Connect Access Card for Intermediate Accounting

9th Edition

ISBN: 9781260029871

Author: J. David Spiceland, Wayne M Thomas, Mark W. Nelson

Publisher: McGraw-Hill Education

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue autho…

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Textbook Question

Chapter 16, Problem 16.18E

Multiple temporary differences; record income taxes

• LO16–6

The information that follows pertains to Esther Food Products:

a. At December 31, 2018, temporary differences were associated with the following future taxable (deductible) amounts:

Depreciation	$ 60,000
Prepaid expenses	17,000
Warranty expenses	(12,000)

b. No temporary differences existed at the beginning of 2018.

c. Pretax accounting income was $80,000 and taxable income was $15,000 for the year ended December 31, 2018.

d. The tax rate is 40%.

Required:

Determine the amounts necessary to record income taxes for 2018, and prepare the appropriate journal entry.

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Chapter 16, Problem 16.17E

Chapter 16, Problem 16.19E

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The comparative balance sheets and an income statement for Raceway Corporation follow. Balance Sheets As of December 31 Year 2 Year 1 Assets Cash $ 6,300 $ 48,400 Accounts receivable 10,200 7,260 Inventory 45,200 56,000 Prepaid rent 700 2,140 Equipment 140,000 144,000 Accumulated depreciation (73,400) (118,000) Land 116,000 50,000 Total assets $ 245,000 $ 189,800 Liabilities Accounts payable (inventory) $ 37,200 $ 40,000 Salaries payable 12,200 10,600 Stockholders’ equity Common stock, $50 par value 150,000 120,000 Retained earnings 45,600 19,200 Total liabilities and stockholders’ equity $ 245,000 $ 189,800 Income Statement For the Year Ended December 31, Year 2 Sales $ 480,000 Cost of goods sold (264,000) Gross profit 216,000 Operating expenses Depreciation expense (11,400) Rent expense (7,000) Salaries expense (95,200) Other operating expenses (76,000) Net income $ 26,400 Other Information Purchased…

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Chapter 16 Solutions

Connect Access Card for Intermediate Accounting

Ch. 16 - Prob. 16.1Q Ch. 16 - A deferred tax liability (or asset) is described...Ch. 16 - Prob. 16.3Q Ch. 16 - Prob. 16.4Q Ch. 16 - Temporary differences result in future taxable or...Ch. 16 - Identify three examples of differences with no...Ch. 16 - The income tax rate for Hudson Refinery has been...Ch. 16 - Suppose a tax reform bill is enacted that causes...Ch. 16 - A net operating loss occurs when tax-deductible...Ch. 16 - Prob. 16.10Q

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Solution Summary: The author explains the calculation of income tax payable and the amount of deferred tax assets.

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Chapter 16 Solutions