Loni Company paid $1,037,000 for tangible personalty in 2019 and elected to expense $1,020,000 of the cost (the limited dollar amount for 2019). Loni's taxable income before a Section 179 deduction was $894,100. Loni paid $23,700 for tangible personalty in 2020 and elected to expense the entire cost. Loni's taxable income before a Section 179 deduction was $228,000. Use Table 7-2. Required: a. Compute Loni's Section 179 deduction and taxable income for 2019. b. Compute Loni's Section 179 deduction and taxable income for 2020.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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![**Educational Content: Understanding Section 179 Deduction**
Loni Company paid $1,037,000 for tangible personal property in 2019 and chose to expense $1,020,000, which is the limited dollar amount for 2019. Before applying the Section 179 deduction, Loni's taxable income was $894,100. In 2020, the company paid $23,700 for tangible personal property and elected to deduct the entire cost. Before the Section 179 deduction, the taxable income was $228,000. For calculations, refer to Table 7-2.
**Requirements:**
a. Calculate Loni’s Section 179 deduction and taxable income for 2019.
b. Calculate Loni’s Section 179 deduction and taxable income for 2020.
**Instructions:**
Complete this question by entering your answers in the tabs below.
**For Required A:**
- Calculate Loni’s Section 179 deduction and taxable income for 2019.
| Amount | |
|----------------------|---------------------|
| Deduction | |
| Taxable income | |
**For Required B:**
[Instructions to compute the Section 179 deduction and taxable income for 2020 will follow in this section, similar to the process for 2019.]
Use the interactive tabs to enter your answers for each year.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F449ae24f-0398-4a86-aaa1-a3aa85768120%2F562a1cd3-a0bb-4a1b-9a5e-c9d4806f703a%2Fdtj3xme_processed.jpeg&w=3840&q=75)
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