Ajax Products, Inc., reported an excess of warranty expense over warranty deductions of $72,000 for the year ended December 31, 2020. This temporary difference will reverse in equal amounts of $24,000 in years 2021, 2022, and 2023. The enacted tax rates are as follows: 2020: 40%; 2021: 25%; 2022: 21%; 2023: 20%. The reporting for this temporary difference at December 31, 2020, would be a
Question 4 options:
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deferred tax liability of $15,840. |
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deferred tax liability of $28,800. |
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deferred tax asset of $28,800. |
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deferred tax asset of $15,840. |
In: Accounting
Creprie Ltd acquired all the shares in Bretonne Ltd on 30 June 2020. At the date of acquisition Bretonne Ltd had a dividend payable of $42,000. The shares are acquired cumulative div. The dividend is paid on 8 July 2020. Which of the following statements is correct?
As Creperie Ltd does not receive the dividend when it is paid, no consolidation adjusting entry is required to eliminate the dividend payable and dividend receivable account at the date of acquisition. | ||
As Creprie Ltd receives the dividend when it is paid, no consolidation entries are required to eliminate dividend payable and dividend receivable at 30 June 2020. | ||
As Creprie Ltd receives the dividend when it is paid, a consolidation adjusting entry is required to credit the dividend receivable at 30 June 2020. | ||
As Creprie Ltd receives the dividend when it is paid, a consolidation adjusting entry is required to debit the dividend payable at 30 June 2021. |
In: Accounting
Exercise 15-08
The following are two independent situations.
| 1. | Sheridan Corporation redeemed $123,100 face value, 8% bonds on June 30, 2020, at 107. The carrying value of the bonds at the redemption date was $109,100. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded. | |
| 2. | Tastove Inc. redeemed $144,000 face value, 15.00% bonds on June 30, 2020, at 96. The carrying value of the bonds at the redemption date was $146,000. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded. |
For each independent situation above, prepare the appropriate
journal entry for the redemption of the bonds. (Credit
account titles are automatically indented when amount is entered.
Do not indent manually.)
No. | Account Titles and Explanation | Debit | Credit |
1. | |||
2. | |||
In: Accounting
The following are two independent situations.
| 1. | Crane Corporation redeemed $137,100 face value, 12% bonds on June 30, 2020, at 108. The carrying value of the bonds at the redemption date was $123,600. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded. | |
| 2. | Tastove Inc. redeemed $153,000 face value, 17.50% bonds on June 30, 2020, at 98. The carrying value of the bonds at the redemption date was $155,000. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded. |
For each independent situation above, prepare the appropriate
journal entry for the redemption of the bonds. (Credit
account titles are automatically indented when amount is entered.
Do not indent manually.)
|
No. |
Account Titles and Explanation |
Debit |
Credit |
|
1. |
|||
|
2. |
|||
In: Accounting
Facts: On April 1, 2020, Foster Company purchased used equipment. The company recorded the cost of the equipment as $66,000. The company expected the equipment to last four years or 8,000 hours, with an estimated salvage value of $6,000 at the end of the useful life. The equipment was used 500 hours during 2020.
1. What amount of depreciation expense will Foster Company record in 2020 using the straight-line method of depreciation? Show your calculations.
2. What amount of depreciation expense will Foster Company record in 2020 using the units-of-activity method of depreciation? Show your calculations.
3. After reviewing Foster Company's records, regulators discover that the company improperly capitalized $10,000 of revenue expenditures in determining the cost of its equipment. Explain how Foster's error affects the company's financial statements if Foster uses straight-line depreciation
In: Accounting
Flint Corp. sponsors a defined benefit pension plan for its
employees. On January 1, 2020, the following balances relate to
this plan.
| Plan assets | $470,900 | ||
| Projected benefit obligation | 609,900 | ||
| Pension asset/liability | 139,000 | ||
| Accumulated OCI (PSC) | 99,800 | Dr. |
As a result of the operation of the plan during 2020, the following
additional data are provided by the actuary.
| Service cost | $93,800 | |
| Settlement rate, 10% | ||
| Actual return on plan assets | 54,500 | |
| Amortization of prior service cost | 19,800 | |
| Expected return on plan assets | 51,300 | |
| Unexpected loss from change in projected benefit
obligation, due to change in actuarial predictions |
74,300 | |
| Contributions | 99,100 | |
| Benefits paid retirees |
85,600 |
Using the data above, compute pension expense for Flint Corp. for the year 2020 by preparing a pension worksheet.
Prepare the journal entry for pension expense for 2020.
In: Accounting
The City of Leonard decides to lease school desks for its school
system rather than buy them because the lessor will do all
scheduled maintenance. On January 1, 2020, the school system leases
5,000 school desks for four years. After that, they will be
returned to the manufacturer. Payment will be $20 per desk per year
with payments on January 1, beginning on January 1, 2020. The city
does not know how the lessor determined the annual charge. The city
has an annual incremental borrowing rate of 8 percent. The present
value of an annuity due of $1 at an 8 percent annual rate for four
periods is 3.5771.
In: Accounting
KLM reported net income of 2 million and made dividend distributions of 1 million during the year ending 12/31/2020
Assuming XYZ is using the EQUITY METHOD for this investment
In: Accounting
The DeVille Company reported pretax accounting income on its income statement as follows: 2018 $ 415,000 2019 335,000 2020 405,000 2021 445,000 Included in the income of 2018 was an installment sale of property in the amount of $56,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $22,400 in 2019, $28,000 in 2020, and $5,600 in 2021. Included in the 2020 income was $23,000 interest from investments in municipal bonds. The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new tax legislation was passed reducing the tax rate to 25% for the years 2020 and beyond. Required: Prepare the year-end journal entries to record income taxes for the years 2018–2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
In: Accounting
During 2020, Vaughn Furniture Company purchases a carload of
wicker chairs. The manufacturer sells the chairs to Vaughn for a
lump sum of $161,595 because it is discontinuing manufacturing
operations and wishes to dispose of its entire stock. Three types
of chairs are included in the carload. The three types and the
estimated selling price for each are listed below.
| Type | Number of Chairs | Estimated selling Price |
| lounge chair | 1,080 | $90 |
| armchair | 810 | 80 |
| straight chair | 1,890 | 50 |
During 2020, Vaughn sells 540 lounge chairs, 270 armchairs, and
324 straight chairs.
What is the amount of gross profit realized during 2020? What is
the amount of inventory of unsold straight chairs on December 31,
2020? (Round cost per chair to 2 decimal places, e.g.
78.25 and final answer to 0 decimal places, e.g.
5,845.)
In: Accounting