chapter22excel

chapter22excel - these entries do not need to be tax...

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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 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,
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Unformatted text preview: 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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chapter22excel - these entries do not need to be tax...

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