Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method. The company decided to use the same for income tax purposes. The tax rate enacted is 20%. Income before taxes under both the methods for the past three years appears below. 2019 2020 2021 Completed contract $450,000 $300,000 $150,000 Percentage-of-completion 750,000 375,000 270,000 Which of the following will be included in the journal entry made by Dream Home to record the income effect? Question 80 options: a A debit to Retained Earnings for $300,000 b A credit to Retained Earnings for $200,000 c A credit to Retained Earnings for $300,000 d A debit to Retained Earnings for $200,000
Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method. The company decided to use the same for income tax purposes. The tax rate enacted is 20%. Income before taxes under both the methods for the past three years appears below. 2019 2020 2021 Completed contract $450,000 $300,000 $150,000 Percentage-of-completion 750,000 375,000 270,000 Which of the following will be included in the journal entry made by Dream Home to record the income effect? Question 80 options: a A debit to Retained Earnings for $300,000 b A credit to Retained Earnings for $200,000 c A credit to Retained Earnings for $300,000 d A debit to Retained Earnings for $200,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
#80
Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method.
The company decided to use the same for income tax purposes. The tax rate enacted is 20%.
Income before taxes under both the methods for the past three years appears below.
Which of the following will be included in thejournal entry made by Dream Home to record the income effect?
The company decided to use the same for income tax purposes. The tax rate enacted is 20%.
Income before taxes under both the methods for the past three years appears below.
| 2019 | 2020 | 2021 |
| Completed contract | $450,000 | $300,000 | $150,000 |
| Percentage-of-completion | 750,000 | 375,000 | 270,000 |
Which of the following will be included in the
Question 80 options:
|
a
|
A debit to
|
|
b
|
A credit to Retained Earnings for $200,000
|
|
c
|
A credit to Retained Earnings for $300,000
|
|
d
|
A debit to Retained Earnings for $200,000
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education