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Marta_Voda [28]
2 years ago
14

Tax laws permit installment sales, which are recognized in the year of sale for financial reporting purposes, to be reported in

the tax return later when cash is received. This results in a deferred tax liability because taxable income is _______ than financial income in the year of sale, and _______ than financial income in later years when collected. Multiple choice question. higher; lower higher; higher lower; lower lower; higher
Business
1 answer:
Lera25 [3.4K]2 years ago
7 0

Answer:

lower; higher.

Explanation:

Taxation can be defined as the involuntary or compulsory fees levied on individuals or business entities by the government to generate revenues used for funding public institutions and activities.

The different types of tax include the following;

1. Income tax: a tax on the money made by workers in the state. This type of tax is paid by employees with respect to the amount of money they receive as their wages or salary.

2. Property tax: a tax based on the value of a person's home or business. It is mainly taxed on physical assets or properties such as land, building, cars, business, etc.

3. Sales tax: a tax that is a percent of the price of goods sold in retail stores. It is being paid by the consumers (buyers) of finished goods and services and then, transfered to the appropriate authorities by the seller.

Generally, installment sales are permitted or allowed by the tax laws in a country. Typically, they are recognized in the year of sale for the purpose of financial reporting. Also, installment sales for any goods or services are to be reported in the tax return, at a later time when cash is received from the customer (buyer).

This results in a deferred tax liability because taxable income is lower than financial income in the year of sale, and higher than financial income in later years when collected.

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At December 31, Folgeys Coffee Company reports the following results for its calendar year. Cash sales $ 901,000 Credit sales 30
Anon25 [30]

Answer:

Please find the detailed answer in the explanation section.

Explanation:

A. 4% of credit sales

Bad Debts Expense is 4% of $301,000

0.04 x $301,000

=$12,040

Adjusting entry

Dec. 31

Dr Bad debt expense $12,040

Cr Allowance for Doubtful allowance $12,040.

B. 2% of total sales

Total sales = cash sales + credit sales

$ 901,000 + $ 301,000

=$1,202,000

Bad Debts Expense is 2% of 1,202,000

0.02x $1,202,000

=$24,040

Adjusting entry

Dec. 31

Dr Bad debt expense $24,040

Cr Allowance for Doubtful allowance $24,040.

C. 7% of year-end accounts receivable.

Unadjusted balance is $5,100

Estimated balance = $8,820(7% of $126,000)

Adjusted balance is $13,920($5,100 + $8,820)

Adjusting entry

Dec. 31

Dr Bad debt expense $8,820

Cr Allowance for Doubtful allowance $8,820

5 0
2 years ago
A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful oper
mafiozo [28]

Answer:

a. Straight-line method

Depreciation Expense for the first year: $333.75

b. Double-declining-balance method

Depreciation Expense for the first year: $667.5

c. Units-of-output method

Depreciation Expense for the first year: $450

Explanation:

a. Straight-line method

Depreciation Expense each year is calculated by following formula

Annual Depreciation Expense = (Cost of machine − Residual Value)/Useful Life = ($1,410 - $75)/4 = $333.75

Depreciation Expense for the first year: $333.75

b. Double-declining-balance method

Under the straight-line method, useful life is 4 years, so the asset's annual depreciation will be 25% of the Depreciable cost.

Depreciable cost = Total cost of machine - Residual value =  $1,410-$75 = $1.335

Under the double-declining-balance method the 25% straight line rate is doubled to 50% - multiplied times

Depreciation Expense for the first year = $1.335 x 50% = $667.5

c. Units-of-output method

Depreciation Expense per copy = (Cost of machine − Residual Value)/Life in Number of Units  = ($1,410 - $75)/13,350 = $0.1

Depreciation Expense for the first year = Depreciation Expense per copy x number of copies were made the first year = $0.1 x 4,500 = $450

3 0
3 years ago
An​ "excessive" budget deficit in this context is
rjkz [21]

Answer:

A) A relatively large budget deficit as a percentage of GDP beyond the European​ Union's deficit and debt rules.

Explanation:

A budget deficit is when the governments have more expenditures in a budgeted year than they have the revenues in form of taxes and other incomes. A deficit is excessive if it is large in comparison to the GDP.

In the European Union the budget deficit is considered excessive if it exceeds 3% of the running years GDP.

A public debt percentage to GDP of 60% or above is considered excessive as most of the GDP then is used for debt servicing and thus impacts negatively on the financial health of the country.

Hope that helps.

6 0
3 years ago
Sarah's Muffler Shop has one standard muffler that fits a large variety of cars. Sarah wishes to establish a reorder point syste
GarryVolchara [31]

Answer:

Following is the solution for the given problem.

Explanation:

Best order size, EOQ =√2DS/H

EOQ = √2*4700*60/5

EOQ = 336 units.

D = 4700/300 = 15.66.

σ L= √∑σ²

= √3*(5)² = 8.66.

Reorder point, R = D*L+ z σ L

Reorder point, R = 15.66*3 + 1.282*8.66

Reorder point, R = 58 units.

4 0
3 years ago
By using bootstrap marketing strategies (unconventional, low-cost, creative techniques) small companies can get as much "bang" f
Marat540 [252]

Answer:

The given statement relates to bootstrap marketing strategies

Explanation:

In simple words, Bootstrap marketing relates to an advertising strategy usually used by entrepreneurs to create a business from the bottom up with little but private money and, luckily, money from the very first sale.

 This method is usually used by start ups for capturing initial market share and with the expertise of an angel investor they can really go for high goals.

8 0
3 years ago
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