Ven Company is a retailer. In 2019, its before-tax net income for financial reporting purposes was $600,000. This included a $150,000 gain from the sale of land held for several years as a possible plant site. The cost of the land was $100,000, the contract price for the sale was $250,000, and the company col-lected $120,000 in the year of sale. The income per books also included $90,000 from a 24-month service contract entered into in July 2018 (the customer paid $180,000 in advance for this contract). The addition to the allowance for uncol-lectible accounts for the year was $70,000, and the actual accounts written off totaled $40,000. Make the necessary adjustments to the before taxable income per books to com-pute Ven’s taxable income for the year.

Ven Company is a retailer. In 2019, its before-tax net income for financial reporting purposes was $600,000. This included a $150,000 gain from the sale of land held for several years as a possible plant site. The cost of the land was $100,000, the contract price for the sale was $250,000, and the company col-lected $120,000 in the year of sale. The income per books also included $90,000 from a 24-month service contract entered into in July 2018 (the customer paid $180,000 in advance for this contract). The addition to the allowance for uncol-lectible accounts for the year was $70,000, and the actual accounts written off totaled $40,000. Make the necessary adjustments to the before taxable income per books to com-pute Ven’s taxable income for the year.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter16: Accounting Periods And Methods

Section: Chapter Questions

Problem 44P

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Ven Company is a retailer. In 2021, its before-tax net income for financial reporting purposes was $600,000. This included a $150,000 gain from the sale of land held for several years as a possible plant site. The cost of the land was $100,000, the contract price for the sale was $250,000, and the company collected $120,000 in the year of sale. The income per books also included $90,000 from a 24-month service contract entered into in July 2020 (the customer paid $180,000 in advance for this contract). The addition to the allowance for uncollectible accounts for the year was $70,000, and the actual accounts written off totaled $40,000. Answer the following regarding any necessary adjustments to the before-tax net income per books to compute Ven's taxable income for the year. What is the gross profit percentage for the installment sale? What is amount of the installment gain installment sale for 2021? What is the amount of service contract revenue recognized in 2021? What is the amount…
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