Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 6, Problem 1RP
Bontaine Publications, an accrual basis, calendar year corporation, publishes and sells weekly and monthly magazines to retail bookstores and newsstands. The sales agreement provides that the retailers may return any unsold magazines during the one-month period after purchase. Bontaine will refund one-half of the purchase price of each returned magazine. During December 2019, Bontaine recorded $919,400 of magazine sales. During January 2020, Bontaine refunded $82,717 to retailers that returned magazines purchased during December. Can Bontaine reduce its 2019 income by the refund paid?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2024, the following transactions related to receivables occurred: February 28 Sold merchandise to Lennox, Incorporated, for $24,000 and accepted a 8%, 7-month note. 8% is an appropriate rate for this type of note. March 31 Sold merchandise to Maddox Company that had a fair value of $20, 240, and accepted a noninterest-bearing note for which S 22,000 payment is due on March 31, 2025. April 3 Sold merchandise to Carr Company for $20,000 with terms 210/, n30/. Evergreen uses the gross method to account for cash discounts. April 11 Collected the entire amount due from Carr Company April 17 A customer returned merchandise costing $4,500. Evergreen reduced the customer's receivable balance by $6,300, the sales price of the merchandise. Sales retums are recorded by the company as they occur. April 30 Transferred receivables of $63,000 to a factor without recourse. The factor…
Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31.
During 2024, the following transactions related to receivables occurred:
February 28 Sold merchandise to Lennox, Incorporated, for $24,000 and accepted a 8%, 7-month note. 8% is
an appropriate rate for this type of note.
March 31 Sold merchandise to Maddox Company that had a fair value of $16,560, and accepted a
noninterest-bearing note for which $18,000 payment is due on March 31, 2025.
April 3 Sold merchandise to Carr Company for $12,000 with terms 2/10, n/30. Evergreen uses the gross
method to account for cash discounts.
April 11 Collected the entire amount due from Carr Company
April 17 A customer returned merchandise costing $4,100. Evergreen reduced the customer's receivable
balance by $5,900, the sales price of the merchandise. Sales returns are recorded by the
company as they occur.
April 30 Transferred receivables of $59,000 to a factor without recourse. The factor…
On June 1, 2020, Chesnaught entered into a franchise agreement with Quilladin Inc. to sell their products. The agreement provides for an initial franchise fee of P3,000,000 which is payable as follows: P1,000,000 cash to be paid upon signing the contract, and the balance in four equal annual installments every December 31, starting in 2020, Chesnaught signs a non-interest bearing note for the balance. The credit, rating of the franchisee indicates that the money can be borrowed at 10%. The present value factor of an ordinary annuity at 10% for 4 periods is 3.1698. The agreement further provides that the franchisee must pay a continuing franchise fee equal to 5% of its monthly gross sales over the six years licensing period. Quilladin incurred direct cost of P930,564 and indirect costs of P167,400. The franchisee started business operations on July 1, 2020 and was able to generate sales of P1,240,000 for 2020. The first installment payment was made in due date. Assuming that the…
Chapter 6 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 6 - Prob. 1QPDCh. 6 - Prob. 2QPDCh. 6 - Prob. 3QPDCh. 6 - Prob. 4QPDCh. 6 - For many years, Mr. K, the president of KJ Inc.,...Ch. 6 - Prob. 6QPDCh. 6 - Prob. 7QPDCh. 6 - Firm NB, which uses the cash method of accounting,...Ch. 6 - Prob. 9QPDCh. 6 - Prob. 10QPD
Ch. 6 - Prob. 11QPDCh. 6 - Firms generally prefer to engage in transactions...Ch. 6 - Describe the contrasting treatment of prepaid...Ch. 6 - Net operating losses can be carried forward...Ch. 6 - Nello Company owed 23,400 overdue rent to its...Ch. 6 - For each of the following businesses, indicate the...Ch. 6 - Assuming a 21 percent marginal tax rate, compute...Ch. 6 - Prob. 4APCh. 6 - FruAgro Company has average annual gross receipts...Ch. 6 - Prob. 6APCh. 6 - Firm F is a cash basis legal firm. In 2018, it...Ch. 6 - Prob. 8APCh. 6 - Prob. 9APCh. 6 - Prob. 10APCh. 6 - Brillo Company uses the calendar year and the cash...Ch. 6 - NC Company, a retail hardware store, began...Ch. 6 - Prob. 13APCh. 6 - Warren Company is a calendar year, cash basis...Ch. 6 - Prob. 15APCh. 6 - Wahoo Inc., a calendar year taxpayer, leases...Ch. 6 - Prob. 17APCh. 6 - Using a 21 percent rate, compute the deferred tax...Ch. 6 - Prob. 19APCh. 6 - Prob. 20APCh. 6 - Prob. 21APCh. 6 - Prob. 22APCh. 6 - Prob. 23APCh. 6 - Prob. 24APCh. 6 - Prob. 25APCh. 6 - Prob. 26APCh. 6 - Prob. 27APCh. 6 - BZD, a calendar year corporation, made the...Ch. 6 - Prob. 29APCh. 6 - Prob. 30APCh. 6 - Prob. 31APCh. 6 - Prob. 32APCh. 6 - Prob. 33APCh. 6 - GK Company, a calendar year accrual basis...Ch. 6 - Prob. 35APCh. 6 - Prob. 36APCh. 6 - TRW Inc. began business in 2019 and incurred net...Ch. 6 - Prob. 38APCh. 6 - Prob. 39APCh. 6 - Margaret, a married taxpayer filing a joint...Ch. 6 - Prob. 41APCh. 6 - Prob. 1IRPCh. 6 - Corporation DS owns assets worth 550,000 and has...Ch. 6 - Two years ago, a professional theater company paid...Ch. 6 - Prob. 4IRPCh. 6 - Prob. 5IRPCh. 6 - Prob. 6IRPCh. 6 - Every December, Maxo Inc., an accrual basis,...Ch. 6 - Prob. 8IRPCh. 6 - Prob. 9IRPCh. 6 - Corporation WJ began business in 2019 and elected...Ch. 6 - Prob. 11IRPCh. 6 - Bontaine Publications, an accrual basis, calendar...Ch. 6 - Prob. 2RPCh. 6 - Prob. 3RPCh. 6 - Prob. 4RPCh. 6 - Company Y began business in February 2019. By the...Ch. 6 - Prob. 2TPC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb.  28  Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note. Mar.  31  Sold merchandise to Maddox Co. that had a fair value of $7,200, and accepted a noninterest-bearing note for which $8,000 payment is due on March 31, 2022. Apr.  3  Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.   11  Collected the entire amount due from Carr Co.   17  A customer returned merchandise costing $3,200. Evergreen reduced the customer’s receivable balance by $5,000, the sales price of the merchandise. Sales returns are recorded by the company as they occur.   30  Transferred receivables of $50,000 to a factor without recourse. The factor…arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred:  Feb.  28  Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar.  31  Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is due on March 31, 2022. Apr.  3  Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.   11  Collected the entire amount due from Carr Co.   17  A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of the merchandise. Sales returns are recorded by the company as they occur.   30  Transferred receivables of $66,000 to a factor without recourse. The…arrow_forward
- Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred:  Feb.  28  Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar.  31  Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is due on March 31, 2022. Apr.  3  Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.   11  Collected the entire amount due from Carr Co.   17  A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of the merchandise. Sales returns are recorded by the company as they occur.   30  Transferred receivables of $66,000 to a factor without recourse. The…arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred:  Feb.  28  Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar.  31  Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is due on March 31, 2022. Apr.  3  Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.   11  Collected the entire amount due from Carr Co.   17  A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of the merchandise. Sales returns are recorded by the company as they occur.   30  Transferred receivables of $66,000 to a factor without recourse. The…arrow_forwardEvergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $20,000 and accepted a 12%, 7-month note. 12% is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $8,800, and accepted a noninterest-bearing note for which $10,000 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $8,000 with terms 2/10, n/38. Evergreen uses the gross method to account for cash discounts. 11 Collected the entire amount due from Carr Co. 17 A customer returned merchandise costing $3,900. Evergreen reduced the customer's receivable balance by $5,700, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $57,000 to a factor without recourse. The factor charged Evergreen a 1% finance charge on the…arrow_forward
- Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred:  Feb.  28  Sold merchandise to Lennox, Inc., for $10,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Mar.  31  Sold merchandise to Maddox Co. that had a fair value of $7,520, and accepted a noninterest-bearing note for which $8,000 payment is due on March 31, 2022. Apr.  3  Sold merchandise to Carr Co. for $5,500 with terms 3/10, n/30. Evergreen uses the gross method to account for cash discounts.   11  Collected the entire amount due from Carr Co.   17  A customer returned merchandise costing $3,700. Evergreen reduced the customer’s receivable balance by $5,500, the sales price of the merchandise. Sales returns are recorded by the company as they occur.   30  Transferred receivables of $55,000 to a factor without recourse. The…arrow_forwardSiomai Corp. sells gift certificates redeemable only when merchandise is purchased. The certificates have an expiration date two years after issuance. Upon redemption or expiration, Siomai recognizes the unearned revenue as realized. Data for the year are as follows:  Unearned revenue, January 1, 2021- P3,000,000 Gift certificates sold- P10,000,000  Gift certificates redeemed- P8,200,000 Expired gift certificates- P600,000  Cost of goods sold- 60% On December 31, 2021, Siomai should report unearned revenues of:arrow_forwardKikiam Company sells televisions at an average price of P19,000 and also offers to each customer a separate 3-year warranty contract for P1,500 that requires the company to perform periodic services and to replace defective parts. In 2020, the company sold 300 televisions and 270 warranty contracts for cash. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs. In 2021, Kikiam Company incurred actual costs relative to 2020 television warranty sales of P2,000 for parts and P4,000 for labor. How much is the balance of unearned revenue from warranty contracts to be reported as of December 31, 2021?arrow_forward
- An entity sells car's spare parts to ZZZ Car Repair during 2020. The entity offers rebates of 3% on purchases up to $30,000 and 4% on purchases above $30,000 if the customer's purchases for the year exceed $120,000. In the past, ZZZ normally purchases more than $100,000 in parts during a calendar year. On March 15, 2020, ZZz Car Repair purchased $38,000 of parts. The journal entry to record the sale includes a a. debit to Accounts Receivable for $36,860. b. credit to Sales Revenue for $36,480. O c. credit to Sales Revenue for $36,860. d. debit to Accounts Receivable for $38,000.arrow_forwardBlossom Company sells televisions at an average price of $856 and also offers to each customer a separate 3-year warranty contract for $93 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 306 televisions and 256 warranty contracts for cash. It estimates the 3-year warranty costs as $21 for parts and $31 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs. Part 1   Record any necessary journal entries in 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)  What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified?  In 2021, Blossom Company incurred actual costs relative to 2020 television…arrow_forwardRegal Company sells gift certificates, redeemable for store merchandise. The gift certificates have no expiration date. The entity has the following information pertaining to the gift certificate sales and redemptions: Unearned revenue on January 1, 2020 = 750,000; 2020 sales = 2,500,000; 2020 redemptions of prior year sales = 250,000; 2020 redemptions of current year sales = 1,750,000. What amount should be reported as unearned revenue on December 31, 2020?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY