ADVANCED FIN. ACCT. LL W/ACCESS>CUSTOM<
ADVANCED FIN. ACCT. LL W/ACCESS>CUSTOM<
12th Edition
ISBN: 9781265074623
Author: Christensen
Publisher: MCG CUSTOM
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Chapter 13, Problem 13.15P

Interim Income Statement
Chris Inc. has accumulated the following information for its second−quarter income statement for20X2:

Chapter 13, Problem 13.15P, Interim Income Statement Chris Inc. has accumulated the following information for its secondquarter , example  1

Additional In formation
1. First-quarter income before taxes was $100,000, and the estimated effective annual tax rate was 40 percent. At the end of the second quarter, expected annual income is $600,000, and a dividend exclusion of $30,000 and a business tax credit of $15,000 are anticipated. The combined state and federal tax rate is 50 percent.
2. The $420,000 cost of goods sold is determined by using the LIFO method and includes 7,500 units from the base layer at a cost of $12 per unit. However, you have determined that theseunits are expected to be replaced at a cost of $26 per unit.
3. The operating expenses of $230,000 include a $60,000 factory rearrangement cost incurred inApril. You have determined that the second quarter will receive about 25 percent of the benefits from this project with the remainder benefiting the third and fourth quarters.

Required

  1. Calculate the effective annual tax rate expected at the end of the second quarter for Chris Inc.
  2. Prepare the income statement for the second quarter of 20X2. Your solution should include a computation of income tax (or benefit) with the following headings:

Chapter 13, Problem 13.15P, Interim Income Statement Chris Inc. has accumulated the following information for its secondquarter , example  2

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GHI Company expects to earn P10,000 pre-tax profit in each of the 1st and 2nd quarters of the year and P15,000 pre-tax profit in each of the last two quarters. The tax rate as of the beginning of the year is 20%. However, following a newly enacted tax legislation, the tax rate will be increased to 30% which shall take effect beginning on the last quarter of the year. Actual earnings match expectations. Compute for income tax expense for the 2nd quarter of the year.
Chicago Company, a calendar-year corporation, had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20x2: Quarter Income Before Income Tax Expense Estimated Effective Annual Tax Rate at the End of Each Quarter First $70,000 Second $90,000 Third $120,000 28% 26% 30% Chicago's income tax expense in its interim income statement for the third quarter should be: a) $36,000 b) $41,000 c) $42,400 d) $84,000
Rhodes Corporation’s financial statements are shown after part f. Suppose the federalplus- state tax corporate tax is 25%. Answer the following questions.a. What is the net operating profit after taxes (NOPAT) for 2020?b. What are the amounts of net operating working capital for both years?c. What are the amounts of total net operating capital for both years?d. What is the free cash flow for 2020?e. What is the ROIC for 2020?f. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.)

Chapter 13 Solutions

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