ACCT week 2 Homework

 
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Week 2 Homework Questions (Links to an external site.)Links to an external site.

document and

grading rubric (Links to an external site.)Links to an external site.

. In a word document, include your name and type your answer to each question. Name your document and include your first and last initials of your name. For example, if your name is Jane Smith, the file name will be ACCT557_W2_HW_JS .

The grading rubric for the weekly homework can be found under Files.

Submit your assignment by the due date.

Homework – Week 2 – Chapter 19

Problem 1:

California Surplus Inc. qualifies to use the installment-sales method for tax purposes and sold an investment on an installment basis. The total gain of $75000 was reported for financial reporting purposes in the period of sale. The installment period is 3 years; one-third of the sale price is collected in 2014 and the rest in 2015 and 2016. The tax rate was 35% in 2014, 30% in 2015, and 30% in 2016. The enacted tax rates of 2015 and 2016 are not known until 2015. The accounting and tax data are shown below.

 

 

 

 

 

 

 

 

Financial Accounting

Tax Return

 

2014 (35% tax rate)

 

 

 

 

Income before temporary difference

 

$ 175,000

$ 175,000

 

Temporary difference

 

$ 75,000

$ 25,000

 

Income

 

$ 250,000

$ 200,000

 

 

 

 

 

 

2015 (30% tax rate)

 

 

 

 

Income before temporary difference

 

$ 200,000

$ 200,000

 

Temporary difference

 

$ –

$ 25,000

 

Income

 

$ 200,000

$ 225,000

 

 

 

 

 

 

2016 (30% tax rate)

 

 

 

 

Income before temporary difference

 

$ 180,000

$ 180,000

 

Temporary difference

 

$ –

$ 25,000

 

Income

 

$ 180,000

$ 205,000

 

 

 

 

 

 

Required:

 

 

 

 

 

 

 

 

 

 

1)

Prepare the journal entries to record the income tax expense, deferred income taxes, and the income taxes payable for 2014, 2015, and 2016. No deferred income taxes existed at the beginning of 2014.

 

2)

Explain how the deferred taxes will appear on the balance sheet at the end of each year. (Assume Installment Accounts Receivable is classified as a current asset.)

 

3)

Show the income tax expense section of the income statement for each year, beginning with “Income before income taxes.”

Problem 2:

Trenton Co. incurred a net operating loss of $850,000 in 2016. Combined income of 2014 and 2015 was $650,000. The tax rate for all years is 30%. Trenton elects the carry back option.
Required:
a. Prepare the journal entries to record the benefit of loss carry back and loss carry forward option.
b. Assuming that it is more likely than not that the entire net operating loss carry forward will not be realized in future years, prepare all the journal entries necessary at the end of 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rubric for Homework Problems

Criterion

Unsatisfactory

0–9

Needs Improvement

10–17

Meets Requirements

18–22

Points earned

0–22

Content and Development

80%
 

Content is incomplete or omits significant requirements.
Major points are not clear or persuasive. Does not indicate a basic understanding of chapter concepts.

Content is not comprehensive.
Major points are addressed, but not well supported. Basic understanding of chapter concepts, but not appears to have been mastered.
Some theoretical errors in submission.

Content is comprehensive, accurate, and persuasive.
Major points are stated clearly and are well supported. Student has mastered chapter concepts and correctly and clearly completed the assignment.

Comments

Criterion

Unsatisfactory

0

Needs Improvement

1–2

Meets Requirements

3–4

Points earned

0–4

Format and

Appearance

10%

Not submitted in Excel format.
No apparent attempt to format for readability. Hard to follow or determine answer. No conclusion or indication of where to find the answer or conclusion for each requirement.

Not a professional submission. Data just typed without any organization or format. No white space or graphics or formatting.
Unable to clearly identify where the answer to each problem requirement is presented.

Submission appropriate to present in a business or professional context. Excellent use of graphics and formatting.
Answer to each problem requirement clearly indicated.

Comments

Criterion

Unsatisfactory

0

Needs Improvement

1–2

Meets Requirements

3–4

Points earned

0–4

Calculations

10%

Not all answers properly supported. Difficult to determine from where the numbers were derived.
No audit trail.

Most necessary calculations included, but no formulas or explanation of how derived. Typed in hard number format rather than using a formula in the cell.

All required calculations clearly shown either as a label or comment or as a formula within the cell. Excellent audit trail.

Comments

Total Score