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attashe74 [19]
3 years ago
10

Cabot Company reported a pretax operating loss of $50,000 for financial reporting and tax purposes in 2018. The enacted tax rate

is 40% for 2018 and subsequent years. Assume that Cabot requests a refund of taxes already paid by electing a loss carryback. Taxable income, tax rates, and income taxes paid in Cabot's first four years of operations were as follows: Taxable Tax Taxes income rates paid 2014 $30,000 30% $9,000 2015 35,000 30% 10,500 2016 42,000 35% 14,700 2017 40,000 40% 16,000 Required: (1) Prepare the journal entry to record Cabot's income taxes for the year 2018. Show well-labeled computations. (2) Compute Cabot's net loss for 2018.
Business
1 answer:
Nady [450]3 years ago
5 0

Answer and Explanation:

1.

Net Operating loss carryback  Amount  Rate of Tax  Tax Recorded as

Carried back - 2014               $0.0          30%         $0.0  

Carried back - 2015               $0.0          30%         $0.0  

Carried back - 2016           $42,000        35% $14,700.0  

Carried back - 2017           $8,000.0       40% $3,200.0  

Total Carryback                 $50,000.0                    $17,900.0

Journal Entries - Cabot Company

Date                Particulars                                  Debit Credit

31-Dec-18      Receivables - Income Tax Refund  $17,900

          To Income tax benefit - Net Operating Loss           $17,900  

2. Cabot's net loss for 2018 = -$50,000 + $17,900

                                          = ($32,100)

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In a command economy, who decides what goods will be produced?
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Wanda takes $3,000 from her savings account that pays 5 percent interest per year and uses the funds to purchase a computer for
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Answer:

$1,150

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Asset turnover _____. A. is another term for inventory turnover B. is calculated from information found on a firm's income state
barxatty [35]

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7 0
3 years ago
Pina Football Shop began operations on January 2, 2017. The following stock record card for footballs was taken from the records
Volgvan

Answer:

A. FIFO $1,794

B. LIFO $6,326

Explanation:

(a) Computation for the December 31, 2017, inventory using the FIFO method

Value of closing Stock

93 Footballs purchased in November = 93 * $16 93 Footballs purchased in November= $1,488

18 Footballs purchased in September= (111-93)* $17

18 Footballs purchased in September= 18* $17

18 Footballs purchased in September= $306

Total Value as on 31 December, 2017 =$1,488+$396

Total Value as on 31 December, 2017=$1,794

Therefore the December 31, 2017, inventory using the FIFO method will be $1,794

B.) Computation for the 2017 cost of goods sold using the LIFO method.

First step is to calculate the Value of closing Stock

67 Footballs purchased in January= 67 * $28

67 Footballs purchased in January = $1,876

44 Footballs purchsed in March= (111-67)* $23

44 Footballs purchsed in March=44*$23

44 Footballs purchsed in March= $1,012

Total Value as on 31 December, 2017=$1,876+$1,012

Total Value as on 31 December, 2017 = $2,888

Now let calculate the Cost of goods sold using this formula

Cost of goods sold

= Gross Invoice amount - Value of closing stock

Let plug in the formula

Cost of goods sold= $9,214 - $2,888

Cost of goods sold= $6,326

Therefore the 2017 cost of goods sold using the LIFO method will be $6,326

7 0
3 years ago
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