Business
Engineering
Math
Science
Social Science
Intermediate Accounting: Reporting...
Solutions
Intermediate Accounting: Reporting...
Comprehensive At the beginning of 2019, Norris Company had a deferred tax liability of $6,400, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income tax rate is 30% for 2018 and 2019, but in 2018 Congress enacted a 40% tax rate for 2020 and future years.
Morris’s accounting records show the following pretax items of financial income for 2019: income from continuing operations, $120,000 (revenues of $352.000 and expenses of $232,000); gain on disposal of Division F, $23,000; loss from operations of discontinued Division F, $10,000; and prior period adjustment, $15,000, due to an error that understated revenue in 2018. All of these items are taxable; however, financial depreciation for 2019 on assets related to continuing operations exceeds tax depreciation by $5,000. Norris had a retained earnings balance of $161,000 on January 1, 2019, and declared and paid cash dividends of $32,000 during 2019.
Required:
- 1. Prepare Norris’s income tax journal entry at the end of 2019.
- 2. Prepare Norris’s 2019 income statement.
- 3. Prepare Norris’s 2019 statement of retained earnings.
- 4. Show the related income tax disclosures on Norris’s December 31, 2019, balance sheet.
1.
Record the income tax entry for Company N.
Income Tax Expenses: The expenses which are related to the taxable income of the individuals and business entities for an accounting period, and are recognized by them for the purpose of federal government and state government tax are called as income tax expenses.
Record the income tax entry for Company N.
| Date | Accounts title and explanation | Post Ref. | Debit ($) | Credit ($) |
| 2019 | Â | Â | Â | Â |
| December 31 | Income Tax Expense (balancing figure) | Â | 30,100 | Â |
|  | Gain on disposal of division F |  | 6,900 |  |
| Â | Retained Earnings (prior period adjustment) | Â | 4,500 | Â |
| Â | Deferred Tax Liability | Â | 2,000 | Â |
| Â | Loss from Disposal of Division F | Â | Â | 3,000 |
| Â | Â Â Â Â Income Tax Payable | Â | Â | 40,500 |
| Â | (To record income tax expense with pre-tax income allocation) | Â | Â | Â |
Table (1)
- Income Tax Expense is a component of stockholders’ equity and decreased, so debit it for $30,100
- Gain on disposal of division F is a component of stockholders’ equity and decreased, so debit it for $6,900.
- Retained Earnings is a component of stockholders’ equity decreased, so debit it for $4,500.
- Deferred Tax Liability is a liability and decreased, so debit it for $2,000...
2.
Prepare an income statement of Company N for the year 2019.
3.
Prepare statement of retained earnings of Company N for 2019.
4.
Explain the manner of reporting income tax disclosures in the balance sheet of Company N.
Chapter 18 Solutions
Additional Business Solutions
Find more solutions based on key concepts
Show solutions addCash flows from operating activitiesnet loss United Continental Holdings, Inc., the parent company of United Ai...
Corporate Financial Accounting
During the taking of its physical inventory on August 31, 2019, Kate Interiors Company incorrectly counted its ...
Financial Accounting
Classifying costs as factory overhead Which of the following items arc properly classified as part of factory o...
Financial & Managerial Accounting
Distinguish between the FTP and TELNET protocols.
Accounting Information Systems
WORKING BACKWARD FROM ADJUSTED TRIAL BALANCE TO DETERMINE ADJUSTING ENTRIES The partial spreadsheet shown below...
College Accounting, Chapters 1-27
Sharp Paper Inc. has three paper mills, one of which is located in Memphis, Tennessee. The Memphis mill produce...
Managerial Accounting: The Cornerstone of Business Decision-Making
The condensed income statements through operating income for Amazon.com, Inc. (AMZN), Bent Buy Co., Inc. (BBY),...
Financial And Managerial Accounting
INSTRUCTOR: Visit the Instructor Companion Website for lecture notes, solutions, discussion guides, and other r...
Essentials of Business Communication (MindTap Course List)
What are the two subfields into which economics is divided? Explain what each subfield studies.
Essentials of Economics (MindTap Course List)
Among monopoly, oligopoly, monopolistic competition, and perfect competition, how would you classify the market...
Principles of Economics (MindTap Course List)
What might motivate a central banker to cause a political business cycle? What does the political business cycl...
Principles of Macroeconomics (MindTap Course List)
Table 1.7 shows data for eight cordless telephones (Consumer Reports, November 2012). The Overall Score, a meas...
STATISTICS F/BUSINESS+ECONOMICS-TEXT
What reasons would you give if you were advising someone to study business?
Foundations of Business (MindTap Course List)
List the four components of GDP. Give an example of each.
Brief Principles of Macroeconomics (MindTap Course List)
An economy produces hot dogs and hamburgers. If a discovery of the remarkable health benefits of hot dogs were ...
Principles of Microeconomics (MindTap Course List)
Suppose a company simultaneously Issues 50 million of convertible bonds with a coupon rate of 9% and 50 million...
Fundamentals of Financial Management (MindTap Course List)
(Equilibrium) Assume the market for corn is depicted as in the table that appears below. a. Complete the table ...
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Experts advise that most catastrophes in organizations result from a series of small problems or mistakes. As a...
Management, Loose-Leaf Version
Contrast the focus of marketing activities during the five eras of marketing history.
Contemporary Marketing
BASICS OF CAPITAL BUDGETING You recently went to work for Allied Components Company, a supplier of auto repair ...
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Discuss the impact of multinational firms on the world economy
MKTG 12:STUDENT ED.-TEXT
What are the three types of maintenance activities?
Accounting Information Systems
Entries for stock dividends Antique Buggy Corporation has 820,000 shares of 35 par common stock outstanding. On...
Financial & Managerial Accounting
Trophy Fish Company supplies flies and fishing gear to sporting goods stores and outfitters throughout the west...
Financial Accounting
Accepting business at a special price for a service company Cityscape Hotels has 200 rooms available in a major...
Accounting (Text Only)
Sharons Dance Studio has the following information related to its current year payroll as of December 31: a. Fe...
College Accounting (Book Only): A Career Approach
Answer the following questions about unemployment. a. If a country has a non-institutional population of 200 mi...
Exploring Economics
The U.S. Department of Energy provides fuel economy information for a variety of motor vehicles. A sample of 10...
Statistics for Business & Economics, Revised (MindTap Course List)
STOCK REPURCHASES Beta Industries has net income of 2,000,000, and it has 1,000,000 shares of common stock outs...
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
CASH RECEIPTS JOURNAL Color Florists, a retail business, had the following cash receipts during January 20--. T...
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Floress Catering purchased equipment that cost 2,500, but it was recorded as 520. Which of the following is cor...
College Accounting (Book Only): A Career Approach
A case study in this chapter discusses the federal minimum-wage law. a. Suppose the minimum wage is above the e...
Principles of Macroeconomics (MindTap Course List)
What is the purpose of each control plan listed in the control matrix (Figure 14.10, on pp. 560561).
Pkg Acc Infor Systems MS VISIO CD
Using Past Information to Estimate Required Returns Use online resources to work on this chapter's questions. P...
Fundamentals of Financial Management (MindTap Course List)
Horizontal analysis The comparative accounts payable and long-term debt balances for a company follow. Current...
Corporate Financial Accounting
Utilization rate Southwest Airlines Co. (LUV) reported the following data (in millions) for a recent year. Year...
Survey of Accounting (Accounting I)
Is it necessary for an employer who is subject to FICA and FUTA taxes to keep a separate expense account for th...
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Deadweight loss results from a. equilibrium. b. underproduction. c. overproduction. d. none of the above. e. ei...
Economics For Today
Suppose Real GDP is 5.2 trillion in year 1 and 5.3 trillion in year 2. What has caused the rise in Real GDP?
Economics (MindTap Course List)
The following comment was made by the CEO of a company that recently implemented the Balanced Scorecard: Respon...
Cornerstones of Cost Management (Cornerstones Series)
Economist Jones believes that there is always sufficient (aggregate) demand in the economy to buy all the goods...
Macroeconomics
You are scheduling company interviews at the annual university career fair. Five interview rooms are available....
Practical Management Science
Discuss the reasons why measuring and evaluating purchasing performance has historically had certain problems o...
Purchasing and Supply Chain Management
