equity accounts.
Instructions
a. What was the amount of net income reported by Patil Corp. in 2012?
b. Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2012.
c. Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.
Check: (a) Net income $58,800
Click here for the solution: The following account balances relate to the stockholders’ equity accounts of Patil Corp. at year-end
Monday, August 3, 2015
The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000
E8-3 The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000.
Instructions
a) If Hixson uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that fells 1.400 balance is uncollectible.
b) If allowance for doubtful accounts has a credit balance of 2,100 in the trial balance journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1 % of net sales, and (2) 10 % of accounts receivable
c) If allowance for doubtful accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.
Click here for the solution: The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000
Instructions
a) If Hixson uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that fells 1.400 balance is uncollectible.
b) If allowance for doubtful accounts has a credit balance of 2,100 in the trial balance journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1 % of net sales, and (2) 10 % of accounts receivable
c) If allowance for doubtful accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.
Click here for the solution: The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000
Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows
BE9-13 Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows: buildings $1,100,000; accumulated depreciation—buildings $650,000; goodwill $410,000; coal mine $500,000; accumulated depletion—coal mine $108,000.
Prepare a partial balance sheet of Spain Company for these items.
Click here for the solution: Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows
Prepare a partial balance sheet of Spain Company for these items.
Click here for the solution: Information related to plant assets, natural resources, and intangibles at the end of 2011 for Spain Company is as follows
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