Cookie Corporation has income and expenses for its current fiscal year, recorded under generally accepted accounting principles, as shown in the following schedule. In addition, a review of Cookie's books and records reveals the following information: GAAP Book Income Sales revenue Cost of goods sold Gross profit Meals and entertainment expense Bad debt expense Depreciation expense Other operating expenses Contingent loss Income before taxes $2,000,000 (1,200,000) $ 800,000 (107,000) (30,000) (80,000) (220,000) (50,000) $ 313,000 Federal income tax expense Net income (80,000) $ 233,000 • Cookie expensed, for book purposes, meals totaling $51,000 and entertainment costs totaling $56,000. These costs were incurred by Cookie sales personnel, are reasonable in amount, and are documented in company records. Assume for tax purposes that the meal costs are 50% deductible and that the entertainment costs are not deductible. During January of the current year, Cookie was sued by one of its employees as a result of a work-related accident. The suit has not yet gone to court. However, Cookie's auditors required the company to record a contingent liability (and related hook expensel for $50.000 reflecting the company's likely liability from the suit
Cookie Corporation has income and expenses for its current fiscal year, recorded under generally accepted accounting principles, as shown in the following schedule. In addition, a review of Cookie's books and records reveals the following information: GAAP Book Income Sales revenue Cost of goods sold Gross profit Meals and entertainment expense Bad debt expense Depreciation expense Other operating expenses Contingent loss Income before taxes $2,000,000 (1,200,000) $ 800,000 (107,000) (30,000) (80,000) (220,000) (50,000) $ 313,000 Federal income tax expense Net income (80,000) $ 233,000 • Cookie expensed, for book purposes, meals totaling $51,000 and entertainment costs totaling $56,000. These costs were incurred by Cookie sales personnel, are reasonable in amount, and are documented in company records. Assume for tax purposes that the meal costs are 50% deductible and that the entertainment costs are not deductible. During January of the current year, Cookie was sued by one of its employees as a result of a work-related accident. The suit has not yet gone to court. However, Cookie's auditors required the company to record a contingent liability (and related hook expensel for $50.000 reflecting the company's likely liability from the suit
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 52E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
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