Exercise 23-17 (Part Level Submission)

Sage Inc., had the following condensed balance sheet at the end of operations for 2019.

During 2020, the following occurred.

b. Prepare the condensed balance sheet for jobim inc. as it would appear at december 31 2020

1. The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years.

         Pretax accounting income                                                                  $800,000

         Excess tax depreciation                                                                      (480,000)

         Litigation accrual                                                                                      70,000

         Unearned rent revenue deferred on the books but appropriately

               recognized in taxable income                                                            60,000

         Interest income from New York municipal bonds                           (20,000)

         Taxable income                                                                                    $430,000

1.   Excess tax depreciation will reverse equally over a four-year period, 2021-2024.

2.   It is estimated that the litigation liability will be paid in 2024.

3.   Rent revenue will be recognized during the last year of the lease, 2024.

4.   Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024.

(a)   Prepare a schedule of future taxable and (deductible) amounts.

(b)   Prepare a schedule of the deferred tax (asset) and liability at the end of 2020.

(c)   Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit).

(d)   Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2020.

1. The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years. Pretax accounting income $800,000 Excess tax depreciation (480,000) Litigation accrual 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income 60,000 Interest income from New York municipal bonds (20,000) Taxable income $430,000

1. Excess tax depreciation will reverse equally over a four-year period, 2021-2024.

2. It is estimated that the litigation liability will be paid in 2024.

3. Rent revenue will be recognized during the last year of the lease, 2024.

4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024.

(a) Prepare a schedule of future taxable and (deductible) amounts.

(b) Prepare a schedule of the deferred tax (asset) and liability at the end of 2020.

(c)   Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit).

(d)   Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2020.

Benito Company reported the following information for the financial year ended 30/06/2020:

Required:

l. What is the net cash inflow (outflow) from operating activities?   

ll. What is the net cash inflow (outflow) from investing activities?

lll. What is the net cash inflow (outflow) from financing activities?

IV. Determine the cash & cash equivalents as of 30/06/2020.

V. Determine the total cash flow from operations as of the end of the year. Opening Balance of Cash at the start of the year is $100,000.

19. Benito Company reported the following information for the financial year ended 30/06/2020:

Required:

l. What is the net cash inflow (outflow) from operating activities?   

ll. What is the net cash inflow (outflow) from investing activities?

lll. What is the net cash inflow (outflow) from financing activities?

IV. Determine the cash & cash equivalents as of 30/06/2020.

V. Determine the total cash flow from operations as of the end of the year. Opening Balance of Cash at the start of the year is $100,000.

11. The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years. Pretax accounting income $800,000 Excess tax depreciation (480,000) Litigation accrual 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income 60,000 Interest income from New York municipal bonds (20,000) Taxable income $430,000

1. Excess tax depreciation will reverse equally over a four-year period, 2021-2024.

2. It is estimated that the litigation liability will be paid in 2024.

3. Rent revenue will be recognized during the last year of the lease, 2024.

4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024.

Instructions (a) Prepare a schedule of future taxable and (deductible) amounts. (b) Prepare a schedule of the deferred tax (asset) and liability at the end of 2020. (c) Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit). (d) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2020.

The following information is available for the first three years of operations for Wildhorse Company: 1. Year Taxable Income 2020 $610,000 2021 460,000 2022 510,000 2. On January 2, 2020, heavy equipment costing $710,000 was purchased. The equipment had a life of 5 years and no salvage value. The straight-line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below: Tax Depreciation 2020 2021 2022 2023 Total $234,300 $319,500 $106,500 $49,700 $710,000 3. On January 2, 2021, $333,000 was collected in advance for rental of a building for a three-year period. The entire $333,000 was reported as taxable income in 2021, but $222,000 of the $333,000 was reported as unearned revenue at December 31, 2021 for book purposes. 4. The enacted tax rates are 20% for all years.

a-Prepare a schedule comparing depreciation for financial reporting and tax purposes.

b-Prepare a schedule of future taxable and (deductible) amounts at the end of 2021.

c-Prepare a schedule of the deferred tax (asset) and liability at the end of 2021.

d-Compute the net deferred tax expense (benefit) for 2021.

f-Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2021.

If your formulas are correct, you should get the correct answers to the following questions.

(a) What is the net operating income (loss) in Year 1 under absorption costing?

(b) What is the net operating income (loss) in Year 2 under absorption costing?

(c) What is the net operating income (loss) in Year 1 under variable costing?

(d) What is the net operating income (loss) in Year 2 under variable costing?

Make a note of the absorption costing net operating income (loss) in Year 2.

At the end of Year 1, the company’s board of directors set a target for Year 2 of net operating income of $20,000 under absorption costing. If this target is met, a hefty bonus would be paid to the CEO of the company. Keeping everything else the same from part (2) above, change the units produced in Year 2 to 4,400 units.

(a) Would this change result in a bonus being paid to the CEO?

(b) What is the net operating income (loss) in Year 2 under absorption costing?

(c) Would this doubling of production in Year 2 be in the best interests of the company if sales are expected to continue to be 2,400 units per year?

Please pick a foreign currency you like and provide the movement of the exchange rate between U.S. dollars and foreign currency in the past few weeks. Please provide data, statistics, or figures associated with your answers to the following questions.

1. Did U.S. dollars appreciate or depreciate against the foreign currency over the period?
2. We have learned which factors can affect the exchange rate, such as income level, inflation rate, interest rate, the expectation of future economics, government policies. Could you please explain the phenomena you have observed about U.S. dollars in question 1? Which factors matter for the movement in U.S. dollars?