See the explanation below to work the problem. XYZ Company, a 'for-profit' business, had revenues of $12 million in 2022. Expenses other than depreciation totaled 75 percent of revenues. XYZ Company, must pay taxes at a rate of 40 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Depreciation originally was $1.5 million; however, a change in the depreciation schedule (still within GAAP) has now made the depreciation expense DOUBLE. Based on this change in depreciation expense, what would XYZ's net income now be? Select one or more: □ a. so b. $3,000,000 O c. $1,500,000 Ⓒd. Not enough information to tell

See the explanation below to work the problem. XYZ Company, a 'for-profit' business, had revenues of $12 million in 2022. Expenses other than depreciation totaled 75 percent of revenues. XYZ Company, must pay taxes at a rate of 40 percent of pretax (operating) income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Depreciation originally was $1.5 million; however, a change in the depreciation schedule (still within GAAP) has now made the depreciation expense DOUBLE. Based on this change in depreciation expense, what would XYZ's net income now be? Select one or more: □ a. so b. $3,000,000 O c. $1,500,000 Ⓒd. Not enough information to tell

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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The 2021 income statement for Duffy's Pest Control shows that depreciation expense was $203 million, EBIT was $516 million, and the tax rate was 35 percent. At the beginning of the year, the balance of gross fixed assets was $1,586 million and net operating working capital was $423 million. At the end of the year, gross fixed assets was $1,839 million. Duffy's free cash flow for the year was $429 million. Calculate the end-of-year balance for net operating working capital. (Enter your answer in millions of dollars rounded to 1 decimal place.) Net operating working capital million
At the end of 2021, Schrutte Inc. in its first year of operations, had pretax financial income of $650,000. The company had extra depreciation taken for tax purposes in the amount of $975,000. Estimated expenses that were deducted for financial income but not yet paid amounted to $425,000. It is estimated that the expenses will be paid in 2022. The tax rate for all years is 25% In the journal entry at the end of the year that records income tax expense, deferred taxes and income taxes payable, what is the entry to the Income Tax Payable account? Question 19 options: a) credit Income Tax Payable account by $162,500 b) credit Income Tax Payable account by $300,000. c) credit to Income Tax Payable account by $25,000. d) credit Income Tax Payable account by $512,500.
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Pretax accounting income is $206,000. Depreciation for tax is $111,000; depreciation for accounting is $29,000. Bad debt expense for tax is $12,000; bad debt expense for accounting is $9000. A fine for pollution of a river was imposed by the state of Kentucky for $7000. The tax rate is 20%. Which of the following is true? Income tax expense is 206,000 x .2 The current portion is 206,000 x .20 Income tax expense is less than the current portion. Income tax expense is more than the current portion.
A chemical company has a total income of 1.62 million per year and total expenses of 716057 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of 1.24 with a MACRS recovery period of 7 years, and a straight-line recovery period of 9.4 years. Thirty-five percent of all profits before taxes must be paid out for income taxes. What would be the reduction in income tax charges for the first year of operation if the MACRS method were used for the depreciation accounting instead of the straight-line method?-
The 2021 Income statement for Egyptian Nolse Blasters shows that depreciation expense is $80 million, NOPAT is $239 million. At the end of the year, the balance of gross fixed assets was $650 million. The change in net operating working capital during the year was $70 million. Egyptian's free cash flow for the year was $180 million. Calculate the beginning-of-year balance for gross fixed assets. (Enter your answer in millions of dollars.) Gross fixed assets million
14) The records for Ehrlich Co. show this data for 2021: Accrued revenue recorded on the books was $480,000. Revenue cash collections was $320,000. Life insurance on officers was $2,800. Fine for pollution violation was $1,000. Machinery was acquired in January for $300,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, accelerated depreciation is used and Ehrlich may deduct 15% for 2021. Interest received on tax exempt Florida State bonds was $9,000. The estimated warranty liability related to 2021 sales was $23,000. Repair costs under warranties during 2021 were $12,000. Pretax financial income is $700,000. The tax rate is 25% for this and future years. Instructions (a) Prepare a schedule starting with pretax financial income and compute taxable income. (b) Prepare the journal entry to record income taxes for 2021. (c ) Show the income statement presentation of income tax expense, starting with "income before tax"
Edwards Electronics recently reported $15,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 25%. How much was its net operating profit after taxes (NOPAT)? Select the correct answer. a. $6,324.00 b. $6,349.50 Oc$6,273.00 O d. $6,298.50 e. $6,375.00
2. For the year 2021, Rattner Robotics had $5 million in operating income (EBIT). Its depreciation expense was $1.5 million, its interest expense was $1 million, and its corporate tax rate was 35%. At the end of year 2021, it had $10 million in operating current assets, $3 million in accounts payable, $1 million in accruals, and $2 million in notes payable. Assume Rattner has no excess cash and no other current liabilities. Assume that Rattner's only noncash item was depreciation. a) What was the company's net income for the year 2021?tion bona 158 b) What was its net operating working capital (NOWC) for the year 2021? c) Rattner reported $4 million in capital expenditure for the year of 2021. Rattner's NOWC for the prior year (year 2020) is $5.5 million. What is the company's free cash flow (FCF) for the year of 2021? (Hint: you need your results from part b to calculate this question).