Acc124Exam2Spring2007SOLN

- NAME EXAM#2 Spring 2007 Problem 1 2 3 Topic Point Value Multiple Choice(Blackboard 25 Accounting for Taxes 25 Stockholders Equity 25 Share-based

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NAME_________________________ EXAM #2 Spring 2007 Problem Topic Point Value Multiple Choice (Blackboard) 25 1 Accounting for Taxes 25 2 Stockholders’ Equity 25 3 Share-based Compensation and EPS 25 TOTAL 100 GOOD LUCK! Exam #2 / Spring 2007 / Page 1 of 5
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NAME_________________________ PROBLEM 1 – Accounting for Income Taxes (25 points) A. Deferred Taxes INSTRUCTIONS 1. Prepare the December 31, 2008, journal entry to record income tax expense, income taxes payable, and deferred taxes for Starfish. 2. Calculate net income for Starfish for the year ended December 31, 2008. 3. Calculate the effective tax rate for Starfish for the year ended December 31, 2008. Income tax expense $156,000 DTA 22,000 DTL $100,000 Income taxes payable 78,000 DTA = $45,000*30% + $25,000*34% DTL = $50,000*30% + $250,000*34% Income taxes payable = $260,000*30% Net income = $500,000 - $156,000 = $344,000 Effective tax rate = $156,000/$500,000 = 31.2% B. Net Operating Losses Required: 1. Prepare the journal entry to recognize the income tax benefit of the operating loss. Conch Shell elects the carryback option. 2. Calculate the net operating loss to be reported on Conch Shell’s 2008 income statement. Income tax refund receivable $38,000 DTA 8,000 Income tax benefit $46,000 Refund receivable = $80,000*30% + 40,000*35% DTA = ($140,000 – [$80,000+$40,000])*40% Net Loss on income statement = $140,000 - $46,000 = $94,000 Exam #2 / Spring 2007 / Page 2 of 5
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NAME_________________________ PROBLEM 2 – Shareholders’ Equity (25 points)
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This homework help was uploaded on 04/10/2008 for the course ACT 123 taught by Professor Venuti during the Fall '07 term at Hofstra University.

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- NAME EXAM#2 Spring 2007 Problem 1 2 3 Topic Point Value Multiple Choice(Blackboard 25 Accounting for Taxes 25 Stockholders Equity 25 Share-based

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