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tresset_1 [31]
3 years ago
11

On December 31, 2015, Howells, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost

for financial statement and income tax purposes. The change will result in a $2,000,000 increase in the beginning inventory at January 1, 2015. Assume a 30% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is Group of answer choices $0. $1,400,000. $1,750,000. $2,500,000.
Business
1 answer:
il63 [147K]3 years ago
5 0

Answer:

$1,400,000

Explanation:

According to the scenario, computation of the given data are as follows,

Increase in beginning inventory = $2,000,000

Income tax rate = 30%

So, we can calculate the effect on beginning retained earning by using following formula,

Cumulative effect = Increase beginning inventory × (1 -  tax rate)

= $2,000,000 × ( 1 - 30%)

= $2,000,000 × 70%

= $1,400,000

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8 0
2 years ago
A flatter, more horizontal demand or supply curve ____
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A. A flatter, more horizontal demand or supply curve is elastic
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2 years ago
While visiting a client to deliver their 2019 tax documents, one of the owners approaches you and states: "The IRS says my trave
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Answer:

Commuting refers to travelling from your home to your workplace. It generally refers to the distance that people generally travel to get to their office or any type of workplace.

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In this case, your client continuously leaves his house and goes form one state to another performing his normal business activities. This perfectly fits the IRS's definition of business travel.

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6 0
4 years ago
"California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2021. In preparing its insura
leva [86]
<h3>California Inc Estimated ending inventory is $319,000 </h3>

Explanation:

Goods available for sale = Beginning inventory + Net purchases

  • California Inc Beginning inventory $310,000
  • California Inc Net purchases = $905,000
  • California Inc Goods available for sale = $1,215,000

Gross profit = Net sales *  profit %

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Estimated cost of goods sold = Net sales - Gross profit

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  • California Inc Estimated cost of goods sold = $896,000

Estimated ending inventory = Goods available for sale - Cost of goods sold

  • California Inc Estimated ending inventory = $1,215,000 - $896,000
  • California Inc Estimated ending inventory = $319,000

California Inc Estimated ending inventory is $319,000

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4 years ago
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