C12-Chp-02-3-Corp-GAAP-Tax-Acct-Questions-Problem-Nov-12-2011

C12-Chp-02-3-Corp-GAAP-Tax-Acct-Questions-Problem-Nov-12-2011

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1. Problem 23c8bbb929a52b5a27f367ee497e135d02e30de5.xls Page 1 of 3 Wang Repair Corporation (First Year of Operation) Balance Sheet Balances: 12-31-11 Income Statement-2011 Cash $28,000 Revenue (and gains, if applicable) $200,000 Accounts Receivable 20,000 Expenses: Allowance for doubtful accounts (2,000) 18,000 Salaries Expense 115,000 Equipment (5-year life) 10,000 Supplies Expense 12,000 Accumulated Depreciation (2,000) 8,000 9,000 Building & Land 200,000 Property Tax Expense 1,000 Accumulated Depreciation (4,000) 196,000 Interest Expense 10,000 Deferred Income Tax Depreciation Expense 6,000 Other Asset 50,000 Bad Debts Expense 3,000 Total Assets $300,000 Other Expense/Loss 14,000 Accounts Payable 15,000 Total Expense 170,000 Mortgage-10% (Due 2011) 100,000 Net Income before Tax 30,000 Income Tax Payable-Current 12,000 Income Tax-Current $12,000 Deferred Income Tax Liability Income Tax-Deferred 12,000 Total Liabilities $127,000 Net Income after tax (loss) $18,000 Common Stock ($10 Par) 155,000 Retained Earnings - Begin. Balance 0 Retained Earnings 18,000 Subtotal 18,000 Stockholders' Equity 173,000 Less: Dividends $300,000 Retained Earnings - Ending Balance 18,000 Corporation was organized by Mr. Wang on January 1, 2011. He owns all of the stock. Financial statements need to be corrected. Assume a 40% tax bracket in current and future years. For each case below, explain how reconciling items are recorded on Schedule M-1. See tab 2. Enter information below and separately prepare all journal entries related to income tax for each case. 1 Only adjustment needed is for bad debts expense. What is taxable income? Amount: §165 What is ending Deferred Tax account balance? Asset or Liab.? Balance: 2 Equipment (cost $10,000) was bought on 1-1-2011, and fully expensed on the 2011 tax return. Only adjustments are for bad debts and depreciation. What is taxable income? Amount: §179 What is ending Deferred Tax account balance? Asset or Liab.? Balance: 3 Other asset is balance of receivable from sale of land for $100,000 (cost $80,000). Wang collected $50,000 in 2011 and will collect remaining $50,000 in 2012, plus interest.
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This note was uploaded on 03/09/2012 for the course ACCT 6120 taught by Professor Godfrey,h during the Spring '08 term at UNC Charlotte.

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C12-Chp-02-3-Corp-GAAP-Tax-Acct-Questions-Problem-Nov-12-2011

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