Section III - Income Taxes (45 points)

- XYZ began business on 1/1/18. During that year, they had pre-tax financial accounting income of$96,000 and paid $800 of officer life insurance (company is the beneficiary). The accountant has determined that a truck purchased in 2018 for $25,000 will be depreciated as follows:

                                                                2018                 2019                 2020                 2021                 2022

Financial Statement $5,000 $5,000 $5,000      5,000 5,000 Tax Return $9,000 $7,000 $4,000 $ 3,000      2,000

Prepare the journal entry to record income taxes for 2018. Assume that the tax rate for 2018 and beyond is 40%.

- In 2019, XYZ had a financial accounting income of 360,000, which includes $800 of municipal income which is not taxable. In addition to the depreciation differences discussed above, the pre-tax income also includes an unrealized holding loss of $25,000 that cannot be deducted for tax purposes until the security is sold. All securities are held in a trading portfolio.

Prepare the journal entries to record income taxes for 2019. Assume that the tax rate for 2019 and beyond remains at 40%.

- In 2020, XYZ had a financial accounting income of $500,000.. In addition to the depreciationdifference discussed in 2018, $9,000 of the security loss recorded in 2019 was realized in 2020 when some of the securities were sold. Also, in 2020 XYZ adopted the installment sales method for tax purposes and $22,000 of profit recognized in 2020 will be taxable in a future year when the related receivables are collected.

Pre pare the journal entries to record income taxes for 2020. Assume that the tax rate for 2020 has been changed, effective 1/1/2020 to 30% and that the new rate is expected to remain in effect for all future years.

Arrowhead is a manufacturing company that produces only one product, an electronic chip, and has provided the following data concerning its operations in January and February 2020:

January 2020 was the company’s first month of operations. The company has theoretical capacity to produce 1,200 chips a month without impacting any fixed costs. Since maintenance of the machines needs to be performed weekly, the company has practical capacity to produce 1000 chips a month. The company uses practical capacity as its denominator capacity level when determining a rate for its FMOH. The company uses FIFO inventory method for reporting purposes. All relevant costs are presented in the chart below and all estimated costs are equal to the actual costs incurred:

January 2020 February 2020

Selling price $400 $400

Chips in beginning FG inventory 0 200

Chips produced 800 800

Chips sold 600 600

Chips in ending FG inventory 200 400

Variable costs per unit:

    Direct materials $25 $25

    Direct labor $40 $40

    Variable manufacturing overhead $15 $15

    Variable selling and administrative $ 10 $ 10

Fixed costs:

    Fixed manufacturing overhead $120,000 $120,000

    Fixed selling and administrative $30,000 $30,000

A. What is the unit product cost for February 2020 under variable costing?

B. What is the unit product cost for February 2020 under absorption costing?

C. Create a contribution format income statement for February 2020. SHOW YOUR WORK. CLEARLY LABEL ALL STEPS.

D. What is the dollar value of the adjustment for product-volume variance to cost of goods sold (CGS) under absorption costing (if any) for February 2020? Don’t forget to indicate if this adjustment increases or decreases CGS.

One amount is missing in the following trial balance of proprietary accounts, and another is missing from the trial balance of budgetary accounts of the Save Our Resources Commission of the federal government. This trial balance was prepared before budgetary accounts were adjusted, such as returning unused appropriations. The debits are not distinguished from the credits.

In completing the assignment, assume that all assets are entity assets, Fund Balance with Treasury is an intragovernmental asset, and all other assets are governmental. Also, assume that Other Appropriations Realized—2019 were zero.

Required

1. Prepare the Statement of Budgetary Resources of the Save Our Resources Commission for 2020.

I have been able to separate out the Preclosing Trial Balance into debits and credits and came up with a funds balance of $330,000 and an other appropriations of $4,913,000. The text provides a similar Statement of Budgetary Resources, but I can't seem to get it to work

The table provided is as follows (bold lines are the blanks that need to be filled in):

Budgetary Resources:

Budgetary Authority

Status of Budgetary Resources:

New Obligations & Upward Adjustments

Total Status of Budgetary Resources

Changes in Obligated Balance

Unpaid Obligations, Beginning of the Year

New Obligations & Upward Adjustments

Outlays (Disbursements)

Unpaid Obligations, End of Year

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