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
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
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
Raziq uses accrual basis accounting to record his business expenses and revenues. He closes his accounts on 31 December every year. Which of the following explains the accrual basis accounting? *
a.All business expenses are recorded when cash has been spent.
b.The pay period for hourly employees ends on 27 December, but the employees continue to earn wages through December 31, which are paid to them on 5th January 2020. The business should not record the wages within the year when the employee earned it.
c.A salesman earns a 10% commission on sales shipped and recorded in December 2019. The commission of RM5,000 is paid in January 2020. The business should record the commission expense in December 2019.
d.Invoice issued to a client for RM10,000 in December 2019 and received in January 2020, should be recorded as part of 2020 income
In: Accounting
Exercise 21-17 (Part Level Submission)
On January 1, 2020, Marin Co. leased a building to Cullumber
Inc. The relevant information related to the lease is as
follows.
| 1. | The lease arrangement is for 10 years. The building is expected to have a residual value at the end of the lease of $2,900,000 (unguaranteed). | |
| 2. | The leased building has a cost of $3,400,000 and was purchased for cash on January 1, 2020. | |
| 3. | The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. | |
| 4. | Lease payments are $255,000 per year and are made at the beginning of the year. | |
| 5. | Cullumber has an incremental borrowing rate of 8%, and the rate implicit in the lease is unknown to Cullumber. | |
| 6. | Both the lessor and the lessee are on a calendar-year basis. |
a.
Prepare the journal entries that Nelson should make in 2020.
b.
Prepare the journal entries that Wise should make in 2020.
In: Accounting
On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation. Barber used the equity method to account for the investment. The following information is available for Thompson’s assets, liabilities, and stockholders' equity accounts on January 1, 2020:
| Book Value |
Fair Value |
|||||
| Current assets | $ | 130,000 | $ | 130,000 | ||
| Land | 75,000 | 193,000 | ||||
| Building (twenty year life) | 250,000 | 276,000 | ||||
| Equipment (ten year life) | 540,000 | 518,000 | ||||
| Current liabilities | 26,000 | 26,000 | ||||
| Long-term liabilities | 124,000 | 124,000 | ||||
| Common stock | 233,000 | |||||
| Additional paid-in capital | 389,000 | |||||
| Retained earnings | 223,000 | |||||
Thompson earned net income for 2020 of $134,000 and paid dividends of $51,000 during the year.
At the end of 2020, the consolidation entry to eliminate Barber’s accrual of Thompson’s earnings would include a credit to Investment in Thompson Co. for
In: Accounting
On January 1, 2019, Hart Corporation purchased 1,000 of ABC 8%, P1,000 callable bonds for P877,068, which represented a 10% effective interest rate. The bonds are dated January 1, 2019, and mature on January 1, 2029. Interest is payable annually on January 1. On January 1, 2020, Hart sold half of the bonds at 101. Assume that Hart uses the effective interest method of amortization and that its fiscal year ends December 31 Instruction: Determine the following:
1. Interest income for the year ended December 31, 2019
2. Carrying value of the bonds as of December 31, 2019
3. Interest income for the year ended December 31, 2020
4. Carrying value of the bonds as of December 31, 2020
5. Gain or loss on sale of the bonds.
6. Give the entry to adjust the allowance for doubtful accounts at December 31, 2020.
In: Accounting
a) On January 1, 2020, Blue Inc. sold computer equipment to Larkspur Co. The sales price of the equipment was $511,000 and its carrying amount is $396,000. Record any journal entries necessary for Blue from the sale of the computer equipment in 2020.
b) Use the information from part a. Assume that, on the same day the sale occurred, Blue enters into an agreement to lease the equipment from Larkspur for 10 years with annual lease payments of $69,428.50 at the end of each year, beginning on December 31, 2020. If Blue has an incremental borrowing rate of 6% and the equipment has an economic useful life of 10 years, record any journal entries necessary for Blue from the sale and leaseback of computer equipment in 2020.
I really just need the answer for the entries for part B) I cannot figure it out, It is so confusing to me
In: Accounting