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Concept Introduction:
Valuation of inventory: It is the cost associated with the cost of inventory at the end of the accounting period. It is based on the cost incurred by the entity to acquire the inventory. There are four generally applied
The amount to be reported as cost of goods sold for 2021.
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Concept Introduction:
Valuation of inventory: It is the cost associated with the cost of inventory at the end of the accounting period. It is based on the cost incurred by the entity to acquire the inventory. There are four generally applied inventory valuation techniques: Specific identification method, First in first out method, last in first out method, and weighted average cost method.
The LIFO liquidation profit.
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Concept Introduction:
Valuation of inventory: It is the cost associated with the cost of inventory at the end of the accounting period. It is based on the cost incurred by the entity to acquire the inventory. There are four generally applied inventory valuation techniques: Specific identification method, First in first out method, last in first out method, and weighted average cost method.
The saving of income tax payable.
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Intermediate Accounting, 10 Ed
- 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.arrow_forwardOn December 28, 2021, Tristar Communications sold 13 units of its new satellite uplink system to various customers for $20,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross method to account for sales discounts. In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2022? By how much? In income before tax will be byarrow_forwardOn December 28, 2021, Tristar Communications sold 10 units of its new satellite uplink system to various customers for $25,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross method to account for sales discounts. In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2022? By how much? In _________ (2021 or 2022), income tax will be ________(increased or decreased) by ______ (how much?)arrow_forward
- At the beginning of 2021, a company had future deductible amounts of $400,000 and the enacted tax rate was 27%. In October 2021, a new income tax act is signed into law that lowers the tax rate to 20% for 2022 and future years. To record the change, the company will (enter 1, 2, 3, or 4 that represents the correct answer): Credit Income Tax Expense by $28,000. Debit Income Tax Expense by $28,000. Credit Deferred Tax Liability by $28,000. Debit Deferred Tax Asset by $28,000.arrow_forwardShenron, Inc. had pre-tax accounting income of P1,350,000 and a tax rate of 40% in 2020, its first year of operations. During 2020 the company had the following transactions: Received rent from Master, Co. for 2021 P48,000 Municipal bond income P60,000 Depreciation for tax purposes in excess of book depreciation P30,000 Installment sales revenue to be collected in 2021 P81,000 For 2020 what is the amount of income taxes payable for Shenron, Inc? a. P579,600 b. P452,400 c. P514,800 d. P490,800arrow_forwardThe company is planning to provide services to a client and receives $90,000 in year 2020. The client has the option to pay the money in the current year or over the next 3 years. Accordingly, Pioneer has the option of reporting the profit in the current year or over the next 3 years. Assume that Pioneer’s uses 9% discount rate and its marginal tax rate is 35% in year 2020 and 40% in the next three years. Which option should the company select? And whyarrow_forward
- The following is the income statement belongs to Shining Star LLC for the year 31 December 2019: Shining Star LLC Income Statement for the year ending 31 December 2019 Net Sales OMR 25000 Cost of Goods Sold 7000 Gross Profit 18000 Operating Expenses 8000 Operating 10000 Income Other Income: Interest Income 4000 Net Income OMR 14000 If the company must pay an income tax expense on its profit and the tax rate is 30%, determine the Net income after-tax Select one: O a. OMR 10000 O b. OMR 9800 C. OMR 18200 O d. OMR 4200arrow_forwardOn December 28, 2021, Tristar Communications sold 10 units of its new satellite uplink system to various customers for $25,000 each. The terms of each sale were 1/10, n/30. Tristar uses the net method to account for sales discounts. In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2022? By how much? In ________(2021 or 2022), income before tax will be _________(increased or decreased by _______(how much?)arrow_forwardRequired: 1. Determine the amounts necessary to record Allmond's income taxes for 20: Allmond Corporation, organized on January 3, 2021, had pretax accounting income of $25 million and taxable income of $33 million 2. What is Allmond's 2021 net income? for the year ended December 31, 2021. The 2021 tax rate is 25%. The only difference between accounting income and taxable income is estimated product warranty costs. Assume that expected payments and scheduled tax rates (based on recently enacted tax legislation) are as follows: Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2 Prepare the appropriate journal entry. (If no entry is required for a transaction/e account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5 View transaction list 1 Record 2021 income taxes. X Cr 2022 2023 2024 2025 $2 million 2 million 1 million 3 million 35% 35% 35% 25% Required: 1. Determine the amounts necessary to…arrow_forward
- Berlin Corp. reported the following data for 2019: Total net sales made to customers were P2,000,000 in cash. Goods purchased for sale totalled P1,200,000 in cash. Beginning and ending inventory of goods for sale, respectively, were P200,000 and P300,000. 1-year advanced rent of P30,000 to apply for 2020 was received from a sublease contract. P40,000 total interest income from customers promissory note earned P30,000 of this was collected. Unrealized foreign exchange gains from foreign currency receivable totaled P60,000. Using accrual basis, compute the total income subject to income tax. P1,060,000 P960,000 P1,000,000 P970,000 ADD EXPLANATION THANKSarrow_forwardBerlin Corp. reported the following data for 2019: Total net sales made to customers were P2,000,000 in cash. Goods purchased for sale totalled P1,200,000 in cash. Beginning and ending inventory of goods for sale, respectively, were P200,000 and P300,000. 1-year advanced rent of P30,000 to apply for 2020 was received from a sublease contract. P40,000 total interest income from customers promissory note earned P30,000 of this was collected. Unrealized foreign exchange gains from foreign currency receivable totaled P60,000. Using cash basis, compute the total income subject to income tax. P990,000 P750,000 P960,000 P690,000 4. Using accrual basis, compute the total income subject to income tax. P1,060,000 P960,000 P1,000,000 P970,000arrow_forwardJKL Corp reports net income on its 2019 financial statements before income tax expense of P400,000. JKL has been profitable in the past and expects to continue to be profitable. The company expensed warranty cost in 2016 for P35,000 that is expected to impact tax return in 2020. JKL also had P60,000 in revenue that will not be taxed until 2021. JKL has a tax rate for 2019 of 30% and enacted rate of 40% beyond 2019. In addition JKL made four estimated tax payments of P25,000 each in 2019. 1. How much will JKLCorp report as taxable income on its income statement for December 31, 2019? 2. How much would JKL Corp report as current year income tax expense on the December 31, 2019 income statement? 3. How much would JKL Corp report as deferred income tax expense on December 31, 2019 income statement? 7,500arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning