FINANCIAL AND MANAGERIAL ACCOUNTING
FINANCIAL AND MANAGERIAL ACCOUNTING
9th Edition
ISBN: 2818440048890
Author: Wild
Publisher: MCG CUSTOM
Question
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Chapter 9, Problem 22E

a

To determine

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

To determine

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 journal entries to record adjustments to income tax and payment of tax of the fourth quarter.

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Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 30% of the current month’s net income. The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter. The following infor-mation is available for the fourth quarter of the year just ended. When tax computations are completed on January 20 of the following year, Nishi determines that the quarter’s Income Taxes Payable account balance should be $28,300 on December 31 of the year just ended (its unadjusted balance is $24,690). October net income . . . . . . . $28,600 November net income . . . . $19,100 December net income . . . . . $34,600 1. Determine the amount of the accounting adjustment (dated as of December 31) to get the correct ending balance in the Income Taxes Payable account. 2. Prepare journal entries to record (a) the December 31 adjustment to the Income Taxes Payable account and…
Nishi Corporation prepares financial statements for each month-end. As part of its accounting process, estimated income taxes are accrued each month for 28% of the current month's net income. The income taxes are paid in the first month of each quarter for the amount accrued for the prior quarter. The following information is available for the fourth quarter of the year just ended. When tax computations are completed on January 20 of the following year, Nishi determines that the quarter's Income Taxes Payable account balance should be $29,446 on December 31 of the year just ended (its unadjusted balance is $24,346). October net income November net income $ 31,000 20,150 35, 800 December net income 1. Determine the amount of the accounting adjustment (dated as of December 31) to get the correct ending balance in the Income Taxes Payable account. 2. Prepare journal entries to record (a) the December 31 adjustment to the Income Taxes Payable account and (b) the later January 20 payment of…
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Chapter 9 Solutions

FINANCIAL AND MANAGERIAL ACCOUNTING

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