Morlan Corporation is preparing its December 31, 2025, financial statements. Two events that occurred between December 31, 2025,and March 10, 2026, when the statements were issued, are described below.1.A liability, estimated at $160,000 at December 31, 2025, was settled on February 26, 2026, at $170,000.2.A flood loss of $80,000 occurred on March 1, 2026.What effect do these subsequent events have on 2025 net income?BIUT₂ T²Ix |!!!IIIE =IIá[།*O Word(s)

Settlement of Liability:Event Description: A liability estimated at $160,000 as of December 31,…

Answered: Morlan Corporation is preparing its…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 10MC

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The following selected transactions relate to liabilities of Chicago Glass Corporation for 2024. Chicago's fiscal year ends on December 31. On January 15, Chicago received $7,400 from Henry Construction toward the purchase of $70,000 of plate glass to be delivered on February 6. On February 3, Chicago received $7,100 of refundable deposits relating to containers used to transport glass components. On February 6, Chicago delivered the plate glass to Henry Construction and received the balance of the purchase price. First quarter credit sales totaled $740,000. The state sales tax rate is 4% and the local sales tax rate is 2%. Required: Prepare journal entries for the above transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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.
Assume that the debt investment in FourSquare Company was available-for-sale and the expected credit loss was $960,000. Prepare the journal entry to record this impairment on December 31, 2021.
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The Boezi Corporation is beginning to report its financial statements at the end of Year Six. Preliminary information indicates that the company holds $90,000 in current assets and $210,000 in noncurrent assets. The company also plans to report current liabilities of $40,000 and noncurrent liabilities of $160,000. However, at the very end of the year, two final transactions take place. First, a $12,000 payment is made on an account payable. Second, a $21,000 collection is received from an account receivable. After recording these two transactions, what should the company report as the amount of its working capital? After recording these two transactions, what should the company report as its current ratio?
NV Corp. has a total current liabilities of 5,480,000 as of December 31, 2021 before recording the following items: December 2021 utilities of 50,000 were recorded and paid on January 7, 2022; Cash dividends of 290,000 were declared and paid in January 2022. NV Corp. 2021 financial statements were authorized for issue on February 14, 2022; Employee taxes in 2021 were understated by 20,000 What is the current total current liabilities as of December 31, 2021?
In its December 31, 2020, balance sheet Oakley Corporation reported as an asset, “Net notes and accounts receivable, $7,100,000.” What other disclosures are necessary?
The accounting records of Sunland Inc. show the following data for 2025: 1. Life insurance expense on officers was $7,000. 2. Equipment was acquired in early January for $432,000. Straight-line depreciation over a 6-year life is used, with no salvage value. For tax purposes, Sunland used a 30% rate to calculate depreciation. 3. Interest revenue on municipal bonds totaled $3,600. 4. Product warranties were estimated to be $93,000 in 2025. Actual repair and labor costs related to the warranties in 2025 were $24,000. The remainder is estimated to be paid evenly in 2026 and 2027. 5. 6. Sales on an accrual basis were $494,000. For tax purposes, $385,000 was recorded on the installment-sales method. Fines incurred for securities violations were $10,300. 7. Pretax financial income was $468,000. The tax rate is 30%. Your answer is partially correct. Prepare a schedule starting with pretax financial income in 2025 and ending with taxable income in 2025. (Enter negative amounts using either a…
As of Dec. 31, 2020, ABC Corporation reported total assets of P600,000 and totalliabilities of P250,000. During the audit, the following were determined:Advertising expense amounting to P45,000 was recorded on Jan. 1, 2020 but the contractis good for three years.The Supplies account balance was not yet established. It should be reported as P2,000.Unearned revenue of P70,000 is recorded in the books but this has decreased to P50,000as year-end.A write-off of P30,000 should be recorded. The allowance for bad debts is correctlystated even after this adjustment.Accounts payable amounting to P23,000 was settled but it was recorded as P32,000.What is the correct equity balance as of Dec. 31, 2020?
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