AC 302 Chapter 19 Questions ANS Problems

AC 302 Chapter 19 Questions ANS Problems
Exercise 19 Question 1

Name				Date		
Instructor				Course		
Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
E19-1 (One Temporary Difference, Future Taxable Amounts, One Rate, No Beginning Deferred 						
Taxes) Starfleet Corporation has one temporary difference at the end of 2012 that will reverse and 						
cause taxable amounts of		$55,000 	in 2013,	$60,000 	in 2014, and	$75,000 
in 2015. Starfleet- pretax financial income for 2012 is				$400,000 	and the tax rate is	
30%	for all years. There are no deferred taxes at the beginning of 2012.					
						
Instructions:						
(a) Compute taxable income and income taxes payable for 2012.						
						
	Pretax financial income for 2012					Amount
	"Temporary difference resulting in future
           taxable amounts in year:"					
				2013	Amount	
				2014	Amount	
				2015	Amount	Formula
	Taxable income for 2012					Formula
	Enacted tax rate					Percentage
	Income tax payable for 2012					Formula
						
"(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income
     taxes payable for 2012."						
						
						
Future Years			2013	2014	2015	Total
Future taxable (deductible) amounts			Amount	Amount	Amount	Formula
Tax rate			Percentage	Percentage	Percentage	
Deferred tax liability (asset)			Formula	Formula	Formula	Formula
						
	Deferred tax liability at the end of 2012					Formula
	Deferred tax liability at the beginning of 2012					Amount
	Deferred tax expense for 2012 (increase in deferred tax liability)					Formula
	Current tax expense for 2012 (Income tax payable)					Amount
	Income tax expense for 2012					Formula
						
	Account Title				Formula	
	Account Title					Amount
	Account Title					Amount
						
"(c) Prepare the income tax expense section of the income statement for 2012, beginning with the
     line ""Income before income taxes."""						
						
						
	Income before income taxes				Amount	
	Income tax expense					
	Current			Amount		
	Deferred			Amount	Formula	
	Net income after income taxes				Formula	
						
						
						
Exercise 19-3
Name:				Date:		
Instructor:				Course:		
Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
E19-3 (One Temporary Difference, Future Taxable Amounts, One Rate, Beginning Deferred 						
Taxes) Brennan Corporation began 2012 with a				$90,000 	balance in the Deferred Tax 	
Liability account. At the end of 2012, the related cumulative temporary difference amounts to						
$350,000 	and it will reverse evenly over the next 2 years. Pretax accounting income for 2012 is 					
$525,000 	, the tax rate for all years is			40%	, and taxable income for 2012	
is	$400,000 					
						
Instructions:						
(a) Compute income taxes payable for 2012.						
						
	Taxable income for 2012			Amount		
	Enacted tax rate			Percentage		
	Income tax payable for 2012			Formula		
						
"(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes
     payable for 2012."						
						
						
Future Years			2013	2014	Total	
Future taxable (deductible) amounts			Amount	Amount	Formula	
Tax Rate			Percentage	Percentage		
Deferred tax liability (asset)			Formula	Formula	Formula	
						
	Deferred tax liability at the end of 2012				Amount	
	Title				Amount	
	Title				Formula	
						
	Title				Formula	
	Title				Formula	
						
	Account Title			Amount		
	Account Title				Amount	
	Account Title				Amount	
						
"(c) Prepare the income tax expense section of the income statement for 2012, beginning with the line
     ""Income before income taxes."""						
						
						
	Income before income taxes				Amount	
	Income tax expense					
	Title			Formula		
	Title			Formula	Formula	
	Title				Formula	
						
Note to instructor: Because of the flat tax rate for all years, the amount of cumulative temporary difference existing at the beginning of the year can be calculated by dividing $90,000 by 40%, which equals $225,000. The difference between the $225,000 cumulative temporary difference at the beginning of 2012 and the $350,000 cumulative temporary difference at the end of 2012 represents the net amount of temporary difference originating during 2012 (which is $125,000). With this information, we can reconcile pretax financial income with taxable income as follows:						
						
						
						
						
						
						
	Pretax financial income			Amount		
	Title			Amount		
						
	Title			Formula		
						
						
Problem 19-1
Name:				Date:		
Instructor:				Course:		
Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
P19-1 (Three Differences, No Beginning Deferred Taxes, Multiple Rates) The following information is available for Remmers Corporation for 2012.						
						
1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by						
$120,000 	This difference will reverse in equal amounts of				$30,000 	over the years
2013-2016.						
2. Interest received on municipal bonds was			$10,000 			
3. Rent collected in advance on January 1, 2012, totaled				$60,000 	for a 3-year period. Of  this 	
amount,	$40,000 	was reported as unearned at December 31, for book purposes.				
4. The tax rates are		40%	for 2012 and	35%	for 2013 and subsequent years.	
5. Income taxes of		$320,000 	are due per the tax return for 2012.			
6. No deferred taxes existed at the beginning of 2012.						
						
Instructions:						
(a) Compute taxable income for 2012.						
						
	Use this area for calculations					
	Use this area for calculations					
	Use this area for calculations					
	Use this area for calculations					
						
(b) Compute pretax financial income for 2012.						
						
	Taxable income from part (a)			Amount		
	Title			Amount		
	Title			Amount		
	Title			Amount		
	Pretax financial income for 2012			Formula		
						
(c) Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes						
     payable for 2012 and 2013. Assume taxable income was					$980,000 	in 2013.
						
2012	Account Title				Formula	
	Account Title				Amount	
	Account Title					Amount
	Account Title					Amount
						
2013	Account Title				Formula	
	Account Title				Formula	
	Account Title					Formula
	Account Title					Formula
						
"(d) Prepare the income tax expense section of the income statement for 2012, beginning with ""Income
     before income taxes."""						
						
						
	Income before income taxes				Amount	
	Income tax expense					
	Title			Amount		
	Title			Amount	Formula	
	Net income				Formula	
						
						
						
						
Problem 19-5
Name:				Date:			
Instructor:				Course:			
Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield							
Primer on Using Excel in Accounting by Rex A Schildhouse							
							
P19-5 (NOL without Valuation Account) Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2008-2014..							
							
		Year	Pretax Income (Loss)		Tax Rate		
		2008 	$40,000 		30%		
		2009 	25,000 		30%		
		2010 	50,000 		30%		
		2011 	80,000 		40%		
		2012 	(180,000)		45%		
		2013 	70,000 		40%		
		2014 	100,000 		35%		
Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2011-2014 were enacted in 2011.							
							
							
Instructions:							
"(a) Prepare the journal entries for the years 2012-2014 to record income taxes payable (refundable),
     income tax expense (benefit), and the tax effects of the loss carryback and carryforward. Assume
     that Jennings elects the carryback provision where possible and expects to realize the benefits of
     any loss carryforward in the year that immediately follows the loss year."							
							
							
							
							
2010	Account Title				Amount		
	Account Title				Amount		
	Account Title					Amount	
							
	Account Title				Amount		
	Account Title					Amount	
							
2011	Account Title				Amount		
	Account Title					Amount	
	Account Title					Amount	
							
2012	Account Title				Amount		
	Account Title					Amount	
							
(b) Indicate the effect the 2012 entry(ies) has on the December 31, 2012, balance sheet.							
							
Enter text answer as appropriate.							
							
							
							
							
							
							
							
							
							
							
							
							
							
"(c) Prepare the portion of the income statement, starting with “Operating loss before income taxes,”
     for 2012."							
							
							
	2012 Income Statement						
	Operating loss before income taxes					Amount	
	Income tax benefit						
	Title				Amount		
	Title				Amount	Formula	
	Title					Formula	
							
(d) Prepare the portion of the income statement, starting with “Income before income taxes,” for 2013.							
							
	2013 Income Statement						
	Income before income taxes					Amount	
	Income tax expense						
	Title				Amount		
	Title				Amount	Formula	
	Net income					Formula	
							
	Loss (2012)				Amount		
	Title				Amount		
	Title				Amount		
	Loss carryforward 2013				Formula		
	Title				Amount		
	Taxable income 2013				Formula		
	Title				Percentage		
	Title				Formula