a
Concept Introduction:
Income tax liabilities: Corporations are required to estimate their income tax liabilities when the financial statements are prepared because income tax expenses are based on earned income. Liability for tax expenses must be created and settled regularly.
The accounting adjustment to correct the ending balance in the income taxes payable account.
b
Concept Introduction:
Income tax liabilities: Corporations are required to estimate their income tax liabilities when the financial statements are prepared because income tax expenses are based on earned income. Liability for tax expenses must be created and settled regularly.
The
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FINANCIAL AND MANAGERIAL ACCOUNTING
- Fanta Ltd has paid the following PAYG tax installments for the year ended 30 June: September quarter $11,000 December quarter $11,000 March quarter $11,000 June quarter $11,000 Total $44,000 Taxable income for the year ended 30 June, was $168,000. Company tax rate is 30%. Required: Prepare general journal entries to record the company’s income tax instalments and final payment.arrow_forwardTrombone deducts employment taxes from its employees' wages on a monthly basis and pays these to the local taxation authorities in the following month. At the year-end the financial statements will contain an accrual for income tax payable on employment income. You will be in charge of auditing this accrual. Question: Describe the audit procedures required in respect of the year-end accrual for tax payable on employment income.arrow_forwardCee & Co.’s fiscal year begins April 1. At the beginning of its fiscal year, Cee & Co. estimates that it will owe $17,400 in property taxes for the year. On June 1, its property taxes are assessed at $17,000, which it pays immediately. Required: 1. Prepare the related journal entries for April 1, May 1, and June 1. 2. Then compute the monthly property tax expense that Cee & Co. would record during July through March.arrow_forward
- Accounting for personal income taxesSaralisa City, which operates on a calendar year basis, obtains 40 percent of its revenues from personal income taxes. Employers are required to withhold taxes from the earnings of city residents and remit them to the city monthly.City residents must also make payments, if necessary, with quarterly tax estimates. No later than April 15 of the following year, residents must file tax returns, remitting any additional taxes due to the city or claiming refunds of overpayments.Saralisa’s accounting policies call for recognizing taxes obtained from income earned during a particular calendar year provided the taxes are received during the year or before April 30 of the following year;income taxes received after April 30 are recognized as revenues of the year in which received.arrow_forwardThe following selected transactions apply to Topeca Supply for November and December Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. 1. Cash sales for November Year 1 were $65,500, plus sales tax of 7 percent. 2. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1. 3. Cash sales for December Year 1 were $83,500, plus sales tax of 7 percent.arrow_forwardThe following selected transactions apply to Topeca Supply for November and December Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. Cash sales for November Year 1 were $65,000, plus sales tax of 10 percent. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1. Cash sales for December Year 1 were $79,500, plus sales tax of 10 percent. Requireda. Record the preceding transactions in general journal form.b. Show the effect of the preceding transactions on a horizontal statements model like the one shown next.c. What was the total amount of sales tax paid in Year 1?d. What was the total amount of sales tax collected in Year 1?e. What amount of sales tax expense will be reported on the Year 1 income statement?arrow_forward
- The following selected transactions apply to Topeca Supply for November and December, Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. 1. Cash sales for November, Year 1, were $165,000 plus sales tax of 7 percent. 2. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1. 3. Cash sales for December, Year 1, were $180,000 plus sales tax of 7 percent. Required: a. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). b. What was the total amount of sales tax paid in Year 1? c. What was the total amount of sales tax collected in Year 1?…arrow_forwardThe following selected transactions apply to Topeca Supply for November and December, Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. Cash sales for November, Year 1 were $64,500 plus sales tax of 9 percent. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1. Cash sales for December, Year 1 were $80,000 plus sales tax of 9 percent. Show the effect of the above transactions on a statements model like the one shown as follows. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). If an element is not affected by the event, leave the cell blank. What was the total amount of sales tax paid in Year 1?arrow_forwardThe following selected transactions apply to Topeca Supply for November and December, Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. Cash sales for November, Year 1 were $64,500 plus sales tax of 9 percent. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1. Cash sales for December, Year 1 were $80,000 plus sales tax of 9 percent. On which financial statement will the sales tax liability appear?arrow_forward
- The following selected transactions apply to Topeca Supply for November and December, Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. Cash sales for November, Year 1 were $64,500 plus sales tax of 9 percent. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1. Cash sales for December, Year 1 were $80,000 plus sales tax of 9 percent. What was the total amount of sales tax collected in Year 1? What is the amount of the sales tax liability as of December 31, Year 1?arrow_forwardMatrix Corporation estimated at the beginning of 20-- that its income tax for the year would be $140,000. 1. Calculate the estimated income tax payment per quarter and show one of the quarterly entries to pay the taxes. If an amount box does not require an entry, leave it blank. Page: 1 POST. DATE DESCRIPTION DEBIT CREDIT REF. 1 Apr. 15 1 2. As of December 31, 20--, Matrix Corporation had an actual tax liability of $143,200. Calculate the income tax due and make the necessary adjusting entry. If an amount box does not require an entry, leave.it blank. Page: 1 POST. DATE DESCRIPTION DEBIT CREDIT REF. 1 Dec. 31 2 2.arrow_forwardThe following selected transactions apply to Topeca Supply for November and December, Year 1. November was the first month of operations. Sales tax is collected at the time of sale but is not paid to the state sales tax agency until the following month. 1. Cash sales for November, Year 1 were $64,000 plus sales tax of 6 percent. 2. Topeca Supply paid the November sales tax to the state agency on December 10, Year 1. 3. Cash sales for December, Year 1 were $80,000 plus sales tax of 6 percent. Required a. Show the effect of the above transactions on a statements model like the one shown as follows. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). If an element is not affected by the event, leave the cell blank. b. What was the total amount of sales tax paid in Year 1? c. What was the total amount of sales tax collected in Year 1? d. What is the amount of the sales tax liability as of December 31,…arrow_forward
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