Sideline Company reported net income for 2021 of $70,000 and in 2022 of $84,000 (both after income taxes at a 30% rate). It was discovered in 2022 that the ending inventory for 2021 was understated by $2,000 (before any income tax effect). Required: Calculate the correct net income (after income tax of 30%) for 2021 and 2022. Net income after tax 2021 $ 71,400 2022 $82,600

Sideline Company reported net income for 2021 of $70,000 and in 2022 of $84,000 (both after income taxes at a 30% rate). It was discovered in 2022 that the ending inventory for 2021 was understated by $2,000 (before any income tax effect). Required: Calculate the correct net income (after income tax of 30%) for 2021 and 2022. Net income after tax 2021 $ 71,400 2022 $82,600

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 18E

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Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020. Prepare Hellers partial income statements (through gross profit) for 2019 and 2020. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the: a. income statement at 12,000 b. income statement at 8,400 (net of 3,600 income taxes) c. retained earnings statement at 12,000 d. retained earnings statement at 8,400 (net of 3,600 income taxes)
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The Pyramid Company has used the LIFO method of accounting for inventory during its first two years of operation, 2019 and 2020. At the beginning of 2021, Pyramid decided to change to the average cost method for both tax and financial reporting purposes. The following table presents information concerning the change for 2019-2021. The income tax rate for all years is 25%. 2019 2020 Total 2021 Income before Income Tax Using Average Cost Using LIFO Method $ 90,000 45,000 $135,000 $ 51,000 Method $60,000 36,000 $96,000 $46,000 Difference $30,000 9,000 $39,000 $ 5,000 Income Tax Effect $7,500 2,250 $9,750 $1,250 Difference after Tax $22,500 6,750 $29,250 $ 3,750 Pyramid issued 50,000 $1 par, common shares for $230,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $10,000 cash dividends were paid in both 2020 and 2021. Required: 1. Prepare the journal entry at January 1, 2021, to record the change in…
Brush Company has the following income before income tax and estimated effective annual income tax rates for the first three quarters of 2019. Quarter Income before income Estimated Effective Tax Tax provision rate 7 st 120,000 12 2nd 130,000 10 3rd 140,000 14 Required: What should be Brush company estimated income for "First" quarter income statement? Select one: a. $54,600 b. None of the other points c. $39,000 Od. $46,800 %24
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On January 1, 2018, Toups Inc. changed from FIFO to LIFO for income tax and external reporting purposes. At that date, the beginning FIFO inventory was $75,000. See the following information from Toups's records. Ending Inventory at FIFO $ 75,000 88,000 100,000 Year Index 2018 2019 1.00 1.10 2020 1.15 2021 2022 75,000 88,000 1.20 1.25 3e. Write the necessary adjusting entries to adjust the LIFO Reserve for each year.
Bridgeport Inc. reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes: Year 2018 2019 2020 2021 (a) Accounting Income 2019 (Loss) $131.000 2020 2021 97,000 (306,000) 223.000 The tax rates listed were all enacted by the beginning of 2018. Bridgeport reports under the ASPE future/deferred income taxes method. 2018 Deferred Tax Expense Tax Rate 25 % Prepare the journal entries for each of the years 2018 to 2021 to record income tax. Assume the tax loss is first carried back, and that at the end of 2020, the loss carryforward benefits are judged more likely than not to be realized in the future. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) de 25 % 30 % 30 % Prepare the journal entries for each of the years 2018 to 2021 to record income tax Assume the tax loss is first carried back, and that at…
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