Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method. The company decided to use the same for income tax purposes. The tax rate enacted is 20%. Income before taxes under both the methods for the past three years appears below. 2019 2020 2021 Completed contract $450,000 $300,000 $150,000 Percentage-of-completion 750,000 375,000 270,000 Which of the following will be included in the journal entry made by Dream Home to record the income effect? Question 80 options: a A debit to Retained Earnings for $300,000 b A credit to Retained Earnings for $200,000 c A credit to Retained Earnings for $300,000 d A debit to Retained Earnings for $200,000
Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method. The company decided to use the same for income tax purposes. The tax rate enacted is 20%. Income before taxes under both the methods for the past three years appears below. 2019 2020 2021 Completed contract $450,000 $300,000 $150,000 Percentage-of-completion 750,000 375,000 270,000 Which of the following will be included in the journal entry made by Dream Home to record the income effect? Question 80 options: a A debit to Retained Earnings for $300,000 b A credit to Retained Earnings for $200,000 c A credit to Retained Earnings for $300,000 d A debit to Retained Earnings for $200,000
Chapter12: Alternative Minimum Tax
Section: Chapter Questions
Problem 1BCRQ
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Question
#80
Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method.
The company decided to use the same for income tax purposes. The tax rate enacted is 20%.
Income before taxes under both the methods for the past three years appears below.
Which of the following will be included in thejournal entry made by Dream Home to record the income effect?
The company decided to use the same for income tax purposes. The tax rate enacted is 20%.
Income before taxes under both the methods for the past three years appears below.
| 2019 | 2020 | 2021 |
| Completed contract | $450,000 | $300,000 | $150,000 |
| Percentage-of-completion | 750,000 | 375,000 | 270,000 |
Which of the following will be included in the
Question 80 options:
|
a
|
A debit to
|
|
b
|
A credit to Retained Earnings for $200,000
|
|
c
|
A credit to Retained Earnings for $300,000
|
|
d
|
A debit to Retained Earnings for $200,000
|
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