Financial Accounting: Tools for Business Decision Making, 8th Edition
8th Edition
ISBN: 9781118953808
Author: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Publisher: WILEY
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Question
Chapter 2, Problem 2.13E
(a)
To determine
Accounting assumptions: These are the conventions which guide FASB (Financial Accounting Standards Board) to develop accounting standards. The basic assumptions are monetary unit assumption, economic entity assumption, periodicity assumption, and going concern assumption.
Accounting principles: These are the rules which guide FASB to prepare guidelines necessary for reporting the accounting formation, in a useful and relevant format which is better understood by the users. Some basic principles are historical cost principle, fair value principle, and full disclosure principle.
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
(b)
To determine
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
(c)
To determine
To identify: The accounting assumptions and principles that were violated by Company L, and explain what the company actually should have done.
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Rowen, Inc. had pre-tax accounting income of $1,672,000 and a tax rate of 40% in 2015, its first year of operations. During 2015 the company had the following transactions:
Received rent from Jane, Co. for 2016
$64,000
Municipal bond income
$80,000
Depreciation for tax purposes in excess of book depreciation
$40,000
Installment sales revenue to be collected in 2016
$108,000
6. At the end of 2015, which of the following deferred tax accounts and balances is reported on Rowen, Inc.’s balance sheet?
Account
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a. Deferred tax asset
$32,000
b. Deferred tax liability
$32,000
c. Deferred tax asset
$59,200
d. Deferred tax liability
$59,200
You are given the following information about Sandhill Plumbing Company. Revenues in 2017 totaled $ 917, depreciation expenses $ 85, costs of goods sold $ 399, and interest expenses $ 62. At the end of the year, current assets were $ 150 and current liabilities were $ 111. The company has an average tax rate of 34 percent. Calculate its net income by setting up an income statement. (Round answers to 2 decimal places, e.g. 15.25)
Sandhill Plumbing CompanyIncome Statementchoose the accounting period
Amount
select an income statement item
$ enter a dollar amount
select an income statement item
enter a dollar amount
select a summarizing line for the first part
$ enter a total amount for the first part
select an income statement item
enter a dollar amount
select a summarizing line for the second part
$ enter a total amount for the second part
select an income statement item
enter a dollar amount
select a summarizing line for the…
Rowen, Inc. had pre-tax accounting income of $1,672,000 and a tax rate of 40% in 2015, its first year of operations. During 2015 the company had the following transactions:
Received rent from Jane, Co. for 2016
$64,000
Municipal bond income
$80,000
Depreciation for tax purposes in excess of book depreciation
$40,000
Installment sales revenue to be collected in 2016
$108,000
5. For 2015, what is the amount of income taxes payable for Rowen, Inc?
a. $603,200
b. $654,000
c. $686,400
d. $772,800
Chapter 2 Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
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