Concord Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis. In 2020, Concord decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $436,900 instead of $327,675. In 2020, bad debt expense will be $107,600 instead of $80,700. If Concord's tax rate is 30%, what amount should it report as the cumulative effect of changing the estimated bad debt rate? (Do not leave any answer field blank. Enter O for amounts.) The cumulative effect of changing the estimated bad debt rate $

Concord Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis. In 2020, Concord decides to increase its estimate to 2%. If the new rate had been used in prior years, cumulative bad debt expense would have been $436,900 instead of $327,675. In 2020, bad debt expense will be $107,600 instead of $80,700. If Concord's tax rate is 30%, what amount should it report as the cumulative effect of changing the estimated bad debt rate? (Do not leave any answer field blank. Enter O for amounts.) The cumulative effect of changing the estimated bad debt rate $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Improved Shoes Company recorded book income of $100,000 in 2020. It does not have any permanent differences, and the only temporary difference relates to a $75,000 installment sale that it recorded for book purposes. Improved Shoes anticipates collecting the installment sales equally over the following 2 years. The current enacted tax rate is 40%. The substantively enacted tax rates for the following 3 years are 42%, 45%, and 45%, respectively. What deferred tax amount should Improved Shoes record for this temporary difference under U.S. GAAP? The book basis of the installment sales receivable from the installment sales is rate Improved Shoes Company will use to calculate the deferred tax amount is record a deferred tax- in the amount of than the tax basis of the asset. The tax Therefore, Improved Shoes will
In 2018, Kardashian Inc. reported pretax accounting income of $240,000. In 2019, the company had a profit of $120,000. In 2020, the company lost $560,000. The following year, the company's accounting income was $440,000. Income for tax purposes was the same as for accounting for all years. Kardashian's tax rate was 32% for 2018 and 2019, 33% for 2020, and 34% for 2021 and subsequent years. The tax rates were all enacted by the beginning of 2018. REQUIRED: Prepare the journal entries for the years 2018 to 2021 to record income taxes. Assume that Kardashian's policy is to carry back any tax losses first, and that at the end of 2021, the loss carryforward benefits are judged more likely than not to be realized in the future.
On December 28, 2021, Tristar Communications sold 13 units of its new satellite uplink system to various customers for $20,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross method to account for sales discounts. In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2022? By how much? In income before tax will be by
Gallo Light began operations in 2018. The company sometimes sells used warehouses on an installment basis. In those cases, Gallo Light reports income in its income statement in the year of the sale. In its income tax return, though, Gallo Light reports installment income by the installment method. Installment income in 2018 was $90,000, which Gallo Light expects to collect equally over the next three years. The tax rate is 30%, but based on an enacted law, is scheduled to become 35% in 2020. Gallo Light's pretax accounting income from the 2018 income statement was $830,000, which includes $40,000 of interest revenue from an investment in municipal bonds. There were no differences between accounting income and taxable income other than those described above.Required:(1.) Prepare the appropriate journal entry to record Gallo Light's 2018 income taxes. Show calculations.(2.) What is Gallo Light's 2018 net income?
Norfolk Southern operates in an industry for which NOL carryback is not allowed, and had the following pretax income (loss) over its first three years of operations 2019 $ 1,200,000 2020 (900,000 ) 2021 1,500,000 For each year there were no deferred income taxes and the tax rate was 25%. No valuation account was deemed necessary for the deferred tax asset as of December 31, 2020. What was Norfolk Southern's income tax expense in 2021?
At the end of its first year of operations on December 31, 2022, the Metro Company reported pretax financial income of $100,000. An investigation of that income revealed the following items:· Bad debts expense of $12,000 was recognized (reported on 2022 income statement). The accounts will be written off (tax deductible) in 2023.· Interest received on municipal bonds: $7,500.· Warranty expenses of $16,000 were accrued for financial reporting purposes, but were not expected to result in a cash payment until 2023.· Depreciation on the tax return exceeded depreciation for financial reporting purposes by $32,000.Assume that any deferred tax assets are considered more likely than not to be realized. The enacted income tax rate for all years is 25%.Required:1) Compute taxable income. Show your calculation. If not, no credit.2) Prepare the entry to record income tax expense and any related assets and liabilities for Metro on December 31, 2022.
Described below are six independent and unrelated situations involving accounting changes. Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 25% in all years. Any tax effects should be adjusted through the deferred tax liability account. Fleming Home Products introduced a new line of commercial awnings in 2020 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 2% of sales. Sales of the awnings in 2020 were $3,600,000. Accordingly, warranty expense and a warranty liability of $72,000 were recorded in 2020. In late 2021, the company’s claims experience was evaluated, and it was determined that claims were far fewer than expected: 1% of sales rather than 2%. Sales of the awnings in 2021 were $4,100,000, and warranty expenditures in 2021 totaled $93,275. On December 30, 2017, Rival Industries acquired its office building…
Northwestern Ocean Lapidary Inc. has been in business since 2015. However, during the 2020 pandemic, the company suffered a large net operating loss. See below. Despite a bad 2020, the company expect to turn a profit in 2021 and in subsequent years. Below you will see the actual taxable income from 2018 to 2021. You will also see the company's expected taxable income from 2022 to 2025. Under current tax laws the company was unable to carry back the NOL in 2020. However, the company applied the NOL CF to offset all taxable income in 2021. Taxable Income 2018 2$ 144,000 2019 $ 252,000 2020 $ (876,000) 2021 $ 72,000 2022* 2$ 204,000 2023* $ 264,000 2024* $ 312,000 2025* 2$ 420,000 *Expected Existing and future enacted tax rates are as follows: 21% in 2018 to 2021, 25% in 2022 and 2023, 28% in 2024, and 32% in 2025 and all years thereafter. What is the DTA the company will report on its 2021 balance sheet that corresponds to the NOL Carry Foward? 227,160 353,880 212,040 212,040 None of the…
During 2024, Marquis Company was encountering financial difficulties and seemed likely to default on a $150,000, 6%, four-year note dated January 1, 2022, payable to Third Bank. Interest was last paid on December 31, 2023. On December 31, 2024, Third Bank accepted $125,000 in settlement of the note. Ignoring income taxes, what amount should Marquis report as a gain from the debt restructuring in its 2024 income statement? Multiple Choice $0 $34,000 O $25,000 O $8,500 留
J-Matt, Inc., had pretax accounting income of $331,000 and taxable income of $376,000 in 2021. The only difference between accounting and taxable income is estimated product warranty costs of $45,000 for sales in 2021. Warranty payments are expected to be in equal amounts over the next three years (2022–2024) and will be tax deductible at that time. Recent tax legislation will change the tax rate from the current 25% to 20% in 2023. Determine the amounts necessary to record J-Matt’s income taxes for 2021 and prepare the appropriate journal entry.
On January 1, 2011, SVTA Bank extended a P1,200,000 loan to ABC, Inc. Principal is due on December 31, 2015 but 11% interest is due annually every December 31. On December 31, 2013, ABC, Inc. was delinquent and it was ascertained that the loan is impaired. SVTA Bank assessed that interests accruing on the loan will not be collected; however, the principal is expected to be received in three equal annual installments starting on December 31, 2014. Accrued interest receivable on December 31, 2013 amounted to P132,000. The current market rate on December 31, 2013 is 13%. How much is the balance of allowance for impairment loss on December 31, 2013 immediately after impairment testing?
am.108.