Chapter 22 Solutions - EXERCISE 22-1(1015 minutes(a The net...

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EXERCISE 22-1 (10–15 minutes)(a)The net income to be reported in 2015, using the retrospectiveapproach, would be computed as follows:Income before income tax$700,000Income tax (35% X $700,000)245,000Net income$455,000(b)Construction in Process........................................190,000Deferred Tax Liability ($190,000 X 35%).........66,500Retained Earnings..........................................123,500**($190,000 X 65% = $123,500)EXERCISE 22-2 (10–15 minutes)(a)Inventory......................................................................14,000*Retained Earnings...............................................14,000*($19,000 + $23,000 + $25,000) – ($15,000 + $18,000 + $20,000)(b)Net Income (FIFO)2012$19,000201323,000201425,000(c)Inventory......................................................................24,000*Retained Earnings..............................................24,000*($19,000 + $23,000 + $25,000) – ($12,000 + $14,000 + $17,000)
EXERCISE 22-3 (25–30 minutes)(a)TAVERAS CO.Income StatementFor the Year Ended December 31LIFO201220132014Sales........................................................$3,000$3,000$3,000Cost of goods sold.................................8001,0001,130Operating expenses...............................1,0001,0001,000Net income.......................................$1,200$1,000$ 870Income StatementFor the Year Ended December 31FIFO201220132014Sales........................................................$3,000$3,000$3,000Cost of goods sold.................................8209401,100Operating expenses...............................1,0001,0001,000Net income.......................................$1,180$1,060$ 900(b)TAVERAS CO.Income StatementFor the Year Ended December 3120142013As adjusted (Note A)Sales........................................................$3,000$3,000Cost of goods sold.................................1,100940Operating expenses...............................1,0001,000Net income.......................................$ 900$1,060
EXERCISE 22-3 (Continued)

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