Question 5(6 pts.)
5.1 (3 pts.) On December 31, 2013, Winston Inc.has determined that it is more likely than not that $240,000 of a$600,000 deferred tax asset will not be realized. The journal entryto record this reduction in asset value will include a
A. debit to Income Tax Expense for $360,000.
B. credit to Allowance to Reduce Deferred Tax Asset to ExpectedRealizable Value of $240,000.
C. debit to Income Tax Payable of $240,000.
D. credit to Income Tax Expense for $360,000.
5.2 (3 pts.) Based on the information aboveindicate the balance sheet presentation of therelevant accounts (not the ownersâ equity section):
Q6 (8 pts.)
Hawkins Inc. had pre-tax accounting income of $1,800,000 and atax rate of 35% in 2013, its first year of operations. During 2013the company had the following transactions:
Received rent from Barrett Co. for2014 $64,000
Municipal bondincome $80,000
Depreciation for tax purposes in excess of book depreciation$40,000
Installment sales revenue to be collected in2014 $108,000
Prepare the journal entry for taxes:
Q7 (3 pts.) Pringle Corporation reported$200,000 in revenues in its 2012 financial statements, of which$88,000 will not be included in the tax return until 2013. Theenacted tax rate is 40% for 2012 and 35% for 2013. What amountshould Pringle report for deferred income tax (asset or liability)in its balance sheet at December 31, 2012?
Amount
Or
Amount
DTA
DTL
Question 5(6 pts.) | |||||||||
5.1 (3 pts.) On December 31, 2013, Winston Inc.has determined that it is more likely than not that $240,000 of a$600,000 deferred tax asset will not be realized. The journal entryto record this reduction in asset value will include a A. debit to Income Tax Expense for $360,000. B. credit to Allowance to Reduce Deferred Tax Asset to ExpectedRealizable Value of $240,000. C. debit to Income Tax Payable of $240,000. D. credit to Income Tax Expense for $360,000. | |||||||||
5.2 (3 pts.) Based on the information aboveindicate the balance sheet presentation of therelevant accounts (not the ownersâ equity section): | |||||||||
Q6 (8 pts.) Hawkins Inc. had pre-tax accounting income of $1,800,000 and atax rate of 35% in 2013, its first year of operations. During 2013the company had the following transactions: Received rent from Barrett Co. for2014 $64,000 Municipal bondincome $80,000 Depreciation for tax purposes in excess of book depreciation$40,000 Installment sales revenue to be collected in2014 $108,000 Prepare the journal entry for taxes: | |||||||||
Q7 (3 pts.) Pringle Corporation reported$200,000 in revenues in its 2012 financial statements, of which$88,000 will not be included in the tax return until 2013. Theenacted tax rate is 40% for 2012 and 35% for 2013. What amountshould Pringle report for deferred income tax (asset or liability)in its balance sheet at December 31, 2012?
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