An audit of the books of Grinch company was conducted for the year ending December 31, 2018. In examining the books, the auditor found that certain items had been overlooked or incorrectly recorded. These items are:

1. The company purchased a copyright in early 2016 for $60,000. The bookkeeper has not amortized the copyright. The useful life at purchase was 10 years.

2. During 2018, the company sold fully depreciated equipment that originally cost $25,000 (no salvage value). The company incorrectly recorded the sale as follows:

Cash                                        3,500

                                    Equipment                               3,500

3. A $12,000 insurance premium paid on January 1, 2017, for a policy that expires on December 31, 2019, was charged to insurance expense.

4. The company failed to accrue sales commissions payable of $3,000 at the end of 2017. It was therefore expensed at the beginning of 2018.

5. Also, at December 31, 2018, Grinch decided to change the depreciation method on its office equipment from double-declining balance to straight line. The equipment had an original cost of $40,000 when purchased on January 1, 201 It has a 10-year useful life and no salvage value. Depreciation expense recorded prior to 2018 under the double-declining balance method was $19,520. Grinch has already recorded 2018 depreciation expense of $4,096 using the double-declining balance method.

Instructions:

Prepare the journal entries necessary in 2018 to correct the books, assuming the books have not been closed. Ignore all tax effects.

Please show steps

National Orthopedics Co. issued 11% bonds, dated January 1, with a face amount of $700,000 on January 1, 2018. The bonds mature on December 31, 2021 (4 years). For bonds of similar risk and maturity the market yield was 12%. 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. Prepare the journal entry to record their issuance by National on January 1, 2018.
3. Prepare an amortization schedule that determines interest at the effective rate each period.
4. Prepare the journal entry to record interest on June 30, 2018.
5. Prepare the appropriate journal entries at maturity on December 31, 2021.

Schedule table:

Prepare an amortization schedule that determines interest at the effective rate each period. (Round final answers to the nearest whole dollar.)

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except for differences in depreciation on an operational asset. The asset cost $210,000 and is depreciated for income tax purposes in the following amounts

: 2018 $ 69,300

2019 92,400

2020 31,500

2021 16,800

The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows. 2018 2019 2020 2021 Accounting income before taxes and depreciation $ 115,000 $ 135,000 $ 125,000 $ 125,000 Assume the average and marginal income tax rate for 2018 and 2019 was 30%; however, during 2019 tax legislation was passed to raise the tax rate to 40% beginning in 2020. The 40% rate remained in effect through the years 2020 and 2021. Both the accounting and income tax periods end December 31. Required: Prepare the journal entries to record income taxes for the years 2018 through 2021

1.Record 2018 income taxes.

2Record 2019

3.record 2020

4.record 2021

Note: Enter debits before credits.

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 $280,000, which includes interest revenue of $40,000 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?

Complete the following table given below to record income taxes in 2018. (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)

ournal entry worksheet

Record 2018 income taxes.

Note: Enter debits before credits.

Depreciation Methods

On January 2, 2018, Skyler, Inc. purchased a laser cutting machine to be used in the fabrication of a part for one of its key products. The machine cost $120,000, and its estimated useful life was four years or 920,000 cuttings, after which it could be sold for $5,000.

Required

a. Calculate each year’s depreciation expense for the machine's useful life under each of the following depreciation methods (round all answers to the nearest dollar):

1. Straight-line.
2. Double-declining balance.
3. Units-of-production. (Assume annual production in cuttings of 200,000; 350,000; 260,000; and 110,000.)

1. Straight-Line

2. Double-declining balance

3. Units of Production

b. Assume that the machine was purchased on July 1, 2018. Calculate each year’s depreciation expense for the machine's useful life under each of the following depreciation methods:

1. Straight-line.
2. Double-declining balance.

1. Straight-Line

2. Double-declining balance (Round answers to the nearest whole number, when appropriate.)

On July 1, 2018, Gupta Corporation bought 30% of the outstanding common stock of VB Company for $170 million cash. At the date of acquisition of the stock, VB’s net assets had a total fair value of $490 million and a book value of $220 million. Of the $270 million difference, $50 million was attributable to the appreciated value of inventory that was sold during the last half of 2018, $160 million was attributable to buildings that had a remaining depreciable life of 10 years, and $60 million related to equipment that had a remaining depreciable life of 5 years. Between July 1, 2018, and December 31, 2018, VB earned net income of $60 million and declared and paid cash dividends of $50 million.

Required:
1. Prepare all appropriate journal entries related to the investment during 2018, assuming Gupta accounts for this investment by the equity method.
2. Determine the amounts to be reported by Gupta. (amounts in millions)

The information that follows pertains to Richards Refrigeration, Inc.:

At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following:

No temporary differences existed at the beginning of 2018.

Pretax accounting income was $210 million and taxable income was $145 million for the year ended December 31, 2018. The tax rate is 30%.

Required:
1. Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2018

Complete the following table given below to record income taxes for 2018. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Negative amounts should be entered with a minus sign.)

Record 2018 Income Taxes

2. What is the 2018 net income?

Corning-Howell reported taxable income in 2018 of $140 million. At December 31, 2018, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below:

*Gains and losses taxable when investments are sold.

The total deferred tax asset and deferred tax liability amounts at January 1, 2018, were $230 million and $45 million, respectively. The enacted tax rate is 40% each year.

Required:
1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2018.
2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2018.
3. Determine the income tax payable currently for the year ended December 31, 2018.
4. Prepare the journal entry to record income taxes for 2018.

Disco-vary has two current projects it believes will be wildly popular. The first, tentatively titled BEAT, is a docudrama about musicians. Disco-vary is purchasing rights to stream seven segments for a flat cost of $15,000,000. Streaming will take place from June 2018 through May 2019. In addition to rights to these segments, the $15,000,000 payment also gives Disco-vary first rights to a second season. DDisco-vary employees value this right of first refusal at $1,000,000.

The second project is an original series about inner city basketball, HOOPS, and is developed and produced by Disco-vary. Filming began in February 2018 and costs in the first month are $6,000,000. Costs include location costs, salaries, equipment, and costs of scripts. Disco-vary anticipates that ultimate costs will be $18,000,000, and that streaming revenues will be $50,000,000. Filming is expected to wrap up in December 2018, with editing complete in 2019. RedFlix plans to stream the series in spring 2019.

Because it is a new start-up trying to attract viewers, Disco-vary is projecting a loss of $110,000,000 in 2018.   The CEO of Disco-vaty would like to treat all costs of BEAT and HOOPS as expenses in 2018 so that 2019 will be profitable.

Is it possible to account for the expenses in that 2018 year? I am under the impression that they will have a lot of expenses in 2018 but you cant say for certain the project and costs pertaining to the project will allow for no expenses in 2019.