A. On November 14, 2013 a delivery truck of the Boone Company jumped the curb in a quiet residential neighborhood, running into a bus stop where twelve pedestrians were waiting for a bus. All twelve pedestrians suffered injuries, including four fatalities. In 2013 Boone estimates that the total costs it will incur to resolve all the legal suits charged by the plaintiffs will be between $52-110 million. The fiscal year is the calendar year. Indicate what would be charged to the income statement and the tax form if in 2013 Boone allows an amount for damages of $70 million. By the end of 2017 all related legal matters had been resolved, and the actual settlements and related payments were as shown in the table. Complete the table for the dollar amounts shown on the income statements and tax forms for each of these years: Cumulative Total 2013 2014 2015 2016 2017 Actual $19 $20 $14 $12 $13 $78 Раyments Income Statement Тах Form A. On the ending balance sheet of December 31, 2014, how much was reported in the following account: Allowance For Legal Matters Outstanding: B. Which kind of account (circle one item below) is the Allowance For Legal Matters Outstanding? • Asset Liability Owners' Equity Revenue Expense

A. On November 14, 2013 a delivery truck of the Boone Company jumped the curb in a quiet residential neighborhood, running into a bus stop where twelve pedestrians were waiting for a bus. All twelve pedestrians suffered injuries, including four fatalities. In 2013 Boone estimates that the total costs it will incur to resolve all the legal suits charged by the plaintiffs will be between $52-110 million. The fiscal year is the calendar year. Indicate what would be charged to the income statement and the tax form if in 2013 Boone allows an amount for damages of $70 million. By the end of 2017 all related legal matters had been resolved, and the actual settlements and related payments were as shown in the table. Complete the table for the dollar amounts shown on the income statements and tax forms for each of these years: Cumulative Total 2013 2014 2015 2016 2017 Actual $19 $20 $14 $12 $13 $78 Раyments Income Statement Тах Form A. On the ending balance sheet of December 31, 2014, how much was reported in the following account: Allowance For Legal Matters Outstanding: B. Which kind of account (circle one item below) is the Allowance For Legal Matters Outstanding? • Asset Liability Owners' Equity Revenue Expense

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 77P: During the last five months of the year, Dwana opens a new Internet telecommunications business...

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During the last five months of the year, Dwana opens a new Internet telecommunications business called Dwan-Com. Dwan-Com bills 50,000 of revenues, but receives only 40,000 cash. Dwan-Com incurs 3,000 of supply expenses, and 41,000 of labor costs. Dwan-Com pays for 2,200 of the supplies and 38,000 of the labor costs in the current year. a. What is Dwan-Coms taxable income if it elects the cash method of accounting? b. What is Dwan-Coms taxable income if it elects the accrual method of accounting? c. What method of accounting do you recommend that Dwan-Com elect?
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