CH+22+Solutions - EXERCISE 22-1 (a) The net income to be...

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EXERCISE 22-1 (a) The net income to be reported in 2010, using the retrospective approach, would be computed as follows: Income before income tax. ............................ $700,000 Income tax (35% X $700,000). ........................ 245,000 Net income. ..................................................... $455,000 (b) Construction in Process. ....................................... 170,000 Deferred Tax Liability ($170,000 X 35%). ........ 59,500 Retained Earnings. ......................................... 110,500* *($170,000 X 65% = $110,500) EXERCISE 22-2 (a) Inventory. ..................................................................... 11,000* Retained Earnings. .............................................. 11,000 *($19,000 + $21,000 + $25,000) – ($16,000 + $18,000 + $20,000) (b) Net Income (FIFO) 2009 $19,000 2010 21,000 2011 25,000 (c) Inventory. ..................................................................... 22,000* Retained Earnings. ............................................. 22,000 *($19,000 + $21,000 + $25,000) – ($12,000 + $14,000 + $17,000) EXERCISE 22-5
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(a) CARLTON COMPANY Income Statement For the Year Ended 2010 2009 Sales. ................................................................. $3,000 $3,000 Cost of goods sold. ......................................... 1,100 940 Operating expenses 1,000 1,000 Income before profit sharing. .................. $ 900 $1,060 Profit sharing expense. ................................... 48 50 Net income. ................................................ $ 852
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This note was uploaded on 11/20/2011 for the course ACCT 316 taught by Professor Debessay,a during the Spring '08 term at University of Delaware.

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CH+22+Solutions - EXERCISE 22-1 (a) The net income to be...

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