I am looking for the correct answer to this financial accounting question with appropriate explanations. Galaxy Technologies reported a net profit of $120,000 for the year ended 31December 2015. It was later discovered that $15,000 paid for the purchase ofequipment had been incorrectly debited to the repairs and maintenance account.The company's policy is to depreciate equipment at 25% per year on the straight-line basis, with a full year's charge in the year of acquisition.What would the net profit be after adjusting for this error?

Step 1: Detailed Explanation of Adjusting Net ProfitIn this case, Galaxy Technologies mistakenly…

Answered: Galaxy Technologies reported a net…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000cost of a machine purchased on January 1, 2015. The machine’s useful life was expected to be five years withno residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, what journal entry will PKEuse to correct the error?
Moore Corporation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings. The following transactions occurred in 2015: March 31, 2015— Negotiations which began in 2014 were completed and a warehouse purchased 1/1/06 (depreciation has been properly charged through December 31, 2014) at a cost of $3,200,000 with a fair value of $2,000,000 was exchanged for a second warehouse which also had a fair value of $2,000,000. The exchange had no commercial substance. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value. June 30, 2015— Machinery with a cost of $240,000 and accumulated depreciation through January 1 of $180,000 was exchanged with $150,000 cash for a parcel of land with a fair value of $230,000.The exchange had commercial substance. Required: Prepare all appropriate journal entries for the March 31, 2015 and June 30, 2015 exchanges for Moore…
Mondale Winery depreciates its equipment using the group method. The cost of equipment purchased in 2016 totaled $425,000. The estimated residual value of the equipment was $40,000 and the group depreciation rate was determined to be 18%. What is the annual depreciation for the group? If equipment that cost $42,000 is sold in 2017 for $35,000, what amount of gain or loss will the company recognize for the sale?
Cordova’s net income for the years 2017, 2018 and 2019 is $ 180,000, $200,000 and $280,000, respectively. During the 2019 audit, the following item came to your attention: On January 1, 2017, Cordova Inc. bought equipment for $80,000 with an $20,000 estimated residual value and a 6-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. Cordova uses the straight-line method to amortize all equipment purchases. Cordova’s tax rate is currently 40%. This rate has been in effect since January 1, 2017. Assume that the amounts deducted for income tax purposes and accounting purposes are the same, and that any changes for accounting purposes are also changed for income tax purposes. Required: Record the required journal entry for amortization of the equipment and any other entries resulting from the audit, assuming that the books are open in 2019.
Tiger Ltd purchased a machine on 1 July 2017 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years. The profit before tax for the company for the year ending 30 June 2018 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that has not yet been paid. Also the company has included $70,000 interest as income that the company has not yet received. The tax rate is 30%. Required: (a) Calculate the company’s taxable profit and hence its tax payable for 2018. (b) Determine the deferred tax liability and/or deferred tax asset that will result. (c) Please help to Prepare the necessary journal entries on 30 June 2018. Thanks
In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2015. The machine's useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, prepare the journal entry PKE will use to correct the error. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Event 1 1 Equipment Accumulated depreciation Retained earnings Answer is not complete. General Journal Debit Credit 350,000
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquire at the beginning of 2015 for $2,736,000. Its useful life was estimated to be six years with a $204,000 residual value. At the beginning of 2018, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows (S In 000s): Year Straight-Line Declining Balance 2015 $ 422 2016 422 2017 422 $1,266 No 1 $912 608 405 $1,925 Required: 2. Prepare any 2018 Journal entry related to the change. (Enter your answers in dollars rounded to the nearest thousand. If no entry Is required for a transaction/event, select "No Journal entry required" In the first account field.) Event 1 Difference $490 186 (17) Depreciation expense $659 Answer is complete but not entirely correct. General Journal Accumulated depreciation Debit 211,333 X Credit 211,333
XYZ Company, a calendar year business, purchased machinery on February 2, 2016. The purchase price of the machinery was $90,000 and the machinery was subject to a 7% sales tax on the purchase price. The company paid $1,500 to have the machinery delivered and set up at its factory. What is the initial basis of the asset?
Ortiz Box Company purchased a patent on a box - folding machine for $160,000 on July 1, 2012. The useful life was estimated at 20 years. There were 19 years remaining on the patent when it was purchased. In early 2019, the CEO of Ortiz noted a decrease, industry - wide, in the demand for folded boxes. The CEO estimated that the patent had a remaining useful life of 5 years. An impairment analysis was done as of June 30, 2019. Expected annual cash flows over the next 5 years were estimated at $20,000. The discount rate used by Ortiz is 5%. How much amortization expense was recognized by Ortiz in 2019 and 2020, respectively? Select one: a. $4,211 b. $7,330 c. $ 7,818 d. $12,870 e. $12, 659
Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company to depreciate the asset over 4 years.The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit the company has deducted $60,000 entertainment expense, and $80,000 salary expense that has not yet been paid. Also the company has included $70,000 interest as income that the company has not yet received. The tax rate is 30%.Required: (c) Prepare the necessary journal entries on 30 June 2017. (3 marks)
Jaguar Ltd purchased a machine on 1 July 2016 at the cost of $640,000. The machine is expected to have a useful life of 5 years (straight-line basis) and no residual value. For taxation purposes, the ATO allows the company todepreciate the asset over 4 years. The profit before tax for the company for the year ending 30 June 2017 is $600,000. To calculate this profit thecompany has deducted $60,000 entertainment expense, and $80,000 salary expense that has not yet been paid. Also the company has included $70,000 interest as income that the company has not yet received. The tax rate is 30%.(a) Calculate the company’s taxable profit and hence its tax payable for 2017. (b) Determine the deferred tax liability and/or deferred tax asset that will result. (c) Prepare the necessary journal entries on 30 June 2017.
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2015 for $2,560,000. Its useful life was estimated to be six years,with a $160,000 residual value. At the beginning of 2018, Clinton decides to change to the straight-line method.The effect of this change on depreciation for each year is as follows:($ in thousands)Year Straight Line Declining Balance Difference2015 $ 400 $ 853 $4532016 400 569 1692017 400 379 (21)$1,200 $1,801 $601Required:1. Briefly describe the way Clinton should report this accounting change in the 2016–2018 comparative financial statements.2. Prepare any 2018 journal entry related to the change.

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