Required: 1. Calculate the Section 481 adjustment with respect to the Company's 2021 change in accounting method from the cash method to the accrual method. 2. Indicate whether the adjustment is a positive adjustment or a negative adjustment.
Required: 1. Calculate the Section 481 adjustment with respect to the Company's 2021 change in accounting method from the cash method to the accrual method. 2. Indicate whether the adjustment is a positive adjustment or a negative adjustment.
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 22CE
Related questions
Question
Transcribed Image Text:T Corporation (the Company) has historically filed its federal
and state income tax returns on the cash method of accounting.
For the year ended December 31, 2021, management has
decided to change its method of accounting to the accrual
method. The Company's trial balance, as of and for the year
ended December 31, 2021, is as follows.
T Corporation
Trial Balance
12.31.21
Debit
Credit
Cash
25,000
Accounts receivable
230,000
1,750,000
Equipment
Accumulated depreciation
Accounts payable
Notes payable bank
Common stock
1,750,000
45,000
20,000
5,000
Retained earnings (deficit)
1,315,000
Sales
4,250,000
Expenses
2,750,000
Totals
6,070,000
6,070,000
Required:
1. Calculate the Section 481 adjustment with respect to the
Company's 2021 change in accounting method from the
cash method to the accrual method.
2. Indicate whether the adjustment is a positive adjustment or
a negative adjustment.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you