Solaris Corporation prepared the following estimates for the four quarters of the current year: First Quarter Second Quarter $ 1,550,000 $ 1,860,000 455,000 535,000 360,000 Third Quarter $ 2,170,000 605,000 Fourth Quarter $ 2,480,000 215,000 Accounts Sales Cost of goods sold Administrative costs Advertising costs Executive bonuses Provision for bad debts Annual maintenance costs Additional Information 0 0 0 82,000 210,000 200,000 0 0 e 0 0 0 0 655,000 225,000 0 96,000 74,000 0 • First-quarter administrative costs include the $100,000 annual insurance premium. • Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year. • No special items affect income during the year. • The company estimates an effective income tax rate for the year of 25 percent. Required: a. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year. b. Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 22 percent. Determine the amount of net income to be reported each quarter of the current year.
Solaris Corporation prepared the following estimates for the four quarters of the current year: First Quarter Second Quarter $ 1,550,000 $ 1,860,000 455,000 535,000 360,000 Third Quarter $ 2,170,000 605,000 Fourth Quarter $ 2,480,000 215,000 Accounts Sales Cost of goods sold Administrative costs Advertising costs Executive bonuses Provision for bad debts Annual maintenance costs Additional Information 0 0 0 82,000 210,000 200,000 0 0 e 0 0 0 0 655,000 225,000 0 96,000 74,000 0 • First-quarter administrative costs include the $100,000 annual insurance premium. • Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year. • No special items affect income during the year. • The company estimates an effective income tax rate for the year of 25 percent. Required: a. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each quarter of the current year. b. Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual effective income tax rate is revised downward to 22 percent. Determine the amount of net income to be reported each quarter of the current year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Solaris Corporation prepared the following estimates for the four quarters of the current year:
First Quarter Second Quarter
$ 1,550,000 $ 1,860,000
455,000
535,000
360,000
210,000
Third Quarter
$ 2,170,000
605,000
Fourth Quarter
$ 2,480,000
215,000
655,000
225,000
0
200,000
Accounts
●
Sales
Cost of goods sold
Administrative costs
Additional Information
●
Advertising costs
Executive bonuses
Provision for bad debts
Annual maintenance costs
0
0
0
82,000
0
♡ ♡ ♡
0
0
0
0
DO O
0
First-quarter administrative costs include the $100,000 annual insurance premium.
Advertising costs paid in the second quarter relate to television advertisements that will be broadcast throughout the entire year.
• No special items affect income during the year.
The company estimates an effective income tax rate for the year of 25 percent.
Required:
a. Assuming that actual results do not vary from the estimates provided, determine the amount of net income to be reported each
quarter of the current year.
b. Assume that actual results do not vary from the estimates provided except for that in the third quarter, the estimated annual
effective income tax rate is revised downward to 22 percent. Determine the amount of net income to be reported each quarter of
the current year.
96,000
74,000
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