What is the total effect of the errors on 2005 net income?
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A: 1.
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A: Net Income: Net income is considered as a measure of profitability of a company. It is computed by…
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A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…
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A: The objective of this question is to determine the impact of the errors in overstating prepaid…
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A: Amount record the dishwasher = Cash paid for acquisition + Transportation costs + Installation fees
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A: Accounting principles refer to the fundamental rules and guidelines that govern the preparation and…
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A: Dishwasher cost = Purchase price + Expense incurred on its transportation and installation fee
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A: Journal: Recording of a business transactions in a chronological order.
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Q: During an audit of Madison Company's December 31, 2020 records it was discovered that the company…
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A: Answer - “Deferred Tax Expense” is created due to the difference in the timing of book profit and…
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A: As per IAS 8,Accounting policies, changes in Accounting estimates and errors Prior period errors…
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Q: Pretax accounting income is $206,000. Depreciation for tax is $111,000; depreciation for accounting…
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Q: During an audit of Madison Company’s December 31, 2020 records it was discovered that the company…
A: Introduction:- A journal entry is used in a company ’s financial statements to record a business…
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- Accounting Muckingjay Inc. opened in 2022. The company reported sales revenue of $486,000 and expenses of $574,000. The revenue is on account, and no cash has been received or paid out for expenses. There are no permanent or temporary differences, so the book loss and taxable loss will be the same. Muckingjay plans to carry forward the net operating loss (NOL). The company has a 38% tax rate, and a valuation allowance is not required. Prepare the following for 2022: a) The necessary journal entry to record the NOL carryforward. b) A partial income statement beginning with sales revenue.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.As of December 31, 2024, Duffy Company believed it was probable that an unfavorable outcome would result from a dispute with the Massachusetts State tax authorities. In-house tax experts estimated that Duffy would owe between $2113 - $4362 of additional taxes, with $3369 being the most likely amount. What is the journal entry, if any, that Duffy should record to reflect this in the 2024 financial statements? a. A journal entry is not booked since this is a gain contingency. b. Debit to Contingent Loss for $3369; Credit to Contingent Liability for $3369 c. Debit to Contingent Loss for $2113; Credit to Contingent Liability for $2113 d. Debit to Contingent Liability for $4362; Credit to Contingent Loss for $4362
- Pearl Inc. incurred a net operating loss of $455,000 in 2020. The tax rate for all years is 20%. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)A company was not able to file and pay its 2015 annual income tax. As a result of this, it was liable for a surcharge penalty of 96,500. There was willful neglect on the non-compliance. Assume all the liabilities are paid today. Question: 1. How much is the total amount due, exclusive of the compromise penalty?In 2025, Sandhill Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1299900 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Sandhill properly included depreciation on its tax return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%. Income before depreciation expense in 2025 was $400000. What was the impact on the following accounts at the start of 2025? Accumulated Depreciation was understated by $86660 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was understated by $43330 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was overstated by $43330 and net income was understated by $43330. O Accumulated Depreciation was understated by $43330 and net income was overstated by $43330.
- 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"In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $67,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 25%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be no change in taxes payable. Additional Information: 20X6 20X5 Beginning retained earnings $454,000 $430,400 Earnings (includes error in 20X5) Dividends declared 85,400 95,900 62,200 72,300Wildhorse Co. purchased machinery that cost $2850000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a 9-year life and a $185000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations.Wildhorse's income statement for the year ended December 31, 2021, should show the cumulative effect of this error in the amount of
- In December of 2019, a company received consulting services of $100,000. No entry was recorded for these service in 2019. The invoice for the services was received in January 2020 and recorded by debiting consulting expense and crediting accounts payable. This error was discovered in 2020 and was determined to be a material error. What is the impact of the error on the net income of 2019 and 2020? Provide the proper correcting journal enntry assuming a 30% tax rate.Northwestern Ocean Lapidary Inc. has been in business since 2015. However, during the 2020 pandemic, the company suffered a large net operating loss. See below. Despite a bad 2020, the company expect to turn a profit in 2021 and in subsequent years. Below you will see the actual taxable income from 2018 to 2021. You will also see the company's expected taxable income from 2022 to 2025. Under current tax laws the company was unable to carry back the NOL in 2020. However, the company applied the NOL CF to offset all taxable income in 2021. Taxable Income 2018 2$ 144,000 2019 $ 252,000 2020 $ (876,000) 2021 $ 72,000 2022* 2$ 204,000 2023* $ 264,000 2024* $ 312,000 2025* 2$ 420,000 *Expected Existing and future enacted tax rates are as follows: 21% in 2018 to 2021, 25% in 2022 and 2023, 28% in 2024, and 32% in 2025 and all years thereafter. What is the DTA the company will report on its 2021 balance sheet that corresponds to the NOL Carry Foward? 227,160 353,880 212,040 212,040 None of the…Sunland Company reports pretax financial income of $72,600 for 2025. The following items cause taxable income to be different than pretax financial income. 2. Depreciation on the tax return is greater than depreciation on the income statement by $17,200. Rent collected on the tax return is greater than rent recognized on the income-statement by $20,300. 3. Fines for pollution appear as an expense of $9,900 on the income statement. Sunland's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2025. (a) X Your answer is incorrect. Compute taxable income and income taxes payable for 2025. Taxable income $ 92500 Income taxes payable $ 27750
