chapter22excel

Chapter22excel - 10,000 Notes receivable 10,000 2003 ENTRY TO RECORD PROPERLY Notes receivable 5,000 Interest income 5,000 2004 ENTRY TO RECORD

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FACTS Tax rate 34% DDB SL Difference Tax effect Tax effected 2003 250,000 125,000 125,000 42,500 82,500 2004 225,000 125,000 100,000 34,000 66,000 BEG 2005 DIFF 475,000 250,000 225,000 76,500 148,500 2005 202,500 125,000 77,500 26,350 51,150 1,152,500 625,000 527,500 179,350 348,150 ENTRY TO RECORD CUMULATIVE EFFECT TO 2005 BEGINNING RETAINED EARNINGS Accumulated dep. 225,000 RETAINED EARNINGS 148,500 Deferred tax liability 76,500 - ENTRY TO RECORD 2005 DEPRECIATION EXPENSE Depreciation expense 125,000 Accumulated depreciation 125,000
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Tax rate 35% Overstated/ (Understated) Pretax effect of errors Tax effect Tax effected Prior to 2002 100,000 35,000 65,000 2002 10,000 3,500 6,500 2003 (5,000) (1,750) (3,250) 2004 (5,000) (1,750) (3,250) 2002 ENTRY TO FIX BEGINNING RETAINED EARNINGS Beginning retained earnings 65,000 Notes receivable 100,000 Deferred taxes 35,000 2002 ENTRY TO RECORD PROPERLY* Interest income
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Unformatted text preview: 10,000 Notes receivable 10,000 2003 ENTRY TO RECORD PROPERLY* Notes receivable 5,000 Interest income 5,000 2004 ENTRY TO RECORD PROPERLY* Notes receivable 5,000 Interest income 5,000 * NOTE that as the "fix" occurs in the income statement before the income tax provision, these entries do not need to be tax effected- the tax provision will take this into account automatically. Idunnonada, Inc. Statements of Retained Earnings 1,275,000 (65,000) 1,210,000 Net income 2002 280,000 Retained eanrings at December 31, 2002 1,490,000 Net income 2003 200,000 Retained earnings at December 31, 2003 1,690,000 Net income 2004 275,000 Retained earnings at December 31, 2004 1,965,000 Retained earnings as of January 1, 2002, as previously reported Correction of an error, see note X, net of $35,000 tax effect Retained earnings as of January 1, 2002, as RESTATED...
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This note was uploaded on 08/06/2008 for the course ECON 136C taught by Professor Anderson during the Summer '08 term at UCSB.

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Chapter22excel - 10,000 Notes receivable 10,000 2003 ENTRY TO RECORD PROPERLY Notes receivable 5,000 Interest income 5,000 2004 ENTRY TO RECORD

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