Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
A resident company with a 30% company tax rate is owned by one resident individual. The company has an opening credit balance of $12,000 in its franking account as at 1st of July 2020. Following are the transactions for the year:
- On 12 July 2020 a fully franked final dividend of $14,000 was paid to the shareholder;
- On 23 August 2020 the PAYG Instalment for June 2020 quarter of $22,000 was paid to the ATO;
- On 31 August 2020 a $42,000 cash dividend franked to 50% was paid to the shareholder;
- On 18 November 2020 the PAYG Instalment for September 2020 quarter of $22,000 was paid to the ATO;
- On 12 December 2020 the company received an income tax refund of $28,000 from the ATO for the 2020 tax return;
- On 21 February 2021 the PAYG Instalment for December 2020 quarter of $12000 was paid to the ATO;
- On 12 May 2021 the PAYG Instalment for March 2021 quarter of $12,000 was paid to the ATO;
- On 21 May 2021 the PAYG Withholding for the month of April 2021 of $42,000 for employee wages was paid to the ATO.
- On 15 June 2021 a fully franked interim dividend of $84,000 was proposed by the board to be paid to the shareholder.
Required:
You are required to prepare the company’s franking account for this income year and advise of any discrepancies you discover.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps
Knowledge Booster
Similar questions
- DIMAG Ltd, an unquoted trading company, which prepares accounts to 31 March. The draft accounting profits for the year ended 31 March 2024 are £365,300. The following items have been added or deducted in arriving at the draft accounting profit. Depreciation Bonuses Qualifying donation Exempt dividends received Bank interest receivable Notes Note £ 24,200 1 50,000 2 7,600 3 2,700 4,000 1 DIMAG Ltd totalling £50,000 were paid by the company in respect of the period, on 2 March 2025. These were the first bonuses paid by the company. 2 The qualifying donation of £7,600 in the accounts comprises of £6,600 paid during the accounting period and an accrual of £1,000 that the company had agreed to pay but was not paid until 10 July 2024. 3 Exempt dividends of £2,000 were received from unrelated UK companies and £700 received from an unrelated German company. In addition, the following items have not yet been included in the accounts: · Legal fees in relation to an issue of share capital…arrow_forwardE 6arrow_forwardFor each of the following situations, indicate the amount shown as current or long-term liability on the balance sheet of Anchor, Inc., at December 31: a. Anchor's general ledger shows a credit balance of $125,000 in Long-Term Notes Payable. Of the amount, a $25,000 installment becomes due on June 30 of the following year. b. Anchor estimates its unpaid income tax liability for the current year is $34,000; it plans to pay this amount in March of the following year. c. On December 31, Anchor received a $15,000 invoice for merchandise shipped on December 28. The merchandise has not yet been received. The merchandise was shipped F.O.B. shipping point. d. During the year, Anchor collected $10,500 of state sales tax. At year-end, it has not yet remitted $1,400 of these taxes to the state department of revenue. e. On December 31, Anchor's bank approved a $5,000, 90-day loan. Anchor plans to sign the note and receive the money on January 2 of the following year. Current Liability Long-Term…arrow_forward
- SydMel Ltd commences operations on 1 July 2020. One year later, on 30 June 2021, the entity prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available. Statement of Profit or Loss and other Comprehensive Income For the year ended 30 June 2021 Gross Profit $510,000 Salaries expenses (210,000) Rent expense (52,000) Long service leave expenses (50,000) Depreciation expense - Plant (30,000) Bad debt expense (19,000) Accounting Profit Before Tax $149,000 The Statement of Financial Position (Extract/partial) As at 30 June 2021 Assets: Cash $152,000 Inventories 198,000 Account receivables (net) 179,000 Prepaid rent 51,000 Plant 150,000 Accumulated depreciation - plant (30,000) 700,000 Liabilities: Revenue received in advance 52,000…arrow_forwardThe trial balance of Plano Company included the following accounts as of December 31, 2024: Debits Credits Sales revenue $ 622,000 Interest revenue 76,000 Gain on sale of investments 126,000 Cost of goods sold $ 440,000 Selling expense 134,000 Interest expense 24,000 General and administrative expenses 88,000 Plano had 50,000 shares of stock outstanding throughout the year. Income tax expense has not yet been accrued. The effective tax rate is 25%. Required: Prepare a single-step income statement with earnings per share disclosure. Note: Round earnings per share answer to 2 decimal places.arrow_forwardCFC Pty Ltd (‘the company’) recorded the following transactions in relation to its franking account: - 1 July 2020 – The company had an opening balance of $43,000 (credit) - 6 September 2020 – The company received a fully franked dividend of $52,000 - 2 October 2020 – The company paid an income tax instalment of $34,000 to the ATO - 11 November 2020 – Received a tax refund of $19,000 from the ATO Required: Calculate CFC Pty Ltd’s franking account closing balance on 30 June 2021arrow_forward
- Matrix 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_forwardA domestic corporation started its operations in year 2008. The following data on income taxes during the years 2012 to 2019 were made available: YEAR RCIT MCIT 2012 25,000 100,000 2013 100,000 150,000 2014 300,000 190,000 2015 250,000 300,000 2016 100,000 50.000 2017 70,000 50.000 2018 5.000 40.000 2019 85,000 60,000 How much is the income tax payable for the year 2018 and 2019, respectively? O 50,000 : 70.000 O 40,000 ; 85,000 O 40,000: 50,000 O None of the choicesarrow_forwardLone Star Company is a calendar-year corporation, and this year Lone Star reported $122,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star’s accumulated E&P was $14,640. At the beginning of the year, Lone Star’s sole shareholder was Matt McCon. Lone Star declared $36,600 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) b. Suppose that Matt sold half of his shares to Chris Coop on June 1st for $51,000. How much dividend income will Matt recognize this year? Dividend recognized: c. If Matt’s basis in his Lone Star shares was $8,100 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star? Capital gain recognized on the sale and distribution:arrow_forward
- The Tusquittee company is a retail company that began operating on October 1, 2018, when it incorporated in the state of North Carolina. The Tusquitte Company is authorized to issue 100,000 shares of $1 par value common stock and 50,000 shares of 5 %, $50 par value preferred stock. The Company sells a product that includes a one year warranty and records estimated warranty payable each month. Customers are charged a 6 % state sale tax. The company uses a perpetual inventory system. There are three employees that are paid a monthly salary on the last day of the month. Following is the chart of accounts for The Tusquittee Company. As a new business, all beginning balances are $0 Can I get some help for numbers 1, 2, 3, and 4? Thank youarrow_forwardRicci Corporation is preparing their financial statements for the year ending September 30, 2021. Ricci Corporation has two categories of stock; Preferred and Common. On September 25, 2021 Ricci Corporation declared dividends on the preferred stock which will be paid on October 18, 2021. In order to calculate EPS the staff accountant had the following information: 2021 Net Income: $4,000,000 Preferred Dividends Declared in September 25, 2021 $ 500,000 but not paid until October 18, 2021 Weighted Average Number of Common Shares Outstanding 125,000 shares The staff accountant has determined that since the preferred dividends were not paid prior to September 30, 2021 the preferred dividend should not be included in the 2021 EPS. Accounting Issue: In the calculation for EPS should Ricci Corporation include the preferred dividends not paid prior to September 30, 2021? Your Interpretation of the Guidance: Should Ricci Corporation include the preferred dividends in the calculation of EPS…arrow_forwardOn June 30, 2020, Wisconsin, Inc., issued $158,100 in debt and 21,600 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2020, were as follows (credit balances in parentheses): Revenues Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 6/30 Cash Receivables and inventory Patented technology (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and equities Accounts a.Net income b. Retained earnings. 1/1/20 e Patented technology (net) d. Goodwill Liabilities Common stock 9. Additional paid-in capital Wisconsin S (983,000) 687,000 Amounts $ (296,000) $ (892,000) (296,000) 102,250 $(1,085,750) $ 187,750 418,000 987,000 706,000 $ 2,298,750 3…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education