Problem 9 Before considering depreciation expense, Ali Corp had income of $170,000. Depreciation for financial reporting...

Problem 9 Before considering depreciation expense, Ali Corp had income of $170,000. Depreciation for financial reporting was 10,000 and tax depreciation was $25,000.

Prepare the FSET entry to record the income tax expense, payable, and deferred tax amount, if any. Assume a 40% tax rate.

Problem 10 EZ, Inc., reports pretax accounting income of $400,000, but due to a single temporary difference, taxable income is $500,000. At the beginning of the year, no temporary differences existed. EZ is subject to a tax rate of 40%.

Determine the impact on the accounting equation for EZ's income taxes.

Expert Solution

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.

Problem	Impact	Account	Debit	Credit	Working

9	Expense	Income Tax Expense	$ 64,000		(170000-10000)*40%
	Liabilities	Defererred Tax Liabilities		$ 6,000	(2000-10000)*40%
	Liabilities	Income Tax payable		$ 58,000	(170000-25000)*40%


10	Expense	Income Tax Expense	$ 160,000		400000*40%
	Assets	Defererred Tax Assets	$ 40,000		(500000-400000)*40%
	Liabilities	Income Tax payable		$ 200,000	500000*40%

ekkarill92 answered 1 year ago

Earnings before depreciation, interest, and taxes $1,600,000 Depreciation expense

Earnings before depreciation, interest, and taxes $1,600,000 Depreciation expense $100,000 Tax rate 40% Interest expense $10,000 Common dividends paid $200,000 Number of shares of common stock outstanding $500,000 a. 1.79 b. 1.39 c. 3.20 d. 1.20

Which one of the following bases of income and expense recognition is acceptable for Financial reporting...

Which one of the following bases of income and expense recognition is acceptable for Financial reporting under current GAAP? A. Cash basis B. Modified cash basis C. Accrual basis D. All of these Under the cash basis, expenses are recognized when A. They are paid by the entity B. The costs expire or as assets are used C. The revenue are recognized that the expenses helped to produce D. Cash is received from revenues that the expenses helped to produce...

a. Titan Inc had net income of $300,000, Depreciation expense of $35,000, gain on sale of...

a. Titan Inc had net income of $300,000, Depreciation expense of $35,000, gain on sale of equipment $11,000, and provided the following information for 2029: 2019 2018 Accounts receivable 52,000 18,000 Prepaid insurance 20,000 30,000 Accounts payable 35,000 11,000 Taxes payable 8,000 29,000 Wages payable 49,000 5,000 Using the indirect method, how much was Titan's net cash provided by operating activities? b. On April 1, 2017, Titan Inc. 6% annual interest-bearing note payable for $60,000. The note has a maturity...

How many of the following depreciation methods result in reporting larger depreciation expense in the early...

How many of the following depreciation methods result in reporting larger depreciation expense in the early years of asset ownership than is reported in the later years?

Kara Fashions uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Three...

Kara Fashions uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Three years after its purchase, one of Kara’s buildings has a book value of $720,000 and a tax basis of $540,000. There were no other temporary differences and no permanent differences. Taxable income was $6 million and Kara’s tax rate is 25%. What is the deferred tax liability to be reported in the balance sheet? Assuming that the deferred tax liability balance was $28,000 the...

1) A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts...

1) A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method? a.$224,000 b.$284,000 c.$217,000 d.$305,000 2) The budgeted finished goods inventory and cost...

The Moore Corporation had operating income (EBIT) of $800,000. The company's depreciation expense is $240,000. Moore...

The Moore Corporation had operating income (EBIT) of $800,000. The company's depreciation expense is $240,000. Moore is 100% equity financed, and it faces a 35% tax rate. What is the company's net income? $ Assuming no changes to any of the Balance Sheet accounts, what is its net cash flow? $

A company had net income of $210000. Depreciation expense is $27000. During the year, Accounts Receivable...

A company had net income of $210000. Depreciation expense is $27000. During the year, Accounts Receivable and Inventory increased $17000 and $42000, respectively. Prepaid Expenses and Accounts Payable decreased $5000 and $6000, respectively. There was also a loss on the sale of equipment of $2000. How much cash was provided by operating activities? $179000 $241000 $271000 $175000

A company had net income of $226,932. Depreciation expense was $25,699. During the year, accounts receivable...

A company had net income of $226,932. Depreciation expense was $25,699. During the year, accounts receivable and inventory increased by $15,649 and $27,550, respectively. Prepaid expenses and accounts payable decreased by $3,313 and $6,060, respectively. There was also a loss on the sale of equipment of $6,825. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?

he Major Corporation had a net income of $100,000 for 2019. 2019 Depreciation Expense is $88,000....

he Major Corporation had a net income of $100,000 for 2019. 2019 Depreciation Expense is $88,000. The changes in current assets and liabilities during 2019 are as follows: Accounts Receivable decrease $55,000 , Inventories increase $78,000 , Prepaid Expenses increased $5,000, Accounts Payable decreased $67,000, and Accrued Liabilities increased $57,000 Calculate the cash flow from operating activities for 2019. Show your calculations.

Question