Check all details and answer me. Sub. Financial account Bigham Corporation, an accrual basis calendar yeartaxpayer, sells its services under 12-month and 24-monthcontracts. The corporation provides services to eachcustomer every month. On July 1, 2017, Bigham sold thefollowing customer contracts:Length of contract Total Proceeds12 months24 months$ 25,600$51,200Determine the income to be recognized in taxable incomein 2017 and 2018.

To determine the income to be recognized in 2017 and 2018, we follow the accrual basis rules for…

Answered: Bigham Corporation, an accrual basis…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 22CE

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On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.
On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.
Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2019, Bigham sold the following customer contracts: Determine the income to be recognized in taxable income in 2019 and 2020.
Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month, and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2021, Bigham sold the following customer contracts: Length of contract Total Proceeds 12 months $14,000 24 months $24,000 Determine the income to be recognized in 2021 and 2022. Length of Contract 2021 Income 2022 Income 12 months $fill in the blank 1 $fill in the blank 2 24 months $fill in the blank 3 $fill in the blank 4
Manjibhai
Sunland AG, which began operations at the beginning of 2020, produces various products on a contract basis. Each contract generates income of €78,000. Some of Sunland’s contracts provide for the customer to pay on an installment basis. Under these contracts, Sunland collects one-fifth of the contract revenue in each of the following 4 years. For financial reporting purposes, the company recognizes income on an accrual basis; for tax purposes, Sunland recognizes income in the year cash is collected (installment basis).Presented below is information related to Sunland’s operations for 2022. 1. In 2022, the company completed seven contracts that allow for the customer to pay on an installment basis. Sunlandrecognized the related income of €546,000 for financial reporting purposes. It reported only €109,200 of income on installment sales on the 2022 tax return. The company expects future collections on the related installment receivables to result in taxable amounts of €109,200 in…
In 2021, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients and earned $25,000. The clients signed notes receivable to Chaya that have a fair market value of $22,000 at year-end. In addition, Chaya sold a 36-month service contract on June 1, 2021, and received payment in full of $12,000. Round any division to four decimal places. If required, round your final answer to the nearest dollar. How much gross income does Chaya report from these transactions in 2021?1. From the services to clients: $fill in the blank 12. From the service contract: $fill in the blank 2
Oriole Company, which began operations at the beginning of 2018, produces various products on a contract basis. Each contract generates a gross profit of $82,000. Some of Oriole’s contracts provide for the customer to pay on an installment basis. Under these contracts, Oriole collects one-fifth of the contract revenue in each of the following four years. For financial reporting purposes, the company recognizes gross profit in the year of completion (accrual basis). For tax purposes, Oriole recognizes gross profit in the year cash is collected (installment basis).Presented below is information related to Oriole’s operations for 2020: 1. In 2020, the company completed seven contracts that allow for the customer to pay on an installment basis. Oriole recognized the related gross profit of $574,000 for financial reporting purposes. It reported only $114,800 of gross profit on installment sales on the 2020 tax return. The company expects future collections on the related installment…
Oriole Company, which began operations at the beginning of 2018, produces various products on a contract basis. Each contract generates a gross profit of $82,000. Some of Oriole’s contracts provide for the customer to pay on an installment basis. Under these contracts, Oriole collects one-fifth of the contract revenue in each of the following four years. For financial reporting purposes, the company recognizes gross profit in the year of completion (accrual basis). For tax purposes, Oriole recognizes gross profit in the year cash is collected (installment basis).Presented below is information related to Oriole’s operations for 2020: 1. In 2020, the company completed seven contracts that allow for the customer to pay on an installment basis. Oriole recognized the related gross profit of $574,000 for financial reporting purposes. It reported only $114,800 of gross profit on installment sales on the 2020 tax return. The company expects future collections on the related installment…
prepare the jouranal entry to record income taxes for 2025
Diva Who Inc., franchisor, entered into a franchise agreement with Mawie Company on January 1, 2018. The initial franchise fee agreed upon is P950,000, of which, P150,000 is payable upon signing and the balance to be covered by a non-interest bearing note payable in four equal annual installment to be paid starting December 31, 2018. It was agreed that the down payment is not refundable and royalties equal to 5% of its average sales every calendar year must be paid to Diva Who. The following expenses were incurred:Initial services:Direct cost-P 331,200Indirect cost-41,400Continuing services:Direct cost-P66,240Indirect cost-16,560The management of Mawie estimated that they can borrow at the rate of 7%; probability of collection is unlikely. The franchisee commenced its operations on June 30,2018. Mawie reported monthly average sales of P80,000 since the start of its operations.The total revenue to be recognized by Diva Who Inc. for the year ended December 31, 2018 is? how much is the…

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