Answer:
Deferred Tax Asset:
The amount of taxes that is paid or carried forward but not yet identified in the income statement is referred as deferred tax asset
Journal Entries:
Debit: Income Tax Expense (balancing amount) = 812,500
Debit: Deferred Tax Asset = 87,500
Credit: Income Tax Payable = 900,000
- Income tax expense reduces the stockholders. equity. Hence, debit income tax expense with $812,500
.
- Deferred tax asset is an asset and is increased by $87,500. Therefore, debit deferred tax asset account with $87,500.
- Income tax payable increases the liability by $900,000. Therefore, credit Income tax payable account with $900.000.
Working note:
Determine the amount of deferred tax asset.
Deferred tax asset = Rent collected in 2021 × Enacted tax rate
Deferred tax asset = $350,000 × 25%
Deferred tax asset = $87,500
Determine the amount of income tax expense.
Income tax expense = Income tax payable — Deferred tax asset
Income tax expense = $900,000 = $87,500
Income tax expense = $812,500
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Answer:
The adjustment to net income for the period will be reported as:
Debit Interest expense ($600 - $500) $100
Credit Interest payable $100
<em>(Being interest expense for the period)</em>
Explanation:
Interest payable is the accumulation of the interest expense in the balance sheet overa specific period of time agreed with the creditor. When it becomes payable, the interest payable account is debited while cash is credited.
The interest payable in the Coffee Cup Company's account increased from $500 (credit balance) to $600 credit balance. This means there would have been an additional $100 interest expense recorded during the period in order to increase it to $600.
The answer is: Increase Encourage Increasing Increasing.
Answer:
The carrying value at year three end is $115,000.
Explanation:
The bond amortization schedule shows the how the interest expense is calculated as well as the coupon payment at each year end.
The carrying value at each year end is the opening carrying value in that year plus interest expense(as % of opening carrying value) minus the coupon payment(as % of face value).
In the beginning carrying value is the price the bond was issued,which could be computed using the pv formula in excel.
=-pv(rate,nper,pmt,fv)
the rate is yield to maturity of 5%
nper is the number of coupon payments to be made by the bond,which is 3
pmt is the yearly coupon payment which is:$115,000*4%=$4,600
fv is the face value of $115,000
=-pv(5%,3,4600,115000)=$111,868.26
Find attached amortization schedule.
