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zysi [14]
3 years ago
10

Taxable income and pretax financial income would be identical for Skysong Co. except for its treatments of gross profit on insta

llment sales and estimated costs of warranties. The following income computations have been prepared. Taxable income 2019 2020 2021 Excess of revenues over expenses (excluding two temporary differences) $148,000 $227,000 $96,400 Installment gross profit collected 8,400 8,400 8,400 Expenditures for warranties (5,500 ) (5,500 ) (5,500 ) Taxable income $150,900 $229,900 $99,300 Pretax financial income 2019 2020 2021 Excess of revenues over expenses (excluding two temporary differences) $148,000 $227,000 $96,400 Installment gross profit recognized 25,200 -0- -0- Estimated cost of warranties (16,500 ) -0- -0- Income before taxes $156,700 $227,000 $96,400 The tax rates in effect are 2019, 40%; 2020 and 2021, 45%. All tax rates were enacted into law on January 1, 2019. No deferred income taxes existed at the beginning of 2019. Taxable income is expected in all future years. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019, 2020, and 2021.
Business
1 answer:
Veseljchak [2.6K]3 years ago
3 0

Answer:

Explanation:

This question was computed in an Excel SOlver and the result are shown below:

Date                Particulars                           Debit($)          Credit($)

31-Dec-19       Income tax expense         62970

                      Deferred tax asset               4950

                     Income taxes payable                                  60360

                      Deferred tax  liability                                     7560

             (To record income tax expense

              for the year)

31-Dec-20       Income tax expense         102150

                     Deferred tax asset                 3780

                     Income taxes payable                                  103455

                      Deferred tax  asset                                          2475

             (To record income tax expense

              for the year)

31-Dec-21    Income  tax expense           43380

                   Deferred tax liability                3780

                  Income taxes payable                                     44685

                  Deferred tax Asset                                            2475

               (TO record income tax  expense

                 for the year)

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Best’s Fried Chicken just took out an interest-only loan of $50,000 for three years with an interest rate of 8.15 percent. Payme
posledela

Answer:

54,075 Payment at Year 3

Explanation:

Because is an interest-only loan:

It will pay the principal completely and the interest for the year.

principal x rate = interest paid

50,000 x 0.0815 = 4,075

+ 50,000 principal

54,075 Payment at Year 3

<u>Remember:</u>

interes-only loan means during the life of the loan the monthly or annual payment are for the interest. At maturity, the principal is fully paid.

4 0
3 years ago
Mary makes 10 pies and 20 cakes a day and her opportunity cost of producing a cake is 2 pies. Tim makes 20 pies and 10 cakes a d
monitta

Answer:

If Mary and Tim specialize in the good in which they have a comparative​ advantage, ______.

Mary would specialize in making cakes while Tim would specialize in making pies.

Explanation:

a) Data and Calculations:

Mary's opportunity cost of making a cake = 2 pies

She can make additional 5 (10/2) cakes instead of making pies

This will increase her cakes to 25 a day (20 + 5)

Tim's opportunity cost of making a cake = 4 pies

She can make additional 40 pies (10 * 4) instead of making cakes

This will increase her pies to 60 pies a day (20 + 40)

When they specialize there will be 25 cakes and 60 pies produced in a day instead of 30 cakes and 30 pies.

5 0
3 years ago
The risk free rate of return is 2.5% and the market risk premium is 8%. Rogue Transport has a beta of 2.2 and a standard deviati
4vir4ik [10]

Answer:

20.1%

Explanation:

In capital asset prcing model (CAPM), cost of equity (or cost of retained earnings in this context) is calculated as below:

<em>Cost of equity = risk-free rate of return + beta x (market index return - risk-free rate of return)</em>

Please note that <em>(market index return - risk-free rate of return)</em> is equal to <em>market risk premium</em>

Putting all the number together, we have:

Cost of equity/retained earnings = 2.5% + 2.2 x 8% = 20.1%

<em>Note: The dividend growth rate, tax rate & stock standard deviation is not relevant in answering the question.</em>

6 0
3 years ago
"Stock R has a beta of 1.5, Stock S has a beta of 0.75, the required return on an average stock is 10%, and the risk-free rate o
Kaylis [27]

Answer:

4.5%

Explanation:

Stock R (Beta) = 1.5

Stock S  (Beta) = 0.75

Expected rate of return on an average stock (Rm)= 10%

Risk free rate (Rf) = 4%

Required Return (Re) = Rf +(Rm-Rf) B

Required Return = 0.04 + (0.10-0.04) B

Required Return = 0.04 + 0.06B

Stock R = 0.04 + (0.06 * 1.50)

Stock R = 0.04 + 0.09

Stock R = 0.13

Stock R = 13%

Stock S = 0.04 + (0.06 * 0.75)

Stock S = 0.04 + 0.045

Stock S = 0.085

Stock S = 8.5%

Here, the more risky stock is R and less risky stock is S. Since, R has more beta than the Stock S.

= 13% - 8.5%

= 4.5%

7 0
2 years ago
Using this feature will fit an image to the size of an image frame.
Aleonysh [2.5K]

Answer:

c option

Explanation:

8 0
3 years ago
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