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2. (TCO B) The Accent Corporation shows thefollowinginformation.
On January 1, 2012, Accent purchased a donut machine for$900,000.
A) Pretax financial income is $2,000,000 in 2012 and $2,500,000 in2013.
B) Taxable income is expected in future years with an expected taxrate of 40%.
C) The company recognized an extraordinary gain of $250,000 in 2013(which is fully taxable).
D) Tax-exempt municipal bonds yielded interest of $50,000 in2013.
E) Straight-line basis for 8 years for financial reporting (SeeAppendix 11A.)
F) Half-year convention basis depreciation for 5 yearsfor tax purposes.
Required:
1) Computetaxable income and income taxes payable for 2013.
2) Prepare the journalentries for income tax expense, income taxes payable, and deferredtaxes for 2013.
3) Prepare the deferredincome taxes presentation for December 31, 2013 balance sheet.

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Nestor Rutherford
Nestor RutherfordLv2
28 Sep 2019

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(TCO A) Adam's Adorable Creations Company provided the followingfinancial information for its installment sales for the currentyear.

Financial Data:

Installment sales for currentyear $3,000,000

Cost of goods sold on installmentbasis $1,500,000

Repossessed merchandise: Estimatedvalue $18,000

Repossessed merchandise: Unpaidbalances $65,000

Payments bycustomers $2,000,000

Required:

a) Prepare journal entries for theend of the year based on the information above.

b) Prepare the entry to record thegross profit realized in the current year.

. (TCO B) The Accent Corporation shows thefollowinginformation.

On January 1, 2012, Accent purchased a donut machine for$700,000.

A) Pretax financial income is $2,300,000 in 2012 and $2,400,000 in2013.

B) Taxable income is expected in future years with an expected taxrate of 35%.

C) The company recognized an extraordinary gain of $150,000 in 2013(which is fully taxable).

D) Tax-exempt municipal bonds yielded interest of $150,000 in2013.

E) Straight-line basis for 7 years for financial reporting (SeeAppendix 11A.)

F) Half-year convention basis depreciation for 4 years for taxpurposes.

Required:

1) Compute taxable incomeand income taxes payable for 2013.

2) Prepare the journalentries for income tax expense, income taxes payable, and deferredtaxes for 2013.

3) Prepare the deferredincome taxes presentation for December 31, 2013 balance sheet.

Johnny Bravo Company began operations in 2015 and has providedthe following information.
1. Pretax financial income for 2015 is $100,000.
2. The tax rate enacted for 2015 and future years is 40%.
3. Differences between the 2015 income statement and tax return arelisted below.
1. Warrantyexpense accrued for financial reporting purposes amounts to $5,000.Warranty deductions per the tax return amount to $2,000.
2. Gross profit onconstruction contracts using the percentage-of-completion methodfor book purposes amounts to $92,000. Gross profit on constructioncontracts for tax purposes amounts to $62,000.
3. Depreciation ofproperty, plant, and equipment for financial reporting purposesamounts to $60,000.
4. Depreciation ofthese assets amounts to $80,000 for the tax return.
5. A $3,500 fine paid forviolation of pollution laws was deducted in computing pretaxfinancial income.
6. Interest revenue earnedon an investment in tax-exempt municipal bonds amounts to$1,400.
4. Taxable income is expected for the next few years.


*Prepare the journal entry to record income tax expense, deferredtaxes, and income taxes payable for 2015. (1-6 above)
*Draft the income tax expense section of the income statement,beginning with

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