Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $100,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 45% of cost in 2018, 30% in 2019, and 25% in 2020. Pretax accounting income for 2018 was $580,000, which includes interest revenue of $80,000 from municipal bonds. The enacted tax rate is 40%.

Assuming no differences between accounting income and taxable income other than those described above:

Required:
1. Complete the following table given below and prepare the journal entry to record income taxes in 2018.
2. What is Southern Atlantic’s 2018 net income?

On January 2, 2018, Baltimore Company purchased 18,000 shares of the stock of Towson Company at $10 per share. Baltimore obtained significant influence as the purchase represents a 40% ownership stake in Towson Company. On August 1, 2018, Towson Company paid cash dividends of $19,000. Baltimore Company intended this investment to a long-term investment. On December 31, 2018, Towson Company reported $50,000 of net income for FY 2018. Additionally, the current market price for Towson Company's stock increased to $26 per share at the end of the year. Use this information to determine, how much Baltimore Company should report for its investment in Towson Company on December 31, 2018. (Round to the nearest dollar.)

On January 2, 2018, Baltimore Company purchased 7,000 shares of the stock of Towson Company at $13 per share. Baltimore did NOT obtain significant influence as the purchase represents a 10% ownership stake in Towson Company. On August 1, 2018, Towson Company paid cash dividends of $25,000. Baltimore Company intended this investment to a long-term investment. On December 31, 2018, Towson Company reported $60,000 of net income for FY 2018. Additionally, the current market price for Towson Company's stock increased to $26 per share at the end of the year. Use this information to determine, how much Baltimore Company should report for its investment in Towson Company on December 31, 2018. (Round to the nearest dollar.)

Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2018, 30% in 2019, and 20% in 2020. Pretax accounting income for 2018 was $260,000, which includes interest revenue of $30,000 from municipal bonds. The enacted tax rate is 30%.

Assuming no differences between accounting income and taxable income other than those described above:

Required:
1. Complete the following table given below and prepare the journal entry to record income taxes in 2018.
2. What is Southern Atlantic’s 2018 net income?
  

Online Storage Inc. reported pretax accounting income in 2018, 2019, and 2020 of $40 million, $70 million, and $75 million, respectively. The 2018 income statement does not include $15 million of revenue from cloud storage subscriptions received that year for one- and two-year subscriptions. The subscription revenue is reported for tax purposes in 2018. The revenue will be recognized in 2019 ($5 million) and 2020 ($10 million). The income tax rate is 20% each year. At the end of 2018, Management determines that it’s more likely than not that 1/3 of the deferred tax asset ultimately will not be realized. Required: Prepare a compound journal entry to record the income tax expense for the year 2018. Remember to account for any potential valuation allowance.

On 1 Oct 2017, Weez Ltd entered into a mortgage loan. The amount borrowed was $458,800 at 12% per annum, with $40,000--part interest, part principal--repayable every six months for ten years, beginning with the payment due 1 April 2018. The company has an annual accounting period ending 28 February.

Instructions:

Without narration, prepare a) the AJE on 28 Feb 2018, b) the journal entry for the $40,000 payment on 1 April 1, 2018, and c) the journal entry for the second $40,000 payment on 1 October 2018. Round to two decimal places.

Prepare the liability section of the balance sheet as at 28 February 2018.

What is the total interest expense to be recognised over the ten year term of the loan?

The Bradford Company issued 14% bonds, dated January 1, with a face amount of $89 million on January 1, 2018. The bonds mature on December 31, 2027 (10 years). For bonds of similar risk and maturity, the market yield is 16%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Determine the price of the bonds at January 1, 2018.
2. to 4. Prepare the journal entry to record their issuance by The Bradford Company on January 1, 2018, interest on June 30, 2018 and interest on December 31, 2018 (at the effective rate).

During 2018, Angel Corporation had 900,000 shares of common stock and 50,000 shares of 6% preferred stock outstanding. The preferred stock is not convertible. Angel declared and paid cash dividends of $300,000 and $150,000 to common and preferred shareholders, respectively, during 2018. On January 1, 2017, Angel issued $2,000,000 of convertible 5% bonds at face value. Each $1,000 bond is convertible into 10 common shares. Angels net income for the year ended December 31, 2018, was $6 million. The income tax rate is 20%. What is Angel's basic earnings per share for 2018, rounded to the nearest cent? What will Angel report as diluted earnings per share for 2018, rounded to the nearest cent?

The Bradford Company issued 12% bonds, dated January 1, with a face amount of $96 million on January 1, 2018. The bonds mature on December 31, 2027 (10 years). For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds at January 1, 2018. 2. to 4. Prepare the journal entry to record their issuance by The Bradford Company on January 1, 2018, interest on June 30, 2018 and interest on December 31, 2018 (at the effective rate).