Answer:
Income Tax Expense (Dr.) $49,080,000
Deferred Tax Liability (Cr.) $49,080,000
Explanation:
Income tax expense = ( Taxable Income for the year + building and equipment taxable amount + Prepaid Insurance - Liability or contingency Loss ) * Tax rate
Income Tax expense = ( $117,000,000 + $14,700,000 + $2,300,000 - $11,300,000) * 40%
Income Tax expense = $49,080,000
Answer:
January 2, 2020
Dr Accounts receivable 410,000
Cr Sales revenue 370,000
Cr Unearned revenue 40,000
Dr Cost of goods sold 300,000
Cr Merchandise inventory 300,000
Accrual accounting states that revenues must be recognized during the periods that they actually occur (i.e. the earning process is completed). Since the installation process lasts 6 months, the unearned revenue will be recognized as the process is being completed.
Answer:
Debit Insurance expense $12,000
Credit Prepaid Insurance $12,000
Explanation:
When insurance is paid in advance, the entries required are
Debit Prepaid Insurance
Credit Cash account
As time elapses and the insurance expires,
Debit Insurance expense
Credit Prepaid Insurance
Monthly insurance expense
= 1/24 * $96,000
= $4,000
Between October 1 and December 31 is 3 months
Total insurance expense = 3 * $4,000
= $12,000
Answer: Bonds are generally a safer, or less risky, investment than are stocks
Explanation: The biggest pro of investing in stocks over bonds is that history shows, stocks tend to earn more than bonds - especially long term. Additionally, stocks can offer better returns if the company growth is exponential, earning the investor potentially millions on an originally minuscule investment.
Many investors are under the impression that bonds are automatically safer than stocks. After all, bonds pay investors a regular fixed income, and their prices are much less volatile than those of stocks. Conversely, a stock is low-risk for the issuing company, but it's high-risk for investors.
